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news you can trust I **wednesDAY 08 may 2019 I vol. 15, no 305 I N300

Stakeholders worried over FG’s double standard in revoking oil licences …Pan Ocean, Allied Energy, Express Petroleum affected

Olusola Bello & Stephen Onyekwelu ecent revocation of six oil mining leases by the Federal Government for non-payment of royalties is not sitting well with some stakeholders who believe this is sending the wrong signal to investors and lacks transparency.

The Federal Government had reportedly revoked licences of six OMLs and one oil prospecting lease (OPL) in the onshore, shallow water and Deepwater Niger Delta basin over alleged non-payment of royalties.

BusinessDay learnt that the assets affected are OML 98 controlled by Pan Ocean, OMLs 120 and 121 held by Allied Energy,

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Investors adopt risk-proofing measures after FX crisis N HOPE MOSES-ASHIKE & OLUFIKAYO OWOEYE

igeria’s first economic recession in 25 years, in the second quarter of 2016, caught several investors and consumers unprepared. The preceding

foreign exchange (FX) crunch left many businesses gasping for breath.

“At times the only way to access FX was through the black market and this led to a tripling of costs in some cases,” a private equity investor told the Economist Intelligence Unit (EIU) in

a new report on ‘FX and debt trends in five sub-Saharan Africa economies’ released Tuesday.

The report focused on Nigeria, Ethiopia, Kenya, Tanzania and Zambia.

The rising import prices in Nigeria reflected in higher costs to consumers and squeezed

margins for local businesses.

Although there has been an improvement in the FX liquidity following the rising oil prices and the interventions by the Central Bank of Nigeria (CBN), the impact of the devaluation in Continues on page 38

Continues on page 38

Inside WEMPCO responds to BusinessDay report, denies plans to exit Nigeria P. 2

L-R: Emeka Emuwa, chief executive officer, Union Bank of Nigeria plc; Cyril Odu, chairman; Somuyiwa Sonubi, company secretary, and Richard Kramer, non-executive director, at the 50th annual general meeting of the bank in Lagos, yesterday.

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news Jumia’s rise exposes challenges of online shopping in Africa Neil Munshi, FT

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anda Aye’s customer called him three times in the half-hour it took him to creep a few blocks through a notorious Lagos goslow toward the Lekki Bridge tollway.

“I’ll be there this morning, madame,” he said, his threewheel truck idling.

“This morning. Yes, this morning.” Asked for a specific arrival time, or at least a window of a few hours, Aye demurred.

The courier he works for, Metro Africa Xpress, trained him to be vague, in case customers are disappointed with its client, Jumia, the panAfrican ecommerce site that listed on the New York Stock Exchange last month at a valuation of $1.1bn.

Aye’s delivery run shows some of the biggest challenges facing Jumia, and the investors who have sent its shares up by more than 200 per cent, as it tries to expand an African ecommerce business: traffic, logistics, and perhaps most importantly, customers wary of shopping online.

Like its rivals in many developing countries, Jumia offers payment on delivery “as a marketing tactic” since customers are worried about being scammed and are uncomfortable sharing their

information online, said Juliet Anammah, chief executive of Jumia Nigeria, which accounts for about a quarter of the business by sales, sellers and customers.

“If you have those kinds of mental barriers, one way to break them is to say you’re not sure, fine, use cash on delivery — and when the things come to you, you decide if you want it,” she said.

But cash on delivery has a much higher return rate, and carries risk. Jumia revamped its system to make sure drivers never carry too much money after a third-party deliveryman in Nigeria was killed two years ago.

Aye delivered to five addresses scattered around Banana Island — probably the most affluent neighbourhood in Nigeria.

But Jumia insists it is not limited to a small market of wealthy buyers and that its potential market is far larger.

Sub-Saharan Africa is projected to have 690m smartphone users by 2025, up from 250m at the end of 2017, according to GSMA, the trade body for mobile carriers.

Sacha Poignonnec, Jumia co-founder and co-chief executive, said this scale was a key advantage. Roughly 700m people live in the 14 countries Jumia operates in, many with

Continues on page 38

WEMPCO responds to BusinessDay report, denies plans to exit Nigeria ISRAEL ODUBOLA

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he management of the Western Metal Products Company (WEMPCO) has responded to reports in publications – notably BusinessDay of May 1, 2019 and Punch of May 3, 2019 – concerning the proposed sale of the Lagos Oriental Hotel.

The company said categorically that “there has never been and there is no intention of the WEMPCO Group to exit Nigeria as stated in the reports”.

It said the Lagos Oriental Hotel “is a flagship in the Nigerian hospitality business but is not a flagship of the WEMPCO Group” and that divesting in the asset “would simply be a commercial decision based on the merits of a reasonable transaction”.

“Ordinarily, we would not directly respond to such reports as we do not conduct our business activities on the pages of newspapers. However, in this case, we deem it important to clarify some rumours surrounding the Group and to correct some inaccuracies and falsehoods contained in the report,” WEMPCO said.

The company said the WEMPCO Group of Companies was founded by businessman and entrepreneur, K. F. Tung, over 50 years ago.

“It is with heavy heart that we announce the passing of Mr. K. F. Tung who died peacefully on 27th of March, 2019 surrounded by his family at the age of 97. He first visited Nigeria in 1967 and soon began businesses in enamelware before venturing into steel, timber, ceramic, and real estate industries.

Under his leadership, WEMPCO flourished and has supplied much of Nigeria’s construction materials through the burgeoning economy throughout the years,” it said.

WEMPCO said the Group has without doubt contributed immensely to the Nigerian economy in particular and that of West Africa in general.

“While K. F.’s presence and guidance will be missed, both the Tung family and everyone at WEMPCO Group of Companies remain fully committed to contributing to the on-going growth and development of Nigeria.

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

R-L: Vice President Yemi Osinbajo; Sydney Ibeanus, country director, UN Decade of Action on Road Safety; Osagie Ehanire, minister of state for health; Clement Peter, country representative of WHO, and Julius Asom, deputy corp marshal, Federal Road Safety Corps, during the visit of audience Stakeholders of UN Decades of Action on Road Safety at the State House, Abuja.

Nigeria faces mixed oil market outcomes as China-US trade war intensifies …Iran, Venezuela sanctions tighten oil flows STEPHEN ONYEKWELU

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oncerns that the rising China-US trade dispute could slow the global economy and that US sanction on OPEC members, Iran and Venezuela, will further tighten the oil market present Nigeria with mixed fortunes.

Slower global economic growth as a fallout from the

trade dispute between China and the United States of America means less demand for oil, because oil demand is a function of economic activities. Less demand for oil implies oil prices will start falling, which is some bad news for Nigeria. But a tightened oil market will further shore up prices, good news for Nigeria’s economy managers.

Brent crude oil futures were at $71.12 per barrel at 0710 GMT Tuesday, 12 cents, or 0.2

percent, below their last close.

US West Texas Intermediate (WTI) crude futures were at $62.30 per barrel, 5 cents above their last settlement.

Nigeria, Africa’s biggest crude producer, is exposed either way to whatever happens at the international oil market because its economy is still heavily dependent on its petroleum sector. Oil still makes up 90 percent of foreign exchange and 80 percent of

government revenue but contributes less than 10 percent of gross domestic product.

Against this backdrop, Oyindamola Adedokun, outcome lead, revenue stream at FOSTER, an Oxford Policy Management programme, says it is time to take out fuel subsidies and put a proper stabilisation mechanism in place as buffer.

Continues on page 38

Regency Allied, UACN, CAP, Caverton offer highest dividend yields … with ex-dividend date in May IFEANYI JOHN

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f you were thinking of buying a stock this month and you are a dividend investor, there are a few top dividend-yielding stocks where the ex-dividend date hasn’t yet elapsed.

Ex-dividend describes a stock that is trading without the value of the next dividend payment. The exdividend date or “ex-date” is the day the stock starts trading without the value of its next dividend payment.

This means that if you buy the stock before this date, you are entitled to very juicy dividend returns.

A buyer who purchases a stock on or after its ex-dividend date is not entitled to the declared dividend – it is owned by whoever owned the stock the day before the ex-dividend date.

BusinessDay analysis of

best stock investment opportunities in the month of May sought to find the highest-yielding stocks in terms of dividends with close of register not too far away.

Investors could buy said stocks and wait till the payment date to receive a considerable return on investments from dividend income.

Regency Allied Insurance led the pack for the best opportunity in the Nigerian Stock Exchange with a N0.03 dividend at a current price of N0.23, leading to a dividend yield of 13.04 percent which ranks as one of the best on the local bourse.

The dividend yield is the ratio of a company’s annual dividend compared to its share price. The higher the stock price, the lower the dividend yield. This is because dividends are

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announced and paid once while stock prices change rapidly during a trading day.

Regency Allied Insurance’s registrars are set to close registration on May 17, 2019 and hold the company’s Annual General Meeting (AGM) on June 18 while shareholders receive dividends a day after.

UAC of Nigeria was another top-yielding stock that would be unavailable at the end of the month if investors fail to take advantage of the 9.14 percent dividend yield.

The company is set to pay N0.64 as dividend on June 27, 2019 and was selling at N7 at market close on Monday.

Chemical and Allied Paints plc was the next best bet in the market which is open till the last day of the month. It has a dividend yield of 8.53 percent and @Businessdayng

traded at N34 on Monday.

The company is set to pay N2.9 on June 21, 2019 after its AGM. Caverton completes the list with 8.33 percent dividend yield but the logistic company closes its register on Wednesday.

Obinna Uzoma, a Lagosbased market analyst told BusinessDay that “most investors focus on the bluechip companies for dividends rather than pay attention to smaller companies where the stock prices are low and dividend yield is high”.

“Because everyone wants to buy the big companies to earn dividends there, the dividend yield begins to drop as stock prices rise due to the buying pressure. This is why I think the best companies to earn decent dividend yields are typically smaller companies with low prices,” Uzoma said.

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NEWS CBN, Unity Bank partner on seeds, inputs distribution to cotton farmers HOPE MOSES-ASHIKE

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n line with commitment to grow the Nigerian economy through therevivalofagricasamajorcatalyst, the Central Bank of Nigeria (CBN),inpartnershipwithUnityBank and the National Cotton Association ofNigeria(NACOTAN),hasflaggedoff distribution of seeds/inputs supplies tocottonfarmersforthe2019planting season nationwide.

The distribution of cotton inputs tofarmersispartofAnchorBorrowers Programme (ABP), an agric development finance initiative of the CBN operated as an on-lending scheme with participating financial institutions packaged to channel financing support to beneficiaries in the sector.

Unity Bank’s collaboration with theCBNinflaggingoffthisyear’sinput suppliesdistributiontocottonfarmers to support wet season farming is in recognition of the bank’s established pivotal footprints in the sector, which has been well acclaimed in various awards received, such as the Presidential Award at the third anniversary of ABP, CBN award on sustainable transaction in agric, etc.

According to Usman Abdulqadir, executivedirector,corporateplanning andcompliance,UnityBank,theCBN is partnering the bank on account of the lender’s strong participation in the ABP aimed at rebuilding customers confidence, alleviating poverty through food and cash crops produc-

tion to make Nigeria self-sufficient in food and diversifying the economy.

The bank’s strategy for agric is deep rooted: “Unity Bank’s strategy is to bank the agricultural value chain.

Therefore, we finance primary production, agricultural processing as well as commodity trading. We also support agricultural mechanisation, agricultural services and the procurement of inputs and implements.

“What is most noteworthy is that while other banks basically concentrate on lending to big value end of the agriculture value chain such as the flour and rice millers, Unity Bank does not leave out the small holders farmers who are in primary production,” Abdulqadir said.

Corroborating the above, an analyst said the bank had brought in critical mass of farmers, hitherto unbanked, to benefit from various sourcesoffunding,suchascreditlines to input supplies and service providers,areasothersmayhaveconsidered unattractive.

According to the analyst, “Unity Bank’s involvement in the ABP has thus created huge social and economic impact on the income of households involving over 500,000 participating small-holder farmers, thereby boosting not only the Gross Domestic Product and reducing unemployment but also helping to end the perennial dissipation of scarce foreign exchange to import food.”

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NB set to review strategy to remain competitive DANIEL OBI, DIPO OLADEHINDE & GBEMI FAMINU

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ue to new excise duty, double-digit inflation and challenging operating environment, Nigeria Breweries is considering an increase in price of its products across board in order to remain sustainable.

Speaking at the company’s preannual general meeting, Jordi Borrut Bel, CEO of Nigeria Breweries, said he expects the challenges in the operating environment to remain the same in 2019, although he remains confident the firm has the right strategy to deliver the right value for its business model.

“We want to ensure our strategy to remain competitive is paying off in terms of growth, although we need to increase prices to compensate for the inflationary pressures that we are facing and probably excise duty,” Borrut Bel said.

He said Nigeria Breweries is looking at its portfolio brands and trying to maximise its value combination either in increasing prices or selling more of the brands.

“Although we need to maximise our revenue, it does not mean we will increase prices nor do that on a certain date. We will follow our consumers closely and remain competitive.

We will not do something that sets us apart from our consumers. We will monitor what our competitive situation is and what our consumers

desire,” Borrut Bel told BusinessDay on the sidelines of the event.

In June last year, the Federal Government announced an increase in excise duty rates of N30 per litre for alcoholic beverages, tobacco and others, a move many consumers feared would mean additional cost for their favourite brands.

“For our company, it translated to approximately a 43 percent increase from the previous average rate of N21 per litre; it was difficult to pass on this extra cost to consumers in view of weak purchasing power, added to the already challenging operating environment,” Nigeria Breweries said in its 2018 report.

Results from operating profit went down from N57 billion to N37 billion in 2018 due to higher excise duties and other operating costs while profit after tax ended at a disappointing N29.42 billion as against N46.63 billion in 2017, representing a decline of 36.9 percent as the brewer posted a net revenue of N324.38 billion in 2018 against N344.52 billion in 2017, down by 5.8 percent.

Reacting to the firm’s investment profile on backward integration, Borrut Bel said, “Two things are involved which are the packaging and raw materials. 100 percent of the packaging comes from Nigeria while 60 percent of our raw materials are sourced locally.

“We will continue to work closely with the farmers and integrate them although we have our own

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technical assistants that help these farmers and this encourages better yields.”

For makers of beer in the country, the battle for market leadership is very stiff. The harsh economic environment has seen profit margin reduce drastically.

Low purchasing power of consumers means makers cannot increase price to cover the increasing operating cost. Epileptic power supply and the notorious bad road network, most especially the gridlock in Apapa, the nation’s busiest port, have hampered the profitability of the major players in

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the country.

Despite these challenges, makers of beer are still making entry into Africa’s largest market, Nigeria, with an average population of 21 years.

According to a report by market research group, Global Data, Africa is the fastest growing region for beer consumption. Nigeria, however, leads the pack of 10 biggest beerdrinking countries on the continent.

Beer brands make up just 16 percent of alcohol consumption in the country, while other drinks (spirits and locally-brewed drinks) make up 84 percent.

Wednesday 8 May 2019

BUSINESS DAY

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NEWS

Focus shifts to NSE as MTN successfully registers shares with SEC Iheanyi Nwachukwu & Jumoke Akiyode-Lawanson

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TN Nigeria has started engaging with the Nigerian Stock Exchange (NSE) for its shares listing by introduction. This follows a successful registration of its shares at the apex market regulator, the Securities and Exchange Commission (SEC).

MTN Nigeria on Tuesday said that it successfully completed the registration of 20.354 billion ordinary shares of N0.02 each with the SEC. In line with the processes of going public for corporates, the completion of this process sets in motion the next steps in MTN’s intended listing by introduction on the NSE. “I am excited we have achieved

…at 2 kobo each another milestone in our listing process and want to thank the SEC and the Corporate Affairs Commission (CAC) for supporting us through the process. We have now begun to engage with the Nigerian Stock Exchange (NSE) to complete the listing process,” MTN Nigeria CEO Ferdi Moolman said.

In a related development, the Federal High Court presided over

by Justice Aneke on Tuesday adjourned the hearing of the telco’s court case to June 26, after a ruling was delivered rejecting the Notice of Preliminary Objection filed by the Accountant General of the Federation (AGF) in response to MTN’s lawsuit.

MTN sought legal redress after receiving a demand notice from

the AGF alleging unpaid duties and taxes between 2007 and 2017.

The company’s suit challenges the authority of the AGF to deal with issues around tax and custom duties.

According to the law, oversight for this is the responsibility of the Federal Inland Revenue Service (FIRS) and Nigerian Customs Service (NCS).

The court heard arguments on the AGF’s preliminary objection on March 26, 2019. At the time, the AGF requested that MTN’s suit be dismissed because it was not filed within the appropriate timeframe, which the AGF asserted was within three months of receipt of the initial request for a self-assessment.

Having considered the matter, the judge determined that MTN’s suit was not statute-barred, as the company was only required to file

its case within three months of receipt of the actual demand notice, which it did.

“It is important to note that even if the court ultimately rules that the AGF is within its rights to assess taxes and duties, it does not imply that the assessment that has been made is legitimate,” MTN said in a statement.

MTN maintains that it is fully compliant with Nigerian tax laws.

The company says it remains committed to meeting its fiscal responsibilities, and to contributing to the social and economic development of Nigeria.

Since incorporation in 2001, MTN has invested more than N2 trillion into the Nigerian economy and has paid more than N1.7 trillion in taxes, levies and other regulatory fees.

FG, stakeholders’ partnership key to growing Nigeria’s forex market – experts IFEOMA OKEKE

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xperts in forex market and fund managers say cooperation between the Federal Government and industry players is essential to growing Nigeria’s forex market.

Emmanuel Stanno, a fund manager, assures that the partnership would be paramount, as programmes could be developed to impart knowledge, especially into the young ones, adding that this could help stem cyber crime among the youths.

Speaking at the Hantec Global Financial conference in Lagos, recently, Stanno expressed concerns over Nigerians low participation in forex market, saying a lot of education had to be done for Nigerians to benefit fully from the market.

“There are so many frauds around that are discouraging people from investing in the forex market; so, people are scared. We are only trying in our own way to change people’s orientation, to let them know that forex market is the real deal,” he said.

There is a need for investors to be patient and not greedy in

order for positive growth to be achieved in the business, he said, saying, “The forex market is a business place and it takes time to grow profits from any business.

When you start up a business, you spend money to run it first before expecting returns. There is a need to work on emotions when investing in forex.”

As a fund manager, he said the partnership with Hantec Global was a mutually beneficial one, as it had shown to be trusted over the years, making the business between brokers and the market much easier.

Mike Fowope, managing director, Hantec Africa Limited, said the opportunities that abound in the forex market were such that people were not fully aware of, and that was why Hantec was focusing on educating the public about it.

“What we are trying to do is to contribute our quota in eradicating poverty, empowering people on how to make money trading on the international currency market. The online forex trading is an offshoot of fintech, and at times financial inclusion, they are all interwoven.

Stakeholders in high spirit as Edo Production Centre reaches 95% completion

M L-R: Bright Jaja, CEO, iCreate Africa; Samson Ajayi, retail and user marketing manager, Bosch Power Tools Nigeria; Frank Nweke II, chairman advisory board, iCreate Africa; Anne Dirkling, director, partnership and sponsorship, iCreate Skills Africa, and Shola Hassan, area sales manager, Bosch Power Tools Nigeria, at the Northern region phase of the 2019 edition of the iCreate Festival in Kaduna.

MAN canvases for alternative solutions to persistent erratic power supply Daniel Obi

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igerian manufacturers will continue to bleed if the lingering poor electric power situation in the country is not addressed immediately by looking into commercially viable alternative solutions to the erratic power supply.

This was the assertion of the Manufacturers Association of Nigeria (MAN) Anambra, Enugu and Ebonyi branches’ exclusive business Forum for Managing Directors and CEOs held in Enugu, recently.

Speaking at the forum, Sumeet Singh, director of sales, Powergas Nigeria, in a statement, reiterated the need for manufacturers to migrate from the use of imported diesel fuel to domestically available Compressed Natural Gas (CNG) fuel, which was more cost-efficient and safer to handle.

“It would be difficult to put an exact figure to the loss incurred daily by manufacturers.

Energy is the driving force of

any economy; economies do not grow as expected when there is an immense shortfall in the supply of energy. This is why manufacturers in Nigeria need to embrace the use of natural gas which is not only a cleaner fuel but more efficient and profitable for production requirements,” Singh said.

Singh highlighted, “Powergas provides a complete solution across the gas-based energy value chain. We provide the gas, the gas generator/ equipment along with operations and maintenance through our Group company Cummins Power Generation Nigeria Limited.

“Before now, most CNG users had to depend on pipeline gas for supply and when there is none, the production process is affected due to using diesel fuel or relying on our national grid.

To tackle this and guarantee an uninterrupted supply flow, we now have virtual gas pipelines as well as gas plants next to existing gas field for consistent, easy and quick access to quality gas by our customers.” www.businessday.ng

ICC makes case for arbitration, investment in Africa regional confab JOSHUA BASSEY & JOHN SALAU

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oreign and local investors are to explore ways of making arbitration work in Africa as well as discuss investment opportunities on the continent as the 4th International Chamber of Commerce (ICC) Africa regional conference holds in Lagos.

There has been a recent paradigm shift from litigation to arbitration, predicated on the fact that arbitration has better economic advantage in terms of less cost and time management.

As a demonstration of its commitment to the growth of arbitration in Africa, the ICC International Court of Arbitration in Paris in collaboration with the ICC in Nigeria is organising the fourth ICC Africa regional conference, which will bring experts and investors to brainstorm from June 18 to 19, 2019, in Lagos with the theme ‘Africa: open for business.’

This year’s conference, which coincides with the centenary anniversary of the ICC, will start with the ICC centenary celebration.

“We work to promote international trade, responsible business conduct and a global approach to regulation through a unique mix of advocacy and standard setting activities – together with market leading dispute resolution services,” Mike Igbokwe, chairman, planning committee of the ICC Nigeria, said.

According to Igbokwe, arbitration is gaining increasing acceptance in many parts of Africa. “It is now relatively common to see arbitration clauses in contracts involving corporate bodies in Africa.

“While the cost of resolving disputes by way of arbitration may no longer be said to be cheap, the relative speed with which issues are resolved by arbitral tribunals makes it particularly attractive to the business community which considers time to be money,” he said.

Olubunmi Osuntunyi, secretary general of ICC Nigeria, said arbitration was an ongoing process. However, the conference is aimed at capacity development of both the practitioners and users of arbitration in Nigeria.

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anufacturers in Edo State are gearing to commence production at industrial scale with the assurance of stable power and other support structures, as work at the Edo Production Centre has reached 95 percent completion.

The facility is a multipurpose, one-stop-shop for Micro, Small and Medium Enterprises (MSMEs) fitted with stable electricity, business support units and a number of other business enablers for efficient industrial production. Similar structures are to be built in Edo Central and Edo North senatorial districts of the state.

Senior special assistant to the state governor on Job Creation and Skills Development, Ukinebo Dare, said work at the Edo Production Centre was at 95 percent completion stage ahead of commissioning by Governor Godwin Obaseki.

While conducting journalists around the facility in Sapele Road axis of Benin City, Dare said the government was collaborating

withtheBankofIndustry(BoI)for fundingastheBoIhadexpertisein industrialisation and production.

She noted, “The facility is ready for production. The state government is providing 24-hour electricity, good road network, security, and solar powered streetlights, among others. The job is about 95 percent complete and will be commissioned soon.

“In the very near future, we will see a complete transformation in terms of the quality of what we produce, capacity to produce and the number of jobs created by this Production Centre. We are looking forward to the commissioning of this project, which willcomeupinthenextfewweeks either on the last week of May or first week of June 2019.”

A representative of fabricators and welders to be hosted in the Edo Production Centre, Lugard Ekhosuehi Michael, said working space and electricity supply had been a major problem for us but with the setting up of the Centre, the problem has been eliminated.

Dabur marks World Malaria Day with new repellent

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frican Consumer Care Limited (AFCC), a subsidiary of Dabur International Limited, launched Stop Malaria Campaign with their global brand - Odomos Mosquito Repellent range, in celebration of World Malaria Day. The campaign was rolled out with the Intern Doctors and final year students of Lagos University Teaching Hospital (LUTH) at Ojuwoye Market, Mushin, April 26, 2019. Key activities were healthcare professionals detailing the traders, customers and consumers on prevention of malaria by reducing mosquito bites, roles of mosquito repellent creams and Odomos in reducing the @Businessdayng

incidence of mosquito bites.

Apart from detailing, large quantities of Odomos mosquito repellent creams were sampled free as part of the STOP Malaria Campaign.

From AFCC, the programme was also attended

by Sanjay Kashyap, head of sub-Saharan Africa, Dabur International, Venkat Reddy, head of West Africa and head of marketing SSA, Mahbub Baset.

It is to be mentioned that the Odomos STOP Malaria Campaign will be extended to a large number of schools in Lagos City, and students will be detailed about prevention of malaria and sampled with Odomos shortly.

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America’s Iran plans suffer from a double-bind: The triangle drama of the United States, Iran, and China

Dan Steinbock

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or three years, the nuclear accord (JCPOA) offered Iran relief from the multilateral sanctions on energy, financial, shipping, automotive and other sectors.

The shift in the U.S. policy began in late 2016, when the Congress extended the Iran Sanctions Act for a decade. That emboldened Trump’s unipolar stance.

But what are the immediate economic and strategic implications?

Implications of three-step destabilization Regionally, Trump’s stance leans on Saudi Arabia for economic and geopolitical support, as evidenced by the $110 billion arms deal with Riyadh in 2017, and reinforced security ties with Israel.

The increasing convergence of the U.S., Saudi and Israeli interests in the Middle East reflects a quest for regional primacy.

Initially, John Bolton, Trump’s neoconservative national security advisor, urged Trump to bury the JCPOA and push for a regime change before February 2019; the 50th anniversary of the Iranian revolution.

The new timeline is more flexible, but the old objectives remain. The three-step destabilization was started with the rejection of JCPOA (juridical pressure), which was followed by sanctions (to cause economic pain) that would provide the pretext for regime change (military intervention in the name of “peace and democracy”).

Despite deficiencies, data on Iran’s crude oil indicates some trends. According to OPEC, Iran’s crude oil production remained around 3.8 million barrels per day until the 2012 sanctions, which caused the capacity to plunge to 3 million. Following

the JCPOA, Iran’s production soared rapidly back to 4 million barrels. With Trump’s electoral triumph and the concerted effort at regime change, the capacity has steadily decreased to less than 3.7 million barrels If Iran’s production capacity takes a hit, that will penalize particularly its biggest importers; that is, China, India, South Korea and Turkey which accounted for twothirds of all Iranian exports in 2017, along with Japan, Turkey, Europe (Italy, France), and UAE (Figure 2). Consequently, the strategic responses to U.S. sanctions by Iran’s major export destinations matter.

Available data on oil purchases in the past 6-12 months indicate that China, India and Turkey have reduced their buys by about 25%, respectively; Japan by 20% and South Korea almost entirely. Yet, the role of “unknown sources” in Iran’s oil exports has quadrupled.

Conversely, import diversification tells something about their degree of reliance on Iran. Last year, China’s largest crude oil importer was Russia, followed by Saudi Arabia, Angola and Iraq. These top-4 suppliers accounted for half of China’s total oil imports. Among them, Iran ranked seventh accounting for 6.3% of the Chinese total. In turn, India’s largest suppliers featured Saudi Arabia, Iraq, Iran and Nigeria, which accounted some 60 percent of the total. Among these, Iran was third, accounting for 11% of the total - that is, twice as much as to China in relative terms.

Last year, global purchases of imported crude oil totaled $1.2 trillion reflecting robust demand from 129 countries. Asian countries accounted for more than half of the total. The largest oil importer was China (20.2% of total crude oil importers), followed by the U.S. (13.8%), India (9.7%) and Japan (6.8%).

Obstacles to the regime change ploy In May 2018, Trump had the U.S. withdraw from the JCPOA, while pledging to reimpose U.S. secondary sanctions by November 2018. The reinstatement drove Iran’s economy into mild recession as major companies exited the Iranian economy rather than risk being penalized by the U.S. Iran’s oil exports have decreased significantly, and the value of Iran’s currency has declined sharply.

The EU and some other countries are trying to sustain the economic benefits of the JCPOA flowing to Iran hoping to keep Tehran in the accord. From Iran’s viewpoint, these efforts have been promising, but remain far from adequate.

Geopolitically, the destabilization of Iran is designed to foster the regional supremacy of America’s key allies in the region, particularly Saudi Arabia and the Gulf states. Strategically, the Iran sanctions serve major oil exporters which just happen to be among the key suppliers of both China and India, respectively - that is, Saudi Arabia, Iraq, and the Gulf (Oman, Kuwait, UAE, Qatar).

Nevertheless, the Trump hawks’ Iran plans are based on misguided assumptions. Saudi Arabia and UAE can boost higher production levels some of the time, but not all of the time. A protracted effort could destabilize markets further. More importantly, Saudi Arabia (and the U.S.) can offer mainly “light crude oil,” but not “heavy oil,” which many countries need for refined oil products - and which Iran can offer.

Furthermore, China and Turkey, which oppose U.S. unilateralism, along with possibly India and some EU allies, will try to work around U.S. sanctions for economic, geopolitical and development reasons. While China is not critically reliant on Iranian oil, it vehemently opposes unipolar bullying.

There is also the last-resort scenario.

If the White House will push Iran against the wall, it could close the Strait of Hormuz - which none of oil exporters and importers want.

The Trump administration believes that America’s military superiority, economic clout and energy dominance suffice to undermine the JCPOA and achieve regime change. Yet, U.S. shale oil is not adequate to dictate unipolar terms to the rest of the international community. Moreover, most Americans see U.S. involvement against Iran as an unnecessary risk. Finally, U.S. economic power is overshadowed by its $22 trillion sovereign debt and the end of the expansionary cycle.

Global repercussions

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If the White House will push Iran against the wall, it could close the Strait of Hormuz which none of oil exporters and importers want

The JCPOA fostered Iran’s economic development, which would have had a constructive effect on its regional role. U.S. efforts at regime change have not played out expectedly even in Venezuela; and Iran is far more capable and determined to defend its rights in the international arena, with the support of much of the international community.

Economically, sanctions against any major oil exporter will diminish total capacity worldwide and boost crude prices.

Before the 2008 global crisis, oil prices soared to almost $150 per barrel. After a severe plunge to $40, they returned to $100 in the early 2010s. As the Fed’s rate hikes caused the U.S. dollar to strengthen, oil prices, which remain denominated in dollars, plunged to mid-$20s. Since then, Fed hikes have normalized and U.S. dollar steadied, which supports rising prices.

Until the late 1960s, America was still an oil exporter. In the past half a century, it has been an importer, which has constrained its geopolitical aspirations. That is now changing. To President Trump, America’s “energy dominance” means not just economic, but geopolitical muscle.

That explains much of recent U.S. assertiveness and regime change plans in Iran (and Venezuela). Yet, U.S. production accounts for barely 15% of global output, which limits its ability to move global oil markets.

Despite its vocal threats, the Trump White House is in a double-bind. If it does not deliver regime change in Iran, it will be seen as a paper tiger, which will further erode U.S. credibility in the Middle East. If it executes its violent plans, the result could be years of violent turmoil, destabilized region, derailed global prospects - and oil prices exposed to new supply shocks.

•The original version was released by China-US Focus on May 3, 2019 Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/

Police extra-judicial killings: when the protectors of lives turn to the takers of lives

Okechukwu Keshi Ukegbu

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ecently, Nigerians woke up to what could be considered joke of the century. Abayomi Shogunle, an assistant commissioner of police,was quoted as saying that” another way of avoiding being killed

by Special Anti-Robbery Squad (SARS) is not to speak Queens English to police officers”.

Unfortunately, Shogunle’s ridiculous advise came on the heels of a recent murder the alleged murder of Kolade Johnson by the operatives of Federal Special Anti- Robbery Squad(FSARS).

This has renewed the fears of Nigerians that the fear of trigger happy cops is the beginning of fear in Nigeria, lending credence to the notion that Nigerians, with whose taxes these policemen are paid, are living on the mercies of these security who derive joy in sending innocent Nigerians to their early graves.

Speaking recently at the Public Tribunal on Police Corruption, Brutality and Abuse in Southern Nigeria in Owerri, Imo State,Uche

Nwokocha, South East Coordinator of National Human Rights Commission (NHRC), accused the Nigeria Police Force of covering up for officers found guilty of extra-judicial killings.

While, decrying the high level of impunity that exists within the Nigeria Police Force,Nwokocha stated that the Police shield erring officers from prosecution and transfer them to another station instead of holding them accountable for their actions and prosecuting them.

The revelation by the rights body has compelled analysts to believe that the alleged attitude of the police authorities of shedding culprits of extra-judicial killings among police officers have emboldened more officers to that path. After all, it is a common adage in the Nigerian parlance a child whose father sends on a criminal mission executes with impunity.

An extrajudicial killing is the killing of a person by governmental authorities or individuals without the sanction of any judicial proceeding or legal process. Extrajudicial punishments are mostly seen by humanity to be unethical, since they bypass the due process of the legal jurisdiction in which they occur.

The Police Act (Cap 359- Laws of the Federation of Nigeria), among other things empowers the police with duties of:prevention and detection of crime; preservation of law and order; apprehension and prosecution of offenders; enforcement of all laws; performance of military duties within or outside Nigeria as many required by them or under the authority of the act or any other; and, protection of life and property. While

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the argument of whether the police have lived up to the expectations of fulfilling other duties above may generate mixed positions, over 90 percent Nigerians will consent to the fact that the key function of protection of life and property have been performed to the reverse.

Numerous cases abound of extra- judicial killings by the police. 2004 Civil Liberties Organisation’s Year Book chronicling the state of human rights and governance in the year under review and entitled “Clear and Present Danger”, warned that “If the government failed in 2004 to advance the democratisation process in the political sector, it also failed in the civil and social sectors .The government failed to curb the excesses of the public and other security agencies .The police remained the usual self and continued to maim and kill citizens in extra-judicial circumstances.

This was quite apart from the of extorting money from motorists and arresting innocent citizens for ransom. There is little doubt that the police and other security agencies are the source of the most egregious violations of civil rights, both in their political role as protectors of state security and their civil role as protectors of peace, law and order. These violations include not only those that occur in the streets, such as extortion, illegal arrest, and the use of undue force against citizens, but also detention without trial, torture and inhuman treatment, and extra-judicial killings”.

The year book also revealed how seventeen year old Izuchukwu Ayogu and Nnaemeka Ugwuoke whose mutilated bodies with eyes, brains, and reproductive organs,were found in

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a forest,after police in Nsukka arrested them on Sunday March 2001.The list is inexhaustible: The Ughelli 6 in 1983, Apo 6 in 2005, over 20 persons killed at Afiesere – Ughelli in 2006, Waliyu Abudu in 2008, Ramonni Balogun in 2013, Suzanna Alamagani in 2013, Ogbe Onokpite in November 2011, Aisagbonbuan Osagie, a truck driver, on 4th February 2014 in Benin city and Femi Awoyale on February, 2014.

We don’t want to delve into the argument of why our security agencies are still using live ammunition in the 21st century to demobilise mobs, while pepper spray and synthetic ammunition can serve the same purpose. That is an argument for another day.

Also, an article entitled” Weapon Handling and Phantom Discharge”, vested the security agents with responsibility of keeping the weapon pointed in a safe direction (where there would be no injuries to persons or damage to property in the event of a discharge); keeping the finger off the trigger until the gun is on a target and the decision to shoot is made;be sure of the target and the target backstop.

There have been calls to redesign the training of our security agencies to expose them to academic works on human psychology, human rights, and the constitution. The proponents of this arrangement also advocate a review of academic entry requirements of the security agencies. They are of the view that the proposal, if implemented, would go a long way in enhancing the security agencies’ performance and respect for the civil population.

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Debates rage as action pale on education and poverty Small Business handbook

Emeka Osuji

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here are now over 201 million of us and about 100 million (roughly 50 per cent) are extremely poor. According to the National Bureau of Statistics, our unemployment rate increased from 18.8 per cent in the third quarter of 2017 to 23.1 per cent in in the third quarter of 2018. A friend recently asked me why I continue to write on the economy and economic welfare of Nigerians who, according to him, are busy fighting for their lives in the face of rampant killings and insecurity, everywhere in the country, particularly in parts of the north. He wondered who was reading my hard financial stuff when gunmen were rampaging everywhere. I actually confessed to him that it has become so very hard for me to concentrate on the economy when all I hear is apocalyptic. He added that only those alive will worry about poverty and enterprise. It is indeed very hard to write about the same thing for so long and see it get worse. It’s no longer about poverty. It’s now about the uncertainty of life. People are not just poor; they cannot guarantee their lives for the next day.

Although he noted that Nigeria has always been a nation of debaters, my friend wondered why they continue to talk about everything but do nothing about anything. That, he further explained, was the reason why they debated the IMF loan under the regime of Gen Ibrahim Babangida and decided not to take the cheap loan from the Fund. Instead of the IMF loan, they opted to embark on a Structural

Adjustment Programme, which they later claimed was the beginning of the nation’s economic collapse. It is good to talk about a problem. Good suggestions could come from them. However, it is a different thing when everybody talks ferociously but nobody seriously does anything to effect the talk.

The debates have continued to rage.

Every day we debate insecurity and economic decline. Unfortunately, and perhaps due to our kind of leadership and political system (the only unique one like it on the planet), there is no way to hold public officers accountable for failing to deliver on their briefs. Or more appropriately, public officials who fail to perform their functions are not held to account either by those who appointed them or all of us. So people take office for the fun and perquisites of it but refuse the work entailed by the office. We debate their failure and make suggestions for improvement but they don’t even pay us any mind.

This probably explains why over the past five years, I have written in this column, every Wednesday without fail, on poverty reduction, enterprise and economic welfare, but poverty continues to run amok in my country. The critical suggestions we put out every week have become script of a movie meant to entertain without more. As if that wasn’t bad enough, we became home for the largest number of abjectly poor people under the sun. Sadly there is no sign of seriousness anywhere – lifestyles of leaders continue to spit the fire of affluence; public office holders continue to grow rich buying up anything with doors and windows at home and abroad. Meanwhile our cities are being overrun by foreigners we allow a free reign in the country.

After listening to my friend, I could barely muster the zeal to write this column for today. It is such a shame that we can’t even make a lifestyle adjustment, even if symbolic, to show that we hear the deafening sound of the silent death our country is facing.

All talks and no work has become our national symbol. What we find now is that Boko Haram will overrun a village, and civilians in some of our 774 local governments, probably those very far from where the attack happened, will come on television to make blind and uninformed propositions as to what happened and why the security agencies could not perform. Even then, it appears the media are talking to those who are willing to talk to them. Those who know what is going on do not even honour invitations to the television houses.

The next thing you hear is that security strategy is not for media consumption.

The result is a mass of conjecture and hearsay by people who are neither close to the points of conflict nor even understand the issues addressing the nation.

As we gradually lose our communities and economic bases, and indeed our livelihood to what have become fancifully tagged bandits and criminals, and nothing significant is happening by way of intelligent response, one thing is becoming clear – Nigerians are running out of debating capacity.

The concept of nation building is a complex amalgam of art and science, which creates a unified but often heterogeneous entity. However, a nation can only get built when consistency, honesty and determination, are put to work. In order words, to build a nation is to be engaged in a process whereby people of diverse origins, languages and religions, come together to forge a common destiny for all citizens. It involves the creation of a legal order, public education systemor even a restructure of existing institutions and systems to reinforce the unity of a people and create an integrated national economy. Nation builders seek to construct a nation or restructure an existing one, using the instrumentality of state power, in order to unify and create a stable society. We complain about out-of-school children but we have a bigger problem: out-of-job youths. Education has lost its charm.

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Listen to the army of terrorists claiming to be in Zamfara openly promising Nigerians a piece of hell on earth and you see how ignorance and lack of education can eat up young men

Why should anyone seek education in Nigeria of today?

To build a nation is not only to forge a cohesive whole from disparate parts but also to create an economic base that will sustain the nation so created.

The mainstay of any economy is not its politics. It is its economy, even if these phenomena are mutually reinforcing.

To create an economic base for a nation, the builders must articulate a system or process that takes the people’s strengths and weaknesses together with the opportunities and threats they face, toset standards of performance. The entrepreneurial spirit of the Igbo, and their commercial acumen, which have helped them to provide above-national average living standards to their families, and to survive, despite obviously enormous challenges they face in the country, have been recognized internationally. The Igbo have a well-evolved apprenticeship system that works. They also have an entrepreneurial culture that has helped to expand the markets and commercial activity wherever they are found, in and out of Nigeria.

Perhaps there is something other Nigerians could learn and benefit from this endowment.These could become a national rallying point for the evolution of a culture of economic independence, resilience and entrepreneurship for Nigeria.

I dare say that illiteracy is still Nigeria’s biggest challenge. Unfortunately, education remains her biggest victim.

There is evidence of the dangers of illiteracy and half education, everywhere one looks. From leaders who must steal every kobo trusted to them to fill their confidence gaps to dumb projects in many places. Listen to the army of terrorists claiming to be in Zamfara openly promising Nigerians a piece of hell on earth and you see how ignorance and lack of education can eat up young men.

Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

How effective can the new Nigerian competition and consumer protection agency be?

Osayomwanbor Bob Enofe

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he Federal Republic of Nigeria recently adopted a Competition Law as part of its overarching trade policy to make Nigeria a more competitive and attractive destination for doing business. However, following the inception of the law, the newly constituted Federal Competition and Consumer Protection Commission (FCCPC) is yet to bring a competition law related issue. Generally, given the complexities that surround the introduction of a Competition Law, it would be wrong to dismiss the caution on the part of the agency.

Notwithstanding, given the generally high expectations that accompanied the introduction of the law, in Nigeria, and the rhetoric that surrounded the introduction of the framework, time will soon tell the extent to which the commission and its reform proponents accorded with the crucial advocacy and capacity building components, of the reform process, to guarantee the law’s success.

Generally, national trade policies refer to the policies of governments (and their agencies)

that are directed at optimising trade within their jurisdictions. The policies can take diverse forms as introducing or removing tariffs and other monetary barriers to trade; incorporating the requisite steps concerning Rules of Origin requirements (ROOs) in bilateral, regional and international trade; deregulating and liberalising various trade and services sectors; actualising FDI openness; instigating trade facilitating measures, and introducing a Competition Law. The competition law aims to regulate the behavioural and structural issues of firms that can lead to an over-concentration of markets, in ways that would be detrimental to the commercial interests of a society and its consumers.

Aspects of the law include, controlling mergers and acquisitions; prohibiting anti-competitive practices, such as the abuses of dominant positions by firms, and cartels, and addressing concerns related to state aid. As with other types of trade policies, effectively introducing and implementing a Competition Law requires a translation of the objectives of the framework into societally backed and appreciated tenets, if the law is to be successful.

A key means by which the above transformation process can be achieved is by adopting a highly targeted and effective scheme of advocacy that incorporates measures aimed at occasioning the requisite changes in possible, counter, social and societal norms. Ideally, the scheme should identify the core private actors that can have converging/ diverging interests, on the law to be introduced (e.g. monopolies v. nascent start-ups in the case of a competition law), but are key

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to the success of the reform process; properly outline how the various trade and investment support institutions (ISIs) can play the roles of an arbitrator between the possibly divergent interests of their members; possess a keen understanding of the relevant issues to be addressed in the reform process, to enable the public sector achieve the right balance between private interests and public interests and objectives, and effectively advocate or propagate the public sector’s position (through public consultation fora, position papers, impact assessments etc). Also, following the introduction of a Competition Law, the requisite advocacy measures can include engaging with the relevant stakeholders to incorporate the prime aspects of the reform into the necessary educational syllabi; working with the various societal actors to ensure a thorough dissemination of the reform’s purposes and objectives, and carrying out a continuous training and acclimatisation of the key enforcement officers, that will be regularly placed in the front line of actualising the law’s objectives. In all the cases, the processes of advocacy should be directed at occasioning the highly needed, broad-based and bottom-up, social engagement and acceptance of the anticipated framework, and preventing possible reform bottlenecks.

Especially, in developing countries, the advocacy requirements of an effective Competition Law reform process are marked, and they arise from the particularities of the countries, directly contrasted to the success of a Competition Law. For example, issues like mass- misunderstandings of the purport of a competition law frame-

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work (and how the law can interface with other applicable trade policies to promote growth and marketability) exist. Also, vested interests that can severely retard the chances of the reform effort equally exist. Furthermore, the resources available for the enforcement of a Competition Law regime in developing countries are distinctively limited, making advocacy a crucial tool for the success of the framework.

Nigeria recently adopted its Competition Law framework, on the 6th of February, 2019, ushering in a new era of (significantly) harsh penalties for what had been previously accepted business practices. However, *following the entering of the law into force, it remains to be seen the extent to which the law’s reformers had effectively incorporated the above advocacy requirements into the law’s reform process. Especially, in Nigeria, the law was only passed after a protracted period of 19 years, and, like many other developing countries, Nigeria suffers from its share of developmental issues—including a significant proportion of the country’s citizens being poorly educated (not least on the nuances of a competition law framework). Also, manifest corruption is rampant in the country, with vested interests having large and consolidated stakes in prominent areas of the economy, now to be regulated by the Competition Act. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr Bob Enofe is an international researcher in International and Comparative Competition Law

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Excellence doesn’t come by chance

Character Matters with Daps

Dapo Akande

U

ntil we re-orientate the mind of Nigerians to embrace excellence, stubbornly insisting on things being done to perfection and making precision our watchword, this country will remain in the deepest bowels of the Third World. Truth is, to arrive at a place of excellence requires discipline, intent, deliberacy, patience, faithfulness to an ideal and a mind which utterly rejects any suggestion to comprise one’s standard. In a nutshell, it’s a mindset.

I found myself engaged in a discussion with a teacher at Nigeria Tulip International College, Lagos,(formerly known as Nigerian Turkish International College, NTIC) not too long ago, as there was something I wanted him to do for me the very next day. He quickly informed me that he wouldn’t be able to do it until a couple of days later because he would be taking an exam the next day. I was a little confused because schools had already vacated for the Easter holidays, so why would the children go back to take another set of exams? As if he knew what I was thinking, he then proceeded to apprise me of the fact that all their teachers sit for two exams every term.

One, I’m guessing may be set by one of the schools within the NTIC group

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and the other is a professional Cambridge exam. Wow! NTIC’s academic predominance especially in Maths and the Sciences is anything but a fluke.

Once the children’s end of term exams are over, it’s the turn of the teachers.

They do this every term. And they must pass! This pursuit of academic excellent is wisely supported by their strict moral teachings. What most may not know is that excellence is an ideal conterminous with character, so why should one be surprised that God continues to bless their efforts? Excellence doesn’t come by chance.

Does it still surprise you that as we’ve managed to lose any sense of perfection in almost all strata of daily life, we’ve become a nation of anything goes? If you’ve been “privileged” to have dealings with a typical Naija artisan, you will know exactly what I mean. A brick layer will construct a doorway where someone even as far away as Timbuktu will see very clearly that one side is nothing less than half a foot higher than the other side but when you point it out to him with as much respect as you can muster, while trying desperately hard to disguise your annoyance, “Baba Muri, it looks like this right side is a bit higher than the left one”, you’re very likely to hear the typical response that’s ever ready to roll of their tongue, “O de wa okay” (And it’s okay as it is). And truly, in his eyes, it really is good enough. Perfection is an alien concept to him and by pushing him to strive for it, you’re made to feel like a wicked person who just can’t be satisfied no matter what he does. “Wahala man yen ti poju jare” is the common attitude. Not “how can I do it better?” In a society where even something as simple as enquir-

ing about the time is likely to elicit a vague response like “it’s to 2” rather than the more helpful “it’s 25 minutes to 2” or “10 minutes to 2”, why would we see the need to be precise about anything else? This speaks to the mindset as perfection is never vague.

It’s an intentional, unambiguous and explicit benchmark.

The sad thing is, this same attitude of elevating mediocrity as the standard bestraddles our whole society. Political appointments are made, not based on the appointees’ reputation for excellence but based on political or more primordial sentiments. Nepotism, which will forever remain a stranger to excellence is the norm and make no mistake, this is by no means peculiar to politics. A Bank MD who places his personal interest of accumulating wealth above the success of the institution he leads is as devoid of the spirit of excellence as he’s morally bankrupt.

An election candidate who’s corrupt background is known to all cannot be expected to perform with excellence should he win the election because he has already developed a propensity to comprise. The point I’m trying to make is that a man who attaches no value to remaining faithful to integrity is far less likely to hold excellence as sacrosanct. Jim Collins, the author and Professor ushered us into his masterpiece, Good to Great, with this highly instructive quote, “the enemy of great is good”. Anyone satisfied with good can never become great.

A man, certainly counted amongst the greatest political leaders of our time, Lee Kuan Yew, said something in his book, “Third World to First”, which continues to offer me a glimmer of hope for my country Nigeria, despite the fact that he had, without mincing

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What most may not know is that excellence is an ideal conterminous with character

words, completely written us off. In appraising what needed to be done to successfully transform his country, Singapore, he said: “This meant we had to train our people and equip them to provide First World standards of service. I believed this was possible, that we could reeducate and re-orientate our people with the help of schools, trade unions, community centres and social organizations. If the communists in China could eradicate all flies and sparrows, surely we could get our people to change their Third World habits.”

Lee Kuan Yew observed, consulted, pondered and came to the understanding that excellence was indeed attainable. Just as importantly too, he believed. Once he’s able transform the people’s mindset, then their habits will also change; dropping unhelpful habits to pick up helpful ones, dropping habits which perpetuate backwardness to pick up habits which guarantee progress and development.

Reform your mindset and material transformation will undoubtedly follow. Without a shadow of doubt, he was right. The saying tells us the taste of the pudding is in the eating. Well, the pudding this gentleman baked, tastes excellent.

Like I always say, social rejuvenation doesn’t require a population of geniuses; only a steely resolve by individuals like you and I, to always do the right thing, beginning from own little corner.

Changing the nation...one mind at a time.

Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Policy takeaways from Ngige’s ‘Surplus doctors’ theory

Vincent Nwanma

O

ne of the policy takeaways from the recent gaffe by Nigeria’s minister of labour is that the country’s problems appear intractable more from wrong diagnosis and faulty approaches than from the nature of these challenges. After all, nations all over the world are going through tough problems, but countries that tackle their difficulties with the relevant tools are recording successes.

It is not so with Nigeria, and an excellent example of why Nigeria’s problems appear intractable manifested in Dr Chris Ngige’s profoundly faulty claims and prognosis of a serious human problem.

Ngige, a medical doctor by training and politician by profession, told Nigerians and the whole world on TV that Nigeria, the leading developing and poor country had (as at the date of his interview) a surplus of medical doctors), and therefore that this poor country could afford not to care

whether the medical doctors stayed in the country or left.

It is odious that a man who has served as minister of labour for close to four years could utter such a claim, the infantile attempts later by his media assistant to insinuate that his boss was misquoted, notwithstanding.

Some pertinent questions arise from his claim. Could Ngige have made this claim if he had with him in the TV studio his counterpart in the Ministry of Health? What would the minister of health have said in response to this bogus claim?

The point here is that our public sector is characterised by discordant tunes. That explains why there are often various versions of the same information sourced from different units of the government.

Is it possible that at the end of Nigige’s tenure one of the conclusions he will put in his handover note to President Buhari is that Nigeria has a surplus of medical doctors and therefore that government should not bother itself about that sector. If that is so, Nigerians would also want to know his summary of the situation in other sectors of the economy.

The import of Ngige’s comment should not be limited to just the medical profession.

A minister’s utterance carries weight and tells a lot about his disposition and capacity as a public servant on whom the nation depends for the articulation of possible solutions to one of the challenging problems facing Nigeria: unemployment.

It is instructive that a few days after his

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TV debacle, the minister said in a statement to an event that Nigeria indeed faced a critical unemployment problem, with the unemployment ratio projected to be about 35 percent in the next few years. Unemployment is real, and must be confronted with deliberate planning.

Being a minister in Nigeria of today has passed that stage where office holders regaled in the tradition of “talk now, think later,” under which they often hid to mask their incompetence. In such situations, they often resort to the claim that they were misquoted, as has already happened in this case.

Unemployment has been described variously, including as a time bomb, and the cause of the diverse vices threatening the survival of nations, including Nigeria.

Therefore, any fellow appointed to head the ministry of labour cannot afford to be flippant about his duties. Such a fellow should, at the minimum, be a creative, innovative thinker, an astute manager of resources.

Policymaking, including finding solutions to unemployment, is not magic; it is a scientific approach to problem solving. It starts with a frame. Framing seeks to situate the problem by first admitting that there is indeed a problem known by its definite nature. Frames give meaning to the problem being analysed or discussed for purposes of identifying causal factors and therefore prescribing possible solutions. Therefore, if the identification and framing stages are faulty, as the minister clearly showed, it is a foregone conclusion that the prescription is

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bound to be unfruitful. This explains why the nation’s problems persist despite endless meetings at the ministries and departments.

The nature of policy making is that there is often a gap between problem identification and policy articulation to address the problem, and the actually implementation of the measures. Sometimes, the delay arises from differences among the policy analysts in terms of the real cause of a problem and appropriate policy instruments to tackle the issue. Ngige’s postulation means that we are far from seeing an end to the challenges in our labour market.

What Nigeria has is cheap labour, not necessarily surplus labour. And that is why many Nigerians, whether doctors, nurses, teachers, or even cleaners, queuing at foreign embassies for visas to countries where their labour power commands higher values.

This is the reality in the developing world.

Labour in Nigeria and the rest of developing world is cheap simply because of the law of demand and supply. When these countries grow their capacities to the point where the human factor is fully put into use, then labour will be able to command its appropriate price.

The solution is certainly not for the government to fold its hands, and wish them safe journey. The ministers, with Ngige or whoever will come after him, as the coordinator, should drive this process.

Nwanma, a Knight-Bagehot Fellow and World Bank Scholar, is Deputy News Editor at BusinessDay

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

Imperative of getting Nigerian youth employed

J

obs are central to the economic development of any nation. Economists have long established a link between the employment rate and economic growth. When citizens are gainfully employed and produce valuable goods and services, both the citizens, the economy and the society prosper and vice versa. And that is the first indices with which leaders are judged in advanced economies is the number of jobs created and how low the unemployment rate is.

As at 2010, the unemployment rate was 5.9 percent. It rose steadily yearly to 8.19 percent in Q2 of 2015 at which point the current government came to power. In Q3 2017, the unemployment rate had more than doubled from to 18.8 percent and peaked at 23.10 percent in the Q3 2018 while unemployment rate and underemployment had also jumped from 26.53 percent in Q2 2015 to 43.3 percent in Q3 2018.

In concrete terms, 20.9 million Nigerians are currently unemployed while 18.2 million are underemployed. This brings the total of unemployed and underemployed to 39.1 million people out of a total labour force of 90.4 million.

The youth (45 per cent of the population is aged below 15)

account for the majority of the unemployed and underemployed in Nigeria. While youth unemployment in 2010 was 8.05 percent, it has climbed to 13.41 percent in 2017 and climbed to an all time high of 38 percent in Q2 2018. It however decreased to 36.50 percent in Q3 2018.

Concretely, there are 44 million youth in the active labour force.

Out of these, only 19.73 million, representing just 45 percent of the active labour force, are in full time employment. The other 55 percent are just trying to eke out a living or as we say in Nigerian parlance, hustling with no full time employment.

Sadly, youth unemployment has been growing steadily since 2010. However, it has intensified since 2015, fuelled, no doubt, by a weak economy and huge population growth.

Meanwhile the labour force of the country expanded by about 15 million in three years between 2015 and 2018 from 75.9 million in Q3 2015 to 90.5 million in Q3 2018.

While estimates in 2014 by the NBS show that 1.8 million graduates in the country move into the labour market every year, the Stutern Graduate Report (2016) suggests that 2.5 - 3 million young Nigerians annually enter the labour market without the prospect of jobs. This is not to talk about those who could

not go to school (a recent report from UNESCO put out of school children in Nigeria at 13 million), those who only completed primary or secondary school and couldn’t proceed to higher institutions. Actual figures from the NBS show that about 9 million youth have entered the labour market since 2015 and are not able to find employment.

This is scary!

The problem is not just about not finding work; it is also about those in employment losing their jobs as a result of the weak economy. While according to available statistics at the NBS, Nigeria created a total of 1.6 million jobs in 2015 and 1.538, 208 jobs in the first three quarters of 2016, a total of 7.956 million Nigerians became unemployed between January 2016 and September 30, 2017. The NBS estimated that the number of unemployed Nigerians rose from 8,036 million in 2015 fourth quarter to 15.998 million in third quarter of 2017. Equally, data from the Manufacturers Association of Nigeria show that about 272 manufacturing plants were shut down across the country in 2016 alone.

The import of this is clear: the economy is not creating opportunities fast enough for its youthful and growing population. A clear sign is that while the country’s population is growing at a healthy 2.6 percent

per annum with a youth population of over 60 percent, economic growth has remained well below 2 percent.

Jobs for Nigeria’s ballooning population appears to be the most pressing national emergency in Nigeria today because youth unemployment is a waiting time-bomb and if nothing is done about it, the millions of jobless youth we through into the system will make the country ungovernable for us all.

Certainly, governments do not have the capacity and resources needed to create the kinds of jobs needed to absorb Nigeria’s young population and keep them away from mischief. Only a strong collaboration with the private sector and massive private sector investments will create the opportunity for creation of jobs at that scale. But just allowing the private sector to take charge of the economy alone won’t do the magic. There should be a high level government plan on job creation to delineate sectors and their potentials to create massive jobs. With that, the government can then begin a strategic engagement with the private sector and investors to nudge them towards its plan while at the same time removing bottlenecks and obstacles through policies to aid massive investments at the scale required to creating the desired jobs.

Bashir Ibrahim Hassan

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

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo

Enquiries NEWS ROOM 08169609331 08116759816 Lagos 08033160837 Abuja

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Wednesday 08 May 2019

BUSINESS DAY

COMPANIES & MARKETS

13

FSDH raises shareholders’ dividend by 38.91% leverages technology for growth Pg. 14

COMPANY NEWS ANALYSIS INSIGHT

BANKING

Big banks remain cautious as loan-to-deposit ratio hits 5-year low ISRAEL ODUBOLA & SEGUN ADAMS

I

ncentivized by juicy rates in Nigeria’s fixed income space, the country’s tier-one lenders have remained conservative in disbursing credit to customers evidenced by their lowest loan-to-deposit ratio (LDR) in the first quarter of the last 5-years.

Analysis of the loanto-deposit ratio of Access Bank, First Bank, United Bank for Africa, Zenith Bank and Guaranty Trust Bank revealed that they loaned 54 percent of total deposits received to customers, despite growing deposits to a 5-year high at N18.7 trillion combined.

Conceptually, loanto-deposit ratio shows the percentage of total deposits given to customers as loans. In other words, it indicates how much lenders give as loans for every N100 collected from customers as deposits.

Deposits collected from customers are lia-

bilities to the banks, and they are obligated to pay interest on savings and term accounts. To ensure this responsibility is met, banks strive to generate income from those deposits by lending to customers (individuals, corporates & government) or putting them in investment securities.

There is a consensus among financial analysts that an ideal LDR should hover around 80 – 90 percent. While a higher ratio might mean higher income, banks are wary of loan default and liquidity risk.

A low ratio, on the other hand, is indicative of a bank’s inefficiency in generating income from its deposits.

Nigeria banks, wary of the risk inherent in the economy, just emerging from its first recession in 25-years, have been enticed to invest more of those deposits in the fixed-income securities, leaving customers with less credit.

To Fola Abimbola, analyst at FBN Merchant Bank, the slow growth

Source: Companies’ financials

of the economy coupled with election uncertainty in the quarter, played a crucial role in banks’ LDR falling to a record-low.

“Moreover, over the last couple of years, banks have been ramping up deposits, and they have not been growing their loan, as such loan-to-deposit ratio has fallen, and they have been investing more in fixed-income securities” said Abimbola.

First Bank led the pack with LDR of about 63 percent in the review

quarter, implying that the lender loaned out N2.7 trillion out of N4.2 trillion total deposits received. This is actually the least compared with 81 percent in Q1 2015, 71 percent in Q1 2016, 73 percent and 71 percent in Q1 2017 and Q1 2018 respectively.

Behind First Bank comes Nigeria’s biggest lender by assets, Access with 59 percent LDR. This means that the lender gave out loan worth N2.7 trillion from N4.7 trillion total depos-

its received.

Guaranty Trust Bank (GTB) and Zenith Bank’s LDR stood at 51 percent and 50 percent respectively in the review quarter, compared with 59 percent and 52 percent reported a year earlier.

While GTB loaned N1.3 trillion to customers from N2.5 trillion deposits received, Zenith Bank gave out N1.8 trillion to customers as loans from N3.6 trillion total deposits collected.

United Bank for Af-

rica had LDR of 46 percent in the review quarter, which is 9 percent points lower than 55 percent recorded in the previous corresponding period. UBA gave out loans worth N1.7 trillion to customers from N3.7 trillion total deposits collected.

The five banks collectively gave out loans worth N10.2 trillion to customers from N18.7 trillion total deposits received, with LDR averaging 54 percent in the review quarter.

OIL & GAS

Forte oil names new investors in upstream assets, Power Distribution Company …declares special dividend for shareholders OLUFIKAYO OWOEYE

F

ollowing approval by shareholders of Forte Oil at the last extraordinary general meeting held in February, Forte Oil Plc has notified the Nigerian Stock Exchange (NSE) that it has entered into a share sale and purchase agreement with Calvados Global Services Limited in line with its divestment plan and sale of its shares in Amperion Power Distribution Company Limited as the Board of the company has

also approved a special dividend of N1.15 per share from the proceeds of the divestments of the subsidiaries of the company to its shareholders.

According to Forte Oil, it has equally concluded the divestment from the sale of its shares in AP Oil and Gas Ghana Limited to Cobalt International Services Ghana Limited while noting that it has also entered into a share sale and purchase agreement with Gbonka Oil and Gas Limited in relation to its divestment from

and sale of shares in Forte Upstream Services limited.

On December 24, 2018, Forte Oil notified all its stakeholders through the Nigerian Stock Exchange that its majority shareholder, Femi Otedola, reached an agreement with Prudent Energy team to divest of his full 75 percent direct and indirect shareholding in the company’s downstream business. According to the notice, Otedola took that decision to explore and maximize business opportunities in refining and petrochemicals

business.

Forte Oil plc said the decision to divest from upstream services and power-generating businesses will boost its distributable earnings for the benefit of shareholders. Forte Oil plc had in December last year notified NSE and the investing public that Otedola’s divestment from the downstream business is pursuant to his decision to explore and maximize business opportunities in refining and petrochemicals.

Figures from its Unaudited first quarter

results for the period ended March 31, 2019 shows revenue grew by 50percent to N42.55bn from N28.36bln in the previous quarter.

Profit Before Tax also grew by 877.4 percent

to N454.73m while Profit After Tax grew by 498.1percent to N650mn. Net Assets declined by 73.1percent to N17.03bln from N63.56bln as at 31st December 2018.

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

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Wednesday 08 May 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

FINANCIAL SERVICES

FSDH raises shareholders’ dividend by 38.91% leverages technology for growth HOPE MOSES-ASHIKE

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SDH Merchant Bank group, which marked seventh year of operating as a merchant bank this year, has declared a total dividend of N3.07 billion to its shareholders for the financial year ended 31 December 2018.

This represents a 38.91 percent increase over the level of N2.21 billion it paid to the shareholders in the corresponding period of 2017. The amount translates to N1.10k per share as against N0.79k per share in 2017.

FSDH Group achieved a profit before tax (PBT) of N6.7 billion for the financial year ended 31 December 2018, representing an increase of 21.4 percent from the profit of N5.57

billion for the year ended 31 December 2017.

Profit after tax (PAT) attributable to the group increased by 13.2 percent to N5.37 billion from N4.74 billion for the previous year.

Earnings per share (EPS) for the group was 166 kobo, which was 2 kobo more than the 164 kobo earned in the previous financial year.

During the period under review, all its subsidiaries posted profits. Consequently, FSDH Asset Management (FSDHAM) recorded a PAT of N326.87 million, while the PAT recorded

by Pensions Alliance Limited (PAL) and FSDH Securities (FSDH-SEC) were N1.47 billion and N64.16 million respectively.

Speaking at the annual general meeting in Lagos, Femi

Agbaje, Chairman, said, “We expect that the Nigerian economy will continue to recover in the short-to-medium term. The expected increase in activity in the Nigerian economy should offer growth opportunities for many sectors of the economy”.

Hamda Ambah, managing director/CEO of the bank, said the bank remains committed to fostering mutually beneficial relationships with our customers by providing tailored solutions that meet their specific needs.

“The FSDH Group will continue to work within a robust risk management framework leveraging on technology”, she said. “By deploying technology, we will be able to further leverage same to bring funds cheaply and more like the commercial banks”.

L-R: General Manager, Yafeng Nigeria, Mr Seiful Gaya; Vice-President, Xiaomi, Mr Ling Ming Wang; Xiaomi brand loyalist, Mr Temidire Olajide; Chief Executive Officer, Jumia Nigeria, Juliet Anammah; and special guest, Senator Kabir Gaya, during the launch of Xiaomi’s Redmi Note 7, in Lagos.

TECHNOLOGY

StarTimes invests $220m in Nigeria’s pay-TV market …negotiates for AFCON ODINAKA ANUDU

S

tarTimes has invested over $220 million in Nigeria in a bid to become the market leader and offer quality digital satellite services to the citizens.

David Zhang, new chief executive officer, StarTimes Nigeria, said in Lagos on Monday that the company employs over 1,000 Nigerians directly and more than 3,000 indirectly through its dealers.

Zhang explained that StarTimes is negotiating for broadcasting rights for the upcoming African Cup of Nations, adding that it is also interested in bringing the much-cherished English Premier League to Nigerian viewers when the rights of the current holders expire.

He said that due to the payTV’s partnership with the Nigerian Television Authority, it has free-to-hear access, stressing that Nigerians will get

good return for their money in his tenure, as others before him have done.

“The bidding rights of English Premier League and others do not happen every year. We had Bundesliga rights for three years before it expired in 2018 and we had to renew it. We are interested in broadcasting EPL to Nigerians,” he said.

The payTV market is mostly dominated by MultiChoice’s DStv and StarTimes, with each introducing several new channels to retain customers.

Previous players such as CTL, FSTV, DAARSAT, HiTV and lately, COMSAT and ACtv all promised something big but died natural deaths.

MultiChoice launched in Nigeria in 1993 with DStv. It added a down market platform— GOtv—iIn 2011. On the other hand, StarTimes, also a down market offering, launched in 2010. It added an up-market

variant in 2015. Both have remained in business albeit with different levels of success.

Zhang said due to StarTimes’ influence in Africa, the Chinese government selected it to implement access to digital satellite TV for 10,000 African Villages, with Nigeria getting 1,000 of those villages.

“This project is almost completed and we are proud to be the contractors in all of Africa,” he said.

The new CEO pointed out that StarTimes started mainly as a pay-tv company, offering DTT service that allows Nigerians to watch digital satellite TV from different parts of the country using just an antenna and a decoder.

“Our customers on digital terrestrial television (DTT) now enjoy more than 100 channels in sports, entertainment, news, kids programs, religion and much more,” he stated.

COMPANY RELEASE

Easykobo winner achieves 17.98 % ROI on stock

C

hikezie Nwachukwu has emerged the winner of the Easykobo Easter Bonanza achieving an ROI of a whopping 17.98 percent in less than two months and more importantly during a time when bears had royally overpowered the market.

The competition, Easter Bonanza, played by thousands of people all over the nation, was a stock-trial game, where anyone can register on the website, and join the competition. It is a stock-simulation game where you are trading in the stock market, observing its ups and downs, but with virtual money. So, you don’t spend a kobo, but can win thousands. The person with the highest ROI in the given time, emerges as the winner.

Chikezie, 36- years old won N 20,000 and more importantly mastered the art of the “Stock Market”. The young man from Abia State says “ ROI of 17.98 is not an easy task, I noticed that

consistency pays ,if you can pull a trade of 0.5 percent gain today and another 0.4 percent tomorrow, then you are on track.

My strategy is to focus more on low cap stocks with a P/E ratio of not more than 10 .I realised that the period consideration for the game is short, so using fundamental analysis may not work fine because stocks takes time to reveal their full value, So,I picked a fundamentally good stock; then I used trend analysis.

Easykobo historic price trend of stocks helps a lot in technical analysis .Some of the stocks I bought were ( FIDELITYBK ), ( FCMB ), ( STERLNBANK ), ( TRANSCORP ), ( ZENITHBANK ) , ( GUARANTY ) , ( ACCESS ) , ( CHAMS )(for speculation ). My advice to young investors would be that speculation is not good for the body and no matter how sure you are before a trade don’t go in 100 percent. The young man running a business has been using Easykobo for the last three years www.businessday.ng

now and says “ I have never ever seen anything like the historic trend where the daily price of stocks dating back to 10 years is given. It is the best in Nigeria.”

Badmus Oladimeji was the second runner-up in this competition and definitely gave Chikezie a run for his money. He says “ In both bearish and bullish market there are always opportunities, in a bear market you search for stocks that have gotten to their lowest low or almost and that stock must have positive results but due to bearish sentiments in the market it get low, you can also position in stocks that have bounce from loss position to profit because speculators tend to watch for that stocks. My advice for young investors is that they should use easy Kobo platform to learn about how to trade in stocks ,with the believe that they are using their real money and not virtual cash, because it will give them good understanding about how the market works”

Toyin Adeniji (l), executive director, micro enterprises, Bank of Industry; Willie Obiano, governor, Anambra State, and Yemi Osinbajo, vice president, Federal Republic of Nigeria, at the Eke-Awka Market, Awka during the launch of the second phase, ‘Next Level’, of the TraderMoni/MarketMoni scheme in Awka, the Anambra State

L-R: Folurunsho Ladeji, head, management information service, UTL Trust Management Services Limited; Kingsley Uzomba, sales manager, Armour X Halogen; Dayo Abegunde, director, Armour X Halogen; Oladapo Ogundijo, head, network security and infrastructure, Fidelity Pension Managers Limited, and Oluwatosin Babafemi, head of engineering, KOBO360, during Armour X Halogen’s maiden Cyber Security awareness workshop themed “Cyber Warfare: Are You Protected?” in Lagos

COMPANY RELEASE

KOTEX launches new range of sanitary pads, tampons brand IFEOMA OKEKE

K

imberly-Clark officially launched its new range of sanitary pads and tampons brands into the Nigerian market on Friday 3rd of May 2019.

The event, which held at Oriental Hotel, Victoria Island Lagos, was attended by various dignitaries and celebrities.

Koushik Ananth, KimberlyClark, GBA Director for West Africa, briefly outlined the stages that culminated in the product launch and thanked the various state and federal agencies which helped the company achieve this feat, while recognizing the talent of the Kimberly-Clark team in

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Nigeria.

Kemi Saliu, marketing manager, WECA, stated that in less than five years of Kotex’s presence in Nigeria, the company established a leading position in providing women with quality, smooth feminine care.

She attributed the success of the brand to the high and consistent quality of the product, the support of Kotex trade partners and the loyalty of its consumers.

“Introducing the new range to our existing products in Nigeria is part of Kimberly-Clark’s mission to provide essentials for a better life for our consumers.

Kotex pads and tampons have a superior, cotton-like feel that give women a comfortable @Businessdayng

experience”, she added.

The highlight of the event was the unveiling of the ‘New Kotex Ultra Sanitary Pads and Tampons’.

“This exemplifies Kotex innovation in developing highquality cotton-soft, fast-absorbent pads to that allow period experience to be discreet and comfortable.

Now, with the launch of these new sanitary pads and tampons, the company has a comprehensive range fully available in stores and outlets for women in Nigeria and we encourage everyone to tell a friend, an aunty, a mother or sister to try Kotex and convert them to becoming a Kotex Woman”, Sailu added.

Wednesday 8 May 2019

BUSINESS DAY

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Wednesday 8 May 2019

BUSINESS DAY

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Wednesday 08 May 2019

BUSINESS DAY

BANKING

17

In Association with

Banks’ widening gap between maximum lending, deposit rate not growth friendly Stories by HOPE MOSES-ASHIKE

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he banking industry’s maximum lending rate remained high at 30.56 percent in February 2019, whereas the yawning gap between maximum lending rate and consolidated deposit rate was as wide as 26.23 percent.

“This picture is not growth-friendly”, said, Isa-Dutse, Mahmoud, member of the Monetary Policy Committee (MPC) in his personal statement, adding that reviewing the monetary policy rate in a downward direction seems to be the right way to go in the absence of direct controls.

The Central Bank of Nigeria (CBN), in March, surprised the Nigerian analysts, economists and investors with a 50 basis point 0.5 percent reduction in its benchmark interest rate to 13.5 percent from 14 percent since July 2016.

The regulator however, retained asymmetric corridor around the MPR at +2%/-5%; Cash Reserve Requirement (CRR) at 22.5 percent and Liquidity Ratio at 30 percent.

Nigeria’s money supply was seen to be constraining the growth momentum in the economy as Godwin Emefiele, governor of (CBN) opined that the current performance of monetary aggregates have been unsatisfactory.

According to Emefiele, both the broad and narrow money aggregates, M2 and M1 performed below their benchmark in February

2019. Specifically, M2 contracted by 1.98 per cent over the preceding December 2018, and about 14.47 percentage points below the 2019 growth bench mark of 12.99 per cent.

Similarly, M1 declined by 6.16 per cent compared with the provisional growth bench mark of 17.08 per cent. Credit to private sector grew by 6.41 per cent, year to date, compared to the provisional bench mark of 9.41 per cent.

Similarly, aggregate credit to the domestic economy grew by 10.64 per cent as against its

provisional bench mark of 11.82 per cent.

Other members of the Monetary Policy Committee also corroborated with the CBN governor on this. Isa-Dutse, Mahmoud, MPC member said, “it is noteworthy that most of the key monetary aggregates underperformed relative to the provisional benchmarks”.

In February 2019, M3 grew by 4.31 percent -well below the benchmark of 14.47 percent, while M2 and Net Foreign Assets (NFA) contracted by 1.98 percent and 7.47 percent

relative to benchmark figures of 12.99 percent and 18.66 percent, respectively. These statistics indicate that monetary policy has been quite restrictive and that money supply may be constraining the growth momentum in the economy. Thus, there is a need to review the current monetary policy stance to promote growth.

In his personal statement, Obadan, Mike Idiah, another MPC member, said developments in monetary aggregates suggest scope to expand money supply to drive economic growth. Broad money supply (M2) declined by 1.98 percent in February 2019 below the level at end-December, 2018. The annualized growth of M2 stood at -11.91 percent compared to the 2019 provisional benchmark of 12.99 percent.

On the other hand, annualized growth of broad money aggregate (M3) at 25.88 percent was, however, above the 2019 provisional benchmark of 14.47 percent.

Although M3 grew largely because of increase in CBN bills, the M2 component contracted in January and February 2019, respectively, reflecting tight monetary policy stance of the Bank. “Overall, money supply still remains weak to drive the growth momentum in the economy”, he said.

Shonubi, Folashodun, deputy governor and also a member of the MPC said in his personal statement that Growth in the monetary aggregates were generally moderate and within the benchmark but remained largely disconnected from real economic activities, especially with the growth in credit to the private sector.

Fidelity Bank ends GAIM3 promo with N115.26m customers’ reward

F

idelity Bank plc last week ended its eight months Get Alert in Millions Season three (GAIM3) promo with a cash reward of N110 million to 77 customers, which helped to boost their financial power.

Also, a total 108 consolation were given to customers who participated in the promo draws held across the six geo-political zones of the country.

The grand prize of N10 million was won by John Silus Poubo, a seaman in Port-Harcourt.

The monthly draw, winners of N2 million were Akpamgbo Stella from Lagos, Dokpesi Aleakhue and Okoye Ndubuisi from South South. For the bi-monthly draw, Ibenegbu

Kingsley and Otubelu Uchechukwu emerged winners of N3 million each.

“When we started, we promised that we were going to make 77 customers millionaires and give out other consolation prizes and we have kept to that promise”, said, Mohamed Balarabe, deputy managing director.

He noted that the promo savings scheme is in line with the financial inclusion drive of the Central Bank of Nigeria (CBN).

“Our desire through the GAIM Season 3 promo is to get people to start to cultivate savings habit for the rainy day, so that when the time comes that they need it, they will have the savings,”, Balarabe said.

Prior to the CBN’s recent drive to achieve

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the 80 percent financial inclusion, many Nigerians, for numerous reasons are unbanked and lack access to formal financial services. The results of the EFInA Access to Financial Services in Nigeria 2012 survey showed that 34.9 million adults representing 39.7 percent of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5 percent of the adult population.

Speaking during the final draw in Lagos, Nnamdi Okonkwo, managing director, who was represented by Chijioke Ugochukwu, executive director, shared services and products, said, “Based on our monthly and bi-monthly draws conducted, 152 winners

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had emerged and we had given out N79 million before now and several consolation prizes. We had also given out airtime of N5.261 million and 3, 803 customers to be precise benefitted from this instant rewards and today in this final draw we shall be giving out the sum of N31 million to 15 customers.

Winners would emerge for N1 million, N2 million and for the first time in GAIM 3 draw, a winner will emerge for N10 million. “Upon conclusion of today’s draw, it would be a great joy for Fidelity Bank because we would have given out cash prizes of N110 million and 108 consolation prizes of television sets, refrigerators and generators, separate from instant gifts I talked about earlier.

@Businessdayng

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Wednesday 08 May 2019

BUSINESS DAY

AGRIBUSINESS

In association with

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Why Nigeria must bridge infrastructural gaps to aid food production Stories by Josephine Okojie

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s Nigeria makes efforts to ensure that agriculture plays a key role in its quest for revenue diversification, stakeholders in the sector have charged the Federal Government to bridge the infrastructural gaps to aid agribusiness development in the country and ensure food security.

Indubitably, some of the greatest problems confronting rural farmers and communities in Nigeria are the absence of critical infrastructure such as motorable roads, storage facilities and irrigation facilities amongst others.

Farmers continue to suffer low levels of agricultural productivity due to infrastructural deficit across the country, which reduces their profit and impact on their capacity to increase productivity.

The provision of critical infrastructure is a pre-requisite for enabling Nigeria stimulate economic growth and to reach the targets for economic diversification and food security.

Obiora Madu, former chairman, export group, Lagos Chamber of Commerce and Industry (LCCI), said that Nigeria does not have an effective agricultural infrastructures, stating that the country’s export drive can only be successful with adequate infrastructural facilities such as storage, good road networks amongst others. He added that the lack of these facilities has made cost of food production higher.

“The costs of logistics are also very high. It is cheaper to transport

a commodity to Europe than to transport same commodity within the country,” Madu said.

After few days of heavy rainfalls most farming areas and markets become totally impassable and this has continued to impact negatively on the prices of food items across the country.

Samson Akwah, organising secretary-yam section, Mile 12 Market, in Lagos State said that the cost of transporting yam tubers using a Mercedes Benz truck (911) from the Middle Belt region to Lagos has increased from N350, 000 to N700, 000 due to the bad state of roads.

Although Nigeria ranks top in the production of some crops, the infrastructures needed to store the excesses are lacking.

“Post-harvest losses in Nigeria are huge due to inadequate storage

facilities in the country,” said Mawuli Coffie, team leader, West Africa Food Markets Programme, adding that the country’s post-harvest losses are enough to feed the West Africa region.

According to Abiodun Olorundenro, manager, Aqua Shoots, the problem with Nigeria’s agriculture is infrastructure. He believes that that the country is growing enough food to feed its people, but notes that most of what is grown often rots in the field because it is difficult to move them easily from the farms and the facilities to store them are lacking.

“We can only feed ourselves when the infrastructures needed to boost productivity across the value chain are there. We can even move our foods from the farm to the market easily,” Olorundenro said.

He stated that developing agriculture is very critical in the country’s efforts to diversify the economy, which he said can only be achieved when heavy investments are made in infrastructures.

Investments in the country’s primary agricultural infrastructures will help integrate poorer sections of the population into a sustainable process of economic growth and development, experts say.

In turn, this will reduce poverty by providing jobs directly and indirectly that will serve as a stimulus to the economy and the agricultural sector specifically.

Nigeria’s population is fast rising and it’s growing at an annual rate of 3.1 percent, therefore the need to bridge infrastructural gaps is necessary for food security and economic growth.

Recently, the non-oil export has come under serious threat owing to the worsening state of the Apapa and Tin Can roads that lead to the nation’s Lagos sea ports.

As a result, agro commodities worth billions of naira are being trapped at the port as clearing processes are becoming difficult owing to the faulty Customs scanners.

Experts stressed that transaction cycles for export are taking longer than necessary and foreign buyers are beginning to question the integrity of contracts they enter into with Nigerians.

As a result, buyers are now shunning Nigeria’s cashew nuts at the international market as contractual agreements are being delayed.

The situation has resulted in a 60 percent drop in price from an average of N500,000 per ton in 2018 season to N 200,000 per metric ton in 2019 cashew season, its lowest since 2016.

“The situation has been bad for cashew exporters as buyers are refusing to renew contract agreements because of the port congestion and delay in clearing for export,” Zacheaus Egbewusi, chief executive officer, Agri-Commodities Inspection Limited, said in a telephone response to questions.

“It takes an average of 30 days for cashew to be cleared and shipped out of the ports currently.

“This has crashed the price of cashew to as low as N200, 000 per metric ton from N500,000 per ton of 2018 prices. This is the lowest we have sold since 2016,” Egbewusi said.

Crown Flour plans backward integration for wheat production …to launch loyalty club for dealers …holds annual customer forum

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rown Flour Mills, a subsidiary of Olam Grains Nigeria, says it plans to venture into the cultivation of wheat in Nigeria as part of its backward integration drive.

A nu ra g Shu k l a, ma na g i n g director, Olam Grains, said that the company is currently working with the Nigeria’s Wheat Frmers A ss o c i at i o n a n d t h e Fe d e ra l Government to boost the production of the commodity in the country.

