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news you can trust I ** monDAY 09 march 2020 I vol. 19, no 515

These 8 infrastructure projects can jolt Nigeria’s sleepy economy LOLADE AKINMURELE

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igeria will need all the ideas it can muster to grow a flailing economy that may be headed for a second recession in four years as crude oil prices race to new lows.

The answer to part of the economic lethargy in Nigeria may lie in some eight projects identified by business leaders as potential game changers that could significantly change the narrative in Nigeria, where the economy is not creating enough opportunities to cater for a burContinues on page 46

Inside

Nigeria wobbles into a price war with oil producers P. 2 Buhari’s $22.7bn loan is net positive for the economy P. 15

₦3,277,242.97

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30 Y 0.37

10.23

10.81

12.56

NGUS feb 22 2023 375.00

NGUS feb 26 2025 380.00

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Nigeria exposed on low buffers as oil may fall to $20 Domestic fund managers seek dollar assets

L-R: Bamidele Abiodun, first lady of Ogun State; Folorunsho Alakija, managing director, Rose of Sharon Group and vice chairman, Famfa Oil Limited, and Ladi Balogun, group chief executive, FCMB Group plc, during the first anniversary celebration of FCMB’s Women in Business proposition, SheVentures, held in Lagos.

LOLADE AKINMURELE & DIPO OLADEHINDE

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t could be 2016 again for the Nigerian economy, or even worse, as Saudi Arabia’s sudden oil price war in response to Russia’s hard ball over production cuts threatens to send oil prices tumbling towards unprecedented lows.

“The cost of OPEC+ failure to agree on a production cut is too great. It would leave the market vulnerable to a short-term swing below $30 a barrel,” said analysts Emily Ashford and Paul Horsnell from Standard Chartered.

In 2016, Nigeria slipped into its first recession in 25 years and was forced to devalue the currency by more than 40 percent, all because crude oil prices had Continues on page 46

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news global oil crisis

Shaky oil price creates new jitters in stock market Iheanyi Nwachukwu

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igeria’s stock market is in for a new but disappointing era following developments in the global oil market.

Oil prices tanked last week by 8 percent to $46.7/bbl the lowest since June 2017 - as concerns of impact of the coronavirus on demand persisted.

Oil market had shunned the news of a possible additional 1.5mbpd production cut by the OPEC cartel announced after the first day of the meeting last Thursday.

Stocks sold off and Nigeria’s risk premium hit new peaks as investors demanded higher to hold Nigerian assets from local bonds to Eurobonds.

Lagos-based Vetiva Securities analysts expect the market to sustain this negative trading pattern at the beginning of the new week “amid fragile macroeconomic environment as oil prices continued to slide, coupled with the continuous threat pose by the fast spreading Coronavirus across the world”.

Trading activities on the Nigerian equities market closed on a negative note last Friday, as the NSEASI sank by 0.55 percent at the close of the session.

“We expect the market to witness the same sentiment in the next session,” according to FBNQuest analysts in their March 6 note to investors.

Oil prices plunged further by 6.7 percent after investors’ fears were confirmed following Russia’s refusal to support taking on the additional cuts upon conclusion of the meeting at the weekend.

S&P, global ratings agency, downgraded Nigeria’s outlook from a stable outlook to negative, highlighting weak economic growth, sizeable public debt, susceptibility to external pressures and depletion in foreign reserves, among others.

The stock market had gone on a losing streak as

investors restructured their portfolio to safe-haven over the possible damaging effect of Coronavirus on company’s performance. Following the outbreak of Coronavirus in Nigeria, some analysts had anticipated a sustained downtrend in the review trading week, despite bargain hunting opportunities.

Amid this fear, the review week witnessed influx of full year (FY) 2019 scorecards of most notable counters in the banking sector. The banking sector is the highest paying sector in terms of dividend.

Ahead of the banks dividend qualification dates, their stocks continued to enjoy investors’ patronage on the Nigerian Bourse, which led to the value of equities listed on the NSE to increase by about N36 billion.

NSE Banking Index, which provides an investable benchmark that captures the performance of the banking sector, increased most by 3.78 percent in the review trading week.

NSE Banking Index comprises the most capitalised and liquid companies in banking.

Other sectoral indexes and their performances this week are: NSE 30 Index (+0.12 percent), NSE Consumer Goods Index (-5.87 percent), NSE Industrial Good Index (-4.27 percent), NSE Insurance Index (+1.40 percent), NSE Oil & Gas (+0.80 percent), and NSE Pension (-0.91 percent).

Here are the stocks ARM research analysts recommend for this week: Wapco STRONG BUY (N23.59), Seplat plc - STRONG BUY (N828.90) and Fidelity (N2.92).

The Nigerian Stock Exchange (NSE) All Share Index increased by 0.24 percent from week open low of 26,216.46 points to 26,279.61 points; while the value of listed equities increased by N36 billion to N13.694 trillion, from a low of N13.658 trillion at the beginning of the week.

Saudi Arabia launches oil price war after Russia deal collapse ... Kingdom to raise crude production and offer deep discounts just as coronavirus hits demand FT

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audi Arabia has launched an aggressive oil price war targeting its biggest rival producers after Russia refused to join production cuts with Opec, in a move that threatens to swamp the crude market with supplies just as the coronavirus outbreak hits demand.

Saudi Arabia will raise production and offer its crude at deep discounts to win new customers next month, according to two people familiar with the country’s oil policy, which risks sending prices tumbling further. Oil prices had already dropped by a third since January to near $45 a barrel.

The kingdom plans to pump more than 10m barrels a day next month while announcing unprecedented discounts of almost 20 per

cent in key markets, in an apparent attempt to punish Russia, while squeezing the US shale industry and other higher cost producers.

Production could eventually surpass 11m b/d, one of the people said, well above the roughly 9m Riyadh had previously proposed lowering its output to.

Crown prince Mohammed bin Salman, the country’s de facto ruler, moved at the weekend to consolidate his position, arresting at least three members of the royal family that may have posed a threat to his accession to the throne.

The fall in oil prices risks new turmoil in the kingdom, as MBS’s plan to modernise the economy relies at least in part on higher energy revenues to fund the transformation.

Shares in Saudi Aramco, the state oil company, dropped almost 9 per cent

on Sunday, falling below its December stock market listing price. The broader Saudi stock market sank more than 8 per cent.

Saudi Arabia had last week sought the support of Opec and allies outside the cartel, such as Russia, for a substantial cut in production to stabilise the oil market, which has been reeling as the spread of coronavirus hits the global economy and saps demand for crude.

But Russia torpedoed the plan, eyeing an opportunity to hit US shale producers, infuriating the kingdom and resulting in the countries removing all restrictions on their output from April.

“Opec and other countries including Russia couldn’t get an agreement. If others will push their production, why is Saudi Arabia not doing the same,” said a second person familiar with the kingdom’s

output policy. “Now we have the right to sell more to compensate for any loss in prices.”

Russia has built up a $170bn national wealth fund from excess oil revenues in recent years and believes it can tap that to offset any shortterm price war, despite crude plunging close to its budget break even price of around $42 a barrel.

Mikhail Leontiev, press secretary for Rosneft, Russia’s largest oil producer, said that the relationship with Saudi Arabia had become “meaningless”.

“The true result of the arrangement is that the total volume of oil that was reduced as a result of the repeated extension of the Opec+ agreement was completely and quickly replaced in the world market with American shale oil,” he said in a statement to state-owned news agency TASS.

L-R: Linda Ikeji, CEO, Linda Ikeji TV; Nnamdi Okonkwo, managing director/CEO, Fidelity Bank plc, and Tara Fela-Durotoye, founder/CEO, House of Tara International, at ‘Giving her Wings’, a platform to mentor, build and connect young women entrepreneurs, organised by the bank in Lagos, Friday.

Nigeria wobbles into a price war with oil producers ISAAC ANYAOGU

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he Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members, including Russia, failed to agree on export curbs to shore up prices last Thursday, and are now scrambling to push volumes into the market, setting off a price war that could impact Nigeria struggling to sell its crude.

Saudi Arabia on Saturday slashed official pricing for its crude scheduled for April, which would be sold in Asia

by $4-$6 a barrel and to the US by $7, according to a copy of the announcements seen by Bloomberg. Other producers are expected to follow.

Oil prices plunged by more than 8 percent after the OPEC+ meeting broke up with no deal. Saudi Arabia and Russia negotiated behind closed doors in Vienna, but Moscow refused to sign on to deeper production cuts. Brent crude is selling at $45 a barrel.

Analysts say Russia is counting on lower prices slowing US shale output as it had said the current oil www.businessday.ng

price levels will not hurt its economy. Without OPEC+’s help to steady the market, US benchmark prices could fall toward $30 a barrel as COVID-19 leads to a decline in demand for oil.

But shale producers are already hedged reducing the risk of adverse price movements. Hence producers like Nigeria, Iran and Angola heavily dependent on higher crude oil prices to run their economies, may feel the biggest shocks from a $30 per barrel oil. Similar price levels, coupled with militancy in the

Niger Delta sent the Nigerian economy into a recession at the end of 2016.

Saudi Aramco’s pricing decision affects about 14 million barrels a day of oil exports but it will serve as a reference for other producers in the Persian Gulf who will take a cue from the world’s second-biggest producer to also slash prices.

This poses a danger to the market because Saudi Aramco has said it can produce as much as 12.5 million barrels per day.

Last month, it pumped 9.7 million bpd but with agreements on curbs expiring this month

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and without any commitment to restrain production, it could well ramp production to maximum capacity to plug holes in its budgets.

Nigeria will face a different kind of problem; its budget gaps could widen. Oil traders are struggling to sell crude grades from Nigeria and Angola as the coronavirus leads to a sharp decline in demand from China and European refiners.

About 70 percent of April loading cargoes from Angola and Nigeria have yet to find buyers, according to Bloom@Businessdayng

berg report. This is unusual because at this time, about half the volumes brought to the market would have been sold. These unsold volumes would be competing against millions of barrels that were slated for export in March and yet to be purchased.

To complicate matters further, without the curbs, more volumes would enter the market and the ensuing pricing war would short-change West African producers who have to move their crude over long distances to markets in Asia and Europe.

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Governor Uzodinma not attacked at Ohaji/Egbema NWACHUKWU IHEANYI

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overnor Hope Uzodinma of Imo State was not attacked at Ohaji/Egbema on Sunday contrary to a propaganda being peddled by the opposition.

The governor was at Mmahu area of Ohaji/Egbema to sympathise with the community that lost three of their kinsmen on Friday following an accident that involved a truck belonging to an oil firm operating in the area.

The killing enraged the youths in Mmahu, causing their leaders to reach out to the governor to visit the community to call the oil firm to order.

Straight from church, Governor Uzodinma, in the company of the Brigade Commander at Obinze, the Commissioner of Police, the Director of State Security Services and Commandant of the Nigeria Security and Civil Defence Corps visited the area to reassure the community of his willingness to secure their lives and property and to draw a programme for the families of the deceased.

Governor Uzodinma, who was sober, condoled with the families who lost their loved ones, as he addressed the leaders of the community at the Eze’s Palace.

While the governor was addressing the families, some boys among the aggrieved youths were heard making noise outside, accusing the security operatives of supporting the Oil companies and demanding that Governor Uzodinma should address them too.

While the security operatives tried to calm them down and control the noise, one of them allegedly hid behind others and threw a stone at one of the official vehicles of the Governor where they were parked and in the process smashed the back glass.

He was promptly arrested by the security present. While this drama was playing out, Governor Uzodinma was still inside the hall addressing the traditional ruler, community leaders and the bereaved families.

Contrary to the claims that he was attacked, there is no truth in it as the meeting Governor Uzodinma had with the leaders of the community was fruitful while the families of the deceased were happy he came.

Meanwhile, one Uzochukwu Chukuwukere who is the vice chairman of Egbema Youth wing, said to have thrown a stone that damaged the windscreen of one of the vehicles has been arrested and has made useful statement to the security operatives.

Addressing the leaders and families of the deceased, Governor Uzodinma called for calm and peace while promising to deal with the situation that led to the killings.

The governor called on the people to remain peaceful and not to take laws into their hands.

His words: “I will not be party to anything that will be against my people, I will enjoin all of you to remain calm as government will take all necessary steps to ensure that such thing doesn’t happen again.

NESG urges FG to take active steps in growing economy Gbemi Faminu

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igeria Economic Summit Group (NESG), a private sector think-tank that promotes sustainable growth and development in the Nigerian economy, has called on the Federal Government to make necessary moves in pushing the country’s economy forward.

This was expressed in a statement signed by Asue Ighodalo, chairman, Board of Directors, NESG, following the first 2020 meeting of the NESG board members.

Following the review of the global and domestic economy, NESG affirmed that the Nigerian economy despite being on the path to recovery following the 2016 recession remained fragile and susceptible to shocks owing to changes in external conditions and oil price fluctuations.

The Board noted that 10 out of the 46 sectors of the economy, contributing approximately 27.1 percent of output, contracted in 2019 partly caused by issues that include rising incidences of insecurity and continuing closure of the nation’s borders.

The NESG commended the efforts of the government in eas-

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ing the business environment, but called for more reformations to fully achieve conducive business environment.

According to the statement, “The NESG acknowledges continuing progress on Ease of Doing Business and commends the work of the Presidential Enabling Business Environment Council (PEBEC), The next level of reform which will further improve Ease of Doing Business must focus on areas which include: Power Supply; Ports Administration; and Rail Infrastructure Development.”

The Board also proffered that the country must leverage the

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Public-Private Partnership (PPP) model to tackle the challenge of infrastructure financing. Therefore, it urged the government to strengthen laws governing PPP agreements and also demonstrate commitment towards maintaining the agreements and protecting investors.

Regarding the African Continental Free Trade Area (AfCFTA) agreement, the Board noted that there was need to commence worktowardsensuringalignment of domestic policies and regulations with the agreement, adding that it was necessary to accelerate the implementation of trade readinessprioritiesinordertogain

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maximum benefit from AfCFTA. On the border closure, the NESG asked the government to work with its regional neighbours in resolving the issues and reopening the borders as the adverse impact of border closure, especially on trade, employment and cost, were mounting.

Due to the outbreak of coronavirus, the board said the global economy had an obscured outlook; however, it advised the government to upgrade national preventative readiness and ensure adequate capacity to isolate any infected entrants into the country, considering its relationship with China.

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Aig-Imoukhuede profiles tools for age of disruption in organisations’ board HOPE MOSES-ASHIKE

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isruption can be ver y traumatic in an organisation, and to deal w i t h t h i s, A i gb o j e A i g Imoukhuede, founder/chairman, Coronation Capital Nigeria, has outlined three vital skills for the age of disruption.

The tools include grounded optimism, learning agility and resilience. “As a result of trauma, your ability to think, plan may be impaired and you default to more mammalian or reptilian behaviour, flight, run or fight without thinking through your response,” AigImoukhuede said.

Aig-Imoukhuede spoke on the topic, ‘Navigating Business Model Disruptions in 2020 and beyond,’ at the 2020 first quarterly meeting of the Women Corporate Directors (WCD).

WCD is a global organisation, started in the United State and it is a body of women who are serving in some of the largest corporate boards.

It empowers those women to be more effective on the board they operate.

The drivers of disruption as profiled by AigImoukhuede are technology,

government policy, disease/ pandemics, climate change, international relations, talent and terrorism.

Speaking with BusinessDay immediately after the session, he said, “I think that women are very well placed if not better placed than men to bring those tools to a boardroom”.

Bisi Lamikanra, co-chair, WCD Nigeria, explained that the forum focused on disruption because “we live in a very volatile operating environment and there is a lot of disruption. The topic focused on how we as board members operate within a very disruptive arena”.

There is more people can do as board members to influence outcomes with greater understanding, she said.

“One specific way is when you have a board and the dynamics of the board is not productive as it should be, one of the things the speaker said was that may be it needs a professional who is almost like a therapist, who can help the board build the culture and dynamics that ensures that the board is able to be extremely productive,” she said.

According to Myma Belo-Osagie, of counsel, Udo Udoma & Belo Osagie, the

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board needs to be prepared and needs to get itself into the mode where all its board members are able to think at the same level of rationality rather than becoming instinctive despondence to problems. “ That wa s w hat A ig Imoukhuede discussed on and we find incredible useful and I think it is something we recommend all board to think about to think about on an ongoing basis,” she said.

Hamda Amba, managing director/CEO, FSDH, who was one of the participants, said, the programme was so pertinent, and so relevant, especially to the industry.

“I think it is something we need to take into account and just try and understand that whatever we are doing when there is disruption, we cannot pretend it is not happening. It is just to see how to deal with it for the benefit of our organisation and the society at large,” Amba said.

Also commenting, Bola Adesola, managing director/ CEO, Standard Chartered Bank, said, “It was very insightful, very informative. It is about a learning process and learning new way of looking at board dynamics.

So it was an excellent session”.

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At N4.6trn worth, Dangote needs just N940bn to buy Arsenal Club Anthony Nlebem

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frica’s richest man Aliko Dangote has been told how much it would cost to buy out Stan Kroenke’s stake in Arsenal takeover.

Dangote has been linked with Arsenal in recent time, with the businessman stating that he will be pursuing a takeover of Arsenal, the Mirror reports.

Dangote has been told how much it will cost to buy one of the Premier League’s big sides - by Bob Ratcliffe, the brother of one of Britain’s richest men Sir Jim Ratcliffe.

Bob Ratcliffe, head of the division of Ineos, which owns Nice Football Club, reveals that it would cost around £2 billion ( about N940bn) to buy Arsenal.

Bob told the Financial Times’ Business of Football Summit that

a takeover of a ‘top six’ club would cost at least £2 billion, but a move for a team elsewhere in the Premier League would cost between £150 million and £350 million.

The Nigerian billionaire has made several statements in the past about his desire to become the owner of the North London club.

Dangote says he is focusing on other interests at the moment, but is targeting next year as a possible date to launch his bid for the club.

In January, Dangote reiterated his intentions, saying: “It is a team that yes I would like to buy some day, but what I keep saying is we have $20 billion worth of projects and that’s what I really want to concentrate on.

“I’m trying to finish building the company and then after we finish, maybe some time in 2021 we can.

I’m not buying Arsenal right now, I’m buying Arsenal when I finish all

these projects, because I’m trying to take the company to the next level.”

According to Bloomberg Billionaire index, Aliko Dangote became $4.3 billion richer in 2019 as he ended the decade with a net worth of almost $15 billion, making him the 96th wealthiest man in the world.

The staggering $15 billion is more the GDP of eight African countries, while the International Monetary Fund (IMF) has lowered the outlook for the continent, but economists see the economies of Rwanda, Ivory Coast and Ethiopia to grow in 2020.

Africa’s GDP was $2.45 trillion in 2019, per latest data from the IMF, and Aliko Dangote net worth is 0.61 percent of that figure.

With $15 billion worth, financial analyst believes Dangote has the financial power to buy Arsenal and will make the move at the right time.

FG says 61 contacts under supervision, appeals to other passengers to reach out Godsgift Onyedinefu, Abuja

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he Federal Government weekend disclosed that it had so far identified 61 contacts of the index Covid-19 (Coronavirus) case and were all under supervised self-isolation, while two of the suspected cases in Lagos involving foreigners had tested negative and the result of the third pending.

The minister of health, Osagie Ehanire, while briefing journalists in Abuja informed that

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of the 148 passengers on the manifest of the index case flight to Nigeria, 55 are actively being followed up. He said the NCDC and port health services were in touch with them to monitor their temperatures and the possible appearance of symptoms of Covid-19.

Ehanire said 21 of the contacts were in Lagos while 40 in Ogun State.

The minister however highlighted that there was still difficulty to reach out to other pas-

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sengers on the Turkish Airline that brought the index case, and said, “I urge any passenger on the Turkish Airline flight that came into Lagos on the 24th February who have not been contacted reach out to the NCDC or call its toll free numbers.”

The minister also noted that some of the passengers were probably Nigerians and might have returned to their countries, but appealed that those who were still in Nigeria should reach out and self-isolate.

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Giving and misgivings – Battling with fraud amid benevolence

(Fourth in the series of an address delivered at the Rotary Foundation dinner/dance at the MUSON Centre, Marina, Lagos on 8th February 2020)

Bashorun J.K Randle

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ccording to the front-page report by Gambo Dori in “Daily Trust” newspaper of January 28, 2020: “The ALDAN (Advanced Local Dairy Development in Nigeria) programme is largely funded by the Bill and Melinda Gates Foundation. The representatives of the Foundation emphasised that the project constitutes one of their largest investments in the country at a time when the dairy sector is in dire need of such boosts. The programme will run in five States of the Federation – Kano; Kaduna; Jigawa; Bauchi and Adamawa. It is expected to reach 60,000 dairy farmers in 15,000 dairy households. It is to be implemented in partnership with private sector companies with the support of the Federal Ministries of Agriculture and Rural Development; Health; Women Affairs and Social Development and the governments of the implementing States. Also, it is expected to galvanise the consolidation of the federal government’s intention to settle the nomadic cattle herders (potential Rotarians!!), so as to improve their access to water, fodder, drugs and vaccines.

This will help to boost milk and meat yield for the overall good of the nation.

This should improve the economic wellbeing of the herders and firmly integrate them into the firmament of the national economy. In the long run, this is the vital antidote needed to curtail the nomads versus farmers’ endless feud.”

Furthermore, as if to underscore his eligibility for consideration as a potential worthy Rotarian, “The Minister of Agriculture, Sabo

Nanono made a brisk appearance and when introduced made an impassioned speech calling for due recognition to be accorded to the hitherto neglected dairy industry. He told us that he regarded his appointment into the Ministry of Agriculture as a personal crusade to uplift the dairy industry to its proper level.

Though he had been known more as a notable in the corporate world, he had actually been a farmer all his adult life and had raised cows for over 40 years.

This long association with cows is an advantage that has given him deep insight into the dairy industry. He is therefore personally committed, and is fortunate to find himself in a Government that is focussed in pursuing those tested policies that would bring succour to the dairy industry.

He assured that the Federal Government would work to consolidate all existing policies into one policy to transform the sector. He asserted that the nomads might be said to own the cows but truly cows are national assets because they make contribution to the GDP of up to 17 percent of the total. It is therefore in our overall interest to guard and nurture the dairy industry and raise it to world class.”

The problem that confronts us as a nation overflowing with Rotarians is that while we clearly owe Bill and Melinda Gates a debt of eternal gratitude, how are we expected to cope with the frontpage report of The Nation” newspaper of January 26, 2020 with bold headlines: “Governor, seven others in trouble over alleged N6.5 billion fraud” “A serving governor is topping the list of suspects being investigated by the Economic and Financial Crimes Commission of Skye Bank, Mr. Tunde Ayeni, retired Air Vice Marshal Salihu Atawodi and four others.

The alleged fraud was perpetrated by the defunct Presidential Implementation Committee on Maritime Security (PICOMSS), which was headed by Atawodi.

About N4.9billion cash was said from PICOMMS accounts without any specific project in mind.

The serving governor was alleged to have received N1, 475, 144,199.15 of the withdrawn cash for the purpose of lobbying members of the House of Representatives to convert PICOMS into an agency. The name proposed was Maritime Security Agency. The governor was chairman of the House Committee on National Security, Intelligence and Public Safety at the time and he was said to have convinced Atawodi’s PICOMS to part with the cash. The sum received was such a top secret that a former Speaker was given a “ridiculous N1million” as his share.

Some former members of the House of Representatives who benefitted from the bribe-for-bill cash from the governor might be invited for questioning, the Nation gathered last night. Sources said the governor was initially cooperating with the EFCC on the investigation, only to stop honouring the invitation of the anti-graft agency two days before he was declared elected by the Supreme Court. He currently enjoys immunity from prosecution by virtue of his office, but he may still face trial after his tenure.

The remaining seven key suspects are expected to be arraigned in court soon.

They include Mrs. Winifred Atawodi; Aeroconsult Limited, Xanatos Limited and a daughter of the ex-PICOMMS chairman, Eleojo who is under investigation. The EFCC has already blocked the following amounts in Mrs. Winifred Atawodi’s accounts: N141, 611, 736.8 and $228, 428.16. Another N200million has been placed on Post No Debit (PND) in First Mutual Micro-Finance Bank traced to Purple Pepper Farms Limited allegedly owned by Atawodi’s daughter (Eleojo). About five hectares of land worth N245million have been seized from the Atawodis. The EFCC has also uncovered how $6.12million was invested by the Atawodis in Midland Corporate Investment Limited account with Sun Trust Savings and Loans Real Estate Limited.

From the cash, AVM Atawodi allegedly transferred $408,000 to an auto firm

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The problem that confronts us as a nation overflowing with Rotarians is that while we clearly owe Bill and Melinda Gates a debt of eternal gratitude, how are we expected to cope with…

‘Governor, seven others in trouble over alleged N6.5 billion fraud’

in the United States called Hennessy Cadillac for exotic vehicles including a Rolls Royce. About $808, 851 was located in Wells Fargo Bank 2 in the name of United International Enterprises. Detectives have identified a house allegedly owned

by Atawodi in Lot of the 17th District of Fulton County in Georgia at 3266 Ferncliff Lane, Atlanta Georgia 30324. Despite the seizure of the passports of the Atawodis, one of the daughters has applied to travel abroad for medical treatment in order to sell the house in Atlanta.

The EFCC has also been alerted by some foreign collaborating anti-fraud agencies of plot by the daughter to sell the house. Investigation revealed that PICOMMS was set up between 2008 and 2012. It was disbanded in 2013. The committee was expected to guarantee safety on the sea and waterways. Findings by detectives revealed that AVM Atawodi, his friends and immediate family feasted on the resources allocated to PICOMMS including donor agencies funds. Others funding PICOMMS were the Office of National Security Adviser (ONSA), NIMASA, Nigerian National Petroleum Corporation (NNPC) and Ministry of Defence (MOD).

A document obtained by The Nation indicated that on 12th November, 2010, AVM Atawodi made PICOMMS to issue out contracts for Maritime Domain Monitoring System for Maritime Surveillance at a cost of $32,337,163.00 to Xanatos Company Limited linked with a former Chairman of Skye Bank, Mr. Tunde Ayeni.

“The fraud was detected in the course of reviewing how funds were disbursed from PICOMS to Xanatos Company Limited and other beneficiary companies.

Xanatos Company Limited made a lot of questionable payments obviously from the contract sum.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Assessing contributions of indigenous hospitality brands to Africa’s economy

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frican-owned hospitality brands have successfully established their relevance to the economic growth of the continent.

Nothing best attests to this than the fact that at the moment, they account for 40 per cent of the hospitality market in the continent’s tourism industry.

What this translates to is the fact that they contribute significantly to the estimated $194.2 billion contribution of the hospitality sub-sector to Africa’s economy, which represents about 8.5 percent of the continent’s GDP. They have also provided a good number of the 24.3 million African jobs the sub-sector has created – about 6.7 percent of total employment on the continent.

They have been able to do this through a combination of factors which include providing services to international standards – the same standards obtainable anywhere in the world – and ability to incorporate African culture into their services, which is what appeals to local hotel patrons, and what most international brands seem to lack and have not been very successful in doing.

Recently, African hospitality groups are also embarking on rapid expansion at the same rate international brands are doing. We are seeing more indigenous hotel groups, especially from South Africa and East Africa, expanding outside their territories to other parts of Africa in a bid to fully exploit the gold mine that tourism has become on the continent.

For instance, Tsogo Sun, a South African hotel which has taken over from Protea as Africa’s biggest indigenous hotel group after the latter was

acquired by the Marriot Group, has established a strong presence in Nigeria managing Southern Sun Hotel at Ikoyi, Lagos. Another South African hotel group that is currently operating in Nigeria is Legacy. The group has also established presence in Ghana.

Some of the African hotel groups are going beyond building of hotels to include, in their baskets of offerings, consultancy services and management of hotels for local brands in different parts of Africa, with wonderful results to show.

Another great example is Icon Hotels Group Africa (IHGA), a leading Kenyan origin hospitality group has made a name establishing and successfully running a chain of hotels within and outside its home country, especially in East Africa. The hotel group continues to record giant strides with making inroads into West Africa, and has already berthed in Nigeria.

The Icon Hotel group handled the successful turnaround of Best Western Hotel on Victoria Island, Lagos, which was rebranded as BWC Hotel. The hotel is today one of the best hospitality outfits in Lagos. The IHGA is planning to expand its operations in the country.

The hotel group is currently involved in the development of the $30 million, 5-star Best Western Premier Breeze Hotel in Cotonou, Benin Republic.

Its involvement in the project is by financing up to the completion and commissioning. It will also manage the hotel when completed.

A major contribution African hospitality groups are making to the growth of the continent’s economy which cannot be ignored is their interwww.businessday.ng

est in training local manpower in the sub-sector.

The benefit of this initiative is that more and more Africans are getting involved in an industry that is very critical to the continent’s economic growth.

They see the growth as their own personal growth, as well as that of their children and generations unborn.

A practice that is of no interest to international brands, because of the mainly profit motive of their involvement in the sub-sector and, indeed, the tourism industry. You find in most cases situations in which the top management positions in international hotels are occupied by expatriates.

This has nothing to do with shortage of Africans to fill such positions, but the notion that the latter do not possess the requisite knowledge and skills to run international hotels. The success of Africans in running wholly indigenous hospitality outfits has given the lie to this notion.

The African Continental Free Trade Agreement (AfCTA) establishing the continent as the world’s largest free trade area is expected to become operational in June, this year. The arrangement is going to boost intra-African trade which will increase travels within the continent.

This is an opportunity for African hotel brands to assert their relevance in the continent’s economic growth, as there would be need for hospitality services in virtually every nook and cranny of the continent. At the moment, at least four out of 10 travellers within the continent is an African. This number is expected to increase when AfCTA comes into existence.

After the current bickering involving Anglo-

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Fidelis Nwoka phone and Francophone countries in West Africa over the sub-region’s choice of single currency, there will be an agreement, and it is taken as a given that the area will have a single currency.

This is expected to increase movements within the sub-region. For hotel owners, this means increased business opportunities, as there would certainly be a need for more hospitality services.

It is an opportunity for international hotels are also hoping to exploit, if it is considered that they are either currently expanding their operations in the sub-region or have announced plans to do so.

As more opportunities open in Africa’s hospitality industry, one area indigenous brands may need to consider is safari management, an area in which they have demonstrated superior knowledge and skill over their international competitors.

It is an area that is said to generate over 70 percent revenue in the hospitality sub-sector.

With the growing involvement of African entrepreneurs in hospitality, it won’t be long before indigenous brands take full control of an area in which their ability to blend intercontinental and local tastes would give them an edge over international brands, with positive outcomes for the economy – in the areas of revenue generation and job creation.

Nwoka, a businessman, lives in Port Harcourt

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Buhari’s $22.7bn loan is net positive for the economy Patrick Atuanya

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h e Ni g e r i a n S e n a t e l a s t w e e k a p p rov e d President Muhammadu Buhari’s request to borrow $22.7 billion from external sources to finance infrastructure projects, social investments, power, Agriculture and Mining.

The funding which is largely concessionary is expected to come from the Islamic Development Bank, the African Development Bank (AfDB), the World Bank, the China Exim Bank, Japan ICA and KFW Germany.

Some of the specific projects the government intends to use the money for include: Water supply for the greater Abuja area ($381m), staple crops processing zone development ($500m), Development Finance for Micro, Medium and Small Scale Enterprises ($1.1 bn), a mining reform fund ($150m) and Education sector reform ($500m).

Others include the Mambilla

Hydropower Project ($4.8 bn), Transmission upgrade for the Transmission Company of Nigeria ($764M), Housing financing guarantee project ($100m), the Ibadan – Kano railway ($5.53 bn), coastal railway from Calabar to PortHarcourt to Onne Deep Sea Port for $3.47 billion and the Abuja Mass Tarnsit Rail 2 ($1.25 billion).

For roads you have the East – West Road ($800m), Enugu Abakaliki – Ogoja, Gombe – Biu Road, Calabar – Ekang – Ajassor Road, Katsina – Jibiya – Niger Rep Road and Maokwa – Kaduna Road, all to gulp ($434.7m).

“The loans will have a positive influence on the GDP of this country,” Senate President Ahmed Lawan said during debate just before passage of the loan requests.

We tend to agree with the Senate President, with some caveats.

Successfully raising the full amount of $22.7 bn, should help to bulk up Nigeria’s dollar reserves, at a time oil prices are weak (as a result of the corona virus), and OPEC is set to increase output.

In essence with oil seemingly suffering a twin supply and demand shock at the same time, it is reassuring to have these inflows which in total would amount to 62% of current gross dollar reserves of $36.2 billion, is a massive confidence booster.

Of course we know that not all the funds will flow into the country as some (especially the Chinese funding), will largely be used to finance acquisition of equipment and manpower from China.

In all we do expect more than

half of the $22.7 bn to actually flow into the Central Bank of Nigeria (CBN), coffers.

The inflow of dollars should help the CBN with its naira stability mandate, and ease the pressure to devalue over the next 18 months.

This now brings us to the cost of the loans which mostly range between 0.25 percent and 3 percent.

Raising Eurobonds in comparison would have been more expensive at around 7 – 9 percent yields.

In terms of debt sustainability, the country is also doing ok for now.

Nigeria’s outstanding loans amount to about 25 percent of its gross domestic product (GDP), although the country spends more than half of its revenue servicing debts.

The International Monetary Fund has warned that without major revenue reforms, the debts could rise to almost 36 percent of GDP by 2024.

We think being an oil producer that earns dollars, the dollar debt is quite manageable currently, even as we seek more clarity from the Government on the structure put in place to effectively and efficiently appropriate the funds and get these projects in place without them running behind schedule.

This is necessary because the economic lift from what is essentially a fiscal stimulus is expected to help propel growth going forward and also improve government earnings and tax take.

The loan request is equivalent to N8.4 trillion which is 80 percent of the 2020 annual budget.

‘

Successfully raising the full amount of $22.7 bn, should help to bulk up Nigeria’s dollar reserves, at a time oil prices are weak (as a result of the corona virus), and OPEC is set to increase output

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

The fear of corona

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nless you have been hiding somewhere under a rock you have probably already heard of COVID-19 popularly known as the corona virus. It is a new strain of a virus that has spread almost all around the world relatively quickly, with a fatality rate that while not as bad as our frequent visitors like Lassa fever or even Ebola, is deadly enough to cause concern. Perhaps more importantly, it spreads relatively easily, and this is what has many worried. Indeed, since it started in China it has spread to almost every country with Nigeria and South Africa the latest hosts. This ease of spread is why many are battling round the clock to prevent that spread. And oh, it has no known cure yet even though most recover from it.

Nigerians are worried as should be expected. Even though sometimes I wonder why given that malaria and more recently Lassa fever have killed more people than the coronavirus probably can. Still there is no maximum limit on the number of things we can be worried about. In terms of the economy though, the direct effect is likely to be limited. It is likely to be just another illness to add to the compendium of ill-

ECONOMIST

nesses that already limit our productivity. Although if we become a hive for the virus while others recover then we may become involuntarily isolated from everyone, which will be really bad for the economy.

The real threat to the Nigerian economy from the corona virus is its effect on the global economy. Already, many economies are having to slow down activities in response to the virus. China, the haven for the global supply chain for many things, has had to shut down entire cities. So much so that you can see the effect on reduced pollution from space. But as China has shut down cities and forced people to stay at home, demand for fuel has collapsed. If people stay home then they don’t burn fuel going to work. Which means demand for crude oil has collapsed. And you can all guess what a collapse in the demand for crude oil does. The price has fallen in tandem. In the first week of January the price of a barrel of crude oil was as high as $68 per barrel (pb). As at the time of writing this article the price had dropped to $50.74 pb.

We know what a drop in the price of crude oil means for Nigeria. First on the budget. The budget assumes a price www.businessday.ng

It should however bring more bang for the buck since the money will already be available to spend, as opposed to the budget which are merely estimates (and often have revenue shortfalls close to 50%).

The fact that most of the expenditure is going to infrastructure and capital projects, which often have a multiplier effect on the economy is also quite positive.

The only grouse with the list would be the rationale for choosing some of the projects (which seem like pork barrel spending) and some missed opportunities to unlock growth in major industrial clusters of the country.

We struggle to see why the Nigerian Television Authority or NTA (with its limited and diminishing viewership), would need $500 million for a digitalisation project.

Some of the chosen roads seem like roads to nowhere, while funding things like rural water supply or power sector vocational school, while laudable, often turn out to be wasteful and ineffective.

Consider these alternate projects for instance: up to 50 percent finance support for a fourth mainland bridge in Lagos, finance to support the completion of the metro blue rail line in Lagos, railway connections between Lagos – Benin – Asaba – Onitsha – Awka – Enugu – Abakaliki (one of the busiest road corridors for passengers and cargo), and a Lagos – Abuja - Kano high speed rail line.

of $57 pb which was supposed to be a conservative estimate. A current price of $50 means that wahala may dey with the scale of the wahala dependent on how long the virus keeps oil prices low.

You could be forgiven for thinking that we can ramp up production to deal with the effects of a lower price. But first, we are mostly already operating at maximum capacity and second, OPEC will not sit by and watch us flood the market.

In fact, they have already agreed to cut global production by 1.5 million barrels per day in reaction to the fall in prices.

We might need to bear a part of that burden so we may actually be forced to produce less.

The wahala does not just end with the budget. Remember that crude oil still makes up a large part of our foreign exchange inflows. Lower prices eventually mean lower inflows. Lower inflows mean that the CBN, who has already been struggling to manage the fall in foreign reserves, will struggle even more to keep its fixed exchange regime in place. Expect more circulars if weak oil prices continue. All this of course has consequences for the wider economy which is already struggling with growth.

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NONSO OBIKILI

The morale of this story is that whether or not the corona virus gets here in full scale we are already affected. And our policy makers should already have plans in place for mitigating the fallout from the effect on global economic activity. We should also be doing our best to ensure the virus does not spread here because if it does beyond a certain point then we may find that our Ebola preparedness history will not be enough.

So, everyone please wash your hands with soap for at least 20 seconds regularly. And if you feel funny and you have reason to believe you have the virus please go into self-quarantine and call the authorities.

Dr. Obikili is the chief economist at BusinessDay

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BUSINESS DAY

Monday 09 March 2020

EDITORIAL Frank Aigbogun

Gender parity in Nigeria…when?

editor Patrick Atuanya

Nigeria risks 1.25 additional GDP growth if gender parity is shunned

Publisher/Editor-in-chief

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

D

espite the numerous resources available in Africa and it’s encouraging pace in technological upgrade and general development, it is one continent where gender equality may remain a mirage if nothing is done about it. Despite its gradually improving thirst for advancement, sadly, women do not benefit enough from these developments as they are hindered by tradition, culture, religion, bias and more.

According to a report by Mckinsey Global Institute titled “The power of parity, advancing women’s equality in Africa”, progress towards gender equality has stalled, and Africa’s women lag behind their sisters in most other regions in most areas of their life. They therefore advise that the time has come to step up efforts to bring women into Africa’s promising future otherwise; Africa will not reach its full potential.

