Businessday 08 may 2018 by BusinessDay

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he solvency ratio of five Nigerian insurers out of 12 that have released full year 2017 results has fallen below the regulatory threshold, according to data compiled by BusinessDay. This means these firms may not have enough buffers to settle all claims in extreme situations. The solvency ratio of an insurance company is the size of its capital relative to all risk it has undertaken. It measures the extent to which assets cover commitments for future payments or liabilities. A stronger or higher ratio indicates financial strength.

In stark contrast, a lower ratio, or one on the weak side, could indicate financial struggles in the future.

The ratio is calculated as the amount of Available Solvency Margin (ASM) in relation to the amount of Required Solvency

Margin (RSM). The ASM is the value of the company’s assets over liabilities, and RSM is based Continues on page 4

Mixed fortunes for Nigeria as oil rallies above $75 on Iran nuclear uncertainties ... NNPC losses to soar on higher landing cost …Trump to make decision on recertifying deal by May 12 DIPO OLADEHINDE

s election approaches, the rising price of crude oil is a double-edged sword that holds mixed fortunes for the Nigerian economy as Brent the benchmark oil price surged Continues on page 4

UBA partners Mastercard to revolutionise ease of payment for SMEs STEPHEN ONYEKWELU

Inside Rising crude oil prices, FAAC, PMI consolidate escape from recession P. 2 Fayemi, Ojudu, others face disqualification over violent APC primaries P. 4

Continues on page 34

Solvency ratio of 5 insurers below regulatory threshold BALA AUGIE

We have listened to you our readers who point us to what you want – more of the rich insight and analysis as well as highlevel commentary for which BusinessDay is known. We are making investment in doubling our editorial workforce over the next one year, bringing in brilliant young men and women with the skills to analyse and explain the news and point readers to where the opportunities are likely to come from long

Kennedy Uzoka, MD/CEO, UBA plc

T Vice President Yemi Osinbajo (l), with Paul Arkwright, British High Commissioner to Nigeria, during the Open Government Partnership (OGP) week in Abuja, yesterday.

he pan-African financial services institution, United Bank for Africa (UBA) in partnership with MasterCard International has released a Continues on page 34

APMT to develop cargo terminals along GE rail concession corridor ... Importers, manufacturers see reduction in cost of moving cargo AMAKA ANAGOR-EWUZIE

PM Ter minals w ill develop and operate a cargo rail terminal along the rail corridor in the recent concession agreement with a consortium led by

General Electric (GE). This forms parts of vital port decongestion efforts, Augustine Fischer, APM Terminals, head, Government Relations and Communication, told BusinessDay while responding to questions on the APM terminals’

investment in the consortium. APM Terminals is part of the GE consortium with the responsibility to optimise the existing narrow gauge lines of the Nigerian Railways Corporation (NRC), which will provide an alternative to road transport

for cargo evacuation “This will complement APM Terminals investments in rail sidings to facilitate cargo transportation from the ocean terminal by rail,” said Fischer. “APM Terminals will also deploy cargo handling equip-

ment at key locations on the rail network to support cargo distribution across the country. All this effort and investment will lead to significant increase in capacity of freight haulage by rail. Meanwhile, the agreement signed last week is the Interim Phase Agreement which is exContinues on page 34

BUSINESS DAY

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Quarterly

Economic Review

Tuesday 08 May 2018

In association with

Rising crude oil prices, FAAC, PMI consolidate escape from recession

vailable indicators show appreciable improvement in Nigeria’s Economic and Business Environment in the first quarter of 2018. The economy has exited recession –confirmed by continuous growth in the last three quarters - essentially because consistent growth in Agriculture compensated for continuing contractions in sectors such as Real Estate; Inflation, though still in doubledigits, is slowing; crude oil prices have recovered and are holding well above the budget benchmark whilst production has also improved resulting in improved terms of trade, and restoration of positive balance in Nigeria’s merchandise trade position with the rest of the world as well as a current account, whilst capital flows – though far from the giddy heights attained in 2013 - have recovered. Against this backdrop, Kainosedge’s First Quarter 2018 Business Conditions Review and Outlook takes the pulse of the economy in the first quarter (Q1) of 2018, with a view to understanding what prevailing macroeconomic trends portend for business operations. In situating businesses within the environment that surrounds them, we recognize the three categories of counterparties a business can have, namely other Businesses, Consumers and the Public Sector, and analyse the conditions pertaining to them across the dimensions of Activity and Cost. 1. Activity There are two key dimensions of economic activity that are intrinsic to business operations as well as their counterparties - Production activities that lead to the generation of output and Spending, which includes spending by households, other businesses and government, on their goods and services. The performances of these measures of activity are best assessed in any given period using Gross Domestic Product (GDP) data measured from production, income and expenditure. With GDP data scheduled to be published in a few weeks -

Source: Kainos Edge Research

Source: Stanbic IBTC/Markit, CBN, Kainos Edge Research

end of May -, any discussion of developments in the 1st quarter must rely on a number of proxies. The Purchasing Managers Index (PMI), published monthly, is a globally respected proxy for activity. An index value higher than 50 connotes an improvement. A. Production Both the Central Bank of Nigeria’s (CBN) and Stanbic IBTC/ Markit (formally recognized as a proxy of economic activity by the National Bureau of Statistics (NBS)) versions of the PMI for Nigeria suggest continuing output growth in the 1st quarter of 2018. Indeed, In March 2018, the Stanbic IBTC Headline PMI hit a record high of 58.8 index points, averaging out at 57.4 points in Q1. Concurrently, the CBN’s Headline PMI, comprising an index for the Manufacturing sector and a composite index for the Non-Manufacturing sectors of the economy, indicate solid activity growth in Q1, the former recording an average score of 56.8 points across the three months of Q1, whilst the Non-Manufacturing index

averaged out at 57.3 points. B. Spending Similar to assessing output, availability of data presents the main challenge to meaningful discussion of spending. In relying on the granular CBN PMI data as a proxy for spending conditions by businesses and their customers, we note that Purchasing Managers report continued growth in new orders, an indicator of spending by customers, as well as inventory, an indication of spending by businesses themselves. The extent to which pressure on the consumer – brought on by slow growth, high unemployment, inflation and delayed or restructured worker remuneration – is being alleviated as the economy improves is unclear. Among the foregoing indicators, recent data is available only for Inflation. In the absence of more recent data on government spending, we draw attention to rising Federation Accounts Allocation Committee (FAAC) disbursements to the three tiers of government as an indicator of rising purchasing power in the public sector.

Driven by rising oil prices and stable production, monthly FAAC allocations are now comfortably in excess of N600bn, way above the computed average of N504.29bn since June 2014 (when the recent downcycle in oil prices began). 2. Cost Conditions Three prices constitute the building blocks of the cost structure of businesses in an economy. They are the inflation rate, the exchange rate and interest rates. To businesses, the inflation rate measures the change in Naira-denominated operating costs. In contrast, movements in the exchange rate provides a sense of developments in the cost of imports and other foreign payments. Interest rates measure the cost of capital, in the debt market for tradable securities as well as in non-tradable debt (credit) market. Headline Inflation eased by 2.03 percent in Q1 - from 15.37% by December 2017 to about 13.34% by March 2018. We are currently witnessing a trend of significant moderation in Inflation – some analysts suggest that we may be approaching a point of inflection where inflation begins to rise as spending in the approach to elections increase. The foreign exchange market maintained the relative stability that started in the second half of 2017, in the wake of the introduction of the Importers and Exporters (I&E) FX window last April. The premium

between the FX rates at the window and the official rate has flatlined, suggesting that the market has found stability around the N360/$ mark. With FOREX Reserves – notwithstanding its composition – ending Q1 at US$46.2bn, the risks to the exchange rate are greatly minimized. Indeed, our Dollarization Index (calculated as the ratio of narrow Money Supply to FOREX Reserves) which peaked at 417 in Oct., 2016 when the rate at Bureau de Change (BDC) N462/US$ ended Q1-2018 at 235.9 with the BDC rate at N362/US$. Is the Naira undervalued? Interest rates on tradable securities in the money markets and the fixed income markets have moderated on account of the combined influence of increases in systemic liquidity. Average liquidity in the overnight market stood at N232bn in Q1:2018, an 62.2% increase when compared to N143bn in the corresponding period in 2017. Moreover, the drop in the volume of FGN bond issuances in the domestic market, consistent with FG’s stated policy of reconfiguring its debt obligations to raise the proportion of foreign debt, has resulted in falling yields. Lending rates remain high, and are not expected to moderate. On-going strengthening of banking sector balance sheets coupled with impact of the International Financial Reporting Standards (IFRS 9) requirements, imply that the cost of credit to the private sector remains elevated and credit supply tight. In this environment, it is not surprising to find businesses relying on higher cash balances to meet liquidity and working capital needs, as opposed to relying on credit. An examination of the 2017 full-year reports of 10 manufacturing companies revealed that they were holding about N108bn of liquidity on their balance sheets, as they pursued higher margins as businesses and reduced staff – rising unemployment appears to have strengthened the position of companies to restrain wages in the face of high unemployment. 3. Outlook Drivers of the Outlook: As usual for Nigeria, key to the outlook for coming months is the trajectory of oil prices and its capacity to support FAAC disbursements. Notwithstanding declared American unhappiness with the present level of crude oil price, its outlook looks encouraging especially against the backdrop of geo-

political developments in the Middle East - uncertainty surrounding the nuclear deal with Iran with the prospect of sanctions being re-imposed is noteworthy. Higher FAAC disbursements make room for spending increases, including potentially to pay off salary arrears, in part or whole by State governments that still owe workers. This might afford the clearest indication of lesser pressure on consumers relative to last year. A minimum wage review is ongoing. Given minimum wage value erosion associated with both inflation and the changes in the exchange rate, our view is that this is overdue (see below), although the impact of electoral politics in driving the current impetus cannot be discounted. While it is sometimes argued that no provision is made for a minimum wage in the budget proposals for 2018, supplementary budgeting to meet the increased wage bill is possible! We expect fairly solid growth in GDP in Q1 when the estimates are published. This expectation is anchored on the pointers to a firmer recovery as highlighted by the PMIs, but also by base effects occasioned by the contraction of GDP in Q1:2017 by –0.91%. We will not be surprised to see Q1:2018 GDP at between 1.5% and 2.01%. Inflation now carries a choppier outlook. We still expect moderations to continue until mid-year. Specifically, we project inflation at 12.7% in April 2017, as the residual base effects from comparatively higher exchange rates last year, before stability ensued at the I&E window, stage their final acts. Afterwards, demand pressures from increased spending could bend the inflation trajectory back upwards, starting around the end of the second quarter and into the latter half of the year. Regarding the exchange rate, the key risk stems from a potential slowdown in portfolio inflows in H2-2018, as electoral uncertainty combines with tighter US monetary policy to render Naira assets less attractive. We don’t expect the exchange rate to change across the various windows. Finally, we expect to see yields in the tradable debt market continue to moderate, even as lending rates remain elevated. This quarterly economic report was prepared specially for BusinessDay by a team at Kainosedge led by Dr Doyin Salami.

Tuesday 08 May 2018

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BUSINESS DAY

Tuesday 08 May 2018

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businessday market monitor Commodities

NSE

Brent Oil

Biggest Gainer

$76.26

Dangcem N248

Cocoa

US $2,848.00

Biggest Loser

1.02pc

Everdon Bureau De Change

Bitcoin NB N128

41,172.82

-0.78pc

3,413,347.42

-2.76pc

Subsidised FX rate as major downside to Nigeria – China $2.5bn swap deal OLALEKAN IPELE

s the Nigeria-China currency swap deal continues to generate reactions among key players in the country, there is need to look at the deal closely and where necessary ask question on the implication certain terms of the deal will have on the Nigerian economy. Asides the fact that the deal is expected to be of immense benefit to Nigerian businesses importing from china as they will no longer have to go through the hard hurdles of currency conversion and access for FX, the worry is at what cost for the country. Bismarck Rewane, the Managing Director and Chief Executive of Financial Derivatives Company (FDC) Nigeria noted that the major downside to the deal is an exchange rate of 305 guaranteed when other transactions are pegged at 360 per dollar. He went further to state that there is definitely subsidy imputed in the deal. He queried why buying a product from China through this transaction will now be at an official exchange rate N305 and buying from elsewhere will be at a rate of 360. He concluded by saying something is fishy about the deal. Analysts are of the opinion that rather than backing the deal by fixing exchange rate at N305, the CBN should have allowed market forces to determine the rates. According data from the Na-

tional Bureau of Statistics, Nigeria’s import bill grew more than 13 per cent in the second quarter of 2017 surging from N2,286.5 billion in the first quarter to N2,595.5 billion. A breakdown of this shows that China is Nigeria’s biggest import trading partner with total import valued at N415.28 billion signifying 16 per cent of total import for the period. For the same period, Nigeria’s total export earnings (to china) stood at N52.7 million, this points to how dismal the country’s balance of trade with china is. “Not allowing market forces to interact and fix rate for this $2.5 billion bilateral currency swap agreement with the Peoples Bank of China (PBoC) is a major down side to this deal,” another analyst said. On his part Johnson Chukwu, MD&CEO Cowry Asset Management Ltd, noted that balance of trade is directed in favor of China as Nigeria exports close to nothing to the Asian economic power house. TheagreementaccordingtoChukwu will worsen the country’s balance of trade as it will encourage increased importation from china giving that theywillnolongergothroughthehard hurdles of currency conversion. He very importantly noted that the deal will momentarily boost Nigeria’s reserve as the country will no longer expend its reserves on importation from China up to the tune of $2.5billion spanning the three year tenure of the swap deal and the net value of the currency swap will have to be settled in the future.

INSIGHT

Buy

Sell

$-N 360.00 363.00 £-N 494 .00 504.00 €-N 433.00 443.00

FMDQ Close Foreign Exchange Market

Spot $/N

I&E FX Window 360.91 CBN Official Rate 305.75

3M -0.92 10.71

5 Years

10 Years

20 Years

0.25 12.19

-0.01% 13.25%

-0.03% 13.14%

0.00% 13.02%

Mixed fortunes for Nigeria as oil rallies... Continued from page 1

beyond $75 on Monday, its highest since November 2014 as traders braced up for a possible re-imposition of US restrictions on Iran, the third-biggest producer in the Organization of Petroleum Exporting Countries (OPEC). The price rally could boost Nigeria’s revenue, grease the foreign exchange market, give new life to banks’ non-performing loans and encourage the restart of oil drilling, analysts say. However it could also translate to higher petrol prices in import dependent Nigeria, and blunt the hunger for badly needed reforms to break decades-old dependence on oil. “Obviously, the higher oil price will lead to higher subsidies on government, the NNPC will be incurring more losses of about N2.3 billion; since we are in elections periods, it’s very rare for the government to make any serious change,” Ademola Adigun, an oil and gas governance consultant said. In Nigeria, the government has justified arguments on why it needs to sustain a duplicitous subsidy regime that is costing the country billions. With landing cost of petrol put at N171 per litre, the Nigerian National Petroleum Corporation (NNPC) incurred N37 on each litre of fuel at a depot price of N133.80, leading to a daily subsidy of N2.046billion for 55million litres. “We are actually subsidising for the almost the whole of West Africa in real terms, because we are currently paying subsides for about 53 million daily when our current consumptions is around 36.8 million,” Adigun said by phone. The landing cost of petrol has

been higher than the government regulated price of N145 per litre, since crude oil prices rose to $45 per barrel in January 2017. This puts total subsidy spends since February 2017 to February this year at N746.79billion. Analysts say there is no better manual on how to self-destruct an economy. All attention will be on US president Donald Trump this week, who is facing a fateful decision (May 12) on whether to keep waiving nuclear-related sanctions on Iran or to rip up the Iran nuclear deal. “The US government has said it is open to renegotiate a new deal in place of the current one, Iran is opposed to changing any aspect of the deal, resulting a standoff that is almost certain to derail the deal and send crude oil price into rally frenzy,” Ecobank energy research analysts said in a report on May 7. Renewed US sanctions on Iran may disrupt more than the Persian Gulf nation’s oil exports; Iran holds the largest proven reserves of natural gas, and its gas and petrochemical industries have continued to grow since sanctions were eased more than two years ago. “We think the market has been pricing in the almost certain expectation that the US will withdraw from the deal. While confirmation of the withdrawal will be positive for crude oil price and will likely be followed by a sudden rally in crude oil price, we believe the magnitude of the rally will be moderate,” Ecobank energy analysts said. Energy Analysts at Ecobank also expected a significant decline in on the off chance that the US government decide to recertify the deal. •Continues online at www.businessdayonline.com

Solvency ratio of 5... Continued from page 1

on net premiums. For instance in India, insurers are required to maintain a minimum ratio of 1.50 or 150 percent. According to China’s regulatory regime, insurance firms are required to maintain solvency ratios above 100 percent, or be subject to penalties on the scope of their business and financing activities. “From the regulators point of view, the ideal ratio is 150 percent but insurance companies should look beyond the target set by the regulator,” Jide Orimolade, managing director and CEO of Law Union and Rock Insurance Plc told BusinessDay on phone. The 5 insurers whose solvency ratios are below the regulatory threshold are, Aiico Insurance Nigeria Plc with solvency ratio of 55 percent, First Bank Insurance Plc, 59.10 percent; Leadway Assurance Limited 76 percent; NEM Insurance Plc, 93 percent and Continental Nigeria Plc 90 percent. However, other insurers have ratios above 150 percent. They are Prestige Assurance with solvency ratio of (385 percent); Wapic Insurance, 283 percent; Law Union and Rock Insurance, (225 percent); Lasaco Insurance, (204 percent). While Mansard Insurance Plc’s and Consolidated Hall Mark Insur-

L-R: Muhammadu Indimi, executive chairman, Oriental Energy Resources Limited; Margot Gill, Harvard University Marshal, and Ibrahim Gambari, former minister of foreign affairs and Under Secretary-General of the United Nations, during a courtesy call on the Harvard Marshal.

ance Plc’s ratios of 132 percent and 116 percent are below the threshold, analysts are of the view that there is room for improvement. In the insurance parlance, a company with a low solvency ratio doesn’t necessary mean it isn’t profitable as evidenced in the example below. While leadway Assurance’s solvency ratio is below the threshold, the company’s net income increased by 82.45 percent to N13.83 billion in

December 2017, thanks to contributions from investment income and gains from fair value investment. Insurers in the United States, Europe and Asia sell some of their equity investment in their books that can help boost solvency ratios. For instance, Italian insurer Assicurazioni Generali S.p.A.’s solvency ratio rose to 200 percent after the sale of its Swiss private banking unit, BSI. In order to strengthen the risk

fgn bonds

Treasury Bills

managementsystemofinsurersinAfrica’s most populous nation, National insurance Commission (NAICOM) hastransitedtotheriskbasedsolvency supervision model (RBS) model. This means that any insurance firm intending to undertake oil and gas, aviation and marine business must have the capital to take on such risk. The objective of the RBS is to reduce the losses suffered by policyholders in the event that a firm is unable to meet claims fully.

Fayemi, Ojudu, others face disqualification over violent APC primaries JAME KWEN, Abuja

equel to the violence that disrupted the Saturday All Progressive Party (APC) Governorship Primary election in Ekiti State, the ruling party has threatened to disqualify Kayode Fayemi, Minister of Mines and steel, Babafemi Ojudu, Special Adviser to the President on Political matters as well as Bimbo Daramola, former member of House of Representatives. This is because the supporters of these Governorship Aspirants had allegedly perpetrated the violence that marred the primary elections leading to its postponement. Consequently, APC declared on Monday that all the aspirants whose agents or representatives were involved in the disruption of the primary election in Ekiti will be disqualified. The party also declared that having received full report of what transpired, the names of those who disrupted the process with their pictures, the party will ensure their prosecution. Speaking with newsmen Monday at the party’s national secretariat after the Governor Tanko Al-Makura led Ekiti primary election led committee briefed the National Working Committee, APC National Publicity Secretary, Bolaji Abdullahi, said the committee also made specific recommendations for the NWC. The Ekiti State primary to select one of the 33 aspirants for the APC gubernatorial ticket was suspended after hoodlums disrupted the voting process over allegation that it was being manipulated by agents of one of the aspirants. Speaking after the primaries was suspended, Ekiti Rebirth Organization (ERO), the campaign organization of Ojudu who is believed to be one of the leading aspirants, maintained that the election was going on peacefully until thugs it claimed were loyal to Fayemi invaded the voting section and began to smash ballot boxes. “The gubernatorial primary was going on smoothly and the delegates were already casting their votes before thugs allegedly loyal to former governor of the state and current Minster of Mines and Steel, Kayode Fayemi, smashed some ballot boxes leading to the disruption of the process,” said Gboyega Adeoye, spokesperson of ERO.

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Tuesday 08 April 2018

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Tuesday 08 May 2018

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Labour Day, minimum wage brouhaha & the political space

MAZI SAM OHUABUNWA OFR sam@starteamconsult.com

was enthused when I heard Pastor Poju Oyemade of the Covenant Christian Centre talk of political cats and dogs at the Platform which he convenes every year on the 1st of May. By the way, that day is usually observed in Nigeria as public holidays in commemoration of Labour Day or workers’ day. This year’s May Day was very eventful and for me there were a couple of issues that drew my attention. The First was the issue of minimum wage for workers in Nigeria. The Nigerian Labour Congress (NLC) was pitching for a new minimum monthly wage of N56,500. Some other labour leaders were demanding more, up to N90, 000 and there were arguments back & forth. Some commentators insisted that the demand was unrealistic. To Triple or quadruple minimum wage at one go would drive inflation up. What of the ability of employers, especially the state governments to pay? They cited the huge unpaid salary backlogs in many states despite several bailouts and wondered what would happen if such states had the burden of paying salaries and other worker emoluments at such new rates. One commentator specifically cautioned that the total financial implication of whatever rate is finally agreed must be painstakingly determined by all parties to avoid

STRATEGY & POLICY

MA JOHNSON Johnson is a marine project management consultant and Chartered Engineer. He is a Fellow of the Institute of Marine Engineering, Science and Technology, UK.

ost nations want to possess nuclear power so that they can be relevant in world affairs and also, be part of the club of “powerful” nations. To a poor nation, the acquisition of a nuclear weapon gives it a reasonable degree of immunity from attack by “powerful” nations. North Korea has joined the list of countries with nuclear weapons. You will recall that sometime in 2017, North Korea claimed it has successfully tested what the world was worried about- a miniaturized hydrogen bomb that could be loaded on top of a long range missile. Equally, several tests of Inter-Continental Ballistics Missiles (ICBMs) capable of reaching the US mainland were conducted. These tests were very

a possible reign of strikes and disruption of the economy that would arise if employers find the burden unbearable. He reminded us that the real impact of the new minimum wage would be on benefits, as much of the benefits- housing allowance, transport allowance, leave allowance pension contribution etc are all linked to basic salary. Our attention was drawn to the fact that the minimum wage applies to all-public, private and NGOs, therefore much of the argument that the states will be in a position to pay if they reduced security votes or became more efficient does not apply to the private sector where most of the SMEs are gasping for air. Some others cautioned the federal government not to use the minimum wage as political bait as the reality will dawn after the elections. Over 70% of the federal government budget is spent on recurrent expenditure with salaries and emoluments contributing the lion share. Certainly any steep rise in the minimum wage will worsen the ratio and so the FGN must be very rational in coming to a new minimum wage and must avoid playing to the gallery or allowing itself to be stampeded by the fat labour leaders. For me, I agree that the minimum wage should be revised once in a while in line with changes in the econometrics of the nation but I insist it should be by negotiation between employers and employees. It must never be imposed on the employers because ability to pay is a pre-requisite for salary negotiation and critical for harmonious industrial relations climate. The second issue that drew my attention was the accusation by Governor Nyesom Wike that the labour and its leaders were selfish.

I agree that the minimum wage should be revised once in a while in line with changes in the econometrics of the nation but I insist it should be by negotiation between employers and employees He wondered why they would just focus on increasing minimum wage and other benefits for themselves and then remained silent on the daily killing of Nigerians across the nation, particularly in the middle belt by the militant Fulani cattle herdsmen. He told them that they were the same ones that participated in the ‘occupy Nigeria ‘ strikes in 2012 because of some increase in the price of PMS but remained silent in the face of the higher increase in recent times. In effect, he was accusing them of bias. They were willing tools in the campaign against President Jonathan & PDP and have failed to rise up against APC and President Buhari when worse things have happened in the polity. While I agree with the observation that the labour has not been sufficiently vocal in condemning the serial killing of innocent Nigerians including workers by herdsmen and other sundry marauders, I think that the problem is with the ineffectiveness of the opposition parties. If what is happening in Nigeria today happened when PDP was in power, the APC would have roasted them and certainly would have led a national revolt, including possible impeachment of the President. Therefore my point is that Wike should not blame the labour leaders for being apparently blind to the mayhem going on in Nigeria, but should blame his

party for lacking the organizational skills to motivate the labour and the civil society to action as APC did when they were in opposition. My free advisory is that they should hire a spokesperson in the mould of my good friend- Lai Mohammed, a phenomenal social mobilizer. The third issue which actually motivated this piece was the statement referenced at the beginning of this article. Many of the speakers at the Platform enjoined their mostly young listeners to go and get their PVCs so that they could vote in the right people to political offices in 2019. They insisted that the youth had the power to change the sad story that Nigeria had become and encouraged all to take their fate in their hands. But then Poju threw in this clincher: “If the electorate are confronted with a choice between cats and dogs, what would they do?” This got many people laughing but I thought this was not a matter to laugh about as it seemed to be at the core of some of the critical challenges we have had in making political choices at elections. What kind of candidates do we have? How do we choose between political cats and political dogs? Who are political cats? Politicians who act like cats. Treacherous, predatory and mischievous. They pretend to be calm and conscientious but their whole focus is on the rat and they often ambush the rat and eat the food meant for the children. These are the politicians who meander and manipulate themselves to power but all they seek is for self. Quite often they take the electorate for granted and mess them up, feeding fat on their misery. Who are the political dogs? Politicians who act like dogs; aggressive, predatory, violent and poisonous. They are the politicians who make so much noise, fight and growl

to get power. But their main objective is the flesh and bone, sometimes of the constituent. As dogs bark when hungry, these politicians can do anything to satisfy their needs and as dogs can turn against its owner or the family and friends of the owner, these politicians can give the lives of their opponents and sometimes friends to get to power or to remain in power. Making a choice between these two sets of predatory, self-seeking and self-centred politicians can be tough. And quite often in Nigeria, that’s the only choice we are allowed. And that is the point Poju was making. Beyond getting our PVCs and coming out to vote, we need both to increase and improve the choices we can make on election day. That then raises the issue of how leaders emerge in our country. What must we do to allow credible and tested candidates emerge from party primaries? That is the true challenge. Anybody who has tried it will tell you that it is a very capital intensive project, especially in the main political parties. The delegates who vote for candidates at the party primaries often have one objective in mind- to maximize their take home from the exercise. Often the quality of the candidate takes a secondary consideration and that’s how we often end up with cats & dogs. Therefore the revolution will come only when can find a way to minimize the impact of money in Nigerian politics. We need to identify credible candidates in the different political parties and encourage and support them through primaries. That is our present challenge and we really need help.

