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Rivers now fastest growing state IGR despite political instability, exodus of companies ... as IGR moves from below N6bn in 2017 to N10bn in 2018 ... RIRS boss says it is down to reforms, tax education, ICT IGNATIUS CHUKWU

n spite of political turmoil that saw the exodus of companies from the oil city of Port Harcourt with attendant loss of jobs, Rivers State has recorded the fastest growth in Internally Generated Revenue (IGR), according to figures released late last year by the National Bureau of Statistics (NBS). Rivers State IGR grew by 36.13 percent, beating Lagos which grew by 16.88 percent, an indication that the measures

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Nigerians binge on dollar savings as naira devaluation memory lingers T OWOEYE OLUFIKAYO & OLUWASEGUN OLAKOYENIKAN

he race by customers of Nigerian banks to buy foreign currency, especially dollars, and pile into their domiciliary account is on the increase as the country’s biggest banks recorded upticks in foreign currency deposits.

FX deposits rise 19% in Q4

Dollar deposits in the five biggest banks that have released full year 2018 results grew by 19.6 percent from 2017 levels to N3.08 trillion or $8.5 billion ($1/N360). The banks are Zenith Bank, Access Bank, UBA, Guaranty Trust Bank (GTB) and Fidelity

Bank. Nigeria’s first economic recession in 25 years caught many unprepared, forcing customers to resort to the greenback as a hedge against inflation or currency devaluation. The naira lost some 70 percent of its value

between 2015 and 2018 as the currency fell to N360 per dollar from about N199/$. An analysis of audited financial results from major banks in the country shows that the volume of savings in foreign curContinues on page 46

Continues on page 46

Inside Stocks touch 52-week low as investors await catalyst P. 2 Highlights from the IMF Article IV consultation with Nigeria P. 45

Governor Nyesom Wike (r) of Rivers State, with Adoage Norteh, chairman, RIRS, at the launch of tax reforms in Port Harcourt.

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NEWS Poor power supply, low access to credit, high interest rate constraining Nigerian businesses IHEANYI NWACHUKWU

nsufficient power supply, high interest rate, unfavourable economic climate and financial problems are among major factors constraining business activity in Nigeria, according to businesses surveyed in the Central Bank of Nigeria’s Business Expectations Survey Report for March 2019. The firms also identified unfavourable political climate, unclear economic laws, insufficient demand and access to credit as constraining factors. According to the CBN report released Thursday, respondent firms expected the naira to appreciate in March, April and the next 12 months. They also expected the level of inflation to moderate in both next six monthsandthenext12months, andtheborrowingratestorisein current month, next month and the next 12 months. The Business Expectations

Survey (BES) was carried out from March 11 to 15, 2019 with a sample size of 1,050 businesses nationwide. The respondent firms were made up of small, medium and large corporations covering both import- and exportoriented businesses. CBN said a response rate of 96.2 percent was achieved, and the sample covered the services, industrial, wholesale/retail trade, and construction sectors. The respondent firms expressed optimism on the macro economy, while their outlook on the volume of total order, business activity and financial conditions (working capital) were positive during the review period. At 28.2 index points, respondent firms expressed optimism on the overall confidence index (CI) on the macro economy. The businesses’ outlook for April 2019

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Mutual funds grow AUM to all-time high in March on product development, distribution … as NAV grew by N613bn in 8yrs ENDURANCE OKAFOR

he asset managed by Nigerian mutual funds reached an alltime-high in the week ended March 22, 2019, according to the Securities and Exchange Commission data analysed by BusinessDay. Since inception, the Asset Under Management (AUM) of Nigerian mutual funds appreciated by N613.76 billion from N 77.67 billion Net Asset Value (NAV) reported for the week ended August 19, 2011, to N691.43 billion reported for the week ended March22, 2019. Dayo Obisan, president, Fund Managers Association of Nigeria (FMAN), said the performance was a reflection of products creation and increased effort in distribution. “Within the asset management space, more products have been created and a lot of Fund managers are into distribution, in terms of marketing,” Obisan told BusinessDay. A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets. Paul Uzum, managing director, Halo Nigeria Capital Ltd, said despite the growth in AUM, the level of participation by investors in mutual

fund is still quite low. “As such, you don’t see much transaction on mutual funds at the exchange. This may be because people are very careful in giving out their money to other people to manage for them,” Uzum said. The eight-year data available on the website of the Securities and Exchange Commission (SEC) revealed that most of the fresh funds flowed into the money market and fixed income mutual funds as double-digit yields in debt securities excited investors to invest less in volatile funds like equity. Analysis of the figures by the industry regulator revealed that money market funds raked the highest share of the entire market with N522.82 billion NAV. Money market funds as a percentage of total mutual funds had a significant increase by N517.45 billion from N5.37 billion in February 2012 when the first asset class categorisation was done to N522.82 billion at the week ended March 22, 2019. On the reasons why money market fund reported the highest AUM in the review period, an analyst from Alpha Morgan Capital Managers Limited, who asked not to be quoted, said it attracts the highest investors because it is risk-free.

L-R: Endurance Uhumuavbi, administrator, Nigerian Bar Association-Section Business Law (NBA-SBL); Seni Adio, chairman; Justina Lewa, council member, and Okey Egbuchu, council member, during the courtesy visit by the council of the NBA-SBL to BusinessDay head office (The Brook) in Apapa, Lagos, at the weekend. Pic by Olawale Amoo

Investors lose N548bn as Nigerian stocks fall to lowest level in 2019 OLUWASEGUN OLAKOYENIKAN

he dow nward spree embarked upon by equities listed on the Nigerian Stock Exchange (NSE) worsened on Friday as the market recorded its most bearish week in almost six months, causing investors’ wealth to shrink by N548 billion.

marginal gain achieved on Friday, which failed to upturn a four-day losing streak recorded earlier at the Lagos bourse. Performance across all sectors was equally bearish as NSE consumer goods stocks got the worst hit with a 7.73 percent loss. Industrial goods stocks shed 6.48 percent, while banking stocks were down 6.09 percent.

Only 14 gainers emerged out of 67 stocks that traded during the week; this compares to 53 stocks that appreciated in share price. “The release of mostly unimpressive earnings results further soured sentiment in the market,” analysts at Lagos-based investment bank, Meristem Securities,

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Stocks touch 52-week low as investors await catalyst BALA AUGIE

igerian stocks on Friday breached the 30,000 points psychological mark to close at 29,616.038 points, only 0.98 percent higher than their 52-week low of 29,329.62 points. Analysts had bet that a successful conduct of the 2019 elections and dovish stance of the US Federal Reserve would add impetus to the performance of equities. But there has been immense sell-off even as some companies recorded earnings growth and declared dividends. Experts blame the loss of appetite for Nigerian assets by investors on the inability of the Muhammadu Buhariled administration to articulate policies that will jumpstart economic growth since winning re-election. They added that negative news such as the huge fine slapped on telecommunication giant MTN Nigeria are •Continues online at some of the reasons inveswww.businessday.ng tors have been apathetic www.businessday.ng

The key performance indicator of the NSE, the All Share Index (ASI), which opened the week at 31,041.42 points, lost 4.59 percent, its biggest loss since end-week September 14, 2018, to close at 29,616.38 points. That put the market at its lowest level since the start of the year and deepened its year-to-date loss to 5.77 percent. This is despite a

towards Nigeria’s risk assets. “There is need for a catalyst, something to spark the market. Unfortunately, there is nothing exciting investors. One major thing that would have excited investors is the listing of MTN and it is taking forever,” said Yinka Ademowagun, analyst at United Capital Ltd. “For instance some investor w ould have got wind of the court ruling on Teleology before the market. Of course, valuations are cheap and attractive and serve as entry point b u t h a r s h a n d u n p re dictable macroeconomic environment remains a cog in the wheels,” said Ademowagun. Ademowagun said the only thing happening at the moment is the N30,000 minimum wage that is expected to boost consumer spending but the problem is how government will fund the package. Since the conclusion of the presidential elections, the local bourse has lost on 21 out of the 29 trading days

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while the ASI has shed 9.6 percent within this period. “Sentiments from the foreign investor community indicate lack of optimism that the hard decisions on structural reforms will be taken by the re-elected president,” said analysts at CSL Stock Brokers. The analysts added that concerns remain on macroeconomic stability, weak operating environment and, more importantly, the need to insulate the economy from external shocks emanating from downturn in oil prices. Fourth quarter results of companies showed banks’ earnings are growing at a slow pace due to a low yield environment and they will have to generate more income from internet banking and cut costs to maintain earnings growth. Fast Moving Consumer Goods firms are the hardest hit from a harsh and unpredictable macroeconomic environment as low consumer demand continues to undermine growth. @Businessdayng

For instance, data gathered by BusinessDay showed only Nestle Nigeria and Unilever recorded an uptick in revenue, profit, and margin while the rest fell. For the year ended December 2018, Dangote Flour Mills plc posted a loss of N1.15 billion, from a profit of N15.13 billion the previous year – the first loss since 2015 when Africa’s richest man Aliko Dangote repurchased the miller from South African food giant, Tiger Brands. Nigerian Breweries plc’s net income dipped by 26.48 percent to N9.98 billion in December 2018, from N13.58 billion the previous year, while revenues were down 5.79 percent to N324.38 billion. Dangote Sugar Refinery plc’s net income was down by 44.75 percent to N21.97 billion in the period under review as against N39.78 billion the previous year, while sales dipped by 26.44 percent to N150.37 billion as at December 2018.

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NEWS Kaduna scored high on Ease of Doing Business Iheanyi Nwachukwu

inister of finance, Zainab Shamsuna Ahmed, has scored Kaduna State high in its efforts on ease of doing business, noting that the state is among those that have made the largest advancement in global practices frontier. Ahmed, represented at the 2019 Kaduna Economic and Investment Summit (KADINVEST) by Mohammed Katrina Dikwa, permanent secretary, Ministry of Finance, said: “Kaduna State’s commitment to bold reforms is yielding results with the State recognized as a pace setter in many regards. For example, the 2018 Sub-national Ease of Doing business Report ranks Kaduna as the easiest place to enforce a contract and register a property.” In her words: “In fact, Kaduna State’s Ease of Doing Business Charter has eliminated common challenges faced by investors who now have a ‘one-stop shop’ ‘to get approvals and business documentations at half of the time it used to take before. So also has the state continued to implement economic and market-oriented initiatives that have resulted in a complete change in the economic performance of the state. “This includes among others, the implementation of the Fiscal Sustainability Plans for States – (implementation of the Treasury Single Account (TSA), Enforcement of Procurement Act) and the establishment of the Kaduna Produce Management Company (KADPMC).” According to Ahmed, the multi-faceted reforms in the State have indeed attracted groundbreaking investments by global powerhouses, including OLAM that has opened a $100 million OLAM Integrated Feed Mill and Poultry (a major investment in the state in decades). She stated that the rigorous verification exercises to remove ghost workers from Payroll of the State’s Civil Service, as well as massive infrastructural developments in Roads and Power had brought about great improvements in the economy of the State there by making the State the leader in the Public Financial Management.

FG bans mining activities in Zamfara Tony Ailemen, Abuja

… orders foreign firms to leave Zamfara in 48hrs

ederal Government on Sunday banned mining activities in Zamfara State and ordered foreign firms operating mines in the area to leave within 48 hours or have their licences revoked. The Nigerian government said it took the action following discovery of strong link between the current spate of massive killings, banditry and kidnapping in the region with the struggle for mineral resources in the gold rich region. The inspector general of police (IGP), Mohammed Adamu,

announced this while briefing State House Press Corps in Abuja on Sunday. It would be recalled that the chairman of Nigeria Governors’ Forum (NGF) and Governor of Zamfara State, Abdulaziz Yari, had while lamenting the spate of killings in the state recently, estimated that well over 4,000 persons had lost their lives to “bandits” in the gold rich region of the state. Aside the loss of human lives, economic activities in the state had been halted

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with over N2 billion paid as ransom to secure the release of residents abducted, during the period. No fewer than 682 villages and towns have been devastated by regular raids, while over 4,000 farmers have fled their communities and moved to neighbouring Katsina, Kaduna and Kebbi states This is as an estimated 13,838 cattle, and 11,088 sheep and goats have been stolen. The bandits are said to be taking advantage of the

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vast unsecured and poorly policed forests from the Basuguma forest of Neighbouring Sokoto, expanding to Kuyambana forest that also borders Kaduna, Birnin Gwari, Niger. “We also have Kuyambana Dansado forest there, in Katsina, we have Rugu and at South East of Zamfara where we have Maradi, we have forest there. Despite the huge ransom paid, the situation did not abate, leading to the cancellation of dialogues and negotiations between the federal, state and local governments

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with the bandits Yari stated, “I have told my people that negotiation and dialogue will no longer take place during my time, because, l have done that three times but it did not work.” Chief of Staff to the President, Abba Kyari; directorgeneral, Department of State Services (DSS), Yusuf Bichi, and director-general, National Intelligence Agency (NIA), Ahmed Abubakar, attended the briefing by the IGP who stated that “a combined team of security forces will be dispatched to the area to take control.

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NEWS Nigeria Innovation Summit 2019 will foster Poor diet habits killing millions globally - study Firms expect naira to appreciate by collaborations to drive economic growth rates, the UK ranked 23rd, 55.7 index points next 12 months ANTHONIA OBOKOH above Ireland (24th) and JUMOKE AKIYODE-LAWANSON

he upcoming 4th edition of the Nigeria Innovation Summit will provide a platform that fosters collaborations among government agencies, businesses, international organisations, innovators, researchers, academic community and start-ups in the country to use technology and innovation to drive sustainable economic development. Technology analysts say the annual summit, which helps Nigeria embrace innovation and move in the direction of digital transformation is a move in the right direction, as it will spur development in various sectors and industries by encouraging the use of emerging technologies and trends, research, development, commercialisation, entrepreneurship and investments. Explaining this year’s theme, ‘Accelerating Nigeria’s Economic Growth Through Innovation,’ Kenneth Omeruo, CEO, Emerg-

ing Media-the organisers of the summit said; “This is the time for Nigeria with her youthful population, to leverage new technologies like Artificial Intelligence, Virtual Reality, Blockchain, Internet of Things, robotics, data sciences, etc, and apply them in sectors like health, agriculture, financial services, education, renewable energy and clean-techs to solve problems around us.” He declared that these opportunities were already creating new businesses that have become major sources of foreign investments into Nigeria and described that as “a major way of accelerating Nigerians economic growth. This is our motivation each year to host this summit.” Omeruo further explained that small businesses and start-ups held the key to a sustainable economic growth for the country, as in 2018, according to Partech Africa report, Nigerian startups attracted $306 million in funding over 26 deals. He encouraged the government to provide more support and create the enabling environment for Nigerian businesses and innovations to thrive.

ne in five deaths a year is linked to poor diets globally, and that led to the death of about 11 million people in 2017, researchers have reported from a new study. The report, released Thursday in The Lancet journal, indicates that poor diet is responsible for more deaths than any other risk factor. A breakdown of the study showed that Nigeria is among countries with low intake of whole grains and fruits, and high consumption of sodium – found in salt – accounted for more than half of diet-related deaths and disability-adjusted life-years (DALYs). The causes of these deaths included ten million diet-related deaths in 2017 were from cardiovascular disease; cancer was responsible for 913,000 deaths, and Type 2 diabetes accounted for 339,000 deaths. In addition, 66 percent of disabilities in 2017 from a range of chronic diseases were due to those three factors, according to the report. In terms of lowest death

Sweden (25th), while the United States ranked 43rd, after Rwanda and Nigeria (41st and 42nd). India ranked 118th, and China ranked 140th. “This study affirms what many have thought for several years — that poor diet is responsible for more deaths than any other risk factor in the world,” said study author Christopher Murray, who is director of the Institute for Health Metrics and Evaluation at the University of Washington in the United States. “Our assessment suggests the leading dietary risk factors are high intake of sodium (salt) or low intake of healthy foods,” he said. The new study is part of the yearly Global Burden of Disease report, prepared by a group of thousands of researchers that tracks premature death and disability from more than 350 diseases and injuries in 195 countries. Akinyemi Tunde, a dietician, says that considering the need for urgent action globally, there was important for Nigerians to be aware of the important links between diets and health.

HOPE MOSES-ASHIKE

igerian firms surveyed by the statistics department of the Central Bank of Nigeria (CBN) expect naira to appreciate by 55.7 index points in the next 12 months. The March 2019 Business Expectations Survey (BES) was carried out by the CBN during the period of March 11-15, 2019, with a sample size of 1050 businesses nationwide. A response rate of 96.2 percent was achieved, and the sample covered the services, industrial, wholesale/retail trade, and construction sectors. The respondent firms were made up of small, medium and large corporations covering both import- and export-oriented businesses. The respondent firms expect the naira to appreciate in the current, and next month as their confidence indices stood at 33.1, and 44.9 index points, respectively. Respondent firms expect borrowing rates to rise in current month by 15.5 confidence index points, next

month by 0.4 points and the next 12 months by 1.8 point. On inflation, respondents’ average expected rate in the next six months and 12 months stood at 11.2 and 11.1 percent, respectively. The firms response on Gross Domestic Product (GDP) shows that they were optimistic of better economic conditions as their expectations on the growth of the economy rose steadily in the short run with an index of 37.7 points for the current month, 52.5 points for the next six months and 64.5 points for the next 12 months. The respondent expressed optimism on the overall confidence index (CI) on the macro economy by 28.2 index points in the month of March 2019 compared 22.1 points in February.

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The black monk (4)

Bashorun J.K Randle

• Continued from last week

fter the assassination, Dimka had made a broadcast at the Nigerian Broadcasting Corporation (NBC) studio in the following words: ‘’Good morning fellow Nigerians, This is Lt. Col. B. Dimka of the Nigerian Army calling. I bring you good tidings. Murtala Muhammed’s deficiency has been detected. His government is now overthrown by the young revolutionaries. Any attempt to foil these plans from any quarters will be met with death. Everyone should be calm. Please stay by your radio for further announcements. All borders, air and sea ports are closed until further notice. Curfew is imposed from 6am to 6pm. Thank you. We are all together.” Two days after Muhammed was assassinated, Dimka was declared wanted for treason and murder by the military authorities. He was eventually caught at a checkpoint at Abakaliki on March 5, 1976 and brought to Lagos the following day. On March 6, 1976, the Federal Government promptly issued a statement on his arrest as follows: ‘’His arrest followed a massive manhunt operation mounted by a combined team of the Army and Police in the area. ‘’The previous day, Lt. Col Dimka had checked in at a local hotel in Afikpo under the name of Mr. C. Godwin of the Federal

Ministry of Agriculture, Enugu. Later, on his request, the hotel manager secured for him a girl, Miss. Beatrice Agboli, with whom to spend the night.” A few hours later, the local Police security was alerted and they closed up on him. At about 10.30 pm, he bolted away through the window of the toilet of his hotel room into a nearby thick bush, abandoning his car with a dangling registration number ECC 6253. The continuous joint manhunt operation by the Army and Police resulted in his subsequent arrest near Abakaliki. Barely few hours after he was brought to Lagos, he was interrogated by the military Board of Inquiry led by Major Gen. E. O. Abisoye. However, while Dimka was being quizzed, 32 people including Major Gen. Illiya Bisalla, who had already been tried for their roles in the attempted coup were executed in Lagos on March 11, 1976. The only civilian executed among them was Abdulkarim Zakari, a graduate of University of Ibadan, who was said to have led Dimka and others into the studios of the NBC on February 13, 1976. The broadcaster was also cited as the man who signed for martial music records from the NBC library the previous night. Just as the first batch of coup plotters were executed, Dimka’s trial began after he was presented to the press on March 11, 1976. Handcuffed, Dimka who wore a kaftan dress watched journalists listen to a tape recording at his appearance before the board of inquiry for about five minutes. He confirmed that the voice on the tape was his own and that it was a recording made at his interrogation. He emphasised that the statement was not made under duress. According to a Daily Times publication, “13 Years of Military Rule 1966-79” the highlights of Dimka’s confessional statements included, “Frankly speaking, I should say the beginning of the

coup idea was around January this year (1976).” He said he had discussions with some persons including former Head of State, Gen. Yakubu Gowon in London and when he returned to the country, he decided to assign responsibilities to members of the young revolutionaries conscripted into the plan. But Gowon, who was in exile at the time denied any prior knowledge of the coup attempt. Dimka also claimed the coup plot was hatched by young officers who resolved not to involve any Lieutenant Colonel and above except himself in a bid to effect a change of government. In his confessional statement, he said, Gen. Bisalla had complained to him and expressed his frustration that despite being a member of the Supreme Military Council (SMC), each time there was a decision to be taken, he was either sent to one place or the other. Dimka said “Bisalla told me that whatever will happen he wanted us to go ahead, and work out the details.” Explaining how responsibilities were distributed, the leader of the coup plot said “When I met Major Rabo, he said that he had finally distributed responsibilities. Major Rabo was for target one- Head of State, Lt. Dauda was for target two- Lt. Gen. Obasanjo, Lawrence Garba was for target threeLt. Gen. Danjuma. Major Gagara was for Ilorin and Sokoto. Jos had nobody. The main centres of operations were Kaduna, Ibadan, Benin where there are Radio stations.” He also listed the targets of attack, that is, those to be eliminated as the Head of State, the four GOCs, Col. Ibrahim Babangida, Col. Olu Bajowa, Col. Mohammed of Sokoto, Col. Ibrahim Taiwo of Kwara, Col. Abdullahi of Jos and Col. David Jemibewon of Ibadan. Dimka also confessed before the military board of inquiry how Zakari showed him the NBC broadcasting section on February 12, a day before the

‘

As for the wives of generals, there is no gainsaying that Maryam Babangida, Mariam Abacha; Justice Fati Lami Abubakar and Turai Yar’Adua were exceptionally powerful

coup attempt. On how the ex-Head of State was killed, he said “I stood at George Street with Major Rabo to wait until such a time when the Head of State’s car was coming out. There, one Capt. Malaki who was to give the warning order was also waiting. Capt. Malaki was to be on the watch to signal Major Rabo and Lt. William Seri on the approach of the vehicle. So, I came up and I was at the petrol station waiting. I was behind while we were talking when the Commander –in-Chief’s car passed. In fact, I did not even see it until when Malaki said the car has passed. So, we rushed in and then followed and the car was held up somewhere just opposite the petrol station. Lt. Seri was approaching the car when we stopped and Major Rabo rushed to him, then the firing started.” Dimka confessed that after the Head of State was assassinated, he went to the NBC and made his broadcast that the young revolutionaries had taken over the government. At the end of his trial, coup leader and a number of others were found guilty of treason and murder. Their death sentences were confirmed by the Supreme Military Council. Dimka and seven others were eventually executed by firing squad at Kirikiri Prisons on May 15, 1976, for their part in the abortive coup. Also executed among the squad was the former Governor of the then Benue Plateau State, Joseph Gomwalk. However, two NCOs, Sgt. Clement Yildar and Corporal Dauda Usman escaped and were never found. They were declared wanted by the authorities. The situation led to the promulgation by Olusegun Obasanjo regime of certain retrospective decrees and new military laws justifying mass executions for coup participation.” Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Sustainable Development Goals 8 and 16: Is Nigeria on the right track?

Joseph Nnanna Introduction n 2015 as part of resolution 70/1, the United Nations general assembly agreed by 2030 to transform the world by achieving 17 sustainable development goals. The goals in question range from ending poverty globally to sourcing partnerships for the goals. The table below provides a descriptive view of all 17 goals. In this article I will attempt to provide some insights where Nigeria is on attaining SDG 8 and 16, which specifically sets out to ensure decent work and economic growth, as well as promote peace, justice and strong institutions. It is axiomatic that diversifying an economy and an increase in the per capita income of citizens go hand in glove at least until income levels reach the neighborhood of just under US$10,000. Subsequently, sectoral growth tends to lead economies. Typically, and history has proven this to be the case, diversification is mainly threatened in countries with the lowest income levels and primarily commodities and

or mineral dominated. In Nigeria, economic diversification is unavoidably linked with the structural transformation of the economy and greater impetus must be aimed at attaining higher levels of productivity which inevitably will result in the movement of economic resources between sectors of the economy. One of the six characteristics of economic growth as opined by the Nobel Laureate Simon Kuznets is a high rate of structural transformation within an economy. In other words, a shift from agricultural to nonagricultural sectors, and from industry to services. To be sure, this experience has mainly been shared in advanced economies. Nevertheless, it provides some insights on where Nigeria is and where she needs to go. Not too long ago circa 2006, global crude oil prices hovered above $100 a barrel before bottoming out below $30. Since this period, oil dependent countries like Nigeria have had to do some soul searching as a nation because during this time leading up to the recession that commenced in August of 2016, Nigeria witnessed an increase and continue to do so, in unemployment and underemployment primarily amongst the youth which make up a greater proportion of the population. According to the National Bureau of Statistics, unemployment and underemployment figures stood at 52.2% in December of 2017. Since exiting the recession in the 2nd quarter of 2017 after 5 consecutive quarters of contraction the Federal Government through the Central Bank of Nigeria made some noteworwww.businessday.ng

thy attempt in their effort to aid in diversifying the economy away from crude oil through the Agricultural Anchor Borrowers Program. So far, the data revealed that the Agriculture sector has grown marginally at 3.5% of gross domestic product (GDP). However, in 2018 we witnessed a contraction by 1.33%. This economist firmly believes that perhaps a lag in the data coupled with the farmer/herdsman clashes has prohibited more growth. It was further reported by the NBS that year on year Q1 2018 GDP (+1.95% YoY) was an oil-led growth (+14.8% YoY). There is no gainsaying that Nigeria is out of the recession without the common person on the street having some comfort in their ability to gain employment and by extension, take care of their family. However, it is also important to note that Nigeria’s exit from the recession was primarily driven by the continuous increase in the price of crude oil which currently hovers around $67 a barrel and the ongoing effort of the Federal Governments drive towards diversification through Agriculture. So, although crude production per barrel has declined below the 2 million barrels per day, the price per barrel has dramatically increased giving greater impetus once again to the sector. In developing and diversifying any economy institutions cannot be overemphasized. In contemporary times, there have been empirical cross-country studies that have been conducted and provides enduring support on the importance of institutions in predicting and supporting the level of development as well as diversification globally (Hall and Jones, 1999;

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Acemoglu, Johnson and Robinson, 2001). To provide further clarity, the protection of property rights, effective law enforcement, and efficient bureaucracies to name a few, together with a broad range of norms and civic mores, are without a doubt strongly correlated to long-run economic performance and sustainability. To that effect, the aim of this paper is to explain the importance of institutions in the development cum diversification of the Nigerian economy. The rest of the article is structured thus: section 2 examines stylized facts on the judiciary in Nigeria, while section 3 reviews the financial sector as a catalyst in diversifying the economy; Section 4 discusses decent work and the minimum wage in Nigeria; Section 5 concludes with recommendations. Stylized facts on the Nigerian Judiciary “Institutions are the rules of the game in a society. The humanly devised constraints that shape human interaction. They structure incentives in human exchange, whether political, social or economic” (North, 1990 p 4). Simply put, institutions matter! From conceptualizing and enforcing a contract, the rule of law, protecting the people as well as property rights, checks and balances in government bureaucracies, and fair play in the financial markets.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Prof. Nnanna is the Chief Economist of the Development Bank of Nigeria. Contact: info@devbankng.com in the subject line Office of the Chief Economist

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10 things learnt from IMF Article IV about state of Nigerian economy

Patrick Atuanya

hen a country joins the International Monetary Fund (IMF), it makes a commitment to pursue policies that are conducive to orderly economic growth and reasonable price stability, and to provide the IMF with data about its economy. The IMF’s regular monitoring of economies and associated provision of policy advice is intended to identify weaknesses that are causing or could lead to financial or economic instability, and culminates in regular (usually annual) comprehensive consultations with individual member countries. The consultations are known as “Article IV consultations” because they are required by Article IV of the IMF’s Articles of Agreement. During an Article IV consultation, an IMF team of economists visits a country to assess economic and financial developments and discuss the country’s economic and financial policies with government and central bank officials. Recently, on March 27, 2019, the Executive Board of the IMF concluded the Article IV consultation with Nigeria. So what is the state of the Nigerian economy today and progress if any, made on reforms? 1. Medium-term outlook for economy remains subdued, with downside risks.

The Nigerian economy might have exited recession, (real GDP increased by 1.9 percent in 2018, up from 0.8 percent in 2017), however growth is still too weak as a result of persisting structural challenges. These include a large infrastructure gap, low revenue mobilization, governance and institutional weaknesses, and banking sector vulnerabilities which according to the IMF, are dampening long-term foreign and domestic investment and keeping the economy reliant on volatile oil prices and production. Current economic expansion is below where it needs to be to reduce poverty and improve, human development indices, such as healthcare and education. The IMF fingers policy choices such as continued foreign exchange restrictions, and petrol subsidies as the major culprits, and notes that over the medium term, absent strong reforms, growth would hover around 2½ percent, implying no per capita growth as the economy faces limited increases in oil production and insufficient adjustment four years after the oil price shock. 2. Debt burden won’t lighten anytime soon Interest payments by the Federal Government on its outstanding debt will remain elevated at unsustainable levels of 63 percent of FGN revenues for 2019, and falling slightly to 50 percent of FGN revenues by 2020. Total FGN debt will also rise to 26.8 percent of GDP in 2019, and 27.7 percent of GDP by 2020. It goes without saying that even at micro household levels if a family makes N1.2 million per annum (or N100,000/month), and spends N720,000 (63%) as interest payments on credit cards, even as total due continues to rise, then the family might have to declare bankruptcy soon. 3. FX Reserves buoyed by short

term flows Record inflows into mostly shortterm local debt and a current account surplus have lifted gross international reserves to their recent highs of $44.6 billion as at April 3rd, 2019. Also the thrice oversubscribed November 2018 Eurobond helped to cushion the impact of outflows late last year. However offshore ‘carry traders’ investing in one year Treasury Bills in Emerging Markets are notoriously fickle and are no substitutes for sound policies that attract more sticky types of capital. 4. Major reforms needed to grow FG revenues Nigeria should strengthen domestic revenue mobilization, through additional excise taxes, a comprehensive VAT reform, and elimination of tax incentives, according to the IMF. Securing oil revenues through reforms of state owned enterprises and measures to improve the governance of the oil sector will also be crucial. This will help to lower the ratio of FG interest payments to revenue and make room for priority expenditure. 5. it’s time to end fuel subsidies Nigeria spent an estimated N623 billion ($1.7 billion) on fuel subsidies last year, a dubious expense line it clearly cannot afford. Phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable would help reduce the poverty gap and free up additional funding for health and education. Nigeria fixes the price of gasoline at N145 per litre ($0.40, or $1.51 a gallon), among the 10 cheapest levels worldwide, according to GlobalPetrolPrices. com. 6. Return CBN to its more orthodox role, improve transparency At the last count the Central Bank of Nigeria (CBN), had at least 18 Develop-

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Nigeria spent an estimated N623 billion ($1.7 billion) on fuel subsidies last year, a dubious expense line it clearly cannot afford

ment Finance Operations across various sectors of the Nigerian economy. These include the Agricultural Credit Guarantee Scheme (ACGS), Interest Drawback Programme (IDP), Commercial Agriculture Credit Scheme (CACS), Paddy Aggregation Scheme (PAS), Micro, Small and Medium Enterprises Development Fund (MSMEDF), Anchor Borrowers’ Programme (ABP), Presidential Fertilizer Initiative (PFI), National Food Security Programme (NFSP), National Collateral Registry (NCR), SME Credit Guarantee Scheme (SMECGS), Small and Medium Enterprises Restructuring and Refinancing Facility (SMERRF), Real Sector Support Facility (RSSF), Textile Sector Intervention Fund (TSIF), Power and Airline Intervention Fund (PAIF), Nigeria Electricity Market Stabilisation Facility (NEMSF), Nigeria Bulk Electricity Trading Payment Assurance Facility (NBET-PAF), Non-oil Export Stimulation Facility (NESF), and Export Development Facility (EDF). Sadly the problem with these myriad schemes goes beyond the funny names and weird acronyms. There are issues around the stress this imposes on the CBN balance sheet and distortions to the wider economy. The IMF urged ending direct CBN intervention in the economy to allow focus on the central bank’s price stability mandate. They also encouraged the authorities to enhance transparency and communication and to improve the monetary policy framework, including by using more traditional methods.

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Can fashion be inclusive? Small-scale trade can reach customers directly GrowthView

Christina Wehbe UNSDG#8 | People Partnerships | Inclusive Technology

his GrowthView article is a continuation of our last article “Inclusive: how prosperity and growth go hand in hand”. This second part, demonstrates with an anecdotal example of how small-trade can be inclusive, honest and bring in straightforwardincome. What is that we value and how do we want to do business? Life is not complicated - We just tend to make it complicated when we start looking at business ideas with the “investor lens” or with the “high-profit” lens. When you start small, and humble, you can only go upwards from there. Scaling becomes natural. This is why it is called organic growth. A personal GrowthView anecdote on fashion trade from Colombia The idea was simple. Find your local strawhat supplier, start with a small-scale shipment of handmade, painted colourful summer hats (flowers, lemons, toucan birds) from Colombia and import them to sophisticated beach locations, who would love the uniqueness of a

“tailormade” Colombian artisan hat. As my family lives in Colombia it took us, to our surprise, only one day to do the phone calls to the local hat designers (WhatsApp direct contact), understand the material made out of local straw (videos) and the price (voice-notes) to have the agreed amount done and shipped by this summer; hand-made and painted in Colombia. This is an example of effective cross-border trade, where income can be made, if done correctly for all parties involved. Knowing your local positioning and your assets is crucial. Do not sell your idea and sell your value-add so quickly. In this example, the hats are handmade in Colombia, and the requirement to have a local trusted partner makes the scaling possible & effective. Having a profit-sharing mechanism that is fair and transparent, is only possible at a smaller scale. This is why corporates have a lot to learn from peer-to-peer and social entrepreneurs. This is a shorter value-chain where the local partner is accessing the final customer directly; as the values are the same between the partners and the middle-man. Family and friend run-businesses can do cross-border trade. “Organic Income opportunities are driven by us, as individuals, regardless of where we are based.” You are creating a value-chain built on individuals and people partnerships, where each person benefits in his or her own way. First (1) increased revenue for the artist (manufacturer) as well as the local partner, (2) bringing life & colours from other cultures through ethnic and artisan artefacts (3) building inclusive trading hubs. www.businessday.ng

This small trade has an immediate economic impact and establishes a proof of concept for fashion industry to scale (in this example, Colombia); despite it being a first sample, each person receives direct revenue. This is how you achieve a social return on investment (ROI): is to know who will be your end beneficiary, who will you buy it from and in which market. Are you inclusive in your business partnerships? People partnerships, making business uncomplicated? Can we do more people partnerships in Nigeria, Sub-Saharan Africa and Latin America? Why don’t we see more small trade to and from Africa or Latin America? It starts with mutual trust between a buyer and seller. If we put behind our “intrinsic” way of overcomplicating life, and go with our initial intuition - will people like these hats, and do I trust the person making them as well as my contact to send it? Then you will be surprised how trade can be made easier. Of course, we need to be cautious and do due-diligence, this is why it is called people partnerships. These are trusted contacts, family or friends in which you do a social transaction with. Know your local market and work with partners that care and are on ground - it will be efficient, trusting and sustainable. Small-scale trade is sustainable as they are based on our personal networks and connections, where we leverage our individual knowledge, know-how and people connections. Something corporates are looking to tap into through corporate partnerships; the same applies to us individuals with “People Partnerships”. The demand is there and people love artisan,

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ethnic and authentic products. They also like having an impact and as human-beings, we are social - so we value goods that have meaning (or a story behind them). I am a corporate or investor, why don’t I trust these ideas? • Payment trust | Firstly, trust in paying upfront half of the clothes, hats or artisan that you will buy. • Shipping trust | Lack of trust in the hats being shipped correctly. Distribution and logistical concerns, will I ever receive them? • Design trust | Lack of trust in customers or individuals liking the items. Remember, the simple economy is demand and supply. The linking of the two is where each individual, with similar values for prosperity, impact and sustainable future can come together to create organically created networks of trade. Technology is the enabler. Inclusive trade is built on partnerships between people that trust each other. Technology enables it and exclusivity contracts allow investors to scale it. Key Take-aways: 1. Partner with people, not with companies 2. Trust your idea 3. Do your social due-diligence 4. Technology will help 5. Know your value Wehbe is passionate about helping others and fighting poverty & injustice. She is the founder of GrowthView. She writes from Zurich, Switzerland.christina.wehbe@gmail. com Cell: +41 79 950 4760 https://www.urbanemerge.com/people https://www.qeh.ox.ac.uk/alumni/christina-wehbe

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

The killing fields of Southern Kaduna

kirmishes between largely indigenous farmers and socalled settler pastoralists in Southern Kaduna, since 2015, has assumed an alarming dimension with killings being reported on a daily basis. For instance, in December 2016, the Catholic diocese of Kafanchan disclosed that within a space of one year pastoralists killed a total of 808 people in 53 villages and burnt 1,422 houses across the local government areas (LGAs) of Kaura, Sanga, Jama’a and Kauru. Farm produce estimated at N5.5 billion were destroyed too. Even the Kaduna State Governor, Nasir El Rufai, confirmed the invaders were Fulani herdsmen; the state government had to pacify and pay them to stop the killings. They so-called herdsmen over the last four years have literarily gone amok, killing and destroying communities as revenge for their rustled cows, as reprisals for the killing of

any of their member or to ensure access to grass for their cows. It’s the same story in Benue Plateau, Taraba, Enugu, Delta, and Ekiti. Fulani gunmen loot and burn communities either in the thick of the night or in the mornings when the men have gone to farms, killing defenceless and innocent women, children, the old and infirm. Shockingly, government’s initial reaction to these killings has followed one trend: deafening silence. Followed by a half-hearted response that has failed to stop the killings and a refusal or inability to apprehend the killers and bring them to justice. At one occasion, the President’s spokesman, Femi Adesina, curtly berated those expecting the president to speak on the issue because the president believes in true federalism and the state government was handling the issue. On the eve of the just concluded presidential election El Rufai, announced that about 66 Fulanis at Maro in Kajuru local government had been killed. Some human rights groups and

humanitarian agencies including the National Emergency Management Agency (NEMA) and the Red Cross providing relief and engaged in peace building efforts in Kajuru hotly disputed the veracity of this information. The Kaduna state governor revised the figure of those killed to 130 and not 66 as reported earlier. After that ill-informed announcement by the governor, the Adara community in Kajuru LGA has been besieged by armed Fulani herdsmen. Hundreds of men and especially women and children have been killed in cold blood and neither the state nor federal government has responded. In 2015, Nigerians had hoped that, given his military background, the election of President Buhari would end the deteriorating security situation of the country. Sadly, the security situation is hardly better. Even more worrisome is the lack of any clear strategy from the president, other than the usual platitudes, for ending the killings.

