BusinessDay 09 Jul 2020 by BusinessDay

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news you can trust I ** thursDAY 09 july 2020 I vol. 19, no 602

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Here’s where wealth managers in Nigeria are telling clients to park cash I W

Excelsior Shipping seen mopping-up Flour Mills’ shares at premium price … buys 6.9m units at N21 per share in 5 weeks Iheanyi Nwachukwu nvestigation has shown that between May 22 and July 6, 2020, Excelsior Shipping Company plc, the substantial shareholder in Flour Mills NiContinues on page 44

LOLADE AKINMURELE & MICHAEL ANI

ealth managers in Nigeria are telling rich clients to invest in risk-free fixed income assets as well as alternative assets - from student housing projects to agriculture finance. Nigeria’s rich have been hard hit by the COVID-19-induced market volatility and the economic impact of the decline in oil prices, which has upended traditional asset classes from equities to residential real estate. Wealth managers have had Continues on page 44

Inside

What planned 3rd Mainland Bridge closure means to Lagos motorists P. 2

Discussants at BusinessDay webinar, themed, “Private Banking and Wealth Management Solutions: Preserving value through the dip and turmoil,” held yesterday.

COVID-19: FG reverses self on schools resumption, postpones WASSCE indefinitely P. 45

Thursday 09 July 2020

BUSINESS DAY

news Nigeria’s property title problems persist as 71% of landlords are without certificate of occupancy ENDURANCE OKAFOR

ore than four decades after, the difficulties in obtaining property title in Nigeria remain as over 71 percent of landlords did not have any document/ Certificate of Occupancy (C of O) as of 2019. According to the 20182019 Nigeria Living Standards Survey (NLSS) report by the National Bureau of Statistics (NBS), 71.4 percent of landlords sampled across the 36 states and the Federal Capital Territory (FCT) are without titles. Collected between September of 2018 and October of 2019, the NLSS data published Wednesday by NBS show 13.2 percent of the country’s property owners have title deed while only 8.1 percent have the certificate. Issues around the rigorous processes, long duration and the high cost of obtaining land and property documentations are among key setbacks identified and highlighted by industry stakeholders. Jide Ogunleye, CEO of Denaro Properties Limited,

a business and investment strategies firm with emphasis on real estate, says bureaucracy combined with corruption in the titling process will not allow things to get done. “Whatever has been done has still not solved the problem of titling, forget the ecertificate. The people that will provide the e-certificate can be bottlenecks in the process,” he states. He explains that this is because “people won’t move your file except they are paid or something, and as such it is likely that, in some cases, you can be on your land title for a very long period of time.” C of O is the document issued by state governments in Nigeria to landowners and property buyers as a legitimate proof of ownership after requirements have been met. Apart from the obvious fact that C of O shows ownership of a property, the certificate can also be used to obtain loans, secure mortgage and also makes it easy for a property owner to re-sell. Analysis of the housing and living conditions segment of the NLSS NBS re-

Airlines face low patronage as flights resume in Lagos, Abuja amid strict safety protocols Ifeoma Okeke & Gift Wada

omestic airlines experienced l ow p at ro n age as flights re s u m e d o n Wednesday at the Murtala Muhammed Airport (MMA2), General Aviation Terminal (GAT) domestic terminal, Lagos, and Nnamdi Azikiwe International Airport, Abuja, amid strict safety protocols. Airlines that operated include Air Peace, Arik Air, Max Air and Ibom Air on LagosAbuja routes with about 50-60 percent load factor. For instance, Arik Air’s 7:15am Lagos-Abuja flight carried 78 passengers with a Boe-

ing 737 aircraft, which would have carried an average of 150 passengers even with the social distance requirement. On its second Lagos-Abuja flight, the airline carried about 80 passengers. Nigeria Civil Aviation Authority (NCAA) only cleared six airlines to restart domestic flights while others are still going through certain documentation process to ascertain payment of their insurance and that of their staff. A visit to the Lagos airport showed passengers adhering to COVID-19 safety protocols: wearing of face masks, social distancing, use of hand sanitisers, and checking of body temperatures.

Passengers said they were impressedwiththelevelofcompliancewithguidelinesaimedat curbingthespreadofCOVID-19 and hope it was sustained. Aisha Khalid, one of the passengers on Max Air at the Lagos airport, told BusinessDay that she was very happy with the flight resumption and the protocols initiated by the airport authority to ensure passengers were protected from contracting COVID-19. “My flight will take off by 11am but I left the house by 6am just to ensure I get to the airport in time and keep to the rules of being there three hours before take-off. “I am impressed with what I see at the airport. Every-

thing is working perfectly fine. Social distancing is implemented and the screening is perfect,” Khalid said. Passengers on the first flight from Lagos who arrived Nnamdi Azikiwe Airport Abuja Wednesday morning said all COVID-19 safety measures were observed and strictly adhered to while on-board. Speaking with BussinessDay, Jibril Sani, one of the passengers, said, “The level of adherence was high, a lot of distancing, temperature check, hand washing and sanitising”. Some passengers, however, were dissatisfied with time management by the airport authorities.

Continues on page 44

REJOINDER

Niger Insurance explains its expense reporting

Rejoinder to an article written by Ifeanyi John and published in the BusinessDay Newspaper of July 6, 2020 Niger Insurance plc is a leading Insurance Company in Nigeria that transacts all classes of Insurance business and offers a wide range of innovative and customeroriented insurance products in Life and Non-life insurance to its clientele. The publicly quoted Composite Insurance Company presently operates with an asset base in excess of N21 billion. We refer to your newspaper publication titled “Niger Insurance Strange Expense reporting confuses analysts’’ dated July 6, 2020. We wish to set the records straight and correct any misgivings therein for the benefit of our stakeholders and general public. The “strange expense reporting” as captioned arose from an interpolation error between the “realised Gain on available for sale financial assets” and “Management expenses” reporting lines and therefore NOT deliberate. There was no strange reporting and we did not confuse the analysts. It is important to state categorically that the report presented is a true financial report of Niger Insurance for Q1 2020,

as the company’s bottom line for the period remains unchanged. The Management expenses for the period under review is N354.85 million while the N620 million captioned in the article as a positive management expenses is actually our gain on the available for sale financial assets and therefore an “income” and NOT an “expense”. The N620 million (gain on available for sale) when added to the Underwriting profit of N16.81 million plus Investment/other operating income of N108.66 million gives a total N745.47 million as income. Therefore, when the Management expenses of N354.85 million plus Depreciation/Amortization of N4.32 million are deducted from the income of N745.47 million, the result is the Net Operating Profit before tax of N386.30 million. Management expenses are a deductible item and had been treated and reported accordingly in the Company’s financial statement in line with the requirement of the IFRS. The Management expenses of N354.85 million as reported are made up of the Finance Charges of N10.6 million plus other Expenses totalling N344.19 million. www.businessday.ng

L-R: Vice President Yemi Osinbajo; President Muhammadu Buhari, and Abubakar Malami, minister of justice, during a virtual meeting of the Federal Executive Council at the Presidential Villa in Abuja, yesterday.

What planned 3rd Mainland Bridge closure means to Lagos motorists CHUKA UROKO

hat the Third Mainland Bridge in Lagos will be closed from July 2020 to January 2021 to enable the Federal Ministry of Works and Housing carry out repair works on the bridge is no longer news. What is news, instead, is that motorists on that route have the longest six months of their driving experience staring them on the face. The Lagos never-ending traffic congestion story is never complete without a mention of the snarling, nerves-straining gridlock that defines daily driving experience on that everbusy 11.8-kilometre bridge that has not, according to federal authorities, received any form of maintenance in eight years. That experience is even under normal circumstances. With repair work going on coupled with the partial closure of the bridge, it means motorists have to prepare their minds for more tortu-

ous driving and longer travel time. It calls for endurance and tactical scheming. But government says there are alternative routes. These alternative routes, according to Olukayode Popoola, the Federal Controller of Works in Lagos, are Carter Bridge through Iddo and Oyingbo to join Adekunle ramp inward Oworoshoki and another from Ijora-Olopa through Western Avenue to Ikorodu Road. Lagos State government also assures motorists of less stressful travel experience. Fredrick Oladeinde, the state’s commissioner for transportation, disclosed at a press briefing in Lagos Tuesday that “a traffic advisory for alternative routes has been carefully planned to ease travelling for commuters plying the route.” The diversion of traffic to the identified alternative routes means that even motorists who ordinarily have no business going to the Island will be affected. Ikorodu Road,

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for instance, will be under serious pressure as it is going to be the receiver-route for vehicles coming from Eko Bridge, IjoraOlopa and Western Avenue. Most, if not all, of these alternative routes are in deplorable condition. Though Aramide Adeyoye, special adviser to Governor Babajide Sanwo-Olu on works and infrastructure, says the state government has commenced remediation works on the identified alternative routes to make it motorable for the public, it remains to be seen how far that can go with the daily heavy downpour in the city. “We expect to see Lagos crawl within this period. The alternative routes, which are already congested, are not in good motorable condition. More vehicles coming to join those routes will certainly create driving experience that is better imagined than expressed,” Frank Onwubuya, who lives in IsolobutworksontheIsland,states. Oladeinde assures that officials from Lagos State @Businessdayng

Transport Management Authority(LASTMA), Federal Road Safety Corps (FRSC) as well as other relevant government agencies would be on ground to enforce the traffic plan and ensure easy movement during the closure. But Onwubuya is sceptical, saying, “We have seen this kind of situation before and the experience cannot be forgotten in a hurry. My advice is that people have to plan their movement very well before hitting the road. If you had been spending two or three hours to get to your office or to keep an appointment on the Island, make allowance for the expected slowdown; add one or two hours to be on the safe side.” Forthosewhomustmakeuse of the Third Mainland Bridge to access the Island, Popoola says traffic would be diverted for only the Lagos Island Bound section of the bridge to take motorists from Oworoshoki inward Lagos from 12 midnight to 1am in the morning.

Thursday 09 July 2020

BUSINESS DAY

news

COVID-19: FG commends OCP Africa for fertilizer subsidy to 50,000 farmers Josephine Okojie

he Federal Government has commended OCP Africa on its initiative to drive food security in the face of Covid-19 pandemic through the subsidisation of over 100,000 bags of fertiliser to 50,000 smallholder farmers. Mustapha Baba Shehuri, minister of State for Agriculture, who made this known at the inauguration of the OCP Africa post Covid-19 intervention package to farmers across the country, held in Nasarawa State recently, said it was critical to have measures in place to avert food crisis due to the negative impact of the coronavirus. He appreciated the company for supporting the government in providing palliatives to farmers across the country. According to him, the firm working with Fertiliser Producers and Suppliers of Nigeria (FEPSAN) to contribute to the Presidential Fertilizer Initiative (PFI) reveals the value it places in ensuring the survival of the agriculture sector as farmers will be able to plant and harvest rich yields. OCP, Africa’s leading producers, and exportation of phosphate-based fertilisers is working within the PFI of the government, and with blending plants under the FEPSAN to contribute to the PFI objectives of providing access to locally produced NPK 20:10:10 fertilizer for smallholder farmers. Also speaking, Mohammed Hettiti, managing director, OCP Africa-Nigeria said

the palliatives were meant to support smallholder farmers across several states of Nigeria to mitigate the adverse impact of the Covid-19 pandemic on the current farming season. He added that farmers will have access to training and extension services, markets and digital technology, all in a bid to increase yields and ensure food security as the 2020 farming season commences. Hettiti said the initiative underscores OCP Africa’s commitment to the federal and state governments in the drive to curtail the spread and adverse effect of the Covid-19 pandemic across Nigeria. ‘’In choosing to initiate the Covid-19 response, OCP Africa saw a need to partner with the government at federal and state levels towards ensuring that the agricultural sector is supported during this global pandemic and national food security is guaranteed,” he said. “However, the need to support the livelihood and productivity of rural smallholder farmers in this difficult period is uppermost in OCP Africa’s strategy which particularly supports the many efforts of government in ensuring not only an agric-revolution but also food security,” he added. Caleb Usoh, country manager/deputy managing director, OCP Africa-Nigeria said under this Covid-19 response initiative, the fertilizer company would be reaching over 50,000 smallholder farmers through access to inputs, training and extension, digital technology support, and access to markets.

L-R: Sherif Idi, co-founder/CMO, TAJBank; Norfadelizan Abdulrahman, MD, TAJBank; Hamid Joda, founder/COO, TAJBank, and Philips Nwachukwu, head, TAJMall, at the launch of TAJMall, Nigeria’s 1st Ethical Online Mall held at the bank’s head office, Abuja..

CIBN to adopt remote online proctoring for its examinations Hope Moses-Ashike

he Chartered Institute of Bankers of Nigeria (CIBN) has commenced plans to adopt remote online proctoring for the conduct of its professional banking and certification examinations. According to Nelson Olagundoye, head corporate communication and external relations, of the CIBN, the new examination mode which will commence in April 2021 in line with the strategic intent of the institute’s to stay ahead of the curve. The governing council, the highest decision making body

of the institute had given its approval to the initiative that will further position it as a foremost and world class professional body. Remote online proctoring is the digital and live form of assessment which enables candidates to write their examinations online in a remote location of their choice duly certified and surveillance- monitored as cheat free to ensure the integrity and sanctity of the exams. Students must confirm their identity and location which will be closely monitored via a live webcam/video proctored software throughout the course of the examination. He further explained that the

Abia: Health workers demand payment of Lagos receives 16 vehicles from NNPC, backlog of salary arrears, allowances SNEPCO to strengthen security GODFREY OFURUM, Aba

he National Association of Government General Medical and Dental Practitioner (NAGGMDP), Abia State chapter, has appealed to the state government to offset their 13 months’ outstanding salary arrears. The group in a letter to Governor Okezie Ikpeazu, which was signed by Obinna Okeugo, chairman, NAGGMDP and Iroabuchi Egeruo, secretary, NAGGMDP and made available to BusinessDay, explained that the body comprising doctors under the state’s Hospital Management Board (HMB) and other health workers were passing through precarious ordeals. They explained that doctors and other health workers were being owed salary arrears from January 2019 to December 2019 and an additional one month in 2020, totaling 13 months. The group in the letter stated that the former governor, Theodore Orji, signed the Consolidated Medical Salary Structure (CONMESS) and Consolidated Health Salary Structure (CONHESS) for doctors and other health workers into law in 2011, but only 70 percent of this salary structure was implemented.

“It may also interest you to know that some states and all federal health institutions are currently enjoying enhanced CONMESS and CONHESS salary structure, which is a higher salary structure, as stipulated, by the health law of the Federal Republic of Nigeria, while we in HMB are still battling with 70 percent CONMESS and CONHESS, which is not even paid to all staff. They argued that they have been completely isolated in the area of remuneration for doctors and other health workers and pleaded with government to treat Abia health workers like their colleagues in other states. According to them, “we feel ashamed and relegated when our colleagues from other states disclose their remuneration”. They also noted that a new hazard allowance that had been passed into law was yet to be implemented in the salary schedule of Abia HMB staff and appealed to the governor to ensure its implementation. “As our contemporaries in other states and health institutions have started receiving their skipping arrears since 2019, we should not be left out as we are exposed to same working conditions and health laws of the nation. www.businessday.ng

JOSHUA BASSEY

agos State governor Babajide Sanwo-Olu on Wednesday received a donation of 16 vehicles from the Nigerian National Petroleum Corporation (NNPC) and Shell Nigeria Exploration and Production Company (SNEPCO) towards the strengthening of security in Lagos. Sanwo-Olu while receiving the donation behalf of the Lagos State Security Trust Fund (LSSTF), at the State House, Marina, stated that the security of lives and properties of Lagosians remained a major priority of his government. He said the donation of the 16 vehicles was in fulfillment of the promise SNEPCO made to the Lagos State Security Trust Fund during a dinner by Lagos state government to seek support from the private sector. He said: “We are excited because this is another confirmation of collaboration, another promise kept and another public private partnership that is working for us in Lagos State. “A couple of months back, before Covid-19, we had met at a dinner where we asked and solicited for support from our private sector operators in Lagos

and SNEPCO was present at that dinner and they humbly committed to providing something for the state. “So this is a commitment that was made to us months back but we are indeed happy that despite the very difficult terrain all of us have gone through, they have been able to make it, together with their joint partners - NNPC, Exxon Mobil and other partners. “They are doing this because we as a government have shown consistent transparency in how we deal with them. We have shown that each time they support us, the support gets to the people and we get to use it for what the support is meant for. Sanwo-Olu further assured the oil conglomerates that the state government will continue to see them as development partners in the project of Lagos. “We have different roles to play but we will continue to collaborate. We can assure you that the men that continue to keep us save will get these vehicles. We will determine how they go round. But you can be assured that none of them will be kept in governor’s residence. It will go to the people that truly require them and they will be used for the reason for which they were given,” Sanwo-Olu said.

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proctored examination will ensure the identity of the candidates, flag any irregular behaviour, scan and ensure the integrity of examinee’s environments as well as detect any instances of fraud or suspected violation(s) of the rules by the candidates. Olagundoye also said that the move was a response to the coronavirus pandemic which has significantly disrupted the examinations of professional bodies all over the world. Online proctored exams are also rapidly gaining relevance in the certification and professionalisation industry. More professionals are seeking ways to earn professional certification with

ease. Institutions in the knowledge space are interested in digital solutions that will enable them to enhance the examination experience for their candidates in line with global best practice. It would be recalled that professional bodies all over the world had to postpone their examinations from March till date as a result of the total lockdown of economic and social activities occasioned by the pandemic. It is believed that the new examination mode would allow the Institute to increase the frequency of its examinations and the geographical spread of the candidates.

Alleged bribery: My father handed over bribed money to Shehu Sani in my presence - Witness Felix Omohomhion, Abuja

prosecution witness, Mohammed Dauda, on Wednesday, told the court that he saw his father hand over some money to Senator Shehu Sani. Dauda, who is the son of Sani Dauda, chairman of ASD Motors, Shehu Sani’s accuser, was testifying in the alleged bribery charge instituted against him by the Economic and Financial Crimes Commission (EFCC) at a Federal High Court in Abuja. Sani is facing a two-count charge bordering on the alleged bribery. The matter is before Justice Inyang Ekwo. Dauda told the court that his father handed over money to Sani in his presence. The witness, answering a question under cross examination by defence counsel, Abdul Ibrahim, told the court that he was there when his father handed over the money to Sani. Dauda also told the court that he was not aware of any case his father had with the EFCC. While being led in evidence earlier by the prosecutor, Abba Mohammed, Dauda said that @Businessdayng

the former senator met his father in November, 2019. According to him, Sani told his father that the Chief Justice of Nigeria and the EFCC were rendering some help to him (his father) and that if a token of gratitude was given, it would be appreciated. Speaking further Dauda said: “Since the former senator collected money from my father, my father never heard from him again as he neither answered his father’s calls nor called back.” The witness added that Sani contacted his father only after his father reported the matter to the EFCC. “My father returned from Saudi Arabia and went to the EFCC and that day was the first time Sani called him and said if he knew he was around he would have returned his money.” Testifying further, Dauda told the court that following the instructions of the EFCC, he always set a recorder each time Sani met with his father, to record their conversation. He added that the EFCC asked his father to hand over to the commission, the money which Sani returned to him, which amounted to $25, 000.

Thursday 09 July 2020

BUSINESS DAY

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Thursday 09 July 2020

BUSINESS DAY

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Thursday 09 July 2020

BUSINESS DAY

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Thursday 09 July 2020

BUSINESS DAY

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Why Nigeria is yet to fully comply with OPEC+ production cut Olusola Bello

igeria is not violating OPEC+ agreement over production cut done to stabilise crude oil prices at international markets, but rather striving to ensure it meets 100 percent compliance by August this year, BusinessDay investigation reveals. Sources at the highest level of the oil and gas industry have described as untrue the allegation by the Saudi Arabia’s Minister for Energy, Abdulaziz bin Saud that Nigeria is not complying with the OPEC+ agreement over crude oil production cut. This is as Nigeria did a little better at 77 percent, and Angola even better at 83 percent. But that was not good enough, they say. The sources that say they are not authorised to talk query the veracity of the source where the Saudi Arabia minister’s got his infor-

mation from. They claim that the allegation is not backed by facts and is far from the truth. One of the sources asks where is the crude oil? He says Nigeria is struggling to meet the 1.7 million barrels per day production currently, as some oil wells are presently shut down and may not even be reactivated for a long time to come because of COVID-19. According to him, to completely comply with the production cut will take a process because the country cannot just shut down it wells without considering the economic implications of such action. He says the government will need to determine which of the facilities supply gas for the purpose of power generation, which one would be shut down and the country would not incur huge sum of money to revive them when the time to go for normal production quota comes, or

would be difficult to revive. He notes that the international oil companies have been given guidelines to follow in this respect and by August they will achieve 100 percent compliance. He told BusinessDay that as matter of fact, Nigeria will pay back for the infractions that have taken place since the commencement of the production cut after it must have successfully put in place the necessary things to meet the OPEC+ decision on compliance. Another source says there is a serious production deferment in the country and it cannot be true that Nigeria is not complying with OPEC +agreement. He explains further that all the works that are supposed to be going on for production purposes have been stopped because of COVID-19. All informations on well maintenance are no longer accessible by the industry because there is no way to get them.

Death of CoS: Kwara officials proceed on isolation SIKIRAT SHEHU, Ilorin

wara State government officials who had contact with the late chief of staff, Aminu Adisa Logun, have proceeded on self isolation and their samples taken for Covid-19 test, a statement said on Wednesday. “Cabinet members, personal staff of the late chief of staff, and some medical personnel who had varying degrees of

contacts with the late technocrat have now proceeded on self isolation,” commissioner for communication Henrietta Adenike Afolabi-Oshatimehin said in the statement. According to her, government has also suspended physical meetings of any kind on official matters until further notice, directing increased use of virtual platforms for such engagements in order to limit physical contacts. “It is important to note

that Governor Abdulrahman Abdulrazaq last had any physical contact with the late chief of staff on April 6 during the launch of the conditional cash transfer for the elderly. The governor’s subsequent meetings with the deceased had all been virtual. Similarly, the state executive council meetings and most official engagements have consistently been held through virtual platforms in line with the Covid-19 protocols.

Industry players to expose how businesses can leverage tech to drive transformation Daniel Obi

technology conference, the first of its kind organised by tech public relations firm, Phyllion aimed at charting the future of African tech through conversations from key leaders and players on how businesses can leverage technology to drive transformation in Africa will hold mid-July, 2020. Themed “Embracing Technology Transformation in Africa, What Next,” the online event is slated for July 17, 2020. It already boasts of a robust panel of speakers from communications and tech sectors alike. “This event is one to look out for, registrations have already begun on the event website while download link to a mobile app will be shared with attendees upon registration to foster networking and upgraded virtual event experience”, the organisers said. The conference has a simple agenda phased into three sessions; the general, panel, and pitch session. The Pitch session happens to be another high point of the day, this is because of the potential of start-

ups getting an opportunity to pitch to a panel of judges for a chance to win an investor or investment. This session further buttresses why the Phyllion Tech Conference is a rare and commendable online conference. It was indeed carefully thought through to ensure attendees get value for their time and it bridges the gap between

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the start-up and the investment community. It comes on the heels of the enduring disruptive technology which have impacted business operations in this period of the coronavirus (COVID-19) pandemic that has greatly altered the way things are done, with a change in the definition of normal.

