BusinessDay 08 Aug 2019 by BusinessDay

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news you can trust I **THURSDAY 08 AUGUST 2019 I vol. 19, no 367 I N300

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362.83 306.90

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NGUS OCT 30 2019 362.03

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Pressure builds as oil falls below budget benchmark N

Nigeria’s fertiliser imports drop 31% as investments hit $7.5bn

…24 blending plants in operation Josephine Okojie & Bunmi Bailey

for first time since 2016

MSCI’s EM currency index turns negative

LOLADE AKINMURELE & DIPO OLADEHINDE

s if Nigerian monetary and fiscal authorities don’t have enough to worry about, the falling price of crude oil presents a fresh threat. Brent oil fell to as low as $56 per barrel as at 4:00pm Nigerian time Wednesday, as the USChina trade spat threatened to expand into a currency war and investors despaired about the damage to crude demand. That has big implications not only for the Federal Government’s budget but for the naira. Diaspora remittances may be the largest source of dollar inflows into Africa’s largest oil pro-

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igeria has seen its global fertiliser imports decline by 31 percent on the back of the Presidential Fertiliser Initiative (PFI) instituted in 2016. Data from the International Trade Centre (ITC) shows that since the initiative kick-started in 2016, Nigeria’s import of fertilisers has been on a steady decline, reaching $149 million in 2018 from $226 million worth imported in 2016. Similarly, the value of the country’s import of fertilisers dropped from $214 million in 2017 to $149 million in 2018, indicating a 31 percent year-on-year decrease. The initiative, which is also part of the Nigeria-Morocco fertiliser

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Inside NES#25 to emphasise P. 2 shift in gears towards competitive private sector L-R: Nkechi Onyenso, head, corporate services, Nigeria Economic Summit Group (NESG); Niyi Yusuf, vice chairman, and Asue Ighodalo, chairman, during a courtesy visit by the board of NESG to the BusinessDay head office in Lagos to Pic by Olawale Amoo discuss the forthcoming 25th Nigerian Economic Summit (NES #25), yesterday.

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news Single-digit interest rate on the way for first home buyers seeking N5m mortgage loan CHUKA UROKO

ccess to housing f i n a n c e i s g e tting increasingly less stressful and ‘cheaper’ for home buyers as both public and private sector operators are working on reviewing high interest rate which is a major challenge to mortgage affordability in Nigeria. While the Federal Government through the Federal Mortgage Bank of Nigeria (FMBN) is now offering zero equity on loans below N5 million to all contributors to the National Housing Fund (NHF), plans are in progress for primary mortgage banks (PMBs) to offer mortgage loans at 9.9 percent interest rate to any first-time home buyer seeking N5 million loan for the purpose of owning a home. A mortgage banking operator who disclosed this to BusinessDay on condition of anonymity explained that the 9.9 percent interest rate is being perfected by the Central Bank of Nigeria (CBN) which, he said, will be subsidising the rate in favour of home buyers. “ T h e Ni g e r i a M o r tgage Refinance Company (NMRC) will continue to go to the capital market to raise funds and will also continue

to refinance our loans,” the operator explained. “What is going to happen is that if, for instance, we get our funds from either the NMRC or CBN at 15 percent interest rate, we will be required to lend to first-home buyers at 9.9 percent and CBN will off-set the balance.” The operator admitted that 9.9 percent, which is an upper single-digit rate, is still very high, but noted that it was a good start on the journey towards addressing the affordability issue in the mortgage system which constitutes a huge golf between many Nigerians and homeownership. To the operator, what the mortgage industry needs today is reduction in interest rate and not recapitalisation as is being considered by the CBN. “Capital adequacy is not the problem of the industry today. If the industry is not growing, it is not because of capital, because we have enough capital from the earlier recapitalisation and refinancing by the NMRC. The interest rate needs to be reduced so that more people will take loans. That way, the industry will grow,” the operator said.

NES#25 to emphasise shift in gears towards competitive private sector IHEANYI NWACHUKWU

he forthcoming 25th Nigerian Economic Summit (NES#25) will set a new agenda for the country to usher in the next industrial revolution and mark a critical strategic shift to competitive private sector economy by 2050. This will be through a renewed focus on investments in human capital development to achieve competitiveness and inclusive growth. Asue Ighodalo, chairman, Nigerian Economic Summit Group (NESG), who led a team of the foremost private sector-led think tank to BusinessDay on a courtesy visit on Wednesday, said the summit theme is “Nigeria 2050: Shifting Gears”. The NES#25 sub-themes will focus on achieving rapid industrialisation, transforming education, managing demography and sustainable peace and security. The NES#25 which holds in Abuja October 7-8, 2019 will bring stakeholders in private sector, public sector, social sector, politics, civil society, academia, interna•Continues online at tional organisations and dipwww.businessday.ng lomatic community together to create a unifying narrative for setting a long-term national agenda that will be led by the private sector. The summit is a yearly flagship event of the NESG, a bly higher interest burdens,” private sector-led think-tank said Abebe Aemro Selassie, that promotes sustainable director, Africa Department, growth and development in IMF. the Nigerian economy. Selassie said this in his The forthcoming sumremark at the Association of mit falls into the NESG’s African Central Banks 2019 roles as a dialogue partner, Symposium ‘Rising African Sovereign Debt: Implications for Monetary Policy and Financial Stability’, last week in Kigali, Rwanda. FRANK ELEANYA & MICHAEL ANI He advised the participants to continue to lans by the Federal strengthen the monetary Inland Revenue Serpolicy framework by reinvice (FIRS) to comforcing the operational and mence collection of financial independence of Value Added Tax (VAT) on central banks and creat- online transactions as part of ing better accountability measures to shore up revenue mechanisms, such as an target of N8 trillion set in the explicit interest target and 2019 budget may not be sitinflation objective. ting well with stakeholders in Ayodele Akinwunmi, the segment. head, research, FSDH MerIn two separate interchant Bank Limited, said views, the first in May and the Central Bank of Nigeria the second in August, Tunde (CBN), through its mon- Fowler, chairman of FIRS, etary policy and within said from 2020, banks may the limit of monetary pol- be mandated to collect 5 icy framework, has main- percent VAT from customers tained low inflation rate using bank cards for online and exchange rate stability, purchases. thereby ensuring low interSince the August interview est rate. published by Premium Times went viral, many Nigerians •Continues online at who believe the move is an www.businessday.ng affront on cashless drive have

IMF advises central banks on managing spillovers of high public debt HOPE MOSES-ASHIKE

he International Mo n e t a r y Fu n d (IMF) has urged central banks in Africa (including Nigeria) to take some important actions to manage spillovers of high public debt, while the central responsibility for public debt management lies with the finance ministry. Countries in Africa have experienced a pronounced rise in sovereign debt, with average debt increasing by almost 20 percentage points of GDP between 2013 and 2018. Nigeria’s total public debt grew marginally by 2.30 percent to N24.947 trillion (US$81.274 billion) as at March 31, 2019, compared to N24.387 trillion (US$79.437 billion) as at December 31, 2018, according to the Debt Management Office (DMO). “Public debt has increased in Africa, but also across the world. Public debt ratios are now significantly higher than before the global financial crisis in all country groups; and emerging market and developing economies face nota-

Nasir El Rufai (r), governor, Kaduna State, presenting the Award of Excellence to Tony Okpanachi, MD/CEO, Development Bank of Nigeria, as Outstanding MSME Clinic Partner at the 2nd National MSME Awards 2019 held at Aso Rock, Abuja.

watchdog, intervener, and connector. “Discussions will be anchored on three pillars – economic growth, competitiveness and inclusive development – and they will drive discussions at the sessions and generate robust and rigorous engagements with an overarching objective of signalling a coherent and clear 30-year forward agenda for the private sector to lead sustainable economic development,” Ighodalo said. “The NESG has come a long way and has always stayed true to its mandate

from the onset ; which is to promote and champion the reform of the Nigerian economy into an open, globally competitive economy. While at it, I daresay that the NESG has become the foremost private sector think tank in Nigeria,” he added. At the first Nigerian Economic Summit (NES#1) in 1993, public and private sector leaders explored global scenario covering 1992-2020 and defined the principles for building a competitive economy for Nigeria. Consequently, NES#1 recommended a number of prin-

ciples in defining the underlying economic philosophy that would be the premise of 21st Century Nigeria. They include commitment to a free market economy, encouragement of private sector led investments, creation of an enabling environment, good governance in the national interest, rule-based economy, and establishment of economic foundation for democracy. “In addition to articulating the characteristics of an economic philosophy

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E-commerce players, others tackle FIRS on planned 5% tax on online transactions

www.businessday.ng

...stakeholders urge wider consultation taken to social media to condemn the plan. They also say it amounts to double taxation. Nigerians already pay different charges for online transactions. “Welcome to Nigeria where we take five steps forward with the cashless policy and 20 steps backwards to the stone age of carrying cash around,” tweeted Ifeoma Solanke, a lawyer, from her handle @ifeoma_solanke. “What in the name of Zeus is 5% VAT on online card purchases? Aren’t we tired of double taxation?” A former presidential aspirant, Garba Shehu, also tweeted from his handle @ adamugarba that the Federal Government’s move was not strategic at a time when the country needed to catch up

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“organically” with the world in terms of digital development. “Focus should be on digital inclusion not red tapes,” he said. The Value Added Tax Act of 2007 governs the administration of VAT in Nigeria. VAT is levied at each stage of the production chain at 5 percent of the value of the taxable good or service supplied, but it is eventually borne by the final consumer, being a consumption tax, according to experts at Andersen Tax. In essence, VAT collection is not a recent development. Consumers have always paid for it when they make purchases in physical stores but most companies do not remit the tax to FIRS contributing to the shortfall in the country’s @Businessdayng

revenue. The government in recent times has hinted that it might resort to increase in VAT to stem the tide. Fowler, in the interview, had, however, expressed a preference for expanding the country’s tax base against increasing taxes. Efforts to achieve this expansion in the past had led to the launch of the tax amnesty programme in 2017 during which tax evaders and defaulters were encouraged to pay within a certain period without penalties. The FIRS claimed it was able to collect $47 million from the evaders. Fowler, however, suggested that getting over 40,000 companies “not doing the right thing” to comply has remained a big challenge.

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NEWS

FG promises support base for decent work

… as ILO urges judicious use of funds from social partners JOSHUA BASSEY

he Federal Government says it will be building a support base for young people towards the promotion of decent work in the country. William Alo, permanent secretary, Federal Ministry of Labour and Employment, gave the assurance at the recent three-day Global Youth Employment Forum (GYEF), in Abuja. Human resource experts as well as social partners, including the International Labour Organisation (ILO), who shared experiences, anchored discussions at the event, and also shared knowledge, expertise and challenges as it relate decent work around the world. “As a responsible government and a member of the Global Youth Initiative, we will strategically use the outcome of the forum to create a database of international best practices that are proven in promoting decent work for young people around the world, in order to strengthen our initiatives in youth employment schemes,” Alo said. Dennis Zulu, country director, ILO, expressed satisfaction with the hosting of the event in Nigeria

and the active participation of the youth in all its sessions. Zulu said the full involvement of the youth was a positive development, as it had led to the recommendations that had been put together to produce the blueprint, which outlines the Sustainable Development Goals (SDGs), particularly the SDG 8. Zulu, however, observed that many extant policies and legislations that in many countries including Nigeria were not supported by necessary funding and implementation. He then called on governments to ensure that the budgets that were provided by the development partners and the technical support were used to ensure that policies, programmes and activities were implemented towards meeting the goals that relate to SDG 8. He further advised that as countries proceed to deal with the challenge of youth unemployment, it was important for them to ensure that they do not leave anyone behind. He stressed the need for all stakeholders to work together to get the job done and ensure that the future for the youth was the one they desire for themselves.

Global airfreight declines for eighth consecutive month IFEOMA OKEKE

he International Air Transport Association (IATA) released data for global airfreight markets show that demand, measured in freight ton kilometres (FTKs), decreased by 4.8 percent in June 2019, compared to the same period in 2018. This marks the eighth consecutive month of year-onyear decline in freight volumes. Signs of a modest recovery in recent months appear to have been premature, with the June contraction broad-based across all regions with the exception of Africa. Capacity growth remains subdued and the cargo load factor continues to fall. Globally, trade growth is languishing, and business uncertainty is compounded by the latest tariff increases in the US-China trade dispute. “Global trade continues to suffer as trade tensions particularly between the US and China deepen. As a result, air cargo markets continue to contract. Nobody wins a trade war. Borders that are open to trade spread sustained prosperity. That’s what our political leaders must focus on,” Alexandre de Juniac, IATA’s director-general/ CEO, said. African carriers were the only ones to report growth in June 2019, with an increase in demand of 3.8 percent compared to the same period a year earlier. This makes Africa the strongest performer for the fourth consecutive month. Capacity grew 16.6 percent. Route analysis shows that the AfricaAsia performance is strong—up 12 percent year-on-year. Airlines in Asia-Pacific and

the Middle East once again suffered the sharpest declines in year-on-year growth in total airfreight volumes in June 2019. Africa was the only region to show any growth. Asia-Pacific airlines saw demand for airfreight contract by 5.4 percent in June 2019, compared to the same period in 2018. Although an important factor, the US-China trade war is not solely responsible for the fall. FTKs for the within-Asia market have decreased more than 10 percent over the past year. Air freight capacity increased by 1.8 percent over the same period. North American airlines’ freight demand decreased by 4.6 percent in June 2019, compared to the same period a year earlier. Capacity increased by 1.9 percent over the past year. US-China trade tensions are weighing on the performance, with FTKs to Asia down five percent. FTKs on routes to/from Europe, South America and Middle East were also lower. European airlines posted a 3.6 percent decrease in freight demand in June 2019 compared to the same period a year earlier. Comparatively strong cargo volumes within Europe are helping to minimize the impact of weaker German exports. Capacity increased by 2.8 percent year-on-year. Middle Eastern airlines’ freight volumes decreased 7.0 percent in June 2019 compared to the year-ago period. Capacity increased by 2.7 percent. Seasonally adjusted demand has been falling since late 2018, and the latest data show volumes to Europe (-7.2%) and Asia-Pacific (-6.5%) were particularly weak. www.businessday.ng

L-R: Duke Abanum, head, operational risk and business continuity management, First Bank of Nigeria (FBN) Limited; Jonathan Odega, sales manager, NCR Corporation Nigeria; Callistus Obetta, group executive, technology and services, FBN; Damilola Adisa, group head, procurement, FBN; Patrick Iyamabo, chief financial officer, FBN, and Tope Dare, executive director, Inlaks, at the FBN Vendor engagement session in Lagos, yesterday. Pic by Pius Okeosisi.

Here is why UAE provides good prospect for Nigeria agro produce exporters DAVID IBIDAPO

ver the years, the Nigerian agricultural sector, despite achieving some landmarkintheproduction of certain agricultural products, has not translated into monetary value for producers. Instead produce from Nigeria has enriched other countries that become major suppliers of these varieties to other countries, having turned sourced raw produce into premium products meeting international standards. This is notwithstanding however that Nigeria as a country has enough potential yet to be unlocked in the agricultural space based on somecomparativeadvantagesithas over other African countries. As at 2017, about 36.6 percent of Nigeria’s population engaged in agricultural production at a subsistence level coupled with the fact that Nigeria has the largest market in Africa with a population of more

than 200 million people, according to data from the National Bureau of Statistic (NBS). There are over 30 million hectares of farmland under cultivation, season to season in Nigeria, according to the NBS. Agriculture remains the base of the Nigerian economy, employing about 36.6 percent of total workforce. Nigeriaalsocurrentlyrankssixth worldwide and first in Africa in farm output to mention but a few of her potential. While we can ascribe the under performance in Nigeria’s agro produce exports to a number of factors ranging from lack of sensitisation and technical knowledge for subsistence farmers, about 40 percent ofperishablefoodgettingspoiltafter harvest due to the lack of electricity, and also lack of infrastructure causing delays in the logistics of harvested crops from the farmland to markets in major cities, among others, opportunities therefore opens up for exports into United Arab Emirate (UAE).

Importantly, it is expedient to note why agro businesses should be included on the list of countries to export to, the UAE. Currently,Nigeria’smajorexport partners include India with export worth $8.25 billion, United States ($6.68bn), Spain ($4.54bn), France ($2.81bn) and the Netherlands ($2.3bn), UAE not included. The Nigerian government’s effort in advancing agro processing will greatly pay off for export, as their most exported products – cocoa beans and cassava, are imported into the Gulf Cooperation Council region in which the UAE is a major importer. Nigeria is currently the second largest producer of sorghum in the world, the largest producer of rice in Africa, and also the second largest producer of sesame seed after Ethiopia. Nigeria also leads in yam and cassava production, and is the largest producer of hibiscus flower exported to Mexico and Russia. A research carried out by Crenov8 Consulting Group reveals that

about 80 percent of needed food to the tune of $100 billion in the UAE are imported, and the country ranking the second most visited destinations after the USA is expected to rise to$400billionincurrentfoodimport in the next six years. Every year, Africa exports over $35 billion worth of agro produce to other parts of the world, and analysts have speculated that this figure will rise to $400 billion in the next 31 years i.e. by 2050, Crenov8 Research shows. More so, Dubai is a re-exporting hub to other GCC countries. This thereforewidenstheagromarketfor agroproductsforimporters,coupled with free zone opportunities. To this end, major Nigerian agriculture businesses such as Farmcrowdy, Farmcenta, Farmconnet to mention but a few, on perceived opportunities in this market have positioned themselves through a conferencethemed“Meetthefarmers” organised by Crenov8, which is to hold in Dubai November 27 – 28, 2019, to seize opportunities.

She stated that the conversation around the projects was kick-started after the visit of the German Chancellor, Angela Merkel, to Nigeria, stating that it had now become government-to-government initiative, which would see the ECA playing a very prominent role in financing the project. “The ECA would be one of those agencies financing the initiative, so whatever other credit instruments are required we would secure as we go along. But in the initial phase we see a bulk of it coming from the German Export Credit Agency (ECA),” she said. The Siemens boss, who dismissed the report that a particular figure had been arrived at as regards the financing of the project, said: “Exactly where we are now is to sign implementation agreement, which will give us the platform to start engaging more intensively to achieve financial clause that would lead essentially to contractual agree-

ment with the government to get this project delivered.” What they would be doing over the next four months, she said, would be structuring the financing and ensuring that all the capacities required are in place, whether it is local or international. The other things the company will be doing are to direct it efforts towards ensuring that the studies carried out are executed so that in a few months it will be able to have a better view of all those issues involved in Phase II. For Phase I, she explained that Siemens was already clear about where it was headed and what needed to be done, which was why the implementation agreement basically provided the platform for the execution of Phase II. “So, we are working out what is coming into a firmed cooperation with the government,” she said. On the benefits that may be accruing to Nigeria if the projects are

successfully carried out, she said the company was also supporting the project with a very robust vocational training concept, which would eventually be delivered with the cooperation of the German Government. Certain schools in Germany, she said, now deliver vocational training for apprentices that can work in the power sector and other sectors of the economy. The intension of the vocational training is to create thousands of jobs for young qualified and highly skilled young Nigerians. “Our Global CEO, Jeo Kaeser, spoke about the impact that such training has had on the Egyptian economy. It is a game changer in the Egyptian economy and game changer for the Egyptians themselves, because it offers Small and Medium Scale Entrepreneurs a lot of opportunities. They have excess capacity, which they can export to other countries,” she said.

German Export Credit Agency, others to finance Nigeria’s power project - Siemens OLUSOLA BELLO

he recently signed agreement to strengthen Nigeria’s power grid and distribution networks would be financed by German Export Credit Agency (ECA) and others, says Onyeche Tifase, managing director/CEO, Siemens Limited Nigeria, in an exclusive interview with BusinessDay. The power grid and distribution network upgrade involves Siemens Nigeria’s parent body, Siemens AG, and the Federal Government of Nigeria. According to Tifase, once the financing is secured, the company will enter into a firm cooperation with the government, and Siemens expects that a lot of planning and efforts already in place will ensure the resources - power equipment, which have been produced, are delivered for immediate rollout of the plans developed for the project.

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news Silverbird Small Business Events Circuit: A game changer for small businesses GBEMI FAMINU

y all accounts, this is probably the best time in recent history to be a small business owner in Nigeria. A growing willingness of private equity providers to investinsmallbusinessescoupled with several sovereign intervention programmes through government owned agencies such as the Bank of Industry, and more recently single digit interest rate longtenored loans. Some calculations reckon that the recent directive from the Central Bank of Nigeria (CBN) to Nigerian banks to maintain a minimum Loanto-Deposit Ratio (LDR) of 60% could release anywhere in excess of one trillion naira for lending to Micro Small and Medium Enterprises. Theintentisclearandmessage is direct, grow small business and consumer lending, now!!! The reason is simple, small businesses are not only drivers of economic growth, but also have the potential to

become the highest employersoflabourwhenaggregated. However, while the availabilityofmoneyforsmallbusiness owners is being resolved, the greater challenge lies in their inability to access these funds. Money is not free, it has a cost and there are conditions to accessing it. The individuals and firms need to be ready and their ideas bankable. On present evidence, not manysmallbusinessesintheir present shape or form possess the capacity to overcome the obstacles to accessing these funds. A lot of effort is still required in equipping smallbusinesseswiththetools and skills they need to access these funds. Skills that include finance, management and marketing. This is where the approach of Silverbird Entertainment Limited and its partners, BusinessDay Newspaper and Eventstracer in launching the SilverbirdSmallBusinessEvents Circuit qualifies as a game changer for small businesses.

While there is no shortage of business events to attend, this particular one is different. The Circuit is a combination of calendared sector specificsmallbusinesseventsand seminars stretched out over an almost year long period. It is designed to promote the stability and growth of SMEs in Nigeria using a six-pillar strategy they have coined as CHITTA (representing Capital, Health, Insurance, Technology, Training and Awareness). CHITTA captures the most urgent challenges that small businesses face and the Circuit aims to provide a platform for over 150,000 visitors and 200 exhibitors from 9 industries to interact over 8 months,inthehopeofproviding solutions to CHITTA. The goal here is to promote greater interaction among stakeholders to find solutions, which can then be used to improve everyone’s revenue. This is why the Circuit has the theme Interact, Sell More.

FG unbundles Ogun Customs’ operations for efficiency, improved revenue RAZAQ AYINLA, Abeokuta

oing by the recent administrative and operational upgrade within the Nigeria Customs Service (NCS), which prompted the unbundling and creation of new eight Area Commands across Nigeria, the Federal Government has unbundled the Ogun Area Command of Customs into two, namely, Ogun I and II. BusinessDay reports that Ogun I Area Command of NCS will have its headquarters at Idi-Iroko in Ipokia Local Government Area of the state and has Michael Agbara as Controller with a mandate of regulation and enforcement of all imports, exports and antismuggling related activities. Whereas, Ogun II Area Command will be located in Abeokuta, the state capital, where all the operations that involve enforcement and regulation of the excise (industries under excise control), free trade zone and parcel post-related activities, would

be handled by Jack Ajoku as Controller. Speaking at the Idi-Iroko headquarters of the NCS on Wednesday, Michael Agbara, Controller of Ogun I Area Command, said the decision to unbundle and create additional eight new Area Commands across the country was taken at the NCS Board at its 50th Regular Meeting. Agbara noted that the unbundling of the State Customs Area Commands into two divisions was undertaken to enhance the Customs administrative and operational efficiency, and boosting revenue through aggressive drive of excise duties, import and export duties, anti-smuggling, and free trade zone operations, among others. While giving the breakdown of activities and achievements of the old Ogun Area Command in the month of July, Agbara, though the monthly revenue target of the Command was put at N643.5 million, but the Command generated about N1.3 billion as

against N1.2 billion generated in the month of June, 2019. On the anti-smuggling, the Command made 102 seizures, comprising - 7, 848 bags of foreign parboiled rice (50 kg each); 23 units of vehicles (seven used vehicles and16 means of conveyance); 32 gallons of vegetable oil (25 litres each); 201 pairs of used tyres; three sacks of used foot wears; 320 bags of sugar (50kg each); four bales and one sack of second-hand clothing; 200 gallons of PMS (Petrol) of 25 litres each, all with the total Duty Paid Value of above N137,950,082.00. He said, “The seizure of over 7, 848 bags of rice (50kg each) in the month of July, 2019 is indeed a landmark among numerous successes recorded by the Command. This is evidently a patriotic duty by the Service to fully align with one of the cardinal Federal Government policies targeted at boosting Agricultural Development with a view to attaining national food self-sufficiency.”

Sam Amuka-Pemu, Akinkugbe, Mobolurin, others for honour … as IoD Nigeria holds 16th President Investiture

ounder of Vanguard Newspaper, Sam Amuka-Pemu; elder statesman and boardroom guru, Olu Akinkugbe, managing director of Capital Bancorp plc, Tola Mobolurin, and the managing director of Beloxxi Industries Limited, Obi Ezeude, top the list of eminent professionals and business leaders to be honoured at the Investiture ceremony of Chris Olufunmilola Okunowo, F.IoD as the 16th President and chairman of Council of the Institute of Directors Nigeria (IoD), which holds on August 8,

2019, at the Civic Centre, Victoria Island, Lagos. The event, which will attract the cream of corporate Nigeria, has Alayeluwa, Oba (Dr.) Sikiru Kayode Adetona, Ogbagba II, Awujale and paramount ruler of Ijebuland as special guest of honour, while Bismarck Rewane, managing director, Financial Derivatives, will be the guest speaker and Olu Akinkugbe, as chairman. The Institute’s Investiture ceremony, which is held once every two years, is to officially inaugurate the new President www.businessday.ng

of the Institute. Apart from the swearing-in of the new President, the Institute also uses the opportunity to discuss issues of topical national importance in the area of Governance, Ethics and Leadership. The new IoD Nigeria president, Olufunmilola Okunowo, is a seasoned lawyer with over 36 years’ experience in both legal practice and the corporate world. He is the chairman/CEO of Chris-Kenneth Limited, Mastersound Entertainment (Nig.) Limited, Goodwill Investment Limited, Energycorp Resources (Nig.) Limited, among others. https://www.facebook.com/businessdayng

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Autarky: Nigeria’s Latest Populist Purple Dragon

David Hundeyin

he term “chasing the purple dragon” is a euphemism used widely within law enforcement circles, particularly those concerned with the use of heroin. As deadly as it is addictive, heroin creates an incredible sensation of relaxation and well-being every time a user injects it, creating a powerful craving for more. As a user begins to inject more and more in search of an imagined permanent high that will not wear of, they are said to be chasing a purple dragon – chasing an impossible outcome and destroying themselves in the process. Whether it is the search for nirvana through illegal substance abuse or the quest for an imaginary outcome through a crackpot religious or political ideology, the search for the elusive purple dragon always has similar characteristics and outcomes. The assumed goal is always grandiose and not thought out well, and the vehicle for achieving said goal always turns out to be ludicrous, bordering on insane when examined objectively. Most importantly, even though it should be manifestly obvious that the purple dragon will never be caught, the chasers never end their quest because it is driven by emotion rather than evidence. Autarky for You, Global Trade for Us The word ‘autarky’ refers to a national situation whereby the country is fully self-sufficient and independent of all international trade or assistance. There was a time in history when a Chinese Emperor’s ability to provide

sufficient rice to his army via the production of Chinese citizens was the most important metric by which his reign was appraised. Unsurprisingly, during the isolationist Cold War period in the 20th century, autarky was a central idea for Marxist states like North Korea and the USSR, from where it found its way into the popular African imagination via the influence of a certain legendary Ghanaian statesman. While the leadership of these countries did not restrict their individual tastes and consumption to local production, they sold the bad product of global isolation and needless suffering to their people under the banner of fervent, navel-gazing, nativist, jingoistic patriotism. Few things have the ability to galvanize human morale in the face of poverty like the warm, fuzzy feeling that comes with knowing that one’s sacrifice is for the greater good of one’s family, community, ethnic group, country or race. Defectors from North Korea who make it across the De-militarised Zone (DMZ) unanimously agree that the biggest change that comes with adjusting to the outside world is dealing with how much consumer choice exists. In North Korea, the diet is a harsh one dominated by poorly grown rice, fermented cabbage and hunger. North Korean leader Kim Jong Un on the other hand, spends an estimated $30 million a year importing alcohol for himself, in addition to a luxury diet heavy on cheese and imported Kobe steak. Luxury Japanese beef for Kim, rice and Kimchi for his people – for their own good of course. Closer to home, while we are inundated with messages decrying our “Imperial Contempt” for pushing back against a policy that will effectively ban milk imports into Nigeria – ostensibly to compensate for whatever makes the local dairy industry uncompetitive – those selling us the gospel of forgoing everything that makes us internationally competitive including foreign education do not live what they preach.

It may be our patriotic national duty to exclusively consume locally-made goods and services, but it is not their duty to invest enough in Nigerian universities and hospitals to reduce their own education and healthcare tourism. Russell Group universities and the NHS for political leaders, ASUU strikes and cockroach-infested hospitals for Nigerians – as God surely intended it. Numbers Don’t Lie The second problem with autarky is that it is fundamentally incongruous with the 21st century world of global supply chains and San Francisco neighbourhoods that import everything but produce computer code worth trillions of dollars annually. The ways of the Ming Dynasty have no relevance to the year 2019, which is why autarky can only be promoted through the purple dragon route. In the time-tested fashion of governments trying to sell ruinous economic policies to citizens, using patriotic bluster and nationalistic fervor, the federal government last week again deliberately and strategically missed the point of the debate around the CBN’s forex ban for milk imports. In an interestingly-timed tweet posted some hours after last week’s column, President Muhammadu Buhari said: “A country with a population of close to 200 million has to be able to feed itself. We cannot rely on importing food. This is why one of our priorities as a government is growing the food we eat. Our policies will continue to be focused on agricultural self-sufficiency.” Apart from the fact that this message ignored the economic arguments against agricultural autarky in the 21st century, the mention of Nigeria being able to “feed itself” is a clever insinuation that the country currently is fully, or at least overwhelmingly, dependent on food imports, which would objectively be a serious problem for a country with 180 million people. A related problem raised by such a scenario is that Nigeria must be hemorrhaging large amounts of scarce foreign exchange to food imports,

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…those selling us the gospel of forgoing everything that makes us internationally competitive including foreign education do not live what they preach

making the situation a real economic crisis. Do the numbers support these talking points however? In 2018, Nigeria’s total import bill according to the National Bureau of Statics was $36.5 billion. Of this figure, an estimated 17 percent went for importing food and beverages – about $6.2 billion in total. If you divide this figure by Nigeria’s estimated population of 180 million people, the figure comes to about $34 worth of food imports per Nigerian per year. In other words, the average Nigerian consumes an overwhelmingly local diet plus roughly N12,400 worth of imported food every year on average – hardly the fiscal emergency the government tries to make it sound like. Even more significantly as I noted last week, Nigeria has a balance of trade surplus, with food imports currently only the third-highest import category behind industrial machinery and capital goods, which cumulatively make up fully half of Nigeria’s annual import bill. Banning food imports would accomplish what outcome exactly? Would it make Nigeria’s local producers more competitive or better off when they still have one of the highest production cost profiles and most inefficient routes to market on earth? In the light of transparently porous borders, would it even have any effect other than raising food prices? Most importantly, at a time when Nigeria’s economic and fiscal outlook is as dire as it has ever been, is the message we want to send to the world one of an unserious petrostate committed to an autarkist ideology with none of the industrial, human or financial capacity to even come close to pulling it off? Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng/ David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Strikes, constitutions and ethnic unions: Nigerian history series 102

n the first episode of our history series, we discussed how ethnic cleavages had begun to emerge in early 1940s Nigeria. However, these divisions were by no means insurmountable or inevitable as demonstrated by one of the most successful examples of organized resistance in Nigerian history: the 1945 general strike. Following World War II, the British faced an upsurge in organized resistance from Nigerians unhappy with the steep rise in living costs that accompanied the wartime economy. Widespread dissatisfaction culminated in a coordinated 37-day general strike in 1945, organized by seventeen labour unions with ethnically-diverse memberships. The strike effectively shut down the colonial economy. It was called-off only after the British agreed to address demands for higher wages. The success of the strike shook the colonial government and made Nnamdi Azikiwe, who had actively supported the workers, a national hero overnight. One can easily imagine the psychological boost this successful collective action provided not just the unionists, but all those agitating for a greater say in their country’s affairs. Nigerians of various ethnicities had self-organized, collectively stared down their British overlords and emerged triumphant. Faced with such increasingly-coordinated Nigerian resistance and fearing a rise in Soviet-inspired communism within the unions, the British launched a far-reaching programme of socio-economic and constitutional development to pre-empt further radicalization. Such was the background for the emergence of the Richards’ Constitution of 1947. Named

after then Governor-General of Nigeria, Arthur Richards, the constitution was a landmark development, ushering in political regionalism by establishing semi-legislative bodies in each of the three regions - North, East and West. The regional legislatures would then choose from among their members’ representatives to a central legislative council which would, for the first time, see northern and southern Nigerians sitting together in a national political body. Two aspects of the constitution annoyed all of Nigeria’s nationalist leaders. First, Governor Richards had not sought their opinion in the crafting process, rendering it a completely foreignimposed constitution. Second, the regional assemblies created were toothless, mere ‘advisory’ bodies with no real legislative powers. While they gave Nigerians little more of an influence in administering their country than previously, southern leaders, however, were divided on other aspects of the constitution. While Zik criticized it for regionalizing politics in a colonialist effort to prevent the emergence of a pan-Nigerian consciousness, Awolowo, on the contrary, felt it had not gone far enough in acknowledging Nigeria’s ethnic diversity. The Richards’ Constitution was drafted ‘without regard to ethnological factors,’ Awo argued. He wanted a federal constitution, saying each ethnic group ‘no matter how small must be given the opportunity to evolve its own peculiar political institutions and must be autonomous with regard to its own internal affairs.’ Igbos had no business in Yoruba or Fulani affairs and vice versa, was his general position.

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In his 1947 book, Path to Nigerian Freedom, Awo declared ‘even as many as 30 to 40 regional Houses of Assembly would not be too many in the future United States of Nigeria.’ Remarkably, this 1947 vision is today’s reality with Nigeria divided into 36 federating units, each with its own House of Assembly. Whether what is in place constitutes a genuinely federalized system is another matter altogether. While both critical of the Richards’ Constitution, Awo and Zik thus differed on the optimal structuring for Nigeria. While Awo was consistent in his federalist vision, Zik wavered between unitarianism and federalism. In 1943, he advocated dividing Nigeria into eight largely autonomous regions reflecting the ethnic diversity of the country, a federalist stance par excellence. In 1949, Zik went even further, demanding ‘self-determination for the Igbos’ in an ‘Igbo state based on linguistic and ethnic factors’ during a speech often cited by pro-Biafrans today. However, by 1951, Zik had switched to supporting a unitary Nigeria, only to return to federalism by 1954. While Ahmadu Bello had not yet emerged the dominant voice in northern Nigeria during the Richards’ Constitution era, northern elites supported regionalization with the fallout from the new constitution only strengthening this tendency. As mentioned earlier, the constitution incorporated the North into the central legislature for the first time. Northern elites came face-to-face with the reality their region’s future was linked to the South. Yet they knew northerners lagged behind southerners education-wise as the latter had embraced Western education in contrast to

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Remi Adekoya the former. The Richards’ Constitution was a stark reminder of this reality when it emerged there were not enough qualified northerners to properly represent the region in the national legislature just as there were not enough qualified northerners to run the region’s civil service, staffed mostly by southerners. Believing a centralized system would seal southern domination of their region, northern elites favoured allocating as much power as possible to the regions and as little as possible to a central authority. At a meeting of the Nigerian Legislative Council in March 1948, Tafawa Balewa, Nigeria’s future first prime minister, expressed northern sentiments at the time in no uncertain terms: ‘Many [Nigerians] deceive themselves by thinking that Nigeria is one, particularly some of the press people…this is wrong. I am sorry to say that this presence of unity is artificial, and it ends outside this chamber…the Southern tribes who are now pouring into the North in ever increasing numbers and are more or less domiciled here do not mix with the Northern people…and we in the North look upon them as invaders.’ Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

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Shakespeare as Nnanyelugo of Stratford-upon-Avon The Public Sphere

CHIDO NWAKANMA

illiam Shakespeare is Stratford-upon-Avon as Stratford is William Shakespeare. Four hundred years later, the good name and exploits of one citizen continue to define, mould and enrich his hometown. It is a fantastic study in the power of reputation. The first thing that struck as the bus parked at the Stratford Leisure Centre was the number of buses. I counted 40. Our team left Birmingham City University on three buses. The one bearing us had 31 passengers. The coaches came from various parts of England and the UK. According to our guide, the population of Stratford-upon-Avon is, on average, 50, 000. It swells to four million during summer as people troop into the town to walk the lanes and streets Shakespeare walked. As they do so, they spend reasonable sums on various artefacts, food and drinks, contributions, plays by the Royal Shakespeare Company and more. Almost everything the tourists do in this town revolves around William Shakespeare. Stratford hitherto had a strong manufacturing base. It is no longer the main draw. William Shake-

speare is the attraction. S t r a t f o rd - u p o n -Av o n i s t h e Nnanyelugo benefitting from Shakespeare’s bequest. It refers to the goodwill and glory a father brings to his children. The Bible proclaims this kind of person as a good man that leaves a legacy. The Shakespearean legacy is enormous and positive. From the Information Centre, you walk straight into a garden by the Avon River. There are statues and carvings, mainly reflecting characters from various Shakespearean plays. The figure of Lady Macbeth and Hamlet are crowd favourites as is that of Shakespeare. Facing you is one of three theatres run by the Royal Shakespeare Company. You can stay to watch a performance or entertain yourself with the open-air live renditions out in the garden at the church end. Then there is the Holy Trinity Church. Its leaflet proclaims, “Holy Trinity is the church where William Shakespeare was baptised, where he worshipped and where he is buried. We are delighted to welcome the thousands of visitors who come each year to view his final resting place. We are also an active parish church serving the needs of local people”. People have worshipped in that church since 713AD and the current building since 1210AD. The church draws the attention of every visitor to the tomb and grave of Shakespeare. The Bard of Avon died on the same day of his birth: 23 April. He left a curse for anyone who would turn his remains around, so they left it ever since. The renowned English poet, playwright and actor was born in 1564 in Stratford-upon-Avon and died in 1616. The three residences of the Shakespeare family are a massive draw. People troop to the Shakespeare Birthplace

where he was born, to the Shakespeare New Place, his building in later life and the one belonging to his wife. The City and the Government ensure that maintenance is top-notch. Macbeth was recommended reading for Literature in the West African School Certificate in my year. It was such a great eye-opener. Shakespeare got the nihilist Macbeth to utter these memorable lines: Out, out, brief candle! Life’s but a walking shadow, a poor player That struts and frets his hour upon the stage And then is heard no more. It is a tale Told by an idiot, full of sound and fury Signifying nothing. Shakespeare’s own life shaped out differently. In the Twelfth Night, he urges, “Be not afraid of greatness. Some are born great, some achieve greatness, and others have greatness thrust upon them.” His greatness casts an extended, positive aura upon his hometown. The power of reputation works for Stratford-upon-Avon. Fame is a critical driver of tourism. People visit places with positive renown. Any number of factors can serve as the draw. The experts list elements such as new money, affordable travel, particularly airfares, the growth of corporate travel and experiential travel. Experiential travel such as the visit to Stratford is growing across the world as people want to share positive experiences. Experts repeatedly assert that tourism has probably the best potential to add to the growth of the African economy. Landry Signe’s 2018 report, Africa’s Tourism Potential: Trends, drivers, opportunities and strategies affirms, “The tourism industry is play-

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Almost everything the tourists do in this town revolves around William Shakespeare. Stratford hitherto had a strong manufacturing base. It is no longer the main draw. William Shakespeare is the attraction

ing an increasingly important role in the global economy, contributing 5 per cent of gross domestic product (GDP), 30 per cent of service exports, and 235 million jobs. Indeed, each year, approximately 1 billion people travel internationally. By 2030, consumer spending on tourism, hospitality, and recreation in Africa is projected to reach about $261.77 billion, $137.87 billion more than in 2015. From 1998 to 2015, service exports, including “industries without smokestacks” such as tourism, have grown about six times faster than merchandise exports in Africa”. The tourism ecosystem pulls in participants from various sources. We did not set out for this purpose. The International Summer School at Birmingham City University attracts students at different levels of higher education. Our PhD class from the School of Media and Communication, Pan-Atlantic University spelt “mature” in comparison with the teens from Asia. There were no fewer than 15 institutions from five countries. China alone accounted for nine, with Taiwan, Spain, Mexico, and Australia. Africa had Nigeria and Uganda. Will Nigeria tap into tourism and its enormous potentials? Shakespeare says in Act 1, Scene 11 of Julius Caesar, “The fault, dear Brutus, is not in our stars, but in ourselves.” Modern translators make it a straightforward declaration, “It is not in the stars to hold our destiny but in ourselves”. 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.