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Trump-Kim summit: Will diplomacy fail? scary and they caused panic globally. To de-escalate tension in the Korean Peninsula, this writer then suggested in an article titled “Kim Jong-Un in love with nukes,” that the military option was not the best of all options in the short and medium terms because of its implication on global peace and security. It was advised that “America should use diplomacy as an instrument of national power to realign North Korea to embracing regional and world peace.” In search of peace, the former Director of the CIA, Mike Pompeo, received a marching order from Donald Trump to meet with Kim Jong-Un, the North Korean leader in Pyongyang to prepare grounds for a possible summit between the two leaders. There was a sigh of relief that peace may return to the Korean Peninsula as in the words of Winston Churchill, “better to jaw-jaw than to war-war.” This summit is unprecedented as no former US president ever held talks with a North Korean leader. At last, Kim Jong-Un has dropped his ego and he is willing to use his country’s nuclear arsenal as a bargaining chip for security guarantees and economic aids. Trump is also willing to have a diplomatic meeting with Kim Jong-Un. The main subject at the summit which takes

place sometime in May or June 2018 is the denuclearization of the Korean Peninsula thereby bringing peace to the North Asia region and by extension the world. Ahead of the Trump-Kim summit was a peace process initiated at the “peace village” on the Demilitarized Zone. On April 27, 2018 history was made when the South and North Korean leaders met for the first time in sixty-five years to end the war in the Korean Peninsula. The two leaders have committed their nations to denuclearization of the Korean Peninsula and pledged to formally end the Korean War. With the recent peace agreement between the two countries, it’s unlikely that China or Russia will use North Korea as a counterweight against South Korea in the future. But does the agreement between the Korean leaders cover denuclearization or was it to stop further testing of missile warheads? There are speculations that Trump is likely to vent his anger on Kim during the summit. And in addition experts believe that what Trump professesat the denuclearization summit is inviolable. He has however, cautioned that he will respectfully leave the summit if Kim does not accept his terms and conditions to denuclearize. Kim also, cannot be predicted. That is why the two leaders are considered a “toxic combination,” and the outcome of the

summit cannot be predicted. Diplomats have expressed their concerns that a face-to-face meeting between the two elephants carries a lot of risks. The risk is in the two leaders getting something concrete out of the meeting that is favorable to both parties. If not, diplomacy would be declared a failure. When diplomacy fails, war begins. No one prays for war in that region. Indeed, it is widely reported that Kim has declared that North Korea no longer needs nuclear tests because its quest for nuclear weapon is “complete” and it “no longer needs” to test its weapon’s capability. Rational US goals for the meeting is likely to include the return of US detainees in North Korea, the return of soldiers’ remains that are held from the Korean War of 1956, place a stop on the nuclear program and a ban on North Korea selling chemical weapons to Syria or any other country for that matter. The North Korean leader aims will likely include getting a relief from economic sanctions as the country is desperately in need of economic development. He also needs assurances from Trump about his regime’s long term survival. It would be a dangerous endeavor if the agenda, objectives, negotiating points, and risks of the summit are not adhered to by both parties.

Trump has however, declared that the “US will not lift sanctions until North Korea had substantially dismantled its nuclear programs.” Irrespective of verbal declarations, there is optimism that diplomacy will not fail as Kim has declared that he would stop missile testing. If the summit however fails, which is a distinct possibility, it is advisable that both leaders remain careful so that the pendulum doesn’t swing to regular nuclear missile testing and threat of war. If diplomacy fails, Trump may return to tweeting “fire and fury.” With the passage of time, it is better for both leaders to remain circumspect as this may help prevent such a reversal later. The North-East Asia subregion needs peace. Yes, the world needs peace. The world cannot afford a nuclear war. It would be very devastating at a time when global gross public debt has risen in recent years and is set to stand at 82 percent of Gross Domestic Product (GDP) in 2018, according to the International Monetary Fund (IMF). As Trump and Kim prepares to meet, the world waits patiently to see whether diplomacy will further bring peace to North East Asia.

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Smart Lagos (2): Status, Prospects & Opportunities

RAFIQ RAJI “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Smart city defined smart city is a des“ tination where hard and soft infrastructures are integrated with technology and securely connected together.” And what does the Lagos State government hope to achieve when it refers to the concept?In remarks made in May 2017, Governor Ambode explained his understanding of the concept this way: “In the emerging knowledge era, ICT has taken centre stage, and as the city of the future, Lagos must take advantage and indeed leverage on the tools of ICT in moving towards a Smart City.” So, what are the steps already taken by the government towards this objective? In June 2016, the Lagos State government signed a memorandum of understanding with Dubai Holdings LLC, owners of Smart City Dubai LLC, “to develop sustainable, smart, globally connected knowledge-based communities that drive a knowledge economy.” To be located in Ibeju-Lekki on the outskirts of Lagos, “a Smart-City Lagos will be the pride of all Lagosians, just as we have Smart City Dubai, Smart-City Malta and Smart-City Kochi (India).” To assess its potential, it would

help to examine the evolution of smart cities elsewhere. Investments and jobs have been touted as potential gains. That has been the case for Smart City Dubai, certainly. But there are many advantages Dubai has that Lagos does not as yet have. Apart from looking to successful cities like New York and drawing up plans and implementing them, a crucial factor for Smart City Dubai’s success has been the authorities’ collaboration with the private sector, especially global technology companies. Today, just about five years after the Dubai Smart City project was launched in 2013, Dubai is at the forefront of research in artificial intelligence, autonomous vehicles and so on. The city of Dubai has also taken on ambitious events and projects to motivate it towards its ambitions, like the Expo 2020 (which it won hosting rights to the same year the smart city project was initiated), Hyperloop Dubai, Oasis Eco Resort and so on.Other initiatives are: Happiness Metre, Smart District Guidelines, Smart Dubai Index, Dubai Data, Smart Dubai Platform, Dubai Blockchain, and so on.Although the Dubai example is perhaps a long shot, the promoters of Smart City Lagos are right to aim that high. Local capital looking to profit from tech play So, what could realistically be expected to happen in regard of Smart City Lagos over the shortand medium-term? And what are the opportunities to watch out for over these time horizons? In assessing the opportunity, a potential investor, and indeed the government, could choose to focus on Smart City Lagos or

The real opportunity lies in Lagos, the smart city. True, the advantages that a smart city in the mould of Dubai Smart City provides, which in addition to flawless infrastructure, include a clustering of talent in a particular area, such that tech companies could easily conduct all their operations in one location, with all the logistical and operational benefits that engenders Lagos as a smart city. In any case, the state authorities seem to be aiming for both. In May 2017, they started the installation of free wifi infrastructure across the city. The state government has also started training its staff to align them with its smart city vision. For instance, staff in the Lagos central business districts (CBDs) had their training session in January 2018. The real opportunity lies in Lagos, the smart city. True, the advantages that a smart city in the mould of Dubai Smart City provides, which in addition to flawless infrastructure, include a clustering of talent in a particular area, such that tech companies could easily conduct all their operations in one location, with all the logistical and operational benefits that engenders. Currently, there are two other major smart city developments in the city apart from Smart City Lagos, which are already at advanced stages, and probably more relevant for a foreign firm looking to make the move to Lagos momentarily.

Eko Atlantic City is a new city being created from a sand-filled area of the Atlantic Ocean bordering the highbrow Victoria Island area of Lagos. A totally private initiative, but with considerable government support, firms could easily set up shop and find accommodation for their staff in a secure and efficiently run enclave, without any of the difficulties typically associated with the main city. The other major development is the Lekki Free Trade Zone (LFTZ), where a deep sea port is being built. Promoted by The Tolaram Group, a Singaporean conglomerate, and the Lagos State government, the Lekki Deep Seaport, the first phase of which is expected to start operations in 2020, would be able to handle 2.5 million TEUs and subsequently almost double that to 4.5 million TEUs when the second phase is completed. And although the broader LFTZ is currently dominated by manufacturing firms and the like, an IT hardware manufacturer could easily set up shop there as well. The Lagos Smart City, under the aegis of the state government, should not be confused with other self-acclaimed smart city projects by private sector players that are ongoing across the city. The idea is more or less the same: a cluster of office and residential buildings dedicated to the ICT business. One being promoted by Chams Plc, “SmartCity Innovation Hub,” located in the Lekki-Epe corridor of Lagos, would, when completed, “provide a conducive cocoon in terms of physical and ICT infrastructure, energy, regulatory and fiscal policies for the optimum and most profitable operation

and development of technology products and/or service companies.” The key attraction of the concept remains the proximity advantages of having many ICT companies in one location where they are able to operate under world-class conditions and standards to enable them to compete favourably with their contemporaries anywhere in the world. Another smart city project, also located in the Lekki-Epe corridor, is the $300 million Imperial International Business City (IIBC), initiated by one of the royal families in Lagos. They boast it would be the first eco-friendly smart business city in Africa and is expected to be completed by 2021. Put together with that of the state government, the potential investor is spoilt for choice. They are all trying to address the typical first concern for tech startups and indeed bigger firms of finding a conducive and cost-efficient environment to operate. But Lagos offers much more than that. It is a market of more than 20 million people. If all these people are able to use the internet for free, they could easily serve as the target of the services of these firms. • The author, Dr Rafiq Raji, is an adjunct researcher of the NTUSBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. This article was specifically written for the NTU-SBF Centre for African Studies

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Why change management is the new gold and are influenced in times of change and developed the ADKAR® Model for individual change. Today, it is one of the most widely used change models in the world.

DEJI ISHMAEL Ishmael is the Managing Director/Lead Consultant of Afrissance, an Enterprise Transformation Consulting Firm with offices in Lagos and London.

he concept of change management is not a foreign concept and has been utilized by many of the world’s largest organizations for years. Prosci, a leading organization in change management studied how individuals experienced

What is change management? In September 2015, an executive accountant of a top business outfit in Nigeria had just returned from his month-long vacation. Mr. Patrick arrived at his desk feeling energized and eager to resume his duties. Then he received a memo that almost derailed his entire day. The memo, about 23-pages long detailed the functions and benefits of a newly acquired accounting software. “This software has been proven to cut down on time and effort by nearly 50%,” the memo said. But Mr. Patrick wasn’t seeing any benefit the software promised yet. And this promise did nothing to clear the throbbing

pain of frustration that was building up inside him. What was wrong with the software he’s been using? If the old one works just fine why bother switching to this new one that looks complicated? “I won’t even bother reading this long boring memo, this old software suits me just fine” he concluded. Mr. Patrick’s case is not unique to organizations who come up with new initiatives. In fact, it is to be expected because psychologically, humans resist change. How did you feel when you were required to make a change in your organization? This is why incorporating change management in an organization’s initiative is more important than ever. Change management is the structured approach that guides, prepare, equip and support individuals and teams in adopting change to drive successful out-

come of an initiative or project. Change management in an organization provides a detailed communication process involving all participants towards a common positive objective. It also ensures a detailed training/coaching program where necessary for an initiative’s usage and execution. Yes, humans resist change, but we are also quite resilient and adaptive even in unfamiliar situations. And change management helps us understand how people experience change and what they’ll need to adapt to it. It helps an organization’s project leader measure accurately, a successful change transition. A variable that can be measured accurately, replicated and adopted for future initiatives. Benefits of change management 1. In an ever-changing world, you thrive: you embrace change

and deliver results with higher competency and capacity. 2. Change management helps to bridge the gaps created by change. It does this by supporting and equipping individuals and organizations to enable them achieve a successful objective. 3. A Prosci correlation data from over 2000 data points in an eight-year period show that initiatives with excellent change management are six times more likely to meet objectives than those with poor change management. 4. Ignoring the people side of change creates problems which lead to excessive risk and cost. Change management helps to lower such mission-critical risks. 5. Change management provides a comprehensive measurable structure and support to individuals to help them achieve their objectives. Send reactions to: comment@businessdayonline.com

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Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi HEAD OF SALES, CONFERENCES Rerhe Idonije SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

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Tuesday 08 May 2018

Nigeria’s rising debt burden

ast month the International Monetary Fund, IMF, in its presentation of the Global Financial Stability Report warned that Nigeria and other emerging economies’ debt level was creating some form of vulnerabilities and if not checked, could undermine financial stability. Although Nigeria always retorts that its debt to GDP ratio is low in comparison to even developed countries, the real danger is in the area of debt sustainability and revenue to debt service ratio. The Debt Management Office put Nigeria’s total national debt stock at N22.73 trillion ($66.70 billion), of which the external dollar denominated component is in excess of US$17 billion. With a GDP of almost $500 billion, Nigeria’s debt remains with 13 percent of GDP. That is why finance minister Kemi Adeosun, always respond to these warnings that Nigeria’s debt are sustainable and under control. The real problem however is in the area of debt service to revenue. The Bretton Woods institution – and some recent calculations, put Nigeria’s debt servicing at 66 percent

of revenue – surely anyone who spends 66 percent of his/her income to service debt monthly has some serious issues and may sooner or later run into difficulties. It is clear Nigeria has a problem of debt sustainability. But the government will never acknowledge it. Reality is, the government is caught between declining revenues and rising expenditures all at once. But there are more sustainable solutions than plunging the nation into unsustainable debt. Nigeria’s tax to GDP ratio is one of the lowest in the world, meaning tax-collection rate is very poor and can be grown exponentially. Additionally, the government could sell public assets, intensify its public private partnership drive to finance capital projects and infrastructure and or outright concessioning of commercially viable government assets. But the government isn’t considering these avenues and is only looking towards borrowing. There’s also the problem of external borrowings at ridiculous interest rates that is hurting the country. The government has explained its penchant for external borrowing on the need to balance its loan portfolio and reduce the pressure on domestic

borrowing. But why is the government borrowing so much of late? Government argues its heavy borrowing pattern is necessitated by the need to invest in infrastructure. But even the sources of the debts are a source of concern. The government could have easily approached the International Monetary Fund for cheap loans which come in at less than one percent interest rate instead of the significantly more expensive commercial loans which it is building up. Obviously, the government is avoiding the IMF because it is not a politically popular decision. Nigerians are not particularly in love with the IMF because of the conditionalities that the fund will force the country to implement in return for its cheap money. So the fear of the IMF has pushed the Nigerian government into the arms of shylock lenders who will demand for their pound of flesh if Nigeria at any point in time is unable to repay the loans. Sadly, unlike the IMF, investors giving Nigeria money through the Eurobond and other such means will not border to see whether the country really spends it on infrastructure as promised. All they are interested in is that the country

does not default in its payment schedule. This is unlike the IMF that will put in place a monitoring programme and ensure that the funds are used as stated and future funds released only when the stated spending plan and in many cases cost plans are met. While money raised from bonds or commercially can be spent in a way and manner that suits the government, an IMF or a World Bank loan cannot be spent in a similar manner. Sadly, Nigeria does not have a track record of judicious utilisation of loans and an IMF loan, accountability-wise, may have been the best for the country. Currently, no Nigerian can say exactly what the borrowed funds are being spent on. For all practical purposes, it may be used to service recurrent expenditure. That is why we would have preferred a loan whose spending will be effectively monitored and supervised. Now that Nigeria has taken the decision to procure expensive loans just to escape supervision, we expect the National Assembly to strengthen its oversight and supervising capacity to ensure that the loans procured are used strictly for infrastructure projects as stated in the request sent to them.

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Tuesday 08 May 2018

DAY

BUSINESS

COMPANIES & MARKETS

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

FirstBank’s profit growth, best among peers in 2017 BALA AUGIE

irst Bank Nigeria Holdings (FBN Holdings) Plc’s profit growth was the best among peers in 2017, thanks to lower impairments, cost curtailments, and income from short term government securities. FBN Holdings’ profit after tax surged by 226.80 percent

to N40.11 billion in December 2017, the fastest bottom line growth in five years. See Chart. This compares with the year on year (YOY) profit growth of Zenith Bank, (37.23 percent); United Bank for Africa (UBA), (8.75 percent); Guaranty Trust Bank (GTBank) Plc, (28.86 percent); Fidelity Bank Plc, (93.72 percent); Stanbic IBTC Holdings Plc, (69.63 percent); and Sterling Bank Plc; (65.03 percent), as shown in their 2017 audited financial statement.

On the flip side, Access Bank Plc recorded a 13.22 percent drop in net income, First City Monument Bank Plc, (-34.43 percent); and Wema Bank Plc, (-11.91 percent). This means only three out of 10 banks under our coverage recorded a profit at the bottom lines (profit), signaling the gradual economic recovery is beginning to show face in their numbers. For the year ended December 2017, after tax profits for the 10 lenders that have

reported results spiked by 44.28 percent to N693.92 billion from N478.19 billion the previous year (2016). For the full year period ending 2016 the 10 banks saw their profits increase by 21 percent, while there was a 12.32 percent decline in profits in 2015 a period when the sudden drop in crude oil prices from above a $100 per barrel to near $40 forced banks with heavy exposure to the sector to write off loans that began to go bad.

Th e u np re c e d e nte d growth at the bottom line (profit) means these lenders have surmounted some of the issues that undermined earnings in the crisis period as a gradual economic recovery helped bolster earnings since customers are paying back some the money borrowed. Also, some lenders have taken a haircut in 2016 on Non-Performing Loans (NPLs), a proactive strategy that validated their risk man-

agement strategy. Between 2014 and 2015, the number of banks with NPL ratio in excess of the 5 percent threshold rose from 3 to 8. Furthermore, NPL in 3 of these banks exceeded 10 percent, while NPLs rose in 18 of the 22 buckets into which the CBN classified Deposit Money Bank (DMB) lending. FBN Holdings Plc’s share price closed at N22.12 as of Friday May 3, valuing it at N450.68 billion.

2017, as basic earnings per share increased to N10.68 in Q1 2018 from a loss per share of N10.39 in Q1 2017. The company also reported a return to profitability as profit for the review period settled at N6.3 billion from a loss position of N5.9 billion in March 2017. “We have made a good start to 2018; our core production base remains strong and predictable, the gas business has once again set a new record for quarterly revenue contribution and the steps we took to refinance the balance sheet have significantly strengthened our liquidity position and will allow investments to be scaled up,” Austin Avuru Chief Executive Officer of Seplat’s said. Also Rencap said Seplat’s first quarter 2018 gas production which was up 15 percent and 66percent on a quarter on quarter and year on year basis, respectively was basi-

cally due to the beginning of the Azura gas contract to supply 52mmscf/d of gas (net). Avuru added, “Our debut bond issuance marks another key milestone for the Company, widening our long term capital base in support of our growth strategy while also reducing overall borrowing costs. Statement of the company’s financial position reveal net assets has improved in first quarter 2018 by 1.2 percent to N465 billion from N460 billion as at December 2017. On the back drop of the results, the company’s directors have proposed the payment of an interim dividend of N15 per fully paid ordinary share while the aggregate amount of the proposed dividend expected to is to be paid out of retained earnings as at 31 March 2018, but not recognised as a liability at period end, is N9 billion ($29.4million) as against none proposed for 2017.

Seplat still at risk despite higher revenue DIPO OLADEHINDE

espite recording a 282 per cent growth in revenue from contracts with customers to N55.2 billion in first quarter 2018 from N14.5 billion in 2017,Seplat Petroleum Company, one of the front runners in Africa’s rapidly emerging independent oil and gas companies still remain exposed to more credit risk. The Nigerian independent oil and gas firm, Seplat announced that the company still remain exposed to credit risk from its sale of crude oil to Mecuria. “The off-take agreement with Mercuria runs until 31 July 2021 with a 30 day payment term. The Group is exposed to further credit risk from outstanding cash calls from Nigerian Petroleum Development Company (NPDC)

and National Petroleum Investment Management Services (NAPIMS),” Seplat announced on its website. Seplat insisted that the credit risk on cash is limited because the majority of deposits are with banks that have an acceptable credit rating assigned by an international credit agency; italso noted that its maximum exposure to credit risk due to default of the counterparty is equal to the carrying value of its financial assets. Seplat added, “In addition, the Group is exposed to credit risk in relation to its sale of gas to Nigerian Gas Marketing Company (NGMC) Limited, a subsidiary of NNPC, its sole gas customer during the quarter.” BusinessDay investigations in the financial books of Seplat showed NPDC receivables represent the outstanding cash calls due to Seplat from its JV partner, Nigerian Petroleum Development Company. The

receivables have been discounted to reflect the impact of time value of money, and an impairment loss has been recognised in the financial statements. As at 31 March 2018, the undiscounted value of this receivable is N5 billion ($16 million), compared to N34 billion ($113 million) in 2017. “The Group applies the IFRS 9 general model to measuring Expected Credit Losses (ECL) which uses a three-stage approach in recognising the expected loss allowance for NPDC receivables. The Group measures loss allowance at an amount equal to lifetime ECL as these assets do not contain a significant financing component,” Seplat said in its financial report. Seplat also announced that the ECL recognised for the period is a probability-weighted estimate of credit losses discounted at the effective interest rate of the financial asset. A r eport by investment

banking firm, Renaissance Capital (RenCap),said Seplat’s new TP of GBPis 1.91which implies 35 percent upside to the current market price; “we continue to use an aggressive risk factor of 30 percent on our NAV due to Niger Delta risks,” Rencap said. “Un-risked NAV implies a fair value of GB P2.81 and potential upside of 203 percent; we see the main downside risks as disruptions to export routes caused by militants and oil price volatility.We maintain our BUY rating,” RenCap said in the May 2 report. The company earned other income of N2.6 billion as against no figure recorded for March 2017 and reduced general and administrative expenses by 17 percent to N4.3 billion from N5.1 billion. Net gains on foreign exchange improved 8 per cent to N572 million in Q1 2018 from N529 million in first quarter

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Tuesday 08 May 2018

COMPANIES & MARKETS Consolidated HallMark’s premium income spikes as claim expenses mount BALA AUGIE

onsolidated Hall Mark Plc started the year with a 16.13 percent growth in revenue while obligations to policy holders continue to mount. For the first three months through March 2017, the insurer’s gross premium income (GPI) increased to N1.94 billion from N1.67 billion the previous year. A breakdown of the insurer’s financial statement shows individual segments of the business contributed to top line (revenue) growth. Gross premium income (GPI) from Motor business increased by 24.72 percent to N547.85 million in the period under review from N439.56 million at March 2017. Gross premium income from oil and gas grew by 26.40 percent to N418.66 million in March 2018 from N339.13 million the previous year. Gross premium income from fire business rose by 19.93 percent to N318.21 million in the period under review from N265.94 million as at March 2017. While Consolidated Hall Mark’s revenue rose amid a tough and unpredictable macroeconomic environment, rising claims expenses resulted in a fall in bottom line (profit) despite an increase in investment income. Claims expenses surged 115.40 percent to N615.12

million in March 2017 from N285.05 million the previous year. Claims ratio otherwise known as loss ratio increased to 42.17 percent in the period under review as against 23.10 percent the previous year. This means the insurer is spending more on claims expenses to generate each unit of revenues (premiums). Analysts have attributed rising claims among insurance firms in Africa’s largest economy to awareness and foreign exchange movement as a weak Naira balloon reserves. As a result of the huge total underwriting expenses, Consolidated Hall Mark’s net income fell by 31.01 percent to N209.64 million in March 2018 from N303.90 million.

Similarly, underwriting income fell by 30.01 percent to N451. 19 million in the period under review from N586.63 million the previous year. Consolidated Hall Mark has concluded the first phase of a N500 million rights issue as the company plans to use the proceeds of the capital raising to strengthen working capital and fund its future expansion plans. The insurer’s total equity otherwise known as shareholders’ fund increased by 15.17 percent to N5.39 billion in March 2017 from N4.68 billion. Consolidated Hall Mark has enough buffers to settle all claims in extreme situations as evidenced in a favorable solvency ratio.

The insurer’s solvency ratio stood at 354.60 percent in the first quarter of 2018. A solvency ratio measures the extent to which assets cover commitments for future payments, the liabilities. The solvency ratio of an insurance company is the size its capital relative to all risk it has undertaken. The ratio is calculated as the amount of Available Solvency Margin (ASM) in relation to the amount of Required Solvency Margin (RSM). The ASM is the value of the company’s assets over liabilities, and RSM is based on net premiums. For instance in India, insurers are required to maintain a minimum ratio of 1.50 or 150 percent.

Inflation rate to drop to 12.43% in April – FSDH Research HOPE MOSES-ASHIKE

SDH Research, a subsidiary of FSDH Merchant Bank limited, said it expects the inflation rate (year-on-year) to drop to 12.43 percent in April 2018 from 13.34 percent recorded in the month of March. Despite the increase recorded in the prices of some food and non-food items, the base effect of the Composite Consumer Price Index (CCPI) in April 2017 will depress the inflation rate. The National Bureau of Statistics (NBS) will release the inflation rate for the month of April on May 13, based on the data release calendar on the website of the NBS. The Food Price Index (FPI) from the Food and Agriculture

Organization (FAO) for the month of April 2018 shows that the Index averaged 173.5 points, 0.25 percent higher than the revised value for March 2018, and 2.72 percent higher than the April 2017 figure. According to the FAO, sugar prices recorded the highest drop; vegetable oil and meat prices also declined. However, prices of dairy and cereal continued to trend upward. The FAO Dairy Price Index was up by 3.4 percent between March and April. Increased demand for all milk products, coupled with reduced exports supply, led to the increase in the Index. The FAO Cereal Price Index also appreciated by 1.7 percent from the previous month, on the heels of improved prices of wheat, coarse grains and rice. On the flip side, the favourable supply

glut in the market, and a weaker Brazilian currency (Real) continued to weigh on the prices of sugar. Hence, the FAO Sugar Price Index fell by 4.8 percent in April to a 31-month low. The FAO Vegetable Oil Price Index was down by 1.43 percent, driven by a fall in prices of palm and soy oil, the key commodities in the Index. The FAO Meat Index was down by 0.94 percent driven by the decrease in the prices for bovine and pig meat. FSDH analysis indicates that the value of the Naira depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX) and parallel markets. The value of the Naira lost by 0.09 percent and 0.14 percent to close at US$/N360.17 and US$/N363 respectively at the NAFEX and parallel markets at the end of April. The rise in the international prices of

food coupled with the marginal depreciation in the value of the Naira led to an increase in the prices of imported consumer goods in Nigeria between the two months under review. “The prices of certain seasonal food items we monitored appreciated in April 2018, leading to 0.86 percent increase in our Food and Non-Alcoholic Index. This Index increased year-on-year by 14.71 percent, up from 234.39 points recorded in April 2017. We also observed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between March and April. We estimate that the increase in the CCPI in April would produce an inflation rate of 12.43 percent, lower than the 13.34 percent recorded in March”, analysts at FSDH Research said.

UBA Disrupts future of payments for SMEs, introduces Master Pass QR Bot in partnership with MasterCard

an African Financial institution, United Bank for Africa (UBA) has again disrupted the epayment space with the introduction of Master Pass ‘Quick Response’ (QR) Bot. The revolutionary solution enables the micro, small and medium enterprises (MSMEs) in Nigeria and across Africa to receive digital payments from their customers through scanning, using their Facebook account. Developed by MasterCard International in partnership with Facebook, Master Pass ‘Quick Response’ (QR), allows payment collection by SMEs through Facebook Messenger and delivers unified and instant self-service across a range of interconnected payment solutions. Like LEO, the acclaimed artificial intelligence payment solution introduced by the Africa’s global bank, UBA, Master Pass ‘Quick Response’ (QR)is a a chat Bot, currently available via Facebook Messenger as Masterpass QR for Merchants With this development, customers are given the freedom to shop across devices and channels. With Masterpass QR for Merchants, small and informal micro merchants, large corporates and governments now have access to fast, simple and secure digital payments options, a global digital system that allows people pay for services using mobile phones. In addition, Individuals can now make purchases via mer-

chant apps, in-store or online by simply clicking the Masterpass button and authenticating to complete a transaction. All a user simply needs to do is Scan the QR Code generated by the merchants to pay. Making transactions for both the merchant and customer fast and seamless. Speaking on the development, Group Executive, Digital & Consumer Banking, Anant Rao, said: “Our customers are at the heart of our business, that’s why we keep going the extra mile to satisfy them. As we very well know Micro, Small and Medium Enterprises (MSMEs) contribute significantly to the economy but remain heavily dependent on cash to run their business; however, consumers are demanding safer and more convenient ways to pay. The innovative new platform enables micro, small and medium enterprises (MSMEs) in Nigeria receive digital payments from millions of customers by simply scanning” He noted that, access to mobile technology presents an opportunity to meet this demand, and the new UBA Masterpass QR Merchant App is set to change the payment landscape to the benefit of micro merchants across the country. Rao further explained that, Banking is going conversational and UBA in partnership with Facebook is at the forefront of driving this innovation globally. “It is 100% self-service and generation of the QR is immediate.