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Thursday 09 July 2020

BUSINESS DAY

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

In association with briu@businessday.ng

08098710024

States with highest transport fares in May 2020 ADEMOLA ASUNLOYE

ccording to the May 2020 Transport Fare Watch Report by the National Bureau of Statistics (NBS), the average fare paid by commuters for bus journey within a city decreased by 0.56 per cent month-on-month (MoM) and increased by 26.19 per cent year-on-year (YoY) to N222.46 from N223.71 in April 2020. Among the 36 states and the Federal Capital territory (FCT), the states that have the highest bus fare on journeys within their cities were Zamfara (N435.00), FCT Abuja (N338.00) and Cross River (N320.00). That is, the highest amount a commuter (person) paid on a bus fare for moving from one destination to another within the same city in Nigeria as at May 2020 was N435.00. All the three states (Zamfara, FCT and Cross River) with the highest bus fare on within city journey in May 2020 all recorded a MoM and YoY increase of 6.10 per cent and 45 per cent; 1.65 per cent and 25.19 per cent, and 1.59 per cent and 4.92 per cent respectively. On the contrary, the states with the lowest bus fare for journeying within their cities were Bauchi (N130.00), Kebbi (N150.00) and Rivers (N157.00). This puts the lowest amount a commuter (person) paid on a bus fare for moving from one destination to another within the same city across all the states in the month of May 2020 to N130.00. Of the three states with the lowest bus fare on within city journey, Bauchi recorded a 7.14 per cent MoM decline but 35.62 per cent YoY increase; Kebbi, down by 56.90 per cent MoM and 40 per cent YoY; while Rivers recorded increases in both MoM and YoY at 4.67 per cent and 10.82 per cent respectively. On the average, the amount of money a commuter pays for boarding a bus for an intercity journey increased by 1.35 per cent MoM (and 13.94 per cent YoY) to N1,803.59 in May 2020 from N1,779.51 in the previous month. While FCT Abuja with N4,150.00 on bus fare, Adamawa (N2,654.00) and Borno (N2,640.00) are the states with the highest bus fare

SOURCE: NBS, BRIU

on intercity journeys; Enugu (N1,150.00), Bauchi (N1,215.00) and Bayelsa (N1,220.00) were the states that recorded the lowest bus fare for intercity journeys in the month of May 2020. The May 2020 fare in FCT grew by 0.73 per cent from the previous month but was the same as that of May 2019; in Adamawa, it represents 0.15 per cent growth from the previous month and 6.16 per cent from the corresponding year; while in Borno State, the

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fare represents 1.54 per cent and 7.96 per cent growth from the previous month and the corresponding year respectively. For the states with the lowest intercity bus fares, Enugu recorded 15.00 per cent MoM increase (19.55 per cent YoY); Bauchi was up by 1.25 per cent MoM (24.62per cent YoY) and in Bayelsa, the fare represented 1.67 per cent and 24.49 per cent MoM and YoY increase respectively. Still on land transport mode,

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the average fare a commuter paid for a journey by taking a ride on a motorcycle increased from N148.00 in April 2020 by 2.62 per cent MoM and by 20.06 per cent YoY to N152.11 in May 2020. The states with the highest fare for a journey by motorcycle per drop were Rivers (N255.00, up by 0.39 per cent MoM), Lagos (N242.00, down by 3.20 per cent MoM) and Kogi (N240.00, up by 3.85 per cent) while states with lowest journey fare by motorcycle per drop were Katsina (N73.00, up by 4.29 per cent MoM), Adamawa (N75.00, down by 6.25 per cent MoM) and Kebbi (N82.00, down by 2.38 per cent MoM). For air transport mode, the average fare an air passenger paid for a specified route on a single journey increased YoY by 0.35 per cent but was flat MoM at N30,743.65 in May 2020, just as it was in April 2020. In the same month, Jigawa (N35,400.00), Rivers (N35,000.00), and FCT Abuja (N34,000.00) are the states with the highest air fare while Sokoto (N22,500.00),

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Katsina (N25,000.00), and Kano (N25,500.00) recorded the least air fares in the same month. None of these states recorded changes in the air fares from the previous month. Similarly, for water transport mode, the average fare paid by a passenger for a specified journey increased by 0.88 per cent MoM and by 12.26 per cent YoY to N611.92 in May 2020 from N606.59 in April 2020. In comparison to the previous month, the highest waterway fare was recorded in Delta (N1,980.00,up by 0.25 per cent), Bayelsa (N1,920.00, up by 1.05 per cent) and Rivers (N1,840.00, up 2.22 per cent) while states with lowest fares by waterway transport mode were Borno (N134.00, up by 3.08 per cent), Gombe (N193.00, up by 1.58 per cent) and FCT Abuja (N247.00, up by 2.92 per cent). The prices of these fares whether by bus (within or between cities), motorcycles, aircraft or water vehicles were influenced by the price of fuel, and majorly by the COVID-19 measures that the transport sector adhered to.

BUSINESS DAY

Thursday 09 July 2020

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Lockdown heroes: Will they ever get a raise? The pandemic has created a sense of moral obligation towards key workers but high unemployment could limit their bargaining power Andrew EdgecliffeJohnson, Claire Bushey, Bethan Staton and Anna Gross

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ero pay”, it was dubbed. When coronavirus took hold in the US in March, Christian Zamarrón and his colleagues at an Amazon delivery centre in Chicago were given an extra $2 an hour — a reward for being thrust into the frontline of America’s pandemic response. In June, Amazon withdrew the extra pay — one of a number of companies to do so. A few weeks before, Mr Zamarrón says, the company handed out free T-shirts. One was emblazoned with a single word: “Hero”. Mr Zamarrón was one of the leaders of a series of protests over claims that Amazon was doing too little to protect its workers — part of a burst in labour activism during the coronavirus crisis. The New Social Contract Coronavirus has exposed the frailties of our economic and social model. In a series of articles this week, the FT explores the problems and difficult solutions we will confront after the pandemic. Who will pay the bill? Taxing multinationals Wednesday, July 8 Generation is the new class — the crisis for millennials Thursday, July 9 How business became addicted to debt Friday, July 10 At the time, he was not complaining about his $15.50-per-hour basic pay.

But that attitude has changed — even if Amazon last week offered a one-time bonus payment for everyone it employed in June. The new T-shirt “feels like a mockery”, Mr Zamarrón says. “Institute some actual protections. Pay us some actual money.” In the US, they are called “essential” staff, in the UK “key workers” and in France travailleurs clés. The Germans have the most elaborate name for the new group: systemrelevante Arbeitskräfte or “system-relevant workers”. But the essential are not always treated as essential. The pandemic has upended the hierarchy of work, demonstrating that many of the people critical to the functioning of a modern economy are also among the least well paid — from the nurses treating Covid-19 patients to the warehouse and delivery workers who provide vital supplies. It is not just that real wages have stagnated in recent years for large numbers of these workers in advanced economies. Many also face the kind of precarious existence that results in part from the flexible labour market policies of the last four decades — lack of job security or control over hours, an inability to save and, especially in the US, little or no paid sick leave. Politicians have responded to the pandemic’s mood of shared sacrifice by insisting they will push for a different social model, one that seeks to address some of the class and racial inequalities that the crisis has exposed. In an inversion of one of Margaret Thatcher’s most memorable statements, the current UK prime minister Boris Johnson declared during his own battle with coronavirus that the crisis proved “there really is such a thing as

society”. Yet they face a sceptical audience. In the wake of the financial crisis just over a decade ago, there was a similar debate about how capitalism’s rough edges should be smoothed, but most peoples’ experience of the post-crisis years was of austerity rather than inclusion. That perception fed Brexit and Donald Trump’s election as US president. In the coronavirus era, the fate of the low-paid will be the defining political and economic issue, the litmus test for whether there really is a course correction. “The essential workers I know are saying ‘thank you very much for running those commercials thanking us; now please pay us a living wage’,” says Darren Walker, president of the Ford Foundation, the philanthropic group. “The fact that it took a pandemic to realise who were the essential workers in our economy is tragic,” he adds. “There are people in this country working 40 hours a week who still need food stamps or other forms of public assistance, which is shameful.” Although the pandemic has created a sense of moral obligation towards essential workers, higher wages are not inevitable. Despite growing signs of activism, high levels of unemployment could leave the low-paid with even less bargaining power. The pandemic is “a moment of reckoning” that will force businesses to rethink how they treat their people, says Mary Kay Henry, president of the Service Employees International Union, which represents about 2m nurses, fastfood employees and cleaners in the US. “The shock to our system has been so severe, and the choice is so stark, that working people and the movement

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There are people in this country working 40 hours a week who still need food stamps or other forms of public assistance, which is shameful

Taking the lead in the second half of 2020

common question I have asked all my coaching clients since the year began is: what do you desire in 2020? From all the responses, I can see the desire to live a fulfilled life in most of the respondents. Some people want to get fulfilment from their job and career, some want a happy home and relationship with their partners while others wish the company they work for and the country they live in is better than it was in 2020. No doubt, the year 2020 started with a virus bug, and it has been a difficult year for everyone and in every environment. Your desire to make the best out of the year 2020 is valid and can still be achieved if you don’t give up. realistically, it is better to achieve some percentage of your goals than using the coronavirus as an excuse to give up in the second half of the year. The second half of every game is crucial irrespective of what has happened in the first half. There records of teams that have turned their losing fortunes around in the second half. The Nigeria football team came from 3-1 to defeat the Brazilian team in Atlanta 1996 and went ahead to win the Olympic gold medals. The Damman Miracle was another example when the Nigeria U-20 team came from a 4-0 deficit to defeat the USSR team in the quarter-final in Saudi 89. I have always asked my clients and proteges to start the year with why. Why are you in 2020? What will you do to make you deserve what you have desired for the year? In most cases, life will give us what we deserved and not necessarily our desire. Desire is, however, the basis for the discipline to take action that will make you deserve your desire. Looking for fulfilment is as old as the journey of life itself. People change career, partner,

relationship, location and many more in finding fulfilment in life. Fulfilment is an inner desire supported by the sense of achievement or contentment for something. Fulfilment is key for you to consider this year one of the best years in all aspects of life. At old age, a memory devoid of fulfilment is an indicator of a life not lived to the fullest. Personal fulfilment is key to community, organisational and national fulfilment. A country with high per capita income (PCI) can be said to be more fulfilled in general terms than those whose PCI is among the least in the world. Individual fulfilment is so important that the World Happiness Report is now a source of policy ideas for some countries where the fulfilment of people is seen as a national productive asset. Nigeria ranked 91st out of 156 countries behind Libya, Algeria and Morocco in the 2015-2017 Ranking of Happiness. Now that we have a virus living with us, we must be determined to be happy, never to give up and work twice as we would have done ordinarily to make the year 2020 count. The focus is on individuals as nations do not necessarily give up. it is individuals that tend to give up surrendering to the situation or circumstances. Our circumstances are not as powerful as our resolve not to give up in life. The individual must be happy before the family, society and the country can be ranked as happy. Individuals who want to be happy in 2010 and beyond must take the lead. To take the lead as noted in my book is do things that fulfil you aside from things that only give you income. I have used the lead as an acronym for live, energise, activate and develop the fulfilment centre in people. The fulfilment centre is simply in activities that fulfil an individual and gives him a sense of satisfaction.

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The foundation of the activities that will make life meaningful to you is your talent. Talent is not a big mountain no one can climb. It is simply any activity you love to do repeatedly with a sense of satisfaction at the end of it. The situation we found ourselves where a virus has limited our movement is an opportunity for us to reflect and know life is short. There is no other time to do and live a fulfilled life than now. An employee that found his fondness for two out of six of his deliverable activities at work has found gold. All he needs is to do more of such activities voluntarily for the workplace or at any opportunity. If perhaps, the activities that fulfil you are outside your required job functions, the activities are latent talents to you and must you use them to avoid dissatisfaction. The best way to avoid turning your talents into toxic assets is to use them voluntarily. It is therefore in your best interest to volunteer your talents in the workplace whether you are being measured by them nor not. If you do this more in the second half of 2020, you will move to operate in your strength zone at work, enjoy your daily routines and merge your responsibility with your desire to be free and fulfilled. The research work of the Gallup group advanced the need for individual fulfilment and its relevance to organisations and nations. Marcus Buckingham and Donald Clifton identified four traces of talents in the book, Now Discover Your Strength. These indicators are spontaneous reaction, yearning, rapid learning and satisfaction. I explained how to use these four indicators to maximise your efforts this year in the book, Take the lead with a subtitle, how to live, energise, activate and develop your strength zone. I’m sure the coronavirus cannot stop you despite its many limitations.

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for black lives are going to stay in the streets,” she says. “We’re not going to settle for a few pennies.” Warehouse work If there is a surge in labour activism after the pandemic, public sector workers are likely to be at the forefront. But decisions on their wages will be a political choice. It is in the private sector where the post-crisis economic model will really be tested. This is nowhere more so than in warehousing, which in both the US and UK has become the new manufacturing. Driven by ecommerce and the consumer economy, it has become an industry that employs many of the school leavers who 50 years ago might have taken jobs at Caterpillar or Ford factories. While US manufacturing employment shrank 26 per cent to 12.7m people over the two decades to 2019, warehousing employment grew 141 per cent to 1.2m, according to the Bureau of Labor Statistics. Some of that growth has been fuelled by the use of low-paid, non-union staff with little job security. Amazon instituted a $15 minimum hourly wage across the US in 2018 — double the $7.25 federal minimum. But warehouse workers make less in real terms than their factory predecessors: in 2018, the average transportation and warehousing employee in Will County, a former manufacturing hub in the Chicago suburbs, earned $43,000, according to the US Bureau of Labor Statistics. That matches the average annual wage for a manufacturing employee — in 1998. Agency staff, who make up a significant percentage of the warehouse workforce, earn just $28,000 a year on average.

Positive Growth with Babs Babs OlugbemI If the collective fulfilment of individuals makes great organisations and countries, there must be roles for business entities and sovereign nations in increasing people’s happiness and increasing the real wealth of societies. Business organisations have people as their major assets for achieving the stakeholders’ objectives. Organisations are therefore encouraged to develop a culture where people are engaged in activities that play into their strength zones. If employees do what is within their strength zones, unnecessary costs of attrition, recruitment, illness and customer service failure will be avoided. It is obvious you cannot play every employee in their strength zone, otherwise, the majority will not be in sales or some of the difficult areas in an organisation. In as much as this is true, a forward-looking organisation will create a culture and an environment where the use of latent talents will be encouraged and rewarded as long as there is no conflict of interest with the stakeholders’ objectives. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng 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.

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Thursday 09 July 2020

BUSINESS DAY

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Coro politics: Is Cross-River understudying Kogi? … My Interstate opening up experience

ik MUO

he economics and politics of coronavirus may even be more problematic than the epidemiology of the disease-unknown. When you read this and that from here and there the probability of forgetting some sources increases. For now, just ignore the source and take in the truth of this statement. Now, back to business. From my observatory, the Cross Rivers State Commissioner for Health and Chairperson of the Coro taskforce, Dr Betta Edu is a very beautiful and cheerful young lady (I hope I have not breached any protocol). However, whenever she speaks about Coro and the NCDC, she turns into something else. She frowns, becomes agitated, verbally combustive and acts as if she would throw punches. Just like her counterpart in Kogi State. The first time I ‘encountered’ her was around 30/4/20 when she bold-facedly claimed that Cross-Rivarians were being offered millions of Naira just for them to claim that they had Coro and that it was via text-messages! Millions? Just to pretend to be Coro-positive? For what now? What would the offeror gain by such a gambit? Anyway, I actually wanted to confirm the story so that I would grab the offer with both hands but that is by the way. That was around the time some NCDC staff were about to visit CRS for sample collection and she gave them a very wonderful welcome package: The state would quarantine the staff for 14 days, before they would do their duties! She stated the state was more interested in the prevention of the virus than its management and that “It is not compulsory that all states will be affected.” She also promised that the state would do everything to ensure that it was Coro-free and appealed to the Federal Government to assist it with funds and test kits, stating that the 50kits supplied to NCDC were not enough to serve a population of 4.5million Since then the war-cry from CRS has been represented mostly by the commissioner for health, occasionally by her information counterpart and her principal has been ‘CRS is Corofree’. I don’t know whether there is a

prize for this. The Nigerian Medical Association believed that there were coro-related deaths in the state as evidenced by increasing cases of flu-like symptoms, respiratory challenges and loss of smell/taste in some hospitals in the state. They called on the FG to intervene, especially given the gross under-testing in CRS, which had recorded 9 samples as at that time. Of course, if you don’t seek, you cannot find (Mt,7.7). They also claimed that their stand is supported by reports from epidemiology units and condemned the delayed and post-mortem sample collection.( Guardian, 15/5/20) But the combat-ready Dr Edu said the doctors, her colleagues, including her seniors based their stand on mere rumour, because the statistics did not support their assertions, The Association of Medical Laboratory Scientist of Nigeria, CRS branch also declared that there were possibilities of coro in CRS, calling for more tests and condemned the disturbing practice of transporting coro-samples by public transport from collection points to the collation centres( Vanguard, 13/5/20) The Efik Leadership Foundation also weighed in, vide a letter dated 30/4/20) asserting that “There is enough anecdotal evidence to support the belief that cases of the COVID-19 disease exist in the State, accusing the government of failing in its duty and that the people have been left to the antics of their ‘maverick governor’. The government however threw in a letter-bomb, referring to them as “disgruntled and disoriented elements”, who would even import the virus into the state to score a political point rather than hailing the governor’s enviable efforts. Meanwhile, the State Chairman of the Nigeria Medical Association, Ayuk Agam warned that if the NCDC failed to enlist the University of Calabar Teaching Hospital as a Covid-19 testing centre, its members will commence an indefinite state-wide strike from Thursday, July 2. In an interview with AIT on 27/6/20, he expressed serious doubts about the sample collection and testing practices in CRS, that all the samples turned out negative under suspicious circumstances and that they would be more comfortable dealing with the federal establishments The governor eventually came on board, saying as a professor of science, that coro cannot survive in the ‘hell-fire temperature of Nigeria’, that the FG is desperate to test people and thereby boosting the businesses of coro-related firms. He called the entire thing a full-blown business and finally declared “I think I cannot comply with it. I must lead from the front because I’m exposed and smart,”

Exposed and Smart? Really? Well the professor has spoken. Sure, Coro has a serious business dimension. But not long after that, the University of Calabar Teaching Hospital announced that a patient had tested positive and thus registered CRS in the coro medal table. The State restated its coro-free status, and through Dr Edu and her talk-talk counterpart, accused Federal authorities of shipping positive and negative test kits and cartridges to the Nigeria Navy Reference Hospital in Calabar, to violate the state’s COVID-19 free status, asking the hospital to refuse to be used to transport the virus to the state. Of course, the NCDC flatly denied an outlandish allegation. This was happening as a lawmaker in the state legislature died of coro-related symptoms. The governor, while restating the CRS Coro-free status, warned that if anything unusual happened, it should be blamed on the opening up of boarders but then thanked the Federal Ministry of Health and NCDC for being a great example, playing a professional and technical role and given a world-class response to the COVID-19 pandemic in Nigeria. Professional? World-Class? When the state has accused them of professional misconduct and criminal manipulation of records? He then commended the efforts of the COVID taskforce with a donation of N30m. As I write, CRS Nigerian Medical Association is on strike against the coro policies and practices of the State and the NCDC failure to accredit UCTH as a testing centre. The NCDC has dispatched a team to CRS. Will the team be quarantined or have they started work? CRS recorded 5 fresh cases as at 6/7/20 So, as I asked in the case of Kogi, what is all this about? Who is fighting who and for what? Is there something that we do not know? Will the truth ever come out? How can a state accuse the federal government of destructive subterfuge without any proof and we go on as if all is well? Earlier on, I wrote “The other side of Governor Ayade”, (28/5/20). Today I have interrogated another side of himself and the government he heads,

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The economics and politics of coronavirus may even be more problematic than the epidemiology of the diseaseunknown. When you read this and that from here and there the probability of forgetting some sources increases. For now, just ignore the source and take in the truth of this statement

Other matters: My interstate opening-up experience My last visit to Igbo-Ukwu was for the general meeting and inauguration of a new executive on 22/2/20. And the last time I drove on the highway was on 17/3/20, on the Ijebu-Ode-Lagos route. For a village-man who goes home as often as my HOD would allow and a visiting husband who shuttles LagosAgo-Iwoye-Ijebuode weekly, it was really unusual for my body and soul and even for my vehicle to be lockedin for almost 4 months, during which period I only went out to buy fuel for my

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Why MTN should consider siting an ICT Lab in Ubulu-Uku

bulu-Uku is situated in Aniocha South Local Council Area of Delta State. The community, considering certain factors such as geographical location, population figure and economic potentials, deserved special status among prominent communities in the state and Nigeria at large. It is however not debatable that Ubulu-Uku is far from being considered a thriving community. The community clearly lacked meaningful modern life-changing amenities. The natives last got potable water, through governmentowned water supply facilities, in the late 80s. It also stands that inhabitants and visitors to the community, intending to gain access to

modern commercial services like banking and large e-documents delivery have no other option than to travel to very far developing areas like Asaba, the state capital. The community, previously, hosts four public secondary schools. Two of the schools, however, were recently returned to their original missionary-owners. Regrettably, none of the schools can boast of having standard libraries or laboratories. In short, some youths of the community recently intervened by purchasing and distributing few recommended Mathematics and English textbooks to the secondary schools. Interestingly, MTN Nigeria, premium telecommunications services provider, has been

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intervening and making appreciable impacts in some communities, across the country. It is clearly demonstrating this through its “What Can We Do Together” initiative. In fact, available records showed that so far, it has, through the scheme executed over 500 projects in more than 400 communities across the country. It is needful that MTN Nigeria should also consider Ubulu-Uku for its give-back initiative, by citing an ICT lab at any of the public secondary schools therein. The project will not just greatly help the benefitting school, it will afford other students and most literate residents of the community the privilege of understanding, appreciating and exploiting the valuable opportunities in the Information

