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news you can trust I **WEDNESDAY 08 AUGUST 2018 I vol. 15, no 113 I N300

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TONY AILEMEN, CHRIS AKOR, DIPO OLADEHINDE, ENDURANCE OKAFOR

esterday’s raid of the National Assembly by the State Security Service (SSS) has raised the country’s political risk profile further,

leading to major selloffs in Nigeria’s stock and bond markets. The bond market witnessed a spur of activity during yesterday’s session, as a flurry of headline political news dominated trading sentiments over the course of the session. “We witnessed continued

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 362.23

0.00 362.68

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Offshore bondholders panic, stocks fall as Nigeria political risk escalates businesses put major investment decisions on hold

Currency Futures ($/N)

fgn bonds

Treasury Bills

Osinbajo summons Chief of Staff, IGP, EFCC chair

selloff by offshore clients mostly on the 2027s and 2028s as tensions in the political space further strengthened their recent bearish position on the market,” Zedcrest capital analysts led by Oluwatosin Ayanfalu said in a late note to clients. Nigeria’s secret police boss

was fired hours after armed security agents temporarily blocked the entrance to the National Assembly in a sign of heightening political tensions before elections in February. Vice President Yemi OsinContinues on page 38

Nigeria’s sesame gains traction as farmers ramp up production ... now 2nd most important non-oil export crop after cocoa Josephine Okojie

igeria’s sesame seed is fast gaining traction in the global market as farmers’ ramp up production in efforts to explore opportunities to earn substantial dollars through non-oil export. Nigeria, the world’s third largest producer and supplier of sesame seed, saw the volume of its global supply increase by 7

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Personnel of the Department of State Security (DSS) barricading the main gate of National Assembly in Abuja, yesterday. NAN

Staff of National Assembly and journalists barred from entering the National Assembly Complex due to barricade of the main gate by personnel of the DSS at the Assembly’s complex in Abuja, yesterday. NAN

CBN sees scope to hike rates before 2019 elections

Inside

… Analysts raise concern on impact on growth, weak economy HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) may raise its benchmark interest rate before the general elections, according to Joseph Nnanna, Deputy Governor.

Nnanna who spoke at a conference in Egypt said the CBN is “in the mood” for tightening and will increase its main interest rate if inflation doesn’t slow. He was quoted by Bloomberg to have said, “Every member of the Monetary Policy Commit-

tee is certain that the monetary policy rate should increase if inflationary pressures build up. Our intention is to ensure that the interest rate is kept positive

Continues on page 4

AB InBev plans second new P. 38 brewery in Nigeria

Duet invests N15bn in Big Cola in first ever Nigerian deal

…as consumer goods deals hit N37bn LOLADE AKINMURELE, ABDULLATEEF ENIOLAGIWA & OLUWATOSIN DOKUMU

i g e r i a n s o f t- d r i n k Company Big Cola has secured a $50 million (N15.3 billion) investment from UK-based Duet Partners, in a deal that could help the company compete better in the saturated consumer goods space. Duet Private Equity Limited,

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2 BUSINESS DAY NEWS Nigeria rig count falls as oil prices rally DIPO OLADEHINDE

s oil prices soar, Nigeria’s rig count for the month of July hit a slight decline to 32 as against 33 rig count recorded in May, at a time the 14-member Organisation of Petroleum Exporting Countries (OPEC) also recorded a decline of minus 13 rig counts while the total world rig count increased by 55. BusinessDay analysis of the report of OPEC showed that since the beginning of 2018 Nigeria’s oil rig count has been hovering around 32 to 33. According to online sources Petropedia.com, Rig count is an official listing of all the oil and gas rigs that are operational at a certain location. It also demonstrates the necessary details such as the location of each rig and its functional status. Data obtained from OPEC for the month of July showed OPEC highest oil producer Saudi Arabia’s rig count fell by 8, having had a rig count of 139 in June, as against 147 recorded in May. Venezuela’s rig count fell by 2 as it recorded 68 as against 70, within the period under review. Abayomi Fawehinmi, an energy analyst in a Lagos based oil firm said oil rigs are indications of drilling activities going on in a country’s oil sector however it can be very dodgy at times. “Some rigs are like beasts and drill faster, cheaper and better than the others while some other rigs can also be docile,” Fawehinmi told BusinessDay. Gabon and Qatar rig count fell by one each to 3 and 10 respectively in July 2018 as against 4 and 11 respectively in the month of June 2018. Eight countries, Algeria, Angola, Equatorial Guinea, Iran, Iraq, Kuwait, Libya and the United Arab Emirates (UAE), had zero change in their rig count, with 50, 4, 1, 61,

60, 54, 1 and 54, respectively. “So a country can let go of 3 old rigs and get a new one that is better than all the 3 old rigs combined,” Fawehinmi told BusinessDay by email. World rig count showed an upward move of plus 55, as it recorded 2, 232 in June, as against 2,177 recorded the previous month. There was also an upward move of plus 67 for non-OPEC rig count, which jumped to 1,688 in June, compared to the 1, 621 it recorded in May. Leading the OPEC loss pack was Algeria, which had minus five, having recorded 50 as against 55 during the period under review. It was followed by Saudi Arabia, which had a loss of four, following its record of 142 rig count in December, as against 146 rig count recorded the previous month. The United States showed an increase of 11, having deployed 1, 056 rigs in June, as against 1, 045 deployed the previous month, while Canada had plus 53, as it deployed 136 rigs in June as against 83 rigs deployed the month before. The OECD members witnessed a rig count of plus 65, having recorded 1, 319 as against 1, 254 recorded within the period under review. The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets. The company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975. According to data obtained from the Bloomberg terminal, Brent crude, the international benchmark was trading around 0.95 percent higher at $74.45 on Monday, while West Texas Intermediate futures rose 0.33 percent to trade at $69.24.

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L-R: David Alan Smith; Kent Alfred Dean Clark; Cletus Ibeto, chairman, Ibeto Group; Dave Umahi, Ebonyi State governor; Amanda Jo Wester, head of delegation; Patrick Richard Mokros, and Egerton Foster, during the working tour to Ibeto Cement Company - Nkalagu Plant in Ebonyi State by the American Actualisation Team

Decisive month for Buhari as AfCFTA deadline nears ODINAKA ANUDU

igeria has until August 30 to sign the African Continental Free Trade Area (AfCFTA) without which the country may be excluded from spirit and letters of the treaty, at least temporarily. The world will not end if Nigeria does not sign the treaty, but investors will prefer Rwanda which has access to 1 billion people (in Africa), a potentially bigger market, than the protectionist Nigeria with an access to just about 200 million people, analysts warn. Other countries will also move on without Nigeria and the country will be a late comer by the time it makes up its mind to sign, they warn. “The fact that Nigeria does not sign does not mean that anybody will wait for Nigeria. It will simply mean that life will go on without Nigeria, and then it becomes progressively much more difficult for you to catch up because, eventually, to the extent that you do not want to cap your growth, to the extent that you do not want to lose the market opportunities that you

have, you still have to sign,” Babajide Sodipo, regional trade adviser at the African Union Commission, said at the just concluded 12th Annual Business Law Conference of the Nigerian Bar Association Section on Business Law (NBA-SBL) in Abuja. Nigeria kick-started the AfCFTA negotiations but pulled out in March, purportedly on the concerns of manufacturers and labour unions. BusinessDay earlier reported that Muhammadu Buhari’s decision was based on consideration of what certain parts of Nigeria stood to gain or lose. The AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994, targeted at creating a single market for Africa’s 1.2 billion people and exposing each country to a $3.4 trillion opportunity. The deal is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all African countries sign up. There will be free movement of labour and people, meaning that a lawyer in Nigeria can serve the entire African market without restrictions. Nigeria has almost 200 million population, while Africa’s population is 1.2

billion. The Manufacturers Association of Nigeria (MAN) believes that the AfCFTA is shrouded in secrecy and that Nigeria will be worse for it if the country signs the agreement in its current form. MAN says it is coming up with studies to determine the impact of the AfCFTA in three weeks. “We have always said Nigeria should sign. We know we have a problem with manufacturing, but the totality of our economy is not about manufacturing, which contributes less than 12 percent to the GDP. Services alone contributes up to 55 percent,” Babatunde Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), said. “It is Nigerian banks that are pushing the Ghanaian economy and an average Nigerian will be able to set up a shop in another country,” Ruwase said. Forty-four countries signed the AfCFTA in March in Kigali, but 49, including South Africa, which earlier refused to sign, have now joined the fray. The treaty will liberalise 90 percent

Continues on page 38

Lack of funds, not knowledge main reason Nestle benefits from FX stability Nigerian millennial’s are not investing as earnings surge 30% DAVID IBIDAPO & OMOBOLA ADU

alf year (H1) results of Nestle Nigeria Plc, a unit of the world’s biggest food company, reveals that profit after tax (PAT) grew by 30 percent to N21.5 billion in H1 2018 from N16.5 billion in H1 2017. BusinessDay analysis shows that the relatively stable exchange rate environment witnessed in the first half of the year 2018 in Nigeria has impacted significantly on the earnings growth of Nestle Nigeria Plc. A critical look into its financials discloses that the first half of 2018 has been a good half so far for the company. As a result of the stable value of Naira against the US dollars, the company was able to cut down heavily on its Net foreign exchange loss by 99 percent during the period. As at H1 2017, Net foreign exchange loss stood at N5.17 billion, however, in H1 2018, net foreign exchange loss was as low as N50.19 million.

Interest expenses on financial liabilities and finance expenses also declined by 52 percent and 85 percent respectively. Analysis reveals that Nestle reduced levels of borrowing from financial institution and intercompany loans. Excluding the impact of foreign exchange differences, the company borrowed less from companies within the sector. Intercompany loans amounted to approximately N485 million which represents a decline of about 65 percent from initial intercompany loan of N1.37 billion recorded in H1 2017. The largest listed consumer goods firm also grew its revenue in H1 2018 by 11 percent to approximately N135.3 billion from N121.9 billion in H1 2017. Nestle Nigeria is about 64 percent owned by Switzerland’s Vevey-based Nestle SA. The company makes Maggi cube seasoning and Milo cocoa as demand for packaged foods grow in Africa’s largest economy. Nestle Nigeria stock is up 51 percent in the past year.

Omobola Adu, Emeka Ucheaga & David Ibidapo

nvesting in financial securities may be the only way to secure a rich and prosperous future but millennial’s just aren’t taking advantage of the investment opportunities available today. Millennial’s are individuals born between 1980 and 1999. With an estimated total population of 105 million people, millennial’s account for more than half of Nigeria’s population. A survey conducted by BusinessDay revealed that millennial’s are not actively participating in the financial and real estate market. Up to 63 percent of millennial’s don’t own stocks, 71 percent don’t invest in treasury bills or bonds and as much as 84 percent have no investment in real estate. You will think they must be saving up their funds to run a business but as many as 64 percent of millennial’s say they don’t own a business. When asked why they don’t invest, they asserted “lack of funds.” 55 percent of millennial’s blame their low participation in the in-

vestment market to unavailability of funds. 27 percent say they don’t have sufficient knowledge about the market, while a remarkable 3 percent say they have stayed away from investing because it’s too risky. With half of Nigeria’s population not investing, it’s not rocket science to figure out why equity market transaction volumes have stagnated in recent years. About 32 million millennial’s in Nigeria cumulatively earn an estimated N27.9 trillion annually, using the per capita income of N873,144 in Nigeria. That’s more than double the total equity market capitalization today and 3 times Nigeria’s 2018 budget. While the national millennial income makes these young folks seem like a wealthy demography, the N27.9 trillion annual income breaks into only N72,762 per millennial every month. This paltry sum places them in the working class group, below the middle class group of the elder population.It becomes more comprehensible when millennial’s blame their poor participation on lack of funds. Investment firms must then create more financial

products that give millennial’s access to a diversified portfolio in the financial and real estate market not only to help in securing the future of these millennial’s but also to get a big bite from the N27.9 trillion millennial purses. It is also important for investment firms to work harder in creating awareness of the available investment products to ensure that lack of knowledge is no longer a hindrance to investing for millennial’s. With inflation running hot, savings with single digit inflation cannot be enough to protect the purchasing power of millennial’s. Since 2009, equities have returned 15.8 percent, bonds have returned 13.84 percent and Treasury bills have returned an average of 12.4 percent. Creating low cost retail financial products is only way forward for both the financial industry to build their asset base and millennial’s to get more exposure into the dynamic and rewarding financial market.

See full report in BusinessDay on Friday

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Nigeria’s sesame gains traction as farmer’s ramp... Continued from page 1

L-R: Mbanugo Udenze, company secretary, C & I Leasing plc; Alex Mbakogu, chief finance officer/executive director; Bola Adeeko, head, shared services division, Nigerian Stock Exchange (NSE); Andrew Otike-Odibi, MD/CEO, C & I Leasing plc; Ikechuku Duru, director, and Maureen Ogbonna, company’s group head, corporate services, at the Facts Behind the Figures of C & I Leasing held at the Nigerian Stock Exchange, Lagos, yesterday…

CBN sees scope to hike rates before ... Continued from page 1

in real terms.” Analysts in the financial services sector yesterday raised concern on the implication of any Monetary Policy Rate (MPR) hike on the fragile economy. Reacting to the development, Razia Khan, Managing Director/Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank, said, “given that non-oil growth is as weak as it is, any meaningful tightening would be wrong for current economic conditions.” The Monetary Policy Committee (MPC) has held its key rate at a record 14 percent since 2016 in a bid to prop up the naira and tame inflation after it spiked to double digits in the same year. While inflation rate has since slowed to below the monetary policy rate, the MPC has shifted from some members voting for rate cuts in January to three of 10 members favouring higher rates at the July meeting. “Although inflation is not yet at the single digit target rate, we should begin to consider expansionary measures rather than further tightening. Even though

spending is likely to increase during election, this will not be at a scale that is sufficient enough to warrant further tightening otherwise we risk hurting the fragile GDP growth rate,” Taiwo Oyedele, head, Tax and Regulatory Services, PWC, said. Inflation has been on the downward trend since January 2017 and the current rate of 11.23 percent is the lowest since January 2016. On the other hand, economic growth is slow at just below 2 percent in Q1, 2018. Godwin Emefiele, governor of CBN, at the last MPC, noted that the downside risks to growth outlook include: continuing delay in the implementation of the 2018 budget; worsening farmer-herdsmen conflicts in some parts of the country; continued non-payment of workers’ salaries and pensions in some states; rising sovereign debt, as well as uncertainties surrounding the direction of trade, including the external demand for Nigeria’s oil. The Independent National Electoral Commission (INEC) has scheduled the 2019 Presidential and National Assembly elections for Saturday, February 16, 2019,

Duet invests N15bn in Big Cola, in first ever .... Continued from page 2

a principal investor in emergingand frontier markets, formally announced on August, 1st 2018 that it has acquired a majority stake in AJEAST Nigeria Limited, manufacturers of Big Cola. The deal marks Duet’s 6th investment in the FMCG sector in Sub Sahara Africa, and its 1st ever in Nigeria. Proceeds of the investment will be used to accelerate in select international territories, facilitate the launch of new products and brands, and increase our production capacity and volume, AJEAST told BusinessDay. The company will also further intensify its focus on targeting a young demography of growing socio-economic segments, capturing both the significant advance of middle-income households, as well as the demographic dividend of the region’s expansive youth base. The deal marks the fifth in the Nigerian consumer goods sector this year, following Affelka’s

N21.45 billion buyout of Nigerian minority shareholders of 7up in January, De United Foods Industries Limited (Dufil) N775 million investment in Mimee noodles in April and Africa Capital Alliance (ACA)’s investment in Daraju Industries in July. Echo venture capital’s investment in online fresh food shopping firm, Easy Shop Easy Cook, in April makes up the numbers. The consumer goods sector in Nigeria has been tipped to continue to attract private equity interest, given its fast growing population which the UN estimates to hit 300 million by 2050, only behind China and India. However, latest data from the Nigerian Bureau of Statistics (NBS) showed that in real terms, consumer spending fell 1 percent year-on-year in 2017, despite an 11.4 percent increase in employee income, the first increase since 2015. The GDP of Africa’s most populous nation grew 1.95 percent in the first quarter, with full-year forecasts largely tilting towards 2 percent.

while the Governorship and State Assembly/Federal Capital Territory (FCT) Council elections have been scheduled for Saturday, March 2nd, 2019. Emefiele also flagged the delayed passage of the record 2018 budget of N9.12 trillion ($25 billion) and preelection spending as possible price risks in the second half of the year. “These factors would warrant a rate increase to send the right signal to the public, that the central bank will tighten policy to respond to higher inflation,” Nnanna said. “There’s a scope to raise rates before the elections in February.” In his response, Uche Uwaleke, associate professor and head, banking and finance department Nasarawa State University Keffi, Nasarawa State, said, “I do not see the MPC further tightening monetary policy before the general elections.” This, he said is because even though the CBN is supposed to be independent the reality is that in the coming months leading up to the polls, the political mood will play a key role in MPC decisions. “I think the CBN Deputy Governor gave his personal opinion. Recall that even in the last MPC, only a few members voted for a “At Duet we strongly believe in the African consumer growth story,” said Henry Gabay, CIO at Duet Private Equity Limited and Co-Founder at Duet Group. “As the number of middleincome households in Nigeria and select West-African markets keeps expanding, and more consumers are entering the formal economy through urbanisation, the demand for products such as BIG Cola will grow exponentially,” Gabay said. Manish Rungta, Managing Director at Duet Private Equity Limited, said: “We are delighted to work together with AJE Group to continue the footprint expansion of brands like BIG Cola in African markets. “With its value proposition, AJEAST is uniquely positioned to capture market share in the rapidly expanding segment of affordable, high quality consumer goods,” Rungta said. AJEAST is the Sub-Saharan Africa subsidiary of AJE Group, globally one of the largest multinational non-alcoholic beverage manufacturers. The Company was officially launched in Nigeria in September 2015, with a factory near Lagos. Continues on wwwbusinessday online.com

percent, from 432,900MT in 2015 to 460,988MT in 2016, according to data compiled by the Food and Agricultural Organisation (FAO). Industry players say there will likely to a 20 to 40 percent increase in production when numbers for 2017 is made available, noting that the country has drastically increased its sesame seed production in recent years. “There is a high demand for Nigeria’s sesame seed in the international market now and a lot of farmers are growing the crop because of the huge export potential. Last year alone, we ought to have increase our production between 20 and 40 percent,” Victor Iyama, president, Federation of Agricultural Commodities Association Nigeria (FACAN) told BusinessDay. “In 2017, we exported over 300,000MT tons and we can do over 500,000MT this year because the demand for our sesame in the international market is very high,” Iyama said. He said that the industry is currently worth about $700 million and that the crop requires a short period to grow. Sesame seed production is steadily growing by the day and it is now Nigeria’s second most important non-oil export crop after cocoa, National Bureau of Statistics (NBS) data show. Data from NBS shows that sesame seed export increased by 105 percent year on year from N13 billion in Q1 2017 to N27 billion in Q1 2018. A total of N42 billion worth of sesame was exported in 2017, according to the NBS. “Sesame is one agricultural produce that does not have any quality challenges. Moisture is not a major issue because the crop is very easy to dry,” Madu

Obiora, former chairman-export group, Lagos Chamber of Commerce and Industry (LCCI) said in a telephone interview. “Despite the fact that we are growing more sesame seeds and the demand for it is increasing daily, we are yet to get the full benefits in growing the crop because of the very low investments in processing. The big money is in value addition,” Obiora said. The bulk of Nigeria’s sesame seeds are exported to Asia, Europe and the United States. Sesame crop thrives well in the northern part of the country owing to its drought resistance nature. It is mostly grown in Jigawa, Bauchi, Borno, Yobe, Adamawa, Taraba, Abuja and some parts of the South West. It can also be grown in some parts of the South East and South-South. “Sesame has a lot of potentials. It has both commercial and medicinal value and oil extracted from the seeds is better than every other seed oil,” Mutairu Mamudu, national president, Sesame Farmers Association of Nigeria told BusinessDay in a telephone response to questions. “It is 100 percent free of cholesterol and that is why the demand for it is very huge both locally and internationally,” said Mamudu. Currently, prices of a metric ton of sesame seed in Nigeria has increased by 29 percent from N350,000 in April to N450,000 in August. “A lot of exporters are trooping our farmland looking for sesame to buy. Some are even willing to buy from us directly from the farm before you harvest,” Danladi Mohammed, a sesame farmer in Kebbi state said.

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Fresh hope for civil servants as implementation of new conditions for accessing NHF loans begins CHUKA UROKO

ope is on the way for civil servants, especially those who contribute to the National Housing Fund (NHF), as the Federal Mortgage Bank of Nigeria (FMBN) commences the implementation of new approved conditions for accessing loans from the fund. The new condition for accessing loans from the fund is a continuation of a renewed FMBN management drive to break down longstanding financial barriers to home ownership by Nigerian workers. This includes zero equity contribution for the provision of housing loans of up to N5 million and 10 percent contribution for housing loans ranging from N6 million to N15 million by contributors to the NHF. The revised requirements, which were recently approved by the FMBN Board, represent a 100 percent reduction in the equity that contributors to the housing fund were hitherto expected to bring before they could

access the housing loans i.e. 5 percent and 20 percent for the two housing loan bands of up to N5 million and N15 million, respectively. The implication of this is that contributors to NHF who want to buy a house, say, two bedroom bungalow can conveniently apply for loan from the fund without fear of being asked to bring up to 20 percent or 30 percent equity contribution, which remains a major barrier to housing loan in the country. This means that a lot more civil servants will be able to buy houses, leading to improved social security, high productivity, more contributions to GDP, and also reduction in the ever-widening housing demand-supply gap which, as at today, stands at 17 million units. “This downward revisions represents a key milestone in the new executive management’s drive to ensure that more Nigerian workers can afford decent and quality housing,” Ahmed Dangiwa, managing director/CEO of FMBN, said in a statement

obtained by BusinessDay in Lagos. “I am delighted that we have been able to achieve this ground-breaking feat. It is a huge win for the Nigerian workers and particularly those that contribute to the National Housing Fund (NHF). “It will go a long way towards reducing the financial burden of homeownership that contributors to the fund have been carrying for the past three decades,” Dangiwa added, recalling that when they came on board, they realised that the existing equity contribution put too much pressure on workers. “I am glad that today, we have been able to crash it by over 100 percent,” he enthused. He advised existing contributors to take advantage of the new friendly conditions to secure loans to purchase or build their homes, calling on those who were not currently registered with the NHF to do so through FMBN offices located in the states nationwide so they too could take advantage.

NCC to regulate lottery on telecoms’ platforms … to reap tax benefits JUMOKE AKIYODE-LAWANSON

ll lottery activities including gaming on mobile telecoms’ platforms will now be regulated by the Nigeria Communications Commission (NCC). This is coming after the National Lottery Regulatory Commission (NLRC) signed a memorandum of understanding (MoU) with the NCC on Monday, after a review of the existing document to accommodate new industry trends, streamlining the strategies needed to ensure the implementation of the MoU. It was revised that the NCC would withdraw their approval whenever NLRC withdraws its permit from service providers for lottery, considering the fact that NCC gives approval only when permit has been obtained

from NLRC. Umar Garba Danbatta, executive vice chairman, NCC, said lotteries all over the world was electronically driven, and there was no better infrastructure that was amenable to the conduct of lotteries in Nigeria than the telecoms infrastructure. “Bringing any additional service on the infrastructure adds additional burden to the networks. Therefore, the Commission is concerned that any additional service added to the networks could or may degrade quality of service. “That is why the NCC has to be involved to ensure that telecom operators who will be participating in hosting the lottery services have the capacity to do so whereas the NLRC will ensure the credibility of the process by making sure that whatever prices promised those who will par-

ticipate in the lotteries are given to them,” Danbatta said. Lanre Gbajabiamila, acting director-general of the NLRC, said the NLRC needed to sign the MoU since the lottery and gaming industry was merged with the telecoms industry. Gbajabiamila said, “Lotteries have been in retail shops, but now, it has advanced to telecommunications platforms whereby Value Added Services (VAS) providers and telecoms service providers use the telecommunications platforms to do lotteries and gaming, hence we needed to have this collaboration and MoU signed.” With this new agreement, the telecoms regulator says it will ensure that proceeds of lotteries go to the price winners and some will go to charity. There will also be tax benefits to government as well as to NLRC and NCC.

Private sector’s investment in teachers’ capacity to tackle high need challenges KELECHI EWUZIE

ndustry experts in the education sector insist that continuous investment by private sector in teacher capacity development will tackle the challenges that high need schools face, and unshackle them to contribute to economic development. Lai Koiki, executive director, Greensprings School, says teacher training plays a vital role in the development of not just individuals, but also the society. According to Koiki, if managers of the economy understand what good education can do for an individual and the nation

in general, then Nigerians need to be worried about the state of education currently. Speaking after an interactive session with a team from Teach for Nigeria in Lagos, Koiki says partnering the Teach for Nigeria initiative is targeted at up-scaling teacher capacity, which is the engine room of human capital development aimed at economic growth. She further says the management of the school will continue to impact the teaching profession because the vision of the school is to reach all the children in Nigeria. Folawe Omikunle, CEO, Teach for Nigeria, while speaking about the initiative, states that the organisation adapted

an approach where outstanding individuals are recruited and trained over a period of time, then are place to teach in high need schools. According to Omikunle, “Last year, we placed 45 outstanding individuals in 25 schools across Lagos and Ogun states. They have being teaching and impacting academic achievement, aspirations, attitude across the schools they are in. right now they are impacting 2,700 pupils and this year, we are looking to scale and expand the numbers.” She says the organisation has selected 205 fellows who are undergoing training at Greensprings Schools, which is the most valuable partner that they have locally.

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BusinessDay’s journalist wins 2018 ‘Nigeria’s economic diversification will fail if oil, gas sector collapses’ OFAB Nigeria Media Award OLUSOLA BELLO, FRANK UZUEGBUNAM & STEPHEN ONYEKWELU

usinessDay reporter, Josephine Okojie, has emerged winner of the Open Forum for Agricultural Biotechnology (OFAB), Nigeria chapter, awards. Josephine won the “Best Agric Biotech Reporter (Print) in Nigeria in OFAB’s second edition of the awards. Her work was selected from an array of agricultural reporters from the print media after a rigorous selection process conducted by an award selection committee headed by Rose Suniso Gidado, country coordinator, OFAB Nigeria chapter. According to Gidado, Josephine selection was based on her deep understanding of biotechnology, clarity of interpretation, scientific accuracy, originality and value in foresting a better public understanding on biotechnology as well as the quality of research. “Josephine’s work was very unique and distinctive. It is an award winning write up anywhere,” she said. Josephine is a graduate of Economics and Statistics from the University of Benin, and started journalism with BusinessDay Media as an analyst, before reporting

Josephine Okojie

on agriculture. She has also won the Nigeria Agricultural Award for Agricultural Reporting in 2016. OFAB is an initiative of the African Agricultural Technology Foundation (AATF) hosted by the National Biotechnology Development Agency (NABDA). In its tradition, BusinessDay, Nigeria’s leading business and financial newspaper, covering business, finance, economy, banking, politics, health and arts, among others, has produced award-winning journalists, including Anthony Osae-Brown (editor), Obinna Emelike, Patrick Atuanya, Iheanyi Nwachukwu, Odinaka Anudu, Teliat Sule, and Isaac Anyaogu, among many others.

takeholders in the oil and gas industry have cautioned that the much sought after diversification of Nigeria’s economy will fail if oil and gas sector is allowed to collapse for lack of investment, policy somersaults and an unfavourable business environment. There has been no investment in exploration and appraisal activities in the last 10 years, which is leading to decline in oil reserves discovery. Most of the current investment inflows into the sector have been for production, which is not good for the economy. Experts with deep knowledge of the matter said this on Tuesday, at a panel session at the ongoing annual conference of the International Society of Petroleum Engineers holding in Lagos, with the topic, “Emerging Economic Diversification Era in Nigeria: Challenges, Policy Frameworks and Prospects for the Oil and Gas Industry.” Odein Ajumogobia, Nigeria’s former minister of state

for petroleum, delivering the keynote address, warned that there was an increasing oil and gas consumption threat to Nigeria, which required pragmatic action on the part of government to reverse the lack of development in the upstream sector due to lack of clarity in policy. Nigeria may go the way of Indonesia, which was a net exporter turned into net importer of crude oil. “Our long honeymoon is over. If we continue the way we are going, Nigeria might become a net importer of crude oil. With its population growing at 3.6 percent per year, if nothing is done about reserves replacement and production we will soon go the way of Indonesia,” Ajumogobia said. Some of the factors that impede diversification include lack of human capacity development due to a failing education system, ease of doing business and electricity. Wumi Iledare, professor of petroleum economics and policy research, said, “If we

have to diversify, the educational system needs attention. If the educational system collapses, there is no hope for diversification. We need human capacity to develop the oil and gas assets that Nigeria is endowed with.” Nigeria can easily diversify into agriculture because of its multiple value-chain developments and the fact that these developments will rob off on other sectors of the economy. Other areas are the service sector, manufacturing, unlocking the infrastructure, which will have huge impact on employment and boost household spending, Ademola Adeyemi-Bero, managing director/CEO at First Exploration and Production Development Company Limited, suggested. To move from a rental economy to one that is more productive, Nigeria needs disciplined leadership. “You must invest; put money aside for the rainy day. Nigeria and Norway started out at the same production capacity of 2.4 million barrels, decades

ago, but Norway today has a sovereign wealth fund of $1 trillion and Nigeria struggled to save $1.5 billion,” Austin Avuru, managing director/ CEO at Seplat Petroleum Development plc, said. Power generation and distribution, real estate and attracting both domestic and foreign investments should be integral to the diversification effort through an enabling business environment. “Nigeria needs to be able to develop its real estate sector with a growing population, attract $125 billion in domestic investment and $60 billion in foreign investment annually,” Andrew Nevin, advisory partner and chief economist at PricewaterhouseCoopers (PwC), said. Amy Jadesimi, managing director at LADOL, a logistics company, disagreed with the received wisdom about what an enabling business environment was, saying some investors who insist on enabling business environment often believe in zero risks and high returns.

Over 200 change makers from 22 nations attend 2018 APF

frican Philanthropy Forum (APF) convened over 200 philanthropists, social investors, heads of foundations and industry experts from 22 countries to its fifth annual conference at the Wanderers Club, Illovo, Johannesburg on August 1 and 2. The annual event kicked off on July 31 with a pre-conference reception at the Nelson Mandela Centre of Memory before which delegates were taken on cultural sites visits to the Apartheid Museum, Nelson Mandela House and Hector Pieterson Museum to get immersed in the culture and history of South Africa. The conference was opened with a tribute to Nelson Mandela by Napo Masheane, who mesmerised delegates with beautifully crafted words that showcased the essence of Nelson Mandela and the spirit of South Africa. Tsitsi Masiyiwa, board chair, APF set the tone of the conference with a welcome address that challenged delegates to dig deeper, think bigger and move beyond speaking about prevalent issues and solutions to actually nurturing and implementing initiatives that would transform the continent. According to Masiyiwa, the potential of Africa is within our power to birth, but it will take cooperation on a massive scale between all stakeholders. During the opening remarks, Judy Dlamini, executive chairman, Mbekani Group and recently appointed Chancellor of Wits University, pointed out that non of the issues in Africa was insurmountable and that each one of them could be resolved by individuals and resources within the continent. Over 60 speakers discussed topics around the theme “Po-

tential and Reality: Bridging the Gap,” covering major issues such as the population explosion in Africa, healthcare, gender equality, climate change, leadership, education and the role of next generation philanthropists in the growth and development of Africa. Speakers and delegates at the Conference also highlighted loopholes that educated active citizens can fill to propel the continent forward. Some of the speakers present at the two-day Conference include: Graca Machel, Founder Graca Machel Trust, H.E Ameenah Gurib-Fakim, former President, Mauritius, Dr Judy Dlamini, Executive Chairman, Mbekani Group, Gbenga Oyebode, Board Member, APF and Founder, Aluko and Oyebode, Lord Michael Hastings, Head, Global Citizenship, KPMG, Dr Obiageli Ezekwesili, Senior Economic Advisor, AEDPI, Kareem AbdulJabba, former NBA star, Serge Ibaka NBA Star, Siya Kholisi and Tendai Mtawarira both Rugby stars amongst others. The atmosphere of the 2-day Conference was uplifting and the collaborations and discussions impactful. Key takeaways from the event which comprised of 11 Plenaries, 2 Fireside Chats, and 4 Nuts and Bolts sessions include, the urgency for unity across borders on the continent and the role of philanthropists in acting as mediators of crosssectorial collaborations to cultivate trust and long lasting impact and relationships, investing in research on the continent that is tailored to solving African problems, the need to align initiatives to the SDGs for continent wide impact and to fill the loopholes created by lack of collaboration in immediate environment.

L-R: Uzoma Nwagba, chief operating officer, government enterprise and empowerment programme, office of the Vice President; Victor Afolabi, CEO, GDM Group; Toyin Adeniji, executive director, Bank of Industry, and Titilayo Razak, a beneficiary, during the inauguration of ‘Trader Moni,’ an initiative of the Federal Government for Micro Small Medium Enterprise, at Ojuwoye Market, Mushin, Lagos. Pic by Pius Okeosisi

NCAA commences investigation into security breach at Sokoto airport JONATHAN ADEROJU

igerian Civil Aviation Authority (NCAA) has commenced a fullscale investigation into the wanton security breach that occurred on Friday, August 3, at the Sultan Abubakar Sadiq 111 Airport, Sokoto. The authority is in receipt of reports of a huge crowd that flagrantly broke all security rules and gained unauthorised access to the safety critical areas of the airport. These include runway, taxiway and apron. The Nigerian Civil Aviation Regulations (Nig.CARs) Part 17.48.3(c), stipulates that “access by persons and vehicles to restricted areas, enhanced security restricted areas and sterile areas is restricted only to persons who have a clear

need for such access by virtue of their duties.” In addition, the National Civil Aviation Security Programme (NCASP), 6.3.1. states “in accordance with the appropriate legislation, no person to whom the legislation applies, shall enter or remain in a Restricted Area, Enhanced Security Restricted Area, or tenant restricted area unless that person has in his or her possession a Restricted Area or Tenant Restricted Area Permit in respect of that restricted area or Tenant Restricted Area and complies with all conditions of issuance of the Permit.” In a release by Sam Adurogboye, general manager, public relations, NCAA, he said, “NCAA will not tolerate the reoccurrence of any such safety and security violations at any of the nation’s airports.

Flutterwave gets CBN approval for USSD

lutterwave, a payment technology company, has received a nod from the Central Bank of Nigeria (CBN) for its Unstructured Supplementary Service Data (USSD) technology product. According to an official company statement, the CBN has granted approval for this solution. The USSD service will enable its enterprise and retail customers layer their products on this infrastructure. Commenting on the recent innovation, head, USSD product engineering, Dayo Okesola said, “We are excited to introduce this new payments solution to the market, staying true to our promise to provide modern payment infrastructure that empowers Africans. Our new payment channel offers Africans the benefits of security and convenience in their dayto-day transactions.”

The CBN’s nod affirms the validity of these provisions, especially for this product. The USSD technology has been adapted in recent times to reduce the number of banking hall visits made by the average Nigerian. Funds are transferred between parties instantly via a GSM device with no internet access or smartphone functionality required. Flutterwave is a payment technology company focused on helping banks and businesses provide seamless and secure payment experiences for their customers. According to Flutterwave, the company’s infrastructure enables business and individual payments via cards, mobile money wallets, and bank accounts from different African countries and around the world, all of which can be performed on one integrated platform.

Wednesday 08 August 2018

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EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

believe that our poverty reduction strategies will profit from a commitment to first seeking, and then properly understanding, how poverty comes about. Doing otherwise would be a fatal error in any effort to improve the condition of the poor.The correction or avoidance of such error is our current interest in this column. Having made the point, last week, that a pathway is never good enough until both sides of it are rid of weed, we begin today to more specifically identify what we consider the architects of poverty, or more appropriately the poverty generators in Nigeria. We believe this is an exercise that will produce good results because it will enable us to unmask the elements behind poverty in this country and understand why poverty seems to get more intractable, the more we try to fight it. Understanding the causes of poverty, we hope, will not only sharpen our focus on strategies to reduce it but also stimulate and direct pointed remedial measures at it. The political system in Nigeria is our number one suspect on the list of poverty generators in the country. I understand that for some strange

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Poverty generators and the challenge of microfinance in Nigeria (2): Political system reason, the study of history is being deemphasised in Nigeria, but we need to do a bit of it here. The first group of Europeans to visit Nigeria were the Portuguese, who came to the Benin Kingdom in 1485. They were however superseded by the British, who arrived in Benin in 1553. The interest of the British in the natural wealth of the kingdom of Benin led to the development of significant trading relations. It wasn’t long though before the Oba of Benin discovered the hidden intensions of the British, including the plan to establish a colony over the kingdom. He then tried to cut communication with the British who responded very forcefully with guns and canons that weakened and practically commenced the obliteration of the Benin kingdom. That was what later became known as the Benin Expedition of 1897 – a very ferocious and punitive attack that resulted in the stealing of Benin artefacts that are yet to be completely returned to Nigeria. At the end of the day, the British established a Colony in Nigeria and soon the whole of Northern and Southern Nigeria became one colony for the British to plunder and exploit. Once you are colonized you will surely be plundered. This is probably why the word colony is never welcome anywhere in the modern world. Although the British are gone, the idea of colonization remains attractive and functional around us. Perhaps, in a bid to completely drop that toga of the colonial political past, our leaders travelled further north to pick up the American governance style – the presidential system of governance. And the stage was set for the mass production of povertystricken people, as one group recolonizes another through political office holding.

Although the British are gone, the idea of colonization remains attractive and functional around us. Perhaps, in a bid to completely drop that toga of the colonial political past, our leaders travelled further north to pick up the American governance style – the presidential system of governance The presidential system was introduced by the military through the flawed military constitution of 1979. Perhaps, also it was felt that since Nigeria is called a federation, it would be well-served by a constitution type that has served the greatest democracy in the world - the United States of America. But the truth is that Nigeria is neither a federation nor a democracy, to say nothing about the quality of leaders that make the presidential system work in America, in comparison to the kind of political prostitutes and tribal champions we have all over the place. Have we heard of anyone who decamped from one party to the other in the United States, even with the emergence of outsiders like Donald Trump? The focus is on the nation and they keep their eyes on that ball. Here we keep our eyes on the purse and our share of the cake. Nigeria is currently witnessing a gale of defections by professional defectors for reasons other

than good governance. In the next one year, honour will flee and Nigerians will sit back and watch adult comedy by clowns that somehow strangely extracted the title of honourables from their country. The economy will barely breathe and poverty gains traction. In addition to producing uncontrollable leaders with executive powers, the cost of the presidential system is another reason why it should not even be touched with a 20 foot pole. Today, we see legislatures that are openly robbing the people, impeachment is sold for cash and looting in the form of obscene self-allocated salaries and retirement benefits are rife. We see people get into government houses and emerge as emperors stealing everything, including those nailed to the ground (because they also steal peoples’ land) and in such measures as to single-handedly hand pick their own successors. At the end of the day, the people are reduced to observers, jobbers, slaves, paupers, armed robbers and political thugs, who perpetually serve those privileged to grab power. This is why no matter how much we budget in Nigeria, the country goes nowhere. The money will be stolen by leaders who are not accountable to anyone but themselves. This system of government is a disaster. No country at our level can survive with it because it is too expensive and unaccountable. It survives here only because those who ought to change it are the ones milking the nation. There was a novel by James Hardly Chase titled “There is always a price tag”. Before the school system was run down, such that people who spoke Queens English were derided and said to be speaking grammar or turenchi,and all kinds of exotic and backward languages like Pigeon gained ascendancy in an English speaking country, we all read literary works like those of Hardly Chase. That

book projected the debatable idea that everyone can be bought or paid off. Today, the system of government has made it true that there’s always a price tag. We have people who are still dogged by their primordial backgrounds exercising executive power. They are prone to many frailties including nepotism, which is the worst form of corruption.If you add the fact that executive powers corrupt absolutely, you have leaders who belong to jail houses but will not go there because justice has got a price tag. There are people here spending the rest of their lives blocking investigation and trials. This is why we have politicians who say one thing today and another tomorrow because their words reflect only the body language of those holding evidence of their crimes. The presidential system of government is a winner-takes-all system, laden with opportunities for sleaze. Itoffers great premium to office-holders to be corrupt and works where there is high level of education, strong institutions, proper federal structure and detribalized leaders. Nigeria scores zero in all of these. That is why you do not try it unless your institutions are strong enough to correct and punish those who misalign themselves with their oaths of office and the constitution. Nigerian institutions are subsumed in their leaders who pick and choose what misalignment to pamper or punish. In our judgement, the biggest poverty generator in Nigeria is her political system and form of governmentthat literally turns the gun against those it is meant to defend.The best they can expect is to die of poverty.Reform or change the political system and poverty will fell your impact.