With developing countries

in Africa, blessed with a promising future, the absence of gender equality can only further limit its obvious aptitudes. It is true that there are few remarkable feats here and there, however, most of the inspiring stories are those of women who are already at the peak of their careers, what about other female hopefuls?

The decision to ignore the importance of gender diversity will only kill their zeal to rise. There is a lot to gain if gender diversity is upheld. For instance, in Africa, it will result in securing extensive growth and surplus in the process.

Africa could add $316 billion or 10 percent to GDP in the period to 2025 if African countries embrace gender parity.

If nothing is done or efforts dwindle, Africa could take more than 140 years to achieve gender parity.

The report says that a “fullpotential” scenario in which women and men play identical roles in labour markets, Africa could potentially add $1 trillion, or 34 percent, to its collective

GDP in the period to 2025, and $316 billion could be added to Africa’s GDP in 2025 if all countries matched the progress towards gender equality of their best-performing neighbour.

If Nigeria embraces gender parity, experts expects an additional 1.25 percent growth in her Gross Domestic Product (GDP) while equally improving national productivity because, in the attainment of sustainable development goals, closing gender gaps would be vital to creating equitable and fair access to economic resources.

However, among other African countries like Rwanda, Botswana and Egypt that have successfully tripled women’s representation in middle management for example, Nigeria is missing.

According to the Mckinsey report, Nigeria scores shameful lows. For gender equality at work is 0.58 (high), for essential services and enablers of economic opportunity, Nigeria scored 0.62 (high). For legal protection and political voice 0.18 (extremely high), Physical security and au-

tonomy 0.82 (medium), for overall gender inequality in society 0.53 (high) and Overall GPS 0.55 (high).

Some women have attempted to go into politics but, saying there is still a long way to go won’t be canard. There is no level playing field for women. For instance, there are only 7 female senators in the National Assembly of 109 and 10 women in the House of Representative of 360, indeed a classic archetype of bias.

The theme for International Women’s Day 2020 is “I am Generation Equality: Realising Women’s Rights”. The question is, are we collectively walking towards helping to actualise gender parity? Are the rights of women acknowledged and respected?

It is saddening that despite the multitasking abilities of women to work, engage in business activities, play their roles as wife and mother, be proficient at work and other outstanding capabilities, they are often “excused” from unlocking their way to pecuniary prospects.

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Northern Nigeria’s socio-economic decline is by design, not by accident global Perspectives

OLU FASAN

T

here is a sharp divide between Northern and Southern Nigeria. The North is deeply impoverished; the South is far more prosperous. Recently, the Emir of Kano, Muhammadu Sanusi II, warned that “If the North does not change, the North will destroy itself”. But the North has long been destroying itself, and what it faces now is an existential decline. Sadly, the problems are manmade, not accidental. We will come to that later but, first, let’s understand the severity of the problems.

The truth is that if Northern Nigeria were a country, it would, in its present conditions, be classified as a failed or fragile state. The North exhibits all the symptoms of state fragility, including widespread insecurity, extremely weak state capacity, with very low level of public services, and an environment that is not attractive to private investment.

In 2014, the World Bank laid bare the scale of the problems in its Nigeria Economic Report. In the report, the Bank lamented the strong divide between the North and South in poverty and poverty reduction. While the three geopolitical zones in the South were experiencing declines in poverty, the three geo-political zones in the North were experiencing increases.

According to the Bank, an estimated 52 per cent of the population of the North West lived below the poverty line, while 50.2 per cent of the population of the North East were extremely poor. But if the North Central was added, the Bank said, about 66 per cent of the poor people in Nigeria resided in the North.

That was in 2014. The situation has since deteriorated. Emir Sanusi said that

“The poverty level of the North is 80 per cent, while it’s 20 per cent in the South”.

Statistics from the Oxford Poverty and Human Development Initiative confirm this. For instance, in 2018, the rates of severe poverty in some Northern states were as follows: Jigawa, 68.5 per cent; Sokoto, 67 per cent; Zamfara, 63.8 per cent; Bauchi, 63 percent. But the figures for some Southern states were Edo, 0.1 per cent; Imo, 0.4 per cent; Lagos, 0.4 per cent; Rivers, 1.3 per cent; Abia, 1.4 per cent; and Osun, 1.8 per cent.

How can extreme poverty rate be as low as 2 per cent in the South, but as high as 70 per cent in the North?

Northern states are really experiencing a significant worsening in poverty and living standards.

But how did the North become trapped in these dire straits? Well, states fail because of their values and institutions. And it is the North’s cultural and doctrinal systems that account for its social and economic backwardness.

Truth be told, the seeds of the North’s decline are embedded in its national psyche, and these seeds are feudalism, twisted religious beliefs and political short-sightedness.

Let’s start with feudalism. The North is very conservative, while the South tends to be progressive. There is a huge difference between the two ideologies.

Progressivism is based on the idea of improving the human condition. By contrast, conservatism is an ideology that promotes entrenched privilege, feudalism and a static social order. Chief Obafemi Awolowo and Dr Nnamdi Azikiwe pursued progressive policies in their regions to liberate the minds of their people and enhance their social progress through education. But in the North, the ruling elite allowed the people’s social status to determine their place in life.

Progressive Northern leaders like Aminu Kano opposed feudalism in the North, but the conservative leaders fought them viciously. They told the people their low status was God-ordained.

Chief Awolowo’s main criticism of the North was its feudalism; he hated the fact that Northern leaders kept their people under bondage by refusing to

educate them. He knew that education is the best route out of illiteracy, ignorance and poverty, and sowed the seed of education in Western Nigeria, which makes the South West what it is today. But the North refused to educate its people. Even today, according to the World Bank, while over 90 per cent of children in Southern Nigeria between the ages of 6-16 attend school, less than half of the children in the North do so!

Emir Sanusi told the North to prioritise education. But that’s inconsistent with feudalism. Under feudalism, only the children of the feudal lords are educated, the children of the serfs are not.

Someone said recently that the Almajiri children have become “ready-made raw materials for criminal activities”. But that’s what those sponsoring them want, an indoctrinated underclass that can be used to serve the interests of the feudal lords. By the way, what’s the meaning of “Boko Haram”? Well, it means “Western education is a sin”. Yet, without Western education, the type that Sanusi and Nasir el-Rufai have, the North cannot compete with the rest of the country except through the quota system, which, as Sanusi rightly said, “must have a sunset clause”!

Now, let’s come to the second reason for the North’s utter decline: twisted religious beliefs. The first consequence of this problem is violence. Islam is a peaceful religion, we are told, but those causing havoc in the name of that religion believe that “if you kill, you will have a place in heaven”. But while Boko Haram creates psychological fears in the South, it’s the North that it’s mainly destroying. Indeed, as President Buhari said recently, “90 per cent of victims of violence and insecurity in the North are Muslims”. So, the North is consciously destroying itself through perverse religious beliefs.

But another consequence of twisted religious beliefs, which is also destroying the North, is the practice of marrying many wives and having many children.

The Quran says a Muslim can marry up to four wives if he can look after them.

But Northerners have taken that as a licence to marry many wives and produce many children who, as Emir Sanusi

‘

The North is opposed to restructuring Nigeria. But it’s being shortsighted again.

The truth is that the North will benefit from the restructuring of Nigeria

candidly put it, “are left on the streets to beg for what to eat”! Recently, a member of the House of Representatives paraded his four wives on the floor of the House and boasted that he had 19 children “and still counting”! It was a disgraceful behaviour that should shame the North.

But, think of it, isn’t the North deliberately destroying itself when, despite facing a population explosion, a Northern leader boasted of having 19 children “and still counting”? Of course, it is!

Well, that brings us to the last problem: political short-sightedness. In the 1950s, the North vehemently opposed the South’s agitation for Nigeria’s independence from Britain. How could a people under bondage refuse an opportunity to be free? Well, that’s emblematic of the North’s resistance to change. Yet, since Nigeria’s independence in 1960, the North has treated the country’s political leadership as its birthright. If you add both military and civilian regimes, the North has ruled Nigeria for 43 out of its 59 years of independence, leaving the South with only 16 years. So, despite initially opposing Nigeria’s independence, the North has benefitted politically from it.

Now, it’s déjà vu all over again: The North is opposed to restructuring Nigeria. But it’s being short-sighted again. The truth is that the North will benefit from the restructuring of Nigeria. Regionalism in which significant powers, responsibilities and resources are devolved to the regions under a restructured Nigeria will serve the North well. It can mobilise its resources regionally, call on support locally and internationally, and develop something like a Marshall Plan to reconstruct the region. But that can only happen under a restructured Nigeria.

So, let’s face it. The North’s existential decline is its own fault, caused by its feudalism, twisted religious beliefs and short-sighted politics. It must tackle these problems head-on; otherwise, it will irreversibly destroy itself, as Emir Sanusi has rightly warned!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Delegation of the Board’s authority

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he role of the Board is a crucial one and as such legislation and a plethora of cases recognize the Board as the alter ego of the Company. Although shareholders are owners, the complex nature of company membership does not allow it to exercise and carry out the far-reaching duties that are consequential to running a company.

Thus, legislation regulating companies make it possible for these inherent powers of the members to be exercisable by the Board. In addition to legislation and case law, the duties and powers of the members and Board are defined by the Articles of Association.

Section 63(1) of the Companies and Allied Matters Act, (CAMA) provides that companies shall act through its members in general meeting and board of directors. Section 63(3) further provides that “except otherwise provided in the company’s Articles, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Act or the Articles required to be exercised by the members in general meeting.”

In exercising these powers, the Board stands in a fiduciary relationship with the Company which by law places it in the highest position of responsibility to the Company. It is however apparent that the Board cannot carry out the function of the day-to-day management of the Company. Therefore, these duties of management originally vested in the Board, shall be exercisable by individuals (the CEO and his/

her team) and Committees appointed by the Board. Section 64 of CAMA empowers the Board, subject to the Act and the Articles, to delegate its powers to Committees and the Managing Director.

The power to delegate raises a few questions – Can the authority of the Board in its entirety be delegated? Does the delegation of the Board’s authority exonerate it from culpability in the event of wrongdoing by the person/committee?

Although Management can act on behalf of the Company and is accountable to the Board, the Board retains overall and ultimate governance responsibility. Accordingly, it is prudent to clearly define the powers delegated to Management and Board Committees as well as establish adequate control measures to supervise the exercise of these powers. For Management, the Board can define these in the CEO’s Contract of Employment or in a Delegation of Authority Document. For Board Committees, the authority limits of the Committee, duties and responsibilities should be set out in Committee Charters or Terms of Reference.

As fiduciaries, Directors bear responsibility for ultra vires and unlawful acts carried out on their behalf. This position is reiterated by Section 279(7) of CAMA which provides that a Director, where he has power to delegate, shall not exercise such power in such a manner that it amounts to an abdication of his duty. It therefore behooves on the Board to ensure that those to whom it delegates authority are sufficiently qualified to perform and that they act within the www.businessday.ng

limits of the authority.

The limits of delegation of powers will be tested where there is failure or inability to perform. In such a case, failure of the Board to exercise its power of supervision will amount to abdication of delegated power.

Furthermore, the age-old maxim that one cannot give what he does not have will also apply. The Articles of Association being the constitution of the Company, reserves some decisions for the members in general meeting.

In respect of such matters, the Board can neither exercise nor delegate power.

In addition to Company Law, the Codes of Corporate governance and best practice require a clear definition of Board’s authority and its power to delegate and supervise delegated power. Principle 11 of the Nigerian Code of Corporate Governance 2018 provides that in order to achieve effectiveness, the Board delegates some of its duties and responsibilities. The Code enjoins the Board to exercise oversight to ensure that Management lives up to its mandate and ensure that shareholder and stakeholder expectations are met.

Section 11.1 of the NCCG provides that the Board should determine the number and composition of Board Committees, the skills and competencies required to perform effectively. In addition, the Board shall approve the Committee Charter which sets out Terms of Reference.

A periodic review of the terms of reference by the Board is also an important form of oversight as is the requirement to undertake an annual

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Bisi Adeyemi evaluation of the performance of each Board Committee.

Board Committees are also expected to present reports to the Board. It is important to note that Committee recommendations must be approved by the Board.

Bringing it all together, while the Board can delegate its powers, such delegation must be done within the confines of the Articles and it remains liable for the exercise of such power as though it had exercised the power itself.

This strict liability makes it imperative for the Board to ensure that it puts in place appropriate structures and processes to enable it maintain oversight of the enterprise. Finally, the Board can revoke the delegated power at any time if it finds that it is being exercised unsatisfactorily and therein lies the ultimate control.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Monday 09 March 2020

BUSINESS DAY

In Association With

Covid-19

The right medicine for the world economy Coping with the pandemic involves all of government, not just the health system

I

T IS NOT a fair fight, but it is a fight that many countries will face all the same. Left to itself, the covid-19 pandemic doubles every five to six days.

When you get your next issue of The Economist the outbreak could in theory have infected twice as many people as today. Governments can slow that ferocious pace, but bureaucratic time is not the same as virus time. And at the moment governments across the world are being left flat-footed.

The disease is in 85 countries and territories, up from 50 a week earlier. Over 95,000 cases and 3,200 deaths have been recorded. Yet our analysis, based on patterns of travel to and from China, suggests that many countries which have spotted tens of cases have hundreds more circulating undetected (see Graphic detail). Iran, South Korea and Italy are exporting the virus.

America has registered 159 cases in 14 states but as of March 1st it had, indefensibly, tested just 472 people when South Korea was testing 10,000 a day. Now that America is looking, it is sure to find scores of infections—and possibly unearth a runaway epidemic.

Wherever the virus takes hold, containing it and mitigating its effects will involve more than doctors and paramedics. The World Health Organisation has distilled lessons from China for how health-care systems should cope (see Briefing).

The same thinking is needed across the government, especially over how to protect people and companies as supply chains fracture and the worried and the ill shut themselves away.

The first task is to get manpower and money to hospitals. China drafted in 40,000 health workers to Hubei province. Britain may bring medics out of retirement. This week the World Bank made $12bn and the IMF $50bn available for covid-19. The Global Fund, which fights diseases like malaria and TB, said countries can switch grants.

In America Congress is allocating $8.3bn of funding. The country has some of the world’s most advanced

hospitals, but its fragmented health system has little spare capacity.

Much more money will be needed.

Just as important is to slow the spread of the disease by getting patients to come forward for testing when outbreaks are small and possible to contain. They may be deterred in many countries, including much of America, where 28m people are without health coverage and many more have to pay for a large slug of their own treatment.

People also need to isolate themselves if they have mild symptoms, as about 80% of them will. Here sick pay matters, because many people cannot afford to miss work.

In America a quarter of employees have no access to paid sick leave and only scattered states and cities offer sickness benefits. Often the self-employed, a fifth of Italy’s workforce, do not qualify. One study found that, in epidemics, guaranteed sick pay cuts the spread of flu in America by 40%.

Sick pay also helps soften the blow to demand which, along with a supply shock and a general panic, is hitting economies. These three factors, as China shows, can have a dramatic effect on output.

Manufacturing activity there sank in February to its lowest level since managers were first surveyed in 2004. In the quarter to March the

economy as a whole could shrink for the first time since the death of Mao Zedong. The OECD expects global growth this year to be its slowest since 2009. Modelling by academics at the Australian National University suggests that GDP in America and Europe would be 2% lower than it would have been in the absence of a pandemic and perhaps as much as 8% lower if the rate of deaths is many times higher than expected.

Financial markets are pricing in fear.

The S&P 500 has fallen by 8% from its peak on February 19th. Issuance of corporate debt on Wall Street has more or less stopped. The yield on ten-year Treasuries dipped below 1% for the first time ever.

In rich countries, most of the economic effort has been directed towards calming financial markets.

On March 3rd America’s Federal Reserve cut rates a fortnight before its monetary-policy meeting, and by an unusually large half-a-percentage point (see article). The central banks of Australia, Canada and Indonesia have also acted. The Bank of England and the European Central Bank are both expected to loosen policy, too.

Yet this slowdown is not a textbook downturn. Lower rates will ease borrowing costs and shore up sentiment, but no amount of cheap credit can stop people falling ill.

Monetary policy cannot repair broken supply chains or tempt anxious

people into venturing out. These obvious limitations help explain why stockmarkets failed to revive after the Fed’s cut.

Better to support the economy directly, by helping affected people and firms pay bills and borrow money if they need it. For individuals, the priority should be paying for health care and providing paid sick leave. The Trump administration is considering paying some hospital bills for those with the virus.

Japan’s government will cover the wages of parents who stay at home to care for children or sick relatives; Singapore’s will help cab drivers and bosses whose employees are struck down. More such ideas will be needed.

For companies the big challenge will be liquidity. And although this shock is unlike the financial crisis, when the poison spread from within, that period did show how to cope with a liquidity crunch. Firms that lose revenues will still face tax, wage and interest bills. Easing that burden, for as long as the epidemic lasts, can avoid needless bankruptcies and lay-offs. Temporary relief on tax and wage costs can help. Employers can be encouraged to choose shorter hours for all their staff over lay-offs for some of them. Authorities could fund banks to lend to firms that are suffering, as they did during the financial crisis and as China is doing today. China is also ordering banks to go easy on delinquent borrowers. Western governments cannot do that, but it is in the interest of lenders everywhere to show forbearance towards borrowers facing a cash squeeze, much as banks did to public-sector employees during America’s government shutdown in 2018-19.

There is a tension. Health policy aims to spare hospitals by lowering the epidemic’s peak so that it is less intense, if longer-lasting. Economic policy, by contrast, aims to minimise how long factories are shut and staff absent. Eventually governments will have to strike a balance. Today, however, they are so far behind the epidemic that the priority must be to slow its spread.

A Balkan betrayal Fiscal policy

Why Britain needs a bold budget Covid-19 is not the only reason that the government should increase spending

T

HE SMOKE signals rising from Downing Street suggest that the budget due on March 11th will be dull. The covid-19 virus has clouded the outlook; the new chancellor, Rishi Sunak, needs to get his feet under the desk; there will be more fiscal announcements later in the year.

It sounds as though the government plans to treat the budget as a holding operation. That would be a mistake. A new government’s first budget is a big moment, and this government has a lot to do. It is time to be bold, not boring.

For over a decade economic policy has been about managing a series of blows. First there was the financial crisis, which landed the government with the cost of rescuing the banks. Then there was Brexit, which has delayed

firms’ investment decisions. Now there is covid-19, which is bound to slow the economy further.

These last two factors would argue for an expansionary budget. But there is a further reason: while the government managed immediate perils, long-term problems—notably poor productivity and public services, particularly outside the south-east—have gone unattended.

To deal with these issues, Mr Sunak will have to spend more in two areas.

The first is investment. The government looks set to double the R&D budget and boost infrastructure spending, particularly for greener transport.

That is all to the good, but other sorts of investment also need a boost. To enhance workers’ skills, Britain should spend more on technical education for school leavers and those already in work. And to raise private investment, which has been weak since 2016 and is growing more slowly than in any other G7 economy, the chancellor should increase capital allowances, which let investment spending be deducted Continues on page 19

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In Association With

The battle for liberty in Africa

How African democrats can fight back

And how outsiders can help them

T

HREE-QUARTERS of Africans favour multiparty democrac y.

Whereas in rich countries the fashion is to lament democracy’s shortcomings, Africans want more of it. Their passion is born of experience.

Many have endured one-party or military rule, and know that unaccountable rulers abuse. Hence the bravery of the hundreds of thousands of Sudanese who protested against the dictatorship of Omar al-Bashir last year. After three decades of tyranny, plunder and economic mismanagement, they had had enough. What started as a rally against higher bread prices turned into a popular wave that forced the army to ditch the despot and agree to a transition to democracy.

A struggle is raging in subSaharan Africa. Most Africans, like people anywhere, want to choose their own rulers. A smaller but powerful group—autocrats and their supporters—is determined to thwart them. Over the past 30 years democracy has gained ground in Africa. During the cold war, peaceful changes of government at the ballot box were almost unheard of, because of Soviet and American support for friendly tyrants. After 1990 nearly every African country held elections. But in the past decade democrats have been pushed back again (see article). Political freedom has shrunk in Africa since 2008, according to Freedom House, a watchdog.

Crooked ruling parties have found myriad ways to nobble opponents and make elections unfair. The share of Africans who report that they are free to say what they think fell from 79% to 70% in 2008-18.

Of the 21 countries that switched off the internet last year, 12 were

African. The same number have passed laws making it harder for NGOs to operate.

Several trends favour the autocrats. China offers cash for roads and bridges with no pesky questions about governance. The current White House has no interest in promoting democracy. And new surveillance technologies let autocrats snoop inside dissidents’ phones, making it easier to harass them.

However, Africa’s democratic backsliding should be seen in context. It is smaller in scale than the advances of the 1990s and early 2000s—a case of three steps forward and one step back. And the forces that favour democracy remain strong.

One is urbanisation. The share of sub-Saharan Africans who live in cities has doubled since 1975, to 40%, and continues to rise. City folk are younger, better educated and harder to intimidate than their rural cousins. In the countryside ruling-party thugs can chivvy whole villages to the polls and threaten to take away their food aid if they back the opposition. In cities, by contrast, dissidents can more easily organise. Autocrats try to suppress urban turnout at elections, but this often causes anger to spill onto the streets. African political protests are more than three times as common as they were in 2012, by one estimate, and last much longer. Soldiers can disperse any crowd, but sometimes refuse to shoot. Some even switch sides and join the protesters, as at a crucial point in Sudan’s uprising last year.

Another force is Africans’ desire to build institutions to hold the mighty to account. These include a probing press and vigorous NGOs: think of the tireless

reporters who exposed Angola’s kleptocracy, or Catholics who proved Congo’s election was stolen. They include assertive courts: think of the judges who overturned rigged elections in Kenya in 2017 and Malawi in February.

They include legislatures, which are not as toothless as is often supposed. Most African presidents are now subject to term limits, which are more than twice as likely to be honoured as broken. And they include reformers within ruling parties. The big struggle in South Africa is between the pro- and anti-corruption factions of the ruling African National Congress; the anti-theft wing narrowly regained the upper hand in 2017.

Some say that an obsession with democracy is misguided, that China proves smart autocracy is better at promoting economic growth. Yet studies show an association between democracy and higher growth in sub-Saharan Africa. Other research suggests that the more democratic a country is, the more likely it is to invest in education and health. Strongmen with spreadsheets can foster development for a time. But democracy does it better. And the moral argument for it is even stronger.

Africa’s battle for democracy will be won or lost by Africans themselves. Still, the rest of the world can and should choose a side. The West has been hopelessly inconsistent, one minute lambasting Zimbabwe for ballot-rigging, the next minute endorsing the same crime in Congo. Better to offer steadier and more united support for democracy. Outsiders should not only reject sham elections but also be more outspoken in the period between votes.

Diplomacy is often about timing.

Outside help is most useful when

a political stand-off could go either way (as when Gambia’s president tried to hang on despite losing an election, but was ejected by the threat of force from neighbouring countries) or when a new, reformist regime is finding its feet (as in Ethiopia today). To know when to intervene, countries need diplomats on the ground, and governments back home that listen to them. President Donald Trump’s gutting of the State Department has not helped.

Support for elections should be more creative. Rather than merely watching what happens on polling day, donors should back local NGOs that can spot intimidation months in advance; digital analysts who can detect disinformation; and parallel voter tabulations against which official results can be checked.

Most important, outsiders should support institution-building. This is slow and thankless.

The results are less visible than China’s railways and dams. Yet it is essential. Prosecutors, legislators and journalists all need training; some also need cash to keep the lights on. African whistle-blowers are harder to ignore when outsiders trumpet their findings. It would be wrong for outsiders to fund opposition parties. But championing financial liberalisation can make for more competitive politics, especially in countries where state-run banks deprive opposition parties of credit, thus making it hard to fund campaigns.

Africa matters. By 2060 it will have twice as many people as China. Outsiders should care whether such a giant neighbour is prosperous and peaceful. Democracy cannot guarantee that, but its absence makes poverty and disorder more likely.

Why Britain needs a bold budget Continued from page 18

from tax bills, and thus encourage firms to invest.

The second area that deserves more cash is public services. Local authorities, which provide many of them, have about a third less to spend, in real terms, than they did in 2010, and the government’s current plans imply further cuts.

That is poor politics and poor economics. A shiny new railway station, paid for out of the capital budget, will be scant consolation to many voters, nor will it boost poorer regions’ prospects if local services, funded out of current spending, continue to deteriorate.

How to pay for all this? In the long run, modestly higher public spending will require higher taxes. And some taxes should rise now, not least to show voters the direction of reform. Raising fuel duty, which has been frozen for almost a decade, will bring in revenue and help wean Britain off fossil fuels. Council tax, the main charge on residential property, needs an overhaul both to raise money and to remove its regional distortions. The property valuations on which it is set date back to 1991, since when real house prices have quadrupled in the capital and doubled in Yorkshire. People sitting on multi-million-pound London piles pay less property tax than those in cheaper homes in other bits of Britain.

Most of the extra spending, however, should be funded by borrowing.

That alarms many sensible Britons, who worry that the government is getting too far into debt and will lose credibility by, yet again, breaking the fiscal rules it has set itself. Those fiscal rules have been revised five times over the past decade.

These are valid concerns, but they are outweighed by Britain’s situation.

The amount of debt matters less than the cost of servicing it, and, with interest rates historically low, that has fallen steadily from 6.5% of tax revenues in 2010 to 4.6% now. Britain is also insulated against shocks because the government’s bonds, at a 15-year average maturity, are longer-dated than those of any other major economy. Of Britain’s three fiscal rules—to balance the current budget in three years, to keep capital spending below 3% of GDP and to keep an eye on government borrowing costs—the one that really matters, therefore, is a pledge to keep the government’s interest bill below 6% of tax revenues. Time to junk the other rules, stick to that one, and start spending.

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COMPANIES & MARKETS

21

COMPANY NEWS ANALYSIS INSIGHT

CONGLOMERATES

Is UPDC’s rights issue a good deal for shareholders?

ODINAKA ANUDU

T

he UACN Property Development Company (UPDC), recently approved an offer for shareholders.

According to a recent press statement released by UPDC, the company is undertaking a rights issue where all shareholders (whose names appeared on the Register of Members as at Monday, September 30, 2019) have been offered an opportunity to purchase 43 ordinary shares for every 7 ordinary shares held. .

The subscription rights may be exercised at any time during the subscription period, which commenced on February 10, 2020, the company said. The subscription rights will expire if they are not exercised by the close of business on Friday, March 13, 2020, unless the company extends the rights offering subscription period.

UPDC expects to issue 15, 961, 574,145 shares of its common stock in connection with the rights offering.

The company initiated this move to raise equity capital to repay short-term debt obligations. It is also a strategic move aimed at strengthening the business to tap opportunities in Africa’s most populous country with huge housing and property gaps.

Analysts think it is a good deal in many respects. The UPDC has indicated that it intends to unbundle its interest in UPDC Real Estate Investment Trust (REIT) and allocate its REIT units directly to UPDC shareholders in proportion to their post-rights issue holdings in UPDC. This offers a growth opportunity for anyone buying UPDC’s stock as every shareholder in UPDC will get direct access to the West Africa’s foremost REIT (which was trading at N3.15 per unit as of Monday, 02 March 2020)

in proportion to their postrights issue holding in UPDC. UPDC is a well-known player within Nigeria’s real estate market and the company that has provided solutions to the many challenges facing Nigeria’s property market.

The company’s corporate history dates back to the late 90s and, over the years, has built a track record for delivering residential, commercial, retail and hospitality projects across the country. The company has a vast array of projects it has delivered in the ma-

jor cities – Lagos, Abuja and Port-harcourt as well as in a number of secondary cities across Nigeria.

In 2013, UPDC set up the REIT, the first real estate investment trust fund in Nigeria.

The REIT has reported profits since its commencement and has paid out over N5 billion in dividends to unit holders.

In 2019, the REIT generated income of N2.38 billion, 10 percent growth on income of N2.16 billion generated in 2018.

Profit after tax for 2019

(unaudited) stood at N1.8 billion, representing 81 percent margin on total income. This may be considered a good performance considering that many companies recorded losses or depressed fortunes within this period.

“Anyone who is able to maintain slow but steady rise on its financials in this economy must be doing well,” Ike Ibeabuchi, managing director of MD Services Limited, a services and manufacturing outfit, said.

“It is tough in the economy

L-R: Konyenasom Ikuni, learning and development manager, Inlaks; Femi Muraino, executive director, Inlaks; Femi Adeoti, MD/ CEO, Africa Operations, Inlaks; Adetokunbo Ayo-Ogunsanya, group head, human resources and administration, Inlaks, and Rufus Fayeun, human resources, business partner, Inlaks at the 2020 Inlaks Graduate Development Program in Lagos.

but tougher in the property market,” he further said.

Investing in the UPDC stocks is an opportunity to be part of a leading real estate development company and participate in its growth story.

The company recently announced changes to its board and executive management team including the appointment of a new non-executive director – Ibikunle Osilaja, a seasoned real estate expert with over three decades experience in leading real estate investments in emerging markets including Nigeria; and a new deputy chief executive officer – Deborah NicolOmeruah, an experienced real estate professional with a track record in financing and developing landmark projects in Nigeria.

The Nigerian economy has been hard hit by economic uncertainties and the real estate sector has been in a downturn since 2016 when the Nigerian economy went into recession. A recent GDP report released by the National Bureau of Statistics (NBS) showed that real growth rate of the construction sector in the fourth quarter of 2019 was recorded at 1.31 percent (year on year), lower by –0.74 per cent points from the rate recorded a year earlier. Relative to the preceding quarter, this was a decrease of –1.06 per cent points.

PHARMACEUTICALS

Neimeth’s shareholders approve balance sheet restructure as company records 5% growth DESMOND OKON

S

hareholders of Neimeth International Pharmaceuticals Plc have adopted and approved the proposal to restructure the company’s balance sheet to pave way for the commencement of the payment of dividends by the end of the financial year.

They accepted the proposal to restructure the financial document with excitement and gave the green light at the 61st Annual General Meeting held in Lagos on Thursday after the company announced a return to growth.

BusinessDay gathered t hat at t h e e n d o f t h e financial year, 30th September 2019, the company’s revenue stood at

N2, 371million, which signalled a 5 percent growth from the gross sales revenue of N2, 269million in 2018.

Profit before tax (PBT) was N304 million, which when adjusted for corporate tax of N84million leaves the company with a profit after tax (PAT) of N220 million.

But despite the return to profitability, it could n o t p ay d i v i d e n d s b e cause of accumulated losses, hence the Board’s d e c i s i o n t o p ro p o s e a restructuring of the company’s balance sheet.

“The company has had accumulated losses, totalling to 898miilion,” said Mathew Azoji, managing director and CEO Niemeth Plc, “we have a share premium of about N1 billion, so, the shareholders have approved that the www.businessday.ng

board can restructure the balance sheet, make use of the share premium to write off the accumulated losses.”

Speaking to this reporter, Azoji said that the company was expecting to have a profit by the end of this financial year and pay shareholders’ dividends as well.

“We are looking forward to paying dividends by the end of this financial year because shareholders have approved the restructuring of the balance sheet and we believe that all the regulatory agencies connected with this activity will give us all the approval we need to restructure the balance sheet,” he said.

Earlier in his speech, Ambrose Orjiakor, chairman, Board of Directors, Neimeth Plc, explained

that the restructuring will clear the accumulated losses in the statement of financial position of Neimeth, “thus present a healthy state and open widows for dividend declaration in subsequent years to shareholders.”

Neimeth International Pharmaceuticals had experienced a lag in the payments of dividends which protracted for nine years, BusinessDay learnt.

As a result, shareholders’ reaction to the news of the possibility of receiving dividends by yearend was not farfetched. “ Wi t h t h e n e w c ro p of the board of directors who we think are ver y focused and competent, we hope the growth of the company will be visible in the nearest future. I’m happy about the growth and once they can sus-

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tain it, the company will start paying dividends,” a shareholder said.

Anthony Omojola, National Coordinator, Independent Shareholder Association of Nigeria, s a i d t h e c o m p a ny ha s performed wonderfully well in the past year.

He added that growth was exactly what stakeholders expect from the company and the econo-

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my in general. “I’m happy with the results of the company and wish the company to continue in that stride,” he said.

Other matters that received approval included the ratification of the appointment of new directors, directors seeking re-election by single resolution, and the election of members of the audit committee.

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COMPANIES&MARKETS

Business Event

POWER

Ibadan disco proposes tariff increase of 50per cent, seeks customers support SIKIRAT SHEHU, Ilorin

T

he Ibadan Electricity Distribution Company (IBEDC) has pleaded with its customers ahead of a planned increase in electricity tariff by 50 percent, saying that the cost of making power available to customers has increased.

The management said it has become expedient for it to do the marginal tariff increase if the business must survive and therefore solicited for understanding among the customers.

Ayoola Adio, Head of Cus-

tomers Support IBEDC, who spoke during a town hall meeting organised by the company with stakeholders in Ilorin, Kwara stated that company want customers to know that the cost of giving power supply has increased and for us to survive in the business, we just have to increase tariff by 50 percent The proposed tariff increase according to the management is going to be across board. The increase is to mitigate the effect of the foreign exchange components of the business.

“We are appealing to our customers to show some

understanding in respect of the proposed exercise as the survival business is being threatened,” he said According to Adio, the average increase is 50 percent on all across the board, that is; Residential, Industrial and Commercial users.

He says major challenge confronting the company is the cost of energy.

“Buying energy is lower than the tariff we are charging the customers. The average cost to us is about N29 and most of our customers are paying N24.97 kobo so, for our unit, we are losing close to N4 per customer.”

L-R: Funmi Awelewa, CSR manager, IHS Nigeria; Olufemi Arosanyin, chief commercial officer, IHS Nigeria; Cima Sholotan, associate director, CSR, IHS Nigeria, and Honourable Folorunso Oladoyin, commissioner for education, Osun State, at a recent courtesy visit to explore partnerships around STEM and Digital Literacy, in Osun State.

Hypo partners FAAN to fight coronavirus at Lagos airport IFEOMA OKEKE

H

ypo Hygiene Products Limited, makers of Hypo Bleach and Hypo Toilet Cleaner donated over one hundred cartons Hypo bleach to the Federal Airports Authority of Nigeria, Lagos on Thursday, March 5, 2020 as part of the company’s contribution to preventing coronavirus epidemic in Nigeria.

The gesture is in line with Hypo’s commitment to promoting environmental hygiene as a means of reducing germ spread as well as outbreak of diseases through its brand of bleach, which is a trusted homecare disinfectant for all hygiene needs, killing 99.9% germs.

Speaking during the presentation, Akintayo Akinseloyin, Brand Manager, Hypo Hygiene Products Limited

stated that the safety of the general public is highly consequential to the company at a time like this, hence the spirited efforts at enlightening the people on the need for good hygiene in the face of the current global threat of Coronavirus.

“As a responsible company and brand, our priority right now is providing support however we can to ensure public safety through hygiene. We are also trying to permeate the culture of hygiene among Nigerians as this cannot be overstated and will go a long way in curbing the spread of the coronavirus”, he said.

Commending the management and officials of the Murtala Muhammed Airport for the protective measures put in place thus far, Akinseloyin declared “we strongly believe the government needs all the support it can get to help

prevent an outbreak in our country, hence the donation of our brands of bleach and toilet cleaner.

“These products will help officials further promote environmental hygiene at the airport through regular disinfecting of its facilities.

The officials and authorities have done a commendable job so far and we would like to encourage passengers and Nigerians at large to maintain good hygiene” In her response after receiving the items on behalf of MMA, Julian Bright Idiaghe, Head of Corporate Affairs, stated “while we have put preventive measures in place to prevent an outbreak so far, we strongly believe this commendable gesture from Hypo Hygiene Products Limited will further promote excellent hygiene in our facilities.

L-R: Umoren Akpan, financial secretary, Distillers and Blenders Association of Nigeria (DIBAN); John Ichue, executive secretary, Distillers and Blenders Association of Nigeria (DIBAN); Jimoh Abubakar, public affairs director, National Agency for Food and Drug Administration and Control (NAFDAC); Mobolaji Alalade, member technical committee, Distillers and Blenders Association of Nigeria (DIBAN), Sheriff Olagunju, director of Food Safety and Applied Nutrition (FSAN) representing the director general of National Agency for Food and Drug Administration and Control (NAFDAC), at the commissioning of BRT Buses for DIBAN advocacy campaign against Irresponsible and Underaged drinking in Lagos.

BANKING

Unity Bank introduces USSD in Nigerian Languages HOPE MOSES-ASHIKE

U

nity Bank Plc has launched Unstructured Supplementary Service Data (USSD) banking in Nigeria’s three major languages – Yoruba, Hausa and Igbo.

This makes Unity Bank the first Nigerian commercial bank to offer USSD in a local language. USSD transactions have gained traction over the past five years among bank customers, compelling Nigerian financial institutions to make it a core component of their e-payment solutions.

According to the Nigeria Inter-Bank Settlement System, NIBBS USSD transactions grew by 35 per cent in 2018 to N261 million from 25 per cent in 2017.

The introduction of Nigerian languages is an added feature to the Unity Bank’s USSD platform and by dialling the short code: *7799# on any mobile phones, Unity Bank’s customers will now have the option to continue their transactions in any of their preferred languages.

A statement by the Bank stated that “the upgrade in the features of the transaction the platform is part of Unity Bank’s initiatives aimed at achieving an optimal level of interaction on the USSD banking channel. It is targeted at market segments at the lower level of the pyramid intended to drive greater financial inclusion in the country as well as deploy more solutions for fast, efficient and convenient banking, whilst targeting the underbanked”. www.businessday.ng

Commenting on the initiative, , Olufunwa Olugbenga Akinmade, group head, retail, SME & e-business, said that the solution will boost the existing e-payment channels available to the bank’s customers to further drive customer experience. He said that it would also help to deepen mobile payment and contribute to Nigeria’s drive to meet the 80 per cent financial inclusion target this year.

“What we have done is to expand the channel of access to our offerings. Nigeria’s teledensity, according to the Nigeria Communications Commission, NCC, is at 91.1 per cent as of 2019. This means that a solution like this will resonate with millions of Nigerians who are more comfortable transacting in their local languages,” he said.

L-R: Chile Igbawua, chief commissioner, Public Complaints Commission (PCC); Adetokunbo Kayode, president, Abuia Chamber of Commerce and Industry (ACCI), and Victoria Akai, DG, ACCI during meeting focused on ways to collaborate on effective delivery of Alternative Dispute Resolution (ADR) in Abuja. Pic by Tunde Adeniyi.

L-R: Magnus Nnoka, president, Risk Management Association of Nigeria and Mobola Faloye, executive director/chief risk officer, Standard Chartered Bank Nigeria at a a Courtesy visit by RIMAN executive council to Standard Chartered Bank’s head office in Lagos, recently.