“We are working actively with the wheat famers association and the Presidency to ensure that famers can grow wheat effectively and efficiently,” Shukla said during Crown Flour Mills customer forum gala night held in Abuja recently.

“It is one of our core focus areas because we believe that Nigeria can grow wheat especially in the northern region,” he said.

He said that the company has been expanding its foot print in the flour milling industry since 2010 when it first acquired Crown Flour

Mills.

He added that with the recent proposal to acquire Dangote Flour, the company will emerge the biggest flour miller operator in the country.

Shukla highlighted opportunities in the Nigerian wheat-milling industry, saying it has the potential to create 10 million jobs across the entire value chains.

“We strongly believe that in Nigeria, the flour milling industry is one business that can provide employment. This is something that is close to our heart since we started 30 years ago,” he said.

In his opening remarks and welcome address, Bolaji Anifowose, vice president - commercial, Crown Flour Mills, said that the event was to celebrate the company’s annual awards for all its customers across the country.

“There is need for us to support our dealers in a different capacity.

Tonight awards will not just be based on volumes like previous years but also on loyalty,” Anifowose said. www.businessday.ng

“Customers will be given gifts that will enhance their business going forward,” he said.

He added that Crown Flour is a complete customer centric compliance company and that the

company would be launching a loyalty club for its customers across the country.

“We would ensure that we support our customers individually to ensure that they keep growing more than

L-R: Raji Omotunde; chairman Lagos State Association of Master Barker, Bolaji Anifowose; vice president commercial Olam Grains, Anurag Shukia; MD/CEO Olam Grains, Rohit Chugh; vice president flour grains, Olam Grains and Ishaq Abudulraheem, chairman Master Barker Abuja during the customer Forum and Gala night of Crown Flour Mill Limited in Abuja. picture by TUNDE ADENIYI.

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their competitors.”

He appreciated the dealers in attendance for their loyalty over the years.

Ishaq Abdul Raheem, chairman, Association of Master Bakers &Caterers of Nigeria, Abuja Chapter, said that the company’s excellent marketing strategy has continued to drive sales for its products more than that of other competitors.

“Crown Flour has a unique way of marketing unlike their competitors.

The strategy is excellent and making them increase their customer base,” Raheem said.

Similarly, Medinat Sanusi of Opeyemi Bakery Industry in Lagos, who was one of the dealers that were rewarded that night, appreciated the company for the initiative of the awards.

“There is a high acceptance of the product in the market and the management has a listening ear to our queries and complaints by ensuring they are resolved quickly,” she said.

Wednesday 08 May 2019

BUSINESS DAY

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AGRIBUSINESS ag@businessdayonline.com

Royal Farms set to commission $5m rubber processing plant …as farmers seek for FG’s intervention fund MIKE ABANG, Calabar

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rrangements are in top gear for the commissioning of a $5-million rubber processing plant by Royal Farms and Estate Limited in Biakpan – Biase Local Government Area in Cross River State.

Us e n U m o h, g e n e ra l manager of the organisation made this known recently in the state capital while speaking with a BusinessDay reporter.

Umoh said that the minister of state for industry, trade and investment, Aisha Abubakar, who has been instrumental to the success of the commissioning, has also expressed happiness at the establishment of a rubber processing plant in the state.

“ Tw o d e l e gat i o n s o n different occasions from the Federal Ministry of trade came to inspect both the

ground breaking as well as the actual installation of the heavy machines at the rubber factory,” he said.

Jumia partners Pizza Hut to improve pizza delivery Josephine Okojie

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uy Futi, managing director of Jumia’s food marketplace, has announced an on-demand pizza delivery partnership between Jumia Foods and Pizza Hut. According to Jumia, the partnership is expected to boost operational performance and last-mile delivery in Nigeria.

“As the premier food delivery business in Nigeria, w e are opening up our platfor m to enable our customers to order pizza from Pizza Hut while ensuring that it is delivered at record time,” Futi said in a statement made available to BusinessDay. “Currently, our average

delivery time is less than 45 minutes which is the quickest in Nigeria. We are reinforcing our operations to further cut our average delivery time to guarantee that both food and pizza are delivered at best times to our customers while not compromising quality,” he added.

On his part, Tony Ozanne, chief executive officer of Marathon Restaurant A f r i c a, w h i c h m a n a g e s and operates Pizza Hut in Nigeria, explained that as a new entrant into the Nigerian market, an extensive research was conducted to identify key players in the market and Jumia’s food marketplace was chosen, thus leading to the partnership.

“Jumia’s Food marketplace

has the platform and the customers. We felt that since we are new in Nigeria, we can ride on their back to get the traction we want. As from today, you can either walk into our three locations in Ikoyi, Ikeja City Mall and Lekki to buy Pizza or take the convenient step by ordering on Jumia’s Food marketplace,” Ozanne said.

On the business expansion plans in Nigeria, he said “in the next five years, we are looking at expanding our footprint to Abuja, Port Harcourt, Ibadan and of course open more outlets in Lagos. And as we touch these cities and towns in Nigeria, so will our partnership with Jumia’s food marketplace grow.”

“The minister at each of those visits described the investment by the farm as a very bold attempt at impacting

the national economy through massive employment of Nigerians and generation of foreign exchange to the country.”

Umoh praised the minister for her concern and encouragement extended to them and disclosed that their rubber plantation sits on a 2,187 hectares of land, and that the company has begun replanting another 1,000 hectares of young rubber trees.

According to him, Royal Farms has already provided employment for 500 Nigerians with potentials to engage more 600 directly and indirectly.

Umoh however appealed to the federal government to include rubber among the five cash crops which are to benefit from the 9 percent incentive from the government, adding that rubber plantations have

more challenges but greater benefits to the economy.

“Rubber is a longstanding economic crop which should be accommodated in any incentive consideration. We can generate employment for nearly 100,000 directly and indirectly in the Niger Delta region which can certainly go a long to calm restive youths as well as earn huge foreign exchange,” he said.

“Rubber has more challenges yet with greater benefits even though it has about a seven-year gestation period. Yet it has generational value. So we need more assistance and intervention from government,” he added.

He said there are 207 rubber farmers in Cross River state, and called for the resuscitation of the Presidential Committee on Rubber.

Kogi cashew farmers task FG on illegal revenue collection, multiple taxation Victoria Nnakiaike, Lokoja

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he Kogi state chapter of the National Cashew Association of Nigeria (NCAN) has appealed to the Federal Government to look into the issue of multiple taxations and illegal revenue collection by the state government and its agencies.

Sule Ochanya, the state chairman of the association who made the appeal recently during the chapter’s meeting, said that cashew stakeholders have realised that the state government encourages its agencies to impose numerous levies on

farmers growing the crop in the state.

Ochanya equally disclosed that both sellers and buyers were constantly harassed, intimidated and threatened on the farms.

He added that cashew dealers were also forced to buy the state’s jute bag at a higher cost of N1,000 instead of the usual N470, with a margin of N530 per bag in favour of the state government.

Ochanya equally made an appeal to the Minister of Agriculture and Natural Resources, the Senate P re s i d e n t , t h e Sp e a k e r House of Representatives, the Speaker of the Kogi House

of Assembly, the Federal Inland Revenue Service, and Inspector General of Police lamenting that states like Nasarawa, Enugu, Edo, Niger and Benue collect N20,000 per truck in loading the produce of the states but Kogi collects about half a million naira.

The NC AN chair man also disclosed that about 85 p ercent o f t he to t al population of the state are cashew farmers and traders, saying the high taxes had drastically inflicted more hardship on the people.

“Kogi State government cannot be an exception from other cashew producing state in the country,” he added.

Ekiti set to distribute N2.9m worth of agrochemicals to cocoa farmers

…advises farmers to use resource effectively Akinremi Feyisipo, Ado-Ekiti

E L-R: Tony Ozanne, CEO, Marathon Restaurant Group Africa - managers and operators of Pizza Hut, Nigeria; Chioma Odimegwu, head of marketing and vendor success, Jumia Food and Jumia Party Nigeria and Guy Futi, managing director, Jumia Food during the partnership agreement in Lagos recently. www.businessday.ng

kiti State Government has approved the use of the Cocoa Development Fund (CDF) to purchase agrochemicals worth about N2.9 million for farmers in the state to enhance production of cocoa in the State, to meet global standards.

The G overnor of the State Kayode Fayemi, made the disclosure in Ado-Ekiti during the official launch of the distribution of cocoa agrochemicals to the teeming cocoa farmers.

The governor, who was

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represented by Folorunso Olabode, commissioner for Agriculture and Rural Development, this is one of the four pillars of the administration’s roadmap for economic recovery which will equally help to boost the state internally generated revenue (IGR).

Reiterating that Ekiti state is essentially an agrarian state with soil properties conducive for growing a wide variety of crops, Olabode said the present administration was ready to adopt sustainable and commercial value chain a p p ro a c h t o t ra n s f o r m agricultural business that can enhance food security, create employment opportunities @Businessdayng

and reduce poverty through viable agro-allied industrial development.

He advised the farmers to make judicious use of the agrochemicals in such a way that the purpose of distributing the agrochemicals, which is to boost cocoa production in the state and improve the standard of living of the farmers, would be achieved.

Earlier in his remarks, the representative of the permanent secretary, Ministry of Agriculture and Rural Development at the event, Oguntuase Samuel, charged the farmers to make good use of the opportunity offered by the government.

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Wednesday 8 May 2019

BUSINESS DAY

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Wednesday 08 May 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

21

PEOPLE & PERSPECTIVE

How Private Equity could become a catalyst for African Fintech development

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n a region where only a minority of the population has access to a bank account and SMEs struggle to get financial help from traditional banks, Albert Alsina, CEO and Founder of Mediterrania Capital Partners, explains how the PE industry is becoming a catalyst for the African Fintech ecosystem’s development, enabling large-scale banking and supporting entrepreneurs and SMEs in their expansion plans.

According to the World Bank Global Findex 2017, only 34 percent of all Africans more than 15 years old have access to a bank account, 16 percent have access to formal savings and 6 percent have access to formal borrowing. Furthermore, more than 70 percent of all businesses in Africa have difficulty in obtaining medium- or longterm financing, according to the African Development Bank.

The lack of access to financial services in African countries, as in other developing nations, is mainly due to insufficient financial services for low-income segments and small and medium enterprises.

This is explained by the high prices of financial services (many existing financial institutions do not have enough knowledge or suitable systems for evaluating and monitoring the projects of SMEs, and they compensate for this by demanding highly costly guarantees), expensive distribution networks with low capillarity, and the use of risk methodologies unsuited to the realities of developing countries.

Furthermore, the regulatory frameworks observed in most of these countries do not favour the emergence of efficient distribution models for financial services.

These problems can be addressed via Digital Financial Services (DFS). These services are business models that distribute low-cost financial services and so increase competition in the sector, using prepaid platforms, mobile phones and agents within the applicable regulatory framework.

According to the GSM Association, over half of the 277 mobile money services operating worldwide in 2017 are in SubSaharan Africa. Nowadays, there are 100 million active mobile money accounts representing 49 percent of all active money users in Africa.

But despite being at the forefront in Digital Financial Services, Africa’s share of global Venture Capital /Private Equity -backed Fintech remains very low, amounting to $119m in Fintech and $14m in Insurtech in 2017 according to Partech Ventures. Those figures represent only 0.8 percent of total worldwide Fintech/ Insurtech investments, worth $16.6bn in 2017 according to CB Insights.

The low levels of Fintech investment in Africa can be explained by the fact that the business models are not yet delivering the expected results for the investor community. In Africa, mobile operators are driving most DFS implementations, although they may face regulatory problems in the long term, possibly jeopardising their strategies.

The banks, on the other hand, are lagging behind, mostly due to legacy systems and unsuitable business models. Lastly, collaborative business models have proven to be difficult to manage due to the conflicting interests of mobile operators and banks.

Albert Alsina, CEO and Founder of Mediterrania Capital Partners

Despite all these challenges, however, there are still plenty of opportunities for PE in the sector.

Through our Mediterrania Capital Partners funds, we have invested in two financial services companies operating via an Independent Service Provider (ISP) business model. The injection of capital has enabled these companies to refocus their strategy, enhance their IT systems, increase their geographical reach and expand their services while strengthening their governance.

Through these two cases, we have seen that the ISP business model, when successfully implemented, offers long-term sustainability and so will attract more private investments.

The Independent Service Provider model involves banks, which bear the legal responsibility for deposits; independent service providers, which bear the reputational risk, because their brand is the one most visible to the public; agents, which give access to the deposits; and mobile operators, which carry the payment instructions.

Operating via an ISP model, our portfolio companies Cash Plus (the leading money transfer company in Morocco) and Groupe Cofina (the leading meso-finance institution in West and Central Africa) have developed new technologies that, although based on different financial services, both resolve the challenges mentioned earlier through prepaid platforms and mobile phones and using agents within an adapted regulatory framework.

Founded in 2004, Cash Plus is Morocco’s leading independent money transfer and low-income financial services provider.

The company enables its clients to access a comprehensive portfolio of inclusive financial products through its growing number of points of sale and its transactional mobile application.

After Mediterrania Capital Partners entered Cash Plus’ equity in 2014, the com-

pany expanded their points of sale from 400 to 1,300 and developed their own ERP system and Web applications.

Cash Plus bases its Independent Service Provider strategy on its product platform and agent network. Its platform has been developed internally and currently offers money transfer services and low-income banking services such as IBAN issuance, own cards issuance, etc. enhancing its clients’ financial inclusion. The company offers both international and and national money transfers.

For transfers within the Moroccan territory, Cash Plus has developed its own national money transfer offer under its own brand, charging highly competitive fees. This service allows its customers to send money from one point to another quickly. International transfers are offered through more than 15 partnerships with major international money transfer players, allowing Cash Plus customers to receive international money transfers sent through these partners to Morocco and soon Mali across its network.

Low-income banking services include payment accounts, prepaid debit cards, utilities and e-government services. Cash Plus has developed a multi-support range of payment accounts, benefiting from regulatory changes and offering alternatives to traditional banking accounts. The company provides prepaid debit card solutions granting access to electronic payments, wire and funds withdrawal as well as payment terminals and mobile accounts. Cash Plus has also entered into partnerships with major utility providers as well as the Moroccan government in order to allow its customers to pay their bills and taxes via its points of sale or its mobile application.

The savings that financial institutions obtain from using electronic platforms such as Cash Plus enable them to offer low-cost financial services profitably. These savings are especially important for financial institutions operating in developing countries

where efficiency ratios are much lower than in developed countries. Low efficiency costs oblige financial institutions to charge high prices in order to reach their equilibrium point, making large-scale banking difficult in developing countries.

Groupe Cofina is a Côte d’Ivoire based pan-African group specialising in providing meso-finance and transactional financial services in West and Central Africa.

Created in 2014, the Group operates two divisions: COFINA, which develops financing solutions to support SMEs in their development, credit granting and other meso-finance products; and CPS (Cash Point Services), which provides a complete range of products and services to access banking facilities such as savings, credit granting, local and international cash transfers, etc.

With more than 1,000 employees and managing 135,000 clients across its 80+ points-of-sale, Groupe Cofina has positioned itself as the “missing middle” assisting entrepreneurs and SMEs whose financing needs have outgrown microfinance institutions but whose entrepreneurial structure is still considered insufficiently formal for traditional commercial banks.

Cofina bases its strategy on its risk analysis methodology. The company uses the NAFA microfinance software package, one of the leading information systems dedicated to decentralised financial organisations. It helps the company offer personalised customer services and track all its accounts. As standard, NAFA includes management reports, accounting and financial statements upgraded to new standards, portfolio tracking tables, client tracking for following up customer requests, and HR management.

Groupe Cofina shows that Digital Financial Services offer a real opportunity for meso-finance institutions, enabling them to serve new customers and broaden their service offerings and so achieve economies of scale and greater risk diversification.

In the cases of Cash Plus and Groupe Cofina, the small density of bank branches and the high prices of financial services are addressed by distributing low-cost financial services via an ISP business model. The low efficiency of the current risk analysis methodologies is addressed by creating new institutional and methodological processes that include the informal economy.

The growing importance of migrant remittances, particularly for low-income segments, demands a distribution model of low-cost services that optimises the impact of these remittances. Lastly, the banking processes require efficient technological platforms and organisational structures.

In the DFS sector, this scale can easily be reached through network structures with a coordinating node that provides services to a wide range of markets.

Cash Plus and Groupe Cofina represent proof that the ISP business model is a very interesting solution bringing financial inclusion in developing countries. The growth potential of such companies is enormous, and PE investors that can identify the companies best positioned to answer the increasing demand for low-cost financial services will reap the benefits of the growing Fintech industry in Africa.

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

Email the PE & F team loladeakinmurele@gmail.com

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Wednesday 08 May 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Finally, NPA gives respite to port users, opens Lilypond Terminal to truckers … Calls for review of Customs law to facilitate trade amaka Anagor-Ewuzie

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n line with its promises of facilitating Ease of Doing Business at the nation’s seaports, the Nigerian Ports Authority (NPA) has finally opened former Lilypond Container Terminal to truckers to use as a temporary park, away from roads and bridges to Apapa.

Bu s i n e s s D ay u n d e rstands the NPA management unveiled Lilypond trailer/truck Transit Park on Friday to aid Ease of Doing Business within the ports community in order to entrench greater operational service efficiency at ports.

With this development, APM Terminals which formerly operated the terminal as off-dock facility for containers under a concession agreement that elapsed few years, may have lost the hope to continue managing the terminal in the future.

Converting Lilypond Terminal to Transit Park was part of the NPA’s efforts to address issues around the notorious Apapa traffic by taking trucks off the roads and bridges leading to Apapa port city.

The terminal will be solely reserved for trucks that have business in Apapa port and have obtained callup to be in the port to pick containers.

When BusinessDay visited the Terminal on Mon-

Source: NPA Website day, it was discovered that several trucks were already parked on the terminal while a few were sited on the Ijora Bridge trying to gain access into the Lilypond terminal. This also recorded positive impact on traffic into Apapa port city.

Meanwhile, to facilitate trade in our ports, Iheanacho Ebubeogu, general manager, Security of the NPA, called for a review of the laws establishing the Nigeria Customs Service (NCS) with a view to improving its performance, especially in the area of trade facilitation.

Speaking at a forum in Lagos recently, Ebubeogu stated that the laws, which currently guide the operation of Customs, do not allow its personnel to strike the right balance between enforcement and trade fa-

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cilitation.

“Our Customs laws do not allow the officers to strike the right balance and if we don’t strike the right balance, there is no way we can facilitate trade. If we don’t facilitate trade and we are going into signing MoUs of trade liberalisation, we may have the market but this market will be accessed by others,” he said.

Ebubeogu advised Customs to discontinue practice of setting revenue targets for its Commands, stating that government over the years has not proven to be a good manager of taxpayer’s money.

“Customs should not be in a hurry to tell Nigerians what their target is. There are things we can let go so that on the other side of the equation, we will provide employment and

socio-economic services.

I think we should be applying optimisation theory now, otherwise we take up money and give to government while the government in Nigeria whether we like it or not, has not proven to be best managers of our tax,” he said.

Speaking on why Nigerian seaports are no longer transit corridors for goods heading to landlo cke d countries in West Africa, Ebubeogu said Nigeria is still backward due to poor port infrastructure, including good roads and security.

“Even if our roads are good, it is not enough to have the roads, we must complement that with security because if we want to transit cargoes to these landlocked countries, it has to be by rail or by road,” he added.

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APM Terminals Apapa’s safety records commendable - stakeholders amaka Anagor-Ewuzie

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takeholders in Nigeria’s maritime industry have commended APM Terminals for maintaining good safety record in its operation at the Lagos Port Complex, Apapa.

The commendation was given last week Tuesday at the celebration of the 2019 Global Safety Day with the theme ‘Safety Differently – Learning from the Way We Work.’

According to them, APM Terminals has recorded zero fatality in its operation in more than four years.

Speaking at the event, Martin Jacob, managing director of APM Terminals Apapa, appreciated employees of the company for living up to their safety responsibilities and upholding their commitment to safety.

He also commended the Nigerian Ports Authority (NPA) for its commitment to a safe port environment especially at APM Terminals Apapa, with the recent acquisition of modern fire-fighting equipment made available for safety and fire drills, which has contributed to improving safety records of APM Terminals.

Ja c o b s a i d t h i s y e a r ’s Global Safety Day theme was about continuous listening to and learning from the workforce when it comes to safety in order to contribute to safe and successful work outcomes.

He said APM Terminals Apapa’s continuous effort at improving safety at the workplace was yielding the desired results, adding that the company was committed to ensuring not just the safety of its assets but the safety of its employees, customers, contractors and visitors at the facility.

Jack Landgrishe, managing director of PIL Nigeria Limited; Francoius Joseph Ossude, managing director of Lansal Limited, and Richard Smith, commercial director of Maersk Nigeria Limited, who were at the event, commended APM Terminals Apapa for ensuring the safety of lives and cargo at the port.

Remi Ogungbemi, chairman, Association of Maritime Truck Owners (AMATO), also commended APM Terminals for maintaining a high level of safety over the years, and for recognising the role of truck drivers in promoting safety at the port.

L-R: Richard Smith, commercial director of Maersk Nigeria Limited; Francoius Joseph Ossude, MD, LANSAL; Iain Lindsay, GM, Arkas Line; Martin Jacob, MD, APM Terminals Apapa; Remi Ogungbemi, chairman, AMATO; Ombugada Garba, representative of the GM, Safety, NPA; Chinedu Okwese, representatives of the NIMASA, and Patience Orukedadi, cutting a cake to mark the 2019 Global Safety Day at APM Terminals Apapa, Lagos recently.

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Wednesday 08 May 2019

BUSINESS DAY

23

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

NIMASA and efforts to end foreign dominance in shipping business, grow indigenous participation Determined to put an end to the foreign domination of the nation’s shipping business, the Dakuku Peterside-led management of the Nigerian Maritime Administration and Safety Agency (NIMASA), recently launched new plans targeted at empowering Nigerians to acquire new vessels and to put an end to granting of waivers to foreign owned vessels, writes AMAKA ANAGOR-EWUZIE. Nigeria’s shipping business ith a coastline of 852 kilometres bordering the Atlantic Ocean in the Gulf of Guinea and a maritime area of over 46,000 km2, Nigeria is no doubt a maritime destination.

Statistics show that a total freight cost of between $5 billion and $6 billion is estimated to be generated on export and import businesses annually, while the maritime component of Nigeria’s oil and gas industry is worth an estimated $8 billion alongside seaborne transportation, oceanic extractive resource exploitation and export processing zones.

Alarmingly, the big business has for several years, been dominated by foreignowned shipping firms. As a result, the Federal Government in 2003 came up with the Coastal and Inland Shipping (Cabotage) Act, aimed at growing shipping through effective participation of indigenous-owned vessels in the nation’s lucrative shipping business.

The act restricted the use of foreign vessels in domestic coastal trade to grow indigenous tonnage. It also made provisions for securing jobs for qualified and upcoming Nigerian cadets presently being trained in different maritime institutions of the world.

Fourteen year down the line, the act is yet to achieve its aim as many Nigerians still lack the capacity to acquire quality vessels to participate in coastal trade and foreign vessels still depend heavily on foreign seafarers for manning.

This is traceable to lack of affordable funding for vessel acquisition, owing to the inability of the Nigerian banking industry to develop a framework for financing ship acquisition, which has a long gestation period.

As a result, credit facilities received from Nigerian banks by indigenous ship owners to fund vessel

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acquisition, usually come with interest rates that are in double digit, sometimes over 20 percent. This makes it near-difficult for Nigerian indigenous shipping firms to compete with their counterparts that operate with offshore loans of single-digit interest rates.

To bridge the gap created by insufficient vessel supply for shipping- related business, the Act further created certain clauses to accommodate granting of waivers of different categories to foreign-owned vessels in the event that Nigerians fail to produce the needed vessels or qualified manpower to man Cabotage vessels, own ship yards to build Cabotage vessels and acquire the specific vessels required for a particular Cabotage trade.

Ironically, granting of waivers created huge capital flight on the nation’s economy as Nigeria continues to lose in excess of N2trillion annually for not developing local shipping capacity.

It is estimated that maritime industry can generate close to N7 trillion annually because developing shipping comes with spinoff effects on other industries such as insurance, steel for the use of ship building and ship repair yards.

Unfortunately, over 80 percent of Nigerian seaborne cargoes are carried by foreign-flagged and registered vessels today.

NIMASA’s effort Following these concerns, NIMASA, the agency saddled with shipping development, recently rolled out plans targeted at putting an end to granting of waivers to foreign-owned, manned, built and flagged vessels.

The new strategies are aimed at addressing issues around growing capacity in ship building by encouraging establishment of shipyards; creating affordable credit facilities to enable Nigerians acquire vessels; creating tax incentives for importing built vessels by Nigerians and building of www.businessday.ng

ships,” disclosed Bashir Jamoh, executive director, Finance and Administration, NIMASA. On changing Nigerian crude oil trading policy to Cost Insurance and Freight (CIS) from Free on Board (FOB), Jamoh said NIMASA has gone far.

The agency is talking with the Nigerian National Petroleum Corporation (NNPC) to ensure that Nigerian ship owners get the right to lift Nigerian crude oil.

“Interestingly, from our conversations, we have evidence that Nigerians are already lifting oil without any problem,” he added.

Dakuku Peterside

qualified seafarers.

Dakuku Peterside, director general of NIMASA, said the agency is engaging with the Federal Ministry of Finance and the Nigeria Customs Service (NCS) to create a special tax incentive for Nigerians br inging vessels in the country.

The plan, according to him, will involve creating special incentives that can enable shipbuilding yards to bring in components for building vessels in-country, adding that the government is also determined to ensure that Ajaokuta Steel Mill and Aluminum Steel Company in Akwa Ibom State, come on stream to provide the needed raw materials for ship building yards.

“The current tax regime makes it impossible for Nigerian ship owners to compete with their foreign counterparts. For instance, foreigners bring in vessels for a short period and they have a special tax regime that enables them pay little to nothing for their vessels and crew to work and live in Nigeria, whereas a Nigerian is charged a full range of all tax applicable (14 percent), making it near impossible for their vessels to compete,” Peterside explained.

He said NIMASA is deter-

mined to ensure that in the next five years, certain categories of vessels (yet to be listed) are built in-country.

This, he said, would put an end to issues around bringing in all kinds of vessels from outside the country and its attendant capital flight and job losses on the economy.

“NIMASA is engaging with the office of the Vice President on the possibility of creating incentives for shipyards. We believe it will encourage a lot of entrepreneurs to invest in shipbuilding. We are also working in partnership with the Nigerian Content Development Monitoring Board (NCMB) and have commissioned an audit of all shipyards in order to identify a level support that will help revive them,” he said.

Ships cannot exist without cargo to lift. Therefore, NIMASA is also working towards ensuring that ship owners have cargo support.

“We have to guarantee them cargo to lift by giving them right to lift government cargo and other heavy cargo, especially project cargo. We are looking for different windows to get favourable foreign exchange rate for the ship owners in terms of handling, purchasing, repairing their own

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Stakeholders’ view Industry stakeholders have commended the efforts of the NIMASA in addressing the shortcoming facing the nation’s shipping business especially as regards to creating jobs to Nigerian ship owners and seafarers.

Greg Ogbeifun, former president, Ship Owners Association of Nigeria (SOAN), expressed concern that Nigeria’s ability to develop capacity through waiver bracket in the next five years especially in the area of using ships built in Nigeria for Cabotage trade.

In placing cadets on institutions abroad, Greg said, it was important NIMASA put a system in place to monitor what the cadets are doing and keep record in order to certify that they cover the areas required by the regulations.

O gbeifun said other countries like United Kingdom, have institutions like Merchant Navy Training Board that supervises the training of cadets up to their certification. “We need to have such a unit domiciled in NIMASA to monitor the training of cadets from beginning till their graduation.”

“We are happy that NIMASA is helping ship owners to find a single- digit interest rate to help raise money for the industry.

We need to keep talking because the commercial @Businessdayng

banks, the CBN and politicians do not understand our industry but this is one industry that if we get it right, the international prices of crude oil and other macroeconomic factors will not have any effect on government revenue,” said Margret Orakwusi, a ship operator.

Stating that we must grow this industr y, Orakwusi said the NIMASA needed to look into the course content of Maritime Academy of Nigeria (MAN) Oron and other universities that the agency is financing to ensure the institutions graduate cadets needed in the industry in terms of quality and exposure.

She added that the stakeholders were happy that NIMASA was getting them involved in its effort to make the Cabotage work.

D e re k Iz e d o n mw e n , Sales and Marketing director of NigerStar 7, who said Nigerians are beginning to see an uptake of activities in offshore oil and gas industry, cited his company as example, saying it recently invested hugely on vessels such that in the last 12 months, it has invested over $100 million in acquiring vessels.

“We have put a plan in place to train Nigerians to be able to operate these vessels in line with Nigerian Content Development Act and NIMASA’s push,” he said.

On the five year plan by NIMASA to end issuing of waivers to foreigners, he said five years was not sufficient, describing the plan as too aggressive and broad.

He advised NIMASA to make the plan more specific and limit it to specific vessels for it to succeed.

Conclusion The general thought in the industry is that NIMASA is presently on the right track to save jobs and create wealth for Nigerians and the economy at large. Therefore, efforts should be doubled on consolidating on already existing laudable plans by ensuring that milestones are achieved within timelines.

24

Wednesday 08 May 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

When scandal engulfs a celebrity endorser FOUR FACTORS SHOULD GUIDE FIRMS’ REACTIONS.

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n December of 2009 marketers at Accenture, AT&T, Gatorade, General Motors, Gillette, Nike, TAG Heuer and other companies faced a difficult decision. After tabloid reports of infidelity and an alleged altercation with his wife that ended in a car crash, Tiger Woods — who had endorsement deals with those firms — publicly (if vaguely) apologized for his behavior and announced that he was taking an indefinite leave from golf.

The following days brought more salacious stories. Should the companies abandon Woods or stay the course? Over the next few weeks investors in firms that used Woods in advertisements lost $12 billion as share prices fell. For managers at those companies, the question became: How to mitigate the damage?

Previous research has shown that firms tend to suffer financially when a celebrity endorser becomes mired in scandal. But the literature offered no practical guidance. “Nobody had ever looked at what firms could do to counter the losses,” says Stefan Hock, a marketing professor at the University of Connecticut. So Hock and a colleague, Freie Universität Berlin’s Sascha Raithel, set out to do just that.

They found that firms making no public statement and taking no action — the path most follow — generally do poorly. They also discovered a surprise: Companies that engage with a situation and handle it well don’t just stanch the bleeding; they come out ahead. “These incidents can be an opportunity,” Raithel says. “If a firm shows an appropriate response to the misbehavior, it can gain market value.”

The researchers began by examining news databases for examples of publicly traded U.S. companies whose celebrity endorsers generated negative publicity from 1988 to 2016 while under contract. This yielded 128 incidents involving 230 companies. Fifty-nine percent of the endorsers were athletes, 24% TV or radio personalities and 17% musicians; 70% were male.

(Nike experienced the most incidents — 23.) Despite the 29-year time frame, half the incidents occurred from 2010 to 2016, suggesting that the pace of celebrity scandals has accelerated.

The data illustrates firms’ uncertainty about how to respond. Fifty-nine percent of the companies did nothing, 20% announced that they would maintain their relationship with the endorser, and 21% put it on hold or ended it. Some firms responded differently to the same incident.

For example, after a photo of the swimmer Michael Phelps smoking marijuana went

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viral, Visa publicly supported him, Kellogg let his contract expire and some other companies stayed silent. “These numbers and reactions highlight that many firms have no clue what the best reaction is,” Hock says.

Next the researchers explored factors that might affect public reaction to celebrity misbehavior, finding four that played a significant role. First, does the celebrity really deserve to be blamed? Someone who commits domestic violence, say, is more clearly culpable than someone whose nude photos were circulated because his or her computer was hacked; in fact, the latter person might be seen as more a victim than an offender. Second, does the scandal directly relate to the celebrity’s profession, as when an athlete is caught using performance-enhancing drugs, or is there no link, as when the person has an extramarital affair? Third, is the celebrity’s profession closely tied to the product being endorsed, as when a musician touts a guitar brand, or is the relationship a distant one, as when an actress shills for a liquor company? Finally, has the celebrity made a public apology?

For each incident, the researchers determined how the firms in question responded (if they did), how quickly, and whether they curtailed or maintained the relationship with the endorser. They coded whether the misbehavior was related to the celebrity’s profession and whether

the endorser apologized. They surveyed more than 300 marketing professionals about how much each celebrity was to blame for the incident and the extent to which the endorser’s profession was associated with the product being promoted. To assess the financial impact of each scandal, they analyzed stock price movement in the 20 trading days after news of it broke, looking for abnormal returns. And they controlled for a variety of factors, including firms’ ad spending, the amount of media coverage an episode received, and whether the misbehavior was rumored or proven.

In every case, firms that responded to events instead of staying silent saw a positive impact on their stock, and firms that did so within three days of the news performed better than their slower counterparts. (The researchers say that’s because prompt announcements reduce uncertainty, which can hurt share price.)

In fact, fast responders saw their stock rise by 2.1%, on average, during the four weeks following the event. Whether a firm stood by its celebrity mattered less than whether it did something A company’s handling of a scandalplagued endorser should be guided by the four factors cited above. Firms are likely to benefit by severing ties with endorsers whose misbehavior is closely related to their profession and those whose work is only distantly related to the brand. Inves-

tors react more favorably when firms drop unapologetic endorsers than when they drop ones who voice contrition. Regarding blame, investors seem to consider it only in cases of suspension, reacting negatively when a low-blame endorser is punished.

The Tiger Woods episode illustrates some of these points. Most firms whose products are directly related to golf, including Nike, stood by him; companies in nonsports industries were more likely to bid him farewell. The researchers say that Woods’s attempts at atonement — a series of statements that stopped short of a full mea culpa, followed months later by a heavily scripted TV apology — didn’t help; a quicker and more authentic apology would probably have served him better, their work suggests.

The research has clear takeaways for endorsers and firms alike. Celebrities who are to blame for an incident should always apologize, quickly and sincerely.

Firms should recognize that silence is their worst option; they should respond one way or another, ideally within three days. And companies that use celebrity endorsers should be aware that scandals seem to be arising more frequently. “Firms need to be ready,” says Raithel. “Even if you can’t prepare for specific types of misbehavior, develop scenarios so that you have some type of response plan for when these things happen.”

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Wednesday 08 May 2019

Harvard Business Review

BUSINESS DAY

25

MANAGEMENTDIGEST

Life’s work: An interview with Bishop Michael Curry Vaulted to global fame by his rousing sermon at the 2018 royal wedding, the Most Rev. MICHAEL B. CURRY leads the U.S.-based Episcopal Church as presiding bishop. He is the first person of color to serve in the role and has championed a message of love and unity at a time of deep division. egies are you using to reverse that tide?

None! Questions about church attendance and church decline are second-order questions. The first-order questions are whether we are helping our people — Episcopalians — to have living relationships with God and with other people. If the answer is yes, then issues of church growth will take care of themselves, or we’ll figure out how to handle them. The first Christians — the first followers of Jesus — never had a discussion about how many people they had at church on Sunday. But they kept following Jesus and his teachings, and eventually they turned an empire upside down.

ANIA G. WIECKOWSKI

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hat made you want to become a priest? Did you ever consider another career?

By the time I went to college, I knew that I wanted to do something that had a positive impact on the lives of people and on society. I considered public service, having worked on Bobby Kennedy’s political campaigns as a kid, licking envelopes and knocking on doors. But my dad was a priest, and his father was a Baptist preacher — that was in my blood. My daddy took me to hear Martin Luther King Jr. speak once when I was about 5 years old. I shouldn’t say I actually heard him: He was the last preacher out of a whole bunch of them up there talking, and I fell asleep. But one day I read Dr. King for a course. It was different from hearing him, or hearing about him, and it made me realize that there was the potential to do real social good from within the Christian religious tradition.

Since then you’ve become presiding bishop of the Episcopal Church, an organization with 1.7 million members (including me). Did you ever have doubts about taking on that role?

Anybody assuming a new leadership position with more demands and larger responsibility would have to be a fool not to go through moments of self-doubt. I still have those moments when I wonder whether someone made a mistake when they chose me, or whether I’m really supposed to be doing this. But I’ve never had a doubt about the reason I do what I do.

My mission is to help people to find their way to a loving, liberating and life-giving relationship with God, and with each other as children of God, and ultimately with the whole of creation. The clearer I am about that, and the more consistently I return to it, the more my doubts diminish, whether they be about the church and the world or my own abilities. If you’re clear on your cause, you can navigate anything else thrown at you. Years ago, I had a conversation with an older African-American gentleman who was shining my shoes. His wife had died, and he was raising his son, who was pretty smart and had just been accepted to a prestigious university. I remember him saying, “I get tired of shining shoes. It’s hard work, and you’re bent over all day long. But I’ll shine shoes till Jesus comes if it’ll get my boy through college.”

When an issue is divisive, how do you go about getting buy-in from people on both sides?

If there’s a point of commonality — however small it may be — affirm that first, and then build from there. I’ve seen this work in the midst of discussions around samesex marriage with leaders from the Anglican Communion, the larger global church we’re affiliated with. My first meeting with them — heads of the various churches, the archbishops, presiding bishops and moderators from across the globe — was right after we in the U.S. Episcopal Church had changed our rules to allow for same-sex

Michael B. Curry

marriage, which was, and still is, seen by many in the rest of the Anglican Communion as deeply controversial. But we did have a point of commonality: our faith. I said, “What I believe we as a church are doing is following the teachings of Jesus, who told us to love our neighbors as ourselves.

I believe that this change in our rules is a practical expression of that in our particular cultural context. I respect the fact that you’re in a different cultural context, so you have a different perspective, but I am serious about trying to follow the way of Jesus in my context and in my ministry.”

Now, we didn’t all sing “Kumbaya” after I said that, but it was a point of commonality that was enough to contain the diversity and the difference.

How do you stay steady in emotionally charged situations?

You’ve got to just get honest with yourself.

First, when you’re upset, acknowledge that you’re upset: My blood is boiling, my stomach is churning, my head is hurting — I’m mad. This doesn’t solve everything, but it helps, because it’s the stuff that we are not aware of in ourselves that has the power to control us in ways that we don’t intend.

Then consider what you are upset about.

The Buddhists are onto something here.

The Buddha taught that self-centeredness is the root of all human-created dilemmas, and that if you can overcome the self, you can overcome these conflicts. If I can get over myself, then I can think about the situation instead: What’s actually being said?

What’s the cause? What’s the truth? That gives me a better shot at being less reactive and more responsive.

How do you encourage people to bring love into their workplaces?

In the past couple years I’ve started thinking of love less as a sentiment and more as a commitment to a way of being with others. As a sentiment, love is more about what I’m getting out of it than what you’re getting out of it. But as a commitment, love means I’m seeking your self-interest as well as my own — and maybe above and

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beyond mine. That kind of unselfishness is actually how Jesus talked about love most of the time in the New Testament — the Greek word that’s used is agape. That’s the kind of love you see in a person who has done something selfless for you and affected your life for the good: a parent, teacher, Scout leader or coach. Take that further and you realize that there has been no social good that’s been intentionally done apart from this kind of love. We don’t give people Nobel Peace prizes for selfishness. We recognize those people because they’ve given of themselves without counting the cost to themselves. So, I’ve been playing with the mantra: Is the action I’m contemplating selfish or selfless? I invite folks to just ask that question throughout the day: “Selfish or selfless?”

How do you respond to critics of your message?

I’ve had people ask whether the way of love is a realistic approach to life. If I’m a CEO, or a member of Congress, can I really build a life around love? Can I if I’m a prosecutor and I see the worst of human beings?

My response is: If you think love is a sentiment, no. But if you understand that love is a commitment, the answer is yes.

How do you prepare to speak in front of a big, diverse audience like the one at the royal wedding?

With some anxiety and trepidation! But I prepare the same way I used to prepare to preach on Sunday morning as a parish priest. One of my congregations in Ohio had a lawyer, a Ph.D., a physician and a couple of women in their 70s who had been cleaning houses all night long. I had to talk to all those people in one sermon!

I figured out that I needed to find different ways to illustrate the message, but in the end it’s the same message for all. That congregation taught me how to preach to princes and paupers at the same time.

Average Sunday attendance at Episcopal churches has dropped by 24% in the past decade. What strat@Businessdayng

How do you decide which aspects of church tradition to keep and which need to change?

Often change is not so much about discarding the past as about reinventing it in a new way for a new time. You need to go back to the real original mission of an institution or a tradition, not just how it manifested itself at one time. Ask what was driving this tradition at its best, and then ask what that would look like now. It won’t look the same, but there you’ll find the energy that can give it new life. For example, the Episcopal Church supports several historically black colleges and universities [HBCUs]. As demographics in the U.S. are shifting, I’ve advised them to go back to their original mission and ask, “Why are we here?” Most HBCUs were started after the Civil War to provide advanced education for the children of newly freed slaves.

At the time, these people were at the bottom of society, and HBCUs helped them find a new place in that society. Today, maybe raising people up means that these schools focus not just on descendants of slaves but also on people who speak Spanish as their first language.