A renowned sales leader put it quite succinctly when he said: “You can’t send a duck to eagle school.” Yet another said: “Although you can teach a turkey to climb a tree, it’s much easier to hire a squirrel.” I know you may say to yourself, it’s good to be amiable and all that; it’s even something to be admired when you come across those with impeccable manners but “how will it benefit me?” “It’s good to be nice but will nice put food on my table?” The simple answer here is yes it can. Statistics provided by Newvoicemedia.com says that feeling unappreciated is the #1 reason customers switch away from products and services. Another by the Temkin groups says, after having a positive experience with a company, 77% of customers would recommend it to a friend. If this won’t put food on your table then I don’t what will. I must say here that it’s unfortunate our country has always been notoriously bad at keeping statistics so I’ve had to rely on foreign statistics, namely from the US, but I’m sure you get the gist. Let me tell you a little story though that brings it closer home. A few years ago, myself and a partner embarked on setting up a supermarket from scratch. Now, even with the foreknowledge that

the largest and most influential player, not just in the Nigerian market but in Africa as a whole was planning to establish a branch in Amuwo Odofin, our preferred location, we weren’t deterred in the slightest from opening up shop. My partner and I had done sufficient research to detect some weaknesses we believed we could capitalise on. Their sheer size, which ordinarily ought to be amongst their greatest strengths belied several Achilles heels, which we were able to explore. One of which was their inability to make timely competitive decisions because all major instructions still came from their Head Office in South Africa. However, the one most relevant to this discussion was the very impersonal service on their shop floor. These foreigners somehow hadn’t factored in a critical element of the average aspirational Nigerian’s psyche. And this, I’m not ashamed to admit is that we particularly like to be made to feel special and appreciated. It’s not for no reason that even with increasing civilization and sophistication in our society, Owambe party praise singers will continue take their pride of place.

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May I help you?

DAPO AKANDE Dapo Akande, author of the acclaimed book, “The Last Flight...a personal journey to rediscovering values”, is also the Founder of MINDS Reform Initiative, a NGO focused Character Education. Contact:dapsakande25@gmail.com

hough we have certainly improved in leaps and bounds in the last decade or two, I don’t believe too many will argue with me that courteous, efficient customer service has never been a national strength, whether in the public or even private sector. I for one, will always argue that at the heart of good customer service or customer relations is good manners. When a child with good manners grows up, by instinct he’s far more likely to provide good customer service, as his interpersonal skills would have been well prepared for this over the

years. That’s why those who lack this foundation either can’t understand why they need to smile to welcome customers, or use those truly magic words that can prize open the stoniest of hearts; crucially important in the world of competitive business. And when they are forced to, maybe because their job depends on it, it’s so contrived that at the slightest provocation, the old rude and scowling self is reawakened. The journey to good customer relations begins from childhood and not when the character is already calcified. What happens to a crayfish when it’s already dry and you try to bend it? It snaps. So do you still wonder why your employee snaps when asked pertinent questions by prospective customers? Wonder no more. It doesn’t take a genius to work out why western nations generally do customer service better. The strict and consistent teaching of good manners right from “toddlerhood” has already taken them halfway there. There’s an age old argument by ethicists and their contending schools of thought and it’s this; do we owe future generations any duty? No one has yet been able to provide an infallible answer but there is a simple verse in the Bible which I believe at least answers one aspect of this gargantuan

question: “Train a child in the way that he should go and when he grows up he will not depart from it”. Subsequently, this child will grow up to also train his own brood and it will continue like that. Tell me, is there a better way to positively influence the future of generations? Even those yet unborn and the society that they will live in? I can’t think of any. And is it a duty? According to the Bible, yes. Bruce Nordstrom may have sounded stupid when he said this but he knew exactly what he meant when he said he preferred to hire people of good character and to train them to become salesmen because it’s almost impossible to train a good salesman to develop good character. Read the words of Bruce Nordstrom, the former chairman of the famous American department store known for its impeccable service: “We can hire nice people and teach them to sell, but we can’t hire salespeople and teach them to be nice.” It has been said that characteristics are something you “buy” during hiring and not something you “build” by training. What does this mean? Those characteristics need to be part of the person already, having been brought up to be polite and well mannered. For a business organization to get those characteristics, it needs to hire the right people.

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The Auditor-General’s report and the ‘’voice mail syndrome’’

UCHE UWALEKE Uche Uwaleke is a Professor of Finance & Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

he ‘’voice mail syndrome’’ is the tendency for a serious issue to be swept under the carpet. With respect to the 2016 audit report, which happens to be the latest submitted by Mr. Anthony Ayine the Auditor General for the Federation (AuGF) to the National Assembly on Thursday 21st June 2018, what fate awaits it? This is one question on the lips of not a few Nigerians who are concerned about the fact that previous reports appear to have ‘’entered voice mail’’ -to borrow a popular Nigerian slang. Indeed, several reports by the Office of Auditor-General for the Federation to the National Assembly never saw the light of the day. Sometime in December 2015, at a two-day retreat in Abuja organized by the Office of the AuGF and Public Accounts Committees (PACs) in partnership with the Department for International Development (DFID), the then Auditor General for the Federation Samuel Ukura made a shocking disclosure: “since 1999, we have submitted 14

RASAK MUSBAU Musbau is of Features Unit, Lagos State Ministry of Information and Strategy, Alausa, Ikeja

orld Breastfeeding Week is celebrated every year from August 1-7 to encourage breastfeeding and improve the health of babies around the world. The celebration provides wonderful opportunity of refreshing knowledge or setting agenda for nursing mothers on breastfeeding for a whole week. First celebrated in 1992 by World Alliance for Breastfeeding Action (WABA), World Breastfeeding Week is now observed in over 120countries by UNICEF, WHO and their partners to spread awareness about benefits of breastmilk and exclusive breastfeeding as well as factors that could promote or hinder exclusive breastfeeding by nursing mothers and recommendations of way forward. The question of exclusive breastfeeding as the best way to provide infants with the nutrients they need has been a subject of several studies. Exclusive breastfeeding by definition is giving the baby only breast milk from birth until 6 months of age. It means the child will not be giving water or herbal concoction for a whole six months. Exclusive breastfeeding is universally recognized as the most cost effective, high impact preventive intervention that promotes the health of mothers and babies while reducing health care costs for government and families.

annual reports to the Public Accounts Committees. Yes! They have considered them at the committee level but those reports have not been passed to the plenary session let alone passing them to the executive for implementation,” Mr Ukura had lamented. Extant laws of the land require that an audit report from the Auditor General is sent to the National Assembly through the Public Accounts Committees. The Committees are expected to work on the report and present same at plenary for consideration after which it is forwarded to the President for execution. Sadly, this has not been the case several years after the country returned to civil rule. The first thing to be alarmed about is the fact that the latest report of the AuGF is far behind schedule. A few months to the end of 2018 what has just been forwarded to the National Assembly is the 2016 report when the AuGF should be putting finishing touches to the 2017 report. Section 85(5) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) requires the Accountant-General of the Federation (AGF) to prepare and forward Annual Financial Statements to the AuGF who is expected to submit an Audit Report on them to the National Assembly within 90 days of the receipt of the Financial Statements from the AGF. The preparation and submission of the Financial Statements by the AGF to the AuGF is also in line with the provisions of Finance (Control and Management) Act, Cap 144 LFN 1990. These provisions have been

Stringent sanctions on Chief Executives of defaulting agencies should be applied to discourage flagrant violation of statutory financial reporting obligations by agencies of the government observed in the breach over the years. The AuGF puts the blame for non compliance squarely on the doorsteps of the AGF contending that the Office of the AuGF was constrained to submit the 2016 report several months late “due to delays in the preparation and submission of Financial Statements by the Office of the Accountant-General of the Federation (OAGF).” This would not be the first time. The 2015 audit report of the ministries, departments and agencies (MDAs) of the federal government was not submitted to the National Assembly until June 2017. In it, the OAGF was equally blamed for delays that kept the submission behind schedule for several months. More specifically, ‘’the OAGF failed to produce for audit, vital documents needed to audit the IPPIS operations transactions account between January 1 and December 31, 2015’’. As disclosed in the 2016 audit report, poor compliance by MDAs to extant audit laws on submission of accounts has not helped matters.

According to the AuGF, “most of the government Corporations, Companies and Commissions have not submitted their audited accounts for 2016 to me. Only 51 audited financial statements for 2016 and 149 for 2015 have been submitted to my Office as at 27th December, 2017, despite the provision of Financial Regulation 3210(v) which enjoins the Chief Executive Officers of these bodies to submit both the Audited Accounts and Management Report to me not later than 31st May of the following year”, the Auditor-General had said in the report. The weighty issues raised in the 743-page 2016 AuGF report should bug any government implementing financial reforms in the public sector. From several ‘’observed discrepancies’’ in financial statements submitted by the OAGF to poor book keeping practices especially in the petroleum sector where accounting and transparency issues left much to be desired including illegal withdrawal of funds and their subsequent diversion to unauthorized use are matters that should be addressed squarely. At another level, the report identified poor funding as a major impediment to achieving the statutory mandates of the OAuGF noting that ‘’the present funding levels make it very difficult to fulfil my constitutional mandate and cover the full range of governance issues to the satisfaction of all key stakeholders.” It goes without saying that the importance of adequate resources for the Office of the Auditor-General for the Federation cannot be over emphasized in a country waging

war against corruption. The basic function of the auditor-general is the protection of public interest through a detailed and objective examination of public accounts and timely reporting to the legislature to enable it effectively perform its oversight function. This task pre-supposes a well-resourced office. Inadequate funding of the OAuGF has attracted poor ranking for Nigeria in the Open Budget Index over the years. In addition to evaluating the opportunities for public participation in national budget decision making, the Open Budget Survey conducted by the International Budget Partnership (IBP), also examines the role of formal oversight institutions such as supreme audit institutions and legislatures. IBP considers countries scoring above 60 on oversight as providing adequate oversight practices. The 2017 survey found that ‘’the legislature and supreme audit institution in Nigeria provide limited oversight of the budget (56/100)’’ unlike in South Africa where adequate oversight of the budget (85 out of 100) is provided. The report recommended that Nigeria should ensure that ‘’the supreme audit institution has adequate funding to perform its duties as determined by an independent body such as the legislature or judiciary’’.

There are also factors of hormonal challenges, lack of family support, societal influence, influence of extended families and social status. This brings to the fore the question of maternity leave: Should maternity leave be six months on national scale? Sincerely, this is very desirable as it will support the mother practice exclusive breastfeeding for the first 6 months of the baby’s life. One of the steps to successful exclusive breastfeeding includes allowing mothers and infants remain together 24 hours a day. This is to enable the mother breastfeed the baby on demand whenever the baby wants to breastfeed. A six months leave will provide ample opportunity for the practice of exclusive breastfeeding. Lagos State has already implemented this and others can take a cue from the Lagos example. This is especially important as most establishments in Nigeria do not make any provisions for crèches where breastfeeding mothers can bring their babies so that the babies are close enough for the mothers to take breastfeeding breaks and breastfeed their infants. Another important issue is how soon mothers are expected to breastfeed their babies. Mothers are expected to put the baby to the breast within 30minuties of delivery and to give the baby the first milk which is known as colostrum. This milk is thick and yellow, rich in antibodies and vitamin A which protect the baby against allergy and infection. It is also

contains growth factors which helps the intestine to mature and reduce intolerance. It has purgative properties that help to clear the meconium (the greenish stool passed by babies). After the first feed, babies are to be breastfed on demand that is whenever the baby shows signs of hunger day and night. This is usually about 8 times during the day and 4 times at night but there should be no limit this is just a guide. To boost exclusive breastfeeding, the Global Breastfeeding Advocacy Initiative, led by UNICEF and WHO in collaboration with international partners, are providing leadership to improve breastfeeding rates. WHO and UNICEF have created a Network for Global Monitoring and Support for Implementation of the International Code (NetCode) with the purpose of strengthening capacity for Code monitoring, adherence and implementation. Beyond combating marketing of breast-milk substitutes, there is need to invest in policies and programmes that support women’s breastfeeding. Supportive health-care systems, adequate maternity leave entitlements, workplace interventions, counselling and educational programmes can all help to improve breastfeeding rates.

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Boosting breastfeeding in Nigeria According to United Nations Children Fund (UNICEF), it is described as the cornerstone of care for childhood development and the gold standard of infant feeding as it provides all the nutrients that a child needs for the first six months of life. Breast milk continues to provide essential nutrients for childhood development up to two years. The theme of 2018 week, ‘Breastfeeding: Foundation for Life’’ is very fitting as breastfeeding especially exclusive breastfeeding is a win-win for all - baby, mother, family and society. Breastfeeding improves the survival, health, and development of all children. It saves women’s lives and contributes to human capital development. These benefits are irrespective of where you live and your economic status. Breast milk contains the entire nutrient that an infant needs for the first six months of life. It also contains antibodies that help the baby fight off infection. Breastfeeding lowers the baby’s risk to allergies such as asthma. Babies who are exclusively breastfed for the first 6 months of their lives have lower risk of respiratory infection, sudden infant death syndrome and fewer bouts of diarrhea. Breastfeeding also protect the babies from adult on set of chronic diseases such as obesity and diabetes mellitus. Breastfeeding also reduces ill health in children, improves their educational potential and probably their earnings as adults. The benefits of breastfeeding for

the mother include protection against breast and ovarian cancers, against hip fracture later in life and postmenopausal cardiovascular disease (the longer mothers breastfeed, the greater their protection against breast and ovarian cancer, and hip fractures). For this, mothers are encouraged to breastfeed for up to two years and beyond with addition of complementary foods from the 6thmonth. Exclusive breastfeeding also helps to bring about bonding of baby and mother and helps delays a new pregnancy. It also boosts the child’s Intelligent Quotient (IQ) and lowers his or her tendency of developing into a violent adult. The findings from WHO and partners estimate that global economic losses from lower cognition associated with not breastfeeding reached more than US$ 300 billion in 2012, equivalent to 0.49 per cent of the world’s gross national income. Yet, worldwide, there are still low levels of optimal breastfeeding. Very low exclusive breastfeeding rate has persisted among mothers in Nigeria with the National rate at 25% in 2014 (National Nutrition and Health Survey, 2014). This rate varies across the geopolitical zones with the lowest rate in the North West at 10% and highest rate in the South West at 39%. The rates in other regions are South East 18%, North East 22%, South South 31%, and North Central 32%. Top on the findings of factors that cause this is that women in the workplace often did not have enough maternal protection from their employers.

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Human rights and police brutality in Nigeria

uman rights abuses by the Nigerian police, especially its special anti-robbery squad (SARS) have reached alarming levels. Last year, Nigerians on social media created a storm with a harshtag #endSARS calling for the total scrapping of the unit that is particularly noted for its brutality, sexual harassment, extortion, theft and outright robbery. Also an online petition, with tens of thousands of signatories, was submitted to the National Assembly seeking the scrapping of the unit. More than six months after that incidence and despite the cosmetic changes introduced by the Inspector General of Police into the working of the unit, the cases of police or more particularly SARS brutality has continued unabated. Young Nigerians complain on social media daily of the harassment, arbitrary arrest, kidnap, forced extortion and torture by SARS. In a 2016 report on the activities

of SARS titled “Nigeria: ‘You have signed your death warrant’ : Torture and other ill treatment in the special antirobbery squad” the global human rights watchdog, Amnesty International, said it received reports from lawyers, human rights defenders and journalists, and collected testimonies stating that some police officers in SARS regularly demand bribes, steal and extort money from criminal suspects and their families. The global human rights watchdog also stated that SARS detainees are held in a variety of locations, including a grim detention centre in Abuja known as the ‘Abattoir’, where detainees are kept in overcrowded cells and in inhuman conditions. According to Damian Ugwu, Amnesty International’s Nigeria researcher, “SARS officers are getting rich through their brutality. In Nigeria, it seems that torture is a lucrative business.” The report also detailed testimonies from former SARS detainees who said they were subjected to horrific torture methods, including hanging, starvation, beatings, shootings

and mock executions at the hands of corrupt officers from the dreaded SARS. To be sure, torture is prohibited under Nigerian and international law. Also, in December 2017, President Muhammadu Buhari signed into law the Antitorture Act. Still yet, SARS and the police continue to unleash torture and other degrading treatment on Nigerians. As the campaign on social media reached a crescendo, the IG of police has again offered a tokenism – banning SARS from conducting stop and search operations on roads except when necessary. The IG also promised to restructure and reposition the unit for effective service delivery while also warning members of the group against acting as body-guards, delving into land matters and debt collection that were considered civil. But this is a well-travelled route. Anytime credible complaints are brought against the police, the police high command order investigations and actions but at the end nothing is done and business continues as usual. For instance, since 1999,

there has not been a police boss that has not hypocritically ordered the dismantling of the notorious police road-blocks in Nigeria. But till date, those road blocks still exists in all nooks and crannies of the country and serve as the medium for the extortion of, and killing of Nigerians and road users who refused to settle the policemen. What happens is that the policemen withdraw from the roadblocks for some weeks and return when national focus and attention shifts to other pressing issues. It is clear that the police has lost the trust of the people it is paid to protect. To get back that trust, a wholesale reform of the police is needed and not just the SARS. But in a situation where the president has empowered the IG of police to disrespect the National Assembly and even harass its members, including the Senate President, and charges to court anyone who dare accuse the IG of any impropriety instead of investigating the allegations, we doubt whether the government will have the courage to do it.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

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Wednesday 08 August 2018

BUSINESS

COMPANIES & MARKETS

DAY

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

AxaMansard, Premium and Stanbic IBTC pensions lead fund performance in 2018 Oghogho Edosomwan

xaMansard Pensions RSA account holders have a good reason to smile this year. The fund administrator had the best performing RSA fund account in Nigeria in the first seven months of the year, with a year to date return of 7.9 percent. Behind AXA Mansard pension was Premium pension (7.6 percent), Stanbic IBTC Pension (6.9 PERCENT), ARM pensions (6.7 percent), Pal pensions (6.7 percent) and Legacy pension (6.7 percent) and whose strong performance propelled the PFAs to be among the six best performing retiree fund in the country. The performance analysis was done using the fund IV unit price returns of 10 pension fund administrators in Nigeria between January 2nd 2018 and July 31st 2018. A pension fund is a pooledcontribution from pension plans organized by employers or organizations to provide retirement benefits for their employees or members.

Pension funds are the largest investment blocks in most countries and dominate the stock market where they invest. These funds are managed by pension fund administrators all of which are licenced by the national pension commission. There are currently 21 pension fund administrators in Nigeria. This number of registered PFAs has dropped over the years from 24 in 2011 to 21 in 2016. Others not included in this analysis due to unavailability of Fund IV unit price data include APT Pension, First Guarantee Pension Ltd, Investment One pension managers, Leadway Pension, NFP Pension Ltd, Radix Pension Managers, AIICO Pensions, NPLC pension, Veritas Glanvills, Sigma Pension and Trust Fund Pension. Others that lagged the high flyers include; Crusader pension (6.5 percent), OAK Pension (6.40 percent), Fidelity Pension (6.3 percent), and IEI Anchor pension (5.9 percent ), On the reason why some pension fund managers outperformed others analyst said; Henry Ogbuaku, group head, asset management at GDL Asset Management Ltd earlier told BusinessDay that

L-R: Rapheal Adeyanju, Ekiti state correspondent; Akinremi Feyisipo, Oyo state correspondent; Adeola Obisesan, Head, Human Resources; Razaq Ayinla, Head, Southwest Bureau; Boladale Bamigbola, Osun state correspondent and Yomi Ayeleso, Ondo state correspondent, all of BusinessDay Media Limited at a brief meeting held at newly acquired Southwest Office of BusinessDay in Abeokuta

there are some key factors which could have led to the disparity in their fund performance. One of them is the capacity of the managers, in terms of their understanding of the market. It is also important to know what constitutes

their portfolio. Based on the Security and Exchange Commission (SEC) regulation, each fund manager is supposed to structure their portfolio in a particular way. For example, there is a limit to the proportion of their AUM that goes into

Air Peace begins Kaduna flight operations August 13 IFEOMA OKEKE

igeria’s leading carrier, Air Peace has announced plans to commence daily flights from Lagos to Kaduna from August 13 as part of its nocity-left-behind project. The airline had earlier commenced its four weekly flights from Lagos, Abuja and Accra to Monrovia which took effect from August sixth. In a statement issued by Chris Iwarah, the airline’s corporate communications manager, said the carrier was pleased to connect and unite the South and North of Nigeria by air. Air Peace, which recent-

ly secured the renewal of its International Air Transport Association Operation Safety Audit (IOSA) certificate, said broadening its route network in the North of Nigeria aligned with its determination to democratise flying experience, give hope to unserved and underserved destinations as well as positively impact the economies of destinations where it operates. The car r ier assured that many more domestic routes, including Makurdi, Warri and Port Harcourt NAF Base, would soon join its network under its nocity-left-behind project. Air Peace also confirmed that it would shortly reopen its Asaba and Sokoto operations.

“We are delighted to announce that Kaduna will reflect on our route map starting from Monday, August 13, 2018, just exactly a week after commencement of our four weekly flights from Lagos, Abuja and Accra to Monrovia. The launch of our daily flights from Lagos to Kaduna is a pleasing consolidation of our pledge to connect and unite Nigeria by air. We are convinced beyond any shadow of doubt that Nigeria stands to gain socially and economically if the North and South are seamlessly connected by air. “Our flights to Kaduna will afford air travellers, especially in the North, an opportunity to experience

the excellent services Air Peace has been reputed for since we commenced scheduled operations almost four years ago. The new route will perfectly fit into our strategy to end the travel difficulties of the North of Nigeria with our flights to Abuja, Yola, K a n o, S o k o t o, B e n u e , among other cities in the area. “We are determined to replicate the success of our intervention in the travel difficulties experienced on the Kano and Yola routes, which we inaugurated on February 12 and 15, 2018 respectively, as a way of appreciating the huge support we have continued to enjoy from the North of Nigeria,” Iwarah said.

equity and a certain amount goes to fixed income. The ability of the fund managers to understand each of those markets is an important factor. It also depends on their investment strategy, that is, how they choose to classify their

bond and equity portfolio will affect their performance. If they are bullish on fixed income or equity, it will affect their performance differently, BusinessDay gathered from another source who pleaded anonymity.

Amni International to drill Tano block in Q4

mni International, a Nigerian oil and gas company has announced plans to drill on its deep-water Central Tano block located off coast of Ghana in quarter four of 2018. According to a statement by the company, it will drill the block regardless of whether or not it secures a farm-in partner. The company also said it aims to drill the block to a target depth 4400 metres in the fourth quarter of this year on the South Tano prospect. “Four proven horizons of Upper and Lower Campanian, Turonian and Albian age can be tested by one well, “said a flyer from Envoi, which is marketing the asset. The company further said that 3D seismic data indicates multiple stacked cretaceous potential will be penetrated, testing potential in-place resources of 2.27 bil-

lion barrels of oil equivalent. “An Upper Campanian target is estimated to have a mean in-place resource of 750 million boe, with 250 million boe thought to lie in a Lower Campanian play, 323 million boe in a Turonian zone and 937 million boe in an Albian play. The 279 square kilometre Central Tano block is sandwiched between the prolific Jubilee oilfield to the east and the TweneboaEnyenra-Ntomme asset, to the west — both operated by Tullow Oil. “The Turonian target of the planned exploration well — which is set to cost about $45 million — is the same that Jubilee produces from. In total, Amni has mapped 17 prospects and leads with a combined in-place resource of over 5 billion boe. Discoveries could be tied back to Tullow’s infrastructure,” the company added.

BUSINESS DAY

Business Event

Waqar Ahmad Kingravi Hilal-e- Imtiyaz, High commissioner of Pakistan to Nigeria (l) with Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry, during a courtesy visit of the High commissioner to LCCI at Commerce House, Victoria Island in Lagos.

R-L: Olugbenga Olayemi, divisional manager, Lagos and West, Fidson Healthcare Plc; Folasade Lediju, director of administration, ministry of education; Friday Enaholo, marketing manager, Fidson Healthcare Plc, and Hakeem Olusola Olalekan of Lagos State Universal Basic Education Board

L-R: Chioma Okolie, CSR lead, Airtel Nigeria; Hauwa Ojeifo, beneficiary/founder, She Writes Woman, and Oladokun Oye, vice president, indirect sales, Airtel Nigeria, during the handing over of a rented and fully furnished apartment to She Writes Woman in Lagos, on Friday, as part of the on-going Airtel Touching Lives Season 4 prize presentation.

Ajai Musaddi, group managing director, Sona Group of Industries (l); Arjan Mirchandani, Chairman, Sona Group on Industries, and Ashok Manghnani, group chief operating officer, Sona Group of Industries, (r), jointly presenting Seaking Schnapps to Adeyemi Abdukabir Obalanlege, Olota of Ota, during the Monarchâ&#x20AC;&#x2122;s courtesy visit and facility tour of the distillery giantâ&#x20AC;&#x2122;s corporate head office recently

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Wednesday 08 August 2018

BUSINESS DAY

Wednesday 08 August 2018

SHIPPING

LOGISTICS

MARITIME e-COMMERCE

Concern as cost of container haulage soars over gridlock, bad roads Stories by UZOAMAKA ANAGOR-EWUZIE

he dilapidated state of roads leading to Apapa and Tin-Can Island Seaports has pushed up the cost of container haulage from the port terminals to the importers’ warehouses in Lagos. Here, the cost of moving cleared consignments to importers’ warehouses, and also moving export goods to the ports, have more than doubled in the last few months, thereby, putting pressure on the operational cost of importers and other shippers. The new haulage rate came with significant cost implication on importers such that the cost of cargo movement from the seaports in Lagos to any warehouse within and outside Lagos has more than doubled depending on destination. In 2017, a truck load of general cargo from ports to any warehouse within Lagos State ranges from N80, 000 to N150, 000; N60, 000 to N140, 000 for one by 20-foot container; N100, 000 to N170, 000 for two by 20-foot container, and N80, 000 to N140, 000 for one by 40-foot container.

Also, lifting cleared cargo from ports in Lagos to other states varies by the distance of the destination state. For instance, a Kaduna based importer who used to pay about N300, 000 to move container to Kaduna, would be required to pay N480, 000 to move one by 20-foot container from Lagos to Kaduna and N500, 000 for one by 40-foot container; taking containers of similar sizes to Nnewi in Anambra State cost N330, 000 and N350, 000 respectively while going to nearby Ife in Osun State ranges from NN180, 000 to

N200, 000. Presently, the cost of hauling containers from the Apapa ports to warehouses in Lagos has increased to an alarming N700, 000 per container compared to months back while outside Lagos has increased as well. Jude Okeke, a Lagos based importer and president, Association of Progressive Traders (APT), said that the prices of goods will continue to soar if the cost of transporting containers continue to rise. Abdullahi Mohammed, vice chairman, Dry Cargo

Section of the National Association of Road Transport Owners (NARTO), told newsmen in Lagos that the hike was being driven by the law of demand and supply as there were many containers to be evacuated from the ports while available trucks were few. According to him, the recent withdrawal of service by truck drivers resulted to a good number of containers being trapped at the ports, thus, the growing demand for trucks to move the laden containers from the ports to importers’ warehouses.

“Now, if about five people are looking for trucks and suddenly one truck comes, it is not even the truck driver that determines the price, it is those agents who are struggling to see that they evacuate their consignments from the ports. For instance, if one volunteer to pay N100, 000, the other, N120, 000, and another may increase it to N150, 000. “Truck owners and drivers did not come together to say let us hike the price. It is simply being controlled by the law of demand and supply. Out of the trucks you see on the roads; 80 percent of them are carrying empty containers or export containers. When you count one to 50 trucks, hardly will you see empty flatbed trucks except the ones that are trapped on the gridlock. He said that people want to take their consignments out of the ports to avoid payment of demurrage but trucks are not available. “Again, when a truck loads and goes out, to come back becomes a problem because it takes days due to the traffic situation. The truck owners are losing compare to when truck can go on average of four to five trips a week. Now, in a month, if you are lucky, you may be able to go for two trips or one.

He however said that if the shipping companies can make use of holding-bays that the traffic situation will reduce, and in turn, cost will definitely come down. Isiaka Olalere, chairman, Tin-Can Island Chapel of the Road Transport Employers’ Association of Nigeria (RTEAN), blamed the rising cost of haulage on bad port access roads and lack of holding-bays by the shipping companies to receive empty containers, which he said, forced trucks to litter the roads and bridges around Apapa. “Even with the price increase, truck owners are still losing because the number of days we are using on one trip when traffic around the port was in good condition is not the same number of days we use for the same destination now. After discharging at your destination, it will take you another 10 days for you to bring the empty container back to the port because of gridlock,” he said. He further suggested that to solve the problem of access roads to the ports, which was the main reason for the increased cost of transportation, that the Federal Government needs to create a space where all the empty containers can be dropped and ferried to the ports.

Hub is much needed and will provide the country with a logistics platform that aims to facilitate the import and export of goods via the Port of Dakar, which is operated by DP World,” Sultan Ahmed Bin Sulayem, DP World chairman/ CEO, said. He added: “DP World’s investment will significantly cut processing times for goods and facilitate trade. We are committed to enabling trade in the region and helping local businesses and people prosper. On his part, Ahmed Boubacar said: “We are excited to partner with DP World on this project. The Mali

Logistics Hub will dramatically improve the cost and time of trade for Mali. The project will provide us with a first-class logistics facility comparable to global standards and will be the largest in terms of capacity. “We are confident that DP World will be able to meet the expectations of our people, traders and exporters by enabling access to more markets, more efficiency and cost effectiveness to international trade. The project also gives Malians the opportunity to be connected to global trade lanes, and to speed up access and transport in and out of the country.”

Malian logistics hub may become first W/African trade centre …DP World to build, operate a trade hub in Mali

s Nigeria struggles to develop a S i n g l e Wi n d ow Platform for cargo clearance at the ports, Malian government has perfected plans to introduce a simplified and paperless cargo clearance in its proposed logistics hub being built by DP World. DP World, a Global trade enabler, signed a 20-year concession with an automatic 20-year extension with the Republic of Mali to build and operate a 1000-hectare modern logistics hub outside of Bamako, the capital city of Mali. Mali L ogistics Hub (MLH), a multimodal lo-

gistics platform, will have Inland Container Depots (ICD) and Container Freight Stations (CFS) that will facilitate the import and export of goods. A statement recently released by APO Group stated that the MLH will be located on the main road corridor from Dakar, Senegal to Bamako and close to the Dakar - Bamako rail line, and will be capable of handling 300,000 twentyfoot equivalent unit (TEUs); 4 million tons of bulk and general cargo. “The first phase of the project, with an estimated initial investment of $50 million, will support the

growth of Malian economy by streamlining the import and export of goods. Construction is expected to start in 2019 and will take approximately 18 months to be completed. APO further said that DP World will also provide the Republic of Mali with three locomotive trains to boost cargo and passenger traffic along the Bamako-Dakar rail system. “The Mali logistics hub will significantly reduce processing time for products entering the Malian market as part of efforts to reduce obstacles to trade and economic development. DP World will also

implement its online paperless facilitation platform to accelerate the movement of goods as part of the agreement. The concession agreement was signed in Dubai recently by Suhail Al Banna, managing director/ CEO, DP World Middle East and Africa, and Moulaye Ahmed Boubacar, minister of Equipment and Transport of the Republic of Mali, in the attendance of Malian and DP World officials. “The Malian market is expected to grow over the next two decades and is driven by a robust economic and population growth. Thus, the Mali Logistics

BUSINESS DAY

Wednesday 08 August 2018

Politics & Policy Wednesday 08 August 2018

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BUSINESS DAY

2019: Saraki will suffer defeat in Kwara, says Oyedepo ... As APC forms coalition with 15 political parties

Deputy Chairman, the treasurer and the youth leader. Virtually all the LG chairman of our party are with us. “When Bukola Saraki decided to move from APC to PDP, we believe that he by that has infiltrated the party. He has more or less provided some sort of stench that may make the party become an unwarranted instrument that can change anything in Kwara State. And necessarily because our politics is different from his own, we had to leave their party,” he said. Speaking further, Oyedepo said: “Yes PDP said anybody coming to PDP with governor will have 60 per cent and those that have been piloting the affairs of the party for a long time will only have 40 per cent. Another obnoxious policy is that whoever decamps from APC to PDP will be giving automatic ticket.

“The governor decamped, even if he can no longer run any term, three senators decamped, six members of the House of Representatives decamped, 24 members of the House of Assembly decamped, 16 LG chairman decamped, if those people are to be given automatic ticket, what therefore remains for those of who have been piloting the affairs of that party for a long time. So we had to leave. “But not because of that alone. Even if we were given all those slots and Senator Saraki will still be part of us, we have a moral burden to be with him because for a long time, we have been telling the whole world that he has not been able to govern well, infrastructure in Kwara State has collapsed, hospitals are not there, no medication and no personnel, educational institutions is not a thing we can be proud of us, poverty is everywhere and these are the things that we have been telling the general public about the same mis-governance. “Now if we have to be in the same party, with Saraki, we will have a moral burden. That explains why we believe that even if we were given 100 per cent of the slots, we still do not want him behind us because it is not going to be something we can explain to the people. “Therefore we have decided to move from PDP to APC. We have also held series of meeting with the national chairman. We have held meeting with the National Chairman and some top leaders, we have even invited Asiwaju who is the National Leader of APC. Right now, we have been meeting with the leadership of APC to make sure that we integrate fully into the party,” he said.

Ononuju chided the President for his desperation for political survival, which was why he backed the election of Adams Oshiomhole as APC chairman, stressing that Oshiomhole suffers from lack of understanding the truth of about what is playing out and has turned himself into an attack dog. “What people are fighting for is inclusion. This is because exclusion is the most violent form of corruption and that is what President Buhari is practicing with his nepotism. A lot of Senators from the north are against Buhari’s strategy of always concentrating on Katsina,” he said. Ononuju noted that the stakeholders can form a brand new alliance that will allow inclusion and bring out a younger northerner who understands Nigeria better. “When you pretend because you

want power and you bring Oshiomhole who instead of being gentle is behaving like an attack dog, things will not work,” he said. He added that the combination of former Governors of Kano state, Rabiu Kwankanso and Ibrahim Shekarau for the PDP, will greatly undermine President Buhari’s second term ambition especially now that they seem to be in alliance with the Emir of Kano, Sanusi Lamido Sanusi in the most populous state in the north. He lamented that President Buhari’s weakness contributed to the resentment in the Middle Belt especially among the people of Benue, Plateau, Adamawa Kogi and Kaduna, whose citizens are being butchered by suspected Fulani herdsmen allegedly because they are not willing to give up their land for grazing for foreigners.

SIKIRAT SHEHU, Ilorin

he All Progressives Congress (APC) in Kwara State has said it had formed a coalition with 15 other political parties to defeat President of the Senate Bukola Saraki and his loyalists in 2019 elections in the state. A former Chairman of the People’s Democratic Party (PDP) who defected to the All Progressives Congress, Akogun Iyiola Oyedepo disclosed this in an interactive session with journalists at the weekend. Oyedepo, who accused Saraki of under-developing Kwara State for the past 16 years, claimed that the over N1trn had accrued to the state in the past 16 years with nothing much to show. “APC in Kwara State had formed a coalition with 15 other political parties to defeat Saraki and his loyalists in 2019. The other parties, I can boost of 15 that are with us. As far as that is concerned, we have not less than 15 that are working with us. KOWA is with us, we are with Labour Party, PPN and many others. “Wherever Saraki goes, he goes with underdevelopment. He represents misgovernance. He is not something who has been known to have developed this state. I can say today that when you sit down to know the amount of money that has accrued to this state for almost 16 years now, we have even exceded a trillion naira when you include statutory allocation, IGR and loans and other interventions, the state has taken. What can you see around? Kwara State has been misgoverned for close to 16 years

Akogun Oyedepo

since 2003,” he said. Oyedepo stressed that Kwara state is more or less as he (Saraki) met it saying “In any case, when you see the percentage of the statutory allocation which still remains at about 75 and 80 per cent, you will see that there is no development in Kwara State. It means that wherever he (Saraki) goes, he goes with misplaced priority, underdevelopment, unfairness in the distribution of amenities, arrogance in power.” According to him, darkness and light cannot co-habit, lamenting “A government that is unable to give us good governance for about 16 years represents darkness. While I have been talking about party, I have laid emphasis with the personalities in government. “I have never attacked Buhari, I have always been categorical about Kwara. I believe that even if

we have bad governance in Nigeria, our own is more or less is a double jeopardy. We are under oppression in Kwara State, that is we agree that there is something wrong with the national politics. “We have to clear Kwara before we can face Nigeria. We are complaining about Kwara. The only issue is Bukola Saraki. We do not pretend about that. He is an issue because this is one person that will ensure that councillors, lawmakers both state and National Assembly he is indeed the only person that will anoint them. “Saraki is fond of shifting. He shifted from ANPP in 2003 to PDP. In 2013, he shifted from PDP to APC, today he has shifted from APC to PDP. “AS far as we are concerned today only four of my executives are let behind, the Woman leader, the

Buhari is cause of defections in APC – Ononuju INNOCENT ODOH, Abuja

public Affairs analyst and a stalwart of the People’s Democratic Party (PDP) Katch Ononuju, has blamed President Muhammadu Buhari’s leadership style for the mass defections of prominent members of the ruling All Progressives Congress (APC) to the main opposition Peoples Democratic Party (PDP) even as he condemned the alleged deployment of the police to stop the lawmakers from carrying out their functions. Ononuju told BusinessDay in an exclusive chart at the weekend that President Buhari’s inept leadership, his attitude of nepotism and divisiveness made some members feel alienated and discontented leading to the defection of 14 Senators and 37 members

of the House of Representatives of the APC to the PDP on July 24 at both chambers of the National Assembly. This first round of defections was soon followed by the defection of the President of the Senate, Bukola Saraki, the Governor of Kwara State, Abdulfatah Ahmed, the Governor of Sokoto State, Waziri Tambuwal, the Governor of Benue state, Samuel Ortom, the National Publicity Secretary of the APC, Bolaji Abdullahi among others. “Let’s be honest, Buhari has been inept. Trying to use force as they did days against the senate is not good for democracy. People tend to blame the APC but Buhari is to be blamed for the crisis in the party. There was no leadership, he did not allow the APC to be part of the government

and he allowed his cabal to run government so APC was outside. So you really cannot blame the APC for this because the APC was a coalition but that coalition was not allowed to govern. So those who were excluded were the ones you see now running away.