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Monday 09 March 2020

BUSINESS DAY

Monday 09 March 2020

BUSINESS DAY

25

KOLA ADESINA

CEOINterview

Group Managing Director, Sahara Power

Interview with Private Sector Leaders

‘We want a unified integrated approach to solving problems in the power sector’ KOLA ADESINA is the Group Managing Director of Sahara Power. In this wide ranging interview with BusinessDay Editor, PATRICK ATUANYA, the GMD outlines the need for consensus and cooperation by all stakeholders to solve the critical issues holding back electricity supply in Nigeria. Excerpt:

C

an you tell us what you think can be the common ground for stakeholders in the power sector?

The common ground is simply this: When you call something a value chain, what it simply means is that it starts with the customer, the person that is consuming the electricity, what level of power does he need to function as a human being? What quality of power does he need to exist in a manner that makes sense? That is the issue here. That’s the first place to start.

Now, having dimension your residential customers’ requirement for good life, for healthy living and for a productive life, then you take the next set of customers into consideration as well; that is the commercial and industrial users. How do you make a nation great? It is through your productivity level and the level of your economic activities that can truly propel the nation.

Now, in Nigeria for everybody to have electricity in a stable, regular and productive manner, we require to generate, transmit and distribute 26,000 megawatts of electricity.

Now, you go into the different alternatives of generating electricity, it is either you want to use renewables e.g. are the hydros, solar, wind or to use the thermal sources. These are different sources are readily available to you as options.

So, in that dimension, the level of hydro you have, what quantum of energy can that hydro generate? What can the thermal plant generate?

How many thermal units do you have presently in the nation? What is inhibiting them from generating their full capacity?

How can you fix those things that need to be fixed in order for them to generate that 26,000 megawatts that you require? If our current capacity isn’t up to 26,000MW, how do we intend to expand capacity by adding more units to existing power plants or building new plants to augment the gap. Then you move to transmission, do you have a transmission infrastructure to evacuate 26,000 megawatts? Today, the answer of course is No. So, the question is how do you rapidly build a transmission infrastructure to be able to take 26,000 megawatts from the various generating plants and ultimately take it to the distribution companies? And once you get it to the distribution company, what is it that they require to take it to our various customers some of these are feeder lines and transformers.? From the above, you can see the systematic and concentric nature of the requirement for success in the sector.

It starts with the customers; and ends with the customers. The lubricant that oils the chain from gas to distribution is tariff; appropriate tariff. The customer must pay for services charged for that chain to continue to work in an unbroken manner. That is the way it works anywhere else in the world. So, there is a need for an integrated solution where everybody in the value chain truly comes up with their own revenue requirement for success in order to make it work. Government role really for us should just be, to be a facilitator and an enabler, that is all. Once a government steps into the pricing of a commodity that is required for the success of that nation, for the prosperity of the nation, from an intervention or subsidy perspective, you introduce a distortion into the system. Now, to cure that distortion, requires a lot of work and

sacrifices. Price distortion is the reason why we are all arguing and blaming one another for absence of reliable, stable and quality supply.

To cure this anomaly, desperate but logical and long-term sustainable measures and solutions are required. Now, when you look at the United Kingdom (UK), they had exactly the same public sector driven like structure like Nigeria. Until Margaret Thatcher stepped if you recall from history when she pushed the reform agenda, it was a bit of a problem. The same uproar, the same noise was made by the British, but the woman insisted, that she was going to fix it, using the plants of reform and privatization as the cornerstone. Today, electricity supply is better and reliable in the UK, nobody is talking about supply of power anymore. That is because they went through that transition, it was rough, it was challenging, but they were able to overcome those teething problems Are you saying Nigeria needs to have 26,000MW now for us to enjoy 24/7 supply?

Let me take a step backward, for any nation that truly has the desire to generate, transmit and distribute 26,000 megawatts, what you should actually be producing about 30,000 megawatts.

The global best practice is to build redundancies into your plan. That is to build more than the required capacity to cater for breakdown, repairs, exigencies of gas infrastructure, turbines, lines, breakers, sub-stations, feeders and transformers. Invariably, you recognize real and potential losses and make provisions for this in your master, here is something we call the aggregate technical commercial and collection loses. When you generate electricity and you take it from one point to another, you lose some quantity in between. So invariably, if you don’t generate more than what the system requires, it means that some customer will still suffer lack in that nation. So, what you typically would do from a gas perspective is to ensure that you produce enough gas, daily consumption, daily production of 30,000 megawatts. And through the chain you lose different percentages based on the transmission and distribution infrastructure that is there. With that, at the end of the day, everybody, every home, business, industry has stable electricity in Nigeria.

With what you have explained, if there is a segment in the society that can’t pay the existing charges what do you suggest?

The key question that needs answers is whether the cost of services in the value chain is captured by the set tariff in the regulated model. As we speak today, the answer is No. One logical consequences of inappropriate pricing of any commodity is the low quality of service production.

In order to deal with the issue relating the ability/capacity to pay, the regulator crafted a model, with which has different tariff for different categories of customers classified, lightening, residential and industrial. The cornerstone of this model is that large end users pays more by cross-subsidizing for those in another categories.

Unfortunately, despite their noble intentions, the tariff aimed at neither sufficient, to meet the cost of energy, is neither sufficient www.businessday.ng

tors as the numbers doesn’t just add up. In the Telecoms, the sim card was originally sold for as high as N30,000at inception, but today is it free.

Some Telecoms investors lost of lot of money at inception but still found their way back into the market because the fundamentals of the sector are sound.

In the pricing of electricity, we have a mix of hydro and thermal generation. Thermal energy is more expensive than hydro but has higher availability ration than the latter. The Hydos are often available in full capacity during the rainy season whilst the thermal are usually all year round. Thus, there are different schools of thought in how to blend the two. One school opines that the Hydros should be sold to low income consumers whilst the thermal should be for the mid to high income consumers. But because we run a grid system with a radial technology, it is difficult to distinguish one electron from the other.

Nigeria has the largest power market in Africa with the largest potential and opportunities. Fix the fundamentals, electron will flow ceaselessly, Investment follows certainty. The Magodo and Ikeja GRA examples demonstrate service improvements when appropriate tariff is allowed.

hospital cost of energy/service change. Investment required to secure cure the defects in the network. The net of electricity (value chain) is not working because the revenue required can’t be met by the current tariff.

Because of social and public interest, it was deemed necessary that a Consumer Protection fund of N100bn be set aside to cater for endusers. The customer with low per capital income where consumption is basic. Sadly, the sector didn’t access the fund in 2013 nor all data, to the best of my knowledge.

Cost of energy is based on rate structure which can be sub divided into customer loss

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(N per kilo), energy cost per kilowatt/hour, deemed cost per kilowatt per month, taxes, fuel, adjustments.

If the outcomes of this exercise produced a figure of say N50 per kilowatt/hr. for a unit of energy but the tariff is set at N27 per kilowatt hour. It will be impossible for such service providers to guarantee quality service.

Let me quickly say the tariff is usually high when the initial capital expenditure required to build and enhance the network is being built. After a number of years, the model recognizes reduction in tariff as the investment would have begun to yield fruits.

Also let me quickly share with you some facts that may be eluding the public in this debate. Have

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we ever calculated the cost of self-generation? Using candles for a month is more expensive than the DisCo bills. A stick of candle is N50. Assuming you use two sticks a day, it will cost you N3,100.

For a household with cost of minimum of N2,000 a month, DisCos bill is still cheaper, more efficient and environmentally Because we hardly compute cost of self-generation, this readily doesn’t get he virus on us.

When you blend today with self-generation through diesel, petrol etc, cost reflective tariff is still cheaper. The average cost of self-generation is N80/ kwh while the highest DisCo bill today is approximately N47 average.

The current tariff structure is scaring away inves-

You have a situation where over 50 per cent of your customers are not metered and so what they get is estimated billing. How does that estimated billing for instance take account of the period they have not had power supply? And you are talking about cost-reflective tariff, what exactly is fair to the man who does not have a meter and you want to put on him the tariff which at the end of the day will not be fair?

This is a catch question. Do we enable 24/7 electricity supply first then charge the right price later? Or we allow the right tariff to unlock the right investments that produces the right supply situation leading to happiness for all.

My take is as a nation like all other nations, when electricity supply is stable, we should take the bull by the horn by reconstructing the tariff to stimulate investment.

Metering is a measuring device that is enshrined in the capital expenditure plan of all DisCos. When the appropriate tariff is allowed, necessary investments will be unlocked as return on investments is assured. A square of expectations, obligations, responsibility and confidence is built when the input and output are directly correlated.

Government is keen on building this bridge of trust with aggressive metering programs of different types being tuned and pushed.

I admonish our dissatisfied customers to kindly tilt towards supporting appropriate pricing of electricity and see whether there wouldn’t be improved services. The regulators are doing a yeoman’s job in trying to maintain standard, fairness, equity, balance and ensure that there is no profiteering with the DisCos being held accountable. We all can then set relevant and well dimensioned performance agreement on which we will all be judged.

Metering is a valuable tool in the hands of the DisCos for the purpose of energy accounting.

We align with the need to meter all.

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Recently the federal government unveiled an intervention for the power sector by Siemen, which is being run from the Chief of Staff’ Office. Did they get the buy-in of the Discos before that intervention was rolled out? Where are we on that intervention and what are your thoughts on the intervention and its ability to make a difference to some of the issues you are having?

We are very much aligned with the government in the Siemens intervention arrangement.

Government is fully aware that there is a huge infrastructure gap and resources are required.

Now, government part-own all these assets because government has 40 per cent stake in the DisCos. So, the solution government has come up with is a very fantastic one –Secondly, there has been ongoing conversation around it, government signed a memorandum of understanding (MoU) and that MoU is what we are trying to activate. We were meant to be going for a meeting with the Germans on how to close the technical gap, the requirement for equipment and the total end-to- end solution they are offering. So, our own view is that an end-to-end solution makes sense. We are fully aligned with it, but the conversation is ongoing as we speak. The DisCos are engaged with the Government to dimension the critical success factors, cast the end to end solution Siemens are offering and ultimately agree to a financing plan.

The truth was that we had ample gas supply and the grid took this power and consumer experience was beautiful. The value chain held to deliver, but thereafter, the network has had to face either gas shortages, grid restrictions arising from sundry reasons. To us, the biggest

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obstacles to te power sector development is lack of alignment. The system is misaligned in planning, coordination and execution.

To site a perfect DisCo example in terms of achievement; at Ikeja DisCo, we started our journey with Aggregate, Technical Commercial and Collection losses of 49.6% but today we have brought this as low to a historical record of 24.9%! This is the most aggressive reduction in Africa and probably beyond.

Also, we deployed $44m on advanced metering infrastructure into the system by way of technology to make metering and energy management more efficient and accurate.

We were deploying approximately about 300MW to 350MW at inception at Ikeja DisCo but today, we have been able to dispatch between 600MW – 700MW. Invariably, we have doubled our output to our customers and consumers alike. The revenue profile has quadrupled while the corresponding population have gone up scientifically too.

Whilst we celebrate this achievement, all we care to give as a company is customer experience that brings energy to life and happiness to all parties concerned.

Are you also going work with government to hand over the discos to Siemens?

Government never said that, the government of Nigeria is responsible, they know the implication of such very strange decision. So, I can say without a doubt that government intention is for us to partner with Siemens in closing the technical gap in the system, it is not to hand over.

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Continues on page 26

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Monday 09 March 2020

BUSINESS DAY

CEOINterview Interview with Private Sector Leaders

‘We want a unified integrated approach to solving problems in the power sector’ empathise and align with us, we want to succeed, help us to succeed To the regulator don’t let us die before our time, our intention is to be in business forever and it is to improve the system. We appreciate the President of the federal republic of Nigeria, the Vice president, the National Assembly that they would not promulgate laws that will be inimical to our business survival.

Continued from page 25

Siemens doesn’t own, neither do they manage any generation, transmission, or distribution asset anywhere in the world. And it is not in their plan, we have had meetings with them. It is not in their plan either to come and take over.

Can you confidently say that the discos have risen up to the challenge given the population explosion?

I will revert to my value chain comment earlier made. The performance of one is dependent on the performance of the other. The gas supplier can’t lay claim to success without the generation companies readily taking the has to convert to power which the Transmission company must evacuate to the DisCos. Should anyone drop the baton in this perpetual relay race, there would be light.

I will give you examples that will depict the daily realities of the sector.

At Egbin, we met about 400MW to 450MW and available and operable capacity. We aggressively invested to recover the full capacity of 1,320MW. If you recall, at he outset of this administration, we were were generating and supplying to the grid 1,100MW (which euphemistically was ascribed to body language of HE President Buhari When we took over this asset, what was the number of customers?

What level of energy were we receiving as an organisation? How many meters did we inherit? What was the gap? What have we done to close the gap? Now, there is something I need to stress here, which I will want to resonate to everybody. Electricity supply is a value chain and that value chain is not just grammar, it is actually symbolic of what really happens in that chain. What is it I am speaking to here? If the gas man shuts his valve and he is supplying no gas, as I am currently experiencing in my generation side today in Port Harcourt; If the gas man says he is not going to give you gas today, everybody in the value chain, either as a Genco, as a transmission company, or Disco, can’t get power. You probably would have observed in the last three weeks or so that the electricity has been bad. You know why? It is simply because of the gas constraint. So, when you have gas supply constraint, or you have transmission, having high frequency, energy, for it to flow in an uninterrupted manner, there is a level it needs to operate, which is the equilibrium. The moment any generation company shuts down, like Egbin that is meant to be doing 1320 megawatt but is currently doing about 700MW or 600MW and something, the moment there is a trip in any of the machine and we lose 220MW, the entire system feels it. You won’t have that equilibrium any more. Now you are going to have a spike in frequency, once you have a spike in frequency, it means that they have to find a way to quickly rebalance the system to ensure that stability is maintained. And that is why you hear of system collapse.

When I am ready to generate 6,000 megawatt, and the transmission infrastructure couldn’t take it, there is wrong movement in the system, the

system goes down. Now it is because of the fact that two things have happened: You have social media now, that is making you hear of the system collapse. Nigeria has not really operated at the full level we should energy wise from time immemorial. It is not a recent thing; it is not us. Under our management, with private sector coming in, Nigeria moved from 3,000MW to 5,700MW. And it is the same private sector that is being vilified. When we took over Ikeja Disco, we were receiving 280MW and 300MW of power. Today, we are receiving close to 700MW of power. So, invariably we are selling more power than we were selling in 2013. So, we are deploying more energy, but because of the fact that the population is increasing as well and the infrastructure is decaying arising from the fact that the investment required to make the system work has not been triggered, arising from inappropriate pricing. So, everybody needs to understand how holistic and how joined together this entire thing is. You cannot remove your liver from your kidney and expect to function optimally, it is impossible. But, what we are trying to do is to dismember the heart, the kidney and the liver and still expect optimal performance from the individual, it is not going to happen. So, that is why I have recommended timelessly that everybody must speak from an integrated perspective without vilification, without ego trips, without insulting anybody, but just stepping back to say, can we truly audit how we got to where we are and what we need to do to fix it.

Rather than just go emotional and then shoot everybody down.

Talking about fixing it, I am aware that the Disco model was brought in from New Delhi. What are those things they have done there that made it to succeed that we are not doing here?

At the point in time when you plant a seed, you don’t see a tree, you don’t even see anything. So, it takes a while. The first thing I am imploring is please understand and be patient

with us, empathize with us. Nigerians we are, we are not foreigners, few people can love this country the way we love this country. We truly paid for these assets, we paid $135 million to acquire these assets. That is not a free money. If we had fixed that money in 2013, we will not have $135 million now. You and I know that we would be richer. So, out of trust, out of faith, out of confidence and believe in the system, we made investment. Now, the New Delhi model is not a model that just happened over night, it took 13 years for the New Delhi model to transform the society and now it is being celebrated. If you give birth to a child, the child is not going to make first class in year one. You have to train that child, expose that child to the elements of excellence and expect and hope that he will turn out well.

That is where we are.

In the last couple of months, Government, World Bank, AfDB etc. have been having meetings on the Power Sector Recovery Plan and Performance Improvement Plan with each of the DisCos. The essence of the plan is to close the infrastructure gap to ensure steady supply of enegy.

It’s all encompassing with regards to the technical, commercial, financial, regulatory/legal and corporate governance structure. Metering is a critical component of this plan. It is instructive to note that renewable/ alternatives, Risks Profile and allocation are in this plan.

So, all that we want is an alignment. We want an integrated arrangement; we want a unified approach in solving this problem. We are deeply sorry to all our customers in Nigeria for the level of service that they have received yet, it is a journey and not a destination but we are promising that we will most definitely stand on our honour, we will make power available to all those that can pay and those who will pay.

So, for our consumers, we are pleading with them to pay for this power.

To the gas supplier, we appeal to them to give us more gas, the generation company want to generate more power. To the government please

But the way consumers see it that discos are deliberately spurning on the prepaid meter just so that they can continue with the estimated billing to recover cost since you talked about appropriate pricing?

Let me tell you something that our businesses universally work with by way of principle, it is called the going concern principle. As a going concern would, you wouldn’t want to be earning revenue you didn’t work for. No. That is because really what it does is that it exposes your organisation to the vagaries of staff going against you to steal from your consumer. I want to be able to truly account for the energy I have given you as against the meter I have read and the payment you have made. When all of them align, then I am in business. But if I am using estimated billing long-term then I am stealing from you. I cannot meter you when the price of the commodity I am selling to you is not covering my cost Have you considered the option of allowing these household pay for the meters upfront just like some Discos do?

And secondly you talked about funding, what happened to all the interventions from the Central Bank of Nigeria to the power sector?

I need to speak to something very quickly here. A meter is just a calibrator. Now if somebody has a value system issue, he has no integrity, the person can bypass that meter. Part of the challenges I need to bring to you, we suffer significant energy bypass and energy theft, It is about 41 per cent. Now, you acquire an infrastructure that you deemed would solve your problem of revenue and assure revenue to you. So, you now have 41 per cent of your customers who are consumers, so they are free riders, they are consuming your power but they are not paying for it. And yet you have meters given to them, but the clever ones have been able to bypass the meter or they are conniving with whoever that gives them the access to electricity. That simply means that in the pricing of that commodity because of the vigilance and monitoring is required for me to ensure that people that bypass don’t bypass, this is a cost to you the consumer must pay. You see, there is a cost structure associated with electricity supply, in that cost structure you find gas, generation, transmission and distribution. Now, the distribution side of it which is what you want me to speak to is that the cost there includes but not limited to metering, bill, monitoring, cash collection, transformer, lines, the feeder, the substation, all those represent the cost. Now, if we have built this huge humongous infrastructure, for us to validate the

energy you have received and the revenue we are receiving, when my revenue is not commensurate with the energy we have dispatched, there is a problem. What that simply means is that there is an additional cost required of me to be able to get it right. At the point of takeover, we did what we call smart metering.

What was that smart metering? This is an intelligent meter that is linked to a software where we can remotely monitor and observe the operations of the meter. But some of the problem that we now have to face is this – and this is the crux of the matter. You have a consumer who is consuming just N2,000 worth of energy every month.

What is the cost of meter? N36,000 for a single Phase from the regulator.

So, for the man that is paying N2,000 every month, how long will it take for us to recover that N36,000 meter we have given him? That’s one. we need to install that meter, there is a cost associated with it. When you do the mathematics, you are now asking yourself a question, should we actually meter everybody? Or can we find a middle of the road approach to the customer who can’t pay cost reflective tariff and whose bill every month is so low that buying a meter for that single customer may not make sense? So hence what do we do? We go to the regulator. So, from the economic point, we can meter everybody and we collect our money.

But the social man in us will say okay, am we being fair to somebody who is paying N2,000? Bulk metering may be the solution. Whilst others might advocate cheap meters, we advocate for quality material to give quality service sustainably. Long term us, we will always start trainings, immediate and short-term gains. Let’s cure the ailment permanently, rather than kick the can down line. All things considered, given our commitment to the power sector and our resolve to bring energy to life in Nigeria, Ikeja Electric plans to inject N15 billion into our metering project towards realising our target of metering 250,000 customers by 2021. We are highly committed to this project.

What would you say is the way forward?

We can achieve far much as a nation if we apply intelligent coordination of skillsets, experience, expertise, feedback and resources rather crippling what we have.

We must process the vast stores of data and meaningfully analyze them to make decisions rather than relying on emotional knee jerk solutions which over time will waste valuable time and resources. There should be an advocacy for behavioral economics to be used to improve policy Regulatory interventions should be focused on improving the customers access to energy and suppliers’ access to liquidity and sustainability.

We must explore the critical strategic drivers that will create value for everybody. Imagine if all homes in Nigeria have access to affordable energy. Our role as market participants is to convert that imagination to reality. We have a duty to man and our God to make impactful energy a legacy beyond our time. Nigeria must be electrified.

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cityfile

NGO engages 78 teachers to improve learning in Bayelsa communities Samuel Ese, Yenagoa

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National Youth Service Corps (NYSC) Plateau Cultural troops performing during the closing ceremony of the annual NYSC cultural festival in Abuja. NAN

Unease in Yenagoa over planned demolition of houses by navy

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roperty owners in Okoria community in Agudama-Epie, a suburb in Yenagoa, capital of Bayelsa State, are squaring up against the Central Naval Command over an alleged plan to demolish their houses and render them homeless.

The aggrieved home owners, who recently took to the streets to air their disagreement with the naval authority, want the Bayelsa State government to intervene and prevail

on the navy to drop the alleged planed demolition.

The home owners during a protest in the state, marched through the Melford Okilo Road terminating at the Government House where they passionately appealed to the state governor, Douye Diri.

The protesting residents comprised property of owners of buildings around the Okoria community in Agudama-Epie, close to the Central Naval Command in Yenagoa.

“Mr President and Governor, please save us’, and

‘we say no to oppression, Nigeria Navy you can’t destroy our houses without compensation” some of the placards displayed the aggrieved residents read.

Two members of the group, Asaye Ebikebina and Emmanuel Efrisou, told newsmen that men of Central Naval command had given them ultimatum to vacate their homes of face demolition their property spite that the matter was in court.

A mother of six, Sokore Blokore, who is in her 60s, said she lost her husband

recently and had nowhere to go to if the house built by her daughter, also now late was demolished.

Another property owner, Christopher Brik, whose house had already been demolished, narrated the harrowing experience he had been subjected to since then.

The special adviser to the governor on domestic matters, Lucky Yubogha, commended the residents for their peaceful conduct and promised to table the issue before the governor.

EFCC goes tough, arrests fraudsters in Ogun, bankers in Sokoto REMI FEYISIPO, Ibadan

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he fight against economic and financial crimes is receiving more boost, as operatives of the anti-graft agency, Economic and Financial Crimes Commission (EFCC) have arrested 42 suspected internet fraudsters (Yahoo-Yahoo boys) in Ogun State.

The agency also nabbed two bankers and a Point of Sale (POS) operator in Sokoto.

The POS operator and the bankers, according to Sokoto zonal command of the EFCC, allegedly unlawfully withdrew N1.2 million school feeding programme fund from an old generation bank.

Th e zo na l h e a d o f EFCC, Abdullahi Law-

al told newsmen at the weekend that the commission has also begun investigation of 3,000 cooks under the Federal Government’s Home Grown School Feeding Programme (HGSFP) in Sokoto and Kebbi States.

Lawal said that some local government education secretaries were allegedly involved in the school feeding programme fraud especially in remote areas.

He identified the suspects arrested as Zaharadeen Ibrahim (POS operator); Ngozi Agbonjari and Michael Alabi, both staff of the old generation bank in Sokoto.

Lawal said the suspects cloned ATM cards belonging to Fatima Ahmadu and Sadiya Bello and over a period of time withdrew the money totaling N1.2 million at Gwadabawa and www.businessday.ng

Bodinga local government areas.

The EFCC zonal head said that the commission had recovered N652,000 from Agbonjari and Alabi and was making efforts to get N553,000 from Ibrahim along with the ATM cards.

According to him, operatives of the commission also arrested one Bello Umar of Sokoto Central Market, who allegedly sold a non-existing land located at Kalambaina in Sokoto town to one Abdurahman Abdurahman for N480,000.

The zonal head added that the commission also arrested one Ogunsina Micheal and Abdulwahab Mayowa of old Airport road Sokoto over alleged fraudulent withdrawal of N47,000 from one Paulina Asogba’s Zenith bank account. He said investiga-

tion revealed that Asogba gave her account details to Mayowa to deduct N4,000 from her account but the suspects conspired and transferred N47,000.

In Ogun, operatives of Ibadan zone of the commission, weekend, arrested 42 youngsters for alleged involvement in internet-related fraud.

The suspects, whose ages range between 18 and 33 years, were apprehended at different locations in Ilaro, Ogun State, following actionable intelligence earlier received on their alleged illegal activities. Items recovered from them include eight exotic cars, mobile phones and laptops.

The commission said they suspects would be charged to court upon the conclusion of investigations into the case.

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community bas e d organisation (CBO), KEFFES Rural Development Foundation (KRDF) has engaged 78 volunteer teachers to help address deficiency in manpower in primary and secondary schools in eight coastal communities in Bayelsa State.

Also engaged are 12 volunteer health personnel to work in health centres and cottage hospitals in the communities as well as 14 volunteer monitors to ensure efficiency and good service delivery in both the education and health facilities.

The project which is tagged, KRDF-FIRST E&P Intervention Program is aimed at addressing the deficiencies in the manpower needs of schools and health facilities in Koluama 1, Koluama 2, Ekeni, Fish-Town, Foropa, Ezetu 1, Ezetu 2 and Sangana communities which make up the KEFFES cluster in Southern Ijaw local government area of the state.

Speaking during the inauguration of the programme in Yenagoa, chairman, board of trustees of KEFFES Rural Development Foundation, Jeremiah Leghemo, said the inauguration of the intervention programme became necessary as it is aimed at improving the capacity of primary and secondary institutions and health sectors that are poorly staffed in coastal communities.

Leghemo emphasised

the importance of the education and health sectors in the well-being of the people, explaining that primary and secondary education form the basis of human development.

A c c o rd i n g t o h i m, though the 104 men and women engaged in the schools and health facilities are referred to as volunteers, they are going to be paid some stipends as motivation to deliver optimal services to the people living in the coastal communities.

“The programme is aimed at improving the capacity of the primary and secondary institutions and health sector that are poorly staffed. The intervention is basically on employing primary and secondary school teachers and health personnel in these sectors,” said Leghemo.

Selepre Matthew, chairman KEFFES Rural Development Foundation (KRDF) said the intervention is “a solution platform to tackle the Sustainable Development Goals 3 and 4.”

Matthew explained that the programme would also improve access to health services, provide access to improved quality learning environment and improve the performance of students in the benefiting schools in the eight oil producing communities.

A representative of Civil Society Advance Forum for Sustainable Development Goals 2030 (CAS2030) said the programme has met 10 of the 17 goals and urged First E&P not to relent, but continue to sustain the intervention.

Man bags 9 months for impersonation

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Sha r i’a c o u r t sitting at Rigasa, Kaduna has sentenced a 25year man, Ahmad Abdullahi, to nine months in prison for impersonating a police officer.

Abdullahi was also convicted for extorting money from tricycle riders.

The judge, Dahiru Bamalli, gave the ruling after the convict pleaded guilty @Businessdayng

to the offences bordering on impersonation and cheating.

The judge, however, sentenced Abdullahi with no option of fine.

The prosecutor, Sambo Maigari, said that they arrested the convict at Barkin Ruwa area of Kaduna on March 5 around 6.00 p.m.

“He was caught collecting N600 from a tricycle rider,’’ he said. NAN

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Monday 09 March 2020

BUSINESS DAY

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Protection of policyholders major target in industry digitalization – NAICOM Modestus Anaesoronye

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he protection of policyholders in insurance contract by ensuring that their claims are promptly paid, they get the best service are key reasons for the planed digitalization of the entire industry, the National Insurance Commission (NAICOM) has said.

According to the Commission, this is critical in its responsibity towards insuring the insurance consumers are fairly treated and protected.

Sunday Thomas, acting commissioner for Insurance/ CEO of the National Insurance Commission (NAICOM) said as part of the Commission’s effort to develop the insurance market, it has commenced the process of attaining the full digitization of insurance business in Nigeria in order to keep tap with current realities.

“There is no hiding the fact in saying that the industry is currently lagging behind other financial services sectors in this regards. “ He said achieving this will

L-R: Val Ojumah, MD/CEO, FBNInsurance; Adenrele Kehinde, Chairperson, FBNInsurance; Paul Richardson, Producer, World Finance, during the presentation of the Best Life Insurance Company in Nigeria Award to the FBNInsurance by the World Finance held in London

ensure that, genuine claims are promptly paid by insurers, ensuring financial soundness and viability of the insurers to protect investments, right prizing of insurance products, value for money, use of technology for ease of transaction etc.

Thomas said the Commission is now more prepared to

drive the IT revolution in the sector starting with itself.

“It is on this premise that NAICOM is working assiduously to see that all its operations are done online and real time by digitalising its processes and encouraging the industry to imbibe same. Appropriate steps are being taking to launch the

Commission’s portal which will go a long way in blocking leakages in the sector, Thomas stated.

To remain relevant and survive in the future financial services industry, insurance companies must embrace digital transformation and this expert’s say has become necessary in view of changing

consumer segment and appetite.

According to them, it is important that digitalization is quickly embraced to drive changing customer relationships and experiences, redefine value proposition and optimise business models and processes.

Remi Babalola, chairman board of directors, Law Union And Rock Plc had during presentation on the theme “Millennials: Digital Transformation & The Nigerian Insurance Industry”, said that the Millennials are either critical success or failure factor for the insurance industry both locally and globally depending on how proactive the insurance industry harnesses their positive characteristics.

“Proactive adaptation of their lifestyle or behaviour to innovate products by insurers to match their lifestyle needs will significantly change the landscape of the insurance industry.”

Babalola had said that with 92 million segment of the population as active users of the mobile phone, insurance business communication needs to change in order to achieve phenomenal growth

in the insurance industry and financial service sector.

“Babalola also warned that “If your brand doesn’t show up in online search, Millennials are not likely to take you seriously.”

“Information available shows that the Millennials have the capacity and are in fact influencing purchasing decisions as well as how companies conduct business.”

“Insurers must therefore be ready to tailor their marketing strategies to align with the digital natives in order to achieve improved performance.”

He further stated that the insurance industry needs to embrace the strategic significance of social channels. “We need to be where the customer is and be part of the conversation where they interact, exchange opinions and levy complaints.”

“Insurance companies would need to allocate resources to study millennials’ habits and employ effective marketing strategies to sell multiples strands of insurance. Since they engage in a sharing economy, we may need to think of how to insure space and time.”

FBNInsurance clinches global award for the fourth time Modestus Anaesoronye

T

he World Finance Magazine recently announced the winners of its 2019 World Finance Global Insurance Award, naming FBNInsurance the Best Life Insurance Company in Nigeria.

The spotlighted insurance firms according to the magazine are transforming

the global insurance sector, with their use of technology and their desire to have a relationship with their customers; one that would be long-lasting.

FBNInsurance, once again claimed the World Finance Global Insurance Award as the Best Life Insurance Company in Nigeria.

This 2019 win would make the fourth time that the company would be claiming

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this award as they were given the same award in 2014, 2016 and 2017.

Val Ojumah, managing director/CEO of FBNInsurance expressed his satisfaction at the win, attributing the accolade to the company’s continuous commitment to customer satisfaction, and investment in customer-centric technology, aimed at meeting their customers’ needs. “We are happy to have won this

award yet again. We will not rest on our oars even as we set our sights to recording more successes.”

Since its inception in 2007, the World Finance Global Insurance Award has celebrated innovative, resilient, and forward-thinking insurers who have learned to adapt their practices to suit the rapidly changing, more digitally driven market.

Val Ojumah, in a bid to

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keep his company at the top, shared the plans of the company for 2020. “In 2020, we would be celebrating our 10 years of operations.

This is no mean feat as we have continually responded to customer needs with a view to providing customer tailored services in meeting the ever changing need of the consumer.”

In a statement, obtained from their website, World

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Finance Magazine stated, “The successful adoption of new technology, is undoubtedly key to future success in the insurance sector, and if firms cannot effectively exploit systems such as AI and the IoT, they risk being left behind.”

Clearly, FBNInsurance, is one firm that does not want to be left behind, and if their fourth win is anything to go by, they will not be.

Monday 09 March 2020

BUSINESS DAY

insurance today

31

In association with

E-mail: insurancetoday@businessdayonline.com

Climate risk insurance: Building resilience and growing markets

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n the first six months of 2019 alone, seven million people were displaced by Cyclone Idai in Southeast Africa, Cyclone Fani in South Asia, Hurricane Dorian in the Caribbean, and flooding in Iran, the Philippines and Ethiopia.

German reinsurer, Munich Re estimated total losses from climate and weather events in 2017 were $320 billion, the largest amount ever recorded.

Globally, only half the $160 billion losses from ‘natural’ catastrophes in 2018 were insured.

Both developed and developing economies are in the firing line. Perhaps surprisingly, the Germanwatch Global Climate Risk Index reports that Japan, the Philippines, and Germany were at the top of the list of the most affected countries in 2018.

Despite this, climaterelated disasters tend to hurt the poor and vulnerable the most - of the ten most affected countries 1999-2018, seven were in the low- or lower-middle income group.

That’s bad news for the world’s poorest populations - especially for women, who are disproportionately affected by the impacts of climate change.

According to the InsuResilience Global Partnership, this is due to their levels of economic participation, role in agriculture, unpaid care responsibili-

L-R: Kundan Sainani, chairman; Babatunde Fajemirokun, MD/CEO; Ademola Adebise, non-executive director; Folakemi Fajemirokun, non-executive director, All of AIICO Insurance Plc during the Company’s Extra Ordinary General Meeting in Lagos

ties, and access to information.

Many women in developing countries struggle to own land, meaning they face barriers to insurance, and lack of documentation and written proof of land tenancy excludes some women farmers from insurance cover.

Furthermore, women’s vulnerability to climate change has implications for their risk profile, protection needs and preferences, and barriers to access and use of climate risk insurance.

Fairtrade International found that, 60-80 percent of the world’s food is grown by women, and women’s role in farming is growing year on year. Women smallholder farmers in developing countries could be major beneficiaries of the new wave of agricultural insurance products - many of them designed to manage climate risk - now coming onto the market.

Inclusive climate risk insurance is vital for building resilience. It can also play a crucial role in na-

tional risk reduction strategies - of course, it’s not the only disaster risk management tool, but it is an important one which does not always get the recognition it deserves.

Agricultural insurance comes in many forms, including area-yield index insurance, crop weather index insurance (or parametric insurance), and more recently, revenue index insurance which protects farmers against price shocks in volatile years.

Satellite imaging, automated weather data, smart-

phones and blockchain technology are constantly improving the efficiency of loss verification. A new climate insurance programme funded by the UK Department for International Development (DfID) and by the InsuResilience Investment Fund aims to reach more than 690,000 families in Kenya, Malawi, Mali, Zambia, Cambodia and Myanmar.

The story of Zemada Kebeb, a smallholder farmer in the drought-prone Tigray region of Ethiopia, demonstrates the ben-

efits of climate risk insurance for women. Recurring droughts left her and her family suffering from food insecurity and chronic hunger, and she was in debt from loans she had taken out for seeds and fertiliser.

However, after Zemada joined the World Food Programme’s R4 Rural Resilience Initiative, she received a drought-related insurance payout which not only covered her loan repayment, but also enabled her to buy two more sheep which now produce milk for her and her children.

“The financial sector is recognising increasingly that the client profile of women is different from men, due to their genderdiverse life cycle needs and associated risks, resulting from cultural norms, socio-economic patterns and biological differences,” wrote Natascha Beinker, who chaired the Global Partnership for Financial Inclusion (GPFI) during Germany’s G20 Presidency in 2017.

“Addressing these needs of women’s client segments present a market opportunity for insurers and intermediaries.”

Women represent an untapped target group for insurance with high growth potential, and there is a strong social and business case for factoring gender into the design and implementation of inclusive insurance. source: Micro insurance network

AIICO progresses with recapitalisation as paid-up share capital hits N11.3bn Modestus Anaesoronye

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fter successful completion of its recent private placement as part of her recapitalization plan to meet the new minimum capital requirement set by the National Insurance Commission (NAICOM), AIICO Insurance has increased its paid-up share capital from N6.1 billion to N11.3 billion.

In compliance with

the new minimum capital requirements, AIICO recently concluded the private placement phase of its recapitalization exercise with an uptake of 38.83 percent of its shares by two strategic investors; LeapFrog Nigeria Insurance Holdings Limited acquired 28.24 percent stake while AIICO Bahamas Nigeria Limited acquired 10.59 percent stake. As a result, the paid up share capital of the company has increased from N6.1bn to N11.3bn and it intends to www.businessday.ng

raise the outstanding capital from existing shareholders.

According to the Company, AIICO Insurance Plc. has recorded an extraordinary success in its recapitalization journey, with successful completion of its private placement investment by two strategic investors. The company had earlier received shareholders’ approval to increase its authorized share capital to N18 billion through various instruments to meet the new minimum capital ??

base for a composite insurer based on the NAICOM guidelines.

At the Extra-Ordinary General Meeting (“EGM”) which held on Thursday, March 5, 2020 in Lagos, the shareholders demonstrated their support by voting in favour of the proposition to raise additional capital through a rights issue.

Speaking on the company’s recapitalization efforts, Babatunde Fajemirokun, managing director/ CEO, said “the future looks

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bright for our company; we are making progress in positioning our company for long-term sustainability.

Increasing our capital base, will enable us strengthen our balance sheet, provide additional capacity to underwrite more risks and deliver better returns to our shareholders. Our history of stability and reliability has earned us a place of admiration in the minds of our esteemed customers.

We are putting structures in place to continuously delight and excite them @Businessdayng

with innovative products and superior service experience”.

AIICO Insurance is a leading composite insurer in Nigeria with a track record of serving our clients that dates back over 50 years. Founded in 1963, AIICO provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

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Monday 09 March 2020

BUSINESS DAY

Start-Up Digest

In association with

Meet Daniel Adekunle, designer of Nigeria’s first bitcoin ATM Josephine Okojie

D

espite the Central Banks o f Ni g e r i a’s refusal to recognise bitcoin and other cryptocurrencies as legal tenders in the country, the number of people in Nigeria that buy, sell and transact using cryptocurrency is increasing daily.

With the increasing adoption and potential to make wealth from the crypto market, some entrepreneurs are taking advantage of the opportunities.

One of such entrepreneurs is Daniel Adekunle, chief executive officer of Blockstale – a bitcoin teller machine vendor tailored specifically for Africa.

The young entrepreneur designed the first Bitcoin Teller Machine firm in the country that is pivoting the technology to enhance businesses in Nigeria.

He designed the machine in Shenzhen, China, and flew it to Lagos, Nigeria’s commercial centre.

Daniel and Adeyiga Olusaye, his friend, founded the business in 2017 for Nigeria’s bitcoin investors.

Unlike ATM, Bitcoin Tell-

Daniel Adekunle

er Machines (BTMs) do not accept cards, whether they are debit, credit, master, or visa cards; they only accept cash.