The last lesson from Mourinho’s leadership style

ose Mourinho recently made revealing comment indirectly admitting the unsustainability of his leadership style in the current dispensation. He wants to put happiness ahead of winning trophies and is also open to managing a national team since no top club is coming for him. The decision of the Chelsea Football Club to snub Jose Mourinho with his experience and profile for Frank Lampard, a one-season tested coach, is instructive for leaders who achieve results in ways detrimental to the culture of their organisations. One would have expected Chelsea FC would to be the saving grace for Jose whose experience could help the club before the end of her ban in the transfer market. His greatest admirers, the fans of the club have turned their back on the Special One and would instead take the risk of allowing the club’s legend, Lampard to fail or succeed. Is it that Chelsea FC is no longer hungry for trophies or they would rather be a club with a peaceful dressing room atmosphere and low exposure to negative press than having the Special One back? Clubs like Juventus, Paris Saint- Germain, Real Madrid and even the little rated Newcastle snubbed Jose because they put their core values and brand above the likely trophies Mourinho could bring to them. I once referred to Jose as an artisan who treats his work tools with disdain and expects the best performance from the tools. He wants to achieve results at all cost to meet his psychological needs as the best coach, but many times creates environments not in line with the culture of the clubs he is trying to make great.

This is significant conflict in the objective of the manager and the way the clubs might want to be seen in the social media dispensation. I guess Mourinho’s laxity in the area of managing his players and the workplace cost him more than he ever envisaged at this time of his career. He’s noted to have said that he’s such a good and respected coach and he can get another job within two weeks if Chelsea FC sacked him in 2008. And truth be told, he was offered the job to manage Inter-Milan within a few weeks of his exit from Chelsea. He won the Champion leagues for Inter on 22nd May 2010 leaving Italy for Real Madrid in Spain as the most controversial coach in the Italian league within two years. What has changed for José Mário dos Santos Mourinho Félix? Why are the clubs snubbing this great tactician for other coaches with fewer records of job-related performance but with little or no history of negative press and conflicts in the dressing rooms? Football is leaving Jose Mourinho not because his skills as a coach are entirely out-dated. I have questioned the relevance of tactical periodisation, Jose Mourinho’s favourite style in my article Parking the bus workplace. The players of today, unlike the days of John Terry and Claude Makelele at Chelsea, prefer to be under pressure as an offensive team, not a defensive team as practiced by Jose. However, Jose is still a good coach. What organisations like Juventus, InterMilan, Real Madrid, Chelsea and other clubs that have snubbed Jose recently did was to put their core values and organisations’ culture

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above the glory of winning laurels. The clubs want to achieve results decently and respect the goose laying the golden eggs. They want to spend less time resolving avoidable conflicts and do less of public relation management where what is presented to the public space is better than what is experienced by the internal stakeholders of the club. It is not only the football clubs that need to be conscious of the way they treat their staff. Business owners and leaders must also stop the celebration of leaders who achieved results violating the staff and enjoyed the benefits of indefensible behaviours. We are no longer in the machine age where people can be treated without recourse to their emotions. All companies should be mindful of how their leaders treat people, including the internal customers who are labouring to create value for the other stakeholders. One of my clients was surprised when I insisted that a top-performing staff not living the core values of the company in terms of respect for others must be shown the exit door. I explained to the business owner that it is better to lose a performing staff than to corrupt the entire system and damage the brand of the company. Some of the indicators of workplace where results are achieved in ways devoid of respect for people include but not limited to having a strong key man board member that encourages sycophancy. The value of the strong key man is ultimately the culture of the company. Other indicators are companies that chase their peers in the industry without a strategy to win in the market place but through undue pressure and

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Positive Growth with Babs

Babs OlugbemI abuse of their workforce. Such an environment is where the performance outcomes and rewards benefit leaders at the expense of the staff that made it happen, a place where loyal staff are eased out without reason other than short-term financial returns, and many other unwholesome practices, including high budget for managing the media and killing negative news about the company. In places where unruly leaders are tolerated for profits, the results are often unsustainable, and the system will also benefit the leaders at the detriment of the staff who are the best assets of the company. For our society to succeed, we must create sustainable institutions. We must respect the people and know that we are not in the age where slavery can produce results without side effects. Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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

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Ekiti’s partnership with Promasidor as a new paradigm

midst uncertainty about the federal policy on milk, the Ekiti state government and frontline consumer goods player Promasidor Nigeria Limited raced off the starting block in July. They agreed on a collaboration that would see Promasidor Limited engage the facilities at the Ikun Dairy Farm for production of milk. It is the kind of partnerships that Nigeria needs currently. Promasidor Limited had grown its portfolio since the successful introduction of its marketchanging Cowbell powdered milk sachets. Then as now, power supply was inadequate, making storage difficult, but citizens were limited only to liquid milk. The packaging and product presentation innovation of Promasidor with Cowbell offered convenience and choice to consumers. Promasidor today boasts a rich portfolio of brands in dairy, seasoning, and teas. On its part, the Ekiti state government established the Ikun Dairy in the 1980s under the civilian leadership of Adekunle Ajasin.

Collaboration between Ekiti state and Promasidor should lead to the effective utilisation of a wasting asset of one of our states. Promasidor would establish and run a standard ranch. It would apply best practice in farm management. Backward integration was a clarion call for many of Nigeria’s manufacturing entities in the 1980s. The country’s manufacturing sector took up the challenge and delivered very many positive outcomes. We remember many success stories. Ni g e r i a n B r e w e r i e s worked with researchers in Nigerian universities to develop and introduce a beer brand made from sorghum. Sorghum was also the wonder crop with Cadbury Nigeria Plc as its research and development team developed a process for malting sorghum. Indeed, so successful was the research that Cadbury developed a patented process for its Cereal Conversion Plant that then-President Ibrahim Babangida launched in 1990 as part of that company’s 25th anniversary celebration. Many other firms recorded significant successes in their backward integration efforts.

It is a measure of Nigeria’s inconsistency with policies that a number of those efforts were rolled back. Businesses set up to take advantage of the seeming dynamism in policy and the opportunities the emphasis on backward integration created lost out as major manufacturers reverted to their foreign suppliers of raw materials. The policy summersault was a disincentive to enterprise. BusinessDay welcomes the efforts by Promasidor and Ekiti state for its inherent promise. It would boost the operations of one of our primary and committed firms in the consumer sector. It would be a boost to agriculture and support the efforts of the Central Bank of Nigeria to push for higher productivity in the livestock and dairy chain. With backward integration, companies move backwards one or more steps in the production chain to ensure control of one aspect of the process say, raw materials or semiprocessed goods. There is the expectation that backward integration would lead to cost savings, increased revenues, stability in supplies of critical components of the manufactur-

ing process and improved efficiency in production. With proper handling, backward integration could yield a competitive advantage to a manufacturer and create barriers to new entrants if their control of the source of raw materials is significant. What’s more, the partnership is an example of the current paradigm in the management of stateowned enterprises. Governments in developing countries are increasingly divesting their stakes in the enterprises into minority holdings while allowing private sector players to run them. The advantages include allowing the state a stake in an enterprise run according to best practices while ensuring full utilisation of otherwise wasting state assets and resources. In the interest of accountability and transparency Citizens of the state must have full knowledge the partnership with Promasidor, including equity structure, tenure, rights and obligations of parties, dividends and profit-sharing as well as the composition of board and management. Its our hope the Ikun Dairy Farms yields a positive narrative.

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The youth unemployment problem

Tracy Osokolo

rson Scott Card says, “Unemployment is capitalism’s way of getting you to plant a garden.” Though I take sides with him, I am aware that the process of planting the garden can still be herculean without necessary skills. Bringing this home to Nigeria, a country experiencing a dramatic population explosion, and projections of 401 million people by 2050 of whom 75 percent will be between 15 and 24 years old, it’s safe to say that Nigeria is really stewing in a complex problem. A preferred name for this problem would be “youth disengagement”. Our government acknowledges it but, unfortunately, according to Kofi Annan, the late former UN Secretary-General, “very few governments think about youth unemployment when they are drawing up their national plans”. The economic theory of demand and supply thrives when describing the nature of youth unemployment. “If demand increases and supply remains unchanged,” the Encyclopaedia Britannica posits, “then it leads to higher equilibrium price and higher quantity,” and vice versa. Essentially, we have more people than we need for existing labour. Worse yet, these “more people” lack the

appropriate mind-set or skills-set to perform on the job. The psycho-social development of our youth is slow. The shift from hard work to “soft work” seems to define what they consider “work”. There is a mental shift from being productive to being rich. Once upon a time, they believed in success by hard work and commitment. The new focus is a theme of “get rich or die trying” and quick riches by “owo gbono” (money ritual). Our youth define themselves based on external materialism instead of their intellectual abilities, leaving little room to think in solutions; instead they zone in on their challenges and dwell there. This ‘Generation X’ emphasises money as the solution to all problems, as opposed to an intelligent mind, skilled energetic hands and a willing spirit. They don’t accept that we go to work to make a difference, and in making a difference, you get paid. An employable mind is made up of experiences through travel, mentoring platforms, academic learning through research and theory formulations, hands-on skills to facing real life problems, and a social environment which supports “birds of the same intelligent feathers flocking together”. The many unemployed Nigerian youths do not seem to possess these qualities. Hence, they remain unemployed. The solution lies with an inner drive or propensity for self-disciple, tutelage, endurance and ‘inquisitivity’. Our cribstyle support culture doesn’t encourage young people to make career decisions on their own, let alone early. In 2017, I interviewed a 24-year-old Nigerian graduate who kept calling her father at every stage of her contract-signing process with my lawyers. She possessed no mind of her own. Obviously, she didn’t fit my business model.

In contrast to the West, numerous Nigerians consider it taboo to leave home at 18 in search of work and dutifully expect their family to support them financially, even into marriage. Our youth exhibit high levels of an “entitlement mentality” making internships, volunteering and holiday jobs unappealing. These features are the torch-bearers of an innovative economy. It means there isn’t unemployment; there are unemployable youths. Education policies should be designed to make learning more practical than theoretical. I’m passionate about schools introducing side-dish classes and crash courses on ‘how to create wealth’. I’ll testify that nearly everything I know today about value creation, or how to make money and trap wealth, wasn’t taught in any classroom I’ve sat in. I learnt them in the real world. We can speed up the process of youth employment by teaching them the secrets of ‘work well done’; introducing the concepts of sales margins, mark-ups, unique selling points and profit generation. Our youth must be encouraged to aspire to making an outstanding difference. I’ll elucidate this with $100,000 being awarded to the Big Brother Naija winner, as opposed to N10,000 awarded to the winner of the National Essay Writing Competition. As human nature suggests, people gravitate towards the greener grass. This is also another reason why the number of Nigerians in diaspora is increasing. The West is cherrypicking the best of what is left of Nigeria’s promising youth through emigration schemes. If the best keep leaving, then who will think for us? Who will save us? It’s common in Nigerian universities to have students study only to pass exams and not to learn. Students barely invest time and resources on reading to understand, writing to express their

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Our youth must be encouraged to aspire to making an outstanding difference. I’ll elucidate this with $100,000 being awarded to the Big Brother Naija winner, as opposed to N10,000 awarded to the winner of the National Essay Writing Competition

thoughts, and testing out those thoughts in experiments, because their minds aren’t curious for unexplored knowledge. It’s on these actions that proper self-development hinges. We need to change the way our youth learn; first at home and then in school. These are the places with the greatest influence on their development. We need to change their belief systems by permeating their psycho-social consciousness through community groups – where they play, fellowship or even shop. Ellen Johnson-Sirleaf agrees with me when she says “there is no easy fix on youth unemployment [as] partnership between the public and private sectors can make a huge difference”. We need to do something about social media, the internet and television. We need to change the message that it shares with our youth or remove the “messaging icon” altogether. We need a supportive environment for positive growth that can be measured physically, socially, economically, culturally, financially and spiritually. We need strong platforms for role-modelling at home, in school and at play. Change the influences on the youth, their beliefs and the impressions on their character. Work on them from the inside out. After this phase, we’ll start an ecosystem for new knowledge and new skills, creating policies favouring entrepreneurship thus helping them develop their own incomes. With tax rebates and other trading advantages in our business space, we’ll be employing more youths. We should advertise this every day because, if we change nothing, then nothing changes.

Osokolo, a creative writer and author of ‘Red Pepper and English Tea’, writes from Lagos

Why Beijing’s ‘managed float’ of renminbi has drawn US ire

he Trump administration’s formal designation of China as a currency “manipulator” on Monday night was dramatic, coming just hours after Beijing finally allowed the renminbi to slip through seven to the dollar — a level it had flirted with repeatedly since 2016 but never breached. It was also largely symbolic. For now US President Donald Trump’s Treasury department will seek consultations with the IMF over possible remedies to what it believes is a rigged system. The designation did, however, highlight one of the central conflicts bedevilling Chinese and US trade negotiators, who are as far as they have ever been from a final settlement after almost 18 months of fruitless talks. In area after area, the US is demanding structural reforms that the Chinese Communist party believes would undermine the stability of the world’s second-largest economy. The Chinese currency’s “managed float” is one of the best examples of this divide. At the start of each trading day, China’s central bank sets a “reference rate” against which the renminbi is allowed to rise or fall no more than 2 per cent in onshore trading. While there are no such constraints in the renminbi’s main offshore market in Hong

Kong, trading there is dominated by large state-owned financial institutions that do Beijing’s bidding when needed. For US officials this allows Beijing to move the currency as it sees fit by, for example, directing it downwards against the dollar to offset the impact of the punitive tariffs Mr Trump has slapped on about half of all Chinese exports to the US. Chinese officials and analysts counter that the renminbi is effectively market-driven but with sensible controls designed to avoid wild fluctuations, such as last year’s sell-off of the Turkish lira. “The renminbi’s depreciation through seven to the dollar was a market move, not a government target,” says Guan Tao, a former official at the country’s foreign exchange regulator now teaching at Wuhan University in central China. “It is a result of what the US government has done [during the trade war] not what the Chinese government has done.” If anything, Mr Guan and other Chinese officials argue, the Chinese government has worked to prevent what would have been an even more rapid devaluation as Mr Trump repeatedly escalated the trade war, putting further pressure on China’s already slowing economy. “The renminbi is depreciating mainly because of market pressures related to the trade war, disappointing second-quarter economic data and the [Chinese] government’s crackdown on

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domestic financial risks,” says Zhang Ming at the Chinese Academy of Social Sciences in Beijing. Many international observers agree with this view and the Trump administration is unlikely to get a sympathetic hearing when it brings its complaints to the IMF. In its last annual review of the Chinese economy, released in July 2018, IMF staff argued that “the renminbi remains broadly in line with fundamentals” and also “welcomed the increase in the flexibility of China’s exchange rate, which should continue”. In a statement issued on Monday night, Chinese central bank governor Yi Gang said that the move through seven to the dollar would not affect the PBoC’s commitment to “fundamental stability” for the renminbi. On Tuesday morning, the central bank set the renminbi’s daily reference rate at 6.97 to the dollar, although it then quickly fell to 7.06 to the dollar. “The [renminbi] could come back below seven before breaching it again,” Wang Tao, chief China economist at UBS, said in a research note. “We expect the PBoC to tightly manage exchange rate expectations and prevent [the renminbi] from depreciating significantly.” Ms Wang added that even if Mr Trump does impose 25 per cent tariffs on all Chinese exports to the US over coming months, the renminbi will not move significantly below

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TOM MITCHELL & XINNING LIU

7.2 to the dollar this year. Four years ago, former PBoC governor Zhou Xiaochuan introduced reforms that gave the central bank less flexibility to set the renminbi’s daily reference rate, tying it more closely to the previous day’s close and overnight dollar movements in Europe in the US. But the initiative was poorly communicated and sparked a prolonged bout of market turmoil that spooked President Xi Jinping’s administration. In response, Mr Zhou watered down his reforms and implemented tough new capital controls. “Our controls on capital outflows are already strict,” says Mr Zhang at Cass. “The possibility of a vicious cycle where depreciation of the renminbi leads to capital flight, and capital flight leads to more depreciation, is very low.” FT

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Thursday 08 August 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

CONSUMER SPENDING

Analysts predict gloom for consumer goods makers BALA AUGIE

nalysts and procrastinators, looking through the flames of fire, see a bleak outlook ahead of consumer goods makers, with a strong hunch that companies will struggle throughout 2019. “Margins will continue to be pressured as long as the economy is harsh and consumer wallets subdued,” said Yinka Ademuwagun Research Analyst - United Capital Plc Fuelling such negative prognoses is the delay in the appointment of ministers perhaps more worrisome is that these cabinet members are yet to be assigned portfolio, casting a pall on the policy direction of the President Muhammadu Buhari led administration. The incessant delay in the implementation of key strategic policies such as the minimum wage increase and power sector reforms has continued to undermine industry growth. Industry operators have continually complained that

unstable powers from the grid have forced them to switch to more expensive energy mixes that are bloating overhead costs. Nestle Nigeria’s net profit margin, increased by 2.64 percent to 18.24 percent in June 2018 and 2019. This compares with 2.28 percent margin expansion in 2017 and 2018, but lowers than the 12.90 percent expansion in 2016 and 2017. Unilever Nigeria’s net margins dipped by 3.64 percent to 8.24 percent in June 2019-18, and it also fell by 3 percent in 2018-17, but margins increased by 4.76 percent in 2017-16. Nigerian Breweries’ margins fell by 2.86 percent to 7.81 percent in June 2019-2018, and margins dipped by 2.45 percent in 2018-17, but margins increased by 1 percent in 2017-2016. Dangote Sugar’s net margins fell by 1 percent to 13.65 percent in June 2019-2018, this compares with a 1 percent increase in 2017-2016, and this compares with 3.93 percet increase in June 2017-16. The trend analysis shows that companies were able to turn each aira invested in sales into higher profit

in 2017, a period when the introduction of a new foreign exchange policy the central bank eased the flow of foreign currency in the system. Also, companies passed rising cost of production on consumers in form of higher price. However, the road to higher margins and profitability for the firms appear to be increasingly uphill as economic recovery has been sluggish since the country existed a recession in the third quarter of 2017.

Post-recession, growth in real household consumption peaked at 3 percent in the final quarter of 2017, before falling to 1 percent in the second quarter of (Q2) 2018. Nigerians are getting poorer as over 50 percent of a population of 200 million live on less than $1.98 dollars a day, as the country overtook India to become the world’s poverty capital. The country’s GDP expanded by 2.01 percent in the three months through

March 2019, from a year earlier; that compares with 2.4 percent expansion in the fourth quarter. While inflation figure for the month of June fell to a 12 months low of 11.22 percent, the figure, however, falls below the central bank’s target range of 6 percent and 9 percent. The near term outlook for the consumer goods firms is unimpressive. The macroeconomic environment has not supported growth in revenue.

And those growing revenue are not efficient, according to Opeyemi Ani, consumer goods analyst at Cordros Securities Limited. “They are now going into retail like schematizing their products to meet the need of the low-income earners. It used to be about brand but now winners are those that are able to bring down price,” said Ani. Further analysis shows Nascon Allied Industries’ net margins was flat at 9 percent in June 2019-18, and it reduced by 6.85 percent in 2018-17, but it rose by 1 percent in 207-16 Ninety-four percent of chief executives of manufacturing companies across the country say congestion at the ports significantly affects productivity, a 2019 second quarter CEOs Conference Index show. In the survey, which was conducted by Manufacturing Association of Nigeria (MAN), the CEO complained that delays in clearing raw materials and machinery often result in high demurrages which increase production costs and slow down manufacturing operations.

DEALS

COMPANY

Campari set to acquire French liquor firm Rhumantilles amid plans to strengthen Rhum business

Samsung’s Q2 2019 profit plunged 56% on weakening memory demand

OLUFIKAYO OWOEYE

n a bid to grow its markets across markets, the world sixth largest spirit maker, Campari, has entered into negotiation with to buy French firm Rhumantilles. Rhumantilles produces Caribbean Rhum Agricole brands via its Bellonnie & Bourdillon Successeurs (BBS) unit. It is owned by Compagnie Financiere Chevrillon and a group of minority shareholders. According to the company, the scope of the transaction could include not only the brands but also the related distilleries. Not to mention the land holdings, visitor centres, and a high-quality aged rum inventory. After the planned acquisition, Campari Group is expected to have an opportunity to add popular Rhum Agricole brands to its offer-

ing and expand its exposure to rum in Nigeria and other markets. According to Campari, its sales in the second quarter jumped 6.9percent in the second quarter buoyed by increasing popularity of its orange aperitif Aperol Aperol and a jump in demand for tequila brand Espolon This is a premium category that is currently at the heart of the ‘mixology’ trend and growing cocktail culture, with the acquisition, Campari Group will have the opportunity to add significant critical mass in the market. Campari Group said that it will provide the key financial terms of the transaction after a positive conclusion of the negotiations. The spirits market in Nigeria is witnessing a surge in total volume growth buoyed by the ‘sachetization’ of some spirit and Rhum brands which has aided its affordability among www.businessday.ng

low and medium-income earners in the country. For many such consumers in the country, sachetpacked Spirit and Rhum drinks are an affordable alternative to more expensive products, such as wine and beer, particularly as less can be consumed to achieve desired ‘highness’. In 2018, Nigeria Distilleries led total volume sales of spirits, thanks to its wide range of affordable brands. The gin and schnapps brands such as Seaman’s Schnapps and Lord’s Dry Gin are very popular amongst consumers of spirits in Nigeria as they are widely consumed at traditional weddings and festivals across the country. Also, brands from Intercontinental Distillers, led by Chelsea London Dry Gin, Eagle Aromatic Schnapps and Action Bitters, were amongst the best-performing brands in their categories in 2018.

…sets new date for Galaxy Fold screen launch OLUFIKAYO OWOEYE

iggest phone-maker by market share, Samsung, has been severely hit by a major decline in the chip market. In its Q2 2019 earnings, the company posted an operating profit of $5.6 billion, which is down by a whopping 56% compared to last year while consolidated revenue came in at $47.4 billion. However, compared to the first quarter of the year, both revenue and operating profit increased. Weakness in the memory market was the primary reasons behind the massive plunge. Samsung says it expects demand for memory chips to grow in the second half of the year but warns volatility in the market is likely to persist.

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Samsung’s mobile business posted consolidated revenue of $21.86 billion (25.86 trillion won) and operating profit of $1.32 billion (1.56trillion won) for the quarter. Even though the global smartphone market saw demand decline during the quarter, Samsung’s smartphone shipments increased over the previous partner, driven by the success of new Galaxy A series phones such as the Galaxy A50 and A70. However, sales of its flagship Galaxy S10 fell compared to Q1, apparently due to stagnant demand for premium products in the market. The consumer electronics division did quite well in the second quarter, posting $9.36 billion (11.07 trillion won) in consolidated revenue. Samsung is planning to maximize end-year sales of @Businessdayng

large-screen TVs by “positioning QLED 8K TVs as mainstream TVs.” It will also focus on lifestyle products such as Bespoke refrigerators and AirDressers in the second half of the year. In the third quarter, Samsung says it will focus on the launch of the “innovative” Galaxy Note 10 and expanding its 5G smartphone lineup. In the meantime, four months after it delayed the retail launch of the Samsung Galaxy Fold’s screen phone, Samsung said it has made “improvements” to protect the Galaxy Fold’s screen and will begin selling the folding phone soon, Samsung now says the Galaxy Fold will be available for purchase at an unspecified date in September. Samsung has confirmed the price will remain the same as before, $1,980.

Thursday 08 August 2019

BUSINESS DAY

Retail &

consumer business

CONSUMER SPENDING

Nigeria’s ‘sachet economy’ continues to expand on depressed consumer wallet Endurance Okafor

he Nigeria’s stunted economic growth that is squeezing the wallets of consumers is paving way for the ‘sachet economy’ to expand at a pace faster than the country’s GDP. Survey by BusienssDay revealed that since the 2016 recession, Fast Moving Consumer Goods (FMCG) companies have been rolling out sachet products to enable them penetrate the larger low-income market which has been hit by the harsh contraction breeze. “Nestlé introduced single serve packs as a strategy to ensure that consumers continue to have access to the nutritious food they need even in the current economic reality. This is in line with our purpose to enhance quality of life and contribute to a healthier future,” Victoria Uwadoka, Corporate Communications and Public Affairs Manager at Nestlé told BusinessDay. Sachet products or single serve packs as they are normally called in the FMCG industry are products that can be used or consumed at once

or for a single meal. “According to our conversation with the companies and the market, the winning strategy is to play ‘cheap’. Given the nature of the current economy where consumer wallet is depressed,” Yinka Ademuwagun, Research Analyst, FMCGs, United Capital Plc told BusinessDay. On the consumers’ side, they are happy to find small unit products that are affordable for them to consume without having to clean up all their income. After all, the smaller size of the products does not affect the quality of the content, instead it gives low income earners the opportunity to have a taste of what only the rich would have ordinarily be able to consume. Egbon, as he fondly called by his mates, Ayo Ogunleye, is

a conductor who works with a bus on the Orile- Ojuelegba route. According to the middle age man, he would have to spend his two days salary for him to afford a bottle of whiskey. “Since they introduced this sachet hot whiskey kind of drinks, I can buy as many as 5 a day, in total it cost me less than N500,” Ogunleye, told BusinessDay adding that he will “forever remain grateful to whoever came up with the idea to start producing sachet drinks.” The five quarter recession which started in the first quarter of 2016, according to some distributors affected the performance of their big pack products in the market as the purchasing power of most Nigerians were eroded forcing them to increase their demand for smaller unit of

products. Nigeria economy has been growing sluggishly as GDP expanded by 2.01 percent in the three months through March from a year earlier; that compares with 2.4 percent expansion in the fourth quarter. While inflation figure for the month of June fell to a 11 months low of 11.22 percent, the figure, however, falls below the central bank’s target range of 6 percent and 9 percent. “This has been a long term trend. With the average Nigerian consumer facing stagnant income and higher commodity prices, it becomes imperative to provide some of these products in affordable smaller sizes. Thus, consumers buy what they need at a point in time as they make income,” Ayorinde Akinloye, a Lagosbased Research Analyst said. According to data by the

National Bureau of Statistics (NBS) as analysed by BusinessDay, Nigeria’s economic growth rate since 2015 has remained lower than the country’s population growth rate of 2.6 percent On the impact the smaller packaging has had, Uwadoka said that “Nestlé has been able to retain consumer loyalty which is a strong contributor to the company’s business growth over the years.” Hardly is there any FCMCG company that has not manufactured a single serve pack in Nigeria, BusinessDay survey has showed. From cooking ingredients, washing products to wine and soft drinks, there is now available unit of the products. According to analyst, despite the effort and strategy by the FMCGs in Nigeria, their bottom line still remained depressed. This is as a result of the fact that most of the products manufactured in the country are not able to compete with imported or smuggled and unbranded products. Of the firms on the Nigerian Stock Exchange 30- the list of the most liquid companies- consumer goods firms are more vulnerable to the

macroeconomic headwinds. The combined revenue of 10 largest firms quoted on the floor of the bourse dipped by 2.63 percent to N752.014 billion in June 2019 from N772.14 billion the previous year. “The current macro environment is not business friendly, Most of the companies have to generate their own power, Bad roads for distribution, No matter how low they try to go the smuggled products will always beat them to price,” Ademuwagun said. Dangote Sugar’s revenue fell by 4.15 percent to N80.36 billion in the period under review as smuggling and influx of cheap products continues to undermine earnings. Dangote Flour Mills’ revenue’s sales reduced by 13.95 pecent to N48.74 billion in the under review as against N56.35 billion the previous year. However, Nestle Nigeria’s sales increased by 5.05 percent to N141.91 billion in June 2019. The growth in Revenue has been largely driven by solid growth in Beverage business as the Milo RTD pack continues to gain widespread acceptance in the marketplace.

CONSUMER SPENDING

Tolaram Group introduces ‘Goodlife Magik’ to Nigeria N40bn juice market

How FX restriction on milk importation will affect mothers, children

David Ibemere

Tolaram Group has made its entrance into the fruit drink market worth over 60 billion by the Federal Government with the launch of its “GoodLife Magik” fruit drink for children on Monday in Lagos. Over the past years, lack of local players in the space has continued to be a major concern for stakeholders, with the Raw Material and Research Development Council (RMRDC) claiming that despite Nigeria abundance of fruits, produces less than 25 percent of local fruit juice demand. The new drink which comes in three variants Or-

ange, Watermelon & Mango, will be riding on three unique selling propositions of Healthy, Nutritious and Great Taste according to Harkishin Aswani, Managing Director, Tolaram Group, will bring a unique experience for children fortified with key nutrients such as Vitamin-C and Glucose that improve immunity and give energy. Speaking during the launch, Aswani said the fruit drink is specially targeted at children who require all the beneficial nutrients they can get, to grow and function optimally. “Tolaram Group is one of the largest manufacturers in Nigeria and the group has consistently produced strong household brands keeping in mind the consumers’ we hope to create another success sto-

ries, the fruit drink is targeted at children with key nutrients such as Vitamin-C and Glucose that improves immunity and and offers a great natural taste and comes in unique and attractive packaging,” he said. Aswani, however, appealed to everyone present to continue supporting the group as it grows, while assuring Nigerians of the commitment towards creating another Nigerian success story. Bamidele Abiodun, wife of the Executive Governor, Ogun State, commended the group for its unflinching efforts in putting smiles on the faces of Nigerians through the introduction of numerous brands which have over the years expanded so large and are actively topping the charts in their respective categories.

BUNMI BAILEY

onsumers are already constrained with the weak income and purchasing power in the economy, unemployment keeps rising and Nigerians are getting poorer. To expiate the already anaemic situation of consumers, the Central Bank of Nigeria (CBN) plans to restrict Foreign Exchange (FOREX) allocation on the importation of milk and its products in a abide to drive importers to produce milk locally. And the understanding of this policy according to consumer experts means that prices of milk will increase because importers of milk products will have to source

dollars from the black market or the parallel market which is more expensive than the CBN’s window and pass the cost to the final consumer. Also the country does not have the local capacity and infrastructure to produce milk in quantities that will feed a teeing young population that crave for milk consumption. Regrettably, mothers and children from the ages of 6months -7 years old will be at the receiving end with this new policy. Of course adults can go for milk but they can take tea without it. On the other hand, children will find it practically difficult to cope without milk. Eronmosele Aziba, Consumer analyst, Tellimer Group, said, “In my own opinion, mothers will be most affected because they don’t have choice

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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but to adjust their budget to accommodate the increase in milk price. There is no other alternative to milk.” “They have to give their babies and kids milk because it is essential for them. You don’t expect mother who after stop giving breast milk for after six months to give them solid food. They need something that they can easily take in,” Aziba further said in a telephone interview. Milk contains lots of nutrients like calcium for strong bones and teeth, protein, for growth and energy, vitamin A, for eyesight and immune function, vitamin B12, for production of healthy cells, Iodine, to regulate the metabolism, magnesium, for muscle function and phosphorus, for energy release.

Thursday 08 August 2019

BUSINESS DAY

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Thursday 08 August 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

FINTECH

Carbon, former Paylater, turns profitable as revenue more than doubles to N3.73bn OLUWASEGUN OLAKOYENIKAN

igerian financial technology (fintech) company Carbon, formerly known as Paylater, returned to the path of profitability last year after a disappointing 2017 which saw the company lose N111 million despite doubling revenue. After-tax profit of the financial services startup rose 232 percent to N147 million in the 2018 financial year as against a loss of N111 million recorded a year earlier, thanks largely to gross earnings which grew more than double to hit N3.73 billion from N1.57 billion. Gross earnings of the digital financial services company did not only balloon in the 2018 financial year, it also reduced its liabilities by more than half in the review period with the key profitability margin returning to the positive territory.

Carbon began operations in 2012 and within the space of six years, it grew revenue steadily, reaching an all-time high of N3.73 billion in full-year 2018. In the same year, loans and advances to customers rose to N2.57 billion from N 1.63 billion. While some startups are concerned about the negative impact of opening their financials for the public to see, Carbon took the bull by the horns by unveiling its results with an assurance that it would make public subsequent results in a bid to gain client trust, an unusual move in Africa’s fintech space. “Over the last year, the Paylater app has transformed into a digital financial services platform that now offers bill payments, credit reports, fund transfers and savings products, in addition to loans,” the company said in the released financial results. “The brand Paylater, therefore, is no longer a true reflection of

who we are, and our promise to customers.” Total liabilities of Carbon fell to N1.54 billion from N3.2 billion recorded in the same period of 2017, while shareholders’ equity,

which is fund payable to the owners of the business, rose marginally by 0.57 percent to N1.75 billion. The profit margin of the firm, a key profitability metric that measures how

much profit a company generates from every naira of its revenue, stood at 3.94 percent against a loss margin of 7 percent recorded in the previous year. This clearly shows that

for every N100 the company realised as revenue in the review period, it generated N3.94 as profit, indicating an improvement from the loss it recorded from N1.57 billion.

LOGISTICS

Trans-nationwide grows mid-year profit by 318 % despite slowdown in courier segment SEGUN ADAMS

rans-nationwide reported that it grew profit 318 percent to N18.59 million in six months to June 2019. The surge was on account of improved revenue of the Lagos-based logistics firm which rose 13 percent from N362.65 million last year, as well as income from exchange gains and disposal of assets. T ra n s - n a t i o n w i d e posted N410.35 million as revenue although it saw a slowdown of 4 percent in courier services, its largest income segment. Across other segments, Trans-nationwide made 40 percent more from its Logistics business, 19.58 percent more from Internal mailing, 250 percent more from Mass mailing and some 5 percent higher

revenue from Freight. The company’s other revenue segments that did not improve are Mailbag, and Warehouse. Direct cost for Trans-nationwide increased to N158.35 million, 3.8 percent over N152.54 Million recorded a year ago. The rise in direct cost was driven by a sharp increase in freight expense. Given the faster pace of growth in revenue, gross profit of Trans-nationwide rose by 19.94 percent to N252 million. The performance meant the transport and distribution company made N61.41 from every N100 it earned as revenue in the period. This is N3.47 more than it made last year. Trans-nationwide almost doubled its other income in the half-year period which the company posted as N6.67 million.

Exchange gains spiked 168.18 percent while assets disposal of N4.84 million supported income. In the period also, the company incurred higher administrative expenses of N235.78 million in mid2019 as against N205.56 million, a year ago. Transnationwide also saw its finance expense rise 69.81 percent in the period. Notwithstanding, the logistics firm was able to post 211 percent higher profit before taxation and a constant tax expense from H1 2018 buoyed earnings by 318.32 percent in the period. Give n th e p e r fo rmance, Trans-nationwide retained N4.53 as profit from every N100 revenue in 2019 half-year, from N1.23 per N100 revenue in the same period of 2018. Shares of the company remained flat at 77 kobo at

the close of trading Tuesday. Year-long, Transnationwide shares have advanced by 18.46 percent, outperforming the benchmark equity index

which was down -12.42 percent same day. Trans-Nationwide Express Plc is a transport and distribution services company involved in do-

mestic and international Express delivery, haulage, freight, and other ancillary transportation and storage services.

L-R: Abdulrahman Abdulrasaq, Governor, Kwara State presenting the Federal Government Award of Excellence for Outstanding MSME Clinics partners to Ayodele Olojede, Head, Emerging Business; and Obiageli Pat-Ibekwe, Regional Sales Director, Abuja & North West, all of Access Bank Plc at the National MSME Awards 2019 in Abuja recently.

