BusinessDay 08 Jul 2019

news you can trust I **monDAY 08 july 2019 I vol. 15, no 348 I N300

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CBN’s bet on these 10 crops creates opportunity for investors T ODINAKA ANUDU & CALEB OJEWALE

he Central Bank of Nigeria’s bet on 10 key crops has opened an opportunity for investors looking to tap into the ever-growing agribusiness value chain.

Agriculture features promi-

nently in the five-year plan of the CBN from 2019 to 2024 as the apex bank hopes to consolidate on gains made through the Anchor Borrowers’ Programme (ABP).

Godwin Emefiele, the CBN governor, while revealing his policy thrust for the next five years, unveiled plans to boost ag-

ricultural productivity through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities. The commodities are rice, maize, cassava, cocoa, tomato, cotton, oil-palm, poultry, fish, and livestock/dairy.

The choice of these 10 crops,

Emefiele said, “is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next five years if efforts are made to expand cultivation and processing of these items in Continues on page 42

CBN 10 INTERVENTION COMMODITIES FOR INVESTORS

2019 PRODUCTION

Maize

Cotton

Livestock /dairy

Palm Oil

Cocoa

PRODUCTION

OPPOURTNITY/GAP

7 million MT

0.5 million MT

200,000 MT

0.5 million MT

600,000 MT

1.4 million MT

900,000 MT

1.2 million MT

250,000 MT

3.35 million MT

Tomato

Fish

Poultry

OPPOURTNITY/GAP

1.5 million MT

700,000 MT

1.12 Million MT

1.6 Million MT

140 million birds

60 million birds

7 million tonnes

Export

42 million MT

11.8 million MT

Rice

Cassava

@

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www.

Source: Federal Ministry of Agriculture and Rural Development/ Food and Agriculture Organisation , BusinessDay

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Foreign Reserve - $45.07bn Cross Rates - GBP-$:1.25 YUANY-N52.22 Commodities Cocoa

Gold

Crude Oil

US$2,463.00

$1,403.10

$64.27

Nigeria joins AfCFTA as Buhari signs trade deal ... AfCFTA to attract GDP of $2.5trn Odinaka Anudu & Tony Ailemen, Abuja

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igeria’s President Muhammadu Buhari has finally signed the longawaited African Continental Free Trade Agreement (AfCFTA).

Buhari signed the deal at 10.49am at the 12th Extraordinary Session of the Assembly of the Union on AfCFTA, on Sunday in Niamey, Niger Republic.

Buhari had refused to sign the AfCFTA since 2018 owing to protests by manufacturers who believe it would harm the sector.

But Buhari last week accepted the position of a committee he Continues on page 42

Inside NSE to list Airtel Africa shares on Tuesday, P. 2 July 9

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news AirPeace records 85% load factor on Sharjah route IFEOMA OKEKE in Dubai

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takeholders in various sector of the economy have raised their hopes that Nigeria’s largest carrier, AirPeace will sustain its new international route, Dubai via Sharjah.

The airline which commenced Sharjah operations on Friday, 5th of June, recorded over 85percent load factor on its inaugural flight to Sharjah, UAE and over 50percent load factor back to Lagos the following day.

Stakeholders say the load factors have never been recorded before during inaugural flights, adding that with the airline’s equipment, right funding and support from the government and the Nigerian people, the airline will sustain the route.

Speaking during a ceremony in Dubai to launch the route, Ken Okpara, general manager, Fidelity bank said he was confident the airline will sustain the new route because Allen Onyema, the chairman of the airline has proven himself to be a disciplined, passionate and determined entrepreneur and this is why Fidelity is strongly behind the bank.

“For us at Fidelity, we are

quite excited because we have seen a very committed, passionate professional and shrewd entrepreneur in the person of Allen Onyema, who is spare heading the Air Peace vision. We have seen a dream come true. This is a function of the fact that if you believe strongly and you have a vision, with the right structure, you will be able to achieve whatever you are committed to.

History is being made today.

“The partnership AirPeace has with Fidelity is one that is very enduring. It is not just like a bank-customer relationship. It has been there from the beginning and what is clear is that it is associated with the way Fidelity has come to do things over the period. We ensure the institution puts the right kind of structure in place. Beyond funding is the fact that we have been involved in advisory services, hand holding and providing the guidance,” Okara added.

He explained that aviation sector requires a high capital outlay and sadly a lot of lot of airlines have closed shop, adding that AirPeace has kept growing because it has the right structures, funding and equipment.

Ahunna Eziakonwa (l), regional director, United Nations Development Agency (UNDP); Tony Elumelu (r), founder, Tony Elumelu Foundation (TEF)/ chairman, United Bank for Africa (UBA), at the signing of the TEFUNDP Sahel Youth Entrepreneurship Programme partnership, which is to to empower 100,000 young entrepreneurs in Africa.

Standing from left: Vera Songwe, executive secretary, United Nations Economic Commission for Africa (UNECA); Benedict Oramah, president, African Export and Import Bank (AFREXIM); Khadijetou Mbarec Fall, minister of trade, Mauritania; Ifeyinwa Ugochukwu, CEO, TEF, and Jidoud Ahmat, minister of finance and budget, Republic of Niger, at the African Union Summit in Niamey, Niger, weekend.

NSE to list Airtel Africa shares on Tuesday, July 9 Iheanyi Nwachukwu & OLUWASEGUN OLAKOYENIKAN

T Biggest PFAs return 4.6% in H1 2019 •Continues online at www.businessday.ng

as total portfolio hits record high OLUFIKAYO OWOEYE, SEGUN ADAMS & ISRAEL ODUBOLA

T

he intensity with which pension funds in Nigeria generate returns for contributors seems to have waned in the first half of 2019.

Although both the Retirement Savings Account (RSA) and retiree fund category of pension funds ended the first quarter of the year with a positive performance, BusinessDay analysis of the half-year return of the seven biggest Pension Fund Administrators (PFAs) reveals that these PFAs delivered an average return of 4.6 percent and 5.2 percent on Fund II and Fund III, respectively, while total portfolio for RSA hit N6.9 trillion.

The choice of Fund II and III is based on the fact that these fund types dominate total RSA funds.

Figures from the National Pension Commission (PenCom) reveal that total funds

in RSA as at March 31, 2019, stood at N6.9 trillion, with Fund II at N4 trillion, followed

by Fund III (N2.1 trillion), Fund IV (N732 billion), and Fund I (N12.7 billion).

Under the multi-fund structure introduced by PenCom in 2018, the Fund II type is meant for middle-aged contributors – below the age of 49 – and this accounts for 58 percent of the total RSA fund.

Fund III, which is the most conservative fund for active contributors designed for people close to retirement and meant for persons above the age of 50, accounts for 31 percent of the pension fund.

Fund I, which is meant for active contributors who were 49 years and below as at their last birthdays, and Fund IV, meant strictly for RSA retirees, account for a meagre 0.19 percent and 11 percent, respectively.

MARKETS

•Continues online at www.businessday.ng

he Nigerian Stock Exchange (NSE) says it is aware of various speculative reports which stated that the postponed Airtel Africa listing on NSE is scheduled for Monday, July 8, 2019. Rather, the NSE on Sunday said the official date for the listing is Tuesday, July 9th, 2019. The shares of the telco would have been listed

on the Exchange last week but it didn’t happen because SEC didn’t approve it.

The planned listing of Airtel Africa on the Nigerian Stock Exchange (NSE) earlier scheduled for Friday was postponed due to uncompleted procedural processes, the Chief Executive Officer of the firm, Raghunath Mandava, said.

The firm is expected to list Tuesday once the processes are completed, according to the Airtel boss.

Mandava who was represented by the Managing Director and Chief Executive Officer of Airtel Nigeria, the Nigerian subsidiary of the firm, Segun Ogunsanya, made this known at the Fact Before the Listing held at the NSE on Friday.

Although the CEO did not give details of the “processes” which he said the company was involved in with the capital market regulators, he only assured they would be finalized by the close of business

Old petroleum fiscal regime means billion-dollar losses for Nigeria DIPO OLADEHINDE

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he failure of the Nigerian government to review the fiscal policies governing the exploration of oil in deep, offshore waters is costing the country a loss in oil revenue amounting to trillions of naira.

While other Organisation of Petroleum Exporting Countries (OPEC) is reviewing its laws in line with the realities of current international practices and crude oil prices, Nigeria remains stuck with old laws and regulations which have seen the country miss out on key sources of revenue even as it struggles to fund its annual budget.

For instance, in Nigeria, royaltyratesaretypicallysetasaper-

centage of value of oil produced and the size of the licensed area of production. Royalty rates range from zero percent to 20 percent in onshore areas under Joint Venture arrangement, while under Production Sharing Arrangement they range from zero to 12 percent. Royalty rates for gas production range from 5 percent for operations in offshore areas to 7 percent for operations in onshore areas.

The situation is not the same for other countries.

Saudi Arabia, for instance, collects 85 percent royalty on commercial oil production and 30 percent on natural gas, while in neighbouring Qatar royalty rate is set by each development and fiscal agreement or joint venture

agreement between the government and the company.

United Arab Emirates has no fixed royalty rate as taxes are currently imposed at the Emirate level on companies based on actual oil production in accordance with specific (but confidential) concession agreements, while Kuwait collects 50 percent royalty on commercial oil production.

In Russia, mineral extraction tax (also known as royalty) is charged on a fixed amount of $11 per tonne, multiplied by coefficients that vary by depletion of reserves and other factors.

Adeola Adenikinju, director, Centre for Petroleum Energy Economics and member of Nigeria’s Monetary Policy

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on Friday.

“We just have some procedural delay,” he said. “All the processes are in place, I am sure they will be completed today (Friday).”

On his part, Oscar Onyema, the CEO of the NSE, noted that the local bourse is a highly regulated market.

“We need to have all the pieces of information together, there are processes at the back end that need to happen before we can list and trade,” Onyema said.

Buy

Sell

$-N 358.00 361.00 £-N 457.00 463.00 €-N 404.00 410.00

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

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fgn bonds

Treasury bills

Spot ($/N)

3M

360.82 306.95

-0.28 10.57

NGUS sep 18 2019 361.03

6M

5Y

0.15

-0.06

12.44

14.25

NGUS dec 24 2019 361.48

10 Y 20 Y -0.12 -0.16 14.19

14.24

NGUS jul 29 2020 362.53

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Committee (MPC), believes the current oil contractual agreement, most especially offshore production arrangement, is not favouring Nigeria “In the past when oil price was very low, an MOU was signed to encourage IOCs, which ought to have been revised over 20 years ago. The MoU was supposed to encourage investment into offshore production, but with higher oil prices, that arrangement is shortchanging Nigeria,” Adenikinju told BusinessDay. A study conducted by The Nigeria Extractive Industries Transparency Initiative (NEITI) in March 2019 revealed that Nigeria had lost at least $16 billion (N2.87 trillion at an average exchange rate of N179.65/$1 during the period) in 10 years due to non-review of the 1993 Production Sharing Contracts with oil companies.

“It would be difficult to recoup what has been described as lost by NEITI. The focus has to be on achieving a fair balance going forward,” Adeoye Adefulu, energy partner, Odujinrin & Adefulu, told BusinessDay.

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A hearty toast to prince Francis Oluwole Awogboro “VQB”

Bashorun J.K Randle • Continued from last week

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ithout any provocation, the old boys of Government College, Ibadan who are “nomadic” visitors insist on wheeling out their formidable catalogue of exceptional old boys – late Alhaji Adegoke Adelabu; Nobel Laureate Professor Wole Soyinka; Dr. Victor Omololu Olunloyo (former Governor of Oyo State); Dr.Akintola Omigbodun; Chief Ajibola Ogunshola and many more.

Well before you enter the club, you could hear the celebrant’s hearty and infectious laughter. Even the gatemen, receptionists and stewards are only too eager to announce: “The Trustee is waiting for you.” He is truly adored and cherished by all and sundry – both young and old.

Awo’s philanthropy to the Catholic Church; St. Gregory’s College; and various charitable organisations is colossal.

It is a measure of his endearing quest for knowledge and excellence that even after establishing himself as a very successful entrepreneur; he proceeded to the Harvard Business School (to lecture them on how to make serious money and what business schools cannot teach you!!). One of his contemporaries at Harvard is Mallam Nasir El-Rufai, the Governor of Kaduna State.

Apart from his sojourn in Abeokuta, London, and Hull the Prince has lived

most of his life in Lagos as a student at St. Paul’s School, Ebute Metta, Lagos followed by St. Gregory’s College, Obalende and a long stint as a senior manager at Royal Exchange Insurance before venturing into business as an insurance broker – Ark Stewart. From a modest beginning, first at Abibu Oki Street, Lagos he scaled up to “Western House”, Broad Street, Lagos and eventually to its own magnificent edifice in Victoria Island, Lagos He can with some justification claim to be a Lagosian to the core.

In wishing Prince Awogboro many more years of the grace of the Almighty – in good health and prosperity I am willing to overlook a minor flaw. In 2016, just before the American presidential election he was absolutely convinced that Hilary Clinton would trounce Donald Trump. He even goaded me into staking a bet of one million dollars. He lost and I won. That was over two years ago but I am still waiting to be paid. Perhaps, if he was an old boy of King’s College, he would have long ago sent me a cheque or surrendered his swanky new ocean going yatch in lieu thereof!!

Regardless, there is no gainsaying that the Prince has served his long apprenticeship with consummate dignity, veritable honour, impeccable character and unassailable commitment to sharing his good fortune. When he was offered the crown of kingship, he declined. His preferred choice is to retain his status as a prince – always smiling and forever providing hope that even in the midst of gross despair and forlorn angst, there is room for love, faithfulness, steadfastness and joy. Had Awo accepted the crown, he would have been obliged to acquire more wives. Tokunbo would have none of that. She put her foot down very firmly.

He is a magnet and may his star never dim as he celebrates his 80th birthday.

He was born on 25th June 1939 and

we are entitled to drink a hearty toast to “VQB” – the Very Quiet Billionaire.

Let’s make some noise in recognition of the sterling qualities of a quintessential gentleman, philanthropist extraordinaire and a jolly good fellow of whom we are all so proud. The birthday was kept as a secret until Tokunbo alerted us that today we would celebrate Awo’s 80th birthday and he in turn gave us an all risks covered insurance that he will always be our friend.

As an addendum to the toast which I have just proposed members of the Friday night group of Lagos Motor Boat Club have handed over to me a sealed envelope which is to be delivered to Prince Francis Oluwole Ademola Awogboro on 25th June 2039 when he will be celebrating his 100th Birthday.

We shall all be there to celebrate with him. I am not privy to the entire contents but I understand that it contains a photograph of the celebrant’s new yatch which he has christened “THE ARK” (derived from the name of his company, Ark Stewart). Like the Biblical Ark, it is an “SPV” (Special Purpose Vehicle). In the event of any calamity or unforeseen circumstances, the celebrant would be at liberty to set sail along with Tokunbo and other members of his family as well as his friends. However, there is a caveat.

There will be plenty of room for old boys of St. Gregory’s College. As for old boys of King’s College, it is back to the old days of discrimination in Britain: “Sorry, no Irish; no blacks; and no dogs.” No room for old boys of King’s College!!

On that journey, in the welcoming embrace of the Atlantic Ocean, there will be plenty of time and opportunity to acknowledge and relish a lifetime of superlative achievements and muscular integrity. It would also be self-evident that the yatch does not have a landing pad for helicopters as is being rumoured (fake news!!). It is merely a testimony to

‘

He has worked hard and he is fully entitled to the reward for his sweat and labour

the Prince’s love of beauty and fine taste.

What the yatch does have is an advanced satellite communication system which will expeditiously alert Awo when Nigeria is no longer safe for anybody – rich or poor; “Gregorian” or “Floreat” (KCOB’s). He has worked hard and he is fully entitled to the reward for his sweat and labour. It is typical of him, when asked for the secret of his phenomenal success, to respond: “The Lord is always faithful. The glory belongs to Him. It is not by my own doing.”

Inevitably, he would remind us that amongst his classmates at St. Gregory’s College were late Oluyomi McGregor and Toyan Doherty. Thankfully, another classmate Chief Anthony Soetan is alive and will still be around for the Centenary celebration.

Hopefully, in twenty years’ time we would look back with joyous recollection of Friday nights devoted to the problems of our beloved Nigeria – sometimes, until well after midnight. Indeed, on at least one occasion matters continued on the following Saturday afternoon at a wedding party where the same gang were seated at the same table only to re-assemble on Sunday at the Lekki residence of Dr. Charles Hammond in Lekki Peninsula, Phase I where the St. Gregory’s College versus King’s College “wahala” started all over again.

It would be remiss of me not to acknowledge here and now (rather than wait for another twenty years) the unflinching support I have received from the celebrant and two other Trustees of St. Gregory’s College plus many distinguished old boys of the college in my campaign to become President of St. Gregory’s College Old Boys Association (in Nigeria and worldwide!!). Such magnanimity is a rare occurrence in this part of the world. I remain eternally grateful.

Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

The Nigerian code of corporate governance, 2018 Principle 10: meetings of the board “Meetings are the linchpin of everything. If someone says you have an hour to investigate a company, I wouldn’t look at the balance sheet. I’d watch the executive team in a meeting for an hour. If they are clear and focused and have the board on the edge of their seats, I’d say this is a good company worth investing in”. Patrick Lencioni or the effective discharge of its oversight and leadership roles, the Board of Directors is expected to meet regularly to deliberate and take decisions on key issues.

Principle 10 of the Nigerian Code of Corporate Governance, 2018 (NCCG) provides that “Meetings are the principal vehicle for conducting the business of the Board and successfully fulfilling the strategic objectives of the Company.”

The Companies and Allied Matters Act, 2004 (“CAMA”, “the Act”) allows Directors to regulate their meetings as they think fit. The Act provides that the first meeting of the Board must be held not later than six months after the incorporation of the Company. The NCCG recommends that the Board meets not less than once a quarter. According to CAMA, every director is entitled to receive notice of a Board meeting at least fourteen days before the meeting. The Company of course can by the Articles of Association fix a shorter notice period.

Failure to give adequate notice to all Directors entitled to receive the notice shall invalidate the meeting. Where the exigencies of the business require that a meeting be convened with less than the statutory (or as fixed by the Articles) notice, each Director shall be required to waive their right to notice by expressly signing off a waiver form.

Every Director is required to attend all Board

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meetings and such attendance record of Directors should be included in the criteria for re-election of Directors by members at the general meeting.

Where a Director is unable to attend, he/she must send prior notice, stating the reason for such absence to the Chairman or the Company Secretary.

It is good practice to agree annual meeting dates in advance to give Directors the opportunity of blocking off Board meeting dates in their diaries.

Directors are expected to prepare appropriately for Board meetings and as such should receive Board Packs in good time to ensure they participate effectively.

Directors reach their decisions by resolutions usually arrived at by consensus. However, whilst consensus is the norm, those Directors with divergent views should be encouraged to share these. Boards tend to waste too much time trying to achieve consensus and shy away from voting.

Where thereis sufficient dissent with respect to a significant issue, the Chairman should step the matter down for further consideration and should not hesitate to call for a vote if the matter requires urgent attention. Each director is entitled to one vote, regardless of shareholding. The Chairman shall have a second or casting vote in the case of an equality of votes.

Where it is not possible to have physical meetings with all the Directors present, resolutions can be passed via written resolutions signed by all the directors. To give effect to “round-robin” resolution, all (rather than majority) of Directors have to accent to the decision being taken.

Given that meetings are integral to the overall performance of the Board, care must be taken to www.businessday.ng

ensure optimization. As such, meetings must be properly and carefully planned and conducted to achieve desirable outcome and avoid unproductive time-wastingsessions.The robustness ofdeliberations and the quality of decisions taken at Board meetingsare dependent on the adequacy of information presented to the Board. The Board should provide clarity as to the type, format and frequency of Management Reporting. Reports should be crisp, precise and straight to the point.

The Chairmanis responsible for coordinating the proceedings and ensuring that the meeting objectives are met. In performing this role, he/ she must ensure that members have a clear understanding of the items for consideration. The Chairman should ensure that deliberations are inclusive and not dominated by an individual or a group (caucus). For Board meetings to be effective, the Chairman must elicit diverse views whilst guiding the Board to a collective decision. Reticent or silent Directors should be encouragedto contribute to Board deliberations to ensure the Board gets the benefit of the diversity of its composition.

Rather than something to dread, Board meetings should be interesting. The Chairman should ensure that the agenda focuses on strategic issues and not mundane operational matters. The Chairman in working though the agenda and allowing Directors to contribute, should be mindful of properly pacing the meeting to ensure that Directors do not spend the whole day at the meeting.

It is not out of place to call for occasional breaks to ease tension or just to allow Directors refresh.

A bye product of a Board meetingisof course minutes of meeting prepared by the Company

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Bisi Adeyemi Secretary. Minutes serve as the official record of Board deliberations that can be referred to in future by the Board, Auditors, regulators and consultants. Minutes must be clear, concise, accurate and objective. The NCCG Code recommends that minutes of Board and its Committee meetings should be prepared and sent toDirectors on a timely basis. Such minutes should be formallyreviewed and approved by the Board or relevant Committee at its next meeting.

Directors stand in a fiduciary relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf. They are therefore expected to devote such time and attention as is necessary for the proper performance of their duties as Directors. Attendance and effective participation at Board meetings are crucial to the performance of a Director’s responsibility to the company, the effectiveness of the Board and by extension the success of the enterprise.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. For more articles, kindly download the DCSL Knowledge Hub via this link https://www.dcsl.com.ng/index/pages/page/dkhub

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Does Nigeria need the ECO monetary union?

Patrick Atuanya

I

suspect that when the nations that make up the Economic Community of West African States or ECOWAS, dreamt up a single monetary union, they probably modelled it after the European Union.

Of course that was long before the Greek sovereign debt crises or the rise of the PIIGS (Portugal, Ireland, Italy, Greece and Spain), sovereign debt contagion that threatened to unravel the common European currency, the Euro.

Some economists believe the genesis of the problem largely was in the January 1999 introduction of the euro, which bound 19 nations into a single currency zone watched over by the European Central Bank but left budget and tax policy in the hands of each country.

ECOWAS last week agreed on the name “ECO” for the single currency to be used in the region.

The commission also adopted a flexible exchange rate regime along with the name, according to a communique.

The regional body is expected to now work with the West African Monetary Agency, West African Monetary Institute and central banks to speed implementation of the single-currency road map, expected to be issued by 2020.

ECOWAS members including Nigeria, Ghana, Guinea and Liberia have their own currencies.

The bloc’s French-speaking members have since colonial times used the CFA franc, which is now pegged to the euro.

So does Nigeria need a common currency with the rest of ECOWAS to drive trade and open borders?

In a sense the sovereign debt problems of Greece and the rest of the PIIGS, provide a

cautionary tale about the perils of a common currency among such a disparate group of countries.

Within the European Monetary Union, Germany has often been blamed for imbalances, and for being the main beneficiary of the EURO, as German export performance provided the competitive advantage to dominate trade and capital flows within the Eurozone.

The German economy is the largest in Europe with a GDP equivalent to 21 percent of the economy of the European Union.

Now if Germany is eliciting such reactions from its neighbours for being so dominant, imagine how it would be for Nigeria to be in

a monetary union with the rest of West Africa.

The Nigerian economy towers above the rest in the West African sub-region, with its GDP of $445 billion, equivalent to 67 percent of ECOWAS. Ghana comes in a distant second at $68 billion and Cote D’Ivoire third at $45 billion (see chart).

In that sense, Nigeria would not just be to ECOWAS what Germany is to the European Union, it would be like having an economy with the combined GDPs of Germany, France, Italy and the U.K in the European Union.

Surely such a dominance would be a recipe for breeding large imbalances and distortions

in smaller economies within such a monetary union.

Another little wrinkle for the ECO would be member states meeting the criteria to join.

These include having a budget deficit of not more than 3 percent of GDP, average annual inflation of less than 10 percent, with a long term goal of not more than 5 percent, gross reserves that can finance at least 3 months of imports and public debt as a percentage of GDP below 70 percent.

There is also the issue of Central Banks financing budget deficits not more than 10 percent of the previous year’s tax revenue.

We think Nigeria would have difficulty meeting the inflation, as well as the CBN financing of Government debt, criteria.

For French speaking West African countries joining the ECO, would be difficult to justify and provide limited upside since losing the CFA currency zone carries clear costs, such as the credibility of the French guarantee and the Euro peg that gives some stability to the currency.

The inflation targeting regime recommended as a framework will probably not also be seen as feasible by Nigerian authorities since it was based on the adoption of a flexible exchange rate policy, which the Central Bank of Nigeria (CBN), has come out against.

A bigger obstacle to the ECOWAS monetary union however is the idea of nation states like Nigeria, surrendering monetary policy to a supranational institution like a West African Central Bank.

In such a scenario the ability for a sovereign to adjust their currency’s exchange rate, and notably devalue in case of an economic downturn, is not possible.

We think that the ECO would cause more harm than good for now for West African economies, but perhaps it could be a currency of the future for the region. It may also make sense to begin to develop a framework for a future block chain or digital ECOWAS wide currency that would be compatible/circulate, side by side, with current currencies of member states, which may be the norm 50 years from now.

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

GDP weights within with the ECO Source: IMF, RenCap

Nigeria’s technological evolution in the age of big data

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ow much of available data is too much? Can we place a limit on how much information the human brain can cope with? At what point does the human brain require external assistance to perform at an optimal level? These and many questions are what big data and artificial intelligence seem to be answering in our daily personal and business lives. For us in MTN Nigeria, it is the core of what drives our customer-centric approach to do business.

Big data is certainly not some fad that will fade away anytime soon. It would not suddenly become “some data” because the human race is generating more data every second today than it did 30 years ago. MTN Nigeria is a pointer to that fact. From May 2001 that we made our first call in Nigeria, the company’s subscriber base has grown as rapidly as its infrastructural demand for information (data) gathering and preservation. MTN has moved from providing voice services to content creation, enhancement and facilitation for our customers’ consumption.

We achieved that by channeling the “big data” concept.

According to the online platform, www. domo.com, estimate has it that yearly-generated data is growing exponentially and well over 2.5 quintillion bytes of data is created every day. These may not make a lot of sense to the average person but pause to imagine that Twitter users across the world generate over 500 million tweets every day. Facebook create even more volume of data on a daily basis. With Google performing several billion searches on

the World Wide Web every day, the scale of data created across the globe on a daily basis is staggering.

While our business capacity has grown in big data management, we are marching into the future as a big data and artificial intelligencedriven organization. MTN Group recently set that process in motion with the launch of Africa’s first Mobile Money (MoMo) artificial intelligence service in Ivory Coast. The AI mobile money “assistant” enables customers to engage with MTN’s MoMo services, including payments on various social media platforms such as WhatsApp and Facebook Messenger and via SMS. The “chatbot” is an artificial intelligence guide that assists users to navigate MTN’s Mobile Money services and provide other useful information. This innovation leverages messaging and artificial intelligence to drive customer engagement and enhance their MTN Mobile Money experience. It would also help create the right synchronization of our big data management capability with our innovative customer-centric engagement process. For us, our ultimate challenge is to help our customers make sense of the big data by proving seamless social media experience, easy downloads of their favourite TV shows and access to entertainment and general news on the go.

With the advancement in Artificial Intelligence, data without a doubt is displaying its leadership capability as the world enters an era of breakthrough experiences. Our vision to lead the delivery of a bold, new digital world www.businessday.ng

for our customers, is dependent on continuous evolution built on timely adoption of innovative solutions such as artificial intelligence. Our goal is to make Nigerian lives a whole lot BRIGHTER by delivering relevant, accessible and highquality telecommunication solutions that put our customers in control of their personal and business lives.

As an organisation, MTN Nigeria has moved beyond just that “phone call” (voice) company, to the one-stop shop for an all-around technological experience. We are providing infrastructure that are enhancing seamless mobile banking services which are fueling the cashless policy drive of the federal government of Nigeria. We are also acting as the reservoir of protected voluminous data that drives our professional and personal lives. From that young university student with that ‘great’ idea on how to change the world, to the lady managing a small shop at Oba market in Benin-City, MTN is aligning the necessary data to better serve Nigerians.

With a customer base of over 58 million subscribers, our business has evolved to reflect today’s customers’ needs, even as it prepares for those of the future without compromising the current regulatory and economic realities.

Our commitment to providing timely information, entertainment and sports news on-the-go are evident in our infrastructural investments.

We believe that we can help that budding tech entrepreneur upscale from his/her bedroom in Nigeria to the world. He/she can rest assured that while he/she is focused on growing a great

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Mazen Mroue ‘idea,’ MTN is in the background managing and channeling the appropriate data in the right quarters to better serve him or her.

That brings us to our next step…, the launch of our 4G+ network represents a natural evolution from MTN’s already fast and reliable 4G network. 4G+ which can also be known as 4.5G or LTE Advanced is a faster version of current 4G network. It works through a carrier aggregation, which allows your 4G device to send and receive data from multiple bands in the 4G spectrum. So, while standard 4G uses a single carrier at a time, 4G+ uses multiple carriers of 4G for even faster speeds and better network reliability in areas where we have more than one 4G band available and compatible 4G devices.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Mroue is chief operating officer, MTN Nigeria Communications plc.

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EDITORIAL Publisher/CEO

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

Ruga suspension: A victory for democracy

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efore President Muhammadu Buhari revoked plans to set up herdsmen settlements across states of the federation, countless voices – from ordinary citizens to even the ruling party, APC’s state Governors – clamoured against it. Many decried the brazen, rude, and thoughtless and avaricious manner it was being implemented. That the overwhelming opposition to the plan forced the government to back down is a victory for democracy and for governance. A reverse from the norm where the voice of the people amounted to nothing other than mere groans from the subjugated.

Whether President Buhari realises it or not, the suspension of the programme is a boost to his ratings. Furthermore, it re-validates the social contact between the people and the governed, a rare in-

cident in the two decades since Nigeria returned to democracy.

During the years of military rule the call of the people for democracy, for representative governance accountable to the people was incessant. Once the soldiers returned to the barracks and democratic governance was restored, Nigerians felt the battle had been won and abandoned the struggle. But as Nigeria’s journey in democratic governance has shown, good governance and accountability are hard to come by even in democracies and to ensure those, the citizens must continually and unceasingly demand for it.

As the saying goes, “the price of freedom is eternal vigilance.”

What the Ruga saga shows is that Nigerians have a voice. Not the voluble type heard in beer parlours, hair salons, sitting rooms, viewing centres, social media platforms and newspaper vendor stands that hardly resound beyond these confines.

Not a voice cowed either due to

frustration –“we can shout from here till tomorrow nothing will happen,”—or tribal, religious or monetary selfish interests.

Repeated failure to exercise a united voice to demand our due as citizens, to demand that politicians keep their campaign promises has portrayed us as lily-livered and docile lots. This has to change!

Elsewhere in Hong Kong and Sudan citizens are making themselves heard, refusing all attempts by the government and military to shut them out or up. Their governments and even the military are fast realising that state security apparatuses and weapons are no match for the collective voice of the people.

There can be no democracy when the people are not able to express themselves freely and get their voices heard. There can be no democracy when the people see the government as all powerful and ‘we the people’ as mere helpless victims

of the actions and policies of government. The people cannot, for instance, continue to only murmur and complain when stuck in five hours traffic gridlock as a result of poor or dilapidated road network. They cannot continue to murmur when politicians make promises during campaigns and disown those promises when they get to power and escape without consequences, winning future elections to boot.

They must learn to constantly demand good governance and most importantly, accountability from those they elect to represent them in government.

The goal, ultimately, is to reach a situation where everyone- both the people and elected representatives – come to the realisation that elected representatives are servants of the people and must be guided in all their actions by the will of the people; for in a democracy the people are supreme not in theory but in practice.

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Cattle colonies: Buhari’s provocative response to the herder-farmer conflicts global Perspectives

OLU FASAN

F

ollowing widespread public outcry, President Buhari last week suspended his plans to create rural grazing areas, otherwise known as “RUGA settlements” or “cattle colonies” across the country. This was a thoughtless and provocative idea, and Buhari was wrong to have mooted it in the first place.

Anyone who objectively read the Presidency’s press statement justifying the RUGA settlements would immediately see that the government’s plans would 1) create a special and protected category of Nigerians, based on their ethnicity and way of life, 2) accord to those special citizens privileges and advantages not given to other citizens, contrary to section 42 of the Constitution, and 3) offend the sensibilities of the nationalities who have suffered untold injustices in the hands of the seemingly untouchable herdsmen, who are of the Fulani extraction, thus subjecting the people of those less-favoured nationalities to restrictions and humiliation as second-class citizens.

The government said the RUGA Settlement plan “is to resolve the farmer/ herder conflicts”. So, instead of stopping the incessant killing of innocent farmers by criminal herdsmen and giving justice to the victims, the government wants to appease the herdsmen by settling them in the same states whose people they’ve been killing, maiming and raping in genocidal-type attacks. How can you resolve the herder-farmer conflicts without justice? How many criminal herdsmen have been arrested, prosecuted and punished?

How many of their victims or families of those victims have been compensated?

The RUGA settlement plan is wrong for many reasons, the first is its inherent injustice!

But any solution to the conflict must begin with a proper understanding of its na-

ture. Those sympathetic to the herdsmen’s case often cite environmental challenges, such as climate change, desertification and droughts, which have reduced the supplies of grass and water for cattle, as the reason for the endless conflicts. They argue that the desperate search for grazing areas has led the roaming of cattle herders, which, inevitably, brings them into regular conflicts with farmers.

Yet, the violent nature of the clashes, with trails of destruction, rape and murders in several communities across Nigeria, cannot simply be the consequence of some environmental and economic challenges that the herders face. After all, there are herders across Africa, and most face similar environmental and economic hardships, but it’s only in Nigeria that herder-farmer clashes have taken the forms of invasions of communities, seizures of farmlands and massacre of innocent farmers, with over 5000 people killed between 2015 and end of 2018, not to mention the humanitarian calamity of nearly 300,000 internally displaced people!

I have been trying to understand the herder-farmer conflict conceptually. Is it a conflict of two rights, namely, the right to freedom of movement and the right to peaceful enjoyment of private property?

Or is it a jihadist agenda or the “Fulanisation of Nigeria”, as former President Olusegun Obasanjo controversially put it? Which of the two conceptualisations – conflict of rights or jihadism? – is true mattersfor the solution.

Surely, if it’s a question of competing rights, that is, the right of herders as Nigerians to move freely around the country to feed their cattle versus the property rights of farmers, the solution should be relatively straightforward. Competing rights are not new; for instance, my right to move freely can clash with your property rights if I want to cross your land. The law responds proportionately to such a conflict by creating, in some cases,“easements”, that is, rights to cross or otherwise use someone else’s land for a specified purpose. But, generally, where freedom of movement and property rights clash, property rights prevail because everyone has the right to peaceful enjoyment of his or her private property. Thus, the herders cannot enter other people’s private farmlands to feed their cattle with-

out negotiations and agreements with the farmers, and the government has a duty to protect the farmers against any violation of their property rights.

However, as I said, the herdsmen are Nigerians, and should enjoy freedom of movement in any public space, as opposed to private lands, in Nigeria, subject to state or local government regulation of the use of public spaces. Nigeria is a single market and, like every single market, such as the United States, citizens are entitled to move freely from state to state to look for jobs, to buy and sell and to engage in social intercourse, provided they do not violate private property rights. You can’t just barge into my home or office, for instance!

In the US, the Constitution protects commercial and social intercourse between citizens of different states, with the “Commerce Clause”, which allows Congress to regulate to protect interstate commerce. But to preserve the principle of federalism, the US Supreme Court held in US vs Lopez that Congress could only use the Commerce power to regulate “activities which have a substantial relation to interstate commerce”, meaning that such regulation must not undermine the constitutional rights of the states to govern their affairs in the spirit of true federalism.

What the foregoing means, therefore, are the following: 1) herders must negotiate with farmers if they want to use their private property, i.e., their farmlands, 2) herders, individually or with the support of their state governments, should negotiate with other state governments to create ranches in those states, and, in the spirit of promoting interstate commercial and social intercourse,the states so approached should respond cooperatively, subject to any reasonable conditions they may wish to impose, and 3)while the federal government should facilitate interstate commerce, it must not undermine the principle of federalism, which means that it must negotiate with, and not bully, the states to provide lands for ranches, fully respecting the provisions of the Land Use Act! Sadly, that spirit of negotiations has been lacking in the herdsmen’s saga. The herders have behaved like the imperialists or colonialists who wanted trade routes and market access in other countries,

‘

The Buhari government has done nothing to protect the oppressed communities.

Rather, every step it has taken is aimed at appeasing the Fulani herdsmen.

But RUGA is a step too far

but, instead of negotiating with those countries, used “gunboat diplomacy”, that is, military force, to secure the trade routes and markets and, what’s more, to colonise the countries. That’s exactly what the Fulani herdsmen have been doing.

They invade communities, appropriate their farmlands and displace the people, colonising their lands. That’s why some have described their activities as jihadism and Fulanisation!

Of course, the government’s seeming complicity or tactic condonement hasn’t helped. In 2005, the UN General Assembly recognised the “Responsibility to Protect” in case of genocide, ethnic cleansing and massive violence. But the Buhari government has done nothing to protect the oppressed communities. Rather, every step it has taken is aimed at appeasing the Fulani herdsmen. But RUGA is a step too far. Note that the RUGA settlements are not just ranches, but special communities for the herdsmen, with “necessary and adequate basic amenities, such as schools, hospitals, road networks, etc”. These would be funded by the federal government, which allocated initial sum of N12bn for a pilot project.

To be sure, RUGA settlements would be special communities within states.

The citizens of the states with such settlements would not enjoy the same basic amenities that the herdsmen enjoy. What’s more, as the Fulani herdsmen spread their tentacles, increasing their population, expanding the cattle colonies, they would gain confidence in spreading their culture, their religion etc in the states. You can imagine how explosive this could be.

Unfortunately, the presidency’s assurances were full of contradictions. The government said RUGA is voluntary, yet it also said it “has gazetted lands in all states” for the settlements. It said 12 states had voluntarily made lands available, yet it also attacked those that didn’t, implying they are irresponsible! The government’s motive simply wasn’t right.

Buhari has rightly bowed to the inevitable by suspending RUGA. Truth is, he must abandon the provocative idea altogether!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

A hostage crisis?

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ast week the National Bureau of Statistics (NBS) released the capital importation report for the first quarter of 2019. On the surface the numbers show an increase in capital inflows by 216 percent from the previous quarter and by almost 35 percent from the same period last year, with overall inflow coming in at just under $8.5bn. Sounds good right? Well not quite. The devil is in the details as they say.

Looking at the breakdown of inflows, the lion share was made up of foreign portfolio flows, mostly going towards purchasing money market instruments. Inflows into these instruments accounted for roughly 70 percent of all inflows.

