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news you can trust I * *MONDAY 07 OCTOBER 2019 I vol. 19, no 409

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s at the end of Aug u s t , t h e C e n t ra l Bank of Nigeria (CBN) had financed the Federal Government to the tune of N4.4 trillion, according to official data.The apex bank continues to act as a piggy bank to a struggling sovereign while turning a blind eye to the economic consequence. The money, which is the net sum of outstanding CBN overdrafts to the FG minus the government’s treasury single accounts (TSA) deposits with the CBN, went into plugging a higher-than-expected budget

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-0.61 12.19

14.24

NGUS MAR 25 2020 363.53

As CBN’s net loans to FG hit N4.4trn Impact felt in low growth, FX pressure L-R: Emeka Nwajiuba, minister of State for Education; Godwin Obaseki, governor, Edo State, and Sunny Echeno, permanent secretary, Ministry of Education, Edo State, at the presentation of Best Governor Award in Education to the governor, at the just concluded World Teachers Day celebration in Abuja. Pic by Tunde Adeniyi.

3M 1.03 13.25

NGUS DEC 24 2019 362.68

Broke FG taps lender of last resort for biggest bailout since 1999 LOLADE AKINMURELE

fgn bonds

Treasury bills

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20 Y -0.05

14.33

14.64

NGUS OCT 28 2020 365.50

Estimated billing not going away as metering plan heads for crash …meter providers abandon consignments at port on new 35% import levy hike OLUSOLA BELLO & ISAAC ANYAOGU

he plan to meter over 5 million electricity customers in Nigeria who are currently charged dubious estimated bills by the power distri-

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news MTN Nigeria impacts over 500 communities with Foundation’s projects Cynthia Egboboh, Abuja

TN Nigeria last Thursday announced that it had reached and impacted over 500 communities with basic infrastructure in health, education and economic empowerment project through the “What can we do together” initiative. Dennis Okoro, director, MTN Foundation, speaking at the MTN What Can We Do Together Initiative phase 3 nominators’ appreciation night in Abuja, said the initiative had gone through three phases in 510 communities across 454 local governments in Nigeria. He said, “We are here to celebrate the people who decided to make their life count in their communities by partnering with the MTN Foundation to improve the quality of life in their communities.” He explained that the third phase impacted 110 communities in the Northern region, as 10 communities received solar powered boreholes, renovation of primary health care in 40 communities as well as supplies of school learning material to 60 primary schools. He said, “The MTN Founda-

tion has come a long way since 2005, with operations in the education, health and economic development sectors. “We have developed digital libraries in secondary Schools, delivered computers and internet connection. At the tertiary level, we built the state of art digital libraries at the University of Lagos, University of Benin, and Ahmadu Bello University.” Amina Usman, GM, Northern region, MTN Nigeria, in her remark, commended the efforts of the nominators in partnering the Foundation to bring progress to their communities. She said, “With the efforts of these nominators we have been able to reach 110 communities with learning materials, medical equipment, solar powered boreholes as well as renovated health care centres and schools. “In health sector, we have renovated 24 hospitals, maternity wards, supplied incubators band, and trained nurses across the six geopolitical zones in Nigeria.” Yakubu Useni, chairman, Senate Committee on ICT and Cyber Crimes, while commending the efforts of Foundation, stressed on the need to promote ICT programmes through the Foundation.

Funding constraints responsible for non-completion of roads - Fashola HARRISON EDEH, Abuja

inister of Works and Housing, Babatunde Fashola, has stated that the number of roads seeking government’s attention for completion or rehabilitation keeps increasing on a daily basis while the resources required to fix them remained grossly inadequate. Fashola disclosed this in Abuja during an interactive session of the Senate Committee on Works with the Federal Ministry of Works and Housing and its agencies. The minister in a statement on Friday maintained that it was the responsibility of his Ministry and its agencies to ensure that the roads in Nigeria were in good condition. He also noted that the inability to complete the various road projects across the country was as a result of inadequate budget and release of funds. While describing roads as national assets of any nation, Fashola called on all stakeholders in the Works Sector to come up with a hard decision on prioritisation of roads for completion and rehabilitation on the basis of social and economic importance to Nigerians. The Minister recommended the prioritisation of major link roads across the states and the roads to the various sea and airports across the country. TheministerwhowasenthusiasticwiththecalibreoftheSenators that constituted the Committee on Works whom he described as capable and tested men of proven integrity,addedthatwiththeirsupport, the challenges on Nigerian roads would be overcome. Earlier, the chairman, Senate Committee on Works, Mo-

hammed Adamu Aliero, stated that members of his Committee would collaborate with the Executive to do the needful in addressing the challenges in the works sector. As an option to address the funding challenge in the works sector, Senator Aliero, suggested sourcing for funds through local and foreign investors by concessioning some of our major roads. “I believe if we concession somemajorroadsandgetthecontractorstoconstructthoseroadsto international standards, they can recoup their investments within reasonable time by tolling the roads. This will gradually reduce government involvement in road construction and allow the ministry focus on being the regulator in line with what is obtainable in many countries in the world. “I am very optimistic that the government of President Mohammadu Buhari and the 9th Senate will deliver roads of international standard to the people of Nigeria and in no distant time, they will notice qualitative transformation in the works industry,” the chairman added.

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L-R: Onyekachi Onubogu, executive director, Tropical General Investment Group; Ismail Omamegbe, head, corporate responsibility, media/external relations, First Bank of Nigeria Limited (FBN); Folake Ani-Mumuney, group head, marketing/corporate communications, FBN; Simi Nwogugu, executive director, Junior Achievement Nigeria (JAN), and Olufunke Smith, group head, retail banking, Lagos Island 1, FBN, at the national company of the year (NCOY) competition in Lagos. Pic by Pius Okeosisi

How Nigeria’s poor fiscal framework threatens 3mbpd crude target, other priority areas – experts HARRISON EDEH, Abuja

il sector analysts have raised doubts on the recent 3 million daily production target announced by the minister of state for petroleum resources, Timipre Sylva. Their doubts, amidst hope raised by the new minister, come from the lack of proper fiscal governance framework which could encourage investments into Nigeria’s oil and gas sector, among other issues. The Minister had as part of his high priority area of focus stated that the federal government within the next four years would prioritise the 3million target daily production of crude oil, to shore up the revenue base for the country, as oil still accounts for 89 percent of the country’s foreign exchange earnings. Nigeria’s budget benchmarks and assumptions are largely hinged on oil output and price. The Nigerian oil sector is facing stiff competition, with several African countries joining the league of oil-producing nations. This has put Nigeria on a weak competitive edge with better fiscal governance framework from countries like Angola, Mozambique Ghana, and Equatorial Guinea, with the last two countries becoming investors’ toast due largely to Nigeria’s weak governance structure. This concern is already eliciting worries from many oil sector governance experts, who have called on the 9th Assembly to prioritise the Petroleum Industry Governance

Bill, as a key component bill to drive investment in Nigeria’s oil resources. Sylva listed priority areas for the ministry for the next four years to include: implementation of the reduction of the federal government’s equity stakes in Joint Venture participation to 40%, among others.

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He also included curbing petroleum products cross-border leakages, completion of the Nigerian Gas Flare Commercialisation programme, and reducing the current cost of crude oil production by at least 5 percent. Other priority areas include: aggressive promotion of the passage of the Petroleum Industry

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Bill (PIB); promotion of inland basin exploration activities; promotion of deep offshore exploration activities; collaboration with the private sector to aggressively increase domestic refining capacity, and working assiduously to support the President in lifting millions of people out of poverty via job creation.

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news I want to be remembered for transforming education in Edo State - Obaseki ...as state, World Bank strategise to extend EdoBEST to junior secondary schools

he Edo State governor, Godwin Obaseki, has reaffirmed his commitment to transforming the state’s education sector, promising that his administration will continue to make the development of the sector and its stakeholders a priority. The governor, who gave the assurance at a Thank You Mega Rally by the Nigeria Union of Teachers (NUT), Edo State Wing, said he wants to be remembered as the man who transformed the education sector of the state. Recall that Obaseki was selected by the National Executive of the NUT as the best performing governor in Nigeria in recognition of his education reforms and prioritising of teachers’ welfare in the state. The governor said the feats attained in the education sector are in line with the promise made to Nigerians by the All Progressives Congress (APC).

The governor said, “What you have seen us do with education in Edo State is the promise our great party, the APC made to Nigerians. That is the promise we in Edo State have decided to keep. We are focused on education in Edo State. We have decided to move Edo from schooling to learning because in the past, the focus had been on schooling.” According to him, “Nobody was asking in the past what the child was learning from school. This became something we were worried about because everyone complains about the quality of education in Nigeria. “It shows that the students did not learn what they were supposed to learn in kindergarten and primary schools. That is why when I became governor, I said if I do not do anything as governor, one thing I should be remembered

for is that I reformed the education sector. Thanks to the people of Edo State for always supporting me in this stride” He continued, “As a minority in Nigeria, what are Edo people known for? They are known for education and hard work, because our school system produced most of the people who are above the age of 50 today. Hence, I believe if we inherited quality education to make us who we are today, then we have no right to deny our children the benefit of the type of education that we received.” The governor said his administration is currently in talks with the World Bank to get assistance in strengthening the Junior Secondary School system in the state. He said the aim was to extend the digital learning system from public primary schools to public Junior Secondary Schools in the state.

Police arrest student for kidnapping own sister in Taraba for N10m Nathaniel Gbaoron, Jalingo

he Nigeria Police, Taraba State Command, on Friday arrested 22-year-old Abdul Umar, a 100-level student of Computer Science at the Adamawa State University, for kidnapping a 10-year-old girl, Amina Umar, who happened to be his biological sister. The Police Public Relations Officer in the state, David Misal, paraded the suspect alongside two of his accomplices, Sadiq Sani, 21, and Abdullahi Habib 27, whom he had hired to carry out the act.

The Command also paraded 19 other kidnappers and armed robbers who were allegedly responsible for kidnapping and armed robbery in Gassol, Bali and other parts of Taraba “The mastermind, Umar criminally conspired with other suspects and lured the innocent girl into a Blue Honda Hennessy car with registration no MKF 67JK Kaduna, and took her to Dove Hotel Mayo Dassa, where she was held captive. “The suspects contacted the family and demanded for a ransom of N10 million. The kidnappers later accepted to

collect the sum of N4 million, and in the process of collecting the ransom at Wuro-Sambe, the outskirts of Jalingo, they were tracked and promptly arrested while the victim was rescued,” he said. Misal said Commissioner of Police, Taraba Command, Alkassim Sanusi, wished to reiterate the unwavering commitment of officers and men in fighting all forms of crimes. Meanwhile, the key suspect Umar told newsmen that his purpose of staging the kidnap of his sister was to make his father cough out N10 million so that he could travel abroad.

Cape Town hosts UNICAF conference 2019

ith over $90 million worth of scholarships, more than 25,000 students and graduates in 156 countries, state-ofthe-art campuses opening in Rwanda, Zimbabwe and Uganda, and a new partnership with the University of Suffolk in the UK, Unicaf, had a lot to celebrate at its annual conference, held August 30 in South Africa. The Cape Town International Convention Centre welcomed a large number of students, graduates, academics and staff from Unicaf and partner universities, who attended the conference to learn, exchange ideas, network and have fun. They watched presentations by Unicaf academics about the skills gap in the global workplace, about higher education serving Africa’s development needs, about flexible learning and the workplace of the future, and about the role of higher education, innovation and industrialisation in

helping establish Africa as an international player. Three interactive sessions provided advice and practical tips on Professional Development, Business Communication and Time Management, before the winners of the essay competition ‘How Unicaf has changed my life’ received their prizes: Aderemi Adedokun from Nigeria, pursuing a Master’s in Public Health with the University of South Wales through Unicaf, Saneliso Zulu from Zambia, studying for an MBA with the University of South Wales through Unicaf, Kabiru Muhammed from Nigeria, an MBA graduate of the University of Nicosia though Unicaf and Peter Silwimba from Zambia, pursuing a doctoral degree in Business Administration with Unicaf University. The winners of the social media competitions were Esther Jemima Cruz from the Philippines, MBA student of Unicaf University Malawi, for the video of her long journey www.businessday.ng

to Cape Town, and Relebohile Mpeete from Lesotho, a Master’s in Managerial Psychology student with Unicaf University Zambia, for her photograph taken at the Conference. By utilising modern technology and offering generous scholarships, Unicaf provides affordable, accessible and flexible higher education of international quality, even in places where poverty and illiteracy are dominant; talented young people and working professionals around the world can obtain qualifications, knowledge and skills, which can secure them better jobs and better lives, thanks to Unicaf. Currently present in 12 African countries (Nigeria, Kenya, Zambia, Malawi, Uganda, Rwanda, Ghana, Somalia, Egypt, Morocco, Zimbabwe and South Africa), Unicaf is continuously expanding. Over 2,000 Unicaf scholars from around the world have already graduated from partner universities in the US, the UK and Europe. https://www.facebook.com/businessdayng

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United Nation’s stress test for Nigeria – Nigerian military insufficient loyalty and spiralling insecurity (fifth in a series of 8 articles)

BASHORUN J.K RANDLE

oday we will discuss the worries of the US secretary general on Nigeria’s low military commitment as published by ThisDay newspaper in its front-page report on June 19, 2019 headlined “officers, men at the frontlines not sufficiently committed says Buratai.” “Yusuf Buratai, the Chief of Army Staff, Lt. Gen. yesterday called out his officers and men, saying their deficient loyalty to set courses was responsible for the setback the Nigerian Army (NA) has had in recent operations. He spoke at a “transformational leadership workshop” held at the Army Resource Centre, Abuja and said insufficient commitment of frontlines soldiers was the reason for the reverses the army had suffered in its operations. Although he acknowledged that the army had scored resounding successes in the past, producing military leaders that had performed exceptionally well at international assignments, he regretted that things had now gone awry in the force. “It is unfortunate, but the truth is that almost every setback the NA has

had in our operations in recent times can be traced to insufficient willingness to perform assigned tasks: or simply insufficient commitment to a common national/military course by those at the frontlines,” he told middle level officers who were at the workshop organised to retool them for the task ahead. Terror gangs, particularly Boko Haram in the north-east and armed bandits in the north-west, have held many communities to ransom in the two regions with the military sent to rein them in achieving little success in its task. Whilst there have been claims by the federal government that Boko Haram had been degraded with no further capacity to hold positions in the north-east, the reality on the ground is that the terror group has demonstrated sufficient capacity for scotch earth attacks even on military bases, including battalions and a brigade. The situation in the north-west has become worse as armed bandits sack villages at will and kidnap citizens for ransom. The military, in most cases, has been reactive rather than proactive. Setting the tone for the critic of his men yesterday, Buratai reminisced the lost glory of the army: “It is worthy to note that the NA has had great success over the years in the grooming of military leaders.” He added: “This is evident in the many successes that the NA has achieved in our operations and the high performance of our personnel, both officers/soldiers, in international/multinational operations or other military duties.”

He said he had tried to maintain this tradition by ensuring that promotion of NA personnel was essentially based on professional considerations only. “But we all know that professional capacity is not a sufficient condition to succeed in a task; willingness to perform the task is equally necessary,” he stated before delivering his upper cut to the officers found wanting. “Many of those on whom the responsibility for physical actions against the adversary squarely falls are yet to fully take ownership of our common national or service cause,” Buratai said with a tone of regret. He, however, urged his officers and men to show sufficient commitment to the national cause, citing President Muhammadu Buhari’s speech made 35 years ago, exhorting Nigerians to fight and salvage the country from external aggression. “I, therefore, believe that the transformational leadership workshops will again remind and clarify to participants what our president and commander-in-chief meant by: ‘this generation and indeed, future generations of Nigerians have no other country but Nigeria.’ We must remain here and salvage it together,” he said, adding: “The president’s exhortation, though about 35 years old, is still relevant today given as we see in some cases that apathy has even increased amongst the younger generations.” The workshop, a six-day programme, for mid-level officers and soldiers, organised by the Nigerian Army Headquarters Department of Army Transformation and Innovation at the Nigerian Army Resource Centre in Abuja, has the theme “Lead, Follow

‘

It is unfortunate, but the truth is that almost every setback the NA has had in our operations in recent times can be traced to insufficient willingness to perform assigned tasks: or simply insufficient commitment to a common national/ military course by those at the frontlines

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

World oil market – a short term outlook

n a country-by-country basis, the United States leads global oil demand in absolute terms at 20.4 million barrels per day (mmbbl/d) or 20.5 percent out of the total world demand of 99.8 mmbbl/d in 2018. However, there is a gradual shift towards emerging economies especially countries in the Asia Pacific region. While global demand surged by 1.4 mmbbl/d in 2018, the region contributed circa 72 percentage of the global growth (48 percentage and 20 percentage by China and India respectively) with United States share at 35 percentage, based on information gleaned from BP statistical review of world energy. In 2019, world oil demand growth is expected to slightly diminish to 1.02 mb/d in 2019 and increase by 1.08 mb/d in 2020, less than 2018 actual growth volume, according to the Organisation of the Petroleum Exporting Counties (OPEC). On the other hand, The International Energy Agency (IEA) on the back of global economic outlook, estimates a growth corridor of between 1.2 -1.4 mmbbl/d. Barring any major swing in global events, actual demand may not deviate significantly from these estimates. On the supply side, the US is projected to lead global oil-supply growth over the next few years due to increased activities from shales formations, following the unprecedented 16.8 percentage supply expansion seen in 2018. However, increased shale activities will be largely dependent on the price of conventional crude. To underscore US production growth trajectory, whereas production by non-OPEC mem-

bers such as Brazil, China, the UK, Australia and Canada. Mexico and Norway are also set to increase, the US alone will account for 70 percentage of the increase in global production capacity up until 2024, adding a total of 4 mmbbl/d according to IEA projections. As a result, the US should surpass Russia in crude export and closely follow Saudi Arabia in the near term. The supply scenario above could portend either good or bad omen. The impact will vary across jurisdictions depending on each country’s energy status and level of dependence on crude oil revenue to finance public expenditure. Supply growth from non-traditional oil plays will spur increased liquidity and greater diversity of supplies in the global crude oil market. From the perspective of major demand centres, this should strengthen supply security, enhance trading flexibility and exert downward pressure on price subject to demand-supplier drivers such as global economic growth outlook, likelihood and impact of geopolitical disruptions, amongst other factors. Conversely, a more diversified supply source may not particularly bode well for countries hooked on oil revenue. Security of demand may be threatened with consequential macroeconomic pressures and social political disruptions. That said, out of every (seeming) adversity lies immense opportunity for self-regeneration. Therefore, this once again emphasises the crying need for structural reforms and diversification to enhance macroeconomic resilience by www.businessday.ng

GLENN UBOHMHE

oil dependent economies including Nigeria. On a related note, how does this positive outlook for supply growth align with the quest for fugitive emissions reductions and transition to a low carbon economy? What it simply means is that the world is yet to wean itself off hydrocarbons, its prominence not likely to diminish so soon. Till date, even “old king coal” has retained its dominance in global electricity fuel mix at 38 percentage, followed distantly by natural gas and hydro at 23 percentage and 16 percentage respectively. Though, share of coal in global electricity generation by fuel type remained constant at 38 percentage between 2017 and 2018, coal-fired electricity however grew by 3 percentage yearon-year in 2018 and total consumption spiked by 9.3 percentage in the last ten years (or by 321 million tonnes of oil equivalent) with varying growth profile across regions. Even the EU Emission Trading Scheme (EU-ETS) has not helped in significantly reducing coal consumption in some countries within the region. As I wrote a few years ago in an article titled “shale, coal and global energy consumption,” the world will continue to seek greener alternatives but ultimately the global energy arc bends towards energy security much more than environmental consideration. Meanwhile, the global oil sector will also have to adapt to new marine fuel specifications mandated by the International Maritime Organisation (IMO) which takes effect from January 1, 2020. The regulation on lower sulfur

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or Get Out of the Way.” It is part of the Buratai’s efforts to have a professionally responsive NA in the discharge of its constitutional roles. Buratai told the officers that leadership was core to military professionalism hence the inclusion of aspects of military leadership skills acquisition. According to him, “military leadership skills equip personnel with the capacity to control and care for members of their group from the lowest tactical to the highest operational level. The NA even conducts special military leadership programmes when necessary to complement what is provided in the routine courses.” He noted that all such programmes, however, “were mainly designed to build capacities that would enhance the intellectual and physical components of a fighting force.” Also slammed on its frontpage was: “Terrorism: UK cautions citizens against travelling to 21 states.” “The Foreign and Commonwealth Office (FCO) of the UK has issued a security travel alert to British citizens, cautioning them against travelling to 21 states in Nigeria. The alert issued by Sajid Javid, home secretary said, terrorists were planning to kidnap foreigners and urged them to also avoid some Niger Delta states.

marine fuel quality requires the implementation of maximum 0.50 percentage Sulphur content from the current limit of 3.5 percentage in a bid to slash marine sector emissions in international waters by over 80 percentage, the largest single reduction of marine fuel Sulphur content undertaken at a time. No doubt, marine vessels constitute a critical component of today’s global economy. More than 80 percentage of global trade is transported by marine vessels in volume terms (more than 70 percentage by value) and account for about 4 percentage of global oil demand according to Energy Information Administration (EIA). Therefore, there are implications for businesses on a global scale. As operators seek to comply with the new regulation, it could trigger growing demand for middles distillates and nonpetroleum-based fuel, such as LNG, with lower sulphur content and as such result in upward price pressure on the costs of ocean-going freight in the short to medium term. Changes in refining operations by refiners and installation of scrubbers in the exhaust of vessels to reduce the quantity of emission are other possibilities in a bid to complying with the regulation. Whichever option is adopted, there are cost implications for global trade especially in the short term. Glenn (FCA, FCTI) is a 2013 recipient of Society of Petroleum Engineers’ (SPE) award for international recognition of excellence as a technical editor of SPE’s peerreviewed journal in Louisiana, US.

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CBN’s LDR victory lap may be too soon

PATRICK ATUANYA

ast week, this column offered cautious praise for the new Central Bank of Nigeria (CBN) regulatory measures to improve lending to the real sector, through a new minimum loan to deposit ratio (LDR) of 60 percent it had recently set. The CBN had been rightly exasperated by the tendency of most deposit money banks (DMBs) to use excess deposits to fund the Federal Government through purchase of Government securities, rather than engage in their core mandate which is to create loans. As a result of the new LDR directive there had been a noticeable increase in lending (in the past 3 months) and this column concluded that if banks are now thinking of how to be innovative to provide core

banking services to their customers, It is an outcome (which if sustained in the medium to long term by the banks) that the CBN should take a whole lot of credit for. However in an unexpected move last week Monday, the CBN in all intents and purposes, took a victory lap, over its new policy, when it further increased the minimum LDR to 65 percent, with immediate effect, which banks must attain by December 2019, or pay a penalty of additional Cash Reserve Requirement (CRR) equal to 50 percent of the lending shortfall implied by the target LDR. This implies any bank that fails to maintain the new specified LDR risks being required to park more of their excess funds with the CBN where it would not earn much in interest and could not be used to purchase Federal Government securities such as bonds and treasury bills. “To encourage the SMEs, Retail, Mortgage and Consumer Lending, these sectors shall be assigned a weight of 150% in computing the LDR for this purpose,” the CBN said in the new circular. Loan-to-Deposit ratio (LDR) compares a bank’s total loans to its total deposits for the same period. A higher LDR means the bank is issuing out more of its deposits in loans and vice versa. The CBN noted that gross credit of the banking sector rose from N15.56 trillion as at end-May 2019 to N16.39 trillion as at September 26, 2019, translating to N829.40 bil-

lion or 5.33 percent increase within the period. The column last week had talked of a medium to long term period (18 months – 36 months) for which this experiment with a minimum level for LDR (then at 60%), would unfold and if successful, the CBN could then take credit and/or adjust the policy. Investors and policy watcher were however blindsided by the new pronouncement, which implies that the CBN is gauging the impact of its new LDR policy on just a 3 month time period, which is clearly inadequate given all the variables at play in a somewhat complex economy like Nigeria’s. For starters the global macroeconomic backdrop suggests a weakening of major growth indicators across different large economies. In the U.S. the once tight labour market is seen as gradually losing steam as a weak reading of activity in the services industry and a similar downbeat report for manufacturing, along with purchasing managers’ disappointing assessments of employment, jolted investors. Data from Europe’s largest economy suggests economic woes are becoming more pronounced, with a sharp slowdown in services and manufacturing. China the world’s second largest economy continued on a slower trajectory in September, with weakness in manufacturing and retailing combining with the trade war to undercut growth.

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A gauge of the largest most liquid banks listed on the stock market has returned -18.44 percent year to date.

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

Why a new agriculture strategy is required

igeria’s population is growing. Although we have not had a census in more than a decade, and a credible one even longer, we know that the population is way more than it was 20 or 30 years ago. We know this because we measure fertility and population growth reasonably well. According to projections by the United Nations, there will be 400 million people in Nigeria by 2050. If that sounds like it is far way then think again. I still plan to be alive by then, so it is obviously not far enough. The obvious question that should pop up when you think of a Nigeria with 400 million people is “what are all these people going to do?”, and specifically “what are all these people going to eat?”. As the former central bank governor Soludo said in his recent address at The Platform, “We need to start preparing for 400 million people that will soon be upon us in a world without oil.” The question is particularly important when you think about the dynamics of our agriculture sector over the last two decades. Agriculture has been important to stability in Nigeria because it has historically served as a kind of social security. As our parents would say, “if all else fails you can always go back to the village and farm”. The assumption however, is that land is

abundant and indeed when Nigeria had a population of 50 million people perhaps it was. With a population today of nearly 200 million it certainly is not abundant. With a population of 400 million? You know the answer. According to statistics from the Food and Agricultural Organization, in 1981 Nigerians cultivated about 15 million hectares of land. By 2000 this had risen to about 40 million hectares. In 2018 we cultivated about 55 million hectares of land. For context, the entire Nigeria, including swamps and deserts and mountains is about 92 million hectares of which an estimated 72 million can be used for agriculture and only 37 million is actually good for it. To cut the long story short, we are running out of land. If you worry about the validity of this data please keep in mind that it is actually very easy to measure these things using satellites now. Indeed, a lot of the growth in agriculture over the past two decades has been driven mostly by farmers as a whole just using more land. On average we have not actually been getting better at growing most things. If you look at the value of agricultural produce per hectare, after adjusting for prices it was roughly $700 per hectare per year in www.businessday.ng

ECONOMIST

1981. In 2017 it was still roughly $700 per hectare. There was a temporary bump in between 1999 and 2007 but that appears to have only been temporary. The major culprit here is that our farming practices or typically archaic resulting in very low yields. Tomato farmers in the Netherlands produce over 5000 percent more per hectare than Nigerian tomato farmers. No typo there. Rice farmers in China produce over 300 percent more rice per hectare than our farmers. Maize farmers in South Africa produce over 200 percent more per hectare than our maize farmers. Even for cassava, which we are the world’s largest producer, Brazilian cassava farmers have yields that are almost 300 percent higher than ours. In short, we use a lot of land for agriculture, but we are not really very good at it compared to almost everyone else. So, what is the way forward? How do we feed 400 million people without having access to more land? Simple. We need to actually get better at agriculture and focus on increasing our yields. To do this we need farmers who are smarter and better educated. If our farmers are still farming the same way their grandparents farmed then it means we are not making progress. We

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South Korea, a bellwether for global growth saw exports slide 11.7 percent in September, meanwhile oil prices have quietly dropped below $60 a barrel (around where they were before the terrorist attacks on Saudi Arabian oil facilities) , as a weakening global economy and fears of recession erode oil demand. Central banks around the world are loosening monetary policy to offset the global slowdown made worse by U.S.-China trade tensions. Australia cut rates last week for the third time this year, while the Philippines and Indonesia eased policy rates last month. The CBN for its part is trapped in the unenviable position of being unable to loosen policy to stimulate growth due to concerns over potential naira weakness. It is clear that against these backdrops it is no time for banks to begin to take on greater risks by aggressively expanding their loan books, especially in a bid to satisfy a regulatory directive. The last time oil prices collapsed in 2014, Nigerian banks saw a surge in non-performing loans, which they are just beginning to get out of. Investors seem to agree. A gauge of the largest most liquid banks listed on the stock market has returned -18.44 percent year to date. The CBN should perhaps be paying more attention to the signals the markets are sending.

NONSO OBIKILI

need to better harness water resources. Depending on rainfall is cool but irrigation systems are better. We need better seeds and better varieties. We need better organised markets and value chains to absorb more production and minimise waste. I could go on but will stop here. The moral of this story is that we need a new agriculture policy direction that is focused on getting better at agriculture. Else, we may have to figure out what to do with those future 400 million hungry Nigerians. Nonso Obikili is chief economist at Business Day.

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BUSINESS DAY

Monday 07 October 2019

EDITORIAL PUBLISHER/CEO

Frank Aigbogun EDITOR Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo 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

China, Nigeria: 79 and 59 years after

fter the euphoria, mostly at government circles, that greeted the commemoration of Nigeria’s 59th independence anniversary, time is now to sit back and do some introspection intent on highlighting obvious pitfalls that dot our country’s growth and development. In our view, the best and quickest way to do this is to place Nigeria side by side with other economies that have had similar experiences but have risen above obvious challenges to seemingly and relatively unassailable heights. China readily comes to mind here. In 79 years, China has molted its communist past for state capitalism and has, in the process, lifted millions of its citizens out of poverty in a generation. The country has also developed many cities within this period. China is the world’s most populous country and, according to a demographic research group in 2017, there are 102 Chinese cities, apparently the size of London, Lagos, Abuja

or Port Harcourt. Each city has over one million people in the urban area. Conversely, after 35 years of military rule, Nigeria returned to full scale democracy but has, according to Tanko Yakassai, missed the road. The country risks becoming a criminal project because of its style of politics and electoral process which are mere fraudulent activities. As a country, Nigeria is characterised by an over-centralised government that is excessively bureaucratised and remains accountable to no one; to no idea or dream unlike what obtains case in China. The immediate fallout of this is that, unlike China, millions of Nigerians have plunged into poverty without hope of where the next meal will come from. A recent report by the World Poverty Clock says Nigeria has overtaken India, a country with a population that is seven times larger than Nigeria’s, as the country with the most people who are extremely poor. The report adds that 86.9 million Nigerians, representing nearly 50 percent of its estimated 180 million populations, are

living in extreme poverty, meaning that, with a major population boom, Nigeria will become the world’s third largest country by 2050, and its problem will likely be worse. It deadens the feeling that in the midst of this extreme poverty, virtually all state-owned assets remain dead capital because of what is clearly an inordinate attachment to an era of commanding heights which China is abandoning or may have abandoned completely. To make matters worse, while millions of Nigerians starve and, in extreme cases, die; and despite all evidences of failure and incompetence, the federal government still lives in selfdelusion, thinking that it is a good manager of the economy. Evidently, unlike China, Nigeria is on a “forsaken road to nationhood and development”. It needs some redemptive steps to find its way out of the present quagmire it finds itself. Humphrey Orjiako, Nigeria’s former Ambassador to Switzerland, is of the view that “over-centralisation of power is a cardinal culprit in stymieing Nigeria’s prospects for eco-

nomic growth and development, as well as an important factor in decelerating her pace of advancement to nationhood.” We cannot agree more. We find it appalling that the federal government, in 21st century Nigeria, does neither believe nor attach importance to human capital development contrary to the view held by Charles Chukwuma Soludo, an eminent professor of Economics. Soludo, appointed recently by the federal government into its newly constituted Economic Advisory Council (EAC), says human capital is Nigeria’s new resource. But the question that agitates the mind in this direction is, where are the schools, hospitals, teachers, and the doctors to develop the capital? The simple answer is the frustrating reality that all of these professionals have migrated, and many more are still migrating, to Canada. And, to us, this is the crux of the matter that should worry any serious government. We urge President Buhari to see beyond big government and face the reality of our time.

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BUSINESS DAY

Monday 07 October 2019

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At 59, Nigeria still can’t run its own affairs. Here’s why GLOBAL PERSPECTIVES

OLU FASAN

very year, at its independence anniversary, Nigeria’s leaders gush out platitudes about the country’s prospects, about Nigeria’s presumed greatness. This year, at Nigeria’s 59th independence anniversary, they were at it again. For instance, the vice president, Yemi Osinbajo, talked recently about “the uniquely confident way we stand out”, calling it “the Nigerian swag.” But what is it to brag about? If Nigerian leaders are not self-referential, if they are not judging themselves by their self-set standards but by the universal standards of public governance, they would acknowledge that this country has been, and is being, appallingly governed. At its independence in 1960, Nigeria was favourably compared with many of the Southeast Asian countries, such as South Korea, Indonesia and Malaysia. But, today, it lags behind these countries on several socio-economic indicators. Take Indonesia, the country’s GDP is $1 trillion, compared with Nigeria’s $397 billion, and Indonesia’s per capital income is over $4,000, compared with Nigeria’s $2,000. In his Independence Day speech, President Muhammadu Buhari hailed what he described as Nigeria’s “robust” reserve of $42.4 billion. But if that was robust, how would he describe Brazil’s current reserves of $388bn, Indonesia’s $124 billion or even Malaysia’s $102 billion? Clearly, Nigeria is a Lilliputian compared with countries like Brazil, Indonesia and Malaysia, not to mention China, which, marking the 70th anniversary of the Peoples Republic this month, can boost of having one of the most impressive development records in

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history, lifting hundreds of millions out of poverty, while Nigeria is the poverty capital of the world! But the comparison with the middleranking countries, such as Indonesia and Malaysia, doesn’t give a true picture of Nigeria’s utter misrule and failure. In a recent speech entitled “Economic and institutional restructuring for the next Nigeria”, Charles Soludo, former governor of the CBN, referred to the fragile and failed states index by the US Fund for Peace, which assessed countries’ vulnerability to collapse. The index assessed Nigeria’s vulnerability along four clusters of variables, namely cohesion, economic, political and social, and showed that Nigeria’s ranking has deteriorated from 54 in 2005 and now stands between 13 and 15. What’s more, according to the index, Nigeria is now in the red alert category with countries such as Afghanistan, Iraq, Haiti, Guinea, Syria, Yemen and Somalia. Where, for goodness sake, is the basis for the “Nigerian swag” when the country is wallowing in utter hopelessness with fragile and failed states like Afghanistan and Somalia? The truth is that Nigerian leaders are in denial. That the denial or lack of selfawareness was evident in President Buhari’s democracy day speech. He said he was “elected to deliver positive and enduring change” but did not acknowledge that his administration has failed woefully to deliver any change to achieve “a united, prosperous and purposeful nation,” capable of facing “21st century opportunities and challenges.” The president’s speech writers may be good at using buzzwords and lingos, but nothing in the speech tells us why the “positive and enduring change” is still elusive. Well, in truth, the president gave us a clue. According to him, “this change can only be delivered if we are united in purpose, as individuals and as a nation”. So, the “positive and enduring change” he was elected to deliver is predicated upon having unity and a sense of purpose. But where is the role of leadership in this? What role is he playing to inspire that sense of common purpose and to engender the national unity? Truth is, Nigeria needs radical political,

economic and institutional transformations, and only the president can articulate, lead and drive the process. Yet, there was nothing in his speech about political reform, which is the starting point in engendering peach and unity in Nigeria. Instead, President Buhari is threatening people who “abuse technology” through hate speech on social media and trampling on judicial independence and the rule of law in the name of national security. He said that whilst he would uphold the constitutional rights to freedom of expression and associations, “we will take firm and decisive action where the purported exercise of these rights … threaten to undermine our national security.” This, of course, was a restatement of President Buhari’s comment last year that the rule of law must be subordinated to national security. So, if your statement is believed to threaten national security, which includes, as recently reported, “insulting the president”, you could be clamped into detention and intimidated, as Omoyele Sowore, publisher of Sahara Reporters, has been for weeks for mouthing the word “revolution”, even though there is no evidence he organised, or intended to organise, an armed insurgence. Yet, protests, even rabble-rousing and illtempered protests, are part of the fabrics of a true democracy. Centuries ago, Marcus Tullius Cicero wrote several theses on how to run a country. In his book, “How to run a country: An ancient guide for modern leaders”, Philip Freeman drew out some of the key lessons from Cicero’s writings. It is the failure of Nigeria’s leaders to learn these lessons and demonstrate the relevant qualities that have, for decades, caused the utter misrule of this country. The first of these lessons is that the best form of government embraces a balance of power. Cicero argues that a just government must be founded on a system of checks and balances. But where, precisely, are the checks and balances in Nigeria’s governmental system, when the president could easily ignore court orders, or the legislatures simply become poodles of the executive? Cicero warns us to “beware the leader who sets aside the rule of law claim-

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Truth is, Nigeria needs radical political, economic and institutional transformations, and only the president can articulate, lead and drive the process. Yet, there was nothing in his speech about political reform, which is the starting point in engendering peach and unity in Nigeria

ing the need for expediency or security”. Isn’t that familiar? President Buhari has said that expediency or security trumps the rule of law. But no country can be run well without the rule of law! Another wisdom from Cicero is that leaders who would govern a country must possess great courage, ability and resolve to bring about change. As Cicero says, governing a country is like steering a ship, and the captain must steer it to safety. If President Buhari can only respond to Nigeria’s political and economic challenges by threatening the citizens with arrests and detention and by trampling on the rule of law and individual liberty, truth is, he is not steering the Nigerians ship of state well. As Cicero also says, compromise is the key to getting things done. Building a national consensus for positive political and economic change is key to running a country. A lesson for President Buhari is that he must lead the national discourse, and build the national consensus, for the political, economic and institutional transformation of Nigeria. He must, as Cicero also says, keep his friends close and his enemies closer; that’s how to govern a multi-ethnic state like Nigeria. But here, for me, is Cicero’s key lesson on how to rule a country, but, unfortunately, it’s a lesson that has no traction in Nigeria. Cicero says that “those who govern a country should be the best and the brightest of the land.” According to him, “if leaders don’t have a thorough knowledge of what they are talking about, their speeches will be a silly prattle of empty words and their actions will be dangerously misguided.” Interesting! To be sure, Nigeria has suffered enough from leaders who govern by sheer whim rather than by knowledge or intelligence. And that’s why, if you ask me, Nigeria is badly governed, even at 59! Nigeria will be governed well when, as a starting point, it gets capable leaders! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

The Nigerian code of corporate governance 2018; principle 21 – general meetings

eneral meetings are important platforms for the board to engage shareholders to facilitate greater understanding of the company’s business, governance and performance. They provide shareholders with an opportunity to exercise their ownership rights and express their views to the board on any areas of interest.” A meeting is the coming together of persons, and an assembling of several persons for the purpose of discussing and acting upon matters in which they have a common interest. According to Aiyar’s Judicial Dictionary “for a meeting, there must be at least two persons, because a man cannot meet himself.” The Companies and Allied Matters Act Cap C20, Laws of the Federation of Nigeria, 2004 (CAMA) lists types of meetings. One of these is a general meeting, which may be a statutory meeting, an Annual General Meeting (AGM) or an Extra-Ordinary General Meeting. A common complaint of shareholders is that the AGM is the only opportunity they have to interact with the directors and management and to air their views on the affairs of the company. It is recommended that the board and management should organise additional avenues to engage shareholders, whilst being mindful of corporate governance considerations on granting preferential treatment to shareholders. A general meeting is intended as a key instrument for the protection of shareholder rights. The general meeting is an indispensable tool of corporate governance as it creates a platform for shareholders to engage with the board on the performance and actives of the company. Unfortunately, the AGM is treated as a yearly gala to fete shareholders.