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

Thursday 08 August 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TECHNOLOGY

Flutterwave opens up Africa-China trade market through Alipay partnership JUMOKE AKIYODE-LAWANSON

lutterwave, a payments technology platform, has announced its partnership with Alipay of China, thereby opening up Africa’s market to Chinese buyers. The partnership enables Flutterwave, a Nigerian-founded B2B payments service – primarily for companies in Africa to accept payment from customers on the continent and abroad – leverage on Alipay’s global network of more than 1 billion active users, per Alibaba’s latest earnings report. With a large portion of Alipay’s network situated in China, the shrewd move will see Flutterwave, capture payment activity around an estimated $200 billion in China-Africa trade, which

Flutterwave CEO, Olugbenga Agboola said will mean that, “All our merchants can accept Alipay as a payment method. “ Commenting further on this initiative,Agboolasaid“Thisisn’t an unprecedented move. The answer to why we’re opening up Africa to the Chinese buyers, lies in what we have set out to do since inception. We set out to provide the complete payment solution for Africans to thrive in the global economy, and this is exactly what this partnership will achieve, as the complete payment solution would first require interconnectivity within Africa which we are already winning at, then connectivity from Africa to the world. In 2010, airlines averaged less than one flight a day between China and Africa. Now, it’s eight direct flights on the average. Imagine what being able to accept Alipay payments will do

for duty-free shops at Africa’s airports for instance.” Flutterwave which counts Uber, Wakanow, Arik Air among other multinational businesses amongst its customers seems to be winning in its mission to shrink the trading gap between Africa and the rest of the world. “I think we’re beyond a tech company now, we’re also a construction company, as we are building a bridge to Africa from China, the world’s longest virtual bridge, if you like,” Agboola concluded. Founded in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Since inception, the payment platform has processed over 100 million transactions worth over $3 billion.

L-R: Lara Dahunsi, training and program coordinator, Lagos State Traditional Medicine Board; Akinola Olumide, supervisory councillor for health, Shomolu Local Government; Rufai Olatundun, senior nutrition oficer, Lagos state ministry of Health; Adekitan Adetoke, nutrition programme officer, Lagos State Primary Health Care Board, and Uche Ralph-Opara, team lead, alive and thrive, Lagos State, at the launch of Zero Water Campaign, dissemination of National Maternity Assessment report and public presentation of exclusive breastfeeding video to mark this year›s World Breastfeeding Week in Lagos

Allianz Nigeria gets consumer top rating, pays out N3m cashback bonus MODESTUS ANAESORONYE

llianz Nigeria, local operating entity of global insurance giant, Allianz appears to be getting it right with the retail segment of the market. Head of Customer Experience at Allianz Nigeria, Uti Ellu recently disclosed that they now score an 80 percent satisfaction level based on ratings by over 1,000 retail customers. “We launched an API that integrates to our insurance suite and generates a link to rate the company following any consumer interaction such as policy inception or claims settlement” explains Uti. She continued: “the customer receives an email prompting them to follow a link and rate their satisfaction level on a 1-5 scale. The aggregated score from over

1,000 customer respondents as at end of H1 2019 places the company at 4 star or 80 percent pass mark”. Commenting on their key source of competitive advantage, Owolabi Salami, executive at Allianz Nigeria clarifies: “We ensure that all of our people always talk straight. Then, we make certain that we walk the talk. If we say we will pay your claim, we pay it. We try to avoid resorting to evasion tactics like requesting supporting documents that were never in the picture from the start. This is crucial in building trust.” Owolabi believes that once you can create the trust connection with customers, they simply keep coming back. The company has consistently been paying 15 percent premium cashback bonus to clients who do not have a claim after insuring for 24 months in a row. Uti explains

that this is yet another way the company endeavors to talk straight and walk the talk. “We don’t offer the 15% bonus as a renewal discount; we don’t insist you have to stay. We simply write you a check or transfer the cash direct to your bank account – there is zero obligations”, she adds emphatically. In the first half of 2019 alone, the company has paid cashback bonus of N3m to nearly 100 customers. The Allianz Group is one of the world’s leading insurers and asset managers with more than 92 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from Property, Life and Health insurance to Assistance services to Credit insurance and Global Business insurance.

Continue online @ www. businessday.ng

Jobberman, TATC engage HR executives on discovering, retaining top performers in organizations MICHAEL ANI

he cost of a bad hire or exit is on an average, three times the annual salary of that position once all bottom-line costs are included in calculations, industry experts say This is an outrageous cost and one of such reasons why Human Resource leaders must ensure their companies hire the right talents and effectively plan for succession at all levels, the experts said at the 2019 edition of the Human Resources workshops organized by The African Tal-

ent Company in Lagos. The event featured over 50 HR Experts and Top Business professionals across different sectors of the economy, who gathered at the Radisson Blu Hotel in Lagos Nigeria to discuss human resource management strategies that help organisations plan for the right hire, identify, develop and retain top-performing talent and position teams for seamless succession. “When you find good people, in an organization, HR executives need to make the value proposition of the firm interesting to them at every stage of their journey

with the firm, so they can be motivated to deliver more,” Hilda Kragha, CEO for Jobberman said while chairing a panel discussion. While deliberating on how HR could identify top performers and retain them, Martin Sutherland who was a panellist said, “personalisation of employee’s engagement was important by ensuring they use tailor-made and strategic processes to deliver a career growth and support plan that was relevant to each individual”.

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L-R: Kehinde Oyelade, head, human resources and administration, LS SCIENTIFIC Limited; Nwigwudu Agnes, laboratory manager; Olumurewa Odunjo, MD, LS SCIENTIFIC Limited, and Olukoya Adewale, head marketing and business development, at the LS Scientific Laboratory launch and equipment expo, in Lagos.

L-R: Ibukun Odusote, permanent secretary, Ministry of Environment, and Adetokunbo Kayode, president, Abuja Chamber of Commerce and Industry (ACCI) at a meeting between ACCI and the Ministry on furtherance of efforts by to commercially develop the Waste to Wealth sector and discussed areas of strategic partnership in Abuja. Pic by Tunde Adeniyi

L-R: Oyefeso Kemi, Mayflower Old Students Association (MOSA) vice president; Ademola Adeniran, Ogun State House of Assembly Member; Akinlesi Rotimi, MOSA president; Segun Ogunsanya, CEO/MD, Airtel Nigeria; Dada Abiodun, past MOSA president; Opeoluwa Osisanya, MOSA financial secretary; Abdul Olawale, MOSA vice president 2, at the 25th Year Remembrance Anniversary of Tai Solarin, at Mayflower School, Ikenne to celebrate and commemorate the legacy of the venerated educator who founded the school in 1956.

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Thursday 08 August 2019

BUSINESS DAY

cityfile Faouk Yahaya, General Officer Commanding 1 Div. Nigeria Army, lead other officers from the division during an operational visit to Birnin Gwari in Kaduna State on Tuesday. NAN

Abia community laments herders’ invasion of farmlands GODFREY OFURUM, Aba

he Akwete Council of Chiefs, in Ukwa East local government area of Abia State, has urged the state government to implement the anti-grazing law passed by the state House of Assembly in order to check the continued invasion of their farmlands by herders and their cattle. The council in an interaction with journalists in Akwete, also noted that the implementation of the antigrazing law would stop imminent crisis between the community and herdsmen. Chinonyerem Kamalu, a member of the council, who spoke on behalf of others, lamented that their

…seeks state’s intervention farms were being ravaged by the herdsmen and their cattle, which leaves their crops damaged with huge records of losses. “What you people came for is to hear our complaints and this is very important to us. In Ukwa East and in Akwuete in particular, we have problems with cattle herdsmen; our people’s major occupation is farming outside the weaving done by women. “And today, we no longer have any farm free from the menace of cattle herdsmen. “They ravage our farms day and night, they sleep there and most of our bush-

es are eaten up, while we are leaving it to lie fallow for few years so that they can take up enough manure. “If you go to our farms now you will see only few shrubs, but the grasses are all cleared and under this condition, our farms can no longer grow food properly”, he stated. To our greatest surprise, few weeks ago, the youths killed one little cattle belonging to the cattle herders by mistake. “But the community was forced to pay the sum of N170,000 to the herders, through the Abia government. These cattle roam in the night, when you come in the morning, you

Flood destroys farmlands, crops in Plateau communities

lood caused by persistent rainfall has destroyed farmlands and crops worth millions of naira in three communities of Kalong, Doka and Bakin Kogi in the Shendam local government area of Plateau. Alhamis Yokden, the information officer of the local council, said in Jos that the farmlands were submerged by flood as a result of the heavy rain that continues to fall in the affected areas. According to him, most of the farmlands affected are located within the river banks. He, however, confirmed no life was lost in the disaster although the river overflowed to some residential areas.

“Last Saturday farmlands and crops at Doka, Kalong and Bakin Kogi communities of Shendam were destroyed by flood. “Maize, banana, and rice farms worth millions of naira were washed away by the flood. This is a colossal loss to farmers as individuals, and to the local government and the state. “Though no life was lost, but this will certainly affect government’s revenue and personal income of the farmers,” the information officer said. He said that a delegation from the local government led by Williams Hitlong, the council’s vice chairman, visited the affected communities and assured them of government’s intervention. www.businessday.ng

He said that the vice chairman during the visit appealed to those residing around river banks to relocate to safer areas, to avert loss of lives and property in future. Juliana Bala, the director in charge of emergency and relief in the State Emergency Management Agency (SEMA) confirmed the incident on Monday. “Yes, we are aware that flood washed away a good number of farmlands in three communities in Shendam. “Already, the local emergency committee has gone to the affected communities for assessment and we are also getting set to move in and assess the level of damage,” Bala said.

will only see your farms ravaged, which leaves the farmers always crying for the damage done to their crops, by the herders and their cattle. We want these things to be made known to the government, to ensure that they stop the herders because we are now slaves in our own land to herdsmen,” said Kamalu on Monday. Among members of the council present at the meeting were Gabriel Achuta, chairman of the council, Okere Eruba and Onyema Olujie, Rawlings Nwakamma, Bernard Akwara and the leader of Akwuete youths, Nkemdirim Ogwo.

Oyo alerts public to fake job racketeers REMI FEYISIPO, Ibadan

yo State government has alerted the public to be wary of individuals going about extorting money from unsuspecting job, promising to secure them teaching with the State Universal Education Board (SUBEB). Chairman, Oyo SUBEB, Nureni Adeniran who made this known while interacting with journalists in his office on Monday said many people have contacted him on the purported recruitment by SUBEB. According to him, parents, guardians and potential job seekers should be careful so as not to fall into the hands of the unscrupulous elements that are poised to dupe them in the guise of selling employment forms and assisting in get-

ting jobs. “Oyo State government’s attention has been drawn to activities of syndicates extorting money from unsuspecting members of the public under the guise of recruitment in the teaching services of the state. Members of the public are advised to disregard such information; it is false and misleading. He, however, stated that while efforts were ongoing to track the fraudsters. Adeniran noted that the necessary medium of relating with the public would be used any time the board is to advertise recruitment. “ The general public should note that Oyo SUBEB has not begun any form of recruitment exercise. Therefore, the information is targeted at deceiving unsuspecting members of the public,” he said.

Fake lawyer, 42, docked in Lagos

42-year man, Charles Nwadiani, who allegedly claimed to be a lawyer, has been docked before an Ikorodu Magistrate Court. Nwadiani is currently facing a six-count charge bordering on impersonation, forgery, obtaining under false pretences and resisting arrest. The prosecutor, Gbemileke Agoi, told the court that the accused committed the offence in 2017 at Igbogbo Town in Ikorodu. Agoi said that the defendant falsely presented himself to Shamsodeen Ali as a lawyer and used such to extort money from unsuspecting members of the

public. According to the prosecutor, Nwadiani also presented himself to members of the public as a special adviser to former Lagos State works commissioner, Rauf Aregbesola. The prosecutor further said that the defendant used forged business documents bearing Nwadiani and Co. to operate an illegal law office at Igbogbo. He said that Nwadiani unlawfully collected the sum of N1.45 million from Ali with the pretext of providing him legal services. Agoi said the offences contravened several sections of the Criminal Law of Lagos State, 2015.

Makinde sets up task force against market hazards REMI FEYISIPO, Ibadan

overnor Seyi Makinde of Oyo State has set up a task force to curb environm e nt a l haz a rd s at t h e popular Gbagi market in Ibadan. Gbagi market, like Idumota market in Lagos, a n d A r i a r i a m a rk e t i n Aba, Abia State is densely populated and attracts international patronage. Since its inauguration on May 29, the Makindeled administration has not hidden its disdain for filthy environment. Before the new admin-

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i s t r a t i o n , u n a p p rov e d market stalls had distorted the original design of the Gbagi market just as waste management had become a concern for the government. Members of the committee include its chairman, Sanitarian John Oyewole, Dapo Atoyebi, G.O Oladele and Oyelakin Oyedokun. According to the chairman, the committee has the task of looking into environmental nuisance currently bedeviling the market and proffer solutions by reaching out to all stakeholders. “With the terms of ref@Businessdayng

erence we were given, the committee is principally saddled with the responsibility of coming up with re co m m e n dati o n s ta rgeted at the current environment situation within Gbagi market in order to prevent environment pollution, epidemics and fire outbreak among others. “In view of this, the task force is inviting lett e r s f ro m m e m b e r s o f the public on challenges presently confronting the market as well as appropriate recommendations to the same effect and submit such documents to the committee,” said Oyewole.

Thursday 08 August 2019

BUSINESS DAY

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Thursday 08 Augsut 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open (26– 07–19)

31,924.51 27,918.59

N13.606 trillion

27,918.59

Week close (02– 08–19)

27,630.46

N13.464 trillion

27,630.46

Year Open

Percentage change (WoW) Percentage change (YTD)

-1.03 -12.09

2,241.37

The NSE-Main Board

1,456.29 1,134.06 1,111.26

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

778.18

1,158.47 1,133.34

971.49

114.00

578.37

229.16

1,794.20

1,062.60

971.49

328.09

112.20

549.04

226.73

1,786.07

1,073.06

962.89

779.54

-0.16

-2.01

0.17

3.87

-22.82

-1.80

-2.17 -20.03

-1.55 -17.76

-1.58 -11.29

-5.07

-1.06

-26.68

-24.98

H2’19: Will equities defy analysts’ views? Iheanyi Nwachukwu

his is truly not a good time for investors in the stock market. The negative sentiment on Custom Street is evidenced in the record negative return of about 12.4percent seen in the market yearto-date (ytd). In the absence of significant market catalysts, many analysts are still not bullish on the possibility of the market closing positive in this second-half (H2) of the year. Though, lately equities may have defied market fundamentals that hitherto spur positives in their pricing , the question now is whether the market can disobey some analysts in their earlier views on negative close in the near future. The bears have continue to reign lately on the Nigerian Bourse as investors (foreign and local) largely remained on the side-lines in search of clear cut policies to guide their investment decisions. In addition to new listing on the Nigerian Bourse, the first-half (H1) earnings season is almost over without corresponding uptick in equities prices. Lagos-based United Capital analysts in their August 1 equity market note asked whether they market will continue to ignore fundamentals. The analysts overall outlook for equities is tepid in the second half (H2) of 2019 “despite the positive monetary policy stance in the global space.” In their August 6 note, Vetiva Capital research analysts who said they foresaw a session of milder bearish trading on Wednesday,

-0.45 -20.05

0.98

-0.89

-13.31

-20.25

Ellah Lakes gets shareholders approval for N1.5bn share capital Iheanyi Nwachukwu

however did not rule out the possibility of bargain hunting on the deflated prices of select names. It is worth noting that the directions of market heavyweights like MTN Nigeria Communications Plc and Dangote Cement Plc could determine the outcome of the trading sessions ahead. To Fiona Ahimie, Managing Director, FBNQuest Securities, “We advise investors to allocate a portion of their investible funds to equity solutions, in line with their risk appetite especially at these times when the share prices of many companies are testing new lows, as equity markets are expected to provide higher returns over the long term.” “As more and more investors apply the concept of asset allocation, we expect to see growth in allocations across our solutions in this asset class”, Ahimie said in a recent note on the markets.

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“Amidst mixe d corp orate earnings, our outlook for equities in the short to medium term remains conservative”, said Cordros Capital analysts said in their April 1 note. Though, Lagos-based research analysts at Afrinvest had expected to see some bargain hunting in early trades this week, “supported by positive earnings releases on some stocks,” but following the paucity of foreign portfolio investors’ participation in the local bourse, they anticipate that the lingering bearish sentiments would drive a negative close at the end of the week. United Capital had imagined the likelihood of a late recovery by fourth quarter (Q4) of 2019 and estimated a -0.1percent year-on-year (y/y) return for equities by end of 2019, capping market uptrend at 31,399.1 points due to the absence of pro-market policy reforms which may continue to constrain momentum despite strong

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fundamentals. According to the analysts, “despite the somewhat dovish tone across major central banks in the advanced economies since the beginning of first-half (H1) 2019, FPI flows into equities continued to taper amid increasing interest in short-dated debt securities in Nigeria.” By the National Bureau of Statistics (NBS) reckoning, FPI flows continue to account for the bulk of capital imported into Nigeria even as the net foreign purchases gap on NSE became wider in H1-19.” “Even though the argument for a rebound is increasingly compelling from a technical standpoint, uncertainties in the domestic policy environment linked to structural vulnerabilities are unlikely to change in the short term. Yet, primary market activities may support the overall performance of the broader index”, United Capital analysts further stated.

@Businessdayng

llah Lakes Plc received approval of its shareholders at an extra-ordinary general meeting to increase its authorised share capital from N1billion to N1.5billion by the creation and addition of 1billion ordinary shares of 0.50 Kobo each, such new shares to rank pari passu in all respects with the existing ordinary shares. The Company also received authorisation to raise additional capital either through debt or equity or a combination of both. This is in line with ELP’s ambitious growth plan which requires significant capital investments in the medium term. Also approved was the appointment of new Non-Executive Directors, namely: Olumide Akpata, Chijioke Dozie, Hauwa Nuru, Shehu Abubakar, Maxwell Oko, Evans Gbubemi Jakpa and Nnenna Onyewuchi. Speaking on the EGM, the CEO, Chuka Mordi, commented: “As we mentioned during our listing process in June 2019 we would be seeking to raise additional capital for the Company and today we have received approval from our shareholders to increase our authorised share capital to N1,500,000,000. This provides us with the flexibility to enhance our capital structure while we pursue our aggressive growth plan in the medium term and ensure we deliver value to our shareholders.

Thursday 08 Augsut 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Investor’s Square

United Capital Investment Views

Earnings fail to sway sentiments…

he equities market resumed its declining trend last week, as the Ni g e r i a n St o c k Exchange (NSE) All Share Index (ASI) dipped 1percent week-on-week (w/w), a drastic fall compared to the marginal decline recorded in the preceding week (0.3basis points w/w). Earnings momentum failed to sway the market in a positive direction, as the NSE ASI remained below the 27,000 points level, closing the week at 27,630.46 points. The year-to-date (YtD) return stood last week at -12.1percent ; the worst level recorded in 2019. Consequently, the market capitalization lost about N141.3bn in value, to close at N13.5tn. Additionally, average volumes traded declined by 28.7percent, partly due to the re-introduction of Value Added Tax (VAT) charges on capital market transactions. Narrowing down to the sectoral indices, red was the color of the week as four out of five indices declined w/w. The

3percent to N467.7billion, with PBT falling 16.2percent to N155.5billion. Finally, FBN Holdings recorded 0.8percent growth in gross earnings to N297.8billion, with profit before tax (PBT) up by 2.6percent to N39.9billion. For this week, we expect performance to remain lackluster, as investors continue to digest earnings releases while awaiting the results of the remaining major Tier 1 & 2 banks in Nigeria. Money Market: CBN stays clear of OMO auction The money market opened the prior week on a tight note and was further pressured by CBN’s weekly wholesale FX funding sales as rates rose steeply to trade at 40percent60percent levels. However, FAAC credits (estimated at c. N366bn) posted in the later hours of Monday provided some succour to the system as rates trended lower to 13percent-14percent levels. By Thursday, the liquidity level received an additional boost, as OMO T-bill maturities (N88.6bn) hit the system amid the absence of an OMO auction. Meanwhile, inflows

Industrial Goods (+1percent) sector maintained its position as the largest gainer, owing to significant increases in JBERGER (+13.8percent) and BERGERPAINT (+8.7percent). The Consumer Goods (-5.1percent) sector recorded the largest decline, on the back of a fall in NB (-16.8percent). The Banking (-1.6percent), Insurance (-1.6percent) and Oil & Gas (-1.1percent) sector indices all fell w/w, pulled by sell-offs in ETI (-5.3percent), CUSTODIAN (-9.8percent) and TOTAL (-9.9percent). Also, financial results continued to file in, in the wake of the 30th July deadline for submission. Notably, SEPLAT reported revenue growth of 4percent to N108.9billion and a PBT growth of 0.4percent to N36.9billion. DANGCEM’s H1-19 revenue was down

from Nigerian Treasury Bills (NTB) maturity and retail FX refunds were later mopped up via NTB and retail FX funding sales. In all, average interbank funding rates –Open Buy Back (OBB) and Over Night (O/N) rates trended lower from 22.5percent to 6percent. The Apex bank conducted its bi-monthly NTB auction, wherein it successfully refinanced total maturing bills worth N223.2bn. The level of demand was positive as total bids came in at 1.7x the offered amount. Compared to the prior auction, stop rates dipped by 15basis points (bps) on the mid tenured bill, while the short and long tenors inched up 1bp and 41bps respectively. Elsewhere, at the secondary NTB market, a mixed bout of buying and selling interest

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characterized the week as the improvement in system liquidity spurred some buying interest while the primary market NTB sales spurred the selling interest. On a w/w basis, the bears outweighed the bulls as average yield inched up by 13bps w/w to close the week at 11.2percent. This week, we anticipate a bullish bias at the secondary market, especially if the CBN continues to stay off the OMO market. Bond Market: Sovereign Eurobonds halt bullish streak Secondary market activity was swayed by a bullish bias in the prior week. This was as we saw some buying interest from investors looking to reinvest funds from coupon payments on the FGN 2022 instruments. Additionally, a mixed bout of demand for FGN 2019, 2022 and 2037 notes was observed, while some selling interest was seen in the FGN 2026 and 2027 notes. In all, average bond yields compressed marginally by c. 2bps w/w to close the week at 13.3percent. Elsewhere, the Eurobond market halted its recent bullish streak as traders react to the less than expected dovish comments from the US Fed. Additionally, declines in crude prices further fuelled some of the sell-offs. Consequently, yields on FGN dollar bonds notched higher across the curve as the average yield was up by 26bps w/w to 6.4percent. However, interest in Corporate Eurobonds remained largely positive as all the corporate dollar notes we track recorded decline in yields, given their relatively attractive yield. Consequently, the average yield for the corporate segment declined by 9bps to 6percent. We expect yields to remain relatively stable at the bond market as investors continue to hunt for a bargain across the curve. In the Eurobond space, we expect some renewed interest in FGN Eurobonds on the back of the ongoing dovish chorus, strengthened by the US-China never-ending trade spat. FX: A mixed performance For the week ended 2nd August 2019, the rate of exchanging the naira for a dollar remained mixed across the windows we track. At the I&E window, NGN/USD rate dipped 295bps w/w to N362.6/1$ while those from the official market inched 49bps northwards to N306.9/1$.

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

Economy & markets

Experts make case for unified FX rate in Nigeria Iheanyi Nwachukwu

he Financial Derivatives Company (FDC) on Monday July 29, 2019 hosted stakeholders in Lagos to discuss the unification of foreign exchange (FX) rates in Nigeria to enhance the African Continental FreeTrade Agreement (AfCFTA) which was signed by President Muhammadu Buhari early last month. It was a unique opportunity for industry leaders to engage in interactive sessions and encourage the use of the AfCFTA provisions to fix Nigeria’s exchange rate problems. The colloquium featured two panel discussions urging stakeholders to advocate for greater market determination and the use of a single exchange rate for the Naira. At the forum, the International Monetary Fund (IMF) stated the need for Nigeria to consider unifying its FX rate, saying it will help the country’s competitiveness in the regional and global trade. In his presentation at the forum, Amine Mati, International Monetar y Fund (IMF) senior resident representative and mission ch i e f f o r Nig e r i a sa i d , “Countries with multiple exchange rates have lower growth and higher inflation.” “A more flexible exchange rate in a reform scenario in Nigeria could boost Gross Domestic Product (GDP) in the medium term. Nigeria has Investors’ & Exporters’ FX Window (I&E FX Window), CBN Official rate, Parallel Market rate, Retail Secondary Market Intervention Sales (SMIS) and Wholesale SMIS and these stifle growth and raise inflation,” he said. According to Mati, “Multiple exchange rates have different implications across different countries in the world. We have analysed the situation in Sub Saharan Africa (SSA) and have noticed that each country is able to succeed as a result of the policies that have been put in place to counter challenges.” “The IMF’s policy has been consistent on this issue,

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such that, we advise for the unification of exchange rates and the Central Bank of Nigeria (CBN) and Economic Recovery and Growth Plan (ERGP) are already working in this direction to ensure that the country has a unified exchange rate,” said the IMF representative and mission chief for Nigeria. T h e b ro a d o b j e c t i v e of the AfCFTA is to create a single continental market for goods and services, with free movement of business persons and investments, paving the way for accelerating the establishment of the Continental Customs Union. Additionally, the AfCFTA is expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources. In his opening remarks, B i s m a rc k J. R e w a n e, Managing Director/Chief Executive Officer of Financial Derivatives Company (FDC) said, “Greater trade can trigger deep structural change by increasing production efficiency and spreading knowledge and technologies across countries. In this case, Nigeria needs complementary structural reforms that can boost efficiency in sectors where we have competitive advantage.” He said, “Unifying the exchange rate will impact the Nigerian economy more positively than the current multiple exchange rate regime does, which creates opportunity for arbitrage,” thereby also making a strong case for a unified exchange rate regime. Moses Tule, Director of Monetary Policy Department at CBN, said “Mati’s presentation @Businessdayng

showed us multiple exchange rates in advanced countries between 1955 and the year 2000. That is 45 years. In the midst of that, these advanced economies were also administering a stream of other incentives to different sectors of their economies, in the form of subsidies.” He said, “Multiple currency practices in Nigeria, if identified, is less than 10 years old. Which means between 1955 and 2000, the advanced countries had the opportunity to put requisite infrastructure in place and make things right before removing multiple currency practices.” “What is wrong if we give preferential treatment to importers of oil, so that they get dollar at N305/$, and then deliver it to Nigerians at certain price, so that it does not extend or transmit into inflation? Moving towards that target (6-9), we can move from 11 percent to 9 percent and then to 6 percent. The temporary exchange rate regime that seeks to achieve the long run term need of inflation can solve current problems”, Tule stated. “Monetary policy solves current problems and in the long run, the fiscal policy will solve the structural issues. Even if you have that in perspective, t h e n mu l t i p l e c u r re n c y practices, which Mati said he identified here, are very temporary measures”, he added. “Our desire is to address cer tain shocks that the economy is experiencing in the interim; expecting that in the long run, fiscal policies, working with monetary policies and structural policies, would have established a macro framework for economic growth”, the CBN director added.

Thursday 08 Augsut 2019

BUSINESS DAY

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Analysis

eTranzact: Positioning for increased market share, higher returns to shareholders …Over N30trn worth of transactions done on its platform in 2018 Iheanyi Nwachukwu

hile the dynamics of Nigeria’s electronic transaction switching and payment processing business is changing, major players in the industry like eTranzact International Plc are positioning to leverage the opportunities it presents. The financial technology industry has witnessed a rapid development within the last three years. This is in line with developments in the electronic payment system within the banking industry and the initiative of the Central Bank of Nigeria and the Federal Government to promote financial inclusion as part of the general macroeconomic framework. This rapid development in the electronic payment system has led to the emergence of many key players and stiffer competition with the industry. The financial, technological, workforce and corporate governance requirements have also changed to an unprecedented level as a result of key reforms within the sector. Preparatory to this, the premier electronic payment solutions provider had gotten the express approval of shareholders of the company to raise its authorised share capital from N2.1billion to N9.1 billion. The capital raise proposal of N7billion became imperative considering the need of the company to expand its operations, deepen its market share and to remain competitive in the financial technology industry. It will be used to upgrade and enhance the Company’s technology infrastructure and network security systems and also to improve on its service delivery. The Company will also invest in its Agent Network Expansion Program, Human Resources and Employee Development. The company which had gone through board/management restructuring is committed to achieving its set of strategic goals. “We have the money and technology to

Niyi Toluwalope, managing director/CEO, eTranzact

compete in the market. The N7billion equity capital raise will be closed before the end of this year. We are ready to compete and do bigger businesses. We are now more sectorcentric in our business strategy. We are still forging ahead with our strategies that are very clear. This is the beginning of a new thing to come”, Niyi Toluwalope, Managing Director/CEO of eTranzact, said in Lagos on Tuesday August 6. “We have investment in our people and products in line with the role we want to play in future. We are developing our Big Data strategy because Data is the next oil,” said Toluwalope, who led other members of the

company’s management to a media briefing. Last year, eTranzact did over N30trillion worth in various transactions on its platform. The company did over 400million specific transactions, the CEO noted. In 2018 financial year, it grew its revenue by 59percent from N11.68billion to N18.62billion. As a CBN licensed switching firm, the company is building a platform that will help the smaller Fintech firms to plug into its platform to consummate their transactions. Toluwalope believes that the injection of additional equity will enable the company’s management to strategically maintain the company leading position as a key market

leader within the electronic payment industry. He affirmed that eTranzact will acquire state-of-the-art infrastructure, ensure that the Company retains the best skill set available, achieve a fast response rate, reduce downtime, and expands its service offerings and market reach. Since Inception, eTranzact has deployed its mobile payment solutions to banks and non-bank financial institutions alike and was recently granted the license by the Central Bank of Nigeria (CBN) to provide Mobile Money services to individuals with a special focus on the unbanked. eTranzact International Plc is Nigeria’s first award winning multi-application and multi-channel electronic transaction switching and payment processing platform. The company has operations in Nigeria, Ghana, Kenya, Zimbabwe, South Africa, Cote d’Ivoire, and UK and is currently expanding operations to more and more countries in the world. ETranzact was launched in September 2003, and has today evolved into a brand with global reach extending its innovative services to include products which cut across virtually all aspects of the e-payment space; ATM, Internet, POS, and Mobile. It is a first fully operational multi-application and multi-channel electronic transaction switching and payment processing company that is publicly quoted on the Nigeria Stock Exchange (NSE). Its vision is: ‘To be a leading global provider of mobile transaction services, leveraging on our award winning mobile switching platform’ and since 2003, we have been at the fore front of delivering cutting edge electronic and mobile payment products and services to customers that cut across virtually all works of life.” The company is ISO certified, and its ISO Certification is a testament to eTranzact’s focus in adopting and implementing global and best practices to ensure effectiveness, efficiency, confidentiality and integrity in its day to day operations. This marks the beginning of a new journey for the company.

Ohara’s shareholding in Fidson increases to 21.57%

idson Healthcare Plc (Fidson), one of Nigeria’s leading pharmaceutical manufacturers has noted the execution of a strategic alliance with Ohara Pharmaceutical Company Limited (Ohara), a leading Japanese healthcare company. This alliance is a result of Fidson’s recent Rights Issue which saw Ohara’s shareholding in the company increased to 21.57percent. The strategic alliance is aimed at supporting Fidson in fulfilling its commitment to provide the Nigerian market with the latest healthcare products and services. Ohara, being a major player in the Asian pharmaceutical market, will bring cutting

edge technology and innovation through technology transfer, expertise, and knowledge sharing to enhance Fidson’s excellence and ascendency in the Nigerian pharma space. The alliance holds promise as a significant growth driver for both companies, particularly as a major factor for the development of local pharmaceutical manufacturing in Nigeria. The significance of collaborations of this nature to the emerging Nigerian healthcare system is evidently enormous, given the rapid population growth, the healthcare state and the living standards of the larger population in the country.

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Given this growing population, there is no doubt that Nigeria is in urgent need of a rapid improvement in the standard of healthcare delivery. This can only be accelerated through modernization and technological intervention which the alliance with Ohara aims to deliver. Ohara Pharmaceutical Company, Limited is a pharmaceutical company focusing on the businesses of orphan drugs and generic drugs. Its mid-term 3-year business plan started in FY2018 under the catchphrase “Challenge 2020,” with the key objective of “addressing unmet medical needs,” to advance management innovations and make the next leap forward.

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The company focuses on the development and marketing of orphan drugs mainly in the field of paediatric oncology and on the development, manufacture and marketing of generic drugs that give extra consideration to the prevention of medical accidents. Ohara plans to further expand these businesses into emerging countries, primarily in the Asian and African regions. Fidson Healthcare Plc is a leading pharmaceutical manufacturing company in Nigeria. Founded in 1995, the company is built on the five core values of Innovation, Excellence, Passion, Integrity and Ownership.

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Thursday 08 August 2019

BUSINESS DAY

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Thursday 08 August 2019

BUSINESS DAY

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Thursday 08 August 2019

BUSINESS DAY

BUSINESS TRAVEL

Nigeria is one of our top three biggest markets in Africa - Colleau Michel Colleau is the general manager, Air France KLM Nigeria & Ghana. In an interview with IFEOMA OKEKE in Paris, he speaks about Air France/KLM redesigned Airbus 330 and how this has improved customer experience on board. He also speaks on Nigeria’s key position in the African market. Can you speak about your redesigned Airbus 330 and why you invested a lot just to enhance customer experience? he re desig ne d Airbus 330 is great, especially with our Air France customer experience. What we experience in the lounges of Air France and KLM is the customer experience. We always improve our products with the intention to have the best of class of products and achieve customer satisfaction. Customers have the choice and they want the best. So that is why we strive to give the best customer experience always. How is this extra attention you give for customer experience affecting passenger traffic? Have you observed any increase? It increased the loyalty and confidence of passengers and allows us to take a greater part of this market because when customers are satisfied, their needs are being provided and they are known, understood and followed all along, they feel more inclined to come back. Even when you keep high standards of follow-up and support for customers, they feel confident and comfortable and they will come back. What position does the Nigerian market occupy in patronage and passenger traffic for Air France/KLM

in Africa? Nigeria is one of the top three countries in Africa. However, it differs year after year, depending on the economy of the country and competition, amongst others. However, Nigeria is among the top three, sometimes number one, some other times number two and some other times number three, in terms of market in Africa for Air France and KLM. So, you cannot be in Africa if you are not in Nigeria. You talked about attention to detail on the chairs, the bars and the entire space in Air France cabins. What does this entail? In Nigeria, we try as much as possible to strive for these details and we constantly follow-up our customers. We are 65 colleagues in Air France and KLM in Nigeria. Following the results of satisfaction on-board, in the lounge or purchasing areas, we have implemented training courses and projects. We care for our customers and we really try to give the possibility for every staff to know the customers, anticipate his needs and to be able to go the extra mile to make him comfortable. So, the experience is really personalised for customers and every staff. Every person is trained in Nigeria to give their best and make the customers comfortable. What is the secret behind your success as one of the

Michel Colleau

oldest airlines in the world, yet still retaining good market share? We always wish to enhance the customer experience and to give the best of the French service on board and on the ground. We try to take on board the best of what France has to offer, thereby achieving customer intimacy. Customer intimacy is something we do locally and we try to maintain the strategy of getting closer to the customers with the local teams that are permanently reminded and trained on how to do that.

We try to know the needs of our customers as regards this intimacy. For Africa and Nigeria, I will say we have built a history of trust. Air France/KLM operates 48 destinations in Africa. So, it is very convenient for people to travel using Air France/KLM. We operate the dual strategy, giving customers more flexibility. It is easy to combine the fares, from Paris, we fly to many destinations and from Amsterdam, we fly to other destinations. So, from Africa to Africa, either with Air France or KLM, you can really

go anywhere. For Nigeria, we are partnering very strongly with Delta Airlines to offer passengers flights into Atlanta and New York. We are aligning our approach to customers with Delta Airlines. For customers that fly to US, they can mix completely the fares and the product. You can fly one way to Atlanta; you return the other way to Paris. One other thing that makes us special worldwide and also in Nigeria is that 0n-top of the personalisation with customers, we have a dedicated approach to corporates in Nigeria especially in the oil and gas industry. We also have start-ups that create the need for travel. We have a separate approach for corporate customers and we give them regular discounts to the destinations they fly to. We have special products for SMEs and it is very flexible because either you are into cargo or passenger operations, it gives you possibility for reduced tickets and upgrades. This is online and very flexible, again aligning cargo and passenger business gives more opportunities. So the corporate approach, dual strategy and customer intimacy give us that leverage for customers to be very comfortable with Air France and KLM. What efforts are you making to make your operations environmentally friendly?

We are very concerned of our environmental footprints. So we try to reduce the consumption of fuel per passenger and per kilometre. We go for new aircraft and there are techniques for the captains to optimise the fuel consumption. There is a system to compensate the customers for the consumption of carbon gas. So, there is a complete consciousness and we are citizens of the world and not only working for the airline. So everybody understands the need to reduce the single use of plastics. With the extent of the services you are creating, there are likely to be some challenges passengers may still encounter. What do you think these challenges are and how can they be addressed? Some passengers who often encounter challenges could be those not used to travelling. Travelling can create anxiety or problems. So, we try to also take care of these passengers. For passengers that can travel on their own, some are not always comfortable in the air. In an industry where there could be weather problems, we need to create solutions for customers not to suffer from this. One of the goals of this personalisation is to try to minimise the anxiety as much as possible. In some situations there are growing anxieties that we try to minimise.

Ethiopian Airlines to expand services in India with Bengaluru

thiopian Airlines said that preparations were in top gear for the commencement of passenger flights to Bengaluru, India.

The airline said that the new service, which would be four times weekly, would commence on October 27, 2019, about 13 weeks from now.