For those who are not well versed in financial-lingo this means foreign investors bought almost $6bn worth of federal government and central bank short term securities.

Or if that still isn’t simple enough, foreign investors loaned money to the federal government and the CBN for between 90 and 180 days. At interesting interest rates too.

CBN bills yielded around 11 to 14 percent in Q1 2019. If you add the exchange rate “stability” then essentially foreign investors are loaning dollars to the CBN and the

government at between 11 and 14 percent interest. Returns which, as it turns out, are too attractive to resist.

Why would the CBN be offering such returns? The way I see it the CBN is in a kind of a hostage crisis. It has promised to keep exchange rates fixed, sorry “stable”. To do this it needs dollars. US dollars, not Zimbabwean dollars. Dollars it does not really have. And since it doesn’t have it is essentially borrowing these dollars from portfolio funds.

There are roughly $45bn worth of CBN bills in circulation and word on the street is that foreign portfolio funds hold almost $16bn worth. What happens if these foreign portfolio funds decide, for whatever reason, that they want to exit their positions and take their dollars and leave?

If you think about it, it kind of looks like a hostage situation with the hostage-takers being the portfolio funds and the “gun to the head” being their holdings of CBN bills. The CBN is the victim of course. Except in this case the CBN keeps supplying their kidnappers with more bullets. If the CBN decides to stop selling CBN bills, or even to retire some of the current CBN bills, it could lead to another bout of inflation. That thing that is www.businessday.ng

CBNs primary objective. But if they continue selling then the costs will keep piling up. Last year the interest on these CBN bills reportedly costs north of $5bn so it can’t keep it up indefinitely. Eventually they would run out of dollars. Then what?

Of course, the CBN could just allow a flexible exchange rate and that would limit the appetite for these CBN bills and give the CBN a path to unwinding them. But everyone knows the CBN is opposed to any kind of voluntary exchange rate movement. So, who will blink first? Or will the status quo hold until some external event shocks us all back into consciousness?

As far as the “real” economy is concerned, the capital importation reports tell the same old story. No improvement in foreign direct investment. The investment in plants, and businesses, and infrastructure that the “real” economy desperately needs. Foreign direct investment at just under $250m, and just under three percent of all inflows, was marginally higher than the last quarter but lower than the 2018 average. And 2018 was not a great year. We are on track to attract less foreign direct investment that smaller countries like Ghana.

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ECONOMIST

NONSO OBIKILI If you dig deeper into the numbers and look at state attractiveness then the numbers are sad. Majority of states attracted no foreign direct investment in the first quarter of the year. In fact, there are some states that haven’t attracted any investment in years. Remember that even the smallest states are larger than some African countries. So, for a state or country to attract no investment in years should have alarm bells ringing. As far as investment in the real economy is concerned we are a long way from being attractive.

What do we need to do to attract FDI? That one is a matter for another day.

Dr. Nonso Obikili is Chief Economist at Business Day.

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BUSINESS DAY

In Association With

Counter-flow

A Balkan betrayal Futurology

it’s worth reading Financial links between China and America deepen, despite the trade war Why crazy-sounding

The two superpowers are at each other’s necks, but also in each other’s pockets

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RADE WAR, tech war, new cold war or just plain decoupling: call it what you will, the confrontation between America and China has been bruising. Tariffs are up, exports down.

Even as they resume trade negotiations, they talk of blacklisting each other’s firms. In the words of Henry Paulson, a former American treasury secretary, the danger is that an “economic iron curtain” will soon divide the world. All the more remarkable, then, that one crucial sector—finance—is bucking the trend. Financial links between China and the West have grown tighter since the trade war broke out. They are set to grow tighter still.

For years Western insurance firms, asset managers and brokerages have been allowed to own only minority stakes in local firms. Now China is giving foreign financial firms more leeway on the mainland. Since mid-2018 they have been able to apply for 51% control.

On July 2nd Li Keqiang, China’s prime minister, said that financial firms would be allowed full control by 2020.

That is not the only sense in which financiers and trade negotiators exist in parallel universes.

China is also making it easier for foreigners to buy into its markets.

Since the start of 2018 they have ploughed $75bn into Chinese shares. In the same period they have pulled $8bn out of all other big emerging markets. In the next decade, Goldman Sachs estimates, $1trn will enter China’s bond market from abroad, putting it among the world’s top investment destinations (see article). All this is possible because China has not stopped foreigners from cashing out, despite the strict capital controls it imposes on its own citizens.

As the rules have eased, stock and bond indices that investors mirror in their portfolios, such as MSCI’s equities benchmark, have added Chinese securities.

Helping Wall Street and the City

scenarios about the

Speculating about the future can make it easier to respond to unexpected events

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REDICTING THE future is hard. But preparing for its uncertainties, while you lie on the beach, can at least be entertaining.

It can also broaden the mind and subtly change your understanding of the present. Rather than the Great American Novel or a tall stack of chick-lit bonkbusters (see our Obitu-

of London do more business in China is not a popular cause there or in the West, but the implications for finance are profound. Firms like Morgan Stanley, BlackRock and Schroders which have long dabbled on the mainland must now decide whether to go for it.

Some worry that they lack clout and connections. Few insurers, for example, relish a brawl with China Life, a state-run behemoth with 1.7m sales agents. Foreign banks’ assets in China have soared to $650bn, but still amount to less than 2% of the country’s total.

Nonetheless a few global firms have a good chance of building large Chinese businesses. HSBC, a London-based firm with roots in Asia, already makes three-quarters of its profits from Hong Kong and China. AIA, which was spun out of AIG, an American firm, is the leader among foreign life-insurers.

Western asset managers have long records and global expertise that local firms do not. Over time, as Chinese savers seek to diversify, this could help them win market share.

China needs to make this opening count. Many Wall Street bosses

have gone from Sinophiles to hawks in the past few years. So, tactically, China has a chance to win brownie points with America’s business lobby. That gain could be dwarfed by the benefits within the country itself. Western firms will push up standards in its immature but giant capital markets, a priority if it is to allocate capital more efficiently and get more out of its savings. And China needs foreign funding more than in the past—its current-account surplus has dropped from 10% of GDP in 2007 to less than 1% last year. Without a steady flow of capital into the country, there could be a destabilising fall in the yuan.

Some political figures in the West argue that financial links with China count as a betrayal.

Steve Bannon, who was once President Donald Trump’s adviser, talks of removing Chinese companies from American stock exchanges. Marco Rubio, a hawkish Republican senator, has accused MSCI of channelling American cash to the Chinese Communist Party by including state-owned companies in its benchmarks.

In fact closer financial links could have a beneficial effect, which is why longtime Chinawatchers like Mr Paulson back them so strongly. When Chinese firms have foreign shareholders or underwriters, their calculations change. They face tougher questions, as Alibaba, a Chinese e-commerce giant, is reminded on every earnings call. None of this will suddenly transform China into a free market but it will encourage its firms to be more open, to respond to market signals and to respect intellectual property. Chinese firms that use Western banks when they go abroad, as Huawei used HSBC, are less able to circumvent global rules on corruption and sanctions.

If America excludes China from the global financial system, China will eventually build an alternative to the dollar-based order that has dominated markets since 1945— which would then feed into a wider strategic rivalry. For the time being, despite the hostilities over trade and tech, China welcomes foreign investors and firms. That is to be celebrated. There is more to be gained from building connections than cutting them off.

ary on Judith Krantz), we propose a different sort of summer reading.

Speculating about the future, even if it is far-fetched, can help people and institutions cope with what comes next. For the best material, here are three places to look.

The first is scenario planning.

This originated in the armed forces during the second world war and was pioneered in industry by Royal Dutch Shell, enabling it to react more quickly and effectively than rival oil firms to the oil shock of 1973.

The central idea was to avoid betting everything on a single forecast and instead to test future projects and plans against a set of plausible scenarios. Mapping out several futures, deciding how to respond to them and identifying the early signs that they might be coming about has been widely adopted by multinational firms, particularly after the terrorist attacks of September 11th 2001. In that spirit, we publish our own annual set of speculative scenarios, “The World If”, in this week’s edition. What if America leaves NATO, or antibiotics stop working, or Facebook switches itself off in Europe? These things may never happen, but it is mind-stretching to think about what you should do if they did.

Science fiction, a second realm of speculation, is perhaps a more familiar beach read. It is wrong to see sci-fi as chiefly predictive, however. Its contemplation of the Continues on page 15

Monday 08 July 2019

BUSINESS DAY

15

In Association With

Politics

The global crisis in conservatism Today’s right is not an evolution of conservatism, but a repudiation of it

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LADIMIR PUTIN, Russia’s president, has declared the liberal idea “obsolete”. It will not surprise you to learn that we disagree. Not just because he told the Financial Times that liberalism was all about immigration, multiculturalism and gender politics—a travesty—but also because he picked the wrong target.

The idea most under threat in the West is conservatism. And you do not have to be a conservative to find that deeply troubling.

In two-party systems, like the United States and (broadly) Britain, the right is in power, but only by jettisoning the values that used to define it. In countries with many parties the centre-right is being eroded, as in Germany and Spain, or eviscerated, as in France and Italy. And in other places, like Hungary, with a shorter democratic tradition, the right has gone straight to populism without even trying conservatism.

Conservatism is not so much a philosophy as a disposition. The philosopher Michael Oakeshott put it best: “To be conservative… is to prefer the familiar to the unknown, to prefer the tried to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near to the distant.” Like classical liberalism, conservatism is a child of the Enlightenment. Liberals say that social order emerges spontaneously from individuals acting freely, but conservatives believe social order comes first, creating the conditions for freedom. It looks to the authority of family, church, tradition and local associations to control change, and slow it down.

You sweep away institutions at your peril. Yet just such a demolition is happening to conservatism itself—and it is coming from the right.

The new right is not an evolution of conservatism, but a repudiation of it. The usurpers are aggrieved and discontent. They are pessimists and reactionaries.

They look at the world and see what President Donald Trump once called “carnage”.

Consider how they are smashing one conservative tradition after another. Conservatism is pragmatic, but the new right is zealous, ideological and cavalier with the truth. Australia suffers droughts and reef-bleaching seas, but the right has just won an election there under a party whose leader addressed parliament holding a lump of coal like a holy relic. In Italy Matteo Salvini, leader of the Northern League, has boosted the antivaxxer movement. For Mr Trump “facts” are just devices to puff up his image or slogans designed to

stir up outrage and tribal loyalties.

Conservatives are cautious about change, but the right now airily contemplates revolution.

Alternative for Germany has flirted with a referendum on membership of the euro. Were Mr Trump to carry out his threats to leave NATO (see “The World If” in this issue), it would up-end the balance of power. A no-deal Brexit would be a leap into the unknown, but Tories yearn for it, even if it destroys the union with Scotland and Northern Ireland.

Conservatives believe in character, because politics is about judgment as well as reason. They are suspicious of charisma and personality cults. In America plenty of Republicans who know better have fallen in with Mr Trump even though he has been credibly accused by 16 different women of sexual misconduct. Brazilians have elected Jair Bolsonaro, who fondly recalls the days of military rule.

The charismatic Boris Johnson is favourite to be Britain’s next prime minister, despite being mistrusted

by MPs, because he is deemed to be the “Heineken Tory” who will, like the beer, refresh the parts other conservatives cannot reach.

Conservatives respect business and are prudent stewards of the economy, because prosperity underpins everything. Hungary’s prime minister, Viktor Orban, paints himself as a low-tax economic conservative, but undermines the rule of law on which businesses depend. Mr Trump is a wager of trade wars. Over 60% of Tory members are willing to inflict “serious damage” on the economy to secure Brexit. In Italy the League is spooking markets by toying with issuing government paper that would act as a parallel currency to the euro. In Poland Law and Justice has splashed out on a welfare bonanza. In France, in the campaign for the European

Parliament elections, the rump Republican Party made more of a splash about Europe’s “JudeoChristian roots” than prudent economic management.

Last, the right is changing what it means to belong. In Hungary and Poland the right exults in blood-and-soil nationalism, which excludes and discriminates.

Vox, a new force in Spain, harks back to the Reconquista, when Christians kicked out the Muslims.

An angry, reactionary nationalism kindles suspicion, hatred and division. It is the antithesis of the conservative insight that belonging to the nation, a church and the local community can unite people and motivate them to act in the common good.

Conservatism has been radicalised for several reasons. One is the decline of what Edmund Burke called the “little platoons” that it relied on, such as religion, unions and the family. Another is that the old parties on both right and left were discredited by the financial crisis, austerity and the long wars in Iraq and Afghanistan. Outside the cities, people feel as if they are sneered at by greedy, self-serving urban sophisticates. A few have been wound up by the xenophobia of political entrepreneurs. The collapse of the Soviet Union, some believe, loosened the glue uniting a coalition of foreign-policy hawks, libertarians and cultural and probusiness conservatives. None of these trends will be easy to reverse.

The right stuff That does not mean everything is going the way of parties of the new right. In Britain and America, at least, demography is against them. Their voters are white and relatively old. Universities are a right-wing-free zone. A survey by Pew last year found that 59% of American millennial voters were Democratic or leaned Democratic; the corresponding share of Repub-

licans was only 32%. Among the “silent generation”, born in 1928-45, Democrats scored 43% and Republicans 52%. It is not clear enough young people will drift to the right as they age to fill the gap.

But the new right is clearly winning its fight against Enlightenment conservatism. For classical liberals, like this newspaper, that is a source of regret. Conservatives and liberals disagree about many things, such as drugs and sexual freedom.

But they are more often allies. Both reject the Utopian impulse to find a government solution for every wrong. Both resist state planning and high taxes. The conservative inclination to police morals is offset by an impulse to guard free speech and to promote freedom and democracy around the world. Indeed conservatives and liberals often bring out the best in each other.

Conservatism tempers liberal zeal; liberals puncture conservative complacency.

The new right is, by contrast, implacably hostile towards classical liberals. The risk is that moderates will be squeezed out as right and left inflame politics and provoke each other to move to the extremes. Voters may be left without a choice. Recoiling against Mr Trump, Democrats have moved further to the left on immigration than the country at large. The British, with two big parties, may have to pick between Jeremy Corbyn, Labour’s hard-left leader, and a radicalised Tory party under Mr Johnson. Even if you can vote for the centre, as with Emmanuel Macron in France, one party will win repeatedly by default—which, in the long run, is unhealthy for democracy.

At its best conservatism can be a steadying influence. It is reasonable and wise; it values competence; it is not in a hurry. Those days are over. Today’s right is on fire and it is dangerous.

Why it’s worth reading crazy-sounding...

Continued from page 14

future is often a commentary on the present: many sci-fi authors take current concerns, from robots to climate chaos to gender politics, to the logical extremes and consider their implications. As a result, sci-fi can play a useful role as a forwardscanning radar for technological, social and political trends. But scifi does directly shape the future in one concrete way: the tech industry is full of people trying to make it come true. Amazon’s Alexa voiceassistant is the talking computer from “Star Trek”; SpaceX lands its rockets on drone ships whose names are borrowed from Iain M. Banks’s “Culture” novels; an entire industry is trying to bring to life the virtual world of Neal Stephenson’s “Snow Crash”. Beyond these familiar tropes, Chinese sci-fi and Afrofuturism offer refreshingly different perspectives and possibilities.

The last speculative category is corporate anthropology and trendspotting. Many large companies employ roving anthropologists to seek out “edge cases”: examples of emerging technologies and behaviour that have yet to become widely adopted, but have the potential to go global. As the sci-fi novelist William Gibson once put it, “the future is already here—it’s just unevenly distributed.” Two decades ago, Japanese schoolgirls led the way with modern smartphones, capable of taking pictures and downloading apps; we are all Japanese schoolgirls now. What’s next: the death of cash? Clothes made of mushrooms?

Artificial meat? Trendspotters often get it wrong. But it is worth paying attention to what they think might be coming, just in case they are right.

The rewards of speculation Pierre Wack, one of the gurus of scenario planning at Shell, once likened dealing with the future to shooting the rapids in a boat. You know the general direction of travel, but not the exact path, and the trick is to be able to respond quickly.

Reading about possible futures can shift your perception of the present and help you understand what might be around the corner.

It can also be fun. So why not give it a try, starting with the speculative scenarios in this issue: who knows what might happen?

16

Monday 08 July 2019

BUSINESS DAY

In Association With

Siege on the Mediterranean

A warlord’s offensive against Tripoli is flagging General Haftar seems unable to take the capital, even with help from his friends

I

N TRIPOLI, the capital of Libya, children play on the beach, cafés buzz late into the night and the manager of a beauty parlour reports that laser treatments, hair-removals and nose-jobs are on the rise. “War hasn’t put off custom,” says Kherea Dughman. About 15km (9 miles) away a rebel army is fighting to take the capital. But after eight years of civil war, Libyans have become inured to the rumble of artillery.

There have been several attempts to stabilise Libya since the overthrow in 2011 of Muammar Qaddafi, its former dictator. In 2016 the UN installed a “government of national accord” (GNA) in Tripoli. But it is beholden to the militias in the west that back it. Khalifa Haftar, the head of the self-styled Libyan National Army (LNA), controls the east and much of the south, including Libya’s largest oilfields.

Talks arranged by the UN to broker a peace between them in April were upended by Mr Haftar, who launched a surprise attack on the capital just after the UN secretarygeneral had arrived. Mr Haftar has little interest in negotiating a settlement. The 75-year-old former general thinks Libya is not yet ready

for democracy and that it needs a strongman—himself.

Mr Haftar returned from exile in America after Qaddafi’s fall and raised a force of perhaps 20,000 fighters. They would, his supporters repeatedly promised, clear the capital of the chaos of “terrorist militia” rule. His sneak-attack was intended to snatch Tripoli swiftly.

But three months on his forces are being pushed back.

Militias that had previously fought each other have rallied against Mr Haftar. On June 26th they captured Gharyan, cutting his supply line to the south (see map).

That leaves his troops over 1,000km

from their main base at al-Rajmah.

Whereas the defenders of Tripoli can go home and shower at the end of a day of fighting, Mr Haftar’s troops are in the desert. The tribes backing him are reluctant to send more men.

Mr Haftar, though, has powerful friends. Saudi Arabia, Egypt and the United Arab Emirates (UAE) provide arms, fighter jets and money to pay recruits. They see Mr Haftar as an ally in their counter-revolution against the popular, and often Islamist, uprisings the Arab spring unleashed in 2011. And they view Libya’s oil, territory and ports as strategic assets that they want to keep out of the hands of their re-

gional foes, Turkey and Qatar. With their support, Mr Haftar hopes to battle on just as he did in Benghazi, Libya’s second city. He took it in 2017 after three years of fighting, but only by destroying and depopulating it.

Turkey and Qatar, meanwhile, have sent weapons and armoured trucks to reinforce Tripoli. Both say they are buttressing the forces of democratic and popular change.

They have also supported armed groups who share their Islamist ideology.

Foreign intervention risks turning a civil war into a regional one.

In June Mr Haftar’s men threatened to strike all Turkish vessels in Libyan waters. It detained six Turkish sailors and released them only after Turkey threatened military action.

The UN Security Council is too divided to restrain the parties. Libya’s former colonial rulers, France and Italy, have backed opposing sides, fuelled by their oil interests.

(Total, a French company, has most of its fields in the east; Italy’s oil giant, Eni, is concentrated in the west.)

Russia, which favours autocrats across the region, has thrown its support behind Mr Haftar.

America, which could be an umpire, acts like a bystander. Since

Barack Obama’s presidency, it has opted to “lead from behind”. Donald Trump phoned to congratulate Mr Haftar—a naturalised American citizen—when it seemed his offensive would be successful. America, which had supported calls for a ceasefire in the UN, abruptly threatened to veto them. Since Mr Haftar’s offensive has failed Mr Trump’s interest seems to have waned in another of what he once called the Middle East’s “stupid wars”.

Despite the conflict, the dinar has stabilised. Oil production is near its post-2011 peak of 1.1m barrels a day and at current prices could earn Libya $27bn this year. In the current fighting both camps are avoiding anything that might damage the oilfields because revenue from them pays the salaries of armed groups on each side.

As Mr Haftar tries to regain the initiative, however, that could change. Although he controls most of the fields, a UN embargo on nongovernment sales prevents him from boosting his own coffers while shrinking those of the government.

Previous efforts to sell oil independently were thwarted by America, but Mr Haftar is thought to be mulling trying again.

Bringing them home

The UAE begins pulling out of Yemen It wants its troops closer to home to guard against Iran

A

FTER FOUR years of fierce fighting and international outrage, the United Arab Emirates (UAE) is quietly slipping out the back door. Over the past few weeks it has begun to withdraw men and materiel from Yemen, where it is part of a Saudi-led coalition fighting against the Houthis, an Iranianbacked Shia militia that controls large parts of the country. The UAE has not commented on the drawdown. But foreign diplomats and eyewitnesses confirm it is happening.

The proximate cause is growing fear of conflict with Iran.

Tensions have climbed steadily since America withdrew last year from the agreement struck in 2015 that imposed limits on Iran’s nuclear programme.

In May four oil tankers were sabotaged near the UAE port of Fujairah. America blamed Iran.

The Emirati foreign minister, in a sign of his country’s nervousness, says it is too early to assign blame. “The UAE are playing it very cool because they understand how vulnerable they are,” says a Western defence official.

But the Emiratis wanted out

ment originated. The coalition’s offensive has also stalled around the western port of Hodeida, where the UN brokered a tense ceasefire. Unable to advance, the Saudis have of late been looking for a negotiated peace deal, though with little success.

Without the support of the UAE, the prospects of a Saudi victory look remote.

even before this crisis. They worry about the reputational costs of a war that has killed tens of thousands of civilians and caused famine and cholera outbreaks. Last month America’s Senate voted to block an $8bn arms deal with Saudi Arabia and the UAE. The war has also caused fissures within the UAE, a confederation of seven emir-

ates. Dubai, the glitzy business hub, is unhappy with the steep financial cost.

Many Emiratis feel the fighting has run its course. They are the most important partner in the coalition. Though the UAE’s army is much smaller than Saudi Arabia’s, it is a more capable fighting force. Emirati troops did most of the heavy fighting

on the ground in South Yemen, while Saudi jets provided often ineffectual air support.

The Houthis are not popular in the south, where locals grate at northern control (South Yemen was a separate state until 1990). It would be much harder to oust the Houthis from the capital, Sana’a, and the northern highlands where their move-

Monday 08 July 2019

BUSINESS DAY

17

cityfile Pipeline vandals bag 12 years

T

What an eyesore in Jakande Estate Despite efforts to enlist Lagos among mega cities, eyesore such as refuse across the city , pushes Lagos down the ladder.

Pic by Pius Okeosisi

Ayade accuses NDDC of neglecting C’ River …seeks review of master plan MIKE ABANG, Calabar

C

ross River State governor, Ben Ayade has accused the Niger Delta Development Commission (NDDC) of neglecting the state just as he called for a review of the commission’s master plan if the Niger Delta region is to witness real development.

Ayade made call when the management of the commission led by its acting managing director, Nelson Brambaifa, visited the Government House, Calabar, recently.

According to the governor, very little has been achieved by way of development under the current master plan. He said the current master plan even as inadequate as it is, has not been “implemented in truth, kind, action and in words.”

He therefore, called for a major review of the master

plan to reflect the realities and the need of the states.

The governor also urged the commission to deviate from the culture whereby governors in the region are not carried along when contracts are being awarded by the commission.

“As governor I have the superintending and overriding power over the land in Cross River which I hold in trust for the people. Therefore, by the provisions of the law, I have the powers to stop any project in this state. It is part of the constitutional provisions under the NDDC Act that the NDDC will have regular meetings with the various stakeholders, including the governors that form part of the governing board.

“As I speak, I’m not aware of nor have I received any official letter inviting me and my colleague for a meeting. We are not interested in deciding who gets the job but we would ask

our works department to be part of supervision to ensure that quality is adhered to at all times. I say this so that you don’t make the mistakes of the past.”

He decried the treatment of Cross River State by the NDDC, saying the story of the state “has been that of melancholy.

We have been reduced to want in body, soul and spirit.

“In sociology, any child who has very little and the other one has more, a mother is allowed to take from the one that has more and give to the one that has little. In NDDC, it is the states that have more money that are allocated bigger projects. It is not African. It is inhuman and inconsistent with the core principles of Kantianism that I know. In all honesty we have structured a society for aggressive rebellion.”

He therefore, urged that the state be treated fairly, especially “when one considers the fact that we have a land mass of over 21,000 square kilometers,

larger than the entire Niger Delta. Connecting two local governments is larger than any state in the Niger Delta with internationalboundariestoover four countries with its attendant challenges. We have been excluded by the NDDC from its original philosophy of making a prosperityagendafortheregion.

He said it sad that at the height of kidnapping and all the criminality in the Niger Delta, ‘Operation Delta Safe’ was mobilised to all the states except Cross River. So, all the militants now found Cross River a safe haven. This once peaceful, beautiful state suddenly became safe haven for militants and kidnappers to inhabit and distort our complete sight. The basis was that there were no pipelines in Cross River. So, as a government we now place premium on oil over blood. Africa has never shown this kind of disdain to a weaker brother,” Ayade contended.

Flood renders 510 homeless in C/River

C

ross River State Emergency Management Agency (SEMA) says at least 510 people have been rendered homeless during two days torrential rain that also destroyed 70 houses and farmlands in different parts of the state.

Princewill Ayim, acting Director General of the agency, said this on Friday in Calabar.

According to Ayim, the

downpour on Wednesday and Thursday week last destroyed property valued at several millions of naira.

The SEMA boss visited Calabar South, Calabar Municipality, Boki, Biase, Odukpani and Etung to ascertain the extent of damage caused by the disaster.

He thanked God that no life was lost, pointing out that most of the affected houses were erected along the waterways. www.businessday.ng

“The affected residents have been relocated temporarily from their homes for safety and to avoid the outbreak of communicable diseases from the flood.

The state government is taking steps to open more channels to ensure the free flow of water within Calabar metropolis and beyond,” Ayim said.

He appealed to the Federal Government, National

Emergency Management Agency (NEMA) and other relevant agencies to intervene by providing relief materials to the victims.

He added that the agency was working with the state ministry of health to ensure that the victims did not contract any diseases from the flood.

Patrick Asikpo-Okon, a victim at Ibom Close in Calabar Municipality,

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wo serial pipeline vandals, Yemi Oluwalogbon and I s k i l u S o d i p o, have sentenced to 12 years in prison by the Federal High Court, Ibadan for stealing 60 kegs of Premium Motor Spirit (PMS).

Justice P.I. Ajoku said that she sentenced Oluwalogbon and Sodipo based on the evidence before her and the plea of guilt which they entered.

“This judgment is in consideration of the fact that the convicts pleaded guilty to the three-count charge instituted against them, as well as the prayer of their counsel.

“I have also considered the fact that the convicts are young and could still be positively useful to the Nigerian society.

“It is my belief that they are now remorseful of their action. However, each of the two convicts is sentenced to two years in prison for each of the offences.

The sentences are, how-

ever, to run concurrently, starting from the date the convicts were first arrested by the police.

The judge ordered the exhibits found in the convicts’ possession to be forfeited to the Federal Government.

The police prosecutor, Kingsley Ngere, informed the court that the duo was facing a threecount charge bordering on conspiracy, destruction and stealing of petroleum products of the Nigerian National Petroleum Corporation (NNPC).

Ngere added that the duo committed the crime on November 26, 2018 at Onigari, along LagosIbadan express road.

According to the prosecutor, the convicts along with Idowu Oparinde and Afeez Yamo, who are still at large, were apprehended with a bus loaded with 60 kegs filled with PMS. Each of the kegs, he further said, contained 25 litres of PMS and two other 50 empty kegs were found in the bus.

Police smash car theft syndicate in Bayelsa

A

combined team o f ` O p e ra t i o n Puff Adder’ and the police command’s monitoring unit in Bayelsa have smashed a five-man car snatching syndicate operating in the state.

Spokesperson o the police in the state, Asinim Butswat said at the weekend in Yenagoa that they acted on a tip-off and arrested one Adebayo Bello, 43 years old.

Butswat explained that Bello, a native of Osun and one Onomis Idegbe, 35 years old, were trailed by the operatives to Tombia Roundabout in Yenagoa.

“On July 1, 2019, some

vehicles including a Toyota Camry L.E with Reg No KMK 188 CC, Toyota Camry L.E with registration AKD 925 FQ, Toyota Camry 2. OG, with registration SMK 775 CC and Toyota RAV4, with registration LSD 134 DC were recovered from their hideout at Obungha community, Agudama-E kp etiama, Yenagoa local government area, Bayelsa State.”

It would be recalled that suspected gunmen on last week invaded AgudamaEkpetiama police station in Yenagoa local government area, and killed four police personnel on duty, including the divisional police officer (DPO).

where over 10 houses were destroyed, said that he lost his credentials and other valuables to the flood. “ The heavy rain of Wednesday and Thursday wreaked havoc in this street.

I lost my valuables because I was trying to rescue my little children from being swept away by the flood.

“I thank God that we are alive today. I moved my family into a hotel because my house is not comfortable for now. For years now, we have been crying to government to come to our

aid and open the channels for free flow of water but no response,’’ Asikpo-Okon lamented.

Another victim, Alfred Odey, resident at the Cross River University of Technology quarters in Calabar South, said that the rain displaced his family, forcing him to park out from the campus.

In Boki local government area, Benjamin Abang, said that the flood destroyed his cocoa plantation which, according to him, is his only viable means of livelihood.

@Businessdayng

18

Monday 08 July 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

How to protect your wealth from being snatched The Solid Wealth Messenger

Grace Agada

W

e live in a lawsuitcrazy, financially risky, and getrich-quick infested world. As such, if you have exposed assets, it is not a matter of whether you will lose them, but when. There are many stories of people who have lost their wealth and these stories have become statistics in themselves. It might sound like a nightmare, but the wealth you have painstakingly strived to build is just one lawsuit away from being snatched and you are one liability away from being financially wrecked. Sadly, being the nicest, smartest and most generous person in the world will not save you or reduce your risk. As long as you are a person of means, you are a prime target for financial attack. Your wealth can end up in the hands of a total stranger if left exposed.

There is an oversupply of lawyers in Nigeria today and new lawyers graduate from law school every year. Yet, there are not enough good cases to support this workforce or keep them in business. Globally, it is estimated that a new lawsuit is filed every thirty seconds and the majority of these lawsuit are against people who leave their wealth exposed. With the number of lawsuits increasing every day, it is no longer safe to leave your asset exposed as there is a lawyer ready to help a potential attacker win a case over you.

An exposed asset is any asset that can be accessed during a lawsuit or any other form of financial attack that can get through to your wealth.

In other words, when a search is carried out on your name any asset that shows up, is an asset that can be snatched. You would be amazed at how many people are searching your name and how unsafe you are, if you were privy to some of the discussions held behind your back among some friends, family members, partners, and even total strangers.

Think about this: One single breach of contract, a work-related accident, trademark or copyright infringement lawsuits, hackers, financial fraudsters, tax claims, contract claims, employee related lawsuit, prolonged health care costs, your own financial mistakes, frivolous creditor claims, natural hazards, fraudulent in-laws, opportunity seekers, trusted friends and family members and many more are all the diverse ways you can lose your wealth. Consequently, your only logical option is to protect yourself before any one of these attack strike. How do you do this? Asset Protection.

Asset protection refers to the totality of strategies you can use to legally shield your assets from lawsuits and the other kinds of threats. It is hinged on the principle of owning nothing but controlling everything. Although there is no such thing as a 100% iron clad protection strategy, asset protection makes it extremely difficult and expensive for anyone to steal your wealth. There are two general ways your wealth can be snatched and they include: “The Legal Way” and “The Family Way” The legal way covers all the different ways you can be sued. The legal system is ideally there to protect our individual rights by holding people accountable for their actions when they cause injury to others. While this is a noble thing to do, only a few cases follow this principle. In today’s litigious environment, you can do everything right and still lose a lawsuit. All too often, people lose lawsuits because of their ability to pay, not because of a true fault or error.

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving. www.businessday.ng

Lawyers now lobby cases just to earn big settlements. And even if you win the case in court, a lawyer still benefits from defending you.

If you leave your assets exposed and reachable, lawyers know how to leverage on them. Your goal is to make yourself legally unattractive so there is little motivation for anyone to sue you.

The family way represents all the ways marital relationships can steal your wealth. There are fraudulent potential spouses all over the place looking for the next jackpot ticket to wealth. If these type of people gain access to your children or surviving spouse, you could lose your wealth. How can you protect your children from marrying potential gold diggers? What will happen to your child’s inheritance when love breaks? How can you protect your surviving spouse from losing control of the family’s wealth to a new spouse?

Your goal as the custodian of your wealth is to set up systems and structures that will protect your family from these kinds of threats. You need to build a tall financial armor, barrier, or shield that will protect the one thing that everyone is after. Putting your assets in a trust or a limited liability company will not automatically give you this kind of protection.

There are, however, two strategies you need to put in place to help you. First, you can protect the legal threats to your wealth using a well drafted asset protection plan and you can reduce the likelihood of poor marital choices using a spouse verification program.

The goal of the asset protection plan is to review all your personal and business assets, identify the potential and imminent risks that you are exposed to, isolate the different type of risks and provide the right protection shield for each risk class. The spouse verification

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program on the other hand will take into consideration all the important things that can negatively affect your wealth, the happiness, security and peace of mind of your children. The goal of the spouse verification plan is to help a person decide for themselves, after weighing all the options whether to go ahead with a potential spouse or not. It would also ensure that they are armed with the right information should they decide to go ahead.

If more people can understand their marital decisions and are able to logically weigh the opportunities and consequences before they enter, there will be more successful in their marriages.

Understanding that you and your family are at risk is the first step to protecting yourself. These threats are present whether you see them or not. If you keep working to increase unprotected wealth, sadly, you would be working solely for the benefit of thieves.

To get more details about the asset protection plan or the spouse verification plan, text “Asset Protection” to 08101860042” to get a special report.

“A lawyer with his briefcase can steal more than a hundred men with guns.” - Mario Puzo, author of The Godfather.

‘

You need to build a tall financial armor, barrier, or shield that will protect the one thing that everyone is after

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

Email: info@createsolidwealth.com Tel: 08101860042 @Businessdayng

Monday 08 July 2019

BUSINESS DAY

COMPANIES & MARKETS

19

MTN group’s new GlobalConnect joins telecom’s giant Opco portfolio

COMPANY NEWS ANALYSIS INSIGHT

Pg. 20

Oil & Gas

LEKOIL to add 20,000bpd to national oil output with strategic investments FRANK UZUEGBUNAM

I

ndigenous oil and gas firm, LEKOIL has indicated that its strategic investments this year could lead to an additional 15,000-20,000bpd increase in national oil production in 2019.

“The priority for 2019 is to grow production volumes at Otakikpo through Phase Two development (subject to funding) to reach gross volumes of 15,000 to 20,000 bpd. The first step has already occurred, with 3D seismic data acquisition and interpretation now completed,” Olalekan Akinyanmi, LEKOIL’s CEO, said in a note that accompanied its 2018 annual report which was released in late June.

At the Otakikpo field

which is sited in a coastal swamp location in oil mining lease (OML) 11, production levels averaged approximately gross 5,345 bpd in 2018 even though LEKOIL only started drilling in the first quarter of 2017. The company is determined to further exploit the asset to the benefit of all stakeholders in the next few years.

“The next year should, therefore, provide key catalysts for value appreciation for shareholders as we move forward in building a leading Africa-focused exploration and production business,” Akinyanmi said in the note.

LEKOIL’s 2018 financial results showed that it had lost significant ground in terms of profit, compared to 2017 when the young

company’s profit stood tall at $6.5 million. Profitability in 2018 was not possible because of the immense investment that was undertaken within the year, as is common in the oil and gas industry.

“We also continue to advance towards- the start of the appraisal drilling program on Ogo in OPL 310. We will work with our joint-venture partner, Optimum to negotiate agreements that will allow us to make progress on the block, after securing all relevant regulatory extensions and approvals, Mr. Akinyanmi also said in the note.

LEKOIL is an Africa focused oil and gas exploration and production company with interests in Nigeria and Namibia. The

Company was founded in 2010 by a group of leading professionals with ex-

tensive experience in the international upstream oil and gas industry as well

as in global fund management and investment banking.

L-R: Akinola Sowemimo, country head/chief investment officer, EDC Securities Wealth and Asset Management (SWAM); Ibukunoluwa Oyedeji, chief financial officer, Ecobank Nigeria; Patrick Akinwuntan, managing director, Ecobank Nigeria; Folajimi Kuti, lead advisor, Family Wealth Africa/Guest Speaker, and Ayodele Osolake, acting head, consumer banking, Ecobank Nigeria, at a breakfast session with High Net worth Individuals on ‘Intergenerational Wealth: A myth or reality, jointly organized by Premier Banking by Ecobank and EDC-SWAM in Lagos.

Pic by Olawale Amoo

INNOVATION

Leadway takes the wheels to drive workspace innovation

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ne major way to predict the future success of any business, brand or organisation is by taking a good look into its culture, and the response of its workforce towards it. History also proves that for culture to remain relevant, it must go through the process of change over time.

However, it is pertinent to note that change and innovation work hand in glove in a generation where it has become more evident that better, flexible workspaces are key to unlocking workforce potential.

Workspace attire or corporate dress codes as widely regarded by many significantly affects the perception and growth of any brand, more so its workforce. As innovation continues to serve as the bedrock for economic growth, brands are beginning to look inwards to see how they can leverage workforce uniqueness to promote better work environments, and to boost productivity.

Nigeria’s leading insurance firm, Leadway Assurance, believes that creating a more relaxed dress code formula will reinvigorate its predominantly millennial workforce.

Workspace attires contribute immensely to productivity and better-improved

workspaces. According to a workplace productivity study carried out by Stormline in the UK, 61 percent of employees believe that they become more productive when the dress code is casual or flexible.

This fact does not come as a surprise considering that millennials make up for nearly 70 percent of today’s global workforce, and may increase by 5 percent in 2025 according to a 2014 Deloitte Millennial Survey.

Further study also proves that there are chances of creating negative perception of your brand or product by embracing strict dress codes and this could be a potential downside for marketing.

Delving into the realm of marketing which comprises the bulk of Leadway’s success strategy, it can be argued that considering the age in which we live in, retail success cannot be attained without a great, visible level of versatility.

This alone has an amazing positive effect on workforce growth and performance as it tends to build brand affinity, thus boosting employee dynamism and confidence by a great margin.

Confidence is crucial particularly when the focus is directed on the insurance industry whose success is hinged on product marketing aimed at driving sales. Leadway believes that confidence is key to

unlocking new businesses, and that it could play a very significant role in penetrating emerging and unexplored markets.