Ononuju

BUSINESS DAY

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Wednesday 08 August 2018

Politics & Policy

Defections: Analysts express concerns over how PDP will manage its new-found ‘success’ OWEDE AGBAJILEKE AND JAMES KWEN, Abuja

ike a phoenix rising from the ashes, the main opposition Peoples Democratic Party (PDP) has become the new political bride ahead of the 2019 general elections. What used to be like a rejected stone has now metamorphosed into a cornerstone with the gale defection hitting the governing All Progressives Congress (APC) in favour of the main opposition Peoples Democratic Party (PDP). From Benue, to Kwara, Sokoto, Kano, the story is the same: APC members are leaving the party en masse and like bees to a honeypot, are pitching their tents with the PDP. Prominent among the defectors are President of the Senate, Bukola Saraki, Governors Samuel Ortom (Benue), Abdulfatah Ahmed (Kwara) and Aminu Tambuwal (Sokoto). Others are Ahmed Ibeto, Nigeria’s Ambassador to South Africa; Bolaji Abdullahi, immediate past APC Spokesperson; over 50 serving federal lawmakers as well as several state lawmakers in Benue, Sokoto, Kwara, Kano States among others. Like the father of the prodigal son who threw a party to welcome his son back home, the PDP organised a lavish dinner at Transcorp Hilton, Abuja in honour of the returnees. But some party members have questioned the rationale behind the event, especially as the party had failed to recognise the immense role played by those who weathered the storm in the 14-month old leadership crisis that shook the foundation of the party. As the party basks in the euphoria of the gale of defections, political commentators say it now faces a litmus test on how to manage the interests of its members who stayed with them through thick and thin on the one hand and the returnees on the other hand. The battle has shifted to control of the party’s structure from state, local government and ward levels.

Saraki

In Kwara State for instance, while the national leadership of the party is elated about the defection of Saraki, the nation’s Number Three Citizen to its fold, this has not gone down well with the state party leadership as members of the PDP in Kwara State, led by the state chairman Iyiola Oyedepo, announced the defection of all political structures of the PDP at the ward, local government and state levels to the All Progressives Congress. Describing Saraki as an ‘anathema’, Oyedepo had met with the leadership of the PDP in Abuja, prior to Saraki’s defection and explained the resolve of party members not to work with him. Although PDP stalwarts like former Minister of National Planning, Abubakar Sulaiman and Muhammed Dele Belgore (SAN), the party’s candidate in the 2015 governorship election in the state, have promised to work with Saraki, it remains to be seen whether the honeymoon will last longer. The same scenario is also playing out in Sokoto where former governor of the state, Attahiru Bafarawa and former Deputy Governor, Mukhtar Shagari, have resolved to work with Aminu Tambuwal who recently defected to the party. The situation is not different in Kano State where former Education

Tambuwal

Minister and two-term Governor of the state, Ibrahim Shekarau agreed to bury the political hatchet and work with Rabiu Kwankwaso immediate past governor of the state, who recently defected to party. Ditto Benue State Governor Samuel Ortom and former PDP National Chairman, Barnabas Gemade on the one hand with immediate past Senate President David Mark and two-term governor of the state, Gabriel Suswam. Despite the reconciliation, some pundits are of the view that as the 2019 elections draw near, ambition may tear the political heavyweights apart in their respective states. “The unfolding developments have simply confirmed the dictum that ‘there are no permanent friends, no permanent enemies in politics but permanent interests’. Our politicians in this part of the world are driven by personal interests and not the collective interests of the electorate. Once their interest is affected, they look for another political platform that accommodates such interest. Behind every politicians’ defection, there is always a selfish interest attached. “It is only a matter of time, the honeymoon will soon be over. And you will see how these strange bedfellows will throw caution to the wind over the battle for the control of the soul of the party in their respective

states,” a political analyst, Jude Akeju told BusinessDay. Another commentator, Suleiman Yusuf, also shares this sentiment. According to him, conflicting interests among PDP presidential aspirants like Atiku Abubakar, Kwankwaso, Tambuwal and Saraki will soon tear the main opposition party apart. Observers have raised concerns over how the party would manage the new found success. They express worry that just like the governing APC, the PDP could suffer the same fate if its leadership fails to strike a balance between those who stayed with the party through thick and thin and the returnees. In the same vein, some chieftains have warned the party to be wary about the type of persons it accepts back into the party. Presidential aspirant and former caretaker chairman of the PDP National Caretaker Committee, Ahmed Makarfi shares this sentiment. The ex-Kaduna State governor cautioned against a repeat of the past where crisis engulfed the party immediately it lost the last presidential election. Makarfi said that those who left the party when things were rough and now returning because they could not realise their ambitions elsewhere, should not be trusted

with too much responsibility. He said: “We must be careful whom we admit back into the party so as not to repeat the mistake of the past.” It was gathered that in order to manage the return of defecting members, the PDP national leadership had given 60 percent of party structure to elected political office holders returning to the party and 40 percent to old members. In an exclusive interview with BusinessDay, the PDP National Publicity Secretary, Kola Ologbondiyan, said the party had learnt from its past mistakes. He added that events to the build up to the last general elections, which saw mass defection from the then ruling PDP to APC, would not repeat itself. The PDP spokesperson explained that the party had the wherewithal to manage both returnees and old members. His words: “You know the PDP is a structured party. And we have always had an understanding of the principle fairness, the principle of togetherness. “What happened in 2014 was a sad experience for our Party. Arising from that situation, we have learnt our lessons. Also don’t forget that PDP as the father of democracy is in its 20th year of existence. So, we have passed the teething stage where little problems would cause division. We are dealing with a party that has become mature over time. So we don’t envisage the kind of crises that we had in the past to manifest with these defections into our party. “We can manage the returnees and old members. We have even set a template and our people are abiding by it. “The template is a framework which the party has given to the respective states to deploy in managing the situation in respect of the accommodation of those who are coming in”. Time will tell if the defections will swing votes in favour of PDP in the forthcoming general election, which is barely six months away.

Nigeria’s paradigm shift awaits its political template CHIMDI E. NWOKEUKWU

here is a paradigm shift underway in Nigeria. What it requires is a political template. The paradigm shift has to do with contemporary history. The closing years of the 20th century provided the transition from military rule to civilian rule. By definition, the first kind of rule is undemocratic. But it does not follow that civilian rule will be democratic by default. What does follow is that popular sentiments will want civilian leaders to be democratic, to deliver the economic and social goods that enable citizens to participate as equal stakeholders in a common national future. Those expectations need a political template in order to be fulfilled. They need a political leader who believes what the people believe,

who respects their right to agree to disagree with even him, who is willing to see himself as a product of national history and not as its producer, The paradigm shift in Nigeria has an opportunity to find that template in the presidential election to be held next year. The key question is the team which Nigerians can trust to continue their progress towards a nation that can say, in all humility, that it is a thought-leader in Africa. For that to occur, Nigerians need a leader who can stand in the tradition of the great leaders who brought Africa out of the disappearing shadows of colonialism into the realm of sovereign modernity. Kenneth Kaunda, Jomo Kenyatta, Patrice Lumumba, Samora Machel, Kwame Nkrumah and Julius Nyerere are among the names that gave decolonised Africa its

insurgent political geography. Its boundaries reached the limits of their expansion in Nelson Mandela, who is more of a global moral identity than just an African legend. For all their differences of nationality, political strategy and personal temperament, figures such as them united Africans around a sense of the persistence of their past. Africa was a great continent before the arrival of colonialism, and it would be great again if it could make the most of decolonisation. That is what the African masters sought to do. However, the tragedy of decolonisation is not that it does not occur. The tragedy is that too little changes after it does. In Africa, the tragedy of postcolonial civilian rule is that the new rulers behave like the junta even without the benefit of uniforms derived from the colonial past.

It is that unwanted continuity which Nigeria must destroy next year if it is to break with a stymied political system in which civilian rule did not lead to true democracy. WHAT IS NEW It takes one generation to overtake the political footsteps of the preceding one. Why change is possible in Nigeria today is that the generation defined by civilian rule, but no more than that, has produced the subsequent one, a generation of young Nigerians who will settle for nothing less than the advent of genuine democracy. Nigeria’s population has reached a demographic tipping point. More than half its people are under the age of 30. In other words, young Nigerians constitute a political generation. They do not think and will not vote like their parents. What was progress to their parents

is unfulfilled achievement to them. Hence, they will venture where a previous generation would have thought it foolish to tread. They will change Nigeria. There could be false turns on the road ahead. The denominator of Nigerian regression is ethnicity, as it is in many other Third World nations. The colonial dismemberment of Africa’s lived habitat of traditional loyalties, carried out through the arbitrary construction of national borders, created a peculiar form of dissatisfied tribalism: the fetishism of political ethnicity. Ethnicity became a form of politics, a defensive mechanism deployed against the artificial African nation-state created by colonial Europe in its historical image. * Chimdi E. Nwokeukwu LLB (Wales), BL, LLM (Derby)

Wednesday 08 August 2018

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Politics & Policy

Defections: No respite yet for Saraki, others INNOCENT ODOH, Abuja

he political fortunes of President of the Senate Bukola Saraki and others who recently defected from the ruling All Progressives Congress (APC), appears seriously threatened as forces loyal to President Muhammadu Buhari and the leadership of the APC, have allegedly thickened their plots to impeach the Kwara lawmaker and the other ‘rebels’ either by hook or by crook. BusinessDay gathered on Monday from a reliable source that the attempt to lure the federal legislators back from their recess ostensibly to pass the N242 billion virement budget for the Independent National Electoral Commission (INEC) to prepare for the 2019 general elections, will provide elements in the camp of Buhari and the leadership of the APC, opportunity to stampede Saraki and impeach him. On Tuesday, July 24, Saraki on the floor of the Senate announced the defection of 14 senators, while the Speaker of the House of Representatives, Yakubu Dogara, also announced that 37 members of the House have defected to the PDP and other parties. Saraki later defected on Wednesday August 1, following the defection of

the Governor of Sokoto state, Waziri Tambuwal, Governor of Benue state, Samuel Ortom, Governor of Kwara state, AddulFatah Ahmed, National Publicity Secretary of the APC, Bolaji Abdullah among others. “Having called for Saraki’s resignation to no avail, allegations are rife that the federal government and the APC leadership have earmarked billions of naira to lure lawmakers owing to the affront and embarrassment the massive defections caused the ruling party, and possibly the disaster that could befall the party if more defections happen,” the source said. Over the weekend, one time Deputy Publicity Secretary of the APC, Timi Frank raised alarm that the APC intends to bribe the lawmakers with N150 million each to impeach Saraki and impose the Senator representing Nasarawa South, Abdullahi Adamu. In the same manner the splinter group of the APC, the Reformed All Progressives Congress (RAPC) through its Publicity Secretary, Kassim Afegbua in a statement on Sunday reiterated the plot. “Having met a brickwall going by the legal processes involved before the Senate can be re-opened, the disputed APC leadership is toying with the barbaric idea of forcibly opening the National Assembly, recon-

Saraki

vening the Senate and using the senators of the APC to preside over the planned impeachment. “Senator Abdullahi Adamu has been penciled down to succeed Senator Bukola Saraki, amid a host of other changes in the Senate’s principal officers. Once the Senate leadership is overthrown in a coup d’etat manner, the Senate will immediately consider the virement budget of INEC and also approve pending nominations in the Senate. “Part of the plot was to reach out to some PDP senators, especially those who have EFCC queries in order to give them a clean bill of health once they defect to

ISL advocates sacrifice, inclusive leadership as panacea for political crisis

s Nigeria grapples with a political future marked by insecurity, unsettling movements across party lines and a gale of impeachments, the Institute of Supervision and Leadership (ISL) has advocated sacrifice and selflessness in the leadership of the nation as a panacea. The ISL also stressed that leadership must be inclusive and always consider the consequences of its policies and actions on the larger society. This was the consensus by the lead speaker and participants at the Institute’s 9th Membership Induction and Inauguration of Fellows held at the University of Lagos, Akoka, Lagos State on Saturday, July 28, 2018. In his presentation titled, “Inclusive Supervision and Leadership: Pathway to socioPolitical Development,” the lead speaker, Kayode Bowale noted that leadership in the 21st century Nigeria was found in families, corporate bodies, religious organisations and all classes of stakeholders

such as low income earners, middle income earners, high income earners, political class and civil society. “If leadership seed is well cultivated, productivity, peace and robust value system can be achieved in any of these areas,” he added. He emphasised that to set the country on the pathway to socio-political development and stability, the current leadership of all the arms of government must, as a matter of necessity and urgency, reorder the value system and make sacrifice for the general good. Bowale, a lecturer at Covenant University, Ogun State, called for a “paradigm shift in attitudinal values of leaders” to enable Nigeria navigate its way out of the current socioeconomic challenges. He said the nation was in an era “when sacrifice takes upper hand than wealth acquisition and service takes pride of place in social life of the people.” The inauguration also featured group discussions in which participants listed greed, selfishness, moral and political corruption and lack

of vision as some of the hindrances to good leadership in Nigeria. In his address, the Acting Registrar of the ISL George Okoroafor informed participants that the Institute has attained affiliation with the American Chartered Institute of Management and Leadership (CIML), and would press on with the promotion of the education of effective supervision and transformational leadership all over the world to enable members achieve commitment to quality of life, work and society. Among the 26 distinguished personalities inducted as fellows of the ISL were the Deputy Governor of Ondo State Barr Ajayi Agboola, members of the political class, Dr. Musa W. Ibrahim, Permanent Secretary, Federal Ministry of Water Resources, who was represented by Funsho Akinya, Executive Director, Finance and Administration, Benin-Owena River Basin Development Authority (BORBDA) and Saliu Osifuemhe Ahmed, Managing Director, BORBDA.

the APC. They also agreed to woo some senators with the sum of N50 million,” Afegbua said. He also warned that the R-APC will not take it lightly adding that it is prepare to take all legal measures to stop the machinations of the APC. In his reaction however, the National Publicity Secretary of the APC, Yekini Nabena, in a statement debunked the allegation of cash inducement for the lawmakers, stressing that the party does not need money to remove Saraki claiming that the APC still has majority in the Senate, which they intend to deploy to deal with the Saraki menace.

In the same vein senator representing Delta Central, Ovie Omo-Agege, gave a hint as to what will befall Saraki in the coming days while briefing newsmen at a function in Emevor community, Isoko North Local Government of Delta state stressing that Saraki knows he must step down as Senate President since he could not continue to lead the Senate when he belonged to a minority party. Omo- Agege, who was accused of bringing in the thugs that carted away the mace during a senate session on April 18, said that party has no regret that they (the defectors) are gone adding that the wave of defection from the APC would not affect the fortunes of the party in the 2019 general election. “I can tell you it will all even out. As we are leaving, we also have people in PDP who are coming especially in a state like Kwara where those in APC left to PDP while those in PDP left to APC,” he said. On the leadership structure of the Senate, the staunch ally of President Buhari said: “APC has 53 Senators in the Senate while PDP has 49. ADC has two, APGA has two and there are two vacancies. Those two vacancies will be filled on the 11th and these elections will be held in our stronghold, Kastina and Bauchi. Even without these two seats, we command the majority in

the Senate. “The Senate President knows or ought to know that the right thing to do is to step down because there is no way he can continue to lead the Senate when he belongs to the minority party and he knows that.” The source added that Saraki is considered a threat to the APC because he had beaten the party’s leadership on multiple occasions in their quest to undo him. “He first maneuvered his way to become the President of the Senate contrary to the position of party’s leadership and frustrated all their efforts to muster enough powers to impeach him as they could not have enough number because the PDP members completely backed him(Saraki). “They dragged him to the CCT but the Supreme Court ruled he had no case to answer, they tried to rope him into the Offa bank robbery that is not working and they tried to use the police to stop him from coming to the National Assembly on July 24 but they failed,” the source said. Saraki, who is equally said not to be in a hurry to reconvene the National Assembly, appears at the moment like the proverbial cat with nine lives, but whether he will survive the latest onslaught being plotted against him this time, only the coming days shall tell.

Benue: Yakassai expresses fear over 2019 elections INNOCENT ODOH, Abuja

hairman of the Northern Elders Stakeholders Fo r u m, Ta n k o Yakassai, has expressed his fear over the 2019 election following some disturbing circumstances associated with political developments in the country in recent days. The elder statesman told BusinessDay in an exclusive chart that the attempt by lawmakers in Benue State House of Assembly to illegally impeach Governor Samuel Ortom with alleged connivance with the Nigerian police is a threat to democracy, warning that it could lead to unprecedented crisis in the country if not checked. He also frowned at the attempt by the federal government to use the police to stop the President of the Senate, Bukola Saraki and his deputy Ike Ekweremadu from performing their leg-

islative responsibilities, following the threats of defections by members of the National Assembly, who felt aggrieved with the ruling All Progressives Congress (APC). “I am getting worried because look at what happened in Benue where the security forces prevented majority members of the state House of Assembly and allow minority to enter and purport to begin i m p e a c h m e n t p ro c e s s against the governor. This is coupled with the attempt to prevent the presiding officers of the Senate from attending the meeting in order to create a situation whereby a temporary President of the Senate will be elected, coupled with what happened in Ekiti”, he said. He bemoaned that the security agencies are becoming partisan on the side of the government in power even as he expressed dismay that the sit-

uation if not checked may cause crisis that will be exploited by those clamouring for the restructuring of the country. “The trend in Nigeria is that the security forces are becoming an armed group of the party in power and if we continue like this and the election is rigged, my fear is that may be Nigerians will not take it kindly. Ultimately if there is any trouble it will give room for the agitation for restructuring but the proponent are yet to articulate that position,” he said. He warned that when there is crisis the ‘hooligans’ will not care whether restructuring has any meaning at all they will just give it a meaning. “And that will mean that if the crisis worsens and the people refuse to curb the crisis through conference, then the issue of restructuring may ensue, which will take the country backwards,” he added.

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BUSINESS DAY

Wednesday 08 August 2018

Leadership

Shaping people into a team

Take control of your learning at work Tomas Chamorro Premuzic

Tomas Chamorro-Premuzic is the Chief Talent Scientist at ManpowerGroup, a professor of business psychology at University College London and at Columbia University, and an associate at Harvard’s Entrepreneurial Finance Lab. His latest book is The Talent Delusion: Why Data, Not Intuition, Is the Key to Unlocking Human Potential.

uman beings have an astonishing ability to learn, but our motivation to do so tends to decrease with age, particularly in adulthood. As children, we are naturally curious and free to explore the world around us. As adults, we are much more interested in preserving what we learned, to the point of resisting any information — and data — that challenges our views and opinions. Unsurprisingly, there is now big demand for employees who can demonstrate high levels of “learnability,” the desire and ability to quickly grow and adapt one’s skill set to remain employable throughout their working life. This demand has been turbocharged by the recent technological revolution. Indeed, one of the major cultural and intellectual changes of the digital age is that information has been commoditized, and access to it is now ubiquitous. With the right question (and WiFi), we can all pretty much find the answer to anything, so long as we are able to judge if the answer is true — which in a world of fake news and dirty data is no small feat. The main career consequence of this is that knowledge and expertise have been devalued. What you know is now less relevant than what you can learn, and employers are less interested in hiring people with particular expertise than with the general ability to develop the right expertise in the future, particularly if they can do it consistently and across a wide range of roles. Note that our inter-

est in people who can learn how to learn is not precisely new. Over a century ago, the French psychologist Alfred Binet, who pioneered the application of modern pedagogy and child development science to formal education, observed that “our first job was not to teach [the students] the things which seemed to us the most useful to them, but to teach them how to learn.” Fast forward to today and Binet’s perspective is perhaps more current than it ever was. When we can all retrieve the same information, the key differentiator is not access to data, but the ability to make use of it; the capacity to translate the available information into useful knowledge. Ironically, a surplus of information can create a poverty of knowledge. It requires curiosity and a hungry mind to resist digital distractions and have the necessary discipline to learn. Unlike our evolutionary ancestors, who lived in a world of relatively low environmental stimulation where attending to novelty was rewarded, it is now more advantageous to ignore new information than to absorb it. Just like our evolved inclination to maximize caloric intake is no longer adaptive — but maladaptive — in a world of abundant and cheap fast food, our evolved predisposition to consume as much novel information as possible is no longer advantageous in the age of Face-

book, Twitter and clickbait news. To make matters worse, today’s jobs and careers often handicap our ability to learn, demanding consistent levels of high-performance and focusing our energies on attaining results rather than broadening our skillset. Instead of genuinely promoting a learning culture, most employers obsess over results, demanding higher and higher levels of efficiency and performance, which can be the biggest barrier to curiosity and learning. Individuals looking to overcome this challenge should consider these four suggestions: 1. Pick the right organization. Most people don’t include “learning potential” as one of the key criteria when they choose their job, but you should. Of course, your learning potential is partly dependent on your own personality, with traits like learnability, curiosity, and openness to experience being key. Unsurprisingly, intelligence is also a very important quality. But regardless of these qualities, your propensity to learn will be strongly influenced by the type of job, career, and organization you pick. For example, research shows that enriching learning environments play a critical role in shaping our experiences and helping us develop new knowledge. Companies like Google, Unilever and Edmunds. com have successfully put in place

cultures to unlock employees’ curiosity and reward their formal and informal learning. To create a learning culture, organizations must value psychological safety, diversity, openness to ideas, and reflection time, all of which can hinder short-term results. 2. Set aside time for learning. One of the biggest barriers to learning is time, particularly when you are focused on delivering top levels of performance. This is also true for your boss, so you cannot expect them to devote much time to your learning journey. In fact, chances are your boss is too busy to set aside time to learn themselves. It is therefore essential that you own your own learning process, managing your professional growth and development. If you are waiting to be told what to learn, you are not being proactive about your learning. Even if you are not given a specific time to achieve this, it is up to you to set aside the necessary time to learn. 3. Ignore your strengths. Although it is convenient to pick jobs that are a good fit for our strengths — and talent is largely personality in the right place — we can only develop new strengths by addressing our weaknesses, so if you want to acquire skills you don’t have, or develop new expertise, you will inevitably have to focus on what you don’t know rather than what

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

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you do know. This takes courage — and support from your employer. At times, finding a skill adjacency can be a compromise: leveraging some of your existing capabilities to learn new things or acquire valuable experiences in a new area. Remember: Even if it makes you a relatively worse performer to begin with, it will improve your ability to learn new things and absorb new types of training, expanding your range of strengths. 4. Learn from others. Too often we equate learning with formal training or education, but some of the biggest learning opportunities are organic or spontaneous, and this is also true at work. They involve learning, not from structured courses or training materials, but from others: e.g., peers, colleagues, bosses and, especially, mentors. In fact, whereas formal learning interventions tend to boost only the acquisition of specific content or subject matter expertise, spontaneous and social types of learning are more likely to result in the formation of new habits and practical behaviors. It has also been noted that most of the problems we encounter during our everyday working lives are ill-defined rather than wellstructured, so they do not have an objectively correct solution, requiring adaptive rather than technical learning. However, this requires seeking the right feedback and being receptive to others’ suggestions, including criticism. Most of us are so busy trying to demonstrate competence that we forget to learn, and we perceive asking for suggestions as a sign of weakness. And if you have limited opportunities to learn from others, you can always learn something about yourself: How do others perceive you, including your talents and performance? Answering these questions will help you identify gaps, as well as future learning areas. Importantly, learning should never stop. Regardless of your past achievements and your present level of expertise, your future depends on your ability to keep learning.

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a g @ bu s ines s dayo nl ine. co m

Nigeria’s palm oil imports from Malaysia dips 20% in 5 months Stories by JOSEPHINE OKOJIE

igeria has seen its palm oil imports from Malaysia declined by 20 percent between Januar y and May 2018, owing to the high stock of crude palm oil (CPO) available at local refineries in the country, the Malaysian Palm Oil Council (MPOC) says. Data from the MPOC shows that Nigeria’s export from Malaysia declined from 99, 971 metric tons (MT) in the first five months in 2017 to 79,873MT over the same period in 2018. This shows a 20 percent decrease on a year on year basis. “Most countries in the West A f r i ca re g i o n i mp o r t e d l e ss Malaysian palm oil in the past 2 months this year after substantial buying in the first quarter of 2018. “This is due to high stock of CPO available at the local refineries after heavy buying earlier in the year but it is expected that they will begin to import more MPO in the third and fourth quarters as the current price makes it attractive to import and restock palm oil,” MPOC says. Nigeria currently produces about 970,000 metric tons of CPO, while

local consumption is estimated at 2.7 million tons per annum, indicating an estimated demandsupply gap of over 1.7 million MT. In terms of production volume, Nigeria is the fifth largest palm oil producer, behind Indonesia with 36 million MT, Malaysia with 21 million MT, Thailand with 2.2 million MT

and Colombia with 1.3 million MT, data in the global oil palm industry shows. Since losing its position as one of the world’s largest palm oil producers, Nigeria is yet to recover and take its proper place in the comity of crude palm oil producing nations. This has been attributed

to the discovery of crude oil, which changed the country’s palm oil narrative of the 60’s. As a result, the country has resulted to export to meet up with local demand for the product and countries such as Indonesia, Malaysia, Ivory Coast and Ghana accounts for majority of the imports, trade report from the National Bureau of Statistics show. “My palm oil trees fruited well because the weather conditions have been favourable but the issue has been the market. There is a lot of supply of palm oil in the market and prices have refused to rise since then,” Gabriel Ogar, a palm oil farmer at Okondi Local Government Area, Cross River state told BusinessDay. “I have about five hectares of palm oil trees waiting to be harvested but because of the unattractive price currently, I do not intend to harvest it. I am looking for a company that would buy from me,” Ogar said. According to Igwe Uche, national president, Oil Palm Growers Association of Nigeria (OPGAN) in a response to BusinessDay questions there has been increase in the planting of new palm oil trees in recent years which has helped in increasing the country’s palm oil

output in recent months. “With a well-developed palm oil industry, Nigeria has the potential to earn huge foreign exchange from oil palm production,” Uche said. According to experts, oil palm has the capacity to produce more oil than any other oilseed crop. About 90 percent of palm oil is used in the production of foods, while the remaining 10 percent is used by the non-foods industry. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics are made from palm oil. To protect the country’s palm oil industry and spur the industry grow th the government had imposed a 35 percent tariff (10 percent duty and 25 percent levy) on the importation of palm oil into the country. But despite this, importation of the product has continued on the rise in recent years. A price of a metric ton of CPO sells for $660 at the international market while a 25 litres goes for N11, 000 at Mile 12 Market in Lagos. Similarly, a five litre gallon sells for N2,200 and a bottle goes for N567 in Mile 12 Market in Lagos.

Lack of structural support responsible for Nigeria’s fluctuating cocoa production, says Aikpokpodion

eter Aikpokpodion, an expert in cocoa improvement and value chain development in Nigeria has said that the country’s inability to maintain a steady growth in its cocoa output over the years is owing to insufficient structural support in the subsector. According him, despite the potential of the Nigeria’s cocoa industry to change the fortunes of the country’s economy, with attendant exponential gains by way of earnings, employment and other spin-offs, the Federal Government is yet to provide the structures that would consistently drive growth. “The current situation in our cocoa production is only a reflection of the worsening conditions since stagnation or near-neglect of national cocoa development efforts which was re-ignited almost two decades ago during President Olusegun Obasanjo’s administration,” Aikpokpodion said “It is obvious that the support structures that made the cocoa sector a solid contributor to the nation’s economy in the past are no longer in place and this leads to underperformance and low farm

productivity as well as fluctuations in output. Cocoa, which remains one of the fastest selling and most desirable agricultural commodities in the international market owing to the rapid growth and expansion of chocolate confectionaries and other products, is still neglected by the government. Over the years, the government has mouthed support for cocoa farming and processing but none has made it beyond the talking stage. “It appears that from the Federal Government side, not much is being done recently to sustain efforts at growing Nigeria’s cocoa output steadily. At government level, the country is yet to have a functional strategic national plan for the cocoa industry despite the huge importance of cocoa to Nigeria’s economy. “ It i s i m p o r t a n t t h a t t h e government support the private sector players and their representative organizations especially the Cocoa Association of Nigeria. With a strategic national plan and functional structures to support on-farm production, Nigerian cocoa farmers will double

their efforts to ramp up cocoa production,” he said. Aikpokpodion also stated that other factors such as high rates of old

trees, limited use of pesticides and vulnerability of pest and diseases as factors responsible for the constant decline of Nigeria’s cocoa output.

“It is estimated that more than 80 percent of Nigerian cocoa farms estimated at 800,000 ha are older than 50 years. The preponderance of very old tree stocks with most over 30 years results in low yields often less than 400 kg and ha and vulnerable to pest infestation. “Limited use of pesticides to control black pod disease at the right time and recommended rates also lead to severe loss of yield on the farm. A recent field visit shows that the cocoa swollen shoot virus (CSSV) disease which is a major yield limiting disease has become a significant constraint that needs urgent attention,” he further said. “This disease has often been overlooked as locally important only in areas of mass infection in southwestern Nigeria and considered not too important by policy makers and research institutions,” he explained. Nigeria that was once the world leading producer of cocoa has seen its production fluctuating in the last five years with a current production of 210,000M T in 2016/2017, a c c o rd i n g t o d at a f ro m t h e International Cocoa Organisation 2016/2017 season.

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‘Innovative farming will attract youth into agriculture’ Odedina Samson Adeola is the provost of Federal College of Agriculture (FECA), Akure, Ondo state. Adeola in this interview with journalists in Lagos spoke about FECA and how the adoption of technology and innovation will help attract youth into agriculture. JOSEPHINE OKOJIE was there. Excerpts:

Can you tell us about FECA? he Federal College of A g r i c u l t u r e , A ku r e (FECA) is one of the oldest institutions in Nigeria and we are the first higher institution in Ondo state. We are 60 years old and we award both OND and HND. What we do in colleges of agriculture is same thing that is done in the polytechnics. We offer National Diploma (ND) and Higher National Diploma (HND) and we are under the same regulatory body that award ND in polytechnics and the same body that award HND as well. Nigeria has 45 Colleges of agriculture in the country and FECA is amongst the 11 that belongs to the Federal Government while the remaining are state owned. The educational sector in Nigeria recognises three tertiary institutions, the University, Polytechnic and College of Education and that is not good for agriculture. We have close to 400,000 youths in about 45 colleges of agriculture in Nigeria currently. Since you became the provost, what have you done to transform FECA? I have done quite some things to transform the institution since I became provost. The school was established in 1957 on a landmass area of about 1,112 hectares. When I came into office by January 1, 2015, I met only 350 hectares, meaning 600 hectares have already been stolen by land grabbers. Also, upon resumption of office I met on my table a judgement by the Ondo state high court saying that about 75 hectares have been awarded to an individual, leaving the college with about 15 percent of the original landmass area of the school. With the help from both the Federal Ministry of Agriculture and Ondo state government, all that is begin resolved now. Also, the college had no internet presence when I came in as the provost. People have to travel from afar to the school to purchase the

Odedina Samson Adeola

forms for admission. Infrastructural development was near zero, the environment was bushy and I met about 220 students on campus. But today, all that have changed. We now have a website and close to about 1,000 students currently. Before now, people were bringing their wards and when they reach the gate they will turn back because the environment was not accommodating then but now I get calls from people who want me to use long leg to get their wards admitted into the college. For 35 years, before I came in as provost we have not seen any traditional ruler, any governor and any minister but last year alone, the Governor of Ondo state visited us twice and appointed the college as the sole trainer of the 18,000 youths, the state intends to empower through agriculture. And again, for the first time in 17 years, we got approval to run five new courses including computer science, fishery and some other courses. Now we are online. If you want to purchase your form, you do not need

to come to our college, we are the same level with other institutions so that youth everywhere can see our institution as viable option. For the first time in so many years, government agenda and mandate happened to be similar to our own mandate but what we do is to produce graduates who on their own practice agriculture responsibly in such a way that they will be making profits and other youths can follow suit. Every month, we have investors forum and we have two weeks for three vocational programs where we teach three things: job opportunities in various agricultural value chains, where individuals can key into and how to reduce cost of production, lastly, network collaboration, marketing and also a post training linkage centre where you can always come back to us for credit linkage, marketing, technology, amongst others. When I came in as a provost, I came in with a five year plan. For first year - the plan was to engage my colleagues in planning, second year - we improve our infrastructures and

structure, third year, we introduced new courses, Fourth year - cement relationship with stakeholders and the fifth year - I would be finishing my plans and the school is now up to run. This is currently my third year at the institution. Right now, everybody wants the school to consult for them, our lecturers are very busy. Now if you come for consultancy or advice at the institution, it is final year students that will attend to you. We are the leader in the continent for this kind of approach to training youths in various agricultural value chains. We now received visitors from Malawi, Ghana, from Anambra polytechnic, UAE and university of Nsukka. Everybody wants to study this template of engaging youths in profitable agriculture. We train youths in our schools adopted villages and secondary schools. So, we have our projects on biogas where we use animal brawl as an alternative to power supply for home use. We have been demonstrating that in communities and some schools and we have been successful in doing that for a while now.

there. Everything we do now is based on ICT and technology. This way, agriculture becomes more attractive to youths. We need innovation to do farming differently from the older generation of farmers who were mostly entangled in poverty. Government must give assistance to finance and land. No youth wants to go to the rural areas to take up farming because the infrastructures there are poor. The government must provide key infrastructural facilities so that youth can take up agric as a profession. Youth need mechanisation, innovative ways to do agriculture, finance, infrastructure and a guaranteed market for their produce.

What are tho s e things the government needs to do to motivate youths into agriculture? The government needs to develop the country’s agriculture using technology. Youth can only find agriculture attractive when it involves technology and innovation. The government needs to create that world for them and allow them to live

How do you final year students at FECA access funds and is there any training attached in this regard? For over 30 years now, we have been doing training for farmers and we are doing the valuation for them as well. Most farmers will tell you that lack of finance is their major problem. That is not it. It is not the issue of money but interest. Every part of the training in agriculture is linked to credit. Feasibility study is part of it and ways to source for finance is part of the training we give to our final year students. We train them on three things they need to survive in agriculture. First, on how to increase their yield per hectare, it not about finance only, they need to know how to reduce the cost of production and get the right information about marketing because the opportunity now we have in the food and agribusiness cannot be tapped. For instance, there a company very close to us that needs about 100 tons of fresh cassava roots, that is a huge opportunity for the youths. We would give out such information to our final year students that have farms. There are lots of value chain opportunities in supply, transport, quality control and marketing and we are not tapping into it because we lack such information.

Nigeria for consumption. This implies that the market is very huge with good return on investment. A l s o, w i t h t h e i n c rea si ng awareness of Nigerians improve their nutrition with at least one egg daily and the Federal Government School feeding initiative, the market for poultry table eggs is widening on a daily basis. The cost of setting up a poultry farm depends on the size of the farm and the number of birds intended to start production with. For a poultry investment between 200 and 500 birds, the potential investor requires between two and five million. The investor has to first identify

the aspect of production desired to start with, either egg production or meat production. The next step is to obtain day old chicks from reputable hatcheries. The small chicks can be either naturally or artificially brooded. If artificially brooded, small chicks must be placed in a separate house from laying chickens and it is necessary to protect the chicks from predators, diseases and cold. This stage of brooding lasts for eight weeks. In the first four weeks of life, small chicks need to be housed in a brooding box first before transferred to the main pen house.

Is the government doing enough to engage youths in agriculture? I think the government is trying in the area of supporting institutions like FECA because everything we have been doing in terms of youth training in agriculture is through the funding and support we get from them. The issue now is the private players to also take it further. There is need for collaborations between the governments at all levels and the private sector to engage more youth in agriculture.

What it takes to own a poultry farm

oultry production is the aspect of livestock farming that presents one of the finest opportunities for potential entrepreneurs and investors to make good money within the shortest period of time possible, if well setup and managed. Currently, Nigeria, Africa biggest economy needs more than a million metric tonnes of poultry products annually to meet local demand. Official figure shows that local farmers are only able to produce about 300,000 metric tonnes, leaving a wide gap of more than 1.2 million metric tonnes. This has made smuggling of

poultry products; especially chicken and turkey a big business for importers of these products. As a result of this, the government placed ban on the importation of poultry products. But most of the bans placed on poultry products have not been effective and have made no real impact on actual foreign imports. Imported poultry products, especially chicken and turkey, have been identified as causative agent in Non- Communicable Diseases (NCDs) and antibiotics resistance. Some of these health conditions include hypertension, kidney disease, and cancer. This has made the demand for

fresh chicken products on the increase especially from Nigeria’s middle growing class which constitute about 60 percent of the total population. According to industry estimates, Nigerian poultr y industr y is estimated at over N80 billion ($600 million) and is comprised of approximately 165 million birds. Apart from chicken production, investors and agro entrepreneurs can go into egg production as well. With the Nigerian population of over 190 million people, the market for poultry eggs is rather un-imaginable. Neighbouring West, East and Northern African Countries also depend on poultry eggs from

BUSINESS DAY

Wednesday 08 August 2018

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Banks’ NPL improves on stable macro economy HOPE MOSES-ASHIKE and AGNES IBOROMA

he levels of non-performing loans in the banking industry is said to be moderating as the performance of deposit money banks continue to improve. Although the current NPL figures were not revealed, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) who said this at the last Monetary Policy Committee (MPC) was optimistic that this moderation would continue. The percentage nonperforming loans reflect the health of the banking system. This implies that a higher percent of such loans means that banks have difficulty collecting interest and principal on their credits, which may lead to fewer profits for the

banks and, possibly, bank closures. Members of the MPC who participated in the May meeting noted some improvements in the banking system as the deteriorations in financial soundness indicators have been halted, and in some cases reversed. Uche Uwaleke, associ-

ate professor and head, banking and finance department Nasarawa State University told BusinessDay early this year that monetary policy easing on the back of receding inflation rate will equally improve banking sector liquidity and will go a long way in reducing the over 15 percent non-

performing loans in the industry. Nigeria’s (inflation) year-on-year slowed marginally to 11.23 percent in June from 11.61 percent the previous month, but still remains well above the 6-9 percent preferred band. The Risk Assets examination of 20 Deposit

Money Banks (DMBs) as at December 31, 2016, revealed that of the total industry loans portfolio of N15,597.32 billion, the sum of N3,105.94 billion (or 19.91%) was non performing. The 19.91 percent NPL ratio was a 79.04 percent increase over the average industry ratio of 11.12 percent recorded as at December 31, 2015, according to the Nigeria Deposit Insurance Corporation (NDIC). The banking industry NPL ratio which stood at 10.13 percent as at December 2016 rose to 15.18 percent by September 2017. Banks are heavily skilled to high risk sector - upstream oil and gas; however the risk appears to be reducing following the sustained increases in the price of crude oil and production. “We are cautiously optimistic on the overall NPL

outlook for the sector”, Renaissance Capital analysts said in their May report. In his personal statement at the May MPC meeting, Adamu, Edward Lamtek, noted that industry return on asset (ROA) and return on earnings (ROE) rose quite significantly to 21.57 and 2.14 per cent, respectively, in April, from 11.78 and 1.28 in February 2018. Likewise, the non-performing loans (NPLs) ratio moderated slightly in April. “These positive developments are broadly connected to the improvement in the macroeconomic conditions including stable exchange rate and declining inflation. Interestingly, banking system stability is required for proper financial intermediation (including credit flow to the real sector) which is needed to support recovery in output”, Lamtek said.