Despite the deteriorating security across the country, the President has kept the heads of his security agencies. Unless the president knows something that we don’t about his security chiefs, there is no better measure of their performance than their ability to protect Nigerians. What is the purpose of a government if it cannot protect its own people? The killings have continued because there have been no consequences. Those who should arrest them have not done so because no one is holding them to account. Mr President, ultimately, is responsible. Meanwhile the perpetrators are emboldened. “How can a responsible government allow [its] people to be killed in this way” asked President Buhari back in 2013 when he criticised former President Goodluck Jonathan over Boko Haram. He even suggested that Jonathan resign for a more competent leader to handle the security situation. Six years after, perhaps it is time President Buhari heed his own advice.

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Sticky expectations

Too many challengers Welfare in India

Uganda tries to dodge the “presource curse”

A better anti-poverty plan for India

Few countries show enough patience after discovering oil

Indian politicians are promising more cash for the poor. They should be less selective

“

IKE SHOE polish”, is how one oilman describes Uganda’s black stuff. It is waxy when heated and solid at room temperature. Some 6bn barrels lie in the western region around Lake Albert, of which 1.4bn may be recoverable. Commercial discoveries were first made in 2006—the biggest onshore oil finds in sub-Saharan Africa for two decades. But if the oil moves slowly, so too does oil development. Production is not expected to begin until 2022 at the earliest. Waiting is hard. Researchers have long worried about a “resource curse”, as oil distorts economies, corrupts politics and fuels wars. Now some warn of a “presource curse”, which strikes even before the first drop is pumped. Ghana and Mozambique found large reserves, of oil and gas respectively, at around the time that Uganda did. Both lurched into economic crises. Uganda is trying to learn lessons. The main one is patience. Ghana borrowed heavily, eager to cash in on future oil revenues. By 2012, even with the oil flowing, the government was racking up big deficits; in 2015 it needed the IMF to bail it out. Mozambique sold bonds and took out hidden loans, then plunged into a debt crisis when they were exposed. As part of a restructuring deal the government has promised bondholders a share of gas revenues, which are still four years away. Its former finance minister is now in a South African jail, fighting extradition to America. Borrowing binges are often based on inflated expectations. In a paper from 2017, James Cust of the World Bank and David

OOD KING WENCESLAS thought of the poor when the weather turned cold. Election season has the same effect on India’s politicians. With national polls looming in April and May, the two main political parties are competing to shower money on the indigent. The governing Bharatiya Janata Party (BJP) has already started paying benefits to farmers who own less than two hectares (five acres) of land. The Congress party promises cash payments for the poorest 50m households. The new focus on the problem is admirable, but these ideas need rethinking. India has about 50m people

Mihalyi of the Natural Resource Governance Institute, a thinktank, analysed 236 oil discoveries around the world between 1988 and 2010. They looked at IMF growth forecasts made after oil was found, then checked to see if the predictions were right. On average, countries grew slower than anticipated, even before any oil was pumped: in the six years after a discovery, forecasts fell short by 0.8 percentage points per year. In places with especially weak institutions the gap was 1.4 percentage points. That bodes ill for Uganda, where Yoweri Museveni, the president, keeps a tight grip on power. But when it comes to oil his political dominance has made it easier to plan long-term, argue Angelo Izama, a Ugandan analyst, and Sam Hickey of the University of Manchester. In Ghana, which is more democratic, leaders struggle to think beyond the next election. They

rushed to the pumps before rules were in place. In Uganda, by contrast, the government held out for better deals from the oil companies. Technocrats were given space to work. The Ugandan fields are being developed jointly by Total, a French oil major, CNOOC, a Chinese state-run giant, and Tullow, a British firm. They have tussled with the government over tax, a refinery, and the tariff charged to get oil to the Tanzanian coast, down what will be the longest heated pipeline in the world. Disagreements have delayed a final investment decision on the oil project, now expected later this year. The worry is that Uganda’s patience will run out. The country has less oil than many Ugandans think. Shared out equally, each citizen would get about two barrels a year at peak production (against 39 in Angola and 261 in Norway). Within three decades

it will be gone. The government, prudently, has not issued dollardenominated bonds. But public debt, which stands at 43% of GDP, has doubled in a decade. Some of it will need to be renegotiated if oil does not arrive on time, warns Adam Mugume, head of research at the central bank. The government has dipped into the Petroleum Fund, which holds tax revenues collected from the oil companies, to plug budget holes. Mr Museveni is increasingly resorting to patronage politics as his popularity dwindles. He shields the oil sector from scrutiny. Lawyers in the western region report a spike in land conflicts; civil-society groups complain they have been blocked from visiting affected villages. Innocent Tumwebaze, one of 7,000 people displaced to make way for a refinery, is already disillusioned with oil. “Maybe it will benefit others,” he says, “but not me.”

living in extreme poverty, according to the World Poverty Clock, an Austrian research project. Many others are severely pinched. Yet India’s safety-net is both immensely complicated, with over 950 centrally funded schemes and subsidies, and stingy. Old people protested in the capital last year, complaining that the central-government pension of 200 rupees ($3) a month has been frozen since 2007. Much of the money spent on welfare never gets to the poor. Numerous subsidies for fertiliser, power, water and so forth are snaffled by better-off farmers or go into officials’ pockets. A large rural employment scheme does mostly reach poor people, since nobody else is prepared to dig ditches all day under the hot sun. But it is expensive to run and prevents participants from doing any other work. A study carried out in Bihar, a poor state, by the World Bank estimated that you could cut poverty at least as much by taking the money for the scheme and dividing it among the entire population, whether poor Continues on page 19

Monday 08 April 2019

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Redesigning life

The promise and perils of synthetic biology

To understand them well, look to the past

OR THE past four billion years or so the only way for life on Earth to produce a sequence of DNA—a gene—was by copying a sequence it already had to hand. Sometimes the gene would be damaged or scrambled, the copying imperfect or undertaken repeatedly. From that raw material arose the glories of natural selection. But beneath it all, gene begat gene. That is no longer true. Now genes can be written from scratch and edited repeatedly, like text in a word processor. The ability to engineer living things which this provides represents a fundamental change in the way humans interact with the planet’s life. It permits the manufacture of all manner of things which used to be hard, even impossible, to make: pharmaceuticals, fuels, fabrics, foods and fragrances can all be built molecule by molecule. What cells do and what they can become is engineerable, too. Immune cells can be told to follow doctors’ orders; stem cells better coaxed to turn into new tissues; fertilised eggs programmed to grow into creatures quite unlike their parents. The earliest stages of such “synthetic biology” are already changing many industrial processes, transforming medicine and beginning to reach into the consumer world (see Technology Quarterly). Progress may be slow, but with the help of new tools and a big dollop of machine learning, biological manufacturing could eventually yield truly cornucopian technologies. Buildings may be grown from synthetic wood or coral. Mammoths produced from engineered elephant cells may yet stride across Siberia. The scale of the potential changes seems hard to imagine. But look back through history, and humanity’s relations with the living world have seen three great transformations: the exploitation of fossil fuels, the globalisation of the world’s ecosystems after the European conquest of the Americas, and the domestication of crops and animals at the dawn of agriculture. All brought prosperity and progress, but with damaging side-effects. Synthetic biology promises similar transforma-

tion. To harness the promise and minimise the peril, it pays to learn the lessons of the past. The new biology calls all in doubt Start with the most recent of these previous shifts. Fossil fuels have enabled humans to drive remarkable economic expansion in the present using biological productivity from ages past, stored away in coal and oil. But much wilderness has been lost, and carbon atoms which last saw the atmosphere hundreds of millions of years ago have strengthened the planet’s greenhouse effect to a degree that may prove catastrophic. Here, synthetic biology can do good. It is already being used to replace some products made from petrochemicals; in time it could replace some fuels, too. This week Burger King introduced into some of its restaurants a beefless Whopper that gets its meatiness from an engineered plant protein; such innovations could greatly ease a shift to less environmentally taxing diets. They could also be used to do more with less. Plants and their soil microbes could produce their own fertilisers and pesticides, ruminants less greenhouse gas—though to ensure that synthetic biology yields such laudable environmental goals will take public policy as well as the cues of the market. The second example of biological change sweeping the world is the Columbian exchange, in which the 16th century’s newly global network of trade shuffled together the creatures of the New World and the Old. Horses, cattle and cotton

were introduced to the Americas; maize, potatoes, chilli and tobacco to Europe, Africa and Asia. The ecosystems in which humans live became globalised as never before, providing more productive agriculture all round, richer diets for many. But there were also disastrous consequences. Measles, smallpox and other pathogens ran through the New World like a forest fire, claiming tens of millions of lives. The Europeans weaponised this catastrophe, conquering lands depleted and disordered by disease. Synthetic biology could create such weapons by design: pathogens designed to weaken, to incapacitate or to kill, and perhaps also to limit themselves to particular types of target. There is real cause for concern here— but not for immediate alarm. For such weaponisation would, like the rest of cutting-edge synthetic biology, take highly skilled teams with significant resources. And armies already have lots of ways to flatten cities and kill people in large numbers. When it comes to mass destruction, a disease is a poor substitute for a nuke. What’s more, today’s syntheticbiology community lives up to ideals of openness and public service better than many older fields. Maintained and nurtured, that culture should serve as a powerful immune system against rogue elements. The earliest biological transformation—domestication— produced what was hitherto the biggest change in how humans lived their lives. Haphazardly, then purposefully, humans bred

cereals to be more bountiful, livestock to be more docile, dogs more obedient and cats more companionable (the last a partial success, at best). This allowed new densities of settlement and new forms of social organisation: the market, the city, the state. Humans domesticated themselves as well as their crops and animals, creating space for the drudgery of subsistence agriculture and oppressive political hierarchies. Synthetic biology will have a similar cascading effect, transforming humans’ relationships with each other and, potentially, their own biological nature. The ability to reprogram the embryo is, rightly, the site of most of today’s ethical concerns. In future, they may extend further; what should one make of people with the upper-body strength of gorillas, or minds impervious to sorrow? How humans may choose to change themselves biologically is hard to say; that some choices will be controversial is not. Which leads to the main way in which this transformation differs from the three that came before. Their significance was discovered only in retrospect. This time, there will be foresight. It will not be perfect: there will certainly be unanticipated effects. But synthetic biology will be driven by the pursuit of goals, both anticipated and desired. It will challenge the human capacity for wisdom and foresight. It might defeat it. But carefully nurtured, it might also help expand it.

A better anti-poverty plan for India Continued from page 18

or not. It is welcome, then, that the parties are vying to come up with better schemes. And it is especially encouraging that both the BJP and Congress are proposing simply to give people money. Distributing cash is cheaper than handing out jobs or food, and allows poor people to buy whatever they need. As bank accounts spread and India’s biometric ID system matures, it should be possible to curb fraud and theft. Yet the politicians’ plans are ill thought out. Even if the BJP’s bung to farmers manages to get round the problem that many lack clear land titles, it will do nothing for landless labourers, who are often poorer than smallholders. It would have perverse consequences, too, for it would discourage small farmers from getting bigger. Congress’s scheme to pay needy families 6,000 rupees a month is better (see article), but faces the practical and political difficulties involved in targeting the poor. Targeting welfare is costly and difficult in a country like India. How is the state supposed to identify the poorest 50m households in a country where income and spending are so hard to track? If it looks for signs such as straw roofs, it will almost certainly miss many poor people, especially in the cities. The political economy of targeted schemes is also tricky. In countries with minimal welfare states, schemes with few beneficiaries also have few supporters, and therefore risk being quietly wound down or diminished by inflation. And any formula used to target the bottom 20% is likely to be so opaque that people will never know whether they should have been included or not, so cannot fight for their entitlements. A workfare scheme in Argentina, trabajar, was so welltargeted—75% of its beneficiaries were among the bottom 30%—that it lost political support and was replaced by a benefit with broader appeal. As Amartya Sen, an Indian economist, put it, benefits that go only to the poor often end up being poor benefits.

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The word on the kona

A new dictionary captures how Africans really talk about politics The most creative wordplay is reserved for the sharpest practices

HERE ARE two ways to talk about politics. One describes the dry mechanics of government. The language of bills and ballots, cabinets and coalitions, is similar the world over. The other is inventive, diverse and bleakly humorous— the idiom of the street, or what in Tanzania they call the kona (corner). A new dictionary of African politics, published by Oxford University Press, tries to capture this richness. It describes people, institutions and events, and defines theoretical terms. More significant, the editors used social media to crowdsource the terminology of the kona, getting hundreds of responses. In Benin, for example, switching parties is called “transhumance”, a term that normally describes the migration of cattleherders. In Ghana “skirt-andblouse voting” means picking a president from one party and a member of parliament from

another. The opposite is “threepiece-suit voting”, when Kenyans back the same side throughout. Some terms describe tactics to challenge bigwigs: for in-

stance, toyi toyi, a dance used in South Africa to protest against apartheid. A quieter method is the ville morte, where people in French-speaking Africa shut

down the city by staying at home. During elections in 2016 some Zambians escaped a walloping by wearing the green of the ruling party, even while secretly

backing the opposition, which wears red. Opposition leaders called it a “watermelon campaign”. Corruption inspires a menu of euphemisms. Swahili-speakers might call a bribe mchuzi (sauce). In French-speaking Africa graft is bouffer (to gobble down); in parts of west Africa the verb is “chop”, from the pidgin for eat. This metaphor reached its apogee in 2014, during a governor’s race in Nigeria. One candidate promised “stomach infrastructure”, such as rice and chickens. He won. Why so much talk of corruption? Partly because it is a real problem; partly because Africans, like outsiders, stereotype the continent, says Sa’eed Husaini, a Nigerian, one of the dictionary’s editors. But then America, with its gerrymandering and pork-barrel spending, has a rich political vocabulary. Maybe it is just that the sharpest practices all over the world inspire the most creative wordplay.

European banks

Europe’s economy is more worrying than America’s yield-curve inversion Bond markets are sounding warnings on both sides of the Atlantic. But the message is much worse in Europe return of 10%, the hurdle rate investors demand from American banks and most other sectors (see article).

Fixing Europe’s zombie banks How to deal with poor performance, defeatism and complacency

IS THERE ANY more miserable spectacle in global business than that of Europe’s lenders? A decade after the crisis they are stumbling around in a fog of bad performance, defeatism and complacency. European bank shares have sunk by 22% in the past 12 months. Deutsche Bank and Commerzbank are conducting merger talks with all the skill and clarity of purpose of Britain’s Brexit negotiators. Two Nordic lenders, Danske Bank and Swedbank, are embroiled in a giant money-laundering scandal. The industry makes a puny return on equity of 6.5% and investors think it is worth less than its liquidation value. Amazingly, many European banks and regulators are resigned to this state of affairs. In fact it is a danger to

investors and to Europe’s faltering economy. The banks make two excuses, both of which are largely rubbish. One is that it is not their fault. Unlike America, where banks have a return on equity of 12%, Europe does not have strongly positive governmentbond yields, or a pool of investment-banking profits like that on Wall Street, or a vast, integrated home market. All this is true, but European banks have been lamentably slow at cutting their costs, something which is well within their control. As a rough rule of thumb, efficient banks re-

port cost-to-income ratios below 50%. Yet almost three-quarters of European lenders have ratios above 60%. Redundant property, inefficient technology and bloated executive perks are the order of the day. The banks’ second excuse is that their lousy profitability does not really matter. Their capital buffers have been boosted, they argue, so why should regulators and taxpayers care about the bottom line? And shareholders, the banks hint, have learned to live with the idea that European lenders are unable to make a

This is bunkum, too. Profits do matter. They make banks safer: they can be used to absorb bad-debt costs or rebuild capital buffers when recession strikes. Depressed valuations show that far from tolerating European banks, most investors eschew them. As a result many lenders, including Deutsche, have too few blue-chip long-term institutional shareholders who are prepared to hold serially incompetent managers to account. And when the next downturn comes and banks need to raise capital, which investor would be foolish enough to give even more money to firms that do not regard allocating resources profitably as one of their responsibilities? Rather than accept this miserable situation, European banks need to do two things. First, embrace an efficiency and digitisation drive. Costs are falling at an annual rate of about 4%, accord-

ing to analysts at UBS. This is not enough. As consumers switch to banking on their phones there are big opportunities to cut legacy IT spending and back-office and branch expenses. Lloyds, in Britain, has cut its cost-income ratio to 49% and expects to get to close to 40% by 2020. The digital German arm of ING, a Dutch bank, boasts a return on

Monday 08 April 2019

BUSINESS DAY

COMPANIES & MARKETS

NNPC upbeat Dangote Refinery will boost Nigeria’s domestic refining

COMPANY NEWS ANALYSIS INSIGHT

Pg. 23

Sector series

The Companies & Markets team is publishing a series on the various sectors of the Nigerian economy to evaluate the financial health of companies playing in each of the sectors using a number of key metrics that would depend on the specific sector. This week we begin with Downstream Oil and Gas.

Downstream Oil & Gas: A tale of shrinking margins DIPO OLADEHINDE & OLUWASEGUN OLAKOYENIKAN

In 2018, listed companies in Nigeria’s downstream oil and gas sector recorded shrinking margins thanks to a plethora of challenges from a contentious petrol price peg that capped the profitability of the oil marketing and trading companies to broader macroeconomic headwinds, as well as other importers of petroleum products. BusinessDay’s analysis of six of the major companies operating in the downstream sector namely Conoil Plc, Forte Oil, 11 Plc (formerly Mobil), Oando, Eterna and Total Plc revealed the performance of key profitability, efficiency and operating margins in 2018.

eturn on Equity 11plc and Total have the highest Return on Equity (ROE) among peers operating in Nigeria’s downstream sector. What this means is that these firms are effective in turning the cash put into the business into greater gains and growth for the company and investors. The higher the return on equity, the more efficient the company’s operations utilizes available funds. Although, the 2018 ROE which is a measurement of how much profit a company generates with the money shareholders have invested, reduced averagely from 17.94 percent in 2017 to 13.13 percent in 2018. However, 11plc recorded the highest 2018 ROE of 27.63 percent compared to 27.49 percent in 2017, while Total trailed with an ROE of 25.90 percent in 2018 compared to 28.41 percent in 2019. Also, Forte Oil had an ROE of 13.12 percent in 2018 compared to 22.12

percent in 2017, while Oando had an ROE of 10.39 percent in 2018 compared to 7.50 percent in 2017. Eterna had an ROE of 7.84 percent in 2018 compared to 16.10 percent in 2017, while MRS had a negative ROE of -6.08 percent in 2018 compared to 6.01 percent in 2017. Stakeholders blame this negative performance on old perennial environmental, operational and regulatory challenges. These include poor governance and management of refining assets,

low operating margin for operators leading to low Return on Equity (ROE), huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest, and foreign exchange differentials on product importation. The partial removal of subsidy by government dealt a blow on earnings as many oil marketers couldn’t adjust to the new template of the regulator. “What’s more, the delay in subsidy payment by federal government resulted in accumulated

debt in the balance sheet of firms that borrowed money from banks to finance the importation of petroleum products,” Emmanuel Afimia, CEO of Afimia Consulting told BuisnessDay. To correct this situation, oil marketers have urged the Federal Government to fully deregulate the downstream subsector of the oil and gas industry to preserve the country’s dwindling foreign reserves and enhance economic growth. “NNPC imports pet-

rol at a landing cost of N171 per litre and sells at N145 per litre at filling stations. Importation of diesel was deregulated and this has created avenues for marketers to import and sell at competitive prices,” Olufemi Adewole, executive secretary, Depot and Petroleum Products Marketers Association (DAPPMA), told the News Agency of Nigeria in a recent interview. The marketers said the immediate removal of the fuel subsidy remained the best option to grow the oil sector; saying over N1.3 trillion was paid on subsidy with little or no benefits to the most vulnerable members of society. Adewole said full lib-

eralization of the downstream sector would address inflation, better the economy and ameliorate the economic uncertainty that characterized the polity, and urged the government to make consultations on the subject and decide on the ideal approach to achieve deregulation. “If we embark on deregulation today, petrol prices will be different across the country; the price may be significantly high at the early stages, but it will reduce gradually as we move on,” Adewole said. “Petrol prices will fluctuate throughout the year, for example, in December and January prices tend to be a lot higher. This is the case in most countries around the world,” he added. Net Profit Margin orte Oil and 11 plc are the leaders of 2018 net profit margin. Net profit margin which is a measure of net income or profit a company can generate as a percentage of its revenue have continued to come under more pressure as firms continue to record below expectations performance since the announcement of a new price regime that saw oil price move to N145 from N86. The average net profit margin for the whole downstream sector declined industry average from 4.90percent in 2017

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

Continues on page 22

Monday 08 April 2019

BUSINESS DAY

COMPANIES&MARKETS Downstream Oil & Gas: A tale of shrinking... Continued from page 21 to 2.95percent in 2018, thanks to old perennial environmental, operational and regulatory challenges. These include poor governance and management of refining assets, huge debts/ receivables on account of unpaid accumulated subsidy and unpaid interest, and foreign exchange differentials on product importation. Gbolahan Ologunro, an equity research analyst at Lagos-based investment firm, CSL Stockbrokers Ltd, said there was a broad base decline in margins due to pricing regime of PMS which have being fixed at N145 despite high landing cost. However, Forte Oil had the highest net profit margin of 6.19 percent compared to 14.19 percent in 2017. 11plc had a net profit margin of 6.19percent compared to 6 percent in 2017 while Oando had a net profit margin of 4.24 percent compared to 3.97 percent in 2017. “For firms like Forte oil and 11plc, they were able to have better margins because they were able to diversify their revenue base to other stream like lubricant sector or power sector which absolved shocks emanating from PMS,” Ologunro told BusinessDay. Total had a net margin of 2.58 percent in 2018 compared to 2.78 percent in 2017, Eterna had a net margin of 0.40 percent compared to1.116 percent in 2017, while MRS had a negative net margin of 1.41 percent in 2018 compared to 1.30 percent in 2017. “Unless we see reforms were government deregulate the sector completely their margins will continue to be under pressure,” Ologunro said by Phone. Share price of Forte Oil grew 9.82 percent, the most in eight weeks, to close at N27.40 at the Nigerian Stock Exchange on Thursday, bringing its loss since the beginning of the year to 4.53 percent. Total continued to trade flat at N196 for almost two weeks, representing 3.45 percent lower from N203 it opened with at the start year. 11 plc on the other hand shed 4.49 percent to settle at N170, causing its year-todate loss to worsen to 8.36 percent. Eterna Oil plunged 8.05 percent to N4, its low-

est share price in almost three months. M R S re ma i n e d u n changed at N20.85 for close to seven weeks, the stock has lost over 18 percent of its market value this year. Oando, however, jumped 3.13 percent to close at N4.95, indicating a percentage drop from its share price at the beginning of the year. Return on Assets (ROA) nvestors that crave for stocks that magnify their income should pay attention to this short and lucid analysis as the sector’s ROA in 2018, which is a profitability ratio that provides how much profit a company is able to generate from its assets, decreased to 4.56 percent from 5.71 percent in 2017. It gives investors or analysts an idea of how efficient a company’s management is at using its assets to generate earnings. 11plc had the highest ROA of 13.20 percent in 2018 compared to 10.07 percent in 2017, while Total had the second ROA of 6.01 percent in 2018 compared to 7.43 percent in 2017. Forte Oil’s ROA declined to 5.89percent in 2018 compared to 8.31 percent in 2017 while Oando’s ROA declined to 2.68 percent in 2018 compared to 1.90 percent in 2017. Eternal Plc had an ROA of 1.90 percent in 2018 compared to 4.16 percent in 2017 while MRS had a negative ROA of -2.32 percent in 2018 compare to 2.37 percent in 2017. Major Oil Marketing Association of Nigeria (MOMAN) in a report titled ‘Making the Downstream Sector Work – An Investor’s Perspective’ suggested

“improved regulations of fuel standards, improved customer service, improvement in port reception logistics, development of transport infrastructure,

and improved security” as some of the major ways on improving efficiency in the sector. Nigeria as the largest market in Africa offers

unique opportunities for investment in the petroleum downstream subsector, according to leading global consulting firm PricewaterhouseCoopers (PwC). “However, the government needs to create the necessary business environment through price liberalization and strong independent regulation,” PwC said in a report titled ‘Nigeria: looking beyond oil’. To overcome these challenges, the umbrella body for the major oil marketers suggested some important strategic steps which include introduction of corporate governance, full deregulation of the sector, and introduction of guilds which will increase

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availability of skilled workmen and artisans in the industry. In the 16-page report, MOMAN also suggested “improved regulations of fuel standards, improved customer service, improvement in port reception logistics, development of transport infrastructure, and improved security”. On quick wins needed to address challenges facing the sector, it recommended that operators adhere to strict governance standards which will attract financing for working capital and investments for expansion, while also emphasizing the need for implementation of fuel monitoring systems such as self-dispensing fuel pumps.

Monday 08 April 2019

BUSINESS DAY

COMPANIES&MARKETS OIL & GAS

NNPC upbeat Dangote Refinery will boost Nigeria’s domestic refining target OLUSOLA BELLO

angote Refinery, currently under construction, would assist Nigeria’s quest of attaining 1.095 million barrels per day self-sufficiency in the refining of petroleum products, according to the Chief Operating Officer, Upstream, Nigerian National Petroleum Corporation (NNPC), Bello Rabiu. Rabiu disclosed this at the on-going Nigeria Oil and Gas Opportunity Fair (NOGOF) in Yenagoa, Bayelsa State. Speaking on ‘Upstream Opportunity in the Oil and Gas Sector’, Rabiu commended the President of Dangote Group, Aliko Dangote for his commitment to Nigeria’s downstream sector.

According to him, the coming on stream of the Dangote 650,000 barrelsper-day Refinery and efforts by NNPC to revamp the country’s refineries in Port Harcourt, Kaduna and Warri, would help Nigeria to achieve zero importation of refined petroleum products. Speaking during a technical session on “Infrastructure as a Key Enabler for Opportunities in the Oil and Gas Sector”, Ahmed Mansur, executive director, Dangote Group, said private sector investment and execution capacity in the Nigeria gas sector need to complement government’s efforts in the industry. Mansur said the Dangote Group catalyzes private investment to supplement

the federal government’s onshore gas development agenda. He added that the company is building pipeline infrastructure that would augment the natural domestic gas supply and add an estimated 12,000 Mega Watts (MW) to Nigeria’s power generation capacity. Mansur noted that the first phase of the project is expected to deliver gas for the use of Dangote Industries, including the proposed fertilizer plant in the refinery complex, and other identified industrial and power plant users. “The pipeline infrastructure will create a corridor for evacuation of trapped gas from offshore platforms in Nigeria to allow their monetisation.

POWER

Eaton’s microgrid system wins international energy award FRANK UZUEGBUNAM

ower management company, Eaton, has won the Hannover Messe Industrial Energy Efficiency Award for its microgrid system installed at its Wadeville headquarters and manufacturing facility in Johannesburg, South Africa. The newly-created Industrial Energy Efficiency Award is dedicated to identifying and awarding prizes to outstanding industrial processes and applications based on their energy efficiency, targeting providers as well as users of energy-efficient solutions for production processes. “Efficient energy use is a matter of importance for all industries, but it is especially important for the industrial manufacturing and energy industries,” said Basilios Triantafillos, global director energy at Deutsche Messe.

“We are therefore delighted to be able to honor leading innovators of energy efficiency with this new award. The Hannover Messe Industrial Energy Efficiency Award gives energy efficiency the platform that its importance merits,” Triantafillos added. Eaton had presented a case for microgrids at the recent Future of Energy conference in Nigeria, using its microgrid installation in Wadeville as a case study. Speaking at the conference, Bunty Kiremire, senior applications leader, Microgrid Energy Systems at Eaton, had noted that microgrid solution will go a long way in meeting Nigeria’s energy demands. The microgrid in Wadeville includes the first-ever deployment of Eaton’s xStorage energy storage system in Africa. This innovative solution strengthens the energy supply for Eaton’s Wadeville site, thereby reducing

demand on the national grid and on regional infrastructure. “The microgrid will be an important driver towards a resilient, cost-effective power future for Africa,” said Seydou Kane, managing director for Eaton adding that “it forms an integral part of our mission to improve people’s lives on the continent through power security and stimulation of infrastructure development, where a substantial portion of our business will come from” With more than 6,000 exhibiting companies and more than 200,000 visitors every year, Hannover Messe is the world’s leading tradeshow for industrial technology. It brings together all key technologies and core areas of industry – from research and development, industrial automation, IT, industrial supply, production technologies and services to energy and mobility technologies.

BANKING

FCMB unveils Easy Account product in financial inclusion push MICHAEL ANI

irst City Monument Bank (FCMB) has taken another major leap in the retail and mobile banking segments of the Nigerian financial services industry by launching a new product called “FCMB Easy Account”, to get more people into the financial services space. Described as banking made accessible to all, a significant and value-added feature of this product is that the telephone numbers of the customers, without the first digit, serve as their respective account numbers. The Account is an enhanced version of its *329# Unstructured Supplementary Service Data (USSD) platform. In a statement, the Bank explained that FCMB Easy

Account has been designed to make banking accessible to all Nigerians and help to achieve the laudable goal of financial inclusion for most Nigerians as set by the Central Bank of Nigeria (CBN). It is a product open to all, particularly to meet the needs of low-income earners and the unbanked segment of the society. It enables the account holders to have access to convenient and secured financial services, irrespective of their locations. The Bank stated that the self-service, stress-free and secured FCMB Easy Account, will be available on all the Global System for Mobile (GSM) networks in Nigeria including Globacom, MTN, 9Mobile and Airtel to enables everyone operating anywhere in the country open an FCMB Easy account from his or her locawww.businessday.ng

tion, by simply dialling *329# from their mobile phones and following the instructions. Internet service availability which has been a major constraint to mobile banking service access is not required for FCMB Easy Account as the account operates on the USSD platform, the bank noted. FCMB Easy Account customers can send and receive money to and from friends, families and business partners across all banks in Nigeria. FCMB Easy Account customers can also deposit funds into their accounts at more than 100,000 agents and banking locations of FCMB and other banks and mobile money operators in Nigeria. FCMB Easy account customers can also use their accounts for airtime purchase, bill payments and other payments. https://www.facebook.com/businessdayng

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Monday 08 April 2019

BUSINESS DAY

Monday 08 April 2019

BUSINESS DAY

CEO INTERVIEW

LEKAN AKINYANMI CEO of Lekoil

Interview with Private Sector Leaders

Slow pace of regulatory approvals locks up assets, stalls investments in Nigeria’s oil sector – Akinyanmi LEKAN AKINYANMI, CEO of Lekoil spent years modelling oil prices for Wall Street firms before founding Lekoil in 2010 as an Africa-focused, AIM-listed oil and gas exploration and production company with interests in Nigeria and Namibia. The company acquired a significant stake in the Otakikpo marginal field from Green Energy and acts as its technical partner to bring the field into production. Akinyanmi and his partners got on the map when they found oil in the Ogo field in OPL 310 Offshore Nigeria. The company and its partners have raised $200million to explore the field with P50 reserves estimate of 770 mmboe but the slow pace of Nigeria’s regulatory approvals is slowing the company’s ambitions Akinyanmi told ISAAC ANYAOGU in this interview

indly give us a general assessment of the oil and gas industry from your vantage point, what are the upsides and down-

sides? My assessment is that we are making progress but still operating below capacity; we can do much better than we are doing. If you look at the resource base that we have and compare it to the production, you will see we are producing below capacity. However, there are a lot of positives. This is one area in the world where you have been able to develop and train people, we can operate at any level whether it is legal, financial, technical. We have had the skill set over many decades in Nigeria. It is considered one of the main staples so any international oil company that is truly global, has operations in Nigeria. But if you look at where we are, compared to where we should be, we have quite a long way to go. Can you speak to Nigeria’s production? What is the current capacity and is the country delivering on its potential? Right now, we are below 2 million barrels per day (mbpd), we are probably about 1.7 mbpd but we should be at 4 mbpd given our base. Let’s even say the investment required to get us to 4 mbpd is quite substantial, at the very least we should be at 2.5 million barrels per day. In my opinion, the reason is that we have a lot of assets that are locked up. I used to be an investor in Wall Street and I put a lot of money in Nigeria at that time and this is one place that I know you have a lot of assets that have been proven but for one reason or the other they are not available to local and international companies. But if these assets are opened, do you think we really have the capacity to take them to production? When you talk about capacity, you are looking at the industry broadly, so it is not only Nigerians that will do the work. There will be people from outside the country. It is always good to have a balance. As indigenous companies, we like the idea of the Nigerian Content Development and Monitoring Board (NCDMB) driving Nigerian ownership but at the end of the day, there’s also a value in diversity. In an organisation, if we were all from the same background, our thought processes are the same, then we can miss things. We all grew up from what I like to call an unstructured background; it is also good to have people that grew up in a different background, where everything is structured. They may not necessarily be good entrepreneurs as we are, but they may be good at getting things done consistently. So, you need to mix those two to get the best.

Now the issue for me is, there needs to be a disaggregation between the upstream, midstream and downstream sectors. For a lot of upstream players, the kind of capital they attract is for upstream projects; it is a different kind of investment for midstream players. If you have a situation where you are forcing the investors who only want to do upstream to come over to midstream it might not go down well with them. But it’s easier for midstream investors to attract the kind of investment it wants so it is different but we are putting all of them together. It’s the same thing with infrastructure. So, in Otakipo for example, we re-entered the wells; we also built our 6km pipeline but the money we invested in building the pipelines, if there was a midstream company whose job it is to build pipelines all over the place, they will build pipelines, and because they are experts if one pipeline breaks, they reroute it to another one. In other parts of the world there are strictly pipelines companies who are certain of the dividend they collect so we need to realise that we are becoming a mature basin and start to restructure things and disaggregate.

companies working for them and more of these needs to happen. At Lekoil for example, we look at opportunities from every part of Africa but it is hard to find a place with the same level of resource as you find in Nigeria. For some of the companies that are not comfortable working in Nigeria they may go to frontier and deep water locations in Senegal or Gambia and other places, because they may find it easier to work there. But if you look at it you will always find opportunities to work in Nigeria and Nigerians working on the continent. Is the discovery of hydrocarbons in other African countries really eroding Nigeria’s competitive advantage? I will say yes and no. Yes, in competition for capital, to the extent that some of these African countries have better fiscal terms, they may actually be able to attract better capital than we do. Our fiscal terms are not that attract. In the grand scheme of the world, you will understand that we are a well-known petroleum basin, the resource is big but you have to pay taxes, royalties, etc. However, oil itself is a global industry and I know a lot of people are talking about renewables but I believe the demand for oil will be there. In a previous life, part of my job was oil price forecast. I studied demand and supply, and one thing I remember clearly is that the per capita consumption then in America was about 25 barrels per person, per year. For most developed countries in the world, it was always between 14 and 15 barrels per person. China then was about 2 barrels per person per year, and to move China to the world average, you needed to find about 7 million barrels per day or another Saudi Arabia, which you wouldn’t, which told me that we were always going to have an energy shortage. So, this created a situation where you need the alternatives such as renewable and gas. As long as we are in a situation where the economic growth will continue with that

Why do other African countries look elsewhere for experts for their energy sector when it is abundant in Nigeria and even cheaper for them? In some of these African countries, you will see Nigerians working there but I understand what you are saying about indigenous www.businessday.ng

Lekan Akinyanmi level of demand, frankly, it is better for other companies to bring their production as well. It is the capital they compete with us for. A concern most investors have is the slow pace of regulatory approvals. How has that impacted your business? It’s been the single biggest challenge that I faced since I returned to Nigeria to start Lekoil. The single biggest challenge we have faced as a company has not been technical, it has not been money, it has been regulatory approvals. We have the consent for one of our interests in OPL 310 which has been pending for three years, and this is an asset on which we have spent over $100million of our money and the other entity we bought has spent $100million. So between us there is over $200 million spent, but still there is no regulatory approval, so we can’t move forward. We need to have a system that allows these things to move quickly because to the extent we do that then you can bring more money into the system, into the country and then everybody benefits. Right now, we have a very central system. I talk to the guys in government and you will find out that many of them are sometimes overwhelmed. Everybody all over the coun-

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try comes to that central system and the people there are dealing with so many things. If you go the NNPC GMD’s office, the number of people waiting to see him on a whole variety of issues is huge. We need to decentralise the system. Why can’t we have folks that will give approvals in Bayelsa State, have an office there or in Rivers or Edo and break it down in such a way that you have more input in the system. Recently, the Minister of state, Kachukwu, said the government has reduced contracting cycle and cost of production has reduced. How has this helped your activities? The government has done a lot to improve the industry, no doubt. But we are in a global industry; we need to be comparing what we are doing with the rest of the world and when we make that comparison we are simply not there yet. Cost of production is a function of asset, size of asset. There is always a cost curve in the entire industry. There is a lot of talk about gas monetization. What initiatives are you looking at in that space? We have a company called LEKGAS which primarily focuses on gas. For example in the Otakipo field we are actually flaring some gas probably around 8 mscf, but we have commenced plans towards bringing it down. We have brought in some gen-

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erators that supply around 6 megawatts of power generation. We are waiting for the system that will clean up the gas so to speak, before we can put the gas into the generators and with that we will have LPGs. For Ogo field, obviously we need to get the ministerial consent sorted out first. This is an asset with 3 tcf of gas which is 20 km offshore Lagos, so our focus is bringing in the gas to Lagos first. A friend of mine accused me of being too sentimental recently. According to him, I should just go and build a floating LNG and export the gas, and I said this one is offshore Lagos which can have a key multiplier effect for the economy and make a huge difference, so we are quite keen on gas , for each asset we look at the optimum gas driving system and we are ready to invest in it. Recently a group conducted a survey and found that co-location could help to drive investment in gas midstream sector. What’s your take on this? It could, but before we get to that we have a lot of gas being flared right now in Nigeria. We know the numbers. At different points in time the federal government has said this is the fine you would have to pay. We have some commercial guys crunching the numbers, which led to a conclusion that it is still cheaper for them to pay the fine than to build the infrastructure needed to monetise the gas, so they continue to flare.