However, since every success emanates from internal strategy, then creating a conducive workspace is foremost for Nigeria’s leading insurance provider.

Leadway has constantly remained committed to preserving its brand identity, and creating a lasting legacy of innovation for future generations in the process. Workplace dress code for the insurance giant is only one way, but surely a great way to solidify the synergy between the company and its customers, as well as to boost workforce morale.

Its culture of dynamism has not only preserved its unrivaled reputation as a next generation insurance provider but as a change leader and organization

dedicated to workforce improvement. Attracting the next generation workforce required for business growth and expansion is no easy task.

Hence, Leadway’s plan is to unearth the uniqueness in its workforce with the aim of encouraging versatility and dynamism within the workspace.

Adopting a flexible-casual, but smart dress code system certainly counts for innovation, and even more for brand attractiveness.

More so, the process of integrating the new with the old is fast becoming a challenge of the past.

Building an attractive brand that boasts a very conducive workspace for employees is important for an organisation such as ours considering the workings of today’s market explained Kunbi Adeoti, Head of Human Resources at Leadway.

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

20

Monday 08 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TELECOMS

MTN group’s new GlobalConnect joins telecom’s giant Opco portfolio MIKE OCHONMA

T

elecommunications giant MTN Group has established its own wholesale infrastructure company called GlobalConnect; an operating company (Opco) within the parent group.

The move follows a review of the operational structure of the Dubai-headquartered GlobalConnect to further enable growth which is in line with the group’s strategic focus on wholesale.

Explaining further on the new move, Jens SchulteBockum, MTN Group Chief Operating Officer said, “I am

pleased that after less than two years of operation, MTN GlobalConnect has exceeded expectations, growing its customer base and revenue ahead of targets”.

The Opco was established in 2017 as a commercial vehicle for the consolidation of MTN’s international and national major wholesale activities while Frédéric Schepens, the current chief executive will continue to lead the Opco.

S c hu l t e - B o cku m e xpressed optimism about the team led by Frédéric noting that he will continue to build on their gains to drive value to the group’s operations,

and lead MTN’s ambition to build Africa’s leading wholesale company.

“Offering the most complete backbone network in Africa, the company provides reliable solutions for fixed connectivity and international mobile services and is the single entry point to the largest network infrastructure on the continent”.

The COO stated.

GlobalConnect strives to enable services that create significant value for other MTN Opcos, partners and third parties looking to gain from the growing opportunities in the Middle East and Africa

L-R: Ubong King, director, Nigeria South Africa Chamber of Commerce; Ohis Ehimiaghe, director, Nigeria South Africa Chamber of Commerce; Kike Longe, principal, Capital Alliance of Nigeria; John Anyanwu, partner, technology advisory, KPMG Advisory Services; Bola Ajibode, head, conglomerates and industrials, CIB Client and Coverage, Stanbic IBTC; Sam Oniovosa, treasurer, Nigeria South Africa Chamber of Commerce; Omasan Ogisi, general manager, corporate affairs, MTN Nigeria; Iyke Ejimofor, executive secretary, Nigeria South Africa Chamber of Commerce; Lawrence Amadi, technology advisory, KPMG Advisory Services, and Ajibola Olomola, director, Nigeria South Africa Chamber of Commerce, at the Chamber’s breakfast forum sponsored

by KPMG Professional Services.

Lagos pledges support for Green projects at PAC Environmental ISRAEL ODUBOLA & SEGUN ADAMS

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abajinde Sanwo-Olu, Governor of Lagos State said his administration would throw its weight behind startups and businesses willing to harness innovative technology in promoting environmental development.

According to Sanwo-Olu, this approach is in line with the focus of his administration on ensuring a more sustainable environment in the state for all and sundry.

The governor made this known at a forum organised

by Lagos-based investment firm, Pan-African Capital Holdings (PAC Holdings) on green finance and the environment, which held at the Oriental hotel, Lekki on Wednesday, July 3.

The green forum themed: “The Earth, Our business, Our Future” brought together stakeholders in the green industry who deliberated on ways to enhance environmental sustainability and ensure profitability for businesses venturing into Ecoprojects.

The experts also discussed the various financial mechanisms and instruments to accelerate green finance and how penetration could be gained. ‘‘The challenges we face today is about developing new business models that are environmentally friendly; yet profitable, ” Sanwo-Olu, represented by his deputy governor, said.

According to the governor, this calls for an appraisal of the production chain and process, identifying those

aspects that are harmful to the environment, and developing appropriate innovative technological solutions.

The solutions must effectively address challenges and achieve the environmental goal of sustaining the earth planet, while also ensuring that the vulnerable population are saved the agony and pains of global warming.

Plastic waste constitutes a major challenge to the environment constituting over 70 percent of waste materials polluting water bodies and blocking drainages with devastating consequences of flooding in Lagos State.

Accordingly, Sanwo-Olu urged businesses to consider investing in new environmentally friendly technologies especially in the areas of renewable energy, waste recycling, emissions and packaging, including the development of alternatives to plastic bottles and other non-degradable items which constitute a major threat to environmental sustainability.

Sanwo-Olu, therefore, said Lagos State would collaborate with the private sector especially the major industrial establishment whose activities impact more on the environment to seek innovative ways of carrying on their activities without jeopardizing peoples’ lives and the sustainability of the planet. ‘‘In addition, we will give the required financial support to young businesses showing a willingness to key into this new model as well as some technological support, ” he said.

Dolapo Atekoja, Chairman, Pan-African Capital

Holdings, stressed the importance of resource allocation in driving fundamental change in the environment. ‘‘As you may know, Green finance is aimed at increasing the level of financial flows from banking, micro-credit, insurance and investments from the public, private and not-for-profit sectors to sustainable environment projects’’ Stakeholders at the meeting included experts from Multilateral Development Finance Institutions, Banks, Issuing Houses and Regulators in financing environment sustainable projects.

“We are happy with the level of dialogue we have had with the stakeholders that attended the forum and we take particular delight in the fact that the government sees the need for us as a nation to be more responsible for our environment,” said Chris Oshiafi, CEO of Pan-African Capital Holdings.

“Investors should be keen on leveraging the investment opportunities in fostering a sustainable environment, whether it is by providing off-grid power solutions or renewable energy as well as waste management and recycling,” Oshiafi said.

Pan-African Capital Holdings Limited is a Proprietary Investment Company with a special focus on key Sectors across Africa including Financial Services, Hospitality & Entertainment, Real Estate & Infrastructure, Agro-Allied & FMCG, Healthcare and ICT & Media.

The company’s corporate Head Office is in Lagos, with presence in Accra, Nairobi, and Mauritius.

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L-R: Joseph Ehigie, non-executive director, Halogen Group; Wale Olaoye, group managing director; Biodun Shobanjo, chairman, and Ibrahim Aliyu Shettima, representing commader, Western Naval command, Lagos, at the transformation of Halogen Security to Halogen Group, and unveiling of the six operating companies in Lagos. Pic by Olawale Amoo

L-R: Ayo Animashaun, CEO Smooth Promotions; John Ugbe, CEO, Multichoice Nigeria, present a painting to the outgoing US Consul General, F. John Bray and his Wife, Tokpa Bray, during the special send forth event organized for the outgoing US Consul General in Lagos.

L-R: Ndifreke Okwuegbunam, head of programmes, ACT Foundation; Ella Gudwin, president Visionspring Org; Osayi Alile, CEO, ACT Foundation, and Friday Oke, optical technical advisor, at a courtesy visit to the ACT Foundation office in Lagos.

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Monday 08 July 2019

COMPANIES&MARKETS

BUSINESS DAY

21

Business Event

FMBN partners KPMG towards building a 5-year strategic action plan CHUKA UROKO

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n continuation of efforts to reform and reposition the Federal Mortgage Bank of Nigeria (FMBN) as a more business-driven affordable housing provider, the Board of Directors of the bank has engaged KPMG, a leading management consulting and business improvement firm, to provide top-level corporate advisory services.

The move is in line with the Management’s policy of leveraging private sector expertise and knowledge to strengthen its market position, optimize internal business processes, develop innovative housing products on the back of a sound strategic action plan and a thorough understand-

ing of current trends in the local and global housing and mortgage industry.

Under the terms of the Strategic Advisory Engagement, KPMG will work closely with FMBN to develop a 5-year Strategic Action Plan for the bank. This will include diagnosis of the current macroenvironment, review of FMBN business operating models, market and industry positioning and a visionary road map for the institution’s future.

This development was revealed by MD/CEO of the FMBN Ahmed Dangiwa during the 2019 Management & Board Annual Retreat, which held recently in Uyo, Akwa Ibom.

The Retreat, the first to include FMBN Board Mem-

bers featured brainstorming sessions between the FMBN team and KPMG professionals on creating a desirable and visionary future for the bank in its bid to better deliver affordable home ownership to Nigerians.

In his words, the FMBN MD/CEO, Dangiwa said, “The Bank needs to move to the “Next Level” in terms of market penetration, business expansion and more impactful service delivery. I am therefore pleased that we have commenced a journey of destiny with the commencement of the project to develop a 5-year Strategic Growth Action Plan for the Bank. The next five years in the life a 63-year old institution like FMBN is a relatively brief period.”

RMB Nigeria certified as ‘Great Place to Work’

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MB Nigeria has formally been certified as a great place to work by the Great Place to Work Institute, at its 6th annual awards ceremony in Nigeria.

Reflecting on the award, Michael Larbie, RMB Nigeria CEO/ regional head West Africa says “We are proud of the recognition as we understand that the key driver of any successful organization is its people. We will continue to invest in our people and provide an enabling environment for our employees to thrive and succeed. RMB strives to sustain a non-hierarchical management structure and an entrepreneurial environment wherein our people think and act like business owners. We trust and empower our people, recognize their achievements and reward them for ex-

ceptional performance.”

Ayotunde Jegede, head of human capital further stated that while most corporate and investment Banks compete on the same basis, it is RMB’s people, our owner-manager culture, collaborative spirit and values that distinguish us from the rest. RMB Nigeria is a values-driven organization where employee development is equally as important as financial results. That is why we make sure we hire the right people who have a passion for excellence, intellectual curiosity, a can-do mindset and give them the freedom to excel in absolute support of our clients.

Rand Merchant Bank Nigeria has over 15 years of transactional experience in Nigeria ranging from advisory roles on infrastruc-

ture projects, mergers and acquisitions to the funding of various transactions across multiple sectors. We have an extensive pool of investment banking talent, including fixed income, currency and commodities experts who understand the Nigerian and broader African landscape.

Over the past six years, we have created a core client base of solid local companies, multinationals and financial sponsors. Using a targeted approach, we have meaningfully supported our clients through different economic cycles and will continue to do so.

RMB’s vision and primary business objective is to create sustainable value, unique solutions and superior economic returns for our clients and shareholders.

L-R: Olufunke Smith, group head, Lagos Island 1, Retail Banking, FirstBank; Abiodun George, incoming head girl, Methodist Girls High School, Yaba; Ismail Omamegbe, head, corporate responsibility and sustainability, FirstBank; Amarachi Umezurike, outgoing head girl, Methodist Girls High School, Yaba, and Abimbola Ali, vice principal, admin, Methodist Girls High School, during the celebration of the 2019 Corporate Responsibility and Sustainability Week of FirstBank held at Methodist Girls High School, Yaba in Lagos.

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L-R: Bolaji Balogun, chief executive officer, Chapel Hill Denham; Oluwatoyin Alake, head, secondary markets department, The Nigerian Stock Exchange (NSE); Jude Chiemeka, divisional head, trading business, NSE, and Phil Southwell, partner, Chapel Hill Denham during a training on alternative investment titled “Listed Real Assets: A Teach-In on Alternative Investment Companies” at the NSE today in Lagos.

Fidelity Bank to give N12m grants to SMEs at funding connect fair HOPE MOSES-ASHIKE

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idelity Bank plc will be giving a total of N12 million in grants to Small and Medium Enterprises (SMEs) who will emerge finalists in a completion that will herald its Funding Connect – Lagos fair initiative.

The bank has concluded plans to connect 60 SME founders to 60 fund providers at the ‘Entrepreneurship Meets Capital’ forum scheduled to hold in Lagos, on August 7, 2019, Port Harcourt, and Kano in the last quarter of this year, and first quarter of next year.

Referencing statistics from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Nnamdi Okonkwo, managing director/ CEO, noted that about 40 million SMEs registered in Nigeria contribute 80 percent of workforce in the country.

Represented by Nneka Onyeali-Ikpe, executive director, Lagos and South West,

Okonkwo said, “this shows that it is a sector we cannot ignore.

We also know that funding is still one of the major challenges for SME growth. There are other bottlenecks such poor infrastructural facilities, and multiple taxes. We are trying to solve the ones we have the capacity because SMEs are our strategic partners”.

He reiterated the bank’s commitment in providing long term funding for SMES through its funding partners, private equity firm, Venture Capital and Angel Investor among others.

Concerning the event, he said there would be a six breakout sessions, three networking cocktails, and adding that it is going to be a very robust event that will feature a lot of beneficiaries to the bank’s SME funding.

Giving an overview of the Fidelity SME funding connect, Osaigbovo Omorogbe, divisional head, managed SMEs, the event will kick start from Lagos and the train will move to www.businessday.ng

Abuja, Port Harcourt and Kano.

We anticipate that at the end of the fair, SMEs would have gotten access to funding from both local and foreign funders.

He noted that the bank has disbursed about N2.3 billion under the Central Bank of Nigeria’s (CBN’s) N220 billion Micro Small and Medium Enterprises (MSME) Fund, and another N9 billion from the N28 billion line of credit it is managing on behalf of the Development Bank of Nigeria (DBN).

“We have been funding the subsector, but through commercial funding, which is very expensive. This is why we are bringing this fair together to give SMEs access to venture capitals, and angel investors where they can get access to longer and stable funds. We are trying to solve their funding needs. The fair is going to bring in venture capital firms, private equity firms both within and outside the country”, Omorogbe said.

L-R: Ahmad Salihijo, chairman, FlexiSAF Foundation; Faiz Bashir, CEO, Edusoft, and Amina Abubakar, coordinator FlexiSAF Foundation, during the signing of MoU between FlexiSAF Foundation and Nigerian Muslim Forum UK (NMFUK) to reduce numbers of Out-of-School Children (OoSC) in Abuja.

Pic by Tunde Adeniyi

Oyedokun Ayodeji Oyewole (r), president/chairman, Institute of Information Management (IIM) Africa, presenting plaque of IIM Africa Professional Fellowship to, Andrew Ysasi (l), president, IG GURU, USA, at the 2019 Institute of Information Management (IIM) Africa Annual Lecture, induction and investiture in Austin Texas, United States of America.

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22

Monday 08 July 2019

BUSINESS DAY

Monday 08 July 2019

BUSINESS DAY

23

KAI WULFF

CEOINTERVIEW

Executive Vice-President, Balton CP Group

Interview with Private Sector Leaders

‘We can build nationwide broadband network for Nigeria and charge end-users free’ KAI WULFF, Executive Vice-President, Balton CP Group, the parent company of Dizengoff Nigeria, in this interview with BusinessDay’s Frank Eleanya opens up on the investment and strategies the company is deploying in connecting millions of Nigerians and institutions via public Wi-Fi.

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n your experience, as one of the leading technology and innovation companies, with strong market share in the African market, how do you see the level of tech development on the continent?

I believe Africa can leapfrog the rest of the world in terms of technology and innovation rather than just copying the present and now dated technologies around the world. The ‘hub and spoke’ systems that are replicated in the rest of the world cost a lot of money to maintain and are outdated and no longer relevant.

In Nigeria just about everybody has a smartphone. In fact, today we were out in suburb of Ajegunle in Lagos where surveys show that 70 per cent of the people there have a smartphone. Smartphone owners no longer need a central organizing entity that teaches them how to trade or tells them how to learn or where to learn things; they can get all this information online. If you give people connectivity and a smartphone, people organize themselves in a communal way and you generate natural peer-to-peer connections, much in the same way as the internet is organized. You can have some super nodes that may be your universities or technical colleges, where you have meeting points, testing theories and exchanges with like-minded people. If you organize it more on how society originally organized itself, Nigeria could leapfrog anything, as knowledge transfer through peer-to-peer connectivity, is faster than the traditional ways of information exchange and you will get the best knowledge to the person instead of having a teacher enforcing it, or an institution with a curriculum or someone deciding on a business case to give you the knowledge or the tools to trade products or services. I think the ingenuity and creativity that African people and not unsurprisingly Nigerians have, is one of the key strengths that Africa as a continent has.

Technology solves the problems in a society. You can’t just take knowledge and force fit it on a society. It does not work like that.

Dizengoff is known for its agri-business. But you also have a vibrant technology business. What have you been doing in this space in terms of investment?

I consult for a company called Balton CP, the parent company for Dizengoff WA. Dizengoff has been in the technology business for about 15 years now. We have come from an agricultural, essentially a trading background and when I joined the Company, we were just supplying and integrating technology, ‘moving boxes’ as I call it and I saw the need to think differently and look at solving social problems through technology.

We need to move the needle and be

aggressive in our evolving models evolving focusing the business on how we can create systems that are more efficient, more impactful, yet costing customers and consumers, less.

We provide skills transfer through our local staff and have amassed a great deal of experience in networks and communication technologies, from our Motorola days. I brought software development capability to the table. We have now developed software and Artificial Intelligence (AI) globally, but the implementation and customization has to be done locally. We specialise in bringing efficiencies and improving productivity in both the work-place and society as a whole.

The other area we are focusing on is to bring technology to the fields of security: physical security, data and cyber security.

We also provide advanced technologies like cyber analytics. The only way you can really protect a network these days is through advanced cyber analytics. Companies need to know what users are doing and if they are staying too long in a specific area of the network on a particular website, you have to know why. Most cyber-attacks happen from within the business’s network and that is why one needs cyber analytics. Businesses, unfortunately, generally only see security as a cost. What we do will not cost you money.

There is no company in Africa but us offering this service and solution. What I’m saying is that we can the same analytics software to assist in making business decisions and how to make your business more efficient. If we know who is working on what, we can start writing algorithms that allow businesses to distribute the workload in a different and more efficient way. Instead of costing money just to protect you, we can help businesses save money whilst at the same time providing that essential level of cyber-protection. It is an approach that only Dizengoff provides in Africa at this stage.

What are the problems you have identified in the Nigerian education system that you are using technology to solve?

The Nigerian education system is underfunded, so the general impression is that you are not getting quality educators.

Teachers struggle to get a living wage in many instances, so those that could potentially be good educators, rather study for a different vocation where the pay is better.

This leaves a shortage in the system which then attracts those that don’t have the natural talent or passion to educate – often those who are not accepted for courses they would like to follow and fall back on an education qualification. These individuals then become the educators and have to transfer knowledge to the youth of the country, when it’s the last thing they want to be doing. If one looks at a modern education system, the teacher’s role is to encourwww.businessday.ng

age learning and to facilitate collaboration between students. The teacher is no longer the only custodian of knowledge. In Nigeria today everything, including the curriculum is written with the 1960s in mind, there is no idea exchange at all and it is not just Nigeria, many African countries are falling behind the education system of the West.

Students are not learning enough and with out-dated curricula, the quality of learning is even worse; more hours, more curricula and less learning.

Modern education systems provide the tools and teach one how to search for the answer and let you find it. Everything we have learnt from 60,000BC to the Enlightenment Period which started in the 1700s is only a single unit of learning. Then from the Enlightenment Period to Industrial Revolution, around roughly 150 years, knowledge doubled. From Industrial Revolution to the 80s we had a ten-fold increase in knowl-

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edge. From then till now we have grown our knowledge a further 20 times.

Learning in a society should be peer-to-peer learning. We have to facilitate interaction and collaboration between the students, as in this way we will be transferring mountains of knowledge, way more than the teachers can do on their own. STEM education is an outcome of interest. It is not force-fed. You can’t force someone to learn technology or maths because if they have no interest in the subject, it can’t work. The job of an education system is to show people what they can do and allow them to pick the things they really want to focus on.

We are not too far away from having an AI and brain interface, so why would one want to store knowledge, the way this was done in the past? Nowadays, I learn language, because I want to understand the culture. I don’t really need it for business anymore, as an English speaking person all I have to do is use Google translate or Baidu translate. Society has to

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change. Education has to change in line with the modern world. This is why it is not right to just speak about the funding of education; it is about a radical change in the education system.

At Dizengoff we have to look for the most efficient way to connect people. Connectivity creates learning energy, engenders efficiencies and it allows society to organize itself better – in a proper societal, peer-to-peer fashion.

Speaking of connectivity, Nigeria has different broadband options including fixed, mobile and satellite broadband, yet we are still only scratching the surface in terms of leveraging the power of the net. What option do you think we should be focusing more on to achieve more and what is Dizengoff doing about this?

It comes down to individual user cases, due to the fact, that operators selling airtime or

data, are not really selling the ‘Why’ they are doing this. Until people figure out and understand ‘Why’ they buy data, you won’t have a real reason to get them to pay for data. If they understand that they are getting something way more powerful that just connectivity i.e. they are getting a world of knowledge and information regarding just about anything - then you have a principle for payment. For example: for a rural trader, the more you have to travel to the centre of the city with your product to market it – the less you will make due to the cost of this exercise.

In the present environment one is paying for data, but the real issue is that the data is presently not making your business more efficient. The revolution brewing on the business side is how to figure out a way that every person in the village that is producing the goods for the city-market can contribute to an ecosystem of trade and trade information. If those providing this information and who benefit from this information financially, would pay for the data – then you have the birth of a new way of financing data – paid for by those benefiting not consumers of the data.

Think of it this way; could an agribusiness company save thousands of dollars in transport charges if it was able to finance connectivity for the off takers?

Nobody looks at it this way.

When we built the Kenya Wi-Fi network in 2005, it was the first metro-fibre solution with blanket coverage. We did not charge for the data. What we did was get organisations like Coca-Cola to sponsor a week’s data, the following weeks we would get the World Health Organization (WHO) involved and the week thereon another institution or organization. We never charged the end-user for any data – it ended up all being sponsored. The norm of the time was to say that the voucher cost would kill the business, but in the end the company made a lot of money, using the above solution. The solution became self-funding, and it turned out to be a win-win situation for all involved.

It is the same model we are trying to convince the operators in Nigeria to adopt. It would include a number of industries, all working together to say how they could benefit out of people being connected. Everyone knows that if you give people access, knowledge goes up, but you can actually monetise this as well as measuring it; then you really are in business. What we are doing is to show our capability as Dizengoff to design, rollout and maintain any size of network and bring creative win-win financing models to the table.

We can build nationwide networks and provide business cases, which approach solutions in a different way. I was personally involved in the business case www.businessday.ng

on Project Loon for Google, so if you are asking me what the right technology is, I can honestly say the above is the route we have to follow. This is because it’s about ‘horses for courses’. In rural areas you can have a floating base station like Project Loon, it’s relatively cheap to do and you don’t need a lot of bandwidth per square km. But this technology will not work in the city it as it is expensive to build and maintain. It will involve a lot of analysis to know where to use which technologies.

We won the contract in Kenya with Safaricom to roll out a $45m Ruckus equipment project, high-density Wi-Fi covering, not only in the major cities, but the towns too. We are not yet in the villages, but we are working on this in collaboration with schools. We have asked Safaricom to connect as many schools as possible, where we put in the Wi-Fi transmitters and from there reach the whole surrounding community and step by step cover the whole country. If you analyse and tactically build the business proposition, you do not need to have to sell data to have a profitable business case.

You have approached University of Lagos for collaboration and I

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understand you are also talking with the Government. From experience, discussions with public institutions never go as planned.

Are you anticipating this and how do you plan to manage it?

I think if you push it through the government in the traditional way you will not be successful, because of some of the same challenges you have mentioned. I believe that you have to show government what’s possible by taking on a project such as the government offices of Lagos State, connecting them in a way to make their work more efficient. Once this has been done, productivity has increased and cost savings have been made, they will be more than willing to support other Government initiatives and projects. This is a step by step process, prove the business case, deliver the results and show then the benefits. In essence, grow together.

When it comes to the social impact of Wi-Fi solutions, you have to bring in all the stakeholders who will benefit from the project, show them what is achievable and then provide a one-stop build and execute solution.

This is what we are trying to achieve at Dizengoff.

Continues on page 28 @Businessdayng

24

Monday 08 July 2019

BUSINESS DAY

real sector watch

Nigerian pharmaceutical industry: Big steps, setbacks, prospects ODINAKA ANUDU

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igeria’s drug makers have made big steps in recent times.

In 2018, an Anambra State-based drug maker, Juhel Nigeria, unveiled a new Oxytocin injection for pregnant women, the first of its kind in Africa.

Juhel’s injection, unveiled in Lagos in May, was manufactured in collaboration with the United States Pharmacopeia (USP). It has the capacity to reduce after-birth bleeding and maternal deaths, estimated at 58, 000 each year. The drug was hitherto imported outside Africa but is now locally manufactured in Awka, Anambra State, Ifeanyi Okoye, CEO of Juhel Nigeria Limited, said.

“We have the capacity to produce enough Oxytocin that will serve the rest of sub-Saharan Africa,” Okoye said.

Fidson Healthcare is a stand-out performer that no one can afford to ignore in the pharmaceutical space.

The drug maker has an ultra-modern plant in Ogun State that matches what is seen in India, Brazil and the United States—countries well-known for drug manufacture.

The new manufacturing facility is one of the five facilities shortlisted for World Health Organisation (WHO) certification in Nigeria. It is an ultra-modern facility with high-tech machinery for manufacturing pharmaceutical products, in compliance with global standards and WHO certification. It is equipped with six production lines – tablets, capsules, liquids, cream and ointments, dry powder and intravenous fluids to meet the needs of the Nigerian and West African markets.

It once partnered United States firms, Immune Therapeutics, GB Pharma and American Hospitals & Resort (AHAR), for the marketing and distribution of Lodonal, a patent-protected product that is indicated for the management of patients with immune-compromising diseases.

L-R: Frank Muonemeh, executive secretary, Pharmaceutical Manufacturers Group (PMGMAN); Abibu Adekunle, financial secretary/chairman publicity committee, Pharma Expo 2019; Fidelis Ayabae, chairman, management board, PMG-MAN; Agboade Degun, member ,PharmaExpo committee 2019 and Jacob Kurian, member, at a press conference on the forthcoming 2019 Nigerian Pharma 2019, 5th edition, in Lagos weekend . Pic by Pius Okeosisi

Fidson today is owned by foreign investors to the tune of 25 percent.

It has pumped between N20 and N25 billion into its facilities in Lagos and Ogun states, said Fidelis Akhagboso Ayebae, founder and chief executive officer, who doubles as chairman of PMG-MAN. SKG Pharma has locally produced Amino Acid and Vitamins, first in Africa. Moreover, Daily Need Industries has produced Amoxicillin Dispersible Tablets (DT), used for the cure of Pneumonia. May &Baker entered into a joint venture project with Federal Government to produce vaccines locally. Gloria Elemo, director-general and chief executive officer of the Federal Institute of Industrial Research Oshodi (FIIRO), told BusinessDay in 2018 that FIIRO had an understanding with May &Baker for the commercialisation of a sickle cell supplement produced by the institute.

Nigerian manufacturers have invested over N400 billion in the last 20 years in upgrading facilities to acquire the World Health O r g a n i s a t i o n ( W H O ) ’s prequalification needed for international competition.

Many drug makers export to the African market.

But amid these investments and big steps, the industry faces a number of challenges. Due to lack of www.businessday.ng

functional petrochemical industry, most inputs used by the industry are imported. Between 2014 and 2018, cost of importation rose by over 100 percent owing to the weakness of the naira and rising logistics costs.

Like manufacturers in other sectors, drug makers face rising production costs.

Energy alone occupies 40 percent of the entire expenditure. Many firms no longer rely on power from energy distribution companies as they run on gas or diesel every day.

Pharma World Magazine said in 2018 that the Indian pharmaceutical market booms owing to low production costs that are significantly lower than those of the United States and Europe (almost by half ).

Consequently, the Indian pharmaceutical industry caters to over 50 percent of the global demand for various vaccines, 40 percent of the demand for generics in the United States and 25 percent of all drugs in the United Kingdom.

Nigeria has the capacity to mimic India by supporting local players. This requires removing barriers to manufacturing such as multiple taxes, high energy costs and policy flip flops.

Orimadegun Agboade, chairman and CEO of Orfema Pharmaceutical Industry, said at a press conference in Lagos recently

that Nigeria can produce all of its malarial drugs if the right polices are in place and checks on donor agencies apply.

Without doubt, the pharma industry requires cheap loans to grow, but this is hardly available locally.

In 2017, Evans Medicals plc, one of the four companies to obtain the WHO pre-qualification, ran into trouble with Skye Bank and First Bank of Nigeria over loans. The banks on October 20, 2017, served Evans with an ex- parte order of the Federal High Court dated 4th July, 2017, granting them the right to take over the assets used as collateral against facilities granted.

No remedy was in sight for Evans. Today, no one hears of Evans— a company that could have been supplying drugs to international agencies with its WHO prequalification.

Currently, there is no sunny side as the government is yet to come up with a policy that will revivify the industry.

S ome phar ma fir ms complain that government’s executive order which deals with patronage has not been implemented at all since its inception by the ministries, departments and agencies.

Perhaps, except the intervention of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria

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(PMG-MAN), a number of things could have gone too bad. Maybe the industry would have died completely, dragging with it over N400 billion investment.

When the Common External Tariff (CET) started, there was an obnoxious clause in it. The CET was aimed at boosting trade in the ECOWAS region by removing barriers to trade.

But the West African treaty placed zero tariff on imported finished drugs but imposed between five and 20 percent duty on imported raw and packaging materials. This happened in the heat of Nigeria’s recession, threatening the existence of many drug makers.

“The lack of demand for locally manufactured medicines as a result of cheap imports will lead to idle capacity and will negatively impact previous investments in the sector, worth over N300 billion,” Okey Akpa, then chairman of PMG-MAN, said.

It was the PMG-MAN that stopped the continued implementation of the clause through advocacy.

Today, the clause no longer applies.

It was also PMG-MAN that helped stop the Economic Partnership Agreement with Europe, which, if implemented, would have hurt the entire industry, according to industry insiders.

The EPA agreement was not bad as it was meant to open West African doors to the European Union and vice versa. However, it was an agreement of two unequal groups, said PMGMAN. Today, the EPA is not in implementation.

Another way the group has boosted the industry is the provision of market opportunities to members.

This August, the group will bring drug makers together with buyers, investors and policy makers to negotiate the way forward for the industry.

This will be the 5th expo.

It has the theme, ‘Strategic Collaboration for Medicine Security, Affordability and National Sufficiency’ and will take place on August 28 and 29 in Ikeja, Lagos.

Fidelis Ayabae, president of PMG-MAN, said at a @Businessdayng

press conference in Lagos recently that this year’s event promises to be better than those before. He said the focus is to bring new technology from across the world to expose local manufacturers to revolutions happening so that they can continue to produce efficacious and quality drugs.

“Nigerians will have the benefit of buying madein-Nigeria products at discounted rates,” he said.

He further explained that it will enable local drug makers to have new partnerships with foreign investors.

He disclosed that the Bank of Industry (BoI) and NEM Insurance are key sponsors.

He explained that the Nigerian manufacturing sector is the most challenged due to man-made, not-too-good conducive environment in which firms operate, but added that drug makers are resilient.

“Those of us that have the courage to set up manufacturing plants, produce and create jobs are the ones being punished by the system,” he said.

On his part, Frank Muonemeh, executive secretary, PMG-MAN, said, “With strategic collaborations with local and international partners, Nigeria can reverse the trend of 70 percent:30 percent ratio of medicine importation against local manufacturing.” Muonemeh explained that the expo will attract 200 international pharma machineries exhibition firms from six countries and nearly 10,000 pharma and related sectors.

He stated that special buyer-seller sessions will happen and will bring together over 500 pharma and allied products manufacturing companies in close business discussions to generate active business relationship.

Speaking further on the benefits of participation, he said participants will meet West and Central African leading market place for pharma machinery, with an opportunity to access N300 billion intervention fund for upgrade and capacity building meant for local drug makers.

Monday 08 July 2019

BUSINESS DAY

25

real sector watch

Brewers face tough times as Nigerian economy sways Odinaka Anudu & Gbemi Faminu

B

rewers in Nigeria are facing tough times as the Nigerian economy continues to see sluggish growth amid shrinking consumer wallets.

The industry fared poorly in terms of profits accruable in the first quarter of 2019.

A contributory factor is the decline recorded in sales caused by the shrinking consumer disposable income and economic sluggishness.

“Is it not when you feed well that you will drink beer?”

Ike Ibeabuchi, a manufacturer and analyst, asked.

“People are cutting their spending and embracing the value brands,” he added.

Value brands are cheap brands such as Trophy, 33 Export, Life, More, Star Lite, Goldberg and Hero.

The more expensive premium brands are innovating ways of getting young people, including engaging in entertainment and offering free gifts and trips.

According to the Q1 financial results released by Nigerian Breweries, revenue increased marginally by 3 percent, moving to N91.3 billion from the N88.4 billion recorded in the correspond-

Source: Company Financials, BusinessDay

ing period of 2018. Its cost of sales moved up 7 percent, from N44.9 billion to N48.2 billion in 2019 while its profit after tax dropped by 21 percent from N10.1 billion in 2018 to N8.01 billion in 2019.

The negative trend was also experienced in Guinness as the company’s revenue dropped by 4 percent to N33.6 billion in 2019, from N34.9 billion in the Q1 of 2018. Its cost of sales dropped marginally by 3 percent to N22.5 billion, having been N23.3 billion in the corresponding period of 2018.

The company’s profit experienced a huge decline by 43 percent, dropping from N2.9 billion recorded in 2018 to N1.6 billion in 2019.

International breweries which joined the league of industry giants in 2017, recording a 35 percent upward movement in its revenue from N25.9 billion in 2018 to N35.09 billion in 2019. Its cost of sales moved by 43 percent, from N2.24 billion in 2018 to N3.98 billion in 2019. The brewer recorded a loss in its profits as it moved down by 78 percent to N3.98 billion in 2019, from N2.24 billion in 2018.

Analysts say insecurity in the northern part of the country is also a contributory factor as it halts supplies and raises logistics costs.

“Cost of logistics is so high,” said Olayinka Ayowole, CEO of Viyola Foods, an agrobased firm.

Crumbling infrastructure and epileptic power supply are also key issues hurting manufacturers. Apapa ports have also added to manufacturers’ woes as raw materials take time to arrive in factories and exporters like NB and Guinness experience delays at ports.

In the second quarter of 2018, the federal government announced an increase excise duty rates of N30 per litter for alcoholic beverages, tobacco and others. This further increased the already high cost of production of the companies.

Headline inflation rate in Nigeria rose marginally to 11.40 percent in May 2019, from 11.37 percent in the previous month. The Nige-

rian economy grew by 2.01 percent in real terms in the first quarter, compared to 2.38 per cent in the fourth quarter of 2018, according to the National Bureau of Statistics (NBS).

The World Bank overview for Nigeria says the full year of 2019 will possibly record snail-paced economic growth, stating that “economic growth is expected to hover just above 2 percent in 2019 and over the medium term. Agriculture may remain affected by conflicts and climate and weather events; and the non-oilnon-agriculture will likely continue to struggle in the face of sluggish demand and constrained private sector

credit growth.”

Most states are yet to implement N30,000 minimum wage agreement reached with the labour union and poverty is escalating.

Nigeria has almost 100 million people living below the $1.90 baseline, which is an extreme poverty line.

Last year, the brewer commissioned its $250million Gateway plant at Bara village along Abeokuta-Sagamu interchange.

It was the fourth brewery plant owned by the firm, with existing three breweries in Onitsha, Ilesha and Port Harcourt.

Analysts say Nigerian consumers may be resorting to cheap/ value brands

United Nations in terms of the number of tractors in the country. This is one reason why farming has been mainly subsistence, rather than commercial.

Angle of the National Institute of Food and Agriculture in the United States believes that this is the same pattern for many other African countries which makes doubling food production difficult amid rising population.

Nigeria’s food inflation is high at 11.4 percent in May, 2019, with tomato prices doubling. Data from Agriculture Ministry show that Nigeria is the largest producer of yam with 40 million metric tons per annum but yam demand in the country is 60 million metric tonnes per annum (MT), leaving a gap of 20 million MT. Nigeria produces 42 million MT of cassava but has a

demand of 53.8 million MT of the crop, leaving a gap of 11.8 million MT. National supply for Irish potato is put at 900,000 MT per annum but with a demand of 8million MT and a gap of 7.1 million MT. Similarly, local production of sweet potato is estimated at 1.2 million MT, while demand is 6million MT, leaving a gap of 4.8 million MT. More so, Nigeria produces 400,000 MT of wheat annually but with a demand of 4 million MT, which leaves a gap of 3.6million MT. Nigeria has 200 million people, with 50 percent in extreme poverty. The population is expected to hit 402 million in 2050. A third of the world will come will come from Africa in 2050. The continent is also expected to produce food for the world but it is not yet ready.

Why Nigerian firms must increase food productivity ODINAKA ANUDU

N

igeria needs to increas e fo o d productivity to contain growing population.

The country is 201 million people currently, making it most populous in Africa, and with 2.6 percent annual growth, it promises to surge further.

Food production is not growing at the same pace as yield per hectare remains low and production cost remains high.

“The only two ways of doubling food production are through investment and science,” Scott Angle, director, National Institute of Food and Agriculture in the United States and former CEO of International Fertilizer Development Center (IFDC), told BusinessDay

recently in Washington DC, United States of America.

“You will need to move from small-scale subsistence agriculture to more commercial agriculture,” he said, while addressing Nigeria and Africa’s food production model.

Nigeria has seen investments in flour, poultry and rice, but key investments are still lacking in Nigeria’s flagship crops, frustrating manufacturers who use them as inputs. Cocoa players complain that there have not been major private investments in the last six to seven years.

“Nigeria’s cocoa average yield per hectare is among the lowest in the world and this is due to old age of most cocoa plantations,” said Anna Muyiwa, plant biotechnologist, Cocoa Research Institute of Nigeria www.businessday.ng

(CAN), “We need to rehabilitate our old cocoa trees in all cocoa producing states. A completely rehabilitated cocoa plantation of proven clone will produce as much as 2.5 tons per hectare,” Muyiwa said, stressing the need to develop more hybrid varieties.

Wheat is hugely imported by flour millers whereas cassava is not turned into

starch locally owing to poor equipment.

Nigeria is one of the least mechanised farming countries in the world with the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation (FAO) recommended tractor density of 1.5 hp/ hectare.