Stanbic IBTC underscores imperative of developing aviation industry

arnessing strategic cooperation and creating an enabling environment have been identified as pivotal factors to drive growth and development of Nigeria’s aviation industry. This was the consensus of stakeholders at a recent interactive aviation session organized by Stanbic IBTC Bank PLC, a member of Stanbic IBTC Holdings, in Lagos. The session attracted players across the aviation spectrum, including aircraft manufacturers, airlines, investors, pilots, lessors, bankers, insurers, engineers, travel agencies, air travellers and aviation service companies. Demola Sogunle, Chief Executive, Stanbic IBTC Bank PLC, said Stanbic IBTC realized the correla-

tion between a vibrant aviation industry in Nigeria and economic growth hence took up the initiative to support the development of the sector, in collaboration with other stakeholders. He added that some of the areas where the Bank can offer financial service solutions are aircraft financing and leasing, advisory services, asset financing, aviation infrastructure development, and capacity building. Sogunle noted that Standard Bank Group, to which Stanbic IBTC belongs, has over 155 years of banking experience in Africa and has been active in supporting the development of industries across the continent. The Group, he reiterated, boasts of leaders in different market segments, in affirmation of

its status as an end-to-end financial services solutions provider. In addition, Stanbic IBTC Bank PLC is the only financial institution in Nigeria with the AAA rating by global rating firm, Fitch Ratings. He also stated that the strategic alliance between the Industrial and Commercial Bank of China (ICBC) and Standard Bank has the clout and resources to support the Nigerian aviation sector to overcome its current challenges. ICBC holds20 percent stake in Standard Bank, while the latter owns 64.4 percent in Stanbic IBTC. “When we say Africa is our home, we mean every word of it. Supporting the continent’s development is a task we take very seriously”, Sogunle stated. Also at the session was

keynote speaker and Chief Executive Officer, African Aviation Services, Nick Fadugba, who spoke against the backdrop of Africa’s below par performance in air transportation. He highlighted three key ingredients that will be helpful in halting the trend; these are having strong airlines, hub airports and an enabling environment. These steps will improve connectivity and convenience, increase safety and aviation infrastructure, as well as enhance competition, drive down costs and raise efficiencies. Achieving this will not be a walk in the park, but it requires hard work by all stakeholders. It was noted that although South Africa Airways, Ethiopian and Kenya Airways are Africa’s three

biggest airlines, Emirates is bigger than the three put together – hence the need to provide every support necessary for the industry. For a continent with 15 percent of the global population, Africa offers immense opportunities in air travel, but unfortunately 90 percent of its air traffic is conducted by foreign airlines. While thanking Stanbic IBTC Bank for being the first Nigerian bank to organize an aviation-specific conference, Fadugba emphasized that building a safe, secure and efficient aviation industry in Nigeria and Africa requires the cooperation of stakeholders in such areas as joint training, repair and overhaul (MRO), spares pooling, joint operations, interlining, and code-sharing.

Other requirements include over-hauling the current business models, raising more capital, abiding by financial and lease obligations and always consulting expert advice. The session also had a panel discussion that featured Sales Director, Middle East & Africa, Embraer Commercial Aviation, Gad Wavomba; National President, National Association of Nigerian Travel Agents, Bankole Bernard; Chairman, Airline Operators of Nigeria, Captain Nogie Meggison; Vice President, Marketing, Nordic Aviation Capital, Sasha Yusufali; Regional Director, International Air Transport Association (IATA), Funke Adeyemi; and Nick Fadugba. The segment was anchored by Stanbic IBTC’s Bolatito Ajibode.

Wednesday 08 August 2018

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Pension Today

BUSINESS DAY

In Association with

EPCCOS making pension remittance easier for employers

technology targeted at enhancing interaction between employers of labour and administrators of the pension scheme called, Electronic Pension Contributions Collection System (EPCCOS) is making pension remittance a lot easier currently. Employers of labour under the Contributory Pension Scheme (CPS) are having fewer troubles remitting their employees’ pensions to the Pension Fund Custodians (PFC’s) for their chosen Pension Fund Administrators (PFAs), following the investment in technology by industry operators. This technology will not only ensure seamless pension collection by operators, it will also enhance compliance by employers who now have easy process of remittance and reconciliation. The initial challenge where pension payments have been remitted without corresponding schedule; inconsistencies between remittance and actual posting; time lag before reconciliation and many more complaints would become things of the past. The new development is part of efforts by Pension Operators Association of Nigeria (PenOp) to ensure a seamless process in pension remittance. PenOp is an independent, non-governmental, non-political and non-profit making body established to promote the operations of the pension industry, provide for self-regulation and ensure that international best practices relating to the industry are observed by the operators registered in Nigeria.

Its roleis to add value to its members across all levels; provide information, education, visibility, networking, while externally it is to increase the awareness and visibility of the pension industry and enable external stakeholders understand and participate in thedevelopment of this financial sub-sector wherever and whenever possible. EPCCOS is a web-based e-payment collections platform, developed by NIBSS in partnership with PenOp. The portal was designed to facilitate the remittance of employees’ Pension Contribution to their various Pension Fund Administrators in an organized and timely manner. Hitherto, these remittances were done manually with schedules distributed to the various PFAs and payments separately to the

PFCs often with reconciliation issues. EPCCOS manages this entire process end-to-end with prompt notification to all parties namely the employers, the PFA and the PFC. EPCOSS has greatly assisted employers to comply with the Pension Reform Act guideline stipulating that employers must remit employees’ Pension Contributions within 7 days of staff salary payments. An employer who deducts pension contributions from employee salaries is under obligation to remit such contributions to a PFA chosen by the employee. According to the Pension Reform Act (PRA) 2014, employers are legally bound to make contributions on behalf of their employees within 7 working days after the payment of salaries.

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

CPS is contributory, fully funded, based on individual accounts that are privately managed by Pension Fund Administrators with the pension funds assets held by Pension Fund Custodians The PRA 2014 also empowers PenCom, subject to the fiat of the Attorney General of the Federation, to institute criminal proceedings against employers who persistently fail to deduct and/ or remit pension contributions of their employees

within the stipulated time. Cases of unremitted pension contributions should therefore be brought to the notice of PenCom directly or through your Pension Fund Administrator (PFA). Pension fund custodians said, EPCCOS is a major

effort towards enhancement of pension collection. The platform should be embraced by employers of labour as the process of pension remittance has been made easy with the platform. According to them, pension operators have increased its investment in the technology to make it endto-end, stating that a lot of success have been made in making pension remittance easy for employers. According to the Pension Reform Act (PRA) 2014, the minimum rate of pension contribution is 18 percent of monthly emoluments, where 8 percent is to be contributed by employees and 10 percent by employers. However, an employer may choose to bear the full responsibility of the scheme provided that in such a case, the employer’s contribution shall not be less than 18 percent of the employee’s monthly emoluments. The key objectives of the scheme are to ensure that every person who has worked in either the public or private sector receives his retirement benefits as and when due; assist improvident individuals by ensuring that they save to cater for their livelihood during old age; establish a uniform set of rules and regulations for the administration and payment of retirement benefits in both the public and private sectors; and stem the growth of outstanding pension liabilities. CPS is contributory, fully funded, based on individual accounts that are privately managed by Pension Fund Administrators with the pension funds assets held by Pension Fund Custodians.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

BUSINESS DAY

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Wednesday 08 August 2018

E-mail: insurancetoday@businessdayonline.com

Leadway Assurance list positives in Tier-Based Minimum Solvency requirement for insurance industry Modestus Anaesoronye

nderwriting giant, Leadway Assurance Company Limited has listed the positives in the recently introduced Minimum Solvency capital requirement for insurance companies in Nigeria. Oye Hassan-Odukale, managing director/CEO of the Company, while commending the National Insurance Commission (NAICOM) for the bold step said the policy was long overdue. Hassan-Odukale, who is also the Chairman of the Sub-Committee on Publicity and Communication of the industry’s Insurers’ Committee, believes the introduction of the solvency requirement for insurers in Nigeria commencing January 1, 2019, will help to restructure the market in a way that insurers can choose which part of the consumer segment (retail, commercial or industrial) is best served based on the capital fund that it holds or is able to deploy. He stated that with this restructuring, insurers do not have to be compelled to increase capital to underwrite risks that stress their capital without delivering commensurate returns to capital providers/shareholders. He believes that the restricting will foster the emergence of players with capacity to become retail specialists or become specialist underwriters of big-ticket risks in critical sectors of the economy, such as the aviation and oil & gas, whilst accelerating the growth of the industry and its contributions to the Gross Domestic Product (GDP) of the country. Hassaan-Odukale also expressed his confidence in the initiative stating;

Oye Hassan-Odukale

“The news of NAICOM’s introduction of TBMSR is a positive one. I am confident that it is an initiative with potential upside for the industry to grow and take its rightful position as a formidable contributor to our national economic activities, growth and development as it is in developed economies. “It is high time we moved beyond the 0.3 per cent contribution to GDP and improve our ranking within the comity of African insurers (heavily dominated by South Africa) as measured by the African Insurance Barometer. Overall, we should expect an improvement in the capacity and reputation of the industry on the back of unwavering market discipline, improved claims settlement, stronger local retention, increased prudence and promotion of appropriate pricing”, he added. Under the new TierBased Minimum Solvency Requirement ( TBMSR), the minimum capital requirement (policyholders’ surplus/shareholders’ funds) for insurance companies remains as the base Tier 3 capital

Tier 1 companies are ultimately required to have 300% of the base capital (N9bn for General Insurance and N6bn for Life) to write all risks including annuity and exclusively Special Risks (e.g. energy and aviation risks)

(N3bn for General Insurance; N2bn for Life). Tier 3 companies are now only able to write retail insurances (micro insurance, motor, fire, agriculture, compulsory liability insurances, individual life, health and miscellaneous insurance). Tier 2 companies are required to have 150% of the base capital (N4.5 for General Insurance and N3bn for Life) based on the types of risks written. Tier 2 companies can write retail insurance as prescribed under Tier 1, including commercial and industrial risks and group life assurance. Tier 1 companies are ultimately required to have 300% of the base capital (N9bn for General Insurance and N6bn for Life) to write all risks including annuity and exclusively Special Risks (e.g. energy and aviation risks) which are highly capital intensive in terms of risks retained on the balance sheet of the insurer in addition to any reinsurance capital purchased. Automatically, composite companies (Life and General Insurance) at any tier only need add both sides to make up the required capital, so you will have, N5bn for Tier 3, N7.5bn for Tier 2 and N15bn for Tier 1. Speaking on how the TBMSR will affect the solvency margin of Nigerian Insurers, Hassan-Odukale added, “It is important to note that all insurance companies already fall within each restructured

tier therefore, no company needs to raise additional capital unless they have existing capital deficiency or prefer to play within a tier above its current capital level. “Leadway Assurance which falls within the Tier 1 bucket currently has shareholders’ funds valued in excess of N40bn compared to N15bn required for a Tier 1 composite insurer. A number of other Nigerian insurers are also within this tier. We believe this TBMSR is good for our industry as it helps to promote the financial health of insurers and ultimately consumer confidence. Nigerian insurers are already at different levels of the tiered system. Each company will then be placed within the bucket

that they already belong. Should companies now decide to play at a level higher than their current tier, the shareholders can take capital actions either by mergers or injection of new funds. With the TBMSR, insurers simply play within the limit of their solvency capacity”, Hassan-Odukale said. Odukale also added that unlike the previous capitalization exercise, no insurer is being asked to shore up capital and neither will anyone’s licence be withdrawn either. He stated that companies simply get to choose which tier they want to operate in, ensuring that they stay within their capacity so that they are able to meet the obligations of the risks that they carry. “If a Tier 3 company then wants to

play at Tier 1 level, nothing stops them from embracing voluntary merging with other companies in order to scale up their capacity and build more formidable and globallycompetitive institutions that would create value for stakeholders and investors. “At the end, the major difference between the three tiers will be in the nature of risks underwritten by each insurer depending on each insurer’s current capital position. To reiterate, the choice of whether to increase capital is left to the insurer who must decide within which tier it wants to play the market as the regulator has not required any company to increase capital above the current minimum.”

Wednesday 08 August 2018

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BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

NAICOM in week-long engagement with insurance Swiss Re CEO sees market recovering, as price rise, directors over Tier-based capitalisation Stories by Modestus Anaesoronye

or the whole of this week, the insurance industry regulator, the National Insurance Commission (NAICOM), will engage with the directors of insurance companies on the new Tier-based solvency capital introduced in the sector. BusinessDay findings show that NAICOM has allocated days beginning from Monday through Friday, when the different companies board of directors will meet the commission. According an industry source, the meeting will enable NAICOM explain to the

Mohammed Kari, Commissioner for Insurance

directors the task ahead and what their roles will be in the insurance industry? The meeting is taking place in Lagos, with the meeting structured in

batches. The new capital requirement, which will commence 1st January 2019, will require insurance companies willing to play big in the market to either raise fresh capital, embark on mergers and acquisition for higher Tierlevels, or remain with low level capitals and underwrite small premium risks. This development analysts say will open up the market for dip pocket investors, as companies operating currently with low capitals will welcome new funds to remain relevant and underwrite big ticket risks in group life, annuity, oil, gas and aviation. Under the new capitalisation structure, life insur-

ance firms need a capital level of N6 billion for Tier 1; N3 billion for Tier 2 and N2 billion for Tier 3: For non-life business, the requirement is N9 billion for Tier 1; N4.5 billion for Tier 2 and N3 billion for Tier 3. While for composite companies (combination of life and general business), the new capital requirement is N15 billion for Tier 1; N7.5 billion for Tier 2 and N5 billion for Tier 3. The recapitalisation according to the Commission will also open doors for fresh licensing to investors willing to play in the higher Tier 1 capital levels. New license was issued eight years ago and FBNinsurance was the last license issued by the regulator.

L-R: Davis Iyasere, corporate affairs manager, Nigerian Insurers Association (NIA); Tunde Odeyemi, corporate communications manager, Staco Insurance Plc and chairman, Corporate Affairs Mangers Association of Nigeria (CAMCONIA); Modestus Anaesoronye, head Insurance and Pensions, BusinesDay and facilitator; Kemi Adewakun, corporate affairs managers, Sterling Assurance Company Limited; and Segun Bankole, corporate communications manager, Sovereign Trust Insurance Plc during the 2018 CAMCONIA Annual Conference held in Ijebuode, Ogun State, where Anaesoronye presented a paper on theme “Strategies for Achieving Excellent Media Relations and Dealing with Bad Press”.

STACO Board leads company change process

nderwriting firm, STACO Insurance PLC has assured the insuring public that the Company will continue to be a responsible and dependable corporate entity fully committed to protecting all stakeholders’ interests including meeting its obligations to all policy holders. The STACO Board has also assured all shareholders that their investments are safe and intact despite the recent change in the leadership of the Company. To this end, the Board has taken some bold steps in laying down a proper Corporate Governance procedure in line with global best practices. The new management team led by Bayo Fakorede has equally assured that STACO will continue to remain a reputable brand noted for efficient customer service delivery and

professional underwriting capacity. According to him, the principal objective of the change process is to put the customer first and deliver exceptional customer service at all times and across all touch points. “STACO will continue to be a major player in the Nigerian insurance market by bringing to the table, a new customer experience and a robust IT infrastructure. In the insurance industry, we know that underwriting expertise and capacity are key. This is where STACO derives its strength as capacity building and manpower development will continue to receive maximum attention” he assured. “We want to thank all stakeholders for their support to the Company and assure them that the Company will continue to deliver value added services to them. Let me assure all policy holders

that we are committed to fulfilling all our obligations and will continue to be their dependable and reliable insurance company of choice. To our investors, they should be fully assured that their investments are safe and fully protected. They will continue to derive maximum value from their investments in our Company”, he stated“ Our commitment to proper and good Corporate Governance in line with global best practices is also be emphasized in our operations as

Samuel Turoti

we want to remain an ethical company” he added. The Company has noted the new NAICOM initiative to strengthen the capacity of the Insurance sector in delivering the much needed impetus for the economic growth of the Nation. STACO’s Board is desirous of keying in to the project by shoring up its capital base to play as a Tier 1 company. Towards this objective, the Board has set in motion the talks with stakeholders to realize this dream. The Board chairman, Samuel Turoti noted that the Company is solvent and in advance talk with Investors and other stakeholders with a view of bringing new capital into the business. Also worthy of note is Management’s continuous emphasis on professionalism of her workforce and a commitment to recognize and reward all deserving employees at all times.

growth continue

hristian Mumenthaler, the CEO of reinsurance giant Swiss Re, has acknowledged an improving market across both insurance and reinsurance, saying that he viewed the fact it was recovering as positive, which goes some way to explain the price improvements and continued premium growth the re/insurer is experiencing. Swiss Re has reported its first-half results, revealing continued premium growth as the company takes advantages of better rates and gave further details on the price increases achieved. Overall, the company sees a better marketplace right now, leading it to grow across its property & casualty reinsurance, life & health reinsurance and commercial insurance through Corporate Solutions. Life & health premium growth led the way, but Swiss Re is also taking on more catastrophe and weather risk through P&C reinsurance premium growth as well, albeit at a slower rate in the second-quarter, as well as more significant premium growth in Corporate Solutions, as it looks to gain access to premiums from as close to the source as possible. Commenting on the state of the market, CEO Mumenthaler said, “It is positive to see that the market environment is gradually recovering. “We improved our profitability and underwriting performance, especially in P&C, and our solid results show

the value of our diversified book of business. I’m also pleased that we were able to grow as a Group overall.” So far this year, Swiss Re has grown its reinsurance treaty volumes by 9 percent to $14.4 billion, with the resulting portfolio having a risk-adjusted price quality of 103 percent, while the renewed portfolio from the July renewals resulted in a risk-adjusted price quality of 104 percent. “These developments are encouraging after experiencing a soft market for years,” the CEO Mumenthaler and chairmanWalter Kielholz told shareholders in a letter today. Swiss Re is taking advantage of these market conditions to deploy its capital, resulting in groupwide gross premiums rising 8.0 percent to $19.6 billion, with the life and health businesses and tailored transactions the main drivers, but growth also seen across the enterprise. P&C reinsurance premiums rose by 1.8 percent to $9.6 billion, life and health reinsurance premiums rose 15.2 percent to $7.4 billion, Corporate Solutions premiums rose 18.5% to $2.0 billion largely driven by growth in the Primary Lead area, finally Life Capital almost doubled its premiums to $1.8 billion. Shareholders will be encouraged to see the growth being driven by the entire business across its units, especially so given the fact P&C reinsurance prices have not risen as much as the reinsurer would likely have wanted.

IGI strengthens Board with two new appointments

nternational General Insurance Holdings Limited (IGI) has announced the appointment of David Anthony and Anwar Al-Jabri as two new non-executive directors to its Board. David Anthony brings to IGI the wealth of his 30 years of experience in the insurance and reinsurance industry, which has included senior, insurance-related positions at ratings agencies and with international banks. He has worked extensively in Europe, the Middle East and North Africa and the United States. David Anthony is an independent insurance consultant working under the DA Research & Analysis (DARAA) trading name. Before that, David was a Director and Senior Analyst with S&P Global

Ratings (formerly Standard & Poor’s). Throughout his time with S&P, David remained an active lead rating analyst, and a Chair of the Insurance Rating Committee. Anwar Al-Jabri has over 18 years’ experience in investment, banking and financial services and has served in various public and non-public company boards locally and internationally. He currently holds the position of a Chief Executive Officer at Oman National Investment Corporation (Jabreen Capital) and has previously worked for Oman Investment Fund (OIF), a Sovereign Wealth Fund of the Sultanate of Oman, Oman Refinery Company and the Central Bank of Oman holding various senior posts in investment and financial fields.

BUSINESS DAY

Wednesday 08 August 2018

INSIGHT

My E/African book tour ‘

ou must kill a goat!” My South African friend Samke says, every time we discuss the obstacles that arise during my book tour. She says that I must have offended my ancestors because these setbacks are not normal. I always cry-laugh when she says this because its hilarious but I disagree. Her perspective is only different because she is South African and she’s used to structured situations where, if you plan properly, things mostly work out without incident. However, I am Nigerian and to be a Nigerian entrepreneur you have to wake up ready to eat problems for breakfast and be nimble and creative enough to overcome obstacles. I remember the exact moment I decided that I was going to embark on the journey to take my book ‘The Smart Money Woman’ to East Africa. I was getting my make up done by my favorite makeup artist, Patience from House of Tara Abuja. I’m sure she thought I was a little insane because I started talking to myself, as I do when I have a brain wave. It was already April and I had been thinking about the goals I had set for myself at the beginning of the year and assessing my progress. One of my goals was to go on an East African Book Tour in 2018. My book was first published in 2016 and I had taken the book tour across Nigeria and to several other cities in countries like Ghana, South Africa and the United Kingdom but not East Africa. Countries in East Africa seemed so foreign to me. However, it became clear that it was a market that needed to be explored because the analytics from my instagram page @smartmoneyarese indicated that I had an increased following in countries like Kenya and Tanzania. I was also getting a substantial number of emails from Women in these countries telling me the impact the book had on them book even though it wasn’t sold in any of those markets. I have the power of piracy to thank for this mixed blessing. It was a big audacious goal because with limited resources and only knowing about three people in East Africa, who were primarily in Tanzania, I didn’t know how I was going to succeed but I knew I would figure it out step by step. The East African Book tour looked super glamorous on instagram but it was hard; there were

many obstacles and many lessons. The business Model ‘What’s the point of a book tour’? I get asked this a lot. I have two main goals; first of all it’s a brand building exercise to establish a pan-African brand and second, to make a profit in foreign currency. The goal is to increase revenue and find creative ways to decrease costs. The revenue streams are ticket sales to the events, book sales, online course sales and one-on-one strategy sessions. The obvious costs are airline tickets, hotel accommodation, logistics and media. Outside Nigeria, the book is sold at a premium of $25. Ticket sales to the events vary depending on the demand in each country. For example in Kenya it cost $50 dollars, excluding the cost of the book and in Tanzania it cost $50 for a ticket and this was inclusive of a signed copy of the book. The average attendance for each event was 100 excluding Uganda. Brand Partnerships Price is what you pay, value is what you get. Brand Partnerships are a great way to subsidize the costs of the book tour. Finding brands that can give you what you want in exchange for showcasing their goods and services on the tour in a way that converts your audience into their customers. This is tough but the key is to seek opportunities to exchange value with brands that buy into your long-term vision. On this book tour, I’ve had the privilege of partnering with brands like, Diamond and Pearls Travel, Samsung Nigeria, designers like LadyBiba, Adeysoile, CpwomanLagos who provided fabulous outfits for my events and media appearances in east Africa. This helped the brands not only sell more units in Nigeria but creates brand awareness in more countries. For example, my travel partner was Diamond and Pearls travel, an agency that has been successful in creating affordable travel packages. I noticed them on instagram a few years ago and fell in love with their creative approach to travel,

especially the way they package African travel. When I first pitched the idea to Wonu Lamidi, one of the cofounders of Diamond and Pearls Travels about sponsoring the East African book tour by covering a substantial part of the travel costs, for 5 countries in 30 days, she was skeptical. However, I convinced her and her husband to see it as a marketing cost that would lead to a conversion of my smart money community to their customers as well as leverage on my relationships for publicity. The tour is over now and they’ve recouped a significant amount of the costs in sales. We both got what we needed. Optimal exchange of value! I also somehow convinced the Tanzanian chapter of EO (Entrepreneur’s Organization) to cover the cost of my weeklong hotel stay in Dar es Salem in exchange for speaking at a Power breakfast they hosted. Also, when my trip to Namibia got postponed, I somehow convinced the managing director of the Avani Pemba beach hotel in Mozambique who I had just met to let me stay in a sea facing $400 a night room for a week at a discounted rate

of less than $100 breakfast inclusive in exchange for influencer marketing on instagram. He even threw in a couple of nights for free after I hooked him up with Wonu from Diamond and pearls to channel some Nigerian customers his way. See exchange of value!!! Finding the right collaborators… A book tour is only as powerful as its collaborators. If you think about it, you have to be a real life crazy person to hop on a plane and go to countries you’ve never been to before to do business with relative strangers. It’s beautiful when it works out but a nightmare when it doesn’t. The first time I took this leap of faith was when I took the book tour to South Africa. I had never really considered the market potential of other African markets asides from our next-door neighbor Ghana, until an encounter I had with a South African girl Samke Mhlongo on social media in 2016. She read my book and reached out to me to bring my book tour to South Africa. At first my reaction was ‘ she must be joking’. Does a stranger think I’m just going to get on a plane and come to a foreign country because she likes my book? I laugh in bini. Other thoughts included ‘I don’t have an audience in South Africa’, so this would be silly and ‘who is going to pay for this’? Taking books to South Africa seemed like a very expensive venture. I raised my concerns but I quickly learned that No is a word that Samke doesn’t understand. Her persistence led to a successful South African Book tour with media interviews on TV and radio (SABC 1, Business day TV, Power FM, Fresh breakfast and many others). It led to Dr Judy Dlamini, one of the most successful black South African women hosting the Book Launch at Luminance, a prestigious high-end store in Hyde Park. The success of the South African book tour gave me a pan African perspective and the confidence to replicate the model in other African markets. Samke became the model for other collaborators.

For the East Africa book tour I created a pitch deck to send to potential hosts with requirements of what it entails to host a Smart Money Woman book tour, to ensure that our goals are aligned and that we work with quality partners. These are typically brilliant women who are power players in their various industries and buy into the vision of The Smart Money Woman brand. They were willing to leverage their resources and relationships i.e. (ability to secure media interviews, venue, hotel accommodation etc.) to bring the book tour to life. The exchange of value here could be a variety of things, profit sharing for the events, access to the Nigerian market for their own brands or collaboration on future projects. With the help of my hosts Nahida Behgani, Nana Wanjau, Caroline Mandi, Irene Kiwia and Nisha Kanabar the east African book tour was a success. Between them, the impossible was achieved. In Uganda, Nahida provided a venue, The Square as well as distribution at her mall store Definition in Uganda. In Kenya Nana Wanjau (Branding Beyond Borders) and Caroline Mandi (True Love Magazine) got the spectacular Strathmore Business School as the venue, Barclays as a sponsor, a car service the duration of my stay and media interviews in everything from print, to TV and radio. In Tanzania, Nisha Kanabar (Industrie Africa) used secured The beautiful Sea cliff Hotel as the venue for the main event, introduced me to the Tanzanian chapter of the Entrepreneur’s Organization who paid for my hotel stay in Dar es Salem, provided a car and driver to make sure I could get around comfortably. Irene Kiwia, is just a force! She organized all the media appearances in Tanzania (I honestly thought I was going to break because they were a lot) as well as handled the logistics of the event and distribution of books. The most remarkable thing is, the only thing these five women have in common is that this time last year we were strangers but have become sisters and business partners. My goal is to be a pan-African brand on a global stage and this experience taught me that if you commit to a vision you could figure everything else out, the process, the people, and the business model. You have to be resilient, you have to ask for help when you don’t know, you have to be open minded about new cultures, take risks and enjoy the adventure of not knowing. There were a lot of wins but there were also many setbacks. I chopped a lot of No’s during this process!! Pitching to potential partners and sponsors can be very difficult. For every Yes I got I probably got ten No’s. Sometimes they felt like a personal rejection but I’ve learned to get over myself and keep it moving. On this journey I learned there was power in resilience and that God rewards a stubborn heart. A winner was once a dreamer that never gave up.

BUSINESS DAY

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Wednesday 08 August 2018

Itakpe-Warri SGR project: Its economic impact Page 31

Jet lag impacts more than sleep cycle Page 30

World’s youngest traveller creates app to swap homes for holidays Page 30

Globe commences Hyundai, Higer vehicles local assembly ... Says market forces will determine volume Stories by MIKE OCHONMA

n line with the Federal Government desire to stimulate local auto assembly in Nigeria, Globe Motors has started production of Hyundai and Higer brands of vehicles in its assembly plant in Lekki, a sprawling business area of Lagos. With an installed capacity of 6,000 vehicles annually for now which the company says can also be increased depending on market forces, the assembly plant is located along ElekoIbeju-Lekki area of Lagos.

This follows the approval of local assembly status granted to the company alongside others in the country by the National Automotive Design and Development Council, NADDC under the Nigeria Automotive Industry Development Plan, (NAIDP). According to Victor Oguamalam, managing director of Globe Motors, “Though we are not producing at installed capacity, we have started production at the plant since 2017. We currently have an annual installed capacity of 6,000 vehicles at the plant, but daily production is subject to market and other forces,’.’ With over 50 staff working in the

plant including engineers, technicians and administrative staff, the plant is operating at Semi Knock Down (SKD) level with plans to move to Complete Knock Down (CKD) stage as soon as possible. The company said it has experienced engineers who have worked in leading automobile companies and attended courses abroad. He noted that the company have qualified staff manning the plant, while Hyundai and Higer experts from Korea and China respectively are always on ground to give backup to the local staff. The managing director disclosed

£10bn high speed railway to connect UK’s busiest underway Page 31

that before assembly activities commenced, engineers from Hyundai Corporation, came and set up the plant and also trained the local staff for months and the company took it up from there. The trainers came in two batches that are made up of group of engineers who installed the equipment and set up the assembly lines and the marketing department who took the local staff on the marketing aspects of the business. “Even the engineers who came to put us through mere amazed at the competence of our staff. They confessed that technical staff in Nigeria are knowledgeable and pick faster than in other countries where they tried to set up plants”. Oguamalam said. He attributed their ability to pick up fast to the fact that most of their staff were drawn from existing auto garages and Globe Motors workshop across the country. “You know Globe Motors is reputed for its competence in automobile maintenance and we are replicating this in our assembly plants. For over 30 years, we have been in the business of automobile so we are not new in this line of business”, he said. On his part, Simon Njere, the assembly plant manager, explained that the plant compares with the very best in the country. “We are well equipped with modern facilities for checking the quality of products we are producing here and our equipment are procured from Korea,” he said. Continuing, he said, there are diagnostic equipment, speed fester, wheel balancing machines among others, to ensure that they conform to international standards of Hyundai and Higer brands”. It would be recalled that about three years ago, Globe announced plans to set up a multi auto assembly plant at the cost of $200 million.

Dealership’s new JLR models for launch at golf tourney

oscharis Motors, owners of the Jaguar Land Rover franchise in the country will be officially launching its latest luxury automobile variants like the Jaguar E Pace, Range Rover Velar and the Discovery into the Nigerian marketcin association with Coca Cola Nigeria, the official sponsor of the ‘Road to Mauritius Golf Tournament’ scheduled for August 4, 11 and September 15, 2018 across Ibadan, Abuja and Lagos respectively. Coscharis Jaguar Land Rover began its support for the Coca Cola Road to Mauritius Golf event at the debut edition in 2017 as the official automobile partner and it is following up with the 2018 edition. “The Coca Cola Road to Mauritius Golf tournament is the perfect fit for Coscharis Jaguar Land Rover, as the company targets high-profile and premium events that link directly to our premium product strengths,” says Cletus Aregbeshola, Jaguar Land Rover Brand Manager for Coscharis. Abiona Babarinde,Coscharis Group General Manager, Marketing and Corporate Communication said that in the dealerships’s strive to always keep improving the Jaguar Land Rover brand association in the Nigerian market, it has decided to consider other relevant events for inspiration and ideas on how to create accessibility to its premium brands by supporting events like this Golf tournament that share similar brand ethos towards giving our common loyal customers better brand experience. This is why we are fully committed to this Coca Cola Golf partnership’’.

Dunlop’s new SP FM800 deepens Nigeria’s market share

umitomo Rubber South Africa (PTY) LTD (SRSA), manufacturer of the popular Dunlop tyre brand, launched the Dunlop High Performance Sport SP FM800 tyre at its dealer meet in Lagos in partnership with Tyre Express Nigeria Limited. Speaking during the product launch, Riaz Haffejee, SRSA Chief Executive Officer expressed optimism for the prospects of growth of its Dunlop and Sumitomo Tyre brands in Africa. In his submission, “Nigeria’s market for tyres is approximately 4 million a year and the country is a key market in terms of our Africa strategy, which sees us focusing on countries with great growth potential and expanding markets,”. It would be recalled that, the Dunlop brand and retail presence were relaunched in Nigeria two years ago. With the launch of the FM800 tyre coinciding with International Nelson Mandela Day, Haffejee reminded the audience of the impact Mandela had on the world. “For us as Sumitomo Rubber South

Africa, the famous quote attributed to Mandela - “It always seems impossible until it’s done” - was so apt for our relaunch of Dunlop in Nigeria and we are very proud of the progress made since then,” he said. “We have confidence in our distributors, Tyre Express Nigeria, a subsidiary of DWA, which operates in a number of countries in West Africa, to leverage these advantages. It is an ideal partnership, in that the company caters to all segments of this market, in particular Passenger Car Radial (PCR), 4x4 and Truck/Bus Radial (TBR),” added Haffejee. Tyre Express Nigeria is the sole authorised distributor for Dunlop and Sumitomo tyres in Nigeria. It boasts a Dunlop Zone and four Dunlop Express stores in Nigeria, in addition to a wellestablished dealer network. Haffejee said the distributor was taking tyre retailing to a new level in Nigeria by providing retail centres that are equipped with the latest fitting equipment, and which offer waiting lounges and free Wi-Fi.

L-R: Govindram Group CEO -DWA International, RiazHaffejee CEO - Sumitomo Rubber South Africa, Sunday Musa Director Sales - Tyre Express Nigeria Limited, Yutaka Kuroda Senior Executive Officer Member of the Board General Manager of Europe and Africa Head Quarters - Sumitomo Rubber Industries, LubinOzoux Director International Business, TakesukeIkeuchi Director Corporate Planning all of Sumitomo Rubber South Africa, Jabber Abbas Chairman - DWA International and Gautam Singh Ghai Executive Director - Tyre Express Nigeria Limited during the product launch in Lagos.

He said SRSA, through Dunlop, offered training assistance and technical

expertise to back up its superior quality products like the new Dunlop High

Performance Sport SP FM800. The SP FM800 tyre offers a new profile design that reduces deformation stress and improves energy consumption, rolling resistance, fuel efficiency and safety due to increased traction and braking response. Its next generation patte rn with four wide, longitudinal grooves and deep lateral grooves incorporates the latest design and technology. This provides a tyre with all-round performance improvements including remarkable wet weather handling, braking and hydroplaning resistance, while a new compound with silica loading increases wet grip. Dunlop has a history of innovation and a proven pedigree in the tyre business, with the added advantages of Japanese technology and the backing of the world’s sixth largest tyre producer – Sumitomo Rubber Industries (Pty) Ltd. The brand has a legacy of OEM fitment for some of the world’s leading motor vehicle, truck and bus manufacturers and transport operators.

30 BUSINESS DAY

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MTravel

Wednesday 08 August 2018

odern

Marriot opens Europe’s largest Residence Inn in London

Jet lag impacts more than sleep cycle Stories by MIKE OCHONMA

s government officials, corporate gurus and captains of industry, do you know that Jet lag which comes as a result of frequent flying across the skies to different parts of the world to hold bilateral meetings and broker deals can put the brakes on the most exciting vacations. Almost everyone that has ever flown across time zones knows what it feels like. The experience ranks somewhere between eating day-old cooked oatmeal and nursing a hangover. These food and drink metaphors are not just a coincidence. Jet lag, it turns out, affects more than our sleep; it affects our internal organs as well. Given what is known about the importance of intestinal bacteria (called the microbiome) and their connection to immune function and well-being, it is clear that any discussion of jet lag, and how to deal with it, needs to consider “gut lag” as well. Beyond sleepiness at the wrong time, jet lag affects our internal organs such as the liver, pancreas; heart and gastrointestinal tract have their own daily rhythms. While these schedules are regu-

lated in part by a master pacemaker in a tiny region of the brain, called the suprachiasmatic nucleus, time change may affect different organs differently. The most obvious signs of this is “gut lag” - feeling hungry (or having no appetite) at the wrong times, experiencing constipation or having an urge to use the bathroom at unexpected times. There is even evidence that gut lag can affect the intestinal microbiome (those bacteria colonizing our gut) and make us more susceptible to traveller’s diarrhoea. That’s in part because disrupting the daily rhythms of our 100 trillion intestinal microbes can impair their immune function. As with jet lag, there are some things you can do to manage gut lag. Experts recommend eating as little as possible while en route, to avoid the possibility of indigestion from unusual eating schedules. This can be hard for sleep-deprived souls: It’s well known that eating is often a way of compensating for lack of sleep. (Sleep-deprived people tend to gain weight.) For some, eating a meal before starting your travel can prevent hunger before you arrive. Bowel habits will adjust more quickly if you

immediately shift to eating during scheduled mealtimes in the new time zone. Exercise also can help regulate bowel function, with the added bonus that it can make you feel less sleepy. Whatever you do, drink a lot of water or other fluids: People often get dehydrated in flight, which can add to constipation, a well-known feature of gut lag. If it persists beyond a few days, gentle laxatives may be helpful. One final caveat about advice regarding jet lag and gut lag is that despite the amazing influence of the cycle of dark and light, we’re all slightly different. Some people are naturally early birds; others are naturally late risers. In addition, our tissues have multiple clocks with varying effects, and some of our internal parts take longer than others to adapt to time shifts. Given this complex interrelationship involving our brain, our other organs and the rhythms of light and dark, there is no one-size-fits-all advice for travellers. It may take several trips across time zones and experimentation with light exposure, sleep patterns, melatonin and diet before you figured out what works best for you. We wish you all a very exciting and safe travelling times.

arriott International, Inc. has said that it has opened its new Residence Inn by Marriott London Kensington, the largest property in the brand’s European portfolio. The opening of Residence Inn by Marriott London Kensington is the brand’s seventh property in Europe, with further expansion including the brand’s entry into new markets such as France due to the opening of Residence Inn Toulouse-Blagnac. Residence Inn by Marriott London Kensington provides one- and two-bedroom suites with separate living, working and sleeping areas designed for longer stays. Each of the seven suite categories has fully-functional kitchens besides the complimentary Wi-Fi, smart TVs, USB plug points and work space. Complimentary breakfast is served seven days a week, while the Grab’n Go market and Fitness Centre are both open 24/7. There is also a grocery delivery service available. Located on Warwick Road in Earls Court, the new hotel features 319 suites, many with private terraces. The hotel’s eighth floor terrace will be available to hire as an events space. Suites at

the Residence Inn by Marriott London Kensington are available from £90 plus tax. ‘Residence Inn by Marriott London Kensington has been one of our most highly-anticipated launches in Europe; not only is it the largest Residence Inn in Europe, but it is the third largest in the world, and a flagship property for the brand,’ said John Licence, Vice President Premium and Select Brands Europe at Marriott International. He added that ‘London is a key market for extended-stay travel and we are delighted to launch the city’s second Residence Inn following last year’s opening of Residence Inn by Marriott London Bridge.’ John Wagner, co-founder of Cycas Hospitality, said: ‘We know that guest expectations and travelling styles have evolved in recent years, creating a growing demand for centrallylocated properties that bridge the gap between hotels and home. Opening London’s biggest aparthotel will therefore allow us to widen the accommodation options available to business travellers whilst also putting the capital’s most popular cultural attractions within easy reach of our long-stay leisure guests.’

World’s youngest traveller creates app to swap homes for holidays

ondon banker James Asquith, who became the youngest person to visit all 196 countries at the age of 24, has launched an app that is considered the Tinder of travelling. It is called Holiday Swap. Although still in its early stages, the Holiday Swap app is an interesting app ideally made to connect travellers, and unlike Tinder which localises your search based on your location, the apps creates search on an international scale - meaning that you can see properties on more than 40 countries across six continents that the app currently covers. According to Asquith, ‘’You can filter your settings “for things like

‘I want a place with a good atmosphere or a young crowd,’ by country,

or whatever.” When someone “matches” with

you, you get a notification and a “pin” added to your map, as well as the ability to chat with the user and see their availability calendar. “If you’re swapping a place but you want to protect against them cancelling on you or you want to protect against damage or whatever, everything is covered on home insurance, but it’s beyond that as well,” he said. The cost is only $1 per bed a night to swap through the app, and the users can also request a fully refundable deposit if it makes them more comfortable, money which the app protects. The deposit fee is kept in a third party account, and then it is all re-

turned when it is done’’. Meanwhile, the new app is now available on both iOS and Android, and Asquith says some users have already started swapping.

