BusinessDay 09 Jan 2020 by BusinessDay

UNDERCOVER INVESTIGATION (I)

With just N200 bribe per immigration checkpoint, illegal migrants are infiltrating Nigeria through Sokoto

Page 34

Between November and December 2019, IBRAHIM ADEYEMI embarked on a four-way undercover trip from Lagos, Nigeria’s commercial capital, to Sokoto, a northwestern state bordering Niger Republic. Throughout the cumulative 96-hour journey of over 4,000 kilometres, he documented how officers of the Nigeria Immigration Service (NIS) conspire with mischievous commercial drivers to extort illegal immigrants and permit them entry into Nigeria in a strict bribe-and-pass pattern — at the expense of national security. businessday market monitor

Biggest Gainer Dangcem N150 pc

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

Foreign Exchange

Biggest Loser Total

+9.33 N110.9 28,562.48

Foreign Reserve - $38.3bn Cross Rates GBP-$:1.29 YUANY - 52.19

Commodities -3.52 pc Cocoa US$2,506.00

Gold $1,572.97

news you can trust I ** thursDAY 09 january 2020 I vol. 19, no 474

₦3,000,515.44

N300

Sell

$-N 357.00 360.00 £-N 468.00 481.00 €-N 390.00 400.00

+5.85

Crude Oil $ 67.75

Buy

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate

363.81 306.95

Currency Futures

NGUS mar 25 2020 364.46

($/N)

igeria’s stock market is on its path to making history again in 2020. The market is now world’s best performer after a seven-day rally put equities on a ‘jet speed’ gain, according to BusinessDay analysis of Bloomberg data. Year-to-date (ytd), the All Share Index (ASI) has returned about 6.41 percent while majority of other sectoral indices and cobranded indices have shown similar growth. The NSE 30 Index has increased by +7.28 percent year-todate; NSE Banking Index (+12.43 percent), NSE CG Index (+7.69 percent), NSE Consumer Goods Index (-0.03 percent), NSE Industrial Index (+7.08 percent), and NSE Insurance Index (+6.41 Continues on page 35

3M -1.64 3.53

-0.79 3.56

0.28

10 Y -0.23

30 Y -0.17

10.57

11.04

12.26

NGUS jun 24 2020 365.37

Over N800bn gain year-to-date places Nigeria stocks as world’s best Iheanyi Nwachukwu

fgn bonds

Treasury bills

As investors eye juicy dividend yields

NGUS jan 27 2021 367.48

Algeria, other peers leave Nigeria behind in chase for oil investment ISAAC ANYAOGU

hile Nigeria dithers on enacting progressive fiscal terms for its oil and gas sector, other African countries including Algeria and Mozambique are reforming theirs, thereby getting a head start in the race for scarce investments. Algeria’s new hydrocarbon law approved in November, aimed at attracting foreign investment into its oil and gas sector, was drafted in collaboration with five major international oil companies operating in the country and cut the total tax burden on international oil Continues on page 2

Inside L-R: Bola Adeeko, head, shared services division, The Nigerian Stock Exchange (NSE); Merrica Heaton, deputy political and economic chief, US Consulate; Oscar Onyema, chief executive officer, NSE; Claire Pierangelo, US consul general to Nigeria; Mayowa Obilade, economic specialist, US Consulate, and Olumide Bolumole, head, listings business, NSE, at the closing gong ceremony to commemorate the US Consulate’s courtesy visit to The Exchange, Lagos, yesterday.

Nigerian passengers may pay higher as airlines re-route, cancel flights around Iraq, Iran P. 2

Thursday 09 January 2020

BUSINESS DAY

news Apapa: Port city without rail system leaves Nigeria in backwoods CHUKA UROKO

Babajide Sanwo-Olu, governor, Lagos State (r) welcoming Patrick Akinwuntan, managing director, Ecobank Nigeria, to his office in Aluasa, Ikeja during a courtesy visit by Ecobank Nigeria management to Lagos State Government House.

Nigerian passengers may pay higher as airlines re-route, cancel flights around Iraq, Iran Tayo Ojuri, chief executive officer, Aglow Limited, an aviation support services company, said 80 percent of passenger traffic in Nigeria are international flights. The current situation, he said, would cause the Middle East carriers such as Qatar, Emirates and Etihad to re-route their flights to get to various destinations. This development would cause these airlines to fly longer routes, thereby costing them more aviation fuel and time to various destinations. If this continues, he said, it would lead to a situation where passengers would begin to pay more and spend more time getting to various destinations. “For instance, Qatar has been blocked from passing through other countries for over ayearnow,sotheypassthrough Iran.Thismaybetheonlyairline thatwillbeflyingthroughIranor look for somewhere else to pass

through,” Ojuri said. Iran fired more than a dozen ballistic missiles from its territory targeting at least two Iraqi military bases hosting US-led coalition personnel early on Wednesday, the US military said. Within hours, the FAA barred US carriers from airspace over Iran, the Gulf of Oman and the waters between Iran and Saudi Arabia, citing “heightened military activities and increased political tensions in the Middle East, which present an inadvertent risk to U.S. civil aviation operations”. The flight ban came shortly before a Ukraine International Airlines Boeing 737 burst into flames shortly after takeoff from Tehran, killing all 176 people aboard in a crash blamed by Ukrainian authorities on an engine failure. Non-US operators are not bound by the FAA’s flight ban, but they and other regulators

consider its advice carefully when deciding where to fly. The European Union Aviation Safety Agency (EASA) is studying the situation, a spokeswoman said. Airlines have taken more steps to avoid flying over conflict zones since 2014, when Malaysia Airlines Flight MH17 was downed by a missile fired from Ukraine, killing 298 people. But re-routing increases flight times and burns extra fuel. Australia’s Qantas Airways said on Wednesday it would add 50 minutes to its PerthLondon flight time and cut passenger numbers to carry more fuel as it re-routes around Iran and Iraq. The FAA had already prohibited US carriers from Iranian airspace and flying below 26,000 feet over Iraq, after Iran shot down a high-altitude US drone last June.

Algeria, other peers leave Nigeria...

licensing, exploration, production, transmission, distribution, transport and global trade of Mozambican energy, takes a stake of between 10 percent and 30 percent in all energy projects and allows generous terms for investors to recover cost. The country is on course to realising over $32 billion in investments into its Rovuma LNG project. “Combined, these investments are expected to position Mozambique as the world’s fourth-largest producer of LNG, supplying a quarter of the world’s LNG needs and adding $15 to $18 billion to the country’s GDP each year,” said Omar Mithá, chairman and executive officer, National Hydrocarbons Company of Mozambique (ENH). In addition to wiping out Mozambique’s national debt, it is expected that LNG investment will increase Mozam-

bique’s projected real growth rate from 4 percent to between 4.8 percent and 5.4 percent, adding around one third to Mozambique’s average household per capita income. Algeria relies on hydrocarbons, which represent 40 percent of government revenues and 95.6 percent of its exports. Backed by state-owned Sonatrach, the country’s law comes at a time where it needs increased activity in its reserves and exploration fields. Algeria’s new oil and gas law came into force on Monday after it was published in the country’s Official Gazette. The legislation is considered essential for restoring the attractiveness of the sector in an era of low oil and gas prices and increased competition among producing countries to attract new investors.

IFEOMA OKEKE

igerians travelling with Emirates, Qatar and Etihad may pay higher as airlines re-route flights away from Iran and Iraq’s airspace following an Iranian missile strike on United States-led forces in Iraq. Major airlines across the world on Wednesday cancelled Iran and Iraq flights and re-routed others away from both countries’ airspace. Germany’s Lufthansa, Dubai-based Emirates and flydubai were among airlines that cancelled flights, as the U.S. Federal Aviation Administration (FAA) barred American carriers from the area. But several other carriers continued operations over the affected airspace. Industry analysts say airlines flying those routes from Nigeria may soon follow suit.

Continued from page 1

companies (IOCs) from 85 percent to around 60-65 percent. In Nigeria, IOCs pay about 85 percent tax. This

does not include other deductions like education tax and NDDC levy which will take the aggregate tax burden close to an astonishing 90 percent. Many blame this for Nigeria’s failure to attract badly needed investment into the once lucrative oil sector. In November, President Muhammadu Buhari assented to the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Act, 2019 which requires an adjustment of the revenue due to the Federal Government from production sharing contracts (PSCs)

whenever the price of crude oil exceeds $20 per barrel in real terms. The amended law further provides for the replacement of the existing productionbased royalty regime with a combination of production and price-based royalty regime and mandates the minister of petroleum resources to cause the Nigerian National Petroleum Corporation (NNPC) to call for a review of the PSCs every eight years. Nigeria also introduced offence and penalty for noncompliance with the provisions of the Act. This is also very different from Mozambique’s approach to attracting FDI. ENH, Mozambique’s stateowned energy company tasked with developing and coordinating the legislation, www.businessday.ng

•Continues online at www.businessday.ng

https://www.facebook.com/businessdayng

he harrowing experience which motorists, residents and business owners were subjected to in Apapa from early morning to midafternoon on Wednesday spoke a lot about the gridlock problem that defines Nigeria’s premier port city. Just within a couple of days that full business and economic activities resumed after Christmas break, the port city was brought on its knees as a result of gridlock caused by a fallen MACK truck laden with a 40-foot container on Apapa-Ijora bridge, keeping many people on their way to work on the road for hours. The incident and its farreaching impact speak volumes about how Nigeria is still in the backwoods, operating a port system without a supporting or dedicated rail line. Supporting ports with dedicated rail lines has long become the norm in other economies whose seaports may not be doing as much port business as the Apapa and Tin Can Island ports in Lagos. With all its imperfections and man-made challenges, Apapa economy is valued at N25 billion a day. This is accounted for by the operations of the two seaports whose combined activities represent 75 percent of all the import and export activities in Nigeria. But concerns abound. “A port city without a rail line will always struggle and

part of that struggle is the daily gridlock we contend with whether as individuals, residents, or businesses in this area,” Bode Karunwi, vice chairman of Apapa GRA Residents Association, noted in a phone interview. Karunwi explained that modernportoperationdoesnot depend on road transportation as a means of freighting cargo, saying that the issue of fallen trucks, which happens too often on Apapa roads and bridges, only speaks to the inefficiency ofportoperationsinthecountry, especially in Apapa. He pointed out that beyond bad roads infrastructure, Apapa also has other problems such as lack of parking lots for the trucks, noting that the original mistake in this respect was made in the concessioning of the Nigeria Ports Authority (NPA) loading bay at the ports. Speaking further on Apapa’s problems, Emmanuel Ameke, a port operator, said proliferation of tank farms and concentration of port activities in Lagos while the Eastern ports remain idle would continue to be counterproductive and make life in and around the ports stressful. In its bid to find solution to the Apapa gridlock, the Federal Government in 2019 set up the Presidential Task Team (PTT) with Vice President Yemi Osinbajo as chairman and Kayode Opeifa as executive vice chairman.

•Continues online at www.businessday.ng

CBN retains 65% minimum LDR as banks ramp up lending to economy ONYINYE NWACHUKWU, Abuja

he Central Bank of Nigeria (CBN) announced on Wednesday that it would in the interim retain the 65 percent minimum Loan to Deposit Ratio (LDR) for all deposit money banks (DMBs) in the country. The apex bank expressed satisfaction that the policy has helped ramp up the commercial banks’ lending to the economy. “The CBN has noticed remarkable increase in the size of credit by the Deposit Money Banks (DMBs) to customers,” the CBN stated in a circular to all banks signed by Ahmad Abdullahi, its director, banking supervision. “Accordingly, the CBN decided to retain the minimum 65 percent Loan to Deposit (LDR) in the interim.” The CBN had in July 2019 asked banks to lend a minimum of 60 percent of their customers’ deposits, giving a deadline of September 30, 2019. It later raised the minimum LDR to 65 percent. The LDR policy within months saw more than N1 trillion loans to the customers by the lenders who said @Businessdayng

their push were not just the proposed punitive measures, but that they are now committed to helping the fragile economy through lending and are encouraged by the CBN’s incentives to play their financial intermediation roles. There were earlier talks of raising the threshold to 70 percent after the December 31, 2019 deadline given to banks to comply with 65 percent LDR. However, the CBN stated in the circular that “all DMBs are required to maintain this level and are further advised that average daily figures shall be applied to assess compliance going forward”. The CBN further explained that the incentive which assigns a weight of 150 percent in respect of lending to Small and Medium scale Enterprises (SMEs) retail mortgage and consumer lending would continue to apply while failure to achieve the target would still attract a levy of additional Cash Reserve Requirement of 50 percent of the lending shortfall of the target LDR on or before March 31, 2020.

•Continues online at www.businessday.ng

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

news

AccessBET announces Davido as brand ambassador

ccessBET, a leading sports bookmaker in Nigeria, has announced Afropop superstar Davido as its official brand ambassador. By this announcement, Davido will represent the brand’s image as well as appear in all AccessBET’s marketing campaigns. With great odds and guaranteed fast payment of winnings, sports lovers can enjoy betting on their favourite teams via prematch, in-play and also entertain themselves with varieties of virtual games. The newly forged relationship with Davido is in line with AccessBET’s vision to ultimately become a renowned bookmaker in the world as well as providing the best online, shop and mobile betting experience in Nigeria.

In his reaction to the announcement, the music star expressed great delight to collaborate with AccessBET, describing it as one of the best sports betting bookmakers in Nigeria. “I’m a massive fan of Ronaldo and I also love boxing, so this partnership brings me closer to the things I have passion for. I am particularly excited to be a part of this new journey and I am looking forward to working with AccessBET,” he said. Kayode Akinbo, AccessBET’s general manager, said the company is pleased to welcome Davido as its brand ambassador. “Davido’s vibrant persona and worldwide appeal are something we love and this represents another positive step in the right direction for the brand,” he said.

US-Iran crisis: Details unknown as Buhari meets NNPC GMD James Kwen, Abuja

etails of the meeting between President Muhammadu Buhari and Mela Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), were sketchy at the time of going to press yesterday. However, the meeting followed the ongoing fracas between the United States and Iran, which has caused rise in oil prices, Wednesday. Buhari, who also serves as minister of Petroleum Resources, was also scheduled to meet with the minister of state, Petroleum Resources, Timipre Sylva, later on Wednesday. The purpose of the meeting(s) is yet to be known, but there are feelers that it is connected with the increase in

No worker in Oyo will earn below N30,000 minimum wage - Makinde REMI FEYISIPO, Ibadan

overnor Seyi Makinde of Oyo State on Wednesday assured that no staff in the state’s workforce would earn below the N30,000 national minimum wage. Once the Committee set up by his government to look into the modalities for the implementation of the wage completes its assignment, the government will stand side by side with the workers to implement the decision, Governor Makinde said. The governor noted that he was looking forward to a decision that would be agreeable to the civil servants as well as affordable and sustainable for the state government. The governor made the declarations during the annual interreligious service to usher in the 2020 working year, held at the Car Park of the Governor’s Office. “On the new minimum wage,

oil prices on the heels of the USIran hostilities. On Monday, Brent crude, the global benchmark, gained 2.4% to reach $70.24 per barrel, which is the first time prices have hit that amount in more than seven months. The heightening tension between the United States and Iran after the killing of an Iranian General, Qassim Suleimani and the subsequent retaliatory attacks on military bases housing American troops in Iraq are believed would lead to oil price increase in the coming months. Suleimani was killed by the United States on Friday in Baghdad in a drone strike, as American officials said the general had ordered assaults on Americans in Iraq and Syria and was planning a wave of imminent attacks.

Abiodun absorbs 1,700 workers engaged by Amosun gun State governor, Dapo Abiodun, has ordered that the last minutes appointments of Permanent Secretaries made in the twilight of the immediate past administration of Ibikunle Amosun be regularised. The governor also directed the mainstreaming and ‘regularisation’ of appointment of over 1000 graduates recruited into the State Civil Service by the same administration. This is contained in a press statement by Kunle Somorin, chief press secretary to Governor Abiodun, Wednesday. Speaking at the swearingin of eight newly appointed Permanent Secretaries at Obas’ Complex, Oke-Mosan, Abeokuta, Governor Abiodun said despite some flaws noted in the appointments and recruitments, his government had decided to be magnanimous as a people-centred administration not to be vindictive. “It is important to make public that we received with great recommendations the report of the Review Committee on the Appointments and Recruitments made by the immediate past administration between February and May, 2019. “Let me state that we very

L-R: Tayo Fagbamigbe, senior legal counsel, Sub-Saharan Africa, Kimberly Clark; Nike Akande, former president, Lagos Chamber of Commerce and Industry (LCCI); Olayinka Zainab Obagun, government relations manager, West, East and Central Africa, Kimberly-Clark; Toki Mabogunje, president, LCCI; Jeannine Scott, principal consultant, America to Africa, and Hope Egwu, associate consultant, America to Africa, during a courtesy visit by Kimberly Clark (Makers of Huggies) to LCCI in Lagos.

much appreciate with the recommendations of the Review Committee, comprising of eminent retired Public Servants, that the appointments and Recruitments were fraught with non-adherence to the principles and laid-down traditions of the public service. “But in line with our administration’s commitment to equity, fairness, Justice and inclusiveness, we will not engage in any action or policy that may be viewed as vendetta, rather, we will call on all to continue to put in their best for the service delivery to the people of Ogun State. “Despite some flaws, we have upheld all the appointments of Permanent Secretaries made in the twilight of the last administration.” The governor cautioned against lobbying by civil servants to attain unmerited position, saying all the new permanent secretaries got their appointment on merit. “I never met any of these new permanent secretaries before. I had no private discussion over who to choose. If you merit it under my watch, you will surely get your promotion as and when due,” he enthused.

the committee has been set up, they are working and moving towards alignment but I promise you that this administration and the workers of Oyo State are on the same page on this ongoing negotiation. And when it is concluded, I give you the assurance that we shall stand side-by-side to announce to the whole world what we have agreed. “Whatever we will agree upon is going to be in the interest of the workers and our state. First, our collective decision will be agreeable to everybody. Second, it will be affordable. Third, it will be sustainable. “Before this administration came into place on May 29, they were paying percentages as subvention to the higher institutions. Just a month before the previous administration left, they moved it to 100 per cent and we have been paying it since we came in. I know that they do have agreement in some states and will still breach the agree-

Concerns mount over functionality of ILS as airlines cancel, delay flights over harmattan haze

www.businessday.ng

IFEOMA OKEKE

takeholders have continued to raise concerns over functionality of Instrument Landing Systems (ILS) installed across Nigerian airports as airlines have continued to divert, delay and cancel flights over harmattan haze. For instance, some foreign airlines into the Murtala Muhammed International Airport, Lagos (MMIA) have continued to divert their flights into Accra, Ghana, due to poor visibility for landing. Domestic airlines are not able to fly into some airports due to poor visibility. For instance, Calabar Airport visibility is very poor and currently no aircraft is landing or taking off from there, flights meant for the airport are being diverted to the Uyo Airport, which has a functioning ILS for operations. These issues are coming barely after a year the Nigerian Airspace Management Agency (NAMA) installed Category 3 ILS across Nigerian airports to aid visibility for landing and take-off.

John Ojikutu, former commandant of the Murtala Muhammed Airport, Lagos, said ‘Operations Down Assessments’ at some of our airports in this period of inclement weather in harmattan made no sense, especially happening after a year of the certification of some of Lagos and Abuja airports. “Do these airports have Periodic Maintenance programmes for their critical safety infrastructure and facilities approved by the Nigeria Civil Aviation Authority (NCAA)? If not, the NCAA needs to begin the process of ensuring each airport have the Programmes that would help its inspectors for the Periodic Audits of these airports,” Ojikutu said. He further explained that after the NAMA said it installed Cat 3 ILS, he was not sure the instruments were calibrated, adding that if the Cat 2 had been withdrawn and no Notice to Airmen (NOTAMS) was issued to inform the operators, particularly the foreign operators that religiously fly by their books, they would fly by their standard operating procedures.

https://www.facebook.com/businessdayng

ment. But, here, once we sign that agreement, we will pay it. “We won’t pay in percentages and I want to also state categorically that no worker in Oyo State will earn below the national minimum wage,” he said. He also urged every resident of the state to join hands, put political affiliation and tribal sentiments aside to keep making Oyo State greater. At the service, which was attended by the Deputy Governor, Rauf Olaniyan; the Chief of Staff, Oyebisi Ilaka; the Secretary to the State Government, Olubamiwo Adeosun, political appointees and civil servants, the Head of Service, AmidatOloladeAgboola, maintained that 2019 was filled with challenges but that God had countedthoseinattendanceatthe event worthy to see a New Year. Agboola, who welcomed political office holders and workers to the service, maintained that it was in 2019 that God blessed Oyo State with a Governor like

Makinde, whom she described as god-sent to the civil servants. According to the Head of Service, the Governor has shown what leadership entailed: selflessness, even as she appreciated the Governor for demonstrating commitment to workers’ welfare and the repositioning of the civil/ public service in the state. She cited the payment of salaries as and when due since the administration took office, noting that the general public in the State had been sharing in happiness engendered by that act. She also commended the Governor for giving the approval for the reinstatement of some officers in the civil/public service who were unjustly dismissed by the last administration; approval for Productivity/Merit Award to recognize the hard work of civil servants and the approval of N15 million for the renovation of offices in each of the ministries in the Secretariat Complex, among other areas.

Lekki-toll users stranded as cashless policy takes effect Temitayo Ayetoto

ome users of the LekkiToll gates along Lekki-Epe Expressway are getting stranded in the wake of the adoption of cashless payment for pass. Following the upgrade of the tolling systems at the Admiralty Circle and Lekki-Ikoyi Link Bridge Toll plazas, uninformed users are still presenting cash at the gates, causing avoidable delay. On the upgraded system, toll accounts and devices at both plazas have been combined into a single account, which can now allow users pay with same account when plying either of the routes. “To this effect, customers with different devices for both plazas prior to the upgrade will also be assisted accordingly at any of our customer service centres in order to ensure a single device is activated on their vehicles for ease of passage at the plazas,” the Lekki Concession Company (LCC) said in a public announcement. With discounts of five and 10 percent for options of ‘preloaded card’ and ‘electronic devices’, users can pay for toll @Businessdayng

tickets or buy vouchers which come at no discount at the company’s offices or designated sale outlets, an LCC attendant told BusinessDay on a visit, Wednesday. Just as the cashless policy took effect on Jan 1 2020, a mobile application was also launched to ease account funding and toll payments, without physical visits to LCC’s offices. BusinessDay learnt users will eventually be able to register accounts on the mobile application. However, issues of unjustifiable deductions from users’ accounts and gaps in account merging have been springing up, with some people seeking redress the LCC’s office. A user who didn’t want his name in print complained the balance on his previous account was failing to reflect on the upgraded system. “I made payment to my old Lekki Ikoyi toll account and it’s not reflecting on the new consolidated account that uses my Lekki-Epe account number. How can this be resolved?” one of the users monitored on Twitter, Ayodeji @dejizaq said.

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

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

In association with briu@businessday.ng

08098710024

Takeaways from the Q3 2019 voice and internet subscriptions TELIAT SULE

ith a sizable population, Nigeria offers entrepreneurs humong ous opportunities. One of the businesses that thrive on huge population is telecommunications services. At present, Nigeria ranks as one of the leading countries in voice subscription and internet services in Africa. As at September 2019, Nigeria’s teledensity stood at 93.87 percent. And what comes with that are a number of opportunities for shrewd entrepreneurs. In 2018, Nigeria ranked high on the Global Entrepreneurship Index in Africa, a confirmation of the strong entrepreneurial spirit of Nigerians. Interestingly, the nation’s telecommunications sector contributed 9.85 percent to the GDP in Q1 2018, which increased to 10.11 percent in Q1 2019 and further rose to 11.39 percent in Q2 2019. With the above sectoral highlights, it is clear that the increasing telecommunications contribution to the nation’s GDP is a clear manifestation of the amount of activities going on in that sector, and how much money is being made by businesses that have positioned themselves at vantage points. When the data is further disaggregated, some states account for most of the gains in the telecoms sector, and by this analysis, we show interested businesses where opportunities exist in the nation’s telecoms sector. The first point of call is the active voice subscribers in Nigeria which rose to 179.17 million as at the end of the third quarter of 2019. What does that mean? It shows that on a quarterly basis, voice subscribers rose by 2.96 percent while on a year on year basis, the growth rate was 10.58 percent. Which network and states recorded the highest growth rates? MTN subscribers constitute the largest users in the country and in spite of the several product innovations and promotions; none of its competitors are poised to change that trend anytime soon. Therefore, MTN Nigeria controlled 65.32 million voice subscribers as at Q3 2019. Globacom Nigeria, with 49.21 million subscribers, is in second position followed by Airtel with 48.9 million voice subscribers. 9Mobile controlled 15.33 million voice subscribers. The network has contin-

Source: NBS

Source: NBS ued to lose many of its subscribers following the impasse that trails its sale to other investors after Etisalat pulled out. In terms of growth, the highest growth rate in voice subscription was recorded by Airtel Nigeria at 6.49 percent and Globacom at 5.62 percent on a year on year basis. MTN Nigeria gained 0.29 percent in voice subscription while that of 9Mobile declined by 3.95 percent. For MTN, the marginal growth rate in voice subscribers took place in seven states. Sokoto and Lagos states witnessed 4.51 and 4.15 percent growth. It was 3.94 percent in the Federal Capital Territory (FCT) Abuja while in Rivers and Nasarawa, it was 2.38 percent and 2.03 percent respectively. Borno and Kogi states complete the sub national

www.businessday.ng

economies where MTN witnessed marginal growth as at the end of the third quarter of 2019. The states with the worst performance for MTN voice subscription are Bauchi, -3.46 percent; Ebonyi, -2.94 percent; Kwara, -2.89 percent; Katsina, -2.43 percent; and Anambra, -2.21 percent. There seems to be nationwide decline in MTN voice subscribers during the period under review. It may be an indication that voice subscribers have attained the point of satiety for MTN voice subscription services. Alternatively, it could be that the substitute products being offered by competition are attuned to the changing customer tastes and fashion, or the changing demographics. These are the issues that deserve urgent attention from MTN Nigeria.

https://www.facebook.com/businessdayng

Globacom posted significant growth in Yobe, with its voice subscribers growing by 22.55 percent. Similar feat was recorded in Anambra and AkwaIbom whose voice subscribers increased by 12.24 and 11.26 percent respectively. Double digit growth rates were equally recorded in Kano, 10.21 percent; Ekiti, 10.03 percent and Imo, 10percent. Globacom’s voice subscription grew arithmetically in Jigawa, Gombe, Kebbi, Niger and Bauchi states, which ranged from 1.13 percent to 2.15 percent. The growth trend in Globacom voice subscription during the reference period raises some pertinent questions: growth rate in Yobe was impressive. However, in the neighbouring state of Gombe, the network operator hardly posted 1.70 growth rate in voice subscription. So, what

@Businessdayng

unique social or economic characteristics separate the subscribers in the two markets? Same issue will be raised concerning Kano with double digit growth and Jigawa with less than 2 percent growth rate during the period. Which insights could be gained from the demographics in these states that could have been responsible for the disproportionate growth rates in Kano and Jigawa states? Population may not be the only answer. Airtel Nigeria’s voice subscribers rose the highest in Katsina, 20.65 percent; Kano, 11.87 percent; Ekiti, 11.53 percent; Benue, 11.15 percent and Kebbi, 10.86 percent. Apart from Ekiti and Benue states, there seems to be a similar trend exhibited by the states in the North West Nigeria in terms of the preference for Airtel Nigeria’s voice services. Anambra, Bayelsa, Imo, Rivers and Enugu have similar growth rates just as Osun and Ondo states, confirming our observation of the rising regional preference for Airtel Nigeria’s voice services. Internet subscription Internet subscription rose by 18.98 percent year on year by the end of the third quarter of 2019. As in voice subscription, same pattern applies to internet subscription. The highest growth was recorded by Airtel Nigeria at 3.82 percent while Globacom posted 1.19 percent. MTN Nigeria and 9mobile saw their internet subscriptions fall by 0.95 and 6.31 percent respectively. Why does this matter? It is because of the treatment of all the products and services as the same which means customers are yet to start distinguishing products and services. While admitting that both voice and internet subscriptions are complimentary, the fact that each of these services could stand alone makes us to deduce that once customers see a product as good, others from the same company will be treated as such. This explains why the growth rates in voice and internet subscriptions are similar for all the network providers. In other words, a telecoms firm with better voice subscription services is expected to automatically have better internet services, and vice versa. This does not hold all the time, but based on the data, users of telecoms services in this country are still held up in that belief. Telecoms firms need to start the campaign that will make customers treat their products based on their quality.