International Breweries swims in losses despite increase of 177% in revenue BUNMI BAILEY

nternational breweries, a leading player in the Nigeria beer industry might be seen losing streak in the triangular beer war, going by the firm’s poor performance in the first quarter of 2018. The beer maker reported a loss of N2.2 billion in the first quarter of 2018 from the profit of N1.4 billion made in the same period of last year, despite having a revenue increase of 175.5 percent to N26 billion in the first quarter (Q1) of 2018 from N9.4 billion in the same period of 2017. Analysts have attributed this to liabilities of the two companies, Intafact beverages and Pabod breweries that merged with the international breweries last year October. “It could be because of the liabilities of those companies that may have affected their balance sheet. When you look at last year results before the merger, you are looking at one company but now you are looking at a group of consolidated companies,” Johnson Chukwu, CEO of Lagos-based financial advisory firm, Cowry Assets, said on phone. Shareholders of International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited have ap-

proved the merger of the three companies. The approvals were granted during separate court ordered meetings of each of the merging entities, held on Wednesday and Thursday October 18 and 19, 2017. Based on their financial statement, their gross profit increased by 114 percent to N9.2 billion in Q1 2018 from N4.3 billion in the same corresponding period of 2017. Also from their financials, financial cost increased by 99.5 percent from N3.6 billion in Q1 2018 from N772.7 million in Q1 2017. Administrative expenses increased by 293.8 percent to N6.3 billion in Q1 2018 from N1.6 billion in the same period of 2017. The company’s total assets increased by 470.5 percent to N259 billion in Q1 2018 to N45.4 billion in Q1 2017 and the total liabilities rose by 627.2 percent to N218.9 billion in Q1 2018 from N30.1 billion in Q1 2017 Dolapo Ashiru, CEO, Mega Capital financial services said, “It could be that the two companies are unprofitable or they are expanding their plant which may increase their debt.” As at Thursday 3rd May 2018, the company’s share price rallied at N51.8 year to-date, outperforming the NSE All share index with a market capitalization of 445.3 billion and outstanding shares of 8.6 billion

Tuesday 08 May 2018

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BUSINESS DAY

COMPANIES & MARKETS RMB aligns with FG’s ERGP to support businesses HOPE MOSES-ASHIKE

n aligning with the Federal Government’s growth plan and in diversification of the economy, RMB Nigeria is supporting businesses in six sectors of the economy targeted by the Economic Recovery and Growth Plan (ERGP). The six priority sectors targeted by the ERGP are: agriculture; manufacturing; solid minerals; services; construction and real estate, and oil and gas. RMB Nigeria has made contributions to all these sectors, and by supporting these sectors, it has contributed to increasing national productivity, growth in the economy, and diversifying production. “Our clients operate in various segment of the economy which generally activity must still continue whether we are in recession or not. We actually want those companies to do even better so they can record an increased output which in itself will drive us out of recession. We want our clients to do this in a sensible way, in a way that shows that whatever profit or production we are doing is sustainable”, Michael Larbie, managing director, said in an interview with some journalists. Agriculture faces a number of challenges including limited access to financing, climate change, and limited access to national and international markets, security threats and destruction of farmlands by herdsmen. RMB Nigeria has contributed to the sector by providing a trade and working capital facility to Olam Nigeria (flour business) and Wacot (cotton ginning). RMB Nigeria also assisted in the

creation of a local agricultural giant through advising the BUA Group on the sale of its wheat milling, pasta and flour manufacturing assets which helped reduce food imports as it became a net exporter of major agricultural products. Data from the National Bureau of statistics (NBS) revealed that in the third quarter of 2017, Agriculture contributed 24.44 percentto nominal GDP. This figure is higher than the rates recorded for the third quarter of 2016 and second quarter of 2017 at 24.11 percent and 19.28 percent respectively. In addition, RMB Nigeria supported Nigeria’s ERGP by providing Indorama Eleme Petrochemicals funding to grow its fertilizer business to increase agriculture output, reduce reliance on fertilizer imports, and become an exporter of agriculture products. In the manufacturing sector, RMB Nigeria acted as a financial adviser to GB Foods in the acquisition of a local fast-moving consumer goods business which means it will reduce the importation of tomato paste thereby conserving foreign exchange. RMB Nigeria also provided GZ Industries with a loan as part of a syndicate to fund the production of aluminium beverage cans thereby supporting the ERGP’s aim of increasing research and development, and technology and innovation to generate a competitive edge for the Nigerian economy. It has also supported a number of other companies in the sector. Nigeria has 44 known types of minerals of varying mixes and quantities, some of which are concentrated in certain regions. The ERGP plans to build

this sector. RMB Nigeria provided African Industries Group (AIG) with funding to support local steel production to build local technical and managerial skills. The liberalisation of communication and telecommunications has increased yet the relatively low penetration of mobile subscriptions and the potential for data-generated revenue suggests the potential for further medium-term growth. RMB Nigeria has contributed to this sector by structuring a term loan facility for Interswitch with the aim of increasing the volume of transactions processed and encouraging rapid technology penetration. In construction and real estate, RMB Nigeria part financed the Wings development company for the constructions of a Grade A office complex in Lagos and, in the oil and gas sector, it provided a bridge loan to OVH Energy to improve the efficiency of fuel imports to support the ERGP’s strategy of saving foreign exchange and increasing local content in the oil and gas sector. RMB Nigeria also facilitated funding to Axxela to extend the gas supply network for industrial clients in line with the ERGP’s plan to expand domestic gas production to meet power generation and manufacturing demand. RMB Nigeria arranged $150m Murabaha Sukuk for Africa Finance Corporation (AFC) for infrastructure development in Nigeria and other parts of Africa. The financing assisted the ERGP in harnessing the existing pool of development funds and encouraged private public partnerships to deliver critical projects

Finlab Nigeria redefines science industry with launch of laboratory fittings KELECHI EWUZIE

inlab Nigeria Limited as part of its strategic effort towards enhancing science and technological development in Nigeria has introduced its new laboratory top and fittings to the Nigerian market. Uzo Nwaije, Marketing Director of Finlab Nigeria Limited said the company has pioneered the advancement in Science and Technology in Nigeria; furnishing and equipping laboratories with state of the art facilities for over three decades. He observes that institutions complaining of dearth of quality tops can now heave a sigh of relief with this new introduction adding that the products have been designed to offer excellent resistance to chemicals, corrosion and stain.

Nwaije He said that the new products have been designed to meet the yearnings of users while urging institution of higher learning and other research institute to take advantage of the opportunity by patronising the brand. “Finlab has come with new range of products with good quality. All the products on our stable have been designed to assist researchers, scientists in their academic work. As we speak, some organisations are showing interest in partnering with us not only in supplying us with the right work top but also in installation”. While calling on the Federal Government for support, he said the provision of key infrastructure was necessary to achieve the goal. “We need the Federal Government to identify with this expansion programme by improving infrastructure in the

sectors of Health care, Education, Science and Technology”, he said. While commending the government commitment to promoting local industries, he urged them to provide other necessary incentives that would help create ready market for the business. While expressing delight over the milestones achieved by the company in the last 36years, the Managing Director said there has been tremendous progress for the business and this has been based on the ability to provide equipment and services tailored to the customer’s needs. Finlab Nigeria Limited, a conglomerate group, is also responsible for the provision of services in construction (laboratory and greenhouse), furnishing, maintenance and equipment training.

Business Event

L-R: Rotimi Akeredolu, governor, Ondo State; Vice President Yemi Osinbajo, and Toyin Adeniji, executive director, Micro Enterprises, Bank of Industry, at the Ondo Micro,Small and Medium Enterprises (MSME) Clinics held in Akure, Ondo State.

L-R: Aidevo Odu-Thomas, company secretary; Femi Agbaje, chairman, and Hamda Ambah, MD/CEO, all of FSDH Merchant Bank, during the 6th annual general meeting of the bank in Lagos. Pic by Pius Okeosisi

L-R: Gbemileke Lawal, brand manager, Eagle Schnapps; Mobolaji Alalade, head of marketing Intercontinental Distillers Limited IDL; Abdul Kabir Obalalen (Olota of Ota), Patrick Anegbe, managing director, Intercontinental Distillers Limited (IDL); Adesina Adegoke, general manager, plant operations, Intercontinental Distillers Limited (IDL), and Tom Ohomele, sales operations manager, when IDL paid a courtesy visit to the monarch of her host commmunity ahead of his coronation ceremony.

L-R: Bhupendra Suri, managing director, Coca-Cola Nigeria; Zoran Bogdanovic, chief executive officer, Coca-Cola Hellenic Bottling Company (CCHBC); Adeitan Motunrayo, Ifako-Agege NBC distributor; Peter Njonjo, Coca-Cola Company Business unit president for West Africa, and George Polymenakos, managing director, Nigerian Bottling Company Limited (NBC), during a visit by MD/ CEOs of NBC and Coca Cola to Ifako-Agege market in Lagos recently.

BUSINESS DAY

STRATEGYBRIEFING

Tuesday 08 May 2018

IDEAS THAT POWER HIGH PERFORMANCE

Making tough decisions

xecutives many times have to make tough decisions to keep the business on track. Its just the way the job is. But the toughest of decisions comes in the gray areas. These are cases where you and your team mine all the data you can, and do all the analysis you can yet the situation seems inconclusive. Under such circumstances its easy to become paralyzed and seek any available route. But it is your responsibility as a leader to judge the situation fairly and take the right decision. Your judgement is critical in moving the organisation forward. Yet your judgement is limited by your thinking, feelings, experience, imagination, and character. But by relying on five principles you can improve your chances of making better informed and effective decisions every time even with incomplete, unclear data, divided opinions and different interest. Through history leaders have found themselves in situations where they must make tough decisions. By relying on these principles they were able to make decisions that reflect the ingenuity of the brightest of minds and compassionate human spirit. Effective executives rely on them to make better decisions and I’m sure it will help you and your team in navigating

through tough decisions. When next you have a tough decision to make, don’t get upset, relax and use the following principles: i. Every decision has a net consequence ii. Your office is defined by your core obligations iii. Effective decisions must take cognisance of the world as it is iv. Every organisation must stay true to its identity v. You live with your decisions Let’s review them one after another. Every decision has a net consequence You have to understand that every decision carries a real world effect. So difficult questions are ever hardly resolved in a flash of intuition. So you need to thoroughly and analytically consider all courses of action available to you in terms of real life human consequences of each option. Let go of your presumptions, and get your team together and list all possible options, considering who will be helped or hurt, short term and long term by every option possible. This is not the same as cost benefit analysis, so you should take a broad, deep, concrete, imaginative, and objective look at the full impact of your choices.

Indeed it is difficult to predict with accuracy the full impact of any action but what’s important is that you walk from the position of love, see others the way you see yourself. Knowing that your decision on gray issues carry real life consequences which affects the lives of people and communities. So its important to take the time to open your mind, assemble the right team, and analyze your options through the lens of love. Your office is defined by your core obligations Your position as a business leader is defined by your obligations. You are obligated to both share holders and other stake holders in your business. But besides this is our moral responsibility to safeguard and respect the lives, rights, and dignity of our fellow men and women. All of us owe this to ourselves and our world. When you have a hard call to make, step out of your comfort zone, put yourself in the shoes of others especially the ones likely to be affected by your decision. How would you feel in their position? What would you react if someone else were to make this decision about someone related to you? How would you want to be treated? What would you see as fair? What rights would you believe

you had? What would you consider to be hateful? You might speak directly to the people who will be affected by your decision, or find someone in your team to fish out that information. At your business school classes you were taught that your core responsibility is your company but you’ll need to understand that this is a broad statement that includes the environment, workers, government, customers and the community the company serves. You have serious obligations to everyone simply because you are a human being. When you face a gray-area decision, you have to think—long, hard, and personally—about which of these duties stands at the head of the line. Effective decisions must take cognisance of the world as it is American President, Donald Trump stated that success is knowing how the world works. He’s right! You need to consider

the world as it is not as it is in Nollywood or how you wish it is. Take a real, pragmatic look at your issue. If you want to make a decision that will empower your team, a department, or your entire organization to move through a gray area responsibly and successfully, then you will have to consider your options in the light of how the world works. Great plans can turn out badly, and bad plans sometimes work. The world is dynamic, you don’t control everything. You can hardly have all the freedom and resources you need. So you must often make painful choices. Your people will pursue their own agendas, skillfully or clumsily, except they are persuaded to do otherwise. That is why, after considering consequences and duties, you need to think about how things really work. What are the possible solutions to your problem, which is most likely to work? Which is most resilient? And how resilient and flexible are you?.

Brian Reuben(@brianoreuben) is an advisor on strategy and leadership. He regularly conducts keynote presentations and senior executive workshops with companies around the world on strategy and leadership. He heads BusinessDay Training Was this article helpful? Share your thoughts with us on Facebook @bdtraininglive or email us on trainings@businessdayonline.com

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Tuesday 08 May 2018

C002D5556

BUSINESS DAY

Fero Mobile deepens Nigeria’s Smartphone market, launches research-driven product Stories by Daniel Obi Media Business Editor

igeria’s multibillion Naira Smartphone market has continued to remain attractive to global phone manufacturers, even after 17 years of introduction of GSM into the country. Though overall Nigerian phone market, according to analysts declined by about 8 percent in 2016 due to economic recession but there are forecasts that the market will pick up again this year. Recognising Nigeria as a key market in Africa, Fero Mobile, Dubai-based firm is expanding its footprint in Nigeria as it positions for more market share. As one of the fastest growing smartphone brands in Nigeria, the firm recently made moves to consolidate its position with the introduction of Pace 2 smartphone dubbed the ’Selfie Boss’ into the Nigerian market. The new device comes with a 13MegaPixel selfie camera and a 13MegaPixel rear camera that allow users capture

and share great moments on the go. The Pace 2 is designed to give customers quality experience while engaged in their daily activities like chatting, gaming and streaming videos. Phiroze Seth, Director, Fero Mobile Nigeria and Emerging Market said “The device is an amazing companion for work and fun. It lets us connect with our world

Sona identifies factors for Group’s successful brands in Nigeria

he CEO of Sona Group of Industries, Ashok Manghnani has identified the factors that enabled it to build successful strong brands in the Nigerian economy, in spite of economic challenges. He identified the group’s belief in the Nigerian project, local sourcing of materials and its motivated Nigerian workforce. Speaking at the Nigeria Manufacturing and Equipment Expo (NME Expo) held recently, where the group participated, Manghnani said, “The promoters of the companies under the group are Nigerians by hearts who have spent many years in Nigeria and who believe in Nigeria. “Most of the people in our management team are people who have spent many years in the country to know what Nigerians want, that is why for many years we have operated in the country building products sourced with local materials. “We started with about six breweries and now we have diversified into packaging, power and gas, manufacturing as well as in real estate. We are also into manufacturing of biscuits. We also have wine, soft drinks all made in Nigeria. We produce sorghum in large quantity which we get from the north” he said in a statement. Sona Group of Industries started operations in Nigeria in 1994 and later on diversified into different sectors. It has within its group 10

subsidiaries which include Sona Agro Allied Foods Ltd; Euro Global Foods and Distilleries Ltd; Food, Agro & Allied Industries Ltd; Shongai Technologies Ltd; Shongai Packaging Industry Ltd; Techblow Nigeria Ltd, Coronation Real Estate Development Ltd, Coronation Power & Gas Ltd; Sona Industrial Gases Ltd. Asked of how challenging it has been doing business in Nigeria, Manghnani said in Europe, the government subsidizes their industries and would want to see the same situation applied in the country. “Some of the challenges we face here is high cost of manufacturing coupled with poor electricity situation and high interest rate which revolves between 22 and 26%. You find out that importation is always cheaper compared to growing locally, however, we have found ways to get our materials locally, though expensive but available. After production we export our products to Ghana and other African countries,” he said. Explaining the reasons for the group’s participation at the Expo, he disclosed that the Expo helps the group to showcase its products and services to customers and other stakeholders directly and the feelers gotten from last year’s event for example led to the production of paper cup, an addition to the innovative products of the group.

in ways that can only be imagined or experienced via the Pace 2. All applications are easy and smooth to use here.” “The Pace 2 combines a stylish design and a powerful hardware to deliver a unique experience to consumers. We strive to deliver quality products that meet the needs of a wide range of users and this new device is a proof that quality, style and

performance can be rolled into one affordable device” Seth said. On the features of the phone, he said Pace 2 is a mid-range smartphone with excellent features that work seamlessly. It is powered by a 4,000 MAH battery and runs on the Android 7.0 Nougat operating system with a quad-core processor that supports multi-tasking at super processing speed and ensures easy completion data-intensive processes. The device sports a 5.5-inch HD display screen with 720 x 1280 pixels resolution that guarantees great colour performance and 75% less light reflection for excellent readability under sunlight. According to him, Pace 2 is packed with 2G of RAM and 16GB of internal memory with storage capacity expandable to 32GB. This device is stylish designed to make a fashion statement. It is available in black and gold colours and comes complete with fingerprint scanner. He said the device is already available in all leading online and retail outlets across Nigeria with a one year warranty and a broken screen replacement coverage.

Chivita Active Fruit Nectar clinches Brand of the Year at LCCI 2018 Awards

t the recently held annual Lagos Chamber of Commerce and Industry (LCCI) 2018 Awards to celebrate iconic brands and corporate institutions that have distinguished themselves, Chivita Active Fruit Nectar emerged as Brand of the Year. The event was attended by prominent business leaders across various sectors. The LCCI’s Brand of the Year 2018 Award is seen as a befitting recognition for brands that have maintained leadership through superior quality and innovative approach to integrating active consumer lifestyle and their needs Speaking on the awards, Director-General, Lagos Chamber of Commerce and Industry, Muda Yusuf, stated that the annual LCCI Awards recognizes, celebrates and promotes institutions and brands that have exhibited the core values

of best business practices, growth through innovations and have positively impacted the society. ”Our Brand of the Year, Chivita Active, emerged the top brand in the highly competitive category following a pain-staking selection process, robust research and extensive market intelligence. The brand has grown through innovation and is positively impacting on society by encouraging consumers to embrace wellness through active health,” he stated in a statment. Responding on behalf of Chi Limited, the company’s Managing Director, Deepanjan Roy, expressed his heartfelt appreciation for the LCCI’s Brand of the Year recognition to Chivita Active Fruit Nectar. “At Chi Limited, we have dedicated years of innovation and commitment to high quality products with the ultimate goal of customer satisfaction. The LCCI Brand of the Year 2018 Award to Chivita Active is a proof that our efforts are appreciated by consumers and that Chivita Active has become one of their favourite juice brands,” he said. He further added that the company’s passion to go the extra mile to produce the highest quality products that nourish the consumers and help them fulfil their aspirations has led to “an increasing number of satisfied consumers who are embracing Chivita Active’s call to start their personal journey

Experts to converge on Lagos June for international conference on marketing, communication

ne of the professions mostly challenged in the present global dynamic economic environment is the marketing and communication profession which ensures brand engagement that will result into sales. The professionals are faced daily with constant changes in human behaviour, interrogation of their brands by the consumer through devices across the globe, reaching consumers where they are, choice of communication platforms, designing appropriate communication for target audience, decisions to quickly respond to threats and opportunities and ensuring that their stay ahead. To therefore ensure that the marketing and communication professionals stay on top of their game, Rome Business School, is assembling foreign and local experts on marketing and communication next month in Lagos for discussion on better ways to manage advertising and communication to achieve their purpose. Speaking on the international conference, Humphrey Akanazu, country manager of Rome Business School in Nigeria recognised that the marketing and communication landscape is getting deeper hence such conferences can never be enough for interactions and learning. Other discussions will centre on future of marketing and digital new media; how to create contents for the right audience and how to leverage best practices even in elections and how media handled some events in the past among others. Among the international speakers at the conference is the founder of Rome Business School in Italy, Antonio Ragusa who will be joined by other renowned speakers. Humphrey further told BusinessDay that the Business School based in Italy with branch in Nigeria has Africa in mind. He said the school has partnerships across the globe but has a full-fledged school in Nigeria running various courses. “Nigeria’s branch established in 2016 is a leg of the Rome Business School” Explaining that the school’s programmes are practical and relevant to Nigerian environment, Humphrey said that 70 per cent of the facilitators are from the industry. He also said that the school has developed a flexible payment process for students and equally reduced the bureaucratic process of admission.

BUSINESS DAY

Tuesday 08 May 2018

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Marketing&Pr Agencies need to put purpose at forefront in driving clients’ business - Lomas Glen Lomas is the President, DDB for Middle East and Africa, MEA. During his recent visit to Nigeria, he interacted with BusinessDay on the reasons for his visit, challenges of the creative industry and trends that will define the creative advertising business. Excerpts Tell us about your trip to Nigeria igeria is one of the places I like to visit. I have been visiting Nigeria since I met Enyi Odigbo, Chairman, Casers Group. There is something about the hustling nature of Lagos. It re-energizes you; the city has got a lot of formality and respect compared to other cities where I have worked. Also, there’s the feeling of we will make a plan, we will get it done. The sort of energy behind what’s going to happen is amazing. Specifically, I have come on this trip to grab inspiration and share thoughts with the guys here. I have not been here for about 3 years which is quite a long time. DDB Worldwide is on a massive growth drive; thus we thought it fit to share knowledge in terms of winning new business and related matters that will help DDB Lagos do better. I’m here so we can inspire one another and remind ourselves that we’re quite a close family. The industry is going through change. The world is equally engulfed in the atmosphere of change. How does change affect advertising as a business? I’ll sort of slightly turn the question and say that one of the things that I try to do when I go around is to emphasize the need to stop concentrating on what’s changing and proffer concentration to what’s not changing. Fundamentally, the factors that drive motivation have not changed. If you listen to any song being produced over the last 50 years, 95% of them are about love and relationships. The things that motivate us (fear, love) don’t change. Things that change include how we potentially communicate with one another about issues. There is great stuff happening in this regard. Phones and digital technologies have influenced interactions with our clients. Broadcast media is still incredibly important in my mind. All of the things that people keep saying, TV is dead or print media is dead is actually not totally true. It’s still as important as it was back then. It’s easy to get so much data about somebody to project what I want you know about the person. My brand can be whatever I want it to be. There is danger in that. That personalization of the brand stops the brand from having its own identity and

Glen Lomas

the identity of that brand starts to become your identity. That’s a big worry. I still think broadcast media is important as it ever was in terms of saying this is who I am and take me as I am. We’ve had a lot of changes. However, let’s be clear that humans have not changed that much over the years. We have to maintain our interactions with the consumer and leverage on communicating with them persuasively. Three years ago, you observed certain things about the Nigerian economy and advertising agencies. What are the changes you’ve noticed three years after? The biggest change I have seen is that Nigeria is no longer different to anywhere else in the world. The challenges you are facing here are the same challenges being encountered elsewhere. The most worrying of the challenges is how to attract really bright, creative people into the advertising industry. The need to inspire loyalty towards brands is still very relevant. When we started off at DDB, we were quite keen on doing great jobs with great companies. It’s sort of motivating to work with a company that challenges and allows you to succeed. That is in short supply now. The most

disturbing part is not only that those companies no longer exist; the desire to succeed doesn’t exist anymore. Of course, success means a lot to different people. As an industry and as an agency, attracting great talents into this industry is quite difficult. It’s very difficult to motivate people the way we have been used to in doing a great job and aspiring to be better. You have shared your views about dearth of talents in the creative industry. How will that define the advertising industry and other industries? Talent defines our industry. To be very frank with you, I think we have to remind people of the power vested in creative talents. We have to remind people that advertising isn’t just a service industry. People perceive advertising as being an unvalued part of the economic chain. It is a vital part. Most people fail to realise that every single business depends on sales. Our successes revolve on the ability to project ourselves. Also, the more creative you can be in terms of how you position others and yourself, the more likely you will become an effective force. The main thing is to stop the industry itself of being belittled by its necessities and its roles and remind everybody that

growth in whatever form, from the economy to individual lives is incredibly important. Persuasive communication is the vehicle that will drive that growth. The digital era is influencing creative messages these days. Clients rely on agencies to create messages for digital marketing. But, it appears some of these messages don’t resonate in terms of dearth of talents. How do we

We need someone in the market that absolutely understands creativity, drives the brands to the communities they really have to target and build a relationship of trust

create messages that will make digital marketing work? Mismatch of data can create so many troubles in this regard. This brings our previous conversation into the picture. That I like a green car doesn’t mean I will desire a green kitchen. Data is an amazing thing, but we need to be equipped with the interpretation and management of data. If you don’t have real experts in terms of understanding human behaviour, your data won’t have a module to which you can apply it. Data is very important but an observation of how humans behave is the key to unlocking that data. If we don’t do the first bit which is seen in some ways as old-fashioned, the second bit wouldn’t work. We will be served with messages that feel irrelevant to us. It will only make sense to an algorithm but it won’t make sense when that algorithm is applied to a real human being with the emotions involved. Data can allow you to be a lazy marketing professional or it can allow you to be a really defined and precise marketing professional. It all depends on the person handling the data and how the person applies it. Should there be domestication of global campaigns in line with local marketing? Personally, I prefer creating individual advertising messages for individual markets and groups. Advertising ought to be as relevant and resilient as possible. When working with a client that has the same brand in about 200 countries, there is always a pressure on them to reduce costs. For instance, Unilever creates multiple adverts for Lipton tea to ensure consistency. The key to success in local marketing is to come up with an idea of the role brands play and its relevance to people’s lives. I love creating different works for different markets. That is when it becomes more touching. How does your group rate the contribution(s) of DDB Lagos to the entire network? Nigeria is one of the engines of Africa. Many of our clients see Nigeria as important. We need someone in the market that absolutely understands creativity, drives the brands to the communities they really have to target and build a relationship of trust. We have a good relationship with DDB Lagos which is quite beneficial to the network.

Tuesday 08 May 2018

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BUSINESS DAY

Energy Report Oil & Gas

Power

Renewables

Environment

Why there has not been another Azura type of project OLUSOLA BELLO

Power generation situation last week

t’s more than two years that the financial closure of Azura has been concluded and Nigerians have not seen more Azura type of project. The process for the financial closure of Azura took about seven years to be concluded while the real work on the phase one of the projects started in 2016. But since the conclusion of the financial process there has not been another of such project coming up anywhere in the country. The long and tortuous process it took the financial closure to be concluded is an indication of how difficult it is to structure large projects in the country. This is the first project financed independent Power project (IPP) with a template that other investor’s can easily use. Industry experts believe that other future projects could benefit from the template immediately after the financial closure was concluded. Unfortunately the first Phase of Azura has been built and completed by the German energy giant, Siemens and handed over to Azura West Africa but we are yet see other investors coming forward with projects

Source: Power Advisary Team

they want to execute using the Azura template. The only projects that are currently making use of the template of Azura financial mechanism are the 14 solar projects which have to key into the put call option agreement (PCOA), based on this, they have signed Power Purchase Agreements (PPA). Observers have attrib-

uted the lack of investors’ interest at the moment in putting up large scale projects like Azura to perhaps the obvious fundamental problems associated with the power industry. One of these fundamental issues is that the electricity market is basically flawed. The market is completely viewed as not functioning, and anybody building large

scale power will require the contingent liability contained in the PCOA. Investors in the power market would want to run for 20 or 30 years but the market is not functioning. The Nigerian Bulk Electricity Trader (NBET) is the primary consumer and paying generating companies would depend on what NBET is able to collect from

the distribution companies. The value chain of electricity is also defective. The electricity market is something that is built and marketed for consumers to buy. Power must be sold from the first day the concept was conceived. If the ultimate consumers are not paying for electricity then, you cannot have a large scale electricity

market in the country. Also tariff has to be cost reflective in order to allow more players to come into the power industry. Of what use is having 20,000 megawatts and people are not paying for it or of what use is the power when it is not getting to the people and if supply is inconsistent to consumers? Of course, it would not be of any value as people would not be able to plan for its usage. The service must improve to enable developers to come into the industry. Nigeria must also realize that it is not all about building power plants but about ensuring that the product gets to the end-users. Gas has to be paid for from consumers to generation and everybody has to be in line in order to get another Azura. Industry observers have said that building large scale power projects in Nigeria is not viable, after all most of the independent power plants built by the federal government are not functioning because the electricity value chain is not functioning. Because of this, developers now go for captive power plants of about 50mw. As a matter of fact, developers are going for what could be describe as modular and breaking into smaller parts.

