BusinessDay 09 Sep 2020 by BusinessDay

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news you can trust I ** WEDNESDAY 09 september 2020 I vol. 19, no 647

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Covid-19: India’s case upslope shows why Nigeria must tread cautiously

Mahamadou Issoufou (l), president of Niger Republic/former chairman of ECOWAS Authority of Heads of State and Government, handing over to his successor, President Nana AkufoAddo of Ghana, in Niamey, Niger Republic, yesterday. President Akufo-Addo will be the chairman of ECOWAS. NAN

hasty lockdown relaxation, patchy test and trace, ineffective safety blamed Temitayo Ayetoto

ndia on Monday reported a daily record of 90,802 cases of Covid-19, pushing the total number of infection to over 4.2 million and overtaking Brazil to become the secondContinues on page 31

Why electricity meter access projects fail in Nigeria C P

Lagos, Century Group, IOSH canvass for healthy environment

OBINNA EMELIKE

ISAAC ANYAOGU

lans by the power sector regulator, Nigerian Electricity Regulatory Commission (NERC), to provide meters to Nigerians appear doomed even before they started because of a

plethora of reasons. Among these reasons is the revelation that majority shareholders at most of the electricity distribution companies (DisCos) perfected plots to sabotage the initiatives, sources tell BusinessDay. A detailed investigation by

BusinessDay found that related to this was the exorbitant price of the meters in Nigeria, a direct result of the ploy by the DisCos to control supply and thus price of the meters. As a result, the cost of meters in Nigeria is 100 percent more than it should cost the ordinary

Nigerian customer. Investigation found out that China’s largest electricity meter producer (name withheld) can supply all Nigeria’s meter requirement in one year and at a price not more than N25,000 for a single-phase Continues on page 31

entury Group, a major indigenous oil and gas company in Nigeria, September 4, 2020, gathered the health safety and environment (HSE) community and stakeContinues on page 30

‘I am humbled to be named first Black Canadian Minister of Justice and Solicitor General’ P. 24

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Redeemer’s University scientists identify 7 lineages of COVID-19 unique to Nigeria FRANK ELEANYA

cientists at the Redeemer’s University, Nigeria, have turned their attention to resolving whether coronavirus (Covid-19) can mutate in proportions that could become more debilitating to people. As of September 7, 2020, Nigeria has recorded 55, 160 active Covid-19 cases out of 424,186 samples tested. Of this figure, 43,231 people have been discharged and 1061 deaths recorded. The number of daily cases has, however, remained low in recent times. The study carried out through genome sequencing has turned up seven lineages unique to Nigeria. According to a statement from the research undertaken at the African Centre of Excellence for Genomics of Infectious Diseases, Redeemer’s University, Ede, Osun State. The first lineage represents viral sequences from China and global exports including South East Asia, Japan, South Korea, Australia, the US and Europe. The second lineage represents a viral sequence from the Italian outbreak. The third represents a new European lineage. The fourth represents sequences from the UK, Iceland and Turkey. The fifth represents se-

quences from Netherlands, Turkey, Saudi Arabia, Egypt, Finland and England. The sixth represents a sequence from the Netherlands. The seventh represents sequences from Turkey, Saudi Arabia, Egypt, Finland and England. Globally, there is only one strain of SARS-CoV-2, which is also the same as the strain circulating in Nigeria. However, there are more than 1,000 lineages of this novel virus in circulation around the world. Why is it important? The idea behind categorising coronavirus or SARSCOV-2 under lineages comes from the mutative nature of all viruses. In most cases, mutations have no functional consequences for the virus. In other words the mutations do not have an adverse effect on the body it infects. The amino acid change does not make the virus able to cause disease (not pathogenic), more or less transmissible (contagious), or more or less disease causing (virulent). Mutations often lead to a new ‘lineage’ of the virus. This is different from a new strain. The Nigerian scientists, however, noted that any mutation that changes the level of disease - like make the virus more dangerous to the human body, transmission becomes a new strain.

School reopening: Safety of students, teachers our priority - Lagos MARK MAYAH

s a follow up to its announced plan to reopen schools, the Lagos State government through the Office of Education Quality Assurance (OEQA, has flagged off training for school owners, associations and educators on Covid-19 safety measures for reopening of schools. The state governor, Babajide Sanwo-Olu announced two weeks ago that tertiary institutions in Lagos will reopen from September 14 while primary and secondary schools will join from September 21. Director-general, Office of Education Quality Assurance, Abiola Seriki-Ayeni, at the commencement of the two-day training on Tuesday, said that the objective was to prepare schools for a safe and hitch-free reopening with the provision of templates and processes for assessing the readiness of schools across

the state. “School owners, leaders of schools and educators are being trained to have a seamless registration process. The process involves registering to get a special code, which is the first part that involves selfassessment, training and verification for reopening clearance. Schools are to download the federal and Lagos state government reopening and safety guidelines from the agency website”, she explained. The training themed ‘moving forward,’ covers segments for questions and answers to burning issues that schools may have as they strive to balance a strong education system with promoting health and safety. Seriki-Ayeni told BusinessDay at the workshop venue that the Office of Education Quality Assurance was responsible for ensuring and upholding standards in schools below tertiary level and has made the health and safety of students and teachers a priority.