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

comment is free

COMMENT

Send 800word comments to comment@businessday.ng

My prophecy for year 2020 Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

IK MUO

ome readers of this treatise will begin by asking: when did Ik become a prophet? But this does not worry me; after all, they asked this same question of the great Saul when they exclaimed: Is Saul also among the prophets (1 Samuel,10:11). However, I have some solid explanations for them and others like them who do not recognise or who underrate my prophet credentials. Firstly, as a child of God, I am a king, prophet and priest. Secondly, I am a spirit (Muo) and all spirits see in the present and in the future. Thirdly, all those prophets who had made several prophetic declarations in and about Nigeria, including those who prophesied that PMB would not win the last elections, that the naira would equal the dollar, that a dictator could easily become a democrat, (as if a leopard would change its spots) were and are mostly self-appointed or self-anointed. So, what is wrong if I anointed myself? Finally, in Nigeria where everything holds, when one does not require a certificate to become anything, I don’t require any certification to become a prophet! QED!! QEF!!! Now to the serious business of the day. As we move increasingly towards the next level in the year 2020, some politicians would die, others will decamp, the rest would continue to mutilate their constituency projects, some will still SLEEP during plenary sessions and many will be disappointed in their political quests. The various DISCOs will continue to deliver more darkness than light; they will continue to brazenly STEAL from their customers and the spirit of uncertainty in the

power circuit (NERC, TCN, DISCOs and Gencos) will continue to be more potent. Traffic gridlock within Lagos, towards Lagos and on the Lagos-Onitsha route, will be more pronounced, especially as the operatives’ pockets would be empty after the yuletide “spend to die” season. Rainy season would start around May nationwide but will start in January in Lagos; the weather will become hotter and hard to predict and the number of foreign okada riders in Lagos will continue to increase in geometric proportions, just as areaboys will become more daring. The war against corruption will continue to be more motion and little movement because efforts are not being made to plug the gaping holes from which our public funds are siphoned. Trump will also continue to “trumpeteer”, always doing the unimaginable and confusing the American system and institutions. Having finished with the above earth-shaking prophecies, of which I am 101 percent certain, let me then go to other minor matters. In 2017, the APC government, on its own accord and in an effort to concretise its vague change agenda, designed the Economic Recovery and Growth Plan (ERGP) as a strategic medium-term economic management framework. In terms of SMART objectives, ERGP promised a real GDP growth of 4.62 percent on the average, reaching 7 percent; oil production to 2.5mbpd; employment reduction to 11.23, through the creation of 3.7 million jobs annually, inflation at 9.9 percent and among others, become a net exporter of agricultural and refined petroleum products, all by 2020. A comparison of the ERGP projections with current realities and figures for 2020 budget shows that the plan performed far below expectations. Growth in the 3rd quarter of 2019 was 1.94 percent, indicating that the GDP needs to grow by at least 7 percent so as to meet the ERGP target. However, even the government has reversed its 2020 growth projections to 2.93 percent, indicating that it has given up on

its earlier expectations of 7 percent. Unemployment is 23.1 percent for 2019 while the Minister of Labour had prophesied that it would hit 33 percent by 2020. Oil production is projected at 2.18mbpd for 2020 as against the ERGP figure of 2.5mbpd and current production of 1.9mbpd in Q1’19. Total debts stood at N24.9 trillion as at March, 2019 against the ERGP figure of N20 trillion and the hope of being a net exporter of petroleum products remains a pipe dream while a demandsupply gap of 2.2 million tones still exists in the rice market, despite CBN interventions which is one of the reasons the price of rice has soared almost 100 percent since the recent border closure. So, what is my prophetic message to Nigerians as regards the economy? “Now Your Suffering Continues” and the most painful aspect is that the government will continue to tell us that we are already in an economic Eldorado! I am not a Chike Obi but I know that to solve an equation, one has to manipulate both sides. I am not a JK Randle but I also know that every accounting entry involves debit and credit, or else, it will not balance. In the recent past the Nigerian federal government has been doing everything to upturn these two self-evident truths by hammering exclusively on the revenue side of the expenditurerevenue equation. So, based on the strange theory that Nigeria has a “revenue problem”, the government has taken some weird unorthodox steps to increase revenue. These include border closure, increase in VAT, introduction of all sorts of taxation and the strange practice in which Customs officials who cleared goods at the boarder or allowed them to slip through the boarders would waylay people on the roads and invade shops and markets, to seize these same goods. Nobody in the customs service has been queried as to how the goods came in in the first instance (after all, they queried Fowler of FIRS). Certainly, nobody has done everything to reduce the outlandish costs of

‘

I am not a Chike Obi but I know that to solve an equation, one has to manipulate both sides. I am not a JK Randle but I also know that every accounting entry involves debit and credit, or else, it will not balance

running this strange structure called a centralised federation (security votes, out of station allowances, cost of local and foreign travels, cutleries and costs of repairs and maintenance). Surely, as long as my name remains Prophet Ik Muo, these strange revenue raising tactics will continue while sinful ostentatiousness by those in government will continue in 2020. The year 2020 is also a year of politicians and politicking. In states like Anambra and Edo states, where elections are scheduled, government and governance will be surrendered to the alter of electioneering. Even the government at the centre will forget that it has WON the elections and continue on the campaign mode of making promises, defending the indefensible and making strange comments like the “5 percent votes” declaration. The degree of inclusiveness in our appointments will continue to plummet and, in these states, scheduled for elections, newer versions of the Kogi model will be implemented. As we have just come out of the holy season of Christmas, and as politicking is still in the air, I want to leave us with these Beatitudes of Politicians as authored by Cardinal Van Thuan: Blessed are the politician with a lofty sense and deep understanding of his role; who personally exemplifies credibility; who works for the common good, who remains consistent, who works for unity and to accomplish radical change, who is capable of listening and who is without fear. For Nigerian Politicians in particular, blessed be those who stay faithful to his ideology and his party, irrespective of whether the party has just won or lost an election. I wish all men of good will, a fruitful 2020. I also thank those who felicitated with me on my birthday on 1/1/20 and particularly the Ministry of Internal affairs who made it a public holiday so that those who failed to show-face will not have any alibi! Continues on businessdayonline

Why hotels fail in Nigeria

ook around you, on every street corner you have boutique hotels springing up fast, apartment turning into hotels, one room turning into Air B&B you hotels, and just as they spring up fast, they close up even faster. Owner’s interference I am the Ex CEO of a bank; I have run 5 companies; I am a financial “Wizkid” so what is so complicated in running a hotel? Hmm stop right their; running a hotel in Nigeria is not the same as running a hotel in Europe; Owner interference is the main reason why hotels in Nigeria fail; Owners believe they know it all and they know more than the hospitality expert and hence they open a hotel and after 6 month they realise that it is not business as usual No online presence About 80 percent of hotel in Nigeria lack online presence and do not have a website. No website means a loss in up to 50 percent of your revenue. For as little as N70,000 you can have a website, an official email address and a Pay Direct button embed into your site all handled by Horeca Cloud. No investment in training It is Monday- 9.00am and your waiter just quit by 3.00 pm you have hired his replace-

ment; No prior background check was done/ no reference check; the new waiter has no knowledge of the hotel facility and yet you are shouting that the service is bad and business is slow. VAT is now 7.5 percent, what is service charge? Let’s face it the new VAT and CBN stamp put a damper on hotel revenue. It means more remittance and more tax. Hello Mr Hotel Owner this does not solely affect you. Hotels that pay their staff service charge have seen over 70 percent increases in guest and employee satisfaction. Service charge is 10 percent in Nigeria and is also known as the staff tips paid in bulk. My brother is the GM and my wife is the procurement officer & MD Before you hire your family member as the manager of your hotel ensure that they have gotten the proper training and are equipped to run a hotel. Jones Hospitality offer short term training for clients wishing to manage and run small hotels. Disregarding feedback Most guests read online reviews of hotels before making a choice. Not paying attention to feedback from guests will impact negatively on the online reservation stream. When the

www.businessday.ng

negative reviews outweigh the positive reviews without follow up responses by the hotel, online potential bookers become apprehensive and look for alternatives within the same star grade and pricing. Most hotels offer feedback forms either at check out or in the room. Seasonality Most hotels/restaurants do not put into recognizance that the hospitality has its low and peak seasons. When the peak and low periods are established, it is always brilliant to plan ahead to sustain the business. Poorly serviced room Guest to receptionist “Can I see your manager” I want a refund, the roof is leaking, the bed sheet is dirty, there is no hot water in my room. “Hmm oga abeg no refund o, My MD has travelled but please sir can I give you a bucket and boil hot water for you? We also have fan as the AC is not working.” The above dialogue is the norm in boutique hotels in Nigeria. Poorly cleaned and maintained rooms will cause dissatisfaction and affect repeat guests. When guests do not get value for their money, they make alternative plans. Air conditioning, hot water, water pressure, bad mattress, linens and towers, ambiance, poor TV signal is some of the major

https://www.facebook.com/businessdayng

IJEOMA UGAMAH

complaints about rooms. It is more frustrating for guests where they are moved to another room and they experience the same or even worse challenges from the previous room. Staff welfare Oh God what kind of Job is this? It is the 15th of the month and I have not been paid, no staff meal, late payment of salary, no medical; this is the cries of 70 percent of waiters in Nigeria; you owe and you owe them and yet you wonder why they steal? Dear Hotel owner your excuse is that business is down and we are not doing well? But guess what if you did the right thing from the beginning business will be up; do not punish the staff. Be guided. Ijeoma is a leader in hospitality and Horeca and can be contacted on Ijeoma.ugamah@gmail.com.

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

COMMENT

comment is free

Send 800word comments to comment@businessday.ng

The Nigerian middle class and the second exodus (II) CHRISTOPHER AKOR

ast week, I began by showing how the second phase of military rule coupled with poor economic management precipitated the first exodus of Nigerian professionals or middle class. Two professional groups were mostly affected: academics and medical doctors. I also argued that the impact on the academia was particularly severe and it marked the beginning of the total collapse of scholarship in Nigerian university, a collapse Nigeria never recovered from. Currently, what goes on in the Nigerian university system, with few exceptions, is best captured by the term “garbage in, garbage out”. By a stroke of luck however, the medical profession survived, in part due to the strong foundation laid in medical training and practice by the British and also the appeal of the profession to Nigerians, even if quality has nosedived. However, years of under-investment and a total lack of interest in the health of its citizens, has resulted in the collapse of the healthcare system in Nigeria. Currently, only about 4 percent of Nigeria’s budget is allocated to the health sector – and these largely go to subsidise the training of medical doctors. Healthcare provision and infrastructure has completely collapsed with a World Health Organisation (WHO) report on healthcare delivery placing Nigeria at 197 out of 200 surveyed countries. Unsurprisingly, medical profes-

sionals have led the second exodus with most seeking better work conditions and pay outside the country. Just to show how terribly they fared in Nigeria, an average Nigerian doctor earns just about N200, 000 ($560) monthly while his counterpart in the United Kingdom earns between £4983 per hour. A recent poll conducted by NOI Polls showed that 88 percent of doctors in Nigeria are considering work opportunities outside the country and the figure is projected to keep rising as more as medical professionals continue to grapple with deep systemic challenges in Nigeria that make it difficult for them to practice and survive. So severe is the rate of emigration that if the current trend continues, Nigeria will be left with no middle class in the nearest future. This will make it the second time in Nigeria’s chequered history that the middle class is being decimated. But whereas the first time was under a military regime, the second time is during democratic rule, where the middle class should normally thrive and be the symbol of an open and democratic society. This leads me to the question of the role of the Nigeria middle class in politics – a question I have had to return to so many times over the last four years. The middle class, that broad group of people in contemporary society who fall socio-economically between the working class and upper class or in classical Marxian speak, located between the bourgeoisie/capitalist class and the proletariat, is so critical to the sustenance of democracy, good governance and economic development. It is, according to David Madland, “a prerequisite for robust entrepreneurship and innovation, a source of trust that makes business transactions more efficient, a bulwark against credit booms and busts, and a progenitor of virtuous,

forward-looking behaviours, such as valuing education”. The middle class not only supply the workforce and expertise needed to run the country’s bureaucracy and manage the economy, they also ensure the government is run most efficiently with adequate public investments in education, health and infrastructure and in accordance with societal and democratic norms. This benefits everyone in the society and not just special interests. Of course, good governance sets the stage for economic growth and development. The middle class act to protect the democratic order because their economic fate is almost directly tied to the quality of governance. They depend on public services more than the rich and as Obama opined in 2011: “When middle-class families can no longer afford to buy the goods and services that businesses are selling, it drags down the entire economy from top to bottom.” However, evidence from Nigeria and other depraved societies suggest that the middle class are their own greatest enemies, often preferring personal emancipation than societal progress. The Nigerian middle class has been the greatest supporters and enablers of the status quo no matter how terrible that status quo is. Being part of the exploited class but with professional knowledge or privileged positions in the civil service, they often offer their services and knowledge to the exploiters for hire. Consequently, they have become the greatest advocates of the ruling class, the greatest defenders of Nigeria’s politics of plunder, neopatrimonialism and prebandalism. Being part of the exploited class themselves, they often speak the language of the downtrodden until they are noticed and called to the service of the ruling class where they have proved espe-

‘ So severe is

the rate of emigration that if the current trend continues, Nigeria will be left with no middle class in the nearest future. This will make it the second time in Nigeria’s chequered history that the middle class is being decimated

cially useful in fashioning strategies to further the exploitation of the downtrodden. In Nigeria, the moment they had the chance, they wasted no time in cajoling naive military boys in their 20s and early 30s into a full blown civil war that consumed millions of lives when all that was at stake was the egos of the military boys. So comfortable were they with the military boys that after the war, the intellectual wing began to advocate for a diarchy – a form of government where both the military and civilians rule – as the best system for Nigeria. Not done, they recommended the rejection of the more collegiate parliamentary system of government bequeathed to Nigeria at independence and the adoption of a more dictatorial presidential system because, as they claim, sharing power between a president and a prime minister was not feasible in Africa. But they also forgot that investing so much power in the president in a system with very weak institutions of restraints is tantamount to creating a dictatorship. But how do they care; the “49 wise men”, as they were called, argued that in anyway, they presidential system they recommended was more compatible with African indigenous kingship/chieftaincy traditions. Of course, they are quick to connive or offer their services to military boys to truncate the nation’s democracy, and immediately after such coups, they rush to legitimise the regimes, offering their services and expertise in entrenching the regimes. Their services do not go unrewarded. They are generously rewarded or they help themselves to the public till generously and quite a number of them have successfully transited from the middle to the upper class. To be continued...

Transforming agriculture in the year 2020

ll practicing farmers are very happy that they were able to see this year 2020 and hoping that this year will bring in bumper harvest with good weather for the agricultural production. They are in the processing of planning and thinking for the farming seasons and looking forward from assistant from the government and an individual. Well the farmers also needs to work very hard in meeting the food security of the citizens and the best way is for them is too be able to do some research, identify food needs, use their previous experiences too determine of what of various crops, farming technology, innovative practices and livestock they are thinking for farming and marketing , so that they can sells and make profits and also take care of their various needs and family matters. The government should be able to provide inputs at when due and well distributed, with lower prices, in getting too the farmers, proactive extension services of the new technology, that will promote new breeds and of feed formulation for cattle’s herdsmen. Training of the peasant farmers in post

harvesting management practices, provision of the farm machineries at lower prices, given out of soft loans, that will target the small subsistence practices cooperative farmers, development of farm settlements, building of silos and helping the farmers to store their agricultural produce, establishment of marketing board, provisions of Agricultural transportations systems, that will boost the transportation of agricultural produce and they should also try in given weathers forecast and price markets information that will boost dissemination of available food produces across the country. Increase fruit quality The manner in which fruits like oranges which are being transported, grows and marketed call for serious attentions and there suppose been a simple technology of bagging the fruits along the value chain, well there are already made market, demands and small holders farmers are making a lot of profits, but the problems of preservation, harvesting, marketing, grading systems, processing and price information. The transportations system is also a big concern and the storage technology, the government needs to look at this fruit business, help

www.businessday.ng

the fruit growers and the exportation methods that is require, such as the various information of the International buyers for exportation purposes and for government to generate revenue in oranges business, the best way of marketing and preservation should be a big concern of the government, thinking of making agriculture too be a lucrative business in the agricultural systems, too reduce cost of production, increase fruit quality, improve market systems and for the farmers to make profits. Fast tracking agricultural technology The government should be proactive enough too fast track all form of agricultural technology that will boost agricultural practices, increase yields, profitability of the peasant farmers, such technology should be targeted too peasant farmers, that will cover production, preservation, post harvesting management practices. Though in the develop countries there are new technology being develop that its use of the robotics in growing apples and which the apple growers are using complementary too other form of technologies being develop by different companies such as the swarm farm and the Green Atlas

https://www.facebook.com/businessdayng

MICHAEL ADEDOTUN OKE which have different product they are marketing, the technology are in the hands of Australians apple growers, such as the cartographer swam farm robots via swarm connections that have increased fruit quality , developing the fruit business, growing, thinning in apple orchards, flowering, spraying application technology systems, increase quality of yields, reduce cost of thinning operation during the seasons. The Dutch company precision tractor makers Although there are a lot of developments in the tractor production, manufacturing and business for the commercial farmers across the globe, it was amazing as the Tractor Dutch company Precision makers converting tractors into robotic tractors and has several improve simple tractors and then the future belongs to small self-driving human and robotic tractors systems in the world.

Oke is a facilitator, Talent Upgrade Global Concept

@Businessdayng

BUSINESS DAY

Thursday 09 January 2020

EDITORIAL PUBLISHER/EDITOR-IN-CHIEF

Frank Aigbogun EDITOR Patrick Atuanya

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

False start on e-payment on Ikoyi Link bridge

haos has understandably attended the introduction of an ele ctronic payment-only new order on the Ikoyi-Lekki link bridge beginning January 2, 2020. The insistence on e-payment as the only mode has created massive traffic snarls that add to the narrative of Lagos as the traffic bottleneck capital of the world. There are even more challenges with the order that would suggest the need for more work and thinking on the project, good as it sounds. First, L ekki Concession Company and the Lagos State Government deserve commendations for seeking ways to minimise the challenge of traffic congestion on the toll points in the city. They earn further pips for the use of technology and innovations that technology enables. There is more work ahead, though, to make the system workable. Lekki Concession Company introduced the e-tolls on the second day of the year. It seemed to work well in the traffic-free days of the holidays. As citizens returned to their activities Monday, January 6, the inadequacies of the scheme began to manifest. The process for getting on the

toll is anachronistic, tedious and wasteful. It does not reflect the need for timeliness which is one of the reasons road users gladly pay a fee for a supposed short cut. The Ikoyi-Lekki link bridge failed the test of ease of movement and speed before now. Morning and evening¸ patrons of the bridge confront colossal traffic congestion. A primary goal of the new e-toll was to reduce the congestion and make it easier to pass vehicles on to either side. It has not done so. First was the lack of adequate notice and information. Lekki and Ikoyi residents as primary users of the road had only a onemonth timeline to prepare. The company did not create much awareness beyond the posters at the two toll points that it manages. Preparations by LCC itself could have been better. LCC said payment platforms would include the e-TAG, prepaid card, contactless card and payment voucher. It promised a dedicated app where users could apply and register to pay and use the service. LCC also promised distribution centres where patrons could pick access cards all over Lagos. As of November 7, 2020, the app was not available either on the LCC website or Google Play Store.

Deficiencies of the electronic payment ecosystem in Nigeria have also affected the scheme in these early days. Payments via Quickteller and the banks take 24 hours and counting to reflect with LCC. Nor does LCC have enough outlets to enable patrons to make payments. The Lagos State government and LCC must work harder to resolve these teething problems. They would then need to address the more fundamental philosophical, political and legal issues around the toll gates and the payment modes. E-payment, given the state of infrastructure in Nigeria today, restricts access to the Ikoyi-Lekki link bridge. It means that persons visiting either of the two places for the first time and probably from out of town cannot use the bridge. They would have to go through a process of education and enlightenment to understand why their cash is not suitable, or why they cannot access a road built with taxpayers’ funds anywhere in Nigeria and in the heart of the city. In December 2014, Lagos State Government announced that it had taken over the management of the Lekki-Epe expressway and the toll gate earlier concessioned to LCC. The Lagos State House of Assembly approved the release

of N7.5 billion for the purpose. That effectively ended the publicprivate partnership basis of the concession. Since then, tolls have continued on the Admiralty Toll Plaza and on the Ikoyi-Lekki bridge. Accountability beckons. How much do the toll plazas yield to Lagos annually? How does the state utilise the income from the tolls? All that citizens occasionally hear from the LCC is justification for increments based on inflation and other economic indices. There is never accounting for what it earns and how it utilises it. The Ikoyi-Lekki Link Bridge is a 1.36km cable-stayed bridge linking Lekki Phase 1 to Ikoyi. Babatunde Raji Fashola as governor of Lagos State commissioned the bridge on 29 May 2013. A significant promise of the bridge is that the tolls would help fund more roads/bridges in Lagos as well as its maintenance. How much has Lekki-Ikoyi Link Bridge generated since May 2013? Has it paid for its construction? Should the basis of continued tolling not be an accountability regimen that enables citizens to know what the state gets? Meanwhile, Lagos State and its operating company LCC should finetune the electronic payment model they have introduced.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

ENQUIRIES NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union

MISSION STATEMENT To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR CORE VALUES

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Thursday 09 January 2020

comment is free

COMMENT

Send 800word comments to comment@businessday.ng

The Igbo wars resume THE PUBLIC SPHERE

CHIDO NWAKANMA

t least five fundamental issues confront Ndigbo in the new decade. Politicians and analysts have positioned two as if they have a shelf-life of three and half years within which they must happen, but it is not necessarily so. The call is for strategic planning that takes in short, medium and long-term perspectives. The issues are the quest for a President of Igbo Extraction, Restructuring of Nigeria, Biafra, Accountability in the homeland and Aku na Madu Ruo Ulo. The ordering here does not speak to relevance or importance but to the way they appear in popular discourse. The last two are the most important in my view for the profound reason for the imperative of charity beginning at home. The issues feature in the Igbo wars that resumed after the 2019 general elections but assumed prominence last December. Interestingly outsiders seeking to undermine the quest, such as Isa Funtua, began beating the drums early in the new year. Igbo groups such as the

World Igbo Summit Group also came out with statements on the direction. Accountability in the homeland of the five states of the SouthEast should be a primary concern of its elite and middle classes. Professionals from the South East have gathered like their counterparts elsewhere on various WhatsApp and Telegram platforms. The discourse, however, focuses mostly on the external. There is often masturbation on the matter of the quest for Igbo presidency by persons. Most of the contributors do not belong to and have no plans to get party cards or be part of the process of ensuring adequate representation to ensure that this happens. Accountability is becoming a top burner issue forced on by various events. I mentioned last time the NDDC revelations concerning projects in Abia State and how its citizens joined in raping the state by not delivering on the projects for which NDDC contracted them. I call on the Abia State Government to release fully for the public record its findings concerning all the projects including sums involved, contractors, stage of work as well as plans it has agreed with NDDC for remediation. It should not end as half-hearted disclosures in a muted press statement. Accountability for the state of things in the South East went up a notch higher during the week. Positioning as a bete noire of the region, Presidency official Lauretta Onochie weighed in with a salvo aimed at Senator Ike Ekweremadu. She alleged that constituency

contracts awarded to the assistant on projects of the distinguished former deputy senate president suffered the Nigerian Factor. She claimed that Jonathan Ivoke, the official, did not deliver on the contract. Onochie made a telling remark: “Those who asked to serve Ndigbo must deliver to Ndigbo everything they have received on behalf of Ndigbo from the Federal Government”. It sounded like a bomb on many of the platforms on WhatsApp. Handle with care has been the approach. Yet, it speaks to the matter of accountability. To get it going anywhere, you have to name, not necessarily to shame but to get a full accounting. I expect that in the days ahead, the constituents of Senator Ekweremadu in Enugu North would hear from him. More importantly, the Federal Government would go beyond naming and shaming by Ms Onochie and get all parties involved to deliver on the abandoned project. Aku Ruo Lo and Madu Ruo Ulo is more than a rallying call. As they make the call, governors must realise that the onus is on them to deliver the policies and enabling environment. Information on fund releases to all the states of the federation is now available on various websites. They show that money sufficient to do significantly more than is currently visible has passed through the bank accounts of the governments in the South East. Why do we not have more to show and why? The external matters call for circumspection, and for hard-nosed strategic

‘

Accountability is becoming a top burner issue forced on by various events. I mentioned last time the NDDC revelations concerning projects in Abia State and how its citizens joined in raping the state by not delivering on the projects for which NDDC contracted them

Fit to lead: Perspective is the difference

ast week, we discussed the need to change focus to the team and the workplace culture to make the difference in the year 2020. The difference between a leader that focuses on his or her people, help them to be better to deliver on the commitment to the stakeholders and the one that focuses on self is perspective. Perspective is a little difference between leaders and followers. Still, the slight difference makes a significant difference in how organisations achieve sustainable results and transform into institutions that last the test of time. The significant difference is what all the leaders desire without much focus on the little difference that enables the vast difference. A person could be in a leadership position but have the perspective of a follower. If your leadership perspective is deficient, you will be self-conscious and focused. Leaders who operate with followers’ mindsets and perspectives breeds followers and leave the team worst-off than they met because they focused on personal rewards in the process. So, the starting point is to check your leadership perspective to make the 2020 difference. Perspective is defined as a mental view or prospect. It is the worldview of yourself and your position in the workplace. It is how you see your role as a leader that dictate your action and disposition to others. A savvy person with a wrong perspective of leadership in this dispensation will be inept in the way he manages his team and the result the organisation will achieve. In the machine age, the focus of leadership is on the equipment and the process. Processes are more important than people, and people are made to function in line with the existing process to produce the outcome. But in this emotional age, people’s emotions are essential to keep productivity high. Hence, leaders with the perspectives of enablers will focus on the team’s feelings

and work to create an enabling culture and environment to aid sustainable productivity. Leaders with views of positions and entitlement with focus on the perquisites of their offices ahead of the team effectiveness might achieve results, but the results cannot be sustainable in the long run with stiff competition. Peter Chao did excellent work in his article on leadership perspective. He identified two lenses that determine our perspective and influence leadership behaviours as the ‘Beings’ and ‘Vision’ lens. The Being lens reflects on the personality of the leader. It is the lens that determines the identity of the leader, his or her understanding of the process and posture of leadership. The outcome of the perspective of the person (the being lens) of the leader in the emotions and depth of his or her role as reflected by the identity and understanding of the process of leadership. This is what I termed the knowledge attribute of a leader in last week’s article. The vision lens is how leaders perceive and define reality which determines appropriate actions or directions to be taken. It is the leaders’ insight, foresight, hindsight and lifting sight, which connects vision to possibility and reality when actions are made toward the realisation of the concept. It is essential for you as a leader to examine your perspective at regular intervals and ensure your vision and being lenses are in alignment with the reality of your environment and nature of your team. A clear view that your role as a leader is to deliver value through others with a positive and purposeful relationship in a process will focus your attention on what is truly important for your team to succeed. A compelling scenario is a case of our process as a nation at the individual and collective leadership levels. Though we have exceptional leaders among us, we have limited results due to the environment and culture

www.businessday.ng

which attribute leadership to the persons rather than the process. At the individual level is the example of Kolawole. Kolawole was a divisional head in his organisation ten years ago. His perspective to leadership at the “Being” lens was about his person. In his division were five teams with managers as the team leads. Kolawole, though intelligent as a person, his perspectives and vision to get noticed at the top affected the process of leading his team. As his team member, you must not reply or send emails to other departments without his review and corrections. No team members can go home until he leaves office even if he’s waiting for traffic to his house to subside. You must put others in the copy of emails based on seniority instead of the need to know. Kolawole succeeds in advancing himself with his politics but left his team without a trace of leadership before his forced exit after ten years. He did achieve his personal career progression at the detriment of the development of the team he was leading. He denied the organisation the services of smart staff who resigned their positions due to his defective leadership perspective. Another corollary of a defective leadership perspective is Nigeria’s political offices where leaders amass wealth as rewards for being elected and get power arrogated to them. Seeking political offices have been a journey to self-enrichment rather than services to the people who are impoverished due to leaders’ perspective of ‘milk them die’. The trend is broad as the political elites have started planting their children and cronies in the offices to replace them aside from the massive looting of public fund. Imagine what the children of today’s senators will do when they succeeded in getting to the senate in the future. They have seen how their parents’ wealth grew geometrically due to allocations not worked for, and the community project funds siphoned into private

https://www.facebook.com/businessdayng

thinking and planning. As Kenichi Ohmae of McKinsey Consulting firm affirmed, “Faced with problems, trends, events or situations that appear to constitute a harmonious whole or come packaged as a whole by the common sense of the day, the strategic thinker dissects them into their constituent parts. Then having discovered the significance of these constituents, he reassembles them in a way calculated to maximise his advantage.” Senator Enyi Abaribe, Mma Agha, has pointed to this need to look carefully before jumping either way. The quest for the presidency by the South East is valid and just. The region should press its case hard. It should listen to persons such as Isa Funtua and Dr Chris Ngige, pick the sense in the seeming nonsense, and stride steadfastly ahead. One of the lessons of the last four years is the need for less noise and more action. “A seed grows with no sound but a tree falls with huge noise. Destruction has noise but creation is quiet”. The decibel of political communication for the many causes dear to Ndigbo must be creative, loud where necessary, but not noisy. There would be many baiters and mockers. Focus is desirable. The rank ordering of the priorities is also essential. Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

POSITIVE GROWTH WITH BABS

BABS OLUGBEMI pockets. The children are not only learning from the self-oriented perspectives but are equally learning to be heartless to the plight of the poor masses being denied of a good life. I’m sure when they get to the senate, they will be chartered “Stealnators” than their parents. For things to improve, leaders must review their perspectives at every stage of their leadership journey. The starting point for being an institutional leader with generational impacts is to have an attitude that leadership is not about you but about the number of others you influence positively to achieve outcomes that will outlive you. We are in search of leaders in all spheres of our public lives and the search start from the re-orientation of what leaders do and how leaders see their positions and roles. The first port of call is your perspective if you want to be a better leader in 2020 than you were in previous years. Conclusively, the word of Peter Drucker that leadership involves “the lifting of a person’s vision to higher sights, the raising of a person’s performance to a higher standard, and the building of a person’s personality beyond its normal limitations” is relevant to you only if your perspective about your roles as a leader is clear and beyond the benefits to you. Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

cityfile Fire kills 34 in Jigawa

hirty-four persons lost their lives and property worth N200 million destroyed in various fire incidents in Jigawa State between January and December 2019. However, 375 lives and property worth over N655 million were salvaged from the fires during the period. Ahmad Danyaro, the director of Jigawa Fire Directorate, who stated this in Dutse, the state capital, also added that 69 animals were lost, while 24 others were saved.