India’s plan to only sell electric cars by 2030 should have Nigeria worried ISAAC ANYAOGU

he decision of the Indian government to start selling only electric cars by 2030 has grave implications for Nigeria who currently supplies the Asian country 12 percent of its crude oil volumes. India’s energy ministry in a blog post, (which has since been taken down after a CNN report on it) said that it has set the “ambitious” target to stop selling gas-powered vehicles in an attempt to clean up its air. The country’s economy which has seen a boom in the form of new industries and mega projects is challenged by pollution that endangers the health of over 1.3billion citizens. This has begun to question the boom

itself. One estimate says India’s air contributes to 1.2 million deaths per year and doctors have said breathing the air in New Dehli, the nation’s capital, is like smoking 10 cigarettes a day, according to a CNN report. In a bid to cut down the pollution, the country is looking away from fossil fuels. India’s energy minister, Piyush Goyal, said recently that the country will help facilitate the electric car effort by offering subsidies for a couple of years. The country projects annual sales of electric and hybrid cars to hit 6 million to 7 million by 2020. But this development could have grave implications for Nigeria’s revenue. According to data from the website of India’s Ministry of External Affairs, India imports around 12 per cent

of its crude oil requirements from Nigeria. Petroleum imports from Africa’s largest economy accounted for $7.46 billion out of total imports of $7.65 billion in

2016 to 2017. Despite Nigeria’s stated intention to diversify its economy from crude oil, the commodity still accounts for over 80 percent

of the revenue. The oil sector employs less than 1 percent of the populace and while it is only now beginning to gain traction, the agricultural sector employs

Fire Service men battling to put out fire at the Alagbon transmittion sub station in Lagos.

Olusola Bello, Team lead, Analysts: Kelechi Ewuzie, Isaac Anyaogu, Graphics: Joel Samson.

50 times more. Yet more brain matter is dissipated on the oil sector at the expense of others. A petroleum industry bill that is touted to tackle teething challenges in the oil sector has remained stuck in the national assembly due to disagreements over critical areas including how to deal with host communities issues and fiscal terms for the country. So not only is there a threat to revenue, Nigeria’s petroleum industry is still in need for deep reforms. Worse still, oil revenues cannot remain high for long. India’s imports declined significantly by 23 per cent to $7.65 billion during 2016 to 2017 as against $9.94 billion earned between 2015 and 2016 due to the fall in crude oil prices in the international market.

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378; +234-8036534708

BUSINESS DAY

C002D5556

Tuesday 08 May 2018

Energy Report

Nigeria’s oil/gas Indigenous operators must invest in skills to compete globally - Experts KELECHI EWUZIE

ndustry experts in the oil and gas sector have advised managers of the Nigeria economy and indigenous operators to strategically invest in human capital which she has in abundance to compete globally in the oil space. They argued that in the absence of investment in technology and required finance to drive growth in the oil and gas sector, Nigeria is left with only the option of building capacity and capability in the technicians, operators, and administrators for all the various industries in the oil and gas sector. Emmanuel Emielu, CEO Oil and Gas Soft Skills Limited in an interview with BusinessDay observed that manpower training and development was severely affected in the last two to three years as a result of the volatility in the global oil price. He opined that all the International Oil Companies and oil service firms and even our indigenous

companies lay off a lot of their staff, cutting cost on work force development and trainings. According to him, “The greatest thing Nigeria could be doing to herself is using her resources to develop her citizens because these developed skills will in turn drive the growth the econo-

my Nigeria. Those who know in the sector rates people skills and skills retention as the second most likely factor to impact oil and gas business over the next three years, ahead of instability and uncertainties in the global oil market. Humphrey Onyeukwu,

an energy expert insist that in order to stand out and increase employability in a re-energised oil and gas market, Organisations need to improve not only their general management skills, but also their specific industry skills. He opined that in addition to being able to handle

Why Nigeria must align future gas projects investment with production’ KELECHI EWUZIE

onsider ing the recent upscale in gas production recorded by Nigeria as a result of aggressive involvement of indigenous players, Operators and industry players have advocated for more investment incentive by government to further boost production. Industry close watchers observed that Gas production has become a major focus for oil companies in response to strong investment in gas-to-power projects across the country. According to them, “Although gas output has increased, issues like infrastructural constraints continue to prevent indigenous

companies from ramping up gas output significantly. It is observed that with Nigeria still West Africa’s largest gas producer, with an estimated output of over 2.5tr cubic feet per year, indigenous investors will require additional investment in gas processing and transporting infrastructure if they are to increase output significantly. Funding of gas projects remains a major challenge in Nigeria, owing to the poor commercial terms for domestic gas suppliers. Despite huge demand for power and the presence of huge gas reserves offshore, governments have been hesitant to change electricity tariff regimes said Wumi Iledare, an energy expert. This has prevented cost

reflective gas prices for power, slowed progress with gas-to-power projects and stalled the creation of a viable gas market. The underlying theme of Nigeria’s future gas development is the monetisation of the underutilised resource base through export, and more importantly, for domestic use. Ibe Kachikwu, Minister of State for Petroleum resources have consistently assured that part of The Federal government has consistently assured that parts of it plans for gas sector is to ensure downstream gas infrastructure development that could include power generation and/or industrial development. At different occasions Ibe Kachikwu, Minister

of State for Petroleum resources has continued to maintain that efforts are been made to increase local content using gas development as a broader prime mover. Nigeria as the largest gas producer in the whole of West Africa , could focus on the optimal development of domestic gas supplies, leverage stronger local content requirements for all future gas development. Ayodele Oni, an energy expert had observed that if government does not address the challenges gas investors are facing, there will be no future investment in gas project in Nigeria, there will be no more addition power therefore Nigeria economy cannot grow. The infrastructure distributing gas around the country is poor and there Is need to encourage a public private partnership in growing this infrastructure because the molecule of gas are over there in the Niger delta while the largest consumer of gas are in the south west and you have to connect the two. G overnment should make it attractive for investors to bring their money which has choice of where to go in the world to come to your jurisdiction, stay there and create wealth and grow.

tasks within the traditional sphere of planning, procurement and execution, they must be knowledgeable individuals who can handle the complexities of each oil project in today’s global business environment. He further said Marketability in oil related field is important in today’s inter-

connected world, because international companies operating in Nigeria’s oil and gas sector also tend to have strong footprints in other oil-producing regions across the world. It is important to note that Nigeria’s oil and gas sector today is characterised by joint venture agreements between the state-owned oil company, the Nigerian National Petroleum Corporation (NNPC) and seven international oil companies (IOCs), six of which are foreign-owned. In partnership with the NNPC, these six multinationals (Shell, Mobil, Chevron, Agip, Elf and Texaco) are responsible for the production of about 95% of Nigeria’s crude oil, the country’s biggest source of foreign earnings. They observe that as oil prices begin to rise and activities ramp up in the industry, individuals who have invested in developing their skills and knowledge towards creating successful project outcomes stand a better chance of being involved in the exciting projects that are on the horizon.

NNPC disowns phantom recruitment announcement

he Nigerian National Petroleum Corporation (NNPC) has disowned a recruitment advertisement currently trending in the social media. The advertisement, set in NNPC’s corporate colour with its logo, invites candidates with background in Sciences, Engineering, Business/Finance, Social Sciences, Arts/Humanities as well as Medical/Health Sciences to apply, giving required educational attainments of prospects to include: Master’s degree, Bachelor’s degree, Higher National Diploma (HND) and National Diploma. Describing the advertisement as phantom, the corporation called on unsuspecting members of the public to be wary of the scam. NNPC advised members of the public to disregard any announcement of recruitment or invitation to recruitment interview appearing in the social media, saying the corporation was not carrying out any recruitment exercise now. The corporation reminded job seekers to note the antics of scammers who deploy such communication

Maikanti Baru

strategies as text messages, vacancy announcements on social media platforms as well as forged letters inviting job seekers for non-existing job interviews with a view to extorting money from them. NNPC cautioned that any applicant who entertained such invitations would have himself or herself to blame, encouraging those who had already fallen victims to volunteer information to the law enforcement agencies. The corporation stated that as an equal opportunities going concern, it would, as usual, advertise vacancies in the corporation through the national dailies.

BDTECH

BUSINESS DAY

Tuesday 08 May 2018

In association with

Solving right of way issues will reduce cost of broadband, increase last mile penetration - Sean Hsu Sean Hsu is the CEO of NETCOM Africa, a Lagos-based technology solutions company with over a decade of operations in Nigeria. The company delivers data centre services, managed IT solutions, data protection and other IT services. In this interview shared with Jumoke Akiyode-Lawanson, he talks about the challenges of managing competition in Nigeria’s dynamic ICT sector, why NETCOM leads the market and how businesses must keep adapting to trends in the industry. Excerpts What unique ICT solutions does Netcom Africa offer? etcom has been in business since 2004 as one of the foremost internet service providers in Nigeria, and we try as much as to stay ahead of competition. We have over time deployed cutting edge infrastructure technology solutions such as VSAT, WIMAX, radio and as of today, fiber technology, as well as, managed IT solutions (Cloud PBX, ERP, CRM, SaaS, HaaSas and IT outsourced services. Now we can be seen as a front runner in the area of transformational IT solutions for business. We also try as much as possible to engage organizations and ensure that they lead their market space by been abreast of the rapid changes in IT innovations. This is one of our strengths. Through a team of our experts and in line with global best practices, we deliver transformational IT solutions. With a 24/7 dedicated support team, we can be said to be one of the best in the country. From our team of network engineers, system integrators, and application developers, we have been able to bring global best IT solutions to Nigerian firms. We are leaving the CAPEX business to more of an OpEx based model with managed solutions like ERP. This is the new narrative of Netcom; We are going to use technology to our advantage. Instead of high hardware costs, which eventually become outdated and need replacing, we charge on per user basis.

What challenges do you face operating as an ICT solutions proffering company in Africa? Well, it is obvious that power is very critical. We have lack of constant power supply as a challenge, especially as an ISP (internet solution provider) business. We have a data center as well as our network across the country so we need power to run and affordable power isn’t available 24/7 in Nigeria. Another critical issue is that we are in a country that no news is good news; this is in the

Sean Hsu

area of customer/client feedback. I think no news is bad news because we are in a service industry and we need feedback. It isn’t just a Nigerian problem but a global one. We have to get feedback, be it positive or negative, it helps us to grow and improve. Those that host with us or have their data warehoused in our data centre facility have never had any cause to complain over the years. NETCOM seems to be more of a customer-centric organisation. Can customers call at any time of the day and be sure to get a helpful response? To answer your question directly, Yes! We have a round the clock non autobot response, we deploy this and have humans round-the-clock also. When people come to NETCOM, they are buying NETCOM for our reputation. We have grown NETCOM as a brand built on quality and trust. One key thing for us on the ISP side is that we have substantial capacity on all subsea fiber cables and we leverage on these facilities. At the end of the day, we are interested in uptime for clients. We do proactive monitoring and also deploy SMS alerts; we try

to engage proactively with customers in real time. We notify our customers of information that they might not be aware of and this has made us to be transparent and customers are pleased. So we don’t take customer feedback lightly, even for our managed IT solutions and every single product we provide. We encourage businesses to focus on their core and let us manage their IT. In all honesty, from infrastructure companies (Infracos) to managed services, we use technology to help organisations increase their productivity. We listen to our customers, who have asked us for the past eight years to help them internally, which is why we evolved our business model from just an ISP to managed IT solutions, outsourcing, and IT consultancy. What prompted NETCOM’s decision to change its business process and model? The transition is a matter of economics, the margins on data are small, it’s around three to four percent and this is not sustainable. The cost of doing business is high and as an organisation, for one to still stay afloat in a highly competitive market, there is a

need for evolution. Let us look at this example; data sales need so much volume now compared to when we entered the market 14 years ago. The internet penetration in Nigeria is in major cities and the rural areas need satellite and they are not economically viable. But in managed services, you can make some decent margins. That is why we had to diversify, and in technology there is constant evolution. At the end of the day we have to look at costs, prices, and margins, and that is why we did a transition. Companies are beginning to come to terms that as they mature they might not have that 10 percent profit or more, the profits would shrink because of the ever evolving market, sophisticated customer base and competition, especially in a stable environment. How do companies get to be viable? Its business intelligence! By analyzing data and having analysts connecting the dots. That is the future and that is the space we are playing in. What is NETCOM particularly doing to ensure that Nigerian firms are willing and able to host data in the country rather than using foreign firms? In terms of data centre services, we are ISO certified and this is an international certification recognised globally and we ensure we keep up to those certifications. Those that host with us or have their data warehoused in our data centre facility have never had any cause to complain over the years. We also have reputable partnerships with international carriers like TATA communications and Avaya. We are proud of our international partnerships and we have rigorous workflow and SLA policies that we follow. I think in terms of an industry like banking there is a policy restriction that stops firms from hosting outside. They must host in Nigeria. Even in the US, big companies found it difficult to host in the cloud. Amazon, Azure, Microsoft, and Google, they have services to secure data, that is the fact.

How will you assess Nigeria’s ICT ecosystem? The biggest barrier in Nigeria’s ability to leapfrog the ICT space to the next level is the right of way access. This is imperative. I lease three different fiber links to Port Harcourt, we have three to Abuja and two to Kano, sometimes operators share fiberducts. I wish NTEL (formally NITEL) has a deal if they can deal or sell off their right of way, they are sitting on goldmine. If they can free up the right of way, then it means that access would be there. Also, we would need the cooperation of government from the highest-level right down to the villagers and local communities. If right of way can be sorted out in Nigeria, then the cost of broadband would reduce drastically and last mile penetration increased. Can Nigeria still achieve the 2018 penetration target for broadband? It’s just a balance and economics. To achieve any target set for increased broadband penetration, there needs to be incentives given to ensure the private sector delivers on its promises. Not all parts of Nigeria are economically viable. Some rural areas and dwellers there might not be able to afford the cost of broadband. The private sector is here to make a small profit and the government has good intentions to drive broadband penetration, so there must be a middle ground where a private investor can deploy these services in hinterland. This is what is done in Korea, the government has given incentives and tax relief to operators which frees up capital to invest in building out the infrastructure of the entire country. To be honest, Nigerian Communications Commission (NCC) is far more open than the regulator in South Africa, we will get there but it might take some time. The recent awarding of licenses to Infracos by the NCC will shorten that timeline and help us possibly achieve the short term goal of 30 percent penetration by 2018.

BUSINESS DAY

Tuesday 08 May 2018

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

NaijaSecCon’18: Experts tackle issues on cybercrime

ESET wins award for best information security company

…Urge government to do more on policy implementation and education

JUMOKE AKIYODE-LAWANSON

JUMOKE LAWANSON AND DESMOND OKON

yber security experts and stakeholders gathered to find profound remedies to to crucial cyber crimes and malicious cyber activities at the 2018 Naija Security Conference, held in Lagos on Friday May 4, 2018. Participants at the second edition of NaijaSecCon were exposed to insights and discussions around malware analyses; cryptocurrency mining, USB forensics, digital forensics capabilities, programming and different topics around security. Speakers at the conference urged the Nigerian government and stakeholders to create more awareness on cybersecurity issues, the threats posed to organisations and the economy at large. The importance of knowledge on cybersecurity has become even more key, as reports project that the devastating effect of cyber-crime will cost about $6trillion by 2021. This is from an increase of $3 trillion recorded in 2015. It is roughly estimated that about 60 percent of Nigerian companies suffered a form of cyber-attack during the year 2017, many of which went unreported for reasons ranging from, lack of knowledge

L-R: Nurudeen Odeshina; member, organising committee, Melissa Gibson; representative of the University of Southampton and sponsors of NaijaSecCon’18, Rotimi Akinyele; the lead convener of NaijaSecCin’18, Debora Okwuzi; member of the organising committee and Funmipe Olofinade; representative of Esentry (sponsors), at the 2018 NaijaSecCon held at The Zone Centre, Gbagada, Lagos on May 4, 2018.

of such happenings, apathy, fear of losing customers, job security etc. Muzudeen Kusimo, the founder of Inspaya said there is a level of education required from those that would be making cybersecurity policies in Nigeria. “This is necessary so that the policies they are making are right and effective. It is good to make policies but if they do not meet the realities on the ground, then the policies become ineffective. For you to apply these policies effectively, it means you have the right context and

that is education. So there is a huge gap in terms of awareness,” Kusimo said. Oluseyi Akindeinde, a speaker at the event, urged the government to do more of educating citizens on the harmful effects of cybercrime and create and implement policies to curb the menace. “They are trying by building cyber security operation centers, but they need to do more, especially in personnel development. They need to train more, especially the police, the EFFC, about these technologies because a lot of

the technologies are advancing everyday, so they need to be constantly updated which is is why for conferences like this they need to attend so that when they get back to their ministries, and parastatals and wherever they work they’ll be able to protect their systems better” Akindeinde told Business Day. Coming from the United States to be part of NaijaSecCon’18, Charles Nwatu, a cybersecurity advisor said he discovered that there are a lot of talents to be harnessed in Nigeria to assist the government and corporate or-

ganisation wall off cyber traitors. “There is a lot of talent; I have seen the skills set developed. There is an issue of how tocapture that talent and refine it. Structure, maturity and development, all those components are part of the experience. As we continue to have more students come into the program to gain more experience doing the actual work within businesses and companies. Then the maturity changes over time. “The talent is there. We need more education and refining these talents to understand the rules of engagement when it comes to cybersecurity practices. We want to ensure that we operate effectively in the cybersecurity space and not to put anyone in jeopardy,” Nwatu said. Apart from discussing issues and charting a new course in the world of cyber security, the event was also a means of training university students who are cybersecurity savvy and enable them build a career path, as well as intimate them on best practices. “Our plan is to identify talent, set them in the right career path, so that they can harness their strengths and capabilities, knowledge, and skill set, and make use of them as well” said Romiti Akinyele, the Lead Convener of NaijaSecCon’18.

SET, a European based information technology (IT) company with significant presence in Nigeria has been recognized and awarded as the best information security company, for the second time in a row, at the Beacon of ICT awards 2018 which held in Lagos recently. The company which is notable for its extensive line of solutions that protect across all types of platforms; from computers and servers to mobile devices was awarded duly for its dedication to developing high performance security solutions for home users and corporate customers, predicting, detecting, preventing and remediating all known and emerging forms of cybersecurity threats. According to Ken Nwogbo, founder/editor in-chief, Nigeria CommunicationsWeek, “the superior detection capabilities, low system requirements of the Company’ solutions, coupled with the local presence and premium support services to their clients, irrespective of the company size came to play even as the products are priced among independent antimalware testing organisations.” Nwogbo further described the award as a testament to array of talents at ESET Nigeria who are constantly innovating and contributing their quota to the growth of the ICT industry, adding “we are at Communications Week Media are happy that Nigerians have recognised ESET’s hard work, sincerity and dedication towards the defense of the of industry”.

to get hands on practicals, type small codes, “do small things that make small sense” because by doing a lot of those they will be “creating big things that make big sense.” Lola Akande, Lagos State Commissioner, Ministry of Women Affairs and Poverty Alleviation who was represented by Olusola Falana said that the topic --’Becoming an ICT Super Girl’ was timely because ICT was a global phenomenon capable of making the girl child financially dependent through online trading even “without owning a physical shop.” “This year’s celebration of becoming an ICT super girl is a wake up call for all our girls out there to open their minds to the opportunities which abound in the ICT world and

also help develop their potentials in order to add value to the society,” Akande said in her goodwill message Ola Brown who was awarded for her role in furthering the cause of health care in Nigeria through technology admonished girls to take advantage of opportunities and not shy away from careers that seem to appeal only to the masculine, no matter how it looks to anybody else. In the competition, which was between the eight schools in attendance, Lagoon Secondary school clinched the first position, Regan Baptist Girls Academy was placed second position. While Faith Academy came third, Chrisland College and Bapstist Girls tied in the fourth position.

E-Business Life encourages female participation in ICT DESMOND OKON

ontributing to the voices advocating for the girl rights and education, E-Business Life Communication Ltd, in concert with Nigerian Communications Commission, (NCC) and National Information Technology Development Agency (NITDA) celebrated girls in Information and Communication Technology (ICT) at the International Girls in ICT Day themed “Becoming a Super Girl in ICT”, in Lagos on Thursday, May 4 2018. The event, which was originally celebrated globally on Thursday, 26th of April, 2018, is an initiative of the International Telecommunications Union, ITU, which intends to create a

global environment that empower and encourages girls and young women to consider careers in the growing field of ICT, as well as enable both girls and technology companies to reap the benefits of greater female participation in the sector ICT. The program which was the seventh edition since it began in Nigeria in 2012 served as a platform to encourage secondary school girls to take on any career of their choice irrespective of gender. “We want to encourage our young girls to delve into ICT based careers or at best intensify its use in what they do,” Ufuoma Emuophedaro, Publisher, EBusiness Life Communication Ltd, said in her welcome address. Emuophedaro said that she

was pushed to initiate the event in the country because she felt that women could do more than they are, and particularly because “we need women to aid the development of some of the things that we have” and also because she believes that if they took part in the creation they would “put in a feminine touch” Victoria Etim Bassey, software developer, Systemspecs praised the organisers for the event, and noted that the IT world was interesting because there is a lot to learn. “We’re not even using half of it.” She said. Bassey noted that although ICT could be challenging, she believes that with the right mentor, passion and hands on practical, the challenges will be overcome. “The challenge in ICT is

that there are too many things to learn, and too many things to do. And at some point your interest will just die down or you will not be interested in coding or learning something new. When you get to that point, you need to look for a mentor, or someone to talk to, wo will remind you that you need to do some more, and then you inspire yourself and you create something for yourself,” Bassey explained. In cognizance to the complexity of the terminologies employed in coding materials which could sometimes make coding difficult to understand, Bassey urged the girls to avoid textbooks with “big English”, and go for the ones “with simple English”. And for them to get better, she also encouraged them

BUSINESS DAY

Tuesday 08 May 2018

EDUCATION Primary/Secondary

Weekly insight on current and future trends in education

Higher

Human Capital

Gig economy workers, freelancers need these four skills

Iguoriakhi: Students commence three-month training at Rubber Research Institute AKINREMI FEYISIPO, Ibadan

…To stay on top of their game

STEPHEN ONYEKWELU

eep social, economic and technological changes rocking the world, transforming how people live and work are also prioritising certain adaptive skill sets. These changes have given birth to a form of economy, which experts have called the gig economy. The true ‘Gig Worker or Freelancer’ is a contingent worker with no formal contract who earns compensation on per job, or per gig, basis. Whatis.com, an online glossary website defines a gig economy as an environment in which “temporary positions are common and organisations contract with independent workers for short-term engagements. The trend toward a gig economy has begun.” A study by Intuit predicted that by 2020, 40 percent of American workers would be independent contractors. In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees. A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career. The gig economy allows people do multiple jobs in non-related fields at the same time. For instance, someone can be a content developer for a software firm in Lagos, a webmaster for blog hosted in Ghana, while working as an Uber driver in his spare time in Lagos and managing a startup’s social media accounts. When properly managed, it gives the person multiple streams of income. Therefore, more gigs a person

L-R: Abimbola Ali, Vice Principal Academics Methodist Girls High School, Lagos; Jadesola Adedeji, Founder STEM METS Resources and Programme Coordinator Airbus A380 Workshop Nigeria; Oluwamumiyo Makindipe, participating student, Airbus A380 Little Engineer workshop and Rana El Chemaitelly, Founder and CEO, The Little Engineer Programme, at the launch of Airbus Foundation A380 Little Engineer Workshop in Lagos Nigeria recently.

gets, the more money they will make. This also means the person has no health insurance or company organised pension scheme. This could be dealt with by hiring a competent personal financial planner. Haven described what the gig economy is. Here are skills sets that can help keep individuals on top of their games as gig workers or freelancers. Critical thinking and logic In order to keep up with a changing marketplace, gig workers need to learn how to ask better questions. Nigeria’s current education system is traditionally all about getting the right answer, rather than the process of experimentation and what that teaches the students. A gig worker needs to become comfortable with uncertainty. A class on critical thinking or logic

will provide the basis for thinking about problems in a different way. Gig workers need to be able to ask the right questions, and develop different ways to view data, issues, and solutions. Human resources While gig workers are independent contractors, they need to understand what a company needs from someone they hire, and few students come out of school with an understanding of what it takes to be a good employee. In the gig economy, you need to know what a good employee looks like, and be able to emulate those traits to be successful in your career. Classes in human resources, team building, and hiring will offer exposure to the insights that can help you become a preferred contractor. Finance Gig workers need to understand

TRCN hosts Conference on deteriorating quality of education in Africa AKINREMI FEYISIPO, Ibadan

roviding solutions to educational quality assurance in Africa has prompted the Teachers Registration Council of Nigeria (TRCN) to host the 7th Africa Federation of Teaching Regulatory Authorities (AFTRA) Conference. The conference which is entitled “Teaching and Learning in Africa in the Context of Sustainable Development Goal 4 (SDG4) and Continental Education Strategy for Africa (CESA) 2016-2025” is aimed at charting a sustainable strategy

for the delivery of quality education in order to meet the Sustainable Development Goals. Segun Ajiboye, the Registrar, TRCN, stated this in Ibadan while informing newsmen that the conference provides opportunities for exchange of best practices between the statutory regulators of the teaching profession in Africa and members of the global community particularly the academia, Information Communication Technology (ICT) experts, employers of teachers, teachers unions and international development partners. According to him, the AF-

TRA Conference and Roundtable which will take place on May 14-19 in Abuja will feature presentation on the implications of terrorism, refugees and internally displaced for education in Africa as well as the professionalisation of teaching in Africa. “The TRCN is happy to host the convergence of AFTRA, which is the Africa Regional Branch of International Forum of Teaching Regulatory Authorities (IFTRA). This years’ conference will further deliberate on issues of professionalism as well as the challenges facing the teaching profession in Africa” Ajiboye said.

finance and taxes. They also need to create financial flexibility, and be able to look at monthly capital and revenue statements to determine if they are profitable or not. You need to understand your personal burn rate, which is about cash flow management. Marketing and communication No matter what their core skill set or area of expertise might be; freelancers or gig workers need to be able to understand the needs of the customers and communicate with them in a compelling way. You cannot just focus on being good at delivering your core product or service. You also have to be in charge of sales, branding, marketing, and new product development. Classes in marketing or communication will help you convey your value, and build relationships with your clients.

batch of 48 students of the College of Agriculture, Iguoriakhi has been posted to the Rubber Research Institute of Nigeria, Iyanomo, Edo State, for a three months internship programme. Checks at the Institute confirmed that majority of the students have resumed for the training and are expected to get hands-on experience of the different areas of the science and technology of rubber production. Kenneth Omokhafe, Director and Programme Leader, Rubber Improvement and Biotechnology Programme at the Institute, said that the students have been posted to various units at the research facility for training. According to him, “We have received the students. They are done with documentation and have been posted to several units here. In fact, some of them have been posted to the field. They are going to get hands-on experience here on the nitty-gritty of rubber research and allied areas.” Omokhafe said the state government was instrumental to the students being posted to the college as agreements had been reached to ensure the institute opens its doors to the students and ensure that they receive comprehensive training on the facility’s area of expertise. The students join 90 others who were deployed to Okomu Oil Palm Company Plc and Presco Plc, in a holistic programme being implemented by the state government to revamp the College of Agriculture, Iguoriakhi, into a world-class institute. The students would be paid N20,000 monthly stipend during the period of their training by the state government.