Nigeria is 132nd out of the 188 countries worldwide measured by FAO /

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@Businessdayng

26

Monday 08 July 2019

BUSINESS DAY

Start-Up Digest

In association with

How Opara uses AI, blackchain tech to provide quality drugs Chibuzo Opara is the co-founder of DrugStoc, a multi-channel, cloud-based platform with over 7,000 high-quality drugs. In this interview with Odinaka Anudu and Maurice Joseph Ogu at the Hague, the Netherlands, the entrepreneur shares some success stories.

What problem did you set out to solve with DrugStoc? hat we are solving is the fragmented supply chain market: counterfeiting, intransparent pricing, poor access to credit, and all the issues. When patients go to hospitals, there are no drugs, and the drugs available are fake.

So, what we do is to work with the providers to bring them all the good products. It is a very simply solution. You go on our platform, place an order and within 24 hours, we supply you with the products. Currently, we work with over 800 pharmacies and with the Association of General and Private Medical Practitioners of Nigeria, with over 2000 registered members.

So, you work with manufacturers?

Yes, we work with all the big manufacturers.

They have their products on our platforms.

Whenever you get your product from our platform, you know that it is not counterfeit.

That is the first thing.

Do you do any kind of due diligence to ensure that drugs on your platform meet the expected standards?

Yes, our platform is actually ISO certified.

We are ISO 9001-2015- certified for quality management services. Whenever you come on our platform, all the processes are consistent.

At DrugStoc, one of our biggest things is how to ensure that we empower the healthcare provider to provide the best healthcare services.

Providing services in Nigeria is very tough in any industry. So, you do not want the healthcare provider to be bothering themselves about how to access the supply chain. As you know, the supply chain is very fragmented.

What we do is to streamline the whole area by offering them value in terms of being able to get access to quality drugs.

From our platform, we manage your entire invoicing, and we manage your entire products. You can go into history, you can find out. We use the artificial intelligence (AI) and blockchain technology to make sure we provide more futuristic services.

This is to prevent you from losing money on obsolete drugs as a hospital or pharmacy. We

W

Chibuzo Opara

try to reduce the money you spend on drugs while ensuring that drugs are always available.

So, we are currently doing that.

So far, how has the reception been?

We cover a few states in South West. So far, our growth has been tremendous. The industry has received us in a very humbling way. When we started, we had no idea that it would grow at this scale.

Just to give you a practical example. The amount of prescriptions through hospitals and pharmaceuticals that we serviced in the first three months of this year is what we did last year. So, that is how phenomenal the growth has been. We are constantly employing and growing.

Is there a way of measuring the impacts you have made on these states?

We measure our impacts in a couple of ways. First of all, when we started about five years ago, there was almost nobody in that space. Now, there are so many people in the space. There are so many people taking interest from other companies, government, international players. Pharmaceutical industry is

actually changing. You see regulations coming in; you see something like Save Medicine Foundations. Now, everybody is aware that these things need to happen. Before, it was like the industry had a secret. People were saying NAFDAC was doing great work, but still there were a lot of gaps. Since we came, the industry has started changing. Now, people are beginning to recognise the pharmacists and hospitals, and our partners are beginning to work with us in quality. So, the market is beginning to differentiate itself.

Tell us about pricing? Are your drugs affordable?

Yes, they are. Because we do huge volumes, we have very good prices. We have one of the best prices in the market.

Who are your patrons, majorly?

Hospitals and pharmacies, typically.

Healthcare market is a human related industry. As you know, we have a huge population of people in the country that want to have good healthcare system. It is one of the markets you cannot charge premium prices, so you have to provide value. We came on and said, ‘No, this is a professional thing and we would do it professionally, but we would use market base approach to bring in that professionalism’.

We have got all the platforms stabilised, so professionals are able to say, ‘you can go there, the prices are consistent.’ We were able to stabilise prices for a very long time based on financial mechanisms that we use, based on the banks and financial institutions that we partner with. So, even when dollar is going up and down, we are able to provide stable prices to our clients.

Do you have plans for expansion?

Yes, we do. We are actually running a programme with a company called Niger Care. It is one of the organisations spotted by Bill & Melinda Gates Foundation. The organisation provides access to a lot of Nigerians because 60 per cent of the population of the country go to them. So, we work with them. One of the interesting things we have been doing is trying to provide them with good purchases and services. The PPMBs are about 20,000 officially and about 200,000 unofficially. So, through that part of the market, we are reaching out.

Facebook, MainOne partner StartupSouth to host Uyo entrepreneurship conference Josephine Okojie

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ocial media giant, Facebook, and West Africa’s largest cable data provider, MainOne, are among the top tech companies that have partnered with StartupSouth to host the fifth edition of the Uyo entrepreneurship conference.

“Over the past five years, we have worked hard to make the #StartupSouth Conference a driver of conversation that will boost economic growth in the region leveraging technology,” Uche Aniche, founder of StartupSouth, said in a statement made available to BusinessDay. “This edition promises to see lots of improvements with participation from more diverse stakeholders. The team is excited at the level of support #StartupSouth5 Uyo is receiving from stakeholders across the regions and Nigeria and we cannot wait to welcome participants to the best edition yet,” Aniche said.

He stated that the major highlight of the

conference is the participation of at least four governors from the South-South region, adding that there will be a pitch session for start-ups to win grant to scale. He noted that the pitch session has seen past winners raise over $400,000 in investment capital in the last four editions.

He explained that the key focus of the conference will be on deepening broadband penetration and access.

Also, MainOne, one of the major partners of the conference, described the event as a critical tool for the diversification of the Nigerian economy, especially the region which is over-reliant on crude oil.

“MainOne’s support for the start-up business community in the South-South/SouthEast of Nigeria is predicated on its belief that start-ups and tech will be the engine for the economic development of Nigeria,” Funke Opeke, chief executive officer, MainOne said in the statement.

“As MainOne expands the reach of its services beyond our landing point in Lagos, we recognise the potential of new ecosystems

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such as #StartupSouth in growing the Nigerian economy and creating jobs and we are eager to lend support,” Opeke said.

“Our focus is on deploying the infrastructure services that enable start-up companies to thrive and this is the reason for our partnership with the #StartupSouth,” she added.

On its part, Abolore Salami, CEO of Riby, another partner of the event, said “Through this partnership with #StartupSouth, we aim to extend our services to co-operatives, potential partners and stakeholders in the South-South zone of Nigeria. Cooperatives are vibrant here and we are excited at the opportunity to introduce our Riby Co-Banking product into the market.”

The fifth edition themed ‘Unlocking the Next 60 Million’ is scheduled to hold between October 29th to November 2nd, 2019 and will feature master-classes, boot camps, keynotes and ministerial panels to deliberate on key issues affecting MSMEs operators in the country.

There will be over 50 sessions by diverse organisations and individuals, the organisers said.

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NASME/OXFAM seek tax compliance amongst MSMEs … Grants CAC registration certificates, TIN to beneficiaries Gbemi Faminu

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n a bid to migrate micro, small and medium (MSME) business owners from the informal to the formal sector of the economy, the Nigerian Association of Small and Medium Enterprises (NASME) has supervised the registration of about 150 companies with the Corporate Affairs Commission (CAC).

Their registration with the CAC facilitates their inclusion in Nigeria’s tax net.

The Nigerian Association of Small and Medium Enterprises (NASME) on Friday presented CAC registration certificates and the Federal Inland Revenue Service (FIRS) tax identity numbers to beneficiaries of the NASME/Oxfam MSME tax compliance project held in Lagos.

This was in partnership with Oxfam, an international confederation of 20 nongovernmental organisations (NGOs) working with partners in over 90 countries to end the injustices that cause poverty. It is said to be the sole sponsor of this project in partnership with NASME. Orimadegun Agboade, president/chairman of council of NASME, said the project was targeted at supporting 180 MSMEs— 90 in Lagos and 90 in Edo State— to file with the relevant authorities.

In achieving this, the president explained that NASME moved to initiate a negotiation with the federal government to review the initial N10, 500 fee for CAC registration to N5,500 in what he termed a ‘carrot strategy’ geared towards making affordable the process to MSMEs. “This is believed to help eliminate or reduce the possibility of progress being hindered by unregulated activities of companies in the informal space, as well as help boost government revenue through a wider tax net, hence spring economy growth,” he said.

“NASME led a coalition of 23 Business Membership organizations (BMOs) to execute the project which kicked off in March 2018 and ended in December 2018,” Agboade explained.

“Today we are happy to present CAC registration certificates of some of the SMEs that formalised their business during the cause of the project here in Lagos,” he said.

Beneficiaries of this project have the opportunity to access credit facilities from deposit money banks due to increased credit worthiness upon company registration. Hence this should promote growth prospects of small enterprises medium and big enterprises.

The president during an interview with BusinessDay commended the efforts of the CBN in ensuring banks commit to providing credit to MSMEs. However, the high interest rate environment of the Nigerian economy still creates default risk potential and unwillingness for MSMEs to consider loans from banks.

Speaking with one of the beneficiaries, Najeedeen Adebimpe, proprietor of AnNejoom School, he described how pleased he was with NASME and OXFAM stating, “upon registration of my school at little or no cost, now I am in Business

@Businessdayng

Monday 08 July 2019

BUSINESS DAY

27

Start-Up Digest

Tomoloju: Making waves in textile value chain Jonathan Aderoju

A

yomide Tomoloju is the founder and creative director of Goldentoms Underwear, a brand worn by both male and

female.

He launched this business in September 2018 while a university student. He was inspired by his knack for learning new things.

“At some point in my life, I wanted to be involved in something different from school,” he says. “I wanted something I could grow with, learn from and build on. In 2018, one of my to-do lists was the start of the company. I had no idea what I wanted to do, but I knew I had to start up a business. So many business ideas came to my mind but I had no interest in them,” he explains.

He says he then prayed to God to give him an idea as starting a business of his own was a priority for him.

“I still laugh at myself today when I remember the idea of starting an underwear company,” he recalls.

“It started like a dream, I mean an actual dream. I remember coming back from lectures one sunny afternoon, had my bath and went straight to bed. That was when I dreamt that I was selling underwear in an open space. It was a funny dream but I paid no attention to it.”

Ayomide Tomoloju

He explains that few days later, he was on Twitter and saw someone’s post on various business ideas and an underwear business was part of them. That was when the entrepreneur knew he had to take his underwear idea seriously.

“I started taking notes of different kinds of underwear and looking to them to see how I wanted mine to be different. That was how Goldentoms Underwear came to light,” he narrates.

The young CEO started his company with N 47,000, but it was his knack for saving the little money he

got since university days that made the difference.

“So, I used all my saving to start up the business. Though that wasn’t enough to start with, I was so determined that I used that money to get some of the materials I needed.

I continued saving until I had all I needed to start. I could say I started with N47,000,” he says.

Tomoloju tells Start Up Digest that he started his business small but is impressed with how far it has gone in less than a year. However, he is not where he ought to be but hopes he will be one of the leading

Veritasi Homes CEO named in 2019 Forbes Under 30 List

V

eritasi Homes and Properties Limited is proud to announce that Adetola Nola, CEO and founder, was named in the Forbes 2019 30 Under 30 list. Nola joins 29 other exceptional leaders in the business category. The Forbes Africa 30 Under 30 list for 2019 was announced at the annual Forbes Africa Under 30 Meet-Up in association with Kingdom Business Network (KBN) at the Houghton Hotel, Johannesburg. Four Nigerian innovators making impact on different industries were named in the business categories.

The fifth annual Forbes Africa 30 Under 30 list, released a Special Issue of Forbes Africa for July this year, featuring 120 young African change makers for the first time, with 30 finalists in each of the four categories – business, technology,

creatives and sport.

“It’s an honour to be part of this list that features so many great people,” says Nola. “Forbes has done a great job compiling and ensuring the credibility of this list since inception, and it’s a leading resource for entrepreneurs like myself,” he added.

His exemplary leadership led to exceptional growth at Veritasi.

The company has grown from one employee to over 12,000 real estate consultants, 1,300 Veritasi Homes realtors, and 18 full-time staff in three years.

“Building a trusted brand is about giving value. We are developing a system that solves the housing problem for the low and middle-income earners in Nigeria; we are also building a firm where people are excited to come to work every day, and where they can do

Adetola Nola www.businessday.ng

great work and have a big impact,” said Nola.

Before starting Veritasi Homes and Properties, he was a real estate sales consultant at Grenadine Homes. After recording a plethora of success in closing property deals and facilitating real estate projects, he founded Veritasi in 2015.

Starting his entrepreneurial journey, Nola founded and cofounded five other companies, including Noah & Nola Incorporated, Pineapples Luxury Retail Store and Couture 89, amongst others. Apart from Veritasi, he is also the founder/chief strategy officer of Nola Travels - a business he started with the aim of helping unemployed graduates.

Having failed in business severally, he is passionate about helping other businesses succeed. In a bid to achieve this, Nola trains batches of at least 40 realtors and entrepreneurs on business and financial intelligence every Thursday since November 2018 in his office. He is also a strategic investor with investments in the automobile industry, fashion and agriculture.

“Nola has always been passionate about entrepreneurship. We met as undergraduates, and he got an award as the Most Enterprising Student at Obafemi Awolowo University,” said Tobi Yusuf, Veritasi Homes and Property marketing manager.

Currently, our CEO is championing the emergence of smarter communities with green energy in Nigeria.

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underwear companies in Nigeria and Africa in no time.

The hardworking entrepreneur has helped to curb the unemployment saga in his own little way by having young talented tailors and dispatch riders to deliver goods to customers.

When asked where he gets his materials, Ayomide says that he used to get them from Lagos Island when he started but now obtains them from China as he wants to use quality materials to satisfy his customers.

Speaking on the challenges he faces in his business, he says, “One of our major problems as a brand is how to enter into the Nigeria market, how to put our product in everybody’s face.”

“Another challenge we are facing is sourcing for funds to improve our products. Demand has increased and there’s no fund to grow into a large scale,” he adds.

He calls on the Nigerian government to assist young entrepreneurs to access cheap funds to enable them realise personal and macroeconomic ambitions.

“Governments could assist us in numerous ways, including providing collaterals, creating and supporting specific loans to SMEs or grants to those that achieve certain goals,” he says.

He urges governments at federal and state levels to harmonise taxes.

Speaking on what he wants to do differently in his business and why

people should patronise him, he says, “A lot of us in Nigeria don’t pay attention to what we wear on the inside, that is, our underwear. So long as we look good on the outside, the inside is nothing to pay attention to.

This is not supposed to be,” he says.

He says Goldentoms Underwear pays attention to what underwear should look like to ensure comfort.

“A lot of people buy underwear cotton materials that are not supposed to be used as underwear.

This causes rashes and other skin diseases. Goldentoms Underwear is more than just underwear; we care for the comfort and health of every user.”

He says Goldentoms is a company that gives back to the society.

“For every product purchased, five percent goes out to charity,” he says.

He discloses that in the future, he sees Goldentoms being one of the leading brands in not just Africa but the world.

“We plan on having our products in every home.”

One of his dreams is to have big impact on the economy.

He advises young and upcoming entrepreneurs to treat their businesses like they treat children.

“Just like the ways parents wouldn’t give up on their children, also do not give up on your business.

You need to be consistent, patient and always open to improvement,” he adds.

How Nigeria’s first collaborative hub will develop human capacity for start-ups IFEOMA OKEKE

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tart-ups looking for avenues to sell, showcase or develop their products or ideas can do that at very low costs with the unveiling of Nigeria’s first design hub called Mbari Uno. The hub features works from several creative start-ups, houses conference halls, work space, restaurant, Show room, an exhibition space, among several other departments, in a bid to meet the needs of various budding entrepreneurs.

Speaking at the launch, Chuma Anagbado, director/ co-founder of Mbari Uno (House of Collaboration), explained that the hub was borne out of the need to provide local references to benchmark the design practice in Nigeria.

“Mbari Uno (House of Collaboration) is the prime space that will converge budding and professional designers to network the design industry, explore design opportunities, promote and establish the ‘Design practice’ in Sub- Saharan Africa.

“Through its proprietary exhibitions, workshops and design activism projects, Mbari Uno will collaborate with non-governmental organisations (NGOs), schools, companies, corporations, government, and host communities to develop frameworks that will promote the culture of probing and innovation aimed at creating @Businessdayng

sustainable solutions, developing human capacity, and improving the quality of lives.”

Anagbado stated that there has been a rise in tech hubs in Nigeria, while there is clearly a deficiency of African designers and an absence of a niche hub that would use design to solve indigenous problems and drive economic development.

He also noted that the space which would bring design enthusiasts, emerging and established designers together to gain access to information, professional networks, experience and education while providing an ecosystem that enables success and propels innovation in the bourgeoning design sector in sub-Saharan Africa.

Julia Obinna, the hub manager, said that it houses several services.

“There is a show room, an exhibition space. It is a combination of a concept store, reading room and a lounge. It serves as a malleable space that can be used for product and art exhibitions, a reading room, and small fire culture events such as poetry reading and digital product presentations.

“There is Aziza Design, a multidisciplinary design firm using human-centered experiences to design solutions. Lastly, Learn Room, which is an auditorium styled space that can sit up to 35 persons and is used for seminars, meetings and trainings can all be found within the Mbari Uno House of Collaboration,” she said.

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Monday 08 July 2019

BUSINESS DAY

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

Top Gainers/Losers as at Friday 05 July 2019 LOSERS

GAINERS Company

Company

Closing

Change

GUARANTY

N29.5

N29

-0.5

ZENITHBANK

N19.5

N19.35

-0.15

N7

N6.85

-0.15

VOLUME (Numbers)

N1.46

N1.32

-0.14

VALUE (N billion)

N2.28

N2.15

-0.13

Closing

Change

N21.65

N23.8

2.15

N14

N15

1

N10.75

N11

0.25

UBN

CCNN

N15

N15.25

0.25

LEARNAFRCA

OANDO

N3.85

N4

0.15

NEM

CONOIL FLOURMILL CADBURY

ASI (Points)

Opening

Opening

DEALS (Numbers)

MARKET CAP (N Trn)

29,270.95 3,377.00 298,404,495.00 1.829 12.901

Global market indicators FTSE 100 Index 7,553.14GBP -50.44-0.66%

Nikkei 225 21,746.38JPY +43.93+0.20%

S&P 500 Index 2,981.82USD -14.00-0.47%

Deutsche Boerse AG German Stock Index DAX 12,568.53EUR -61.37-0.49%

Generic 1st ‘DM’ Future 26,890.00USD -80.00-0.30%

Shanghai Stock Exchange Composite Index 3,011.06CNY +5.81+0.19%

Nigeria stock investors lose N305bn in one week Stories by Iheanyi Nwachukwu

I

nvestors in Nigeria’s equities market lost approximately N305billion in the trading week ended Friday July 5, 2019.

The record disappointing outing came amid earlier expectations that investors will take positions in attractive stocks ahead of earnings releases.

While there was no respite for the market, it closed the first week of the third quarter (Q3) on a bearish note.

Week-on-week (wow), the benchmark performance indicator of the Nigerian stock market (NSE All Share Index) decreased by 2.32percent, while the year-to-date (YtD) negative returns widened to -6.87percent.

L–R: Tinuade Awe, executive director, The Nigerian Stock Exchange (NSE); Oscar N. Onyema, OON, chief executive officer, NSE; Segun Ogunsanya, managing director/CEO, Airtel Nigeria; Awuneba Ajumogobia, Member, Airtel Africa Board and Krishna Menon, chief financial officer, Airtel Nigeria Plc during the Airtel Africa Plc Facts Before The Listing presentation at the Exchange.

Market watchers said investors expressed huge negative bias towards the market in the review week, especially stocks in the banking sector.

The NSE 30 Index recorded a decline of 3.33percent in the review trading week, NSE Banking Index (-5.44percent); NSE Consumer Goods

Honeywell reports 4% revenue growth, commences production in new Sagamu Factory

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oneywell Flour Mills Plc has released its audited results for the year ended March 31, 2019, recording its largest revenue figures since inception.

The full year 2019 financial highlights show revenue increased by 4percent to N74.4 billion; operating profit reduced by 58.7percent to N3.9 billion, while total assets increased by 10percent to N137.5 billion.

The Company commenced commercial operations from its new ultramodern pasta plant at its Sagamu factory during the financial year. Management expects that concentrating pasta production in one location and sales of the increased volumes of pasta will boost revenues of the business, thereby improving the operating profit in the com-

ing years.

‘Lanre Jayeola, Managing Director, Honeywell Flour Mills Plc comments “Despite the humongous challenges operating out of our flour mill in Tin Can Island, Apapa, our 2019 year end results shows a 4percent growth in revenue to N74.4 billion from the N71.5 billion recorded in the previous year which is an all-time high for the company. The growth in sales volume and revenue is testament to the strength of our brands portfolio even in a difficult operating environment”.

He said, “Due to higher input costs, particularly cost

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of purchasing wheat cost of sales increased by 13.5percent to N62.9 billion. Consequently, gross profit declined by 28.3percent from N16.05billion to N11.5 billion as the increase brought about by higher input costs could not be passed onto the customer.”

“Selling and distribution costs also grew at a higher rate than sales volumes and reflected the increased costs associated with evacuating finished products out of its flour milling plant located within the Tin-Can Island Port, Apapa where the traffic gridlock has now persisted for over a year. In line with our strategy to continuously improve operational efficiency and effectiveness, we reduced net finance costs by 28percent from N4.6 billion to N3.3 billion during the period under review.

Index (-2.84percent); NSE Industrial Goods Index (+3.28percent); NSE Insurance Index (-0.97percent); NSE Oil & Gas Index (-0.75percent), and NSE

Pension (-1.20percent).

The value of listed equities which opened the review week at N13.206 trillion decreased to a record low of N12.901trillion, while the Nigerian Stock Exchange All Share Index (ASI) decreased from a record high of 29,966.87 points as at June 28 to 29,270.95 points as at July 5.

As some listed companies go into their closed period, analysts believe cautious investor interest will begin to trickle back into the market.

“We believe our macro fundamentals remain positive, but the lack of policy direction will still weigh on the market. Going into the new week, we expect sideways trading to persist in the market,” research analysts at Vetiva Securities said in their July 5 note.

Agusto assigns “Aa-” rating to Access Bank

N

igeria’s credit Rating Agency, Agusto & Co has assigned an “Aa” rating to Access Bank Plc. The rating expires on June 30, 2020.

The rating assigned to Access Bank Plc reflects the bank’s good profitability and liquidity, as well as an experienced and stable management team.

This is in addition to a good brand franchise, buoyed by strong market share following the 2019 merger with Diamond Bank Plc, which lifted its industry position within the Tier I bank category.

Access Bank Plc’s performance over the years has been reflective of a dedicated strategy to expand its scope of offerings and become a global payments gateway, facilitating transactions not just within Nigeria and across Africa, but between Africa and the rest of the world. This appetite for expansion has spurred internal initiatives to grow the bank’s business both organically and through mergers and acquisitions.

Stanbic IBTC reinforces credentials in Forte Oil shares acquisition

S

tanbic IBTC Holdings Plc has leveraged its deep financial services knowledge and expertise in successfully supporting the acquisition of a majority stake in Forte Oil Plc by Ignite Investments and Commodities Limited, an affiliate of Prudent Energy and Services Limited.

The deal was executed by members of Stanbic IBTC Holdings Plc, who undertook multiple roles: Stanbic IBTC Capital Limited acted as Financial Adviser and Debt Arranger; Stanbic IBTC Bank PLC acted as Lender and Underwriter, Stanbic IBTC Stockbrokers Limited acted as Stockbrokers to the buyer and Stanbic IBTC Trustees Limited as Escrow Agents.

Demola Sogunle, Chief Executive, Stanbic IBTC Bank Plc reiterated the financial institution’s commitment to delivering ex-

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ceptional quality of service to its clients and its strong focus on consistently adding value to its clients’ businesses, thereby enabling them to achieve their set objectives.

Sogunle said the unmatched financial groups’ expertise, knowledge and experience in handling the end-to-end requirements of big-ticket transactions, whether in debt or equity financing were brought to bear in successfully closing the historic deal. The Stanbic IBTC Bank CE said the outcome is a result of 19 months of a grueling multistage sell side process, painstaking negotiations, @Businessdayng

consultations, thorough and conscientious fulfillment of every conditional transaction traits that are synonymous with the financial institution and which has earned it the respect of its clients.

“We have a proven track record in this market and to this end we are keen on continuing to work and grow with our clients, leveraging on our local knowledge and international connection to deliver cutting edge solutions to meet the needs of our clients while helping to also nurture their business operations,” Sogunle said.

Funso Akere, Chief Executive, Stanbic IBTC Capital Limited expressed gratitude to all the parties involved in the deal, including the clients as well as every other person who worked tirelessly to ensure a seamless process – from start to close of the successful transaction.

Monday 08 July 2019

BUSINESS DAY

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29

30

Monday 08 July 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Why insurers are not paying dividend?

BALA AUGIE

A

company’s willingness and abilities to pay steady dividend is paramount to shareholders because it signals the firm is of sound financial health.

Late American oil magnate, industrial list and the richest man of his time, John D. Rockefeller, once said that the only thing that gave him pleasure was to see his dividend coming in.

However, the reverse is the case in Nigeria, where most insurance companies, nobbled by weak liquidity and deteriorating margins, do not reward their owners.

Anthony Rapu said he bought insurance stocks 5 years ago with the optimism that they will deliver a higher return on investment, but to his consternation, he hasn’t received a dividend warrant.

“They don’t care about their shareholders. The industry has to put its house in order so as to meet obligations to owners. I feel disappointed by these stocks, right now they are below N1 after the Nigeria Stock Exchange removed the cap on them,” said Rapu.

The 59-year-old businessman is one of the millions of Nigerians who has not been rewarded by companies they invested in and perhaps more worrisome is that the money could have been invested in other ventures.

Thirteen largest insurers paid a combined N12.35 billion as dividend to shareholders in 2018. This compares with the N78.50 billion Zenith Bank put on the plate of its owners.

Similarly, the total shareholders fund of these insurers in the period under review stood at N206.07 billion, which is lower equity of Zenith Bank’s total equity of N815.71 billion.

Johnson Chukwu, chairman Standard Alliance Insurance Plc, and chief executive officer of Cowry Asset Management Ltd said that the industry has not recovered from the financial crisis of 2007 and 2008 and were still building their balance sheets by way of restructuring.

“A lot of these them have negative reserves and the law doesn’t allow a firm in such precarious situation to pay dividend,” said Chukwu.

The average industry dividend per share of is N0.06, this compares to Zenith Bank’s N2.70.

The stock markets, the symbol of capitalism reward firms that serve public interest, and on the other hand, punish those that fail to meet public interest.

Shares of insurers are moribundly stuck at less than N0.50 and the N20.50 billion market capitalization of AXA Mansard Insurance Plc is less than the N49.25 billion market value of Tier 2 lender, Fidelity Bank (as at Thursday’s close of trade).

Paul Uzum, Equity Trader at Roy-

al Guaranty and Trust Limited, said investors easily lose confidence in a company that does not reward them as people will start doubting the authenticity of the annual report.

“Imagine when a company is not paying dividend and the directors are receiving jumbo salaries and bonuses, buying expensive cars, and paying expensive flight tickets,” said Uzum.

“If these firms pay steady dividend, they will attract a new clientele. That’s why most insurers are badly priced.”

Ozim, however, said Custodian and Allied Investment has distinguished itself as it has been rewarding its owners in the last five years, which is why its share price has moved from between N1 and N2 as at 2014, to between N5 and N6 today.

Insurers are not liquid enough to take on more risk and invest in investment securities that will help magnify revenue and underpin profit. In better climes such as the United States, the United Kingdom and Asia, companies are in a solid liquidity position that they buy banks and skyscrapers that fetches them rental income.

Earlier in the year, China announced that insurance companies are allowed to invest in perpetual bonds and Tier 2 capital bonds issued by certain banks as the government seeks to bolster banking industry capital.

During the financial crisis of 2008, Life insurers in the United States weakened by losses on their

immense investment portfolios and were manoeuvring to get a slice of government bailout funds by buying up tiny banks.

But the insurance industry is bedevilled with a myriad of challenges such as cultural beliefs, lack of awareness about the benefit of taking up a cover, lack of trust, and sluggish economic growth.

In a country where over 50 percent of its people live on less than $1.90 a day, taking up a cover is luxury of the average man on the street.

Nigeria, with a population of 180 million people, has a penetration rate of 0.3 percent.

That compares with South Africa at 14.7 percent, Kenya 2.8 percent, Angola 0.8 percent and Egypt 0.6 percent. Similarly, the sector’s insurance density - a measure of industry gross premium per capita - is still one of the lowest when compared to peers – South Africa $762.5, Egypt $22.8, Kenya $40.5 Angola $30.5 and Nigeria $6.2.

But the Nigeria Insurance Commission (NAICOM), the body that regulates insurers, has jerked up capital bases of firms, recognising that there are too many weak firms that cannot compare with their peers in Sub Saharan Africa.

The revised paid-up capital requires life insurance business operators to raise their capital from N2 billion to N8 billion; general businesses from N3 billion to N10 billion, while that of composite businesses has been jerked up from N5 billion to N18 billion

Constituting PenCom board will help drives initiatives - Ahmad advises FG Modestus Anaesoronye

M

ohammad Ahmed, former director general of the National Pension Commission (PenCom), has called on the Federal Government to constitute the board of the commission as a matter of urgency.

Ahmad, who was the Chairman

of a session, at the just concluded 2019 National Insurance Conference in Abuja, noted that non-constitution of board for the commission is slowing down the pace of growth for the pension industry.

Speaking to Pension journalists at the event, he added that, without board, there will be no proper direction for the regulatory body as well as the pension industry.

While applauding the commis-

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Mohammad Ahmed

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sion for rolling out series of initiatives to enhance pension system in the country, he believes proper constitution of PenCom board would make these policies have the desired impacts.

Moreover, he advised industry stakeholders, especially, the regulator to make pension scheme a private driven initiative by persuading and encouraging more private sector players into the pension system.

@Businessdayng

The objectives of the Contributory Pension Scheme is to ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and Local government or the Private Sector receives his retirement benefits as and when due; and to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

Monday 08 July 2019

BUSINESS DAY

insurance today

31

In association with

E-mail: insurancetoday@businessdayonline.com

It’s only insurance that can guarantee peace of mind – NIA DG The insurance industry in Nigeria is currently embarking on a rebranding campaign targeted at creating awareness on the benefits of taking insurance as a form of protection. Yetunde Ilori, director general, Nigerian Insurers Association (NIA), in this interview with Modestus Anaesoronye explains the objective of the campaign, benefits to individuals and corporates, and the different products available in the market. Excerpts: Could you give us an overview of the insurance industry in Nigeria today? n Nigeria today, I would say that the insurance industry is at the point of inflection.

Every attention is on insurance, given the benefits it offers to both the individuals and the economy as a whole. Today every effort is being directed towards ensuring that insurance takes its rightful position and contributes appropriately to the economy. This is also reinforced with the creation of awareness among those who are supposed to use insurance but are not currently using it. We have about 59 players in underwriting, and these are the people that sell and are also called the risk carries.

There are also the intermediaries, who are the people that connect those who want to buy and those who want to sell, called the underwriters. Now, the underwriters (sellers) cannot bear all the risks alone; they have other technical partners called reinsurers and two of these partners are Nigerian companies.

Every one of them at the moment is looking for a way forward. How do we get the appropriate number of people from the population to buy insurance? That is what everybody is focused on at the moment. And this is also in line with the ongoing efforts to build stronger capacity by way of recapitalisation and all that.

Many people have little understanding about the benefits of insurance. Now, why is insurance important to every individual?

Insurance is important to everybody and it’s a daily need. Everyone is exposed to risks and these risks vary from one individual to another. There are many ways of managing the risk. If you have your life and possession, both you and your possession are exposed to risk. You can say you want to avoid the risks, how much can you avoid it? You can say you want to reduce the risk, but by what magnitude can you reduce it?

But insurers are the specialists that help you manage these risks by taking care of your financial loss.

Anything you have that you treasure, that can have a financial loss, that is what insurance takes care of, and that is what is presented to insurance companies to protect. It is so important that nobody should step out of their house without making adequate provision or having taken insurance cover. For

I

example, if you are a motorist and you have a car, you can say you will be careful, but do you guarantee the carefulness of the other parties?

A car you treasure, if you decide to buy now, you cannot buy it at the same price you that you bought it about five years ago.

Instead of saying I will save gradually towards a financial loss or for an eventuality that you cannot even determine when it will happen because it is uncertain. It is better you move the risk or expected financial loss to the business that is set up to take care of that concern, which is insurance.

It is not only your motor, even your home. These days you hear of fire incidents here and there, some preventable some others not preventable. But what if it happens to you?

People are fond of saying, ‘God Forbid’ it cannot happen to me,’ but what if it happens to you? We see it happening every day, and we are seeing it. Your home, the property that is contained therein, and the things there in and other things that are contained inside that you cannot afford not to lose, pass them to insurance.

Also, as soon as you begin to raise a family, you should begin to think of the future of the people you love so much and care about.

‘What if I am not there and I am the breadwinner, what happens to them. This beautiful child I have just given birth to, how do I ensure that this child gets the quality of education I have always desired.’

You don’t need to get there before you plan for it, just like you don’t need to see the rain before you buy an umbrella. Even from the birth of that child, you have to start providing for his or her education.

Even for your business, you have to provide for your staff because they are the greatest assets of the business. They leave their houses everyday to spend substantial part of their time with you, so you must provide insurance protection for them. You can do a business and go to sleep if you have insurance because it’s insurance that guarantees peace of mind.

In Nigeria, what we have been used to is the informal protection as a form of insurance, but this is fast disappearing because the size the families are reducing.

If your thinking is that, at old age my children will take care of me www.businessday.ng

Yetunde Ilori

without making arrangements for retirement by planning for it, then you are making a mistake because they may not be there for you. But if you plan well, you would have made adequate preparation for yourself by transferring your risk to the insurance companies.

How can insurance support other sectors of the economy?

Like I said before, insurance is critical to the growth of every sector of the economy. Look at aviation industry for instance. No aircraft can be allowed to take off without insurance cover. Number one is for the aircraft itself; secondly is the liability side of it and thirdly is the third party liability and damage.

Insurance is important to everyone, including individuals, businesses, corporates, and government because everyone is exposed to risk. Rather than making daily provisions for liabilities, or being distracted from your business by thinking of how to provide liability that may befall the business, you shit it to insurance companies and concentrate on your core business.

By so doing, productivity will

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increase; contribution of every sector to the economy will keep increasing because the appropriate sector is taking care of the risks of possible financial loss that they are exposed to.

If you also look at a thriving sector like the oil and gas business, there are also many risks that the sector is exposed to. Is it spillage?

Is it explosion? Or is it the equipment they use for drilling that sometimes disappears as a result of one accident or the other? But, if these risks have been transferred to the insurers as at the time of the loss, insurance companies with their technical support will come together, pay back or put back the entity that has suffered the loss in the position they were just before the loss so that there is continuity of business and everybody can concentrate on their aspect of generation of wealth. So, it’s a cycle, and what insurance does is to enable everyone focus on their area of specialty, while insurers manage the associated risks as far as financial loss is concerned.

What kind of freedom does insurance offer?

It frees up worries. It frees you @Businessdayng

up from fears. It makes you focus on what your area of competence is, because someone else has taken over the risks that have been a distraction to you.

The insurance industry is currently running a rebranding campaign. What is the target?

One thing we have discovered about Nigeria is that there is low awareness about insurance. People definitely enjoy being compensated for the loss they have; families like coming to help a family member in the event of a crisis. But honestly, for you to get adequate compensation, it can only come from insurance. But people don’t know. There are so many wrong perceptions about insurance; they don’t know the benefits and they don’t know where to get it.

There is this particular campaign that the insurance industry is running. It is to create awareness among the people that when there is a loss, you don’t need to start going around begging; you don’t have to face unnecessary ridicule because the bread winner is dead and the children cannot continue their schooling. Pass it to insurance company and have rest of mind.

We need create that awareness because everyone is exposed to one kind of risk or the other and there is one form of insurance cover or the other that you can take, but you don’t. This is the awareness we are creating. The campaign is here to tell the public the way out - that you don’t need to suffer unnecessary hardship because of an incident, but that you should push this burden to those whom it is their responsibility to manage risk.

Instead of doing it in silo, insurers harmonise the risks and then compensate whoever that happens to be unfortunate among many. We need to create this awareness and that is what we are doing.

The industry has been talking about compulsory insurances.

What are these insurances?

There are many insurances by virtue of the Insurance Act 2003 that have been made compulsory.

They are Motor Third Party Insurance; Building Liability Insurance, Occupier’s Liability Insurance; Group Life Insurance; and Professional Indemnity Insurance.

32

Monday 08 July 2019

BUSINESS DAY

Access Bank Rateswatch

Market Analysis and Outlook: July 5 - July 12, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.01

Broad Money Supply (N’ trillion) Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

STOCK MARKET Indicators

Friday 5/07/19

NSE ASI Market Cap(N’tr)

29,966.87 13.21

Volume (bn)

0.25

Value (N’bn)

5.40

Q1 2019 — lower by 0.38% compared to 2.39% in Q4 2018

Global Economy In the US, the Labor Department released a report showing U.S. employment jumped by 24.86 Decreased by 0.13% in May’ 2019 from N24.89 trillion in Apr’ 2019 2.11 Decreased by 2.22% in May’ 2019 from N2.16 trillion in Apr’ 2019 much more than expected in the month of June.The report said employment surged up by 11.4 Increased to 11.40% in May 2019 from 11.37% in April 2019 224,000 jobs in June after edging up by a 13.5 Adjusted to 13.5% in March 2019 from 14% downwardly revised 72,000 jobs in May. The 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5% Labor Department said the stronger than expected job growth reflected significant job 45.08 July 03, 2019 figure — a decrease of 0.14% from June start gains in professional and business services, 64.53 July 05, 2019 figure— a decrease of 3.24% from the previous wk 1.73 May 2019 figure — a decrease of 5.49% from April 2019 figure healthcare, and transportation and warehousing. Elsewhere, the Eurozone seasonally-adjusted unemployment rate dropped to 7.5% in May 2019 from 7.6% in the preceding month. According to the European Statistical Office, It was the lowest jobless rate since July 2008 as the number of unemployed continued to decline. The number of unemployed people in the Euro Area decreased by 103,000 to 12.348 million in May compared to April. Compared with the previous year, it dropped by 1.133 million. Among EU Member States, the lowest unemployment rates in May were recorded in Czechia (2.2%), Germany (3.1%) and the Netherlands (3.3%). The highest unemployment rates were observed in Greece (18.1% in March 2019), Spain (13.6%) and Italy (9.9%). Compared with a year ago, the largest decreases were registered in Greece (18.1% from 20.2% between March 2019 and March 2018), Spain (13.6% from 15.4 %) and Cyprus (6.5 % from 8.3%). In a separate development, Brazil's trade surplus contracted to $5.02 billion in June 2019 from $5.88 billion in the COMMODITIES MARKET corresponding period of the prior year. The 5/07/19 1-week YTD Friday Change(%) Indicators Change Change Ministry of Development, Industry and Foreign Trade revealed that exports fell 10.3% from a 28/06/19 (%) (%) year earlier to $18.05 billion in June 2019 mainly Energy 29,851.29 0.39 due to lower sales of manufactured goods and Crude Oil $/bbl) 64.53 (3.24) 0.11 13.15 0.39 Natural Gas ($/MMBtu) 2.30 0.00 (24.74) imports dropped 9.1% to $13.03 billion, mostly due to lower purchases of consumption, 0.19 30.75 Agriculture Cocoa ($/MT) 2,460.00 351.38 27.07 intermediate and capital goods.