You are the first person of color to lead the Episcopal Church — a majority-white denomination — as well as having been the first African-American diocesan bishop in the American South. What advice do you have for black leaders or for other minority leaders?

Stay on the mission that called you. I happen to be African-American. I happen to be male. I happen to be married. All that is part of who I am. But the driver for me in my job as bishop must be the mission I see myself on.

Ania G. Wieckowski is the executive editor of Harvard Business Review.

26

Wednesday 08 2019

BUSINESS DAY

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XECUTIVE MOTORING

New car ownership eludes Nigeria’s middle class …As 14th Lagos Motor exhibition opens

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MIKE OCHONMA mikeochonma@gmail.com

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he Nigerian middle class is gradually fizzling away as a result of their inability to purchase brand new vehicles due to the high cost of these vehicles and worsened by lack of consumer credit purchase scheme in the country. And even where such exists, the interest rate offered by the banks and other financial institutions are always within the reach of the middle class that survives on meagre salary.

With the stage set for the 2019 edition of the annual automobile exhibition and autoparts expo in Lagos orgainsed by BKG Exhibitions Limited, the Federal Palace Hotel, Victoria Island, Lagos will once again provide another platform for a sober reflection for the Federal Government and other critical stakeholders to reflect on the nation’s journey under the 2013-2023 National Automotive Industrial Development Plan (NAIDP).

It will indeed be an opportunity for stock taking on how far Nigeri has gone as country with abundant resources, sound minds and high successful people, yet many cannot afford a brand new car, even as many so called local assembly plants are now idle due to inaction on the part of government.

Every year, the organisers put in extra effort and planning to assemble local automobile dealers, foreign auto spare parts makers, decision makers in government at various levels and decision makers in the industry to come and and network among themselves as well as showcase what they have for the visiting members of the public.

According to BKG Exhibitions, more than 50 players in the global auto industry are taking part in the

exhibition the 14th Lagos Motor Fair & 8th Autoparts Expo at the Federal Palace Hotel, Victoria Island, Lagos. The event lasts from May 6-11.

Ifeanyi Agwu, Chairman of the Organising Committee of the fair which is organized by BKG Exhibitions Limited of Nigeria, SENEXPO International Fairs Inc of Istanbul, Turkey and China Auto Modification Accessories Association (CAMAA)-Genertec of China is recording such turnout in these challenging times underscores the seriousness of stakeholders to keep the sector running.

The managing director of BKG Exhibitions Limited noted that the presence of these companies will go a long way in reinforcing the aims and objectives of the show which is fast tracking the development of the automotive sector of in Nigeria. Their coming at this time shows seriousness and resilience on their part.

With ‘New Contacts; New Opportunities’ as this year’s theme,

Agwu explained that, this was informed by the enormous offers available in this unique key industry event.

He noted that despite the challenges confronting the sector currently, the organisers shifted to a new approach of educating the people and government in developing new options and approaches for creating and harnessing new abundant opportunities in the sector through the event with emphasis on keeping the sector alive.

According the head of the organizing committee, Lagos Motor Fair remains the platform for existing brands as well as new entrants, ranging from passenger busses, cars, trucks, spare parts, accessories, lubricants, financials and many more.

He emphasised that, the importance of continuously staging the show cannot be over-emphasized as all hands must be on deck to promote and support investments into the sector which occupies a

Ford hires external experts over emission inquiry

strategic position in enhancing the economic development of Nigeria.

Continuing Agwu revealed, “As part of our efforts in promoting investment into the automotive sector, all strategies have been deployed to ensure that the fair more than ever before receives the needed attention from participants, institutional, trade, professional and individual buyers as well as visitors’’.

Some of the companies and agencies that are participating are: Toyota Nigeria Limited, CIG Motors Limited, PAN Nigeria, Elizade Autoland (JAC Motors), TATA Motors and National Automotive Design and Development Council (NADDC) Others are: Ammasco Oil, 11 Plc (Mobil), Eterna Plc, Golden Tripod, Starsew Machine-Denso & Aisin, Garu Technologies and, Michelin Tyres Services Company Limited . Companies from Turkey, China, India, South Korea and United Arab Emirates are also participating in the Autoparts Expo.

ord has commissioned outside experts to investigate its testing procedure. The move is coming shortly after a criminal investigation was opened into the way Ford tests the emissions of its vehicles. The process is expected to last several months.

Recall that BBC Report only last Friday explained that the US Department of Justice took action after Ford alerted the US Environmental Protection Agency to potential problems.

Ford employees had before the development raised concerns about the computer modelling and, in particular, the figures Ford engineers used for road load, which involves the weight of the vehicle and other data.

“We are fully co-operating with all government agencies. Because this matter is still in the preliminary stages, we cannot predict the outcome, and we cannot provide assurance that it will not have a material adverse effect on us,” Ford said in a filing with the Securities and Exchange Commission.

Ford said the issue did not involve the use of defeat devices, which were at the centre of the emissions scandal involving Volkswagen in 2015 which was found to have used software that could cheat emissions tests. Emissions testing in the US have two parts: testing on the road and computer modelling.

The modelling generates mileage and emissions data submitted to regulators. Regulators have been paying closer attention to emissions testing since the scandal involving Volkswagen emerged in 2015.

VW sold more than 10 million cars between mid-2007 and 2015 that had emissions-test-cheating software installed and was fined €1bn (£880m) by German prosecutors over the scandal and in 2017 agreed to pay $4.3bn (£3.5bn) to settle a US investigation. Under the deal with the Department of Justice, VW agreed to scrutiny by an independent monitor for three years.

How Porsche enthusiasts celebrated New Cayenne

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he third generation Cayenne was last week presented to local Porsche enthusiasts that gathered at the iconic brand’s iconic showroom in Victoria Island, Lagos to have a feel of the re-engineered Cayenne into the family, seventeen years since it debuted as the dominant on/off roader with four doors in the German automaker’s staple.

Held in partnership with Remy Cointreau, marketers of Remy Martin brand of cognacs, the Cayenne played host to auto many auto luxury freaks from far and near to witness the unveiling of Porsche’s most successful flagship SUV with unprecedented 8-speed Tiptronic S gearbox mated to a six-cylinder turbo engine that delvers 450Nm of torque and 340bhp.

One by one, the Porsche fans

gathered and by the evening time of penultimate Thursday, the Victoria Island showroom had been transmuted to a hive of the crème de la crème, hobnobbing, networking and exchanging pleasantries in ways that validates an existing bond amongst a con-

gregation of six figure earners.

As they moved and swayed to the classical music vibes in the light emitting diode lightedshowroom, the Porsche fans waited eagerly for the unveiling in partnership with Remy Martin that later initiated the toast to

the event.

No sooner Remy Martin’s XO (Extra Old) Brand Ambassador Nigeria Stephen Jimba was done with the tribute than the Porsche Centre Lagos General Manager Anurag Shah in company of the Sales Manager Josephine Nwosu walked to the podium to unveil the launch model.

The crowd was ecstatic with rapturous cheers just as Anurag invited everyone to take detail assessment of the new Cayenne, which he said was Porsche’s most popular model in Nigeria.

“I have no doubt that the third generation Cayenne, which offers even more sports car performance and practicality will continue the success story of its predecessors. The Cayenne is at home on any road, and equally ready to explore new terrain. Its

versatility is truly unique”. Anurag said.

He added that the Cayenne “enjoys short sprint as much it relishes long road trip, and commuting to work via a lap on the track.

Completely redesigned from ground to up, it brings closer its racetrack roots and offers greater versatility and performance than ever before.

What’s more, the Cayenne is “capable of producing a superb drive experience anywhere and that is really what sets the Cayenne apart from any other SUV. We’re very excited to be welcoming it to Nigeria today,” Anurag quipped.

Suffice to say the new Cayenne is an unmistakable identity of the Cayenne but delivers a more streamlined and athletic impression to complement an increased length and dropped height.

Wednesday 08 2019

BUSINESS DAY

27

EXECUTIVEMOTORING 3-Series earns IIHS top safety pick

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Toyota takes Rush SUV campaign to LMF MIKE OCHONMA

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arely three months of its successful launch of the Toyota Rush SUV into the Nigerian market, Toyota Nigeria Limited (TNL) said it hopes to use the ongoing Lagos Motorfair to explain further on why the new compact SUV should be a must-have in family garages.

In a telephone chat with BusinessDay last Monday, Olukoya Adekunle, senior assistant manager of TNL disclosed that, typical of the franchisees level of participation in past editions, the company is showing presence at this years autofair with a ‘basket of 15 models’ with the new Rush and retooled Camry registering huge presence at the exhibition that will end this Saturday.

For the past couple of years, automakers have been busy rebranding and transforming their existing models into something different.

Whether it is to attract buyers into a certain segment or expand their market share, they are now building cars that go above and beyond its original make.

And with Nigerian market awash with quite a large number of Sport Utility Vehicles (SUVs) and crossovers, Toyota Motor Corporation (TMC), through TNL; its manufacturers representatives decided now was the time to introduce their own contender in the lucrative compact seven-seater crossover scene: the all-new Rush.

Featuring the underpinnings of the Avanza wrapped in a sleek and stylish body, the Toyota Rush combines MPV practicality with SUV capability. As far as its looks are concerned, Toyota clearly made the Rush stand out. While it does appear to borrow some styling cues from the Fortuner and RAV4, the small seven-seater still comes with its own unique design.

A sleek front grill with tapered LED headlights gives the Rush a

striking yet mature look. The rear, on the other hand, is dominated by a pair of sharp LED taillights and a sporty rear spoiler which further adds to the Rush’s eye-catching aesthetics. The most favorite exterior feature is the bodykit which though may look outlandish enhances the Rush’s rugged and sporty appearance.

It consists of a restyled front bumper with new foglight covers, side skirt garnishes, side protection moldings on the doors, and an emblem at the back, a glossy black trim on the tailgate, and new front and rear bumper garnishes.

All in all, Toyota made the Rush look like a proper mini SUV. Place it beside an Avanza, and most folks would not think that the two are practically the same vehicle underneath.

Rush comes with a shed some of its utilitarian design cues for a smoother, more refined interior.

Splashes of cream-colored trim pieces cover the dashboard, center

console and door handles. There are also black fabric seats which give it a more mature look and feel Toyota also went to the trouble of actually changing up portions of the Rush from its MPV brethren. Both the aircon vents for the driver and passenger adopt a circular shape rather than the rectangular ones from the Avanza. Also adopting a redesign are the central aircon vents which are now smaller and sleeker in design.

The 2019 Rush has a decent powertrain but it could have received a torquier engine to help it move all that precious cargo. In-car features and amenities are aplenty although I wished it came with more comfortable seats, especially for the driver and front passenger.

Handling and ride comfort, on the other hand, are adequate, if a bit rough. It’s true redeeming factor, however, are the wide array of standard safety features throughout the model range that are offered at test. Even when breaking the ongoing Lagos Motorfair. down each test into more

Depreciation: How much value will a new car lose

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re you a prospective new car shopper looking to put a brand new N5million car in your driveway, here are some expert advice: Buy a vehicle with a sticker price closer to N6million. That’s one way to look at depreciation.

Reliable data shows that cars can lose more than 10 percent of their value during the first month after you drive off the lot and the amount your car is worth will just keep falling, too.

According to current depreciation rates, the value of a new vehicle can drop by more than 20 percent after the first 12 months of ownership. Then, for the next four years, you can expect your car to lose roughly 10 percent of its value annually.

This means that a new car can be worth as little as 40 percent of its original purchase price after five years. The value of a new vehicle can drop by more than 20 percent after the first 12 months of ownership.

Then, for the next four years, you can expect the car to lose 10 percent of its value annually.

What is Depreciation?

The modern concept of depreciation was developed in the 19th century so that, the big railroad companies could declare more profits. With a little accounting

magic, the cost of laying track and building trains wouldn’t be subtracted from their yearly income all at once.

Instead, the companies calculated how much a train, for example, was “used up” each year. They assigned a value for that use and then counted this smaller amount against their annual income until the train’s value was down to zero. In the same way, a car’s depreciation essentially represents how much of a vehicle’s value you’ve used over time.

Another important factor came into play as industries became more technologically advanced. At that point, corporations had to worry

about assets that didn’t necessarily wear out, but did lose their value as more sophisticated replacements became available.

Think of a business computer or, for car buyers, a vehicle without modern safety technologies. Both become less and less valuable as newer and newer capabilities are developed for the latest products.

What Else Affects My Car’s Value?

If you want to drive a new car, you usually have to pay more than that car’s really worth in the first place. After all, you are not only paying for a vehicle, but also covering taxes, fees and the cost of running

t gets harder and harder each year to earn awards from the Insurance Institute for Highway Safety (IIHS). Yet, even in the first year of its latest generation, BMW’s venerable 3 Series has again proven mighty safe.

The IIHS announced last week that the 2019 BMW 3 Series has earned its highest safety rating. In order to achieve this, a car must withstand a series of difficult crash tests that go above and beyond the 5-star tests. In addition, a vehicle needs to succeed in a variety of technical evaluations that look at safety systems and headlights.

On the crash-test front, the 3 Series was flawless. It earned the top Good rating in every single crash test, including the IIHS’ brand new small-overlap front passenger

the dealership.

The same goes for certified preowned vehicles and traditional used cars bought on a retail basis. When you compare your total outlay for a vehicle against its value, you’re running at a loss even before you get the car off the lot.

Then there’s the matter of perception. Luxury cars and cars from certain well-regarded mainstream brands can hold their value better than others simply because of their reputations.

For instance, the way people perceive different types of vehicles can also impact their depreciation.

When trucks and SUVs are in higher demand than cars, the former will have higher retained values, too, since people are willing to spend more money for them.

Can I do anything to reduce depreciation There are a few basic guidelines that will help your car hold its value. First, because depreciation is the price you pay for using your vehicle, you can soften the blow by using your vehicle less.

The tipping point is right around 10,000 miles (16,000 kilometers) a year. Any more and routine wear and tear begin to really take their toll on a vehicle.

specific subcategories, the 3 Series passed with flying colors.

The results of the technical evaluations were almost as rosy. With its standard complement of safety systems, the Bimmer achieved the IIHS’ top rating of Superior, avoiding crashes at both 12 miles per hour and 25 mph.

The headlight situation is a little less exciting. While the 3 Series did receive a Good rating for its headlights, that only applies to the optional LED headlights with automatic high beams. The mid-tier headlights were only rated Marginal, while the base LED headlights were rated Poor for inadequate side and curve illumination.

The new BMW 3 Series finds itself in good company. Dozens of vehicles have picked up IIHS awards for this year thus far, including four other 2019 BMW vehicles like 5 Series , X2, X3 and the X5. Of those cars, only the X2 failed to meet the criteria for top safety pick plus, earning the second-best top safety pick instead.

28 BUSINESS DAY

Wednesday 08 May 2019

INTERVIEW

Leadership walks the talk at Sterling Bank – Temi Dalley TEMI DALLEY is Chief Human Resources Officer (CHRO) of Sterling Bank Plc, the lender recently recognised as the Innovative Bank of the Year by the Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement System (NIBBS). She is a top-level executive of the bank with oversight for organizational development, recruitment and talent management, performance management, employee relations, and compensation and benefits, among others. In this interview, Temi talks about what makes a company a Great Place to Work, talent management and recognition as one of the 101 Most Influential Global HR Leaders. Excerpts.

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efore now, CEOs are inclined to ask just any business leader to run the human resources department. Now, companies are evicting and replacing these seniors with career CHROs, what has changed?

The past 10 years clearly has produced a wave of ‘’people’’ considerations; from the increased attention on diversity to work-life integration demands of millennials, necessitating corporate actions. This appreciation of people as capital has re-emerged with CEOs now depending on Chief Human Resources Officers with experience working in HR. These are professionals skilled in partnering with line managers and senior leaders to recruit talent and solve workforce problems.

The CHRO’s credibility comes from knowledge and skills that can only be attained in practice.

Excellent execution ensures superior returns which all businesses strive for. It has therefore become more important to empower the human resource profession.

In today’s gig economy where the war for talent is real and job hopping is the norm; how are you keeping employees, especially the restless millennials group happy and at home at Sterling?

At Sterling, we take pride in our organisational culture as we are building a workplace that enhances the lives of our employees. The relationship between the employee and the employer (Sterling) is designed to be mutually beneficial where we fit into the life plans of our employees rather than demand that they alter their lives for us.

Initiatives from our agile way of working such as flexible working models, accelerated career routes, bespoke reward systems and deliberate investment in capacity building of our workforce, has helped in keeping not just the Millennials but our entire

gress?

A number of Human Resources Professionals are doing a great job every day, from talent acquisition, to building competent, dynamic and agile teams well equipped to meet the rapid changing demands of today’s workplace, with a focus on the future business needs. I believe this is a valid recognition of our ability to unlock the potential of our employees for sustainable growth and our contribution to organizations’ overall success.

As an award-winning CHRO with credits that include a Great Place To Work Award, what makes a company a Great Place to Work?

A great place to work is an enabling environment, where employees trust the people they work with, derive a sense of meaning from their work and take pride in the overall success of their organization.

At Sterling, we have nurtured a strong value system aligning our behavioral codes and our organizational purpose to building Trust.

Communication, Dialogue and Co-determination are key factors on which we base our human resource approaches and these form the bedrock of our culture. We are constantly creating products and services that clearly add value to the society and enrich the lives of people in our communities and beyond.

Temi Dalley

workforce mix.

Can you share the upside and downside of managing talent in Nigeria’s fast paced and fiercely competitive financial services sector?

There is a never-ending war for talent going on. Financial services used to be the only competitors for talent and maybe higher paying industries but that is changing with people demanding for excellent employee value proposition. It has therefore become imperative to build an enviable employee brand, www.businessday.ng

leverage an employee alumni network and constantly find the best ways to retain talent.

Over the past couple of years, technology is changing the way companies work with organization culture being set and reset every day. What are your thoughts on managing this fluidity?

I am a strong advocate when it comes to leveraging technology to improve the workplace and as such, I would rather focus on how to collaborate using these elements i.e., using technology

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to further propagate culture. A typical example is how technology is supporting our flexible working models, our employee engagement channels etc. However, irrespective of our focus on technology, we still want to retain a workplace where our employees are fully integrated, utilizing technology to build networks of connected employees.

Can you tell us about your most recent laureate - 101 Most Influential Global HR Leaders award from the World Human Resource Development Con@Businessdayng

How do you or other leaders at Sterling Bank communicate the core values?

At Sterling Bank, we demonstrate our commitment to maintaining an ethical workplace in two important ways.

First, right from the leadership – we lead by example, walking our talk and consistently adhering to our code of conduct.

Secondly, we continue to implement systems that ensure fair and equitable treatment of all employees across board, driving performance through the right behaviours.

Wednesday 07 May 2019

BUSINESS DAY

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INTERVIEW Grid is tackling the problem of reliable addressing system in Nigeria Adefola Amoo, founder and CEO of Intercab and Grid, in this interview with BusinessDay’s Frank Eleanya on the innovation that is helping many Nigerians, in real time, reduce the risks they face getting to places they have never been before. He also spoke about why many businesses in ridehailing market are not living up to expectations despite demand in the market.

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Tell us about Grid and InterCab he parent company for InterCab is Mini Taxi Company. InterCab is actually my second rideshare on the store. The first one was called MiniTaxi. It is a rideshare I designed and have built for me based on my structure. We are currently deploying it in Port Harcourt. We are also getting reasonable response from the people. In coming to Lagos, it became apparent that the market in Lagos was much more matured than MiniTaxi. I had to pivot to get market standard product specifically for the market in Lagos. That was how InterCab was born. So the parent company for InterCab is MiniTaxi.

For Grid, having finished all the establishment processes; concept, development, testing, alpha beta and the patent we got from the US patent office and registration from Nigeria, it was then time to go corporate. I set up the company Akutari, to own Grid.

What is the value-proposition of Grid?

It is very simple; we make finding you very easy. Grid makes customers showing up at your doorstep independent of any phone calls to you.

What you made you believe this was a need that needed to be filled?

Two things; I was fortunate to be moved out of Lagos to Bayelsa state. Second when I was building another one of my apps called Jobmoney – an app to put artisans at your fingertips. The artisans include plumbers, electricians, technicians, head dressers, tailors among others. While I was building it and it was necessary to locate the artisans, it then became apparent to me that we can extend it to businesses and everyone. Staying in Lagos you would have thought that the standard mapping functions on your app was sufficient for you to navigate your way around. But there are lots of places in Nigeria, in developing countries, across the world where there are no addressing systems and I happen to live in one of those places. That sought of heightened my awareness about the need for reliable addressing. From Jobmoney I pivoted from that and just focused on building the system that codifies locations – that’s the Grid.

How does it work?

A lot of us are familiar with zipcodes and post codes from Europe and America. You go on your phone, stand in front of your house and get your Gridcode. That Gridcode becomes a live reference to you.

What’s the revenue model for Grid?

If you don’t have capital for the backend, you will not survive. If you are just a frontend and you think that just because you have that you can make the backend work, if it is cash intensive it doesn’t take away the need for cash. If on the other hand you have a business that doesn’t have a cash intensive requirement you have a better chance of surviving. It is like Grid; we built Grid and have invested in it already. It works of its own and on its own. We don’t have any cash heavy backend to sustain.

Hence the question about revenue model is a relevant question but it is not a life or death question for us.

As long as we can survive the gestation period and the awareness becomes prevalent

Adefola Amoo

to users, we then have a business from which we can make cash. As long as online platforms are alive, Grid doesn’t die. It is not going to stop working just because we didn’t have a cash inflow. We have our annual cost for the presence we have online, for the marketing and pushing the products. Those costs are there but they are not life and death for us.

You recently spoke about the knowledge economy. Is Grid part of the solution to the knowledge economy?

Grid is a solution for an infrastructure problem we have in Nigeria. It is not a solution for the knowledge economy rather it is a demonstration of what is possible. Being knowledgeable about technology and being in an environment where there are problems to solve using that knowledge, Grid is a demonstration of what can be achieved when knowledge is in the hands of those that can

‘‘

We are approaching the problem from the head. So we see the successes of all these technology and we are running after them without understanding the underlying principles that led to the success

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use it to solve problems that in other parts of the world don’t need solving but we have that problem here. Look at GSM phones, wireless telephony helped Nigeria to leapfrog the time, the investment and complexity of deploying land wired phones across the country. If we had attempted to build a wired system, we wouldn’t have been able to achieve what we have today. It is too expensive and it takes so long. But what happened with GSM, with moved from 40,000 lines to 60 million lines in two administrations. These kinds of things take lifetimes.

Looking at the tech ecosystem in Nigeria, what are the problems you think require urgent attention?

We are yet to understand that everything is not about money. The technology itself, the business around the technology, the penetration of the technology or whatever innovation you are making, and the funding cycle, all of that is very important. Not untypically, we are approaching the problem from the head. So we see the successes of all these technology and we are running after them without understanding the underlying principles that led to the success. Hence, a lot of people are getting programming knowledge and proprietary knowledge on different things but they are not getting educated on the business side of things.

Which of the schools are teaching it? Is any school teaching the development cycle or business cycle? There are not many of them.

Under those circumstances the startups end up groping for the levers that are not in the direction that they need to grow. The people that have money and fund some of those processes eventually have tried to do so and gotten burnt. When people get burnt they run away and others that have seen them get burnt will stay away as well. You have a loop

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that is closing in on its self; the knowledge is not yielding the result and the young men are getting frustrated and disillusioned and the funders are excited in the beginning but end up running away.

Something we don’t understand in Africa is that development is deliberate and not accidental. It is a deliberate effort of somebody; individual, government a group private people or advocates. We have a lot of people dabbling in and out of the market. Until we can synthesize that deliberate action we are still going to struggle. We are on the path, it is not as though nothing is happening. Human beings learn from mistakes. It is when things are bad that people learn. If you are in a situation that is bad what is happening is that you are building the lessons of how not to do it. Eventually, that knowledge of how not to do it will become the basis of asking “How do we do it?” when we get to that point we will get it right.

There are about 50 ridesharing companies in Nigeria. What do you think puts you in the same position with the likes of Uber and Bolt?

There is something that we see and we can get indicators. One of our competitors has lost market share in almost every single major market across the globe. They lost the market share to local players. It is an indication that local players can succeed. For us, that is a motivation. No one understands an environment as good as local person. The other rideshares have all mostly been local, 95 per cent of them, they are not big today but that does not mean the opportunities are not there. The opportunity is there and we are committed to taking a share of the market. We are focused on getting a share of the market. The only people that succeed are the people that don’t stop. We are not going to stop.

You will agree that part of succeeding depends on how you manage your drivers.

What are the incentives that are there for drivers?

Yes you have to treat your ride providers very well. We start from just the fact that we don’t call them drivers. Who is a driver? A driver is a person you employ, at a fixed rate of income, to do a single job, provide service to single client and he has fixed working hours.

Our guys do not fit any of these characterizations. Our guys are not employed, they risk takers, they have taken assets, used their funds or their integrity to acquire an asset in the vehicles and they use the asset to provide service to multiple customers at a rate that is driven by market economics and during hours that will enable them meet their expenses, pay off their financial responsibilities and come back and look at what profit if left for them. They also have a mindset to expand their business because a lot of them want to have a second vehicle and employ someone to drive it. You will agree that is not a driver, that is an entrepreneur. So we call our guys Autopreneurs.

We have that name trademarked so that no one else can use it. You can see mentally how differently we are approaching these gentlemen that are providing these services. That underscores the entire ethos of how we treat them. We have a lot of challenges too those are not things we can solve overnight.

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Wednesday 08 May 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Disquiet in industry as NAICOM dithers on plans we get this right the insurance industry will continue to be in disarray, stating that interlopers in different guises will continue to make inroads into the insurance business to the detriment of the industry, the Nigerian financial system and the country as a whole.”

Looking at the role of the insurance industry including protection and conservation of national wealth as well as risk management, he noted that the industry would be failing in its duties if as in industry “we do not galvanise all arms of this important sector of Nigerian financial system towards attaining these laudable objectives.”

Stories by Modestus Anaesoronye

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he insurance industry is unsettled. There seems to be a gap in the communication vehicle between the regulator, the National Insurance Commission (NAICOM) and the players. The regulator looks to have become too careful not to see more policies fail in its hands, or strongly resisted by any arm of the industry.

NAICOM’s experience with Tier-Based Minimum Solvency Capital (TBMC) policy, which was largely resisted by operators not because of its model, but because of the time frame given for implementation; as well as the policy to grant States of the Federation State Insurance Producer (SIP) license, which was also resisted by Brokers.

All these put together have created some cracks in what seemed to be flourishing relationship between the market and the regulator.

The SIP was to be an Agency of a State Government licenced by NAICOM to provide intermediary services and was to be remunerated from the services they provide.

The development has not only affected moving forward with proposed Nigerian Insurance Industry Development Plan (NIIDP), it may also have affected realizing the sector’s growth ambition as planed in the FSS 20: 2020 document.

Mohammed Kari, commissioner for Insurance/CEO of NAICOM had said that the NIIDP would have global objective which would have different dimensions with countries and institutions willing to develop models to suit their peculiar environment.

He said insurance sector in Nigeria

Mohammed Kari, Commissioner for Insurance

Tope Smart

would effectively and efficiently navigate it to increase the number of policyholders, while reducing the figure of the financially excluded, which are part of what the NIIDP contains.” he said.

Insurance Icon, Olabode Ogunlana, chairman of SCIB Insurance Brokers had said in 2013 during an insurance conference that for the industry to remain relevant in achieving the country’s Financial System Strategy (FSS) 20:2020 targeted at developing and transforming Nigeria’s financial sector into a growth catalyst and engineering Nigeria’s evolution into an international financial centre, players in the sector must cohesively work together.

Specifically, the vision of the FSS 20:2020 is to make the insurance market a first choice in Africa noted for high level of capacity, transparency, efficiency and safety and attain the 15th position in world insurance premium generation by the year 2020”.

Ogunlana, said then “unless and until

abir Ahmed, executive director, Business Development North & Investment, Premium Pensions; Umar Sanda Mairami, managing director/CEO, Premium Pensions first three retirees in the North Aishatu BabaPate, Barnabas Dau Yakubu and Mohammad Ibrahim at the Celebration of Excellence event which took place recently in Kano.

ARM innovation progrmme drives tech startups Premium Pension celebrates search for financial services solutions contributors, compliant employers

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RM in partnership with Ventures Platform in November last year launched an innovation programme, ‘Labs by ARM’, focused on supporting start-ups leveraging technology, applications, and services to solve specific problems.

It is also helping to unlock markets thereby changing how consumers access financial services.

As part of the Labs by ARM innovation programme, a 12-week Accelerator programme was launched in February 2019, designed to help six early and growth stage Fintech start-up companies commercialise and grow the distribution of their products and services.

The teams participated in deep-dive sessions to ascertain the health status of the start-ups and were supported to create unique strategies for solving the challenges.

Programme mentors and advisors, who are thought-leaders in their field, provided support around business growth, productmarket fit, and distribution; helping the startups navigate specific challenges.

Within the 3 months, one of the companies went live with their mobile app, another start-up grew the number of on boarded customers from 6000+ to 10,000, further securing a partnership to onboard an additional

250,000 customers. The Demo Day, signaling the end of ARM’s corporate Accelerator programme was aimed at showcasing the progress made by the six start-ups. The event was held at Impact Hub on Ikoyi.

The demo day event was attended by ARM executives and members of the board of Advisors for Labs by ARM including; Africa Partner for Alta Global Ventures, Victor Asemota; CEO, Jumoke Ogundare, Deputy CEO, Sadiq Mohammed;, MD, ARM Academy Uche Azubuike and MD, ARM Financial Advisers, Henrietta Bankole-Olusina; and they spoke about why it was important for established companies to partner with start-ups.

The six start-ups who presented their innovations were: Trove: Trove is a self-directed trading mobile application that allows Africans to invest in financial securities in Africa (Government Bonds, Stocks) and also in international markets (US Exchange Traded Funds & Stocks of US companies) with the tap of a button.

Asusu : Asusu is building the infrastructure for informal micro-financial services by digitizing the financial activities of low income and daily earners through cooperatives, trade groups, and agent networks and partnerships. www.businessday.ng

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n a bid to deepen market penetration and consummate customer loyalty, Premium Pension Limited has rewarded its key contributors and compliant employers that have made their pension service excellent and rewarding.

At the event tagged “Celebration of Excellence “awards held at Bristol Hotel, Kano, the company appreciated its esteemed members and compliant employers who has stood with the company, enabled it attain market leadership in industry.

Pension Limited is a licensed Pension Fund Administrator Company which started operations in the year 2005, with current Assets Under Management (AUM) standing at N633 billion.

The Company presented awards in various categories which includes Organizations with highest contributions in the public sector (Federal) which comprise Nigerian Prison Service, Independent National Electoral Commission, Nigerian Security & Civil Defense Corps, Federal Road Safety and Nigerian Television Authority; Organizations with highest contributions in public sector (State) goes to Kaduna, Zamfara, Jigawa and Kebbi States; Organizations with highest contributions in

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Private Sector received by Reynolds Construction Company, Gongoni Company Limited, Dantata&Sawoe, Kano Electricity Distribution Company and ASD Motors; Employers with highest employees with Voluntary Contribution are Nigerian Deposit Insurance Corporation, Central Bank of Nigeria, Nigerian Customs Service and Tiddo Securities Limited.

Other categories are First 3 active female members that registered within the Northern Division including Lami Baba, Ummi Mohammed and Grace Musa; First 3 active male Shafi’I Abubakar Wababe, Umar B. Daniya and Badamasi Dantanko Usman. The last category are the First 3 retirees within the Northern Division comprising Alh. Mohammed Ibrahim, Mr. Barnabas Da’u Yakubu and Aishatu Baba-Pate.

In his opening remark, Umar Sanda Mairami, chief executive officer of Premium Pensions said the award, which was divided into seven categories, was meant to celebrate individual members and corporate clients that had patronized the Company since inception. He reiterated the commitment of the Company to serve its current and potential members with the premium experience to serve as the ardent advocates.

@Businessdayng

Wednesday 08 May 2019

BUSINESS DAY

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insurance today E-mail: insurancetoday@businessdayonline.com

Reinsurer positive about renewal rates mid-year Stories by Modestus Anaesoronye

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ohn Dacey, the group chief financial officer (CFO) of reinsurance giant Swiss Re, has said that in all cases, rate movements at the April 1st renewals were adequate for the firm and that it’s optimistic about the important June / July renewals season.

Swiss Re weekend reported its financial results for the first-quarter of 2019, including an update on its experience at the recent April 1st renewals, which saw much of the loss-affected Japanese business come up for renewal.

Overall, treaty premium volume increased by 18

Afolabi Abiodun (2nd left), chief executive officer, SB Telecoms and convener of TAMS/Nigeria’s Employee of the Year Award (NEYA) Summit flanked by some of the TAMS/NEYA award winners at the press conference to announce the upcoming 2019 TAMS/NEYA Summit

NEYA urges PenCom to follow through on pension remittance compliance …celebrates productivity at workplace

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onvener of TAMS Summit and initiators of Nigeria’s Employee of the Year Award (NEYA), Afolabi Abiodun has called on the National Pension Commission (PenCom) to follow through on its responsibility of ensuring that monies deducted from employees salaries are remitted to their respective pension fund managers as at when due.

Abiodun, who made the call during an interactive session with journalist on the 2019 TAMS Summit and NEYA slatted for May 16th in Lagos, noted that the challenge of Nigeria today is making laws without following through on compliance.

He said it is unfair that deductions are made from employees salaries for their pensions are not remitted appropriately and as at when due, and nobody is punished for it.

While, as body we push for productivity in work place, we are also concerned about moral of the worker, stating that such treatment do not only kill the employees moral it affects productivity in the work place, Abiodun.

Abiodun therefore called on PenCom to enforce pension remittance to enhance employee morale and boost productivity.

Now in its fourth year, the TAMS Summit is a social impact initiative designed to push the agenda for workplace and national productivity. Convener of the summit, Afolabi Abiodun, who was featured in the Stanford Seed series, Profiles of Purpose, leads a team of young Nigerians who are committed to promoting accountability of time and resources in workplaces in all sectors of the economy.

Holding at the MUSON Centre, over 300 dignitaries, guests and delegates are expected to be in attendance. With the theme, “Charting Nigeria’s Path to Growth: Playing by the Rules of Work, Wealth and Wellbeing”, with Bismarck Rewane to present the lead paper.

According to the ora-

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ganisers, the summit will present the Nigeria’s Employee of the Year Award (NEYA) in celebration of the most productive and punctual employees in Nigeria, as well as Nigeria’s HR Manager of the Year in recognition of the crucial role of creating enabling workplaces for employees to contribute to the success of the organisation and grow their careers.

Both categories will get an all-expense paid vacation to Dubai and Abu Dhabi in addition to an assortment of prizes.

We believe that resourcefulness (productivity) and timeliness (or punctuality) are two sides of a coin. Thus, it is all too clear that no society can hope to make progress or catch up if there’s a culture of disregard for these attributes, Abiodun said.

percent and the price quality improved 1 percent. The reinsurance giant notes that it reinforced its strong position in the country, increased premium volumes by 10 percent and experienced improved price quality of 7 percent during the renewals.

Discussing the most recent renewals during a Swiss Re Q&A session, CFO Dacey said the Swiss Re thinks rate increases in Japan were strong, and while rates in other parts did not increase particularly, “in all cases, we found the rates to be adequate for us.”

In light of the Japan renewals being in line with Swiss Re’s expectations, it’s maintained its 98 percent P&C Re combined ratio estimate for the full-year

2019.

Dacey explained that the positive results Swiss Re experienced following the 2011 Tohoku earthquake and subsequent rate response, is playing out again in 2019 following typhoons and other flooding and storm events in the region.

The hope for market players is for more material and sustainable rate increases at the important June and July renewals, which focus heavily on lossaffected U.S. business.

Commenting on the upcoming mid-year renewals, Dacey said: “We see important renewals in the U.S. in June and July, and the continuing impact of California wildfire in particular, we expect to support reinsurance rates moving forward.”

Insurance man, Justus Uranta goes to royal throne in Opobo kingdom

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ustus Clinton Uranta, the former group managing director/CEO of Niger Insurance Plc is set to join the ranks of Royal Fathers in Nigeria following his recent emergence as Alabo-Elect of Queenstown in Opobo Kingdom, Rivers State.

His coronation ceremonies scheduled for June 7, 8 and 9, 2019 will formally mark the beginning of his journey to serve his people as ‘His Royal Highness’ (HRH) after more than 35 years of meritorious career in the insurance industry.

Queen’s Town (Kweniama) was founded and established by Chief Captain Uranta in 1887 under the protectorate of her Britannic Majesty, HRM Queen Victoria 1, Queen of England.

Today, Queenstown is part of the Opobo Kingdom, established by ‘Chief Captain Uranta along with others, including the revered King Jaja of Opobo. Chief Captain Uranta was a merchant warlord who fought and conquered many battles that earned him War Canoe Houses in Ibani translation– Omufie Aru Wari.

After the reign and death of Chief Captain Uranta, there had been other great men of repute who had reigned in royalty on their father’s throne, including Chief Justice Elijah Allswell Uranta, TIU’s illustrious father.

The immediate past Chief that occupied this royal stool was HRH Alabo Magnus N.

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C. Captain Uranta, Captain Uranta (X) Paramount ruler of Queenstown, Iroanya section.

After the death and burial of the immediate past Chief, the Royal stool has remained vacant with the need to fill the vacuum. On that premise, a resolution was passed to Chief Captain Uranta War Canoe House to search for a befitting replacement.

Following an elaborate meeting of Chief Captain Uranta Wariseniapu Council Queenstown held on 27th January, 2019 at Chief Captain Uranta Palace, a consensus was reached and the Council unanimously elected/appointed Amaopusenibo Justus Clinton Uranta as Alabo Designate of Chief Captain Uranta War Canoe House and Iroanya Section.

The Alabo designate, Justus Clinton Uranta is a former Group Managing Director/CEO of the NSEquoted Niger Insurance Plc. An astute Manager of Men & Resources, Uranta had over 20 years of experience at the top management level of Niger Insurance Plc before bowing out of office as the GMD. Prior to this, he held top management positions in other equally notable public institutions: such as NICON Insurance Corporation, Federal Ministry of Trade (finance) and Veritas Insurance Company, to mention but a few. He has served on the Board of the following companies: Niger Insur@Businessdayng

Justus Clinton Uranta

ance Plc; NIC Properties Ltd; NIC Securities & Trust Ltd; Beta Glass Industries; Union Assurance Co.; Express Discount Ltd and Trustfund Pensions Plc A graduate of Business Administration from the Ahmadu Bello University Zaria, Dr Uranta holds an MBA from the Delta State University and a Doctorate in Business Belize, from the Common Wealth University, Central America.

Uranta is a Chartered Insurance, and council member of the Chartered Insurance Institute of Nigeria (CIIN), as well as ViceChairman, West African Insurance Institute (WAII) at The Gambia and alumnus of the prestigious Lagos Business School (AMPIO 2010).

A grassroots man, he is well at home with members of his rural community. His belief in selfless service to humanity has been demonstrated in his contributions to educational advancements in his environment.

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Wednesday 08 May 2019

BUSINESS DAY

PENSION today

In Association with

PFAs intensify data recapturing to enhance pension system …falls back on BVN for available data

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ension Fund Administrators (PFAs) have intensified efforts towards data recapturing with the view to achieving harmonized information of all Retirement Savings Account(RSA) holders under the Contributory Pension Scheme(CPS).

The exercise according to Pension Fund Operators Association of Nigeria (PenOp) will enable PFAs reconcile the previous information they have about their contributors to enhance credibility of the system.

Ronke Adedeji, president of PenOp who disclosed the development said PFAs are reaching out to individual contributors to update their records, while also they are falling back on Bank Verification Numbers (BVN) for those who already have data with banks.

Adedeji stated that the ongoing data recapturing exercise is compulsory for all Retirement Savings Account (RSA) holders, urging contributors not to wait for their PFAs to notify them, but rather, willingly approach their pension administrators for the recapturing exercise.

“People should go and update their data and should not wait for PFAs to come to them before they subject themselves to this exercise.

The process has started, PFAs have invested so much into the project and operators are progressively approaching their customers to recapture their data.”

Adedeji noted that because of the difficulty in rescheduling people , the time involved and the resources needed to do all that, PFAs are falling back on BVN available with the banks, while those without bank accounts will be reached individually.

She stated that for now, there is no deadline, since the exercise is just starting but that in future, there could be a deadline, depending on the response of Pension contributors toward this exercise. She also said that the data recapturing exercise is in the interest of contributors as well as the pension industry, noting that, operators are eager to capture pension account holders as much as possible.

“It is going to be a long and pain staking exercise. It is a very huge project and it has started and so people should not wait for their PFAs to come to them, but should walk into their PFAs to update their records, she said.

According to experts in the industry one of the benefits of the data recapturing is to recon-

cile information of some pension contributors that may have inadvertently registered with more than one Pension Fund Administrator (PFA), in other words having more than one PIN. The PFAs action currently falls in line with the National Pension Commission (PenCom) directive that contributors and retirees under their management should be aligned with National Identity Management Commission(NIMC) data base.

Findings have shown that some contributors do not know which PFA to align with since they have PIN with more than one PFA, and in some cases have their contributions spread across.

