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Focus shifts to pricing of Otedola’s Forte Oil stake sale ... SEC, NSE yet to receive application IHEANYI NWACHUKWU

he price at which billionaire businessman and majority shareholder in Forte Oil Plc, Femi Otedola is selling his stake in the oil company is now a source of concern to many equity holders in the company. Investors are further kept in the dark as both the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) said they are yet to receive Otedola’s application on the proposed divestment of his majority stake in Forte Oil Plc. Otedola’s application to both the market apex and self-regulator is expected to provide details of the transaction, including the price at which the transaction will clear. Forte Oil Plc had in Decem-

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With Teleology fiasco, Nigeria fails yet another investor test

Lack of technical partner threatens 9mobile sale

JUMOKE AKIYODE-LAWANSON & LOLADE AKINMURELE

he damage done to foreign investor confidence with MTN’s row with Nigerian regulators had barely cooled before another sucker

punch was dealt, as a brewing fiasco involving Teleology Holdings and its Nigerian shareholders threatens to taint Abuja’s investment climate. Teleology Holdings acquired 9mobile, formerly Etisalat, last November, after paying some $500 million for the struggling

telco that was dumped by previous investors, Etisalat Group, over a fall-out with a consortium of 13 local creditor banks. Etisalat was said to have defaulted in servicing a $1.2 billion loan taken from the banks. What began with an outburst of optimism for the 9mobile

project has since turned sour after some infighting in the Teleology consortium between the foreign partner led by former MTN CEO, Adrian Wood, and the Nigerian unit, over the business strategy of 9mobile, with the Continues on page 38

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Inside Stocks slide to 19-month low as election jitters bite P. 39

Members of organised Labour, JAF, and Civil Society Organisations at a mass rally from Maryland to the Governor’s Office, Alausa, Ikeja, demanding immediate enactment of N30,000 minimum wage law in Lagos, yesterday. Pic by Olawale Amoo

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Emerging markets to profit from anticipated Fed pausing of US rate hikes ... Nigeria might miss out due to higher volatility DIPO OLADEHINDE

merging markets have been buoyed by hints from Federal Reserve officials that they might slow the tempo of interest-rate increases if the United States’ economic growth continues to decelerate. Rate hikes from the Fed were largely blamed for the poor performance of emerging-market assets through the first three quarters of 2018. However, recent comments by Fed Chairman Jerome Powell have added to expectations the US central bank may adopt a more cautious outlook. Powell told the American Economic Association that the Fed is not on a pre-set path of rate hikes and that it would be sensitive to the downside risks that markets are pricing in. After emerging-market stocks led global equity markets lower in a brutal 2018, analysts are betting that emerging-market asset class may have the largest rebound in the new year with Nigeria expected to miss out due to higher volatility. “TheFederalReserveisreevaluating theirprovision.Theywanttoslowdown tightening in order to give the market some breathing space and allow some economic fundamental to mature,” Nnamdi Olisaeloka, fixed-income brokeratZedcrestCapitalLimited,said. Olisaeloka explained that if that happened, some portfolio managers would begin to look at their undervalue assets in emerging markets some of which might be priced below what seems to be their fair value. “It’s not all emerging markets they would be looking at. They would be more selective this year, especially countries that have strong reserves or good macroeconomic fundamentals, and might not consider countries with volatile issues like Nigeria,” he said. Omotola Abimbola, research analyst at Ecobank, said there is a pos-

sibility emerging markets (excluding China) would possibly outperform developed markets in 2019. “Valuationsarelooking quite cheap compared to last year or two years ago,” Abimbola told BusinessDay. He, however, noted that 2019 would be a very tough year for emerging markets despite the news of pausing US rate hikes. There are other factors like uncertainties regarding trade tension between US and China, expected growth that might probably moderate within as business cycle matures. “For Nigeria, valuations are looking very cheap in the market, PE ratio at record low, while dividend yields are close to a record high. It will still be a very weak volatile year due to investor sentiment,” Abimbola said. The dollar outperformed other currencies in 2018 on the back of the Fed being the only major central bank hiking rates. If it stays on hold in 2019, other currencies such as the euro might benefit. The MSCI Emerging Markets Currency Index rose to its highest level since July on Monday, having risen in eight of the past 10 weeks. The Brazilian real, South African rand and Russian ruble are leading the gains so far this year, with all three currencies appreciating at least 3 percent against the dollar. However, emerging market currencies on Tuesday fell as the dollar saw a modest rebound, while scepticism about US-China trade talks weighed on developing world stocks. “Talks with China are going very well!”President Donald Trump tweeted on Tuesday. Goldman Sachs Asset Management, one of the world’s leading investment managers, says it expects to see improved economic conditions in emerging markets in 2019, thus providing a springboard for the value of regional stocks and currencies.

Lagos moves to increase job losers’ woes with tax on termination benefits IHEANYI NWACHUKWU

agos State government is at it again. This time, the state’s Internal Revenue Service (LIRS) is making efforts to increase the woes of people who lose their jobs by taxing their termination benefits. The LIRS has issued a public notice mandating employers of labour to account for and remit Capital Gains Tax (CGT) on termination benefits and any other capital sum paid to disengaging employees. Already, the appointment of collecting agents for the CGT purposes as contained in the notice became effective from January 1, 2019. The LIRS had in September 2017 issued a public notice maintaining its basis for the tax treatment of terminal and termination benefits. In Nigeria, Capital Gains Tax is 10 percent and it accrues on an actual year basis to all gains accruing to a taxpayer (individual or company) from the sale or lease or other transfer of proprietary rights. Nigeria’s unemployment rate increased from 18.8 percent in the third quarter (Q3) of 2017 to 23.1 percent in Q3 of 2018, according to the National Bureau of Statistics (NBS). “The imposition of CGT on com-

pensation for loss of employment may be regressive in the absence of a threshold. This is because the 10 percent CGT rate will be higher than the effective Personal Income Tax (PIT) rate for very low-income earners. The LIRS should therefore consider a modification of the notice as stipulated under S.43 (1) of the CGT Act to address this issue,” said Taiwo Oyedele, PwC West Africa tax leader. Oyedele said any payment to an employee as a result of the termination of his employment which the employee has not earned as at the termination date qualifies as compensation for the loss of office or employment. “It is obvious by this notice that the LIRS is seeking a practical way of collecting taxes from individuals who may ordinarily not render returns and pay the tax due by way of selfassessment. It is, however, not clear how non-employer agents will comply with the notice regarding other payments that are liable to CGT,” he added. Lasbery Nwaeze, an associate at Lagos-based full service law firm, Blackfriars, had looked at exemptions and reliefs relating to Capital Gains Tax in Nigeria.

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Vice President Yemi Osinbajo (r), with Hadiza Bala Usman, managing director, Nigerian Ports Authority (NPA), during the commissioning of Buhari New Media Centre in Gwarinpa, Abuja, yesterday.

Manufacturers invest N4.43trn in 42 months amid high interest rate ... ask for lower interest costs ODINAKA ANUDU & GBEMI FAMINU

igerian manufacturers invested N4.43 trillion between January 2013 and June 2018, despite borrowing at a doubledigit interest rate of between 20 and 21 percent within the period, according to a survey done by the Manufacturers Association of Nigeria (MAN). The investments were made mostly in agro processing, cement, metals, steel, plastics, vehicle assembly, textile, among others. The biggest beneficiaries of these investments are Ogun, and Lagos comprising Ikeja and Apapa industrial zones. The survey shows that in the first six months of 2018, manufacturing investment stood at N305.56 billion, which is a 7.2 percent decline from N329.28 billion recorded in the corresponding half of 2017. But when viewed against the second half of 2017, the figure represents a 72.9 percent rise from N176.69 billion obtained within the period. Manufacturers have been bullish on the Nigerian economy despite tough business environment and high production costs. Forty percent of manufacturing expenditure goes to the provision of alternative energy, with about 30 percent spent on logistics, manufacturers say. They have asked for 5 percent to 9 percent interest to mark up their investments. They add that the Bank of Industry should be recapitalised to make more money

available for investments. Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 14 percent. But deposit money banks lend as high as 30-35percent,accordingtoBusinessDay checks. Manufacturers say they were charged 22.9 percent in the first half of 2018,representing0.25percentagepoint higherthan22.65percentrecordedinthe corresponding half of 2017. The Nigerian economy emerged from recession in 2017, which led to the shutting down of over 50 firms and crippling of many others, according to MAN. Inflation rate remains high at 11.28 percent. “We need to know that there is a strong nexus between political stability and economic progress. We should not create a situation where citizens and investors (domestic and foreign) lose confidence in the state institutions,” Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and Industry, said in 2018, while analysing the impact of elections on investments. In 2014 alone, new investors such as Shongai Technologies Limited, Ijako in Sango-Otta, Apples and Pears Limited, Ceplas Farms Limited, Greenlife Bliss Healthcare Limited, and Sumo Steel Limited berthed in Ogun. Even Procter &Gamble (P&G) set up a diaper plant in Agbara within that year, but shut down in 2018 owing to high production costs. Fidson Healthcare, May & Baker, Pure Chemicals, Eagle Packaging,

Nycil Limited, and Dufil made significant investments in the Nigerian economy within the period. Less than six months after commissioning its 1.5 million metric tonnes per annum (mtpa) Kalambaina Cement Plant in Sokoto State, BUA Cement has completed its newest Obu plant in Edo State, which has a capacity to churn out 3 million mtpa of cement. This brings the total capacity of BUA Obu cement operations to 6 million tonnes and moves the entire group’s installed capacity to 8 million mtpa. “We have built a 32-megawatt multi-fuel captive power plant and a coal mill. To put this in perspective, this new plant will be generating more power than is currently generated by the entire Sokoto State,” Abdul Samad Rabiu, chairman and CEO of BUA Group, said in Sokoto in 2018. Beloxxi, on February 9, 2018, launched the second and third phases of its biscuit lines in Agbara, Ogun State. Beloxxi Industries is one of the largest biscuit makers in Nigeria with a capacity to produce 40,000 metric tons (MT) per annum, amounting to 28 million cartons. The biscuit firm in 2016 closed an $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is raising the company’s capacity from 40,000MT to 80,000MT while the staff strength is over 3,700.

•Continues online at www.businessday.ng

Nigeria’s revenue, FX suffer as World Bank downgrades global growth to 2.9% ... as trade, investment weaken ... further drop in prices, demand for crude oil anticipated HOPE MOSES-ASHIKE

igeria may see further drop in crude oil prices and demand as the World Bank on Tuesday projected the global economic growth to soften from a downwardly revised 3 percent in 2018 to 2.9 percent in 2019 amid rising downside risks to the outlook. The 2.9 percent global growth rate is lower than the World Bank’s estimate

and forecast growth rate of 3.1 percent for 2017 and 2018 which was released in its Global Economic Prospects report (June 2018 Edition). It is also lower than the forecast of 3.0 percent released in the same report for 2019. “The trade war between US and China may be responsible for this downward review. Slow global growth may lead to a drop in the demand for crude oil and subsequently drop in crude oil price. This

may reduce the revenue and foreign exchange earnings for Nigeria,” Ayodele Akinwunmi, head, research, FSDH Merchant Bank Limited, said. These developments, Akinwunmi said, may cause currency weakening, rising inflation rate and increase in the interest rate and yields. In addition, it may also lead to other macroeconomic instability in Nigeria due to significant drop in foreign direct

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Wednesday 09 January 2019

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Nigeria passengers to benefit from IATA’s new payment system for air tickets IFEOMA OKEKE

… as travel agents decry new system

assengers travelling in and out of the country will soon benefit from a new payment method for air tickets introduced by the International Air Transport Association (IATA) that offers access to a new, simpler method of payment that is highly secured. And for airlines, the advantages of IATA Pay include cheaper payment option compared to other alternatives, highly secure, faster cash flow with instant/near instant payment to the merchant and simpler payment process resulting in fewer lost sales, the organisation said yesterday in a statement. IATA announced the successful completion of the first “IATA Pay” ticket purchase transaction in a live test environment. The transaction was conducted in partnership with ipagoo, a UK-based fintech company. This is as airlines globally

spend nothing less than $8bn on card payment cost annually. IATA Pay is an industry-supported initiative to develop a new payment option for consumers when purchasing a ticket directly from an airline website.It is made possible by the European Commission’s second Payment Services Directive (PSD2), and the UK’s Open Banking regulation. These regulations encourage use of so-called direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant. IATA assured that this method offers an extremely high level of security to both user and recipient and can be instantaneous. However, a travel agent who craved anonymity told BuisnessDay that this payment option would not benefit travel agencies in Nigeria, as it encourages travellers to bypass them by buying tickets

directly from airline websites. “IATA wants the local airlines to consider this option and go with it. What is the benefit of this for travel agents from whom IATA collects annual dues? What they are saying is that people should go to website and book their tickets. “IATA collects money from us to renew our licence, to use their platforms and other commissions, yet they want people to go and buy tickets directly from the website. This cannot benefit travel agents in anyway,” the travel agent said. IATA said its role in the new payment system is to develop an industry solution enabling airlines to make this payment option available on their websites. The live test conducted with ipagoo was done under the UK’s Open Banking framework with IATA Pay pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines and Emirates.

Education reform: AAU Ekpoma prepares for take-off of Tianjin varsity’s Chemical Engineering programme

s part of the unfolding reforms initiated by the Governor Godwin Obasekiled administration in the education sector in Edo State, all is set for the mounting of a Department of Chemical Engineering at the Ambrose Alli University (AAU), Ekpoma, in partnership with Tianjin University, China’s oldest higher institution. According to Governor Obaseki, the partnership with the Chinese university is targeted at promoting Research and Development (R&D) and the strengthening of capacity at institutions of higher learning in the state. The new department, expected to kick off in the first quarter of 2019, is an offshoot of the deal for the state’s 5,500 barrels per day (bpd) modular refinery

project, which will be established in Ikpoba Okha Local Government Area of the state. The state government has already approved N700 million seed fund for the project, which will pave way for the construction of the first refinery project in the state. The modular refinery is to be built by a Chinese consortium, comprising Peiyang Chemical Equipment Company of China (PCC), a world-leading modular refinery company; Sinopec International Petroleum Service Corporation (SIPS), which is a subsidiary of Sinopec, a top chemical giant in the world, and African Infrastructure Partners (AIP), a Nigerian infrastructural company. Confirming that modalities are being fine tuned for the take-off of the department

at AAU, Ekpoma, Ignatius Onimawo, vice chancellor of the university, said the institution was concluding plans for the kick-off of the department. According to Onimawo, “We have created several more functional departments including the Department of Business Education and Human Nutrition and Dietetics. We have in the pipeline a Department of Chemical Engineering which is expected to take off early 2019, as soon as the nitty-gritty of linkage with a Chinese University is concluded.” The governor inaugurated new Governing Council to lead its new vision for AAU, Ekpoma, and had assured of providing the required resources to strengthen the institution’s capacity to produce quality manpower for Edo State and Nigeria.

CIAPS commits to improved 21st Century practices for Pas, executive assistants KELECHI EWUZIE

entre for International Advanced and Professional Studies (CIAPS), the first paperless academic institution in Africa, says it is committed to improving the performance of personal assistants and executive assistants to meet 21st Century practice using the right training programme. Anthony Kila, CIAPS centre director, observes that one of the important roles that a lot of people dangerously underestimate is that of personal assistants and executive assistants. According to Kila, “It is a shame that too many people don’t realise that a huge frac-

tion of success and failures of senior managers and companies can be attributed to their personal assistants and executive assistants. As a matter of fact, I am convinced that to predict the performance of an executive and an office, part of what you need do is just to observe the assistants.” Announcing the hosting of a programme scheduled for January 29, which will draw experts across Nigeria and other African countries to deliberate on the role and responsibilities of PAs and Executive Assistants of the future, Kila said the programme had been designed bearing in mind the need of and with a lot of inputs from company chairmen and directors, ministers and com-

missioners, legislators, advisers and top consultants. The programme is an initiative of the CIAPS, with input from ECAPS, Cambridge, The Global PA Association London and The Executive Assistant Network Sydney. He further said as part of the programme, participants would have a special session with a CEO to discuss the practical side of assisting projects, offices and events. Sadie Davies, CIAPS administrator and events coordinator, while also commenting on the programme, said technology was a major factor in the way PAs and executive assistants of the future would perform their role and responsibilities.

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ernthe ical ong was ard, ose t eirt of men ns). lion rian

vey will outh ria, loyemged 8. It per018. ent, rter en? tion the ants reby h. orsouth e to the the eria ntly the ker, tireem. f the egin ates and have

become silent due to any number of reasons, such that it is hard to say whether they still exist. The national Manpower Board, according to the law that set it up, had the following duties, inter alia: i) To determine and advice the government on the nation’s manpower needs in all occupations; ii) To formulate manpower development and utilization policies and programmes in order to ensure optimum implementation of same for the enhancement of the nation’s manpower resources; andiii) To co-ordinate manpower policies and programmes of Federal, State and Local Governments. Many Nigerians will be surprised to hear that there are people doing these roles on behalf of the country today. There is need therefore, to strengthen such institutions wherever they exist and link their output to the real world – the job creating entities in the economy. The traditional apprenticeship system in the private sector can also be made more responsive to the realities in the market. As presently organized, the apprenticeship system, which traders use to groom their members is valuable but unstable. It does not have any proper procedure or legal framework to operate, and depends mostly on the whims of those providing the apprenticeship opportunity to the youth. In that regard, the system lacks stability and standards. Part of the support we could offer the informal sector should be to help with the refinement and formalization of its good inventions, including the apprenticeship system.

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ss Crude Account (ECA)

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saved enough for the future generations. The importance of savings cannot be over emphasized especially when optimally invested. The withdrawal from the excess crude account to make payment for the tranche calls for some questions; 1. Was the money originally collected from States to service the Paris Club Debt deposited into the ECA? 2.Why can’t a special account be created in the Central Bank of Nigeria for such deposit to service debts? Continuously dipping hands into savings before the forming of rainy clouds is likely to cause complications for the future generations. While the debate on the constitutionality of the ECA rages on, more focus should be placed on improving the SWF. The savings in the SWF should be maintained or rather spent on creating a springboard for stable long run growth that will benefit future generations. Today’s satisfaction should not be at the expense of the future. Send reactions to: comment@businessdayonline.com

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comment Small Business handbook

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

t is often said that the Small and Medium Enterprises (SME) sector holds the key to growth in emerging economies like ours. However, that role will be better played when the sector is equipped with relevant competencies and skills it needs to function effectively. In other words, the SME sector must have the capacity and dynamism demanded by the realities of the modern world. The boisterous nature of its members and their abundant energies are necessary but hardly sufficient condition for an effective delivery of its role in the economy. There is an existing apprenticeship system in Nigeria, which has apparently worked very well, unlike most things in the country, especially for those that practice it. But that is only up to a point before it begins to retard progress both for the operators and the entire economy. As it is now, Nigeria cannot boast of an apprenticeship system that meets the need of a technological world that is driven by innovation. We surely need one. The Nigeria apprenticeship system, used mostly by those in the trading business, is

Amuda Toheeb Toheeb wrote via amudatoheeb@ gmail.com and can be contacted on 09092434762

he news broke in the Q4 of 2018 particularly the 19th of December that about $1.68 billion was drawn from the Excess Crude Account (ECA) in the last one month, leaving a balance of $631 million as at the date of the report. Barely three weeks before then, the Minister of Finance, Zainab Ahmed, disclosed at the end of the Federation Accounts Allocation Committee (FAAC) meeting in Kaduna on November 25, 2018, that the balance in the account stood at about $2.319 billion. At the end of the FAAC meeting for December in Abuja on Wednesday, Permanent Secretary, Federal Ministry of Finance, Mahmoud Isah-Dutse, said the money was withdrawn to settle the last tranche of the Paris Club loan refund to states. The handling of the ECA has

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Modernizing the apprenticeship and skill enhancing systems in Nigeria indigenous and essentially home grown. Much of its practices are a result of many years of local practice and experience in the system. Thus, we can say that the apprenticeship system in Nigeria has evolved over time mainly from local experiences and even tradition. Nigeria may actually have one of the strongest apprenticeship systems in the wholesale and retail trading sector in our region. Although local indigenous enterprises, especially in the eastern part of the country, have pioneered and popularized the system, and also survived over the years through the acquisition and the transfer of skills using the apprenticeship system, there has for many years also existed an official but ineffective apprenticeship system. Perhaps, in recognition of the fact that the best way to fight unemployment is to equip those looking for jobs with relevant skills, government took interest in the promotion of technical and vocational skills among the youth, through the apprenticeship system in the military era. The year 1986 marked an epoch in the history of Nigeria’s economic management experience. It was the year in which the Structural Adjustment Programme (SAP) was introduced and the Naira began the downward journey in which it is still engaged. During this period, Nigeria introduced an official element to the apprenticeship system. The SAP implied that many new things began to happen in the country’s economic space – the exchange control law was repealed and the age-old fixed exchange rate was scrapped, deregulation, decentralization and

‘

There is an existing apprenticeship system in Nigeria, which has apparently worked very well, unlike most things in the country, especially for those that practice it. But that is only up to a point before it begins to retard progress both for the operators and the entire economy

’

decontrol became the major policy thrust, and there were signs of increasing entrepreneurial activity, as newly created financial institutions and instruments enhanced access to finance in the informal sector. However, because several sectors of the economy were negatively impacted, shifts began to occur in productivity, output and employment. This situation climaxed in job losses and increasing unemployment. It was at that point that the federal government got more involved with the training and development of Nigerian manpower through skill acquisition and training. The Babangida administration, which was the architect of the SAP, as early as 1986, created the National Directorate of

Employment (NDE). The government set up the NDE following the publication of a revealing statistical survey of unemployment among youths in the country, which was carried out by the Manpower Board, established in 1992 (one of those critical institutions in Nigeria that either disappeared or became part of the private estates of the strong men that control our weak institutions). According to that report, two million people, or ten percent of Nigerian youths at the time, had no jobs. A comparison of that survey result with the current situation will give an indication of how far south things have travelled in Nigeria, especially in the area of unemployment. For instance, youth unemployment rate in Nigeria averaged 23.63 per cent from 2014 to 2018. It reached an all-time high of 38 percent in the second quarter of 2018. The all-time low was 11.70 percent, which occurred in the fourth quarter of 2014. How are the mighty fallen? The NDE organized skill acquisition and internship activities across the county’s rural areas, for participants and operated public works thereby enhancing the skills of the youth. But things have actually worsened. With 38 per cent of the youth still unable to find jobs, it is time to restore, expand and strengthen the apprenticeship system. Part of the drivers of unemployment in Nigeria is not just our failure to significantly expand the economy but also the unemployability of the job-seeker, which we erroneously blame entirely on the formal educational system. The revamp and strengthening of the apprenticeship system could begin with the restoration of the mandates of key institutions like the NDE and the Manpower Board, which have

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Improving Nigeria’s saving culture: Assessing the Excess Crude Account (ECA) continued to receive criticism from various angles. The final tranche was vigorously criticized by the Peoples Democratic Party (PDP). In a statement disclosed to newsmen by the National Publicity Secretary, Kola Ologbondiyan, the party accuses President Buhari of “superintending over the surreptitious withdrawals from the ECA without recourse to the statutory appropriation of the National Assembly...” The Permanent Secretary, Ministry of Finance, Mahmoud Dutse and the Accountant-General of the Federation, Alhaji Ahmed Idris, however also noted that due process was followed and the necessary approvals were gotten It is a clear fact that the country’s oil reserves are depleting. This national asset belongs not just to the current generation but also to the future ones. The rapidly changing dynamics and volatility of the global oil market thereby underscored the need for building material fiscal savings. Hence, the wisdom behind the establishment of ECA

in 2004 to serve as buffer to sustain present and future developmental strides in Nigeria. At times of crisis like when the price of oil nosedive, savings like those in the ECA could be used as a fiscal buffer to mitigate loss in income from either low price of oil or low oil production output. During the global financial and economic crisis of 2008 to 2009, some of the savings were used to administer a fiscal stimulus to the Nigerian economy thus giving it a boost and warding off a recession. In her book, “Fighting Corruption is Dangerous - The Story Behind the Headlines”, Ngozi Okonjo Iweala, the Former Minister of Finance gives a glance on the creation of the ECA and the many criticisms and events that followed. She writes that despite the success of the oil-price based fiscal rule and the Excess Crude Account, governors opposed these mechanisms noting that the ECA was unconstitutional and that all monies therein should be shared with federating units and not saved, relying on Section 162 (1) and (3) of the 1999 Constitution. She

continued, that the counter argument from the Finance Ministry and the Economic Management Team sprung from Section 16 (1) (a)(b)(c) of the Constitution which enjoins the State to amongst others (a) harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy; This and other challenges led to the creation of the Sovereign Wealth Fund (SWF) and the enactment into law of the Nigeria Sovereign Investment Authority act of 2011. $1bn out of the ECA was used as seed fund to kick start our SWF. As at 30th May 2018, Nigeria’s Sovereign Wealth Fund Savings stood at $2.15 billion. The Nigeria SWF is comparably tiny being the eighth-largest exporter of oil in the world as opposed to the funds set aside in Saudi Arabia, Norway and Abu Dhabi, which have more than $600bn in assets as part of their funds. Sadly, it can be said that Nigeria has frittered its oil revenues with large infrastructure deficit, white elephants projects and has also not

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comment Character Matters with Daps

Dapo Akande 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

f we sincerely desire to catch up with the rest of the world as we want to profess, it becomes imperative we abandon our propensity for insular thinking. Old ways of doing things cannot produce new results. We need to combine the best of all worlds; time tested African traditional values with western and eastern concepts. The Japanese approach to education could teach us a thing or two, just as that of the Fins who are gradually phasing out straight jacketed subjects and have instead opted for an amorphous, more fluid problem solving approach to education. This unique approach requires a good understanding of what we currently call subjects and how to collectively apply acquired knowledge of the appropriate ‘subjects’ to solve real problems. Useful, practical and most importantly, applicable knowledge. Going back to the Japanese, their educational model only affirms my position that it’s a grave mistake to regard education simply as a series of academic exercises to enhance cognitive thinking and the like. If anything, its primary role can be said to be a

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Valuable lessons from the Orient ‘ Education worth its

form of induction into what it really means to be a human being. Education worth its salt should teach us to respect the unique value and dignity of every human being. It should lead and urge us to always pursue the path of dialogue, equality and justice. Critically too, it should prepare us to think for ourselves, thereby empowering us to get involved in issues that affect our lives. This forges the solid moral foundation upon which all other building blocks can then be set. That’s why we Christians say, “when the foundation is faulty, what can the righteous do?” Tell me if the following sounds familiar. Policeman shoots man for twenty naira. Lecturer demands sexual favours to give student a pass mark. Contractor in connivance with government official builds substandard road thereby endangering lives, just to maximize profit. Hospital refuses to administer even the most basic First Aid procedure on dying patient unless a hefty deposit is paid; Hippocratic oath turned on its head, conscience seared, humanity long abandoned. Education devoid of a moral foundation speaks equally to Theodore Roosevelt’s observation that, “to educate a man in mind and not in morals is to educate a menace to society” as it does to what the universally revered Indian liberator, Ghandi, referred to as one of the seven devastating social sins, education without character. To elaborate a little on this Japanese model, I will cull some passages from my book, “The Last Flight”, so here we go: “The Japanese are remarkably well mannered people but don’t be fooled,

salt should teach us to respect the unique value and dignity of every human being. It should lead and urge us to always pursue the path of dialogue, equality and justice. Critically too, it should prepare us to think for ourselves, thereby empowering us to get involved in issues that affect our lives

’

it didn’t come by chance. The Japanese Primary educational system places less emphasis on academics and more on developing character. A keen eye is kept on sowing a sense of right and wrong, good and bad, honesty. To put it succinctly, good and decent human conduct. Until a Japanese child reaches the age of ten, he is not subjected to taking any major exam. Instead, emphasis is placed on shaping his character. His mind is intentionally and systematically ingrained with virtues such as good manners, politeness, selflessness,

compassion and a heart which pursues the common good. As one article puts it, ‘the first three years is not for the child’s knowledge or learning but to develop their character’. Good conduct, a direct consequence of good character doesn’t just happen, it must be deliberately and meticulously cultivated. No Japanese school, whether it be Elementary, Middle(Primary) or High School(Secondary) employs janitors. The pupils do all the sweeping, cleaning and even scrubbing of the toilets themselves, ably assisted by their teachers. This is one aspect I love and these are the reasons why. One, because the teachers are not exempt but equally participate in these chores, it doesn’t feel like a form of punishment to the pupils. Two and probably more importantly, it’s a wonderful way of putting the servant-leader concept into practice. As Naija would say, it’s not just by mouth. The children therefore grow up with the understanding that a leader should lead from the front, not just when it’s time to enjoy privileges but also when it’s time to share in burdens and tasks.” It comes as no surprise that Japan is a highly progressive society which can proudly boast of operating the third largest economy in the world while beating it’s chest at having an unbelievably low crime rate. A crime rate which quite honestly puts the USA and most of the supposedly developed western European nations to shame. It’s a highly innovative society where many offices have replaced the stereotypical receptionist with infinitely more efficient robots. A society renowned for producing many of the world’s leading brands in electronics. Brands such as

Sony, Panasonic, Sharp and Hitachi will ring a bell in just about any ear, no matter how remote the community one lives in. Similarly, Japanese vehicles on the most part outnumber all others in many countries of the world. The USA being a case in point. And all this by a people who by design opt to forgo rigorous academic pursuit until the age of ten but instead see wisdom in first inculcating crucial life defining values. This is why on the rare occasion, leaders whether in the political, business or any other sector are found to have soiled their hands or behaved in a way incompatible with their national ethos, are as a rule expected to submit themselves to the public, as it were. This they do via the most visible medium, national television, by profusely apologizing to their compatriots, expressing remorse for their actions and humbly bowing repeatedly in recognition of the greater cause, their society. Unlike the shameful anomaly we have gradually got used to here in Nigeria where an outed criminal today will not only proudly vie for public office tomorrow, but will also find support in numbers; to the Japanese, honour is everything. To close, R.S Peters in his Ethics and Education describes the process of educating as the intentional transmission of something worthwhile in a morally acceptable manner. He went further to say that “education must involve knowledge and understanding such that the knowledge is not inert, in that it characterizes a person’s way of looking at things and he is committed to the positive use of that knowledge.”