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A statement by the airline’s media consultant in Nigeria, said that the capital of the Indian state of Karnataka, Bengaluru is dubbed ‘Silicon Valley of India’ and serves as

the centre of technology and innovation. Commenting on the upcoming services, Tewolde GebreMariam, Group Chief executive Officer (GCEO) of Ethiopian Airlines said that the airline was a significant player in connecting India and Africa and beyond. He said that the new four weekly flights would connect the important Information Communication Technology (ICT) hub city of Bengaluru to the ever-expanding Ethiopian network in addition to its twice daily

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flights each to the commercial city of Mumbai and the Capital New Delhi. He added that the flights would also complement the carrier’s existing dedicated freighter flights to and from Bengaluru. “The addition of Bengaluru to our Indian network will give wider menu of choices to the fast-growing air travelers between India and Africa and beyond. The increasing flight frequencies and number of gateways in India will facilitate trade, investment and tourism to/from the Indian @Businessdayng

sub-continent. “The schedule is carefully designed to connect passengers efficiently through our global hub in Addis Ababa with short connections and will provide the fastest and the shortest connections between Bengaluru in southern India and more than 60 destinations in Africa and South America,” he explained. Currently, Ethiopian operates passenger flights to Bombay and Delhi as well as cargo service to Bangalore, Ahmedabad, Chennai, Mumbai and New Delhi.

Thursday 08 August 2019

Innovation

Apps

BUSINESS DAY

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

Moneylenders’ Law: Do Nigerian online credit firms need a license review? FRANK ELEANYA

nline lending business in Nigeria has exploded as dozens of firms are set up to provide easy and quick access to credit to thousands of businesses and individuals. Beyond just making loans available at a more convenient manner, these firms have reduced the time from weeks to days to hours and now to minutes. Chijioke Dozie, co-founder and CEO of Carbon, former Paylater, told BusinessDay that its platform can disburse loans in less than five minutes of downloading its mobile application and applying for a loan. Renmoney and Page Financials have even gone on street to street campaigns with boxes and kiosks to give more people access to loans. These days, deposit money banks are not left out in the online lending party. GTBank, for instance, have evolved from mild participation to an aggressive competitor, offering one of the most attractive interest loans (23%) to salary earners. The problem is that lending to individuals and small businesses often fall through the regulatory cracks, specifically on borrower protection. Generally, the legal framework in Nigeria is very weak and lacks the bite required to hold firms accountable or keep them transparent in a more sustainable manner. Online lending – and lending in general – falls under the regulatory purview of

the Central Bank of Nigeria (CBN). The apex bank provides that any entity that wishes to provide lending could only do so by registering as a bank or Other Financial Institution (OFI) pursuant to the Banks and Other Financial Institutions Act, Chapter B3.LFN 2004. Additionally, a marketplace lender may be registered as a money lender in accordance with the Money Lenders Law of the state in Nigeria which it wishes to operate from, according to lawyers from Udo Udoma & Belo Osagie. “States also have lending laws which are restricted to activities within the state,” Enyioma Madubuike, founder of Legitng, a digital legal services provider, told BusinessDay. “Usually, fintechs go the CBN route. They can apply

to register as Micro Finance Banks.” The firms run with a unit-Microfinance Bank license which now cost N100 million to get. The MFB provides NDIC insurance cover which means the firm pay 17/19 of 1 percent of the deposit balance to the NDIC each year. One of the problems with the Moneylenders Law is in its definition of who can be considered a money lender. Section 31 of the Moneylenders Law provides that Moneylender includes every person whose business is that of money lending or who carries on or advertises or announces himself or holds himself out in any way as carr ying on that business, whether or not he also possesses or owns property or money derived

from sources other than the lending of money and whether or not he carries on the business as a principal or as an agent; but shall not include a. Any society registered under the Co-operative Societies Law; or b. Any body Corporate, incorporated or empowered by special Law to lend money in accordance with such Law. The Moneylender Law’s exclusion of co-operatives is a potential loophole that some firms are exploiting. Rather than apply for a moneylender’s license these firms opt for co-operative license. Many co-operatives entities loan money to their members, but these are not properly captured. In Nigeria, Cooperative Societies are regulated by Nigerian Co-Operative Soci-

eties Act which is a Federal Law that grants powers to the Governor of each state to establish a Directorate for Cooperatives which will be in charge of registering and regulating cooperatives. Due to limited resources many states do not have a directorate, hence there is little regulatory oversight on cooperatives in these states. Babatunde Babs Ogundeyi, CEO of Kudabank told BusinessDay that there is a limit to what a Moneylender’s license can do for an online lending firm. Kudabank recently secured an MFB license from the CBN. “Technically if you are lending your own money, you don’t need a license to lend. It‘s your risk,” he said. “But if you want access to independent information that helps you make credit decisions, then you need at least a money lender license. This applies to any lender not just an online lender.” Another challenge with the Moneylender law is that it was written at a time when online lending did not exist. The Lagos Moneylenders’ Law for instance was written in 1960 with the last review in 1972, in essence, it has not been reviewed to keep up with the changing times. Hence, the Moneylender does not consider the peculiarities of online lending. In addition, the fact that they are administered by states means there are variations of interpretations. The implication could be a firm who has applied for a license in Lagos may need to apply again in Ondo state if they

desire to operate there. “I think the CBN needs to breakdown the existing licenses into chunks so that fintechs can deal with what they have the capacity to do,” Adedeji Olowe, CEO of Trium Networks told BusinessDay. “For example, separate licenses for: lending, digital lending, wallet and digital bank. Each license could be a super-set of the other. For example, lending can do just lending, but lending can do lending and also in a digital way.” Ma d u b u i k e h o w e v e r believes a better approach would be to create a new category for online platforms, because as it stands a unit MFB license is meant to cover for a particular sone but most lending platforms just go for it because it is the cheapest and use it as extensively as they choose. The new category would consist of an MFB license for SMEs with a national scope but similar requirements (in terms of costs and other licensing requirements) as unit MFBs. “Online platforms require small teams, they don’t need branches everywhere. If CBN is okay with giving unit MFB licenses to online lenders, it is fine. They know these platforms operate on a national scale and have oversight into their operations to ensure they do not go overboard. I know there are some portions which do not fit perfectly but as long as online lending businesses are operating within CBN oversight and not in the shadows, I don’t see any problems” he said.

Nigeria needs more than Lagos to dominate tech scene in Africa FRANK ELEANYA

part from earning the designation of a commercial capital, Lagos has also become the tech capital of Nigeria and West Africa. The state accounted for 100 per cent of investments worth more than $1 million in technology startups in Nigeria between January and July. Lagos’ suzerainty of tech funding activities in the country for many years, while it is desirable, often comes at the expense of startups in other states.

Data compiled by GSMA’s Maxime Payne, showed that 11 of the startups that secured funding in excess of $1 million are all based in Lagos, Nigeria. Among the startups are Andela ($100 million in January); TeamApt ($5 million in February); OneFi ($5 million in March); Farmcrowdy ($1 million in March); Kudi ($5.5 million in April); mDaaS ($1.1 million in April); Gokada ($5.3 million in May); Arnergy ($9 million in June); Maxdotng ($7 million in June); OPay ($50 million in July); and 54gene ($4.5 million in July). Lagos state’s exploits in

the funding market in Africa notwithstanding, Nigeria has perennially played second fiddle to South Africa and fallen behind Kenya a couple of times. Plus it has new competition from Ghana, Egypt and Uganda. The 11 Nigerian startups on the list are part of 44 firms in Africa that have raised a cumulative $450 million between January and July. While 80 percent of the firms are located in South Africa, Nigeria and Kenya, the top deals account for 70 per cent of the total funding. South Africa remains the top tech ecosystem in

Africa - many years in a row - with 15 startups making the 2019 funding list. Aside from being adjudged the most mature tech market on the continent, unlike Nigeria, South Africa has more than one state dominating the activities. Although, Johannesburg and Cape Town are seen as the most dominant tech hubs in the country, Pretoria still had a startup representing it on the list. There are over 77 technology hubs in Nigeria with about 12 new ones scheduled for launch before the end of 2019, according to a research. With 36 hubs, La-

gos has the largest number of hubs and Abuja is second with 13. States like Enugu has about 5 hubs, Rivers 5; Kwara has two; Delta 3; Abia 2; Cross River 2; Ondo 3; Kano 2; Oyo 2; Ogun 3, among others. In a March 2018 report, GSMA categorized Lagos as the largest tech hub in Africa by the sheer number of startups popping up at the different corners of the state. But that hype may soon not amount to much if startups in other states continue to struggle to raise funds to keep them alive and if investors are driven

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away from investing due to the economic environment. Investors are not going to wait for ever to tap Nigeria’s famous 200 million population. They are also not looking for places to throw away money. There has to be participation from other states to increase the investment pie. It could mean taking with intentional steps by creating an enabling environment for the growth of startups - if necessary committing funds, well thought legal framework that not only protects consumers, but the investors and businesses involved.

Thursday 08 August 2019

BUSINESS DAY

INTERVIEW

‘Savers have been the major marketers of CashBox’ Sydney Aigbogun, the founder and CEO of online savings platform in this interview with BusinessDay’s FRANK ELEANYA speaks on the growth of the company and how it has built an army of users willing to market it at every giving opportunity.

avings used to be a challenge for many people, particularly with low income earners, until platforms like yours came along. Tell us about the experience of convincing people that Cashbox is a platform they can trust. When we launched, we were quite worried about the acceptance, like every new business we weren’t sure if people would welcome the idea and trust us enough to save their money. But within the first 1 week, we already had about 500 registered savers. We found out that many people actually want to save, but they were only used to the traditional wooden/clay box and local savings groups “Ajo/ Esusu”. They could easily break that anytime, and that most people were actually not very good at using those clay box and “Ajo” stories were not encouraging. Trying to convince people to save with CashBox hasn’t really been too difficult, they see that the platform is safe, licensed and we provide 24/7 customer support so that already gives them a level of confidence. The amount you can save in CashBox is limitless, some people save to buy a phone while others can even save to buy a house depending on what your income allows you save. We constantly create awareness so people get to know of CashBox and our users have been our major marketers. They like CashBox and confidently introduce it to their family and friends. And since users can save as low as N100, that already opens the market to almost everybody. What made you decide to build CashBox? CashBox was founded because we saw a void in the market. The average individual wants to save but wants to do that easily, safely and without being charged unnecessary maintenance fees and charges. Strangely, it was more of illiterate and semi-literate agents that were involved in this savings market. They were in the form of local contributions, with zero use of technology and little education, so their reach was very limited, hence the reason why we decided to go into this space and

we will be open to that, already some potential investors have reached out to us, but we want to be very sure we need the funds before accepting it. Also we want to keep the mission and vision of the company the same and that is putting customer satisfaction at the peak. Which category of people saves the most on your platform and why? Our top savers at the moment are Millennials and mostly between the ages of (19-35) and female gender top the list right now, but the men are not far behind. I think why we have more of this age group is because our major form of marketing has been social media and that is where these Millennials are mostly. But we do have quite a number of savers in their forties and a few fifties.

Sydney Aigbogun

help savers achieve more and securely save most importantly. We decided to find a way to get this savings product to almost anybody that has a mobile phone and wants to save money. With the help of technology, we have been able to build CashBox and make it extremely secure since we use Bank Grade security on the platform. With the use of an ATM card or bank transfer, you can easily save in CashBox.

“

So far you have not announced any fund raise unlike

some of your top competitors; is this deliberate? At the moment, we are concentrating on our customers. We are a customer-centric company and we want to make sure our savers enjoy the best experience first. We haven’t announced any fund raising because we haven’t had need for it yet, but maybe in the future we would, but for now we just want to continue providing top notch services and get as many customers to build a healthy savings culture. Should we have the need to raise funds,

Lowest interest any saver can earn on CashBox is 7 per cent and that is for even the N100 savers. As your balance increases, the interest earned also increases. To earn 15 per cent interest on CashBox, a user would have to use our “Locked savings” feature to lock away money for at least 360 days www.businessday.ng

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“

What exactly would a user have to do to earn as much as 15% on Cashbox? Lowest interest any saver can earn on CashBox is 7 per cent and that is for even the N100 savers. As your balance increases, the interest earned also increases. To earn 15 per cent interest on CashBox, a user would have to use our “Locked savings” feature to lock away money for at least 360 days. The 15 per cent interest would then be paid to the user upfront. The user can withdraw this upfront interest earned or decide to save it as well. How do you insure users’ funds and in what instruments do you invest them? Security of savers funds is our priority at CashBox and we do not take that lightly. We do not invest in any risky investment; we only invest in absolutely risk free securities like Treasury bills and the likes. Cashbox started in 2018, what has been the growth story so far? The growth has been amazing and beyond what we even expected. In the first few months of launching, we already had over 10,000 savers and the number keeps rising every day. We have users in almost every state in Nigeria. We also have a number @Businessdayng

of users in Ghana, Kenya, UK, US, Germany, Russia and many more. Basically, any country that has a Nigerian who is interested in saving money back home can use CashBox. What we expected to achieve in the first year happened in just the first few months and our reviews online have been very encouraging. Like I previously mentioned, our customers have been our major marketers, seeing that makes us very proud of the company we founded. Some savings platform now features investment opportunities. Is that an area CashBox is likely to go into? At the moment, we do not plan on going down that road because of some risky elements in such investments. It would bring more money to the company but at the same time expose us to more risk which we do not want. Should we decide to invest in anything in the future, the users would be briefed and we would all have to vet that investment together. But right now, we only invest in risk free securities and intend staying that way for a long time. Are you planning on going into mobile money services soon? Fintech space is very wide and our users keep asking us for more services, but safety of our users’ information is key. Right now, we are not in the mobile money space, but we never can tell what the future holds. It all depends on what our many users ask for and if we believe it’s something that will benefit the populace, then we might consider it. When is your mobile application coming out and what should users expect? Our users have been patiently waiting for the release of this app. The delay has mainly been because we don’t want to take security for granted. Our Android and iOS apps will be released very soon, most likely within the next one month. And our users can expect the same level of top notch services they’ve been getting, and they can be assured that all their personal and banking details will be very safe and secure on our apps.

Thursday 08 August 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Brand protection in Nigeria: the startup edition TOLU OLALOYE & VINCENT OKONKWO Understanding Brands and Brand Building nderstanding what brand protection is, requires first that we understand what a brand really is. If I were to ask three random people to tell me what a brand is, they are likely to give three different answers; which may capture to an extent what a brand entails but which would likely not encompass the full scope of what it means to be a brand. This multiplicity of conceptualization goes to show the unique nature of the concept of brands. So, what makes a brand? When you see the Nike ‘’tick’’ logo and call it a brand, what are you really referring to? Is it the Logo? Is it the company? Is it the corporate personality? If a brand is simply the company or the corporate personality, then what about Cristiano Ronaldo? What makes him a brand? The Business dictionary defined a Brand as a unique design, sign, symbol, words or a combination of these, employed in creating an image that identifies a product and differentiates it from its competitors as well as the level of credibility, quality, satisfaction and consumer desire associates with the sign or symbol in the mind of the consuming public. What this tells us is that, a brand goes beyond the company or corporate personality, the symbols or names, slogans or gimmicks associated with a product, but also includes every other market sentiment associated with the product.

Tolu Olaloye

Vincent Okonkwo

So, it is not just the trademark or the patent or name of the company, it’s the full package, the entire awareness of the product – that is what the brand is. Take the example of Cristiano Ronaldo, his brand is his name, plus his status, plus his character and public image all fused – the entire awareness of his person. So, when you talk about the Ronaldo brand in a business sense, you talk about everything associated with the product Cristiano Ronaldo. Brand Protection; the What, Why and How? In the same way the brand encompasses various aspects of the product, so also does brand protection encompass various intellectual property related activities. Cambridge Dictionary defines brand protection as “the act of preventing someone from illegally making and selling a product using a brand name owned by another company”; this is in simple terms, the ‘’what’’ of brand protection. Simply put, brand protection means

to protect your brand. It’s that simple. Now, let’s have a quick scenario: you’ve started a business, and you are providing services or creating products and selling to the consuming market whether just your friends or within your community, or within your estate, or around your city; whether from your room or on the internet, or maybe it’s something bigger, maybe an SME that has some reach across the metropolis and as you keep providing for your market, you’ve created something that has developed some goodwill – people are getting to know your goods, and are patronizing you. Now, having started this business, you realize that somebody has started using the name you are using for your business, to sell to customers different goods; basically, stealing from the goodwill and market awareness you’ve struggled to build. This is the ‘’why’’ of brand protection. Brand protection encompasses all the things you could do to prevent this from happening.

Now that you know why you should safeguard your business by protecting your brand, the next question you’re likely to ask is how? The ‘’how’’ of Brand protection includes; identifying the trademark, registering it, watching out for any third party, undertaking market investigation, obtaining injunctions and enforcements, amongst other things, all geared towards protecting your brand. Brand protection usually starts with registering your trademark. A trademark is a symbol, a name or a mark which identifies a product in any given market. In the Nike example earlier, the trademark is the ‘’ ’’ as well as the word ‘’Nike’’ which combine to create the visible elements with which you identify the brand. If Amaka was to open a jewelry business and calls it ‘’Maks Glitters’’, that name ‘’Maks Glitters’’ can be a trademark. If she gets a design that looks like a fancy woman to add to her branding, that logo too will be registered as a trademark. To register a trademark, you would be required to file an application for trademark registration at the Trademark, Designs and Patents registry in Abuja and the procedure takes roughly 8 - 12 months to conclude. Registering your trademark, only signifies that you now have an indisputable business identity associated with a visible symbol or name. To protect your brand, you need to always be at alert for any third party who may be infringing on your mark and stealing from your market share and investigating the market, both in the real world and online to make sure your brand is safe. What it means to infringe, is to wrongly

use or parasite on a brand to sell a product not belonging to the brand owner. So, what our brothers at Aba do, where they make ‘’Nika’’ shoes that are shaped like ‘’Nike’’ products is what we call brand infringement. Brand protection also involves taking steps against people who you occasionally find infringing on your brand by taking actions such as a cease and desist or a take down, if they are infringing on your products online, or reporting for seizure or getting an injunction or judgment from a court where the infringement happens in the real world. A cease and desist is a formal letter written to a person who is wrongly using your brand, commanding them to stop or risk legal or enforcement action, whilst a domain name take down involves contacting the relevant internet Registrar to uproot the online infringers presence. If it is a website that’s doing the infringement, you can contact the domain name administrator like NiRA in Nigeria to remove the website and if it is on an online platform like ‘’Instagram’’ or an e-commerce site like ‘’Jumia’’ you can make a report to the platform requesting them to take down the infringers page or sellers page as the case maybe on the basis of brand infringement. An injunction is an order from a court of law compelling a person to stop an action. Where an injunction is gotten against such a person and they do not stop doing what they have been commanded to stop doing, they risk contempt of court and consequent sanctions. A lawsuit or other enforcement action with Continues on page 31

Malami is wrong – Justice Reform Project Excerpts from a statement by the Convener, Justice Reform Project (JRP), Yemi Candide-Johnson, SAN explaining the role of the Attorney General (AG), vis-à-vis public interest. This is in reaction to Abubakar Malami’s testimony before the Senate on July 26th, 2019.

he principal function of an Attorney-General is to preserve and promote the rule of law and to guide the government so that essential public confidence in the rule of law is maintained. This is a paramount public interest. That is why the testimony of Mr. Abubakar Malami SAN (who has recently held the office of AttorneyGeneral of the Federation and may return to it) before the Senate of the National Assembly of Nigeria on 26th July 2019 could be dangerously misleading. Senators asked the AttorneyGeneral why he has wilfully disobeyed court orders by continuing the detention of individuals who have been granted bail by the very courts to which government has arraigned them. Mr Malami’s response was that he

deliberately disobeys some court orders in the interest of the public and that it is his duty to protect the overall rights of Nigerians, which overrides the need to respect individual liberties. The Senators did not demur. Mr Malami is wrong. It is not the right or power of the Attorney General to determine legal rights and to pick and choose which he will respect or not. To assert such a right or power threatens the very constitution and the rule of law. If an individual or a group breaks the law or threatens national security or public order, it is the duty of the Attorney General to build a compelling case and then present it to the constitutional adjudicator. This official cannot be accuser, prosecutor and then judge at the same time. If any single minister or group of ministers can secretly determine what is in the public interest and enforce such aswww.businessday.ng

Malami

Candide-Johnson

sumed public interest by defying due and legal process, then every single Nigerian is at risk of arbitrary power. If any minister can determine that he can abuse or discard court process, even after himself invoking the power of the courts, then he can abort every other constitutional guarantee in turn. The powers of the attorney-general are circumscribed in the constitution, and as a consequence, there

may be need for the immediate past attorney-general to reconsider his position, particularly because as a senior member of the bar and former chief law officer, his unusual opinion might be taken as the correct representation of the law. JRP therefore considers it expedient to state that no matter the apparent flaws in our judicial system, it remains the bastion of our democracy that all court orders must be respected by every

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Nigerian citizen. No person or authority is superior to our constitution and therefore should not undermine the sanctity of court orders. The Attorney-General’s role in ascertaining the balance between the competing public and private interest, is limited to persuading the court as to where the balance lies. It is necessary to remind Mr Malami, and any other holder of this special office, that as chief law officer he/ she as an incumbent must uphold the constitution, the rule of law and respect for the independence of the courts. Arrogating to the office of the Attorney-General, powers that are exclusively reserved for the courts, erodes public trust and confidence in the administration of justice and negates the rule of law which authorises civil government.

Thursday 01 August 2019

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Leading legal technology company, Lawpavilion opens experience centres in Lagos & Abuja …Integrates AfCFTA Dispute Settlement Procedure Into Solicitors And Arbitrators’ Toolkit

igeria’s leading legal technologies company, LawPavilion Business Solutions Limited has scored another first, demonstrating its uncanny ability to equip Nigerian and African lawyers with cuttingedge solutions, in order to compete successfully in the provision of legal services in Nigeria and across the continent. Briefing the press in Lagos, the Managing Director of LawPavilion Business Solutions Limited, Mr. Ope Olugasa, stated that the company has keenly observed and followed the deliberations on the African Continental Free Trade Agreement (AfCFTA), which has the primary objective of enhancing intra-Africa trade, thus promoting accelerated economic integration of the African continent. The AfCFTA, which Nigeria became a signatory to in July 2019, has significant importance for Nigeria especially, particularly in view of the fact that Nigeria with an estimated population of 200 million people, represents the largest economy in Africa, and therefore has the potential of being the biggest benefactor of the AfCFTA, if well executed and implemented. As related to legal services, Olugasa drew attention to the staggering statistics that between 70% - 80%

of the high-end legal services consumed in Africa is provided by law firms and lawyers in Europe and North America, leaving African lawyers to scramble for the remaining 20-30%. He stated that one of the difficulties that has beleaguered the provision of excellent and efficient legal services in Africa is the inadequacy of the type of capacity needed to compete with Law firms in London, New York or Paris. Finding a lasting solution to this difficulty is one of the main drivers of the innovations pioneered by LawPavilion. With access to a market of about 1.2 billion people, the potentials for doing business is mind-boggling and requires new ways of thinking and being properly equipped to promptly, ef-

ficiently and comprehensively provide the legal services that will be required as a direct result of the successful implementation of the AfCFTA, which seeks to liberalize trade of goods and services across the Continent. According to the United Nations Economic Commission for Africa (UNECA), successful implementation of the AfCFTA could boost intra-Africa trade by as much as 52% by 2022 as local productivity, supported by appropriate policies would be exponentially boosted and increased. Speaking further, Olugasa drew attention that, particularly for Nigerian lawyers, it is instructive to note that the Protocol on Rules and Procedure on the Settlement of Disputes, in Article 27, prescribes arbitration as one of the dispute settlement

mechanism that can be adopted by Member-States of the AfCFTA in the resolution of disputes. He mentioned that, recent statistics based on 2018 UNCTAD statistics, revealed that African countries are parties in about 101 InvestorState Dispute (ISD) cases at international arbitral tribunals. Yet, it is glaring that a greater percentage of African lawyers do not have enough exposure or expertise to handle cases at international arbitral tribunals. It is thus, as a first step towards equipping Nigerian and African lawyers to respond and rise up to the future of liberalized legal services that LawPavilion has developed and is now showcasing its newest solution – The Solicitors and Arbitrators’ Toolkit (SAT). The SAT, together with LawPavilion’s Practice Management Software, boasts of a Document Authoring and Management platform, which provides access to hundreds of customizable Forms and Precedents, Court Forms and Insight Notes on various practice areas. Moreover, with the introduction of electronic filing at the Supreme Court, and the foreseeability that any arbitral tribunal set up under the AfCFTA will leverage significantly on electronic filings, robust document management and correspondence, it is more imperative than ever for Nigerian lawyers to get aboard. LawPavilion’s Case Manager, which

is integrated with LawPavilion’s patented Artificial Intelligence tool – TIMI, and legal research software, LawPavilion Prime, creates a robust tool for the lawyer who is ready to bring his legal practice to the future of trade in goods and services. With the sole objective of deploying the latest technologies to enhance the capacity of legal practitioners for them to compete favorably in the international scene, LawPavilion is demonstrating the unique value proposition of their new and enhanced offerings by setting up Experience Centers in its Lagos and Abuja offices, and invites legal practitioners for a hands-on experience. LawPavilion will host top notch legal practitioners on the 9th and 16th of August 2019 at their Lagos Experience Center, and in Abuja on the 21st of August 2019. According to Olugasa, it is of utmost importance that Nigerian lawyers are equipped to provide legal services in respect of Investor-State disputes as well as State to State dispute, in order to forestall a situation where other sectors are able to sufficiently capitalize and take advantage of the emerging opportunities afforded by the implementation of AfCFTA, while Nigerian lawyers continue to grapple with meagre earnings occasioned by inadequate capacity to provide requisite legal services.

Recalling notes from the just-concluded business Law conference in Lagos…

he NBA-SBL organised its 13th Annual Business Law Conference with the theme “Growth, Investment and Employment: Beyond Rhetoric” from June 26th to 28th June 2019, The conference comprised of fourteen sessions (six plenary sessions and eight breakout sessions) in which experts examined and analysed various knotty issues vis-à-vis the Nigerian economy. Topics discussed included: a triage on the Nigerian Economy; Health, Security and Education - Building a Foundation for Inclusive Growth; Moving from Crude Export to Value Addition; Leading the Charge – The Private Sector and the Nigerian Economy; Smarter Regulation; Making Mining Work in Nigeria; Improving Financial Services as a Catalyst for Growing Micro, Small And Medium Scale Enterprises (MSMEs); #MeToo – Sexual Harassment in the Workplace; and The New Era of Taxation in Nigeria. Observations from speaker, panelists and participants High rate of youth unemployment, and astronomical population growth. Lack of a mandatory universal

Some panelists with members of the NBA-SBL councile during the 13th Annual Business Law Conference healthcare system/program, and severe underfunding in States making efforts to provide basic primary health coverage. Also, poor infrastructure, and in practical terms almost a wholesale lack of health insurance coverage (save for the top echelon of society). Out-dated laws and, notably, the Companies and Allied Matters Act, 1990 (CAMA) and, as a corollary, the urgent need for assent by the Executive to the Companies and Allied Matters Repeal and ReEnactment Bill 2019 (CAM Bill). Insecurity and insurgencies fueled by socio-economic issues, www.businessday.ng

such as unemployment and underemployment, low educational proficiency, lack of healthcare, housing, and extreme discontent caused primarily by the foregoing factors. Lack of clarity of tax laws, rules, and regulations, and inconsistent applications of same. Equally disconcerting, is the disconnect between taxation and social benefits in infrastructure and public utilities, such as roads, power, healthcare, education and security. Communiqué issued at the 13th Annual Business Law Conference

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In the oil and gas sector, the need to have a robust and sustained policy on value addition. The policy needs to be mutually beneficial to all stakeholders, including the Federal Government, investors and operators in the industry. An inefficient dispute resolution and judicial system, which includes commercial disputes taking grossly inordinate duration at the trial courts, unmeritorious appeals, and various other inefficiencies. The foregoing are quite apart from the difficulties associated with access to justice @Businessdayng

caused by factors, such as decay in infrastructure, de-motivated administrative personnel, and lack of modern amenities including technology. Grossly insufficient investment in the agriculture value chain, to transform yield in livestock and dairy products, food crops, and funding value addition including storage, transportation, packaging and export of agriculture and allied products. Whereas, the Federal Government has developed some innovative funding mechanisms for MSMEs, there continues to be a dearth of funding for them resulting in a stifling of the sector that employs approximately 80% of the labour force, and accounts for approximately 50% of GDP. The Nigerian Government’s delay in signing the Africa Continental Free Trade Agreement (AfCFTA), which would be to the country’s disadvantage, long term. The AfCFTA was the flagship plenary topic at the 12th NBA-SBL International Business Conference in June 2018, and the in-depth and incisive discourse provided a unique platform for further Continues on page 32

Thursday 08 August 2019

BUSINESS DAY

GREYMATTER

LegalBusiness

National identity management in Nigeria: Matters arising (2)

Continued from last week

n a suit instituted in 2018 at the High Court of Anambra State of Nigeria (SUIT NO: 0/103/2018), the validity of the NIN Slip as a means of identification was tested. The plaintiff in the suit, a mobile telephone subscriber, had tendered her NIN Slip as a means of identification to the defendant, a mobile telecom operator in Nigeria, for the purposes of SIM-Swap/ SIM replacement. The NIN Slip was rejected by the defendant on the ground that it is not a valid means of identification. Aggrieved by this decision, the plaintiff filed the suit and prayed the court to determine the issue of “whether in view of the extant laws/regulations the NIN Slip is a valid and sufficient means of identification in Nigeria for the purposes of transactions including SIM-Swap or replacement?” In its response, the defendant contended that the NIN Slip is not a valid means of identification in Nigeria, having regards to relevant laws and regulations. In particular, it was argued that a subscriber is required to submit a “valid photo identification” for SIM replacement, as provided under the Nigerian Communications Commission’s Guidelines on SIM Replacement

(“NCC Guidelines”) and that the NIN Slip is not included in the interpretation of “photo identification” in the NCC Guidelines. In resolving the issue in favour of the plaintiff, the court on December 4, 2018, held that the NCC Guidelines do not contain an exhaustive list of items qualified as photo identification and is also inferior to the NIMC Act being a subsidiary legislation. Further, it was held that by the provisions of Section 27 and other relevant sections of the NIMC Act, what is required to be provided by a person to any authority or organization for the purposes of carrying out any transaction is the National Identity Card or the NIN. Thus, the production of the unique NIN is sufficient identification of an individual for the purposes of any transaction in Nigeria and consequently, the NIN Slip issued temporarily in lieu of the National Identity Card is a valid photo identification. Meanwhile, in an appeal

recently filed before the Supreme Court in the case of APC & Anor. v Marafa & 17 Ors. (SC. 377/2019), a preliminary objection was raised on the ground that, by the provisions of Section 1(1)(u) of the NIN Mandatory Use Regulations and the NIMC Act; the use of the NIN is a precondition for filing and registering criminal and civil actions in courts or other arbitration processes in Nigeria. In overruling the preliminary objection, the Supreme Court on May 24, 2019, held that Section 27 of the NIMC Act and its regulations are not part of the rules of the court and can therefore not apply to the processes filed there-in. Comments It is widely acknowledged that data is the new “oil” and Nigeria needs to take implementation of its Digital Identity Ecosystem seriously, in order to be at pace with the advanced and other emerging economies around the globe and be positioned to

GLOBALREPORT

UK: Onasanya struck off after ‘disastrous’ perverting course of justice conviction

isgraced former MP Fiona Onasanya has been struck off the roll of solicitors over her conviction for perverting the course of justice. The 35-year-old, who was a commercial property lawyer before entering politics, had remained on the roll until today’s decision by the Solicitors Disciplinary Tribunal. She was found to have failed to act with integrity and failed to behave in a way that maintains the trust the public places in her and the provision of legal services. She was also found to have acted dishonestly. Onasanya was struck off following a half-day hearing, but the SDT also opted to cut the £22,762 costs claimed by the Solicitors Regulation Authority. Tribunal chair Edward Nally expressed ‘anxiety’ about the figure, which was based on 40 hours’ preparation, and reduced it to £6,562. Giving sanction, Nally said: ‘A solicitor owes a duty to the court and, whilst a parliamentarian makes the law as an officer of the court, a solicitor must uphold the

Onasanya

rule of law and administration of justice. Sadly in this case Miss Onasanya has failed in those duties.’ He added that the matter has had ‘disastrous consequences both personally and professionally’ and that the tribunal had taken full account of this. Onasanya was elected to represent Peterborough as a Labour MP in 2017 but in January this year she was jailed for three months for perverting the course of justice in connection with a speeding offence. She continued as an MP www.businessday.ng

during her time in prison. Her application for permission to appeal against the conviction was refused by the Court of Appeal in March. Representing herself at the tribunal today, Onasanya maintained her innocence and said she had applied to challenge her conviction with the Criminal Cases Review Commission. She had applied, unsuccessfully, to have the SDT hearing adjourned while the outcome of that challenge was resolved. She told the tribunal: ‘I did not do an act intending to pervert the course of justice. I maintain that stance, it was the same at trials where I pled not guilty.’ She challenged the SRA’s submission that she had assisted in ‘dishonest support for her own benefit’, asserting that her driving licence remained clean and there was no benefit to her from lying about the identity of the driver. Nimi Bruce, representing the SRA, stated the judge in her case said she had ‘let down those who look to you for inspiration, your party, your profession and parliament’. ---LAW SOCIETY GAZETTE

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harness information technology for security and development purposes. It is our firm belief that the success of the policy of the FGN on mandatory use of the NIN will enhance the current administration’s focus on economic development, adequate security and anti-corruption crusade. However, the law is yet to settle and the processes fully institutionalized. For instance, whilst the decision of the High Court of Anambra State means that the NIN Slip is valid for use in lieu of the National Identity Card and thus enhances the powers of the NIMC to enforce compliance with relevant statutory provisions; we are aware that the defendant is currently on appeal. Whilst the NIMC has issued a press release supporting the decision of the High Court (see NIMC Press Release, 15 November, 2018), we note that except the decision is reaffirmed by higher courts in the land, it will be difficult to enforce the law as there are many unregistered persons and registered persons with only the NIN Slip than those who have obtained the National Identity Card. Again, the recent ruling of the Supreme Court on the mandatory use of the NIN for registering and filing court processes po-

tentially undermines the ability of the NIMC to enforce the NIN Mandatory Use Regulations in that regard. It is most likely other authorities and organizations will make the ruling a reference point for discountenancing the mandatory requirement of the NIN, as a precondition for providing services to registrable persons. As a way forward, it is recommended that the Federal Government intensifies efforts to create awareness on the importance of the NIN to the country and procure the endorsement of relevant stakeholders, government agencies and relevant industries. It is also advisable to procure relevant amendments to the NIMC Act, incorporating the salient provisions of the NIN Mandatory Use Regulations. The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

Brand protection in Nigeria: the... Continued from page 29

relevant authorities would involve taking legal steps before authorities with power over brand infringement complaints to sanction the brand infringer or compel them to stop. The Necessity of Brand Protection for Start-ups Now that we have been able to paint a picture of what brand protection looks like, let us bring it back home to the aspect most relevant to small business owners and startups. It is obvious that brand protection is relevant, but how is it relevant to a startup? Understandably, brand protection sounds like the exclusive pastime of big businesses and corporations, the blue chips and the big bucks; but this is not the case. Fair enough, in Nigeria, big businesses are usually more interested in brand protection and they engage big firms to help them with it, but brand protection is also relevant to small business owners and startups just as it is important to big brands. Brand protection is important for startups for many reasons; one of the most fundamental of them is the fact that for a small business or a startup, your most important asset is your brand. The time and effort expended in getting just the right name or mark, gathering loyal customers by the handful, undertaking marketing online post after online post, building the brand awareness and developing a functional brand identity from scratch cannot be measured or bought. After the investments and sacrifices, the last thing that you would want to learn is that @Businessdayng

somebody out there is eating from your work by utilizing your name or a name so like yours in selling their products. So yes, while the scale of brand protection would be diminutive as compare to that undertaken by the big corporations, the threat of brand infringement is just as urgent. Another reason why brand protection is important for startups is to protect fledging brands from brand protection, ironic as that sounds. For a business that is just starting, brand protection not only helps protect you, it helps you know where other people’s protection ends so that you would not mistakenly infringe on their own products and lose your business because of it. An example would be as follows; You started a perfume making business and you call it ‘’Aquarius’’ and you’ve been doing business with the name and you’re doing well. Then one day, you get a cease and desist letter from someone saying that they have trademark registration for ‘’Aquarius’’ for their own perfume or toiletries business and that you’re infringing on their mark. They will successfully compel you to stop using that mark and you will lose all the momentum you’ve gained with that name, something you would have avoided if you had at least taken the first step of brand protection and registered your tradename. You started a fashion line called S-Mot man and you’ve been using the name since 2010 in Ibadan. In 2012, B registers the tradename S-Mot Man for a shoe making busiContinues on page 32

Thursday 08 August 2019

BUSINESS DAY

YOUNG BUSINESS LAWYER Generalist v. Specialist

ot too many words are used more often than these two in professional parlance today. As people upskill, they seek more descriptive words to describe or distinguish what they do and carve a niche for themselves. For the young lawyer, these are not just adjectives, they are hard choices, the difference between success and failure and in some cases, the stumbling block over which many fail to climb for a very long time. Before I delve in, I will like to set the tone by alluding to a very popular saying in my native language, Yoruba, “ona kan o wo oja” which in literal terms means that there are many routes to the market (portraying a centre of trade and benefit). I say this because it is important to highlight that we are all not one prototype and the way to success is not singular. This is the viewpoint that I believe any professional should take in considering decisions (short term or long term) and career choices and the context within which I hope this article is read. A generalist is described as “a person competent in several different fields or activities” while a specialist is described as “a person who concentrates primarily on a particular subject or activity; a person highly skilled in a specific and restricted field.” As simplistic as these definitions look, they form the blurred lines that attend the most difficult career questions. More so, there are so many plausible arguments and

counters that make the choice of either more arduous. For many professionals, career starts with what is found and not necessarily what is loved, and I say to many peers, how do you know how much you like something you have never tasted? As such, if your response mirrors the “follow your heart” or the “what you are familiar with” route, I beg to differ because it is vague answers like these that in my opinion, create latter day dissatisfaction or disorientation. In choosing what area(s) to upskill, apart from taking your realities into account, you must set targets and make intelligent choices. Your career success is a summation of the instalments of informed choices taken over time. As such, your career strategy whether generalist or specialist is very important.