34.89

Decreased by 0.77% in May’ 2019 from N35.17 trillion in Apr’ 2019

4.16

29.84

MONEY MARKET NIBOR Tenor

Friday Rate (%) 5/07/19

OBB

Friday Rate (%)

Change (Basis Point)

28/06/19

3.8600

4.0000

(14)

O/N CALL 30 Days

4.5700 6.6875 11.6390

4.6400 5.1250 11.6195

(7) 156 2

90 Days

12.5814

12.6451

(6)

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

5/07/19

Friday

1 Month

(N/$)

Rate (N/$)

28/06/19

5/06/19

Official (N) Inter-Bank (N)

306.95 360.82

306.90 360.74

306.95 360.44

BDC (N) Parallel (N)

0.00 361.00

0.00 361.00

0.00 361.00

Friday

Friday

BOND MARKET AVERAGE YIELDS Tenor

(%) 5/07/19

(%)

Change (Basis Point)

28/06/19

3-Year 5-Year

0.00 13.52

0.00 14.02

0 (51)

7-Year 10-Year 20-Year

13.98 14.04 14.21

13.97 14.14 14.38

0 (10) (17)

30-Year

14.33

14.57

(23)

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

Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

115.15 67.16 12.59 514.00

5.02 1.47 (1.64) (5.69)

(11.56) (13.34) (17.87) 18.57

Domestic Economy The Nigeria Bureau of Statistics in a recent publication reported that total value for capital 1,414.24 0.03 7.34 importation stood at $8.485 billion in the 15.22 (0.13) (11.46) Q1'2019 from $2.140 billion in Q4'18 265.45 (2.14) (19.02) representing an increase of 216.03% and 34.61% increase compared to the same NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS quarter of 2018. Portfolio investment which remained the largest component of capital Tenor Friday Friday Change imported, recorded $7.14 billion in Q1'19, (%) (%) (Basis Point) contributing 84.21% to total capital imported, 5/07/19 28/06/19 followed by followed by Other Investment, 1 Mnth 10.55 10.93 (38) which accounted for 12.91% ($1.096bn) of total 3 Mnths 10.78 11.61 (84) capital, and then Foreign Direct Investment 6 Mnths 12.40 12.52 (12) FDI, which accounted for 2.86% ($243.36m) of 9 Mnths 12.97 12.99 (1) total capital imported in 2019. Banking sector 12 Mnths 13.16 13.27 (11) remained the highest beneficiary of capital importation, followed by shares, and financing.

United Kingdom, U.S.A and South Africa ACCESS BANK NIGERIAN GOV’T BOND INDEX emerged as the top source of capital investment in Nigeria with $4.531 bn, $1.532 Indicators Friday Friday Change bn, and $763.505 million respectively. This accounted for 80.54% of the total capital inflow (%) (%) (Basis Point) in Q1 2019. The CBN in a recent circular titled “regulatory measures to improve lending to the 5/07/19 28/06/19 real sector of the Nigerian economy” has Index 2,959.00 2,949.34 0.33 instructed Deposit Money Banks to maintain a minimum Loan to Deposit Ratio (LDR) of 60% Mkt Cap Gross (N'tr) 8.87 8.73 1.55

by September 30, 2019. The ratio shall be Mkt Cap Net (N'tr) 5.67 5.53 2.51 subject to a quarterly review. SMES, Retail, YTD return (%) 20.46 20.07 0.39 Mortgage and consumer lending have been YTD return (%)(US $) -35.35 -35.72 0.37 assigned a weight of 150% in computing the LDR in order to encourage lending to those TREASURY BILLS (MATURITIES) sectors. Failure to meet the above minimum Amount Rate(%) Date Tenor LDR by the specified date shall result in a levy of (N' million) additional Cash Reserve Requirement equal to 91 Day 3,000.00 9.6 19-June-2019 50% of the lending shortfall of the target LDR 182 Day 4,000.00 11.89 19-June-2019 for Banks.

364 Day

10,614.11

12.02

19-June-2019

Stock Market Trading activities on the floor of the Nigerian Stock Exchange (NSE) closed on a negative note in the week ended July 5, 2019. This was due to sell offs in medium and highly capitalised

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

stocks spurred by investors' bearish sentiments regarding the sluggish economy.

The index decreased by 2.32% to settle at 29,270.95 index points from 29,966.87 index points the previous week. Similarly, market capitalization lost 2.30% to close at N12.90 trillion from N13.21 trillion last week. We expect investors to continue tread cautiously this week in the absence of any definitive positive market triggers.

Money Market Rates at the money market witnessed a marginal decline as the market was bolstered by liquidity of N850 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates closed at 3.8% and 4.5% from 4.0% and 4.64% respectively the preceding week. Similarly, the 90-day NIBOR ended the week at 12.58% from 12.64% the previous week. This week, we expect a slight rate hike as the market adjusts itself Foreign Exchange Market Last week, the Naira depreciated against the green back across most major market segments. The official window saw a slight depreciation as it ended N306.95/$, a 5 kobo loss from the prior week. Likewise at the NAFEX window, the local unit saw a slight depreciation of 8 kobo to close at N360.82/$. The parallel market remained unchanged at N361/$. The relative stability of the local currency continues to be supported by the apex bank's foreign currency liquidity intervention. This week, we envisage the naira remaining at prevailing levels.

Bond Market Average bond yields further waned across all th segments in the week ended July 5 , 2019.

This was fuelled by the absence of an Open Market Operation (OMO) auction amidst a system awash with liquidity. Consequently, yields on the five-, ten- and twenty-year debt instruments closed at 13.52%, 14.04% and 14.21% from 14.02%, 14.14% and 14.38% respectively. The Access Bank Bond index moved higher by 0.33 points to close at 2,959 points from 2,949.34 points the previous week. This new week, we foresee a continuation of the buy interest at the secondary market if the liquidity levels remain at elevated levels.

Commodities The price of oil dipped last week weighed down by data showing a smaller-than-expected draw on US crude stockpiles along with fears over future demand amid trade disputes threatening global economic growth. Bonny Light, Nigerian benchmark crude settled at $64.53 per barrel last week, 3.24% lower than the previous week.

Precious metal prices went in varying direction as the price of gold edged up while the price of silver dipped. The slight rise in gold prices was reflected US dollar weakness which fuelled safe-haven demand. Consequently, gold price closed at $1,414.24 per ounce, up 0.03% from the previous week's close. In contrast, silver declined slightly to $15.22 per ounce compared to $15.24 per ounce the prior week due to low demand. This week, oil prices may likely nudge higher buoyed by a commitment at the G20 summit between the US and China to restart trade talks. For precious metals, we envisage safe-haven induced demand to persist.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Jul’19

Aug’19

361

362

362

Inflation Rate (%)

11.44

11.5

11.5

Crude Oil Price (US$/Barrel)

65

67

67

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

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Sept’19

Exchange Rate (Interbank) (N/$)

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Monday 08 July 2019

BUSINESS DAY

MARKETS INTELLIGENCE

33

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

CBN’s decision set to wipe over N1trn off treasury markets Ifeanyi John

T

he most recent regulatory circular by the Central Bank of Nigeria (CBN) which aims to improve credit to the real sector by beefing up the Loanto-Deposit Ratio (LDR) of Deposit Money Banks (DMBs) May remove over N1 trillion from the treasury markets.

The loan-to-deposit ratio (LDR) is used to assess a bank’s liquidity by comparing a bank’s total loans to its total deposits for the same period. The LDR is expressed as a percentage. If the ratio is too high, it means that the bank may not have enough liquidity to cover any unforeseen fund requirements.

Conversely, if the ratio is too low, the bank may not be lending as much as it should be.

Last week, the apex bank of Nigeria required all Deposit Money Banks (DMBs) to beef up lending to the real sector by meeting up with a regulatory Loan-to-Deposit ratio benchmark of 60 percent. Come September, Deposit Money Banks who fail to meet this requirement will be fined to the tune of a Cash Reserve Requirement equivalent

to half of the shortfall of the new LDR target.

Analysis of the LDR shortfall as at the end of the first quarter of the year shows a deficit which could directly move to credit to the real sector by Q3, 2019. Zenith Bank as at Q1 2019, recorded the least

LDR in the banking industry. The most profitable bank in the country could see the need to extend up to N607.13 billion in loans to businesses.

Obinna Uzoma, a Lagos based economist explained that “In order to meet the 60 percent target,

banks will have to assume more risk in form of borrowing. This will mean diverting money typically channelled into less risky financial instruments that generate income.

The capacity of banks to participate in open market operations will reduce to the tune of the current shortfall which has been estimated to about N1.3 trillion to N1.6 trillion.”

United Bank of Africa will also be saddled with the responsibility to give out up to N423.71 billion in loans if it aims to meet up with the LDR target. Access Bank and Guaranty Trust Bank would each have to grow their loan book by up to N200 billion to meet regulatory standards.

“The risks associated with the new loans that will be created in order to meet up with the target will have to be properly managed so as to not increase the already high banking industry Non-Performing Loan ratio.”

“Albiet the fear of excessive regulation, this might be the right move for the government as the already buoyant treasury market will fail to miss N1 trillion and the appetite of the foreign investors is well enough to fill the void that would be created by this regulation” Uzoma added.

P.E

SHORT TAKES N15.45 trillion Total loan portfolio of the Nigerian banking industry between January and April 2019 stood at N15.45 trillion, with oil and gas sector (4.86trn) accounting for 30 percent in gross loan book. Manufacturing (N2.24trn) and government (N1.37trn) featured in the list of top three sectors lenders are expose to.

N145 Average price paid by consumers for premium motor spirit (PMS) decreased by 3.4% year-on-year and -0.6% monthon-month to N145 in May 2019 from N145.9 in April. States with the highest average price were Ebonyi (N146.25), Kwara (N146.14) and Niger (146.11).

N34.02 trillion

A Lannister always pays his debt:Lafarge Africa earns Buy ratings with deleveraging strategy BALA AUGIE

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ccording to G.R.R Martins best seller book The Game of Thrones (GOT), if the lannisters do not have money to pay back loans taken from a bank, they simply say “A Lannister always pays his debt”.

They will surely pay because they are one of the most influential and richest families of the Seven Kingdoms of Westeros.

Just as members of this great

family meet their obligations, so is Lafarge Africa Plc, the second largest producer of the building material in Africa’s largest economy, has finalized deleveraging its balance sheet.

Lafarge Africa plans to sell Lafarge South Africa Holdings (LSAH) and reduce debt by N248 billion, a strategic plan that will see the company deliver higher returns to shareholders.

The proceeds of the proposed sale -$316.29mn-will be used to set-off Lafarge Africa’s debt to LafargeHol-

cim Group.

Total debt the balance sheet of the Nigerian cement maker as the first quarter of 2019 stood at N375.15 billion, but it will reduce to N258.30 billion after settling the dollar denominated debt.

This means debt to equity ratio will reduce to 114.73 percent post leveraging, from 165.37 percent as at the current period.

The strategic decision of the savvy board directors of the cement maker will boost profitability; underpin profit margin

and strengthen working capital position.

Analysts are upbeat the company will record an uptick at both the top line (revenue) and the bottom line (profit) while valuations are expected to be attractive.

“Even as the company posted another loss after tax in 2018, we remain confident that the company will return to profitability in 2019E, when finance burden will be some way lower relative to 2018,” said analysts at Cordros Securities Limited in a recent not to client.

A total volume of 557,083,712 transactions valued at N34.02 trillion were recorded in Q1 2019 as data on Electronic Payment Channels in the Nigeria Banking Sector revealed. NIBSS Instant Payments (NIP) transactions dominated the volume of transactions recorded. 232,816,102 volume of NIP transactions valued at N24.17trn were recorded in Q1 2019.

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

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

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BUSINESS DAY

MARKETS INTELLIGENCE Corporate Nigeria snubs bond market for lending market …just 20 companies currently have corporate bonds listed on FMDQ

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orporations in Nigeria have failed to take advantage of lower yields accessible from corporate bond listing as compared to the prime lending rate of 18.23 percent last reported in the country. Just 20 companies currently have corporate bonds listed on FMDQ. Corporate bonds are long-term debt securities issued by corporations in order to raise finance for a variety of reasons, from building facilities and purchasing equipment to expanding their businesses.

With an outstanding value of N389.92 billion at an average yield of 15.66 percent, the value of corporate debt on FMDQ is far below the N15.23 trillion overall worth of loans collected by customers of Deposit Money Banks. A large proportion of the loans to customers is to corporate individuals at a rate above the prime lending rate.

Obinna Uzoma, a Lagos based economist told BusinessDay that “there are vast ways to negotiate interest rates when corporates want to borrow from banks but the requirements for listing with FMDQ might push a number of companies away, thereby having to deal with

just DMBs.” Corporate bonds are usually characterized by higher yields than government bonds because there is a higher risk of a company defaulting than a government. They, however, can also be the most rewarding fixedincome investments because of the risk the investors must take on. A corporation’s credit quality is very important as the higher the quality, the lower the interest rate the inves-

tors receive.

The companies who are taking advantage of cheaper rates are Flour Mills of Nigeria, Union Bank of Nigeria (UBN), C&I Leasing, Nigeria Mortgage Refinance Company (NMRC) and UAC Property Development Company.

In reviewing the amounts listed by the companies, FMDQ admitted the listing of the Flour Mills N20.11 billion bonds, comprising N10.11

High yields, naira stability trigger Nigeria’s capital inflows 118% in 5yrs Israel Odubola

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nflows of capital to Africa’s biggest economy rose to a record high of $8.49 trillion in the first three months of 2019, according to figures from the National Bureau of Statistics, buoyed by relatively high yield environment, naira stability and dovish monetary policy stance of major apex banks.

Capital importation to Nigeria ballooned 118 percent from $3.9 trillion in the first quarter of 2014, and 35 percent higher than $6.3 trillion realized a year earlier.

“Investors were enticed by the high interest rate and yields environment which enabled them borrow from low interest environment and invest in securities in another high interest environment, otherwise known as carry trade” said Nnamdi Olisaeloka, analyst at Lagos-based Zedcrest Capital.

The dovish monetary policy stance of major central banks such

as the United States Federal Reserve and European Central Bank was also a boon for the huge capital imported to the country as it supported carry trade across emerging markets including Nigeria.

Of the $8.49 trillion that made way into the country, $7.14 trillion or 84 percent came through portfolio investment or hot money, with other investment ($1.1trn) and foreign direct investment ($243bn) accounting for the other 16 percent.

Foreign investors showed disinterest for equity that got a paltry 9 percent in total portfolio investment, but rather piled into money market instruments to take advantage of relatively high interest in these riskfree short-term assets.

The meagre share of equity in total portfolio investment reflects investors’ weak confidence in the Nigerian equity market that has been battered by lack of urgency in implementation of reforms to revive the local bourse.

“There is low apathy from portfolio investors in picking up equity investments in the domestic economy as

cost of equity is somehow high and few listed corporates are able to deliver higher returns on equity than cost of equity to investors”, Gbolahan Ologunro, analyst at CSL Stockbrokers said.

Beyond high yield environment and dovish action of top apex banks, the stability of the naira against the US dollars and the efficiency of the Investors & Exporters Window is another major contributory factor to the increased capital imported to Nigeria.

The local currency hovers around N360 per dollar since the start of the year and even showed resilience amid political tension in February, thanks of the apex bank’s sustained intervention in the foreign exchange market buoyed by higher petrodollar.

“The stability of the naira must have given foreign investors a sense of stability about our economy” Gabriel Ilori, analyst at Access Bank said, adding that unifying the country’s multiple exchange rate system is a way-to-go as it will help magnify capital flows, boost stability and revive economic growth.

United Kingdom emerged the top source of investment in Nigeria with $4.53 billion accounting for 53 percent of total capital inflows while Lagos, the country’s economic hub, received the most capital inflow of $4.58 billion.

Meanwhile, portfolio flows to emerging markets jumped to a five months high at $40.8 billion in June, driven by strong investors’ appetite for Chinese equity as investors are positioning for a favourable outcome from trade talks between United States and China, world’s two biggest economies.

billion Series 1 and N10 billion Series 2 Senior Unsecured Fixed Rate Bonds under its N70 billion Bond Issuance Programme.

Union Bank listed N13.50 billion bonds, comprising N7.19 billion Series 1 and N6.31 billion Series 2 Senior Unsecured Fixed Rate Bonds under its N100 billion Debt Issuance Programme, while C & I Leasing listed N7 billion Series 1 Fixed Rate Bond under its N20 billion Bond

Issuance Programme on both Exchanges.

Nigeria Mortage Refinance Company and UAC Property Development Company also listed N11 billion 13.80 per cent Series 2 Bond under the N440.billion Medium Term Note Program and N4.355 billion, 16 per cent series 1 senior guaranteed fixed rate bond on the NSE. “If corporations want to borrow money at cheaper rates, meeting FMDQ requirements for listing corporate bonds is a strategical business move to reduce finance cost.”

Uzoma addedAnalysts at Chapel Hill Denham Ltd have retained their BUY rating on Lafarge Africa and raise their 12-month Target Price to N27.64 from N18.51 previously.

“Our revised forecasts capture lower debt of N53.70bn in FY-19E vs.

N301.49bn in FY-18, so we forecast 44.1% yoy and 76.7% yoy reduction in interest expense in FY-19E and FY-20E respectively,” said analysts at Chapel Hill Denham.

“We highlight that the debt/EBITDA ratio of Lafarge Africa will drop significantly to 0.3x in FY-21E from 27.5x in FY-16, indicating a substantial headroom for the business to expand via new investments,” summed analysts at Chapel Hill Denham.

Egyptian sovereigns bond ahead of Nigeria’s as carry trade improves SEGUN ADAMS

inflows and lower borrowing costs.”

gypt’s sovereign bond has stood out as the most attractive among comparable markets as investors’ appetite push yield by double digit so while Nigeria has impressed so far in 2019.

Yields on Egypt’s benchmark bond have fallen by 12.17 percent from 18 percent at the start of the year while Nigeria has seen yields drop by 9.4 percent in the same period.

Carry Trade has been attractive across emerging market on the back of high interest environment while a dovish tilt in developed markets has spurred interest in high risk assets of the emerging markets.

“Egypt makes for a very good trade,” said Mohamed Abu Basha, EFG’s head of macroeconomic analysis told Bloomberg. “I don’t think

E

Egypt has undertaken reforms advised by the International Monetary Fund (IMF) as condition for a threeyear loan deal of $12 billion in 2016.

The deal expires later in 2019, but the prospects for the northern Africa nation remains bright with President Abdel-Fattah El-Sisi’s seeking a non-financial agreement that would see IMF continue supporting its economy.

Nigeria on the other hand is yet to borrow a leaf from Egypt’s playbooknot the recent stance Egypt took on energy subsidy and not its 2016 devaluation.

However, Nigeria’s high interest environment has seen investor jump on its debt instrument which stands at 14.088 on Friday.

For other peer nations, Yields have fallen by 6.58 percent in South Africa after it opened at 8.745 percent in January. India’s yield stood at 7.937

many investors were very worried about the government backtracking on reforms, but signing the deal would act as further reassurance and can guarantee a consistent stream of

percent at year’s start but has dropped 2.19 percent while China is the only market among the countries covered

by BusinessDay which has a positive yield trajectory of 0.41 percent.

Monday 08 July 2019

BUSINESS DAY

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Monday 08 July 2019

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MONDAYMORNING

In association with

How to work with someone who thinks he’s always right RON CARUCCI AND JARROD SHAPPELL

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any people suffer from “chronic certainty” on issues for which no perfect answer exists.

Here are three ways we’ve seen leaders get underneath chronic certainty to help themselves and others broaden their perspectives and have more productive conversations.

— GET BEHIND THE ORIGINS OF CHRONIC CERTAINTY. Cognitive biases come in many forms, and often underlie dogmatic viewpoints. Staunch certainty is always rooted in deeply held, but often unconscious, beliefs.

Slow things down. If the certainty represents a pattern, don’t try and address it during an argument about a specific issue.

Instead, schedule a separate conversation to ad-

dress your concern. You might say something like, “Whenever we find ourselves on different sides of an issue, I feel as if you assert your views with such unbending force that I ei-

ther want to shut down or dismiss your confidence.

It would help me to know that my views were being considered, even if you don’t agree with me.”

— CONSIDER HOW YOUR ORGANIZATION MIGHT BE ENCOURAGING CERTAINTY. Does your culture prize assertive convictions? Is decision-making perceived to be competitive? Do people feel as if appearing uncertain about their views will be perceived as weak? In certain situations, like conversations around strategic planning, budgeting and talent management, where people perceive a lot to be at risk, the need to appear certain becomes a matter of survival.

To avoid institutionaliz-

ing certainty as the preferred approach to articulating views or requests, ask people to come to meetings with pros and cons. Make it a routine to have others on the team weigh in with differing views when making decisions. Approaches like these normalize the need for people to self-regulate, balancing confidence in one’s views without the dogma of certainty.

— ACKNOWLEDGE IF OTHERS’ CERTAINTY MAKES YOU RESISTANT. For some, the convictions of others can feel threatening to our own views and values. Confirmation bias leads us to screen out disconfirming views, so when we are forced to contend with differences,

we naturally resist. We can become overly defensive, or withdrawn, dismissing information that might be very important.

With so much emphasis these days on speaking up, we need to learn to temper our voices by listening, especially when making important decisions for which there are conflicting options.

Remember that speaking “your” truth is far different from speaking the truth.

(Ron Carucci is a cofounder and managing partner at Navalent. Jarrod Shappell is a partner there.)

What Jony Ive’s years at Apple can teach us about looking forward ROBERTO VERGANTI

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onathan Ive, Apple’s legendary chief design officer, has announced he is leaving the company. His departure — and Apple CEO Tim Cook’s challenge in replacing him — offer an opportunity to reflect on how executives should go about the difficult job of choosing the right creative talent for their own organizations.

In 1997, Steve Jobs had just returned to Apple and needed to reinvigorate the innovative soul of the organization. He wanted design to be at the core of this renewal. Since Apple was a computer company at that time, you would have expected Jobs would have searched for an ex-

pert computer designer — someone well-respected in the industry.

He did not. Before joining Apple, Ive had been an independent design consultant in London. His firm, Tangerine,

was involved in designing household products (for example, Tangerine was a consultant for Ideal Standard, then a major player in the bathroom and plumbing industry).

The young designer then

moved to Apple in 1992, but the designs he was involved in before 1997 were not especially successful. Yet in hindsight it was a brilliant choice. The lesson: When choosing an innovator, look to the fu-

ture, not the past.

The first product designed under Ive’s leadership was the iMac G3, introduced in 1998. It was acclaimed as one of the most revolutionary personal computers ever released, with a design language that was completely novel for the industry: a friendly shell in translucent colored plastic and an ovoid form that challenged the dominant paradigm of unsympathetic beige boxes.

One takeaway: When you are picking talent for innovation endeavors, you should imagine what is coming down the pike — what the future will look like — and then understand which capabilities you will need to succeed in that future. If Tim

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

Make this summer your best one ever With any of our FirstBank cards, you can enjoy a flexible summer in over 200 countries worldwide Visit any FirstBank branch for the issuance of your Summer Cards

Cook has absorbed Steve Jobs’s lesson, his choice of Ive’s successor will reveal his vision of the emerging world in which Apple will compete in the years ahead.

(Roberto Verganti is a professor of leadership and innovation at Politecnico di Milano.)

Monday 08 July 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

37

In association with

Stop panicking about corporate short-termism termism.

— REWARD LONG-TERM INVESTORS. Legislators could tier capital-gains tax rates to reward truly long-term shareholders.

The current system too often rewards “trading securities,” rather than “owning companies.”

LIZANNE THOMAS

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ontrary to some claims in popular culture, boards and C-suites are not intrinsically heartless and societally myopic.

While the rules of the capitalist road surely could do with some updates, almost all the corporate decision-makers my firm has dealt with are responsible, not reckless.

This is particularly true when it comes to the question of how well public companies balance the precepts of long-term value with those of short-term performance. As a practical matter, at most organizations most of the time, the notion that these tenets are in opposition constitutes a false dichotomy.

Recent analysis indicates that listed companies are measurably more inclined toward the long term than has been surmised. Last year, economists connected to the Federal Reserve Board published a study

of IRS data from 2004 to 2015 that indicated publicly traded companies actually invested 48.1% percent more on R&D than their privately held counterparts (when adjusted for size and sector).

Let’s accept that the obligations imposed by corporate and se-

curities laws, in the main, reward good conduct and deter bad. That has created an environment that invites investment and innovation. Capital is already largely accountable.

And yet, while the majority of corporate leaders whom we deal with set strategies for the

long term and do their best to stick with them, more can be done to encourage all stakeholders to prioritize long-term corporate health. Here are a few suggestions.

— DEACTIVATE ACTIVISTS. Shareholder activists are often potent contributors to short-

— ALIGN COMPENSATION TO THE LONG TERM. Investors should support executive compensation that is linked to the types of targets referenced above — development of strategic plans, articulation of those plans to stakeholders and establishment of goals based on long-term performance and value creation. Likewise on that front, equity should be generally slow to vest.

Solutions in search of problems aren’t the answer. Transparency is.

(Lizanne Thomas is a partner at Jones Day. This article represents her personal views and opinions.)

How one health system overcame resistance WHO ARE COMMITTED TO CHANGE. By starting with those who were committed to the checklist, Rose engaged leadership across disciplines and levels. Nurses and technicians joined with surgeons, anesthesiologists and senior leaders to advance the adoption.

Results followed. As Rose sees it, the surgical team members not only saved others’ lives, they also improved the staff’s well-being and renewed their spirits.

KATE HILTON AND ALEX ANDERSON

D

uring a time when health care is undergoing the most sweeping change ever, health systems, not surprisingly, are struggling to overcome resistance to change.

But research and the experiences of some organizations suggest that embracing those who resist change the most — empathizing with them, identifying the sources of their resistance and helping them see change as positive — is far more effective.

For 18 months between 2009 and 2010, Michael Rose, an anesthesiologist who was then vice president of surgical services at McLeod Regional Health System in Florence, South Carolina, worked with surgical teams to implement the checklist — an evidence-based best practice for safe surgery.

Similar to a flight safety checklist, the surgical safety checklist ensures that the patient is the correct person, the surgery is the correct surgery and surgical teams are prepared for emergent complications. It takes only a few moments to conduct, improves patient outcomes and

saves lives.

Rose experienced many forms of resistance. For 18 months, he shared the checklist’s virtues, instituted training to teach teams how to use it, marketed its benefits, persuaded or cajoled colleagues and mandated its use. Despite all these efforts, adoption rates stalled at 30%.

Then Rose tried a different approach: embracing three essential measures to address people’s psychological reactions to

change.

— DON’T FIGHT THE RESISTERS. Rose fought the temptation to view resistance from surgical team members as a problem, obstacle, personal attack or source of frustration.

Instead, he focused on understanding and addressing its root causes, especially fear.

— STOP TELLING PEOPLE WHAT CHANGES TO MAKE. Rather than asking, “How can I get this group of people to do

what I want them to do?,” Rose made a critical pivot to listen and ask, “How can I get this group of people to do what they want to do?” Rose also sought to unearth team members’ interests in the change being asked of them. In addition, by activating more and more surgical staff to test and improve the checklist, Rose elicited “ownership” and avoided the trap of “buy-in.”

— FOCUS ON PEOPLE

Brought to you courtesy of First Bank Nigeria

(Kate Hilton is a member of the faculty at the Institute for Healthcare Improvement. Alex Anderson is a research associate there.)

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NEWS Senior government official accused of forgery, falsification to obtain passport IFEOMA OKEKE

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senior government official has been accused by the Nigeria Immigration Service (NIS) of forgery and falsification to obtain passport.

This is coming at a time when Muhammad Babandede, comptroller general of NIS, has ple dg e d not to spare i n d i v i d u a l o r g ro u p s i nv o l v e d i n p a s s p o r t related offences from getting away with them.

The suspect (name withheld) is a senior protocol officer in the Ministry of Power, Works and Housing and is alleged to be involved in the forgery of docum e nt s m e a nt f o r t h e procurement of Nigerian passport.

In a statement sent

by NIS management on Sunday, it stated that the suspect conspired by forging official Identity Card and signature of the Minister of the Ministr y of Power, Works and Housing on a letter issued to another offi-

cial to procure “Official Passport” thereby collecting N250,000 as proceed knowing fully well that the subject is not a government official.

According to the statement, “the suspect appeared before Justice Taiwo Taiwo of the Federal High Court, Abuja, where he was charged with ‘Conspiracy’ making false statement for the purpose of procuring Nigerian passport and engaging in forgery.

“The Comptroller General of Nigeria Immigration Service has advised prospective applicants seeking Nigerian passport to avoid false d e c l a ra t i o n s, f o r g e r y and use of fake breeder documents, and follow due process by paying online, applying online and desist from patronising touts.

“The procurer and the applicant will be prosecuted in accordance with the provision of the law related to ‘ Passport Offences,” the statement added. www.businessday.ng

Huawei awards Nigerian students for excellence, launches 2019 ICT Global Competition James Kwen, Abuja

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team of three Nigerian students got Huawei Technologies Company Nigeria Limited’s Outstanding Performance (Huawei Global/national/subSaharan Africa ICT Competition), Nigeria National Award for Best ICT Academy Instructor, and Most Cooperative ICT Academy, last week for emerging 3rd place among the top three winners in the Global Final of the Huawei ICT Competition.

The global final of Huawei ICT competition, a top-level event for students in the field, concluded May 26 at the company’s new headquarters in Southern China’s city of Dongguan, China, where they competed with 49 other teams and a total of 147 students representing 30 countries racing for the global trophy.

Huawei Technologies Company Nigeria also signed a memorandum of nderstanding (MoU) with the National Information Technology Development Agency (NITDA) for the 2019/2020 next edition.

Speaking at the ceremony, Isa Ali Ibrahim-Pantami, director-general of NITDA, commended Huawei Tech-

nologies for its commitment in promoting ICT development in Nigeria, saying the initiative aligned well with one of NITDA seven pillars – the capacity building pillar, which is in line with the Economic Recovery and Growth Plan (ERGP) of the President Muhammadu Buhari administration.

Ibrahim-Pantami expressed the need for a renewed partnership, adding that the Agency looked forward to a new relationship and partnership with Huawei that would foster ICT for inclusive sustainable national development in Nigeria.

Ambassador of the People Republic of China to Nigeria, Zhou Pingjian, observed the growth Nigeria had experienced in the past 20 years since Huawei Technologies came into Nigeria.

“Twenty years ago, there were 27 thousand mobile phone owners in Nigeria. Today, that number soars to 170 million.

Twenty years ago, for oneminute talk in Nigeria, it would cost $1, today, that same call costs 2US cents. Twenty years ago, Huawei began knocking the door of Nigeria, today, Huawei grows with Nigeria as a most reliable business partner in Nigeria.”

Permanent secretary, Federal Ministry of Communications,

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M.F. Istifanus, represented by the director of ICT in the Ministry, Moni Udoh, applauded Huawei for increased partnership with Nigerian universities and colleges in the last 12 months, which had resulted to “more than 55 MoUs signed with partners to be Huawei ICT Academies and giving more than 13,000 students opportunities to participate in the recently concluded Huawei 2018 2019 ICT Competition.

“We appreciate the attention Huawei has paid to this program, by focusing not only on the students but also, building the skills and capacities of our Universities and lecturers. We strongly believe that the skills transferred through this programme will enhance the quality of our educational system and provide economic opportunities to individuals as well as the broader economic development of not only Nigeria but the whole of Africa.”

Tank Li, managing director, Huawei Technologies (Abuja office), Nigeria, said, “This year marks the 20th year of Huawei operating in Nigeria. Within that period, Huawei has made progressive achievements through both collaboration with the public and private sector in Nigeria. @Businessdayng

“Huawei through its many CSR programmes have strived to reach many lives in Nigeria, especially the education sector.

Some of these programmes also include the Seeds for the future Programme, where we send 10 students to China for two weeks, all expenses covered by Huawei, which we have done for the past two years.

“Huawei will continue to invest in this collaboration with universities, this number is expected to increase greatly within the coming months, and continuously supply excellent candidates to Huawei’s ICT talent eco-system. Huaweis vision in Nigeria is to create an ICT talent Ecosystem that will form the foundation in the digitalisation plan for the nearest future.”

Huawei launched its global ICT competition in 2015, and Nigeria joined in 2018, and in Nigeria, the competition had over 13,000 students from more than 30 universities participating.

Overall, the 2018/19 event attracted more than 1,000 universities in over 50 countries around the world under the slogan Connection, Glory and Future. The total number of students participating globally was 80,000 including 28,000 students from sub-Saharan Africa.

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news CBN’s bet on these 10 crops creates...

Continued from page 1

Nigeria”.

He also expressed optimism that these measures (which include getting importers to set up production facilities in Nigeria) “will help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2bn in 2018 to $12bn by 2023”.

BusinessDay had reported Nigeria has a deficit across every type of food produce. In fact, the Agriculture Promotion Policy released in 2016 showed a 20.14 million metric tonne deficit across 13 major crops and a 60 million poultry bird deficit.

Threeyearslater,withtherapidly growing population, this deficit would have increased substantially. With these deficits, and the CBN’s plans for agriculture, there is a huge market that provides opportunities for targeted investments.

Rice According to the Food and Agriculture Organisation (FAO), Nigeria’s rice production reached 7 million tonnes

(4.2 million tonnes, milled basis) in 2017, up 12 percent from 6.3 million tonnes (3.8 million tonnes, milled basis) in 2015. The growth, according to FAO, was encouraged by high local prices and inputs assistance programmes under the country’s self-sufficiency drive.

Notable in this regard is the Anchor Borrowers’ Programme of the CBN, which has extended support to farmers across different states, even though official numbers and value of funds till date are unavailable.

“Before the Anchor Borrowers’ Programme, we would cultivate rice, but will not have buyers,” said Mohammed Suleiman Ambursa, a judge of the Kebbi State High Court, who was on his farm during a recent BusinessDay visit to Birnin Kebbi. “The price was so low before.”

Now that more rice mills are springing up, there is an increase in demand for paddy.

This presents an opportunity for those who want to take advantage of producing rice, which is perhaps Nigeria’s

most consumed staple food.

For price of local rice to come down significantly, Rotimi Fashola, general manager, Elephant Group plc, told BusinessDay that paddy (which is the raw material) will have to sell well below N100,000 per metric tonne. Currently, it sells for N115,000 on the average, before other logistics costs are factored in, which could then take it to about N130,000.

Cassava “All processors in Nigeria are still struggling to produce 2 percentofstarchthecountryneeds,” said Nike Tinubu, president, Industrial Cassava Stakeholders Association of Nigeria, in a phone interview with BusinessDay. Yet, Nigeria is the world’s largest producer of cassava, responsible for an estimated 20 percent of global output, which in 2017 was 285 million metric tonnes in the global cassava processing market report.

The irony is, whereas there is abundance of cassava in Nigeria, the value extracted from the tuber is extremely low.

Even though Nigeria ranks as the world’s largest producer of cassava, the yield is low (at 5 to 10 tonnes per hectare against

global average of 25 tonnes per hectare). More importantly, for industrial usage, the starch content derived from the best of cassava tubers is between 18 and 22 percent, whereas in countries like India and Malaysia, starch content of between 38 percent and 40 percent is derived, and there are possibilities of doing even better.

“We need to differentiate between cassava for food security and cassava for industrial prosperity,” said Segun Adewumi, national president, Nigeria Cassava Growers Association (NCGA).

Cassava has some major industrial products among which are ethanol, industrial starch, cassava flour, glucose syrup, sweetener, etc. These products are also raw materials to numerous industrial items with limitless domestic and export market potentials.

“This means cassava can trigger massive industrial revolution in Nigeria to the extent that every Nigerian village will have viable cassava industries,” according to NCGA. Industrial starch, a major product from cassava, is used in gum/adhesives, textiles, phar-

maceuticals, book binding, paper and packaging, confectionery, chemical and household products. Manufacturers of batteries, beverages, baby food, and wood finishers also make use of it. But despite these potentials, Nigeria imports over 95 percent of the industrial starch used in the country.

Potential off-takers for ethanol in Nigeria include all the pharmaceutical companies, breweries and food companies for whom it is an essential component.

Yet, most of the smallholder farmers struggle to move cassava tubers from rural to urban communities. Hence logistics, vital link between the farm and factory, is a major area of opportunity for investors.

But someone has turned that into an opportunity.

Olayinka Ayowole, an agronomist and CEO of Viyola Foods, is providing hundreds of vehicles that will collect tubers of cassava from rural farmers and move them to city markets.

“Most farmers cannot get their produce to the market, so we help bring the buyers (households, firms) close to

Nigeria joins AfCFTA as Buhari signs...

Continued from page 1

inaugurated on the trade

deal, who wanted Nigeria to join the trade treaty.

AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent.

Experts believe it is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.

The AfCFTA is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030, if all the countries sign up.

The treaty liberalises 90 percent of products manufactured in Africa, meaning that a country can only protect 10 percent of its local industries.

The AfCFTA officially came intoforceonMay30,2019,when the required number of ratifications were deposited, making the agreement a binding international legal instrument.

The Gambia had the two monthsagocompletedthenumberofcountriesratifyingthetrade agreement to 22. South Africa, Ethiopia, Sierra Leone, Lesotho, Burundi, Namibia, Guinea Bissau, and Botswana, among others, had earlier signed up.

Iyalode Alaba Lawson, national president of NACCIMA, said recently in Lagos that the body was in full support of Nigeria signing up to AfCFTA, adding, however, that governmentneededtointensifycurrent effortstoeradicatenon-tariffand regulatory barriers to international trade such as border delays, burdensome customs and inspection procedures, as well as ensure that multiple licensing and taxes were eliminated.

The Lagos Chamber of CommerceandIndustry(LCCI) supports the trade deal but canvasses an enabling environment that will enable Nigerian manufacturers to compete.