When someone “matches” with you, you get a notification and a “pin” added to your map, as well as the ability to chat with the user and see their availability calendar

Wednesday 08 August 2018

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BUSINESS DAY

Local and global rail news as it breaks

Itakpe-Warri SGR project: Its economic impact

MIKE OCHONMA & STELLA ENENCHE

ew weeks ago, there reports of renewed efforts on the part of the Federal Government towards injecting life into the nation’s rail infrastructure, with specific mention of the $200 million Itakpe-AjaokutaWarri standard gauge rail line which is expected to be completed and opened to commercial activities by next month, September 2018. Across the country, all rail projects when completed according to government intention are expected to ease commerce and other economic activities. And no doubt, the 302-kilometer Itakpe-Ajaokuta-Warri rail modernisation project is according to some transportation analysts of its kind in rail transportation in Nigeria. On one hand, the rail corridort could best be described as the central economic belt of the country, owing largely to the huge solid mineral deposits within the axis, which connects states of Kogi, Edo and Delta and on the other remains vital in the entire economic value chain of the economy. Investigation has shown that the 34-year old project, upon completion, is expected to transport steel and other raw materials from Ajaokuta, as well as food items from the South to other parts of the country. It is hoped that when completed, all state capitals will be connected by rail, alongside agricultural and industrial clusters. Expectedly, the project would further open up the areas to commercial activities, which were not possible due to the cost of moving goods from one place to the other, by other means of transportation. With the over 18. 8 million unemployed and underemployed youths in the country, the ambitious project

GE Transportation secures first locomotive deal in Chile

would not have come at a better time, particularly with the promise of helping in closing the huge job gap in the country, thereby reducing the rate of crime and criminality currently assailing parts of the country. Furthermore, safety and affordability are a major factor to consider when sourcing for a means of transportation for either passengers or goods. Authorities and other stakeholders say the Itakpe-Ajaokuta-Warri rail line would not only serve those purposes, it will also reduce the pressure on roads thereby reducing cost of governance. Recall that Amaechi, the minister of transportation, during his recent inspection of the project maintained

that the rail line would be completed before the scheduled date. Amaechi disclosed during the assessment tour, that the tracks were ready, noting, however, that only the stations were yet to be completed that, the project is currently between at its 70 to 80 per cent completion stage The minister said, government is also compelling the contractors and as a result of the pushing, they are working day and night to have it done. He added that, if it is time frame, they are well ahead of schedule. “However, we had a verbal agreement with them to quit site by June 2018,” the minister said. The project was awarded to three construction firms - Julius Berger, China Civil Engineering construc-

tion Corporation (CCECC), and ZTE. IIn the new arrangement, 12 new stations were proposed between Itakpe and Warri, with two cited between Itakpe and Ajaokuta, while the remaining 10 stretch between Ajaokuta and Warri. The rail track will extend to Lokoja and then Abuja. In that connection, the implication is that, it will travel through Warri in Delta State, to the FCT (Abuja) by rail. With a total of 12 stations and wor presently on top gear on eight of them, the entire project is 302 kilometres (km), with ongoing rehabilitation work reaching 52km distance , which is from Itakpe to Ajaokuta where the wooden sleepers are being changed to concrete sleepers.

hile’s Antofagasta Railway (FCAB) has awarded GE Transportation a contract to supply five C23EMP single-cab ac/dc diesel-electric locomotives for delivery in 2019. The deal, the first between the two partners, includes a parts, service and warranty agreement. The locomotives have been specially designed for FCAB for light-axleload operation and are equipped with a GE FDL 12-cylinder engine to operate at high altitude. The locos use GE’s electronic fuel injection system to improve fuel efficiency. The metre-gauge C23EMPs will be used to haul different products for the mining industry that represents approximately 50% of Chile’s export trade. The locomotives will be assembled at GE Transportation’s facility in Contagem, Brazil. GE Transportation says locomotive and digital sales in South America have increased by 40% over the past three years, with strategic projects in Brazil, Chile, Colombia, Uruguay, Argentina and Bolivia. “The acquisition of these five new GE locomotives, along with other brand-new rolling stock, will trigger a step change in greenhouse gases emission reduction, improve safety features for our crews and enhance train productivity,” says Mauricio Ortiz, FCAB general manager.

£10bn high speed railway to connect UK’s busiest underway

evelopers are submitting plans for a new high-speed line to the UK’s Department for Transport (DfT) in response to a call for market-led proposals. Named ‘HS4Air’, the proposed £10 billion railway will connect HS1 at Ashford to HS2 North West of London with stops at Heathrow and Gatwick airports and a spur connection to the Great Western main line. Under the plans, new stations would be built at Ashford, Tonbridge, Gatwick and Heathrow if the scheme gets the go ahead, with improved connectivity providing a “boost for regional economies from South East England to Northern England.” When completed, it is expected that, the rail route would minimise its environmental impact by following the M25 west of London, tunnelling under sensitive rural environments and re-using and upgrading the existing railway

between Ashford and Tonbridge. By connecting Britain’s two high-speed lines to the west of the capital, developers say HS4Air will remove an historic barrier between regions north and west

of London to mainland Europe. And by taking passengers and freight out of London that does not need to pass through, HS4Air is expected to release capacity on the congested London rail network.

The idea for the new highspeed line has been developed by Expedition Engineering with architects Weston Williamson + Partners (WW+P) and consultants Turley. According to the

development team, HS4Air will reduce journey times as follows: Ashford-Gatwick : 25 minutes (Currently 1 hour 50 minutes); Manchester-Heathrow: 1 hour 10 minutes (Currently 3 hours 20 mins); Heathrow-Gatwick: 15 minutes; Cardiff-Heathrow: 1 hour 40 minutes (Currently 2 hours 50 minutes) and Birmingham-Paris: 3 hours (Currently 3 hours 50 minutes by air). WW+P associate partner Nick McGough said: “HS4Air takes the problem of linking HS1 with HS2 and turns it into an opportunity in by-passing London entirely whilst better connecting the UK’s two largest airports and the country generally through high speed rail. “It is exciting that the DfT’s Rail Market Led Proposal initiative opens the door for this sort of innovative proposal. HS4Air can help unlock opportunities for much needed housing in the South East through joined-up and sustainable infrastructure development’’. McGough concluded.

32 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 08 August 2018

Supported by:

CBN flip flop, says 80% financial inclusion still possible ENDURANCE OKAFOR

t seems the Central Bank of Nigeria (CBN) has gone back on its words about the set 80 percent financial inclusion target, claiming the 2020 goal is now possible. This was disclosed in its Financial Inclusion Newsletter, Volume 3, Issue 2 published on Tuesday, July 31, 2018, this is contrary to the statement published in the Apex bank’s Exposure Draft of the Financial Inclusion Strategy Refresh as seen on Friday, July 06, 2018, on the CBN website. “Despite the challenges, achieving the set financial Inclusion target is possible and requires a strong will, sustained commitment and active collaboration of all stakeholders towards the removal of bottlenecks militating against financial inclusion in the country,” Aishah Ahmad, Deputy Governor, Financial System Stability (DG, FSS) said in a statement published on CBN website. Meanwhile, the apex bank, in its refreshed exposure draft asserts had earlier said Nigeria was not on track to meet up with the 20 percent exclusion target. “Nigeria is not on track to meet the 2020 target set out in the National Financial Inclusion Strategy (NFIS) of 2012,” the lender had disclosed on its website a month ago. Dolapo Ashiru, a Lagosbased financial analyst, responding to the latest development said the government need to come out with clear policy and milestone that can be verified not just

Godwin Emefiele

making political statement. “It is not helpful for us to have contradicting statements from our regulator. There is need for them to reconcile all the statements and come out with a situation report and also the way forward,” Dolapo told BusinessDay in a phone response. The impediments to achieving the 80 percent set target were ascribed to economic constraints, insecurity issues in the northern part of Nigeria, obsolete strategies, among others. Meanwhile, according to the recent Financial Inclusion Newsletter published on the last day of July 2018, the National Financial Inclusion Technical Committee held its 14th

meeting on 21st June, 2018, and the meeting featured key highlights from the four working groups (Literacy, Channels, Products and Special Interventions). In the meeting, Aishah of Financial System Stability (DG, FSS) reminded members of their critical roles in delivering the 80 percent financial inclusion target by 2020, particularly in view of EFInA‘s biennial report which showed 58.4 percent financial inclusion rate, as at 2016. She noted that a lot of grounds were still to be covered considering the country‘s demographics which popped out adults yearly, as compiled from the publication on the CBN website. According to the news-

letter on the lender’s website, the National Financial Inclusion Strategy Refresh (NFIS 2.0) was also presented at the 14th meeting of the National Financial Inclusion Technical Committee by Akin-Fadeyi, the Head, and Financial Inclusion Secretariat. She highlighted that the draft document had been updated following the Critique Workshop held in May 2018. The Refresh was necessitated by the 5 year implementation experience since the Strategy, as compiled from CBN’s publication. Meanwhile, according to CBN’s 2016 financial inclusion figures, which was researched by EFInA, just 58.4 percent of Nigerian adults were financially included

with only 48.6 percent using formal financial services. This showed that Nigeria lagged in her inclusion targets of 80 percent (overall financial inclusion rate) and 70 percent (formal financial inclusion rate) of Nigerian adults by 2020. The NFIS though defined 15 targets for channels and products as well as 22 key performance indicators (KPIs) related to these targets, but Nigeria still lags across all these measures. The economic recession in the country as well as the insecurity in northern Nigeria is said to have hampered the progress of financial inclusion in the country, as they were never anticipated in the course of drafting the NFIS in 2012. Also, the slow uptake

of digital financial services and limited rollout of national identity numbers restricted financial service providers to meet the know-your-customer (KYC) requirements, as compiled from the CBN’s statement. Nigeria therefore performed poorly in including its citizens into the financial cycle, as seen in the latest World Bank’s Global Findex Database released 19, April 2018. Nigerian adults who are 25 years and above with bank accounts declined by 5 basis points from 49 percent in 2014 to 44 percent in 2017. This was not different with account holders over 15 years, as their numbers fell 4 percentage points from 44 percent in 2014 to 40 percent in 2017, as compiled from the latest World Bank’s Global Findex Database. Meanwhile, on the way forward to including more Nigerians into the financial cycle, Dolapo, a financial analyst said he thinks CBN cannot do it alone. “All financial service regulators would have to come together along with other stakeholders in order to straighten out all the challenges but first there is need to know where we currently stand, and let there be a quarterly or yearly review in order to know how well or how badly we are doing. All the stakeholders involved should also leverage on mobile platform because it is the fastest way to reach a mass audience as Nigeria is long overdue for mobile banking, mobile stockbroking, and mobile insurance ,” Dolapo concluded.

mCASH relaunch deepens financial inclusion OLUWATOSIN DOKUNMU & OMOBOLA ADU

he relaunch of the mCASH platform is expected to boost e-payment services to SMEs and rural dwellers, which could attract more adults into the financial fold especially among the unbanked rural dwellers in the lower pyramid of the country. The mCASH is an initiative designed to enhance low-value retail payments by merchants and players engaged predominantly in

cash transactions with the use of the USSD technology to drive financial inclusion. From a survey of analysts carried out by BusinessDay, a positive outlook on financial inclusion is seen from the relaunch of the mCASH initiative. “All stakeholders are currently leveraging technology to ensure that they reach the unreached and it is a bit more convenient, so a lot of people are using their mobile phones to carry out financial transactions, so I think it is going to aid financial inclusion” Ayo Akinwunmi, head of

research & strategy at FSDH Merchant Bank Ltd asserted. “The relaunch is positive, but a lot still has to be done beyond that, financial inclusion is an initiative the government cannot do alone, they need to work together with the private sector and make policies that will spur the inclusion.” Dolapo Ashiru, Lagos based analyst said in a conversation with BusinessDay. An analyst who preferred not to be named, also Continues on page 33

Wednesday 08 August 2018

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Financial Inclusion

BUSINESS DAY

& INNOVATION Redefining Financial Inclusion Supported by:

We may be going about financial inclusion all wrong…

overlaps. In our collective quest for financial inclusion, if we fail to do these two things, we may end up patting ourselves on the back for a job poorly done and uncompleted. When it comes to financial inclusion, access is not enough. It’s just one half of the puzzle! The other half is usage. Financial inclusion initiatives in different parts of the world (Ghana and India come to mind) suffer from this phenomenon - at the onset of a particular financial inclusion initiative, there’s an initial spike in account openings followed by a lag in account use and

activity. This leaves us with a high number of inactive accounts. Still following that train of thought, a high number of inactive bank accounts could also signify other underlying problems within the ecosystem, for one, the lack of real value proposition to the consumer. Is it possible that consumers just don’t see the benefits of using these services yet? We know that a considerable percentage of the unbanked population are suffering in cycles of extreme poverty. They live hand to mouth which means, money is used immediately it comes to them,

and hence no perceived need for long term savings. So far, in the financial inclusion discourse, the focus has been more or less, mathematical in nature how many bank accounts are opened? However, the philosophy of financial inclusion demands a commitment from us, not only to bring financial access to all people (especially those who have been grossly underserved or excluded), but also to make sure these tools and services are affordable and convenient to use. Because, if financial services are affordable, then usage will increase and we can begin to reap the dividends of true inclusion. As one expert put it, measuring bank accounts highlights “nominal inclusion” i.e. it is a vain metric. A high number of bank accounts doesn’t advance the economy nor does it give us the desired outcomes we want. Rather, people using financial services which are affordable and sustainable is what will take us to the desired utopia. This just reinforces our original conviction that financial inclusion is a multidimensional task that requires all hands on deck - all stakeholders need to pull their own weight and then some, new and innovative models need to be explored and above all, collaboration between the public and private sector - in order to achieve true financial inclusion. In what other ways can the dividends of financial inclusion be maximised? Send your thoughts and contributions to sustainabledfs@lbs.edu.ng or on Twitter: @SustainableDFS

mCASH in November 2016, volume of transactions, users and merchants have grown and the platform is now more secure with insurance services against possible fraud. “Within the two years we have a learnt a lot of lessons and we have seen the attempt that fraudsters have made and at every fraud identified, we investigate and strengthen the system to ensure that it is more

secure.” Niyi Furthermore, the platform will allow individuals without ATM cards to be able to make electronic payments for goods and services through their mobile phones, and also allow for low-cash transactions. Financial institutions can allow their customers to access the service with either their custom codes or the generic 402 short code without extra charges.

The SMEs that will take advantage of this medium are equally to display their allocated mCASH merchant codes at their various locations for easy payments. With the presence of the telecommunication industry and the financial institutions at the relaunch, it is evident that a lot of people are increasingly embracing new ways of payment which is positive for financial inclusion.

OLAYINKA DAVID-WEST AND IBUKUN TAIWO

t the core of the global drive for financial inclusion is the understanding that all lives have equal value - everyone should get the opportunity to live wholesome lives in peace and good health, with the ability to pursue their dreams and aspirations. In order to achieve this, people need to have the tools required to do just that, affordably and conveniently hence the importance of financial access. Aside being a global good, inclusive growth is also an essential prerequisite for financial, economic, political or social stability of the society, regardless of which part of the world we are looking at, hence the formulation of the United Nation’s SDGs. However, an emerging body of work is highlighting the limitations in measuring financial inclusion. So far, for every major development organisation monitoring the rate of financial inclusion in nations (for example World Bank, EFinA and Intermedia), the metric of measurement is the number of bank/deposit accounts (either with a commercial bank or a mobile money provider). This is understandable because, the bank account opens up consumers to a world of other financial services beyond just remittances and payments - like insurance, credit etc. However, this presents a problem. The problem with measuring bank accounts is that while it is able to measure

the increase or decrease in uptake of financial services, it tells us nothing about usage. And it is in usage of the tools and services financial institutions provide that consumers can begin to reap the dividends of financial inclusion. Take Nigeria’s situation for example. There are about 34 million unique bank customers who own a cumulative of about 90 million bank accounts. Now, if just 70 percent of those accounts are inactive, then the number 34 million becomes a bit superficial in the grand scheme of things. True financial inclusion would be

just 70 percent of 34 million (about 23.8 million people). Thus, when reporting financial inclusion, it is important that we also account for the ratio of access to usage. Further complicating the matter is the fact that many mobile money customers presently in the country are already banked individuals. It is not uncommon to see a banked individual with at least two bank accounts and a mobile money account. It therefore becomes obvious that we need a new measurement or at least framework for measuring financial inclusion which takes into account these

mCASH relaunch deepens financial inclusion Continued from page 32

opined that, “the relaunch will be effective in driving financial inclusion, but there is a need to target the unbanked household more which could be achieved through agent banking.” T h e N i g e r i a I n t e rbank Settlement Systems (NIBSS) relaunched the mCash programme in partnership with 16 banks and all major mobile telcos in

Nigeria last week after its first launch in November 2016. The aim of the relaunch of the mCash programme is to further help drive financial inclusion in Nigeria where statistics show that only 80,000 merchants have POS devices according to NIBSS, in a market comprising of well over 20 million small and medium scale enterprises (SMEs). The relaunch is expected

to bridge the gap for those SMEs who do not have the funds to access POS devices in an increasingly digital economy through its mobile device platform. “With mCASH, these millions of SMEs without POS can now accept electronic payments” Niyi Ajao, executive director for business development at NIBSS said in an interview on CNBC. Since the last launch of

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Wednesday 08 August 2018

Tax Issues

Technology seen having effect on tax obligations of businesses IHEANYI NWACHUKWU

round the world and across many different taxes, technology is having a significant effect on the tax obligations of businesses, Paying Taxes 2018 shows. As tax authorities become more sophisticated in their use of technology and data analytics, they are changing how they select companies for audit and how they conduct those audits. This may reflect the variety of ways governments are choosing to raise revenue and attract investment in the face of changing business models, demographics and environmental issues. The use of technology also gives tax authorities much greater access to data with the potential for them to use data analytics to better identify high risk companies for audit and to match data from different sources. “Time to comply and number of payments continue to fall thanks to technology,” according to the report by the World Bank Group and PWC which looks at how a case study company interacts with tax systems in 190 economies around the world. As shown from the Paying Taxes indicators, technologically enabled systems for tax administration can make tax compliance easier, but there is an ever increasing demand from tax authorities for greater amounts of data, sometimes in real-time. Among the key findings from the Paying Taxes 2018 data is that the indicators for

time to comply and payments have continued to fall reflecting the increasing use of technology. The payments indicator has fallen by around 1 payment for the second year running. While the biggest increases resulted from new taxes in a handful of economies; the biggest reductions resulted from increased online filing and payment capabilities, new web portals, and greater use by taxpayers of online systems. “Information technology has also changed the way businesses collect, re-

cord and transmit data and the way that they pay their taxes. It has changed the way tax administrations can communicate with taxpayers, the way they select companies for audit and the way they conduct those audits”, the report shows. “This year, we have seen several economies introduce online payment and filing systems which have reduced their number of payments sub-indicator by up to 48 payments. “Not all economies have been able however to embrace new technologies at the

same rate and these differences are evident in the latest set of results in Paying Taxes 2018”, said Rita Ramalho Acting Director, Global Indicators Group, World Bank Group and Andrew Packman Tax Transparency and Total Tax Contribution leader PwC UK. “The use of real or near real time information systems by tax authorities is also increasing. In such systems transaction data is transmitted to tax authorities at, or near the time the transaction occurs – for example monthly submission of payroll and social security payments, or real time submission of sales transactions”, they noted in the report. Tax reforms in the last year have been many and varied; so given the rate at which the world is changing, many more reforms can be expected in the near future. The potential for technology to enable better risk assessment of companies and to speed up audits and refunds is considerable, but is not without its burdens especially as it pushes more obligations onto smaller taxpayers, the report noted. “Technology cannot however compensate for a lack of well-designed tax policy, and the rapidly changing world in which we live continues to create challenges for policy design. High income economies score better on average on the post-filing index than those in lower income brackets. This may be because these economies have better technology and more mature tax systems along with better fiscal resources to make refunds”, the report stated.

Principles for identification and taxation of capital income in Nigeria Introduction

ertainty’ is one of the central themes of a good tax system. Certainty of tax rules allows tax payers to plan their tax affairs properly. However, tax rules cannot be static, due to the dynamic and increasingly complex nature of business transactions. This is why, in developed tax jurisdictions, tax rules are reviewed, clarified, or amended, on a regular basis by either the tax authorities or the legal court system. One tax rule that is a subject of continuous dispute and review in many jurisdictions is the proper identification/classification of income as either revenue or capital for tax purposes. As Lord (Sir) John Anthony Dyson, a former Justice of the United Kingdom (UK) Supreme Court, said in Inland Revenue Commissioners v John Lewis Properties Plc, “The question whether a payment is to be regarded as capital or income has troubled the courts for a very long time. There are statements of the highest authority which indicate that classification cannot be made by the application of something akin to a simple litmus test. Various guidelines have been given from time to time. But it has repeatedly been emphasised that much depends on the nature of the transaction and the matrix in which it is set.” Disputes between tax payers and tax authorities with respect to this rule normally arise in countries where different tax rates apply to both classes of income, and where the tax laws do not provide sufficient guidance in identifying the incomes. This is a common area of dispute in Nigeria. Generally, the term ‘revenue income’ is used to define income earned from trade or business carried on by an entity, i.e., income from sale of goods or provision of a service in the ordinary course of its business. Often, there are a number of markers in a transaction that indicate that a trade has occurred. In Nigeria, the Federal Inland Revenue Services (FIRS), in its information circular

on “What constitutes trade for tax purposes”, listed some of the indictors of a trade to include: profitseeking motive, repetitive nature of the transaction, and the manner of acquisition and sale of the item. Any income that is incidental to trade is considered part of the trading/revenue income. However, the evidence of one or more of these indicators in a transaction is not always conclusive that a trading activity has occurred. Based on the above definition, it should logically follow that, any income that is not from trade or business of an entity is capital in nature. However, it is not that simple! Two questions typically arise in this regard: •Aside from passive investment incomes (e.g., dividend, interest on bonds, etc.), is it possible to disassociate any other income of a company from its trade (directly or indirectly)? Normally, the object clause of a company is as comprehensive as possible, to accommodate all potential business related activities that the company can engage in. • If the answer to the above question is yes, what is the basis for such separation? Complicated by law In Nigeria, and in many other tax jurisdictions, revenue incomes are subject to corporate income tax (CIT). The CIT Act, 2004 (amended in 2007), governs the imposition of CIT in Nigeria. Sections 9(a) and (d) of the CIT Act stipulate that tax is chargeable on “the profits of any company accruing in, derived from, brought into, or received in, Nigeria in respect of •any trade or business for whatever period of time such trade or business may have been carried on; •any source of annual profits or gains not falling within the preceding categories;…” The above provisions of the CIT Act suggest that any annual profits or gains of a company, whether from its trading activities or not, should be assessed to CIT, including investment incomes which are listed as taxable incomes in sections 9(c) and 9(d) of the CIT Act.

However, the capital gains tax (CGT) Act, 2004, imposes CGT on gains arising from disposal of chargeable assets. The CGT Act defines a chargeable asset as all forms of property (section 3). Although, the Act does not define the term ‘property’, it however gives examples of it to include: options, debts, incorporeal property, and foreign currencies. Based on legal precedence, as documented in the Black’s Law Dictionary[4], property is used to “denote everythingwhichisthesubjectofownership,corporeal orincorporeal,tangibleorintangible,visibleorinvisible, real or personal; everything that has an exchangeable value or which goes to make-up wealth or estate. It extends to every species of valuable right and interest, and includes real and personal property, easements, franchises, and incorporeal hereditaments [Samet v.Farmers’ & Merchants’ Nat. Bank of Baltimore, C.C.A.Md., 247 F. 669, 671; Globe Indemnity Co. v. Bruce, C.C.A. Okl., 81 F.2d 143, 150]”. The above definition further exacerbates the debate, especially with regard to companies engaged in the buying and selling of goods. Normal trading inventories will qualify as property, therefore, would the profit from sale of such inventories be subject to CGT or CIT? Additionally, there are some overlaps in the list of taxable incomes under the CIT Act and CGT Act. For example, consideration received for use or exploitation of any asset (i.e., rent, royalty, etc.) is listed as a chargeable income under the CGT Act, as well as under the CIT Act. So, which tax should apply, and in what circumstance? Toaddresstheabovequestions,theCGTActmakes reference to capital sum received as a qualifier for applicationofCGT(section6oftheAct). Essentially,CGT willonlyapplyifacapitalsumisreceivedfromthesale, lease, transfer, assignment, compulsory acquisition or any other disposition of a chargeable asset. A capital sum received by a beneficiary, even where there is no disposition of a chargeable asset, is also liable to CGT. The Act simply defines capital sum as any consideration received in money or money’s worth, used in the calculation of CGT. This definition encompasses all potential forms of compensation receivable in any

business transaction! What is a capital sum? From the foregoing, it is obvious that a proper definition or understanding of the term ‘capital sum received’iscentraltodistinguishingbetweenarevenue and a capital income for tax purposes. Yet, it is difficult to find a proper definition of this term in literature with regard to taxation (the definitions of this term in literature refer to insurance compensation/pay-out). Over time, a number of principles have been established to distinguish between a revenue sum and a capitalsumreceivedfortaxpurposes.Theseprinciples, which are drawn from decided cases and practice in other tax jurisdictions, may provide guidelines in evaluating incomes as revenue or capital. The commonly applied principles are discussed below: • Existence of a profit motive: This principle is typically applied when there is a disposal of a chargeable asset/property between a seller and buyer (i.e., in trading transactions). If the underlying purpose of a transaction is to make a profit, then the proceeds from such transaction would be revenue in nature, rather than a capital sum. This principle supports the treatment of income from sale of trading inventory as a revenue income. However, this does not mean that every transaction that results in a profit will automatically be considered as revenue in nature. The motive of the seller would have to be evaluated. For instance, if a company realises a profit from the sale of an asset in line with its normal asset retention/disposal policy, the proceeds from such sale may be considered a capital sum. Conversely, if the asset was sold purely because of its high market value, the proceeds from the sale will be a revenue income. Babem, Olufemi Senior Manager, Tax, Energy & Natural Resources, KPMG in Nigeria Awe, Lovina Senior, Tax, Energy & Natural Resources, KPMG in Nigeria Continues from next week

BUSINESS DAY

Wednesday 08 August 2018

CityFile

Gridlock: Bonded terminals get 21-day ultimatum to relocate JOSHUA BASSEY

wners and operators of bonded terminals in Ajegunle area of Lagos have been issued a 21day ultimatum by the state government to vacate their current locations of face the wrath of the law. Rotimi Ogunleye, the Lagos State commissioner for Physical Planning and Urban Development, issued the warning after a meeting with Edgal Imohimi, the Commissioner of Police and owners of the terminal. Ogunleye also gave the trailers parked on various streets in Ajegunle and Olodi Apapa up till Wednesday (today) to vacate the streets. He said the bonded terminals are located in the areas designated for residential purposes, saying their

operations are in conflict with the state’s Urban and Regional Planning and Development Law. According to him, the illegal siting of the terminals has disrupted the socioeconomic lives of the people of Ajegunle and environs and caused hardship to motorists. Recall that Governor Akinwunmi Ambode had on July 26, 2018 led members of the state executive council and security operatives to the premises of the terminals and ordered their immediate closure, after which the Lagos State Building Control Agency (LASBCA) moved in and sealed up the companies’premises. The affected companies include Don Climax Bonded Terminals which has three of the sealed site and Queena Bonded Terminals.

2019 National Pension Commission prospective Federal Government Retires for FTC AND Niger State excises in Abuja. Pic by Tunde Adeniyi.

Herder/farmer clash: Ondo adopts Police arrest kidnappers of Kogi monarch, cleric feed lot system for grazing

he police in Kogi have arrested five suspects said to be behind the kidnap of a traditional ruler, a catholic cleric and the recent spate of armed robbery on Okene -Lokoja road. They were paraded by Ali Janga, the Commissioner of Police (CP) in charge of Kogi, who alleged that the suspects were responsible for cattle rustling in Lokoja and its environs. Janga said that one of the suspects was a member of a gang that kidnapped Ibrahim Adoga, the Obaro of Jakura, and Leo Michael, the priest in charge of St Michael Catholic Church, Obajana, on July 24. He said that the suspects who held the traditional ruler in captivity for five days also killed a son of the monarch. According to the CP, the suspects

received N1.1 million as ransom before releasing their victims, stating that N240,000 suspected to be part of the suspect’s own share of the ransom was recovered from him. The commissioner said that the police were on the trail of other members of the gang. He added that the suspects were also responsible for cattle rustling in Lokoja and its environs, saying that the suspected buyer of the rustled cows had also been arrested. He said that the suspects were arrested inside bush with sophisticated weapons, including, ammunition, machete, Jack knife and a locally made pistol. The traditional ruler who later spoke with newsmen said that the kidnappers detained him for five days without food and water.

YOMI AYELESO, Akure

n continuation of the search for a peaceful co-existence among every interest group in Ondo, Governor Rotimi Akeredolu has adopted ‘feed lot system’ for the grazing of cattle in the state. The system entails setting aside a particular location where herders irrespective of tribes, take their cattle for grazing, with the government providing the necessary facilities. The senior special assistant to the governor on agriculture and agricbusiness, Akin Olotu, told journalists in Akure that the feed lot system has been introduced to provide

short-term and long-term solutions to the clashes between the two groups. He said the system was in continuation of the government’s efforts to stem herdsmen/farmers clashes in the state. Governor Rotimi Akeredolu recently held a peace meeting with representatives of herders and traditional rulers from the Ondo-north senatorial District where he urged them to resolve their differences through dialogue, rather than take up arms. The governor ’s aide added that all the interest groups met at Isuada in Owo local government area of the state where they agreed to the new system for cattle rearing.

According to him, farmers and representatives of the herders, led by Umaru Babangida, agreed to abide by the conditions of the feed lot. Among the conditions, according to Olotu, are banning of night grazing and under-age herders and reporting of strange herders to the appropriate authorities. Olotu said that in Owo local government area alone, no fewer than 19 herders’ camps had been identified and registered to ensure seamless interaction with herdsmen and farmers in the council. “The state government will replicate the feed lot system in other communities. We have started in Owo

as a pilot scheme. What this actually means is that a place is set aside in Owo local government area for every herder in the area to graze their cattle. “With this system, nobody, including the Yoruba who are equally rearing cattle is allowed to move their animals from one place to another in search of grasses. “All they need to do is to bring their cattle to the expansive feed lot where facilities, including water and medications are provided. It is a modern ranching system, which is different from the Federal Government’s proposed cattle colony. “Many benefits are derivable from the feed lot system. First, it is capable

Over 2m Nigerians engage in illegal mining

bubakar Bwari, the minister of state for Mines and Steel Development says more than two million Nigerians are engaged in illegal mining activities in the country. Bwari disclosed this at a stakeholders discourse on ‘opportunities and challenges of artisanal mining in Nigeria’’ Monday in Abuja. According to him, most of the miners are poor and unemployed living in rural areas and employing crude methods to exploit the minerals which they sell to feed their families. He said they were mostly

found mining precious minerals like gold, silver, lead/ zinc, sapphire, emerald, tourmaline, aquamarine, gypsum, barytes, silica sand, granite, sandstones, clay, and salt among others. “We cannot afford to criminalise their activities and we cannot also fold our arms and watch as they damage the lives of our people and the environment,’’ he said. He said some of the environmental problems which include lead poisoning, mercury pollution, deforestation, poor sanitation, and heavy metals pollution among others were caused

by Artisanal and Small Scale Mining in Nigeria (ASM). Bwari said that the use of inappropriate mining methods and unwholesome mineral ore processing techniques impact dangerously on public health as they exposed people to heavy metal pollution and outbreak of infectious diseases. He, however, said the forum was to address the myriad of challenges posed by illegal mining. According to him, the ministry has made strenuous efforts to regulate ASM activities over the years. The minister of state said that in the last three

years, the ministry’s regulatory mechanisms had led to some measure of success. “We are more than ever before determined to ensure better policing of artisanal miners through the newly constituted Mines Police. “We have also increased the monitoring capacity of our Mine Inspectorate with the recent purchase of new vehicles. “The formalisation policy of the ministry has also led to the registration of more artisanal miners into mining cooperatives.’’ Bwari said the ministry had trained more than 250 members of these coopera-

tives across the country. He urged the participants to provide lasting solutions to the thorny issue of integrating artisanal miners into formal mining in Nigeria. “As the theme of this conference clearly shows, there are great opportunities in the artisanal and small scale mining subsector which can lead to growth in the economy, while also enriching the lives of the miners themselves,’’ he said. The minister of state also donated a Toyota Hilux to the Miners Association of Nigeria to aid the activities of the association. Abdulkadir Muazu, the

permanent secretary of the in the ministry said that artisanal mining activities had also been linked to smuggling, social disruption, child labour, influx of illegal migrants, and outbreak of diseases due to poor sanitary environment under which mining camps thrive. “On the contrary though, artisanal mining has been known to provide jobs and livelihoods to great number of people around the world. “Globally, it is estimated that more than 40 million people are engaged in the sector producing more than a fifth of the world’s gold, tin and tantalum supplies.

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Private sector eyes 5% interest rate for SMEs to unleash growth ODINAKA ANUDU

s funding gaps in Nigeria widen, the organised private sector (OPS) players are canvassing for 5 percent lending rate to small businesses to enable them unleash growth in the economy. The OPS says micro, small and medium enterprises (MSMEs) create the most jobs and therefore should be supported with single-digit funds to enable them do more. “Five percent interest rate would further stimulate the productive sectors of the economy, create jobs and provide new opportunities for the micro, small and medium enterprises (MSME) operators,” Alaba Lawson, president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said. According to the most recent Enterprise Baseline Sur-

vey conducted by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), there are 37 million MSMEs in Nigeria, contributing almost 50 percent to the country’s Gross Domestic Product (GDP) and over 60 million jobs for Nigerians. The CBN said in 2016 that banks’ lending to this category of business was less than 4 percent. The OPS says Nigeria needs to cut the Monetary Policy Rate, which is the benchmark interest rate, down from 14 percent. Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), said what Nigeria needed now to recover fully was a single-digit rate of 5 percent. “What we need is an interest rate of 5 percent. We believe that this is what can stimulate SMEs and manufacturing,” Jacobs said recently in Lagos. Interest rates have continued to head north as the CBN

Prison decongestion: Edo seeks NBA’s input to reduce inmates awaiting trial ... links progress to support of judiciary

do State governor, Godwin Obaseki, has sought the input of the Nigeria Bar Association (NBA), Benin branch, on the state government’s effort to decongest prisons in the state and reduce the number of inmates awaiting trial. The governor also attributed the progress recorded by his administration to the support of the judiciary in the state, who provided the needed enablement for restoring law and order. Obaseki disclosed this when he received the newly elected executive members of the NBA, Benin branch, who were on a courtesy visit at Government House in Benin City, the state capital. He urged the executive members to work with the in-house committee on the decongestion of prisons in the state, as his administration was committed to reducing the number of inmates awaiting trial, significantly this year. Explaining that his administration has been able to restore law and order in critical sectors of the state, he said: “The success of

my administration so far has been principally based on the ability to use the law, constitution and the judiciary.” The governor said the design for the industrial court to be built by the state is ready and reassured that the state government is committedtorepositioningthestateas a judicial hub in the South-South geopolitical region. “Our goal isto build a state that has a robust complement of the whole judicial infrastructure. We want to make the state attractive to judges and have commenced a project to develop housing estate for our judges to enable them live in comfort and security,” he said. The newly elected chairman of Edo State chapter of the NBA, Collin Ogiegbaen, commended GovernorObasekiforhisdecision to reduce the cost of obtaining Certificate of Occupancies (C-ofOs), noting that the step would encourage investors and increase revenue receipts for the state. Hecommendedthegovernor onthegiantstridesbeingrecorded in the agricultural sector, adding that the NBA anticipated a boom in the oil palm sector.

Edo Joint Account committee declares N3.2bn for July

do State Joint Account Allocation Committee (JAAC) has declared a total of N3.2 billion as the total allocation that accrued to the state in the month of July. The state recorded an increase of N300 million compared to the previous month, when it hauled in a total of N2.9 billion. Chairman, Oredo Local Government Area, Evbareke Jenkins Osunde, disclosed this while briefing newsmen shortly after the end of JAAC meeting presided over by Governor Godwin Obaseki. Osunde said of the N3, 243, 012,057.44 teachers’ salaries gulped N1, 091, 070, 754. 84 while pensions fund contribution stood at N264, 115, 845.36. He said the total deduction for July stood at N1, 667, 738, 909.66 and net allocation shared was N1, 406, 769, 191.71.

He said that the governor also approved a special grant for traditional rulers through the Local Government Councils, assuring that details of the grant would be announced later. Recall that JAAC recorded N5 million increase in Internally Generated Revenue (IGR) of the local councils in June, which formed part of the N2.9 billion declared for the month. He had noted that the internally generated revenue in local councils increased from N206 million recorded in May to N211 million recorded in June 2018. “Teachers’ salaries deducted for June was N1,081,654,814.22, contribution for pension fund stood at N264, 115, 845.36, while pension arrears paid was N100 million,” Osunde was quoted as saying and lauded Governor Obaseki for assisting local councils with the payment of workers’ salary for the month of June.

retains the MPR at 14 percent. The average borrowing rate by real sector players in 2017 was 22.8 percent, representing 0.4 percentage point increase from 22.4 percent recorded in 2016, according to MAN. Tony Elumelu, founder of Tony Elumelu Foundation, recently said every $1 spent on SMEs generated $5. “It is important to fast track the recapitalisation of the Bank of Industry (BoI) to enable it to meet up with huge credit demands of the industrial sector,” Jacobs said. “It is critical to intensify the implementation of the Moveable Collateral Registry and Credit Reporting system which were recently passed into law,” he added. According to Jacobs, government now needs to open up access to various development funds created by the Central Bank of Nigeria (CBN) such as the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the N300 billion Real Sector Support Facility (RSSF) by relaxing stringent conditions denying SMEs and manufacturers access to these funding windows.

Wednesday 08 August 2018

Politics takes toll on economy as Osinbajo fails to show up at MSMEs business clinic JOSHUA BASSEY

n f o l d i ng p o l i t i ca l events in the country are taking a toll on the economy and business, with governance seen focusing more on political crisis than business and economicrelated programmes. This manifested Tuesday at the two-day National Micro Small and Medium Enterprise (MSME) Business Clinic, Lagos edition, which kick-started on Monday at the Teslim Balogun Stadium, in Surulere, Lagos. Acting President Yemi Osinbajo, who was billed to inaugurate the business clinic as special guest of honour, was absent. The host governor, Akinwunmi Ambode, was also not present at the event. BusinessDay learnt from sources that the absence of the two influential officials at the event was not unconnected with Tuesday’s threatening political event in Abuja, in which operatives from the DSS and police barricaded the National Assembly, and denied lawmak-

ers and staff access to their offices, for close to two hours. “We can understand the Acting President’s inability to come. There was an untoward event this morning at the National Assembly complex, which he has to address,” according to a source. The business clinic, which began on Monday, was an initiative of the Office of the Vice President in partnership with the Federal Ministry of Industry, Trade and Investment as well as 11 other federal agencies and jointly organised by the Lagos State government. The event was organised to further complement the efforts of the state government towards the expansion of existing MSMEs in Lagos, as well as encourage start-ups by discussing and implementing policies favourable to the growth of small businesses. Olayinka Oladunjoye, Lagos State commissioner for commerce, industry and cooperatives, while speaking about the business event last weekend, said Osinbajo would inaugurate it, and it

was to further complement the policy of the state government aimed at promoting MSMEs. “As it is evident to all, the present administration in Lagos State is leaving no stone unturned in ensuring even development of all sectors and the micro, small and medium enterprises clinic will never be an exemption,’’ Oladunjoye said. She expressed confidence that the programme would go a long way in raising a new set of entrepreneurs while the existing ones would be guided on the best steps to take to add value to their efforts. It became obvious to the organisers of the business clinic that everything may not go as planned, when Osinbajo and Ambode who were billed to personally attend, failed to show up. The event was billed to start 8:am, and by 9:00am, the main bowl of the Teslim Balogun Stadium was quite busy with exhibitors, mostly small business owners, who showcased their products and services.