Generalisation is touted as negative and the trend today appears to be specialisation, as it is said that the world today is shifting from demanding a “jack of all trades” to demanding the “master”. While this is true, in his book, “Range: Why Generalists triumph in a Specialized World,” David Epstein asserts that there are also fault lines peculiar to specialisation which may impede the breadth and extent of success that an individual may attain when they adopt this strategy. On the other hand, some researchers argue that though generalists are compelled to make choices and acquire specialist skills which in turn increased their perceived value and efficiency, they have the benefit of diversity which makes them more agile when certain skills cease to be in demand than specialists. As you can see from the above, contra arguments apply to either side and we can validate these assertions with myriad examples. My view Whether generalist or specialist, your career strategy must be realistic, suited to you and very intentional. Apart from this, one would observe that the definitions of both words make reference to competence and capacity as such, this should be the end game for any professional. Beyond the colourful words and the hype that is the world of work, are you building capacity and competence? This is the core reason for building experience in any field at all and the only viable means of sustenance. Irrespective of the nominated career strategy, both generalist and specialist will find the following tips useful:

Recalling notes from the just-concluded business Law conference... Continued from page 29

stakeholder consultations on the subject. However, since raising the issue at the 13th Conference and, just before issuing this Communiqué, the Federal Government signed the Agreement, thus evincing that even the 12th Conference was beyond rhetoric. Neglect, illegal activities, and lack of transparency in the mining sector. #MeToo – Sexual Harassment in the Workplace. The need to create an environment conducive to protecting victims and, importantly, providing swift recourse to enforcing rights and disciplining offenders. RECOMMENDATIONS Extensive deliberations and discussions from participants resulted in the following resolutions/recommendations: GOVERNMENT Diversifying from oil - investments should be made in the five critical stages of the agricultural value chain, that is, production, transportation, storage, processing and export. Government should remove VAT from locally produced LPG and, instead, impose tariffs on imported LPG in order to encourage local production, availability and domestic utilization of gas. The oil sector should be liberalized – government should allow more flexibility in terms of pricing to encourage investments in the sector. Government should move away from commercial infrastructures, which are financeable by the

private sector and, instead, work on improving transparency and encourage market determination of pricing. Government should build investor confidence by providing a transparent, fair, and inclusive tax regime to all the stakeholders thus enhancing the ease of doing business. There is an urgent need for rapid human capital development and investments across health, education, agriculture, security and other sectors to tackle unemployment while keeping population growth in check through family planning and controlled immigration. Healthcare should be policydriven - to ensure broad health insurance coverage, the federal laws governing health insurance should move from ‘may’ to ‘shall’ – insurance should not be optional for employers. Government should demonstrate the political will to tackle insecurity, professionalize the Nigerian security apparatus, and secure Nigeria’s borders. Financial inclusion for the youth should be prioritized to enable them access loans and other entrepreneurship benefits. Policy formulation in Nigeria should be more consultative and inclusive. The Federal Government should ensure that the licensing regime in the mining sector is coherent and made transparent in order to attract and retain investments in the sector. Also, the government needs to immediately www.businessday.ng

address issues of insecurity and illegal mining activities, as well as jurisdiction between the Federal Government and State Governments. LAWYERS AND THE PRIVATE SECTOR We should develop a high sense of patriotism, optimism, and sell the Nigerian brand. Businesses should establish clear policies prohibiting sexual harassment in their respective organizations, including severe sanctions for those who violate the policy. Lawyers should enhance capacity in the area of international trade and investment law, particularly with the advent of AfCFTA. Lawyers are encouraged to develop capacity in accounting in order to enhance their practice as tax lawyers. Lawyers should refrain from filing frivolous actions and impeding the swift administration of justice. COMMITMENTS OF THE NBA-SBL The NBA-SBL has committed to do the following: 1. Develop a policy against sexual harassment for consideration and adoption by law firms; 2. Push for Smarter Regulation and, in doing so, engage all levels of governments, as well as other relevant stakeholders; and 3. Work with the Nigerian Bar Association (NBA) to reform and adapt the rules of professional conduct in line with modern realities, as well as fostering transparency and discipline.

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Aim to acquire basic knowledge relevant in your field: there are certain things that you must know as a professional and in this case, as a lawyer. Irrespective of your area of specialisation, inability to articulate or understand basic concepts showcase incompetence. For instance, for any business lawyer, understanding of basic principles of contract law and company law are important no matter the sector you choose to specialise in. The foundation on which you grow knowledge is very critical and must be intentionally groomed. If there is a deficiency in this area, work hard to cure same. Stay updated: Law is mobile, business is mobile, people are mobile, you must be mobile! If the repository of knowledge retained is that learnt in school or acquired in the course of work without more, you cannot thrive. You must intentionally train as a life-long student. It is the only route to building capacity and grooming excellence. Keep experimenting: There is a saying attributed to Herbert Read, English Historian: “In history, stagnant waters, whether they be the stagnant waters of custom or those of despotism, harbour no life; … One must live dangerously if one wants to live at all.” Failure to try new things keeps one rustic, barely carrying much value for the future. The ones who are afraid to experiment are usually the ones out the door once change happens. For every professional, innovation is a duty.

Re-evaluate periodically and adjust: stock keeping is one of the best skills to learn as an individual. The reason that many wake up after ten years of “garnering” experience to disappointment and pain is that they were not in the course of time, making assessments of the value accrued. Time is of little value without content and adjustments. Mind the gaps: Many times, we focus on building specialist skills and miss out on opportunities a. Imagine this, if one is skilled in maritime law and moves to a city where there are several opportunities in, for instance, technology law. This person would be foolhardy if he/ she fails to upskill in technology law and take advantage of the available opportunities. These gaps present themselves daily and we must be keen enough to recognise and take advantage. Competence is the watch word and as I have opined above, the route you choose does not matter;, “ona kan o wo oja”. OYEYEMI. OYEYEMI ADERIBIGBE is a Senior Associate at Templars. She is also the current Vice-Chairman of the Young Lawyers’ Forum of the Nigerian Bar Association -Section on Business Law and the Young Lawyers’ Committee Liaison Officer of the African Regional Forum of the International Bar Association. Feedback – Oyeyemi.aderibigbe@templars-law.com; yemiimmanuel@yahoo.com.

Brand protection in Nigeria: the... Continued from page 31

ness and registers it the same year. In 2015, you’re faced with the untoward task of proving use of the name since 2010, in a bid to oust a legal right, with the nebulous common law right of passing-off. In the best-case scenario, you face a tedious task and survive by a hair breathe – worse case, you lose S-Mot man. Also, startups protecting their brand is mainly because of growth potential. Now, every business hopes to grow, but only few businesspeople work with a mindset that anticipates this growth. The choice of working a business with the short-term view is not exactly business smart. So, if you feel as a small business owner, brand protection is too advanced for you, consider this; what about when you grow? Would it be right for you then? Well, it would – but then it might be too late. Like the scenario I gave before; this time imagine you started Aquarius and you’ve been selling your perfumes on instagram and all of a sudden, you’ve become a business sensation and you’re raking in the money and it occurs to you that maybe it’s time to get legal protection for your business, only for you to try to register the tradename and realize that somebody already registered it for a similar business. To make things worse, maybe you discover that they only registered the name in 2018, when you’ve been building your empire on Instagram since 2015. Truth is, they have a legal claim to that name, and you may, in the unfortunate turn out, be forced to abandon the name and all the goodwill that comes with it because you failed to do the needful from the very start. The best business decisions after all, are made proactively. This costly mistake can be avoided if you ensure that you have all the rights to use the name you choose through trademark searches and registration, @Businessdayng

at the earliest stage. With Brand Protection, you can never be too early, but you can so easily be too late. There are many other reasons why startups should protect their brands, and we cannot go through all of them here. The bottom line is ‘it is better to err on the side of safety.’’ It is better to have protection for your business and not need it, than need protection for your business and not have it. Brand Protection for Starters: the full picture After everything said so far, the complete picture is that every businessperson needs to protect their business for their own sake, and startups none-the-less. It is not compulsory to protect your brand. The only compulsory legal requirement for businesses is company registration and even that applies only for certain types of businesses. However, as much as it is not a compulsory legal requirement, it is a smart business decision that every prudent businessperson should make. Usually, the only thing stopping small business from undertaking brand protection is the absence of information about these things and in other cases, the lack of funds to carry out massive brand protection. The good news is, you don’t need all the money in the world to protect your brand and now you have all the information you need. A simple trademark protection is a big step and would give some reasonable protection – at least 50% protection – to your brand and would serve as a major legal launching pad form where to carry out any other brand protection activities latter on. Below (Image), are some basic dummy steps for small business owners or startups who don’t have much financial strength to manage some sort of brand protection:

Thursday 01 August 2019

BUSINESS DAY

Corporate Social Impact

Why more corporates must think community and sustainability Stories by ONUWA LUCKY JOSEPH

igerian corporates routinely engage in the CSR that draws plaudits from government and the general public. And it’s a good thing, whatever is done to improve the lives of others that may not necessarily register on the bottom-line, at least not immediately. But there are lots of areas where corporate organisations in Nigeria need to apply themselves on behalf of the long term interest of the business as well as the community within which the business is undertaken. The oil companies readily come to mind. Shell and its never ending battle with its host communities is well documented. The company is currently in court on many fronts with aggrieved community leaders and wives of those who were slain with Ken Saro Wiwa. The much talked about cleanup is not going to plan and the strain between the company and the Ogoni as well as other communities is quite evident. This need not be so. Despite the millions spent on education and other matters, the community feels hard done by for the way the company treats its environment and the people’s sources of livelihood. The stark reality the communities face is that one day, there may be no more oil in their ground, but by then the ground would be so despoiled that it becomes literally good for nothing. But Shell is not the only company with such a withering reputation. There are many others polluting the environment where they do business. There are those others, (whose names are not Shell), whose products, as well, do not

Aliko Dangote

augur well for the long term health of their environment. Examples of these are companies involved in production of plastics or whose products require massive usage of polythene for packaging. One

volved in the production or massive usage of chemicals for their production processes. How safely are the chemicals disposed? What are the consequences for those whose source of water or food

changes. However, because the world is so used to doing things a certain way, the disruption of such ingrained patterns can only come from new inventions and discoveries; which is where we believe our big corporates should today be channeling their energies, aside other commitments. Sub Saharan Africa has its storied peculiarities that we need transform into modern realities. How we achieve that as a people is up, to a large extent, to our big organisations which must consciously strive for more collective wealth because only when the community is healthy and wealthy, only then can we really begin to play bigger on the international stage. Otherwise, we will remain easy pickings for outsiders who with enough capital can buy us out and have us working for their interests rather than ours. This has been the unfortunate situation in many an African country. But it must change. The need for community enhancement must be at the forethought of corporate honchos especially the communications

ness, for instance to, in concert with others, donate cement on a regular basis, to schools, hospitals, those places that are falling apart, and to put its people to work to ensure that derelict buildings are rehabilitated. Where they can’t be salvaged, they can be pulled down and others stand in their place. It won’t be easy work, and it may not get the mileage a hefty donation to some ‘national emergency’ gets. However, real lives would be impacted and grateful. That is the foundation for brand loyalty and a do-good culture that carries on from one generation to another. The call is to companies with the resources to engage the brains at their disposal to bring solutions about. Fortunately, Africa has no shortage of brilliant minds. What we have a glut of, is governments and organisation that do not have what it takes to galvanise the brains at their disposal towards solving Africa’s many problems. Let it be that we begin to look beyond the contrived fineries of today to build something for posterity. Business, as indeed life, should be about posterity

Abdul Samad Rabiu

would expect that in this era of sustainability where progressive businesses are known to align their products with their CSR strategy, that there would be more companies working hard towards alternatives. We do not always have to wait for the research to be done abroad and for us to adapt. There are big corporates in-

Mike Adenuga

happen to be along its disposal path? What of batteries? Be it for cars, telephones, computers, etc. Is enough effort going in to ensure adequate disposal that does not have a long term consequences for the environment? If good research is carried out that produces alternatives e.g. paper-based or other biodegradables for packaging, etc. all the credit would go to the company for innovativeness and resourcefulness. There is big room for those who are bold in their sustainability thinking. Paperless is good, sure, but what else. Usage of domestic gas as against firewood is good, sure, but what else. It’s a universe of possibilities that is not always hamstrung by lack of finances, only imagination and right thinking. Research & Development is the big kahuna ultimately in any sustained talk about sustainability. The low hanging fruits should be harvested by all, of course. And by this, I mean behavior and lifestyle

Cosmas Maduka

and CSR strategists who more than others can relate with the reputation deficit that we have and which we need reversed. It is for reasons of sustainability that corporates should engage more, for example, in school rehabilitation and infrastructure overhaul. We expect a Dangote, BUA and others in the cement busi-

and nothing else. It is what we bequeath that makes our names indelible. I am hoping that more organisations will take up the challenge of R&D to solve our long term sustainability issues. Air pollution, noise pollution, water pollution, the answers are not abroad. They are here. Let’s get to work.

Shehu Abdullahi, Super Eagles defender, opens Football Academy in Sokoto

s someone who also grew up in Sokoto, it’s easy for me to appreciate what Shehu Abdullahi just did by opening a football academy there. Truth is, Northern Nigeria is not in any way short of sporting talents. Unfortunately, there isn’t a good management programme in place for sustainably harnessing the talents. And not just for football, but, as I remember from back then, also for handball, basketball and hockey where there were so many naturals. As a matter of fact, mid

80s, early 90s a slew of Nigerians, mostly from Northern Nigeria (natives and settlers, so to speak), were plying their trade as professionals in different parts of Africa and the world. That’s all dead now. That is why we need commend Shehu Abdullahi, a young man who sees and understands the potentials. On his twitter page, he talked about Sokoto producing players for the Super Eagles. It is in order to bring this about that his foundation, the Shehu Foundation set up the football academy. According www.businessday.ng

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to Shehu, “The target is to discover the talents, nurture them & give them the platform to excel. Sokoto State must produce the next Super Eagles stars.” Good one. He’s not just saying it; he’s putting in place the structure capable of making it happen. As we know, though, starting projects like these is the easier part. Maintenance and sustenance is the koko of the matter. We pray this stands the test of time and produces, as expected, a harvest of world beaters made in Sakkwato, Nijeriya. @Businessdayng

Thursday 01 August 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Flashback: How Access Bank Stole the Show at The SERAS 2017 MAUREEN KLINE

he Overall Prize/Most Responsible Company in Africa, won by Access Bank

at the prestigious The SERAS CSR Awards-Africa. The awards is an annual awards ceremony promoting CSR and Sustainability in Africa and highlights and

recognizes the best performers in CSR and Sustainability. It is open to Large, small and medium scale enterprise as well as notfor-profits.

From left to right: Mike Okwoche –Senior Anchor, TVC News; Amaechi Okobi – Group Head, Corporate Communications & External Affairs, Access Bank; Ken Egbas – Founder, SERAS CSR Africa Awards; Senator Liyel Imoke – Former Governor, Cross River State; Roosevelt Ogbonna – Group Deputy Managing Director, Access Bank; Omobolanle Victor Laniyan – Head, Sustainability, Access Bank; Mary Ephraim – Managing Director TRUCSR, Organizers of the Awards; Suleiman Ibrahim, Peter Dieojomah and Mrs. Emem Affiah – Director of Administration at Cross River State Festival.

When Bridge House College hosted Tony Elumelu, Ibukun Awosika & Austin Okere

ugust 16th, Tony Elumelu, Chairman of the Tony Elumelu Foundation was at the Bridge House College, Ikoyi, Lagos, to engage with the students on the occasion of its 15th annual lecture and prize giving day. He was, as usual, forthright, urging the kids to endeavour to conduct themselves always as responsible Nigerian citizens. Referring to the event as the beginning of a new phase in their lives, Elumelu encouraged them to be careful to lay the right foundation as this would form the bedrock for how their lives would turn out in the future. He also made sure to commend Mrs. Foluke Abdulrazak, the Executive Director of the College, whose passionate commitment to equipping future leaders, he said, has continually ensured the emergence of great leaders from the school. The graduating class was only too happy to hear him assure them that the door of the Tony Elumelu Foundation was open to assist them even as they journeyed through life. This

Ibukun Awosika

couraged and adjured the students at the event. “The future is digital” said Mrs. Awosika, “and we have to adjust to the new world. (Truth is, these kids don’t know anything other than digital). “Be careful on how you use technology tools that are available to you because it will leave a trail. (Most definitely) “As you step into a different level, remember that you will be held more accountable for the things you do. Learn to use technology positively; think of doing things in a new way. Don’t be afraid to start alone.” Austin Okere, on his part, remarked that for the country to see the desired change it craves for, citizens must be committed to writing a new chapter for the Nigerian society through responsible citizenship. Regretting how that the country had failed to attain its full potential due to lack of character on the part of the people, Okere urged the graduates to choose character over compromise. “When we choose character over compromise, we become stronger.” True, true, a hundred times true!

assistance more so for intending entrepreneurs amongst the students: for them the foundation’s door is perpetually ajar. Two other noted entrepreneurs Austin Okere, Entrepreneur-in-Residence, Ausso Leadership Academy, (who also doubled as chairman for the day) and Ibukun Awosika, Chairman First Bank of Nigeria, also en-

Austin Okere

Audacious Social-Change Initiatives of the Past Century

e studied social movements that defied the odds and achieved life-changing results to uncover lessons for today’s ambitious donors. Although we now take their success for granted, most of these initiatives took many decades to achieve breakthroughs. THE ANTI-APARTHEID MOVEMENT The institutionalized oppression of South Africa’s nonwhites came to an end in the 1990s—more than four decades after apartheid first became law—thanks to a tireless campaign of social, political, and economic activism. ARAVIND EYE HOSPITAL: Using a highly efficient surgical model and variable pricing, this hospital chain has reduced cataract blindness in Tamil Nadu, India, by more than 50% and serves all patients regardless of ability to pay. CAR SEATS: By 2006, some 98% of U.S. children traveling by car were restrained in safety seats, reducing their risk of death in an auto accident by 71%. CPR TRAINING More than 18 million Americans a year learn this

emergency procedure, administered to nearly half the people who experience cardiac arrest outside a hospital. THE FAIR FOOD PROGRAM: Fast-food boycotts and other efforts led by migrant farmworkers significantly improved working conditions and increased wages for tomato pickers in Florida and other U.S. states. HOSPICE CARE: This system of specialized palliative care, started in the late 1940s, now supports 60% of dying patients in the U.S. MOTORCYCLE HELMETS IN VIETNAM : Helmets specially designed for tropical climates, along with a national helmet law and advertising campaign, raised rates of use in Vietnam from 30% to 95%. THE NATIONAL SCHOOL LUNCH PROGRAM: By 2012, some 31 million U.S. children—more than half of all public school students—received free or reduced-price meals. 911 EMERGENCY SERVICES: Nationwide access to a trauma response system and other emergency services via a three-digit phone number was made available

in the U.S. in 1968. ORAL REHYDRATION SOLUTION: Widespread adoption of a sugar/salt rehydration mixture by Bangladeshi households resulted in a 90% reduction in children’s deaths from diarrheal diseases. POLIO ERADICATION: Following the development of a vaccine in 1955 and decades-long inoculation efforts, polio has been virtually eradicated globally. PUBLIC LIBRARIES: Early investment by Andrew Carnegie, coupled with long-running advocacy by interest groups, has provided 96% of Americans with easy access to free libraries. SESAME STREET: The first TV show to achieve early-childhood learning gains, launched in the U.S. in the late 1960s, is now viewed by more than 156 million children around the world. TOBACCO CONTROL: The longterm antismoking effort, started in the 1950s, eventually reduced smoking rates by more than 60% among U.S. teens and adults. (Slightly modified from © HBR. ORG)

Axxela Ramps up Schools Adoption and Renovation

xxela, the gas and power portfolio company is taking active steps to ensure that primary schools in host communities have access to quality educational facilities in conducive learning environments. So far, three schools have been adopted by the company with total overhaul and renovation activities carried out on their structures. The schools, Olowogbowo Meth-

odist Primary School, Apongbon, Olisa Primary School, Mushin, and Dele Ajomale Primary School II, Ilasamaja, are now adjudged to have met and exceeded standards of State Universal Basic Education Board (SUBEB). In achieving this, the company is making sure the pupils get the required foundation for their academic pursuits and positioning them as potential assets to Nigeria and the world at large. www.businessday.ng

BEST PRACTICE: From Opunimi Akinkugbe’s Wall on LinkedIn

visited a great work space today at Standard Chartered Bank. I love the “Nap Pod” where staff can snatch some time out to catch a few winks and be rejuvenated to continue with their busy day, energised. There is a comfortable mother’s room where you can nurse your baby in comfort, peace and privacy. Then there’s a charming garden that you can escape to for some fresh air and not be cooped

Oloye Aigbonoga, Axxela community relations manager, while speaking at the commissioning of the newly renovated Olowogbowo Methodist Primary School, emphasized that what the company does is in line with its policy of giving “back to communities where we operate”. Aside refurbishing the school, Axxela also donated books to the school library and provided school supplies.

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Tony Elumelu

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up indoors all day. Congrats to the SCB Property team for the great work space you’ve created and maintain. Workspace is critical for employee success: Wellbeing Improves positivity Reduces stress Increased productivity

Thursday 08 August 2019

BUSINESS DAY

Garden City Business Digest Dezionite loan facilitation scheme:

The book that reveals hiding places of business financing • CBN, BoI, commercial banks, grants agencies now made easy •Why startups should go for business registration, not incorporation, yet Ignatius Chukwu

wo books have been unveiled in Port Harcourt by same author on exactly how to get funding for various enterprises and what exactly one needed to do to get funding. First, one would need to know how to structure one’s business. Inside the books, the budding entrepreneur would get everything he or she needed to know in setting up an enterprise and how to structure it, step by step. The hit is; the loan seeker would see a template on how to apply and submit what is called bankable business plan. The list of where loans can be obtained in Nigeria is right inside. The first book is called ‘A Bankable Business Plan’ and the other is ‘Developing Your Enterprise”, all written by Mercy Ikeji, a woman who has accessed most of these loans and grants to build a fast-growing business empire in Port Harcourt. Unveiling the books at the PIND conference room near Genesis Event Centre in the GRA2 on August 2, 2019, Ikeji said such books are not in existence. ‘Developing Your Enterprise’ is an eye-opening guide on how to start, run and grow your business. The 51-page book contains robust list and contact of funding organizations you may need as you trudge on your entrepreneurial roadmap. The other, ‘A Bankable Business Plan’ is the secret to accessing business funding and it contains free business plan samples and template. It has 251 pages. Mercy Ikeji is described as a serial entrepreneur who started her cleaning and interior services business ‘Dezionite Interiors and General Services Limited’ with a startup grant given to her by Shell LiveWIRE Nigeria. She has successfully grown her enterprise from a onewoman business to an incorporated company with so many workers spread around Nigeria; branches in Lagos and Abuja with Port Harcourt as headquarters. She is the founder and president of Dezionite Helping Hands Development Initiative (DHDI), an NGO out to eradicate poverty among women

Mercy Ikeji, author of two books on business loans and business plans

and the youth through enterprise development and capacity building. Mercy Ikeji has accessed several loans and grants for her businesses but has maintained the discipline needed to apply the funds and pay back; a track that has sent many lenders chasing her about to take more. She began with a Shell LiveWIRE training and grant, then accessed grants from Tony Elumelu Foundation and GroFin Growth Nigeria Fund. She has also undergone several entrepreneurship and capacity-building trainings which have contributed to her vast knowledge and expertise in running a successful enterprise. She studied accounting in the university but is also a graduate of the Clarie Blare Women Mentoring Programme and Emerging Capital Business School. She is today a business coach, a certified trainer and a member of the Institute of Training and Development (NITAD). She is a consultant and accredited business development service provider who focuses on developing enterprise; building capacity of young entrepreneurs who once were like her. She is married and is now a mother of three.

Ikeji believes that with proper business planning, any enterprise stands a great chance of succeeding, given the varieties of business opportunities available in today’s world. Some of her institutional lending partners who graced the books presentation include Bank of Industry (BoI), Access Bank, Zenith. Crowds besieged the event centre, an indication of the level of appetite for capital to do business in the oil region. Loans & Partners: BoI * Startups should better register business names instead of incorporation Bank of Industry (BoI) in Port Harcourt is located at No 105 Olu Obasanjo Road. An officer thrilled the entrepreneurs on hand with details. “We fund expansion, equipment, and start-up with very bright ideas. Tenure of loan is based on turnover and cash-flow, but interest is 10 per cent maximum. BoI manages many funds for governments and organizations; FG funds, states, Local Content Development and Monitoring Board fund, Dangote Fund, etc. SMEs is 9 per cent under five years tenure.

“We have over business kinds or clusters we can fund such as adire making, animal feeds making, bakery, bottled water, aqua-culture, food processing, foundry, Nollywood, restaurant loan, foundry, entertainment fund, plastic fund, etc.’ He gave advice: “Register a business name instead of limited liability company because the processes for enterprises are less cumbersome than those of limited liability ones. The filings required for corporate bodies are many and expensive, even if you made no profits.” He said processing BoI loans is now faster due to online facilities. “Everything is now automated. We really want to promote more enterprises and push up many more entrepreneurs.’ BusinessDay gathered that the Dangote’s N5Bn Traders Fund is suspended at the moment because the fund owners have some issues they are resolving at the moment. He said when the company is through, BoI would resume the administration would be ready to resume disbursement. Access Bank: There is the need to get all conditionalities before taking any loans. Our loans are for start-up businesses, old businesses, leases, equipment funding, etc. For leases, there is no collateral. Get all the conditionalities during transaction before taking the loan. Often, customers lament that they did not know the full details; they turn round to talk about hidden charges. We have equipment funding and capital funding. Its better to go for equipment loan because the interest rate is lower, then generate your working capital. Zenith Bank: Beauticians can now access loans. There is beauty/confectionery loan at 9 per cent plus 1 per cent charge, nothing more. Agric loan is available too, from N2m to N10m. SME loan is 24 per cent interest rate. The amount you get depends on volume of your turnover. Conclusion: The next day, training on how to structure business plans and face to face opportunities with banks took place at Port Harcourt Library near Pleasure Park on Aba Road.

Wike makes two strong moves in two days Port Harcourt by Boat

IGNATIUS CHUKWU

overnors seem to show their real colours in the second tenure; dealing out some bitter pills they feel needed to turn around the society or deal with certain issues and persons in the state. Goodluck Jonathan wanted such an opportunity but never got it. In just two days, Gov Nyesom Wike of Rivers State sent two strong signals that would otherwise be seen as strange. The first is his order that Rivers State is not to be used to launch any push to topple the FG. Strange! Thus, he ordered the arrest of any RevolutionNow protesters in the state. This killed the move and emboldened other PDP governors to so do. Before now, many felt anybody that wanted

to hurt APC or FG or Muhammadu Buhari should run to Rivers. Wike said: “Rivers State does not subscribe to what the RevolutionNow protest represents and Rivers State is not part of the protest”. He directed security agencies in the state to not only arrest anybody involved but to also take all necessary steps to prosecute such persons. In the past, many who wanted to hurt the FG, APC or Buhari would run to Rivers. Now, Wike showed red eye. Was it for Buhari, was it to protect the Constitution and nationhood, or was it to preserve himself? Many still try to interpret. The next strong move is declaring that Port Harcourt is dirty. This could only have been said by the opposition. There two things that would make you APC in the state; saying there is insecurity or that PH is dirty. On his inauguration on May 29, 2019, Wike mentioned his areas of high success but listed sanitation and environment in area of low points. Tongues wagged that Wike and Sanitation boss, Felix Obuah, were falling apart. No evidence was given. Inquiries to RIWAMA did not get any response, so speculation remained the greater part of reason. Many have hinted that somebody was accumulating funds to contest for governor in

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2023 and that the sanitation contractors may not be getting what was recorded and that the governor was aware and not happy. All is speculation. Now, Wike made a strong move by inviting the sanitation contractors and talking to them directly. This alone seems to be a huge indictment of the man handling them. Wike merely repeated the threats obuah used to render; work or be sacked. Now, why would the governor choose to deal directly with them only to say what Obuah had been saying?

Governor Wike

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Could he be sending signals that he needed to get the task done himself? Wike said he gave all Sanitation Service Providers an ultimatum of seven days to effectively clean up their respective beats or lose their contracts. Wike said; “As I go out daily, I feel unhappy because of the filth in different parts of the state capital. The job of cleaning this town must be done. At present, Port Harcourt is dirty and we must accept this fact. I stated this during my inauguration address. But we are determined to change the situation”. Wike charged all environmental service providers to live up their responsibilities and justify the fees paid by the state government. Fees? Could this be the hint? “I was not the person who awarded the contracts. I don’t even know the contractors. I have not restricted contracts to my supporters. Several of you are from the opposition parties. In the past, Wike would not do anything to show or confirm any cracks between him and Obuah who is the chairman of the PDP in the state, his ally in pushing Ake out as chairman and Chibuike Amaechi from PDP. Obuah was there all through and was not quoted to have said anything, not even to assure his boss that the order would be carried out?

@Businessdayng

Thursday 08 August 2019

BUSINESS DAY

Investing in Rivers State Manufacturing:

ALCON’s panel prowess may help Nigeria push deep in AfCFTA • ABB sees great power from Nigeria in Africa and ECOWAS markets • Nigerian content board sets 70% target by 2027; bans importation of panels • Bank of Industry says has over N1trillion base to push for manufacturing •Top consumers (NLNG, Shell) want ALCON to expand range Ignatius Chukwu

LCON Nigeria Limited unveiled its new factory in Trans-Amadi, Port Harcourt, from where it is manufacturing electrical panels and other products that would stop or reduce importation of low voltage panels. Previously named Med Construction (Nigeria), ALCON established about May 1982 but now with over 2,500 including about 40 expatriates, is an engineering company, procurement, construction, installation and commissioning company that now helps Nigeria in its importsubstitution campaign. This must be why top industry leaders and regulators such as the NLNG, Shell, BOI, PHCCIMA, MAN, Nigerian Content Development and Monitoring Board (NCDMB), and SON made impressive presence at the unveiling. The company brandished its records in quality assurance, safety

and international standards that carry top-notch certifications from almost every important national and international organization. ALCON leaders: * The products are world class, more plants to open soon At the event, many important voices were heard and deep revelations were made for those who can interpret and act. ALCON leaders, Olatunde Ayeni (chairman), Deardo Della Santa (MD), and Uba obasi (director of manufacturing) gave thrilling accounts of the business journey and manufacturing pathway of the company and how their products can stand any quality test in the world. They hinted that another plant would soon be opened. ABB country director: Hany Abdulazim * Nigeria should target African market This is fantastic and we fully support it. This is local value-adding to the power sector. This will create jobs and productivity will be boosted. It

Rivers deputy governor, Ipalibo Harry Banigo, in handshake with ALCON bosses; chairman (Olatunde Ayeni), director manufacturing (Uba Obasi, and MD (Dela Santa)

Olatunde Ayeni, ALCON chairman

is the outcome of about four years of collaboration with ALCON to provide technology. We have more things to do in Nigeria and at ALCON. It is important for ALCON to target the ECOWAS market, especially now that African Continental Free Trade Area Agreement (AfCFTA) has been signed. Nigeria can be made export base to Africa. An official later revealed that inspections were thorough and that their experts abroad always dropped in to ensure that what was submitted was real. MAN: Munsur Ahmed * Manufacturers must focus on Africa’s N3trillion market Ahmed lived and worked in Ph long ago and now wants the city and Trans-Amadi to bounce back and drive the nation’s industrialization quest. He said Nigeria did wrong things that led to the crash of industrial cities such as PH and Kano. He wants MAN and NCDMB to plot the way out for the sake of industrialization and help manufacturing to move from 9 per cent to 15 in GDP. Nigeria has just signed the AfCFTA and the 55 countries transact in a market zone of about 1.2Bn people

handling over $3.4 trillion worth of products. Manufacturers such as ALCOn should focus on this because this is the right time to start. He described Rivers as a business-friendly state and hinted of coming back to meet with Gov Nyesom Wike for the sake of opening an industrial park, a dream for MAN in the state. He said MAN will fully support ALCON because Africa is rearing to grow, with a market waiting to occupied. SON: For DG ALCON has made us to domesticate international benchmarks The official who represented the DG said SON was proud of its contributions to the success of ALCON through rigorous inspections including the ones from headquarters. “The products have conformed to Nigeria’s industrial and international standards. All are quality-assured and certified locally and internationally. Quality is a moving target and we will keep coming back. Because at ALCON, we have domesticated the ISO standard.” Nigerian Content Board: Simbi Wabote * Nigeria targets 70% local content in 2017 ALCON and ABB remained faithful in Nigeria and Rivers State even when many others fled. This commissioning represents success of Nigerian content. It’s about building gradually. Our focus is domiciliation and domestication. The NCDMB is not about Nigerianisation. If you want to bring what Nigeria does not have, and you want to bring any number of expatriates, we will approve, so long as you give us a plan to domesticate the positions. This will drive human capital development in the oil industry. ABB has a global reputation. You kept the working partnership. You have kept faith with each other. International OEMs will be eager to come because

of this success story. We have developed a 10 year strategic roadmap to achieve 70 per cent local content by 2027. On AfCFTA, I studied the draft in 2017, and I saw it as a creeping target. Some governors are pro-active. Imo has asked for collaboration on industrial park and I was with the governor yesterday. Edo has also shown some interest. I urge states to key into it and be a catalyst. To Alcon, I would say, widen your work beyond oil/gas to agric, aviation, ICT, etc. AfCFTA too is a window. ALCON should add more panels on its production lines. With NCDMB certification that you have met, there is no more permit to import panels in those grades made here. People can testify that we keep to our word. We can’t compete with the Chinese in prices because most countries have cheap loans (5% against our 23%). We must thus support our people, but safety should be watchword. So, put safety first because it’s the hallmark of the oil/gas industry. Deputy Governor, Ipalibo BanigoHarry Tell FG to repair road to Onne Port This is a great event and we must give all assurances to ALCON. Tax harmonization is on course. What we ask is that you give people jobs; give them managerial positions because we have quality manpower in Rivers State. The governor fixed roads to the ports, especially the Port Harcourt port. Onne port has collapsed. MAN should help us to press this matter. The body language we get is that this port is not important. The Rivers State government tried in 2015 to fix it with multinationals working there but is bad again. On industrial park, we urge Wabote to include Rivers State. We are very keen on this.

tem of skills development, analyze opportunities for employment creation and to develop models of youth jobreadiness or workforce development and get them job placements that are relevant to their skills.

“PIND’s study included a labour market assessment in the pilot states to understand the growth of each industry (ICT, Agriculture, Construction); the impact of each sector’s growth on employment; and how a youth employment programme could support and grow the labour force,” he said. He said beyond fast-tracking development of the region, youth employment is also critically linked to de-escalation of conflict in the Niger Delta and in collaboration with PHCCIMA they want to see more young people sustainably employed. PHCCIMA hierarchy such as 1st Deputy President of PHCCIMA (Mike Elechi), 2nd Deputy President, Chinyere Nwoga (PhD), PHCCIMA Treasurer, Tony Nwogbo, Financial Secretary, Oriaku Hanson Oyet-Ille, Publicity secretary Mercy Abu, Uche Onochie, elected council member, chairman of SME’s/ICT committee, and Edughom Hanson made striking remarks.

PHCCIMA fully behind youth scheme by PIND • Saleh says PHCCIMA is ‘A’-rated in Nigeria Ignatius Chukwu

ort Harcourt Chamber of Commerce has thrown its weight behind the Niger Delta Youth Employment Pathways (NDYEP) project, initiated by the Foundation for Partnership Initiatives in the Niger Delta (PIND). President of PHCCIMA, a chief, Nabil Saleh, made this declaration when the Executive Director of PIND, Dara Akala, led a delegation of senior PIND directors on a business visit to the chamber. The president said PHCCIMA has a history of successful collaborations with PIND, particularly at the RIVJOB project, the Rivers State Employers Round Table where he served as chairman among. According to him, PHCCIMA is not just the second-largest chamber in the country, but also the most vibrant rated category A. Because of this, he said PHCCIMA can coor-

dinate other chambers of commerce to achieve set objectives of the PIND project. “We have looked through your partnership request and I must confess it is a laudable project we will like to support because our objective has always been how to ensure thriving and stimulation of businesses.” In his remark, Akala said as a partnership-based organization, the visit had become imperative because PHCCIMA is not just strategic as the head of the organized private sector but also a massive skills-demand hub that would help the foundation through partnership to bridge the gap and support the quest to achieve her NDYEP objective for Niger Delta. He said the NDYEP projects are targeted at agriculture, ICT, construction sectors and the emerging renewable energy; and that the project is not just to reduce youth unemployment by creating paid employment, but also to stimulate and groom youths on entrepreneurship. Making a power-point presentawww.businessday.ng

tion, the PIND project lead, Niger Delta Youth Employment Pathways, Emeka Ille, said; “PIND is implementing the NDYEP project in three pilot states; Abia, Akwa Ibom, and Rivers states, with the goal to map the ecosys-

R-L: PHCCIMA President, Nabil Saleh with PIND executive director, Dara Akala

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Thursday 08 August 2019

BUSINESS DAY

Live @ The Exchanges Nigerian equities bleed further Iheanyi Nwachukwu

ow activity in large cap names on the Nigerian Bourse continues to determine the direction of the market. The latest being negative close seen on Wednesday August 7. At the sound of trade closing gong, the Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased further by 0.42percent. The market’s Year-to-Date (Ytd) negative return printed at -12.78percent. With the dearth of market catalysts, analysts do not see any res-

pite for the bourse Thursday. The All Share Index decreased from preceding day high of 27,527.40 points to 27,412.13 points, while Market Capitalisation decreased from N13.415 trillion to N13.358trillion, which implies N57billion loss. The stock market activity measured by volume and value traded dropped by 25percent and 48percent respectively with MTNN accounting for 33percent of turnover. On the losers table, MTN Nigeria Communications Plc declined most, from N128 to N127, after losing N1 or 0.78percent,

Lafarge Africa Plc followed, from N14.5 to N14.3, losing 2kobo or 1.38percent, while Continental Reinsurance Plc declined from N1.55 to N1.4, losing 15kobo or 9.68percent. The shares of Conoil Plc increased most from by N1.05 or 6.33percent, from N16.6 to N17.65; also, Dangote Flourmills Plc followed after rising from N20 to N20.3, adding 30kobo or 1.50percent. Also, FCMB Group Plc advanced from N1.6 to N1.72, adding 12kobo or 7.50percent. “Most of the stocks on the premium board and main board of the Exchange are trading at year-lows, thus, we do not rule out the possibility of bargain hunting across some of the fundamentally sound counters”, according to market analysts at Lagos-based Vetiva in their August 7 note. FBN Holdings Plc, Transcorp Plc, FCMB Plc, Lafarge Africa Plc, and Zenith Bank Plc were actively traded stocks. In 699 deals, stock investors exchanged 39,422,265 units valued at N212.757million.