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Ayuba Wabba (m), president, Nigeria Labour Congress (NLC), addressing members of the NLC on the suspended strike in Port Harcourt, yesterday. NAN

Analysts canvass unlocking $900bn in dead capital to cushion COVID-19 impact Odinaka Anudu

eading economists have asked the Federal Government to tap $300 billion to $900 billion locked in dead capital to cushion the negative impact of Covid-19 on the Nigerian economy and the livelihoods. Dead capital refers to assets/property that cannot be converted to economic capital. They cannot be used as collateral for loans and their ownership rights are not properly recorded, according to the World Bank. “PwC estimates that Nigeria holds $300 to $900bn in dead capital in residential real estate and agricultural land alone,” Andrew Nevin, chief economist, PwC Nigeria, said at a virtual meeting organised by the Lagos Chamber of Commerce and Industry (LCCI) in conjunction with PwC recently. “No better time than now to unlock and harness the capital for wealth creation and economic growth,” he said at the meeting entitled, “Assessment of Government’s Economic Interventions and

the Way Forward.” The Nigerian economy declined by 6.1 percent in the second quarter of 2020 ow ing to lockdowns and other measures put in place by the government to contain the spread of Covid-19. Unemployment has risen to 27 percent in the same quarter, from 23 percent in the third quarter of 2018. Businesses, especially small and micro enterpr is es, are under severe pressure amid lack of bail-outs and low consumer spending. Nevin said the six percent contraction in GDP and three percent growth in Nigeria’s population translate into almost 10 percent decline in GDP per capita year-on-year, with impact on poverty, unemployment, among others. He commende d the Central Bank of Nigeria (CBN)’s exchange rate response, but acknowledged that there is still a significant gap of 20 to 25 percent between the official and the parallel market rates, meaning that people cannot access FX, which creates problems in the supply chain.

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The Federal Government has planned a stimulus package of N2.3 trillion— 2 percent of GDP— to revivify the economy damaged by the virus. Nevin said it is commendable, but cautioned that it is small compared with several countries now spending 15 to 20 percent of their GDP to get through the current financial crisis. “The government needs to aggressively promote peace and tranquillity across the country in order to attract patient capital, while restructuring the fiscal plan, especially spending on non-essential projects,” Nevin advised. “Carefully manage the risk of debt trap that could result from increasing debt accumulation, and put in place framework that ensures transparency and accountability across MDAs,” he counseled. He urged the federal government to mobilise external funding and seek debt relief, while supporting the financial viability of states. Taiwo Oyedele, West Africa tax leader, PwC, said a recent research by his organisation showed that

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business were worried by liquidity problems, safety of personnel and infrastructure to work from home. He advised the government to unlock dead capital, optimise assets and stimulate the economy by creating an enabling environment, removing artificial barriers and cutting wastes. “It is important to expand the tax net, but do not increase taxes. Also reduce corruption and leakages,” Oyedele said. “Ensure you stay liquid, productive, while developing agility,” he counseled business leaders. Ayo Teriba, CEO, Econ o m i c A s s o c i at e s a n d chairman, LCCI, economics and statistics committee, explained that Nigerians must understand that the Federal Government and the CBN, which are being asked to bail out businesses, are not immune to the pandemic. He said the apex bank might need a stress test in the future, urging the government to tap dead capital for recovery. He asked the government to plan and review sectors and households hard hit by lockdowns.

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Recession looms with 47.15% of NSE 30 firms in decline Bala Augie

here are indications that a second recession in five years is inevitable, as profits of nearly half of the largest companies on the Nigerian bourse slumped as coronavirus headwinds dented the economy. The economic fallout from the coronavirus pandemic and the sudden crash in oil price have unprecedented financial and social disruptions. Also, the lockdown imposed by government to curb the spread of the virus has dealt a great blow on sales and supply chain, and the devaluation of the currency could balloon foreign debt in the capital structure of some entities, putting further pressure on earnings. For the first six months through June 2020, the combined net income of Nigerian Stock Exchange (NSE) 30 firms - the most liquid and capitalised companies - reduced by 10.12 percent to N745.12 billion from N829.89 billion the previous year, according to data gathered by BusinessDay. “As long as macro indica-

tors are not showing any sign of improvement, companies that operate in the country will be affected directly or indirectly,” Gbolahan Ologunro, an equity research analyst at CSL Stockbrokers, said. “Even aside corporate performance, series of data so far shows the country is at the verge of recession. Even sectors such as banks and telecoms would also feel the pinch,” Ologunro said. Interestingly, Seplat, Unilever, Guinness, Total Oil Nigeria, International Breweries, and Julius Berger posted combined losses of N63.11 billion as at June 2020. Nigeria’s biggest banks are not spared the pang of the headwinds as they posted their slowest profit growth in five years on the back of rising bad loans. Net income of the 10 largest lenders on the NSE 30 increased by a mere 1.87 percent to N408.64 billion in June 2020, but Zenith Bank, First City Monument Bank (FCMB), FirstBank Holdings, Stanbic IBTC Holdings, and Fidelity Bank bucked the trend as they recorded double digit growth in at the bottom line (profit). Nigeria’s economy con-