The NCCG code recommends best practices towards the conduct of general meetings in addition to the requirements in CAMA. It is recommended that the meeting be conducted in an open manner to foster free discussion on all issues on the agenda. Shareholders – particularly minority shareholders – should be provided ample opportunity and enough time to participate fully and contribute effectively at such meetings. The venue of a general meeting should be accessible to shareholders, to ensure that shareholders are not disenfranchised on account of the choice of venue. The code recommends that the notice and documents of meeting shall be circulated to shareholders at least 21 days before the date on which the meeting will be held. To ensure that they contribute meaningfully to deliberations at the general meeting, it is important the shareholders receive the Annual Reports well in advance and not on the day of the AGM as is now the trend. In conducting the meeting, it is recommended that the board ensures that unrelated issues for consideration are not lumped together. All matters to be considered should be clearly and separately set out. Separate resolutions should be proposed and voted on for each substantive issue. The Board should also ensure that decisions reached at general meetings are properly and fully implemented as governance directives. The code also provides that the chairmen of all board committees and of the statutory audit committee be present at general meeting to respond to shareholders’ inquiries. The failure or success of the general meeting is often dependent on the effectiveness of the www.businessday.ng

board chair. Section 240 of CAMA provides that the chairman, if any, of the board of directors shall preside as chairman at every general meeting of the company, or if there is no such chairman, or if he is not present within one hour after the time appointed for the holding of the meeting or is unwilling to act, the directors present shall elect one of their number to be chairman of the meeting. If at any meeting no director is willing to act as chairman or if no director is present within one hour after the time appointed for holding the meeting, the members present shall choose one of their members to be chairman of the meeting. The chairman should conduct the meeting with utmost care and attention, peacefully and with dignity. He should conduct the proceedings with regularity as per the agenda and can cast his or her vote provided, he or she is a shareholder. The chairman is responsible for ensuring that its business is conducted in an orderly manner and ensuring that all questions that arise are promptly decided. In the case of John v. Rees ((1969) 2 W.L.R. 1294), the court held that when facing disorder, the Chairman should make earnest and sustained effort to restore order. If these efforts are in vain, the chairman should attempt to put into effect any provisions for adjournment which appear in the rules. Where the rules fail or are not in existence, he should use his inherent power to adjourn the meeting for a short while, ensuring that all know of the adjournment. However, where the disorder is or results into an actual violence, i.e. blows are being exchanged and there is a real possibility of grievous bodily harm, the chairman should immediately adjourn the meeting.

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BISI ADEYEMI Institutional investors hold significant stake in most of the companies listed on the Nigerian Stock Exchange. They are in a position to positively influence the efficient governance of their investee companies and given their significant stake, ought to have an incentive to take a more active role in monitoring corporate misconduct. To a large extent, they have been content to take a passive approach to their investment or simply sell the shares of underperforming companies. There is need for more activism on the part of institutional investors, as the shareholder associations are too fragmented and usually ineffective in influencing corporate behaviour. Shareholder associations on the other hand need to equip themselves to be positioned to monitor and assess the wellbeing companies such that their intervention will be more structured and value adding.

Bisi Adeyemi is the managing director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides governance advisory, corporate restructuring & board evaluation, board & senior management training, retreats & strategy sessions, executive talent recruitment, HR outsourcing, company secretarial services.

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Monday 07 October 2019

BUSINESS DAY

In Association With

Lessons from an open-air prison

Ethiopia’s most repressive state is reforming The change in Somali Regional State offers an example for the country

“H

OW IS DEMOCRACY?” asks Bashir A h m e d Ha s h i , smiling broadly, as he bounds out of his jeep towards the gates of Jigjiga prison. Entering the courtyard, the commissioner is greeted by a loud cheer. Excitable inmates jostle to shake his hand and pat him on the back. “For 24 hours a day we are happy now,” says one. Bashir, who was appointed prison chief for eastern Ethiopia’s Somali Regional State less than a year ago, looks a little bashful. “I’m popular here,” he explains. Before August 2018 the Somali region was the most ill-treated place in all of Ethiopia, tyrannised by its then state president, Abdi Mohamed Omar, who had waged a scorchedearth campaign against secessionist rebels for more than a decade. Backed by the central government, Abdi and his heavily armed special police force, the Liyu, murdered and raped civilians, imprisoned and tortured tens of thousands of alleged rebels, and, according to Human Rights Watch, committed crimes against humanity. “It was like a giant prison,” says Mohammed Gurey, one of hundreds of thousands of Ethiopian Somalis to have fled abroad in recent decades. That all changed last year when Abiy Ahmed became Ethiopia’s prime minister. Abiy, who deposed Abdi and put him on trial in Addis Ababa, the capital, invited Mustafa Omer, an exiled activist and UN staffer whose own brother had been killed by the Liyu, to take over as acting state president. Dissidents and rebels returned in droves. Mohammed became the region’s deputy security chief. The infamous central prison in Jigjiga, the state capital, was closed. Thousands of prisoners were freed. Since then Mustafa has overseen the most dramatic turnaround in the region’s recent history. “It is the safest place in Ethiopia right now,” says Kamal Hassan, another recent returnee. When your correspondent visited Jigjiga in the final months of Abdi’s rule, former detainees refused to meet in public for fear of reprisals. Today many of them are in government. The old prison is to reopen as

A Balkan betrayal State of disgrace

India’s judges are ignoring the government’s abuses in Kashmir If they put off the decisions long enough, they may not have to rule on anything awkward

a museum, and Bashir takes visiting journalists and human-rights workers on tours—revealing, for example, the toilet cubicles where political prisoners huddled in solitary confinement and the underground pit where human waste was dumped on them as punishment. Meanwhile separatist leaders of the Ogaden National Liberation Front (ONLF) have ditched their weapons and plan to contest elections next year. The contrast with other parts of Ethiopia, where recent democratic reforms have been accompanied by a surge in violence and lawlessness, is striking. But even in the Somali region, the process is imperfect and fragile. Some critics allege that Mustafa is keener to take revenge on the old guard than to strengthen state institutions. “He treats everyone who worked for Abdi like they are Hitlers,” complains an associate of the former regime. Locals bristle at a government dominated by well-heeled diaspora types. Others resent a lack of consultation. “Transparency is not very strong,” sniffs Abdirahman Mahdi, the ONLF’s secretarygeneral. Some worry about a return to strong-arm tactics: in recent days nearly 600 youngsters were indiscriminately rounded up in Jigjiga on vague allegations of criminality

and taken out of the city for “rehabilitation”. About a tenth have since been released. Reforming such an authoritarian set-up is tricky. Take the Liyu. One of Mustafa’s first moves was to recall its top commanders to Jigjiga to undergo a two-month evaluation. The most notorious were fired, the rest given lessons in human rights and the constitution. Rubber batons replaced live ammunition for crowd control. These days reports of serious abuses are rarer. But reforms will need to go further. In the past the Liyu answered only to the president, in effect acting as a private army. Re-educating the troops is a “very cursory” solution, notes the ONLF’s Abdirahman. A more lasting one is likely to involve integrating them into the state’s regular police. In recent years all of Ethiopia’s regional governments have built up special police forces which they are loth to give up. Even more vexing is the question of justice for past crimes. Only Abdi and some of his closest associates have been put on trial. Mustafa calls it a “moral dilemma”. Stability, he says, was the priority when he took office: “We had to balance the need for justice with the pragmatic reality that we need a special force here to keep peace.”

Yet many Ethiopian Somalis are demanding that those responsible for atrocities be held to account. “Everywhere you go this is the complaint: people who committed crimes are still living among them,” says Mustafa’s human-rights adviser, Jemal Kalif Dirie. Mohammed Mohamud Mohammed, a former detainee, recalls seeing one of his tormentors working for the Liyu as a security guard at the ONLF’s homecoming ceremony last year. “I couldn’t believe my eyes,” he says. “I just froze.” To this end the government plans to establish a regional commission to investigate atrocities going back decades. And it has set up a committee with the ONLF to work out how best to pursue what lawyers call “transitional justice”. So far, a few people have been identified to go on trial. “You cannot have reconciliation without having accountability,” says Mustafa. Such challenges are found throughout Ethiopia. In February Abiy’s government established a national reconciliation commission, the first in the country’s history. But what happens in the Somali region in the coming months and years may be instructive. “What we want the commission to recommend is how to get out of this mess,” says Jemal. “There has to be a departure from this cycle of killing.”

WO MONTHS ago Narendra Modi, India’s prime minister, boldly scrapped seven decades of legal precedent. Voiding Jammu & Kashmir’s semi-autonomous status, his government abolished its legislature, sliced the state in two and demoted the new parts to “union territories”, subject to direct rule by the national government in Delhi. The move prompted cheers in much of India, and fury in the former state. It also, inevitably, raised pressing constitutional questions. But pressing to whom? The 7m people of the Kashmir valley certainly feel some urgency. Since August 5th this overwhelmingly Muslim slice of the state has been under virtual siege, painfully squeezed between some 500,000

itchy-fingered Indian troops and a few hundred armed militants. Wielding draconian anti-terror laws, the government has arrested hundreds, not for any crime but to prevent protests. It has also restricted movement into, out of and around the state and imposed a total block on mobile phones and the internet. Militants and their supporters are enforcing their own blockade in response, forcing schools, shops and markets to close in an open-ended protest strike. “It is suffocating and unbearable,” says a Kashmiri civil servant who is opting to stay with relatives in Delhi. “Young people especially are going crazy, with nothing to do except dream of revenge.” To the Supreme Court, however, none of this seems particularly urgent. When it met in late August Continues on page 19

Monday 07 October 2019

BUSINESS DAY

In Association With

Masters of the universe

India’s judges are ignoring the government’s ...

The rise of the financial machines

Continued from page 18

Forget Gordon Gekko. Computers increasingly call the shots in financial markets

HE JOB of capital markets is to process information so that savings flow to the best projects and firms. That makes high finance sound simple; in reality it is dynamic and intoxicating. It reflects a changing world. Today’s markets, for instance, are grappling with a trade war and low interest rates. But it also reflects changes within finance, which constantly reinvents itself in a perpetual struggle to gain a competitive edge. As our Briefing reports, the latest revolution is in full swing. Machines are taking control of investing—not just the humdrum buying and selling of securities, but also the commanding heights of monitoring the economy and allocating capital. Funds run by computers that follow rules set by humans account for 35% of America’s stockmarket, 60% of institutional equity assets and 60% of trading activity. New artificial-intelligence programs are also writing their own investing rules, in ways their human masters only partly understand. Industries from pizza-delivery to Hollywood are being changed by technology, but finance is unique because it can exert voting power over firms, redistribute wealth and cause mayhem in the economy. Because it deals in huge sums, finance has always had the cash to adopt breakthroughs early. The first transatlantic cable, completed in 1866, carried cotton prices between Liverpool and New York. Wall Street analysts were early devotees of spreadsheet software, such as Excel, in the 1980s. Since then, computers have conquered swathes of the financial industry. First to go was the chore of “executing” buy and sell orders. Visit a trading floor today and you will hear the hum of servers, not the roar of traders. High-frequency trading exploits tiny differences in the prices of similar securities, using a barrage of transactions. In the past decade computers have graduated to running portfolios. Exchange-traded funds (ETFs) and mutual funds automatically track indices of shares and bonds. Last month these vehicles had $4.3trn invested in American equities, exceeding the sums actively run by humans for

the first time. A strategy known as smart-beta isolates a statistical characteristic—volatility, say— and loads up on securities that exhibit it. An elite of quantitative hedge funds, most of them on America’s east coast, uses complex black-box mathematics to invest some $1trn. As machines prove themselves in equities and derivatives, they are growing in debt markets, too. All the while, computers are gaining autonomy. Software programs using AI devise their own strategies without needing human guidance. Some hedgefunders are sceptical about AI but, as processing power grows, so do its abilities. And consider the flow of information, the lifeblood of markets. Human fund managers read reports and meet firms under strict insider-trading and disclosure laws. These are designed to control what is in the public domain and ensure everyone has equal access to it. Now an almost infinite supply of new data and processing power is creating novel ways to assess investments. For example, some funds try to use satellites to track retailers’ car parks, and scrape inflation data from e-commerce sites. Eventually they could have fresher information about firms than even their boards do. Until now the rise of computers has democratised finance by cutting costs. A typical ETF charges 0.1% a year, compared with perhaps 1% for an active fund. You can buy ETFs on your phone. An ongoing price war means the cost of trading has collapsed, and markets are usually

more liquid than ever before. Especially when the returns on most investments are as low as today’s, it all adds up. Yet the emerging era of machine-dominated finance raises worries, any of which could imperil these benefits. One is financial stability. Seasoned investors complain that computers can distort asset prices, as lots of algorithms chase securities with a given characteristic and then suddenly ditch them. Regulators worry that liquidity evaporates as markets fall. These claims can be overdone—humans are perfectly capable of causing carnage on their own, and computers can help manage risk. Nonetheless, a series of “flash-crashes” and spooky incidents have occurred, including a disruption in ETF prices in 2010, a crash in sterling in October 2016 and a slump in debt prices in December last year. These dislocations might become more severe and frequent as computers become more powerful. Another worry is how computerised finance could concentrate wealth. Because performance rests more on processing power and data, those with clout could make a disproportionate amount of money. Quant investors argue that any edge they have is soon competed away. However, some funds are paying to secure exclusive rights to data. Imagine, for example, if Amazon (whose boss, Jeff Bezos, used to work for a quant fund) started trading using its proprietary information on e-commerce, or JPMorgan Chase used its internal data on credit-card flows to trade

the Treasury bond market. These kinds of hypothetical conflicts could soon become real. A final concern is corporate governance. For decades company boards have been voted in and out of office by fund managers on behalf of their clients. What if those shares are run by computers that are agnostic, or worse, have been programmed to pursue a narrow objective such as getting firms to pay a dividend at all costs? Of course humans could override this. For example, BlackRock, the biggest ETF firm, gives firms guidance on strategy and environmental policy. But that raises its own problem: if assets flow to a few big fund managers with economies of scale, they will have disproportionate voting power over the economy. Hey Siri, can you invest my life savings? The greatest innovations in finance are unstoppable, but often lead to crises as they find their feet. In the 18th century the joint-stock company created bubbles, before going on to make large-scale business possible in the 19th century. Securitisation caused the subprime debacle, but is today an important tool for laying off risk. The broad principles of market regulation are eternal: equal treatment of all customers, equal access to information and the promotion of competition. However, the computing revolution looks as if it will make today’s rules look horribly out of date. Human investors are about to discover that they are no longer the smartest guys in the room.

to consider a batch of petitions challenging the constitutionality of Mr Modi’s moves, it gave the government a month to reply. When the judges took the matter up again on October 1st, the government’s lawyers received not even a tap on the wrist for failing to prepare a response. Instead, the judges graciously yielded more time. The next scheduled hearing is now set for mid-November, which is to say, two weeks after the Jammu & Kashmir Reorganisation Act is due to come into force, on October 31st. With equal unconcern, another bench of the Supreme Court on the same day postponed—for the seventh time in one case—an even bigger batch of petitions regarding unfair imprisonment and suspension of communications. It has shunted petitions for habeas corpus—which in legal theory are urgent matters—back to the high court in Jammu & Kashmir, in full knowledge that it has been swamped by more than 250 such protests against illegal detention, yet has only two judges to hear them all. The reason why the state’s top court is so cripplingly undermanned, with eight of its 17 judgeships vacant, is that the Supreme Court has for months neglected to ratify any new appointments for the state. (Lawyers in Kashmir are also on strike, to protest arbitrary arrests.) The Supreme Court has at times stood up to the governm e nt, th rou gh r uli ng s that expanded the public right to information, for instance, or strengthened ordinary citizens’ right to privacy. Legal experts concur, however, that this record has notably darkened in recent years. Gautam Bhatia, a lawyer who writes on legal issues, describes one of the Supreme Court’s recently favoured tactics as a “doctrine of constitutional evasion”. Rather than rule against Mr Modi’s government, the top court has repeatedly waffled just long enough for matters to resolve themselves in its favour.

Monday 07 October 2019

BUSINESS DAY

In Association With

Running out of gush

Angolan oil production is in decline Costs are high and so are the risks

HUGE JET of flame bursting from the Kaombo Norte oil platform lights up the sea some 260km (160 miles) off the coast of Angola. The processing platform, part of a $16bn project that takes oil from wells drilled under nearly 2km of water, ought to be one of the crowning achievements of an industry that has endured 27 years of civil war. Instead, it may be a swansong for sub-Saharan Africa’s second-biggest oil producer: Angola’s offshore oil fields are running dry. Daily oil production has tumbled from its high of almost 2m barrels a day in 2008 to around 1.4m today. Since oil provided 95% of export revenues and almost two-thirds of government revenues, the fall in output—as well as a slump in the price of crude—has thrashed the economy. GDP has shrunk for three years in a row. This year the IMF expects growth of just 0.3%. The fall in output is not because the country has no oil—its reserves are second only to Nigeria in the region—but because of underinvestment. The government is trying to reverse the decline in oil produc-

tion. It has slashed the tax rates on smaller oilfields from 20% to 10%. And the agency in charge of auctioning oil blocks recently went on a roadshow, hoping to drum up investor interest. Meanwhile Sonangol, the state-owned energy giant, plans to sell off some of its eclectic collection of assets—which include a convent

in Portugal and stakes in the state diamond miner and state airline— in order to free up money to invest in oil production. Yet no matter how much Angola might sweeten the terms of new investment, it may not be able to lure back all of the international oil companies that once flocked to the country’s oil-rich offshore basins.

Firms including ExxonMobil and France’s Total spent freely, ordering hulking offshore rigs in the 2000s when oil prices approached and then exceeded $100 per barrel. Prices crashed in 2008, but were back above $100 by 2011. In 2014 they plummeted to less than half that. Most oil firms retreated from big risky projects in deep waters to

focus on the shale fields of Texas and North Dakota, where capital investments are smaller and operating costs are lower. By contrast production and capital costs in Angola have been stubbornly higher than the oil price (see chart). Unless high prices return, oil companies may not, either. “From the moment oil prices go down or flirt with $50, deep and ultra-deep offshore investments such as the ones that Angola has been offering become less attractive,” says Gonçalo Falcão, head of the Angola practice at Mayer Brown, a law firm. A handful of new projects are in the works, but America’s Energy Information Administration expects their completion merely to sustain current levels of output. Angola’s government has not prepared the country for this slump. Between the end of its civil war in 2002 and 2014, GDP rose from $15bn to $146bn. José Eduardo dos Santos, president for 38 years, squandered the wealth, turning Luanda into a gleaming capital but investing in little else. João Lourenço, who took over as president in September 2017, is trying to diversify the economy, but progress is slow.

Parliamentary privilege

Two European Commission nominees fall at the first hurdle Others look set to follow

EW PEOPLE expected the European Commission’s proposed new team to emerge intact from the confirmation hearings that started in the European Parliament this week. Claiming the scalp of at least one aspiring commissioner has become a tradition for the EU’s elected legislature. But the decision of a parliamentary committee to rule out two nominees before the full hearings had even started, an unprecedented move, suggests that the parliament’s vetting process will be even spikier this time round. By the time The Economist went to press the fate of three more nominees, including France’s Sylvie Goulard (a close associate of President Emmanuel Macron) appeared uncertain. The first casualty was Laszlo Trocsanyi, Hungary’s former justice minister. In a secret ballot the parliament’s legal-affairs committee, charged with poring over the nominees’ financial declarations before hearings begin, declared him unfit to be commissioner. The committee’s digging revealed that a law firm bearing his name had been contracted to provide legal services to Hungary’s state-owned nuclear power plant while he was

minister. Mr Trocsanyi says that he no longer owns shares in the firm, adding that it had not won any new government contracts during his ministerial term. But parliamentarians also pounced upon the appointment of one of the firm’s owners as his personal adviser in the justice ministry. Eyebrows were raised higher when it emerged that the power plant’s main contractor was Russia’s state-owned nuclear energy corporation. This is not Mr Trocsanyi’s first flirtation with Moscow: as justice minister, he ignored an American request to extradite a Russian father-and-

son arms-dealing duo. Instead, he sent the pair back home, where they were promptly released. As his portfolio, enlargement policy, was supposed to include cultivating diplomatic ties in the western Balkans, Russia’s backyard, parliamentarians fretted about a conflict of interest. Rovana Plumb, Romania’s candidate for the transport portfolio, was also summoned before the committee after failing to declare two loans worth nearly €1m ($1.1m). One was intended to cover a donation to her party, whose former leader was imprisoned in May for putting party loyalists on

the public payroll. Her aspiration to become Europe’s transport commissioner was dashed when she could not explain how she intended to pay back her debts. She strongly denies any wrongdoing. At first, the leaders of Hungary and Romania stood by their candidates. Viktor Orban said Mr Trocsanyi’s only sin was withholding support for Brussels-backed proposals to share responsibility for refugees. Viorica Dancila blamed Romania’s opposition for mounting a character assassination. But Ursula von der Leyen, the new commission’s German president-elect, swiftly demanded that new candidates be picked, a request both prime ministers have now met. As the two rejects hail from the parliament’s centre-right and socialist groups, rumours swirled that a liberal, preferably from western Europe, would be next. In her hearing on October 2nd, parliamentarians took Ms Goulard to task over an ongoing probe into the alleged use of European Parliament funds to pay party employees. Equally incendiary was her role as a paid adviser to an American think-tank. Along with the nominees from

Poland and Sweden, she faces another round of questioning. Her supporters suspect she is being scapegoated to pay back Mr Macron for thwarting the centre-right group leader’s ambition of running the commission. The process could get bloodier yet.

Monday 07 October 2019

BUSINESS DAY

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Monday 07 October 2019

BUSINESS DAY

www.businessday.ng

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@Businessdayng

Monday 07 October 2019

BUSINESS DAY

www.businessday.ng

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@Businessdayng

Monday 07 October 2019

BUSINESS DAY

Monday 07 October 2019

BUSINESS DAY

EBRIMA FAAL

CEOINTERVIEW

Director, AfDB Nigeria Office

Interview with Private Sector Leaders

AfDB woos global investors for Nigeria’s agriculture sector

With about $5bn active portfolio in Nigeria - almost $1bn of that in agriculture sector, the African Development Bank (AfDB) hopes to catalyse up to $16bn private sector investments into the Nigerian economy. The Bank is already reaching out to global investors in this regard, and during one of those meetings with Chinese investors, EBRIMA FAAL, AfDB Director, Nigeria Office said Africa’s $35 billion annual food import bill is no longer acceptable. In an interview, with ONYINYE NWACHUKWU, BusinessDay’s Abuja Bureau Chief, Faal explained why Nigeria is at the centre of the bank’s agriculture strategy, among other issues.

hy is this meeting with the investors so important? Just by way of background I guess you are familiar with the high 5 priority of the bank, a central aspect of that is the feed Africa strategy. Africa is the biggest importer of food, basically most of the foods that we consume are imported and it is costing us almost $35 billion annually. So part of the feed Africa strategy is to say that we have everything it takes to produce food domestically in Nigeria and the rest of the Africa to feed ourselves and to actually export some of these foods. But of course to do that we need to have an integrated value chain system and we have been working in the bank and some countries have made advances, like Ethiopia, Kenya, South Africa but Nigeria is biggest agricultural country in the continent. So we needed to make sure that we formulate our strategy properly and the idea is that when we take the high 5s as a whole instead of in silo, how can we use that to transform rural areas by transforming agriculture, with all of the good things that come with it in terms of productivity, incomes, and rural/urban migration. We engaged with the business community, government, and promoters at the beginning of the year to tell them our ideas on how to transform agriculture and the rural areas. We had several meetings with some anchor investors, big companies that are interested in agriculture, flour mills, Dangote and smaller ones down the scale. All the states are interested because clearly agriculture is a big part of what they do in the states, so we have been meeting with state governors as well. Now with regard to the Chinese, they are part of our drive to attract global investors in the agriculture space in Nigeria, we are reaching out across the board to all global investors, the Chinese have been extremely responsive in terms of wanting to come and do agriculture. Basically, the reason why we have this special reach is because once we got the buy in of the government both at the federal and the state levels, we now have to start thinking of how to develop the programs which is going to require a lot of funding and expertise and the Chinese already have these. As far back as 50 years ago, their agriculture was just as backward as ours is now, but they have gotten out of that through innovating both in terms of crop, mechanical equipment and of course they

had adequate financing to support that. So we think we can leverage that South-South cooperation for a win-win situation as far as we are not asking for grants or charity cases, we are asking them to come and invest with us and I think that is a different approach. So they have been quite responsive, I think it was a little over two months ago that we expressed our interest to welcome Chinese investors to come and look at the opportunities in Nigeria and across Nigeria, in the South West, North East, so I think we very happy that they took us up on that opportunity. Apart from China, are there other partners? Locally, what we call anchor investors are all the people doing things in different aspects of agriculture for example Dangote is one of them, flour mills is also there, and we are looking to leverage others like Unilever in terms of equipment etc. So we are looking at people that are already investing in Nigeria and those that want to invest in Nigeria. We have received from the private sector in Nigeria, from almost every state in the federation, so it is not just the Chinese, but locally we have received a lot of private sector investors, and we also have the states themselves that want to invest in agriculture. On top of that we also see a lot of interests coming from Europe especially in terms of wanting to invest in the processing side of things. So I think people realize that they can get good returns to their investments in Nigeria while helping us to develop that space as well. All the engagement is all about agriculture and industrialization. What we do not want to do, for example, is if you take the case of cashew, sometime before the cashew mature, we have Indians coming in to buy all of the cashew even before they are harvested. They buy and take it to India or Vietnam, process it and then sell it back globally to us, sometimes at three/four times the price, but we are saying that, no, we need to process that cashew in Nigeria to consume it locally and then to export it, thereby getting all of the benefits, the same for cassava and same for rice. In terms of numbers, what do you think Nigeria can leverage through this partnerships, discussions? A large part of why agriculture across the value chain is not developed is the lack of infrastructure associated with it, like the roads, power especially, water irrigawww.businessday.ng

tion, and so on. The bank can help both the public sector, the states, the federal government to develop the infrastructure around agriculture, that’s one. Two, we are also able to help the private investors if they wish to get financing from us, to then conduct the operations once those infrastructure are available. So this special agro processing zone is going to be not only about growing the food and processing but how to develop the whole infrastructure around a particular set of crops or a crop to be able to create, for example, what many people don’t see is, if you are growing cassava and you want to produce flour from it, that whole value chain is not only the grower and those doing the grinding, there is transportation, suppliers, so we try to develop the whole value chain around it, and that is how really china was able to develop the rural areas and I think Korea was also able to do the same. So we hope to replicate those kind of models that have worked in other places.

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So you are not looking at financials yet? Ofcourse, we have three ways of financing things, one is debt and the other is equity, and the third one is if you are already in operations maybe retained earnings. For companies that are already in a particular crop, let’s say Dangote tomatoes for example, before setting up, they might need to borrow from banks meanwhile they are with their money as well. For companies that come to the bank with good bankable projects, as part of our SAPC, we will see how we can finance them, we will do the same thing for the government if the government say we have this 10,000 hectares that we want to develop for cassava but it’s all forest right now so how can the bank help us turn this into an agro industrial zone where you have farming, manufacturing, sets of roads, schools around it, hospitals and other things, so it’s a whole ecosystem that we are trying to develop. So some of it will be financed by

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debt, some of it will be financed by equity and of course for companies that have retained earnings they can use their own funds to be able to do it. Which key sub-sectors or crops are you targeting? If you look at the regions of Nigeria, they all have comparative advantages, in the North you are looking at sorghum, tomatoes, some animal husbandry, in the South you have cocoa, palm oil, so all of those crops, are things I think depending on the investor interest we will have to support. One that comes to mind is cassava in the South West for example, there is a lot of production there, even in the South East region, we are seeing some anchor investors that are keen to be able to not only produce but buy the cassava and then transform it into finished products for industrial use. Talk through the bank’s feed Africa project and how Nigeria keys into it?

The strategy is feed Africa and what we are trying to do is, it started four/five years when Adesina came in, is to say all of the remaining arable land in the world about 60 percent of that is in Africa, so if you wish to do anything in agriculture, the opportunity is here. Now in the meantime while that opportunity is here we also have the youngest population globally, other regions are aging but we have young people. So when you bring these undeniable resources together, the market, the lands, endowment, it’s a very compelling proposition that we cannot miss, because we cannot keep importing rice when we can grow it, consume and still have some to export, the same thing for cassava and others. So what we are saying as part of the feed Africa strategy is that Africa now must feed itself and feed the rest of the world by exporting and bringing in foreign exchange instead of spending foreign exchange. If you take most of the crops that we are talking about, Nigeria is either ranked 1st, 2nd or 3rd in terms of global production, so the revolution that we are seeking in agriculture has to happen in Nigeria for the rest of Africa to benefit from it. We are looking to really, yes we already have some of these kind of SAPCs already in one or two places, like I mentioned, Ethiopia and Kenya is moving fast ahead and South Africa but I think in terms of skill, Nigeria is the place where we think, because it is already happening. If you look at sorghum, Nigeria is the second largest producer in the world, the third for cassava of so in world, but you look at tomatoes, not only can you grow, process, consume and export, Nigeria is the second highest importer of tomato paste. So it just make sense that we grow the tomato here, process it and get the tomato paste, consume and sell the rest of it. There are fantastic investment opportunities, and to go with that is the job creation and opportunities for the young people and as I mentioned earlier I believe that when you provide opportunities for the young people. I am a firm believer that there is need to provide opportunities for young people, government cannot employ all, it is very small, but the private sector has to do that and what we are saying is that young people now are extremely entrepreneurial. So if we provide them those opportunities where they can create jobs for themselves and hire others, I believe that it has a high potential to reduce security risks across the continent which we see in other places. www.businessday.ng

Despite the testimonies of the huge potential in agriculture, we are not yet able to make substantial progress, what do you think is holding us back? Many things, the easiest one that people say is financing. I think financing is a problem but it can easily be surmounted if you bring in projects that are extremely viable because then they sell themselves. However, we do have a lot of governance problems, we do have very significant structural problems especially around infrastructure like I mentioned earlier. We also have problems around skills and all of these in a nut shell translate into low productivity. So it’s a very viscous cycle that you have to break and in our thinking, if you bring all of those components together through the high 5s, then I think that’s better approach. Apart from financing, is there anyway the AfDB is helping government shape some of these? I think we are always in constant dialogue with the government, but we have to be mindful that as an international agency, our mandate is to discuss, dialogue and help policy formulation. At the end of the day, those that are elected are really the ones that will have to decide which way things go. But I must say that our dialogue in Nigeria has been write fruitful, I think the focus on infrastructure and human capital development in the ERGP is the same focus that we have in the high 5s. So in terms of alignment of purpose, I think it is very similar and I think we will continue to engage the government in difficult conversations to say well, you need to improve the infrastructure, you need to improve the

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governance and I’m optimistic. What is the bank’s portfolio for Nigeria? The bank’s current active portfolio is about $5 billion, when we start active of course, we have been financing projects in Nigeria since 1972, so projects close, some of them finish and then close up, but those that are still ongoing are about $5 billion. Then we have a pipeline for the next four to five years, and that pipeline, we estimate we are investing about $1 billion to $1.5 billion a year over the next five years, so it’s a significant amount. What we also find is that for each dollar that we spend in Nigeria, we are leveraging another 5 dollars, so if we are spending 5 billion for example over a certain period which will be between 15 to 20 billion of investments in total. When you look at all of the sectors, the dominant investment right now is in energy sector which is critical for agriculture to realize the productive gains that we want. Agriculture has been around 8 percent of our total portfolio, over the next five years we want to push it to about 20 percent. So basically over the next five years when we put all the projects together it may reach $16 billion, now we cannot finance all of that so what we trying to do is to finance maybe a quarter of that, let’s say 4, 5, 6billion dollars and then the private sector comes in to finance some of them and the Chinese are here for that, then others will come and also our partners in development like the World Bank, DFID, and our track record for Nigeria shows that for every dollar we spend we get $45 partnership, and that is quite significant.

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Monday 07 October 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

The Turkish diaper that swooped on the lunch of older peers LOLADE AKINMURELE

here’s hardly a shortage of reports on companies that have been on the receiving end of Nigeria’s stuttering economy, but the success stories of others who have thrived in the midst of the downturn manage to slip away quite frequently. One of such companies is Turkish conglomerate and fifth largest diaper manufacturer in the world- Hayat Kimya, makers of Molfix baby diapers. Hayat Kimya took a big gamble in 2015 when it decided to invest $100 million in a tissue and diaper factory in Nigeria. This was a time of prolonged global oil price plunge which threatened the economic stability of Africa’s largest oil producer. The signs were there that Nigeria was set for a sharp downturn which would eventually materialise in 2016. The poor economic indicators at the time derailed several investments into Nigeria, as evidenced by the decline in foreign direct investments that

year, according to data agency, National Bureau of Statistics (NBS). From $2.3 billion in 2014, FDI into Nigeria slumped 39 percent to $1.4 billion in 2015 and a further 28 percent to $1.0 billion in 2016. The drastic plunge was for good reason. The economy had slipped into its first recession in 25 years while inflation spiralled out of control on the back of acute dollar shortages caused by the global rout in oil prices.

The profits of Fast Moving Consumer Goods companies tanked rapidly as rising operation costs combined with lower sales volumes to hurt their bottom lines. Nigerians were consuming less, owing to falling average incomes. The average Nigerian now earned less than $2,300 from around $3,000 in 2014. With Nigeria’s uncertain future tainted by expectations for low economic growth and weak

consumer spending, it made sense for foreign direct investors to be a little hesitant about Nigeria. It wasn’t the case for Hayat Kimya, who saw an opportunity amid adversity and took a gamble by setting up shop in the country in 2015. The company’s Agbara factory sits on a 200,000 square-meter plot of land in the south-western Ogun state, and has the capacity to produce 1.3 billion units of diaper and 13,000 tonnes of tissue per annum. The diaper manufacturer has 14 such factories across the 14 countries it operates in. Today, that gamble looks to be paying off. Molfix hasn’t made data on revenues publicly accessible but a survey by BusinessDay gave some insight into how the company has grown market share since its recent launch in Nigeria. Two in ever y three nursing mothers interviewed last month by BusinessDay used Molfix for their babies. Of the 100 people, primarily Lagos residents, captured in our modest survey, 67 of them used

Molfix with Huggies, Pampers and other brands accounting for 33 percent. A 2017 report by AC Nielsen, showed that Molfix controlled 44 percent of the diaper market share at the time, eclipsing Pampers, with 37.3 percent, on its way to becoming the market leader. “Nigerians prefer the cheaper option,” said Andrew Alli, former President and CEO of the Africa Finance Corporation. “(The makers of Molfix) apparently stole Pampers’ lunch with a much cheaper product,” Alli said. For Molfix and some other consumer goods companies that are able to appeal to the price sensitivity of Nigerians, their success has been irrespective of the economic downturn that has rocked many other companies. And there could yet be more success to come. By 2050, the country will boast the third largest population globally and would have as many people as Germany, The United Kingdom and France combined. When Molflix first made its foray into Nigeria, it looked an impossible task

to knock Huggies and Pampers off their perch. For a long time, Pampers, the baby diaper brand of Procter and Gamble (P&G), has been the market leader in Nigeria, trailed by Huggies, a product of Kimberly-Clark, who held forte as second. However, with average incomes shrinking, Nigerians are fast switching to the Turkish diaper to save cost. Perhaps the fact that both P&G and Kimberly Clark have both closed their local diaper plants may have also aided Hayat Kimya in gaining some ground over its rivals. For the bulk of Nigerian consumers who are increasingly switching to cheaper substitutes for everything from alcoholic beverages to clothing, Molfix makes a compelling case- it is first cheap and of some good quality. Dupe John, a store owner in the heart of Idumota, says she stocked her store with Molfix when she noticed “no one was buying anything else.” “They (her customers) tell me that they prefer it to the other ones because it is pocket-friendly,” she said.

TECHNOLOGY

WorldRemit unveils cash pick-up service in Nigeria DIPO OLADEHINDE

nternational money transfer platform, WorldRemit, has unveiled a new service that will allow Nigerians to receive remittances from the diaspora in cash across FCMB Bank, Fidelity Bank, Access Bank, Zenith Bank, and Polaris Bank branches across the country. With over 15 million Nigerians living in the diaspora including the United States, the United Kingdom, Australia and Canada, the stable inflow of remittances plays a significant role in Nigeria’s economy. “WorldRemit is delighted to expand its service offering in Nigeria. We recognise that the future of international payments will increasingly be defined by diversity and choice as more countries across the world strive to achieve universal financial inclusion,” Andrew Stewart, Managing Director for Middle East

and Africa at WorldRemit said. Sending and receiving money across borders has always been a strenuous and costly endeavour, and even more so within Africa with options limited to a handful of services in spite of the volume of transactions to Sub-Saharan Africa which grew from $37.8 billion in 2017 to a record high of $46 billion in 2018. Stewart noted that thanks to the app or website, customers living in over 50 countries can now send money home for collection as cash in just a few taps from their phones. “We also offer notifications to both senders and recipients when the money has been sent and received for complete peace of mind,” Stewart said. Remittances continue to play a significant role in Nigeria’s economy as migration increases in its many forms. Studies show that

inflow tends to be more stable than foreign aid and are not impacted by occurrences such as conflict and tend to increase in the event of natural disasters on a short-term basis. In addition to Nigeria, WorldRemit’s cash pickup option is available in a number of African countries including Ethiopia, Zimbabwe, Ghana, and Morocco. Wo r l d R e m i t , w h i c h launched in 2010, offered a simpler and cheaper way for Africans in the diaspora to transfer money to Africa. In 2018, it launched transfer services within Africa and is now present in 50 countries around the world completing nearly a million transactions monthly. The cost implications, however, continue to remain a cause for concern in optimising their inflow into the economy. According to the World Bank, SubSaharan Africa remains the

most expensive region to send remittances to, with an average cost of 9.4percent for sending $200. Much of these remittances are directly received by individuals and families in the middle and low-

income countries who rely on these inputs for basic necessities and to run small businesses to sustain livelihoods. Consequently, during the ADEPT Fifth Diaspora Development Dialogue

(DDD5) in Nairobi in 2016, the IMF, World Bank and the Africa Institute for Remittances constituted a UN SDG project with plans to reduce the cost of remittances to less than 3percent by 2020.

L-R: Senior Brand Manager, Heineken Nigeria, Mfon Bassey; Representative of the President, Nigerian Tennis Federation, Funmilayo Koya-Adekola; Brand Manager, Heineken Nigeria, Olaoluwa Babalola; Representative of the Chairman for the Local Organising Committee (LOC), Prince Wale Oladunjoye, at the Press Conference announcing the 2019 edition of the Lagos Open Tennis tournament sponsored by Heineken.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

Monday 07 October 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

OIL&GAS

AOS Orwell expresses readiness for Train 7 project JOSEPHINE OKOJIE

OS Or well, a leading indigenous oil and gas servicing o r ga i n s at i o n has stated its readiness to participate actively in the Nigeria LNG Train 7 and Bonga South West Aparo projects that are expected to commence soon in the country. Femi Omotayo, managing director, AOS Orwell during a chat with journalists in Lagos recently, said the organisation has built enough capacity in its workforce to sufficiently deliver on both ground-breaking projects as well as on its multi-billion dollar facility. Omotayo said that the orgainsation will be working on the Train 7 project as with Saipem Consortium – the winner of the project as partners. He noted that the organisation is looking to provide end-to-end services on the valves aspect of the project, adding that his organisation is working to offer enough value that will create a onestop-shop solution as far as it concerns valves. “We are big enough to give the guarantees with both local and internation-

al manufacturing, infrastructure and partnerships in place,” he said. “We will also be working with them on skids, chemical injections and things like that. We will work on electrical as well,” he added. He stated that AOS Orwell has a facility in Port Harcourt, Rivers State that will handle Low Voltage/ Medium Voltage switchgear in-country. He noted that his organisation is looking forward to the Bonga South West project with optimism. The managing director further stated that the outlook for Africa’s Oil & Gas industry is positive amid operating and economic headwinds, noting that with oil prices steadily on the rise towards pre-collapse levels, internal and external conditions had arm-twisted companies to be more efficient. “This no doubt has impacted on the way indigenous companies in the oilfield servicing industry operate. Investors as well, more than ever, have an increased need for clarity and certainty in making key investments against this backdrop,” he said. On the impact of the

local content act and its implementation on indigenous companies, he described the act as “a jewel for indigenous companies operating in Nigeria”. “Specifically, for us at AOS Orwell, we build capacity in our locals to the point where we can maintain world-class standards. Today, when I walk into our workshop and see our local boys handling the same control system wires, I get a good feeling. This is very encouraging and the industry has been very supportive,” he said. “There is a lot of trust and belief in the system today. This has paved the way for investment to thrive. And there has been a lot of investment. Nigerian companies have invested heavily in the growth and development of local content.” “For us at AOS Orwell, we have always been committed to local content even before the law backed it up. We have two worldclass schools, in Lagos, and Port Harcourt, where we train young indigenous engineers and help them build capacity in the areas of process automation and control and the other in fishing,” he further said.

L-R: Onyeche Tifase, Managing Director/ CEO at Siemens Ltd; Simi Nwogugu, Executive Director, Junior Achievement Nigeria; Mojolaoluwa Aderemi-Makinde, Head Brand and reputation, sub Saharan Africa Google Africa , and Dave Uduanu, Managing Director, Sigma Pensions Limited, at hhe Junior Achievement Nigeria @ 20 in Lagos

Femi Gbajabiamila , speaker, House of Representatives, in discussion with the High Commissioner ,republic of Bangladesh to Nigeria , Md. Shameem Ahsan during a courtesy visit to the speaker by the commissioner at the National Assembly on 3rd Oct. 2019.