This is just as Accra, the capitalofGhana,wasselectedtohost the secretariat of the AFCFTA. Twenty-four countries have already ratified the AfCFTA, which is expected to be the world’s largest free trade area since the formation of the World Trade Organisation with a potential market of 1.2 billion people and a Gross Domestic Product (GDP) of $2 5 trillion, across all 55 member states of the African Union.

The President signed the agreement at exactly 10.48 am local time, at the opening of the 12th Extra Ordinary Summit of the African Union on launch of the Operational Phase of the AfCFTA. Buhari speaking after signing the agreement told the Summit that Nigeria would build on the event by proceeding expeditiously with the ratification of the AfCFTA. President Buhari declared that Nigeria’s commitment to trade and African integration had never been in doubt nor was it ever under threat. ‘‘Nigeria wishes to emphasize that free trade must also be fair trade. ‘‘As African leaders, our attention should now focus on implementing the AfCFTA in a way that develops our economies and creates jobs for our young, dynamic and hardworking population,” he said.

He said Nigeria would sustain its strong leadership role in Africa, in the implementation of the AfCFTA, adding that: “We shall also continue to engage constructively with all African countries to build the Africa that we want.’’

The Nigerian leader also congratulated Ghana on bewww.businessday.ng

the seller (smallholder farmers),” Ayowole said.

Many manufacturers today import starch because smallholder farmers and small-scale processors do not have the financial muscle to procure the hi-tech machines needed for processing.

This is an opportunity for the big players. Mozambique is an example of a country utilising cassava to produce beer. Impala beer, made from cassava, has becomeapopularbrandamong thelow-endconsumersbecause itischeapandmultinationalslike InBev are tapping into it.

Moreover, an opportunity exists for Nigerian firms to process cassava into chips for onward export to China. China is ramping up demand for Nigerian cassava pellets and import requests from China and other countries are estimated at 10 million tonnes of cassava chips annually, said Segun Adewunmi, president, Nigerian Cassava Growers Association (NCGA).

Cotton Nigeria’s cotton demand is 700,000 metric tonnes, with a production of 200,000 metric tonnes, according to the Agri-

Continues on page 43 L-R: Adetutu Otuyalo, corporate sales manager, British Airways; Abisoye AjayiAkinfolarin, founder, Pearl Africa Foundation, and Kola Olayinka, regional commercial manager for West Africa, at the donation of laptops and desktops to the foundation in Lagos.

ing selected to host the Secretariat of the AfCFTA. ‘‘I have just had the honour of signing the agreement establishing the African Continental Free Trade Area (AfCFTA), on behalf of my country, the Federal Republic of Nigeria. ‘‘This is coming over a year since the AfCFTA Agreement was opened for signature in Kigali, Rwanda, at the 10th Extraordinary Summit of the African Union, on 21st March 2018. ‘‘In fact, you will recall that the treaty establishing the African Economic Community was signed in Abuja in 1991. ‘‘We fully understand the potential of the AfCFTA to transform trade in Africa and contribute towards solving some of the continent’s challenges, whether security, economic or corruption. ‘‘But it is also clear to us that for AfCFTA to succeed, we need the full support and buy-in of our private sector and civil society stakeholders and the public in general. ‘‘It is against this back-

ground that we embarked on an extensive nationwide consultation and sensitisation programme of our domestic stakeholders on the AfCFTA. ‘‘Our consultations and assessments reaffirmed that the AfCFTA can be a platform for African manufacturers of goods and providers of service to construct regional value chains for made-in-Africa goods and services. ‘‘It was also obvious that we have a lot of work to do to prepare our nation to achieve our vision for intra-African trade which is the free movement of ‘made in Africa goods’.“ Buhari who also stated that some of the critical challenges identified would require a collective action as a Union, adding, “We will be presenting them for consideration at the appropriate AfCFTA fora.”

He listed the challenges to include “tackling injurious trade practices by third parties and attracting the investment we need to grow local manufacturing and service capacities.’’

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President Buhari noted that Nigeria’s signing of the AfCFTA and its Operational Launch at the 12th Extraordinary Summit was an additional major step forward on the AU’s Agenda 2063.

Buhari had delayed in signing the agreement, which entered into force May 30, 2019 to give room for extensive consultations with stakeholders, culminating in the submission of the report by the Presidential Committee to Assess Impact and Readiness of Nigeria to join the free trade area.

The committee had recommended that Nigeria should sign the agreement, which aims to boost intraAfrican trade.

President Muhammadu Buhari is currently attending the Extraordinary Session of the Assembly of the Union where the continent will launch the operational instruments of the Agreement establishing AfCFTA. The instruments include: AfCFTA Rules of Origin, Tariff @Businessdayng

Concession Portals, Portal on Monitoring and Elimination of Non-Tariff Barriers, Digital Payments and Clearing Systems and African Trade and Observatory Dashboard.

Recall that President Buhari had delayed signing the documents until his administration had embarked on extensive consultations with stakeholders, culminating in the submission of the report by the Presidential Committee to Assess Impact and Readiness of Nigeria to join the AfCFTA. The committee had recommended that Nigeria should sign the agreement, which aims to boost intraAfrican trade.

President Buhari appended his signature to the treaty in the presence of African Heads of State and Government, delegates and representatives from the private sector, civil society and the media attending the 12th Extraordinary Summit of the African Union on Launch of the Operational Phase of the AfCFTA.

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Sanwo-Olu hinges Lagos growth strategy on technology, innovation ...eyes growing tech startups to 2,000 in 2020 Temitayo Ayetoto

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overnor Babajide Sanwo-Olu of Lagos State says technology and innovation will take centre stage among strategies mapped to grow the state into a smarter and more efficient city.

The Governor, at an evening of ‘Conversations on Moral Leadership’ convened

by Eko Innovation Centre (EIC) Sunday, said with a more supportive business environment, the state eyes growing technology start-ups from current 500 to about 2,000 next year, saying deployment of technology in differ-

ent sectors of the economy is potentially viable for growth.

“There are some agencies that want to train 8,000 Lagosians every month in Information Technology, coding, networking. We will train the population members available and get them better. Technology will be very big for us,” he said.

Addressing moral leadership and its implication on growth, Sanwo-Olu, who was represented by Obafemi Hazmat, his deputy, noted that the culture of morals was not entirely foreign to Nigeria but began to decline with military incursion into the political system, desperation for acquiring wealth and the mindset of entitlement

among many Nigerians.

While the general attitude of leadership must change, Sanwo-Olu encouraged wealthy Nigerians to make impactful contribution in lifting the less privileged, others.

Victor Afolabi, EIC cofounder said for the Nigeria to leapfrog some phases of development, entrepreneurs require the support of patient capital to leapfrog and fix ingrained colonial mindset of relying on grants.

“We need structures of for young people to understand that concept must attract commercial value for investment. If structures show that you can pay back it discourages investor,” Afolabi.

L-R: Oscar Onyema, CEO, Nigerian Stock Exchange (NSE); Segun Ogunsanya, MD/CEO, Airtel Nigeria; Awuneba Ajumogobia, member, Airtel Africa board, and Krishna Menon, chief financial officer, Airtel Nigeria, at the Airtel Africa plc Facts Before the Listing at the Pic by Olawale Amoo Exchange in Lagos, weekend.

Inflation rate to drop to 11.32% in June - FSDH Research Hope Moses-Ashike

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igeria’s inflation rate is expected to moderate to 11.32 percent in June from 11.40 percent recorded in May 2019, according to FSDH Research, an arm of the FSDH Merchant Bank Limited.

“Our analysis shows that the inflation rate will remain within the current region in the short-term if there is no shock,” Ayodele Akinwunmi, the firm’s head of research, said.

The Central Bank of Nigeria (CBN) targets single-digit inflation rate for the Nigerian economy and reiterated the desire to achievethattargetinthefive-year plan it released a few weeks ago.

“In other words, any inflation rate in double-digit is considered high in our view,” Akinwunmi said in Lagos on Friday in his presentation on monthly economic and financial markets outlook titled, ‘5-Year Policy Thrust of the Central Bank of Nigeria 2019-2024: Implications for

the Financial Market’.

Given recent developments inthecountry,particularlyinthe agricultural sector, and farmers’ inability to move their produce to the market efficiently, it may be difficult to achieve a singledigit inflation rate in 2019.

While the CBN is deploying strategies to influence the amount of money in circulation in a manner that will not be inflationary,thecompanybelieves thereareotherkeycausesofhigh inflation in Nigeria which the CBN’s current policy may not be able to address.

The price monitor that FSDH Research conducted on food and non-food items shows prices moved in varying directions in June compared with May. While the prices of some consumer goods increased faster in June compared with May 2019, the prices of a few consumer goods increased slower in June than in May. The National Bureau of Statistics is due to release the actual figure for the month of June on Sunday, 14 July 2019. The prewww.businessday.ng

liminary investigations of the firm show that the local prices of imported goods increased marginally in June over May because of the exchange rate adjustment on import duties.

However, the marginal increase was not enough to accelerate the inflation rate. The Food Price Index that the Food and Agriculture Organisation (FAO) of the United Nations published for the month of June 2019, shows that the prices of dairy products and oils declined significantly. The prices of meat, cereals and sugar, however, increased on the international market. Most of the decreases recorded on the international market were mainly as a result of increased export availabilities and limited import demand.

In the June edition of its monthly Economic and Financial Market Report, FSDH Research reviewed the fiveyear policy trust of the CBN and the implications for the financial market and outlines the opportunities.

CBN’s bet on these 10 crops creates...

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culture Promotion Policy (APP) projections. It notes that demand for seed cotton could rise to 1.0 million-1.5 million tonnes subject to textile sector revival.

The CBN recently intervened in the cotton value chain and textile industry, with the distribution of seeds in Katsina State to over 100,000 farmers cultivating an estimated 200,000 hectares of farmland. According to Emefiele, the farmers are also to benefit from extensive trainingonproperfarmingtechniques, which is expected to translate into production of high grade cotton lint at much improved yields of up to 4 tonnes per hectare. These measures, as projected by the CBN, will help to improve cotton production from 80,000 tonnes produced in 2018 to 300,000 tonnes by 2020.

The sector has high growth potential, and is capable of creating over one million jobs, from cotton production across different states to factory works in the manufacturing sector, if textile production regains its lost momentum.

As Nigeria targets a return to theheydayofcottonproduction, farmers say obtaining quality seeds remains a problem.

“A lot of farmers are abandoning their farms because they do not have enough seeds to plant,” Anibe Achimugu, president, National Cotton Association of Nigeria (NACOTAN), said in an interview with BusinessDay. Seeds remain an area of opportunity. Nigeria’s seed industry potential stands at N777.38 billion, according to the Federal Ministry of Agriculture. Local farms’ annual production is estimated at N252.35 billion, leaving a gap of N525.04 billion.

The total national seed requirements for eight major crops, including maize and rice, in Africa’s most populous country stood at 388,690.64 metric tonnes (MT) in 2015, while the quantity available was 126,173 MT, leaving a yawning gap of 262,518 MT. Cocoa The demand for cocoa in Nigeria, according to the APP, is 3.6 million MT, with the country producing a meagre 250,000 MT. The APP also noted demand is global, and will rise to 4.5million MT by 2020.

Data from the National Bureau of Statistics (NBS) show that in the first quarter of 2019, Nigeria exported N31.35 billion worth of cocoa (in different variants). The country can export not just more raw cocoa, but as well cover the deficit in local needs, particularly in the production of confectioneries.

Poultry In 2017, the Nigerian poultry industry suffered a tumultuous period, with a number of poultry farms shutting down as most farms found it difficult to feed their birds owing to difficulty in accessing feed and other inputs.

“A lot of farms are being closed down because so many people cannot afford to feed their birds,” said Onalo Akpa, who was director general, Poultry Association of Nigeria

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(PAN), in a phone interview with BusinessDay at the time.

“If you have a [poultry] farm and you cannot feed your birds, then you better shut it down!”

The price of maize and soya bean which are the main components of poultry feed increased by over 100 percent.

The situation at the time worsened the country’s poultry deficit which has been estimated at 60 million birds. The APP document released by the Federal Ministry of Agriculture indicates that Nigeria’s annual chicken consumption is 200 million birds, while supply is 140 million birds.

The 2017 poultry industry crisis, which still exists mildly though not as bad as two years ago, was precipitated by the armyworm invasion that plundered Nigeria’s maize output by more than half. According to the APP, Nigeria’s maize deficit as at 2016 was 500,000 MT. However, the bulk of this goes into direct food consumption, leaving the poultry industry battling continually with high cost of feed. Importation has often been cheaper, particularly from countries like the United States.

Maize Maize/corn demand in Nigeria, according to the APP, is 7.5 million MT, while production is 7 million MT. Limited importation is required but can shift due to feed demand, which primarily drives demand in Nigeria.

However, there is a need to ramp up production, as availability of maize can spur an increase in production for some manufacturers that require it as raw material. Even the poultry sector depends on increase in maize production, as higher volumes and lower prices will enable the sector to thrive.

Tomato Nigeria is said to be the 13th largest producer of tomatoes in the world and the second in Africa after Egypt, yet the country is unable to meet local demand because about 40 percent of tomato produce is wasted due to poor packaging, transportation and storage.

TomatodemandinNigeriais putat2.2millionMTperannum, whileactualannualproductionis 1.5 million MT of which 700,000 MT is lost to post-harvest wastage, according to data from the Ministry of Agriculture.

The 40 percent loss, valued at N72 billion annually, between farm and market, on face value, is another business potential if the gap can be fixed, particularly through processing tomato into paste.

Fish According to a 2017 report by theNBS,Nigeria’sfishproduction data have reflected that 5.8 milliontonnesoffishwereproduced between 2010 and 2015. In 2014, Nigeria produced 1.1 million tonnes of fish, the highest within the period. Fish production was 1.12 million mt in 2015 while demand was 2.7 million mt.

Small scale fish production has consistently accounted for the bulk, more than 60 percent annually, followed by aquaculture (fish farms), with industrial commercial trawlers contributing the least. However, Nigeria has a deficit of over 2 million MT. @Businessdayng

With the focus from CBN, fish farms could take advantage of this opportunity to expand, and go beyond just production of catfish which they are predominantly known for.

“A lot of Nigerians are more into catfish, because it is easier to breed,” said Heineken Lokpobiri, former minister of state for agriculture, in an exclusive interview with BusinessDay. However, he noted that there have been growing investments in production of other types of fish, such as tilapia.

“Some people have started realising that tilapia is also one that they need to do because of the huge market that exists in Nigeria. Instead of bringing in tilapia from China, what is producedhereisfresh,andhealthier for people to consume,” he said.

Livestock/dairy The demand for milk/ dairy in Nigeria is 2 million MT, but only 30 percent of that is met through local production due to insufficient milking cows and low yields, notes the APP report.

Oil palm Nigeria produces 900,000 to 1.3 million MT of palm oil, but demand is above 2 million MT. Presco and Okomu, two companies into production of oil palm, have in recent years recorded considerable growth on the back of prospects in the local market. These opportunities can be deepened even further, considering the yet untapped potential in the oil palm market.

With the CBN’s recent announced that it would blacklist companies importing oil palm, local producers of the commodity are likely to get an even more favourable market for their produce.

Now is time for investors to look at palm oil again. With an annual bill of over $500 million import, according to the CBN, excluding smuggled products, there is enough room for investments, especially in the cultivation of land areas for oil palm.

“The only viable means of bridging that gap now is to develop the domestic plantation industry and to support the local refineries,” Santosh Pillai, managing director, PZ Wilmar, told BusinessDay. “However, critical longterm goals should aim at supporting development of palm oil plantations within Nigeria by providing time-bound critical infrastructural and policy support, developing the palm oil supply chain by implementing a robust smallholder scheme,” he added.

Henry Olatujoye, national president, National Palm Produce Association of Nigeria (NIPPAN), said large and established firms are only cultivating 400,000 hectares, which are insufficient.

“Smallholder farmers are doing above 900,000. However, established enterprises need to cultivate up to 2 million hectares to plug the gap.

This will cost up to N700 billion,” Olatujoye said.

Perhaps, one way of identifying opportunity in the industry is the return of Ada Palm, which is now Imo VTU, and slow comeback of Okitipupa and Araromi-Ayesan Oil Palm.

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abujacitybusiness Comprehensive coverage of Nation’s capital

FCTA disburses N197.5m for Community Development Projects James Kwen, Abuja

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he Federal Capital Territory Administration (FCTA) has disbursed N197.5 million for infrastructural development at the community levels in the Federal Capital Territory (FCT) through the Community and Social Development Programmes (CSDPs).

Out of the N197.5 million, each of the various communities numbering 23 got between N5.3 million and

N8.9, depending on the nature of their projects such as the purchase of speed boats, mechanized boreholes, rural electrification, community roads, blocks of classrooms, health centres, skills acquisition centres, among others.

Chinyeaka Ohaa, FCT Permanent Secretary at the presentation of cheques to the representatives of 23 communities in the six Area Councils of the FCT that are beneficiaries of the fund, said CSDPs have been of great importance in the development of rural

communities in the Territory.

Ohaa who commended the efforts of Community and Social Development Project workers representing their communities for working hard to ensure that their people have access to basic social infrastructure through community driven development programmes, urged them to ensure that the funds are judiciously deployed for the set purpose.

He said the issuance of the cheques will enable the FCTA assess the performance

of community development projects, the challenges encountered and the way forward to successful implementation of the various community development and poverty elimination projects in the FCT. Ohaa assured that FCTA will continue to partner with various international and community agencies as well as other groups, towards the achievement of its vision of ensuring an acceptable standard of living for FCT people.

AbdulRazaq reinstates salary of Kwara ‘sunset workers’ ... approves N100m gratuities Sikirat Shehu, Ilorin

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overnor AbdulRahman AbdulRazaq of Kwara State has reinstated the payment of salary to workers employed in the twilight of the last administration.

Rafiu Ajakaye, Chief Press Secretary to the Governor who made this known in Ilorin said the Governor has directed that the workers be paid their May and June salaries as government would not punish these workers for decisions they did not take.

Ajakaye noted that these category of workers popularly known as ‘sunset workers’,with most governors often disengaging them for fear that they had

been engaged to wrong fault a new administration were sacked by former Governor Bukola Saraki when his predecessors had engaged such in 2003.

“This Governor dares to be different. He has shown good will and magnanimity to all. It is expected that the affected workers will do their part by serving the state diligently. The last administration had in the twilight of its reign recruited hundreds of workers into the civil service, including teachers and ministry workers.

“The recruitment triggered allegations that the beneficiaries were mainly members of the People’s Democratic Party in the state and that the due process was not followed in engaging them.”

Reps to partner journalists on fight against quacks James Kwen, Abuja

T L-R: Feyi Soyewo; former president, Nigerian Council of Registered Insurance Brokers (NCRIB); Sola Olabode, former chairman, NCRIB, Abuja Area Committee; Babajide Jayeoba, elder of the Council, NCRIB; Lateef Omoladun, chairman, Abuja Area Committee, and Chijioke Nwafor, board member, NCRIB, at the NCRIB Abuja Area Committee members’ evening in Abuja. Picture by Tunde Adeniyi

FCTA flags- off 2019 Annual School Census ...Stresses need for accurate data collection

James Kwen, Abuja

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he Federal Capital Territory Administration (FCTA) has flagged-off the 2018/2019 Federal Capital Territory (FCT) level Annual School Census with emphasis on accurate data collection.

The Annual School Census is a fall out of the Nigeria Education Management Informa-

tion System (NEMIS) policy of 2007 aimed at significantly improving collection of education data to achieve higher educational objectives.

Chinyeaka Ohaa, FCT Permanent Secretary at the flagoff ceremony in Abuja called on all Principals of Schools in the FCT to ensure that accurate, valid and reliable data of all schools were made available on time.

The Permanent Secretary

warned that it was illegal to falsify data submitted for the purpose of the school census, adding that such offence carries a heavy penalty.

He debunked the misconception that data gathered during the exercise would be used to levy schools and reiterated that all information gathered will be utilized for policy formulation, decision making and planning purposes only.

“I cannot emphasize

enough that collection of data is for policy formulation, decision making and planning purposes only. It is certainly not for school levy or other misconceived purposes.

“In the coming weeks, the exercise will begin all over the territory and I call on all stakeholders to cooperate fully with the officials carrying out this exercise in all the educational establishments all over the FCT”, he said.

Poverty Alleviation: 15, 000 Poor Benue Indigenes benefit from NCTO Benjamin Agesan, Makurdi

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o fewer than 15,000 poor Benue State indigenes have benefited from the National Cash Transfer Office (NCTO) poverty alleviation programme of the Federal government aimed at improving the living standard of poor people in the country.

Waghbo Terkula, Unit Head of Benue State Cash

Transfer Office who made this known at a two-day step down training on orientation beneficiary enrollment process in Makurdi, said each enrollee would be paid N5,000 monthly, disclosing that 14, 581 have so far benefited in the first phase of payment.

Waghbo explained that 9 out of the 23 Local Government Areas in the state have been selected to benefit from the programme in the first phase with three Local Gov-

ernments drawn from each of the three senatorial zones of the state.

He said Ushongo, Konshisha and Vandeikya have been captured from zone ‘A’; Buruku, Gwer West and Guma from zone ‘B’ while Oju, Ogbadibo and Ado local government areas have been captured from Zone C. Muhammad Musa, National Enrollment Officer in a presentation titled: ‘Local Government Cash Trans-

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fer Facilitators’, revealed that poverty and hunger were still high among rural dwellers especially female headed households with poor sources of income in Nigeria.

Muhammad emphasized that the Federal Government has created the conditional Cash transfer programme as a deliberate strategy to help graduate people from extreme as well as prevent the vulnerable from living below poverty line.

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he House of Representatives has indicated interest in partnering with professional journalists to flush out quacks in the pen profession so as to redeem the battered image of the fourth estate of realm.

Ahmed Wase, Deputy Speaker of the House who gave the indication in Abuja at an interactive session with House of Representatives Press Corps said quackery and non professional conduct is negative to sustainability of core journalistic values such as fairness, objectivity and balance.

The Deputy Speaker noted that journalists are agenda setters which government relies heavily on to evolve initiatives and programmes that can impact rapid development to the

generality of the people.

He however decried the rising number of fake persons who parade themselves as journalists to extort money from those in positions of authority, thereby denigrating the good image of professional journalists who are partners in progress of a nation.

Wase insisted that the National Assembly will wade in and assist the professional bodies such as the Nigeria Union of journalists on how best to weed out quacks who are using the noble profession to achieve their selfish needs.

Earlier, Grace Ike, Chairman of the House Press Corps sued for partnership with the National Assembly to ensure accountability of lawmakers for effective representation and provision of dividends of democracy to their various constituency across the country.

MSSN appeals to Kwara Government to intervene in attack on School Imam Sikirat Shehu, Ilorin

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he Muslim Students Society of Nigeria (MSSN) in Kwara State have appealed to the state government to prevail on management of all public schools in the state to allow students of different religious beliefs to observe morning assembly prayers according to the dictates of their religion.

The Muslim students said this is necessary to forestall a breakdown of law and orders in the state public schools.

MSSN condemned the recent occurrence at Bishop Smith College, Ilorin where the school’s Imam was al@Businessdayng

legedly molested by some staff when he attempted to pray in Islamic way, immediately after the Christian prayers were said at the school’s assembly ground.

Nurudeen Ibrahim, MSSN Chairman said that, “the Muslim dominated city of Ilorin is one of the most peaceful cities in Nigeria. Muslims in Ilorin (like others everywhere) are accommodating and tolerant. But our tolerance and peace loving nature are exploited as a basis for the desecration and infringements of our rights, religion and cultural norms.

“Thus, we received the above devastating news with a mix of umbrage and shock.

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NEWS Dangote Cement’s promo excites end users

…as lottery commission lauds ‘bag of goodies’ promo

TEMITAYO AYETOTO

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he mega-billion-naira “Bag of Goodies” promotion unveiled by the Dangote Cement plc last week has started generating excitement among consumers of Dangote cement as winnersbegantoemergejusthours after the launch in Lagos.

Joseph Makoju, group managing director, of Dangote Cement plc, had disclosed that not less than 21millionusersofDangotecement would win various prizes while the promo lasts.

He also revealed that lucky consumers would go home with 43 cars, 24 tricycles, 24 motorcycles, 550 refrigerators, 400 television sets, 300,000 Dangote foods goodies packs and recharge cards for all networks worth N200,000,000.

The excitement came just as the National Lottery Regulatory Commission commended the management of Dangote Cement for their foresight in running such a humongous promo meant to reward the end users for the first time in the built industry.

Visitstosomeoftheredemption centres across the country showed that winners have emerged just hours after the launch as winners

thronged the centres to collect the items won.

Tunde Mabogunje, Dangote CementLagosregionaldirector,said the consumers were too excited at the promo and have been coming forward to collect their winnings.

He noted that one of the users who bought 10 bags of Dangote cement hadscratchcardswithN10,000cash winnings in nine out of the 10 bags.

AccordingtoMabogunje,scores ofpeoplehavecometoredeemtheir winning cards for recharge cards worth thousands of naira, pointing out that the promo was a deliberate effort at rewarding the consumers.

He also said the company is happy that the consumers are winning.

Meanwhile, Nkiru Onuzulu, deputy director and coordinator of the Lagos Liaison Office of the LotteryCommission,haspraisedDangote Cement for putting in place a promo specifically to economically empowerendusersoftheirproduct, noting that such promo was not common in the industry.

She also vouched for the integrity of the redemption process, saying the Commission approved and endorsed the promo and would be working closely with the company to ensure the success of the entire process.

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“It is our duty to monitor the promo to ensure the process complies with laid-down rules and regulations,andthatitistransparent enough,” Onuzulu said.

She maintained that the “Dangote Cement Bag of Goodies” promo would be one of the best so muchsothattheconsumerswould long for more.

The leading cement company had last week launched a jumbo consumer promo, which it said was designed to economically empowersome21millionwinners across the country.

At the launch, Makoju, group managing director, Dangote Cement plc, who was represented

by Knut Ulvmoen, group executive director, Dangote Industries Limited, had said the company decided to run the biggest promo ever in Nigeria as a way of contributing to the economic wellbeing of the consumers of its products given the prevailing economic situation.

“Thepromoistorewardvalued consumers for their unflinching partnership in ensuring that our range of cement products remains today the first choice for construction purposes across the country,” he said.

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UNDP partners Elumelu Foundation to empower 100,000 Africa young entrepreneurs

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he United Nations Development Programme (UNDP), global development network of the United Nations, has partnered the Tony Elumelu Foundation (TEF), Africa’s leading philanthropy committed toempowering entrepreneurs - to train, mentor and financially support 100,000 young entrepreneurs in Africa over 10 years towards the achievement of the Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063.

The TEF-UNDP Sahel Youth Entrepreneurship Programme, expected to mobilise support for businesses, aims to generate millions of new jobs and contribute at least $10 billion in new annual revenues across Africa.

This was announced at the 12th Extraordinary Session of the Assembly of the African Union (AU), where TEF founder, Tony Elumelu and UNDP regional director for Africa, Ahunna Eziakonwa, joined African presidents at the African Continental Free Trade Area (AfCFTA) Business Forum, where the agreement was signed.

The President of Niger, H.E Mahamadou Issoufou joined UNDP and TEF to launch the programme.

The partnership will target young Africans in under-served communities, starting with the Sahel, given the region’s opportunity as the youngest population in the world with 194 million people under 25 years of age (64.5% of the total population).

The TEF-UNDP Sahel Youth Entrepreneurship Programme will be implemented through TEF’s flagship Entrepreneurship Programme, which has already benefited 7,520 local entrepreneurs across 54 African countries in just five years of existence. Similarly, the programme builds on UNDP’s YouthConnekt initiative. The aim is to increase job creation through dynamic entrepreneurship and create sustainable economic growth that anchors the development of communities and states.

Speaking on the partnership,

Ahunna Eziakonwa, assistant secretary-general and UNDP regional director for Africa, said, “We see Sahel as a land of many opportunities and investing in the youth is a pre-condition to stabilizing the region. The youth should be at the heart of any development agenda. We need to invest in their potential, talent, energy and enthusiasm and create the opportunity for them to fully realize their dreams.

That is why UNDP is co-creating development solutions by investing in entrepreneurship models to promote inclusive growth.

Partnership with the Sahelian youth entrepreneur is a catalyst for transformation and sustainable development. We call on other private sector entities to join the TEF to support young entrepreneurs.”

On her part, CEO of the TEF, Ifeyinwa Ugochukwu, said: “Our partnership with UNDP is welcome and timely – it will directly assist entrepreneurial success in a number of fragile areas and is a testament to the validated approach to philanthropy we have pioneered.

“Africa needs partners that do not only believe in the potential of its private sector to champion economic development, but backs this with commitment.

With this agreement, UNDP has proven to be a true partner to Africa’s entrepreneurs and has demonstrated its commitment to work with us to scale up the impact of this initiative and eliminate poverty on the continent”.

T h e T E F- U N D P p ro gramme is fully aligned with the 1 Million by 2021 Initiative of the Chairperson of the African Union Commission, His Excellency Moussa Faki Mahamat. Launched in April at the AU Headquarters in Addis Ababa, the 1 Million by 2021 Initiative aims to concretely reach 1 million African youth from across the continent with opportunities and interventions in the key areas of Education, Entrepreneurship, Employment and Engagement (4Es) to accelerate Africa’s socio-economic development.

NAFDAC suspends drinking of some batches of Eva bottle water till further notice Anthonia Obokoh

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ational Agency for Food and Drug Administration and Control (NAFDAC) has directed Nigerian Bottling Company Limited to recall Eva Premium Table Water 75cl as a precautionary step pending investigation by the Agency.

According to a statement on NAFDAC twitter handle, the company voluntarily reported to NAFDAC on June 20, 2019, a change in colour of the product from colourless to light green and presence of particles in two lots.

The twit reads: “Public Alert No. 0011/2019 – Recall of Eva Premium table water 75cl due to change in colour and presence of particles.”

The affected Eva Premium Table Water 75cl was produced between May 22 and 23, 2019, at Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo

State.

The details of the affected Eva Premium Table Water 75cl with the production date and best before date 220519.14.27 AC4 220520 and 230519.15.15 AC4 230520.

Eva Premium Table Water 75cl produced by Nigerian Bottling Company is registered by NAFDAC. The NAFDAC Registration Number is 01-0492.

Production of Eva Premium Table Water 75cl at Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo State has been suspended pending the outcome of investigation being conducted by the Agency.

NAFDAC implores distributors, wholesalers and retailers to immediately stop the distribution and sale of the affected Eva Premium Table Water 75cl.

They should return the stock of the affected product in their possession to Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo State. www.businessday.ng

L-R: Isa Pantami, DG, NITDA, with Tank Li, MD/ CEO, Huawei Nigeria Enterprise Business, during the ICT Academy signing ceremony between Huawei and NITDA at 2018-2019 Huawei Nigeria ICT competition award and 2019-2020 launch ceremony in Abuja.

Pic by TUNDE ADENIYI.

Manufacturing, construction’s below 30% contribution to economy too low to drive insurance uptake MODESTUS ANAESORONYE

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o grow insurance business in Nigeria, major sectors of the economy, especiallymanufacturing andconstruction,mustcontribute significantly to the economy to enhance demand for insurance.

Manufacturing sector’s contribution, currently at less than 30 percent, cannot support insurance industry growth.

Doyin Salami, CEO of Lagosbased Kainos Edge Consulting, saidmanufacturingandconstruction are major sectors in the economy that drive activities across board, including job creation, which automatically impacts on standard of living of the populace.

Manufacturing industry currentlycontributes10percenttothe country’s gross domestic product (GDP) and construction industry contributes 5 percent, but these

figures are too low to support uptake of insurance, either as protection for assets, construction risks, group life or personal life insurance, among others, Salami said in a side discussion at the just-concluded 2019 National Insurance Conference in Abuja.

Comparatively, agriculture sector contributes 19 percent to the GDP, trade and distribution contributes17percent,oilandgas 10 percent, telecoms 10 percent, and real estate 7 percent.

Salami said there must be clear-cut policies to grow manufacturingandconstruction,charging insurance industry to lead the discourse for government and policymakers’ attention.

“The structure of this economy requires us to be more involved and engage key stakeholders to support our industry,” Salami said.

TheNigerianinsuranceindustry at the end of 2018 financial year generated a total business of N400 billion, a 10 percent increase from N364 billion generated in 2017.

From the figure, the industry paid a total of N160 billion, as against N140 billion in 2017.

Yetunde Ilori, director-general, NigerianInsurersAssociation(NIA), harped on the need to support insurance sector growth, saying insurance is critical to the growth of every sector of the economy.

“Look at aviation industry, for instance,noaircraftcanbeallowed to take off without insurance cover.

Numberoneisfortheaircraftitself; secondlyistheliabilitysideofit,and thirdlyisthethirdpartyliabilityand damage,” Ilori said.

According to her, insurance is important to everyone – including individuals, businesses, corporates,government–because

everyone is exposed to risk.

“Rather than making daily provisions for liabilities, or being distracted from your business by thinking of how to provide for liability that may befall the business, you shift it to insurance companies and concentrate on your core business,” she said.

Ilori said by shifting the risks to insurance, firms’ productivity would increase, contribution of every sector to the economy would also increase because the appropriate sector is taking care of the risks of possible financial loss that the firms’ are exposed to.

“If you also look at a thriving sectorliketheoilandgasbusiness, there are also many risks that the sectorisexposedto.Isitspillage?Is itexplosion?Orisittheequipment they use for drilling that sometimes disappears as a result of one accident or the other?” she said.

Renewable energy in Africa gets lift on €40m One missing, houses burnt in Taraba hours after peace meeting investment from European Commission STEPHEN ONYEKWELU

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frican Development Bank (AfDB) has announced a €40 million investment from the European Commission for the Facility for Energy Inclusion (FEI), a new platform for financing small-scale renewables in Africa.

The announcement was made to energy sector stakeholders at a sideline event held during Africa Energy Forum in Lisbon, Portugal, in June. The bank, the European Commission, in partnership with Lion’s Head Global Partners and Fieldstone and the Lusophone Renewable Energy Association presented the Facility to participants at the Forum.

FEI is a $500 million financing platform spearheaded by the AfDB to catalyse financial support for innovative energy access solutions. FEI On-grid, a targeted $400 million fund, supports improved energy access through the development of small-scale renewable energy generation and mini-grids across Africa, while the Off-Grid Energy Ac-

cess Fund (OGEF), a targeted $100 million fund supports off-grid energy distribution companies and boost their long-term capacity to access capital markets at scale.

Joao Cunha, manager for Renewable Energy Initiatives at the AfDB, said FEI had been developed to offer debt instruments, including in local currency, to companies providing affordable, clean and sustainable access to underserved communities in the sub-Saharan region.

“Through FEI, we aim to increase co-financing and private sector investment in innovative on-grid and off-grid clean energy access solutions, and consequently move faster on our “Light Up and Power Africa priority to achieve universal energy access in Africa by 2025,” said Cunha.

The event was attended by the renewable energy investor community, including representatives from various Development Finance Institutions (DFIs), international and African commercial banks, project developers and sponsors.

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...Tiv Paramount ruler insists indigenous Tiv in Taraba must be accommodated Nathaniel Gbaoron, Jalingo

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arely eight hours after a security meeting between Taraba and the Benue State governments held in Makurdi, Gese village, a Tiv community in Wukari Local Government area of Taraba was attacked and razed by some youths.

This is even as one person was said to be missing between Tar-Orshi and New area on his way to Wukari.

Nathaniel Gbanwuan, a resident of the community told our correspondent that the attackers invaded the village at about 2:am on Sunday and burnt the entire village.

Gbanwuan noted that no life was lost in the attack, as the villagers had earlier fled the community located along Rafinkada -Donga road for fear of attack, which eventually happened.

Caretaker Chairman of Wukari Local Government Council, Daniel Adi, said over the phone that a Jukun man travelling on a motorcycle from Rafinkada to Wukari was reportedly missing on Sunday morning. @Businessdayng

Adi who confirmed the attack on Gese village, however said the attack was carried out by irate youths who were prevailed upon by some Tiv elders not to attack Rafinkada.

The Tor-Tiv, James Ayatse, had during the security meeting insisted that for genuine peace to return in Wukari, the indigenous Tiv people in the area must be accommodated and integrated.

“The Jukun and the Tiv people have a common history in the Benue valley and anybody who now wants to expel the Tiv people from Wukari for whatever reason must think twice, because the agenda will not work.

“The crisis in Wukari will only stop when the Tiv people in Wukari are accepted as indigenes of Taraba,” he said.

The Tiv paramount Ruler who backed the call to end the killings, called for the sincerity of purpose on the part of government and the people in ending the hostilities.

Taraba State Police PRO, DSP, David Missal told BusinessDay that he was yet to receive briefing on the two incidents.

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NEWS

‘Never confuse a clear line of vision with a straight line of execution’

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he recently concluded Nigeria Oil and Gas Conference, 2019, themed ‘Driving Nigeria’s Oil and Gas Industry Towards Sustained Economic Development and Growth,’ can only be described as nothing short of insightful, challenging and eye-opening.

One presentation that struck a chord with the audience was Oando plc’s group chief executive, Wale Tinubu’s thought leadership speech where he walked through Oando’s evolution from a downstream company to an integrated energy solutions provider.

He highlighted the challenges the company faced in this journey and how through determination, focus and tenacity they were always able to realise their goals and finally he used this as an opportunity to advise indigenous players in attendance on how best to consistently add value and remain relevant in the industry.

The event also marks Maitanki Baru’s, the erstwhile group managing director of the NNPC, last NOG as GMD of the NNPC. Baru gave a heartfelt opening speech, saying: “This year’s event comes with mixed feelings. Like many of you know I’ll be retiring from my position as GMD, NNPC with effect from July 7. This event is an opportunity to bid goodbye to some of you whom I’ve worked with in the course of my career over the past 30 decades.”

Baru went on to highlight some of the achievements of the NNPC during his tenure including the identification of investment opportunities replete in the Nigerian oil and gas sector, paying down cash call obligations and strategic partnerships with both indigenous and International Oil Companies (IOCs), among others.

The GMD’s speech was followed by Wale Tinubu’s thought leadership session titled: ‘The Evolution of Oando: Survival and Growth Strategies’.

In Wale Tinubu’s walk down memory lane he enlightened the audience on the support Oando had received from the NNPC in the early days of the business.

“We had a lot of support from the NNPC when we started out as a trading company in 1994.

We had the opportunity of working with NNPC in the 90s in what was typically the golden age in the industry when the refineries worked to full capacity.

The refinery was doing so well in Kaduna that we had excess petroleum products and we secured a very innovative solution for the NNPC to manage the excess products,” he said.

Speaking further on the NNPC’s support, he said: “We branched out towards infrastructural opportunities, once again with the NNPC. We built the first gas distribution network in Lagos. It was called Gaslink Lagos, NNPC gave out the gas in the project and today there are about 130 industries taking gas from us and we have been able to drop, by at least 40%, the cost of power to those industries and in the process stimulate economic growth.”