Waste management workers parking refuse at a dump in Kurudu area of Karu after the New Year celebration in Abuja on Tuesday

Man bags 6 yrs for stealing jewellery

PANDEF tasks FG on demands of N/Delta agitators ANIEFIOK UDONQUAK, Uyo

he Pan Niger Delta Forum (PANDEF), a sociopolitical group in the oil producing region of the country, has expressed concern over the non implementation of the 16-point agenda it submitted to the Federal Government. PANDEF presented the 16-point agenda to the Federal Government as part of efforts to create an atmosphere of peace following increased agitation by youths in the area. Idongesit Nkanga, a retired air commodore and chairman of the forum, expressed the frustration

when he received the president of the National Association of Nigerian Students (NANS), Danielson Akpan in his office in Uyo, the Akwa Ibom State capital. Nkanga, a one-time military administrator of Akwa Ibom, lamented that Nigeria though richly blessed, her leaders have, however, failed to manage her resources to the benefit of all. He lamented that, of the 16 points agenda presented by PANDEF, only the establishment of Maritime University in Delta State, has been met, while the others, including making the Maritime Academy Oron, a full fledge university has not been met. “Nigeria is a place that

has been blessed by God, in human and materials resources, but we have failed to manage the resources, so we go through the circle of frustration. People hear that we are going through this and wonder why it should be like this. “We have kept quiet for too long, sometimes silent may mean betrayal. What I did not achieve; my children should. We should have a country with equal opportunities. Restructuring means justice, so nobody should kick against it, when you look for peace to have development, I think you have to look for justice”, he said. He described the visit as divine, saying he has been

looking to an opportunity to seek the students’ support for the forum’s vision for the Niger Delta people. Akpan pledged to work with governors in the southsouth and PANDEF for the realisation of the 16-point agenda forwarded to Federal Government since 2016. According to him, NANS would use it contacts and numerical strength to talk to people in government to ensure that, the demands of the people of the Niger Delta as encapsulated in the 16- point agenda are met. “We are going to mobilise our people to join you, PANDEF and governors of the Niger Delta region to push for the actualisation of the 16-point agenda.

Insurgency: Borno opposes relocation of communities

overnor Babagana Zulum of Borno has called on military authorities to rescind the decision to relocate Minok and Jakana communities in Kaga local government area of the state. Zulum made the call when he visited the affected communities on Tuesday. Mainok and Jakana communities located on Maiduguri-Damaturu Road, witnessed resurgence of insurgency activities in recent weeks. In furtherance of its clearance operation against remnants of the insurgents, the military planned to relocate inhabitants of the communities to Internally Displaced Persons (IDPs) camps in Maiduguri. “I call on the Chief of Army Staff, Tukur Burutai, to refrain

According to Danyaro, the directorate received 246 fire outbreak calls and 47 calls relating to rescue operations. He warned residents against careless use of fire during the harmattan and also stressed the need for people to always switch off electrical appliances before leaving home or office after close of work. He reminded parents to warn their children against reckless use of matches or other fire igniters to avert fire outbreaks.

from the action. As much as possible, we need to commend the Federal Government’s effort in the counter insurgency operation, but we are not in support of displacing these communities. “We are fully behind the military and police with a view to condone and search exercise in the communities to arrest and prosecute all those involved in nefarious activities. “But we do not want the communities to be displaced,” he said. The governor noted that such action would compound the humanitarian crisis in the state, adding that adequate arrangements must be put in place to facilitate smooth relocation and resettlement of the affected communities. “The Federal and State Government, the National and State Emergency Manwww.businessday.ng

agement Agencies (NEMA and SEMA), humanitarian and development partners should be notified. The police, Civilian Joint Task Force (CJTF) and other security agencies should also be notified so that we can make adequate arrangements. “I am sure that no information had been passed to the police, Department of State Security Service (DSS), as well as the Nigeria Security and Civil Defence Corps (NSCDC) with respect to the planned evacuation of Jakana and other communities to Maiduguri. “Therefore, the government of Borno State is not in support of the move,” Zulum said. He, however, warned the communities against collaboration with the insurgents and urged them to support the military and security agencies

to end insurgency. The governor also reiterated his commitment to support the military in the ongoing clearance operation to rout remnants of insurgents in the state. “Maiduguri-Damaturu road has not been closed since 2011, and Jakana community not displaced. “Therefore, displacing these communities means that commuters plying the road are not safe for it entails blocking the road. We are pleading with the Federal Government to ensure protection of the communities on this highway. We appeal to them to ensure protection of life and property. “People should freely move around while supporting their desire to punish all those culpable,” said the governor.

https://www.facebook.com/businessdayng

Benin Chief Magistrate Court has sentenced a 27-year man, Simon Bedangzak, to six years imprisonment with hard labour for stealing jewellery and clothes. The court also sentenced Mohamed Musa, 23, and Ibrahim Aliyu, 37, to five years each with hard labour for receiving stolen property. The chief magistrate, Patricia Igho-Braimoh sentenced the accused persons, after she found them guilty. IghoBraimoh did not give the convicts an option to pay a fine, saying it would serve as deterrent to others. “I find the three defendants guilty as par their plea and facts stated by the prosecution,” she said. Bedangzak, who was facing a two-count charge bordering on stealing, was sentenced to three years in prison in each count charge. The chief magistrate said jail terms would run concurrently. The police prosecutor,

Osayomwanbor Omoruyi, said that Badangzak committed the offence of stealing on November 9, 2019 at 2, Ewemade street, off PZ road, Benin. According to the prosecutor, Badangzak stole 11 trousers, nine shirts, two eye glasses, three pairs of shoes and a belt, valued at N480,000 belonging to one Sunny Ewemade. Omoruyi said the convict also stole six gold earrings , three gold pendants and a necklace, valued N3.2 million, properties of one Osasu Ewemade. On November 26, 2019, the convict, Badangzak sold the stolen gold jewellery to Musa at Ring road and Aliyu at Third East Circular Junction in Benin. He said during investigation into the case, the police recovered some of the stolen items. The prosecutor said the offence contravened the provisions of sections 390(4)g, and 427 of the Criminal Code Act. Cap. 48, VoI. 11, Laws of the defunct Bendel State of Nigeria, 1976, now applicable in Edo.

Abia: ASOPADEC to train 600 youths on new skills

bia State Oil Producing Areas Development Commission (ASOPADEC) says 600 youths will be trained under the Youth Empowerment Scheme (YES) in 2020. Hope Uwaga,a commissioner in the commission, who disclosed this, said that youth empowerment was part of the agenda of the commission. He said that the commission had already enrolled 50 of them whose training would commencethisJanuary,adding that it would be done in batches. According to him, the youths would be trained in different fields including automobile, electrical installation, fashion designing and catering among others. He said, “we will push them to different companies that are well established; they will do the training there and if possible get employed there at the end of the training. “We will give soft loans to @Businessdayng

those that want to establish their own business through our collaboration with the Bank of Industry (BoI).” Uwaga also hinted that over 200 artisans who were undergoing skill acquisition training at Kiara De-Luke Academy, Umuobiakwa, Obingwa local government area, would soon graduate. According to him, the youths, drawn from different local government areas in the state, are being trained in computer engineering, automobile, electrical installation, garment making, catering and others. The commissioner said that the beneficiaries would be sponsored to start off their trades through the partnership arrangement between the commission and the BoI. Graduates of the scheme, he said, would also be given low-interest loans which they would start repaying after one year of establishing their own businesses.

Thursday 09 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

United Capital sees relief for Nigerian stocks in 2020 SEGUN ADAMS

utlook for 2020 f av o u r s the Nigerian equities market according to United Capital analysts, who say that the probability of a rebound seems more likely for the undervalued market than a further downturn. Analysts at the Lagos-based investment bank in an outlook report said they expect the Nigerian Stock Exchange, which has declined for the last two consecutive years, to return 5.3 percent in 2020. “Our Base case scenario sees equities market return at 5.3 percent, driven by

low rate environment and increased system liquidity in 2020,” United Capital said in its annual outlook report. While base scenario projects 5.3 percent gain, a best-case scenario suggests a 23.6 percent rally while the worst-case scenario would be -16.3 percent, they said. Tepid macroeconomic environment and uncertainty about policy direct i o n s w e re m a j o r weights on stocks in 2019, despite a relatively uneventful conclusion of the general elections. Nig e r i a n s t o ck s slid for the second year in a row to return -14.6 percent last year, while global

stocks rose 25.2 percent, Frontier Market gained 13.5 percent and Emerging Market advanced by 15.4 percent. However, technical analysis of the performance of the NSEASI over the last decade allays concern for investors about a potential further decline in the market in 2020. “Looking closely, while the lowest level of the index over the last 10 years can be traced to 20,000pts in 2011, we strongly believe realistic support level or the bottom can be pegged at 22,465pts index levels in 2016,” United Capital said. Beyond, technical analysis, the analysts say that Nigerian eq-

uities are attractive enough for investors with a medium to long-term view. However, for an attractive market valuation to trigger a rally, the macro picture must look good to spur domestic and foreign investment, they said. Data from the investment bank shows that as of December 2019, Nigerian stocks at 7.1x continued to trade at a bigger discount to its 5-year average P/E of 12.2x. (P/E was 9.0x in 2018) Compared to peers, the Nigerian market trades at a deeper discount to Emerging Market (14.3x) and Frontier Market (12.2x) peers, despite the two major listings

in 2019. For 2020, growth is expected to be modest but macroeconomic environment may not compelling enough for the return of the FPIs. The analysts say the low-interest-rate environment is expected to increase the money supply, reduce the cost of borrowing, support investment, output and translate to better profitability as well as increased wage bill and the border closure. However, pressure on disposable income as well as a segmented money market which favours FPIs, distorts the expectation, United Capital says. The favourable base case of 5.3 percent

gain in 2020 by United Capital assumes that the CBN will sustain its unorthodox policy stance, particularly concerning OMO sales to FPIs. However, the realisation of such performance remains linked to broader economic outcomes with a bear case scenario of a 16.3 percent decline in the market should developments in the macroeconomic environment deteriorate. “Finally, we do not rule out the possibility of rebound, if development in the economy improves considerably, as such, our Bull case scenario projects a 23.6 percent upside for the Nigerian bourse,” United Capital said.

BANKING

Absa strikes $473mn deal with World Bank agency to boost financing in Africa MICHAEL ANI

outh Africanbased banking group, Absa, on Tuesday, entered a $473 million deal with the Multilateral Investment Guarantee Agency, as it seeks to expand financing across seven SubSaharan countries. The agreement which will be valid for 15 years will enable Absa hedge against risks related to the mandatory capital reserves that banks are required to hold with central banks under Absa’s subsidiaries in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda and Zambia. “It will also free our subsidiaries in the re-

gion to provide more financing to corporates, small- and mediumsized enterprises and projects that will benefit the climate,” the bank said in a statement. According to Absa, the deal puts it as the first African banking group to enter into such an agreement with MIGA, a World Bank organisation with a mandate that includes promoting investment by providing guarantees against political risk. Absa Group Limited is listed on the JSE and is one of Africa’s largest diversified financial services groups with a presence in 12 countries across the continent and around 42 000 employees. The group owns majority stakes in banks in

Botswana, Ghana, Kenya, Mauritius, Mozambique, the Seychelles , South Africa (Absa Bank), Tan-

zania (Barclays Bank in Tanzania and National Bank of Commerce), Uganda and Zambia.

It also has representative offices in Namibia and Nigeria, as well as insurance op-

erations in Botswana, Kenya, Mozambique, South Africa, Tanzania and Zambia.

L-R: Joy Esan, assistant head of learning support staff, The Zamarr Institute (TZI); Khadeejah Katagum, CEO TZI, and Kosamatu Raji, centre administrator, at a press briefing on Learning Ability Centre for Children and Adolescents with special education needs in Abuja. Pic by Tunde Adeniyi.

Thursday 09 January 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

FINANCIAL SERVICES

Paga appoints Cleverly as new group chief financial officer JUMOKE AKIYODE-LAWANSON

aga, Nigeria’s largest mobile money operator on Tuesday announced the appointment of Ian Cleverly as its Group Chief Financial Officer. The hiring of its Group CFO, according to the company, is in line with Paga’s vision to become a leader in mobile payments across emerging markets. Ian joins Paga with over 20 years of industry experience in senior financial and operational management roles within the following sectors, telecommunications, FMCG, and mobile payments across multiple countries and continents. Ian began his appointment with Paga in November and is based out of the Paga Group office in London, United Kingdom. Prior to joining Paga, Ian served as CFO and executive director at Maistro Plc, a B2B marketplace for online Procurement Services. Prior to his role at Maistro PLC, he served as CFO of Cable & Wireless Communications in Jamaica and before that

was CFO for Hutchison 3G Ireland. Through his various appointments, his experience includes M&A, disposals, divestments, corporate restructuring, business transformation, operationalizing change, legal regulatory & compliance, strategy, supply chain, fundraising and extensive international board level experience. Ian began his career leading various finance departments at Procter & Gamble. He graduated in the United Kingdom and is a qualified Chartered Accountant (ACMA). Announcing the appointment, Tayo Oviosu, founder and Group CEO of Paga, said; “We are pleased to welcome Ian to our team. In our search for a Group CFO, we were searching for a candidate who has strong finance and risk management acumen, could partner closely on strategy and fundraising with a focus on people development as we scale globally. Above all, we also wanted someone who aligned with our core values at Paga. I am pleased to say that we have found that person with these qualities in Ian.” As Group chief finan-

cial officer, Ian will be responsible for finance, risk, compliance, and internal audit functions across all countries of operations. Ian will also play a critical role as Paga launches into new markets. Speaking on his appointment Ian Cleverly said: “I am delighted to have joined Paga at an exciting time as the company scales and gathers momentum for its next phase of international expansion. I look forward to playing a key role in its growth and value creation, making it simple for one billion people to access and use money. Paga encompasses smart and passionate people, strong technology and innovation as well as a growing worldwide footprint and I believe my experience will be additive to the team as we implement and execute our growth strategy.” Paga launched in Nigeria as its first operating market in August 2012. The mobile money operator, which has become the largest distribution network for financial services in Nigeria through its nationwide agent network, is licensed by the Central Bank of Nigeria

L-R: James Momoh, chairma/CEO, Nigerian Electricity Regulatory Commission, and Frank Okafor, commissioner, Engineering Performance Monitoring, at a press briefing on the forthcoming 11th edition of the International Conference on Energy, Power Systems Operations and Planning (ICEPSOP), an initiative of the Howard University U.S.A with sponsorship from the National Science Foundation (NSF) of the United States of America is being hosted and organized by the Nigerian Electricity Regulatory Commission (NERC) in Abuja. Pic by Tunde Adeniyi

Sharon Ikeazor (r), minister of state for environment, handing over the project document to Nkem Okeke, deputy governor of Anambra, at the inauguration of Umunze erosion/flood control and road improvement works at Orumba South Local Government Area of Anambra

BANKING

Fidelity Bank receives awards for supporting real sector HOPE-ASHIKE MOSES

idelity Bank Plc, Nigeria’s fastest growing bank has been recognised for its efforts at growing the economy particularly in terms of supporting the real sector. The bank received 2 awards to the effect at the 11th Annual Bankers’ Committee Retreat which held at Ogere, Ogun State recently. The awards were bestowed on the bank for its leadership role in the ongoing efforts to strengthen Nigeria’s agricultural valuechain as well as its staunch commitment to promoting women economic empowerment. Organised by the Central Bank of Nigeria (CBN), the two-day retreat was themed “Delivering Inclusive Growth: Leveraging Digital Finance” and brought together Chief Executives of Commercial Banks and other stakeholders in the financial services industry to articulate and strategise on initiatives for economic development and specific growth imperatives of the financial system. The bank emerged winner in two categories, securing second place in the ‘Sus-

tainable Agricultural Transaction of the Year Award,’ and third position as the ‘Best Bank in 2019 in Women Economic Empowerment.’ Fidelity Bank won the award on Sustainable Agricultural Transaction, for its compliance with the sustainable banking principles as mandated by the regulator of the financial services industry. On the other hand, the bank’s sustained focus on economic empowerment and SME funding, which led to its increased support for female businesses, made it to win the award on Women Economic Empowerment. Joseph Nnanna, deputy governor, Economic Policy, CBN, presented the awards to Nnamdi Okonkwo, managing director/Chief Executive Officer, Fidelity Bank Plc,. Okonkwo, who attributed the awards to the support of the board, management and entire staff of the bank, pointed out that the initiatives being implemented by the lender particularly as it relates to growing the agriculture and non-oil exports sector were yielding the desired result, hence this recognition. He stated that the lender has provided finance in excess of N50 billion for farm

start-up, expansion and consolidation, among others. According to him, Fidelity remains one of the leading disbursement banks of the CBN Commercial Agric. Credit Scheme (CACS). “Over N20 billion has been disbursed to by the bank, resulting in employment generation and economic growth”, he stated. Okonkwo promised that the bank would not relent in its efforts to improve access to capital, provide technical assistance, and invest in projects that support women and women-led SMEs, in line with CBN’s financial inclusion policy. “Research have shown that increasing women’s participation in the economy would boost economic output and benefit generations to come” he explained further. Fidelity Bank is a fullfledged commercial bank operating in Nigeria with over 5 million customers that are serviced across its 250 business offices and various digital banking channels. The bank focuses on select niche corporate banking sectors as well as Micro Small and Medium Enterprises (MSMEs) and its currently driving its retail banking businesses through its robust digital banking channels.

L-R: Babajide Sanwo-Olu, Lagos State Governor; Cecilia Bolaji Dada, commissioner for Women affairs and poverty alleviation; Adebisi Sosan, former deputy governor, and Fadeke Adejaiye, at the Y2019 Mega Empowerment Programme at the Blue Roof, LTV Complex, Agidingbi, Ikeja, Lagos

L-R: Bola Orolugbagbe, chairman/president board of trustees, Co-operative Financing Agency of Nigeria (CFAN); Abubakar Lawal, MD/CEO, GTI Capital Limited; Eric Olo, director, EPercent Investment Resources; Dipo Odeyemi, CEO, Cavidel, and Bola Ajomale, CEO, NASD Limited, at the sensitisation workshop on the establishment of a cooperatives shares exchange in Lagos.

Monday 09 December 2019

BUSINESS DAY

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,150.16 1,186.09

354.50

122.15

555.68

582.11

1,810.91

1,048.29

1,027.01

364.95

127.75

586.63

246.78

1,854.88

1,051.30

1,053.67

2.95

4.58

0.78

Week open (27 – 12–19))

26,416.48

N12.753 trillion

2,075.07

1,137.82

734.99

Week close (03– 1–20)

26,968.79

N13.019 trillion

2,139.47

1,149.76

734.99

Percentage change (WoW) Percentage change (YTD)

2.09 0.47

3.10 1.10

1.05 -0.18

0.00 0.00

3.12 0.70

2.27

1.53

-1.05

0.29

2.60

-6.00

1.10

-2.26

-0.04

Iheanyi Nwachukwu

GTBank, Vetiva research analysts had set a target price (TP) of N47.89 for the stock which closed at N30.10 last week. As at Tuesday Januar y 7, GTBank closed at N31, rising by 90kobo or 2.99percent. It looks good to reaching its 52-week high of N39.15 per share against 52week low of N24.65.

NSE Pension Index

2.43

…Board to meet soon, closed periods disclosed

2020. The closed period will run until 24 hours after the audited account is released to the investing public. Both stocks are among analysts’ picks for the year 2020. Despite their potential for capital appreciation, they also have the record of dividend payment. Recently in their ‘buy’ rating, for

NSE Ind. Goods Index

5.41

GTBank, Zenith may release FY’19 scorecards ahead of listed peers uaranty Trust Bank Plc and Zenith Bank Plc may get their full year 2019 financial statements released to the investing public ahead of their listed peers. The Board of Directors of both tier-1 lenders will be meeting this month to consider their full year results. The Board of Directors of Guaranty Trust Bank Plc will be meeting on January 22, 2020 to consider the bank’s audited financial statement for the year ended December 31, 2019. Pursuant to the post listing requirements of the Nigerian Stock Exchange (NSE) for quoted companies, the bank’s closed period for trading in its shares commenced on January 7, 2020. The closed period intends to prevent trading in a company’s shares by its insiders ahead of the public dissemination of its financial results. Also, the Board of Directors of Zenith Bank Plc will meeting on January 28, 2020 to consider the Group’s audited financial statements for the same period e n d e d D e c e mb e r 3 1 , 2 0 1 9 . The closed period for trading in the shares of Zenith Bank c o m m e n c e d o n Ja n u a r y 3 ,

NSE Lotus II

Likewise, their target price of N32.77 for Zenith Bank Plc against N19.25 it closed last week represents an upside potential. Also on Tuesday January 7, the share price of Zenith Bank Plc increased to N20, gaining 75kobo or 3.9percent. It had reached a 52-week high of N26.85 and a corresponding week low of N16.

John Holt reports pretax profit of N236m Iheanyi Nwachukwu

ohn Holt Plc has released its financial statements for the period ended September 30, 2019. The Consolidated statement of profit or loss for the year ended September 30, 2019 shows group restated revenue of N 1.793billion as against N2.674billion in 2018. The principal activities of the group are the assembly, sale, leasing and servicing of power and cooling equipment; sale and servicing of fire fighting vehicles and equipment; boat building, sale and servicing of marine equipment; marine transport ; warehousing and distribution services; property services and construction. The shares of the company traded at 56kobo per share. It had reached a 52-week high of 61kobo and a corresponding 52-week low of 46kobo. The group’s gross profit came lower at N451million against N521million 2018. Profit from operating activities stood at N298million as against loss of N31million in 2018. Profit before taxation increased to N236million against loss before tax of N86million in 2018. Earnings per share attributable to the ordinary equity holders of the parent was 55.90kobo as against loss per share of 20.77kobo same period in 2018. John Holt Plc was incorporated on August 28, 1961 in Nigeria as a Limited Liability Company. The Company was listed on the Nigerian Stock Exchange in May 1974. John Holt Plc is a subsidiary of John Holt & Company (Liverpool) Limited, UK. 52.97 percent of the issued share capital of the Company is owned by John Holt & Company (Liverpool) Limited, UK, while 47.03 percent is owned by Nigerian individuals and corporate investors.