COMPANY RELEASE

Dale Carnegie hosts Workplace Conference for Business and HR leaders SEYI SALAU

ale Carnegie Training, hosted Managing Directors, CEOs, and C-Suite executives in Lagos today as the global organisation unveiled the latest research, insights and skills for “building the workplace of our dreams.” The free event which was sponsored by Coronation Merchant Bank, Credit Direct and Tolaram group was part of Dale Carnegie Training corporate social responsibility and commemorates its six years of operating in Nigeria, the company said. “Research shows that employees deliver 80 percent less than what they are expected to due to lack

of engagement and motivation amplified by negative work culture and attitude,’’ according to Patrick Nwakogo, the Country Director of Dale Carnegie Training Nigeria. Nwakogo reiterated Dale Carnegie’s commitment to facilitating a revolution of the Nigerian workplace. The conference which held at the Oriental Hotel in Victoria Island sparked conversations on how to boost engagement, productivity and sustainability. The overarching goal has always been to share ideas on how to create the environment that enables people to unleash their full potential and stimulate sustainable growth and success for our organiza-

tions in particular, and the economy in general, Nwakogo added. “The mission is to eliminate the things that steal the ‘pleasures of work’ and give people the mojo, that positive spirit that enables people to unleash their full potential.” He said. Top industry professionals, including the HR Director from MTN, Group Head HR Sahara Group, Chief Human Resource Officer for Dangote Group, President of the Chartered Institute of Personnel Management and the CEO of Tolaram Group led deliberations at the event, Dale Carnegie has initiated The Workplace Project to both challenge and encourage relevant stakeholders to rethink how work is done in Nigeria,

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institute best practices and make work more fulfilling and productive, a participant at the event commented. Representatives of major sponsors had declared their support for the event. According to Seyi Boluwatise, divisional head of corporate services, CreditDirect, “the concept of an ideal work place resonates with our organizational value, as we are constantly seeking to provide a conducive and enabling and inclusive work place for the coming generation.’’ Patrick Nwakogo enjoined organizations to improve work place culture even when business fortunes are low, because that would motivate employees for greater productivity and business turnaround.

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Monday 07 October 2019

BUSINESS DAY

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Recapitalisation deadline, capital levels remain as regulator clears coast to roadmap Stories by Modestus Anaesoronye

arlier thinking in some quarters, that the National Insurance Commission (NAICOM) was going to extend the recapitalisation deadline beyond 30th June 2020, or that it was going to reduce the level of capital requirement for different insurers may have probably ended with current developments today. This is coming on the heels of different levels of consultations by the industry trade groups to the regulator, which though was successful, but failed to change the key issues - timing and amount of capital. Again, NAICOM has substantiated this assumption with its statement penultimate week that it has resolved to adhere to the recapitalization roadmap towards achieving its desired objectives in the best interest of all stakeholders. What that means is that NAICOM has asked individual companies to go ahead and meet the new minimum requirement as directed following the review of their re-

L-R: Davis Iyasere, controller/head, human resource, administration and corporate communications; Yetunde Ilori, director general; and Bola Omole, controller, Information Technology, Research & Statistics, all of the Nigerian Insurers Association during a press conference to flag off ‘Wetin U Carry’ campaign in Lagos.

capitalisation plans. According to NAICOM, out of the 57 registered insurance companies and two reinsurers, one insurance company has met the recapitalisation requirement. According to the Commission, 47 insurers submitted their recapitalization plans and have all been directed what to do. In a statement tittled ‘Update on Recapitalization of Insurers and Reinsurers’ signed by Rasaq Salami, head, Commissioner for Insurance Directorate , the Commission said, further to the circular issued by NAICOM on May

20, 2019 increasing the paid up share capital of Insurers and reinsurers in Nigeria and, the subsequent directives to companies to submit their recapitalization plans by August 20, 2019 the Commission hereby notifies all insurance stakeholders that it received plans of FortySeven (47) insurers and two (2) reinsurers.” He said in keeping with the recapitalization roadmap, the Commission has concluded review of the submissions and have communicated individual companies on their positions as detailed below:”

Salami said twenty six (26) companies have been granted “No Objection “ to proceed with their plans, while the plans of 17 companies were corrected and have been advised to resubmit their new plans using paid-up capital and not shareholders fund;. According to the stamen, four (4) companies do not have the requisite 2018 financial statements and are thus, advised to review their plans of using IPO. The statement also noted that one company has litigation issues and has been advised to resolve them as soon as possible to enable its pro-

gress, while one company’s submission was noted to have met the necessary requirements. “The review of submissions from two (2) companies is ongoing while, three (3) companies are yet to submit their recapitalization plans.” NAICOM had in a circular dated July 23rd, 2019, sent to the all insurance and reinsurance firms titled: “Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies,” signed by Pius Agboola, director, Policy & Regulation Directorate, NAICOM stated that the recapitalisation plan should include among others, capital status of the companies as at the last audited financial statements; board resolution on how to comply with the directives, and detailed action plan on how the funds for the recapitalisation are to be sourced with timeline and deliverables. The circular also directed that companies intending to seek funds from the capital market were required to submit their plan of action on a file-and-use basis, just as, “companies that intend to merge or acquire another

should submit their proposal after which they must comply with Section 30 and 31 of the Insurance Act 2003.” The commission noted that after the submission is made, it “shall review and provide response on the submitted plans on or before September 17, 2019,” adding that the review may require meeting the board and management of each of the insurance companies on its recapitalisation plan. The Nigerian insurance regulator, NAICOM had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion, to N20 billion. According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of this circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020.

Loss of good name, major risks concern for organisations now

orporate scandals of the past few years have sullied many businesses. Environmental incidents, workplace casualties, litigation and more have dragged the names of others through the media, destroyed shareholder value and ended careers. “As recently as the 1970s, the value of a company lay primarily in physical items, such

as ships and cargo, that fostered global trade,” explains Susan Crabtree, regional head of Product Development, Financial Lines and Entertainment, at AGCS. “But in the 21st century, the value of companies is less about solid objects than of intangibles such as intellectual property (IP), data and reputation.” Such assets are hard to

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define, let alone value in dollar terms. But when bad news comes and a company suffers a blow to its reputation, their value becomes obvious – market value can collapse with astonishing speed. For example, credit bureau giant, Equifax, to date has spent $1.4bn on clean-up costs and updating its IT security in the wake of its devastating 2017 data breach that affected half

of all US residents. In the age of social media, what starts as a small incident or even as ‘fake news’ can reverberate rapidly around the world wiping out brand value in seconds. The company’s 2018 earnings of $300m were a 49 percent decrease from 2017 and its stock price tumbled 31 percent in just a week after it first announced the breach,

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erasing $5bn in market capital was down 60 percent a year later in the third-quarter 2018 and was still trading at about 15 percent less than that by the end of the firstquarter 2019. Negative compliance events can quickly turn into a reputational risk – a cyberattack that compromises user data now leaves firms open to eye-watering fines

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under the European General Data Protection Regulation (GDPR) – for example, the UK Information Commissioner’s Office (ICO) fined British Airways a proposed $230mn for the data compromise of half a million customers. It also fined Marriott a proposed $123mn for the loss of 339 million guest records, both companies plan to appeal the fines.

Monday 07 October 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Insurance industry moving in the direction of the dynamics of the economy - NIA Stories by Modestus Anaesoronye

e a s u r i n g t h e ro l e o f insurance in terms of contribution to economic development in line with the country’s 59 independence anniversary, those behind the wheels in the risk management industry says the sector is moving in the direction of the dynamics of the economy. The economy is evolving, we are not yet there as a nation, but we are moving and that is the same with insurance business, the Nigerian Insurers Association (NIA) said. Yetunde Ilori, director general of the NIA said as an industry we have evolved, doing quite a lot of the thing we were unable to do before, we are innovating and providing great risks protection for the Nigerian people. She said that a lot could be done by the industry, believing that as Nigeria develops, the insurance industry will continue to play more effective role in giving protection to life and properties. Insurance business will spike when SMES, individuals are able to have increased access to credit and that is the direction the economy should be

L-R: Roland Emorwodia, executive director, Roland Lloyd’s Agencies Ltd presenting an award to Funmi Folorunsho, secretary general, African Shipowners Association as the Industry Champion of the Year 2019 at the commemoration of the World Maritime Day 2019 and The Mariners Award held in Lagos.

heading, experts said. They believe that Small and Medium Scale Enterprises (SMEs) are a very important sector in the economy that must develop for there to be economic

growth and development. Beyond contributing to the GDP of the country, the SMEs sector holds the key for employment generation and poverty alleviation, which are key

measurement indices for any economy, and that is why this collaboration with insurance industry is critical. Insurance therefore is major component of access to credit, such that people or business are granted credit or funding when there is insurance guarantee, that is, in the event of default, insurance comes to their rescue. In this vein, finance institutions like micro finance banks are easily given out monies to SMSEs, while car companies, equipment firms, electronics and home appliances establishments are also at peace, giving out credit which will be repaid over a period of time. In Nigeria, access to credit was up after the banking industry consolidation in 2005, but has gradually disappeared as the economic situations worsened, indicated by the collapse of the middle class, increasing loss of job, closure of factories and industries, among others. Ebelechukwu Nwachukwu, managing director/CEO, NSIA Insurance Limited had during an interactive session with journalist that credit is the engine of insurance business growth. Until we begin to have access to credit as citizens, growth of insurance will take longer time to come. Jerome Gotcsche, a retail marketing expert said the SMSE industry in Nigerian is hugely untapped and its growth requires the support of insurance.

Sigma Pensions challenges youth on retirement planning

Stanbic IBTC Pensions to sponsor fourth edition of Art X Lagos

ension Fund Administrator, Sigma Pensions Limited has urged youths to plan towards saving for their retirement early, in a bid to achieving financial independence. Dave Uduanu, managing director/ Sigma Pensions gave the advice while speaking to youths at a master class session powered by Sigma Pensions at the Junior Achievers Conference held in Lagos. Uduanu also urged the participants to be disciplined in spending starting before they become working adults, and also lectured extensively on the importance of starting to save towards retirement. He said: “By starting pension saving immediately you start working, you are on your way to financial Independence. You can start early, how much you save depends on you. The trick is that, from studies, if you save 20 to 30 percent of your income since the day you start working, you are on your way to financial independence.” Furthermore he added that as they become salary earners they should work towards increasing their savings percentage. He said:”Now as your income increases, the rate of increase in consumption should be lower than the rate of increase in income meaning that, your savings rate should go up. So if your income is increasing by 50 percent a year, but your

consumption is increasing by only seven percent a year, it means that your savings rate must go up.” “If you start pension savings at age 25, and by the time you are 60 years, depending on the quality of your savings, and when you leave it in an account and it compounds at 15 percent a year, it is going to worth a lot but the trick is you need to start early.” Secondly, he added: “The other trick is, when the money is being invested, don’t touch it. Another distinction you need to make is that there is a difference between savings and investment. And there is a difference between investment and business, or ventures.” “People often mix it up. People often think that their business is their retirement savings; it is not. Your retirement savings account is that pot of money that you don’t touch till you retire. “There has to be a conscious effort to be discipline to it till retirement. That pot of money should be kept intact, and you shouldn’t touch it. “The reason why investment is important is because of compound interest. A lot of people go and keep their money in the bank, and they are paying you three percent. You are losing money every day. You should put it in an investment account, while you are getting more than three percent.

tanbic IBTC Pension Managers Limited (SIPML), a subsidiary of Stanbic IBTC Holdings Plc, has announced its sponsorship of the 2019 edition of Art X Lagos. This year, SIPML is sponsoring Art X Modern which is a newly created section dedicated to celebrating pioneers of African modern art from the 20th century. Art X Modern will comprise three galleries: Bloom Art and Mydrim Gallery, which are Nigerian, and Gallery 1957 from Ghana. The newly introduced section will also feature UcheOkeke and ObioraUdechukwu, both Nigerian artists, as well as Professor Ablade Glover from Ghana, amongst other reputed names. SIPML will also host a dedicated sponsored talk session which will be open to the public. Eric Fajemisin, Chief Executive, Stanbic IBTC Pensions said the company’s sponsorship of Art X was hinged on its commitment towards promoting Nigeria’s art sector. He said: “Our interest in promoting arts is hinged on the belief that creativity and intellect can serve as sources of livelihood for individuals who decide to make a career out of their passion for painting and drawing. In other climes, art ischerished, and patrons sometimes pay a fortune for works of art that are considered collectors’ items. We want to promote a culture which ensures that artists are appreciated for their ingenuity and adequately rewarded with

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the premium and royalties that their works attract.” He added that the company decided to host the Art X Modern section as a means of ensuring that artists get the recognition due them during their lifetime. The Stanbic IBTC Pensions Chief Executive said: “Being Nigeria’s largest pensions manger, we have the responsibility to ensure that our customers retire well, so that they have something to fall back on post work-life. We are also promoting that principle which holds that those who contribute actively to enriching lives and enhancing our creative industry get their due, even after leaving active work life.” This year’s edition of Art X Lagos will hold at Federal Palace Hotel from Friday, November 1 to Sunday, November 3, 2019. This year’s Art Festival will feature 23 gallery booths including Nigerian gallery exhibitors such as: The Space, Bloom Art, Nike Art Gallery, Retro Africa and SMO Contemporary, among others. The roll call of artists who will showcase their art includes: Abe Odedina (Nigeria / UK / Brazil), SolyCissé (Senegal), Sam Nhlengethwa (South Africa), TiztaBerhanu (Ethiopia), PejuAlatise (Nigeria) and Lady Skollie (South Africa). ART X Lagos is West Africa’s first international art fair, designed to showcase intriguing and innovative contemporary art from the African continent and diaspora.

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Monday 07 October 2019

BUSINESS DAY

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Monday 07 October 2019

BUSINESS DAY

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BUSINESS DAY

Monday 07 August 2019

PHOTOSPLASH BusinessDay Future of Power Conference with the theme, â&#x20AC;&#x2DC;Unlocking the Potential in the Nigerian Electricity Supply Industryâ&#x20AC;&#x2122; held in Lagos

Frank Aigbogun, publisher/CEO, BusinessDay, presenting his welcome address.

L-R: Oge Peters, commercial manager, power, Seven Energy; Babajide Onakoya, business development manager, power, Axxela Group; Chinedu Ugbo, MD/CEO, Niger Delta Power Holding Company; Ibi Ogunbiyi, partner, Olaniwun Ajayi LP/moderator; Osaisai Emontonghan, director, investment and sector development, Federal Ministry of Power; Valentine Ozigbo, president/CEO, Transnational Corporation of Nigeria; Oti Ikomi, MD/CEO, Proton Energy, and Amaechi Alokeh deputy director, project manager, (NPSR) BPE, all members of the 2nd panel.

Osaisai Emontonghan, director, investment and sector development, Federal Ministry of Power, representing, Saleh Mamman, minister of power, during her presentation

L-R: John Ayodele, deputy MD, Ibadan Electricity Distribution Company; Wolemi Esan, partner, Olaniwun Ajayi LP/moderator; Olajumoke Delano, general counsel, Abuja Electricity Distribution Company; Sunday Oduntan, executive director, Association of Nigerian Electricity Distributors, and Aigbe Olotu, chief financial officer, Sahara Power Group, all members of the 3rd panel.

L-R: Ademola Adegbusi, group head, corporate banking, (infrastructure), First Bank of Nigeria; Joba Akinola, head, Power and infrastructure, Olaniwun Ajayi, LP/moderator; Solabomi Oregba, GM, Viathan Engineering Limited; Saurahbh Srivastava, director, Nigeria Infrastructure Debt Fund, and Toluwase Adesina, vice president, origination and structuring, Infrastructure Credit Guarantee Company, all members of the 4th panel.

L-R: Adejoke Ajaero Mage, commercial manager, Gas, Seplat; Ajibade Adetayo, CEO, Alpha Crown Engineering, and Temple Ezebuike, associate, Benchmac and Ince

L-R: Shehu Usmar, director, Wattlinq Limited, and Muntasir Adamu, legal officer, Eko Electricity Distribution Plc

R-L: Crystal Okwunonu, associate, Aelex Legal Practitioners; Makinde Samuel, stockbroker, WSTC Securities Limited, and Alhassan Gwaro, chief operating officer, SCM Capital Limited

Monday 07 August 2019

BUSINESS DAY

PHOTOSPLASH BusinessDay Future of Power Conference with the theme, â&#x20AC;&#x2DC;Unlocking the Potential in the Nigerian Electricity Supply Industryâ&#x20AC;&#x2122; held in Lagos

L-R: Jide Onakoya of Axxela Limited; Vera Nwanze, MD, Azuri Technology, and Chukwuka Isichei of Metka West Africa.

R-L: Chukwuma Isichei, business development manager, Metka Power West Africa, and Stanley Egware, associate partner, Praxis Legal

Moyo Maku (r), associate counsel, Imperial Law Office and Wiebe Boer (l), CEO, Allon

L-R: Mayowa Obilade, economic specialist, United States Consulate General, Lagos, and Enyinna Anumudu, transactor, infrastructure finance, Rand Merchant Bank Nigeria

R-L: Dayo Okusami, partner, Tempcars, and Hector Okposo, coverage and origination, Rand Merchant Bank

R-L: Oge Peters, commercial manager, power, Seven Energy; Osaisai Emontonghan, director, investment and sector development, Federal Ministry of Power, representing Saleh Mamman, minister of Power, and James Odiase, senior manager, commercial, Seven Energy.

L-R: Ginikanwa Obioha, associate business development, Daystar Power Energy Solution, and Opemipo Akinosun, deputy manager, Niger Delta Power Holding Company

L-R: Valentine Ozigbo, GMD, Transcorp Plc, with Chinua Azubike, CEO, InfraCredit. Pictures by Pius Okeosisi and David Apara

Monday 07 Ootober 2019

BUSINESS DAY

REAL SECTOR WATCH

Beta Glass receives $30m investment for business expansion GBEMI FAMINU

eta Glass, a Nigerianbased glass maker, has received $30 million for the expansion of its glass and packaging

business. The company disclosed this in a statement released to the Nigerian Stock Exchange, where it stated that the investment fund will be used to expand its furnace capacity at its manufacturing plant located in Agbara, Ogun State. Expected to begin operations in the second half of the coming year, it stated that the new machine will boost the company’s production capability by 35,000 tons while pioneering the use of the Narrow Neck Press and Blow (NNPB) technology in Africa. The furnace is expected to have an active production capacity with a life span of 12 years and will replace the existing furnace which will complete its expected life span by 2020. Consequently, the use of the new furnace will encourage increased productivity and enhance operational efficiency as it is equipped with additional

production line and quality inspection instrument. In addition, the furnace will enable the company to act as pioneers in the introduction of the lighter weight as well as non-returnable glass bottles to the Nigerian market, giving the company a competitive edge in the global market while strengthening its position as a force in the glass bottles and com-

plimentary packaging products in West Africa. In the statement, Abimbola Ogunbanjo, chairman, Beta Glass, said, “The new furnace will enable us to leverage the lastest technology and our technical expertise to make world-class glass packaging products in Nigeria whilst promoting sustainability and improving our environmental footprint this

investment will enable growth and create long term value for both our shareholders and society,” he said. Darren Bennett-Voci, managing director of the company, said the new furnace will significantly enhance the company’s ability to meet the growing demand for glass bottles and jars in Nigeria and across West Africa as well as create a number of new jobs, both direct and indirect.

Analysis of the company’s halfyear financials for the year 2019 show that its revenue from customer contracts stood at N14.4 million, representing a marginal increase of 9.92 percent from the N13.1 million recorded in 2018. But its gross profit dropped by 20 percent to N2.9 million from N3.1 million realized in 2018. The company’s profit before tax dropped as well to 3.4 million from the 3.5 million accrued to them in the previous corresponding period. Consequentially, its total comprehensive income experienced a decline by stood at N2.33 million from the N2.39 million recorded in the previous year. Experts believe that the investment and business expansion will improve the firm’s financial books. At the annual general meeting held earlier in the year, Ogunbanjo had said, “We have also commenced preparations towards furnace rebuild in Agbara plant, which is scheduled for H1 2020. This furnace rebuild is a strategic project targeted at the transformation of the company’s glass capacity for Nigeria and the export markets, for the anticipated growth and demand for glass in Nigeria.”

Avanti Industries promises thousands Corporate governance key to survival of indigenous firms- Dangote GMD of jobs with new shavers CYNTHIA EGBOBOH, Abuja

vanti Industries Limited, a subsidiary company of KGM Group of Industries in Nigeria, has commenced the manufacturing of shavers, with a promise of thousands of jobs for Nigerian youths. Already, KGP industries has created over 1,500 jobs at their local factory at Agbara, Ogun State, and has employed more than 500 people directly, Arvind Khebudkar, managing director, Avanti Industries Limited, said. Speaking at the launch of the new line of products in Abuja, Khebudkar said Avanti Industries was the first manufacturer of shavers in Nigeria and that the production processes would consistently introduce modern technology and maintain international standards to serve Nigeria and the African market. According to Khebudkar, AVANTI Shavers are locally produced— an achievement born out of deep understanding of what Nigerian consumers want. AVANTI® Shavers blades are made in Conformity with world’s topmost quality certification ISO9001:2015. “Our research and development team focuses on

developing innovative new products, delivering significant value consumers,” he said. “We take pride in being a leader in introducing innovative and modern products to African Consumer. “This product is designed taking into consideration all requirements specifically all people staying around Nigeria. It is a very comfortable shave, and it is the first time we are coming with a two-colour handle that is unique in the market and this is the first company who is manufacturing this product in Nigeria. “Whereas no one is manufacturing in Nigeria, we are now manufacturing in Nigeria that will help Nigeria in employment as well as in economy,” he said. Khebudkar stressed that the company aims at enhancing the government’s efforts towards job creation, promising to create more jobs in Nigeria. “The number of people we have engaged in direct and indirect employment is in thousands. The KGM group has employed more than 1,500, and in the factory where these are manufactured, we have more than 500 people direct, and we will engage more youths as we continue production in Nigeria.” He said that Avanti will www.businessday.ng

be adding new products such the Avanti shavers; A1-Single Blade, A2-Double Blade, A2Plus Double Blade with Aloe Vera Strip to the growing portfolio of internationally-acclaimed and locally produced brands which help fulfil Nigerian consumers’ demands for a broader range of quality products to choose from. “We have the capacity to produce five million per month. We can also make more if there is an increased demand.” Ranganathan V., general manager of Avanti Industries, said that the various brands aim to redefine how consumers shop for personal care products, adding that they have engaged well-trained team of passionate employees as well as rigorous quality control system. “We know consumers have choices, but the Avanti shavers blade system combines everything this consumer is looking for: exceptional performance, terrific value, an inclusive platform and the most available, affordable and accessible shopping experience, thanks to our distribution network and trade partnership across the nation.”

ood corporate governance and proper succession planning are key drivers to the survival of indigenous firms and building trust in corporate Nigeria. Olakunle Alake, group managing director of Dangote Industries Limited, Olakunle made this assertion while delivering a paper titled ‘Corporate Governance and Succession Planning’ at the 35th Omolayole Management Lecture Series organised by AIESEC Alumni Association in Lagos He said that the absence of sound corporate governance structures and good succession planning are reasons indigenous companies hardly outlive their founders. Alake said many great indigenous businesses collapsed partly because of effective corporate governance structures and succession processes were not put in place to ensure that these businesses were sustained. “For businesses with poor corporate governance structures, the founder was often the chairman and the chief executive and made all decisions. They believe in owning all without a thought for tomorrow. He

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alone had the vision, energy, strategy and ran the business. When the man died, the business died,” he said. However, the Dangote Group helmsman pointed out that with a good board, sound corporate governance structures and proper succession planning, the founder can retire without looking back and the company will continue to thrive because there would be transferred vision and goals. “There would be effective corporate governance and shared operational sustainability. These are fundamental reasons why a business must have a proper and effective board,” he said. Alake recalled that in the period of the early 70s and late 90s, several Nigerians held sway at the top of many blue chips and they adopted sound corporate governance practices and implemented credible succession plans, which was why many of them still exist till date. Giving an instance of Dangote group as a multinational with corporate governance and succession plan in place, he said a lot of people assume and wrongly so that the Dangote Group @Businessdayng

business is a family business and therefore operates completely as such. Contrary to such view, he said, Dangote is a wellstructured business with a lot of professionals responsible and accountable for key aspects of the business and who have no family relationship with the founder. Earlier speaking, Olukunle Iyanda, president and chairman, Nigerian Institute of Management( Chartered) (NIM), noted that good corporate governance is extremely necessary for building trust in corporate Nigeria He said that currently, Nigeria is facing a trust deficit that is cutting across both public and private sectors. This trust deficit is due to the abuse of trust and has to be rectified through good corporate governance. In her address of welcome, Brenda Nwagwu, president of AIE SE C Alumni Association, noted that the lecture series has served as a veritable source of quality management education and insight for Nigerian professional managers.

Monday 07 Ootober 2019

BUSINESS DAY

REAL SECTOR WATCH

Flour millers consolidate as market fundamentals favour players ODINAKA ANUDU

consolidation is taking place in the flour-milling industry as demography continues to drive the market for the product. But squeezing consumer wallets are also hurting sales as poverty deepens among consumers. Poverty rate is almost 50 percent while unemployment is 23.1 percent, according to the National Bureau of Statistics. Only consumer firms sensitive to prices are thriving, but investments have continued despite foreign exchange exposure. Most flour millers import wheat and are exposed to FX, but many are seeking local alternatives. Olam recently offered N130 billion to acquire Dangote Flour Mills, Nigeria’s third largest miller by market capacity, in a deal seen transforming the Singaporean company into the biggest flour player in Africa’s biggest economy, with 43 percent share. Flour Mills of Nigeria (FMN) has remained the market leader over the years with a 32 percent share, with Olam squaring 24 percent, and Dangote Flour having 19 percent share. Charghoury Group (11 percent) and Honeywell (10 percent)

come fourth and fifth in market ranking while others share the rest four percent, according to a 2016 research report by KPMG on Nigeria’s flour milling industry. But the game may have changed after Olam’s offer to Dangote. A potential 43 percent ( 24+19) market share by capacity is in offing when the deal between Olam and Dangote is completed. Market analysts foresee economies of scale for Olam and a scramble for higher share of the market by Flour Mills of Nigeria and others. Muda Yusuf, directorgeneral of Lagos Chamber of Commerce and Industry (LCCI), said that the offer by Olam could be Dangote’s a business strategy. “I suspect Dangote wants to concentrate on areas of competitive strength and consolidate there. They would have done their numbers and found the decision right,” Yusuf said. John Anua, a US-based market analyst, told BusinessDay that Olam’s investment shows untapped opportunity and Olam’s confidence in the Nigerian economy. “What I see is a consolidation that will help firms to achieve economies of scale,” he said. In early 2016, Olam acquired BUA Group’s flour in a deal worth $275million. Earlier in 2010, Olam had acquired Crown Flour Mills (CFM) in

Nigeria and consequently expanded its capacity and set up milling operations in Ghana, Senegal and Cameroon. Dangote’s current market capitalisation is N59 billion. Thabo Mabe, Dangote’s executive director, said after the offer that the company was debt-free, adding that while the offer was still being deliberated on by the concerned parties, it would continually be modified to suit everyone. Dangote Flour Mills recorded double digit growth

in earnings since 2016— a year after Aliko Dangote repurchased it from South Africa food giants, Tiger Brand Limited. Low consumer purchasing power, decrepit infrastructure and multiple taxation have hindered companies in Africa’s largest economy from breaking even while margins have been under pressure. Analysts say consumer goods firms will continue to falter so long as there is no improvement in the living standard of Nigerians, with

98 million extremely poor people and unemployment rate of 23 percent, according to the National Bureau of Statistics (NBS). Gbolahan Ologunro, research analyst at CSL Stockbrokers, said the move by Dangote to divest from the Flour mills could be a financing strategy for the ongoing Dangote Refinery and Petrochemicals. “It is possible that the owner prefers to finance the ongoing refinery through equity rather than raising debt,” he said.

According to Gbolahan, it is going to be a win-win situation for the shareholders of Dangote Flour Mills. Ayodeji Ebo, managing director of Afrinvest Securities, said after the deal that flour millers had struggled with smuggling and infrastructure deficit, especially in the transportation of products through the Apapa ports. “But this acquisition by Olam industries will represent a forward integration which will mark a positive change in the sector,” he conceded.

the orthopaedic mattresses that you cannot compare them with other mattresses. There’s a wide difference between Mouka and other mattresses,” Onigbinde said. “Before we decided to endorse Mouka foam, we went round to inspect the production process and we have seen that it meets international standards and it is very comfortable for people using it. For now, this is the only product we have seen, inspected, and tested; and we have found it to be compliant of orthopaedic standards and best for usage in all homes,” Onigbinde said. This partnership also marks the beginning of a new packaging era for Mouka orthopaedic mattresses

as they would now come with the logo of NAOMT and in commemoration of Mouka’s 60th anniversary. Meanwhile, Mouka recently launched Comfort -a – Home initiative to celebrate decades of brand excellence and market dominance in Nigeria. The initiative which is part of activities marking the brand’s 60th anniversary seeks to comfort homes with free donations of Mouka branded mattresses in line with the company’s Corporate Social Responsibility programme. Under the initiative members of the public are expected to nominate homes they believe deserve to be comforted with donations of free Mouka mattresses between October 1st to 31,2019.

Why Mouka got NAOMT endorsement

ouka, Nigeria’s leading mattress and other bedding products manufacturer, has been endorsed by the Nigeria Association of Orthopaedic ManualTherapists (NAOMT) ahead of its 60th anniversary. The endorsement comes on the back of consistency in quality delivery and innovative mattress production which has characterised the brand’s market trajectory in Nigeria. According to Raymond Murphy, Mouka’s chief executive officer, Mouka is the country’s champion of healthy sleep culture, an attribute which its mattresses have consistently reflected in its 60 years of operating in the mattress and bedding industry.

This endorsement signals a ten-year partnership between the brand and the Association. Both parties signed a memorandum of understanding (MoU) to officially seal the mutual relationship Friday at Mouka’s corporate head office inIkeja area of Lagos State. Murphy said his firm’s www.businessday.ng

partnership with NAOMT sets a new benchmark for the brand in quality delivery. “This partnership comes in different ways. We are being engaged to inspect our facilities, to ensure that our manufacturing facilities are of first class standard, and

to ensure that the claims we make for the Mouka well-being products, the orthopaedic and semi-orthopaedic products are substantiated and not just loose marketing claims,” Mouka’s chief executive said. “Obviously, we’ll work together to see what further developments we can bring forth in the future. The strength of this partnership is to see how we can technically work together to meet the orthopaedic needs of Nigerian consumers,” he added. 0 “Mouka has improved the foam materials to orthopaedic standards that will meet the needs of the community of people using the mattresses. They have made a lot of improvement on

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Monday 07 August 2019

BUSINESS DAY

PHOTOSPLASH

Service of songs for Late Cyril Akporuere Odu, chairman, Union Bank Plc, in Lagos.

L-R: Idoko Kadiri, son-in-law; Ajaire Kadiri, daughter; Orevaoghene Odu, daughter; Patience Odu, wife; Oghenekome Odu, daughter; Womano Kadiri, granddaughter, and Ehemena Odu, daughter.

Afolabi Oladele, partner, Afrian Capital Alliance/friend of the deceased, giving his tribute

Udom Inoyo, vice chairman, ExxonMobil Nigeria, giving his tribute

R-L: Enase Okonedo, dean, Lagos Business School, (LBS); Evarista Aliyu, and Winifred Alli, all sisters of the deceased

Emeka Emuwa, CEO/GMD, Union Bank, giving his tribute

Femi Ogunbi, friend, giving his tribute

Michael Omughele (2nd r), priest, Catholic Archdiocese of Lagos/officiating priest, and other priests

Mike Odu, brother of the deceased, giving his tribute

L-R: Jim Ovia, founder, Zenith Bank, and Osagie Okunbor, MD/chairman, Shell

L-R: Okechukwu Enelamah, former minister of industry, trade and investment, and his wife

Monday 07 August 2019

BUSINESS DAY

PHOTOSPLASH

Service of songs for Late Cyril Akporuere Odu, chairman, Union Bank Plc, in Lagos.

L-R: Basil Omiyi; May Omiyi; Ikay Afe, and Jacinta Afe, sisters and brothers of the deceased

L-R: Bismarck Rewane, and Oviemo Ovadje

L-R: Kenneth Ufere, head, BSRD, Union Bank; Abigail DuopamaObomanu, and Dupe Ogunbiyi, both of Union Bank

L-R: Dalu Ajene, deputy CEO, Rand Merchant Bank, and Chidi Iwuchukwu, head, LEVFAN, RMB

L-R: Udoma Udo Udoma, former minister of budget and national planning, and Sally Udoma, his wife

L-R: Kehinde Durosinmi-Etti, founder/CEO, Variant Advisory, and Tajudeen Ahmed, GM/group head, business development, BUA Group

L-R: Yewande Zaccheaus, and Ibukun Awosika, chairman, First Bank of Nigeria

L-R: Michael Ojeme, and Lookman Durosinmi-Etti

R-L: Aigboje Aig-Imoukhuede, chairman, Wapic Insurance, and Yewande Zaccheaus

R-L: Ibukun Awosika, chairman, First Bank of Nigeria, condoles Patience Odu, wife. With them are Ajaire Kadiri and Orevaoghene Odu, daughters. Pictures by David Apara

Monday 07 October 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

Use your travel time productively DORIE CLARK

’m writing this article on a flight to Raleigh-Durham; I began it last week on a train from New York City, and added a few paragraphs a couple of days later on a flight to San Francisco. Staying productive on the road — while navigating unfamiliar destinations, schlepping heavy luggage and dealing with not-infrequent delays and inconveniences — can be a herculean challenge. Here’s how to accomplish more while in transit.

You can engage in professional development by listening to podcasts. Many airport rituals are short and staccato —

five minutes in line to check a bag, 10 minutes to get through security, five minutes walking to the gate and 10 minutes

standing in line to board. If you have access to an airport lounge (where it’s quieter), you can also use the time to make a series of short phone calls. Pro-

ductivity expert David Allen, whom I profile in my book “Stand Out,” recommends keeping a “to call” list so that you can cluster the phone calls you need to make and bang them out in a row. Though internet access is becoming more common on flights, it’s still not a given. Even when Wi-Fi is offered, it can be slow or patchy. That’s why I generally focus on writing projects that don’t require use of the internet. I’ll download all the necessary information and supporting materials beforehand, and then go offline to complete projects like writing articles (including

this one), edits to book chapters, client reports or interview questions I’ve committed to answer. Travel has become a standard part of many professionals’ work life. Each year, U.S. business travelers make about 488 million trips — around 1.3 million per day. With that much travel, we can’t afford to write off days in transit; using that time wisely is essential to getting our jobs done.

(Dorie Clark is a marketing strategist and professional speaker who teaches at Duke University.)

Will we realize blockchain’s promise of decentralization? HANNA HALABURDA AND CHRISTOPH MUELLER-BLOCH

ince its inception, blockchain has promised to make “trusted third parties” redundant. In practice, though, whether blockchain is actually decentralized depends on what is governed and how this governance is enacted. As more businesses explore blockchain, this distinction becomes increasingly important. There are many expected benefits from decentralization that may elude us if it fails in practice. Blockchain is commonly defined as a distributed ledger shared by multiple parties who can add transactions to it. Bitcoin, the first blockchain implementation, has succeeded in allowing for digital payments without having to rely on any

trusted third party acting in the user’s best interest. Such decentralization is expected to bring cost savings and empowerment. If it fails to materialize, we return to the problems of power and trust. We can understand this

contradiction by identifying the four different ways Bitcoin, as a prototypical example of blockchain, is governed. — GOVERNING NEW TRANSACTIONS: Users unwilling to pay high transaction fees may

choose to either not transact at all or have to wait longer to get their transactions validated. — GOVERNING CONSENSUS: New transactions need to be validated to become part of the blockchain. Consensus

mechanisms allow for decentralizing these validations, a crucial element in any argument that the Bitcoin system could replace banks. In practice, however, achieving consensus is more centralized than was envisioned. — GOVERNING UPDATES: Once the blockchain is operating, updates to the protocol may be needed or desirable. In Bitcoin, it is envisioned that anyone can develop and suggest protocol updates. In practice, these changes are typically proposed by only a handful of developers and the discussions are highly centralized. — GOVERNING THE DESIGN: Before the blockchain starts operating, the protocol needs to be designed. In practice, protocol development is typically highly centralized and coordinated. Despite how they were envisioned, governance

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of blockchain technologies is often more centralized in practice, since decision-making power is usually costly to acquire and exercise. Expertise, reputation, time or money can all be required to gain decision-making power. The higher these costs are, the fewer are the people who want to participate, which contributes to centralization. Managers need to carefully consider two things. First, that decentralized governance is not a necessary feature of blockchain; it needs to be enacted. Second, that the benefits of decentralized governance may not always be worth the associated costs.

(Hanna Halaburda is an associate professor at NYU Stern School of Business. Christoph MuellerBloch is a doctoral candidate at the IT University of Copenhagen.)

Monday 07 October 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

Monetizing a business ecosystem PETER WILLIAMSON AND ARNOUD DE MEYER

ore companies are starting to recognize that developing a vibrant ecosystem of partners across industries is essential for accelerating innovation and withstanding disruption. Partners can share new technologies and knowledge, open up new routes to market and help create new business models. But it isn’t enough to get an ecosystem up and running; you also need a way to sustainably monetize it. In our work analyzing company ecosystems, we’ve found that a firm needs to do three things if it wants a sustainable profit stream from the ecosystems it has created. First, it must identify a “keystone contribution,” some element or activity it can uniquely own and control that is essential for the ecosystem to create val-

ue for customers. Second, an ecosystem leader needs to establish an efficient “tollgate” to collect revenues when partners use its keystone contribution. The tolls may take the form of: license fees, royalties or commissions on trans-

actions within the ecosystem; a share in the revenues of the products and services that partners supply; or the profits on value-added products or services created using the data and knowledge from the ecosystem. Of course, the toll for any

single type of transaction, activity or partnership can be only so high. Leaders must also diversify their revenue sources. That means designing multiple tollgates at different points in the ecosystem. Another useful strategy we’ve observed is to

vary the charges between participants, subsidizing some and demanding a higher share of the value created from others. Third, leaders need to find a way to leverage the ecosystem to innovate and find ways to renew the keystone contributions. This means establishing reliable and ethical channels to accumulate data on the activities of partners and customers, and processes for innovating on insights gleaned. While some learning needs to remain proprietary, some can be shared with partners to help make the ecosystem more productive. By focusing on these three priorities, companies can establish sustainable profit streams, ensuring their ecosystems work for them.

(Peter Williamson is a professor at the Cambridge Judge Business School. Arnoud De Meyer is a professor at Singapore Management University.)

For returning professionals, there’s power in the cohort technology professionals, some of whom have been on career break for up to 20 years. “We decided it was better to have everyone based in one location,” says Cathy Hawley, senior director of people development. “These women are joining separate teams that are overwhelmingly younger and primarily male, so it is helpful for them to meet as a group at regular intervals.” Program “conversion rates” — meaning how many participants become permanent employees — range from over 50% to over 90%.

CAROL FISHMAN COHEN

ndrea Chermayeff wishes she’d kept a diary during the fall of 2013. That was when Chermayeff, a Harvard Business School graduate who’d left the workforce for 15 years to stay home with her four children, was a member of the inaugural class of J.P. Morgan’s ReEntry program, one of a number of return-to-work programs offered by Wall Street firms and other professional employers. “I wish I’d documented how petrified I was,” she recalls. “I felt that I wouldn’t match up, somebody would figure it out, and it would be — game over.” While she didn’t put those fears in writing in a diary, she was able to share them with her ReEntry colleagues, which was invaluable. “To be able to express these fears with nine other women in the same situation was comforting,” Chermayeff says. “It was my safe zone.” In recent years, major financial services companies like

Credit Suisse, J.P. Morgan and Morgan Stanley have piloted reentry internship programs for professionals returning to work after a career break. They joined Goldman Sachs, which has offered such a program since 2008, and many others. It is well documented that cohorts can strengthen a work or school experience. However, in the case of the re-entering professional, the cohort adds

the critical additional function of providing emotional support from peers during a transition that is otherwise isolating, and can involve dramatic professional transformation. Taking a cue from internship programs for younger demographics, companies admit the re-entering professionals as a class with a single start date, and establish the cohort immediately. The cohort is used

as a mechanism for efficiently and economically delivering onboarding programming, and provides opportunities to grow together and bond. The cohort can be formed and remain strong even if participants are in different locations and from diverse circumstances. Return Path, a New Yorkbased data solutions company, launched its program with an all-female group of returning

Brought to you courtesy of First Bank Nigeria

(Carol Fishman Cohen is chairwoman and co-founder of iRelaunch.)