Through Blockstale BTMs, Nigerians can find simpler ways to enter into the crypto market even without much technical knowledge as the technology has simplified the process and reduced the challenge of selling and buying the commodity.

“I know there is a scarcity

of these machines in Nigeria, and that’s why we’re quietly filling the gap, for now,” he says, in an interview with Weetracker.

“For about three years now, I have been working on the blockchain technology and BTMs hardware, software and firmware most especially,” he further says.

But according to Adekunle, it is bitcoin only that can be traded on the BTM currently as other altcoins cannot be traded.

Nigeria tops Africa’s start-up investment deals with $684.4m in 2019 Josephine Okojie

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igeria’s start-ups outperformed others on the continent by attracting an investment of $684.4 million in 2019 from 66 deals, according to a recent report by Baobab Insights.

This has made Nigeria - Africa’s biggest economyclinch the first position of start-ups investments, followed by closely by Kenya with $640million investments from 49 deals and Egypt with $174million invested in 82 deals.

On a continent level, Africa’s tech start-ups raised $1.93billion in 2019, representing a 63percent compound annual growth rate since 2015, the report says.

Fintech stat-ups raised 50percent of the total fund-

ing in 2019 with $809million secured over 79 funding rounds.

Healthcare, energy and logistics solutions also fared well, raising $264.2 million, $214.6million and $214.5 million respectively.

Start-ups based in Nigeria Kenya, Egypt, and South Africa closed 81.3 percent of all investment rounds across Africa, totalling $1.59billion of all funding raised in 2019.

“2019 has been a record year in terms of investments for African tech start-ups in particular for pre-seed and seed-stage companies,” the report states.

Fintech, transport and logistics, agtech and solar energy sector-based startups all fared well in 2019 as well as markets such as payment solutions, the report adds.

The figure shows that the

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Nigerian startup ecosystem is maturing and investors are placing more confidence in the country’s entrepreneurs,” Uche Aniche, founder of StartupSouth said.

“Investors are marvelled about our start-ups, making it big without infrastructure, knowing they will be much better if they get it and this is another reason investors are betting on the potentials of start-ups,” Aniche further said.

He added that most of the investments are into businesses involving largely fintech, logistics, agtech and energy because investors are largely betting that these start-ups can grow bigger.

Seventy-three percent of the funding was for seed capital investments with 16 percent series A and 11 percent series B/venture capital, the report states.

The young entrepreneur says he plans to expand his operations beyond Ajah, Lagos, to other parts of the metropolitan city before the end of the first quarter in 2020.

In the long run, he plans to deploy Blockstale BTMs across major cities in the country.

He says that his BTM has some tracking devices such as cameras and alarm systems that are built in to address security concerns of

the machines deployments.

“Security was my very first concern and part of the reasons I built these machines from scratch— because of the components we have in the machines,” he says.

“We added trackers, door alarm system, and camera to contain the issue of security to a level,” he further says.

“We are still working on more components but as it is, these machines can work anywhere in Nigeria

and Africa so long there is power and internet facilities,” the young entrepreneur adds.

On what it cost averagely for him to get his first BTM designed and deployed, Daniel admits that it cost between N5 million and N6million.

He notes that the actual cost depends on the location and the agreement between the operator and the store owner.

“We are excited to welcome more tech companies into the BTM space as Blockstale has made history in Nigeria and Africa at large.

We hope this great innovation structures our economy and opens more opportunities to our youths and other business owners,” he tells Weetracker.

Lots of Nigerians see BTMs as money laundering tools, but Daniel has taken it upon himself to prove that it is not by setting algorithms to enable the machines to conduct proper Know Your Customer (KYC) to any level per user.

“The device can carry out phone number and ID verifications, and set a limitation on purchase per user, depending on their KYC,” he says.

Utomi to lead entrepreneurship discussion at CBU 20th annual lecture

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atrick Utomi, erudite scholar and a professor of political economy, will be the keynote speaker at the Catholic Brothers United (CBU) annual lecture scheduled to take place on April 26, 2020, at the McGovern hall of St. Agnes Catholic Church, Maryland, Lagos.

The event is poised to congregate key business leaders and thought-leaders and is aimed at equipping business owners and potential entrepreneurs with critical skills necessary for the 21st-century marketplace. It has as its theme, ‘Entrepreneurship: A Tool For Mitigating Unemployment For National Growth.’

The select panel of discussants which will feature at the event includ Ifeyinwa Ugochukwu, a seasoned administrator and the managing director of Tony Elumelu Foundation (TEF); Chukwuemeka Agbata, co-founder, GoDoHub. org and director, Founder Institute; Ndidi Nwuneli, founder, LEAD Africa, and managing

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partner, Sahel Consulting. The session would be moderated

by George Ehusani, director of Lux Terra Leadership Foundation—a well-known religious cleric of the Catholic faith, writer and life coach.

Commenting on the annual lecture, Gabriel Akumhegie, chairman of the organising committee, said the event will offer business owners, entrepreneurs and executives opportunities to gain insights and practical knowledge from established industry experts, to further enable them to make balanced and informed decisions in their respective roles.

According to Akumhegie, available data can help improve business decisions in so many ways, one of which is efficiency gains. These gains are valuable because they can improve not only individual businesses but entire markets and society as a whole.

“The annual lecture will be uncovering key leadership principles, innovation possibilities and leveraging available data that have the @Businessdayng

potential to positively impact businesses, individuals and the Nigerian economy at large,” Akumhegie added.

On the choice of the topic, Akumhegie explained that because entrepreneurship is a tool for people pursuing careers in business creation and other related fields, it has become an interested topic given the level of unemployment in the country and the new policy direction of government to equip the youth to take up careers that will help them develop their talents and contribute to economic growth of the country.

“For instance, the 2017 report of Global Entrepreneurship Index shows that the first 10 well-performing nations in terms of entrepreneurship are developed nations,” Akumhegie said.

He further opined that policies made and implemented by the government can help promote development in rural environments, thereby ensuring equity in the forms of development experienced in an entire nation.

Monday 09 March 2020

BUSINESS DAY

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Start-Up Digest With simple technology, start-up solves farmers-herdsmen problem ODINAKA ANUDU

A

n agro start-up is solving the farmers-herdsmen problem with a simple technology in the northern part of Nigeria.

Ibrahim Maigari Ahmadu may not be a popular name, but he is providing a solution that has defied even the government of the day.

An IT expert, the cofounder/chief executive of Livestock247.com reduces movement of cows from one place to another, thereby cutting down on the spate of clashes in the north.

His strategy is simple: He tells herders to stay where they are, while he provides pasture, water, funding and market for them. With this strategy, he reduces nomadic movement of cows through farms, which often results in conflicts, blood and tears.

His Livestock247.com is the country’s first livestock online marketing and listing platform.

A lawyer by training, Ahmadu has been in the livestock industry for seven years, revolutionising a sub-sector viewed primarily through cultural and ethnic lenses.

Through his platform, livestock sellers meet buyers.

The herders make money from huge sales while buyers get fit-for-slaughter cattle.

The entrepreneur tells Start-Up Digest that his firm’s big vision is to mitigate spread of animal-tohuman disease transmission in Africa.

He explains that one big challenge facing Nigeria’s cattle production is lack of

Ibrahim Maigari

functional animal identification system.

His firm creates a platform whereby livestock producers, consumers, financial service providers and insurance firms come together with a view to mitigating the spread of diseases and putting a structure to a sector that has been under the control of middle-men for years.

“We are investing heavily in production,” he says.

He says Livestock247. com is trying to solve a very serious problem—cattle rustling.

“We partnered with MTN Nigeria to develop the cattle tracking system. We developed this system ourselves.

During that time, we developed relationships with rural farmers. Before we even launched our products, we had to go round the country and familiarise with rural farmers. And they are not as uncivilised as many people think they are. They are literate in their own way,” he

explains.

Ahmadu says the cattle business is a multibillion enterprise and is not about culture or ethnicity.

“The cow does not understand Igbo, Hausa, Yoruba or Efik. Most livestock producers are looking for market.

They want to get away from the shackles of middle-men; they want good margins,” he states.

There is a popular livestock market in Jigawa State called Maigatari Market, which is busiest on Thursdays.

Traders and buyers come from Mauritania, Congo Brazzaville, several parts of Central Africa and other countries to buy or sell cows.

The entrepreneur says he is now trying to re-orient livestock producers there to ensure their market runs 24/7.

“When you go there on Friday, the place is quiet.

And I ask them, ‘Why don’t you have a market on 247

basis?”

“We are bringing the financial service providers to this market because it is a business that is credit based.

Maigatari Market turns almost over $3 million a week.

They do over N500 million, but 80 percent of this is cash.

We partnered with Sterling Bank to have what we call Experience Centres and we are bringing financial services to the cattle market.

That is financial inclusion.

We are bringing together the banks and the under-banked through our system. So, we are helping them to sell their cattle and now we are telling them they don’t need to come with cash. Have an account with this bank and you don’t have to come with cash to the cattle market because it breeds rural banditry and kidnapping,” he says.

He says that 95 percent of the 20 million cattle in Nigeria are owned by the pastoralist communities.

He believes that trace-

ability has been a landmark innovation in the livestock business.

“What you are getting for nothing, you get a fit-forslaughter that is traceable and you are getting value for money,” he says.

“The traceability is working at the moment. There is a microchip that we implant on the animals. It is not harmful on the animals and is based on World Organisation for Animal Health (OIE) specifications. The body is like the World Health Organisation (WHO) of the animal space. There is also the International Standards Organisation. We design our products in line with OIE. Fortunately, Nigeria and other 180 of countries are all signatories to OIE,” he discloses.

Forty-two percent of all the livestock in West Africa are in Nigeria but the country can’t export one kilogram of beef because of poor animal identification system, he said.

“Botswana, Namibia and South Africa export beef.

Nigeria has over 20 million cattle but can’t export any beef,” he says He points out that his firm’s new Livestock Fattening Project is bringing bite to the industry, as he has an agreement with financial partners who are investing almost N500 million in the project.

“What they are trying to do is to show to the government that the market-driven approach is the solution,” he says.

“The farmer-herder crisis happens every year. During the dry season –from November to February— herders start moving southwards because rains stop early

in the north. So, they start looking South-West and converge at the Middle-belt.

They also congregate around the Ikom Belt. By March/ April when the rain starts again, they go back. As they go back, people are already in the farm. That is why you have farmer-herder crisis.

When you sit down with them, you see it is a competition of resources. The pastoralist is looking for pasture and water. The farmer, on the other hand, has every right to go to the farm. What we are telling them is, look, you say government is not investing in livestock development.

There is no pasture and grazing land, so stay where you are. We will give you money for feeds and also give you the bulls to fatten. We will give you money for drugs and vaccines. We will give you a veterinary doctor to supervise you. We will give you the market,” he says.

“Over 1,000 companies have applied to participate in the programme. Our plan is to do 24,000 cattle in 2019 to 2020. We are starting with Osun, Taraba, Kaduna, Katsina, Kano, Abuja. We have escalated it to reach Lagos and the South-East,” he explains.

He adds that one other thing his firm is trying to do is to de-ethnicise livestock production the way poultry business has gone mainstream.

He explains that livestock business is no longer a cultural thing.

“We are a platform. We bring buyers and sellers together. People that want to buy, sell, transport livestock come to our platform. Insurance companies and investors come to our platform and they pay some fees.”

Entrepreneur plans to raise new recyclers to tap $265bn market Odinaka Anudu

L

uther Kington Nwobodo, entrepreneur and CEO of Zeugnis International, is planning to raise a new set of Nigerian recyclers who will tap the $265 billion global market.

Nwobodo told Start-Up Digest that Nigerians were yet to learn the basics of recycling of PET bottles and nylon and were missing in the market, which he called a gold mine.

Recycling is the process of converting waste objects into new materials. This big business is not yet popular in Nigeria as it is mainly done by few foreigners and

multinationals.

“The business of PET recycling is very lucrative and the return on investment is over 100 percent,” he said.

Nigeria’s population is almost 200 million. The country’s citizens drink bottled water worth N938.6 billion annually, according to a report by Euromonitor International.

The tendency to spend many hours in traffic in major Nigerian cities has also driven the growth of the industry.

The population of Nigeria is booming, and infrastructure and services are failing to keep up with the growth. Mismanagement of the public water system has www.businessday.ng

compounded the problem, leading to warnings of a looming water crisis in Nigeria, especially Lagos.

Over 63 million Nigerians have no choice but to get water from wherever they can, while 57 million Nigerians don’t have access to safe water, according to Wateraid.

The water needs of Lagos are put at over 700 million gallons per day. The state has capacity of a little over 200 million gallons per day, but actually produces and distributes between 145 to 150 million gallons each day from its facilities, leaving a huge gap of over 500 million gallons.

But this has created

enormous opportunities as water is bottled in PET bottles.

The major area of this opportunity is recycling.

Hence it is now possible to recycle these bottles and even nylon into more advanced products for industrial use.

Only few entrepreneurs have studied the business and want Nigerians to get more involved.

Zeugnis International Limited is organising a training session for Nigerians of all ages about the potential in PET plastic bottle and nylon recycling.

The training will take place on 14th March at the Lagos Chamber of Com-

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merce and Industry, Ikeja.

Nwobodo said that after the training, Nigerians would be confident of going into the recycling business.

“PET bottles are littered everywhere and I felt that someone had to find solutions with them,” he said.

“I went to a dump site, stayed there for six months, learned plastics and its different types and I was able to see the gold in it. It is a goldmine, but many people do not know,” he explained.

He further said that recycling is a going trend and the opportunity is so huge that there are only three major participants in it.

“Ninety percent of our plastics are not recycled, @Businessdayng

unlike in Sweden where 95 percent are recycled. In fact, government will even pay you to bring PET bottled in that country,” he disclosed.

He said that participants in the training would have direct contacts of proven local and international vendors and could have access to funds/free export financing.

“They could also get onthe-spot demand-supply business deals,” he said.

He further encouraged those seeking lucrative businesses to invest in to give the training a try and learn the secrets of making money from waste. Interested investors are advised to contact the organisers on 08032810868.

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Monday 09 March 2020

BUSINESS DAY

real sector watch

FG considers re-opening Nigeria-Benin border as external pressure mounts ODINAKA ANUDU

T

he Federal Government is considering re-opening Nigeria-Benin land border, which it closed in August 2019, on the back of pressure from outside West Africa, BusinessDay has gathered.

Sources close to the Federal Government told BusinessDay on the condition of anonymity that the United States, the United Kingdom and the European Union were putting pressure on President Muhammadu Buhari to re-open the border and allow free trade in the region.

The source said trade between West Africa and the countries/blocs outside the ECOWAS region was being hurt by the border closure.

“The US, the EU and the UK have companies in West Africa who export to Nigeria, but they cannot do that again after the border closure,” a trade source, who is familiar with the plan for border reopening, said.

“Also, firms owned by nationals of the EU, the US and the UK can’t export from Nigeria to West and Central Africa since this border closure,” the source said.

When asked about the timeline for border reopening, the source refused

to give a specific date but assured that it would be “sooner than most Nigerians expected.”

One source said West African countries were mounting pressure on the EU, the US and the UK to ask Nigeria to re-open the border.

L-R: Jean Bakole, United Nations Industrial Development Organisation (UNIDO) representative to ECOWAS & regional director, Nigeria Regional Office Hub and Fahad Obaid Al Taffaq , ambassador of the UAE to Nigeria,during a meeting on Inclusive and Sustainable Industrial Development in Nigeria and ECOWAS in Abuja recently

FAE retains industry leadership, urges increased patronage of envelopes ...celebrates distributors

Gbemi Faminu

F

AE Limited, a leading envelope manufacturing and customising company, has said that it retains leadership in envelope production, urging Nigerians to patronise locally-made products.

The manufacturer says it appreciates its distributors who have been its backbone in the past year.

Richard Abiodun Okeowo, chairman, FAE, said despite the experience of the past months, especially the difficult terrain in which businesses operated, the firm managed the challenges and came out strong enough to retain the leadership position in the market.

Appreciating the distributors, he said, “We cannot but recognise those who have stayed with us and performed well in the year through the turbulent storm, not forgetting the many years of patronage.”

“When we started the journey of 2019, it looked like the goals we set were hard and unachievable, but when we look back now at

Nigeria shut its land border with Benin Republic in August 2019 on the back smuggling of rice and petrol as well as unbridled trade malpractices at the border.

West African leaders have since then mounted pressure on Africa’s biggest economy

the results today, particularly our performance, they all look encouraging, however a little bit short of expectation,” Okeowo said.

Speaking on the progress of the company, he said that all the departments and those in the value chain had contributed in achieving the great feat.

“We have moved from open market operations of ‘yesteryears’ to a robust and fully fledged organised inter-state distributorship and corporate marketing with responsible sales workforce. We also moved to ECOWAS region last year, and we hope that the prospect of moving further into other terrains such as Ivory coast will be successful,” he further said.

In an interview, Layo Bakare-Okeowo, chief executive officer (CEO) of FAE Limited, said it was important for the company to appreciate its distributors as they played a significant role in its growth. “We appreciate our distributors because even if we manufacture, if we do not have distributors to sell to the market, we will not be here today.” www.businessday.ng

tra-trade agreements which the border closure is hurting.

Nigeria’s exporters can no more ship their products to ECOWAS and Central African markets via land borders.

Trade among ECOWAS countries is about 13 percent, which is considered abysmally low.

In the fourth quarter of 2019, the nominal year on year growth rate of Nigeria’s trade sector stood at 2.03 percent, indicating a decrease of 2.39 percent points when compared to the fourth quarter 2018 growth rate of 4.41 percent, according to the latest data released by the National Bureau of Statistics (NBS).

Trade’s contribution to Nominal GDP in the fourth quarter of 2019 was 15.66 percent, lower than its contribution in the same quarter of the previous year of 17.24 percent, but higher than the preceding quarter’s 14.69 percent. The Trade sector contributed 15.61 percent to real GDP in 2019, lower than 17.16 percent recorded in 2018.

Flour Mills’ CEO appreciates role of women in manufacturing, productivity Gbemi Faminu

She urged the government to support the manufacturing sector with policies, schemes and necessary infrastructure, especially as the countdown to the African Continental Free Trade Agreement had begun.

“We are ready to manufacture and expand the market, but the government needs to help by addressing infrastructural challenges,” she said.

She further urged the government and Nigerians to grow the country by patronising local products, adding that directly or indirectly, it was a form of development for the country and the economy.

Caroline Ogbonna, sales manager, in her remarks, said the company’s position as a market leader in the industry was a result of the distributors’ efforts, in addition to its high quality products.

She said that in a bid to improve client satisfaction, the company engaged in research in different places.

Speaking to the distributors, she said, “When a target is set, some will meet and some will not. However, note that there is always a prize for meeting up with the target.”

to reconsider its move.

In January 2020, Nana Akufo-Addo, Ghana’s president, solicited for border re-opening because of its impact on Ghana’s economy.

Akufo-Addo had pleaded for an expedited process, saying that the Nigerian market was significant for certain categories of business people in Ghana.

Earlier, John Mahama, former Ghana president, had called on the Nigerian government to reopen its land borders so that economic activities could effectively continue within the West African region.

“I am sure that businesses in Nigeria that rely on supplies from these countries are also suffering,” he had said at an event in Lagos in November 2019.

“With the signing of the joint border task force agreement between Nigeria and her neighbours, I will like to take this opportunity to appeal to Nigeria to open up her borders so that economic activities can resume,” he had said.

ECOWAS has several in-

P

aul Gbededo, group managing director, Flour Mills of Nigeria (FMN), has appreciated the role of women in critical sectors of the economy, including manufacturing, saying that they should be recognised for their contributions to productivity and other aspects of life.

Speaking at the Flour Mills of Nigeria Women Network (FMNWN) Forum in celebration of the 2020 International Women’s Day (IWD), Gbededo said despite the monumental impact women had had on the world, the numbers showed that there was still a huge disparity in the way the world perceived and treated them when compared to men.

He said, while addressing the theme ‘Each for Equal,’ that in the corporate environment, women earned about 20 percent less than men on the average. He cited data showing that if the range and participation gaps were closed and women were al-

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lowed to participate in the labour market at the same level as men, $28 trillion or 26 percent of the global economy would be added by 2025.

He added that excluding women from affairs was expensive, and gender equality should be a cause which everyone most fight.

“We must collectively act to see that the world is not just gender friendly but gender balanced,” he said.

He, however, said that FMN as agents of change was changing the narrative and working towards ensuring equality between the genders. “At FMN, we remain committed to ensuring that our women have the right tools and access to equal opportunities as the men,’ he said.

“Since 2018 when the chairman initiated the FMNWN, we have been taking bold steps to ensure that the FMN woman is on the right track to take up leadership positions in any group,” Gbededo added.

Kulu Abdullahi Sifawa, commissioner, Women Affairs, Sokoto State, said wom@Businessdayng

en were gifted with the power to do so much but what they needed were encouragement, opportunity and enlightenment.

“When you encourage a woman, you make them know who they are, you enlighten them and counsel them and you let them realise they can do more,” Sifawa said.

In her remarks, Kemi Oyedele Aro, coordinator, FMN Women’s Network, said while the position of women was being celebrated and recognised, there was still a need to do more in achieving equality in the society.

“International Women’s Day is a golden day celebrating the political, economic, cultural, and social achievements of women. It also marks a call to action for accelerating gender parity,” she said.

She said that the FMNWN was also celebrating its first year anniversary, adding that the group had successfully groomed 27 mentees with 13 mentors within its first year, while working to achieve more in the coming years.

Monday 09 March 2020

BUSINESS DAY

35

real sector watch

Dangote, Olam, Guinness, Fidson invest N238bn into economy in 6 months ....but this is a decline of 22% ODINAKA ANUDU

M

embercompanies of the Manu f a c t u rers Association of Nigeria (MAN) such as Dangote Group, Olam, Guinness Nigeria and Fidson Healthcare, among others, have pumped N238.45 billion into the Nigerian economy in six months, according to the association’s latest data.

The figure represents investments made by over 2,000 members of MAN in the first half of 2019.

However, the N238.45 billion reflects a N67.11 billion or 21.9 percent decline from N305.56 billion recorded in the corresponding half of 2018.

“Manufacturing investment in the period was affected by late passage of 2019 budget which affected capital expenditure implementation, poor economic support infrastructure, over regulation and high cost of capital in the economy,” MAN said in the economic review.

When compared with the second half of 2018, the number then represents 3.5 percent decline from N247.08 billion recorded in the period.

Manufacturing investments are based on investments by new entrants and those of existing manufacturers. They are usually calculated from the amount of money pumped i nt o b u i l d i n g s, p l a nt s, machinery, vehicles, and land, among others.

According to the report, estimated cumulative manufacturing investments from 2013 to first half of 2019 stood at N4.78 trillion.

Within the first six months of 2019, investment in plant and machinery was biggest at N100.92 billion, though lower than N110.47 billion recorded in corresponding half of 2018 but higher than N72.98 billion recorded in the second half of 2018.

Asset under construction trailed with investment worth N84.06 bil-

lion; land and building attracted investment valued at N40.35 billion, while N7.97 billion was pumped into the purchase of new vehicles. More so, investment in furniture and fitting stood at N5.15 billion within the period.

Across sectoral groups, food, beverage and tobacco group ranked highest with investment worth N73.95 billion. The group was trailed by chemical & pharmaceutical subsector whose investment was N51.76 billion. Next was the basic metal, iron & steel group whose investment stood at N33.06 billion within the period.

For industrial zones, Ogun ranked highest with an investment of N74.56 billion. This was lower than N95.31 billion recorded in the first half of 2018 but higher than N26.16 billion recorded in the second half. This puts Ogun zone as Nigeria’s investment destination within the period.

Ikeja zone in Lagos recorded investment valued at N55.98 billion in the first half of 2019, though higher than N54.8 billion obtaine d in the cor responding half of 2018 but lower than N80.76 billion achieved in second quarter of 2018. Investment in Apapa zone declined to N18.52 billion as against N93.67 billion recorded in the first of half of 2018 and N47.29 billion in the second half, according to MAN’s report. www.businessday.ng

In the first half of 2019, Nigeria’s gross domestic product (GDP) grow th, which measures economic activities within a period, stood at 1.97 percent. This was lower than 2.6 percent annual population growth, signifying low rate of spending and poverty among the population.

Manufacturers self-generate 13,000 megawatts of electricity and spend huge amounts in powering their factories, owing to poor power supply by distribution companies.

The country is still without critical rails in many parts of the country and poor road infrastructure is a common sight.

Taxes are many and are yet to be harmonised by various levels of government and their agencies in their chase for higher internally generated revenue.

Muda Yusuf, directorgeneral of the Lagos Chamber of Commerce and Industry (LCCI), said recently all these would naturally make Nigerian manufacturers uncompetitive and unable to find their feet in the global market.

The Nigerian economy has become unattractive to investors as old problems continue to drag the country. Cases take long to settle in courts, and government agencies work in cross purposes. The nation’s premier ports in Apapa and Tin Can, Lagos, are not easily accessible by manufacturers and exporters. “ The slight improve-

ment, notwithstanding, port-related challenges are still present, particu-

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larly delay in clearance of imported raw-materials and machinery that are not locally available by manufacturers, including the associated high and unwarranted demurrage which oftentimes slow down manufacturing operations and increases cost of production in the sector,” CEOs of manufacturing firms said in a third quarter report compiled by MAN. Baker Magunda, managing director/CEO, Guinness Nigeria, said social instability in agricultural communities had been rife.

He stressing the need to reduce taxes and tariffs for investors.

“When taxes get to a

@Businessdayng

point that it becomes punitive to the industry, and it stops growing, it impacts a lot of people,” he stressed.

He said congestion in the nation’s ports was hurting investors’ margins.

Paul Odunaiya, managing director and CEO of Wemy Industries, called for policies that would checkmate importation of substandard products into the country.

But manufacturers expect to make more investments after an early passage of the 2020 budget, but warned that exogenous factors such as crude oil price and spread of Coronavirus would impact their decision.

36

Monday 09 March 2020

BUSINESS DAY

BusinessDay Workplace Health & Wellbeing Conference

Frank Aigbogun, publisher, BusinessDay Media Limited, giving his welcome address.

Ogho Okiti, managing director, BusinessDay Media Limited , delivery his welcome address .

Adeobi Agbalugo (l) with Peace Ugoala , both of MainOne .

Hilda Kabushenga Kragha, CEO, Jobberman, (l) and Sola Akinyosoyo, head, HR, Nestle Nigeria,

L-R; Omolola Oshinlaja, HR, Leadway Pensure; Titilola Bashorun, head, HR, Leadway Pensure, and a guest , Roseline .

L-R : Femi Olulana; Uyi Asemota, and Modestus Iheje, all of Total Health Trust HMO

Biola Onyejekwe (l) of BASF West Africa Limited, with Ebele Iyayi, practice director, Allaince law firm.

A Cross section of participants.

L-R: Sola Akinyosoyo, head, HR, Nestle Nigeria; Kieran Godden , CEO, Total Health Trust Limited, and David Mbelu , business development lead, Jobberman.

Monday 09 March 2020

BUSINESS DAY

37

& Report held in Lagos

L-R: Ogechi Obiora of CIPM Nigeria; Abimbola Adejomo of Onikan Health Centre, Lagos and Ene-Light Daniella of Grace College Clinics .

A Cross section of participants.

Adeniyi Bukola, (l) consultant, family physician , Life Family Clinic, Lagos with Adeola Obisesan, head, HR, BusinessDay Media Limited.

L-R: Lola Esan, director, people advisory services, EY West Africa ; Esther Akinnukwe, chief HR officer, MTN , and Sola Akinyosoyo, head, HR, Nestle Nigeria.

L-R: Tayo Fagbule, editorial board chairman, BusinessDay; Hilda Kabushenga Kragha, CEO, Jobberman; Obinna Ekezie, chairman, Consulated Hallmark Insurance Plc/ co-founder, Wakanow; and Ogho Okiti, managing director, BusinessDay Media Limited

L-R: Nsikak Ntia, regional occupational health manager, Shell Companies in Nigeria; Folake Odegbami, head HSE, Lafarge Africa, Itunu Akinware, CEO, Medbury Medical Services; Obinnia Abajue, CEO, Hygeia HMO Limited; Ogho Okiti, MD, BusinessDay Media Limited, and Kieran Godden , CEO, Total Health Trust Limited.

L-R : Obinna Ekezie, chairman, Consulated Hallmark Insurance Plc/ co-founder, Wakanow; Tayo Fagbule, editorial board chairman, BusinessDay , and Hilda Kabushenga Kragha, CEO, Jobberman,

L-R : Adesimbo Ukiri, CEO, Avon HMO; Effiem Abbah, national president, Society of Occupational and Environmental Health Physicians of Nigeria ;Dapo Omolade, CEO, Hybrid Group; Busola Alofe, , CEO, Chartered Institute of Personnel Management (CIPM) Henry Oigingbe, executive secretary, Occupational Pic by Pius Okeosisi Safety and Health Association (OSHA)

38

Monday 09 March 2020

BUSINESS DAY

feature

The Olori Omo-Oba @ 86: A legacy of excellence, a lifetime of impact out with a very good grade. Then I went to Britain and studied law.

I qualified at a very young age. At 25, I was one of the youngest lawyers in the Western Region. Then I tried to be very close to my God, always seeking His guidance, and it is the answer to such prayers that brought me to where I am today. The then government of Western Region trained me as the first Parliamentary draftsman. When the British were passing the Nigerian Independence Act, I was the first black face to be seen in the official box”.

DIPO OLADEHINDE

I

t is not always that you find the prized virtues of humility and selflessness domiciled in a single individual of outstanding means and affluence, a blue blood modestly defined. There is no better way to describe it than divine grace, a specie specially dispatched from above. The impact is not only far reaching, but the evidence is also enduring.

Otunba Michael Olasubomi Balogun readily comes to mind when the issues of impactful living via philanthropy, thoughtful philosophy, and visionary entrepreneurship are mentioned in Nigeria. He belongs to that rare class, who by inspiration, birthed solid institutions that have stood the test of time. It is in this sense that you cannot discuss the Nigerian banking sector today, especially impactful enduring banking without due credence to First Monument Bank (FCMB). That premium banking brand remains a testament to his entrepreneurial ingenuity and monumental contributions towards the nation’s economic growth and development.

Aside helping the regulatory agencies in realizing their fiscal and monetary policies aspirations, FCMB is a key service provider to the Nigerian banking public and an employer of labour. It is a pride of an institution that globally plays its role in elevating Nigeria’s corporate reputation. All of these would not have been if the Olori Omo-Oba Akile Ijebu did not envision, and beyond envisioning, work in both clement and inclement weathers.

The man himself has shared his personal experiences in published books and memos how for example, the timing was not just ripe, or supposedly so for the regulatory agencies to give at that time, a banking license to an individual.

But he never deterred. Clarity from his vision and dogged determination ensured he withstood all opposition, eventually receiving the licence to operate a bank. The rest, like they say, is history.

FCMB today has taken its place, a frontline place and as a strategic contributor to the economy of the country. For this Nigerian patriot, a visionary, first class banker, foresighted entrepreneur and humanist, the month of March is unique, being the month of his birth.

At 86 this month, Olasubomi Balogun remains a philosopher king, a moral force, a father figure and a true patriot who has built bridges across ethnic barriers, helping to entrench the spirit of oneness in the country, and never discriminates. As a respected community leader, he is very much appreciated because he has made his life and impact felt in his community as well as other communities in Nigeria.

Truly, as a leading philanthropist, he has touched lives and restored destinies, by giving to worthy causes. A pioneer role model, he has distinguished himself in many ways, and cultured generations of

Nigerian entrepreneurs on excellent business ethics, replete in his business mantra-The Culture of Excellence. Aside FCMB, other firms in the full stable include CSL stockbrokers, Credit Direct Limited, FCMB Pensions Limited, FCMB Capital Markets Limited (FCAM), among many others in different sectors, all owing their existence to the ideals of this man.

As much as these organisations command respect in different sectors and fields, their collective success has not in anyway, made the man stop working. The grand master of the Nigerian financial services sector, remains on the spot of action, driving growth, motivating commitment, creating leaders, gathering souls for the Lord, call him an evangelist, if you so desire, though he shies away from this fact, you have not made a mistake.

Recapping the highlights of this life of purpose and the celebration could be understood from different perspectives.

Family background “I was born in Ijebu-Ode. I can’t deny that I am from a notable family in Ijebu. I happen to be a primus inter pares among royalties. I’m a direct descendant of the Awujale (king of Ijebuland) who had the courtesy of receiving representatives of the British Queen in 1892.

And he allowed them to preach Christianity, which was unheard of then. Anyone, who tried to preach Christianity before 1892, was driven away with Oro (a Yoruba deity).

But my own progenitor allowed that to be done. He even allowed some of his children to be christened and gave them the land on which the first church in Ijebuland was built. Only he wasn’t partial.

He also gave the Muslims the site on which the first mosque was built. It was in commemoration of going to thank the Awujale that the idea of the Ojude Oba festival www.businessday.ng

started. They were all going to the Oba’s palace to show appreciation for what he had done.

Parental pedigree “Even though my parents were affluent, they had a common touch.

We didn’t put on airs. Two things I like and have a weakness for are my white dress and my white cars.

Maybe it is because my parents had the opportunity of putting me on the right track When I started First City Monument Bank, FCMB, I wanted it to have a solid character and integrity”.

The God factor in his life The Asiwaju of Ijebu Christians said, “My name, Olaotan and Olaonipekun mean wealth has no end. I’m throwing myself to God for him to make me whatever he wants. And I am enjoying it. I want to thank my Maker for his benevolence to me. In all humility, I’m using this opportunity to let people know how appreciative I am for what the good Lord has done for me. I marvel at every occasion and ask why God has been so kind to me. It’s the amazing grace of God. I attribute everything to the awesomeness of God. His love for little me is awesome. I now spend most of my time talking about God as a measure of my appreciation.

I will spend the rest of my life just thanking him”.

Philosophy of goodness If I see someone doing something good, I would rather emulate the person than criticise him. At a point in life, I said the purest thing I want is to be close to my God and God has allowed me to do that”.

Educational background Dr. Balogun revealed, “I had good education. I went to one of the most illustrious secondary schools in Nigeria, Igbobi College. I came

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My Healthy living at 80s To the glory of God Otunba said, “I still do certain things people won’t expect me to do. I still go swimming. I still wear shorts. I am a child of God. It would be wrong for me to conclude that God has concluded his work in my life. I’m throwing myself as a free agent for him to use me till the very end. And I am also praying for something very interesting. By the time I am 90, I would be praying to be 100 and I would still want to be articulate and maintain my cerebral gifts. A friend of mine once visited and asked why I still use a staircase when there is an elevator. I said I still want to be walking like a sprinter. These are my prayers and my approach to God. I talk about it as the culture of excellence at FCMB. I always want the best but I’m not arrogant about it. Rather, I am consumed with my appreciation to my God, the Almighty”.

Rare philosophy about philanthropy The Forbes Magazine rated entrepreneur and benevolent philanthropist said, “when people approach me for something, even though I’m not Father Christmas, I will at least do something. I won’t send anybody away. I don’t know why I do these things. God pushes me to do it. It is not that I have an ostentatious lifestyle. I am even scared to tell you because they amaze me. I regard myself as a special agent sent by my God to do all these. I am doing a lot which I don’t like people to know. When God gave me this endowment, he didn’t want me to spend it on myself. He wants me to use it for the upliftment of my neighbours.

And my neighbours are not just my family or domestic staff. Everyone is my neighbour. I will pass through this world but once. Any good I can do, let me do it now. That’s what drives me”.

A rare example Otunba replied to an inquiry, “During the opening of a children ‘s ward in honour of my mother with many top dignitaries who were present, we saw a taxi driver screech to a stop in front of us. A woman, who was about to get down from the taxi delivered a baby in our presence. I decided to adopt that child and he was named Subomi. He has just left university. He even added my name to his surname.

Attitude to critics and criticisms He said, “Anybody who listens to @Businessdayng

critics won’t be able to do the work of God. It is not easy for somebody who is successful not to be criticised. The mere fact someone has succeeded in life would make some people not to like the person.

People should humbly do what they are doing and leave the rest to God because our God sees the mind and he will continue to provide to enable us to do what we are doing for his cause”.

Founding FCMB Founding FCMB Group, he revealed, “At the time we created FCMB, something was pushing me to do it. The reason was that I helped to set up another bank, which is now dead. And I thought I deserved being made the head. They didn’t want me. They said I was only a lawyer. I prayed to God. My nine-year-old boy, who is now almost 50 went to his mother and said, ‘why is daddy praying to be head of another person’s bank? Why doesn’t he start his own?’ The story is in my book. I went to the chapel and prayed, singing songs of praise. From my chapel, I walked into my study. I prepared all the papers. A few weeks later, I set up City Securities. Luckily, the indigenisation programme came up during the military era and foreigners had to sell their shares. I was the numero uno in this country. Everybody who wanted to sell shares came to me. After that, I decided to start my own bank.

People thought it was impossible. Someone said I would either end up as a multi-billionaire or go to jail. I applied. I didn’t have any foreign partner. My God was my only partner. They didn’t give me a licence initially. I went to church. I saw Alex Ekwueme. I asked my wife to grab his wife’s garment. I asked him, ‘Mr. Vice-President, what is happening to my licence? He said I should come and see him and assured me he would give me a licence. That was how I got it. And no Nigerian before then, had singlehandedly set up that type of bank.

Beginning his day When I wake up first thing in the morning, my wife comes in and we have a family prayer. I openup as if I’m communicating with my earthly father. I will pour out my mind. I will pray for my wife and myself, then I will pray for my children and their families my neighbours, my friends and then the people who work with me. I do the same thing the last thing in the evening when I go to bed. Unless there is something extraordinary, by 9:30, I’m in my bed. After praying, I don’t communicate again. If you telephone me when I’m in bed, I don’t pick. But I will respond in the morning. I attend church regularly every Sunday. If I am not in the church, I would probably be worshipping somewhere.” As this rare gift marks his 86th birthday, one can only but ask God to continue to give Otunba Michael Olasubomi Balogun, the Asiwaju of Ijebu Chriatians, the grace to remain strong and healthy with the joy of the Holy Ghost for what he is doing, and his choice to serve God and humanity, the rest of his life.

Monday 09 March 2020

Harvard Business Review

BUSINESS DAY

MondayMorning

39

In association with

Every leader needs to navigate these 7 tensions Jennifer Jordan, Michael Wade and Elizabeth Teracino

I

n recent years, articles have claimed that oldstyle command-and-control leadership is “out” and a new way of leading is “in.” Instead of telling people what to do, leaders should ask them open-ended questions.

Instead of sticking exactly to plans, they should adjust goals as new information emerges.

Instead of working from the gut, a leader should rely on data to make decisions. And so forth.

In surveys and interviews with hundreds of leaders worldwide, we uncovered seven core tensions between the traditional and emerging leadership approaches. Those tensions create significant stress for leaders, as they are often unsure of what competencies, skills and behaviors to exercise in a particular context.