L-R: Chuka Uroko, property editor, BusinessDay; Chido Nwakanma, member, editorial board; Dolapo Ashiru, guest lecturer; Yvette Uloma Dimiri, head of audience engagement, BusinessDay; Patrick Atuanya, news editor, and Iheanyin Nwachukwu, head of capital market, at the BusinessDay knowledge sharing series with the theme “The Gains of Investing in Financial Market Instruments” in Lagos, Pic by Olawale Amoo

Onne youths stage peaceful protest to SNEPCo supply base

... ask company to remain AMAKA ANAGOR-EWUZIE

ew days after some workers protested its planned relocation to Lagos, more than 1,000 youths under the aegis of the Onne Youths Council (OYC) on Tuesday staged another peaceful protest at the office of Shell Nigeria Exploration and Production Company (SNEPCo) in the Oil and Gas Free Zone, Onne, Rivers State. During the protest, the youths asked the company to rescind its decision to relocate its Supply Base from the free zone to Lagos port. Philip John Tenwa, president of OYC, who led the protest, said the planned relocation would lead to the loss of more than 5,000 direct and indirect jobs. The protesters carried plac-

ards with various inscriptions condemning the planned relocation and requested relevant authorities to intervene in the matter. He said: “We are here today on behalf of our members and the Onne Community to draw the attention of government to the plan by SNEPCo to relocate its Supply Base from the Onne Port to Lagos.” Recall that SNEPCo last week directed that its property and equipment including turbines, engine spares and miscellaneous equipment spares be loaded into containers and moved out of Onne Port, where it had operated for more than 20 years, to another port in Lagos. “This move by SNEPCo holds serious implications for the Onne community and the

entire Rivers State. This is because SNEPCo, which is the operator of the Bonga field, at present, supports more than 5,000 direct and indirect jobs at its Supply Base in Onne. There are also several small businesses and contractors whose businesses and fortunes are tied to SNEPCo,” he said. According to Tenwa, the relocation of SNEPCo out of the Onne Free Zone also has negative affect on the economy of Rivers State and the entire Niger Delta region. “It will also put the means of livelihood of many families and the future of our children at risk by pushing many to the job market,” he said. He said while the Federal and State Governments have worked hard to ensure peace in the Niger Delta region, “the relocation of

the SNEPCo to Lagos can jeopardise the peace currently being enjoyed in the region. “Also, we are all aware of the huge congestion in Lagos Port and the underutilisation of the Rivers Port, Port Harcourt and Onne Port. The ports in Lagos are bursting at the seams and the Apapa gridlock, which has practically hampered vehicular movement in Lagos, is clear evidence of this. “As a result, the Federal Government has expressed its readiness to revive operations at the Port Harcourt, Onne and other ports in the South-South. Why then is SNEPCo not complementing this effort? What does it stand to gain by abandoning a community that has hosted its Supply Base for more than 20 years?

Wednesday 08 August 2018

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BUSINESS DAY

NEWS Shell restores health to 600,000 persons in Niger Delta, flags off free medicare in Rivers IGNATIUS CHUKWU & SABI ELEMBA

ver 600,000 persons in the Niger Delta region have so far benefitted from the free medical treatment tagged “Healthin-Motion” organised by Shell Petroleum Development Company (SPDC)inthepasteightyears. This was disclosed by Igo Weli, general manager, external relations, during the opening ceremony and flag-offoftheSPDCAssa-Obite pipeline community care programme at Obite town hall in Ogba - Ndoni -Egbema Local Government Area in Rivers State through Chibuzor Anyim, manager, external relations, land. The free medicare featured cardiac vascular screen, breast and cervical cancer care, dental and eye care, and treatment of minor and chronicailments. “What distinguishes the SPDC JVhealthinmotionprogrammeand makesitsopopularlyacceptedisthat the doctor comes to the doorstep of the recipients and the doctor does notcomeemptyhanded,”hesaid. He went on “As a company, we are passionate about health and safety and committed to the people in the communities where we operate. We uphold a maxim of ‘We Care’ in our business and believe that a healthy population is not only a productive population but strengthens the economy and wealth of the nation.” The general manager regret-

ted that the efforts of the people to access medicare were sometimes hindered by ignorance, limited resources, and avoidable delays. “But with the presence of our doctors in the benefitting communities, I encourage all of you to take advantage of the opportunity and present yourselves for screening andtreatmentatthedifferentservice pointsinthetownhallandcanopies outside,” he said. He reminded them that the greatest gift or wealth was good health, and commended them for making themselves available. The chairman of ONELGA, Odili Ifeanyi, who was represented by the chief of staff, commended Shell for their healthcare programme and urged the company to make the service to be regular. He also urged the people from the local government to support and cooperate with Shell. Shellsaysitrunsvariousprojects in some of the communities where we operate, often in partnership with local NGOs or development bodies,toimproveaccesstohealthcare for local people and to reduce the spread of diseases like HIV/ AIDS and malaria. Today,millionsofpeopleacross theworldareunabletoaccessmedicaltreatment.Insomecommunities wherewework,accesstohealthcare may be limited or inadequate. For example, parts of Iraq have an acute shortageofdoctorsandothermedicalstaffduetoongoinglocalconflicts andwar.

Saraki to speak on N/Assembly invasion today … as Labour condemns siege by DSS, Police JOSHUA BASSEY & OWEDE AGBAJILEKE, Abuja

enate president, Bukola Saraki, will address a world press conference at the foyer of the National Assembly on Wednesday. A brief statement by Yusuph Olaniyonu, special adviser (media and publicity) to the Senate president, revealed that the briefing would hold by 12 noon. The Senate president is expected to address the eight-hour siege at the National Assembly Complex by operatives of the Department of State Service (DSS). PDP lawmakers who sat at the lobby to foil attempts by APC senators to impeach the nation’s number three citizen welcomed Saraki, who walked into the chamber at around 3:20pm. Meanwhile, the siege on Tuesday morning had been condemned by the organised labour, which described it as imminent threat to democracy. The labour under the aegis of United Labour Congress (ULC) said the development also heightened fears over the stability of the nation, and ability of the political class and security agencies to manage affairs in a decorous, principled and honourable way. Joe Ajaero, president of ULC in a statement, reminded the security agencies that the National Assembly was a different and independent arm of government in a democracy. “We want Nigerians to remember that as a union we observed this increasing intolerance of opposing views by Nigerian politicians and urged for

restraint. It is therefore important that we reiterate that stance here “That the deepening crisis of political intolerance, debauchery and brigandage that have suddenly become prevalent in our body polity is highly condemnable. Governance in Nigeria has been reduced to drama on daily basis ridiculing the seriousness with which other nations hold its dynamics and importance to the welfare of their citizenry and nation,” he said. Nigeria is a democracy and the beauty of democracy is when all of its tenets are strictly observed by all parties, especially the principles of the Rule of Law and Separation of Powers between the three arms of government, he said. “We therefore strongly condemn the harassment, intimidation and hounding of political opponents across the nation using the instruments of state and other forms of terror. We condemn the action of the DSS and the Police for invading the hallowed grounds of the National Assembly which remains the furnace upon which our laws are generated and refined,” he said. He regretted that the executive had also defiled the judiciary and had tried everything possible to take over the legislature. ‘The defiling of the judiciary has led to serious executive impunity and lawlessness in disobeying court judgments and pronouncements. “What will the attempt to forcefully pacify the legislature by forcefully overrunning it produce? It certainly does not bode well for Nigeria and that to us is very alarming as it is an active recipe for dictatorship,” he said.

L-R: Olukayode Ogunnubi, permanent secretary, Lagos State Ministry of Science and Technology; Hakeem Fahm, the commissioner; Zdzislaw Wiater, department director, internal organisations and security sector solutions unit, Asseco Poland; Simon Melchior, CEO, Asseco Nigeria, and Tomasz Mosiej, architect, international organisations and security sector solutions unit, Asseco Poland, during the delivery to Lagos State of Asseco UAV Simulator system in Alausa, Lagos, yesterday . Pic by Pius Okeosisi

Dangote to up investment in Niger

heDangoteGroupissetto deepen its investment in NigerState,representative of the Group at the state’s Trade Fair, Bello Danmusa, says. According to Danmusa, Niger State has all it takes to industrialised given its vast land and natural resources, even as he commended the government of Abubakar Sani Bello for being proactive in the partnership with the Dangote Group and other private sector investors. Wife of the governor, Amina Sani Bello, who declared the Dangote Day open, said the contribution of the Group to the development of the state was incalculable. President of the Niger Chamber of Commerce Industry, Mines and Agriculture (NCCIMA), Umar Ahmed Bakai, commended the Dangote Group for supporting and sponsoring

the Trade Fair, adding that Aliko Dangote had helped in job creation in the state, and called on other investors in the country to emulate Dangote. Speaking also, chairman, House of Assembly Committee on Investment, Muhammad Nurudeen, said the Niger State House of Assembly welcomed private sector participation in driving the economy of the state. Permanentsecretary,Ministry of Commerce and Investment, Uthman Shehu, urged the Dangote Group to scale up its investments in Shea Butter, saying the state had about 64% share of the totalglobalsheabutterproduction. Africa’s industrial giant, Dangote Group, said its sponsorship of the ongoing Niger State Trade Fair was part of its commitments to support states toward the industrialisation of Nigeria. In partnership with states’

chambers of commerce, the Group has, over the years, sponsored most of the Trade Fairs across the country, a statement from the Group’s corporate communications department said. Niger State has vast arable land, mineral resources and great potential for industrialisation, it said, adding that Governor Abubakar Sani Bello has taken the path to industrialisation and job creation through his government’s partnership with the private sector. The Trade Fair, which opened July 29, is expected to close on August 9, 2018. The theme for the 16th Niger’s National Trade Fair holding in the state’scapital,Minnais:‘Exploring Agriculture and Solid Minerals as Panacea for Nigeria’s Economic Growth and Development.’ Director-general of NCCIMA, Adamu Salihu, said the partner-

ship between the Dangote Group and his Chamber was robust as the conglomerate was the biggest promoter of agriculture and solid minerals in Nigeria. Hesaidabout10states,12Federal agencies and not fewer than a thousand traders were participating in this years’ fair. Our reporter said the Dangote pavilion at the Trade Fair was a Mecca of a sort as participants thronged the pavilion to have a glimpse of its innovative products, while others want to be distributors for the company. Some of the products with pocket friendly prices on display include the recently improved pasta (Slim spaghetti and macroni), cement, Dan-Q seasoning, sachet sugar, salt among others. It said the participation of the Group was part of the strategic move to grow market share and expand customer reach.

Akpabio arrives Uyo in preparation for defection ANIEFIOK UDONQUAK, Uyo

reparations are in top gear by All Progressives Congress (APC) supporters for the planned defection of Godswill Akpabio, the immediate past Senate minority leader that has resigned his position to enable him formalise his defection from the People’s Democratic Party (PDP). Akpabio, who represents Akwa Ibom North West Senatorial District in the Senate, was the governor of Akwa Ibom State between 2007 and 2015. According to reports, his defection will take place in Ikot Ekpene, the headquarters of his senatorial district about 30 kilometres from Uyo, the state capital. Already, he has arrived the Ibom Airport where hundreds of his supporters received him on his way to his hometown in Essien Udim Local Government Area, in a convoy of buses and cars. Many of the supporters carried the banner of the party waving brooms, the symbol of their party with jubilation and excitement as the convoy drove through Ikot Ekpene Road. Speaking, a supporter who hails from the same senatorial district described the defection as

that of a big fish that had defected to join another party. “Akpabio’s defection is a remarkable event, we are all happy with him as our leader,’’ he said. Also speaking, Ita Awak, immediate past publicity secretary of the APC in the state, said he would not speak on the matter until Akpabio’s defection, adding that he would adopt a wait and see attitude until after his defection. Awak, who is the director of air worthiness at the Nigerian Civil Aviation Authority (NCAA), had earlier posted on his timeline that “I know as a truth that

CHANGE OF NAME

I, formerly known and addressed as Ogene Felicia now wish to be known and addressed as Ezekiel Felicia Ifeyinwa. All former documents remain valid. General Public please take note.

ADDITION OF NAME

I, formerly known and addressed as Afinjuomo Emmanuel but now am adding Pelumi. And i now wish to be known and addressed as Afinjuomo Emmanuel Pelumi. All banks and genral public please take note.

nobody can politically negotiate him/herself out of the reach of retributive justice.’’ Both the chairman of the party, Ini Okopido and the secretary of the party, Effiong Etuk, did not response to text message sent to their phones, neither did they pick their phone calls. It was gathered that the entire preparation was being handled by the senatorial district of the party and not by the state chapter, a development that might be an indication of alleged infighting over Akpabio’s defection. Checks showed that though Akpabio was the former gover-

CHANGE OF NAME

I, formerly known and addressed as Miss Oluwabusayo Elizabeth Antonio now wish to be known and addressed as Mrs Oluwabusayo Elizabeth Hassan. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Bashua-Alimi Anthonia Oluwadamilola now wish to be known and addressed as Adesina Anthonia Oluwadamilola. All former documents remain valid. General Public please take note.

nor of the state, his decision to defect has split the polity into two. While he is drawing his support base from his senatorial district, the two other senatorial districts in the state appear to be bothered that Akpabio’s defection might change the zoning arrangement in the state, which he instituted.

CHANGE OF NAME

I, formerly known and addressed as Ogene Felicia now wish to be known and addressed as Ezekiel Felicia Ifeyinwa. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Sylvester Ngozi Amaechi now wish to be known and addressed as Martin Chibuzor Otibe. All former documents remain valid. Banks & General Public please take note.

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I, formerly known and addressed as Catherine Jessica Isioma Obiazor now wish to be known and addressed as Catherine Jessica Isioma Okigbo. All former documents remain valid. General Public please take note.

38 BUSINESS DAY NEWS

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L-R: Nyokabi Kenyatta, director, Kenyatta Trust; Tsitsi Masiyiwa, board chair, APF/executive chairperson, Higherlife Foundation; Gbenga Oyebode, board member, APF/founder, Aluko & Oyebode; Judy Dlamini, executive chairperson, Mbekani Group/chancellor, Wits University, and Ndidi Nwuneli, board member, APF/founder, LEAP Africa, at the 2018 African philanthropy forum conference in Johannsburg, South Africa.

Offshore bond holders panic, equities fall ... Continued from page 1

bajo, who’s acting head of state while President Muhammadu Buhari is on vacation in the U.K., ordered the dismissal of State Security Service Director General Lawal Musa Daura “with immediate effect,” according to a statement, which gave no explanation.

His ouster capped a day of d rama in the capital, Abuja, which started with secret police officers wearing masks and their standard black uniforms turning away legislators, reporters and staff as they tried to enter the National Assembly complex. The Nigerian equities market closed in the red as the NSE-ASI shed 0.40 percent to close at 36,333.80pts. Sector performances were broadly negative yesterday with the oil and gas sector emerging the worst performer. The broad sell-off was driven by losses recorded in SEPLAT (-8.45%), Forte Oil (-2.34%), Guaranty Trust Bank (-2.13%), Lafarge WAPCO (-1.97%), and Zenith Bank (-0.83%). Rafiq Raji chief economist at Macro Africa Intel said recent political events confirm foreign investors’ suspicions and also vindicated their decisions to withhold investments due to the current uncertainties. “ The delay in investment decision will affect economic growth and hinder development in major sectors of Nigeria economy,” Raji told BusinessDay by email. Nigeria Eurobonds also turned bearish in yesterday’s session, with yields rising by c.7basis points on average. “We witnessed the most selloff on the Jan 2021 which rose by c.12bps, consequently reversing recent gains. The 2038s however lost the most in price terms down by c.0.70pct (+6bps) d/d,” Ayanfalu of Zedcrest Capital said. Chief executives officers in the countr y have told BusinessDay that they have put on hold major new investments in the country until after the 2019

elections. They took the decision due to the rising political uncertainty in the country as politicians engage themselves in high profile battle for power. Africa’s top oil producer has seen increasing political turmoil in the past weeks. Dozens of legislators, including Senate President Bukola Saraki and several governors, walked out of the ruling All Progressives Congress (APC) to join the ranks of a swelling opposition. Buhari is seeking re-election next year. Bismarck Rewane, CEO of economic intelligence firm, Financial Derivatives said the uncertainty is being factored into asset prices. “The economic benefit of an open and democratic society has not yet been embedded in our culture,” Rewane said. “These are early stages, and so we are still on the learning curve,” Rewane told BusinessDay by phone. A key question is whether Osinbajo obtained the president’s approval for the decision to fire the state security service boss, who’s from Daura, the same hometown as Buhari. The standoff between Buhari and Saraki and other lawmakers has been largely responsible for the stalemate between the executive and legislature that’s hobbled the government for the past few years. Presidential adviser, Ita Enang, said on Monday that the government was at risk of shutting down unless lawmakers returned earlier from their current break to pass a supplementary budget. Buhari on July 17 asked lawmakers to reallocate N229 billion ($633 million) in a supplementary budget, less than a month after he signed 2018’s spending plan into law. Business leaders who talked to BusinessDay said that their top concerns include uncertainty over the country’s macroeconomic outlook, especially the direction of the country’s exchange and inflation rates. They also said that they are

concerned over the inaction on the 2019 budget, as there have been no capital releases from the budget, despite the fact that it has been signed into law. Another area of concern is the open partisanship that civil servants are displaying in the run-up to the 2019 national elections. Some complained of visiting offices, only to find out that senior civil and public servants have abandoned their posts for political campaigns and therefore the needed approvals have been put on hold. The business leaders also told BusinessDay that while the rising conflicts and defections in the political space are signs of increasing political maturity in the country, as it indicates that being an incumbent no longer guarantees victory, they are also concerned that the conflicts may also be a sign of political instability. Only last week Shell said that it will wait until 2019 to decide whether to go ahead with the development of its Bonga Southwest offshore oilfield. The project, one of the country’s largest with an expected production of 180,000 barrels per day, will generate profit at below $50 a barrel, according to Bayo Ojuli, managing director of Shell Nigeria Exploration and Production Company. Even though Shell said that it is negotiating a production sharing contract agreement with the federal government to determine the viability of the project, oil industry sources told BusinessDay that there is no way Shell would make the Final Investment Decision on a project that will cost as much as US$10 billion in a pre-election year with so much political uncertainty in the air. Four key petroleum bills that could help facilitate investments in Nigeria critical oil and gas sector remain stuck between the National Assembly and the Presidency even as the relationship between both arms of government has completely deteriorated, reducing the chances that the bills will be passed before the end of the tenure of

this administration. On August 4, Ibe Kachikwu, the Minister of State for Petroleum Resources had to assure investors that plans by shareholders of the Nigeria Liquefied Natural Gas (NLNG) Limited to reach a Final Investment Decision (FID) on its Train-7 project by December 2018, would not be affected by the 2019 general election. But oil industry sources say that it is unlikely as investors will be reluctant to put money down in the US$7 billion Train 7 project if the current noise in the political environment remains high. Pa s t t re n d s h av e a l w a y s shown that the country’s economy tends to slow down near elections due to rising political uncertainty. But there are fears that this year’s slowdown in the economy could be worse because the economic growth is already very fragile. The country only managed GDP growth of 1.95 percent in the first quarter and second quarter economic growth is also expected to be below 2.0 percent. With the government fully distracted with the battle to win a second term, most economist believe that growth could slow down further with a risk of recession not far-fetched. However, Acting President Yemi Osinbajo took firm actions Tuesday to check acts of impunity by government officials following the unauthorized invasion of the National Assembly by operatives of the Department of State Security Service, DSS. The Acting President, disturbed by the Tuesday action, summoned the Chief of Staff to the President Abba Kyari, acting Chairman of the Economic and Financial Crimes Commission, EFCC, Ibrahim Magu and the Inspector General of Police, Ibrahim Idris, to his office and met with them behind closed doors. Prior to the sacking of the DSS DG, many had reasoned that President Muhammadu Buhari’s appointees had held the nation hostage by their actions ahead of the 2019 general elections. The Inspector General of Police after the meeting denied being part of the plan to lay siege on the National Assembly. An insider informed BusinessDay that the Vice President used the opportunity to assert his authority. The Vice President BusinessDay gathered lamented that the siege on the National Assembly was a major dent on the planned reception to welcome former People’s Democratic Party PDP, Senate Minority leader, Godswill Akpabio, schedule for Akwa Ibom state on Wednesday. “He was very bitter that while he was working to bring about a political solution to the National Assembly impasse, the DSS acted the way they did without recourse to his office,” the source said. “The VP has sent a strongly worded message to all those concerned and he has the backing of the President to take these actions,” he said.

Wednesday 08 August 2018

AB InBev plans second new brewery in Nigeria Emeka Ucheaga, Oluwatosin Dokunmu & Dipo Oladehinde

espite falling disposable incomes, the beer war in Africa’s largest economy is getting more intense as Anheuser-Busch InBev NV, (AB InBev) makers of Budweiser and Stella Artois have announced plans to build a second new brewery in Nigeria as the major beer maker seek to expand its footprint in Africa. AB InBev chief executive officer Carlos Brito announced plans on Tuesday to open a second brewery in the country after starting production in its first plant in Nigeria later this month. The plant is the newly-completed $250 million 2.0mn hectolitres Greenfield beer factory in Sagamu, Ogun state. “We are very excited about building in Africa; where others see risk we see opportunity,” Brito said after meeting investors and analysts in Johannesburg South Africa. Nigeria is the second largest beer market in Africa and consumes some 16 million hectolitres of beer a year, about half as much as in South Africa, the continent’s biggest beer market. The country’s per capita beer consumption is about 10 litres a year, compared to a global average of 35-40 litres, according to Morgan Stanley. AB InBev, the world’s largest brewer, acquired SABMiller, South Africa’s largest brewer, in 2016. In what could be a troubling move for the other major Nigerian based brewers (NB and Guinness Nigeria), AB Inbev may gravite towards price cuts as it sees ensuing margin improvements across its operations post-merger of its Nigerian assets. The Belgium- based company has invested heavily in the continent and has sought to expand the availability of signature brands such as Budweiser and Stella Artois. In March, the company agreed to build a $100 million brewery in Tanzania, and the firm is also investing in South Africa. The head of Ab Inbev’s Africa operations, Ricardo Tadeu said earlier that a new plant became necessary in order to address supply constraints that had limited sales of the company’s products to areas close to existing plants. Tadeu noted that 70 percent of the company’s raw materials such as cassava, millet and sorghum as well as packaging materials are sourced locally.

Decisive month for Buhari... Continued from page 2 of products produced in the continent. This means that a country that is bound by the AfCFTA can only protect 10 percent of its local industries. “Trade leads to increased prosperity for all, but there is a short-term interest always to protect the gains that come. And this is how we need to understand the plight of manufacturers in Nigeria because many of the things they are dealing with are compounded by factors somewhat beyond their control,” Pat Utomi, political economist and faculty at Pan Atlantic University, said at the NBA-SBL. Continues on wwwbusinessday online.com

Wednesday 08 August 2018

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BUSINESS DAY

News Extra

Commendations trail Osinbajo’s sack of DSS boss, but cynicism rules the wave ZEBULON AGOMUO

n an apparent show of concern over the increasing meddlesomeness of the Department of State Services (DSS) in the nation’s politics, the Acting President, Yemi Osinbajo, yesterday sacked Lawal Daura, director-general of the agency. Analysts however, believe that the sack was just a move to “save face” or a way of pulling a wool over the eyes of Nigerians. They wondered if the acting president did not have a pre-knowledge of the siege with all the talk about “intelligence gathering”. Osinbajo had described the blockade of the National Assembly yesterday by operatives of the Department of State Services as “unauthorized” and condemned it as “a gross violation of constitutional order, rule of law and all accepted notions of law and order”. He said that the unlawful act which was done without the knowledge of the Presidency was condemnable and completely unacceptable. A statement signed by Laolu Akande, senior special assistant to the President on Media and Publicity on Tuesday in Abuja, said Osinbajo assured Nigerians that anybody involved in the act would be punished. “All persons within the law enforcement apparatus who participated in this travesty will be identified and subjected to appropriate disciplinary action,” the statement said. Observers however, say that Daura may have become a fall guy and “sacrificed” to save the integrity of government. An analyst, who spoke to BusinessDay on condition of anonymity, said: “A lot of things happen in government. Since the plot to impeach Saraki did not work out, government may have come up with the plan of sacking the DSS boss to create an impression that its hands were clean and that Daura acted on his own. Something of this nature is natural in power play. The man may be subjected to temporary inconvenience, but would be heavily compensated secretly. Why is it now that government is reacting to the impunity going on and the excesses of the DSS?” What appears to have created doubts in the mind of Nigerians over government’s sincerity in the sack of Daura is the “body language” of the powers that be and the harsh treatments it had meted out to the opposition party members, particularly, since the gale of defections from the APC. Commendations have however, continued to trail the sack of the DSS DG. Atiku Abubakar, a former vice president and presidential aspirant on the platform of the People’s Democratic Party (PDP), commended Osinbajo for “listening to the clarion call of Nigerians

Osinbajo

and taking action to halt the illegal and anti-democratic siege of the National Assembly by men of the Department of State Security.” Atiku noted that “by firing the Director General of the DSS, Mr. Lawal Daura, the acting President has given meaning to the cries of Nigerians that we will not tolerate such anti democratic actions.” Achike Chude, a Lagos-based public affairs commentator, posted on his facebook wall: “Soap has been poured into the eyes of those who did not have the courage or conscience to say the truth. Osinbajo has given himself some lifeline. But President Buhari must not be allowed to share from Osinbajo’s glory.” The siege on the National Assembly complex yesterday by the operatives of the Department of State Security Services (DSS) has become one too many. In the last three weeks, the DSS had attempted to give democracy a wrong name by carrying out assignments that are not consistent with their brief in a democratic setting. The nation woke up on Tuesday with the sad news of the invasion of the National Assembly complex by the operatives of the DSS, who attired themselves as if they were going to the war front. In a Gestapo manner, they brandished lethal arms, threatening anyone who dared to flout their “No Entrance” order. It was however, gathered that they only allowed senators who are known to belong to the All Progressives Congress (APC) to enter the complex through the back door. The hooded security agents said they were given an order “from above” to ensure that no one entered the complex. Nigerians know the source of the siege. In the last few days, news of alleged plot to impeach Bukola Saraki, the Senate president, has been making the rounds. It was gathered that the stage was set

Daura

for Ahmed Lawan, Senate leader, to become the Senate president, while Hope Uzodinma, would replace Ike Ekweremadu as deputy Senate president. Saraki, who was elected senator and president of the Senate on the APC platform, had last Tuesday decamped to the main opposition PDP, a development that, not only riled the APC establishment and Aso Rock, but has also engendered controversy The ruling APC insists that Saraki must resign his leadership position and drop the “crown” that belongs to it (the party). Sensing that the Kwara State-born politician is not ready to tow that line, the ruling party may have decided to employ all means possible to oust him. Analysts have however, condemned the level of desperation being shown and displayed by the APC, saying that the party may be dragging the country back to the days of the Jackboot. An analyst, who craved anonymity, told BusinessDay that “we are regaling in orgy of impunity.” The analyst, who said that the ugly incident at the National Assembly on Tuesday was a reminiscent of what happened at the complex in 2014 following the plan by the then speaker of the House of Representatives, Aminu Tambuwal, to defect to the APC from the PDP, however, noted that the big difference between then and now is in the party. “Why I am so pained about the impunity being perpetrated by the APC is that the party promised to take Nigeria away from that type of politics. When they came with their change mantra, we thought that sanity would be brought into the nation’s politics, but we are unfortunately seeing the worse of brigandage. I doubt if the 2019 will even be possible. When it happened in 2014, because it favoured them, it was commendable; now that the table is turned, they crying blue murder. This reminds me

of a quote by ‘Will Rogers, that ‘A politician is just like a pickpocket; it’s almost impossible to get one to reform.’ So, no matter what the promise; no matter how they try to paint themselves - democrats or what; they are the same,” the pundit said. In the recent times, Nigerians have witnessed a dangerous type of politics being introduced by the ruling party. First, it was in Ekiti State, during the gubernatorial election; the entire place was militarised in the name of providing security. A few days ago, G overnor Samuel Ortom of Benue State, got a state-sponsored impeachment notice. Eight members of a 30-member House of Assembly were provided security by the powers that be, to impeach a sitting governor, just because Ortom defected to the PDP from the APC. It would also be recalled that the DSS operatives had recently invaded the residences of the Senate President and his deputy, Ike Ekweremadu, allegedly to block the two principal officers from presiding over the sitting of the day at the Senate where a number of senators had concluded arrangement to defect to the PDP from APC. But the recourse to oppression, persecution and sheer impunity to have a violent change of leadership at the National Assembly is against the tenets of democracy. Analysts speak in tandem that the double-standard, which the APC is manifesting may further endanger peace in the country. What the desperation shows is that days ahead may be brutal as the APC may decide to bare its fangs against any one that may dare to stand before the moving train. President Buhari has come under fire for stoking the fire of desperation in the nation’s political arena. Some pundits believe that the drama playing out at the National Assembly may have been the brain child of the President.

“I am very sure that what we are seeing today may be the result of the meeting Buhari had with the security chiefs before he jetted out of the country a few days ago. He may have given the order and want it perfectly executed, so that when it is boiling here, he would claim that he was away on holiday. Someone who said he was going on holiday is still receiving the likes of Godswill Akpabio when he should be resting. There must be something fishy somewhere. If they have conscience, they should please, let this country be,” the analyst said, pleading anonymity. A lecturer of International politics, Edwin Udo, told BusinessDay, that the genesis of the impunity was instituted in the current administration, when President Buhari decided to employ almost all the security chiefs from his side of the country, tribe and religion. “I see things getting worse as we get closer to 2019. The seed of impunity was sown at the point when the President decided to employ all the security chiefs from his tribe and religion. Whenever they meet, they plan how to tame those who do not share their views, rather than how to make Nigeria secure. Look at how many DSS operatives that took over the National Assembly complex with the best of firearms, yet, insecurity remains the worst challenge of this country at the moment,” Udo said. On the illegality of attempt to impeach Saraki with the composition of the Senate, Udo said: “It is not as if they do not know it is illegal to impeach the Senate president as it stands now, what is happening is that in a banana republic like ours, where there is no respect for the rule of law; where the power available to the President is so massive and absolute, they do whatever they like. It is about impunity and no regard and respect for the rule of law. A country that plies that route is likely to end in anarchy.”

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Wednesday 08 August 2018

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BUSINESS DAY

FINANCIAL TIMES Poor Iranians bear brunt of sanctions as food prices soar

Katzenberg and Whitman raise $1bn for mobile video start-up

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World Business Newspaper

Kroenke emerges victorious over Usmanov in battle for Arsenal US sports billionaire buys out Russian rival’s 30% stake in London football club Cat Rutter Pooley, Josh Noble & Arash Massoudi

tan Kroenke, the US sports mogul who owns a controlling stake in Arsenal, has struck a deal to buy Russian metals magnate Alisher Usmanov’s 30 per cent stake in the London-based football club for £550m in cash, giving him sole ownership and bringing an end to a battle between the two high-profile billionaires. The English Premier League club’s two largest shareholders had tussled for control of Arsenal and its direction for years, with both seeking to buy out the other. Last month, the Financial Times reported that Mr Usmanov had in effect conceded defeat after recognising Mr Kroenke would never sell control to him. The sale, which values the shares in the club at £1.8bn, marks only a small step-up in value from the offer rejected by Mr Usmanov in October. Then, when offered £525m for his shareholding, Mr Usmanov said: “I have always been and will continue to be an ardent supporter of Arsenal and I see my 30 per cent stake as an important aspect in protecting the best interests of the fans in the club.” Last year, Mr Usmanov offered $1.3bn to acquire the 67 per cent of shares held by Mr Kroenke, but the offer was rejected. Frustrated with the club’s performance and a lack of spending for players, Arsenal fans cheered during one match for Mr Kroenke to sell his stake. Despite his 30 per cent holding, Mr Usmanov has never had a board seat or any say in the way Arsenal is run, complicating a sale of his holding to any interested party other than Mr Kroenke. On Tuesday, Mr Kroenke said he appreciated Mr Usmanov’s

“dedication to the Arsenal Football Club and the storied ethos and history the club represents”. His investment vehicle, KSE UK, said in a statement that the takeover would “result in the opening of a new chapter in the history of the club in bringing 100 per cent private ownership by KSE”. The offer values each Arsenal share at £29,419. The deal is being funded by a £557m loan from Deutsche Bank, and just over £45m in cash from Mr Kroenke’s own resources. Mr Kroenke, who also owns the LA Rams American football franchise and the Denver Nuggets basketball team, has been a divisive figure among Arsenal fans, with some blaming the club’s waning fortunes — Arsenal last won the Premier League in 2004 — on his management. “This news marks a dreadful day for Arsenal football club,” Arsenal Supporters Trust said in a statement following the announcement. “Stan Kroenke taking the club private will see the end of supporters owning shares in Arsenal and their role upholding custodianship values.” Arsenal’s thinly traded shares, which are quoted on London’s NEX exchange, will be delisted as a result of the deal. The change in ownership comes as the club embarks on a new era on the pitch. Spaniard Unai Emery will take charge of the side for his first Premier League match on Sunday, after replacing Arsène Wenger, the French coach who managed Arsenal for 22 years. The deal draws a line under a battle for control of Arsenal that has stretched back more than a decade. Mr Usmanov first took a 14.6 per cent stake in Arsenal in 2007 for £75m, in partnership with Anglo-Iranian businessman Farhad Moshiri, now owner of rival Everton.

Turkey’s benchmark bond yield reaches 20% as lira rebound fizzles Currency trades near record low after large drop on Monday Adam Samson & Edward White

urkey’s benchmark bond yield jolted to a historic high above 20 per cent on Tuesday after a recovery in its beleaguered currency lost momentum, the latest sign that the country’s financial troubles are deepening. Just after midday in London,

yield on Turkey’s 10-year debt reached 20.09 per cent from 18.93 per cent at the close on Monday, Reuters data tracking pricing on the Borsa Istanbul showed. Just three months ago, the yield, which has jumped as prices have dropped, was 13.9 per cent. The country’s dollar-denominated paper fared better on TuesContinues on page A4

Stan Kroenke took control of Arsenal in 2011 after buying out a number of significant shareholders © Bloomberg

Germany plans further foreign investment curbs

Threshold to veto deals will be lowered as concern grows over Chinese acquisitions Guy Chazan in Berlin

ermany is to increase its powers to block foreign investments by significantly lowering the threshold for deals that can be subject to ministerial veto, in a further sign of growing protectionist sentiment towards Chinese acquisitions. Berlin can veto deals that involve the purchase of at least 25 per cent of the equity of a German company by an entity from outside the EU, and only if they endanger public order or national security. Ministers now want to reduce that threshold to 15 per cent. Peter Altmaier, economics minister, told the newspaper Die Welt that the threshold would be lowered “so that we can check more acquisitions in sensitive sectors of the economy”. Die Welt

said the new bill could come into force this year. “We want to be able to take a much closer look at companies in the defence sector and in critical infrastructures, and certain other civilian technologies that are relevant to security, such as IT-security,” Mr Altmaier said. Germany is increasingly intervening to stop Chinese investments, particularly in companies operating in critical infrastructure, amid fears that some of its most advanced technology is ending up in Chinese hands. Last month, the government directed state development bank KfW to take a 20 per cent stake in 50Hertz, a high-voltage power network operator, to pre-empt the stake’s acquisition by a Chinese state investor. Last week a Chinese company, Yantai Taihai, withdrew its

bid for Leifeld Metal Spinning, a small German machine tool manufacturer that specialises in materials for the aerospace and nuclear industries, after the government moved to block the deal. It would have been the first use of Germany’s foreign investment law to veto a mergers and acquisitions transaction. Germany’s tougher stance is part of a global backlash against Chinese takeovers. President Donald Trump is expected to sign into law measures to expand the powers of the Committee on Foreign Investment in the US (Cfius), an inter-agency panel that reviews foreign investments for national security threats. Meanwhile the UK recently unveiled a 120-page policy to enhance government powers to prevent foreign purchases of security-sensitive British assets.

Former Trump aide says he and Manafort committed crimes together Rick Gates takes witness stand in fraud trial of president’s former campaign manager Kadhim Shubber

aul Manafort’s former deputy testified on Monday that his former boss kept millions of dollars hidden in Cypriot accounts, telling jurors in Mr Manafort’s fraud trial that the pair had committed crimes together. Rick Gates, who worked alongside Mr Manafort for a decade, first in Ukraine and later on Donald Trump’s presidential campaign, said the income and accounts were hidden from Mr Manafort’s tax accountants. “We didn’t report the income or the fact that the accounts existed,” said Mr Gates, who pleaded guilty to conspiracy and lying to the government in February.

Mr Gates’ testimony is a central element of the case brought against Mr Manafort as a result of an investigation into links between the Trump campaign and the Russian government by Robert Mueller, special counsel. Mr Manafort is accused of failing to declare offshore bank accounts and income he earned from consulting for Ukraine’s pro-Russian former president, Viktor Yanukovych. Prosecutors also allege that, when the money dried up after Mr Yanukovych was ousted in 2014 and fled to Russia, Mr Manafort fraudulently obtained bank loans in the US. Earlier this year, the special counsel’s office brought similar charges against Mr Gates. Since his guilty plea, he has been co-

operating with the investigation and may avoid jail time as a result. Mr Gates admitted his own wrongdoing as he appeared on the stand in a blue suit and gold tie. He said he had lied on his own tax returns, in mortgage and credit card applications, and to the government. He confessed to stealing hundreds of thousands of dollars from Mr Manafort’s consulting company by filing false expense reports. The government said Mr Gates would testify for another three hours on Tuesday, after which attorneys for Mr Manafort will crossexamine him. They have indicated they will aim to show Mr Gates is an untrustworthy witness who is responsible for any issues with their client’s tax returns.

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NATIONAL NEWS

FT Turkey’s benchmark bond yield reaches...

Wake up to the security risks in Chinese tech dominance

Continued from page A3 day. The risk premium investors demand to hold the 10-year bond maturing in October 2028 — compared to the equivalent US Treasury — ticked up to 4.625 percentage points, from 4.583 points on Monday. It was issued in April with a spread of 3.37 points. The lira, which had been up more than 2 per cent at one point after a violent sell-off on Monday, shed most of its gains in more recent dealings. At 5.31 lira to the dollar, the currency was once again heading back towards the historic low TL5.425 that was reached late on Monday. Turkey’s currency, which has fallen 28.7 per cent since the end of last year, has dropped 7.8 per cent so far in August alone. On Monday it slid 4.7 per cent. “Turkey is going through its first currency crisis of the floating era,” Dani Rodrik, professor of international political economy at Harvard University, said on Twitter. Other Turkish assets have also taken a heavy blow in recent days. The BIST 100 gauge of stocks traded in Istanbul is down 2.2 per cent for August and 17.8 per cent for 2018. In dollar terms, the index is off almost 40 per cent this year, FactSet data show. After deciding against lifting interest rates at its July meeting despite widespread market expectations for a rise, Turkey’s central bank made policy tweaks on Monday that injected $2.2bn into the banking sector. While the move caused a brief bump higher in the lira, it proved to be fleeting. “We do not consider the Turkish central banks measure yesterday to be suited to take the pressure off the currency,” said Ulrich Leuchtmann, an analyst at Commerzbank. Mr Leuchtmann said while the policy tweaks illustrated that policymakers are “concerned about the situation”, they also raised concerns about the central bank’s independence. “It clearly does not dare to hike interest rates or it is not allowed to do so any longer,” he said. Several factors have conspired to place intense pressure on Turkish markets. Booming inflation and widening economic imbalances have ignited concern among many analysts that Turkey could face a hard landing after rapid growth last year. The re-election as president of Recep Tayyip Erdogan, a critic of high interest rates, has sharpened those concerns. Investors have pointed, in particular, to Mr Erdogan’s appointment of his son-in-law for a key economic and financial role as sign the government may lack the willingness to act aggressively to tackle the economic problems. Adding to the sense of malaise, the US has hit two senior government ministers with sanctions over Turkey’s detainment of an American pastor on terrorism and espionage charges. The US and Turkey reached a “preliminary understanding” regarding the sanctions, the progovernment newspaper Daily Sabah reported earlier on Tuesday. The report, which cited unnamed diplomatic sources, said a Turkish delegation would visit Washington “within two days.”