What are your thoughts on gas pricing in Nigeria? While oil is a global market, gas is a local one. Gas is a local market because the pricing of gas depends on what you can do with gas in that particular area so if the government can give the right incentive in terms of taxes, it will drive investments. If the right incentives are given to develop then there will be a willing buyer and willing seller. Part of the problem we have is that power companies cannot pay. We know there are lots of things that have happened in the sector especially with privatisation but I don’t think the power companies have gotten to the point where they are strong enough to pay even with the Nigerian Bulk Electricity Trading Company operating as buffer.

The first thing that put us on the map is the Ogo discovery. When we started we raised some money, went public, funded and drilled an exploration well. Not many people have been drilling in Nigeria but we thought the Dahomey basin is good. We studied the entire basin and we know where the good lots are and OPL 310, where the Ogo field is located, is one of those we picked. We drilled that well in 2013 and made a big discovery which was reported to be the third largest in the world that year. It is still the largest discovery that has been made in Nigeria in the past 10 years. Then we farmed into this Otakikpo field, which was a marginal field and within a couple of years, we brought it to production and it is doing about 6,000 barrels per day and now we want to take it to 20,000 barrels a day. We built the infrastructure from scratch. A lot of companies who bought assets from an IOC already have the infrastructure in place, but this place was just swamp. We first started doing civil works, we had to sand-fill the entire place, we worked with the communities, sorted everybody out and then we re-entered those wells and built everything from scratch. For evacuation, we built the pipeline ourselves. We built a 6-kilometre pipeline that went underwater such that there is a point where you connect and the shuttle tanker takes the crude to an FPSO. When we did it, it was as if nobody noticed, but now we see that a lot of people noticed and they are coming to ask us to partner with them on working on their assets.

How long do we expect Ogo field to reach production? First, we need to sort out the approvals. We need to drill some appraisal wells which will lead to some flow tests. So we are looking at three to four years before full production. In the meantime, we want to move quickly to start drilling the appraisal wells.

While your marginal field is a success story, the same cannot be said of many other fields. What has been the challenge in getting them to production? Some of the fields are truly marginal; they are quite small it may not be as easy to develop them on their own unless they are part of a cluster. It means people have to collaborate more but in Nigeria we haven’t proven to be so good at working together. The other challenge is there are folks that have been awarded these fields but you see a mismatch between expectation and reality. We talked to a few people and for many of them, we found that expectation did not match the reality of what is on the ground. Given our background, we model everything just to ensure it is profitable. Overtime, we are starting to see many marginal field operators figure out ways to make it work, some find partners, others partner with service companies, one way or the other it is starting to work out. But that speaks to what I said earlier about assets being locked up. We have not had a licensing round in many years and we are talking of increasing production and problems in the economy. Why not just do a simple licensing round? You can even prepack it and say put your money in the bank and you get the field…just make it open, do it on the internet and let everybody bid. It is not complicated.

Generally, what is your experience with operating in Nigeria? What milestone can you say you have met?

From your interactions with government officials at the senior level, what has been their response to

How much are you considering putting down to develop the infrastructure you need for that Gas space? For example let’s talk about Lagos, because we are so fortunate that our gas is offshore Lagos, which is huge market. We are getting a lot of interest in it, and as much as possible we will be looking for captive solutions. So if it’s a free trade zone for example, and we know that in the zone we are supplying the gas and this is the price and anybody can come put their industry and power with it, that’s the kind of solution we are looking at for now. But if we wait for everything to be fixed then we won’t do it. We have to find ways in the system to get things going.

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your concerns about lack of licensing round? Their response has been that it would come soon, but the sense we are getting is that there is always going to be an issue with what is going to be done from a discretionary manner and what is going to be bid for and I think it just gets complicated that way. But from my perspective, even if you want to keep some as discretionary and worry about those later, the ones that people want to pay for, let’s do it. People are looking for assets all over the place. After the last court decision requiring ministerial consent before OPL 310 acquisition can be completed, what is the company’s next move? Regarding the court case itself, the point was always to create clarity around some situations where you have ambiguity. Now whether we agree with the ruling of the judge or not, at least there is some clarity right now. Our focus is now to start to negotiate with our partners and work the system to get things moving while retaining our option, obviously, to push forward if need be. But then again, our real objective at the end of the day is to move these assets forward. It was the frustration from inaction, so whatever the outcome, what has been positive is that the court case has brought the matter to the fore and we are seeing some senior people stepping up to ask to mediate and help move things forward.

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Monday 08 April 2019

BUSINESS DAY

CITYfile Kwara pensioners plot showdown with govt SIKIRAT SHEHU, Ilorin

Remains of a room housing 20 National Youth Service Corps (NYSC) members, which was gutted by fire at the NYSC permanent orientation camp in Wamakko Local Government Area of Sokoto State, No life was lost as the corps members were out for morning activity when electrical sparks caused the inferno. NAN

IGP orders police to arrest killers of Akure Anglican bursar YOMI AYELESO, Akure

nspector General of Police (IGP) Muh a m m e d Ad a m u has given matching orders to the police command in Ondo, to arrest and bring to justice, killers of Gabriel Abiodun, late bursar of Akure diocese of the church of Nigeria, Anglican Communion. Abiodun was shot dead by armed robbers last week in the diocesan office located in the heart of the state capital after returning from a bank. The robbers were said to havetrailedthedeceasedfrom the bank to the office where they killed him and allegedly made away with the sum of N500,000 he was said to have withdrawn from the bank. Leye Oyebade, an Assis-

tant Inspector General (AIG) of Police, in charge of zone 11, comprising Ondo, Oyo and Osun States, who visited the scene of the incident at the weekend, said that the police high command was disturbed by the incident. According to him, the police have gotten some information about the incident, assuring that the killers would be arrested. The police, he said, was planning adequate surveillance around banks in the state, while also advising banks to upgrade their equipment. “We are certain to get the perpetrators. The IGP has given a marching order to get them; that is the reason I am here. We have gotten some information from the bishop. When crime of

this nature occurs, there are things we must learn, that is the most important thing. “We are going to ensure security at banking environment, though we have been doing that but we will do more. W will also need to do more of surveillance in banking environment because those that committed this crime must have been hanging around on motorcycles and vehicles close to the banking.” The AIG appealed to the residents of Akure to assist the police with useful information that could lead to the arrest of the bandits. “With what we are doing now, we are very confident that we will get to the root of this matter. Members of the public should continue to partner with us. The

community policing we are preaching today involves everybody and we need information because information is key.” he explained . Bishop of Akure Anglican Diocese, Simeon Borokini appreciated the IGP and the police force for their efforts on the incident. Bishop Borokini urged the police to ensure that the perpetrators are arrested and prosecuted “God is our utmost security and we are hoping you will apprehend the killers. Those who saw them said they are young men in their early twenties.” Oladele Olugbenga, who spoke on behalf of the family, described late Abiodun as a loving and peaceful, saying he would be greatly missed by the family.

NDLEA seizes 23.8kg cannabis in Ebonyi

at i o na l D r u g Law Enforcement Agenc y (NDLE A) has confiscated 23.8 kg worth of cannabis during a raid in Amike Ezzamgbo, in Ohaukwu local government area of Ebonyi. Ibrahim Bashir, NDLEA deputy commander incharge of operations and intelligence, Ebonyi com-

mand, said that the exhibits were recovered from a room inside the community hall. Bashir noted that the hall had been sealed by the agency, as the development showed that the community allowed illegal drug-related activities to be carried out in the area. “We have been gathering and working on inwww.businessday.ng

telligence reports about drug activities in that area, before raiding it and arresting five persons. “The main suspect is providing useful information on the source of the exhibits. We have released others who merely slept inside the hall,” he said. Bashir noted that with the arrest of the suspect and sealing of the hall, the

command would meet the community leaders over the issue, adding that the suspects would be charged to court. “We do not prosecute all the suspects, as prosecution depends on the gravity of the offence and exhibits recovered from them. Some of them are just drug users, who are counselled and released,” he said.

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ensioners in Kwara are planning a showdown with the state government, as their total benefit package, including pension deductions and gratuities are still unpaid. The pensioners are alleging the state government owes them N4.5 billion illegal pension deductions as well as N15 billion gratuities, bringing the total debt to pensioners in the state to N19.5 billion. The pensioners in a statement jointly signed by Saidu Oladimeji, chairman, Nigerian Union of Pensioners, (NUP) and Abubakar Audu, secretary respectively, maintained that the debts had accumulated over the years and covered pension deductions and gratuities. They have therefore dragged the state government to court, seeking legal remedies and court

intervention as regards the accumulated debts, especially as a new government is about to take off in Kwara. Meanwhile, a Kwara State High Court holden in Ilorin has declared as illegal the monthly diversion of local governments’ funds to pay the salaries of junior secondary school teachers in the state, by the state government. Justice M.O Adewara, in his ruling, stated that the local governments’ funds meant for the maintenance of primary and adult education, payment of salaries as well as entitlement of local governments’ staff both serving and retired must not be diverted for any obligations except what it’s voted for. The judge ruled that the state government’s deduction of N421 million monthly from the local governments’ funds was unconstitutional and should stop forthwith.

Police bans night operation of ‘okada’ in Badagry

he police in Badagry, Lagos State, have banned commercial motorcyclists from operating between 10 p.m. and 5 a.m. in all roads in the coastal town. The Divisional Police Officer (DPO) in Badagry, Olukemi Tijani, confirmed the restriction on Friday. The ban is to stop the increasing killings and snatching of motorcycles in the town. Tijani said many motorcycles have been seized and suspects charged to court for motorcycle snatching. According to a source, the rate at which armed robbers are attacking okada riders at night, killing and snatching their motorcycles in the area is alarming. “As a result of this, the police in the city banned night riding. Any okada rider caught between these hours will have his motorcycle seized by the @Businessdayng

special task force set up by the new divisional police officer. “Police, customs, immigration or soldiers are not exempted from this ban,” he said, adding that Badagry residents have witnessed series of killings by gunmen last month and the ban of riding at night has reduced crime rate. “The perpetrators of this crime used to hide at a corner in the night, stop okada riders, kill them and run away with their motorcycles,” he said. On March 4, gunmen shot two motorcyclists dead in Badagry and took away their motorcycles. The first killing occurred around 11 p.m., while the second killing happened around 6 a.m. the following day. One of the motorcyclists met his fate at Ibereko community, while the other was killed at Atanda Filling Station at Topo Road in Badagry.

Monday 08 April 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 05 April 2019

Top Gainers/Losers as at Friday 05 April 2019 LOSERS

GAINERS Company CCNN DANGFLOUR CADBURY

Company

Opening

Closing

Change

N16.2

N17

0.8

N8.55

0.55

FIDSON

N10

N10.5

0.5

UACN

Closing

Change

N10.15

N9.5

-0.65

DEALS (Numbers)

N4.95

N4.5

-0.45

GLAXOSMITH

UBN

N6.65

0.35

FLOURMILL

AFRIPRUD

N3.55

N3.76

0.21

ZENITHBANK

ASI (Points)

Opening

N7.6

N7.35

-0.25

VOLUME (Numbers)

N17.55

N17.3

-0.25

VALUE (N billion)

N20.5

-0.15

MARKET CAP (N Trn)

29,616.38 3,575.00 401,185,077.00 3.491 11.124

Stock investors trapped in N550bn weekly loss Stories by Iheanyi Nwachukwu

tock investors at the Nigerian Bourse had no reason to cheer in the trading week ended Friday April 5 following a record loss of about N550billion they booked in the five-day trading period. As bears continued their reign with no much activity on the buy side, the value of listed equities decreased by 4.69percent to N11.124 trillion as against a high of N11.672 trillion in the trading week ended March 29. Likewise, the Nigerian Stock Exchange (NSE) All-Share Index depreciated by 4.59percent to 29,616.38 points as against preceding week high of 31,041.42points. Summary of price changes in the review week to April 5 shows that 14 equities appreciated in price, lower than 21 in the preceding week. Fifty-five (55) equities depreciated in price, higher than 36 equities in the preceding week, while 98 equities remained unchanged,

lower than 111 equities recorded in the preceding week. The stock market’s Year-to-Date (ytd) return stood further negative at 5.77percent. In their commentary on the market, Lagosbased equity research analysts at Vetiva Securities noted that despite the steep declines seen in the review week, “the market showed some respite closing out the week (1.2x positive market breadth).”

“Whilst investor apathy in the Nigerian market has persisted in recent sessions, we expect to see players bargain on appealing price marks across the board as the index returns to above 30,000 points - the last time the market stayed below 30,000 for an extended period (more than two sessions) was prior to the recovery in June, 2017”, Vetiva analysts added. The market recorded

total turnover of 3.544 billion shares worth N20.264 billion in 19,130 deals in contrast to a total of 2.629 billion shares valued at N12.794 billion that exchanged hands in the preceding week in 15,558 deals. The Financial Services Industry (measured by volume) led the activity chart with 3.060 billion shares valued at N14.469 billion traded in 11,738 deals; thus contributing 86.35percent and 71.40percent to the total equity turnover volume and value respectively. The ICT Industry followed with 253.633 million shares worth N53.707 million in 277 deals; and Consumer Goods Industry with a turnover of 65.499 million shares worth N4.356 billion in 2,732 deals. Trading in the top three equities - Wema Bank Plc, Sterling Bank Plc and Chams Plc (measured by volume) accounted for 2.104 billion shares worth N2.026 billion in 965 deals, contributing 59.38percent and 10percent to the total equity turnover volume and value respectively.

NSE launches multi-asset brand campaign

s part of efforts to boost investor education and increase investor participation in the Nigerian capital market, The Nigerian Stock Exchange (NSE) has flagged off an above the line marketing campaign that amplifies the Exchange’s credential as a leading securities exchange that provides investors with varied investment options such as Stock, Fixed Income, Exchanged Traded Products (ETPs) and more. Themed “The Multi-Asset Sustainable Exchange”, the

campaign will be featured across print, broadcast, outdoor and digital media. Commenting on the campaign, Olumide Orojimi, Head, Corporate Communications stated that “The campaign is coming against the backdrop of the innovative offerings NSE has birthed since its intentional transformation that commenced in 2011. During this period, the Exchange has achieved phenomenal milestones, deployed cutting edge technology for trading and the use of artificial intelligence www.businessday.ng

to monitor its market; upscale securities in its market with the flagship listing of the first Sovereign Green Bond in an emerging market; establishment of an investors protection fund; launch of a corporate governance rating system and more recently the unveiling of the NSE Sustainability Disclosure Guidelines for quoted companies”. “As the Exchange transits to a demutualized Exchange, its credential as multi-asset securities Exchange will be adequately communicated through series of creative

messaging in this campaign. While investors’ appetite for capital market products continues to evolve, this campaign highlights NSE’s offering which transcends stocks. We are committed to driving sustainable products, responsible investment in a market that is orderly and transparent whilst leveraging cutting edge technology. This commitment is shared by all of our employees who continue to champion the development of new and improved experience for investors in our market”, said Orojimi.

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Global market indicators FTSE 100 Index 7,446.87GBP +44.93+0.61%

Deutsche Boerse AG German Stock Index DAX 12,009.75EUR +21.74+0.18%

S&P 500 Index 2,889.29USD +9.90+0.34%

Nikkei 225 21,807.50JPY +82.55+0.38%

Generic 1st ‘DM’ Future 26,413.00USD +25.00+0.09%

Shanghai Stock Exchange Composite Index 3,246.57CNY +30.28+0.94%

Investors may offload Med-View stocks as airline reports N10.35bn loss …shareholders fund depletes by 144%; stocks near 52-week low

nvestors who bought the shares of MedView Airline Plc may no doubt have been disappointed with the airline’s recently released financials for the year ended December 31, 2018. The company’s results released at the Nigerian Stock Exchange (NSE) on Friday April 5 showed Loss After Taxation (LAT) of N10.3billion as against N1.2billion Profit Before Tax (PBT) in 2017, representing a decline of N11.6billion or 925percent. The airline’s revenue decreased to N9.5billion from year 2017 high of N36.9billion representing a decrease of about N27.39billion or 74percent. The company reported loss before income tax of N10.3billion as against profit before tax of N1.5billion in 2017, which represents a decline of N11.8billion or 786percent. Its statement of financial position shows Total Assets of N17.741billion as against N19.59billion in 2017, representing N1.8billion or 9percent decline. Med-View Airline Plc closed the review year with Total Liabilities of N21billion from a low of N12.2billion in 2017, up by N8.79billion or 72percent. Isiaq Na-Allah Suyutu, Executive Director, Business Development MedView Airline Plc did not take his call, neither did he respond to text message when BusinessDay sort to speak to the company on its strategy to get out of this huge loss position. Shareholders’ Funds which is the amount of equity in a company, which belongs to the shareholders at N3.26billion in 2018 as against N7.38billion in 2017 represents a decrease of N10.65billion or 144percent. Basic Loss Per Share (LPS) of 106.22kobo as against Earnings Per Share (EPS) of 12.87kobo @Businessdayng

in 2017, implies a decrease of 119kobo or 925percent. The company has negative Return on Assets (ROA) of 55.4percent against positive ROA of 8.6percent, which implies a decrease of 64percent or 744percent. At N1.80 per share, the stock has lost 12.2percent of its year-open value. The stock price had reached a 52-week high of N2.14 and a 52-week low of N1.70. Its Market Capitalisation stood at N17.55billion on shares outstanding of 9,750,649,400 units. The interests of the Directors in the paid-up capital of the company as recorded in the register of Directors’ shareholdings as at December 31, 2018 show Abdul-Moshen AlThunayan holds 36 percent or 3.509billion units; Muneer Bankole hold 40percent or 3.858billion units; Ocean Trust Limited (Representative) holds 10.26 percent of 1billion units; while Nigerian Citizens and Corporate Bodies own 1.262billion units 14percent, representing a decline from 2.262billion units or 24percent of the total shareholders in 2017. Abdul-Moshen AlThunayan, Chairman, Med-View Airline Plc said, “The year 2018 will long be remembered as one of the most challenging in the Airline’s recent history. The economy suffered its first contraction in over a decade. The excessive economic decline did have a significant impact on the financials of your Airline. The uncertainty over the political situation of Nigeria did not also help matters, as it spilled onto its economic situation”. “Despite the strong headwinds which confronted our airline’s revenue throughout the year, the airline was able to balance itself but recorded a loss after tax (LAT) of N10.33 billion which was lower than prior year profit of N1.25 billion.

Monday 08 April 2019

BUSINESS DAY

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Monday 08 April 2019

BUSINESS DAY

Government Enterprise & Empowerment Program

Brought to you by

FG uses technology to scale largest governmentled microcredit scheme in the world

he Government Enterprise and Empowerment Program (GEEP) is a micro-credit scheme of the Federal Government of Nigeria executed by the Bank of Industry. GEEP started in 2016 and has empowered 1.8 million micro-enterprises with collateral-free, interest-free loans to grow their businesses; making it the largest government-led microcredit program globally. GEEP beneficiaries are petty traders, merchants, enterprising youth, and agricultural workers in over 1600 clusters and markets across Nigeria. These people comprise the MSME sector and contribute 76% of Nigeria’s GDP, employing 60% of Nigeria’s labor force. Yet they are often neglected by traditional banks. According to a 2016 report by McKinsey and company limited, 85% of these enterprises cite “access to finance” in their top three challenges. Of all bank loans in 2017, only about 0.4% were lent to this microenterprise segment. Most people in this segment have not used financial services before, see going to the bank as an inconvenience since they cannot leave their wares unattended, and have a natural aversion to technology. They do not have collaterals for bank loans nor can they afford the interest rates on bank loans. The federal government is committed to empowering this segment. They are the Nigerians for whom ₦10,000 to ₦300,000 represents a complete turnaround in their businesses and livelihoods. Through the Micro-Enterprises Division, BOI and the Ministry of Trade and Investment, the Federal Government designed GEEP to deliver last mile credit using an aggregation model that leverages Technology and market cooperatives as an acquiring structure. This has enabled the program scale fast: enumerating over 7 million MSMEs in over 1,600 markets across the 36 states and the FCT. Every single day, over 4000 agents go into the markets to onboard beneficiaries. GEEP agents are equipped with a proprietary application that enables full registration and capture of beneficiary data e.g biodata, information on the market, nature of trade, GPS coordinates of the trade point, association membership and all other data that enables credit assess-

TraderMoni, FarmerMoni and MarketMoni Beneficiaries

ment. This enumeration platform also employs geo-fencing and mapping to ensure that target beneficiaries at the base of the pyramid, and in the most rural parts of the country are reached. Data on every captured beneficiary is delivered to Bank of Industry real time to enable verification, appraisals and credit assessment. This is done by a call center staffed with over 120 agents and a number of officials. Qualified applicants then get disbursements into their bank accounts or mobile wallets that was opened for them by the agent during the registration process.. Qualified beneficiaries who do not have phones are given free

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phones from the over 40,000 phones donated by the Banker’s Committee - a committee representing all commercial banks in Nigeria. Every loan disbursed is booked automatically on a core banking system that is plugged to all commercial banks in the country; enabling beneficiaries to walk into any bank in the country and make repayments periodically the same way they would pay their utility bills. For beneficiaries who stay far from banks, GEEP developed a repayment scratch-card to ease repayment. Beneficiaries can buy the cards in their local markets and load it as they would a Telco recharge card. This immediately credits their loan account.

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Upon completion of loan repayments, a subsequent loan offer is made via phone to the beneficiaries Furthermore, the Federal Government, through GEEP has pioneered the use of the BVN as a digital collateral. With the power of biometrics, a BVN as digital collateral, mobile data capture, mobile wallets, a 4000-strong agent network, and a well equipped operations monitoring centre, the Federal Government through GEEP has been able to properly target, document, profile, and deliver credit to 1.8 million people in this demographic. GEEP’s achievement – and continued mission – remains to provide access to finance, and sustainable financial inclusion, and to do this at scale. Over 1.4 million of the 1.8 million GEEP beneficiaries are first-time beneficiaries of credit from a formal financial lender. Also, the program has seen the detailed enumeration of over 7m MSMEs and their owners. GEEP is also broadening financial inclusion by removing the first critical barrier - which is the barrier of engagement. Beneficiaries can only participate in the program by opening bank accounts or mobile wallets. Over half of the1.8 million beneficiaries are first-time operators of bank accounts or mobile wallets. These people have been observed to use those tools even after the loans. Through GEEP, the Federal Government aims to empower 20 million Nigerians in active commercial activity by 2023. GEEP consists of three financial products: MarketMoni is a 6-month interestfree collateral-free credit starting from N50,000 to N100,000 for small businesses under the auspices of their cooperative societies or associations. FarmerMoni loans start at N250,000 and are tailored to suit the peculiarities of the different planting seasons and farming requirements. The program also includes a guaranteed of-taker which is sourced by the program. These offtakers commit contractually to purchasing of all produce for the purpose of local manufacturing. TraderMoni provides petty traders with collateral-free microloans starting from N10,000 for their businesses.

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Monday 08 April 2019

BUSINESS DAY

insurance today

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E-mail: insurancetoday@businessdayonline.com

Old Mutual launches ‘protect your dreams’ 2-in-1 savings plan

L-R: Awa Kone, head, West Africa vice president Europe, Middle East and Africa, Swiss Re; Antonio Trillo, regional manager, Property and Casualty Business Management Reinsurance, Swiss Re; Kehinde Borisade, managing director/ CEO, Zenith General Insurance; and Dan Okehi, founder, Brickred Insurance Brokers during the Zenith General Insurance 2019 Brokers Forum ‘Partnering for Excellence’ held in Lagos

Zenith General Insurance CEO list threats to market …call for innovative underwriting Stories by Modestus Anaesoronye

he managing director/ CEO of Zenith General Insurance Company Limited (ZGIC), Kehinde Borishade has listed key market threats that undermine the survival and contributions of the industry to economic growth. Borishade, who spoke at the Company’s 2019 Brokers Forum with the theme ‘Partnering for Excellence’ held in Lagos, said the past year witnessed conflicting regulatory pronouncements, aggressive competition among players, cut-throat rate cutting, declining underwriting standards and notification of bogus claims, among other things . This he said is also worsened by the current trend where reinsurers are tightening their belts, to the

extent of rejecting risks from the Nigerian market as result of arbitrary rate cuts. Borishade said these challenges are real threats to the survival of the insurance industry, urging stakeholders to rise up to the challenge and protect the market. “We must continue to innovate better ways of managing our business in the most efficient, sustainable and profitable way, using best global practices, as well as adapting these standards to our local environment. This creates a complex business eco-system for every insurance business.” He told the insurance brokers that Zenith General Insurance was taking proactive initiatives in responding to these challenges, amongst which is the enhancement of underwriting procedures, which has enabled the company break away from a negative underwriting position of N388 million to a positive N265 million in the last

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one year. “We have structured our marketing model along regional lines, bringing management closer to customers as well as the establishment of agency operations, while also fortifying our Banassurance business model with the aim of diversifying our portfolio to serve our customers better, the CEO said. Borishade assured the brokers of the Company’s commitment to excellent services to customers and broker partners, saying, he will continue to collaborate with brokers to increase market share and enhance contribution of the industry to the economy. “We shall continue to collaborate with brokers, as you are the most important channel of distribution for business patronage. In the same vein, the management remains committed to recognizing and rewarding excellence amongst the workforce.”

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ld Mutual, has launched its 2 in 1 Savings Plan for customers in Nigeria, especially young professionals and families. With a minimum monthly contribution of N5, 000, customers can save up funds for a period of five or ten years to fund their future financial goals. The plan also gives the customer the opportunity to access a part of the savings for immediate needs during the savings period, should the need arise; thereby providing financial security. Another critical component of the plan is the protection on the savings, so that in the event the policyholder passes away in the course of the savings plan, the assigned beneficiaries will receive the originally targeted sum as assured in the plan. Alero Ladipo, the executive head, Marketing and Customer Experience, Old Mutual, commenting said; “We understand that life is filled with a constant juggling of our priorities. Trying to excel in our career, expand our businesses, get another degree, start a family, raise the children, provide education for them; yet take care of our siblings and parents, all on an income is a stretch for many. At Old Mutual we realise that entrenching a savings culture will help individuals realise dreams that day to day life tries to take away from them. We know as a business with over 170 years of wealth creation and management that smart financial planning is the answer to a future of financial security. “It is on the back of these in-

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Alero Ladipo

sights that we enhanced the 2-in1 Savings Plans to allows you save towards your life goals over period of at least 5 years and with the added benefit of insurance protection, so that if life’s uncertainty happens in the course of saving for your future dreams, a chosen beneficiary will still receive the targeted sum. In other words, if you have set out to save for your child’s education and death unfortunately occurs, the 2-in-1 Savings Plan protects that dream from falling apart and ensures that the child gets the targeted sum.” Old Mutual General Insurance Company and Old Mutual Nigeria Life Assurance Company are part of Old Mutual Limited which provides protection, savings, investment and lending services to 11.3 million customers in 17 countries across Africa, Asia and Latin America.

Monday 08 April 2019

BUSINESS DAY

insurance today

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E-mail: insurancetoday@businessdayonline.com

These insurance stocks surmount headwinds as premium income spikes BALA AUGIE

hareholders of four insurance companies shouldn’t fret because their firms have recorded stellar performance in the fourth as evidenced by a double digit growth in revenue, underwriting profit, and improved margins. 2018 was a tough year for companies operating in the industry as low consumer purchasing power made it practically difficult for Nigerians to take a cover, while apathy towards insurance remains a clog in the wheels. Insurance is the least of problems of Nigerians as 87 million people live on less than $1.98 a day while inflation has eroded the purchasing of the people. Unemployment rate has risen to 23.80 percent as of the third quarter of 2018 from 18.80 percent in the third quarter, according to NBS. Decrepit infrastructure like epileptic power supply has forced firms to rely on an expensive source of power to runs offices and branches across the country. This means overhead costs spiked, hence, eroding profitability and suppressing margins. However, FirstBank Insurance Limited, FirstBank GeneralInsurance Limited, AXA Mansard Insurance Plc, and Custodian Insurance have surmounted the

headwinds as they were able to record improvement in key performance ratio. For the year ended December 2018, FirstBank Insurance’s underwriting profit surged by 168.86 percent N7.34 billion from N2.73 billion as at December 2017; the growth in underwriting profit was driven by an uptick in revenue and a reduction in insurance ceded to reinsurers. The insurer’s combined ratio, a key performance benchmark, weakened to 38.98 percent from 46.36 percent in 2018.

The combined ratio measures costs and claims as a percentage of premiums, so the further it is below 100 the more profitable underwriting has been. The deterioration in the ratio was due to an increase in claims as obligation to policy holders continued to mount. Total claims expenses increased by 14.65 percent to N6.33 billion in the period under review, but the company spent less on claims in generating one unit of premium as claims ratio fell to 22.70 percent in December

2018 from 27.10 percent as at December 2017. First Bank Insurance’s net profit margin increased to 21.23 percent in December 2018 from 18.35 percent the previous year while profit after tax spiked by 61.85 percent to N5.94 billion as at December 2018. The company’s diversified product has has paid off as gross premium, gross premium income, and net premium income increased by 32.53 percent, 35.57 percent, and 39.34 percent to N30.61 billion, N30.38 billion, and N27.88 billion, from N23.09 billion, N22.74 billion, and N20 billion. AXA Mansard Insurance’s underwriting profit surged by 129.84 percent to N5.93 billion in December 2018 from N2.58 billion as at December 2017, but rising management expenses hindered the company from turning the impressive performance at the top line (revenue) into bottom line growth. While combined ratio of fell to 103.39 percent in December 2018 from 115.90 percent the previous year, the ratio is above the 100 percent threshold. AXA Mansard’s management expenses of N6.39 billion as at December 2018 is 42.30 percent of N19.70 billion net premium income, while net profit margin fell to 12.58 percent in the period under review from 19.37 percent despite a 42.96 percent uptick in net premium income. Custodian Insurance Plc

combined ratio improved to 88.20 percent in December 2018 from 89.30 percent the previous year as the insurers Life and Non-life Business continues to contribute to Group revenue. The company’s gross premium written, gross premium income and net premium income was up 16.61 perccent, 14.80 percent, and 9.80 percent to N50.20 billion, N36.70 billon, N20.60 billion from N43.10 billion, N32.0 billion and N18.80 billion as at December 2017. FirstBank General Insurance Plc’s underwriting profit was up 49.08

percent to N1.30 billion in the period under review from N872.86 billion as at December 2017. Combined ratios fell to 59.67 percent in December 2018 from 68.41 percent the previous year, thanks to insurance claims recovered from reinsurers that helped lower claims expenses. The insurer was able to translate top line (revenue) impressive performance into bottom line (profit) growth as net profit margin increased to 20.29 percent in the period under review from 13.98 percent the previous year.

Prospective retirees to get more with Leadway’s retirement simulator FRANK ELEANYA

n a bid to help individuals considering retirement not to miss their targets, Leadway Pensure has on Monday unveiled a retirement simulator that removes uncertainty and prepares customers for the journey in peace. The company launched the product at a recent breakfast meeting with the theme ‘Post-Election Eco-

nomic Outlook: Positioning to win’ in Lagos. Lanre T. Idris, chief operations officer and executive director of Leadway Pensure explained that the meeting was to focus on Nigeria’s post-election economy in a bid to adequately consider where the opportunities lie for businesses and how to better position for them. “We all are very much interested in ensuring that the economy thrives,” Idris said. “At Leadway Pensure, we www.businessday.ng

understand the pressures of operating in an uncertain environment and the impact it has on businesses and indeed our lives as individuals. We are not only focused on your retirement future but also very importantly, we are paying very close attention to your progress today.” Delivering the meeting’s keynote speech, reputable economist and CEO at Kainos Edge Consulting, Doyin Salami, noted

that the Nigerian economy is on the path of growth and will continue to do so throughout 2019. “I am clear that the outlook is much brighter now than it was a couple of months ago, before the election,” said Salami, who is also a faculty member at the Lagos Business School. The economist, however, pointed out that the country’s short to medium term economic future will be largely determined by

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the nature of government cabinets and policies to be formed by the middle of the year, as well as international economic forces, including the value of the US dollar and Chinese growth. Idris stated that it is imperative to help the Nigerian public take control of their future by providing a simple and smart solution that can help them measure their ways to financial freedom. Leadway Pensure was granted its operational li@Businessdayng

cense in December 2005 by the National Pension Commission. Leadway Pensure is one of the most capitalized PFAs in Nigeria with an authorized share capital of N2 billion. It’s shareholder’s fund is in excess of N5billion, unimpaired by losses. The company is an affiliate of the Leadway Assurance Company, the largest insurance company in Nigeria and one of the foremost brands in Nigeria’s financial industry.

Monday 08 April 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Unemployment: Survive or thrive MONEY MATTERS

Nimi Akinkugbe

igeria was recently ranked as the “sixth most miserable country in the world” (out of 95 countries surveyed) by an annual Misery Index 2018 published by Forbes. Every year, Steve Hanke, an American Professor of Applied Economics at the John Hopkins University in the United States and Forbes contributor, releases his annual Misery Index. The Misery Index is used to determine how economically well off the citizens of a country are. It looks at unemployment, inflation and bank lending rates across the world. “The human condition inhabits a vast continuum between “miserable” and “happy.” In the sphere of economics, misery tends to flow from high inflation, steep borrowing costs and unemployment.” Steve Hanke Unemployment is one of life’s most challenging events; it’s impact can be felt physically, psychologically, emotionally, professionally and of course, financially. Here are a few tips to help you cope with unemployment. Cut back on expenses A budget is a good tool at anytime but particularly when your regular source of income is compromised. It is important to closely examine how you spend your money so that you can cut back on your expenses beyond necessities. Don’t ignore your debt Contact your creditors and tell them your situation. They may be able to modify the payment terms to a more manageable option. Stay connected Don’t be embarrassed and keep to yourself. This is not the time to withdraw from your circles. Your network, including your immediate family, relatives, friends, colleagues, former clients, and business contacts, matter now more than ever. Communities such as your church or alumni association, professional bodies etc as well as on-line communities provide excellent opportunities to connect with others, many people rely on word of mouth to find the right people, so everyone you know needs to know you are looking for a job. You need to be out and about and engaged in activities to keep you energized. It is usually on one of such outings that your next lead

comes. If you sit at home moping all day, nothing will happen and opportunities will pass you by. Be organized Dedicate a few of hours each day to your job search. Structure the time for looking for adverts, sending out your CV, contacting people etc. Of course there will be many dead ends or leads that lead nowhere. Remember like in any sales role, you need persistence; in this case you are selling yourself. Learn new skills This “downtime” could well be a perfect opportunity for new learning that could make you more marketable. Are there some important skills that you need in order to improve your prospects? Do you have the skills to get to where you want to be? It’s tempting to start rushing off to do yet another degree or course. Equip yourself with practical skills that are needed in today’s workforce. Meeting new people on your course also expands your network. Volunteer Volunteering can have a positive impact in the job search. Even if it doesn’t come with pay, it does come with personal and social benefits. Doing good feels good, so volunteering will lift your spirits, give you a sense of purpose and help your self-esteem. Then there is the added benefit of new skill sets and an enhanced CV. Strong performance in a volunteering role can lead to a permanent role either with the same firm or from referrals or contacts that that came through the role. Your CV Your CV often provides the first impression that an prospective employer has of you. There is nothing more exasperating for an employer than to have the misfortune of reading a badly written

CV full of grammatical and typographical errors. Prepare your CV and proof read it very carefully; there are many good online samples and tips to guide you. The worst thing you can do is to pretend to be what you are not. Be honest or your will be caught out; even if you are hired initially, you will soon be fired. Be prepared for the interview If you are one of the tiny percentage of those that get to the interview stage, be prepared. Find out about the company you are interviewing with. Do your homework. What value can you add? Are there problems you think you can solve? Prepare questions that you wish to ask. There are literally thousands of people looking for work; what makes you unique? Why should they hire you? Arrive early so you aren’t flustered. Stay positive Don’t despair. No matter how many rejections you’ve had, try to remain positive. Employers receive literally thousands of CVs for a small number of places. It’s nothing personal; there are just so many to go through so they will not respond to all of them. It’s easier said than done but you just have to move on from the latest disappointment and towards the next opportunity. If you are down, dejected, or depressed, it will show, and sadly this reduces your prospects even further. An employer wants to hire a positive, energized, enthusiastic candidate. Physical and emotional health Stress, anxiety and despair will affect your state of mind as well as your physical health. Make an extra effort to stave off stress with a healthy diet, regular exercise and enough sleep. You have the time now to give this greater focus so put a proper regime in place;

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There are literally millions of people looking for jobs even as new graduates join an already lengthy queue. If you are offered something that you can do well, accept it so that at least you are earning whilst you continue your search

it will put you in a much better frame of mind and get you fit and ready for your next role. Be flexible Your dream job may not come just yet, so don’t be fixated on this. Be prepared to accept a role that may not necessarily meet your expectations when you consider your qualifications, expertise, experience or status. Consider part time, contract work or a consultancy role. There are literally millions of people looking for jobs even as new graduates join an already lengthy queue. If you are offered something that you can do well, accept it so that at least you are earning whilst you continue your search. Uncover your skills, talents, and passions What do you love to do? What do you enjoy doing? This is the time to look inwards; reflect on your skills, talents, those things that you do effortlessly but have never leveraged on or thought of monetizing. Have you ever explored your entrepreneurial side? Can you teach, can you bake, sew? Are you a good photographer? Do you find it easy to fix things? Are you an expert with social media? Are you tech savvy? Many people are trying to bring a small business idea to life; can you assist with writing business plans? Reflect on the possibilities and you will find that there is some solution that you can provide. People will pay for solutions. This may just be the impetus you need to follow your passion, and bring that dream to life. Build in some funSchedule activities that are inexpensive, engaging and fun. Abandoned hobbies, books you never had the time to read, on line learning are all ways to add value to yourself whilst reducing the pressure of the situation you find yourself in. Try to enjoy this time; remember how much we all crave down time when we are working. You can survive and thrive Whilst being unemployed is one of life’s most challenging events, it can also come with huge opportunities if you remain positive, proactive and are able to seize the moment. Your time of unemployment can be a time of growth and purpose. With focus, determination, support and a positive mindset, you can survive and even thrive.