Gov. Ahmed advocates solar energy drive SIKIRAT SHEHU, Ilorin

bdulfatah Ahmed, Kwara State Governor, has advocated effective solar energy drive as an alternative source of energy to meet local needs, wealth as well as guarantee green economy. Ahmed made the call weekend at the graduation of first set of trainees on full scholarship programme in Solar Photovoltaic Technology, Installation and Entrepreneurship sponsored by Riccofortezza-Asteven Energy Limited at the International Vocational, Technical, and College, Ajase-Ipo. The governor noted that opportunities inherent in green economy are huge and immeasurable which could be harnessed and converted

to energy for proper use to create wealth and drive industrialisation. According to him, “in green energy lies the future of Nigeria for abundant opportunities rather than relying on limited source of energy”. Governor Ahmed also stressed the need for improved power infrastructure in order to create jobs and ensure economic growth. In his address, Sunny Akpoyibo, the Chairman, Asteven Renewable Energy, congratulated the 25 graduands for developing interest in green economy and charged them to exploit opportunities therein to become entrepreneurs. Akpoyibo thanked the state government for the opportunity to extend his company’s corporate social responsibility to the state.

BUSINESS DAY

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EDUCATION

Tuesday 08 May 2018

INSIGHT

Respect for children leads to healthy development

OYIN EGBEYEMI

recently had a minor dispute with a five-year old. It was very interesting and ended up becoming quite deep because it became glaringly obvious that my childhood was significantly different from that of today’s children. When I was this child’s age, my relationship with most adults, especially those

outside my family, was pretty straightforward: “Do what you are told, do not ask why, do not complain, do not dare explain yourself, just do it, and do it quietly.” The cause of this dispute was a broken promise: I had promised this child that I would feature him in a video, and then changed my mind about it at the very last minute because I found another who I thought would perform better. The former child is very playful and easy-going, so it seemed to me that he would be okay with rejection. At the time that I told him that he would not be featured in the video, he seemed very much okay and went on to play with his friends. This, I thought, until his class teacher came to me later and asked what happened. I was dumbfounded; yet tried to gather enough of a logical

explanation to justify my actions. After a few minutes of incomprehensible babbling, she asked me two very simple, yet thought-provoking questions: “How did you explain his exclusion from the project to him?” and “Did you ask him how he felt?.” I then realised that I had disrespected him and communicated poorly. Regardless of age, status and background, we should have a great level of respect for each other; and we must not forget that this also extends to children. We have to learn to understand when this is a false assumption because in today’s world, children have a whole lot more concepts to understand and they need to be bolder and more confident in order to stand out from their peers and live well.

With this in mind, it is also very important to know that academic excellence is not enough and complacency with situations that are wrong and inappropriate is unacceptable. Children need to be carried along in some of the decisions that adults make. This helps build their self-awareness, awareness of their environment, maturity and confidence. Below are a few tips on how to give respect to children: Speak and explain: One thing that my parents always did and still do is that they explain a lot to me. I had a very strict curfew before I turned 16, but they explained their reasoning being the risks of exposure to certain people and situations that occur at certain times of the day at certain places. It was not always a

Meadow Hall Foundation rewards four inspirational teachers STEPHEN ONYEKWELU

eadow Hall Foundation, a Lagos-based non-profit organisation on April 21 rewarded school leaders and teachers who have been sources of inspiration to students during the second edition of its Inspiration Educator Awards (INSEA). The INSEA is a meritbased award ceremony aimed at elevating the teaching profession and motivating teachers and school leaders to continue to strive for excellence in their profession. The event was attended by captains of industries, philanthropists, educators

and high net-worth individuals. Kemi Adewoye, head of Meadow Hall Foundation, explained that the Foundation pays attention to teacher training, development and rewards because it believes that students are mostly influenced by their teachers. Hence, a happy, well-trained and inspired teacher would go a long way in affecting the lives of the students in their care. Cash awards were presented to four winners as follows: N2,000,000 to Olufemi Folaponmile of Aduvie International School, Abuja as the Inspirational School Leader of the year; N500,000 to Chioma Akin-Adekeye of Preserved Generation Schools,

Amuwo Odofin, Lagos as the runner-up of the Inspirational School Leader of the year; N750,000 to Kikelomo Usilo of Ifesowapo/Aboru Senior Secondary School, Lagos as Inspirational Teacher of the year; and N750,000 to Olalekan Ademola Adeeko of Baptist Boys’ High School, Abeokuta, Ogun State also as Inspirational Teacher of the year. Olalekan Ademola Adeeko, winner of the Inspirational Teacher of the Year 2018, said he believes the process was thorough and fair as there were very many exceptional teachers that went through the vetting and interview process with him. For him, winning was a pleasant surprise and he

dedicated his award to all the other inspirational teachers that he met during the process of the award. Demola Aladekomo, Chairman of Meadow Hall Foundation’s Board, said that the Foundation seeks to reward teachers here on earth as opposed to the popular saying that teachers’ rewards are in heaven. He implored the government and members of the society to recognise and work with teachers. Kehinde Nwani founded Meadow Hall Foundation in May 2009. The Foundation supports communities, public schools, pupils and teachers through various developmental initiatives and programmes.

LPSS students extend non-learning support to less privilege home KELECHI EWUZIE

he students of Lagos Preparatory & Secondary School as part of their cocurricular engagement with communities around them have donated gift items purchased through the funds raised by selling items handmade by the students to Lions Village Motherless Babies Home in Lekki. Nicholas Barrett, Headmaster of the school while speaking about the initiative

said children from the school are taught to appreciate their privilege as they do indeed attend an elite school but more importantly, it is their duty to make our society a better place. According to him, “Raising well-rounded citizens is at the core of what we do. This is why in addition to the core academics; we expose our students to much more”. Barrett in explaining the important role that Music, Arts, Languages and Sports play in the development of their children said although

the school has an outstanding academic standing in Maths and English, the school encourages its children to excel in co-curricular areas too as success in those areas are indeed what helps build a rounded child. “These expose them to live outside of their usual circles and builds better future leaders. In particular, he made reference to areas of achievement within Music and Sports. Barrett said Lagos Preparatory & Secondary School have a long standing relationship with their

adopted school in Makoko and through the recently concluded Parents Teachers Association ( PTA) Star Trek sponsored walk, they have been able to raise money to upgrade the building of Premier Foundation Preparatory School, Makoko. Within the school, all children are given opportunities to showcase their musical abilities during the music recitals for their year group and they all take part in the Inter House Song Festival, a singing competition within the school.

situation of “I’m telling you to do this, with no explanation and you must do it because I am an adult and you are a child and I said so.” Keep your promises: Children have very loving and vulnerable hearts. They do not pretend to have a tough exterior like most adults do. In most cases, they also have not formed the thick skin that most adults have. Hence they are very sensitive and take every word for what it is. So when you go back on your word, it hurts their feelings and that makes them feel disrespected. Listen attentively: When children have something to say, we should be patient and give them enough time to express themselves. Cutting children short is disrespectful and could even take away from their confidence. Children may also not be

able to express themselves fully verbally sometimes. Listening should go beyond hearing; body language and general demeanour are important too. Apply some emotional intelligence: Different children have different personalities, so it is important that we adjust the way to interact with them to suit their ways. Some children respond well through physical gestures while others respond through words and other means of expression. As much as freedom of expression is a means of demonstrating respect to children, we must also remember that lines must be drawn when we find them in situations that are not constructive. Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

Airbus Foundation trains 1000 students in Nigeria STEPHEN ONYEKWELU

irbus Foundation through its Airbus Little Engineer has partnered STEM METS Resources to roll out youth development programmes, which have trained more than 1, 000 school students across Nigeria. Airbus Little Engineer Workshops is the flagship initiative through which both organisations pursue their youth empowerment goal. The goal of the programme is to encourage students to understand and embrace technology and ignite a passion that could grow into an exciting career in Science, Technology, Engineering and Mathematics (STEM). To celebrate this milestone the partners invited distinguished guests to attend the Airbus Little Engineer A380 workshop organised for 30 students at the Methodist Girls’ High School in Lagos. The four-hour A380 workshop saw students aged between 13-15 years focusing on identifying various aircraft parts and enhancing understanding of both the manufacturing and assembling processes of the world’s largest passenger aircraft. The students also got an opportunity to build an A380 scale model from scratch – from initial programing to understanding full take-off functionality of the aircraft. Andrea Debbane, Executive Director of the Airbus Foundation, said: “Having already trained more than

1,000 students in such a short time is a remarkable achievement and I would like to thank STEM METS Resources for their dedication and efforts. Investments in education and training are essential in building an educated and skilled workforce. The goal of the Airbus youth development programme is to support the countries’ efforts in creating a sustainable pipeline of talent for Africa.” Jadesola Adedeji, Founder of STEM METS Resources said: “We are very proud of our partnership with the Airbus Foundation, the Airbus Little Engineer programme is such a unique learning opportunity. These popular workshops are designed to channel students’ potential, encouraging them to use science, technology, and mathematics in an exciting and engaging, team work approach.” Africa has the fastestgrowing and most youthful population in the world, furthermore, the continent has developed an ‘innovation’ culture that is growing fast with many social entrepreneurs, local non-profit organisations and the Airbus Foundation wants to support and work with them. Since its launch in 2012, the Airbus Little Engineer programme successfully positioned itself as an effective vehicle for discovery-based learning, working to enlighten and empower youth in the areas of science and technology through robotics and aerospace. As of now, the programme has reached over 4,000 students.

Tuesday 08 May 2018

C002D5556

BUSINESS DAY

In association with

Developments, infrastructure elevate Ibeju Lekki as new investors hub

Infrastructure Maintenance With TUNDE OBILEYE

…Dangote Refinery, others to create over 300,000 jobs that need real estate assets

Need to evaluate buildings security level

CHUKA UROKO

espite the allure of largely empty mansions, well paved roads with expansive and beautifully landscaped compounds that define the Ikoyi and Victoria Island neighbourhoods, new investible money is now finding its way into a hitherto rural, sleepy and outlying community called Ibeju Lekki in Lagos. This evolving ‘city’ is the new hub for investors. Its character, stature and value have undergone dramatic change by virtue of the massive developments and infrastructure provision taking place there. Before now, the only real estate development of note in this community was the Amen Estate developed by Tunde Gbadamosi’s Redbrick Homes International which intoduced a new innovation in aesthetics and energy-saving in housing delivery. Ibeji Lekki is home to one of Africa’s largest free trade zones—the Lekki Free Trade Zone (LFTZ). The facts about this community are not only interesting, but also compelling, especially for savvy and patient investors with long term view of the property market. “The prospects are high at this upcoming free trade zone. After the commissioning of the zone by the president, a lot of people are already asking if we have anything to offer. I see that axis starting to develop; I see it starting to boom and because there is cheap land there, it is an area our company is already looking at for affordable housing development. Private developers are already doing developments there”, an estate developer, who did not want to be named, confirmed in an interview. Lekki Deep Seaport, Dangote Refinery and Petrochemical Industry, Dangote Fertilizer Plant, International (Cargo) Airport, Lekki International Golf Course, Pan Atlantic University,

Eleganza Industries are some of the developments in this community that has seen a good number of investors, especially real estate developers, taking position by acquiring large tranches of bare land and selling same in bits to buyers at “cheap” prices. Over 1,000 staff of Dangote Refinery are to be provided accommodation by developers, while others are still providing within and outside the zone. Over 8,000 engineers will be engaged by Dangote Refinery. The combined demand for real estate assets by the staff of this company alone means that a plot of land that is sold for N500,000 today will be going for over a million naira in the next couple of years. The satisfaction of their housing needs is a huge opportunity for both public and private investors. Adron Homes is leading the pack of ‘new generation’ estate development companies that are already taking advantage of both the new developments and roads infrastructure driving property demand and prices in that axis. Unconfirmed report has it that the LFTZ has attracted about $10.1billion investment commitments from about 49 investors. Presently, only about 20 percent of the available space around the area is being utilized and injection of investments in the region is set to transform the existing environs into a highly industrialized area with mixed-use developments, leading to rapid economic growth, increased migration rate and creation of about 300,000 jobs. The 300,000 jobs to be created are potential sources of demand for real estate assets as all of these workers will be needing residential and commercial real estate for living, working and even for leisure. It remains unimaginable what land prices are like to be in that enclave in the medium to long term when most of the projects come on streams and government’s road infrastructure are completed. The area is properly planned and free from congestion, leaving it relatively and adequately secured. There

is an on-going expansion of the road by the Federal Government in that axis which gives access to Epe, Ijebu and towards the eastern part of the country. The expansion of the Lekki-Epeh Expressway by the Lagos State government is another attraction to this community and as is known generally, road infrastructure enhances value of real estate investment. Roads infrastructure, particularly, remains a major driver of real estate investment and development as it helps to lower the cost of construction by as much as 30 percent. Federal Government is also doing its bit by the re-habilitation and reconstruction of Benin-Shagamu road and Lagos-Ibadan Expressway to enhance the distribution of over 35 percent of farm produce from the zone to the hinterland. Since the slight improvement in, and the gradual recovery of the economy, there has been revitalization and continuation of a few infrastructure projects many of which are critical not only to opening up new real estate hot spots, but also driving key economic investments in the country as a whole. The Federal Government has partnered with the Nigeria Liquefied Natural Gas (NLNG) and Julius Berger to resume work on the 34km Bonny – Bodo road construction. The ₦120.6 billion project would be a landmark achievement, considering that it had been in the cooler in the last 40 years. The 1,100 kilometre Standard Gauge Rail (SGR) will go a long way in increasing the current national capacity of 15,000 metric tonnes per year. To finance these projects among others, it was a delight to see the federal government’s sukuk fund oversubscribed by N5.8 billion. The 7-year N100 billion fund will also be applied to the construction and rehabilitation of 25 priority road projects spread throughout the country.

ith the serious security challenges facing us as a nation, the need for facilities managers and executives to critically evaluate the level of security measures required to reduce the physical risks and vulnerabilities of their buildings to ensure the safety of the end users is real. The consideration calls for a comprehensive planning approach. There are generally three categories of security safeguards to look at in any given situation, depending on requirements. They are physical security, information security and operational security. Physical security involves action taken to protect lives and property against foreseen threats. This may include active and/or passive measures. Passive measures will include effective use of architecture, landscaping and lighting to improve security. This is done to deter, disrupt or mitigate potential danger. Active measures involve using systems and technology to detect, report and react against threats. Information security requires protecting the confidentiality, integrity and availability of data from any form of misuse by anyone within or outside a facility. Some key elements include limiting information to authorized person, preventing unauthorized changes to or the corruption of propriety data.Operational security is the process of creating policies and procedures, and establishing controls which require identifying, controlling and protecting interests associated with the integrity and unhindered performance of a facility. A major aspect is having trained security personnel to protect and enforce the security procedures and policies governing the operations of a facility. It is important to note that well-conceived and implemented policies will ensure the resistance of a facility to threats. Having identified these categories, the following steps should be taken to determine how to ensure each category receives the necessary attention. Securita Assessment: A risk assessment is required to identify threats and determine the extent all activities of the facility can run continuously and uncorrupted. It also involves looking critically at the assets and determining the level of protection each one is given. An assessment of vulnerabilities should be undertaken that will consider the physical and operational features of the facility through a systematic survey approach. To avoid a weakness in the security plan, a comprehensive risk assessment is required from an overall security standpoint as part of a risk mitigation strategy.

Budgeting is also an important element to consider when conducting a risk assessment. This allows for informed decisions to be taken on the allocation of capital resources. Mitigation responses: As part of a mitigation response strategy, security plans should be updated periodically to ensure they are still fit for purpose and in line with corporate objectives. A common mistake by facilities managers when reviewing security plans is the failure to provide adequate administrative support for security systems in place. An example is where CCTV cameras have been deployed, there is need to ensure a balance with the number of security personnel available to monitor the cameras on a 24/7 basis. Consideration must also be given to the time needed to review, archive and store any digital or analogue information available from the cameras. Training: Training measures must be linked to every identified risk and vulnerability. These measures can then be tailored along physical and operational initiatives. Consulting with a security expert can assist facilities managers in determining the most effective plan of action based on each client’s individual circumstances. Technology: Facilities managers should look at technology and where it can be effectively implemented. A major misconception I have observed is that a single technology can provide comprehensive security for any organization. This is very unlikely. Multiple technologies integrated into all operational and information systems are more result-oriented. Culture: The senior management has the responsibility to ensure a corporate culture is created that embraces, reinforces and demands security practices that are consistent with the built environment. Part of this culture is the need to understand the human dynamics because this involves anyone who interfaces with operations, including, facility operators, maintenance personnel, customers, delivery people, clients and visitors. The human element affects everything with regard to security and reliability. Within each organization, responsibility for policy compliance should be defined. Therefore, all policies and procedures must take into account the human variable. Best practices require that security be treated as a fundamental value. Obileye is a UK-trained lawyer and CEO, Great Heights Property and Facilities Management Limited Email: Tundeobileye@greatheightslimited.com

BUSINESS DAY

Tuesday 08 May 2018

Commercial properties: Devil in the details corporate tenants must know Commercial Office Pipeline

CHUKA UROKO

Projected Delivery Date

he commercial real estate space is quite dynamic and requires expertise in the leasing processes. It is clearly more complex than leasing a residential apartment. This segment of the market has its downsides at the moment. Its high vacancy rate, falling rents and oversupply make it a tenant’s market. As at the end of the first quarter of this year, Grade A office space rents hovered between $500 and $800 per square metre, which is over 20 percent lower than the $1,000 per square metre price point that obtained in a few cases 2-3 years ago. But even at the present rent, it is still significantly high for a typical indigenous company outside oil/gas and finance. Because rents have reduced and seem to have stabilized coupled with concessions offered by landlords, more firms are now ready and better positioned to lease some space in GradeA buildings. But most times, this ‘rush to grab it’ comes at a price. Many corporate tenants take leasing an office space for granted and end up making huge mistakes. They frequently fall victims of what they don’t know because they do not follow and understand due process. There are, however, steps that could be taken to help minimize potential risks and other costly errors associated with this, giving what leasing agents hand out as “a list of top mistakes corporate tenants make when leasing commercial real estate”. ‘Beginning negotiation for a renewal or new lease too late’ is one of the biggest

Source: Broll, Northcourt mistakes corporate tenants make. Waiting until lease expires before starting to speak to the landlord about renewal of the lease or before starting to look for a new space may leave a tenant with hard time finding exactly what he needs, especially in a competitive market. ‘Leasing an office space requires competence and expertise’, but many corporate tenants go into lease agreement process without properly having adequate and required knowledge and as such, they have made lots of mistakes that have impacted their business negatively. ‘Lack of knowledge combined with time pressure’ usually cause this class of tenants to make wrong location decisions without being aware of all the choices. This sometimes results in errors that eat into their profits and/or increase financial exposure. Experts advise that such tenants should either guide themselves properly or consider getting the services of a commercial real estate advisor to walk them

through the process and confirm that a space will meet their current and future needs. There is usually a lot of ‘documentation as well as clauses’ in a commercial lease contract that are mostly in favour of the landlord. That is why prospective tenants are warned of the lease clauses which they describe as “the devil in the detail”. For this reason, it is important to understand what those clauses mean and how they can positively or negatively impact business. Most times a real estate advisor or a legal team can help a tenant understand these and negotiate clauses that will be more favourable to the tenant. To avoid ‘the devil in the detail’, tenants should ‘focus on strategy and not on the transaction’. Whenever there’s need for a company to move to a new development or to renew their lease, in the excitement that goes with ensuring the transaction goes on smoothly, corporate strategy is often neglected. All negotiations tend to

focus only on the major financial terms of the lease agreement and as a result, the impact of the transaction on the portfolio strategy is easily forgotten. Important terms like rent review, expansion and contraction rights seem to have low priority in the leasing process. In any new lease agreement, tenants are advised ‘not to underestimate the time the process will require’. The inability of corporate tenants to understand the time process required often results in companies having to stay longer in their existing premises and may negotiate a soft lease renewal with the landlord. A ‘successful relocation transaction time process’ should include time for a site analysis and property selection, negotiation, executive approval, legal documentation, fit-out, relocation, etc. All these processes need to be completed within the remaining period of the lease and if not the landlord will demand compensation as entitled regarding the terms of lease.

NIA targets $1m grant to develop Makoko slum MICHEAL ANI

akoko, often seen as one of the neglected slums within the Lagos metropolis, may be getting some face lift as the Nigerian Institute of Architects (NIA) says it is making moves to raise $1million through grants from a US-based foundation for the community’s development. The Makoko waterfront is a community on the Lagos mainland where majority of the residents live in clusters on water, in conditions best described as beneath acceptable standards for human living. Fitzgerald Umah, NIA’s chairman, disclosed this at a news conference recently in preparation for the institute’s 2018 Architect Forum in Lagos, saying , “we have been able to get a foundation in the United States and Uganda where we are trying to raise funds to do something in Makoko, and it is about $1million”. Umah noted that though modalities on how this will be used have not been concluded, the design for the project will start in June when discussions would have been held with the foundation making the funds available. “However, before the end of this year and first quarter of 2019, a proper plan would have been made to see how the funding would be done as the first tranche of the funds will be going to Uganda, while the second tranche will be coming to Nigeria,” Umah said. The chairman also noted that the 2018 edition of the Lagos Architect Forum will be focused on how slums in these affected areas (Makoko and Ijora Bhadia) can be taken care of and how their residents can be integrated in the society rather than relocating them from where they are since most of them are fisher men. He also said the forum’s

outcome will give the Lagos state and federal government a policy document that will help the country build well and join the entire world in terms of sustainability. The three-day event, holding from May 9 to May 12, 2018 is expected to be an avenue to explore some of the interesting ideas in architecture as they relate to the environment. Sessions will highlight contemporary issues such as regeneration of architectural designs and practices in view of the current economic challenges, issues surrounding incessant building collapse and new directions for building material technology. Umah added that the motive was to regenerate the environment and for operators in various professions to be exposed to new trends and global realities. According to him, considering the population of Lagos State, there is a need to start building vertically and no longer horizontally to accommodate the rising population. Samson Akinyosoye, the Secretary of NIA, said the forum would focus on how professionals in the industry could come together to build a sustainable livable environment using the latest technology across the globe. He said that the 2018 LAF would spend quality time building the capacity of the professionals in the built environment to meet international standard. He listed professional development sessions, planned seminars, exhibition of architects’ works, post-conference site tours and building product manufacturers expo as lined up activities of the forum. “And at the end of this forum, we hope to give the State Government a document that will help end building collapse not just in Lagos but throughout the country,’’ Akinyosoye said.

Promoting sustainability in economic environment through non-sewered sanitation system CHUKA UROKO & DIPO OLADEHINDE

or an economic environment to thrive and support business growth, it must be sustainable and there must be conscious efforts by supervising and regulatory agencies to put measures in place to ensure that sustainability is not only given, but also enforced. In this instance, standardization and its enforcement become not only necessary, but also imperative. The purpose of standardization is to enable the development of standards along the sanitation system which is designed to address basic sanitation

needs and promote economic, social and environmental sustainability. In the light of this, it becomes clearer why the Standards Organisation of Nigeria (SON), Nigeria’s watchdog for standardization and standard practice, is perfecting plans to implement the ISO PC 305 and ISO PC 318 through sustainable non-sewered sanitation system. There are some benefits of participation and adoption of these international standards. The adoption, in the opinion of Osita Aboloma, director general of SON, will among other things provide a basis for confidence, transparency and continuity in

businesses. It will also provide global best practices in the environmental sector; promote international trade through removal of technical barrier to trade (TBT) as well as ensure sustainable economic and environmental development. The ISO PC 305 was established at the Technical Management Board (TMB) resolution in May 2016 and Aboloma explained at a meeting where two committees were set up for its adoption, that the aim was to provide a standard solution to the issue of a sustainable and affordable sanitation that will alleviate the problem of open defecation.

Sanitation and standard are very critical to business growth. Statistics released recently by WaterAid International make a shocking revelation that working days lost to poor sanitation costs the global economy approximately $4 billion per year while loss of productivity due to illnesses caused by lack of sanitation and poor hygiene practices is estimated to cost many countries up to 5 percent of GDP. It adds that lack of access to sanitation cost the global economy US$222.9 billion in 2015, up from US$182.5 billion in 2010, a rise of about 22 percent in just five years. “ISO PC 318 community

scale resource oriented sanitation treatment systems has just been formed”, Aboloma said, disclosing that the two committee, National Mirror Committee (NMC)/ Technical Committee (TC), inaugurated at a stakeholders meeting in Lagos recently are to work on both standards through non-sewered sanitation systems. But while the Mirror Committee will be responsible for establishing Nigeria’s position on issues relating to the activities of the ISO PC 305 and ISO PC 318, the Technical Committee will be responsible for adopting the ISO PC 305 and ISO PC 318 standards as national

standards. “The national mirror committee will mirror the activities of these two ISO technical committees and also establish Nigeria’s position in the ISO draft standards on sanitation systems and services”, Aboloma explained. Specifically, ISO PC 318 will build on the information and expertise gathered to develop 1WA 28,which is a major step in realizing the potential of such technology, ultimately save lives and help facilitate the commercialisation and expansion of treatment units into the market, making them safer and more accessible to those who need them.

Tuesday 17 April 2018

BUSINESS DAY

Harvard Business Review

C002D5556

Tips & Talking Points Block out time for solitude and thinking

TALKING POINTS Unemployment Spike During Financial Crisis 34 million: According to data from the International Labor Organization, unemployment rose by 34 million around the world between 2007-2010. + Alexa Growing in Popularity Double: Amazon has sold about 25 million Echo speakers, which allow customers to communicate with Alexa, the company’s artificial intelligence assistant. Amazon expects that number to double by 2020. + Netflix’s Numbers 100 million: The entertainment tech company Netflix has a workforce of about 3,500 people who serve more than 100 million subscribers. + Happiness U-Curve 30-50: According to an analysis published at the National Bureau of Economic Research, human happiness around the world slumps between ages 30-50, an idea that is called the “Happiness U-Curve.” + An Ounce of Prevention 5%: According to data from the Centers for Disease Control, if flu vaccine rates increased by 5%, about 483,000 cases of influenza could be avoided in the U.S.

Tuesday 08 May 2018

The volume of information and stimuli coming at us every day makes it more difficult to focus than ever. To do the careful thinking that decision making and leadership require, you must step back from the noise of the world. Schedule 15-minute breaks at least once or twice a day to sit quietly in your office or take a walk. Commit to these breaks as you would any meeting or appointment; if you don’t schedule moments of quiet, something else will fill the time. Use them to

think about your to-do list, especially the tasks you should stop doing. Solitude gives you the space to reflect on where your time is best spent. Try to get clarity on which meetings you should stop attending, which committees you should step down from, and which invitations you should politely decline.

(Adapted from “In a Distracted World, Solitude Is a Competitive Advantage,” by Mike Erwin.)

Managers, be respectful to departing employees

During a difficult conversation, own your perspective

When one of your employees quits, you may take it personally. But keep in mind that their decision may have little to do with you: Most people leave because their opportunities for growth are limited. Encourage all your employees to openly discuss with you their goals and plans for the future, even if those plans don’t involve staying with the company. Honest conversations like these will help you plan for the future if an employee doesn’t intend to stay over the long term. And don’t try to convince employees to stay if they aren’t getting the opportunities they need; they’ll just end up bored and unmotivated. If you accept that it’s time for someone

When you and a coworker are discussing a conflict you’ve been having, you might be tempted to launch into your account of the events, assuming that your counterpart should see things exactly the way you do. But that approach is unlikely to go over well. Instead, treat your opinion of what’s happened as what it is: your perspective. Start sentences with “I,” not “you.” Say “I’m annoyed that this project is six months behind schedule,” rather than “You’ve missed every deadline we’ve set.” Even if you

to move on, they will leave feeling positive — and you’ll have a stronger pool of alumni advocating for your company in the marketplace. Making the exit process open and respectful will be better in the long run for you and the person leaving. (Adapted from “As Your Company Evolves, What Happens to Employees Who Don’t?” by Robert Glazer.)

have valid criticisms of the other person, blaming or cornering them will shut down the conversation. And remember, you’re almost certainly contributing to the dynamic as well. Acknowledging your role in the conflict will set a tone of accountability for both of you, making your counterpart more likely to own up to their missteps as well. (Adapted from the HBR Guide to Dealing with Conflict, by Amy Gallo.)