Wednesday 08 August 2018

Policymakers have to grapple with the difficulty of policing complex supply chains Robert Hannigan

Meg Whitman and Jeffrey Katzenberg: their NewTV venture hopes to deliver video in ‘bite-sized’ chapters of up to 10 minutes each © AP; Bloomberg

Katzenberg and Whitman raise $1bn for mobile video start-up NewTV aims to deliver ‘bite-sized’ content from top Hollywood studios for subscription Tim Bradshaw

n unusual alliance of Hollywood studios, Wall Street banks and the family fund of Walmart’s founders have invested $1bn into Jeffrey Katzenberg and Meg Whitman’s ambitious mobile video start-up. The giant fundraising comes more than a year before the venture, currently known as NewTV, expects to launch its subscriptionbased service to consumers. NewTV plans to bring Hollywood’s multimillion-dollar production values, brand-name talent and franchises to a new standalone mobile app, delivering video in “bite-sized” chapters of up to 10 minutes each. As much as $900m of the financing will go towards commissioning and licensing content from top Hollywood studios, many of whom are also investing in the company. “The sheer scale of that [funding] for a start-up is unusual,” said Ms Whitman, the former chief executive of eBay and HP Enterprise

who is running NewTV. In a joint interview in Hollywood on Monday alongside Mr Katzenberg, former Walt Disney and DreamWorks executive, Ms Whitman said that raising such a large amount of capital upfront was necessary to create an “entirely new platform”. While YouTube, Instagram and Snapchat have taught billions of consumers to watch short, adsupported videos on their smartphones, technology companies have not invested enough in professionally produced content to justify a premium subscription service, the two executives argue. “There is no library to go buy here,” said Ms Whitman. “We have to launch with a rich immersive site. Frankly, no one studio can do this on their own.” As well as offering snappier shows more suited to the coffee shop than the sofa, NewTV will optimise its content for mobile viewing, in how it is filmed and how it is displayed on-screen. Videos will come in both horizontal “landscape” mode, like traditional films and much of You-

Tube, and vertical “portrait” orientation, the format preferred by Snapchat and Instagram. NewTV will also offer quicker search and discovery than existing services. “The viewing window is quite short,” said Ms Whitman. “You can’t spend eight minutes figuring out what you want to watch.” Today, though, these ideas are mostly still concepts. NewTV — itself only a working title — has fewer than 10 employees, based out of a co-working space in Hollywood, and initial content production is only just getting under way. Nonetheless, the project’s nascent stages of development did not deter investors including Madrone Capital Partners, Goldman Sachs and JPMorgan Chase, as well as Liberty Global and Alibaba, from buying into NewTV’s vision. The lead investor in its $1bn round, Madrone Capital Partners, is an investment vehicle of Rob Walton, the son of Walmart founder Sam Walton. Silicon Valley-based Madrone is run by Greg Penner, Rob Walton’s sonin-law and successor as Walmart chairman.

Carl Icahn targets ‘ridiculous’ Cigna takeover of Express Scripts Cat Rutter Pooley

arl Icahn has taken aim against a more than $60bn deal by the US health insurer Cigna to buy Express Scripts, a pharmacy benefits manager, in an attempt to derail the tie-up ahead of a shareholder vote later this month, describing it as “inexplicably ridiculous”. The activist investor called the takeover a “folly”, arguing in an open letter to Cigna shareholders that the company was “dramatically overpaying for a highly challenged business” that was “facing existential risks on several fronts”. The healthcare sector has been a focus for dealmaking activity over the past year, as providers have sought scale to help hold down the cost of drugs and medical procedures, and fend off the threat from Amazon, which has the industry in its sights. Cigna’s tie-up with Express Scripts was announced before Jeff

Bezos’s retail giant’s latest foray into the sector, however. Amazon’s acquisition of PillPack, an online pharmacy group that delivers repeat prescriptions to patients with high medication demands, was announced in June and marked a clear step-change in the ecommerce group’s expansion into the sector. Mr Icahn wrote in his letter: When Cigna entered into this agreement several months ago I believed a $60 billion purchase price made no sense, but there were at least arguments that could be made by management to try to persuade us into thinking that it was not completely ridiculous. These arguments now disappear in light of certain material events of the last month, such as Amazon’s almost certain entrance as a competitor to Express Scripts and the government’s direct challenge to the highly flawed rebate system. As a result, Express Scripts’ earnings will almost certainly be seriously diminished, but even more importantly, Express Scripts

will be existentially challenged, ie, their very existence might well come into question over the next few years. Even if they do survive, exposing Cigna, a thriving company, to these risks by acquiring Express Scripts now is inexplicably ridiculous. While pharmacy benefit managers are little known outside of the US healthcare system, they pay a critical role in that market, acting as a middleman between the drugmakers and the employers and insurance companies that buy their products. They rely on accumulating large numbers of patients across different “payers” and using that scale to secure discounts based on volume. The model has come under pressure not just from Amazon’s acquisition of PillPack, but also from the retailer’s joint venture with JPMorgan Chase and Berkshire Hathaway, which have clubbed together to try to lower the cost of healthcare plans for their employees without the middleman.

he UK government’s announcement this week that it will take greater powers to scrutinise and block foreign takeovers on national security grounds brings it closer to the approach of the US and other countries, including Germany and Australia. It follows decades of peculiarly British vagueness about who had the responsibility for worrying about these security implications, still less the power to do anything. It is also part of an international trend, as western nations wake up to the intellectual property they may be losing, or dependencies they may be inviting. Add to that the realisation in recent years that sophisticated cyber attacks are increasingly being delivered through the supply chain and buried deep within the internet infrastructure, and western jitters are understandable. US president Donald Trump’s castigation of Germany for supporting the Nord Stream 2 gas pipeline and his defence of domestic steel production on national security grounds fit this recent pattern. Steel tariffs may be driven by protectionism, but Mr Trump is making a sensible point. Concern about over-dependence on a particular energy source or security of supply for key commodities is hardly new in foreign policy. But Russia and China present very different challenges at the intersection of economic and national security. Russia’s limited leverage is old-fashioned energy rather than technology. As its unreformed economy declines it will lash out and the west will aim to contain this. Viewed from the offices of Moscow’s securocrats, the internet is a huge US conspiracy, albeit one which is conveniently open to asymmetric exploitation, whether through cyber attack or propaganda. But Russia’s misuse of the internet is essentially tactical. The challenge presented by China is radically different and brings both opportunity and risk on an entirely new scale. China manufactures an estimated 90 per cent of the world’s IT hardware, including some three-quarters of all smartphones. That has been true for many years, and it means the world economy is increasingly sitting on a global IT infrastructure manufactured in China. Quantifying the risks involved in this dependency is difficult. Cyber space therefore presents traditional policymakers with a novel challenge. In the past we were used to disputes about who ruled and navigated the high seas, but never about who made the water. Even this acknowledgment of the scale of China’s achievement misses the point. The real challenge for the west in this century is not that Chinese technology is ubiquitous, but rather that increasingly it is world leading. This has been best illustrated in recent months in the mobile telecoms sector. Governments need to deliver faster broadband and next generation 5G telephony for their data-hungry populations. The leading suppliers of this technology are all Chinese.

Wednesday 08 August 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Poor Iranians bear brunt of sanctions as food prices soar Higher cost of living taps into growing anger at economic misrule and corruption Najmeh Bozorgmehr & Monavar Khalaj

ehran’s municipal markets used to be notorious for their long queues, as shoppers lined up to buy meat, vegetables and fruit in bulk at discounted prices. But today the customers are far fewer. Those buying goods carefully select just enough to meet their daily needs, with soaring prices meaning low-income families struggle to make ends meet. “God damn this regime and its corrupt rulers,” one middle-aged Iranian woman cursed as she paid for a lettuce and a cabbage. “They have sent their children to the US and Canada while making us poorer every day.” Such complaints have become common in Iran, highlighting the acute domestic pressures building on the leadership as the US imposes new sanctions on the Islamic republic. Measures targeting cars, gold and other metals trading, and the government’s ability to buy US dollars came into force on Tuesday. The decision in May by US President Donald Trump to withdraw from the 2015 nuclear accord Tehran signed with world powers exacerbated a slump in the rial. The currency has lost more than half its value against the US dollar on the unofficial market this year. The price of food such as fruit and vegetables is up to 50 per cent higher since the start of 2018, according to official figures, adding to the mounting anger many Iranians feel towards leaders they blame for economic mismanagement and corruption. Analysts say the disconnect between the people and the regime has never been wider since the 1979 Islamic revolution. Iran has

been plagued by sporadic protests across the country since thousands of people took to the streets at the turn of the year. Most of the demonstrations have been small and have erupted over a range of issues, from water shortages to joblessness. But often they have taken on an anti-regime tone. They have added to the concerns of Iranian politicians who view the US sanctions as part of a plot to escalate public anger by squeezing the republic financially to the point where Iranians rise up against their leaders. The top commander of Iran’s Revolutionary Guards acknowledged recently that the regime was more concerned about its challenges at home than foreign military threats. Tehran could respond to the latter, said Major General Mohammad Ali Jafari, “but domestic weaknesses and threats are more serious”. A main cause of the public anger relates to allegations of corruption within the regime and a politically connected business elite. Reformist and hardline politicians locked in an intense struggle for power have repeatedly accused each other of fraud and mismanagement. The currency crisis has added to concerns about corruption, with allegations that some businessmen have illegally profited from the government’s currency controls after receiving euros at subsidised rates to import goods. The judiciary said last month that it had arrested several businessmen in relation to alleged graft involving the import of cars and smartphones. In one case, it said more than 10,000 phones had been imported at low prices by a “dead person” to be sold at a higher rate on the open market.

Commerzbank warns on 2018 cost targets German lender says corporate clients unit likely to suffer fall in revenue this year Olaf Storbeck

ommerzbank said it would miss its 2018 cost target by about €100m and lowered the outlook for its core corporate clients segment, which despite strong growth is likely to suffer a fall in revenue this year. Shares in Germany’s second-largest listed lender traded down 2 per cent at €8.77 in Tuesday afternoon trading after it published its secondquarter results. The bank confirmed its plan to resume dividend payments of €0.20 a share for the year after paying no dividend in 2017. The bank posted revenue of €2.22bn for the three months to the end of June, up from €2.06bn in the same period a year ago and just ahead of the €2.18bn forecast by a Reuters poll of analysts. Pre-tax profits of €389m also beat the €341m forecast and compared favourably with a loss of €628m during the prior corresponding period.

However the bank’s common equity tier 1 ratio, a closely watched measure of financial strength, dipped to 13 per cent at the end of June from 13.3 per cent three months earlier, driven by loan growth in the core business, where risk weighted assets increased 3.5 per cent to €176bn. While confirming the group’s overall guidance of increasing revenue in 2018, the lender on Tuesday warned that the performance in its corporate clients segment will be worse than previously expected. Compared with the previous outlook of rising corporate client revenue, the lender now said that they are likely to be “below the 2017 figures”.Stephan Engels, chief financial officer, told journalists that the bank was ahead of its growth targets for corporate clients, but is suffering from fierce competition and falling profit margins. “We have to monetise our growth,” said Mr Engels, adding that this has become more difficult because of the tough market environment.

European Investment Bank bows to calls for reform Lender owned by EU states to start talks over ECB supervision after Brexit Mehreen Khan & Alex Barker

he European Investment Bank has agreed to start talks to become independently supervised by the European Central Bank after EU governments demanded sweeping governance changes at the lender after Brexit. A group of seven EU member states — including Denmark, Sweden and the Netherlands — are pushing the EIB to overhaul its internal operations and introduce new supervision as a condition of governments’ putting more capital in to the bank after the UK’s departure from the EU. Britain, which provides €39bn of the lender’s €243bn capital base, is one of the largest backers of the EIB, which is owned by EU member states. In June Werner Hoyer, EIB president, wrote to EU member states asking them to fill the Brexit gap by increasing their capital contributions. The capital-raising exercise is considered crucial by some governments — including France and smaller central and eastern member states — to maintain the EIB’s triple-A credit rating. But Brexit has sparked a debate among EU finance ministries

about how best to maintain the EIB’s financial firepower, with a group of governments urging reforms at the lender in return for more taxpayers’ money. In the face of calls from capitals in The Hague, Copenhagen and Stockholm, the EIB has agreed to a series of governance changes, the biggest of which will include steps to introduce independent supervision of its lending operations by the ECB. A letter from Olaf Scholz, Germany’s finance minister, to Mr Hoyer and seen by the Financial Times “strongly welcomed the improvement to the Bank’s governance and supervisory framework” agreed at an EIB board meeting on July 17. The EIB’s role in funding projects such as road building in France or energy networks in eastern Europe has grown rapidly since the financial crisis. But the lender is not subject to external bank supervision like normal banks. Instead, its projects are audited by the European Court of Auditors, the EU’s independent external auditor. As part of an agreement last month, the EIB’s internal audit committee will propose a new supervisory structure for the bank

involving the ECB’s supervisory unit — the Single Supervisory Mechanism — and supervision experts from non-eurozone EU member states, according to the letter dated July 24. “I would encourage you to use the intensified contacts with the relevant bodies of the ECB and the SSM with a view to working out an appropriate supervisory framework for the future,” wrote Mr Scholz. A paper from seven EU governments in June demanded that the EIB come up with a “clear supervisory concept” — hinting at concerns over the lender’s status, which leaves it outside most traditional forms of financial oversight. At a finance ministers’ meeting in June, Mr Scholz also suggested the EIB appoint a “chief risk officer”, according to a diplomat familiar with the talks. One EU diplomat said the EIB could not “carry on business as usual after Brexit”. The bank’s last capital increase was in 2013. The Luxembourg-based EIB said it was “discussing the impact of the departure of the UK on its structure and governance and the adjustments that might be possible and desirable”.

Indian ride-hailing app Ola maps out route into UK Company to launch in Wales within a month as it scales up challenge to US rival Uber Simon Mundy

ndian ride-hailing app Ola is expanding to the UK as it scales up its challenge to US rival Uber. Founded in 2010 by the then 25-year-old Bhavish Aggarwal, Ola claims to have a clear majority of India’s ride-hailing market, operating in over 110 cities — more than three times Uber’s number in the country. In March, Ola launched services in Australia, in its first international expansion. Its next target is the UK, where it plans to roll out nationwide services by the end of this year, it said on

Tuesday. It will begin by launching operations within the next month in South Wales, where it has already obtained a licence to operate, followed by Greater Manchester. The move is the latest eye-catching announcement from Ola after it emerged that Japanese telecom and investment group SoftBank, which holds large stakes in both Uber and Ola, had been pushing for a merger between Ola and Uber’s Indian operation. In April Ola unveiled plans to deploy 1m electric vehicles on Indian roads within three years. Analysts said such initiatives may be driven by Ola’s desire to make clear that it has serious

potential as an independent entity, or to ensure that the terms of any Uber merger would be in the Indian company’s favour. Last month Mr Aggarwal said at an event in Bangalore that SoftBank has “a voice at the table, but that’s only one voice”. He added that Ola was now making an operational profit on every ride in India, and expected to become a public company within four years. However, Ola’s most recently filed financial statements, for the year that ended in March 2017, showed a net loss of Rs49bn ($710m) — more than four times net revenue in the period.

PrivateEquity & fundraising A6

PFAs investment in Private People & Perspectives equity funds rise 35%

BUSINESS DAY

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Nigerian insurers face capital raising, M&A phase after regulatory tweak

Wednesday 08 August 2018

COMPANIES & MARKETS

Duet buys $50 million stake in Nigerian soft drink company DIPO OLADEHINDE

LOLADE AKINMURELE

he months leading to a regulatory deadline for insurance companies to adopt a new capitalisation structure may see frantic efforts by insurers to either raise capital or consider merging businesses to prevent being shut out of big ticket policies and protect market share. There has only been a sole insurance deal this year, with Allianz Group acquiring an 8 percent stake in Africa Reinsurance in a N29 billion deal, June. Although the new minimum capital becomes effective on 1 January 2019, insurers have a deadline of 14 September 2018 to indicate a choice of tier-level to the National Insurance Commission (NAICOM). While insurers are not necessarily compelled to raise additional capital, they will be restricted to the Tier that applies to them in terms of underwriting risks. “ To protect market share, we expect some insurers to consider merging businesses or kick-start the process of capital raising ahead of NAICOM’s deadline,” said Tajudeen Ibrahim, head of research at investment bank Chapel Hill Denham. “We also see acquisition opportunities for foreign, strong local insurers, and other financial institutions,” Ibrahim said from Lagos. Only a few insurance companies in Nigeria would be allowed to underwrite big ticket policies by next year, under the so-called Tier-Based Minimum Solvency Capital structure, with close to 40 facing the risk of being sidelined. The new Tier-based minimum solvency capital for composite insurers has three tiers; Tier 3 – N5 billion, which is the existing minimum paid up capital; Tier 2 – N7.5 billion, which is a 50 percent

L-R: Ify Ossi, Exec Sec. PEVCA; Danladi Verheijen, Board member & MD, Verod Capital Management; Yemi Osindero, Managing Partner, Uhuru Investment Partners; Wale Adeosun, Founder & CIO, Kuramo Capital Management; Paul Kokoricha, Board member & Partner, at African Capital Alliance; Mezuo Nwuneli, Board member & Managing Partner, Sahel Capital Agribusiness Managers Ltd; Folake Elias-Adebowale, Board member & Partner at UUBO Private Equity & Corporate Advisory team; Folabi Esan, Partner, Adlevo Capital, at the recently organised Breakfast Forum of the Private Equity and Venture Capital Association, Nigeria.

increase over the previous minimum paid up capital; and Tier 1 – N15 billion, which is a 200 percent increase to N5 billion. The solvency capital is calculated based on the admissible assets and admissible liabilities of an insurer with the difference between both called the solvency margin. Based on risk classification for each tier capital level, life insurers that fall in Tier 3 can cover only individual, health, and miscellaneous risks with a minimum solvency capital of N2 billion. Life insurers that fall in Tier 2 can cover all Tier 3 risks plus group life assurance with a minimum solvency capital of N3 billion, while the insurers that fall in Tier 1 can cover all Tier 2 risks plus annuity with a minimum solvency capital of N6 billion. Similarly, non-life insurers that fall in Tier 3 will be allowed to cover risks relating to fire, motor, engineering (only classes covered by compulsory insurance), general accident, agriculture and miscellaneous insurance with a minimum solvency capital of N3 billion. Non-life insurers that fall in Tier 2 can cover all Tier 3 risks plus engineering (all inclusive), marine bonds credit guarantee, and suretyship insurances with a minimum solvency

capital of N4.5 billion. Tier 1 non-life insurers can cover all Tier 2 risks plus oil & gas (oil-related projects, exploration & production, and aviation insurances with a minimum solvency capital of N9 billion. Given the breakdown, composite insurers’ minimum solvency capital is derived from the combination of the corresponding tiers. According to NAICOM, companies will be assessed in the first instance on their approved 2017 financial statements. All companies will be assessed and graded to the equivalent tier, based on their solvency capital. The new solvency capital requirement has elements of intervention levels and actions by NAICOM. There are 4 broad indicators for capital topup requirements for insurers. Going forward, insurers with solvency margin above 130 percent will be regarded by NAICOM as well run with all financial and non-financial indicators within acceptable range. Insures that have their solvency margin below 130 percent, but above 120 percent will be required to come up with business strategy to sustain the solvency level, five years cash flow projection and other

plans driven by management and NAICOM. Insurers with solvency margin below 120 percent, but above 100 percent will be regarded as having acceptable status, but with deteriorating indicators and will be required to inject additional capital to enhance their capital base. In addition, they will have to limit redemption/repurchase of equity instruments (shares) and payment of dividends among other restrictions by NAICOM to be implemented by management. Insurers with solvency margin below 100% will be regarded by NAICOM as having significantly deteriorating indicators and will be required to inject capital among other strict actions by management and NAICOM. NAICOM believes that the new capitalisation approach will allow insurers to focus on their areas of strength, improve settlement of claims, enhance local retention of risks, as well as encourage market discipline, prudence and appropriated pricing. The new system will also encourage innovation and deepen market penetration, encourage voluntary mergers and build investors’ confidence and build a stronger and more vibrant insurance industry.

eading United Kingdom private investment firm Duet Private Equity Ltd has acquired a majority stake worth $50 million in a multinational beverage company Ajeast Nigeria which is a subsidiary of AJE Group. “At Duet we strongly believe in the African consumer growth story as the number of middle-income households in Nigeria and select West-African markets keeps expanding, and more consumers are entering the formal economy through urbanisation, the demand for products such as BIG Cola will grow exponentially,” Henry Gabay, Chief Investment Officer (CIO) at Duet Private Equity Limited and CoFounder at Duet Group said. Over the years Ajeast Nigeria, a major player in Nigeria soft drink market have been given stiff competition to other key players such as Nigeria Bottling Company (NBC) producers of Coca –Cola drink , SevenUP Bottling Company, producers of Pepsi , Miranda, Seven UP soft drinks and The Lacasera company Plc , producers of Lacasera drinks. The introduction of BIG Cola brand into the Nigerian market has further increased the race for market share and profitability. This has forced competing brands to either increase the size of their products or dropped the price. “The acquisition of AJEAST follows our previous investments in the beverage sector across Africa, and we are excited to be able to leverage our experience in partnership with a prominent multinational like AJE Group,” Gabay who is also co-founder at Duet Group said. Manish Rungta, managing director at Duet Private Equity Limited said the private equity firm is delighted to work together with AJE Group in continuing the footprint expansion of brands like BIG Cola in African markets. “With its value proposition, AJEAST is uniquely positioned to capture market share in the rapidly expanding segment of affordable, high quality consumer goods,” Rungta, managing director at Duet Private Equity Limited said. Chairman of AJE Group, Angel Añaños said With Duet its company have found a partner that shares AJE Group commitment to widen our product reach of affordable value beverages to the African consumer. “We also believe that Duet is the ideal partner to continue the growth of our brands in such a crucial market. We are confident that our longstanding experience will help replicate the successes we have had in our markets, and look forward to a fruitful partnership with Duet,” Añaños, Chairman of AJE Group said. Established in 2003, Duet Partners Equity Ltd is a corporate advisory firm that provides capital raising, M&A, and strategic advisory services to high growth, privately held businesses. The company has a wide range of Venture capitalists in various sectors such as Electronic Devices, Clean Technology, Life Sciences, Medical Technology, Materials Technology, Nanotechnology, FinTech and other sectors. With over 28 years of experience, AJE Group is one of the largest multinational beverage companies, with presence in over 23 countries in Latin America, Asia and Africa. According to Euromonitor in 2011, AJE is the 10th largest soft drink company in sales volume and the 4th largest producer of carbonated soft drinks.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: samuel iduh ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 08 August 2018

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PrivateEquity & fundraising

People & Perspectives

PFAs investment in Private equity funds rise 35% MICHEAL ANI

he total amount of asset invested in Private Equity Funds (PEF) by Pension Funds Administrators(PFAs), increased to N37.27 billion as at May 2018. This figure represents a 35 percent increase from the N27.59 billion that was recorded as at the first quarter of 2018, according to data from the National bureau of statistics (NBS). While data from the NBS still reflects first quarter (Q1) pension Asset contributions, a statement signed by Peter Aghahowa, a spokesperson for National pension Commission, on Sunday showed PEFs gulped N37.27 billion of the total N8.14 trillion pension fund asset, as at May 2018. Accounting for about 0.5 percent of total pension fund asset, as at the said date. “It is the long-term nature of private equity that makes it a particularly well-suited investment for pension systems that are required to

manage the accounts of participants so they can ultimately meet their retirement goals,” Wale Okunrinboye, Head of research Sigma pension told BusinessDay on phone. “In addition to creating a better alignment between long-term liabilities and incoming cash flow, private equity offers pension fund contributors an outperformance potential that is uncorrelated to other assets,” he added. Data compiled by BusinessDay and obtained from NBS shows that in Q1 2017, Private Equity Funds got investment worth N17. 4 billion from PFAs, accounting for about 0.27 percent of the total N6.4 trillion pension fund asset. This investment crawled to N25.4 billion as at December 31 2017, representing a 46 percent increase from the Q1 figure and accounted for about 0.34 percent of the total N7.5 trillion pension fund asset. Investment by PFAs in PEF increased to N27.6 billion as at end of

March 2018, but still accounted 0.35 percent of the total N0.35 percent. As at Q1 2018, private equity funds had the fourth lowest investment by PFAs among other asset classes after Infrastructure funds, Mutual funds and Supra-National bonds. These asset classes got N7.9 billion, N19.2 billion and N7.3 billion respectively. This however, begin to arouse questions that an asset class that as being viable and rewarding good long term investment returns despite political uncertainties is receiving such poor investment from pension fund administrators. Eguarekhide Longe CEO/MD AIICO pensions said in a phone response to BusinessDay that “the limit by regulator for investment in private equity funds is 5 percent of funds under management, so as such we can’t expect to see a very high up take,” “Secondly, private equity is place vanilla, as you need to put up so much together, there has to be a team of

people who must come together to propose a certain style of investment of real companies .Hence, we won’t find a lot of private equity offers coming up and the once that come up, people will review them and decide whether they can back the sponsors that also, is a reason why you will not see a huge commitment to private equity funds,” “Lastly, not every PFA operator is comfortable with the private equity off take because they do not understand it very well, or they are not comfortable with feeding their contributors money to third party to do real sector investing, that is why you will find out that most people that have committed much to private equity funds are those that have some certain degree of investment banking backgrounds, which makes it a little easier for them to understand what the people are offering, the process by which the private equity investment are made and harvested”

BUSINESS DAY

COMPANIES & MARKETS

Synergy capital raises $230 million in first close of SPEF II fund LOLADE AKINMURELE

ynergy capital managers has raised in excess of $230 million in a first close of its $250 million Private Equity Fund II LP (SPEF II), the Mauritius-based firm announced last Friday. With the first close of SPEF II, Synergy intends to complete 2-3 investments before the end of the year, with the final close for SPEF II lined up for the fourth quarter of 2018. The Lagos phone number on its website was switched off as at the time of filing this report Tuesday. SPEF II is focused on making investments in small-medium enterprises in Nigeria, Ghana, Liberia and Sierra-Leone, and despite being sector agnostic, will target investments in select high growth industry sectors such as Consumer goods and services, ICT, Agro-processing, Fintech, power services and midstream oil and gas. With SPEF II, Synergy Capital now has some $350 million under management. Its maiden fund SPEF I which closed in September 2015 at just over $100 million has made a total of 10 investments

across Nigeria and Ghana in a number of high growth sectors. The manager uses an active hands-on approach to working with portfolio companies with the goal of helping these companies attain leadership positions in their industries, while institutionalising processes that ensure sustainable growth and attractive returns. Synergy’s investment professionals have over seven decades of combined experience in finance and private equity and are adept at leveraging their local knowledge and deep network of contacts to access attractive investment opportunities and generate significant return for investors. In addition to attracting over 80 percent of its Fund I investors into SPEF 11, the manager has broadened its investor base with select new commercial and Development Finance Institution (DFI) investors. SPEF II, comprises a unique mix of commercial and public investors with a considerable track record of investing in Africa. At first close, commercial investors and DFI investors represent 65 percent and 35 percent respectively of SPEF II.

Carlyle backs South-African manufacturer

he Carlyle Group has acquired a majority stake in Tessara, a South African manufacturer of preservation technologies for use in the marketing and export of fresh produce. The transaction closed on July 31, 2018 and funding for this investment came from the Carlyle Sub-Saharan Africa Fund. Financial terms were not disclosed. Bruce Steen, Principal in Carlyle’s Sub-Saharan Africa Fund, said: “Tessara is a great business with exciting growth prospects. Led by an experienced, talented management team, Tessara has built an impressive reputation for its core product whilst investing in R&D and the opportunity that exists to expand the product pipeline and broaden the application of SO2 sheets.” “We look forward to partnering with Tessara at this exciting time, supporting their continued growth and innovation and fueling expansion into new products and markets, especially China and USA,” he said. Founded in 1985, Tessara boasts a growing global market position in Sulfur Dioxide (SO2)-based sheets for use in the preservation of fresh produce. Its flagship product is Uvasys, a SO2-based sheet, primarily used to protect table grapes against Botrytis infection, which is responsible for almost 50% of all post-harvest agricultural loss. Uvasys also enhances

transportation, export and storage of grapes. Tessara has rapidly grown its business both in South Africa and internationally with exports now representing more than 65% of annual sales. Tessara employs more than 150 people and has manufacturing facilities in Cape Town, South Africa. The company operates through a network of 15 distributors and it has built strong relationships with both suppliers and customers. Craig Cloete, CEO of Tessara, said: “We are delighted to partner with Carlyle as we embark on a new chapter of development. We believe Carlyle’s global network, scale and experience, supporting international growth, will help us boost our sales and expand into new markets.” Established in 2012, the Carlyle Sub-Saharan Africa Fund and its affiliates, with $698m of committed capital, have invested over $450m to date across a variety of industries, including energy, financial services, TMT, retail, logistics and mining services, and across a variety of geographies, including South Africa, Gabon, Nigeria, Mozambique, Zambia, Tanzania, and the Democratic Republic of the Congo. The SSA fund makes buyout and growth capital investments in private and public companies from offices in Johannesburg, South Africa and Lagos, Nigeria. Carlyle was advised on the transaction by Webber Wentzel and Ernst & Young.

BUSINESS DAY

Wednesday 08 August 2018

Live @ The Exchanges Top Gainers/Losers as at Tuesday 07 August 2018 GAINERS Company

Market Statistics as at Tuesday 07 August 2018

LOSERS Opening

Closing

Change

Opening

Closing

Change

N100.9

N103

2.1

SEPLAT

N710

N650

-60

FLOURMILL

N24.6

N25.5

0.9

CAP

N31.5

N28.35

-3.15

AIRSERVICE

N4.5

N4.95

0.45

GUARANTY

N40

N39.15

-0.85

CADBURY

N9.5

N9.95

0.45

WAPCO

N30.5

N29.9

-0.6

UCAP

N2.8

N3.08

0.28

N23.55

N23

-0.55

Company

ASI (Points) DEALS (Numbers)

VALUE (N billion)

Stories by Iheanyi Nwachukwu

13.261

Nigerian exchanges collaborate for greater global competitiveness …Launch Association of Securities Exchange of Nigeria

T L-R: Alex Mbakogu, executive director /CFO, C&I Leasing Plc; Bola Adeeko, head, shared Services Division, The Nigerian Stock Exchange (NSE); Andrew Otike-Odibi, managing Director/CEO, C&I Leasing Plc and Alex Mbakogu, executive director /CFO, C&I Leasing Plc during the Facts Behind the Figures presentation at the Exchange.

cent, from 182.29million to 248.04million, while the total value of stocks traded increased by 10.43percent, from N2.034 billion to N2.246 billion in 3,932 deals.

Wema Bank, GTBank, UBA, Diamond Bank, United Capital were actively traded stocks at the Lagos Bourse on Tuesday August 7, 2018. The Financial Services

sector led the activity chart with 207.23 million shares exchanged for N1.573 billion, followed by Healthcare with 14.717 million shares traded for N7million.

C&I Leasing assures investors of dividend payment

248,046,767.00 2.245

MARKET CAP (N Trn

...Seplat leads laggards, Nigerian Breweries gains most

ndrew OtikeOdibi, Managing Director/Chief Executive Officer of C & I Leasing Plc has given assurance that the company will pay dividend at the end of current financial year. The company has not paid dividend for the part years. Otike-Odibi spoke during the company’s ‘Facts Behind the Figures’ presentation at the Nigerian Stock Exchange (NSE) on

3,932.00

VOLUME (Numbers)

Stock market dips further nvestors at the Nigerian Bourse are still unwilling to buy stocks, a development which promoted the Nigerian Stock Exchange (NSE) All Share Index (ASI) to decrease further by 0.40percent at the close of Tuesday’s trading day. The market’s year-todate return moved further into the negative zone at -4.99percent. Seplat Petroleum Development Company led the 21 decliners while Nigerian Breweries Plc the 22 advancers. The All Share Index closed at 36,333.80 points against the preceding day’s close of 36,479.42 points while Market Capitalisation closed at N13.262 trillion as against preceding day close of N13.315 trillion. The volume of stocks traded increased by 36.07per-

36,333.80

Tuesday. He explained that the company had focused on growing the business, hence no dividend was paid. According to him, the business is stronger now and is in a better position declare a dividend. “We appreciate the fact that the business has not paid dividend in the past two years. Last year, we were all very expectant for that to happen but it did not happen. One of the

things we did last year was to set aside money to grow the business. It did not make sense for us to raise fresh capital and then begin paying dividend. “We needed to plough back funds as much as possible. But that said and done, our plan is to pay dividend by the end of this financial year. The business is stronger now and cash flows are better. Shareholders have been more than mag-

L-R: Tony Ibeziako, Ag. Head, Listing Business Division, The Nigerian Stock Exchange (NSE); Bola Adeeko, Head, Shared Services Division, NSE; Andrew Otike-Odibi, managing director/CEO, C&I Leasing Plc; Alex Mbakogu, executive director /CFO, C&I Leasing Plc and Ikechukwu Duru, director, C&I Leasing Plc during the Facts Behind the Figures presentation at the Exchange.

nanimous because with the patience they have exercised so far, we will definitely want to reward them with dividend and given the way our share price is moving, they will also enjoy capital appreciation,” Otike-Odibi said. Speaking on the company’s performance for the half year ended June 30, 2018, the CEO said gross earnings of N12.8billion was recorded, showing an increase of 11 per cent above the same period in 2017. He explained that the gross income was driven by growth in the company’s rental income on the back of volume increase in its fleet and marine business. “Profit after tax of N682.2 million, up 17.6 per cent, was achieved through a combination of cost reduction initiatives and optimal utilization of assets. We successfully raised a N7 billion bond, the largest ever raised in the company.

he Nigerian capital market will on Wednesday, August 8, 2018 witness the launch of the Association of Securities Exchange of Nigeria (ASEN) at The Nigerian Stock Exchange event centre in Lagos. ASEN, Nigeria’s first association of domestic securities exchanges, is a non-profit industry association established to accelerate the development of domestic securities exchanges and support the Nigerian capital market to achieve greater global competitiveness. Membership of the association currently includes AFEX Commodities Exchange (AFEX), FMDQ OTC Securities Exchange (FMDQ), NASD OTC Securities Exchange (NASD), Nigeria Commodity Exchange (NCX) and The Nigerian Stock Exchange (NSE). Special guests slated to attend the Launch include the Chairman, House of Representatives Committee on Capital Markets and Institutions, Yusuf Tajudeen; Acting Director-General of the Securities and Exchanges Commission (SEC), Mary Uduk; Director-General, Debt Management Office (DMO), Patience Oniha; Tony Elumelu, Chairman, Heirs Holding (investors in AFEX Commodities Exchange) and Abimbola Ogunbanjo, President, National Council of The Nigerian Stock Exchange. Speaking on the development, Oscar N. Onyema, Chairman, ASEN Board of Trustees and Chief Executive Officer (CEO), NSE, noted that “we are excited to launch ASEN, an association that will help build a stronger capital market and cultivate a

culture of mutual support and collaboration among stakeholders. Global securities exchanges are responding to developments in the operating environment and competitive landscape, by establishing mechanisms for cooperation that position not only their businesses but their markets to become more attractive to investors. Nigerian securities exchanges must therefore embrace a broader collaborative effort to unlock new opportunities and efficiencies in view of increasing global competition. The establishment of this Association is a bold step towards the actualization of that vision of becoming globally competitive trading venues”. Bola Ajomale, Member, Board of Trustees, ASEN and CEO, NASD Plc stated, “This event is the culmination of deliberate cooperation between the various exchanges in the Nigerian capital market. Collaboration between exchanges in this manner will ensure some level of uniformity and consistency in governance whilst allowing each member to continue along its natural trajectory. Ultimately key stakeholders in the Nigerian capital market - Regulators, issuers, investors and operators will be the real beneficiaries. We also believe the existence of such an association will significantly support market structure in Nigeria.” Other distinguished members of the Board of Trustees, ASEN include: Ayodeji Balogun (representing AFEX), Zaheera Baba-Ari (representing NCX) and Bola Onadele. Koko (representing FMDQ).

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 08 AUGUST 2018

Opinion The audacious gift of CIC Enugu Old Boys

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

ld students of the College of Immaculate Conception (CIC) Enugu scored a massive goal for social responsibility, philanthropy and alumni relations at the weekend beginning August 2-5, 2018. During their annual convention, they formally unveiled a 540-bed students hostel they built for the institution of their formative years. In doing so, they also notched up one more for the land of selfhelp, South East Nigeria. The CIC initiative continues

TUNJI OLAOPA Dr Olaopa is the Executive Vice Chairman Ibadan School of Government and Public Policy (ISGPP). Contact: tolaopa2003@ gmail.com/tolaopa@isgpp.com.ng

n aspect of Nigeria’s democracy that speaks to the youth population in the country and their involvements in political processes was in focus at the Ibadan School of Government and Public Policy (ISGPP)’s August Seminar on Progress, Setbacks and Opportunities for Youth Political Inclusion: A scrutiny of the Not Too Young to Run Act. The seminar as a strategic forum was headlined by youth and the conversation was enriched by the active participation of the youth who did not only interrogate the Not Too Young To Run Act but also probed themselves and did a critical self examination of their capacity, agency and readiness to explore opportunities for relevance and significance in national development. It highlighted the fervor that promoted the bill and noted the euphoria that greeted its passage into law but established that that was as good as it could be as the youth need to shake off the delirium of the passage into law and accept that the Act is not an end but a means to an end. The youth were reminded that the law is not a silver bullet that cures all. Instead, it has only allowed a ray of hope for the youth especially as it concerns political processes and participation. Although the promoters of the bill had advocated for independent candidacy as an integral part of the bill with a view to using such to checkmate the issue of money, a factor that is considered a major barrier to youth participation in standing for elective positions, this was not eventually made part

an age-old practice. Communities in the South East have a history of providing the social infrastructure of schools, hospitals, water and electricity by taxing themselves. In the case of CIC, they have moved the needle to the critical area of support for education and provision of needed infrastructure to make schools competitive. The audacity of the CIC seed would set a new paradigm. The hostel project cost N240M, according to a spokesman Nze Uche Nworah. The Managing Director of Anambra Broadcasting Service, Awka informed this writer that the Old Students had in 2016 built and donated an alumni centre and multipurpose building with the capacity to seat 2, 200 persons. It cost N120m. In the space of three years, therefore, CIC Old Boys have invested N360M in laudable and visible projects in their school. Members say the achievements came from a deep commitment, their love for the school and the spirit of sacrifice they imbibed. Nworah added, “We have a hardworking global executive led by Emman Denchukwu and use social media

a lot to mobilise our members who contribute to the various projects. Already we are discussing new projects to embark on in the school such as water and classroom rehabilitation as well as fencing. This is not to say that the government should no longer do their bit.We are just supporting.” The students also celebrated one of the pillars of the College of Immaculate Conception, Enugu and long-term principal, Monsignor Charles Ikeme. He was the toast of the gathering. Commendations to the CIC Old Boys. At about the same time, members of the Nzuko Umunna hailed the philanthropyof a

couple, Mr Joe and Mrs Rejoice Attueyi who built an architectural attraction of a building and donated to St Stephen’s Primary School, Utuh, Nnewi South LGA, the foundation for Joe. The one-storey building provides 12 classrooms for Primary 1-6, headmaster’s office, ensuite staff rooms, conference/training room, lavatories, borehole and water storage/reticulation facilities. Mrs Rejoice Attueyi took it as a labour of love, serving as Project Manager and empowering community-based contractors. Rather than the N65m quotation from contractors in Lagos, they delivered the project at N52m. Use of direct labour and

purchase of materials locally infused economic activity into the local environment, thereby doing more than just providing a modern school. Public schools in Nigeria suffer from poor budgetary allocations across the board. It is worse for primary education, the foundation. Gestures such as those by the CIC Old Boys and the Attueyis would fill the gap as well as draw attention to the pressing need for more and better. Alumni giving is an indicator of how students value the education they received. It flows from grateful hearts. It also comes from a proper upbringing in the values that build societies. Research shows that schools with high levels of alumni giving do well in other indicators. Results would be above average as the visible projects in the school speak to the students and challenge them to succeed and do more. Studies show that alumni giving correlates directly with satisfaction with intellectual development offered in the school, and the formation of deep friendships. Students feel challenged academically

and develop close bonds with class and schoolmates. Shared experiences of challenges and conquests, as well as a nurturing environment, evoke the desire to give back to some schools more than others. There is also the factor of social standing. Enlightened alumni know that the current perceptions of their schools rub off on them. If your school lacks necessary facilities today, claims of how good it was in your days are mere housewives’ tales. They do not cut ice with anybody. Do something, individually or collectively. The CIC gift would serve as a barometer. The significance of their charity is that it would ginger many others in the competitive ethos of the region to do high-impact projects in their schools. As they do so, I draw attention once more to the importance of the new direction. After providing the basics, future projects should aim at enabling the schoolsto offerexcellent training in Science Technology Engineering and Mathematics. STEM is the future. Let us prepare our young for it. Kudos to CIC Old Boys and Mr & Mrs Attueyi for continuing a good tradition of giving back.