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generator. So, when the all-powerful PTF opened up the interstate space on 1/7/20, I did the expected. Just like a caged bird suddenly let loose. I hit the road. I had missed home and the usual home matters and I never believed that I would be off Igbo-Ukwu for more almost 5 months. On that day (1/7/20), I decided to warm up my vehicle, revalidate my driving skills and confirm that I still knew the way to my school. I also wanted to ensure that my “house of exile” and neighbours at Ijebu-Ode were still there. Even though I left my Lagos abode long before 6am, it took me four hours to get to Ago-Iwoye, an indication that not much had changed. Since schools were still closed and ASUU was and is on strike, there was nothing to do, apart from disturbing the rats which had turned themselves into the landlords. At Ijebuo-Ode, my neighbours, especially the children were ecstatic to see me but it was from a distance. I attended Mass at the Cathedral, the first live-mass in the previous 3 months+. It was a thing of joy to see the priest and the parishioners and participate in a live Mass. Face-masks were scarce from the faces at Ijebu-Ode. Surprisingly, the most compliant people were okadariders, who were using face masks before-before. The following morning, to avoid the previous day’s experience, I left very early and got to Lagos around 7. On 3/7/20, I engaged an ad-hoc driver and hit the highway (though there are some low-ways on the route) to Igbo-Ukwu. I noticed that the commercial vehicles did not obey the appropriate protocol as they carried on as before. Even the small Toyota-Picnic (very regular along Ijebu-Ode-Benin route), still carried driver+2 in front! The usual toll-gates (police, customs, FRSC) were operational but it appeared they had mellowed down a bit. Probably they still had enough from their loot during the interstate lockdown. We got to Asaba around 2pm where I discharged my emergency driver and drove home myself. There were celebrations and impromptu thanksgiving prayers by my people at home, but again, from a distance. I have satisfied my curiosity. I had stepped feet into my compound and my house was still there, my neighbours, relations and in-laws were still there, the market, the churches and schools were still there. It was good to be home again! That was the first reason for my trip

Sunday Odiaka

and Communications Technology, ICT sector. It is equally possible that the project will position MTN as the first corporate organisation to site an outstanding project in the community. Odiaka is a result-driven media content analyst, helping forward-thinking individuals and organisations maximise potentials and increase return on investments. He can be reached through: shorikwueodiaka@gmail.com

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Thursday 09 July 2020

BUSINESS DAY

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Politics matter: Why private sector leaders must take active interest in politics

CHRISTOPHER AKOR

ust like Francis Fukuyama’s premature victory lap over the triumph of western liberal democracy and neoliberalism in his book The End of History and the Last Man, Nigeria’s private sector leaders in 2014 also assumed prematurely that Nigeria’s liberalisation reforms and march towards a private sector led economy had taken firm roots and was irreversible. The privatisation and liberalisation reforms of the Obasanjo administration had positioned the private sector to be the main driver of the economy. After a brief interregnum of the Yar’Adua years, the private sector roared back to live, dictating the tune of the economy and things were looking rosy for the country: the economy grew at a healthy seven percent on average, private and foreign investment poured into the country, the oil and gas share of the GDP declined from a high of 48.9 percent in 1999 to a mere 6.4 percent in 2015, and the reforms gave rise to a burgeoning middle class that is critical and necessary for the sustenance of a market economy and democracy. What was more, even the government itself realised that it did not have the resources to close the huge infrastructure gap in the country and bring it up to the international benchmark for infrastructure stock and required huge foreign investment/private sector participation. This much was affirmed in the Buhari administration’s Economic Recovery and Growth Plan (ERGP),

which prescribed spending $3 trillion over the next 30 years, most of which was to come from the private sector. However, Buhari’s real aim was to reverse the trend and restore the supremacy of the state in economic affairs. Mr Buhari has never hidden his dislike for the private sector despite the marvellous job done by his campaign handlers to hide that fact during the campaigns and his selling a dummy to the politically naive private sector leaders and even the international community at the Chatham House. With hindsight, it appears he came to power with a vengeance to reverse what he may have likely considered as the mortgaging of Nigeria’s patrimony to private and selfish individuals by the previous administration. Since 2003 when he began his quest for public office, he has always voiced his opposition to the surrendering of the “commanding heights of the economy” to the private sector and specifically, the privatisation of the largely inefficient and wasteful State Owned Enterprises that became established conduits for the siphoning of public revenues. This can be seen in how the president talks about the privatised SOEs in nostalgic tones and never fails to excoriate past administrations for mortgaging Nigeria’s common patrimony to private and selfish individuals. Not long after, in 2016, when constituting the country’s economic management team, he said matter-of-factly that he was averse to the inclusion of members of the private sector in his administration’s economic management team because such persons frequently steer government policy to suit their own narrow interests. And he’s done everything since then to claw back control of the economy from the private sector. This much was confirmed by a former member of the Central Bank’s Monetary Policy Committee (MPC) and now the Chair

of Buhari’s Economic Advisory Council (EAC), Doyin Salami. Blowing the whistle at the meeting of the MPC of the CBN in July 2017, Mr Salami expressed “concern over the increasing fiscal deficit ... and crowding out effect of high government borrowing”. In plain language, the terribly complaint CBN has been illegally printing money to fund the government. However, according to Salami, the “massive injections of cash” to the government doesn’t reflect in higher inflation and currency weakness at the time because the CBN through “special auctions” raised the cash reserve requirements for banks beyond the stipulated 22.5 percent thus skilfully crowding out the private sector. “We thus find ourselves at a point where government borrowing from the CBN is neutralised by raising the CRR of banks, thereby limiting private-sector access to credit”, said Salami who later lamented that “Monetary policy management is presently about funding the federal government.” Sadly, the crowding out effect has continued unabated. Although the official CRR ratio in Nigeria is now 27.5 percent, the actual CRR rate is between 58 to 60 percent. The CBN currently holds as much as N10.3 trillion in CRR out of a total naira deposits N17 trillion. Coincidentally, the N10.3 trillion the CBN is illegally holding is also about the size of the federal government’s budget. But that is not all. Aside from having the world’s highest CRR, the CBN equally directs banks to maintain a loan to deposit ratio of 65 percent. In simple language, it means for every N100 held in interest-free deposit with the CBN, the banks must lend N65. Coupled with a regulatory requirement for the banks to maintain a 30 percent liquidity ratio, BusinessDay’s Lolade Akinmurele described the rule as “mathematically impossible”. Yet banks are being punished constantly

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Any wonder then that the economy has tanked, foreign and local investments have dried up, borrowings have skyrocketed (total debt stock as at December 2019 stood at N27. 4 trillion), unemployment and inflation are on rampage and Nigeria continues to languish at the bottom of the world poverty index

Revisiting the legality of executive order No. 10 of 2020

n Monday, 25th May 2020, the President of the Federal Republic of Nigeria, President Mohammed Buhari signed the Executive Order No. 10 (EO 10) of 2020 to grant financial autonomy to the Judiciary and Houses of Assembly at the State level. EO 10 is a move to further entrench the principles of accountability, transparency and good governance and a further step towards actualising the growing clamour for re-structuring the federation. EO 10 has its roots in the Constitution of the Federal Republic of Nigeria, 1999 (Fourth Alteration, No. 4) Act, 2017. (“The 4th Amendment”, “The Act”), The Act formed part of the Fourth Amendment to the Constitution and was passed in the twilight of the 5th Assembly after undergoing an elaborate amendment process and approval by over two-third majority of the State Houses of Assembly. A review of the provisions of Section 121(3) of the Constitution prior to the amendment indicates that, unlike the provision of Section 81 of the 1999 Constitution which gave financial autonomy to the National Assembly and Judiciary at the Federal Level, Section 121 (3) did not fully cascade this autonomy to the State level. In an attempt to correct this anomaly, the 4th Amendment to the Constitution amended Section 121(3) as follow – “Any amount standing to the credit of the (a) House of Assembly of a State; and (b) Judiciary, in the Consolidated Revenue Fund of the State shall be paid directly to the said bodies directly; in the case of the Judiciary, such amount shall be paid directly to the heads of courts concerned”. However, despite the enactment of the 4th

Amendment in 2017, State Governors continued to be wholly in control of the finances of the States and the allocation of funds to the other arms of government and simply ignored the provisions of the Act, which itself did not provide the framework for the implementation of the Act. The lack of an implementation modality and the continuing neglect of the provisions of the 4th Amendment by State Executives, necessitated the need for a directive that would give backing to the 4th Amendment whilst providing clear modalities for its implementation. EO 10 was issued to provide a framework for the implementation of the 4th Amendment and further entrench sound democratic principles in governance at the State level. To ensure compliance with the Act, EO 10, amongst other provisions, empowers the Accountant-General of the Federation to authorise the deduction from source from the money allocated to any State of the Federation that fails to release allocation meant for the State Legislature and State Judiciary in line with the financial autonomy guaranteed by Section 121 (3) of the Constitution. Several commentaries have been raised on the legality or otherwise of the EO 10. Commendable as some of these arguments may be, it is important to look beyond the emotional side of the law to examine the intent of the Order. Section 5(1) of the Constitution vests executive powers on the President and authorizes him to exercise the same directly or through the Vice-President and Ministers. The Section also provides that the exercise of this executive power shall extend to all laws made by the Na-

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tional Assembly and to all matters with respect to which the National Assembly has, for the time being, power to make laws. Whosever is in search of the source of the President’s power to issue EO 10 should refer to this Section of the constitution. As earlier noted, EO 10 was made pursuant to “The Constitution of the Federal Republic of Nigeria, 1999 (Fourth Alteration, No. 4) Act, 2017” which is an Act of the National Assembly. The key consideration is that to be valid and effective, Executive Orders must be anchored on an enabling Law or Act. The extant order satisfies this critical requirement. Indeed Section 4 of the Constitution confers legislative powers on the National Assembly and gives it the power to make laws for the peace, order and good government of the Federation or any part thereof with respect to any matter included in the Exclusive and Concurrent Lists set out in the Second Schedule to the Constitution and to any other matter with respect to which it is empowered to make laws in accordance with the provisions of the Constitution. The National Assembly lawfully exercised this power when it amended the provisions of Section 121(3) of the Constitution and provided for direct allocation to the State Houses of Assembly and to the heads of Judiciary. It was on the strength of the exercise of this power by the National Assembly that the President issued the EO 10. Laws do not typically provide implementation modalities. Accordingly, guidelines that provide more clarity on implementation and interpretation are required. In this regard, Section 315(2) & (4) of the Constitution allows modifications in the texts of existing laws.

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for failure to meet those rules that no longer add up. Any wonder then that the economy has tanked, foreign and local investments have dried up, borrowings have skyrocketed (total debt stock as at December 2019 stood at N27. 4 trillion), unemployment and inflation are on rampage and Nigeria continues to languish at the bottom of the world poverty index. Yet, despite these, the appetite for killing off businesses has not waned. The government has made more than four attempts since coming to power to reintroduce the thoroughly discredited Decree No 4 of 1984 that prohibited journalists from reporting anything that could embarrass the regime, even if it were true. When those efforts weren’t successful, the government is now attempting to achieve the same purpose through an innocuous amendment of the existing broadcasting code whose whole purpose, as aptly described by David Hundeyin is to “destroy Nigeria’s free press and slow its market-led economic growth”. This was about the same mistake Nigeria’s civil society and pro-democracy advocates made in 1999. Bloodied by the brutal fight against military dictatorship but garnering huge social capital at the time, these heroes largely refrained from participating in the transition to democratic rule in 1999 on the mistaken belief that the military was insincere. Sadly, as they have now discovered, Nigeria’s political space has been taken over by convicted criminals such as Ibori and self-described jobless people like Rotimi Amaechi, and it is proving difficult, if not outrightly impossible to dislodge them. Sadly, as they are now discovering, Nigeria’s liberalisation reforms are not irreversible and unless there is a concerted effort to rescue the country from these advocates of a dead ideology, Nigeria will continue travelling down an escalator that is going up.

Chinedu Ozor

Section 315(2) gives the appropriate authority (the Executive in this instance) the power to, at any time, by order make such modifications in the text of any existing law as the appropriate authority considers necessary or expedient to bring that law into conformity with the provisions of the Constitution. Herein lies the expediency of Executive Orders in governance. It is perhaps useful to add that EO 10 would have been totally unnecessary if the State Governments had complied with the provisions of Section 121 (3) of the Constitution as amended by making sure that allocations due to the State Legislature and Judiciary were charged to the Consolidated Revenue Fund of the State as a First Line Charge and remitted to them in line with budgetary provisions. In conclusion, whilst Executive Orders should not take the place of legislation or be wantonly used to usurp the powers of parliament, they can be deployed as an important tool for social engineering and re-direction. The enactment of Executive Order 10 is not only within the constitutional powers of the President but is also a welcome development and would serve to breach the highhandedness of State Executives who deny the other tiers of government appropriate funding that will empower them to deliver the elusive “dividend of democracy” and grant the judiciary the much needed autonomy and independence. Ozor is a Partner at DCSL Law. Kindly forward comments and reactions to cozor@dcsl.com.ng.

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Thursday 09 July 2020

Editorial Frank Aigbogun

Replicating successes in telecom, others in key sectors

editor Patrick Atuanya

…FG needs to change philosophy, imbibe propelling principles

Publisher/Editor-in-chief

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule 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 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 HEAD, HUMAN RESOURCES Adeola Obisesan

mong successful and celebrated economies of the world, a number of factors are noticeable in the success stories of these economies in terms of economic size and growth, purchasing power parity and human development index (HDI) among other critical measures. These factors revolve around a clear economic philosophy, political will to act, competent leadership, acknowledging the role of the private sector and smart regulation. Unfortunately, Nigeria seems to be starved of these foundational elements and it is amply reflected in miserable economic indicators such as sluggish GDP growth, high inflation rate, poor HDI, bleeding stock market performance, shallow capital market, investment-starved sectors, high unemployment rate and high poverty rate. However, the success stories of some Nigerian industries like telecommunications, pensions and cement show that all hopes are not lost for the country. The onus lies with the Nigerian authorities to replicate these successes in other

key sectors of the economy. The Nigeria telecommunication industry, for example, had a clear mandate and avoided half-hearted deregulations. Unlike the oil and power sectors where the government is both an operator and a regulator at the same time, the telecoms industry had the private sector as operators and the Nigerian Communications Commission (NCC) as the regulatory authority. No wonder the sector has attracted Foreign Direct Investments (FDI) like MTN, Airtel, etc. The sub-sector, after exiting recession in Q1 2018, has recorded remarkable growth in GDP since then. In 2019, for instance, the sub-sector grew at 11.41 percent, outperforming the information and communication sector growth of 11.08 percent and GDP growth of 2.27 percent. It is the same story for the Nigeria pension industry. The industry is currently the second largest in Africa with assets under management to the tune of N10.22 trillion as at December 31, 2019, showing an increase of 18.28 percent from N8.64 trillion at the end of December 2018. South Africa, however, leads the chart. Dave Uduanu, CEO, Sigma Pensions Limited, explained at BusinessDay’s digital dialogues last week

that the tailwinds of that landmark achievement for Nigeria were honesty of purpose and shielding from political influence and interference in critical decision makings. He added that regulators and rule setters should be the smartest people in the room because, essentially, they write the rules and superintend over them. The industry has now become a major source of domestic borrowing for the federal government. As at December 2019, for instance, the government had borrowed about 71 percent from the fund in the form of bonds and treasury bills. The cement industry isn’t left out in the success stories. Statistics show that Nigeria has the largest demand for cement in sub-Saharan Africa and about 95 percent of the inputs for cement production are sourced locally. Nigeria, at some point, imported cement but the story changed when industry players began to look inwards, utilising Nigeria’s gas, limestone, coal and other input materials for manufacturing cement. The sector has also attracted FDI like Lafarge playing actively in the industry. We are of the view that these successes can be replicated in other sectors of the economy. But that,

essentially, demands strong political will, good regulations, deregulations and a clear mandate from the government to the private sector. It is pertinent to note that, since the 2016 recession, most sectors of the economy have struggled to grow and very few have triggered the snail-paced GDP growth of barely 2 percent recorded so far. Without equivocation, we believe that the COVID-19 pandemic provides Nigeria a chance to reimagine and reawaken its strategies for growth. The country is starved of good policies. The economy is still largely government-driven despite its negligible contribution to GDP. Regulations that stifle sectoral operation and performance are still prevalent. We advise that the federal government must change its philosophy, look inwards and imbibe principles that will propel the country comprehensively and progressively, else the national economy will keep playing catch-up to global development. For us, the importance of a competent leader cannot be overemphasized, hence, we call for a more credible democratic process. We support the view that leaders must be selected based on their competencies. Anything otherwise is balderdash.

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Thursday 09 July 2020

BUSINESS DAY

COMPANIES&MARKETS

GBfoods boosts Nigeria’s economy with N20bn tomato processing factory DANIEL OBI

Bfoods, a global player in culinary product manufacturing, in partnership with the Central Bank of Nigeria (CBN), Kebbi State Government and the Emirate of Yauri has built a N20 billion Tomato processing factory, in Kebbi State. The factory regarded as the second largest in Nigeria and the only fully backward integrated plant in ECOWAS has the largest single tomatoes farm in Nigeria. It has employed many Nigerians boosting the job creation in the country. The company said when all phases of the project are finished, the factory will be the largest fresh tomatoes processing factory in Sub-Saharan Africa. The investment, in the world-class factory and adjoining farm, according to the company includes drip irrigation and fertigation infrastructure, greenhouses, seed planting robots, an incubation chambers and a plethora of agricultural machinery. The farm will serve a dual purpose, it will produce industrial tomatoes in the dry season and soya beans in the raining season. The tomato factory will convert fresh tomatoes

into tomato concentrate used for producing Gino Tomatoes Paste and Gino Tomato Pepper Onion Paste while the soya bean will be used to process soya-bean oil which is a critical ingredient for GBfoods’ Bama and Jago Mayonnaise.

he Nigerian Content Development and Monitoring Board (NCDMB) on Friday signed equity investment agreements with two companies-Duport Midstream Company for the establishment of an Energy Park in Egbokor, Edo State and Eraskon Nigeria Limited, for a lubricating oils blending plant in Gbarain, Bayelsa State. The Board’s investments will catalyse industrialisation, with the two partnerships expected to generate about 1,500 direct, indirect, and induced employment opportunities, in addition to several other spin-off economic activities that will be developed where these projects are located. The planned Energy Park comprises a 2,500bpd modular refinery, 30MMscfd gas processing facility, which will include a CNG facility and 2MW power plant. Similarly, the lubricating oils blending plant will be the first of such plant in Bayelsa State and will have the capacity to produce 45,000liters per day and enhance the availability of engine oils, transmission fluids, grease and other products. The Executive Secretary NCDMB, Simbi Wabote signed

ricultural practices, GBfoods provided them with tomatoes seedlings, agrochemicals and various equipment such as water pumps and hose pipes, enabling the farmers’ access to water in the dry season. GBfoods also supported the host

communities by providing and maintaining 16 boreholes of drinking water, a first for some of the surrounding villages. The factory is engaging over 5,000 small holder farmers as out-growers, in the coming tomatoes season, to grow fresh

L-R: Kelly Danjuma Usman, Banker and Financial Analyst, Prof Jimoh Habibat Isah, Federal Commissioner representing Kogi State, National Population Commission, Mrs Catherine Obalola, Office of Secretary to the State Government, Lokoja, Lawal Itopa Lamidi, The Author , CMS Solutions Management Technique Book, at a public lecture, titled “ State of the Nation: The need for CMS Solutions held at NUJ Conference Hall, Lokoja, Kogi State.

NCDMB signs investment agreements with DUPORT Midstream, ERASKON on Energy Park, Oil blending plant OLUSOLA BELLO

The project created over a 1,000 jobs including: 500 farming jobs, 150 factory jobs and 150 construction jobs. GBfoods also engaged many small holder farmers as outgrowers. Apart from training the out-growers on good ag-

the Shareholders Agreements and Share Subscription Agreements at the Board’s liaison office in Abuja while Akintoye Akindele, Managing Director of Duport Midstream Company and Maxwell Oko, managing director of Erakson Nigeria Ltd equally signed for their firms respectively. In his remarks, the Executive Secretary explained that the investments were part of the approvals granted recently by the Board’s Governing Council chaired by the Minister of State for Petroleum Resources, Timipre Sylva. He clarified that the investments were coming under the Board’s commercial ventures program and was in sync with the Board’s vision to serve as a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors. Wabote indicated that the Duport partnership is in furtherance of the Board’s strategy to enhance in-country value addition by supporting the establishment of processing facilities close to marginal or stranded hydrocarbon fields. He stressed that the recent drastic drop in the prices of oil had made it imperative to have refining capacities to reduce if not eliminate cases of stranded oil cargoes without buyers.

tomatoes. The CEO of GBfoods Africa, Vicenç Bosch, commended the Federal Government for encouraging and supporting GBfoods to engage with CBN, Ministries, Departments and Agencies to ensure the successful completion of the factory. He also expressed his gratitude to the Federal Ministry of Industry Trade and Investments, Federal Ministry of Agriculture & Rural Development, Kebbi State Government and the Ngaski Local Government Authorities for their tremendous support towards the actualization of the project. Bosch added our team of extension workers, consultants and agronomists are ensuring that the Nigerian farmers benefit from the technology transfer of our best practices and knowhow built through over 40 years of successful tomato operations in Italy and Spain. Speaking during opening of the factory, according to a statement, Vincent Egbe, the Country Manager, GBfoods Nigeria said, “The opening of this processing factory is a great milestone for us. It further demonstrates the company’s commitment towards helping Nigeria achieve its food security ambitions.

Allianz Nigeria partners GIDN to provide insurance solutions MODESTUS ANAESORONYE

llianz Nigeria Insurance Plc. a local operating entity of global insurance giant, Allianz G ro u p h a s a n n o u n c e d its partnership with Get it Done Now Limited (GIDN), developers of the GIDN Platform. The aim of the GIDN platform is to connect customers with verified service providers while Allianz Nigeria provides insurance products to registered customers and service providers on this platform. “Through this strategic partnership, we contribute our own quota to a stable

and viable economy by providing bespoke insurance products to mitigate business risks of the registered service providers” said Walter Bossman, chief marketing and strategy officer at Allianz Nigeria. “We are indeed excited to partner with Allianz Nigeria. This partnership aligns with our goal of providing a safe and secure platfor m for users and providers to transact. We also believe that adding insurance services from Allianz to our platform is a great way to build trust among customers, while adding credibility to the small business owners” added Alberto Rodriguez,

co-founder of GIDN. “For us at Allianz Nigeria Insurance Plc, digital transformation has moved from being a vague and futuristic concept to an immediate term action. Our partners are empowered through a digital distribution channel which provides an easy way and wastes no time on platform integration” said Benjamin Ooye, group head, Technology at Allianz Nigeria. In view of the new normal imposed by COVID - 19 and the strategic vision of Allianz to secure the future of its stakeholders, this initiative also integrates Application Programming Interface of both compa-

nies. This allows customers, service providers and the general public regardless of location buy Insurance solutions with their mobile phones. GIDN is the developer of an easy to use mobile application that provides a platform for customers to search, find and book verified professional service providers. Allianz Nigeria Insurance plc is a composite Insurance company licensed to transact Life and Non-Life Insurance business in Nigeria, delivering a range of retail products such as Motor, Life, Home Insurance and corporate products to over 30,000 customers.

LXLF Limited adds designer eyewears to it’s online portfolios IFEOMA OKEKE

X LF Limited, an online fashion retail store that’s a subsidiary of I’s Age Limited has added designer eyewears to its online retail portfolios less than a month after celebrating one year anniversary. These brands include Gu-

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... introduces one week discount promo cci, Hugo boss, police, Tom Ford, Rayban among others. The online retail store will officailly launch the eye wears on Saturday 11th of July 2020 with a one week discount promo Okeisolobrugwe Clifford Ikpikpini, the Chairman and CEO of I’s Age Limited

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said the addition is in line with LxLf Limited’s goal to expand the categories and brand choices for their customers in a Nigerian online retail market filled with so many fakes and close replicas that has forced many Nigerians to look to outward online retailers for authentic @Businessdayng

brands. Ikpikpini assured LxLf’s customers that I’s Age Limited is working diligently to add more brands and categories on LxLf Limited by getting into more retail agreements with brands directly or their Nigerian accredited dealer.