Monday 07 October 2019

BUSINESS DAY

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Monday 07 October 2019

BUSINESS DAY

START-UP DIGEST

In association with

Adewale Aladejana: Entrepreneur with nose for African-styled perfume JOSEPHINE OKOJIE

igerian entrepreneur Adewale Aladejana created his business venture, Sapphire Scents, to produce affordable perfumes for the African continent. Seeing the gap in the market for affordable and quality body fragrance, the start-up manufactures and retails a range of perfumes to meet the needs of Nigerians and Africans at large. Apart from identifying a gap in the market, Adewale was inspired to establish Sapphire Scents in 2015 by his passion to provide effective and life-enhancing solutions that ensure people smell good always. “I love perfumes and I always ensure people smell good around me,” he says. “If I smell a perfume once and I know the name

and I meet someone wearing that same perfume in five years’ time, I would be able to tell you exactly what you are wearing,” the young entrepreneur says. Adewale started his

business with N30,000 in 2015 and the business has grown tremendously and it is now a multi- million enterprise. He made a million naira in his first three months of

Why Africa must step up to support innovators, entrepreneurs – Curnow IFEOMA OKEKE

NN, a global newsbased pay television channel, has reiterated the need for Africa to support its innovators and entrepreneurs. Robyn Curnow, a CNN Anchor and a host of Innovate Africa, which airs on CNN International, in a statement, said Africa is a continent rich in resources and with an understanding of the possibilities of untapped markets, enormous progress have been made in certain cities. She said it is, however, difficult to escape the notion that opportunities are being squandered. Curnow explained that Africa is also a continent that demands inventiveness, but there are challenges that demand unconventional thinking and bright new ideas. “Necessity is the mother of invention, and Africa has both in abundance. I’ve been meeting some inspiring innovators for a new CNN series, Innovate Africa, and I am already reevaluating my own thoughts on the topic,” she said. Among those she said she has interviewed is a designer, Patience Torlowei, whose work forms part of a new

exhibition at Washington’s Smithsonian Museum of African Art. “Innovation, she said, was not necessarily about doing things differently, but doing things better. She worries about environmental destruction in Africa, something reflected in her work, and she says she wants to give back, and leave a legacy. “To this end, she has focused the efforts of her highly successful garment business on manufacturing in her home country, Nigeria. She believes that by training staff, instilling in them the value of patience, and nurturing them to adopt new skills themselves, she can help create pioneers of her own, who can drive the manufacturing industry forward in Nigeria and the rest of Africa. “In Cape Town, inventor Thinus Booyson found inspiration during the severe drought of 2017, when the city’s water system was on the brink of collapse. The university professor had been working with his students on a device to manage electricity used for water heating, but stripped it down to become a simple water meter. Dubbed ‘Count Dropula’, and installed in schools, it has revolutionwww.businessday.ng

ised the attitude to water care among pupils, who now fully understand the value of water, and are inspired to conserve every drop,” the CNN anchor said. She said he had met Ravi Naidoo, founder of the creative incubator, Design Indaba. “He talked to me of the need to inspire the next generation of Africans, and the various different challenges that design can tackle. Clean water is a design challenge. Better housing is a design challenge,” he said. His mission is to convert inspiration into products and platforms and projects, from museums to modalities for low cost housing, and has seen commissions from the likes of Ikea. “Using the power of ideas for socio-economic impact, creating technology that can aid civil society, training and investing in people, inspiring the next generation are all wonderfully worthwhile and genuinely impactful goals. Working on this series has confirmed what I knew already: there are some incredible Africans creating remarkable things that are making a tangible difference to people’s lives and to their communities.”

establishment, Adewale tells Start-Up-Digest. “We started with N30,000 and in three months, we have made a million naira.” Adewale uses various social media platforms in advertising his business and showcasing its range of Sapphire Scents. According to him, Nigerians outside Abuja, where his business is located, make orders online for his products after seeing them on various social media platforms. “Daily, I would post pictures of our perfumes and when anyone buys them, I would post client reviews and appreciations. I post it on social media every morning, and then people will make enquiries and if they are not in Abuja, I will deliver the products to them through transport lines,” he says. The young entrepreneur sources raw materials used in manufacturing his per-

fumes both locally and from abroad. He currently has 30 employees working directly with him and 1,000 distributors spread across 32 states in the country, the United Kingdom, US, Canada, Cyprus, Ireland, South Korea and most neighbouring West African countries. When asked what he is doing differently that has made the business survive since 2015, Adewale says that his focus on creating an affordable and quality African body fragrance has helped the business stay afloat and grown. Speaking on some of the business expansion goals, the mass-communicatorturned-entrepreneur says that the business aims to open its stores across major cities in Africa. “We are opening stores all over Africa. We are already at Lennox Mall at Lekki and Jabi Lake Mall in Abuja. Our next store is

going to be Abidjan, Cote d’Ivoire by God’s grace,” he says. When asked what the biggest challenges confronting his business are, Adewale says that finance remains the big issue. He urges the government to provide more funding opportunities for start-ups in the country. Similarly, he explains that poor power supply and tough business environment are also some of the challenges confronting his business. When asked his advice to younger entrepreneurs, Adewale says they should be focused and ensure adequate research is carried out about any business before venturing into it. “Do not give up, keep your head up. There is a high consumer rate in Africa. If you are a producer, you will make a lot of money,” he says.

Pan- African e-logistics start-up debuts in Nigerian market ANTHONY NLEBEM

an-African e-logistics, a start-up in Kenya, East Africa, has debut in the Nigerian market to seamlessly connect cargo owners to transport in frontier markets. Over the past 10 months, Pan Africa e-logistics also known as Lori, has completed a successful pilot in Nigeria with some of the country’s top cargo companies, including Olam, Honeywell Flour Mills and Flour Mills Nigeria. This expansion presents a massive opportunity for Lori, as the company seeks to facilitate and connect technology innovation, smart policy and government partnership, and seamless operations to continue to lower the cost of goods. As Africa’s largest single market, Nigeria faces challenges with a congested port and a shortage of transport options. In July, Lori announced the appointment of new global leadership to drive the company’s expansion efforts across Africa. “Lori is at the forefront of revolutionizing cargo transport across Africa from the

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ground up,” said Uche Ogboi, chief operating officer, Lori. “Our mission in Nigeria is to create a more efficient logistics experience for cargo owners who are burdened with the task of moving their goods across the country. “We have successfully created a digital platform to enable the movement of goods through a transparent supply chain management system that is affordable, reliable and flexible,” she added. As a digital marketplace and eLogistics service provider, Lori provides value to clients in three key areas: technology, operational excellence, and customer service. For cargo owners, Lori offers reliability by working with high quality transporters who have been vetted, verified, successfully onboarded, and constantly rated on performance. Lori is developing the most sophisticated technology tools available in market to package and deliver meaningful data to provide management teams with insights for better control. These tech tools also allow for better tracking with greater context for goods on journey. Ultimately, cost @Businessdayng

savings is achieved directly and indirectly with better end-to-end coordination with transporters. For transporter partners, Lori optimises truck and asset utilisation for on-boarded trucks by up to five times through access to its pool of cargo owners and with quicker turn-around times and through our proactive loading and off-loading activities. Lori also offers access to working capital in the form of fuel financing and insurance, with better payment terms, so that there is no delay in getting trucks on the road. Lori has also developed proprietary systems and software for automatic invoicing to relieve administrative burden. Lori’s mission is to solve the problem of high cost of goods across Africa where in certain countries, up to 75 percent of the cost of a product on the continent is attributed to logistics, compared to only 6 percent in the U.S. The company aims to achieve this by eliminating customer pain points along the cargo journey with new technologies and superior user experience.

Monday 07 October 2019

BUSINESS DAY

START-UP DIGEST

How CBN’s new lending rules will help boost MSMEs growth GBEMI FAMINU

n July this year, the Central Bank of Nigeria (CBN) mandated deposit money bank operators in the country to give out 60 percent of their deposits to businesses as loans. The directive implied that deposit money banks’ loan-todeposit ratio (LDR) must be 60 percent. Last week, the CBN raised the ratio to 65 percent in a bid to improve lending for micro, small and medium enterprises and to the real sector. LDR is the percentage provision the bank is willing to give as loans out of its total cash deposit with the CBN. Last Wednesday precisely, the CBN announced a refundable debit of N499 billion on the accounts of 12 banks. The deductions were made over the failure of these banks to meet the September 30, 2019 deadline the CBN stipulated for them to maintain 60 percent loanto-deposit (LDR) ratio. The move was also made to facilitate more investments into the country’s real sector and economy while also building a resilient financial system. Experts in the MSMEs sector have lauded the initiative by the apex bank, but stress the need for compliance by the money deposit banks. “Lack of adequate finance has been the major challenge limiting MSMEs growth in the country. With the CBN’s compulsion on

banks to lend more will oil MSMEs – which is the engine of growth,” Femi Egbesola, national president, Association of Small Business Owners of Nigeria (ASBON), said. “The problem with the directive is for the banks to comply. The policy has been on since July and we are yet to feel the impact,” Egbesola said. He stated that if the banks comply with the policy, lots of ailing businesses in the country will spring back to life to create employment. “It is a good policy,” said Anyansi Igwe, a small-cale leather maker in Lagos. “The challenge, however, is how much cost banks will be will-

ing to lend,” he added. Over the years, business owners, especially small and medium scale enterprises, have constantly complained about the inability to access funds for expansion and business development. Data from MAN also shows that the lending rate to the manufacturing sector was 22.21 percent in 2018. “I do not think it is a good decision to sterilize the shortfall of the amount required in meeting up with the LDR ratio as it negatively impacts the funding cost of the bank whilst also improving their LDR ratio without achieving the initial objective of improved lending,” Gbolahan Ologunro, Equity

analyst at CSL stockbrokers, said. The Manufacturers CEO’s Confidence Index (MCCI) report released by the Manufacturers Association of Nigeria (MAN) for the second quarter of 2019 which represented the view of about 400 CEOs of MAN member-companies across the country expressed the challenges of business owners regarding funding. The report states that the issue of funding has been a constant problem for manufacturers who need it for business expansion, improved productivity, procurement of raw materials and business development purposes. It highlighted that 76 percent of the CEOs interviewed said the rate at which commercial banks lend to manufacturers discouraged productivity in the sector, while 66 percent of the CEOs claimed that the size of loans allotted to industry players by commercial lenders further contributes to low productivity in the sector and also discourages foreign and local investments. Speaking on the impact of the move, Ologunro said, “ I do not see a significant change as banks are still likely to adopt a cautious stance in extending credit to SMEs given the fragility of the macroeconomic environment.” “The cost of lending is a critical challenge that the CBN appears to have shrugged off, they need to look into that to incentivize SMEs to increase their demand for loans” Ologunro added.

Nigeria is one of the few countries with a high-interest rate as it has retained its double-digit monetary policy rate at 13.5 percent and as a result, small and medium enterprises are unable to access loans from commercial lenders as these banks lend at 20 to 35 percent rates with a 12 months tenor. Analysts say measures should be put in place to control the imbalance regarding foreign exchange as well as the unstable rate of the naira to the dollar. This is because many business owners source raw materials internationally and have to pay using the dollar which further increases their cost of production. The National Bureau of Statistics (NBS)’s recent MSME report shows that 85 percent of businesses could not have access to external financing within 2013 and 2017. In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks. Ibrahim Maigari Ahmadu, chief executive of Liverstock247.com, Nigeria’s first livestock online marketing and listing platform, said interest rate is high just as there are many gridlocks to access to funds. “Nigerian commercial banks are risk-averse. They put so many bottlenecks on the way when you want to access funds,” he said. “Interest rate is very high, which is a major inhibiting factor. Collaterisation is structured to knock you out,” he said.

Veritasi holds mentoring program for entrepreneurs

FG partners USNC to attract foreign investment, tech start-ups

JOSEPHINE OKOJIE

ODINAKA ANUDU

eritasi Homes and Properties Limited is set to hold the premier edition of its mentoring program for start-ups. The programme, which is aimed at tackling problems in Nigeria’s entrepreneurship ecosystem, will equip start-ups with the needed skills and the practical guide to succeed in any business ventures. “We are excited to kick-start the mentoring program. I see a lot of people with great skills around me making little or nothing,” Adetola Nola, founder, Veritasi Homes and Properties Limited, said in a statement. “We aim to make businesses work in Nigeria by creating interactive training sessions and teaching business owners the right measures to grow. We want to help more businesses survive,” he said. He noted that the programme is unique in the sense that there will be follow-up and support after the event to ensure that the businesses succeed. Adetola, who is now a successful entrepreneur, will share his entrepreneur-

ship story- the failures and lessons learned with participants, the statement states. The young entrepreneur noted that participants will be mentored on the right way of doing business in Nigeria’s entrepreneurship ecosystem. “I want to teach people how to monetize their skills. We also want to help startups make more money, thereby tackling issues of unemployment and poverty in the country,” he said. He stated that the programme has designed meetings and connections between businesses, speakers and fundraisers. “The discussions, relationships, and synergy will continue after the actual event and that is where the magic is,” Adetola said. www.businessday.ng

Also speaking, Aderinsola Jolaosho, media assistance for Veritasi Homes said, “Adetoal is a very smart person. Although he is young, he has a wealth of experience in business and I learn business lessons from him every time. “I would advise anyone that has a viable business idea and anyone that has a new business to attend the event,” she added. Various sessions will be helpful for start-ups which include; fundraising, business structuring, proposal writing, hiring and business structuring among others. The programme is scheduled to hold on the 12th of October, 2019 in Lagos. Attendance is free but only 50 entrepreneurs will be admitted.

he Federal Government has disclosed that the United States of America (USA) and other key foreign allies hold the ace to deepening technology ecosystem in Nigeria in order to create a long-lasting technological innovation and economic growth. Richard Adeniyi Adebayo, minister of industry, trade and investment, made this disclosure at a breakfast meeting of the U.S. Nigeria Council (USNC) for Food Security, Trade and Investment on the margins of the just concluded 74th United Nations General Assembly (UNGA) in New York City, USA, recently. He said that technology hubs are critical to the country’s economic growth in order to enable start-ups companies to flourish. Adebayo charged foreign investors to explore and strengthen the country’s Information Communication and Technology (ICT) sector in a bid to build a strong digital economy. The industry minister assured 40 key members of the USNC that the present administration under Muhammadu Buhari is committed to

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creating an enabling environment that will allow technology start-ups companies to flourish in the country. According to him, government is doing its best, saying it has been launching different technology hubs in the country to achieve digital economy. He added that resources play a critical role in achieving a digital economy and technology driven based nation. Adebayo said, “We must create the governmental environment that will help these technology start-ups flourish. “The government is helping to launch several technology hubs and it’s important we put more resources into this.” For Terence McCulley, chairman of the USNC, the focus of the breakfast meeting was on strengthening Nigeria’s digital economy by allowing US investors targeting the Nigerian market to invest in the country’s ICT and start-ups sector in order to further boost her economy. According to him, Nigeria’s digital and ICT sector need foreign investment to grow and attain a technology driven based economy. “Foreign investment is vital to building the technology ecosystem in Nigeria,” he said. Also speaking at the occa@Businessdayng

sion, Muhammadu Sanusi II, former governor of the Central Bank of Nigeria and Emir of Kano, explained that developmental impact in terms of technological innovation and corporate venture partnerships are critical to Nigeria’s economic growth. He added that such developmental impacts are needed in the country’s education and health sectors of the economy. Sanusi explained that about three million children are out of school in the North because of lack of infrastructure funding for schools and teachers salary payments. “When w e apply our minds to utilise innovation and technology to boost our goals in education and health, we will see great social returns. “Three million children are out of school in the north of the country, but there’s not enough funding for schools and teachers. Digital innovation can help us think beyond the conventional ways to solve this problem,” Sanusi said. The USNC is a business organization dedicated to fostering commercial ties between the US and Nigeria, with members cutting across key sectors of the economy in the USA and Nigeria.

Monday 07 October 2019

BUSINESS DAY

MARKETS INTELLIGENCE

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

A low rate world is better for emerging market bonds BALA AUGIE

here has been a torrent of funds flowing into emerging markets due to the continued easing stance of central banks across the United States, Europe and Asian as global synchronized economic growth losses steam. Analysts are of the view that emerging markets offer high nominal and real yields, which looks especially attractive in the yield starved world. As yields drop, bond prices rise, as both variables are inversely correlated. As the global bond rally intensifies, buying up developing market

long dated is proving to be a good strategy. This is because global central banks have joined the Federal Reserve in their dovish stance, as a trade spat between the US and China is unsettling global economy. Federal Reserve Chair, Jerome Powell is facing greater pressure to cut rates for a third straight time in respond to weakling data. Manufacturing data were disappointing, as analysts fret trade tensions and geopolitical tensions could tip the country into a recession. Outgoing European Union Central Bank, Mario Draghi, cut interest rate for the first in eight years to the lowest level ever, as well as introducing a round of quantitative easing, as the

global economy grapples with negative interest rates. The Bank of England may cut interest rate to fend off the effect of a brexit uncertainty, and Prime Minister Boris Johnson could face a backlash from the British parliament in a no deal scenario. “Since the beginning of the year, we have seen accommodative monetary stance in advanced economy like the United Kingdom, the United States, and Germany,” said Kayode Tinuoye, Head of Portfolio Management Limited at United Capital. “That means a lot funds have been flowing into emerging and frontier markets,” said Tinuoye. A cursory look at African economy shows it pays to be an Egyptian inves-

Source: Bloomberg

tor than Nigerian because the former offers a higher real return after adjusting for inflation. That is because Egypt has a lower inflation rate that makes investment more valuable in the hands of investors as it undertook some transformation reforms that stabilized its currency. Real rate of return is simply the return an investor receives after the rate of inflation is taken into account. If inflation rises, the real rate will fall. Egypt has a real rate of return of 8.30 percent and inflation rate of 7.50 percent, this compares with Nigeria’s returns of 3.30 percent and inflation rate (11.0 percent). South Africa has a real rate of return of 4.60 percent and an inflation rate of 4.30 percent. With over 50 percent of a population of 200 million living below $1.29 a day, it will take the donkey passing through them eye of the needle to salvage the vast majority of rustics from an imminent dependency. Nigerians should tighten their belts as a possible hike in tarfiff on electricy and a possible removal of subsidies means they may never drink from a flagon poured into a golden goblet. As G.R.R Martins puts it in his bestselling novel, Game of Thrones (GOT): Winter is coming, and our harvest could be short. But will Nigeria pay ever pay its debt like the Lannisters? That is a discussion for another day. Smaller African countries are catching up with Nigeria. Are we a sleeping giant? Posterity will never forgive our generation if we fail to create an enabling environment for the generation unborn.

Equity investors should brace up for a rough ride in Q4 …NSE ASI has declined in 7 of the last 10 years in Q4

ark Twain famously said history never repeats itself, but it rhymes. As we enter into the last quarter

SHORT TAKES N499.1bn The Central Bank of Nigeria (CBN) debited N499.1 bn belonging to 12 lenders which failed to meet its minimum lending threshold of 60 percent of all deposits as at October 1, 2019. The Apex bank said the debit was not a fine and is refundable whenever the lenders meet the threshold. The CBN had in July asked banks to lend a minimum of 60 percent of their customers’ deposits, failure of which would result in a levy of additional Cash Reserve Requirement equal to 50 percent of the lending shortfall of the target LDR by October 1. The CBN has raised the target to 65 percent and set December 31, 2019 as deadline for banks.

14.14% The All Share Index plunged 2.48 percent last week and worsened year’s loss to 14.14 percent as moves by the Central Bank of Nigeria to debit erring banks that failed to achieve its lending target of 60 percent Loan-to-Deposit ratio weighed on banking stocks. The banking index consequently had its worst performance in more than 6 weeks following a decline of 3.9 percent latest week.

Source: Bloomberg

IFEANYI JOHN

P.E

of the year, an equity report by EUA Intelligence, a Lagos based investment advisory firm, showed that in the past decade, the Nigerian All Share Index has declined in 7 of the last 10 years, sending jitters through the spine of investors. Investors who have already seen

the stock market decline by 14.14 percent year to date were hoping to enjoy a Q4 stock or Santa rally but the report by EUA Intelligence shows that investors should put little faith in the expectation of any market rally in the last three months of the year.

Since the market meltdown in 2008, the stock market has declined 70 percent of the time in Q4 increasing the likelihood that investors may see something similar this year with the market trend already

Continues on page 44

In the second quarter of 2019, Banks NonPerforming Loan (NPL) dropped to the lowest level in 13 quarters. This means N1.44 trillion bad loans in the quarter is the least since the first quarter of 2016 when NPL stood lower at N1.29 trillion. Similarly, NPL ratio at 10.36 percent is the least since the fourth quarter of 2015.

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 07 October 2019

BUSINESS DAY

MARKETS INTELLIGENCE

Investors jittery as crude falls below Nigeria’s budget oil benchmark IFEANYI JOHN

rude oil price volatility has been a source of concern for the Nigerian government but crude oil prices falling below its benchmark price could have dire consequences on local investors as some foresee continued selloffs by foreign investors due to weaker economic fundamentals in the country. Oil dependent Nigeria has already seen its economic growth decline from 2.1 percent in the first quarter of the year to 1.9 percent in Q2 2019. “With crude oil falling below its benchmark price, there is high tendency to see the foreign external reserves decline, as weaker oil prices negatively affect foreign exchange earnings for the country,” said Obinna Uzoma, Chief Economist at EUA Intelligence. According to data compiled from Central Bank of Nigeria (CBN), the foreign reserves has declined by $3billion since August, averaging a monthly decline of around $1.5b in August and September this year. “You have to expect investor’s seeing the trend with what is going on with the external reserves and all the conversation around a possible devaluation to be derisking their portfolio and going to safe haven assets rather than stay invested in the equity market here,” Uzoma added. The Nigerian government in its

Continued from Page 43

seen in the fixed income-based, bonds funds and money market funds reflect impressive returns in the debt market following moves by the Central Bank of Nigeria to stabilize the Naira by offering attractive rates on government securities as a way to lure hot money into the economy, experts say. On the other hand, the downward trend seen in NAV of equitybased funds is on the back of pessimism that has weighed on stock performance year-long. Analysts expect the equity market which has declined 14.14 percent to remain bearish in the mid-term given tepid growth of the economy which has impacted companies’ performance.

titling downwards. Analysts say sell pressure from investors who are looking to liquidate some of their investments to enjoy the holiday season may be what to blame for this trend. In the past decade, the only years when the stock market rallied in Q4 were in 2012, 2013 and 2017. All were years when the stock market was already trending higher during the year at double digit growth in the first 9 months of the year. In the first 9 months of 2012, the stock market rallied about 25 percent before enjoying another 6 percent gain in the last 3 months of the year. In 2013, the stock market had already rallied about 15 percent in the first 9 months of the year before the market gained another 10 percent in the final quarter of the year. In 2017 as well, the stock market had gained as much as 36 percent in the first 9 months before adding another 4 percent gain in the last quarter of the year, according to the report by EUA. The worst Q4 stock market performance during the period was recorded in 2014, after rapidly declining crude oil prices led to a deep selloff in the final quarter of the year. With crude oil prices declining by around 20 percent over the past 2 weeks, investors are now wondering if Q4 2019 could be a repeat performance of Q4 2014. “I think we will have to wait and see how the market performs in the final quarter this year. We expect corporate earnings to be better than they were last year but the economic fundamentals in the country continues to deteriorate which is a major concern for investors. Lower crude oil prices and the stagnant inflation will definitely be on the minds of the investors who will be trading very cautiously in this period. There is perhaps a higher chance of a decline than a rally in Q4 as we can see that is what history and our current economic situation is pointing to,” Obinna Uzoma, chief economist at EUA Intelligence told BusinessDay during a telephone chat.

exemptions without reducing the total size of the corn ethanol mandate, starting in 2020. The proposal would “result in sustained biofuel production to help American farmers”, said Andrew Wheeler, EPA administrator. The exemptions for oil refiners had begun to damage the goodwill Mr Trump established in the Corn Belt last spring when he allowed unfettered sales of petrol containing 15 per cent ethanol, an increase from the customary limit of 10

per cent. Since he took office, the average number of exemptions has trebled. Agriculture and biofuels interests said the waivers hit a sector already suffering from a collapse in ethanol exports to China as a result of the Sino-US trade war. Eighteen of the nation’s more than 200 ethanol plants have closed in the past year, according to the Renewable Fuels Association. US ethanol plant output has slumped to levels last reported in 2016.

Source: NSE ASI 2019 budget set targets for average crude oil during the year at $60 and daily crude oil production at 2.3mbpd. As at market close on Friday, crude oil price was trading around $58 (which is below the benchmark price) and crude oil daily production in Nigeria is around 1.9mbpd (also below the budgetary estimate). Concerned investors are now wondering what the impact will be on the government’s finances and the economy. With most investors pessimistic on the equity market, the deepened

selloffs this year has caused the Nigerian market to be among the worst performing indices in the world. As at market close on Friday, the Nigerian Stock Exchange All Share Index had declined by 14.14 percent since the beginning of the year. “While I don’t think the decline in crude oil prices has a direct impact on corporate earnings, it is obvious what the impact on lower crude oil prices on the economy will be. The last severe decline Nigeria suffered sent it into a recession. The government heavily relies on crude oil revenue

for more than half of its budget. Lower crude oil prices will send the government back to selling more treasury bills to fund the budget deficit. If the government gets desperate, treasury yields will go up and that is bad for the stock market. That’s why I think you are seeing the equity selloffs in the past few days,” Uzoma told BusinessDay. The NSE All Share Index (ASI) declined on Friday by 0.36 percent to drop to 26,987 points as bearish market sentiment continued to dominate trading during the last trading day of the week.

Equity, Mixed, Ethical Funds underperform as total NAV rises 31.5% YTD SEGUN ADAMS

t has been an impressive year for fund managers who have grown Net Asset Value (NAV) by more than a quarter since the start of 2019 but three fund types are missing in the actionequity fund, mixed fund and ethical fund. The Net Asset Value of total mutual funds in Nigeria was N817.25 billion as at September 26, latest data from the Securities and Exchange Commission (SEC) shows. That is 31.5 percent more than it opened for the year. While bond funds and fixed income funds have been stellar with the growth of NAV up to 72.5

Equity investors should brace up for a rough ride in Q4

percent and 70.7 percent respectively, ethical fund has performed worst with a decline of 14.2 percent in NAV. NAV of equity-based funds have declined by 12.1 percent and mixed funds have dipped 3.9 percent while money market fund is up 31.4 percent and real estate funds have

grown by 4.8 percent. To calculate a Collective Investment scheme Net Asset Value or NAV, the value of the total assets of the fund is subtracted by its liabilities, this amount is then divided by the total number of shares in the fund to give the unit price. The impressive growth that was

Trump moves to placate swing state farmers over biofuels Gregory Meyer, New York

he Trump administration has changed course on US biofuels policy to placate angry farmers ahead of the 2020 election. Under the new plan, large oil refiners and fuel suppliers will be required to use more ethanol and biodiesel, to make up for exemptions to a federal mandate that the administration gives out to smaller

refiners. Ethanol made from corn and biodiesel from soyabeans are massive sources of demand for US agriculture, and the federal mandate is an important driver of sales. The move is a win for corn growers in their long-running feud with the oil industry over the Renewable Fuel Standard, as the mandate is known. The nation’s two largest oil lobby groups condemned the administration for distorting fuel markets and pledged to challenge www.businessday.ng

the policy as it circulates for public comment. The Trump administration blew a hole in the mandate with dozens of exemptions for smaller oil refineries, biofuel and farm advocates claimed. The policy put President Donald Trump on the back foot in Midwestern states that overwhelmingly backed his 2016 campaign. On Friday, Mr Trump’s Environmental Protection Agency announced a new plan to allow

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Monday 07 October 2019

BUSINESS DAY

Monday 07 October 2019

BUSINESS DAY

news Telecom consumers to bear the brunt of 9% communication service tax …As ATCON wades in to stop likelihood of high data service cost JUMOKE AKIYODE-LAWANSON

L-R: Jumoke Oduwole, special adviser to the president on Ease of Doing Business; Doyin Salami, vice chairman, Financial Centre for sustainability, Lagos; Babajide Sanwo-Olu, governor of Lagos State; Mary Uduk, acting director-general, Securities and Exchange Commission; Bola Onadele. Koko, chairman, Financial Centre for Sustainability, Lagos; Solape Hammond, special adviser to Lagos State governor on Sustainable Development Goals; Rabiu Olowo Onaolapo, commissioner for budget and planning, Lagos State; at the official launch of the Financial Centre for Sustainability, Lagos.

Nigeria’s border closure hits hard on rice-exporting countries …as product price slips in India, Thailand …rice jumps 86% in Nigeria ENDURANCE OKAFOR

he closure of Nigeria’s border with Republic of Benin, aimed at curbing smuggling activities, especially of rice, has taken a toll on rice-exporting countries as price dipped by a joint 46 percent in one month. Without any formal notice, President Muhammadu Buhari on August 21, 2019 ordered the closure of the Seme border between Nigeria and Benin Republic to check smuggling of rice and wheat. Between that period and September, data gathered by Tridge, a global trade ecosystem in the food and agriculture industry, show that the wholesale price of the broken parboiled rice, the species consumed mostly in Nigeria,

in top exporting countries fell on product glut resulting from a decline in exports. According to the data analysed by BusinessDay, the wholesale price of rice in India dropped from $0.64/kg in August to $0.40/kg as at 30 September of this year. In Thailand, the seventhlargest producer of rice, the price of the same product declined by 9.2 percent in the review period. Demand from African countries has been muted for the last few weeks, even as export prices have corrected, said an exporter based at Kakinada in the southern Indian state of Andhra Pradesh. Data from both Thailand and India, which previously accounted for up to 90 percent of Nigeria’s rice imports, show legal imports to the country have declined but

at the same time, exports of rice to Benin Republic have increased. This, according to industry players, points to the diversion of consignments originally meant for Nigeria, only for them to find their way back to the country through smuggling. “I am sure Benin has not gone back to Thailand or India to import rice since the border to their market has been closed and it is most likely they have not exhausted the last stock of rice they imported,” a Lagosbased consumer goods analyst said on the condition of anonymity. The US with a population size that is 29 times more than Benin Republic imported the same volume of rice as the Francophone African country in 2018, according to

data from Tridge as analysed by BusinessDay. Benin Republic with a population of 11.18 million is ranked by Tridge as the world’s third-largest importer of rice, after Saudi Arabia and Iran, coming before the US with a population of 327.2 million. The West African country which shares a border with Nigeria from the west, the entry point to Lagos, Nigeria’s business hub, accounted for 4.6 percent of the global rice imports in 2018, the same volume as the US. Benin spent $899.49 million on rice importation in the review period, $990,000 more than the $898.50 million spent by US to import the same product in the review year.

•Continues online at www.businessday.ng

Hope rises for exports, FX earnings ...as Nigeria nears repeal of Export Prohibition Act JAMES KWEN & CYNTHIA EGBOBO, Abuja

here is now high optimism that Nigeria would boost its export trade, earn some more foreign exchange, particularly through agriculture, and in fact play big in the African Continental Free Trade Area (AfCFTA) as the National Assembly nears final stages of repealing the0 Export Prohibition Act. The Act had hitherto placed restrictions on export of most of the country’s agricultural produce. The repeal bill, sponsored by Mohammed Mongunu (APC, Borno) and Benjamin Kalu (APC, Abia), has passed second reading and has been referred to the House Committee on Commerce. It seeks

to repeal the Export Prohibition Act and provide for the unhindered exportation of commodities from Nigeria. Leading the debate, Monguno said the Bill seeks to ensure the diversification of the Nigerian economy away from oil, develop many sectors including the agricultural and processing sectors, among others, and ensure the exploration and development of other resources to become exportable goods. The Export Prohibition Act which was enacted in 2004 puts restriction on exporting farm produce, including beans, cassava tuber, maize, rice, yam tuber, all products or derivatives of these crops and all imported food items. “Notwithstanding anything contained in the Cuswww.businessday.ng

toms Excise Tariff, etc. (Consolidation) Act or in any Act or other enactment (including any statutory instrument or order), the goods specified in the Schedule to this Act shall be absolutely prohibited from being exported out of Nigeria,” the 2004 Act notes. Experts who spoke to BusinessDay say removing the legal restrictions will boost agricultural production, increase the size of Nigeria’s export commodities and enhance diversification of the nation’s economy from oil to agriculture which has a lot of untapped potential. Johnson Chukwu, CEO, Cowry Asset Management, said repealing the Act is a step in the right direction as it has been a hindrance to the expansion of agriculture pro-

duction as it does not allow for exportation of produce. Chukwu stressed that the Act contradicts the aim of entering into the African Continental Free Trade Agreement (AfCFTA ) and would limit the nation’s ability to participate in the market. “AfCTA allows for free movement of goods within the Africa continent, makes the Africa market a free market for nations in Africa. The prohibition law is a complete interference which must be corrected,” he said. He further said placing restrictions on product exportation denies the producers the full value for their product and repealing the Act would lead to price increase which may encourage more people to come into the production.

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•Continues online at www.businessday.ng

he 9 percent Communication Service Tax (CST) that was previously suspended by the 8th National Assembly has resurfaced in the 9th NASS and is being considered for passage into law even after major kicks by industry stakeholders. The Communication Service Tax (CST) Bill 2015, if passed into law, will require consumers of voice, data, short message service (SMS), multimedia message services (MMS) and payTV services to pay a 9 percent tax on the fees paid for the use of these services. The tax will be collected in addition to the 5 percent Value Added Tax (VAT) that consumers already pay when they purchase devices and communication services, as well as the 12 percent Customs import duty paid on ICT devices, and the 20 percent tax levied on SIM cards. The 9 percent Communication Service Tax is double taxation on voice, SMS and data services as 5 percent VAT already applies on these services, experts say. Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), said the adoption of CST represents

an additional burden when applied to a subscriber base of 173 million. “If the passage of this bill goes through, it would negatively impact Nigerians and foreigners that use these services. The implementation of this CST bill would take the affordability of data services out of the reach of the citizenry,” Olusola said. The bill was introduced in 2015. In November 2016, ATCON waded in and recommended to government through the then senate president, Bukola Saraki, that the tax base of the country be widened to include more taxpayers. It was noted that only 13 million out of 70 million eligible taxpayers were contributing to the tax revenue of the Federal Government. “Since 2016, Nigeria has undergone a recession and experienced low GDP growth rate coupled with government recurrent expenditure that now exceeds oil revenue. Therefore, we understand that measures to shore up government income in the way of taxes should be explored. However, government needs to also consider a reduction in the cost of governance that will fit within the new government revenue generated through taxes and oil receipts,” ATCON said in

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Lagos crawls, residents groan as Apapa ghost hovers over entire city

…state government continues to watch the weather CHUKA UROKO

agos, Nigeria’s commercial nerve centre, is currently on its knees and crawling for reasons of its collapsed roads infrastructure that has invoked the ghost of Apapa on virtually every part of the city. As a geographical expression, Apapa is just one of the 20 local government areas in Lagos. But beyond that, Apapa is an economic phenomenon. It is Nigeria’s premier port city and home to the two busiest seaports that account for over 70 percent of import and export activities in the country. Apapa economy is estimated at N20 billion a day. Until lately when federal might brought back sanity to the port city, it was hell on earth with its degraded and suffocating environment arising from uncontrolled activities of rampaging trucks and other marine operators. The city was then defined by congestion and gridlock; it was a dreaded city avoided like leprosy by those who could. Driving to Apapa at the time was considered a jour-

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ney of ‘no return’. Motorists spent quality man-hour on all the routes to the port city, making it the hardest and most challenging destination in Lagos. With the pouring rainfall, the entire Lagos has seemingly been rolled into Apapa and the residents, whether driving or commuting, are groaning as they spend hours on end moving from Point A to Point B in the city. “It is a crazy situation and it does not matter where you are coming from or where you are going to; the experience is just frustrating,” Gbenga Olowookere, a Lagos resident who lives in a Lagos suburb but works in Victoria Island, fumed following what he called a “tortuous journey” to work these days. Olowookere explained that before the last few months when the roads became what they are today, he usually left home by 5am for work and got to his office one and a half hours later. But these days with collapsed roads and frequent rainfall, it now takes him three to four

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Monday 07 October 2019

BUSINESS DAY

news Estimated billing is not going away... Continued from page 1

bution companies (DisCos) is careening towards disaster on the back of a 35 percent hike in import levy on electricity meters and poor financial ability of meter asset providers to finance purchase of new meters, BusinessDay findings show. Following the introduction of the Meter Asset Provider (MAP) regulations in May, a plan to have thirdparty investors finance meter purchase and recoup proceeds from customers’ retail payment for power, the Ministry of Finance reviewed upwards the import levy on electricity meters from 10 percent to 45 percent and the Nigerian Customs Service began immediate implementation. The consequence is that the Meter Asset Providers are unable to clear the meters at the ports. This has started to derail the programme as the Nigerian Electricity Regulatory Commission (NERC), the industry regulator, had directed that all DisCos complete the MAP procurement process by March 31, 2019. “The Nigerian Customs does not set import duties, our job is merely to implement government policy and tariffs are implemented following guidelines including duties in other countries,” Joseph Attah, Customs spokesperson, said by phone. Analysts say this points to a mismatch of priorities by various agencies of government. “It doesn’t show we are serious about encouraging meter rollout if we are increasing import duty at the same time,” said Chuks Nwani, an energy lawyer and vice president of PowerHouse International, a Lagosbased consultancy. The Nigerian Customs Service began implementing a revised 10 percent import duty on solar panels soon after the Ministry of Industry, Trade and Investment granted pioneer status to solar energy entrepreneurs and volumes shot up, arguing that solar panels should be taxed the same as generators because they both generate power. BusinessDay also gathered that the Meter Asset Providers are cash-strapped and unable to fulfil orders for meters. The new import levy

provides a convenient excuse to absolve the investors of responsibility. “The way it is going, the MAPs programme may fail if urgent steps are not taken to check the situation,” said a top executive in one of the DisCos. Operators decr y the seeming reticent nature of the regulator whom they say should be canvassing to remove obstacles to the meter rollout scheme. However, NERC, BusinessDay learnt, is blaming DisCos for appointing meter asset providers who lack financial capacity. Usman Arabi, NERC’s spokesman, was yet to provide a response to BusinessDay’s questions at the time of this publication. While the operators and regulators muddy the waters, electricity customers continue to bear the brunt of unfair electricity pricing through estimated billing by DisCos. According to NERC’s first quarter report, of the 8,840,801 registered electricity customers in Nigeria, only 3,793,895 or 42.9 percent have been metered as at the end of the period. Thus, 57 percent or over 5 million electricity customers are still on estimated billing which has contributed to customer apathy towards payment for electricity. Since the setup of the MAPs programme, only about 33,000 new meters have been issued under the scheme, which is only about 4 percent of the over 750,000 applications for new meters. Abuja DisCo alone has issued about 30,000 meters. The MAP Regulations issued by NERC in March 2018 aims to fast-track the rollout of end-use meters through the engagement of third-party investors for the financing, procurement, supply, installation, and maintenance of electricity meters. According to NERC, a review of the customer population data indicates that only Abuja, Benin, and Port Harcourt DisCos had metered more than 50 percent of their registered customers as at the end of March 2019. The disaffection by customers is seen in the fact that metering and billing accounted for about 61 percent or 92,626 of the 151,938 complaints from consumers in the first three months of this year.

Telecom consumers to bear the brunt... Continued from page 46

a recent statement sent to BusinessDay. “It is inconceivable that a CST Bill of 9 percent that was put aside which is a direct copy of Ghana’s CST is now being pushed through the National Assembly without due consultation with all stakeholders and it is especially targeted at the telecoms and ICT sector,” it said.

Adebayo Shittu, former minister of communications, also pushed back on the proposed bill saying that already, over 60 million Nigerians were unable to afford basic broadband connection and this, to a large extent, would be a cog in the wheel of further deepening of broadband penetration levels in the country.