What difference will ‘Not Too Young to Run Act’ make? of the law but the gathering recognised finance, network and competence as the major barriers limiting youth entry into partisan politics. Some of the constraints that are responsible for voters’ fatigue are still present and most of these weigh heavily against the youth in their path to political inclusion. On another hand, participants decried the emphasis on the age of young people as proponents of ideas instead of the age of the ideas. The Not Too Young To Run Act as it stands today is not far reaching enough to recognise young persons as critical stakeholders and cornerstone for societal development. The youth in self examination highlighted that they have failed to show innovation in their style and mode of political involvement as they have continued to use the old paradigms with an expectation to achieve new feats, acting out the scripts of the older generation, who understand and have mastery of the complexities of party politics and electoral processes. The youth admitted the need for new approaches especially in the formation of youth based political parties, mobilization and more importantly, in fund raising processes leveraging on their number and technology. They recognised that political inclusion is premised on three cardinal principles of being able to vote, being eligible to be voted for and being part of the process that can influence the policies that shape futures. Although, the Act has opened some windows of opportunities for young people especially with the reduction of the age of eligibility, and with a youthinclusive legal framework which is an essential and primary step in mainstreaming the youth in the political processes, the onus

is now on the youth to participate formally and improve their political roles in their societies. This must be actualised through active involvement in political parties, mastering internal party processes, getting visibility and experience, building necessary and strategic alliances and network with a view to influencing internal party policies and practices It agreed that a lot of youth have the entitlements mentality and this serves as a self imposed barrier to the integration of youth especially into the mainstream of leadership in the country. Nigerian youth were advised to stand up and be counted. The house made historical references to past and older generations who achieved political and social milestones as young persons. So, the problem is not that there hasn’t been political inclusion for the youth in the country but today’s Nigerian youth have kept themselves in the beggarly mode of entitlements instead of rising up to the challenge to make their marks and earn their places of honour. Reminding themselves that power is not legislated and would not be served with pomp and circumstance, the seminar noted that power must be earned without demonizing the older generation who have built social capital, and must be mindful that today’s young people are tomorrow’s elders. So, it is important for the youth to ingratiate themselves with the older generation for political empowerment and relevance, as the Act does not address the problems of money politics, nepotism and gender discrimination among others but increased youth involvement in political parties can set changes in motion. Young people need to build

political and social capital because the Act is all about democracy, participation and inclusion. The desire for greater political empowerment for the youth and by the youth will not happen automatically considering the peculiarity of politics. One of the speakers pointed out that there is no retirement age in politics except on the grounds of ill health or death, so the youth must deepen their involvement in political parties, enhance their capacity and build strategic networks even beyond party lines. However, young people must live with the uncomfortable realities that owing to the factors of experience, wisdom, long standing networks and alliances as well as mastery of the game, it may be impossible to ever find a level playing ground because everyone, like a poker player, will always play his or her best card as an ace. So, young persons will do well to extend their minds beyond vying for elective public positions but instead join political parties and get more involved in civic duties and responsibilities especially as a way of connecting with their communities and environments, building credibility and visibility and be impactful. Beyond these, youth were enjoined to leverage on its population to build their own structure including parties to offer viable and credible alternatives to the existing and big parties. They challenged themselves to leverage on the capital of time with which they can build experience, relevance and impact. The euphoria that came with the signing into law of the Not Too Young To Run Act was misplaced because the law has only thrown youth up to the realities of work to be done especially in the political

sector. The law should lead to a paradigm shift in the political space. A speaker challenged the youth that if young Nigerians, in the not too distant past, excelled and changed the economic landscape of this nation, then it should not be impossible to replicate same in the political sector. He however added that those who achieved landmark successes in the economic space demonstrated remarkable competences. It was established that, whatever good intentions that underlie the current vogue for youth participation and ultimately the Not Too Young To Run Act, a limited concept of civic responsibility is very necessary, one that does not exclude democratic participation but draws a correlation between membership and inclusion. To advance citizenship in a sustainable way, youth must progress beyond “virtual citizenship” to “real” political and civic participation at local and national levels. While youth are enthusiastic about political engagement and associational life, it has yet to be implemented in a fully active manner. In contrast to the idealistic aspirations associated with the youth, they must go beyond engaging exclusively in a virtual public space. Making the transition from virtual to active citizenship will require new associational skills, which are as important as entrepreneurial skills in building effective agency. Youth can benefit from opportunities to learn how to establish and manage associations, including understanding the legal environment for doing so, being financially accountable and transparent, lobbying effectively, handling public relations and communications strategies, mapping democratic internal processes against effec-

tive management structures, and engaging in strategic networking. Political participation is a key pillar of active citizenship. Participation entails taking part in mainstream politics, including voting, joining a party or pressure group, campaigning, or standing for election. Participation encompasses more than elections; it involves participating in the public discourse through organized channels and other forms of expression. Nevertheless, participation in elections is an important indicator of public trust in political institutions and an exercise of active citizenship by young people. Low levels of political participation by youth reflect the limited space that young people perceive for themselves within established parties. Other socioeconomic problems, worsening social justice, and the continuing patronage and other ills associated with the older generation can dampen the optimism ignited by the Act. With scant tangible gains, the level of disillusionment for many youth has intensified to a sense of betrayal. Relatively low participation in the elections was a clear indication youth of disillusionment and lack of faith in formal political parties The new law opens the possibility of a new phase in Nigeria’s political history, including the potential to increase youth involvement in decision making—a civil society space that youth are keen to fill. The time is opportune to consider interventions to support youth aspirations, to foster their participation at the local and national levels, and to rebuild their trust in policy making as well as explore concrete avenues for youth engagement from the bottom up, starting at the local level.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 08 August 2018

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BUSINESS DAY

POLICY

Reviving abandoned LNG projects needs pragmatic ideas Page 5 finance people appointments

Debrief

Gas production at Egypt’s 9B field to begin in October Page 6 OPEC weekly basket price DAY

PRICE

3/8/18 27/7/18

72.81

20/7/18

71.06

13/7/18

74.05

6/7/18

75.13 Source: OPEC

As Nigerian crude demand slows, USChina trade war could provide the spark FRANK UZUEGBUNAM

igeria’s crude demand has slowed considerably in recent times with an overhang from August still pending. While September cargoes of Nigerian crude were selling slowly, some August are still available. Sahara was said to have sold a cargo of mid-September Escravos to Cepsa. Late-August loading cargoes of Nigerian Qua Iboe were said to have changed hands at a premium of around $1.60 a barrel to dated Brent, but were offered

as low as $1.45, traders said. September cargoes of Forcados, Escravos were being offered around dated Brent plus $1.80 a barrel. About one or two Nemba cargoes were left being shown at dated Brent plus 20-30 cents a barrel but the last trade was heard at a slight discount. Despite the gloom, the USChina trade war could provide the spark to lift Nigeria’s crude barrels. US crude exports have slowed in recent weeks, likely because the US-China trade war has reduced flows to China, the single largest buyer of US crude in May. US Energy Information Administration data shows that

on a four-week average basis, US crude exports have slowed to 1.87 million b/d during the week that ended July 27 from 2.43 million b/d. China’s Unipec, the trading arm of state oil major Sinopec, has suspended crude oil imports from the United States due to a growing trade spat between Washington and Beijing. Also, the US has been unable to persuade China to cut Iranian oil imports dealing a blow to President Donald Trump’s efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord. Beijing has, however, agreed

not to ramp up purchases of Iranian crude because discussions with China and other countries continue. That would ease concerns that China would work to undermine US efforts to isolate the Islamic Republic by purchasing excess oil. But Nigeria still have a hurdle. With refinery maintenance season around the corner, US crude inventories could start to rise, especially if exports do not pick up again. West African crude market sources warned that reduced refinery runs would lead to higher US crude exports into Europe competing with Nigerian light sweet crudes.

02 BUSINESS DAY WEST AFRICA Outlook Algeria: Sonatrach set to launch London trading arm for IMO 2020

Algeria’s Sonatrach is set to launch a trading company in London, which could be a joint venture with an international company, sources said. Sonatrach

Petroleum Corporation already has an office in London, which is responsible for marketing its crude oil, as well as its gas and LPG. This would be a separate oil trading desk from its current London

office. This new desk might also play a part in purchasing its crude for its new refinery ownership in Augusta, Italy, trading sources said. The move teased ideas from fuel oil traders that Sonatrach could be a

Angola: Sonangol brings in helicopter firms to restructure air division

ngola’s state oil company Sonangol said it has signed an agreement with two helicopter transport firms, Heliconia and Canada’s CHC, to restructure its aviation subsidiary SonAir. The agreement will urgently seek solutions for offering transport services to oil companies in Angola, which previously used SonAir’s helicopters to fly personnel to offshore platforms. Employees of oil companies in Angola increasingly travel out to plat-

forms by boat due to safety concerns around Super Puma helicopters, which SonAir has in its fleet, and the high cost of services provided by SonAir, leaving aircraft grounded. Two types of Super Puma, a

workhorse of the offshore oil industry, were banned from commercial traffic in Norway and Britain for more than a year after a 2016 accident that killed 13 people flying from a Norwegian offshore oil platform. A flight between Luanda and Houston which was operated by SonAir has also been cancelled. The memorandum of understanding signed by Sonangol will have two phases - the first to conduct an internal audit and evaluation of SonAir’s structure and services.

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oil

Brief

favorable player in the blending market to produce 0.5 percent bunker fuel, upon the implementation of the International Maritime Organization’s 2020 0.5 percent global sulfur cap. Algeria’s Saharan Blend crude typically contains 0.1 percent sulfur and has a 45 API gravity which will yield more fuel oil. Specifically, crude oils with an API gravity of more than 31.10 and a sulfur content of less than 0.5 percent are considered light and sweet. As a light, sweet crude, Saharan Blend is rich in naphtha and kerosene and is produced from various oil fields in southern Algeria. Due to its low sulfur content, the grade is sold across the globe, with cargoes each month traveling to refineries in North America, Europe and Asia.

Tanzania: Tanzania wants to build pipeline to pump gas to Uganda

anzania wants to build a pipeline to pump natural gas to neighbouring Uganda, another step in the two countries’ bid to expand energy cooperation. State-run Tanzania Petroleum Development Corporation (TPDC) said that the pipeline would start from its capital Dar es Salaam, then pass through Tanga port on the Indian Ocean and to Mwanza, a port on Lake Victoria before crossing the border to Uganda. It said it was looking to hire a contractor to conduct a feasibility study to

determine current and future natural gas demand “by identifying all potential customers”. It did not give an estimated volume. The study would also establish the most economically viable route for the pipeline, it said. Tanzania boasts estimated recoverable natural gas reserves of over 57 trillion cubic feet (tcf), mostly in offshore fields in the south of the country. In 2016 the two countries agreed to develop a crude oil export pipeline to help transport land-locked Uganda’s crude reserves from fields in the country’s west to offshore markets.

Africa: Russia planning to increase involvement in African energy projects

resident Vladimir Putin said that Russia is planning to increase its involvement in developing energy projects in Africa, during the tenth BRICS Summit in Johannesburg. His comments come after Russian oil and gas producers, including Rosneft and Rosgeologia, signed several new agreements to explore and develop hydrocarbons on the continent in recent months. “In particular I would like to note that Russia plans to increase its assistance in developing the

energy sectors of African countries, with a number of countries such as Angola, Mozambique and Gabon. We are developing

promising oil and gas projects,” Putin said. Putin added that he is planning to discuss organizing a Russia-Africa summit with leaders in the region. Russia is also planning to boost its cooperation on nuclear energy plants in Africa, Putin said. “We are offering to create an entire turnkey industry for our African partners. We have signed a number of agreements on nuclear energy with countries in the region, and some are already reaching the implementation stage,” Putin said.

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gas

BUSINESS DAY

WEST AFRICA

ENERGY intelligence

Nigeria Gas Flare Commercialisation Programme as a Panacea to developing Nigeria’s gas reserves KARIMAAT ALIYU-DAUDA & LINDA ASUQUO

ith the continued procrastination in passing the Petroleum Industry Bill (PIB) and the consequent delay in bringing about the much vaunted reforms of the oil and gas sector in Nigeria, other African countries such as Angola are forging ahead by creating an enabling legal and regulatory environment that will attract additional investment to their oil and gas sector. The Angolan government recently passed a gas specific legislation Presidential Decree No. 7/18, which sets out the rules for the exploration and production of natural gas. Hitherto the new law, the legal framework for gas development in Angola particularly associated gas, was similar to that of Nigeria. Under Nigeria’s extant petroleum laws, paragraph 35 (b) (i) of the first schedule to the Petroleum Act allows the Federal Government to take natural gas produced with crude oil by a licencee or lessee, free of cost at the flare or at an agreed cost and without payment of royalty. In Angola, associated natural gas surplus for use by oil companies in their operations, was required to be made available to the state oil company (Sonangol) for free. This provision was however deemed too broad and devoid of the necessary features to incentivize investors to develop the gas subsector, hence the introduction of the new law. Some of the salient provisions of the new law allows for: Sonangol and the oil companies to explore, appraise, develop, produce and sell natural gas both in the international and domestic markets; Oil companies to continue to have the right to use free of charge natural gas associated with their own operations and in the case they do not wish to use or sell the surplus gas, same

should be made available free to Sonangol at a delivery point the latter is to designate; and Concession decrees and underlying agreements to set specific longer periods for natural gas exploration and production activities than the ones already set for crude oil. In particular the periods for exploration, production, declaration of commercial discovery, term to develop the general development and production plan and first production following the commercial discovery declaration, can all be extended to accommodate the features of a natural gas project Nigeria on its part, has always treated the exploration and development of natural gas the same as crude oil and therefore lacks the legal and fiscal framework needed to attract investment for the development of natural gas. Excess non associated gas utilized for crude oil operations is often flared depriving the government of much needed additional revenue. Perhaps in realization of this, the government is proposing the Nigeria Gas Flare Commercialization Programme (NGFCP) designed to attract investment for the gas sector through a competitive procurement process of allocating gas flare sites to potential investors. The NGFCP is to be hinged on the proposed New Flare Gas (Prevention of Waste and Pollution) Regulations 2018 (Regulations) to be made pursuant to existing legislations - s.9 of

the Petroleum Act and S. 5 of the Associated Gas Reinjection Act. The Regulations as part of its objectives, seeks to curb the waste of natural resources, reduce the environmental and social impact caused by gas flaring and create social and economic benefits from gas flare capture. Similar to the provisions in the new Angolan gas law, associated gas not being utilized by a Licensee or Lessee of a Licenced or Leased Area inclusive of marginal fields in Nigeria is to be made available to third party licensees under the procurement process for commercialization. The proposed commercial framework to underpin the programme as depicted below, forsees an agreement between the Federal Government and the Flare Permit holder (Flare Licencee) for the sale of contracted Flare Gas volumes to the Flare Licencee - Gas Supply Agreement; an agreement in respect of the connection of the respective facilities of the Operator and the Flare LicenceeConnection Agreement; and an agreement between the Operator and the Flare Licencee under which the Operator guarantees to supply an agreed volume of flared gas to a Flare Licencee Deliver or Pay Agreement. Key considerations in negotiating these commercial agreements Gas supply agreement (GSA)

Take-Or-Pay (TOP): Takeor-pay provisions are designed to guarantee payment to the seller for a specified quantity of gas even where the buyer is unwilling or unable to take such quantities. It is also common for a buyer with a TOP obligation to seek a reciprocal right to Make-up gas by requesting later delivery as refund of the TOP payment later in the life of the contract. Default Provisions: allows for suspension of delivery for nonpayment of an invoice. To address this, advance payment for the gas flare volumes, posting of a stand-by letter of credit or arrangement of some other form of credit support that will ensure the continued payment for the gas flare volumes received. Off specification gas. Remedies for delivery of off specification gas may range from rejection of same to price discounts or allowing TOP credit for any off-specification gas taken by the Flare Licencee. Supply Interruption: Where gas supply is interrupted, an option may be included in favour of either the Flare Licencee or the Federal Government to make-up the shortfall in a subsequent period and with such later delivery sold at a reduced price (Shortfall gas price). Title and Risk: The delivery point for the gas must be a precisely defined geographical location. This will assist in determining which party is to bear the risk of transportation of the flare gas volumes. Force Majeure: It is important to ensure the duration of the contract performance can be extended for a period that is equivalent to the duration of Force Majeure. Termination events: Termination events should be material and where applicable, reasonable cure periods should be provided for them. Connection agreement Regulatory and Antitrust: flare sites are likely to be in clusters with multiple licencees

using common connection facilities. The Regulation does not presently address the issue of third party access to processing facilities and pipelines on a nondiscriminatory and cost-reflective basis. These issues must be properly negotiated. Commingling, Allocation and Attribution: With multiple users of common facilities, issues such as commingling of flare gas volumes will bring to the fore the principles of allocation and attribution as well as balancing which may necessitate additional contractual arrangements. Other issues: These are likely to be infrastructure related and will include pipeline crossing, abandonment and decommissioning. Deliver or pay agreement Ship or Pay: It is important to ensure the ship-or-pay obligation of the Operator is sufficient to ensure certainty of payment from the Flare Licensee. Though the Regulation already provides for a guaranteed fee to be payable by the Flare Licencee to the Operator. Force Majeure: It is important to determine if the ship-orpay obligation of the Operator should survive the occurrence of an event of force majeure to the Operators pipeline and facilities. Right of Set off: Given that the Regulation provides for a guaranteed payment by the Flare Licencee to Operator, consideration should be given as to whether it is still necessary for the Operator to have a right of set-off against any amount owed to it by the Flare Licencee. Other Issues: aspects of the Operator’s delivery obligations that must be taken into consideration are the point-of-delivery, delivery pressure and minimum quality specifications. Also, consideration for third party access on a non-discriminatory basis to the Operators facilities. Karimaat Aliyu-Dauda & Linda Asuquo writes from Advocaat Law firm in Lagos

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Nigeria’s DisCos illiquid as electricity attracts largest energy investments globally STEPHEN ONYEKWELU

lectricity Distribution Companies (DisCos), which interface with endusers, occupy a critical position in Nigeria’s power value-chain but struggle to stay afloat because of illiquidity and stifling legal framework, while electricity continues to attract the largest energy investments, globally. On July 17, 2018, Alex Okoh, director general of the Bureau of Public Enterprise said most of the DisCos are technically insolvent. Okoh made this known during an interactive session held at the instance of House Committee on Power, with critical stakeholders in Nigeria’s power sector including Nigeria’s Bulk Electricity Trading Company (NBET), Electricity Distribution Companies (DISCOs) and Generation Companies (GENCOs). Globally, the scenario is different. According to Paris-based International Energy Agency (IEA), in a report ‘World Energy Investment 2018’, 2017 was the third consecutive year of decline in global energy

investment with energy efficiency the lone sector of growth. Despite a 6 percent decline in spending, the electricity sector again attracted the largest share of energy sector investments, exceeding the oil and gas industry for the second year in row, as the energy sector moves toward greater electrification. In 2017, newly sanctioned coal power fell 18 percent, driven by a slowdown in China, India and Southeast Asia. Although, despite declining capacity additions - and a wave of retirements of existing plants - the global coal fleet continued to expand in 2017. While investment decisions signal a continued shift towards more efficient plants, 60 percent of currently operating capacity uses inefficient subcritical technology. Meanwhile, sanctioned gas power fell nearly 23 percent, due mainly to the Middle East and North Africa (MENA) region and the United States. In Nigeria the DisCos have failed to attract adequate investments because of their debt burden and lack of competitive tariffs.

An assessment conducted by BPE showed that many of the DisCos are technically insolvent. Their current liabilities are in excess of their assets, most are owed to NBET. They are unlikely to pay because of poor tariff. DisCos need to improve infrastructure that consumers can pay for, “but technically they do not have the capacity to do so,” Okoh said. Eugene Edeoga, NBET Director of Procurement lamented that the company is “technically dead and insolvent with huge liabilities” arising from over N800 billion owed it by the DisCos. To find sustainable solution to the power sector woes and attract investments inflows, four action steps must be taken, people with knowledge of the sector have suggested. BusinessDay’s check shows that the highest percentage of revenue paid by the distribution companies for electricity received from the generation companies is 29 percent. One of the radical first steps towards revamping Nigeria’s power sector is for government to find a way of renegotiating, absorbing or setting aside the N800 billion electricity debt stocks, a source who have worked at both the BPE and one of the founding commissioners at the Nigerian Electricity Regulatory Commission (NERC) told BusinessDay, and requested not to be identified. Secondly, the government needs to give up its 40 percent equity holding in the DisCos, in stages. First, it could be managed by a consortium and some commercial banks. However, the government will have to ultimately give up its equity entirely. This is not completely novel because, on September 25, 2017, Baba-

tunde Fashola, minister of power, works and housing, stated that the federal government would be open to welcome new and tangible offers that would lead to it divesting its 40 percent shares in Nigeria’s 11 electricity distribution companies (DisCos). “The other point is to ensure that government, going forward, would not owe Discos. It must budget for power in the way that it budgets for diesel and travels. We have done that in the 2017 budget; we will do it again in the 2018 budget, and enforce compliance by agencies to pay their debt” Fashola said. This will help in bringing stability to liquidity problems in the power sector, ultimately for the benefit not only of the DisCos but the entire value chain. Thirdly, transmission company Nigeria (TCN) needs to be broken-up and privatised. Experts say this is necessary if the market it to be optimally deregulated. In other countries where the electricity industry was formerly a government owned, vertically integrated, monopoly the reforms have generally involved splitting the industry into separate generating, transmission and distribution sectors. The transmission system often remains a government-owned common carrier, or is kept under extensive regulatory control as a natural monopoly. Stakeholders in Nigeria’s power industry say Nigeria’s TCN needs to be broken up into mini privatised operations to make the system work. The fourth solution on the list is that those who get a concession must present two evidences: proof of experience doing something similar in a similar economy and proof of liquidity or money to pull off the deal.

Wednesday 08 August 2018

power

Nigeria: Cummins Power Generation to commission 26 MW Power Plant at Sapele in Q3 2018

ummins Nigeria has successfully installed 25.75 MW power plant at Sapele Power Plc in Delta State, Nigeria. The commissioning works are ongoing, and the plant will be operational in Q3 2018. This gas-based power plant will provide power to Nigerian homes and industries. This first phase will generate enough power

to supply 200,000 homes in Nigeria. The following phases will add additional capacity (MW) until the total installation reaches 300 MW as per the signed PPA between Cummins Nigeria and Sapele Power Plc. Speaking on the development, Project Manager, Cummins Nigeria, Sudipta Mazumdar said, “At full capacity, enough power will be generated to supply electricity to all the homes in Delta State which has an estimated population of 4 million people” The power plant will generate electricity 24/7. “As the plant will be owned and maintained by Cummins Nigeria, the power supply will be continuous and steady. All our plants operate under preventive maintenance schedule as per the OEM guidelines” Sudipta explained.

Ethiopia: Off-grid lighting generates $1bn worldwide

he IFC-World Bank programme, Lighting Africa, is developing markets for off-grid lighting products and promoting their use in Ethiopia. Since its launch in Ethiopia in 2015, the programme has enabled more than one million people to meet their basic electricity needs. Ethiopians have purchased 1.3 million Lighting Global qualityassured products. Those results reflect a worldwide trend: more than 140 million people in over 80 countries are using Lighting Global’s qualityverified products to light their homes and power their businesses. By replacing kerosenepowered alternatives, the global programme avoids 2.9 million tonnes

of greenhouse gases every year—the equivalent of removing 364,000 cars from the road. Lighting Africa has an ambitious target: to enable the more than 250 million people across sub-Saharan Africa who are living without electricity to gain access to clean, affordable, quality-verified off-grid lighting and energy products by 2030.

Wednesday 08 August 2018

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POLICY

BUSINESS DAY

Reviving abandoned LNG projects needs pragmatic ideas ISAAC ANYAOGU

be Kachikwu, minister of state for petroleum resources over the weekend said the government might ask the NLNG to help get two delayed LNG projects in the country – the 10mtpa BrassLNG and 20mtpa Olokola LNG – off the ground through either minimal investment or expert advice. Kachikwu said this when he visited the Bonny Island base of the NLNG, which currently produces 22 metric tonnes per annum (mtpa) of LNG, with plans to invest about $7 billion on the Train-7 project to expand its production capacity to 30mtpa. Since the development of the NLNG, new projects have been too few and far between. Three LNG projects in Nigeria: Olokola LNG, Brass LNG and the NLNG’s Train 7 have been unable to reach final decision by the stakeholders as investors have pulled out. The OK LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation (NNPC) left. The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013. The minister said, “We have opportunities that are stranded everywhere – BrassLNG in terms of shareholding and financing; OKLNG in terms of even taking off the ground – I am saying, as the grandfather of this business, they built six trains, looking at seven, hopefully potentially more, let’s begin to look at where through

minimal investments, through structures and designs and reconfiguration and expert advice, you can actually handhold some of those trains that are beginning to lag behind so that the whole founding father

concept of ‘take this all over the place’ can happen. “We are going to be reaching out to them, not from an imposition point of view, but from a collaborative point of view, to see what we can do and learn

Snapshot

60MTPA

Nigeria can ramp its capacity to 60mpta by reviving abandoned LNG projects and bringing NLNG train 7 on stream

from what they have done well.” According to NLNG’s shareholding structure, the Nigerian government through the Nigerian National Petroleum Corporation (NNPC) owns 49 per cent of its shares; Shell Gas B.V. has 25.6 per cent; Total Gaz Electricite Holdings France, 15 per cent; and Eni International, 10.4 per cent. It is not clear how the government will get the NLNG to invest in these projects considering its shareholding structure. Nigeria’s own dividend from the project is used to finance the budget and other critical sectors of the economy so it is difficult to use only its share. With moves to amend the NLNG Act, Nigeria will have a difficult time convincing other investors of its seriousness to respect con-

tracts. Rather than urging NLNG who is facing a threat to its market share in Asia from prolific production from Australia, the United States to invest in new projects, whose investors pulled out because there is no clear path to profit, Nigeria should be thinking of making generous concessions, similar to ones granted to NLNG to attract investments. Locally the need for domestic gas is huge, perhaps it makes more economic sense to liberalise gas pricing, enact competitive gas terms in production sharing contracts to ramp up production that will give the plants feedstocks and develop these projects for local consumption through public private partnerships.

06 BUSINESS DAY

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WEST AFRICA

ENERGY intelligence Brief Big tankers ferry fuel to Europe as China surplus seeks home

rand-new supertankers are ferrying a rare flow of diesel from Asia to ports thousands of miles away in Europe as a surplus of the fuel from China scouts for a new home. At least three newlybuilt Very Large Crude Carriers have loaded diesel from Tianjin in China and near Singapore to reach as far as Fos Sur Mer in France around June or July. That compares with only two VLCCs laden with the fuel that sailed from Asia to Europe for the whole of 2017. “Part of the reason behind the increased Asia-Europe diesel flow is the persistent fuels

es have restrained consumer sentiment across Asia, diesel in Europe has remained strong on economic growth, seasonally-lower stockpiles and stable demand from the region’s large dieselbased transport fleet, Lee said. “This is likely to have supported freight economics and Asian refiners’ desire to ship to Europe,” he said. The availability of new supertankers has also helped increase the flow. While VLCCs normally do not carry clean fuels like diesel, they are sometimes a more viable option than sailing empty on their maiden trips. Such journeys cost relatively less due to

Wednesday 08 August 2018

finance people appointments

Gas production at Egypt’s 9B field to begin in October

roduction of natural gas from two deepwater wells at Shell’s West Nile Delta field 9B in Egypt will begin in the first half of October, Tarek El Molla, the country’s petroleum minister said. Molla said in a statement that the whole project, which includes several other wells being dug and linked to production, was set for completion in the second half of 2019 and that its output aims to reach 400 million cubic feet per day. The statement did not say how much gas the first two wells would initially produce. Egypt plans to become a regional hub for the trade of liquefied natural gas after a string of major discoveries in the Mediterranean that are

expected to make Egypt self-sufficient in gas by the end of 2018. The discoveries include the mammoth offshore Zohr gas field. Italian oil company Eni said recently

that the daily production capacity of Zohr stood at 1.6 billion cubic feet and would reach 2 billion by September. Egypt in February issued long-awaited execu-

tive regulations to allow the private sector to import natural gas directly, hoping to attract greater privatesector participation in the country’s rapidly expanding gas sector.

Kuwait taps banks for $1.1bn loan in shale push

glut in China,” said Peter Lee, an analyst at BMI Research. The oversupply “has contributed to Asia’s diesel prices under-performing prices in Europe.” China’s diesel exports climbed almost 30 percent to over 10 MM metric tons in the first half from a year ago, with March shipments hitting a record high. The premium of the product in Rotterdam to the Singapore benchmark rose to $1.40/bbl in the second quarter from $0.80 in the first quarter, said BMI’s Lee. A year earlier, European fuel was at a discount of $0.70, he said. While stronger oil pric-

the risk associated with first-time voyages, offering a cheaper transport option. A VLCC typically holds 2 MMbo. More barrels are set to flow out of China. The nation’s oil refining is near a record-high of over 12 MMbpd, while China National Petroleum Corp. forecast a capacity boost of 36 MM tons nationwide this year. Crude processing may rise by a “whopping” 525,000 bpd, year-on-year in the latter half of the year, worsening the regional surplus of diesel, also known as gasoil, said Sri Paravaikkarasu, head of East of Suez oil at industry consultant FGE.

uwait Foreign Petroleum Exploration Co. is borrowing $1.1 billion to spend on oil and natural gas projects as the company plans to expand its shale operations, CEO Sheikh Nawaf Saud Al-Sabah said. Sumitomo Mitsui Banking Corp. and Societe Generale SA were the joint lead arrangers of the fiveyear loan for Kufpec, a unit of state-run Kuwait Petroleum Corp., Al-Sabah said at a news conference in Kuwait City. The new financing includes a twoyear grace period and is in addition to $3.5 billion that Kufpec has borrowed from banks since 2013. The company will finish repaying the $3.5 billion next year, he said. Kuwait, fifth-biggest producer in the Organiza-

tion of Petroleum Exporting Countries, has long planned to increase its global capacity to produce oil and gas. The Persian Gulf nation currently can pump as much as 3.15 MMbopd from its wholly owned fields, and KPC targets a daily capacity of 4 MMbpd by 2020 and 4.75 MMbpd by 2040.

Kufpec, which currently produces 100,000 boed, expects to pump 119,000 next month and 150,000 in 2020, a level it will maintain until 2040, it said in a statement. The company’s plan coincides with OPEC’s campaign, together with allied producers such as Russia, to pump more oil to offset supply

disruptions in Venezuela and Libya and anticipated losses from Iran due to looming US sanctions. Achieving Kufpec’s foreign production target has been a multinational effort. The company is producing 38,000 boed in Australia and 30,000 in Norway, and it has drilled 120 wells to produce gas and condensates at shale fields in Canada’s Alberta province. Kufpec is currently producing 8,000 boed in Canada and plans to gradually increase output there by drilling a total of 2,000 wells, Al-Sabah said. The company’s total reserves comprise 494 MMboe, and the Canadian project will add 28 million to that, Al-Sabah said. Kufpec is also considering investing in U.S. shale deposits but is waiting for a more attractive price.

07 WEST AFRICA ENERGY intelligence

Wednesday 08 August 2018

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marketinsight

Crude oil falls on higher OPEC supply, US-China trade spat

rude futures fell on rising OPEC and Russian output and concerns that a trade dispute between the US and China will affect demand. October ICE Brent settled 24 cents lower at $73.21/b, while September NYMEX crude settled 47 cents lower at $68.49/b. OPEC produced 32.66 million b/d in July, up 340,000 b/d from June as increases from Saudi Arabia, Kuwait, Iraq, Algeria and the UAE offset declines from Libya and Venezuela. Russia’s crude output climbed nearly 150,000 b/d in July, the energy minister said, largely in line with Moscow’s late-June agreement with OPEC. Russian output is now just 15,000 b/d below the record high of 11.23 million b/d set in October 2016. “Rising Saudi Arabian

and Russian oil supply, coupled with concerns about demand due to the further escalating trade conflict between the US and China, the two largest oil consumer countries, is weighing on the Brent price,” Commerzbank analysts said in a note. US crude exports have slowed in recent weeks,

likely because the US-China trade war has reduced flows to China, the single largest buyer of US crude in May. US Energy Information Administration data shows that on a fourweek average basis US crude exports have slowed to 1.87 million b/d during the week that ended July 27 from 2.43 million b/d

OPEC Flakes OPEC July crude oil output surges 340,000 b/d from June to 32.66 mil b/d July 27. With refinery maintenance season around the corner, US crude inventories could start to rise, especially if exports do not pick up again. West African crude market sources warned that reduced refinery runs would lead to higher US crude exports into Europe competing with Nigerian light sweet crudes. The crude bears should keep in mind looming US sanctions on Iran, which are expected to remove up to 1 million b/d of crude from the market when they go into effect November 4. Also, refined products remain relatively tight, as demand has been strong for gasoline and diesel. Some refineries in Europe have reduced runs because of the current heat wave, lending support to gasoline prices, sources said.

China rejects US request to cut Iranian crude imports

he US has been unable to persuade China to cut Iranian oil imports dealing a blow to President Donald Trump’s efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord. Beijing has, however, agreed not to ramp up purchases of Iranian crude because discussions with China and other countries continue. That would ease concerns that China would work to undermine US efforts to isolate the Islamic Republic by purchasing excess oil. Teams of US officials have been visiting capitals around the world to try to

choke off sales of Iranian oil by early November, when US sanctions are due to snap back into effect. While the Trump administration has said it wants to cut Iranian oil exports to zero by November 4, most analysts viewed that target as unlikely. The Trump administration argued that the

nuclear deal, which lifted some economic sanctions in exchange for restrictions on Tehran’s nuclear program, was fatally flawed because it did not address the country’s destabilizing behavior or limit its development of ballistic missiles, among other things. The other partners in the agreement, including the

BUSINESS DAY

UK, France, Germany and Russia, criticized the US move to quit the deal. Unfazed, the administration has warned that even allies would face sanctions if they did not show “significant” progress in reducing Iranian oil purchases by November 4, ruling out broad exemptions or waivers. China -- the world’s top crude buyer and Iran’s No. 1 customer -- has said previously that it opposed unilateral sanctions and lifted monthly oil imports from the country by 26 percent in July. It accounted for 35 percent the Iranian exports last month, according to ship-tracking data compiled by Bloomberg.

audi Arabia pumped close to its all-time high in July and several of its OPEC members posted their largest crude oil output figures in more than a year and a half, as the bloc appears to be following through on its agreement to unleash more barrels on the market. OPEC produced 32.66 million b/d in July,

a 340,000 b/d rise from June, including newest member the Republic of Congo, according to the latest S&P Global Platts survey of industry officials, analysts and shipping data. Saudi Arabia, OPEC’s largest member, produced 10.63 million b/d, the Kingdom’s highest since August 2016, when it produced its record 10.66 million b/d. Its Gulf allies Kuwait and the UAE pushed their output to their most since December 2016 -- the last month before OPEC and 10 nonOPEC allies agreed to implement supply cuts that are now being eased -- as did Iraq and Algeria. Those gains were more than enough to offset output declines in sanctionshit Iran, crisis-wracked Venezuela and conflicttorn Libya.

Iraqi oil exports stable near record high

he Iraqi Oil Ministry reported total crude oil exports for July at around 3.5 million barrels per day, relatively unchanged from June. The ministry reported total exports from July brought in $7.6 billion for the Iraqi economy. Last month, the

government in Baghdad said it realized a price for oil of $69.16 per barrel. Economists at the Organization of Petroleum Exporting Countries have reported steady declines in the price for Basra Light, the Iraqi benchmark for the price of oil. Basra averaged $72.83 per barrel in May and $71.90 in June. Total exports from Iraq averaged 3.54 million barrels per day, relatively unchanged from June. The ministry does not include oil exported from the north, where the semiautonomous Kurdistan Regional Government sends oil by truck and through pipelines to a Turkish sea port.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 08 August 2018

talking points

In association with

Danger looms for Nigeria in an evolving crude oil market STEPHEN ONYEKWELU

he Centre for Petroleum Information, a knowledge resource centre for the petroleum industry recently organised Petroleum Policy Roundtable on July 20 in Lagos to keep stakeholders abreast of changing trends in the sector and the implications for Nigeria. Chambers Oyinbo, chairman board of governors and Victor Eromosele, executive director and secretary highlights important takeaways from the sessions. Following the 2015 UN Paris Climate Change Summit, Nigeria is one of the 188 countries that in April 2016 signed commitments to reduce carbon dioxide/greenhouse gas (GHG) emissions by 2030, pledging nationally determined contributions (NDCs). A low carbon future is one in which transport is dominated by electric vehicles and electricity generated significantly from renewable energy sources. The CPI roundtable is designed to sensitize petroleum industry policy makers and decision takers on the need to have a robust plan now and prepare to deal with the inevitable consequences of the certain low carbon future (LCF) ahead. Be prepared Nigeria and its petroleum industry cannot afford to “play ostrich” in the face of the anticipated rapid change in the complexion of global energy within the next decade and beyond. Matching policy with urgent action required, recognising the imperatives imposed by the ongoing changes such as the exponential growth in the number of hybrids and electric vehicles (EVS). According to the International Energy Agency (IEA), by 2030, there would be 100 million such vehicles worldwide and expected to grow by 100 million every five years. Consumers of Nigeria’s crude oil, China and India would have more than half the number. Plan for refinery obsolescence Not only would the configurations of new

refineries be flexible and more compatible with the imperatives of the low carbon era, the configuration of old refineries would need to be reviewed for potential technological obsolescence. There would be a significant drop in the demand for gasoline (PMS) and diesel. The emphasis would necessarily shift to petrochemicals, past President of the African Refining Association, Anthony Ogbuigwe, observed. Develop gas as ‘transition’ fuel As the cleanest of fossil fuels, gas would stay relevant in the transition to a low carbon future. The roundtable congratulated the Nigeria LNG CEO, Tony Attah for the previous week’s signing of front-end engineering and design (FEED) contracts with two consortia towards the realisation of Final Investment Decision (FID) for the 7.7-MTPA Train 7 expansion of the Bonny Island plant. Nigeria is the world’s fifth largest LNG supplier.

Replicate Azura-Edo IPP gas supply model The roundtable recommends more support for gas to power arrangements, such asthat between Seplat and the hugely successful Azura-Edo independent power plant. The “willing buyer, willing seller” gas pricing model worked well (as Azura is the only power plant in Nigeria without gas supply issues) and ought to be replicated for all such new gas to power projects. Nigeria must learn to celebrate and build on its success. Learn from Total renewable energy diversification example The roundtable is impressed to see an international oil company (IOC) on a globalscale aggressively investing in renewables across the value chain. It plans by 2021 to solar-power 250 Nigerian filling stations, up from 20 currently. Rural dwellers are benefiting from solar lanterns sold by Total

(even though, it is in competition with kerosene, which it also sells). Many more largecorporate firms should emulate this laudable forward-looking initiative. Rethink renewable energy strategy at NNPC Given the challenges in getting the otherwise laudable efforts by NNPC’s Renewable Energy Division at developing automotive biofuel (from cassava, sugar cane and oil palm), after 11 years, the roundtable suggests it is time to rethink strategy. NNPC should consider partnering with IOCs such as Total to get utility-scale solar power projects off the drawing board, in consonance with the now urgent demands of a low carbon future. Way forward Clearly, a credible petroleum industry policy/action plan is now crucial to ensure Nigeria does not risk belated action when it is too late.