Thursday 09 July 2020

BUSINESS DAY

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Thursday 09 July 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

NNPC boss’ tumultuous one year as chief presiding officer of oil, gas industry olusola Bello

he management team of the Nigerian National Petroleum Corporation headed by Mele Kyari was one year in office on the 8th of July, 2020. Their coming coincided with the time when the oil and gas industry was indeed in a very tumultuous period, as productions were stagnant and no major decisions were taken on explorations and production. No final investment decisions have been taken for so many years, yet, strategic projects crying for attention are scattered across the landscape. The NNPC was neck deep in what was regarded as under recovery in most of it business transactions. The books of NNPC subsidiaries were in negatives. Under this situation it was obvious that the industry needed a direction which must be led by a very pragmatic and focused person. However in the last one year a few positive changes are beginning to be seen in the industry under the leadership of Mele Kyari, according to some stakeholders. They tried to point out those positive developments that are now given observers some ray of hope. They pointed out that the corporation subsidiaries are now making profits, final investment decision (FID) for Nigeria Liquefied Natural Gas Limited train 7 has been taken. He also has been able to stabilize the industry in the face of COVID19 pandemic. According to Okorafor Bank – Anthony, the im-

mediate past chairman of Petroleum Technology Association of Nigeria (PETAN), he said: “He came at a time when the industry was in a turmoil, but he has been able to enable FID for Nigeria LNG Train 7 to happen, commission the take off of the Ajaokuta, Kaduna and Kano gas pipeline, just as he is pushing vigorously to ensure that the Bonga South West project takes off.” He said he has done well but can still do better, stating however that these are not the best of times for the industry and the country as a whole. Another industry operator that does want his named mentioned, said he has done extremely well by continuing with what his processor started. They did well as the subsidiaries of NNPC are now making profits, he said. “Unlike the other group managing directors before him, he warned the government about the consequences of not been proactive against COVID19 and got the authority’s attention”. According to him, there is tough time ahead as the price of crude oil is still far from been comfortable and advised the NNPC boss to fasten his belt to meet the challenges ahead. Tunji Oyebanji, chairman, Major Oil Marketers Association of Nigeria (MOMAN) and managing director of 11plc in his assessment of his one year, said: “I think he has a genuine interest in listening to stakeholders in order to move the industry forward. He also has brought an unparalleled level of transparency to bear on the affairs of NNPC. He has ensured industrial harmony

Mele Kyari

and peace. The major area needing attention is dealing one way or the other with our moribound refineries” Diran Fawibe, chairman and chief executive officer of International Energy Services Limited and Doris joint venture observed that the man has been able to insulate the NNPC from politics unlike previous administrations of the organisation. He said he has brought quality into the top management of NNPC and he is generally known as very transparent and someone with high integrity. “He is a clear departure from the past administrations of NNPC and if he continues like this by the end of his tenure Nigerians are likely to see a different NNPC” A typical example of this, is the statement of account of the corporation which for the first in 43 years was made public recently, he said. Taking a cursory look

at what has happened in the industry in the last one year, one would not doubt the fact that there areas where Mele Kyari and his team deserve to be given credits and in other areas they need to push hard so that the economy can be better for it. One of the most profound actions the NNPC boss took when he assumed office was to put an end to under recovery in the corporation business transactions. The country was losing a humongous amount of money through Direct Purchase and Direct Supply arrangement embarked upon by the NNPC to bring in fuel supply to the country. He tried to sanitise the supply of PMS in the country with the introduction in the downstream,‘Operation White’, an initiative designed to make petroleum products imports, supply and distribution more effective and

accountable. As a collaborative project, ‘Operation White’ has something for everyone - government, marketers and the ordinary Nigerian. It guarantees access to affordable petroleum products in line with the intended target of the regulated supply system. It also enhances energy security through containment of unwholesome PMS distribution in-country and improves transparency and accountability in the nation’s downstream Sector. The NNPC boss aggressively took the necessary steps to ensure the realisation of the signing of the final investment decision (FID) of the Nigeria Liquefied Natural Gas project by the stakeholders. By the time project comes on stream the production capacity of NLNG would jumped from 22 million metric tons a year to 30 million metric tons. The project is expected to generate over $20billion of revenue to government over the project’s lifecycle, 10,000 direct and 40,000 indirect jobs. Prior to the launch of NLNG Train 7 FID, NNPC had recorded a major feat with the recovery of over N80billion and US$45million debt from gas off takers, a feat which energized the sector. Also,the realisation of the recently flagged off Ajaokuta, Kaduna Kano gas pipeline project which he claimed has been dear to his heart and therefore has invested everything, time, money and other resources to make the project happen is seen as commendable. In the upstream sector of the oil and gas industry, within the short time he

became the group managing director of NNPC, he got NNPC crude oil daily production to reach as high 2.3barrels by building on the fortunes of the corporation’s upstream flagship company, the Nigerian Petroleum Development Company (NPDC). Immediately after inauguration as the NNPC boss, works started on the N875.75m NPDC OML 65, Alternative Funding and Technical Services package with CMES-OMS Petroleum Development Company. The upstream sector is a critical arm of the Industry value chain and perhaps, sets the pace of progress and functionality of the Sector. Activities in the upstream sectorhas been energised. The publication of NNPC Audited Financial Statements which was done recently was received with a lot of accolades across the globe. The NNPC under Kyari is anchoring its operations on the well-articulated TAPE agenda which translates to Transparency, Accountability and Performance Excellence. Under the TAPE blueprint, the Transparency branch of the tree is configured to maintain positive image, share values of integrity to all stakeholders and expansion. Essentially, the accountability portion seeks ensure strict compliance with business ethics, policies and regulations. Despite all these achievement obser vers believe that he should also pursue deregulation of the downstream sector with vigour by ensuring that all the necessary frameworks that will engender confidence in investors are in place.

PNG Gas achieves two million man-hours without loss time incident olusola Bello

NG Gas Limited, operators of Egbaoma Gas Processing Plant, said it has achieved two million man-hours without lost-time incident (LTI), spanning over six years of operations as at 12th June, 2020. The achievement was made possible through the joint efforts and hard work Olusola Bello, Team lead,

of the entire team, including its contractors and subcontractors. Bolaji Ogundare, Chairman, Board of Directors, PNG, said “the achievement is an indication that everyone at PNG Gas Limited has become a Leader in Safety. We work as a team daily to sustain the company’s mission to safely and efficiently process gas to the benefit of our stakeholders”. He added

Graphics: Joel Samson.

that the gas processing plant which is operating safely and over 90 percent indigenously manned, has significantly improved the carbon footprint of Egbaoma field and the eco system of the host communities at large. In his remark, Charles Osezua, Director/Promoter, PNG, attributed the achievement to the continuous improvement of the PNG’s systems and processes.

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He commended the efforts of the management and staff of PNG for their continuous focus on the zero LTI target, lessons learnt from implementation and, great care exercised in managing the environment and asset integrity. On his part, Gabriel Ilenreh, managing director, PNG, explained that the total 2 million manhour achieved include manhours for the engineering, procurement,

construction and installation. He said PNG was able to achieve this milestone through continuous proactive engagement of its employees, customers, suppliers, host communities, contractors and subcontractors. “Best practice governance and risk management practices being implemented at the PNG contributed significantly to the company’s excellent safety performance

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which he said has won the confidence of its shareholders and strategically positioned the business to replicate its success in other oil fields and assets”, Ilenreh stated. He added that PNG’s business model is structured to protect the environment while creating value for the nation by converting gas flare to wealth in line with Federal Government’s gas commercialization policy thrust.

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INTERVIEW

‘Nigeria’s microfinance policy, regulatory GODWIN EHIGIAMUSOE has just completed his tenure as the managing director of LAPO Microfinance Bank. Over thirty years ago, he took a very simple step of setting up Lift Above Poverty Organisation (LAPO), which has grown into a number of mutually reinforcing institutions serving low-income households. In this interview with HOPE MOSES-ASHIKE, he speaks on record success story of the bank and how he will be providing leadership for the LAPO Group, which consists of institutions in micro-insurance, micro leasing, health, agriculture and social empowerment.

ntil recently, you were the managing director of LAPO Microfinance Bank. Give you us your perspective on the current state of the microfinance sector in Nigeria? The microfinance sector has come a long way. Against the background of the practice at the launch of the Nigerian microfinance policy and regulatory framework, tremendous progress has been recorded. Why do you say so? Before the policy, microfinance was confined to the non-profit space. It was common then for people to ask in surprise, ‘what is microfinance.’ The penetration rate of microfinance in Nigeria was far behind most countries even in Africa. Today, the practice has experienced a quantum leap, which has put the Nigerian microfinance sector ahead of most nations. Let us talk about LAPO. Why and how did you begin? Lift Above Poverty Organisation (LAPO), as an idea and eventually as an action, was a response to the spike in spread and severity of poverty immediately after the adoption of the Structural Adjustment Programme (SAP) in 1986 by the then government of General Babangida. The central components of SAP were devaluation of the naira; gradual removal of subsidies; rationalisation of workforce in the public sector, and liberalisation of foreign trade. The cumulative effect of these social and economic interventions was the sudden rise in the level of poverty. There were some personal factors. Certainly, it was not the expected explanation of personal experience with poverty. No, our household in the immediate community I grew up was very comfortable. My father built his first-storey building in the village in the year I was born— that was when the number of storey buildings in Benin City was less than fifteen. The personal factor was my early ideological sensitisation on what meaningful development is. Meaningful development interventions are those which target people at the bottom of the society. The condition of living of large number of people at the bottom end of the society is a credible indicator of the level of development of that society. The founding of LAPO was the practical express this development fact.

How did LAPO start? LAPO was initiated as non-profit in Ogwashi-Uku, a town now in Delta State. When on a vacation job in 1980 with the then Bendel State Government, I was posted to the Cooperative Office in Benin City. The short period was enough for me to realise the potentials of the cooperative enterprise as a veritable tool for rural transformation. When I eventually graduated and sought employment with the state government, I opted for the cooperative department. After one-year study for a post-graduate diploma in cooperative studies, I was posted to Ogwashi-Uku to grow and supervise cooperative societies and unions in the then Aniocha Local Government Area. Very soon, I became disillusioned, mainly because of the over-officialisation of the cooperative movement. I will explain. Government officials right from our boss at the headquarters were deeply involved in the management of cooperatives with little initiative by the members who should be the owners. Approval for formation, inspection, audit exercises, and appropriation of surpluses by the cooperatives were either carried out or sanctioned by government officials. The provisions of cooperative laws and regulations in states across the country were not significantly different from the provisions of the Cooperative Ordinance of 1935, which the colonial masters designed to ‘manage the cooperatives for the natives.’ I doubt if this has changed now. Disillusioned, I reached for my idea and opted to adopt a non-governmental voluntary approach. What were the initial steps? I took N300 and gave N100 each to three women in my local Christian denomination, Christ’s Chosen Church of God, which my father introduced us to in 1962. The three women were a wife of an elderly member, a wife of a driver and a very industrious young girl who had just completed her secondary education. Every ‘Afor’ market day in the evening, I would go around to collect repayment of N10 each. There was one incident that remains fresh on my mind. I went to collect the repayment from a lady, one of the early borrowers who joined after the first three. As I knocked at the front door, she came out promptly as if she was expecting me. When I requested the repayment, she promptly denied ever taking money from me. I was so stunned, given that she made repayment few days before. I simply turned away and headed for the house of another borrower. The denying woman ran after me www.businessday.ng

and said as she caught up with me because her husband was in the sitting room and she did not want him to know that she had borrowed money. This incident and perhaps other factors made group approach very attractive and we opted for it. Many people tend to associate LAPO with the Grameen Bank of Bangladesh. Many call you the Professor Yunus of Nigeria. How did these come about? My contact with Dr Muhammad Yunus, as he was then known, was perhaps the greatest factor in the pace of development of LAPO. Around 1990, I read about Grameen Bank in Business Times, a very popular and only business newspaper then. It was so inspiring and close to what I was doing. I wrote a letter but had a problem with the address since the address of the bank was not in the Business Times feature. I decided to address the envelope ‘Dr Muhammad Yunus, Grameen Bank, Dhaka, Bangladesh.’ Some months later, I did not only get his reply with an impressive signature but with newspaper cuttings and studies on the Grameen Bank. I was so excited and I wrote to thank him. Dr Yunus published my letter in their newsletter called Grameen Dialogue. Fortuitously, a programme officer at the Lagos Office of The Ford Foundation subscribed to the newsletter. One day, I got a letter from Frank Hicks, the programme officer, who wanted to know more

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about the project, LAPO. He added that anytime I would be in Lagos I should stop by their office then at Church House, Marina. I did not wait for anytime to be in Lagos, I came to Lagos. Less than a year later, The Ford Foundation claimed the distinction of being the first agency to support LAPO. Back to Grameen Bank, in April 1991, Dr Yunus invited me to the International Grameen Dialogue along 27 participants from Europe, Asia, US and Africa. The 14-day session, including a field visit, was not only eye-opening but also very inspiring. I remember at a private meeting with Dr Yunus when I appealed for funding support. He looked at me intensely and said, Godwin, you will get funding but first, do everything to do it right.’ On the eve of my department, I turned on my bed at Mid-Town Hotel, Gushan, Dhaka, and said Lord, I will never go back. A year later in April 1992, I resigned from my formal employment. Since then I have enjoyed the confidence and support of Professor Muhammad Yunus who, in 2006, won the Nobel Peace Prize for his work with Grameen Bank and other poverty-focused initiatives. What do you consider as milestones in the LAPO journey? LAPO journey and microfinance journey, if you like, are essentially the same. LAPO was right at the beginning of what was later to be known as ‘microfinance revolution’ and we @Businessdayng

have lived and witnessed all three phases of development. These are the feasibility phase when we all struggled to prove if putting loans in the hands of poor women and expecting proper utilisation and repayment is possible, and the sustainability phase which was concerned with institutional sustainability of institutions which serve poor people. This was after the feasibility of poverty lending or microcredit as microfinance was called then has been demonstrated. The final and current phase is the full-bloom commercialisation of microfinance with private capital interventions and the accompanying profit-taking. That we went through all the phases and still survive speak volume of LAPO’s institutional resilience. There were several milestones. First is our decision to exit grant mode and reach for commercial loans to fund our loan portfolio. This was unheard off then for a non-profit to seek loans and not grants. We were determined, based on our reasoning, that if we desire to make impact on poverty, we needed to reach a very large of the poor. Grants cannot do that. Grants are adequate for implementation of pilot projects and obviously inadequate to implement growth plans. We were prepared for the challenges and requirements for accessing commercial loans. This singular bold step propelled LAPO to where we are today in Nigeria and indeed Africa. The second major step was our decision to go under regulation with the emergence of the Nigerian Microfinance Policy and Regulatory Framework. It was not attractive to microfinance NGOs then.

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framework among best in the world’ What were the enabling factors for LAPO and the challenges as well? First is my firm commitment to assisting the people at the bottom of the society to break out of the grip of poverty. This came out of my commitment to meaningful development, which is about the development of the ordinary people. Therefore, the founding of LAPO was deliberate. For instance, six operating assumptions were formulated very early to guide the services, the structures and targets of the organisation. By the way, what were these operating assumptions? Frist was that the poor are disadvantaged to meaningfully benefit from services provided by very formalised organizations and agencies. Second, the poor are not necessarily lazy. Of course, the poor women and their male counterparts work from dawn to dusk with very little to show for it because they operate from a very slim economic base. Third is that an improvement in the socio-economic situation of the poor would take place if financial services were added to support their physical labour and skills. We believe in the power of capital as an effective escalator out of poverty. Fourth, small groups have tremendous influence on cooperating individuals. Fifth, poverty is reinforced by problems such as too large family size, malnutrition, ignorance and disease and, sixth, poor women and children are relatively more neglected. These obviously are not original but simple statements of fact which define what we do, how we do it and whom do we do it for? LAPO, from the very beginning, prioritised informality in all we do; provide financial services in addition to health and social empowerment services; apply group methodology and focus more on women and children. What were the other enabling factors? Committed people. I have only been the face of LAPO, but there have been thousand of Nigerians who bought into the LAPO vision and are running with it. What is interesting about these young people is that they all came into LAPO fresh at least at the beginning. Many were retained members of the National Youth Service Corps. With determination and commitment, we created what is widely regarded as a great organisation. Also, very early we prioritized integrity and later consolidated it by sound corporate governance processes. In relationship with some of our partners, we lost some on the basis of unwavering commitment to integrity, but on the long-run, LAPO has gained enormously from its goodwill. Solid reputation of integrity has also helped us to attract enormous support. And, of course, my tendency to live in the future is another enabling factor. We have, in many instances, taken leaps to the future which many of our contemporaries would consider pure foolishness.

What do you consider as the accomplishments of LAPO, if you like, the impact? Accomplishments of LAPO can be best understood in three dimensions. First is our performance on our primary objective, which was to assist poor women break out of the grip of poverty with micro-credit as we would say then. We wanted to create access to institutional credit for the largely excluded poor women on a sustainable basis. On this, we have done well given that cumulatively, we have delivered over N1 trillion to operators at the lower end of the economy. Second is our impact on microfinance practice in Nigeria and Africa. LAPO has been at the forefront of the promotion of microfinance on the continent. I made a huge input into the formulation process of the Nigerian Microfinance Policy and Regulatory Framework. I remember I came in from Benin in 2004 and spent one week at the Lagos branch of the Central Bank of Nigeria to review the initial draft of the Microfinance Policy and Regulatory Framework. Someone said recently that LAPO at one point saved microfinance in Nigeria. I can understand her point. LAPO was one of the first set of vibrant microfinance NGOs. Unfortunately, for a combination of factors of which loan repayment delinquency was prime, these institutions were badly hit. We at LAPO made strong commitment to enforce credit discipline and we survived and, by extension, the first wave of microfinance practice survived. That was before the introduction of the microfinance bank policy and microfinance banks as we know them today. LAPO is the only institution from the first generation of microfinance banks that successfully made the transition and still at the forefront of the industry. Thirdly, job creation might not have been our initial prime objective, but now we have made huge impact on job creation. Many young men and women have passed through LAPO. Currently we have 10,245 full staff within the LAPO system with the LAPO Microfinance Bank accounting for 7,210 as at May 31, 2020. No doubt, there were challenges. How were you able to deal with them, especially the problem of loan default? As one of the early pathfinders in the industry, LAPO encountered obvious challenges at various stages of our development. At the very beginning at Ogwashi-Uku in Delta state, it was a challenge of acceptance. LAPO’s procedures and requirements were considered too good to be true. For instance, we talked about giving loans without collaterals or surety. We overcame that with extensive training and motivation sessions. Growing acceptance came with the problem of inadequate funds to meet www.businessday.ng

microfinance sector anywhere. Let us go personal; who are you? I am simply a person who decided very early in life to make firm commitment to the service of God and humanity. For the latter, I have been committed to creating access to life- transforming opportunities for members of low-income households. Note that LAPO is not just about loans. Lift Above Poverty Organization (LAPO) has vibrant institutions which serve low-income people with micro-insurance, micro-leasing and health services. We obtained license to deliver micro-insurance recently. For the former, I mean service to God, it is still a race.

increasing demand for loans. This we addressed with accessing commercial loans from local and international financial institutions for on-lending instead of dependence on grants. Of course, the challenge was inadequate trained staff. There were no microfinance institutions to poach experienced staff from then; we had to invest hugely in staff training. We set up a training institute which has growth into a well-resourced accredited institute. Loan repayment delinquency was a challenge, as many microfinance NGOs then were crumbling under the weight of loan default. We quickly turned the ‘mirror of blame’ at ourselves. That is, we looked seriously at ourselves. We needed to re-examine our operating processes and actions to detect where we, as a lending institution, was at fault. We discovered many areas to amend and we overcame the problem. What were some of the areas of institutional defects? Our loan officers were not wellequipped to engage potential borrowers as support agents as against just being credit officers. We were only interested in loan appraisal but our follow-up institutional structures and processes were inadequate and our approach to enforcing credit discipline was weak and ineffectual. We took some firm decisions and implemented them. In the process we saved LAPO and also the microfinance practice here. Let us come back to the microfinance sector in Nigeria. Why are rates charged by microfinance banks quite high? In the industry worldwide, it is said the microfinance is expensive because it is expensive to deliver micro loans. Here is an example; if a commercial bank is to deliver N10 billion as loans, perhaps it will be for only five borrowers and managed by one relationship manager. On the other hand, if LAPO is to deliver N10 billion, it will be for 100,000 borrowers and managed by over 3,000 loan officers. This means that there will be

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100,000 applications to appraise, 100,000 accounts to monitor, among others. These have implications for cost. Also, because of the low level of confidence in microfinance sector, microfinance banks are unable to mobilise adequate deposits from which they can make loans to borrowers. They have to borrow from local and international financial institutions with interest. An average Nigerian with free N50,000 will head to a commercial bank to deposit, but if in need of N100,000 loan, he or she turns to a microfinance bank. High cost of fund and extremely high cost of operations combine to make interest rates on micro-loans high. The only solution is the existence of a sustainable re-financing arrangement that can ensure reliable flow of cheap funds to microfinance banks to enable them deliver cheaper loans to our people. Various intervention funds are fantastic, but a regular institution, rather than ad hoc approach, will avail much. This is what obtains in nations where microfinance has sufficiently been designed to make the desired impact on the micro, small and medium enterprises. What are the prospects for microfinance in Nigeria? Are they bright? Very bright. Why? Here is a nation of not just with huge population, but also with men and men who are exceptionally enterprising. I have visited close to 40 countries, mostly developing nations. In most of them, you will need to motivate people to get into business and take loans. Not for Nigerians. Two, in spite of the obvious challenges in the operating environment, operators in the set have done so much to close the skills gap that was apparent in the past and, finally, the Nigerian Microfinance Policy and Regulatory Framework is one of the best enabling microfinance policy documents in the world. A combination of enterprising people, skilled operators and enabling policy is a good recipe for a vibrant @Businessdayng

Many honours and recognition must have come your way. True? Sure; several. Many of them are very dear to my heart. In 2006, we won the Grameen Foundation’s Award of Excellence in Microfinance which came with a cash prize of $10,000, which we applied as seed fund for the current LAPO Scholarship Fund. Over 5,000 children of our clients and those in difficult situations have benefited for secondary and tertiary education. Each award takes the beneficiary through all the years of study. The FATE Foundation, the enterprise support non-profit founded by Mr. Fola Adeola, selected me as Model Entrepreneur in 2008; Prof Schwab Foundation’s recognition as Outstanding Social Entrepreneur for Africa came in 2010. I was a joint-winner with Governor Peter Obi of the Distinguished Alumni Award of the Alumni Association of the Lagos Business School in 2014. In 2016, the University of Benin, Benin City, where I did my first and second degrees, honoured me with the honourary degree of Doctor of Science. Several Rotary Clubs have honoured LAPO. Above all, I cherish the amazing show of emotion and appreciation by our clients. At a client forum organised for our clients in South- South, a lady walked to me with others and said, ‘Sir, I vowed that the day I would meet the founder of LAPO, I would prostrate to thank you for all he has done for women in Akwa-Ibom’. Of course, I did not allow her. Another was a lady in Benin City who came to me at the close of a wedding reception. She put her mouth close to my ear and said ‘You picked us out of the pit’. As she recognised that I was wondering whether she was my distant relative I might have assisted, she added, ‘I am not your sister, I am a LAPO woman.’ Instantly, tears of joy flowed down my cheeks. How do you want to be remembered? Perhaps, as one who took simple steps to make huge impact on the lives of persons at the bottom end of the society.