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

United Capital Investment Views

Nigeria Economic Outlook 2020: A different playing field G l o b a l E c o n o my i n 2020: A potential recovery in sight? way from a synchronized g ro w t h s t o r y in 2018, global growth reverted to a synchronized slowdown in 2019, as growth in major Advanced Economies (AE) and Emerging Markets (EM) decelerated. In 2020, the IMF forecasts global growth to be stronger, driven largely by recoveries in the EM countries. By our estimates, better trade terms between the US and China, as well as accommodative monetary policy stance by global central banks, supports improvement in the global growth outlook. On trade, we expect a mild improvement, on the assumption that President Trump may be willing to fasttrack negotiations with China as well as other bilateral trade agreements to score political point ahead of his 2nd term bid. Additionally, the prospect of a no-deal BREXIT seemed out of the way as the UK parliament voted to back the Prime Minister’s deal. According to PM Boris Johnson, who won a resounding victory at the Dec-19 polls, the deal “paves the way for an ambitious free trade deal with the EU”. In all, our outlook for the trade remains mildly positive. However, the potential for further escalation, which could slow the pace of recovery remains significant. Elsewhere, global monetary policy is expected to remain accommodative in 2020 amid concerns around the fragility of global growth. However, the pace of easing will moderate as monetary authorities around the world wait to see the impact of their recent policy actions. On global crude oil prices, we see reasons to believe that prices will hover around $60/b-$65/b, supported by recent output cut by Saudi Arabia and OPEC. However,

slower growth in key demand markets (China & India) is a cause for concern. Su b -Sa ha ra n A f r i ca : AfCFTA, the real deal? The economic performance in the SubSaharan Africa (SSA) region was soft in 2019, no thanks to faltering momentum in key markets such as Nigeria, South Africa and Angola. However, the countries with the fastest GDP growth were Rwanda, Ivory Coast, Benin, Ghana, Tanzania and Kenya. Elsewhere, the Africa Continental Free Trade Agreement (AfCFTA) aimed at expanding intra-African t ra d e s, g a i n e d f u r t h e r ground in 2019. Notably, 54 of the 55 African Union (AU) member states (Eritrea being the only exception) signed the deal while 28, including Egypt, Ghana, Kenya, and South Africa, ratified the deal in 2019. Trading under the AfCFTA framework is slated to start in July 2020, even though regional developments in H2-19 suggests that many African countries are unprepared to implement the commitments of the deal. The re-emergence of xenophobic attacks in South Africa (Services), and the closure of all land borders by the Nigerian government (Goods), just three months

www.businessday.ng

after celebrating its signing of the AfCFTA, buttresses this position. Relatedly, the 8 - member francophone West African countries dropped the CFA franc late in Dec-19 and voted to adopt the ECO in 2020. Looking ahead, the World Bank forecasts growth in t h e re g i o n t o i mp rov e from 2.6percent in 2019 to 3.1percent in 2020, driven by stronger growth among non-resource intensive countries and modest expansion in resourceintensive countries. For us, slow recoveries in the larger economies will continue to constrain the pace of growth in the region amid longdelayed reforms. Nigeria: …in need of a coordinated and coherent policy framework Momentum in the Nigerian economy re ma i n e d s o f t i n 2 0 1 9 despite increased clarity in the political space after the 2019 general elections. In 2020, the outlook for t h e Nig e r i a n e c o n o my hangs on a framework of a well-intended but slightly uncoordinated policy outline. Notably, the recent amendment of the Deep Offshore and Inland Basin Production Sharing Contract (DOIBPSC) 1993 Act and the on-going reviews of the Tax

Acts via the finance bill, will support the implementation of the 2020 Budget and beyond in the face of sharp rising debt profile. Again, the unprecedented early passage of the 2020 budget by the senate in Dec-19, to return the economy to a January to December budget cycle, effective 1st of Jan-20, is a positive development. Also, a lower yield environment, triggered by the CBN’s recent mix of heterodox policy actions, will not only ease the cost of rolling over government borrowings but also stimulate domestic private sector investment. On the back of the above, GDP growth is expected to sustain a gradual uptick in 2020, anticipated to expand above 2.3percent, faster than 2019 but below 3percent. Also, inflationary pressure will persist due to supply shortages and the shutdown of the border, given the direct impact on food prices. Again, increased money supply by the CBN may keep the core inflation sub-index elevated due to pressure on FX. In all, we expect the headline inflation rate to average 11.9percent in 2020, higher than 11.4percent in 2019, in the absence of further structural changes that may trigger a fresh uptick in month-on-month

https://www.facebook.com/businessdayng

(m/m) inflation. While the benchmark interest rate (MPR) may be kept unchanged or reduced marginally, we imagine that the CBN will sustain its recent framework of heterodox policy mix until conditions necessitate policy n o r ma l i z at i o n . He n c e, interest rates in the fixed income market may remain low, especially in H1-2020. On the exchange rate and capital flows, we expect the CBN to continue to support the naira at N360-N365/$1 levels, by selling OMO bills to FPIs (Foreign Portfolio Investors) as a strategy to preserve the reserves at decent levels. At the current run rate, this can be sustained for another 7 to 9 months, all things being equal. Nevertheless, we acknowledge the growing concern about an impending devaluation of the naira. In our opinion, while a currency devaluation is unlikely in the immediateterm, there is a possibility for the harmonization of the official rate from N305.5/$1 to something very close to the I&E window rate of N360/$1, in the medium term. Hence, the adjustment may not really affect the market rate by more than a spread of 2percent to 5percent to the official rate. Overall, our outlook for the naira is stable in the near term with a potential harmonization in the medium - to - long term. On capital flows, no significant change is expected in the current dynamics. More specifically, the CBN is likely to sustain its OMO sale to FPIs in support of the reserves. This may keep FPIs interest dominant in money market funds at the expense of equity flows. Notably, we expect an upsurge in Loans & Other Claims to continue, given the low-interestrate environment in the international debt market. However, Foreign Direct Investment (FDI) flow may remain broadly muted. Naira Assets: A different playing field Notably, a quick sequence of monetary policy actions, particularly those relating to sales of CBN’s OMO bills announced since Jul-19, changed the dynamics in the Nigerian financial market in H2-19. While the currency @Businessdayng

market remained broadly stable, supported largely by the CBN’s sustained FX intervention, the equities market tumbled 14.6percent y/y. Also, the average yield in the fixed income market moderated from 14.5percent in Dec-18 to 9.7percent in Dec-19 2020 is a different playing field for capital market players. The fixed income market will be a corporate/ private issuer market due to the buoyant level liquidity and the low yield environment. Yields on FGN T-bills are projected to stay in the mid-to-high singledigit levels and Bonds yields at low double-digit levels, especially in H1-20. Hence, interest in riskier assets, mostly corporate papers, will increase. The rate on OMO bills (solely for FPIs and Banks) are unlikely to witness significant changes, as the CBN continues to deploy its set of unconventional policy tools to attract FPIs and limit an impending dollar outflow in Q1-20 while preserving the stock of reserves above the $30.0bn threshold. Overall, we expect the sovereign yield curve to remain normal in H1-20. However, this may reverse to a hump-shaped curve from Q3-20. For equities, the continued auction of high yield OMO bills to FPIs may keep foreign interest in local equity market tepid amid fears of a naira devaluation and confidence deficit in the economy. Again, FPIs are likely to continue their flight to safety by swapping/ selling equities for lowrisk OMO bills. Yet, our outlook for stocks in 2020 is anchored on developments in the domestic and global economy with monetary policy as the biggest factor to watch. From all indications, the only justification for an uptick in the equities market is the lower yield environment, supported by increased local currency liquidity. However, this will not be enough to trigger a major rally in the absence of the demand from FPIs. O verall, our base case scenario, sees equities market return at +5.3percent in 2020, driven by local demand for high-quality dividend-paying stocks and increased system liquidity.

Thursday 09 January 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Wapic Insurance: Shareholders still have opportunity as Rights Issue closes tomorrow Iheanyi Nwachukwu

apic Insurance Plc got regulatory approval to extend till tomorrow its offer period for the Rights Issue of 15,613,194,623 ordinary shares of 50 kobo each at 38kobo per share. Wapic Rights Issue to existing shareholders is on the basis of 7 new ordinary shares for every 6 ordinary shares held as at the close of business on September 19, 2019. With Securities and Exchange Com-

Aigboje Aig-Imoukhuede, Chairman, Wapic Insurance

mission (SEC) approval, the Offer which was initially scheduled to close on Tuesday December 31, 2019 will now close tomorrow Friday January 10, 2020. The Right Issue comes at a premium price when compared w ith 37kobo which it closed on September 19. Though, Wapic Insurance Plc share price had reached a 52-week high of 47kobo and a 52-week low of 33kobo. Shareholders of Wapic Insurance Plc had ahead of National Insurance Commission’s (NAICOM) directives for insurance firms to comply with

its new capital regime given the company approval to increase its capital base to N15billion from the current N8.5 billion level. Wapic Insurance Plc together with its subsidiaries (the Group) is a public liability company domiciled in Nigeria with operations in Nigeria and Ghana. In incorporated on March 14, 1958 as a private limited liability Company under the name of West African Provincial Insurance Company Limited, the company became a public limited liability company in 1990 when its shares were listed

on the Nigerian Stock Exchange. The insurance company’s unaudited interim financial statements for the half year (H1) period ended June 30, 2019 shows the Group’s gross written premium increased to N8.66billion as against N6.96billion in the corresponding half year period of 2018. Gross Premium income stood higher at N7.88billion in H1’2019 from N5.45billion i n H 1 ’ 2 0 1 8 . H o w e v e r, the group’s under writing profit printed lower at N1.261billion in H1’19 from N1.32billion in H1’18.

Sigma Pensions

Nigeria 2020 outlook: A year of promise and opportunity, but difficult times first Sigma Pensions Limited is a Pension Fund Administrator (PFA) providing pension administration services to over 700,000 working Nigerians and retirees. The company which manages assets of about N430 billion as at the end of 2019 looks at Nigeria in 2020.

fter a year characterized by trade disputes between the world’s top two economies, which negatively impacted global markets, 2020 holds out prospects for a return to normalcy in global economic growth. Central to the improved outlook is scope for more progress in negotiations between the US and China, following from the Phase I agreement reached in December 2019. Elsewhere, the majority victory of the Conservative Party at the UK general elections suggests room for conclusion on the three-year Brexit divorce from the European Union. Beyond politics and trade, we think that global monetary policy will remain largely accommodative with the US Federal Reserve in a holding pattern over 2020. For commodities, the deal by the Organization of Petroleum Exporting Countries (OPEC) and their allies to deliver on additional cuts to oil production (totaling 1.7mbpd) should support crude oil prices in the USD65-70/bbl range over Q1 2020. However, over H2 2020, we see scope for potential fatigue among OPEC allies and some OPEC members to drive a breakdown in unity leading to potential over-supply in the crude oil market. As such, we look for prices to average $5560/bbl by year end (2019 average: $65/bbl). On the domestic front, following the conclusion of the 2019 general election which saw President Muhammadu

Buhari return to a second fouryear term, investor focus has returned to various economic policy proposals aimed at addressing the macroeconomic imbalances across the Nigerian economy. The pressures on fiscal finances increasingly appear evident as the recently passed 2020 budget includes several measures (VAT hikes, introduction of stamp duties and further excise tax increments) designed to raise the FGN’s revenues. Overall, we believe that the investment landscape in 2020 will be shaped by: A largely favourable global economic environment and relaxed global monetary policy; A supportive oil price picture in the first half of the year ; Greater impetus for implementation of capital budget as fiscal revenues improve; Concerns regarding FX reserves and exchange rate outlook; Potential inflationary pressures from increases to tax and electricity tariffs; In what follows, we set out key themes for investors to watch out for over 2020. Amore upbeat global economy as trade wars simmers, near term support for oil prices In a turnaround from the weak patch over 2019, global economic performance looks upbeat over 2020 driven by optimism about trade negotiations between the US & China. Elsewhere, we see an increased likelihood of an orderly resolution of Brexit though we highlight that the lead-up to the US presidential elections in www.businessday.ng

November could present sizable uncertainty to global financial markets. That said, we think any concerns about political risk spillovers are likely to be tempered by further monetary policy accommodation by leading central banks. In all, the IMF expects the global economy to expand by 3.6percent up from 3.5percent in 2019. For oil prices, we believe that the December 2019 agreement by OPEC and its allies to trim 1.7mbpd in crude oil production will keep global crude oil markets finely balanced with near term support for stronger crude oil prices. Nigeria – Minor improvements in economic growth, inflationary pressures on the horizon We expect the Nigerian economy to remain on the path of slow recovery in 2020 largely helped by higher oil output, which will help mask the negative impact of tax increases on consumption spending. On account of new oil production from the Egina oil field, we see oil sector growth remaining positive over 2020 though we highlight that Nigeria is likely to come under pressure from OPEC members to comply with agreed output reduction quotas (following significant undercompliance over 2019). This might cap upside to oil output which we expect to average 2.1mbpd in 2020. In the Non-Oil Sector, we expect improvement in fiscal spending as well as implementation of the minimum wage

increases to support economic activities. However, these gains are likely to be muted by the impact of tax measures (increased VAT and stamp duties), border closures and higher electricity tariffs on consumer disposable incomes. In all we expect improvements in economic growth to be marginal and look for 2020 real GDP growth in the region of 2.5percent. Across other macroeconomic variables, we think imbalances in the external sector where a deficit has materialized will place downward pressure on the exchange rate. Here, the CBN has guided to two devaluation triggers: a decline in oil prices below $50/bbl and/or a drop in FX reserve levels below USD30billion, which can drive a move in the peg to N400/$. However, we think the CBN will look to hold off any devaluation in the near term and envisage the re-introduction of FX curbs to manage USD demand

Dave Uduanu, managing director and CEO

https://www.facebook.com/businessdayng

alongside measures to attract portfolio flows. For inflation, we think the environment speaks to further uptick and estimate that headline inflation will average 13.2percent over 2020 (2019e: 11.4 percent). Capital Markets: Low interest rates for now, cheap valuations supportive of equities The ban on local investor participation in the CBN’s Open Market Operations (OMO) has resulted in a strong decline in interest rates as demand for instruments from maturing OMO bills outpaces the supply from Nigerian T-Bills, FGN bonds and corporate bonds. We expect this trend to continue over the near term as the expensive cost of these OMO bills have become burdensome to CBN’s balance sheet. However, our view regarding higher inflation and pass through impact of current account weakness to FX reserves imply that CBN may at some point need to curtail excess Naira liquidity via higher interest rates in a bid to curb USD demand. The combination of a low interest rate profile at the start of the year, cheap equity valuations and double-digit dividend yields in some sectors presents scope for positive sentiments towards Nigerian stocks. Key risks to our 2020 outlook include: A reversal of the dovish monetary policy posture by the US Federal Reserve could trigger a sell-off in capital markets across emerging and frontier markets from portfolio outflows; A failure of OPEC and its @Businessdayng

non-OPEC partners to agree to rollover the current production reduction agreement past Q1 2020 which could result in a larger than expected crude supply glut and drive crude prices towards $50/bbl. This would lead to increased perceived risk in economies and markets of oil producers (such as Nigeria); Faster depletion of the country’s FX reserves which would increase concern towards naira assets. Conclusion In summary, we think a confluence of factors (higher oil prices, dovish US monetary policies and Brexit progress) suggest the first half of 2020 presents a positive global macro-economic backdrop which is supportive of capital flows to emerging and frontier markets. However, farther out into 2020, we are less optimistic about crude oil prices as we think OPEC and its allies will struggle to successfully balance oil markets. For Nigeria, we expect further pick-up in economic growth though tax increments and border closures suggest inflationary pressures. While we expect increased pressure on the Naira, the CBN in our view is unlikely to devalue the currency and may instead reintroduce FX curbs and tighten liquidity to limit dollar demand. In the capital markets, equities are likely to be favoured as the preferred asset class amid the current low interest rate environment, attractive dividend yields and relatively cheap valuations.

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

BUSINESS TRAVEL With right infrastructure, Nigeria can grow passenger traffic by 10m yearly – Sanusi Ado Sanusi, the chief executive officer of Aero Contractors in this interview, speaks on how the airline will address its infrastructure gap to grow passenger traffic.

is that they are only willing to sell; that they are not in the position to lease. What is the reason to that? They said country risk. What is country risk? They don’t think that if there is default and they want to reposes their airplane they will have smooth repossession or at least, a hitch free repossession. They don’t also feel that at the time of returning the aircraft it would be returned based on the leasing conditions. They feel that the safety oversight is not strong enough to make sure that the aircraft are effectively maintained and when they are to be returned, they will be returned in good condition. They also feel we are not very good in record keeping. These are the things we need to address. As an industry we need to go to government and urge them to make sure that the Convention is fully implemented. Yes, we are signatory and it is fully domesticated but is it implemented to make sure that anybody that is bringing his aircraft will feel very safe, knowing that the government of the day is the government of rule of law and respects international treaties signed by the country; and whenever the leasing companies want to take their asset (aircraft), they would be freely allowed to take their asset. In fact, they will be assisted to take their assets. If we do this they will be willing to lease their aircraft to us. What policies can Nigeria introduce to create a West Coast market that will benefit both Nigerian and other operators in the sub-region because currently Nigerian airlines spend more money flying to West Coast destinations than the airlines in the ECOWAS countries spend in coming to Nigeria? This yields itself to the demand and supply theory. In Nigeria we have the flying public so we can still cultivate more and grow passenger traffic to 10 million per annum. This is achievable but we must have the aircraft to fly the people. We must also make sure we have the infrastructure www.businessday.ng

Ado Sanusi

so that when they enter the airport they will be happy with what they see. We must also have the confidence of the flying public so that they will feel comfortable flying our airlines. With all these in place, the introduction of new airplanes will definitely allow growth in the market. What can government do to reduce cost of operation for domestic airlines?

‘

It is quite unfortunate that Nigeria that is well blessed with a lot of natural resources and well respected in Africa, we still cannot boast of buying aircraft and bringing them into the country for operations

‘

Kindly give an assessment of aircraft operation in the sector today? f you look at the number of operating aircraft in the entire system, including all the airlines in the past 12 months or starting from January 1, 2019, till date you will see that there is remarkable decrease in the inflow of aircraft into the country, there is definitely a significant decrease. If you also look at the inflow of leased and acquired aircraft you will also notice that there is a decrease. The only airline that is bringing aircraft to operate in the country is Air Peace. So, the capacity of the airlines has not grown because Nigerian airlines are not able to lease aircraft that will operate in the country. Passenger demand has increased because after the election there was stability, which triggered the demand. More people travel since after the election and this is natural. But unfortunately, we are not meeting the demand by making sure that we have adequate number of aircraft that are operating in the system to feed the market. It is quite unfortunate that Nigeria that is well blessed with a lot of natural resources and well respected in Africa, we still cannot boast of buying aircraft and bringing them into the country for operations. If you look at Rwand Air, the airline is buying new aircraft ; even Uganda is buying new aircraft and they are operating. We have to look inwards to see what went wrong at the beginning and then correct it. We could establish a leasing company that can make aircraft available to us or we make the leasing companies in other parts of the world feel comfortable to lease aircraft to us. Are there hitches in getting aircraft by Nigerian airlines? Yes. There is a big hitch because a lot of leasing companies do not want to do business with Nigeria. So when Nigerian airlines make enquiries to lease aircraft the response they get from the leasing companies

Yes. The first intervention should be in the supply of fuel, which over the years government has been striving to bring down. 40 percent of the cost of operation is almost on fuel, Jet A1. So we can look at it and ensure that the fluctuation in the prices is not much. Look at the situation now. The prices go from N198 to 220 per litre. So if we can have a constant supply of Jet A1 at constant price, airlines will know how to plan their budget and how they can bring down the cost of ticket based on the lower cost of aviation fuel. In most countries the price of Jet A1 is very, very dependent on the price of crude oil but in Nigeria it is dependent on the landing cost of imported product. Crude oil price can be steady for the next six months but Jet A1 price will be fluctuating. So I think we can streamline that. It is already deregulated but we can persuade the importers to ensure constant supply of the product. Or government can be importing Jet A1 and be selling to marketers. Government should also look at the taxes. It has done very well in the taxes by reducing some and looking at removing VAT. I hope it has done that already. But

https://www.facebook.com/businessdayng

the most important thing government should tackle is multiple taxation. The federal government should look at it. The last time they reviewed taxes in aviation was a very long time ago and I think they should look at it and reflect the reality on ground. Besides weather and VIP movement, what other factors cause flight delays and cancellations? Infrastructure. If I have 10 departures out of the General Aviation Terminal of the Lagos airport and let’s say my departures are 100 passengers per flight, it means I will have 1000 passengers for the 10 flights. All of them are departing at 7:00 and they had come about 40 minutes before. This means that we have to process the passengers 30 minutes before departure, but if the infrastructure cannot support that physically, there is nothing you can do but to delay your flight. If I have five checking in counters but I have one x-ray machine at the screening point. That means we all have to queue and it takes the x-ray machine about 40 seconds to one minute to screen one passenger and if the x-ray machine should break down they will revert back to manual searching. This will take up to two minutes to screen each passenger, so physically it will not be possible to quickly dispatch the passengers in time. Another factor is Aircraft on Ground (AOG) is a major factor issue and when a company says that we are delaying flight because there is fault in the aircraft that is a good company. Nigerian passengers are apprehensive when it comes to technical issues with the aircraft. I don’t blame them because there have been so many mishaps in the country. So when you say there are technical issues they will become afraid. What are you looking at in the future for Nigerian airlines in a situation where there is increasing passenger traffic but few aircraft? When you look at the trajectory and you notice that it is shrinking. This may @Businessdayng

bring us to a time of 1992, 1993 and 1994 when Nigeria Airways was down to one or two aircraft and Kabo was coming in with aircraft and Okada was coming in with aircraft. Then people were struggling for aircraft seats, running on the tarmac to get on board the flight. But that is not exactly what will happen now. What will happen is that the highest bidder will be inside the airplane. If I know that I am the only airline that goes to Abuja from Lagos at 1 pm, what I will do is that I will put the price at N70,000. That is how the demand will be if this trend is not checked in the next three to four years. The ticket price will increase. I don’t know how much it will increase. Do you think the private sector can save the situation and does the situation now justify the clamour for national carrier? I am always a true believer in national carrier. In fact, every country should have a national carrier. National carrier is a source of pride to any nation. But will the national carrier solve the problem? I think it will just ease the problem. This is because we must try to understand what is wrong with the aviation industry. If a national carrier will come and change the architecture of the entire aviation industry by saying, we are going to bring 20 brand new aircraft and every airport will experience flights. We are doing this to change how aviation is being run in the country for decades. Do you think this should be done by government or private sector? I think both. I think government has a big role to play and I think the private sector also has a big role to play. But I think private sector driven but government backing. I don’t think government has money to put aside for airline business but it can give sovereign guarantee for private investors. It will encourage investors to commit their money because their money is guaranteed by the state. I think that will help if the state will guarantee bringing in new airplanes into the country. I think that will also help.

Thursday 09 January 2020

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

The good and bad for Nigerian investors eyeing tech startups Stories by FRANK ELEANYA

ast year, startups in Nigeria cut a large slice of the investment cake in Africa as less than 25 of them accounted for nearly $500 million in funding led mostly by foreign investors. While that may not be the best measure of the state of their health, it is certainly an indicator of the opportunities that are available for investors. But despite the promise, there is still a dearth of big-spending local investors. Tech startups are seen as high-risk assets. The $5 million investment in TeamApt from Quantum Capital, a private equity firm owned by Nigerian billionaire and investment banker Jim Ovia, is arguably the only significant equity investment that came from a local source to a local startup in 2019. Experts say, often, the lack of interest isn’t because investors in Nigeria do not want to invest. Being a relatively new space with little to show in terms of profitability and customer acquisition numbers, local investors with no idea of how to begin, tend to shy away from the space. Experts, however, say they could be missing out on great opportunities. Around the world, early investments in tech startups have proven a life-transforming event for many people. Investors in big winners like Google, Amazon, Facebook, Tesla, Apple, etc have had their lives changed as a result of the current valuations of their assets. Peter Thiel, co-founder of PayPal invested in Facebook and sold most of it for over $1 billion just a few years after. Africa is seen as the last frontier

hence investors from abroad with endless resources and patience are increasingly seizing the opportunities that abound on the continent. Local investors can be part of the party. Over 10 years, the right portfolio mix could give an annualized 30 percent per year in Nigeria. However, Adedeji Olowe, CEO of Trium, a Nigerian-based venture capital firm, said it is unlikely to happen in a single investment but from a fund or portfolio, as putting all investment in a single startup would probably lead to loads of heartbreak. The Nigerian tech startup space is not for the fainthearted. “We have romantic stories of

young techs starting out of some garages and going on to dominate the world. Yes, that’s true. But it’s only true for maybe 0.5% of startups,” said Olowe. “If you are an angel investor in tech companies, you have to see it from a portfolio point of view. Probably 80% of your investments would go up in flames, about 19% would just be there. But if you are consistent and have a portfolio-wide enough, only 1 out of 100 could give you over 1000 returns. Yes, it can be profitable in the long run.” Pamela Anoliefo, cards and payments expert, says the startup space is a “hit or miss” for investors. It explains, she says, why traditional banks are unfriendly when it comes

to lending to startups with no actual product in the market. Ife Ojonibanke, a startup consultant at Microtraction, a venture capital firm, advice investors not to get carried away by the hype in the market. The media has done a fabulous job of following closely the majority of the funding successes of the startups, even to the extent that increasing valuations are mistakenly being used to determine the health of a tech startup’s financial wellness, growth, and future success. “Valuations determine if you are a unicorn, decacorn, hectacorn or not. Undisclosed amounts and your firm is shrouded in mystery. High and it is assumed you are thriving.

Low or not growing astronomically and it’s assumed you are bound to crash and burn,” she noted. Investing in a tech startup requires due diligence. Any hope of becoming a successful investor in tech startups requires being very knowledgeable. Ojonibanke says due diligence does not stop when you have made the investment commitment. Still check up on the startups where you have your investment. Are they fulfilling orders? Are they meeting predefined milestones? Are they accountable for their expenses? What about customer acquisition are they still as passionate in meeting the customers’ expectations? “And more importantly; how can you help?” Ojonibanke said. In any case, if you are not committed to going through the process, it is best to make your investment through venture capital (VC). In fact, experts advise that you do not directly invest in individual startups. Olowe says although using a VC isn’t foolproof you are making a lot of money anytime soon it will save you a lot of heartaches. “Investment in a VC’s fund is a long game - from 10 to 13 years,” Olowe said. “So it is not like a mutual fund that you can get in and out in a beat. Getting into bed with a VC is like a marriage but where there isn’t a divorce judge.” Part of the advantages of going with a VC is their ability to spread your money, therefore reducing yours. Also, they have better expertise in spotting winners, and they are not going to be emotional in making investment decisions. Emotion is one of the most significant risk factors in investment.

NITDA moves to investigate alleged leak of Surebet247 customers’ data

he National Information Technology Development Agency (NITDA) said it has commenced investigations into an alleged security and data breach of data belonging to thousands of betting customers on SureBet247 platform. The story first reported by iAfrikan.com showed that the breach was discovered by an anonymous source who tipped off Australian security researcher and founder of haveibeenpwned, Troy Hunt. The breach allegedly affected over 32GB of backups across 6 databases of various online betting assets. “Within the databases, there is everything from user records to betting histories, the latter consuming more than 100M rows in one of the databases,” Hunt said. iAfrica said it was able to verify

that the breach of the database, which includes table names, list of staff, email addresses that belong to Surebet247. Founded in 2011, SureBet247 is owned by Chessplus International, a Nigerian company which specialises in online gambling and casinos. The founders of the company are Sheriff Olaniyan and

Olsaupo Badmus who met at the University of Ilorin in Nigeria. Olufemi Daniel, desk officer of NITDA’s regulatory guideline NDPR told BusinessDay that the agency has made contact with the author of the article while it prepares to serve the betting company a query. “We are also writing to the

company to hear their side of the story,” Daniel said. “We will make an announcement when we have heard from them within the allotted time.” The director general of NITDA has asked the Data Breach Investigation Team to investigate the incident. The company is yet to respond to queries on the alleged data breach. In the iAfrica report, Hunt claims SureBet247 was contacted 8 days after the breach was first discovered, but no action was taken by the company. Three days later, Hunt also tried to contact the Nigerian betting operator’s support team and got no response. “It was only on Tuesday 31 December 2019, after I tried various methods of getting hold of the people at SureBet247, that eventually there was a response. However,

the frustration continued as the company continued to display a nonchalant attitude to the potential security and data breach they could have suffered,” Tefo Mohapi, author of the story said. NITDA told BusinessDay that it cannot take arbitrary actions when asked whether there was a penalty for lack of response from SureBet247. “We have a process based on the principles of natural and that is what we are following,” Daniel said. iAfrikan said there is a possibility that more betting customers beyond SureBet247 were affected. “Upon closer inspection, it appeared that other online sports betting operators could be affected given the names of the databases that were shared with us,” Mohapi said.

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

Oil & Gas

Power

BUSINESS DAY

Renewables

ENERGYREPORT

Environment

Nigeria’s oil and gas industry outlook 2020, a mixture of good and bad OLUSOLA BELLO

he Nigerian oil and gas outlook looks promising on one side and on the other hand not too good. Not too good, because the United States of America is encroaching her territory in terms of trade and must be proactive to curtail this so that she would not loss her Asian crude oil markets. As losing them may affect her foreign exchange earnings adversely. However given the number of activities that took place last year and some policy pronouncements made by the government officials the industry looks promising. With the taking of final investment decision (FID) on Nigeria liquefied Natural Gas NLNG Train 7. This NLNG train 7 has been delayed for several years. The signing is a big boost to the government investment drive and hopefully it would

act as impetus for other investors that have been staying on the side-line. There is likely to be a lot of activities by oil and gas companies this year on account of the FID. This would by extension affect the economy because of jobs opportunities that comes with such exercise. According to Bank-Anthony Okoroafor, president, Petroleum Technol-

ogy Association of Nigeria (PETAN), he said with this development the Nigerian National Petroleum Corporation (NNPC) has demonstrated capacity to deliver on other big projects. The NNPC holds 49 per equity stake in trust for the Federal Government of Nigeria in the NLNG. “This raises hope on other big projects in 2020 like Bonga South West,” he said.

If the government decides to keep to its promise of organising oil licensing rounds whether marginal or the big fields it would then mean that the activities in oil and gas industry would likely be upscale. With Dangote Refinery itching towards completion and Waltersmith modular refinery expected to commence production,impact on foreign exchange on

importation of petroleum products would be highly reduced. Also, if the Niger Delta Petroleum Refinery comes on stream with Jet Fuel, Premium Motor Spirit (PMS) and increase of its Automotive Gas Oil (AGO) production, it means the time for stoppage of petroleum subsidy is in sight THE Nigeria Content Development and Monitoring Board (NCDMB) is expected to be more aggressive in 2020 to raise the Nigerian content in most projects. The minister of State Petroleum, Sylva Timipre has assured us that the petroleum Industry Bill (PIB) will be passed into Law by mid year 2020. This will definitely remove the uncertainty around fiscals and sanctity of contracts if this does happen. If the government maintains the tempos of obeying of court orders as displayed before Christmas, this would definitely have positive impact on the oil and gas investments. However there are certain concerns by Oil and

Gas operators who felt if the government does not take the necessary steps to checkmate some development in the international arena Nigeria would find it challenging to sell her oil, especially at the international market. For instance, with US crude oil production averaging 13.33million barrels per day (mbpd) and with it putting energy in bilateral trade deals with India and china that are the traditional buyers of Nigeria’s crude oil, it is hoped that this does not affect the country’s crude sales to these countries. The other areas that can affect oil and gas in 2020 includes weakening global economic growth in USA, Europe and china, Trade tensions , political risks like 2020 USA elections, outcome of Brexit in Europe and any tensions in Middle East. Also, it is not known if the Production Sharing Contract (PSC )amendment and the new finance bill will have any effect on investments in 2020.