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tracted the most in at least a decade in the second quarter, as Gross Domestic Product shrank 6.1 percent in the three months through June from a year earlier, compared with growth of 1.87 percent in the previous quarter, according to a recent data by the National Bureau of Statistics (NBS). The jobless rate rose to 27.1 percent in the second quarter, the highest in at least a decade, according to the Bureau. That compares with 23.1 percent in the third quarter of 2018. The Monetary Fund (IMF) has announced that the Nigerian economy would witness a deeper contraction of 5.4 percent and not the 3.4 percent it projected in April 2020. IMF says the forecast is influenced by the larger than expected storms to global value chains due to the coronavirus, affecting global demand for goods and services. According to the foreign trade in goods statistics released by the NBS, the total value of Nigeria’s merchandise trade declined by 27 percent to N6.2 trillion in the second quarter (Q2 2020) from N8.6 trillion in the first quarter in (Q1 2020).

FX outflows for imports, invisibles jump by 146.15% in May – CBN HOPE MOSES-ASHIKE

oreign exchange outflow through autonomous sources mainly for imports and invisibles rose significantly by 146.15 percent to $0.32 billion in May 2020, above the level of $0.13 billion in April 2020, because of the partial ease in lockdown restrictions. The Central Bank of Nigeria (CBN) stated this in its economic report for the month of May released on Tuesday. However, aggregate foreign exchange outflows from the economy decreased by 23.9 percent to $2.50 billion in May. Outflows through the CBN decreased by 30.9 percent to $2.19 billion, below the level in the preceding month. With inflow of $5.55 billion and outflow of $2.50 billion, the economy registered a net inflow of $3.02 billion in May 2020, compared with the net inflow of $6.43 billion in the preceding month. Foreign exchange inflows into the economy fell by 43.2 percent in May 2020. Inflows through the CBN and autonomous sources were negatively impacted. On a month-on-month basis, foreign

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exchange flows, into the economy declined to $5.52 billion in May 2020. The decline in inflow, relative to the level in April 2020, was attributed to the lower receipts from oil sources, which fell sharply by 55.2 percent because of the continued fragility in global crude oil demand. Inflow through autonomous sources, particularly invisible purchases, declined by 7.0 percent to $3.51 billion, relative to the preceding month, while there was a 66.2 percent fall in inflow through the CBN, which stood at $2.01 billion in May 2020. Foreign exchange supply to authorised dealers increased by 18.8 percent to $1.00 billion in May 2020 from $0.84 billion in April 2020, due to rising demand as factories and businesses begin to reopen. Foreign exchange sales at the I&E window increased by 68.4 percent to $0.28 billion, relative to the preceding month’s level of $0.16 billion. However, interbank sales declined by 10.0 per cent to $0.055 billion, below the $0.062 billion sales in April 2020. In May 2020, sales to BDCs remained suspended as international travels were

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yet to re-start. The average turnover at the I&E window fell by 4.9 percent from $0.043 billion in April to $0.041 billion in May 2020; a decrease of 78.8 percent below the level in May 2019. During the month under review, the average exchange rate of the naira at the Interbank segment of the foreign exchange market remained unchanged at N361.00/$, relative to April, 2020. It, however, depreciated by 15.0 per cent, compared with the corresponding month of 2019. The rate at the I&E window, at N386.25/$, depreciated by 0.3 per cent and 6.6 per cent relative to N384.99/$ in April 2020 and N360.70/$ in May 2019, respectively. Similarly, at N443.33/$, the naira depreciated by 5.2 percent and 18.9 percent at the BDC segment, relative to N420.15/$ in the preceding month and N359.75/$ in May 2019. Consequently, the interbank/BDC premium widened from 16.4 per cent in the preceding month to 22.8 percent in May 2020. The premium between the BDC/I&E also widened to 14.8 percent from 9.1 percent, in the preceding month.