One of the contributors having this challenge said “I have two different PINs, one with a particularPFA and second with another PFA”.

According to the contributor, he had earlier registered with one of the PFAs and when he changed employment, his new employer did not accept the first PFA he had chosen, may be for ease of remittance to their Pension Fund Custodian (PFC), and so he was compelled to open with a second PFA where the rest of the staff had their contributions domiciled” According to the contributor, he is confused having received a notification from one of the PFAs about their plan to come for his bio-data update.

Peter Aghahowa, head, Corporate Communications at PenCom had said “we are aware of these issues and that is why we are appealing to contributors to provide their National Identification Number (NIM) and their Bank Verification numbers with their PFAs so that we can reconcile the information we have”.

According to him, no one person has two NIMs or two BVN, and that is the same thing we want to do with RSA holders.

We believe that when this exercise is completed we would have properly resolved the bio-data issues we have, so that is why we are soliciting the support of contributors and retirees, Aghahowa said.

Nicholas Emeziem, a manager with one of the PFAs said the Contributory Pension Scheme as implemented in Nigeria and many other countries is highly technology-driven; I mean cutting edge technology. “If there is total compliance with the necessary procedures and requirements, the implementation of the scheme would be a smooth sail; stopping shot

L-R: Usman Hamma, Premium Pension Limited Micro Pension Coordinator; Aisha Dahir Umar, executive secretary, PTAD; President Muhammadu Buhari and Secretary to the Government of The Federation Boss Mustapha at the launching of Micro Pension Plan which took place recently at the State House Abuja.

of being a turnkey rendition.”

He noted however that inadequate and inappropriate data input by contributors at times render the work of pension operators extremely difficult and slows down processes.

“Even contributors have been subjected to avoidable suffering because of the inadequacies and inconsistencies in data input. Some have had the payment of their entitlements unduly delayed, and consequently casting a slur on the effectiveness of the CPS.” Emeziem stated further that there are even extreme cases, such as double registration, where workers or contributors open Retirement Savings Accounts (RSAs) with two different Pension Fund Administrators (PFAs). I do not know how two different accounts can be simultaneously funded.

However, the on-going Bio-data update or recapturing provides an opportunity to harmonize such situations. A worker can only have one RSA, he noted “The CPS remains the most effective and altruistic policy of the Nigerian Federal Government aimed at addressing identified and specific societal anomaly, therefore, coopera-

tion of all stakeholders is required for it to succeed, including contributors who are expected to provide adequate and accurate information from the beginning.”

The National Pension Commission (PenCom) had in 2018 directed all Retirement Savings Account (RSA) holders and retirees to update their bio-data particularly the National Identification Number (NIM) and Bank Verification numbers with their respective PFAs. PenCom in an advertorial said “The Federal Government of Nigeria has made it mandatory that every Nigerian must have a National Identification Number (NIN). To achieve this, all data generating organisations have been directed to harmonies their database with National Identity Management Commission (NIMC), whose mandate is to implement the National Identity System in Nigeria.”

“To enable the pension industry comply, PenCom therefore directs all PFAs to update the records of their clients. Consequently, all RSA holders, both active and retired, were advised to approach their PFAs to provide their NINs and BVN, as well as their other mandatory bio-data information”.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme.

If you have enquiries or contributions, send to this e-mail:

RC634453

Diamond Pension Fund Custodian Limited

1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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diamondpfcbusday@yahoo.com

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Wednesday 08 May 2019

BUSINESS DAY

33

tax issues Raising the bar against millionaire tax dodgers

Most people believe that fairness dictates that taxes be “progressive,” meaning that higher-income taxpayers pay not only more, but also proportionately more. However, a significant minority takes the position that tax rates should be flat, with everyone paying the same proportion of their taxable income.

Moreover, the idea of vertical equity (that is, the “proper” amount of progressivity) often directly contradicts another notion of fairness, the “benefit principle.” According to this principle, those who benefit more from the operations of government should pay more tax.

Many economists judge the fairness of the tax system largely on how the tax burden is distributed among different income groups.

In Nigeria, FIRS recorded an increase in Value Added Tax (VAT) collection between 2015 and 2018.

The revenue agency was however categorical that VAT is not for the poor: “Out of about N5.3trillion, a large percentage is shared between States and Local Governments. In VAT, there has been a growth of over 44 percent between 2015 and 2018. And that is at the current rate of 5 percent”.

FIRS said it is broadening its VAT collection scope with the adoption of States Accountants Generals (SAG) collection platform, VAT Auto Collect,

integration of the GIFMIS platform with Ministries, Departments and Agencies, (MDAs) and through eService payment options.

“Now when you look at Africa as a continent, Nigeria still has the lowest VAT rate. When we look at the items that are not VATable, basic food is not VATable, medicals, education.

But if you decide and you have the ability to go to a restaurant to eat and drink the same thing you can buy in the open market, then you pay VAT. So VAT basically is a consumption tax and those who choose not to go to the open market to buy their food and cook at home are subject to VAT. So its (VAT) not a hardship on the low income earners because normally they do not even go to hotels when their wives can cook at home and they can have something very nice”, Fowler stated.

“But the same Nigerians who are complaining about an increase are the same ones who go to Ghana and go and pay triple the amount in VAT or go to London and pay higher amount.

“So we are just saying, like the minister said that we should get used to the idea. And 85 percent of VAT goes to the State Governments who are supposed to be closer to the people. So they can use that money as approved by their State Houses of

Assembly. So they can use that money on education, infrastructure, etc. Yes, we had in increase of about 32 percent from N4.02 trillion in 2017 to N5.3 trillion in 2018. At the Federal level, clearly we can see all the projects that are being completed, based on the available funds. I am just saying that if we keep on the same way, the expectations cannot be different. For those who have the ability and the desire to take the choice, of going to areas where they have to pay VAT, then they should be allowed to pay VAT”, Fowler further stated.

The FIRS Chairman told the committee that through enforcement activities in respect of defaulting taxpayers from various tax offices, tax audit and investigation assessments, FIRS has generated the sums of N28.51billion and $77.83million.

“FIRS and the Economic and Financial Crime Commission (EFCC) Joint Tax Force (JTF) was introduced in 2018 to enhance the fight against tax related economic fraud. As at December 2018, a total of N6. 94 billion and 278,430 dollars had been recovered by the JTF. This and other such initiatives are continuous and will be continuous going forward.’’

He said that FIRS also initiated income tax on property owners in Abuja and Lagos as part of efforts to deepen tax revenue collection and expand the nation’s tax net as well as increase the revenue base.

“This project which initially targeted property owners in Abuja and Lagos has so far yielded N4.3 billion, and is being extended to other locations. In this regard, Oyo and Kaduna states have commenced.

“It is important to note that this is not a property tax but rather the use of the provisions of the law to bring into the tax net companies that own properties but failed to file necessary tax returns and pay appropriate taxes due,’’ Fowler, explained.

On tax audit exercise of the Service, Fowler said “This covers both the National Tax Audit (NTA) and the Pioneer Audit (PA). The NTA exercise contributed the sum of N212.79 billion to tax collection in 2018. Following improvements to the audit process and resultant increased efficiency, the exercise is expected to produce increased audit yield in 2019.”

your business operates is critical.

Implementing a globally coordinated approach enhances your ability to manage and prioritize risk and could help mitigate the impact of controversy.

Creating a global tax audit management framework, a global compliance platform and a tax controversy management reporting framework and making use of pre-filing tools and economic modeling can bring clarity, confidence and more certainty. A global approach can de-

liver benefits across the enterprise: a reduced audit risk, greater control over audits involving sensitive issues, a proactive management of tax controversy and increased knowledge-sharing.

Close the digital tax administration readiness gap With many governments requiring near real-time reporting and performing increasingly sophisticated data analytics, tax authorities are gaining global visibility. Busi-

nesses need to enhance their digital capabilities so they can meet the demands of this new world of digital tax administration.

Putting in place a new digital operating model is an essential step. This means that businesses need to ensure they understand tax authority data requirements, can format source data for local country requirements and have the appropriate tools to prepare digital tax submissions.

Iheanyi Nwachukwu

I

f Nigeria’s non-oil revenues are to rise, there are good grounds to look first to the rich. The wealthy are being heavily subjected to taxation in Europe, the United States and Australia. Ireland is also not left out. In the United States, high tax rates targeting the rich used to be the norm.

As recently as 1963, the top income tax rate was 91 percent, a rate that persisted, plus or minus a point or two, from World War II through Truman and Eisenhower and the early Kennedy years.

Nigeria, with an estimated population of about 189 million people, almost half of whom are aged 15 to 64, according to World Bank data, still has one of the world’s lowest tax-to-Gross Domestic Product (GDP) ratios of 6 percent, the lowest among the subSaharan countries the International Monetary Fund (IMF), an arm of World Bank, has measured. South Africa has 24.7 percent.

While FIRS no doubt works harder to change this narrative for Nigeria, it must continue to make efforts to bring the high income earners into the nation’s tax net so as to boost internally generated revenue. It is sad to say that many millionaires in the country pay little or no tax at all.

The Federal Inland Revenue Service (FIRS) said last month that it hopes to pull in about N750billion from about 55,000 defaulting taxpayers, most of them are millionaires.

While much of the recent interest in tax policy has focused on the individual and corporate income taxes, much controversy remains, though certain results seem clear.

“From the Bank Accounts substitution exercise, we used banking information to bring non-compliant taxpayers with N1 billion and above turnover to comply. It has so far resulted in the recovery of N23.35 billion. The exercise has been extended to cover those with turnover of N100 million and above” said Tunde Fowler, Executive Chairman, FIRS. He told the House of Representatives joint committees on Finance, Appropriations, Aids, Loans and Debt Management, Legislative Budget and Research and National Planning and Economic Development

on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), that the substitution led to recovery of N23.25 billion.

“To date, about 500 of them have come forward and they have paid and we have collected in the region of about N24 billion. We believe we should be able to go through the 55,000 before the middle of this year which will be the 30th of June. “In terms of estimates, which we should be able to generate from this exercise alone, that will be about N750 billion”, Fowler said.

In recent years, taxation has been one of the most prominent and controversial topics in economic policy.

Many economists specialising in public finance have long enumerated four objectives of tax policy: simplicity, efficiency, fairness, and revenue sufficiency. While these objectives are widely accepted, they often conflict, and different economists have different views of the appropriate balance among them.

On the principle of Fairness, to most people, it requires that equally situated taxpayers pay equal taxes (“horizontal equity”) and that betteroff taxpayers pay more tax (“vertical equity”). Although these objectives seem clear enough, fairness is very much in the eye of the beholder.

Tax steps into the light Continued from last week Develop, with the bord’s advice and consent, a clear policy explaining the company’s approach to tax planning. In developing this policy, keep in mind that the board, CEO and company representatives must be comfortable with making the policy available publicly and, if necessary, be prepared to defend it.

At the same time, decide how transparent your business wants to be in terms of disclosing the amount

of taxes you pay in the countries where you do business; once a decision is made, develop a plan for communicating it to external stakeholders and tax authorities in a consistent way.

Adopt a global approach to managing tax controversy In a world of increased information sharing among tax authorities, aggressive tax enforcement and associated reputational risks, maintaining a global perspective on all the jurisdictions in which www.businessday.ng

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34

Wednesay 08 May 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 07 May 2019

Top Gainers/Losers as at Tuesday 07 May 2019 LOSERS

GAINERS

Company

Opening

Closing

Change

5.7

JBERGER

N26.95

N24.9

-2.05

N7.15

0.2

OKOMUOIL

N72

N70

-2

N6.35

N6.5

0.15

DANGFLOUR

N17.75

N16

-1.75

N7.4

N7.45

0.05

CADBURY

N11.8

N10.7

-1.1

N8.95

N9

0.05

ZENITHBANK

N20.9

N20.55

-0.35

Company

Opening

Closing

Change

BETAGLAS

N57

N62.7

ACCESS

N6.95

CUSTODIAN FBNH PZ

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

29,096.41 4,512.00 430,269,283.00 2.834 10.935

Stock market falls further as Julius Berger, Okomu, 30 others dip …Investors lose additional N37bn Stories by Iheanyi Nwachukwu

N

igerian stock market recorded further decline on Tuesday May 7, 2019 as Julius Berger Nigeria Plc led the basket of 32 laggards against just 11 advancers.

At the sound of closing gong on the Nigerian Stock Exchange (NSE) 9th floor trading hall, the All Share Index (ASI) decreased by 0.34percent, while the Yearto-Date (ytd) return stood further negative at -7.43per-

cent.

Investors lost approximately N37billion in just one day as all key sectors closed in the red amidst profit taking across the board, despite NSE Industrial Index.

The All Share Index closed at 29,096.41points as against the preceding day close of 29,196.87 points while Market Capitalisation closed at N10.936trillion as against preceding day close of N10.973trillion.

The volume of stocks traded increased by 58.7percent, from 271.07 million to 430.26 million, while the total value of stocks traded increased by 103.9per-

cent, from N1.39billion to N2.83billion in 4,512 deals.

Julius Berge Nigeria Plc led the losers table after its share price decreased from N26.95 to N24.9, losing N2.05 or 7.61percent. It was followed by Okomu Oil Palm Plc which dipped from N72 to N70, after losing N2 or 2.78percent.

Other top losers include Dangote Flour Mills Plc which was down from N17.75 to N16, shedding N1.75 or 9.86percent. Cadbury Nigeria Plc declined from N11.8 to N10.7, losing N1.1 or 9.32percent; while Zenith Bank Plc stock price declined from N20.9 to

L – R: Tajudeen Abiodun Isola, chairman, Shomolu Branch of Association of National Accountants of Nigeria (ANAN ); Bernard Akinnola, chairman, Ikeja Branch of ANAN; Bola Adeeko, head, Shared Services Division, The Nigerian Stock Exchange (NSE); James Ekerare Neminebor, second vice president, ANAN, and Fodio Inuwa Musa, chairman Research & Technical Committee, ANAN, during a Closing Gong Ceremony at the Exchange .

N20.55, shedding 35kobo or 1.67percent.

“As the All Share Index nears the 29,000 point mark (closed 29,096.41 Tuesday), we see this as good entry points for investors with medium to long term investment horizon”, said equity research analysts at Lagosbased Vetiva.

The analysts expect investors to take advantage of already deflated prices on select names in Tuesday’s session, adding that they foresee a “neutral to positive session characterised by mixed trading and average activity levels”.

Meanwhile, Beta Glass Plc led the advancers’ league after its share price rose from N57 to N62.7, adding N5.7 or 10percent. Access Bank Plc stock price was also on the rally from N6.95 to N7.15, up by 20kobo or 2.88percent.

Custodian Investment Plc increased from N6.35 to N6.5, adding 15kobo or 2.36percent. FBN Holdings Plc increased from N7.4 to N7.45, up by 5kobo or 0.68percent; while PZ Cussons Plc moved up from N8.95 to N9, rising also by 5kobo or 0.56percent.

The Financial Services sector led the activity chart on the review day with 198.9million shares exchanged for N1.9billion; while ICT followed with 118.6 million shares traded for N33million.

NSP set to lists first corporate green bond on NSE

T

he Nigerian Stock Exchange (NSE) will today Wednesday May 8, 2019 list the first N8.5billion North South Power Company Limited (NSP) green bond on the floor of the Exchange.

The 15-Years, 15.60percent Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bonds maturing 2034, is the first certified green corporate bond and the longest tenured (15 year) corporate bond issued in the Nigeria

debt capital markets.

Commenting on the Bond, Ibrahim Aliyu, Chairman, North South Power Company noted that the success of the bond issuance is a significant milestone in the company’s long-term corporate strategy, demonstrating its market leadership, innovation and commitment to the highest standards of environmental, social and corporate governance.

“With the listing of the Series 1 Guaranteed Green www.businessday.ng

Infrastructure Bonds issuance on The NSE, the Company has established a long-envisioned link with a more sustainable long-term, local currency financing, required to implement its ambitious strategic power generation expansion plan through the capital market”, he said.

The Nigerian Stock Exchange provides a unique platform to support both the Federal Government and businesses to access capital for sustainable initiatives. It will be recalled

that, NSE, in collaboration with Federal Ministry Environment, Federal Ministry of Finance and Debt Management Office hosted a high profile conference themed “Green Bonds: Investing in Nigeria’s Sustainable Development” in 2016 that provided an opportunity for the government to engage capital market stakeholders. The conference was a major step towards the issuance of Nigeria’s first sovereign green bond currently listed on the Exchange.

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Global market indicators FTSE 100 Index 7,260.47GBP -120.17-1.63% S&P 500 Index 2,888.60USD -43.87-1.50% Generic 1st ‘DM’ Future 25,975.00USD -430.00-1.63%

Deutsche Boerse AG German Stock Index DAX 12,092.74EUR -194.14-1.58% Nikkei 225 21,923.72JPY -335.01-1.51% Shanghai Stock Exchange Composite Index 2,926.39CNY +19.93+0.69%

LSEG grows Q1 total income by 5% to £546m

L

ondon Stock Exchange Group Plc trading statement including revenues and key performance indicators (KPIS) for the three months (Q1) ended March 31, 2019 shows total income went up 5perent year-on-year (yoy) to £546 million.

Information Services revenues were up 6percent to £214 million – with 7percent growth at FTSE Russell. Growth in index subscriptions remained strong while FTSE Russell asset-based revenues reduced due to reduction in Asset Under Management (AuM) at the end of 2018 (which impacted on revenue in the first part of Q1 2019); asset-based revenue in Q2 is expected to be stronger.

Post Trade - LCH: income up 17percent to £182 million, with 16percent revenue growth in OTC following record volumes at SwapClear and no discernible change to customers’ use of the service as equivalence secured in event of hard Brexit; LCH benefited from an updated SwapClear agreement with partner banks, with effect from the start of the year, estimated to deliver circa £30 million savings to cost of sales in 2019.

Post Trade - Italy: income down 4percent to £36 million as equity markets experienced a slow first quarter; after adjusting for the treatment of T2S costs, gross profit increased 3percent.

Capital Markets: revenues down 9percent to £97 million, mostly reflecting lower equity trading volumes. Technology Services: revenues up 9percent to £14 million.

The Group’s financial position remains strong and is broadly unchanged from that reported for 31 December 2018. As at 31 March 2019, having funded the purchase of a 4.9percent stake in Euroclear, the Group had committed facility headroom of over £750 million avail@Businessdayng

able for general corporate purposes.

David Schwimmer, CEO said: “We continue to execute our strategy across our core businesses of Information Services, Post Trade and Capital Markets. In Post Trade, we acquired a stake in Euroclear, which shares our open access approach, and we updated our SwapClear agreement, which will deliver significant savings as we further develop the service.

“We are investing in and growing our Information Services business, including developing our multi-asset and data and analytics offering. While equity markets were slower due to macroeconomic uncertainty, we have seen an improved listing environment in Q2. “The Group is strategically well positioned to develop its growth opportunities further in the evolving macroeconomic landscape.”

New product development and investment in opportunities continued across the business: Group acquired a 4.9percent stake in Euroclear with a seat on the Board, which will help strengthen the existing commercial relationships between the businesses.

LCH RepoClear members successfully consolidated European debt clearing activity in LCH SA, benefitting from T2S efficiencies SwapClear Non-Deliverable IRS Clearing expanded to include 5 new LatAm and Asia-Pacific currencies. Dutch pension fund Pensioenfonds Detailhandel selected a custom FTSE Russell ESG benchmark as the basis of a new €6bn developed market passive equity mandate managed by BlackRock. FTSE Russell launched a new MultiAsset Composite Index Series – a wide range of indexes across major asset classes covering global, regional and emerging markets.

Wednesday 08 May 2019

BUSINESS DAY

35

Markets + Finance

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

Huawei: The journey to becoming China’s pride BALA AUGIE

A

s at 1980, China’s telephone penetration rate was 0.22 percent, one of the lowest rates in the world, according to a World Bank report. In this period, telephone lines were restricted only to senior government officials.

The country was plagued with internal conflicts, wars, and decrepit infrastructure, as the poverty rate was 88 percent, while numbers of registered vehicles were 365, 000.

In 1981, China’s government realized that the underdeveloped telecommunication industry was a quagmire to economic growth and development as they carried a series of reforms.

Government increased investment in telecommunications to 4.2 billion RMB; they allowed the MPT to keep 90 percent of the profits earned and encouraged these profits to be invested in building infrastructure.

They changed the rules for MPT salaries such that regional directors could only increase their pay by adding more customers. Also, they lowered tariffs and removed import restrictions on foreign telecommunication equipment and adjusted the accounting rules to encourage investments in telecommunications projects.

These reforms yielded fruit as 78.40 percent of China’s population now have access to phone while mobile subscribers surged to 529 million in 2007, from 234 million in 2003, 120 million in 2001, 40 million in 1999,

and 1.07 million in 1994.

During the economic and political transformation, China birthed a baby named Huawei, with Shenzhen and the telecom industry in China both growing at a swift pace.

When Ren Zhengfi founded Huawei in 1987 with just $3,500, little did he know the company would take the world by storm. The company’s original business was reselling Mitel PBX equipment, imported from Hong Kong.

The years between 1994 and ’96 marked a new era for Huawei; the end of its life as a trading company, and the beginning of a fresh life as telecom vendor.

However, the company faced some challenges that include quality of products and delivery time. But when such happened, Huawei apologised and got the problem fixed.

Because Huawei took criticisms constructively, it began to develop better quality products that penetrated the global market.

The success of the company can be attributed to co-

pious investment in research and development as Ren recognized that competition could kill the company by blocking their access to the equipment they re-sold.

In 1991, the team was manned by 50 research and development engineers, virtually all recent university graduates. By 1993, Huawei had grown to 400 employees.

In July 1994, Huawei launched the C&C08, their first digital switch with a 2,000 line capacity but architecture that can supports up to 400,000 lines allow us to grow capacity quickly.

The company kept spending copiously on research and development, a strategy that yielded fruit as it expanded into both Optical Networking and into Mobile Networks.

In 1997, Huawei launched fixed network solutions, and shortly afterwards a GSM mobile solution.

By this stage, the quality of Huawei’s products had improved enough that is was able to compete with foreign competitors in China’s big cities, expanding internationally as well. In 1998, it won the first contract in an urban city in China.

Offices were opened in Bangalore 1999 and Stockholm 2000. In 2004, Huawei developed the first mobile phone.

From 2008 to 2018, the company spent $75 billion on research and development, with 12-15 percent of its annual revenue invested in it. The vision is to invest

$2 billion software engineering process within the next 5 years.

An era of explosive growth driven by smartphones In 2009, Huawei launched the world’s first LTE network with TeliaSonera in Norway.

In 2011, it expanded into the enterprise space with the establishment of the Enterprise Business Group.

In 2015, the company deployed over 400 LTE (4G) networks covering 140 of the world’s capitals. That same year, its smartphone shipments hit 100 million worldwide.

Consistent growth in earnings validates smartphone penetration Huawei’s revenue grew at a compound annual growth rate (CAGR) of 26 percent in the last five years to touch down at $108.50 billion (721.10 billion Yuan) as it won customers for its smartphones and networking gear.

A breakdown of the sales figure shows revenue from its consumer business, which includes smartphones, jumped 45 percent to 348.9 billion yuan while sales in the carrier unit were slightly changed at 294 billion yuan.

The company’s net profit has been growing at a CAGR of 21 percent since 2014 to 59.30 billion yuan ($8.8 billion), while year on year (yoy) was up 25 percent.

Cash flow from operating activities have been growing at the CAGR of 16 percent between 2014 and 2018 to 74.70 billion yuan ($11.18 billion), which means the company has enough money to settle its debt, pay dividend, and fund future expansion plans.

Huawei make up 34 percent (29.90 million) of the total 88 million shipments of smartphones in China. This compares with Apple’s 7.40 percent (6.50 million).

Analysts Huawei could have displaced Apple as the number two smartphone producer, but for the trade war between China and the United States of America.

BD MARKETS + FINANCE Analysts: BALA AUGIE www.businessday.ng

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36

Wednesday 8 May 2019

BUSINESS DAY

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Wednesday 08 May 2019

BUSINESS DAY

37

OPINION

Nigerian banks: Listen to Mahatma Gandhi!

Franklin Ngwu

I

n a speech in South Africa in 1890, Mahatma Gandhi most interestingly stated as follows: “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption to our work. He is the purpose of it. He is not an outsider of our business. He is part of it. We are doing him a favor by serving him. He is doing us a favor by giving us the opportunity to do so”. Whenever I interact with Nigerian banks, I always wonder if they have ever heard or read the above counsel form Mahatma Gandhi. I am constantly at a loss and shocked at the way they treat us in most of their services and products.

Not only do they treat us with a kind of disdain, they make it look like they are doing us a favor. As Gandhi is from India, a developing economy, it means that customer oriented services and products are possible in a developing economy like Nigeria.

Just from January- March this year 2019, Nigerians have already paid about N15.7 billion as account maintenance charges to our five top banks- Zenith, Access, GTB, First Bank and UBA. While we continue to pay these charges, the key question is, what is account maintenance charge and is it justified? From my many years of experience with the financial sector, account maintenance charge is

normally applied when a customer is unable to meet certain agreed terms and conditions of an account such as balance below agreed threshold. It can also apply when there are added benefits to the account such as travel insurance and overdraft facility. As such instances are not the reasons why most Nigeria banks charge account maintenance fees, it means that the huge amounts we pay are unjustified.

If this is the case, a further question is why they continue to charge these fees and why the CBN has not deemed it necessary to stop the unwarranted charges. A further question is if the banks can profitably survive without the questionable charges and I think the answer is YES! This is an economy described as the poverty capital of the world with 21 million brethren unemployed and only about 36 million people use the formal banking sector.

In the 2017 CBN Revised Guide to Bank Charges, there are over 100 different incurable bank charges. With charges such as card issuance and maintenance fees, credit and debit alert fees, cheques books and counter cheques, bank transfers, ATM usage, current and savings accounts maintenance, bank drafts and stopped cheques charges, one will begin to wonder if the Nigerian banks are actually interested in real banking or just collection of fees. Are they really financially intermediating or ‘dis-intermediating’ the Nigerian economy? Not only are these charges contributing to financial exclusion, they seem unethical and very exploitative. Some banks even charge BVN enquiry fee and cash transfer form usage charge. A situation where any and every attempt to use the formal banking sector especially by poor Nigerians is met with a fee is not only abnormal but contradicts all our financial inclusion efforts.

Traditionally, banks generate their revenue and profits through the perfor-

‘

Are they [Nigerian banks] really financially intermediating or ‘disintermediating’ the Nigerian economy?

mance of their inherent financial intermediation functions to the economy.

Primarily, this is done through the mobilization and transfer of savings and other resources from areas of surplus (depositors) to areas of scarcity (borrowers & investors broadly defined). The revenue or profit of the banks therefore comes from the interest rate spread which is the difference between the deposit interest rate paid to the depositors and the lending interest rate charged the borrowers.

Other sources of revenue or profit made by the banks are variations or mutations of this fundamental intermediation function. Economies where banks effectively perform these intermediation functions are characterized by visible and sustainable economic development and particularly the contribution of the banking sector to the economy. Unfortunately, this is not the case in Nigeria even when we have had a formal banking sector for over 122 years.

A better understanding is through a comparison with that of UK where Nigeria adopted and continues to adopt her banking and other economic systems from. In a country of about 200 million, the total number of formal bank account holders in Nigeria is about 36.4million.

With a lending interest rate of above 20%, only about 7% of adults and 10% of firms have loans with Nigerian banks even as access to credit remain a major challenge to over 80% of SMEs. With a total domestic credit provided by the Nigerian banks as a percentage of our GDP just at 23.3% in 2018 as compared to South Africa with 180.4%, it is very clear that Nigerian banks are not lending to our private sector. While only about 6.9% of Nigeria firms are using banks to finance investments, only 3.9% of their working capital is provided by the banks.

In the UK with a population of about

A delicate fiscal balance Bongonomics

Bongo Adi

O

ur last week’s piece exposed the precarious position of Nigeria as everything appears to be out of balance - from the most miserable country in Africa to a high and growing unemployment rate to population explosion. Unemployment, brought about by sluggish economic growth and high cost of living are the chief purveyors of Nigeria’s miserableness. Economic growth is dwarfed by that of the population for years now. Coupled with the demographic nightmare – overrepresented by youths in a population with a median age of 18 – the challenge of delivering jobs and sustainable livelihoods has never been more cogent. Failure to do this will continue to exacerbate the insecurity levels that currently threatens to overrun the country from all flanks.

But the challenge of growing the economy and providing jobs has never been as difficult as it appears to be for the current government. The greatest hindrance to economic growth today is infrastructure.

The country’s very poor record in ease of doing business over the years is largely attributable to infrastructure constraints.

Firms have responded by voting with their feet. Economic activity is low and so is

productivity.

Although infrastructure spend has been ramped up significantly since 2016, the bulk of the country’s annual budget is still spent on recurrent rather than capital expenditure. As a result, the rate of expansion of core infrastructure stock remains very low with the attendant drag on productivity. Nigeria’s core infrastructure stock stands at less than 20% of the country’s GDP against 70% World Bank’s benchmark for improved ease of doing business.

The recent infrastructure ramp-up in the budget is largely financed through borrowing which again weakens the fiscal position – almost 70% of independent government revenue now goes to servicing debts. Evidently, Nigeria’s economic system is not designed to depend on effective revenue mobilization outside oil rent. The fiscal regime imposed at the aftermath of the civil war in 1973 arguably dismantled all of the colonial structures of a tax-paying democracy. Our government has never drawn the bulk of its revenue from economic activities in the country and therefore, has no incentives to grow the non-oil sector. Government’s interest has always been on devising new ways of redistributing oil rents, which include expanding the army as well as the civil service and public works as employment programmes and ways to distribute favours, consolidate power, and exert total control over oil revenues. Such a neopatrimonial system did not offer citizens incentives to demand accountability and transparency from the government nor “the incentive to pay taxes to a corrupt government flush with oil money.” www.businessday.ng

But with oil fortune becoming endangered and its price volatile and unpredictable from day to day, in the face of expanding population and joblessness, there is no need for a fortune teller to announce that the doomsday is imminent. The evil chicken of Gowon’s fiscal consolidation has come home to roost! As Soludo, the CBN governor put it in 2007, “the umbilical cord that ties government and the private sector in most economies … got broken… government in Nigeria did not need the private sector for revenue, and because of government’s expansive nature, it depended very little on the private sector for job-creation.”

Obafemi Awolowo, one of the architects of Nigeria’s independence, had warned about this dilemma: …there is that broad, smooth road, with promises of no-taxation, and efforts to get money from other places, leading nowhere but to perdition, poverty, disease and economic enslavement; and there is the other road—people who go therein pay tax. They also have to apply self-help and self-sacrifice to get where they want. But this road...leads to success.

(Awolowo, 1954) It is clear that Nigeria has travelled on the former path for much of its history until its precariousness and unsustainability forced the current rethink. There is no doubt that the government’s ability to mobilise revenue especially, non-oil tax revenue, since the unreliability of oil revenue has become apparent, is critical for public goods provisioning to meet the Sustainable Development Goals. But the challenge is that you cannot reap where you haven’t sown. The private sector

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‘

This is a typical catch 22 situation! People do not pay taxes because government does not provide services and government will not provide services because people do not pay taxes

66 million people, there are about 150 million bank accounts (savings, deposits and current) and about 95% of adults have at least one bank account. Not only did the financial sector contribute about £119billion to the UK economy, it enhanced tax revenue of UK by about £27.3 billion in 2017. With about 65,379 ATM machines with no withdrawal charge in over 98% of them, the financial sector employs about 1.1million people and generated a trade surplus of about £51billion in 2016.

Interestingly, there is no maintenance charge for savings account and most current accounts. The few fee paying current accounts come with added services such as travel insurance, car break-down cover, home emergency and mobile insurance among other services. While the lending interest rate in the UK over these years has been about 0.5%, the average credit provided by the banking sector to the economy as a percentage of the GDP from 2008 to 2012 was about 214.32% and about 168% in 2017. With over 10,500 bank branches, there is no charge for interbank transfers, cheque books, debit Cards etc. Using other measurement variables for banking sector development and contribution to the economy reveal the same wide differences and disappointing performance of Nigeria.

With the increasing technological innovations and disruptions, provision of financial services by fintechs and telcos, and the licensing of new banks by CBN, I think that it is time for our banks to really appreciate and practice Ganhdi’s wise counsel if they are interested in sustainable long term growth.

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail: fngwu@lbs.edu.ng

has been emasculated. Those who are unlucky to be caught in the tax net complain of multiple taxation. Those who are not there yet keep devising ingenious means of evasion. Some who can pay tax have seen a reversal of fortune that necessitates constant government bailout as in the case of the electric discos. The manufacturing sector cry for infrastructure constraints and prohibitive lending rates that have bankrupted many firms.

Personal income tax still stands at 1% of GDP. These economic persons have also witnessed an inflation-induced budget decimation over the years that warranted the current minimum wage increase. So, from where does the government intends to extract this all-important tax?

The fiscus currently stands at just 6% of GDP (tax to GDP). Given the above scenario, getting the economy to respond to a fiscal revolution that privileges taxation is tantamount to teaching an old dog new tricks. But it seems that the government does not appreciate the depth of the current fiscal imbroglio. Yes, it is imperative that taxes be extracted to grow the economy — incentivize the growth of job-creating economic activities. But citizens cannot be coerced to pay taxes when there is nothing to show for taxes paid in the past. This is a typical catch 22 situation! People do not pay taxes because government does not provide services and government will not provide services because people do not pay taxes.

Continues online at www.businessday.ng

Dr Adi is a Senior Economics faculty at the Lagos Business School @Businessdayng

38

Wednesday 08 May 2019

BUSINESS DAY

news Investors adopt risk-proofing...

Continued from page 1

2016 and the consequent FX shortages on firms, banks and consumers is still

being felt.

While some high-end consumers are forced to resort to the greenback as a hedge against inflation or currency devaluation, companies and investors on the other hand are trying to limit their risk exposure by diversifying their investment portfolio across sub-Saharan African regions.

Local businesses and investors spoken to by EIU gave insight into their risk-proofing strategies. They suggested developing conservative business

plans, with ample levels of reserves. They also suggested that currency mismatches (for payments and revenue) should be avoided as far as possible, while mitigating risk by diversifying an investmentportfoliogeographically is worth considering.

Furthermore, interviewees pointed to the need to take opportunities for exits when they present themselves.

The interviews revealed that, facing FX restrictions, businesses resorted to unofficial channels. The situation also pushed for changes in business planning. Cash reserves became a necessity in such an environment.

“Companies can adjust to

a devaluation by passing on some of the increase in costs to customers and accepting a squeeze on margins. But a lack of availability of FX makes life very difficult, even for a business like ours which is not particularly import-intensive,” said a private equity investor.

The foreign exchange turnover at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) stood at US$105.9 billion as of March 2019, with foreign portfolio investors (FPIs) accounting for over 60 percent.

The Central Bank of Nigeria (CBN) in April 2017 introduced the Investors’ and Exporters’ (I&E) window for portfolio investment flows, export earnings and trade-related payments

such as loan repayments, dividends and interest payments.

“The retail sector has been badly hit. Consumer demand is taking time to recover from the downturn.Marginsonimported goods have been squeezed as retailershavebeenunabletopass on fully to consumers increased costs from the devaluation. Also, some retailers’ rents, in malls, for example,areindexedtodollars,”a real estate investor told EIU. Another private equity investor said Nigeria’s economy is extremely import-dependent. As a result, currency weakness has broad-based knock-on effects across the whole economy, as the increase in costs for imported staples, such as rice and sugar, squeeze the amount that

households can spend on discretionary goods and services.

According to the National Bureau of Statistics (NBS), 5.32 billion litres of petrol were imported into the country in the fourth quarter of 2018.

The devaluation and shortages of FX highlighted the benefits from an operational point of view of matching currency costs with revenue.

Analysts suggest that wherever possible, firms and investors should borrow in the currency in which they earn.

Thereport,however,forecast that the managed float system introducedbytheCBNwilllikely remain in place throughout 2019-22. It projected a likely devaluation later in 2019, particularlyifoilpricesfailtorecover

from the 20 percent decline suffered since the peak in September.Ifthishappens,itwouldhelp tocorrectanovervaluationofthe currency that has built up owing to persistently high inflation, the report said.

The CBN’s secondary market intervention sales (SMIS) amounted to US$4.2bn in Q1 2019. These sales are targeted at therealsectoroftheeconomy(includingmanufacturers,importers ofrawmaterialsandairlines),and totalled US$2.9bn in Q1.

The CBN recently introduced Chinese yuan interventions, which are mainly geared towards manufacturers and a totalofCNY237.6m(US$34.9m) was injected into the market in Q1 2019, according to a recent report by FBNQuest.

Stakeholders worried over FG’s...

Continued from page 1

now Erin Energy (which is now bankrupt), OML 108 owned by Express Petroleum, OML 141 held by Emerald Resources, and OPL 206 held

by Summit Oil International, a company founded by the late Moshood Abiola.

But some industry stakeholders are alleging double standards in the Federal Government’s action as it was said to have applied different and milder sanctions on other companies that committed the same offence. While the government revoked the licences of some companies, it was learnt that the government only seized the crude belonging to some other defaulters.

The stakeholders say the government action would send the wrong signal to prospective investors in the oil and gas sector as they might fear government severe sanctions at the slightest infraction.

“In terms of correctness, the government acted within the scope of the laws governing the petroleum sector and each breach has a corresponding penalty. Remember also that the minister possesses discretionary powers to revoke or withdraw oil licences,” said

Ayodele Oni, energy partner at Bloomfield Law Practice.

“In terms of fairness, that is a different conversation.

The government could have chosen to warn the companies or awarded fines for the default in royalty payments.

There may be other political undertones but I leave that to political analysts,” Oni added.

Pan Ocean, Allied Energy, and Yinka Folawiyo were among companies listed inside the Nigeria Extractive Industries Transparency Initiative (NEITI) report as owing the Nigerian government some royalties in 2016.

NEITI specifically stated that Pan Ocean Oil Corporation (Nigeria) Limited failed to make any financial payments in 2016, despite being in Joint Venture (JV) arrangement with the federation.

“The non-payment by these companies will result in revenue loss to the federation. It is worthy to note that Pan Ocean did not make any financial payments in 2016, despite being in JV arrangement with the federation,” NEITI noted.

An industry source close to Pan Ocean Oil Corporation, however, told BusinessDay

Nigeria faces mixed oil market outcomes...

Continued from page 2

“Nigeria’s revenue this year is going to fluctuate, given these two major factors in the global oil market,” Adedokun said. “We are just barely out of a recession and if nothing is done to fix the petroleum sector, Venezuela may be our destination.”

Maritime consultancy and shipbuilding tanker brokerage Eastportsaidinanotethat“worsening trade friction between Washington and Beijing poses a downside risk” to its forecasts for petroleum products.

The US sanctions have already halved Iranian crude oil exports over the past year

Jumia’s rise exposes challenges of online...

Continued from page 2

among the fastest population growth rates in the world.

“Already there are 400m internet users in our market, and last year we had 4m consumers,” he said.

Givenwhatittakestoactually buildanddeliveraproperecommerce offering in any market, it makes better sense that investment is amortised over multiple

countries instead of one.

“So the question of how big is the middle class, or how many of the 700m can spend money with us — we just know that we have $1.5tn in consumer expenditure [in Africa] that we want to contribute to shift from offline to online and we have dozens of millions of consumers to go after . . . Today we’re very far from hitting any www.businessday.ng

L-R: Simon Melchior, chief executive officer, Asseco Nigeria; Wale Olokodana, business group lead, intelligent cloud, Middle East and Africa, Microsoft; Adefolu Majekodunmi, MD, Asseco Software Nigeria; Robert Mihaljek, international sales manager, South Eastern Europe, Asseco, and Obi Mojekwu, regional sales lead, Asseco Nigeria, at the Digital Finance Innovation Summit in Lagos, yesterday.

that a meeting has been slated for stakeholders to have discussion with Emmanuel Ibe Kachikwu, minister of State for Petroleum Resources, on the way out of this situation.

“As a matter of fact, representatives of the Federal Ministry of Petroleum Resources led by the Hon Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu,

and Pan Ocean are currently engaging in high-level negotiations to resolve the issues of outstanding payment as well as related projects tied to the JV and other assets within the vicinity of OML 98,” the source said.

The source added that there are credible indications that Pan Ocean Oil Corporation (Pan Ocean) remains operator

of OML 98 Joint Venture, contrary to previous information regarding revocation of seven licences including OML 98.

Similarly, a source in Emerald Energy Resource, who spoke to BusinessDay on condition of anonymity, said the company was not given any revocation letter. He explained that what happened was that there was a time lag in the

payment of its royalties and that the money had already been paid to the Department of Petroleum Resources (DPR).

“The DPR had to write to the minister intimating him about our payment and everything was settled,” the source said, adding that the company had requested for a letter of good standing from DPR.

to below 1 million barrels per day (bpd), and shipments to customers are expected to drop to as low as 500,000 bpd in May as sanctions tighten.

Beyond Iran, Washington has also placed sanctions on the Venezuelan government under President Nicolas Maduro, disrupting supplies from the country, a founding member of the Organisation of the Petroleum Exporting

Countries (OPEC).