Again, Shell, Chevron choose Egypt as preferred Nigeria sleeps as Algeria’s new hydrocarbon law attracts investment investment destination over Nigeria OLUSOLA BELLO

h e l l a n d C h e vron have joined ExxonMobil in asset acquisition in Egypt even as they reduce their level of activities in Nigeria on account of government failure to be proactive in attracting investments in flow into the oil and gas industry. Just this week, Egypt said that it awarded oil and gas exploration concessions in the Red Sea to Chevron, Royal Dutch Shell and Mubadala in an international tender. After unveiling plans to divest some of its assets in Nigeria last year, Chevron, Exxon Mobil and Shell have acquired oil and gas resources in Egypt. Chevron was awarded the first block, Shell a second block, and a third block was awarded jointly to Shell and Mubadala with a total exploration area of around 10,000 square km (3,860 square miles) and with a minimum investment of Olusola Bello, Team lead,

President Muhammadu Buhari $326 million, the petroleum ministry stated. Exxon Mobil has acquired oil and gas resources, spreading across more than 1.7 million acres, located off the coast of Egypt. Of the total acquired resources, 1.2 million acres are in the North Marakia offshore block, while 543,000 acres are situated in the North East El Amriya Offshore block. In both the blocks, the leading integrated energy player will have operating interests of 100 percent. The

Graphics: Joel Samson.

company expects operations to commence in 2020. Notably, the takeover of seismic data is part of ExxonMobil’s operations. Nigeria has the second largest oil reserve in Africa after Libya yet smaller countries that have fewer reser ves have been able to attract investments into their oil and gas sector. This is part of Nigeria’s many failings in positioning itself as an investment destination being laid bare yet again.

www.businessday.ng

For Nigeria, losing one of its FDIs to Egypt is a big blow given the amount of capital the former needs at a time of weak economic growth. Nigeria lost out to Egypt i n 2 0 1 8 w i t h t h e l at t e r emerging the biggest destination of foreign direct investment according to data by UNCTAD. With $7 billion in FDI, Egypt got more than double the $3 billion investment Nigeria attracted despite being smaller in terms of population and economic size. American multinational oil and gas corporation joined the league of multinational oil companies divesting from Nigeria assets According to sources, ExxonMobil is weighing the possibility of selling its stakes in Oil Mining Leases (OML) 66, 68, 70 and 104 with a total production capacity of 120,000 bpd as at 2017 which might provide an opportunity for indigenous companies who have in the past purchase billion worth of assets from firms such as Eni, Shell, Chevron and Total in the past five years.

OLUSOLA BELLO

s Nigeria sleeps, not knowing when to pass into law the Petroleum Industry Bill, Algeria has come out with new hydrocarbon law designed to reverse declining foreign upstream investment through improved contract terms and tax rates. The law came into force Monday after it was published in the country’s Official Gazette. The Nigeria Minister of state for Petroleum Resources, Slyva Timipre has promised that the Petroleum Industry Bill which was meant to reposition oil and gas industry but which has suffered setbacks for more than 15 years would be passed into law by June this year. The implications of not passing the PIB is that the oil and gas industry has been declining in production as there are no new investment coming. Most investors have taken their money to other climes that are investment friendly.

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

https://www.facebook.com/businessdayng

@Businessdayng

The Petroleum Industry Governance which was passed by the 8th assembly suffered a setback when P re s i d e n t Mu ha m ma d u Buhari decided not sign it into law. The new Algerian law according to it government is considered essential for restoring the attractiveness of the sector against the background of low oil and gas prices, and increased competition among producing countries to attract new investors. Under the new legislation, the tax burden on state-owned Sonatrach and its international partners will be cut from 85 percent to around 60-65 percent, Toufik Hakkar, head of the working group responsible for the law, said. In a n i nt e r v i e w w i t h state news agenc y APS, Hakkar -- who is also vice president for development at Sonatrach, said the “significant” fall in the tax burden was due to the reduction of three main taxes: the production levy; petroleum income tax (TRP); and complementary income tax (ICR).

Thursday 09 January 2020

BUSINESS DAY

Garden City Business Digest Elano reels out development strides in Eleme with security support as high point • As chairman points to gains of investments, preaches peace for more strides Ignatius Chukwu

any have wondered why shooting and killing has ebbed in the industrial town of Eleme near Port Harcourt in recent times, only to hear that Elano Investments Limited has stepped in with multifaceted approaches. The revelation came on Monday, December 30, 2019, at the end of year address issued at a dinner organized by the company in Port Harcourt. Elano is an investment company created to receive and manage the 7.5 per cent equity granted the host communities of Indorama Eleme Petrochemicals Limited. Elano is said to have raised about N3Bn from a commercial bank at a time no bank was ready to lend such an amount to a community to buy shares and when the Bureau of Privatisation and other arms of government were not ready to give the shares as a handout as the communities previously expected. Elano was thus formed as a special purpose vehicle to raise funds, acquire the shares, and manage it on behalf of the host communities. They signed deals share out part of the dividends and use part to do development projects in the host communities while also using part to pay back the loans and to run the company. Now, Elano has become a huge intervention firm, solving many problems of the host communities far ahead of any government agency, since the first tranche of N14Bn accumulated dividends, the taste of which raised eyebrows and evil eyes. Now, Elano has gone beyond provision of infrastructure and empowerment schemes to intervene in security as Eleme area was becoming a killing field where high and low personalities were killed on regular basis. The result has been a lull in gun fights and end to killing. Revealing the strategy, the chairman of Elano, the chief, Gomba Okanje, said in his end of year address to stakeholders that the firm

Elano end of year: chairman, Gomba Okanje )left) with the professor, Walter Ollor (right)

had to intervene in the deteriorating situation. He said: “Our interventions and partnerships in restoring security in Eleme local council area and neighbouring communities has started paying off with the improved security in the land. We supported the police, the newly created Eleme Area Command, other security agencies and the youth council with patrol vans.” Insiders said this has been achieved with patrol vans for rapid response, better training and higher motivation added to the support of the youth council who seem to form a community policing layer to the secondary layers. Information and surveillance seem to be part of the strategy. On this score, the chairman said 2019 has been very eventful for Elano Investment Limited, the company mandated to mobilise resources to acquire and manage the community’s 7.5 per cent shares in Indorama Eleme Petrochemicals

Limited (IEPL). “Not only have the shares of your investments in IEPL been yielding good dividends, the dividends of investments in education, infrastructure, healthcare, security and estate development has been bearing fruits. “The 10 students sponsored to pursue master’s degree programmes in top universities in the UK have completed their courses. The 45 youths that the company sent to the Maritime Academy of Nigeria at Oron in Akwa Ibom State to acquire specialised skills have graduated and have been provided with starter packs. It is the same with the 12 women that were trained in catering and hospitality management at the University of Port Harcourt. More than 300 students benefited from the first phase of our bursary scheme for students in tertiary institutions. The second batch of the awards is being processed and very soon the authenticated recipients will receive their alerts.

“In the area of infrastructure, all the host communities have received the touch of Elano Investments Limited. We have since gone beyond the first phase of the construction of community roads after successfully constructing 15 km of asphalted roads concretized with drainages. We have since completed work on the inner section of Nyade Road and School Road, both in Aleto; the Craft Centre in Agbonchia, Okerenwa Road linking Ogale, Agbonchia, Njuru and Okerenwa communities. “The number of families enjoying the Elano Health Insurance Scheme has increased from the initial 400 to 1,300. This means that the number of members of host communities benefiting from the free health insurance of the company has increased to 7,200. “We have collaborated with other organisations like Ofalarun Eleme USA and O-E’la Obor Eleme and most recently Hope Charity Foundation to support Eleme people in need. For these and other efforts, we have been recorgnised with multiple awards, not only in Nigeria but also in Africa. “We successfully held our 2018 Annual General Meeting in Calabar at which major resolutions an decisions that will see to the growth of the company were taken. On a sad note we lost three directors who were with us from the beginning. New ones have however joined the board. In his address, the chief said the evening was not to discuss the hard facts and figures of business but to relax the body and mind after a hectic year of achievements. He said: “We have done well. It is time to do the pleasure side. “We have learnt the importance of true loyalty, sacrifice and faithfulness. I say, thank you. You were all carefully chosen because you have demonstrated care for not only the company but the host communities. “Today is not a speechmaking day, so I will let you settle down to your meals and drinks. I pray the Almighty to continue to bless our company and the host communities and our critical stakeholders.”

Formula for 2020 • Shift your level in 2020: See winning strategies for next year Port Harcourt

IGNATIUS CHUKWU

very person desires a shift to the next level but it is not everyone that will get it. Success does not come by wishing but by proceeding to act. Every faith has a script for success and for things to change. Christians rely on Judges (20:14-18) on this matter. Those other adherents who may not find their in their books can join Christians to read Judges. There, A Israelite went to the Benjamite tribe with his concubine and after some days of merriment with the woman’s father, he set to return but the woman was captured and raped to death by wild humans in that tribe. Out of frustration, the man cut up the woman’s flesh into the number of tribes (12) and shared her parts round. This provoked anger and the 11 tribes demanded the handover of the Benjamite offenders to be slaughtered to avenge the death. The Benjamites refused and accepted the option of a war against

the 11. They presented 26,700 fighters, 700 of them being the best archers in the land. The other tribes contributed 400,000 fighters, but went to inquire of the Lord if they should go to war against their brothers. The Lord permitted them thrice, but twice they lost the battle. A man of God, James Okeaba, w versed teacher and doctorate degree hopeful, who thrilled the Redeemed Christian Church of God (RCCG) Redemption Model Hall Area Parish in Elelenwo, Port Harcourt, this Sunday, 22 December 2019, said the fact that people with 400,000 solders against 26,700 still saw the need to inquire of the Lord, to consult, to ask questions, shows that it is compulsory for a Christian to consult widely before setting out on any major project. The next point is that you must prepare for discouraging factors on any mission or project execution. So, the loss of 22 fighters on day one and 18,000 on day two show that discouragement is part of test or part of any venture. It is what you do that matters. This is a big discouragement. It means even if your plan is good or God approved of it, things must show up to discourage you, to test you. It’s up to you to build support system around you. Who encourages you? Find internal and external encouraging forces. Learn to encourage yourself, too. Then, attract God’s encouragement through deep prayers. Discard (red card) all those whose

www.businessday.ng

roll in your life is to encourage you. Find where your stand on things. She would be a great encourager. The third factor is to be consistent. Levels will change, if you keep pressing at your plan. Listen, don’t ever get offended by God for anything or because He has not done what you wanted or what He promised you. Keep praying, according to great teacher and motivator. The fourth is to get a strategy; a winning strategy. The 11 tribes inquired of the Lord, got the nod to go to war, but until they devised a strategy, they kept failing. Battles are won by strategy, on the drawing board. Ahitophel was the

best adviser to David, but Ahitophel decamped to Absalam’s side. David prayed that his counsel be turned foolish but did not stop there. He sent his best friend, Hushai, the second in command in advice, to decamp along and go and counter whatever counsel Ahitophel would give. Hushai did so by providing alternative counsel to Absalom and Ahitophel went and hung himself. Many do not know why. He realised that by rejecting a sound counsel, his team would lose and King David would return to power and would execute him. He acted in advance. They lost the war and David returned to power. The rest is history. Finally, be action-oriented: Plan and act. Action blesses people. Result comes from actions. Take a step. Place a demand. Life is for those who place a demand on it. Conclusion: So, develop a project or mission for 2020. Plan it very well, make all consultations needed and seek the face of the Lord over it, if truly you are a Christian. Then develop a winning strategy, get encouraging people that share in your vision. Get enough steam inside to encourage you in case external encouragement does not come. Pray fervently for God to encourage you, too. Then take the step. Remain consistent and prayerful all the way. Success will surely shock you, and your next level is already waiting for you. Congratulations!

James Okeaba

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

Investing in Rivers State Book review:

The Brothers Osaro: Ollor launches new social criticism pathway Ignatius Chukwu

he Port Harcourt literary atmosphere last monthend sent waves around the world when a highly reputable professor of economics opened a new pathway in the world of fiction with the unveiling of his novel, The Brothers Osaro. In it, the professor seems to show the world another way to look at the society through the institution of marriage. In the new novel, with the use of turns and twists, Ollor opens a perception of marriage as a social institution in contemporary Nigerian society, according to a professor of Comparative Literature of the University of Port Harcourt, Chidi T Maduka, who was book reviewer. In the novel, Ollor employed strong issues in marriage including impotence, infertility, polygamy, and adultery as motivating factors of this work of fiction. Osaro, the protagonist of the Novel, is torn between two lovers in an attempt to masquerade his impotence. His first wife, Osila, responds by seeking extra-marital relationships in attempt to prove her fertility and capability for childbearing in a society which places very high premium on pro-creation as the purpose of marriage. The narrative climbed to a new turn as both husband and wife, in search for social affirmation, resort to religion and tradition as weapons of competition. Redemption comes through one Reverend Thirdchild who succeeds in indoctrinating Osaro’s second wife into divorcing honourably; and to search for her own God-given husband; while Osaro blesses his marriage to his first wife with a onein-a-century celebration of rebirth. The crescendo came when the Osaro Brothers, products of extramarital relationships, bring the story to a tragic end in their fight for inheritance at Osaro’s death. According to the reviewer, the turns and twists in the tripartite

marital relationships of Osaro, (husband) and Osila and Chichii (wives) tell the reader a lot about Ollor’s perception of marriage as a social institution in contemporary Nigerian society. It leads one to ask; What is the nature of polygamy? How does it provoke opposition from the Christian religion? Through turns and twists, Ollor opens a perception of marriage as a social institution in the current ideologies of feminism and womanism? How does the motif of barrenness in marriage lead to tragedy? This comes often through inheritance battles. Ollor has equally asked questions about the educational and political sectors of the economy. For instance, according to Maduka, should the teacher who is a character molder be seen exchanging money for grades? In terms of politics, should the politician limit himself to getting and wielding power for personal gains? To what extent does corruption pervade the national life? Reading the novel will equally provide food for thought for the lovers of the technique of the novel, he says. How does Ollor manipulate the first-person narrative mode, a mode used by Chinua Achebe in ‘A Man of the People’? How does he handle the elements of diction, setting and characterisation? Maduka says of significance is the size of the novel. It is short

enough for Nigerians who, in general, put aside works of fiction that are as long as Dostoievesky’s ‘The Brothers Karamazov’, he argues. Beside, the packaging is attractive, as is characteristic of the works published by Onyoma Researched Publications usually focusing on texts dealing with the Niger Delta. On the unveiling day, the reviewer said: “We are gathered to celebrate a new dimension to the accomplishments of Prof. Walter G. Ollor who is well-known social scientist. His works; Hearts and Treasures: Memoirs, Economics Management and Sustainable Development of Nigeria, Power and Tradition: The Epic Journey of Jonah Ollorinta and Education for Sustainable Development: Essays in Honour of Sylvanus J.S Cookey (Ed) point to his industry and perseverance as an intellectual who is forcefully confronting the difficulties inhibiting creativity in Nigeria and frequently forcing professionals out of the country”. He said; “This phenomenon is hardly recognized as brain-drain in the sphere of governance in the country; rather, the émigrés’ are emphatically called Nigerians in Diaspora instead of Nigerian in exile. Even a big body called ‘Commission’ has been established to look after their interests instead of using the resources to attract them back home by properly equipping the

facilities sustaining their professions and paying them attractive wages as was done in Pakistan which is now a nuclear power. “His other intellectual activities dramatize his skills as an economist championing the cause of the knowledge economy in which the principle of unity in diversity is made to generate a productive spirit in the citizens interacting harmoniously with one another in a well-structured corporate entity. It is, however, hardly realized that Nigeria has made a lot of progress in this sphere of national life, since the colonial structure prepared for us by Lord Lugard has been systematically undergoing changes, even to the point of the six geopolitical zones which will inevitably be further shaped to suit the ideal needs of the country.” Maduka said he was privileged to be there on that day to present the book showing that Ollor has taken a very firm decision to join the club of the Achebes who use words connotatively to evoke pleasurable experiences in the reader. “Any person in any career can be a member of the group, if he/she is visited by the muse by experiencing the urge to exorcise the demon of creativity ceaselessly tormenting his/her soul. He said Cyprain Ekwensi was a pharmacist, Elechi Amadi a soldier rooted in Mathematics and Physics,

and Chinua Achebe abandoned the study of Medicine for English at the University of Ibadan. “The novel is entitled The Brothers Osaro: A Voyage Around The Social Observations of the Author. As we are told by the author, the titles are inspired by Feodor Dostoievsky’s ‘The Brothers Karamazov’ and Wole Soyinka’s ‘Isara: A Voyage Around Essay’. Feodor Dostioievsky (1822-1889) is a celebrated 19th century Russian novelist acknowledged by many English speaking literary critics as the world’s greatest novelist.” He went on: “As is well-known, Soyinka is a Noble laureate in drama. He is equally a poet, novelist, essayist and a socio-political activist. His work ‘Isara’, provides the sub-title to Ollor’s novel which simply makes us understand that Ollor’s world in the novel is a product of his experiences in daily life starting from his childhood through his days in primary, secondary and tertiary institutions to those in full adult life. As many artists do, he has even warned us in Acknowledgement and Author’s Note that “The characters of the Brothers Osaru do not represent any individual, living or dead. Rather each character is a composite of personalities to portray human behaviour, observed over sixty-plus years of my participation in human society”. In short, his characters Osaru, Mbe, Wawu, Eporoenu, Osila, Chichii and Rev. Thirdchild, the leader of the Holy Ghost Christian Ministries, as well as Otigba, the voice of the traditional religion and the community Akara are all products of his imagination used to make us think about our social, political, economic and religious institutions and help bring about changes in them. To Ollor, a work of art does not limit itself to entertainment; it is equally an instrument of social criticism. Through Ollor eye-view, the reading community can understand the interplay of forces in most African marriages where culture, tradition, modernity and religion engage in daily battles, often leaving behind a path full of tragedies.

NLNG Train 7: What has Buhari or Jonathan got to do with it? • As FID raises hope for $10Bn investment in Rivers, 12,000 jobs Ignatius Chukwu

t last, the final investment decision (FID) of the Nigeria Liquefied Natural Gas (NLNG) Train 7 project was reached in Abuja Friday, December 27, 2019. This is insiders say 12,000 jobs may be available in the oil region as spin off from the projected expected to gulp over $10Bn in five years. A statement by the NLNG at noon Friday affirmed that upon completion, Train 7 would increase NLNG’s production by 35 per cent

and would boost its competitiveness in the global LNG market. The statement also said the FID allows the expansion to increase the capacity of NLNG’s six-train plant from the extant 22 Million Tonnes Per Annum (MTPA) to 30 MTPA, with the award of contracts for the engineering, procurement and construction activities to follow the closure of bank and Export Credit Agency (ECA) financing. It would also lead to the finalization of some key supporting commercial agreements expected in early 2020. “The actualisation of the Train 7 Project comes as NLNG celebrates 30 years of its incorpowww.businessday.ng

ration and 20 years of safe and reliable operations since exporting its first LNG cargo in 1999. “ NLNG is an incorporated JointVenture owned by four Shareholders, namely, the Federal Government of Nigeria, represented by Nigerian National Petroleum Corporation (49%), Shell Gas B.V (25.6%), Total Gaz Electricite Holdings France (15%), and Eni International N.A. N.V. S.àr.l (10.4%). According to Tony Attah, the managing director/CEO of NLNG, “Train 7 is the crux of a growth agenda which will ensure the Company’s position as the 5th

https://www.facebook.com/businessdayng

major supplier of global LNG is maintained, increasing value to its Shareholders and other stakeholders, as well as further reducing the gas that would otherwise have been flared, in fulfillment of its vision of ‘being a global company, helping to build a better Nigeria’”. Attah further revealed the import of the FID, saying over 12, 000 jobs would be created during the peak of construction. He affirmed that trade and commercial activities within the Niger Delta region would equally receive a boost as a result. “The Project will also support the development of local engineering and fabrication capacity @Businessdayng

in the country. Other opportunities for local content include procurement, logistics, equipment leasing, insurance, hotels, office supplies, aviation, haulage, and many more.” The Company further remarked that the project upon completion would support the Federal Government’s drive to diversify its revenue portfolio and generate more revenue from Nigeria’s proven gas reserves of about 200 Trillion Cubic Feet (Tcf ). The construction period after FID will last approximately five years with first LNG rundown expected in 2024.

Thursday 09 January 2020

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

MALLS

Most consumers seen in Malls during festive period bought basic food items BALA AUGIE

n a crisp afternoon of a New Ye a r ’s Day , Esther had to squeeze her through a throng of people to go into the Adenuran Ogunsanya Shopping Mall located at Surulere, a commercial town in Lagos Nigeria. The 27-year-old reporter from BusinessDay, who hadn’t been to the place before was surprised that a Mall could be cramped amid an economic downturn and austere period. Over 50 people waited outside Shoprite stores because the place was clocked to pave the way for shoppers inside to finish buying items before the ones outside could go in. But Bailey came to the realization that she was mistaken, as a lot of people could be seen strolling and chatting without making purchases, while some, especially ladies were taking selfies. Luxury and accessory shops were scanty as sellers

despondently stared into space, and the large chunk of customers that went into Shoprite came out with small yellow bags full of basic food items. But one thing the certain: Nigerians like to go shopping even though their pockets are squeezed. “According to Nielsen Shopper Trends syndicated study, Nigerians shop 30 times per month and they want value and assortment when they shop. They are also price-conscious, with more than 70 percent aware of prices and 95 percent noticing price changes,” said analysts at Nielsen. Nigeria hasn’t recovered from a sudden drop in crude oil price of mid-2014 that stoked a severe dollar scarcity that paralyzed business activities and dealt a great blow on government revenue. While the introduction of a new foreign exchange policy in 2017 and a rebound in crude oil price helped the country exit its first recession in 25 years, unemployment rate is at an all-time high of 23 percent as the country displaced India to

become the poverty capital of the world. Income per capita has declined to $2236 percent in 2019 from $2719 in 2015, according to a recent report by Financial Derivative Company. Inflationary pressures and hike in fuel price have put consumer spending in check, and it could get worse this year as government has increased Valueadded Tax (VAT) to 7.50

percent from 5 percent. Also, the Nigerian Electricity Regulatory Commission has approved increase in electricity tariff by the 11 Electricity Distribution Companies (DisCos); the increment will take effect in April. “For Nigeria, consumers will groan about the hike in VAT, the restoration of tollgates and cost-reflective electricity tariffs,” said Bismarck Rewane Chief Execu-

tive Officer of Financial Derivatives Company Limited. While the economy is expanded by 2.38 percent in the third quarter of 2019, it is lower than the population growth rate of 2.60 percent. A stuttering economy coupled with huge service charge cost has forced many tenants to desert stores as patronage continues to be low. Last year, there were a total of 19 stores empty, even the cinema hall had been sealed. Some of the top brands that had evacuated include: Ruff and Tumble, the seller of kid clothes, Samsung Phones, and Cash and Carry. Aside shrinking consumer wallets that causes low patronage from customers, analysts attributes the menacing gridlock in the town to menacing gridlock as a lot of high-end earners have relocated to other parts of the state. “Even if economic activities pick, the gridlock will continue to discourage people from coming here to shop,” said Adebukunola Taiwo, an Architect and Head of the Apapa Management Office.

Novare Lekki Mall, a 22,000 square metre retail facility has a 57 percent vacancy rate as at June 2017, slightly reduced from the 63 percent figure recorded in December 2016. This is followed closely by Jabbi Lake Mall in Abuja, whose vacancy rate by the first half of this year was estimated at 56 percent. The mall, a 30,000 square metres shopping outlet, sitting on about 48,000 square metres of land, is a joint venture project between Actis Nigeria (a private equity firm) and Duval Properties. Analysts attribute the rising vacancy rate in this mall and others in the Federal Capital Territory (FCT) including; Ceddi Plaza with 27 percent vacancy rate, Grand Towers, 22 percent; and Silverbird Entertainment Centre, 32 percent, to the lower purchasing power in the economy and the high political risk of the FCT. The countr y’s rising young population that crave for consumption is a boon for the economy, but lack of transformation policy on the part of government is continually undermining economic growth.

Beer makers in Africa’s largest economy will face a tough year (2020) as the recent hike in Value added Tax (VAT), hike in excise duty, and the proposed increase in tariff on electricity are expected to keep consumer discretionary spend under pressure. Also,higher raw material costs stemming from sustained closure of the land borders could undermine profit margins of operators in the industry. A myriad of challenges hasn’t damp consumer appetite for liquor as Nigeria led Africa in alcohol per capita consumption as of 2019. Nigerians were reported to consume around 13.4 liters per capita. The Kingdom of Eswatini was the second leading country with around 9.9 liters per capita alcohol consumption, and South Africa next

in rankings, following closely with per capita consumption of around 9.3 liters. The cumulative net income of the three largest players in the industry- Nigeria Breweries, International Breweries, and Guinness Nigeria- fell by 151 percent to N4.54 billion in September 2019 from N8.48 billion the previous year. International Breweries and Guinness recorded losses while the management and boards of directors of International Breweries plans to raise capital via a rights issue to help reduce the company’s huge debt. The valuations of firms are very expensive, making them less attractive in the event that investors decide to take advantage cheap valuations. Nigerian Breweries, a firm

COMPANY

Nigerian Breweries to stay ahead of pack BALA AUGIE

hile analysts have adopted a less cautious stance on the Brewery sector in 2020, they are upbeat that Nigerian Breweries (NB) Plc will deliver solid leadership and earnings. They expect Nigeria Breweries to stay ahead of the pack, thanks to a price increase in premium brand and capital injection by parent company, Heineken International. NB, in November 2019, increased crate prices to distributors on Heineken and Legend both Premium brands –, each by 1.8 percent (N50.00), and on 33 Export, a mainstream brand by 5.6% or (100.00). GUINNESS also followed suit, increasing

the price of Guinness Foreign Extra (Premium) by 1.5 percent (NGN50.00), according to data from Cordros Capital Research. “This is awelcome development, as this is needed

www.businessday.ng

in order to compensate for rising excise costs and weaker volumes,’’ said analysts ar Cordros Capital “We note that the price increases are focused mainly at the premium segment, which

grew double-digit last year, and according to NB’s parent company, Heineken NV, has been growing double-digit in each of the previous 3 quarters,” said analysts at Cordros Capital

https://www.facebook.com/businessdayng

@Businessdayng

Continues on page 29

Thursday 09 January 2020

BUSINESS DAY

Retail &

consumer business

CONSUMER SPENDING

The rise of Instagram-preneurs but buyers’ concerns persist OLUFIKAYO OWOEYE

ero (not her real name) is an upwardly mobile lady who enjoys shopping for the latest clothing materials and other beauty items. Vero’s busy work schedule during the week and her professional classes on the weekend means she doesn’t have the luxury of time for her shopping duties. Interestingly, Vero can now heave a sigh of relief as she does not have to worry about her physical shopping duties all these can be catered for online through her Instagram page where she follows sellers of various products. The exponential growth in the penetration of smartphones has helped to boost e-commerce in the country. With social media platforms playing a very crucial role, e-commerce has made shopping more convenient for Nigeria’s huge population majority of whom are between the ages of 18-21 years. According to the Nigeria mobile report 2019 by ecommerce platform, Jumia, 44percent of mobile sub-

scribers in Nigeria are using 3G technology and 4percent are using 4G technology, with a projection that Nigeria’s mobile broadband penetration would rise to 55percent of the population by 2025, with 70percent having 3G connectivity. Social media platforms such as Instagram has significantly bridged the gap between buyers and sellers by creating a new value chain by which products move from the buyer to the seller with ease and in the process creating a market that transcends across geographical boundaries, time and distance. The choice of instagram among other platforms is not far-fetched; it allows sellers to display pictures of their products for their customers (with specified description) and in essence allows the buyers to “inspect” (to some extent) the products they intend to purchase before making orders. Sellers have also double down on their expand their brand awareness and increase sales by partnering with Instagram influencers to reach an audience that‘s specifically targeted to your products and services.