New leaders, be thoughtful About What Tasks You Say Yes To New managers are often tempted to hold onto the work that keeps them close to their team’s everyday operations. But now that you have a wider set of responsibilities, you need to be discerning about your time and selective about the tasks you take on. Carefully assess every demand that comes your way, and ask whether it aligns with your highest-value contributions. To those requests that draw on your particular talents, say yes and carve out the necessary time and attention. To those that don’t align but are important, identify other people on your team who can take them on: “Yes, we can do that, but Tomoko on my team will be the main contact.” You can still consult on, motivate and lead your team’s work — but you should be a catalyst, not the one doing the heavy lifting.

(Adapted from “To Be a Great Leader, You Have to Learn How to Delegate Well,” by Jesse Sostrin.)

Be tactful when you provide feedback in writing In an ideal world, feedback would always happen face-toface, so the other person could read your body language and hear your voice. But there are times when you have to provide input through email, text message, or even instant message, and in these cases it’s important to be careful about tone. Written criticism can easily lead to misunderstandings, since it’s missing the natural empathy that comes from talking to someone in person. And once it’s typed, it’s harder to take back than a spoken comment. Generally, your written feedback should stick to descriptive, rather than evaluative, language. People are usually more receptive to, for example, “This is what I see happening” than to “This is what I think you should do differently.” The latter can be read

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

as harsh and uncaring, whereas the former is more objective. You’ll have more latitude if you have a strong relationship with the recipient, because the person is less likely to perceive the criticism as an attack. Still, the extra effort you put into thinking through what to say and how to say it will help the person hear your message (even if they’re reading it). (Adapted from “What I Learned About Coaching After Losing the Ability to Speak,” by Mark Rosen.)

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Tuesday 08 May 2018

THE BIG HEART DIGEST In association with Delta State Micro, Small and Medium Enterprises Developement Agency (DEMSMA)

‘I didn’t know leather-works will take me this far,’ says graduate of accountancy now entrepreneur Gov Ifeanyi Okowa-led administration in Delta State is raising a new generation of enterprenuers to help drive the state’s economy beyond oil. Within the three years in the saddle, thousands of youths are now entrepreneurs helping to provide jobs for others. They now go beyond certificate acquisition to having ‘sabificate’. In this interview, Augustine Okolie, a pioneer student of the state’s Shoe and Leather-works Factory located at Issele-Uku, Anioma North LGA, tells MERCY ENOCH his experience. He confesses that leather-works gives him money, even as he now teaches others on the skill. Excerpts: MERCY ENOCH, Asaba

Introduction:

am Okolie Ketojuo Augustine. I’m from Oshimili North Local Govt Area of Delta State. I hold a Higher National Diploma (HND) in accountancy, from Delta State University, having graduated in 2014. I’m 29 years old and a Christian by religion. My father was late when I was 12 years old. We are three boys of which I am the first born. My mother, a businesswoman sponsored my education. Among my siblings, I’m the only one that has graduated from higher institution for now, and I am training my younger one who is living with me. Learning skill beyond what I read in polytechnic After my graduation, I served in Anambra State. I decided to acquire a skill. When I was in school, I was into interior and exterior decoration. So, during my youth service year, I decided to acquire another skill because I knew that decoration is just a seasonal work. I went to register in shoe and bag making in Onitsha, and was trained for six months as was doing my youth service. After I passed out from my NYSC, I started looking for jobs and there was nothing coming until the money I saved from the NYSC got exhausted. I was left with nothing. Along the line, I was travelled back to my village, Ebuh to gather some money and was able to raise N50,000. I took it to

Onitsha to get materials and a styling machine. So, that’s how I started small. Then somebody introduced me to this DEMSMA office. I went there to apply for loan because that was my initial plan. The day I went to the office, I met Madam (the Executive Secretary of DEMSMA). I introduced myself to her and told her my purpose of coming. How I got trained in Isseleuku factory I showed Madam some of my products in phone. She said they want to open a factory, that they want to train more people, that she would want me to be among and acquire more knowledge on leather-works. I said okay, I really appreciated. So, when the factory then opened, I was opportuned to be in the first batch of trainees in the basic course. After that, I was among the trainees in the first batch to enter the intermediate course. From intermediate course, we came to advance, and from there I was selected as one of the persons to train others. Training others After the basic and intermediate course, I started to organize seminar to train people in churches and in schools. I trained in Abuja and Asaba. I opened a small shop where I am managing – producing belt, wallets, keyholders etc. I then decided I must go further because I like imparting knowledge on people. So, I went to the school I graduated from, which is Delta State Poly-

Okolie displays made in Delta shoes

technic, Ogwashi-uku. We have entrepreneurship centre there, of which it is compulsory for every student to acquire one skill, whether you like it or not. So, I went to apply, the lady there said I should bring some of my products and I complied and the following month, she told me to resume work. So, as it is now, I am a lecturer (on contract) in Delta State Polytechnic Ogwashi-uku. They pay me monthly and the students would provide materials for their studies. When I started the leather-works, I did not know it would take me this far. It’s just something I have pas-

sion for. When I was in the school, there was no entrepreneurial centre then, Okowa hadn’t come then. I’m now taking the students on leather-works. Presently, I’m teaching shoe-making and leather-works. I have a shop in Ogashiuku and a have a business name called A&K Unique Shoe/Leather-works. What I’m good at is organizing seminars to train people. I love imparting knowledge to people. Presently, I have seven apprentice under me. I’m good in the work, I produce wares but I have passion for teaching. Mocked by friends

When I started training, I was discouraged by my friends in the NYSC. They condemned me for going to learn shoemaking despite being a graduate. They said I was not supposed to do that. But I said no, this people cannot discourage me because I know where I am coming from and I know where I am going. If for example I did not learn the work, by now, I would have still been at home after graduation from school. So, this leather-works some people think it is just making of shoe. Some people when you tell them you are into shoe-making, they think you are all these abokis’ and cobblers. So, in my experience, I see that leather-works is different thing entirely. People view it in different angles. Leather-works gives money. If you are good in producing and you are a market environment, know that environment matters a lot. Like Ogwashi where I produce, students patronize me very well by buying my products – sandals, slippers, bags, belts and wallets etc. The market is there already because its students’ environment. That’s why I’m even training people. I have people I train free of charge, so that any time I call them to come and help me, they would come and assist me. And anybody I’m training, I give them the best because I want them to do more than I do. The person that trained me in this work in Onitsha, I’m doing better than him and he is proud of me. Almost all my designs, I got them from

internet. The Onitsha mentality is about repetition of designs yearly but due to knowledge, I go to the internet and get what young guys like. I also create my own designs and put my logo, all to satisfy those who are desirous of using my products. Another thing was that when I started, it was in the sense that I was working with quality materials whereas most people prefer something cheap. I maintained that standard and today, people who have known me with high quality come to patronize me. Appreciation: Thanks to Gov Okowa for initiating this programme for Delta Youths. The SMART agenda is working. I pray he would come back the second tenure to continue what he has started so that more and more people would benefit. Thanks to Mrs Shimite Bello for mentoring me to this level I now find myself. I even came to apply for loan in the agency but I thank her for encouraging me to get more skills to enable me know how to invest the money (loan) that I would be given me. At last, I did not apply for the loan because by the time I could get through to the basic and intermediary courses at Issele-Uku Factory, I was able to acquire knowledge that enabled me organize seminars that gave me more than the amount I was applying for. Advice: No matter the qualification you have, try to acquire more skills. Be hard-working

t h e ra p i d d e v e l o p m e nt of the Delta State Capital Territory in line with the Master Plan of the State Capital territory. We have observed that some parts of the state capital territory currently stand the risk of degenerating into urban slumps because of the uncoordinated approach to housing development. The population explosion being witnessed

in Asaba is o ccasione d by influx of people from neighbouring states. With better town planning and visionary leadership, this growth in population can be turned into financial prosperity that benefits all. T h e s u m o f N 3 b ha s been proposed for the activities of the Delta State Capital Territory Development Agency in the 2018 fiscal year.

Editorial coordinator’s corner:

Understanding Delta’s 2018 fiscal direction:

Sectoral Highlights Contd… IGNATIUS CHUKWU

ov Ifeanyi Okowa explained allocations in more sectors, starting with Health. Contributor y Health Scheme. The Delta State Health Insurance Scheme has kicked off and its cardinal objective is to give Del-

tans access to quality and affordable healthcare no matter their socio-economic status. The sum of N1.2bn is provided for the Commission’s activities during the 2018 fiscal year. Environment and Urban Renewal Environmental sustainability is important to our State as it is to the national and global communities. In

managing the environment better we must recognise and respond adequately to the varying challenges in different parts of the State. This administration has embarked on urban re newal in key towns and cities across the state. The programme involves rehabilitation, reconstruction, and construction of new roads, clearing of drains, environmental sanitation,

public water supply, and beautification in the form of leisure parks and gardens. Accordingly, the sum of N2.2billion is proposed for the Ministries of Environment and Urban Renewal in the proposed 2018 capital budget. Delta State Capital Territor y Development Agency We are committed to

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32 BUSINESS DAY NEWS

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Cholera vaccine drive underway in Nigeria, others in fear of new outbreak ANTHONIA OBOKOH

he World Health Organisation (WHO) has begun the largest cholera vaccine drive in history in Nigeria and four other African countries aimed at reining in a widespread of outbreaks across the continent. According to WHO, the campaign in Nigeria where more than 1,700 cases have been reported, aims to provide 600,000 people with two vaccine doses each making it 1.2 million doses. “Three distinct cholera outbreaks have been declared in Northeast Nigeria in 2018 so far, with 2,060 cases and 30 deaths have been reported in Bauchi, Borno and Yobe states. The government of Nigeria has requested 1.4 million doses of vaccines,” WHO reveals “More than 2 million people will receive the oral cholera vaccine as part of five major campaigns in Malawi, Nigeria, South Sudan, Uganda and Zambia, as thecampaignswouldbecompleted by mid-June,” the WHO says. Inthefirstfourmonthsof2018, over15milliondoseshavealready beenapprovedforuseworldwide. The burden of cholera remainshighinmanyAfricancountries. As of May 7, many countries are facing cholera outbreaks, with at least 12 areas or countries reporting active cholera transmission in sub-Saharan Africa. “Oral cholera vaccines are a key weapon in our fight against cholera,” Tedros Adhanom Ghebreyesus, WHO director-general, said. “But there are many other things we need to do to keep people safe. WHO and our partners are saving lives every day by improving access to clean water and sanitation, establishing treatment centres, delivering supplies,

distributing public health guidance, training health workers, and working with communities on prevention.” Faeces in sewage contaminating water or food spread the disease, and it can kill because patients quickly lose fluids through vomitinganddiarrhoea.Reported early it can be treated with oral rehydration salts. The ongoing campaigns in Africa are being implemented by the respective ministries of health supported by the WHO and partners of the Global Task Force on Cholera Control (GTFCC), and mostly in reaction to recent cholera outbreaks. Theagencyfurtherrevealsthat the campaign in Malawi, where more than 900 people have been infected, aims to provide vaccine protection for 500,000 people. Some 360,000 doses of the vaccine have meanwhile been shipped to Uganda, where the Kyangwali camp housing Congolese refugees is facing a cholera outbreak that has killed dozens and left more than 900 in hospital. In this campaign, only one dose is being provided per person to increase the spread. The countryisalsoplanningtovaccinate1.7 million more people in coming months. Another 113,800 doses have also been shipped to South Sudan as a prevention measure ahead of thewar-torncountry’srainyseason. And 667,100 doses are being delivered to Zambia as part of a second round of vaccination after a major outbreak infected more than 5,700 people and killed more than 100. Recent developments in the use of OCVs show that the strong mobilisation of countries and partners can effectively tackle the disease when tools for prevention and control are readily available.

Globacom clinches Headies’ Power Brand Support Award

lobacom, indigenous telecoms firm, received laurels for its years of support for Nigeria’s entertainment industry as it clinched the Power Brand Support Award at The Headies Awards, African replica of the American Grammy Awards. Winners at The Headies Awards emerged through votes cast by music industry experts including label executives, artiste managers, on-air personalities, producers, and event agencies. Results for the 12-year-old awards ceremony were collated and audited by Alexander Forbes. The ceremony was held at the Eko Hotel Convention Centre, Lagos, in recognition of the nation’s outstanding entertainment figures, who, through dint of hard work, have carved a niche to aid the growth of Nigeria’s entertainment industry. The organisers explained that Globacom was deemed worthy of the award for its “relentless and unapologetic support for entertainment, as well as in leveraging on the music and entertainment industry to strike a mutually beneficial relationship through sponsorship, endorsement, VAS, tours,

concerts, event partnerships, patronage and many other creative ways of opening the ‘eyes’ of many other corporate companies to join the party.” Senior manager, events and sponsorship, Globacom, Sola Mogaji, said the award was a worthy recognition for the company on the strength of its immense contributions to Nigeria’s entertainment industry and will encourage the company to continue to do more to support the abundant talents across the country. Mogaji further quipped: “this award is a great testimonial to our modest contributions to the growth of the nation’s entertainment industry and we are delighted that Nigerians who voted Globacom for this award are appreciative of our efforts at promoting, projecting and developing the music industry and entertainment generally in Nigeria”. Globacom has left its imprints on the entertainment industry in Nigeria through corporate endorsements for entertainment practitioners across the different genres of creativity providing formidable platforms for artistes and other entertainers to ply their trades.

L-R: Victor Fadeke, MD, TellCo Europe Nigeria; Rudolph Fielder, CEO, Europe TellCO; David Collett, group chairman, Catch Energy, and Wale Omole, chairman, TellCo Europe Nigeria, at the world press conference preceding official launch of TellCo Europe Nigeria and inauguration of off-grid solar power solutions for MSMEs in Nigeria held in Lagos yesterday . Pic by Pius Okeosisi

Budget likely to be passed next week - Saraki … reports IGP, NASS invasion, Melaye’s incarceration to Buhari ONYINYE NWACHUKWU, Abuja

he long-awaited 2018 federal budget will be laid within the week and possibly passed early next week, Senate president, Bukola Sarakisaidafterameetingbetween President Muhammadu Buhari and the leadership of the National Assembly on Monday. Issues also discussed at the meeting held at the instance of President Buhari centred on the non-appearance of the Inspector General of Police (IGP), Ibrahim Idris, before the parliament, the ill treatment being meted to Senator Dino Melaye, as well as the invasionofNationalAssemblybythugs. Emerging from the meeting held at the Presidential Villa in Abuja, SarakiandspeakerofHouseof Representatives, Yakubu Dogara, told State House correspondents that they discussed key issues of importance to both arms of government. “Hopefully, it (the budget) shouldbelaidthisweek.Ifitcanbe laidthisweekthenitcanbepassed early next week but we are hoping itwillbelaidthisweek,”Sarakisaid. Saraki and Dogara arrived Aso RockbarelytwohoursafterBuhari arrived Abuja from his home state

of Katsina, where he had participated in the ward congress of the All Progressives Congress (APC) on Saturday. Saraki said the President invited them to discuss his recent visit to the USA, the passage of the 2018 Budget, and the invasion of the National Assembly by thugs, but also used the opportunity to report the non-appearance of the IGP, despite repeated invitations. “We came on the invitation of Mr. President, he wanted to brief us on his trip to the United States andalsotheissueofthebudget.We alsotalkedontheissueofconcerns to us, the invasion of the National Assembly,whichheshowedgreat concern and said action will be taken to investigate that,” Saraki said, as he also appealed that the President should advise officers of the executive arm to operate within the ambit of the law in their actions. On what was the President’s response on invasion, Saraki said, “Of course, he sees it as an embarrassment to the country and that therewillbeaproperinvestigation because is something that is not just about the National Assembly, it is about the country.” Saraki also spoke on their efforts to improve the strain relationship between the executive

and the legislature. “You see, we are here today, it was the initiative of Mr. President to brief us on his visit to America and to engage on discussions and Ithinkthatisagoodsign.Weinthe National Assembly have always been ready to give all our support to the executive and we will continue to work along those lines. “As I said, the presidential system that we operate, we sometimes have the responsibility to check the excesses of the executive, so there will always be times we will disagree but by and large, wewillalwaysworkfortheinterest of Nigerians and always keep on moving on.” The Senate president speaking on the non-appearance of the IGP before the parliament said the National Assembly was worried about the matter. “Just talking about the issue of the police, we also raised the issue of the nonappearance of the IG at the senate and felt that they must continue to ensure that he continues to apply obedience to the issue of constituted authority. “We are of great concern that this is the first time this is happening and that this matter needs to be addressed considering the importance of the powers of the constitutionthatgivesinvestigative

powers, also gives to us and that there is need for police to accept thattheytooareunderconstitution andtheymustobeythat.Weraised that concern.” Dogara, who also addressed journalists, speaking on whether Dino Melaye was discussed at the meeting, he said, “On the issue of Senator Dino, of course anything that happens to one of our members or any member of the National Assembly is of concern to us. And there is no way we can have this kind of meeting without raising that. “This is a civilian administration, it is democracy and it is imperativeandveryimportantthatall institutions of democracy operate within the ambit of the rule of law. “There is nowhere, I have said it before that police will behave in a democracy like a clan of tribesmen, like an upgraded barbarians sort of. So there is need for us to act with civility. We are not saying that anybody should be protected and defended. “Onceyouhavecommittedan offense,ourlawsaidyoushouldanswer to it but you just have to utilise the provision of our constitution, the rule of law and that this administrationofPresidentMuhammaduBuharihasoveremphasised in order to bring people to book.

Edo appeals to donor agencies to sustain support for development

… assures Health Insurance Scheme will boost human capital

overnor Godwin Obaseki of Edo State has called on donor agencies for continued support for the state’s development initiatives, assuring that the government is committed to ensuring high impact of donors’ assistance for all stakeholders. The governor said this at the First Quarterly Review of Donor Agencies’ projects in the state held at the Banquet Hall, Government House in Benin City, the state capital. Obaseki, who was represented by the Secretary to the State Government, Osarodion Ogie, said in the light of Nigeria’s transition from low- to

middle-income status, the country risked losing access to certain funding for development. He said this called for more creative approaches to addressing developmental challenges, especially in healthcare and education, noting, “ The state government is adopting the Edo State Health Insurance Scheme to ensure that accessible and affordable healthcare does not elude her people.” According to Obaseki, “Edo State is not sleeping on its oars in the face of such dire situation. Hence, we are adopting a special

Edo State Health Insurance Scheme. “As donor supp or t is shrinking, we must put on our thinking caps to begin to look at other sources of funds to assist us with our developmental projects. It is on this note that we request our donor partners to keep granting Edo State the understanding it truly deserves because of our unalloyed commitment of ensuring that every of your effort crystalises into high-yielding gains for all stakeholders.” He said the meeting was also to acquaint local government executives with the different donor funded projects

in their domain so that they do not only have inventory of the projects, but also to ensure monitoring and maintenance. In her remarks, commissioner for budget, Maryam Abubakar, said the state government organised the meeting to review performance and ascertain intervention and impact of donor agencies’ projects. She said the state government places emphasis on the deepening of development by donor agencies, especially in line with her developmental plan, captured in thematic areas in the state’s Strategic Plan 2010-2020.

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34 BUSINESS DAY NEWS UBA partners Mastercard to revolutionise... Continued from page 1

revolutionary solution to one of the critical challenges being faced by small and medium scale enterprises (SMEs) and micro small businesses in Nigeria and across Africa, with the introduction of UBA MasterPass QR Bot, which will ensure faster and easier payment for goods and services provided by these important economic groups. MasterPass QR Bot is part of UBA’s efforts targeted at supporting SMEs, which remain a critical catalyst for the overall development of the continent’s economies. It is also in line with the bank’s vision to create a sustainable and all-inclusive solution to the digital needs of businesses and individuals on the African continent. Specifically, this revolutionary solution developed by MasterCard International in partnership with Facebook will also enable small businesses in Nigeria and across Africa to receive digital payments from their customers through scanning, using their Facebook account and, Master Pass ‘Quick Response’ (QR). More importantly, with the UBA’s MasterPass QR, small and medium scale enterprises (MSMEs) will enjoy zero cost of enrollment, as they do not have to pay to enroll, while transaction costs will remain at par with existing charges used at PoS. Apart from assuring the free-

dom to shop across devices and channels, UBA’s MasterPass QR will revolutionise payment by democratizing the payment process, thereby eliminating a key challenge that merchants currently face, which is payment for goods and services beyond their current location. UBA Masterpass QR enables merchants, small and informal micro merchants, large corporates and governments pay and receive payments for goods and services using mobile phones. It also allows payment collection by SMEs through Facebook Messenger, delivering unified and instant selfservice across a range of interconnected payment solutions. Throwing more light on this priceless solution, UBA’s Group Executive, Digital and Consumer Banking, Anant Rao, said: “Our customers are at the heart of our business, that’s why we keep going the extra mile to satisfy them. As we very well know Micro, Small and Medium Enterprises (MSMEs) contribute significantly to the economy but remain heavily dependent on cash to run their business; however, consumers are demanding safer and more convenient ways to pay. The innovative new platform enables micro, small and medium enterprises (MSMEs) in Nigeria receive digital payments from millions of customers by simply scanning.” He noted that, access to mobile technology presents an opportunity to meet this demand, and the

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new UBA Masterpass QR Merchant App is set to change the payment landscape to the benefit of micro merchants across the country. Rao further explained that, Banking is going conversational and UBA in partnership with Facebook is at the forefront of driving this innovation globally. “It is 100 percent self-service and generation of the QR is immediate. Acceptance of payments can begin immediately the QR is generated, it is making banking simple.” The development follows the commitment made by UBA to introduce safer and more convenient ways to pay for goods and services in Nigeria and across the African continent. “As a group, we are committed to driving financial inclusion and empowering businesses across Africa. Our partnership with Mastercard enables us to deploy safe digital solutions for customers, and the UBA Masterpass QR Merchant App is just such a solution,” said Rao. Rao, confirmed that UBA will be working with other Mastercard partners that are experts in their respective fields thereby further supporting the local industry. “By using Masterpass, our customers can know with confidence that they are paying with trusted technology, whether they are a small business buying equipment at an office supply store or a family of four dining at their favourite neighbourhood restaurant.

•Continues online at www.businessdayonline.com

Aigboje Aig-Imoukhuede (r), immediate past president, Nigerian Stock Exchange (NSE), and Olasubomi Balogun, founder, FCMB Bank, at the official commissioning of Chartered Institute of Stock Brokers House, Ikoyi, Lagos,

APMT to develop cargo terminals along GE rail... Continued from page 1

pected to last for 15 months after which the substantive concession continues,” said Fischer. According to him, the consortium led by GE comprises of SinoHydro, a leading infrastructure construction services corporation; Transnet, a leader in transportation and logistics infrastructure management and APM Terminals, a global port, terminal and intermodal inland services provider. The move to concession the near-dead existing narrow gauge lines of the Nigerian Railways, will reduce the cost of transporting cargo and finished products as well as the cost of production for industries that rely on import for their raw materials, importers and manufacturers, say. They further say that if actualised, the move will become vital

in the decongestion of Apapa port, facilitate cargo movement and distribution in and out of the ports and ease doing business at the ports. Frank Jacobs, president of Manufacturers Association of Nigeria (MAN), who said that manufacturers always experience hardship moving their finished products from the factories to the seaports, and imported raw materials from the ports to factories, affirmed that the any move by government or private investors to improve the transportation system in Nigeria is a welcome development. “Concession of the rail line to private investors will have tremendous economic benefits to not only manufacturers but the entire economy at large. It will help to cut down cost. Effective management of the rail will have cost implications because sometimes it takes

our members four weeks to transport export products to Apapa. But if this time is reduced, transport and production cost will be reduced as well,” Jacobs explained. Jonathan Nicole, president of Shippers Association of Lagos State, stated in a telephone interview that with GE and SinoHydro being part of the consortium, Nigeria will move three steps up on the ladder of reviving its rail transport, adding that the successful take-off of the concession will transform movement of cargo in and out of the ports. “Modernisation is the birthright of Nigerian seaports and whatever brings development and modern technology is welcome by shippers because moving cargo with ease has been our dream judging from all that shippers have been suffering since the inception of Apapa gridlock,” Nicole said.

•Continues online at www.businessdayonline.com

Tuesday 08 May 2018

Letter from the publisher Continued from page 1

before others see them. Today, BusinessDay published the first of the fruits of the groundbreaking content generation partnerships with some of Nigeria’s brightest subject matter experts, all of them acclaimed economists. Through these arrangements, BusinessDay will produce weekly, monthly and quarterly insights into the national and sub-regional economies as well as key economic sectors and industries. BusinessDay is now able to focus regularly on themes like the middle class, the millennial economy, how the economies of each of the 36 states are performing. We will now be offering you impactful snapshots of the spending pattern of Nigerian households. What we have published today is written by a team at Kainosedge led by the leading economist, Dr Doyin Salami, an associate professor at the Lagos Business School. The special report published today provides penetrating grasp of developments and trends in the economy and policy as well as their underlying drivers and what they mean for businesses. Going forward, Dr. Salami and his team will offer our readers insights into the expected direction of key macroeconomic parameters and outlook quarterly. Next week Tuesday, we will publish another well researched special report titled, “Nigeria’s Broken Middle-class”,written by Dr Ogho Okiti, economist and researcher who has served at the UK’s office of national statistics, ONS. Imminently, they will be joined by Dr. Ayo Teriba, arguably the leading authority on the fiscal wellbeing of the subnationals in Nigeria. Weekly, his insightful articles in BusinessDay will focus on the sectoral diversity of the states and the six geo-political zones along with their fiscal sustainability, human capital status and their physical capital, including endowments like farms, factories, cities and infrastructure and the opportunities they present. These special reports are a mere teaser of what you can expect from BusinessDay. Our enlarged research and Intelligence unit, BRIU, is migrating into a full research and data analytics company with the primary purpose of serving you better. This year alone, BRIU will publish up to 20 reports including the Nigerian Banking Sector Report, the Fund Managers Transparency Report, the Future of Work in Nigeria Report, the Nigerian Technology Industry Report, and the Nigerian SME Financing Report. These are in addition to insightful reports already published such as the Top 100 Companies in Nigeria report, Banks Corporate Governance Report, Nigerian Vegetable oil Exports Report, etc. We are also working on deploying the latest technology applications to ensure that our well-curated content is distributed and delivered to your phones and devices in a

seamless manner where ever in the world you are waking up in. Shortly, we will be introducing a metered paywall and with this readers will be able to view five (5) articles each month at no charge. After eight articles, we will ask you to become a paid digital subscriber with unrestricted access to our acclaimed content which also includes articles from the Financial Times and The Economist. A visitor to our website can now be able to engage in a live chat with our people to resolve whatever issues they may have. You can also let us know what more we can do to make your experience purposeful. Our paid digital subscription options are well priced. Here are three paid digital subscription options available to you: Premium Digital subscription at N1,500 a month gives you a 24 hours full digital access to all our platforms including our tablet and mobile apps where you will find in-depth analysis, insights and explainers including informed commentary by our leading columnists and writers from both the Financial Times and The Economist. We will also be offering you as much as a 75% discount on all our research reports and briefs, a 20% discount on all our paid delegate conferences and events. Standard Digital subscription at N1,200 a month, offers you same as above but with reduced discounts for our research reports and paid delegates conferences. Basic Digital subscription at N835 a month grants you access to the digital edition of our daily newspaper, delivered to you first thing every morning. While we will continue to make changes at BusinessDay, driven by the changing taste of our audience, our commitment shall ever remain the same – to provide you unrivalled chronicle of the Nigerian economy and its underlying trends in all their ramifications, round the clock. We will stay within the time-tested virtues of accuracy and fairness - the only path to objective and data-based journalism that you have demanded from us. Ours is a mission - to deliver journalism that impacts; publish news that holds the powerful accountable, alongside financial intelligence that is actionable, always. As BusinessDay turns 17, we begin a new five-year journey we call Project 2023. BusinessDay is unyielding to the forces ranged against the traditional press. In our contrarian approach, we remain focused and at a time others are shrinking, we are setting out more ways to satisfy our readers. We are making more investment in our people and processes that ensures that our traditional newspaper is getting even bigger and better. In the meantime, we invite you to join us on this exciting expedition and do send in your feedback. Sincerely yours Frank Aigbogun

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BUSINESS DAY

NEWS FG spent $36.3bn on fuel importation in 5 years – CBN

entral Bank of Nigeria (CBN) on Monday said Nigeria spent $36.3 billion on the importation of petroleum products between 2013 and 2017. The apex bank made the disclosure at a public hearing organised by House of Representatives’ Ad hoc Committee investigating the state of the nation’s refineries, their turn-around maintenance to date and regular/modular licensed refineries. Ganiyu Amao, director of research, CBN, who represented the bank, said the fuel importation figure was part of $119.41 billion the Federal Government spent on importation of commodities during the period. Amao said that efforts by the bank to intervene in foreign exchange market were usually curtailed by excessive outflow of foreign exchange. According to Amao, the trend had exerted undue pressure on the nation’s external reserve and induced depreciation of the naira. “Data from CBN shows that from 2013 to 2017, total foreign exchange commit-

ted to imports in the country stood at 119.41 billion dollars, while total foreign exchange committed to imports in oil sector stood at 36.37 billion dollars. “This represents 13.5 percent of all imports made by the country. “It greatly exerts serious pressure on our external reserve and depreciates the value of our local currency,” he said. He also disclosed that domestic consumption of fuel rose from 4.5 million metric tonnes to 23.9 million metric tonnes in 2013 and dropped to 2.6 million metric tons in 2016. He said that the CBN favoured a policy that compelled International Oil Companies (IOCs) to refine at least half of the crude that they produced for domestic consumption. Earlier, the committee had directed the Nigerian National Petroleum Corporation (NNPC) to provide relevant information on the turn-around maintenance of refineries in the country. Chairman of the Committee, Rep. Datti Muhammad (Kaduna-APC), expressed dismay that some

stakeholders attempted to frustrate the investigation by refusing to avail the committee of information needed to aid the probe. He said, “only a few organisations and individuals have complied with the committee’s request for documents and memoranda as many are bent on frustrating the investigation. “The committee derives its authority to conduct this probe from the resolution referred to it in line with the provisions of the Constitution. “And, this committee will not hesitate to evoke relevant provisions of our laws with a view to obtaining compliance from parties required to make inputs and providing information,’’ Muhammed said. In his submission, Chief Operating Officer, NNPC, Mr Anibor Kragha, said that instead of turn-around maintenance, the refineries required comprehensive rehabilitation. According to him, while the turn-around maintenance is supposed to take place every two years, many of the refineries have seen irregular maintenance.