Email: info@moneymatterswithnimi.com Website: www.moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi www.businessday.ng

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Monday 08 April 2019

BUSINESS DAY

Start-Up Digest

In association with

Emmanuel Alade: Designer with dexterity Josephine Okojie

hen it comes to fashion, Emmanuel Alade knows it best. He is the founder and chief executive of Kodasilver Couture, a fashion line that operates in Lagos, Nigeria’s commercial centre. Emmanuel, a graduate of Geography and Regional Planning from Lagos State University, was inspired to establish Kodasilver Couture out of his passion for fashion and desire to always look good and elegant. Emmanuel’s desire to build a future for himself without having to work for anybody also prompted him to establish his business even while still an undergraduate. The young entrepreneur registered his business in 2016 after taking extensive training in fashion and design to further develop his skills. He started his business very small with the little amount he could save during his service year. He started by sewing for his siblings and friends as well as church members. “I started so little, gradually from making wears for my siblings and friends and I was able to save some money which I eventually used in setting up my fashion line,” he says. Since starting, the young entrepreneur says that his business has grown comfortably, owing to increasing patronage and referral from clients. The entrepreneur says that his business

Emmanuel Alade

has continued to grow despite that the industry is highly populated with a lot of talents, adding that his ability to remain creative and meet customers’ deadlines have been the biggest driver.

GIZ empowers technical centres to train 1,500 youths on construction RAZAQ AYINLA, Abeokuta

s part of bilateral relations with Nigeria, German Development Agency (GIZ) has entered into a working agreement with three technical centres in the country with a view to training and empowering 1,500 Nigerian youths for construction works within a year. The training and empowerment of 1,500 artisans with the required power tools for the construction industr y, mainly wood, concrete and metal works, are part of ongoing 1,500 projects initiated and undertaken in 120 countries of the world by German Development Agency (GIZ). Speaking during the inauguration of a steering committee and handover of power tools to beneficiary institutes, Ibrahim Ali, adviser on skills development at GIZ,said that the exercise was in continuation of technical trainings designed and overseen by GIZ for Nigerian construction, agricultural and automotive industries, which tend to boost employability in the country. Ali said that GIZ had earlier trained 60 artisans selected from three beneficiary institutes and technical partners, namely, Shelter Watch Initiative (SWI), Millard Fuller Foundation (MFF) and Peter Akinola Foundation (PAF), who were also expected to step down the technical trainings and empowerment to their members using GIZ technical manual and power tools supplied. He explained that the project, which was designed to fight youth unemploy-

Rite Foods celebrates women entrepreneurs in foods and drinks industry David Ibemere

ment in Nigeria, targets young job seekers of age 15 to 35 and people interested in skills acquisition and development who would be trained by 60 artisans earlier trained by GIZ with a view to producing 1,500 artisans within a year of training. He, however, noted that each beneficiary institute would train 500 artisans which bringing the total trainees to 1,500 at the end of the programme, saying that the power tools distributed to the institutes should be handled with care as routine audit would be carried out on them. Also, David Kornemann, manager of C. Woermann Nigeria Limited, one of GIZ technical partners, said that the exercise was divided into a theoretical and practical module, adding that C. Woermann was not only supplying the power tools for these technical centres but serviced the tools for them whenever required and would also be part of tools audit. He said that the empowerment of Nigerian young job seekers and artisans would boost activities in the construction industries thereby improving on the employability of young Nigerian job seekers and employees of micro-small and medium enterprises in accordance with GIZ objective. Responding on behalf of the technical centres, Segun Olutade, chief executive officer of Shelter Watch Initiative (SWI), lauded the GIZ, C. Woermann and other technical partners for designing such a programme which tends to fight youth unemployment, saying the beneficiaries are ready to step down the trainings in their various centres and achieve 1,500 artisans target within a year. www.businessday.ng

“The business has continued to grow over time as we continue to be consistent and ensure total satisfaction of our customers.” The geographer-turned-entrepreneur currently has two full-time employees and

eight apprentices working with him. Emmanuel says he sources his fabrics from local markets in across the country. “We have been consistent and always kept to deadlines. This is mostly the problem of start-ups in the fashion industry,” Emmanuel says. He tells Start-Up-Digest that the business plans to open its showrooms across major cities in the country and also a larger work station in Lagos for its operation. Emmanuel believes that Nigeria’s fashion industry has what it takes to become the hub in Africa as it is filled with lots of talents and innovative designers. Speaking on the challenges confronting the business, Emmanuel identifies inadequate power supply as the biggest issue. “Poor power supply is a big challenge we experience. We need electricity to power our machines, and the issue of electricity has been frustrating. We spend a lot on fuel and this has continued to increase our production cost,” he laments. He urges governments at all levels to bridge the country’s infrastructural gaps, especially in the power sector, noting that stable power supply remains the lifeline of industries and growth see sectors in the country. On his advice to other entrepreneurs, he says, “Do not despise little beginnings; be consistent and open to critics and learning to better your craft. “Also know that entrepreneurship is for the patient and brave hearted, nothing good comes easy.”

ite Foods Limited, last week, commemorated the International Women’s Month by hosting female entrepreneurs to an exhibition at the Lagos Continental Hotel. The maiden event themed, ‘Food, Drinks and Her march edition’ , designed to recognise, support and celebrate women entrepreneurs in the food and drinks industry in Nigeria, featured insightful sessions, as speakers took turns to highlight issues and proffer solutions on how women can effectively build profitable and innovative businesses While delivering the keynote speech, Seleem Adegunwa, managing director, RFL said the event was the company’s way of celebrating the International Women’s Day, and bringing to the front burner the importance of gender parity in the workplace and empowering women in business. He said, most times, people wouldn’t see women as entrepreneurs in the society, which was why the company empowered them to bring to the forefront, their businesses. Adegunwa, whose company makes Bigi & Rite Sausages, Bigi Beverages, Bigi Premium Table Water and Fearless Energy Drinks, explained that: “Many societies still have a long journey in the appreciation of women empowerment and the impact on society. It cannot be over emphasised that what women teach has a positive impact and what they do not teach has a negative impact on the society, the country and hence generations. We are in full support of a gender-balanced society.” On the exhibition, he noted, “As a food and beverage company, it was natural that our thoughts gravitated towards the idea of recognising, celebrating and ultimately empowering female, food and drinks entrepre-

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neurs by providing a platform where they can showcase their entrepreneurial spirit, network among themselves for positive alignments for future successes and most importantly, have fun while doing it.” “This is why it is heart lifting for me, seeing this hall filled with a fine mix of established names and fast-rising female entrepreneurs, all set and ready to unleash. We do hope that dreams come true for you all.” Ahead of the event, Adegunwa had lamented that women and girls who represent half of the world’s population, were still subjected to all sorts of gender discriminative practices in Nigeria despite the country’s membership of the United Nations. “This event was primarily designed to promote the feminine gender and create a platform highlighting the strength of a woman, their survival in the male- dominated society, and also provides a platform where women can interact, educate and pitch ideas to each other.”

Start-Up Digest Team

@Businessdayng

Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

Monday 08 April 2019

BUSINESS DAY

Start-Up Digest

I sold pairs of shoes so well that my client felt I could sell real estate – Adetola Nola Adetola Nola is an innovative entrepreneur who founded Veritasi Homes - one of the fastest rising real estate firms in Nigeria. As the CEO of Veritasi, he brings a plethora of knowledge and expertise to facilitate the growth of the Nigerian real estate industry. In this interview with Odinaka Anudu, the visionary business leader with a passion for excellence shares some insights on his journey into entrepreneurship and how he got into the Nigerian real estate industry. Tell us a little about your academic background. studied Chemical Engineering at Obafemi Awolowo University, Ile Ife. I have a certificate in Strategic Leadership from Manchester Metropolitan University. I just got certifications in Finance and Management from London School of Business and Finance. I am currently doing a CFA (Chartered Financial Analyst - level 1). I have also attended a lot of seminars and training sessions locally and internationally.

I only knew how to sell houses. So I contacted all the real estate companies selling lands in Lagos and set up meetings with them. I facilitated projects for some of these companies. We decided to start Veritasi because I had gained a lot of knowledge about real estate.

What’s your professional background? I worked in the PPNP department of NNPC, Ibadan, for a year. Although I was an intern, I was managing a department. It was there that I understood the power of networking. After I left NNPC, I came to Lagos and started a fashion business with my friend. When I was in school, I was into designing female wears so I understood the business. We started off buying our shirts and shoes at affordable prices from a distant market. Then, we would repackage them for resale at a sizeable profit margin. In a matter of time, our demand grew. And we started making our own shoes. How did you venture into real estate? While retailing shoes, I met Hakeem Bakare and sold some pairs of shoes to him. I sold the shoes so well that he felt I could sell real estate. Bakare told me he wanted me to be in his team. Real estate was something that I was interested in, but I had always thought one needed a lot of money

What’s the biggest risk you’ve ever taken? The biggest risk is selling everything I had and borrowing a lot of money from family and friends to start Veritasi. Prior to starting the company, I had two cars and a shoe factory. I sold the cars, all the machines, the generators, and all the shoes I had imported. I also borrowed money from a friend of mine called Ife. If the business had failed, I would probably have committed suicide (laughs), but then, I wouldn’t have, anyway, because Veritasi would be about the fifth company I started.

Adetola Nola

to start. I seized the opportunity and started with a friend of mine who also now owns a real estate firm. Starting off our career in real estate was tough. For the first six months, there was no sale, but we kept pushing. I made my first sale in the eighth month. I had given up. I wouldn’t even go to the office for three days in a row, sometimes. Hakeem (whom I still consider a mentor till date) would call me to come back, set up a meeting to restrategise and force us keep pushing. One day, I was reading a sales book by Brian Tracy at Neo Cafe in Sanusi Fafunwa. A man walked in and asked, “Those books, do they really work?” I said, “I think they work sometimes.” So we got talking. He

came to buy coffee. Immediately he left, the guy that sold coffee hinted me that he was a billionaire with multiple investments in real estate. I went after him and pushed till I got a deal. The term of the deal was that I should liquidate some of his properties in Lagos, and if I was able to do that, he would buy from me. I was able to sell two of his properties at premium locations. That was how I started selling houses. How did you start your company? Hakeem and I won the best sales team award at Grenadine Homes with an all-expense paid trip to Dubai as an incentive. On the Dubai trip, I met a man who had a lot of landed properties in Lagos. Then,

What happened to all the other businesses that you founded? All the other businesses were learning grounds for us. They failed, but they taught me a lot of things. Because when I started Veritasi, I understood business dynamics and a lot of other things. I am trying to resurrect one or two. What’s your definition of success? For me, success equals purpose fulfilment. My purpose is to touch lives through entrepreneurship. One of the reasons I started my travel company, Nola Travels, is to be able to employ smart graduates roaming the street due to unemployment. I would say that I am successful when I can create a system that provides help for a lot of people. In

the real estate market, I would also say that Veritasi is successful when it can solve the housing problems of middle and low-income earners in Nigeria. What’s the next big move for Veritasi? We are providing housing solutions via Green Energy. We want to replicate noiseless and smart homes in Nigeria. We hope to achieve that in the second quarter this year. Why Green Energy? Our company is known for innovation and pacesetting. We want to introduce fast buildings into the Nigerian real estate market, like ‘fast fashion’ - meaning fashion that goes and comes back. Top brands like Zara sell products they can replicate in three days because they are fast. In a similar vein, we can deliver ‘fast buildings’ in two months, while the conventional real estate company delivers in two years. How do you think the Nigerian audience will embrace this? Well, I think changes are very difficult to embrace in every part of the world. We have a market penetration strategy centered around creating a shift in mindset and acceptance for smart homes. These are houses that people stay in when they travel abroad. They’ve stood the test of time and have withstood different weather conditions. Smart homes are cost-effective, timely in delivery and durable. The buildings are lightweight and resistant to earthquakes. We want to develop a community that has its own electricity. Once it picks up, nobody will go back to the archaic way of building.

Nigerians urged to transform creativity into economic prosperity Gbemi Faminu

igerians have been urged to utilise their creativity and develop innovative ideas that will foster growth and development in the country. Aisha Abubakar, minister of state for industry, trade and investment, said, “The Nigerian creative industry has the fastest growth rate in the world. It has seen a period of rapid growth spurred by emerging digital technology, which supports content creation, distribution and consumption for the growing middle class in Nigeria and most of sub-Saharan Africa as well as supporting industries, which are rapidly evolving.” Speaking at the maiden edition of

the Creative Entrepreneurs Summit hosted by the Creative Business Cup, Abubakar, who was represented by Adewale Bakare, director at the Federal Ministry of Industry, Trade and Investment, said that although the Nigerian creative sector has been able to record giant achievements, including international partnerships with little government intervention, the incumbent administration has made various efforts to provide an enabling environment as well as the necessary funds needed by the sector. She said Nollywood is the second biggest employer in Nigeria engaging over a million persons, according to the International Monetary Fund. The film sector was seen to contribute 1.42 percent to the economy, she said. www.businessday.ng

“By 2016, the film industry sector contributed 2.3 percent (N239 billion) of Nigeria’s Gross Domestic Product (GDP). As a result of the industry’s financial potential and job creation capacity, the industry became a focus for interventions, investments, and partnerships.” “Nigeria’s music industry grew by 9 percent in 2016 to reach a value of 39 million dollars, and is set to grow by 13.4 percent CAGR by 2021, with an estimated worth of about $73 million. This says a lot about the lucrativeness of the industry, as well as the enabling environment it provides for all genres to thrive.” Outlining opportunities in the sector, she added that there is still room to develop innovative ideas and creativity amongst Nigerians in line with global trends.

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“According to the Terragon Group, Nigeria continues to grow exponentially in digital media adaptation and technology use. Also, the adoption of digital media presents great opportunities for businesses.” “UNICON Industry Fact Sheet estimates the global market for video games, e-sports, animation, and VFX as falling between $150 and $254 billion depending on market segmentation. With a mobile penetration rate of 84 percent, the Nigerian tech market is yet to be fully exploited.” Jesper Kemp, Danish ambassador to Nigeria, said there is a need for Nigerians to become more innovative and creative in line with global trends, in order not be left out in the change and growth process. Kemp, who was represented by @Businessdayng

Per Christensen, consul-general of Denmark in Lagos, added that the population of Lagos increases per hour with no fewer than eight persons migrating into the heart of the country in search of greener pastures Thererefore, there is a need to develop innovations and better infrastructure to accommodate and serve the growing population,he said. He stated that creativity, invention and innovation in Denmark is seen as a public-private partnership and is recognised that the government has to make efforts in promoting healthy competitions by investing in each innovation or creative idea, advising that Nigeria should follow suit, considering that there are many creative and innovative ideas birthed in the country.

Monday 08 April 2019

BUSINESS DAY

Start-Up Digest

How Yinka is thriving as personal shopper Gbemi Faminu

guntoyinbo Olayinka is a 23-year-old business owner and chief executive officer of Spiffy Royale, an online female fashion store. She is also a personal shopper and teaches people how to import goods into Nigeria as well as how to start businesses. She describes her business as an avenue to help women become more confident in their appearance as well as relive the burden of shopping for good and quality outfits. She explains that her business name ‘Spiffy’ means ‘smart in appearance’ while ‘Royale’ implies ‘royalty’. Both showcase that her business is about presenting women as queens, she says. She started this business in 2018 during her fourth year in school. Although now a graduate of Zoology with a major in Parasitology, she has continued her business and has expanded it to include product import and retail marketing.

Oguntoyinbo Olayinka

Yinka was inspired to start this business due to her love for shopping as well as her passion

for dressing people up. She states that “although this was one of my hobbies initially, but I realised I

How over-regulation hurts business, by LCCI, others Gbemi Faminu

takeholders in business say overregulation by government agencies creates a big gridlock to success and negates the federal government’s ease of doing business policy. Speaking at an interactive forum with regulatory agencies in an event organised by the Lagos Chamber of Commerce and industry (LCCI) themed ‘Regulatory Environment Roundtable’, Babatunde Paul Ruwase, LCCI President, said that some regulatory actions are not consistent with the ease of doing business agenda of the federal government. He stated that “the regulatory environment is crucial to the operations, survival, viability and the profitability of doing business in Nigeria. They have sensitive and enormous responsibilities that are critical to the growth and survival of the economy. “There are some regulatory agencies that are not consistent with the ease of doing business. Some of these borders on high regulatory compliance cost, lack of clarity in regulatory requirements, overlapping regulatory functions, among others. “It is imperative to minimise the burden of regulation on investors if the private sector must play the desired role of wealth and job creation as prescribed in the Economic Recovery and Growth Plan (ERGP)” He further stated that business-

es are generally burdened with the challenges of infrastructural deficiencies and macroeconomic blows, adding that most investors are saddled with huge cost of providing electricity, poor access to good roads, insecurity and other industry specific issues in the midst of poor access to affordable credit, high exchange rates and multiple taxation. He said the number of regulators is not a problem as they have various responsibilities expected of them but overregulation of the various agencies is the challenge, especially for the micro small and medium enterprises as they are compelled to comply with all the rules and regulations of each agency as well pay the required dues of each of them. He advocated that the agencies need to liaise with each other and reach a general consensus that will reduce over regulation as well as confusion on the functions of each agencies. Osita Aboloma, director general, Standards Organisation of Nigeria, (SON), said that SON is in conformity with the industrial standards to ease doing business based on the Executive Order 1. Aboloma, who was represented by Mosunmola Samuel, head, customer feedback and collaboration, said, “SON ensures the compliance of locally manufactured goods and imported products and services to the requirements of the Nigeria industrial standards through conformity assessment programmes, some of which www.businessday.ng

include SONCAP, MANCAP and laboratory services to ensure compliance to standards.” Aboloma further stated that 1,953 companies have been certified and 3,398 products have been discovered through the innovations of the MSMEs, adding that MSMEs have been encouraged with discounts on various levels. Kayode Oguntuase, Nigerian ambassador to Benin Republic, while speaking on the challenges of the business environment, stated that smuggling and mounting of numerous roadblocks are major issues to contend with in the business environment. He said, “Smuggling is not helpful for trading countries. Thanks, Nigeria, Benin and Benin Republic have made an agreement to setup a committee against smuggling because we have realised that smuggling is not doing any good for any of the countries.” He added that mounting numerous roadblocks in Nigeria remains a major challenge for the trade, import and export sector in Nigeria, disclosing that Nigeria has almost 17 roadblocks before getting to the border; Togo has 4 while Benin republic and Ghana have none. He said that the government agencies need to address the excess roadblock as it is hindering the ease of doing business, especially among countries, stating that before signing the free trade agreement, there is a need to cross examine its contents well in order to avoid future hitches in the business environment.

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could make money from it as well.” Furthermore, she has always been interested in becoming a business owner, so when the opportunity came, she grabbed it with both hands. She started her business with N50,000, which she got from her mother as loan. The young entrepreneur is frugal in her spending and has been able to grow her business to a great height. Currently, she gets her products by importing them from China, USA, Turkey and other European countries. Speaking on her expansion plans, she says, “I am working on getting a physical space for my business and also get employees to make the workload easier.” “I intend to incorporate logistics to ease the delivery process of my business as well as expand the products I import into the country.” Yinka adds. In fact, she intends to register her business duly as well as gather certifications to validate it. The young entrepreneur affirms that she attends trainings whenever the opportunity presents itself as she intends to be-

come a trailblazer in the business world. ‘Yinka gets involved in lots of self-development activities too. She discloses that although she has competitors, she offers her services with incentives that attract customers and keep them coming back, highlighting that “Every of my items comes with free gift and I match quality with affordability.” As interesting as her business is, she says that she encounters various challenges such as difficulty in gaining customer’s trust, infrastructure deficit that causes logistics challenges, and poor access to loans for business expansion, among others. She requests that government should make the import duty favourable and as well address the infrastructure deficit problem in order to reduce its effect on the transport sector of the country. Yinka affirms that she is inspired by successful people and is working towards becoming one. Advising other entrepreneurs, she says, “Don’t be scared of losing, you might not get it right initially but eventually it will work out.”

Expert attributes poor performance of SMEs to poverty SIKIRAT SHEHU, Ilorin

ohammed Sanni, a revenue consultant and forensic auditor, says poverty remains one major reason why small businesses perform poorly in Kwara State. “It is on record that despite the fact that Kwara State was created in 1967, it is currently ranked one of the 10 poorest state in Nigeria with the GDP of $3.840, as reported by Wikipedia in February, 2019,” he said. Sanni stated this while presenting a paper, ‘Economic and Internally Generated Revenue (IGR), Potentials of Kwara State’, at the 24th Media Parliament organised by the state council of Nigerian Union of Journalist (NUJ), in Ilorin, recently. The financial expert, however, posited that lack of support by the state government for small and medium scale businesses is the major factor hindering economic development in Kwara State. “The current administration didn’t only slow down the activities of SMEs, but vigorously pursued anti-people policies, which aggressively retarded the performance of SMEs and this accounted for the current position of the state,” he said While expressing dismay over current challenges confronting Kwara despite the enormous resources and economic potential the state has, he said the activities of SME businesses determine the economic growth of any societ, as they are the engine room of the economy. The guest speaker recommended that SMEs should be strengthened and supported in order to create a vibrant economy, and an enabling environment should be provided @Businessdayng

for the operators to enable them perform optimally. The support, according to him, could also be in the form of good policies, guaranteed credit facilities and market opportunities. He equally suggested strategic partnership with SMEDAN, Bank of Industry and other development banks, adding that such effort would go a long way in creating values that promote economic activities in the state. Sanni also identified bad governance, poor rural development and decayed infrastructure as other factors responsible for the bad state of economy in the state. He said Kwara State is blessed with large deposit of mineral resources such as; Limestones, marble, feldspar, clay, kaolin, quartz and granite rocks. The financial expert, who asserted that the incoming government has inherited a decayed system that would require a lot of effort to ameliorate, recommended that the new government should explore the potential of the state to ensure a sustainable economic development. “The new government should come up with local content policy so as to ensure that local services and materials are utilised by any contractor being engaged by the state government except where such services or materials are not available locally. This would broaden market for small and medium operators. “Also, the incoming government should vigorously pursue programmes such as active support for SUBEB operation by accessing the grant of over N5 billion with federal government in order to give more rooms for activities that would create economic opportunities for our entrepreneur,” he added.

Monday 08 April 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

From bad bosses to career changes: The Hosts of “Dear HBR:” on one year of answering listener guestions ALISON BEARD AND DANIEL MCGINN

advice often, but we recognize it’s hard to do — and sometimes we aren’t very good at doing it ourselves.

year ago, we began cohosting “Dear HBR:,” a podcast in which the two of us (with help from an expert guest) answer questions from listeners struggling with workplace problems. After 28 episodes we’ve decided to take a step back and outline the recurring themes and takeaways we’ve seen. YOUR RELATIONSHIP WITH YOUR BOSS REALLY MATTERS. In the 84 questions we’ve featured on the show, the phrase “my boss” appears 55 times. JOB-CRAFTING CAN TAKE YOU ONLY SO FAR.

In theory, the solution at work is to find a way to do more of the stuff you enjoy, and less of the stuff

you don’t. There’s a word for this — job crafting — and a lot of our answers tend to lean on this strate-

gy. Still, we recognize that it’s not always realistic. IT’S HARD TO “SWIM IN YOUR LANE.” We give this

EXPERTS OFTEN DISAGREE. Even when we disagree with our guests, and each other, we try to offer value by helping people learn how to think through all aspects of a dilemma. PEOPLE ARE LOOKING FOR EMPATHY, NOT JUST ANSWERS. Not every problem has a perfect do-this-and-don’t-dothat solution. NEGATIVE SITUATIONS REALLY RESONATE. To date, our most popular episode is “Toxic Workplaces.” THOSE WHO WORK

BEHIND THE SCENES NEED MORE CREDIT. One of life’s greatest frustrations is not feeling appreciated or recognized. And, unfortunately, this seems to happen all the time at work. NEW PROJECTS RUN BETTER WHEN YOU DO THEM WITH A FRIEND. We couldn’t imagine doing the show with anyone but each other. We invite you to check out “Dear HBR:” on your favorite podcast app.

(Alison Beard and Daniel McGinn are senior editors at Harvard Business Review.)

Stop eliminating perfectly good candidates by asking them the wrong questions NILOFER MERCHANT

could tell right away from the tone of his voice that the vice president of engineering wasn’t happy. He practically growled at me. He had just finished interviewing a job candidate named Anand, who I had directed his way, and was calling me to say he was going pass. Candidates are too often screened out because they don’t fit a particular pattern; one survey found as many as 75% of resumes don’t make it past applicant tracking systems. The VP thought Anand had the right skills and experience but found Anand’s questions annoying. His assessment that

Anand was a “bad fit” was really code for “I don’t want to feel uncomfortable.” Leaders need to build teams that can both define the right questions and then discover new answers. Here are the types of questions the VP might’ve asked — and the ones you should ask — if you want to avoid screening out perfectly good candidates based on the wrong criteria. QUESTIONS THAT UNCOVER CAPABILITIES, NOT JUST EXPERIENCE. Are you asking questions that get to someone’s capabilities or are you seeking confirming data that someone has done exactly what you have already

THINGS THEY LOVE TO WORK ON. If you’re hiring for innovation, you need to ask what this person authentically brings to work. Ideas, after all, are not invented and grown in a vacuum; they grow and evolve by connecting previously separate elements. It’s easy to forget that the job of a leader isn’t to know all the answers but to create the conditions by which the entire team gets to learn and innovate. scoped? Unfortunately, an estimated 77% of all jobs (60% in the U.S. and 80% worldwide) require little to no creativity, decision-making or independent judgment.

QUESTIONS THAT ASSESS WHETHER THEY CAN CO-CREATE ON A TEAM. Teams need to figure out new terrain together. You want to find

people who can play together, filling in the gaps between pre-defined roles to get the work done. QUESTIONS THAT UNCOVER THE KINDS OF

Expertise It’s in our DNA

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(Nilofer Merchant’s latest book is “The Power of Onlyness: Make Your Wild Ideas Mighty Enough to Dent the World.”)

Monday 08 April 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

Young people are leading the way on climate change ANDREW WINSTON

n one of the many oddities of biology, kids hear differently than the rest of us. Lately it seems that the under-20 crowd is hearing one particular high pitch much better than the rest of us, including most business leaders: the alarm that climate scientists have been sounding. Consider Greta Thunberg, a Swede who turned 16 in January. Last year she stopped going to school to protest inaction on climate change, saying there was little point in studying for a future that may not exist. Within months, Thunberg urged immediate action from business leaders at the World Economic Forum and told the United Nations secretary-general and others at the global climate summit in Poland that they are “stealing [children’s] future in front of their very eyes.” She’s been nominated for a Nobel Peace Prize for her efforts. Will this climate movement

end up as significant as the antiwar, civil rights and gay rights movements? It’s hard to predict. But what’s clear is that we’re in the middle of a major realignment of values around climate. It’s now unacceptable to young activists, and the millions of people they inspire, to espouse climate denial or play

the “let’s go slow” card. This brings me to business, and a warning: No organization can avoid values shifts. Remember, there were moments in history where it was generally acceptable to use slave labor or children in supply chains, to wink at rampant sexual harassment in offices

and to freely dump pollution in rivers and the air. And while executives do increasingly seem to be moving toward action on climate change, with public pronouncements to cut their own emissions or buy renewable energy becoming the norm in large companies, it’s not clear whether those ac-

tions are enough to satisfy this next generation of customers and employees. But that needs to change now. It’s time, in the words of U.S. Sen. Sheldon Whitehouse, for “corporate good guys” to “show up in Congress to lobby for climate action.” We need CEOs in the halls of power at the state and federal level pushing for aggressive policy. In practice, this will mean disagreeing with politicians, up to and including the president, who say it’s too expensive to act, or that climate change is a hoax. It may just take the youngest Americans to get companies to take a real and public stand for aggressive global action on climate change; after all, if they don’t, they risk getting out of step with an entire generation of employees and customers.

(Andrew Winston is the author, most recently, of “The Big Pivot.”)

Corporate boards are pessimistic about trade between the U.S. and China MICHAEL WITT

tive capabilities. The challenge is that the more a branch and its products become localized, the less advantage these capabilities confer. — FEASIBILITY OF PROFIT REPATRIATION. Doing business internationally is ultimately futile if companies cannot bring profits home to deploy them elsewhere or distribute them to shareholders. Faced with these conditions, and the understanding that a localization strategy is vastly more complex and riskier to execute, many firms may opt for a withdrawal strategy.

he U.S. trade fights and U.K.’s Brexit are the most salient and recent symptoms of a decade of retreat from globalization that has international business apprehensive about the future. My research has shown that many corporate leaders believe this strategic rivalry could develop into a situation reminiscent of the Cold War, in which much of the world is divided into two spheres of influence, this time the U.S. and China. In a recent study I led at INSEAD we surveyed 109 board members from around the globe about the likelihood of this “new Cold War scenario.” Almost three-quarters of respondents in primary industries and manufacturing — and 50% of those in service industries — believe that such a scenario is likely. Our survey shows that multinational firms faced with this scenario are contemplating or adopting one of two major strategies in response: One option is to withdraw from some territories to fo-

cus operations in only one of the two spheres. Given Asia’s dominance in global supply chains, and the likelihood that large parts of East Asia would be in the Chinese sphere, the necessary adjustments for Western firms would be significant. The other option is for a firm to continue to operate in both spheres using a decentralized and locally embedded approach. While this approach

may help firms preserve some of the benefits of global reach, it would be much more difficult to implement and would be contingent on several conditions: — FEASIBILITY OF INCREASED LOCALIZATION. . Localized supply chains may be economically suboptimal. And introducing distinct brands reduces economies of scale and scope. — LEGALITY. Either of the

two powers could legally bar companies from operating in certain jurisdictions. — PROPERTY RIGHTS. Were Sino-U.S. tensions to continue to escalate, governments might similarly expropriate firms, even in the absence of military conflict. — HEADQUARTERS CONTROL. For most multinational firms, success abroad requires that local offices draw on the wider firm’s unique competi-

Brought to you courtesy of First Bank Nigeria

(Michael Witt teaches and researches international business at INSEAD.)

Monday 08 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Reduction in impairment charge salvages banks from disappointing results

SHORT TAKES N188.08 billion Total transactions at the Nigerian Stock Exchange (NSE) in February 2019 stood at N188.08 billion, indicating a 54.06% increase over N122.08 billion recorded in the previous period. Foreign investors outperformed their domestic counterparts by 6% in February.

BALA AUGIE

n improvement in impairment charge was the life line that salvaged banks from a disappointing result as a recovery in crude oil price paved the way for debtors to pay interest on money borrowed. For the year ended December 2017, after tax profits for the 11 lenders that have reported full year results spiked by increased by 19.56 percent to N677.59 billion from N566.56 billion the previous year (2017). Analysis by BusinessDay showed that the growth at the bottom line (profit) was largely driven by 71.66 percent decline in cumulative loan loss expense to N76.62 billion as at December 2018. The stellar performances of these lenders mean they have surmounted the tough and unpredictable macroeconomic environment. However, analysts are saying that future profit could shrink it companies do not invest in retail banking to grow non-interest income. Ayodele Akinwunmi, Head, Research and Strategy at FSDH Merchant said such charge should not be in the books in the first place and that it is the quality of assets that drives earnings. “In the Europe and United States, banks pay attention to net interest income, which is the difference between revenues generated by interestbearing assets and the cost of servicing (interest-burdened) liabilities,” said Akinwunmi. Further analysis of the financial statement of the 11 banks in showed that in 2017 their profits increase by

13.5%

24.27 percent, and there was uptick of 21.42 percent in 2016 while there was a 12.32 percent decline in profits in 2015 a period when the sudden drop in crude oil prices from above a $100 per barrel to near $40 forced banks with heavy exposure to the sector to write off loans that began to go bad. “If lenders do not invest in retail banking then profit could be flat because loan loss expense may not be add impetus to bottom line in subsequent quarters,” said Ayodeji Ebo, managing director and CEO OF Afrinvest Securities Ltd. Unity Bank of Nigeria Plc’s recorded a reduction in 65.94 percent reduction in interest income to N29.50 as at December 2018, but a 99.63 percent decline in impairment on financial assets to N161.17 million helped the lender post a profit of N1.29 billion in December 2018 from a loss of N14.19 billion the previous year. Zenith Bank Nigeria Plc’s interest income dipped by 6.89 perccent

to N440.05 billion as at December 2018, but the second largest lender by market capitalization recorded a 11.29 percent increase in net income to N193.44 billion, thanks to a 81.29 percent decline in loan loss expense to N18.37 billion. Guaranty Trust Bank Plc’s interest income dipped by 5.96 percent to N306.96 billion as at December 2018, but a 59.96 percent reduction in impairment charge added impetus to bottom line as net income increased by 10 percent to N184.63 billion as at December 2018. Non-Performing Loans NPLs of lenders in Africa’s largest economy have been improving since the central bank introduced the foreign exchange policy in 2017, a period that concomitant with a rebound in cruse price that helped the country exist its first recession in 25 years. A Juicy yield on fixed income and short term securities have hindered lenders from turning on the tap on

lending to the economy since the real sector is risky. NPL ratio of the banking industry which was reported at 11.7 perent for fourth quarter of 2018 representing a 2.5 percent decline from third quarter 2018’s 14.2 percent but well above CBN’s threshold of 5.0 percent, according to a latest report by the NBS. The 11.7 percent NPL ratio for the fourth quarter 2018 represents the lowest in 9 quarters dating back to Q2 2016 when Nigeria was said to be in a technical recession occasioned by the fall in oil prices. “Even in the event of a moderation in yields on fixed income instruments, many banks believe that as long as yields remain above 10 percent, they still remain attractive considering that fixed income instruments have no Capital Adequacy Ratio (CAR) implications, are tax free and do not result in NPLs,|” said analysts at CSL Stock Brokers Ltd.

Treasury yields remain flat despite MPC rate cut IFEANYI JOHN

fter the monetary policy committee cut rates by 50 basis points, investors would have expected yields on government securities to fall but after fresh open market operations by the Central Bank of Nigeria concluded on Wednesday, the average treasury bills yield advanced marginally by 0.003 percent at the end of the

P.E

day’s trading to 12.86 percent. Ayodeji Ebo, managing director of Afrinvest Securities Limited, explained on his Twitter account that “there was an OMO Auction a day before which included long term bill. This was oversubscribed; hence investors were not too aggressive to get their orders filled yesterday. However, Govt needed to raise funds so were forced to increase rates to meet this objective.”

Fresh treasury bills valued at N95.7 billion were sold to investors on Wednesday by the Central Bank of Nigeria (CBN). The exercise, conducted via primary market auction, was largely successful as it was oversubscribed to by market players. Of the N95.68 billion worth of the debt instrument auctioned at the exercise, offers worth N197.05 billion were received by the apex bank, which did the auctioning on behalf of the

Nigerian government. CBN had also auctioned N17.60 billion worth of the 182-day bill, but received subscriptions worth N22.97 billion, with only N17.60 billion sold. Of the N68.08 billion worth of the 364-day bill auctioned, the central bank received offers worth N153.99 billion, with N68.08 billion allotted. While the CBN slightly reduced

The Monetary Policy Committee (MPC) cut Monetary Policy Rate (MPR) by 50 basis points to 13.5% on Tuesday, March 26, 2019. Meanwhile, cash reserve and liquidity ratios are retained at 22.5% and 30% respectively.

N660.37 billion The Federal Account Allocation Committee (FAAC) disbursed N660.37 billion to three tiers of government in February 2019 from revenue generated in January, 2019. Federal Government received the highest 42% allocation among the three tiers.

Continues on page 39

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 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 08 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE NSE more attractive than peers amid uninspiring performance

among analysts that P/E might not paint a full picture of market valuation, and needs to be backed-up with other metrics such as price-tobook ratio (P/B), which provides a valuable reality check for investors seeking growth at reasonable price. Further analysis revealed that Nigerian stocks, with 1.3 P/B are lower compared with Egypt (1.5), Kenya (1.8) and South Africa (3.1). This therefore implies that investors are paying less to buy stocks on NSE than in other markets, for what would be left if the bourses liquidate the next minute. The fact that Nigerian stocks are cheap is nothing to cheer about as it may signal investors’ low confidence about the growth prospect of the market, according to Olayinka Olohunlana, a Lagos-based economic & financial analyst. “Investors are on wait-and-see note to know what Nigeria’s economic managers have for them before showing full commitment”, she said. The quite impressive financial outings posted by some blue-chip companies in 2018 financial year fails to give the Nigerian market a boost, as investors wants to the policy direction of Buhari’s second tenure. Olohunlana urged the Federal Government to enforce Executive Order 003 which advocates greater patronage for locally made products, maintaining that the capital market will jerk up especially if tweaked to the direction of |Nigerian-listed firms.

ISRAEL ODUBOLA

lthough Nigerian Stock Exchange (NSE) halted its four-day bearish streak to gain a mere 21 basis points after Friday’s trading, down 3 percent weekon-week, nonetheless the market is more attractive compared to peers in the emerging market space. The trend seen so far in the Nigerian bourse defy analysts’ postelection rally expectation, however, bears may likely continue to prevail in the market until the Buhari-led administration comes up with vibrant pro-market policies that will spur growth in the private sector. Analysis of the price-earnings ratio of four notable bourses – Johannesburg Stock Exchange (JSE), Nairobi Securities & Exchange (KSE), Egyptian Exchange (EGX) and NSE revealed that Nigerian stocks are trading at a multiple of 7.5 times their earnings, the least among peers. South African stocks are trading 17.5 times their earnings, Kenya – 12.6x times their earnings and investors are willing to invest 16.3 times in EGX for a unit of the stocks’ earnings. The cheapness of Nigerian stocks is further confirmed by the fact that they are trading below peers on the average in Emerging (13.2x) and Frontier (12.6x) markets. There has been a consensus

What 50-50 debt strategy means for domestic bonds market SEGUN ADAMS

ast week the Debt Management office (DMO) announced that the nation’s total debt rose 9.1 percent to N24.39 trillion as the agency released the borrowing calendar for the second quarter of 2019. DMO unveiled the 2019 borrowing plan of the federal government to strike a balance in its debt sourcing in a bid to achieve 60 to 40 domestic to foreign debt stock. The decision was in line with hitherto stated objective of rebalancing towards cheaper external debt in order to create more space for private sector in the domestic market, extend the average tenor of the debt stock in order to reduce refinancing risk and increase Exter-

nal Reserves. Experts who weighed on the possible outcomes for investors in the local debt market, in particular how yields would be impacted say the revenue pressure government remains crucial for players in the market. According to Ayodele Akinwunmi, Head of Research and Strategy at FSDH Merchant Bank Limited, there are lot of factors that affect the yield and depending on the absolute amount the government might borrow this year, yields could still go either way. However he believes the new minimum wage law and petroleum subsidy are factors that would worsen the fiscal deficit especially as he estimates the global economy slowdown and other crucial domestic factors to weigh on the revenue generation of the federal government.