Chisom, 21, an undergraduate in one of the tertiary institution in Lagos is one of the popular sellers of hair attachments online and according to her trust and fast delivery of products to buyers has helped her gained more customers. The paradigm shift to online purchase through social media platforms also comes with its own shortcomings. Products displayed online are ascertainable in the sense that the buyer can see what they are interested in purchasing. The buyer, however, has the misfortune of not being able to physically inspect the products

due to the virtual nature of the products. This precludes the buyer from discovering defects that would have otherwise been detected by physical examination. Most times, products displayed by vendors are different from products delivered to the buyer and in most cases a ‘No Refund’ clause has been entered into. Vendors on Instagram often state that there would be no refunds where products sold are delivered in good condition; the vast majority use the phrase loosely without necessarily stating the conditions that will warrant a “no refund” situation. According to Chisom the business is still very young hence some teething problems. “For me, logistics remains the major problem, getting a reliable bike man to deliver within my budget and time is a major issue,” Chisom believes vendors who sell and deliver substandard products would not last lomg in the business. “Most of my customers today are refereed to me by my customers who are happy with my products and service delivery,” she said.

Nigerian Breweries to stay... Continued from Page 28 that controls 56 percent of the volume market share, have seen shares underperformed the NSE All-Share Index, declining by 4.92 percent YTD, primarily on weaker earnings due to the challenging operating environment. It has a price to earnings ratio of 26.17 times. International Breweries shares underperform the NSE All-Share Index, declining 2.11 percent. Premium brands otherwise known as “Premiumisation” hs been the most important contributor to growth algorithm, driven by urbanization and a growing middle class. Heineken NV in it’s recent ‘What’s Brewing’ investor seminar, highlighted that premium beer has an expected medium-term volume CAGR of c.3 percent in developing markets, according to the report by Cordros Capital. The spirits segment has

been a major driver of GUINNESS’ sales as the product continues to thrive amidst the challenging environment. Spirits sales make up c.17 percent-18 percent of revenue, with a medium-term target of c.25 percent-30 percent. Diageo (GUINNESS parent company) brands have grown market share in the highly competitive spirits segment from 1.5 percent in 2011 to 9.4 percet in 2018, according to data from Euromonitor, a feat we believe is highly laudable. “Similar to the brewery space, Diageo brands now have the third-largest share of the spirits markets. While this is positive on the whole, we note that spirits growth has not been sufficient to cover the decline in the lager and Research and Development,” said analysts at Cordros Capital Ltd. Analysts at Cordros Capital expect Guinness to continue to lose market share in the brewery space while suffering persisting margin deterioration.

CONSUMER SPENDING

Tougher times ahead for cash-strapped consumers in 2020 ... VAT, border closure, electricity tariff spell doom BUNMI BAILEY

imes are tough economically already for consumers but it appears that the year 2020 may look even bleaker already for cash-strapped Nigerian consumers, according to BusinessDay survey of three analysts on the outlook of consumers in 2020. Already, there are telling signs of the hard times ahead for consumers, given the increment in Value Added Tax to 7.5 percent effective this month January 2020, combined with continued closure of the land borders as well as possible hike in electricity tariffs, a tougher year beckons for consumers. In 2019, consumers faced

myriads of challenges from fragile economic growth to unfavourable protectionist policies of government – border closure and foreign exchange restriction for food imports which elevated food prices. “Consumers will be worse off this year than in 2019 mostly in terms of price increase. The border closure if extended will continue to affect prices of major commodities. Although we had seen elevated prices of major food items in December, those prices will begin to come down mostly in January and February but where you will see that increase is from consumer goods firms,” Ayorinde Akinloye, consumer analyst at Lagos-based CSL Stockbrokers said. “And this is because if you

look at a survey of household income, over the past few years you will notice that there has been some moderate recovery in consumer income. Last year consumer income was estimated to be have grown to about 8.8 percent last year. So if firms are seeing this then we might see some 10-20 percent jump in their prices which will ultimately affect consumers,” Akinloye said. The Nigerian economy is yet to recover fully from a recent recession as growth of the wider economy which printed at 2.28 percent in the third quarter of 2019 underperforms population growth rate estimated at some 3 percent. This indicates that Nigerians are getting poorer even as GDP per capita or income per

head, a perfect proxy for living standard, fell by 40 percent between 2014 and 2018, official data show. According to the World Bank, Nigeria’s tepid growth is driven by weak consumer demand combined with low private investment and contracting net exports. The bank expects Nigeria to expand by 2.1 percent by 2020-end, implying that an average Nigerian might get poorer in the New Year. An analyst who wishes to be anonymous said that the increase in prices will put more pressure on disposable income. “This year, consumers will be priorizing their expenses more.2019 was already challenging enough and 2020 looks

like as if it is going to be worse,” he said. Apart from consumers, it is also expected that Nigerian listed fast moving consumer goods companies could see further decline in revenue and margins in the year 2020 on attempt to hike prices of their products. “The expected decision is based on recent policy actions of government and also on the fact that they are not making money as before,” said Abiola Gbemisola, analyst at Lagosbased Chapel Hill Denham. According to Damilola Adewale, a Lagos-based economist and independent consultant, if they attempt to raise price, they should expect lower sales revenue as consumers will most likely switch to

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

https://www.facebook.com/businessdayng

@Businessdayng

cheaper substitutes. “The decision to hike prices will put industry players in a tight corner given the price-sensitive nature of Nigerian consumers,” Adewale further said. A research report by Lagos-based Coronation Merchant Bank published earlier in 2019, corroborated Adewale’s stance, that most Nigerian consumers are leaving premium brands for cheaper value brands. Also, data from the National Bureau of Statistics on Gross Domestic Product (GDP) by Income and Expenditure approach at 2010 purchaser’s values show that consumption expenditure of households has been declining at varying pace since it rose by 1.5 per cent in 2015.

Thursday 09 January 2020

BUSINESS DAY

Corporate Social Impact

FG nails it with new tax policy for SMEs Stories By ONUWA LUCKY JOSEPH

here’s a lot to not like about the policies of the Federal Government of Nigeria. Sometimes, it’s hard to reconcile the appellation with the expectations of the masses. There’s a feeling, shared not by a few that the government is actively pushing an agenda to make people’s lives a lot less livable. But we won’t go into all of that. The particular concern of this write-up is the recent announcement by the Minister of Finance, Budget and National Planning, Zainab Ahmed, that the Finance Bill 2019, after being signed into law, will see to it that small businesses with less than N25million turnover will have no business paying Companies Income Tax. That’s a big hurrah right there for the Federal Government if this is successfully implemented. Up until now, every company, and especially the small, vulnerable companies that can be hounded and harassed by everyone carries the weighty albatross of 30 percent income tax payment regardless of turnover figures. Failure to remit has resulted in the closure of shops and business places and made of small enterprises a frightful bunch always looking over their shoulders for the ever lurking taxman.

With this new development, small businesses will channel their energies and resourcefulness towards being more productive rather being evasive of the FIRS and other revenue mobilization and enforcement services at state and local government levels. Noteworthy as well is the reduction for those companies

making between N25million to N100million. They are now required to pay 20% only of profit as company income tax. Under the new company tax regime, only those earning above N100million are expected to remain in the 30% band. According to the minister, the federal government’s “assessment is that any business that

has a turnover of N25million needs that break, not being taxed, so they can invest in their businesses.” Yes, Ma’am! A thousand times yesss! “And we reduced the tax for medium size businesses from 30% to 20% so they can have more resources that they can plough back in their business. These are the largest employers of

labour”. How about that for impeccable logic!? Some ‘experts’ are sure to throw shades at the decision, arguing how government needs every dime from every business especially at a time when it’s had to serially go a borrowing to fund the budget deficit. That argument might have its merit but fails to factor in the stress of the Nigerian small business which Madam Minister rightly describes as the largest employers of labour. This breed of business is at the moment bogged down by epileptic electricity supply, (further worsened by a recently approved tariff hike), bad roads, high bank charges, security issues, debts, etc. Under this government, many SMES have had to close shop, further worsening the spiraling unemployment rate. It’s a big leap, The Finance Bill 2019, that’s sure to bolster productivity and to incentivize the small Nigerian entrepreneur. And another thing, it helps the ordinary citizen realise that Aso Rock is not all tin eared as was highly suspected. There seems to be some listening going on. Which means we should keep talking, interrogating, insisting that the wrongs be righted, and that the common man’s concerns be reflected in government decision making. That’s one way countries grow.

She never attended a university, but her estate will give nearly $10 million to community colleges MARISA LATI

oney was scarce when Eva Gordon graduated from her Oregon high school, and attending college was not an option. But her fortune, amassed over decades of investing what little money she could scrape from her paychecks, will enable students at 17 community colleges to fulfill the dream that she had to forgo. “Eva had a tremendous heart and liked to throw a rope to help people climb,” John Jacobs, her godson and a representative for her estate, said in a statement. Gordon left nearly $10 million to community and technical colleges in western Washington state when she died in June 2018 at age 105. Each college’s foundation will receive roughly

$550,000 to help students pay for housing, transportation, books and other needs in a state where many community college students also have jobs and family responsibilities. Gordon grew up on an orchard and graduated high school at the top of her class, according to Jacobs’s statement. She then worked as a legal secretary and as a trading assistant for a Seattle investment firm. With each paycheck, Jacobs told the Seattle Times, his godmother bought partial shares in oil companies, Seattle utility companies and other businesses. In addition to being thrifty, Gordon was an early investor in Nordstrom, Microsoft and Starbucks, Jacobs told the Guardian. With her husband, whom she married in 1964, Gordon taught www.businessday.ng

classes at McNeil Island Corrections Center in Washington. Ed, a stockbroker, taught business practices, and Gordon led warmup exercises. The couple did not have children. When Ed died in 2008, he left more than $3 million to South Seattle College in a display of the dedication to higher education that he and Gordon shared. Gordon wished later in her life that she had attended college, Jacobs told the Guardian. That unfulfilled desire, combined with her volunteer work for children’s and educational programs, may have contributed to her decision to leave her wealth to colleges, Jacobs said. Although college officials said Gordon’s gift — announced this month — is among the larg-

https://www.facebook.com/businessdayng

est donations that they have received, Jacobs told the Times that his godmother did not flaunt her money. She dressed well, he said, but drove older cars. “A lot of people didn’t know the wealth she had,” Jacobs said in the statement. “If there was a coupon for two-for-one at Applebee’s, she was all about that.” At Renton Technical College, Gordon’s gift will be used to confer scholarships and grants upon students with financial and other barriers to attendance. The funds will help pay for tuition and other education-related expenses, as well as for financial emergencies, Renton said in a statement. A representative of Shoreline Community College told the Times that it plans to put some of its gift into scholarships for @Businessdayng

new students. Most of the college’s scholarships currently go to students who have completed at least one semester, Mary Brueggeman, vice president of advancement, told the Times. Gordon’s gift comes as Washington and some of its cities try to lessen the financial burden of attending college, the Times reported. State legislators in May passed a law that will make 110,000 low-to median-income students each year eligible for financial aid to attend the state’s public or private universities. In Seattle, graduates of public high schools now can go to any of three community colleges for two years tuition-free.

(Culled from The Washington Post)

Thursday 09 January 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Do the Australia fires Signpost a fiery future? Stories by ONUWA LUCKY JOSEPH

ustralia seems to be going to blazes, a conclusion anyone would reach after watching footages of the Australian fires that’s burning up earth’s smallest continent. It started in September, and didn’t seem like much in the beginning, but it’s since picked up venomous steam, consuming everything on its path, including houses, infrastructure, human lives and, as at the last estimates, close to a billion million animals. That’s an awful lot, to be sure. This has brought out the ‘Itold-you-so’ streak in climate change activists who see this as another fiery vindication of their long held position that the world is ultimately going to blazes if nothing is done to quickly mitigate the effect of climate change. Recall that before the Australia fires were the Amazon fires that ravaged Brazil and other South American countries. And right about the same time were the Congo Basin fires in Central Africa. Climate change activists and Australian citizens are particularly miffed at the Australian Prime Minister Scott Morrison who, rather than come up with decisive measures for tackling the fires decided to go holiday in Hawaii, leaving hapless folks to their fates. It’s no surprise therefore that some Australians (championed by YouTube sensation Jor-

dan Shanks a.k.a. Friendlyjordies) are calling on Queen Elizabeth the Second, Queen of Australia, (the same one who is Queen of England), to sack the Prime minister for gross dereliction of duty as well as for thumbing his nose at the notion that climate change could be the cause for the fires. Drama aside, what the fires make clear is that climate change, a phenomenon characterised by extreme weather fluctuations is a clear and present danger to the long term health of the world. The science is clear: there’s a growing concentration of carbon dioxide in the atmosphere which traps heat from the earth’s surface and

refuses to release it to diffuse into space. This creates a natural greenhouse effect that makes the place a whole lot warmer than it ought to be, leading to drought and tinder dry conditions extremely susceptible to combustion. Unfortunately, there are fewer forests to help trap the carbon and keep it imprisoned in tree trunks, as used to be the case. Logging is immensely big business. But that’s only one reason for deforestation worldwide. Also heavily implicated is the need for human habitation as the world’s population keeps growing. Also worthy of mention is that the for-

ests log, deep underneath their tree trunks, a disproportionate reserve of minerals that big business cannot wait to mine. And so, with government’s support, the big corporations, impervious to the health of the environment and those who depend on it for their very livelihood, moves in and hews down vast tracts of land, despoiling the environment and opening up the world to the rage of the sun. It is for this reason that the fires in Australia, not yet under control, by the way, are hardly going to be the last. The push and pull of profit, not to mention convenience vis a vis responsibil-

ity is a spiraling tension that that has periodically given the world a bloody nose but that right now threatens to burn the entire planet in an all-consuming conflagration. And did we mention drowning the world? It’s lose-lose under climate change because the warmer atmosphere also has potential for holding more water vapour thereby posing greater risk of heavy rainfall that flood and threaten to drown age old communities. Already, five Pacific islands that used to be part of The Solomon Islands have totally disappeared, wiped off by the rising seas. That one isn’t a result of flooding but glacial melting that’s increasing sea levels worldwide. We have experienced some flooding in Nigeria but, thankfully, beyond the small time fires set by hunters and farmers, and the regular arson orchestrated in our public offices and marketplaces, Nigeria has been largely spared these wildfires that burn up everything in their path. The world needs to quickly wake up to the dangers that climate change presents and do the needful to stall its advance. It was for all these reasons that the kid dynamite, Greta Thunberg was named Time’s Person of the Year for 2019. Her style may not square with everyone else’s, but there’s a voice of reason behind that cocky if childish confidence. Let’s not ruin her world. Let’s not ruin our world. Australia is but a cautionary tale for us all.

Victor Wanyama Foundation awards scholarships to 6 students Quotable CSR Quotes

ver here at Corporate Social Impact (CSI), we are ever quick to acknowledge the efforts of champions who though not keen on anything but victory steadfastly refuse to leave their less endowed counterparts in the dust. Literally, yes! And despite what might seem like a surfeit of such stories in recent times, it’s interesting to see how not a lot of people operate with that mindset. The majority would rather be lone winners who enjoy more than their fair share of time in the limelight while the less advantaged stay content with being less fortunate. Not so for the heroes whose stories we tell here. They are big hearted men and women who are forever reaching back to lift those left behind. It is not for them to rationalize why the left behind were left behind but rather to extend a hand and see if perchance they – the heroes – were the ones reserved this duty by the Almighty, or the Universe, or to Whatever/ Whoever you ascribe the assignor role . We’ve seen that in the stories, chronicled here, of Asisat Oshoala, Sadio Mane, Colin Kaepernick,

and a host of others. These are all stalwarts in their different sporting fields who insist on dragging others with them towards success. And to this elite line up we here add the story of Victor Wanyama who’s doing what some might consider little in terms of scale but which has potential for altering for the best the trajectory of six young Kenyans. The Victor Wanyama Foundation, named after the resolute Tottenham Hotspurs defensive midfielder, called for applications www.businessday.ng

for scholarships, 48 of which were received, whereafter the Foundation’s announcement: “After careful vetting based on merit and need, the Foundation has awarded its Secondary School Scholarships to the following six students…” to cover “tuition fees, boarding and related expenses for the four year period.” According to Standard Newspaper, Wanyama urged the kids to stay disciplined while promising to visit them individually in their respective schools. “I wish to congratulate the six successful applicants and most definitely visit all of you in your new schools when I come back home. This is a good opportunity for you to work hard without any distractions and I would like to urge you to seize and make it count. All the best as you begin this journey,” said Wanyama It is doubtful that Wanyama made the journey to Kenya for Christmas as we all know the packed schedule of the EPL for December. But he’s a man of his words. We trust that his mentees will see him in the flesh soon so as to draw more inspiration for their life journeys.

https://www.facebook.com/businessdayng

reating a strong business and building a better world are not conflicting goals they are both essential ingredients for long-term success Bill Ford (Executive Chairman of Ford)

o build and sustain brands people love and trust, one must focus-not only on today but also on tomorrow. It’s not easy...but balancing the short and long term is key to delivering sustainable, profitable growth-growth that is good for our shareholders but also good for our consumers, our employees, our business partners, the communities where we live and work, and the planet we inhabit. Irene Rosenfeld (Former CEO and Chairman of Mondelez International)

e n e e d g ove r n m e nt and business to work together for the benefit of everyone. It should no longer @Businessdayng

be just about typical “corporate social responsibility” where the “responsibility” bit is usually the realm of a small team buried in a basement office - now it should be about every single person in a business taking responsibility to make a difference in everything they do, at work and in their personal lives. Richard Branson

he business of business should not be about money. It should be about responsibility. It should be about public good, not private greed Anita Roddick

(Kindly send feedback to 08023314782 / csrmomentum@ gmail.com)

Thursday 09 January 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

news

SON wants consumers to patronise its certified LPG, cylinders for safety HARRISON EDEH, Abuja

tandards Organisation of Nigeria (SON) has called on Nigerian consumers to patroniseonlySON’scertifiedLiquefied Petroleum Gas (LPG) and other cylinders with necessary markings in order to safeguard theirhomes,officesandsurroundings from avoidable fire incidents from substandard cylinders. Osita Abuloma, directorgeneral of SON, made the appeal in Kaduna on the back of the recent explosion in the state and other areas around the country involving the product. Represented by Nwaoma Olujie, group head, LPG, Abuloma warned importers of cylinders to adhere strictly to SON’s procedures for the importation of the product, which according to him, was classified as lifeendangering. He reiterated the need for consumers to look out for necessary embossed markings on all imported LPG cylinders as specified in the Nigeria Industrial Standard NIS 69:2013 such

as manufacturer’s brand name, country of origin, test pressure, tare weight, and SON product registration number with prefix FA and year of manufacture. Aboloma advised users to also look out for SON Mandatory Conformity Assessment Programme (MANCAP) logo and number on certified, locally manufactured cylinders in addition to the markings specified for the imported products. According to Aboloma, the specified lifespan of LPG cylinders in Nigeria is 15 years during which the cylinders must be re-qualified twice, after every five years. The SON has put in place a rigorous procedure for the certification of imported and locally manufactured LPG cylinders for use in Nigeria to guarantee the safety and durability of the product, he disclosed. He admonished consumers of cylinders to ensure proper handling of the product in transit as well as during use, while also adhering to necessary safety precautions.

Ogun gets first president Customary Court of Appeal since creation 44 years ago ... we’ll respect Court judgments – Abiodun RASAQ AYINLA

ustice Mobolaji Ayodele Ojo was Wednesday sworn in as the first President of the Ogun State Customary Court of Appeal, 44 years after the creation of the state. At the ceremony, Ogun State governor, Dapo Abiodun said his administration would always respect all judicial pronouncements as a cardinal principle of good governance. He, however, urged judges to be fair, firm and courageous to ensure equitable dispensation and efficient administration of justice in the state. The swearing-in ceremony of the President and other judges took place at the Obas Complex, Oke-Mosan, Abeokuta. Governor Abiodun said the decision of his administration to appoint a President and other members for the Customary Court of Appeal was a practical representation of his administration’s deliberate plan to bring the system and administration of justice closer to the people. He noted that the appointment of the President and other members of the Court completed the practical establishment of the Ogun State Customary Court of Appeal. He said the court would adjudicate on appeals arising from the Customary Court, since it deals with issues bordering on values, customs, beliefs and traditions. “Let me assure you therefore that our administration will continue to ensure equitable dispensation and efficient administration in Ogun State. Today’s appointment of the President and other members of the Customary Court of Appeal, therefore brings into full the practical establishment of the Ogun State Customary Court of Appeal since the cre-

ation of our dear state in 1976. “This special court is a practical representation of our administration’s deliberate plan and part of our commitment to bring the system and the administration of justice closer to our people, especially, at the grassroots. The Court will adjudicate on appeals arising from the customary court,” he said. Abiodun added that it was the belief of his administration that the background of the appointees and the proud record of the state in the dispensation of justice would be an addition to an already distinguished higher bench. He expressed the hope that judges would be faithful to the oaths of office, and dispense justice without fear or favour.

CHANGE OF NAME

I, formerly known and addressed as Elaigion Joseph now wish to be known and addressed as Agbo Michael. All Former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Enete Judith Onyinye now wish to be known and addressed as Mrs Judith onyinye EmekaOkpe. All Former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ifeoma Henrietta Dike now wish to be known and addressed as Ifeoma Henrietta Abidoye. All Former documents remain valid. General public please take note. www.businessday.ng

Sunny Egbon (l), chairman, Edo State chapter, National Union of Textile, Tailoring and Garment Workers of Nigeria, presenting a plaque to Godwin Obaseki, governor, Edo State, at the Government House, Benin City.

Employers’ ignorance, lack of awareness fuel mental health in workplace – experts ANTHONIA OBOKOH

he threat of mental health in the workplace in Nigeria is mounting due to a low level of awareness by various employers. The World Health Organisation’s (WHO) statistics of mental healthcare delivery for Nigeria is, for every 100,000 cases of mental healthcare delivery, Nigeria has 46 psychiatrists, 20 psychologists, and 20 nurses against its 200 million people. “Navigating workplace challenges is becoming more tougher among individuals, both the young and the old these days, especially in the work setting in Nigeria, with the long working hours, daily traffic needs to be paid by mental health,” says Rotimi Coker, consultant psychologist and psychiatrists with Lagos State University Teaching Hospital (LASUTH), while discussing on Doctors on-Air focusing on mental health in the workplace on Classic FM 97.3. According to Coker, mental

health can be treated, but that mental health aspect at the workplace manifests with emotional exhaustion, and can affect productivity at the workplace. Mental health at the workplace could be associated with some feelings of under achievement, Coker noted, stating that this eventually leads to burnout at the workplace. “These days, we have to be present at work but become unproductive, because employees suffering from stress and if they do not know how to cope with stress-related disorders they start to have issues about their mental health and anxiety, symptoms of depression, phobia, and even suicide attempts begin to manifest,” he said. Meanwhile, sharing experiences from other guests in the programme they said work was good for mental health but a negative working environment could lead to physical and mental health problems, stating that there were many risk factors for mental health that might be

present in the working environment. The guests emphasised on women especially facing burnout, stating that they do 80 percent of household work and contribute 50 percent to the family upkeep and still had to go to work to contribute optimally. However, they believe when employees are not fulfilled and are not actualising their goal, they then start having some metal feelings of not been fulfilled daily at workplace. They say individuals that are stressed out with personal issues and work stress keep the energy but are dying of work burnout, which can lead to demotion, and is common among younger people at workplace. Also speaking, Akolade Habib from Synlab Nigeria said the main issue that fuels mental health in the workplace is lack of support system, an acceptance by our culture. “Nigerians see it as a shame and there are no supports. We realise people are not comfort-

able to discuss these issues because they feel they are not the only person going through it, but this increases the burden,” Habib said. Confidentiality really needs to be maintained and management acceptance will allow people to come out to speak up, Habib said, noting that there is actually a law that prevents people from discrimination. “Nigeria can begin not to stigmatise people, and management must invest in the workforce when the turnover is high in mental health, especially for those who have dropped in productivity,” Habib said. However, a human resource guest at the programme harped on the need to prioritise mental health at workplace, as it was an important issue employers needed to look at this time and age, noting that as a country we were not really dealing with mental health issues and addressing and recognising it in the workplace the way we ought to.

Six months to AfCFTA, how prepared is Nigeria MICHAEL ANI

n July this year, the African Continental Free Trade Agreement (AfCFTA), a deal that hopes to facilitate free trade among African countries, is expected to kick-off, but most parties to the pact appear to be unprepared. Their unpreparedness stems from a perceived lack of political will to resolve trade conflicts through dialogue before unilateral trade restriction, pre-empting analysts to doubt the success of the trade agreement, which is supposed to start in six months’ time. As of today, several African countries that are parties to the deal have maintained stance to close their doors towards other African neighbours in what they said is to fight illegal trade and insecurity, and are showing no plan to reverse the decision in the near future. This is despite signing on to a trade treaty promises to liberalise trade among African countries and create a single market for goods and services on the con-

tinent. For instance, in August last year, Nigeria, which is seen as the ‘big brother’ in the continent and key player in piloting the deal, shut its land borders against its immediate neighbours to check smuggling of goods, particularly rice and petrol. This directive came barely three months after African largest economy joined 52 other countries in the continent to subscribe to the deal. As if it had no knowledge of what the deal entails, the Nigerian government has also gone about celebrating the success from the closure, saying it has boosted local production and tackle the leakage in petrol consumption, hence, it is very unclear when the decision would be reversed Also, the government of Kenya closed a border with neighbouring Somalia indefinitely (due to insecurity concerns) with cross-border trade banned in the process. Similarly, in East Africa, Eritrea, who continues to remain on the side-lines of the AfCFTA deal shut all border crossings with

https://www.facebook.com/businessdayng

neighbouring Ethiopia (that had been reopened only for months) without any prior notice, for the major part of 2019. Rwanda shut down borders against Uganda over diplomatic row that has seen the two countries suspecting each other. Around the second half of 2019, the re-emergence of xenophobic attacks on Nigerians and other African nationals in South Africa (Services) sent a raft of agitation in the region that led to the disruption of South African businesses on other parts of the continent. “We believe without a willingness by countries to take commitments made under the AfCFTA seriously and match their words with concrete deeds, the AfCFTA risks not being the game-changer it could be,” investment banking firm, United Capital, said in a note. Nigeria in 2019 joined 52 other African countries in signing into a trade agreement that will see it open its economy to free trade on virtually 90 percent of its imports. With the trade pact, Nigeria alongside other parties to the @Businessdayng

agreement would be open to an estimated $3 trillion market with trades among 1.2 billion people. While the deal has the potential of creating jobs across member countries and catapulting Africa’s nominal GDP to $6.7 trillion by 2030, analysts say the chances of AfCFTA to succeed depend on African countries, particularly Nigeria, South Africa, Egypt and Kenya, to understand the impact of unilateral trade policies. “If the AfCFTA is to succeed, African states, especially South Africa, Nigeria and Egypt – must embrace more liberal transnational trade policies,” United Capital said in its 2020 outlook themed “a different playing field”. Aside from the protectionist stand of shutting its borders, Nigeria is faced with structural challenges, which analysts have raised concerns that it must be addressed for it to benefit from the trade deal. These structural challenges among other things include epileptic power supply, poor road network and other dilapidated infrastructure, limiting the growth of businesses in the country.