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Between insecurity and economic strangulation: It’s possible to breathe Small Business handbook

Emeka Osuji

he economic condition in Nigeria today may be very bad; it is actually terribly so, but it is certainly not irreversible. I feel the mood of most Nigerians who watch the value of their earning and savings vapourised in the face of inflation, now at 12.82 percent, exchange rate tending to N500 per United S dollar, and unemployment rate of 27.1 percent. Those are not the numbers you see among happy citizens anywhere in the world. It is natural for individuals to focus on the pains of the moment without casting more than a passing gaze at the solutions. That is human nature. The idea of self-preservation demands that humans react negatively to the stimuli of discomfort. However, survival, and indeed progress, comes only if this initial reaction is followed by intelligent problem analysis and effort to apply reasonable solutions. In that regard, it is the solutions being administered to the current economic and security crises in Nigerians that should be our central focus. Are they well thought out and appropriate to the circumstances? Are they timely? I think it is better to focus on those things that make our current condition redeemable, rather than the pains of the moment. Scrutinising the economic policies constructively and proffering value-adding solutions should be a better preoccupation for us at this time. Luckily, books are not judged by their looks and so what we see on the

surface may be different from the eventual direction the economy and Nigeria as a whole may be going. First and on the positive side, Nigeria is not alone in the present pass. It is worldwide. This implies that the solution does not lie within Nigeria alone to apply. The varying travel conditions being imposed by different countries exemplifies the global nature of the problem. Even if we no longer have COVID-19 today in Nigeria, we cannot fly into any country as we used to, if they have any concerns with us. Second, many things are being done in different countries and by the Nigerian governments (state, Federal and Local) to return the world to sanity, which have the potential to ease the pain we currently feel. What should therefore take interest in the policies at play and interrogate them for correctness. Every country embarked on the provision of palliatives to cushion the effects of the pandemic. Nigeria was upfront in this regard, particularly the leading private sector corporates. They raised huge funds to support the provision of treatment centres, drugs and even food. The Central Bank of Nigeria, in its new and increasing activism, has established numerous intervention funds to promote the recovery of the MSME sector and to empower households. In particular, the N50 billion COVID-19 fund was distributed through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) – a $500 million Non-Bank Financial Institution wholly-owned by the Central Bank of Nigeria (CBN). NIRSAL was established, according to government, to redefine, dimension, re-price and share agribusiness-related credit risks in Nigeria. This fund was said to have been fully disbursed by April. Again, most Nigerian MSMEs have denied participating in the fund. In fact, some members of the organize private sector are calling for the head of NIRSAL and its management for refus-

ing to heed the instruction of the CBN to carry them along. Such bodies as the Nigerian Association of Small-Scale Industrialist, Nigerian Association of Small and Medium Enterprises, Nigerian Farmers’ Association are said to have been excluded in the distribution. Governments all over the country have been focused on making life easier for the people. However, whether their efforts are yielding expected results is a different kettle of fish. My preliminary take is that they are not. That is where we all need to be focused. First. are the policies well-intended? Some of them are. The palliatives were provided with good intensions but distributed in, at best, opaque manner. As a result, most Nigerians, particularly from certain parts of the country, did not see a dime of it. Similarly, the N50 billion provided by the CBN for on-lending to MSMEs was equally distributed in a translucent manner. Evidently, between the cash palliatives and he CBN COVID-19 funds, one string runs through – poor management that culminated in lack of transparency. The federal governmentowned microfinance bank, NIRSAL, may claim to have branches in every local government or the technical skills for financial services delivery but that is not all that is needed to effectively distribute financial support to private sector operators. Some have insisted that for accountability sake in matters of national patrimony, it is imperative to give feedback after such events by way of publishing the list of beneficiaries. This should be done at every stage of government distribution of public resources to avoid discretion without accountability, which is my simplest definition of corruption. Without any doubt, the noose around the neck of the average Nigerian is getting tighter – average Nigerian now defined to include the middle class in its entirety. Every policy action taken, most of which were flawed on arrival due mainly to the operating environ-

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If Allan Greenspan and Ben Bernanke, both successful central bank governors of the United States, shared offices, as Governor and Deputy, in the CBN today, without more, the Naira, would probably be more devastated than it is now and our woes persist

ment and structural deficiencies of the country, have failed woefully and the livelihood of the people, especially the poor has taken a very bad turn. Without going far down the memory lane, and in order not to amplify the bad feeling about the high degree of destruction of wealth and livelihood that we have suffered in the past few years, I will not dwell on the dastard economic statistic we now clutch. Suffice it to say that we need to more effectively implement public policy for it impact the targets. The absence of accountability is a major setback as public officers who mismanage policy implementation have had nothing to worry about. We must admit that there is nothing inherently wrong with the current managers of the economy. Some of them were my classmates that beat me in class. But something has gone terribly wrong with them for them to continue to behave as though they have no idea what to do. The system is a killer. If Allan Greenspan and Ben Bernanke, both successful central bank governors of the United States, shared offices, as Governor and Deputy, in the CBN today, without more, the Naira, would probably be more devastated than it is now and our woes persist. It is time to discuss Nigeria’s economic behaviour, especially with regard to making it a thrifty producer rather than a profligate consumer. That way, we can still breathe despite the knees of insecurity and economic strangulation on our necks. I am not that am an advocate of a strong currency in an unproductive and uncompetitive economy. Although a weak currency will make exports expensive and force domestic production, it is not healthy for those that have nothing to sell but products whose prices are determined outside their limits of influence. Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii, Twitter: emekaosuji_