WAPIC Insurance profit before tax up 67% in H1 Modestus Anaesoronye

nderwriting firm, WAPIC Insurance Plc has announced its unaudited financial results for the half year ended June 30, 2019, recording a profit before tax (PBT) of N401 million, an increase of 67 percent from N241 million recorded during the same period in 2018. The Group, a multi-line insurance company with headquarters in Lagos also posted a gross written premium (GWP) increase year-on-year of 24 percent to N8.7 billion compared to N6.9 billion written in the same period in 2018. This according to the company was buoyed by sustained leadership status in some major accounts, attainment of increased market share and enhanced underwriting capabilities, the company said. The Group’s underwriting profit decreased slightly by 5 percent year on year to N1.2 billion, which the underwriter said was impacted largely by growth in underwriting expenses for major businesses in the review period occasioned by

the growth in the top line. Its cost optimization measures paid off as operating expenses dropped by 11 percent to N2.1 billion year-on-year, compared to the prior period’s position of N2.4 billion. Commenting on the result, Yinka Adekoya, managing director, WAPIC Insurance Plc, said our Group’s financial performance in the first half of the year is largely in line with our growth expectations and strategic aspirations. Adekoya noted that despite the prevalent tepid economic conditions with GDP growing below market expectation at 2.0 percent, we grew its gross written premium higher than its growth rate target of 20 percent. “This positively influenced our profit before tax position, which grew at a doubledigit growth rate of 67 percent to N400million when compared to N241million reported in H1 2018.” She also stated that as efforts are geared towards positioning the company for long-term success, “we trust that our ongoing digitization efforts and bestin-class customer experience offerings will open up

new opportunities, which we believe will ensure the continued creation of sustainable value to all our stakeholders.” Yinka further remarked that “within the first half of the year, precisely in May 2019, the National Insurance Commission (NAICOM) announced a major increase across board in the minimum paid-up share capital of insurance and reinsurance operators in the country. With this new Minimum Capital Requirement (MCR), a further consolidation of the Nigerian insurance sector is imminent, as some insurers may seek to merge, or be acquired by bigger firms, in a bid to comply with the Circular. “There is absolutely no doubt that the new MCR will have a significant impact on the Nigerian Insurance Industry given the country’s untapped vast potential in the insurance market space. For Wapic, our general insurance business is adequately capitalised for the new MCR, while measures are already in place for the life subsidiary to be fully capitalised before the June 2020 deadline.”

Thursday 08 August 2019

BUSINESS DAY

news

Nigeria’s fertiliser imports drop ... Continued from page 1 deal, is in its third stage of implementation and has improved the country’s local capacity to blend and produce fertilisers, thus ensuring timely supply of product to farmers and conserving foreign exchange it would have spent on importing the product. It has also attracted lots of investments into the sector from fertiliser heavyweights such as Indorama, Dangote, Notore and OCP Africa. Currently, the investments into the industry have reached an all-time high of an estimated $7.5 billion (N2.7 trillion). “Massive investment has come into the sector since the Federal Government liberalised the fertiliser industry. We now produce the NPK that we need for our local consumption and this has seen imports constantly reduce since the PFI started three years ago,” Gideon Negedu, executive secretary, Fertilisers Producers Suppliers Association of Nigerian (FEPSAN), told BusinessDay in a response to question. “From 11 blending plants that we started with, now we have 24 blending plants. Private sector is taking the lead in the industry with the government providing the necessary support,” Negedu said. The initiative was to disrupt the importation of blended fertiliser statusquo by directly negotiating discounted contracts to procure the four constituent raw materials for NPK fertiliser – urea, limestone granules (LSG) which are sourced locally; Diammonium Phosphate (DAP) imported from Morocco, and Muriate of Potash (MOP) sourced from Europe – and blending these locally to produce NPK at reduced cost. According to the PFI document seen by BusinessDay, the fertiliser industry possesses a blending capacity of 4 million tonnes of NPK annually and 2 million tonnes production capacity for urea, with the capacity to employ over 250,000 people in both direct and indirect jobs across the country. But before the initiative, the country’s local blending capacity utilisation was

10 percent of the annual 6 million tonmes of both urea and NPK. Experts estimated the current capacity utilisation of the industry to reach 45 percent with the 24 blending plants in operation. Now, farmers buy a bag of fertilisers at N5,500, as against N8,000-N9, 000 of imported brands, according to the PFI document. BusinessDay spoke with some farmers across the six geo-political zones and found out that the cost per bag of fertilisers is between N5,000 and N5,500. “We used to import huge amount of fertiliser but now that has changed since the government deal with the Moroccan government,” Ibrahim Kabiru, national president, All Farmers Association of Nigeria (AFAN), said. “Fertilisers are readily available for farmers now and we buy between N5,000 and N5,500 per bag because we are now blending locally. Prior to the initiative, we were buying per bag between N9,000 and N12,000,” he added. Under the initiative, the government worked with FEPSAN to identify the problems in the industry and how to address them, experts say. “With the price of fertilisers at N5,500, farmers will be able to use enough quantity needed for optimum yield per hectare,” said Abiodun Olorundenro, manager, Aquashoot Limited. “Farmers usually do not use sufficient fertilisers because of the high cost of fertilisers in the country. But with the deal which has brought down the price to N5,500, they may start applying enough,” said Olorundenro. He noted that farmers are expected to use a minimum of eight to10 bags of fertilisers per hectare going by basic agronomy practice. In March 2019, the Senate passed the Fertiliser Quality Control Bill (FQCB) which is to safeguard the interest of farmers against adulteration, nutrient deficiencies and short weight and create an enabling environment for private sector players interested in investing in the sector.

NES#25 to emphasise shift in gears... Continued from page 2 designed to enable Nigeria to achieve an open market economy, the first summit also defined areas of focus in building a competitive economy across ‘New Frontiers’ consisting education, macro-economic stabilisation, privatisation, deregulation, ‘infrastructurisation’

and democratisation,” Ighodalo said. “After days of dialogue and deliberations, the Federal Government at NES#1 adopted the underlying economic philosophy that would be the premise of 21st Century Nigeria,” he noted.

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

L-R: Nnamdi Okonkwo, managing director/CEO, Fidelity Bank plc; Obafemi Hamzat, deputy governor, Lagos State, and Ernest Ebi, chairman, board of directors, Fidelity Bank plc, at the the Fidelity SME Funding event organised by the bank in Lagos, yesterday.

Pressure builds as oil falls below budget ... Continued from page 1 ducer, but oil exports still account for a significant chunk of total inflows. A persistent current account deficit and lower foreign portfolio inflows have already sent the naira tumbling this year, albeit marginally, but an unprecedented oil price rout could deal the biggest blow yet. In July, the naira weakened by 26 basis points to N361.68 per US dollar at the Investors and Exporters (I&E) window, which is a market-reflective rate. The pressure has continued into August, sources say, with the currency trading closer to N363 per dollar for the better part of the month, the lowest level since the presidential elections that ushered in Muhammadu Buhari for a second four-year term in February. The Central Bank of Nigeria (CBN) carried out an unexpected open market operation (OMO) auction Wednesday, in what traders perceived as an effort by the apex bank to keep the exchange rate stable. The naira closed at N362.83 Wednesday, according to FMDQ data. The CBN typically carries out OMO auctions on Thursdays. An unplanned OMO auction is not the only thing the CBN has done differently to prop the naira. The apex bank has also been forced to step up intervention in the I&E window, with spot and forward sales totalling US$538 million in July, also the highest monthly intervention by the CBN in 2019. The impact of the in-

terventions took a toll on external reserves which fell by 0.37 to US$44.9 billion – 7.05 months of import cover. It has since fallen further to $44.8 billion since the start of August. If the oil price continues its free fall, the country’s external reserves position will weaken, as the CBN has signalled its commitment to keeping the exchange rate stable. Emerging-market (EM) currencies have already erased 2019 gains with the MSCI currency gauge dropping 0.5 percent this year, reversing yearly gains of as much as 2.2 percent just a week ago. “The market reaction will likely be a prolonged period of weakness both in EM currencies and EM equities as investors adjust to lower GDP and earnings growth projections,” Per Hammarlund, chief emerging-markets strategist at SEB AB, said. A decline in oil prices also means more pain for Nigerian stocks, which are down some 12 percent year to date, the worst performance of the biggest economies in Africa from South Africa to Egypt. Nigerian shares fell 0.4 percent on average Wednesday. Perhaps the biggest implication of the oil price rout is that it casts a cloud over the implementation of Nigeria’s N8.9 trillion 2019 budget. “Nigeria must watch the oil market with bated breath and hope the US/ China trade war is resolved as quickly as possible,” said Johnson Chukwu, a fund manager and chief executive officer at Lagos-based

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advisory firm, Cowry Assets. “If the war escalates and oil stays below the budget benchmark for too long, it’s a threat to the implementation of the 2019 budget,” Chukwu added. The Federal Government’s N3.73 trillion projected oil revenue for 2019 is predicated on an oil price of $60 per barrel, $4 above Wednesday’s price of $56. “Clearly, the decline in oil prices is a big source of worry in fiscal terms, because it may leave us with no option but to overshoot b or row ing,” said Wale Okunrinboye, head of research at pension funds manager, Sigma Pensions. Oil has now officially entered bear territory, as prices are down 20 percent since attaining a peak last April. It g e t s e v e n w o r s e. Crude oil prices could sink to as low as $30 a barrel if China decides to buy Iranian crude oil in retaliation to the latest US tariff measures, according to Bank of America Merrill Lynch. When oil prices found a floor around $40 in the first quarter of 2016, the Nigerian economy slid into a recession and the CBN began restricting scarce forex for what it considers important items and began to artificially prop the naira to maintain exchange rate stability. The long-term effect of these controls is an economy with weak growth. “Within six months if we don’t see an improvement in oil prices it means that foreign investors will begin to get worried and we might see a massive @Businessdayng

outflow of funds from our fixed income instruments or investment,” Gbolahan Ologunro, an equity research analyst at Lagosbased investment firm, CSL Stockbrokers Ltd, told BusinessDay. To ascertain whether oil prices will stay lower for longer, much will rely on how quickly the US and China can resolve their ongoing spat. The trade war between the world’s two largest economies has fanned fears of a global economic slowdown, which would then translate to lower oil demand and lower revenue for countries like Nigeria where oil accounts for a large chunk of budgetary inflows. “Oil prices below $60 will have an impact not just on Nigeria’s fiscal numbers but also on external sectors account. It means our current account balance will swing into a deficit once again in 2019 which will further lead to capital outflow pressures from foreign investors,” Abimbola Omotola, analyst at Chapel Hill Denham Management Limited, said. Francisco Blanch at Bank of America Merrill Lynch wrote in a research note this week that oil is “at the edge of a cliff”. He said growth in global oil consumption has slowed to about 600,000 bpd in the past six months compared with an average of 1.5 million bpd over the past four years. “In our view, global oil demand has been trapped for some time between the negative effects of protectionism on industry and the mildly positive effects of populism on consumer sentiment,” Blanch wrote.

Thursday 08 August 2019

BUSINESS DAY

news Kaduna, Delta, Anambra top states with most effective e-governance platforms KELECHI EWUZIE

aduna State government has emerged tops as the state with the most effective website. Centre for International Advanced and Professional Studies (CIAPS) governance report index on e-governance has shown. The e-Governance Report on Websites of Nigerian states prepared by students of media/journalism and digital media of CIAPS ranks the website of Kaduna State government as the most effective with 72 percent scores based on 10 key criteria. The criteria include: User friendliness, empowerment opportunity, directory updated, interactivity, content relevance, updates, policies, accountability and call to action. Also, Delta State with 70 percent; Anambra State 65.5 percent; Kano State 65.1 percent; Ekiti State 64.5 percent; Lagos State 64 percent; Akwa-Ibom State 64 percent; Oyo State 61 percent; Enugu State 56.5, and Plateau State 54 percent make up the top 10 state governments with an active websites. The e-Governance report on Websites of Nigerian also indicated that Taraba State had the lowest score with 20 percent while Adamawa, Bayelsa, Cross River, Niger, Imo and Zamfara have non-existent websites.

Anthony Kila, director, CIAPS, while reacting to the outcome of the report bemoans the neglect of websites by federal and state governments. Kila says when you talk about democracy, e-Governance must be taken seriously because the world is going digital, adding that e-governance tackles pollution and corruption best. “The future is digital. So, the rational thing to do is to be prepared to go digital too. It is sad that we still have to tell our leaders this at this point in time,” Kila states. The report also indicates only two states scored 70 percent and above in the whole of the process. The category was broke down into four segments that consisted of the top 10 states, the middle states, the bottom 10 and the non-existent websites states. “Kaduna led all other states with 72 percent, while Delta followed with 70 percent. On the non-existent list, we have Adamawa, Bayelsa, Cross-River, Niger, Imo and Zamfara states. There is no data on interactivity because all that were evaluated failed to respond to our mails after communicating to them via their e-mail addresses provided on their websites,” the e-Governance report on Websites indicated.

High unemployment poses threat to Africa’s biggest economies Gbemi Faminu

igh unemployment rate in Nigeria as well as South Africa, is hurting investors and creating insecurity that puts hundreds of investments at risk. Nigeria’s unemployment rate is 23.1 percent as of the third quarter of 2018, according to the National Bureau of Statistics (NBS). The data further reveals that while many people are unemployed, others are underemployed and few are being employed South Africa’s unemployment rate, on the other hand, increased to 29.9 percent in the second quarter of 2019, from 27.6 percent in the previous quarter, the highest recorded in over 10 quarters, leaving 6.7 million people between the ages of 15 and 64 years jobless. “Unemployment is rather too high in Nigeria, and South Africa,” Matthew Ibeabuchi, CEO of MD Services Limited said. “It breeds insecurity, putting investors and their investments at risk. Many investors in the agriculture sector have abandoned their farms and investments in the North East and many are also doing the

same in many parts of the country due to herdsmen problems. You cannot have sustained investments when the majority of the youths are hungry, poor and jobless,” he said. Boko Haram terrorist group has sacked farmers and investors in the North-East states of Borno, Adamawa, and Yobe. Business experts believe it is caused by long years of poor education and joblessness. Large enterprises such as Flour Mills of Nigeria and Honeywell have since relocated their offices to more peaceful states. Many investors in the Agric sector no longer visit their farms as the number of deaths from farmer-herdsmen crisis increases. “Unemployment problem is a time bomb,” said Simeon Okolo, former national president, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) in Aba. “Unless we move fast to curb it by promoting small businesses, we are not doing anything,” he added. South Africa’s economy is fast deteriorating, with power cuts hurting businesses leading to low productivity and job loss. Eskom, the publicly-managed power holding company in South Africa is hugely indebted like Nigeria’s power dis-

tribution companies (DisCos), prompting questions as to whether privatization or government ownership is better. Crimes such as theft and robbery have been on the increase in South Africa, like they are in Nigeria, as long years of graft hurts Africa’s two biggest economies. Foreign exchange crisis, which led to the recession of 2016, shut down at least 222 small-scale businesses and 54 manufacturing firms in one year in Nigeria, leading to 180,000 job losses, according to a 2016 report by the Manufacturers Association of Nigeria (MAN) and the NOI Polls. A number of firms have shed jobs as they labor under the high cost of production and lack of infrastructure. Manufacturers are selling to majorly poor consumers who can hardly buy at competitive prices. A report from Vizon research shows that the unemployment rate in Africa will rise to 5 percent in 2020 and will continue to increase on the back of an increasing population. “Ten years on from the global financial crisis, the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and

policy-makers to put in place reforms necessary to underpin competitiveness and bring about muchneeded increases in productivity,” the World Economic Forum (WEF) ’s 2018 Global Competitiveness Report states. According to the 2019 World Bank’s Doing Business Index, Nigeria ranked 146th out of 190 countries, scoring 52.89 out of 100 points, while South Africa ranked 82nd position, which reflects the difficult situations business owners find themselves in both economies. The National Bureau of Statistics (NBS) recently released the National Survey of Micro Small & Medium Enterprises (MSMEs) for 2017 and it showed that the number of medium scale enterprises dropped by 61 percent from 4670 in 2013 to 1793 in 2017 while the total MSMEs grew marginally by 12.1 percent. Adesola Sotande-Peters, vice president of finance at Unilever Nigeria said that the consumer goods industry is battling various challenges that are constraining the Fast Moving Consumer Goods (FMGC) as the sub-sector battles various issues, including the high cost of production and foreign exchange crisis.

Leadway hosts seminar on modern strategies to boost agric investment Seyi John Salau

s part of its contributions to Federal Government efforts to boost the agric value chain, Leadway Assurance is set to host a breakfast seminar to discuss modern trends in investment and managing risks in the agricultural sector. Themed ‘Using Crowdfunding platforms to invest in Agribusiness,’ the one-day seminar is scheduled to hold in Lagos, August 16, 2019, and will draw frontline agribusiness experts as resource persons. Among the speakers expected at the event are Uka Eje, co-founder/CEO, Thriveagric; Onyeka Akuma, managing director, Farmcrowdy, and Ayoola Oluga, co-founder/CEO, Agrecourse. Ayoola Fatona, head, agric and micro insurance, Leadway Assurance, and Adetola Ade-

gbayi, executive director, general insurance, Leadway Assurance, are also among the panellists. According to Gboyega Lesi, commercial director, Leadway Assurance, the resolve of Leadway Assurance Company Limited to organise the one-day seminar is driven by its belief that the agric sector holds so much promise for the nation’s economic revitalisation and thus requires various players from the sub-sectors to collaborate to unearth innovative strategies that could engender growth, development and viability of agribusiness in a manner that mirrors modern global trends. Speaking further on the benefit of the seminar, Lesi noted that sourcing investment and holistic agricultural risk management had remained strong challenges affecting entrepreneurial success in the sector.

We have extreme faith in NNPC - NEITI Olusola Bello

igeria Extractive Industries and Transparency Initiative (NEITI) has expressed absolute faith in the ability of the new management of Nigerian National Petroleum Corporation (NNPC) to turn around the fortunes of the Nigerian petroleum industry. The NEITI says the commitment to transparency and accountability by the new NNPC management headed by Mele Kyari has prompted it to decide to cooperate with the corporation. Waziri Adio, executive secretary, NEITI, and coordinator, Extractive Industry Transparency Initiative (EITI) implementation in Nigeria, who said this during a courtesy visit to the NNPC new boss Abuja, expressed confidence in the ability of the new management to transform the corporation for the good of the country.

“We have extreme faith in the new management, we are ready to work with NNPC one thousand percent, we are working together for the good of the country,” the NEITI chief said. He said based on Kyari’s credentials and antecedent, “he is somebody who brings something to the table, something that is not usually associated to this institution, that is transparency.” He assured that from the goodwill that had trailed the NNPC in the last one month, the corporation would be repositioned, and in no time, “It would be mentioned in the same light as its peers all over the world.” The executive secretary however advised the management to be proactive by making information on all its transactions, especially crude oil lifting contracts and contractors available to the public. www.businessday.ng

L-R: Adebimpe Adebiyi, director, family health, Federal Ministry of Health; Aisha Ummi el-Rufai, wife of Kaduna State governor; Emmanuel Meribole, director, Health Planning and Statistics, Federal Ministry of Health; Mairo al-Makura, representinge of the wife of the president, and Pernille Ironside, deputy country representative, UNICEF, during the launch of Zero Water campaign, dissemination of National Maternity Assessment Report and public presentation of exclusive breastfeeding video to mark the 2019 World Breastfeeding Week Ceremony in Abuja.

Obaseki reiterates Edo’s readiness to host U-20 Women’s World Cup, National Sports Festival

… hosts PMAN, pledges support for reforms in creative industry

do State governor, Godwin Obaseki, has reiterated the state’s preparedness to host the FIFA Under-20 Women’s soccer competition as well as the National Sports Festival next year. He gave the assurance during a meeting with a delegation of the Nigeria Football Federation (NFF) and FIFA inspection team at Government House in Benin City, Wednesday. Obaseki said the revamp of the Samuel Ogbemudia Stadium, which is near completion, would host various local and international sporting events. “We take sports seriously in the state because 72 percent of our population are under 30 years of age. We are building 20 mini-stadia across the state and four of the stadia

can be used as practice fields,” he said. The governor said the fibre optic cables being laid across Benin City metropolis would provide the infrastructure to broadcast matches, adding that the Benin Specialist Hospital would provide the needed medical services. Earlier, the NFF President Amaju Pinnick said the inspection team had also visited the Lagos State government, and was in Edo State to assess its sporting facilities ahead of the 2020 Women’s Under-20 World Cup competition. The NFF boss commended the governor for reviving sports in the state, especially the repositioning of Bendel Insurance Football Club. “You have done a lot for football development in the country and the Nigerian foot-

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ball community wants me to thank you for the role you played in ensuring our girls qualified for the last under-20 World Cup.” He added that Edo would also be hosting a match between the Super Eagles and Benin Republic on November 11 as well as the NFF Annual General Conference. Meanwhile, the governor has pledged support for reforms that would help reposition the creative industry and put it on positive growth trajectory. He made the pledge in Benin City while playing host to members of Edo State chapter of Performing Musicians Employers Association of Nigeria (PMAN), in Government House, Benin City. “As a government, we believe in what you do, and @Businessdayng

ready to collaborate with you because you are into the business of creativity which has huge potential. “The business has to be regulated to contribute more to the development of the state. You will have to make the move to clean up the system and as a government, we will surely support you,” he assured. He stressed the need to clean up the creative industry to ensure genuine artistes are left to do their business, adding that enforcement of regulations will be successful if there is a database of members and a proper booking system. “We are working to return night life to the state through a project called Electrify Edo and we will light up 50 kilometres of streets to boost socioeconomic activities at night.”

Thursday 08 August 2019

BUSINESS DAY

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Thursday 08 August 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

PHILIP GEORGIADIS, ADAM SAMSON, AND ALICE WOODHOUSE

nvestors piled into government bonds on Wednesday after a trio of central banks slashed interest rates, China’s currency weakened further and fresh warning signs emerged over the health of the German economy. US Treasuries, which benefit from looser monetary policy and are typically seen by investors as a haven in times of market stress, extended their recent rally, with the yield on the 10-year benchmark bond falling 9 basis points to as low as 1.645 per cent, its lowest level since October 2016. The moves in the bond market came as central banks in India, New Zealand and Thailand signalled concerns over a slowing global economy by cutting interest rates by more than expected. A steep fall in German industrial production also raised fears that the eurozone’s largest economy could be heading for its first recession in six years. US Treasury yields have fallen 37bp this month alone as trade tensions between Washington and Beijing have escalated. Joachim Fels, global economic adviser at bond manager Pimco, said Treasuries could go negative when the world economy next enters a prolonged slump. “If trade tensions keep escalating, bond markets may move in that direction faster than many investors think,” he said. German 10-year Bund yields, al-

Government bonds rally amid mounting economic gloom Trio of central banks cut rates in sign of concern over faltering global growth

ready well below zero, fell a further 6bp to minus 0.598 per cent, while UK 10-year gilts fell 4bp to touch a fresh record low of 0.489 per cent. The move into bonds comes amid a wave of action from central banks. The Reserve Bank of India cut rates by 35bp, a bigger move than

had been expected, New Zealand’s central bank aggressively cut its benchmark policy rate to a fresh all-time low, prompting the local currency to fall sharply, and the Thai central bank unexpectedly cut rates. “As trade war tensions rise and the ripples are felt across global

markets, overnight saw a further sign that central banks seem fixed on a race to the bottom,” Rabobank said. Traders now expect the Federal Reserve to cut rates by 110bp from the current level by the end of next year to 1.045 per cent, according to data on the federal funds futures

market. The deep cut to the central bank’s main rate would be in addition to the 25bp reduction agreed by policymakers last week. Participants in the futures market had been forecasting as recently as April that the rate would finish next year at 2 per cent. Expectations for sharp cuts from the Fed has placed pressure on other central banks, particularly those in emerging markets, to reduce their rates to keep local currencies from appreciating too sharply. The market value of outstanding negative yielding bonds is now at a record $15tn, according to Barclays. “These aren’t even terrible economies. Not like, say, Germany,” said Kit Juckes, a macro strategist at Société Générale, referencing the fresh German industrial production data. Spiralling trade tensions were back in focus after the People’s Bank of China set the renminbi daily reference rate at very close to, but just below, the Rmb7 mark at 6.9996, its weakest level since 2008. The currency, which is permitted to trade 2 per cent on either side of the central bank’s rate, fell 0.3 per cent to Rmb7.0419.

Investors flock to Occidental jumbo-bond sale Trump administration has few tools to weaken the dollar Announcing the end of the strong dollar policy is easier than actually ending it

Underwriters price $13bn in debt at a lower yield than anticipated RICHARD HENDERSON

ccidental Petroleum issued $13bn in bonds on Tuesday to fund its takeover of Anadarko, an acquisition that has pitted famed investors Warren Buffett and Carl Icahn against one another. Orders for the 10-part bond sale swelled to $78bn by midday on Tuesday in New York, according to two people briefed on the matter, allowing underwriters to lower the yield on the offering compared with the initial guidance released earlier in the day. The strong appetite underscored investors’ renewed interest in corporate debt amid a global bond rally that has pushed yields for government bonds sharply lower. The 10-year bond priced at 185 basis points above comparably maturing US Treasury bonds, down from the initial guidance of 220bp. This would peg the yield at about 3.56 per cent. Occidental’s current outstanding debt, maturing in 2027, yielded 3.187 per cent as of Tuesday evening. The effective yield on the ICE Bank of America index of investment

grade energy debt was 3.52 per cent. The more favourable pricing came even after Moody’s, the rating agency, last week downgraded Occidental’s credit rating to Baa3, the lowest investment grade level. Matt Brill, senior portfolio manager for Invesco, said the US investment grade credit market was set to see an increase in buying by foreign investors facing negative yielding government debt. “Foreign investors are hungry for yield because of the negative yielding rates in Europe and elsewhere, so we think there will be a lot of demand from those investors for new credit issuance,” he said. Proceeds from the deal will be used to finance Occidental’s $55bn takeover of Anadarko. The companies agreed the deal in May after a bidding war involving Chevron, which initially offered $38bn. The Occidental acquisition is set to close later this year and expands the group’s reach in the Permian Basin, a centre of US shale oil production, where Anadarko has drilling rights to 250,000 acres. www.businessday.ng

BRENDAN GREELEY AND COLBY SMITH

n early 2018, before an audience of chief executives and politicians at Davos, Steven Mnuchin got in trouble for saying the obvious: a weaker dollar would help US manufacturers export their products. Mr Mnuchin, the US Treasury secretary, had cast a sliver of doubt on a policy held by administrations of both parties for over two decades, namely that when markets want the dollar to strengthen, the Treasury should stand by and allow it to. And so, like other Treasury secretaries before him, he was forced to clarify, confirming his commitment to a strong dollar. On Monday, Mr Mnuchin was finally allowed to speak freely, declaring that China manipulates its currency to create an unfair competitive advantage, with the implication that the greenback is overvalued against the renminbi. The US Treasury is no longer bound by verbal rules of the strongdollar policy. It is not immediately clear, however, what the US can do about the strong dollar itself. Jawboning from President Donald Trump and

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his Treasury secretary is unlikely to work on its own, and it will be difficult for the Treasury to address the issue without help from both the Federal Reserve and the rest of the world’s central banks. With varying degrees of intensity since the beginning of his administration, Mr Trump has urged Mr Mnuchin and Robert Lighthizer, the US trade representative, to be more aggressive about the dollarrenminbi exchange rate. More recently, Mr Trump has expressed frustration more broadly about the value of the dollar. Declaring China a currency manipulator came after Beijing’s decision to allow the renminbi to depreciate to below 7 to the dollar. Brad Setser, a Treasury official under Barack Obama and now a fellow at the Council on Foreign Relations, called the move a “major rhetorical escalation”. The White House is not escalating alone. Chuck Schumer, the top Democrat in the Republican-led Senate, called for action on the renminbi earlier on Monday and Senator Elizabeth Warren, a Democratic candidate for president, has already made a weaker dollar one of her campaign promises. Ms Warren’s campaign did not @Businessdayng

respond to requests for examples of tools that would lower the value of the dollar, which points to a broader problem: there are no great tools. “The dollar is overvalued now,” said Mr Setser, “because the US is the only major advanced economy with a central bank whose interest rates are significantly above zero.” The broad real trade-weighted dollar — an index created by the Fed to track the dollar’s value against a wide range of trading partners, including China — moved higher in late 2014 and early 2015, as the European Central Bank and the Bank of Japan eased policy while the Federal Reserve went in the opposite direction and signalled that it was ready to tighten. After peaking in December 2016, it has remained elevated. If the White House, the Treasury and a few Democratic senators want to do something about the dollar, they will need the cooperation of the Federal Reserve, which could weaken the currency by cutting rates more aggressively. So far, the dollar has brushed off the Fed’s abrupt embrace of easier monetary policy; after last week’s rate cut the dollar soared to a twoyear high against its peers.

Thursday 08 August 2019

BUSINESS DAY

NATIONAL NEWS

SoftBank’s Vision Fund 2 to start spending in next 3 months Share sale boosts Japanese tech group as it prepares to deploy further wave of capital KANA INAGAKI

oftBank’s new $108bn investment fund is expected to deploy capital within the next three months, its billionaire founder said, following a blockbuster first quarter of record profits. Preparations for the Vision Fund II are under way as Masayoshi Son seeks to complete the transition of the Japanese technology conglomerate into an investment powerhouse with regulatory clearance over the $59bn sale of its unit Sprint to T-Mobile. “It won’t be an exaggeration to say that the future of our company will basically be the Vision Fund,” Mr Son said at a news conference on Wednesday. The comment came as SoftBank said its first quarter net profit increased to a record ¥1.12tn ($10.6bn), a 3.6-fold increase from a year earlier. The result strongly beat analyst forecasts after a special gain from the partial sale of its shares in Chinese e-commerce group Alibaba in 2016. Its quarterly operating profit fell 3.7 per cent to ¥688.8bn. Last year, the number was boosted by a gain from the sale of Arm’s stake in its Chinese subsidiary. Profits were also helped by a ¥408.5bn valuation gain for the first Vision Fund on its investments in Oyo, the fast-growing Indian hotel chain, messaging service Slack and food delivery start-up DoorDash. That helped to offset losses from a valuation decline in ride-hailing group Uber, whose shares have fallen since its tumultuous May initial public offering. Mr Son sought to address some of the concerns raised when SoftBank revealed its plan for the Vision Fund II last month. At the time, the company said it would commit $38bn to the new fund. But the various other investors including Microsoft,

Apple and Japanese financial groups who will provide the remaining $70bn had only signed a non-binding memorandum of understanding. There was also no mention of the governments of Saudi Arabia and Abu Dhabi, which between them contributed 60 per cent of the first Vision Fund. On Wednesday, Mr Son said the sovereign wealth funds of both Saudi Arabia and Abu Dhabi have expressed “strong interest” in the second fund, and they were in the process of ironing out details of their investment. He also said each of the MOUs signed had a specific amount of money each company would commit, and the total figure could top $108bn if other negotiations currently under way came through. “The second fund will begin investment activity within one to three months” using the $38bn in capital from SoftBank, Mr Son said, adding that its own money will be raised by cashing out on some of the investments made through the first Vision Fund. The current Saudi-backed Vision Fund contributed 58 per cent of SoftBank’s quarterly operating profit, but most of that is unrealised gains that do not pass through the group’s books as cash. As of the end of June, the $97bn Vision Fund has invested $66.3bn in 81 companies, which SoftBank said was now worth $82.2bn. Mr Son said the first fund will in effect be exhausted by next month because it needs to maintain 15 per cent of the capital for dividend payments and follow-up investments. Daniel Baker, an analyst at Morningstar, said while the performance of the current Vision Fund appears to be good, investors are still waiting to see independent values on the companies it has invested in. Mr Son said he expects about 10 Vision Fund companies to carry out their initial public offerings in the next financial year.

Short-seller Muddy Waters takes aim at UK’s Burford Capital UK-listed litigation financing specialist rebuffs criticism of its accounting

ROBERT SMITH AND LINDSAY FORTADO

hort-seller Muddy Waters is betting against the shares of litigation financing specialist Burford Capital, taking aim at a favourite of London’s junior market and one of the rare bright spots in Neil Woodford’s funds. The US hedge fund, which is headed by the outspoken shortseller Carson Block, described the company as a “poor business masquerading as a great one” in a report published on Wednesday morning. The report criticises the accounting Burford uses to value its litigation cases, which it says it is “aggressively marking”, while arguing that the company is then “actively misleading investors” further with some of the metrics it reports. In a stock exchange statement on Wednesday, Burford said that it employed IFRS accounting standards that it said were “used widely across the financial services industry”, while citing years of “clean” audit opinions from Ernst & Young. The company also said that it reported on its investments

in “extraordinary detail”. Burford Capital’s shares fell 19 per cent on Tuesday following a tweet from Muddy Waters that said the company would be announcing a new short position. Burford said it was “strongly suspicious” of Tuesday’s share price fall and that it would “take appropriate legal action” if misconduct was discovered. “There is a clear line between appropriate commentary and market manipulation,” the company said. Burford’s shares plunged a further 33 per cent on Wednesday, wiping £1.6bn off the group’s market value over two days. Mr Block said that at times when Muddy Waters disclosed that it had a new short position, several stocks dropped, noting a previous incident when several Hong Kong shares fell after he announced an upcoming short. “Burford, like the most speculative stocks in Hong Kong, attracts gamblers with little faith in the companies’ long-term prospects, and that’s why stock drops on nonspecific tweets,” he said. The hedge fund is not the first observer to question Burford’s

reporting practices. Some analysts have previously noted that much of the company’s revenue comes from writing up the value of disputed court cases that have not finished. Before the share price fall, Burford’s market value was in excess of £3bn, making it one of the largest stocks listed on Aim, the London Stock Exchange’s market for smaller growth companies. Burford, which specialises in financing legal claims in exchange for a share of the potential award, has also been one of the junior market’s strongest performers, with its share price surging more than 1,000 per cent over the past five years. Burford Capital is the secondlargest holding in troubled stock picker Mr Woodford’s now-suspended Equity Income fund. Mr Woodford has backed the company for a decade, having first invested in its shares in its 2009 initial public offering when at Invesco, the then-star fund manager’s longtime home before he set up his own firm. Invesco is still Burford’s largest shareholder with close to 14 per cent of its stock, with the investment managed by Mr Woodford’s successor and protégé Mark Barnett.

Indian central bank cuts rates again to boost slowing economy RBI downgrades GDP growth forecast to 6.9% as other Asian banks also ease monetary policy BENJAMIN PARKIN

he Reserve Bank of India cut interest rates on Wednesday for the fourth time this year as the government of Prime Minister Narendra Modi battles a deepening economic slowdown. India’s decision to break with global convention and cut rates by 35 basis points, instead of by increments of 25 bps, came as other central banks in the region also turned more dovish, with those in New Zealand and Thailand slashing rates on Wednesday. The latest cut brought India’s benchmark repo rate, already at

the lowest level in almost a decade, down to 5.4 per cent. A Reuters poll of analysts had forecast a cut of 25 basis points. “Domestic economic activity continues to be weak, with the global slowdown and escalating trade tensions posing downside risks,” the RBI said in a statement on the decision, while signalling that further rate cuts could be ahead. “The benign inflation outlook provides headroom for policy action to close the negative output gap.” The decision comes amid questions about the independence of India’s central bank, after a highprofile spat with the government, which was accused of trying to www.businessday.ng

force the bank to ease monetary policy. A governor and a deputy governor of the bank have both resigned since the dispute became public late last year, with the new RBI governor Shaktikanta Das subsequently embarking on a string of rate cuts. Mr Modi is keen to shore up growth to support his goal of almost doubling the economy in size to $5tn by 2025, a target that would require gross domestic product to expand by 8 per cent a year. The latest figures showed the economy grew 5.8 per cent in the first quarter of this year, the lowest level in five years. This follows a severe liquidity squeeze that has

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hurt everything from car sales to the stock market. The RBI on Wednesday also cut its GDP growth forecast for this year to 6.9 per cent from 7 per cent. “There is a demand and investment slowdown,” RBI governor Mr Das said after the cut. He indicated that monetary policy would not be enough on its own to spur growth — the government also needed to push ahead with structural reforms. “The Reserve Bank has done its part,” he said. Shilan Shah of Capital Economics said he expected the RBI to continue cutting rates to stimulate the economy but warned inflation @Businessdayng

might pick up later this year or early next. “A little bit of support for the economy would have been perfectly reasonable,” he said. “The risk is that it goes too far, which is essentially what we think is going to happen.” The rate cut is the first since the resignation in June of Viral Acharya who was deputy governor, the second high-profile personnel change after the then-governor Urjit Patel stepped down last year. Mr Das, his replacement, is a former high-level secretary in Mr Modi’s administration and is perceived as being closer to the government.