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Election Manipulation: NBA faces biggest political crisis …as members accuse electoral committee of attempting to rig process …Prominent lawyers warn ECNBA against disenfranchisement of lawyers CHUBA AGBU

rominent lawyers have called on the Electoral Committee of the Nigerian Bar Association (ECNBA) to guard against the disenfranchisement of lawyers during the forthcoming elections of the Association. The letter, which was made available to BD Legal Business, was signed by Ade OkeayaInneh, SAN; Ayuli Jemide, ViceChairman, NBA Section on Business Law; Professor Chidi Anselm Odinkalu, Co-Convener, Open Bar Initiative and Barbara Omosun, Chairman, NBA Young Lawyers Forum (2014-2016). Their concerns revolve around the numerous technical and procedural issues that lawyers have encountered simply trying to vote for their preferred candidate. They cited an example of this being the fact that some lawyers have their names omitted from the voters list even when they have paid their Bar Practicing Fees amongst other issues; warning that these technical issues could lead to the disenfranchisement of thousands of voters. The letter implores on the chairman and the Electoral Committee of the Nigerian Bar Association (ECNBA) to take the issues raised very seriously to avoid a dent on the image of the ECNBA, the NBA, and all Nigerian lawyers. They thus advised the ECNBA to consider “requesting the NBA for a short postponement of elections to enable it to discharge its duties creditably.” BD LEGALBUSINESS recalls that the co-convener of the Open Bar Initiative, Professor Chidi Odinkalu, only last week wrote an article about how the NBA elections was on the way to being rigged. In this article, the former chair man of the National Human Rights Commission (NHRC) and prominent lawyer,

alluded to an infamous letter written by Chief Adegboyega Awomolo, SAN to a former President of the NBA, Chief T.J.O. Okpoko, SAN, stating that “it will be a great failure of leadership for the senior advocate to surrender leadership to outer Bar when there are willing and able senior advocates.

Chidi-Odinkalu

INSIDE The business of law is not an end in itself.

Whatever affects our clients’ business, affects us – Ozofu Ogiemudia

The article read in part, ”In an election in which two of the three aspirants for the top prize of president of the Nigerian Bar Association (NBA) are SANs, this was as close as anyone could come to openly advocating rigging the election à la carte, without calling the crime by its name. Barring last

minute course correction by the Electoral Committee of the NBA (ECNBA), Chief Awomolo is likely to get his wish: these 2020 NBA elections, like the two before it in 2016 and 2018, have been set up to be rigged to order”. He went on to make the point that while Chief Awomolo may have provided the motive or rationale for rigging the NBA election, the mechanics of procuring the rigging are in the hands of the ECNBA. He stated, “In their 2018 book, How to Rig an Election, Nic Cheeseman and Brian Klaas point out that “once upon a time, to do the dirty of changing votes, you had to be present in the actual polling location. That is no longer true.” In an earlier piece of work on “Making Democracy Harder to Hack” published in the Michigan Journal of Law Reform in 2017, Scott Shackleford and his collaborators examined essential vulnerabilities that make rigging possible in digital democracy, focusing in particular on three aspects: who can vote (voter rolls); who you vote for (voting platforms) and vote computation. (how many votes each candidate receives). As will be shown shortly, all

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Ayuli Jemide

Former U.S. Senator William “Mo” Cowan to give keynote at the 14th Annual Business Law Conference

three vulnerabilities are deliberately built into the NBA’s electoral processes” “Essentially, there are four vulnerabilities that have been designed to guarantee rigging of the vote in the 2020 NBA election. These are voter rolls (register), portal integrity (or lack of it), voter verification opacity and prohibitive transaction cost,and lack of independence in the ECNBA. I will explain each of these briefly. “Voter Register: Voters in NBA ballot have to meet three conditions. First, they must be enrolled as lawyers in Nigeria. This is easily confirmed from the Roll of lawyers kept with the Supreme Court. Every lawyer on the Roll has an enrollment number, with which their enrollment can be verified. Second, the person must have paid their annual practicing fees by 31 March. The collecting bank for this is Access Bank. It should be easy to verify those who paid from the records or tellers of the bank. In reality, the only people who have access to this record are the President of the NBA and those whom he wishes to. Third, the voter must also have paid his or her branch dues by 31 March. The NBA comprises 125 branches. Each branch manages its own processes for collecting dues. These are not standardized. The list of eligible payees is at the say so of the different branch chairmen. “Without access to the records of the bank or of the branches, the register of voters lacks integrity and it shows. When the ECNBA issued the provisional register at the end of May 2020, it contained 21,067 names. By the time it issued what it called a final list one month later in June, it had ballooned by 186.65% to 39,321. A close reading of the list shows it contains multiple repetitions, omissions and even figments. People who did not pay the practicing fees are there while many who paid are not. Many branch chairmen

Determination of significant economic presence by a foreign entity taxable in Nigeria’s digital economy

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The business of law is not an end in itself. Whatever affects our clients’ business, affects us – Ozofu Ogiemudia A couple of months ago, the Nigerian Bar Association Section on Business Law (NBA-SBL) announced that its renowned Annual Business Law Conference which has been on for the last 13 years, will be going online for the first time and will have thousands of participants and speakers attend the conference from across the world. This was huge! Now, as Section gets ready for its first ever annual business law e-conference, the Chairperson of the 2020 conference, OZOFU OGIEMUDIA sits with BusinessDay Law Editor, THEODORA KIO-LAWSON to speak about the forthcoming conference and issues germane to business continuity in Nigeria. EXCERPTS…

rom 14th Annual Business Law Conference to the 14th e-Conference. Given the challenges of the time, why was it important to carry on with this conference in the face of a pandemic? We started preparing for the 14th Annual Business Law Conference in December 2019. By the time COVID-19 had become a pandemic, we were already far along in our preparations. It would have been easier, and certainly understandable, if we decided to cancel this year’s conference or postpone it to 2021, but we believe that just as we cannot shut down our law firms or expect our clients to close up their businesses due to the pandemic, we have to carry on as best we can and work to develop an understanding of the new way of doing business during and after the pandemic. The COVID-19 pandemic offers an unprecedented and unique opportunity for us to evolve as lawyers, business managers and as a professional body. We decided to embrace the challenge of re-inventing our conference as an e-Conference while still delivering the quality of speakers and conversation around relevant issues that are associated with the NBASBL Conference. We have ensured that our conference theme and the topics of the panel discussions are all relevant to the realities of the current pandemic and will lead to interesting engagements on how we forge ahead long after the pandemic is over. The theme of the e-Conference is Business Unusual: Digital Acceleration for Growth in a New World. What informed the choice of theme for this e-conference: “Business Unusual: Digital Acceleration for Growth in a New World”? One of the effects of the Covid-19 pandemic has been the unprecedented global shift to a virtual and digital way of life. The business world has been irreversibly disrupted and even the most traditional professions (such as the legal profession) have had to find a way to conduct their businesses digitally. As the Section on Business Law, we feel it is important for us to drive the discussion around how to navigate the ‘new world’ that will continue to evolve from this pandemic, and consider how, as business lawyers, we can leverage technology to position ourselves as catalysts for growth. The e-Conference will also offer an opportunity for us to look closely at certain key sectors of the Nigerian economy and discuss what players in those sectors can do to come out successfully on the other side of this pandemic. Those sectors include banking, oil & gas, technology, maritime, aviation,

topic, “The ‘Next Normal’: Practice in a borderless legal profession” from various perspectives, seeking to answer the questions”: Is digital technology an aid or inhibitor of legal practice?; Are 9-5 work patterns still relevant?; and Are Nigerian-trained lawyers well-equipped for practice in the Digital Age?

Ozofu Ogiemudia

travel and tourism. Speaking of a new world and a new normal‚Ä¶ this is the first time in its history, the NBA-SBL Annual Conference will hold as an e-conference, what is the nature of this conference? And how would it be driven? This is an exciting time for us at the NBA-SBL and I am very privileged to be chairing the committee that gets to organise the first e-Conference. It is a new day and we are certainly being ushered into a new world! In some respects, we have retained the structure of our most recent Annual Business Law Conferences which featured a mix of plenary sessions and more focused break-out sessions. We have also retained the tradition of having a keynote speaker who will set the tone for the topic to be discussed at the conference. This year, we are honoured to have Sen. William “Mo” Cowan as our keynote speaker. Sen. Cowan served as a United States Senator from Massachusetts from February 1, 2013 to July 16, 2013. He is the President, Global Government Affairs and Policy (GAP) and Developed Markets for General Electric Co. (GE). GE is one of the leading global companies in technology and innovation, and it will be exciting to hear our keynote speaker discuss the impact of technology on the practice of law and the business environment, and how we can embrace the changes that have been foisted upon us as a result of the ongoing pandemic. Before our current realities, www.businessday.ng

(the pandemic and remote working), not many law firms appreciated the need for virtual meetings, remote working and legal technology generally. However, it’s the new norm today. Where in your opinion is the business of law headed in the next few years and how will this conference drive the conversation to influence this shift? I think that some of the changes that have had to be made as a result of the pandemic, such as those you have identified i.e. remote working, virtual meetings and incorporating digital technology into our service delivery are here to stay, and will remain with us even after the pandemic. I expect that we will adapt to a business environment that is more flexible and dynamic than was previously the case, especially for an industry such as the legal industry that has traditionally been very conservative and slow to change. With respect to the conference, our panel topics are very relevant to the conversation around the shift to a digital-led world. We will have a panel session that will discuss how the legal industry can catch up, and learn to move forward successfully leveraging on digital technology. Other sessions will focus on current issues including the state of the maritime industry; patenting a cure for COVID-19; e-health and the role of technology in healthcare delivery; and the recovery of the travel and tourism sectors. Our debate sessions, which is always a platform for the best and brightest of our young lawyers will examine the

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The theme of the e-Conference is “Business Unusual: Digital Acceleration for Growth in a New World”. How has the new norm affected legal businesses in Nigeria and how do you hope speakers and panellists at the conference will interrogate these issues? As I mentioned earlier, the law is a conservative profession, and even the leading law firms that had already begun to incorporate digital technology into their processes have had to adapt like everyone else. The business of law is not an end in itself; we are here to provide a service which is to help our clients do business. Anything that affects the businesses of our clients also ultimately affects us. When there is a shock to the economy (like the ongoing pandemic) that threatens businesses, it also affects us. In order to survive, we have to adapt. This has meant embracing the #WFH culture (i.e. work from home), supporting employees by providing the tools required for remote working, remaining in contact with our clients virtually and continuing to provide our services electronically. Even the courts have had to adapt and have begun hearing cases virtually. The regulators with which we relate routinely have also adapted and most of them now permit electronic submission of documents. We are mindful that the pandemic has affected us all in different ways and to varying degrees. Some have been hit harder than others, and it is important to evaluate how we cope with the ensuing pressures. We are very pleased with the session topics for the e-Conference, and the rich faculty of speakers that have committed to share their time, knowledge and wealth of experience with the participants at the conference, and we are confident that our participants will have a fulfilling experience at the e-conference. Where are your speakers and participants drawn from and would you be kind enough to share details of some of your speakers and guests? We are able to get speakers that might not otherwise have been able to travel to Lagos for the conference, because our conference is a virtual conference and our speakers will be able to partici@Businessdayng

pate from wherever they are. We have reached out to, and received confirmations from several distinguished domestic and international speakers. As I mentioned, we have the honour of hosting Sen. William “Mo” Cowan who will deliver the keynote address. We also look forward to hearing from leaders of the legal profession in Nigeria such as Hon. Mr. Justice Ibrahim Tanko Muhammad, CFR, the Chief Justice of Nigeria as well as the NBA President, Mr Paul Usoro, SAN. The Honourable Minister of Mines and Steel Development, Arc. Olamilekan Adegbite, is one of our panellists as is Mr Okey Enelamah, the immediate past Nigerian Minister of Industry, Trade and Investment. Other panellists that represent the best of the global legal and business community include Mr Nigel Boardman, Chair of Slaughter and May’s Africa Practice; Mr. Karl Hennessee. Senior Vice President, Litigation, Investigations & Regulatory Affairs at Airbus; Mr Mitchell Elegbe, MD, Interswitch; Prof. Ruth Okediji. Jeremiah Smith. Jr, Professor of Law at Harvard Law School; Prof. Terry Fisher. WilmerHale also of Harvard Law School; and TV legend, Ms. Joke Silva, Chairman, Lagos State Post COVID-19 Pandemic Review Committee. Our speakers represent an extensive range of private sector law firms and organisations as well as regulatory authorities and governmental bodies. Our keynote speaker is someone that will be able to offer invaluable insight on our theme from his experience working in the United States Senate and presently in General Electric, and we are very excited to hear from him. We encourage delegates to follow us on social media and visit our conference website nbasblconference.org for the latest updates on our confirmed speakers and an overview of the econference sessions. Does this year’s e-conference have offerings for lawyers on every cadre of the profession? e.g. senior lawyers, young lawyers, advocates, solicitors, business lawyers, arbitrators, legal business administrators, etc. How does this year’s programme cater to these clusters of stakeholders? Yes, it does. We have carefully selected our topics to ensure that there is something for everyone. We have created a unique event for participants, combining the plenary sessions, noteworthy presentations and stimulating debates with a new digital networking experience and seamless confer-

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Former U.S. Senator William “Mo” Cowan to give keynote at the 14th Annual Business Law Conference ONYINYE UKEGBU

he Nigerian Bar Association Section on Business Law (NBASBL) has announced that U.S. Senator William “Mo” Cowan (retired) is the Keynote speaker for its firstever e-Conference themed, “Business Unusual: Digital Acceleration for Growth in a New World”, which is scheduled to hold on 16th- 17th July, 2020. Retired Senator Cowan is currently the President, Global Government Affairs and Policy (GAP) and Developed Markets for General Electric Co. (GE), and responsible for directing the company’s government relations and public policy engagement. Under Cowan’s direction, the GAP team leads on all aspects of international economic policy including trade, investment, cross-border transactions, international tax, advocacy, anticorruption, government procurement, investment screening (CFIUS), foreign affairs and national security, to name a few. Mr. Cowan also leads the

Global Growth Organizational (GGO) national executive teams in Canada and Europe. As GGO leader for Canada and Europe, Mr. Cowan leads the in-country corporate teams supporting GE’s portfolio businesses in

two of the Company’s largest markets. During his Senate, Cowan served on the Senate Agriculture, Commerce, and Small Business Committees, and co-chaired the Subcommittee

on Nutrition, Specialty Crops, Food and Agricultural Research (Commerce Committee). Prior to his Senate appointment, Cowan served Massachusetts Governor, Deval L. Patrick in a variety of leadership positions, including Chief Legal Counsel, Chief of Staff, and Senior Advisor. Cowan’s attendance of the 14th Annual Business law Conference was disclosed in an exclusive chat with the Chairperson of the NBA-SBL, Seni Adio, SAN and the Chair of the 14h Annual Business Law Conference, Ozofu Ogiemudia. Seni Adio, SAN, said, “The NBA-SBL intends to maintain its quest to be dynamic, ingenious, resourceful, catalytic, and foster specialization. The SBL will deploy technology that will make this e-Conference one for the ages. Though virtual, it will still be what I call VIRTUALRACTIVE TM. It will be VirtualActive because we intend to deploy technology that would enable delegates to “move” between sessions and not be “locked” into specific sessions. It would also allow for all sorts of business, as well as social networking.”

The Conference Chair, Ozofu Ogiemudia, added that, “The conference topics will focus on issues such as charting a path for an alliance between public and private sectors in order to strike the correct balance between the regulatory function of government and collaborative initiatives with the business community. We will also discuss business continuity in times of crisis, the digital workforce and accelerating remote productivity.” The NBA Section on Business Law (SBL) is the special arm of the Nigerian Bar Association, which engenders the development of commercial law and specialised commercial law practice in Nigeria. The section currently has 21 committees who focus on specialized areas of commercial law practice and addressing issues from different sectors of the Nigerian economy. Through its committees and strategic partnerships with the public and private sectors, the section organises periodic workshops, seminars and training programmes for members, with a view to promoting commercial and business interests in Nigeria.

The business of law is not an end in itself.... Continues on page 37 encing interface. There will be a lot for delegates to do, a wide range of panel sessions to choose from, as well as a very exciting speed networking experience which will allow delegates to create their own conference-within-a-conference. It will be a truly unique experience for each participant! The SBL conferences are said to present learning opportunities for young lawyers across the country. Are there plans for the 2020 e-conference to fill this gap? We are confident that the nature of the conference as an e-Conference will appeal to all young lawyers regardless of where they may be in Nigeria. Our debate session is designed, presented and judged by our young lawyers and will deal with topics such as “Pay cuts in a COVID-era: a necessary sacrifice by all, or an unfair burden on already under-paid lawyers?” which I am sure every young lawyer will have an opinion on! The pandemic will have affected all lawyers to varying extents and could have an impact on our wellbeing. For this reason, the e-conference will include a session on the physical and psychological wellbeing of legal practitioners. The e-conference platform has the capability to match delegates randomly with other delegates for a 3-minute speed networking ex-

perience. This will ensure that one of the key features of an in-person conference, namely networking opportunities, will be a key feature of our e-conference. We are confident that this will be particularly useful to our young lawyers as it will give them unprecedented access to our speakers and delegates and help them expand their growing network of key contacts. What sort of impact do you hope the theme for this year would have on not just to members of the section or lawyers, but the economy as a whole and how would you like to see drive conversations around this? The theme of the e-Conference says it all: “Business Unusual: Digital Acceleration for Growth in a New World”. One of the effects of the Covid-19 pandemic has been the unprecedented global shift to a virtual and digital way of life. The business world has been irreversibly disrupted and even the most traditional professions (such as the legal profession) have had to find a way to conduct their businesses digitally. As the Section on Business Law, we feel it is important for us to drive the discussion around how to navigate the ‘new world’ that will continue to evolve from this pandemic, and consider how, as business lawyers, we can leverage technology to position ourselves as catalysts for growth. We are confident that the topics that will be explored at the e-Conwww.businessday.ng

ference by our distinguished panellists will drive these important conversations and move us along the path to accelerated growth not only within the legal community, but also on a national scale. Are there notable examples of how deliberations at the NBA-SBL conferences have driven policy changes or led to the enactment of legislation that affect economic growth? Could you please share these with us?’ The 12th Annual Business Conference was themed, “Bringing Down the Barriers: The Law as a Vehicle for Intra-Africa Trade.” It focused on the Africa Continental Free Trade Agreement (“AfCFTA”) and the implications of the AfCFTA for Nigeria and the African continent. The conversations at that conference led to the involvement of the NBA-SBL, represented by the current Chairperson of the NBASBL, Mr Seni Adio, SAN, on the Presidential Committee for Impact and Readiness Assessment of AfCFTA, inaugurated by President Muhammadu Buhari. Following this, the NBA-SBL has remained active in supporting the federal government in its preparedness for the implementation of AfCFTA. The NBA-SBL has been an active partner with the various arms of government, at federal and state levels, in supporting economic growth through legislative advocacy. To this end, the NBA-SBL worked actively with the National

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Assembly and the Enabling Business Environment Secretariat of the Presidency on the bill to repeal and re-enact the Companies and Allied Matters Act 1990 (“CAMA”), the Investments and Securities Act 2007 and the Labour Act, among others. The CAMA is Nigeria’s 30-year old companies act, which is grossly outdated. The CAMA Bill was previously passed by the National Assembly, but not signed by President Buhari. A revised

version of the Bill is currently going through the legislative process and, once it is passed by the 9th National Assembly and assented to by the President, it will become law. The NBA-SBL is committed to supporting the efforts of the federal government in respect of the CAMA bill and for this reason, the e-Conference will feature a fireside chat with the RegistrarGeneral of the Corporate Affairs Commission on the CAMA bill.