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

L-R: Ugochi Obi, head, X-Academy, Nigerian Stock Exchange (NSE); Olufemi Shobanjo, head, broker dealer regulation, NSE; Boniface Okezie, chairman, Progressive Shareholders Association of Nigeria; Shuaib Audu, vice president, Fund Managers Association of Nigeria; Jude Chiemeka, divisional head, trading business, NSE; Haruna Jalo-Waziri, managing director/CEO, Central Securities Clearing System (CSCS) plc; Dapo Adekoje, president/chairman, Chartered Institute of Stockbrokers (CIS), and Olumide Orojimi, head, corporate communications, NSE, at the “Ring the Bell for Financial Literacy” at the Exchange in Lagos. Pic by Pius Okeosisi

Broke FG taps lender of last resort for biggest bailout... Continued from page 1

deficit this year as well as some carry-over obligations from the last two years. More than anything, the rapid growth in the CBN’s bailout for the Federal Government this year exposes how the latter’s financial challenges have worsened in 2019. As at the end of December, the CBN’s net claims on the Federal Government, which is the difference between the apex bank’s total claims on the FG versus the FG’s deposits with the bank, was N400 billion. Fa s t f o r w a r d e i g h t months and that figure grew more than tenfold to N4.4 trillion, according to CBN data, the most since at least the return to democratic rule in 1999.

For context, N4.4 trillion is equivalent to the entire FG’s 2014 budget and more than half of the 2019 budget. The figure is also 15 percent more than the FG’s total revenue in 2018. The CBN’s spokesperson, Isaac Okarafor, didn’t immediately respond to calls seeking comment. Sometime in July, the CBN, in a scathing response to what it called false media reports, said that it was a net creditor to the FG only on two occasions in the last five years being 2016 and 2018. With the trend observed this year, the CBN is almost nailed on to be net creditor to the FG in 2019, a trend analysts and economists say could be a future drag on economic growth. “It’s a dangerous game we are playing and there are signs the CBN is becoming worried as well,” a former CBN deputy governor told BusinessDay. When the Central Bank is funding the government this much, it raises money supply and risks spurring

inflation. Pumping so much liquidity into the market also has negative implications for the exchange rate and could see the CBN dig even deeper into already thinning external reserves to defend the naira against all odds. It also crowds out the private sector, which in turn starves the economy of new investment and jobs. “That’s why at the last M P C m e e t i ng, t h e C BN called on the government to adopt a big bang policy to boost revenues through privatisation,” the person who did not want to be quoted due to the sensitivity of the matter said. Beyond its economic risks, the excessive funding of the federal government by the CBN contravenes the financial law binding on member countries of t h e E c o n o m i c C o m mu nity of West African States (ECOWAS). The ECOWAS norm for central bank financing of the government’s budget deficit is capped at 5 percent of revenue, which has now been well surpassed in Nigeria. Analysts say while central bank’s financing may be inevitable in an environment with lower tax revenues due to recession and undeveloped financial systems, borrowing from the apex bank should be on a transitory basis. Ideally, where such borrowing is undertaken, the l oa n s s h ou l d b e re pa i d within the same fiscal year, and gradually, the government should wean itself off central bank financing of deficits. Zainab Ahmed, the finance minister, may need to reassert herself and put an end to the fiscal recklessness of the federal government, according to some sources familiar with the matter. Standing up against the president is no easy task, but the minister needs to act fast, if the country is

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to avert a severe financial crisis, sources tell BusinessDay. A new economic advisory council (EAC) set up by President Muhammadu Buhari has as its chairman, D oyin Salami, a for mer member of the Monetary Policy Committee (MPC) who heavily criticised the CBN’s funding of the government in 2017 while still an MPC member. There are expectations that Salami would have as part of his remit as head of the new EAC, advice the government to finance its budget in a more sustainable manner and ditch the excessive CBN bailouts. Since 2015, when President Muhammadu Buhari first assumed office, the total amount of money borrowed from the CBN (Ways and Means) to meet fiscal obligation has surged by more than 14 fold on the back of consistent higher than planned budget deficits owing to the unrealistic revenue target set by Africa’s biggest oil producer in its budget. In 2014, borrowing by the Federal Government stood at N922 billion. This later surged to N2.5 trillion in 2015, N5.21 trillion in 2016, N5.87 trillion in 2017, and a whopping N8.12 trillion in 2018. “The Federal Government has been r unning a huge fiscal deficit and as such, the central bank is lending to the Federal Government through Ways and Means and this has a serious multiplier effect in the economy,” said Johnson Chukwu, managing director/CEO at Lagos-based financial and investment house, Cowry Asset Management Limited. “What this does is that it would increase inflation, crowd out the private sector and make the CBN to have a weaker balance sheet,” Chukwu said on the phone. Since 2016, the Federal @Businessdayng

government has failed to meet the revenue target stipulated in the budget and the variance keeps getting wider as the country gradually recovers from the global collapse in oil prices that sent the oil-dependent nation to its first recession in a quarter of a century in 2016. In 2018, for example, Nigeria approved a fiscal expenditure of N9.12 trillion and hoped to rake in about N7.2 trillion from both non-oil and oil sources. An anticipated revenue of about N7.2 trillion means the government would have to borrow about N1.9 trillion which in the budget is stipulated as fiscal deficit. However, data from the Budget Office of the Federation showed that the Federal Government could only retain a meagre N3.9 trillion, thereby pushing the deficit higher than projected. The poor revenue turnout highlights the need for the government to urgently seek ways to improve nonoil revenues. Plans to raise VAT by 2020 to 7.5 percent is one way the federal government will be seeking to plug its gaping revenue shortfall that has seen it rely so much on CBN bailouts. But whether that will be enough to significantly boost revenues remain to be seen. On the evidence of previous tax revenue rescue schemes like the Voluntary Assets and Income Declaration Scheme (VAIDS), any optimism that the government can significantly boost its tax take in the short term fades. While targeting to raise N360 billion from the scheme, only N30 billion has since been raised. “Privatisation is the best way out for the government, there are assets idling away that can generate income and help alleviate the increasingly reliance on life support from the CBN,” said Wale Okunrinboye, head of research at Lagos-based Sigma Pensions.

Monday 07 October 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Are you financially independent at 59?

Ignore the Joneses One of the reasons we spend so much money on “things” is to keep up with friends and neighbors. Most people cannot afford a mansion, luxury cars, expensive schools, designer clothes or fine jewelry, but particularly in a materialistic society like ours, many feel pressured to dip into their retirement fund just to keep up appearances. This is one of the surest and quickest ways to financial ruin. Cut back on your expenses There is no magic formula; the key to financial independence is to spend less than you earn. Entering retirement forces us to rethink

every aspect of our financial situation. it will take discipline to consciously spend less. We are often forced to give up some of the luxuries that we once considered essentials. Track your expenses to see where your money is going and cut out things you don’t need. You must be prepared to adjust your lifestyle and spending habits as appropriate. It is particularly challenging where you have been a corporate executive for many years with perks that you took for granted. To reduce costs, consider downsizing and moving to a smaller home in a less expensive area or city. Generate passive income Give some focus to acquiring assets that can appreciate and generate passive income. Interest from your bank deposits is a reliable, predictable form of income. Property is one of the most dependable assets when carefully acquired with professional guidance. It is a great source of passive rental income when chosen right. The stock market has a good long-term track record, and many successful investors have built significant wealth this way, earning regular income from dividends or selling stocks that have appreciated in value. Every investment opportunity comes with risk so do seek professional advice. Can you generate addi-

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Too many people have gone through life without a firm plan and then find that there are more years of life than there is money to fund it

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igeria celebrated 59 years of independence last week. We know that in this period, given the enormous human and material resources we have been endowed with, we have not met expectations with staggering debt, massive unemployment and extreme poverty for the vast majority of citizens. Fortunately, we still have a huge opportunity to earn and to manage our resources properly to get out of this situation. 59 is a relatively short time in the life of a nation. Just as you assess your country, take a look at yourself. How have you fared? What does 59 mean to you? Are you approaching 60 in overwhelming debt and with little in the way of savings and investments? If there is any comfort in numbers, this problem is far more common than we think. Too many people have gone through life without a firm plan and then find that there are more years of life than there is money to fund it. The good news is, that you can start making changes today that will help you along the journey to independence; you do need to make some drastic changes though. Financial independence typically means having enough income to pay for your living expenses for the rest of your life without having to work full time. Here are some habits that can make financial independence a part of your future:

maintain the lifestyle you have grown accustomed to. Whatever you do, don’t bury your head in the sand. You cannot wish away your debt; take control of it. The first step toward financial independence is to get rid of or at least reduce your high interest debt and free up your money to start to work for you, instead of your lenders. One of the main advantages of retirement is that it gives us the freedom to follow our dreams. You have worked for so many years with not enough time to do the things you love. Now you are relatively free from intense family and career commitments; you can can travel, focus on yourself and enjoy new experiences, but not if you are broke.

tional income? Look for ways to generate additional income. What do you love to that you are very good at? Can you monetize it? Explore opportunities that can earn you additional income without losing focus on your primary objectives. If you have been in business for a number of years, consulting is a good way to earn from your experience. Companies need support in many areas; from financial management, business strategy, HR, sales and much more. If you left your former employment well, you may be able to offer your services on a project basis or for a few hours a month. Retirement does not mean staying away and out of things; network, stay in touch with friends and family and remain in circulation. Remember you have so

much knowledge garnered over decades. Consider writing a book, getting into the corporate speaking circuit to impart knowledge where your expertise is needed. These opportunities keep you mentally active, relevant and earn you some money. Can you generate income from doing what you already love to do in your spare time? Are you a gardener? Are you a talented interior designer? Are you a great cook? Do you love to bake? Do you have special subject skills that you can teach? There are so many opportunities to keep you earning from what you already know. Just start. Start by offering your services, at cost or even free in the first instance to friends and neighbours. If you are good, the word will spread and you could end up with paid work. Keep working If you find that the numbers just don’t add up, and you are physically and mentally able to keep working, then do so. A few more years earning in full time employment can make all the difference; it will give you time to accumulate and invest additional funds for retirement. If you aren’t able to work full time, a part-time job can help to stretch your long-term finances. Many people are still fully employed in some business or other well into their seventies and loving it. The aim should be to work because you want to, and not because you have to.

Be careful of consumer debt Debt is the bane of financial independence. While you are working, debt is a nuisance, but you can manage because the regular income is coming in. When you retire, everything changes. Living solely on a pension will be extremely challenging; you will need other sources of income to be able to

Don’t neglect your health Healthcare is a very expensive part of life, and even more so as we age. Protect www.businessday.ng

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your retirement years by taking care of your physical and mental health. Focus on preventive care measures including regular exercise, rest and a healthy diet. Don’t neglect your insurance; ideally this should have been in place for decades but there are plans available even if you are just starting. Seek professional advice A financial advisor should get you farther; they will review your specific situation, considering your risk tolerance, financial status, your goals and your family situation, and help you develop a financial plan to include short-term and longterm investments. But it is necessary for you to understand the basic financial principles, as you must ultimately take responsibility for your financial future. Knowledge is power You need knowledge to make smart decisions for a financially secure retirement. It is critical to have a plan in place in order to ensure you are prepared for that time when you can no longer work or no longer wish to work. You may not be there now, but you can take deliberate steps to make a real difference in your future financial prospects, but it will need discipline, focus, commitment and time. Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 07 October 2019

BUSINESS DAY

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50 BUSINESS DAY

Monday 07 October 2019

news

What we’re doing to aid investments in Lagos - Sanwo-Olu JOSHUA BASSEY

overnor of Lagos State Babajide Sanwo-Olu says his government is taking critical measures to encourage new investments and existing businesses in the state. Part of the measures, according to Sanwo-Olu, include fast-tracking of business registration and contract as well as creation of a competitive and profitable environment. “We are also improving on titles around assets we give out, such as land. We are also making resources available to strengthen the judiciary and legislature in order to support our drive at promoting transparency in business,” he said. Sanwo-Olu spoke at the Turkey-Nigeria Business Roundtable held at Eko Hotels and Suites in Victoria Island, saying his administration was open and willing to partner investors in any sector of interest. He said he was also committed to leveraging Public Private Partnership (PPP) to scale up investments in critical

sectors of the state economy. The objective, he said, is to create profitable business environment for private investments in the state. “I am using this opportunity to assure prospective investors that there will be continuous improvements in the business environment to encourage constant flow of capital and returns on investments. One of the moves is continuous review of our PPP policy. “This decision will give investors the confidence on our readiness and allow them to see opportunities to apply their capital. We have the free trade zone, which is about the biggest commercial avenue in the country; it hosts the Dangote Refinery, which will be about the biggest refinery in Africa,” Sanwo-Olu told the businessmen. He said beyond the two main federally owned seaports in Lagos, the state government was working on additional ports in Lekki and Badagry to fast-track movement of goods to the international market. The governor further said Lagos had maintained a booming market, given its

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population size. This, he said, should form the basis of investors’ decision in applying their capital towards investments in all sectors of the economy. “In making effort to ease establishment of businesses, we discovered time is a key factor that can encourage businessmen to invest their capital in the state. We realised we needed a formidable legislation to address administrative bottleneck, thereby reducing the time of business registration and contract. “The faster the time a title is issued on an asset, the quicker the returns on the investment. We are also making resources available to strengthen the judiciary and legislature in order to support our drive at promoting transparency in business,” he said. Head of the Turkey-Nigeria Business Council’s delegation, Haken Ozel, said the meeting was aimed at expanding business opportunities and deepening the relationship between Turkey and Lagos. Parts of the areas of partnership with Lagos, Ozel said, included food security and agriculture, energy, tourism, rail and water transportation.

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Monday 07 October 2019

BUSINESS DAY

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Monday 07 October 2019

BUSINESS DAY

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Monday 07 October 2019

BUSINESS DAY

news Dangote’s multi-billion naira greenhouse farm goes full operations in Kano … as Nigeria eyes tomato self-sufficiency in 2 years Adeola Ajakaiye, Kano

he multi-billion naira hightech greenhouse farm established by Dangote Farms Limited geared towards boosting the cultivation of highquality tomatoes in Nigeria has commenced full production in Kano. The farm, fully automated, is the first of its kind in West Africa, and is expected to transform the economy of the local tomato farmers, as the technology is expected to up their harvest from the current 10 tons per acre to as much as 40 tons. Abdulkarim Kaita, managing director, Dangote Tomatoes Company Processing Limited, confirmed this last Thursday, at the visit of senior officials of the Kano office of Central Bank of Nigeria to the farm. Speaking with BusinessDay on the sidelines of the visit, Kaita disclosed that his company’s new investment in the farm was motivated by the quest to help Nigeria stop the over $350 million expended on the importation of fresh and processed tomatoes yearly. He said his company had so far injected over N3 billion in the development of the farm, which in the next three weeks, was expected to deliver high quality tomato seedlings to tomato farmers across 12 states of the Federation where commodity was heavily cultivated. “The management of the Dangote Farms, which is a sub-

sidiary of Dangote Tomatoes Company Processing Limited, is excited to reveal the tremendous effort that we are making to ensure that Nigeria becomes selfsufficient in tomato production. “The planting medium you are looking at is called PAT MOOSE, which has the capacity of producing 350 million seedling per season that can be used to plant an estimate 12,000 hectares of tomato farm. “We are glad to disclose that we are the first to bring this new technology into the country, and this is going to fast track the yield of our tomato farmers tremendously. “The project is being executed under the CBN’s Tomato Anchor-Borrowers Programme. The CBN will be paying for the seedling that we are cultivating, and it will be distributed to farmers. “The PAT MOOSE process you are seeing takes 3 weeks, after which it goes to the next stage, and the whole process of growing the tomato takes just three months,” he explained. Giving further insight into the value addition the greenhouse farm would provide, Kaita noted that the introduction of the technology would put an end to post-harvest losses as well as increase the volume of harvest of the commodity. In the same vein, he said the introduction of the technology would lead to expansion of production of the commodity beyond the over 2.5 million tons current consumption demand.

Nigerian firm to partner government to reduce 17m housing deficit Innocent Odoh & Harrison Edeh, Abuja

Nigerian housing company, BSTAN Group, has expressed its readiness to collaborate with government at all levels to provide decent and affordable houses for Nigerians, thereby reducing the estimated housing deficit of 17 million. President/group managing director of BSTAN Group, Becky Damilola-Oke, gave this indication during opening of a three-day National HouseFair 3.0 on the 3rd Annual summit on Housing Economy and Government Policies with the theme “New Economy: Amplifying the Impacts and possibilities of Real Estate Utilising Technology,” in Abuja. According to Damilola-Oke, the HouseFair is a summit where both the government agencies, developers and other stakeholders in the housing system come together to reduce the deficit in Nigeria. “BSTAN has been doing so much for Nigeria. We have done over 20,000 housing units and we are doing 22,000 this year, so there is so much we are putting in place. But we cannot do that alone without the partnership of government and that is why this kind of summit is put together so that we can collaborate with the government. Let them know what we are doing and what they need to do so that we reduce the

deficit drastically. This and much more is what BSTAN is putting together,” she said. She called on the Federal Government to sort out the lingering issue of 30,000 minimum wage and take other measures that would help provide decent homes. She also tasked the Federal Government on renewed urbanisation system thereby preventing flooding in the country, adding that the displacement of people caused by flood overtime could be prevented if the government took the impact of urbanisation seriously. She said the government needed to sort urbanisation out through Public Private Partnership (PPP) for new economy and good vision. One of the ambassadors of BSTAN and also aNollywood actor, Femi Branch, told reporters that the housing issue was very important in any nation and in any economy. He commended BSTAN Group for providing affordable houses for the masses because they know that the government cannot do it alone. He said as an ambassador, they were promoting BSTAN housing scheme through their fan base across the globe to ensure people are aware. “It is refreshing to find that a company like BSTAN is taking up the gauntlet of proffering solution for affordable houses for the masses in the county.

L-R: Akinola Ogunsakin, associate/facilitator; Ivie Ehanmo, partner/facilitator; DianaAbasi Okop, associate/facilitator, and Samson Ozah, associate/facilitator, all of George Etomi and Partners (GEP), at a day Power MasterClass on the Fundamentals of Nigerian Electricity Supply Industry (NESI), hosted by George Etomi and Partners in Lagos at the weekend. Pic by David Apara

Rubella virus, gaps persist in Africa, 3 in 10 children still unprotected ANTHONIA OBOKOH

he greatest gaps on rubella virus persist in Africa, where roughly 6 in 10 countries are yet to make the vaccine routinely available to infants, leaving 3 in 10 children globally without access, says World Health Organisation (WHO). Rubella, also known as German measles, is a mild infection, causing little more than a mild fever and a rash. However, cases are often under-reported, especially in many developing countries, owing to inadequate attention and weak funding of elimination strategies, despite being an epidemic-prone disease. “Even in countries that have the vaccine in their schedules, significant gaps in access and uptake can persist – potentially

leaving large numbers of people still vulnerable to infections with the rubella virus,” the agency states. Rubella brings immense health risks if a woman contracts it when she is pregnant, 90 percent of women who get it early in pregnancy will pass it on to their unborn babies. Rubella infection early in pregnancy can lead to miscarriage, stillbirth or congenital rubella syndrome (CRS) in the baby – a condition that includes severe birth defects and lifelong disability, like vision and hearing impairments and heart defects. Deafness occurs in about two-thirds of all those born with CRS. According to a study by Pan African Medical Journal 2016, the results of few surveys done in Nigeria among (unimmunised) pregnant and women of child-bearing age

to determine the prevalence of rubella showed that between 53 percent and 77 percent of the women had rubella, based on the presence of rubella I Immunoglobulin G antibodies. The reported further states that prevalence will likely continue to increase as a result of non-introduction of childhood vaccination against the disease and little or no attention being paid towards improving surveillance for Congenital Rubella Syndrome (CRS) and rubella infections. “Sadly, the most populous country in Africa - Nigeria, with potentially high case burden of rubella has dearth of data on the prevalence or incidence of rubella infection and is yet to introduce rubella into routine vaccination schedule for underone or even under-five population,” the report states. Globally, it is estimated that

around 100,000 children are born with CRS every year. In order to eliminate rubella, rubella vaccine must be included in national immunisation schedules. Often, this vaccine is given in combination with measles and sometimes mumps vaccines, meaning it can be easily and affordably introduced into existing programmes. “There is no room for complacency. Even in countries that have eliminated the disease, the job is not yet done. The only way to ensure protection against rubella is to make sure that all children are vaccinated against it, alongside surveillance systems that are strong enough to quickly detect cases and respond rapidly to stop the spread - especially to pregnant women,” says Shalini Desai, an expert in rubella at WHO and author of the report.

NDDC eyes over 38,000 jobs in $129m agric project with IFAD Ignatius Chukwu

he $129.17 million Livelihood Improvement Family Enterprises Programme in the Niger Delta (LIFE-ND) being driven by the Niger Delta Development Commission (NDDC) in partnership with the International Fund for Agricultural Development (IFAD) is targeted at creating 38,250 jobs in the agricultural sector. Speaking at a day stakeholders’ meeting of the LIFEND project at the Hotel Presidential, Port Harcourt, last Thursday, the NDDC acting managing director, Akwagaga Lelegima Enyia, stated that the goal was to transform the rural economy of the Niger Delta region and improve the livelihood of the citizens of the region.

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Enyia, who was represented by the NDDC director, special duties, Nosa Agbongiasede, said LIFE-ND was planned with a financing period of six years, adding that it had both a first phase of six years, with parallel finance from NDDC to the tune of $30 million and an additional six years to be financed in the future by other partners and additional IFAD loan. According to the acting managing director, the total project cost to be incurred during the 12-year implementation period, including price and physical contingencies, duties and taxes, was estimated at $129.17 million. She stated: “The project directly supports the Federal Government’s agricultural policy and the strategic framework for youth employment

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and job creation. The strategic framework addresses the large and growing number of restless unemployed youths, especially in the rural areas. It seeks inclusion of young people in profitable agribusiness.” Enyia stated that LIFE-ND would be implemented in the nine Niger Delta states and was designed to commence with 10 local government areas and 10 communities per local government. The NDDC boss noted that IFAD had a global mandate of eradicating poverty through agricultural interventions targeted at rural communities, stating, “The FGN/NDDC/ IFAD partnership is a novel one designed to improve the living standards of the rural populace. This in turn is expected to reduce rural-urban migration and criminal activities.” @Businessdayng

Enyia reiterated the commitment of the NDDC to continuously partner development organisations like the IFAD in bringing the best to the people of the region. In his own speech, the NDDC director, Agriculture and Fisheries, George Ero, said the focus on agriculture would help to diversify the resource base of the country and reduce the dependence on oil and gas in the Niger Delta. He observed that the NDDC had always recognised agriculture as the way forward for Nigeria, adding that it would continue to support IFAD to integrate rural dwellers into agricultural entrepreneurship. Ero said as co-financier, the NDDC would facilitate the operations of the LIFE-ND programmes in the Niger Delta and see to its sustainability.

54 BUSINESS DAY

Monday 07 October 2019

news

Minister woos Polish investors to Nigeria HARRISON EDEH, Abuja

L-R: Reginald Okeya, director MTN Foundation (MTN Nigeria); Aisha Sadauki, director MTN Foundation; Denis Okoro, director MTN Foundation, and Okey Odunna, director, National Lottery Regulatory Commission, during the regional nominators’ appreciation event of ‘What Can We Do Together (WCWDT)’ Initiative Phase 3, a community “give-back” by the MTN Foundation, in Abuja. Pic by TUNDE ADENIYI.

Julius Berger deadline on Kara-Berger road construction doubtful MIKE OCHONMA & IHEANYI NWACHUKWU

…as businesses, commuters count losses

here are very strong indications that the October 31, 2019 date set for the completion of the 1.4km road expansion project between the Kara cattle market junction and the Berger bus stop along the Lagos-Ibadan Expressway may not be achieved, BusinessDay checks have shown. Rehabilitation work which initially affects 600 metres of the corridor caused the temporary closure of the inward Lagos traffic sinceMonday,September2,2019. One month after the commencement of rehabilitation work along the short stretch of theLagos-IbadanExpressway,the construction company handling the project, Messrs Julius Berger, is yet to cover up to 50 percent of thework,accordingtoourreporter who plies that road on daily basis. The slow pace of work on the project has resulted in long delays for the regular commuters enter-

ing and exiting Lagos, the commercial heart-beat along the very strategic arterial corridor. Every day, motorists are subjected to gruelling hardships due to the snail pace of work by the contractors. Motorists end up spending between two and six hours on a journey that would normally take just 15 minutes and in severe circumstances create vibrant market for hoodlums and other criminal elements with little or no security presence. Last Wednesday, one Beatrice Nwosu, a bank worker who described the Lagos-Ibadan Expressway as Nigeria’s busiest stretch of road, lamented that the partial closure for one out of the projected two months has resultedinalotofpainsforthousandsof motorists and commuters while businesses have lost productive economic hours. For many business owners, motorists and residents along

the Berger-Sagamu corridor of the Lagos-Ibadan Expressway, anytime Julius Berger announces plans to work on a section of the corridor,nightmaresandpalpable fears of horrendous days of traffic come to their minds. “Driving through this place on daily basis is a nightmare not only because of the hours spent, but the avoidable risks that commuters are exposed to all the time. Commuters are robbed here in the early hours of the day without any form of security presence,” said Dayo Malik, a driver of a commercial bus who plies Lagos to Ibadan. A road user doubted the possibility of the contractor completing the work within the stated timeframe. “This current Julius Berger now works like civil servants. Their workers are hardly seen at theconstructionsiteduringpublic holidays and weekends,” said the

road user who simply identified himself as a public servant. Another driver told BusinessDay that on Monday, September 30, the traffic stretched from the construction portion at Ogun River to as far as Mountain of Fire (Prayer City). “It is over 10km of horrific traffic faced by commuters on this road. Most of them are students and employees of companies whohavenooptionthantospend over five hours before getting to their destinations. It is becoming unbearable.Somehavenooption than to enter commercial motorbikes on the expressways at the risk of their lives,” the driver said. Going by the original timeframe, the work is expected to be completed by October 31 and traffic re-opened. But barely 23 days to the set date, Julius Berger is yet to complete the filling of the Lagos-boundlane,letalonelaying asphalt on it.

Edo orders setting-up of Clearing House to regulate building construction

More children released, cleared of ties with armed groups in Northeast

Cynthia Egboboh, Abuja

do State governor, Godwin Obaseki, has ordered the immediate setting up of a committee to establish a Clearing House that will regulate building construction in the state. The governor gave the order during a courtesy visit by members of the Edo State chapter of the Association of Professional Bodies in the Construction Industry, at Government House, Benin City. According to Obaseki, there is a need to have control of the rate and pattern of construction going on in the state before it gets out of hand, as “development cannot occur in an area where there is lawlessness. The city is expanding into huge slumps and we cannot allow this to happen. This committee needs to be set up immediately and the terms of reference spelt out.”

He said the committee would also be part of the Urban Planning process for some major city projects in the state, adding that the association should be prepared to work w ith the state government in executing the plans. Earlier, chairman of the association, Sonnie Ohenhen, said the introduction of a Clearing House comes w ith multiple benefits to the state, noting that the House would boost the Internally Generated Revenue (IGR) in the state, create jobs and enhance the beauty and organisation of the physical environment. The Clearing House, he added, would comprise representatives of professionals in the building industr y including architects, town planners, builders, surveyor, among others. www.businessday.ng

wenty-three boys and two girls were released from Nigerian Army administrative custody after being cleared of suspected ties with armed groups. Pernille Ironside, UNICEF Nigeria acting representative, in a statement signed by Geoffrey Njoku, UNICEF communication specialist, says the release brings the total number of children released this year to 44. “These are children taken away from their families and communities, deprived of their childhood, education, healthcare, and of the chance to grow up in a safe and enabling environment. UNICEF will continue working to ensure that all conflict affected children are reunited with their families, have hope of fulfilling their dreams and their human rights. “Since 2016, a total of 2,499 people including 1,627 children have been cleared of association with non-state armed groups. UNICEF and partners continue to provide age and gender ap-

propriate community-based reintegration support services to all affected children and other vulnerable children in communities that are at risk of recruitment by armed groups,” she notes. Ironside further states that the children have been handed over to the Borno State Ministry of Women Affairs and Social Development and will be kept at a UNICEF supported Transit Centre while efforts to reunite them with their families and reintegrate them back to their communities are underway, adding that they will access medical and psychosocial support, education, vocational training and informal apprenticeships, and opportunities to improve their livelihoods. “We have made progress, but we would like to see all children suspected of involvement with armed groups, transferred out of military custody to the care of the relevant local authorities as quickly as possible to facilitate their return to their families and communities, spending minimal, if any, time in detention.

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inister of Industry, Trade and Investment, Richard Adeniyi Adebayo, has wooed investors from Poland to consider Nigeria for business opportunities. The Minister stated this on Friday in Abuja when he received Jonna Tarnawska, the Ambassador of Republic of Poland to Nigeria, in his office. Adebayo said the Federal Government was committed to building on the existing relationship between Nigeria and Poland in terms of trade, commerce and industrialization. He said that government had put in place measures to ensure that all foreigners, including those from Poland engage with credible local investors. He listed one of such to include the Executive Order 001, Ease of Doing Business, aimed at removing all incumbrances of business regulation. “As a ministry, we are more than willing to assist Polish investors in anyway possible with regards to guaranteeing the credibility of Nigeria businesses. “ We know our people and we know the credible ones, so we ready to give assistance in that regard. If there are areas where your firms need introduction to credible people here, we will assist. “We will give you the investment brochure of Nigeria through the Nigeria Investment Promotion Council, to

help further your knowledge of our local business environment. “ Nigeria is also going to initiate economic and technical cooperation with Poland so that in the process, we will have a trade mission and proper economic activities to be carried out between the two countries. *I want to specifically allay your fears about Polish businesses coming to Nigeria, this ministry is playing a leading role in ease of doing business and it is backed by the Executive Order, tagged “Executive Order 001” . “It means that no incumbrance when it comes to the registration of your businesses. Even at the point of entering into the country, you will have automatic visa on arrival. “ In fact, the agencies under this ministry were given awards for easing businesses for both foreign and local investors. We have the Corporate Affairs Commission, CAC. We have the Oil and Gas Free Zone Authority, OGFZA, for the Oil and Gas sector, we have an array of them like that. “I’m saying this to allay your fears about the type of relationship that could exist between your country’s business and Nigeria. “ I can assure you that it is a very friendly environment. From the export angle, there are lots of things we can synergize on, there are lots of items branded and certified meeting all the necessary international standards through the Standard Organization of Nigeria, SON.

AfDB disbursed $5.93m to boost agriculture in Africa Cynthia Egboboh, Abuja

he Africa Development Bank (AfDB) has announced its disbursement of $5.93 million grant to boost productivity in the agricultural sector in Africa. Jonas Chianu, coordinator, Agriculture Fast track Fund, AfDB, speaking at a knowledge sharing network mission in Abuja, said there was an urgent need to close the yield gap and build the robust agriculture sector to sustainably feed the growing population in Africa. The AfDB regional member countries that are eligible for the AFT grant awards are Benin Republic, Burkina Faso, Cote d’Ivoire, Ethiopia, Ghana, Malawi, Mozambique, Nigeria, Senegal and Tanzania. According to Chianu, the bank through its Agriculture Fast track Fund has supported 63 projects in 10 countries of Africa, as the fund seeks to support agriculture small and medium enterprise by off-setting the project cost preparation activities and advance pipeline of bankable projects. “Of the total $15.88 million approved for the projects, $5.93 million has so far been disbursed,” Chianu said, saying, “Ending hunger and malnutrition is a moral impera@Businessdayng

tive of our generation and the AFT is a critical component of the feed Africa strategy.” Ebrimal Faal, country director, AfDB, in his remark, said the initiative, being funded by the USAID, SIDA of the Sweden government and DANIDA of the Denmark government speaks to the commitment of the United Nations to reduce poverty in the continent to below 3 percent by 2030, as the number of hungry people soars over 820 million people while over 200 Africans are malnourished. He said, “Over 60 percent of the world’s arable land is in Africa; over 60 percent of population is in agriculture, but due to poor agricultural system there has been a constant increase of import despite large resources.” Abdulahi Baba, representing the country director, stressed that it was disheartening to know that projections had shown that the total value of food imports would rise to $110 billion by 2050, adding that it was of serious concern to the bank. “AfDB in its effort to reduce this statistics launched the feed Africa program among the high-fives of the bank which include light up and power Africa, feed Africa, integrate Africa, industrialise Africa and improve the quality of life of the Africa people.

Monday 07 October 2019

BUSINESS DAY

news NAMA boosts upper airways communication in North East corridor IFEOMA OKEKE

n line with its resolve to totally eliminate blind spots in the nation’s airspace, the Nigerian Airspace Management Agency (NAMA) has completed the installation of a VSAT station at the Jos airport in Plateau State. With the installation completed a week ago, the agency has successfully integrated the VHF radio into the network in that sector. Speaking on this development, Fola Akinkuotu, managing director of NAMA, said this new installation had greatly improved the upper airways radio communication in the North East sector to the delight of air traffic controllers and pilots alike. Akinkuotu expressed optimism that the challenge of radio blind spots in some parts of the nation’s upper airspace would soon be history as the ongoing massive deployment of VSAT network and VHF radio

systems embarked upon by the agency was yielding positive results. He noted that the Jos Obudu corridor, which had experienced radio blind spots over time, had to be tackled headlong because of the intense traffic on that axis, even as he commended NAMA engineers for addressing the problem with the installation of the new VSAT terminal. Akinkuotu said under the ongoing AIS Automation project, the installation of VSAT stations had been completed in Lagos, Abuja, Port Harcourt, NAMA headquarters, and Jos, while that of Kano VSAT master station would commence by next week. He also stressed that the installation of the VSAT stations would be done in 26 airports while the VHF radios would be installed in 14 strategic remote sites to finally eliminate radio blind spots in the upper airways segment of the entire Nigerian airspace.

Buhari approves reconstruction of National Theatre for creative park by CBN, Bankers’ Committee Hope Moses-Ashike

resident Muhammadu Buhari has given his approval for the reconstruction of the National Theatre, Iganmu, Lagos, into a world-class convention centre, for the development of creative sector in diverse areas including entertainment, movie, music, fashion, and ICT. Under the new arrangement, the national asset built in 1976 for the purpose of hosting the Festival of Arts and Culture (FESTAC) will be under the control of the Bankers’ Committee and the Central Bank of Nigeria. Handing over the edifice on behalf of the President on Saturday, Lagos State Governor Babajide Sanwo Olu said in line with the plan, the creative village would in future become the destination for tourism, entertainment and commerce, thereby creating more jobs and wealth for Nigerians. After an inspection tour of the facility, Governor Sanwo Olu, who expressed confidence

with the level of infrastructure at the facility, charged the Bankers’ Committee and the development partners to try and redeem the land surrounding the centre. Governor Sanwo Olu said the President had been gracious to give the go ahead and turnaround of the national theatre, considered to be a dead asset, into an income-earning stateof-the-art, developed fashion entertainment industry. “We have worked around this entire land area inhabiting the national edifice called the National Arts Theatre. What we have come to ascertain for ourselves is to also appreciate the extent of an asset that has been conceived as a non-income earning asset, but I there say that Mr. President has been gracious to give the go ahead and turn this dead asset into an income-earning state of the art developed fashion entertainment industry. “What we have gone around to ascertain for ourselves is the piece of land measuring in excess of about 30 hectares which

currently as you can see is all swamp and is all grown within the heart of Lagos. “What we have come to see is for us to be able to give the go-ahead, working with all of the other stakeholders and our development partners which is led by no other person of the governor of the central bank himself, who are putting investments together to be able to do a first of its type entertainment, fashion, music, technology, movies and an all-round creative hub,” the governor said. “You can see that infrastructure is available and close by is the Iganmu rail station that is also currently ongoing and you can see the edifice. “We have gone round and it is to see how we can make this place a tourism destination for the future, an entertainment destination for the future and a technology destination for the future where the teaming youth of Nigeria can come and exhibit all their God-given skills and talent and even be able to bring up new ones and turn it into a hub where all of us as Nigerians can

be truly proud of. “So, I’m excited and happy the kind of field we have seen here today just so we can start the regeneration of this whole area and that is why we are here. And if we have the chance to also touch the national art theatre whilst doing that, so be it but the first point of call is to develop the land surrounding this whole place.’’ Receiving the edifice on behalf of the Bankers’ Committee and development partners, the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, marvelled at the size of the national theatre, noting that when fully developed, it would be 10 times the size of the Convention Centre in Peru. Emefile, who commended President Buhari for his foresight in transforming the theatre into a revenue-generating hub, stressed that under the CBN Creative Industry Financing Initiative, a hub would be built around the edifice to accommodate talented youths, so that they can develop their God given gifts.

Private vehicles, businesses gain as firm eliminates fuel theft with innovation Daniel Obi

a nag i ng d irector of a Nigerian technology company, Concept Nova, Chukwuma Ochonogor, says the company’s innovative fuel management system has eliminated the challenge of fuel theft suffered by many businesses, especially fleet operators in Nigeria. According to Ochonogor in a statement, the need for the Fuel Control System solution is significant as the cost of diesel is set to rise. “Diesel is one of the top three expenses most organisations incur every year. Globally, over 72% o f d i e s e l pu rc ha s e d i s used to operate mobile a s s e t s w h i l e ov e r 1 3 % o f d i e s e l pu rc ha s e d i s used to operate stationary assets. According to a recent report released by Reuters, the cost of diesel is expected to spike globally by nearly 20%. This pr ice r is e could ne gatively affect GDP growth and unfortunately, many businesses are not prepared.” While speaking during a Product Knowledge Session held in Lagos recently, Ochonogor explains that the solution, Fuel Control System (FC S),

comes in a stationary FCS for tanks and a mobile FCS for trucks. The technology solution “is a unique diesel management solution designed to prevent diesel fraud, theft and leakages that may occur at any point from the purchase to the consumption of diesel,” he said. He said, “FC S s olution provides real-time detailed information about the diesel level, consumption and refuelling activities for FCS protected assets. With this information, business owners and organisations can make better-informed decisions on operational costs, monitor diesel consumption, enjoy an abundant return on investment and put several control measures in place that eliminate the possibility of diesel theft.” In a recent Fleet Management Weekly report by Shell, two out of every five drivers have participated in or witnessed fuelrelated fraud. Concept Nova’s Fuel Control System solution has helped many businesses address this challenge by driving continuous improvement to business operations and create value geared towards achieving a Connected Economy. www.businessday.ng

L-R: Gbenga Onimowo, commercial director, Lafarge Africa plc; Michel Pucheros, CEO, Lafarge Africa plc; Ugbaja Joseph, group head, civil/building, SON, and Idim Nsemo, sectional head, product certification department, SON, at the re-launch of Lafarge Africa’s newly improved Elephant Supaset Cement.

JOSHUA BASSEY

overnor Babajide Sanwo-Olu at the weekend unveiled the Network of Financial Centres for Sustainability (FC4S Network) – a private-driven initiative working with the United Nations Environment Programme (UNEP). The centres provide sustainable finance for public sector development programmes. Sanwo-Olu said the initiative was in response to the growing demand for private capital in the quest to deliver sustainable projects in environment, housing and infrastructure in line with objectives of the UNEP. He restated his government’s readiness to partner

Lagos advocates inclusion as Financial Sustainability Centre unveiled in state corporate and development organisations to address contemporary challenges around waste management and climate change in the state through his administration’s six pillars of development, known as Project T.H.E.M.E.S. He said the establishment of FC4S in Lagos would complement his government’s actions to provide capital and capacity to ease the challenges of waste management in the State. “Lagos has continued to demonstrate its capacity as a city-state that can respond to the needs of its people through

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excellent initiatives, such as this that is being launched today,” he said. He said Lagos as one of Africa’s leading economies, must not be short of solutions to our challenges, saying, “It is in view of this, that our administration rolled out six pillars of development whose implementation rests squarely on private sector participation. “For Lagos to survive and thrive, we must take environmental issues seriously. We are a city that combines exploding population with very limited land mass, which puts our resources – land, water, and so on - in a very precari@Businessdayng

ous shape. To keep productivity high, we must drive our ambitious environmental and health programmes through partnerships that will work for our people.” He said his administration would leverage the services of FC4S to build strong financial base for its environmental programmes, noting that innovation would also generate job opportunities for residents. He reiterated his administration’s readiness to deploy resources and actions towards confronting challenges around waste management and climate change.