“As sweet as Nigeria’s crudes are renowned to be globally, we have recently lost our mostvalued customers and our gas buyers are themselves now competing with us in the same market space as suppliers,” Luqman Agboola, head of infrastructure at Sofidam Capital Limited, told BusinessDay. One of the assumptions undergirding Nigeria’s 2019

budget is crude oil estimate of $60 per barrel. But with Brent at $71 per barrel, Africa’s most populous economy has opportunity to save $10 on each barrel of oil sold. The catch, though, is that there is no constitutional backing to save money from sales of crude oil above the budget benchmark, which is supposed to go into the Excess Crude Account domiciled at the Central Bank

of Nigeria.

“There is no legal backing for the excess crude account.

The Constitution says revenue accruing to the Federation Account should be shared; there is no provision to save for future generations,” said Oby Ezekwesili, who was part of the economic team under former President Olusegun Obasanjo that proposed the establishment of ECA.

type of ceiling.”

But to become Jumia buyers, those smartphone users will also need data connections, disposable income and either bank accounts or mobile payments wallets.

Nigeria alone is home to the most people living in extreme poverty in the world, 87m.

So ecommerce is unlikely to grow in step with rising mobile data penetration, according to Uzoma Dozie, who prioritised expanding mobile

banking as chief executive of Nigeria’s Diamond Bank.

“As you put those conditions in, your market size drops and when you add the issue of trust and payments, you now have a very, very small market,” said Dozie. “It’s very difficult to achieve scale.”

In order to attract as many customers as possible, Jumia also has a travel website, a food delivery service, an events and movie ticket business, and a payments system

that gives users access to microloans.

Jumia has spent a lot of money in its aggressive drive to gain market share, logging roughly $1bn in losses, including $195.2m on revenue of $149.6m last year.

Poignonnec said Jumia was focused on driving down costs while gaining users, but that the hundreds of millions of dollars it has invested over the past seven years has given it the scale to be the only pan-

African ecommerce player — even as rivals have withered.

Last year, Jumia’s Nigerian rival Konga, which is backed

by Naspers, was sold to Zinox, a data centre and computer firm, after cutting roughly 60 per cent of its staff.

A number of other ecommerce sites have downsized, shut down or pivoted into other businesses.

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•Continues online at www.businessday.ng

Wednesday 08 May 2019

BUSINESS DAY

39

news Osun now has lowest unemployment rate in Nigeria

Buhari seeks UN assistance on insecurity in North East ... as political intrigues scuttle Nigeria’s quest for Security Council seat Tony Ailemen, Abuja

Razak Ayinla

O

sun State is now the state with the lowest unemployment rate in Nigeria.

Recent figures released by the NationalBureauofStatistics(NBS) show that the state leads with the unemployment rate of 10.1 percent followed by Oyo with 10.3 percent.

The figures show that Nigeria’s South Western region has the lowest unemployment rate regionally with 14 percent, while the South South has the highest in 32 percent.

The new figures corroborate earlierfiguresreleasedbytheNBS, UNDP Statistics on Miserable Index and the Financial Derivatives Company findings, all putting Osun top in Financial Sustainability, Investment in its people and Less Poverty Ridden in 2016, 2017 and 2018.

The latest report shows the results of the long-term investment drive of the state government under the immediate past administration of Rauf Aregbesola and the incumbent of Governor Gboyega Oyetola in youth employment, women empowerment, massive infrastructural development and other developmental strides that has meaningfully impacted positively on the fortunes of the state.

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P

resident Muhammadu Buhari Tuesday said the United Nations support would greatly assist Nigeria in reversing the negative effect of insecurity in the North East.

President Buhari stated this when he played host to visiting President of the 73rd Session of the United Nations General Assembly (UNGA), Maria Espinosa Garces, at the Presidential Villa, Abuja.

President Buhari, who described the condition of internally displaced persons ((IDPs) in the country as pathetic, said Nigeria had at least a million children who neither know their parents, nor where they come from, a condition imposed on them by the Boko Haram insurgents.

He said the damage to

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as Jemiyotan Ereku now wish to be known and addressed as Jemiyotan Arokodare. All former documents remain valid. General Public please

take note.

F

rench integrated oil and gas company, Total, has reached a binding agreement with Occidental Petroleum to acquire Anadarko’s assets in Africa for $8.8 billion in the event of the successful completion of Occidental’s takeover bid for Anadarko.

The transaction hinges on Occidental entering into and completing its proposed acquisition of Anadarko as well as on approval by the relevant authorities. The deal is expected to close in 2020.

Chevron has submitted a competing bid to acquire Anadarko. The acquisition offers Total the opportunity to acquire a “world-class portfolio” of assets.

Assets that will be sold in the proposed acquisition include a 24.5 percent participating interest and operatorship of blocs 404a and 208 in the Berkine basin, in Algeria, in which Total already owns 12.25 percent, as well as a 27 percent participating interest in the Jubilee field and a 19 percent participating interest in the TEN fields, in Ghana.

In Mozambique, Total is set to acquire a 26.5 percent

participating interest and operatorship in Area 1 where a 12.8-million-ton-a-year liquefied natural gas (LNG) project is largely derisked and close to sanction.

In South Africa, Total will acquire exploration licences near the Brulpadda discovery.

Overall, these assets represent about 1.2-billion barrels of oil-equivalent proven and probable reserves, of which 70 percent is gas, as well as two billion barrels of oil-equivalent long-term natural gas resources in Mozambique.

Equity production is expected to grow to around 160,000 barrels of oil-equivalent a day by 2025.

Commenting on the announcement, Total chairperson/CEO, Patrick Pouyanne, said through the Anadarko p o r t f o l i o, t h e c o m p a n y would be able to leverage its expertise in LNG by operating a major project in Mozambique and in Deepwater, in Ghana.

The company would also become the operator of major Algerian oil assets, where the company is already a partner, and it would be able to generate value through adding volumes to its growing LNG portfolio.

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dent Buhari’s leadership of ECOWAS, and of the Lake Chad Basin Commission, pledging to call the attention of the international community to the “hurting effects” of the Lake Chad problem, and other issues raised by the Nigerian leader.

The UNGA President also lauded Nigeria for rehabilitating the UN building in Abuja, which was destroyed by Boko Haram insurgents during an attack in August 2011.

Speaking further on the humanitarian needs in the Lake Chad area, the outgoing UNGA President said, “We are deploying all our capacities not only our office of humanitarian affairs but all our development apparatus of the UN, working in all the Chad Basin, supporting governments, countries and the leader to improve humanitarian aid according to people’s needs in the regions and micro regions.

“I have specific numbers on how much, specific coverage and people but everything we do is in strict and close coordination with the governments of the Lake Chad Basin.

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infrastructure, particularly in the North East, had been horrendous, adding, “Bridges have been blown up, schools, hospitals, churches, mosques, and other buildings have been destroyed. All these will be rehabilitated, and every form of international help is welcome.”

On the recharge of Lake Chad through inter-basin water transfer from Congo River, President Buhari said climate change was quite real to the region, noting that no fewer than 30 million people were negatively affected by the shrinking lake, with at least half of them being Nigerians.

He stressed the role the international community needed to play in the endeavour, since recharging the lake was beyond the financial power of the affected countries.

The UNGA President commended Nigeria for being a key part of the UN system, saying the country was well respected in the global body.

“Nigeria is a major troops’ contributor to peace keeping operations, and a major part of the human rights architecture,” Garces said.

She commended Presi-

Total to acquire Anadarko’s Africa assets for $8.8bn on Occidental bid

I, formerly known and addressed as Miss Ruth lghometuvwewi Earkpodia now wish to be known and addressed as Mrs Ruth lghometuvwewi Akpeji. All former documents remain valid. Union Bank Plc & General Public please take note.

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L-R: Bambo Adebowale, chairman, Lagos Chamber of Commerce and Industry, Automobile and Allied Products Group; Zhang Yazhu, vice president, Genertec International Advertising and Exhibition Company Limited; Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), and Michael Olawale-Cole, vice president, LCCI, at the LCCI-China international auto product expo business to business meeting in Lagos, yesterday.

Pic by Olawale Amoo

Joint tax board unveils new TIN registration system … projects database integration to on-board 45m taxpayers Endurance Okafor

I

n a quest to grow the base level of Nigeria’s taxpayers through the use of technology, the Joint Tax Board (JTB) recently rolled out a new Taxpayer Identification Number (TIN) Registration System.

Presenting the report of the new TIN registration system to Babatunde Fowler, executive chairman, Federal Inland Revenue Service (FIRS), Oseni Elamah, executive secretary, JTB, said the newly completed TIN Registration System comprised the integration of TIN

numbers of various organisations in Nigeria.

“The growth of the taxpayers’ database is a major flank of the goals of the JTB in collaboration with the apex tax authority, the FIRS,” Elamah said on Monday in Abuja.

Fowler expressed happiness over the completion of the new TIN Registration System and said that the system would encourage transparency, efficiency and convenience in tax administration in Nigeria.

According to the FIRS chairman, when the integration of the new TIN Registra-

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tion System is launched, “it will afford prospective taxpayers the opportunity to register for tax from the comfort of their homes and print their registration certificate.”

On how much impact the on-going integration of database will have on Nigeria’s tax industry which has one of the world’s lowest tax-to-GDP ratios at 6 percent, Fowler said Nigerian taxpayer roll will soon hit 45 million, going by the efforts of the JTB led by its chairman.

Nigeria’s tax-to-GDP ratio at less than double digit is relatively low when compared to @Businessdayng

other developing economies like Ghana with 17.6 percent ratio and Kenya’s 18.5 percent and is also lower than the average for the African countries in Revenue Statistics which is 18.2percent, as compiled from the Organisation for Economic Co-operation and Development OECD, an intergovernmental economic organisation with 36 member countries JTB’s boss affirmed Fowler’s claim as he said the ongoing integration of databases would “fetch the nation a total of 45 million individual and corporate taxpayers.”

40

Wednesday 08 May 2019

BUSINESS DAY

NEWS

Solid Minerals business

Symbol Mining commissions second wash plant at Macy Mine …raising output to1,000 tonnes of zinc per day …commences 1,000-metre exploration drill JOSEPH MAURICE OGU

S

ymbol Mining, which mines zinc and lead, has successfully installed and commissioned the second wash plant at its Macy Mine site in the Benue trough.

The company confirmed this development in an email statement signed by its managing director, Tim Wither, and sent to Business Day. The plant, which took ten months to complete, is now set

to complement the first plant previously installed.

The second wash plant, which is much bigger than the first, was designed with the ability to increase zinc concentrate production.

According to Wither, both wash plants can now produce approximately 100 tonnes of zinc per day. On this basis, the combined processing plants have the capacity to achieve approximately 3,000 tonnes of zinc concentrate per month.

“Achieving the processing

capability of 3,000 tonnes of concentrate per month is the final state in the Macy operations ability to become cashflow positive,” Wither said.

In another development, the company has equally commenced the exploration of a 1,000-metre exploration drill programme.

According to Wither, the reason for the exploration is to gain more knowledge of what was not previously known, and to explore new frontiers.

Mining companies energise in bid to be part of Nigerian growing economy JOSEPH MAURICE OGU & ODINAKA ANUDU

S

ince the new rush into the mining industry in Ni g e r i a c o m m e n c e d , mining companies are making conscious push into the mining economy. While some new companies have emerged, others have revitalised their energies to be part of the multi-billion-dollar economy that is expected to shape the future of the Nigerian economy.

Jamis Minerals is one of the local companies licensed to mine and export ores. Jamil Suleiman, CEO, Jamis Minerals Ltd., told BusinessDay that his company is registered as an indigenous company to carry out mining and exploration, mineral processing and export of processed solid minerals.

“We are licensed to mine lead ore, zinc ore and copper ore, although we also keep our eyes in other minerals, but we are unable to venture into them now because of unavailability of funds,” said Suleiman.

Topmost Minerals and Allied Resources Ltd. is another Nigerian- owned company that is a player in the mining

industry field.

Dele Ayanleke, the CEO of the company, told BusinessDay that the company mines gemstones and metallic minerals, in its location in Komu, Itesiwaju Local Government Area, Oyo State.

A company that has decided to do things differently is Kian Smith Gold Refinery. The company has emerged as the first company to be awarded a license to refine gold in Nigeria by the Federal Government.

With its plant located in Mowe, Ogun State, the company is set to open the first gold refinery in Nigeria, in June, 2019.

When operational, it will serve as a gateway to the small and medium scale miners across the country where it plans to locally source raw materials for its refinery. Miners in Ile-Ife, Ibadan, Ilesha, Zamfara, Kwara, Kaduna, Kebbi and other places are expected to benefit from the market.

Symbol Mining, an Australian publicly listed company, mining high-grade zinc and lead in Bauchi State, is another player in the industry.

Symbol has two local Joint Venture projects— Tawny in Nasarawa State and Imperial www.businessday.ng

in Bauchi State, with total tenements spanning over 500km2.

Next is Minutor International, which is mining gold, zinc, lead, lithium and copper in many parts of Nigeria.

“Nigeria has amazing bluesky opportunities in the solid mineral industry: from IOCG deposits to hydrothermal and epithermal gold deposits, copper porphyries, sedimentary copper deposits, high-grade battery minerals including lead, zinc, lithium and graphite to name but a few,” Riaan van der Westhuizen, MD, Minutor, said.

Similarly, Mines Geotechniques Nig. Limited, an Australian firm, and Northern Numero Resources Ltd. from the UK mine gold in Kebbi State.

In addition, Segilola Nigeria Ltd. and KCM Mining Ltd, two Australian firms mine gold in Osun and iron ore in Kogi.

Niger ia has at least 44 known mineral assets that include precious minerals, base metals, gold, iron ore, barite, bitumen, lead, zinc, tin and coal, among others.

The sector lacks bankable data and suffers from state government interference. https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 08 May 2019

BUSINESS DAY

41

news Weak global airfreight demand continued in March IFEOMA OKEKE

T

he International Air Transport Association (IATA) released data for global airfreight markets showing that demand, measured in freight ton kilometres (FTKs), increased 0.1 percent in March 2019, compared with the same period in 2018.

While this is a significant improvement on the 4.9 percent contraction in February, in seasonally adjusted terms, demand is still down 1.5 percent over the past year.

Freight capacity, measured in available freight ton kilometres (AFTKs), rose by 3.1 percent yearon-year in March 2019. Capacity growth has now outstripped demand growth for 11 out of the last 12 months.

Industry confidence regarding the outlook however remains relatively upbeat with only 13 percent of respondents from IATA’s Business Confidence Survey expecting to see a decrease in

freightvolumesin2019compared with 2018.

“Year-on-year demand for airfreight edged back into positive territory in Marchwith0.1 percent growth. After four consecutive months of contraction, this is an encouraging development. But the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away,” Alexandre de Juniac, IATA’sdirector-general/ CEO, said.

All regions reported year-onyear demand growth in March 2019, except Asia-Pacific, which contracted.

African carriers posted the fastest growth of any region in March 2019, with an increase in demand of 6.0 percent compared to the same period a year earlier.

Seasonally adjusted international freight volumes are lower than their peak in mid-2017; despite this, they are still around 30 percent higher than their most recent troughin late-2015. Capacity grew 15.2 percent year-on-year.

Africa’s Sports tourism week celebrates diplomats in golf tournament BUNMI BAILEY

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frican Sports Tourism Week, a pan-African event and platform where sports fuse with tourism, through the “Diplomacy Stableford” will May 9, 2019, hold the annual golf tournament to celebrate Diplomats from around the globe.

The event, which will take place at the Ikoyi Club 1938, Lagos State, will feature 15 different nationalities as they all score stableford points to the glory of their respective nations and ultimately to global harmony.

Consul-generals from about 10 different countries have confirmed attendance and will be performing the ceremonial take off that will declare the competition open, at 8am.

“The concept in a nutshell is to gather the world in the golf field.

Diplomacy is what keeps the world

sane. Had there been no subject matter known as diplomacy, humanity would have been at constant loggerheads, without middle grounds for goodly compromises to perch,” Deji Ajomale-McWord, organiser/CEO, Vuvuzela Destination Marketing and Exhibition, said while explaining the rationale behind the event.

Diplomacy is the art and practice of conducting negotiations between representatives of states. It usually refers to international diplomacy, the conduct of international relations through the intercession of professional diplomats with regard to a full range of topical issues.

Through diplomatic missions in a country people of different races have blended and enjoyed cohabitation through migration, cultural and commercial exchanges, The Diplomacy Stableford, a

golf tournament and a recreational convergence for diplomats, expatriates and other golfers, serves as a platform for exchange among diverse nationalities of the world.

It is aimed at fostering harmony vis-a-vis globalisation.

“We intent making it bigger in the future by bringing in some charity mix so that we can raise funds to introduce golf to the less privilege and take golf to the grass root. If you look at golf globally, a number of golfers started as young boys who wanted to earn some money and today they are international players in that field,” Ajomale-McWord said.

The event is sponsored by Airfrance KLM, Rwandair, Kenya Airways, The Lansdown Resort Aburi and Legend Lagos Airport (a Curio collection by Hilton).

Christopher Zsaiah, sales man-

ager, Kenya Airways, said, “You cannot downplay the role of diplomacy in the world because this is what connects us to foster peace and unity. For us it is very important to be part of this and that is why we are partnering with Africa’s sports tourism week” towards this event.

It is our part of giving back to the society and such a noble cause.”

The event will be a celebration of migration, tourism, travel, cultural cum commerce exchange and other virtuous subjects tied around consular services that keep humanity in touch.

“The diplomats that are meeting there, they need a place like us to stay. So, they will have the confidence that if there is a Hilton hotel, I am safe in that location,” Funmi Philip-Adewunmi, sales manager, Legend Lagos Airport (a Curio collection by Hilton) said.

FCCPC takes over SEC’s role in M&As, other business combinations ENDURANCE OKAFOR

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ith the coming on board of the Federal Competition and Consumer Protection Commission (FCCPC), the responsibility for the review of mergers and acquisitions and other business combinations has been transferred to the new commission.

This role was hitherto played by the Securities and Exchange Commission (SEC), the regulator of the capital market in the country, pursuant to the Investment and Securities Act (ISA).

But SEC will now discontinue the aforementioned role, according to a guideline with the signatories of both SEC and FCCPC seen by BusinessDay. “A key role of the FCCPC is to review all mergers and other business combination or arrangement,” according to the document entitled ‘SEC and FCCPA joint advisory and guidance on mergers, acquisitions and other business combinations notifications’.

This, according to the document, is to ensure that such combinations do not distort or impede the markets.

The FCCPC became effective May 3, 2019, months after President Muhammadu Buhari signed into law the Federal Competition and Consumer Protection Act (FCCPA) 2019 on January 30. It was formerly known as the Consumer Protection Council.

The new competition and consumer law mandates FCCPC to set, gazette and publish thresholds applicable to all mergers and combinations, whether small, medium or large.

“This is without prejudice to the powers of SEC to determine their fairness of transactions involving public companies,” the document said.

BusinessDay had, in an earlier report in March, raised concerns that if not properly

scrutinised and regulatory roles duly outlined, the Federal Competition and Consumer Protection Act would only succeed in whittling the powers of SEC on M&As. The FCCPC has commenced this process. However, there were notifications pending before SEC at the time of the enactment of the FCCPA. The document says in order to ensure continuing and seamless commercial transactions and market operations, SEC and FCCPC have come to a mutual understanding with respect to these transactions within the transition period.

This is to commence immediately and will remain in force until otherwise discontinued by further advisory or guidance.

The guidance notification document noted that during the transition period, starting from May 3, 2019, all notifications or filings would be reviewed under existing SEC regulations, guidelines and fees but all applicable fees would be paid to FCCPC. In the same period, SEC and FCCPC will jointly review notifications and FCCPC will convey decisions with respect to the notifications.

Notifications previously received by SEC but yet to be decided will be subject to the interim process above and FCCPC will convey the decisions accordingly.

The recently signed FCCPA is one of the many bills the Buhari administration has enacted since assumption of office in 2015.

Other recently signed bills are Minimum Wage Bill, which was passed into law in April 2019; the Council for the Registration of Engineering in Nigeria (COREN) Amendment Bill; the strategic partnership agreement on export of madein-Nigeria goods, the Discrimination Against Persons with Disabilities Act, among others. www.businessday.ng

L-R: Rob Kleinjan, finance director; Jordi Borrut Bel, managing director/chief executive; Sade Morgan, corporate affairs director, and Uaboi Agbebaku, company secretary/legal director, all of Nigerian Breweries plc, at the company’s pre-annual general meeting media briefing in Lagos, yesterday.

Pic by Olawale Amoo

Apapa gridlock eases as decongestion processes commence … Lilypond Terminal opens, but Trailer Park drags CHUKA UROKO, AMAKA ANAGOR-EWUZIE & JOSEPH MAURICE OGU

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joraBridge,whichisoneofthe two major routes to Apapa, Nigeria’s premier port city in Lagos State, has been largely free of its usual gridlock in the last four days as a result of the opening of the Lilypond Terminal, taking away a good number of container laden trucks off the bridge.

The opening of the Lilypond Terminal is part of processes stakeholders have adopted for the decongestion of Apapa. Another is the completion of construction work and opening of the Trailer Park being constructed along the Apapa-OshodiExpresswaytoserve asatransitcampfortrucksthathave businesses in Tin Can Island Port.

Whereas, Lilypond Terminal has been open to trucks since Friday, the Trailer Park is not likely to be completed this week due to what Adedamola Kuti, Federal Controller of Works, Lagos, called “minor hitches,” delaying the provision of critical infrastructure such water, electricity and conveniences at the park.

“We cannot open that park withoutthesefacilities,particularly

water, because this is a place we will be expecting over 400 trucks, translating into 400 drivers and 400 conductors, giving about 800 persons or more; we need to have those facilities on ground before opening the park,” Kuti stressed in a telephone interview.

The Tin Can Trailer Park is today one of Nigeria’s oldest constructionsites,havingbeeninwhat has been in “perpetual construction”since2010,whenthecontract for its construction was awarded by the former President Goodluck Jonathan’s administration.

Expectation for its completion and opening last week Thursday was dashed for the above stated reasons. Though Kuti was hopeful ofitscompletion,hecouldnotconfirm its opening for use this week.

Butthereissomethingtocheer about as Nigerian Ports Authority (NPA) lived up to expectation by opening the Lilypond Container TerminaltotruckersFridayand,in the process, aiding Ease of Doing Business within the ports community and entrenching greater operational service efficiency.

When BusinessDay visited the terminal on Monday, empty and export containers were seen exitingthefacilitytotheport.Itwas gathered that no fewer than 1,000

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trucks have so far transited to the port through the terminal since it was opened.

It was also discovered that the NPA sent trucks in batches to the road from the terminal in line with what the terminal operators wanted. Also, majority of the containercarryingtrucksparkedalong the Ijora Bridge have been cleared off the highway, allowing drivethrough experience into Apapa.

Adebayo Toafik, a truck operator, lauded NPA for the truck transit park initiative, he said had brought succour to truck drivers whogothroughharrowingexperience daily to enter the port.

He said the NPA call-up system, being implemented alongside the truck transit park, had eased the traffic as truck drivers could now access the port only when called upon.

He added that none of his members had complained of extortion from the NPA security personnel saddled with the responsibility of managing the facility.

“The system introduced by NPA is a welcome development and we are happy with this plan to ease traffic. You cannot just put your truck on the road without being called. Trucks that you see going out now are the ones that @Businessdayng

are ready to do business and you cannot see them on the road; they are going straight to the port, discharge their goods, load another one and go out and if they did not see anyone to load, they will come out and go and park at their garage.

“The traffic has eased. The trucks can only come when there is need and we know when it is needed for them to come and those not to come because we are the ones arranging it within ourselves. We align with NPA as theregulatorofthesysteminorder to get a free flow of traffic. Even the drivers are happy because once you get to the transit park, it is certain that you will get into the port to do your business.

Meanwhile, the Lagos State commissioner for transportation, Ladi Lawanson, said the gridlock in Apapa would disappear in the next 21 days.

Lawanson, who gave this assuranceinanexclusiveinteractionwith BusinessDay in Lagos, Tuesday, said, “I can tell you categorically that within 21 days the Apapa gridlock will be resolved permanently.” The permanentsolutionisexpectedfrom the initiative taken by Vice President Yemi Osinbajo, to find a lasting solutiontothecongestioninApapa.

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Wednesday 08 May 2019

BUSINESS DAY

43

FINANCIAL INCLUSION

& INNOVATION

Here are World Bank’s 3 policies important for facilitating digital savings, financial inclusion Stories by Endurance Okafor

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i na n c i a l i n s t i tutions now leverage on digital technologies to expand digital financial services (DFS), such as digital transaction accounts and payment services, which serve as the gateway to financial inclusion.

A recent World Bank Group report that examined DFS products geared toward longer-term savings has outlined three policy considerations that seem most important for facilitating digital savings account.

Top on the list of the policies is the fact that banking institutions should be able to pursue digital savings partnership with non-bank entities.

Nigeria has 36.6 million of its adult population excluded from the financial cycle, owing to its traditional bank-led model in driving financial inclusion.

Although technologydriven financial companies (Fintech) have sprung up recently in Nigeria while financial institutions have also partnered with technology companies to roll out digital financial products, that has not helped the Cen-

tral Bank of Nigeria (CBN) in achieving its target before the deadline.

The Nigerian apex bank has set a target to ensure that 80 percent of its adult population are included in the financial cycle by 2020.

With 36.8 percent exclusion rate, the lender has about a 16.8 percentage gap to close in less than two years.

“Accessible, flexible, and affordable digital savings products could bring existing informal savings into the regulated financial sec-

tor,” the Washington-based lender said in its report.

According to the World Bank report titled ‘Financial Inclusion Beyond Payments: Policy Considerations for Digital Savings,’ which looked at how digital savings products—though not yet mature–have the potential to advance an important element of digital financial inclusion, the second policy is the conscious effort to support the development of interoperability between banks and

Visa collaborates with PalmPay to spur financial inclusion in Nigeria, Ghana, Tanzania

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isa, the global payments Technology Company, and PalmPay, a Point-Of-Sale product in Africa, have joined forces together to advance financial inclusion across Africa through access to digital payment services.

As part of the partnership, PalmPay will roll out an app with a mobile wallet in Nigeria, Ghana and Tanzania. The mobile wallet would offer customers a platform to top up funds electronically or via offline access points, with the ability to make and accept individual and merchant payments.

According to Otto Williams, Vice President, Strategic Partnerships, Fintech and Ventures at Visa, advancing financial inclusion remains a priority for Visa, and its collaboration with PalmPay will help the Fintech Company to reach consumers and merchants not previously addressed by traditional financial services, across Africa.

“Around the world, there

is a growing recognition that cash is a major impediment to advancing financial inclusion and Africa remains a cashcentric region. Delivering access to digital payment services on more mobile phones will be a significant step towards the continued expansion of financial inclusion on the continent,” Williams said.

Visa cardholders would be able to initiate payments within the app and make online and mobile payments by attaching their card details to their PalmPay profile. Noncard carriers can generate a virtual Visa card upon registration.

On the other hand, the PalmPay app would provide access to a variety of financial products offered by third parties. The technology-driven product is also introducing a loyalty points programme to incentivise the growth of the service.

Also speaking on the partnership, Greg Reeve, CEO of

PalmPay, said, “We are building a digital financial ecosystem that brings together the best services and offers from across each market, which will be made available to anyone with a smartphone, including the unbanked.”

Checks by BusinessDay revealed that PalmPay is in partnership with industry players like Global Technology Partners and Ecobank Group, who are working with the company on payment processing and banking services respectively.

As a result of the partnership with Visa, PalmPay is currently being tested by a limited number of private beta customers in Nigeria, Ghana and Tanzania and will be launched to the public in the coming months.

Already, an early access version is available on the Google Play Store and the iOS App store that allows users to accumulate PalmPoints, which can be used for transactions once the full app is available.

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nonbank e-money issuers.

The report by the international bank which analysed digital savings product deployments and relevant DFS policy issues across sub-Saharan Africa (SSA) and Asia revealed that partnerships between banking institutions and NBEIs, such as mobile network operators (MNOs) and other Fintech companies are common in the provision of digital savings accounts.

Finally, the report said that based on current mar-

ket observations, the third policy that can lead to digital savings market development is to harmonise customer due diligence standards for e-money wallets and low-risk bank deposits.

“Access to reliable savings products at regulated financial institutions is important for helping lowincome and financially underserved segments safely meet their long-term saving goals,” World Bank said.

The report noted that significant gaps exist in developing regions between the proportion of adults who save and those who save at a financial institution.

The gaps are due, in part, to limited access to savings products among lowincome and rural populations, and to the perception among low-income individuals that their savings are not large enough to warrant a savings product at a financial institution, which may entail maintenance fees, minimum balance requirements, and high indirect access costs (e.g., transportation, time).

Among the 36 digital savings accounts examined in the report, three primary deployment models have taken shape, details showed. Similarly, part-

nerships between banking institutions and NBEIs, such as mobile network operators (MNOs) and other financetechnology companies are common in the provision of digital savings accounts.

According to the World Bank, MNO partnerships account for a greater share of the digital savings account deployments in SSA than in Asia, which reflects the historically MNO-centric DFS approach in SSA and contrasting bank-oriented DFS patterns in a number of Asian countries.

The report also found out that digital technology and innovative business models enable product and market properties that enhance savings account accessibility.

Digital savings represent a relatively new area of inquiry for digital financial inclusion research, the report said, although it focused on supply-side factors in the digital savings market.

“As products mature and more data become available, researchers will be able to evaluate questions that bring together supply and demand side factors, thus developing a clearer picture of what works best in the digital savings market,” the report said.

Digital PayExpo to promote financial inclusion in Nigeria …offers opportunity for knowledge-sharing on digital infrastructure

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he Digital PayExpo, one of the premier conferences in the digital payments space in Africa, plans to gather key industry players at its 19th annual conference for knowledge-sharing and discussions on new developments, products and services related to digital payment infrastructure and management in Nigeria and Africa.

The 2019 edition of the conference with the theme: “Finclusion: Aligning Expectations with the DFS Business Case,” will be hosted

by Intermarc, a financial services consulting firm that has operated in the industry for almost two decades.

Scheduled to take place at Eko Hotel in Lagos, from 9th - 11th July 2019, the 19th edition of the Digital PayExpo will provide a unique platform for the electronic payment and digital finan-

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cial service players to meet and exchange ideas on deepening financial inclusion.

Checks by BusinessDay revealed that every year, hundreds of C-Suite executives – bankers, investors, start-ups, policy-makers, and development professionals converge to discuss and explore innovative solutions to emerging themes in the financial inclusion space.

“In addition, typical personas of the un/underbanked populace who remain conspicuously absent in most conferences are well represented in the conference. We also ensure they play an active role in the conference by participating in the panel/plenary discussion,” Jacqueline Jumah, MD, Intermarc & Market Expert in Digital Financial Sevices, told BusinessDay by mail. @Businessdayng

Previously focused on electronic banking and payment intermediation ser vices in Nigeria and across Africa, through research and thematic conferences, Intermarc recently repositioned its core activities for greater impact within the financial services industry. The Lagosbased company is now focused on promoting access to financial services to lower- and middle-income households across Africa through digital financial services.

“With industry big brands and key decision-makers attending, the conference offers excellent opportunities for companies to showcase their products and services in a state-of-the-art exhibition facility. Join the growing list of exhibitors in this year’s Digital PayExpo by reserving your space today,” Jumah concluded.

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cityfile NDDC partners Bonnadium to lift PLWD GODFREY OFURUM, Aba

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Officials of Presidential Investigation Panel for the Recovery of Public Property sealing off the Murjanatu House in Abuja on Monday. NAN

Kidnapped 2-year baby girl rescued in Lagos …as ransom seeking suspects arrested

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JOSHUA BASSEY t is all joy for the family and relations of little Esther Ojo, a two-year baby girl kidnapped about two weeks in Lagos, as she has been re-united with her parents.

Operatives of the Lagos police command rescued the baby girl on Monday, May 6. She was kidnapped on March 24 from the Mountain of Fire Ministry Church at Agege in Lagos on March 24.

Bala Elkana, spokesperson of the Lagos police

command, who confirmed the incident to newsmen, said two suspects have also been arrested while attempting to collect a ransom from the parents of the baby.Elkana said that at about 8:00 a.m. on Monday, acting on credible intelligence, the Divisional Police Officer (DPO), Igando Police Station, Taiwo Kasumu, led plain clothed operatives on the trail of the suspects.

According to him, the suspects had abducted the girl baby from the MFM

regional headquarters at Agege on March 24, 2019 at 12:30 p.m.

“The kidnappers, one Nwaigbo Magnus and Sixtus Osunwoke Egwim, demanded a ransom of an undisclosed amount from the parents of the baby and the church.

“The kidnappers continued to change the venue of the collection of the ransom within the Igando axis for over four hours, until they were rounded up by the police.

“Upon interrogation,

the DPO followed up on available information and the baby was recovered from a hidden den and re-united with the parents, Jame Oladipo Ojo, and other well wishers, all crying for joy,” Elkanah said.

Meanwhile, the Commissioner of Police (CP), Lagos command, Zubairu Muazu, has directed the Deputy Commissioner of Police (DCP) in charge of Criminal Investigation Department (CID) to commence investigations with a view to charging the suspects to court.

Road traffic injuries leading killer of children -FRSC

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he Federal Road Safety Corps (FRSC) has identified Road Traffic Injuries (RTI) as a leading killer of children and young people from the age of 5 to 29.

The sector commander, FRSC, Gombe State, Godwin Omiko, stated this in Gombe, as part of activities marking the 2019 United Nations Global Road Safety Week.

“In spite of progress

made in many countries, recent studies show that road traffic injuries are now the leading killer of children and young people from the age of 5 to 29, globally.

“This is an unacceptable price to pay for mobility, whether we travel as pedestrians, cyclists, motorcyclists or drivers.

“All of us as parents, students, employers, legislators, volunteers and concerned citizens, can be leadwww.businessday.ng

ers for road safety,’’ Omiko explained.

He said to achieve the desired goal, everyone, irrespective of status, must be involved in the road safety campaign.

The sector commander said that in Gombe, the corps constantly reminded individuals, groups and government to take decisive action against road traffic crashes.

“In 2018, last quarter re-

ports of road traffic crashes showed that 71 crashes were reported, involving 96 vehicles killing 30 persons while 218 were injured.

“Similarly in the first quarter of 2019, the command recorded a total of 57 crashes involving 91 vehicles, killing 30 persons while 245 persons were injured,’’ he said.

The programme was week-long, featuring road show and motor park rallies.

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onnadium Development Foundation, a nongovernmental organisation has concluded two weeks skill acquisition programme for Persons Living With Disability (PLWD) in Abia State.

The training, which held at the Women Development Centre, Umuahia, the Abia State capital, was sponsored by the Niger Delta Development Commission (NDDC), to empower the targeted group.

The benefiting PLWDs, drawn from different local government areas of the state, were trained in GSM repairs, photography, wig making, bead making, shoe and bag making, confectionary, makeup, manicure and pedicure.

Kenneth Amogu, the programme facilitator, explained that the training was designed to empower people living with disability with relevant skills that would enable them be gainfully employed, make money, support themselves, their families and be better persons in the society.

He applauded NDDC for sponsoring the programme and appreciated the trainers for impacting on the trainees, who according to him, have start-

ed making money already with their acquired skills.

At the end of the training, Queen Ekpo (on wheel chair) a member of the confectionary class, emerged overall best trainee, while Grace Eke, (blind), who was trained in bead making, came second best and Enwereji Chinedu Samuel of the photography class, emerged third best trainee.

Stanley Onyebuchi, chairman, PLWD, Abia State, described the training as timely, noting that it has enabled people with disability, to have skill for their own development.

Nwanosike ThankGod, one of the trainees, while appreciating NDDC for sponsoring the training, also thanked Bonnadium Development Foundation and Kenneth Amogu, for their expertise.

Madubuike Stella, one of the resource persons, observed that the workshop provided an opportunity for the trainers to impact on the PWDs in Abia State, despite their challenges.

She encouraged all the trainees to make good and adequate use of the skills acquired to make money and contribute to the society.

The trainees will receive starter packs and mobility aids from NDDC to begin their businesses.

Police nab 9 suspected armed criminals REGIS ANUKWUOJI, Enugu

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he police in Enugu have arrested and paraded nine suspected armed criminals between the ages of 21 and 26 said to have been terrorising the state.

Items recovered from suspects include one Ak47 rifle, two locally made double barrel guns, two locally made pistols and two live cartridges.

Parading the suspects, the Commissioner of Po@Businessdayng

lice (CP), Sulieman Balarabe, said their arrest was made possible by the effective collaboration of sister security agencies and relevant stakeholders Balarabe warned criminals hibernating the state to relocate, as the command was leaving no stone unturned in getting at them.

The CP said the police was partnering other security agencies, particularly to invade all suspected criminal hideouts in the state.

Wednesday 08 May 2019

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BUSINESS DAY

FINANCIAL TIMES

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World Business Newspaper

US accuses China of ‘reneging’ on trade promises Beijing dismisses Trump’s tariff threats and will send negotiators to Washington this week JAMES POLITI AND TOM MITCHELL

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enior US officials accused China of backtracking on its pledges in talks to end the trade war between the world’s largest economies and said a new round of tariffs on Chinese exports would take effect on Friday morning.

Despite the stinging criticism directed at President Xi Jinping ’s trade negotiators, China’s commerce ministr y s a i d o n Tu e s d ay t hat v i c e premier Liu He would arrive in Washington on Thursday for an abbreviated round of talks. Mr Liu had previously been scheduled to lead a large delegation for at least three days of discussions aimed at concluding a draft agreement.

In a briefing on Monday, Robert Lighthizer, the US trade re p re s e nt at i v e, a n d St e v e n Mnuchin, the US Treasury secretary, said the Trump administration was prepared to move ahead with higher tariffs on $200bn of Chinese imports as they accused Mr Liu’s team of failing to honour commitments made in previous negotiating rounds.

“Over the course of the last week or so we have seen an erosion in commitments by Chi-

na,” said Mr Lighthizer. “Really, I would use the word reneging on prior commitments.”

Mr Mnuchin described a “big change in direction for the negotiations”.

In its statement, China’s commerce ministry did not respond to Mr Lighthizer and Mr Mnuchin’s comments. Chinese stock markets, which had fallen sharply on Monday, also stabilised as it emerged that this week’s negotiations had not been completely derailed.

A Chinese foreign ministry spokesman declined to comment on the US allegations, saying it was “natural for the two sides to have differences”. Geng Shuang also dismissed the threat of higher US tariffs on Chinese imports as “something we have seen many times before”.

The remarks underscored the abrupt shift in the tone of USChina negotiations in recent days.

Last week, Mr Lighthizer and Mr Mnuchin left Beijing touting “productive” conversations that were widely expected to set the stage for a final session and possibly an agreement by the end of this week.

On Sunday, however, Donald Trump, the US president, fired off a pair of tweets denouncing the slow pace of the negotiations and vowing to impose higher tariffs

Could Trump’s tariffs threat wreck the global bull market?

COLBY SMITH AND ROBIN WIGGLESWORTH

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S president Donald Trump rattled markets on Monday with his latest threat to ratchet up tariffs on China. Is this the beginning of a renewed, broader bout of financial turbulence, or a mere blip in the roaring 2019 bull run?

After the bounceback of early 2019, Mr Trump’s vow to raise tariffs on all Chinese imports by 25 per cent and slap similar duties on $325bn of Chinese goods that are currently “untaxed” was an unwelcome jolt for many investors.

“This is an event risk that is very concentrated and relevant,” said Alessio de Longis, a portfolio manager at OppenheimerFunds. “The entire market rally year-to-date has been driven by two things: more dovish central bank policy and the belief that trade tensions were easing. Now, we’re removing one of those things.”

Since the beginning of the year, the S&P 500 has gained more than 10 per cent, Chinese equities 22 per cent, European stocks 14 per cent and emerging markets almost 11 per cent. All told, it is the fourth best start to a year since 1970 for the MSCI World index, and the fourth-best since 1929 for US equities, according to Goldman Sachs.

This made investors nervous that a reversal was overdue.

“Markets were at all-time highs, so there was a certain level of complacency about [trade],” said Tobias Levkovich, chief US equity strategist at Citigroup. “There’s a

sense that markets were vulnerable to something.”

That vulnerability was on display early on Monday, with the MSCI World equities index down more than 2 per cent at one point. But markets recovered some of those early losses to end the day down a more modest 0.6 per cent, reflecting hopes that the latest shock from Mr Trump will end up being mere posturing ahead of an ultimate USChina deal.

The S&P 500 futures index fell back again on Monday evening after senior US officials accused their Chinese counterparts of backtracking on some of their promises, but many investors are hopeful that an agreement will be struck.

“There is a willingness on both sides to reach a resolution, and an understanding that [2018’s tit-for-tat sanctions] weren’t useful for both sides,” said Anik Sen, global head of equities at PineBridge Investments.

Mr Trump’s turn in rhetoric comes just days before US officials are set to meet dozens of Chinese delegates in Washington for socalled “make-or-break” negotiations to iron out the final contours of a trade agreement. The talks are still scheduled to take place, but Beijing officials are said to be “livid” by the fresh threats.