PROFILE Ozofu ‘Latunde Ogiemudia is a legal practitioner and a partner in the commercial law firm, Udo Udoma & Belo-Osagie. She is a member of the firm’s Corporate Advisory team and I specialise in Mergers & Acquisitions, and Private Equity. As a result, I routinely advise on company law and corporate governance, foreign investments, mergers, acquisitions, take-over bids and corporate restructurings. She also coheads the firm’s pro bono practice where she provides legal support to non-profit organisations and social entrepreneurs. Under the umbrella of the Nigerian Bar Association’s Section on Business Law (“NBA-SBL”), she chaired the technical advisory committee that advised the Nigerian Senate on the bill to repeal and re-enact the Companies and Allied Matters Act 1990 and the Investments and Securities Act 2007. She is currently the Thematic Lead of the Regulatory Working Group of the National Assembly Business Environment Roundtable (NASSBER) that is to assist the National Assembly in identifying and improving bills that relate to any aspect of the regulatory environment. @Businessdayng

Thursday 09 July 2020

BUSINESS DAY

GREYMATTER

Determination of significant economic presence by a foreign entity taxable in Nigeria’s digital economy Continued from last week

COMMENTARY By introducing a new tax chargeable on the activities of foreign entities carrying on business in the digital economy, the Order heralds a paradigm shift in our tax regime. Given the technological disruptions and interventions that have re-defined the global business landscape heavily geared towards e-commerce, updating our tax system to accommodate the present realities is not only commendable, it is also unassailable, as it will bring many foreign entities operating in Nigeria hitherto shielded from tax within our taxation purview. Though timely and pragmatic, we note a regulatory impediment to the effective implementation of the provisions of the Order, and in effect, the attainment of the Government’s overall objective in respect thereof. For instance, the applicability of the Order to NRCs from countries and jurisdictions that have subsisting DTTs with Nigeria and the mechanism for the imposition and collection of tax from such NRCs is unclear and may be fraught with implementation and enforcement challenges. Whilst the Order stipulates that the tax liability of a NRC, shall be determined in accordance with the consensus arrangements in respect of the taxation of the digitalized economy under an applicable DTT, the problem in this regard is the fact that Nigeria is not presently a party to any DTT that speaks to, or has any mechanism for, taxing the digital economy. Needless to over-emphasize, the hurdles and challenges inherent in amending bilateral international agreements, such as a DTT,

and the attendant statutorily prescribed process for domesticating such an agreement for the purpose of it having legal efficacy. It is also not discernible from the Order, the accounting indices and mechanism the Federal Inland Revenue Service (“FIRS”) will apply, in ascertaining the profits of NRCs that carry on activities in the digital economy who however do not have or maintain any determinable physical presence in Nigeria. It is unclear if the FIRS shall resort to assessing such NRCs to tax based on a determined turnover, in accordance with the provisions of sections 30(1)(b) and 65(3) of the CITA, even though, the exercise of this power may likely be open to challenge and contest by NRCs. Existing applicable tax instruments, such as the Income Tax (Country by Country Reporting) Regulations 2018 (in relation to NRCs with determinable presence in Nigeria) and the Income Tax (Common Reporting Standard) Regulations 2019 (in relation to NRCs with no determinable presence in Nigeria) could be helpful and useful sources of obtaining credible information, which can assist the

FIRS properly and fairly administer the tax now applicable to foreign entities that are active in the digital economy. Similarly, the limited collaboration and exchange of information arrangements between Nigeria and certain members of the Organization for Economic Cooperation and Development (OECD) can also be a useful tool, which can be leveraged to overcome some administration and enforcement challenges. Another regulatory issue, which may likely arise as the FIRS positions to administer the provisions of the Order, may be in relation to a NRC’s use of the internet, websites and other web-based domain name(s). The Order qualifies foreign entities who use Nigerian domain names (.ng) or register a website address in Nigeria; or have purposeful and sustained interactions with persons in Nigeria, by customizing their digital pages or platforms to target persons in Nigeria (including reflecting the prices of their products or services in Nigerian currency or providing options for billing or payment in Nigerian currency); as having taxable significant economic presence in Nigeria even if they do not meet the prescribed N25 million

gross turnover or income threshold in any relevant assessment year. This implies that such entities will have to file tax returns in Nigeria, and will be required to comply with other tax registration and reporting obligations and other requirements specified in the CITA, or by the FIRS, regardless of the fact that they may be exempt from tax as “small companies” under the Finance Act. Further, it is also not inconceivable that the FIRS may continue to leverage its statutory “powers of substitution”, under section 31 of the FIRS (Establishment) Act, 2007 to appoint banks and other relevant financial institutions, to source and obtain information on NRCs with a view to bringing them under the administrative purview of the Order. The identified challenges nonetheless, we commend the Minister’s forward looking subsidiary legislation, which is properly aimed and focused on advancing and bringing our tax legislation, system and its administration in line with the 21st century realities, and the changing global digital economy and technology-driven commercial practices.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

Election Manipulation: NBA faces biggest... Continues on page 36

have no records of people whom they have put forward as having paid branch dues. There are credibly attested reports of chairmen printing receipts of payment and backdating fictional payments. One particular voter on the list goes by the incredible name of “Opening Balance”. The joke is that this voter has a twin, who is also a lawyer called “Closing”. Their Dad, Mr. Balance, must be proud! Portal Integrity: In 2018, the voting portal for the NBA election was from a compromised provider. In 2020 it is not clear who the provider is. The portal appears to be managed by the NBA itself. It is not clear who has built it. There is neither transparency to its provenance nor verifiability or falsifiability to its operations and computations. As such, its integrity can neither be investigated nor guaranteed. It should be easy to engage external monitors for this purpose or engage the leading campaigns to designate back-end agents to monitor and verify the integrity of the operations. Neither the leadership of the NBA nor the ECNBA constituted by it is willing to grant either. Verification Opacity and Prohibitive Transaction Cost: By meeting the three conditions for getting on the voter register, a potential voter does not earn the

right to vote as such. S/he only qualifies for the privilege of verification. To do this, the voter is required to go to the portal and key in their details, including uploading their qualifying certificate and providing an e-mail address to which a password can be sent to them. The uploading can take up to three to four days. Many voters find this frustrating and opt out. Passwords are generated by the portal and changed by it at will without the agency of the voter. The voting register does not contain the e-mail address of the voter, so it is impossible to verify in any forensic process whether an e-mail www.businessday.ng

corresponds to any particular voter. On their part, the ECNBA and the NBA can put forward data-protection concerns for circumspection with publishing of the e-mail addresses. In response, surely, that cannot be cited to justify creating deliberate balloting vulnerability. This opacity guarantees inflation of actual voting. In 2018, this was precisely the vulnerability that allowed for clusters of voting to happen using fake Firemail addresses generated from one source. That is almost guaranteed to occur in 2020. The prohibitive transaction cost is engineered for targeted disenfranchisement of voting clusters or conurbations seen as favourably disposed to unfavoured candidates. Lack of Independence in ECNBA: Appointed to supervise the NBA election, the ECNBA lacks independent appropriations and operations. It has to function through the NBA Secretariat under the direction of the NBA President. Despite the existence of an ECNBA, aspirants and candidates continue(d) to receive letters from the NBA Secretariat and the NBA continues to be involved in directing essential aspects of the election value chain. The absence of institutional and process independence could itself become a dent on the personal integrity of members of the ECNBA. It happened in 2016 and 2018. The

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litigation commenced in 2016 against the outcome of the rigged election to the position of the NBA presidency was only concluded at the end of the tenure of the beneficiary in 2018. After the 2018 election, the Economic and Financial Crimes Commission (EFCC) and the State Security Service (SSS) instituted investigations into the rigging of the ballot for the NBA presidency. Several staff of the NBA Secretariat were arrested. In one case, a young mother who works as staff of the NBA was arrested and detained for nearly two weeks. Odinkalu, Jemide and various other lawyers hold the view that the ECNBA has an opportunity even now 2020 to avoid all of these, as it can easily infuse greater transparency into its operations. “It can invite independent monitors to certify the integrity of its operations. All the accredited campaigns should be entitled to records that should enable them to certify the integrity of the process. These are not expensive steps. The only reason none will happen is because the NBA elections will be rigged. Odinkalu is also Co-Convenor of the Open Bar Initiative and writes in his personal capacity. Ayuli Jemide is the Vice Chairman of the NBA Section on Business Law.

@Businessdayng

Thursday 09 July 2020

BUSINESS DAY

INSIGHT Infrastructure in Nigeria: Unlocking pension fund investments (4) 1. Lack of deal pipeline: The majority of project sponsors in Nigeria had limited capability to develop projects to a bankable level while the majority of investors would not invest without projects reaching financial close or close to. 2. Currency risks: The majority of infrastructure investors wanted dollar hedged returns and so looked to cover the costs of hedging from Naira based project cash flows. This reduced the number of projects that were fundable as the return expectations were accordingly raised significantly. 3. Pension fund demand: The Nigerian government had made a major push over the previous two years to allow pension funds to invest directly in infrastructure related equity funds so long as such funds met strict guidelines. Nonetheless, up until the end of 2017 no equity funds had emerged in the market to meet this need. From a capital aggregation point of view, some of the investors might be pension funds and institutional investors, and others might be insurance companies or high net worth individuals seeking asset diversification, Naira based investments, and Naira based yields. Compensation to the sponsor was comparable to a US private equity or venture capital setup, with a 2% management fee on drawn and committed funds and a 20% carry to the sponsor (after a set return to initial capital). The InfraFund sponsors expected to participate pari passu with about 5% of capital, aligning their interests with investors and keeping “skin in the game.” From an investment point of view, InfraFund expected to keep a very tight focus on smaller ticket, shorter duration projects well under the radar of the Azura-Edo sized projects. To date these had included schools and roads and they were expected to comprise power (including renewables), transportation (road and also seaports, airports, and rail) and basic infrastructure (water and sanitation). Africa Plus also expected to be more involved in project development with the sponsor, as opposed to the lighter on-the-ground engagement of a typical private equity fund due to the lack of skills in the Nigerian market. This InfraFund was led by a hands-on specialist in construction and project delivery, Anhad Narula (HBS MBA ’08) of DSC Group. DSC Group had been involved in some of the largest PPP and EPC projects in India and had project delivery experience in several African nations. The firm felt it had a defensible competitive advantage in project selection and project delivery thanks to its construction company origins. A further focus for InfraFund was acting as a catalyst in shepherding some of the larger projects to financial close, and then letting a larger fund or institution take the project to completion. To this

and additional guarantees on revenue). • Value generation through the life cycle of the investment (InfraFund would look for current cash yields from the asset rather than purely an asset value appreciation and sale). • Clear and quantifiable execution visibility (InfraFund would shortlist projects with construction periods of six to 18 months and use of proven technology to reduce the high risks associated with project development in the market). Observers wondered if InfraFund had a higher yielding riskadjusted offer than an investment like the Viathan bonds, given that InfraFund would take project inception risk and project delivery risk, which had greater upside potential but also substantial uncertainties (the Viathan bond was based on cash flows from in-place stable assets). Observers also considered whether InfraFund, which was a first-time fund in a space in which pension fund advisors had limited experience, would be able to attract investors at a reasonable rate of return. Was the Azura-Edo large project structure, the Viathan bond format, the InfraFund setup, or the InfraCredit enhancement offering the model that would unlock trillions of Naira in infrastructure investment? Which one would attract capital?

end InfraFund decided to partner with AFC for independent review of investment opportunities and eventual co-investment, when projects developed to a larger scale and met AFCs investment criteria. AFC was an Africa-focused multilateral financial institution covering project development, financial advisory, and principal investing.57 AFC acted both as a www.businessday.ng

leading financier and adviser to its investor clients. It offered project finance, trade finance, structured debt, greenfield equity, and buy out capital as well as fixed income products. It complemented those product offerings with advisory capabilities in areas including project development, project management, capital raising, and restructurings. Since its inception in 2007, AFC had

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committed US $3 billion to funding large-scale infrastructure projects. Strategic advantages of InfraFund were thought to be: • Monopolistic/ high barriers to entry (in the revenue streams of projects selected). • Stable and secure assets (looking at opportunities with stable legal and operating environments @Businessdayng

Fresh Equity, New Debt, or More Contingent Money? In order to grow the InfraCredit business at a rapid rate to accommodate huge infrastructure need and potential substantial interest from investors, Azubike would need to raise more capital. As InfraCredit became more established, could they expect to raise additional capital from NSIA? Could they look to the GuarantCo team to scale up with them – or might GuarantCo determine that InfraCredit was now successful and move on to other initiatives? Was the risk / return offer in the InfraCredit business model attractive to new institutional investors who might add to core capital (equity), or was that avenue likely to be closed off? And if none of those avenues looked promising, should InfraCredit borrow funds in order to have them to both invest in current assets and also as a backstop for guarantee problems? Many international banks and insurance companies indeed borrowed money to build the liabilities side of their balance sheets so they could then lend out money to build the asset side. There was so much going on at the guarantee level that Azubike felt he should only pursue one capital structure path. Which one? The right choice could help Nigeria grow and thrive, and the wrong choice would lead to disappointment. Concluded

Thursday 09 July 2020

BUSINESS DAY

news

COVID-19: Africa records 11,959 deaths in less than 5 months ANTHONIA OBOKOH

n less than five months, Covid-19 infections in Africa have shown signs of accelerating as the virus claimed 11, 959 lives, overtaking the 11, 308 lives lost in the world’s worst EbolaoutbreakinWestAfricabetween 2014 and 2016, says the World Health Organisation (WHO). According to WHO, Covid-19 infections in Africa today surpassed 500, 000, and there is concern as a growing number of countries are experiencing a sharp rise in cases. The organisation noted that cases have more than doubled in 22 countries in the region over the past month. “Nearlytwo-thirdsofcountriesare experiencing community transmission. Algeria, Egypt, Ghana, Nigeria and South Africa account for about 71 percent of COVID-19 cases. South Africa alone accounts for 43 percent of the continent’s total cases,” said WHO. Matshidiso Moeti, the agency’s director for Africa, said with more than a third of countries in Africa doubling their cases over the past month, the threat of Covid-19 overwhelming fragilehealthsystemsonthecontinent is escalating. “So far the continent has avoided disaster and if countries continue to strengthenkeypublichealthmeasures such as testing, tracing contacts and isolating cases, we can slow down the spread of the virus to a manageable level,” she said. Moeti added, however, 88 percent of COVID-19 infections are among people aged 60 and below, likely due to Africa’s relatively young population. However, the likelihood of dying from COVID-19 rises with increasing age and the existence of co-morbidities, with the risk of death among patients aged 60 years and above being 10 times higher compared with those

below 60. However, the accelerating growth trend is not uniform across the continent, with some countries recording a steady rise in cases, indicating a protracted pandemic. Eritrea, Gambia, Mali, Seychelles and Togo are witnessing long doubling times and low growth rates. Seychelles had not experienced a case in nearly two months, but in the past week had dozens of new imported cases, linked to crew members of an international fishing vessel. There are also some signs of progressas10countrieshaveexperienceda downward trend over the past month. Although Egypt accounts for 15 percent of cumulative cases, it has seen a decline in the past week. AhmedAl-Mandhari,theagency’s director for the Eastern Mediterranean said, communities across the continent have a crucial role to play in controllingthepandemic,especiallyas countriesbegineasinglockdownsand opening up their borders. “As governments continue to implement public health measures, individuals must remain as cautious and vigilant as ever to protect themselves, their families, and their communities. Hand washing, mask use, physical distancing and other preventative measures are key to controlling transmission, saving lives, and ensuring that already overwhelmed health systems are not stretched to breaking point,” he said . As Covid-19 continues to spread, thousands of health workers have also fallen ill. Equipping and protecting health workers is one of the central pillars of the Covid-19 response. WHO is working to support countries responding to Covid-19 by providing technical guidance, crucial medical equipment and has remotely trained more than 25 000 health workers.

Nigeria’s development hinges on addressing content, context aspects of education KELECHI EWUZIE

he outbreak of Covid-19 has exposed the underbelly of the weaknesses in Nigeria’s education system and further questioned the readiness of the sector to compete on the global scale. Nigeria, Africa’s largest economy urgently needs to address both the issue of content and context in her education ecosystem to be relevant and globally competitive post Covid- 19. In the last four months, all indices show the sector to be one of the biggest losers since the outbreak of the Covid-19 forced the government to shut down academic activities across the country. Panellists at a national discourse webinar organised by Reignite public affairs in partnership

with BusinessDay, observed that decades of government’s underfunding of education and poor teacher quality has left the sector with products whose certificates are increasingly worthless. The panelists comprising of educationists, technologists, government educational policy designers and financial experts while speaking on the topic Nigeria @60 Education: navigating a new normal, observed that Covid-19 pandemic has further exposed the crisis within Nigeria’s education sector as government and educational institutions, including stakeholders, struggle to adjust to a new normal in the face of uncertainties. The webinar was moderated by Modupe Adefeso-Olateju, an education policy expert and managing director, The Education Partnership Centre (TEP Centre) Julius Ihonvbere, chairman,

House of Representatives committee on basic education, also speaking, said for Nigeria to overcome the various challenges around within its education system, the nation has to begin a new conversation about responsibility, discipline, accountability and prioritise the sector. To tackle the challenge of content and context, Ihonvbere said there was need for a synergy among managers of the economy to focus the conversation around giving education the priority it deserves. He further noted there were over 20 bills on education, but only few of these bills get through to the executive adding that a whole new perspective is necessary for the relationship between governance and the people for the education sector to thrive. “One of the things that have come out of this current situation with Covid-19 is that the response

capacity and the adjustment capacity of the education system is so weak and nonexistence across all levels”. “Covid-19 has provided the country with a good opportunity to rethink. It is not too late, it is not impossible, but there has to be commitment, leadership and resources,” Ihonvbere said. Chukwuemeka Nwajiuba, minister of State for Education, in his remarks, stated that the challenges in the education ecosystem should be the concern of all stakeholders and not the government alone. Nwajiuba announced that the Federal Government was working on a lot of public-private partnerships to facilitate a fresh injection of capital into the sector, adding that the government alone cannot provide all the resources needed to address the education challenges.

Hussaini Ibrahim (r), director-general, Raw Materials Research and Development Council (RMRDC), and Vice Chancellor, Ibrahim Badamasi Babangida University, Abu-Kasim Adamu, observing some raw materials at the Resource Centre of RMRDC, during the later’s working visit to the council in Abuja. NAN

Lagos to empower 1m youths in digital skills, entrepreneurship Josephine Okojie

he Lagos State government is set to empower one million youths in digital skills and entrepreneurship by 2023 throughitsrecentlylaunched‘Jobs Initiative Lagos.’ The initiative is targeted at young people in eight tertiary institutions in the state. Thefirstphaseofjobsinitiative kicked off in June and will continue over the next four months leveraging a virtual learning platform while the digital skills initiative will commence virtually until the ease of the lockdown necessitatedbytheCovid-19pandemic. “The initiative will see to the complementary training of students in their ultimate and penultimateyearinentrepreneurship, employability, and basic digital skills required for the workplace,” said Damilola Obidairo, general manager, Business Development & Strategy, Loftylnc Allied Partners- coordinator of the project.

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Obidairo stated that the essence of the programme is to account for the documented gaps in the current curriculum that bedevils the employment market and to increase labour employability of graduates in Lagos. He said that candidates who complete the programme will get an opportunity to be featured on a job portal from where partner corporateorganisationscanselect fresh graduates for recruitment. He added that the initiative will run alongside a more robust digital skills campaign ‘Digital Skills Initiative Lagos’ aimed at empowering over one million young people in the state by 2023 withdigitalskills,whichwillinvariably position Lagos as the tech hub of Africa. Studentsinsecondaryschools in the state would have access to well-trained instructors while those out of school would access digital skills training and various internship opportunities as they complete the programmes,” he said.

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FCT senator protests as Buhari replaces 2 non-career ambassadors-designate Solomon Ayado, Abuja

hilip Aduda, the senator representing the Federal Capital Territory (FCT) has protested what he termed the exclusion of a non-career ambassador from the FCT. This came as the Senate received a request from President Muhammadu Buhari for the replacement and confirmation of two non-career ambassadors-designate. Aduda said on Wednesday that his protest became necessary because the only FCT indigene presently serving as a non-career ambassador in Sierra Leone, Hafiz Obada, was not re-appointed. Buhari’s request to replace the non-career ambassadors was contained in a letter read during plenary by Ahmed Lawan, the Senate president. The president requested to replace the earlier nomination of Oboro Effiong Akpabio @Businessdayng

and Bwala Yusuf Bukar from Akwa-Ibom and Borno State, respectively. The letter reads: “In accordance to Section 171(1)(2) (c) and subsection (4) of the 1999 constitution as amended, I have the honour to forward for confirmation by the Senate, the appointment of John J. Usanga and Air Commodore Peter Anda Bakiya Gana (rtd) from Akwa-Ibom and Niger State respectively, as non-career Ambassadors-designate. “The Senate is kindly requested to recall my earlier submission of Mr. Oboro Effiong Akpabio and Brigadier General Bwala Yusuf Bukar from Akwa-Ibom and Borno State respectively, vide letter dated 17th June 2020, I substitute Mr. Oboro Effiong Akpabio with Mr. John J. Usanga (Akwa-Ibom State). I replace Brigadier General Bwala Yusuf Bukar (Borno State) with Air Commodore Peter Anda Bakiya Gana (Niger State).”

Thursday 09 July 2020

BUSINESS DAY

BUSINESS TRAVEL May passenger demand shows slight improvement Stories by IFEOMA OKEKE

he International Air Transport Association (IATA) announced that passenger demand in May (measured in revenue passenger kilometers or RPKs), dropped 91.3 percent compared to May 2019. This was a mild uptick from the 94 percent annual decline recorded in April 2020. The improvement was driven by recovery in some domestic markets, most notably China. “May was not quite as terrible as April. That’s about the best thing that can be said. As predicted, the first improvements in passenger demand are occurring in domestic markets. International traffic remained virtually stopped in May. “We are only at the very beginning of a long and difficult recovery. And there is tremendous uncertainty about what impact a resurgence of new COVID-19 cases in key markets could have,” said Alexandre de Juniac, IATA’s Director General and CEO.

May international passenger demand fell 98.3 percent compared to May 2019, which was virtually unchanged from the 98.4 percent decline recorded in April. Capacity plummeted 95.3 percent, and load factor sank 51.9 percentage points to 28.6 percent meaning a bit more than a quarter of seats were filled, on average. European carriers’ May demand contracted 98.7 percent compared to last year, virtually unchanged from a 98.9 percent drop in April, year-over-year, and the worst decline among regions. Capacity dropped 97.5 percent and load factor fell by 41.7 percentage points to 42.4 percent.

Asia-Pacific airlines’ May traffic plunged 98.0 percent compared to the year-ago period, also in line with a 98.2 percent recorded in April. Capacity fell 95.1 percent and load factor shrank 46.6 percentage points to 32.1 percent. Middle Eastern airlines posted a 98.0 percent traffic contraction for May, compared with a 97.3 percent demand drop in April. Capacity tumbled 93.9 percent, and load factor sagged to 23.9 percent, down 49.1 percentage points compared to the year ago period. North American carriers had a 98.2 percent traffic decline in May, little changed from a 98.4 percent decline in

April. Capacity fell 94.5 percent, and load factor dropped 56.7 percentage points to 27.2 percent. Latin American airlines experienced a 98.1 percent demand drop in May compared to the same month last year, versus a 98.2 percent drop in April. Capacity fell 96.6 percent and load factor fell 38.1 percentage points to 45.9 percent, best among the regions. African airlines’ traffic sank 98.2 percent in May, fractionally improved from a 98.7 percent decline in April. Capacity contracted 77.8 percent, which was the smallest supply reduction among the regions, and load factor dived 61.8

percentage points to just 5.3 percent of seats filled, which was the lowest among regions. Domestic traffic fell 79.2 percent in May. This was an improvement compared to an 86.2 percent decline in April. Domestic capacity fell 69.2 percent and load factor dropped 27.2 percentage points to 56.9 percent. China’s carriers posted a 49.9 percent year-on-year decline in traffic in May, significantly improved from the 64.6 percent demand drop recorded in April. However, the improvement has been more recently interrupted by flight cancellations to and from Beijing amid an increase in the number of new infections in the city. US airlines’ domestic traffic was down 89.5 percent in May, an improvement over the 95.6 percent decline experienced in April. However, the recent rise in infection rates in key US states following the lifting of lockdown restrictions could negatively impact the budding recovery. “We appear to be in the very early stages of a recovery in air travel. But the situation is fragile. We need gov-

ernments to support and strengthen the restart by quickly implementing the International Civil Aviation Organization’s (ICAO’s) global guidelines for restoring air connectivity contained in ICAO’s Takeoff: Guidance for Air Travel through the COVID-19 Public Health Crisis. “Governments also need to avoid adding blockers to the recovery, such as implementing entry quarantines. They have the same impact as outright travel bans and will keep economies closed down to the benefits of aviation connectivity. Governments should also avoid new fees and charges to cover the cost of COVID-19 related health measures (such as testing and contact tracing), which will make travel less accessible. “Travel and tourism accounts for 10.3 percent of global GDP and 300 million jobs. It is in everybody’s interest, including governments, to remove barriers to travel as soon as it is safe to do so. And in the process, it is critical that governments don’t stall the fragile recovery by introducing new regulatory or cost barriers to travel,” said de Juniac.