Thursday 08 August 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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Chinese hackers who work for both Beijing and personal gain identified APT41 team allegedly targets political dissidents but also breaks into video games for cash HANNAH MURPHY AND MADHUMITA MURGIA

newly identified team of Chinese hackers is carrying out political espionage for Beijing while simultaneously attacking businesses for personal financial gain, in an example of how the lines are blurring between state-sponsored and commercial cyber criminals. Advanced Persistent Threat 41 (APT41), the hybrid group identified on Wednesday by US cyber security group FireEye, is described as a “creative and well-resourced” outfit that has been operating since 2012, eventually moving into state-backed espionage operations against the healthcare and high-tech sectors and political dissidents in 2014. “This is remarkable because explicit financially motivated targeting is unusual among Chinese state-sponsored threat groups, and evidence suggests these two motivations were balanced concurrently from 2014 onward,” a FireEye report said. “[This] may indicate the group enjoys protections that enables it to conduct its own for-profit activities, or authorities are willing to overlook them.” The group’s espionage activities, which have taken place in 14 countries including the US, UK, Singapore, Japan and France, were aimed at industries “aligned with China’s Five-Year economic development plans”, the report said. For instance, the hackers repeatedly targeted major global telecoms companies and their subsidiaries for call record information, and tech groups developing machine learning, autonomous vehicles, medical imaging, semiconductors, processors and enterprise cloud computing software. In the healthcare sector, the hackers allegedly stole sensitive intellectual property from medical device and pharmaceutical companies, including clinical trial data, and detailed business

information ahead of mergers and acquisitions transactions, for instance. China and the US previously agreed to stop commercial espionage in 2015 and FireEye said it had not seen examples of intellectual property theft by the group since then. FireEye said APT41 had also “gathered intelligence on prodemocracy dissidents in Hong Kong” in 2016 and 2017. According to Fred Plan, a senior threat intelligence analyst at FireEye, the timing suggested that the group had been tasked with gathering intelligence on the pro-democracy Umbrella Movement candidates who at the time were running for election in Hong Kong’s legislative council. In 2017, shortly after an APT41 hack, the group of pro-democracy activists were banned for five years from holding public office in Hong Kong, effectively putting an end to their political careers. APT41’s cyber crime career started in the video games industry, where it stole code and digital certificates from games studios and distributors in Asia and from some US-based companies. It managed to break into games including Path of Exile, League of Legends and Fifa Online 3. The group also generated millions of dollars of virtual currency in games, which it could then sell on the black market to gamers. “Learning to access video game production environments enabled APT41 to develop the tactics, techniques and procedures that were later leveraged against software companies to inject malicious code into software updates,” the report said. The revelations, which shed light on little-known Chinese cyber operations, come at a time of escalating trade tensions between Washington and Beijing, and rising suspicion among lawmakers and US intelligence that Chinese companies, such as technology group Huawei, present a risk to US national security.

HSBC appoints Nicolas Moreau to lead fund business Former DWS chief is ‘ideal candidate’ for bank’s investment arm CHRIS FLOOD

SBC has appointed Nicolas Moreau to lead its underp er for ming $500bn asset management business at a time of heightened uncertainty at one of the world’s biggest and most complex banks, which is currently searching for a group chief executive. Mr Moreau, who will join HSBC in September, was previously chief executive of DWS, the asset management subsidiary of Deutsche Bank. He helped complete the stock market listing of Deutsche Asset Management in 2018 as well as the rebranding of the business to DWS. The unit, however, failed to perform after the stock market listing. Investors withdrew billions of euros from its funds, leading to a fall in the DWS share price. Those problems led to the abrupt dismissal of Mr Moreau by Deutsche Bank’s supervisory board in October 2018. Mr

Moreau, a Frenchman, was a casualty of the instability that has plagued the top management of the troubled German lender. At HSBC, Mr Moreau will be based in London. He will succeed Sridhar Chandrasekharan, who has led HSBC’s asset management business since 2012. Mr Chandrasekharan, who has spent his entire career at HSBC, will move to another senior role at the bank, which will be announced at a later date. Charlie Nunn, chief executive of retail banking and wealth management at HSBC, said that Mr Moreau was the “ideal candidate” to lead the investment business. “Asset management is a key area of focus for HSBC and one that we are committed to growing in line with increased client demand for products and solutions that help meet their long-term financial ambitions,” added Mr Nunn. HSBC publishes only limited details about the performance of its asset management business, at which operating profits

declined to $344m last year from $365m in 2017, a drop of 5.7 per cent. Diana Mackay, managing director of global distribution solutions at Broadridge, a corporate services provider, said that although HSBC was a global banking brand, it did not rank highly with third-party fund selectors in Europe. “Fund selectors became quite wary of big bank brands after the financial crisis. HSBC will need to really energise its product focus and engagement with fund selectors to compete against the pure-play asset managers,” she said. Amin Rajan, chief executive of Create-Research, an asset management consultancy, said that Mr Moreau would bring a wealth of experience to the new role. “Mr Moreau is very savvy and understands the nuances of what happens in every area of an asset management business across the front, middle and back offices. He has expertise that HSBC’s asset management business needs,” he said.

UniCredit leads trio of European lenders alarmed by low rates

Germany’s Commerzbank and Dutch lender ABN Amro also warn of testing backdrop DAVID CROW

arge European banks lined up on Wednesday to warn that the low interest rate environment would hurt their earnings, wiping hundreds of millions of euros off their market valuations. UniCredit, Italy’s second-largest bank by market capitalisation, cut its revenue forecast for this year to €18.7bn from €19bn due to what chief executive Jean Pierre Mustier described as the “prevailing environment, with rates expected to be lower for much longer”. Commerzbank, the German lender, warned that its profit target for 2019 was now looking “significantly more ambitious”, noting that leading

central banks had “tempered their interest rate . . . expectations” because of a darkening economic outlook. Meanwhile, ABN Amro, the Dutch bank, said that low interest rates would hit its net interest income, the amount it earns on lending minus its financing costs, owing to lower deposit margins. “The second-quarter earnings season for European banks has been largely disappointing,” said Ronit Ghose, an analyst at Citi. “Many banks have undershot revenue forecasts. Bearish outlook guidance, especially on net interest income, has reflected an increasingly negative interest rate environment.” The warnings from some of Euwww.businessday.ng

rope’s largest lenders underscored how global banks are scrambling to position their businesses for a “lower for longer” interest rate environment. Central banks in Europe, the US and the UK have either cut or are poised to cut interest rates to support the global economy at a time of escalating geopolitical turmoil, including trade tensions between China and the West and the growing prospect of a hard Brexit. Central bankers in India, Thailand and New Zealand also cut interest rates by more than markets had expected on Wednesday in a bid to boost growth in their economies. Shares in the trio of European lenders — which all reported first-

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half results on Wednesday — were lower in early afternoon trading, equating to a reduction of more than €840m in their combined market capitalisation. Record-low interest rates are already weighing on banks’ profits as they have been forced to lower borrowing charges and in some cases pay to store money at central banks, without a similar reduction in the rates they pay to savers. Until recently, many eurozone lenders had been hoping that the European Central Bank would increase interest rates for the first time in half a decade, leading to a recovery in the income they generate by lending to consumers and businesses. @Businessdayng

But now the ECB is expected to cut its deposit rate from minus 0.4 per cent to minus 0.5 per cent next month — with some economists predicting that the central bank will go further in loosening monetary policy. “As client rates are close to zero, it will be increasingly difficult to offset the decline and over time margin pressure will increase further,” warned Kees van Dijkhuizen, the outgoing chief executive of ABN. The warnings from some of Europe’s largest lenders echoed similar concerns at banks in the US, where the Federal Reserve cut interest rates last month, and the UK, where the Bank of England is expected to do the same.

Thursday 08 August 2019

BUSINESS DAY

ANALYSIS

FT China’s economy faces currency devaluation drag Political choices about value of renminbi tempered by consequences for growth DELPHINE STRAUSS

eijing’s decision to let the renminbi fall below the symbolic level of 7 to the dollar was a political choice — but it would not be in China’s economic interests to “weaponise” its currency, economists say. Monday’s move to increase the renminbi’s trading band came as a retaliation against the latest US threat of fresh tariffs. And although China’s central bank took steps to stabilise the currency on Tuesday, investors worry that the authorities could seek to put pressure on Washington by allowing a bigger devaluation. While political calculations might dictate that decision, con-

economic outlook had made the Chinese leadership more open to a market-driven depreciation; and Jian Chang, an economist at Barclays, said policymakers might consider it as an alternative to cutting interest rates as a tool to stabilise growth. Mr Magnus said a much larger, sustained devaluation — in the order of a 20 per cent fall against the dollar since the outset of the trade war — would “bestow some competitive advantage”, although it could also spark tit-for-tat action in the region. But a weaker exchange rate does not make as much difference to trade patterns as it did in the past. Global supply chains mean exporters’ gains are offset by the higher

cerns over the impact on China’s economy could act as a restraint, according to economists. “I don’t see any upside for China,” said George Magnus, an associate at Oxford university’s China Centre. A depreciation would boost trade at the margin, he said, but stability in the currency was far more important to Chinese policymakers, whose main concerns are to contain capital flight, avoid a domestic debt crisis and pursue a rebalancing of the economy from exports to consumption. Using the exchange rate as a tool “is a double-edged sword, potentially hurting both the US and China”, said Alan Ruskin, a strategist at Deutsche Bank. Has China been manipulating its currency? No. The renminbi lost about 10 per cent of its value against the dollar last year, as the first rounds of US tariffs took effect. But given the scale of the penalties the US has imposed, a bigger adjustment could have been expected. The IMF said last month that the exchange rate was in line with economic fundamentals and economists dismissed the idea that China had intervened to drive the currency below its fair value, saying that if anything, Beijing had recently been keeping the renminbi artificially high. Would a much weaker renminbi boost the economy? It would help Chinese exporters compete overseas, and it might prop up growth to an extent. Bo Zhuang, at the consultancy TS Lombard, said a worsening

price they pay for imported components. The widespread use of the dollar in global trade invoicing may also limit the gains, at least initially. The IMF argued in its latest external sector report that when a country’s currency weakened, there would often be a rapid hit to imports, but only a tepid boost to exports at first — because other trading partners also saw their currencies fall against the dollar. “Exchange rate changes have muted effects on the trade balance in the short-term,” the IMF concluded. “Currency movements may not be passed through to final prices and may well be more than offset by higher tariffs . . . at least for exports to the United States,” said Stephanie Segal at the Center for Strategic and International Studies. Economists at Morgan Stanley said that if Chinese policymakers wanted to do more to support growth the most likely response would be a fiscal stimulus, focused on infrastructure projects. What are the downsides for China? One risk of a renminbi devaluation is that it could trigger defaults on domestic dollar-denominated debt, especially in the property sector. Analysts at the consultancy Pantheon Macroeconomics noted that while these debts were not a high proportion of total Chinese debt, they were “non-negligible and will put the screws on developers”. However the government has already taken action to rein in excesses in the real estate sector, where bankruptcies have risen recently. www.businessday.ng

Lex In Depth: Bayer’s €50bn blunder With the disastrous purchase of Monsanto and plummeting shares, some question if it is time to break up the German group RALPH ATKINS

spirin, cancer medicines, products to boost crops: healthcare and agriculture group Bayer is integral to German society and industry. It even lends its name to the local Bundesliga football club, Bayer Leverkusen. The giant illuminated logo above the 156-year-old group’s headquarters is visible for kilometres across Germany’s north-western manufacturing heartlands. Bayer, however, has also come to symbolise something less wholesome: large-scale shareholder value destruction. Last year, Bayer completed the purchase of US agrochemicals group Monsanto for $63bn. Measured by the share price fall since the deal was first mooted three years ago, the deal ranks among the worst in corporate history. US courts have linked Roundup, a widely used herbicide made by Monsanto, to cancer. With more than 18,000 legal cases pending — three have already been heard — Bayer faces possibly paying billions in compensation. Its share price has fallen more than 50 per cent since mid-2017, wiping €50bn off a market value that now stands at €52bn — less than it spent on Monsanto. In April, investors’ anger erupted at its annual meeting. Werner Baumann, who has worked at Bayer for more than 30 years, became the first serving chief executive of a Dax-listed company to lose a vote of no confidence. That dramatic share price fall raises the question of whether Bayer has made a terrible blunder. An analysis by Lex shows Bayer’s shares could comfortably have generated returns well into double digits since early 2016 if Bayer had instead exited its crop science business by selling it to Monsanto. The enlarged Monsanto would have become the world’s largest agricultural group by sales. But Bayer’s shareholders would not now be nursing heavy losses. Instead, Bayer shareholders are left asking whether it would now make sense to split up the German conglomerate. “I personally think that they are going to have to break it up,” says one. Monsanto’s woes would be separated from the healthcare businesses, which anyway have little

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to do with agrochemicals. But if that happened Bayer might itself become a takeover target. In 2016, such thoughts were far from the minds of Mr Baumann and Werner Wenning, Bayer’s chairman. There was a wave of merger activity in the agricultural sector. Monsanto had sought to buy rival Syngenta the previous year, but the Swiss company successfully argued that Monsanto was undervaluing its business. By December 2015, Dow Chemical and DuPont, the two largest US chemicals groups, were announcing plans for a $130bn merger which would combine seed and crop protection businesses. Then in February 2016, ChemChina, the Chinese stateowned chemicals company, unveiled an ultimately successful $43bn bid for Syngenta. Mr Baumann and Mr Wenning did not want to sit on the sidelines. Combining Monsanto’s strength in seeds with Bayer’s expertise in herbicides made sense, they believed. Herbicides clear farmland but seeds have to be resistant to the treatments used. The growth opportunity was clear, the Bayer bosses later told investors. Agricultural land is limited so farm productivity would have to rise by 60 per cent by 2050 to feed the planet and a global population expected to swell by 2bn over the next 30 years. Lex In-depth: Bayer “If they had kept crop sciences without reinforcement in seeds, they would not have remained competitive in this sector,” says Markus Manns, portfolio manager at Union Investment in Frankfurt, which has a small stake in Bayer. Bayer, however, did not have to buy Monsanto to create a combined agricultural business. It could have instead sold its crop sciences unit, harvested a windfall and avoided the Roundup pitfall. Applying a similar enterprise value-to-earnings multiple as when ChemChina bought Syngenta, Bayer’s crop sciences business could have been sold for as much as €40bn in early 2016. If so, on conservative assumptions about how Bayer’s share price would have performed, Lex calculates that Bayer shares held at the start of 2016 would comfortably have generated total returns of 17 per cent by now. On less onerous assumptions, returns could have @Businessdayng

been as high as 50 per cent. As a result of the Monsanto deal, total returns to Bayer shareholders were negative 40 per cent, even though global pharmaceutical companies generated more than 10 per cent returns over the same period. Selling Bayer’s agricultural business was not on the company’s agenda, however. It operates as a conglomerate, running a changing portfolio of different businesses. The idea behind the concept is that managers can spot growth opportunities. Bayer saw agriculture, a regulated sector, as an area it could apply, and benefit from, the knowledge it had gained in healthcare. At least that was the official explanation. An alternative view is that the Monsanto takeover was a defensive move. Selling crop sciences would have left the remaining healthcare businesses vulnerable to a takeover. In 2000, Mannesmann, an industrial company located in nearby Düsseldorf that had expanded into telecoms, was taken over by the UK’s Vodafone in a £112bn deal. Lex In-depth: Bayer The loss of an industrial icon was a defining moment for corporate Germany. Mr Wenning “thought that Monsanto would make Bayer unacquirable”, says one banker. “The irony is that it has made it more vulnerable — except that the US lawsuits are now a potential ‘poison pill’.” The deal, which was not put to a shareholders’ meeting, was controversial from the start. Analysts argued the price of $128 in cash per Monsanto share — 44 per cent above the share price before Bayer’s first written proposal in 2016 — was too high. Moreover, they said, investors had bought Bayer shares because it was a healthcare company. Monsanto was a pioneer of genetically modified crops — dubbed “Frankenstein foods” by opponents. Historically, the company was linked with controversial products such as Agent Orange, a herbicide used by the US military in the Vietnam war. Regulatory approval for Bayer’s takeover deal also took longer than expected. “The company has never been able to get on the front foot and extol the virtues of the deal,” says Peter Verdult, analyst at Citi.

Thursday 08 August 2019

BUSINESS DAY

news BA delays Lagos flight over system hitch at Heathrow Airport IFEOMA OKEKE

agos-bound passengers on British Airways flight BA0075, Wednesday experienced delay from London due to system failure from Heathrow Airport. British Airways Flight 94 from Heathrow Terminal, which was expected to arrive Murtala Muhammed International Airport, Lagos, at 15.55pm on Wednesday, was delayed. British Airways flights have been cancelled with delays around the world affecting thousands after an IT glitch halted check-in and flight departures. Almost 300 flights were cancelled or delayed at Heathrow and Gatwick airports alone as holidaymakers had their plans thrown into chaos. However, with this development, BA could face a compensation bill in excess of £5 million if all those affected claim what they are entitled to under EU rules. From as early as 4.30am, there were photos online revealing frustrated passengers in huge queues stretching through terminals. The system hitch affected the airline’s flight networks. The British Airways is apologetic as passenger facilitation is being affected by computer

system failure resulting to delays and cancellations of flights from its London (Heathrow and Gatwick) airports. “We are very sorry to our customers for the disruption to their travel plans,” BA apologised, saying, “We are working as quickly as possible to resolve a systems issue which has resulted in a number of cancellations and delays today.” The London-based airlines said the issue was from the hub (London) with ripple effect on its outstations. “The issue is affecting our London airports and this is having a knock on effect at some of our out stations,” explained BA through its press office in London. “For your background some of our systems are affected but we are operating with backup manual systems to keep our flights operating. “We are offering customers booked to travel on short-haul services departing from Heathrow, Gatwick and London City airports today, the opportunity to rebook to another travel day between August 8-13 2019. “Customers whose flights are cancelled are being offered refund or rebook options. Where available we are rebooking customers with other airlines. Water and snacks are being handed out to customers in the terminal.”

Intelia partners Nasdaq on corporate CBN hinges sustainable microfinance on governance solutions in West Africa sound corporate governance, competent HR Daniel Obi

ntelia, data-first software company with emphasis on the use of Artificial Intelligence, has entered into partnership with Nasdaq, global provider of trading, clearing, exchange technology and listing services, to provide clients with access to Nasdaq Boardvantage portal. Nasdaq Boardvantage has been designed with an intuitive interface and multiple layers of security to help board members and leadership teams with options to elevate their governance and easily access meeting information. “Intelia is very excited to begin this partnership with Nasdaq, and we consider it an opportunity to empower companies in Nigeria and Ghana with the technology needed to elevate their corporate governance. As a technology company, we are thrilled about the robustness, scalability, and security-first provisions of Nasdaq Boardvantage, which companies of

varying sizes need to compete at the highest level,” Udoka Uzoka, founder/CEO, Intelia, said in a statement. Nasdaq Boardvantage allows directors to manage their board, committee, and meeting materials efficiently across desktop, tablet and smartphone applications. Key features for board-level users include approving initiatives, e-signing agreements, participating in meetings remotely, and in-app messaging and annotation sharing. “We are pleased to bring our next generation governance technology to companies in Nigeria and Ghana through our partnership with Intelia,” Mike Bartels, vice president, Nasdaq, said in the statement. “Forward-thinking executives and governance professionals in the region are seeking new ways to elevate their corporate governance practices. We are proud to support that growth through our easy-to-use technology with innovative security features.”

IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

entral Bank of Nigeria (CBN) has identified sound corporate governance and proficient, competenthumanresources(HR) as key requirements to a sustainable microfinance sector. Agnes Martins, director, other financial institutions department, Central Bank of Nigeria (CBN), made the remark at the 5th conference on Microfinance and Enterprise Development organised by LAPO Institute on Wednesday in Benin City. The conference has in its theme,‘HumanResources,CorporateGovernanceandMicrofinance Sustainability in Nigeria.’ It is impossible for any institution including microfinance to survive without sound corporate governance and proficient, competent human resources, Agnes noted. The apex bank director, who however,hingedhighrateofmicrofinance banks’ failure to poor asset quality and sometimes outright fraud,addedthatqualityofhuman resources should be given utmost priority.

According to Agnes, ascribing adequate importance to quality of human resources in any organisation is key to its survival. “Efficient and effective human resource is a necessary condition for sustaining the microfinance institutions in the country. “It is said that the most critical asset of any organisation is its humanresource.Thus,itisimportant to attract and retain the right kind of staff. “With a strong workforce and best practice corporate governance, appropriate policies and strategies can be formulated. Effective oversight hinged on the presence of a principled board and management will enhance productivity at all levels within an organisation and translate to sustainability. “Thequestionariseswhysome institutions are able to consistently meet and even beat all regulatory minimum prudential ratios and financial soundness indicators while some eventually fail. The critical distinguishing factors are thequalityofcorporategovernance and human resources,” she said.

FCT, 15 states access N51bn Basic Health Provision Fund Godsgift Onyedinefu, Abuja

ifteen states and the Federal Capital Territory (FCT) have so far benefitted from the N51 billion Basic Health Care Provision Fund (BHCPF), the National Primary Health Care Development Agency (NPHCDA) has disclosed. Executive director of NPHCDA, Faisal Shuaib, in December 2018 said the Agency was coordinating the disbursement of the BHCPF, which was rolled out by President Muhammadu Buhari in the same month. Head of the public relations unit, NPHCDA, Mohammed Ohitoto, on Wednesday explained that 5 percent of the BHCPF was being retained by the Federal Ministry of Health as emergency treatment gate, while 50 percent goes to the National Health Insurance Scheme (NHIS). He added that the NPHCDA is entitled to 45 percent as a gateway to the states, in respect of Primary Health Care (PHC) facilities management. Ohitoto revealed that N5.8 billion had so far been released to NPHCDA from the fund, which has subsequently been disbursed to the 15 States that met the criteria to access the fund. He listed the beneficiary states to include: Abia, Osun, Kaduna, Kano, Delta, Anambra, Edo, Nasarawa, Ebonyi, Benue, Adamawa, Kwara, Plateau, Bayelsa, and the FCT. Ohitoto noted that the disbursement to seven states that have opened their Treasury Single Account (TSA), which is a criterion to access the fund, was being processed. He said funding would be made available to additional number of states as

soon as their TSA were opened and other conditions met. The spokesperson further explained that the BHCPF was shared proportionately among the States, based on targeted population derived from National Bureau of Statistics projected population. According to Ohitoto, the larger part of the funds is to be used to support Decentralized Facility Financing (DFF) in areas such as logistics, infrastructure and operational cost –transportation, hiring of ad-hoc Staff, purchase of seed drugs e.tc, while some of the funds would also be used by the states to improve the availability of midwives and for the establishment and payment of allowances to Community Health Influencers, Promoters and Services (CHIPS) programme agents. Ohitoto informed further that the 18 states, which were yet to access the funds, were at various stages of compliance with the conditions that must be met. According to him, the requirements to be fulfilled, which were instituted by the Primary Health Care under One Roof (PHCUOR) include: the existence of functioning Local Government Health Authorities (LGHA), an established State Primary Health Care Board (SPHCB), baseline assessment of primary health care (PHC) facilities, an instituted state Steering committee and the TSA with N100 million opened. Others are signed Memorandum of Understanding (MOU) with the NPHCDA, notification of planning Research and Statistics (PRS) department, confirmation of participating PHCs, selection of Facilities and accreditation of pharmacies among others. www.businessday.ng

L-R: John Nnia Nwodo, president-general of Ohanaeze Ndigbo; Godwin Obaseki, Edo State governor; Ifeanyi Okowa, governor of Delta State; Allen Onyema, son of the deceased/CEO, Air Peace Limited; Ebele Obiano, first lady of Anambra State; Willie Obiano, her husband, governor of Anambra State, and Alice Onyema, deceased daughter-in-law, at the funeral mass in honour of late Michael Onyema at St. Patrick Catholic Church, Mbosi, Anambra State.

Buhari signs AMCON Bill, others into law Tony Ailemen, Abuja

resident Muhammadu Buhari has continued to sign bills passed by the eighth National Assembly into law, the latest being the Asset Management Corporation of Nigeria (Amendment) Act, 2019. Others signed into law, according to Ita Enang, senior special assistant to the President on National Assembly Matters (Senate), include the Defence Intelligence Agency Civilian Pensions Board (Establishment) Act, 2019 and the National Biosafety Management Agency (Amendment) Act, 2019. According to Enang, the AMCON (Amendment) (No. 2) Act further amends the 2010 Act, and increased the powers of the Commission in enforcement of recovery of debt from persons owing legacy banks or seizure of property subject of loan obligation.

Under the new law, AMCON now has powers to place any bank account or any other account comparable to a bank account of a debtor of an eligible financial institution under surveillance, obtain access to any computer system component, electronic or mechanical device of any debtor with a view to establishing the location of funds belonging to the debtor. It also empowers AMCON to obtain information in respect of any private account together with all bank financial and commercial records of any debtor of any eligible financial institution, banking secrecy, and the protection of customer confidentialityisnotagroundforthe denial of the power of the Corporation under this section.’’ The law makes mandatory for AMCON to, despite the convention of confidentiality of banking, business and contracting relations to:

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‘’…furnish the Federal Government, Ministries, Departments and Agencies with a list of recalcitrant debtors and then impose an obligationtoseek clearance on the Federal Government, Ministries, Departments and Agencies when the Federal Government, any Ministry, Department or Agency proposes to contract with, or pay, debtors on the list furnished by the Corporation.’’ The law further provides, “All money standing to the credits of the Corporation in any bank account is deemed to be in the custody and control of the Corporation. “Whereanyproceedingispending in any court of competent jurisdiction by or any the Corporation, the grant of any interim, interlocutory or preservative order of attachment against the Corporation’s funds in any bank is prohibited. “The Corporation may require anyeligiblefinancialinstitutionfrom @Businessdayng

which it has acquired an eligible bank asset or any director, manager or officer of such eligible financial institution to furnish information and produce documents, books, accounts, and records in relation to any eligible bank asset acquired by the Corporation from such eligible financial institution or in relation to the borrower or other obligator connectedwithsucheligiblebankasset.” The Act also states that upon dissolution of the Corporation, all unresolved eligible bank assets then held by the Corporation shall be transferred by the liquidator or joint liquidatortosuchgovernmentagency, or for valuable consideration, to a third party asset management companyorotherentityspecifiedby the Central Bank of Nigeria; “All the existing staff shall be redeployed to and absorbed into the Central Bank of Nigeria or the Nigeria Deposit Insurance Corporation.

Thursday 08 August 2019

BUSINESS DAY

BANKING EcobankPay Hits N1bn in transactions value their customers in-store or online. EcobankPay’s unique offering is such that all bank customers in Nigeria can pay with Masterpass, mVisa, and mCash with any phone by scanning the QR code or using USSD at merchant locations. It is free to set up, as the shop owner only needs his/her QR code and phone for notifications to start receiving quick and easy payments. EcobankPay is currently available at over 90,000 multiple merchant locations across the country, additional offerings include instant settlement of transaction with no transaction fees and it supports domestic and cross border transactions. Announcing this in Lagos, Carol Oyedeji, executive director, Commercial Banking, Ecobank Nigeria,

Stories by HOPE MOSES-ASHIKE

cobankPay, the lifestyle digital payments and collections service of Ecobank Nigeria has recorded a cumulative transaction value of over N1 billion. EcobankPay offers customers a multi-channel payment experience including: Mobile QR Payment at merchant stores (mCash, Masterpass and mVisa), Merchant QR is set up via Facebook Messenger a well as USSD payment for low-income phone users. EcobankPay is used by all businesses from small, informal micro merchants to large corporates as well as governments. It enables them to offer easy and convenient payment options to

Union Bank’s edTech challenge to boost innovation in Education Sector

s part of efforts to promote innovation in the education sector, Union Bank recently announced the launch of the 2019 EdTech Challenge. The edTech Challenge is the third edition of the annual Innovation Challenge series and aims to discover, showcase and support innovative, cutting-edge technologies with the potential to transform Nigeria’s education system. The Challenge reinforces the Bank’s commitment to innovation and education, underpinning its dedication to enabling success in Nigeria. During the entry period from July 30 to August 28, 2019, entries will be received on the Union Bank website, from anyone with innovative technological solutions that demonstrate a strong potential to transform the education system. Entries are expected from students, teachers, developers, designers, fintechs and tech companies. The competition is being put together in partnership with VHA Services, a Lagos-based professional services and coaching or-

ganisation that supports individuals and companies to set up, build and grow sustainable ventures. Speaking on the launch of the competition and Union Bank’s support for education, Lola Cardoso, Chief Digital and Innovation Officer, said, “The edTech challenge links two areas that Union Bank is passionate about – Education and Innovation, and our focus on these two areas stems from the realisation that they are crucial to driving development and sustainable impact in Nigeria. We are focused on collaborations and part-

nerships that will boost the development of education and shape a better, more sustainable future.” Following the entry period, up to 10 shortlisted entries will be unveiled and the successful applicants invited to participate in an accelerator programme providing them with access to coach-mentors, and a community of education stakeholders and strategic partnerships. In the final stage of the competition, the top three entries will be announced during edu360, Union Bank’s annual flagship education event scheduled to

Emeka Emuwa, group managing director, Union Bank www.businessday.ng

hold in October this year. These top three winning entries will receive total funding support of N5 million towards scaling their solutions, and venture support including specialised support based on their specific project needs. They will also receive advisory regarding the deployment and management of funding received. The competition is the third edition of the annual Innovation Challenge series. Through the Centenary Innovation Challenge in 2017, and the Campus Innovation Challenge in 2018, Union Bank discovered and supported innovative ideas and solutions that solve various social and business challenges. The Bank also recently partnered with The Education Partnership (TEP) Centre to host the Education Innovation Summit (NEDIS), an event that convened stakeholders from government, research and academia, innovators and educators for two days of rich discourse, knowledge sharing, learning, capacity development and networking.

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said the current level of performance of EcobankPay underscores the choice of the bank in bringing digital payment solutions for safe, reliable and convenient transactions to both customers and noncustomers of the bank. She further added that the channel offers a distinct advantage of supporting the three main schemes, Masterpass, mVisa and mCash thereby broadening acceptability regardless of which Bank a Client makes payment from. The QR Code is much cheaper than having a point of sale (PoS) terminal and credit to the merchant is instant, she noted. In his comment, Patrick Akinwuntan, managing director, Ecobank Nigeria said we are placing Ecobankpay as the choice for

instant digital payment in every part of the country. He noted that the innovative payment solutions was introduced by the bank to create payment convenience for good and services and also to support the growth of businesses including small and medium scale enterprises (SMEs) across the country. “We are impressed with the significant progress made so far on EcobankPay transactions. It is gradually becoming a lifestyle payment for all. The initiative is to deepen financial inclusion in the communities and specifically aid business transactions between merchants and clients by eliminating risk of payment rejection. It also delivers instant value and sales, transparency for merchants and all customers” he stated.

Heritage Bank’s training institute gets CIBN accreditation

eritage Bank Plc’s training school, known as “The Refinery” for new entrant staff has been accredited by the governing council of the Chartered Institute of Bankers of Nigeria (CIBN). The Refinery supervised by the bank’s human capital management group was accredited by CIBN after assessing and evaluating its syllabus, curriculum and structure by panel of technocrats and seasoned bankers set up by the Institute, which according to the chartered institute aligns with the Competency Framework of the Central Bank of Nigeria (CBN) and the professional paper standard of CIBN. The President of the Institue, Uche Olowo commended Heritage bank for changing the narratives of the banking system via the establishment of a credible training facility, that prepares trainees who are to be employees for a core professional banking experience. He further applauded the bank for setting a high standard of learning facility which its structure and curriculum “is next to that of CBN’s training institute,” whilst stressing that the bank’s training school is the best in Nigerian banking industry and at par with international best standard. Seye Awojobi, the Regis@Businessdayng

trar/CEO of CIBN, who represented Olowo, stated that the Institute would be grateful to Heritage Bank for the values it holds tenaciously for changing the narrative of the system not just supports to the Institute’s activities but in terms of human capital development and the nation’s economy. Ifie Sekibo, managing director/CEO of the bank described Heritage Bank as a forward looking business whose strength lies in the ability to spot and mould talents into great professionals. Sekibo, represented by the Executive Director, Jude Monye explained that the word “The Refinery” was chosen for the purpose of refining its employees to emerge as gold and harness the required skills to excel in their job functions. He noted that the Refinery was established to train, nurture and arm young employees with the right skills needed to fast-track development and enable teams to flourish. Sekibo further explained that at the Academy, “we hire young graduates who want to advance their skill levels, which will lead to a direct and indirect improvement of life for their families and communities that will culminate toward more productive, resourceful persons.”

Thursday 08 August 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with briu@businessday.ng

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

08098710024

Analysis of 2018 immigration statistics and implications for development Likewise, the total number of ECOWAS Travel certificates (ETC) increased by 18.44 percent to 26,975 in 2018 from 22,775 in 2017. Lagos, 3,988 and Bauchi, 2,022 issued the most ETCs, while Ebonyi, 75; Taraba, 52 and Osun, 49 are the states with the least ETCs issue.

AMAMCHUKWU OKAFOR

Passport issues Of the total passport applications of 1,011,158, the data reported that more than 1,036,000 passports were issued (data entry error may be possible here as we expect total applications to be more than total issues). In Lagos, however, a total of 292,848 passports were issued – representing 99.3 percent issue rate. Like Lagos, all other states have high issue rates. Foreign issuance The data shows the total number of passports issued in foreign missions in 46 countries across the world. A total of 185,657 passports were issued at the foreign missions in 2018 as against 152,163 issued in 2017. This is an increase of 22 percent. The United Kingdom (UK) recorded the highest issuance of 45,389 in 2018 which represent 24.45 percent of the total and 6.1 percent higher than the previous year. The United States (US) follows with a total issuance of 40,246 in 2018 as against 32,652 in 2017. The US 2018 figure represents 21.67 percent of the total issuance. This implies that the combined issuance of the UK and US alone claim 46.1 percent of the total foreign issuance. Other countries with high issuance include Italy, 12,889; South Africa, 12,639; Canada, 9,783; Saudi-Arabia, 7,816 and Germany, 7,815. Saudi-Arabia, however, recorded a 13.96 decline in 2018, followed by Malaysia and Brazil.

Visa issuance and ECOWAS Travel Certificate (ETC) In pursuance to the ease of entry for business tourists and other visitors to the country, the visa on arrival option is vehemently being heralded. In 2018, the total visas on arrival issued rose to 30,666 from 22,620 in 2017—35.6 percent increase. The total number of visa issuance at the foreign missions was put at 120,697. This represents 4.82 percent positive growth over the previous period. It is noteworthy to say that

these issuances are only Nigerian visas to foreign nationals seeking entry into Nigeria. The data revealed that the most visas were issued in the UK than elsewhere: a total of 19,196 visas representing 15.9 percent of the total visas issued were granted in the UK. India followed closely with a total of 16,309 visas issued in New Delhi; then South Africa with a total of 12,496 with 10,563 in Pretoria alone. Others include China, 7,518; France, 5,771; Netherlands, 5,252 and Germany, 4,502.

Revenues The NIS generated N39 billion in 2018 as against N35 billion in local revenue generated in 2017. This represents a positive growth of 9.34 percent. The data shows that 52.1 percent of the total revenue came from the Combined Expatriate Residence Permit and Aliens Card (CERPAC); followed by passport revenue contributing 37.8 percent. Other service charges such as EPass, address verification charges contributed and Non-Refundable Revenue for Operations contributed 3.64, 5.3 and 0.78 percent respectively. Implication The analyses verify the outward pressure by majority to travel out of the country. This is due to both economic and political uncertainty. This has severe implication for the quality of labour in the labour pool and by extension, productivity. A positive implication, however, would be the potentials in the diaspora capital as well as the trickle down of resources known as remittance.

12734BDN

igeria is a country known for its actively migrant population: the size of its population, economic condition, as well as its porous borders are factors responsible for the mass emigration. The 2018 immigration statistics released by the National Bureau of Statistics showed that a total of 4,529,153 international traveller movements were recorded across all national borders in 2018 as against 3,715,268 in 2017. The total arrivals in 2017 and 2018 were 1.8 million and 2.2 million respectively, whereas total departure was 1.9 million and 2.3 million for the respective years. Through the years, the net movement was a net departure of 111, 078 and 116,017. Passport application and issues A total of 1,011,158 passport applications were received in 2018 as against 720,958 received in 2017. This represents about 40.25 percent positive growth and implies emigration pressure. An analysis of the data reveals a 35.64 percent increase (from 2017 to 2018) in passport applications for minors (between the ages 1 – 17) and reenforces the idea that the future of a child is best secured outside of the country. The increase in adult (18-59 years) applications for passports takes as expected, the highest from 544,473 to 779,905 applications – a 43.24 percent increase, while those of advanced individuals (60 above) rose by 18.91 percent. This increase across all categories highlights the phenomenon of the search for greener pastures elsewhere. As expected, Lagos State recorded the highest number of passport applications with a total of 294,895 applications which represent 29.2 percent of national total. The number is also a 41.4 percent increase from the previous year, 2017. The Federal Capital Territory follows with a total application of 107,576. Then it is followed by Oyo, 66,461; Ogun, 49,762; Delta, 47,644; Edo, 37,114 Kano, 36,233 and Rivers, 35,846. The states with the least applications include Taraba, 2,336; Yobe, 2,625; Nasarawa, 3,171 and Benue, 3,995.