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A golden (long-term) opportunity Dan Steinbock Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world. He is the founder of Difference Group. He has served as Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see www. differencegroup.net

hose analysts who believe that fear has made a comeback argue that gold is benefiting as equities slide and investors are increasingly concerned about the economic prospects of the U.S., China, Europe and Japan. Yet, even at $1,290, gold still remains more than 30% behind its all-time high of $1,898 in September 2011 amid the U.S. debt-limit crisis. Although U.S. dollar has not strengthened as much as anticipated, the Fed’s rising rates have contributed to the fall in gold prices. In this view, a reversal may be unlikely because the investor assumption is that the Fed will continue to normalize, though perhaps slower than anticipated. In the postwar era, such tightening meant a strengthening U.S. economy and a stronger dollar. But at the time, American economy was

not haunted by budget and trade deficits or a debt burden. Today, it suffers from both twin deficits and a massive $22 trillion sovereign debt burden. In this view, the Fed’s normalization may not herald increasing stability, but contribute to instability and mixed signals in the U.S. economy. In that case, rising international uncertainty and volatility is likely to support an upward gold trajectory in the longer term. Uneasy markets - and gold Following the burst of the asset bubble in the U.S.(2008), Europe’s debt crisis (2010) and the U.S. debtlimit crisis (2011), markets plunged and gold soared until it peaked at almost $1,900 in September 2011. In the course of the past eight years, these fundamentals have not improved. As central bankers in major advanced economies resorted to ultra-low interest rates and rounds of quantitative easing, markets tanked along with the oil prices, whereas gold soared. That period prevailed as long as central banks pushed cheap money and bought their multibillion dollar assets, while major advanced economies supported their ailing economies with large fiscal stimulus packages. It was great for gold but bad for equities. The great reversal began with the Fed’s tightening in 2015, which boosted markets and strengthened the dollar, but penalized gold and oil, which both tanked. This phase accelerated significantly

even before the Trump era with the expectation of the new administration’s deregulation, privatization and liberalization. Markets soared, gold lingered. However, as Trump’s agenda became constrained by the Mueller investigation and investors grew concerned about tariff threats that became effective last summer, the mood became more volatile and the sentiment more uncertain. Today, Dow Jones remains more than 13% below its October peak Market forces behind upward trajectory After its all-time high, gold has been seen largely as a weak asset until 2016, when it began to bounce, along with the Fed rate hikes. While it has advanced to $1,290, lingering uncertainty has resulted in fluctuations, which have effectively penalized further gains, yet prevented new plunges. Market consensus tends to offer habitual reasons for gold’s upward trajectory. First, market volatility and economic uncertainty are back. Even Trump’s erratic tweets favor gold as a hedge against volatility, which boosts gold prices. And equity market volatility, as measured by the VIX, has tripled in just two months, after a long period of perceived calm. Second, when a solid asset loses almost a third of its value, as gold did between 2011 and 2016, it becomes more cost-efficient. Gold’s average return is now more attractive. Third, there’s the dollar story. Historically, a rapidly-strengthening dollar, typically boosted by rate

hikes, has undermined gold’s gains. However, as the dollar has stabilized since early summer, downward constraints do not work as much against gold. Finally, gold tends to be constrained by rising real rates (interest rates minus inflation). Since rising rates raise the opportunity costs of an asset that does not generate income, gold was expected to languish as the Fed would hike rates. But if real 10-year yields have peaked, as some argue, real rates may no longer pose a critical constraint to gold’s advances. Secular strength in long-term In the long-term, the picture may look different, however. It is the thriving U.S. economy and markets that keeps gold down. But have American fundamentals improved since 2011 debt-limit crisis? After all, today U.S. sovereign debt is twice as large as in 2011. And, according to CAPE (cyclically-adjusted PE ratio), equity valuations are almost twice as high as the historical norm – even amid the government shutdown. Moreover, U.S. economy is no longer the key driver of global growth prospects; China and other large emerging economies are. In long term, secular stagnation is set to broaden across the major advanced economies, which cannot be disguised by hyper-aggressive monetary policies, such as ultralow rates, quantitative easing, or overpriced markets. That’s one reason why several large emerging economies, which today fuel most of global growth

prospects, and major oil exporters, are intrigued by the idea of re-coupling gold with a multilateral currency basket to avoid excessive exposure to U.S. denominated energy and commodity markets. As China-supported One Belt One Road (OBOR) initiatives advance, U.S. dollar is being effectively sidelined by the yuan and other emerging-country currencies. Moreover, over time the OBOR is also likely to have a substantial impact on the gold market as it takes place in regions rich in mining resources and accounts for a vital share of global gold supply and demand. Furthermore, there have been interesting shifts in gold reserves. While advanced economies, such as the U.S. and Germany, still own most global gold reserves, the U.S. has increased its gold holdings in the past decade only marginally, while Germany has been forced to cut its reserves. In contrast, China has tripled its reserves, while Russia has nearly quintupled its gold (after dumping billions of U.S. Treasuries), despite rounds of sanctions. As some 90 percent of the physical demand for gold comes from outside the U.S., mainly from large emerging economies that are also fueling global growth prospects, gold is on the right side of the future. • Based on an investor briefing on gold prospects amid new international uncertainty

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Wednesday 09 January 2019

De-industrialization and ease of doing business

espite the harsh economic conditions in the c ou nt r y , t h e re appears to be progress in one area of the economy at least : The ease of doing business. In 2015, Nigeria ranked 170th in World Bank’s ease of doing business. However, by 2017, Nigeria’s ranking has improved considerably to 145th. However, despite the improvement, multinational companies operating in Nigeria and other businesses do not seem to share that optimism as they continue to close shop and leave Nigeria in droves with all of them citing the harsh business environment. The shut-down of Procter & Gamble’s $300 million consumer goods plant in Agbara in July 2018 reflects the challenges of doing business in Nigeria. In 2014, P&G set up a diaper line in Agbara, Ogun State, tapped as biggest US non-oil investment in Nigeria. Four years down the line,

the company packed up, citing unusually harsh operating business environment. But P&G is not alone. According to Manufacturers Association of Nigeria, about 272 manufacturing plants were shut down across the country in 2016 alone. Truth is: There has been near collapse of infrastructure in Nigeria and it is hurting businesses badly. For instance, many businesses now groan under intense pain due to overhead costs incurred in providing alternative infrastructure like power. According to data from the Manufacturers Association of Nigeria, manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018. This is over 100 percent higher than what was incurred in the previous four halves. Other challenges faced by companies operating in Nigeria are bad network of roads, rising logistics cost, multiplicity of taxes, high cost of funds and poor sales resulting from a stunted economy. The roads across the country

make it difficult for businesses to operate smoothly and eff i c i e nt l y . W hat i s m o re, t h e three tiers of government in Nigeria are more interested in competing to impose multiple taxes on businesses than fixing the roads. Manufacturers also told BusinessDay that logistics costs have risen by 50 to 100 percent in the last two years, owing to poor state of roads and lack of a good transport system. Equally, tax experts have put the number of taxes payable by businesses across the country at 54 as against 37 in 2014. President of the National Cashew Association of Nigeria, told BusinessDay that exporters shipping out 1,700 tons of cashew per day in 2014 now manage to ship between 100 and 250 tons. A reduction in export and sales increases cost per unit of product and raises inventory. There is yet no respite in sight for low-cost-seeking manufacturers who would have seen their logistics costs fall had GE not exited a railway contract linking Apapa ports to Lagos mainland.

The combined administrative and distribution expenses of 24 largest manufacturers quoted on the floor of the bourse were up 7.59 percent to N196.61 billion between September 2017 and 2018, albeit lower than November inflation figure. Manufacturers were unable to sell goods worth N149.23 billion in the first half of 2018 after producing goods worth N4.6 trillion. Manufacturers are also not finding borrowing easy as interest rate charged them by banks in the first half of 2018 stood at 22.9 percent, 0.25 percentage point higher than 22.65 percent recorded in the same half of 2017. Then in the midst of all these challenges, the government adds capriciousness, callousness and an extortionist’s attitude in dealing with businesses. South Africa’s MTN Group Ltd, Africa’s largest telecommunications provider is currently in the process of resolving its stand-off with the Nigerian authorities following the CBN’s laughable order on them to cough out $10.1 billion in alleged unpaid taxes and illegal repatriation.

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Wednesday 09 January 2019

BUSINESS DAY

Wednesday 09 January 2019

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Wednesday 09 January 2019

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‘Even if there are no new oil finds, Nigeria’s crude oil reserve will last another 45 years’

Pg. 18

C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

BANKING

GTB, Stanbic IBTC outperform peers in profitability metrics DAVID IBIDAPO

uaranty Trust Bank (GTB) and Stanbic Ibtc boast the best profitability metrics among industry peers and could prove good value for investment in a depressed stock market. According to data pulled from the financial reports of 14 banks listed on the Nigerian Stock Exchange (NSE), GTB and Stanbic Ibtc outpaced other banks with a 27 percent return on equity (ROE) respectively, above industry average of 12 percent and approximately 4 percent return on asset (ROA) above industry average of 1.5 percent. ROE measures of how well a company uses investments to generate earnings growth meanwhile ROA is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources. As at Q3 2018, GTB recorded a net income of N142.22 billion which stood as the largest amount recorded amongst peers in the industry. Its net income was driven by a surge in net gains on financial instruments, other income and a significant decline in net impairment loss

on financial instrument. Stanbic Ibtc on the other hand recorded a net income of N59.75 billion majorly driving by significant increase in non-interest revenue and net impairment write-back on financial assets. Amongst banks that underperformed the industry in terms of ROE was diamond bank which stood as the worst performing bank with an ROE of 1 percent. Others include Union Bank (5%), Wema Bank (5%), First Bank (6%), FCMB (6%), Sterling bank (8%) and Fidelity bank (9%). Meanwhile, of 14 banks listed on the exchange, only 3 banks with the inclusion of Zenith bank outperformed the industry average of return on asset. Zenith bank recorded an ROA of 2.6 percent. BusinessDay analysis of the financial risk or leverage position of Nigerian banks revealed that compared to an industry average of 7.2, six Nigerian banks had ratios above the industry average. This was arrived by dividing the total liabilities of banks by their total equities. These banks include Ecobank (11.48), Sterling bank (9.17), Access Bank (8.6), Wema bank (8.24), UBA (7.8) and Fidelity Bank

L-R: Pilsoon Han, vice president, Good Consulting Group; Emomotimi Agama, head registrar, exchange and market infrastructure, Securities and Exchange Commission (SEC); Mary Uduk, acting director general, SEC, and Choonglyol Lee, head of the South Korea Delegates to Nigeria, during a meeting between SEC and South Korea Delegates in Abuja, yesterday. Pic by Tunde Adeniyi

(7.7). Conventional theory states that if a lot of debt is used to finance growth, a bank could potentially generate more earnings than it would have without that financing. However, amongst tier one banks BusinessDay analysis revealed that

banks with higher leverage ratios above tier one average returned to shareholders lower than tier one average returns to shareholders at 15 percent. Access bank and UBA recorded leverage ratios above industry average at 8.6 and 7.8 respectively but returned 13 percent and 12

percent to shareholders. With the exception of First bank, GTB and Zenith despite lower financial risk recorded 27 percent and 19 percent returns on equity higher than industry average. First bank on the other hand recorded an ROE of 6 percent with a low financial

risk of 6.68. According to stock recommendation report released by Meristem on Monday, eleven banks were recommended as a buy option in 2019 namely Ecobank, FCMB, Fidelity, GTB, Stanbic Ibtc, First Bank, Sterling, UBA, UBN, Wema and Zenith bank.

CONSTRUCTION

Julius Berger takes early lead as stock jumps 15.9% LOLADE AKINMURELE

ulius Berger has got off to a good start this year, with the construction company’s share price rising 15.92 percent since the turn of the New Year. That makes it the best performing listed company year to date, according to data compiled by BusinessDay. Julius Berger shares rose 0.2 percent Monday to close at N23.30 per unit. The share rally comes on the back of the construction company’s improving financial health and rising optimism for

future earnings on the back of the government’s increased focus on in-

frastructure works from roads to bridges. The company erased

losses in the first nine months of 2018, posting profit after tax of N3.4

billion compared to a loss of N349 million in the same period of 2017, according to its unaudited financial statement. Analysis of the company’s financials show a significant reduction in foreign exchange acquisition loss, which fell 34 folds to N91 million as at September 2018 from N3.1 billion a year ago. Investment income of N1.087 billion also impacted the company’s bottom line, given that it made no extra cash in investment income the year before. Martin Brack, the company’s finance director, said in an

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

interview last year that the company was “cautiously optimistic as we look to a brighter future.” “Supported by our strong positioning and project backlog as well as some major positive economic indicators, inflation rates are stabilizing, thus allowing the company to work in a more stable economic environment again,” Brack said. Nigeria expanded 1.8 percent in the third quarter of 2018, as the economy struggles to find its feet after a scathing recession in 2016.

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Wednesday 09 January 2019

Business Event

INTERVIEW

‘Even if there are no new oil finds, Nigeria’s crude oil reserve will last another 45 years’ JAMES SHINDI is the Chief Executive of Brevity Anderson, organisers of the annual Nigeria Petroleum International Summit (NIPS). In this interview with FRANK UZUEGBUNAM, Shindi talks about the forth-coming NIPS2019 conference and exhibition amongst other issues. Excerpts;

James Shindi, Nigeria Petroleum Summit Project Director & chief executive, Brevity Anderson

ow attractive is Nigeria for oil and gas investment? If you take into accountNigeria’scondensates production, the daily average production is over 2 million barrels. There is a very realistic capacity to upscale the country’s proven reserves to40billionbarrelswithinthenextfew years, so this market will continue to remain attractive for a long time. Even if there are no new oil finds, you are looking at another roughly 45 years or so of supply at current rates. However, when you start to look at the huge gas reserves of well over 5 trillion m³, which ranks Nigeria as possessing Africa’s largest gas reserves, the picture looks even better. This surely has to be the investment destination of choice and will continue to be. What is the Federal Government’s objective with the organisation of the annual international petroleum summit? The Federal Executive Council (FEC)tookthedecisiontoapprovethe eventinitscurrentformatwithaprivate sector operator to create an international platform for high-level discussionsaroundthehydrocarbonssector, which helps lead Africa’s response to the current and future challenges in the sector. It is one of the ways Nigeria continues to provide leadership in the sector on the continent. The event, being the property of the Federal Government, also means thatallkeygovernmentdecisionmakersattend;tonetwork,provideanswers toburningquestionsandalso,listento feedbackfromstakeholders.Andwith afocusontechnologyandinnovation, theaimistogrowtheeventintoamust attend meeting for unveiling of major technological breakthroughs. We are alreadystartingtoseethishappenand we at Brevity Anderson feel absolutely delightedtobeonthisjourneywiththe Federal Government. What is the main thrust of this NIPS2019, the 2nd edition? Issues around oil market stability continue to be on every stakeholder’s front burner. When you speak to both producers and consumers, you soon get the sense that price volatility hurts both sides. This sort of market instability means that investment decisionsareeitherdelayedorinsome instances scrapped all together. Since 2014, we have been seeing more and moreproducersturningexclusivelyto short-cycle projects, the long-term effectofthiswilldefinitelyhaveanimpact beyond just oil markets. Within the context of OPEC and APPO,Nigeriacontinuestoplayaleading role in driving talks to help stabilise the market. I would like to stress here and at the same time, commend the Federal Government for deliberately takingconcretestepsaspartofabigger strategy of bringing down production

costs while initiating the right policies to attract additional investment. For example, the Hon. Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu announced a roadmap to attract an additional $10 billion worth of new investment into the sector in Nigeria alone. We are seeing a real shift from just talk to tangible action. Against this background and the technological advancement (or lack of it in some regard), geo-political activities and other very existing topics, the event creates the perfect platform to engage stakeholders as the event will take place at different levels; Government-to-Government, Business-to-Business and Governmentto-Business. Nigeria International Petroleum Summit (NIPS) 2019 will certainly be the place to be between January 27th and 30th 2019. Wearegladtoreporttoyouthatwe havereceivedsignificantamountofinterestfrombothlocalandinternational players,includingnationaldelegations from seven (7) countries, headed by top political and economic leaders. For example, Khalid al-Faliih, the Saudi Energy Minister, during his recent visit to Nigeria, specifically mentioned that Africa and in particular, Nigeria, remains a key partner in forging partnerships and he is looking forwardtoreturningtoourgreatcountry in 2019 both to the NIPS event and to further deepen the special relationship between both countries. Amongst other international delegates, the Norwegian State Secretary (Deputy Minister) for International Development Jens Frølich Holte also confirmed his participation at the NIPS 2019. What are the highlights of NIPS 2019? The next edition of NIPS comes up between January 27th and 30th, 2019. There will be a Ministerial Session, an Executive Round Table, a session on OPEC, Energy Revolution, Offshore & Marine Session amongst other interesting sessions. There will also be some pleasant surprises. I will not be letting the cat out of the bag just yet. However, we are excited to announce that at NIPS2019, we will be incorporating the Honorary Patron’s Dinner/Awards, where Patrons and Corporates will be honoured during a spectacular evening of business, culture and fanfare. The evening is sponsored by Total. Specifically, how many speakers, exhibitors and participants are you expecting to attend? Weareplanningforabout100toplevel speakers from both Nigeria and abroad.Todate,wehaveconfirmedattendance from over 45 countries with morebeingexpected.Weareplanning towelcome3,000participants,including visitors. Certainly, NIPS 2019 will

be the place to be to make those deals happen. For instance, for capacity issues,wehavenowdecidedtomovethe official opening ceremony of Monday 28thJanuary2019totheNiconLuxury Hotel while the main conference and exhibition will still hold at the International Conference Centre, just next door once the opening ceremony is concluded. How will this year’s edition be beneficial to participants and exhibitors? The event will be attended by top decision makers from both the public and private sectors and staged on a government-to-government, business-to-business and government-to-business levels, thus, there will be something for everybody. The reportsfromthiseventgodirectlytothe highestlevelsofdecision-making.This is certainly not just another talk shop. What kind of support are you currently receiving from stakeholders, including OPEC? The support has been tremendous. The OPEC Secretary General, Mohammed Barkindo, led an official delegation to the maiden edition and they will again be attending with an official delegation, along with other key stakeholders in 2019. From an organisationalpointofview,theNNPC undertheleadershipofMaikantiBaru and as the national host has been unwaveringly robust in its drive to make a success of NIPS 2019. Our media partnersareworkingroundtheclockto promotetheeventinnewandcreative ways. The Presidency, PEF, PPPRA, DPR, PTDF, PTI, NCDMB have all been tremendous in their support. Then or course, we have the outstanding Honourable Minister of State Ibe Kachikwu and his excellent team of lieutenants who continue to make themselves available literally round the clock. We have enjoyed the bestpossibleworkingrelationshipany PPP partner could wish for. The civil service structure at Federal Ministry of Petroleum Resources driven by the amiable Permanent Secretary, Folashade Yemi-Esan has been immense. To put this into context, some of our planning meetings have held on weekends and we have had the Honourable Minister of State and the PermanentSecretarysitthroughhours of details each time. The heads of the variousagenciesundertheMinistryof Petroleum have also been exemplary to say the least. The E.S. of NCDMB Simbi Wabote has been colossal. You get the sense that NIPS is indeed a national treasure that is here to stay. What advice do you have for individuals and organisations planning to attend this event? The key advice is for individuals and organisations planning to attend the event to move quickly to secure their spots. For health and safety reasons, there is only so much we can fit into the available space and once we reach that capacity, it will become irresponsibletoeventhinkabouttaking on any more bookings. Our approach is not to view attendees as just customers. We like to seeourselvesastheirpartners,helping tocreatetheenablingenvironmentfor their voices to be heard and for their businesses to flourish. For example, there are companies attending NIPS 2019 who have not been to Nigeria before. These are the sort of stories we are helping to write. I stand to be corrected but we are the only event organisers (or certainly the first) on the continent to deploy a live exhibition booking system that allows exhibitors view the floor plan in real time, select their preferred booth location and book seamlessly.

L- R: Karyn Welsh, CEO of Chartered institute of logistics and transport Australia and Festus Okotie, a Maritime Transport Specialist based in Australia during a meeting in Melbourne,Australia.

“Ehia Erhaboh, Group Head, Transformation and Excellence at Interswitch, mentoring Makoko children in a Masterclass held recently at Adekunle Primary School, Makoko - Lagos “

AbiolaChamp receiving a certificate of recognition as a Fellow of the Institute of Management Consultants from Prof. David Iornem, Director General, IMC.

L-R: Nike Olobayo, human resources/administration manager, C.Woermann Nigeria Limited; Klaus Okunoski, managing director; Dettev Woermann, director, and Segun Olaniyi, financial controller, during a media briefing to mark the company 50th golden jubilee, in Lagos.

Wednesday 09 January 2019

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BUSINESS DAY

CITYFile

Jigawa: C’mtte seizes N100m adulterated farm produce

igawa Consumer Protection Committee said it impounded adulterated farm produce worth over N100 million from 2018 till date. Chairman of the committee, Farouk Abdallah told newsmen that many bags of adulterated hibiscus, sesame and flour were impounded in Mallammadori, Taura and Gujungu areas of the state. “Part of our mandate is to impound adulterated produce and handover the offenders to relevant authorities for prosecution. Recently, we impounded 80 bags of hibiscus at Mallammadori, while the suspects were arraigned in a magistrate court in Hadejia. “Just last week, we seized 40 bags of sesame in Gujungu. The offenders will also be prosecuted.’’ Abdallah warned produce merchants against selling unwholesome farm produce, stressing that anyone caught would be prosecuted. “Our objective is to ensure that the interests of both the buyer and seller are protected. Therefore, we often sensitise traders, through multiple channels, on the need to avoid selling unwholesome produce to the general public. “Our intelligent officers are everywhere and will surely report offenders to us,” he said.

Gombe: NDLEA opens rehabilitation centre

he National Drug Law and Enforcement Agency (NDLEA) is to inaugurate a 24-bed capacity rehabilitation centre in Gombe before the end of January. Aliyu Adole, NDLEA commander in the state, disclosed this on Monday. According to Adole, the centre, constructed by the state government, is being equipped with ICT facilities, fashion centre and recreational area. He said that the state government has also approved three-daily square meal for inmates at the centre and thanked the government for the assistance being given to the agency. “Drug is the problem of our society and for us to have peace, we have to ensure that drug peddlers are out of circulation,” he said. Adole said the agency in 2018 arrested 69 drug dealers, from whom 55 were convicted and 14 still awaiting trial. He said the command sized 257.28 kilogrammes of psychotropic substance and appealed to the public to assist with useful information to track peddlers and cannabis growers.

Benue: Man arraigned for culpable homicide

he police in Benue have arraigned one Emmanuel Okpere, 19, in a Makurdi Upper Area Court II for alleged criminal conspiracy and culpable homicide. Theprosecutor,VeronicaShagee,toldthecourt on Monday that the case was transferred from Obi Division Police Station to the State Criminal Investigation and Intelligence Department (CIID) through a letter on December 27, 2018. Shagee said one Elijah Ogbodo of Ohuma, Obi local government, reported the case December 26, 2018. According to Shagee, the accused, who live in the same address with the complainant, conspired with Abati Idoko, Johnson Odeh, Ogati Akpo and Dennis Onah now at large and beat up Peter Agadaph, 19, to death on Dec 25, 2018. The prosecutor added that during police investigation Okpere confessed to the crime. She said the offence contravened section 97 and 222 of the penal code laws of Benue State. However, no plea was taken for want of jurisdiction. The magistrate, Rose Iyorshe, remanded the accused at Makurdi Medium Prison and adjourned the case to until February 4 for further mention. NAN

Students of Ijaye-Ojokoro Government College rushing to school as they resumed after Christmas and New Year Holiday, yesterday in Lagos. Pic by David Apara

Lagos: Police foil kidnap attempt on 4-year boy ... suspect nabbed JOSHUA BASSEY

he police in Lagos have arrested a 37-year man for an alleged attempt to kidnap a four-year boy in Okokomaiko area of the state. The Commissioner of Police (CP) in charge of Lagos command, Imohimi Edgal, confirmed the incident on Monday, saying that the suspect was arrested following a tip-off. He said: “On January 6, at about

9:55pm, information was received from a credible source that a man was seen around Otun Market Square, in Okokomaiko, a Lagos suburb, holding a little boy in a suspicious manner. “Based on the information, operatives of the command attached to Okokomaiko Division swiftly moved to the location and arrested the suspect. “The suspect later led detectives to the location where he picked the child and the police were able to locate his parents who said that they had been searching for their child and had

never met the suspect before,” he said. The CP said that the case was under investigation, while the child had been reunited with his parents. Meanwhile, four suspects including a fake soldier were arrested by the command’s anti-cultism unit during a routine patrol with a pump action rifle concealed in a Toyota Camry car. The CP said that investigation revealed that the suspects were members of kidnapping syndicate that had been terrorising residents of Ikorodu axis of the state.

Oyo: Govt to prosecute culprits of Ibadan mayhem REMI FEYISIPO, Ibadan

overnor Abiola Ajimobi of Oyo State has vowed to fish out and bring to justice persons involved in various robberies and mayhem across the state. Ajimobi spoke during an on-the-spot assessment visit to areas where mayhem occurred in Ibadan. Recall that no fewer than 28 shops and six houses were burgled and set ablaze by suspected cult rival groups in some areas of Ibadan last weekend. The affected areas were Idi-Arere, Asaka and Oja-Igbo in Ibadan South East, Ibadan South West and Ibadan North East local government areas. Ajimobi, who was represented by his deputy, Moses Adeyemo, during the visit

on Monday, said that the state government would not condone such dastardly act in the state. “Before our administration came on board, this state was known for brigandage, killings and violence. Since we came on board, our administration is known for peace and security. “Those who did this are enemies of government and peace loving people of this state. I assure you that those who did this will never know peace. “We won’t condone it and will ensure those responsible for the crime are apprehended and prosecuted,’’ he said. Ajimobi said that government would support the victims of the violence and urged them not to take laws into their hands. The governor also called on the

parents to ensure proper training and upbringing of their children and wards. Abiodun Odude, the state Commissioner of Police (CP), said that the police had arrested 11 of the culprits. He said among those arrested were four leaders of the suspected cult groups. “The police is still gathering intelligence reports to ensure the real culprits were arrested and prosecuted. Our response to crime has always been timely,’’ he said. Kolawole Sodehinde, a victim, said the incident at Idi-Arere was carried out by some known hoodlums Sodehinde said that the suspected hoodlums had besieged the area with rifle and petrol which they used in perpetrating the dastardly act on Sunday.

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TBMSC, though cancelled, redefines consumer taste for insurer’s capacity Stories by Modestus Anaesoronye

hough the Tier Based Minimum Capital ( TBMSC) policy earlier introduced in the insurance industry in the mid part of 2018 has been withdrawn and cancelled following agitation in some quarters, the impact particularly on consumer choice will linger for a long time. This also places a challenge on operating companies that have low capital to brace up for higher capital to avoid stigma that may defranchise them from certain businesses. The impact is playing out seriously in the market right now; as renewal for 2019 has shown preference for higher capitalized firms particularly in high risks businesses. Consumers through their brokers are placing a caveat, which may likely not favour operating companies with low capital going forward. Eddie Efekoha, president chartered Insurance Institute of Nigeria reviewing the economy recently said he was told of a broker, who said his client had informed him not to place risks with any underwriting firm with less than N9 billion as proposed in the cancelled TBMSC policy. Efekoha who is also the manag-

L-R: Olorundare Sunday Thomas, deputy commissioner-Technical, National Insurance Commission (NAICOM); Tope Smart, chairman, Nigerian Insurers Association; Mohammed Kari, commissioner for Insurance/CEO, NAICOM and Eddie Efekoha, president, Chartered Insurance Institute of Nigeria during one of the industry meetings in Lagos

ing director/CEO of Consolidated Hallmark Insurance Plc posited that with such developments, it is now immaterial whether the industry regulator withdraws the TBMSC policy or not, adding that the policy has opened the eyes of insurance consumers. He said: “What I heard from

our office recently was that there is a broker that said his client has already seen that N9 billion is what is required, so please go and shore up. It is immaterial whether the commission has withdrawn the TBMSC or not. Of course, we are all here in this market, there is a particular transaction in Exxon

Mobil for several years that never respected the N3 billion capitalization and to that extent some of us whose capital were not up to that minimum were excluded. “Of course it is equally a public knowledge that even Dangote for several years did not select underwriters based on the authorized

capitalisation by NAICOM. So for clients to begin agitate, it means that the commission and all of us have whet the appetite of the consumers. So things have to change. I want to thank the commission for seeking the wisdom to suspend or cancel TBMSC,” he said. He noted that the Commission never said the TBMSC was a recapitalisation, stressing that whatever meaning NAICOM gave, was considered differently by operators and that the initiative was a wakeup call for operators to do certain things. “Thanks to the commission because sometime we ignore some certain things that we should do and focus on less important things. The issue of TBMSC has brought about a reawakening in some of us who were already sleeping at that time; that we must do something in order to help our situation,” he said. Efekoha said he is a major beneficiary of the TBMSC, adding that this is because sometimes in a board room, managers do have challenges in getting some policies through. “Some of us needed external force to convince those we work with that there is need to push capital because we Nigerians are fond of looking at our holding control. So, I think that to some of us, it was a motivation. I was part of those who were sleeping, and the commission has reawakened us,” he said.

Swiss Re says insuretech to help global economy resilience report, titled ‘Global Economic and Insurance Outlook 2020,’ the company claimed that major economies are now less wellequipped to rebound from unexpected shocks than they were before the 2008-09 global financial crisis. The report urged policy makers to focus on increasing cooperation at the global level and encouraged a move towards more

private and capital markets solutions to remedy the situation. It added that private market solutions should also be looking to integrate new technologies and data analytics, as well as innovative new products such as parametric insurance, to improve insurance take-up. Re/insurance is a central component of global economic resilience, Swiss Re said, and yet its

latest estimates put the global protection gap for mortality and property risk at $500 billion, or roughly 70 percent of the size of the respective markets (or 0.6 percent of global GDP). Public-private insurance partnerships are therefore to the benefit of both parties, as closing the protection gap represents a huge opportunity for re/insurers and will help support global economic

resilience. “Building risk awareness and encouraging consumers to take up insurance coverage is a key area of action in both the advanced and emerging markets,” the report stated. “Insurance is an automatic stabiliser to smooth financial volatility for households and businesses. In this function, it makes economies more resilient to shocks.”