Emirates to fly A380 to London Heathrow and Paris, adds Dhaka, Munich to net ….Nigerians travelling to London can benefit from this

mirates A380 aircraft will begin serving travellers on flights to London Heathrow and Paris starting from 15 July. This marks the return of Emirates’ flagship aircraft on scheduled services since the pandemic forced the temporary grounding of the airline’s passenger fleet in March. Adel Al Redha, Emirates’ Chief Operating Officer said: “The A380 remains a popular aircraft amongst our customers and it offers many unique on-board features. We are delighted to bring it back into the skies to serve our customers on flights to London and Paris from 15 July, and we are looking for-

ward to gradually introduce our A380 into more destinations according to the travel demand on specific destinations. The Emirates A380 experience remains unique in the industry, and even though we’ve modified services onboard for the health and safety of our crew and customers, we are confident that our customers would welcome flying again in this quiet, comfortable aircraft.” In addition, Emirates has announced that it will commence flights for travellers to Dhaka (from 24 June), and Munich (from 15 July), adding to its growing network. This follows the an-

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nouncement earlier in the week, that Dubai will reopen to business and leisure visitors from 7 July, with new air travel protocols that facilitate travel for UAE citizens, residents and tourists while safeguarding the health and safety of travellers and communities. Emirates currently offers flights to over 40 cities, with safe and convenient connections to, from, and through its Dubai hub for customers travelling between the Asia Pacific, the Gulf, Europe and the Americas.Flights to Dhaka and Munich will be operated with an Emirates Boeing 777-300ER aircraft, and can be booked on emirates.com or via travel agents. Emirates has implemented a comprehensive set of measures at every step of the customer journey to ensure the safety of its customers and employees on the ground and in the air, including the distribution of complimentary hygiene kits containing masks, gloves, hand sanitizer and antibacterial wipes to all customers.

Flight resumption: Airlines raise fares by 48%

omestic airlines have raised fares by almost 50percent as local flight operations resumed on the 8th of July. Four months ago, the federal government shut down all airports across the country as a result of the cases of COVID-19. However, the Murtala Muhammed International Airport Lagos and Nnamdi Azikiwe International Airport, Abuja has reopened for domestic flights from July 8th 2020. BusinessDay’s check show that a one-way ticket from Lagos to major destinations such as Abuja, Port Harcourt or Owerri increased by 48percent which cost between N22,000 to N28,000 no’s cost between N33,000 to N41,000.

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For instance a one way ticket from Lagos to Abuja on Arik Air, which cost N32,699, for Dana it cost N35,099 and on AirPeace it cost N40, 299. Following the approval of flight operations, the Federal Airports Authority of Nigeria (FAAN) released new procedural guidelines for air travelers and other airport users. The new Standard Operating Procedure (SOP) is aimed at protecting all stakeholders and preventing further spread of theCovid-19 virus. In a statement signed by Henrietta Yakubu, general manager, corporate affairs, FAAN, it stated that “In the “New Normal”, departing passengers must comply with the following guidelines; All passengers must arrive at the airport properly kitted with their face masks on. @Businessdayng

“They must also ensure a minimum of one point five meters (1.5m) physical distancing, Aviation Medical/ Port Health personnel would screen each passenger and ensure the use of face masks, those travelling with pets must get necessary clearance from Nigerian Agricultural Quarantine Services, All passengers’ luggage would be disinfected before entry into the departure halls. “Passengers are required to wash their hands as often as possible, hand sanitizer would be provided for passengers before entrance, at the waiting halls/lounges and pre boarding gates, All footwear would be disinfected or sanitized by foot mats placed at all entrances to the terminal building, amongst others,” Yakubu stated.

Thursday 09 July 2020

BUSINESS DAY

FEATURE

Understanding how FMBN’s loan products enable access to affordable housing Unknown to quite a good number of home buyers in Nigeria, the Federal Mortgage Bank of Nigeria (FMBN) is easing access to housing finance and boosting home ownership. The apex mortgage bank, established as a wholesale mortgage finance institution, is, on consistent basis, changing Nigeria’s homeownership story through its rich portfolio of housing loan products which, in some cases, come at zero equity contribution and single digit interest rates, reports CHUKA UROKO

orldwide, mortgages take the lead as the preferred means for owning a home. In countries such as the United Kingdom, USA, France, and other Organisation for Economic Co-operation and Development (OECD) countries, it is rare to see people pay outright for homes using savings, loans from friends, family members or cooperative societies. The mortgage process entails granting of monies to obtain a home with good faith that the debtor will repay the loan with interest attached to life of it. Both the debtor and lender benefit if nothing goes wrong. Over the years, the borrower repays the loan, plus interest, until she or he owns the property free and clear. Mortgages have helped millions of people all over the world to buy homes. Even if you do not have N5 million cash, you can buy a home worth that amount using a mortgage and pay gradually over time till the loan is defrayed. “High mortgage adoption leads to high homeownership levels. In the United States, for instance, the proportion of households that are occupied by the owners is over 65. e1 percent,” notes Terhemen Ikyaave, a public policy analyst based in Abuja. Ikyaave notes further that, in the United Kingdom, homeownership rate is above 67.69 percent and 90 percent and 84 percent in Singapore and Indonesia, respectively. In contrast, Nigeria has a homeownership rate of about 25 percent, which is much lower than even Kenya – 73 percent, Benin Republic – 63 percent and South Africa, 56 percent. According to him, it is against this backdrop that the role of the Federal Mortgage Bank of Nigeria (FMBN) in boosting access to affordable housing finance is so significant. “Established as a wholesale mortgage finance institution, the FMBN provides primary mortgage banks with low-cost funds to provide affordable mortgages to Nigerian workers,” he explained. Notable features of FMBN mortgage loans include zero equity requirements for loans less than N5 million, and 10 percent equity down payment for loans ranging from N5million to N15million. Others include single digit interest rates ranging from 6 to 9 percent

Ahmed Musa Dangiwa

per annum and payment tenors of up to 30 years. FMBN’s housing products are available to contributors to the National Housing Fund (NHF) Scheme, a social savings scheme designed to mobilize long-term funds from Nigerian workers, banks, insurance companies and the government to boost access to affordable housing finance. The bank also has a wide portfolio of housing products that target low to medium income earners. Consider the FMBN-supervised National Housing Fund (NHF) Mortgage Loan. FMBN leverages funds from the NHF scheme to grant concessionary loans to its accredited Primary Mortgage Banks (PMBs) at a 4-percent interest rate. The mortgage banks in turn use these funds to give loans to qualified workers that contribute to the NHF scheme at 6 percent interest rate per annum with payment tenors of up to 30 years. Loans under N5million attract zero equity down payment while only 10 percent equity is required for loans ranging from N5m-N15. Subscribers are qualified to apply after six months of contributions of 2.5 percent of monthly salaries. For comparison, interest rates on housing loans in the open market range from 18 percent to 25 perwww.businessday.ng

cent per annum. Maximum loan repayment tenors hover between 10 – 20 years and lenders demand between 30 percent to 50 percent equity contribution depending on the borrower’s risk level. Balancing Housing Products and Worker’s Financial Capacity Besides the NHF Mortgage Loan, FMBN in the past three years under

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FMBN has maintained a trajectory of high performance over the past three years under the Dangiwaled management with key reforms that are gradually improving service delivery and creating historic impact

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the leadership of Arc. Ahmed M. Dangiwa, the bank has introduced innovative housing products and upscaled legacy ones. The first is the individual Home Construction Loan. The loan enables NHF contributors with unencumbered land, appropriate land titles and approved building plans to undertake self-construction. It provides up to N15million to NHF subscribers at 7 percent interest rate per annum with up to 30-year payment tenors depending on their age and number of years left in service. The second product is the FMBN Rent-To-Own Product. The loan allows beneficiaries to move into an FMBN-owned housing property as a tenant and pay towards ownership of the property in monthly or annual installments over 30 years at an interest rate of 9 percent! Third is the home renovation that provides up to N1m for home improvement. In the past three years, about 43,000 Nigerians have benefitted from this facility. FMBN has also revamped its legacy Cooperative Housing Development Loan (CHDL) in line with the initiative of the Minister of Housing, Babatunde Fashola (SAN) to adopt cooperative societies as the channel for the aggregation and delivery of houses to members of cooperative societies. Key features include tenors of up to 24 months with a moratorium of 12months and interest rate of 10%. Up to N500million is accessible by qualified cooperative societies under the facility. Leveraging FMBN’S Structures to Implement FG Housing Interventions To reverse the housing deficit in the country, bolder and more aggressive policy actions are required to strengthen both the demand side of housing in the country as well as the supply side. This entails supporting existing institutions such as the FMBN to scale their operations for greater impact. The recent announcement by the Central Bank of Nigeria (CBN) that it plans to inject about N500billion into the housing sector is a right step in the right direction. One sustainable way to guarantee judicious use of the funds and ensure direct impact on those who @Businessdayng

really need homes in the country is leveraging the institutional framework that the FMBN already provides and increasing the capacity of the bank to give more affordable loans to Nigerian workers. For one, the bank has the largest registry of potential homeowners in the country. Recent data show FMBN has over 5 million contributors to the National Housing Fund (NHF) Scheme. The list of subscribers includes civil servants, workers in the private sector, selfemployed persons, traders etc with comprehensive information about their income levels and financial capacity to pay back mortgage loans. “Deploying part of the CBN stimulus funds to enhance FMBNs’ ability to provide loans to subscribers to the National Housing Fund (NHF) scheme will be a good starting point for any housing intervention,” Ikyaave reasons. Housing Products that Target Low-Medium Income Earners Another related point is sustainability and affordability. Interventions must be anchored on institutions and proven systems with track record of delivery and improvements over the years. FMBN has maintained a trajectory of high performance over the past three years under the Dangiwa-led management with key reforms that are gradually improving service delivery and creating historic impact. Overall, Ikyaave is of the view that, to achieve high mortgage penetration levels in the country and increase homeownership rates, especially within the lowmedium income segments of the economy, there is, of course, the need to think outside the box giving the perennial stagnation of growth in the sector, noting hoewver that re-inventing the wheel is not an attractive option. “A low hanging fruit is to empower strong institutions and systems that have shown capacity to deliver affordable housing to do more. FMBN presents one such platform as the CBN seeks to stimulate growth in the sector. The current Board and Management should, therefore, be encouraged, and its finances bolstered to enable it to create greater impact as the foremost government tool for social housing delivery,” he says.

Thursday 09 July 2020

BUSINESS DAY

news Excelsior Shipping seen mopping-up Flour... Continued from page 2

geria plc, has mopped up the shares of the flour miller as shown in various transactions tracked by BusinessDay. Details of the share purchases in the past 5 weeks, valued at N145.5 million executed in 10 transactions on the Nigerian Stock Exchange (NSE), show Excelsior Shipping bought the shares of Flour Mills Nigeria at a premium price of N21, which had its stock price closed at a low of N18 as at Tuesday July 7, from week open high of N18.5. The NSE mandates companies to disclose every share dealings by insiders. Excelsior Shipping is a company registered in Liberia. The beneficial owner of Excelsior Shipping Company is a trust established by the late John S. Coumantaros. In every dividend paid to Flour Mills shareholders, which Excelsior Shipping Company Limited is the majority shareholder, it gets large chunk. Also, between May 22 and May 29, Excelsior bought 1,229,764 units at N21 per share, and between June 1 and 3, it bought 500,000 units at same price. On June 22, at N21 per share, Excelsior bought 200,000 units of Flour Mills; June 24 (500,000 units); June 26 (1.8m units); June 29 (2 million units), and July 1 (250,000 units). BusinessDay checks further show that Excelsior also bought 250,000 units of Flour Mills shares at N21 on July 2; on July 3 it bought 100,000 units while on July 6 it paid the same N21 for 100,000 units. Flour Mills is the market leader in food and agroallied products in Nigeria. The Group is primarily engaged in flour milling, production of pasta, noodles, edible oil and refined sugar, production of livestock feeds, farming and other agro-allied activities, distribution and sales of fertilizer, manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials, operation of terminals A and B at the Apapa Port, customs clearing, forwarding agents, shipping agents and logistics, etc. Excelsior Shipping is no doubt paying more to increase its equity stake in the viable Flour Mills, which its stock price closed at a low of N18 as at Tuesday July 7 from week open high of N18.5. The shares had reached a 52-week high of N24 and a corresponding week low of N12.50. Flour

Mills has 4,100,379,605 shares outstanding. According to the Regi st e r o f Me mb e r s o n March 31, 2019, apart from Excelsior Shipping Company Limited with 2,256,437,696 (March 31, 2018: 2,242,727,789), representing 55.03 percent of the paid up share capital, respectively, no other individual shareholder held up to 5 percent of the issued share capital of the company. Flour Mills of Nigeria third-quarter (Q3) results for the year 2019/2020 show impressive growth. The Nigeria’s leading integrated food business and agroallied Group recorded profit before tax (PBT) increase by 23 percent to N3.7 billion in Q3, and by 9 percent to N12.3 billion nine months period. The Group continues to make progress in its purpose of ‘feeding the nation, everyday’. The Group’s revenue in Q3 2019/20 was N152.7 billion, compared to N130.9 billion in Q3 2018/19 (17% - YoY growth). For the nine months ended December 31, 2019, Group revenue was N423.5 billion, representing a 6 percent increase compared to same period last year. Gross profit increased by 11 percent in Q3 and by 3 percent year-todate (YtD), and gross profit is N47.8 billion, compared to N46.6 billion last year. Finance cost reduced to N4.3 billion, a significant drop (20%) compared to N5.3 billion in Q3 2018/19 (21% year-on-year (YoY) decline). Profit before tax increased by 23 percent to N3.7 billion in Q3 and by 9 percent to N12.3 billion YTD. Net cash generated YTD was N7.9 billion, compared to N7.2 billion in the prior year. “The revenue growth in these segments did not come as a surprise, as we had anticipated better volume supported performances from the edible oil and sugar segments, given the closure of the borders and the end of year festivities,” note research analysts at Lagos-based Vetiva. They also note that Flour Mills has been well positioned for increased demand from the closed borders, having expanded and regionalised their pasta and ball-food product segments with the introduction of the Mai Kwabo and Dawavita brands in the North; this was in addition to their already diversified portfolio and expanded production capacity for the pasta and semovita brands. www.businessday.ng

L-R: Babatunde Osadare, head, legal and regulatory; Enobong Ezekiel, chief commercial officer, both of Ikeja Electric; JohnPaul Onyiliagha, chairman, and Jirgba Bitacy, secretary of Coker Estate, during the signing of Bi-Lateral Power Agreement with Ikeja Electric in Lagos.

Here’s where wealth managers in Nigeria are... Continued from page 1

a field day advising wealthy clients who are keen to either preserve capital or invest in assets with inflation-beating returns (above 12%), as they attempt to soften the damage wrought by the pandemic on their investment portfolios. At a BusinessDay webinar, themed, “Private Banking and Wealth Management Solutions: Preserving value through the dip and turmoil,” held Wednesday, the wealth managers in attendance shared some insight into what they had been advising their clients to invest in. “One of the first things we recommend at this time is to buy fixed income assets, which not only help preserve capital but guarantee a healthy return. For those who are heavily exposed to residential real estate, we are also advising them to sell down on some of them in order to have a diversified portfolio,” Titi Adeoye, founder of Sankore Investments, said. “We found that close to 60 percent of the net worth of most high net worth individuals (HNIs) is held in real

assets like residential real estate and little in fixed income. “But we are now telling our clients to up their fixed income holdings to 47 percent, which should constitute not just Nigerian government securities but also sovereign bonds of developed and emerging markets as well,” Adeoye said. Not every type of real estate is a preserver of longterm value and a hedge against inflation in Nigeria, according to Adeoye. “Most real estate owned by HNIs are residential and in highbrow areas like Ikoyi. But when you look at the relatively high vacancy rate in Ikoyi, which is about 22 percent, you realise such assets are not necessarily great value for money. “There are, however, opportunities in alternative assets and other forms of real estate like student housing and residential flats in areas like Yaba and Ikorodu, where the vacancy rate is below 2 percent, and the need for housing is huge,” Adeoye said. “I think alternative assets are the way to go for high

Nigeria’s property title problems persist as 71%... Continued from page 2

port reveals that the “highest prevalence of ownership certificate is in Lagos – 22.9 percent.” According to the Lagos State Business Made Easy (BME) document driven by the Presidential Enabling Business Environment Council (PEBEC), there has been a reform in the method of operations by the Lagos State Land Bureau as it has introduced the use of technology in its day-to-day transactions. The BME document, however, explains that prior to the implementation of the reforms, “applicants seeking to register a property in Lagos were required to pay fees at different stages and carry out visits to the land registry before registration could be

completed.” But, checks by BusinessDay reveal that Nigerian property owners, estate developers, legal practitioners and other stakeholders in Lagos State have had a mixed bag of experiences, in getting their land documents in a country where 90 percent of houses are built with own savings. The provision by Nigeria’s Land Use Act of 1978 that the Governor has to grant a statutory right of occupancy before a person can use his landed property for mortgaging, transfer or subleasing is one of the reasons cited by industry players as the major barrier to affordable housing. “It shall not be lawful for any customary right of occupancy or any part thereof to be alienated by assignment,

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returns.” Fixed income assets also present a viable option for wealthy people to park their cash, according to Lanre Fabunmi, CEO of AIICO Capital, noting, “We have been pointing clients in the way of risk-free assets like government treasury bills.” “Treasury bills have outperformed every other asset class in the last 5-10 years in Nigeria,” Fabunmi said. “In the last five years, TBills have returned 111 percent on average and 328 percent in 10 years, that’s more than a three-fold return,” Fabunmi said, saying, “Equities on the other hand posted a loss of 12% in five years but a gain of 23 percent in 10 years.” Yields on Nigerian treasury bills have collapsed to within 4 percent in 2020, from a high of 21 percent in 2016, but Fabunmi noted that the asset class should still be a preferred option for a passive investor seeking to preserve capital. “We also recommend TBills and other fixed income assets to clients because of the tax advantage, given that capital gains tax don’t apply on fixed income, whereas it

does for equities,” Fabunmi said. Samuel Enuechusue, head of investment management at Investment One, also advised clients to invest more in alternative assets, noting, “The only place to get inflation-beating returns is in alternative assets, particularly the agriculture value chain. “For instance, we have been taking to AFEX to see how we can help clients invest in agriculture.” Alternative assets also form a good chunk of what wealthy clients are increasingly being advised to consider by Platform Capital, according to Akintoye Akindele, the firm’s chairman. “There are exciting opportunities that can deliver over 20 percent return in the agricultural value chain, education especially, from a private equity perspective,” Akindele said. Wealth managers are also increasingly advising clients to think of currency allocation, especially those with foreign currency expenses. “It may be useful to have some US dollars holdings even as it is important to have sufficient naira liquidity as well,” Adeoye noted.

mortgage, transfer of possession, sublease or otherwise howsoever - without the consent of the Governor in cases where the property is to be sold by or under the order of any court under the provisions of the applicable Sheriffs and Civil Process Law,” the Land Use Act reads. Nasir el-Rufai, Kaduna State governor, explained, “The major issues that continue to affect housing delivery in Nigeria, which also account for the wide demand-supply gap, include constraints related to the high cost of securing and registering secure land title.” While the Land Use Act was established to curb land speculation, the key driver for the astronomical rise in land values, the lack of modification of the Act, which was passed some 42 years ago, is now described by industry

experts as a setback for many property owners. Difficulties in obtaining land title, for example, would mean that real estate developers will have challenges having access to lands and this would also mean that there would be fewer inventories in the market or the available products will come at a higher cost. The latter is the case for Nigeria, a country that requires an estimated N170 trillion to N200 trillion to bridge its housing deficit of more than 20 million units. “The cost of building a house is the same, whether you are building in Victoria Island or Ikoyi, but it is the land value that drives the cost of properties high,” Adekunle Abdul, managing director, Metro & Castles Homes, a real estate development company, notes.

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Thursday 09 July 2020

BUSINESS DAY

NEWS TAJBank launches Nigeria’s FG eyes expansion of revenue base with MoU on Ajaokuta landing port first ethical online mall SEGUN ADAMS

AJBank, Nigeria’s second non-interest bank, has announced the anticipated launch of TAJMall, the nation’s first ethical online shopping mall. TAJMall is an ethical shopping mall with a carefully curated selection of local and international brands sold by strictly vetted brands. The launch of the e-commerce site, which held recently, is coming closely on the heels of the commencement of its Agency Banking Network that began in June across 13 states in the country. To celebrate this, the brand will be holding a week-long TAJMall campaign from July 6 – 11, 2020, to sensitise and also reward its new customers to its platform. “This is a great milestone as we present a fully customer focused e- commerce platform offering 100 percent authentic brands from highly vetted vendors. Our mission is to rebuild trust in the online shopping niche, hence the emphasis on our platform being an ethical shopping mall. We want to deliver on our promise and make this an enjoyable and safe experience not just for our customers, but also for our numerous trusted vendors as well,” Hamid Joda, founder/

COO, TAJBank, said. “Our customers place absolute trust that goods will be delivered exactly as requested, and we do not take that trust lightly,” he said. The brand expressed commitment to continuously deploy technological tools on it new e-platform to maintain optimal customer service delivery and ensure shopping on TAJMall remains a productive and hassle free experience. Customers who log onto the tajmall.ng platform (or download the app) will have the opportunity to enjoy massive price slashes, shopping coupons, free shipping and other incredible offers. The bank also intends to offer financing to its customers who shop on the mall. “Well beyond our exciting line up of activities, they are assured the highest level of value each time they make a purchase on TAJMall. Our marketing insights have shown that there is an increasing need to match the kind of variety in product offerings that customers yearn for with the exceptional shopping experience that may at times be lacking. We aim to make that an unmatched experience right from the moment our customers visit our mall to the receipt of their items,” affirmed co-founder/ CMO, Sherif Idi.

HARRISON EDEH, Abuja

ederal Government is targeting expansion of its revenue base from solid mineral sector with the signing of memorandum of understanding (MoU) with Sealink Promotional Company Limited on the use of Ajaokuta Jetty Landing Port. Sealink Promotional Company is a ferry company, and the MoU commitments would enable it transport Nigerian solid mineral by waterways, which will remove about 80 percent of cost element of vehicular transportation, while ensuring proper tracking of Nigerian solid mineral movement. Analysts say with the landing port, the Federal Government would save lots of fund from illegal transportation of its solid mineral unaccounted for and shore up solid mineral contribution to the Gross Domestic Product, beyond the current 5 percent contribution. “With logistics and transportation that is digitalised, not one ounce of our solid mineral will get missing when being transported .That is one thing that Sealink is bringing to the table in this MoU with the government,” chairperson of

Sealink Promotional Company, Dabney Shall-Holma, said at the MoU singing in Abuja, Tuesday. Also, the project, which is being executed in conjunction with Nigeria Export Import Bank (NEXIM), is geared towards utilising the commercial value of the jetty and effective usage of the waterway. Olamilekan Adegbite, minister of mines and steel development, speaking during the signing ceremony, disclosed that the use of waterways as means of transportation would not only increase the volume of commerce, but also would remove the huge logistics challenges encountered on the road, reduce the damage done to the roads by heavy duty trucks as well as decrease the high cost of road maintenance. Adegbite revealed that the use of the Ajaokuta jetty as landing port for the internal waterways would enable goods to be transported easily and at a cheaper rate, and increase commercial activities around the jetty. He applauded the collaboration, saying such Public Private Partnership would aid economic growth and improve infrastructural development.