— Expert vs. Learner: Traditionally, leaders built their careers by developing deep expertise of some kind and demonstrating increasing levels of competence as they moved up the corporate ladder. In the emerging approach, leaders must accept that their specialized expertise is limited (in some cases obsolete) and be open to learning from others.

— Constant vs. Adapter: The

traditional approach values decision-making conviction and consistency; the emerging approach recognizes that in fastchanging environments, decisions often need to be reversed or adapted.

— Tactician vs. Visionary: The traditional approach to leadership calls for operational clarity and well-defined plans; the emerging approach suggests that leaders require a clear vi-

sion for where they want to go, without necessarily needing a concrete road map for how to get there.

— Teller vs. Listener: Traditional leaders tell others what to do and how to do it; the emerging approach values listening carefully to others before deciding.

— Power Holder vs. Power Sharer: The emerging approach values empowering others to

achieve goals. If this tension is not managed wisely, leaders run the risk of alienating and marginalizing promising talent. Alternatively, they may undermine their own authority by sharing power too broadly.

— Intuitionist vs. Analyst: The traditional approach suggests that leaders make intuitive decisions. By contrast, the emerging approach says that leaders should base decisions largely on

data.

— Perfectionist vs. Accelerator: The emerging approach calls for leaders to acknowledge that doing something quickly, and failing fast, is often more important than doing it perfectly.

(Jennifer Jordan and Michael Wade are professors at IMD. Elizabeth Teracino is a research fellow in the Global Center for Digital Business Transformation at IMD.)

How the economy differs for workers, consumers and savers James Manyika and Michael Spence

W

hile the economic gains for many people in advanced economies are significant in some respects, in others they have been eroded by unexpected challenges. We examined a range of economic indicators, such as employment and wage growth, benefits, prices for basic and discretionary goods and services, and savings for retirement, and found that outcomes for individuals in three roles — workers, consumers and savers — present a more nuanced picture than the aggregate data might suggest.

For individuals as WORKERS, employment is much higher than it was at the turn of the century. In the 22 Organization for Economic Cooperation and Development countries we looked at, there

were 45 million more jobs in 2018 than in 2000, 31 million of which went to women.

There was also a wider array of alternative income-generating activities and work arrangements, which gave millions newfound flexibility.

But more precarious working arrangements have also been gaining ground, undercutting economic security for many. Moreover, wages have

stagnated for most people.

For CONSUMERS, technology and globalization, along with deregulation, have substantially reduced the cost of many discretionary goods and services, from communications to clothing. Data costs have dropped almost 90%, as usage has surged tenfold.

But house rental prices — often the biggest-ticket item in the household budget, ac-

counting for as much as onequarter of spending on average — have soared. Holding all else constant, consumers in advanced economies would have to work an average of four additional weeks per year to be able to consume the same amount of housing, health care and education as they did two decades ago.

For SAVERS, the good news is that mean wealth is back

up and above where it was in 2008.

At the same time, household savings are down in many countries. More than half the people on average in the 22 countries we looked at didn’t save for retirement in 2017, and just over onequarter didn’t save at all. And this at a time when saving for retirement is more important than ever, as people live longer.

The shift in the role of institutions does not just affect outcomes for savers. Indeed, our analysis shows a decline in market intervention by institutions across all three arenas of work, consumption and saving, although the extent of this varies by country.

(James Manyika is the chairman of the McKinsey Global Institute. Michael Spence, a Nobel laureate in economics, is a professor at NYU’s Stern School of Business.)

40

Monday 09 March 2020

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: March 6 – March 13, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.55

Q4 2019 — higher by 0.27% compared to 2.28% in Q3 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

26.41 2.20

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019 Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

Inflation rate (%) (y-o-y)

12.13

Increased to 12.13% in January 2020 from 11.98% in December 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

36.22 51.94 1.77

March 5, 2020 figure — a decrease of 0.11% from March start March 6, 2020 figure— a decrease of 0.8% from the previous wk January 2020, figure — an increase of 1.42% from December 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

Indicators

Change(%)

6/3/20

28/2/20

NSE ASI Market Cap(N’tr)

26,279.61 13.70

26,216.46 13.66

0.24 0.27

Volume (bn)

0.36

0.42

(13.26)

Value (N’bn)

4.28

6.19

(30.96)

Friday Rate

Change

(%)

(Basis Point)

NIBOR Friday Rate (%) 6/3/20

28/2/20

OBB

11.7143

15.5000

(379)

O/N CALL 30 Days

12.8571 12.1875 9.9519

16.4200 16.5625 6.6929

(356) (438) 326

90 Days

10.0792

Friday (N/$)

6.6275

Tenor

Friday

1 Month

(N/$)

Rate (N/$)

6/3/20

28/2/20

6/2/20

307.00 365.90 0.00

306.95 365.38 0.00

306.95 364.00 0.00

Parallel (N)

360.00

360.00

360.00

3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

Change

(%)

(%)

(Basis Point)

6/3/20

28/2/20

0.00 7.41 10.23 9.99 10.96 12.56

0.00 6.70 6.99 8.75 10.26 12.00

0 70 324 124 70 56

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

(19.42) (43.06)

2,578.00 113.00 62.70 13.27 516.75

(4.73) 3.72 1.64 (4.94) (1.01)

33.16 (13.21) (19.10) (13.44) 19.20

1,683.35 17.44 255.85

3.39 1.22 0.97

27.76 1.45 (21.95)

Friday

Change

(%)

(Basis Point)

6/3/20

28/2/20

1 Mnth 3 Mnths

3.06 3.41

3.13 3.04

(7) 36

6 Mnths 9 Mnths 12 Mnths

3.75 4.47 5.22

3.45 4.51 5.25

30 (4) (3)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

AVERAGE YIELDS Friday

(0.80) 2.96

Friday

BOND MARKET Friday

(%)

51.94 1.74

(%)

345

Official (N) Inter-Bank (N) BDC (N)

Tenor

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

FOREIGN EXCHANGE MARKET Market

1-week Change (%)

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

MONEY MARKET Tenor

6/3/20

Friday

Friday

Change

(%)

(%)

(Basis Point)

6/3/20

28/2/20

Index

3,804.12

3,889.07

(2.18)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%) YTD return (%)(US $)

11.89 8.14 54.86 -0.97

12.15 8.40 58.32 2.51

(2.18) (3.08) (3.46) (3.48)

TREASURY BILLS (MATURITIES) Amount (N' million)

Rate(%)

Date

91 Day

4,384.18

3.5

12-Feb-2020

182 Day

10,000.00

4.5

12-Feb-2020

Tenor

364 Day

140,000.00

6.5

Global Economy In the US, the Federal Reserve cut its target range for its federal funds rate by 50bps to 1-1.25% during an emergency move last week, saying the coronavirus poses evolving risks to economic activity. The Fed reiterated that it is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.

The interest on excess reserves rate (IOER) was also cut by 50bps to 1.1%, following a 5bps rise in January. It is the first emergency rate cut since the 2008 financial crisis. The move follows a G7 announcement made earlier in the day in which policymakers reaffirmed their commitment to use all appropriate policy tools to achieve strong and sustainable growth. Elsewhere, the People's Bank of China (PBoC) lowered its benchmark 1year Loan Prime Rate (LPR) by 10 bps to 4.05%, in an attempt to inject more liquidity into the financial market and lower financing costs for companies. The 5-year LPR, generally used for new mortgage loans, was cut by 5 bps to 4.75%.

The cuts in the LPRs follow a similar 10bps drop in the PBoC's medium-term lending rate to 3.15% percent. The decision was in line with market forecasts and investors expect the PBoC to continue to loosen monetary conditions, aiming to support the economy battling with the coronavirus outbreak. In a separate development, the Eurozone inflation rate was reported at 1.2% year- on-year in February 2020 from a nine-month low of 1.4% in the previous month according to data from European Statistical Office. The drop in inflation reflected a decline in energy prices, which fell 0.3 per cent in February. The price of oil and other commodities have fallen in recent weeks in response to the factory closures and disruption to global supply chains caused by the coronavirus outbreak. Core inflation, excluding the more volatile energy, food and tobacco prices, rose to 1.2% from 1.1%.

Prices of services rose 1.6%, while non-energy industrial goods prices were up only 0.5% per cent. Food alcohol and tobacco prices rose 2.2%.

Domestic Economy International credit rating agency, Standard & Poor's (S&P), lowered Nigeria's credit rating to “negative” from “stable” due to its declining foreign exchange reserves. Foreign-exchange reserve levels have fallen from $45 billion at midyear 2019 to $38 billion at end-2019 and $36.5 billion in February 2020. This came amid low oil prices and severe shortage of foreign exchange.

In a separate development, the Nigerian Stock Exchange (NSE) published its monthly Domestic & Foreign Portfolio investment report for January 2020. The report revealed that the total transactions at the nation's bourse increased by 84.03% to N235.46 billion from N127.94billion recorded in December 2019. The total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by approximately 40%. Total domestic transactions jumped by 154.86% to N165.14 billion in January from N64.80 billion in December 2019. Similarly, total foreign transactions increased by 11.35% to N70.32 billion from N63.14 billion during the same period. Total domestic transactions, which is split into retail and institutional investors, revealed that institutional investors outperformed retail investors by 2% during the period. Total retail transactions climbed by 233.75% to N81.67 billion in the reference month from N24.47 billion in December. Likewise, the institutional composition of the domestic market notched up by 107.02% to N83.47 billion in January 2020 from N40.32 billion in the prior month. The performance of the current month when compared to the performance in the same period (January 2019) of the prior year revealed that total transactions increased by 92.87%.

12-Feb-2020

Stock Market Trading indicators on the stock exchange took a positive turn on sustained buying interest as market players took advantage of low prices to position for dividend and capital gains ahead of

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

markdown dates for some companies that had declared cash dividends earlier. Consequently, the All Share Index (ASI) went up slightly 0.24% to close at 26,279.61 points from 26,216.46 points the prior week. Similarly, market capitalization increased by 0.24% to N13.69 trillion from N13.66 trillion the prior week. This week, we expect the trend to be sustained as funds may flow the way of stocks, dividend news and resist further decline as more audited earnings hit the market this March.

Money Market Average rates tapered in the week ended March 6, 2019 as the market had a net inflow of N121 billion. Short-dated placements such as Call, Open Buy Back (OBB) and Over Night (O/N) rates settled lower at 12.19%, 11.71% and 12.86% from 16.56%, 15.5% and 16.42% previous week. The slightly longer dated instruments such as 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) closed at 9.95% and 10.08% from 6.69% and 6.63% the prior week. This week, rates are expected to remain at double digit numbers as foreign investors repatriate FX to Central Bank of Nigeria.

Foreign Exchange Market The local unit depreciated against the dollar across most markets. The official window saw a marginal loss as it ended N307/$, a 5 kobo dip from the prior week and at the Nigerian Autonomous Foreign Exchange (NAFEX) segment the local currency declined by 52 kobo to close at N365.90/US$ from N365.38/US$ the previous week. The parallel market was steady week-on-week at N360/$. This week, we expect the naira to hover around prevailing levels at the various windows, boosted by the Central Bank's sustained supply of liquidity to the market Bond Market The bond market was bearish due to selling pressure from market participants. As a result, there was a sell-off for most securities on display particularly for the 2024, 2027 and 2028 security. Yields on the five-, seven-, tentwenty- and thirty-year debt papers finished at 7.41%, 10.23%, 9.99%, 10.96% and 12.56% from 6.7%, 6.99%, 8.75%, 10.26% and 12%.

The Access Bank Bond index decreased by 84.94 points to settle at 3,804.12 points from 3,836.95 points the prior week. We expect the sell-off to continue as market participants maintain a risk-off stance on long term Nigerian securities.

Commodities Oil prices slid last week as worries for demand being sapped by the global coronavirus outbreak were heightened by concern over non-OPEC crude producers failure to cut output further to support prices. Bonny light, Nigeria's benchmark crude dipped 0.8% or 42 cents to close the week at $51.94 per barrel.

On the other hand, precious metal prices rose due to increased risk aversion amid the coronavirus outbreak. Consequently, gold gained 3.39% to $1,683.35 per ounce while silver edged up 1.22% to $17.44 per ounce.

This week oil prices will likely remain pressured amid supply glut and Russia disagreement to any additional production cuts. Precious metal prices are likely to gain more support from a weaker US dollar against other major currencies and hopes of additional monetary easing measures by central banks.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Mar’20

Apr ’20

363

362

362

Inflation Rate (%)

12.20

12.25

12.27

Crude Oil Price (US$/Barrel)

57

58

58

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

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May ’20

Exchange Rate (NAFEX) (N/$)

@Businessdayng

Monday 09 March 2020

BUSINESS DAY

MARKETS INTELLIGENCE

41

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

African countries have $92.80 bn Eurobond outstanding as continent intensifies debt binge BALA AUGIE

A

frican countries have an outstanding $92.80 billion of Eurobond and they plan to return to the international debt market, taking advantage of investors’ voracious appetite for high yielding debt.

Nigeria has $11.20 billion unpaid debt and President Muhammadu Buhari is seeking National Assembly approval to sell additional $3.30 billion Eurobonds this year so as to provide external financing for 2020 budget and for debt refinancing.

While the total outstanding obligations ($11.20 billion) are 2.26 percent of GDP, there are concerns that the country’s dwindling revenue base may not be enough to absorb interest expense.

Analysts said the repayment plan has to be taken into consideration so as to avoid a downgrade.

New issuances could help Nigeria’s central bank shore up the external reserve that has been depleting in the last two years as authorities continue to defend the currency amid a current account deficit and dearth of inflow of foreign direct investment.

Early in this year, the reserves

dropped to the lowest level since October 2017 (24-months), falling further by 1.4 percent or $539 million to $38.056 billion as at January 30 from $38.595 billion at the end of December 2019.

Foreign direct investments (FDI) into Africa’s biggest economy tanked after a 2014 collapse in global oil prices, coupled with an agitation in the Niger Delta region caused the country its biggest nightmare it had dreamt of in more than two decades.

Data from the National Bureau of Statistics show that investment into the country dropped 53.5 percent in 2015 to $9.8 billion from $20.7 billion in 2014. At the thick of the recession in 2016, the figure reached its lowest levels at $5.1 billion not until the country exited recession in 2017, that investors started building up interest into investing in the country. In 2017, foreign investment picked up at $12 billion and went further to $17 billion in 2018.

The devastating effect of the China made novel coronavirus ravaging global economy and sending crude oil to an all-time low of $50 a barrel is forcing federal government to mull reviewing the budget benchmark.

Experts fret that the country may be overwhelmed by debt service costs as it uses nearly half of its budget to

P.E

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5

service debt.

S and P, one of the leading rating agencies in the world, has downgraded Nigeria from stable outlook to negative, siting slower than expected economic growth and the threat of coronaviruses on crude oil price.

The fear is that the negative rating signals a possibility of costlier debt round should the country proceed with the Eurobonds. Foreign investors could demand a higher yield on the back of higher risk rating due to this downgrade.

The International Monetary Fund has warned African governments that the rapid buildup of commercial debt makes them vulnerable to the whims of international investors now thirsty for returns in a world awash with negative yields. The continent raised a record $30 billion in Eurobonds in 2018.

The risk to these countries if they continue to borrow in United States dollar is how to pay back if oil price continues to fall as interest expense will be high, according to Wale Okunriboye, head of research at Sigma Pension Limited.

“We are coming from the crises of 1980s and 1990s. Zambia Eurobond has surged and their debt service is large compared to their reserve.

Africa countries borrow in foreign currencies because they do not have an Eurobond market to fund themselves,” said Okunriboye.

Okunriboye said that huge dent distracts a country from solving its own problems.

Analysts are of the view that using borrowing isn’t a bad idea for a county

plagued by infrastructure deficit and that president Muhammadu Buhari led administration has embarked on some capital project that will add impetus to economic growth.

The present administration is investing in construction, oil and gas and the power sector and it these projects are completed, the benefit to the real economy will be immense, according to Wale Olusi, head of research at United Capital Limited.

Olusi said government need to borrow this money to help build railways and embark on project that will help lift millions of people out of poverty.

A study conducted by Mckinsey on Nigeria’s infrastructure requirement threw up the need for the investment of well over $31bn annually, over a 10-year period for the country to bridge her huge infrastructure deficit.

Over 50 percent of a population of 200 million people live below the poverty $1.98 a day while unemployment rate at 23 percent is one of the highest in the world.

The Senate has approved the $22.79 billion loan request of president Muhammadu Buhari.

Details of the project are as follows: World Bank ($2,854,000,000), African Development Bank ($1,888,950,000), Islamic Development Bank ($110,000,000), Japan International Cooperation Agency ( $200,000,000 ), German Development Bank ($200,000,000), ChinaExim Bank ( $17,065,496,773), and the French Development Agency ($480,000,000).

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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42

Monday 09 March 2020

BUSINESS DAY

MARKETS INTELLIGENCE

Oil price slides further as Russia refuses to play ball mark oil price for 2020 is $57, making the current price level difficult for most OPEC+ countries except Russia.

Brent crude oil price has now tumbled about 27 percent since the start of year after an outbreak of coronavirus in China which claimed the lives of over 3,000 people around the world so far this year and infected almost 100,000 individuals globally. Crude oil prices closed on Friday at around $47, its lowest price in almost 3 years, prompting oil producing countries to explore production cut of up to 1.5 million barrels per day to support oil prices as oil demand gradually softens due to weaker Chinese economic activity.

A 2.1mbpd cut agreed

by OPEC+ countries last year which helped stabilize oil prices is due to expire later this month, making an agreement between OPEC+ and Russia critical to ensure

IFEANYI JOHN

C

rude oil price fell by 5.02 percent on Friday after Russia refused to join the OPEC+ countries in cutting oil production to help stabilize crude oil prices.

OPEC+ countries have been trying for the past week to convince Russia to join them in production cuts to support crude oil prices but the Russians appear to be unwilling to cut production largely due to the fact that the oil price decline is not due to a supply shock but a global health crisis.

Bloomberg reports that oil price is now trading far too low to balance the budgets of most OPEC members. Riyadh needs more than $80 a barrel, according to the International Monetary Fund. Russia only requires a price of about $40 a barrel to balance its budget. In Nigeria, the bench-

that oil supply doesn’t increase significantly at a time when oil prices are rapidly declining.

Ministers from the Organization of Petroleum Exporting Countries told Russia on Thursday that if it doesn’t join them in cutting oil output by another 1.5 million barrels a day to offset the impact of the coronavirus, then the cartel could abandon its reductions altogether. Hours later, the group raised pressure on Moscow again, emerging from an informal meeting at the Saudi delegation’s hotel with a proposal to extend the curbs for even longer than initially suggested.

Although experts say they expect Russia will eventually agree to cut oil production, OPEC+ may have to reach a compromise to cut about 3mbpd rather than the 1.5mbpd currently proposed for oil price to rebound to around $60 amid the coronavirus market rout.

Combined market cap of BADMN is more than GDP of 8 African countries BALA AUGIE

T

he combined market capitalization of the largest and most liquid companies is more than the GDP of 8 African countries.

The combined market capitalization of BUA Cement, Airtel Africa, Dangote Cement, MTN Nigeria, and Nestle Nigeria stood at N8.03 trillion ($22 billion) as at 2:00 pm in Lagos.

That compares with the GDP of Sao Tome and Principe, ($477 million), Comoros, ($726 million0); Guinea Bissau, ($1.53 billion), Seychelles, ($1.65 billion); The Gambia, ($1.74 billion); Cape Verde, ($2.04 billion); Central African Republic, ($2.28 billion), and Djibouti, ($2.39 billion).

The market cap of BADMN, the acronym for the five largest bellwether firms, make up 60 percent of the Nigerian Stock Exchange (NSE).

The NSE All Share Index (ASI) has shed -2.66 percent this year, as investors continue to dump shares on the back of lack of transformation policy on the part of government and bleak economic outlook

‘

The NSE All Share Index (ASI) has shed -2.66 percent this year, as investors continue to dump shares on the back of lack of transformation policy on the part of government and bleak economic outlook

’

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Also, the negative impact of the coronavirus on crude oil price and the recent downgrade of the country’s debt status by ratings bodies have cast a pall on future

economic growth.

The S and P rating agency has downgraded Nigeria from a stable outlook to negative.

It is double whammy for

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the country as the downgrade could worsen the situation of the capital market, which relies heavily on foreign direct inflows to boost demand and prices. @Businessdayng

Foreign exchange reserve levels have fallen from $45 billion at mid-year 2019 to $38 billion at end-2019 and $36.50 billion in February 2020.

Monday 09 March 2020

BUSINESS DAY

43

Live @ The Exchanges Market Statistics as at Friday Friday 06 March 2020

Top Gainers/Losers as at Friday 06 March 2020 LOSERS

GAINERS

ASI (Points)

Opening

Closing

Change

Company

Opening

Closing

Change

MOBIL

N133.2

N146.5

13.3

ZENITHBANK

N20

N18.8

-1.2

BUACEMENT

N34.75

N35.3

0.55

STANBIC

N35.7

N35

-0.7

REDSTAREX

N2.98

N3.27

0.29

ETI

N6.45

N5.85

-0.6

VOLUME (Numbers)

UBN

N6.85

N7.05

0.2

UNILEVER

N13.5

N13

-0.5

VALUE (N billion)

MAYBAKER

N1.96

N2.15

0.19

N5.75

N5.35

-0.4

MARKET CAP (N Trn)

Company

FBNH

DEALS (Numbers)

26,279.61 4,602.00 361,108,160.00 4.275 13.694

Global market indicators FTSE 100 Index 6,473.72GBP -231.71-3.46%

Nikkei 225 20,749.75JPY -579.37-2.72%

S&P 500 Index 2,948.22USD -75.72-2.50%

Deutsche Boerse AG German Stock Index DAX 11,541.48EUR -403.24-3.38%

Generic 1st ‘DM’ Future 25,510.00USD -550.00-2.11%

Shanghai Stock Exchange Composite Index 3,034.51CNY -37.17-1.21%

Increased interests in banking stocks drive NSEASI higher by 0.24% Stories by Iheanyi Nwachukwu

N

igeria’s equities market advanced by 0.24percent in the trading week ended March 6, driven by investors’ interest in banking stocks.

Before now, the market had gone on a losing streak as investors restructured their portfolio to safe-haven over the possible damaging effect of Coronavirus on company’s performance. Following the outbreak of Coronavirus in Nigeria, some analysts had anticipated a sustained downtrend in the review trading week,

L -R: Harriet Thompson, British deputy high commission Lagos; Awuneba Ajumogobia, chairman, CAP Plc; Oscar N. Onyema, chief executive officer, The Nigerian Stock Exchange (NSE); Asue Ighodalo, founding Partner, Banwo-and-Ighodalo; Eme Essien, country manager, International Finance Corporation (IFC); Olamide Sanya-Olu, representing the First Lady of Lagos State, Ibijoke Sanwo-Olu, during a symposium to Commemorate 2020 International Women’s Day Celebration at the Exchange.

Stanbic IBTC posts N75bn profit in Full Year 2019 audited group results

S

tanbic IBTC Holdings Plc, a member of Standard Bank Group declared a profit after tax (PAT) of N75billion in its full year audited group results for year ended December 31, 2019.

This represents an increase over its year end 2018 profit after tax which was N74.4 billion. Profit before tax for the year 2019 was N90.9 billion, representing a 3 percent increase over 2018 figures which stood at N88.2 billion.

The company’s non-interest revenue also grew by 6 per cent to N108.8 billion in 2019, from N102.6 billion which it recorded in 2018. Stanbic IBTC Holdings also reported growth in its total operating income, from N180.8 billion in 2018, to N186.6 billion in 2019, representing a 3 percent increase.

As at December 31, 2019, the total assets of the Stanbic IBTC Group stood at N1.876trillion. This reflects a 13 percent increase, when compared to the value of the assets which was N1.663trillion as at December 2018.

Speaking on the full year audited group results, Yinka Sanni, Chief Executive, Stanbic IBTC Holdings Plc said: “Our financial results were largely in line with market guidance.

We achieved double digit growth in both assets under management (AuM) and loans. Loan-to-deposit ratio was 67.5 percent, above the regulatory minimum of 65 percent as at 31 December 2019. Non-performing loans ratio was 3.9 percent, similar level with prior year and within acceptable limit of 5 percent.”

Highlighting some of the growth areas in the full year audited group results, he noted: “The Group’s total assets grew by 13 per cent aided by

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the growth in loans and financial investments portfolio. Our Personal & Business Banking division contributed to profit yet again with a significant improvement in profit after tax year-on-year.

Cost of risk was 0.2 percent compared to the write-back in prior year due to a nonoccurrence of a significant recovery, however it is still well below our guidance of 3 percent.

Our sustained focus on cost containment coupled with revenue growth during the year yielded an improvement in cost-to-income ratio of 50.4 percent from 52.9” percent in 2018.”

While acknowledging that the regulatory and economic environment could sometimes be challenging, he stated that the company remained resolute in its target to emerge as Nigeria’s leading end-toend financial solutions provider. He stated: “While we look to 2020 with great optimism, we are fully aware of the challenging macro-economic and regulatory headwinds that we must contend with as we enter a new decade.

despite bargain hunting opportunities.

Amid this fear, the review week witnessed influx of full year (FY) 2019 scorecards of most notable counters in the banking sector. The banking sector is the highest paying sector in terms of dividend.

Ahead of the banks dividend qualification dates, their stocks continued to enjoy investors’ patronage on the Nigerian Bourse which led to the value of equities listed on the NSE to increase by about N36billion.

NSE Banking Index which provides an investable benchmark that captures the performance of the banking sector increased most by 3.78percent in the review trading week.

NSE Banking Index comprises the most capitalised and liquid companies in banking.

Other sectoral indexes and their performances this week are: NSE 30 Index (+0.12percent), NSE Consumer Goods Index (-5.87percent), NSE Industrial Good Index (-4.27percent), NSE Insurance Index (+1.40percent), NSE Oil & Gas (+0.80percent), and NSE Pension (-0.91percent).

The Nigerian Stock Exchange (NSE) All Share Index increased by 0.24percent from week open low of 26,216.46 points to 26,279.61 points; while the value of listed equities increased by N36billion to N13.694trillion, from a low of N13.658 trillion at the beginning of the week.

NOVA Merchant Bank declares N1.65bn profit in FY’19

N

OVA Merchant Bank Limited has released its audited results for the financial year ended December 31, 2019, recording impressive performances across its major financial lines.

Specifically, the Bank declared a profit after tax of N1.65billion for the 2019 financial year representing an impressive 44percent growth compared to N1.15billion recorded at the end of the 2018 financial year.

The result showed that the Bank achieved strong growth across all parameters as it recorded a remarkable 113percent growth in gross earnings from N2.76billion in 2018 to N5.87billion in the year under consideration, while profit before tax closed at N1.5billion, representing a 56percent rise from N960million the year before, even as total assets grew by 155percent from N25billion to N63.8billion in the year under consideration.

In the same vein, Customer Deposits stood at N40.5billion in 2019, compared to N6.4billion in 2018 representing a rise by 533percent; while Shareholders Funds increased by 11percent to N19.5billion in 2019

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compared to N17.6billion in 2018. Loans to customers closed the 2019 financial year at N29.3billion up from N2.4billion in 2018 representing a significant rise by 1,121percent.

Market watchers are of the opinion that this increase shows that the Bank is beginning to reap the benefits of its investments in its operations, technology and people. This also demonstrates the Bank’s growth trajectory which is expected to accelerate as it continues to scale its business and grow its client base.

Anya Duroha, Managing Director and Chief Executive Officer, NOVA Merchant Bank who commented on the result, said that as a young bank, the motivation to be the best Merchant Bank remains a key driving force that made the Bank churn out products and services to satisfy and meet the needs of its growing client base.

He said, “Our full year 2019 performance resonates our resilience and commitment to excel and succeed despite being a fairly new Merchant Bank and macroeconomic headwinds that persisted in 2019.”

Continuing, he explained, “Going into 2020 we will con@Businessdayng

tinue our resolve to be the best merchant bank in Nigeria as we will leverage our track record of trust, to deliver on operational efficiency through digital innovation while proffering customercentric solutions to our existing and new customers.”

On his part, Phillips Oduoza, Chairman, Merchant Bank stated, “I am particularly delighted that the key ratios are trending in the right direction, we are beginning to see the results of our distinct and impactful business model as exhibited in the strong figures across all key indices.

A notable reference that we recorded 0percent Non-Performing Loans in 2019” “We are well equipped with the leading technology, structure and staff to leverage all opportunities the market presents to us while operating at the highest level of governance.”

Oduoza added, “The year 2020 we believe our business will grow exponentially with the commencement of our capital market subsidiaries, deployment of innovative products to our customers leveraging our investments in digital channels, whilst reinforcing risk management and compliance.

44

Monday 09 March 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Financial equality and International Women’s Day ing. Have you identified, nurtured and embraced your passions and talents?

Are you utilizing them for growth, fulfillment and earning?

The healthier you are, the more productive you will be. In good health, you will have brighter prospects in all aspects of your life.

Do you need to lose weight, eat more healthily, or exercise more regularly? Make healthy-living a way of life for you and your family.

Protect yourself and your assets with insurance You are your greatest asset. Do you have adequate cover for your health and your life, particularly if you are the primary breadwinner? Are your assets, including your car and home adequately insured? You’ve worked so hard to build assets so be sure to protect them. Don’t neglect this most important part of your financial plan.

Invest consistently for the long term Risk is a fundamental part of investing. But with savings rates at an all-time low and high inflation, you need to make your money work for you. If you are totally risk-averse, there is very little prospect of achieving those great goals. Women can be somewhat conservative and tentative about their finances. You do need investments that give you a higher return than traditional money market instruments, which hardly keep apace with inflation.

With knowledge and experience as well as a clear objective, you will build confidence and can take carefully considered, calcu-

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‘

No one wants to think about death, but you owe it to your family particularly if you have children, to put something in place should something untoward happen to you

‘

I

nternational Women’s Day, celebrated on March 8th around the world, seeks to celebrate the social, economic, cultural and political achievements of women.

It also acts as a catalyst for change when it comes to gender equality. The theme of this year’s International Women’s Day is “Each for Equal”.

While the general equality for women is making slow, steady progress, we remain a long way from financial equality. For a variety of reasons, women have generally not been as successful as their male counterparts in terms of earnings and even in our general attitude to money.

Whilst the general principles of personal financial planning are universal and apply to both genders, women face unique challenges that translate to distinct concerns regarding their earning potential, roles and responsibilities.

Wealth accumulation for women is often slowed due to career breaks and the lack of flexible work options; the care of dependents, children and aged parents, usually falls on women. These issues often steer women into roles that do not advance their careers. Whatever your age, or stage and whether you are single, married, divorced, or widowed, there are proactive steps to take for greater financial equality: Build your knowledge Whilst it is important to seek professional advice, you owe it to yourself to build your knowledge; ultimately, you are responsible for your finances. There is no excuse for being totally ignorant about your finances with the plethora of information around you.

With some knowledge of the principles and the options available, you are in a better position to take advantage of them and build financial security.

Establish a budget Budgeting is one of the most important tools for financial security and equality. Where does your money go? Track your expenses for

a month; it will highlight where your money is going.

A good budget will help you to monitor your expenses so you have a clearer idea of where you can cut back and begin to save and invest.

Build an emergency fund It is important to have an emergency fund, a financial cushion that you can fall back on in difficult times, such as job loss. Six to twelve months’ worth of living expenses set aside in a safe, accessible interestbearing account is usually recommended. Beyond that and money for your daily expenses, explore other highyielding investments. One of the most effective ways to increase savings is to automate the process by having the funds deducted via a direct debit into a savings, money market or mutual fund account.

Reduce your debt Don’t ignore your debt or it will just mount. Getting out of debt or at least reducing it is a key step to taking control of your finances. List all your debt, and prioritize by focusing on the debt that is the most urgent or most expensive.

Avoid debt that is incurred purely for consumption; don’t borrow to buy clothes, jewelry, or holidays.

Debt needn’t be negative; indeed, credit can be a most effective tool in the journey to financial security, through well-planned longterm investments such as funding real estate, financing education or a business.

Invest in yourself Are you growing? Constantly improve your skills through reading and learn-

lated risk that is likely to give you better returns. The key is to build a diversified portfolio with both local and offshore assets. Spreading your investments across asset classes including property, stocks, bonds, mutual funds, and business interests, will mitigate some of the risk; where one asset class is not performing optimally, you may still earn from others.

Retirement is sooner than you think Make your retirement plan a priority; just imagine that you might well spend a third of your life in retirement. Your retirement years should be a time for new and exciting opportunities that keep you productive, mentally stimulated and fulfilled. Those who start planning early have a much better chance of retiring in comfort.

Do you have an estate plan?

No one wants to think about death, but you owe it to your family particularly if you have children, to put something in place should

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something untoward happen to you. Meet with a lawyer who will put you through a relatively simple process.

If you already have a will, review and update it to make sure you have included any new assets or beneficiaries.

You are responsible for your personal finances Whilst delegating some responsibility for your finances might be important for the dynamics of your relationship, having little or no involvement can put you at risk and render you ill equipped to handle unfortunate life events such as sudden job loss, divorce, serious illness or the death of a spouse. A marriage should be a partnership; don’t become an unequal financial partner. As a fulltime homemaker, do show interest and be involved in the family finances.

The Gender Pay Gap It is true that the gender pay gap is slowly closing, but it is still far from where it ought to be. What can you do? Have you ever thought of asking for a pay rise? It is a sad fact that women are much less likely to ask for a pay rise than their male counterparts. It takes courage to ask for a pay rise but it is a conversation that you should have if you deserve it; if you are outstanding at your job, and show commitment and reliability in your performance, it may be considered. There is no harm in trying. At all times you should be proactive about developing yourself and the skills that you need to advance in your career.

The Glass Ceiling It is great to observe the strides being made with women on boards; yet the numbers are minute when you consider the number of positions. Do you put your@Businessdayng

self forward for advertised promotions and positions or do you shy away and even feel inadequate? There is significant evidence that companies that promote women to management roles and higher, have better results. It has also been proven that gender diversity at board level translates into better performing companies.

Do you have a mentor? Are you a member of a women’s network that provides wonderful opportunities for growth, and for you to network and learn from other women who have made considerable progress in their careers, in business and in government? Be proactive about self-development.

Financial literacy is essential if women are to close the gender gap. There has been so much done to reach, indeed, smash the glass ceiling, but let us not be complacent and end up hitting a financial brick wall and jeopardizing our financial wellbeing and future security. #EachforEqual

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 09 March 2020

BUSINESS DAY

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news These 8 infrastructure projects can jolt...

L-R: Henry Egbiki, EY Nigeria country leader; Cosmas Maduka, founder/president, Coscharis Group/winner master category, EY entrepreneur of the year award 2020 for West Africa, and Obafemi Hamzat, deputy governor, Lagos State, at the EY entrepreneur of the year award dinner ceremony 2020 in Lagos, yesterday.

Pic by Pius Okeosisi

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geoning population.

Oil may fall to $20 as Saudi Arabia, Russia ...

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fallen off a cliff.

The banking sector was worst hit as loans to the oil and gas sector, a third of total loans, went bad and lenders lost a chunk of their capital.

Stocks sold off and Nigeria’s risk premium hit new peaks as investors demanded higher to hold Nigerian assets from local bonds to Eurobonds. Nigeria bled.

It’s 2020 and the current oil price rout may mean a similar scenario is well on the cards in Africa’s top oil producer which could translate to a second recession in four years. This comes at a time when the pain from the last recession is still being felt in an economy that has grown below its population growth rate since 2015, thereby leading to rising poverty levels.

“There’s likely to be a massive Nigeria sell-off on Monday as investors react to the sharp downturn in oil prices,” said Wale Okunrinboye, head of investment research at Lagos-based Sigma Pensions.

“Oil prices could go as low as $30 and that could plunge the economy into a recession very quickly and create all sorts of problems for the fiscal and monetary authorities,” Okunrinboye said.

BusinessDay gathered that most domestic investment and fund managers are looking at buying or investing in dollar-denominated instruments such as Eurobonds.

“This will provide the needed hedge should interest rates and stocks continue to go south and inflation north,” a fund manager said.

Brent crude, the global oil benchmark, closed down 9.4 percent on Friday, its biggest daily drop since the global financial crisis in 2008, settling at $45.27 a barrel.

Oil traders are looking to historical charts for an indication of how low oil prices could go. One potential target is $27.10 a barrel, reached in 2016 during the last price war.

Some analysts, however, believe the market could go

even lower than the 2016 mark.

Roger Diwan, an oil analyst at consultant IHS Markit Ltd. and a veteran OPEC watcher, told Bloomberg that the price could fall below $20 a barrel.

Brent crude, the global benchmark, fell to a low of $9.55 a barrel in December 1998, during one of the rare price wars that Saudi Arabia has launched over the last 40 years.

“We are at one of the most uncertain times in the history of Nigeria’s financial market; no one really knows what to expect but one thing that is clear is that Nigerian risk went off the roof the moment Saudi started the oil price war,” a money manager who did not want to be quoted due to the sensitivity of the matter said.

“Don’t be surprised if everyone wants to get out first and ask questions later and that could really unravel the economy and hurt the naira,” the person said.

Oil price at the current level is already below the Federal Government’s budget benchmark and has necessitated a review. The Federal Government’s estimated oil revenue in the 2020 budget is pegged at N2.64 trillion.

It is also below the CBN’s resistance level which could spell a naira devaluation given that external reserves remain on the decline and have now touched $36 billion.

“Nigeria did not plan for a shocker of this magnitude,” said Bismarck Rewane, a leading economist. “First, no one saw oil prices falling to as low as $45 per barrel or Saudi going for a price war, and that throws every other projection from economic growth to FX out the window.”

Some analysts have also raised fresh concerns on how exposed the country’s licensed commercial banks are to the oil and gas sector through large syndicated loans, many of which were either not hedged or were poorly collateralised.

The managing director of one of the tier-one banks, in a www.businessday.ng

conference call recently, was reluctant to say where the oil and gas loans were hedged at because it seems everyone was caught unawares.

There has been “significant restructuring” of energy-related loans since the price of oil began falling, Charles Akinbobola, an energy analyst at Sofidam Capital, said. “Most banks may need to extend the tenors of the facilities to reschedule cash flows.”

Kelvin Atafiri, who runs Cavazanni Human Capital Limited, an investment firm exposed to the oil and gas sector, said the lower oil price will definitely have an effect on bank loans which might lead to deteriorating assets.

“When the banks were giving out the loans, they didn’t factor the current trends in oil price,” Atafiri said.

The banks’ exposure in terms of loan facilities to the oil sector, according to a recent CBN financial stability report, is about N6.1 trillion.

Nigeria has itself to blame if it is caught out due to an oil price slump once again like in 2016, having failed to reduce the country’s heavy reliance on crude oil.

Almost everything, from economic growth in 2019 to the relative stability in the exchange rate, has been due to crude oil prices trending higher from 2016’s low rather than government reforms.