Nnamdi Olisaeloka, fixed income analyst at Zedcrest Capital, explained that the government are basically repeating what they had done last year and it has been in line with the market expectation as the information has already been stated in the 2019 proposed budget released in 2018. ‘’ The crucial question is what would be the borrowing appetite of the government and how strong the DMO is going to be’’ Olisaeloka explained that the concern going forward is if the debt management agency would have to clear the auction at market rates or subsidize rates. Olisaeloka noted that the fiscal pressure on the government would be a key consideration of investors in the market and upside risks. Analysts at Chapel Hill Denham believe ‘’ The increasing odds of

lower supply of bonds in Q2-2019 will likely fuel further bullish positioning in the sessions ahead.’’ At the end of trading on Friday, analysts at Chapel Hill Denham reported that sentiments were bullish in the fixed income market in reaction to the publication of the DMO bond auction calendar for Q2-2019.

The DMO bond auction calendar showed the FGN is looking to raise N255.0bn - N345.0bn in Q22019 which is lower than N388.9bn raised in Q1. In addition, the DMO is looking to extend maturity profile of domestic debt by introducing a 30-year bond for the first time.

Treasury yields remain flat despite ... Continued from page 38 the stop rate for the 91-day bill to 10.29 percent from 10.30 percent, rates for the two other maturities were increased. The 182-day bill rate was raised from 12.20 percent to 12.60 percent, while the 364-day bill rate was increased from 12.35 percent to

12.85 percent. It was observed that the focus on the primary market auction left the secondary market slightly bearish as a result of tight system liquidity levels. Consequently, the average treasury bills yield advanced marginally by 0.003 percent at the end of the day’s trading to 12.86 percent.

Monday 08 April 2019

BUSINESS DAY

BOOK SERIALISATION

W H Y N OT Citizenship, State Capture, Creeping Fascism, and Criminal Hijack of Politics in Nigeria

Chapter I A Haunting Metaphor hortly after I decided to write this book to show how politics underdevelops Nigeria and eclipses the dreams of its founding fathers, a bizarre story was reported in several Nigerian newspapers. The story was about the arrest of a young man who had apparently raped his mother, killed her, and proceeded to sodomise her lifeless body even as the corpse began to manifest rigor mortis. Gory as the report may seem, I saw it as a metaphor sent from heaven. In many ways it is the story of Nigeria, a country of enormous potential laid waste by those given the most by the country, its most powerful people who, unfortunately never managed to become citizens in the classical sense of the word. A thesis I have held up for a while is that Nigerians love the business of finger-pointing. Who is to blame? As soon as those words are uttered, fingers spring forth, often directed at the public office holders and politicians. I was sure many more were deserving of blame, but I was looking for evidence. In 2018 I decided to contest for the gubernatorial candidate of the APC, the political party in charge of the government at the centre in Nigeria’s federal arrangement. It was for the seat of Delta State Governor. And suddenly there was a flood of evidence. Party apparatchik, senior statesmen, high office holders betraying sacred trust and the oath of their office by the minute, the educated middle class who found it all an amusing game and were thus complicit in their own enslavement, weak public institutions and even the media and academia. The trouble with Nigeria was clearly gang rape of a loving mother by her own children. While some were central to the sordid act, others were cheering and jeering even as a compassionate mother who sacrificed it all for her children was raped into a coma. Others looked on and were thus guilty, by association, and failure to exercise citizenship obligations. Such abominations often bring down a curse on heritage. Can this haunting metaphor help us narrow down the reasons why Nigeria’s democracy is almost completely out of credibility and legitimacy in the eyes of both its citizens and the world? How does the evidence from my experience show what is wrong, how it went wrong and what may be done to save Nigeria?

Can Nehemiahs arise and rebuild the falling walls of Nigeria? Can dry bones arise and walk from the ruins of Nigeria and the Nehemiahs among them set stock for rebuilding what the rapists damaged as a gasping dear mother struggled for breath? The boy who raped and killed his mother was presumed by many, including myself, to be suffering from a mental disease from the moment of sighting the headline. But the report went on to indicate that the young man took to so dastardly a deed because he was assured that wealth beyond comprehension would be his if he did it. This motive is strikingly similar to what has driven most in the political class to run Nigeria to the brink of anarchy, shame her before the nations as the misery and poverty capital of the world and cripple her as central residence of people most desperate to escape their conditions by illegal migration through the desert and Mediterranean or for the wellheeled professional; with a oneway flight ticket to Canada. Whether it be this metaphor of a gang rape of a mother by her own children that is the dominant metaphor of the Nigerian condition or the competing one in which Nigeria is characterised as an asylum for the mentally challenged? Such asylum though seems to be one in which the inmates take over the enclave and hold the psychiatrists hostage and subject the original caregivers to treatment for a perverse mental condition! This Orwellian state (remember George Orwell’s animal Farm) – a psychiatric dimension is

‘‘

Citizenship demands a role, an obligation from the educated middle class in a manner that brings civility to public life and forces the common good on the agenda of society

steadily creeping into the Nigerian narrative. Whatever the shrink may think of us in Nigeria, in 2018 our challenges have a tinge of déjà vu. The primary elections of the political parties in 2018 were essentially the moral equivalence of June 12. In 1993, the country voted and a group of soldiers conspiring in Aso Rock decided to annul it. In 2018, the citizens in political parties went out to vote but groups of civilians prevented them from doing so and announced whatever pleased them as the outcome. On a moral scale, the 2018 experience was more morally degenerated because the architects of the annulments of 2018 were in civilian clothes and pretended to be running a democracy. The 1993 conspirators were soldiers who had grabbed power and had no obligation to accountability beyond the iron law of legitimacy which forces any who governs to require some justification of those being governed. Even less flattering is the fact that many who perpetrated the travesty of 2018 fancy themselves as heroes of democracy who fought the conspirators of 1993. The major difference between 1993 and 2018 is that we have a generation that has lost its sense of

outrage. Whereas in 1993, I, as the top executive of a multinational felt personally insulted by the annulment and wrote an op-ed piece in the Guardian titled “We Must Say Never Again” which forced middle-class professionals to rally and we founded the Concerned Professionals that mounted opposition to military rule; today’s people of my equivalence in 1993 are on Twitter and Facebook making jokes about happenings guaranteed to ensure that they and their children will have a more miserable experience of a future foretold. I have conceived this book as the second coming of my oped piece of 1993, this time in the longer book form. No doubt influenced by Mahathir Ibn Mohamad’s writing of the book : The Malay Dilemma, in similar circumstances. As The Malay Dilemma triggered a revolution in Malaysia, causing the Prime Minister to resign and Mahathir Mohamad (who had been expelled from the United Malay National Organisation (UMNO) the ruling party at the time) to be reinstated, I have no pretence about my hope that this longer version of ‘We Must Say Never Again’ will awaken the generation with a loss of a sense of

outrage and ignite a revolution to save Nigeria. I make this case in three volumes of which this is the first. I begin by challenging the perceived wisdom that politics in Nigeria is not for the decent or for people who are honest, hence the question, why bother! I try to provide evidence of the damage this phenomenon has done to the Nigerian brand and the Nigerian experience and offer a more appropriate poser: “Why Not?” The book takes its title from a recognition that citizenship is a gift with which comes duties and responsibilities. Noblesse oblige; he who has privilege has obligations to the less privileged. For me this is a compelling title and a fitting mission in a country where it seems the political class has a vested interest in the perpetuation of the poverty and misery of the people they claim to lead. Sure, it makes it easier for them to buy votes with peanuts, accomplish state capture with little effort, and be a big man in a country where servitude is writ large; but the results are there for all to see. All you have to do is watch the video of the remarks of the Emir of Kano at 100 years celebration of Union Bank of Nigeria. The state of poverty in the land, remarkably among those who have had the longest and strongest hold on power in Nigeria shows the foolhardiness of the perceived self-interest that has driven a largely incompetent political class to repeatedly gang rape their mother. This being done in pursuit of delusions of grandeur – private jets, siren-escorts, fancy automobiles and homes sitting empty most of the time in such places as Dubai, London and California, where the authorities regard them with contempt even though they welcome the funds looted from the looter’s mother’s bosom. Citizenship demands a role, an obligation from the educated middle class in a manner that brings civility to public life and forces the common good on the agenda of society. The middle class, however, has generally chosen to flee from Nigeria and to provide spurious rationalisations for allowing such. The Motive The chorus from close friends rose to a deafening crescendo as I considered yielding to persuasion of some that I consider running for Governor of Delta State: Why in the world would you consider such a thing, they asked. The logic of their views was strong. In a very Nigerian and

Monday 08 April 2019

BUSINESS DAY

BOOK SERIALISATION personal peace way, they were right. There was so much to lose, it seemed and very little to gain. For some, the gubernatorial seat was a climb down. I had run for the office of the president twice. At the celebration of the 70th birthday of the wife of Dr Thomas John, one of our favourite people, I met Chief Sonny Odogwu, Ide Ahaba, the nanogeneria tycoon who asked, “Is it true that you are running for governor?” It was almost by way of rebuke. “You are too big to run for governor” he continued. ‘Why not?’ I replied. Pride was not a major offering in my packaging and brand. Could it lead to service to the people that could change the wellbeing of many? I politely told him that if it would make life better for many, I would serve as a Local Government Counsellor. I was even more worried because my wife was within earshot. She was working hard at being the supportive spouse willing to encourage a loved one to pursue what will bring them fulfillment. But I knew she was very worried that I should be running for public office again. As we parted from Chief Odogwu I wondered if something was wrong with me. Why did these people who were working so hard for me to run pick on me? Was I listening to them out of pride or out of a much talked about weakness that I have difficulty with saying, ‘No’? I agonised quite a bit on the matter. Surely it should not be a matter of seeing a position as beneath me. After all, I had the pleasure of making the acquaintance of former French Prime Minister, Raymond Barr who was then, Mayor of Lyons and President of Aspen Institute, France many years after having served as Prime Minister. And did I not have as campaign adviser, Joe Trippi. (US Democratic Strategist Joseph Paul Trippi) who also worked with Jerry Brown who was Governor of California when I lived in the United States as a graduate student in 1979 and had become an Alderman, a local government official before dramatically returning to the seat of Governor of California more than three decades later. Really, why was I inclined to respond to this effort to get me to commit? After all, similar effort had been made in 2015 and I went to Delta, took one look at things and walked away. What was different this time? The other perspective on why I should not run was offered by Dr Chris Asoluka, a very dear friend of more than three decades who

‘‘

has shared many of my social engineering dreams. He stated, “You have a flock of scoundrels in APC. The last thing they would like to see is someone with your values in a position of authority. They can humiliate you, use you when it is convenient and would not want true performance from you as this would show them up for who they are even though most young people and businessmen took to them because of you. Not only did they shut you out from the cabinet position even though the whole country was waiting for it, and it would have boosted their credibility, but they did not even bother to name you to some inconsequential Board.” I teased him that his PDP mentality made him think in terms of compensation for contribution and that people tend to ask for or lobby for appointments. Maybe I did not get on the radar because I did not ask, I continued. But, Chris went as far as to suggest that the party chieftains may even deliberately encourage me to run so they can rubbish me by then pulling the rug from underneath my feet. I recognised there could be plenty of truth in his worries. So why run? Not to run would leave me with my peace and reputation intact but it would also leave the scoundrels with their iron-clasp grip on public life, asphyxiating the polity, and draining Nigeria of the possibilities of progress as they loot the Treasury and incompetently manage what they have not stolen. Surely it should be citizen duty for some to sacrifice their reputation and challenge the status quo even in a failing effort that breaks down the wall and makes way for the future. I further challenged Chris saying what value is there in my reputation being saved from being rubbished if, because of the way Nigeria is governed – every time I bring out the green Nigerian passport, as is the case today, shame precedes and overcomes me. Fear of reputation loss where there is rectitude of intent, was my least problem, I tried to assure Chris, just to make him less agitated about what decision I would make. One of my favourite prayers, I further offered, in my selfdefence, is the prayer of St Francis of Assisi asking God to make me an instrument of his peace; where there is hatred let me sow love, where there is injury; pardon, where there is discord; union; where there is doubt; faith, where there is despair; hope, where there is darkness; light and where If I offered all up in this ultimate

Can Nehemiahs arise and rebuild the falling walls of Nigeria? Can dry bones arise and walk from the ruins of Nigeria

prayer of humility, why should I fear reputation loss. Who said I was worth anything, beyond just being among the fortunate in a world of ordinary people? Still, it was not the easiest of choices. I always wanted to change the direction of things in Nigeria. But what was the acceptable cost of this commitment? Why does this have to be my cause? Had I not done enough through the years? If truth be told, I was looking for a good excuse to give the groups putting pressure on me to run so I could continue my life of trying to use my work in social enterprise, academia and commercial ventures to have impact culminating in the change that I had proselytised for a generation. Nonetheless, there were even more reasons why I should not run for office of Governor of Delta State. The view had been offered that my terrain was national, not subnational. Even Chief Bisi Akande, pioneer Chairman of APC, my father’s colleague from their days working for BP in the 1960s, who I had visited to inform of my considering a run as a result of pressures, had wondered if moving down to state level did not diminish the potential of my contribution. He said he would have preferred a more federal or national role for me, given my antecedents. Closely related to this was the growing criticism of identity politics. I had lived most of my life in Lagos. Why should I go to Delta to run for office? Femi Falana even suggested I make a bid for a position, such as the Senate, from Lagos. This, he figured, would show a path away from the tradition of identity politics that sends people back to their homestead which they had not spent much of the present time in. Olisa Agbakoba the civil rights activist and former president of the Nigerian Bar Association, had supported same. One group of non-indigenes had even come to me and urged me to run for Governor of Lagos State and that they had enough votes of non-indigenes to make it work. I had defended against those suggestions by making the point that I was so depressed by the conditions in Delta and I wanted to be remembered for making a difference there. This was a goal I had pursued through my work with young people, the Church as well as social and commercial enterprises. Besides, I had made a fair contribution to Lagos by supporting the work of every Governor of Lagos since 1999 and had a deck full of awards to prove it. I thought, therefore, that in this autumn of my life, it was inappropriate to open a new kind of front, even if it made sense. True, a run in Lagos would fit into what I had, for generations, tried to get Nigerians to embrace so that our country could be a true melting pot that could give dignity to the people of Africa. Perhaps that should be the task for the many I have mentored. Maybe, just maybe, that could be one mountain too many to climb in one lifetime.

‘‘

The trouble with Nigeria was clearly gang rape of a loving mother by her own children. While some were central to the sordid act, others were cheering and jeering even as a compassionate mother who sacrificed it all for her children was raped into a coma

As if these reasons being advanced for me not to run were not enough, several others were on offer. One came from a very cosmopolitan northern lady who was very senior in the public service. She ran into one of my protégés, Ubong Essien, who had offered her agency professional services. She said to him that my being a candidate would have redemptive value for the party and be pure salvation for the people of Delta State. She however feared that the leadership of the party at both state and national levels would be uncomfortable with an ethical person of Pat Utomi’s standing because they would fear that it would be difficult for them, as is the practice to call on the governor for money that wasn’t for the public interest. States like Delta, Rivers and Akwa-Ibom were even seen more as cash cows for such. In conversation with me later, she gave an example of a certain randy former president who each time he wanted to reward a “hard catch” would call upon the then Governor of Rivers State. Some of the women were “assisted” to set up businesses that bled the state of more than hundreds of millions of naira. If they know that you cannot do that, they would openly support you but behind your back, do all it takes to stop you from getting in the way of their “gravy train”, she said, suggesting the reason for me not to run. I found the statements reasonable but the logic behind my reasoning to run more stimulating. Why should citizens not object to such abuse of their common wealth and go in search of candidates with courage that they can call their bluff and break this yoke? But could a people be such masochists, such suckers for

suffering that they allow themselves to be so abused? On the other hand, can these so-called politicians really hate their own people to the extent that they deliberately inflict on them such ways that even if they get some instant material gain from their politicking, their people continue living a “cursed” existence? And their consciences not be troubled. I suggested to the lady that what was required was either a revolution of a violent type, to force a rethink, a revolt of non-violence like the Mahatma Gandhi movement in India, or a campaign of education that ultimately leads the politicians to realise that they were working against their own long-term selfinterest and required an enlightened self-interest reconstruction of reality. Whatever the choice it should not be a reason not to run but precisely the reason for a run to change a world steeped in serfdom. How could these politicians be blind to this obvious fact? The conversation would be from 18 years back. I had arrived Ibusa for a thanksgiving event. Standing in the company of my friend and colleague from the Lagos Business School, Chris Ogbechie, the man who in 2018 was Senator from my district, Peter Nwaoboshi, stopped to say hello to us. He was then a Commissioner in the State Government. In the course of exchanging pleasantries, he raised a subject of bother to him. He said one of his colleagues in the state cabinet had run to his office a few days before in great discomfort. The reason for his discomfiture was in the newspaper he had open before him. The other colleague had asked Peter what problem his brother, that is me, Pat Utomi, had with corruption. Why was I always complaining about corruption? Can you imagine? He said his colleague then went on to say that there was now speculation I would be appointed Minister of Finance. “Can you imagine him in such a position? He would just block ways for people. In Jesus name that appointment will not come to pass.” Peter Nwaoboshi then pleaded with me to be less critical of corruption. As he left, I turned to Chris and said; poor Jesus, can you imagine His name is being invoked to make way for corrupt plunder of the public teal. Discouraging me from running because the corrupt who rule the parties would block the process seemed to pump up the old juices that made my early life one of protest. Should we accept that the Nigerian tragedy was irredeemable? But how do you prosecute a revolution without a strategy? Or, where are all the overly pessimistic? Did Adams Oshiomhole not work to have reformer technocrat Godwin Obaseki as Governor in Edo State? They cannot all be that stupid, surely? Continues Tuesday

Monday 08 April 2019

BUSINESS DAY

real sector watch

The rise of women dairy makers Odinaka Anudu

airy making or farming was once seen as an exclusive preserve of men. But the story is gradually changing, with women getting more involved in producing the milk Nigerians consume daily. Hawawu and Umu Abdullahi are both wives and mothers. Before FrieslandCampina WAMCO, a Dutch dairy maker in Nigeria, started a project known as the Dairy Development Programme (DDP) in Iseyinland, Oyo State, they had both been local cheese sellers without hygienic means of extending the shelf life of the cheese they both ate and sold for sustenance. The stories of these women today have changed, with them supplying raw milk to WAMCO and making money from doing so. “My profit has improved. Every day after the cows are milked, we go and deliver the milk to the collection centres and the company (FrieslandCampina WAMCO) pays us money very promptly,” Hawawu said. Her lifestyle and social life have equally improved, thanks to the DDP. “Right now, I belong to a women forum where we learn and discuss things of great benefit to us as women,” she said. “Before, things were very hard, but today, my life and that of my family are much easier. I have even started an additional business of selling uncooked rice,” Hawawu added. For Umu Abdullahi, her family now make a steady, regular and reliable income. “I now have time to do other things as my family make steady income from selling raw milk from our cows to the company,” she said. “Also with more people coming to trade and live among us, this boosts our sales as we sell other things like foodstuff to the community and transporters,” she added. Funke Majaro is a teacher in a secondary school in Oyo State. Majaro, who runs an agro-based firm called F&F Farms, went into cattle rearing not only because

Some of the women in DDP-enhanced communities in Oyo State

she was a farmer’s child but also needed to tap into the opportunity. “When we were introduced to rearing cows, we didn’t have the intention of collecting milk until we came in contact with FrieslandCampina. They organised artificial insemination and allowed us to cross-breed our cattle in our farm. “We didn’t know as farmers we could make money from milk, as what we had known before then was to turn it into cheese. But now, we make money. Some of the people here have become millionaires,” Majaro, who hails from Fasola, another community in Oyo State, told this writer. These women now have a guaranteed market for their raw milk, which WAMCO uses as raw material. Nigeria’s dairy sector is still largely evolving and unable to cope with the needs of the country’s population of 200 million. There are key players in the sector who sell milk and other dairy products to Nigerian consumers, but only one multinational company has demonstrated total commitment to developing the sector. When FrieslandCampina WAMCO, Nigeria’s leading dairy company began its multi-billion naira DDP in 2010, not many people in the dairy sector knew it was in it for the long haul, because similar efforts by others had failed in the past.

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In just a few years, the company’s commitment to growth and the development of Nigeria’s dairy sector has yielded encouraging results. Today, over 900 rural women in Oyo State, where FrieslandCampina WAMCO operates its successful scheme, have been sharing huge testimonies of how the DDP has improved their lives, living conditions and livelihood, amid the 3,500 dairy farmers who are benefitting from the scheme. Since 2010, FrieslandCampina WAMCO has been investing in the DDP and has established a large network of milk collection centres across the south west of Nigeria. The Dairy Development Programme provides sustainable livelihoods in over 90 farming communities where dairy farms have been made more effective. Since signing and renewing its Memorandum of Understanding with the Federal Ministry of Agriculture and Rural Development as well as the Oyo State Government, FrieslandCampina WAMCO has also collaborated with the Dutch Government under the FDOV, IFDC-2SCALE and Sahel Capital. It has setup one bulking centre, five milk collection centres, 10 milk collection points and dedicated 15 specialised milk trucks to facilitate the process of milk collection in the DDP area. Other companies have contemplated this project, but they face drawbacks such as huge financial outlay, long-term investment turnaround period and related community development projects that every dairy investor must also engage in before the affected communities can embrace fully the business model. Over the years, FrieslandCampina WAMCO, alongside its partners, has provided 50 solar-powered boreholes in the milk producing communities in Oyo State, completed over 200 hectares of pasture development, and trained over 3,500 dairy farmers/milk suppliers on various topics in modern dairy production. B e n L a ngat, ma nag i ng d i re c t o r, FrieslandCampina WAMCO, said, “Our Dairy Development Programme has supported four master farms where dairy

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projects are currently running and there are 16 more under development. “The DDP has impacted over 100,000 people from raw milk supplies to the creation of job opportunities to host communities, for example - transporters, feed, veternery supplies etc. This has engendered business development around the milk collection centres.” FrieslandCampina WAMCO grouped the women into two co-operatives of 30 members each, namely Fashola Women Dairy Cooperative and Alaga Women Dairy Cooperative. The women were trained on entrepreneurial and leadership skills to increase their income and sources of livelihood. They were also trained on vocations such as bead making, fabric designs and dress making. The company provided shops for members of these cooperatives to sell provisions and other items to members of their communities. These forwardlooking women are also empowered to sell in these shops, milk products made from the raw milk they initially supplied to the milk collection centres. Families living in these DDP-enhanced communities use the potable water provided by FrieslandCampina WAMCO for milking, domestic and personal hygiene like cooking, cleaning and drinking. Some of these women have made significant socio-economic progress; a good number have built houses and moved out of the thatched huts they used to live in. This DDP is the nucleus of the company’s CSR programmes. It transfers over 140 years of FrieslandCampina’s global expertise to Nigeria, bringing gold-standard Dutch farming practices to the nation. “The DDP is the second chapter of our history and a new era for the dairy industry in Nigeria,” Langat said. “Studies show that 95 percent of farmers in Nigeria are nomadic and they face challenges such as lack of knowledge, poor infrastructure and low financing. The DDP stimulates local sourcing of raw milk and supports the Federal Government’s initiative of improving dairy farming.” The DDP enables dairy farmers run their businesses optimally as well as raise the quality and quantity of their dairy production. This is done through knowledgesharing, training courses and exchange programmes with a number of partners. FrieslandCampina WAMCO’s DDP spans across 90 communities in Southwest Nigeria, identifies dairy value chain actors, organises and trains dairy farmers and extension workers, collects and processes raw milk, funds crossbreeding and hybrid pasture cultivation, and transfers global know-how to farmers. Other successes of the DDP include an increasing appreciation of women farmers as game changers in the community. In the DDP areas of Oyo State, the overall quality of raw milk supplies have improved with bacterial contamination reduced considerably. Farmers’ competencies have increased as a result of sustained trainings.

@Businessdayng

Monday 08 April 2019

BUSINESS DAY

real sector watch

Was Buhari right to reject $1bn Ajaokuta Completion Bill? ODINAKA ANUDU

ast week, Niger i a’s P r e s i d e n t Muhammadu Buhari rejected the Senate-proposed $1 billion for the revival of Ajaokuta Steel Complex in a bill now known as Ajaokuta Steel Company Completion Fund Bill. In a synopsis, Buhari said he rejected the bill, among others, because appropriating $1 billion from the Excess Crude Account to Ajaokuta was not ”the best strategic option for Nigeria at this time of budgetary constraints, and the nation cannot afford to commit such an amount amid competing priorities.” He further said that the Excess Crude Account belonged to the federation so it was necessary to consult with the National Economic Council and the states. He added that the most critical ministries, notably the Ministry of Mines and Steel Development, and the Ministry of Industry, Trade and Investment were not fully consulted. “The inputs of key stakeholders are necessary to create the optimal legal and regulatory framework as well as the institutional mechanism to adequately regulate the steel sector,” he said. The question now is, was the president right in taking

Peter Bamkole (3rd l), director, Enterprise Development Centre; Aisha Abubakar (m), Minister of State Trade, Industry and Investment; Adewale Bakare (4th r), staff of Ministry of Trade, Industry and Investment, Olawale Anifowose (3rd r), managing director, GEN Nigeria with the Top 15 semifinalists of the Creative Business Cup Nigeria held in Lagos recently.

this decision? To answer this question, it is critical to note that Ajaokuta Steel was established in 1971 to develop Nigeria’s steel sector and stimulate the exploration of God-given natural resources, especially iron ore. Luckily for the country, large iron ore deposits were found in Itakpe, Ajabanoko and Oshokoshoko all in Kogi State. The Ajaokuta Steel Complex and Delta Steel Company were subsequently incorporated in 1979 as limited liability companies. Between 1980 and 1983, the then federal government stated that it had achieved 84 percent completion of

Ajaokuta steel plant, having completed the light mill section and the wire rod mill. It was also widely reported that erection work on equipment reached 98 percent completion around 1994. Ever since then, Nigerians have been made to believe that Ajaokuta is 98 percent completed. But here lies the biggest puzzle: Why is a company that is 98 percent completed still failing to produce a sheet of steel over 35 years after its establishment? Despite being unproductive, government after government has continued to pump billions into the com-

plex. Government records show that successive administrations have pumped $8bn so far into the complex since 1979. The current government of Muhammadu Buhari has joined the party of spenders on a government facility that needs to be in private hands. In a move that shocked economists and finance experts, the federal government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the moribund Ajaokuta Steel Company, despite an earlier business case in the last administration showing that the complex could only

work if properly privatised. There was also a humongous budget on it in 2018. “So why would anyone continue to pump money into an enterprise that is unproductive?” Ike Ibeabuchi, a manufacturer, asked. “The government says new investors are interested in taking over the complex, so why would Nigeria spend that huge fund on it?” Eleven private investors have expressed interests in the concessioning of Ajaokuta Steel Company, Abubakar Bawa Bwari, minister of mines and steeldevelopment, said in the nation’s capital on January 15. Bwari said it would be concessioned to a firm with the financial muscle, technical know-how and genuinely committed to the nation’s steel sector development. “But then, why have they not found investors since Kayode Fayemi’s days? We don’t know whether this socalled Ajaokuta is meant for siphoning public funds,” a private sector player in the steel sector, who does not want his name in print, said. Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others, but it is yet to produce a sheet. It has a managing director and staff members who are paid from tax payers’ funds.

“Currently, I am not sure those technologies at Ajaokuta are competitive in steel making. The world has moved on. What is required now is for the private sector to get more and more involved in the downstream and the upstream segments in the steelbusiness,” Raj Gupta, chairman, African Industries Group, a consortium of 12 companies, including six steel plants, told BusinessDay recently. This shows that it makes no sense to continue to allocate scarce resources to a complex which is unproductive. Analysts say the best bet now is to sell it to a competent firm, just like Delta Steel has been sold to Premium Steel. BusinessDay’s recent visit to Premium Steel showed that the company employs 160 workers in its rolling mill, which is the only functional section at the moment. There is also a plan in place to revive other sections of the factory with N600 billion. Moreover, as Buhari stated, Nigeria is a cash-strapped economy struggling to pay its workers and meet infrastructure obligations. Federal allocation to states was N660.37 billion in February as against N1.19 trillion in August 2013. Industry analysts believe that Buhari was right to reject the bill and urge him to privatise it as soon as possible, while stopping allocations to it.

Manufacturers to gain as Bayer offers solution to pest management in maize

ayer Middle Africa Limited has proffered solution to pest management in maize farming, thereby boosting the fortunes of manufacturing companies using maize as an input. The second annual Nigeria Maize Conference organised by Bayer Middle Africa Limited held in Abuja on April 3, 2019, attracting more than 40 farmers, agriculturists, academics and government agricultural experts. The conference with the theme: ‘Integrated Pest Management: Key to Profitable Maize Farming’, had in attendance the deputy director of the International Institute of Agricultural Research, . D.D. Yusuf; weed

scientist from the Department of Crop and Soil Science, University of Port Harcourt, Udensi Ekea Udensi; Buba Galadima, an engineer, and officials of Bayer Middle Africa Limited. Speaking during one of the sessions, Udensi EkeaUdensi noted that maize was the world’s third most important cereal crop, accounting for over 30 million metric tons while Nigeria remained Africa’s largest producer of the crop with over 10 million tons. The university don highlighted some key challenges facing farmers in the country such as lack of resources for training of smallholder farmers, poor dissemination of need information and the perennial menace of weeds www.businessday.ng

on farms. He advised farmers to ensure appropriate use of herbicides managed by skilled technical personnel as he

enjoined them to check labels on products purchased to ascertain suitability. In his presentation, Bayer’s development and reg-

L-R; Temitope Banjo, country sales manager, Bayer Middle Africa Limited; D.D. Yusuf and Rabiu Adamu, professors and representatives of the Institute for Agricultural Research, and Ahmed Bello, development & regulatory affairs manager, Bayer Middle Africa Limited, during the unveiling of Bayer’s Belt Expert for maize farming. https://www.facebook.com/businessdayng

istration manager, Ahmed Bello, who emphasised the proper use of pesticides, pointed out that farmers must make the right choice of pesticides. Bello announced that Bayer had a five-step window programme for Nigeria in which farmers were expected to spray their crops appropriately for maximum yield. Reacting, participants expressed worry about difficulties in obtaining loans from banks and other financial institutions in their bid to improve their farming potentials. They also expressed concern about how to dispose of chemical products containers after use to which officials of Bayer gave assurance @Businessdayng

that a pilot project on ways to assist farmers on disposal was ongoing in Cote D’Ivoire and Benin. A panel discussion was also held with the panelists drawn from among the participating experts, researchers and academics, which reemphasised what farmers must do. The focus was on land preparation – proper ploughing, identification of incursion of pests, assessment of the appropriate chemical to use and the mode of application. Bayer Middle Africa Limited used the occasion to officially unveil two of their products, Lagon and Belt Expert, originally formulated to address pest management in maize farming.

Monday 08 April 2019

BUSINESS DAY

NEWS Uwaleke emerges new chairman of Chartered Institute of Bankers HARRISON EDEH, Abuja

che Uwaleke, a professor of Capital Market and the head of banking and finance department at the Nasarawa State University Keffi, has emerged as the new chairman of the Chartered Institute of Bankers of Nigeria (CIBN), Abuja. This followed a successful election held on Thursday, April 4, at the Central Bank of Nigeria’s auditorium in Abuja. In his acceptance speech, Uwaleke promised to continue the good works started by his predecessor and take the Institute in Abuja to greater heights. He pledged to sustain and grow the Bankers Quarterly forum as well as the Bankers’ Dinner and Award Ceremonies, both flagship activities of the Abuja branch. He promised to accord priority to the organisation of workshops including international conferences aimed at knowledge sharing and bringing members up to speed with developments in the financial world. The Capital Market Professor, who was unanimously elected as chairman, promised to leverage his long years of teaching and research in top universities in Nigeria to grow the membership of the Institute.

NNPC allays fears of fuel scarcity, says 55 depots have fuel Olusola Bello & HARRISON EDEH

... promises to increase domestic gas supply to 5bscf/d

mid fears that there could be fuel scarcity, the Nigerian National Petroleum Corporation (NNPC) has advised motorists and other petroleum products consumers not to engage in panic buying, saying there is enough petroleum products stock in 55 depots across the country. Listing the depots that have adequate petroleum products stock, Ndu Ughamadu NNPC group general manager, group public affairs division, in a statement said 23 depots in Lagos, seven in Port Harcourt, 11 in Warri, six in Calabar and

eight in Kaduna were fully stocked with white products. But some marketers say it is only the depots the NNPC has a throughput arrangement that have fuel, and that even the fuels in those depots are being rationed. They say what the NNPC has succeeded in doing was to ensure that it retail outlets were not starve of supply while other companies are completely left out of the supply arrangement. However, the Major Marketers Association of Nigeria (MOMAN) has also confirmed the claims by NNPC as Clement Isong, the executive secretary of the association, told

BusinessDay that all members of MOMAN had stocks as at last weekend. The NNPC explained that two vessels of 50 million litres of petrol would arrive the shores of Nigeria every day from the weekend. The release assured Nigerians of an eventful Easter period as the just ended Yuletide, even as it cautioned depot owners or terminal operators not to sell petrol above the official ex-depot price of N133.28k per litre. The corporation also advised petroleum products marketers not to sell the product above N145 per litre.

The release said the subsisting ex-depot petrol price of N133.28k per litre was consistent with the Petroleum Products Pricing Regulatory Agency’s (PPPRA) template and should be adhered to. The corporation advised Nigerians to remain vigilant and volunteer information to the Department of Petroleum Resources (DPR), the industry regulator, or to any law enforcement agency around them, on any station selling petrol beyond N145 per litre. Meanwhile, the Kaduna State government had pledged to support Abuja-Kaduna-Kano (AKK) Pipeline Project to

Streamliner.com commemorates milliondollar fund at annual Nollywood, Hollywood exhibition OBINNA EMELIKE

L-R: Oba Abdul-Fatai Akorede Akamo, Agbodere Kinni, the Olu of Itori land; Group executive director, Strategy, portfolio development & capital projects, Dangote Industries Limited, Group Executive Director, Strategy, Portfolio Development & Capital Projects, Dangote Industries Limited and Baaselu of Itori, Devakumar Edwin, Fola Ali, group general manager, Dangote Projects, during the presentation of the Leadership and Corporate Management Award to Aliko Dangote, at the grand finale of 15th coronation anniversary of Olu of Itori in Itori Ogun State on Saturday.

‘Management practice will continue to change as human nature, organisations, environment evolve’ Daniel Obi

anagers of human and material resources in Nigeria have been told not to totally stick to the old practice of management, as the concept and practice will continue to change as human nature, organisations and the environment evolve. “As the nature of man changes, as the principal player in management, the concept of management is

expected to change also,” Muritala Olakitan Awodun, executive chairman of Kwara State Internal Revenue Service, says. Awodun says as the nature of organisations change, the concept of management will respond and as the nature of the environment changes, the management concept will not remain stagnant but will also change. Awodun spoke recently at the Nigerian Institute of Management (NIM) forum

on ‘Management yesterday, today and tomorrow’. He spoke on the background of changes in human nature and environment largely occasioned by the evolution of internet. According to Awodun, “The practice of management, which we call managing, like every other practice, is an art based on the science of management. It is knowing how to do things based on the realities of situations. It will continue to evolve, as cir-

cumstances and situations dictates.” Noting that human nature, organisation and environment are fundamental and have played significant roles in the evolution of management today, he said managers cannot practice management tomorrow if they don’t understand management today. “This is because management tomorrow is already here today. Our ability to excel in management tomorrow

is based on our knowledge of management yesterday and practice of management today,” he said. Awodun, before joining the government of Kwara State internal revenue, he was an Associate Professor of International Business and Entrepreneurship of Kwara State University. He was recently appointed Professor of Business Administration in January 2019 by Crown Hill University, Ilorin, Kwara State.

Flooding: Edo assures of conducive resettlement camps for residents in flood-prone areas

he Edo State acting governor, Philip Shaibu, has assured of conducive resettlement camps for residents of the state in flood-prone areas as part of proactive measures to mitigate the impact of flash floods as predicted by the Nigerian Meteorological Agency (NiMet). Shaibu gave the assurance when he visited the In-

ensure effective optimisation of the project by stakeholders across the state. This is as the NNPC moves to increase domestic gas supply from 1.5bscf/d to 5bscf/d. Governor Nasir el-Rufai of Kaduna State declared the support while receiving Maikanti Baru, group managing director of NNPC, at the Sir Kashim Ibrahim House in Kaduna. Governor El - Rufai described the AKK project as a very important one to the state, noting that the people of Kaduna were happy because the project would support the state’s ‘huge power ambitions.’

ternally Displaced Persons’ camp at Ekperi in Auchi, Etsako West Local Government Area, Edo State. NiMet predicted the possibility of isolated flash floods due to high-intensity rainfall at the peak of the season, especially in places naturally prone to flooding. The acting governor said the visit to the camp was part of www.businessday.ng

the Governor Godwin Obasekiled administration’s proactive measures to prevent a reoccurrence of last year’s experience when flooding displaced residents in some part of the state. He noted, “As the rainy season approaches, there is a need for the Edo State Government to put modalities in place in order to safeguard the life and property in Edo State.”

He assured that adequate arrangements had been put in place to ensure a conducive environment for persons who will be camped at the facility when the need arises as the state government anticipates heavy downpour. He urged the National Emergency Management Agency (NEMA) to collaborate with the state govern-

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ment in sustaining the proactive measures and work to ensure that the impact of the floods is limited. During a visit to Illushi, a community on the bank of the River Niger in Esan South East LGA, the acting governor said there is urgent need to prepare ahead of time and watch out for early warnings signs, as the rains approach. @Businessdayng

mid the rise of African stories in mainstream media, Streamliner. com, a media streaming company, has taken a major historical step in the advancement of Africa’s film market with the striking of Hollywood’s biggest multi-million dollar production fund with leading media/entertainment and film distributors, Silverbird Group. Silverbird Group is a diversified multi-media company withholdings in Radio, Television, Real Estate and Cinemas. Stremliner.com is a platform that provides a vast spectrum of high quality “Freemium” content that includes, Music, Video (Film, Television Serials), gaming and more. Like any streaming company, acquiring titles for distribution is at the core, but Streamliner also specialises in financing multimedia content. “As the founder of an industry leading fintech company, I am biased towards any opportunity to take advantage of synergies between finance and technology,” Amadou Kane Diallo, founder/financier, Streamliner, Inc, said. Streamliner will serve both as a medium of financial empowerment to innovative and experienced filmmakers in the African market, and also provide an exclusive distribution gateway to hundreds of millions in the fast growing African market this summer via Digital streaming, TV, and/or Movie screens across the continent.