Original builders of Warri, Port Harcourt refineries not involved in TAM since inception - report ... proposes $1.4bn, $2.2bn on current TAM KEHINDE AKINTOLA, Abuja

acts emerged on Monday that the two companies involved in the construction of Warri and Port Harcourt refineries were at no time involved in the Turn Around Maintenance (TAM) since they were handed over to Nigerian National Petroleum Corporation (NNPC), BusinessDay reliably gathers. The two companies are: JGC Nigeria, was the original builder of the new Port Harcourt Refinery completed in 1989, while Warri Refinery was constructed by Snamprogetti, completed sometime in 1976. In its documents, however, the NNPC, which denied knowledge about the alleged $20 billion spent on TAM of the refineries in the motion adopted by the House of Representatives, disclosed that the sum of $1.873 billion was spent on construction of the four refineries between 1965 and 1989. According to the Corporation, based on the estimate submitted by reputable local and international consultants for the planned comprehensive rehabilitation of all the four refineries, between $1.4 billion and $2.2 billion will be spent. It however stressed: “The award values are not known yet, as negotiations are still ongoing.

It is important to mention here that refining investment all over the world involved huge costs.” While stressing that urgency to rehabilitate the refineries in order to restore domestic refining capacity cannot be overemphasised, the Corporation in the document further observed that Nigeria cannot afford to spend “millions of US dollars to import petroleum products, which should instead be invested in-country to address the high levels of unemployment and poverty. “Published figures show that Nigeria spent N2.58 trillion in 2016 to import petroleum products, which is equivalent of about 43 percent of the federal budget of N6 trillion of the same year. “Immediate restoration of the refineries would address head-on, the problems identified in the attached House Votes and Proceedings dated 21st November, 2017 to ‘reduce huge capital flight to fuel importation, meet local demands and possible export’ as well as reduce the ‘unacceptable high level of poverty in the country which stands at 69%, mainly due to the unsustainable levels of general and youth unemployment, which stands at 24% and 45%, respectively,” Anibor Kragha, NNPC’s chief operating officer, refineries and petro-

chemical, said in a letter seen by BusinessDay. According to the reports obtained by BusinessDay at the ongoing investigative public hearing on the ‘status of the nation’s four refineries, the TAM to date and regular modular licensed refineries,’ held at the instance of Ad-hoc Committee chaired by Mohammed Datti, the new NNPC management has contacted Saipem, which acquired Snamprogetti (builder of Warri refinery) on the rehabilitation of Warri and Kaduna refineries. The Ad-hoc Committee was also in receipt of a page letter dated 23rd March, 2018 from JGC Nigeria, the original builder of the new Port Harcourt Refinery which was completed in 1989, denied involvement in the TAM conducted so far by Nigerian National Petroleum Corporation (NNPC) since inception. Hirold Suzuki, JGC managing director, noted: “With respect to the current NNPC management efforts to carry out Port Harcourt refinery rehabilitation works, JGC corporation had been invited for initial phase of the engagement related to site survey to evaluate the current conditions of the facilities and come up with the possible solution to rehabilitate the refinery as original builder.

Nigeria’s parliament probes over N2.5bn alleged fraud in CRFFN ... accuses Registrar of diverting N35m KEHINDE AKINTOLA, Abuja

ouse of Representatives hasconcludedarrangement for the probe of over N2.5 billion alleged fraud perpetuated by Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) in breachoftheprovisionsofFiscal Responsibility Act. RecallthattheHousehaslast weekmandatedtheCommittee on Ports, Harbours and Waterways chaired by Patrick Asadu to commence investigation into serial allegations of financial improprietyagainsttheregistrar. Speaking with journalists in Abuja at the weekend, Prestige Ossy, who sponsored the motion, said the motion was promptedbythemind-boggling allegations against the Registrar. Explaining why the House mandated the committee to investigateCRFFN,Prestigesaid allegations against the Registrar were mind-boggling. According Ossy, who is a member of the committee on customs and excise, “5 percent of the sum of N836,458,385.28, which was approved for the construction of 61 outpost offices was paid to the beneficiary companies as VAT instead of Federal Inland Revenue Service (FIRS). “33 contracts were awarded undertheguiseofconstruction/ provision of buildings’ at the sumofN418,113,198.56without due process and to some cities that have no relevance to port or borderoperations,and5percent of this sum was paid as VAT to

the beneficiary companies. “The House is aware of the fact that apart from the aforementionedfinancialinfractions, the registrar/chief execution officer of the CRFFN was also alleged to be involved in several other financial scandals which include unilateral approval of an undisclosed sum for the purchase of two Toyota Land Cruisers and 50 Toyota Hilux vans but purchased only one Land cruiser and ten Hilux vans, and diverted the rest of the funds. “The registrar diverted the sum of N35 million meant for the opening of Micro Finance Bank for Freight Forwarders, rented his own personal house as office of CRFFN in Abuja for an undisclosed sum.” He expressed worry that the way and manner these sums were expended shows financial recklessness and manifestation of incompetence on the part of the registrar. Speaking further, Prestige alleged that the registrar clandestinely recruited over 100 staff without due process, and promoted some unqualified staff as directors and unilaterally sacked or suspended some and recruited additional 21 other staff without due process. He noted that the sum of N3,942,709,857 was approved for both capital and recurrent expenditures for CRFFN in the 2017 Appropriation Act 2017; a breakdown of this sum shows that the sum of N3.650 billion was for capital expenditure, while the sum of N292,709,857 was for recurrent expenditure.

L-R: Apochi Suleiman, commander, Joint Task Force, Operation Delta Safe; Godwin Obaseki, Edo State governor; Robert Okubo, senior special assistant to the governor on waterways and surveillance, and Johnson Kokumo, state commissioner of police, during the governor’s tour of the Gelegele waterway in Ovia North East Local Government Area, Edo State.

FG saves N200bn through whistleblower initiative – Buhari

re s i d e nt Mu ha m madu Buhari said on Monday that the Federal Government had saved N200 billion through the elimination of ghost workers by the action of the Presidential Initiative on Continuous Audit (PICA), the monitoring organ of the whistleblower policy. Buhari, represented by Vice President Yemi Osinbajo, announced this in a keynote address at the Open Government Partnership (OGP) Week 2018 in Abuja. In his address titled “The Impact of Open Govern-

ment Partnership to Nigeria’s Anti-Corruption Efforts,’’ Buhari stated that government had recovered about N7.8 billion, $378 million and £27,800 through the Whistleblower’s Policy launched in December 2016. He explained that PICA was established to clean up the payroll and pension system across all the ministries, departments and agencies. According to him, the administration has included recovered assets in the country’s annual budget since 2017 and invested

them in the development of infrastructure and in the Social Investment Programme (SIP). The president added that an executive bill had been sent to the National Assembly for the purpose of enacting a more comprehensive legislation on proceeds of crime. Buhari underscored the administration’s utilisation of technology in a way that it had not been done before to underpin his commitment to transparent and accountable governance. “Nigeria’s experience has shown that technology

and innovation tools as well as social media platforms are changing the ways in which citizens engage with government, and empowering citizens and non-state actors to take a more active role in holding government to account,” he said. He stated that the administration gave bite to the Treasury Single Account (TSA), which it inherited from the past administration as a paper work only and through the creation of the Presidential Advisory Committee against Corruption (PACAC), among others.

A1 BUSINESS DAY NEWS AfDB to support Nigeria, others to boost development in Africa

frican Development Bank (AfDB) plans to support Nigeria, Senegal, Ethiopia, Morocco and Algeria with industrial policies to boost development in Africa. Alhassane Haidara, manager, Industrial Development, disclosed this in an interview with the News Agency of Nigeria in Abidjan. According to Haidara, the bank in partnership with UNIDO will help the countries to develop policies that will drive industrial development in various sectors of the economy. This, he said, would go a long way to boost economic development and increase Foreign Direct investment, saying the bank would also through the policies support capital markets by boosting the market liquidity. He added that the policies wouldsupportthegrowthofsmall businesses, adding that industrial clusters would be established in all the five regions in Africa. “This project is going to be in a pilot scheme. If we are successful with the five countries, we will replicate in many other countries in the region,’’ he said Thethemeforthebank’s2018 annualmeetingis“Industrialising Africa.” The annual meeting will beheldinBusan,Korea,fromMay 21 to 25. The theme is one of the high fives priority projects of the bank that majorly focuses on how best to transform Africa.

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Tuesday 08 May 2018

Weak maritime, logistic infrastructure hike Toshiba moves to develop hydropower, geothermal systems in Africa Nigeria, Africa’s transportation costs BEN EGUZOZIE, with agency report

igeria’s inability to upgrade its maritime and logistic infrastructure has been described as particularly harmful to its transportation and transaction costs. With its 823 kilometres coastal territory, and 65 percent of total sea-borne traffic in volume and value in the West and Central African shipment, the inability of Nigeria to explore its ocean blue economy has ranked it among the countries with the highest transportation and transaction costs in the world. In the last year, out of Africa’s 6 percent handling of global seaborne traffic, 50 percent were taken by Egypt and South Africa, leaving Nigeria far behind. According to Africa Shipowners Summit, marine transport accounted for 92 percent of Africa’s external trade in the last year, and 92 percent of the continent’s imports were seaborne. Meanwhile, Nigeria, with the largest market in Africa and the biggest economy in sub-Saharan Africa, accounts for over 65 percent of total

sea-borne traffic in West and Central Africa. Nigeria’s maritime and port activities are bedevilled by infrastructure decay or outright lack them, low capacity utilisation, corruption, insecurity and other inefficiencies. There is no stability or continuity of policies, whereas in other developed counties, the economy, the currency and other things are planned, which attract investors to plan their businesses. Industry stakeholders have projected that the maritime sector has the potential of injecting over N7 trillion per annum into the Nigerian economy. Africa Export-Import Bank (Afrexinbank) says Africa must urgently upgrade its maritime and logistic infrastructure in order to successfully promote the continent’s trade, especially intra-African trade. Kanayo Awani, managing director of Afrexinbank’s Intra-African Trade Initiative, said at the just-concluded Africa Shipowners Summit in Seychelles that, Africa’s weak maritime and logistic infrastructure were being particularly harmful to Af-

rican trade; noting that the continent currently had the world’s highest transportation and transaction costs. Awani pointed out that only a few of the African countries with access to the sea had established the right infrastructure for marine transport, even though marine transport accounted for 92 percent of Africa’s external trade and 92 percent of the continent’s imports were seaborne. She said that Africa currently handled only six per cent of global seaborne traffic, out of which 50 percent of the volume was handled by Egypt and South Africa. Lamenting that most African countries did not have national vessels, Awani said that it was estimated that Kenya lost about $3 billion annually in money paid to foreign shipping lines. She recommended that there should be incentives to encourage African businesses to support the development of local shipping lines and called for investment in national/domestic fleet through gradual and staggered vessel acquisition, terminal management, freight forwarding and logistics.

MIKE OCHONMA

n a strategic move to boost trade relations across continents and close the yearning energy gap in Africa, Toshiba Energy Systems and Solutions of Japan recently signed four memoranda of understanding (MoUs) to co-operate with African countries to develop hydropower and geothermal energy systems. This was the highpoint of events at the just concluded Japan-Africa Public-Private Economic Forum in Sandton, South Africa. Iwasuke Shimada, managing director, Toshiba Africa, says the MoUs are aimed at forming partnerships with companies that have a deep knowledge of infrastructure building to accelerate growth and progress in Africa. “Toshiba will continue to contribute to stable electricity supply and the realisation of a low-carbon economy across the globe,” Shimada says. Additionally, Toshiba provides opportunities for local partners or subsidiary employees to complete masters and doctorate degrees at Japanese universities, specifically on geothermal sciences, including chemical, electrical, geologi-

cal, mechanical and electronic engineering, Toyoaki Fujita, Toshiba business development executive, says. “This role of local capacity building is critical and has been demonstrated as being effective in Kenya. This is a key role that we play to develop and sustain the African energy market,” he explains. The company has also developed hydropower plants in Africa and hydro-storage systems to stabilise renewable energy generation. Additionally, Toshiba proposes its ultra-supercritical steam turbine systems to improve the efficiency of thermal power stations, which predominate in Africa, to increase their efficiency by 10 percent to 13 percent. These turbines can be retrofitted and help to improve the efficiency of existing plants, but operate at pressures of greater than 24 MPa and temperatures higher than 593 °C. Similarly, the company aims to help reduce no-load losses, estimated between 8% and 18% across Africa, through the use of its amorphous distribution transformers, which has an amorphous metal core and requires less maintenance than most other transformers.

Active mobile lines in Nigeria hit 149m in March - NCC … as internet users decrease to 100.6m MICHEAL ANI

L-R: Osarieme Ezekiel, managing partner, Oakwell Partners; Anthony Gross, guest speaker, and Justice Opeyemi Oke, chief judge of Lagos State and special guest of honour at the Oakwell annual mediation conference in Lagos.

Over 90 power projects online to boost supply through grid capacity upgrade OLUSOLA BELLO

f the over 90 power projects slated to be commission this year are fully executed and commissioned, the power sector will receive a major boost while economic moribund activities would be reactivated. The projects, which are transmission related, are scattered across the country and are being commissioned one after the other by the government. The Federal Government commissioned one of such projects, new 2x60mva, 132/33kv on Monday. It is sited at the transmission sub station in Odogunyan in Ikorodu area of Lagos.

Babatunde Fashola, minister of power, works and housing, who did the commissioning, said Transmission Company of Nigeria (TCN) had over 90 ongoing projects to be commissioned in 2018 to expand grid capacity. The projects, according to Fashola, are expected to help in stabilising and improving the capacities of transmission lines, and also boosting distribution. According to the minister, we have been commissioning projects from one state to other, and still we have not finished the projects in our hands. He said transmission sector of the value chain of power sector was one of the beneficiaries

of the present administration, saying, “I can tell you that in the course of this year, TCN has no less than 90 projects of substations, expansion of old lines and other projects in order to expand grid capacity. “TCN has been moving from state to state expanding the network by commissioning different project to improve power supply. Here in Odogunyan, substation, we have put enough capacity and redundancy to take care of Ikeja Electric customers. “The substation will improve the quality, stability and increase the power supply to communities in this area. “The present administration

is committed to the completion of all the ongoing projects because the completion of these projects will bring value into our life.” He said the present administration had increased the grid capacity from 5,000 megawatts in 2015 to over 7,000mw capacity. “So, when they asked what does change means, you should tell them that Buhari has expanded the capacity from 5,000mw to 7,000 mw, that is change. “At the moment, let me also tell you that nationwide, the Rural Electrification Agency had completed 131 rural electrification projects targeting Distribution Companies (DISCOs) programme.

umber of active mobile phone lines in Nigeria rose to 149 million in March 2018, according to data published on the website of the Nigerian Communications Commission (NCC). The figure represents a 0.6 percent increase from the 147,961,791 recorded in the preceding month (February 2018). The Code Division Multiple Access (CDMA), however, had 217,566 users in March 2018 just as in February. Furthermore, the number of fixed wired/wireless shrunk 0.6 percent in March to 136,781, as against the 137,570 recorded in February, showing a decrease of 2.082 lines. According to the report, the number of Voice over Internet Protocol (VOIP) was 85,185 in March 2018 compared with 81,498 in February, showing an increase of 3, 687. The teledensity, which records the number of telephone connections for every 100 individuals living within an area, increased to 106.64 from the 106.00 recorded in February. Further analysis of the Data showed that the number of connected mobile lines in March 2018 increased to 238,116,977 compared to 237,621,583 in February, an increase of 495,394 The Code Division Multiple Access (CDMA) for connected lines in March 2018 was 3,586,095, the same figure with February 2018. Data also showed that the number of fixed wired/ wireless for connected lines

increased from 345.195 in February to 355,485 as at March, showing an increase of 912 lines. Voice over Internet Protocol (VOIP) for connected lines in March was 542,063 while February 2 was 515, 231, showing an increase of 50,454. Meanwhile, internet users in Nigeria decreased to 100.6 million in March from 100.9 million recorded in February, the NCC has said. The NCC made this disclosure in its Monthly Internet Subscribers Data for February2018 on its website on Monday in Abuja. The data showed a decrease of 308,440 subscribers in the country. NCC said Airtel gained more internet subscribers during the month in review, while MTN, Glo and 9mobile were the big losers. The breakdown revealed that only Airtel gained the most with 401,209 new internet users, increasing its subscription in March to 25,476,319 million from 25,075,110 in February. It said MTN however lost 534,769 internet users in March, amounting to 37,428, 647 as against 37,963,416 recorded in February. It said 9mobile also lost 1,346,47 internet users in March, decreasing its subscription to 10,997,506 as against 11,132,153 recorded in February. The data showed in March that Globacom lost 40,233 internet users, decreasing its subscription to 26,693,756 from the 26,733,989 recorded in February.

A2 BUSINESS DAY NEWS

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Africa is going nowhere without insurance – Ghana President

… urges operators to reduce $8bn annual premium flight MODESTUS ANAESORONYE in Accra

residentofGhana,Nana Akufo-Addo, says Africa as a continent is not going to grow as strong economywithoutaviableinsurance industry that will provide the needed long-term funds to grow industries and agriculture. Consequently, President Akufo-Addo challenged the insurance industry in Africa to buildcapacitythatwouldenable the continent reduce annual premium flight valued at over $5 to $8 billion. Akufo-Addo said Africa had the capacity to do more than what it was presently doing, only if there could be regional and continental integration, whereriskswerepulledtogether, financed together and opportunities shared together.

Speaking at the 45th African Insurance Organisation Conference and General Assembly holding in Accra, Ghana, with the theme “Innovation, Risk Management and Future of Insurance, the Ghanaian president said: “We should think of working together, pull resources together to be able to retain a larger percentage of the risks leaving Africa to other markets in the world.” Represented by the senior minister of Ghana, Yaw OsafoMarfo, the president stated that the solution to the problem facing Africa’s growth was lack of long-term funds to develop industries and agriculture, and it was only insurance industry that held the key. Most of the institutions, particularly banks, can only provide short-terms funds, which does

not support effectively longterm investments, he said, stating that it is only insurance that can play this role. He said Africa’s low penetrationwheremost countries in the continenthadonedigitpenetration meant that the opportunity for growth was huge. “The potential of the African insurance market is bigger than the present $64 billion we are doing. It is call for action, it is call for us as continent to strategise and take advantage of the growth opportunities. “I see opportunities to create more jobs, I see opportunities to createwealth,buttoachievethis, the industry must adopt best practice in technology, adopt bestgoodcorporategovernance and good customer service and the industry will be there,” he said.

Gelegele Port: Edo strengthens ties with Police, Navy on security

do State governor, Godwin Obaseki, says the state is working with the Nigeria Police Force as well as the Nigeria Navy to ensure robust security architectureinGelegelecommunity as work progresses on the Benin River Port in the community. The governor stated this during a tour of the Gelegele waterway in Ovia North East Local Government Area of the state on Sunday. The governor was accompanied by the commander, Joint Taskforce Operation, Delta Force, Suleiman Opochi, a rear admiral, and the Edo commissioner of police, Johnson Kokumo, on the boat ride that extended to the state’s boundary with Delta State, and lasted for about two hours. Speakingwithjournalistsafter the tour, the governor said the state was planning to undertake some security initiatives in collaboration with the Navy and Police in Gelegele community, hence the trip to have first-hand knowledge of the waterway. He said the state was privi-

leged to have a Marine Police Command, which would be sited in Gelegele community, noting, “The visit to this place is also to see how much work was done by China Harbour, the company handling the project and the facilities available at the Marine Police Base.” He said a road network different from the Ekenwan route would be constructed during the execution of the Benin River Port project, to link other parts of the state and country to the area. “A road network to link other parts of the state to this environ is contained in the feasibility study of the Benin River Port project, but we have decided to upgrade the Ekenwan Road starting from the Oba Market axis,” he said. The commissioner of police, Kokumo, said the Marine Base in Gelegele community was to effectively combat crimes on the waterway, saying, “I was able to get the approval of the Inspector General of Police to have a base here to ensure there is adequate security in this environ.”

He added that the Police has established a synergy with the local vigilantes in Gelegele community to beef up security in the area. SuleimanOpochi,commander,JointTaskforceOperation,Delta Force, said protection of facilities and installation on the Niger Delta waterways was part of the taskforce’s mandates. He said the tour with the governor of the Benin River Port project was to assess the terrain, which is part of the taskforce’s surveillance duties. “What we have come here for is within the confines of our mandate to protect oil and gas installations on waterways from sea robbery and crude oil theft. We have relayed the challenges in this environ to the Edo State Government and we believe it is on top of the issue,” he said. Chairman, Gelegele Community,DennisMilton,described the governor’s visit to the facilities in the Benin River Port as laudable, noting that there are assurances that the project would be actualised.

Private sector’s off-grid investment to upscale energy demand for MSMEs KELECHI EWUZIE

ndustry experts in the electricity sector in Nigeria and Africa insist that continuous investment by private sector in off-grid innovative solutions will tackle the electricity challenges that Micro Small and Medium Enterprises (MSMEs) face, preventing them to contribute to economic development. Wale Omole, chairman, Tellco Europe Nigeria, says off-grid investment will further help Federal Government policy drive for off-grid powering systems. Omole says Nigeria presently has the biggest and most attractive off-grid opportunity in Africa, and one of the best locations in the world for minigrids and solar home systems. Speaking at a press conference in Lagos Monday to announce the unveiling of well-

tested off-grid solutions into the Nigeria market, he said the strategic solution was targeted at up-scaling the powering of MSMEs, which is the engine room of economic transformative growth development, beyond the 30 percent scenario. According to Omole, “It is important to highlight here that power is a critical component of the nation’s infrastructure, and renewable energy is an inextricable growing pathway of the future supply mix now disparagingly needed for Nigeria, without which future sustainable economic growth and development will be a mirage.” The solution will unlock a never yet seen scale of massive powering of MSMEs sector in a most efficient, affordable (pocket-friendly) and sustainable manner, with co-benefits of socio-economic and demonstrable livelihood benefits

for the climate, homes, farms, healthcare facilities, communities, businesses, he said. “That will soon impact enormous market opportunity in sub-Saharan Africa and across the continental Africa with over 600 million people in countries with smaller demand and/or less-robust economies “It is wor th know ing that the upscaling of our proposed empowering of MSMEs energy projects initiative can only be guaranteed and sustained by mobilising all available resources and actors, specifically funding from the private sector, international development partners, which explains the presence of some high level private sector individuals among the team of Tellco Europe at this unveiling ceremony as our assurances for measurable reportable and verifiable success,” he said.

Tuesday 08 May 2018

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BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Vladimir Putin starts new term with call to modernise Russia

President says Moscow will address domestic reforms while upholding global interests KATHRIN HILLE

ladimir Putin has started his next term as Russian president with an appeal to the nation to muster strength for a radical modernisation. “We need breakthroughs in all spheres of life,” Mr Putin said in a speech on Monday in the gilded Andreevsky Hall in the Kremlin after being sworn in for a six-year term. Russia had overcome trials since the collapse of the Soviet Union but what had been achieved was far from complete, Mr Putin said. “Life constantly puts us in front of new challenges, new difficult tasks, and we will still have to work hard to resolve them. There is no time to relax,” he said. In his state of the nation speech in March, Mr Putin had laid out a similar agenda for decisive structural economic reforms — a message undermined by his boasting of Russia’s military capabilities in the same speech. On Monday Mr Putin said that while Russia would continue to uphold its interests on the international stage, his priority now lay in internal development. “We must use all the possibilities we have, first of all for solving our internal, most vital development tasks, for economic and technological breakthroughs, for raising our competitiveness in those areas that decide our future,” Mr Putin said. “A new quality of life, wellbeing, security, human health — that is what is important today, that is what is at the centre of our policy.” However, many Kremlin critics and foreign observers remain sceptical that the Russian president can refrain from further conflict with western countries. Mr Putin’s inauguration ceremony was held at the Grand Kremlin Palace © AFP Mr Putin on Monday nominated his long-time associate Dmitry Medvedev to continue as prime minister. Although Mr Medvedev’s record in implementing earlier planned reforms is weak, his ap-

pointment is widely expected, with his loyalty to Mr Putin and lack of an independent following making him a safe option. Attention will now focus on any changes Mr Putin makes to his presidential administration and cabinet, especially in economic policy areas. Senior Russian officials told the FT a week ago that Mr Putin was considering appointing Alexei Kudrin, his economic adviser, to a senior position, either in his administration or in the cabinet, in charge of dialogue with the west and economic policy. Mr Putin won the March presidential election with more than 76 per cent of the vote, the highest achieved by any post-Soviet Russian leader, leading many Russian observers to say he had become a tsar-like figure. But some political analysts said the election outcome stemmed from a high-pressure mobilisation campaign and did not necessarily reflect stable, enthusiastic support. At the weekend, thousands of young Russians in dozens of cities followed the call of opposition politician Alexei Navalny and demonstrated against Mr Putin. “He is not the tsar to us!” many shouted at a rally of several thousand in central Moscow on Saturday. Mr Putin’s inauguration celebration appeared geared towards emphasising the president’s popular support. After an elaborate ceremony inside the Grand Kremlin Palace — where Mr Putin swore to serve the Russian people, safeguard rights and freedoms, and protect the country’s sovereignty — he greeted representatives of pro-Kremlin youth groups and volunteers. The young men and women could be overheard repeatedly thanking Mr Putin. Instead of being brought to the Kremlin through streets cleared of traffic, as in his three previous inaugurations, Mr Putin took a short ride in a new, Russian-made limousine from his office in the Kremlin to the Grand Kremlin Palace, where 5,000 guests waited.