Gambia woos Nigerian investors, offers tax-free incentives, unfettered access to land Chuka Uroko

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overnmentofTheGambia, one of Nigeria’s English speaking West African neighbours, has told visiting Nigerian investors that the country is free, good and open to business.

The country assured the investors of a number of incentives including free tax and VAT operations,unfetteredaccesstolandand 100 percent profit repatriation.

Isatou Touray, vice president of the country, at a dinner to receive theNigerianinvestorsinBanjul,the

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Gambiancapital,onSaturday,said in rebuilding the country after 22 years of dictatorship, they needed private capital to be injected into their economy.

Touraysaidthecountrylooked up particularly to Nigeria as big brother in Africa, and its investors to help in their economic block building efforts by investing in the country.

The vice president, who represented the president, Adams Boro, whose election in January 2016 ended the many years of dictatorshipinthecountry,pointedoutthat the country needed investment

in critical sectors of its economy includingagriculture,tourism,real estate, manufacturing, energy, etc.

Earlier, Seedy Bittayean, an official of the Gambian Import and Export Promotion Agency (GIEPA), had explained to BusinessDay in an interview that the country needed investors.

In order to jumpstart their economy and also to reduce their exposuretoimporteditemsincluding foodstuff, which in some cases, according to him, was as high as 90 percent.

Bittaye,whoseagencyoversees import and export activities and

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investmentinflowintothecountry, noted that the country needed investors most in agriculture in order to tap into the opportunities the vast arable land in the country offered and create jobs.

He disclosed that efforts were being made to reform land tenure system in the country not only to put an end to land grabbing which was the case in the past but also to make access a lot easier for investors. The destination, he said, was to attain land free-hold system as against the lease hold system for investors at the moment.

Inhisopeningremarks,Musta-

@Businessdayng

pha Njie, the managing director of Taf Africa Global, who was the chief host, explained that Gambia needed all the investment that it could get at the moment given its harrowing experience under a dictatorshipthathelddowndevelopment in the country.

Taf Africa Global is a Pan African and global real estate investment and development firm with strong footprints in many African countriesincludingNigeriawhere, in Port Harcourt, it developed the 750-unit high end RivTaf Golf Estate with plans to do more in other parts of the country.

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news Buhari approves payment of N350bn Export Expansion Grants to exporters Tony Ailemen, Abuja

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fter several years of carryovers, President Muhammadu Buhari has approved payments of backlog of N350 billion export expansion grants to exporters.

Segun Awolowo, executive director, Nigerian Export Promotion Council (NEPC), disclosed this over the weekend, saying the backlog would be paid to exporters through the Debt Management Office (DMO).

With the approvals, exporters will now receive their certificates, which they can use to cover loans, debts, pay AMCORN and pay taxes as well.

Awolowo, who expressed gratitude to President Buhari for the gesture, said the sum of N190 billion had been appropriated in the 2019 budget and approved by the National Assembly for the payment.

“The President promised to give continuous support for this export. I thank him that we have paid the backlogs on the export expansion grant, that is an incentive that we give to exporters. We owed them for several years but we have reversed the whole

system and the president approved to pay the backlog of N350 billion to pay them,” Awolowo said.

“The National Assembly has appropriated and approved N190 billion out of it so far and we are paying it through the DMO. “We are about to enter into African Continental Free Trade Area (AfCFTA) Agreement, which is the biggest in the world, we don’t want to be a dumping ground and that is why Mr. President refused signing until we are ready. We must be competitive, we must produce more, and we must help our manufacturers get into this market.”

Against the backdrop of poor revenue from oil, Nigeria put in place, a zero-oil plan, in line with the growth recovery plan, to drive an export revolution to move foreign earning from $5 billion to $30 billion exploring the nation’s comparative advantage of agricultural products.

The zero-oil plan aims at earning at least $30 billion from non-oil sources in the near to medium term as against the current earnings of about $5 billion Awolowo said Nigeria had identified 22 sectors where the

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country could earn foreign exchange apart from oil.

“We are hoping that in the next 10-15 years we will be able to raise $150 billion from sources outside oil. That is what we are working on and we are galvanizing the whole states behind us in order to raise production and productivity. We are working with the relevant MDAs to achieve this.

“You know the CBN just announced an initiative on five of our products and giving them low interest rates to farm and raise production.

Nigeria is leveraging on exports from Cocoa as an immediate win, being Nigeria’s number one none oil revenue raking exports commodity But, according to him, Nigeria’s 300,000 metric tons is far behind Ghana’s 900,000, metric tons, even as Cote d’ Ivoire is now heading towards two million metric tons.

“So, how do we compete?

Meanwhile if you see the landmass in Nigeria you can imagine what we can do.

“Another sector is sheer nut; cashew is another breadwinner for us. So let’s raise production, let’s give our farmers, plantations low interest loan so that they can raise production for us.

How to exploit Nigeria’s $900bn dormant capital in real estate for wealth creation ISRAEL ODUBOLA

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yotunde, a Lagos-based merchant dealing in cars, owns three plots of land in Ikorodu. The 43-year-old trader approaches his bank for a N10 million loan to expand his business but his request is rejected. The bank will not help him because the landedasset tendered as collateral lacks verifiable ownership proof.

Like Ayotunde, many Nigerians are oblivious of the economic value embedded in having their property duly titled. This has consequently created a large stock of dormant assets with zero economic relevance.

Harnessing the vast dead capital in the Nigerian real estate sector can provide the country with the required capital resources needed to bolster growth and create wealth for its 200 million inhabitants.

This is even more important as the International Monetary Fund (IMF) in its latest report on Nigeria warned that income per head will decline in the near term as economic growth continues to be outpaced by a faster population rise. Unlocking the potential in dead assets might help reverse the trend.

“We estimate that Nigeria holds at least $300 billion or as

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much as $900 billion worth of dead capital in residential and agricultural real estate alone,” said analysts at consulting and advisory firm, PricewaterhouseCoopers (PwC), in their report titled ‘Bringing Dead Capital to Life: What Nigeria should be doing’.

The estimate was based on a population figure of 180 million, and 36 million households of which 95 percent have no title on their assets.

Putting this in context, unlocking $900 billion will expand the size of the economy from $445 billion (according to IMF) to $1,345 billion, and might be the breakthrough to bridge the country’s wide housing shortage of over 17 million units.

Dead capital is an economic term relating to properties that are informally held, and so not legally recognised. The uncertainty of ownership diminishes the value of the asset and the ability to lend or borrow against it.

Becausethesepossessionsare not well recorded, they cannot be readily converted to capital, cannot be traded outside narrow local circles where people know and trust each other, and cannot be used as collateral for loan or as share against investment.

Majority of houses in Nigeria have no title or contestable title and cannot be used as collateral

@Businessdayng

to finance economic activities, leaving billions of capital idle as there is no way to utilise such capital.

Creating a mechanism that allows asset owners to use their property as collateral to access credit is one big way to unlock dead capital.

In Nigeria, real estate is mostly accepted as collateral by financial institutions to secure loans, implying that owners of properties whose asset have no title cannot access credit.

“Collateral laws shape access to funds to a large extent. Dead capital cannot be unlocked if existing collateral laws are not revised to adequately support credit creation,” said Damilola Ijalade, broker at PWAN Homes.

In advanced climes, the major source of capital for business owners is their home. By representing assets with titles, western nations have comfortably turned their assets to wealth.

For instance, every asset in the US, either privately or stateowned, is titled and recorded at time of creation and quantified to the extent that it can be used as collateral to raise funds, first in the primary market, and then mortgage instrument created can be sold and resold in the secondary market, bundled together to create more money.

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FINANCIAL TIMES

World Business Newspaper LAURA PITEL

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ew Turkish financers expected to find themselves standing up for Murat Cetinkaya, Turkey’s former central bank governor, whose three years in office were often marred by erratic and unorthodox policy making.

But his sacking over the weekend by President Recep Tayyip Erdogan after a clash over the pace of interest rate cuts drew howls of outrage.

“Removing the central bank’s governor in this manner will deal a big blow to its institutional structure, capacity and independence,” Ibrahim Turhan, a former deputy central bank governor, wrote on Twitter.

The manner of Mr Cetinkaya’s departure means that the new governor, his former deputy Murat Uysal, risks being seen as beholden to the president. Faik Oztrak, a former senior Treasury official and a member of Turkey’s main opposition party, warned that the central bank had become “a prisoner of the presidential palace”.

The firing of Mr Cetinkaya has deepened the already profound concerns among investors about Mr Erdogan’s dominance over all areas of government policy, including economic management.

Some now fear that, if the new governor faces pressure to aggressively cut rates, Turkey could be headed for a repeat of the currency crisis last summer that wiped 30 per cent off the value of the Turkish lira in 2018, caused inflation to skyrocket and triggered a recession.

Analysts say that this would be a lot more painful a second time round,

Sacking of Turkish central banker sparks concern Fears that new governor will face increased pressure over rates

especially for Turkish corporates that are saddled with foreign currency debt and their lenders.

“If you are hit by another exchange rate shock when the economy is already in a recession that will severely limit your ability to pay back your debt,” said Selva Demiralp, a professor of economics at Istanbul’s Koc university. “We haven’t even resolved the first crisis yet … Another hit is only going to make things worse.”

When Mr Cetinkaya was appointed as governor three years ago, he was widely seen as a lackey of Berat Albayrak, Mr Erdogan’s powerful son-in-law, who last year became treasury and finance minister.

Under fire from Mr Erdogan — a notorious opponent of high interest rates — he drew criticism from investors for failing to respond quickly enough to steep slides in the lira.

When the currency plunged last August, the bank waited six weeks before raising its benchmark rate to 24 per cent.

Though investors have been alarmed by other unorthodox tactics, most notably the bank’s efforts to disguise an erosion of its foreign currency reserves, they have praised Mr Cetinkaya for keeping the main rate on hold

The firing of Murat Cetinkaya has deepened the already profound concerns among investors about the dominance of Recep Tayyip Erdogan’s dominance over all areas of policy © Reuters

since September. Inflation fell to 15.7 per cent last month, while the large current account deficit has drastically shrunk.

Yet, behind the scenes, tensions were mounting. The central bank governor increasingly clashed with Mr Albayrak, according to several people familiar with the matter.

The finance minister acted as an emissary for the president, whom Mr Cetinkaya had not seen oneon-one for almost a year prior to

his sacking.

Mr Cetinkaya angered the finance minister by refusing to cut rates at the last meeting of the monetary policy committee in June.

They tussled again over the plans for the next meeting, in late July, when Mr Cetinkaya was willing to lower rates — but not as much as Mr Albayrak wanted. Mr Erdogan last month warned that high rates were “hurting” Turkey and promised that a “definitive solution”

would be found soon.

Less than three weeks later, Mr Cetinkaya — who refused to resign — had been fired. Legal experts said that the manner of the sacking, by presidential decree, was illegal.

A finance ministry spokesman did not respond to a request for comment. But Mr Erdogan all but confirmed the dispute over rates at a meeting of ruling party MPs on Saturday, according to Turkey’s Hurriyet newspaper.

nears recession as Brexit deadline looms Deutsche Bank to exit equities UK Business uncertainty is hitting Britain harder than many other economies trading in radical overhaul GAVYN DAVIES

Germany’s largest lender closes unit and unveils €74bn ‘bad bank’ as part of global retreat OLAF STORBECK AND STEPHEN MORRIS

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eutsche Bank has unveiled one of the most radical banking overhauls since the financial crisis, closing swaths of its trading unit and hiving off €74bn of assets as the struggling German lender calls time on its 20-year attempt to break into the top ranks of Wall Street.

Deutsche confirmed it would close down its lossmaking equities trading business and shrink its bond and rates trading operations in a long-awaited announcement on Sunday afternoon.

It is also creating a new bad bank — dubbed a “capital release unit” — that will comprise €74bn of risk-weighted assets, equivalent to €288bn of leverage exposure on the balance sheet.

Around €3bn of upfront restructuring costs will push the bank into a second-quarter net loss of €2.8bn, and the total bill is expected to rise to €7.4bn by the end of 2022, the bank said in a statement.

The bank said it “intends to fund

its transformation from its existing resources, without requiring additional capital”.

The new strategy by Christian Sewing, chief executive, signals a retreat from Deutsche’s global ambitions and its aim to be Europe’s main rival to Goldman Sachs. One year ahead of Deutsche’s 150th anniversary, Mr Sewing is refocusing the lender on its historic roots — financing German and European corporate clients and domestic retail banking.

“These actions are designed to allow Deutsche to focus on and invest in its core, market-leading businesses of corporate banking, financing, foreign exchange, origination and advisory, private banking and asset management,” the lender said.

As many as 20,000 jobs are also expected to be cut, but the bank did not mention headcount reductions in its initial statement. Most of the job losses are set to come at the investment bank, particularly the underperforming operations on Wall Street and in the City of London. www.businessday.ng

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ecent economic data have shown further weakness in manufacturing sectors in most of the major economies, including Germany where growth is now negative. Amid this generally sluggish global backdrop, one big advanced economy looks in more danger of recession than most others. That country is the UK, where economic activity data have been plummeting as the next Brexit deadline approaches on October 31.

According to the latest Fulcrum nowcasts, UK activity growth has fallen to minus 0.8 per cent, compared with plus 1.0 per cent as recently as mid May (see box). Since then, economic data have revealed downward steps in the annualised growth rate on five successive occasions.

As in other countries, some of these drops have come from the industrial sector, with business surveys and official industrial production releases both contributing towards significant declines in estimated activity growth. However, two Brexit-related developments have hit UK industry particularly hard.

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First, business sector investment in equipment and new building has strongly underperformed in Britain since the EU referendum result.

Mark Carney, governor of the Bank of England, last week said UK investment has fallen about 12 per cent below the path that would have been expected from previous UK cyclical behaviour, and from the experience in other economies since 2016. This gap may continue to widen as Brexit uncertainties persist.

Second, there was an increase in precautionary stockbuilding ahead of the first Brexit deadline on March 29, and some of these stocks have probably been shed by cutting output subsequently. There was also a temporary hit to industrial production data for May as car factories brought forward their closures for annual maintenance.

It is unclear how far these “temporary” Brexit-related factors will unwind before the end of October, but there seems little doubt that the industrial sector has already travelled into recession.

What about the rest of the economy?

Here the evidence is less clear cut but is becoming more concerning.

According to the nowcast model, the

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past two CBI distributive surveys have both contributed towards large downgrades to estimated activity growth.

The most recent services purchasing managers’ index for June fell to a level just above stagnation in that sector.

Furthermore, the June PMI for construction was exceptionally weak, taking the economy-wide composite PMI for June down to 49.2, compared with 50.7 in May. This signalled the first contraction in activity for the private business sector since the temporary collapse in business sentiment that followed the Brexit referendum in June 2016.

The one bright spot amid all this gloom is the buoyant state of the labour market. The unemployment rate is at cyclical lows and official data for employment growth remain robust.

This resilience in hiring new employees may seem surprising, given the extent of the contraction in business investment.

The explanation is probably that businesses believe it is less difficult to reverse mistaken decisions on hiring new staff than it is to unwind expensive long-term capital investment plans. But if the conditions continue to deteriorate with contractionary trade and Brexit shocks, the effect on employment could be seen quickly.

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How private equity overcame its fear of dabbling in drugs With a $2.5tn cash pile and fierce rivalry for usual deals, buyout groups are moving into biotech HENNY SENDER

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ilicon Valley biotech start-up BridgeBio celebrated its fifth birthday last week by going public at a valuation of $3.3bn, bringing a lucrative payday for investors including venture capital firm Sequoia Capital.

But while venture capital has a history of investing in early-stage biotechs, among those reaping the rewards from the BridgeBio IPO was Sequoia’s private equity neighbour in Menlo Park, KKR. Private equity has long invested in more established parts of the healthcare sector, putting its money to work in businesses such as hospitals and medical device manufacturing that produce steady cash flows which can be used to pay off the debt used for acquisitions. The mega $33bn buyout of hospital operator HCA in 2006 led by KKR and Bain Capital was a case in point.

Biotech investment, on the other hand, requires long time horizons and specialist expertise to take bets in a sector where new drugs often fail to live up to their promise and regulatory approval can take considerable time.

But this has not stopped private equity from becoming a major investor in life sciences and big pharma in the past two years.

In some ways, this embrace of biotech is counter-intuitive. “The cycle can easily be 15 years from inception to commercial success,” said Fred Hassan, a director of Warburg Pincus’s health practice and a pharmaceuticals industry veteran.

“There is a mismatch between the investment cycle and the development cycle. Moreover, [new drugs] have a high failure rate.

Biotech is hard to predict. Nine out of 10 end in failure.”

“Private equity has VC envy,” said the head of life sciences at one major private equity firm. “All the buyout firms are looking at doing growth equity and that takes them to life sciences. They are taking advantage of big pharma’s shortcomings.”

The economics are daunting. It costs $2.5bn on average to develop a drug. The top 20 drug companies spend a combined $60bn a year on research and development, according to data from Blackstone.

Most of that money is invested at later development stages and in drugs that treat the most highprofile diseases, which often means cancer. That also means it can be hard for other drugs to attract funding.

Private equity’s interest in life sciences reflects several trends.

First, at a time when “impact” investing has become ever more fashionable, investing in drug development allows companies to present themselves as doing good, not just enriching themselves.

At the same time, the competition for big deals that take control of mature companies — private

equity’s usual area of expertise — has become intense, while returns are starting to come down. That is why the industry, with a record $2.5tn of unspent cash, needs new places to invest. Given the greater risk, they aspire to returns of 25 per cent, or twice as much as on traditional buyouts.

The biggest private equity groups vary in their approach to this new area of business.

KKR, for example, decided it would build in-house expertise.

“We wanted to challenge ourselves to succeed at sourcing and commercialising attractive opportunities,” said Ali Satvat, who runs the firm’s life science practice from its Menlo Park office.

So the group, which is synonymous with buyouts, kick-started the operation with more than $300m of its own money and funded the first six deals with this pool of capital. Then about 18 months ago, it raised a $1.4bn fund, where KKR remains the biggest investor.

Meanwhile, in Boston, Bain has established Bain Capital Life Sciences, a venture-like business to complement its private equity activities, reviewing something like 1,000 companies each year and investing in seed and earlystage companies, according to Jeffrey Schwartz, who is in charge of many of the life sciences initiatives at Bain.

Bain recently joined forces with investment firm Orbimed and Pfizer to launch SpringWorks Therapeutics, putting in $103m of early-stage series A funding. It plans to help develop drugs that are still in clinical trials. It has also worked with Pfizer to create Cerevel Therapeutics, investing $350m in its initiatives to develop drugs for central nervous system disorders.

Blackstone, too, has moved into life sciences, although it is buying, rather than building, expertise. Last year, it acquired Clarus, a life sciences investment firm that takes promising drugs that are being developed by big pharma groups and shepherds them through the long and costly approval process. It then takes a share of the profits for those drugs that make it through the process. Blackstone said it would use Clarus as the base of its own new life sciences business, “filling a critical void in the industry, which is seeing unprecedented growth, but lacks the necessary funding to bring medicines and healthcare to market”.

Clarus is raising its own fund with the help of the powerful Blackstone machine — as much as $5bn, according to competitors.

As private equity groups build their life science business, they are moving closer to the earliest stage financing model of venture capital firms such as Sequoia or those such as General Atlantic, a private equity firm with a history of providing growth equity to the sector as a minority investor. www.businessday.ng

On the global economic outlook, Bruno le Maire said EU leaders should try to settle trade tensions with the US © AFP

French minister says top IMF job must stay with Europe Bruno Le Maire claims it is in the continent’s interests to keep leadership HARRIET AGNEW

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rance’s finance minister Bruno Le Maire has said that the top job at the IMF should go to a European candidate, reiterating the decades-old convention for one of the most sought after jobs in international finance.

All of the 11 heads in the IMF’s 73-year history have stemmed from Europe, with a US citizen managing the World Bank in return. Asked if it would be possible to have a non-European candidate for the managing director of the IMF, Mr Le Maire said: “No. I am a European, so I think that it is in the interests of Europe to keep the leadership at the IMF.” Mr Le Maire spoke to the Financial Times in an interview on the sidelines of the Rencontres Économiques gathering of economists, politicians and business leaders in Aix-en-Provence.

The nomination of Christine Lagarde for the top job at the European Central Bank has left a vacancy at the top of the IMF. Mr Le Maire

ruled himself out for the job and declined to comment on France’s support for potential candidates such as Mark Carney, governor of the Bank of England, who holds British, Irish and Canadian citizenship. The important thing is “to find a compromise as soon as possible on the European candidate,” he said.

Mr Le Maire reiterated support for Ursula von der Leyen, Germany’s defence minister who has been picked as the new leader of the European Commission, and must win over many MEPs who oppose her appointment. Her unexpected appointment has provoked widespread bemusement in her home country. Mr Le Maire said that “we don’t have a Plan B” if Ms von der Leyen is not backed by the European Parliament.

On the risk of France breaching the EU’s deficit limit of 3 per cent of economic output, Mr Le Maire said tax and labour market reforms were starting to have positive effects, boosting growth and reducing unemployment.

He pointed to the next wave

of reforms to the unemployment system and pensions. “We are fully determined to remain on the path of reforms. But, of course, we will stick to our European commitments.”

Emmanuel Macron, French president, has spent about €17bn to pacify the anti-government gilets jaunes movement.

Business leaders warn the spending package could undermine Mr Macron’s ability to cut public spending, which at 56 per cent of gross domestic product is the highest in the EU. France’s budget deficit had been forecast to hit 2.8 per cent of economic output this year, bringing it below the EU limit of 3 per cent, but economists have warned that the gilets jaunes giveaway puts it at risk of breaching the limit.

“Tax cuts for consumers have not been financed by a decrease in public spending so there are fears that companies could end up footing the bill,” said Geoffroy Roux de Bézieux, chief executive of Medef, the employer federation. “At some point the figures do not add up.”

Indian lender PNB alleges $556m fraud by steelmaker Second such scandal in as many years raises questions over health of state banks BENJAMIN PARKIN

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ndia’s second-largest state l e n d e r P u n j a b Na t i o n a l Bank has reported a Rs38bn ($556m) fraud, raising questions about the health of India’s public sector-dominated financial system only a year after one of the country’s biggest scandals rocked the same bank.

Punjab National Bank said that investigators and forensic auditors uncovered an alleged fraud in the account of Bhushan Power & Steel, a steelmaker undergoing bankruptcy proceedings.

The fraud extended internationally, the bank said, with $50m worth of alleged fraudulent borrowings from a branch in Dubai and a further $39m from Hong Kong. The bank said it had reported the scam to the Reserve Bank of India, the country’s central bank.

Bhushan Power & Steel “has misappropriated bank funds,

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manipulated books of accounts to raise funds from consortium lender banks”, the bank said in a regulatory filing. Bhushan Power & Steel did not respond to a request for comment.

The lossmaking Punjab National Bank, whose assets total about $113bn, was last year at the centre of one of India’s largest political and financial controversies after it reported that companies associated with celebrity jeweller Nirav Modi were allegedly behind a fraud worth about $2bn.

The two scandals have highlighted concerns about corporate governance standards at the heart of India’s banking system, in which public lenders account for roughly two-thirds of bank assets.

Some economists and business leaders have called for the privatisation of state lenders, arguing that publicly controlled banks are liable to make politically motivated lending decisions, adding to a precarious pile of @Businessdayng

non-performing loans dished out to powerful industrialists.

The government under Prime Minister Narendra Modi has so far resisted calls to privatise banks, opting instead to introduce a tough new bankruptcy and insolvency law in 2016 designed to strengthen the rights of creditors.

Punjab National Bank’s share price is trading at less than half its peak in early 2018 before the Nirav Modi scandal was revealed.

Authorities charged more than 20 people over the scandal, including the bank’s former chief executive. The government is trying to extradite Mr Modi and one of his associates back to India after they left the country.

Bhushan Power & Steel, meanwhile, was one of 12 companies that the Reserve Bank of India forced into bankruptcy proceedings in 2017 under the country’s landmark insolvency law.

Monday 08 July 2019

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Investors flee active funds at highest rate in 3 years More than $30bn pulled so far in 2019 as stockpicking comes under intense scrutiny ATTRACTA MOONEY

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nvestors in the US and Europe have fled active mutual funds at the highest rate in at least three years, pulling more than $30bn so far in 2019 as stockpicking comes under intense scrutiny.

The active investment industry, where fund managers select stocks rather than track an index, has been under severe pressure because of disappointing performance, high fees and booming stock markets. The decisions by Swiss asset manager GAM in 2018 and British star manager Neil Woodford last month to stop investors taking their cash from some funds after a wave of redemptions intensified scrutiny of the sector.

Meanwhile, passive funds, which track indices, continue to take market share, accounting for 37.5 per cent of the mutual fund market in the US, up from 35.5 per cent a year ago. In Europe, their market share jumped to 18.3 per cent, from 16.6 per cent in the same period, according to Morningstar, the data provider.

Dimitar Boyadzhiev, analyst at Morningstar, said active funds had been hit by challenging macroeconomic factors this year, including concerns about the US-China trade war.

“The other forces that will continue to drive flows from active to passive are low fees and strong performance [of passive funds],” he added.

Investors pulled €20.9bn from active mutual funds based in Europe in the five months to the end of May,

compared with net sales for the same period in each of the previous five years, according to figures from Morningstar.

In the US, active funds suffered redemptions of $12.9bn in the five months to the end of May, reversing a trend of positive sales in the same period in 2017 and 2018. The figures exclude money market funds.

Alan Miller, chief investment officer at SCM Direct, a wealth manager, said: “The shift from active to passive is accelerating as more members of the public are voting with their feet as they discover the simple maths.

“Over the long term simply because of lower costs, a typical index fund offers greater performance with less volatility, more diversification and better liquidity.”

He added that new European rules, which have forced the investment industry to reveal the true cost of investing, have prompted investors to shun active funds.

Mr Miller said the decision by Mr Woodford, who had struggled with performance for several years, to shut his fund to redemptions in June had “exposed many of the active fund myths and the performance and liquidity risks attached to such funds”.

Figures from Calastone, the global fund transaction network, showed that investors pulled £1.9bn from active funds in the UK in June, the highest monthly figure since 2016.

The redemptions came in the same month as trading was suspended in Mr Woodford’s Equity Income fund.

Natixis fund management boss defends model after H2O crisis Jean Raby denies UK unit is suffering from liquidity crisis DAVID KEOHANE AND ROBERT SMITH

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atixis has come out swinging to defend itself against criticism of its business model as the French bank tries to convince investors that a crisis of confidence in one its funds should not shake the entire structure.

The French bank’s multi-boutique model has been hit by a crisis at H2O, a London-based fund manager that it owns half of. FT Alphaville revealed last month that H20 had put more than €1bn of investor money into illiquid bonds linked to Lars Windhorst, a controversial German financier with a history of legal troubles.

“We do recognise the market is nervous, following the recent crises of illiquidity at other funds but we think the market is wrong to think that H2O is in the same position,” Jean Raby, chief executive of Natixis Investment Managers told the Financial Times.

Assets in six H2O funds tumbled by nearly €7bn in the week after the FT revealed their Windhorst-linked exposure. While some of these funds have since seen modest inflows, assets in others are still down as much as 50 per cent.

“We’ve had an affiliate that has faced significant redemptions . . . and there has been no contagion,” said the

Natixis IM boss. “There have been no consequential outflows at any other affiliates. Yes, some have received some questions from investors, but just a minority and that’s it.”

Natixis’s share price fell 14 per cent following the revelations by the FT around Mr Windhorst and subsequent concerns expressed by Morningstar, a fund-research adviser.

Although the share price has partially recovered, it remains down 6 per cent.

“When I think about the share price reaction, the logical assumption is that the market is extrapolating the issue to Natixis’s control of its affiliates,” admitted Mr Raby, while defending those controls.

The French bank, majority owned by mutual group BPCE, is also under pressure after it booked a €260m loss linked to South Korean derivatives, raising similar questions about its ability to manage risk.

Natixis is putting its faith in an internal audit, which had already been scheduled but was pulled forward in response to the crisis, to help calm investor fears. However, people close to the bank said no due date had been confirmed for the audit and there were currently no plans to release the findings, emphasising this was standard practice. Natixis’s quarterly results are due on August 1. www.businessday.ng

The active investment industry has been under intense pressure due to disappointing performance, high fees and booming stock markets (AP)

Will European government bonds continue to push higher?

JAMIE POWELL

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arket Questions is the FT’s guide to the week ahead Wi l l Eu ro p e a n g ov e r n m e nt bonds continue to push higher?

It took a surprisingly upbeat US jobs report to puncture a seemingly unstoppable rally in European bond markets last week, but many investors are betting that Friday’s sell-off will merely be a pause.

The nomination of Christine Lagarde as the next president of the European Central Bank was cheered by bond investors, who bet that she would prolong an era of very easy money and massive asset purchases.

But eurozone bond yields, which plumbed new depths in many countries after the IMF boss’ selection was announced, snapped back after a strong set of readings from the US jobs market.

While US traders, many of whom were pricing in a hefty 0.5 percentage-point rate cut from the Federal Reserve this month, may have been getting ahead of themselves, the same cannot be said of investors in eurozone bond markets, said Rabobank analyst Lyn Graham-Taylor. Bond yields are likely to resume their march lower on expectations of

another round of quantitative easing from the ECB, he said.

“This doesn’t change the big picture. The eurozone is struggling to generate any inflation and more QE is on the way,” he said.

“The market hasn’t fully priced in the scale of what’s to come.”

Even so, fading expectations of aggressive rate cuts in the US could also fuel doubts that another round of QE is a fait accompli.

“Restarting QE is not a foregone conclusion,” said Ario Emami Nejad, a fixed income portfolio manager at Fidelity International. “While we have no doubt that the ECB will resume QE if there are signs of deterioration in macro data, European indicators have shown some signs of stabilisation recently.”

Tommy Stubbington Is the yen poised to break out from its tight trading range?

Traders in Tokyo left their desks on Friday predicting a big week for the yen as campaigning begins for elections later this month. The poll — to determine the composition of the House of Councillors, the upper house of Japan’s parliament — could make life difficult for prime minister Shinzo Abe and what remains of his Abenomics reform programme.

After its big wobble in midJune, when the yen flirted with the ¥106 level against the dollar, it has crawled back down to the ¥108/$ zone — proof, say some, that whatever anyone throws at the Japanese currency these days, it soon trends back into the same ¥108-112 range it has held for the past couple of years.

But perhaps not for much longer.

In a big call last week, Morgan Stanley revised its dollar-yen projections significantly lower, with analysts now expecting a much stronger ¥102 by the end of the 2019 calendar year and ¥94/$ by the end of 2020.

The call came with a warning that the current environment was “reminiscent of early 2016” when inflation expectations fell faster than nominal yields and the yen tore up from ¥121 to ¥99 in the space of a few months.

Markets will spend the early part of this week testing the implications of that call, said traders. By no means all agree with Morgan Stanley — if the Fed cuts rates twice this year, says NatWest Markets strategist Mansoor Mohi-uddin, the yen is likely to retain its status as a favourite funding currency — one to sell in favour of higher-yielding bets — potentially pushing it closer to the ¥115 level. Leo Lewis

Ex-Goldman Europe boss Michael Sherwood to join fintech Revolut Start-up has appointed string of City grandees as it seeks to boost governance credentials CAT RUTTER POOLEY

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ast-growing UK fintech Revolut will appoint Goldman Sachs veteran Michael Sherwood to its board as part of efforts to improve corporate governance after a series of mis-steps.

The recruitment of Mr Sherwood, the former co-head of Goldman Sachs in Europe, as a non-executive follows the appointment of experienced banker Richard Davies as Revolut’s chief operating officer.

Confirmation of Mr Sherwood’s role, which was first reported by Sky News, is expected this week.

Revolut declined to comment.

Revolut has faced scrutiny this year from the UK Financial Conduct Authority, the Advertising Standards Authority and the Lithu-

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anian parliament, with particular questions over its ability to combat illicit money transfers.

It reported a spate of suspected money laundering to regulators and law enforcement last year, ran into problems with a planned upgrade to part of its compliance systems, and has suffered from high staff turnover in senior compliance roles.

In response, it has hired Standard Life Aberdeen co-chief Martin Gilbert to work with chief executive Nikolay Storonsky in an advisory capacity, and has recruited Silicon Valley Bank chief operations officer Bruce Wallace and former Deloitte partner Caroline Britton as non-executives.

Mr Sherwood has kept a low profile since he quit Goldman @Businessdayng

Sachs after a three-decade career.

Previously tipped as a successor to former chief executive Lloyd Blankfein — a job ultimately taken by his US rival David Solomon — towards the end of his tenure, Mr Sherwood became embroiled in the controversy over the sale of the failed department store BHS by Philip Green. He was also at the helm of Goldman Sachs International during the 1MDB scandal.

When Mr Sherwood left, he said he planned to focus on his personal investments and philanthropic activities, including work for a charity that provides sports training to children in London. He has also invested in a credit analysis start-up and is a trustee of the Serpentine Galleries in London.

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Monday 08 July 2019

BUSINESS DAY

ANALYSIS

FT

Boeing loses $5.9bn order for up to 50 of its 737 Max planes Saudi Arabian low-cost carrier Flyadeal picks Airbus’s A320neo jets for fleet JANINA CONBOYE

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oeing has faced another setback after Flyadeal, a Saudi Arabian low-cost carrier, cancelled its order for up to 50 of the US aircraft maker’s 737 Max jets.

The airline signed a $5.9bn deal for the Boeing aircraft in December but stated on Sunday that it had ordered 30 A320neo aircraft from Airbus — the US company’s European rival — with options for a further 20 of the jets.

Flyadeal said the order would “result in Flyadeal operating an all-Airbus A320 fleet in the future”.

The announcement came as the 737 Max continues to be grounded following two fatal crashes in which 346 people died.

Boeing said in a statement that it wished “the Flyadeal team well as it builds out its operations”, adding that its workforce “continues to focus on safely returning the 737 Max to service and resuming deliveries of Max aeroplanes”.

The order for the A320s was made last month at the Paris Air Show by the carrier’s parent company, Saudi Arabian Airlines.

Flyadeal’s decision is another setback for Boeing, despite International Airlines Group, the parent company of British Airways, putting in a $24bn order for 200 Boeing 737 Max jets at the air show.

Last week Europe’s aviation safety regulator presented Boeing with a list of outstanding issues it wanted the US aircraft maker to resolve before it would allow the

737 Max back into the skies.

The European Aviation Safety Agency set out a detailed list of topics in a letter addressed to senior management at Boeing as well as at its US counterpart, the Federal Aviation Administration, according to two people close to the situation.

The issues cited in the letter included resolving a new software flaw in the flight control system identified during simulator training by the FAA where an onboard computer appeared to become overloaded and it took the pilots too long to recover the plane from a stall.

The emergence of the new issue prompted Southwest Airlines, the largest 737 Max operator, to push back the reintroduction of the plane into its flight schedules until October 1, a month later than previously planned. Boeing has said it was working on the issue.

EASA also wants Boeing and the FAA to assess whether the average pilot has enough physical strength to turn the trim wheel in the cockpit, an emergency manual crank to help change the angle of the plane’s nose, as well as reviewing how the autopilot engages and disengages when the plane approaches a stall.

The crisis has hit Boeing’s reputation as well as that of the FAA, whose role in originally certifying the plane has come under scrutiny.

Boeing has also pledged to commit $100m to help address the needs of families and communities affected by the crashes. The company is facing several lawsuits from the families of victims

Huawei CVs show close links with military, study says Findings to fuel debate over whether group’s 5G networks pose security risk KATHRIN HILLE

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study of the employment information of thousands of Huawei staff has revealed deeper links with the Chinese military and intelligence apparatus than those previously acknowledged by China’s biggest telecom equipment maker.

The findings are likely to add fuel to the debate among governments around the world over whether to block Huawei’s gear from the rollout of 5G telecoms networks for security reasons.

The research was conducted by Christopher Balding, a professor at Fulbright University Vietnam, and researchers at the Henry Jackson Society, a UK think-tank. Trawling through a database of leaked Chinese CVs, they found Huawei employees who appeared to be simultaneously employed by institutions affiliated with the Chinese military, others who previously worked in areas related to hacking or telecom monitoring, and still more who described their work at Huawei as linked to the Ministry of State Security (MSS), an entity involved in cyber warfare and network penetration.

Prof Balding identified one Huawei employee who describes himself as a “representative” of the MSS at Huawei and claims to have worked on “building lawful interception capability into Huawei equipment”.

The researchers suggest that this employee could have been involved in the alleged installation of backdoors — clandestine access points

that could allow eavesdropping on sensitive communications — in a Vodafone network in Italy a decade ago that was first reported earlier this year.

Vodafone has denied that there was a backdoor that could have given Huawei unauthorised access to its network, arguing the vendor had just forgotten to remove a function used during developing the gear that would not have enabled a breach of its data security in any event. Both Vodafone and Huawei said the issue was fixed at the time.

The study’s findings could not be independently confirmed because Mr Balding is not sharing the database and describes in concrete terms only three profiles which he has edited to protect the individuals’ identities and prevent the research from being replicated by others.

Huawei said that in a preliminary investigation it had “not been able to verify any of these so-called ‘Huawei Employee CVs’”. The company added it welcomed professional and factbased reporting on investigations into its transparency. “We hope that any further research papers will contain less conjecture when drawing their conclusions,” it said.

Elsa Kania, an expert on Chinese military innovation in emerging technologies and military-civil fusion in China — the practice in the country of close cooperation between the military and civilian entities on technology, called Mr Balding’s paper a very valuable contribution, but added it was inconclusive in some respects. www.businessday.ng

The Netherlands-Sweden game on July 3 averaged 5m Dutch viewers, the biggest audience for any Dutch TV programme since the official celebration of the Lionesses’ victory at the 2017 European championship © Reuters

World Cup marks rise of western European women’s football

Continent provides a template for what is required to improve the sport globally SIMON KUPER

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month before the women’s World Cup, the Dutch winger Lieke Martens sat in the training centre of her club, FC Barcelona, marvelling at the growth of the European female game.

As a child, Ms Martens did not even know that the Netherlands had a national women’s team.

Now she spends her working days in the same complex as Barça’s men’s team, supported by specialist coaches, medics and video analysts. She studies her clubmate Lionel Messi’s on-field decision-making. Her salary, although a fraction of his, allows her to play football full-time.

During her career, she has watched the European women’s game professionalise: “Defenders are getting better, midfielders can play passes over 40 metres.

Our keepers said recently: you’re all shooting much harder and more precisely than five years ago. But the keepers are really good now too, so the balls don’t go in that easily.”