Strengthening power transmission in Nigeria

he Transmission Company of Nigeria (TCN) alongside the seven Generation Companies (GenCos) and eleven Distribution Companies (DisCos) that came out of the unbundling of the then staterun monopoly - the National Electric Power Authority (NEPA) in 2005 to the now defunct Power Holding Corporation of Nigeria (PHCN) were expected to fix the comatose, epileptic electricity supply industry in the country. This has been the bane of economic growth and development in the country for over forty long years. With the vast amount of investment needed to perform a meaningful upgrade and expansion of the country’s transmission network and ensure that installed transmission wheeling capacity matches available generation capacity, it is clear that only the private sector can drive the required efficiency and funding required for the development. According to the Nigerian Electricity Regulatory Commission (NERC), TCN would require about $5 billion investment to build and implement the “supergrid” concept, i.e. a transmission network that spans a wide area, and makes it possible to move high volumes of electricity across extremely long distances. Though it sounds massive, this amount if deployed, can move upwards of 20GW of electricity to over 6,000km, meaning that approximately 100million Nigerians across the country would have access to electricity once implementation is completed, also with the assumption that the DisCos can keep up the pace. In a non-exact comparison, investing a similar amount in gas pipelines would only

yield about one third of the 20GW in additional generating capacity. TCN’s high voltage network, systems and market operations provide the required connection infrastructure and services between the GenCos and the DisCos, essentially delivering generated on-grid power supplied by GenCos to the DisCos via their feeder sub-stations. While TCN proudly announced an increase of a meager 42.5MW in its wheeling capacity from the previous peak of 5,377.8MW recorded on August 1, 2020 to “an all-time national peak of 5,420.30MW” on August 18, 2020, developing nations are recording increases in their respective grids in thousands of megawatts. Yet again, while it is understandable that improvements in infrastructure can be gradual and require lots of well-placed effort and investment by stakeholders, an increase of 42.5MW in a country with Nigeria’s population and natural resources is not worthy of note. It is a drop in the turbid ocean of latent electricity demand in the country, suppressed by decades of absence of a robust supply by the Nigerian Electricity Supply Industry (NESI) and should therefore be largely ignored. In a write up on their High Voltage Direct Current transmission (HVDC) technology, General Electric (GE) indicated how a supergrid would allow transmission of vast amounts of electricity generated by renewable sources like solar or wind via direct current instead of alternating current as is regularly done today over extremely long distances with minimal losses. The write up discussed the possibility

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of generating enough electricity to power all of Australia (about 50GW) only from solar energy in one part of the country, getting it to every part of the country on a HVDC supergrid, and possibly even using an underwater link to move excess energy to other countries like Indonesia, Papua New Guinea and Singapore. With the amount of intelligent human resources available in Nigeria, as well as the vast natural resources available in the form of natural gas, coal, biomass, solar energy, wind energy and hydro, I argue that Nigeria is mature enough as a country and has the capacity to motivate big initiatives like a HVDC supergrid, rather than continuing with the relentless struggle to increase TCN’s transmission wheeling capacity in tens of megawatts. An example of a successful supergrid project that Nigeria should aspire to emulate is Brazil’s Rio Madeira HVDC transmission line, built with a capacity of 7.1GW to move 3,150MW of power at +600kV from new hydro power plants on the Madeira River in the northern part of the country, to 44 million people 2,375km away in Sao Paulo in the south eastern part of the country. It took only 24 months to build. Amongst other lines in the country, Brazil also boasts a 2,543km-long 800kV Ultra-High Voltage Direct Current (UHVDC) transmission line known as the Belo Monte-Rio de Janeiro transmission line that is capable of transmitting 4GW of electricity from Para in the north to Rio de Janeiro in the southeast coast. This line, which crosses 80 cities along its route was started in September 2017 and completed in April 2019, barely 18 months.

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Chukwueloka Umeh

A typical +600kV HVDC transmission line with a wheeling capacity of up to 7GW (the current total theoretical wheeling capacity of TCN) running from Rivers State 1,100km to Kano would take about 24 months to build and should cost about $1.5bn or less if driven by private sector. With its vast deposits of natural gas, the Niger Delta would easily provide the required fuel to power large GenCos in the South-South and parts of the South-East that would provide all the power demands of the major geopolitical zones. Similarly, because of the high solar insolation in parts of the northern region, non-dispatchable electricity generated from solar GenCos in the north would be balanced by dispatchable power from gas-fired Independent Power Producers (IPPs) in the south, as well as power from the hydros in the north. Such a system, made possible by private investment in a supergrid would be much cheaper and faster to deploy than a gas pipeline grid across the country. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr. Umeh is the Managing Director/CEO of Century Power Generation Ltd and the Group Chief Operating Officer at Nestoil Group.