2015

s economies across the global face volatilities as result of shocks in the political and financial environment, experts at Swiss Re says that public-private partnerships, in combination with the use and development of new technological capabilities can help to strengthen them. In the Swiss Re’s latest sigma

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2019: Investment shifts to assets with high correlation to interest rates

Aisha Dahir-Umar, acting director-general, National Pension Commission

prices underpinned a favourable external balance for Nigeria, the reverse is likely to be the case in 2019. We adopt a pessimistic view on oil amid a growing supply-demand imbalance reflecting a mix of rising US Shale oil production and subdued global economic growth and its implications for oil consumption. Accordingly, we think any OPEC rebalancing will struggle to clear a building over-supply picture and expect the benchmark Brent crude oil prices to average between $55-60/bbl (2018 average: $71.7 /bbl). Given the large role of oil in Nigeria’s exports, our cynicism about oil prices feed through to a weaker view on the current account balance in 2019. On the global front, we think US monetary policy will continue on the path of normalization and envisage further rise in US bond yields curbing the quantum

of foreign portfolio inflows to emerging/frontier markets. Overall, the balance of payments is likely to present headwinds to Nigeria’s economic performance in 2019 and in particular the exchange rate. Nigeria - A tale of two halves in 2019 with a political football match in H1 2019 The presidential contest pits incumbent president Muhammadu Buhari of the All Progressives Congress (APC) against former vice president Atiku Abubakar of the People’s Democratic Party (PDP) as prime candidates. We think the election is going to be keenly contested. Nevertheless, as the election matches both candidates by ethnicity and religion, we see limited risk of an outbreak of widespread post-election violence. Given the time lag between the election in February and transition on May 29, we

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foresee economic policy inertia which will weigh on business and investment outlook in H1 2019 with implications for economic growth. Overall, we see Gross Domestic Product (GDP )growth of 2.3 percent over the year. On the currency front, while we see the Central Bank of Nigeria (CBN) maintaining the peg ahead of the elections, we think afterwards, the CBN will be under less pressure to hold the line on the currency amid a weakening current account. We envisage a weakening of the exchange rate to around N382-390/$ as we approach the end of the year. With no expected changes to key prices (fuel, electricity and the exchange rate) over H1 2019, inflation is likely to remain within the 12 percent band. However, in the second half of the year, we see upside risks to inflation on account of likely

‘

With no expected changes to key prices (fuel, electricity and the exchange rate) over H1 2019, inflation is likely to remain within the 12 percent band

‘

abina Yinkere, chief investment officer, Sigma Pensions Limited (Sigma), one of the leading Pension Fund Administrators (PFAs) in Nigeria reviews the economy in 2018, provides outlook for economic and investment landscape in 2019: Review: After a period of strength, the rapid sell-off in crude oil in November and December 2018 amid a testy political climate is driving a cautious outlook regarding Nigeria’s macroeconomic environment in 2019. In our view, the investment landscape for the coming year will be shaped by relatively lower oil prices; pace of monetary policy normalization in developed markets and the 2019 general elections in February. For much of 2018, Nigeria’s financial markets struggled under the weight of heightened political risk ahead of 2019 polls. Also, a fresh concern over crude oil prices in a less accommodative global financial e nv i ro n m e nt p re s e nt s headwinds to the domestic investment landscape. In 2019, we note that Nigeria’s large dependence on crude oil for Foreign Exchange (FX) reserves and fiscal revenues, positions her poorly in a soft crude oil price environment, which we envisage over the year. The implications of a less supportive current account balance for key economic variables are central in our thoughts around the macroeconomy, policy responses and asset price movements. A less supportive oil price and external environment over 2019 The central point from our review of the global macroeconomic environment is that in contrast to 2018 when stronger oil

currency pressures as well as possible increments to fuel and electricity prices. Consequently, we expect inflation to average 13 percent over 2019 (2018e: 12.2 percent). Fixed Income: Higher interest rates will drive outperformance over equities in 2019 As earlier stated, our views about a less supportive external environment over 2019 implies downside potential to the exchange rate. Nevertheless, we think the CBN will continue to defend the currency, at least over H1 2019, which will inform the continuation of a tight monetary policy. Over most of 2019, we think the tight policy stance will drive a focus on liquidity sterilization which could push front-end interest rates to as high as 18 percent and support bond yields above 15 percent. Set against this high hurdle and in view of low foreign participation until clarity emerges on the political front, we think Nigerian equities will struggle for investor attention for much of 2019. Equities: Raise exposure to high interest rate beta names for equities, short oil and politics For equities, we think Tier I banks with liquid balance sheets and low term deposit share of balance sheet funding will outperform other banks, as banks with these features are well positioned to benefit from the high interest rate environment. Fo r n o n - b a n k s , w e believe post elections; a de-risking of the political premiums on Naira assets will favour multinational names in the Fast Moving Consumer Goods (FMCG) sector where valuations appear attractive following the sell-off across the stock market over the last year.

From a market fundamentals perspective, while we remain bearish on FMCG names in view of weak consumer purchasing power, we see tactical opportunity for playing some highly defensive names with cheap valuations presently. For construction materials like cement, we think that likely fiscal policy inertia in H1 2019 will lead to a slowdown in overall capital expenditure projects as well as building activities - this dims revenue outlook for the sector. Lastly, for the oil & gas sector, we note that a lower oil price outlook switches the dynamics of the industry in favour of downstream companies. Also, our views regarding likely fuel price adjustments in H2 2019 imply potential earnings expansion in these downstream companies. Risks Key risks to our 2019 outlook are the emergence of a more bearish case in crude oil prices and a protracted conclusion to the 2019 elections. Conclusion The Nigerian economy faces another round of oilinduced pressure over 2019. However, focus is likely to be on the elections and less on economics. In a bid to keep economic variables in a neutral state, monetary policy will shoulder the burden of delivering an economic policy response to the developing external environment and will tilt towards a contractionary stance. We think fiscal policy response will likely be delayed until much later in the year, whichever way the elections go. Given likely foreign reservation towards Naira assets in general, our investment strategy prioritizes a focus on assets with high correlation to interest rates over most of 2019.

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

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Ten insurance stocks outperform broad equities index in 2018 IFEANYI JOHN

he bad year for the Nigerian equities market was difficult for all sectors in the economy but the insurance sector was resilient with almost half of companies in the sector on the stock exchange outperforming the market. After the banking sector, the insurance sector followed with the most number of stocks that performed better than the NSE main board index in 2018. NEM Insurance, the fourth best performing stock of 2018, led the group with 62.5 percent positive return since January and was followed by Continental Reinsurance (36.43 percent), AIICO (21.15 percent) and Linkage Assurance (9.09 percent). Goldlink Insurance and Prestige Insurance did not have a difference on price at the beginning and the end of the year. STACO Insurace (-4.00 percent), AXA Mansard (5.1 percent), Veristas Kapital (-8.00 percent) and Wapic Insurance (-16.0 percent) were the remaining companies to outperform albeit the negative returns recorded. The NSE Insurance Index was the only sub-sectoral index that recorded below single digit returns in 2018. It closed last Friday at -9.62 percent. “There is an opportunity in safeguarding investments in the insurance sector on the exchange. There are good companies that are selling for great prices and are not as risky when you buy at a right price. A majority of stocks are trading below N1 and some close to the price floor.” The sector also recorded a significant number of companies that lost over 40 percent of its value because of the minimum price floor of 0.20 kobo earlier in 2018. Investors looking for bumper

rewards tend to look for stocks that are relatively cheap and if such stocks also have a low absolute value, it will mean a higher return if the price moves upwards. Going forward, investors in Nigeria will be looking to increase their exposure to sectors in the economy that offer the most mon-

ey-spinning rewards, whereas current investments made in under-performing sectors in the first half of 2018 will be dropped. This strategy is widely recognized as sector rotation. The Nigeria Stock Exchange (NSE) insurance index increased by 7 percent in the first half (H1) of

2018 making it the best performing index on the bourse for the period according to the data compiled from Bloomberg. The insurance index also outperformed general market performance as the market maintains a bearish state despite a 4 percent growth in the All Share Index (ASI) in H1 2018.

Speaking about the insurance index, Dolapo Ashiru an investment analyst opines that regulations that was planned to put insurance companies into tiers has made the index see a rally in anticipation of consolidations among these companies in the first half of the year.

L-R: Segun Bankole, AGM/head, Corporate Communications and Brand Management, Sovereign Trust Insurance Plc; Olabanji Oladapo, KCOP, chairman, Island Club and newly elected Sec. Gen. Nigeria Olympic Committee; Gbenga Gbadesire, CEO, Session Synkated Group of Companies; Gbenga Falekulo, former DMD, Continental Re and Femi Ambode at the 2018 Christmas Eve Party of Island Club in Lagos recently.

Insurance giant, Alianz to become worldwide Olympic partner for 2021-2028

he International Olympic Committee (IOC) and Allianz announced recently that the insurer will join the “Worldwide Olympic Partner” (TOP) Programme in 2021. Through this sponsorship agreement, Allianz will work with the IOC to provide innovative and integrated insurance solutions to support the Olympic Movement, including the Organising Committees of the Olympic Games, with the ambition of providing those insurance solutions to the National Olympic Committees around the world and their Olympic teams and athletes. The support will include existing products, such as fleet and prop-

erty & casualty insurance, but also insurance solutions for future products and services, driven by technological changes. The partnership will run from 2021 through to 2028. The ambition of both partners is to use the power of sport to connect with new audiences via digital channels, including the Olympic Channel. Engaging with the next generation in their preferred way gives Allianz the opportunity to cover their insurance needs. Having supported the International Paralympic Committee since 2006, most recently as an international partner, Allianz will also become a “Worldwide Paralympic Partner” from 2021

as part of this agreement. Thomas Bach, IOC president said: “This new partnership demonstrates the global appeal and strength of the Olympic movement, and we are delighted to be working together in the long term with Allianz to support sport around the world. Allianz has built a global business founded on trust. With this partnership, together we are building a foundation based on mutual trust. Allianz also has a strong sporting heritage and, in line with the Olympic Agenda 2020, we share a digital ambition of connecting with young people around the world to promote the Olympic values and the power of sport.” Oliver Bäte, Allianz CEO said:

“I am thrilled that we are joining a global community of athletes and people enthusiastic about sport and team work – in addition to our existing strong partnership with the International Paralympic Committee (IPC). Through the IOC’s digital and social channels, we can connect with more people than ever before and offer them our expertise in insurance. We believe the world is a better place when people have the courage to leave differences behind and stand together to achieve better outcomes for themselves and for the societies they live in.” The Allianz Group - headquartered in Munich, Germany - is one of the world’s leading insurers and asset managers with

more than 88 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from Property, Life and Health insurance to Assistance services to Credit insurance and Global business insurance. The Allianz Group manages over 650 billion euros on behalf of its insurance customers and an additional 1.4 trillion euros of third-party assets. Allianz holds the leading position for insurers in the Dow Jones Sustainability Index and in 2017, over 140,000 employees in more than 70 countries achieved total revenue of 126 billion euros and an operating profit of 11 billion euros for the Allianz Group.

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‘Importers operate under harsh conditions given the decay of port access roads’ Tony Anakebe, managing director of Gold-Link Investment Ltd in this interview with AMAKA ANAGOR-EWUZIE assessed Nigeria’s port business in 2018. He also highlighted the challenges confronting seamless port operations in the year under review. Excerpts. Ports in 2018 The Federal Government made lots of revenue from the ports, judging by the N1.1 trillion generated by the Nigeria Customs Service (NCS) in 2018. These are monies paid as charges and tariff by Nigerian importers. The importers were the greatest losers because in 2018 imported goods took not less than one to two months to be cleared. The importer pays duty to the government, demurrage and storage charges to shipping companies and terminal operators, which Nigerians pay back because the importer adds the expended cost into the market prices of the commodities. Nigerian importers are operating under harsh conditions, given the decay of the access road to the port. The situation has worsen, as importers now spend over N1 million to load a 40-foot container from Lagos to Abuja. How much are the goods inside the container worth?

After spending a long time to clear the container, it also takes over three weeks to return the empty container to the port. We say kudos to Customs for the revenue generated, even though the situation is impoverishing Nigerians. For instance, if you can afford to bring in one container today, after clearing and selling, the person would not be able to bring in half a container again. This is affecting essential commodities like medical equipment and pharmaceutical products and they are already scarce in the market. Challenges faced by importers In 2018, a lot of car dealers could not import vehicles because of high tariff placed on every vehicle that comes into the country. There was relative scarcity of foreign exchange. Importers could not have access to foreign exchange because some goods were placed under the 41 items prohibited from

to Abuja on regular basis to answer queries on why they released some certain goods. When importers book for examination, it takes two to three days before the container would be dropped for examination, and all these were part of the delay that we encountered in the port.

Tony Anakebe

accessing forex from the official window, while those allowed access, still find it difficult to have access to the amount required. The situation of port access roads is making things difficult for Nigerians and that is why 24 hours port operation cannot work. There is no way importers will be moving their cargoes at night in darkness. The port environment is also

very dirty. During festivity, there was congestion in the port terminals and some bonded terminals that were empty in the third quarter of 2018, started receiving goods in the fourth quarter. Congestion built because the goods were not being cleared as they should. Customs operations have changed and we learnt that officers are now summoned

CSR: INTELS trains 92 women on tailoring, fashion design

s part of its Corporate Social Responsibility (CSR) programme, INTELS Nigeria Limited, a leading oil and gas Logistics Company has trained 92 women under its Women Empowerment Programme Scheme Synergy

(WEPSS). WEPSS was established in 2013 with the vision of empowering 5,000 women in the Niger-Delta over a 20year period, through training in fashion design and tailoring. Eighteen-year-old Joy

L-R: Nancy Freeborn, project head, Women Empowerment Programme Scheme Synergy (WEPSS); Phillip Embleton, representative of INTELS managing director; Joy Tom-West, WEPSS best performing trainee, and Rex Asaikpuka, Government and Public Affairs manager of INTELS at the 2018 second session graduation ceremony of WEPSS trainees, in Onne, Rivers State, recently.

Tom-West emerged the best performing trainee, winning a start-up kit comprising of an industrial sewing machine, steam iron, chair, scissors, seam ripper, box of tailors’ chalk and a measuring tape. Phillip Embleton, who represented INTEL’s managing director at the graduation, urged the graduates to use their newly acquired skills for the development of self and community. He also encouraged them to appreciate the dedication and hard work put in by their trainers during the fourmonth programme. Nancy Freeborn, project head of WEPSS, described the occasion as special because WEPSS clocked five years in November 2018. “The project commenced on November 6, 2013 with an intake of 300 rural women. These women were trained for a period of nine months, using different specialised machines, and afterwards, they remained

at WEPSS, working and producing garments. WEPSS has produced over 50,000 garments over this period,” she said. Freeborn said that WEPSS has over the years, increased its focus on training, while placing less emphasis on garment manufacturing. She said the centre currently absorbs a minimum of 300 trainees annually, who are taught to produce different types of garments. She said that INTELS, through this scheme, has contributed to the national economy by deploying materials and machines from the global market, thereby promoting Nigerian content development. “ Ev e r y y e a r, W E P S S makes thousands of garments for different charity homes. About 1,050 garments were donated to the Compassion Centre for the Physically Challenged in Port Harcourt in 2018,” she said.

Cargo dwell time Cargoes now dwell between one and two months in the ports and the importers pay the prize in demurrage and storage charges. This notwithstanding, it takes about three weeks to successfully return the empty container because truckers go as far as Cele Bus Stop to join the queue. Customs officers come to work around 11am and close by 3pm and terminal operators give as much as two to three days to drop containers for examination. After payment, the releasing officer may ask the cargo owner to wait for days for the DC to carry out analysis of the examination to avoid

harassment from Abuja. Before the agent will go through the processes and also give the truck the ‘delivery paper’, it will take another three to five days for the truck to enter the port. Cost of haulage In terms of haulage cost, we still hope that the completion of Apapa-Wharf road, as well as the opening of the Leventis Bridge will help to reduce the cost in 2019. Now, within Lagos importers pay between N700,000 and N750,000 for a 40-foot container, while outside Lagos, such as in the East or North, it cost between N1.1 to N1.2 million, depending on the weight of the cargo. Observations The Customs brokers and freight forwarding associations should wakeup because their performance in 2018 was not encouraging. They need to unite, put personal interest aside and fight for the right of the agents and the importers.

SIFAX Group CEO, Corporate Affairs manager bag NIPR, SCAN awards

aiwo Afolabi, Group executive vice chairman/CEO of SIFAX Group and Olumuyiwa Akande, Corporate Affairs manager, ended 2018 on a high note, receiving various awards. The awards were conferred on both by the Shipping Correspondents Association of Nigeria (SCAN) and the Lagos State Chapter of the Nigerian Institute of Public Relations (NIPR). At the maiden edition of the SCAN Awards held in Lagos before Christmas, Taiwo Afolabi, was honoured with the ‘Distinguished Leadership in Maritime Sector’ while Olumuyiwa Akande, Corporate Affairs manager, received the ‘Best Media Relations Manager’ award. Yusuf Babalola, president of SCAN, said Afolabi demonstrated unrivaled leadership excellence in the maritime sector, which propelled SIFAX Group to have unprecedented growth in the last few years.

“As an indigenous company, SIFAX Group has held its own among its foreign competitors and this is made possible by the insightful leadership of Taiwo Afolabi”, he said He said that since Olumuyiwa Akande, took over SIFAX Group’s Corporate Affairs, the media has enjoyed his support which has translated to better media mileage and corporate reputation for the company. Also, at the 2018 Lagos PR Industry Gala and Awards night, SIFAX Group was awarded the ‘Best PR Support Company of the Year’ in recognition of its’ consistent support for the programmes and activities of the Nigerian Institute of Public Relations, Lagos State Chapter. Basil Agboarumi, managing director of Skyway Aviation Handling Company Plc, a subsidiary of the SIFAX Group, was also awarded the NIPR’s 2018 Leadership award.

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Why MFBs charge higher interest rates than DMBs Stories by Hope Moses-Ashike

ate last year at the Bankers Committee retreat in Lagos, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) cried out over outrageous interest rates charge by microfinance banks operating in the country. Microfinance banks are charging about 48 percent per annum as interest rate on loans extended to low income earners, while deposit money banks (DMBs) are charging over 31 percent. Operators and other stakeholders admitted that microfinance banks are charging higher than commercial banks but not outrageous rates. Giving the reason for the high interest rate, Rogers Nwoke, National President, National Association of Microfinance Banks (NAMB) explained that it is failure of the CBN to disburse planned intervention funds to MFBs. “The National Microfi-

nance Policy provides for the “establishment of a Microfinance Development Fund to provide liquidity to the Microfinance segment of the economy. This fund is still not in place since the launch of the policy in 2005”, he said. The CBN on August 2013 established the “Micro, Small

and Medium Enterprises Development Fund’ (MSMEDF) to provide for the wholesale funding requirements of MFBs and Microfinance Institutions (MFIs). Nwoke said another reason was the failure of the CBN to implement the linkage programme as stipulated

Keystone Bank floats first zero data mobile App

ustomers of Keystone Bank Limited can now transact banking services at their convenience on the new ‘Keystone Bank Mobile App’ with Zero Data. The feature, which is another first from the Bank and in the Nigerian banking sector, enables customers enjoy banking services on their mobile phones without data. According to , Obeahon Ohiwerei, group managing director/CEO of bank, the development is in demonstration of the bank’s commitment to deliver superior and innovative banking solutions to its customers. “In our fast-paced and evolving digital world, service literally has to be at the speed of thought; the rules of en-

gagement are changing so fast that customer expectations are as diverse as our lifestyles and choices,” he said. “It is no longer a question of stepping out to the bank but about the convergence of innovative services, digital technology and Omni-channel platforms coming to us at breakneck speed. “Mobile Banking for one isn’t entirely new in the industry, but there is no end to innovation in delivering customer convenience; at Keystone Bank, that’s what sets us apart and that shall continue to be our strength. “We are determined to be your preferred bank; dependable, responsive and always within reach.” Other notable features of the mobile App are, easy ac-

count opening, convenient self- booking and liquidation of fixed deposits, an expanded list of bill-payment options and easy activation of standing instructions and recurrent future payments. Others include, a “switch card on/off option” which allows users to disable their cards temporarily if missing and re-enable at the click of a button, the “hide balance feature” which is an additional safeguard against third-party viewing and the “meet your relationship manager option” which allows users to call or email their account officers right within the app. Keystone Bank is a technology and service-driven commercial bank offering convenient and reliable solutions to its customers.

by the National Microfinance Policy. However, the CBN’s 2018 half year report revealed that the total sum disbursed, from inception in 2013 to date, was N81.64 billion, with N56.61 billion (69.3%) to state governments, while the MSMEs collectively accessed

N25.03 billion (44.2%). The sum of N4.04 billion was repaid in the review period, bringing the cumulative repayment to N17.42 billion, since inception, to the end of June 2018. “Today commercial banks can collect deposits from the smallest saver but cannot give loans. A system where commercial banks can collect savings and not give loans to poor people will continue to aggravate the situation. Commercial Banks must be mandated to lend a percentage of their loans to MFBs for on-lending to micro clients”, Nwoke told BusinessDay. “The impact of inflation, currency devaluation, very high operating cost, and multiple taxation, among others is high and outrageous”, he added. Looking at microfinance banks in 2019, Johnson Chukwu, managing director/ CEO, Cowry Asset Management Limit said the sub-sector will continue to be under pressure because of low customer confidence and increases in Non-Performing

Loans (NPLs). According to the CBN’s report, net loans and advances of microfinance banks fell to N175.20 billion at the end of June 2018, from N193.16 billion at the end of December 2017 and N193.20 billion at the end of June 2017. Emefiele said the CBN has through its MSME fund disbursed over N100 billion to the MSME sector, but still feel a lot can be done. The CBN recognizes that the greatest challenge confronting the MSMES and local farmers is access to credit, and that to unlock the growth potentials in the country; these groups must access funding seamlessly. “In response to this challenge, the CBN will in due course take action that will directly bring banking services to the rural communities through licensing of a national Micro Finance Bank to be located in all local governments in Nigeria, through which credit can be channelled to our rural communities”, Emefiele added.

Access Bank’s new bride - Diamond lender makes mobile banking easier

iamond Bank, which was recently acquired by Access bank plc has launched new exciting features on its mobile app to provide customers unrivalled experience in bill payments and their respective business transactions. Speaking on the new features, Sam Aneke, head, transaction and electronic banking, Diamond bank, told newsmen that the upgraded Diamond mobile app does not require customers to log-in to carry out quick transfers, pay bills and apply for quick

loans up to N150,000 on the home page of the app. “We are pleased to announce the launch of new exciting features on the Diamond mobile app. The new features allow our app users do more to suit their lifestyles. Customers can now maintain standing instructions for recurring transfers, access Naira Box events, and explore other related services. Non- customers of the bank can also access the Diamond mobile app home page for instant account opening, bill payments and more. “With the new upgrade

of the Diamond mobile app, Diamond bank has once again demonstrated its commitment to being at the forefront in offering technological solutions that makes banking an exciting, convenient and secure experience for customers” Aneke concluded. The Diamond mobile app has over three million registered users and has been reviewed by several tech bloggers and experts within and outside Nigeria who have applauded the app for its flexibility, easy to use features and an absolute time saver.

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BUSINESS DAY

Peugeot returns to Pick-up segment ...Set to launch revamped model MIKE OCHONMA mikeochonma@gmail.com

eugeot is revisiting its celebrated historical past in the pick-up segment in Nigeria with the planned market launch of the refreshed, completely revamped Pick-up in Abuja, Nigeria’s political capital. The product presentation which is described as a new market offensive by industry watchers is expected to attract many decision makers in the public and private sectors, financial institutions and fleet buyers both from the corporate and government circles. The proposed launch is coming after the utility vehicle was officially unveiled and testdriven in Marakkech, Morocco in September 2017 by dealer representatives including PAN Nigeria Limited, franchise owners of the brand in the country, automotive journalists across the African continent and beyond, one of which was Businessday’s motoring editor. Such move by the French automaker which signalled the return of Peugeot to the pick-up market to accelerate the internationalization of the brand on the African continent is coming about 14 years after the production of the last edition of the model from Peugoet’s assembly plant in Kaduna. According to Ibrahim Boyi, managing director of PAN Nigeria Limited who doubles as the chief marketer of the company while speaking with our reporter on the sidelines during the launch, the completely reengineered model is a proof of the Peugeot’s ambitious move for a return to the pick-up market in the country as part of its international growth. Benefiting from a remarkable level of roominess and equipment, the debutant model which is expected to recharge the automotive market’s commercial

vehicle segment fulfils the fundamental needs for robustness, endurance and 4x4 drivetrain in the segment. With a high body belt line, a vertical front, a horizontal bonnet and a large ground clearance (210 to 215 mm, depending on model), it possesses all of the fundamentals of the pick-up universe. At the centre of its large grille is the emblem of the lion: the image of all the new SUVs of the brand. The Peugeot lettering stamped on the rear panel echoes its illustrious forebears like the 404 and 504 Pick-up. The cab and the rear compartment are fixed on a ladder chassis with a rigid rear axle, fourbladed springs and Yokohama tyres as standard. These assets assure reliability and endurance, adapted to the load and use on all terrains in every condition. The load zone has a bed that is 1.40m long and 1.39m wide, equipped with anchoring hooks on the outside. The side walls and the real panel are completely covered with a protective resin

which adds to the rigidity and robustness of the whole vehicle. The maximum payload of the vehicle is 815 kg. It has a performance drivetrain adapted to the needs of the core market. Its longitudinal 2.5l common rail turbo diesel engine develops 115bhp and 280Nm, combined with a manual 5-speed gearbox. It is available in 4x4 and 4x2 versions. The 4x4 version is engaged using a special lever to transmit some of the power to the front drivetrain to allow the driver make a selection where needed, whether in normal 4x4 4H (4 High) mode or in the 4L (4 Low) mode at short speeds. Thanks to a reducer, extra torque can be applied at very slow speeds to maneuver out of the most extreme driving situations. The 4x4 version, therefore, gives it the versatility, easy use in every weather condition and over every terrain. With its focus on reliability and ease of use, it offers many features as standard, manual airconditioning, electric windows,

Rose scents reduces accident by 64%, say reseachers

here are recent scientific research believes which suggests that a whiff of rose scent in cars can cut the number of accidents. Scientists tested several different smells, including rose, lemon and civet, a musky smell used in perfumes. In lab simulators, the fragrance was released when a car approached a hazard, such as an erratic cyclist. Rose cut accidents by 64% while civet increased them by 46%. The Sussex University team believe smells in cars can alert the brain quicker than a visual warning. But to work in real life, cars will need a trigger device to spot danger ahead. “The idea was inspired by trends in the auto industry as it affects the use of different in-car perfumes,” said Dmitrijs Dmitrenko, a doctoral researcher at Sussex University. “Obviously smell is very hard to investigate, it’s very hard to control and hard to get it right. People in the industry are put off by the idea because they don’t know how to control the olfactory stimuli (scents). ‘But we built this equipment that enables this. A key advantage of smell over sight is that smell is quicker at reaching the brain, Dmitrenko added.”Smells take a while to reach the nose, but once the smell molecules reach the nose, the radio with CD player and USB transition to nose and brain is quicker than eyes and ears.” port are present at all levels.

It comes equipped as standard for safety and ease of driving with an ABS braking system with brake force distribution, rear parking aids, passenger and driver air bags, plus electrically adjustable exterior mirrors. The 4x4 version is distinguished by a chrome bow at the level of the bed, roof bars and lateral footboards.The most spacious and accommodating passenger interior in its class, with rear-seat roominess of 1,738 mm and knee space of 62 mm, it ensures passenger comfort for both professional and private use. With its simple and robust design perceived as a functional work tool that is durable and reliable over all terrains, it dates back to the Peugeot 403 Camionnette-Bâchée of 1956, the 404 Camionnette-Bâchée of 1967, and then the 504 Pick-up particularly in Africa, until 2005, which was the last year of production at PAN Nigeria Limited, assemblers of Peugeot brand of vehicles.

Infiniti unwraps EV crossover concept

issan’s luxury brand said it plans to show the QX Inspiration concept at the Detroit auto show this month. The concept will be the blueprint for a production electric crossover in the next couple of years as Infiniti plans to electrify its portfolio from 2021 onward, using either its e-Power hybrid system or full EV powertrains. Infiniti, however, is late to the electrification game. “Electrification and other new technologies have given us the opportunity to evolve our design philosophy. The concept car we will show in Detroit is the beginning of a new era for Infiniti, and an illustration of where we want to go with the brand’’.Karim Habib, Infiniti’s executive design director, said in a statement Infiniti was light on details about the QX Inspiration, vaguely noting the cabin is “hand-crafted using traditional techniques and a choice of materials inspired by a subtle Japanese sensuality.” New interior technology, meanwhile, “follows the Japanese hospitality principle of omotenashi, creating a welcoming environment while assisting drivers and connecting occupants to the world around them.”

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Kia plans post-autonomous era

ia Motors is previewing a range of new technologies developed for the post-autonomous driving era at the Consumer Electronics Show (CES) 2019 holding from January 8 to 11. Building on the the brand’s ‘Beyond Autonomous Driving’ vision for connected vehicles presented at CES 2018, Kia is looking ahead to a time when autonomous driving will become the norm with an interactive ‘Space of Emotive Driving’ exhibit at this year’s show. In a future where vehicles have the potential to drive themselves, Kia is laying the foundations for major technological development to improve the human mobility experience. Central to the presentation of this ‘Space of Emotive Driving’ vision at CES 2019 is Kia’s new Real-time Emotion Adaptive Driving (R.E.A.D.) System; a worldfirst emotional AI-based

optimized and interactive in-cabin space centered on human senses. R.E.A.D. system can optimize and personalize a vehicle cabin space by analyzing a driver’s emotional state in real-time through AI-based bio-signal recognition technology. It monitors a driver’s emotional state using sensors to read their facial expressions, heart rate and electrodermal activity. It then tailors the interior environment according to its assessment – potentially altering conditions relating to the five senses within the cabin, creating a more joyful mobility experience. AI deep-learning technology enables the system to establish a baseline in user behaviour, and then identify patterns and trends to customize the cabin accordingly. Albert Biermann, president and head of research & development division of Hyundai Motor Group said, “Kia considers the interactive cabin a focal point

for future mobility, and the R.E.A.D. System represents a convergence of cutting-edge vehicle control technology and AI-based emotional intelligence’’. The system enables continuous communication between driver and vehicle through the unspoken language of ‘feeling’, thereby providing an optimal, human-sense oriented space for the driver in real-time” It is revealed alongside VTouch which is a world-first virtual touch-type gesture control technology that employs a 3D camera to monitor users’ eyes and fingertip, allowing occupants to manage several in-car features via an unobtrusive head-up display. Through simple finger gestures, all vehicle occupants can make changes to the cabin environment, including lighting, HVAC (heating, ventilation and air-conditioning) and entertainment systems, eliminating the need for buttons or touch screen. Another feature of the

innovative system is Kia’s music-response vibration seats, where occupants can ‘feel’ their favourite songs as well as listen to them. The sensory-based signal processing technology adapts seat vibrations according to sound frequencies of the music being played. The vibration seats can also be set to massage mode to increase cabin comfort, as well as enhancing safety by providing haptic warnings from the vehicle’s advanced driver-assist systems. Meanwhile, Kia will have in place a specially-designed experiential modules installed at its CES booth to demonstrate the potential of the system. For the first time ever, the public will be able to experience vehicle technology that recognizes their physiological emotions based on facial expressions, electrodermal activity, and heart rate. Visitors will be able to witness the sensory controls react in real-time to their changing emotional state.

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Wednesday 09 January 2019

JLR auto-technology opens door to easier access

aguar Land Rover (JLR) has developed the ultimate car door that opens automatically as the driver approaches or can be operated by gesture control. The mobility door prototype, currently being tested on a Range Rover Sport, uses motion sensors and existing keyless entry technology to detect the driver as they walk towards the vehicle before automatically opening the door to welcome them like an invisible valet. The technology could help disabled people for whom a car is their main mode of transport as many as a third of whom report practical difficulties in their daily usage**. In addition, it has benefits for those carrying child seats or large items as the driver no longer has to struggle to free a hand to

behind you as you walk away. JLR is working with a gold medal-winning Invictus athlete to try the system. According to Mark Ormrod, former Royal Marine Commando and Britain’s first triple amputee from the Afghanistan conflict, “This innovative Jaguar Land Rover technology would be such a benefit to me and has real power to change lives for those who face problems getting in and out of the car’’. ‘’Opening and closing the car door may seem like such an insignificant task to many people, but sometimes it’s the small, everyday obstacles which people take for granted that are most frustrating to overcome for those living with disabilities.” He stated. JLR research engineers developed the system on a laboratory rig over six months

open the door. Once on board, occupants can close the mobility door with an overhead button without the need to reach out and pull the door shut. Software built into the infotainment system shows the status of each door and allows operation of the driver and passenger doors from inside the cabin. Radar sensors on the driver’s door detect lamp posts or other obstacles to stop the door swinging open and bumping into objects. The door can also be programmed to close and lock

before testing it on a Range Rover Sport. As well as helping disabled people, they also see the technology as relevant to all future vehicles. Xu Zhou, Deep Learning Technical Research manager at JLR, said: “The mobility door is an exciting piece of technology that offers a realworld value to our customers. There’s also something very welcoming about the door opening on your approach and something we think will be greatly valued as we become more familiar with shared mobility’’. He added.