Business leaders say the best response at this time of heightened uncertainty will be to finally push through the reforms that can help soften the blow of an oil price downturn.

Oil prices, which have tanked since the coronavirus outbreak capped Chinese demand, fell even steeper after Russia balked at a plan by OPEC to cap oil production to shore up prices.

To make matters worse, Saudi Arabia, the world’s largest oil producer, is preparing for an all-out price war.

Saudi Arabia plans to increase oil output next month, looking to boost it well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its

OPEC+ alliance with Russia.

Saudi’s price war started on Saturday by slashing pricing for its crude for foreign markets by the most in at least 20 years, offering unprecedented discounts for buyers in Asia, Europe and the US to entice refiners to purchase Saudi crude at the expense of other suppliers.

The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to bring them back to the negotiating table, and then quickly reverse the production surge and start cutting output if a deal is achieved.

One bearish factor for a $30 oil price is the fact that some US shale players with viable acreages and sub-$35 break-evens run in the spirit of private enterprise that will continue to monetise their barrels.

Which means non-OPEC production could come in anywhere between 2.1-2.3 million bpd, with barrels not just from the US but Brazil, Canada, Guyana and Norway as well.

The growth in non-OPEC production is a bigger headache for oil price and could lead to an OPEC+ discord. The group’s discipline has held firm since 2016buttheRussianshaveoverpromisedandhaven’tdelivered.

Yet, OPEC’s relevance is under question as credibility is predicated these days on Moscow’s participation.

Another bearish factor for a $30 oil price is the domino effect of the coronavirus pandemic. The outbreak has spread to over 20 countries and led to 3,600 deaths as at March 8, which implies fewer travellers, higher restrictions and global health-related wariness over flying, a development that leads to more oil glut and lower oil price.

“Combine the factors and you have demand destruction on a scale and speed that is unprecedented this century. Neither SARS (2002), Ebola outbreak (2013) nor the global financial crisis (2008) can match it,” Akinbobola concluded.

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The list of projects, which is by no means exhaustive, includes the $10 billion Bonga South West Oil field (Bonga II) planned by oil major Shell, which is expected to increase Nigeria’s total oil output by 10 percent with an additional 200,000 barrels of crude oil daily.

But there’s a problem preventing the development of the Bonga South West, which is the uncertainty over future fiscal terms.

The oil majors remain some of the country’s biggest foreign direct investors and increasing their investment in the sector increases the chances of the government to earn more revenue and be closer to its annual budget oil production target.

The second project is the Lagos-Kano railway. The Lagos-Kano railway is a standard gauge railway under construction from the Atlantic Ocean port of Lagos to Kano, near the Niger border.

The railway is expected to run parallel to the British-built Cape gauge line, which has a lower design capacity and is in a deteriorated condition.

Like the Lagos-Kano Railway, projects in transportation that will connect major cities and facilitate trade feature heavily on the list with the Lagos-Ibadan Expressway and an eastern rail line that perhaps connects Lagos to Calabar.

“Anything that facilitates the ease of moving people and their goods and services will certainly have a big impact on economic activity,” said Ayo Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank.

The railway sector has not been liberalised by the government and that caps private-sector involvement in the sector.

Another key project would be to fix at least one of the country’s comatose seaports.

According to the Nigerian Ports Authority (NPA), the country has six seaports: Apapa and Tin Can in Lagos, Onne and Port-Harcourt ports in Rivers State, Warri Port, and Calabar Port. But, by many accounts, only the Lagos ports are operating anywhere near full capacity.

The Apapa and Tin Can Ports account for 70 percent of imports on average, according to NPA data.

Meanwhile, 99 percent of Nigeria’s trade goes through its sea borders, meaning the fate of the country’s trade rests on port efficiency, thereby making fixing the ports a potential game changer for the economy.

The Second Niger Bridge is another project touted as a big impact project that Nigeria should prioritise. The Nigeria Sovereign Investment Authority, which is invested in the project, says construction work on the Second Niger @Businessdayng

Bridge has reached over 40 percent.

Another potential big impact project would be in the health sector. Some economic analysts and investment experts say the development of at least three ultra-modern hospitals in Nigeria will go a long way for an economy where average life expectancy is a mere 54 years.

The N41 billion Ibom specialist hospital in Akwa-Ibom failed to live up to expectations while the 300-bed Kaduna ultra-modern hospital, backed by a $48 million fund from the Islamic Development Bank, is still in the works since it was first initiated in 2009.

Projects targeted at Nigeria’s power transmission should also be prioritised to breathe life into the economy, analysts say.

Six years since Nigeria privatised its power sector, the lights are still out, hobbling economic activity while driving up the cost of doing business.

The power sector has been trapped in a dilemma with available generation still standing at around 4000MW for over 200 million people.

While the control of electricity generation is currently in the hands of the private sector, the government wholly controls the transmission segment, and owns 40 percent stake in the distribution companies.

Stakeholders in the sector say the power situation will be better off if the government let go of transmission and fully liberalised the sector.

“Building a 3,000MW power plant sounds like a good idea but for private capital to flow into power projects, the government must derisk the sector,” said a senior business leader who didn’t want to be named to speak freely.

“When I look at the breakdown of the $22 billion borrowing plan that the Senate just approved, it’s a clear case of misplaced priorities as most of the projects in there are not even viable,” the person said.

Nigerian lawmakers last Thursday approved President Muhammadu Buhari’s borrowing plan that will see the government spend over half a billion dollars each year in interest payments for an average of 21 years on a bunch of infrastructure projects.

The loan, which would be sourced from multilateral development lenders including the World Bank, Africa Development Bank, China Exim Bank, Japan ICA and AFD, will cost the government some $12.1 billion (N3.7 trillion) over an average duration of 21 years. That works out to $573 million (N175 billion) each year.

The worry for most analysts is whether the loan will be invested in infrastructure, from transport to power, as highlighted in the breakdown and not frittered away with little to show for it.

Monday 09 March 2020

BUSINESS DAY

news PE firms bet on Nigeria insurers’ growth with recapitalisation stakes MODESTUS ANAESORONYE

N

igeria’s insurance industry recapitalisation exercise, now in its 10th month, has started to bear fruits with private equity investors taking position in the underwriting business of Africa’s most populous country.

At the last count, no fewer than seven private equity firms have come into the industry from within and outside the country, while some are still at the discussion stage, according to BusinessDay findings.

Insurance business in Nigeria has a lot of potential given the country’s over 200 million population and less than 1 percent insurance penetration level.

Analysts say these constitute the major attractions for foreign insurers who have been coming to take position in the market in the last six years.

Just last week, Verod Capital Management Limited and the majority shareholders of Law

Union & Rock Insurance plc signed Transaction Implementation Agreement (TIA).

Verod Capital, the latest of the private equity investors in the ongoing insurance industry recapitalisation, is an Anglophone investment company with substantial interest in Nigeria and West Africa. Verod’s coming will result in acquisition of 100 percent stake in Law Union and Rock and recapitalisation of the company to over N10 billion.

“The crucial phase of our recapitalisation exercise has been crossed with the signing of Transaction Implementation Agreement (TIA),” Mayowa Aseduro, managing director/ CEO, Law Union and Rock, said.

“The board, management and shareholders are delighted with this development, as our recapitalisation exercise will be concluded in a couple of months to this time,” Aseduro said.

AIICO Insurance plc has also concluded the private placement phase of its recap-

italisation exercise with an uptake of 38.83 percent of its shares by two strategic investors – LeapFrog Nigeria Insurance Holdings Limited, which acquired 28.24 percent stake, and AIICO Bahamas Nigeria Limited which acquired 10.59 percent stake. As a result, the company’s paid-up share capital has increased from N6.1 billion to N11.3 billion.

“The future looks bright for AIICO,” Babatunde Fajemirokun, managing director/ CEO, AIICO Insurance plc, said at the company’s Extra Ordinary General Meeting on Thursday.

“We are making progress in positioning our company for long-term sustainability.”

Royal Exchange plc, Consolidated Hallmark Insurance plc, among others, have also attracted private equity investors that have also given a boost to their recapitalisation plans.

Sunday Thomas, acting commissioner for insurance/CEO, National Insurance Commis-

sion (NAICOM), said the commission initiated the process to recapitalise the insurance industry in 2019 in order to upscale its financial standing to meet current economic realities and avoid imminent systemic collapse and solvency crisis in the insurance sector.

Thomas said this would ensure that the industry becomes more robust in its technical competence and financial base, build confidence, trust and enhance market value.

“It is further aimed at repositioning the sector for selfactualisation in terms of growth and development,” he told the House of Reps Committee on Insurance and Actuarial Matters.

NAICOM last year raised the paid-up share capital of life companies from N2 billion to N8 billion, general business from N3 billion to N10 billion, composite business from N5 billion to N18 billion, and reinsurance companies from N10 billion to N20 billion.

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At N4.6trn worth, Dangote needs just N940bn to buy Arsenal Club Anthony Nlebem

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frica’s richest man, Aliko Dangote, will require £2 billion (N940 billion) to buy out Stan Kroenke’s stake in Arsenal. That’s about 20 percent of his $15 billion (N4.6 trillion) worth, according to Bloomberg Billionaire Index.

Bob Ratcliffe, a brother to Jim Ratcliffe, one of Britain’s richest men, said it would cost around £2 billion to buy Arsenal.

Bob, who is head of the division of Ineos which owns Nice football club, told the Financial Times’ Business of Football Summit that a takeover of a ‘top six’ club would cost at least £2 billion, but a move for a team elsewhere in the Premier League would cost between £150 million and £350 million.

Dangote has been linked with Arsenal in recent times, with reports quoting him as stating he would be pursuing a takeover of the club which is one of the Premier League’s big sides.

The Nigerian billionaire has made several statements in the past about his desire to become the owner of the North London club.

A consistent Arsenal fan, Dangote told Francine Lacqua, an anchor on Bloomberg TV in London in 2017, “I don’t change clubs. Even when Arsenal isn’t doing well I still stick by them. It’s a great team, well-run. It could be run better, so I will be there.”

Dangote has said he is fo-

cusing on other interests at the moment, but is targeting next year as a possible date to launch his bid for the club.

“It is a team that, yes, I would like to buy some day, but what I keep saying is we have $20 billion worth of projects and that’s what I really want to concentrate on. I’m trying to finish building the company and then after we finish, maybe some time in 2021 we can,” Dangote said in January.

“I’m not buying Arsenal right now, I’m buying Arsenal when I finish all these projects, because I’m trying to take the company to the next level,” he said.

According to Bloomberg Billionaire Index, Dangote became $4.3 billion richer in 2019 as he ended the decade with a net worth of almost $15 billion, making him the 96th wealthiest man in the world.

Dangote founded and chairs Dangote Cement, the continent’s largest cement producer.

He owns nearly 85 percent of publicly-traded Dangote Cement through a holding company. Dangote Cement produces 45.6 million metric tonnes annually and has operations in 10 countries across Africa.

Dangote also owns stakes in publicly-traded salt, sugar and flour manufacturing companies. Dangote Refinery has been under construction for three years and is expected to be one of the world’s largest oil refineries once complete.

Nigeria trudges on amid persistent power outage ... but firms, households bear the brunt ... as blackout throws South Africa in recession L-R: Oludolapo Adigun, group head, retail banking, Lagos Mainland, First Bank of Nigeria Limited; Bismarck Rewane, MD/CEO, Financial Derivatives Company Limited; Yinka David-West, representing the Dean, LBS; Babatunde Irukera, CEO, Federal Competition and Consumer Protection Commission (FCCPC), and Olawale Ajayi, at the LBS Breakfast Club meeting, held last Wednesday at the Oriental Hotel, Lagos.

NCC deactivates 2.2m improperly registered SIM cards Jumoke Akiyode-Lawanson

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he Nigerian Communications Commission (NCC) has completely deactivated all 2.2 million improperly registered Subscriber Identification Module (SIM) cards across Mobile Network Operators (MNOs) in the country.

This is in line with a key agenda of President Muhammadu Buhari to ensure security of lives and property for all Nigerians, according to the telecoms regulator.

Over the years, the NCC has tenaciously worked with determination and through various policy initiatives to rid mobile networks of improperly or invalidly-registered SIM cards to ensure that all the current 184 million registered SIM cards/mobile lines across MNOs’ networks have valid data that are traceable and not anonymous, Umar Garba Danbatta, executive vice chairman, NCC. “Our efforts received a

boost, following the implementation of a September 12, 2019 ministerial directive that the NCC should compel service providers to block all improperly-registered SIM cards, pending when their owners regularise their registration,” Danbatta said in Abuja at the weekend.

As at the time the ministerial order was issued, the NCC, through its compliance monitoring and enforcement team, had reduced the number of improperly-registered SIM cards on mobile networks in the country to 9.2 million.

As part of the commission’s ongoing regulatory interventions such as the setting up of the SIM Registration Industry Task Force, which led to several resolutions including the Industry Working Group (IWG) on harmonisation of SIM registration process with the National Identity Management Commission (NIMC) to ensure a clean SIM database, the commission had, in June 2019, commenced the second round of comprehensive veriwww.businessday.ng

fication audit of MNOs’ SIM card registrations. This audit exercise was concluded in August 2019.

The audit was specifically to ensure strict adherence by telecom operators to the provisions of the Telephone Subscribers Registration Regulations 2011.

Following the September 2019 ministerial directive, however, the NCC, within a week, intensified efforts by reducing the number of improperly-registered SIM cards from 9.2 million to 2.2 million.

“We have since initiated the second phase of SIM deactivation based on the ministerial directive and as at today, we have completely deactivated the remaining 2.2 million lines on the networks. This is contrary to reports by a section of the media, suggesting that nothing has been done with respect to the issue of improperly-registered SIM cards,” he said.

Danbatta assured all stakeholders that the NCC would continue to aggressively pur-

sue the national objectives of delivering an accurate database of telephone subscribers in Nigeria, stating that the SIM data submitted to the commission was constantly being validated for higher efficiency to support the national security objectives of the SIM registration exercise through NCC’s zero tolerance for deviations from the proper registration process.

“I also use this opportunity to restate the commission’s commitment to the periodic SIM data audit, continuous compliance monitoring exercise on the MNOs, as well as constant consumer education and engagement against using improperly-registered SIM cards,” Danbatta said.

“With this, we would be able to, collectively, address national security concerns, especially kidnappings, banditry, armed robberies, cattle rustling and other crimes associated with SIM cards across the nation and to ensure that all SIM cards are traceable to their real owners,” he said.

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ENDURANCE OKAFOR

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lmost a year of blackout threw South Africa’s economy into its second recession in two years, but Nigeria, which has been wallowing in darkness for more than three decades, seems to have found ways to remain immune and escape contraction.

South Africa’s economy contracted 1.4 percent in the fourth quarter of 2019, according to official statistics released last Tuesday.

The most industrialised nation in Africa recorded the lowest growth rate in 10 years at 0.2 percent in 2019 fuelled by the severe rolling power blackouts.

The South African Reserve Bank had warned that annual economic growth could remain as low as 1 percent if the problem of Eskom, the country’s broken state power utility, persists.

The resulting blackouts from Eskom, which experienced its worst-ever generation crisis in December 2019 after several ageing plants broke down, left mining giants, car dealers, factories and informal entrepreneurs with ‘low shedding’ for the most part of the year, hence the country’s recession.

On the other hand, Nigeria, whose national electricity grid collapsed about 11 times in @Businessdayng

2019, grew the fastest since the recession in 2016.

The country’s GDP expanded by 2.27 percent in 2019, higher than the 1.91 percent growth reported in 2018. This was largely supported by the growth recorded in the final quarter of last year at 2.25 percent, the strongest level since Q3 2015.

Nigeria is suffering, smiling and surviving, Yinka Ademuwagun, research analyst at Lagos-based United Capital plc, said.

“It tells you the apparent potential for growth in Nigeria that we are missing,” Ademuwagun said.

The growth reported by Africa’s largest economy outpaced the World Bank and IMF predictions of 2.0 percent and 2.1 percent, respectively.

While a lot of companies in Nigeria are devising alternative means of power supply – from generator to solar – the cost incurred as a result of the regular blackout in the country is telling on the bottom-lines of most companies and has compelled some others to fold up or leave the country, checks

by BusinessDay show.

The administrative expenses of Flour Mills of Nigeria (FMN), a diversified Nigerian agribusiness company, for example, jumped to N17.26 billion as 31 December 2019 from N14.93 billion in 2018.

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PE firms bet on Nigeria insurers’ growth with recapitalisation stakes MODESTUS ANAESORONYE

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igeria’s insurance industry recapitalisation exercise, now in its 10th month, has started to bear fruits with private equity investors taking position in the underwriting business of Africa’s most populous country.

At the last count, no fewer than seven private equity firms have come into the industry from within and outside the country, while some are still at the discussion stage, according to BusinessDay findings.

Insurance business in Nigeria has a lot of potential given the country’s over 200 million population and less than 1 percent insurance penetration level.

Analysts say these constitute the major attractions for foreign insurers who have been coming to take position in the market in the last six years.

Just last week, Verod Capital Management Limited and the majority shareholders of Law

Union & Rock Insurance plc signed Transaction Implementation Agreement (TIA).

Verod Capital, the latest of the private equity investors in the ongoing insurance industry recapitalisation, is an Anglophone investment company with substantial interest in Nigeria and West Africa. Verod’s coming will result in acquisition of 100 percent stake in Law Union and Rock and recapitalisation of the company to over N10 billion.

“The crucial phase of our recapitalisation exercise has been crossed with the signing of Transaction Implementation Agreement (TIA),” Mayowa Aseduro, managing director/ CEO, Law Union and Rock, said.

“The board, management and shareholders are delighted with this development, as our recapitalisation exercise will be concluded in a couple of months to this time,” Aseduro said.

AIICO Insurance plc has also concluded the private placement phase of its recap-

italisation exercise with an uptake of 38.83 percent of its shares by two strategic investors – LeapFrog Nigeria Insurance Holdings Limited, which acquired 28.24 percent stake, and AIICO Bahamas Nigeria Limited which acquired 10.59 percent stake. As a result, the company’s paid-up share capital has increased from N6.1 billion to N11.3 billion.

“The future looks bright for AIICO,” Babatunde Fajemirokun, managing director/ CEO, AIICO Insurance plc, said at the company’s Extra Ordinary General Meeting on Thursday.

“We are making progress in positioning our company for long-term sustainability.”

Royal Exchange plc, Consolidated Hallmark Insurance plc, among others, have also attracted private equity investors that have also given a boost to their recapitalisation plans.

Sunday Thomas, acting commissioner for insurance/CEO, National Insurance Commis-

sion (NAICOM), said the commission initiated the process to recapitalise the insurance industry in 2019 in order to upscale its financial standing to meet current economic realities and avoid imminent systemic collapse and solvency crisis in the insurance sector.

Thomas said this would ensure that the industry becomes more robust in its technical competence and financial base, build confidence, trust and enhance market value.

“It is further aimed at repositioning the sector for selfactualisation in terms of growth and development,” he told the House of Reps Committee on Insurance and Actuarial Matters.

NAICOM last year raised the paid-up share capital of life companies from N2 billion to N8 billion, general business from N3 billion to N10 billion, composite business from N5 billion to N18 billion, and reinsurance companies from N10 billion to N20 billion.

At N4.6trn worth, Dangote needs just N940bn to buy Arsenal Club Anthony Nlebem

A

frica’s richest man, Aliko Dangote, will require £2 billion (N940 billion) to buy out Stan Kroenke’s stake in Arsenal. That’s about 20 percent of his $15 billion (N4.6 trillion) worth, according to Bloomberg Billionaire Index.

Bob Ratcliffe, a brother to Jim Ratcliffe, one of Britain’s richest men, said it would cost around £2 billion to buy Arsenal.

Bob, who is head of the division of Ineos which owns Nice football club, told the Financial Times’ Business of Football Summit that a takeover of a ‘top six’ club would cost at least £2 billion, but a move for a team elsewhere in the Premier League would cost between £150 million and £350 million.

Dangote has been linked with Arsenal in recent times, with reports quoting him as stating he would be pursuing a takeover of the club which is one of the Premier League’s big sides.

The Nigerian billionaire has made several statements in the past about his desire to become the owner of the North London club.

A consistent Arsenal fan, Dangote told Francine Lacqua, an anchor on Bloomberg TV in London in 2017, “I don’t change clubs. Even when Arsenal isn’t doing well I still stick by them. It’s a great team, well-run. It could be run better, so I will be there.”

Dangote has said he is fo-

cusing on other interests at the moment, but is targeting next year as a possible date to launch his bid for the club.

“It is a team that, yes, I would like to buy some day, but what I keep saying is we have $20 billion worth of projects and that’s what I really want to concentrate on. I’m trying to finish building the company and then after we finish, maybe some time in 2021 we can,” Dangote said in January.

“I’m not buying Arsenal right now, I’m buying Arsenal when I finish all these projects, because I’m trying to take the company to the next level,” he said.

According to Bloomberg Billionaire Index, Dangote became $4.3 billion richer in 2019 as he ended the decade with a net worth of almost $15 billion, making him the 96th wealthiest man in the world.

Dangote founded and chairs Dangote Cement, the continent’s largest cement producer.

He owns nearly 85 percent of publicly-traded Dangote Cement through a holding company. Dangote Cement produces 45.6 million metric tonnes annually and has operations in 10 countries across Africa.

Dangote also owns stakes in publicly-traded salt, sugar and flour manufacturing companies. Dangote Refinery has been under construction for three years and is expected to be one of the world’s largest oil refineries once complete.

Nigeria trudges on amid persistent power outage ... but firms, households bear the brunt ... as blackout throws South Africa in recession L-R: Oludolapo Adigun, group head, retail banking, Lagos Mainland, First Bank of Nigeria Limited; Bismarck Rewane, MD/CEO, Financial Derivatives Company Limited; Yinka David-West, representing the Dean, LBS; Babatunde Irukera, CEO, Federal Competition and Consumer Protection Commission (FCCPC), and Olawale Ajayi, at the LBS Breakfast Club meeting, held last Wednesday at the Oriental Hotel, Lagos.

NCC deactivates 2.2m improperly registered SIM cards Jumoke Akiyode-Lawanson

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he Nigerian Communications Commission (NCC) has completely deactivated all 2.2 million improperly registered Subscriber Identification Module (SIM) cards across Mobile Network Operators (MNOs) in the country.

This is in line with a key agenda of President Muhammadu Buhari to ensure security of lives and property for all Nigerians, according to the telecoms regulator.

Over the years, the NCC has tenaciously worked with determination and through various policy initiatives to rid mobile networks of improperly or invalidly-registered SIM cards to ensure that all the current 184 million registered SIM cards/mobile lines across MNOs’ networks have valid data that are traceable and not anonymous, Umar Garba Danbatta, executive vice chairman, NCC. “Our efforts received a

boost, following the implementation of a September 12, 2019 ministerial directive that the NCC should compel service providers to block all improperly-registered SIM cards, pending when their owners regularise their registration,” Danbatta said in Abuja at the weekend.

As at the time the ministerial order was issued, the NCC, through its compliance monitoring and enforcement team, had reduced the number of improperly-registered SIM cards on mobile networks in the country to 9.2 million.

As part of the commission’s ongoing regulatory interventions such as the setting up of the SIM Registration Industry Task Force, which led to several resolutions including the Industry Working Group (IWG) on harmonisation of SIM registration process with the National Identity Management Commission (NIMC) to ensure a clean SIM database, the commission had, in June 2019, commenced the second round of comprehensive veriwww.businessday.ng

fication audit of MNOs’ SIM card registrations. This audit exercise was concluded in August 2019.

The audit was specifically to ensure strict adherence by telecom operators to the provisions of the Telephone Subscribers Registration Regulations 2011.

Following the September 2019 ministerial directive, however, the NCC, within a week, intensified efforts by reducing the number of improperly-registered SIM cards from 9.2 million to 2.2 million.

“We have since initiated the second phase of SIM deactivation based on the ministerial directive and as at today, we have completely deactivated the remaining 2.2 million lines on the networks. This is contrary to reports by a section of the media, suggesting that nothing has been done with respect to the issue of improperly-registered SIM cards,” he said.

Danbatta assured all stakeholders that the NCC would continue to aggressively pur-

sue the national objectives of delivering an accurate database of telephone subscribers in Nigeria, stating that the SIM data submitted to the commission was constantly being validated for higher efficiency to support the national security objectives of the SIM registration exercise through NCC’s zero tolerance for deviations from the proper registration process.

“I also use this opportunity to restate the commission’s commitment to the periodic SIM data audit, continuous compliance monitoring exercise on the MNOs, as well as constant consumer education and engagement against using improperly-registered SIM cards,” Danbatta said.

“With this, we would be able to, collectively, address national security concerns, especially kidnappings, banditry, armed robberies, cattle rustling and other crimes associated with SIM cards across the nation and to ensure that all SIM cards are traceable to their real owners,” he said.

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ENDURANCE OKAFOR

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lmost a year of blackout threw South Africa’s economy into its second recession in two years, but Nigeria, which has been wallowing in darkness for more than three decades, seems to have found ways to remain immune and escape contraction.

South Africa’s economy contracted 1.4 percent in the fourth quarter of 2019, according to official statistics released last Tuesday.

The most industrialised nation in Africa recorded the lowest growth rate in 10 years at 0.2 percent in 2019 fuelled by the severe rolling power blackouts.

The South African Reserve Bank had warned that annual economic growth could remain as low as 1 percent if the problem of Eskom, the country’s broken state power utility, persists.

The resulting blackouts from Eskom, which experienced its worst-ever generation crisis in December 2019 after several ageing plants broke down, left mining giants, car dealers, factories and informal entrepreneurs with ‘low shedding’ for the most part of the year, hence the country’s recession.

On the other hand, Nigeria, whose national electricity grid collapsed about 11 times in @Businessdayng

2019, grew the fastest since the recession in 2016.

The country’s GDP expanded by 2.27 percent in 2019, higher than the 1.91 percent growth reported in 2018. This was largely supported by the growth recorded in the final quarter of last year at 2.25 percent, the strongest level since Q3 2015.

Nigeria is suffering, smiling and surviving, Yinka Ademuwagun, research analyst at Lagos-based United Capital plc, said.

“It tells you the apparent potential for growth in Nigeria that we are missing,” Ademuwagun said.

The growth reported by Africa’s largest economy outpaced the World Bank and IMF predictions of 2.0 percent and 2.1 percent, respectively.

While a lot of companies in Nigeria are devising alternative means of power supply – from generator to solar – the cost incurred as a result of the regular blackout in the country is telling on the bottom-lines of most companies and has compelled some others to fold up or leave the country, checks

by BusinessDay show.

The administrative expenses of Flour Mills of Nigeria (FMN), a diversified Nigerian agribusiness company, for example, jumped to N17.26 billion as 31 December 2019 from N14.93 billion in 2018.

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Dangote Subsea Pipeline to boost Nigeria’s gas supply, reduce flaring

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angote Subsea Gas Pipeline Project is expected to unlock significant gas supply for industrial activities and considerably reduce flaring in Nigeria. The pipeline project is part of Dangote’s multi-billion dollars’ gas pipeline, fertilizer, petrochemicals and refinery projects.

Regarded as the largest sub-sea pipeline infrastructure in the world, the 1,100 kilometres gas pipeline is capable of handling 3 billion Standard Cubic Foot (Scf) of gas per day.

One of its many derivables is that it will help feed the company’s fertiliser plant and will connect the Niger Delta to the Lekki Free Trade Zone (LFTZ) in Lagos.

Subsea pipelines are expected to create a corridor for evacuation of trapped gas from offshore platforms in Nigeria to allow the monetisation of the product.

Most of the associated gases produced offshore in Nigeria are currently being reinjected or flared; hence the Dangote strategy is to utilise the gas.

For decades, Nigeria has been accused of polluting the atmosphere by flaring gas while the country itself has been facing shortage of

gas, therefore the pipeline facility is expected to reduce the quantity of gas flaring in Nigeria and increase government revenue.

According to the company, the building of the subsea pipeline and processing facilities will be achieved on time, on budget, and it will ensure the facility is capable of achieving operating objectives, which can be operated economically over its entire life span.

Enumerating benefits of the pipeline project, the company stated: “The pipeline project will make gas readily available for commercial use; nullify the need for future gas import; lead to diversification of Nigeria’s economy; increase government revenue (and meet demand for domestic petrochemical products); ensure an increase in FX from exports, and the creation of thousands of direct and indirect jobs.”

Devakumar Edwin, group executive director, Strategy, Capital Projects & Portfolio Development, DIL, described the pipeline as the largest subsea pipeline infrastructure in the world, noting, “Our target of pipeline infrastructure is to handle three billion scf per day and this is all offshore gas that we shall

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trap and cap.”

He said gas would be trapped for electricity, which is a sore point for manufacturers, in addition to other byproducts of the refinery used in the petrochemical industry to drive industrialisation.

Edwin said the Gas Pipeline Project would guarantee uninterrupted power supply within the Dangote Refinery and Petrochemical Plants on completion, which he said would also positively increase the Nigeria’s Gross Domestic Project (GDP).

He further said the projects would attract other bigger investors into the Lagos Free Zone, and added that the projects would benefit the local communities, as many people in the catchment area would be employed, while others people would be trained.

“Our target is that in the next five years or so from now, we hope and we believe that half of Nigeria’s crude will be refined and exported rather than just exporting crude to go and create jobs elsewhere,” he stated.

Speaking on the benefits of the refinery, Edwin said the asset creates a market for $11 billion per annum of Nigerian crude and can meet 100 percent of the Nigerian requirement of all liquid products.

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Tech holds promise as Nigerian justice system excludes 90% population

NEPZA confirms partnership with World Bank, IFC to develop infrastructure

FRANK ELEANYA

HARRISON EDEH, Abuja

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ne of the major conclusions by stakeholders from BusinessDay summit on legal business last Wednesday was that the justice system in Nigeria was technologically backward and lacked the capacity to compete with peers in South Africa, Egypt and Kenya.

This comes on the heels of the revelation that only 10 percent of Nigeria’s about 200 million people have access to the justice system, as less than 10 percent can afford the premium placed on justice.

“The judicial system isn’t serving the purpose that it is supposed to serve,” said Ngozi Aderibigbe, partner at Jackson, Etti & Edu. “How much justice are people getting from the justice system?”

With little investments deployed to acquiring new technologies, justice delivery in Nigeria remains at the mercy of traditional court processes, meaning that cases are delayed for years, data collected are lost in volumes of dusty files, lawyers resort to textbook tactics while judges lose track of time buried in frivolous lawsuits.

The result is an inordinately expensive justice sys-

tem that excludes hundreds of millions of Nigerians who cannot afford the cost of delays and the rising cases of questionable judgments that have seen many judges sent on suspension, thereby eroding what is left of the integrity of the judiciary.

The situation can get even more worrisome.

Abi Haruna, managing lead counsel, Siemens, said foreign organisations and investors are also losing confidence in the system and if handed a choice, they would prefer their investments are under legal systems outside Nigeria.

“Delay, access and the quality of judgment are the major challenges in the Nigerian judicial system. Investors don’t like questionable justice systems. They want certainty,” he said at a panel session at the summit tagged ‘Disruptive Technology and the Future Realities of Legal Business’.

Part of the problem lies in the size of the industry.

First, there is little information about the actual size of the justice system in Nigeria.

However, almost on a daily basis, new law firms spring up across the country.

Collins Onuegbu, founder and executive vice-chairman

of Signal Alliance, said information about the size of the justice system would help in determining the capacity of the market in providing sufficient services to the people.

It would also be necessary for determining what technology investments to make.

Adopting technology comes at a cost and only financially liquid law firms can make the necessary technology leap.

Given that the size of the largest law firm in the country, Aluko & Oyebode, only boasts of 85 staff members, compared to the top five legal firms in South Africa with each having more than 400 staff members, Nigerian law firms do have a long way to go Gbenga Oyebode, chairman of Aluko & Oyebode, said while the sufficiency of the talent in the justice system was not in doubt, they need to be trained to run the industry as a business. The majority of lawyers have not been trained in the broader picture of the system hence it is practically impossible to attract investments.

“I think the Nigerian law school isn’t fit for purpose, some Nigerian lawyers can’t read a balance sheet,” Oyebode said. “I think Nigerian lawyers think they are practicing law

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and it isn’t a business but it is a business. Law isn’t just something that we practice.”

The industry’s seemingly apathy to technology means that non-legal entities are beginning to encroach and even dominate most services that are usually seen as lawyers’ domain. High-demand legal services such as document review; Contract management; Litigation support; Discovery and electronic discovery; Contract lawyers and staffing; Investigation support and legal research, and IP management are becoming the primary domain of Alternative Legal Services Providers (ALSPs).

The ALSPs are playing a bigger role in providing legal services. Businesses are now more often turning to these innovative companies for many routine legal services, and law firms are even outsourcing certain jobs to ALSPs that would be too expensive and timeconsuming to do in-house.

Olasupo Shashore, former attorney general and commissioner for Justice Lagos State said the adoption challenge can be addressed by removing regulatory bottlenecks that shut out opportunities for law firms to scale their business.

The structure of the system, he says, isn’t such that law firms can take foreign investments.

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… says obsolete legislation hindering investments inflow

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he Nigeria Export Processing Zones Authority (NEPZA) says it is embarking on a new partnership with the World BankandtheInternationalFinancial Corporation (IFC) in the area of infrastructural development of Free Trade Zones across Nigeria and staff capacity building.

This development, NEPZA says, will help in attracting more Foreign Direct Investment (FDI) to the Nigerian economy.

The NEPZA acting managing director, Bitrus Dawuk, who gave the information when the World Bank and the IFC delegation paid him a courtesy visit in Abuja, said one of the bottlenecks militating against optimal performance of Free Trade Zones was NEPZA’s obsolete legislations, which is in the process of being amended by the National Assembly, and after its amendment would be capable of generating billions of dollars’ worth of investments into the country.

“NEPZA is ever ready to work with the World Bank and the IFC in giving Nigeria a world class Free Zones as there are already measures in place to review the out-dated regulations of NEPZA to make it more favourable for Foreign Investors to come in and invest in the country. I will be on your neck from now on, especially in areas of training of my

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staff for optimum performance,” he said.

In his remark, leader of the delegation, Feyi Boroffice, said the visit was aimed at strengthening relationship with NEPZA by providing an enabling environment to attract more foreign investors into the country by building anchor projects that would encourage the establishment of industries such as the Dangote Refinery and Petrochemical plant.

He said the World Bank, which has the mandate of providing funding or advice for the development of countries, do so with the help of the four arms of the organisation.

It would be noted that the IFC finances private companies, International Development Association (IDA), which provides assurance on political risks for foreign investors and the International Centre for Settlement of Investment Disputes (ICSID), which provides arbitration for investment disputes.

“The World Bank group is the multilateral development institution so our aim is to go to all the developing countries in the world to see where we can provide funding or advice to help with development. So, the 210 or 220 in the world, 150 of them are developing countries we need to go there and see how we can help with development.

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Search for better life, heightened insecurity top reasons Nigerians rush to Canada STEPHEN ONYEKWELU

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igeria’s middle class is jetting out to Canada in search of a better and more enabling social, economic and political environment where they can flourish and far from Africa’s most populous country that presents uncertainties about the future.

Canada has become a choice destination for Nigerians wishing to relocate.

A weak economy and insecurity are among the “push factors” underlying the rush to Canada, according to the latest study by Africa Polling Institute, an independent opinion research think-tank, entitled ‘Deconstructing the Canada Rush: Motivations for Nigerians Emigrating to Canada’.

On the flip side, favourable Canadian immigration policies appear to also constitute a key enabler and “pull factor” attracting prospective migrants.

The current rush to Canada appears to have taken a new dimension in terms of the calibre of Nigerians applying on the different Ca-

nadian migration schemes.

This is guaranteed to heighten brain drain across sectors and professions in the country, Bell Ihua, executive director, African Polling Institute, said.

A middle class is someone who lives on $10-$100 per day, according to the United Nations using the Global measures. The African Development Bank (AfDB) which focuses on the African continent, on the other hand, measures the middle class as those who live on $2–$20 a day.

In total, 877 respondents participated in the online survey, across WhatsApp and Telegram groups of prospective migrants. Of this number, only 772 had already migrated or were considering migrating.

The analysis focused on the 772 individuals – comprising 490 males and 282 females – who have either migrated or are currently considering migrating out of Nigeria. The survey had more responses from prospective migrants (652 individuals or 84.4%) than from actual Nigerian migrants in Canada (120 individuals or 15.5%).

The result showed that

the top five motivating “push factors” for Nigerians seeking migration opportunities to Canada are: the search for better career opportunities (75 percent), heightened insecurity and violence (60 percent), the desire to provide a better future for their children (55 percent), for further education (40 percent), and perceived poor governance in Nigeria (35 percent).

Across age demography, the search for better career opportunities and educational advancement appeared to be a more important reason for emigrating amongst respondents aged 18-35 years (82 percent and 45 percent, respectively) than for older folks aged 36-60 years (55 percent and 26 percent).

“It seems stupid right now to put all one’s eggs in the Nigerian basket. Is the government concerned at all about the mass exodus of Nigerians to Canada?” Jerome Sampson, a social media user, tweeted via @Gentlejerome.

Canada’s postgraduate work permit offers an easy route to the “holy grail of immigration” – permanent residency – and students are taking advantage of the pro-

Coronavirus: Millions quarantined in Italy as DC reports first case

gramme by staying back after their studies and going on to pursue permanent residency in Canada.

Almost six in 10 of actual migrants (59 percent) affirmed that in retrospect, they consider their decision to migrate to Canada an excellent decision.

The survey also found that 81 percent of actual migrants make financial remittances to Nigeria frequently, and there is a strong connection between remittances and family upkeep (85 percent), charity (39 percent), business investments (16 percent), and building projects (14 percent).

Education, jobs and security are three interrelated challenges facing Nigeria, BusinessDay stated in a report last year. Additionally, a bulging uneducated and unemployed youth population is a dangerous concoction and one of the major reasons for unrest across the country.

In response, bright young middle-class Nigerians in search of better education, jobs, and peace are voting with their feet because they do not see any immediate or remote solution to these problems.

Campari Nigeria rewards trade partners with awards, prizes

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select gathering of customers and major distributors of premium cocktail base, Campari, gathered at the Sheraton Hotels and Towers, venue of the 2019 Campari Nigeria Trade Partners Award for a first-class celebration in the city of Lagos.

The glitzy event was hosted by Brian Munro Limited, the sole distributor of Campari in Nigeria, and the evening lived up to its billing as everyone in attendance experienced a top-notch occasion. The main agenda was to recognise, celebrate and honour distinguished trade partners of Campari in Nigeria while A-list entertainers took turns to serenade everyone seated.

The event was anchored by ace compere and comedian Tee-A who did not hesitate to dish out rib-cracking jokes as he led all those in attendance through the programme of events. Entertainment could not have been completed without the exhilarating live performance of the vivacious music band, Salt of the Earth while DJ

… as Uber, Lyft pledge to compensate drivers diagnosed with coronavirus

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taly’s government has placed more than 16 million people — a quarter of the population — under lockdown, in a drastic bid to prevent the spread of coronavirus.