COVID-19: FG reverses self on schools’ resumption, postpones WASSCE indefinitely TONY AILEMEN, Abuja

he Federal Government on Wednesday reversed its earlier decision on school resumption, saying schools would no longer reopen revision classes for final year students preparing for examinations. Government also announced that no school would participate in the West African Senior School Certificate Examinations (WASSCE) earlier scheduled for August 5 to September 5. The examination was postponed indefinitely due to the spread of the coronavirus (COVID-19) disease. Chukwuemeka Nwajiuba, minister of state for education, had on Monday announced that the West African Senior School Certificate Examinations would take place between August and September. Minister of Education, Adamu Adamu, speaking with State House correspondents at the end of the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari, yesterday, said Nigerian schools would not re-open any time soon until it was safe to do so because of the COVID-19

pandemic. Adamu declared that final year students preparing for the Senior Secondary Certificate Examination (SSCE) would not be allowed to return to school contrary to earlier announcement. The minister stated that the West African Examinations Council (WAEC) cannot determine the resumption date of schools for Nigeria, saying he would prefer that Nigerian students lose an academic year than expose them to dangers. He said FEC approved an agreement between the Kaduna Polytechnic (KADPOLY) and an investor to renovate 18 blocks of student hostels at the cost of N744,264 million. The concessionary contract is for a 15-year period under a Renovate Operate, Maintain and Transfer (ROMT) arrangement. He said: “It will take one year to construct the hostels, after which the contractor will run it for 15 years within which they will recover what they have sunk into the project. “There are 18 blocks of hostels and each room in a block will house four students. The total number of students to be housed will be 4,032.”

Flights resume in Lagos, Abuja amid strict safety protocols after over three months of COVID-19 lockdown

Domestic flight resumes at MMA in Lagos

Passengers queue to board a flight from Nnamdi Azikwe International Airport, Abuja, to Murtala Muhammed Airport, Lagos, during the resumption of domestic flight operations.

Passengers boarding the first flight to kick start domestic flight resumption at the Murtala Muhammed Airport, Lagos, yesterday. Federal Government suspended local flight operations in March to curb the spread of COVID-19 pandemic in Nigeria. www.businessday.ng

Passengers arrived three hours before flight take off at Nnamdi Azikwe International Airport, Abuja

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Thursday 09 July 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Political insiders benefited from US small business rescue plan Groups receiving funds from $520bn PPP scheme include lobbying firms and conservative think-tanks COURTNEY WEAVER

new trove of data has revealed that politicians and some of Washington’s top lobbying firms benefited from the US government programme to help small businesses during the pandemic. At least four congressional representatives — Republican lawmakers from Pennsylvania and Missouri and two from Oklahoma — have equity stakes in businesses that received funding from the $520bn Paycheck Protection Program, which offers forgivable loans to small businesses that kept their staff on payroll during the economic crisis. Other Republican and Democratic lawmakers — including Democratic congresswomen from Nevada and Florida — have spouses whose businesses who took PPP loans, the data show. The Trump administration has heralded PPP as a success, arguing that the scheme has saved hundreds of thousands of businesses and preserved millions of jobs since the US economy screeched to a halt this April. But the Treasury and Small Business Administration have also stressed that any business taking the funds must face serious “economic uncertainty” and should not have ready access to other forms of fundraising.

Republicans have highlighted that a California limited partnership in which the husband of Nancy Pelosi, the Democratic House speaker, holds an 8 per cent stake, had received between $350,000 and $1m in PPP funds © Reuters

While the political figures, family members and organisations to have benefited from the scheme have not been accused of acting fraudulently, political activists from both parties have criticised the management of the programme, arguing that such groups were not the scheme’s intended recipients. According to the data released by the Small Business Administration, other groups that were approved for PPP loans include top Washington DC lobbying firms such as the company started by former secre-

tary of state Madeleine Albright, the Ohio and Florida chapters of the Democratic party and two conservative groups that have staked their reputation on opposing big government spending: the Ayn Rand Institute and Americans for Tax Reform, which was founded by Grover Norquist. Trump and his cronies were like pigs at the trough, using the pandemic with Americans 3m sick, 133,000 dead and tens of millions out of work to enrich themselves further

Amy Siskind, anti-Trump activist, on Twitter On Tuesday the Republican National Committee sent a mass email noting that a California limited partnership, in which the husband of Nancy Pelosi, the Democratic Speaker of the House of Representatives, holds an 8 per cent stake, had received between $350,000 and $1m in PPP funds. A law firm connected to Democratic presidential candidate Joe Biden had also received money, the message said. “Joe Biden’s former law firm,

which he and his family still use for their legal representation, received a PPP loan for between $150,000 and $350,000. So much for Biden’s empty smears that the PPP was designed to award President [Donald] Trump’s ‘cronies’,” the RNC said. Sean Hannity, the conservative broadcaster and ally of Mr Trump, wrote on Twitter that Blue Star Strategies, a PR firm tied to a Ukrainian gas company that had once employed Mr Biden’s son, Hunter, had received a loan in the range of $150,000 to $350,000. Republicans have also seized on the distribution of loans to Planned Parenthood clinics. On Tuesday Marco Rubio, one of the main congressional backers of the PPP, sent a letter to attorney-general William Barr, reiterating his request to investigate why multiple Planned Parenthood affiliates had received PPP loans, despite the fact that their parent organisation employed 16,000 people nationwide, and thus was not a small business. Planned Parenthood has rejected the assertion that its local affiliates must return the loans, arguing that they have separate leadership structures and bylaws from the national organisation. On the other side of the aisle, Democrats have noted that many Trump administration officials appeared to have benefited from the programme, as had conservative groups and Republican lawmakers. Kushner Companies, the hold-

Trump’s niece calls president a lying narcissist Scathing portrait comes in family memoir that White House calls a ‘book of falsehoods’ DEMETRI SEVASTOPULO

onald Trump developed a penchant for employing hyperbole and lying after watching his “high-functioning sociopath” father demean any members of the family who showed weakness, according to a new memoir by his niece. In To o Mu c h a n d Ne v e r Enough, Mary Trump describes her uncle as a bully and narcissist who learnt to lie to ensure that his father, Fred Trump, did not treat him with the scorn the New York builder laid on his eldest son, Freddie. In the memoir, obtained by the Financial Times ahead of its publication later this month, Mr Trump’s niece says his long history of lying has become a more serious problem now that he is having to deal with crises, including the coronavirus pandemic. She says he is not equipped to handle it. “His ability to control unfavourable situations by lying, spinning and obfuscating has diminished to the point of impotence

in the midst of the tragedies we are currently facing,” Ms Trump writes in the book. The publication comes four months before the presidential election as fresh questions are being asked about Mr Trump’s character and performance in office, particularly his handling of the pandemic and his response to the protests following the killing of George Floyd. It also comes just weeks after John Bolton, his former national security adviser, wrote a scathing memoir in which he said Mr Trump was unfit to serve as commander-in-chief. Mr Trump’s younger brother, Robert, tried to block Ms Trump’s book from being published by Simon & Schuster, but he was rebuffed in court. Asked about the memoir on Tuesday, Kayleigh McEnany, White House press secretary, said it was a “book of falsehoods and that’s about it”. Ms Trump, a psychologist by training, says that in addition to meeting the clinical definition for narcissism, the president may also suffer from antisocial personality disorder, dependent personality disorder and learning disabilities that make it hard for www.businessday.ng

him to process information. “Donald Trump’s pathologies are so complex and his behaviours so often inexplicable that coming up with an accurate and comprehensive diagnosis would require a full battery of psychological and neuropsychological tests that he’ll never sit for,” she writes. The president has described himself as a “very stable genius”. In the 225-page book, Ms Trump describes her uncle as a fraud who has “failed up” his whole life. She claims he paid a friend to take the SAT college admission tests to help have him accepted to the University of Pennsylvania. Ms Trump says the key to understanding her uncle lies in his relationship with his deceased father, a strict man who had few emotional connections with his children. She writes that Fred Trump taught his son never to apologise because it would be seen as a sign of weakness. She claims that Fred Trump frequently rhetorically abused his eldest son, Freddie — her father — who wanted to be an airline pilot rather than working in the family business. She says Donald

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Trump took advantage of this by repeatedly pointing out what he and his father viewed as Freddie’s weaknesses as he positioned himself to take over the business instead of his older brother. Freddie died an alcoholic in 1981, aged 43. The only time Donald went to church was when the cameras were there Mary Trump The book describes a highly dysfunctional and hierarchical family where their mother was often sidelined by illness while their father was only interested in furthering his building empire in suburban New York. Ms Trump says her grandparents’ large house had a library that was devoid of books until Donald Trump published The Art of the Deal. In explaining the family, she says Fred Trump’s need for recognition “propelled him to encourage Donald’s reckless hyperbole and unearned confidence that hid Donald’s pathological weaknesses and insecurities”. Ms Trump claims that her uncle at one point tried unsuccessfully to trick his then-ailing father into amending his will so that his son would have complete @Businessdayng

control over his estate. She says Mr Trump has been preoccupied with winning — and being seen to be winning — since he was young. She recounts how he would even strive to win when he was playing sports with his younger cousins. “Even with little kids, Donald had to be the winner,” she recalls about her uncle, whom she adds also lacks a sense of humour. Ms Trump acknowledges giving the New York Times documents about the president’s taxes for a 2017 story because she was concerned about his behaviour in the White House while watching “democracy disintegrating”. She also takes aim at Mr Trump’s support among US evangelicals, saying her uncle has “no principles” and that “the only time Donald went to church was when the cameras were there”. Ms Trump says her uncle launched his presidential campaign in 2015 as a marketing stunt. When she saw the result the morning after the election, she writes that “it felt as though 62,979,636 voters had chosen to turn this country into a macro version of my malignantly dysfunctional family”.

Thursday 09 July 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

European stocks retreat as coronavirus outbreaks threaten recovery

Gold hovers near 9-year high while Wall Street opens higher SARAH PROVAN AND DANIEL SHANE

uropean stocks retreated on Wednesday while gold tested a nine-year high as investors tracked a surge in coronavirus cases that threatened to undermine economic recoveries across the world. US shares opened higher, with the S&P 500 climbing 0.5 per cent and the tech-heavy Nasdaq Composite rising more than 1 per cent. Recent data reflecting economies reopening is “what has really pushed markets higher” over the past few trading sessions, said Nick Peters, multi-asset portfolio manager at Fidelity. Wall Street’s advances come despite Texas, California and Florida reporting an increase in coronavirus outbreaks. US infections rose by more than 50,000 on Tuesday while the number of deaths jumped to levels not seen since June. But in Europe, equities were on course for a second day of declines, with the region-wide Stoxx 600 and London’s FTSE

100 falling 0.6 per cent in afternoon trading. Unease among investors lifted gold. The price of metal, often considered a haven asset in times of market turmoil, stayed above $1,800 a troy ounce, testing its highest level since September 2011. It was 0.3 per cent stronger on Wednesday. The yield on the 10-year US Treasury, another relatively safe asset, was

little changed, adding 0.02 percentage point to 0.664 per cent. Yields rise when bond prices fall. “Gold is a more attractive defence position, especially with government yields being as low as they are,” Mr Peters said. The Cboe’s Vix index, which gauges investor expectations of short-term volatility in US stocks, has neared 30 this week. Known as Wall Street’s “fear gauge”, the

creep higher reflects traders’ expectations for heightened volatility. Its latest measure was at 28.36, down 3.7 per cent, on Wednesday. In commodities, oil traded within a narrow range as investors weighed the impact on demand from the US Covid-19 flare-ups. Brent, the international marker, steadied at $43.19 a barrel while West Texas Inter-

mediate, the US benchmark, was up 0.3 per cent at $40.73 a barrel. The yield on 10-year UK government bonds was stable and the strength of sterling was largely unmoved against the dollar and euro following the announcement of stimulus by Rishi Sunak, the UK chancellor, to support jobs as lockdown measures eased. China’s CSI 300 of Shanghai and Shenzhen-listed stocks closed up 1.6 per cent, extending this week’s rally to more than 8 per cent with the index heading for a seventh week of gains. That puts the mainland Chinese stocks benchmark on course for its biggest weekly advance since December 2014. Elsewhere in the Asia-Pacific region, Japan’s Topix index fell 0.9 per cent while Australia’s S&P/ASX 200 dropped 1.5 per cent and South Korea’s Kospi declined 0.2 per cent. Hong Kong ’s Hang Seng added 0.6 per cent but shares in HSBC fell nearly 4 per cent following a report that the US administration could target the city’s currency peg to the US dollar in retaliation for Beijing’s new security law.

Gold shoots above $1,800 for first time since 2011 Layer3 marks 15 years of delivering Nine-year high for the haven asset on fears over economic hit from coronavirus NEIL HUME

old prices rose to more than $1,800 an ounce on Wednesday for the first time in nine years as data showed investors had stashed a record $40bn of cash into funds backed by the precious metal during the first half of the year. The commodity, widely favoured by investors as a store of value in times of stress, breached $1,810 during afternoon trading in London, with a gain of more than 1 per cent on the day. Gold has risen about 19 per cent so far this year, cementing its position as one of the best performing major asset classes of 2020 as investors have looked for safe places to park their cash at a time of heightened uncertainty for the global economy due to the Covid-19 crisis. James Steel, chief precious metals analyst at HSBC, one of the world’s biggest bullion banks, said prices “were already rallying well before the emergence of Covid-19”, which has further added to their momentum. Net inflows into gold-backed exchange traded funds hit $5.6bn (or 104 tonnes) in June, taking global holdings to a new all-time high of 3,621 tonnes, worth more

than $200bn, according to data published by the World Gold Council this week. Overall net inflows in the first half of the year came in at almost $40bn (or 734 tonnes), surpassing the highest level of annual inflows, both in tonnage terms (646 tonnes in 2009) and US-dollar value ($23bn in 2016), according to the WGC. This has helped offset a collapse in jewellery demand, which HSBC reckons could be down by a fifth this year, and an increase in recycling. “Investment demand is doing a lot of heavy lifting at the moment and needs to continue for gold to prosper,” said John Reade, chief market strategist at the WGC. Like other asset classes, gold was hit hard in March as investors rushed to liquefy their investments when the scale of the Covid crisis became clear. Since then, governments and central banks across the world have unleashed huge fiscal and monetary support packages, driving down yields on other safe assets, with some US Treasuries in effect paying investors a negative return. That has undermined one reason not to buy gold: that it provides no income. More recently, the metal has benefited from nervous investors hedging their exposure to riskier www.businessday.ng

assets after a rise in new Covid infections in the US. “Fears of further increases in infections and related lockdown fears have been driving demand and thus prices,” said Carsten Menke of Swiss bank Julius Baer. “This suggests that short-term price risks remain skewed to the upside as long as the virus does not come under control.” Gold’s strong run has turbocharged the performance of big producers, which can enjoy rising prices without an accompanying increase in costs. The NYSE Arca Gold Miners index is up 28 per cent so far this year. “We expect a strong interim reporting period,” said Numis analyst Justin Chan, who is forecasting a 79 per cent year-on-year jump in earnings from the gold producers he follows. The key question investors are now asking themselves is whether gold will surpass its 2011 record high of slightly more than $1,900. “The health, financial and economic uncertainties generated by the Covid-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level, we believe,” said HSBC’s Mr Steel. He thinks prices could reach $1,845 by the end of this year before falling back to $1,705 in 2021.

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IT solutions in Nigeria

ayer3, a leading IT services provider, is marking its 15th year of delivering Information Technology (IT) services and solutions in Nigeria’s technology space. Launched in 2005, Layer3 provides technology solutions ranging from network and security solutions, to cloud and access solutions and boasts of some of the most demanding global and national organizations in the private and public sectors. Oyaje Idoko, CEO of Layer3, said the company’s anniversary is an opportunity to reflect on its growth over the past decade-and-half. “For 15 years, we have supported organizations with the technologies they need to scale and thrive. Each year, we remind ourselves of how far we have come on this journey,” said Idoko. Idoko noted that the company’s work was driven by a mission to make organizations and individuals excel through technology. According to him, this was evidenced by the accomplishments its customers had recorded while working with Layer3. “The work we do is meaningful and transformative. There is evidence of this in the wins that our solutions have helped our clients achieve. We want the coming years to yield even greater successes for them, and for us,” Idoko said. Shatse Kakwagh, executive @Businessdayng

director at Layer3, said the IT company is a positive force in Nigeria’s organizational landscape. “Through sheer hard work and dedication to our vision, we are enabling the success of numerous businesses. The technologies we provide to them have spurred growth across this country,” said Kakwagh. As one of Nigeria’s leading IT services firms, Layer3’s services are enjoyed by organizations in various parts of the country and in other African countries. Layer3 impact is also being felt through its Corporate Social responsibility projects and interventions especially in the education, health, and start-up innovation ecosystem. For instance, Layer3 has continually supported NCDC, allowing the agency to strengthen its communications and response capacities, as it tackles the COVID-19 pandemic. Layer3 was recognized as one of the London Stock Exchange’s Companies to Inspire Africa in 2019. It has also been named one of the top five IT companies to work for by Jobberman and has won the Beacon of ICT Awards for Best Cloud Service provider in Nigeria, as well as the back-to-back awards for the best Customer Service in IT awards, amongst many other awards.

industry Insight

BUSINESS DAY Thursday 09 July 2020 www.businessday.ng

Saving SMEs sector from coronavirus-induced collapse Gbemi Faminu

ince the outbreak of the novel coronavirus (COVID-19), countries around the world have experienced pressure in various forms. Apart from the strain the virus has placed on the health sector around the world, it has also affected countries economically, politically and socially. It has neither spared governments’ fiscal status nor the incomes of low and middleclass citizens. All economies—developed, emerging or frontier—have experienced slump in one form or the other. Developed economies have created buffers to curtail the harsh effect of the virus on economic and commercial activities. The United States is already seeking additional $250 billion to complement $350 billion earlier budgeted as relief fund for small businesses in the country. The loans are meant to keep the economy running and jobs intact. The loans are easily forgiven if there is evidence of using the money to keep workers on the payroll rather than laying them off. Several emerging markets have not been that lucky as they do not have such war chest except they borrow from multilateral agencies. Principally, the micro, small and medium scale enterprises (MSMEs), which account for 90 percent of all businesses in Nigeria and contribute 50 percent to the GDP, seem to be the worst hit as they have been forced to restrict and in some cases suspend business operations. “The best thing for me to do is to sack two out of three of my workers after this lockdown,” Daniel Jackson, a small business owner, who produces leather shoes, said. Jackson, who has not opened his Lagos factory since the partial lockdown almost two weeks ago, complained that he had not been able to recover some of the debts owed him and had not paid his workers. Owolabi Mercy, a Lagosbased entrepreneur, who deals in bags, shoes and clothing items, told BusinessDay that since the outbreak she had nothing to sell as her suppliers would not pick their calls. Obviously, there will be mass closures post-Covid-19, but some nations will recover quicker than others, analysts say. In 2016, the Nigerian economy went into recession with the federal government imposing a

lot of restrictions on businesses. Consequently, 272 MSMEs, including manufacturing firms, were forced to shut down that year, with 180,000 jobs lost, according to a survey jointly done by NOI Polls, the Manufacturers Association of Nigeria (MAN) and Centre for the Studiesof Economies of Africa. Predictions are that the number might be three to five times higher this time. A national survey of MSMEs conducted by the National Bureau of Statistics (NBS) in 2017 shows that the country has 41.5 million MSMEs scattered across various sectors. The data also affirm that about 73 percent of these MSMEs fully engage in wholesale and retail trade activities with China as a principal partner while about 43 percent of the medium scale enterprises engage in manufacturing activities. But many firms also shut down. “The number of mediumsized enterprises decreased significantly from 4,670 in 2013

to 1,793 in 2017, indicating a 61 percent drop,” said the 2019 report which covered between 2013 and 2017. This means that 2,877 firms shut down within four years. Unemployment in Nigeria, now world’s poverty capital, is 23.1 percent. The number may run into 30+ after the pandemic, analysts say. Covid-19 is cutting short lives and businesses with some firms not sure of recovering after the pandemic. Businesses are not in operation and even those allowed to operate experience low product demand. Nigeria is set to borrow $6.9billion from multilateral lenders to provide liquidity for the economy and counter the negative impacts of the virus. The government is seeking $3.4 billion from the International Monetary Fund, $2.5 billion from the World Bank and a further $1 billion from the African Development Bank, according to Zainab Ahmed, finance minister.

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Principally, the micro, small and medium scale enterprises (MSMEs), which account for 90 percent of all businesses in Nigeria and contribute 50 percent to the GDP, seem to be the worst hit as they have been forced to restrict and in some cases suspend business operations

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On the domestic front, available data on key macroeconomic variables indicate the likelihood of subdued output growth for the Nigerian economy in 2020 Analysts are urging the government to ensure that part of the funds go to the MSMEs who have created more than half of jobs in the economy. Bongo Adi, a Lagos-based economist, said this is a bleak period for many companies especially the MSMEs as no country has been able to arrest the virus. He said that the impact of the pandemic was beyond what the MSMEs would handle and said government must create palliative measures. “The MSMEs cannot solve this because this is not a normal challenge. Their supply and logistics have been cut off from various sources so there is nothing they can do,” he added. In addition, for a country like Nigeria, which is heavily reliant on oil, the virus has instigated a pendulum-like movement on

oil price which hovers around $32 per barrel (Brent). The over 20 percent drop in oil, which accounts for almost 90 percent of foreign exchange earnings, as well as about half of federal government revenue, has implications for the economy which could result in another recession and even stronger implications for manufacturers and traders that need Forex for their business activities. “The best bet is for government to provide six to nine percent loans to SMEs at a tenor of three to four years,” Ike Ibeabuchi, a manufacturer, said. “This should not be taken lightly like other things we do in Nigeria. It is serious, otherwise we will be courting a big unemployment disaster that will have a ripple effect,” he advised. Questions hang in the air as to how the country will make a rebound after the pandemic which is yet to be arrested, especially as major drivers of economic growth have been greatly affected. Already the Central Bank of Nigeria (CBN) during its last Monetary Policy Committee (MPC), stated that the outbreak of the pandemic had affected economic activities and will dampen the growth of the economy for the year. “On the domestic front, available data on key macroeconomic variables indicate the likelihood of subdued output growth for the Nigerian economy in 2020. Based on the current downturn in oil prices, staff projections indicate that output in the 2020 would be less than earlier envisaged,” Godwin Emefiele, Governor, CBN said Although the apex bank introduced some palliatives and stimulus packages for businesses to curb the impact of the virus, there are concerns on currency stability and disruption to global supply chains. Due to the growing number of cases in Nigeria, the federal government has directed that Lagos, Abuja and Ogun State be placed on total lockdown to curtail the pandemic. There are indications that it will be extended. This inevitably will further trigger a negative demand and supply shock to the economy and cause a hike in the prices of essential goods. Analysts say it will do a lot of damage to the economy, particularly small businesses. But they add that fighting the virus should be the number one priority of every country and bailing out business should be the next.

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