Monday 08 April 2019

BUSINESS DAY

NEWS World Health Day: Obaseki harps on attaining Why MFBs can’t offer loan at Afreximbank Universal Health Coverage in Edo with reforms single-digit interest rate - LAPO MD records $285m … tasks local councils to harmonise budget timeline

do State governor, Godwin Obaseki, has assured of his administration’s commitment to attain Universal Health Coverage with ongoing reforms in the health sector geared towards providing access to responsive, affordable, efficient health services, especially at the primary healthcare centres across the state. Th e g ove r n o r s t ate d this in commemoration of the World Health Day, celebrated every April 7, to mark the founding of the World Health Organisation (WHO). According to Obaseki, “As we mark the founding of WHO, we are emboldened to press on with our mission to provide access to qualitative, responsive and efficient healthcare ser vices, at the primar y healthcare to all Edo residents. We have begun by gradually overhauling the primar y healthcare system, a move that brings us closer to attaining Universal Health Coverage in Edo.” The governor explained

that the state government’s h e a l t h c a re re fo r m s a re holistic and far-reaching, and got a boost recently with the right institutional framework, to be driven by the 17-member Edo State Primary Healthcare Board. He noted that the board was inaugurated with a mandate to ensure revamp of the state’s primar y healthcare system to be responsive, efficient and effective, in delivering affordable and accessible healthcare. Th e g ove r n o r a d d e d that part of his administration’s commitment to providing access to quality healthcare to Edo people and residents is expressed in the payment of counterpart funding for the Basic Health Care Provision Fund (BHCPF), “which will enable Edo State fully benefit from the implementation of the BHCPF, a fundamental funding provision under the National Health Act signed in 2014.” “In Edo State, we are revamping our Pr imar y Healthcare system which is being built on sever-

al pillars, including human capacity, provision of technology and data, quality assurance, financing and infrastructure of the healthcare system to provide a well-package preventive, curative and rehabilitative healthcare services to our citizens,” he said. In a statement to mark the 2019 World Health Day, in Geneva, Director-General, WHO, Tedros Adhanom, said in 2019 it is simply unacceptable that “half the world’s population cannot access essential health services. “Millions of women give birth without help from a skilled attendant; millions of children miss out on vaccinations against killer diseases, and millions suffer and die because they can’t get treatment for HIV, TB, and malaria.” Meanwhile, local government areas in the state have been urged to ensure that their budget timelines are in harmony with that of the state government so as to ensure that development efforts are

RAZAQ AYINLA, Abeokuta

anaging director of LAPO Microfinance Bank L i m i te d, G o dwin Ehigiamusoe, says the 20% interest rate placed on funds drawn from commissioned banks by the microfinance banks (MFBs) accounts for double digit interest rate being charged by MFBs on the loans that they offer their clients, who are majorly operators of Micro, Small and Mediumscale Enterprises (MSMEs). The situation is worsened by the volatility in the foreign exchange market that poses higher risk and affects MFBs’ lending abilities to stimulate Nigerian economy through MSMEs credit facilities, Ehigiamusoe said, saying unless there is a downward review of the 20% interest rate by the commissioned banks and appreciable level of stability of foreign exchange, MFBs would still offer loans at double digit. Speaking at 2019 LAPO Clients Forum in Ibadan at the weekend, the LAPO managing director said, “As a microfinance bank, what

we set out to do is basically to recognise the potentials that the people at the bottom end of the society could make, the only constraint they could have is access to finance and therefore, we provide finance. “Just as a lending institution, we periodically provide huge credits, if you look at their (MSMEs) number and we do still believe that giving them for instance N137 billion in a year, for a nation like Nigeria, is not sufficient. The need is huge and unfortunately, the supply has not been able to meet those needs. “One thing about pricing or interest is about a number of factors. First is how do you access the fund that you use for the credit. The second thing is the nature of cost that is involved. Normally, in the commissioned banking sector, bankers are able to mobilise so much deposit and they can only give a portion of that deposit to the people as credit but in the microfinance space ordinarily this type of people have not been able to make deposits that will ensure credits for them from that fund.

income in 2018

frican ExportImport Bank (Afreximbank) has shown strong financial and operational performance in 2018 with a total comprehensive income of $285.4 million. Af re x i m b a n k ’s p re s i dent, Benedict Oramah, disclosed this in a statement signed by the bank’s head of media, Obi Emekekwue, on Sunday in Abuja. Oramah disclosed that the sum was the bank ’s abridged audited financial statements for the year ended December 31, 2018. According to Oramah, the total comprehensive i n co m e re f l e c t s a s o l i d growth of 24 percent compared to 2017 performance of $229.8 million. He said the increase was mainly due to a higher net income in the period under review, which amounted to $275.9 million compared to $220.5 million recorded in 2017. He said the bank’s total assets grew by 13 percent from $11.91 billion as of D e ce m b e r 3 1 , 2 0 1 7 , to $13.42 billion as of December 31, 2018.

OPINION Highlights from the IMF Article IV consultation with Nigeria

he IMF published their Article IV consultation report with Nigeria over the last week. I know many Nigerian tend to get emotions somewhere between angry and nervous whenever the IMF is mentioned with regards to Nigeria but please relax. This was just a regular exercise that goes on every year to get an unbiased sense of what the Nigerian economy looks like and what risks there are. It is particularly useful because of the access they have to government officials and the data they are usually able to pull together. The report contains a lot but there are a few things which stood out for me. First, the federal government may really be broke. The federal government budget projections for 2018 assumed revenues of over N7tn or 5.6 percent of GDP but actual revenues were only about half of that. Which left a big gap. If you recall, the 2018 budget like those from 2017 and

2016, proposed big spending increases and near-record deficits combined with very loft revenue projections. It does not look like the expected revenues materialized. Despite the revenue shortfalls most of the spending went on as planned coming in at roughly N8.7tn. So, the federal government ended up with revenues of roughly N3.6tn but spent N8.7tn or thereabouts. Some of this deficit spending was financed by debt as the approved deficit in the 2018 budget was N1.9tn but who financed the rest? The report doesn’t say but we know, from the CBNs reports that it extended roughly N2.2tn in new overdraft facilities to the federal government in 2018. I’ve written a lot on the dangers of that kind of back door financing, so I won’t re-hash it again. The fiscal distress of the federal government is apparent. The sad truth is that the federal government actually doesn’t spend that much relative to other countries. Its spending in 2018 was only 6.8 percent of GDP which really isn’t that high. The key disappointment is with revenues. I have argued that crunch time for reforming the tax structure is here. This is yet another indicator for that. A few things like the removal of fuel subsidies and scrapping the official exchange rate can bring immediate revenue boosts but those will really only be temporary reprieves. On a similar note, the deficit in 2018 ended up at four percent of GDP which is higher than what is stipulated in the fis-

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cal responsibility act. The act stipulates a maximum deficit of three percent of GDP. We’ve broken that for the second straight year now.Something to note for the members of the national assembly currently debating the 2019 budget which again has the same lofty revenue expectations. The second major highlight was the lack of optimism about Nigeria’s growth prospects. We all have the numbers from the NBS, and we all know that GDP per capita growth has been negative since 2016. We officially recovered from recession but the growth outlook going forward is not great. The IMF projects GDP growth of 2.1 percent in 2019 and 2.5 percent in 2020, both of which are slower than our reported population growth rate of 2.6 percent. What this means is, even before you talk about inequality, average

‘ A dip in the oil price or

disruptions to oil production could throw federal government finances into even more disarray

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incomes of Nigerian may not grow over the next two years. At least if the IMF projections are to be believed. Given the level of poverty this is not something to ignore. The story of the years of fast growth after the return to democracy in 1999 were about fast but non-inclusive growth. Now there is no growth at all. The IMF also points to risks which may make the already bad situation worse. We have done that thing we like to do where we set ourselves up such that any small shock leads to problems. A dip in the oil price or disruptions to oil production could throw federal government finances into even more disarray. The excess crude account is basically empty so there are no fiscal buffers. The CBN has also returned to its exchange rate inflexibility way which means any shock to foreign exchange inflow either from oil prices or from reversal of capital flows is likely to lead to foreign exchange problems and another round of “demand management”. We all know how well that worked last time around. And so,we stay hoping that nothing goes wrong but what if it does? Any one in government heard of Murphy’s law? There’s a lot more in the report from banking sector challenges to the potential impact of Dangote refinery coming on stream and the CBNs monetary policy. There is a lot to digest but the report is certainly worth the read if you have the time.

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Monday 08 April 2019

BUSINESS DAY

NEWS Nigerians binge on dollar savings as... Continued from page 1

rency has grown since the

2016 economic contraction. Leading the pack is Nigeria’s biggest bank by assets, tier-one lender, Zenith Bank, with N1.2 trillion worth of deposits in US dollars in full-year 2018 compared to N1.19 trillion in the same period in 2017, N917 billion and N637 billion in 2016 and 2015, respectively. This shows a steady increase in the volume of foreign currency deposits from customers of the bank. Guaranty Trust Bank also recorded a surge in the volume of foreign currency deposits from its customers. A breakdown of the company’s

results shows that foreign currency deposits hit the highest level in four years in full-year 2018. US dollar deposits were N608.59 billion; pounds deposits, N57.8 billion; Euro deposits, N17.44 billion; while other foreign currency rose to N229.9 billion in 2018. AccessBank,atier-onelender, also hit the highest foreign currency deposit in the last four years,withtheUSdollarsrecording the highest volume of deposit at N442 billion in full-year 2018. Pounds deposit climbed N7.54 billion, while Euro deposits grew to N7.39 billion. United Bank for Africa also benefitted from this new rush by customers to cushion their deposits in foreign currency

as its US dollar deposits also increased to N491 billion; pounds deposit, N7.48 billion; while Euro climbed to N137.7 billion in full-year 2018. Interestingly, it is not only the tier-one banks that have benefitted from this new trend as other smaller banks in the mid-tier segment of the market also recorded an increase in the volume of foreign currency deposits hitting the highest in 2018 financial year. Fidelity Bank, a major player in the tier-two segment, recorded N205.7 billion in US dollar deposits, N3.19 billion in pounds deposits, and N4.56 billion in Euro deposits, the highest in four years. In recent times, use of foreign currencies, especially the US dollar, has increasingly

been usurping the legal role of the naira as the medium of exchange within the Nigerian markets for foreign exchange, savings and commodities. The loss of the domestic currency’s external value and appeal as a store of value is prompting dollarisation of the national currency for the three classic uses as a medium of exchange, a unit of account, and a store of value. The Central Bank of Nigeria (CBN) in 2018 introduced the special intervention for foreign exchange cash sales to Bureau de Change operators to cater to the resultant increase in demand for foreign exchange for Personal/Business Travel Allowance. Anthony Obi, an economist, noted that it is not un-

Rivers now fastest growing state... Continued from page 1

launched by the present

management of Rivers State Internal Revenue Service (RIRS) led by Adoage Norteh may be yielding results. According to the November 2018 NBS report, “Lagos, Rivers, Ogun, FCT and Delta were the best five performers during the period of January to June 2018 in terms of grossing thus: Lagos State generated N196.395bn, up by 16.88 percent from N168.025bn in the first half of 2017 to top the list. In second place is Rivers State with N60.906bn, an increase of 36.13 percent from the N44.742bn recorded last year.” Rivers State was doing less than N6bn per month by the time the present RIRS boss came into office in 2017 with a mandate by the state governor, Nyesom Wike, to move the IGR first to N10bn per month. What seems to baffle IGR watchers and analysts around the country is how Rivers State’s IGR has surged in the face of endless political tension and exodus of companies with loss of jobs that ought to boost Pay As You Earn (PAYE) takings by the RIRS. Many say if it was not for instability, the state’s IGR would have surged even higher towards the N15bn mark. But Adoage Norteh, executive chairman of the Board of Internal Revenue Service, attributed the giant leap to the

policy thrust of the Rivers State government to, through tax initiatives, make the state an economic destination of choice. He explained that the Board has been able to roll out strong revenue strategies backed by a robust ICT system that puts most of its activities to digital operations and on the deskview of the state’s tax boss. Norteh said he asked himself important questions when he came on board as the chief executive of the state’s tax body and went about seeking answers to those questions, especially on how to boost the voluntary compliance level of taxpayers in the state. “We have executed ICT rollout. We ask, is it possible for you to stay in your office and file your annual returns? Why is it impossible for you to make transfers to the Revenue Board the same way you transfer money for your other transactions? These questions drive us to the programmes we have created,” Norteh said. The other important measure, according to him, is the filing of ‘Annual Reports’ whereby digitalisation has reduced the corruption and distortion in the system, thereby boosting the confidence of taxpayers and companies and ensuring that what is remitted gets to the coffers of the Rivers State government. “This serves as voluntary

Investors lose N548bn as Nigerian... Continued from page 4

said in a note to clients. Checks by BusinessDay show that out of 91 companies that have released their 2018 financial statements

in line with NSE rule which stipulates a 90-day expiration period for dealing members to file their results, 23 companies recorded losses for the year. Med-View Airline, UAC of

Poor power supply, low access... Continued from page 4

showed greater confidence on the macro economy with 64.8 index points. The optimism on the macro economy in the month of March was driven by the opinion of respondents from services (16.8 points), indus-

trial (8.6 points), wholesale/ retail trade (2.3 points) and construction sectors (0.5 points), whereas the major drivers of the optimism for next month were services (37.0 points), industrial (19.4 points), wholesale/retail trade (6.2 points) and conwww.businessday.ng

common to see some goods and services being priced in US dollars in the lobby of luxury hotels, even as some multinational firms, especially oil and gas companies, pay some of their workers in dollars. “The country seems to encourage this act as the practice is seen to confer high social class and in every corner of the country, people even hail personalities that spend dollars at parties,” Obi said. “The implication of these acts is a high inflationary rate for the country.” The economy is recovering from the 2014 crash in crude prices and the International Monetary Fund (IMF) forecasts that growth will accelerate to 2.1 percent this year from 1.9 percent in 2018. Consumer prices rose 11.3

percent in February. The CBN unexpectedly reduced its key interest rate for the first time in more than three years last month to 13.5 percent to help boost the economy. The avoidable recession periodof2016turnedseveralNigeriansintopart-timeforextraders just as many were already accustomed to using their debit cards while on holidays abroad or shopping online. Bola Adeyemo, a Lagosbased foreign exchange trader, noted that since the years of economic contraction, financial savvy customers are now wiser, leading to a rise in deposits to domiciliary accounts by customers in the country and, according to her, customers do this as a hedge against inflation or currency devaluation. cause you used inflated salaries to escape company income tax or you may have increased other costs of operation such as purchases to depress the outlook for company purposes and in that case, I want to know if the necessary withholding tax on such transactions has been paid to the relevant tax authorities,” he added. He also said he would ascertain if withholding tax was remitted on the rent paid by the company and other purchases made. “If the landlord is a corporate entity, the withholding tax goes to the FIRS, but if it is an individual, it goes to the RIRS,” he said. By creating a stable friendly environment, Norteh said Rivers State has been able to survive the exodus of companies and the strains of instability that ceaselessly threaten to derail the state’s economy. He, however, appealed for stability in the interest of the economy because, as he put it, the state’s economy may not withstand a long hall of instability. Major business groups in the state, such as the Port Harcourt Chamber of Commerce (PHCCIMA), Manufacturers Association of Nigeria (MAN) and the Rivers Entrepreneurs and Investors Forum (REIF), have admitted in several fora that though tax harmonisation is work in progress, there is calm and harmony between taxpayers in Rivers State and the Revenue Board in recent times.

compliance mechanism. This breeds healthier relationship between the tax authorities and taxpaying public,” he said. Tax education, Norteh said, is the other very critical measure used by the RIRS since he took charge. “We engaged in very robust taxpayer education because we realised that much of the problem in tax administration is linked to inadequate information on the part of taxpayers. This had led to confusion regarding the taxes to be paid and to which tax authority. Before now, this had resulted in multiple taxation and consequent hue and cry from taxpayers. We are happy that this is now a thing of the past in Rivers State,” he said. Another measure involved strategic management of assessment mechanism to eliminate what most people call invasion, Norteh said. The

tax audit appeared to create apprehension in the business community and looked like the state government was at war with companies operating in the state. By playing down on this and allowing red flags to point to where to go, tension reduced and more self-compliance emerged. The result was higher revenue despite dwindling economy and exodus of companies, he said. “We have played down on tax audit visits; instead, we do it randomly and as investigation. We rather encourage companies to make filings and willingly report their operations. We now review their filings and see what they paid as taxes from the filings they made. Our audit team now acts on red flag and random sampling,” Norteh said. “Red flags appear when your filing remains same, year

in, year out. We begin to ask, does it mean this company does not increase staff, reduce personnel, promote, or what? Or when there are increases or decreases in taxes paid,” he said. Despite the progress made, however, Norteh said more work needs to be done to complete the tax harmonisation policy of the government. Investigation revealed that some companies present withholding tax receipts, but while they expect to use it to make claims, the RIRS uses it as red flag to know how much revenue they may have made. The Board would now want to know if the companies paid tax on that income that was used to finance the assets that brought about withholding taxes as indicated in annual returns of that year. This is because most companies make partial disclosures, it was gathered. “I can look at your financial statement where you bought fixed assets worth an amount, but when I look at your cash flow, I cannot see where the money came in: is it loan, is it from business, a gift? If I cannot see it, it means you have simply depressed your profit for the purpose of income tax,” Norteh said. “Company income tax is not in my area (RIRS), it is for the Federal Inland Revenue Service (FIRS), but you may have inflated salaries to depress income. I want to know if you paid appropriate tax on the salaries. This is what concerns me be-

Nigeria, and Japaul Oil top the list of companies that recorded losses for full-year 2018, having lost N10.35 billion, N9.58 billion, and N6.59 billion, respectively. An analysis of results released on NSE reveals that

total net income of Nigeria’s most capitalised company Dangote Cement, Zenith Bank and Guaranty Trust Bank in 2018 was more than that of the entire listed firms at the bourse. The three companies post-

ed a total profit of N768.37 billion in 2018 as against an aggregate net income of N668.14 billion posted by 88 other companies. When the total net profit recorded by the three firms in 2018 is compared with

N545 billion garnered a year earlier, it represents 40.97 percent growth, while other listed companies only saw their aggregate net income improve by 11.5 percent to N668.14 billion from N599.34 billion.

struction sectors (2.2 points). The positive outlook by type of business was driven by businesses that are neither import- nor export-oriented (20.3 points), both importand export-oriented (4.1 points), import-oriented (3.5 points), and those that are export-related (0.2 points). All the four sectors ex-

pressed optimism on own operations in the review month. However, respondents from the services sector expressed the greatest optimism on own operation with an index of 7.1 points, followed by the industrial sector with 3.3 points, the wholesale and retail trade with 2.0 points and the construction sector

with 0.5 points, respectively. More respondent firms were satisfied with the management of inflation by the government with a net satisfaction index of 8.0 percent in March 2019. The net satisfaction index is the proportion of satisfied less the proportion of dissatisfied respondents. Respondents’ outlook on

the volume of total order and business activity in March 2019 remained positive, as the indices stood at 15.1 and 15.4 points, respectively. Similarly, respondents were optimistic in their outlook on financial conditions (working capital) and average capacity utilisation as the indices stood at 12.8 and 20.0 index points, respectively.

Adoage Norteh, executive chairman, RIRS, searching for ‘Red Flags’?

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Monday 08 April 2019

BUSINESS DAY

ABUJACITYBUSINESS

COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

FCDA, ICRC adopt PPP for infrastructural development JAMES KWEN, Abuja

ederal Capital Development Authority, FCDA in partnership with the Infrastructure Concession Regulatory Commission, ICRC, have adopted Public Private -Partnership (PPP) strategy to provide infrastructure in the Federal Capital Territory, Abuja. This strategy was adopted at a collaborative workshop in Abuja where both organisations emphasised the need for government to ensure full private sector participation in the development of infrastructure

through funding. Umar Jubrin, Executive Secretary of FCDA said there was need for an alternative for the development of infrastructure in Abuja to stimulate economic growth of the nation’s capital. Jibrin explained that the Federal Capital City was planned to be developed within 25 years but 45 years after its creation, only about 30% of infrastructure had been provided due to paucity of funds, noting that, as at 2006 only eight districts of Abuja had been fully provided with infrastructure while a few others are at various stages of completion.

He disclosed that there plans for preparation of outline business case for other projects such as the provision for design and construction of by-pass road project through PPP (Onex-Mpape-PandaAbuja/Keffi road) and Wasa junction to Gwagwalada. Chidi Izuwah, ICRC Director General in his presentation said PPP should be adopted by the FCDA as an alternative in providing infrastructure in the Federal Capital Territory (FCT). Izuwah identified PPP focus areas for FCDA to include street lighting, agriculture, healthcare, co location-in hospital services; imaging/radiol-

ogy, diagnostic hematology and markets/ bus terminals. He said there was the need for the FCDA to work closely with the Commission in order to execute its plans on developing Abuja, saying if the stakeholders look at challenges there would be no progress but the available opportunities should be explored to boost infrastructural development. Izuwal noted that with the commitment of President Muhammadu Buhari’s administration to infrastructural developemnt, the Commission was working with the FCDA on how to execute impactful projects.

NAMEL partners MANTRAC to increase access to land for agricultural activities CYNTHIA EGBOBOH, Abuja

he Nigerian Agricultural Mechanization and Equipment Leasing Company (NAMEL) has entered into partnership with Mantrac Nigeria Limited to increase farmers access to land for agricultural activities across the country. Ahmed Adekunle, NAMEL CEO speaking at the MOU signing ceremony in Abuja said that the collaboration is aimed at opening up additional hectares of arable land with a minimum of 13,000 hectares per state and increase annual food production in the country. Adekunle said, “the main objective of this project is to open up additional 500,000 hectares of arable land with a minimum of 13,000 hectares in ecah state and FCT from over 47 million hectares of unused arable land in the country”. He explained that the high cost of proper agricultural land development often discourages most investors in primary production, adding that there is need for the government to promote commercial

agriculture by developing contiguous farmlands and give farmers access to lands. Adekunle further said that the project is structured to compliment and optimize government efforts and resources in land development using a cost split mechanism to support small holder farmers and youth empowerment programmes in the country. Ahmed Ragab, Managing Director, MANTRAC said the project aims to empower farmers as well as take away the financial burden from the federal, state and local government, adding that the projects have potential of creating jobs, increased agricultural product and ensure food security in the country. “The project aims at taking away the financial burden from the federal, state and local government, investors as well as the farmers through the use of flexible deferred payment model while enhancing the needed capacity for small and medium scale farmers to expand their areas under cultivation and increase their productivity”, said Ragab.

Taraba: Council Scribe tasks Ishaku on 10 years abandoned hospital, road NATHANIEL GBAORON, Jalingo

L-R: Sani Garba, manager, regional sales, 9mobile, Ali Ashiru Yahaya, N1million Prize Winner of 9mobile Northern Promo, and Babangida Mukaddas, head, regional sales north, 9mobile, during the prize presentation of the Promo, held in Kano.

FCTA committed to fight against diabetes – Bappah JAMES KWEN, Abuja

damu Bappah, Secretary, Federal Capital Territory Administration (FCTA) Health Secretariat has said the Administration is committed to the fight against diabetes in the Federal Capital Territory, Abuja. Bappah stated this when the officials of Department of Non-Communicable Disease, Federal Ministry of Health paid him an advocacy visit on diabetes awareness and care in his office He said the Health Secretariat was committed to

encouraging corporate organisations and individuals with the aim of supporting government to achieve its plan for the well being of residents scattered in various communities of the FCT. Bappah called on the Heads of primary health care and public health to work with the Department of Non-Communicable Disease, to ensure that the diabetes diagnosis pilot scheme in FCT is a success. Earlier, Nnenna Ezeigwe, National Coordinator for the Non-Communicable Disease said the visit was

to present a Civil Society Organisation which will be anchoring diabetes diagnosis scheme in FCT communities selected to benefit in the first phase. Eze ig w e e x p l a i n e d that the group, Society for Women Development and Empowernment of Nigeria (SWODEN) was going to be working with the care givers in the areas of education and training of the community members. She said the group will provide education and training for communities identified and link them with appropriate care giv-

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ers, disclosing that FCT and Imo were the first pilot states and Abuja Municipal Area Council, AMAC and Bwari Area Council are to benefit in the first leg of the exercise in the FCT. Ma i m u n a Mo h a m med, Executive Director of SWODEN in her remarks expressed the organisation’s readiness to do its best for the communities and urged the FCT Health Secretariat to make provision for adequate personnel and better facilities in the Health care centres, especially those located in rural areas.

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ecretary, Ussa Local Government A re a o f Ta ra b a State, Caleb Timothy has called on Governor Darius Ishaku to prioritise the completion of the Ussa General hospital which has been abandoned for almost ten years. Timothy who made the call in Jalingo also asked the governor to rehabilitate the 15 kilometer Takum - Ussa road to address the major challenge facing the people of the area in transporting their agricultural produce. He noted that the completion of the General Hospital Ussa which was started by late Governor Danbaba Suntai will go a long way in addressing the health needs of the people who will no longer have to travel to the neighboring Takum to access healthcare while the rehabilitation of the road will boost the economic viability of the area with farming as @Businessdayng

the main occupation. “As you are aware, work at the General Hospital Ussa has suffered serious setback for several years now. It will be a huge waste if structures already in place at the General hospital are allowed to further deteriorate and become useless. When completed the General Hospital will serve the health needs of residents of Ussa and beyond. “Again, Ussa is an agrarian place so the construction of the Takum-Ussa road and other road networks in the area will boast agricultural production in the area and the economic viability of the area in terms of aiding movement of farm produce to markets”, Timothy said. He appreciated Governor Ishaku for extending the tenure of local government chairmen for three months, saying the gesture will go a long way in enhancing development at the third tier of government.

Monday 08 April 2019

BUSINESS DAY

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Monday 08 April 2019

BUSINESS DAY

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Monday 08 April 2019

BUSINESS DAY

NEWS ‘Investing in coaching capable of generating 500% returns on investment’ Modestus Anaesoronye

xperts in coaching industry claim that investment in coaching, both for individuals and corporate organisations, has proven to boost returns on investment by up to 500 percent. They believe that coaching has a way of transforming and helping people discover hidden and innate qualities that impact positively on their productivity, irrespective of their chosen fields. Lanre Olusola, the catalyst and founder, Olusola Lanre Coaching Academy (OLCA), said businesses in Nigeria, both public and private had the opportunity to achieve g re at n e s s by e mb ra c i ng coaching as a major part of their human capital development programme. Olusola, speaking at the maiden edition of the Coaching Icon Awards organised by OLCA in Lagos, said, “Coaching is surely one critical thing that gives hope for the future, and because of its power and benefits, individuals, corporates and government need to embrace it.” He noted that to achieve our collective dream of rapid national development and transformation as country, our people need to first take responsibility, find their purpose, equip themselves, consistently perform at their peak, and become personally effective and productive in

everything they do. He noted that starting out professionally as a Life Coach in Nigeria at a time when the environment did not understand what it was presented with - several challenges, but with clarity of purpose, consistent education, perseverance and the results achieved with the transformation of individual lived and organisational change, the awareness spread, and the need for coaching as a solution to problems became sought after among individuals and organisations. According to Olusola, the OLCA has trained and certified over 400 Top Life Coaches and NLP practitioners, who are doing exceptional work in their various coaching niches, from business to sales, relationships, marriage, career, finance, family, leadership, and even sex. He however lamented the wave of quack coaches, who have not been properly trained or certified and were wreaking havoc on the profession. “The Coaching Icon Award is also a medium to create awareness of the need to undergo appropriate training and certification to be a professional coach. “Our coaching industry can only grow by having well trained and equipped coaches providing standardised and professional coaching services that meet the needs of Nigerians and Africans,” he said.

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Investors want Diaspora Nigerians’ $20bn annual spend in commercial economy

…as real estate accounts for 10% of total Diaspora remittances CHUKA UROKO

nvestors in the Nigerian economy have said that the estimated $20 billion (N7.2trn) Nigerians in Diaspora spend annually should be invested in commercial economy, especially real estate assets, where such expenses could have wider impact. Remittances by Nigerians in Diaspora have been increasing progressively in the last couple of years. Nigerians in Diaspora remitted an estimated $25 billion into the country in 2018, up from N22 billion in 2017. Average remittances for 2015, 2016 and 2017 hover around $20 billion, according to reports. A substantial part of this $20 billion is spent in Nigeria on sending parents abroad for medical treatment, sending children to school, or building houses in the village. “What we need is to get this

money into the commercial economy. This kind of money is better used in goods and services that are provided within the country,” Paul Onwuanibe, CEO, Landmark Group, a real estate investment and development firm, told BusinessDay in an interview recently. It is estimated that 10 percent of total remittances into the country goes into real estate assets. Emmanuel Obire, CEO, Multipurpose Infrastructure Development Company (MIDC), confirmed in an interview that being the only viable investment asset class in the country today after the crash of the stock market, “real estate attracts a large chunk of these remittances being invested mainly in site-and-serviced land schemes, well-finished stand-alone houses, terraces and apartments in choice locations”. “Though some of us have enough resources to borrow money from banks at very high

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interest rate and pass same to the end users, we rely mainly on Diaspora remittances,” Obire said. “A lot of Diaspora Nigerians are taking advantage of the weak naira relative to the dollar to make wise and ambitious investments decisions.” Damola Akindolire, managing director, real estate at Alpha Mead Group, agrees, stressing that much of these investments are in landed property. “The reasons for this land preference are quite clear. Buying land is a quiet investment; land appreciates faster and gives higher return on investment than finished house, and again, many of these guys have had their fingers burnt from fraudulent uncles and aunties who collect money from them for building houses but diverted same for their own personal uses,” Akindolire said. The Niger ian economy needs money from outside to grow and create jobs, and the

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government needs to do its bit by making the business environment friendly, Onwuanibe said. He added that from quality conversations he has had with foreign investors who have interest in the Nigerian market, they are delaying their entry because they want to see improvements in the ease of doing business. “Some quality discussions one has had in the last six-eight weeks show that everybody is looking to see how things get better and easier. We are looking at $2 billion-$3 billion investment that is waiting to come into Lagos State alone. In real estate, that will make a huge difference,” Onwuanibe said. It is estimated that every one square metre space of construction creates employment for three people, he said, meaning that “when there is a real estate activity on 1,000 square metres of real estate, 3,000 jobs are created”.

Monday 08 April 2019

BUSINESS DAY

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Monday 08 April 2019

BUSINESS DAY

NEWS Uwaleke emerges new chairman of Chartered Institute of Bankers HARRISON EDEH, Abuja

NNPC allays fears of fuel scarcity, says 55 depots have fuel Olusola Bello & HARRISON EDEH

... promises to increase domestic gas supply to 5bscf/d

Streamliner.com commemorates milliondollar fund at annual Nollywood, Hollywood exhibition OBINNA EMELIKE

‘Management practice will continue to change as human nature, organisations, environment evolve’ Daniel Obi

Flooding: Edo assures of conducive resettlement camps for residents in flood-prone areas

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Monday 08 April 2019

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Monday 08 April 2019

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Monday 08 April 2019

BUSINESS DAY

NEWS 10 people killed, many ingured, 10 communities burnt in Taraba ongoing crisis Nathaniel Gbaoron, Jalingo

hairman of Wukari Local Government Area in Taraba State, Daniel Adi, has confirmed that no fewer than 10 people have been killed and several others injured in the ongoing clashes between Jukun and Tiv ethnic groups on the fringes of Benue and Taraba states. In an interview with newsmen in Wukari on Sunday, Adi, who called for calm, said about 10 communities had so far been burnt down around Kente ward of the council area. “As I am talking to you now several households including Government Day Secondary School (GDSS) Kente were burnt down by the attackers in the early hours of today. “I made efforts to contact my counterpart in Ukum Local Government in Benue State to appeal to his people to lay

down their arms and embrace peace,” Adi said. He disclosed that the Local Government was footing the bills of several injured persons currently receiving treatment at the Wukari General Hospital. Meanwhile, David Kente, a former APC governorship aspirant who hails from the area has condemned the wanton destruction of lives and property. He described the crisis as unfortunate adding that the Tiv and Jukuns in Kente have coexisted peacefully for many years after their first clashes in 1991. He appealed to both the Tiv and Jukuns to embrace peace and sheath their sword promising that all those who lost their property to current crisis on both sides of the borders of Benue and Taraba would be compensated.

“You see this achievable because after the 1991 clashes between the two ethnic groups in Kente area I single handedly provided succour to all the affected communities by providing roofing sheets, cement and related building materials. “I also dug boreholes to the affected communities both on the Benue side and Taraba.” When contacted the Police Public Relations Officer (PPRO) to the Taraba Police Command, David Misal, confirmed the ongoing clashes. He said after the death of two persons at the initial stage of the crisis on April 1, 2019, the police was yet to ascertain the actual casualty figure. He however disclosed that the command has deployed additional officers and men to restore peace and order in the area.

AXA Mansard launches new education product

n response to the growing needs of its customers and as part of its quest to ensure continuous access to quality education, AXA Mansard Insurance, registered and regulated by NAICOM, and a member of the AXA Group, has announced the launch of its revamped Education Plan product. This was disclosed by Kunle Ahmed, CEO, AXA Mansard Insurance, saying, “In addition to assisting parents achieve their lofty goals for their children

in terms of education, the revamped Education plan is also designed to reward customers for their loyalty. “Customers will have immediate access to a free annual health check and receive 3 months value of their premiums in the first 5 years of policy period. These rewards align with our payer to partner bid and our continued focus on living benefits as well as promoting healthy living in our society.” The plan gives parents/ guardians the opportunity

Shell l eads IOCs in Local Content - NCDMB

igerian Content Development and Monitoring Board (NCDMB) on Sunday recognised Shell as the most impactful International Oil Corporation (IOC) on Local Content Initiatives in the Nigerian Oil and Gas industry. The News Agency of Nigeria reports that Shell Companies in Nigeria clinched the laurels in the upstream category at the just concluded 2019 Nigerian Oil and Gas Opportunity Fair (NOGOF) in Yenagoa. Shell beat Total and ExxonMobil to the second and third positions at the 2nd edition of the fair organised by NCDMB. Executive Secretary of NCDMB, Simbi Wabote, who presented the award, lauded Shell for support to local vendors and suppliers in the oil and gas industry. Wabote said Shell’s patron-

age to indigenous firms had enabled greater participation of Nigerians in the oil and gas industry to service value chain. Osagie Okunbor, managing director of Shell Petroleum Development Company of Nigeria Limited (SPDC) and country chair, Shell Companies in Nigeria, received the award. The Shell Nigeria chair, described the recognition as an important acknowledgement of the work Shell companies continued to do in Nigerian content development. “This award is a strong recognition of our leadership in the Nigerian content development space. Nigerian content development remains a very important step in our growth aspiration as Shell Companies in Nigeria roll out the next phase of major projects,” Okunbor said. Shell’s Nigerian Content Development manager, Olan-

to ensure they have funds for educational expenses of their children/wards, especially when they reach university entry age. It also ensures that their education is not derailed in the event of any unforeseen circumstance such as death or permanent disablement of the parents/guardians. AXA Mansard Insurance is a member of the AXA Group, the worldwide leader in insurance and asset management with 166,000 employees serving 105 million clients in 62 countries.

Kaduna environment agency allays threat to lives in NB operations KELECHI EWUZIE

aduna State Environmental Protection Agency (KEPA) has dismissed as false the allegations that Nigerian Breweries (NB) plc Kaduna brewery was discharging harmful toxic waste causing discomfort, saying nothing going on at the brewery is harmful to the environment or lives. The agency expressed satisfaction with the company’s safety operational standards. Lawal Jibrin, KEPA general manager, told newsmen after an inspection of the brewery in Kaduna that as far as the agency was concerned, having gone to the discharge point and taken samples, “we have gone to take samples, which confirm no nuisance to the environment.” Jibrin said from all indications, what was needed was a

political solution to the issue, since the complainants had remained faceless, saying, “We are looking at the issue as political, we intend to invite all the parties to sit and see how we can resolve the matter amicably. “What we have seen from the water discharged to community shows that if fishes can live in that place, in the fish pond using same water, it means it can’t harm life. We have moved round, from here we are visiting the community. What we have seen today is not constituting any nuisance.” He, therefore, called on the complainants to come forward and make claims if any existed, saying Governor Nasir el-Rufai, concerned about the welfare of the people, gave express order for the allegations to be investigated. “His Excellency was concerned about the plight of the community and instructed www.businessday.ng

the commissioner of Environment to embark on a thorough investigation. We are assuring the community that there is no cause for alarm,” he said. Abiodun Ajayi, Kaduna brewery manager, NB, told newsmen that besides human safety, the company also adhered to environmental safety standards. Ajayi in an interview with newsmen after the inspection explained that constant monitoring from ISO 14001: 2015, KEPA, Standards Organisation of Nigeria (SON) and other agencies had always given them pass mark. According to Ajayi, “If we can put a face to these people, we would understand what they are referring to and address it. We have been here for over 50 years and as a long term investor and responsible operator, we plan to be here for the long haul.” https://www.facebook.com/businessdayng

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rewaju Olawuyi, described the NOGOF award as well earned, given the pioneering initiatives and strides by Shell companies in Nigeria. According to Olawuyi, the efforts have put the oil and gas industry in the hands of Nigerians. “We are motivated by the award to continue to pursue in-country value addition in the oil and gas sector as this aligns with the government’s aspiration in local capacity development. “The NOGOF award is a confirmation of the leadership position of Shell in local capacity development in the oil and gas industry. “In 2018, Shell Companies were named the Local Content Operator of the Year at the Annual Oil Industry Achievement Awards Dinner of the Petroleum Technology Association of Nigeria (PETAN).