Sonal Desai, chief investment officer for fixed income at Franklin Templeton, said the escalation is clearly part of the Trump administration’s negotiating strategy. For this reason, she expects the trade tensions to increase volatility, but only intermittently. www.businessday.ng

From left, US trade representative Robert Lighthizer, US Treasury secretary Steven Mnuchin and Chinese vice-premier Liu He in Beijing earlier this month © AP

on a wide range of Chinese goods.

Mr Trump’s tweets caused a sell-off in equity markets on Monday, as investors grappled with the prospect of a new escalation in US-China trade tensions. By late trading in New York, the losses were contained, partly because of expectations that some kind of settlement between Washington and Beijing could still be found.

But Mr Lighthizer’s comments sent the S&P 500 futures contract falling again, and hit after-market trading in trade-sensitive stocks such as Apple, Caterpillar and Boeing.

Chinese equities rebounded slightly on Tuesday, rising more than 1 per cent after falling 5.8 per cent on Monday, the biggest one-day fall in more than three years, while Hong Kong’s Hang Seng index was up by nearly 0.6 per cent after shedding over 2.8 per cent the previous day.

Japan’s Topix slipped nearly 0.5 per cent after traders returned from a six-day holiday. South Korea’s Kospi fell more than 0.9 per cent, while Australia’s S&P/ASX 200 was up almost 0.9 per cent.

Mr Lighthizer and Mr Mnuchin stressed they were not breaking off

talks with Beijing, leaving some hope the negotiations could get back on track.

However, Mr Lighthizer said they were ready to move ahead with higher tariffs on Chinese goods while Mr Liu and his team are in Washington. Under such a scenario, he said levies on $200bn of Chinese goods would increase from 10 per cent to 25 per cent at 12.01am on Friday.

Mr Lighthizer did not specify precisely how China had retreated on its pledges but he suggested a backlash from hawks in Beijing might have caused the shift.

EBRD considers move to extend lending to sub-Saharan Africa Support builds in EU capitals for more investment to stem migration to Europe BEN HALL

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hareholders in the European Bank for Reconstruction and Development will be asked next year to approve extending its lending operations to sub-Saharan Africa as support builds in EU capitals for more investment in the region to stem migration to Europe.

The EBRD, which was set up to support former Soviet bloc countries in their transition to market economies, will launch a feasibility study for an Africa foray at its annual meeting which takes place this week in Sarajevo, Bosnia.

Sir Suma Chakrabarti, EBRD president, told the Financial Times there was a strong case for a “gradual, incremental” expansion into Africa.

“If you are going to win the sustainable development goals competition, you’re going to have to do something about sub-Saharan Africa in the private sector as well,” he said.

The push to create more investment, growth and jobs in Africa, making migration to Europe less attractive, was helping to shift attitudes in some European capitals where there has been scepticism about enlargement of the bank’s operations beyond its original focus on central and eastern Europe.

The EBRD now lends to companies in Mongolia, central Asia, the Middle East and north Africa.

Concern about the EBRD’s focus has grown with the increase of

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Chinese lending in south-eastern Europe, which has raised questions about the viability of projects, the lack of transparency and the burden of higher public debt.

“You can imagine in certain parts of Europe, some of the shareholders will see that as one of the reasons we should think about this, and whether we are able to create jobs through investments that would help reduce migration flows,” Sir Suma said.

He acknowledged that “there are some who worry about whether taking that on will take our eye off the ball of our existing region”.

But he said the idea that central and eastern Europe would secure less lending was “the one argument that cannot run”. The EBRD has doubled its annual lending over the past 10 years to about €9.5bn, he said, and was aiming to hit €11bn by 2021. It had no need to request more capital from its member governments.

One reason for expansion is that the bank is close to its shareof-portfolio limits for Turkey and Egypt, two of its biggest customers.

But Sir Suma said expansion into sub-Saharan Africa would have to be based on evidence of where EBRD loans to the private sector could make a real difference.

Sir Suma played down the controversy over Chinese lending in the Western Balkans and other parts of eastern Europe. There were some problematic investments by the Chinese government or state@Businessdayng

owned companies which the EBRD “openly raises” with both Beijing and the recipient governments, he added.

But “there are lots of good things going on” with Chinese lending, he said. The EBRD helped to set up the Asian Infrastructure Investment Bank, the new Beijing-based multilateral lender which Washington has in effect boycotted.

“I’m someone who very much believes it is engagement with China and the Chinese that is the best way to actually try and push these views, and you’re more likely to have success doing so that way.”

Sir Suma also shrugged off the threat, floated by France and Germany, that the EBRD might be broken up or merged with the EU’s lender, the European Investment Bank, as part of a broader overhaul of development finance in Europe.

Sir Suma said the two institutions were working more closely than before and co-operation was to be encouraged, but “mergers or acquisitions I don’t think make sense at all”. The two bodies have different shareholding structures and remits, so would be hard to combine.

France last year pushed for the EBRD to move from London to Paris because of Brexit. But the EBRD is not an EU body and its board agreed last year it would stay in the UK. Last week it said it would move from the City of London to new headquarters in Canary Wharf.

46 BUSINESS DAY

FT

Wednesday 08 May 2019

NATIONAL NEWS

Malema eyes South Africa election breakthrough against ANC Populist leader expected to double vote in challenge to ruling party JOSEPH COTTERILL

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s Julius Malema, leader of the Economic Freedom Fighters, prepared to take the stage at the Soweto stadium at a final rally before this week’s South Africa elections, a sea of scarlet glowed under the sun. Vuvuzelas and revolutionary songs died away into a chant heard across the bleachers: “Juju, Juju.”

“You have made miracles, you have shaken the ANC . . . we are everywhere,” the firebrand 38-yearold, who vows to nationalise mines and land in one of the world’s most unequal countries, told thousands of supporters clad in red.

“The EFF is fighting for equality . . . not for blacks to oppress whites,” he said on Sunday. “No one is going to eat until all of us eat at the same dinner table. It’s not sustainable, it’s dangerous, to keep sitting alone.”

Mr Malema’s populist force looks more than ready to shake the governing African National Congress at the ballot box — and possibly reshape politics in Africa’s most industrial nation.

The ANC is likely to retain a majority in Wednesday’s poll under President Cyril Ramaphosa, who replaced the scandal-hit Jacob Zuma last year and has pledged to expel rampant graft from the party.

But Mr Malema’s party — which he forged barely five years ago after expulsion from Mr Zuma’s ANC — is expected to be the poll’s biggest gainer and to double its vote.

More than one in ten voters may back the EFF’s uncompromising message of radical state action,

which is aimed at ending inequality but which some see as racially divisive and authoritarian.

Amid the red jumpsuits and flags in Soweto was jobless Isaac Moeketsi, 23, who had come from a distant township to see his hero.

“Half of the youth you see here are unemployed,” he said. “Mr Malema understands the youth more than the ANC. He’s young, vibrant. He will provide for us.”

Many had expected Mr Malema’s support to falter once Mr Zuma’s resignation deprived the EFF of a target. But his party’s rhetoric has reflected often unspoken frustration with the rainbow nation’s “founding myths”, said Sithembile Mbete, a political scientist at the University of Pretoria.

“They say out loud what a lot of unemployed, poor, powerless people are thinking . . . if that isn’t articulated in everyday politics, then it simmers and it will come out in destructive ways. We would be further from creating a ‘normal’ South Africa,” Ms Mbete said.

The EFF attracts more than just the young and jobless. Black middle-class professionals have been drawn by its fierce criticism not just of ANC corruption, but of workplace racism and white privilege. The main opposition, the Democratic Alliance, is courting the same voters but is battling an image as a white-dominated party.

At Sunday’s rally Mr Malema dismissed Mr Ramaphosa and other senior ANC leaders as ripe for “the old-aged home” — or prison — and portrayed the party as offering dependency rather than dignity for the black majority.

US DoJ to return $200m to Malaysia as part of 1MDB probe Remittances include funds linked to film company that produced ‘The Wolf of Wall Street’

STEFANIA PALMA he US will return a total of almost $200m to Malaysia from an international probe into funds missing from Kuala Lumpur’s state investment fund 1Malaysia Development Berhad, including money linked to the film company that produced The Wolf of Wall Street.

The US Department of Justice has already returned about $57m linked to Red Granite Pictures, the US-based production company accused of using misappropriated 1MDB funds to finance movies, such as the 2013 Martin Scorsese film about financial excess.

The US will “soon” remit another $139m linked to the sale of a stake in New York City’s Park Lane Hotel allegedly bought using 1MDB money, Tommy Thomas, Malaysia’s attorney-general, said in a statement on Tuesday.

The reimbursements are a victory for Malaysia, which launched an immediate investigation into 1MDB — from which the DoJ alleges $4.5bn had gone missing — after Prime Minister Mahathir Mohamad ousted Najib Razak in elections last year on a platform condemning corruption.

The Mahathir government’s commitment to the probe has added to efforts in countries from the US to Singapore and Switzerland to track the alleged misuse of 1MDB funds across the globe. The US alone in the past three years has filed forfeiture complaints to seize $1.7bn in assets allegedly acquired with 1MDB proceeds.

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“1MDB asset recovery efforts across the globe are still ongoing, and Malaysia is optimistic of recovering further monies in the coming months,” said Mr Thomas.

The reimbursement announcement comes one day after Roger Ng, one of two former Goldman Sachs bankers indicted by the DoJ, pleaded not guilty in Brooklyn federal court to allegations of bribery and money laundering in the 1MDB scandal, after his surprise extradition to the US from a Malaysian jail.

The first tranche of the $200m that has already been transferred to Malaysia derives from a $60m settlement paid in 2018 to the US government

by Red Granite Pictures, a company co-founded by Riza Aziz, stepson of Mr Najib.

A deduction of about $3m was made from the total for investigation costs incurred by the DoJ and the FBI, according to the statement.

The $139m tranche was obtained from the sale of a stake in Manhattan’s Park Lane Hotel formerly owned by Jho Low, a Malaysian financier accused of masterminding the 1MDB scheme.

A sum will also be deducted for US authorities’ investigation costs.

Mr Najib set up 1MDB in 2009 and is facing trials for alleged abuse of power, breach of trust and money laundering linked to the fund and other state entities.

Malaysia has so far recovered $322m worth of 1MDB assets since the start of investigations in May 2018, according to Mr Thomas’s statement. www.businessday.ng

Crown Prince Mohammed bin Salman and King Salman. The prince’s ascension has infused young Saudis with hopes for radical change, but has also inspired a patriotic zeal © FT montage

Nationalism on the rise as Saudi Arabia seeks sense of identity Activists warn social media being used to foster ‘with us or against us’ mentality in kingdom ANDREW ENGLAND AND AHMED AL OMRAN

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hen the final series of Game of Thrones was about to air, a video production house in Saudi Arabia released an image of a man sitting on the hit show’s iron throne wearing a traditional white robe.

It was meant to be a lighthearted promotion for the group, UTURN. Instead, it became an incitement to Saudi nationalists, who took to social media to lambast the company for what they interpreted as an insult to the al-Saud royal family.

“Clear mockery of the king,” said one Twitter user. “Whoever did this must be held accountable,” “Revoking citizenship might be the solution,” raged others.

The attacks on the 10-second video, which was posted on Snapchat, were the latest example of a wave of ultranationalism that has swept across the kingdom in the three years since Crown Prince Mohammed bin Salman consolidated his power.

While his ascension has infused young Saudis with hopes for radical economic and social change, it has also inspired a patriotic zeal among citizens who are attempting to define Saudi identity in increasingly confrontational terms.

To the crown prince’s supporters, it is an expression of pride in the confidence of the new leadership and its bold and brash style of rule in the traditionally reserved, conservative kingdom.

But for others, it a divisive and worrying trend perpetuated by an aggressive “with us or against us” mentality fostered on the 33-yearold heir’s watch.

“It’s very exclusionist, even to other Saudis, and in the long term that can be very dangerous,” said a senior Saudi academic, who, like others, did not want to be named discussing a sensitive topic. “If [a Saudi] voices an opinion that is against their own, then they [trolls] would go search for other reasons to cast him as not purely Saudi.”

In an environment where even the hint of dissent can lead to jail,

some fear that being called out on social media for the mere appearance of not displaying sufficient loyalty to Prince Mohammed can cost them their reputation and their jobs — even their freedom.

“It’s not just trolling, it’s cyber bullying. It can be a cyber campaign to get us jailed,” said a young professional who has endured social media attacks.

Saudis trace the rise of nationalism to royal court advisers who have used social media to aggressively promote support for Prince Mohammed’s economic plans and his assertive foreign policy — from the decision to lead an embargo against Qatar to Riyadh’s extraordinary spat with Canada last year.

Initially, it was perceived criticism of government policies that drew vitriolic backlashes on social media. Then, as Prince Mohammed faced international scrutiny after the murder of Jamal Khashoggi in October, people were branded “traitors” just for being perceived to be not supportive enough of the government.

Italy budget deficit forecast to smash EU fiscal rules Increased risk of fresh clash with Brussels over Rome’s spending commitments MEHREEN KHAN AND JIM BRUNSDEN

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taly’s budget deficit is set to breach EU rules by a wide margin next year, according to forecasts from the European Commission that raise the prospect of a renewed clash over economic policies between Brussels and Rome’s anti-establishment government.

The Italian deficit is expected to balloon to 3.5 per cent of gross domestic product in 2020, up from an already higher than expected 2.5 per cent this year.

The deterioration is set to be driven by a slowing Italian economy, Rome’s plans to implement expensive policies including a citizens’ income and its intention to repeal a landmark pension reform.

Italy’s projected deficit in 2020 has risen sharply from a commission forecast of 3.1 per cent in November. The expected breach of the EU’s limit of 3 per cent of GDP would be Italy’s first since 2011.

The Italian numbers are part

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of a generally gloomy set of EU data, with downward revisions to expected growth for the next two years.

The forecasts raise the risk of a fresh EU sanctions procedure against Rome and will fuel criticism that the commission was too lenient with Italy when striking a deal with Italy’s populist government on its budget plans in December.

Rome promised to delay key spending measures and bring the deficit to 2.04 per cent this year.

But the Dutch government has repeatedly argued that Italy was let off the hook.

The weak economy has thrown the country off course, leaving Brussels to reflect on how tough to be when it reviews eurozone countries’ budget situations this year. The commission’s verdict is due a week after European Parliament elections in May. Italian growth is expected to stagnate at just 0.1 per cent of GDP this year, down from a previous forecast of 0.2 per cent, before rebounding @Businessdayng

to 0.7 per cent in 2020, according to numbers published by the commission on Tuesday.

“Government spending is set to increase significantly following the introduction of the citizenship income and several provisions on pensions, including a new early retirement scheme,” the commission said in its new forecasts.

Brussels said the 3.5 per cent deficit projection did not take into account some planned Italian tax increases because there was no certainty about when they would be applied.

The commission also warned that Italy’s public finances could weaken further if markets took fright at the government’s spending plans, raising the state’s borrowing costs.

“Renewed tensions on sovereign yields constitute a risk to these fiscal projections. Conversely, the possible activation of the VAT safeguard clause in 2020 and potential underspending for the new measures would lead to a better fiscal outlook,” the commission said.

Wednesday 08 May 2019

BUSINESS DAY

47

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

US stocks open lower as trade jitters persist PAN KWAN YUK

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S stocks remained under pressure on Tuesday, with the main indices extending their decline as investors weighed the White House’s threat of raising tariffs on all Chinese imports against news that negotiators from Beijing would still be visiting Washington this week for the latest round of trade talks.

The S&P 500 fell 1.2 per cent lower to 2,898.25 in early trade. The Dow Jones Industrial Average also shed more than 1 per cent to trade at 26,149.49 and the Nasdaq Composite fell 1.2 per cent to 8.028.00.

President Donald Trump shattered the months-long period of relative calm in the markets after he unexpectedly declared over the weekend that he would raise tariffs on all Chinese imports to 25 per cent. The sudden escalation in trade tensions — following weeks of claims of progress from the White House — caught investors by surprise and

triggered a sell-off in global equities, a spike in volatility and a dash for haven assets on Monday.

US stocks finished lower on Monday, but managed to pull themselves off their session lows after reports emerged that this week’s trade talks would still take place.

The reports were subsequently confirmed by China’s commerce ministry, which said on Tuesday that vice-premier Liu He would arrive in Washington on Thursday for an abbreviated round of talks.

But the cautious sentiment lingered. Treasuries extended their rally, pushing yields lower as investors continue to clamour for the safety of haven assets. Yield on the benchmark 10-year note was 3.1 basis points lower at 2.4692 per cent.

The CBOE volatility index (Vix), which is sometimes referred to as Wall Street’s “fear” index, continues to hover near the four-month high reached on Monday. The gauge is up nearly 2 points at 17.28.

France’s Iliad to raise €2bn by selling mobile towers to Cellnex Telecoms group looks to raise cash to bolster its balance sheet HARRIET AGNEW

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he French telecoms company Iliad has agreed deals worth €2bn to sell almost 8,000 mobile towers in France and Italy as it raises cash to bolster its balance sheet.

Iliad, whose share price has dropped by a fifth this year, also set a series of strategic targets for 2024 on Tuesday, as it sought to turn the page on a tough period.

Shareholders have grown increasingly concerned about Iliad’s commercial strategy, its ability to generate cash, an insider trading conviction for its chairman and a controversial pay scheme for its senior management.

But the planned sale of its French and Italian mobile towers brought some relief for its downtrodden share price, which rose 5 per cent on Tuesday.

The company said it had started exclusive negotiations with Cellnex Telecom for the Spanish infrastructure operator to buy 70 per cent of the company managing its 5,700 French mobile towers.

In Italy, Cellnex has agreed to buy the entire company managing Iliad’s network, which comprises about 2,200 sites. The deals sent Cellnex shares up 6 per cent.

“Selling towers to Cellnex makes sense,” says François Godard, an analyst at Enders Analysis. He said the French group was “taking advantage of the fact that financial markets are ready to give a higher value to towers when they are set aside in a separate corporate shell than when they are buried in an operator’s balance sheet”. He added: “But it does not change the Iliad business model.”

The announcement, which fol-

lows similar infrastructure sales by rivals Altice and Bouygues, came ahead of Iliad’s first capital markets day for years on Tuesday as it sought to restore trust with investors.

Iliad, whose majority shareholder is its founder Xavier Niel, launched its low-cost Free Mobile offering in 2012 and has subsequently grown to a fifth of market share in mobile. For the past few years it has been locked in a brutal price war with its rivals Orange, Altice’s SFR and Bouygues, which has eaten into its profitability.

The proceeds of selling its French and Italian towers will be used to strengthen the company’s balance sheet. Iliad said that its French business would start to generate positive cash flow in 2020 and ramp up throughout 2020-2024.

“This operation is part of an industrial logic allowing the acceleration of deployments of 4G and 5G networks and multiplying the investment capacity of Iliad,” said Thomas Reynaud, chief executive of Iliad.

In a separate deal announced on Tuesday, Salt Mobile, a Swiss telecoms operator also owned by Mr Neil, said it had agreed to sell its mobile towers to Cellnex.

Ahead of its investor day, Iliad unveiled a plan called “2024 Odyssey” that outlined targets in four main areas: fibre, mobile, B2B and Italy.

France’s leading “fibre to the home” operator by subscribers behind Orange, Iliad said it aimed to increase its subscriber base in fibre from 1m to 4.5m subscribers by 2024.

In its mobile business, Iliad it aimed to have 80 per cent of subscribers on its 4G data plan by 2024, versus 58 per cent today. www.businessday.ng

US stocks open lower as trade jitters persist PAN KWAN YUK

U

S stocks remained under pressure on Tuesday, with the main indices extending their decline as investors weighed the White House’s threat of raising tariffs on all Chinese imports against news that negotiators from Beijing would still be visiting Washington this week for the latest round of trade talks.

The S&P 500 fell 1.2 per cent lower to 2,898.25 in early trade. The Dow Jones Industrial Average also shed more than 1 per cent to trade at 26,149.49 and the Nasdaq Composite fell 1.2 per cent to 8.028.00.

President Donald Trump shat-

tered the months-long period of relative calm in the markets after he unexpectedly declared over the weekend that he would raise tariffs on all Chinese imports to 25 per cent. The sudden escalation in trade tensions — following weeks of claims of progress from the White House — caught investors by surprise and triggered a sell-off in global equities, a spike in volatility and a dash for haven assets on Monday.

US stocks finished lower on Monday, but managed to pull themselves off their session lows after reports emerged that this week’s trade talks would still take place.

The reports were subsequently

confirmed by China’s commerce ministry, which said on Tuesday that vice-premier Liu He would arrive in Washington on Thursday for an abbreviated round of talks.

But the cautious sentiment lingered. Treasuries extended their rally, pushing yields lower as investors continue to clamour for the safety of haven assets. Yield on the benchmark 10-year note was 3.1 basis points lower at 2.4692 per cent.

The CBOE volatility index (Vix), which is sometimes referred to as Wall Street’s “fear” index, continues to hover near the four-month high reached on Monday. The gauge is up nearly 2 points at 17.28.

Porsche fined €535m by German prosecutors over diesel scandal Car maker wrapped up in cheating episode as a unit of Volkswagen group

PATRICK MCGEE

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ports car maker Porsche has been fined €535m by public prosecutors in Stuttgart for “negligent violations of supervisory duties” which allowed the diesel scandal to occur.

The German carmaker, a unit of Volkswagen Group, was wrapped up in the decade-long cheating episode exposed by US regulators in 2015 because some of its cars used engines made by sister brands Audi and VW. Porsche said it “never

developed and produced diesel engines”.

“According to the investigation results of the public prosecutor’s office in Stuttgart, there have been negligent violations of supervisory duties in a department of the development department several levels below the board in the exhaust gas-related testing of vehicles on their regulatory compliance,” the carmaker said.

Porsche said it would not file an appeal against the penalty notice for negligent breach of duty. Its accep-

tance brings to an end the prosecutors’ lawsuit against Porsche.

Last year VW Group was fined €1bn by public prosecutors in Braunschweig, near its Wolfsburg headquarters, for its criminal role in the scandal, in which 10.7m cars were equipped with software that cheated tests and emitted up to 40 times the permitted level of nitrogen oxide in the real world.

Porsche said VW had already increased its provision to cover the fine. Last week VW said total provisions now exceed €30bn.

Dean Foods losses widen on soggy dairy demand Company behind Berkley Farms expects to generate cash this year but shares down 8% MAMTA BADKAR

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ean Foods swung to a wider thanexpected loss and said revenues fell in the first three months of the year amid weak milk demand but said it expects to generate cash in 2019.

Dallas-based Dean Foods, which earlier this year said it was reviewing strategic option that could include a sale of the company, said net sales fell 9.3 per cent from a year ago to $1.8bn. That was shy of the $1.9bn Wall Street had expected, according to a Refinitiv survey.

Shares in Dean Foods, which are down more than 50 per cent year-todate, fell 8 per cent in pre-market trade.

The company behind TruMoo and Berkley Farms said its net loss widened to $61.6m or 67 cents a share, compared with a loss of $265,000 in the year ago quarter,

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when it broke even on a per share basis. This marked the company’s fifth consecutive quarterly loss.

Adjusting for one-time items, the company reported a loss of 41 cents a share. While the company said this figure in line with its forecast, it was wider than analyst expectations for a loss of 27 cents.

“We believe we have passed the inflection point as the transformative actions implemented over the past 12 months through our enterprisewide cost productivity plan are taking hold,” said chief executive Ralph Scozzafava.

He added: “While our results demonstrate that our efforts are beginning to achieve the desired results, there is still much more work to do.”

One of America’s biggest milk processors Dean Foods has faced intense competition as alternatives such as almond and soy ‘milk’ have @Businessdayng

gained ground with consumers seeking dairy alternatives for health or environmental reasons. A push by grocers and food retailers into their own private label milk brands has also added to pricing pressure.

Earlier this year, the company suspended its quarterly dividend for the first time since payment began almost five years ago.

Looking ahead, Dean Foods expects to deliver positive free cash flow for the full year in 2019 and said it is “turning the corner” and predicts it will deliver positive cash flow as soon as the current quarter.

The company said it continues to explore potential strategic alternative and refinanced its revolving credit facilities in the first quarter. Its net debt stood at about $991m compared with a market capitalisation of about $154m.

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Wednesday 08 May 2019

BUSINESS DAY

FT

ANALYSIS

Where now for the rules that rocked European finance?

More than a year on from implementation, calls to amend Mifid II are growing louder PHILIP STAFFORD AND KATIE MARTIN

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elping small and medium companies access capital markets was at the heart of Mifid II but more than 16 months on, bankers and regulators are worrying that Europe’s flagship securitiesindustry overhaul has become more of a problem than a solution.

On the face of it, the new legislation sought to make the European Union’s stock and bond markets work for the benefit of the so-called real economy — midsized manufacturing or family businesses far removed from big financial hubs like London.

To encourage a fairer distribution of capital, Mifid clamped down on potential conflicts of interest within the investment banks that dominate trading. One of its biggest targets was

research for equities — the daily diet of market analysis and commentary from banks that is widely distributed among investors.

Mifid imposed cleaner divisions between payments for trading and those for research. Historically, brokers had “bundled” research for free as part of its service; asset managers would send trading business — and pay commission — to the bank. The new standards would mean asset managers paying for research they want, rather than simply sending their dealing commission to banks.

The effects on the banks have been profound, say critics. “European investment banking is in disarray, and people should start worrying because it is key infrastructure for people and companies to access the markets,” said Andrea Vismara, chief executive of Equita, a boutique investment bank, in Milan.

“People think it’s about funds and bankers. It’s not; it’s about the sales and trading and investment banking infrastructure in Europe, the whole ecosystem.”

Nearly 60 per cent of asset managers were taking less research from banks than before Mifid II’s introduction, according to a survey in February by the CFA Institute.

The price asset managers are willing to pay has also fallen, squeezing banks’ profits.

“There were worries that niche players would bear the brunt of unbundling and the incoming regulation would raise barriers to entry for small mid-cap specialists,” said Joelle Tarrant, global head of market structure at HSBC. Those fears appear to be realised, with a wave of

consolidation, or cutbacks by brokers like Canaccord.

Critics of Mifid say they worry about a vicious circle, in which costconscious banks stop researching smaller companies. Those companies then lose their profile among institutional investors and the stock becomes less liquid and trades more cheaply — making it less appealing for investors to buy and for brokers to cover.

Authorities in the UK, Germany, France and Italy are now assessing Mifid II’s impact, and policymakers in Brussels are considering changes to standards.

The European Commission, which proposes legislation, is preparing a review. “We have been receiving a lot of complaints, especially on the [small-company] side, in this area,” said Valdis Dombrovskis, a commission vice-president, in April.

But it is not yet clear if there is genuine political will to make changes. European elections will delay potential tweaks well into next year. Furthermore, not everyone is convinced by investment banks’ complaints and see opportunities in the new regime.

Most EU asset managers now produce market research themselves, or buy only what they want from banks.

“Mifid II means that you have less good coverage of a sector. That’s a great place for active managers to be,” said Philip Macartney, a fund manager at Threadneedle Asset Management in London.

AJ Bell, a midsized UK investment platform, had few problems under the new regime in raising £651m for a London stock market listing last year. “We certainly don’t feel like we’ve struggled to get our investment case heard,” said Andy Bell, chief executive. “The new rules give unconnected analysts access to companies coming to market earlier in the IPO process.”

According to Ms Tarrant of HSBC, there are longer term trends changing the market that cannot be attributed to regulation: among them investors’ attention to the total cost of trading, falling volumes and a shift to passive trading.

Meanwhile, the UK’s Financial Conduct Authority, Europe’s largest national regulator, and arguably the driving force behind the new Mifid regime, says the market disruption is a price worth paying for increased transparency. “Competition creates winners and losers,” said Andrew Bailey, its chief executive, in February. www.businessday.ng

Investors take on Germany Inc

Scandals over ‘cosy’ relationships at several top German companies have led shareholders to demand better governance GUY CHAZAN

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err Baumann, what have you done to our Bayer?”

The question, posed by Joachim Kregel of the German Association for the Protection of Investors, was just one of dozens of emotional tirades against Werner Baumann, Bayer’s chief executive, at the aspirin-to-crop chemicals conglomerate’s annual meeting in late April.

“Where is your humility and empathy for shareholders who have invested their savings in Bayer?” he added. Investors like Mr Kregel had reason to be angry.

The German group’s share price has slumped 37 per cent since June, when it closed its $63bn acquisition of US agrochemical giant Monsanto.

That fury fuelled a rebellion unique in German corporate history. For the first time, shareholders delivered a vote of no confidence to the serving management of a Daxlisted company, an unprecedented act of defiance.

“It was an earthquake,” says Michael Wolf, professor of management at Göttingen University.

“Investors in Germany have traditionally tended towards compromise and avoiding conflict. This is a turning point.”

Bayer is in many ways a special case. Last August, a US jury determined that Monsanto had not warned of the alleged cancer risks associated with using Roundup, a controversial weedkiller, and found Bayer liable. Since then, €30bn has been wiped off the company’s market value.

But it is not the only German company being punished by the stock market. Dogged by post-crisis misconduct investigations, ratings downgrades and stiff competition from Wall Street rivals, Deutsche Bank has seen its share price plunge more than 90 per cent in the past 12 years. Volkswagen is still struggling to restore the faith of investors four years after the diesel scandal broke. And shares in Wirecard, one of Europe’s leading financial technology groups, slumped earlier this year after allegations emerged of fraud and false accounting at its Singapore office.

The country has plenty of national champions untouched by scandal — companies like insurers Munich Re and Allianz, the software giant SAP and its successful “Mittelstand” exporters.

But Germany Inc still has its fair share of corporate crises — and they are now increasingly being fought over in public. Shareholders, it seems, are far less willing to put up with bad management than they used to be. “Before, companies got away with making questionable decisions, but now

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they’re being pilloried for them,” says Jörg Rocholl, head of the ESMT Berlin business school.

It is a cultural change that has been building over the past decade or so but is now in full spate.

“Shareholders are increasingly willing to articulate their concerns, via the press, through direct conversations with management or in their voting behaviour at AGMs,” says one German investment banker.

“A taboo has been broken.”

Companies were often protected from pesky investors by Germany’s two-tier governance system, under which a management board in charge of day-to-day business is overseen by a supervisory board of investor and employee representatives. Relations between the two can be cosy, to say the least: for example, when Mr Baumann went to Munich for takeover talks with Monsanto boss Hugh Grant, he took Bayer’s chairman Werner Wenning with him.

Shareholders are often critical of the way senior executives at German companies move seamlessly into jobs on supervisory boards: Hans Dieter Pötsch, VW’s chief financial officer during the emissions scandal, was appointed chairman in 2015. At VW’s 2016 AGM, one investor called him “the personification of a conflict of interest”.

But supervisory boards “are becoming much more arm’s-length in their dealings with management than before”, says the investment banker. As a consequence, the twotier board system “does not provide German corporates with anything like the level of protection from shareholders, activists and predators as it used to”.

Shareholders were already shaking up the German corporate landscape even before Bayer’s AGM in late April. Last year, activist investors Cevian Capital and Elliott Management successfully pushed German conglomerate Thyssenkrupp into splitting itself into two companies. It was a bitterly fought battle: Ulrich Lehner, the then-chairman, accused the activists of using “psycho-terror” tactics against senior executives.

There has also been trouble at the top at Deutsche Börse, whose chairman Joachim Faber said last week he was to step down early. He came under pressure from the exchange group’s shareholders over an insider trading case against the company and former chief executive Carsten Kengeter.

Against this backdrop, Bayer’s is unlikely to be the only AGM where tempers fray. “The sparks are definitely going to fly this year,” says Ingo Speich, fund manager at Deka Investment, a German asset manager.

Shareholder activism has a relatively short history in Germany. @Businessdayng

The country was long dominated by the system known as Deutschland AG, an intricate web of cross-shareholdings between banks, insurers and big industrial companies that was in part designed to protect Germany’s corporate jewels from predators. That led to a situation where, at one point, the directors of Deutsche Bank held more than 135 supervisory board positions at other companies.

The Deutschland AG model fuelled a perception by shareholders that the big corporate decisions were taken behind closed doors by a small group of insiders, often in cahoots with politicians and bureaucrats.

But that form of capitalism gradually changed this century. The 2001 decision to abolish capital gains tax on the disposal of crossshareholdings triggered a wave of corporate restructuring, while a new governance code strictly limited the number of board seats that individuals can hold. Companies adapted to international norms of financial reporting and embraced value-based incentive packages for their managers. And as more international investors moved into the German market, the principle of maximising shareholder value began to take root. According to EY, 54 per cent of shares in Dax companies are now in foreign hands. In the case of Bayer, that figure is as high as 74 per cent.

“The cosy years are over, and the cold wind of the capital markets is now blowing on German companies,” says Mr Rocholl.

Yet some critics believe there is still room for improvement. “A lot of the chairmen of German companies are still old-school corporate titans who are not open to considering shareholders’ interests, or at least not to the extent that is necessary,” says Thomas Schweppe, a former Goldman Sachs banker who now runs 7 Square, which advises investors.

Those bosses are, however, coming under mounting scrutiny. At Deutsche Bank’s AGM, chairman Paul Achleitner is likely to face searching questions from investors over his role in the failed merger talks with Commerzbank, a tie-up he is believed to have championed.

Management will have to explain the continuing losses and falling revenues at Deutsche’s investment bank. Influential proxy advisers Glass Lewis have recommended investors vote against ratifying Deutsche’s management at the AGM, citing “loss of substantial shareholder value”.

Carmaker Daimler could face criticism, too. Some investors are unhappy that the company has lined up Dieter Zetsche, the outgoing chief executive, to become chairman of its supervisory board in 2021.

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BUSINESS DAY

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Ghana: Aker completes appraisal drilling off Ghana

Page 50

GAS

Ghana: Ghana Gas to expand operations at Atuabo

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Market Insight

Debrief

Nigeria’s downstream hiccups ignite focus on refinery projects FRANK UZUEGBUNAM

Oil edges up after strong economic data, but ends week lower Page 58 OPEC weekly basket price DAY

PRICE

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70.98

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ecent hiccups in Nigeria’s downstream sector following supply challenges and advice

by Christine Lagarde, managing director, International Monetary Fund (IMF), that the Nigerian government should discard fuel subsidy has re-ignited focus on refinery projects in Nigeria.

In March this year, the stateowned Nigeria National Petroleum Corporation (NNPC) announced the formal commencement of the first phase of the rehabilitation of the 210,000 barrels per day capacity Port Harcourt refinery.

The overhaul should raise capacity utilization at the facility to 90 percent. The rehabilitation project is being handled

by Italy’s Maire Tecnimont in collaboration with its Nigerian affiliate, Tecnimont Nigeria would be in two phases. Oil ma-

jor, Eni, was also appointed as technical adviser.

“At the end of the phase 1, the refinery complex should be able to reach 60 percent capacity utilization,” Ndu Ughamadu, NNPC spokesman said in a statement.

The Port Harcourt overhaul would be followed by the Warri refinery, and then the refinery at Kaduna as the country battles save billions of dollars on fuel imports.

Nigeria has 445,000 bpd of refining capacity across four separate facilities which operate well below capacity as shortages of petroleum products have plagued the country for years.

Ibe Kachikwu’s (minister of state for petroleum resources) recent visit to Riyadh where he met with his counterpart Khalid al-Falih and also held meetings with Amin Nasser, Saudi Aramco CEO also threw up the possibility of an MoU with Saudi Arabia that “will cover the existing refinery revamp, building of a brand new refinery, LNG investments and product sup-

ply trading in crude and refined products,” Nigeria’s ministry of petroleum resources said in a statement.

For now, Nigeria’s concrete hope of meeting domestic petroleum demand remains the Dangote’s 650,000 bpd refinery which is beginning to take shape as it installs key refining units.

According to sources, initial civil works have been completed and they have commenced the installation of the units.

Besides Dangote refinery, there are other projects in the pipeline. The NNPC said in August 2018 that it plans to establish two condensate refineries with a combined capacity of 200,000 b/d. Also, Nigeria has reached an agreement with neighbor Niger to build an oil refinery in a border town between Niger and Katsina state in northern Nigeria.

In the Niger Delta, another refinery, Azikel Group’s 12,000bpd unit in Obunagh Gbarain community of Bayelsa State, is under construction while Waltersmith’s 5,000 bpd refinery, being built at

Ibigwe field in the Ohaji/Egbema Council Area of Imo state is progressing.

Elsewhere, Nigeria’s privately-owned Sahara Group is planning to buy Total‘s stakes in refineries located in three African countries and this could give Nigeria another kind of leverage in the refining sector. The refineries are located in Cameroon, Cote d’Ivoire and Senegal.

Sahara group also plans to buy a 70 percent stake in state-owned Indeni refinery in Zambia.

The group already have less than a 10 per cent stake in the 75,000 barrels per day refinery in Abidjan, Cote d’Ivoire, and the 27,000 bpd refinery in Dakar, Senegal. However, the group is aiming to acquire Total’s shares which are 19.71 percent interest in Sonara, Cameroon’s only refinery, a 7 percent stake in the Societe Africaine de Raffinage refinery in Senegal, and has a 20 percent holding in Societe Ivoirienne de Raffinage, which owns and operates Cote d’Ivoire’s sole refinery in Abidjan.

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Outlook

Ghana: Aker completes appraisal drilling off Ghana

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ker Energy Ghana, the operator of the Deepwater Tano Cape Three Points (DWT/ CTP) block, said it has concluded its appraisal drilling campaign offshore Ghana.

The company commenced appraisal drilling in the DWT/CTP block offshore Ghana in November 2018, leading up to the submission of an integrated Plan of Development and Operations (PDO) on 28 March, 2019. The drilling campaign has now been concluded.

The purpose of the appraisal cam-

paign was to verify the partners’ understanding of the area and to prove up additional resources to further strengthen the Pecan field development. The recent appraisal drilling campaign has contained of three appraisal wells and a side-track well.

“The appraisal wells have provided valuable information for us to further optimise the area development plan in the DWT/CTP block. We remain committed to continue developing the petroleum resources in the area in a way that will deliver value to the people of

Brief

Ghana and to us and our partners,” Jan Arve Haugan, CEO of Aker Energy, said.

Pecan-4A and Pecan South, the first and second wells in the appraisal campaign, identified deep oil/water contact and confirmed the partners’ geological model, as previously announced. A sidetrack well to Pecan South was initiated to verify the volume potential of Pecan South by testing a deeper part of the structure.

The sidetrack well encountered oil shows, but no recoverable resources due to a tight reservoir. Based on preliminary data analysis, it is estimated that between 5 - 15 million barrels of oil equivalent (mmboe) could be added to the Pecan field development from Pecan South.

Aker Energy has also completed a well in Pecan South East, the third well in the appraisal campaign. The well encountered oil in a thin upper sand. The partners will now assess the data gathered from the well to evaluate whether the accumulation could be tied-in to the Pecan field development.

Discovered contingent resources, to be developed in subsequent phases, are estimated at 110-210 mmboe, resulting in a combined volume base of approximately 450–550 mmboe. These estimates exclude any additional volumes from Pecan South and Pecan South East, currently being assessed.

The partners have identified further upsides in the area that they intend to mature as part of the area development.

Aker Energy believes that the total resource potential in the area is still within the range of 600-1000 mmboe, as earlier communicated.

Gambia: Gambia inks oil exploration deal with BP

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P has signed a deal to explore for oil and gas off Gambia’s coast in a potential economic boon for the West African country, although another producer says it owns the rights to the same licence.

BP was awarded the licence to the A1 block, the Gambian government said, a deal which comes as producers seek to emulate oil and gas finds in neighboring Senegal and Mauritania that have attracted oil majors from across the globe.

The A1 block is one of two that the Gambian government stripped from Norwegian-listed African Petroleum Corporation in 2017, saying the licences had expired and that the company had failed to meet contractual obligations.

African Petroleum disputed that and launched arbitration proceedings in October 2017 at the US-based Interna-

tional Centre for Settlement of Investment Disputes. No resolution has been announced in the case.

African Petroleum said it “continues to reserve its rights in relation to the A1 licence and will continue with its efforts to protect its interest” through arbitration.

A statement from the office of Gambian President Adama Barrow quoted Jonathan Evans, BP’s vice president for Africa New Ventures, as saying the project would begin with an environmental impact assessment, followed by two years of drilling, exploration and development of a first well.

“This is about looking for oil and gas in the deep water, and if it is successful to develop that oil in the future,” Evans said.

BP’s move into the country follows a www.businessday.ng

$1 billion entry into gas fields in offshore Senegal and Mauritania in 2016 that includes plans to build a liquefied natural gas (LNG) plant to export West African gas worldwide.

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Africa: Eni to offset CO2 emissions by saving African forests

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ni SpA’s plan to offset emissions from its oil and gas operations will focus on working with African communities to prevent deforestation.

The project is part of the Italian energy giant’s goal of removing the equivalent of 20 MMtpa of carbon dioxide from the atmosphere by 2030. On top of efforts to improve operational efficiency and minimize waste, the forest initiative would result in net zero emissions from its upstream fossil fuels business, Eni says.

The company has clarified its plans after the initial announcement in March appeared to involve planting 20 million acres of new forests, an area roughly the size of the US state of South Carolina.