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Is cryptocurrency the key to defeating Nigeria’s adversarial government?

David Hundeyin

regular riposte to the ideas expressed in this column is that they merely expose problems or provide commentaries, as against “provide solutions.” Putting aside the irony of responding to an alleged catalogue of complaints with what amounts to yet another complaint in itself, the sentiment does have some value. The mind that can pick through problems and analyse them to their underpants should also be able to throw out ideas and solutions. There’s just one problem with that, and the problem is a single word - Nigeria. Over the past year in this column, several attempts at providing solutions and suggestions have been made, all to the grand effect of approximately nil. In this column, there has been a proposed infrastructure investment plan that will superheat the economy instead of waste money on doomed railways to Maradi and Maiduguri. There has been a series of policy suggestions to ease trade and make commerce less attritional. There have been suggestions for alternatives to the retinue of border closures, capital controls, uniform lockdowns and import restrictions that have put Nigeria on the brink of its worst recession since the civil war. At this point, the only suggested solution yours truly has left is one that might

deliver Nigerians from the mouth of the monster that is statistically more likely to eat them than any other - the Nigerian government. As a relative veteran of the cryptocurrency space who has seen it move from a fringe cypherpunk movement into a bona fide global multibillion dollar behemoth, I have often asked myself if this free and unregulated asset class could represent freedom for Nigeria’s squeezed middle classes from their openly parasitic, extractive, unproductive and adversarial government. I do not have a definite answer, but what I do have is some food for thought that might hopefully have some financially nutritional value for someone reading this. First the boring stuff What is cryptocurrency? To cut an unnecessarily long and technical story short, it is basically a decentralised openmarket electronic medium of exchange, which means that its value rests entirely on its demand versus its supply, and there is no central institution like a bank or regulator that controls it. The biggest attraction of cryptocurrency is also what some consider to be its biggest downfall - there is literally nobody in charge. This means that there is no Godwin Emefiele to slam a “Post No Debit” on your account whenever he wakes up on the wrong side of the bed, but this also means that there is no Godwin Emefiele to ensure that you get your money back if the exchange platform collapses or you accidentally send it to the wrong account. In such a scenario, it’s pretty much just you and whichever deity you believe in. Cryptocurrency is as easy and exhilarating to use as it is easy to lose if you do not treat it like real-life money and do your due diligence before engaging with it in any way. What makes it uniquely attractive to a growing number of Nigerians is the fact that it is completely outside any kind of effective control of the CBN, which places it beyond the CBN’s

onerous capital control policies like the current forex restriction. Over the past 12 months, many Nigerians have rapidly discovered how to carry out international trade and pay foreign tuition fees using cryptocurrency, sidestepping Emefiele’s small library of circulars and memos issued over that period. The next time you replace one of your car’s worn out parts or buy a pack of juice at the supermarket or shop for some new clothes at the mall, there is a very big probability that those goods were imported in whole or in part via a crypto transaction. Whereas previously the Nigerian government had the sole power to decide who, what and how much trades at what time, cryptocurrency has created a distinctly multipolar financial order and given Nigerians the welcome ability to thumb their nose at a government that clearly does not have their interests in mind. To be clear, I am not suggesting that the solution to bad monetary policy in a poor, under-productive country like Nigeria is to dump our national currency enmasse and pile into crypto, effectively nuking the naira a la Venezuela. What I am saying is that Nigerians no longer have to be victims of adversarial, selfish and politically-influenced economic decisions like forex restrictions. If the government continues to avoid doing the commonsense thing and floating the naira, leading to investor confidence and increased forex inflows, choosing instead to nonsensically ration its way to zero, the citizens who were not consulted or listened to at least deserve an escape pod. A word of caution Despite the decentralisation and lack of CBN control, it is still important to note that it is still possible to restrict if not quite throttle cryptocurrency usage in Nigeria. Currently, there is a confusing regulatory schizophrenia on the subject, with conflicting information coming from different banks concurrently, and no kind

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If the government continues to avoid doing the commonsense thing and floating the naira, leading to investor confidence and increased forex inflows, choosing instead to nonsensically ration its way to zero, the citizens who were not consulted or listened to at least deserve an escape pod

Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Yes, I can

was watching a cookery program with my younger daughter and her elder brother; whose feigned interest was so easy to see through. He was far more concerned with getting the latest premiership team news on his phone but I chose to ignore this and dragged him into our conversation anyway. The host of the cookery program, himself a celebrated chef, was praising one of the junior “chefs” (a child who couldn’t have been more than 11 years old) that his pasta dish was one of the best he had ever tasted. Not one of the best made by a child but by anybody, even other chefs. This got me thinking. How did this child make a dish so much better than so-called experts? I turned to my children and asked them a question which I know has a very obvious answer. “What makes adult cooks better than young cooks?” At least generally. And of course, they blurted out the obvious, which were all absolutely correct. Adult chefs have more know-how, as a result of age, experience and so on. I then asked the question which took us to where I actually wanted to go. “Why is it that at times, child cooks produce magically good dishes that blow seasoned chefs totally out of the water? What enables them to achieve this?” Thankfully, they both pretty much got it, so I was saved the agony of spending the rest of the evening agonising and wondering why I’ve been spending quite so much on their school fees. Still, I tried to explain further and put it in my own words, just to give them greater clarity in understanding. Children are by nature less held captive by convention. They dare to peer at and are subsequently able to see what adults dare not even take a peek into, all because they (adults)

have been taught over time, the combinations that work and those that supposedly don’t. Sometimes, it goes beyond what they’ve been told though. Experience, which we place so much premium on, may have conditioned their minds to accept what works and what apparently doesn’t. Numerous failed attempts could have evaporated the last drop of adventure in them and whipped them into the line of conventional thinking. Children on the other hand are not constrained by such. To them, anything is possible once they can imagine it. Rather than an uncanny knack of peering at a knotty issue, the best thing children have going for them is actually the opposite. They succeed where adults fail because they just get on with it without any doubt that they will succeed. Unlike adults, they’re not hindered by 1001 reasons of why it won’t work. They just make it happen because they refuse to entertain the thought of it not working. In that wonderful book, Nudge, by Richard H. Thaler and Cass R. Sunstein, we learn that the authorities at Schiphol Airport in Amsterdam came up with an ingenious strategy to tackle the problem of careless aiming into the urinals by travellers who patronise their public lavatories. I want to believe they must have already trod the usual route of putting up notices, soliciting the cooperation of their patrons but hadn’t enjoyed much success. They then employed a method which took everybody’s eyes off the problem they were trying to tackle but instead appealed to the little boy within all of us, who doesn’t just love playing games but always wants to win. A strategically positioned image of a housefly was etched in each urinal and because boys will always be boys, irrespective of their age, their at-

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tention shifted to “aiming” at the fly as soon as they saw it. Little did they know, it was simply a nudge for them to aim correctly. Careless shooting which had always left the floor in a terrible mess was reduced by a staggering 80 percent and essentially became history from that point onwards. Clever, eh? Possibly exasperated having tried so many different strategies and failed, it was time to think out of the box. It was time to try a less frontal and less obvious approach. But was it simple? Very. It’s one of the many things we hear about that makes us ask, “why didn’t I think of that?” Many a time, we’re better off keeping things simple. In the book, “Good To Great”, the author Professor Jim Collins, came to a conclusion after spending several years tediously researching businesses and trying to understand why some were able to make the leap from good to great. Supported by volumes of largely incontrovertible statistics, he affirmed that those who made the transition from good corporate entities to becoming great organisations were the ones who were wise enough to streamline their operations, narrow their ambitions and aim for simple goals. They identified what they could do better than everyone else while acknowledging and confronting the brutal facts. Those whose nebulous ambition was just to become “the biggest and the best” never achieved either. The great companies had succeeded in making their company goals simple by removing unnecessary complexities. They managed to focus the attention of their employees in a particular direction. Clear, precise and simple goals did the trick. Oh yes, there were a couple of other things too but to put it in his own words,

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of definitive statement from the CBN. Some cryptocurrency exchanges have bank accounts, which seems to indicate a measure of CBN approval. Other banks regularly restrict and block accounts linked to cryptocurrency usage, claiming that these actions are CBN-sanctioned. Just as importantly, it is also key to understand that the state of the naira does indirectly control the financial status of all Nigerian residents whether they use crypto or not. With the sole exception of so-called “crypto maximalists” - people who hold their entire liquid net worth in crypto and even carry out regular transactions with it instead of fiat currency pretty much everyone uses naira linked to Nigerian bank accounts under the CBN’s jurisdiction. Some crypto exchanges currently offer the ability to purchase crypto with naira by paying the equivalent naira sum into a CBN-regulated bank account - this means that the Nigerian state if it wants can still crack down on a large amount of regular crypto commerce in the country. Ultimately, if the goal is to extricate oneself completely from the suffocating grasp of Emefiele’s Soviet-style central planning policies via cryptocurrency while still living here, there can be no half measures. It will mean ditching all but a small percentage of naira holdings used to deal with daily expenses and moving one’s net liquid holdings into cryptocurrency. In such a scenario, dollar-pegged stablecoins provide the ideal hedge for both CBN policy somersaults and crypto’s legendary volatility. Whether a significant number of people reading this will be brave enough to do that is another matter altogether.