The Lombardy region, including the city of Milan, has been quarantined, as have other cities including Venice, Parma and Modena.

Meanwhile in the US, the first case has been confirmed in the capital Washington DC and hundreds of other cases have been reported around the country.

Meanwhile, Uber has announced that it will support

drivers with confirmed cases of coronavirus, the company said Sunday.

The ride hail giant said it would support its contracted drivers who were diagnosed with COVID-19, the disease associated with coronavirus, or those forced into quarantine by public health officials, according to Andrew Macdonald, senior vice president of rides and platform.

Macdonald said drivers and delivery workers would receive compensation for up to 14 days, saying, “This has already begun in some markets

and we are working to implement mechanisms to do this worldwide,” McDonald said.

‘We believe this is the right thing to do.”

Lyft has also confirmed Sunday that it had decided to provide compensation to drivers infected or quarantined.

The announcements from Uber and Lyft come just a day after New York City Mayor Bill de Blasio said one of the city’s confirmed coronavirus cases involved an Uber driver from Queens. The patient was in isolation at a local hospital, NBC New York reported.

Famfa Oil holds literacy day for children to raise future leaders BUNMI BAILEY

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amfa Oil Limited, one of Nigeria’s largest indigenous owned exporters of crude oil, hosted its second annual literacy day at City Hall, Lagos State, on March 6, 2020.

The programme themed “Readers are Leaders” is an educative corporate social responsibility (CSR) initiative fuelled by the company to foster a reading culture among children in primary schools, empowering them to lead through the exercise of their creativity, now and in their future careers or industries.

During the opening remarks while addressing the audience, Folorunso Alakija, vice chairman, Famfa Oil, stressed the importance of knowledge, stating that literacy was the bedrock of education, which enables children to discover and develop their full potential in life, thus empowering

them to be leaders.

“We have strategically targeted our CSR project in education to encourage literacy in primary school pupils, which is the breathing ground for productive Nigeria leaders of tomorrow. These skills are necessary in today’s modern world and essential to the functioning of developed economics.

When children are encouraged to read, it enables them to discover their full potential in life, thereby empowering them to be future leaders,” Alakija said.

Literacy plays a major role in reducing poverty as well as inequality, creating wealth, which is an impetus for economic growth in Nigeria, she explained.

Guest readers at the event were, Rolake Akinkugbe-Filani, managing director, EnergyInc. Advisors; Oscar Gbemileke, managing director, Amber 11 Media; Ada Ogunkeye, a renowned media personality, and Bankole Williams, Africa’s Peak Perforwww.businessday.ng

mance coach, who all creatively read along with the children from chapters of the book titled ‘The First Female Ruler of L’Eko” written by Oluwatofunmi Lawal, a child author.

Other activities of the day included a drama presentation

by Proud African Roots, which showcased the resilience of an orphan in receiving educational empowerment that resulted in him rising to leadership within his community.

The stage performance was followed by a Spelling Competition, run by Nigeria Spelling Bee, which further aided the pupils in developing their vocabulary.

The winner of the Famfa Oil Literacy Day spelling competition was Oscar Elizabeth of Bodmak Solid Beginning School. Wisdom Jackson of Godsave Nursery and Primary School, and Ogungbeje Janet of Ken-Ade Private School, emerged as the first and second runners-up, respectively. https://www.facebook.com/businessdayng

@Businessdayng

Cypha was on hand to play pulsating songs to spice up the evening.

A great number of major Campari distributors were recognized and given awards for their remarkable trade efforts and loyalty.

Notably amongst the winners were Mathew Momoh of Just Drinks, Chogozie Anagwu of Chigotex Royal Link Limited and Ndubisi Dennis Onyeananu of Uzems Abawhowere presented with trophies and cash prizes.

The delighted first prize winner, Mathew Momoh, said, “I feel so elated for this recognition and support bestowed to me and my business as a trade partner.

This award simply means to us that we can always do greater exploits together.”

Campari is a smoothly blended bitter aperitif, exclusively distributed by Brian Munro Limited in Nigeria. Mostly served in juice, beer and soda cocktails, it is made with the infusion of selected herbs and fruits in alcohol and water.

Campari encourages everyone to enjoy their drink responsibly, toasting life together.

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Saudi Arabia targets senior royals in sweeping crackdown

Arrests appear to be part of efforts by crown prince to tighten grip on power Simeon Kerr and Andrew England

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audi Arabia has launched a sweeping crackdown against senior royals and security officers in a purge that appears to be part of Crown Prince Mohammed bin Salman’s efforts to tighten his grip on power by targeting potential rivals.

At least three princes were among those detained, including Prince Ahmed bin Abdulaziz, a 77-year-old brother of King Salman, and considered by many as an obstacle to Prince Mohammed’s succession, two people briefed on the matter said.

Prince Mohammed bin Nayef, the former crown prince and interior minister, was also detained on Friday.

He is believed to have been under house arrest since being replaced as crown prince by Prince Mohammed, who is known as MBS, in 2017.

The widening crackdown has extended to the “entire inner circle” of Prince Mohammed bin Nayef, said one person close to the royal family.

The number of arrests of princes could amount to as many as 20, said another person briefed on the operation. Other officials and officers were also taken into custody, the person added.

The crackdown appears intended to remind the wider family that any hints of perceived disloyalty would not be tolerated.

“The key is the top two guys,” said the person close to the royal court, referring to Prince Ahmed and Prince Mohammed bin Nayef. “The others that came with them are peripheral.”

The person added: “They wanted to send a message to family for all to fall into line and Prince Ahmed was

Mohammed bin Salman, the Crown Prince of Saudi Arabia, left, speaking to his father King Salman in 2018 © AP

the biggest fish. He had been making noises for a while so patience ran out.”

Ali Shihabi, a Saudi commentator and supporter of the crown prince, dismissed rumours of a coup attempt, adding that “what people must appreciate is that the royal family has had to go through a very delicate generational succession . . . given the large number of princes who were technically eligible to succeed”.

Saudi Arabia will remain standing tall and safe despite the plots of haters and enemies. We all stand behind our leaders Tariq al-Harbi, TV presenter “What is important is that this process is playing out without any bloodshed which is a rare occurrence in history,” Mr Shihabi said on Twitter. “The message is very clear that

nothing will be allowed to destabilise the country or cause any bloodshed.”

He added that the king and crown prince “are in absolute control”.

King Salman swore in two Saudi ambassadors on Sunday, according to the official news agency, which published pictures showing him in apparent good health.

The event appeared designed to quell rumours about his health. The 84-year-old monarch had also had lunch with senior princes on Friday, a person familiar with the matter said.

The government has not responded to a request for comment.

Speculation had swirled on Saturday that the king’s health had persuaded MBS to launch the crackdown to smooth any transition.

As the news about the arrests spread, many government support-

ers took to social media to express their backing for the leadership, with several nationalistic hashtags trending on the social media site over the past 48 hours.

“Saudi Arabia will remain standing tall and safe despite the plots of haters and enemies,” television presenter Tariq al-Harbi said in a tweet featuring a picture of the king and crown prince.

Prince Mohammed, the kingdom’s de facto leader, has launched farreaching social and economic reforms while projecting Saudi power across the region. But his drive to modernise the conservative kingdom has been accompanied by waves of crackdowns that have targeted members of the royal family, businessmen, academics, activists, bloggers and journalists.

He has displayed zero tolerance towards criticism and the world’s top

oil exporter was plunged into its biggest diplomatic crisis in years after Saudi agents killed Jamal Khashoggi at the kingdom’s consulate in Istanbul in October 2018.

Riyadh blamed the veteran journalist’s murder on a rogue operation, and Prince Mohammed’s supporters and Riyadh’s western allies hoped the 34-year-old leader would heed lessons from the chastening experience. He has avoided controversy since then as Saudi Arabia prepares to host the G20 group of nations meeting this year.

But the arrests of the royals will cast further scrutiny on his autocratic leadership and suggest he is reverting to his aggressive approach of dealing with any perceived threats — even from those family members who appear to have been neutralised by his previous crackdowns.

It is unclear how much of a threat Prince Ahmed — who was overlooked as a potential successor after a brief stint as interior minister in 2012 and has kept a low profile since his return to the kingdom — and Prince Mohammed bin Nayef posed to the crown prince’s grip on power. The latter’s friends say he has been subject to close monitoring since he was replaced as crown prince.

MBS, whose rapid rise to heir apparent three years ago shook up the traditional succession process, has pushed through a series of contentious policies.

Months after he became crown prince, he launched an extraordinary anti-corruption crackdown that led to more than 300 princes and businessmen being detained at the RitzCarlton hotel in Riyadh. Most have been released, but many were freed only after they agreed to transfer cash and assets to the state.

Italy locks down huge swath of the wealthy north

Fears grow over strain virus is putting on healthcare system as well as risk of recession

Davide Ghiglione and James Politi

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taly has imposed a lockdown on a huge swath of its prosperous north that is home to 16m people as part of draconian measures to contain the spread of the deadly coronavirus in the eurozone’s third-largest economy.

The restrictions on movements in the region of Lombardy and its capital Milan include a ban on entering or exiting certain areas of the country, and the closure of museums, gyms, schools, universities and ski resorts, according to a decree signed by Giuseppe Conte, Italy’s prime minister, in the early hours of Sunday.

As well as Lombardy, the measures will affect more than a dozen other provinces in neighbouring regions, including the cities of Parma, Modena, Padua and Venice. They are expected to be in place until at least April 3.

There have been more than 5,000 confirmed cases of coronavirus in

Italy since the contagion came to light in the wealthy north on February 20, and at least 233 people have died.

According to a statement released by Italian Civil Protection, close to half the cases registered are in Lombardy.

“We are facing a national emergency . . . without underestimating it, we have chosen transparency, we are acting with lucidity, courage and determination,” said Mr Conte. “We want to contain the spread of the contagion and avoid overloading the hospitals.”

However, there are growing concerns about the intense strain that the virus response is placing on Italy’s healthcare system as well as fears that its spread could push the country into recession.

“We are now being forced to set up intensive care treatment in corridors, in operating theaters, in recovery rooms. We have emptied entire hospital wards to make space for people in critical condition,” Antonio Pesenti, chief of the Lombardy regional criwww.businessday.ng

sis response unit, told Il Corriere della Sera newspaper. “One of the best health systems in the world, in Lombardy is a step away from collapse.”

Alberto Cirio, president of the adjacent northern region of Piedmont, said on Sunday that he had tested positive for coronavirus, despite the fact that he had no symptoms.

Coronavirus has spread rapidly in Italy since the first cluster of cases began to appear in a group of towns south of Milan. Those areas were rapidly put under lockdown, but the area facing similar restrictions has now been hugely expanded to cover millions of people and some of the most economically productive areas of the eurozone.

When coronavirus was largely confined to China, Italy quickly moved to ban direct flights to and from the Asian nation. But travellers from Italy are now facing bans of their own, as well as periods of quarantine and self-isolation, around the world, as other countries seek to limit the

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spread of the disease.

The move to ramp up restrictions on travel within Italy came after Nicola Zingaretti, leader of the centre-left Democratic party, said he had tested positive for coronavirus, and was staying at home.

“Doctors told me I tested positive,” Mr Zingaretti said in a video posted on Facebook on Saturday. “I feel good but I will have to stay at home for the next days . . . and follow all the protocols.”

Mr Zingaretti also said all the people he had been in contact with in the past few days were being contacted for checks.

In the past weeks he has regularly visited the National Institute for Infectious Diseases in Rome, and other hospitals in the region where patients with coronavirus are being treated.

Roberto Gualtieri, Italy’s economy minister, this week announced a €7.5bn stimulus package to tackle the impact of coronavirus on the country’s economy and health system. Mr Gualtieri also told the European Com@Businessdayng

mission that the Italian government would raise this year’s deficit goal to 2.5 per cent of national output from the current 2.2 per cent target.

Attilio Fontana, president of Lombardy, said that while the tough measures were aimed at containing the virus, “the draft decree is, to say the least, ‘messed up’ and requires clarification from the government to allow citizens to understand what can be done or not”.

Luca Zaia, president of nearby region of Veneto, said he was against any “red zone”.

“I am against curfew. What they are doing internationally — describing us as the new Wuhan, is rather scandalous. We have been the most careful in diagnosing,” he said, referring to the Chinese city where the virus began.

Carlo Canepa, 30, a communications professional who lives and works in Milan, said he was shocked at news of the lockdown. “I don’t know when I’ll be able to see my family,” he said.

Monday 09 March 2020

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

How will the ECB respond to the coronavirus threat?

Market Questions is the FT’s guide to the week ahead FT Reporters

H

ow will the ECB respond to the coronavirus threat?

Following last week’s emergency rate cut by the Federal Reserve, all eyes are on the European Central Bank. The ECB, which holds its rate-setting meeting on Thursday, is in an awkward spot: with its deposit rate set at minus 0.5 per cent, there is debate as to whether further cuts would do more harm than good.

Markets are pricing in a 0.1 percentage point reduction by the ECB, while some analysts expect other easing measures in the form of cheap loans targeted at smaller companies or an increase in the size of the central bank’s bond purchases.

Four months after taking over, president Christine Lagarde will have to balance markets’ hunger for easing against critics who say there is little monetary policy can do to cushion the blow from the coronavirus outbreak.

“Lagarde’s moment to show crisis composure has arrived sooner than expected,” said Giles Gale, head of European rates strategy at NatWest Markets. Mr Gale expects Thursday’s meeting to be “very dovish” in tone but said that a package of easing measures will wait until the April policy decision — including a cut in rates to minus 0.6 per cent and a doubling of asset purchases to €40bn a month.

Alongside any new measures, Ms Lagarde is likely to continue to encourage eurozone governments to borrow and spend in a bid to boost economic output.

Germany’s 10-year bond yield tumbled to a record low of minus 0.74 per cent on Friday amid a global rally in fixed income.

Yields in most other eurozone members have also fallen, but remain above their record lows from last August. Italian and

© FT montage; Armando Babani/EPA-EFE/Shutterstock

Greek yields have risen as investors shun riskier debt. Tommy Stubbington Will sterling buckle as UK responds to virus?

The pound is up 2 per cent against the US dollar this month, but some of those gains could be given up if this week’s Budget is seen as bad for growth — or if the Bank of England chooses to follow the US Federal Reserve and make an unscheduled cut to interest rates.

The BoE’s rate-setting committee is not due to meet until March 26. Investors are betting that the bank will lower rates by a quarter of a percentage point to 0.5 per cent. The question is when. The Fed made an emergency cut last week of half a percentage point, setting its policy rate at a range of 1 per cent to 1.25 per cent.

“We think [the BoE] will opt to

lower interest rates by an initial 25 basis points over the coming days, before its scheduled March meeting,” said George Buckley, European economist at Nomura.

The dollar is under pressure against currencies such as the pound and the euro, due in part to investors rushing to exit higheryielding bets elsewhere amid the growing uncertainty driven by the coronavirus outbreak. Sterling rose to $1.30 on Friday.

A rate cut by the BoE would likely be negative for the pound at a time when growth prospects are also under threat.

Wednesday’s Budget could push the currency lower, say analysts, if Rishi Sunak, the chancellor, announces measures to respond to the growing economic risks from the disease. “While the chancellor is likely to reserve some of his . . . fiscal firepower for

a second budget later in the year, we can still expect some targeted fiscal loosening to address the risks presented by the virus,” said Mr Buckley. Eva Szalay How bad has the virus been for China’s economy?

The coronavirus outbreak has hit China’s economy so hard that normally steady official economic indicators are reflecting serious disruptions. But last week’s record low for the country’s official gauge for manufacturing activity may have been only the start.

On Tuesday China’s National Bureau of Statistics will release February readings on consumer and producer price inflation. Nomura expects the consumer price index to remain above 5 per cent throughout the first half of 2020, up from 4.5 per cent late last year, as fears grow that logistics and distribution glitches will push

price rises even higher.

If inflation keeps moving up, it could leave China grappling with negative real interest rates, should the central bank decide to ease.

“The prices of some raw materials have declined on slumping demand,” Nomura analysts said, “but the average prices of food and other consumer staples have been rising on hoarding and supply shortages, which are an inevitable consequence of nationwide lockdowns, roadblocks and travel bans.”

Much of that price growth comes from pork, which is heavily weighted in China’s CPI basket.

Wholesale pork prices are up about 16 per cent so far this year, as measures to contain the virus have disrupted supply chains vital to shipping pigs from farm to market.

Oil price war spells danger for US junk bonds

Saudi Arabia’s expected production rise set to squeeze heavily indebted US shale producers Joe Rennison

U

S junk bonds face a day of reckoning when markets open on Monday, with the unfolding price war in oil set to knock energy companies buckling from the outbreak of coronavirus.

Saudi Arabia is set to raise oil production next month, in an apparent attempt to put pressure on Russia after Moscow refused to join other nations in curbing output to support the price of oil.

As well as squeezing Russia, the aggressive move is likely to threaten the US shale industry and imperil companies that are teetering on the

brink of collapse.

“This was literally the last thing US high-yield energy producers needed,” said John McClain, a portfolio manager at Diamond Hill Capital Management, referring to the effects of the move from Riyadh on junk-rated companies.

“There will be blood in the market on Monday.”

Energy companies are the biggest issuers of junk bonds, accounting for more than 11 per cent of the US high-yield market.

Such issuers have credit ratings of BB or below, indicating that they are at higher risk of default than “investment-grade” issuers, rated

BBB and above.

A Saudi-led price war could usher in the worst rout for junk-rated energy debt since the rise in US shale production and subsequent collapse in the oil price in late 2015.

The average US high-yield energy bond closed in “distressed” territory last week, defined as a cost of borrowing of 10 percentage points or more above Treasury yields. The spread was almost 11 percentage points on Friday, according to an index run by Ice Data Services.

The prices of bonds issued by heavily indebted oil and gas producers have dropped sharply in recent weeks.

Laredo Petroleum’s $600m bond maturing in 2025, for example, fell 10 cents to 58 cents on the dollar on Friday, while struggling Chesapeake Energy’s $2.2bn bond maturing in 2025 also tumbled about 10 cents to trade at 40 cents.

A recently issued $550m bond from Range Resources has slipped to 65 cents on the dollar, having been sold to investors at face value in early January.

A warm winter and falling global demand have also sent natural gas prices lower, compounding the fallout from the declining price of oil. Bond markets have been closed to new sales from low-rated energy

companies in recent weeks, cutting off a vital source of additional financing.

“If this persists for any meaningful period of time you could see a wave of restructurings,” said Mr McClain.

Higher-rated companies may also suffer.

Just over 11 per cent of the investment-grade corporate bond market sits within the energy sector, with a host of companies rated BBB, the lowest rung. More pressure on cash flows caused by lower oil prices could result in downgrades, further weighing on junk debt.

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Monday 09 March 2020

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FT

ANALYSIS

Mexico: ‘You kill a woman here and nothing happens’

With femicide rates rising and a climate of impunity for the killers, anger is being directed at López Obrador government Jude Webber

A

na Sánchez Vázquez breaks apart a bunch of dried roses and scatters the petals over her daughter’s grave. The grass adorning the plot has been scorched by the sun and wind.

A photograph of the 19-year-old Mexican woman, murdered in August, hangs from a metal cross, the smiling image already half faded.

What has not been effaced are the words above the picture: “We demand justice for Noemi Haydée Hernández Sánchez.”

The young woman — raped and strangled, her hands bound, her body dumped face down by the side of a highway less than a fortnight after her birthday — was a victim of femicide, the intentional killing of women and girls because of their gender. No one has been convicted of her murder.

As violence in Mexico has surged, femicides have more than doubled in the past five years, to over 1,000 in 2019, according to interior ministry data. Based on death certificates, the state statistics institute Inegi, an autonomous institution, puts the surge even higher: since 2007, murders of women — not all officially classified as femicide — have more than tripled to an average of 10 a day in the face of what families and campaigners say is near total impunity.

Already in 2020 there have been more than 360 cases but two atrocities in February — the murder of Ingrid Escamilla, images of whose skinned and mutilated body were splashed in tabloid newspapers, and the abduction and murder of 7-year-old Fátima Aldrighett, her tortured body discovered in a plastic bag — have fuelled a tide of protest and fury that has put pressure on President Andrés Manuel López Obrador, already struggling with a faltering economy.

“It’s like this is in fashion”, says Ms Sánchez, “as if it were normal.

There’s a lot of evil around . . . You want to burn things down and shout and scream but nothing will give us our daughters back.”

The issue has rocketed to the top of Mexico’s political agenda

after a spate of protests including one in which masked women daubed graffiti on the walls of the National Palace and tried to set fire to a door while Mr López Obrador was holding a news conference inside.

The anger shows no sign of abating and “could become one of the Achilles’ heels of AMLO’s government,” says Iván Castro, head of market research firm PQR Planning Quant, which found in a survey last week that twice as many women disapproved of the government than men.

The country’s first nationwide female labour strike is scheduled to take place on Monday, exhorting women to be conspicuous by their absence and disappearing from the economy — staying home from work and school, not going out, not doing household chores and not buying anything.

Schools will stay open but many government departments, banks, offices and supermarkets have given women the choice of whether to work or not, promising there will be no penalties if they strike.

Mr López Obrador, a socially conservative 65-year-old nationalist who prides himself on his man-of-the-people background, has appeared out of touch on the issue even though more than half of all female voters in the 2018 election backed him.

When the subject was raised at a press conference in February — at which Mr López Obrador announced the funding of lottery prizes to match the value of the presidential plane — he snapped that he did not want femicide to dominate the day’s agenda and that it “has been greatly manipulated in the media”.

He has also sought to blame what he calls the neoliberal policies of his predecessors, which he argues are the root cause of Mexico’s economic and social ills, for the rise in femicides. A poll on March 2 in the Reforma newspaper suggested that the population disagrees. At least 60 per cent of respondents pointed to Mexico’s impunity for rising femicides and only a quarter agreed that neoliberalism is the underlying factor.

“He [López Obrador] is insensi-

tive, he minimised the issue . . . It’s as if the [femicide] figures don’t speak for themselves,” says Norma Murillo, whose 24-year-old daughter, Valeria Jiménez Murillo, was brutally beaten before being shot and killed last June.

The young woman’s boyfriend, a municipal policeman, was arrested and is awaiting trial. But Ms Murillo fears that even if he is convicted, any sentence could be too lenient. “We need tougher penalties. You kill a woman here and nothing happens,” she says.

The deliberate killing of women is a global horror — the UN estimates that 87,000 women were murdered in 2017 and in Mexico the phenomenon is tragically not new. Ciudad Juárez, a manufacturing hub bordering El Paso in Texas, witnessed hundreds of killings of women, starting in 1993 and continuing into the 2000s, in which the victims often displayed signs of sexual violence. Ecatepec in south-central State of Mexico, and the coastal state of Veracruz, are other places that have also seen gruesome levels of femicides in recent years.

“Judicial ineffectiveness when dealing with individual cases of violence against women encourages an environment of impunity that facilitates and promotes the repetition of acts of violence,” wrote the Inter-American Court on Human Rights in a 2009 ruling on the murder of three women whose bodies were found in a field in Ciudad Juárez in 2001. The court added that it “sends a message that violence against women is tolerated and accepted as part of daily life”.

The ruling could have been written today: victims’ families and women’s groups say prosecutors are underfunded, overwhelmed and often not interested.

When Ms Sánchez went to the public prosecutor’s office in Tizayuca, in the state of Hidalgo, to report her daughter missing, she was told to “go and look for her — she’s probably still with her boyfriend in a hotel”. She adds: “It’s as if you’re the criminal, they interrogate you.”

Fátima Aldrighett’s relatives were told to wait 72 hours to see if

she turned up before an investigation could begin — something the family say may have prevented the 7-year-old from being rescued alive. Mexico City Mayor Claudia Scheinbaum acknowledged what she called a “chain of institutional negligence” in Fátima’s case shortly before two people were arrested in connection with her murder. In the case of Ingrid Escamilla, her husband, blood streaking his torso and soaking his jeans, was arrested and confessed to killing her.

But in a country where distrust of the authorities and a justice system plagued by inefficiency and corruption translate into only 10 per cent of all crimes being reported, only 6 per cent being investigated and just 136 convictions for femicide in 2018, according to Inegi — most killers literally get away with murder.

“There are two enabling factors — Mexico’s utter impunity for homicides and the fact that it has long been known that there are contagion factors,” says Vanda Felbab-Brown, a security expert at the Brookings Institution. “The gruesomeness of murders in my opinion encourages more.”

Mr López Obrador insists that he is “working every day to guarantee peace” adding that “we are dealing with the problem of femicides”. But Olga Sánchez Cordero, interior minister, admitted that “we’ve come late” to the problem.

Compounding the difficulties, experts say prosecutors lack training in gender-based violence. This means that not all femicides are investigated as such. The number of femicides is dwarfed by overall homicides — Mexico hit a record total of 34,588 murders last year — almost 100 a day. Official data show that a key trigger for the rise in murders of both men and women was former President Felipe Calderón’s failed military war on drugs, launched in 2006.

“Since 2007, there has been a very clear increase of murders of women in public spaces, and murders in private spaces have also risen. In states which have seen more militarisation and more intense drug trafficking conflicts, the violent deaths of women have also increased,” says Tatiana Re-

villa, director of Gender Issues, a public policy think-tank. “I think the context we’re living in has an influence.”

Traditional male-female roles in a country in which more than four out of 10 women say they have suffered violence at the hands of their partner throughout their entire relationship is another factor.

“We’re stupid — we let ourselves be mistreated,” says Zenaida Chávez, whose daughter Linda Olguín Chávez went back to her abusive partner, only to be stabbed to death, her throat cut, in 2014. The couple’s one-yearold daughter, now brought up by Ms Chávez, was also beaten and nearly killed.

“I am sure femicides have risen because of a lack of response on the part of the authorities,” says one prominent activist who goes by the pseudonym Frida Guerrera. “For years they have allowed it to grow.”

A row erupted last month over how the crime of femicide — a designation currently based on seven factors, including the presence of sexual violence, a relationship with the perpetrator or the woman’s body being exhibited in public — should be categorised.

Alejandro Gertz Manero, Mexico’s attorney-general, caused outrage when his suggestion of treating femicide in the same way as homicide was interpreted in the media not, as he insisted, as a way to make it easier to prosecute crimes, but as an attempt to eliminate the concept of femicide altogether.

The government’s leaden handling of the subject deepened when Mr López Obrador unveiled a 10-point list outlining his stance on violence against women.

Feminists panned it for containing platitudes like “women should be respected”, “it’s cowardly to hurt a woman” and “no to hate crimes against women” without any concrete measures to rein in the femicide phenomenon.

“He hasn’t incorporated the chip of what gender violence is, he doesn’t understand,” says Ms Guerrera of a president who has

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Monday 09 March 2020

BUSINESS DAY

FT

NATIONAL NEWS

The eurozone is too complacent about the coronavirus threat Ideally governments would co-ordinate fiscal policy but there is no sense of urgency Wolfgang Münchau

W

e are on the cusp of another economic p olic y error in the eurozone. Its roots lie in a mixture of complacency about coronavirus and a deepseated belief that monetary policy has no ammunition left when interest rates are negative and that fiscal policy is, by nature, constrained.

It is comical, yet consistent with the observation above, to hear European policymakers reiterating that they are waiting and monitoring the situation. Eurozone finance ministers could not agree on a co-ordinated policy response when they held a telephone conference last week. And the G7 industrialised nations only managed to agree — guess what — to monitor the situation. Even Christine Lagarde, president of the European Central Bank, felt the need to issue a statement saying that she, too, was “closely monitoring developments”.

There is still a lot we do not know about Covid-19. But we know what we need to know for an economic policy response.

The UK government’s medical advisers, for example, have calculated that, with existing measures, the greatest increase in the number of cases will occur in April, with a peak in May or June. This implies economic disruption lasting at least into the summer.

The timeline should be broadly the same for the eurozone, with the spread of the virus peaking a little earlier in Italy, where it started earlier.

The direct impact on the eurozone economy is, therefore, a hit to supply chains and to consumption for two or three quarters. This is a foreseeable and probably significant economic shock, very different in effect to Sars and other viruses of the recent past.

Like many European policymakers, Christine Lagarde, president of the European Central Bank, is waiting and monitoring the situation © Neil Hall/EPA/Shutterstock

In an ideal world, eurozone governments would co-ordinate fiscal policy with each other and also with the ECB. But there is no sense of urgency. In Germany, for example, a survey found that 66 per cent of the population think the situation is under control, while 76 per cent are not greatly concerned about becoming infected.

For as long as such delusions persist, there will be no public pressure for immediate government action. Germany has announced a fiscal stimulus of a magnitude of 0.008 per cent of gross domestic product. If there is no political pressure for a domestic stimulus, then there will be no support for a co-ordinated response either.

What about monetary policy? During the eurozone crisis,

the ECB was the only functioning institution of the EU. A combination of negative interest rates, quantitative easing and liquidity policies prevented the eurozone from falling into a depression. The ECB managed to ringfence the banking sector and the money markets. And it managed to compensate, in part, for the lack of a mutualised safe asset. But most important it was able to neutralise the effects of austerity, the biggest economic policy error of our times.

Monetary policy is still the only game in town. It would be delusional to think it has no effect. For example, the rise in the euro’s exchange rate since the middle of February stemmed from the expectation that the US Federal Reserve would cut interest rates more aggressively than

the ECB. The exchange rate is one of several channels through which monetary policy affects the economy.

The big question for the ECB now is whether it continues to do “whatever it takes” to support the eurozone economy when others do not, or whether it reverts to the mindset of 2011 or earlier. During that era, policymakers prided themselves on keeping calm in the face of adversity.

Ms Lagarde has talked a lot about green finance and tackling climate change. Important as these issues may become in the future, I wonder whether this focus has become too much of a distraction from the more urgent task at hand. The ECB should not only be discussing whether it ought to encourage banks to maintain credit flows to small

and medium-sized companies.

It should also be dealing directly with the economic shock from coronavirus that lies ahead.

The US, China, Japan and the UK are, at present, more likely to take effective action than the eurozone. The right policy will, this time, require a significant fiscal component. And it will take more than an Italy-only fiscal injection of 0.3 per cent of GDP. The whole of the eurozone will need a stimulus of at least two or three times that size. My expectation is that eurozone policymakers will act eventually, reluctantly and insufficiently.

The result of the collective brain fog in Frankfurt and Brussels would be entirely negative: another policy-induced recession that will last longer than it should.

Mexico: ‘You kill a woman here and nothing happens’ Continued from page 63 promoted gender parity in his government but incensed women’s groups by cutting state aid to shelters for female victims of domestic violence and nurseries. “But I believe in the president . . . I think he’ll get there. We have to make him see it.”

Monday could be a turning point. After the traditional March 8 International Women’s Day march on Sunday, women are being urged to opt out of public life for a day under the banner “on the 9th, nobody moves — #A day without us”.

Women’s participation in the workforce in Mexico has been increasing in recent years. Yet

only four out of 10 women or about 22m have jobs. And more than half of Mexico’s economy is in the informal sector — which employs more females than males — but where workers pay no taxes and a day without work means a day without pay.

St i l l , M r Ca s t ro p re d i c t s “massive participation” even if so-called maquiladoras — factories making consumer goods for export, which are major employers of women — are not expected to join in.

Nevertheless, Carlos Urzúa, who resigned last year as finance minister and has emerged as a strident López Obrador critic, estimated in El Universal newspaper earlier this month www.businessday.ng

that the impact of the strike could cause a $1.5bn drop in gross domestic product.

“We’ve reached a limit — feminist groups and women won’t be quiet now,” says Ms Revilla. “The pressure will be there with every case until they manage to bring the numbers down.”

Mexico: a mounting death toll >360 Women killed in Mexico this year already 60% Of respondents to a March 2 poll believe Mexico’s culture of impunity is the main reason behind the rise in femicides 34,588 Overall number of murders in Mexico last year — almost 100 a

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day, a record That would require earmarking a chunk of scant resources solely to investigating femicide cases, enforcing tougher sentences and investing in domestic violence prevention programmes, says Ms Felbab-Brown.

Homicide levels have stabilised since Mr López Obrador took office in December 2018 — something the president frequently refers to — but polls show crime and security remain key concerns as the government struggles to show results and the economy craters.

The president’s disapproval ratings have more than tripled to 28 per cent from a year ago, according to a new survey by pollsters Buendía & Laredo, but his support @Businessdayng

remains a highly respectable 62 per cent.

Ms Sánchez says she came under pressure from local authorities in her hometown of Tizayuca not to publicise her daughter’s death to avoid making officials look bad.

Authorities could not be reached for comment.

Ms Sánchez put up a banner depicting Noemi at the town hall on Saturday. “I’m not looking for vengeance,” she says. “I’m looking for justice.”

Yet, the grisly death toll continues to rise. On a mural on a Mexico City wall that used to read, “Every day 6 women die because of gender violence crimes”, the 6 has been crossed out and replaced by a 10.

BD Money

Monday 09 March 2020

BUSINESS DAY

EQUITIES

INVESTING

Cover Story

FIXED INCOME

3 takeaways from MTN Nigeria’s earnings conference call

Survey shows how LinkedIn is now effective for video marketing

A-Z about investing you need to know

Investors show no interest in short, medium term OMO bills

Big Telco MTN Nigeria grew revenue by 12.6 percent in 2019 after rebounding from a slowdown in the third quarter of the year to post 14.1 percent year-on-year growth in the last three months of last year.

A new survey by Wyzowl, an explainer-video company has revealed that LinkedIn is catching up with both YouTube and Facebook on video marketing due to its effective nature.

Knowing the right financial asset class to invest in has always been at the heart of investors wishing to earn good returns for their money. Many, in the quest for higher return on investments have taken up various investment options which they have little or no knowledge about.

Investors failed to participate in the short term and medium term Open Market Operation (OMO) bills auction conducted by the Central Bank of Nigeria (CBN) on Thursday.

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@Businessdayng

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Monday 09 March 2020

BUSINESS DAY

Equities

3 takeaways from MTN Nigeria’s earnings conference call SEGUN ADAMS

B

ig Telco MTN Nigeria grew revenue by 12.6 percent in 2019 after rebounding from a slowdown in the third quarter of the year to post 14.1 percent year-on-year growth in the last three months of last year.

With growing market share, MTN Nigeria delivered 38.7 percent year-on-year growth in 2019, although cost efficiency was an area analysts at Lagos-based Chapel Hill Denham pointed out for improvements.

The Telco shared insights on the year and its outlook with investors last week.

We highlight some of the main talks based on current issues.

On impact of Coronavirus Outbreak on business MTN Nigeria said it has not seen any direct impact of the Coronavirus.

MTN Nigeria noted that while it had been through a number of issues before with its vendors it has put the appropriate processes in place in ensure that things like the virus outbreak doesn’t impact the network directly.

“We will do things like order equipment in advance, make sure we get the equipment in the country as quickly as possible, those type of things,” said MTN Nigeria’s CEO Ferdi Moolman. “But for now we haven’t seen a direct impact of the Coronavirus yet.”

On whether tax issue with Nigeria is ‘done and dusted’ MTN Nigeria said its contention with the Attorney General always was its jurisdiction on the tax matter.

It said Federal Inland Revenue Service was set up for tax issues and Nigerian Customs Service for customs-related issues.

The AG had had issued MTN Nigeria a demand letter for the payment of back taxes, the letter which has been withdrawn and the issues referred to appropriate quarters.

MTN Nigeria said every year it goes through the normal tax process. “...and in Nigeria ultimately if you’ve issued your tax you get a tax clearance certificate,” said MTN Nigeria.

“

We will do things like order equipment in advance, make sure we get the equipment in the country as quickly as possible, those type of things

The Telco noted that the tax clearance certificate “doesn’t mean that they can’t come back and review it but it basically gives an indication that you submitted all your taxes, you paid the taxes that were due and it confirms that the tax is actually received by the government,” it said.

MTN said the AG has now sent his document to Federal Inland Revenue Service which would decide what process they would like to follow.

“And we are eagerly waiting to see how they deal with this issue,” MTN Nigeria said.

MTN described the process of appealing to the Tax Tribunal as fairly transparent; adding that it would follow the normal process around the taxes if anything came up.

With custom duty, MTN Nigeria said it noted that the AG would have to refer the issues to the Custom but it is currently having no issues importing into the country, a situation that isn’t possible for individuals or institutions owing custom duty.

On impact of new VAT rate on voice revenue MTN Nigeria said it was largely able to pass the 50 percent VAT increase onto its subscribers without a negative impact on our voice revenue.

The new VAT rate of 7.5 percent took effect from 1st of February as part of sweeping changes in the new finance act. “... we’ve largely been able to implement that VAT increase without any major issue taking place,” said MTN Nigeria.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Olufikayo Owoeye; Graphics: Fifen - Famous www.businessday.ng

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@Businessdayng

Monday 09 March 2020

BUSINESS DAY

67

Investing

Survey shows how LinkedIn is now effective for video marketing … as confirmed by 87% of users ENDURANCE OKAFOR

A

new survey by Wyzowl, an explainer-video company has revealed that LinkedIn is catching up with both YouTube and Facebook on video marketing due to its effective nature.

The recent research by the Manchesterbased company shows that LinkedIn offers a surprisingly effective channel and as a result two-third of marketers globally plan to use video on LinkedIn in 2020.

“87 percent of LinkedIn video marketers say it’s an effective channel,” The employment-oriented service platform adopted native video in 2017 and introduced live video and enhanced its video measurement last year.

According to Wyzowl LinkedIn yields high organic reach to a professional audience and has been striving to catch up to Facebook and other networks.

YouTube, used by 88 perecent of marketers, remains the favourite channel for video marketing, followed by Facebook (76%), but Wyzowl said LinkedIn’s popularity and effectiveness is “surprising.”

LinkedIn currently sees a 25 percent year-over-year increase in engagement spanning sharing job updates, business reports, collaborating to share creative strategies, and bringing a community together to remember the loss of a basketball player whose life and career inspired generations of fans.

“I’m excited to see how stories will bring creativity and authenticity to the ways that members share more of their work life so that they can build and nurture the relationships necessary to become more productive and successful,” Pete Davies, LinkedIn’s Head of Content Products said.

Meanwhile, about 4.71 million Nigerians are reported to have been using LinkedIn as at August 2019. This accounts for an

estimated 2.3 percent of Nigeria’s entire population. People aged 25 to 34 were the largest users group (3million).

The Wyzowl survey revealed that marketers believe Facebook has become more effective for video marketing than YouTube (85% versus 83%).

“That highlights Facebook’s recent emphasis on video, as well as its widespread popularity. Despite public concerns of privacy, it remains the most-used, if perhaps not the most-loved, social media network,” an industry expert said.

On what consumers want, the survey revealed that they like short videos; consumers named explainer videos and product demos as their favourite types.

“Two-thirds say they prefer to watch a short video to learn about a product or service, and 86% would like to see more video from brands in 2020,” Wyzowl said.