While Eni’s initiative will involve planting some new trees, the main focus is on preserving mature forests “which play a crucial role to absorb CO2 from the atmosphere,” the company said.

“We pursue an approach which aims at the sustainable management of forests, their conservation, and enhancement of forest carbon stocks, also leveraging local population as crucial players,” an Eni spokesperson said.

The Italian company will spend about $1.1 billion euros on “circular economy” initiatives to reduce emissions over the next four years. Other oil majors have also turned to the forests to offset their climate change footprint.

Royal Dutch Shell Plc plans to plant and conserve trees to offset emissions through a $300 million investment over three years. The company will provide carbon credits to its diesel and gasoline customers in the Netherlands. Total SA expects to invest about $100 million in forests starting in 2020.

Eni said it will develop forestry projects through REDD+, a program to reduce emissions stemming from deforestation or forest degradation. The company has formed partnerships with Zambia, Mozambique, Zimbabwe, Mexico and Brazil.

Talks are underway to develop new initiatives in Congo, Indonesia, Mozambique and Ghana, it said.

The strategy includes growth in Eni’s portfolio of low- or zero-carbon energy sources, with an increasing share of gas, biofuels, solar, wind, and “a circular approach to maximize the use of waste as a feedstock and to transform and extend the life of industrial sites,” the company said.

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Wednesday 08 May 2019

BUSINESS DAY

gas Brief Global LNG: Prices climb but cargoes change direction signal uncertainty

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sian spot prices for liquefied natural gas (LNG) edged up amid stronger bids from market players with short positions and expectations of a rise in summer demand in Asia.

The price for delivery of LNG to northeast Asia in June is estimated at $5.60 per million British thermal units (mmBtu), a 30 cent rise.

“The buying is still not strong, but we understand that there are a few players short for summer,” an LNG trader said.

The uptick may not be long-lasting as demand from end-users remained subdued, while production from Australia is also going up, creating additional supply in the Pacific basin.

Traders in Japan and China were largely on holiday this week, with trading activity led by portfolio and trading firms.

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ENERGY intelligence

Ghana: Ghana Gas to expand operations at Atuabo

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hana National Gas Company (GNGC) has revealed its readiness to expand operations at the Atuabo Gas Processing Plant (GPP) and produce about 150 million standard cubic feet of gas per day (mmscfd) to about 220 mmscfd by 2024.

“As a company we are internally discussing all scenarios and when we are ready, we will announce details to the people of Ghana,” Robert Lartery, general manager in charge of Operations at the GPP, Robert Lartery, said during a visit by the Parliamentary Select Committee on Mines and Energy to Atuabo.

Ghana Gas, as part of the expansion programmes, had extended pipelines to the Prestea enclave which would also reach Kumasi to feed into Ghana’s industrialisation plans, satisfy the domestic gas market and also boost power generation in the country.

“Currently in the Prestea enclave Ghana Gas is undertaking a massive infrastructure expansion and by June this year, another private company can be ready for off-takes of reliable supply of gas, as we look forward for the expansion of the gas processing plant,” Lartey added.

The GPP plant, he explained, receive 150 mmscfpd of raw gas from offshore

oil fields for production processes, assuring that “safety and security are paramount in our operations.”

Ghanaian engineers had effectively taken over operations from expatriates and were poised to deliver quality work to industry, Lartey said.

Ghana Gas began operations in November 2014 with commercial operations coming on stream on April 1, 2015, and since then the company had laid a good foundation for industry and gas business with the desire to supply affordable and reliable products all times.

Nigeria: Wärtsilä supplying LNG dual-fuel engines for Nigerian plant Strong bids came from Vitol in the Platts market on close (MOC) window. It bid at $5.55 mmBtu for an end June cargo, while lowest offer was from Trafigura at $5.75 mmBtu for a mid-June cargo.

Asian prices have risen from about $4.40 mmBtu in late March, when they were below European gas prices, to trade at a premium, which is now firming.

In Europe, the Dutch June gas price rose around 15 cents to about $4.80 mmBtu, with cargoes in northwest Europe priced at around a 30 cent discount to the gas price.

Gas traders expect European June contracts to be supported by maintenance work on Norwegian gas facilities and fields. Some 50 million cubic metres a day are expected to be out of action in Norway next week and that may double the following week.

“Asian LNG prices are still very much keeping up with what is happening in Europe,” a market source said.

Uncertainty about the development of price correlation between Asia and Europe has left the destination for some cargoes unclear.

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ärtsilä will deliver engines for a power plant serving a cement production facility in Nigeria, the company announced.The 48-MW power plant was ordered by the BUA Group.

Wärtsilä will supply five 34DF dualfuel engines mainly running on liquified natural gas (LNG), but they can switch

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to fuel oil when necessary.

“Wärtsilä was able to offer an attractive value proposition that includes superior technology, high efficiency, and the ability to deliver the needed fuel flexibility,” Magnus Miemois, regional director for Wärtsilä’s energy business, said in a statement.

“We are particularly proud to be part-

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nering with BUA in this project, since they are a dominant player in the Nigerian economy and a major cement producer.”

The plant will operate without connection to grid and provide the power needed to serve the new cement line number 3 at the Sokoto cement production facility. The new line will be the first to run on cleaner burning LNG primarily.

“We cannot compromise on quality,” Abdul Samad Rabiu, executive Chairman and CEO of the BUA Group, said.

“We are known to provide quality products and services, and we recognise that Wärtsilä aligns with this vision of ours.

They have an impeccable track record and can be relied on to deliver as promised. We also look forward to the opportunities this project will create for the local community and its economy The Wärtsilä equipment is scheduled for delivery at the end of 2019, and the new plant is expected to become operational in mid-2020.

This latest in a string of power plant orders that Finland’s Wärtsilä has received from companies in Nigeria will bring the total installed base in the country to 650 MW and more than 7,200 MW in Africa.

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ENERGY intelligence

Egypt: Egypt expects giant solar park to be fully operational in 2019

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gypt expects the 1.6 gigawatt solar park it is building in the south of the country to be operating at full capacity in 2019, the investment ministry said in a statement.

The $2 billion project, set to be the world’s largest solar installation, has been partly funded by the World Bank, which invested $653 million through the International Finance Corporation.

Some parts of the park are already operating on a small scale, while other areas are still undergoing testing.

The solar park is set to generate the equivalent of 90 percent of the energy produced by Aswan’s High Dam. The Benban solar park, named after a Nile River village close to the power plant, is set to be the largest solar plant in the world. The power plant will cover Egypt’s electricity needs and edge it forward on its path to becoming the region’s energy hub.

The project has signed a 25-year contract with the state-owned Egyptian Electricity Transmission Company (EETC), who will buy its electivity at a rate of 7.8¢/kWh, pegged to the value of the US dollar.

Currently, 29 projects have been financed at a total of $1.8 billion, produc-

ing almost 1.5 GW of solar power, on the 14.3-square-mile plot of land. The project is built on an area that receives some of the best sunlight on the planet, Benban is arguably the second best spot for solar power plants, behind the Chilean desert highlands.

Egypt aims to meet 20 percent of its energy needs from renewable sources by 2022 and up to 40 percent by 2035.

Renewable energy currently covers only about 3 percent of the country’s needs.

“Egypt’s energy sector reforms have opened a wider door for private sector investments,” David Malpass, World Bank President said during his visit to the site alongside Egypt’s Investment Minister Sahar Nasr. Egypt is on a drive to lure back investors who fled following the 2011 uprising with a slew of economic reforms and incentives the government hopes will draw fresh capital and kickstart growth. Most of the foreign direct investment Egypt attracts goes towards its energy sector.

South Africa: Chinese loan to Eskom not in jeopardy

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outh Africa’s public enterprises ministry said that a China Development Bank (CDB) loan to struggling state power company

Eskom was not in jeopardy.

Eskom had expected to draw down 7 billion rand ($481 million) from a $2.5 billion CDB loan facility by late March,

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but South Africa’s finance ministry said in a report to parliament last month that the drawdown had been delayed.

The delay meant South Africa had to bring forward a planned bailout for Eskom, which supplies more than 90 percent of the electricity in Africa’s most industrialised economy but has been grappling with a severe financial crisis.

The South African government and Eskom are working to ensure the transfer of funds from CDB to Eskom, the public enterprises ministry said in a statement.

“It must be emphasised, for the sake of clarity, that this, or any other loan, is in no way connected to the issue of equity in any of our state-owned enterprises,” the statement said.

The Chinese loan to Eskom was agreed in July last year, during a visit to South Africa by Chinese President Xi Jinping.

Eskom is battling with liquidity problems. The government has promised the utility a bailout of 23 billion rand a year over the next three years, but energy experts say it will need more support.

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Total targets expansion in retail power market

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il major, Total, is picking up about 150,000 retail energy customers a month in France and is on course to hit its 2022 target for the business ahead of schedule, company executives said.

The French energy group is looking to broaden its revenue streams with expansion in a retail power and gas market in which demand is shifting to low-carbon energy from more polluting fossil fuels.

Total has said it plans to invest between $1.5 billion and $2 billion a year on low-carbon electricity.

Rival Royal Dutch Shell, which is expanding its own retail power business, has said it plans to invest the same amount on renewables and low-carbon business.

Total bought Belgium’s Lampiris in 2016 and Direct Energie last year for $1.7 billion, merging the businesses in its push to become a so-called integrated player operating gas-fired, wind, solar and hydropower generation while also selling power directly to retail clients.

The group had set a target of 7 million clients across France and Belgium — about 15 percent of the market — by 2022, up from 4 million currently.

Patrick Pouyanne, Chief Executive and Xavier Caitucoli, the head of Total’s power and gas business in Europe, told journalists that current trends make the target achievable before 2022.

It is now France’s third-largest retail power supplier, behind former monopolies EDF and Engie, and the biggest alternative supplier in a market that also includes Leclerc, Casino and Italy’s Eni. EDF is the market leader with 28.4 million customers, according to data from French energy market regulator CRE. Pouyanne said that Total will leverage its brand recognition and petrol station network to win customers, with plans to offer 1 euro cent for every litre of petrol bought form its French forecourts to the first million clients that sign up for its residential electricity offer from June 1.

The company also plans to expand its power generation capacity, particularly in gas and renewables.

It has four gas-fired plants, plans to buy two others operated by Germany’s Uniper and has made a final investment decision to build another by the end of 2021.

“We will likely not stop there,” Pouyanne said, pointing to European efforts to halt coal-fired generation while France plans to reduce its nuclear power capacity.

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BUSINESS DAY

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ENERGY intelligence

New India-China buyers’ club is budding in oil markets DIPO OLADEHINDE

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s Organization of Petroleum Exporting countries (OPEC) and Russia allies are already yielding positive results with oil price reaching $70, two of the world’s largest oil buyers are teaming up and looking to leverage their power by jointly sourcing crude at a better price.

According to market sources, India and China are close to reaching an agreement to form a bargaining bloc to seek better oil prices from OPEC, who have probably being too busy with its upcoming June 22 meeting to concern itself with that dangerous alliance.

The two countries, which are the hardest hit if prices rise as a result of OPEC’s actions accounts for a combined 17 percent of global oil consumption.

China and India, second- and thirdlargest oil consumers, respectively have been meaning to form a joint front for more than a decade to assert their weight in the oil market, dominated by a producers’ cartel, OPEC. “The timing is right. The boom in US oil and gas production gives us greater

leverage against OPEC,” the Times of India quoted an Indian official as saying last month after the formal start of said talks.

India has long claimed that OPEC is overcharging Asian countries for oil exports at a time when New Delhi’s dependence on oil from OPEC countries is set to increase with the United States unwilling to renew Iranian oil sanctions waivers.

“With oil producers’ cartel OPEC playing havoc with prices, India discussed with China the possibility of forming an “oil buyers’ club” that can negotiate better terms with sellers as well as getting more US crude oil to cut dominance of the oil block,” a tweet from India’s petroleum ministry’s Twitter account said in the middle of last year, when oil prices were rising ahead of the return of the US sanctions on Iran’s oil industry.

At the same time, India and China are exploring potential areas of cooperation in an attempt to further ease tensions against the backdrop of their intensifying geopolitical rivalry.

“China and India should do so to grab more bargaining power to make oil prices more sustainable,” Jawaharlal Nehru University Professor Srikanth Kondawww.businessday.ng

palli told the Global Times in a recent interview, commenting on the benefits of an oil buyers’ club.

India and China might not be alone in this attempt to curb OPEC’s clout on the global oil market. According to Bloomberg’s Carl Pope, Japan and some countries in Europe previously reluctant to take part in any anti-OPEC projects, may now join in, thanks to alternatives to fossil fuels.

Another threat looming though as OPEC+ prepares to meet at its June 25-26th ministerial meeting in Vienna is the internal cohesion of the cartel is being called into question at present, as several major member countries are facing not only external sanctions but threats of a total internal implosion of their respective regimes.

The removal of US waivers for leading oil importers of Iranian oil and gas is putting the Tehran regime under severe pressure. While Trump’s target of reducing Iranian production to zero is unrealistic, the impact of the sanctions is undeniable. No new oil contracts have been reported between Iran and its main clients, China and India, since the sanctions.

Also, Iran’s oil minister warned that

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OPEC is “likely to collapse” because some members of the 14-nation group are working against their fellow producers.

The comment appears to be a thinly veiled reference to Saudi Arabia and the United Arab Emirates.

“Iran is an OPEC member just for its interests and if certain OPEC members want to threaten and endanger Iran, it will not refrain from responding to them,” Iranian Oil Minister Bijan Zangeneh told Shana, the ministry’s news agency, following a meeting with OPEC secretary general, Mohammed Barkindo in Tehran.

Although the two nations stand to benefit from joint action, it may not be easy to collaborate on most strategic matters. The latest opportunity to stand together on Iran sanctions was lost after China and India, top importers of Iranian oil, failed to jointly strategize and act.

In the coming weeks, as analysts focus on production figures, storage volumes and demand, OPEC will be focusing on defusing pressure to increase production, while at the same time the Saudi-led faction will likely confront the Tehran-Venezuela (and possibly Iraqi) axis.

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BUSINESS DAY

finance people appointments

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Sonatrach’s new CEO harps on foreign energy partnerships

Brief

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BOST losing $2m per month

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hana’s Bulk Oil Storage and Transportation Limited (BOST) has lamented a staggering $2 million loss per month as a result of transmission losses.

The company says it is consequently rehabilitating its river vessels to pave the way for the resumption of the transportation of petroleum products by water, effective July 1, 2019.

The river vessels operate mainly on the Volta Lake, and the resumption of their operations would help the stateowned strategic oil storage company to minimise transmission losses and cut back on its trans-

The bigger goal is to invest in one of the biggest pipelines from the Akosombo Depot to the Kumasi Depot, and if this project becomes successful, it would mean that the BRV business would slow down

portation costs.

George Okley, managing director of BOST, said the move was aimed at maximising the company’s revenue from the transportation of products adding that transit losses cost BOST about $2 million every month.

Transit losses, he said, often came about as a result of different factors, some of which sometimes saw some drivers penalised, hence the need to create a platform “where we can all share ideas and find common solutions to challenges confronting us”.

He expressed the hope that the new policy reforms would ensure BOST raked in the needed revenue so as to maintain the country’s strategic stock.

The BOST managing director said with the pipeline being the cheaper mode for the transportation of products, BOST had begun processes to replace the lines from the Accra Plains Depot near Tema to Akosombo which was started some 12 years ago.

“The bigger goal is to invest in one of the biggest pipelines from the Akosombo Depot to the Kumasi Depot, and if this project becomes successful, it would mean that the BRV business would slow down, hence the need to engage stakeholders to buy into the idea and also become partners by taking up equity in the project so as to remain in business,” Okley said. www.businessday.ng

lgeria’s state energy company Sonatrach wants to develop its partnerships with foreign firms to boost output and exports, Rachid Hachichi, its new chief executive said in comments that could reassure investors a week after his appointment.

Algeria, a member of the Organization of the Petroleum Exporting Countries (OPEC) and a major gas supplier to Europe, has struggled to lift production to meet rising domestic demand, while foreign investors have often baulked at contract terms.

“Our group will continue to develop partnerships with foreign firms seeking to invest in Algeria,” he said in a message to mark Labour Day. “Partnerships are an essential element in our development strategy, especially in the field of production and exploration,” he said.

Sonatrach has a deal with Britain’s BP and Norway’s Equinor to develop Algeria’s shale gas reserves, but industry sources said in March that talks with Exxon Mobil on developing a gas field had stalled.

Algeria produces an estimated 1 million barrels per

day of crude and 135 billion cubic metres a year of gas. Oil and gas account for 94 percent of Algeria’s total exports and 60 percent of the state revenues.

“We will work to improve the professional climate so that everyone will have a favourable environment,” Hachichi said, after workers at some

Sonatrach oil and gas facilities have protested to demand higher wages and better working conditions.

Algeria has been buffeted by mass anti-government protests since February 22. Demonstrators have demanded a clear out of the elite that has ruled the North African nation since independence in 1962.

Buffett may tip scales on Anadarko battle

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arren Buffett’s intervention in Occidental Petroleum’s $37 billion unsolicited bid for Anadarko Petroleum may tip the scales in the oil industry’s biggest bidding war in decades.

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In a stunning escalation of the contest for Anadarko, Buffett’s Berkshire Hathaway Inc. disclosed plans to inject $10 billion into Occidental in exchange for preferred stock and warrants. The bombshell landed in the midst of Anadar-

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ko board deliberations about whether Occidental’s offer is superior to a lower but already agreed-to deal with Chevron.

The arrangement was announced just two days after Occidental’s corporate jet flew to Buffett’s hometown of Omaha.

It’s contingent on the deal for Anadarko closing and would be his biggest investment in more than three years aside from Apple Inc. It also answers the question about what to do with a swelling cash pile just ahead of Berkshire’s annual shareholder meeting.

Furthermore, the transaction is a major sign of approval for the future of the Permian Basin, the world’s largest oilfield, from an investor who has previously plowed dollars into oil refiners, drillers and Canada’s oil-sands.

Chevron stuck to its guns following Buffett’s move. “We believe our signed agreement with Anadarko provides the best value and the most certainty to Anadarko’s shareholders,” Kent Robertson, Chevron company spokesman said.

Wednesday 08 May 2019

BUSINESS DAY

marketinsight

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ENERGY intelligence

Oil edges up after strong economic data, but ends week lower

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il prices inched up as strong US economic data boosted demand sentiment and as production losses in sanctions-hit Iran and Venezuela tightened the market.

Still, oil futures recorded weekly declines after a jump in US crude inventories reported.

Brent crude oil futures settled at $70.85 a barrel, rising 10 cents.

The global benchmark shed 2.6

percent for the week, breaking a five-week winning streak. US West Texas Intermediate (WTI) crude futures closed at $61.94 a barrel, up 13 cents, while losing about 3 percent during the week, its second straight weekly decline. Gains in the oil market, however, were capped by report that showed US crude inventories jumping to their highest since September 2017 and production hitting a record 12.3 mil-

lion barrels per day last week.

Exports of US crude broke through 3 million bpd in November for the first time and peaked at 3.6 million bpd earlier this year, according to data from the Energy Information Administration.

US sanctions against Iran and Venezuela and supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, helped to tighten the market and support prices.

Russia, part of OPEC+, is cutting oil output by as much as 10 percent for several days as its exports suffered from disruptions due to contamination of crude in a major pipeline to Europe and at a key port for shipments, industry sources said.

Production from Saudi Arabia could edge higher in June to meet domestic demand for power generation, though output will remain within its quota in the supply pact, sources familiar with the kingdom’s policy said.

The world’s top crude exporter is expected to produce about 10 million bpd in May, slightly higher than in April but still below its 10.3 million bpd quota under the OPEC-led deal, industry sources said.

Qatar says tightening Iran sanctions harms oil consuming nations

Q

atar has spoken out against Washington’s decision to block all exports of Iranian oil, saying unilateral sanctions were unwise because they hurt the

countries that rely on the supplies.

The United States has demanded that buyers of Iranian oil stop purchases by May 1 or face the prospect of sanctions,

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55

ending six months of waivers that had allowed Iran’s eight biggest customers, most in Asia, to import limited volumes.

“The sanctions should not be extended because they have an adverse impact on countries benefiting from Iranian oil,” Sheikh Mohammed bin Abdulrahman al-Thani, Qatar’s foreign minister said.

“In Qatar, we do not believe unilateral sanctions bring positive effects for crises which must be solved through dialogue and dialogue only,” he said.

Qatar, the world’s leading exporter of liquefied natural gas, is at odds with other Gulf Arab states who are strong supporters of tighter US sanctions on Iran.

Saudi Arabia and its allies accuse Qatar of supporting terrorism, which Qatar denies. They cut trade and diplomatic ties with Qatar in 2017, a boycott that Qatar says is aimed at curtailing its sovereignty.

Qatar, which despite its large gas exports sells comparatively little oil, quit OPEC in December, a move seen as a swipe at the organisation’s de facto leader Saudi Arabia.

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OPEC Flakes

US confident OPEC will meet any supply gap from

T

he world’s major oil producers can offset any potential supply disruption as tougher US sanctions remove more Iranian barrels from the market, the US Department of Energy (DOE) said.

Rick Perry, Energy Secretary met in London with Saudi energy minister Khalid al-Falih and International Energy Agency Executive Director Fatih Birol, the same day US sanctions waivers expired for eight importers of Iranian oil.

“Secretary Perry remains actively engaged with his counterparts from the world’s major oil supplying nations and remains confident in the ability of these nations to offset any potential disruptions in global energy markets,” DOE said in a statement.

Iran’s top oil customers, China, India, Turkey, South Korea and Japan, no longer hold “significant reduction exemptions” from the US State Department, allowing them to continue oil

trade with Tehran.

When it announced the tougher stance April 22, the Trump administration said it had received assurances from Saudi Arabia and UAE that the major OPEC producers would ensure adequate supplies to replace additional Iranian barrels removed from the market.

But Gulf OPEC officials have said they had yet to commit to any production increase and were waiting to see how the tighter sanctions affect the market.

Barkindo says OPEC tries to de-politicise oil

T

he Organization of the Petroleum Exporting Countries (OPEC) tries to de-politicise oil, the producer group’s secretarygeneral was quoted by the Iranian oil ministry as saying, following accusations by Iran that the United States is using oil as a weapon against Tehran.

The United States has demanded that buyers of Iranian oil stop purchases by the start of May or face sanctions, ending six months of waivers that had allowed OPEC member Iran’s eight top customers, most of them in Asia, to import limited volumes.

Bijan Zanganeh, Iranian Oil Minister warned that nations that use oil as a weapon will bring about the collapse of the OPEC. “I have told my colleagues at OPEC that you must leave your passports home when coming to this organisation,” Mohammad Barkindo, OPEC Secretary-General was quoted as saying.

OPEC and other oil producers in the cuts pact are following developments in Venezuela and other countries to ensure an energy crisis is avoided, Secretary General Mohammed Barkindo said.

“Our objective remains as an organization that we will continue to work with all mem@Businessdayng

ber countries as well as the participating countries in the declaration of cooperation to avoid any energy crisis in the world despite current travails in several of our member countries,” Barkindo told journalists in Tehran, referring to the agreement by OPEC and other producers led by Russia to reduce oil output.

With two OPEC members under sanctions, Iran and Venezuela, “we are conscious of the times that we have found ourselves. But the good news is that talking to all member countries we remain committed, we remain focused on our principal objective as an organization to ensure stability at all times in n the oil market, to ensure that we avoid any energy crisis that will impact on the global economy.”

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Wednesday 08 May 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

OPEC faces new challenges. Nigeria needs to pay attention STEPHEN ONYEKWELU

O

PEC’s recent supply cuts had sent oil prices to a five year high of over $70 dollars per barrel with the American Bank Merrill Lynch projecting prices will probably hit the $100 p/b mark by the three months ending December, 2019.

This was a remarkable feat in terms of its compliance rate of over 80 percent and success at stabilising the oil market and shoring up prices. But OPEC’s influence may be waning.

In December 2016, the 14-nation Organisation of Petroleum Exporting Countries made a Declaration of Cooperation after a joint ministerial meeting with 11 non-OPEC members, including Russia (OPEC+) to initially cut oil supply by 1.8 million barrels a day, in order to suck out glut. This was reduced to 1.2 million barrels of per day in December 2018.

Similarly, in May 2017 another joint Ministerial meeting extended the voluntary production adjustment for another nine months starting July 1, 2017. In November, the OPEC+ agreed to keep the production cuts for the entirety of 2018.

However, the plot of the story is

changing in 2019; with both OPEC and non-OPEC member countries getting paranoid and reassessing benefits accruing from the Declaration. Russia is reconsidering her commitments to the deal. Nigeria needs to pay more attention at this point too. Three factors currently threaten sustainability of the 58-year-old oil cartel.

First, Donald Trump, president of the United States of America ended oil import waivers on May 01, which were granted to some countries to enable them buy crude oil from Iran, despite Washington’s sanction on the OPEC founding member nation. This has sent oil prices to their highest since November. This has not sat so well with Tehran and the oil minister has resurrected questions about possible collapse of the organisation.

“Those who use oil as a weapon against two founding members of OPEC are disturbing the unity of OPEC and creating the death and collapse of OPEC and the responsibility for that with them” Bijan Zanganeh, Iran’s oil minister said in response to Trump’s administrations latest sanction moves.

The US has demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers that had allowed Iran’s eight

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biggest customers, most them in Asia, to import limited volumes.

Secondly, bidding wars between Chevron Corp and Occidental Petroleum Corp in the Permian Basin, US is changing the shale oil landscape - providing shale producers and production with new, larger economies of scale, which will lead to bigger volumes of shale oil flowing into the market and pushing down prices. This move, the OPEC will have little control over.

Occidental Petroleum Corp on April 24, offered $38 billion for Anadarko Petroleum Corp, a bid that topped the $33 billion offer by Chevron Corp. As of year-end 2018, Anadarko Petroleum Corp, an independent Exploration and Production company had 1.47 billion barrels-equivalent of proved reserves.

Analysts have said they expect further industry consolidation. Small oil producers revolutionalised the sector through advances in horizontal drilling and fracking, but their stock prices have languished with investors pressing higher returns.

The Permian produces about 4 million barrels per day and is expected to hit 5.4 million bpd by 2023, according to consultancy firm, HIS Markit, more than the total production of any OPEC country other than Saudi Arabia.

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A third although remote factor threatening OPEC’s future is the No OPEC (NOOPEC) bill in the US. The bill seeks to open OPEC to antitrust lawsuits. The legislation would change US antitrust law to revoke the sovereign immunity that has long protected OPEC members from US lawsuits.

President Trump’s administration looks determined to increase oil flow and willing to explore every option.

“Spoke to Saudi Arabia and others about increasing oil flow. All are in agreement” he said on his Twitter handle, April 26.

OPEC’s share of world crude oil reserves as of 2017 was 1.214 trillion barrels, representing 81.89 percent. NonOPEC oil reserves hold the remaining 18.11 percent, which is 268.56 billion barrels. Nigeria contributes 3.10 percent to the OPEC basket.

However strong a position the Organisation looks in terms of crude reverses, it is past time for Nigeria to start exploring alternative uses for its oil, especially in areas where there are no immediate substitutes for oil such as the petrochemicals. A pathway Saudi Arabia has taken with its recent acquisition of the largest petrochemical company in the Middle-East, SABIC, a global leader in diversified chemicals headquartered in Riyadh.

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Wednesday 08 May 2019

BUSINESS DAY

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Wednesday 08 May 2019

BUSINESS DAY

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Wednesday 08 May 2019

BUSINESS DAY

59

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 07 May 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

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Change

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 252,371.10 7.15 2.88 349 53,691,748 UNITED BANK FOR AFRICA PLC 229,136.12 6.60 -1.49 222 40,515,890 ZENITH BANK PLC 646,767.77 20.55 -1.67 394 22,110,161 965 116,317,799 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 267,419.93 7.45 0.68 182 4,505,991 182 4,505,991 1,147 120,823,790 BUILDING MATERIALS DANGOTE CEMENT PLC 3,084,331.84 181.00 0.55 130 1,016,488 LAFARGE AFRICA PLC. 177,185.75 11.00 - 49 308,461 179 1,324,949 179 1,324,949 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 341,239.00 579.90 - 13 10,208 13 10,208 13 10,208 1,339 122,158,947 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 1 20 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 1 20 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 100 3 140 3 140 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 3 140 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 3 25,000 OKOMU OIL PALM PLC. 66,773.70 70.00 -2.78 32 430,808 PRESCO PLC 58,000.00 58.00 - 8 60,525 43 516,333 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,770.00 0.59 -4.84 18 840,652 18 840,652 61 1,356,985 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 - 0 0 JOHN HOLT PLC. 182.90 0.47 - 2 377 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 47,964.63 1.18 -5.60 118 8,974,536 U A C N PLC. 19,880.95 6.90 -1.43 158 10,124,246 278 19,099,159 278 19,099,159 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 32,868.00 24.90 -7.61 24 252,588 ROADS NIG PLC. 165.00 6.60 - 0 0 24 252,588 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 -1.96 10 367,953 10 367,953 34 620,541 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,196.18 1.43 - 6 205,757 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 109,519.14 50.00 - 27 39,835 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 7 6,670 NIGERIAN BREW. PLC. 527,795.54 66.00 -0.08 75 3,333,316 115 3,585,578 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 80,000.00 16.00 -9.86 218 6,329,152 DANGOTE SUGAR REFINERY PLC 165,000.00 13.75 -1.79 53 563,380 FLOUR MILLS NIG. PLC. 66,016.11 16.10 -0.31 79 1,336,882 HONEYWELL FLOUR MILL PLC 9,278.33 1.17 -0.85 27 1,329,518 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 47,557.42 17.95 - 34 120,703 UNION DICON SALT PLC. 3,321.07 12.15 - 1 1,000 412 9,680,635 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,096.76 10.70 -9.32 61 886,442 NESTLE NIGERIA PLC. 1,204,837.50 1,520.00 - 75 73,201 136 959,643 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 10 VITAFOAM NIG PLC. 4,990.87 3.99 - 13 320,237 14 320,247 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 35,734.29 9.00 0.56 28 390,724 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 21 54,476 49 445,200 726 14,991,303 BANKING ECOBANK TRANSNATIONAL INCORPORATED 183,495.51 10.00 - 35 81,071 FIDELITY BANK PLC 52,734.13 1.82 -4.21 106 7,811,342 GUARANTY TRUST BANK PLC. 971,228.91 33.00 0.15 215 21,251,184 JAIZ BANK PLC 15,910.69 0.54 - 33 381,000 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 76,294.61 2.65 - 19 604,560 UNION BANK NIG.PLC. 199,477.16 6.85 -2.14 28 481,341 UNITY BANK PLC 9,351.47 0.80 - 2 70,000 WEMA BANK PLC. 27,773.62 0.72 -1.37 30 2,399,621 468 33,080,119 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,197.65 0.75 -5.06 40 2,398,895 AXAMANSARD INSURANCE PLC 19,425.00 1.85 -7.50 22 997,455 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 7.41 5 734,500 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 10.00 19 7,001,653 GOLDLINK INSURANCE PLC 1,364.98 0.30 -9.09 1 2,500,000 GUINEA INSURANCE PLC. 1,228.00 0.20 - 4 285,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 -3.33 15 2,427,460 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 1 50,000 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 2 76,000 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 - 5 1,008,000 NEM INSURANCE PLC 12,620.40 2.39 -1.65 44 4,460,951 NIGER INSURANCE PLC 1,547.90 0.20 - 4 40,428 PRESTIGE ASSURANCE PLC 2,529.80 0.47 - 3 3,800 REGENCY ASSURANCE PLC 1,733.88 0.26 4.00 20 5,582,897 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 4.00 15 1,210,703 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 3 266,410 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 11 732,100 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 8 304,100 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 -9.09 3 200,200 WAPIC INSURANCE PLC 5,219.27 0.39 2.56 28 7,043,822 253 37,324,374 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,224.16 1.41 - 21 299,473 21 299,473

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,620.00 3.81 -4.75 49 902,969 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 2.36 25 381,320 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 37,625.15 1.90 -1.05 66 3,103,094 ROYAL EXCHANGE PLC. 1,183.44 0.23 - 4 31,012 STANBIC IBTC HOLDINGS PLC 445,464.05 43.50 - 20 193,011 UNITED CAPITAL PLC 15,600.00 2.60 0.78 73 2,767,448 237 7,378,854 979 78,082,820 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 100 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 -8.00 10 2,842,400 11 2,842,500 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,900.00 4.60 - 3 22,800 GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,762.89 9.00 - 16 34,736 MAY & BAKER NIGERIA PLC. 3,916.28 2.27 -1.30 31 1,526,718 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,158.49 0.61 -8.96 5 208,000 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 3 1,850 58 1,794,104 69 4,636,604 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 923.52 0.26 8.33 139 106,573,882 139 106,573,882 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 100 NCR (NIGERIA) PLC. 648.00 6.00 - 2 20 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 9 86,917 12 87,037 PROCESSING SYSTEMS CHAMS PLC 2,488.91 0.53 8.16 92 11,982,945 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 92 11,982,945 243 118,643,864 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 10 16,605 CAP PLC 23,800.00 34.00 - 16 39,629 CEMENT CO. OF NORTH.NIG. PLC 201,095.56 15.30 - 23 383,146 FIRST ALUMINIUM NIGERIA PLC 886.35 0.42 - 2 235,214 MEYER PLC. 313.43 0.59 - 1 10,296 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 52 684,890 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,276.06 1.86 0.54 8 170,700 8 170,700 PACKAGING/CONTAINERS BETA GLASS PLC. 31,348.24 62.70 10.00 12 82,464 GREIF NIGERIA PLC 388.02 9.10 - 1 50 13 82,514 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 73 938,104 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 2 1,413 2 1,413 2 1,413 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 2,066.69 0.33 -8.33 263 61,232,001 263 61,232,001 INTEGRATED OIL AND GAS SERVICES OANDO PLC 57,184.50 4.60 -5.15 97 2,588,365 97 2,588,365 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 - 24 21,176 CONOIL PLC 13,948.44 20.10 - 34 128,999 ETERNA PLC. 5,086.16 3.90 -3.70 43 619,318 FORTE OIL PLC. 45,521.71 34.95 - 14 59,893 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 6 2,779 TOTAL NIGERIA PLC. 55,002.54 162.00 - 52 68,604 173 900,769 533 64,721,135 ADVERTISING AFROMEDIA PLC 1,997.57 0.45 - 1 100 1 100 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 5 68,300 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 3 2,720 8 71,020 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 10 IKEJA HOTEL PLC 3,014.25 1.45 -9.37 6 165,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 3 2,359 10 167,369 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 3 21,000 3 21,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 4 15,640 LEARN AFRICA PLC 1,033.74 1.34 - 5 137,288 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 4 1,655 UNIVERSITY PRESS PLC. 793.79 1.84 - 3 13,835 16 168,418 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 7 91,773 7 91,773 SPECIALTY INTERLINKED TECHNOLOGIES PLC 764.54 3.23 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 2 2,000 2 2,000

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BUSINESS DAY Wednesday 08 May 2019 www.businessday.ng

Social Media

India: The WhatsApp election It is the most influential social media platform in many parts of the world — it could also shape a country’s political future FT

S

anjukta Pandey quit her job as a hair and make-up stylist in March to devote herself to Indian Prime Minister Narendra Modi’s re-election campaign on social media.

Ms Pandey, a feisty 32-year-old wearing huge hoop earrings, neon pink lipstick and a tattoo of Mr Modi’s name on her left forearm, now spends her waking hours spreading his election message on WhatsApp and other social media apps.

“I’m online almost 24/7. I don’t go to sleep; we want Mr Modi to come back,” she says. “You won’t see anyone getting inked with Rahul Gandhi’s name.”

India’s ruling Bharatiya Janata party (BJP) is using WhatsApp to wage one of the world’s most sophisticated digital political campaigns, carried out by a vast army of volunteers like Ms Pandey, who are devoted to Mr Modi’s brand of Hindu nationalism.

As internet access surges in India with the proliferation of smartphones and cheap data, more than 300m Indians are now on WhatsApp, making the country by far its biggest market.

While campaigns used to be conducted on TV and at large rallies, WhatsApp has become the central battleground of India’s election, which began on April 11 and will conclude on May 19.

The Indian contest follows a divisive election in Brazil, where far-right candidate Jair Bolsonaro swept into power in October — helped in part by a wave of toxic rumours and misinformation, much of it spread over WhatsApp. Now India is becoming the latest test case of the capacity of the messaging app, whose millions of small groups of encrypted users are often beyond the purview of electoral authorities or independent fact-checkers, to potentially shape the election in the world’s largest democracy.

For every supporter who says the app has helped bring together families and friends with a cheap communication tool, there are as many critics who fear it has become an impossible to monitor conduit for fake news. “WhatsApp is the echo chamber of all unmitigated lies, fakes and

Opinion Nigerian banks: Listen to M‘ahatma Gandhi!

– Franklin Ngwu P. 37 A delicate fiscal balance – Bongo Adi P. 37

Narendra Modi, Indian prime minister

crap in India, it’s a toxic cesspool,” says Palanivel Thiagarajan, an elected official and head of the IT department of DMK, a regional party in the state of Tamil Nadu who is running against the BJP. “If it were up to me I would say just cut it, there are hundreds of substitutes.”

The messaging app, which has 1.5bn

electoral manipulation.

The report by special counsel Robert Mueller outlined the extensive efforts by Russian actors to manipulate the 2016 US presidential election using Facebook.

It also came under fire when it emerged Myanmar’s military was using the social network to incite violence against the

‘

The messaging app, which has 1.5bn users globally, has risen to popularity particularly outside the US in countries where its parent company Facebook is hoping to grow new revenue streams users globally, has risen to popularity particularly outside the US in countries where its parent company Facebook is hoping to grow new revenue streams.

Claire Wardle, a research fellow at Harvard University and co-founder of First Draft, a non-profit group addressing misinformation on social media, says WhatsApp took off with the explosion of smartphone users in countries such as Brazil, Nigeria and India, where it has become “a primary source of information”.

“These questions about its role in the spread of misinformation are not just to do with elections,” she says. “It’s about WhatsApp’s role in societies, full stop.”

In recent years, it has been Facebook itself which has attracted most of the criticism around the spread of false news and

Muslim Rohingya minority in the country.

But it is WhatsApp, which Facebook bought for $22bn in 2014, which has become the communications platform of choice not just in India and Brazil, but also across swaths of Europe including Spain and the UK. Mark Zuckerberg, the Facebook founder, has said WhatsApp’s intimate form of communication is the future of the Facebook group.

“In the last year or so we have seen a move from Facebook news feed to more private channels, including WhatsApp and Messenger, particularly in places like Brazil,” says Ms Wardle.

Its encryption system means that in contrast with Facebook or Twitter, WhatsApp conversations are impenetrable

even to the company itself, say executives.

But that has made it more vulnerable to misuse, especially in elections, say critics, who argue it has become a platform for spreading campaign-related misinformation.

This risk came to a head in Brazil last year, in what became known as the first “WhatsApp election”. With 120m WhatsApp users in a country of over 211m, the platform was flooded ahead of the October vote with false rumours, doctored photographs and audio hoaxes — much of which helped Mr Bolsonaro. Researchers studying 100,000 images circulating in 347 groups found that only 8 per cent were “fully truthful”. “Misinformation was huge in Brazil. It was an election plagued with fake news that left behind a country split in half by hatred,” says Fabrício Benevenuto at the Federal University of Minas Gerais and a researcher on the impact of the social media network. “The political discussion ended up being reduced to a meme.” In India, the BJP has been the most active of the main parties in trying to use WhatsApp to win votes. “I’ve been trying to reach every household via at least WhatsApp,” says Punit Agarwal, the BJP’s social media co-ordinator for the Delhi area. Mr Agarwal says the party has 74,000 volunteers tasked with spreading its message over WhatsApp. “There was a limited audience last time,” he says. “This time we have a vast audience.” WhatsApp has become the platform of choice for politicians because of its massive reach that goes beyond a party’s loyal voter base, but also because of the lack of gatekeepers. Messages forwarded through the system have no context about where they originate, but benefit from the trust of coming from a contact.

Mr Agarwal denies that the BJP is spreading polarising content, but public WhatsApp data collected by analysts and anecdotal evidence show that Indians are being flooded with propaganda memes, much of it anti-Muslim and critical of the opposition Congress party.

“WhatsApp groups are considered the most dangerous,” says SY Quraishi, India’s former election commissioner. “The disastrous potential of this media is very strong; you’ve seen how rumours floating [around] can cause havoc.” Because of the extensive political participation on WhatsApp in India, the company said it began to plan its election strategy early.

“We know political parties are using WhatsApp to organise, and we decided to do a test run [to monitor it] during the Karnataka election,” says Carl Woog, WhatsApp’s head of communications, referring to regional elections last May. Despite its huge presence in India, WhatsApp only hired its first employee in the country last year. But since then, the app has struggled to contain a torrent of false news in India — from rumours about child kidnappings to fake footage of terrorist attacks and dead bodies — that has contributed to bouts of mob violence and unrest. WhatsApp says it bans roughly 400,000 accounts in India every month.

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