PAN scoops Auto Assembly Plant Of The Year Award

n what the top management described as an exciting way to end the year, PAN Nigeria Limited, assemblers and franchise owners of the Peugeot brand has emerged the winner of the Auto Assembly Plant Of The Year during the last Nigeria Auto Journalists Association (NAJA) Awards 2018 edition on Thursday, December 13, 2018 at Eko Hotels, Victoria Island Lagos. Down history lane, the assembly plant factory attained peaked production 1981, producing 160 cars

per day in two shifts. To date, PAN remains the leading assembler of vehicles in Nigeria auto industry. The plant has been fully certified by Standard Organisation of Nigeria (SON) to have met the Quality Management System certification mark with NIS ISO 9001:2015. National Automotive Design and Development Council ( NADDC ) sustains PAN’s validation as a bona fide plant with capability to assembly CKD/SKD, good and wide range of auto-

mobiles, passenger cars, commercial vehicles, light van and vehicle adaptation for use. The range of vehicles can be used as ambulances, fire fighting vehicles, bullion vans and also a platform for local content development programs. The Director General, NADDC Engr. Jelani Aliyu, described PAN as “Plant with great potentials”. PAN Nigeria Limited was incorporated in 1972 as a joint venture between the Federal government of

Nigeria and Automobile Peugeot France. The Kaduna factory was commissioned in 1975 and production commenced the same year. The factory has an installed capacity to produce 90,000 vehicles annually in three shifts and can generate direct employment of over 5000 people. Ibrahim Boyi, managing director/CEO of PAN Nigeria Limited, attributed the sustainable success of the plant to its “heritage of quality and commitment to excellence’’.

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LegalPerspectives

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with the Director of Factories at least six months before the commencement of actual construction of a building or structures intended to be used as a factory. (3) Any person who‐ (a) not having been issued a certificate of registration as aforesaid, occupies or uses a factory or any premises which have not been registered as a factory; or (b) having been issued a certificate of registration of a factory as aforesaid, occupies or uses as a factory any premises which were not so registered as a factory, shall be guilty of an offence. (4) Any person who commits an offence under subsection (4) of this section

Caveat emptor

shall be liable on conviction to a fine not exceeding N2,000 or to imprisonment for twelve months or to both such fine and imprisonment and if the contravention is continued after conviction, the person shall be guilty of a further offence and liable on conviction in respect thereof to a fine not exceeding N 100 or to imprisonment not exceeding fourteen days for each day on which the offence was continued. (5) Where the Director of Factories refuses to issue a certificate of registration under this section he shall, if so requested by the applicant, state in writing the grounds of such refusal.”

Suspicious transaction report

ome financial transactions are usually reported to the Economic and Financial Crimes Commission. They are usually tagged “suspicious transaction”. What makes a transaction suspicious and thereby warrant being reported to EFCC? The answer is in section 6 of the Money Laundering (Prohibition) Act, 2011. Section 6(1)-(3) of the Act states that “(1) Where a transaction- (a) involves a frequency which is unjustifiable or unreasonable; (b) is surrounded by conditions of unusual or unjustified complexity; (c) appears to have no economic justification or lawful objective; or (d) in the opinion of the Financial Institution or Designated Non-Financial Institution involves terrorist financing or is inconsistent with the known transaction pattern of the account or business relationship, that transaction shall be deemed to be suspicious and the Financial Institution involved in such transaction shall seek information from the customer as to the origin and destination of the fund, the aim of the transaction and the identity of the beneficiary. (2) A Financial Institution or Designated NonFinancial Institution shall within 7

Odunayo Oyasiji

Do you know?

t is compulsory to register a factory with the Director of Factories. Anybody who fails to register is guilty of an offence. The punishment for the offence is stipulated in section 3(4) of the Factories Act 1987. The entire section 3 is reproduced below“(1) Before any person occupies or uses as a factory any premises which were not so occupied or used by him at the commencement of this Act, he shall apply for the registration of such premises by sending to the Director of Factories an application containing the particular set out in the First Schedule to this Act. (2) An application under this section shall be filed

BUSINESS DAY

his is a regular notice we see on properties all around the country. However, the meaning and implication of it is not quite clear unto many. It’s a latin maxim for “let the buyer beware” i.e. trying to caution whoever is interested in the purchase of a property to be careful and not just deal with anybody or buy the property without doing the necessary investigations and findings. It is the principle of law that regulates the sale of property after the date of closing. The principle also extends to the sale of other goods. It is often used as a way of disclaimer of warranty. This is because it is assumed that the seller most times have a deeper knowledge and information about what he is selling. This information is mostly not made available to a buyer who is at risk of either buying a deficient product/property or losing his or her money to a wrong seller. Under this principle, the buyer is to beware as he cannot recover damages from the seller for selling a property with defect that renders it not to be fit for purpose. The only situation where damages can be recovered from the seller is if the seller is guilty of material misrepresentations that are

meant to mislead the buyer or if the seller actively conceals the latent defects. It is therefore important that serious caution should be exercised when buying a property. Necessary steps must be taken to do thorough investigation on the title of the person that wants to transfer the property- this is because you cannot give what you do not have. If the person’s title is defective then the person cannot pass a good title to the buyer. Furthermore, it is essential to do thorough physical inspection of the property that is the subject of the transaction. It is advised that the services of experts should be secured so as to be sure that thorough investigation and inspection is done. It may cost more to do this, but it is safer.

Locus Classicus

Walton Harvey Ltd v Walker & Homfrays Ltd [1931] 1 Ch 274

he owner of a hotel in order to boost his hotel business entered into a contract with an advertising agency. The contract is for the advertising agency to put illuminated advert on the top of the roof of the hotel. The contract was entered into by both parties and the wish of the hotel owner was carried out. The local authority later compulsorily acquired the hotel and demolished it. The advertising agency then approached the court on the basis of breach of contract on the side of the owner of the hotel. The owner of the hotel argued that the contract had become frustrated

due to the compulsory acquisition of the hotel by the local authority. The court held that the contract was not frustrated. This is because the hotel owner was aware of the intention of the local authority to acquire the hotel before entering into the contract with the advertising company. He should have known that it is possible for the acquisition to happen during the lifetime of the contract. Therefore, provision should have been made for such occurrence in the contract between the parties. The hotel owner was held liable to pay damages for breach of contract to the advertising agency.

Who is a trustee in law?

days after the transaction referred to in subsection (1) of this section- (a) draw up a written report containing all relevant information on the matters mentioned in subsection (1) of this section together with the identity of the principal and, where applicable, of the beneficiary or beneficiaries; (b) take appropriate action to prevent the laundering of the Special Surveillance on Certain Transactions. proceeds of a crime or an illegal act; and (c) send a copy of the report and action taken to the Commission. (3) The provisions of subsections (1) and (2) of this section shall apply whether the transaction is completed or not.” From the above, the your financial institution is in some

circumstances empowered to seek information from its customer on the origin and destination of funds that enters and goes out of the customer’s account. Also, they can ask questions on the aim of the transaction and the identity of the beneficiary. The reason for bringing out the above is that I have been questioned on few occasions with regards to who I am transferring money to, the purpose and the identity of the person. I felt embarrassed and even argued that my privacy is being intruded. If this has ever happened to you or you fall into the same situation later in future, remember that the law empowers the financial institution to ask such questions.

trustee can be a person or firm. What the person or firm does is to hold and administer a property or assets for the benefit of another person usually referred to as the beneficiary. Trustees can be appointed in case of bankruptcy, for a charity, for a foundation or even for a trust fund. A trustee is expected to make decisions in the interest of the beneficiary. Trustees usually have fiduciary duty to the beneficiaries. Therefore, they are under an obligation to always act in the best interest of the trust and not allow personal interests to be the driving force. There are certain duties which the position of being a trustee imposes on the person occupying the position. A trustee must adhere to the terms of the trust deed. He must do and abide by all

that is contained therein. A trustee must be loyal – he must administer the trust in the interest of the beneficiaries. They are not meant to benefit personally from the trust asides what is due to them as stipulated in the trust deed. They also have the duty to manage the trust efficiently- to do this well, a trustee must be familiar with the terms of the trust, the purpose of the trust, the trust assets and liabilities and the circumstances of the beneficiaries. He also has the duty to act personally, he must be involved in decision making. The trustee must always put the beneficiaries into consideration when discharging their duties as trustees. Another major duty that must be observed is with regards to the trust account, they must keep and up to date account and other records.

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BUSINESS DAY

Tax Issues

Tax treatment of dividends paid out after tax holiday period …the Nigerian electricity supply industry case study EWERE IKEM & OGADINMA ASOGWA

he Nigerian electricity supply industry has been identified as one of the key anchors on which the nation’s present and future economic growth and survival is hinged. To this end, the Nigerian government initiated a process of privatization of the hitherto publicly owned power company into the various companies engaged in the generation, transmission, and distribution of electrical power. The aim of which was to attract new investments and help create an industry that would meet the nation’s electrical energy requirements in a costeffective manner. Unfortunately, despite the privatization reforms carried out by the government, the sector is still rife with challenges such as Aggregate Technical & Commercial (AT&C) losses, gas shortages, non-cost reflective tariff structure, significant debts owed to industry players in the industry, amongst others. In order to address some of the issues noted, the government has initiated the power sector recovery program, which includes plans to make electricity market contracts more effective, ensure cost reflective tariffs, develop and implement a robust loss reduction plan, and establish data-driven processes for decision making across the sector. Consequently, a number of investors have shown interest in developing power-generating plants and are at various stages of engagement for the development of power plants and related supporting infrastructure. Incentives available for the Power Generation Companies As part of the ways of making the sector attractive and improving bankability of power projects, certain fiscal incentives are available to investors seeking to develop power generating plants. These incentives include the Gas Utilisation Incentive (GUI) and the Pioneer Status Incentive (PSI). The Gas Utilization Incentive, as the name suggests is only available to power generating companies utilizing Nigerian Gas to generate electricity. However, the Pioneer Status Incentive is not restricted to gas-fired plants alone and can be obtained by power generating companies using other technologies. •The Gas Utilisation Incentive The GUI was incorporated into the Companies Income Tax Act (CITA) as part of the efforts to reduce gas flaring and encourage investment in downstream gas

capacity in Nigeria. Specifically, Section 39 (1) of the CITA provides thus. A company engaged in gas utilisation (downstream operations) shall be granted the following incentives: —an initial tax free period of three years which may subject to the satisfactory performance of the business, be renewed for an additional period of two years — tax free dividend during the tax free period where – •the investment for the business was in foreign currency or •the introduction of imported plant and machinery during the period was not less than 30% of the equity share capital of the company. In addition, the company would be entitled to claim accelerated capital allowances after the tax free period for investment in plant and machinery. As an alternative to the initial tax-free period, a company seeking to take advantage of this incentive, may opt for an additional investment allowance of 35%, which shall not reduce the value of the asset. It should be noted that a company that engages in gas utilization can only opt for either the initial tax free period or choose to claim the additional 35% investment allowance. Consequently a careful analysis of the financial projections of the business would be required to determine which option would maximise its return on investment. •The Pioneer Status Incentive (PSI)

The Nigerian government also put in place some Pioneer Status Incentives to encourage investment and growth in certain sectors of the economy. This initiative is covered for under the Industrial Development Act (IDA), which is the legal basis for granting the PSI to eligible companies, industries, and products. Pursuant to the IDA, the Official Gazette No. 84, Vol.104 of 2017 which provides a comprehensive list of the pioneer industries and products was issued, effective 7 August 2017. In the Gazette, the Electricity and Gas Supply sector is included as one of the approved sectors with the electric power generation, transmission and distribution industry specifically categorized as a pioneer industry. This is clearly based on the recognized need to boost development in the sector and attract the much-needed private capital to the economy. Section 10(2) of the IDA provides that “The tax relief period of a pioneer company may at the end of three years be extended by the President – •For a period of one year and thereafter for another period of one year commencing from the end of the first period of extension; or •For one period of two years” Thus, companies that have obtained Pioneer Status approval are entitled to the tax holiday of three years, as indicated above, which can subsequently be extended to a maximum of two years. Similar to the GUI, the PSI also

exempts dividends paid out of the pioneer profits from taxes and as such, withholding tax should not apply on the dividend distributions during the pioneer period. This is however, to the extent that the profits from which such dividends paid are maintained in a special account and the tax authority is satisfied with the entries in the said account. Other applicable tax incentives under the PSI include: - capital expenditure on qualifying assets incurred during the tax free period would be treated as being incurred on the first day following the end of the tax holiday. -for companies making tax losses, net losses incurred during the tax free period would be deemed to be incurred on the first day following the end of the tax holiday and these will be available as an offset against post pioneer profits. It is quite clear that significant tax benefits could accrue to companies developing power projects, where they obtain requisite approval to utilize either the PSI or the GUI. This is particularly critical considering the magnitude of investments required to develop power projects in Nigeria. However, there are certain constraints peculiar to companies developing power assets that may inhibit the distribution of dividends during the early years post Commercial Operations Date (COD). Some of these constraints include warrants/clauses in the financing arrangements which seek to restrict/limit the distribution of cash to the Project Sponsors during

the early years of project development and deployment. Where such companies have also obtained any of the above tax exemptions, a situation could easily arise where the profits accrued during the tax-free period remain undistributed after the period. When, dividend are thereafter distributed, the companies stand the risk of being exposed to additional tax under the excess dividend tax rules as set out in Section 19 of the CITA. Specifically, Section 19 of the CITA provides that; “Where a dividend is paid out of profits on which no tax payable due to: •no total profits or •total profits which are less than the amount of dividend, which is paid, whether or not the recipient of the dividend is a Nigerian Company, the company paying the dividend shall be charged to tax at the rate prescribed in section 40 (1) of this Act as if the dividend is the total profits of the company for the year of assessment to which the accounts out of which the dividend is declared, relates. Total profits as described above also refers to the taxable profit, which is the base on which CIT is applied at 30% (CITA rate). The tax risk described above has come to be generally known as Excess Dividend Tax (EDT) and may be interpreted to restrict the dividend a company can pay out of its total profit for each year of assessment. As such, where a company pays out dividends in any year of assessment and its taxable profit is less than the dividend paid out, EDT may likely be triggered. Where this happens, the dividend paid will be taxed as though it is the company’s taxable profits for that year of assessment. Interaction between EDT and Dividends paid out of profits from the tax free period Let us paint a potential scenario. A company is granted a tax-free period of five years (under either the PSI or GUI) and makes accounting profits during that period. Based on financial concerns highlighted above, it is only able to make dividend payments from such accrued profits in the third year following the grant of the PSI or GUI. Note that from an accounting perspective, such company would be able to demonstrate the source of all profits it declares and pays dividends from by ring-fencing these specifically in its financial statements. Ewere Ikem and Ogadinma Asogwa are both managers, tax, regulatory and people services, KPMG Advisory Services Continues next week

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Financial Inclusion

& INNOVATION

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BUSINESS DAY

Supported by:

Why financial exclusion rate is highest in Northern Nigeria, way forward BALA AUGIE & Endurance Okafor

the South West, 64 percent are formally included into the financial cycle, this compares with North East with the same total adult population but has only 34 percent of its adult population included. North West, with total adult population of 23 million also has only 27 percent inclusion rate. While South South with less population of 16 million has 60 percent of its adult populations formally included and South East with adult population of 12million has the same percentage of inclusion as South South. “The weak purchasing power that we are experiencing is why the bankable adults are dropping,” akinwunmi mentioned. BusinessDay survey revealed that there is strong relationship between job creation and financial inclusion, considering when people are employed, they have high tendency to own a bank account, as in some case are mandated by their employers. Proximity to financial institutions and cumbersome requirement by banks are some of the challenges as researched by BusinessDay that damps the morale of people in some northern part of the country. For example, BusinessDay learnt that banks ask rural farmers to bring utility bills, identifications cards among other requirements before a basic bank account

can be opened, this encourage most of the rural dwellers to continue with their conventional way of stashing money under their pillow. The result of EFInA Access to Financial Services in Nigeria 2018 survey revealed that 39.50 million (39.70 percent of the adult population) have access to a formal bank account, while a further 8.9 million (9 percent) are banked formally through other means while some 14.6 million (14.6 percent) use informal means for financial access. According to the financial sector development organization, of the total adult populations, 46.10 percent (22.7 million) are male while 33.30 percent (15.60 million) are female. This recent survey shows that the nation is still far from the 80 per cent financial inclusion target of the National Financial Inclusion Strategy, but has significantly increased from the previous inclusion rate recorded in 2016.

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“The aim of the report is to engage policy makers and the regulators to come up with the right regulations that will ensure the actualization of central bank’s vision of achieving 80 percent financial inclusion by 2020,” said Esaie Diei, Chief Executive Officer of EFInA. “The report will let us where we are and what we need to do,” said Diei. On the way forward in including more Nigerians into the financial sector and especially in the Northern part of the country, Rafiq Raji, chief economist at Macroafricaintel said may be if mobile money really takes off it can help grow inclusion in the north. “Mobile money could be the enabler,” Raji suggested. As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the

I think there is still a wide communication gap between the telecoms and the banks which can only be addressed by the CBN. In the case of Kenya (Safaricom), every bank in Kenya integrated with Mpesa (mobile money app) for ease of transfer,

‘

espite the increase in Nigeria’s financial inclusion rate, the Northern region of Africa’s most population retained its position of highest excluded hub in the country, EFInA’s bi-annual 2018 figures shows. The percentage of financially-excluded people in 2018 dropped by 4.8 per cent from 41.6 per cent in 2016 to 36.8 per cent in the review year, although, millions still lack access to financial services and the North East, North Central and North West take the large share of the rate. According to EFInA Survey (A2F) for 2018, Nigeria adult population who are both formally and informally excluded from the financial market stood at 36.6 million. Compared to other regions of Africa’s largest economy, the northern part of the country reported more unbanked people owing to high illiteracy level, insurgency in some parts of the region coupled with high poverty rate, as compiled from BusinessDay survey. According to a recent data from the National Bureau of Statistics (NBS), Yobe State has only 7.23 per cent literacy level, the lowest in the country. The dismal record of Yobe is followed by Zamfara (19.16 per cent); Katsina (10.36 per cent); Sokoto (15.01); Bauchi (19.26); Kebbi (20.51); and Niger (22.88), of which only Taraba state is an exception with 72 per cent literacy rate. Ayo Akinwunmi, Head of Research, FSDH Merchant Bank said that the issue of insecurity and the high unemployment rate in Nigeria are factors contributing to the decline in financial inclusion. “A lot of banks that are located in these areas where there is high level of insecurity are already shutting down .If there is peace there will be more bankable adults,” Akinwunmi said. Out of the 22 million total adult population in

regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system. Africa’s largest economy needed to see how the regulation of mobile money could evolve owning to significant volumes of currency that could be circulating in mobile wallets, and may not be visible to the regulatory authorities. As such it was clear that a better balance between the market and the regulatory structures was required. Meanwhile since then there has been an explosion in mobile money wallet usage in Kenya and other Africa peers, the Nigeria’s CBN was rather focused on an independent bank led model that would supplement and support the existing banking system. “I think there is still a wide communication gap between the telecoms and the banks which can only be addressed by the CBN. In the case of Kenya (Safaricom), every bank in Kenya integrated with Mpesa (mobile money app) for ease of transfer,” Ayodeji Ebo, MD, Afrinvest Securities limited said. In furtherance of its mandate to promoting a sound financial system in Nigeria and the need to enhance access to financial services for the unbanked rural segments of the society, the Central Bank of Nigeria (CBN) has

proposed Payment Service Banks (PSB). Industry experts says CBN’s move to open the banking system to nonfinancial companies and register mobile money operators could be the biggest innovation to hit Nigeria’s beleaguered financial services industry in decades, and it is attracting a lot of takers. No less than 30 business names are currently undergoing registration as payment service banks at the Corporate Affairs Commission (CAC), in a move that could prove a game changer for tens of millions of financially excluded Nigerians. For non-banks, registering a subsidiary unit is the first step in applying for a payment service bank license under a new set of mobile money guidelines launched by the CBN in October, as it attempts to replicate a system that has succeeded in bringing large swaths of people from Kenya to India into the formal financial fold. According to data obtained from the Abujabased CAC, the thirty business names undergoing registration include financial technology companies, Verve, Quick teller, Interswitch, Paga and Paystack. But since the last month of 2018, no information has been made available to the general public as the level of registration attained by the firms.

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Plantain processing creates opportunity for farmers, entrepreneurs, as gap widens to 99,800MT Stories by Josephine Okojie

he failure of Nigerians to invest in plantain processing has created an estimated d e m a n d -s u p p l y g a p of 99,800metric tons of the flour, this presents an opportunity for entrepreneurs to invest in the value addition of the crop. A recent plantain report by the Bill and Melinda Gates Foundation puts Nigeria’s plantain flour production at 25, 200 metric tons (MT) and estimated demand at 125,000MT. This means that currently, there is a 99,800MT demand and supply gap in production, showing a huge potential in the subsector for investments opportunities. “Plantain business is booming now in Nigeria because there is a strong demand for the flour,” said Adjarho Oghenekaro, national president, Banana and Plantain Farmers Association of Nigeria (BAPFAN) in a telephone response to BusinessDay. “Processing plantain helps in reducing post-harvest loss of the crop which is currently about 30 percent,” Oghenekaro said. According to the Food and Agricultural Organisation (FOA), Nigeria is Nigeria fourth largest producer of plantains, with 2.8 million metric tons per annum, behind Ghana with 3.6 million MT, Cameroun with3.5 million MT and Colombia with 3.3million MT.

L – R: Rashidat Elesho, 2nd runner up; Sithembiso Dlalisa, sales account manager ENP BASF West Africa; Jean-Marc Ricca, country cluster head, BASF West Africa; Ukeme Daniel, 1st runner up; Ahmed Yakasai, president, Pharmaceutical Society of Nigeria; Mojisola Adeyeye, director general, NAFDAC; Mfonobong Nelson, winner and Kwadwo Owusu-Sarfo, regional head of sales and business development, BASF West Africa.

“I lecture at one of the higher institutions in Ondo State but went into processing plantain when I realised the demand for processed plantain products is becoming huge daily,” said Adekonbi Olufunke, CEO, Providence Plantain Flour. “The business is lucrative and demand is growing daily both locally and internationally. I am currently registering my business to commence exporting my products

next year,” Olufunke said. She called for the support of processors of the produce with cheap agro finance to enable them purchase processing machines and dryers as well as advocacy on health benefits in plantain consumption, noting that some Nigerians still have wrong perception that its consumption is meant for only diabetes patients. Besides cocoa, cashew and sesame, plantain is another crop

Resolute 4.0 seen as solution to Nigeria’s farmers-herders crisis

esolute 4.0 technology has been seen as one of the solutions to Nigeria’s decades of prolonged violent conflicts between farmers and herders which have thwarted growth and development in recent years. The farmers-herders crisis has destroyed hundreds of lives and properties worth millions of naira in states where the conflicts occurred. But with the adoption of the resolute 4.0 technology, this will become a thing of the past as conflicts will be reduced to the barest minimum. According to experts in the livestock subsector, adoption of the technology will help Nigeria in tackling its farmers-herders conflicts, while creating infrastructures to drive ranching investments as a lasting solution to the decades-long conflicts. “We have taken it upon ourselves to ensure that this crisis comes to an end and to do this, we have created the resolute 4.0 technology,” said Rotimi Williams, chief executive officer, Kereksuk Rice Farm. “There are two parts to the technology. The first part is an early warning system where a device is

provided to flash point communities to alert authorities on any impending attacks,” Williams said. He stated that the second part of the technology will be disclosed in due time, when the initiative has been officially launched. Williams owns the second largest commercial rice farm in Nigeria by land size and has been unable to return to his farmland owing to the continuous farmers-herders conflicts in the community where he operates. “I have not planted anything since 2017 and this is because of the continuous farmers-herders crisis going on in the area my farmland is. This is not only affecting me but all farmers in the community,” he said. He urged the Federal Government to collaborate with him in the adoption of the technology across board, adding that there is a high rate of misconception on the major causes of the conflicts. He noted that his organisation has properly dissected each component involved in the crisis before coming up with the resolute 4.0 technology to address the major issues causing the crisis. Similarly, the Miyetti Allah

in Nigeria that has huge export potential. Plantain can be eaten raw when ripe, processed into flour to make ‘elubo’, a local meal consumed in Nigeria with soup and also serves as industrial raw material in firms producing sanitary pads, fabrics and also for the food and beverage industry for making baby foods, biscuits, bread and cakes. Its nutritional benefits include

low-fat, good for blood pressure, a key source of vitamins and minerals, high in fibre and rich in protein. This makes the consumption of plantain a great option for diabetic patients. Currently, one of the major challenges for plantain farmers and processors is the unavailability of cheap agricultural finance for the subsector and the informal nature of activities in the industry. “The country is yet to realise the full potential in the production of plantain because activities in the subsector are still largely informal and unregulated. Also, most farmers and processors cannot easily access cheap credit,” Oghenekaro who is also a processor and was earlier quoted said. He called for the proper organisation and coordination of activities in the subsector to explore opportunities in plantain production to create jobs and generate income, adding that the industry has the potential of generating $2.5 billion annually from export. The plantain fruit is an all year crop but its main seasons are August through December. Plantain can be grown in 17 states across the country with major production occurring in the humid forest agro-ecological zones which aligns with the South-South and South-West. Oyo, Bayelsa, Edo, Ondo, Ogun, Taraba, Ekiti, Osun, Cross River and Akwa Ibom accounts for over 60 percent of Nigeria’s total annual production.

IBM Research, Hello Tractor pilot digital wallet for farmers to drive mechanisation Cattle Breeders Association of Nigeria (MACBAN) has applauded the initiative, saying it would foster peaceful co-existence and cooperation between herders and farmers. “We are in support of your traceability initiative for tracking cattle by way of GPS and we are looking forward to collaborating with you,” Baba Othman Ngelzema, national secretary, MACBAN said in a statement seen by BusinessDay. “We assure you our highest regards, support and cooperation as you have also shown neutrality and deep understanding in assessing the matter,” Ngelzema said. Nigeria loses about $2.3 million (N828 million) annually due to the conflict between farmers and herdsmen, according to a Mercy Corps 2015 report, and states where these conflicts take place lose an average of 47 percent of tax generated internally. These conflicts sack farmers and destroy agro raw materials such as oranges, mangoes, pineapples, cassava, pears, tomatoes, grains, oil seeds, wheat and other commodities. This has forced a decline in the crops majorly produced by these states.

cientists from IBM Research and Hello Tractor – a start-up are piloting an agriculture d ig i t a l wa l l e t a n d d e c i s i o n making tool that provides demand-supply visibility for farmers to easily access tractor ser vices to drive mechanised farming on the continent. The e-wallet technology which was unveiled recently at the 2018 TechCrunch Startup Battlefield Africa is a combination of advanced analytics and the blockchain technology that enable farmers easily access tractor services providers through the application of a mobile app. “Through valued relationships with companies like John Deere, we have been very successful in increasing mechanisation access of smallholder farmers in rural communities,” said Jehiel Oliver, CEO and founder of Hello Tractor. “To reach the next level, we need to add additional services including predictive fleet utilization and maintenance; operator and tractor scoring;

financing and the crop yield forecasting,” Oliver said. In Sub Sahara Africa more than 60percent of farms are powered by humans, with less than 20percent powered by tractors, a model which is not sustainable to achieve food sufficiency for the continent as population grows at an alarming rate. In addition, the Food and Agriculture Organisation (FAO) states that the continent records 35-50 percent of post-harvest losses annually due poor farming practices. The adoption of the e-wallet technology will help in addressing the issues. To achieve this, Hello Tractor turned to IBM’s research lab in Nairobi, Kenya to to apply several technologies, including the Watson Decision Platform for Agriculture, Blockchain, IoT and cloud, to bring new services to the app for tractor owners and dealers, farmers and banks. The new services will be tested in a pilot starting in the first half of 2019.

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Key issues to shape Nigeria’s agric sector in 2019 Josephine Okojie

i g e r i a ’ s agricultural performance in 2019 depends on the Federal Government’s commitment to addressing fundamental issues that have continued to impact farmers’ productivity and the sector’s contribution to economic growth. As a result, BusinessDay’s agribusiness section is taking a look at these issues that would shape Nigeria’s agricultural activities in 2019. Climate Change Extreme weather conditions such as droughts, storms and floods are putting pressure on the ecosystems that famers depend on. As a result, it has continued to impact negatively on agricultural activities, making its mandatory for farmers to be trained to become more resilient to the impact of climate change. The country’s 2018 agric output declined, owing to the high volume of rainfall in most parts of the country that resulted to floods which destroyed farmlands across the country. This was a huge setback to the Federal Government’s diversification quest through the sector, as it affected the production of major crops s u c h a s r i c e, s o rg hu m, sugarcane and millet, amongst others. According to the Nigerian M e t e o ro l o g i c a l A g e n c y (NIMET), the rainfall pattern in 2018 posed a great risk to farmers in the areas that were affected most by the floods. The agency urged concerned government ministries to carefully manage the situation. NIMET is yet to give its seasonal weather forecast for 2019. Experts who spoke with BusinessDay have predicted that climate change will play a key role in farmers’ 2019 productivity. The experts says that extreme weather conditions a re l i ke l y t o a f f e c t n o t only the outcome of 2019 farming seasons, but also government’s plans to stop food importation which has been valued at over N1 trillion annually, or at least reduce it to the barest minimum. The extreme weather condition does not only affect crop production, but also livestock and fish production. “C limate chang e has

become evidenct daily in our lives and the impact has been massive on the agricultural sector. The weather conditions will affect the quality of crops and the pricing,” said Desmond Majekodunmi, an environmentalist. Farmers-herders crisis Apart from the impact of Boko Haram in the North-East, that has displaced thousands of agrarian communities, farming activities have also come under threat in the middle belt region and other regions in Nigeria due to conflicts between farmers and herdsmen. The recent attacks by herdsmen in Benue, Enugu, Bayelsa, Ekiti and Adamawa among others have impeded agric output in the affected states and market development. “The crisis has implication for the agricultural sector and employment generation. It is a major risk to the growth of the sector,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry. “This is also a threat to raw materials for industries. The agric sector provides the raw materials that feed industries, especially the food and beverage industries. This conflict is happening in a period of FX shortage,” said Yusuf. Nigeria’s inflation rate accelerated to 12.8 percent, the highest in almost four years in March. Food prices rose 12.7 percent in March from a year ago, compared with 11.4 percent in the previous month, according to the National Bureau of Statistics.