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Thursday 08 August 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Will Mele Kyari succeed where others failed? OLUSOLA BELLO

lmost every group managing director of the Nigerian National Petroleum Corporation (NNPC) has promised to make landmark reforms that would revolutionise the oil and gas industry, but unfortunately, those promises ended up as mere expressions of desires. For instance when Emmanuel Ibe Kachikwu became the group managing director of NNPC in 2015, his first major pronouncement was to the effect that the downstream sector of the petroleum sector would be deregulated, Petroleum Industry Bill (PIB) would be passed and the refineries would be up and running again. Unfortunately, he was swallowed in the political intrigues of the powers that be. These promises marked the less than flattering legacies of the two men who ran NNPC before Mele Kyari. When Maikanti Baru came on board, he promised to end importation of petroleum products by making the refineries work, alas he was wrong. Today, the refineries are not working while the import bills continue to rise at the expense of other critical sectors of the economy. The Petroleum Industry Bill was passed by the National Assembly but the president refused to give his assent. Agitation for subsidy removal by

Mele Kyari, GMD, NNPC

well meaning Nigerians and international organisations that mean well for the Nigerian economy has remained a constant decimal. Observers have said that all these issues persist till date because of lack of political will by the executive arm of government to tackle them headlong, lack of sincerity or both. Part of the reasons why the

government is not acting on some of these according to industry observers is because the various governments that have been in power, including the incumbent All progressive Congress headed by President Muhammadu Buhari have allegedly been entrenched in corrupt practices. The NNPC has been reputed

as the cash cow of all the governments that come to power till date. But they heap the whole blame on NNPC. As if it would act without directives from the presidency. A question often lingers; can corruption thrive in NNPC without the active support of the executive arm of government? Now Mele Kyari, the newly appointed group managing director is also following the familiar terrain with promises to fix the refineries and stop importation of petroleum products, and ensure that the PIB is passed. However, it remains to be seen if Kyari who has been praised by NEITI and other international agencies for his transparency, will be able to succeed where others have failed. The same government that appointed the previous NNPC group managing directors is the one he has to work with. So what will he do differently that would ensure refineries, which have been challenged in the last 20 years would be resuscitated within the next three and half years? During the Society of Petroleum Engineers (SPE) conference and exhibition in Lagos he was frank to admit that his organisation is challenged and it needs to get its act together. He said,‘’Today, NNPC is challenged by the reality of our environment. Because our refineries are not operating optimally and today we have become a net importer of petroleum

products. It is a very big shame for us as a nation and as professionals. We can give excuses, but whether you are a chemical engineer or Petroleum Engineer it is a shame that this nation is a net importer of petroleum products and we are going change it”. According to Diran Fawibe, chairman and chief executive officer of International Energy Services (IES), the lack of political commitment and tenacity of purpose by the executive arm of government, rank high among reasons the refineries are not working. He said even when the repairs are budgeted for, the amount of money that would be released might be too small to meet the needs of the refineries. Another industry operator who retired from NNPC was of the opinion that politicians will not allow Mele Kyari to work even if he wants to. According to him, too much of political interference from politicians who want to bring products into the country may make the comments by Mele Kyari end up being mere expressions just like his predecessors. Another thing he said, is that the actual amount that can really bring the refineries on stream may be considered too much, therefore the management of the refineries may begin to make some short cuts, thereby compromising the required work.

Stakeholders emphasise relevance of Artificial Intelligence in oil and gas industry operations

he Department of Petroleum Resources has said it align itself with the opportunities provided by the use of Artificial Intelligence (AI) for effective performance in its operations According to the acting director of the agency……..Shakur, he said since the focus of the industry today is management of information and data analytics among others, DPR has to align with presidential executive order on Ease of doing business and developed robust automation process which has positively impacted its oversight functions in the oil and gas industry. DPR integrated automated programme he said, is hinged on technology adaptation, artificial intelligence, opportunities and creative collaborations to drive big quality data availability to support informed decisions in the industry and timely response to operational details while advancing national planning and execution. The DPR director who spoke at the ongoing International Conference and exhibition organised by the Society of Petroleum Engineers, Nigeria chapter in Lagos said: “Our initiatives span the industry value chain but focus on upstream process being the main area of concern in this conference” He said the platform has been able to reduce the turnaround time

Chairman/CEO, Waltersmith Petroman Oil Mr. Abdulrazaq Isa; Governor of Imo State H.E Emeka Ihedioha, CON; and Executive Secretary ,Nigerian Content Development and Management Board(NCDMB) Engr. Simbi Wabote, during the Imo State Governor and his entourage facility visit to WalterSmith Petroman Refinery site located in Ohaji-Egbema, Imo State recently.

for licensing and licensing rounds for all categories of service providers in the industry from average of three weeks to a record time of 72 hours. According to him, this platform enhances hydrocarbon accounting and reporting by transporting production data from flow stations and terminals in real-time. It also tracks every molecule of hydrocarbon leaving the shores of Nigeria its final destination. Similarly movement of every petroleum product in and www.businessday.ng

out of the Nigeria territorial waters are capture. Commenting on the theme of theconference entitled: Artificial Intelligence, Big Data and Mobile Technology: Changing the Future of the Energy industry, Mele Kyari, group managing director of the Nigerian National Petroleum Corporation(NNPC) acknowledged the fact that the emergence of artificial intelligence has altered the dynamics of operations by providing

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quicker processes and interventions in the conduct of business in the industry made possible by effective deployment of big data. He challenged industry players to be forward-looking and embrace this approach in seeking solutions to the challenges that confront the industry. He said that technology and innovations will continue to shape the way the oil and gas industry businesses and operations are @Businessdayng

conducted especially in the deep offshore and other hard-to-operate environment. “Artificial intelligence, big data and the mobile technology will continue to shape our industry in practically unimaginable ways, but certainly the transformations they promise will lead to quantum shift in the delivery of our task,’’ he said. He however called on oil and gas industry players in the country to support the national oil company to achieve the national aspiration to grow crude oil reserve to 40 billion barrels and boost oil production to 3 million barrels per day. Kyari said that this could only be achieved if players collaborate effectively to ensure timely resolution of contractual issues and the passage of the necessary petroleum legislation. “To achieve this ambition, huge investment is required across the value chain. We have to attract investment to deploy improved technology in the exploration and production of hydrocarbon from inland as well as the ultra-deep offshore basins,’’ he said. Kyari challenged industry operators and stakeholders alike to desist from further lamentations of the challenges that plague the operating environment but pick up the gauntlet and confront the issues frontally with diligence and sure mindedness.

Thursday 08 August 2019

BUSINESS DAY

ENERGYREPORT

Disruption in African energy may be slow, but it is steady ROLAKE AKINKUGBE

ydrocarbons cannot exclusively meet Africa’s rising energy demand. The biggest game changers will be in power generation with the growth of renewable and natural gas and eventually electric vehicles (EVs) in transportation. For a continent that has not fully conquered how to meet fossil fuel demand efficiently in the form of petrol and diesel for local transportation or meet domestic electricity needs, this may be idealistic. But markets evolve despite inefficiencies. Renewables already account for 20% of Africa’s installed generation capacity and globally will become the largest source of power generation by 2040, according to a report by the international oil company, BP. Meanwhile, the global EV and battery storage market is rising (more than 2m EVs were sold globally in 2018), and although Africa is still only a fraction of this market, the continent is undergoing an energy transition that should not be ignored. Disruptive technologies When BMW CEO Harald Kruger stepped down from his role in July 2019, his departure was said to be accelerated by the firm’s failure to respond to the rise of car manufacturer Tesla’s premium EVs. Telsa’s US sales had skyrocketed in the past year, compared to the steep downward trend in sales of BMW’s sedan car. We often forget that global trends ultimately impact Africa; witness the oil supply glut from shale production (and technology) of the past few years, which forced oil prices so low that the continent’s main commodity exporters were left with difficult economic headwinds. · The BMW-Tesla case is a classic example of what happens when industry incumbents stay myopic. With disruptive technologies, the signs are always there: changing consumer preferences, oligopolistic industries (which stifle innovation to preserve the status quo and are thus blindsided by new entrants), efficient cheaper alternatives, negative consumer

sentiment and rising consumer awareness. The confluence of these factors could re-order Africa’s incumbent energy systems, with gas, renewables and transportation at their heart. Add up all the deficits of African utilities – estimated at $21bn annually – and you quickly realise the enormous amount of waste involved in maintaining a grid-based and fossil fuel system that has not served all. Multiple fuel sources The clarion call here is not for a zero-sum approach. Multiple fuel sources can co-exist in Africa. After all, the technologies that utilise alternative and cleaner fuel sources have not evolved rapidly across all African countries, while the infrastructure to support these is only slowly developing. Take transition fuels such as gas. Compressed natural gas (CNG) is a gas transport technology that has been around for decades and should be a natural substitute means of use for many of Africa’s rural communities who are unlikely to ever consume piped gas due to the huge capital costs of piping to remote areas for domestic use. But challenges with bulk trans-

portation of CNG via trucking have constrained consumption via this method too, also known as ‘virtual pipelines’. There are some welcome signs of increased uptake of CNG in transportation. · In January, two funds in Egypt signed an agreement to convert thousands of diesel-powered cars to CNG fuel, as part of a government policy initiative to improve gas consumption locally and incentivise consumption of lowcarbon fuels. · Africa has roughly 260,000 natural gas vehicles (NGVs) in operation, with only about 200 stations servicing these – hardly a revolution given the continent’s 42m-strong fleet. However, market inefficiencies and infrastructure challenges create the very foundation for leapfrogging and disruptive trends that are likely to make other energy sources viable. These elements were a key driver of Africa’s mobile phone revolution. · EVs, for instance, could well become more popular than or even leapfrog NGVs in some African countries given the challenges with CNG. Technology and necessity While preferences among Af-

rica’s energy consumers have not radically changed since most still use equipment, generators, machines and vehicles that require fossil fuel energy sources to work, energy consumers are increasingly cost sensitive, and in many instances ecologically sensitive. Technological innovation and sheer necessity will ultimately force a shift in consumer preferences and choices, as seen with the rise of off-grid technology in Africa. In just a few years, for instance, the market for basic solar-powered lights and home systems, phone charging and basic appliances has grown rapidly in the developing world, with more than 24m units sold. Imagine the implied revolution in making decentralised customers make small payments for bits of equipment and appliances over a period. This model and type of disruption has aided the rise of pay-asyou-go solar companies such as M-Kopa, Off-Grid Electric, Bboxx and Arnergy. Together, they have raised more than $360m and serve about 700,000 customers, which is still only a small fraction of the addressable market on the continent.

Transport costs Consumer preferences also point to cost as a future deterrent to specific modes of energy consumption in transportation. In Kenya, for instance, recent research showed that commuters spend up to 30% of their income on transportation due to high fuel costs. Moreover, the cost and fiscal burden on Africa’s fuel-based economies are a problem. Today, the cost of fuel subsidies across the continent averages out at around 1.4% of GDP. With urbanisation rates of 4% annually and a corresponding increase in the vehicle fleet, a gradual shift to low-emissions transport systems should be seen by Africa’s policymakers as inevitable. EVs will eventually become cheaper as battery prices continue to fall, while tightening emissions regulations are helping to shape emerging transportation technology and improve air quality. Renewables, such as solar photovoltaic, are being predicted to surpass coal as the largest source of power generation in Africa by 2030, underpinned by the fact that the costs of solar panels have fallen by more than 50% in the past decade. Even the appliance systems that we have got used to, such as the LED light bulb, the simplest of which has fallen in cost by almost 85% and lasts 30 times longer than its incandescent counterpart. Limits to disruption There are, of course, limitations on the pace of the disruption in African energy. · At least 40% of the African communities that use solar energy still rely on base load fossil fuel energy sources as a backup, given the obvious intermittency of solar. In addition, new hydrocarbon discoveries on the continent mean governments can’t abandon incumbent energy sources altogether; proven oil and gas reserves today stand at 125bn barrels and 87.7trn cubic feet respectively. · A short-term priority should be how to harness these resources in a sustainable way and use the proceeds of their production to build inclusive and sustainable economies that thrive on a balanced and cleaner energy mix.

New NNPC boss tasks Energy Correspondents on constructive engagement with NNPC The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC),Mele Kyari, has challenged the Nigerian Association of Energy Correspondents of Nigeria (NAEC) to monitor the activities of the corporation closely with a view to keeping it on its toes towards the delivery of its mandate to the Nigerian public. The Group Managing Director gave this charge during a courtesy visit by the executives of the

Nigerian Association of Energy Correspondents (NAEC) to the NNPC Towers, Abuja. Ndu Ughamadu the corporation’s Group General Manager, Group Public Affairs Division, quoted the NNPC boss as saying that the corporation has identified the association as a critical stakeholder to work with for the growth of the energy industry. Mele Kyari said the corporation was committed to continuing on the path of truth to move NNPC www.businessday.ng

to the next level. “We know that this body is a very significant component of our country. We are aware that what we do here affects everybody and therefore, ventilating the issues here, giving it critical assessment is important to this country. So, the work of the energy correspondents is just like the energy sector that contributes 80 – 90% of the nation’s revenue, that means literarily, your reporting contributes to that per cent in the value

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of journalism in the country”, the Mele Kyari said. He urged the body to join the corporation’s drive to change the negative narrative about the oil and gas industry by being factual in their reportage of the efforts of the corporation in revamping the refineries and other oil and gas infrastructure. In his remarks, the National Chairman of NAEC, Olatunde Dodondawa, said the visit was informed by the unprecedented @Businessdayng

track records of the new helmsman. He commended the efficient manner the NNPC boss handled his duties as Group General Manager, Crude Oil Marketing Division, with particular reference to the DSDP initiative that brought significant value to the corporation. He used the opportunity to invite the GMD as the keynote speaker of the association’s forthcoming annual conference.

Thursday 08 August 2019

BUSINESS DAY

POLITICS & POLICY

Court restrains NASS from taking over Edo Assembly FELIX OMOHOMHION, Abuja

Federal High Court, on We d n e s d a y , ordered the National Assembly to halt all actions to take over legislative duties of the Edo House of Assembly, pending the determination of a suit before it. Both the Senate and House of Representatives at different times passed resolutions threatening to take over the running of affairs of the House if the state governor, Godwin Obaseki did not issue a fresh proclamation. In a ruling, Justice Taiwo Taiwo, ordered parties in the matter to maintain status quo, pending the determination of a suit that was lodged by the Speaker of the Edo House of Assembly, Hon. Francis Okiye, who was elected by nine, out of the 24 mem-

bers of the Assembly. The suit is challenging the Senate and the House of Representatives’ resolutions to take over the running of legislative duties of the state Assembly if Obaseki failed to issue a new proclamation, con-

voking the Assembly to accommodate majority of the elected members, who were alleged to have been sidelined in the first proclamation. At the resumed hearing of the suit on Wednesday, vacation judge, Justice

I will appoint more party men to head MDAs - Buhari

Taiwo, ordered all parties to maintain status quo until the case before the court is disposed off. Recall that nine, out of 24 members of the House, said to be loyal to the governor had allegedly in the first proclamation met

…Says APC election spending won’t be made public … NLC demands immediate release of Sowore TONY AILEMEN, Abuja AND JOSHIUA BASSEY, Lagos

and energy you deployed for the party for your own personal use. “I respect the sacrifices you are making; you can only derive satisfaction if you are working for your country and all our people because, materially, nobody can pay you for the sacrifices,” he said. President Buhari used the occasion to appeal to NWC members to abide by the constitution of the party, adding: “It is not enough to just criticise certain decisions of the party without first understanding what the constitution says.” Earlier, Oshiomhole while congratulating the President on the electoral victory, noted www.businessday.ng

that the NWC was meeting with him exclusively for the first time after the elections. The party chairman acknowledged that, while it was regrettable that the party lost some states, the greatest victory of the APC was in Kwara and Gombe states. “In Kwara, we uprooted the ruling dynasty and inaugurated absolutely loyal and totally committed APC men at the helm of affairs,” he said. Commending the unique leadership style of the President, Oshiomhole thanked President Buhari for his unflinching support that ensured the success of the party in holding the principal offices of the 9th National Assembly.

members of the State Assembly duly inaugurated and principal members elected, the National Assembly, still vowed to hijack legislative functions in the state. However, Justice Taiwo fixed August 22 to hear the case, even as he directed the National Assembly to within seven days, respond to the suit. He said he would have to hear from the respondents before order could be made regarding stopping the takeover plans. He said before an interim injunction against the National Assembly, he was minded to hear the substantive matter on the adjourned date. Defendants in the matter are the Clerk of the National Assembly, Mohammed Sani-Omolori and the National Assembly of the Federal Republic of Nigeria.

Revolution: Sowore crossed the red lines - Oshiomhole

TONY AILEMEN, Abuja

resident Muhammadu Buhari Wednesday assured members of the National Working Committee (NWC) of All Progressives Congress (APC), that competent members with the requisite experience will be invited to contribute their quota to nation-building as heads and chairmen of boards of governmental parastatals and agencies. The President, who said he would be more conscious of the interests of the party in taking key decisions, made the promise when he met with members of the NWC of the APC at the State House in Abuja. A statement by Special Adviser to the President on Media and Publicity, Femi Adesina, said President Buhari pledged to uphold party supremacy and commended the National Chairman, Adams Oshiomhole, and other members for their sacrifices and overall success in the last general election in the country. “It is obvious that the success of the party was more paramount in your hearts. You could have deployed the times

about 9 pm on June 17 and inaugurated the House. The plaintiffs, Okiye and the Edo Assembly, in the suit marked FHC/ABJ/ CS/815/2019, among others, sought for interpretation of the legality of the directive to governor to issue a fresh proclamation to inaugurate the House? They also sought the order of the court to stop both federal Houses to takeover running of the state Assembly. Counsel to the plaintiffs, Ola Olanipekun (SAN), lamented before the court that the Senate had after it was duly served with the legal processes, still passed a resolution on July 30 to take over the Edo Assembly if the governor fails to issue fresh proclamation. He said it was disheartening that despite the fact that Governor Obaseki’s earlier proclamation was officially gazetted, with

dams Oshiomhole, national chairman of the All Progressives Congress (APC), on Wednesday justified government detention and clampdown of Omoyele Sowore, convener of the Global Coalition for Security and Democracy, and other anti-government protesters, saying that they were arrested for crossing the red lines, over the calls for “Revolution.” Adams Oshiomhole stated this while fielding questions from State House Correspondents after leading members of the party’s National Working Committee to meet with President Muhammadu Buhari at the Presidential Villa, Abuja. Oshiomhole however, affirmed that Nigerians have the right to protest, adding that such protesters must properly articulate their grievances and it must be devoid of forcefully taking over “a properly constituted government.” He said: “I believe people have a right to contest issues, people have the right to disagree. I have often said government doesn’t have the right to dictate to people how to protest, but you must state exactly what you want. I ask you to name any country in the

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world where somebody stands up and say after the election that I contested and lost; now therefore, I want revolution. “Go and check the dictionary and political meaning of a revolution, if it comes it will be like the Christmas turkey, nobody knows which one will be first to be slaughtered on Christmas. “I think we do need to take things seriously, we have serious issues in this country, I have my own reservations about many things but we have submitted to this process and we must work hard to make it work. Nigeria must deliver to the poor, APC government must deliver, but the challenge is now with the mandate, how do you recreate the middle class so that Nigeria can be stable, all other things will then fall in line.” According to him, “All that is required is clear thinking, determination and to ensure that the ministers that are coming are not coming to implement what they think, but that they are coming to implement programmes that the party has agreed to. And that is why they are going to have a retreat before the President assign ministerial position to them.” The APC Chairman, who stated that they were at the Villa to present their audited @Businessdayng

party spending for the general election to the President, however, refused to make public the details of revenue and expenditure for the elections. “Because you are not a contributor, I am not obliged to account to you. I am accountable to APC members and unless you show me your membership card, I am not obliged to report to you,” he said. He said the statement was presented to the President because: He is a very senior member of the APC and so he is entitled to know how much we spent, and as the steward of the party, I am entitled to present the report of my stewardship and cost we incurred in the cause of that stewardship.” He declared that “the party, the Executive, the National Assembly, all of us working together sharing ideas, we are much more likely to make faster progress and those are the sort of things we discussed. “The tragedy for now is that over the period people are either very poor or they are very rich. The President has to provide leadership, working with the National Assembly leadership to see how we can over the next four years deliver, so that the current situation of extremely poor and extremely rich will be bridged by recreating the middle class.”

Thursday 08 August 2019

BUSINESS DAY

MADE in aba

Nigerians’ preference: Aba or foreign? Gbemi Faminu

ba is one of Nigeria’s biggest industrial hubs, churning out la rg e vo l u m e s of shoes, bags and leather products in various quality, sizes, designs and colours daily. The Aba shoe industry, worth over N120 billion, is popular due to its unique designs. Ni g e r i a n s v e n t i l a t e d their opinions on which they prefer between Aba and foreign products. Dim Chigozie, chief executive of Prince Dim Fashion Concept and major industry player, referred to Aba as the China of Africa because anything and everything can be produced there. Emmanuel Obasuyi, a user of Aba products, said he will patronise Aba any time, any day. “Most of my shoes are Aba made and they have served their purpose well. Some of the products manufactured in Aba are exported abroad and rebranded and sent back into the market at a high price, which most Nigerians will save to have. “Most Nigerians do not appreciate our homemade products which is wrong. Nigerians ne e d to appre ciate Aba made products. This will encourage more products from the industry with all the specifications of foreign products,” he said. Soyode Damilola, another consumer, said, “ I a m a t r u e Ni g e r i a n . Whatever the case is, Aba made products will be my choice. They are always up

to the task when we talk of durability, affordability, and quality. Even some foreign products are not as good as our indigenous products here, from the t rav e l b a g s t o s h o e s t o handbags, Aba products are the best.” Damilola added, “I use both Aba made and foreign products. What I am after is quality, affordability, and value. As long as I see that the shoe or bag is of g o o d qualit y, I am less concerned about where it was produced. Let it just serve its purpose.” Olusegun Adeniyi I always take my time when buying things for myself and I do not mind the cost as long as I am able to get value for my money. I prefer foreign products, not necessarily top designers but as long as I am sure of its durability and quality. I do not trust most Nigerian m a d e p ro d u c t s a s t h e y do not give value for its purpose. Therefore, I prefer foreign goods every time.

globally.

Mbanefo Elijah Whenever I shop for my personal use, I watch out for quality, beauty, and durability regardless of the cost. Once it meets these criteria, I rush for it whether it is Nigerian- or foreignmade. I use both of them because some of the locally ma d e p ro d u c t s su r p a ss foreign products.

Okafor Chidinma I prefer foreign products because I believe it has better quality and I will not waste my money. Furthermore, foreign goods have better designs and innovations that always make the products loveable. Most Aba products that I know have mediocre designs and unpalatable colours.

Agbeleye Ben I always buy Abamade products. Aba ma nu f a c t u re r s a c t u a l l y produce good, quality and affordable products. With a little help and training, I expect Aba-made products to b e come s ought-after

Opeyemi Alabi I prefer Aba-made products. Most Aba products are easy to get and can also be very beautiful. I prefer them to foreign products. S ome believe that Aba-made products are inferior but we also have

foreign products that are sub-standard. It revolves around what you can afford— the major point is to get value for your money. Adebayo Mary Locally made products are not so bad, but most of the producers are mediocre and cannot make unique and innovative designs. This is one of the many reasons I resort to buying foreign products instead of local products. Babatunde James I am indifferent to both of them. As long as they both serve their purpose and are good enough, I go for it whether it is locally made or imported.

Aba garment, FNL sectors to benefit from GIZ programme GODFREY OFURUM

e u t s c h e Gesellschaft für Internationale

would support those in the finished leather and garment sectors to improve their entrepreneurial capacity to be able to

produce quality products at the right quantity. To achieve this, the GIZ will expose the entrepreneurs to technology

that would improve their productivity and quality as well, he explained. “We are also going to link them to markets, because

Zusammenarbeit (GIZ), a German development agency headquartered in Bonn and Eschborn, is set to launch its Nigerian Competitive Project in Abia State. GIZ provides a story services in the field of international development cooperation. The four year project, which aims at strengthening the competiveness of selected value chains in Nigeria, is funded by the European Union (EU) and German government. Yakubu Paiko, access to finance advisor, GIZ, explained that the project www.businessday.ng

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one of the problems they have here is lack of access to market,” he said. “So part of the programme is to link them up with one of the global names in the industry so that they can sell their products,” he added. On access to finance, he promised that GIZ would explore various sources of finance that are available to enable the artisans to access low-interest loans to enhance their capacities. He explained that GIZ would be hosting a roundtable stakeholders’ meeting where they will discuss regulator y framework that affects the leather and garment industries in Abia and Nigeria at large, stressing that they want to create an enabling environment for @Businessdayng

these businesses to thrive and to be able to compete at the international market. “This is our plan and hopefully at the end of the day, we hope to touch about 25,000 businesses in Nigeria as a whole and about 5,000 in Abia and at the end, we will have enhanced their capacities, improved their competitiveness and quality of what they produce and off course increase their output.” He s t a t e d t h a t G I Z would be working with its partners, all the actors and stakeholders, to ensure the success of the project. The GIZ launch and policy round table will happen in the second week of August, this year and Governor Okezie Ikpeazu and all relevant stakeholders are expected to there.

Thursday 08 August 2019

BUSINESS DAY

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Thursday 08 August 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 07 August 2019 Company

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Price (N)

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Trades

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Company

Market cap(nm)

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 223,934.92 6.30 1.61 153 9,006,438 UNITED BANK FOR AFRICA PLC 201,776.59 5.90 -0.85 157 5,077,652 ZENITH BANK PLC 557,287.76 17.75 -1.39 334 8,340,731 644 22,424,821 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 184,860.76 5.15 -0.96 197 30,901,073 197 30,901,073 841 53,325,894 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,611,484.02 128.30 0.23 152 3,047,449 152 3,047,449 152 3,047,449 BUILDING MATERIALS DANGOTE CEMENT PLC 2,811,683.72 165.00 -1.79 31 59,310 LAFARGE AFRICA PLC. 233,563.03 14.50 -0.34 47 3,332,785 78 3,392,095 78 3,392,095 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 288,337.83 490.00 - 16 36,389 16 36,389 16 36,389 1,087 59,801,827 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 49,603.32 52.00 - 20 39,742 PRESCO PLC 44,800.00 44.80 - 4 1,590 24 41,332 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,350.00 0.45 - 3 31,500 3 31,500 27 72,832 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 767.71 0.29 - 2 8,782 JOHN HOLT PLC. 179.01 0.46 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 37,396.15 0.92 -1.09 128 16,028,391 U A C N PLC. 16,567.46 5.75 - 63 1,181,864 193 17,219,037 193 17,219,037 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 27,192.00 20.60 - 7 35,782 ROADS NIG PLC. 165.00 6.60 - 0 0 7 35,782 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,222.01 1.24 - 6 66,452 6 66,452 13 102,234 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 1 100 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 100,757.61 46.00 - 11 2,710 INTERNATIONAL BREWERIES PLC. 103,150.34 12.00 - 10 110,005 NIGERIAN BREW. PLC. 399,845.10 50.00 - 47 178,936 69 291,751 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 101,750.00 20.35 1.75 238 2,024,154 DANGOTE SUGAR REFINERY PLC 117,600.00 9.80 - 52 233,860 FLOUR MILLS NIG. PLC. 62,735.81 15.30 -1.92 75 544,382 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 5.26 9 236,365 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 37,092.14 14.00 - 19 125,362 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 393 3,164,123 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,345.48 10.30 - 44 189,366 NESTLE NIGERIA PLC. 1,006,673.44 1,270.00 - 56 25,962 100 215,328 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,366.12 4.29 - 4 44,000 4 44,000 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,822.86 6.00 - 15 64,892 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 15 21,988 30 86,880 596 3,802,082 BANKING ECOBANK TRANSNATIONAL INCORPORATED 133,034.25 7.25 0.69 69 948,501 FIDELITY BANK PLC 44,910.94 1.55 0.65 76 5,364,703 GUARANTY TRUST BANK PLC. 815,243.66 27.70 -0.18 186 4,678,780 JAIZ BANK PLC 11,196.41 0.38 -9.52 30 2,366,662 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 68,521.20 2.38 - 8 22,379 UNION BANK NIG.PLC. 196,565.08 6.75 -2.17 39 517,411 UNITY BANK PLC 8,182.54 0.70 - 6 10,161 WEMA BANK PLC. 21,215.96 0.55 -5.17 33 928,043 447 14,836,640 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 9.38 16 729,293 AXAMANSARD INSURANCE PLC 17,325.00 1.65 - 5 108,050 CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 - 4 44,300 CONTINENTAL REINSURANCE PLC 14,521.84 1.40 -9.68 12 589,483 CORNERSTONE INSURANCE PLC 3,240.49 0.22 - 5 33,050 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,636.44 0.36 5.88 22 2,515,200 LAW UNION AND ROCK INS. PLC. 1,847.42 0.43 - 0 0 LINKAGE ASSURANCE PLC 4,160.00 0.52 - 1 5,000 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 -8.33 8 845,000 NEM INSURANCE PLC 10,825.03 2.05 - 16 311,513 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 2 130 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 500 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 6 607,655 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 300 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 10,840 WAPIC INSURANCE PLC 4,951.61 0.37 -5.13 45 5,431,216 145 11,231,530

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,698.23 1.18 - 1 500 1 500 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,600.00 3.80 - 42 175,687 CUSTODIAN INVESTMENT PLC 32,350.25 5.50 - 1 1,206 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 31,882.36 1.61 0.63 66 11,037,474 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 STANBIC IBTC HOLDINGS PLC 390,165.07 38.10 - 14 18,615 UNITED CAPITAL PLC 12,660.00 2.11 -1.40 58 1,115,372 181 12,348,354 774 38,417,024 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 781.69 0.22 -4.35 4 536,800 4 536,800 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,388.62 4.50 - 0 0 GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,925.77 8.30 - 7 19,413 MAY & BAKER NIGERIA PLC. 3,899.03 2.26 -5.83 10 143,621 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,044.54 0.55 - 1 5,315 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 1 3,900 19 172,249 23 709,049 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 -4.76 5 1,618,171 5 1,618,171 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 2 1,762 NCR (NIGERIA) PLC. 626.40 5.80 - 3 20,181 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 2 836 7 22,779 PROCESSING SYSTEMS CHAMS PLC 1,174.02 0.25 -7.41 21 3,385,935 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 21 3,385,935 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 5 512 5 512 38 5,027,397 BUILDING MATERIALS BERGER PAINTS PLC 1,985.29 6.85 - 3 11,172 CAP PLC 17,325.00 24.75 - 11 21,234 CEMENT CO. OF NORTH.NIG. PLC 178,094.44 13.55 0.74 20 185,876 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 34 218,282 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,747.66 1.56 - 17 64,524 17 64,524 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 - 12 17,551 GREIF NIGERIA PLC 388.02 9.10 - 0 0 12 17,551 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 63 300,357 CHEMICALS B.O.C. GASES PLC. 2,318.48 5.57 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 1 925 1 925 1 925 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 -9.09 21 1,361,376 21 1,361,376 INTEGRATED OIL AND GAS SERVICES OANDO PLC 45,996.23 3.70 2.70 33 820,780 33 820,780 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 28 9,277 CONOIL PLC 12,248.25 17.65 6.33 29 105,670 ETERNA PLC. 3,586.40 2.75 1.85 24 224,857 FORTE OIL PLC. 23,835.40 18.30 - 48 193,882 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 2 500 TOTAL NIGERIA PLC. 38,977.11 114.80 - 38 3,675 169 537,861 223 2,720,017 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 1,000 1 1,000 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,806.00 4.76 -9.85 5 161,706 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 0 0 5 161,706 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 3,333 1 3,333 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 2 5,265 IKEJA HOTEL PLC 3,035.04 1.46 - 7 83,088 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 1,000 10 89,353 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 2,000 1 2,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 1 19,949 LEARN AFRICA PLC 1,080.03 1.40 - 7 116,121 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 3 600 UNIVERSITY PRESS PLC. 690.26 1.60 - 8 199,240

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BUSINESS DAY Thursday 08 2019 www.businessday.ng

Examining CEOs view on Nigeria’s manufacturing sector Gbemi Faminu & Michael Ani

he Manufacturers Association of Nigeria (MAN) has just released the 2019 second quarter (Q2) Manufacturers CEOs Confidence Index (MCCI). Unlike the first quarter where 200 chief executives of manufacturing firms were interviewed, the Q2 captured the views of 400 CEOs. The MCCI is primarily targeted at examining what chief executives think about their sector. According to the report, MCCI for the second quarter was 50.9, which are few points above the 50 points benchmark of a good performance. It represents a 0.4 percent decline from the 51.3 percent recorded in the previous quarter of the year, indicating a decline in the industry’s productivity and activities. A composite manufacturing index above 50 points indicates that the manufacturing economy is generally expanding, 50 points indicates the average position and below 50 points indicates that it is generally contracting. The report highlights major challenges facing manufacturers, including difficulty in accessing loans, high interest rate and insufficient working capital. The issue of funding has been a constant problem for manufacturers who need it for business expansion, improved productivity, procurement of raw materials and business development purposes. The majority (76 percent) of the CEOs interviewed were of the opinion that the rate at which commercial banks lend to manufacturers discourages productivity in the sector. Only 12 percent disagreed. Regarding the size of loans issued, 66 percent of the CEOs claimed that the size of loans allotted to industry players by commercial lenders further contributes to low productivity in the sector and also discourages foreign and local investments. Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent; Kenya’s is 9 percent; South Africa is 6.75 percent; Zambia is 10.25 percent, and Cameroon is 4.25 percent. Similarly, Rwanda is 5 percent; Mauritius, 3.5 percent; Algeria is 8 percent, and Senegal is 4.5 percent. The National Bureau of Statistics (NBS)’s recent MSME report shows that 85 percent of businesses could not have access to external financing within 2013 and 2017. In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks. Due to high inflation rate and the monetary policy rate, deposit money banks give out loans at 20 to 35 percent interest rates per annum with a usually 12-month tenor while development banks like the Bank of Industry capable of issuing loans at single-digit interest rates lack the

required capital to keep up with its activities. A CEIC data show that the lending rate of Nigerian banks dropped by 7 percent, from 16.08 in February to 14.92 in March 2019. In 2018, MAN said in its economic review that lending rate to the manufacturing sector dropped to 22.21 percent in 2018, from 22.84 percent in 2017. But analysts see that rate as high and incapable to awakening the majorly comatose productive sector. Data from the NBS show that banking sector credit to the economy declined by 2.9 per cent, from N15.6tn in Q3 2018 to N15.1tn in Q4 2018. Similarly, the number of customers borrowing from commercial banks also headed south. As a possible solution, MAN advocates policy measures from the CBN that will lower the cost of borrowing and increase productivity in the sector. “ The current CBN polic y aimed at increasing loan to the real sector of the economy to stimulate production, is a step in the right direction and should therefore be conscientiously,” respondents in the survey said. The report further buttresses the 2019 World Bank’s Doing Business Index, which scored Nigeria 52.89 out of 100 points and giving a ranking of 146 out of 190 countries surveyed.

Ninety-four percent of chief executives of manufacturing companies across the country reported that congestion at the ports significantly affects productivity negatively. The CEOs complained that delays in clearing raw materials and machinery often result in high demurrages which increase production costs and slow down manufacturing operations. The report taps inadequate space inside the ports, weak trade facilitation infrastructure, poor road network and the associated traffic gridlock as critical issues that require government attention. A 2018 report by the Lagos Chamber of Commerce and Industry (LCCI) had supported the CEOs point. The report by the LCCI had disclosed that 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day even though they were originally meant to accommodate only 1,500 trucks. The report said that Nigeria loses N600 billion in customs revenue, $10 billion (N3.6trn) in non-oil export sector and N2.5 trillion in corporate earnings across various sectors on annual basis due to the poor state of Nigerian ports. The LCCI report further noted that 25 percent of cashew nuts exported from Lagos to Vietnam in 2017 went bad or were downgraded owing to delays at Lagos ports.

Similarly, only 10 percent of cargoes were cleared within the set timeline of 48 hours while the majority of cargoes took between five and 14 days to clear. The report added that some cargoes took as many as 20 days to be cleared at the ports. Just like the LCCI report of 2018, MAN’s survey generally shows that CEOs are frustrated by the state of the ports. Many of them want the federal government to improve the state of ports outside Lagos to decongest Apapa and Tin Can. In the first quarter survey, 92 percent of CEOs said multiple taxation was their biggest impediment. But in the second quarter, the number rose to 95 percent. “This is substantiated by the numerous taxes, levies, fees and other charges that manufacturers pay to agencies of the federal, state and local governments,” the report says. “Consequently, there is the need to streamline multiplicity of taxes and ensure that only approved taxes/levies/fees are charged,” it says. Furthermore, half of the respondents disagreed that government capital expenditure implementation encourages productivity in the sector. The CEOs’ perception rested principally on the delay in budget approvals, low implementation of budgetary provisions, award of contracts to foreign firms and dearth of basic infrastructure such as inefficient port infrastructure, inadequate electricity supply, deplorable road networks, and low patronage. “This therefore confirms the need to review the infrastructure development plan to deliberately stimulate sustained productivity in the real sector,” it adds. The report further shows that foreign exchange access is still a critical challenge for many manufacturers, as 46 percent disagreed that the rate at which the sector sources foreign exchange (forex) has improved. While 36 percent agreed that there was more dollar access, 18

percent were not sure that forex has improved. The survey cited inadequate access to foreign exchange and dilapidated infrastructure as major issues that pose threat to the growth of the sector. Manufacturing companies in Africa’s biggest oil producing country faced the problem of acute dollar shortage after it slipped into a recession that happened in 2016. In August 2016, the MAN and the NOI Polls reported that 222 smallscale businesses closed shops, leading to 180,000 job losses. This was attributed to FX challenges. About 54 manufacturing firms also closed shop, according to MAN. The CBN has taken several steps to bring stability in the FX market, but manufacturers still see the foreign exchange as a key problem, given that many of them import their inputs. Only 21 percent of CEOs agreed that patronage of Nigerian manufactured products has improved as a result of the implementation of Executive Order 003. The Order mandated all government establishments to make Nigerian manufactured goods first choice in public procurement processes. However, 34 percent of those interviewed were not sure while 45 percent disagreed. “This indicates the need to urgently step up the campaign on Buy-Made-In-Nigeria, interrogate the implementation of the EO003 to ascertain the degree of compliance of ministries, departments and agencies (MDAs) and establish support-structures that would ensure that government patronage of goods manufactured in Nigeria improved as expected,” the report recommends. Furthermore, 55 percent of the chief executives disagreed that inventory of unsold manufactured products in the country has reduced over the last three months. Twentyone percent agreed while the remaining 24 percent were not sure. “The high level of disagreement among respondents indicates the need for government to introduce disposable income enhancing fiscal policy measures that would be in sync with existing monetary policies,” the report suggests. The survey examined manufacturers’ perception using a set of diffusion factors which included current business condition, business condition for the next three months, current employment condition, rate of employment, employment condition for the next three months and production level for the next three months. Manufacturers in Nigeria over time have battled with various challenges to which they have been seeking succour mostly through personal efforts. Regardless, the challenges have continued to linger on and have shown little signs of improving.

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