Thursday 09 January 2020

BUSINESS DAY

news With just N200 bribe per immigration checkpoint, illegal migrants are infiltrating Nigeria through Sokoto

abuka Zakariyau, a Nigerien residing illegally in Nigeria, was aggrieved but he dared not agitate. His sibling, Wabuka Zibo, was dying of a mysterious stomach ache that had befallen him 12 months ago. The twenty-somethingyear-old had no means of taking his younger brother to any hospital in Lagos; this saddened him a lot. One more trouble: As an illegal immigrant, he would have to cough up N4,000 — for himself and his sick brother — to settle the bribe-us-and-go immigration officers at different checkpoints on the highways from Lagos to Sokoto, and then find his way back to his country. So, when at the Oyingbo bus terminus in Lagos, the bus conductor urged the illegal immigrants amongst other passengers to contribute the sum of N2,000 each to bribe the Nigerian Immigration Service (NIS) officials stationed on the highways on their behalf, a furious Zakariyau rolled his eyes at the conductor, staring at him disdainfully. “These people think we carry millions with us when we travel,” he mumbled. Ten years ago, the short, dark man was smuggled into Nigeria to seek greener pastures, andhe would only become a jack-ofall-trade at Idumota area

of Lagos State, subsisting on any menial job he could lay his hands on. Now, he was travelling back to his country because his brother was very sick. There are many illegal immigrants like Zakariyau and his brother in Lagos and other parts of the country. They leave their countries for Nigeria without the required documents to crisscross the country or even trade in it. More than ever before, however, Nigerians are clamouring for the deportation of illegal immigrants due to the high level of insecurity and the threats on the ‘thin’ economy of the country. Security experts and NIS officials have said the influx of these illegal migrants, who are unskilled and largely uneducated, constitutes security threat to Nigeria. Investigations have also shown that many of them who operate commercial motorcycles, colloquially known as ‘okada’, are usually armed, a report by ThisDay newspaper states. Recently, in the heat of Nigeria’s border closure, the

House of Representatives called for stricter enforcement of the Federal Government’s border closure policy by deporting illegal immigrants. Many concerns have been expressed about the continued influx of illegal immigrants, mostly of African descent, into the country, with many of them easily gaining access through the various porous land borders. In a unanimously-adopted motion titled ‘The Closure of Nigerian Territorial Borders Not Enough’, which was moved by Rotimi Agunsoye, representing Kosofe Federal Constituency in the lower chamber, the lawmakers argued that such uncontrolled immigration into the country poses serious socio-economic and political threat to the country. Nevertheless, the immigration officers positioned at many patrol checkpoints on various Nigerian highways have indirectly ‘legalised’ illegal migration with their cashfor-pass attitudes. Even, during their land border patrol, a significant number of officers fail to check undocumented immigrants coming in and out of the country. Therefore, armed migrants could go scotfree by simply wooing the NIS officers with bribes. INTRODUCTION TO BRIBERY AND CORRUPTION “You’re wasting everybody’s time, Mr Man! Na who say make you no get passport, abi you get tetanus for head ni? Them say make you pay immigration money you dey do one kain,” the bus conductor at the Oyingbo terminus booed Zakariyau for hesitating when asked for his N4,000 bribe for immigration officers. Zakariyau met me at the Oyingbo terminus; I had arrived at the terminus early to book a seat that suited my mission. I had deliberately left home for the terminus www.businessday.ng

on Wednesday, December 3, without any (valid) ID card to prove my Nigerianness and, of course, I knew the risks involved in travelling from Lagos to Sokoto, passing through more than six immigration checkpoints on the road, without any means of identification. After arriving the terminus at 6:54 am, I presented myself to the bus conductor as an undocumented immigrant from Benin Republic. One look at me, what the young man saw on my face was fear — a look I purposefully adopted. “Why are you afraid because of immigration?” the tall, dark man quipped in Pidgin. I kept mum and nodded in repulsion to his comment. “You only have to pay them their money. Na N2,000; na driver go collect am. If you hear say them don dey pay, you sef pay. Nobody go challenge you for road.” In a matter of minutes, Zakariyau and his sick brother, followed by other undocumented persons, all Nigeriens, joined other Nigerian passengers at the terminus. And, of course, before the bus finally took off, an agreement was reached that the illegal immigrants in the bus cooperate with the driver when he eventually requests funds to “settle the immigration officers we would meet on the road”. Seeing bus drivers in connivance with prohibited immigrants to bribe NIS patrol officers across land borders wasn’t a strange thing. I had witnessed the same in my first attempt to track the illegal migrants crossing Nigeria’s land borders without having the required documents to live and travel in the country. I had travelled from Lagos to Sokoto in November to study the terrain, in preparation for my December reporting trip. ‘MAD MAN, KING OF THE INSANE’

When it was time for the 18-passenger bus to take off, Jamiu, the man who drove us from Lagos to Sokoto during the first trip, asked the bus conductor to gather money from the illegal immigrants in the bus. “Hey, mad man that collects money, king of the insane, how many of them (referring to the illegal immigrants) are there?” Jamiu asked the bus coordinator. “One, two, three, four… they’re four,” he replied after counting. “All of you should cooperate here; nobody should act unfortunately, else I’ll drop you,” Jamiu warned. Many Nigeriens have lived with Nigerians for decades but in many cases, illegally. Aside from Nigeriens, immigrants from Nigeria’s neighbouring countries such as Benin Republic, Togo and Cameroon thrive and survive for a number of years in Nigeria without acquiring the necessary documents to legalise their stay in the country. While many of these persons would usually find a way to claim to be Nigerians, immigration officers also have their ways of identifying them. However, a peanut backhander, when offered to the officers, would most times set culprits of illegal immigration free — even when they have a dangerous agenda in Nigeria. 18 PASSENGERS, 10 ILLEGAL MIGRANTS As we drove out of the bus terminus during my second trip in December, I found myself choked with puffs of cigarettes smoked by the driver. I knew I would have to deal with this for the next 24 hours or thereabouts, but I wasn’t that bothered. I had purposefully picked the seat just behind him, a vantage position, so I could watch every detail of the journey unfold before my curious eyes. Right

https://www.facebook.com/businessdayng

beside me was Ismaila, an illegal immigrant from Niger, followed Zakariyau and his sick brother: There were 18 passengers in the bus but only eight were legitimate citizens; the remaining 10 were ‘illegals’. In a few minutes, we were en route to the Lagos-Ibadan expressway, after escaping the predictably heavy Lagos traffic amidst the give-me-wayif-you-can’t-go hustle and bustle of the city. At 1:23pm, we had a stopover in Ibadan, the largest city in West Africa. From Ibadan, we left for Oyo, the political capital of Yoruba land. Next stop was Ogbomoso, a town in Oyo State. From Ogbomoso, we drove straight to Ilorin, the capital of Kwara State. N2,000 BRIBE FOR IMMIGRATION OFFICERS AT BIRIBIRI As we left Ilorin, traversing Shao, the true picture of cash-for-pass patterns of the Nigerian security operatives began to appear to me clearly. The driver passed through a number of checkpoints manned by the Army and the Police without being checked. He did this by simply exchanging hands with security officers and dashing out some naira notes. As we advanced towards Jebba, a geographical point between Kwara and Niger states, we were flagged down at a place called Biribiri, after Bode Sadu in Kwara, by two immigration officers who walked straight to the driver, collected the sum of N2,000 and turned back immediately without even taking a look into the bus. And so the driver zoomed off. Economic and security challenges ranging from banditry, kidnapping, smuggling, illegal migration and proliferation of light weapons are major issues affecting the country. The relentlessness of the Boko Haram insurgency, for instance, is known to be partly due to the ease with which insurgents from countries in the Lake Chad region easily cross into Nigerian territory, smuggling in arms and ammunition. These were some of the issues that necessitated last year’s closure of the borders by the Federal Government. Illegal immigrants are key contributors to the country’s insecurity and economic problems. In November 2019, the Federal Government announced that it had captured 296 illegal immigrants since the border closure. But hundreds of prohibited immigrants, by far outnumbering the government’s arrests, still thrive in Nigeria; a good number of them gain seamless entry by indulging corrupt immigration officers across @Businessdayng

various borders. N2,000 BRIBE AT NGASKI; ANOTHER ALONG JEBBA-MOKWA ROAD It was already dark when we alighted at Jebba around 9 pm; we had 40 minutes to fill our yearning stomachs and visit the loo, and then routed some 38 kilometres to Mokwa, Niger State, from Jebba. Meanwhile, along the Jebba-Mokwa Road, another immigration officer stopped our vehicle, but instead of him to, at least, take a peek at the passengers in the bus, he quickly demanded for “my money”. The driver settled him with another N2,000 and moved on. The time was at exactly 10:53 pm. When we left Mokwa for Kotangura, still in Niger State, the driver, in an attempt to avoid the deathtrap along Mokwa-Kotangura Road, changed his route, traversing through forests of many dangers en route to the terrible roads of Wara town, Ngaski Local Government Area of Kebbi State – a terrain so bad that Google map could not track. By treading that path, we had short-cut areas such as Zugurma, Eban, Kabogi, Rafingora and Kagara, before Kotangura. It took us about three hours before we found our way out of the bush path, only to find ourselves at the Kotangura Immigration Border Patrol, Ngaski, along Yauri Road. “Stop there!” an immigration officer screamed, and the driver obeyed immediately. The officer, a short man with protruding belly and a toothpick dangling in his mouth, stretched his hand to take the N2,000 readied for him from the driver. He allowed us to drive on without further checks. At this juncture, people on the bus, including the illegal immigrants, were already getting irritated by the constant stops and the corrupt immigration officers manning the highway checkpoints. “We first paid at Biribiri, went further a little and paid again, went further and paid. We’ve paid again, doesn’t that make it five?” the driver lamented as he drove on. Among other security operatives in the country, the Nigeria Police are perceived to be the most corrupt perhaps because they interact with the people the most. But the Police are not the only public officers associated with bribery and corruption. According to the Nigeria Bureau of Statistics (NBS), the Police, Immigration and Customs services are the public organisations that seek bribes the most. Africa Check quoted NBS in a report detail-

Continues on page 35

Thursday 09 January 2020

BUSINESS DAY

news With just N200 bribe per immigration... Continued from page 34

ing the percentages of bribes sought by these organisations. For the police officers, it was 74.7 percent, while Customs and Immigration officers had 86.9 percent and 83.30 percent, respectively. PRICING IMMIGRATION BRIBE LIKE PEPPER Bored and bothered, Ismaila, the illegal immigrant who sat beside me, moaned about the bribery and extortion propensities of the officers on the highways. “These people too like money; this kind thing no fit happen for my place,” he bragged. I was really stunned by Ismaila’s comments; I wondered how a culprit of illegal migration would be so rest-minded that he turned out to be faulting officers who were supposed to scold him. At exactly 2:50 am, we arrived at the Kebbi State Immigration Patrol checkpoint in Yauri. The driver, consciously or subconsciously, did not stop to ‘settle’ the officers at the checkpoint. “Hey, stop there!” an officer yelled at him before he could drive further. “So you wouldn’t stop if I didn’t stop you?” “Sorry, officer, I’m very sorry; you know that’s not how I behave,” the driver apologised, handing over a N1,000 note to the officer, which was promptly declined. The driver again handed over N1,500 from a pile of N500 notes to the officer, but the officer rejected the money. This looked interesting as it seemed the officer would decline the bribe offer. “How many are they?” he asked, referring to the illegal migrants.

“Just accept it,” the driver begged. “How many are they?” he insisted. “That is my concern.” The driver, instead of giving the figure of illegal migrants in the bus as requested, added another N500 note to make it N2,000, but the officer refused the offer. Moments later, however, my initial excitement of meeting an upright officer faded into thin air as a drama of haggling ensued. “You will pay N3,000. That is the usual amount,” the officer told the driver, who, obviously unhappy with the amount, retorted: “When did that start to happen? The day before yesterday I passed here, I did not pay up to that.” “Let me call my boss,” the officer threatened, but the driver refused to budge. “Call him,” he replied, daringly. “I swear, it is N3,000,” the officer insisted. “You heard him say N3,000 should be given to him,” the driver addressed the passengers in the bus, but none of the illegal migrants uttered a word. “This is not something we should start arguing over. I swear it is N3,000 they pay now,” reiterated the officer, who was already getting irritated. “I don’t want my boss to come here, because once he does, they must come down.” At this point, the driver, tired of haggling and arguing, paid the N3,000 bribe reluctantly — N1,000 more than he’d spent at other checkpoints. The officer then bade the passengers farewell while the driver zoomed off. N2,000 BRIBE TO FREE 10 ILLEGAL MIGRANTS We spent the night at Yelwa, an area in Yauri, after

Over N800bn gain year-to-date places... Continued from page 1

percent). Others are NSE Lotus Islamic Index (+5.88 percent), NSE Main-Board Index (+2.21 percent), NSE Oil/Gas Index (-5.85 percent), NSE Pension Index (+5.56 percent), NSE Premium Index (+10.46 percent), NSE-AFR Bank Value Index (+12.97 percent), NSE AFR Div Yield Index (+12.39 percent), NSE MERI Growth Index (+2.25 percent), and NSE MERI Value Index (+17.65 percent). Market sources are attributing the bullish run on stocks to attractive valuations, adding that the Nigerian equities market had been relatively undervalued in comparison to other African countries. Another important factor said to be driving the positives is investors searching for positive real returns on the back of falling yields in the money market as well as increasingly positive outlook for major sectors of the Nigerian economy.

On Wednesday, January 8, the market gained 3.54 percent and week-to-date (Wtd) rally of 5.91 percent. Investors have increased their stakes in banking, industrial goods, and insurance stocks. Following the NSE-ASI in the top performing stocks is the S&P IPSA (Índice de Precios Selectivo de Acciones) which seeks to measure the performance of the largest and most liquid stocks listed on the Santiago Exchange. While the S&P/CLX IPSA (CLP) TR has gained 2.76 percent this year, the BLOM Stock Index, a major stock market index which tracks the performance of largest companies listed on the Beirut Stock Exchange, has increased by 2.06 percent. The RTS Index “Russia Trading System” which is a free-float capitalisationweighted index of 50 Russian stocks traded on the Moscow E xchange has gained 1.67 percent this year. S&P/BMV IPC, which measures the performance www.businessday.ng

travelling away from the scene of the haggling. At 5am, the bellowing voice of the call to prayer woke everyone; the Mu’azin admonished all Muslims to observe their prayers, for “praying is better than sleeping”. By the time everyone was done praying, brightness of the day had taken over the darkness of the night and the journey continued. We headed to Koko, a community neighbouring Yauri in Kebbi State. At exactly 8:14 am, we arrived at the immigration patrol checkpoint at Koko-Bagudo Road. ‘Kebbi State Immigration Service Command, Koko’ was boldly scribbled on a butter-co-

loured van parked by the roadside. Our driver had prepared N2,000, which he handed over to an immigration officer, who flashed his teeth to receive it. Another officer sauntered towards the bus, hands in his pockets, to confirm the amount given to his co-officer. Inches forward, as the driver sped past them, I saw another officer extort a truck driver and I wondered what could have attracted an immigration officer to a truck driver, only for me to find out from the driver that the truck was conveying a horde of undocumented persons. As the driver drove out of the checkpoint, speeding

along the Koko-Jega highway, I did a quick calculation of the figures: N2,000 for 10 illegal immigrants, that’s an equivalent of N200 per illegal immigrant! Therefore, this could mean that N200 covers up for the travel documents required by law for an immigrant to live and survive in Nigeria. PROHIBITED BY LAW, PERMITTED BY BRIBERY Section 18 (1) of the Nigerian Immigration Act says any immigrant not in possession of a valid passport shall be deemed to be a prohibited immigrant and liable to be refused admission into Nigeria or to be deported as the case may be. Section 8 (2) of the same Act rules that any person desirous of entering Nigeria for any of the purposes in subsection (1) of this section, shall produce the consent to an immigration officer; and the failure to do so shall be an offence under this Act, and any person who commits such an offence shall be liable on conviction to deportation as a prohibited immigrant. Regardless of the law, corrupt immigration officers stationed at different checkpoints on Nigerian highways are having a field day extorting and condoning undocumented migrants in the country. Meanwhile, for extorting and collecting bribes from illegal immigrants, the highway NIS officials have breached Section 98 (1) of the Criminal Code Act-Part III-IV. According to the Act, any public official who: (a) corruptly asks for, receives or obtains any property or benefit of any kind for himself or any other person; or bribes, etc., (b) corruptly agrees or attempts to receive or obtain any property or benefit of any kind for

of the largest and most liquid stocks listed on the Bolsa Mexicana de Valores, is up by 1.44 percent. The index is designed to provide a broad, representative, yet easily replicable index covering the Mexican equities market. The Karachi Stock Exchange 100 Index, also called KSE-100 Index, increased by 1.27 percent. This stock index acts as a benchmark to compare prices on the Pakistan Stock Exchange (PSX) over a period. Maur itius Stock E xchange Semdex Index, a major stock market index which tracks the performance of all companies listed on the Stock Exchange of Mauritius, increased this year by 0.94 percent. At the Nigerian Stock Exchange (NSE), the value of listed equities has increased by over N816 billion ($1.6 billion) year-to-date (Ytd). The early-year rally seen at the nation’s bourse is fuelled by higher oil prices and the CBN’s crushing rates on T-bills. Oil prices surged on Friday following

the assassination of Iran’s most powerful and visible military leader, Qassem Soleimani, by US forces in Iraq, but they are now below $70/ barrel ($68.60/b). Also, while many companies prepare to release their full-year financials from next month, the record positive looks good to continue as more investors move to buy value stocks with history of dividend payments and capital appreciation. Guaranty Trust Bank plc and Zenith Bank plc, which are among analysts’ stock picks for 2020, may get their full-year 2019 financial statements released to the investing public ahead of their listed peers. The boards of directors of both tier-1 lenders will be meeting later this month to consider their full-year results, according to notices they sent to the Nigerian Stock Exchange. Cumulative value of listed equities rose to N13.787 trillion as at January 7, 2020 from N12.971 trillion at the beginning of the year. The NSE All Share Index

(ASI) which opened the year at 26,867.79 points has advanced remarkably to 28,562.48 points. On Monday, January 13, the Nigerian Stock Exchange will hold its 2019 Market Recap and 2020 Market Outlook. Ahead of this event, analysts anticipate an extension of positive performance into future trading sessions due to current market sentiment and renewed buy-side interest in the domestic bourse. “ The bullish performance persisted at the domestic bourse as investors continued to take positions in attractive tickers. With major indicators (positive market breadth, increased market activity as well as all sectors closing higher) coming in positive, we expect no deviation from this bullish trend on Thursday, though we anticipate mild profit taking action,” said Lagos-based Vetiva Securities. Analysts at Sigma Pensions Limited, a Pension Fund Administrator, said the combination of a low interest rate profile at the start

Pricing Immigration bribe like pepper

https://www.facebook.com/businessdayng

@Businessdayng

himself or any other person, on account of (i) anything already, done or omitted, or any favour or disfavour already shown to any person, by himself in the discharge of his official duties or in relation to any matter connected with the functions, affairs or business of a government department, public body or other organisation or institution in which he is serving as a public official, or (ii) anything to be afterwards done or omitted, or any favour or disfavour to be afterwards shown to any person, by himself in the discharge of his official duties or in relation to any such matter as aforesaid, is guilty of the felony of official corruption and is liable to imprisonment for seven years. ‘SEND US YOUR EVIDENCE’, IMMIGRATION SERVICE REACTS When BusinessDay contacted Samson James, spokesperson of the Nigerian Immigration Service, he was not willing to listen to the reporter. Informed that there was proof of how illegal migrants were moving in and out of the country through the land borders, he interjected the reporter, saying: “That means you’re not current. What about the recent arrests made?” Before the reporter could explain further, James questioned his professionalism and insisted he was being economical with the truth. “We believe only in evidence-based journalism. Since you said you’re an eye-witness, send me the evidence so that we can go there and arrest them.” He dropped the call afterwards.

of the year, cheap equity valuations and double-digit dividend yields in some sectors presents scope for positive sentiments towards Nigerian stocks. Also, FBNQuest research analysts expect the market to maintain the positive trading pattern. GTI Research analysts had in their 2020 outlook said they expect Nigeria equity market to recover in 2020, “driven by low yields in the fixed income market (versus high inflation rate), dissipation of political risk, and expectation of improved budget implementation”. “In anticipation of the release of the full-year 2019 earnings result by many of market players in the coming weeks, we expect to see increased positioning by portfolio investors, supported by the declining yields on both fixed income instrument and fixed deposit account,” GTI analysts said in their January 6 note to investors. As such, they expect the market to close positive next trading week.

• Part II coming next week

Thursday 09 January 2020

BUSINESS DAY

news

Iran’s revenge sends Saudi Aramco tumbling, as shares hit lowest since IPO DIPO OLADEHINDE

audi Aramco shares h av e t u m b l e d 1 0 percent in after Iran launched missiles against US targets in Iraq on Wednesday in revenge for America’s assassination of its Army commander last week. Saudi Aramco opened at 34 riyals ($9.06) on Tadawul Stock Exchange , its lowest since it began trading on December 11, 2019, but fell to $8.15 in intra-trade, putting the market value of the company at around $1.8 billion, down from a peak of $2.06 trillion on December 12. The fall came after Iran launched more than a dozen ballistic missiles against mili-

tary bases housing U.S. troops in Iraq overnight, as part of Tehran’s response to the U.S. killing of top Iranian military commander Qasem Soleimani last week. The world’s most highly valued company fell 1.7 percent Sunday and as much as 1.2 percent Monday and has now seen its market value fall by around $200 billion since its peak. The oil behemoth’s listing was part of Crown Prince Mohammed bin Salman’s Vision 2030 programme aimed at transforming the Saudi economy. Escalating tensions in the Middle East have sent oil prices surging, with Brent crude trading up a further 1.1percent at $69 per barrel on Wednesday

morning, while US West Texas Intermediate (WTI) was up 0.8% at $63.2 a barrel. Shares of oil companies in Europe have posted gains since Soleimani’s death amid fears of disruption to Middle Eastern oil supplies. Aramco’s shares fell in the final couple of weeks of 2019 because reality kicked in among investors, but the recent weakness was caused by geopolitical tensions, Jason Tuvey, a senior emerging market economist at Capital Economics tweeted. In September, two Saudi Aramco oil facilities in Abqaiq and Khurais were severely damaged by drone strikes, with Riyadh suggesting Iranian culpability, which also sent oil prices soaring.

Lagos begins dislodgment of illegal squatters from Ikoyi, V/Island JOSHUA BASSEY

he committee set up by the Lagos State government to drive the clean-up exercise in Ikoyi and Victoria Island will commence enforcement of all environmental and traffic laws in the areas, from Friday, January 10, 2020. The exercise will see to the removal of all illegal structures and dis-

lodgment of squatters and miscreants in Ikoyi and Victoria Island. Commissioner for the environment and water resource, Tunji Bello, who doubles as chairman of the committee, confirmed on Wednesday that the state government was embarking on the exercise in collaboration with Victoria Island and Ikoyi Residents Association (VIIRA), as well as various other enforcement agencies. Bello said the committee had in

www.businessday.ng

November 2019 conducted a reconnaissance operation in Victoria Island and Ikoyi to identify specific areas of infraction. According to Bello, the enforcement exercise would also involve clearing of refuse, identification and removal of all illegal structures on setbacks, walkways, drainage alignments as well as the eviction of roadside mechanics who have converted open spaces to automobile workshops.

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 09 January 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

NAJMEH BOZORGMEHR, ANDREW ENGLAND, CHLOE CORNISH AND KATRINA MANSON

ran launched more than a dozen ballistic missiles at US forces in Iraq in its first military retaliation for the killing of commander Qassem Soleimani. The strikes on at least two bases where US troops are housed marked a dramatic escalation in the confrontation between Washington and Tehran, raising the threat of a broader conflict in the Middle East. But the military action, which appeared to cause no casualties, seemed to be a calibrated response intended to avoid a full-blown war. The evolution of the conflict now will depend heavily on America’s next move. Iran’s supreme leader said the missile attack was a “slap” in the face for the US and that American forces had to end their “corrupt presence” and leave the region for good. “This region will not tolerate the US presence; the nations in the region will not accept that and the governments backed by their people will not accept it,” Ayatollah Ali Khamenei said on Wednesday in his first comments since Soleimani was killed on January 3. He did not make any further military threats against America but dismissed US calls for negotiations as merely “preparation for their presence” in Iran. The supreme leader praised Soleimani for being “brave and thoughtful” and “cautious” in military and political fields. Some observers interpreted this as

Iran fires ballistic missiles at US forces in Iraq Attacks raise fears of broader conflict in Middle East after killing of Qassem Soleimani

an invocation of his name to justify Iran not taking further military retaliation against US bases. The Pentagon said it was working on “initial battle damage assessments” of the twin attacks on the al-Assad base in Iraq’s Anbar province and a facility in Erbil, in the autonomous Iraqi Kurdistan region. A US official told the Financial Times that the military had been able to track the incoming missiles and warn personnel in Iraq. Although the official damage report is not yet available, the official said the only buildings hit at the sprawl-

Relentless rise of passive investing has transformed the business of managing assets

Lawmakers seek ‘compelling intelligence’ on reason for Qassem Soleimani assassination

resident Donald Trump’s top national security officials will brief the Senate on Wednesday to fend off criticism that his “defensive” decision to kill Iran’s top military commander has thrown America’s Middle East strategy into chaos and was based on presidential whim rather than compelling intelligence. The Trump administration has justified the decision to kill Qassem Soleimani, seen by some as Iran’s second-most powerful figure, as a pre-emptive strike to prevent plots to kill hundreds of Americans across the region, but some lawmakers have expressed doubt it merited an assassination and fear that the decision risks ceding US influence in Iraq to Iran and puts the US on a path to full-blown war. Overnight Iran launched missiles at US forces in Iraq in its first military retaliation for Soleimani’s death, prompting critics to accuse the president of stoking a regional conflict. Mr Trump, who tweeted “all is well” after consulting his top national security advisers at the White House, said the US was assessing casualties and damage, and that he would make a statement on Wednesday. “The president must come to

Congress and present clear and compelling intelligence as to why the strike against Soleimani was absolutely necessary,” Bob Menendez, the top Democrat on the Senate foreign relations committee, said in a speech on Tuesday. “What was the imminent threat that Soleimani uniquely possessed?” After the overnight Iranian missile attacks, Mr Menendez, who was briefed by US secretary of state Mike Pompeo, called for the US to pursue diplomatic channels and said Mr Trump must seek congressional authorisation if he intends further, extended military engagement. He wanted an account of the attacks in Wednesday’s briefing. Senators are expecting defence secretary Mark Esper, top military commander Mark Milley, Mr Pompeo and CIA director Gina Haspel to give them a one-hour classified briefing on Wednesday afternoon on the triggers that led to the decision to strike Soleimani and its effect on US strategy in the Middle East. They are likely to ask whether Soleimani himself was going to be involved in any expected attacks, how killing him would stop the attacks, whether any other commanders would have been involved in the plots and if they were still operational. www.businessday.ng

president wrote: “All is well! . . . We have the most powerful and well equipped military anywhere in the world, by far!” Iran’s Revolutionary Guard said its forces fired “tens” of surfaceto-surface missiles in an operation codenamed Martyr Soleimani. It warned “the great Satan and arrogant US that any aggressive act will be responded with more painful and more crushing retaliation”. Mohammad Javad Zarif, Iran’s foreign minister, said Tehran launched what he described as “proportionate measures” in self-

Index funds break through $10tn-in-assets mark amid active exodus

Donald Trump’s officials to brief Senate on Iran killing KATRINA MANSON

ing al-Assad air base did not contain people, and that the missiles that had targeted the facility in the Kurdistan region landed in an open area. The official added that no one from the anti-Isis coalition of American and foreign forces had been hurt. The UK said on Wednesday morning that no British nationals had been killed. The Iraqi military also said that no Iraqi soldiers had been affected. Donald Trump, who had vowed to respond to any Iranian retaliation, said in a tweet that he would make a statement on Wednesday. The US

defence on a base from which “cowardly armed attack[s] against our citizens & senior officials were launched”. “We do not seek escalation or war, but will defend ourselves against any aggression,” he said on Twitter. Emile Hokayem, a Middle East security expert at the International Institute for Strategic Studies, said the missile strikes looked carefully planned to satisfy the need to retaliate but avoid an immediate descent into a full state-to-state conflict with the US, which Iran would likely loose. “The response was direct, military and it came from Iran so it checks the immediate requirements of Khamenei and the Iranian regime,” said Mr Hokayem. “But this is probably just the opening salvo . . . at an acceptable cost risk. The real Iranian response will take time to unfold and will probably rely more on proxies than direct military force.” Soleimani was killed by a US drone strike in Baghdad on Friday, and Iraq, which hosts about 5,000 US troops and myriad Iran-backed militias, was considered the likely flashpoint in a confrontation between Tehran and Washington. The US is estimated to have more than 50,000 troops in the Middle East at bases across the region, including in Qatar, the United Arab Emirates and Kuwait.