Agro finance Nigeria’s expectation from its agricultural sector may never crystallise if banks remain unwilling to lend to the sector. Lack of access to adequate financing by farmers and other actors in the sector has remained a major impediment that prevents investments in basic farm inputs needed to raise productivity and sustain growth of the non-oil sector. As a result, yields have failed to increase significantly, leading to pervasive hunger and poverty. Similarly, agro entrepreneurs seeking to build businesses that could boost food production have continued to remain at a subsistence level in the country. “Funding is the biggest problem we have in Nigeria’s a g r i c u l t u r e ,” H e i n e k e n Lokpobiri, Minister of State for Agriculture and Rural D e v e l o p m e nt s a i d at a breakfast meeting with bank CEO’s held in Lagos in 2017. “We need finance to put all the factors of production together to drive growth in the sector. We know that banks are still finding it difficult to fund agriculture but until we have the money to fund agriculture at the production, processing and marketing level, we would not achieve anything from the sector,” Lokpobiri said. Nigeria’s agricultural fundamentals are robust and include an estimated 84 million hectares of arable land, out of which only 40 percent is cultivated and only 10 percent of the 40 percent is cultivated optimally. But with adequate financing, the country can

put its 84 million hectares of arable land to productive use, experts say. Inputs Prices of key inputs such as seeds, herbicides, pesticides, fertilisers and agro machinery will be the determinants of food prices in 2019. Also, access to adequate, secured and timely supply of quality seeds is a major hurdle in the nation’s quest to return to its heydays with agriculture. Poor seeds have been identified as the major challenge facing farmers’ cultivation of crops efforts and it reduces their yield per hectare. Despite efforts of successive governments to give farmers access to improved seeds, farmers are still unable to get access to good and quality seedlings. Nigeria’s failure to invest in the seed industry has created a yawning seed gap estimated at N525 billion, leaving farmers’ to low quality inputs that portend danger to crop production and the country’s food-sufficiency target. “Most of the seeds in the market today are imported and this is because we do not produce enough seeds. The research institutes that are mandated to produce improved varieties of seeds are not doing anything,” Abiodun Olorundenro, a farmer told BusinessDay. “There are lots of adulterated seeds in the country today because demand is much higher than supply. The level of investments in the industry is low. To bridge the gap, a lot of merchants are importing these seeds for farmers,”

Olorundenro said. Despite the growth recorded in the numbers of seed companies in Nigeria, investments in the subsector is still low, as farmers still find it difficult to easily access improved seeds and seedlings to cultivate. The total national seed requirements for eight major crops, including maize and rice, in Africa’s most populous country stood at 388,690.64 metric tons (MT) in 2015, while the quantity available was 126,173 MT, leaving a yawning gap of 262,518 MT. Experts in the agricultural sector say that government needs to prevent the supplyavailability gap from widening further to prevent creating a fertile ground for the proliferation of unregistered and incompetent operators who flood the market with fake or poor quality seeds. They explained that legal backing from the National Assembly would empower the National Agricultural Seeds Council (NASC) to carry out its statutory mandate of regulation and supervision of seeds more effectively and seamlessly. To bridge the gaps, experts have called for collaborations between the government and the private sector to drive investments in seed production in the country. The experts also urged the government to create an enabling environment that will spur investments in seed production while enforcing stronger regulations to protect local investments. Framers seek hybrid seeds owing to their productivity advantage, but most of them are imported, leading to high cost of production of farm produce and high prices of food items in the country. Poor research funding Agricultural research institutes operating in the country are proving to be the weak link in Nigeria’s drive to boost food production and make exponential gains by way of earnings, employment and other spin-offs. The institutes which are mandated to develop technologies and practices to improve farmer’s yields per hectare and ensure food security in Africa’s most populous country have failed to improve farm output. Stakeholders attribute the inability of agric research institutes to reach their potentials owing to poor

funding and total neglect of the institutions by the government. They stated that there is need for the government to address this issue if it wants agriculture to play a leading role in the diversification process. “Less than 5 percent of the yearly budgetary allocation for agric research institutes goes into core research, while 70 percent goes into salaries and emoluments, with the remaining going into procurements, renovation and overheads,” Baba Yusuf Abubakar, professor of Animal Science, Federal University of Abuja told BusinessDay in a telephone interview. “ We c a n n o t c o n d u c t effective research which such stipends. Research plays a pivotal role in transforming the agricultural sector and that is why we must take it very seriously,” Abubakar said. Data obtained from the budgetary allocation to the agricultural ministry shows that the research institutions get an average of N19.6 billion yearly in the last three years. T h i s m e a n s t hat t h e country cumulatively spent N59 billion on research institutes in the last three years without commensurate result. Data obtained from the budgetary allocation to the agricultural ministry shows that the research institutions got an average of N28 billion ($70 million) yearly in the last four years. Nigeria’s annual spend on its agric research institutes compares with India’s $2 billion, Brazil’s $1 billion and China’s $700million, BusinessDay findings shows. Despite the country’s large size of agriculture in relation to other African nations, Nigeria lags behind its peers in the sector in terms of research funding. A 2015 ActionAid report show that Nigeria only invests $0.42 into agric research for every $100 of agric output, as compared to $0.94 and $1.40 in Ghana and Uganda respectively. Nigeria has the highest agricultural research system in Africa though, in terms of investments and number of researchers, with over 80 government and high education institutes and over 2,000 researchers engaged in research. However, official fraud limits funds from reaching their points of critical need.

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e d n s d o d s y d g d d e 0 h -

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Live @ The Exchanges Top Gainers/Losers as at Tuesday 08 January 2019 GAINERS

LOSERS

Company

Opening

Closing

Change

OKOMUOIL

N77.6

N83.75

6.15

N78.5

N78.9

0.4

N11.35

N11.7

0.35

N5.8

N23.3

N23.5

WAPCO UBN JBERGER

Market Statistics as at Tuesday 08 January 2019

Company

Opening

Closing

Change

N28.85

N26.55

-2.3

N64

N62

-2

GUARANTY

N33.85

N32

-1.85

0.2

FLOURMILL

N19.7

N18

-1.7

0.2

ZENITHBANK

N21.3

N20.3

-1

FO PRESCO

ASI (Points) DEALS (Numbers)

pplication list for the N1.89 billion initial public offering (IPO) of Skyway Aviation Handling Company (SAHCO) Plc closes today. Investors will formally have up till the close of business today to submit their remaining applications. Stockbroking firms and other receiving agents however have some two weeks window to submit their final collations to the issuing houses, providing discerning investors with additional opportunity to use the filing period to submit additional applications. SAHCO is offering 406.074 million ordinary shares of 50 kobo each through an IPO at N4.65 per share. Application list for the N1.89 billion IPO, which opened on November 12, 2018, closes today, Wednesday, January 09, 2019. Minimum subscription to the IPO is 500 shares and thereafter in multiple of 100 shares.

This implies that any Nigerian with N2, 325 will be able to be part of owners of the company, thus realizing one of the objectives of privatization of creating and distributing wealth to Nigerians. SAHCO was privatised by the Federal Government in 2009. Sifax Group acquired the entire share capital of the company but the Share Sale Purchase Agreement (SSPA) mandated the majority core investor to partially divest the shares of the company to the general Nigerian investing public. A total of 10 per cent of the shares being offered for sale will be reserved for staff of SAHCO under an Employee Stock Owner-

ship Plan to be set up and administered by a Trustee. The shares of SAHCO are expected to be listed on the Nigerian Stock Exchange (NSE) this quarter, providing investors with dual opportunities of dividend and capital gain. Many analysts have projected that the share price of SAHCO has significant upside potential and could deliver doubledigit gain in the months ahead. Analysts at leading investment firms including Vetiva Capital Management Limited and Cordros Capital Limited said the post-IPO performance would create values for shareholders. Analysts said SAHCO

4,508.00

VOLUME (Numbers)

216,248,805.00

VALUE (N billion)

2.669

MARKET CAP (N Trn

Investors make last buys as SAHCO’s IPO closes Stories by Iheanyi Nwachukwu

30,036.15

11.200

NSE CEO to review 2018 market performance, give outlook for 2019 has strong potential to sustain growth in the years ahead given its exposure to long-term expansion of air traffic, improvement in macro environment, relatively under-geared balance sheet and its competitiveness enhanced by IATA Safety Audit for Ground Operations (ISAGO) registration. The board of SAHCO has also outlined a growth plan aimed at consolidating the company’s leading position in the Nigerian aviation handling industry with expansion into other West African countries as part of efforts to ensure long-term values for shareholders. The board of the company has also assured that the company would provide good returns to shareholders citing its impressive historic growth and potential upside from ongoing growth initiatives. SAHCO plans to ride on the back of the success of its ongoing initial public offering (IPO) to further push its vision of becoming the leading provider of aviation handling services in the West African region.

he Nigerian Stock Exchange (NSE) is set to hold its 2018 Market Recap and Outlook for 2019. The review/outlook event holds on Monday, January 14, 2019 at the Stock Exchange House, Marina, Lagos. This annual event is a forum for the Chief Executive Officer of NSE, Oscar N. Onyema to brief the stockbroking community, analysts, media and other stakeholders,

on the performance of the market in the preceding year and give prognosis for the market for the New Year, 2019. With the significant progress made by the exchange in 2018 in areas of thought leadership, product development, regulation, sustainability, protection of investors fund amongst others, attendees will have the opportunity of learning more of the 2019 plans

Godsmart Nigeria becomes majority shareholder in NAHCO …now holds 26.95% equity stake

he Nigerian Stock Exchange (NSE) has been notified that Godsmart Nigeria limited now holds 26.95percent of the issued and paid up share capital of the Nigerian Aviation Handling Company Plc (NAHCO). This development follows a transfer of 97,453,125 ordinary shares of NAHCO Plc (representing a 6 percent

shareholding) from Lufthansa Commercial Holding Gmbh to Godsmart Nigeria Limited. This now makes Godsmart Nigeria a major shareholder in NAHCO Plc. NAHCO shares are currently priced at N3.50. The stock has lost 4.1percent of its value this year. With shares outstanding of 1,624,218,750 units, NAHCO market capitalization is in excess of N5.684billion.

United Capital releases economic outlook for 2019 ABRAAJ agrees to convert Aureos Africa Fund of $10m loan stock in C&I Leasing to equity ...themed ‘Sailing Through the Storm’

s part of its strategic initiatives to recommend trends and developments in the Nigerian macro-economic environment, United Capital Plc has released its Economic outlook for the year 2019. The Nigerian Economic Outlook aptly themed ‘Sailing Through the Storm’ takes a critical look at the developments in the global economy as well as the dominant themes that would shape events in the domestic economy, and a host of other economic discourse. Specifically, the report illustrates how rising downside risks and waning upside surprises

will define the outlook for global economy in 2019. Also, critical concerns on the mind of investors such as; whether SubSahara African (SSA) assets will rally in 2019; if the election-risk in Nigeria is overpriced; and the investment case for Nigeria in 2019, are addressed. “The uncertainties around the election and transition period, and the need to implement bold policy changes are the biggest issues identified for investors in 2019. Asides the need to address the badly needed policies changes as well as take bold decision and implement them, our

2019 Economic Outlook provides insights into how local and foreign investors could wade through these uncertainties and make decisions that would take them to the next level”, said Peter Ashade, Group CEO, United Capital Plc. The Nigerian Economic Outlook by United Capital Plc is one of the organizations efforts to position itself as a thought leader in Nigeria’s macroeconomic space as well as increase our brand visibility and awareness. The 2019 Nigeria Economic Outlook is one of our key deliverables and contribution as an enabler of economic growth.

epresentatives of ABRAAJ - managers of the Aureos Africa Fund have confirmed their intention to convert the loan stock of a matured $10million unsecured, coupon redeemable, convertible loan stock in C & I Leasing Plc to equity. The made the confirmation at a Board of Directors’ meeting of C & I Leasing which held in December 2018 at the company’s corporate head office in Lagos, Nigeria, the Nigerian Stock Exchange (NSE) was told on Tuesday. C&I Plc stock price remained stable at N1.78 at the close of trading session on Tuesday January 8,

2019. “This development is positive for our business as it improves the capital structure of the company and helps position it favorably for additional capital raise from the market in Q1 2019” said Andrew Otike-Odibi the MD/CEO of the service conglomerate. C & I Leasing in December announced its intention to restructure the Company’s issued and paid-up share capital, consolidating every four (4) ordinary shares currently held to one (1) new share in the company. The purpose of the reconstruction was to allow the company to have enough unissued shares

to accommodate the conversion of the Abraaj loan stock to ordinary shares and to raise additional capital through the capital market for business expansion. C&I Leasing Plc has been in operation for over two decades and has since evolved from being a simple finance leasing company licensed by the Central Bank of Nigeria in 1991 to becoming a diversified leasing and business service conglomerate providing support services to various indigenous and multinational organizations in West Africa along three lines: Fleet Management, Personnel Outsourcing and Marine Services.

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BUSINESS DAY

The Bloom Africa launches with the ‘Passion, Purpose and Power’ tea

L-R: Babatunde Balogun, chairman, Lagos State chapter, All Progressives Congress; Akinwunmi Ambode, governor, Lagos State; Babajide Olusola Sanwo-Olu, APC governorship candidate, and his running mate, Kadir Obafemi Hamzat, being presented to the party supporters during the party flag off campaign rally, at Skypower Open Field, Ikeja GRA, Lagos, yesterday.

How Nigeria burnt N275.6bn in 9 months of 2018 DIPO OLADEHINDE

n the first nine month of 2018, Africa biggest oil producing country literally threw N275.6 billion into the flames through age long gas flaring menace in spite of its potential for development, particularly in the generation of electricity, and its deleterious effect on the environment. Analysis by BusinessDay showed from January 2018 till September 2018, Nigeria flared a total of 215.9 billion scf flared translating to a total cost of $755.65 million (N275.6 billion) using the average price of natural gas of $3.5 per 1,000scf as at September last year. Further analysis revealed if the flared 215.9 billion scf were to be sold today Tuesday, January 8, 2019) at the current price of $3 per 1,000scf it would cost $647.7 million (N236bn). “It’s a sad story and a combination of several fac-

tors which cut across the value chain; the gas flared away in Nigeria would have been able to address some of the challenges facing our gasto-power plants,” Luqmon Agboola, head of energy and infrastructure at Sofidam Capital, said. Agboola explained that there are still major bottlenecks in infrastructural operational capacity which needs to be addressed in order to solve the menace of gas flaring. Analysis of the NNPC report using September average cost of $3.5 per 1,000scf showed in January Nigeria flared 31.68 billion Scf of gas worth $110 million, in February 27.25 billion scf was flared worth $95.3 million while in march and April, Nigeria flared 26.88 billion scf and 23.06 billion scf worth $94 million and $80.5 million, respectively. The oil and gas companies, which include international and indigenous

operators, also wasted 21.20 billion scf of gas in May worth $74.2million, 21.66 billion scf in June worth $75.81, 21.21 billion scf in July worth $74.2million, 22.42 billion scf in August worth $78.47, and 20.54 billion scf in September worth $71.89 million. Since the 1950s when Nigeria started oil production, gas has been flared indiscriminately by the oil companies operating in the country, despite its many implications. Yet legal efforts to reduce gas flaring and convert the resources into productive use such as generating electricity have never really come through. The Federal Government increased the gas flare penalty from N10 per thousand standard cubic feet of gas to $2 or N612.8 (at the official exchange rate of N306.4 to one dollar) per thousand standard cubic feet of gas in October last year. The increase is in the case of any firm that pro-

duces 10,000 barrels of oil or more, the government explained, adding that for anyone producing less than 10,000 barrels of oil per day, the penalty was increased to $0.5 or N153.2 per thousand standard cubic square feet of gas. The government also announced a fine of N50, 000 or six months jail term, or both, for anyone who provided inaccurate flare data. The effectiveness of the policy lies in its implementation, Agboola said. “Who are those who are supposed to implement these laws that were put in place, and why are they not publicly indicting those found culpable?” he asked. The NNPC data further revealed that out of the 238.91 billion scf of gas supplied in September 2018, a total of 142.09 billion scf of gas was commercialised, comprising 30.36 billion scf and 111.73 billion scf for the domestic and export market, respectively.

Minimum wage: Don’t expect another notice before nationwide strike, Labour tells FG, governors KEHINDE AKINTOLA, Abuja

oalition of labour and civil society organisations on Tuesday called on the Minimum Executive to immediately transmit the N30,000 National Minimum Wage bill to the National Assembly. To this end, the leaders of the trade Union centres who spoke during a nationwide protest held across the country, threatened not to issue another notice before embarking on a nationwide strike. Ayuba Wabba, president, Nigeria Labour Congress (NLC), who spoke on behalf of the coalition, gave the charge during the nationwide protest rally held in Abuja.

Some of the placards displayed by the protesters read: ‘Minimum Wage is not Negotiable, it is our right’; ‘Give us our new minimum wage now’; ‘Upward review of minimum wage will not trigger inflation’; ‘Minimum Wage is willingness to pay and not ability to pay is the challenge’; ‘Minimum Wage will boost Nigeria economy,’ and several others. Wabba said the protest rally served as a warning to the Federal Government before a nationwide strike if government continued to delay the transmission of the minimum wage bill to the National Assembly. According to Wabba, “workers welfare and wellbeing must be paramount, that’s why we say this rally must take place across the

length and breadth of the country. “Today in every government house in Nigeria protest is being transmitted to all our political leaders, governors at the state levels and here we are in the office of the Minister of the FCT, which also like the governor. “We want to say that workers are very central to economic development and very central to the prosperity of any country and therefore we can not be described as the tiny minority. “Workers are very productive, we built the Nigerian economy, we fight for democracy, rule of law and good governance and there is no way we can be described as tiny minority, as we service the entire country.

“So, workers must be able to take care of their family, sent their children to school, but today workers are not able to feed three times a day or send their children to school. “Because minimum wage of N18,000 is no longer obtainable and no longer realistic and can not take care of workers needs and this is the reality,” the NLC president observed. He also noted that workers have been have being patience and more considerate throughout the one year negotiation that agreed on the N30,000. He added that, therefore we have agreed on the negotiation table which took us up to one year negotiating and we also look at all issues and we agreed on the N30,000.

early 100 women gathered on December 23, 2018, for the launch of the The Bloom Africa, an initiative and platform that curates intimate engagements for ambitious African women to build positive and lasting legacies by gathering, connecting and growing as it relates to career, business and self. Founded by Tosin Durotoye, the platform will also strive to connect women to pan-African opportunities and build bridges between like-minded women in the Diaspora. The first event titled ‘The Tea: Passion, Purpose and Power’ featured four of the most dynamic women from the Diaspora – Luvvie Ajayi (New York Times Best Selling Author and digital strategist), Funa Maduka (acquisitions executive at Netflix), Justina Omokhua (global marketing lead at Apple), and Bozoma Saint John (chief marketing officer at Endeavor). The women shared their respective career and personal journeys and lessons learned along the way. From the importance of building a supportive tribe of women, self-branding, building legacies to why it’s important to be kind in business, the women delved into a wide range of topics that kept guests engaged throughout. Speaking on the importance of building a supportive tribe of women, Maduka said, “If you find that when you want to share an aspiration or something really great that just happened to you with

someone…[and] you feel that you need to dumb it down, apologise or make it feel like it’s not such a big deal – then they’re probably not someone you should be talking to about your life.” Saint John, who spoke on the importance of selfbranding, said the reason she is so adamant about women creating their own brands is that, like reputation, “it is going to walk into the room before you do and it’s what will get you the calls when you weren’t even looking for the opportunities”. She said her past three moves from Apple to Uber to Endeavor have not involved her submitting a resume, thanks to the strong personal brand she has built over the years. “Do not be that person who somehow sees another black woman as competition because the only race you’re running is yours,” said Ajayi, speaking on competition amongst women. “You could be running for the same position but really you’re not in competition with her… because if you show up as your best self, that’s the only thing you were supposed to do and the decision then ends up with somebody else. Your job is to be as excellent and as dope as you’re supposed to be. That is your only job. That is the race you’re supposed to run.” Omokhua, on her part, stressed the importance of building legacies. Sponsor partners include the flagship sponsor, Veuve Clicquot and House of Tara, Workstation, Vlisco and Bella Naija.

FG earmarks N1bn for completion of Enugu airport new terminal IFEOMA OKEKE

he Federal Government has budgeted N1 billion for the construction of new terminal building at the Akanu Ibiam Airport in Enugu, according to official documents. The government also budgeted at least N390million for the completion of new headquarters for the Federal Airports Authority of Nigeria (FAAN) in Abuja. These were contained in the 2019 budgeted submitted by the Federal Government to the National Assembly last December. According to the document, the sum would be expended on the construction of a new terminal building alone. It would be recalled that Enugu Airport was in the news for most part of 2018, following the inability

of FAAN to install the Instrument Landing System (ILS) procured for the airport. The Federal Government has announced it will demolish more structures to give way for the full internationalisation of the Enugu Airport. Government had said that for the new ILS to be installed, it would demolish more structures to give way for full internationalisation of the Airport. Hadi Sirika, minister of State for Aviation, disclosed this after a facility inspection around the airport. Sirika said the Federal Government had released N1.7 billion for construction work to continue at the international wing of the airport, noting that more money would be made available when the 2018 budgetary provision was released for completion of work.

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Analysis Lessons for Nigeria, others from failed military putsch in Gabon CHRIS AKOR & DIPO OLADEHINDE

he brevity of the coup d’état that took place, Monday, in oil-rich Gabon may not have come to many by surprise. It underscored the changes that have taken place on the political landscape across Africa as a continent. Back in the 1970s, the question by now would have been: Where next would this happen? A group of soldiers sought to take power in Gabon on Monday while the country’s ailing president was abroad, but the government later declared that the bid had failed and the rebels arrested. Gone are the days when coup d’états or unconstitutional changes of government were so rampant in Africa and had contagion effects. Then, a coup in one country could excite or inspire the military in neighbouring countries to also overthrow their governments. This was so in part because the Organisation of African Unity – the continental body then – did not help issues by recognising almost all regimes that came to power by means of coup d’états. However, thanks to the so-called third wave of democratisation in the 1990s which saw renewed move towards democratisation, the OAU in 1999 decided to suspend any government that comes to power through unconstitutional means from the organisation. The decision was ratified at the Lome Summit in July 2000 where the organisation reiterated “its condemnation of all types of unconstitutional changes of government as anachronistic and in contradiction of its commitment to the promotion of democratic principles and constitutional rule”. The OAU went further by calling on the “United Nations...to join in the rejection of all types of unconstitutional changes anywhere in the world, and take appropriate measures against their perpetrators”. These developments have provided safeguards for countries going through major turning points, such as an election, as is the case currently with Nigeria. In the past, a country at the verge of an election could wake up one morning to hear that for some reason, the military had decided to effect a change in the government, and one of the first things to be suspended would be the planned election, along with the Constitution and other institutions of government. One of the factors that foster violent takeover of governments is the inclination of African leaders to hold on to office forever and pass power to family members, which leads to instability, says Opeyemi Agbaje, a public commentator and CEO at

Gabon soldiers on state radio announcing that a “national restoration council” would be formed. The government later said two of the suspected plotters had been killed © AFP

RTC Advisory Services. “So, if there are no legal ways (to change the government) it leads to uprising,” Agbaje told BusinessDay over the telephone. “It’s unfortunate. It has implications for African leaders who continue to hold on to power.” Agbaje cited examples of sit-tight presidents, including Teodoro Obiang Nguema Mbasogo of Equatorial Guinea and Omar al-Bashir of Sudan. One of Africa’s longest-serving presidents, Robert Mugabe of Zimbabwe, was forced out of office by the military in late 2017, after 37 years in office. Agbaje said the coup attempt in Gabon has an implication for the forthcoming elections in Nigeria, especially if the election is perceived to be rigged or imposed. “Perhaps we should expect something similar,” he warned. “That’s why it’s important we have elections that are free and fair; elections that are credible so that after the elections the government can have credibility.” As the sit-tight political leaders provided the fertile ground for coup leaders, Africa’s Heads of Government forum soon became populated with military Generals and dictators, so much so that it was derisively referred to as a “dictators’ club”. Besides the forum adhering to its principle of non-interference in the internal affairs of member countries, it was inconceivable that leaders who came to power through unconstitutional means would seriously oppose the same means by

which they came to power. Although it took some time to take root, coupists soon discovered it wasn’t going to be business as usual and international recognition was not going to come cheap. Between 2002 and 2009, for instance, there were about nine coup d’etats or unconstitutional changes of governments – Central African Republic (15 March 2003); Saõ Tome and Principé (17 July 2003); Guinea Bissau (14 September 2003 and 2009); Togo (5 February 2004); Mauritania (3 August 2005 and 6 August 2008); Guinea-Conakry (23 December 2008); and Madagascar (January 2002 and 17 March 2009). Yet, not everyone believes that what happened in Gabon yesterday can happen in Nigeria. “No, I don’t think what happened in Gabon would happen in Nigeria. The dynamics are different,” Rafiq Raji, chief economist at MacroAfricaintel, said. Raji explained that Nigeria faced the risk during the 2015 elections had former President Goodluck Jonathan insisted on staying on, saying that no one would have predicted what could have happened. Now, the times have changed, he said. “I think the elite and former military rulers have come to like the current democratic experiment since they now wield the most influence, run for office or sponsor candidates,” Raji told BusinessDay. Election seasons in Nigeria are synonymous with war situations, a do-or-die affair. Barely a month to the country’s defining 2019 general

elections, governance and business activities are almost at a standstill. Machiavellian intrigues, seismic political stunts, inter-party defections, impeachment plots are now the new normal in Nigeria. Incumbent President Muhammadu Buhari is banking on his perceived popularity in the North East and North West to give him another four years in next month elections, while leading opposition candidate, former Vice President Atiku Abubakar, backed by a group of former military generals led by former President Olusegun Obasanjo, is hoping he can turn the table around. “Besides, Obasanjo did a good job of purging the military of ambitious types who want to overtake power,” Raji said. Nigeria experienced four coup d’états within a period of 10 years (1966-1975). The first shot was taken on January 15, 1966, and for several years later, the practice has almost become a vicious cycle for the country’s military. The soldiers who challenged the coup in Gabon have been detained and there has been no reported disturbance to the country’s oil output, which accounts for just 0.5 percent of the Organization of Petroleum Exporting Countries’ (OPEC) total production. OPEC and its allies agreed on a harmonised effort to reduce production and rebalance the market, after a 20 percent slump in Brent prices late 2018. “Any loss of Gabon’s crude is doubtful to significantly tighten the market or send prices higher,”

Charles Akinbobola, energy analyst at Sofidam Capital Limited, said. Gabon is a member of OPEC but is one of the smallest producers in the oil cartel, pumping just under 200,000 barrels a day in November, or approximately one-tenth of the output from Nigeria, Africa’s largest producer. The Central African country rejoined OPEC in 2016 after pulling out in 1995, following what it called “high membership fees” considering its low production. According to data from an emerging and frontier markets-focused investment bank, Renaissance Capital (RenCap), Gabon exports 10 times more oil than Nigeria per person making it the third biggest oil exporter (per capita!) in Africa. While Gabon might not be faced with another round of general elections till 2023, Africa largest oil producing country will be heading to the polls next month amid rising political uncertainty. Businesses and investors are taking a cautious approach to investing more money in the Nigerian economy or even raising new money to expand their existing operations. The political wheeling and dealing playing out in Nigeria is having a butterfly-effect on the already fragile economy, volatile political climate, security, geo-political risk, and instability. For the second year in a row, the 2018 Fragile States Index (FSI) released by the Washington DC-based think-tank, Fund for Peace (FFP), ranked Nigeria as the 13th least stable country in the world.

Wednesday 09 January 2019

BUSINESS DAY

38 BUSINESS DAY NEWS

With Teleology fiasco, Nigeria fails yet another... Continued from page 1

foreign partners now threatening

to pull out. “9mobile is an exciting opportunity to build a revolutionary mobile network that could be the pride of Nigeria. Unfortunately, it appears that we will not be able to participate,” Wood told BusinessDay exclusively. Sources close to 9mobile disclosed that Teleology Holdings and Wood had become increasingly uncomfortable with their local partners who were allegedly taking actions outside of the agreed business plan. Teleology Holdings, the sources said, has been blocked from concluding a management services contract with the local joint venture. The management services contract would have enabled Teleology Holdings and its team of experts to oversee the implementation of the organisation’s elaborate business plans including funding proposals. Wood is understood to be displeased with how events are shaping up and has since resigned from the board of Teleology Nigeria Limited. Wood almost suggests that the time and resources invested in pushing the 9mobile project this far may have gone to waste.