Monday 08 April 2019

BUSINESS DAY

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BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Global economy enters ‘synchronised slowdown’ Disappointing indicators show similar picture in US, China and Europe CHRIS GILES

he global economy has entered a “synchronised slowdown” which may be difficult to reverse in 2019, according to the latest update of a tracking index compiled by the Brookings Institution think-tank and the Financial Times. Sentiment indicators and economic data across advanced and emerging economies have been deteriorating since last autumn, suggesting fading momentum in global growth and the need to resort to new forms of economic stimulus. The worsening outlook has sparked warnings from Christine Lagarde, managing director of the IMF, who said the fund would cut its growth forecasts later this week, and the World Trade Organization which has said the continued threats of trade skirmishes had weakened forecasts. The findings follow generally disappointing economic indicators over the past six months that have shown a similar picture in the US, China and in Europe. Professor Eswar Prasad of the Brookings Institution said the slowdown did not yet appear to be heading for a global recession, but all parts

of the world economy were losing momentum. “The nature of the slowdown has ominous portents for these economies over the next few years, especially given present constraints on macroeconomic policies that could stimulate growth,” he said. The Brookings-FT Tracking Index for the Global Economic Recovery (Tiger) compares indicators of real activity, financial markets and investor confidence with their historical averages for the global economy and for individual countries. The headline readings slipped back significantly at the end of last year and are at their lowest levels for both advanced and emerging economies since 2016, the year of the weakest global economic performance since the financial crisis. The index fell partly because hard data indicating real economic activity has been weaker, with countries such as Italy falling into recession and Germany narrowly avoiding one and with the US economy losing steam as the effects of Donald Trump’s tax cuts wear off. Although economic sentiment remains high in advanced economies, it has fallen from its peaks and has plummeted to well below normal levels in emerging economies, led by fears

Political pressure for a cut makes the US central bank’s next decision vexed

onald Trump’s renewed public demand for easier monetary policy has injected a further political dimension into decision-making at a Federal Reserve that is anxious to display its independence. Having raised interest rates four times last year, the US central bank faces a debate over whether the next move will need to be down rather than up. The president’s willingness to trample over the Fed’s independence will only make the next decision more vexed given central bankers’ desire to prove they are not being steered by politicians. “To expect that the next move might be a cut is not crazy,” said Joe Gagnon, a former Fed official who is now at the Peterson Institute for International Economics. However “it is awkward for them to do what he has asked them to do”. Following fears of a recession in the bond market, optimism about the US economy revived late last week, with March jobs growth approaching 200,000 and unemployment hanging at just 3.8 per cent. The numbers were easily strong enough to reinforce the Fed’s central case for 2019, namely for respectable economic growth and unchanged interest rates. But the case for a rate cut could yet materialise this year. If the US sees signs of a serious downturn there is little doubt that chairman Jay Powell and his colleagues would cut aggressively. Some of-

ficials could start seeing arguments for a downward move even if the economy is not falling off a cliff. The rate adjustments under former Fed chairman Alan Greenspan during the record-breaking expansion of the 1990s serve as one set of precedents. Charles Evans, the Chicago Fed president, in late March discussed Mr Greenspan’s rate cuts during the 1998 emerging markets crisis as an example of what he calls a “risk management” approach to policy. The Fed lowered rates even though US unemployment was just 4.6 per cent and America’s gross domestic product growth remained steady. It was an example, Mr Evans said, of the Fed easing policy “as insurance against bad outcomes”. Bill English, a Yale professor who used to be director of the Fed’s division of monetary affairs, said reductions pushed through by the Fed earlier in the 1990s are also relevant. In July 1995 the Fed started reversing an earlier series of rises by lowering rates by a total of three-quarters of a point — even though the economy was by no means cratering. If the US economy slows later this year and inflation is low, the Fed could make a similar “midcourse correction”, Mr English said. Adding to present-day arguments for the Fed to act pre-emptively is the relatively low current level of neutral interest rates — rates that neither stimulate growth nor hold it back. This is leaving the central bank only modest firepower to prop up the economy. www.businessday.ng

that China’s years of rapid economic growth are coming to an end. Athough China’s economy has been showing signs of improvement following government efforts to stimulate capital spending and the US Federal Reserve’s reversal of its plans for further interest rate rises this year

has had a steadying effect, economic confidence has taken a knock over the past six months. Growth indicators in Europe have been disappointing, Prof Prasad said. Globally, only India stands out as an exception to the slowing trend, boosted by fiscal and monetary stimulus ahead

of national elections starting later this month. Delays in the anticipated trade rapprochement between the US and China have also raised questions over the prospects for greater momentum in the world economy in the second half of the year.

Saudi Aramco attracts $30bn demand for expected $10bn bond issue

Donald Trump’s demands add to Federal Reserve interest rate headaches SAM FLEMING

Strong investor interest comes despite concerns over close links to repressive state JOE RENNISON AND ROBERT SMITH

audi Aramco’s impending debut international bond has already drawn tens of billions of dollars of demand from investors, who are putting aside concerns over close linkages with a repressive state government to back the world’s most profitable company. Reflecting the scale of appetite for the deal, bankers are pushing for the multibillion-dollar bond to come at a cheaper borrowing cost for the oil company than for Saudi Arabian government bonds, according to people familiar with the debt sale — a highly unusual quirk. Early indicative interest from investors has already swelled to nearly $30bn for an expected total issuance of around $10bn across several maturities, said the people, although some investors expect the deal will increase in size. The bonds are expected to be sold in the coming days. Lead bookrunners Morgan Stanley and JPMorgan declined to comment. “This is a seminal transaction for Saudi Arabia,” said Samy Muaddi, a portfolio manager at T-Rowe Price. The bond sale is intimately tied to Saudi Crown Prince Mohammed bin Salman’s vision to open up the desert kingdom’s economy to the wider world, with his grander plan of listing a stake in Aramco on stock markets having faltered. Neither banks nor

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investors have been deterred from participating in the high-profile deal despite initial displays of outrage from JPMorgan and others over the death of journalist Jamal Khashoggi in the Saudi consulate in Istanbul last year. Saudi Aramco’s treasurer has told investors that the company does not need to raise the funding, because of its “fortress-like corporate position”, and is focused solely on opening up the historically secretive group to public investors for the first time. Investors have been lured in by the disclosure of hefty profits for the oil company, backed by a high, “single-A” credit rating. Aramco has told investors that credit rating agency Moody’s would have given it a top-notch triple-A credit rating, if it was not for the close links to the Saudi state. Saudi Aramco provided the Saudi government with 63 per cent of its revenues in 2017 but the government still runs a deficit, and some investors fear further cash could be diverted away from the company, to the detriment of bondholders. “It is a rare issuer and if you look at the pure credit of the issuer it is extremely attractive,” said Tim Jagger, head of emerging-market debt at Columbia Threadneedle. “But the fate of this company is inextricably tied to the fate of the sovereign and we know the sovereign is running a large fiscal deficit.” @Businessdayng

The oil company has been meeting fund managers behind the scenes for several months to lay the groundwork for this debut bond sale. It even enlisted the help of veteran investor Mohamed El-Erian, chief economic adviser at Allianz and a former chief executive of bond giant Pimco, to consult on “technical aspects” of the $10bn offering. The deal has drawn the attention of both emerging market bond investors and funds focused on investment-grade developed markets because of its high credit rating. Investors expect the Saudi Aramco bonds to price at a similar level to the government’s debt. The Saudi government issued a 10year dollar bond earlier this year with a regular interest payment of 4.38 per cent, which has since fallen to a yield of 3.77 per cent as the price of the bond has risen. Another 10-year bond issued in 2017 currently yields 3.65 per cent. “It is a strong credit but it is a company that gives most of what it makes to the government. We feel that Saudi government risk and the company are closely linked,” said Shamaila Khan, head of emerging market debt strategies at AllianceBernstein. “When you are owned by the sovereign, you generally price above the sovereign. We would like to get paid an additional amount to the sovereign but that may be unlikely because of the investor demand.”

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Monday 08 April 2019

NATIONAL NEWS

Libyan strongman Haftar claims air strike on Tripoli Crisis escalates as US announces it has evacuated forces from the war-torn country

HEBA SALEH

orces loyal to General Khalifa Haftar, the military strongman who controls eastern Libya, claimed to have carried out air strikes against targets in Tripoli on Sunday in a sharp escalation of the conflict in the oil-exporting North African state. Fierce clashes on the southern outskirts of the Libyan capital were also reported to be under way as the militias that protect the city scrambled to repel the offensive launched on Thursday by Gen Haftar’s selfstyled Libyan National Army. Fayez al-Sarraj, the head of the UN-backed government in Tripoli, had vowed on Saturday to respond with “force and determination” to the assault by the LNA. On Sunday, a military spokesman in the capital said they had launched a counter operation named “volcano of anger”. Tripoli is being defended by militias from the capital and by other armed groups from the nearby city of Misurata, which has its own battle-hardened brigades, some of which have moved to the capital. As the fighting raged on Sunday the LNA said it had also seized an area around Tripoli’s international airport, a claim denied by Tripoli military officials, according to Reuters. The UN mission in Libya, UNSMIL, meanwhile called for a twohour truce to evacuate the wounded from southern parts of the city. The US also announced on Sunday that it had temporarily evacuated forces from Libya because of the flare-up of civil war. Africom, the US command in Africa, said the forces in Libya had been involved in

counter-terrorism and “improving security in the region”. “The security realities on the ground in Libya are growing increasingly complex and unpredictable,” said US Marine Corps Gen Thomas Waldhauser, commander, US Africa Command. Since the 2011 uprising that overthrew and killed Muammer Gaddafi, Libya has been in chaos. In the past five years the country has been split between a UN-backed government in Tripoli in the west and a rival government under the thumb of Gen Haftar in the east. Gen Haftar gave his forces the order to advance on Tripoli after sweeping across the south of the country earlier this year, an offensive largely achieved without fighting but through forging alliances with local tribes and militias. The renewed clashes threaten UN-led efforts to organise a national conference next week to agree arrangements to end the division of Libya between rival governments in the east and west and hold elections. Ghassan Salamé, the UN special envoy to Libya, said on Saturday he was working to defuse the crisis and was still “determined” to hold the conference on time. Mohamed Eljarh, an analyst who heads the Libya Outlook for Research and Consultancy, based in the east of the country, said Gen Haftar had launched his offensive on Tripoli because he was not getting the concessions he wanted from the UN process. “He believes if he did not have a military presence in or around Tripoli, he will not get what he wants which is a monopoly on military decision making [in a unified Libya], said Mr Eljarh.

Protesters stage sit-in outside Sudanese president’s residence Deaths reported as momentum gathers in four-month revolt against Omar al-Bashir

DAVID PILLING AND ZEINAB MOHAMMED SALIH

housands of protesters held a sit-in in front of Sudanese President Omar al-Bashir’s residence in Khartoum on Sunday in what appears to be a new phase of the four-month popular uprising against the regime. Videos of gunfire circulated on social media and organisers said that five demonstrators had been killed. The police said only one person had died, in Omdurman, Khartoum’s twin city. The sit-in, which was streamed live on Facebook, followed rallies across Sudan on Saturday in what organisers said were the biggest demonstrations since anti-government protests began in December. In Khartoum, the capital, it was the first time that protesters had reached the army headquarters, a sign that the security forces’ resolve to put down rebellion may be weakening. As they approached the compound, which is close to Mr Bashir’s residence, the crowds appealed for solidarity with soldiers, shouting “one people, one army”. Some soldiers were seen chanting with protesters, handing out water and even blocking the police from reaching demonstrators. However, witnesses said that police fired tear

gas and made arrests. On Sunday, the Sudanese leadership met amid rumours of intensifying pressure within Mr Bashir’s inner circle to persuade the 75-year-old leader to go. Later in the day, internet speeds slowed and a power outage hit Khartoum. The president, who has ruled for 30 years, is thought to be reluctant to quit partly because of fears that he would face prosecution by the International Criminal Court for alleged massacres in Darfur. Attempts to negotiate immunity for Mr Bashir against prosecution have so far come to nothing. Saudi Arabia and Egypt have both offered Mr Bashir exile, according to people knowledgeable about talks. Hafiz Ismail, an economist in Khartoum, said the sit-in had worsened the sense of crisis among Mr Bashir’s entourage. “They are really panicking and in total disarray,” he said. Outside the capital, protests had died down since Mr Bashir imposed a state of emergency in February. But Saturday’s rallies, which marked the anniversary of the 1985 overthrow of the government of Jaafar al-Nimeiri, represented an apparent escalation of the revolt. “This has to be the end of President Bashir,” said Muhamed Osman, a political analyst in Khartoum. “The most likely scenario is a coup.” www.businessday.ng

Theresa May, UK prime minister, said she did everything in her ‘power to persuade the Conservative and DUP MPs who form the government’s majority to back’ original Brexit deal © AFP

Theresa May seeks to revive stalled Brexit talks with Labour

PM warns cross-party deal needed or EU exit will ‘slip between our fingers’ GEORGE PARKER

heresa May has tried to revive stalled Brexit talks with Labour amid reports that she is willing to include a “future proof” commitment to Britain staying in a customs union with Brussels as a way of brokering a deal. The UK prime minister insisted that there was common ground between her Conservative party and Labour, and that she was determined to get a cross-party agreement soon. She said a long delay could mean that Brexit could “slip through our fingers”. Downing Street declined to comment on reports that Mrs May was willing to include an aspiration to some form of customs union with the EU as a way of reviving talks with Labour, which stalled on Friday. The Sunday Times reported that Mrs May could legislate to make it harder for her successor as prime minister, potentially a Eurosceptic such as Boris Johnson, to rip up any agreement. One option would be to put a legislative “lock” on the commitment to a customs union in the Withdrawal Agreement bill, the law that would put Brexit on to the statute book. Rebecca Long-Bailey, shadow

business secretary and a member of Labour Brexit’s negotiating team, said the overall tone of talks with the government was “positive and hopeful” and that more talks were possible early next week. She said Labour was waiting to see if the government would move on its red lines, confirming that discussion was focusing on the UK and EU maintaining some form of close customs relationship. Labour was demanding that any agreement could not be “ripped up” by a future Tory leader, Ms LongBailey said, confirming on the BBC’s The Andrew Marr Show programme that an objective was to “Boris-proof” any deal. Many Tory MPs strongly oppose Britain remaining in a customs union, claiming it would undermine their hopes of the UK having an independent trade policy after Brexit. As a result, negotiating teams from the Tories and Labour are trying to find ways to include a customs union in any final deal, without actually calling it that. Philip Hammond, chancellor of the exchequer, said on Saturday that the government no longer had any “red lines”, further inflaming fears among Eurosceptic Tories of an im-

pending deal with Labour. Andrea Leadsom, the Eurosceptic Leader of the House of Commons, also told the BBC there was scope for a deal with Labour on a customs arrangement. “There are various types of arrangement,” she said. “The prime minister’s deal has a customs arrangement in it . . . We can’t be purist about it. We are now at the point of Brexit slipping away altogether.” Ms Leadsom said she could not accept any form of “confirmatory referendum” on a Brexit deal, describing it as an “appalling” idea. Ms Long-Bailey said the issue had been raised by Labour but suggested it was not a red line for the party in the cross-party talks. Facing widespread outrage from Tory members over the talks with Labour, Mrs May defended her approach, ahead of a summit in Brussels on Wednesday at which she will seek a further delay to Britain’s exit date until the end of June. Referring to her original Brexit deal, she said: “I did everything in my power to persuade the Conservative and DUP MPs who form the government’s majority to back that deal — including securing legally-binding changes to address MPs’ concerns with it.

Netanyahu pledges to take over large areas of West Bank Israeli prime minister seeks support from rightwing voters ahead of election MEHUL SRIVASTAVA AND ANDREW ENGLAND

enjamin Netanyahu has vowed to annex vast swaths of the occupied West Bank as he seeks to mobilise his rightwing base ahead of a fiercely contested election. The Israeli prime minister, who is seeking a record fifth term, needs a surge in rightwing voter turnout to ensure his chances of forming a governing coalition after Tuesday’s poll. The future of Jewish settlements in the West Bank, which Israel wrested from Jordan in the 1967 war, is a core concern for his supporters. On Sunday, Israel’s defence ministry advanced plans for 3,600 new homes in the occupied territory and legalised an outpost by agreeing to seize privately owned Palestinian land to build a road for it, the Times of Israel reported.

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The issue has taken on added importance as US President Donald Trump is expected to unveil details of a peace plan that he has described as the “deal of the century” to resolve the Arab-Israeli conflict. “We will move to the next stage . . . I will impose sovereignty, but I will not distinguish between settlement blocs and isolated settlements,” Mr Netanyahu told Channel 12 News on Saturday night. “From my perspective, any point of settlement is Israeli, and we have responsibility, as the Israeli government. I will not uproot anyone, and I will not transfer sovereignty to the Palestinians.” Some 650,000 Jews live in the West Bank, including about 200,000 in East Jerusalem, which Israel annexed days after winning the war in 1967. The move was rejected by the international community, but @Businessdayng

Mr Trump’s recent recognition of Israel’s 1981 annexation of the Syrian Golan Heights — also seized during the 1967 war — has reversed decades of US policy. Arabs and Palestinians fear the US president’s contentious move has set a precedent for land captured in conflict. Mr Netanyahu has used last minute interviews to spur his rightwing base before — in 2015, he famously warned that Israel’s Arab citizens were “voting in droves” and endangering his rightwing government. He apologised for that comment, but only after he won the election. Applying Israeli law to the settlements, which range from large suburban complexes just outside Jerusalem to small, isolated communities deep inside the West Bank, would leave Palestinians with a vastly reduced portion of the land where they hope to build a country.

Monday 08 April 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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US stocks rise after strong jobs data PHILIP GEORGIADIS AND SIDDARTH SHRIKANTH

S stocks rose after employment data showed the US economy added more jobs than forecast in March. The US added 196,000 jobs, beating expectations and recovering after an unexpected stutter in February, when the economy added just 33,000 jobs, a figure which was revised fractionally higher in Friday’s report. The closely watched non-farm payrolls follow a bout of mixed economic data that have contributed to a more dovish stance from Federal Reserve policymakers. The jobs figures also look set to prop up a strong run of gains on Wall Street, with the S&P 500 rising 0.4 per cent on Friday and on track to record a seventh straight session of gains. The Dow Jones Industrial Average rose 0.1 per cent, while the Nasdaq Composite was 0.5 per cent higher. The dollar rose and Treasury yields trimmed gains, with the US 10-year yield recently at 2.504 per cent, after

average earnings growth missed expectations and fell to 3.2 per cent in March, from 3.4 per cent the month before. Thomas Simons, an economist at Jefferies, said the wages miss should be taken in the context of an inflated number in the previous month. “Overall, we think there is good reason to believe that wage growth will continue to accelerate and we are encouraged by the return to trend in payrolls. The Fed should be happy with this number, but it isn’t going to move them off of their “patient” stance,” Mr Simons said. “The outlook for the US economy remains strong relative to slowing global growth. Job numbers today have surpassed expectations,” said Kully Samra, vice-president at Charles Schwab. European equities rose, with the Stoxx Europe 600 up 0.2 per cent and the UK’s FTSE 100 benefiting from a weaker pound to rise 0.7 per cent. The index’s suite of multinationals earn the bulk of their revenues in dollars so are boosted by a weaker sterling.

Europe trumps Google on AI ethics Snap’s new offerings, Samsung’s profit slump, the new graphene, AirPod rivals CHRIS NUTTALL

rtificial Intelligence has the potential not only to transform business but to help us solve the big problems facing the planet from climate change to global health issues. There are big ethical issues to iron out as the use of AI becomes more pervasive and Big Tech has just taken a step back on this, as Europe is about to take a major one forward. Google has scrapped an AI ethics advisory council it had only announced last week, after external and internal protests about its choice of members. The eight-person group included Kay Coles James, president of the Heritage Foundation, a rightwing think-tank that is sceptical about climate change. Google responded to employee and Twitter protests by saying it was now “going back to the drawing board,” adding that it would “find different ways of getting outside opinions on these topics”. Meanwhile, on Monday, the European Union is expected to release one of the world’s first governmentled set of guidelines on developing and implementing Artificial Intelligence ethics. A high-level expert group came up with draft guidelines in December that prompted more than 500 comments, leading to the revised version now being delivered to the European Commission. Its lofty aim is for human-centric “Trustworthy AI” that respects fundamental rights and ensures an “ethical purpose”, while being technically robust and reliable. So, just as with data protection and copyright, Europe is leading the way again in setting standards for Big Tech to follow, as the companies

themselves struggle to make ethical issues a priority. Snap steps up its offering Snap is following WeChat and Facebook Messenger by adding games to Snapchat, part of its latest attempt to revive user growth. At its first event for its content and developer partners in LA, the camera messaging company also announced an ad network and set out plans to open its platform further to third-party developers. Samsung profits plummet Samsung Electronics on Friday delivered an earnings shock for the first quarter with its quarterly operating profit falling 60 per cent, hit by lower prices of memory chips and display panels. The plant-based burger king “If you can figure out what makes meat delicious . . . you can save the planet from an environmental catastrophe,” says Pat Brown, founder of Impossible Foods. We profile him after this week’s deal with Burger King for his plant-based “meat”. Forwarded Microsoft’s toxic culture Dozens of female Microsoft employees alleged pervasive sexual harassment and discrimination, with threats of coercion dismissed by human resources as “just flirting”, in a 90-page email chain. Chief executive Satya Nadella addressed the revelations at a meeting on Thursday. (Quartz, Bloomberg) Borophene is the new graphene As graphene still strives to become the next new wonder material, Technology Review says it faces competition from borophene, which is stronger and more flexible. A single layer of boron atoms could revolutionise sensors, batteries, and catalytic chemistry. www.businessday.ng

Saga seeks to revive brand as over-fifties take flight Profit warning reveals the challenges facing insurance and travel provider OLIVER RALPH, OWEN WALKER AND YUSUF KHAN

hen Saga floated in 2014, the pitch was clear — it was all about brand, brand, brand. The company believed that the over-fifties felt such enthusiasm for the Saga name that it could be used to sell everything from cruises and insurance to private homecare and legal services. “Saga’s brand and the strength of its relationships with its customers are at the core of the group’s business philosophy,” said the company in its initial public offering prospectus. This week’s profit warning — the second in as many years — has shown how tough it has been for Saga to deliver on that promise. The over-fifties, it turns out, want a bargain as much as everyone else and are prepared to shop around

to find one. The latest warning — which knocked more than a third off the value of the company’s shares on Thursday — was caused by Saga’s insurance business, which provides the majority of the company’s profits. Saga has been losing market share in motor insurance — down from 9 per cent to 5 per cent over the past decade, according to the company — as its customers and potential customers have looked around for the best prices. They have found that those best prices have not always come from Saga. Data from research firm Consumer Intelligence show that in 2017 more than a third of the over-fifties shopped around for a new insurance provider when it was time to renew their policy, and that the vast majority of them used a price

comparison site. In response Saga is planning to keep a tighter hold on customers by cutting its renewal prices, and by offering a new product that promises to keep insurance prices flat for three years. The price cut, however, will hit profits and dividends. Saga chief executive Lance Batchelor admitted that the company had lost the edge it used to have in pricing insurance for the over-fifties, but insisted it could turn things round. “What we have to prove, and intend to prove, is that we can be as innovative in insurance as we have been in cruises,” he said. “We want to sign up people who want a long-term relationship so we can meet more of their needs in retirement,” added Mr Batchelor. “We have 1.1m members and they have been clear that they come to Saga for value-added products and services.”

Investors flee stock market at peak Isa season Concerns over Brexit surface — though UK stocks show healthy growth this year KATE BEIOLEY

nvestors have continued to pull money out of the stock market even as seasonal demand for Isas approached its peak, amid continued nervousness over the UK’s Brexit gridlock. Britons sold £156m worth of funds in February, a 115 per cent decline on the £1bn worth of inflows at the same point the previous year, according to data from the Investment Association. In the past four months alone, outflows from UK funds have amounted to almost £5bn. This follows a market sell-off towards the end of 2018 that sent investors scurrying for the exit and meant many missed out on market gains this year. Investors relinquished UK-focused funds and European equity funds in particular, as tensions over the outcome of the UK’s Brexit vote continued to build. European and UK funds experienced outflows of £453m and £236m respectively in February, despite the fact that stocks across those regions enjoyed positive overall results in the first months of the year. The FTSE 250 mid-cap index has

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delivered a total return of 12 per cent in the year to date and in February notched up a positive return, while the MSCI Europe ex UK index has returned just under 10 per cent in the year to date. Both fund sectors have been affected by negative sentiment surrounding the outcome of the Brexit vote and weaker economic data flowing out of Europe. “The fund industry had been hoping for an ‘Isa season’ bounce, with people piling cash into funds ahead of the tax year-end deadline,” said Laura Suter, personal finance analyst at investment platform AJ Bell. “But any initial signs of this have not materialised, and it appears investors are still too nervous about the Brexit deadlock to put their money into UK markets.” A total of £11.5bn has been pulled out of UK funds since the Brexit vote, while the UK All Companies sector has seen consistent outflows for nearly two years. Chris Cummings, chief executive of the Investment Association, said: “Despite a slight improvement in investor confidence, February experienced the fifth consecutive month @Businessdayng

of net retail outflows.” He said savers had turned instead towards mixed asset and global equity funds “to weather the ongoing economic and political uncertainty”. Global funds experienced inflows of £513m in February. The average fund in that sector has returned just under 12 per cent in the year to date. Investors also flocked to global bond funds amid a rally in bonds resulting from investors seeking low-risk places to park their money in the face of mounting economic and political risk. In fact the year so far has been a relatively strong period for global markets, which experienced a bleak 2018 but have performed strongly since. All major equity markets delivered a positive return in the first three months of the year, according to data from AJ Bell, with UK large companies and mid-caps both performing well in spite of Brexitrelated fears. Both bonds and global equities have been buoyed in recent months by less aggressive stances taken by central banks in Europe and the US, which have cooled on the idea of interest rate rises in 2019.

64 BUSINESS DAY

Monday 08 April 2019

ANALYSIS

EU official confronts China on trade promises Cecilia Malmstrom frustrated by Beijing’s reluctance to open markets to bloc JIM BRUNSDEN AND ALAN BEATTIE

top EU official has voiced frustration over China’s trade policies ahead of a summit this week as Brussels struggles to get Beijing to deliver on commitments to open up its market to European investments. In an interview with the Financial Times ahead of a meeting between EU and Chinese leaders on Tuesday, EU trade commissioner Cecilia Malmstrom said the bloc would not follow the US route of using punitive tariffs to try to force China to the negotiating table. European steelmakers are among those to have been hit by additional duties imposed by US president Donald Trump since he took office, and Brussels has attacked the measures as a breach of World Trade Organization rules.

to be adopted at Tuesday’s EUChina summit in Brussels. A senior EU diplomat warned that negotiations between European and Chinese officials had made little headway because Beijing was stalling “on a range of important issues” including reciprocal market access and WTO reform. “This doesn’t bode well and constitutes already now a serious burden for the summit,” the diplomat said. “If China doesn’t change its negotiation positions substantially and engage in a meaningful way, there will not be enough common ground to agree on joint declaration.” Ms Malmstrom said she hoped that trade talks under way between the US and China would lead to “systemic concessions” from Beijing that would also benefit China’s other trading partners such as the EU.

EU trade chief Cecilia Malmstrom is pushing for the US to be more involved in WTO reform

But Ms Malmstrom stressed that Europe shared US exasperation about China’s model of “massively” subsidised stateowned enterprises that expand abroad through acquisitions. A five-year long effort to negotiate an EU-China investment treaty is “not moving as fast as it should”, Ms Malmstrom said. “It’s been going for a long time now and we’d hoped that China would be a little more open to do this. We have exchanged offers, that is a step forward, but they are very modest.” Brussels sees the treaty as the most direct way to address complaints from European businesses who say they are denied the investment and takeover opportunities enjoyed by Chinese companies in Europe. Pushed by Germany and France, the EU last month hardened its stance towards Beijing, calling China a “systemic rival”. Brussels is planning to introduce legal tools to fight takeovers by state-backed groups and to tighten access to the EU’s public procurement market. French leader Emmanuel Macron called it the end of “European naïvéte.” The EU’s frustrations have been heightened by Beijing’s resistance o including commitments to open markets in the communiqué that is supposed

US ambitions in the negotiations include ending forced technology transfer from its businesses active in China — also an EU priority. While Brussels has welcomed the trade talks between the US and China, it is wary of some of the details of the deal under negotiation. Washington’s attempts to get Beijing to commit to buying more American products and take other steps to reduce its trade surplus are examples of “managed trade” policies that the EU argues violate the spirit of the WTO system. “If there is a return to managed trade, this is certainly not what we should be looking at in 2019 and this worries us,” Ms Malmstrom said. She added that “quotas, decided beforehand” were “not really belonging to the market economy, and we should not encourage that.” Brussels’ primary fear is of the WTO system coming under ever increasing strain as a result of Chinese policies and unilateral US retaliation. Beijing should show “leadership” at the WTO and join efforts led by the EU, US and Japan to rewrite its rule book in a way that addresses the gaping loopholes that have been exposed by China’s economic model, including on industrial subsidies, Ms Malmstrom said. www.businessday.ng

Israel looks to ultraorthodox to fill tech skills shortage

Greater integration of this marginalised community is seen as critical for the economy and a key election issue HARRIET AGNEW AND MEHUL SRIVASTAVA

t first glance the Ampersand co-working space in Israel looks like any of its peers from San Francisco to Barcelona: an array of cacti, trendy furniture and multicoloured cubicles. But this project, in a poor suburb of Tel Aviv, has one crucial difference: the work areas for its 130 or so tenants are segregated by gender, to prevent men and women from mingling — one of the necessary working conditions for the ultraorthodox Jews that represent Ampersand’s target market. “The idea of our project is to build bridges for the ultraorthodox community to get into the Israeli high-tech industry,” says founder Moshe Friedman. From Ampersand’s offices on the 18th floor of a tower block, he points westwards at the glitzy high-rise towers of Tel Aviv, home to many of the workers in Israel’s high-tech boom. By contrast, Ampersand’s neighbourhood of Bnei Brak, 7km from central Tel Aviv, is one of the poorest and most crowded in Israel, and a centre of ultraorthodox Judaism. Known collectively as Haredim — which means to be in awe of god — this broad spectrum of groups is characterised by a rejection of modern secular culture. “We are trying to close the cultural and educational gaps,” says Mr Friedman, whose great-grandfather co-founded the Haredi community in Jerusalem in 1921 and banned maths, science and English from its schools. “The challenge is to bring the ultraorthodox coming from a religious culture and lifestyle and connect them with a secular Israel, which is an innovative high-tech economy.” The success or otherwise of initiatives such as Ampersand — a WeWork for the ultraorthodox community — and the potential to emulate them across the country and for other minority parts of the population, is crucial to Israel’s ability to integrate isolated communities such as Haredi Jews and Israeli Arabs into the workforce, notably the high-tech industry that powers its economy. “The integration of the Haredi is one of the most pressing issues in Israel today,” says Philippe Guez, founder and chief executive of Maor Investments, which recently raised a $100m venture capital fund to invest in Israeli high-tech companies. “Integrating the ultrareligious into the workforce is crucial in the fight to improve labour market participation and increase productivity.” This socio-economic challenge has also emerged as a key issue ahead of national elections on April 9, which are shaping up to be one of the closest in Israel’s recent history, with one major political party

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advocating rapid, enforced integration. It comes at a time when the authority of the elderly rabbis who direct ultraorthodox votes is being challenged by young Haredim, especially by women who have ventured out into the modern workforce. “Haredi society is going through an earthquake,” says Peggy Cidor, who has studied the closed-off community for a decade as a reporter for The Jerusalem Post. “This way of life has brought them only poverty, and the young see a way to have a sort of modern life, but to remain religious at the same time.” Failure to integrate the 1m ultraorthodox Jews into the workforce could blunt Israel’s decade-long economic transformation. The booming tech sector, which contributes 12.5 per cent to gross domestic product and makes up almost half of all exports, according to the Central Bureau of Statistics, is facing a skills shortage. There are at least 15,000 unfilled positions in everything from software engineering to machine learning and artificial intelligence, according to a 2018 survey by StartUp Nation Central, a non-profit group. “The biggest bottleneck in the Israeli tech industry is people,” says Zvi Limon, an Israeli venture capitalist and investor in Ampersand. “We’re all struggling to hire engineers and are having to go abroad to find them. There’s a pocket of ultrareligious people in Israel . . . and this is a great untapped resource.” Higher birth rates — more than double the 3.1 children per woman in the general population — means that Israel’s ultraorthodox Jews are forecast to grow from 11 per cent of the country’s population today to one-third by 2065. They are typically exempt from military service and are the recipients of various government subsidies and welfare benefits, as many do not work. “When you look at the future growth of the Israeli economy, this country will collapse if the Haredim do not participate in civil society,” says Mr Limon. “Instead of being consumers of resources, it’s crucial that they become contributors.” The ultraorthodox community is largely made-up of descendants of eastern European Jews and those who migrated to Israel from north Africa and neighbouring Muslim countries. Their rabbis tend to reject many aspects of modern life, such as unfettered internet access or smartphones, and most live their lives under strict interpretations of biblical restraints. These restrictions range from how to dress in public, what to eat and even how to vote: “Act on the instructions of the priests . . . do not deviate from the decisions they hand down to you, either to the left or the right,” says one biblical exhortation cited by rabbis to demand obedience. @Businessdayng

The Haredi live in self-imposed segregation and observe an absolutist interpretation of the religious texts, the Torah and the Talmud. The fact that almost half of its male population do not work in the formal economy, spending their time studying in the Yeshiva educational establishments, means that Haredi women are often the primary breadwinners. Many study computer science at vocational training institutions, or seminaries, rather than universities. And more than 7,500 young Haredi women enrol at these institutions each year — a figure that is expected to double within the next decade, according to SNC. “[But] these seminaries are not regarded as prestigious educational institutions and so when the students leave, they struggle to get well-paid jobs in big international companies,” says Ampersand’s Mr Friedman. “Another problem is the cultural gap.” After the seminaries, Haredi women tend to work in low-paid jobs at contractor companies providing outsourced programming and other tech services. Some contractors have been criticised for exploiting them with low salaries. “There is a double glass ceiling because you’re a woman and Haredi,” says Yael Raavad, a 26-yearold software engineer, and mother of three, who two years ago set up a networking community on LinkedIn to help ultraorthodox women share knowledge and job opportunities in the tech sector. It has grown to almost 1,000 members. “Companies make it sound like it’s complicated to employ Haredi women,” she adds, “but it’s not a big deal.” To help them into higher-paying tech jobs SNC has developed its own two-year seminary computer science programme, alongside Google, Mobileye and Western Digital. Ampersand is working on a similar scheme, which offers Haredi women online computer courses from top universities, and then introduces them to large companies after graduation. “We’re giving Israel’s high-tech industry a new pool of talent — the Haredi women,” says Mr Friedman. “It’s a game changer.” Chart showing that Israel has the highest birth rate in the developed world Rachel Horowitz, chief executive of an eponymous clothing line, is the archetypal modern Israeli businesswoman. She employs nearly two dozen people, flies to Istanbul every month to meet suppliers, which manufacture her designs to the exacting rules of rabbinical Judaism, and is set to expand her Jerusalem-based chain with a website marketed to the US. When she quit as a teacher 14 years ago and decided to enter the world of business, Mrs Horowitz’s daughter was mocked at school for having a “modern” mother.

BD Money

Monday 08 April 2019

BUSINESS DAY

PERSONAL FINANCE

Economics

COVER

Agri Business

All you need to know about planning your wedding budget

Risk of a no-deal Brexit dangerously underpriced

Go after the money but stay healthy

Very few things can be as stressful as planning your wedding in Nigeria. From deciding what to wear, the hall to use for reception to catering for guests, planning weddings can be very exhausting.

The British Pound performed unexpectedly well during the first quarter of 2019 despite the chronic uncertainty, growing confusion and chaos revolving around Brexit.

Underdeveloped logistics chain of agric-marketing viable for investors

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Many Nigerians get caught up in the hustle and bustle of amassing wealth that they forget their health deserves just as much attention as making those billions.

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The underdevelopment that surrounds the logistics system of marketing agricultural products across the country could be repelling but investors who understand the economy controlled ...

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@Businessdayng

Monday 08 April 2019

BUSINESS DAY

PersonaL Finance All you need to know about planning your wedding budget ISRAEL ODUBOLA & SEGUN ADAMS

ery few things can be as stressful as planning your wedding in Nigeria. From deciding what to wear, the hall to use for reception to catering for guests, planning weddings can be very exhausting. BusinessDay polled a number of service providers in the wedding industry to get you the average rates so you can draw up your budget stress-free. Bride’s wear There cannot be a wedding without a wedding gown. A pristine white, flowery pink, silvery gold and even black gownwhichever colour or style, the bride’s dress is usually the talk of a wedding. BusinessDay finding across several online platforms and interaction with experts in the line of business suggests an average of N350, 000 for purchasing a wedding gown while rental costs around N120, 000. The cost of a wedding dress depends on the brand the bride has preference for and can even cost millions. Since the dress would not be complete without a shoe, the bride should set aside about N100, 000 extra. Groom’s wear You should not hesitate to spend your hard-earned naira on a wedding day you will remember. Of course, the groom’s suit and shoes are among the things that have to be absolutely right. You can get quality suits for your wedding on e-commerce platforms like Jumia and Konga or big boutiques. It is important to know that prices of men’s suits depend on brand and quality. For instance, High-Quality-Black Tuxedo Men’s suit ranges N250, 000 to N450, 000, a sales director who works in a notable boutique in Lagos confirmed to our correspondent. He, the sales director, revealed to our correspondents that men’s formal shoes for wedding include Mario Fagni Hand Weaved Calf Leathered shoes, which hovers N215, 000. The groom may also consider buying Maurices Crocodile Skin Shoe (Black) between N250, 000 and N280, 000 depending on the grade. Photography Before the wedding comes the pre-

wedding and nothing says “ I am getting married” better than high quality prewedding pictures on your social media handles with captions like “together_forever”, “#Sam&Sammie2019”, etc. A Lagos-based wedding photographer told our correspondent that the rise of the social-media age and smartphone adoption means many couples can share beautiful moments with friends and families all over the world. Whether to eternalise the moment or join the bandwagon, photography has become a sine qua non in many wedding plans. The average price for wedding photography (Pre-wedding, Traditional and White) ranges from N250, 000- N450, 000 for Photobook, although the deal might include 2 frames. The photographer says the deal one gets “depends on the location and the concept to be used,” Damola (pseudo) an Abuja-based photographer however says it is usually subject to negotiation as newer studios might agree for N200,000 while more established ones could demand up to N500, 000. Photo and Video packages start from N350, 000 and can cost as much as N1 million. Hall for Wedding Reception Choosing the right wedding venue is

very important if you desire a memorable and stunning wedding ceremony. The wedding venue is one of the largest expenses, if not the largest. You naturally need to find a venue that fits into your budget. The cost of a renting a hall for reception is basically determined by the number of guests, location and time. Information gathered by our correspondents revealed that the cost of renting expansive halls in top-notch hotels in Lagos averages between N12 million and N20 million. Aso-Oke Nigerian weddings are a colourful affair and quite literally. Aso oke which means “top cloth” in the English language is a traditional wear and the first set of clothes the couple would emerge in as they step out in style, matching each other’s apparel from head to toe. The traditional wear denotes cloth of high status and is a wedding essential for many Nigerian couples getting married. Given the demand for top quality, a set which is for the couple could go for N150,000-N200,000, depending on the location of retailer. Master-of-Ceremony (MC) Planning a wedding takes time and requires numerous considerations. A professional Master of Ceremony is

important for wedding as they are experienced in using commanding and strong voice to catch the attention of guests. According to our correspondent, the cost of engaging M&Cs for high-class wedding ranges between N500,000 to N2 million. Bridal Makeover Looking good is good business and it gets better on one’s wedding day. Many small and medium enterprises have emerged in the last decade on account of the lucrative nature of the makeover industry in Nigeria. A make-up artist in Lagos says she helps brides look their best on their wedding as a side job and sometimes get more demand than she can handle. The average cost of a bridal makeover service varies depending on location and what theme the wedding would be based on, our correspondents say. N80, 000 - N120, 000 is the range most of the surveyed service providers offered. The fees would cover both the introduction and the wedding although if the bridal train is to be catered to, the fee would increase by N10, 000-N20, 000 with each additional person. Wedding Caterers Either you are having a wedding celebration or any events, one thing is certain, great food makes wedding memorable. As the saying goes, tasty foods don’t come cheap. A senior chef who works with a Lagos-based food company that specializes in catering for indoor and outdoor events told our correspondent that cost of hiring caterers for wedding events ranges between N3 million - N5 million, depending on the number of guests and varieties of dishes among others. Cake Cutting the cake has its own special place on every wedding program. The cake designer is usually give audience to explain the philosophy behind the design, what each colour means and what materials have been delicately blended to create the edible masterpiece. A decent wedding cake, say 3-tier, can sell from N70, 000 up to N180, 000- of course with more tiers and layers. Whether Vanilla, Velvet or Chocolateto mention a few, everyone sure looks to see a wedding cake.