ROBIN WIGGLESWORTH AND ALEX JANIAUD

ssets managed by global index funds have smashed through the $10tn level, buoyed by rising markets and an investor exodus from pricier, actively managed funds that often struggle to beat their benchmarks. Cheaper, passive investment funds, which merely try to match an underlying index, were invented in the 1970s but took a long time in gaining traction, as asset managers were largely sceptical that anyone would accept the market’s average return. However, index-tracking investment vehicles — whether in a more traditional mutual fund, or one traded on an exchange — eventually took off. Since the financial crisis they have exploded in popularity across stocks, bonds and commodities, radically reshaping the asset-management industry. A decade ago there was about $2.3tn in index funds, according to Morningstar data compiled by the Investment Company Institute, a trade association, for the FT. The market recovery of 2019, and the shift into passive investing, lifted the global industry to $11.4tn at

https://www.facebook.com/businessdayng

the end of November. “It’s a big number,” said Ben Johnson, head of ETF research at Morningstar. “This has been a decade marked by the ascendancy of indexing.” Even this figure may understate the extent to which index investing has caught on. Many big pension funds, endowments and sovereign wealth funds have set up internal strategies that mimic markets without having to pay an asset manager. Data on this is sparse, but BlackRock estimated in 2017 that such activity could amount to an additional $6.8tn. Column chart of Total global assets under management ($bn) showing Index funds power past $10tn mark as investors ditch active managers Index funds have gained the most ground in equities, and above all in the US, where it has proven particularly difficult for traditional, active stockpickers to consistently beat their benchmarks. The past year has been no exception. Just 28 per cent of US equity fund managers investing in large companies managed to beat the US stock market last year, and over the past decade a mere 11 per cent managed to do so, according to Bank of America. @Businessdayng

“ The past 10-year period posed unique challenges for active funds,” Savita Subramanian, head of US equity strategy at BofA, said in a report this week. The toughest part was contending with “a wave of redemptions”, she wrote, as investors demanded their money back. Indeed, about $1tn has left active equity funds over the past decade, according to Morgan Stanley, which estimates that only the top decile of fund managers, by performance, has been able to retain assets during that period. In the 1990s the top six deciles still enjoyed inflows, and in the 2000s the top three deciles did so. The trend towards index funds is accelerating in bonds too, a market that is generally more opaque and less liquid than stocks, and therefore more amenable to active investing. Just over the past year, fixed income index funds attracted more than $200bn of inflows, according to EPFR. Index funds have been dogged by criticism from traditional investment groups, but their growth is now so dramatic that some analysts are warning that it could damage the efficiency of financial markets by impeding price discovery, or imperilling standards of corporate governance.

Thursday 09 January 2020

BUSINESS DAY

NATIONAL NEWS

Central banks running low on ways to fight recession, warns Mark Carney Exclusive: Bank of England governor sees threat of ‘liquidity trap’ and need for fresh monetary tools LIONEL BARBER AND CHRIS GILES

he global economy is heading towards a “liquidity trap” that would undermine central banks’ efforts to avoid a future recession, according to Mark Carney, governor of the Bank of England. In a wide-ranging interview with the Financial Times, the outgoing governor warned that central banks were running out of the ammunition needed to combat a downturn. A liquidity trap occurs on the rare occasions when monetary policy loses all effectiveness to manage economic swings and looser policy does not encourage any additional spending. “It’s generally true that there’s much less ammunition for all the major central banks than they previously had and I’m of the opinion that this situation will persist for some time,” he said. That meant there was a need to look for supplements to monetary tools, including interest rate cuts, quantitative easing and guidance on future interest rates, he said. “If there were to be a deeper downturn, [that requires] more stimulus than a conventional recession, then it’s not clear that monetary policy would have sufficient space.” Despite concerns about a potential downturn, Mr Carney was optimistic about the City’s prospects after Brexit. He made clear there was no point in London, as a world financial centre, being a rule taker from Brussels. He urged the UK government to avoid aligning its financial regulations with those in the EU in the hope of better trade terms after Brexit. “It is not desirable at all to align our approaches, to tie our hands and to outsource regulation and effectively supervision of the world’s leading

complex financial system to another jurisdiction,” he said. Mr Carney echoed other central bankers, such as the European Central Bank’s Mario Draghi and his successor, Christine Lagarde, in recommending that governments consider fiscal policy tools, such as tax cuts or public spending increases when tackling a downturn. However, he accepted “it’s not [central bankers’] job to do fiscal policy”. The governor said monetary policy was not yet a spent force internationally, with US and eurozone interest rate cuts last year encouraging borrowing and spending. “We’re starting to see that stimulus flow to the global economy.” He insisted that he was not leaving his successor, Andrew Bailey, without any tools in the armoury. The BoE could still cut interest rates from 0.75 per cent to close to zero and “supplement monetary policy with macroprudential tools” by relaxing banks’ capital requirements to enable them to lend more. Mr Carney predicted that the City of London could profit from the “huge commercial opportunity” of helping to finance and accelerate action to mitigate global warming — although he recognised that the financial sector was not a substitute for effective policies at the national and international level. He predicted that the City could benefit from financing the transition to a low-carbon economy in place of some EU activity. “This happens to be a huge commercial opportunity for the City of London and the UK financial sector writ large.” The Bank of England has led other central banks on taking a firmer stance on combating the financial risks to banks and insurance companies that stem from global warming.

Low yields. Low fees. How’s a custody bank to make money? State Street chief gambles on winning new business from asset managers under pressure ROBERT ARMSTRONG

“

he industry’s pain becomes our gain,” said Ron O’Hanley, chief executive of State Street, providing a neat summary of his strategy for the Boston-based custody bank. The industry in question is not banking, but asset management, where State Street’s key customers operate. In recent years asset managers have passed plenty of their pain on to custody banks such as State Street, BNY Mellon and Northern Trust. With revenues under pressure from the rise of low-cost passive investing, money managers are less willing to pay up for custodians’ back office services: settling trades, holding securities, keeping records and exchanging currencies. This comes on top of other pressures on custody banks, notably falling interest rates and correspondingly lower interest income. State Street is expected to report revenues of about $11.6bn for 2019, down 3 per cent from the year before. The decline in profitability has been more dramatic: in the first three quarters of 2019, return on equity, at 9.5 per cent, was 4 percentage points lower than the year before. Mr O’Hanley thinks the shake-

out in asset management will continue, and with it the pressure on custodial fees. His solution? Sell a wider range of services, becoming a full-service administrative outsourcer and helping money managers take costs out of their businesses. The centrepiece of the strategy was the $2.6bn acquisition of Charles River Development in July of 2018. Charles River provides order management and analytics tools for traders, what is known in the asset management industry as “front office” software. The vision is that combining trading software with State Street’s “middle office” tax and accounting software and “back office” custody services would allow State Street to lower clients’ total operating costs significantly. Yet investors panned the deal when it was first announced. State Street’s shares fell 8 per cent on the day, and plunged another 40 per cent before they bottomed over a year later, underperforming even those of slumping peer custody banks. That the shares have rallied since — State Street is the best-performing large bank stock over the past six months — contributes to Mr O’Hanley’s confidence in the deal. Line chart of Share price ($) showing State Street rebounded late in 2019

Although he can spend like US president Donald Trump, Michael Bloomberg, left, trails four other contenders in the race for the Democratic presidential election © AFP via Getty Images

Donald Trump and Michael Bloomberg both buy $10m Super Bowl ads Former New York City mayor uses his wealth in attempt to get under the president’s skin LAUREN FEDOR

he US presidential campaigns of Donald Trump and Michael Bloomberg have reportedly spent more than $10m each on 60-second television advertisements to air during next month’s Super Bowl, in the latest public showdown between the two billionaires. Michael Frazier, a spokesman for the Bloomberg campaign, told The New York Times on Tuesday that the former New York City mayor’s advertising buy was intended to get “under Trump’s skin”, adding: “The ad is part of Mike’s strategy of running a national campaign that focuses on states where the general election will be decided, parts of the country that are often overlooked.” Mr Bloomberg’s campaign did not say how much it spent on the advertising, but executives at Fox Sports, which will air the annual championship game of the National Football League, said last year that it was selling 30-second slots for “north of $5m”.

Mr Trump’s campaign later told Politico that it was also planning to spend $10m on a Super Bowl ad. The president’s re-election campaign has amassed a considerable war chest, with the campaign and the Republican National Committee saying last week that they had raised a combined $463m in 2019, with almost $200m cash on hand. Mr Bloomberg, a billionaire who initially ran for mayor of New York City as a Republican before becoming an independent, entered the Democratic party’s presidential primary in November, months after many of his rivals. The founder and chief executive of financial information company Bloomberg LP has said he will not accept donations to his campaign, but has already spent almost $170m of his own money on TV and digital advertising, and hired some 800 staffers in more than 30 states. Despite the record-setting spending, Mr Bloomberg currently ranks fifth nationally among the Democratic presidential hopefuls, at 5.8 per cent, according to a polling

average compiled by the website RealClearPolitics. He trails former US vice-president Joe Biden, Vermont senator Bernie Sanders, Massachusetts senator Elizabeth Warren and Pete Buttigieg. the former mayor of South Bend, Indiana. With the Iowa caucuses less than a month away, Mr Bloomberg’s campaign is less focused on the early voting states of Iowa, New Hampshire, Nevada and South Carolina, and is instead targeting “Super Tuesday” on March 3, when more than a dozen states will hold their primary contests. This year’s Super Bowl will take place on February 2, a day before the Iowa caucuses and the week when many primary voters in Super Tuesday states, including California, will have the chance to vote early by post. While the Super Bowl has historically been a prime slot for advertisers, political commercials have not typically aired during the annual sports event, where ads reportedly sold for $5.2m for a 30-second slot last year. The last Super Bowl was watched by 98.2m people, down from previous years.

Boeing 737 crashes in Tehran killing all 176 on board

Ukraine Airlines disaster caused by ‘technical failure following a fire’ MONAVAR KHALAJ, CLAIRE BUSHEY AND MAX SEDDON

Uk ra i n e Int e r nat i o na l Airlines Boeing 737-800 crashed shortly after takeoff from Tehran’s international airport on Wednesday, killing all 176 passengers and crew on board. The early morning disaster was caused by “technical failure following a fire” on the flight destined for Kyiv, Ali Kashani, the airport’s spokesman, told Iran’s state news agency IRNA. Volodymyr Zelensky, the Ukrainian president, said: “We need to examine every possible version. Whatever the conclusions over the reasons for the crash in Iran, we will check the entire civil aviation fleet’s flight capability.” Ukraine’s embassy in Tehran deleted a statement it had issued earlier in the day citing engine failure and replaced it with a new one saying “any statements about the reasons for the crash made before the commission’s decision are unofficial”. Boeing did not shed any light on the circumstances in a statement posted to its website: “This is a tragic event and our heartfelt

thoughts are with the crew, passengers and their families. We are in contact with our airline customer and stand by them in this difficult time. We are ready to assist in any way needed.” Hours before the incident, Iran launched missile strikes against US forces in Iraq in retaliation for the killing of Revolutionary Guard commander Qassem Soleimani. By the time of the crash, major airlines had already begun rerouting or cancelling flights to avoid the airspace over Iraq and Iran after the US Federal Aviation Administration had banned US carriers from the area after the missile launches. The aircraft crashed at 6am local time, about six minutes after takeoff from Imam Khomeini airport, according to local media, which added that it came down near Parand, a town 35km south-west of the capital. Iranian officials said the flight recorders — the plane’s two black boxes — had been found. According to Vadym Prystaiko, Ukraine’s foreign minister, 82 of the passengers were Iranians, while 63 were from Canada, which has large Ukrainian and Iranian

diasporas. Eleven of the dead, including nine crew members, were Ukrainian citizens. The others included three UK citizens, three Germans, 10 Swedes and four Afghans, Mr Prystaiko wrote on Twitter. Mr Zelensky cut short a trip to Oman to return to Kyiv to deal with the crisis. He has set up a special commission to investigate the crash and ordered prosecutors to launch a criminal investigation. A graphic with no description UIA said it would suspend all flights to Tehran until further notice. Ihor Sosnovskiy, UIA’s flight director, said the plane’s last maintenance check on Monday had uncovered no faults on arrival in Tehran or before take-off. UIA’s pilots have trained flying on the 737 exclusively in Tehran for the past several years, Mr Sosnovskiy added, dismissing suggestions pilot error could have led to the crash. “We know today that the plane was at 2,400 metres, so the chance of pilot error is minimal, we just aren’t considering it. With their experience, it’s very difficult to say that there could have been anything with the crew,” he told reporters.

Thursday 09 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Global airlines reroute flights as Middle East tensions mount Commercial flights cancelled or rerouted to avoid airspace over Iraq and Iran TANYA POWLEY

ajor airlines around the world are rerouting flights to avoid airspace over Iraq and Iran or cancelling flights as tensions escalate in the Middle East following the Iranian missile attack on Wednesday. The move comes after the US Federal Aviation Administration banned US carriers from the region after Iran launched more than a dozen ballistic missiles at US forces in Iraq in retaliation for the killing of military commander Qassem Soleimani. The airspace ban prohibits US passenger airlines from flying over Iraq, Iran, the waters of the Gulf and the Gulf of Oman. The FAA said it had issued the notice “due to heightened military activities and increased political tensions in the Middle East, which present an inadvertent risk to US civil aviation operations”. However, the new rules are likely to have little impact on US carriers as many of them already avoid this airspace following FAA guidance in June last year which banned them flying over an area of Iranian airspace above the Gulf and Gulf of Oman after Tehran shot down a US drone. While the FAA ruling only applies to US airlines, several global airlines have made moves to reroute flights to avoid the airspace, while others have temporarily cancelled flights to the area in a bid to reduce any threat to their planes. The move to reroute flights will typically lengthen journey times for airlines and add to fuel costs. John Grant, of OAG, the aviation consultancy, said: “Airlines have for a very long time been very cautious around overflights in Iran and review their options and alternate flight plans on a daily basis so any increase in tensions and advice will be reflected in their daily operations.” Germany’s Lufthansa said it had cancelled the airline’s flight to Tehran on Wednesday as a precautionary measure. A spokeswoman said it was evaluating the situation together with national and interna-

tional authorities, and said it would decide if and when flight operations to and from Tehran and Erbil could be resumed. Dubai-based carrier Emirates cancelled a return flight to Baghdad on Wednesday, and a spokeswoman said it was monitoring the developments and would make further operational changes if required. Air France suspended all flights over Iranian and Iraqi airspace, while data from flight-tracking website Flightradar24 showed British Airways was also rerouting flights. Meanwhile, Singapore Airlines said its flights to Europe had been diverted. Australian carrier Qantas said it was adjusting its flight paths over the Middle East to avoid the airspace over Iraq and Iran until further notice, a move that will add an extra 40 to 50 minutes to PerthLondon flights. The change means the airline will have to reduce the number on passengers on board so it can carry more fuel for the longer flight. While many airlines have changed their routes, data from Flightradar24 revealed several carriers were still flying over the region. Qatar Airways was continuing to fly its routes as it has limited options because of a longstanding ban from Saudi, Emirati and Bahraini airspace. According to data from OAG, Qatar Airways has 36 flights scheduled to Iran this week, while Emirates was due to fly 14. OpsGroup, an aviation security consultancy, described the US ban as significant, noting that the “entire overwater airspace in the region” was now unavailable. The group said it would mean that flights heading to and from the main airports in the region, such as Dubai, would now need to route through Saudi Arabia’s airspace. Airlines are typically quick to respond to any perceived threat or escalation in tensions. The broader threat to civilian airlines from regional conflicts was underscored in 2014 when Malaysia Airlines flight 17 was shot down over Ukraine, killing 283 passengers and 15 crew.

Oil steadies after initial jolt sparked by Iran attack on US forces Markets jolted before recovering some poise after Tehran retaliates for killing of military commander FT REPORTERS

il prices and global stock markets stabilised after an initial jolt of volatility as investors bet an Iranian missile strike against American forces in Iraq would not escalate towards a broader conflict in the Middle East. Brent crude was 0.6 per cent higher at $68.70 a barrel in London trading, having calmed from an earlier spike to as high as $71.75 in the Asian session as investors gauged the consequences of the Iranian action and the likelihood of a US response. US stock futures turned positive having earlier fallen as much as 1.6 per cent. President Trump is due to make a statement in the coming hours, but tweeted “all is well!” in the aftermath of the strikes, while Iran’s supreme leader said the attack was a “slap” in the face for the US but fell short of making further threats of escalation. “As long as the US does not respond to Iran’s most direct attack since the seizing of the US Embassy in Tehran in 1979, tensions should gradually ease and appetite for risk

should improve,” said Piotr Matys, a senior emerging markets strategist at Rabobank. “However, it is still too early to declare with a high degree of confidence that the conflict is over. The risk of a very dangerous spiral of titfor-tat remains elevated and every single step from both sides could prove critical.” Declines in European markets were measured, with the composite Stoxx 600 index down 0.4 per cent, and similar falls for the major bourses across the continent. Shares in state oil company Saudi Aramco hit a new low of 34 riyal, the lowest level since the group floated on Saudi Arabia’s stock market last month, as regional markets fell. Markets across the world were jolted after Tehran’s Revolutionary Guard said it fired “tens of rockets” at facilities in Iraq including the Ain Assad base, which hosts US troops. The attack was retaliation for a US drone strike that killed Qassem Soleimani, head of Iran’s elite Quds force responsible for overseas military operations, and marked a serious escalation in the confrontation between Iran and the US. However, investors were reassured by an apparent absence of US casualties and the measured tone of the official responses. President

Donald Trump said on Twitter that “assessment of casualties & damages [are] taking place now” and “So far, so good!” following the attack. Mohammad Javad Zarif, Iran’s foreign minister, tweeted that Iran does “not seek escalation or war, but will defend ourselves against any aggression”. “We knew some kind of retaliation was going to happen . . . so this is not overly shocking,” said Jim Paulsen, chief investment officer at Leuthold Group. “I hate to say it but there are no casualties as of yet, so right now I would say the markets won’t be facing too much selling pressure.” Line chart of Price of Brent crude per barrel ($) showing Oil markets volatile after Iran attack Investors had sought safer segments of the markets in response to news of the missile attack. The price of gold, seen as a haven during times of uncertainty, climbed to a near-seven-year high, rising 2.2 per cent to $1,600 per troy ounce. In the European morning it was trading back at $1,580, a gain of 0.5 per cent. The yield on 10-year US treasuries was down 2 basis points at 1.8038 per cent after earlier hitting a onemonth low, while the Japanese yen was flat versus the dollar after rising early in the day.

Cash in the chips: 2020’s semiconductor recovery

Tech Scroll Asia, your guide to the billions made and lost in Asia tech JAMES KYNGE AND MERCEDES RUEHL

he new year brings optimism over semiconductor sales. Corporate leaders from UMC, the world’s fourth-largest contract chipmaker, and Macronix International, an important supplier to Nintendo, Sony, Huawei and Apple, are forecasting a recovery in chip demand during 2020. They told the Nikkei Asian Review in exclusive interviews here and here that chip demand growth would be fuelled by the uptake of 5G smartphones, OLED displays for smartphones and other products.

Key implications: As Miin Wu, chairman and chief executive of Macronix, puts it, chip companies are like ducks on a river that know before others that spring is coming. Mr Wu sees room for memory chip prices to rebound given the current demand-supply dynamics. UMC’s president, SC Chien, believes demand will pick up in the second half of 2020, with growth drivers including radio frequency chips for 5G smartphones as well as chips for OLED displays. Mr Chien adds that UMC is open to making acquisitions in the sector as the industry consolidates. Upshot: Over time, competition from China’s aggressive www.businessday.ng

semiconductor industrial policy will probably have a significant impact on the industry. Beijing recently launched a Rmb204bn second phase of the “big fund”, the China Integrated Circuit Industry Investment Fund. But Mr Wu said it would still take China “some 20 years” to train a pool of qualified engineers to build up its own technologies. Business in 2020 will be little affected by emerging Chinese competition. Mercedes’ top 10 A round-up of the week’s best tech stories from the FT’s Asia tech reporter Mercedes Ruehl. The prices of cryptocurrencies are on the up in the wake of the Iran

https://www.facebook.com/businessdayng

crisis. Thousands of migrant southeast Asian workers employed in the Gulf use digital currencies as a way of moving out of local currencies and into US dollars. One thing I am watching this year: will the growth of 5G in Asia finally start lifting the stretched balance sheets of telecommunications companies and suppliers? Following on from that, governments’ attempts to decide what level of spectrum to allocate to 5G is another big topic. Just look at Taiwan’s mega 5G auction this week. Ryan McMorrow, the FT’s China corporate tech reporter, took stock of the number of unicorns that failed last year. New data show @Businessdayng

that 336 start-ups in the country were forced to cease operations last year. Singapore is trying out unmanned stores and retailers are being extra careful about repeating others’ mistakes. A recent boom in unmanned stores in China ended almost as quickly as it began after the shops struggled to move fresh groceries. Last year James had a scoop on China’s Alibaba stepping up competition with Amazon globally. Six months on, it appears the strategy has had mixed results in Europe, with some big names such as Benetton holding back from joining AliExpress. Report here.

industry Insight

BUSINESS DAY Thursday 09 January 2020 www.businessday.ng

Nigerian manufacturing sector in era of AfCFTA Gbemi Faminu

he Nigerian manufacturing sector is among the largest in Africa. With a contribution of eight to nine percent, the sector contributes over $30 billion to the the Gross Domestic Product (GDP). In 2019, the biggest discourse in the sector was the African Continental Free Trade Area (AfCFTA), which was expected to bring the continent under one trading umbrella. The AfCFTA implementation will begin in July 2020 and all manufacturers are keen on what the trade treaty holds out for them. While it provides opportunity for Nigerian firms to leverage broader continental market, it also promises to pressure firms to either innovate or die. Bismark Rewane, CEO of Financial Derivatives, said in July 2019 that the AfCFTA would favour Nigeria, Kenya, Egypt and Ghana and other big countries, but warned that any government that was not effective would fail within the AfCFTA environment. The United Nations Economic Commission for Africa (UNECA) projects that the trade agreement will boost intra-African trade by between $50bn and $70bn in monetary terms, with a 40 percent to 50 percent increase over the first 20 years of its implementation. In addition, the trade agreement is hoped to expand a market of 1.2 billion people and a gross domestic product (GDP) of $2.5 trillion across all 55 member states of the African Union. These and much more benefits await participants of the trade agreement. However, the big question is, how prepared are manufacturers for the trade agreement? Osaro Omogiade, managing director of Nosak Distilleries, which manufacturers foodgrade ethanol, told BusinessDay that his team was ready. “Our group presence in the export trade zone, especially in the oil and vegetable oil, is an indication that we are ready,” he said. “We have commenced export of food-grade ethanol to the neighbouring West African countries, particularly Ghana. It is an expression of our readiness. We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems,” he further said. Segun Ajayi-Kadir, directorgeneral of the Manufacturers Association of Nigeria (MAN), told BusinessDay recently that manufacturers were ready for the trade agreement. But he warned

that unless issues around ports, taxes and other regulatory pressures were addressed, the country might lose out. “There is a moratorium for us to get our acts right, and it could be anything between five and 10 years,” he said. “I believe strongly that if government is willing, and this president has told us that he is willing, we can mitigate those risks and manage the process robustly and become net gainers of the free trade. The only thing is that if we carry on as business as usual, Nigerian economy will suffer badly,” he further said. BusinessDay understands that many multinationals are already in many parts of Africa and the trade treaty seems wellsuited for them. Moreover, many export companies such as De-United Foods, British American Tobacco, Indorama Eleme Fertilizer & Chemicals and Dangote Group, among many others, have the opportunity to grow their margins, expand operations and earn bigger foreign exchange as the African Continental Free Trade Area (AfCFTA) offers them an opportunity to consolidate foothold on the continent. Vice-President Yemi Osinbajo said at a breakfast meeting in 2019 that the implementation of the African Continental Free Trade Agreement would transform the Nigerian economy and create jobs for millions of people. “AfCFTA will also promote a vibrant and competitive industrial sector that is central to job creation and income growth,” he said. However, some Nigerian manufacturers say they are at a disadvantage as the business

environment makes them uncompetitive. Their reasons are not farfetched. Recent reports from MAN showed that major problems of these manufacturers included the congested Apapa and Tin Can ports in Lagos, poor power supply, issues around multiple and excessive taxation, infrastructure deficit, difficulty in sourcing Forex, among others. The poor state of infrastructure in the country causes manufacturers to lose millions of naira yearly. “Manufacturing companies situated on the Amuwo-Odofin and Kirikiri axes lose over N20 billion annually, and most of the factories are on the brink of shutting down because we produce but do not sell as customers avoid coming to this area,” said Frank Onyebu, chairman Manufacturers Association of Nigeria (MAN) Apapa branch in Lagos recently. Oluwafunmilayo Bakare Okeowo, chief executive officer of FAE Limited, said in a phone interview that manufacturers needed better infrastructure to reduce cost of production. “The issue of tariffs should be properly addressed. We also need protective policies to create an enabling and competitive environment,” she further said. For some manufacturers, border closure remains one big hit that hurts their capacity to import inputs through the border. In August 2019, the federal government gave a directive to shut the land borders in a bid to reduce the dominance of foreign goods and smuggling while improving the patronage of locally produced goods. This has automatically constrained

trade relationship between Nigeria and its neighbouring countries and surprisingly came after the signing of the free trade agreement. “It is quite evident that the border closure stands in stark contrast to the principal objectives of the AFCTA. Consequently, regional trade and cross- border investments are in dire straits, limiting the overall competitiveness of the continental market.” said Vincent Nwani, CEO RTC Advisory Services said in a telephone conversation with BusinessDay. Some manufacturers say they now incur more costs while importing inputs and machineries. During the presentation of the 2020 budget, President Muhammadu Buhari said N2.46 trillion, including N318.06 billion in statutory transfers, was proposed for capital projects out of the N8.155 trillion estimated as the total federal government revenue for the year. Nigeria requires $15 billion (N4. 59tn at N306 to a dollar) worth of investments annually for 15 years in order to adequately develop its infrastructure, according to a report from the Financial Derivatives Company, an economic and financial research firm. However, the possibility of raising the funds that is quite slim considering fiscal crisis facing the government and the dwindling foreign investments into the country. Manufacturers need investments in infrastructure such as road and rail to move their goods to the market at cheaper rates. But this is not happening. Logistics ranks after power to manufacturers and it is gulp-

ing huge expenditures of many firms. The capital importation report released by the National Bureau of Statistics (NBS) showed a persistent decline of foreign investments in value in most sectors of the economy, especially in protected sectors with the exception of the banking, finance and telecoms sectors. The foreign direct investments (FDI) into Nigeria in 2014 stood at $2.28 billion but five years later, inflows slowed to $1.19 billion growing at a negative rate of 15 percent, as firms moved out of the economy in droves, taking with them longterm capital. FDI in half-year 2019 fell by eight percent and in the third quarter of the year stood at $200.08, according to data from the National Bureau of Statistics (NBS). Unfortunately, Nigeria’s manufacturing sector, which should be one of the active drivers of FDI and economic growth, was only able to contribute a marginal three percent, which shows how low investments are in the sector. In a 2019 third quarter report prepared by MAN, chief executives of manufacturing companies in Nigeria identified multiple taxes and levies as a major challenge for businesses. Eighty-nine percent of the CEO-participants in the survey agreed that multiple taxes and levies dampened productivity in the manufacturing sector with records showing that manufacturers pay over 30 different taxes, levies and fees to agencies of the federal, state and local governments on account of increased revenue target. The Global Competitiveness Report for 2019 ranks Nigeria 116th position out of 141 economies, with a 39.7 rating in infrastructure and 37 in government orientation as well as public sector performance in business regulation, despite squaring 58.5 in business dynamism. The 2020 World Bank’s ease of doing business index ranks Nigeria 131st in position, which is an improvement from its previous ranking of 146. However, according to the president, the goal is to be a part of the top 70 by 2023. The question is, are there policies and instruments in place to achieve this? What is the government’s plan to expand the horizons of Nigeria’s trade portfolio considering its recent actions? How will Nigerian manufacturers, especially the medium and small segments, survive competition in the face of low power supply/ high energy cost, multiple taxation, poor infrastructure, high funding cost and insecurity? The answer is best left for the government.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.