“Fifteen Teleology experts have worked since June 2017 on a detailed 9mobile turnaround plan, development strategies and financial restructuring, which included lining up more than US$500 million fresh direct foreign investment from international institutions,” Wood said. “However, we now must stand down from further work on the 9mobile project,” he said. Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), told BusinessDay that Teleology’s exit would be damaging for the telco which would be left with no technical partners. Without a technical partner, the entire project could be reversed by the Nigerian Communications Commission (NCC), as having one was part of the prerequisites for the acquisition of the troubled telco. “The involvement of Teleology Holdings Limited is very instrumental in the success of 9mobile and it is unfortunate that the holding company has not been able to resolve its differences with the Nigerian company,” Teniola said. “If they leave as purported, 9mobile will need to establish another technical partner in order to successfully manage and run the telco,

www.

because it was on the basis that Teleology Holdings will provide technical expertise that the deal was sealed.” Foreign investor confidence took a severe hit after the CBN alleged late last year that the Certificates of Capital Importation (CCIs) with which MTN exported some $8.1 billion between 2007 and 2015 were illegally issued and the banks involved in the deal were fined some N5.6 billion. The CBN ordered MTN Group, which had a market capitalisation of $10 billion at the time, to repatriate the $8.1 billion. Investors panicked at what seemed a severe punishment for MTN, which sparked a sell-off in the shares of the Johannesburg-listed telco, wiping out a third of its market capitalisation. The matter has, however, been resolved as government officials, from the CBN governor to the acting finance minister, took turns in admitting that the situation was a mistake and one that threatened to mar the country’s reputation before global investors. MTN agreed to pay a fine $53 million in December 2018. The amicable resolution between MTN and the Nigerian government provided a momentary relief that may be snuffed out as the Teleology fiasco continues. This time, it is the Nigerian share-

L-R: Benson Abounu, deputy governor, Benue State; Isaac Adewole, minister of health; Udoma Udo Udoma, representing President Buhari; Abdullahi Ganduje, governor, Kano State, and Adegboyega Oyetola, governor, Osun Sate, during the presidential launch of the second National Strategic Health Development Plan (2018-2022) and disbursement of fund to high performing states under the Saving One Million Lives for results at the Presidential Villa in Abuja. NAN

Focus shifts to pricing of Otedola’s Forte... Continued from page 1

ber last year notified the SEC, the NSE and the investing public

that Otedola’s divestment from the downstream business is pursuant to his decision to explore and maximise business opportunities in refining and petrochemicals. The transaction is expected to be consummated in this first-quarter (Q1) of 2019 subject to the satisfaction of various conditions and receipt of applicable regulatory approvals. As at time of filing this report, the securities and investment services department of the SEC had not received the application, and there was also an indication that the securities registration unit of the apex regulator had not received the application. “No information on the price yet; all they have is formal information that he is selling,” Efe Ebelo, head, corporate communications, SEC, said in a terse message in response to BusinessDay questions. Otedola reached an agreement with Prudent Energy team, investing through Ignite Investments and Commodities Limited, to divest his 75 percent direct and indirect shareholding in the downstream business

of Forte Oil Plc. Market watchers foresee Otedola selling his equity stake at a premium than a discount. Forte Oil Plc share price reached a high of N31.85 as at December 28, and the stock declined by 26.7 percent in 2018. The stock price closed trading at N26.55 per share yesterday, representing a year-to-date (ytd) loss of 7.45 percent. “To consummate the transaction, the approval of the Nigerian Stock Exchange (NSE) as well as that of the Securities and Exchange Commission (SEC) is required,” Olumide Orojimi, head, corporate communications, NSE, said in an emailed response to BusinessDay enquiries. “As at today [Tuesday], the NSE is yet to receive an application regarding the said transaction, so we are unable to comment on terms which would ordinarily be set forth in such an application, including price and volume et al.” A look at directors’ interests as at December 31, 2017 shows that Femi Otedola directly holds 186,260,357 units in Forte Oil Plc while indirectly he holds 838,472,441 units. At N26.55 per share as at Monday, January 7, 2019, his stake in Forte Oil Plc is

valued at N27.2 billion. Forte Oil Plc is listed on Petroleum and Petroleum Product subsector of the NSE Oil & Gas sector. It has 1,302,481,103 outstanding shares and market capitalization of N34.5 billion. Standard Chartered Bank, Corporate Finance & Advisory, Dubai and Olaniwun Ajayi LP served as financial and legal advisors, respectively, to Otedola; PricewaterhouseCoopers and Stanbic IBTC Capital Limited served as Joint Financial Advisors, and Sefton Fross served as legal advisors to Investments and Commodities Limited. Forte Oil Plc downstream business recorded a turnover of N74 billion in the financial year ended December 31, 2017, representing 38 percent decrease compared to N120.1 billion recorded in 2016. In the financial year, Forte Oil Plc reported 13 percent decline in revenue to N129.4 billion as against N148.6 billion in 2016 financial year. The year in review was very challenging for Forte Oil Downstream Business with reduced product supply owing to foreign exchange scarcity and volatility, the company had said. “Theoutstandingsubsidypayments persist and remain a source of funding pressurefordownstreamcompaniesin general,” Akin Akinfemiwa, CEO, Forte Oil Plc, had told shareholders.

holders of Teleology who are deviating from the initial plan for the company that are to blame, analysts say. “When you are struggling to raise foreign capital, these are not the type of events you want to be linked to,” a money manager who sits in South Africa told BusinessDay. While the CBN said Foreign Direct Investment (FDI) to Nigeria declined by 29 percent to N379.84 billion ($1 billion) in the first half of 2018, from N532.63 billion (approx. $1.5 billion) in the same period a year earlier, statefunded data agency, the National Bureau of Statistics (NBS) reported a 4.5 percent increase to $507.96 million in the first half, from $485.75 million the same period a year ago. FDI inflow to Nigeria is way below requirements for a country tipped to be the third most populous nation by 2050 with a population exceeding that of the United States. Nigeria’s FDI per capita was barely $5.6 in 2017, compared to $107 in Ghana,

Wednesday 09 January 2019

$78 in Egypt and $58 in South Africa, according to data from UNCTAD. In the third quarter, the NBS reported FDI of $530 million, the highest in three years, without detailing the drivers. In a pre-disconnection notice advertised by the NCC in the media on December 18, IHS, the infrastructure services provider which hosts majority of 9mobile’s base stations, was granted permission to disconnect 9mobile and other debtor telecom operators within a 10-day ultimatum, ostensibly on account of 9mobile’s indebtedness. Should this disconnection take place, subscribers on 9mobile’s network would have been effectively shut out completely from the telecommunications network and would be unable to make or receive calls. “I feel sorry for Nigeria’s telecom sector and the country’s general outlook to foreign investors with all the hiccups in the sector,” Subomi Sodipo, CEO, CF mobile, told BusinessDay.

Nigeria’s revenue, FX suffer as World Bank... Continued from page 2

investments and foreign portfolio investments in Nigeria. Meanwhile, a report by the UN Secretary-General on the ‘Socioeconomic Trends’ in the West African sub-region predicted 2.1 percent economic growth for Nigeria, which is expected to drive the regional growth forecast of 2.9 percent. International trade and manufacturing activity has softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures. Growth among advanced economies is forecast to drop to 2 percent this year, the January 2019 Global Economic Prospects says. Slowing external demand, rising borrowing costs, and persistent policy uncertainties are expected to weigh on the outlook for emerging market and developing economies. Growth for this group is anticipated to hold steady at a weakerthan-expected 4.2 percent this year. Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, told BusinessDay on phone that slowdown in Nigeria’s economic growth is driven by two factors – local political environment and the performance of crude oil in the international market. He said Nigeria is connected to the global economy through crude oil and that the slowdown in global economy would impact negatively on the price and demand for crude oil. Nigerian economy is actually not a determinant of what happens to global economy but a recipient, Chukwu said, adding that there is need for Nigeria to focus on stable political environment and appropriate economic policy. “At the beginning of 2018, the global economy was firing on all cylinders, but it lost speed during the year and

the ride could get even bumpier in the year ahead,” said World Bank Chief Executive Officer Kristalina Georgieva. “As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies.” The upswing in commodity exporters has stagnated, while activity in commodity importers is decelerating. Per capita growth will be insufficient to narrow the income gap with advanced economies in about 35 percent of emergingmarketanddevelopingeconomiesin2019,withtheshareincreasing to 60 percent in countries affected by fragility, conflict, and violence. “It is not surprising that global growth is expected to be at a modest rate of 2.9 percent in view of the slowing growth inChina,Trump-inspired trade war and challenges with Brexit among other key factors,” said Taiwo Oyedele, head, tax and regulatory services, PwC. “Unfortunately, Nigeria’s projected growth is not better than the global average while our population growth rate is higher. If the trend of fragile GDP growth we witnessed in the recent past continues in 2019, it means Nigerians will even be poorer in 2019 than 2018,” Oyedele said. A number of developments could act as a further brake on activity. A sharper tightening in borrowing costs could depress capital inflows and lead to slower growth in many emerging market and developing economies. Past increases in public and private debt could heighten vulnerability to swings in financing conditions and market sentiment. Intensifying trade tensions could result in weaker global growth and disrupt globally interconnected value chains.

Lagos moves to increase job losers’ woes with... Continued from page 2

By virtue of section 26 of the Capital Gains Tax Act applicable in Nigeria, some capital gains are exempted from taxation, he noted. This includes sums obtained by way of compensation or damages for any wrong or injury suffered by an individual. In his overview of the capital gains tax act (tax legislation), Abdul-Wahhab Ibrahim, a director/partner at PML Advisory, noted that that the Capital Gains Tax Act contains comprehensive guidelines on how Capital Gains should be taxed. It also included the terms, conditions, and clauses attached to their taxation and is made

up of 47 sections, with subsections embedded in them, he noted. “LIRS in the notice (September 2017) held the position that termination benefits are capital in nature and exempt from Personal Income Tax (PIT) but subject to Capital Gains Tax (CGT) while terminal benefits are revenue in nature and subject to PIT,” said Oyedele of PwC West Africa. “The LIRS has now issued another Public Notice mandating employers to account for and remit withholding tax on CGT on termination benefits and any other capital sum paid to the employee,” Oyedele said.

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2nd N100bn sukuk: Oversubscription No to siege on the press - NPAN indicates investor confidence - DMO N

ONYINYE NWACHUKWU, Abuja

n a show of confidence and soaring appetite for Nigeria’s sovereign securities, investors oversubscribed the second tranche of the Federal Government’s N100 billion Sukuk bond that closed last week Monday, by N32 billion. The Debt Management Office (DMO), which gave the update at the weekend, said it received subscriptions of over N132 billion from 2073 investors for the public offering. The bond, which opened December 6, 2018, is a 7-year 15.743% Sovereign Sukuk due 2025. The DMO had said earlier that the proceeds would be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country. Specifically, the proceeds of the road projects

are being planned to fund the reconstruction of BidaLambatta road in Niger State; the rehabilitation of Gwoza-Damboa-GoniriNgamdu road in Yobe/Borno states, and the construction of Ikom Bridge in Cross River State, among others. “The high success rate of the Sukuk, which is the second by the Federal Government of Nigeria, showed investors’ appetite for FGN Securities and also their interest in the fact that the proceeds will be used to improve the state of road infrastructure in the country,” the DMO said in a mailed statement announcing the outcomes of the deal. It noted that the Federal Government issued Sukuk to fund the construction/rehabilitation of key economic infrastructure projects across Nigeria such as roads, to diversity the sources of government funding, and to offer investors an opportu-

nity to invest in governmentissued securities. Nigeria’s Federal Government issued the first tranche of N100 billion Sukuk to fund the construction/rehabilitation of key economic infrastructure projects across Nigeria such as roads, diversity the sources of government funding, and to offer investors an opportunity to invest in government-issued securities. Patience Oniha, director-general, DMO, had severally explained that apart from the direct infrastructure benefits, the federal Sukuk was also useful to achieve a higher level of financial inclusion and to serve as a reference for pricing Sukuk issued by other bodies, especially private sector issuers. Ahead of the second tranche issuance, Oniha had galvanised retail investors to fully embrace the offer and subscribe.

ewspaper Proprietors’ Association of Nigeria (NPAN) has received with shock the news of the Nigerian Army’s siege on the Daily Trust newspaper offices in Abuja, Lagos, and Maiduguri over the weekend, arresting an editor and reporter in addition to seizure of computers thereby disrupting the operation of that newspaper. Although the unwholesome raid was called off on the order of the Presidency, and the Army has explained that its action was warranted by the violation of the Official Secret Act by the newspaper giving prior notice of military strategy and tactics to Boko Haram insurgents, but the siege left in its trail panic and anger reminiscent of the military era brutalisation of the press and the people. The last time in this constitutional dispensation when the Army violated Constitutional guarantee of free speech was in June 2014, when the logistics for distribution of newspapers was

Sadeeq Abubakar, chief of air staff (l), consoling the widow of a deceased Air Force officer, Flt. Lt. Kaitho Paul Kilyofas, during the burial of five Air Force officers at the Military Cemetery, Karmajiji in Abuja, yesterday. The officers died in a plane crash on January 2, 2019, in the cause of their duty at Damansak in Borno.

as Simisola Olubunmi Dada now wish to be known and addressed as Simisola Olubunmi Ojosipe. All former documents remain valid. General Public please take note.

CORRECTION OF NAME

This is to inform the general public that my name was wrongly written as Badmus Kafayat Odunola & Gbadamosi Kafayat Abisola instead of my correct name which is Gbadamosi Kafayat Abisola. All banks and genral public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Mary Gabby Akko now wish to be known and addressed as Mrs Mary Ubon George. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Charles Emilia Precious & Sunday Emilia Ogechi now wish to be known and addressed as Charles Emilia Precious. All former documents remain valid. General Public please take note.

Stocks slide to 19-month low as election jitters bite igerian equities market plunged to a 19-month low, Tuesday, as the All Share Index fell to 30,036.15 points at the close of trading. The decline meant that the benchmark index dipped to its lowest since 31 May, 2017 when it was stood at 29,498.31 points as investors sold on elections worries. The market, which was battered in 2018 has now lost 33.39 percent since its peak of 45,092.83 points on 19 January, 2018, following continued sell-off in market bellwethers as global and domestic headwinds prove too strong. The decline was on the back of poor performance in banking stocks – Guaranty (-5.5 percent), UBA (-5.2

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I, formerly known and addressed

I, formerly known and addressed as Miss Florence Ofuchi Nwabuzo now wish to be known and addressed as Mrs Florence Ofuchi George. All former documents remain valid. General Public please take note.

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SEGUN ADAMS

wantonly disrupted and newspapers confiscated across the country on spurious allegation that materials “with grave security implications were being moved across the country through newsprint related consignments.” That action warranted an apology and payment of token atonement to the newspaper houses by the Federal Government, although it was later criminalised and newspapers made to make refunds to the EFCC.

percent), and Zenith (-4.7 percent) – which exerted a downward pressure on the benchmark index as it fell 1.20 percent on day-on-day basis and 4.44 percent since trading commenced in 2019. “The decline in the stock market is expected with the elections fast approaching. Q1 2019 is anticipated to be bearish as investors remain very cautious,” Aluko Paul, an analyst at MBC Securities, told BusinessDay. “We should expect to see the market plunge further in the coming days as political uncertainties remain on the front burner.” John Holt, which had traded flat since December 24, 2018, jumped 9.09 percent to lead the advancers on the day, closing at 48k per share. Okomu Oil Palm plc followed closely, gaining 7.93

percent to close at N83.75 per share, while Union Bank Nigeria advanced 3.45 percent to close at N6 per share. Rounding off the top five gainers chart, Lafarge Wapco and Honeywell Flour Mill inched 3.08 percent and 2.70 percent higher, respectively, to close at N11.70 and N1.14 per share. The laggards were led by NEM Insurance, which depreciated 9.40 percent to close at N2.12 per share, while Northern Nigeria Flour Mills Plc in similar fashion dipped 9.38 percent to close at N4.35 per share. Equity Assurance and Wapic Insurance both lost 9.09 percent as they closed at 20k and 40k, respectively, with Unity Bank closing 9 percent lower at 40k per share. Across sectors, the performance was bearish as 4 of 5 indices covered closed

in the red. The Banking sector lost the most following sell-offs in tierone lenders Guaranty and UBA, while the Industrial Goods sector gained marginally for the day. ‘’The downtrend is not surprising given the elevated political risk in the political economy,” Gbolahan Ologunro, an analyst at CSL Stockbrokers said. “In addition, headwind s in the external economy evident in continued normalisation of monetary policy in the U.S and on-going trade dispute between US and China amid oil volatility has continued to raise concern about a weak global economy which has le foreign investors to move their funds to low risk and high quality asset in foreign markets,’’ Ologunro said.

The weekend siege on the Daily Trust newspaper premises was clearly unconstitutional, without due process and an act of self help. Additionally, it showed a poor appreciation of the advancement in information dissemination in the global village where news is disseminated at the touch of a keyboard and not necessarily in a fixed address. This is 2019 and those who gave the vexatious order ought to know better.

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I, formerly known and addressed as Mr. Mosopefoluwa George Shonekan now wish to be known and addressed as Mr Mosopefoluwa George Ogunbanjo. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Babatunde Julianah Bosede now wish to be known and addressed as Oladosu Julianah Bosede. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Omosimisinuola Omoshalewa Ajayi now wish to be known and addressed as Mrs Simisola Omoshalewa Tolulope Adeyemi. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Wuraoluwa Moyosolu Okeowo now wish to be known and addressed as Modupeoluwa Omobola Oyeronke Oyelese. All former documents remain valid. WAEC, JAMB, Adeleke University & General Public please take note.

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I, formerly known and addressed as Obialo Adaugo Princess now wish to be known and addressed as Obialo Adaugo Princess Dawnisha. All former documents remain valid. General Public please take note.

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We, formerly known and addressed as kayode Michael Adesiyan Atiba now wish to be known and addressed as Kayode Michael Adesiyan Adewusi, Oluwakemi Atiba now wish to be known and addressed as Oluwakemi Precious Oluwalofifunmi Adewusi, Temiloluwa Samuel Adeniran Atiba now wish to be known and addressed as Temiloluwa Samuel oluwafemi Adewusi, Ayanfeoluwa Samuel Adeniyi Adebare Atiba now wish to be known and addressed as Ayanfeoluwa Michael Adeniyi Adebare Adewusi, Oluwalayomi Adekunmi Emmanuel Atiba now wish to be known and addressed as Iyanuoluwa oluwalayomi Adekunmi Emmanuel Adewusi, Israel Ilerioluwase Atiba now wish to be known and addressed as Isaac Israel Mobolorunduro Ilerioluwase Adewusi. All former documents remain valid. General Public please take note.

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Leaked audio tape: Atiku describes Amaechi’s confession on state of the nation as courageous … it is blackmail against South South, plot to set Amaechi up for political assassination - Group INNOCENT ODOH, Abuja

residential candidate of the People’s Democratic Party (PDP), Atiku Abubakar, has described the statement made by the minister of transportation and director-general of the Muhammadu Buhari Campaign Organisation, Chibuike Rotimi Amaechi, on the state of the nation as courageous, just as he urged him to resign his appointment and return to the PDP. In a statement issued by his special assistant on public communication, Phrank Shaibu, Atiku lamented the shabby treatment of Amaechi for speaking truth to power in a leaked audio tape which led to his being made a ceremonial director-general of the President’s re-election campaign organisation. “We dare say that the cold

war between the national leader of the All Progressives Congress (APC), Asiwaju Bola Ahmed Tinubu and Rotimi Amaechi as well as the statements credited to the latter in a leaked tape which led to the appointment of Tinubu to take charge of the campaigns are at the least a national embarrassment to the nation. Amaechi must now resign and return home to the PDP where he belongs,” the statement said. However, Integrity Group, a civil society organisation, has condemned the leaked audio tape The director of the group, Livingstone Wechie, in a statement issued on Tuesday in Abuja described the leaked audio as blackmail and fake against Amaechi and the South-South region that he represented. “Our organization de-

scribes the so-called audio leak on Rotimi Amaechi as a sheer blackmail against the South-South region of Nigeria which he represents as leading the region in the current political dispensation. It is most unfortunate that fake news has gone extreme to the point where honest, frank and private conversations can be so contrived with the aim of destroying the reputation of an individual and his region as it is in this case without doubt,” Wechie said. The secret tape, which portrayed Amaechi as lacking confidence in the APCled government also rubbished Lagos State, generally portrayed by APC leaders as the flagship of the APC-led government as well as Tinubu’s achievements as governor of Lagos State for eight years and the 20-year reign of the ACN/APC in Lagos, describing the nation’s com-

mercial capital as a ‘a glorified village.’ In the audio clips which were made out of an informal interaction Amaechi had with journalists covering his ministry, the minister said, “Apart from Abuja, check anywhere else that has infrastructure... Lagos is a glorified village... the only difference between Lagos and other cities is that fact that our business is in Lagos and when our people are doing business they can always have food. “If not, what do you have in Lagos? 1000plus megawatts, that’s all. What else do they have? No water, there are no roads. When you hear traffic jam in Lagos or any part of Nigeria it’s because they are no roads. Why is there no traffic jam in Abuja? The reason why you meet traffic jam in Lagos is because they are no roads.”

L-R: Ikechukwu Ugbaja, national secretary, Foursquare Gospel Church in Nigeria; Felix Meduoye, general overseer, and Paul Olagunju, convention chairman, during a national press conference by the church in Lagos, yesterday. Pic by Pius Okeosisi

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BUSINESS DAY

Obiano inaugurates AfDB approves Agulu Lake Hotel $14.12m to support EMMANUEL NDUKUBA

nambra State government has inaugurated the Agulu Lake Hotel and Convention Centre. Performing the ceremony, Governor Willie Obiano reiterated the determination of his administration to exploring the vast tourism potentials in the area to enhance the socioeconomic development of the state. The Agulu Lake Hotel was inherited by the present administration with few percentage of the work already carried out in the 88 hectares of land facility. The governor, who expressed happiness over the success of the project, noted that it would be fully turned into a tourism venture with a nine-hole golf course. Obiano appreciated the people of Agulu for offering robust support to ensure the completion of the job, stressing that agreements entered into with the community would be kept. He stated that the state government had fully paid for the landscaping of the area housing the facility and asserted that more hotels were attracted to the state due to the provision of adequate security. Earlier, chairman of the Board of Agulu Lake, Chukwuma Soludo, said the delivery of the job was a testimony to Governor Obiano’s ability to promoting continuity in governance. Soludo noted that an additional 200 rooms would be added to the facility, which he said would add great value to boosting the economy of the state. On his part, managing director of the firm overseeing the facility, Amaechi Ndili, asserted that the firm was committed to offering world-class hospitality services to the people.

Nigeria’s membership in ATI Agency MICHEAL ANI

frican Development Bank Group, through its trade finance operations, says it has approved $14.12 million facility to support Nigeria’s membership in the African Trade Insurance (ATI) Agency. The approved facility complements ongoing and planned interventions geared at building institutional capacity and improving the resilience of the Nigerian economy. This is a critical and mandatory step to enable ATI commence its operations in Nigeria. Nigeria, as Africa’s largest economy, joins 14 other African countries that have already signed up to ATI membership. “Once membership formalities in ATI are finalized, Nigeria could benefit from gross political and commercial risk insurance cover on total investments and trade amounting to over $5 billion by 2020. The catalytic effect of using limited financial resources in this way is undoubtedly massive,” the development bank said. Joining ATI will enable Nigeria to leverage its position to mobilise additional resources to finance trade, especially importation of essential goods such as medicines and communications equipment, to rehabilitate basic infrastructure and strengthen the country’s productive sector. These financing scales up the work of ATI by supporting the beneficiary RMCs to become members. According to the director of the Financial Sector Department, Stefan Nalletamby, “The bank seeks to achieve its ambitious development mandate by working with and through other strategic partners.

Edo sees growth driver in Egina oil field amid cautious projection

Nigeria lost $2.8bn to oil, maritime-related crimes in H2 2018 – UNOWAS

mid cautious economic projections for the nation’s economy by experts in the New Year, Edo State governor, Godwin Obaseki, has assured that the recent addition of Egina production facility to the bouquet of income streams in the country, will sustain growth in the oil sector. Obaseki in his 2019 budget speech at the Edo State House of Assembly, said: “Our expectation for growth in 2019 is an expansion of 2.5 percent in Gross Domestic Product (GDP), an improvement over the expected growth of 2.1 percent in 2018.” The governor said, “While crude oil price may decline, we hope that the increase in oil production to 2.3mbp/d due to addi-

ISRAEL ODUBOLA

tional output from areas like the Egina field, will sustain growth in the oil sector.” The Egina deepwater oilfield achieved first oil production recently, helping to push Nigeria’s oil output beyond 2.09 million barrels per day in December. According to Total, the field, which is located around 1,600 meters of water depths, 150 kilometres off the coast of Nigeria, started up production on December 29, 2018. At plateau, the Egina field will produce 200,000 barrels of oil per day, which represents about 10 percent of Nigeria’s production, a statement on the Total’s website said. Total described the Floating Production Storage and Offloading (FPSO) unit used to develop the giant Egina

field as the largest one it had ever built, and added that the project also involved a record level of local contractors. The governor further said, “In the non-oil sector, we expect a sustained positive performance in manufacturing and services due to higher consumer spending (as higher government revenues which are ensuring the settlement of outstanding salary obligations across states and a new minimum wage, will boost household income). “In agriculture, we expect a boost in 2019 as governments move to enhance stability and productivity in this sector.” Obaseki’s positive outlook dovetails with the views of experts at Vetiva Research in their analysis of Nigeria’s economic trends in 2019.

igeria lost an estimated $2.8 billion in the second half of 2018 largely as a result of oil and maritime crimes, including piracy, a report released by United Nations Office for West Africa and Sahel (UNOWAS) last Monday in New York states. The report, which covered a six months period from July 1 to December 31, 2018, said these activities, which occurred off the coast of West Africa, had inhibited the development and tranquillity in the region. Between January 1 and November 23 2018, there were 82 reported cases of maritime crimes and piracy in the Gulf of Guinea,

the report stated, adding that the incidences of drug trafficking in the length and breadth of West Africa and the Sahel gained more prominence in 2018 compared to 2017. The weight of cocaine seized from traffickers in Nigeria, Benin Republic and Gambia was more than 50 kilograms, the report said. Joint interdiction task forces seized more than 6kg of methamphetamines, 2.6 tonnes of cannabis and 8kg of heroine, which is 50% higher than the quantity confiscated in the first half of 2018, the report noted. It added that drug production was becoming more severe as 100kg of hard drugs are under the grasp of authorities within the region. The report stated that

outburst of violence was recorded in a number of states across the federation especially in the Middle Belt and North-East zone, while that clash between Fulani herdsmen and farmers was prominent in the period covered. However, Gbenga Ojewoye, a political economist, pointed that the violent crises between Fulani herdsmen and sedentary farmers is not a strange phenomenon in Nigeria as the crises have been in existence for decades. Lack of effective policies on land management, limited enforcement of existing pastoral laws, climate change adaptation policies, political and economic interests, abrasion of traditional conflict resolution strategies.

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from defeated. Reports have it that just as Buhari was preparing to launch his campaign in Uyo, suspected Boko Haram terrorists attacked two military bases in northeast Nigeria, and briefly seized the headquarters of a multinational force comprising troops from Niger, Nigeria, Chad and Cameroon. The rampaging group also sacked a military base in Mile 3, some 5km from Baga. According to Al Jazeera the fighting around Baga continued on Friday morning. This attack was in quick succession to the attack earlier launched by the Boko Haram and their allies in November against the 157 Task Force Battalion in Metele, Borno state, in which over 50 Nigerian soldiers were said to have been killed. The grim efforts by the Boko Haram do not suggest that the terrorist group has been defeated. Buhari perhaps has deliberately ignored the rampaging menace of the Fulani herdsmen regarded as the fourth most dreaded terrorist organisation in the world. This group, whose leadership endorsed Buhari’s second term, has been fingered

as the sponsors of the widespread deaths and destruction of indigenous farmers and farmlands across the Middle Belt. Amnesty International had put the death toll at 3,600 allegedly killed by the herdsmen yet the Buhari government has neither arrested nor prosecuted any of the killers. On anti- corruption, Buhari appears to fight a one-sided war on corruption and the facts are many. Even as the President has used the Economic and Financial Crimes Commission (EFCC) to hound and harass opposition figures, the case of Abdulrashid Maina, the alleged pension thief, has remained mysterious, while the former Secretary to the Government of the Federation, Babachir Lawal, stripped of his position for alleged diversion of funds meant for the Internally Displaced Persons (IDPs), is not facing prosecution yet. If the President succeeded in using propaganda to catapult himself to power in 2015, the realities of today, along with the massive shortcomings in his administration will certainly make his claims of achievements difficult to accept.

2019: Can Buhari survive on propaganda? INNOCENT ODOH

resident Muhammadu Buhari, the candidate of the All Progressives Congress (APC) in the 2019 general elections, on Friday flagged off his campaign in Uyo, the Akwa Ibom state capital amidst claims of some successes in the economy, security and anti-corruption in his three and a half years of leadership in Nigeria. However, today the facts appear not to be kind to the Buhari campaign machinery as the APC propaganda appears to have run into a bad weather. In 2015, Buhari had one profound item his supporters called “integrity” which turned his campaign trail into a national movement and

transformed the President who had failed to win election in three previous attempts, into a folk hero who amassed massive votes with which he defeated then incumbent President Goodluck Jonathan. Today, that integrity quotient appears to be collapsing like a pack of cards. Buhari’s claim that he has transformed the economy is not supported by many facts known to Nigerian institutions and foreign agencies. Nigeria plunged into recession for reasons many analysts attributed to Buhari’s policies that did not reflect proper understanding of the economic variables. According to the Brookings Institute and the World Poverty Clock, Nigeria has in the last three-and-a -half years of the Buhari administration, overtaken India as the world’s capital of poverty, with 87 million of its citizens living in extreme poverty. Nigeria’s currency- the naira has lost about 70% of its value, the GDP growth rate has plummeted from an average growth of 7% before Buhari took over to about 1.8%. Inflation has gone from single digit to a double digit of 11.28% under Buhari, a trend

that is largely attributed to his poor grasp of the economy and lack of vision. Buhari had hiked the fuel price to N145 per litre from N87 per litre, promising to deregulate the petroleum and gas sector with the removal of the much maligned subsidy. However, the promise to revive Nigeria’s refineries to optimum capacity and the construction of modular refineries has not materialised, yet the Buhari government is paying the same subsidy it condemned without appropriation. What hypocrisy. It has now dawned on the Buhari government that there is a huge gap between propaganda and the current reality that his government is having to face. On the insecurity ravaging the country, there appears to be some form of speciousness in Buhari’s definition of insecurity. His fixation on the purported defeat of the Boko Haram insurgents appears to be figment of his imagination. The Global Terrorism Index (GTI) in 2018 rated Nigeria as the third most terrorised country in the world and facts have emerged that the Boko Haram insurgents are far

NEWS

Gunshots, stampede as Lagos 2019: Miyetti Allah makes U-turn, APC flags off guber campaign dumps Buhari, endorses Atiku, Ishaku JOSHUA BASSEY

here were gunshots and stabbing at the venue of the ruling All Progressives Congress (APC) 2019 governorship campaign, which flagged off in Lagos on Tuesday, causing attendees and party faithful to scamper in different directions for safety. It could not be immediately ascertained those responsible for the bloody action and whether any arrest had been made, as Chike Oti, spokesperson of the Lagos State police command, did not take his calls or respond to a text sent to his cell phone. The campaign was held at the Sky Power Ground, Oba Akinjobi Road, Ikeja GRA, Lagos. Everything was going on well when suddenly a gunshot was heard near the podium where popular Yoruba artiste, Wasiu

Ayinde Anifowoshe, popularly known as ‘K1 De Ultimate’, was performing and thrilling the audience. Musiliu Akinsanya, chairman, National Union of Road Transport Workers (NURTW), Oshodi branch, also known as ‘MC Oluomo’, was said to have been stabbed in the pandemonium that broke out at the campaign ground. Sources said there was a skirmish between supporters of MC Oluomo and other transport unions, as series of gunshots rent the air. Outgoing Governor Akinwunmi Ambode was addressing the crowd when the first gunshot was heard, throwing the mammoth crowd into panic. Ambode was said to have told the crowd that the police were in control of the situation, but things got worse as series of

gunshots were heard. The campaign was cut short as Babajide Sanwo-Olu, the governorship candidate of the party in the 2019 elections, could not fully address the crowd as expected. Sanwo-Olu was left with no option but to rush through the vote of thanks, as attendees and party members started leaving the venue in droves. Policemen drafted to the venue were seen in frantic effort to engage the hoodlums in gun battle as people ran helterskelter to for their lives. In the melee, several people were injured. Journalists covering the event also fled the scene to avoid being caught in the bloody clash. Officers of the Lagos State Ambulance Services (LASAMBUS) were said to have later conveyed injured persons to the hospital, including MC Oluomo.

NATHANIEL GBAORON, Jalingo

he Miyetti Allah Cattle Breeders Association of Nigeria (MACBAN), Taraba State chapter on Tuesday, dumped President Muhammadu Buhari, candidate of the All Progressives Congress (APC), which it had earlier endorsed and started drumming support for the presidential candidate of the People’s Democratic Party (PDP), Atiku Abubakar. The Group also endorsed the PDP governorship candidate for Taraba State, Governor Dickson Darius Ishaku and other PDP candidates in the forthcoming general election. The leader of the Group and Northeast chairman of Miyetti Allah, Mafindi Damburam, said they had decided to endorse the governor following his decision to step down the Anti-Open Grazing Law in the state for more consultations. This is “a mark of good fate following his decision to step down the law for a long time to avoid the unnecessary bloodbath it could have caused,” he said.

Damburam also urged the governor to address some of the issues the herdsmen earlier raised against the law. He said the earlier decision of the state’s chapter of the Miyetti Allah to endorse President Buhari and the governorship candidate of the APC in the state, Sani Abubakar Danladi, did not portray a crack in the MACBAN but served to deepen democracy. Governor Ishaku in his reaction said the ongoing confrontation with the Group in the state over the Open Grazing Prohibition law was not only unnecessary but also retrogressive for the Group and the state as a whole. He said, “The return of the Fulani groups to join in building a stronger state shows that they have realised his good intentions and are reneging on their earlier antagonistic position like the prodigal son.” He promised to carry them along while assuring them that he would create an enabling environment for effective take off of ranching in the state as soon as he was returned.