Nestlé to pay $7bn for Starbucks’ products Swiss group to sell US chain’s coffee in stores alongside Nescafé and Nespresso brands RALPH ATKINS

estlé has agreed a $7.15bn deal with Starbucks to sell its coffee products outside the US brand’s cafe chain as the Swiss group ramps up its US and global expansion plans. The world’s largest food and drinks group will add Starbucks’ brand to its Nescafé and Nespresso portfolio, it announced on Monday, and will roll out their sale across markets worldwide — especially in Asia. The deal is the latest move by Mark Schneider, who took over last year as chief executive, to boost Nestlé’s sales growth and profits.

Like other big consumer goods groups, Nestlé has lost sales to smaller rivals as a result of changing consumer tastes and slow economic growth. Mr Schneider has identified coffee as a fast-growth market for the Swiss group. However, it is weak in the US coffee market, where it faces stiff competition from the empire built by JAB Holdings, the investment company of Germany’s billionaire Reimann family, which includes Keurig Green Mountain capsules. The deal “opens up another front against JAB”, said Jon Cox, consumer industry analyst at Kepler Cheuvreux in Zurich. “It gives Nestlé a Continues on page A4

Iran nuclear worries pushes crude oil to 4-year high Energy stocks climb globally as US poised to rethink waivers on sanctions STEPHEN SMITH AND EDWARD WHITE

rent crude on Monday touched its highest level since 2014 as oil prices increased on rising tension between the US and Iran. The international oil price, which has benefited from a lift in US demand and Opec supply constraints this year, rose nearly 1 per cent to $75.53 after earlier hitting a session peak of $75.89, its highest level since November 2014. The move came after Iran’s president Hassan Rouhani warned on Sunday that US president Donald Trump would be making a “historic” mistake if the US were to withdraw from its 2015 nuclear deal with Tehran. Mr Trump has threatened to abandon the deal, under which Iran shut down its nuclear activities. US sanction waivers expire on May 12. “US oil prices pushed through the $70-per-barrel mark for the first time since November 2014 amid expectations for a re-impo-

sition of sanctions on Iran,” said Action Economics analysts. US benchmark West Texas Intermediate was up 0.8 per cent on the day at $70.27 a barrel. “Although oil prices have benefited from tighter supplies, a lot of risk premium has been priced in due to Trump’s threat,” said Hussein Sayed, chief market strategist at FXTM. “However, it’s challenging to know the magnitude of reimposing sanctions on oil exports from Iran. That’s why analysts’ expectations varied widely on this front. But prices may remain elevated and even reach $80 a barrel in the short run.” Energy stocks were the beneficiaries with the sector pushing Wall Street higher in US trading as oil major Exxon Mobil and oil services group Schlumberger both climbed around 1 per cent. In Europe, the Stoxx 600 oil and gas sector was outperforming the broader European benchmark index after rising 1 per cent. Chinese oil group Cnooc had earlier climbed 3.1 per cent in Hong Kong to its highest peak since 2015 while the energy sector

added 1.6 per cent in Japan, beating the broader Topix index that made just 0.2 per cent gains. In Sydney, the S&P/ASX 200 Energy index was up 0.8 per cent. Analysts pointed to a broader potential impact on markets if continuing oil price rises feed into US inflation data and force the US Federal Reserve’s hand on rate tightening. “Market participants realise that the recent increase in the commodity’s price — and possibly more gains in light of the US versus Iran dispute on the nuclear deal — will have to take their toll on US inflation,” said Konstantinos Anthis, head of research at ADS Securities. “Higher domestic inflation would be just what the Fed needs in order to tilt towards three additional rate increases in 2018,” he added. But the oil price moves were failing to help commodity-linked currencies with both the Australian and Canadian dollars struggling to make headway against a broadly stronger greenback.

Emerging market currencies slip after worst week since 2016 Resurgent dollar and local issues have sparked an EM sell-off ADAM SAMSON

merging markets currencies faced further selling on Monday on the heels of the worst week in more than a year, with a resurgent dollar and a slew of local issues sparking jitters among investors. In early European action on Monday, the JPMorgan emerging markets currency index slipped 0.29 per cent. The Turkish lira faced the heaviest fall on Monday, sliding 0.85 per cent on the buck, with a dollar buying 4.2624 lira. South Africa’s rand was the second biggest faller, down 0.44 per cent on the greenback, while the Philippine peso, Russian rouble and Indian rupee were each off roughly 0.4 per cent. Trading in the Argentine peso, which tumbled 6.2 per cent last week and sparked a series of three rate rises from the central bank, opens at roughly 2pm London time.

EM equities Monday is a bank holiday in the UK, meaning trading desks may be more thinly staffed than is usually the case. Emerging market currencies came under “ intense selling pressures last week,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. JPMorgan’s currency gauge fell 1.7 per cent over the period, the worst fall since Donald Trump’s shock election victory sparked severe market ructions. US Treasury yields have pushed markedly higher over the past month, with a robust economy expected to prompt the Federal Reserve to increase interest rates a total of three to four times this year. In fact, the 10-year climbed from 2.73 per cent at the start of April to above 3 per cent by April 25. Higher yields take some of the polish off of the carry trade, in which investors borrow in lower-yielding countries to buy debt in higher-

yielding ones. The trade has been a boon for demand of EM currencies, according to analysts. At the same time, several EMs have also suffered from idiosyncratic issues. Argentina is facing a crisis of confidence, with investors worried that even after the central bank hiked borrowing costs 27.25 to 40 per cent just seven days it may not be sufficient to stop rapid inflation. Turkey has been burnt by similar concerns. Inflation there is running at above 10 per cent a year, more than double the central bank’s target. However, the government of Recep Tayyip Erdogan has continued injecting fiscal stimulus ahead of snap elections in June. Mr Chandler said he reckons EM currencies will “remain under pressure”. He added that investors will watch US producer and consumer price inflation data, due out on Wednesday and Thursday respectively.

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NATIONAL

Long lending boom will be a test of ‘shadow’ finance With banks on the sidelines, credit funds have swollen in size MARK VANDEVELDE

or an accessories retailer called Charming Charlie, the path to bankruptcy arguably began with a strategic blunder: just as Amazon was undermining brick-and-mortar retail, the Houston-based chain opened nearly 100 stores, each one a rainbow of cheap

trinkets and handbags. At Six Month Smiles, a maker of invisible dental braces for adults with wonky teeth, a drive to make the business more digital floundered and missed financial targets led to problems with its debt. And Southern Technical Institute, a for-profit school in Florida whose subordinated debt is now reckoned almost worthless, simply could not

catch a break. First came the Obama administration’s regulatory crackdown on corporate-owned colleges. Then, last summer, a rough hurricane season compounded the financial hit. These delinquent borrowers ran into trouble despite an unbroken streak of economic expansion that is among the longest in US history. Their struggles, documented in public filings by some

of their creditors, have become an early test for the “shadow” finance providers that are replacing traditional banks as the chief creditors to a swath of corporate America. Leveraged loans, commercial lending to US companies with credit ratings in junk territory, reached $564bn last year, topping the high water mark reached on the eve of the financial crisis, according to the International Monetary Fund.

Much of the money comes from pools of capital run by private equity firms and other asset managers. Cheerleaders say that these funds, unlike banks, can safely take risks without endangering the financial system or inflicting unnecessary pain on wayward borrowers. Still, even some of those responsible for crafting the deals worry that an insidious build-up of risk, abetted by policymakers and all but invisible while the economy is still growing, could again erupt in a downturn.

India shows neighbours the way out of tax trap

Nestlé to pay $7bn for Starbucks’ products... Continued from page A3 better position in North America, and also in roast and ground [coffee] where they don’t have any position on a global basis . . . The magic will be really using Nestlé’s global distribution and modern retailing to really leverage sales of Starbucks products.” The $7.15bn upfront cash payment was equivalent to 15 times earnings before interest, tax, depreciation and amortisation — in line with other deals in the sector, analysts said. Nestlé’s share price, which has fallen 4 per cent over the past 12 months, was up 1.7 per cent at SFr77.46 by afternoon trading in Switzerland. Starbucks’ “out-of-shop” operations — which include ground coffee, coffee beans and capsules for coffee machines for sale beyond its café chain — generate $2bn in annual revenues. Starbucks said the proceeds from Monday’s deal would be used to accelerate share buybacks and that it expected to have returned $20bn to shareholders in cash by the end of its 2020 fiscal year. A Nestlé executive said the Starbucks deal “will allow us to address a historical weakness Nestlé had in North America”. It will buttress Nestlé’s efforts to expand its Nespresso upmarket coffee capsule system in the US, following the 2014 introduction of VertuoLine machines producing the long coffees preferred by Americans. The Swiss group has also revamped its Nescafé Gold Blend instant coffee brand and last September acquired a majority stake in the hipster Blue Bottle café and roastery chain, which valued the Californian company at more than $700m. Nestlé is considering using the Blue Bottle brand to expand ready-to-drink products, which are excluded from the Starbucks deal. Under their partnership deal, which does not involve the transfer of any industrial assets, Nestlé will work with Starbucks on developing new coffee products — although the US group will retain control over its global brand management. Nestlé would pay royalties for the Starbucks brand at normal market rates, it said. The deal means Starbucks coffee capsules will in future be available for Nestlé coffee machines. However, Nestlé also hopes to use its global distribution and manufacturing facilities to sell Starbucks products in geographical markets underserved by the US group. That would include selling soluble Starbucks coffee in developing market economies, where instant coffee remains popular.

Tuesday 08 May 2018

Demonetisation drive and GST push up income tax filings to record high

KIRAN STACEY

Air France-KLM shares drop following chief’s resignation French government’s rejection of a bailout for airline adds to investor concerns DAVID KEOHANE

hares in Air France-KLM fell sharply on Monday morning following the shock resignation of its chief executive over a pay dispute with staff and the French government’s rejection of a bailout for the airline. Jean-Marc Janaillac, who heads the Franco-Dutch airline group, said on Friday he would resign after losing a vote over pay that aimed to end a series of damaging strikes. The board will now meet on May 15 to decide on a replacement plan for Mr Janaillac. The carrier, formed by Air France’s merger in 2004 with Dutch KLM, saw shares fall by as much as 13 per cent on Monday as investors digested Mr Janaillac’s resignation, the government’s stance and the strengthened position of the Air

France unions. The company had offered a staggered 7 per cent pay increase over four years, with 2 per cent in 2018 and further increases dependent on the airline’s financial performance. Unions, led by the powerful pilots’ lobby, had wanted a larger up front percentage and no conditions on further raises. Mr Janaillac is not the first Air France executive to suffer at the hands of its unions. In 2015, the company’s human resources director was stripped shirtless by an angry mob while in 2016 the carrier’s previous boss, Alexandre de Juniac, left after being worn down by constant battles with pilots. The group’s share price has halved this year as it faces increasing competition from low-cost rivals and deep-pocketed Middle Eastern airlines, as well as the prospect of a

sustained higher oil price. The strikes had already cost the airline about €300m and pushed its first-quarter results to a €118m loss despite KLM making a €60m profit. Full-year results will also be hit, said the group. The strikes are continuing this week. The French government, which owns 14.3 per cent of the company, said Air France needed to reform or its survival would be at stake. Delta and China Eastern are the next largest shareholders, with close to 9 per cent each. “If Air France does not make the necessary competitiveness efforts that will allow this national flagship to be at the same level as Lufthansa or other major global airlines, Air France will disappear,” said Bruno Le Maire, France’s finance minister, in an interview with BFMTV on Sunday.

US hedge funds drive surge in Asia investor activism Number of campaigns up almost tenfold since 2011 amid search for higher returns on risk DON WEINLAND AND

ctivist investment campaigns have surged almost tenfold in Asia since 2011 as US hedge funds seek higher returns, Japan’s corporate governance reforms begin to bite and Asia’s tycoon families slowly loosen their grip on their companies. Activists launched 106 campaigns in Asia in 2017, up from just 10 in 2011, according to data compiled by JPMorgan. Activism in Asia comprised 31 per cent of activity outside the US, up from 12 per cent six years earlier. Of the main countries surveyed, Japan was the primary hotspot for

activist campaigns, accounting for 32 per cent of Asia activity last year. The Tokyo Stock Exchange, said veterans of several high-profile campaigns, has become a focus for activist funds as companies — often notorious hoarders of cash — have responded to governance reforms initiated under Prime Minister Shinzo Abe. Under Japan’s 2015 corporate governance code, companies have faced pressure to improve transparency, sell off or buy out listed subsidiaries, and reduce the crossshareholding structures that often allow management to ignore the interests of minority investors. Foreign and domestic activists

who might previously have been dismissed as troublemakers now have an official vocabulary for holding Japanese companies to account. Campaigns undertaken during the period studied by JPMorgan have targeted titans of Japanese industry including Nintendo, Toshiba, Fujitsu, Hitachi and Sony. One of the most noticeable effects, said analysts, has been a surge in share buybacks at Japanese companies, totalling more than ¥4tn ($37bn) a year between 2015 and 2017. Most of the capital deployed to shake up company leadership and bend the will of boards has come from the US, where investors are seeking higher returns on risk.

arendra Modi’s occasionally fumbled attempts at economic reform have achieved one big success: for the first time in its postindependence history, India appears to be building a stable tax base to fund its long-neglected public services. Since India’s prime minister announced the abrupt cancellation of 86 per cent of the country’s cash in late 2016, tax officials have reported that millions of people have registered to pay tax for the first time. According to India’s latest economic survey, 10.1m people filed income tax returns for the first time between November 2016 and November 2017, compared with an average of 6.2m in the preceding six years. Since then, small businesses have flocked to sign up for the country’s new national goods and services tax, which has boosted its indirect tax base by 50 per cent. The numbers are so stark that some say it will go down as Mr Modi’s greatest economic legacy, while others are offering India as a model for other developing countries looking to tackle widespread tax evasion. Sudhir Kapadia, a tax partner at EY in India, said: “Both demonetisation and the GST have led to a jump in the number of people filing income-tax returns, though it has taken a while for the results to filter through. Along with the new insolvency code, this will go down as the most effective reform Modi has implemented.” India has long suffered from a narrow tax base, with many of the country’s richest people finding ingenious ways to avoid declaring their income to the government. Total tax revenues in 2016 amounted to about 17 per cent of gross domestic product, according to the country’s annual economic survey. That is only 4 percentage points above where it was in the mid-1980s. Economic growth has averaged 6.5 per cent since then. India’s tax-GDP ratio is the lowest of all the Brics countries, with China at 20 per cent, Russia at 22 per cent, South Africa at 26 per cent and Brazil at 32 per cent. The average for OECD countries is 34 per cent, according to data from the IMF and the OECD. As a result, India suffers from underfunded public services, leading to lower literacy rates and lower life expectancy than most of its fellow middle-income countries. Other South Asian countries are in an even worse position: Pakistan’s tax-GDP ratio for 2016-17 was 12.5 per cent, while that in Bangladesh is about 11 per cent. But there are signs that might be about to change for India.

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Tuesday 08 May 2018

ANALYSIS

Retail: Is the beauty industry ‘Amazon-proof’? Record numbers of bankruptcies and store closures have devastated the retail sector. So why is the beauty market thriving? ANNA NICOLAOU AND AIMEE KEANE

“

ou don’t need lipstick, lipstick needs you,” reads the bubblegum pink sign posted on one of many doors to Manhattan’s Javits Center — the 1.8m-squarefeet glass fortress that is the busiest convention centre in the US. Inside, hairdressers offer complimentary styling, courtesy of Target, the discount store, and teenage girls line up to make their own lipgloss for $5. Drake’s new single, “Nice for What”, pounds out through the sound system as crowds pose for selfies in front of branded flower walls. Paris Hilton shills her new skincare range, Unicorn Mist. Fans swarm outside a fenced off “pink carpet”, where Kim Kardashian’s make-up artist competes for star billing with Hillary Clinton, the former presidential candidate, as both stop to pose for photographs. This is Beautycon, the festival arm of the namesake retail company, where tens of thousands of enthusiasts last month spent anywhere between $60 and $2,000 for a weekend of fun. Echoing the language of Instagram — #empowerment and #selfcare — attendees are encouraged to “work hard” and “be yourself”. While doing so, these teenage girls and parents will spend a staggering annualised sum of $4,600 per square foot of the beauty sanctum, according to Beautycon. It is a figure traditional stores would kill for. The average US store brought in about $325 in sales per square foot in 2017, while the Apple store made $5,546, according to data from CoStar. This is a trend that stretches far beyond the island of Manhattan — beauty and personal care

It is no secret that retail is being reshaped by the internet. In the past year the US has endured record high rates of bankruptcies and the closure of thousands of stores. But beauty is booming, with the market set to grow to $750bn by 2024, according to Inkwood Research. People want to touch and see lipstick and concealers before opening their wallets, sending them through the doors of Sephora, the French cosmetics chain owned by LVMH, or Target. Meanwhile an American obsession with “wellness” — valued at $3.7tn by the Global Wellness Institute and including segments such as nutrition, fitness and personalised medicine — has made make-up and skincare even more en vogue. Another factor, some argue, is that beauty is “Amazon-proof”. Jan Zijderveld, who left Unilever to become chief executive at Avon this year, says that “within [consumer goods], beauty is absolutely the best place to be . . . It is so tough out there [in retail] between discounting and Amazon”. Yet even stalwarts such as Estée

product sales in Asia jumped 6.4 per cent to $149bn last year, according to Euromonitor. The US market was valued at $86bn and western Europe, where more health and beauty shops opened in 2016 than any other type of retailer according to CBRE, brought in $94bn. “Retail is going through this massive reinvention”, says Moj Mahdara, chief executive of Beautycon, listing off statistics about the $465bn global beauty market. “Eighty-six per cent of women buy make-up; 78 per cent buy skincare. Billions of people are online at all times, scouring for something that’s going to make them feel better.”

Lauder — which still relies heavily on troubled department stores like Macy’s — and L’Oréal are reaping the benefits. Estée Lauder has increased sales for 11 straight quarters. Analysts say the sector is benefiting from a secular move towards “experiences”, making beauty less susceptible to the price cuts that have plagued commodities from toilet paper to T-shirts. “There’s a whole event [Beautycon] about the excitement around people wanting to actually be present when they buy make-up. That protects prices from Amazon,” says Simeon Siegel, analyst at Nomura

Instinet. “Apparel has been the most easily disrupt-able business. Beauty has not.” Growth in the beauty market is being fuelled, at least partly, by an influx of savvy YouTube personalities offering advice to millennial shoppers, who tend to trust the vloggers over big corporations. Beauty is second only to gaming as the most viewed topic on YouTube. Millennials, accused of weakening sectors ranging from diamonds to breakfast cereals and laundry products, spent 25 per cent more on cosmetics in 2016 than they had two years earlier, according to NPD, a trade group. The rise of social media, along with the growing popularity of speciality stores like Sephora, has made it easier for new brands to swiftly become household names — at least in some houses. It starts with a prominent vlogger endorsing a product — either for payment, or organically. If this generates excitement around the brand then there is a good chance of attracting a distribution deal via Sephora or Ulta Beauty. The final step for the most successful is being acquired by a prestige company, such as Estée Lauder. The casual entrance of these young brands belies their power. Kylie Cosmetics, the lipstick company founded by reality star Kylie Jenner in 2016, made $420m in sales in 18 months without any traditional advertising. Fenty Beauty, the line of lipsticks and foundations launched by the singer Rihanna, made five times the sales of Kylie in its first month, according to analysts at Slice Intelligence. Estée Lauder and L’Oréal have responded by racing to buy younger brands, mirroring what Procter & Gamble and Coca-Cola have done with their purchases of all-natural soapmakers or kombucha tea brands. Estée Lauder paid $1.5bn f o r m i l l e n n i a l f av o u r i t e To o Faced Cosmetics, and an estimated $200m for Becca Cosmetics — after an endorsementfor the latter by YouTuber Jaclyn Hill helped sell 25,000 rose-gold highlighters in 20 minutes at Sephora. Some 105 beauty care mergers and acquisition deals were completed globally last year, a 70 per cent jump from three years earlier, according to Intrepid, an investment bank. “Private equity remains in love with the beauty care sector,” says Steve Davis, Intrepid’s managing director.

Influencer Paris Hilton at the Beautycon Festival

Beautycon has become the place where the new reality plays out: the key matchmaking event for brands, YouTube’s army of vocal backers and consumers. What began in 2011 as a meeting of a few dozen YouTubers has morphed into a key calendar date for the likes of Target and Revlon to reach Beautycon’s savvy

for advice from someone “who has curly hair like me”. When she could not find it she began posting videos on YouTube to document her own experience. Eight years and 5m social media followers later, Walmart pays Ms Brooks to post pictures on Instagram wearing their floral embroi-

shoppers. The average Beautycon visitor has 3,500 social media followers, according to Ms Mahdara, spends a sizeable chunk of their monthly budget on make-up, and is sometimes a vlogger themselves. Johanna Jimar, a 12-year-old actress and model, says she spends about $500 a month on make-up, funded by her parents, explaining that “make-up is a great way to express yourself”. As a bored university student who had “no idea” what to do for a career, Andrea Brooks, who is mixed race, searched the internet

dered jeans. “Brands are paying the big dollars,” she says. “People aren’t going to trust a brand to tell them what’s good. Maybe I have the same skin colour as these girls, or we both have oily skin, and they trust me.” “Influencers” like Ms Brooks have toppled magazines as the voice of authority — almost half of US shoppers admit social media has played a part in a beauty purchase, according to Fung Global Retail. Fees for brand sponsorships routinely run to six figures, according to executives and influencers.

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Tuesday 08 May 2018

BUSINESS DAY

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NEWS YOU CAN TRUST I TUESDAY 08 MAY 2018

Insight Banking sector credit disparity - a call for de-risking other sectors

redit allocation disparity by t he de p o sit money banks remains obvious as seen in the latest report of the National Bureau of Statistics (NBS) on banking sector credit to private sector of the economy. The report revealed that total value of credit allocated by the banking sector stood at N15.60 trillion as at first quarter of 2018. This represents about 0.89 percent decline from the level of N15.74 trillion in the fourth quarter of 2017. Oil & gas and manufacturing sectors got credit allocation of N3.42 trillion and N2.07 trillion to record t h e h ig h e s t c re d i t a l location as at the period under review. The numbers indicated a decline of 4.2 percent and 4.6 percent respectively over the level of N3.57 trillion for oil and gas and N2.17 trillion for manufacturing sector. A n a l y s t s a re o f t h e view that the govern ment needs to strengthen its efforts at derisking the entire agricultural value chain to effectively diversify the economy away from oil to attract banks’ lending and subsequently achieve inclusive growth and sustainable development. “Historically oil and gas sector attracts the highest credit from the banking system becaus e the s ector gen erates the highest revenue in Nigeria. As you are aware, banks lend against cash flow. As the Federal government continues to implements the diversification strategies of the economy and also imp l e m e nt p o l i c i e s t hat will de-risk sectors like agriculture, power, and such sectors will begin t o a t t ra c t s u b s t a n t i a l c r e d i t s f r o m b a n k s ”, said Ayodele Akinwunm i , h e a d o f re s e a rc h, FSDH Merchant Bank Limited. In order to address the lending challenges i n a g r i c u l t u ra l s e c t o r of the economy, the

Emefiele, governor, Central Bank of Nigeria

Central Bank of Nigeria (CBN) in 2011 l a u n c h e d t h e Ni g e r i a Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL) which was incorporated in 2013. It is a dynamic, holistic approach that tackles both the agr icultural value chain and the agricultural financing value chain. NIRSAL does two things at once; including fixing the agricultural value chain, so that banks can lend with confidence to the s e ctor and encourages banks to lend to the agricultural value chain by offering them strong incentives and technical assistance. From NBS report, revealed that the mining and quarrying sector got the least allocation of N10.46 billion in first quarter of 2018, showing a decrease in lending compared to N25.25 billion in the preceding quarter of 2017 (Q4). This was followed by education sector which received a total of N73.48 billion credit allocation in the first quarter of 2018 as against N72.53 billion in the previous quarter of 2016. Uche Joe Uwaleke, P ro f e s s o r o f Fi na n c e, Chair, Banking and Fi-

nance department, Nasarawa State University Keffi, Nasarawa State, said that the highest allocation of credit went to the oil & gas sector during the period is not surprising. It is an indication of increasing risk appetite

pipeline and other oil facilities vandalism. By the same token, the relative increase in credit allocation to the manufacturing sector signals the banking sector’s enhanced confidence in the business environment following

Historically oil and gas sector attracts the highest credit from the banking system because the sector generates the highest revenue in Nigeria. As you are aware, banks lend against cash flow. As the Federal government continues to implements the diversification strategies of the economy and also implement policies that will derisk sectors like agriculture, power, and such sectors will begin to attract substantial credits from banks by the banks on the back of rising crude oil prices. It is equally a reflection of the relative stability and peace in the Niger Delta region which has witnessed a significant drop in

improvements in the m a c ro e c o n o my f ro m retreating inflation and stable exchange rate. This development Uwa l e ke a d d e d i s e xpected to bring about fur ther upticks in the m a n u f a c t u r i n g P u r-

chasing Managers Index (PMI) as well as capacity utilization. Other factors remaining the same, this development is expected to ramp up business investments and job opportunities. The contributions of the Oil & Gas and manufacturing sectors to GDP in Q 1 2 0 1 8 a re l i k e l y t o be higher than in the preceding quarter. The manufactur ing and non-manufacturi n g P u rc h a s i n g Ma n agers Index continued to expand on a faster rate in the month of April according to the Central Bank of Nigeria (CBN). The breakdown of the PMI showed that the manufacturing ind e x g re w f o r 1 3 c o n secutive months to 56.9 index point in April from 56.7 index point in the preceding month of March. For the non-manu f a c tu r i ng s e c t o r t h e PMI rose to 57.5 index point in the month of April from 57.2 index point in the month of March. The report revealed that supplier deliver y time, employment level and inventories grew at a faster rate; production level and new orders grew at a slower rate in April 2018. The Monetary Policy Committee (MPC) has kept the key rate at a record high of 14 perc e n t s i n c e Ju l y 2 0 1 6 , trying to balance bringing down inflation and boosting an economy t h a t e x i t e d re c e s s i o n last year. At the last MPC held in April, the Committee reiterated the Cent r a l B a n k ’s c o m m i t ment to delivery of low interest credit as evidenced in its bold steps to adopt unconventional monetary p o l i c y t o a i d c re d i t flow to vulnerable and growth enhancing sectors of the Nigerian economy. The Committee, enjoined the Bank to continue to support and encourage cre dit delivery at single digit i n t e re s t ra t e t h ro u g h other mechanisms in the interim, while en-

couraging the banking system to establish frameworks to increase credit delivery to the e mp l oy m e nt g e n e rating sectors of the economy. Ayodeji Ebo, managing director, Afrinvest Securities limited noted that oil and gas activities are significant and could be beneficial to banks because of the potential to earn revenue. Lending by the banking sector is u su a l ly d r i ve n by t h e p o t e nt i a l f o r re ve nu e earning. He sees this as highly risky but admitted that the banks have been able to manage the credits they advance. H o w e v e r, t h e C B N data show that cre dit to the Federal Governm e n t ro s e b y 7 . 7 p e r c e nt t o N 5 2 5 0 . 4 8 b i llion at the end of the first half of 2017, compared with the growth of 9.7 p er cent at the end of the corresponding half of 2016. The development was due to the growth in holding of government securities, especially treasur y bills by commercial banks, which rose by 9.9 per cent. Net claims on the Federal G overnment c o n t r i b u t e d 1 . 2 p e rc entag e p o i nt s to t h e g ro w t h o f t o t a l m o n etary assets, compared with 0.6 percentage point at end-June 2016. The data from CBN also revealed that Credit to the private sector grew by 0.02 per cent to N21, 985.94 billion at end-June 2017, compared with the 14.6 per cent growth at the end of the corresponding period of 2016. The development owed wholly, to the 19.3 per cent growth in claims on States and Local Governments as claims on the core private sector declined by 0.9 per cent. The contribution of claims on the pr ivate sector to the growth of total monetar y ass ets was 0.02 percentage point, compared w ith 13.6 percentage points at the end of the corresponding half of 2016.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.