Analysis of the 2020 survey Wyzowl www.businessday.ng

shows that most businesses (85%) use video as a marketing tool, down slightly from 87 percent in 2019.

Wyzowl predicted that video marketing will rebound this year, given that practically all marketers (99%) who use video plan to continue using it and most (92%) regard it as an “important” part of their marketing strategy.

According to Kristin Graham, principal of culture and communications at Amazon it is advisable to distil long town hall meeting videos into short clips.

“Very few people will watch an entire 30-minute video. Most watchers, including professionals and employees, view video clips on social media with their phones,” Graham said.

For production, you don’t need fancy equipment or a studio. You can shoot video with a smartphone. Viewers consider videos from phones more credible

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than slick productions, Graham advised adding that good audio and lighting, especially with a smartphone, increase viewer satisfaction.

Further analysis of the survey report shows that many marketers adopted video for the first time in 2019. One in five video marketers said were using it for the first time.

A combination of factors, including affordability, accessibility and deeper understanding of video, prompted the trend.

Expense, time and questions about its return on investment hold back non-adopters. However, 59percent of non-video marketers say they expect to start using videos in 2020.

“The proliferation of videos has increased competition. Marketers must think long and hard about how to grab— and hold—audience attention,” the report read.

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Monday 09 March 2020

BUSINESS DAY

Cover Story

A-Z about investing you need to know MICHAEL ANI

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nowing the right financial asset class to invest in has always been at the heart of investors wishing to earn good returns for their money.

Many, in the quest for higher return on investments have taken up various investment options which they have little or no knowledge about.

The resultant effect of that has either made them gotten their hands burnt by losing money or have had their investment eroded in the wake of current economic realities, making them afraid of investing further This discourse of knowing the right financial assets to invest in, took center stage as both financial and investment experts dissect the nitty-gritty of investment at a summit put together by leading financial services firm, Investment One, to commemorate the Social Media Week in Nigeria’s biggest commercial city, Lagos.

According to the experts who spoke on the need of investing, the first step into taking a right investment decision is “risk profiling”.

By profiling risk, the decision to invest in any financial asset should be in line with an investors investment goal.

For short terms investors looking to get returns within a one-year period, they could consider investing into financial assets like treasury bills, which is seen as a Federal government risk free asset.

For long term or value investors, they could decide to invest in the stock/equities market, to share in the risk and gain of a quoted company, thereby benefiting from the company’s growth in terms of capital appreciation and dividend yield.

Retail investors, those with small money, wishing to invest, are also not left out as they are open to investing into mutual funds, and make good returns, particularly the money market mutual funds.

Impact investors are opened to investing in various infrastructural bonds, used for the development of the economy like the Sukuk bonds; while investors who wish to hedge against any form of currency risk, can invest in dollar funds.

“Investment is for everybody who wants to get returns by putting their money to

work, as opposed to many who believe it is done by only the rich,” Tope Omojokun, managing director who oversees the mutual funds and retail investment business of Investment One said.

“To reap the benefit of investment, one needs to be educated on it, having in mind that there are various options for one to invest in no matter the amount of money one has,” Omojokun said in a panel session when educating millennial’s on the benefit of investing.

Tomie Balogun, founder, The Vestract Company, a financial education and technology company, said Investment is the only way one can learn how to put money to work and if one doesn’t understand how investing works in the economy, then one is basically just sitting on a tree.

“If you want to move forward, you have to learn how to make best use of your money and investing is the best way to do that hence, as much as possible, I advise people to learn about investing,” Balogun said.

With inflation touching 22-months high at 12.13 percent in January, based on data from the National Bureau of Statistics, many investors have been left with nothing to cheer as their returns have www.businessday.ng

been eroded in the wake of increasing commodity prices.

Nigeria’s financial regulator, the Central Bank, in a bid to boost lending to the real sector of the economy and reduce the cost of credit, restricted non-bank local investors in the likes of the Pension Fund Ad-

‘

If you want to move forward, you have to learn how to make best use of your money and investing is the best way to do that hence, as much as possible, I advise people to learn about investing, Balogun

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’

ministrators (PFAs) and the insurance players, from investing in its N14 trillion Open Market Operation Bills (OMO), a kind of short-term instrument issued by the CBN. This singular move culminated into making local investors increase their exposure into various financial assets like in equities and treasury bills.

Yields on one-year treasury bills have crashed to as low as 6 percent, based on FMDQ data, bringing real yields (inflation minus NTB) to around -6percent.

Moses Hammed, research analyst, Investment One, said despite the higher inflation, it is still in the best interest of people to invest and get returns than stashing their money at home, as the former would make them better-off.

Hammed noted also that in spite of the downward trend seen in the Nigerian equities market which is a reflection of the performance of the broader economy, many investors are still raking in higher returns with the help of the right knowledge, guiding them in investing in those company’s perceived as having the right fundamentals.

“As an investor, your duty should always be to ask of the risk involved before you can be looking at the returns on the risk, as those who mostly sought after returns in most times, get their hands burnt,” he explained The formation of an investment club can go a long way in helping shape people’s knowledge of investing, according to Ola Brown, a medical doctor, and trainee helicopter pilot who founded West Africa’s first indigenous air ambulance service, the Flying Doctors Nigeria.

“I do not believe that taking a higher risk would give you a higher return. When you access your risk profile, you need to look at what kind of return is there in the market that you are in, the currency you are investing and what you want to take out from it. Stop putting your mind that the higher the risk, the higher the return,” Brown said, citing the dangers of investing in Ponzi schemes, whose sole aim are for juicy/higher returns.

According to her, if one wants to take on a higher risk investment, one should stagger portfolio by making sure one puts some in safe asset.

She urged millennials on the need to develop the right saving culture as data has shown that Nigeria despite having a huge and growing population, savings as a percentage of GDP is still low, even lower than some poorer African countries.

The investment experts noted that people should see the services of a registered and regulated fund managers and portfolio managers before making investment decision, as these professionals would help in guiding them on the right kind of asset class to investing in depending on their risk profile, age, goals and current economic realities.

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Monday 09 March 2020

BUSINESS DAY

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Fixed Income Investors show no interest in short, medium term OMO bills … As CBN offers N100bn HOPE MOSES-ASHIKE

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nvestors failed to participate in the short term and medium term Open Market Operation (OMO) bills auction conducted by the Central Bank of Nigeria (CBN) on Thursday.

The CBN offered a total of N100 billion but allocated N10 billion each for the short (89-day) and medium term (180) bills. The result of the OMO auction shows that there was not subscription, no bid, and no sales for the two tenor instruments.

Akintunde Olusegun, financial market analyst at Polaris Bank Limited, said, the shortage of fund in the system (Liquidity squeeze) might have accounted for the lack of interest shown in the short to mid tenors and the not too impressive subscription (when compared to last auctions subscription level) recorded in the longer tenor.

He said investors will rather channelled available cash towards the longer tenor with attractive yield. The tightened liquidity as predicted last week, will continue to impact bank’s ability to buy OMO bills in size and the secondary market will continue to witness sell pressure as banks in need of liquidity tries to raise cash.

The CBN last week debited the banks of some N700 billion and another N400bn for OMO, leading to interbank rates more

than tripling.

OMO investors have always shown interest on longer tenor instruments that offer the most attractive yield, analysts have said.

The longer tenor bill, which was 362-day, was oversubscribed to the tune of N112.11 billion with a total sale of N110.51 billion at a stop rate of 12. 99 percent after investors bid at a range of between 12.90 percent

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and 13.90 percent. Total offer for this tenor, which matures on March 2, 2021 was N80 billion.

On Friday, the money market rates closed lower by an average of 283 basis points on the back of buoyant system liquidity. Inflows from the OMO bills maturities worth N231.12 billion surpassed the outflows from OMO auction worth N110.51 billion, a report FSDH research indicated.

The overnight rate declined by 2.79 percent to close at 12.86 percent on Friday, while Open Buy Back (OBB) declined by 2.86 percent to close at 11.71 percent on the same day.

The Nigerian treasury bills market closed on a negative note on Friday, with average yields increasing by 2 basis points to 4.00 percent as against 3.98 percent on the previous day. The average yield across long term maturities increased by 3 basis points, while average yields across short term and medium term maturities remained unchanged. The rise in average yields was led by the NTB 11Feb-21

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(+28bps) maturity bill, which witnessed maximum selling pressure.

The CBN had in October 2019 directed banks to restrict individuals and local corporates from investing in OMO instrument.

Consequently, the restriction crashed Treasury bill rates. Treasury bill rates for 91-days tenor declined by 7.3 basis points to 3.50 percent currently from 10.80 percent in October 2019.

At the bond market on Friday, activities ended on a negative note as average yields cleared higher by 42 basis points to close at 6.85 percent from 6.43 percent on the previous day, FSDH research stated.

Selling pressure was witnessed across short, medium, and long term maturities, widening average yields by 42 basis points, 36 bps, respectively. The FGNSB 13-JUN-2020 bond was the best performer with a decline in yield of 3 bps, while the 27-APR-2023 maturity bond was the worst performer with an increase in yield of 180 bps.

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Monday 09 March 2020

BUSINESS DAY

Investing

Modest FY-19 earnings growth on weak Q4-19 outing Chapel Hill Denham

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ccess Bank Plc (Access) just published its audited FY-19 results, reporting PAT growth of 2.7 percent year-on-year to N97.51bn. Access proposed a final DPS of 40kobo (total DPS of 65kobo), implying a dividend yield of 4.7 percent, the lowest among its tier 1 peers.

What we like about the results Interest income grew by 40.9 percent year-on-year in FULL YEAR-19, supported by the larger treasury and loan books, following the merger, with yield on assets improving to 11.2 percent in FY-19 from 10.4 percent in FY-18. We, however, note that organic loan growth persisted on a quarter on quarter basis as gross loans grew by 4.1 percent qoq. While the bank could cautiously take advantage of attractive lending

opportunities in FY-20E, lower yields may dampen the net interest margin.

Cost of funds fell to 5.0 percent in FY-19 from 5.5 percent in FY-18. This reflects the accretive impact of a larger retail deposit base, which aided the improvement in Access’ net interest margin to 5.8 percent in FY-19 from 4.7 percent in FY-18, by our estimates. Notably, low cost deposits accounted for 58.1 percent of customer deposits as at FY-19 vs. the pre-merger level of 49.8 percent as at FY-18.

Although impairment charges grew by 37.7 percent year-on-year due to the material charge of N9.6bn taken in Q4-19, the cost of risk was steady at 0.7 percent in FY19. While we note that there are downside risks to asset quality in FY-20E on weaker oil prices and soft macro conditions, we expect management to tighten its risk measures to address such risks.

Our concerns about the results The net foreign exchange loss of N83.88bn, due to the FX trading loss of N64.82bn (relating to the bank’s derivative contracts) and FX revaluation loss of N19.05bn booked in FY-19, was the major lowlight of the results. We note that FX trading loss of N74.79bn was booked in Q4-19, which dampened the bank’s earnings in the quarter (PAT of N6.77bn) to the weakest level since Q4-17. Lower fixed income yields and further exchange rate depreciation amid sustained net short FCY position are major downside risks to the bank’s earnings in the coming quarters.

Cost efficiency weakened as the costto-income ratio increased to 65.2 percent in FY-19 from 62.2 percent in FY-18 due to the faster operating expense growth of 30.8 percent year-on-year vs. the operating income growth of 24.9 percent year-on-year, which we attribute to sustained post-merger impact. We could see efficiency gains in FY-20E as the bank realises some merger synergies amid other cost saving initiatives.

Valuation We have a BUY rating on Access with a 12-month target price of N17.35, which implies a total return of 113.5 percent (capital gain of 104.1 percent and dividend yield of 9.4 percent). www.businessday.ng

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Monday 09 March 2020

BUSINESS DAY

71

Investing

What OPEC+’s failed cut could mean for stocks, in 450 words SEGUN ADAMS

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he fast-spreading coronavirus had not reached Nigeria when the impact of the deadly diseases started to be felt by industries and markets in the country, through its impact on global oil price and trade.

When Nigeria reported its first case of the

virus two Fridays ago, oil price was already on the verge of dipping below $50, causing the Nigerian equities market to suffer its worst one-day loss in almost a year at its lowest point in the year.

However, the market gained Tuesday on news of global efforts to limit economic impact of the coronavirus and expectations that OPEC and its allies would announce a dip enough cut to support oil price.

On Thursday OPEC said it planned to cut

oil production to 1.5 million barrels per day from April through December but it would depend on it biggest ally Russia, which is a non-member, to decide if there would be any cuts at all.

According to the proposal, OPEC would take one million barrel off the market while Russia would take the other half-million cut.

Oil price collapsed to $45 Friday (rose to $46.12 as at 17:00 GMT+1), its lowest since at least mid-2017 after Russia failed to give the necessary cooperation to the cartel.

What this means is that one-half of the condition for the devaluation of the Naira set by the Central Bank of Nigeria (NBS) might no longer be an unlikely scenario with the oil market now in free-fall. (The other half condition is the country’s foreign exchange reserve – now at $36bn - dipping below $30bn).

Beyond the apex bank and broader risk to the government’s revenue target, the stocks market might be set for another round of bleeding should downturn in the www.businessday.ng

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oil market persist when trading opens in Lagos on Monday.

“I think the market will kick off the week on a bearish note with the recent development where Russia seems not to be in support of further production cut,” said Gbolahan Ologunro, an analyst at Lagosbased CSL Stockbrokers Ltd. Ologunro added that the continued spread of the coronavirus has kept foreign investors risk-off towards risky assets, “a double-whammy situation,” he said.

While the outlook looks depressing, Boboye Olaolu, research analyst at Lagos-based Cordros Capital says the market might not see any significant reaction although the news is not very positive.

“OPEC not being able to reach a consensus with Russia means we might not get the support we are looking for,” said Olaolu.

“While we cannot estimate the magnitude of decline that would follow, we believe by next week oil price should hover around or above $50.”

So far in 2020, oil has lost 26.61 percent while Nigerian Stocks have shed 2.1 percent.

@Businessdayng

Monday 09 March 2020

BUSINESS DAY

Market Wrap-up Here’s how the market performed last week

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total turnover of 1.814 billion shares worth N26.008 billion in 23,494 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.547 billion shares valued at N24.263 billion that exchanged hands preceding week in 21,646 deals.

The Financial Services industry (measured by volume) led the activity chart with 1.382 billion shares valued at N16.909 billion traded in 16,275 deals; thus contributing 76.20% and 65.02% to the total equity turnover volume and value respectively. The Services followed with 98.557 million shares worth N263.837 million in 369 deals. The third place was ICT industry, with a turnover of 89.782 million shares worth N598.016 million in 800 deals.

The NSE All-Share Index and Market Capitalization appreciated by 0.24% and 0.27% to close the week at 26,279.61 and N13.695 trillion respectively.

All other indices finished higher with the exception of NSE Main Board, NSE Pension, NSE AFR Div Yield, NSE MERI Growth, NSE Consumer Goods, NSE Lotus and NSE Industrial Goods indices which depreciated by 1.34%, 0.91%, 0.91%, 2.36%, 5.87%, 2.28% and 4.27% while NSE ASeM Index closed flat.

Thirty-six equities appreciated in price during the week, higher than Six equities in the previous week. Twenty- five equities depreciated in price, lower than fifty-eight equities in the previous week, while one hundred and two equities remained unchanged, higher than ninety-nine equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week

GlobalAhead Economy Week (Monday, 8th April – Friday, 12th April, 2019)

The US Federal Reserve slashed the Fed funds rates by 50bps on Tuesday; the first out-of-cycle rate cut since the 2008 financial crisis. The committee stated that this was in response to the growing threat from the coronavirus pandemic, which poses a downside risk to economic activities. While the Fed continues to emphasize that the US economy is stable, the decision to cut rate by 50bps to a range of 1.00% -1.25% was unanimous.

While the magnitude of the overall impact of the virus on the US economy is yet to be ascertained, further rate cuts should the outbreak persist becomes necessary. In addition to the preemptive monetary policy move, the US government has recently signed a $8.3 billion emergency bill to further combat the spread of the virus within the US. Nigerian Economy Looking ahead, the blend of the new VAT rate (2.5 ppts to 7.5%), together with persistent upward inflationary pressure (January: 12.13% y/y) will continue to weigh on economic activities.

Nonetheless, the CBN’s credit creation drive and lower interest rate environment will continue to keep the composite PMI afloat.

The Nigerian Minister of Finance said on Wednesday that the government was worried about the drop in oil revenue and would soon begin a mid-term review of the budget to determine the way forward. For one, we note that over 75% of 2020 expenditure is recurrent, including debt servicing.

While the FGN cannot default on its debt obligations, a reduction in recurrent expenditure is not possible as it will imply either a reversal of minimum wage or retrenchment of workers, neither of which is likely given the precarious state of the nation. Meanwhile, aside from the fact that the budgeted 2020 capital expenditure is already the lowest since 2016, the CAPEX implementation rate has disappointingly trailed 50% over the same period. We strongly doubt that the government will be willing to cut back on CAPEX spending. Hence, the only adjustment we see is a reduction in revenue estimates and a high borrowing plan Capital markets www.businessday.ng

There is no contest about Nigeria’s place as Africa’s biggest economy after the release of South Africa’s GDP report which showed that the latter suffered a recession in the fourth quarter of 2019.

South Africa’s economy slumped into its second recession in consecutive years as power cuts weighed on output and business confidence dropped, adding to pressure on the central bank to cut interest rates.

GDP in the West African country stood at $476 billion or $402 billion, depending on the rate used according to Bloomberg data while South Africa GDP was $352 billion.

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Monday 09 March 2020

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Nigerian university curriculum not at pace with reality - Vice Chancellors

L-R: Abdullahi Garba, chief of staff, Kuje Area Council; John Nawchukwu, Man O War; Geraldine Ogbonna, senior education officer; Abdullahi Suleiman Sabo, executive chairman, Kuje Local Government; Happy Joe Isitua, president, Waka About Grassroots Media; Ismaila Muhammed, chairman, PDP, Kuje, and Joseph Nathan, commandant, Kuje Man O War, during the grassroots unveiling of Kuje FCT anti-human trafficking, child abuse and schools security summit 2020 and NATIP Vounteer Corps in Kuje Abuja.

Pic by Tunde Adeniyi

Godsgift Onyedinefu, Abuja

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FG sets to accelerate entrepreneurship in Abuja, other states

W Gift Wada, Abuja

ith view to fight poverty and ensure economic development, the federal government on has inaugurated the advisory board of the Abuja Team for Regional Entrepreneurship Acceleration Programme(REAP), promoted by the Massachusetts Institute of technology (MIT) .

The REAP programme offered by the MIT was first introduced in Nigeria in 2018

by Lagos State after a period of evaluating options on programmes that could help deepen the emerging innovativeness among youth and catalyse economic growth.

The Minister of Communications and Digital Economy, Isa APantami said in Abuja that the Federal Government made efforts to introduce the programme nationwide with Abuja being the pilot state, having seen the benefits on Lagos economy.

Speakingduringtheinauguration in Abuja, Pantami noted

that the adoption of the MIT programme is to produce E entrepreneurs which is in line with the President’s fight against poverty and focus on economic development.

“The main purpose of the programme is to adopt, and adapt MIT’s proven frameworks on accelerating innovation to create localized strategies for developing and sustaining enterprises driven by innovation (IDEs). The march towards a Digital Economy, which I currently oversee will depend on harnessing scaled innovation towards fulfilling the 8 pillars, which our national strategy is built upon.”

He said although the programme emphasizes regional teams, “the benefits from this undertaking invariably spread beyondlocalboundaries;which can only be good for Nigeria.

According to Pantami, after the MIT accepted Abuja’s application to embark on the programme, Abuja is joined in REAP’s 7th Cohort by teams fromregionsinDenmark,Japan, SaudiArabiaandTaiwan(ROC).

While stating the importance of REAP in the country’s

economic development, Pantami promised to incorporate the programme into Nigerians digital transformation plan.

“REAP advocates a structured, stakeholder driven approach to tackling innovation.

The reality we find is that innovation has operated largely in silos; each stakeholder largely doing their own thing.

However, by coming together we can achieve the synergies that accelerate it.”

He further explained that “REAP is not, and cannot be a short-term gimmick, but actions emanating from it can begin to take root now.

It is strategic and will be incorporated into our Digital Transformation plans.”

He said the induction of Abuja into REAP seeks to develop harmonized strategies and remove identified bottlenecks; in order to catalyze innovation and the business of innovativeness.”

The Minister while emphasising the need for partnership in the programme said the private sector is very integral to the project.

“For REAP to succeed, no

entity can act alone. MIT requires a collaboration between 5 stakeholder groups, and we here represent all those. Additionally, beyond the team itself, the implementation of REAP has required creating wider partnerships with other players within those stakeholder groups. Hence the success of REAP will be derived from the synergies and partnerships that we build out.”

“The private sector is very integral to REAP. Here with us in Team Abuja are members from varied business backgrounds, including entrepreneurs and financial service professionals; whose valuable experience and networks shall ensure better cross collaboration between Government, Business and Education.”

The Abuja REAP is Hosted by the minister of FCT, Championed by the minister of communication and digital economy, Isa Ali Pantami, and Co-championed by the Executive secretary, Petroleum Equalisation Fund PEF(M)B, Ahmed Bobboi Associate and the Director general (NITDA) Inuwa Kashifu Abdullahi.

he Secretary General Committee of Vice Chancellors (CVC), Yakubu Ochefu has expressed concern that the curriculum been run in Nigerian Universities is not at pace with reality, which is the reason for the disconnect and gap between what is studied in institutions and what industries require, making the economy to suffer.

Ochefu noted the curriculum in most universities are about 25 years old while the pace of change has been so rapid that obsoleteness is now measured in 5 or 10 years, making it difficult for the curriculum to be at par with reality.

He said the reason for this, is the long process it takes to review curriculum in Nigeria, stressing that, “some of the top 10 grossing jobs did not exist as academic disciplines about 20 years ago, they are new creations, such as data analytics, social media marketing, many of those things that comes with technology, talk less of a curriculum that is 20-25years old keeping pace with this”.

The CVC Chief Scribe noted that the NUC has been working tirelessly to ensure that the curriculum is closer to what industry and the marketplace requires, but said it is a long struggle, and advised that a minimum benchmark be developed and universities should be allowed to keep abreast with technology.

FCTA partners Head of Service on workers welfare James Kwen, Abuja

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he Minister of Federal Capital Territory (FCT), Muhammad Bello has pledged that the FCT Administration will partner with the office of the Head of the Civil Service of the Federation to improve the welfare of civil servants in the Territory.

Bello made the pledge when he received Folasade Esan, Head of the Civil Service of the Federation on a courtesy visit to the FCT Administration.

The Minister who stressed the need for the provision of affordable houses for civil servants, said more partnership is needed among government agencies to provide high rise buildings in the face of inadequate land to carter for the teeming number of civil servants in the FCT in need of personal accommodation.

“What we have also ob-

served is that the concept of building that hitherto was done here in Abuja may be 20 or 25 years ago, even for the affordable housing, is no longer sustainable in the sense that land is simply not available in the areas that are accessible by all the means of transportation and more importantly, where there is infrastructure”, he said.

Bello also said that with a strong collaboration, a robust high capacity bus system could be worked out to meet the transportation needs of civil servants, noting that, it will greatly ease the hardship faced by civil servants in transporting themselves to and from work.

Earlier, the Head of the Civil Service of the Federation, Esan had solicited the assistance of the FCTA to improve the welfare of civil servants across the country, especially in the areas of affordable housing and transportation.

FCT to establish emergency maternal, child health intervention center FCTA demolishes illegal structures in Abuja community James Kwen, Abuja

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he Federal Capital Territory (FCT) Minister of State, Ramatu Tijjani-Aliyu has disclosed that preparations for the establishment of the FCT Emergency Maternal and Child Health Intervention Center have reached a critical stage with the appointment of the Programme Manager after a competitive selection process.

Aliyu disclosed this during the inauguration and handing-over of maternal and child health clinic in Waru Area of the Abuja Municipal Area Council (AMAC) executed by the Innercity mission for children

of Christ Embassy, Abuja.

The Minister further revealed that by the end this year, renovation of 12 PHC facilities would be completed, 6 PHC clinics upgraded to PHC Centers and 6 more PHC centers would be rehabilitated across the six Area Councils, stressing that due to paucity of funds the administration is adopting a phased approach to fix the problems at the primary healthcare centres.

Aliyu who commended the innercity mission for children of Christ Embassy, also used the occasion to implore other religious bodies to emulate what she described as “purposeful partnership”. www.businessday.ng

She assured the donor that the Administration, through its Primary Health Care Board will take charge of this facility, adding that one NYSC Doctor with 2 Midwives would be posted to improve quality of care and number of deliveries attended to by skilled birth attendants in Waru and surrounding communities.

Earlier, the Pastor, Christ Embassy Abuja Ministry Centre, Tom Amenkhienan said the Chris Oyakhilome Foundation, the umbrella body of Innercity for Children has brought respite, hope, and succour to the needy and vulnerable faced with the aftermaths of war and natural disaster around the globe.

...Says buildings without approval criminal James Kwen, Abuja

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he Federal Capital Territory Administration (FCTA) at the weekend demolished shanties and unapproved structures at Pewoyi, Tundun Wada near peace village in Lugbe, yesterday.

This is as the FCTA described some buildings without approval from the appropriate authorities in the Territory as criminal activities.

Director, Development Control Department, Abuja Metropolitan Management

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Council (AMMC), Murktar Galadima who stated this after the exercise said structures built against the master plan will not be allowed to stand.

Galadima noted that such structures if allowed would be hideout for criminals as well as affect the original master plan.

“The demolition is ongoing exercise, this recent one in Pewoyi and Lugbe is the continuation of demolition of illegal structures, those structures removed are unapproved, and we are advising people to desist @Businessdayng

from unprove construction.

“Development without approval is criminal activities, when you built and people don’t occupy, you built a hideout for criminals, that is why we have to enforce our standards, rules and regulations” he said.

Galadima however said, the demolition in Lokogoma was informed by the need to clear all structures on water ways and widens the channels to pave way for free flow of water, adding that if the illegal structures are not well cleared they will aid flooding.

Monday 09 March 2020

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Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 08 March 2020 Company

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Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 302,134.42 8.50 -3.41 195 24,655,607 UNITED BANK FOR AFRICA PLC 235,976.01 6.90 -3.50 364 34,923,392 590,254.08 18.80 -6.00 880 85,835,085 ZENITH BANK PLC 1,439 145,414,084 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 192,039.82 5.35 -6.96 211 10,254,046 211 10,254,046 1,650 155,668,130 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,340,769.00 115.00 - 93 941,150 93 941,150 93 941,150 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 52 367,664 LAFARGE AFRICA PLC. 219,871.41 13.65 -2.50 161 10,414,091 213 10,781,755 213 10,781,755 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 356,008.96 605.00 - 4 5,191 4 5,191 4 5,191 1,960 167,396,226 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,538.46 3.20 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 58,570.07 61.40 - 13 13,948 44,900.00 44.90 - 2 40,000 PRESCO PLC 15 53,948 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,980.00 0.66 - 5 31,350 5 31,350 20 85,298 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 1 750 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 34,550.79 0.85 -5.56 43 7,664,899 U A C N PLC. 25,355.41 8.80 -2.22 113 4,622,713 157 12,288,362 157 12,288,362

BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,568.00 22.40 - 13 58,330 ROADS NIG PLC. 165.00 6.60 - 0 0 13 58,330 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,650.36 1.02 9.68 13 338,178 13 338,178 26 396,508 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,107.01 0.78 -1.27 4 115,100 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 - 22 69,812 INTERNATIONAL BREWERIES PLC. 189,377.58 7.05 - 26 1,314,082 NIGERIAN BREW. PLC. 326,273.60 40.80 - 66 309,992 118 1,808,986 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 132,000.00 11.00 0.92 58 1,868,666 FLOUR MILLS NIG. PLC. 90,208.35 22.00 - 16 193,091 HONEYWELL FLOUR MILL PLC 7,612.99 0.96 -4.00 4 242,289 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 13 130,938 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 91 2,434,984 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 15,213.44 8.10 - 18 33,283 NESTLE NIGERIA PLC. 806,131.41 1,017.00 - 53 151,441 71 184,724 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,653.82 4.52 - 26 274,568 26 274,568 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 17,668.62 4.45 - 18 55,711 UNILEVER NIGERIA PLC. 74,685.07 13.00 -3.70 57 3,588,325 75 3,644,036 381 8,347,298 BANKING ECOBANK TRANSNATIONAL INCORPORATED 107,344.87 5.85 -9.30 53 1,117,845 FIDELITY BANK PLC 57,949.59 2.00 -0.50 105 22,786,045 GUARANTY TRUST BANK PLC. 724,007.01 24.60 -1.20 581 43,950,821 JAIZ BANK PLC 16,794.62 0.57 1.79 15 3,634,064 STERLING BANK PLC. 44,913.05 1.56 4.00 69 4,324,437 UNION BANK NIG.PLC. 205,301.31 7.05 2.92 37 389,356 UNITY BANK PLC 6,195.35 0.53 -3.77 17 1,038,150 23,530.42 0.61 -6.15 37 3,353,636 WEMA BANK PLC. 914 80,594,354 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 9,404.07 0.83 -1.20 15 1,274,256 AXAMANSARD INSURANCE PLC 17,640.00 1.68 - 2 15,454 CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 3.70 6 1,073,000 CORNERSTONE INSURANCE PLC 7,364.75 0.50 - 2 11,000 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 2,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,757.62 0.24 4.35 13 1,881,763 LAW UNION AND ROCK INS. PLC. 4,511.15 1.05 6.06 38 9,625,374 LINKAGE ASSURANCE PLC 3,200.00 0.40 - 1 50,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 3 119,374 NEM INSURANCE PLC 9,135.27 1.73 - 22 1,148,968 NIGER INSURANCE PLC 1,547.90 0.20 - 1 58,080 PRESTIGE ASSURANCE PLC 2,960.40 0.55 1.82 4 1,000,500 REGENCY ASSURANCE PLC 1,333.75 0.20 - 7 2,721,400 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 2 50,200 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 27,682 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 7,917.25 0.33 3.13 54 2,845,119

172 21,904,170 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,378.10 1.04 9.47 11 567,000 11 567,000

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 3 659 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 3 659 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,400.00 4.70 -1.88 173 10,001,018 32,056.16 5.45 - 17 353,770 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 495.00 0.33 - 0 0 FCMB GROUP PLC. 36,635.01 1.85 2.78 65 3,745,599 1,131.98 0.22 - 1 14,347 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 367,673.86 35.00 -1.96 34 2,920,516 18,600.00 3.10 -0.32 211 14,071,648 UNITED CAPITAL PLC 501 31,106,898 1,601 134,173,081 HEALTHCARE PROVIDERS EKOCORP PLC. 2,742.30 5.50 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,299.36 2.54 - 9 188,353 4,544.33 3.80 - 38 320,987 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,709.26 2.15 9.69 19 524,969 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 835.63 0.44 - 2 20,780 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 68 1,055,089 68 1,055,089 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 -4.76 17 3,777,650 17 3,777,650 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,088.46 0.37 -9.76 1 500,000 1 500,000 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 237.60 2.20 - 1 100 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 0 0 1 100 PROCESSING SYSTEMS CHAMS PLC 1,127.05 0.24 9.09 39 10,004,800 10,962.00 2.61 - 1 139 E-TRANZACT INTERNATIONAL PLC 40 10,004,939 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 4 108 4 108 63 14,282,797 BUILDING MATERIALS BERGER PAINTS PLC 1,767.92 6.10 - 8 95,847 BUA CEMENT PLC 1,195,411.70 35.30 1.58 28 209,607 CAP PLC 15,505.00 22.15 - 31 106,777 244.37 0.46 - 0 0 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 67 412,231 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,465.85 1.40 2.19 17 1,221,235 17 1,221,235 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 5 1 5 85 1,633,471 CHEMICALS B.O.C. GASES PLC. 1,685.79 4.05 - 2 505 2 505 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 3 451,000 3 451,000 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 1 5,000 1 5,000 6 456,505 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 5 2,384,812 5 2,384,812 INTEGRATED OIL AND GAS SERVICES OANDO PLC 33,564.81 2.70 -0.74 78 8,757,299 78 8,757,299 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 52,827.21 146.50 9.98 18 428,663 ARDOVA PLC 19,927.96 15.30 - 7 128,576 CONOIL PLC 12,491.14 18.00 - 18 62,017 ETERNA PLC. 2,634.37 2.02 - 19 105,705 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 0 0 TOTAL NIGERIA PLC. 36,328.84 107.00 - 11 55,727 73 780,688 156 11,922,799 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 2 1,889 2 1,889 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,029.17 3.27 9.73 3 1,100,000 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 3 1,100,000 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 2 600 IKEJA HOTEL PLC 2,515.34 1.21 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,781.64 4.05 - 1 512 3 1,112 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 1 10,000 1 10,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 1 1,000 LEARN AFRICA PLC 856.31 1.11 9.90 5 191,000 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 452.98 1.05 - 8 101,654 14 293,654 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 513.89 0.31 6.90 4 524,262 4 524,262 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Company IN FOCUS

BUSINESS DAY Monday 09 March 2020 www.businessday.ng

Union Bank plc: Returning value to shareholders after 11 years of dividend drought OLUFIKAYO OWOEYE

S

hareholders of Union Bank now have every reason to smile after a long wait to spanning 11 years for cash rewards on their investment following the announcement of a proposed dividend of 25kobo per 50k share for 2019 financial year ended 31 December.

Analysis of the recently released result shows that gross earnings grew 14.4percent to N166.5bn compared to N145.5bn recorded in full-year 2018, on the back of an increase in earning assets, Interest income was up 11percent to N117.07bn compared to N105.2bn in full–year 2018. Driven by growth in fees and commission income as well as recoveries, Non-interest income surged 24.7percent to N42.8bn against N34.3bn recorded in 2018. Profit after Tax surged 9.8percent to N19.87billion from N18.09billion.

During the period under review, gross loans increased 20percent to N595.3bn from N496.8bn in December 2018, customer deposits was up 5percent to N886.3bn from N844.4bn in December 2018.

Active users on Union Bank’s enhanced mobile and online banking platforms increased 60percent and 42percent- 2.1 million and 1.3 million users respectively. Coupled with increasing efficiency and growth in its traditional channels (e.g.

ATM, POS), e-business income grew by 64percent to N7.7bn in 2019 from N4.7bn in 2018.

In line with the bank’s 2019 guidance, its non-performing loan ratio went down to 5.8percent from 7.8percent as at December 2018, while the capital adequacy ratio (CAR) remains well above the regulatory threshold at 19.7percent.

Union Bank raised N30billion bond program, the largest 10-year bond ever issued by a corporate institution in Nigeria.

The N30bn Tier 2 bond was fully subscribed from the Nigerian capital market. The bank working in partnership with Atlas Mara, secured $200 million in funding from the US Development Finance Corporation (DFC) previously called OPIC, one of the largest investments made by the DFC in a financial institution in Nigeria and subSaharan Africa to date, for investments over the next ten years in digitization, on-lending to SMEs and funding for alpher, women banking proposition.

In a bid to drive cost optimization and ensure optimal operational efficiency, the bank introduced the Long Term Efficiency Acceleration (LEAP) Programme, this has saved the bank N2.4bn in recurring expenses helping drive overall cost down notwithstanding doubledigit inflation and an increase in nondiscretionary cost.

Since the 2005 recapitalization exercise, Nigerian banks have continued to face an uphill task of meeting series of tough regulations from the Central Bank of Nigeria (CBN) coupled with weak macro-economic with revenue and bottomline coming under intense pressure.

The tier-2 lender in January announced it has entered a share sale and purchase agreement to divest its 100percent equity stake in its UK subsidiary. According to the management of the bank, this is to align with Union Bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.

“Following a competitive bid process, MBU BidCo Limited, an acquisition vehicle wholly owned by MBU Capital Limited, was selected as the preferred bidder,” the bank said in a notice.

The completion of the sale is subject to regulatory approvals from the relevant regulatory authorities in Nigeria and the United Kingdom.

Taking advantage of the currently low-interest rate in the debt market and following the successful registration of its N100 billion Commercial Paper Programme in 2018, Union Bank announced the commencement of its series 3 and 4 CP issuance.

The offer closed on January 21, 2020, with a target issuance size of N20 billion across 180-day and 268-day tenors. The CP offer was targeted at institutional investors including pension and non-pension asset managers, as well as eligible high net-worth investors.

Industry laden with regulatory landmines Nigerian banks’ current regulatory crises have their roots in the 2014 oil price crash. The resultant pressure on government revenues that led to the CBN being called upon to fund the deficit (CBN overdrafts to the federal government of Nigeria [FG] ballooned 10x between May 2015 and September 2019), the CBN maintained a fixed FX stance despite underlying depreciation pressure, it has significantly scaled up its OMO issuance programme to attract more foreign investors and mop up liquidity.

56percent of the growth in CBN liabilities between January 2016 and September 2019 was driven

by CBN bills – mainly OMOs, CBN bill issuances, of which OMOs are now 73percent, have grown 5x between May 2015 and September 2019, while imposing increasingly higher cash reserves on the banks, which provides the CBN with zero-cost funding to help offset the high and rising cost of FX defence.

Also the slew of 2019-2020 regulations that have forced the banks to achieve a higher

loan-to-deposit ratio pushed local private and institutional investors out of the OMO market, and hiked the cash reserve ratio (CRR) to 27.5percent, have enabled the CBN to raise even more zero-cost funding from the banks. This helps to not only support FGN lending, but also, according to the banks, multiple CBN development finance initiatives targeted at different sectors. Thus, the banks are likely to continue to bear the cost of macro stability.

Outlook Going forward, the challenge for Nigerian banks such as Union Bank would be to deliver sustainable growth and good return on investment for shareholders amid the difficult macro-economic and tough regulations.

To mitigate these risks, analysts have urged banks to build lowcost business models to penetrate the bottom of the pyramid.

According to the World Bank, half of all Nigerians work in the agriculture sector, while half of the people working in agriculture belong to the poorest 40percent of the population and 64percent of all poor lived in rural areas and 52percent of the rural population lived below the poverty line in 2016. This implies that growth benefits from the bottom of the pyramid cannot happen while ignoring the agricultural sector and rural areas, a low-cost business model can successfully crack this space at scale.

Banks can also evolve to a holding company model with sizeable subsidiaries in fastgrowth sectors.

This in addition to giving Nigerian banks a route to explore earnings growth outside of the challenging banking sector, it would serve as a room to explore cross-selling opportunities across a larger group, one key benefit to investors from a bank adopting this structure is the earnings see-through it gives.

It allows investors to value the group on a sum of the parts (SoTP) basis. Scale growth in extant operations outside Nigeria.

Over the past few years, Nigerian banks have spread their networks to a wide range of countries, much to investors’ disappointment. However, scale achievements in some locations appear to finally be yielding meaningful fruit at group level.

Scale is not only critical to returns delivery but if a niche or non-banking business line, scale within that vertical is equally important.

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