Monday 15 April 2019

BUSINESS DAY

Monday 07 October 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 04 October 2019

Top Gainers/Losers as at Friday 04 October 2019 LOSERS

GAINERS Company

Opening

Closing

Change

Company

Opening

Closing

Change

ASI (Points)

N24.65

N26.7

2.05

N16.4

N14.8

-1.6

WAPCO

N16

N16.25

0.25

CCNN

N16.4

N14.8

-1.6

NAHCO

N2.34

N2.47

0.13

NASCON

N13.7

N13.2

-0.5

VOLUME (Numbers)

UBA

N6.05

N6.15

0.1

MTNN

N130.5

N130

-0.5

VALUE (N billion)

N15.15

N15.25

0.1

GUARANTY

N27

N26.5

-0.5

UNILEVER

CONOIL

26,987.45

DEALS (Numbers)

2,688.00 138,879,927.00

MARKET CAP (N Trn)

1.033

Stories by Iheanyi Nwachukwu

L-R: Zeal Akaraiwe, chairman, Interim Governing Council, Association of Corporate Treasurers of Nigeria (ACTN); Patrick Ajunwoko, executive secretary/CEO, ACTN; Kabir Okunlola, partner, Financial Services Industry Audit Group, KPMG and Funso Sobande, member, Interim Governing Council, ACTN during the Association’s breakfast meeting held in Lagos on Friday with the theme “The Central Bank of Nigeria (CBN) 5-Year Policy Thrust: Implications for the Corporates”.

mestic market came on the heels of the heavyweights experiencing sell pressure in the four-day trading week. Amongst other sectoral indices, the worst hit was the Consumer Goods Index (-4.92percent); followed by NSE Banking Index (-3.94percent); while NSE

Insurance Index increased most by 5.71percent, and that of Industrial Goods which gained 0.14percent. The negatives also came despite market watchers earlier expectation that stock investors will consider buying some fundamentally sound stocks especially

FTSE 100 Index 7,155.38GBP +77.74+1.10% S&P 500 Index 2,952.01USD +41.38+1.42% Generic 1st ‘DM’ Future 26,518.00USD +338.00+1.29%

13.137

Stock investors lose over N330bn in one week igerian stock investors booked approximately N335billion loss in the trading week ended October 4, 2019. The value of listed stocks and the NSE All Share Index (ASI) stood remarkably low at N13.137trillion and 26,987.45 points respectively as against N13.472 trillion and 27,675.04 points recorded at the preceding week close. The review week’s trading sessions were dominated by the bears as investors engaged in profit taking action on gains made in the previous week. The stock market’s Year-to-Date (YtD) negative return has increased to -14.14percent. The Nigerian Stock Exchange ASI decreased by 2.48percent in the review week. Month-toDate (MtD), the market has decreased by 2.33percent. The record loss in the do-

Global market indicators

those now trading at lower levels. With most bellwether stocks declining in the review trading week and subsequently trading at their lows, analysts expect discerning investors to begin position taking in fundamentally sound stocks.

Deutsche Boerse AG German Stock Index DAX 12,012.81EUR +87.56+0.73% Nikkei 225 21,410.20JPY +68.46+0.32% Shanghai Stock Exchange Composite Index 2,905.19CNY -26.98-0.92%

NSE, FMAN enhance access to N801.5bn worth of Mutual Funds

n a bid to promote access to diverse investment opportunities while building and strengthening investor confidence in the capital markets, the Nigerian Stock Exchange (NSE) in collaboration with the Fund Managers Association of Nigeria (FMAN) hosted Mutual Funds workshop. The workshop held last week helped participants to recognise the investment opportunities presented by registered mutual funds and also identify the benefits of accessing a bouquet of funds on the NSE Mutual Fund Platform. “Over the next few months, the Nigerian Stock Exchange will be rolling out measures and initiatives as well as leading further engagements aimed at providing an avenue for market stakeholders to engage on the prospects of Mutual Funds in Nigeria, promoting the usage of the Exchange’s Mutual Funds Platform and ultimately stimulating investor interest in Mutual Funds,” said Jude Chiemeka, Divisional Head, Trading Business, NSE. This is aimed at deepening knowledge and understanding of the growing asset class but also drive increased demand. The workshop comes on the back of the launch of the Exchange’s Mutual Funds Trading Platform in February

2019; an initiative birth in collaboration with Central Securities Clearing System Plc (CSCS), Fund Managers Association of Nigeria (FMAN) and Association of Stockbroking Houses of Nigeria (ASHON) to further enhance access to wide range of openended funds in Nigeria. The Nigerian market has witnessed exponential growth in the popularity of Mutual Funds over the past few years, making it the fastest growing asset class. As of year-end 2018, the Mutual Funds Industry had a Net Asset Value (NAV) of N621.6billion from 78 registered funds, and as at the end of August 2019, the figure stood at N801.5billion from 87 registered Funds. This represents a 29percent increase in the Net Asset Value of Mutual Funds over a period of 8 months and is projected to hit the N1trillion mark by the end of the year 2019. “The growing interest in Mutual Funds can be attributed to their being professionally managed investment vehicles which offer diversification benefits to a broad range of investors”, Chiemeka noted. He noted that the Exchange’s Mutual Funds trading platform facilitates electronic transactions in Mutual Funds in a seamless and efficient manner.

CBN’s stance on LDR may spur loan defaults

T L–R: Benedicta Osigbemhe, relationship manager, Investment One Funds Management; Efiok E. Efiok, head, Investment Management Department, Securities and Exchange Commission (SEC); Omotola Imafidon, stockbroker, FBNQuest Securities; Oluwatoyin Alake, head, Secondary Markets, Nigerian Stock Exchange (NSE); Adeyemi Aloyinlapa, head, Direct Sales, FBNQuest Asset Management; Kike Mesubi, representative, Fund Managers Association of Nigeria and Abimbola Babalola, head, Market Surveillance, NSE, during Mutual Funds Workshop at the Exchange recently. www.businessday.ng

he aggressive position of the Central Bank of Nigeria (CBN) for banks to maintain a minimum Loan to Deposit Ratio (LDR) of 65 percent can lead to increase in default rate by banks customers. The loan policy forceful drive is believed to lead banks into doing a “not-too-detailed” type of credit analysis on the loan seekers which could result to increased non-performing loans (NPLs). These among others are the takeaways at the breakfast meeting of the Association of Corporate Treasurers of Nigeria (ACTN) held in Lagos on Friday October 4, 2019. The breakfast meeting themed “The Central Bank of

Nigeria (CBN) 5-Year Policy Thrust: Implications for the Corporates” was supported by FMDQ Securities Exchange. While speaking to Corporate Treasurers at the breakfast meeting, Kabir Okunlola, Partner, Financial Services Industry Audit Group, KPMG noted that CBN 5-year policy thrust (2019-2024) aims to: preserve domestic macroeconomic and financial stability; to foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians; to continue to work with the Deposit Money Banks to improve access to credit for small holders farmers, MSMEs, and indi-

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vidual consumers; to grow the external reserves; to support efforts at diversifying the economy through intervention programmes in the agriculture and manufacturing sectors. The target is to achieve double digit economic growth, single digit inflation rate, and accelerate the rate of employment. The apex bank, on July 3, 2019, directed banks to maintain a minimum Loan Deposit Ratio (LDR) of 60 percent by September 30, 2019. Twelve banks were fined about N499billion for the loan policy breach. The LDR, which is being reviewed quarterly to improve lending to the real sector, was 58.5 percent as at May. It has now been raised to 65 percent for @Businessdayng

the last quarter of the year. Amid these, he believes that “pushing banks to lend will result to highest level of default with significant impact on the sector.” Though Okunlola noted that one of the major aims of the loan policy is to increase lending to businesses – corporates and Micro, Small and Medium Enterprises (MSMEs) – especially in targeted sectors (agriculture and manufacturing), he however advised that a potential threats to this development will be on financial system stability for banks due to risk of deterioration of asset quality, and higher cost of borrowing which may result from increased nonperforming loans (NPLs).

Monday 07 October 2019

BUSINESS DAY

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BUSINESS DAY

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BUSINESS DAY

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BD Money

Monday 07 October 2019

BUSINESS DAY

FIXED INCOME

cover

Personal finance

Liquidity squeeze seen as CBN mops up N606bn maturing TBs this week

With Banks all out to lend, hereâ&#x20AC;&#x2122;s how you should borrow

An simple guide to differentiating Assets from liabilities

The financial market will experience some liquidity squeeze as the Central Bank of Nigeria (CBN) will mop-up the sum of N606 billion maturing Treasury Bills from the financial market with week

Recent moves by the Central Bank of Nigeria to help the economy grow faster than it currently is means that banks have to give a large part of their deposits as loan

A simple measure of wealth is the difference between oneâ&#x20AC;&#x2122;s assets and liabilities. In other words, what you have left after settling all your debt obligations is what your fortune is

Page 3

Page 4

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Personal finance

Top Nigerian states where private school students shine in WAEC Education is the best legacy parents can give their children and the primary legacy a nation can offer her citizens. While the latter remains a daunting task for the Nigerian government as it continued to prioritize fuel subsidy payment over its education sector, making the former work would require extra efforts on the part of the parents.

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Monday 07 October 2019

BUSINESS DAY

BD Weekly Tenders Wrap-up

Market Review The market opened for four trading days this week as the Federal Government of Nigeria declared Tuesday 1st October 2019 a Public Holiday to mark the Nations 59th Independence Anniversary. Meanwhile, a total turnover of 660.654 million shares worth N9.189 billion in 12,032 deals were traded this week by investors

on the floor of the Exchange in contrast to a total of 1.097 billion shares valued at N16.693 billion that exchanged hands last week in 14,717 deals. The Financial Services industry (measured by volume) led the activity chart with 458.190 million shares valued at N5.905 billion traded in 6,720 deals; thus contributing 69.35 per-

cent and 64.27 percent to the total equity turnover volume and value respectively. The Conglomerates industry followed with 55.804 million shares worth N124.513 million in 545 deals. The third place was Construction/Real Estate Industry with a turnover of 54.330 million shares worth N62.585 million in 135 deals. Trading in

the Top Three Equities namely, Guaranty Trust Bank Plc, Access Bank Plc and FBN Holdings Plc. (measured by volume) accounted for 280.714 million shares worth N4.909 billion in 2,985 deals, contributing 42.49 percent and 53.43 percent to the total equity turnover volume and value respectively.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 07 October 2019

BUSINESS DAY

Fixed Income

Liquidity squeeze seen as CBN mops up N606bn maturing TBs this week

… CBN injects $311.5m, CNY15m into forex market HOPE MOSES-ASHIKE

he financial market will experience some liquidity squeeze as the Central Bank of Nigeria (CBN) will mop-up the sum of N606 billion maturing Treasury Bills from the financial market with week. The money market last week recorded an inflow of N472.4 billion emanating from maturing Open Market Operation (OMO) bills, which resulted in the decline of money market rates. Overnight inter-bank rate, which is the rate at which Deposit Money Banks (DMBs) borrow and lend to each other, declined on Friday by 6.2 1percent to close at 3.43 as compared to 9.64 percent. Also, the Open Buy-Back (OBB), the money market instrument used to raise short term capital, declined by 5.86 percent to close at 2.71 percent as against 8.57 percent on the previous day. “We expect the rates to rise in anticipation of OMO auction next week, owing to an inflow of maturing bills worth N606 billion,” analysts at FSDH Merchant Bank Limited said. The CBN sold N11.52 trillion treasury bills through the OMO in the last nine months, to mop up liquidity from the system as a strategy for monetary management. According to the analysts, the treasury bills market closed on a positive note on Friday, and buying interest was witnessed across the yield curve. Average yields across the curve declined by 14 basis points to 13.25 percent from 13.39 percent on the previous day. Yields on the short, medium and long term maturities fell by 8bps, 27bps, and 10bps respectively. On Friday October 4, 2019, made an intervention of $311.5million in the retail Secondary Market Intervention Sales (SMIS) and CNY 15million in the spot and short-tenored forwards segment of the inter-bank foreign market. Isaac Okorafor, director, corporate

communications department at the CBN confirmed the latest injection, disclosing that “the dollar interventions were for customers in the agricultural, airlines, petroleum products and raw materials and machinery sectors, while the yuan component was for payment of renminbi denominated letters of credit for agriculture as well as raw materials”. Okorafor further said that the market continued to enjoy stability, owing to the regular interventions by the Bank, which he said has also guaranteed a stable exchange rate for the Naira. He assured that the Bank’s Management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange. www.businessday.ng

Meanwhile, $1 exchanged for N357 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY1 exchanged at N47. The regulator sold a total of US$8,287.52 million at the foreign exchange market in the first half of 2019, according to the CBN’s half year activity report. This comprised US$2,142.63 million at the Inter-bank spot, US$550.70 million for Invisibles, US$810.00 million for SMEs, US$212.11 million at the I&E window and US$4,572.03 million as Forwards sales. On the other hand, the Bank purchased US$9,368.92 million at the inter-bank segment, hence a net purchase of US$1,081.40 million by the Bank. At the Forwards segment, the sum

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of US$4,979.46 million matured, while US$2,552.01 million was outstanding at end-June 2019. In the corresponding period of 2018, US$9,499.91 million was sold at the Interbank segment, comprising US$1,546.43 million at the Inter-bank spot, US$768.70 million for Invisibles, US$637.00 million for SMEs, US$1,236.69 million at the I & E window and $5,311.09 million as Forwards sales. The Bank purchased US$6,436.47 million at the interbank segment, resulting in a net sale of US$3,063.44 million. The sum of US$5,681.77 million matured at the Forwards segment, while US$1,469.04 million was outstanding at end-June 2018.

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Monday 07 October 2019

BUSINESS DAY

Monday 07 October 2019

BUSINESS DAY

Cover Story

Personal Finance

With Banks all out to lend, here’s how you should borrow

An simple guide to differentiating Assets from liabilities SEGUN ADAMS

SEGUN ADAMS

simple measure of wealth is the difference between one’s assets and liabilities. In other words, what you have left after settling all your debt obligations is what your fortune is. This means growing your assets faster than your liabilities can improve your fortune the same way reducing your liabilities without depleting existing assets can. Although this sounds straightforward and perhaps simple, distinguishing assets from liabilities can be tricky. Is a car an asset or a liability? How would you classify an expensive artwork in your house? How about a mortgage? Here is a basic way to draw a parallel between assets and liabilities.

ecent moves by the Central Bank of Nigeria to help the economy grow faster than it currently is means that banks have to give a large part of their deposits as loan. With up to N6.3 trillion private demand deposit (not including time and savings deposits) in the custody of Commercial Banks as at July, lenders are coming up many products in a bid to align with the apex bank’s policy. Businesses now get offers for different kind of loans that can provide the much-needed capital for growth, while individuals also get email and text notifications for products like a payday loan, education loan and the likes. In short, it has become very easy to take a loan which is not a bad thing in itself unless you do so irresponsibly and end up in a debt trap. Before you opt for the next offer that comes your way, these considerations can help you maximize the opportunities made available by the central bank’s loan policy. Understand what you should borrow for It can be very tempting to unlock your phone, dial the shortcode for a payday loan so you can buy a new phone, give yourself a nice treatment at some fancy restaurant or go on a shopping spree- after all the bank officers are not going to ask how you spent the money. As a rule, you should not borrow for anything that would not help you generate more money or help you save cost. Taking a loan for Education, a new business you are certain would generate cash for repaying the loan at maturity (unless you have another source from which you can repay) and existing ventures can be a good step. While there could be exceptional cases, it is not one involving a loan to fund your birthday party, wedding ceremony or any of such. Have a repayment strategy One of the first things, before you borrow, is outlining a plan to repay. It is very vital to painstakingly model

Cash Cow or Cash Out A cash cow in this instance is not the business unit generating higher-thanmarket returns. It is that particular property (tangible or otherwise) that helps you make money. By the same token, a cash-out (not same as profit-taking) costs you money. This definition was popularized by Robert Kiyosaki, the author of Rich your finances throughout the loan to see what sources of income you would have, liabilities and expenses that would be incurred or paid in the period, as well as to create room for unforeseen circumstances. Do not be unnecessary optimistic in your forecast, in fact, it is better to err on the side of caution; this means transitionary income and expected inflows to your wallet should be treated carefully in your plans. Credit Bureaus got eyes on you Data on the credit history of up to 30 million Nigerians are at the disposal of Credit Bureaus, agencies that help lenders run a background check on potential borrowers. This means plans to liquidate your accounts so that banks cannot collect back the borrowed amount or any delay on your part in repaying interest or principal would taint your credit history and make it costlier-if not impossible- for you to borrow in the future. It might interest you to know that Credit Bureaus in Nigeria do not just rely on financial institutions to get information on you, www.businessday.ng

they also get data from Telcos and other utility companies so that they can tell what kind of risk you pose to lenders through your bill payment history. Double Check offers A loan offered to you at 10 percent per month might sound attract but when you annualize the interest it becomes a scary 120 percent per month. It is vital to also compare rates across lenders and seek for loan packages that fit your budget as well as presents you other benefits. For instance, a big bank in Nigeria offers loans that are insured so that in the events of a job loss, the loan is paid by the insurance firm allowing the borrower a breathing space after which the insurer is repaid. Set a debt limit Investopedia, an American finance and investing website, advice that households should spend no more than 28 percent of their gross income on home-related expenses (including mortgage payments, homeowners

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insurance, property taxes) and a maximum of 36 percent on total debt service (i.e. housing expenses + other debt such as car loans and credit cards). This means regardless of how bad you need a loan-especially for personal usethe amount required for repaying principal and interest must be less than 36 percent of annual income. While there are different limits advised by several experts, reaching out to a financial expert or engaging a Credit Bureau can give you an insight into an appropriate debt load. Alternative financing You should also consider financing alternatives so you get the cheapest option for your business or personal project. There are several alternatives if you do not want a bank loan, like equity (sharing ownership with someone who has capital you need) or asking that friend who wouldn’t request for as much interest as banks.

“

In summary, identifying what brings more money than it takes from you, and vice versa is a simple way to distinguish between assets and liabilities

Dad, Poor Dad, although he did not use either term. According to Kiyosaki, a BMW that loses few thousands every time you drive it would be a liability ( in strictly financial terms, although you may drive non-monetary benefits like pleasure from riding one). In the same vein, the same car used for Uber Services would be an asset (so far it is generating more cash than it

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costs you to maintain). You can use the same parameter to gauge other things like your rent which would be a liability in every sense since it is a one-sided flow of cash. There is a caveat however that a property said to be a liability in the short run can become an asset over time. A mortgage is a classic example; in the immediate period a mortgage, which is a

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home loan with the house as collateral, is a liability in the short term but once repayment is complete, it becomes an asset Another way is to classify assets as whatever saves you money; not everything you own would bring cash (at least immediately) but they can help reduce your or reduces your liability in the immediate period or the future. This is not a popular definition but it is broader in the sense that expenditure on things like education, nutrition and fitness and the likes can be categorized. This perspective according to some financial experts is also necessary because it would help you avoid a short-term view of building wealth and ensures sustainability. In summary, identifying what brings more money than it takes from you, and vice versa is a simple way to distinguish between assets and liabilities. This is a very subjective definition if you want to point out specific items like cars, houses, artworks and the likes, but it is, in fact, a good approach because the same item may serve a different purpose to different people.

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Personal Finance

Top Nigerian states where private school students shine in WAEC OLUWASEGUN OLAKOYENIKAN

ducation is the best legacy parents can give their children and the primary legacy a nation can offer her citizens. While the latter remains a daunting task for the Nigerian government as it continued to prioritize fuel subsidy payment over its education sector, making the former work would require extra efforts on the part of the parents. For instance, the Federal Government of Nigeria spent a total of N648 billion to subsidize fuel in 2018, this amount is over four times more than the combined fund devoted to building new public schools, health facilities and equipping new science laboratories, according to data collated by Bloomberg. For this reason, it is oftentimes not a piece of cake for some families to know what to do with regards to their children’s education, and when they know, doing it rightly becomes a concern in the face of the worrisome revelations on the quality of education in Nigeria, particularly in the nation’s public secondary schools. More so, with growing trends on information and communication technology, learning differences among children, and acquiring 21st-century skills, today’s education is apparently no longer about enrolling at a local public school and hoping to graduate some years after but excelling in external examinations. These ills in Nigerian public secondary schools and the craving for quality education have spurred interests in privately-owned secondary schools in the country. To this effect, we compiled a list of top Nigerian states, where students in private school recorded the best performance in the West African Senior School Certificate Examination (WASSCE), administered by the West African Examinations Council (WAEC), across the country. This could serve as a guide for discerning parents who are concerned about the potential output of investment

on their children’s education. In the last three years (2016 to 2018), Ogun, Lagos, Nassarawa and Rivers continued to feature among top 10 states across the federation with the highest proportion of private secondary school students having five credits and above including English Language and Mathematics, the basic requirement for admission into tertiary institution. The percentage of students in private schools in Ogun state who had five credits and above including English Language and Mathematics in 2016 was 48.4 percent, the highest in the country. This was trailed by Lagos with a record of 44.3 percent and Rivers with 43.6 percent, according to recent data obtained from the National Bureau of Statistics (NBS). Although Ogun state retained its leading position in 2017, it underperformed its 2016’s record as only four out of every www.businessday.ng

ten students who enrolled for WAEC in private schools within the state had five credits and above including English language and Mathematics. Kano followed closely with 33.8 percent, while Abia was the third in the ranking with 32 percent. Ogun state lost its position last year after more than half (52.59 percent) of students who sat for WAEC in Kano state’s private schools excelled, making it the best state where private school students have the highest tendency to succeed in WAEC. Abia and Lagos states followed closely as the second and third positions, Ogun stood as the fourth, while Nassarawa had the fifth-largest proportion. Findings by BusinessDay revealed that the average cost of private secondary school education in Kano state is N50,000 per term. However, the fee is slightly higher in states such as Abia,

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Ogun, and Nassarawa where it costs about N50,000 to N150,000 on the average to fund a child’s education per term in a private college. For Lagos state, the fees vary depending on the location, and the quality of services rendered. An average private secondary school situated on Lagos mainland charges between N150,000 to N300,000 per term as tuition fee, while the fee ranges from N300,000 to N500,000 for schools located on Lagos Island with almost similar facilities and standard of education. Private schools running both Nigeran and foreign (British) curriculum on Lagos Island charge between N500,000 and over N1 million per term on the average. A breakdown of the ranking comprising top 10 Nigerian states from 2016 to 2018 is contained in the embedded table for better understanding.

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BUSINESS DAY

Data

Federal government Eurobond Yields on Eurobonds rose 0.2 percent point week on week from an average of 6.35 percent when the market closed last week to 6.56 percent following sustained selloff in Nigeriaâ&#x20AC;&#x2122;s Sovereign Eurobonds.

Corporate Eurobond Yields on corporate Eurobonds saw dipped of 0.0225 percent points across all tickers week-on-week with average yield rose slightly from 5.42 percent last week to 5.398 percent.

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BUSINESS DAY

Personal Finance How to grow your ideas with little or no funding gaining traction from those groups that you belong to. You could start by innovatively marketing your products either at a low cost or no cost to this group, obtain feedback and get referrals to expand further. This speaks also to the need to maintain a good relationship with people around you as many a time lack of fund isn’t just the major hindrance to idea/business growth but character flaws.

DAVID IBIDAPO

ometimes individuals are quick to give up on ideas with great potentials capable of unveiling great results and innovation, on the back of little or no fund to see through its development stages. While scholars have argued back and forth on which is most should be considered with utmost priority – the idea or the fund – this write stands on the fact that starting/growing your business with little or no funding is very much possible. Day to day conversation with friends and acquaintances, the chorus of “no fund/money” to undertake that business is rampant despite fecund imaginations which is abundant in the minds of Nigerians. Nigerians are very entrepreneurial and the fact that we are faced with many challenges bothering on better living standards and governance is a big opportunity to be creative and impactful. Yes, of course, it can be exasperating being inspired but

lacking the funds to implement such inspiration. In growing your idea with little or no funding, you may need to consider these steps and strategies. Most importantly, you must understand that identifying a need within a society affecting the people is key. People are always willing to pay for things that they perceive will make life easier for them. There lies the first step to growing your business even without fund.

Over the years, it has been recorded of persons who got sponsorship from organisations who perceive their ideas will go a long way to solving the plethora of challenges faced by Nigerians. Gain traction Whosoever you may be, you are either identified with one organisation, group, gathering, church, mosque etc or the other. After identifying a solution to the needs of the people, it is wisdom to start

Week Ahead (Monday, October 07 – October 14, 2019) Week Ahead Week Ahead (Monday, 8th April – Friday, 12th April, 2019)

Leverage on exiting technology The world has gone digital and through technology, it is easier to reach larger audience that those around you when marketing your products or your business. With over 200 million internet users, over 3 million active websites, over 50 million active Nigerians on Instagram to mention but a few, then you can imagine how endless the opportunities are for you to explore. One major advantage to this is the little or no cost technology brings to the table. Just with your mobile phone and at least a 1gig subscription on any of the available networks in Nigeria – which is just about N1,000 to N1,500 – you

are connected to the world. Partnership Who said that a business must be run by just a person? A conceiver of an idea doesn’t necessarily need to be the funder of the business. There are people looking for a promising opportunity to invest their idle funds in. Also, if you have an idea or product you want to offer, you can think through the value chain. Referencing Udoka Ozurumba, “you are good with digital marketing and search engine optimisation; you can collaborate with a website developer to offer better services to clients by adding more value to their online presence.” Sell services first If it is product you want to create, it may first pay you sell services first which is easier to start in order to generate cash flow needed to fund your product. These are just few points but important and basic ways amongst several options you could use develop your idea with little or no cash.

Chart of the week

Main equity gauge plunges 14.14% YTD as CBN fine tells on banking stocks

Commodity The price of oil is expected to trend downwards to $60 per barrel after pressures from the drone attack on Saudi’s Oil installation eases. It traded on an average of $62.29 per barrel last month, a 4.64% rise from the prices in August. Liquefied Natural Gas is expected to be traded at $2.60mmbtu from $2.53 last month. The Cocoa is expected to trade $2,400 per metric tons as compared to $2,372 in September. Wheat traded at $478.75 bushel. Sugar traded at $11.48 per pounds a 2.77percent increase from August price. Fixed Income The bond market remained sluggish as market participants focused more on the outcome of bond auction. Improve offers across FGN Bond curve as bids drifted wider in anticipation of a slight uptick in yields at FGN Bond auction. The T-bills market remained slightly stable as liquidity from last week’s statutory disbursement linger on in the money market. In the coming week, OMO maturities worth NGN443.54 billion are expected to hit the system on the 10th of October. we expect the OVN rate to settle lower week on week. Currency Off the back of a “bloody September” wherein reserves declined by USD1.88 billion (largest monthly loss since October 2018), Nigeria’s FX reserves sustained its downward trend, declining by USD227.45 million WTD to USD41.77 billion (2 Oct 2019) – the lowest level since 23 Nov 2018. www.businessday.ng

Stocks returned -14.14 percent on Year to Date, Friday, after investors reacted negatively to a half trillion naira fine imposed on 12 banks that failed to give up to 60 percent deposits as loan on October 1. Analysts at Lagos-based Cordros Securities say the market saw its worst week weighed down by banking stocks that lost 3.9 percent Cordros believes the trend witnessed through the year is likely to persist through the final quarter of the year, although they expect pockets of gains over the final months of the year as fund and portfolio managers realign portfolios prior to the start of 2020. “Nonetheless, we note that valuations remain attractive driven by price deterioration throughout the year,” Cordros said in a note to clients. “Hence, we advise that long-term investors consider appropriately timed investments.”

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Nigeria needs to grow domestic credit to escape low growth cycle - Akintemi Page 10

A new chapter in Nigeria’s literature Page 4

Data sovereignty and its benefits to Nigeria Page 12

BUSINESS DAY

Monday 07 October 2019

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In Association with

L-R: Oby Ezekwesili, former Senior Economic Advisor, African Economic Development, Policy Initiative (ADEPI), Yemi Osinbajo, Vice President, and Adetoun Suliaman, Non Executive Director Cadbury Nigeria Plc, at the 2018 NES 24

Bumpy road to 2050: Building Nigeria of the future ODINAKA ANUDU

everal countr ies are already planning their future. Rome decided few years ago to ban diesel vehicles from entering the city centre by 2024. Electric car makers are already making plans to fill the void, and

combustible car companies are innovating. From 2016, Nor way commenced a plan to stop new gasoline or diesel vehicle sales by 2025. Politicians have so far reached concrete conclusions and agreements about 100 per cent of Norwegian cars running on green energy by 2025.

In 2015, China started what w a s c a l l e d ‘ Ma d e i n C h i na 2025’—a strategic plan of targeted at moving away from being the world’s manufacturer of cheap, low quality products to making high-quality goods and services. Today, Chinese firms are beginning to test their capability to compete in a market of

high-quality products by playing in a more competitive European market. In 2017, South Korea decided to focus more on robots, installing 710 installed industrial robots per 10,000 employees. Data show Japan accounts for 56 percent of Continues on page 16

BUSINESS

DAY

Preparing Nigeria for 2050: The development plan imperatives HARRISON EDEH, Abuja

he federal government must prepare the country for its economic future with an economic development plan that will unravel step by step priority areas of focus. These concerns were raised by some analysts who are worried that lack of a holistic economic template for the country is a key impediment to maximising Nigeria’s potential as Africa’s largest economy, while preparing it for the economic demands of the future. “What we have not been able to do is to have national key priority areas, and it has affected even our policies and planning strategies as a nation,” said Joseph Amenaghawon,Programme cordinator,Open Society Initiative for West Africa told BusinessDay. “It is a major source of concern for even investors who want to put in their money here. What of our education, health, security? What is the target focus in Continues on page 8

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NES #25

A new chapter in Nigeria’s literature

”

Sterling Bank lights Nigeria’s path to accelerated development magine a world without electricity? Without it, our lives would be radically different, and in almost every instance a whole lot harder. Regrettably, access to electricity for Nigeria’s over 100 million rural inhabitants is estimated at 36% while it is almost 60% for urban dwellers. It is not surprising that the World Bank has ranked Nigeria as the second largest country in the world after India and the first in Sub-Saharan Africa with the highest number of people deprived of electricity. Ironically, electricity generation started in Nigeria in 1896 with her first electric utility company established in 1929. As it stands, between 500,000 to 800,000 new households would have to be connected to electricity sources every year between now and 2030 for the country to achieve her target of universal access to electricity for all its citizens. Certainly, life without electricity is tortuous and has been aptly described as living in the dark. It deprives excluded people or communities every basic comfort and fuels migration. For instance, residents of Unguwar Dogo, a village in northern Katsina, travel 40 minutes to another village to charge their mobile phones. This community is limited to the use of traditional sources of energy such as firewood, animal dung, and crop residues for heating and cooking which are effective causes of harmful indoor air pollution. In contrast, access to electricity improves the quality of life and accelerates development of rural communities by enabling access to safe potable water, improved sanitary and health conditions, food security, as well as lighting and information. Access to electricity is not only critical for improving living standards but regarded as indispensable for eradicating poverty. To bridge the country’s gaping electricity deficit estimated at more than 20 million homes, Sterling Bank Plc has identified renewable energy as an alternative form of energy which can be easily and conveniently delivered to

Life without electricity is tortuous and has been aptly described as living in the dark. It deprives excluded people or communities every basic comfort and fuels migration

Abubakar Suleiman millions of Nigerian homes, small, medium and large enterprises in both urban and rural areas. Affirming this, Abubakar Suleiman, Chief Executive Officer, Sterling Bank, disclosed that the bank has committed itself to be at the heart of Nigeria’s accelerated development by focusing on five critical sectors of the economy namely Health, Education, Agriculture, Renewable Energy and Transport. Taking the first letters of these sectors, one is pleasantly surprised to see them form the word HEART. Abubakar calls these five critical sectors, the HEART of Sterling. According to the Bank Chief, Nigeria’s power problem affects businesses and communities, and must be solved to ensure quality life for all citizens as well as accelerated economic development. He believes that resolution of the power problem through decentralized renewable energy solutions will lead to rapid

industrialization, job creation, quality education and healthcare delivery, among many other benefits. T h e b a n k ’s t h r e e pronged approach to achieving this are financing, trading and partnerships. It has set aside funds for large projects that provide electricity to communities and businesses. From the trading perspective, it is creating a platform that enables the sale of renewable energy solutions between electricity generators, distributors and users. Finally, Sterling Bank is creating partnerships to encourage the flow of foreign investments into the renewable energy space in order to bridge the service gaps which currently exist in market. Remarkably, the bank has signed an agreement with the Kaduna State Government, Kaduna Business School and Blue Camel Energy to deliver a renewable energy solution called ‘Solar-fi hub.’ The hub was developed by a start-up

incubated by the Kaduna Business School. Dr. Dahiru Sani, Rector, Kaduna Business School, said the mini accelerator project was created to improve access to electricity with the invention of Solarfi hub as outcome. “The Solar-fi hub is powered by solar energy to meet the day-to-day needs of the average citizen who may want to listen to news, watch football matches, or boil water for domestic use”, Sani disclosed. According to the Rector, the Solar-fi hub can be used by farmers in rural communities to power grinding machines and water pumps for irrigation while also bridging small power needs like charging of phones in homes where there is no power. He added the partnership between the Kaduna Business School, Blue Camel Energy and Sterling Bank to deliver the Solar-fi hub will improve the quality of life and earning potential of rural dwellers.

Commending Sterling Bank for believing in the renewable energy dream, Yusuf Suleiman, Managing Director, Blue Camel Energy, said solar energy is the future of electricity in developing countries. He added that Blue Camel Energy is laying the foundation for the democratisation of electricity to homes, businesses and schools ensuring that they can generate their own cost-effective electricity using solar energy. Yusuf disclosed that Blue Camel Energy initiated and completed its assembly plant and academy within eight months. The plant has the capacity to assemble over 10,000 units of clean, affordable and reliable solar products in a year while the academy has the capacity to provide energy entrepreneurship training to about 3,000 youths within the same period. “We are ready to lead in solving energy-related problems across different sectors of the economy. So far, we have invested over $1 million and would be investing another $5 million in the next 24 months to ensure delivery of solargenerated power to factories”, Suleiman informs. Similarly, Sterling Bank partnered with Zola Electric, a for profit social enterprise, to make distributed renewable energy accessible to Nigerians businesses and households in need of constant and clean power supply. Adaptable to energy need and income, Zola’s

renewable energy solutions can be easily accessed through consumer finance from Sterling Bank. Chief Executive Officer, Zola Electric, Mr. Bill Lenihan said the company has studied the Nigerian electricity market and figured out a way to proffer lasting solution to the country’s electricity needs. “Our solutions are designed to solve every level of the energy access problem. And while financing has been identified as one of the key limitations for consumers to acquire renewable power solutions, our partnership with Sterling Bank ensures access to product finance for interested customers.” Despite the commitment of Nigerian Electricity Regulatory Commission (NERC) to stimulating investment in renewable energy, little progress has been made in the sector. Existing investments in power grids built on fossil fuels keep players tied to costly and pollution inducing energy sources regardless of the obvious advantages of renewable energy solutions. However, all of this might become a thing of the past considering Sterling Bank’s commitment to bridging the funding gap hitherto faced by would-be adopters of renewable energy solutions. This indicates that Nigeria will eventually tap the potential of its abundant renewable energy resources for socio-economic benefits. International development agency, Oxfam, believes renewable energy solutions are more reliable, effective and affordable for poor people in developing countries who do not have access to electricity. This is especially true for northern Nigeria where the electricity grid does not extend to remote areas and the distances between villages are significant. Apart from being generally clean and pollution-free, renewable energy sources are sustainable natural forms of energy which require less maintenance than traditional generators. Truly so, renewable energy facilities are more suitable for community management and ownership because they can be set up in small units. By investing heavily in renewable energy solutions, Sterling Bank is lighting Nigeria’s path to development. It is apparent that the bank has its HEART in the right place.

Monday 07 October 2019

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NES #25 Preparing Nigeria for 2050: The development plan imperatives Continued from page 1

these areas, or do we just do budget?” he asked. He said it is important that these points be discussed to enable future governments to have a direction of where the country is going. Justin Nwankwo of the Department of General Studies at the Federal Polytechnic Okoh, told BusinessDay that Nigeria’s infrastructure deficit must be made bankable to advance the economy into a competitive status. “We cannot grow if there is no massive investment into Nigeria’s infrastructure. Attract investors into Nigeria’s infrastructure with a bankable plan, and you see the economy rebound,” he said. Nigeria’s scary unemployment rate leaves sour taste in the mouth of policy makers, and indeed many Nigerians who desire to have a noble and sustainable means of livelihood, Unemployment rate is

23.1 percent, according to official date. Nigeria’s President Muhammadu Buhari has, as part of his assurances on the inauguration ceremony, pledged to the onerous task of lifting over 10 million Nigerians out of poverty in the next 10 years. The assurance, many industry watchers say, must go beyond political rhetoric, as Africa’s most populous nation is labelled the poverty capital of the world, with 98 million people and counting living in extreme poverty. On the back of this development, industry watchers have picked holes in the implementation of Nigeria’s policies,describing some of the policies as a kneejerk approach which does not offer lasting solution to the issue. “The missing link in the job creation strategy of the government, whether at the federal or sub-national level, is that we don’t

President Muhammadu Buhari

have a disaggregated data of unemployment, their demography,skills for job component. Who are those that lost their jobs and why? What is their marketability? What is the level of their technical and analytical skills in a competitive 21st century,”Celestine Okeke, lead partner, Sustainable Enterpreneurship

and Economic Development Initiative (SEEDI), told BusinessDay exclusively. “The missing link is that we don’t have a disaggregated data of who actually is the unemployed Nigerian youth,” he further said. According to him, “We are still neck-deep in federal and sub-national

cash-backed interventions, which is heavily reliant on how much money the government could raise,” he said. He suggested a South African model wherein the entrepreneurs are taught for some particular months, certified by a consultant before the government gives out the intervention fund through the STANBIC IBTC Bank. “Government, rather than investing all the money in its interventions which albeit is not sustainable, should look toward supporting the Small and Medium Enterprises eco system in their various states for wealth creation,” he said. Nigeria is Africa’s largest economy, yet three in every five Nigerians live in poverty. To worsen the concern, inequality has also reached extreme levels. The sub-national governments, experts say, share in the bulk of this

blame, although the federal government is not totally exempt from it, since outside of a job in the agriculture, the best employment prospects for a young and bulging labour force are in urban centres like Lagos,Abuja and Port Harcourt. In many states, there are no proper demographics of unemployed youths in the state. A report obtained by BusinessDay from Sustainable Entrepreneurship and Economic Initiative shows that Bauchi State, for instance, has no history of structured interventions for youths employment, neither does it have any youth development plan. According to the report, “Bauchi State between 2015 and 2016had a total of N90.03 billion at its disposal for developing the state and improving youth employment and by end of 2017 and Q3 2018, Continues on page 18

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Monday 07 October 2019

NES #25

Nigeria needs to grow domestic credit to escape low growth cycle - Akintemi In this interview with BusinessDay journalist, Segun Adams, Segun Akintemi, CEO of Page Financials, talks on how innovation has steered Page Financials to becoming a leading financial services company in Nigeria.

Who is Segun Akintemi? hank you, Segun. I consider myself passionate about life, family and creating value for the benefit of many. This passion has driven several of my antecedents since starting Page six years ago and before that, through my banking career which spans over 31 years. Although I have a background in technology, I am service oriented and find that delivery of excellent service to customers, exemplary leadership and optimal returns to stakeholders are important elements of growth and sustainability in business, and they have become my pillars as an entrepreneur. Can you tell us about Page Financials, what does it represent to Nigerians? Page Financials represents empowerment and opportunities to our customers and we hope to extend this to other Nigerians. We realise that access to finance is sometimes the difference between a great idea and its actualisation, whether it is getting a post-graduate degree, moving homes or expanding a business, and we are here for well-meaning Nigerians who can achieve these targets and settle their obligations over a convenient period of time. At Page Financials, we aim to partner with our customers, rather than handle their transactions as a one-off. We achieve this by offering suitable investments, loans, or payments products that fit their needs per time. Ultimately, we make it our priority that the financial objectives of our customers are met and right on time too. As a CEO what would you say drives you? Success is important and my definition of it is creating irrefutable value that people and the society at large can benefit from. It is about being able to touch and impact lives positively while at the same time finding fulfilment in mine. This is what motivates me every morning and puts the spring under my feet because I’m thinking of new ways to deliver value to my team, customers and all those in my sphere of influence. You are offering loans of between N200,000 to N5 million to people with need for cash. How is Page Financials different from other financial institutions that are lending to consumers? At Page Financials, the focus is offering our products through the most innovative, convenient and speedy platforms and processes. We understand that people sometimes make financial decisions that require an urgent need for cash, and we ensure they get what they need, right when they need it.