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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@Businessdayng

Monday 08 April 2019

BUSINESS DAY

Economics Risk of a no-deal Brexit dangerously underpriced Lukman Otunuga, Research Analyst at FXTM

he British Pound performed unexpectedly well during the first quarter of 2019 despite the chronic uncertainty, growing confusion and chaos revolving around Brexit. Much of the positivity seen in the Pound has been encouraged by expectations that the United Kingdom is heading for a softer Brexit, a potential second referendum or, as some optimists would like to believe, no Brexit at all. Investors guilty of complacency regarding no-deal Brexit risks Given that at time of writing there have been multiple defeats and rejections of UK Prime Minister Theresa May’s Brexit deal, and that the latest headline from the EU Commission is that a no-deal Brexit on April 12 is “likely”, the upside in recent months for the Pound has been a mystery for most traders. Market participants need to be aware of the risks over market complacency with Brexit uncertainty, because investors do not look like they are positioned at all for no-deal Brexit risks, or a disorderly Brexit. In the event that United Kingdom politicians are able to miraculously agree be-

tween themselves a new Brexit agreement before the April 12 deadline at time of writing, further upside in the GBPUSD is likely limited to between 1.34 and 1.36. However, the unexpected occurring and the risk of traders getting nervous on the edge of their seats over a no-deal Brexit holds the potential to suddenly send the GBPUSD to 1.25, if not lower. Brexit uncertainty to remain the name of the game The third rejection by the House of Commons on Theresa May’s Brexit deal has created another element of uncertainty and confusion at a critical period where investors are scrambling for clarity on Brexit. The United Kingdom now only has until April 12 to come up with an alternative plan, otherwise fears of a no-deal Brexit are set to rise in the foreign exchange markets. Will there be a second referendum, a general election, or even perhaps a longer delay to Brexit? Or, will the UK end up crashing out of the European Union without a deal in place? Where we go from here remains an open question, and this endless uncertainty should weigh on sentiment for the Sterling. GBPUSD searching for catalyst to make next major move In regards to the technical picture, the GBPUSD is trading within a range on the

monthly timeframe, with support found at 1.3000 and resistance at 1.3300. Although prices have breached the bearish channel, the downside is likely to resume if a monthly close below 1.3000 is achieved. Sustained weakness below this level would likely threaten opening a path towards 1.2820 and 1.2700, respectively. In the event of a no-deal Brexit, the Sterling has the potential to tumble towww.businessday.ng

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wards 1.2400, possibly even lower if investors panic. The weekly timeframe paints a similar picture to the monthly timeframe that 1.30 is a critical level for the Pound. For bullish sentiment to jump firmly back into the game, a decisive monthly close above 1.3350 would be encouraging for potential buyers. Such a move would likely open the doors towards 1.3470 and 1.3630.

@Businessdayng

Monday 08 April 2019

BUSINESS DAY

Monday 08 April 2019

BUSINESS DAY

Cover Story

Investing

Go after the money but stay healthy David Ibidapo

any Nigerians get caught up in the hustle and bustle of amassing wealth that they forget their health deserves just as much attention as making those billions. Poor health is enough to scupper whatever wealth amassed, such that in the end, all those painstaking efforts to make money would have been for relatives with better health to inherit. Many young Nigerians don’t place the same value attached to making money on staying healthy and that’s a big mistake. According to the latest World Health Organization (WHO) data published in 2018, the average life expectancy of Nigerians is 55 years, the lowest in all West Africa. While the lack of a functional health scheme and requisite infrastructure hamper the Nigerian health sector and can be blamed for the low average life expectancy, more Nigerians just need to be committed to a healthy lifestyle. Here are some things to note in pursuing a healthy lifestyle. Stress The average Nigerian is disposed to daily stress, especially those residents in places like Lagos with very high population and every one practically struggling for everything the state can offer. Way back in 2015, a study conducted by Bloomberg revealed that Nigeria was the most stressful country in the world. We can to a large extent further claim that it still is the most stressful country in the world. To mention but a few, non-ex-

istent power supply, poor road networks and never-ending traffic congestions, erratic public transportation, overworked and underpaid low-income earners, high cost of living etc., contribute to stress levels an average Nigerian experience. In 2017, an article paper on the theme “Stress and Depression in Workplace: Strategic approach to management”, Olabode Shabi, a medical consultant and Chairman of the Society of Family Physicians of Nigeria explained that about seven million Nigerians are currently suffering from mental health problems associated with stress and depression. Medical practitioners have proven that in managing stress levels, avoiding or reducing caffeine, alcohol, and nicotine, adequate sleep, trying relaxation techniques, and time management are key factors to take to heart amongst other factors. Also, there are nice massage places like Jane’s Haven Beauty Spa, Eko Gym and Spa, Spa Intercontinental, Oasis Medspa etc one can visit for good relaxation and stress relief. Pollution According to a report by WHO, 94 percent of the population in Nigeria is exposed to air pollution levels that exceed WHO guidelines (compared to 72% on average in Sub-Saharan Africa in general) and air pollution damage costs about 1 percent post of Gross National Income (GNI). These days, the air quality is so bad. Almost every breath taken is like the breath of death. Literally, air pollution is choking the life out of Nigerians with little attention paid to it. Indoors and outdoors, air pollution is killing more urban residents today than ever before. The average Nigerian on a www.businessday.ng

How investors can take advantage of FGN Bond issuance in Q2 2019 OLUFIKAYO OWOEYE

daily basis has to deal with the risk of polluted air, ranging from emissions from vehicles especially trailers and dusty streets etc which poses danger to the citizens. In Lagos state for instance, transportation by bikes is prevalent as individuals seek to reach their destinations faster, this is due to severe traffic congestions in the city. Hence, this increases their exposure to risk of accident and inhaling of dust. After smoking, high blood pressure and poor diet, air pollution is the fourth-highest cause of death worldwide with

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most deaths occurring in developing countries, hardly captured in death certificates according to WHO. Resultant effect of polluted air as been highlighted as strokes, lung disease, lung cancer and heart attacks. We therefore lay emphasis on the need to engage the usage of face masks while boarding bikes to lessen the effect of polluted air intake. Balance diet and constant exercises Also most importantly, the food we eat determines to a large extent how healthy we are. @Businessdayng

Although we are faced with challenging economic situations which drains daily nutrients and energy from the body, conscious effort in food selections aimed at replenishing lost nourishments is key to maintain healthy living. If possible, avoiding or reducing road side purchase of fruits and food which most times are contaminated due to exposure to dust and other unseen germs could be a great start to living healthy. Some individuals, especially employed bachelors are faced with the challenge of preparing their own food so result to eating out. There is need to device methods to time management and reducing eating out. The problem

with food vendors is not being certain of the food preparation process. In addition, constant exercises keep the body fit always and ready for another day. Also helps in smooth flow of blood through the veins. Health is wealth Good health often translate to wealth because the less you spend on medical bills, the more money you have to deploy into more productive business activities or investments that will assure you better returns. The major point to consider is that pursuing billions at the expense of one’s health is like working for another man to inherit without enjoying the reward of your labour.

he Debt management office (DMO) has released the calendar for 2019 second quarter FGN Bond issuance. FGN Bond is a bond issued by the Nigerian government in exchange for cash at a given interest rate and a repayment period. It also states how payments of the principal and interest will be made. A Bond is a confirmation from a borrower that it borrowed money from a lender at a given interest rate and repayable over a period. They also include the minimum amount that can be subscribed to by the lender and in what multiples. Benefits investors stand to gain Investors in bonds earn an interest that will be paid quarterly directly into their bank account. Interestingly, you need not to be rich to invest as anyone with as little as N5,000 can invest in the bond. Investing in FGN Bonds is a good way to save towards your House rents, marriage, an occasion, school, project, retirement, etc. How will the interest and principal be paid? The interest will be paid quarterly into your bank accounts while the principal will be paid at maturity depending on what duration you subscribed to. Retail investors looking to invest in the FGN bond only need a minimum of N5,000 to invest. Subsequent investment over N5,000 will be in multiples of N1,000. Meaning that investors cannot invest N5,500. It’s either N6,000 or N13,000 or N30,000. The maximum amount a single retail investor can invest in the FGN Bond is N50 million.

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Government bonds hardly default, so you are nearly 100 percent sure that you will get your money back in full along with the interest

What if I decide to sell before maturity? Investors need not to hold on to the bond until maturity. If you need cash anytime during the duration of the bond, you can sell your bond in exchange for cash. However, the portion of the interest that you are not entitled to earn because you have sold will not accrue to you any longer. For example, if

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you buy April 24 and sell July 14, because you cannot wait until April 2023 to get your principal, you will only be entitled to the interest earned between April 24 and July 14. Bonds have certain characteristics similar to stocks; their prices can often be higher or lower than their face value. The face value of a Nigerian bond is typically N1,000. So assume an investor bought FGN bond at N1m and at an interest rate of 13 percent per annum. It means that for every N1,000 of your investment, such an investor will earn N130 (also known as the coupon rate). So, if you decide to hold your N1m to maturity, you will earn N130,000 annually. In the secondary market, bond prices behave like stock and react to the forces of demand and supply. Supposing lending rates in the country suddenly rise to 16 percent. It means that the bond that earns @Businessdayng

you 13 percent is no longer attractive as the FG will only continue to pay the N130 for every N1,000 in Face value. Leveraging on technology to buy FGN bonds. The penetration of the internet and technology has caused several disruptions in the ecosystem. Fortunately, the fixed income market is not left out in this disruption. There are mobile applications such as TradeFi, that enable retail investors to buy FGN Bonds from the comfort of their phones and other mobile gadgets. TradeFi app also allows for willing investors to learn the basics of fixed income trading and better still you can reach out to a stockbroker. The bond is safe and is backed by the full faith and credit of the FG. Government bonds hardly default, so you are nearly 100 percent sure that you will get your money back in full along with the interest.

Monday 08 April 2019

BUSINESS DAY

Agri Business

Underdeveloped logistics chain of agric-marketing viable for investors Temitayo Ayetoto

he underdevelopment that surrounds the logistics system of marketing agricultural products across the country could be repelling but investors who understand the economy controlled by the growing number of mouths waiting to be fed could look above it for value, experts say. BusinessDay findings revealed the challenges signpost opportunity in raising an enterprise that can effectively ease the flow of produce from sources of production to the point of need, especially in urban centres. Institutionalising a logistic initiative that can focus on providing storage facilities or build reliable cargo services for players in the production and processing aspect of agricultural is a viable venture as the space is currently undersupplied, according to Taiwo Oyaniran, PwC head of Agric Business. Logistics management lies at the heart of marketing but when poorly handled, could trigger post-production loss, scarcity, price volatility and even shorten shelf lifespan. Owing to the fact that the local transport system is still largely led by pockets of individuals who care less about protecting product integrity, many producers find it difficult getting their products sustainably from point of origin to point of demand without compromising value in the process of supply. “Anybody that is willing to play around providing storage such that wastages are reduced will be a right investment. What we have is few transporters providing these services but if there are dedicated companies, like how Uber has institutionalised transport, then logistics will grow.”

About 50 trucks of tomatoes, for instance, leaves Kano in peak seasons of production to supply markets in Lagos, PortHarcourt, Benin and Abuja among others. For a farmer, hiring a truck in periods when there is less competition with other products, the average rate is N350,000. That amount excludes N150 charged by those who harvest the tomatoes per 50 kilogramme and N50 by those who lift it on the head to the roadside (since there are no motorable road networks to link the farms to the roads). In the week preceding the gubernatorial election, for instance, Sanni Yadakwari the secretary of Tomato growers association of Nigeria told Businessday that truck hiring surged as high as N500, 000. And when there is competition with other produce, truck drivers leave them stranded, increasing the rate of perishing which is already estimated at 50 percent. In Lagos, movement of livestock products, particularly meat from slaughterhouses to markets remains a challenge despite the state government’s introduction of a cold-chain scheme to prevent contamination and preserve quality. Some still convey them in weak sacks on motorcycles. These logistics gaps exist in the various points of production across the country, needing a robust system for operational efficiency. But like the risks associated with most investment decisions, it is also important for investors to arm themselves with workable strategies latching on the opportunities in logistics. In the area of warehousing, for instance, Oyaniran pointed attention to the fact that getting robust facilities to preserve produce could be capital intensive because spending will not be limited to facilities but will equally extend to guaranteeing www.businessday.ng

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In Lagos, movement of livestock products, particularly meat from slaughterhouses to markets remains a challenge despite the state government’s introduction of a coldchain scheme to prevent contamination and preserve quality. Some still convey them in weak sacks on motorcycles

stable electricity supply. Such investor, he said must also consider the nature of produce in order to determine the kind of storage that will suit them. “Such an individual is becoming more or less like an aggregator, getting stuff in bulk from people and storing them,” Oyaniran explained. According to Taiwo Ajibola, MDS Logistics chief executive officer, the strategy of an investor should be conscious of the

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type market targeted to be serviced and the locations where the demand resides. This implies a logistics firm conveying tomatoes from Kano in a healthy cold-chain system that retains the quality should not focus on the same market serviced by the regular transporters to avoid loss. Rather, he believes such investor must carefully select consumers like the Grade A hotels, supermarkets or restaurants who their @Businessdayng

policies on standards encourage them to easily appreciate the quality produce, even when at a higher cost. “The target market of those you are going to serve is what you should consider. But If at the end of the day, people are not willing to pay for such services and there is an alternative where they can meet their need at a lower price, it becomes difficult,” Ajibola explained. “Taking the same fresh produce to Mile 12 and not hotels would mean you have to contend with those who are delivering the same service with a non-cold-chain compliant system.” For an investor considering the cold-chain system, Ajibola’s opinion is that the cooling system is the most relevant, which cost a lot more than purchasing a regular vehicle. The capacity in terms of tonnage is also important. Depending on the brand, a cold-chain vehicle could cost as much as N17 million.

Monday 08 April 2019

BUSINESS DAY

Data

Federal government eurobond Yields on Eurobonds fell week on week by c.79bps to an average of 6.75 percent compared to 6.80 percent last week as market turned slightly bullish. During the week the Debt Management Office (DMO) announced that the Federal Government will continue in its plan to raise foreign debt component in the total debt stock to 40 percent by raising equal proportion (50 % each) of the 2019 deficit from the local and external market. Total deficit in the 2019 proposed budget amount to N 1. 649 trillion. As at the end of 2018, the ratio of foreign debt to domestic debt has increased to 62:38 from 68:32 in corresponding period of 2017.

Corporate eurobond Across board, yields on Nigerian Corporate Eurobonds rose by an average of c.463bps to an average of 8.43 percent even though in the preceding week average yield was 8.06 percent. Yields on ZenithBank rose the most by 5586bps to 6.25 percent while ACCESS Bank PLC III followed closely. On the other hand, DiamondBank fell the most by 2822 as yields return to single digit range at 8.75 percent. www.businessday.ng

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Monday 08 April 2019

BUSINESS DAY

Questions of the week 1.Which would be a better investment option for me right now: Equities or Fixed Income. 2. Is it advisable for a young couple (no kids) to rent a 3-bedroom apart-

ment? 3.Who should I make my next of kin; my wife, kids or siblings. 4. What is the most convenient way for me to buy government securities?

Charts of the week Three NSE firms combined more profitable than entire listed companies

Net incomes of Nigeria’s most capitalised company, Dangote Cement Plc, and two of its biggest lenders, Zenith and Guaranty Trust Bank Plc (GTBank), outstripped that of the entire listed firms on the Nigerian Stock Exchange (NSE) for the full year 2018. The three companies posted a total profit of N768.37 billion in 2018 as against an aggregate net income of N668.14 billion posted by eighty-eight (88) other companies that have so far released their 2018 financial results.

Commodities

Week Corn-Ahead Prices are expected to decline in near times due to expectations of higher South(Monday, America’s8th corn output. Nigeria’s import2019) is about 0.5% of world’s Week Ahead April – Friday, 12th April, output. A lower corn price would reduce the country’s import bill. Wheat – Prices are expected to be bullish in the near times owing to a drop in Zimbabwe’s wheat output. An increase in prices could have negative impact on the operating expenses of wheat-dependent manufacturers. Fixed Income A 2-year Federal Government bond with description “12.794 FGNSR 12-Apr2019” will mature Friday, April 12, 2019. Commercial paper with description “UPDC CP XXXIII 11-April-19” issued by UACN Property Development Company Plc with 15% issue yield will mature on Thursday, April 11, 2019. Currency We envisage the stability in the foreign exchange market to continue as a result of regular FX liquidity injection by the Central Bank of Nigeria. Data Release The National Bureau of Statistics to release the Nigerian Domestic and Foreign Debt 2018 report on Thursday, April 11, 2019. Event Economic Associates will host a day conference on Nigeria’s Economic Outlook on Wednesday, April 10, 2019 at Radisson Blu Hotel & Anchorage, Victoria Island, Lagos. The gathering will be bring in attendance policy makers, economists and senior executives to discuss the outlook of the country’s economy Post-May, 2019. www.businessday.ng

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Monday 08 April 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: April 5th – April 12th, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

22.72 23.29

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018 Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

Inflation rate (%) (y-o-y) Monetary Policy Rate (%)

11.31 14

Decreased to 11.31% in February 2019 from 11.37% in January 2018 Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

14 (+2/-5) 44.14 67.55

Lending rate changed to 16% & Deposit rate 9% April 3, 2019 figure — an increase of 5.59% from March start April 5, 2019 figure— no change from the prior week

Oil Production mbpd (OPEC)

1.74

February 2019 figure — a increase of 0.58% from January 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Change(%)

5/04/19

29/03/19

29,616.38 11.12

31,041.42 11.67

(4.59) (4.69)

Volume (bn)

0.40

0.27

50.33

Value (N’bn)

3.49

3.15

10.73

Friday Rate

Change

(%)

(Basis Point)

NSE ASI Market Cap(N’tr)

5/04/19

1-week Change

YTD Change

(%)

MONEY MARKET NIBOR Tenor

Indicators

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

(%)

67.55 2.64

0.00 (2.22)

4.79 (13.61)

2,394.00 95.35 77.58 12.69 465.75

5.93 0.21 1.21 0.63 0.70

23.66 (26.77) 0.10 (17.22) 7.44

1,289.93 15.17 291.15

(0.69) 0.00 (1.09)

(2.10) (11.75) (11.18)

5/04/19

29/03/19

OBB

15.2900

9.8600

543

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

16.1400 15.6500 11.4149

10.6700 11.4000 12.2000

547 425 (79)

Tenor

90 Days

12.6654

12.9200

(25)

1 Mnth 3 Mnths

9.95 11.07

10.86 11.18

(91) (12)

6 Mnths 9 Mnths 12 Mnths

13.92 14.54 14.53

14.10 14.43 14.45

(19) 11 9

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

5/04/19

29/03/19

Friday

Change

(%)

(Basis Point)

5/04/19

5/03/19

Official (N) Inter-Bank (N)

307.00 360.33

306.95 360.68

306.90 360.43

BDC (N) Parallel (N)

0.00 360.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

5/04/19

29/03/19

3-Year 5-Year

0.00 14.35

0.00 14.15

0 21

7-Year 10-Year 20-Year

14.39 14.47 14.57

14.13 14.29 14.27

27 18 30

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

Friday

Change

(%)

(Basis Point)

5/04/19

29/03/19

2,797.88

2,811.91

(0.50)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.42 5.27

8.43 5.30

(0.08) (0.55)

YTD return (%) YTD return (%)(US $)

13.90 -41.94

14.47 -41.34

(0.57) (0.60)

Index

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

3,000.00

10.3

8,385.20

12.2

20-Mar-2019 20-Mar-2019

364 Day

37,176.06

12.345

20-Mar-2019

Global Economy In the US, the Commerce Department reported that the gap between the goods and services that the United States sells and what it buys from other countries dropped by 14.6% to $51.1 billion in January from $59.9 billion in December. Exports rose 0.9% to $207.3 billion, and imports dropped 2.6% to $258.5 billion. With regard to specific countries and areas, China still runs the largest trade surplus with the United States, trailed by the European Union (EU) and Mexico. US goods deficit with China decreased to $33.2 billion in January, down $5.5 billion from December. Elsewhere, business conditions across the Chinese economy improved at the fastest rate for nine months in March, according to the latest Caixin PMI surveys. The Caixin China Composite PMI (which covers both manufacturing and services), compiled by IHS Markit, indicated the largest increase in output since mid-2014. The 'all-sector' output index rose to 52.9 in March from 50.7 in February. The rebound in March was mainly driven by improvement in new works, especially in new export orders, which rose at the second strongest rate since December 2017. In a separate development, seasonally adjusted unemployment rate in the Euro Area was unchanged from previous month figure at 7.8% in February 2019. This is also lower than the rate reported a year earlier at 8.5% According to the European Statistical Office, It remained the lowest jobless rate since October 2008 Domestic Economy The Nigerian Stock Exchange (NSE) published its monthly Domestic & Foreign Portfolio investment report for February 2019. The report revealed that the total transactions at the nation's bourse increased in the month of February 2019 by 54.06% to N188.08billion from N122.08billion recorded in January 2019. Total foreign transactions witnessed an increase when compared to the previous month by 48% to N98.94 billion from N66.85billion the prior month. Total domestic transactions which is split into retail and institutional investors showed that institutional investors outperformed retail investors by 8%. Total retail transactions increased by 38.26% to N41.01 billion in February 2019 from N29.66 billion in January. The institutional composition of the domestic market also increased significantly by 88.15% to N48.13 billion in February 2019 from N25.58 billion in January 2019. There was a significant increase in foreign outflows which jumped by 97.80% to N55.01 billion from N27.81 billion and foreign inflows which climbed by 91.24% to N43.93 billion from N22.97 billion between January and February 2019. In a separate development, businesses expressed optimism on Nigeria's macro economy in March 2019 according to the Central Bank of Nigeria (CBN) monthly Business Expectations Survey (BES) report for March 2019 released last week. The macro-economy index came in at 28.2 points for the month of March. The businesses outlook for April 2019 showed more confidence on the macro economy at 64.8 index points. The respondent firms were made up of small, medium and large organisations covering both import- and export-oriented businesses. The positive outlook by businesses in March 2019, according to the report, was driven by the opinion of respondents from the following sectors: services (16.8 points), industrial (8.6 points), wholesale/retail trade (2.3 points) and construction (0.5 points) sectors. The surveyed firms listed insufficient power supply, high interest rate, unfavourable economic climate, unclear economic laws, financial problems, insufficient demand, unfavourable political climate and access to credit as the major factors constraining business activity in the reference month. Stock Market Bearish Sentiments prevailed on the bourse last week as the all share index declined below the

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

“30,000” psychological mark. The All Share Index (ASI) shed 4.59% to 29,616.38 points from 31,041.42 points the preceding week. Similarly, market capitalization lost 4.69% to N11.12 trillion from N11. 67 trillion the prior week. The negative performance seen in the gauges of market performance reflected intense sell pressure on bellwether counters. This week, we anticipate the equities market will sustain a negative outing as investors continue to tread cautiously. Money Market Cost of borrowing edged up slightly last week following several Open Market Operation (OMO) mop ups conducted by the CBN which tightened system liquidity. Consequently, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 15.29% and 16.14% from 9.86% and 10.67% respectively the previous week. In the same vein, longer dated placements notched upwards. In contrast, the 30-day and 90-day NIBOR closed lower at 11.41% and 12.67% from 12.20% and 12.92% respectively the previous week. Market liquidity is expected to remain strained due to wholesale and retail Secondary Market Intervention Sales (SMIS) scheduled for this week. Foreign Exchange Market The naira witnessed contrasting performances across various market segments for the week ended April 5th 2019. At the Investors' and Exporters window, it gained 35 kobo to settle at N360.33/$ from N360.68/$ the previous week. Meanwhile, at the official window, it depreciated by 5 kobo to settle at N307/$ compared to N306.95/$ the prior week. The parallel market remained unchanged at N360/$ from the prior week. This week, we expect the naira to hover around prevailing levels at the various windows, boosted by the Central Bank's sustained supply of liquidity to the market. Bond Market Last week, bond yields declined further as the market recorded low trading volumes. Yields on the five-, seven-, ten-, and twenty yeardebt papers closed higher at 14.35%, 14.39%, 14.47%, and 14.57% from 14.15%, 14.13%, 14.29% and 14.27% respectively the preceding week. The Access Bank Bond index declined by 14.03 points to close at 2,797.88 points from 2,811.91 points the previous week. This week, we expect the lull to persist as participants remain risk averse. Commodities Oil prices climbed higher last week supported by the OPEC cuts and signs of tightening supplies. The recovery has come as Saudi Arabia has led OPEC in slashing output to compensate for fastgrowing production from US shale, while Venezuela and Iran's output has fallen sharply due to US sanctions. OPEC bench mark crude, rose $2.38, or 4% to $68.76 per barrel. Conversely, precious metals prices declined for the second consecutive week as the dollar rose against the yen on signs of progress in the USChina trade dispute and strong US economic data. Consequently, Gold shed $8.91, or 0.69%, to $1,289.84 an ounce. Silver remained the same at $15.17 an ounce. This week, we expect oil prices to maintain the momentum due to positive signs for the global economy and tighter supplies. For precious metals, higher U.S. labour market figures might put further pressure on bullion values. MONTHLY MACRO ECONOMIC FORECASTS Variables

Apr’19

May’19

Exchange Rate (Interbank) (N/$)

363

Inflation Rate (%)

11.3

11.35

Crude Oil Price (US$/Barrel)

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

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Jun’19 363 11.39 62

Monday 08 April 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 05 April 2019 Company

Market cap(nm)

PRICES FOR MAIN BOARD SECURITIES (Equities)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

BUSINESS DAY

news you can trust I monday 08 APRIL 2019

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Insight

Buhari’s planned tax hikes fail the magna carta test global Perspectives

OLU FASAN

he budget and national planning minister, Udo Udoma, and the executive chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, recently hinted that the federal government would raise the value-added-tax (VAT) rate by 50%, that is, from the current 5% to 7.5% or even 10%. They said the proposed increase was necessary to fund the new minimum wage of N30,000 per month. Understandably, the proposal has provoked mixed reactions, but the preponderance of public opinion is against any tax increase. In a significant intervention, the national leader of the ruling All Progressives Congress, Bola Tinubu, warned against raising the VAT. “Let me appeal to Vice President Yemi Osinbajo and his team to put a huge question mark on anything that concerns VAT”, he said, adding that any increase would reduce the people’s purchasing power and slow down the economy. Unsurprisingly, those who say that Nigeria is in a dire fiscal state favour a hike in tax rates, including a significant rise in the rate of VAT. The IMF, which has always called for the reform of Nigeria’s tax regime, supports the government’s plans to reform and raise the VAT. In a statement after its recent Article IV Consultation on Nigeria, the IMF stressed “the importance of strengthening domestic revenue mobilization, including through additional excises, a comprehensive VAT reform, and elimination of tax incentives.” Well, here’s my take. There are two basic issues that undermine the tax-hike proposal, and a philosophical one: the connection

with the Magna Carta. I start with the two basic points, namely: one, the premise of the proposed VAT increase is flawed; two, the idea itself is counter-intuitive. Why is the premise flawed? Well, because it links the proposed hike in VAT to the funding of the new minimum wage. That’s thoroughly misguided, because it stigmatizes the minimum wage, making it look like a necessary evil. To say that a federal government that had a budget of N7.3trillion in 2017 and N9.1trillion in 2018 cannot fund a rise in the minimum wage without penalizing Nigerians with tax rises is to attach a nuisance value to the minimum wage. But the minimum wage is not a dirty concept; rather, it’s a policy tool that civilised nations use to reduce in-work poverty and income inequality. Even the Nigerian Constitution recognises that imperative. Indeed, significantly, the Constitution uses the words “minimum living wage”, not “minimum wage”. Section 16(2)(d) says that “the State shall direct its policy towards ensuring reasonable national minimum living wage are provided for all citizens”. A “living” wage is defined as “a wage that is high enough to maintain a normal standard of living”. Truth be told, N30,000 per month is not a reasonably high enough living wage to maintain a decent standard of living in Nigeria! The UK introduced the minimum wage 20 years ago, in 1999, at £3.60 an hour, and set up the independent Low Pay Commission to advise on the pace at which it should rise. Since 1999, the UK minimum wage, now called the “national living wage”, has risen faster than average earnings and is now at £8.21 per hour. What’s more, in 2015, the government set a target to reach 60% of median income by 2020, with the aim of ending low pay, meaning a living wage as high as two-thirds of median earnings! Yet, no tax has been raised as a result; no controversy attends the regular increase in the living wage; and no false claims about its potential damage to jobs and the economy. The economist Alan Krueger, who died recently, discredited the basis of such claims with his seminal research on the impact of minimum wages on jobs. Despite its rising

Proposed increase in VAT

Boniface Chizea

ecently discussion regarding the proposal to increase the Value Added Tax (VAT) rate currently at 5 per cent has been trending and as usual there has been opposition to this proposal. I suppose an urgency to this proposal has been found as the fiscal authorities scamper in search of additional revenue sources to fund the recent approved increase on the Minimum Wage. This proposal has been opposed by some very powerful voices which recently climaxed during the Bola Tinubu 67thbirthday colloquium which was held in Abuja on Thursday, March 28, 2019. Bola Tinubu during his remarks at the colloquium had cautioned the government not to dare increase the rate of Value Added Tax as he argued that it could be counterproductive as it would worsen the economic hardship in the land as the purchasing power of the population is further depressed as a result of the price inflation which is bound to follow such proposed increase. Closely aligned with this observation is the fear that such an increase

would affect capacity utilization negatively which will lead to further job losses making an already bad situation worse. Not long after Peter Obi, the Vice Presidential candidate of the People’s Democratic Party (PDP) congratulated Tinubu for his caution to the government as he shared the view that no positive outcome should be expected from the proposed increase but instead tax rates should be relaxed to act as an incentive to investors. He further argues that, ‘It’s extremely unrealistic for anybody to think of growing the economy of this country, and creating jobs just by increasing tax; it is a simplistic approach.’ But as would be explained subsequently, all this opposition is due to the fact that compatriots have a mindset that perceive VAT just like any other tax; which of course reflexively must be opposed but fortunately as would soon be made amply clear it is not. The intention to increase the VAT from the current rate of 5 per cent has been on the cards right from its first outing in 1993 as a replacement to the extant Sales Tax when the initial proposal was a VAT rate of 10 per cent but was upon introduction negotiated down to the current 5 per cent. An attempt was also made to increase this rate following a review of the Act in 2007 without success following wide spread opposition. But my take, up front regarding these remarks is that to a large extent the opposition is populist and ill-informed and are not aligned with the received technical knowledge on this matter. We hope to expatiate and shed better light on this observation during the course of this discussion.

national living wage, the UK has the lowest unemployment rate among OECD countries, because an open, competitive and innovative economy can tolerate a reasonably high minimum wage. So, the idea that the VAT, or indeed any tax, must be raised to fund a minimum-wage increase is a misguided attack on the concept of a minimum wage and an abject failure of public policy. But the second preliminary point is that the idea itself is counter-intuitive. One of the key barriers to industrialisation or the growth of the manufacturing sector in Nigeria is low consumer purchasing power. Industrialisation is not possible without a robust consumer base, and you can’t have a strong consumer base in a low-wage society or in a society where consumption taxes are a disincentive to consumption. Surely, any VAT increase in Nigeria, a country where the people have low purchasing power and are even reluctant to buy “Made-in-Nigeria” goods, would further reduce consumption, harm industries, cause job losses and increase poverty! Given those scenarios, how barmy can the VAT-hike idea be? Sadly, Nigeria has one of the most uncompetitive corporate tax regimes in the world. According to the World Bank, there are 59 tax payments in Nigeria, compared with an average of 37 in sub-Saharan Africa. Multiple taxes are widespread across the three tiers of government. With a corporate tax rate of 30% (19% in the UK) and petroleum profit tax ranging from 50% to 85% (from 19% to 30% in the UK), not to mention heavy “sin taxes” on alcoholic beverages, as well as other special taxes and mandatory contributions, Nigeria has a very uncompetitive tax regime that is not appealing to foreign investors or supporting business growth. Rather, the government sees businesses as milk cows, a source of easily gained income, even though it provides no supportive environment for them to thrive! I mean, Nigeria imposes a tertiary education tax on businesses, yet the quality of tertiary education is so poor that industry can’t find the skills to increase their productivity! Which, finally, brings me to the philosophical point, the connection with the Magna Carta. It is often said that only death

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…to a large extent the opposition is populist and illinformed and are not aligned with the received technical knowledge on this matter

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Nigeria has a very uncompetitive tax regime that is not appealing to foreign investors or supporting business growth

What really is Value Added Tax to ensure that we are all on the same page? VAT is a consumption tax which is a type of indirect tax which the final consumer of designated goods and services are obliged to bear. It contrasts with direct taxes such as the Personal Income Tax, Company tax, Petroleum Profit tax, Capital gains tax etc. This tax is administered by the Federal Inland Revenue Services which collects the receipts into a pool which is shared amongst the Federal Government, the State Governments and the Local governments respectively in the ration of 15, 50 and 35 per cent. The tax does not include all goods and services produced in the country. Exported goods, medicine and Pharmaceutical products, products for kids, basic food items, Commercial vehicles and spare parts, books and educational materials, fertilizers, farming machines, agric. products, transportation and equipment, Vet. Medicines, magazines and newspapers amongst others are all exempt from this tax. Therefore for shouting out loud the application of this tax is selective and not across board as it is being made to appear and for justifiable reasons there is no reason the list of excluded items cannot be increased. The proposal by FIRS is to increase the rate between 35 to 50 per cent that is an increase from the current 5 per cent to 6.75 and 7. 25 per cent. For comparability purposes it is salutary to observe that VAT rates in selected African countries are as follows; Ghana 15%, South Africa 15%, Egypt 14%, Rwanda 18%, Kenya 16%,

and taxes are certain in life. So, taxes are inevitable. But the Magna Carta established centuries ago, in 1215, the fundamental principle of “no taxation without representation”. Ah, you may say, but Nigerians have been electing their leaders and, in fact, just elected new leaders in this year’s elections. Well, that’s true, but the principle goes beyond mere elections; it’s also about proper representation and linked inextricably to the social contract basis for the legitimacy of the state. But the social contract doesn’t exist in Nigeria. Successive Nigerian governments have woefully failed the people. Nigerians lack basic things taken for granted in even poorer nations. Nigeria, as we know, is the poverty capital of the world, with over 90m of the people living in extreme poverty. According to a recent UN report, two-thirds of the world’s hungriest people live in Nigeria and seven other countries, and Nigeria is home to the 6th most miserable people in the world. Nigeria languishes at the bottom of all the World Governance Indicators, particularly government effectiveness. It’s no wonder that there is deep distrust between government and citizens in Nigeria. According to Heritage Foundation, Nigeria has the second lowest government integrity in the world. To be sure, there is a chicken or egg conundrum about taxes. Citizens who pay taxes hold their government to account, while governments that fail and lack legitimacy in the eyes of the people will struggle to raise taxes. Both situations exist in Nigeria. Most Nigerians don’t pay taxes and so don’t hold government accountable. The government, on the other hand, lacks legitimacy and can’t secure voluntary tax compliance. Taxes may be as certain as death, but without proper representation, without a meaningful social contract, they won’t be a certainty in Nigeria! That’s the Magna Carta test.

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

Angola 10% Algeria 19%. Therefore even if the proposed increase is allowed, the rate of VAT in Nigeria will still remain the lowest in the African Continent. The imperatives of this proposal is anchored on the urgent need to diversify the revenue base of the country from the unwholesome situation whereby government revenue is dependent up to 70 per cent on the extractive sectors of the economy. It must be noted here that the attempt to achieve this desired diversification of the economic base has been on the cards since the introduction of The Structural Adjustment Program in 1986 without any noticeable never mind desired progress. There is also the need to urgently find other revenue sources to commence the termination of the current practice whereby the country borrows to pay salaries and also in view of many funding gaps for meeting the requirements of other desirable social investments. We are not unmindful of counter proposals by some powerful voices to the effect that the salaries of principal fiscal authorities should be halved to generate such money. To my mind, that misses the point as the responsibility of the determination of the levels of remunerations in the country is domiciled with the National Salaries, incomes and wages Commission and the argument really is that we have an anomaly on our hands which we must seize the next opportunity to rectify. Continues online @www.businessday.ng

Dr Chizea writes from Lekki, Lagos

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