Sunday’s World Cup final in Lyon pits the Dutch “Lionesses” against the US, women’s football’s historic superpower. But even if the Americans win their fourth World Cup, the tournament marks the rise of western European women’s football.

The region has already won four consecutive men’s World Cups.

At this tournament, it supplied seven of the eight women’s quarter-finalists. “The World Cup has become a European Championship,” said Germany’s co-trainer Britta Carlson.

Western Europe provides a template for what is required to improve women’s football globally.

One factor is relative gender equality. Nine of the top 15 countries in the World Economic Forum’s global gender gap index are western European.

The region also possesses the world’s densest network

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of amateur clubs. Once these belatedly began to open to women, the number of registered female players in Europe rose fivefold from 1985 through 2015, to 1.2m. Uefa, the continent’s football association, plans to double the number again by 2024. However, playing numbers are lower in southern and eastern Europe than in the north. “We still have countries where we have to do some work to encourage society [to realise] that girls can play football too,” said Nadine Kessler, Uefa’s head of women’s football.

In a minority sport where most countries struggle for players, the size of the national talent pool predicts success. All six European nations with 100,000 or more registered female footballers — Germany, the Netherlands, Norway, Sweden, England and France — reached the quarter-finals of this World Cup. Coaches tend to train girls and boys in the same national playing styles, said Ms Kessler: a possession game in Spain and the Netherlands, a more physical style for the Swedes. Traditional competition between European football nations and also between clubs raises standards, she added: “If Italy does well, Spain wants to do well, and then France wants to do well.”

The latest boost to western European women’s football has been the expansion of the professional game. The continent had 3,311 professional and semi-pro female players in 2018, more than double the total of 2012. England last year launched Europe’s first fully professional women’s league.

Four of the Dutch starters in Wednesday’s semi-final against Sweden played for Arsenal, while Jackie Groenen, scorer of the winning goal, is joining Manchester United, one of several big European clubs now expanding its female wing.

On other continents, even the US’s National Women’s Soccer League struggles to match @Businessdayng

European professionalism. The Japanese coach Asako Takakura said after losing to the Dutch in the last 16 that Japan (world champions in 2011) “must learn from the European clubs”. South Africa’s coach Desiree Ellis said she hoped her players would join European clubs and improve there.

There is a risk that European women’s football could stagnate, like Olympic sports such as canoeing or archery: watched during a big tournament when national pride is at stake, ignored the rest of the time. “That’s what we’ve been struggling with over the years, to move away from this trend,” said Ms Kessler. “But we see in countries like the Netherlands and England that the positive momentum from a major tournament can be carried further.”

European professional women’s teams have the potential to create year-round interest.

For now, most lose money, but there are signs that could change. In March, the Atlético Madrid-Barcelona league game drew 60,739 spectators, a world record for women’s club football. European clubs have ready-made fan bases built by their men’s teams, and can target the viewers and sponsors now engaged by the World Cup. The England-US semi-final drew a peak British TV audience of 11.7m, making it the country’s most watched programme of the year. The Netherlands-Sweden game averaged 5m Dutch viewers, the biggest audience for any Dutch TV programme since the official celebration of the Lionesses’ victory at the 2017 European championship.

Ms Martens is now struggling with an injured toe. On Sunday, her team was tipped to continue the Dutch men’s tradition of losing. But her recent autobiography has become a bestseller in the Netherlands, devoured by girls who can finally dream of becoming professional footballers.

BD Money

Monday 08 July 2019

BUSINESS DAY

PERSONAL FINANCE

PERSONAL FINANCE

COVER STORY

EQUITIES

Getting the cheapest motorcycle-hailing service in Lagos this July

How to effectively negotiate the best deals (1)

Soybean performs most in June trading, outstrips others season-till-date

A Simple Relative Valuation of Nigerian Banking Stocks

Lagosians commuting from Iyana-Ipaja to Ikeja-Along axis didn’t have it pleasant last week as there was a resurgence of traffic congestion along the route, a trend that hasn’t been witnessed in a while, Bosun Olanrewaju, a 32-year-old man, said last Friday.

How often do you come across something you want so badly but cannot have because it costs just a little more than you can afford?

Your target might be a piece of clothing, a car, a house...

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One of the most cultivated leguminous vegetable in Nigeria, Soybean attracted the most gain in agricultural commodities trading on AFEX Exchange during June and continued to outstrip paddy rice, Cocoa, Sorghum, Ginger and Maize season-till-date.

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The Nigerian equity market maintained its bearish streak in the previous trading session (Friday, July 5), down some 7 percent year long, amid the absence of positive catalysts to stimulate investor sentiments.

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Monday 08 July 2019

BUSINESS DAY

Personal Finance

Getting the cheapest motorcycle-hailing service in Lagos this July OLUWASEGUN OLAKOYENIKAN

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agosians commuting from Iyana-Ipaja to Ikeja-Along axis didn’t have it pleasant last week as there was a resurgence of traffic congestion along the route, a trend that hasn’t been witnessed in a while, Bosun Olanrewaju, a 32-year-old man, said last Friday.

While the horrible traffic gridlock, which spanned through the week, held thousands of workers and students hostage, making them resume late at work and delaying some behind schedules for key appointments. Despite the tacky state of the road, some had a smooth ride at almost no cost.

“This is a the time you wish you had a helicopter,” Olanrewaju said.

But how the 32-year-old man, with a monthly remuneration slightly above the newly but yet-to-be implemented minimum wage of N30, 000, would procure the much-desired luxury makes one thinks of when pigs fly and hell freezes over.

The story is not different from that of Omolara Balogun who sells clothing materials in Oshodi, but has to ply the route from Abule Egba where she resides. The woman spent more than double what she would regularly spend during the period.

“I don’t mind how much it would cost me to get to Oshodi in order to attend to my customers,” the trader lamented.

“My worry now is that, despite paying exorbitantly for transportation, we are still trapped in this traffic.”

While Balogun can conveniently pay any amount to get to her shop, she was not aware of the various e-hailing platforms that operate within Lagos.

But for Olanrewaju who had budgeted N200 to get to his office as expected

for each of the weekdays, he had only three choices. One was boarding a commercial transport bus which travels along the route at an average speed of 250 metres per hour; the second was using one of the ride-hailing service platforms currently operating in Lagos, or waking up earlier to trek the distance.

Of these choices, using one of the ride-hailing service platforms appeared unrealistic for the young man, especially considering the financial implication on his budget.

But people like Bosun might find respite in OPay’s entry into the Lagos motorcycle-hailing ecosystem, joining the competitors such as MAX Okada, SafeBoda, and Gokada.

OPay, owned by Opera, has a ridehailing platform called ORide. Checks by BusinessDay show the platform is one of the features on the OPay mobile application. Other features on the mobile app are fund transfer, which allows users to transfer money, order food from restaurants, pay electricity bills, mobile airtime recharge, sports betting and manage mobile data subscription and pay television.

ORide allows users to book for a ride using mobile application, but the strategy being deployed by ORide to have a reasonable share of the market is its affordability. Riders can pay N200 for each trip that costs less than N2, 000. Unlike other motorcycle-hailing start-ups in the country, OPay only accepts online

payment, indicating riders must have at least N200 before embarking on any ride on the platform. In June, it cost as cheap as N100 to ride with OPay. Nothing serves Olanrewaju better right now in shuttling between his home and office this July, but the concern remains how the man and several other people faced with this gridlock would cope should OPay fail to sustain the customer-acquiring strategy or Governor Babajide Sanwo-Olu shuns the traffic situation.

While this looks impressive, the intent behind this strategy of subsidising riders’ payment may not be unconnected to creating enough customer base for its payment channel where users can perform myriads of payment transaction.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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BUSINESS DAY

57

Personal Finance

How to effectively negotiate the best deals (1) SEGUN ADAMS

H

ow often do you come across something you want so badly but cannot have because it costs just a little more than you can afford?

Your target might be a piece of clothing, a car, a house, a pay raise or a contract, whatever it is, you often find that being able to convince the salesperson (or other parties) to agree to your terms is a priceless skill.

Negotiation is a process by which parties come to an agreement on certain issues, and every day, we are involved in negotiations one way or another.

Even though the process is not new to anyone, the problem is people often feel

too embarrassed to ask for deals at the rate they can afford. This means they lose out on good opportunities.

However, there are steps you can take to help you price effectively.

Do your research The first step to getting the upper hand in a negotiation is to be well informed beforehand. It is not wise to bargain over anything if you are not sure of the price because you would not be able to tell when you overprice or sell yourself short.

Asking questions from people familiar with the matter or carrying out desktop research at the very least. Know how season affect prices, know whether or not it is a perishable good (they have to be sold faster) if there is an on-going promotion, and what competitors offer.

In addition, having information would www.businessday.ng

make you seem very knowledgeable and prevent the seller or other parties from exploiting information gaps.

Understand your seller While understanding the product, service or market can be great, knowing the motive of the seller can hand you added advantage. How so? Remember those times you needed cash badly are was willing to sell something for less the market price? The same works.

In addition, knowing the cost to your seller can help you make offers the seller would be willing to consider. Take, for instance, it costs your favourite car dealer N15 million to purchase the car you want, but he fixes his selling price at N17 million to compensate for selling cost and other expenses amounting to N500,000. Your car dealers want to make a profit of N1.5 million! Knowing this can help you bargain

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well knowing the dealer might not be willing to sell less than N15.5 million.

This usually works but in some instances as you would come to see, being reasonable can be counterproductive.

It is “give and take�, incentivise your seller Sometimes people can be willing to make short term losses if it promises longer-term benefits. The other party might be interested in a compromise if there is a value proposition you make s(he) thinks is good enough.

You might find that promising patronage in the future can be enough motivation for the salesperson to let you have what you want.

NB: Do not promise patronage if you would not be interested in the seller afterwards, because negotiation also involves trust.

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Monday 08 July 2019

BUSINESS DAY

Cover Story Soybean performs most in June trading, outstrips others season-till-date Temitayo Ayetoto

O

ne of the most cultivated leguminous vegetable in Nigeria, Soybean attracted the most gain in agricultural commodities trading on AFEX Exchange during June and continued to outstrip paddy rice, Cocoa, Sorghum, Ginger and Maize season-till-date.

The crop gained 3.64 percent week-onweek, moving from an average of 151 points during the first week to 156.50 between 7th and 13th of the month, according to data obtained from AFEX Commodities Weekly Price Report. The increase drove the Soybeans from 25.83 percent to 35 percent, followed from a distance by Ginger 11.47 percent, Maize 11.11 and Sorghum 7.79.

The latest AFEX Commodities Index composite - a collection of all commodities indexes averaged together to represent overall market or sector performance - averaged 170.68 points during June, marking a 2.97 point increase from 1.77 percentage point at the beginning of the month. It also represented a recovery from the initial neutral performance due to the closure of markets from the public holidays.

The Soybean sub-index had the only positive performance amongst the subindices of the composite.

According to the report, maximum prices for Maize, Sorghum, Soybean and Paddy Rice were recorded in Shuwarin market, Jigawa State; Oja tuntun, Kwara; Dawanau market, Kano and Mbulatawiwi, Borno state. The minimum price for maize, sorghum, Soybeans and Paddy Rice were recorded in Sabuwar Kasuwa, Borno State; Leggal, Gombe; Mbulatawiwi, Borno and Kamba, Kebbi state. For ginger, the minimum and maximum price was recorded in Kwoi market Kaduna state.

The report tracked price movement of commodities traded on the exchange and all executed prices inclusive of logistics cost, covering commodities from farm gate to the reference delivery point.

During the first week of June, the commodities index composite averaged 167.71 points, marking a flat performance over the week due to the closure of markets from the public holidays. All sub-indices of the composite index recorded neutral independent performances for the period, with maize falling during the week due to the increase in quantity available in the market without an equal increase in their demand.

“Paddy rice saw a little increase in price.

We expect this trend to continue till price stabilises as planting season begins,” the report said.

The period saw maximum prices for Maize, Sorghum, Soybean and Paddy rice in Dawanau market, Kano state; Kwaya, www.businessday.ng

Kusar, Borno and Biu, Borno. The minimum price for maize, Sorgum Soybeans and Paddy rice were recorded in Saba, Kaduna state; Biu, Borno and Burbura, Jigawa.

Maximum and minimum price for Cocoa was recorded in Ovia, Edo State and Awopeju, Ondo, while the maximum and minimum price for Ginger was recorded in Kwoi and Wolijo markets, Kaduna.

On digital platforms for agricultural investment monitored by BusinessDay, soybeans deals for July were already sold out. On Farmcrowdy, for instance, a unit of Soybean to be farmed in Jos was offered at N148, 000 with 14 percent return on investment in five months. As of July 5th, no units were left.

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Monday 08 July 2019

BUSINESS DAY

Lafarge S/Africa Holding sale points to a stronger Lafarge Africa Tajudeen Ibrahim, Chapel Hill Denham

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ollowing our research report entitled Lafarge Africa to Sell Lafarge South Africa Holding (LSAH) reduce debt by N248billion, published on 19 June 2019, we provide further insight and revised forecasts on Lafarge Africa Plc (Lafarge Africa).

The proposed sale of Lafarge South Africa (LSAH) is due to lacklustre performance in the past 3 years amid less convincing outlook for the South African market. Notably, LSAH’s revenue weakened in 2016 (-11.0% year-on-year) and 2018 (-4.3% year-on-year) on broadly weak macro and stiff competition in the industry. The EBITDA also dropped in 2016 (-50.8percent year-on-year) and turned negative in 2017 (-N8.48bn) and 2018 (-N7.39bn).

Importantly, KPMG’s assessment of Lafarge Africa’s performance in 2018 indicates that the valuation of LSAH in Lafarge Africa’s accounts would have to be impaired by N70bn (the potential impairment).

Considering this, and the debt burden (shareholder loans) on Lafarge Africa, the Board of Directors decided to sell LSAH, which was purchased from LafargeHolcim Group in 2014, back to LafargeHolcim Group for US$316.29million. The proposed sale is subject to shareholders approval at an AGM on 22 July 2019.

The proceeds of the proposed sale (US$316.29mn) will be utilised to set-off Lafarge Africa’s debt to LafargeHolcim Group. The consideration is the sum of the

principal, US$293million, and all accrued interest of US$23.29million by 31 July 2019.

We, however, highlight that US$22.2million was repaid from the proceeds of the N89bn (US$247mn) rights issue, which was concluded in March.

It is worth noting that our EPS forecast is fully reflective of the impact of the rights issue. On the valuation of LSAH, we note that Standard Chartered Bank (SCB) valued LSAH in the US$85millionUS$117million range, indicating that LafargeHolcim Group is paying a significant premium in the proposed transaction.

This, in our, indicates a strong support for the future growth of Lafarge Africa by LafargeHolcim Group.

The benefits of the transaction, as indicated by management include; (I) Stronger cash flows and net income, given the expected reduction in debt service outflows.

(II) Reduction in annual interest expense by c.N9.1billion on the back of full repayment of the foreign currency intercompany loan (III) Ability to reinvest in and expand the operations of the existing plants (IV) It will enable the management of Lafarge Africa to focus attention on the Nigerian plants, which have higher profitability and prospects (V) It will strengthen Lafarge Africa’s balance sheet and position it to improve overall profitability.

We retain our BUY rating on Lafarge Africa and raise our 12-month TP to N27.64 from N18.51 previously.

Our revised forecasts capture lower debt of N53.70bn in 2019-estimated vs.

But Thrive Agric, another investment platform had just begun its offer July 2nd, with 9069 out of 10,000 units left. At N47, 600, the Soybean project would be carried out on a total of 5400 hectares of farmland located in Wasagu, Kebbi State and Kaboji in Niger.

According to IITA, the demand for soybeans in Nigeria alone is currently estimated at 2.2 million tons while the annual production is only at 600,000 tons. Although Nigeria remains the largest producer of soybeans in Sub-Saharan Africa, the huge gap between demand and supply makes the crop insufficient for consumption, hence, a need to cultivate soybean.

But according to the United States Department of Agriculture, Nigeria has produced 1.1 million metric tons so far in 2019, rising 4.3 percent from 1.054 million in 2018.

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N301.49 billion in 2020, so we forecast 44.1percent year-on-year and 76.7 percent year-on-year reduction in interest expense in 2019-estimated and 2020-estimated respectively.

We highlight that the debt/EBITDA ratio of Lafarge Africa will drop significantly www.businessday.ng

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to 0.3x in 2021-estimated from 27.5x in 2016, indicating a substantial headroom for the business to expand via new investments. The risks to our valuation include slower-than-expected economic growth over the forecast period and stiff competition in the cement industry.

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Monday 08 July 2019

BUSINESS DAY

Equities

A Simple Relative Valuation of Nigerian Banking Stocks Israel Odubola

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he Nigerian equity market maintained its bearish streak in the previous trading session (Friday, July 5), down some 7 percent year long, amid the absence of positive catalysts to stimulate investor sentiments.

Following the rout in the market which has pushed a number of stocks to new lows, value investors are keen to identify cheap stocks with strong fundamentals and return potentials.

Determining cheap stocks require valuation which is critical in investment decisions, making it possible to ascertain the fair price of stocks.

Business Day carried out a simple relative valuation on banking stocks listed on the Nigerian Stock Exchange (NSE). These stocks fit this purpose as they are the most liquid on the exchange, accounting for about three-quarter of total equity market volume.

Several metrics can be employed for stock valuation, but price-to-book (P/B) ratio suits banking stocks, given the liquid nature of their balance sheet. P/B is used by value investors to identify undervalued stocks.

Price-to-book ratio compares a company’s stock price to its book value per share, and shows if investors are paying too much or less for what would remain if a company went bankrupt.

Conventionally, a stock with P/B figure less than one is considered to be potentially undervalued, however, value inves-

tors may often consider stocks with a P/B less than three as benchmark.

Methodology: Business Day compiled the P/B figures and book value (or total equity) per share of 12 banks.

From our computation, the sector’s P/B average 0.65, and was multiplied by each bank’s book value per share to ascertain each stock’s fair price or intrinsic value. A stock is considered under-priced if its market price way less than its fair price, and vice-versa First Bank The 125-year old tier-one lender is one of Nigeria’s valuable banking brands

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and operates along with four key strategic units, corporate, commercial, public sector and retail banking.

First Bank closed Friday’s trading 1.59 percent lower at N6.20. The lender’s P/B stood at 0.42, with book value per share at N15.14 Multiplying the sector average P/B of 0.65 with its 15.14 book value per share put the lender’s a fair price at N9.85, far less than its N6.2 market price.

Guaranty Trust Bank Nigeria’s biggest lender by market value topped laggards after Friday’s close of business. GTB shed 1.69 percent to N29,

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down 14 percent year to date.

The lender has a P/B of 1.39 and multiplying this by its book value per share of N21.31 showed that its shares ought to be trading at N13.87.

Access Bank Nigeria’s biggest bank by customer base climbed 1.52 percent higher to N6.7 per share, with 3 percent year-to-date losses.

Access Bank’s P/B stood at 0.41 and multiplying this by its book value per share of N16.22 put its fair price at N10.56, implying the lender is underpriced.

United Bank for Africa UBA emerged the fourth-most active stock in which 28.6 million shares of the lender worth N172.9 million exchanged investors’ hand after Friday’s trading.

The tier-one lender has a P/B of 0.40 and multiplying this by its book value per share of N15.88 put the stock’s fair price at N10.34.

Zenith Bank Nigeria’s biggest bank by assets shed 0.77 percent to close Friday’s trading at N19.35, down some 15 percent year long.

Zenith Bank has a P/B of 0.78 and multiplying this by its book value per share of N24.87 put the stock’s fair price at 0.78 percent.

Union Bank The mid-tier lender declined 2.15 percent to N6.85 per share, with 2.14 percent loss year-to-date. Union Bank has a P/B of 0.88 and multiplying this by its book value per share of N8.01 put its fair price at N5.21, implying the stock is trading more than its intrinsic value.

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Monday 08 July 2019

BUSINESS DAY

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Data

Federal government eurobond Yields on Eurobonds fell further week on week by c.286ps from an average of 6.42 percent when the market closed last week to 6.23 percent as investors maintained a buying interest on Nigeria’s Sovereign Eurobonds.

Meanwhile Brent shed 3.47 percent week-on-week on Friday after price dipped from $66.55 per barrel to around $64.24 per barrel as at 20:23 GMT+1 Friday. But Sri Paravaikkarasu, director of Asia oil at industry consultant FGE, told Bloomberg price may still rise to $72 per barrel.

Corporate eurobond Yields on corporate Eurobonds rose c.657bps across all tickers week-on-week with average yield rising from 7.505 percent last week to 7.998 percent.

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Monday 08 July 2019

BUSINESS DAY

Fixed Income Money market awaits N1.09trn inflow this July HOPE MOSES-ASHIKE

T

his month, a total inflow of about N1.09 trillion is expected to hit the money market from the various maturing government securities and the Federation Account Allocation Committee (FAAC).

The Central Bank of Nigeria (CBN) on Wednesday rolled over a total of N88.9 billion at the primary market auction across the short, medium and long term maturities.

This consisted of N10 billion for 91 daytenor, N20 billion for 182 days, and N58.9 billion for 364-day tenor maturities.

The Federation Account Allocation Committee on May 2019 distributed the sum of N616.19 billion from the federation account to the three tiers of government as revenue allocation for the month of April.

“We estimate a total outflow of approximately N1.13 trillion from various sources, leading to a net outflow of about N40.54 billion”, said, Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited.

FSDH report revealed that there was a further decline in capital importation via the Investors’ and Exporters’ Foreign Exchange Window (I&E window) in June 2019.

The total capital importation through the I&E window in June 2019 stood at US$1.42bn,

the lowest monthly figure recorded since July 2017.

Analysts at Cowry Asset Management limited noted that the humongous foreign capital inflows into Nigeria’s money market stimulated the strong demand pressure for federal government short-term instruments, especially t-bills; hence, the fall in primary market rates across the maturities. However, the analysts expect treasury bills rates to move northwards in H2 2019 as real returns on the bills have become negative amid increasing inflation rates.

“We expect redirection of capital inflows

Week Ahead Week Ahead(Monday, 8th July – Friday, 12th July, 2019)

into the bonds markets (where rates are higher and about 200 bps above inflation rate) as well as equities”, the analysts said.

In the bonds market, Afrinvest Securities limited noted the introduction of a 30-year bond by the Debt Management Office (DMO) which lengthened the yield curve and now provides the basis for evaluating investments with the tenor in that range.

During H1:2019, a total of N700.0 billion were auctioned in the domestic sovereign bonds market at an average marginal rate of 14.5 percent, a 50bps decline from rates in H2:2018. Similarly, the average yield on

bonds in the secondary market moderated by 68bps to settle at 14.5 percent.

In the Open Market Operation (OMO) and treasury bills space, a total of N8.8 trillion and N1.5 trillion were auctioned at an average marginal rate of 12.1 percent and 13.1 percent, which is a 30bps and 40bps increase when compared to H2:2018.

“Also, as we envisaged at the start of the year, a number of prime corporates took advantage of the low rate in the money market space. This resulted in commercial paper issuances totaling N196.5bn in the period at an average rate of 13.4 percent”, analysts at Afrinvest said. At the start of the year, the firm envisioned an investment climate that would be characterized by uncertainties amid domestic political risk and global concerns.

“These informed our investment strategy which we held was a blend of risky and less risky assets between the two halves of the year. We preached that, whilst there was a clear case of undervaluation of Nigerian equities and a relatively higher yield environment compared to frontier and emerging market peers, investor confidence in 2019 will be laced with caution in search of value. Hence, our strategy recommended significant overweight on fixed income securities for H1, 2019 and a balance of play between equities and fixed income assets in H2, 2019”, analysts at Afrinvest said.

Chart of the week Nigeria’s Investment inflows rise to highest in more than 5 years

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity

Oil: Brent likely to trade between $62 and $67 per barrel in July as geopolitical tensions and seasonal demand for oil would help support prices. However, concerns about a weak global outlook for global oil prices would continue to put pressure on prices.

Fixed Income 2-year Federal Government Bond worth N160 million issued at 13.38% coupon will mature Friday, July 12.

196-day OMO bills issued on December 27, 2019 offered for N300 billion at 14.5% stop rate will mature Thursday, July 11.

Data Release The National Bureau of Statistics will on Wednesday, July 10, release 2018/19 socioeconomic survey.

Currency The naira depreciated 0.02% to N360.82/$ on the Investors and Exporters window at Friday’s trading. Friday’s turnover stood at US$98 million. Going forward, we expect naira to remain stable across all windows given Nigerian Apex Bank’s sustained intervention in the foreign exchange market.

Event Seplat Petroleum Development Company (Plc) will on Friday, July 12, will host a capital market event at the Nigerian Stock Exchange in Lagos for analysts and investors. The session will focus on the Assa North Ohaji South (AHOH) greenfield gas and condensate development projects in Nigeria. www.businessday.ng

After declining for three straight quarters, capital importation into Nigeria rose to the highest in six years and gained the most on a quarterly basis since Q3 2017 as carry trade increased in Q1 2019.

This followed the peaceful conclusion of the 2019 general elections, an attractive yield environment in Nigeria, while most central banks in developed economies dropped interest rates, analysts say.

Data released Tuesday by the National Bureau of Statistics (NBS) showed that the total value of capital importation into the country stood at $8.49 billion in the first three months of this year, the highest since Q3 2014, when $6.54 billion flowed into the country.

On a quarterly basis, capital importation rose by 216 percent, the highest gain since Q3 2017, when it increased by 131.27 percent. The latest figure also represents a 34.61 percent increase from $6.3 billion in the first quarter of 2018.

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BUSINESS DAY

63

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

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 238,153.01 6.70 1.52 165 10,445,905 UNITED BANK FOR AFRICA PLC 206,906.50 6.05 -0.83 266 28,585,608 ZENITH BANK PLC 607,522.15 19.35 -0.77 308 23,113,919 739 62,145,432 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 222,550.82 6.20 -1.59 155 35,473,060 155 35,473,060 894 97,618,492 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,625,732.18 129.00 -0.35 52 2,400,867 52 2,400,867 52 2,400,867 BUILDING MATERIALS DANGOTE CEMENT PLC 3,016,169.81 177.00 - 19 13,902 LAFARGE AFRICA PLC. 220,676.80 13.70 1.11 159 4,293,190 178 4,307,092 178 4,307,092 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 311,875.62 530.00 - 12 25,482 12 25,482 12 25,482 1,136 104,351,933 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. 59,142.42 62.00 - 19 61,720 PRESCO PLC 46,800.00 46.80 - 10 21,747 29 83,467 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 -5.88 12 783,352 12 783,352 41 866,819 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 0 0 JOHN HOLT PLC. 182.90 0.47 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 44,306.31 1.09 0.93 58 10,324,074 U A C N PLC. 17,864.04 6.20 - 51 1,354,243 109 11,678,317 109 11,678,317 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,334.00 19.95 - 32 227,653 ROADS NIG PLC. 165.00 6.60 - 0 0 32 227,653 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,637.75 1.40 - 2 210 2 210 34 227,863 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 - 4 51,010 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 104,043.18 47.50 - 21 62,078 INTERNATIONAL BREWERIES PLC. 146,559.45 17.05 - 12 38,293 NIGERIAN BREW. PLC. 483,012.88 60.40 -0.17 46 434,836 83 586,217 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 86,000.00 17.20 -0.29 58 841,179 138,000.00 11.50 0.44 85 574,396 DANGOTE SUGAR REFINERY PLC FLOUR MILLS NIG. PLC. 61,505.69 15.00 7.14 54 464,247 HONEYWELL FLOUR MILL PLC 8,168.10 1.03 -1.90 23 858,186 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 39,741.58 15.00 - 12 127,882 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 232 2,865,890 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,660.22 11.00 2.33 18 445,692 NESTLE NIGERIA PLC. 1,066,122.66 1,345.00 - 37 25,807 55 471,499 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,803.24 3.84 - 2 7,338 2 7,338 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 27,396.29 6.90 - 43 350,508 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 11 80,994 54 431,502 426 4,362,446 BANKING ECOBANK TRANSNATIONAL INCORPORATED 190,835.33 10.40 - 17 123,678 FIDELITY BANK PLC 46,359.68 1.60 -0.62 123 8,045,844 GUARANTY TRUST BANK PLC. 853,504.20 29.00 -1.69 246 7,478,199 JAIZ BANK PLC 12,964.27 0.44 4.55 18 3,192,600 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 66,217.96 2.30 - 209 4,369,510 UNION BANK NIG.PLC. 199,477.16 6.85 -2.14 23 518,962 UNITY BANK PLC 7,247.39 0.62 3.33 10 207,863 WEMA BANK PLC. 23,530.42 0.61 -4.69 16 759,444 662 24,696,100 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,712.54 0.68 - 6 243,549 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 4 1,900 CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 10.00 2 120,000 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 8 1,351,004 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 1,228.00 0.20 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 - 0 0 LAW UNION AND ROCK INS. PLC. 2,320.02 0.54 - 0 0 LINKAGE ASSURANCE PLC 5,680.00 0.71 - 0 0 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 -4.76 119 691,940 NEM INSURANCE PLC 11,353.08 2.15 -5.70 7 190,914 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 -4.00 4 151,207 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 14,000 SOVEREIGN TRUST INSURANCE PLC 1,751.57 0.21 4.76 14 807,535 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 2,800.00 0.20 - 5 5,100 SUNU ASSURANCES NIGERIA PLC. 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 - 2 2,010 WAPIC INSURANCE PLC 5,353.10 0.40 -6.98 43 78,334,503 216 81,913,662

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,469.57 1.08 - 5 12,741 5 12,741 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 4 6,220 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 1 100 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 5 6,320 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,200.00 3.60 0.84 63 2,079,065 CUSTODIAN INVESTMENT PLC 36,761.65 6.25 - 5 61,476 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,288.28 1.58 -1.86 53 2,504,337 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 STANBIC IBTC HOLDINGS PLC 412,182.26 40.25 - 18 48,305 UNITED CAPITAL PLC 13,800.00 2.30 2.22 50 2,045,978 189 6,739,161 1,077 113,367,984 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 1 120,000 1 120,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 583.61 0.59 9.26 4 45,462,329 4 45,462,329 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,492.94 4.55 - 3 2,090 GLAXO SMITHKLINE CONSUMER NIG. PLC. 12,197.94 10.20 - 9 13,897 MAY & BAKER NIGERIA PLC. 3,968.04 2.30 - 12 260,500 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 987.56 0.52 - 3 36,300 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 3 3,360 30 316,147 35 45,898,476 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 9.52 16 5,051,150 16 5,051,150 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 2 210 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 2 210 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 7.69 7 1,032,856 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 100 8 1,032,956 26 6,084,316 BUILDING MATERIALS BERGER PAINTS PLC 2,057.75 7.10 1.43 17 116,628 CAP PLC 19,250.00 27.50 - 60 401,304 CEMENT CO. OF NORTH.NIG. PLC 200,438.39 15.25 1.67 29 409,622 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 2 5,161 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 2 210 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 110 932,925 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,712.44 1.54 - 24 812,273 24 812,273 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 4 610 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 610 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 138 1,745,808

CHEMICALS B.O.C. GASES PLC. 1,889.75 4.54 - 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 - 2 12,494 2 12,494 2 12,494 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,440.42 0.23 8.70 12 1,679,960 12 1,679,960 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,725.65 4.00 3.90 111 6,079,497 111 6,079,497 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 17 65,663 CONOIL PLC 16,516.06 23.80 9.93 66 331,941 ETERNA PLC. 4,760.13 3.65 - 5 31,395 FORTE OIL PLC. 35,166.99 27.00 - 30 190,151 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 3 2,350 TOTAL NIGERIA PLC. 50,249.23 148.00 - 30 56,230 151 677,730 274 8,437,187 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 2 150 2 150 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,918.01 4.95 - 7 15,870 342.26 0.73 - 2 1,100 TRANS-NATIONWIDE EXPRESS PLC. 9 16,970 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 1,900 1 1,900 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 30 IKEJA HOTEL PLC 2,972.68 1.43 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 50 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 50 3 130 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 8.11 4 545,524 LEARN AFRICA PLC 1,018.31 1.32 -9.59 14 484,110 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 - 4 83,400 22 1,113,034 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 8 118,000

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Company IN FOCUS

BUSINESS DAY Monday 08 July 2019 www.businessday.ng

Forte Oil: Will new ownership turn the tide?

OLUFIKAYO OWOEYE & DAVID IBIDAPO

L

ike most companies in the downstream sector, Forte Oil had its own share of the ups and downs in the industry.

Forte Oil Plc was incorporated on 11 December 1964 as British Petroleum. It became African Petroleum through the nationalization policy of the Federal Government of Nigeria in 1979.

In May 2007 the shareholding structure changed as Incorporated Trustees of NNPC’s Pension Fund divested its stake to Zenon Petroleum and Gas Limited owned

by Femi Otediola thus making him the majority shareholder in the company. To reflect the new ownership, it changed its name to Forte Oil Plc in December 2010.

In a notice sent to the Nigerian Stock Exchange dated 24th December 2018, the majority shareholder, bllionaire businessman, Femi Otedola, announced that he had reached an agreement with Prudent Energy investing through Ignite Investment Commodities Limited to divest his full 75% in the company’s downstream business the deal was closed last week.

This announcement came to many as a surprise. With the deal closed, Femi Otedola said he will focus on his flagship power asset, Geregu Power Plant, while Forte Oil will focus only on downstream and upstream under new ownership. The billionaire businessman believes Power should be his next focus after operating in the downstream sector for over 20 years.

The task of regaining the company’s momentum now falls on the new leadership of Forte Oil headed Olumide Adeosun, following the resignation of the erstwhile CEO, Akin Akinfemiwa. Prior to his appointment, Adeosun has led the Energy & Power (West Africa) Practice at Price Waterhouse Cooper. Adeosun also held various leadership roles including, Head of Strategy Consulting for West Africa and Head of Capital Projects and Infrastructure where he was a lead adviser on a number of multi-billion-dollar projects. The company also announced the appointment of Moshood Olajide as the company’s chief financial officer.

Navigating through challenges Last year the energy firm announced the decision to sell its upstream services and power business in Nigeria and also divest from debt-ridden Ghana operations and focus on its core fuel distribution operation in the country.

The sale of its Ghana operations did not come to many as a surprise. The Gha-

naian operations have been insignificant at both the top and bottom lines. AP Oil and Gas Ghana accounted for just 0.9% of the Group’s revenues of N148.6 billion in 2016 and 3.6% of Group revenues of N129.4 billion in 2017.

The Ghanaian segment made a loss before tax of N59 million in 2016, and a profit before tax of just N29 million in 2017. Forte made an equity investment of N670 million in AP Oil and Gas Ghana, in addition to cumulative preference shares worth N424.9 million. Interestingly, before the decision to put the Ghanaian subsidiary on sale, the company had taken several impairments on its investment. Impairments of N547 million were taken in 2016 and N410 million in 2017 respectively.

Conversely, its decision to offload its

stake in Geregu Power Plc came to many as a huge surprise for an energy company that had in the past pride itself as a leading integrated energy company. Also, gross profit margin from Geregu has been quite impressive at between 35% and 40%.

It would be recalled that Forte Oil owns a 57% of Amperion Power Distribution Limited, BSG Resources Limited owns 38%, while Shangai Municipal Electric Power Company (SMEPC) has a 5% stake.

Amperion Power Distribution Limited, in turn, owns 51% of Geregu Power Plc. In effect, Forte owns about 29% of Geregu Power Plc. Amperion completed the acquisition of a majority stake in the Geregu Power plant for $132 million in August 2013. The company has since invested funds into rehabilitation of the plant. As at 9 months ended 30th September 2018, the Group has a long-term loan of N11.4 billion for its acquisition of the Geregu Plant through Amperion.

Financial performance mirrors industry challenge Over the last 5 years, Forte Oil plc has seen its profit margin shrink to about 0.3percent, its lowest level over the periods. Analysis of the company’s profit and revenue trend has revealed a faster decline in firm’s net income compared to its revenue.

While Forte oil recorded an annual average decline of 6percent in its revenue during in the last 5 years, net income plunged 47percent during the same period. This was no thanks to 72percent shrinkage in its profit after tax from continued operations to N361.47 million in FY 2018 against N1.31 billion in FY 2019.

This is however despite revenue gener-

ated in 2018 stood at N134.7 billion, up 56percent from 2017 numbers. This we can term a rebound from a heavy revenue plummet in 2017 to N86.16 billion from N148.69 billion in 2016.

This trend is however not typical to forte oil in isolation as oil companies in Nigeria downstream sector have all suffered the same faith as Forte oil.

The Nigerian downstream sector broadly categorized into the refining and marketing segments of petroleum products have continued to underperform, recording shrinking margins despite opportunities for growth.

Nigeria’s inability to refine adequate petroleum products domestically in order to meet local demand has continued to render the downstream sector vulnerable to foreign exchange volatility particularly for petroleum independent marketers.

Recent efforts to revive the local refineries have failed as they have struggled to refine up to 30 percent of their installed capacities despite the huge amount ($1.6billion) reportedly spent on repairs and maintenance over the past 19 years.

Forte Oil has also struggled to revive its profits from operating activities to 2014 - 2016 levels which averaged N8.8 billion. The last 2 years have seen operating profits down to an average of N2.6 billion mirroring challenges faced with the industry.

While in 2016, tough business operating landscape in the marketing segment however slightly improved as petroleum importers enjoyed relative higher margins due to the special exchange rate of N285/$1 (parallel market rate stood at N305/$1) provided by the government, lower oil prices (average of $49.00) meant lower associated cost of importation and higher pump for petrol (from N87 to N185).

This was however short-lived as oil prices began to rally in Q4 2016 which implied higher landing costs for petroleum marketers. In addition, the unending delay in subsidy payments which limited access to credit facilities from banks while interests accrued on loans that were obtained worsened the financial capability of petroleum marketers to import.

Investors’ low appetite takes toll on Forte Oil stocks Same trend has also been witnessed in the industry as investors in the nation’s capital market have continued to demonstrate low appetite towards shares of companies in Nigeria’s oil and gas downstream sector.

Before now, the sector was the darling of all either to government, investors or general public however recent analysis revealed status quo seems not to be the same again for listed firms such as Oando Plc, Forte Oil Plc, Total Nigeria Plc, MRS Oil Nigeria Plc, Conoil Plc and 11 Plc (formerly Mobil Oil Nigeria Plc) under the umbrella of Major Oil Marketing Association of Nigeria (MOMAN).

The last five years have seen significant erosion in the value of Forte’s oil shares.

Stock price of forte oil has plunged 83.9 percent in 5 years.

Analysis have shown that investors in the shares of Forte oil have lost about N181.9 billion in market value in the last five years, as firm’s stock price stood at N27.00 as at Friday from a height of N180 during the period.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.