Segun Akintemi

Today, a customer can put in an application on any of our digital channels or in any of our branches and get the funds in less than three hours after thorough risk assessment and profiling simply by using technology, analytics and the skills of brilliant personnel. Honestly, what drives us is not a desire to be different from other financial institutions but the passion to deliver unrivalled service to our customers. In doing this, we simply stand out and we have thousands of customer testimonials that attest to this. We always raise the bar in meeting customer demands, once we achieve a level of ingenuity, we’re unto the next. That’s what makes us Page Financials— there’s always a new ‘page’ to turn to. What category of people do you offer loans to? We offer two categories of personal loans to salary earners and business loans to support Small and Medium Enterprises (SMEs) which today account for about 50 percent of Nigeria’s Gross Domestic Product (GDP) and employs a large part of the country’s workforce. As a growing fintech company, how are you able to guarantee

that those loans are repaid? Do you also engage the public on financial prudence? We are a financial services firm driven by innovation rather than technology. We believe technology is only an enabler of innovation so we make an effort not to get caught up in the web of technology but continue on a path of innovation and employ technology to deliver on our ideas. In ensuring loans are repaid, most of the work is done before disbursement. Again, we use technology and analytics to predict the performance of the facilities and we have good reports to show for it. In terms of educating the public, we inform, remind and engage our followers and customers on savings, managing credit facilities and deriving value from a range of investments products across all our touch points including our social media platforms. We also sponsor several events where we engage SMEs and salary earners directly. Since Page Financials started, a lot of players have entered the space. Can you speak to how you have been able to stand out? It is simple: innovation. Our pledge as a company is to continue

to provide excellence in our service by delivering satisfaction at all times while supporting the our customers in the most innovative way. We are a thought leader in the financial services sector, which makes it impossible for us to stop growing. So we would continue to innovate and grow. When I talk about innovation it is not limited to how we sell loans or market investment notes, but the way we provide internal services within the company as well as our marketing strategy. We strive to create our future and pursue it actively. As an operator that has been around for a while, can you speak to how the industry has fared in the last decade, what critical issues players face and how the government can come in to serve as a growth catalyst? The industry has evolved well, although a lot of companies have gone under in the process based on their focus, target market and many other factors. The government is trying to encourage investment in the sector as one of the major issues in this space remains funding. The government has been very proactive with the provision of N220B MSME fund focused on the development of SMEs disbursed through microfinance banks. The Bank of Industry (BoI) has also been active in lending to the real sector, thus supporting its growth and development. These are the factors that are going to help us in terms of growth. But there is still a lot more to be done, particularly in terms of regulations. The regulatory framework is evolving in line with the realities of today, with the aim of building more resilient and robust financial institutions. So, I see the industry evolving and developing as the DMBs have in the last decade, The ease of accessing financial services has also increased significantly with the use of ATMs, POS and the USSD technology which does not require smart phones. This has further propelled growth in the sector but the potential and opportunities remain huge and can only be fully tapped with very innovative thinking. Less than four months to the financial inclusion deadline of 80 percent, players have not closed the gap.What factors have slowed progress and what lessons can we learn? I am a bit worried about our approach to financial inclusion. Financial inclusion is not solely the responsibility of financial institutions because it can’t be handled as a revenue generating channel if we must achieve the expected growth rate of inclusion. Rather, financial services and institutions should partner with

the government, regulatory agencies and other stakeholders. So I feel we need to go back to the framework of financial inclusion. We cannot succeed in it if we keep pursuing it to drive revenue. We need to go back and identify how we want to push financial inclusion, but definitely, it is not the forte of financial institutions but rather a social service. They can however provide the enabling environment to make it a success. The CBN has granted Telcos license to participate in the financial services space, are you looking at collaborating with them? The CBN issued exposure papers and then license to what is called Payment Service Banks (PSBs), and PSBs are supposed to largely gather deposits. They are not supposed to lend. So it is not a license appropriate for us as we are largely lenders. In terms of partnerships, we have always partnered with Telcos by providing loans to their customers for acquisition of handsets and several other initiatives that provide seamless flow of our transactions through their network. We also continue to collaborate with a lot of mid-tier Telcos by providing financial support to their customers. I think it would be interesting to watch how Telcos evolve with their PSB license because they have a monumental database, but then I would say this market is big; there is enough room for all of us. How would you appraise the credit culture in Nigeria? I make bold to say we have been a significant contributor to the consciousness of the importance of good credit history. Historically, people never realised Nigeria had very active credit bureaus but today we have three with data of about 40 million Nigerians. So, if you approach us for a loan, the first thing we do is run a check through the credit bureaus. If we realise that you have a loan you are defaulting on, we would politely tell you we would be unable to approve your application. For us, if we have given hundreds of thousands of loans, you can imagine that we probably would have rejected a lot too, so people would realise that if they do not meet their obligations, they cannot get a loan from us. That’s the responsible thing to do because we have stakeholders that entrust us to make the best decisions in their interest. The major issue is for our regulatory authorities to intensify the campaign particularly with our players in the industry to ensure no loan is given to someone with questionable character. Until that is done, it might Continues on page 16

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NES #25

Data sovereignty and its benefits to Nigeria ated and collected within Nigeria from being passed to other countries without the permission of the Nigerian government. According to this law, local authorities are expected to review the laws of the specific countries to which data is to be transferred and ascertain the safety of the material within that region. It also says that ‘data subjects’ (that is, Nigerian individuals and organisations) are to be informed about the implications of having their data transferred to other countries. More far-reaching legislation will be needed to deal with data sovereignty issues in the country. But while the government works on introducing new laws, businesses will have to consider their options and try to make sure they are keeping their data safe from unwanted foreign interests.

Oyaje Idoko

Real concerns These concerns are not unfounded. There have been multiple cases in which indigenous data sovereignty have been violated by international actors. In 2013, the United States’ National Security Agency (NSA) was revealed to have been collecting data on citizens of several countries from data centres owned by a number of global tech companies. The revelation sparked a debate about the sovereignty of countries. There have been other events related to the leaking or collection of information from other countries by both state and nonstate actors. And as the numbers of these cases grow, individual countries have enacted stricter laws to prevent governments from presiding over data generated and collected within their borders. How stronger data sovereignty initiatives can benefit Nigeria Although data sovereignty has arisen out of concerns over privacy, there are benefits to be derived from it by countries that take it seriously. They include: 1. Greater confidence in local technology With firmer laws and implementation, Nigerians will be more confident about the security of their information. This sense of security will ease interaction

with digital platforms, and ensure that opportunities in the budding technology space will continue to be exploited by local businesses. 2. Boom in domestic tech ecosystems With the assurance of minimal interference by state actors, techdriven businesses could flourish, and a thriving tech ecosystem

”

ata sovereignty refers to the rights of countries to regulate the sharing of data that is generated within them with entities in other nation-states. In the past few years, countries across the world have increasingly insisted on this right. They are preventing global agencies from sharing their citizens’ information with foreign governments and implementing laws that restrict such companies from doing so. That, in a nutshell, is how data sovereignty plays out in reality. But this idea has only become a top concern for governments in the past decade. Understanding its significance in today’s world will require some unpacking of the ideas and technologies involved. W hy is data sovereignty such a big concern? Contemporar y technology runs and thrives on data. As individuals, businesses and economies have become more dependent on digital technology, and the volume of data they produce, store and share have increased exponentially. The traditional ways of holding data have become insufficient for processing and storing the terabytes of information being yielded on the planet every day. Cloud technology has stepped in to solve this problem. Businesses no longer have to hold their data on-site. They can now run their processes on cloud software; build bespoke programs on cloud platforms, and even store massive volumes of their own information in third-party-owned data centres located far away from them. However, these cloud solutions are often provided by companies that are not located within the countries to which they are deployed. And even when the cloud service provider is indigenous, they may still be storing data from that country in facilities sited on foreign soil. Here is an example. If you run a business and you are using digital solutions that are hosted on the cloud, the cloud platform may also be storing data from your activity on it as well. If the cloud service provider’s data storage facility is sited in another country, your information may find its way there. This is where the problem arises. Governments in countries where data is collected are concerned about such cross-border data transfers. They fear that the privacy of their citizens may be violated if a foreign agent (for example, a foreign government) gets hold of their information. These foreign agents may obtain citizens data, either illegally or by threat of their own (foreign) laws.

If you run a business and you are using digital solutions that are hosted on the cloud, the cloud platform may also be storing data from your activity on it as well

could be formed. Something like this has been seen in countries in which authorities have actively made the environment conducive for technology-based enterprises to operate. It is reasonable to think that policies supporting more data security will free up innovative energies and attract more investment for tech start-ups. 3. Economic growth Ultimately, a greater sense of security around tech breeds could quicken the adoption of vital technologies by SMEs, and accelerate their productivity and the growth of the wider economy. This is important for a country like Nigeria, where the majority of businesses are still not taking advantage of contemporary technology solutions. Data sovereignty laws in Nigeria Nigeria does not have specific laws dealing with data sovereignty issues. But there are sections of its existing legislation which cover matters commonly addressed by such laws. For example, the Nigeria Data Protection Regulation (2019) provides for Nigerians to have greater control over how their data is collected, shared, and used. The regulation prohibits data gener-

Where does Layer3 feature here? Nigerian businesses want to be sure that their data does not pass into unknown foreign agents. They need their financial transactions stored away from dubious actors and would like their employees and customers to trust them with their own bios. These concerns can be taken care of by an IT service provider that is conversant with these issues and can guarantee the safety of data generated by businesses. Layer3, through its newly launched service Layer3Cloud, takes on this challenge on a daily basis. With its engineering expertise and grasp of trends in global cybersecurity, it is delivering high-grade managed services to companies in Nigeria. Layer3Cloud utilises data centres that are located in Nigeria. This eliminates any possible concerns over data sovereignty. Enterprises that store their data with it also retain full control over their material and have it secured with high-level encryption. The multiple levels of security offered by the Layer3Cloud Virtual Data Centres and Virtual Private Servers keep its users’ data beyond the reach of potentially malicious attacks. Rounding off Nigeria can address the current concerns over data sovereignty by enforcing laws that protect Nigerian businesses and their data. Companies, on their own part, can leverage the expertise of local data and cloud computing providers to safeguard vital information. These measures could position Nigeria for a flourishing of its millions of businesses, enabled by technology and carried by the cloud. If you would like to know how Layer3Cloud can help your business store, manage and secure your data visit www.layer3.cloud. Idoko is Layer3’s chief executive officer.

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NES #25 469 NASS membership not sustainable in 21st century Nigeria SOLOMON AYADO, Abuja

here are heightening concerns that the current constitution which allows 469 National Assembly NASS membership is no longer sustainable considering the economic and dwindling incomes of government, and huge threats to the economy. There are 109 Senators and 360 members of the House of Representatives in the National Assembly, and unless the country is able to take the bold step to significantly cut this number and their jumbo pay, the already high cost of governance will continue to surge. The concerns come amid the country’s over-dependence on oil, which has seen low prices, as well as supply output concerns. Apart from the jumbo pay lawmakers receive, execution of developmental projects to benefit the generality of people is not commensurate. This is seen as detrimental to the economy, hence the call to diversify it and employ new measures towards achieving a sustainable economic structure. It is established that salary of Senators is N750,000 per month plus allowances of N13.5 million per month, totalling N14.25 million per month. Also, it is publicly known that allowances of the lower legislative lawmakers (House of Representatives) surpass their basic salary, hence making the public request for such enormous allowances be removed. The basic salary of a House of Representatives member in Nigeria is put at N1, 985,212 and the yearly allowance is N23, 822,000 respectively. Experts say that with the current black market rate of 360 naira to the U.S. dollar, estimates are that majority of Nigeria’s population lives on less than $2.00 per day. A former Senator in the 8th Nigerian Senate, Shehu Sani, who represented Kaduna Central senatorial district, had exposed how much senators earn. He said the secrecy was hurting his conscience because it was affecting economy. Sani said he burst the bubble on how much lawmakers earn because it was hurting the country’s economy and that parliament was becoming attractive to only people who cannot contribute ideas for nation’s growth. “Nigeria’s parliament is peopled by former governors and geriatric politicians. I

decided to bust it open. It was a moral issue. “The national assembly is one of the most non-transparent organs of government. It pricked my conscience and I decided to burst the bubble and open the national assembly to public scrutiny.If the expenses payment system was ended, then parliament would only be attractive to people who contribute ideas”, Sani had said.

Also, a former Governor of the Central Bank of Nigeria (CBN) and Emir of Kano, Sanusi Lamido Sanusi recently wrote to President Muhammadu Buhari and canvassed that pay of federal lawmakers, ministers and political appointees be slashed by half. Sa nu si , a re n ow n e d economist, opined that the review in remuneration would create jobs and boost economy.

In his letter, he wrote, “Where is the change? Change should start with NASS members. A senator receives N36 million monthly and if divided by half, N18 million can be used to create jobs for 200 Nigerians, each earning N90,000 monthly. When you multiply this by 109 Senators, it will give 21,800 Nigerians gainful employment.” Sharing same opinion, the Senator representing

Imo North and former governor of Imo State, Owelle Rochas Okorocha, has advocated a slash in the number of lawmakers in the national Assembly. Okorocha specifically proposed a reduction for each state per Senator, and instead of electing more than 10 lawmakers in the Lower Chamber per state, there should be only three members of the House of Representatives per each

state. Giving cogent reasons, Okorocha said apart from cutting down costs of governance, if a change is made, it will grow the economy. He said the elected lawmakers are many and there are no dividends of democracy to the citizenry. Okorocha, in an interview, insisted that the country is underdeveloped because the cost of governance is progressing far above the

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NES #25

How Nigeria can move from oil to gas giant DIPO OLADEHINDE

here are low-hanging fruits for President Muhammadu Buhari. Africa’s biggest oil-producing country can convert from oil to gas giant in the template of Australia or Qatar with the completion of several major gas projects scattered around the country. The world is gradually turning away from crude oil to gas to drive their economies. Countries like Norway and Saudi Arabia, among others, are doing well because they have made gas a critical catalyst to their economic development. These big-ticket projects are expected to create thousands of new jobs, spur domestic gas demand, generate electricity, create an opportunity to diversify revenue of the Nigerian government, strengthen the country’s revenue base and turn Nigeria into a dominant geopolitical player in Africa, using its gas resources, just like Australia, Russia or Qatar. Some of the critical gas development projects include development of the 4.3 Trillion Cubic Feet (TCF) Assa North/Ohaji South field by Shell Petroleum Develop-

ment Company of Nigeria Limited (SPDC), a major momentum to the domestic gas aspiration of the Federal Government for increased power generation and industrialisation. SPDC is also participating in the development of the 6.4 TCF Unitised Gas fields (Samabri-Biseni, Akri-Oguta, Ubie-Oshi and AfuoOgbainbri) in conjunction with the Nigerian Agip Oil Company JV while Nigeria Petroleum Development Corporation’s (NPDC) is also developing OML 26, OML 30 and OML 42 which is expected to develop 7 Tcf. Other works include the development of 2.2 Tcf by SPDC JV Gas Supply to Brass Fertilizer Company, the cluster development of 5 Tcf of gas from OML 13 to support the expansion of Seven Energy’s Uquo Gas Plant, and the cluster development of the 10 Tcf Okpokunou/Tuomo West (OML 35 & 62). SPDC JV also signed a gas supply and aggregation agreement with Geometric Power Aba Limited (GPAL) for the supply of about 43 million standard cubic feet of gas per day to support the 140MW Aba Integrated Power plant at Ossisioma in Abia State. Other gas assets include Bosi, which is reported to contain as

much as 5-7tcf of gas; the Nnwa/ Doro structure reportedly carrying 6-9tcf of gas; the Ngolo trap (OPL 219) and Assa-North. Eni also just announced a new discovery. “Some of the fields were discovered as far back as in the 1990s, and have been plugged after successful production test were carried out,” Charles Akinbobola, energy analyst at Lagos based Sofidam Capital, told BusinessDay recently. Moving forward, ExxonMobil and Qua Iboe Power Plant Limited (QIPP) have initiated plans to invest a combined $1.6 billion in the development of gas and power projects in Akwa Ibom State. The initiative would see QIPP invest $1.1 billion in the building of a gas power plant with ExxonMobil investing $500 million in a gas project in the area. Also, there are other gas pipelines projects such as ObiafuObrikom-Oben Gas Pipeline, the planned extension of the West Africa Gas Pipeline (WAGP) to Cote d’Ivoire, Escravos-Lagos Pipeline (ELP), East-West Offshore Gas Gathering System (EWOGGS), Ajaokuta-Kaduna-Kano (AKK) pipeline project and the Trans Saharan Gas pipeline. Obiafu-Obrikom-Oben Gas Pipeline, also called the OB3 Pipe-

line or the East-West Pipeline, is a proposed natural gas pipeline, running from the Obiafu-Obrikom gas plant near Omuku, Rivers state to the Oben node in Edo state which is also expected to increase domestic gas supply from 42.5 mcm (1.5 bcf ) to 56.6 mcm (2 bcf ) per day. The West African Gas Pipeline is a natural gas pipeline to supply gas from Nigeria’s Escravos region of Niger Delta area to Benin, Togo and Ghana. It has an initial capacity of 200 million cubic feet a day (mcfd), which is expandable to 600mcfd. Also, there is the EscravosLagos Pipeline (ELP), a natural gas pipeline which supplies gas from Escravos region of the Niger Delta area to Lagos. The 36-inch, 342-kilometre gas pipeline project is expected to double the capacity of the existing ELPS, thereby improving gas supply to Ogun State and environs and guaranteeing a significant improvement in power supply across the country. Early this year, NNPC awarded the Engineering Procurement Construction (EPC) contract for the $727 million Ajaokuta – Abuja portion of the Ajaokuta-Kaduna-Kano (AKK) pipeline project to Axxela

Limited, formerly known as Oando Gas & Power, and Oilserv Limited. Ajaokuta-Kaduna-Kano (AKK) pipeline is a 614km-long natural gas pipeline currently being developed by the Nigerian National Petroleum Corporation (NNPC). The pipeline will cost an estimated $2.8bn and is currently scheduled for commissioning in 2020. The proposed East West Offshore Gas Gathering System (EWOGGS) Project being promoted by the Dangote Group consists of two 38-in, 550km pipelines, each with a capacity of 1.5 Bcf/day while the Trans-Saharan Gas Pipeline Project (TSGP) is expected to help Nigeria achieve zero gas flaring by 2020, although its currently running behind schedule. While Nigeria seems to be dillydallying, Trinidad and Tobago is a good example of a country that has accomplished much with its gas resources. With a small population of 1.4 million and only 11 TCF of proven gas reserves, the country has developed a globally competitive petrochemicals industry. Today, Trinidad and Tobago is the world’s largest exporter of ammonia and second largest exporter of methanol leading to this industry contributing significantly to the country’s GDP.

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NES #25

Bumpy road to 2050: Building Nigeria of the future Continued from page 1

global supply of industrial robotics. Like other nations, Nigeria is also planning. Key documents have been drawn, including the National Industrial Revolution, Economic Recovery and the Growth Plan (ERGP), among many more before them. The key difference, however, is the type of action taken to actualise the visions. Bangladesh used to be a mockery of a nation. Even poorer countries in Asia would look at it with disdain. But the country decided to change its situation. Sheikh Mujibur Rahman, the then head of the Awami League, enacted the Bangladesh Industrial Enterprises (Nationalisation) Order. This was followed by the 1982 New Industrial Policy (NPI) which privatised several jute mills and textile mills. This heralded the beginning of the readymade garment market. With conducive private sector environment, cheap labour and low taxes, the country was able to navigate to become a net exporter of textiles. In 2018, the countr y earned $33 billion from readymade exports. Nigeria’s total non-oil export earnings from more than 25 commodities in 2018 were $3.3 billion (N1.19 trillion),

L-R: Danladi Kifasi, Head of Civil Service of the Federation, Yemi Osinbajo, Vice President and Kyari Bukar, Chairman NESG, at the 2018 NES 24

according to the National Bureau of Statistics (NBS). The key issue for Nigeria is the will to implement favourable, competitive and private sector-driven policies across sectors. To d ay , t h e Ni g e r i a n education system is not adequately preparing the you t h f o r 2 1 s t c e nt u r y jobs. Due to perennial unemployment and a culture that values cer tificates m o re t h a n k n o w l e d g e, more attention is paid on acquisition of certificates and degrees, rather than practical application of knowledge. Less attention is paid

to science, technology, engineering and mathematics (STEM), which are pivotal for industrial development. Most firms go abroad to get skilled labour, leaving the majority of half-baked university and polytechnic graduates in the lurch. Many manufacturing firms and other industries in Nigeria are not competitive. In 2017, manufacturing companies in Nigeria spent as much as N117.38 billion in fuelling their plants to run daily operations, according to data from the Manufacturers Association

of Nigeria (MAN). Taxes are rising by the d ay w i t h e a c h l e v e l o f g overnment aggressive in revenue generation. Even when manufacturers produce, they sell to consumers that are mainly cash-strapped. Brookings Institute said in 2018 that 87 million Nigerians, or around half of the country’s population, were extremely poor or lived on less than $1.90 a day. Just recently, the United Nations Development Programme (UNDP) said slightly over 98 million Nigerians are living in multidimensional poverty.

Restructuring urgently needed to cater for imminent 400m population Innocent Odoh

igerian experts have suggested economic restructuring and diversification of critical sectors of the economy to meet the needs of the growing population of the country estimated by the United Nations to hit over 400 million by 2050. Nigeria is potentially rich with a youthful population, which if properly harnessed, could add value to the nation’s economy. However, in view of the worrying dimensions of the Nigerian economy, which is suffering deficits in critical sectors, there are indications that if the nation fails to control the population and exploit the potential of its youthful population, the nation might face unimaginable consequences. Speaking to BusinessDay

on the way Nigeria can escape the prediction of doom associated with the population explosion, Tamunopriye Agiobenebo, national president of the Nigerian Economic Society (NES), during the 60th annual dialogue of NES in Abuja, said Nigeria must stop the oil sharing mentality and take deliberate steps to restructure and diversify its economy to make the components units of the country to become economically viable. He said the discovery of oil would have changed the development narrative of Nigeria, but lamented that Nigeria developed wrong incentives associated with the sharing mentality. “We have the wrong incentives. This sharing mentality does one thing for the states that are not having any cost but going to Abuja to share. Their marginal cost is zero.

“The condition for equilibrium in Economics is marginal cost equals marginal benefits. If marginal cost is equal to zero, then marginal benefits must be zero. So, all we are doing is obeying that law by debasing our assets. That is what has happened to us. “You might think it is an oil-based redistribution, but it is giving the wrong signals both in market and institutions. So, our incentive system is wrong,” he said. On the issue of diversification, he advised that all the ports in Eastern part of the country lying idle should be revived, stressing that if the port system is decentralised, it will go a long way in reducing the gridlock in Lagos ports and create more jobs in the country. “All the Eastern ports are idle, if you decentralise and activate them, Port Harcourt Port alone will give not less

than 6,000 direct jobs. Eastern importers will use the Port Harcourt Port and Eastern rail line. We are not doing that and so Apapa Port is gridlocked,” he said. Also speaking to BusinessDay on the threatening population explosion and the concomitant economic crises in the country, Law Mefor, forensic and social psychologist and public policy analyst, said Nigeria must be restructured and returned to true federal governance, adding that only then can the economy bounce back from comatose. “If you follow the nation’s economy, the policy prescriptions and applications have been mere palliatives. Palliatives are used to keep something alive and not growing it, Nigeria and its economy need fundamental restructuring to truly become a nation and a thriving economy,” he said.

More so, innovation is still low in the manufacturing sector, with many firms stuck in the past. “ Yo u n e e d t o k e e p learning and innovating to stay afloat. If you are stuck in the old ways, you will be left behind,” Tequila Harris, an associate professor in Georgia W. Woodr uff S chool of Mechanical Engineering, told BusinessDay recently about Nigerian manufacturers in the United States. The agriculture sector is still mainly subsistence and less mechanised. Nigeria is one of the least mechanised farming countries in the world with the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation (FAO) recommended tractor density of 1.5 hp/ hectare. Nigeria is 132nd out of the 188 countries worldwide measured by FAO / United Nations in terms of the number of tractors in the country. This is one reason why farming has been mainly subsistence, rather than commercial. Changing this narrative will prepare Nigeria f o r a f u t u re t hat g u a rantees food for citizens and exports for the global market. Ac c e s s t o cap i t a l by young and enterprising entrepreneurs averages

23 percent, according to t h e Ma nu f a c t u re r s A ssociation of Nigeria, with the benchmark monetary policy rate sitting at 13.5 percent. In health, Nigeria has the worst life expectancy record in West Africa with 54.5 years, according to the latest World Health Organisation (WHO) data. The report shows the influenza and pneumonia kill 305, 460 Nig er ians e a c h y e a r, w h i l e d i a rrhoeal diseases sending 186,218 annually to their early graves. The country has seven chemotherapy machines for cancer patients, but only two are functioning. Over $1 billion is spent annually on medical tourism by the rich. Private expenditure on health as a percentage of total health expenditure is 74.85 percent. According to the World Bank estimates, Nigeria’s Maternal Mortality Rate is still as high as 821 per 100,000 live births as against Kenya’s 540. Finding s olutions to these and many more challenges will prepare Nigeria to a golden future. Thes e issues are expected to form the fulcrum of discourse at the Nigerian Economic Summit (NES) which begins today, with the theme “Nigeria 2050: Shifting Gears”.

Nigeria needs to grow domestic credit... Continued from page 10

be quite a challenge to push for better credit behaviour. An average Nigerian knows Page Financials would not give loans to people that have defaulted so we would rather be known as a strong proponent for a stronger credit culture. Secondly, the government needs to be a little bit harder in terms of regulations that protect the lender. Again, we could also create a court where borrowers who can repay their debt but refuse to, can be taken. This would make decision-making faster because the reality is that I cannot take a debtor owing me N5 million to court because the cost and time of going to court can far outweigh the borrowed sum. So, the government needs to design policies that support a culture of responsible lending. Above all, it is a culture we all must imbibe and I am very glad the credit bureaus are already doing this. How can Nigeria escape its low growth cycle? One of the biggest measures of growth for an economy is your consumer credit

ratio to GDP. If you look at the advanced countries, their rates are averagely above 70 percent while Nigeria is barely 20percent. If you do not drive consumer credit, which in turn grows the economy, then we can’t witness improvement in our GDP growth. What we should be doing as an entity is to identify how to further empower and enrich our consumer credit culture so our SMEs have access to credit and the average Nigerian too. Naturally, it is a way of infusing growth and driving the velocity of money, which is what propagates the growth of GDP. Where do you see Page Financials in the next five years? We are building a sustainable organisation that aims to outlive its founders with presence in other African countries and continents. We hope to continue to dominate the market through the acquisition of customers and providing excellent and innovative service and products. We want to continue impacting lives and that for us is the focus.

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NES #25

Electronic transmission of results is game changer for Nigerian elections James Kwen, Abuja

he usual disputes surrounding the declaration of election results in Nigeria since the return to democratic rule in 1999 would be a thing of the past by 2050 if electronic transmission of data is fully entrenched in the electoral process. Elections in Nigeria are prone to manipulations, particularly at the polling unit, ward, local government and state collation centres by poll agents in collaboration with politicians because of manual transmission of results which has no backup proof. Nigeria’s attempt at entrenching electronic voting and transmission of data was ahead of the 2019 general elections was squashed following President Muhammadu Buhari’s refusal to assent to the Electoral Act Amendment Bill (2018) which provided for the compulsory transmission of election results from polling units to collation centres. Thus, the Independent National Electoral Commission (INEC) consequently resorted to the use of manual transmission of results during the 2019 general elections which was reported to be highly manipulated through rigging and cancellation of results. One of the serious subjects of litigation at the Elections Petitions Tribunals, particularly in the suit by Atiku Abubakar, the presidential candidate of the main opposition Peoples Democratic Party (PDP) against Muhammadu Buhari, the candidate of the ruling All Progressives Congress, APC in the 2019 general elections was the existence of ‘Results Server’, which the courts dismissed for not having any legal backing as some Nigerians think INEC hid under the declined assent to the amended Electoral Act and denied its existence. Consequently, stakeholders in the electoral process have identified electronic transmission of election results the only way to minimise if not eradicate the manipulation of the process. They observed that election results in Nigeria since 1999 and particularly in the 2019 general elections were mostly manipulated at the ward, local government and state collation centres by poll agents in collaboration with politicians, thereby eroding the credibility of elections results. The stakeholders argued that INEC is not restricted

by law to adopt electronic voting and transmission of results, hence it is empowered by the constitution to set its own guidelines and not everything that is done in an election is stated in the Electoral Act. They encouraged the Commission to amend its guidelines to allow what it has piloted in Ekiti and Osun so that there will be electronic transmission of results because the major problem of the 2019 general elections

was collation. Jude Ilo, head of office, OSIWA-Nigeria, noted that, INEC by the constitutional provisions establishing it, is allowed to make sure that election results announced are legitimate and electronic transmission is a tool that can help verify what is been announced. “I do not see anything in the law that disallowed that. I know that INEC inability to employ electronic transmission of results as a second

layer of verifying and authenticating numbers is just an act of either cowardice or incompetence. Nothing in the law says you cannot do electronic voting. We can have two layers of collation, hard copy and electronic copy,” he said. Idris Akinbajo, managing editor, Premium Times, who observed that Nigeria needs to be pragmatic with what will solve the problem of manipulation of election results, and total electronic

voting is what INEC should start thinking towards. He said, with electronic voting, results can go straight to a server where politicians have virtually no way to influence the outcome, but manual transmission provides leeway for politicians who already know that there are processes at the ward level they can manipulate. Peter Ameh, Inter Party Advisory Council (IPAC) chairman, said most times, elections are actually rigged from

the ward collation centres to the national collation centre and the best way to address the problem is to adopt both the manual and electronic transmission of results. “The best way to solve this is for us to have a dual way of collation. We must get to put electronic process into action. As they are collating, transmission is already at the national headquarters and what does not tally with what they have will be void”, Ameh suggested.

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NES #25 Preparing Nigeria for 2050: The development plan imperatives Continued from page 8

its youth unemployment figures had increased from 423,056 to 498,601.This raised the questions of how the state government spent the funds at its disposal between 2015/2016 for state development and youth employment.” The report notes also that,”Borno state government is not known to have initiated and implemented any structured youth intervention in the state.” “Between 2015 and 2016,Borno had a total of N93.45bn at its disposal for developing the state and improving youth employment and by end of 2017 and Q3 2018,its youth unemployment figures had increased from 626,650 to 775,063.This raises the questions of how the state government spent the funds at its disposal between 2015-2016 from state development and youth development,” the report states further.

Apart from those mentioned, most states in Nigeria lack the demographic data of who is employed and unemployed in their respective states and the marketability status of such people. Apart from the key interventions by the Industrial Training Fund,ITF in equipping young enterpreneurs with hands-on skills, most states don’t have a holistic plan for their people towards addressing youth unemployment. Economist Eze O nyekpere said unemployment cuts across Nigeria’s economy. In his own submission, Chijioke Ekechukwu, a former director-general of Abuja Chamber of Commerce, told BusinessDay much as government is seen to be desirous to increase the employment rate, its approach can achieve more result if anchored on the real sector. “We consider how important the Real Sector

Vice President Yemi Osinbajo

is to economic development. All the countries that have evolved did so through growth in the real sector. We need to identify all the major hindrances to real sector growth as lack of power, lack of access to funding, lack of access to cheap funding, taxation, and multiple levies.

“We need to make conscious efforts to addressing these problems in order to grow the real sector, whether conglomerates or SMEs. There should be incentives to manufacturers and farmers. “Most of the beneficiaries of the interventions currently taking place are not even involved in the

businesses the interventions are meant for,” he said. Nigeria is known globally as a petrol -economy, but in reality, it is a country of small business people. These entrepreneurs, whether informal traders, cottage industry workers,and small holder farmers, collectively power Africa’s largest economy. Operating in one of the world’s most difficult business environments,the MSMEs face many challenges. Analysts say if the government does not come up with a workable national development plan, recorded successes would not have the needed impact on the lives of the people—since most administrations operate on a stop-gap measures which do not benefit most Nigerians. “As a matter of fact, the negative growth we have is that you have to add population growth plus

the inflation rate which is 11.2 percent that takes you to about 15 percent and then the economy is growing at 2.05 percent, which takes you to a negative of 13 percent,and that is the reality. It is not just the a development plan that we need. We need a marshal pla—something that is radical and out of the box that deals on growth,human captial development, “Tope Fasua,an economist told BusinessDay. He argued further that the ERGP is projecting a growth of about 3.5 percent when countries like S e n e ga l , Et h i o p i a a n d Ghana are growing at almost seven and and eight percent. “An economy like India is growing at about 8 percent, and this is a $3 trillion size economy with such pace and we are so sluggish here,and the managers are working as if there is no emergency.”

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NES #25

No economic prosperity without security, stability …experts want scrapping of fuel subsidies Tony Ailemen, Abuja

conomic analysts say the Nigeria’s continued existence and prosperity lie in government’s ability to ensure a stable economy, tackle insecurity and unstable power supply. This is just as they call on President Muhammmadu Buhari to allow for more robust private sector roles in the economy, urging the government to open up space through appropriate regulatory policies. They see the current resort to importing finished petroleum products and the consequent payment of subsidies of about $2 billion annually as ‘waste of public funds’ which must be reversed urgently. Nigeria spends close to N700 billion subsidising fuel, which can be better used to address millions of investment and develop-

mental needs, provide better electricity and healthcare system. Nigeria has the unenviable record of having one of the poorest performing economies in the world, with a projected growth rate of 2.8 percent for 2019, compared to her neighbours such as Ghana, Ethiopia, Benin Republic and Senegal that are growing at the rate of 7 percent. They, therefore, want to see more actions that will assist in strengthening the economy , help the private sector achieve backward integration, beef up domestic production of basic goods, especially those consumed locally, as well as narrow class inequality gap using new socio economic policies. These are in addition to earlier promises by President Muhammmadu Buhari to provide better and reliable electricity supply, embark on vigorous anti-corruption

war, set the templates for lifting 100 million Nigerians out of poverty, as well as create more investment in primary and secondary health care services They noted that although the President signed an agreement with Siemens, in a partnership aimed at raising production to 25,000

megawatts of electricity by 2025, analysts believe that the current indication does not show that this is achievable within the period. Saratu Aliyu, national president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), who spoke to Busi-

nessDay on the economic challenges, stated that the private sector has been constrained by lack of patronage by the government Aliyu listed the perennial power failures as a big challenge to achieving economic growth and competitiveness in the manufacturing sector, especially as it affects the country’s ability to maximise benefits from the Africa Continental Free Trade Agreements AFCFTA. “There is very little we can do to support the government. If they refuse to seek our opinion and our involvement, there is nothing we can do,” Aliyu said. Aliyu listed a total of 16 things that government must look into, as part of measures to ensuring business growth and socioeconomic advancement through public and private sector collaboration on each of the program points. Thes e include areas where Nigeria currently has competitive advantage

including the creative industry, agribusiness, solid minerals and metals, micro and medium scale development, technology and infrastructure, creation of Industrial parks. Also speaking on the issues, Adetokunbo Kayode, president of the Abuja Chamber of Commerce and Industry, described the recent composition of the Economic Advisory Council (ECA) as a smart move. “The move is good, one of the smart move by the President,” he said. Kayode also charged the President to strengthen the petroleum downstream sector. “We must produce the fuel we consume locally. We have no business importing refined petroleum products,” he said. “Unlike when they started newly, we have dropped on the ease of doing business scale. Government is no longer effectively monitoring the MDAs on the programme as they did when it started newly,” he added.

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World Business Newspaper AIME WILLIAMS IN WASHINGTON

second whistleblower has come forward with information about Donald Trump’s dealings with Ukraine as the US president faces an impeachment probe and an escalating political crisis. Mark Zaid, an attorney specialising in national security issues, told US news channel ABC that the second whistleblower had first-hand knowledge of the allegations set out against Mr Trump and his officials in an original complaint that is at the centre of the impeachment probe. On Twitter, Mr Zaid added that the second person had made “a protected disclosure under law”, and “cannot be retaliated against”. Mr Trump has called for the identity of the first whistleblower to be revealed. Andrew Bakaj, another attorney who represents the original whistleblower, tweeted that his firm represents “multiple whistleblowers in connection to the underlying August 12, 2019, disclosure to the Intelligence Community Inspector General”. The original seven-page whistleblower statement alleged that Mr Trump had pressured Ukrainian president Volodymyr Zelensky to investigate his political rival, Joe Biden, and the business dealings of his son Hunter. Officials then used a classified storage system to hide a transcript of a call between Mr Trump and Mr Zelensky, the whistleblower said. A second complaint from an intelligence official could worsen Mr Trump’s political woes by adding

New whistleblower emerges in Trump’s Ukraine scandal

Attorney says client has first-hand knowledge of allegations surrounding disputed phone call

credibility to the account of the first whistleblower, at a time when he is being investigated by House Democrats and facing unease from within his own Republican party. Mr Trump has attracted fire from some Republicans after he suggested on Thursday that Beijing could

investigate Mr Biden and his son’s business operations in China. Susan Collins, the Republican senator from Maine, said on Saturday: “I thought the president made a big mistake by asking China to get involved in investigating a political opponent.”

“It’s completely inappropriate,” she was quoted as saying by the Bangor Daily News. Mitt Romney, the Utah Republican senator who was the Republican presidential candidate in 2012, slammed the president’s appeal to China as “appalling”. Mr Trump re-

sponded in a Twitter tirade over the weekend, referring to Mr Romney as a “pompous ass.” Ben Sasse, a Nebraska Republican senator widely seen as a future presidential contender, later criticised the president’s appeal to China in an interview with the Omaha World-Herald newspaper, while Texan Republican lawmaker Will Hurd said the appeal to a US “adversary” was “terrible”. But most Republicans are refusing, at least publicly, to criticise the president. Speaking on ABC on Sunday, the top Republican on the House oversight committee — one of the three committees leading the impeachment probe — defended Mr Trump’s remarks on China by arguing that he had been “tougher on China than any other president”. Jim Jordan said he did not believe Mr Trump “really meant” it when he called on Beijing to investigate the Bidens. He alluded to remarks made by Florida Republican senator Marco Rubio, who said in a press conference on Friday that he did not know if Mr Trump’s request to China was real, and that the president could merely have been “needling the press, knowing you guys were going to get outraged by it.”

Paris police attack spurs review UK offers flexibility over Northern Ireland to revive Brexit talks of radicalisation checks Stephen Barclay says government’s proposals are ‘a broad landing zone’ Prime minister says France must ‘tighten the net’ after death of four officers DAVID KEOHANE IN PARIS

rance is to review how its intelligence services identify signs of radicalisation among officers after a knife attacker killed four of his colleagues at Paris police headquarters. P r i m e m i n i s t e r Ed ou a rd Philippe said there was a need to make sure procedures to detect radicalisation were adequate. “It’s our responsibility to never accept possible flaws [in the detection of radicalisation] and always tighten the net,” he said in an interview with Le Journal du Dimanche. The intervention comes after France’s anti-terror prosecutor said the attacker showed signs of radicalisation and appeared to have planned Thursday’s assault, in which four people died before the assailant was shot dead by an armed officer. The attacker, a 45-year-old IT professional who had been working at the Intelligence Directorate of the Paris police headquarters since 2003, had adhered to “a radical vision of Islam”, the prosecutor said. The revelation has put pressure on the government of president

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Emmanuel Macron, and in particular his interior minister Christophe Castaner, who said after the attack on Thursday that the attacker’s behaviour before the incident had not given cause for alarm. Mr Philippe said on Sunday that he had full confidence in Mr Castaner. The anti-terror prosecutor took over the investigation on Friday after police examined the attacker’s mobile phone and questioned his associates, including his wife. The prosecutor said on Saturday that on the morning of the attack the perpetrator had exchanged 33 text messages with his wife, all of a religious nature, ending with the phrase “Allahu akbar [God is great]”. He sent the messages 30 minutes before he bought the knives used in the attack. The prosecutor said the attacker had probably had contacts with members of the Salafist movement, a radical form of Islam, adding that the investigations had revealed his “approval for certain atrocities committed in the name of that religion”, including the deadly assault in 2015 against satirical magazine Charlie Hebdo, and that he had changed his manner of dress during the past few months. www.businessday.ng

tephen Barclay has suggested Britain could show some flexibility over proposals to give Northern Ireland a veto on its regulatory future post-Brexit. The UK is battling to get talks on the government’s new blueprint deal back on track after EU leaders refused to hold negotiations over the weekend unless significant concessions were made. Boris Johnson’s demand that Northern Ireland’s Stormont assembly will have to vote every four years to remain aligned with EU single market goods rules, starting from 2021, is a sticking point for the Irish government. Speaking on the BBC’s The Andrew Marr Show, Mr Barclay, the UK Brexit secretary, said: “The key issue is the principle of consent. That’s why the backstop was rejected three times. “So the key is the principle of consent. Now of course, in the mechanism, as part of the intensive negotiations, we could look at that and discuss that.” EU leaders have also raised concerns around Mr Johnson’s customs proposals to remove the so-called backstop from the deal negotiated

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by his predecessor Theresa May and prevent the return of a hard border on the island of Ireland. The UK prime minister’s plan involves the creation of two new borders: a customs frontier between the Irish Republic and Northern Ireland, and a regulatory one between the region and mainland Britain. EU officials warn that the UK’s proposals do not meet commitments enshrined in the backstop, such as upholding the all-Ireland economy and single market. Asked if the government “was going to move” on its demands, Mr Barclay said: “Well, we’ve set out a broad landing zone, so in the detail of the negotiations of course we can get into the detail as to how operationally they work [and] what legal certainty is required by the Commission as of October 31. “But the point is the Commission themselves proposed customs checks away from the border, and in terms of the all-of-Ireland economy that would have had a bigger impact in terms of trade to Great Britain than it does to Northern Ireland.” The prime minister’s allies have warned that talks could break down as soon as Monday if there is no @Businessdayng

movement on the EU side. They also warned on Sunday that Mr Johnson would refuse to leave Downing Street if his Brexit proposals were rejected by Brussels and MPs tried to force him out of office in a vote of no confidence, to avoid a no-deal Brexit. Instead, Mr Johnson will dare the Queen to sack him and continue to honour a pledge to get Britain out of the EU by October 31. A senior aide said: “The prime minister is pretty clear that he’s not going to allow a group of MPs to cancel the referendum by undermining the negotiations via the surrender act and then seizing power.” Mr Barclay also confirmed on Sunday that the government was considering putting Mr Johnson’s proposals for a deal to a vote in the House of Commons before the EU summit on 17 October. Shami Chakrabarti, Labour’s shadow attorney-general, suggested her party could back the deal if it secured the support of Ireland. Asked if Labour would support a deal agreed by Brussels, she told the BBC: “Well it seems to me that if he [Mr Johnson] is to get something through in Dublin and Brussels, it would be something that is more likely to meet our tests.