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Buhari committed to reactivate abandoned projects in Lagos, says Ambode JOSHUA BASSEY

agos State governor, Akinwunmi Ambode has urged the electorate to vote for President Muhammadu Buhari and Babajide Sanwo-Olu in the 2019 general elections to ensure continuity as Buhari is committed to revive abandoned projects. Ambode stated this at the flag off of the All Progressives Congress (APC) gubernatorial campaign in Lagos, Tuesday. The campaign was, however, disrupted by gunshots and stabbing of people. The Lagos APC is presenting Sanwo-Olu to the electorate to replace Ambode as governor. Ambode, who addressed the crowd at the SkyPower Ground, Ikeja GRA venue of the campaign, said Lagosians needed to vote candidates of the APC at both federal and state levels. He said President Muhammadu Buhari that has shown concern for Lagos and working in conjunction with the state government to lift the state. According to him, the residents should support the candidates of the APC all levels to consolidate on the gains so far recorded. The governor, who was at the rally with his wife, Bolanle, said President Buhari, had walked the talk. “At the

national level, we have only one choice, the choice of continuity is what we want and we need continuity and consolidation. We need to vote for President Buhari and Professor Yemi Osinbajo. “This election at the national level is not about religion neither is it about tribe. It is about those who have the poor at heart. You know at the national level, we are already doing TraderMoni, we are doing N-Power and we are already doing Employment Trust Fund, among other things. “We know that we would be glad to have Muhammadu Buhari continue as president, all the abandoned

infrastructure that we have had in this state, it is only Buhari that has been propagating the renewal and so we are very conscious that we need to continue voting for the APC,” said. At the state level, the governor said from 1999 till date, Lagos has continued to witness progressive growth, and there was need to support the candidates put forward by the APC to consolidate and further take the State to higher levels. According to him, “The first question to ask is why we have been experiencing progressive in the last 20 years and the answer is very simple - that is because I have had prede-

Presidential candidate of Peoples Democratic Party, Atiku Abubakar, flanked on the right by Senate President and DG of PDP Presidential Campaign Council, Bukola Saraki and other party leaders at the PDP Presidential Campaign Rally in Lokoja, Kogi State.

Kwara group, Elders forum endorse APC candidate SIKIRATSHEHU, Ilorin

he Kwara Rescue Movement has directed its members to vote for the candidates of the All Progressives Congress (APC) in Kwara State during the 2019 general election. In a communiqué issued by the secretary of the group, Saleh Duro, which was made available to journalists in Ilorin, the group noted that members unanimously resolved to choose APC as most suitable political platform to support in the forthcoming elections. “All the members of Kwara Rescue Movement are hereby enjoined

to vote for All Progressives Congress candidates in the next general election. “Kwara Rescue Movement will henceforth, begin to vigorously mobilise, canvas and campaign for the victory of the candidates of the All Progressive Congress (APC) political party at the polls. “Lastly we also wish to put on record the pledge of our members to freely, totally and loyally support the All Progressive Congress Party by working for its success in the next general elections,” the group resolved. Similarly, the Kwara Elders Unity Forum has endorsed the governorship candidate of the All Progressives Congress (APC), Abdulrahman Abdul-Razaq for 2019 election

in the state. S. A. Ajia, the coordinator and convener of the forum, stated this in a chat with newsmen on Tuesday in Ilorin. Ajia explained that the forum, an assembly of eminent Nigerians of Kwara origin, is chaired by Chief Cornelius Adebayo, one-time governor, senator and minister. According to him, the forum unanimously resolved at its meeting to support the candidate for strategic reasons. “In the same vein, members of Kwara Elder Unity Forum also agreed to support the candidature of President Mohammed Buhari in the same general elections as a matter of national expediency.

2019: Aremu declares agenda to change the game in Kwara, pledges more factories SIKIRATSHEHU, Ilorin

ssa Aremu, the governorship candidate of Labour Party in Kwara State, has declared that his government would create factories in the 16 local government areas in the state, if elected in 2019. He however, noted that the major vehicle for an enduring prosperity in all known human societies is availability of industries that will not only lubricate the economy but also provide numerous job opportunities

cessors that have actually delivered on their promises starting from Bola Ahmed Tinubu to Babatunde Raji Fashola and to myself. “It has been 20 years of growth and it has been under one single party, APC. We have had an uninterrupted continuity of governance in the last 20 years and that is why you can corroborate that with other things that are happening with the development and growth of Lagos State. “So, come February 16, we will vote President Muhammadu Buhari and Professor Osinbajo and come March 2, we will vote Babajide Sanwo-Olu and Obafemi Hamzat,” Ambode said.

for the teeming unemployed youths and adults. The governorship candidate made the declaration at the 23rd media interactive session organised by the Kwara State Council of Nigeria Union of Journalists (NUJ) for candidates seeking political offices in the state ahead of 2019 general elections. According to Aremu, who is an economic expert, there was need to resuscitate the moribund industries in the state if the economy of the 51 year old state must pick up again. He added that the rationale be-

hind the revival of industries and companies by his government was a calculated attempt to generate massive employment opportunities and increase the state Gross Domestic Products (GDP) for better living of all and sundry. Aremu, while lamenting over the state of things in Kwara, stated that he had offered himself to put an end to 16 years of Peoples Democratic Party (PDP) in kwara State, put an end to hunger by ensuring food security as well as massive investment in education.

Pro-Buhari organisation hails President’s openmindedness

he Buhari Media Organisation (BMO) has described President Muhammadu Buhari meeting with the Ogun State Governor Ibikunle Amosun alongside Adekunle Akinlade, the gubernatorial candidate of the opposition Allied People’s Movement (APM), as a positive development. BMO said in a statement jointly signed by its Chairman, Niyi Akinsiju, and Secretary, Cassidy Madueke, that it is not necessarily a sign of President Buhari’s endorsement of the APM candidate. This, it said, is especially as he had before now raised the hand of the All Progressives Congress (APC) candidate Dapo Abiodun as his preferred candidate during a recent visit alongside former Ogun State Governor, Olusegun Osoba. “We are aware of some disquiet among APC members on seeing the picture of the President with Governor Amosun and the APM candidate on the front page of national dailies after the weekend meeting at the Presidential villa. “But just as the Presidency has made it clear that the President would only back APC candidates, we don’t see the meeting as a contradiction of the stance.

Ogun APM candidate pledges massive investment in crops production RAZAQ AYINLA, Abeokuta

dekunle Akinlade, the governorship candidate of Allied People’s Movement (APM), has pledged to improve on rice production earlier financed by Governor Ibikunle Amosun’s administration in Ogun state. He added that there would be a strategic investment in cassava which is a symbol of Allied People’s Movement as part of effort to unlock the entire value chain of the produce through production, storage and processing for both domestic and industrial uses. It will be recalled that Governor Amosun, the political godfather of Akinlade had invested state resourc-

Adekunle Akinlade

es, as governor of All Progressives Congress (APC), in rice production and processing, and has succeeded in providing employment for hundreds of the state residents as well as internally generated revenue. Akinlade, who led APM governorship campaign rally to the riverine area of the state - Ogun waterside Local Government Area of the state on Tuesday, declared that APM would be strong supporter and financier of agriculture and agribusiness which the state is known for, saying the party is out to help fight food insecurity in the state. While leading thousands of party faithful to places such as Ode-Omi, Makun Omi, Irokun in Ogun waterside, Akinlade said that APM would continue “the mission to rebuild” started by Governor Amosun by investing massively in rice and cassava production, processing and storage in order to economic add value to the produce. The APM candidate however promised to acquire needed farm implements and equipment that will fasten and facilitate huge investments as well as harvests of such investments in that direction in first 100 days of his administration, saying the party would guarantee bountiful harvests of both food and cash crops for people of the state.

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Wednesday 09 January 2019

Nigeria needs president with vision to work with private sector ODINAKA ANUDU

he private sector is the bedrock upon which many economies are built. According to the Australian Government Department of Foreign Affairs and Trade, the private sector is the engine of growth. “The evidence is clear. The private sector is the engine of growth. Successful businesses drive growth, create jobs and pay the taxes that finance services and investment. In developing countries, the private sector generates 90 percent of jobs, funds 60 percent of all investments and provides more than 80 per cent of government revenues. “Private companies are providing an ever increasing share of essential services in developing countries, such as banking, telecommunications, health and education. Foreign investment, particularly in exporting industries, can accelerate domestic development.” This aptly captures the role of the private sector in an economy and justifies the call for the next president of Nigeria to carry the private sector along. For instance, it has been estimated, and even the government affirmed it in its Economic Recovery and Growth Plan (ERGP) that for Nigeria to close its infrastructure gap and bring itself up to the international benchmark for infrastructure stock, it needs to spend as much as $3 trillion in the next 30 years and majority of this money is expected to come from the private sector. As in many other growth and development indices, Nigeria lags behind many countries of the world in its infrastructure stock. The international benchmark for infrastructure stock as a percentage of GDP is 70 percent, but Nigeria currently stands at below 30 percent. This realisation that both the government and the private sector must contribute their quota towards building Nigeria’s infrastructure is now mainstream and all progressive governments are designing policies to ensure a robust public-private partnership where the private sector can invest massively in infrastructure. But not so with the Nigerian government. Nigerian public officials often do not remember that working with the private sector does not just mean holding meetings with them or including them in com-

President Muhammadu Buhari

mittees, but also selling underperforming or moribund assets to interested private firms. Muda Yusuf, director-general of LCCI, said in an interview with BusinessDay recently, as well as on a TV programme monitored in Lagos, that associated public sector bureaucracy and efficient running of a business enterprise cannot go together. A combination of the both, he argued, cannot produce exciting results. According to Yusuf, the way to engender growth and development is to ensure that public enterprises, which have direct impact on the economy (such as refineries), are efficiently run, and this can only be guaranteed when the economy is private sectordriven. Yusuf explained that at below 30 percent utilisation, publiclyowned refineries are no longer adding value to the economy but a burden to the government. “Government’s continued funding of the refineries is a burden to itself. There is a lot of logic in privatising them. There are, of course, areas where the government will continue to play a key role- health, education and social services, but the private sector can better handle the oil sector. “There was a time when the government had shares in banks, but they sold those shares and the fortunes of the banks were turned around. In fact, where you cannot privatise, liberalise. Public sector bureaucracy is not needed in a business enterprise,” said Yusuf. Speaking further, he argued that government should focus on policies and implementation of same to create the right environment that would attract private capital

Atiku Abubakar

into the economy. As of January last year, Port Harcourt Refinery, according to the Nigerian National Petroleum Corporation (NNPC), performed at 20 percent while the Kaduna Refinery was at an abysmal 4.7 percent utilisation. Similarly, the Warri Refining and Petrochemicals Company Limited ebbed to zero performance but managed to return to 10.70 percent utilisation in August. Once upon a time, President Muhammadu Buhari said, “We are averse to an economic team with private sector members because such persons frequently steer government policy to suit their narrow interests rather than the overall national interest”. Buttressing the president’s position further, the media adviser to the vice president, Laolu Akande further explained that the presidency considers economic management as purely ‘a government affairs’. Many private sector players think that the president is a staunch believer in a statecontrolled economy and a closed state-centric policy process. They believe he considers private sector players as greedy, selfish, and inherently incapable of working with the government towards the development of the state. In 2003 when Buhari began his quest for public office, he voiced his opposition to the surrendering of the ‘commanding heights of the economy’ to the private sector. Private sector players say should Buhari return, he must work with them in a more creative manner. The private sector is facing challenges which should catch the

attention of anyone who becomes president next month. First, the shut-down of Procter &Gamble’s $300 million consumer goods plant in Agbara in July last year reflects the challenges faced by manufacturers in the outgone year. In 2014, P&G set up a diaper line in Agbara, Ogun State, tapped as biggest US non-oil investment in Nigeria. Four years down the line, the company packed up, citing restructuring as its main reason. P&G cited restructuring as its reason, but those familiar with the company said that the company had to shut down its Agbara plant due to high production cost incurred at the plant. Agbara is notorious for its poor road network and multiplicity of taxes. Government of the day is, however, more interested in collecting taxes than in fixing those roads. This is not peculiar to Agbara but is also a clog in the wheel of many industrial zones in the country. Second, tax experts say that the number of taxes payable by businesses across the country is now 54 as against 37 in 2014. Also, 30 to 40 percent of business expenditure in Nigeria goes to alternative energy. Manufacturers have spent N212.85 billion on alternative energy sources between the second half of 2016 and the first half of 2018, according to data from the Manufacturers Association of Nigeria (MAN). This is over 100 percent higher than what was incurred in the previous four halves. Manufacturers and businesses say their logistics costs have risen by 50 to 100 percent in

the last two years, owing to poor state of roads and lack of a good transport system. More so, firms bringing in raw materials into Apapa ports and those exporting commodities abroad have seen their costs swell on rising dwell time, which results in high demurrage charges. Only 10 percent of cargoes are cleared within the set timeline of 48 hours now while the majority of cargoes take between five and 14 days to clear, according to a maritime report conducted by the Lagos Chamber of Commerce and Industry (LCCI).The report notes that some cargoes take as many as 20 days to be cleared at the ports. Tola Faseru, president of the National Cashew Association of Nigeria, said exporters shipping out 1,700 tons of cashew per day in 2014 now manage to ship between 100 and 250 tons. A reduction in export and sales increases cost per unit of product and raises inventory. Furthermore, there is yet no respite in sight for low-cost-seeking manufacturers who would have seen their logistics costs fall had GE not exited a railway contract linking Apapa ports to Lagos mainland. Manufacturers are also not finding borrowing easy as interest rate charged them by banks in the first half of 2018 stood at 22.9 percent, 0.25 percentage point higher than 22.65 percent recorded in the same half of 2017. Incidentally, firms are selling to a population whose disposable income and spending are shrinking. Real household consumption and government consumption expenditures declined in 2017 (at –0.99 percent) while national disposable income fell by 1.52 percent, according to the National Bureau of Statistics (NBS). According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. Nigeria, with a population of 180 million people, has 87 million people, nearly half its population, in extreme poverty as high inflation environment continues to erode discretionary income. Unemployment rate in Nigeria increased to 23.10 percent in the third quarter of 2018 from 18.8 percent in the second quarter of 2018, according to the latest figure from the National Bureau of Statistics (NBS). These are challenges that require the urgent attention of the next president.

Wednesday 09 January 2019

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Deutsche Bank slashes bonuses after lacklustre year

Executives braced for ‘pretty horrible’ bonus round after results and shares disappoint Stephen Morris and Olaf Storbeck

eutsche Bank’s investment bankers are bracing for a double-digit cut in their bonus pool after the division recorded one of its worst years since the financial crisis and the shares slumped to a record low. The bonus pool “is looking pretty horrible . . . it’s significantly down”, said one of the people briefed on the process, which has not yet been finalised. The person added that decline was “comfortably” in the double digits. Another person said that, on aggregate, bonuses in some business areas were set to be down between 15 and 20 per cent. Last year, the bank paid €2.2bn in variable pay, reversing its dramatic 2016 move to slash bonuses by more than 80 per cent to €500m. The 2017 bonus pool was 8 per cent lower than in 2015 but exceeded payouts to shareholders by a factor of almost 10. The bank will report preliminary 2018 results on February 1 and will disclose its final bonus pool on March 22, when it will publish its annual report. “The eventual size of the bonus pool can still change over the next two months,” said one person familiar with the process. The reduction should not come as a surprise after Deutsche’s struggles in investment banking last year. The bank lost further market share to rivals across the board and posted a 15 per cent

plunge in revenue at the crucial trading business in the third quarter. Discouraged by dwindling pay and worried about Deutsche’s long-term commitment to the unit, a string of high-profile executives and managing directors have defected to rivals. Additionally, in a drastic measure to control costs — which still account for more than 90 per cent of the division’s income — in May Christian Sewing, chief executive, axed one in four jobs in its equities sales and trading business. Deutsche cut 930 front office staff in the year through September leaving them with 16,500 such employees in the investment bank. Overall, the bank reduced headcount by 2,800 to 94,800 over the same period. The cuts and departures are part of the reason the pool is smaller. However, the actual impact per employee might be steeper than the headline figure suggests because recent attrition among senior bankers with aboveaverage bonuses was particularly high, one of the people said. That means the bonuses for the people brought in to replace them must come from the remaining pool. A spokesman for the bank declined to comment. Mr Sewing, who took over in April, has also come under pressure from the bank’s largest shareholders not to repeat 2017’s tactic of paying to retain staff despite substandard performance. One top-ten investor “vehemently” pointed out to management that 2018’s poor results

Jim Yong Kim’s resignation tees up World Bank succession battle Trump administration to face critics seeking to break US stranglehold on presidency Sam Fleming and James Politi

he storms that surrounded Jim Yong Kim’s successful bids for the top job at the World Bank in 2012 and 2016 may pale in comparison to the one that lies ahead. Mr Kim, a Korean-American academic, on Monday stunned the world of development finance by announcing he would leave his post as World Bank president in less than four weeks, moving to a private sector firm where he will focus on infrastructure investments in developing countries. The sudden departure more than three years ahead of schedule tees up a battle between the Trump administration, which will have the central role in choosing his replacement, and critics seeking to break the US stranglehold on the World Bank presidency. It will be an immediate test of the White House’s highly sceptical approach to multilateral institutions, especially one such as the World Bank that works closely with China and enthusiastically finances climate change projects. The US will probably seek to retain

its grip on World Bank appointments, observers say, especially after the White House unexpectedly backed a capital increase for the lender last year. But the administration of President Donald Trump has openly questioned aspects of multilateral lenders’ work: last month David Malpass, the top US Treasury official on international affairs, expressed worries about “substantial inroads” being made by the Chinese at multilateral development banks. “This creates a dilemma for the administration — they have signalled they have deep concerns about multilateral institutions, but they will not want to give up a prominent US seat either,” said Clay Lowery, managing director for Rock Creek Global Advisors and former assistant secretary of Treasury. Some Trump supporters were quick to flag up the opportunity presented by Mr Kim’s early departure. Judy Shelton, the US executive director on the board of the European Bank for Reconstruction and Development, the London-based multilateral lender, said the resignation presented an “interesting potential opportunity.”

Christian Sewing, appointed Deutsche chief in April 2018, axed one in four jobs in its equities sales and trading business in May © FT montage / Bloomberg

cannot justify across the board incentive payments at the previous level, a person familiar with the thoughts of the investor said. “It is fine if the bank pays top dollars for top performance, but it needs to stop paying top dollars for bad performance”, the person said. A person familiar with Mr Sewing’s thinking said the chief executive understood investors’ rationale and was willing to accept that some high-level investment bankers may leave because of the limited bonuses. Frankfurtbased top executives believe staff in international hubs such as London and New York have been historically overpaid, another

person said. The lender’s current executive board stands by the assertion of former chief executive John Cryan, when he said last year that the last bonus payments were a “one-off investment” to retain important staff and would not be repeated unless performance improved. Since then Deutsche’s investment bank has continued to lose ground. In the first three quarters of the year, revenue fell 9 per cent to about €10.5bn and pre-tax profit was down 53 per cent to €834m. Fees from arranging bonds, loans and M&A advice dropped 13 per cent and the bank remains mired in eighth position globally, ac-

cording to the latest data from Refinitiv. On a group level, analysts on average expect a return on tangible equity of only 1 per cent for 2018, a far cry from Deutsche’s medium-term target of around 10 per cent. One of the bank’s top managers said the years of job cuts and pay disappointments were having a disproportionate impact on younger staff, who are both easier to make redundant and more willing to quit if they receive a “bad” bonus. Older managers closer to retirement, with fewer options to move and more ties, are more likely to grin and bear it.

Renaissance joins big hedge funds in defying 2018 gloom Two Sigma, Citadel and DE Shaw also deliver stronger returns along lines of Bridgewater Robin Wigglesworth and Lindsay Fortado

he flagship investment vehicles of Renaissance Technologies, Two Sigma, Citadel and DE Shaw notched up hefty gains in 2018, underlining how some of the hedge fund industry’s biggest names have managed to thrive despite renewed financial market turmoil. They join rival fund Bridgewater in defying rocky markets last year, when almost every major asset class suffered reversals as investors fret over the health of the global economy and an inflection point in the era of low interest rates and ultra-easy monetary policy that had helped nurture a bull market. Last year was among the worst for hedge funds since the financial crisis. Many stumbled as they were whipsawed by fierce economic and financial cross-currents, with the average hedge fund losing 6.7 per cent in the year to the end of November, according to HFR’s Global Hedge Fund index. However, a clutch of the industry’s biggest players, especially ones that to a large extent use computerised strategies to trade markets, managed to sidestep the turbulence and profit from the resulting dislocations.

Bridgewater Associates’ Pure Alpha returned 14.6 per cent to investors net of fees, its best performance in five years, while DE Shaw’s $14bn Composite fund gained 11.2 per cent, according to people familiar with the matter. Two Sigma’s $9bn Absolute Return fund returned 11 per cent, while its “global macro” Compass fund notched up a 14 per cent gain in 2018. “Quantitative firms that have made very significant investments in infrastructure, technology, data sets and human capital have an ongoing competitive advantage,” said John McCormick, chief executive of Blackstone Alternative Asset Management, the private equity group’s $80bn hedge fund unit. “Increasingly, firms that have a clear view of what is going to be a differentiated capability and have the scale to build up those capabilities, those are the firms who have the ability to put up a solid return. The bar goes up every year,” he added. Renaissance, founded by former cold war codebreaker Jim Simons and one of the leading quant firms, also enjoyed a strong year, despite being thrust into the public spotlight by the political activities of Robert

Mercer, who was until November 2017 its co-chief executive. Mr Mercer’s support for President Donald Trump and several conservative causes and organisations, such as Breitbart News, had made him a lightning rod of criticism, and heightened scrutiny of a hedge fund that has long been secretive even by the industry’s opaque standards. However, the upheaval appears to have had little impact on Renaissance’s prowess. The Renaissance Institutional Equities fund last year gained 8.5 per cent, Renaissance Institutional Diversified Alpha returned 3.23 per cent and Renaissance Institutional Diversified Global Equity made 10.3 per cent. Renaissance’s oldest fund, Medallion, is only open to the company’s employees, and its performance is not known. Spokespeople for the various hedge funds declined to comment. Ken Griffin’s Citadel, a multistrategy hedge fund, also enjoyed a strong 2018, with its flagship Wellington fund gaining over 9 per cent, and its global equities and tactical trading funds returning almost 6 per cent and 9 per cent respectively, according to people familiar with the matter.

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NATIONAL NEWS

FT WeWork to expand operations after $2bn fundraising

Russian lawyer in Trump Tower meeting charged in separate

Plan to develop residential and educational arms as part of rebranding as The We Company

Natalia Veselnitskaya accused of obstructing justice in money laundering case

Judith Evans

Kadhim Shubber

eWork, the shared office provider, will restructure its business to help expand operations in sectors such as residential and education after agreeing to sell a further $2bn of shares to SoftBank, its largest investor. The real estate group on Tuesday confirmed plans to raise fresh funds from the Japanese tech group, which will acquire $1bn of newly issued shares from WeWork directly and a further $1bn from employees and existing investors. The deal, which was first reported by the Financial Times on Monday, will give WeWork much less than the $16bn that the group had initially hoped from SoftBank, which scaled back its plans following the sell-off in tech stocks and worries among investors in its $100bn Vision tech fund over the investment. As part of the new structure, the group will be rebranded as The We Company, and split into three divisions: WeWork, the serviced-office business that is by far its largest part ; WeLive, a provider of coliving spaces; and WeGrow, which includes a school and coding education provider. The new structure will aim to “expand upon WeWork’s existing efforts in these areas,” the company said in a blog post, adding: “The We Company’s guiding mission will be to elevate the world’s consciousness.” The rebrand and strategic shift were announced at the company’s annual summit in Los Angeles. Adam Neumann, chief executive of WeWork, told Fast Company magazine on Tuesday that SoftBank’s chairman called him in December to say the much larger planned investment could not proceed, after market turmoil cut into SoftBank’s market value and that of its newly listed Japanese telecom unit. Mr Neumann said Masayoshi Son, chairman and chief executive of SoftBank, “called me . . . He said, ‘We’re partners. What should we do?’” The parties then returned to negotiations and hammered out the latest, more modest deal. SoftBank’s $100bn Vision Fund, whose investors had expressed concerns, will not participate in the new tranche of funding. WeWork said the fresh funding meant the group and its subsidiaries had raised more than $10bn from SoftBank since 2017. On Monday, one source close to the discussions said the new deal will see SoftBank buy $1bn of newly issues shares from WeWork at about $110 a share, valuing the technology group at a pre-money figure of $42bn. WeWork said the post-money valuation, including debt, was $47bn. Meanwhile SoftBank will spend a further $1bn buying shares from WeWork employees and investors at a price of about $54 a share. A second source cautioned that the full $2bn investment would value WeWork at about $20bn. Alex Snyder, senior analyst at the real estate investment management firm CenterSquare, said the new strategy gave WeWork “more growth avenues to try and justify their valuation [and] it will require even more time and capital”.

Wednesday 09 January 2019

Donald Trump’s top security aide snubbed by Turkey’s president John Bolton was expected to meet Recep Tayyip Erdogan but had talks with spokesman instead Laura Pitel

onald Trump’s top security aide was snubbed by Turkey’s president on Tuesday, striking a blow to Washington’s efforts to contain the fallout from a plan to withdraw US troops from Syria. John Bolton, White House national security adviser, had hoped to meet Recep Tayyip Erdogan on his two-day visit to Ankara as part of a rearguard effort to reassure American allies and secure the safety of Kurdish forces in Syria following last month’s abrupt announcement that US soldiers would depart. Instead, he found himself on the receiving end of a blistering attack by Mr Erdogan, who accused him of making a “serious mistake” in asking Turkey not to attack Kurdish militants in comments to reporters in Jerusalem before his arrival. “We cannot swallow . . . the message that Bolton gave in Israel,” the Turkish president said, adding that he “probably doesn’t know” the difference between ethnic Kurds and armed Kurdish groups. The Turkish president repeated

a vow to launch a military assault against the Kurdish YPG militia. The group played a leading role in the campaign against Isis jihadis in Syria, and received US weapons and training in return. But it is viewed in Ankara as a threat to Turkey’s security and faces an attack from Turkish armed forces after US troops leave. “We will do what is necessary against these terrorists,” Mr Erdogan said. Mr Bolton and his delegation instead met Ibrahim Kalin, Mr Erdogan’s spokesman and one of his most trusted aides. “They had a productive discussion of the president’s decision to withdraw at a proper pace from north-east Syria,” Garrett Marquis, US National Security Council spokesman, said in a statement. However, US officials were deprived of the chance to meet Mr Erdogan. Speaking to reporters, the Turkish president said there was “no need” for him to see Mr Bolton, adding that the national security adviser’s counterpart was Mr Kalin. Mr Bolton’s difficult visit to Turkey deepens the uncertainty over the future of the Syrian conflict in the wake of Mr Trump’s announce-

ment that Isis had been defeated and US troops would pull out. Mr Trump’s words unnerved not only key US allies in the Middle East but also many in his own administration, who fear it strengthens Syrian president Bashar alAssad and his backers Iran and Russia, as well as leaving Kurdish forces in danger. Mr Bolton, one of the Trump administration’s most hawkish voices on Iran, previously said that US troops would stay in Syria for the foreseeable future to counter Tehran’s influence in the country. He and other senior officials have in the weeks since Mr Trump’s announcement sought to reassure allies and cobble together a plan for protecting US interests. Yet even before Mr Bolton’s arrival in Ankara, analysts had warned that Turkey would be unwilling to accept his plan to secure the safety of Kurdish groups. Some analysts believe that Mr Erdogan may now seek a deal with Russian president Vladimir Putin, Mr Assad’s most important military and diplomatic backer. The Turkish president is due to travel to Moscow next week.

Flagship South African airline in crunch debt talks SAA chief stresses need to restructure loans as it strives to avert closure threat Joseph Cotterill

outh Africa’s struggling state airline is making progress in talks to renegotiate debts due early this year as it seeks to avert the threat of closure, said the airline’s chief. President Cyril Ramaphosa pledged to save South African Airways but his government has balked at the high cost of rescuing state-owned companies. Under Mr Ramaphosa’s predecessor, Jacob Zuma, SOEs became a byword for corruption and inefficiency. Vuyani Jarana, who was appointed as chief executive of SAA to clean up the airline after years of misrule, told the Financial Times: “We are looking very clearly to restructure” the R9.2bn ($640m) of debts. State-owned groups — including the power monopoly Eskom — are crucial to Africa’s most industrialised economy, but their mostly government-guaranteed debts threaten to overwhelm public finances unless Mr Ramaphosa reforms them. The airline has been briefing its lenders on its plans for achieving a

“path to profitability” to persuade them to accept delays in debt payments due in March, said Mr Jarana, who was appointed in 2017. Easing pressure on SAA debt is critical as South Africa’s finance minister Tito Mboweni has signalled the state cannot afford to continue bailing out the lossmaking group. Mr Mboweni said last year that SAA should instead be closed and a new airline started. Mr Mboweni’s comments reflected frustration among South African taxpayers over repeated bailouts for SAA, which slid into financial ruin under Dudu Myeni, the airline’s former chair and Mr Zuma’s close ally. She left SAA last year before the ruling African National Congress removed Mr Zuma from office. SAA has not turned a profit since 2012 and made losses of R5.7bn during the latest financial year. Under Mr Jarana’s rescue plan, SAA is expected to break even in 2021 by overhauling wasteful supply chains and contracts that were allegedly used to dole out patronage under Ms Myeni. “This is not misplaced optimism,” said Mr Jarana, who

urged South Africans to back the turnround. “We’ve shown that there is a board and management that is really focused on getting things done. We would like to do things a lot faster . . . but these are long legacy issues, long-term contracts” that cannot be easily abandoned, he added. The former telecoms executive acknowledged that speculation about the government shutting the airline down was unhelpful. “It creates an impression that the airline is going to die tomorrow. In fact we are here for the long haul . . . if [customers] have a sense we are not going to be there, they are not going to book with us,” Mr Jarana said. Mr Jarana dismissed criticism that SAA had made a strategic mistake by focusing on Johannesburg as its main hub over Cape Town, South Africa’s second city and biggest tourist draw. SAA still saw Johannesburg as a gateway for the region even as airlines in rival hubs such as Addis Ababa have eaten into the southern African travel market, he said.