Monday 07 October 2019

BUSINESS DAY

NATIONAL NEWS

Joe Biden goes on attack against Trump’s ‘flat-out lies’ Democratic presidential hopeful faces conundrum over how to respond to corruption claims DEMETRI SEVASTOPULO IN WASHINGTON AND LAUREN FEDOR IN SAN FRANCISCO

oe Biden came out swinging at Donald Trump at the weekend, accusing the president of spreading “flat-out lies” with a conspiracy theory about his son that is at the heart of the impeachment inquiry. “He is frantically pushing flat-out lies, debunked conspiracy theories and smears against me and my family, no doubt hoping to undermine my candidacy for the presidency,” the former vice-president wrote in the Washington Post. Mr Biden was responding after Mr Trump urged Beijing to find dirt on his son Hunter Biden’s business dealings in China — mirroring a request to his Ukrainian counterpart in the fateful July 25 phone call that sparked the “Ukrainegate” investigation on Capitol Hill. Mr Trump claims that Mr Biden pushed Ukraine to fire a top prosecutor who was investigating a Ukrainian gas company, Burisma, on whose board Hunter Biden sat. US, European and other international officials have all dismissed the charges as a debunked conspiracy. However, Mr Biden faces a conundrum. He does not want to fuel the claims by responding blow by blow. But he knows that not rebutting the charges could be dangerous, given how Hillary Clinton seemed to suffer by not defending herself more forcefully in the 2016 presidential campaign. A Biden adviser said the campaign was being “incredibly aggressive” in responding to the charges in the media, precisely because of the way the 2016 race had unfolded. “We are aware of how the media covered a lot of the 2016 Hillary storyline that resulted in an unhelpful false equivalence, and we are determined not to let that happen.” He said one silver lining was that Mr Biden was getting much more media coverage than his Democratic rivals. “It elevates vice-president Biden in a way that makes him the primary protagonist and sucks up a lot of oxygen in the room.” But the attacks come at a pivotal moment, as Mr Biden, 76, starts to look vulnerable. After holding a sizeable lead in the polls of likely Democratic primary voters, he has suddenly found senator Elizabeth Warren on his shoulder. And the recent hospitalisation of Bernie Sanders after the 78-year-old Vermont senator had a heart attack, has reignited questions about Mr Biden’s age. According to an average of recent national polls compiled by Real Clear Politics, Mr Biden leads Ms Warren by 26 to 24 per cent. But she has overtaken him in the last two national polls, and has the overall lead in Iowa. She is also gradually making ground

in South Carolina, an early voting state where he has his biggest lead, and is tantalisingly close in California. The Biden adviser said he had his second-best fundraising haul in the week the CIA whistleblower accused Mr Trump of inappropriately pressuring the Ukrainian leader. But he raised only $15m in the third quarter, $9m less than Ms Warren and $10m less than Mr Sanders. Ed Rendell, a former Pennsylvania governor, urged his friend not to engage on the substance but instead stress that the charges had been debunked. “What Joe Biden should say is that every media outlet that looked at this . . . found no ounce of corruption. The more he talks about it, the more he seems to elevate it on the same level as the charges against Trump.” In his Washington Post article, Mr Biden did not mention his son by name, or address the allegations. At a recent campaign event in Iowa, he snapped at a Fox News reporter who asked if had spoken to his son about his work in Ukraine. Pointing his finger at the reporter, Mr Biden said: “You should be asking him the question, why is he on the phone with a foreign leader, trying to intimidate a foreign leader . . . Everybody who has looked at it has said there is nothing there. Ask the right questions!” But the problem for Mr Biden may be less the conspiracy theory and more the perception that his son may have profited because his father was vice-president. David Ignatius, a Washington Post columnist, wrote that he had shown “poor judgment” in allowing that perception to exist, and that, “Denying this obvious fact only weakens the Democrats’ case against Trump”. Jonathan Turley, a George Washington University law professor, said that although there was no evidence to support the conspiracy, the other claims had more potential to take hold. “Few people I know think China and Ukraine looked the world over for an expert on finance and energy issues and came upon Hunter Biden, who just happened to be the son of the vice-president,” said Mr Turley. Geoff Garin, a Democratic pollster, said it was unclear if the Ukraine affair would hurt or help. “On the one hand, Biden could use all of this aggressively to confirm that he is the candidate who Trump is most afraid of, to highlight his strength as the most electable candidate,” said Mr Garin. “On the other hand, the constantly repeated descriptions of Hunter Biden’s involvement in Ukraine could raise red flags and worries for Democratic voters.” The Biden adviser said he thought Mr Biden would be fine but that “anyone who says they know for sure how this will play out is not being truthful because all of this is unprecedented”. www.businessday.ng

Workers at RATP, the Paris public transport network that also has its own pension scheme, staged a walkout in Paris last month © AFP

Emmanuel Macron’s pensions reform meets chorus of disapproval

French president grapples with widespread backlash against proposed overhaul VICTOR MALLET IN PARIS

mmanuel Macron has a problem with opera — or more precisely with the Opéra national de Paris and its 2,000 singers, ballet dancers and support staff. It is not that the French president has any issue with La Traviata or Rudolf Nureyev’s version of Raymonda: the problem is that employees have always contributed to their own, statesubsidised retirement scheme and are resisting Mr Macron’s plan to unite the country’s 42 separate schemes in a radical pension reform he wants to make the hallmark of his presidency. “I’m very worried,” Philippe Gerbet, a 65-year-old CGT trade unionist who danced in the ballet when it was directed by Nureyev and now helps oversee

the pensions, said in a back room in the Palais Garnier opera house. “The dancers are stressed. The sword of Damocles is hanging over their heads.” Of the 154 dancers in the troupe, 130 joined a strike on September 24, the CGT said, prompting cancellations of rehearsals and performances. The opera employees are only a few hundred of the millions of French workers who fear they will be worse off under the Macron reform. Earlier in September workers at RATP, the Paris public transport network that also has its own pension scheme, staged a big walkout that shut 10 of the capital’s 16 metro lines. Unions have called for another strike by RATP and SNCF railway workers starting on December 5. Mr Macron has sought to soothe public opinion by launching a months-long national consultation before introducing the

reform, promising to clear up misunderstandings and “adjust, change, modify and correct” the reform as needed. The reform will merge all current schemes to create a single, points-based national pension scheme that would make it easier to switch professions and jobs and benefit those whose careers have been interrupted — particularly mothers. Mr Macron promised “golden rules” to set the value of each pension “with a clear commitment that the standard of living of pensions should not be reduced, it should be the same and continue to improve”. “We’re not proposing to put this in place from one day to the next,” he said. “It starts in 2025, and none of those already retired will be affected — all the rights acquired up to 2025 will be preserved — and after that we’ll see a transition over 15 years.”

Nissan’s board in civil war over carmaker’s next leader Internal factions wrestle for control of Japanese company KANA INAGAKI AND LEO LEWIS IN TOKYO, PETER CAMPBELL IN LONDON AND DAVID KEOHANE IN PARIS

issan’s struggle to fill the leadership vacuum left by the arrest of Carlos Ghosn has led to a boardroom civil war, as powerful internal factions wrestle for control of the Japanese carmaker. A rift has emerged between the head of Nissan’s nomination committee and one of the company’s most influential senior executives, according to three people with knowledge of the situation. Nissan’s board is expected to meet on Tuesday to discuss among other matters the future role of Hari Nada, the former head of legal who switched from being one of Mr

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Ghosn’s closest lieutenants into a ringleader of the investigation into him. Despite signing a plea bargain with Japanese prosecutors, there have been increasing questions from executives at Nissan and Renault, its French partner, into why Mr Nada was allowed to remain involved in the probe on Mr Ghosn in recent months. Pressure for his removal is widespread. Masakazu Toyoda, the former Japanese trade ministry official who heads Nissan’s nomination committee, and Hitoshi Kawaguchi, the executive in charge of government relations who played a pivotal role in the months leading up to the ousting of Mr Ghosn, have waged a battle on who should lead the group. Ahead of a decision later this @Businessdayng

month, discussions about the new chief have centred on three candidates, including Yasuhiro Yamauchi, the former chief operating officer and interim CEO. Mr Yamauchi had been considered a safe pair of hands due to his experience and as a sitting member of Renault’s board. Nissan officials in Mr Kawaguchi’s immediate circle were in favour of Mr Yamauchi as a caretaker chief executive to repair relations with Renault. But Mr Toyoda has expressed reservations about Mr Yamauchi as a permanent CEO, citing concerns about his management ability and his recent rocky interactions with Renault, two of the people said. A person close to Mr Kawaguchi denied he had supported Mr Yamauchi for the CEO position. Mr Toyoda declined to comment.

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Credit Suisse scandal shakes Zurich’s elite Rarefied world of Swiss banking left stunned by tale of corporate espionage at country’s ‘crown jewel’ SAM JONES IN ZURICH

t the opening gala of the Zurich Film Festival a week ago, over champagne served to the city’s social elite, the small talk centred not on the dramas of the big screen but a much more local affair: the corporate spying tale at Credit Suisse. It was just a short distance from the festival’s venue on Bellevueplatz, that, days earlier, Iqbal Khan, a young, unashamedly ambitious former executive at the bank, had spotted a man trailing him. The confrontation that followed on a quiet, manicured street just behind the polished facades of the Bahnhofstrasse set in motion two of the most tumultuous weeks of the past decade in Swiss finance. Mr Khan’s shadow, it emerged, was an agent hired by Credit Suisse. It has been an intangible crisis: no clients have lost capital; no money has been laundered; no assets have been riskily rehypothecated. But what should have been a mere embarrassment for Switzerland’s second-largest — and arguably most revered — bank has ended up as something far more significant thanks to the particular strains in the insular, but still globally powerful, world of Zurich’s great counting houses that it has laid bare. “The past few years have been a tense time in Swiss banking,” said James Breiding, founder of Naissance Capital, an investment boutique, and author of the book Swiss Made. A global crackdown on tax havens and the great shift in economic gravity towards Asia had hit Swiss banking hard, noted Mr Breiding, leaving institutions such as Credit Suisse struggling to define what makes them unique. It is more than a matter of corporate branding. “Credit Suisse

has historically had a halo in Switzerland, it was the bastion of the Zurich establishment, founded by a very famous Swiss entrepreneur, Alfred Escher,” Mr Breiding said. “The Swiss are not big on heroes but if you go to the main train station in Zurich, there’s a big statue of him.” Mr Khan, 43, spectacularly fell out with chief executive Tidjane Thiam, 57, in a professional dispute, driven by ambition, ego and insecurity, that spilled into their private lives. Mr Khan quit in June and, shortly after, announced his pending appointment at Credit Suisse’s great rival, UBS. Credit Suisse, fearful that the young rainmaker would take clients and colleagues with him, ordered his surveillance. In the furore which followed that chain of events becoming public, the contractor who acted as a middle man between Credit Suisse and a private investigation firm took his own life. For many outside of Switzerland, including Credit Suisse’s most powerful shareholders, the crisis has bordered on the absurd. “Most people outside of this little European centricity don’t really care or have a strong opinion on this,” said David Herro, vice-chairman of Harris Associates. “This is ground-zero Zurich with some echoes in Europe. But we have got to put this into perspective.” The Chicago-based Mr Herro was forced to fly into Zurich to hold crisis talks with Credit Suisse’s board and emphasise his backing for Mr Thiam. Yet it is in the lurid — if trivial — detail that the key to the real outrage in Switzerland lies. If the historic essence of Swiss banking was professional discretion and restraint, married to the promise of holding others’ privacy as sacrosanct, then it is hard to think of a scandal more carefully calibrated to upset: a tale of ambition and ego, unseemly public feuding, and potentially unlawful intrusive surveillance.

Blow for Iran as Chinese oil group pulls out of flagship gas field project Exit of CNPC spells further hit to economy already being damaged by US sanctions NAJMEH BOZORGMEHR IN TEHRAN

hinese oil company CNPC has withdrawn from Iran’s flagship hydrocarbons project in a further blow to the Islamic republic’s economy, which has been hammered by US sanctions. Iran’s oil minister Bijan Namdar Zanganeh told local reporters on Sunday that state-owned CNPC would no longer help develop phase 11 of South Pars, the world’s largest gas field. He did not clarify when the Chinese group had made its decision or the reason for it. Iranian analysts said CNPC abandoned the project because of US sanctions and concerns over its interests in America, but Iran’s oil ministry said it could not provide further details. The US has imposed punishing

sanctions against Iran since President Donald Trump last year withdrew from a 2015 deal intended to curb the Islamic republic’s nuclear ambitions. In recent weeks Washington has stepped up its policy of “maximum pressure” on Iran’s energy industry. Last month it placed sanctions on two subsidiaries of China’s state-backed shipping giant Cosco for their alleged involvement in handling Iranian crude. It was one of the first US actions against a major state-backed Chinese entity. The move sent rates for chartering many oil tankers sharply higher, as international oil traders can no longer use the 40 or so tankers connected to the Cosco subsidiaries without risking falling foul of Washington. Total of France quit the multibillion-dollar South Pars scheme last year to escape US penalties. www.businessday.ng

France’s Société Générale CEO rejects call for ECB to buy bank bonds Frédéric Oudéa says policy would support failing rivals and prevent consolidation DAVID KEOHANE IN PARIS

ociété Générale’s chief executive has dismissed calls for the European Central Bank to buy bank bonds, arguing it would support failing rivals and prevent consolidation. “There is a need to make the difference between banks with a robust business model and the ones that are just still there thanks to support from the ECB,” Frédéric Oudéa told the Financial Times. Mr Oudéa said that ECB should not try to reduce the cost of funding for “an average, mediocre, small retail bank that should disappear in two years’ time”. “If you buy the bonds of a small bank, which should change its business model . . . is it an obstacle at the end of the day to some consolidation?” asked Mr Oudéa as he took the reins as head of the French Banking Federation. He is only the latest European chief executive to wade into a fierce monetary policy debate, as Mario Draghi prepares to cede the ECB presidency to Christine Lagarde. The views of Mr Oudéa clash with

those, such as Jean Pierre Mustier, CEO of Italy’s UniCredit, who have called for the ECB to directly purchase bank bonds, which might help lower their funding costs. Oliver Bäte, chief executive of Europe’s biggest insurer, Allianz, slammed the ECB this week for “making it easy for people to spend money they don’t have”. The ECB lowered its key deposit rate by a further 10 basis points to minus 0.5 per cent in September, sparking renewed fears in some quarters of a so-called Japanification of the European banking sector. Executives at some EU lenders, such as Deutsche Bank, have lashed out at the ECB’s “lower for longer” monetary policy, which has seen it keep its key deposit rate below zero since mid-2014. However, others, such as Mr Mustier, have called for banks to stop complaining about negative interest rates and instead find ways of offsetting their impact. Mr Oudéa, head of France’s thirdbiggest bank by assets, agreed that “moaning” about negative interest rates “is not an action” and the job of bankers now was to deal with their

reality, including diversifying internationally and into less rate-sensitive parts of the market. He argued that the ECB’s recent decision to introduce tiering, which excludes a portion of banks’ reserves from negative rates, was “a very important decision because it means that the ECB is paying attention to the consequences on profitability of the sector”. “Philosophically, at least, the instrument is there,” said Mr Oudéa. “If for any reason they would have to go further, deeper into negative territories, there is a tool which can again mitigate the consequences.” Significantly, Mr Oudéa also thinks that the imposition of tiering by the ECB will make it harder for banks to pass on negative rates to small customers. It will be hard, he says to justify charging smaller customers because tiering benefits banks with large amounts of excess reserves, such as those in France and Germany, to the tune of hundreds of millions of euros. However, Mr Oudéa added that for corporates and financial institutions, the imposition of negative interest rates had already started and would be hard to resist.

Investors struggle to make US companies change tack on climate change Number of shareholder-backed environmental proposals tumbles CHRIS FLOOD

arely a dozen proposals on environmental issues put forward by shareholders reached a vote across 1,500 of the largest US companies, raising questions about institutional investors’ determination to push for meaningful corporate action on climate change. Thenumberofshareholder-backed environmentalproposalsatcompanies intheS&P1500indexdroppedtojust13 in the year ended June 30, down more than half from the 29 in the previous 12 months, according to Georgeson, the shareholder engagement and gover-

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nance consultancy. The sharp decline could be a result of more negotiations on how to meet environmental challenges between companies and shareholders. More than 100 companies have started to report financially material environmental and social issues, including climate change, based on guidelines developed by the Sustainability Accounting Standards Board. Moves by US regulators had also affected efforts by shareholders to table proposals, said Don Cassidy, global head of corporate governance at Georgeson. The Securities and Exchange Commission adopted a new stance in 2018 and began dismissing some @Businessdayng

environmental proposals as impermissible attempts by shareholders to intervene in company affairs. Danielle Fugere, president and chief counsel at As You Sow, a shareholder campaign group, said the SEC’s shift had made the process of challenging companies more difficult. As You Sow put forward proposals that would have required JPMorgan, Wells Fargo and Goldman Sachs to provide assessments of their own carbon footprint based on the Wall Street banks’ role in financing companies that produce damaging emissions. The proposal directed at JPMorgan was withdrawn after it agreed to more discussions and the SEC rejected the others.

Monday 07 October 2019

BUSINESS DAY

ANALYSIS

The golden age of tech growth may be coming to an end WeWork’s failed IPO could usher in a new era of more cautious expansion RICHARD WATERS

What price growth? n a period when many companies have looked to juice their earnings by cutting costs rather than investing in the future, tech has provided a rare shot in the arm for growth-starved investors. This week’s downward lurch in the stock market is the latest sign that things are starting to change. Third-quarter financial results over the coming weeks will provide a chance to reassess. The questions starting to percolate to the top of investors’ minds: What has it cost to deliver the kind of growth the market has been clamouring for — and will a slowing economy finally force a rethink about how long the growth spurt can go on? The shock from WeWork’s failed IPO last month has been echoing back through the private markets, where many “growth stage” companies have preferred to remain rather than going public. Backers who seemed willing to buy growth at any price have been sent a clear message: Wall Street is not about to bail them out. It is never easy for a company to make the transition from being a pure growth play to one judged on its ability to generate free cash flow. But that is now an unavoidable necessity. Uber burnt through $9bn in the

three years leading up to its IPO, and another $1.9bn in the first half of this year. Even after raising more than $8bn at the time of its public listing, its wilting share price is a clear sign of the limits of investor patience. The adjustment is already under way. Uber is limiting its new electric bike and scooter services to a handful of markets, choosing to refine the business model before expanding into all the cities it operates in. That is a revolution in thinking for a company whose name once stood for breakneck expansion. But how to take its foot off the accelerator without giving up on some of its biggest opportunities? The food delivery market is in the middle of the sort of capitaldevouring growth spurt that ridehailing saw three or four years ago. Following its IPO, Uber’s painful adjustment is playing out in full view of Wall Street. Other unicorns will now have to make similar course corrections — if necessary, putting off stock market listings until they have refitted their business models for more cautious times. For other high-growth public tech companies, meanwhile, Wall Street has started to re-evaluate some of its most optimistic assumptions. The air has started to go out of the most overstretched valuations, but there is still plenty of room for further deflation.

EU allies urge US to avoid tit-for-tat trade spat over WTO France and Germany say they want a deal but are ready to hit back if none can be reached GUY CHAZAN IN BERLIN, VICTOR MALLET IN PARIS, JAMES POLITI IN WASHINGTON AND ALAN BEATTIE IN BRUSSELS

rance and Germany have said they hope for a deal with the US to avoid a full-blown trade war over aircraft subsidies but warned that they would eventually hit back against Washington if no agreement could be reached. “We are offering the hand of friendship, and I hope the US listens to the voice of reason.” said Bruno Le Maire, French finance minister. The US government said this week it would impose 25 per cent tariffs on EU goods ranging from cheese, olives, business suits and sweaters, after prevailing in a WTO case over illegal support to Airbus, the pan-European aircraft manufacturer. Arbitrators at the Geneva-based body gave the US the go-ahead to impose levies on $7.5bn of goods, marking the biggest authorisation of countermeasures in the WTO’s history in a case that has dragged on for 15 years. The WTO is expected to give its final green light to the US tariffs on October 14, and the levies will take effect on October 18 — an urgent timeline for Washington and Brussels to try to avoid the levies. As of Friday, no negotiations

between Washington and Brussels had been scheduled to reach a deal and defuse the dispute. New US tariffs against the EU threaten to escalate into a tit-for-tat trade spat, at a time when widening trade tensions are straining the global economy. Brussels could strike back next year when the WTO will almost certainly rule that the US was itself in violation of subsidy rules by giving tax breaks to US aircraft manufacturer Boeing. “If the US administration refuses the hand held out by France and the EU, we stand ready to react, through sanctions that would be within the framework of the WTO,” Mr Le Maire said. Heiko Maas, the German foreign minister, conveyed a similar message, saying the EU “will now to have to react and, once they have been approved by the WTO, impose its own punitive tariffs”. European officials said that one plan for immediate retaliation — to employ sanctions already authorised by the WTO in a previous case — had been shelved as too inflammatory and counterproductive. The move, which would resurrect up to $4bn in sanctions from a case from 2002 over an illegal US corporation tax break, was considered by the European Commission but rejected for now. www.businessday.ng

Geordie Greig: ‘Provocation is a good thing’ The Daily Mail editor on making headlines, changing tack on Brexit — and stalking Lucian Freud HENRY MANCE

here is one thing that a journalist can count on, said a character in Evelyn Waugh’s 1938 novel Scoop: “popularity”. The public always has “a smile and the best of everything for the gentlemen of the press”. How times changed, particularly for the Daily Mail. At the turn of the century, the tabloid became the most influential newspaper in Britain, but also the most divisive — thanks to angry headlines such as “Crush the Saboteurs”, “Over 1m Illegals are in Britain” and “Is this a case of bias against men?” Comedians mocked it, advertisers boycotted it, Alastair Campbell, Tony Blair’s former spin-doctor, called it the “most evil paper in the world”. “They just get on everyone’s tits, don’t they?” sighed the model Kate Moss. Then last year, after a quartercentury in charge, the Mail’s fearsome Brexiter editor Paul Dacre was shoved upstairs — replaced by Geordie Greig, a debonair Remainer famed for his literary contacts. It was as if the Brexit party had chosen Amber Rudd as leader. So Greig and I are meeting in his favourite Notting Hill restaurant, Clarke’s, to mark his first year in charge. It’s the first media interview by a Mail editor in seven years. “It couldn’t be a more exciting time to be editing a newspaper,” he says. “Every time I take over a new job, there is a sense of trepidation and a certain concern — how are you going to make a difference?” Oh, he made a difference all right. Within weeks, Britain was no longer overrun with foreigners. When the Supreme Court ruled against Boris Johnson last week, the judges were not “Enemies of the People” but “the friend of a strong Constitution”. As for Moss, in 2018 she was “Cocaine Kate”

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who looked “frankly ridiculous in a playsuit”. Since Greig took over, she has been “looking gorgeous”. For years, the Mail depicted a country going to the dogs; now Britain might actually be going to the dogs, and the Mail is seeing the bright side. “It’s a really complicated journey a lot of people are on,” says Greig. Viscount Rothermere, the proprietor, is happy with the new tone; the paper’s previous coverage was said to embarrass him at dinner parties. The Mail’s sales — 1.16m a day — are falling more slowly than its rivals’. Perhaps optimism works. Can a liberal editor etch his views on the bedrock of British conservatism? Could at least one corner of Britain’s public discourse be becoming nicer? Greig and I sat next to each other at lunch a decade ago at Wimbledon. I recall he spent the meal speaking to someone more important; I rather admired the polite ruthlessness. “How good to see you again,” he says warmly as we shake hands. Clarke’s, an elegant English restaurant, used to have no menu. That suited Greig fine. “The only thing I hate is rice pudding,” the 58-year-old smiles, boyishly. There is now a menu, filled with delightful ingredients, all of which the Daily Mail has probably linked to cancer. Greig chooses a ricotta and fig starter, followed by grey mullet. I go for the vegan options — described as a salad and “a lovely selection of vegetables” — plus a glass of Pinot Grigio. We are nestled against a wall at the back of the restaurant, and at first Greig speaks so softly that I can barely hear him. His grandfather was a courtier and medic, who played doubles with the Duke of York at Wimbledon. Greig is the first tabloid editor to have gone to Eton; indeed, it’s the only four-letter word he utters all meal. @Businessdayng

“I loved Eton . . . It set me up doing so much of what I’m still doing.” It was there that he first wrote to stars — David Hockney, Samuel Beckett, Joanna Lumley — for interviews. He managed to keep in touch, starting one of Britain’s best address books. What’s his secret? “It’s sort of slightly the EM Forster thing — only connect!” Even with the royals? “If you’re comfortable in your own skin, you just be yourself.” Greig was urged by his father, a courtier and shipping executive, to be a banker. But he instead joined an unglamorous local paper in Deptford, south London. He worked his way up to the Mail, The Sunday Times, then edited the society magazine Tatler, the Evening Standard and The Mail on Sunday. “I was never entirely sure if he was my New York correspondent or my social secretary,” his Sunday Times editor Andrew Neil said. Greig’s career trajectory has been that of a hot-air balloon; his contacts the propane, his confidence the spark. He seems proudest of his memoir of Lucian Freud, whom he met regularly in Clarke’s. Breakfast with Lucian is a hair-raising book that depicts Freud as selfish, secretive and sexually sadistic. One reviewer did question if the elderly artist knew what he was getting into. Greig concedes his methods were unorthodox. “I sort of stalked him . . . I twisted my way into getting access to him through a bit of deception, charm and kidnapping.” It’s a brazen admission. Then again, what does the Daily Mail editor have to fear? What’s it like being editor, I ask. “People always think, oh my God, it must be conflict with 10 Downing Street.” It’s actually often the small diary stories that “cause difficulties later”. Indeed, I think, remembering how the Mail’s diary used to tease him as a “Tintin lookalike”.

Monday 07 October 2019

BUSINESS DAY

cityfile Pastor confesses to killing girl friend in Enugu REGIS ANUKWUOJI, Enugu

A Sustainability Week: Dangote unveils waste-to-wealth recycling SEGUN ADAMS

s part of activities marking the 2019 Global Sustainability Week, employees of the pan-African conglomerate, Dangote Group, last Thursday flagged off a waste-towealth initiative to create a sustainable environment, generate revenues from environmental waste, and also give back to the company’s host communities. The company marked the Sustainability Week with the theme “Our Community, Our Passion” with various activities held in the Lagos head office and across the plants and business units. These activities focused on investment programmes directed towards turning waste to wealth, and reviving reading culture in young children in host communities. In Lagos, over 200 sustainability champions and employee volunteers across the business units assisted five international facilitators to train the children on turning the most insignificant

materials and waste in the environment into tangible assets of economic value to the nation. Dangote employees took the initiative to St. George’s Primary School and Aunty Ayo International School in Ikoyi, Lagos, where the facilitators, with additional help from the volunteers, trained the children on how to manage their wastes and create sustainable products that are marketable from their everyday generated wastes. Speaking on the initiative, Ndidi Nnoli, Group chief sustainability and governance, Dangote Industries Limited, said the company’s sustainability approach is driven by a desire to contribute and impact positively towards the development of host communities and the society at large. The 2019 Sustainability Week is directed towards safeguarding the environment by educating the host communities on how to turn waste to wealth to achieve sustainable development, Nnoli said. “We chose St. George’s School because the school is

a neighbour to Dangote Head Office building in Ikoyi. Charity begins at home,” she said. “We started to engender the sustainability culture as an employee volunteering initiative. We honestly believe that people are at the centre of any organisation and sustainability needs to begin with the individual person. It is a culture in Dangote to celebrate the Sustainability Week every year and this year we decided to bring it to a neighbouring school.” Nnoli said it was important to bring the initiative to the schools around the company “because we need to be very concerned about our children, their future, and most especially, education outside the classroom”. “We need to be concerned about educating our children on sustainability beyond the definition,” she said. She disclosed that the company brought international artists to educate the employees that the type of waste that can easily be thrown into the trash bin could be transformed into usable items.

“We have people making bangles and pencil cases out of waste plastics. We also have literacy session, mentoring and above all, we are learning about why it is necessary to hunger for knowledge,” she said. She noted that the Dangote Group has a responsibility to the environment and the society. “We are looking for ways to ensure that value is added to things around us. We have many volunteers who are so eager to learn and impart knowledge to the children. The children are also very excited to learn on new ways to transform the environment,” Nnoli said. “For us at Dangote, it is social responsibility and also corporate services, but in this case, the employees have volunteered to carry out this initiative. But the organisation has given us the licence to do whatever we want to do. So, as Dangote employees, we have chosen to stand for sustainability, we stand for social development and we stand for the education of a child,” she said.

Rivers communities suspend planned shutdown of NDPR facility IGNATIUS CHUKWU & GLADYS NWEKE

ost violent uprisings in Rivers State by host communities seem to be getting positive response and resolution. Now, the proposed shutdown of the operation of Oil Mining Lease (OML) 54 belonging to Niger Delta Petroleum Resources (NDPR) by host communities has been generating tension in the state. Deputy speaker of the

Rivers State House of Assembly, Ehie Ogerenye Edison, called on chiefs, elders, youths, men and women of the host communities of OML 54 to shun its proposed protest over the marginalisation of the people by NDPR. The host communities of NDPR are Ogbele, Ubumeze and Oshuigboko in Ahoada East Local Government Area of Rivers State. NDPR, which began operating in the area in 2005, has been accused of renegwww.businessday.ng

ing on the memorandum of understanding (MoU) it entered with the communities. Edison, who is the lawmaker representing AhoadaEast Constituency II in the State Assembly, appealed to the host communities for calm as the governor of the State, Nyesom Wike, had indicated interest in the matter. Edison said the House of Assembly was doing its best to ensure every injustice was looked into and addressed amicably. Meanwhile, the host

communities of OML 54 have agreed to put off the proposed protest aimed at shutting down NDPR facility. The decision to call off the protest followed the intervention of the state government. President general of Upata Youth Council, Alali Justice Livingstone, after a meeting with the secretary to the state government, told correspondent that they had confidence in the government to handle the matter amicably.

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33-year Enugu b a s e d p a s t o r, Chukwuemka Eze, has finally confessed to killing his girl friend, Ogechukwu Ogbodo. Eze, a native of Udenu local government area of Enugu State, had upon his arrest on July 15, 2019, denied killing Ogbodo, but finally admitted the heinous crime last week, after three months in police cell. Eze in his confessions to the police in Enugu, claimed he was ‘pushed by the devil’ to kill his girl friend of five years. A source close to the family said the lady was a business woman, who used to buy tricycles for wiling operators and had helped the pastor in many ways. The source said that pastor grew angry when the deceased turned down his request to buy a tricycle for him. “She did not oblige to the pastor’s demand, so that faithful day she came back with money, once the pastor noticed that she had money with her,

he started trouble with her and in the process, killed her and collected the money and her landed property documents. Ogbodo who, until her death, lived behind bethel Plaza Railway Quarters, GRA Enugu, was said have accommodated the pastor and took care of him for the period they lived together. The Commissioner of Police, Enugu State, Ahmad Abdur-Rahman who paraded Eze alongside 14 other criminals arrested for offences, including conspiracy, armed robbery and defilement, said t h at t h e p a s t o r e a r l i e r denied the murder. Abdur-Ramham said the command would continue the efforts to check violent crimes in the state. “ We a re s t r i v i n g t o wards reducing crime t o i t s b a re s t m i n i mu m through proactive measures without losing sight of respect for human r ights and r ule of law” he said. Recovered from the criminals were two locally made pistol, one locally made single-bar rel cut to size gun and four live cartridges.

Oyo deploys OYRTMA mayors to LGs REMI FEYISIPO, Ibadan

yo State government has deployed officers of Oyo State Road Transport Ma n a g e m e n t A g e n c y (OYRTMA) known as ‘mayors’ to local government areas in the state on voluntary service to ease traffic congestion and make the public roads free. The mayors are primarily saddled with the responsibility of monitoring, controlling and directing traffic along secondary and basic schools across the state. They are also expected to check road accidents involving school pupils. Executive chairman of OYRTMA, Akin Fagbemi, while distributing operational kits to the officers said: “This is another angle to the novel developmental plans of the present administration in the state.” According to Fagbemi, the traffic mayors were @Businessdayng

volunteers that who would complement the efforts of the agency in all the 33 local government areas of the state. “The concept is to free our roads of all traffic entanglements. As we all know, the number of officers we have cannot cover the entire state. We will make do with the volunteers till government will have the financial capacity to employ more. “The operational kits and other gadgets will help identify these set of volunteers and we are confident that they have been given enough training on good conduct and how best to relate with motorists,” he said. Distributing the items which included high quality crested vests, berets, jungle boot, reflective jackets as well as operational trousers, Fagbemi charged the mayors to discharge their duties diligently, adding that outstanding ones among them would be adequately rewarded.

Company IN FOCUS

BUSINESS DAY Monday 07 October 2019 www.businessday.ng

Fidson Healthcare Plc: Glimpse of stellar performance in Nigeria’s healthcare industry laden with thorns OLUFIKAYO OWOEYE

n the last few years, several promising drug manufacturing companies in the country have closed shop with many on their way to winding down. In 2017, Evans Medical Plc was taken over by First Bank and defunct Sky Bank Plc a defaulting on a loan facility. Sadly, before Evans, with the World Health Organization’s prequalification license that gives it an opportunity to participate in international bids could hardly reap the dividend, the two lenders came for its jugular. Drugmaker, Swiss Pharma Nig Ltd (Swipha) was in 2017 acquired by French pharmaceutical multinational firm, Biogaran, a subsidiary of the Servier Group specialized in generic medicines. No doubt the doing business in Nigeria is not for the faint at heart. Despite the uninspiring performance among drug makers in the country, Fidson Healthcare Plc has in recent times show a ray of brilliant performance which has caught the attention of Analyst desk at BusinessDay and industry watchers. Fidson in History Started as a local distributor of pharmaceutical products in 1995, barely a year after Fidson moved into the importation of its own brand of finished medicines. Determined to make an impact on Nigeria’s growing population, Fidson set up its first local manufacturing facility in July 2002. In March 2005, Fidson became the first company in sub-Saharan Africa to manufacture Antiretroviral (ARVs) drugs. In February 200, Fidson set up a second manufacturing facility and ceded the former manufacturing facility to an international joint venture project, which led to setting up of Ecomed Pharma Limited. Fidson currently run a Current Good Manufacturing Practices (CGMP) compliant manufacturing facility and are one of a few Nigerian pharmaceutical manufacturers that are candidates for the WHO GMP certification. The GMP certification

is the aspect of quality assurance that ensures that medicinal products are consistently produced and controlled to the quality standards appropriate to their intended use and as required by the product specification. Fidson’s shares were quoted on the floor of the Nigerian Stock Exchange on June 5, 2008. As of December 31, 2018, the issued share capital is held 38.86percent directly by its directors and 5.74percent indirectly by directors while 54.94percent by the investing public. The company realises its revenue from the sale of Ethical Products, sale of Over the counter drugs and sale of paper products and diapers. Leadership Fidelis Ayebae, a 1976 graduate of civil engineering from the Mainland Institute of Technology is the founder, CEO& MD. Fidelis has worked in various capacities with a number of organizations among which is CitiBank Limited. As of December 31, 2018, Fidelis owns a 35.44percent stake in the healthcare company. He also doubles as the chairman of Nem Insurance Plc and as of December 31st, 2018, Fidelis owns a total of 24.37million units of shares in the insurance company. He is an Associate of the Chartered Institute of Administration and also a member of the Nigeria

Institute of Management. His wife, Funmilola is a non-executive director of the company. Other non-executive directors include Emmanuel E. Imoagene, Mabel Ndagi, and Segun Adebanji, who is the chairman. F i n a n c i a l P e r f o rmance A dive into the company’s financials show revenue has been on the

increase. In full-year 2018 for the period ended 31st December 2018, the revenue stood at N15.5bn as compared to N14.1bn recorded in the full year 2017. Full-year 2019 revenue would continue its upward trajectory, supported by new product development and improved capacity utilization. It, however, recorded a loss of N97.4m as compared with 1.57bn in the full year 2017. What is Fidson doing differently? During its facts behind the figures held on the floor of the nation’s bourse in April, the company’s Head of Finance and Accounts, Imokha Ayebae shed lights on the rationale behind the company’s rights issue. The company raised N3 billion through a rights issue of 750 million shares at N4 per share. Proceeds from the rights issue will be used to deleverage its balance sheet and inject more working capital. As at November 2018, the company had an outstanding debt balance amounting to N6.1 billion. Imokha said with Fidson’s state-of-the-art factory in Ogun State and increased capacity utilization, the company car-

Source: CardinalStone Equity research report

ried out a number of costcutting measures to help achieve its target, such as lowering finance cost with fresh capital and an increase in product prices, adding that plans are in top gear to reduce energy cost from the current 40 percent of total by moving from diesel to gas-fired power generators, introducing new products and cutting out middlemen. He blamed the drop in revenue and profit in 2018 to an increase costs due to scarcity and cost of imported raw materials, Nigeria’s port congestion and Naira devaluation, all of which, he said impact on operating costs that could not be passed to consumers. Fidson’s penetration into the low end of the market has continued to support top-line and is expected to contribute further over the years. A key product of the company its intravenous fluids has gained significant traction since the introduction in 2017, management expects this to increase which a bullish posture given the local demandsupply gap for intravenous fluids. Imokha said the company is projecting to earn N20 billion in sales revenue this

year, with profit before tax to hit N3.4 billion, soaring by 2020 to N23 billion and N3.92 billion respectively. The company is also enjoying a tax holiday under the pioneer status incentive of the Federal government for a three year period which would help retain working capital and deliver more value for its shareholders. Fidson has also enjoyed government patronage in the wake of renewed awareness for locally manufactured products and a 20percent import duties on finished pharmaceutical products. Sector filled with several landmines Drugmakers in the country like their counterparts in other sectors of the economy are weighed down by several challenges. Notable among this is lack of adequate power supply, logistics worsened by congestion and bad roads at the nation’s busiest port, Apapa, harsh economic environment which has weakened consumers purchasing power. S a d l y , m a n u f a c t u rers have not been able to transfer the surging cost of production to consumers who are cash trapped, while some have resulted to cheaper traditional medicines with some taking their worsened health conditions to religious ‘miracle’ centers. Drugmakers have also battled the effect of drug smuggling through the nation’s porous border post, while drug faking and adulterated medicines continue to thrive in quack medicine kiosk and roadside medicine shops. No doubt drug makers have their hands full as the industry is laden with thorns. Outlook Going forward, it is expected that Fidson, with a strong fundamental will continue to deliver substantial value proposition for investors on the back of the company’s ability to continue to grow its top line, given an ultra-modern facility, robust product offerings over 300 drug products to its credit. Fidson has also been selected as the preferred local manufacturing partner for GlaxoSmithKline (GSK) Plc with effect from the third quarter in 2021.

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