Russian lawyer known for her involvement in a controversial 2016 meeting with Donald Trump’s campaign was charged on Tuesday with obstruction of justice in a separate matter. Natalia Veselnitskaya, who attended the June 2016 meeting at Trump Tower, was accused by federal prosecutors in New York of fabricating evidence in a prominent money laundering case. Ms Veselnitskaya, a 43-yearold who lives in Russia, was an attorney for Prevezon Holdings, which agreed to pay $5.9m in 2017 to settle civil money laundering claims brought by the US attorney’s office for the southern district of New York. On Tuesday, the US attorney’s office accused her of filing “an intentionally misleading declaration” in the case. The lawyer also has come under scrutiny from Robert Mueller, the special counsel investigating possible ties between Russia and members of the 2016 Trump campaign, after she met with Donald Trump Jr, Jared Kushner and Paul Manafort at the Trump Tower in New York in June 2016. The meeting was sold to Mr Trump Jr by a music promoter with ties to a Russian oligarch as an opportunity to receive dirt on Hillary Clinton from the Russian government. Mr Trump’s son has said no such information was ultimately exchanged. The Prevezon Holdings case was connected to a massive Russian tax fraud uncovered by Sergei Magnitsky, a Russian lawyer who died while in pretrial detention in Moscow. His death led to the passage of the Magnitsky Act in 2012, which allowed the US to sanction Russian officials accused of being responsible. The Manhattan US attorney’s office had sought to prove that Prevezon had laundered portions of the $230m fraud Magnitsky had uncovered. The US attorney’s office on Tuesday alleged that Ms Veselnitskaya had submitted in that case the findings of an investigation by the Russian government “under the false pretence that these findings had been independently drafted.” Prosecutors claimed she was involved in drafting the findings “in secret co-operation with a senior Russian prosecutor” and concealed her involvement from the court. “Fabricating evidence — submitting false and deceptive declarations to a federal judge — in an attempt to affect the outcome of pending litigation not only undermines the integrity of the judicial process, but it threatens the ability of our courts and our government to ensure that justice is done,” Geoffrey Berman, the US attorney in Manhattan, said in a statement announcing the indictment.

Wednesday 09 January 2019

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US government shutdown deprives markets of key data State of economy unclear to Wall Street, policymakers and farmers Gregory Meyer, Richard Henderson, Sam Fleming and Kiran Stacey

nvestors, policymakers and even farmers are being deprived of key economic data as the partial US government shutdown moves into its third week. Funding for agencies deemed “non-essential” lapsed on December 22 amid a political stand-off over President Donald Trump’s proposed border wall. About 800,000 federal employees are affected. Essential or not, some of the agencies produce data vital to market participants — not only on Wall Street, but on Main Street. The longer the shutdown persists, the cloudier the world appears to these users. The shutdown is impeding the production of numbers about the US economy at a time when the Federal Reserve has said policy would be particularly “data dependent”. Grain exports have become impossible to verify as the farm belt is desperate to assess China’s soyabean purchases. On Tuesday, the Census Bureau was scheduled to release November data on international trade in goods and services. The previous month’s report showed a US trade deficit at the widest level in a decade. Instead, the release has been postponed because the bureau, a division of the commerce department, has lost funding. The trade figures are source data for reports on US gross domestic product, the latest estimate of which was scheduled for January 30 release before the Bureau of Economic Analysis shut down. The US agriculture department has postponed Friday’s scheduled release of four reports on grain stocks, crop production, winter wheat seedings and world supply and demand. The reports typically move Chicago’s futures markets. Sara Menker, chief executive at Gro Intelligence, an agricultural information company, said that farmers seeking compensation under federal crop insurance schemes needed the official crop production data to calculate payouts. “It impacts farmers’ planting intentions if they don’t get paid on time,” she says. The department’s reports on export sales of grain were suspended just when China was restarting modest US soyabean purchases in a friendly gesture towards the White House. This week, US and Chinese envoys resumed talks on trade, six months after Beijing placed high tariffs on US soyabeans. “We’re in the midst of these USChina trade talks, and everybody’s on the edge of their chairs about hoped-for goodwill Chinese soyabean purchases during this period of negotiation,” says Richard Feltes, vice-president at RJ O’Brien, a Chicago-based commodities broker. “We regrettably are not getting that information.” Mr Feltes, a grain market specialist, added that the information blackout “provides an unfair information advantage to large exporters who now have inside information on whether or not those sales are taking place. For us standard market users, that aren’t involved in the

export trade of key commodities, we don’t know if anything is going on or not.” US federal government shutdown The Commodity Futures Trading Commission has stopped publishing weekly data on traders’ futures positions in interest rates, currencies, equity indices and commodities. The derivatives regulator’s “commitments of traders” reports are used as a weathervane of market sentiment. Robert Hillman, chief investment officer for investment group Neuron Advisers, said the data allow fund managers to identify which types of investment strategies would be vulnerable in a market shock. “That can give you an indication of risk and potentially alter our models of risk in the market,” he said, describing the shutdown as “a pain”. Bankers and lawyers are watching the shutdown for the impact it has on initial public offerings and other new share issuances. There are no IPOs expected over the next few weeks, although there are 167 companies that have publicly declared their intention to list, according to MarketWatch. The lack of activity may reflect uncertainty in the industry about whether or not the Securities and Exchange Commission will be able to complete the necessary paperwork. “Any company hoping to launch this week is already being affected,” said Joseph Grundfest, a professor at Stanford Law School and former SEC commissioner. “Having no IPOs on the calendar is not normal.” Mr Grundfest added: “When the SEC does reopen, it will be like a pig moving through a python. There will be a huge backlog of documents to get through — registrations, statements, action letters.” The partial shutdown has left many parts of government functioning, allowing some of the most critical data used to assess the economy’s health to continue to be produced. The Energy Information Administration continues to compile energy statistics such as oil supply reports, for example. The Bureau of Labor Statistics produced the employment report for December last week, and key inflation gauges including the consumer price index are still expected to appear. In addition, private sector economic reports including consumer confidence and surveys of purchasing managers, are unaffected by the shutdown. While the shutdown is therefore making it somewhat harder to do monetary policy, “we are not completely flying blind here”, said Michael Feroli, US economist at JPMorgan. A government shutdown in 2013 triggered greater anxiety among economists. Former Fed chairman Ben Bernanke was sufficiently worried about a delay to payroll figures produced by the Department of Labor that year that he asked if it would be possible for the central bank to pay for the report from its own budget. Government lawyers determined this would not be permissible, Mr Bernanke wrote in his book, The Courage to Act.

Funding for agencies deemed ‘non-essential’ lapsed on December 22 amid a political stand-off over President Donald Trump’s proposed border wall

Norwegian pharma company’s oil experiment blows up Vistin Pharma to shut energy arm after being hit by wild swings in the oil market David Sheppard

ne of the more unlikely victims from the recent wild swings in oil markets has emerged: a Norwegian pharmaceutical company better known for manufacturing diabetes drugs. Vistin Pharma ASA, which is listed in Oslo and specialises in producing Metformin for type 2 diabetes, said on Tuesday it was shutting down an ill-fated oil trading venture it had launched last year in an effort to diversify its business. The company, which may seem an unlikely candidate for oil trading despite Norway’s energy riches, said its “ambition” had been to develop a business that could cash in on changes affecting the oil industry, including new regulations designed to sharply curb the global shipping fleet’s use of high sulphur fuel. But Vistin’s energy unit, which was run by Torbjorn Kjus and Kenneth Tveter, two oil specialists who previously worked for Norwegian bank DNB, was left nursing painful losses after the market moved against it during a period when the entire energy complex was whipsawed by wild moves.

Financial bets on the spread between diesel and shipping fuel, which are attracting increasing attention ahead of the so-called IMO 2020 regulations next year that will force the majority of shippers to use lower sulphur fuels, left Vistin Pharma, which has a market capitalisation of just $38m, with losses approaching $10m as of December 31, it said in a statement. While the amounts are relatively small in the context of an industry where a single supertanker can carry a cargo valued far in excess of $100m, the blow-up nevertheless illustrates the extent of the recent price swings that have wrongfooted even some of the most storied energy investors. Brent crude oil hit a four-year peak above $86 a barrel in early October but then suffered one of its sharpest quarterly falls on record, slipping briefly below $50 a barrel on December 26. Prices for refined products such as petrol, diesel and shipping fuel also moved violently. Since then, oil has posted a minirecovery, with Brent rallying almost 18 per cent — an impressive gain in less than two weeks but still only taking prices back to near $58 a barrel. Vistin Pharma, which first an-

nounced problems in its energy business on January 4, a day after Mr Kjus resigned, said on Tuesday that “to establish a sustainable business unit based on energy trading has proved to be demanding”. It added that “the international energy markets have been challenging and the trading positions taken by the company has so far not performed as planned”. It said while it was closing its energy business it continued to hold contracts exposed to the price difference between 150,000 metric tonnes of ICE low sulphur gasoil and Sing 380, a shipping fuel contract, which expire on December 31 2020. Oil’s swings have come as traders have reassessed the pace of US shale growth, which is contributing to signs of an oversupplied market, while weighing fears of a broader slowdown. Some traders still see opportunities in oil, however, not least around IMO 2020. London-based Enerjen Capital has launched a $1bn fundraising this week for an investment vehicle that aims to hedge against a potential fuel price spike caused by the introduction of the regulations.

Stocks gain as optimism grows over trade talks Oil prices continue to rise; euro little moved by eurozone economy worries Dave Shellock

S and European stocks maintained their upward momentum as hopes for progress in resolving the trade dispute between Beijing and Washington were buoyed by news that negotiations between the two countries would be extended into an unscheduled third day. President Donald Trump earlier said that the talks were “going very well”, following on from positive comments on Monday by Wilbur Ross, US commerce secretary and trade hawk. “With the US and China working to resolve their issues, the Federal Reserve promising to remain flexible and the US economy firing on all cylinders, it is easy to see why sentiment is on the up,” said Fiona Cincotta, senior market analyst at City Index. “Obviously, this is not the end of US-China trade tensions by a long shot and there will almost certainly be further bumps and twists along the way but, for now, the markets are happy with the slow, steady progress that it perceives has been achieved.” Indeed, the S&P 500 was heading

for its third straight day of gains and was up more than 9 per cent from the 20-month intraday low it struck on December 26. Oil prices also continued to regain ground with Brent crude rising for a seventh day and appearing to make a decisive break above the $58 a mark. The trade optimism continued to weigh on Treasury prices with the yield on the 10-year note continuing to climb off a one-year low hit at the end of last week. German Bund yields also inched higher, in spite of further signs of weakness in the eurozone’s biggest economy. Industrial production fell 1.9 per cent in November, echoing an unexpectedly steep drop in factory orders announced on Monday and heightening the view that the German economy, and that of the eurozone more generally, had shifted down a gear in the fourth quarter. Yet there was only a muted impact from the data on the euro with the single currency holding at the upper end of its recent range against the dollar. “The narrowing in the Treasury/

Bund yield differential is doing stalwart work in defending the downside for euro/dollar now and my confidence we’ve seen the lows for this cycle is growing,” said Kit Juckes, analyst at Société Générale. Equities By midday in New York, the S&P 500 was up 0.5 per cent at 2,563 — having earlier risen to 2,579.82 — leaving it 9.2 per cent up from its Boxing day low. The index has now risen 4.7 per cent over the past three days. The Dow Jones Industrial Average was 1 per cent higher while the techheavy Nasdaq Composite was up 0.7 per cent as participants largely managed to brush off a profit warning from South Korea’s Samsung. Retailers led the way higher in Europe, helped by positive comment on the sector from BoA Merrill Lynch, which put a “buy” rating on France’s Carrefour. The stock rose more than 2.7 per cent, with CAC 40 index in Paris rising 1.2 per cent. The pan-regional Stoxx Europe 600 index rose 0.9 per cent as the Xetra Dax in Frankfurt gained 0.5 per cent and London’s FTSE 100 ended 0.7 per cent higher.

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Wednesday 09 January 2019

ANALYSIS Why the world economy feels so fragile Political instability will make it harder to ride out a slowdown Martin Wolf

Data brokers: regulators try to rein in the ‘privacy deathstars’ Companies that collect consumer information have operated in the shadows. But calls are growing for tougher rules Aliya Ram and Madhumita Murgia

here are many personal details that Paul-Olivier Dehaye is willing to share online, but the behaviour of his bladder is not one of them. Yet when the Belgian privacy campaigner requested his data from advertising technology company Amobee, he found the business had predicted that on June 9 he was “likely to suffer from overactive bladder”. A legal representative for Amobee explained in an email to Mr Dehaye that the data had been licensed from The Weather Company, a business owned by technology group IBM. The Weather Company decided that based on hot weather conditions in Mr Dehaye’s area he was likely to have an “overactive bladder” — and buy more drinks — on that day: “The overactive bladder [category] targets a mix of weather conditions that cause symptoms of overactive bladder to flare up, enabling advertisers to message when OAB is most likely to be top-of-mind for sufferers,” the email said. Few internet users will have heard of Amobee, a US company that sells advertising insights to the likes of Airbnb, Publicis and Lexus. But the business is just one of a constellation of adtech groups, data analytics firms and credit reference agencies that make up the rapidly growing data broking industry. That industry is now very much in the regulatory spotlight in Europe. While the practices of its businesses have been investigated in the US for a number of years, regulators in Europe are now for the first time looking closely into their activities in the wake of the Cambridge Analytica data harvesting scandal last year and the introduction of the General Data Protection Regulation, Europe’s new privacy law. Businesses that for years have operated largely in the shadows face the prospect this year of heightened scrutiny as public opinion shifts on questions of privacy. The regulators have made it clear that they are deeply uneasy about the way the industry has been operating. “They are all processing personal data, there is absolutely no doubt about that,” says Mathias Moulin, director for the protection of rights and sanctions at the French data protection watchdog, CNIL. “They all try to say that it’s anonymous to lower the pressure from the public, but that’s not true. They know that and we know that.” While much of the attention last year focused on the use of data by tech groups such as Facebook, regulators and policymakers from the UK, France and Ireland who are examining the data-mining industry are turning their attention to the interlocking universe of lesser-known brokers that have also flourished as people spend more time online. In November, Privacy International, the campaign group, asked European regulators to investigate seven brokers including software company Oracle after accusing them of breaking European data protection laws.

“[We are] concerned about whether or not their practices are compliant with the laws,” says Elizabeth Denham, the UK’s information commissioner. “We are looking at how they conduct their business and their general compliance with GDPR . . . certainly there is a dynamic tension between the way the businesses are conducted and the principles in the GDPR.” Data brokers mine a treasure trove of personal, locational and transactional data to paint a picture of an individual’s life. Tastes in books or music, hobbies, dating preferences, political or religious leanings, and personality traits are all packaged and sold by data brokers to a range of industries, chiefly banks and insurers, retailers, telecoms, media companies and even governments. The European Commission forecasts the data market in Europe could be worth as much as €106.8bn by 2020. “The explosive growth of online data has led to the emergence of the super data broker — the ‘privacy deathstars’, such as Oracle, Nielsen and Salesforce, that provide one-stop shopping for hundreds of different data points which can be added into a single person’s file,” says Jeffrey Chester, executive director of the Center for Digital Democracy based in Washington. “As a result, everyone now is invisibly attached to a living, breathing database that tracks their every move.” Over the past five years, the data broker industry expanded aggressively in what amounted to a virtual regulatory vacuum. The rise of internet-connected devices has fuelled an enhanced industry of “cross-device tracking” that matches people’s data collected from across their smartphones, tablets, televisions and other connected devices. It can also connect people’s behaviours in the real world with what they are doing online. “The dream for the industry is to be able to connect the online and offline worlds to have a 360-degree view of the customer,” says Gabriel Voisin, partner in international privacy and data protection at Bird & Bird, the law firm. While brokers do not ever buy data directly from consumers, they are central to the data market. Even consumer data leaders such as Facebook, Google, Twitter and Snapchat have signed up as customers of brokers such as Acxiom, Oracle, Experian and others, because of the wealth and granularity of offline and crossdevice data they have accumulated. For instance, if you went into a supermarket and bought baby wipes or nappies, that information could land you on a list for showing targeted ads to new parents. According to IDC analyst Karsten Weide, growing demand should cause data vendor sales to more than triple to $10.1bn by 2022, compared with $3.1bn in 2017. “The large platform giants, Google, Facebook and a few others — they are the major nodes in today’s personal data economy,” says Wolfie Christl,

a researcher at Cracked Labs, a nonprofit group based in Austria. “At the same time there is a kind of distributed surveillance economy . . . [that is] also collaborating with each other and large old-school data brokers like Acxiom.” One of the largest data marketplaces is Oracle, the computer software company based in California. Oracle owns and works with more than 80 data brokers who funnel in an ocean of data from their own range of sources, including consumer shopping behaviour at brick-and-mortar stores, financial transactions, social media behaviours and demographic information. The company claims to sell data on more than 300m people globally, with 30,000 data attributes per individual, covering “over 80 per cent of the entire US internet population at your fingertips”. Richard Petley, head of Oracle in the UK, told the FT in August that there was “lots of opportunity” in data analytics as people spend more time online. Oracle declined to comment for this article. Others, such as credit rating agency Experian and Acxiom use demographic, sociographic, lifestyle, cultural, mortgage and property data to categorise individuals. Experian uses the “Asian heritage” label for targeting “large extended families in neighbourhoods with a strong South Asian tradition”, while Bank of Mum and Dad describes households where a grown-up child still lives at home. Best known for its consumer credit scores, Experian’s business model has changed significantly since it went public over a decade ago. Its data business comprises 55 per cent of its revenues, with the rest coming from other services such as identifying fraud or helping customers make credit decisions. Under the company’s “One Experian” transformation plan announced last year, it has sought to “connect different data sources”, according to its annual report. By law, the company cannot sell data collected for credit decisions to advertising customers,but according to chief executive Brian Cassin, the businesses overlap “to a degree” as the company seeks “to build much more precise products” that use data to build more accurate tools for predicting credit worthiness, affordability and the likelihood of fraud. Despite the sensitive nature of the data that brokers gather, acquiring the information they compile can be surprisingly easy. In October, Spanish researcher Joana Moll was able to buy the online dating profiles of 1m people for €136 from data broker USDate. The profiles of unsuspecting customers, garnered from online dating app Plenty Of Fish, included 5m photographs and details like their date of birth, zip code and gender as well as intimate information like sexuality, religion, marital status and whether they smoke, drink or have children. Plenty of Fish says it does not sell user data to USDate, and was unclear about the provenance of this data set.

hould we be concerned about the state of the world economy? Yes: it always makes sense to be concerned. That does not mean something is sure to go badly wrong in the near future. On the contrary, the world economy seems to be heading into just a mild cyclical slowdown. Far more important is the adverse longer-term structural and cyclical context because it makes any short-term swing far more perilous. According to Goldman Sachs, the momentum of global economic growth slowed markedly in 2018. The most globally significant slowdown has been in the Chinese economy— the main engine of global growth since the financial crisis of 2007-08. But Germany and Japan also recorded economic contractions in the third quarter of last year. Stock markets have also been

in turmoil. In part, that presumably reflects worsening perceptions of prospects. These falling markets should also weaken consumption and investment. All this suggests a cyclical slowdown is on the way. Yet conventional forecasters are hardly unduly worried. The OECD stated last November that the “global expansion has peaked” and that global gross domestic product growth is “projected to ease gradually from 3.7 per cent in 2018 to around 3.5 per cent in 2019 and 2020, broadly in line with underlying global potential output growth”. This would be an ultra-soft landing. Consensus forecasts support this: the December consensus forecasts for growth in 2019 are little different from those made a year ago. Growth prospects for the US are even slightly upgraded. A mild economic slowdown should hardly be problematic. On the contrary, it is to be expected. In the high-income economies, which still generate three-fifths of world output (at market prices), the cyclical upswing is elderly and excess capacity has fallen sharply. Where the expansion is most advanced and excess capacity has disappeared, monetary policy has been duly tightened, quite appropriately, pace Donald Trump. Happily, inflation is still subdued and nominal and real interest rates are low. While equity markets have indeed corrected, US stocks have rarely been as highly valued as today. Nothing here suggests a severe global recession is on the way. Indeed, it bears remembering that while capitalist economies have always been cyclical, severe recessions, especially global ones, are rare. It would appear wise, in sum, for everybody “to keep calm and carry on”.

Yet there is a catch — a big one. As Ray Dalio of Bridgewater argues in a note on what is going on, the short-term cycle is the least of our challenges. There are also structural changes, which he summarises in terms of differential productivity trends, and the longterm debt cycle. Crucially, these developments have made the world economy fragile. “Productivity” should be viewed as a shorthand way of summarising the shifts in global economic power, widening inequality, collapse in employment in manufacturing, rise of the digital economy and the “savings gluts” of past decades. The long-term debt cycle, which accelerated from the 1980s, was, among other things, a way to manage the social and economic consequences of those structural shifts. These structural shifts have had big political effects: a surge in nationalism and populism, Brexit,

the election of Mr Trump, a trade war between the world’s two most important economies and an erosion of the liberal global economic order. The long-term credit cycle reached its denouement in the disastrous financial crisis of 200708. Today, China, whose long-term debt cycle accelerated after the crisis, is reaching the limits of debt accumulations, too. These long-term conditions significantly constrain any optimism one feels over a short-term cyclical slowdown. A powerful implication is that room for a response to a recession would be limited by historical standards, especially in monetary policy. If the US Federal Reserve had to make a standard response to a significant recession, its shortterm rates might need to be minus 2.5 per cent. The European Central Bank and Bank of Japan would have to go further still. If the worst came to the worst, the Fed and the ECB might be forced to follow the BoJ into even more deeply unconventional policies. While the People’s Bank of China has more room for manoeuvre, reigniting China’s credit boom carries longer-term risks. The transformation of the global environment brings further dangers, both negative and positive. The biggest negative risk is that it would be impossible to mount a co-ordinated and effective response to a severe global economic slowdown. One obvious positive danger comes from the possible unmanageability of the past accumulations of private and public debt. Another danger is that a breakdown in the global political order creates severe economic disruption on its own, perhaps through a collapse in trade, perhaps as a result of another geopolitical event.

Wednesday 09 January 2019

BUSINESS DAY

Opinion

OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

have never had as much difficulty in any year since I started selecting my person of the year as in 2018. This is probably a sign of the diminution in the quality of governance and civil society that we have experienced in Nigeria in recent years. It is difficult to observe evidence of persons one may regard as outstanding governors, ministers or other public officials as everything appears to have become crass and base. It is worse in civil society-very few people have any credibility left as many of its leaders squandered most of theirs with the seeming merger of civil society and the APC over the Buhari presidency in 2015. Now what passes for activism are the antics of Senator Dino Melaye, former Governor Ayo Fayose and maybe the common sense articles of Senator Ben Murray-Bruce. All we are left with in the civil space are busi-

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Person of 2018 ness models to ensure personal “sustainability”! Ask yourself which governors can credibly be described as having distinguished themselves in impacting the lives of their residents? It’s really difficult to point to real achievement, beyond PR and propaganda! Governor Ambode tried and started a lot of infrastructure projects but he has been castrated politically and his record left in tatters; Obaseki in Edo has shown some thinking, economic planning and seems to want to restore the dignity of the state, but has he done enough? The public space is now dominated by entertainment-Senator Ademola Adeleke, the dancer nearly made it into the Osun State Government House on account of vigorous dancing, with his excess bodily slabs shaking visibly, and while it became known that he only possessed secondary education, with accusations of examination malpractices hanging over his head; Dino Melaye has done enough to earn awards in Nollywood and even globallyhe is the one filling the vacuum in civil society, along with now former Governor Ayo Fayose! Any reflective person will wonder what happened to all our activists that activism now rests

on the dramatic shoulders of Melaye and Fayose? Nnamdi Kanu started a new Biafra struggle, only to disappear and show up many months later praying at the Western (Wailing) Wall in Jerusalem, Jewish Scriptures in hand and draped in Judaism’s holy praying shoal! He has since dropped a significant controversy as he solemnly avers that the President Muhammadu Buhari we see today, is actually Jubril from Sudan, with the old Buhari long deceased and buried! There is a sense of course in which Buhari is unquestionably invisible-in the quality (or lack of it) of the leadership and governance he does (not) provide for Nigeria! The country has not managed to reach two percent GDP growth in spite of Nigeria’s endowments, and revival of oil prices-at a point approaching $85 per barrel. Even Buhari’s wife Aisha in her activist moments (!) contends forcefully that her husband’s government has been hijacked by two or three men. Most gossip suggests she refers to Mamman Daura, Isa Funtua, Babagana Kingibe and the Chief of Staff, Abba Kyari, which some others describe as the “fantastic four”! I think Aisha and her husband

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In spite of the dis-ennobling state of politics and civil society, there are two people however who save us from our shame-Leah Sharibu, the little girl who, in her weakness and captivity of Boko Haram, gave others hope by refusing to renounce her faith and Segun Awosanya who led and still leads the “END SARS” Movement

are playing “good cop; bad cop” tricks on the Nigerian people though to what end is yet unclear! To be fair, Babatunde Fashola has been trying to construct some roads, even though he has had less success with power-we pray he oversees the completion of the troubled Lagos-Ibadan Expressway as his legacy to the nation; and Rotimi Amaechi affirms that

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he would also deliver a LagosIbadan rail service (in his case, we should be praying that he is not displaced from that objective by the notorious “Amaechi Tapes”) but beyond those two, there is really nothing to celebrate with the notable exception of the vigorous exertions of our dear Vice President Yemi Osinbajo who is zestfully providing “moni” to traders, farmers and sundry poor persons! His critics accuse him of vote buying but he has been neither distracted nor deterred from his noble endeavours! In the political space, former Ogun State Governor Gbenga Daniel bounced back into national reckoning by leading the successful primary campaign of former Vice President Atiku Abubakar, but in the curious ways of Nigerian politics, some of those he defeated have now taken over the Atiku campaign! His principal, Atiku himself has returned to the national stage and now has a plausible (but probable?) chance of defeating the incumbent president, Amina Zakari permitting! Governor Kayode Fayemi achieved the improbable-returning to office as Ekiti State Governor though his own adversaries say his victory was tainted by “federal might”; and Asiwaju

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Bola Tinubu appears to have reasserted his political relevance in the APC (as co-chairman of the presidential campaign) and in the South-West (replacing (?) Ambode; electing his cousin Oyetola in Osun; displacing his chief power rival, Amosun’s candidate from the party ticket in Ogun State-working with VP Osinbajo and Chief Segun Osoba, it seems; and selecting the APC candidate in Oyo State) but will he achieve his ultimate aim, upon which he’s staking everything? In spite of the dis-ennobling state of politics and civil society, there are two people however who save us from our shameLeah Sharibu, the little girl who in her weakness and captivity of Boko Haram gave others hope by refusing to renounce her faith AND the gentleman known on social media as “Segalink” or “SEGA L’eveilleur-real name Segun Awosanya who led and still leads the “END SARS” Movement which campaigned against police brutality and gave voice and support to its victims. Leah Sharibu and Segun Awosanya are my joint persons of 2018. They demonstrate that when the erstwhile leaders of civil society get tired and/or are co-opted, others will rise up and replace them!

PMB & APC are restructuring Nigeria? FRANKLIN NNAEMEKA NGWU (PHD)

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

ith recent developments in our polity, I am more convinced that those opposing the restructuring of the country seems to be fighting a moving train! They can only delay it because Nigeria’s restructuring is ongoing and cannot be stopped. It is something that its time has come and most interestingly, the phase that is currently taking place is being done possibly obliviously by those that cannot be described as advocates of restructuring- PMB and his APC government! Of the many actions of the government, I will use only two to illustrate. While the first is the plan to build six industrial parks as contained in PMB’s 2019 Next level plan, the second is the emerging proliferation of regional development commissions due to increasing demands for their creations. According to PMB’s next level plan, the need to create one industrial park in each of the six regions of the country is to ‘exploit the comparative

advantages of the regions and states’ for the industrialization and economic development of the regions and Nigeria. To enhance the functioning of the regional economic zones, one Special Production and Processing Centre (SPPCs) will be built in each of our 109 senatorial zones. I pray that the plans are achieved as Nigeria’s industrialization and economic development will be truly enhanced with effective implementation of the plan. The interesting aspect of the plan is that it is being proposed and championed by the PMB APC led federal government. On the emerging proliferation of regional development commissions, it seems that only South-West and North-Central are yet to get or commence proper demand for their own development commission. While South-South has NDDC and North-East waiting for the take-off of the North-East Development Commission (NED C), the South-East one has just been passed by National Assembly and the North-West is intensely lobbying for the passage of the bill for North-West Development Commission (NWDC). Again, note that of the three bills passed or being considered by the National Assembly, two (NEDC and NWDC), are from APC members who to a large extent oppose the call for restructuring of Nigeria. The latest one- NWDC bill is being championed by

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Nigeria is a plural society and the only way to govern a plural society is through effective deep-rooted and longlasting integration of the different components of the society or proper restructuring of the country

Senator Jibrin Barau (APC Kano North). The interesting question that comes from a deep retrospection of the above issues is why the pursuit for such regional development initiatives are from both the executive and legislative arms of a government that seems to oppose restructuring? The simple answer is that it is obvious that Nigeria cannot be effectively governed or developed through the present centralized form of government disguised as a federal system. By proposing to build one industrial park in each of our six regions in addition to one SPPC in each of the 109 senatorial zones, PMB’s APC led federal government is simply indicating that the industrialization and economic development of the country will be better

achieved through the regions. In the same vein, the increasing demand for the creation of a regional development commission for each of our six regions is also a further affirmation that the development of the country might be better achieved through the regions. The centre cannot hold and unable to develop Nigeria! The more interesting aspect of the demand for the creation of regional development commissions is that it is not based on an empirical assessment of the success or failure of the already existing one-NDDC. As NDDC is generally perceived to be performing below expectation, the further question which would have helped the effective creation and functioning of other ones such as NEDC or SEDC is the reason(s) why NDDC cannot be said to be functioning well and perceived as another avenue to settle the boys and their related interests. From research and interactions with Niger Delta stakeholders, a key reason why NDDC is performing poorly is the law and the way it is set up. Particularly, its control by the Federal government which creates a sense of very limited or no ownership, responsibility and accountability. As the proposed regional economic zones will have similar ownership and operating structure as NDDC, they might unfortunately suffer the same fate of poor performance, waste and no accountability

as NDDC. The problem with Nigeria is that we are always inventing solutions through a reactive assessment of symptoms instead of a proactive examination of root causes. Nigeria is a plural society and the only way to govern a plural society is through effective deep-rooted and long-lasting integration of the different components of the society or proper restructuring of the country. As the former should effectively start at the creation of the nation, we missed it as neither were the different ethnic groups in Nigeria properly integrated before the creation and independence of Nigeria nor after independence. For those opposing restructuring, it might be important to reiterate what a plural society is“A society is pluralistic to the extent that it is structurally segmented and culturally diverse. In more operational terms, pluralism is characterised by the relative absence of value consensus; the relative rigidity and clarity of group definition; the relative presence of conflict, or, at least, of lack of integration and complementarity between various parts of the social system; the segmentary and specific character of relationship, and the relative existence of sheer institutional duplication( as opposed to functional differentiation or specialisation) between the various segments of the society” (Van Den Berghe, 1964: 2)

If the above is our society and we have missed effective integration of the different components of Nigeria, we are therefore left with the only option which is proper restructuring if we are really interested in the growth and development of the country. It is the route that every developed or properly developing or emerging economy has passed- either restructuring or effective integration of the different components of the society. And for some such as USA, UK and Canada they have pursued both restructuring and effective integration of the components of the society. UK where we adopt majority of our laws and systems is a properly restructured plural society with powers and control largely devolved to Wales, Scotland, England and Northern Ireland leading to their name as United Kingdom. For the proposed regional economic zones and development commissions to properly function and meaningfully contribute to our economic development, Nigeria first need to be properly restructured with significant powers devolved to the regions. Denying or rejecting the importance of this as presently done by PMB led APC government is just a delay to something that its time has come-the demand for sustainable and inclusive growth and development of Nigeria!

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