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Character Matters with Daps

Dapo Akande one of the most critical was an ability to, “Retain faith that you will prevail in the end, regardless of the difficulties”. He called this the Stockdale Paradox and it’s a notion totally unrelated to baseless optimism. It’s a sturdy belief in oneself even after taking all factors into consideration, that one will succeed. To parents whose children are still young, my advice is that you allow them to remain in the naïveté that anything is possible for as long as you possibly can. There’s no special place in history kept for those whose mantra is, “forget it, it can’t be done”. Only for those who managed to take us beyond what we ever dared believe possible. It’s time many of us unlearn some of the “facts” that have held us back for so long and quickly acquaint ourselves with truths that can set us free to fly. Great men and women have always emerged from the company of those who said “Yes, I can”. Changing the nation...one mind at a time. Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. Contact: dapsakande25@ gmail.com

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IMF, World Bank & Nigeria: We are reaping what we sowed!

Franklin Ngwu

s generally ascribed to Benjamin Franklin, “He that goes a borrowing, goes a sorrowing”. This is the typical situation of our dearly beloved nation Nigeria! With the increase in almost everything from electricity to fuel and from tomatoes to plantain especially in this period of COVID-19, Nigerians are moaning and wondering what has befallen them and what kind of government we have. To the ordinary Nigerian, it is PMB and his government that is inflicting all the pains and to a large extent, they are correct. Are our current challenges accidental, no they are not? Are they caused by COVID-19, the answer is no. Did we as a country and particularly the PMB’s government contribute and responsible to the crisis, it is a resounding yes! All the problems we are facing now started manifesting before PMB took over with an overwhelming goodwill in 2015. He campaigned and won the election on the promise of bringing change that will address most of our socio-economic problems. Over five years down the road, how are we faring? If we classify all the problems into weak revenue generation and high cost of governance, the question is what the PMB’s government has done to address these two major problems. In 2015, our excess crude account had about $2.5 billion with an exchange rate of about N200 to $1 and external debt of about $9.7 billion.

Five years after, this year 2020, excess crude account has about $72 million with exchange rate at about N430 and external debt of about $27 billion. It is the same worsening situation in other measurement variables – unemployment, inflation, insecurity, FDI etc. As many people cautioned, the solution to our economic crisis is not through excessive and continuous borrowing which has been PMB’s government approach. Now that we have borrowed and borrowed and still want to borrow with little to show for it except increasing consumption and some infrastructure, our lenders are getting worried and demanding for tougher terms and conditions before we can get our next meal ticket. Who do you blame, IMF, World Bank or Nigeria? Before 2015, it was clear that certain key reforms were pertinent to move the country forward. These include removal of many subsidies particularly fuel and electricity, reducing the cost of governance, rethinking the structure of governance and devolution of powers from federal to states and local governments. Also emphasised was the imperativeness of selling or privatising many government assets such as the four moribund refineries and many other reforms such as appointment of government functionaries and pursuit of policies and interventions from a deeply committed inclusive approach. As usual, most of the reforms and suggestions were ignored and we are where we are today, a worse situation. Interestingly as we want to borrow more, the needed reforms are now externally imposed on us and we have little or no room to say no. Moreover, while we are contending with the emerging IMF/World Bank demands, the Chinese and other creditors are waiting by the corner to enforce their own demands. Will it get better? Not immediately! It will likely get worse before it starts improving but dependent on how serious and committed PMB and his government are to do

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As usual, most of the reforms and suggestions were ignored and we are where we are today, a worse situation. Interestingly as we want to borrow more, the needed reforms are now externally imposed on us and we have little or no room to say no

what is needed. First for immediate liquidity, the removal of the subsidies should be quickly complemented with selling or privatising many government assets that are idle and wasting with the four refineries that cost about N140 billion every year to maintain without production a good place to start. Second, CBN needs to pursue a unified exchange rate that will likely result in about N400-N420 to $1. This can be achieved through the average of the multiple exchange rates we have and deliberate mopping up of the excess liquidity in the market. With such move and proper forward guidance policies from key regulatory agencies such as CBN on key issues such as interest rate and inflation, a better stability will be achieved. Third is the need to use every rainy season to plant economic trees until we plant 20 million trees in every state of Nigeria. With the potential of every tree to generate about N20 thousand revenue every year after three years when they start fruiting, every state will be able to generate additional annual revenue of N500 billion and about N18 trillion for Nigeria. Fourth is the urgent need for deliberate efforts to reduce the cost of governance. Its urgency is like yesterday. We cannot in the face of an overwhelming crisis such as COVID-19 continue to run a very extensive and expensive system of governance as we currently do. The need to fully implement the Orasonye Report cannot be over emphasised. In line with the saying that leading by example is an excellent way to teach, President Buhari needs to exhibit courage and urgently reduce the number of ministers and aides to serve as a reference point for others such as the governors and National Assembly leadership to follow. With courage, the President needs to clearly agree and pursue the necessary constitutional amendments and persuasions required to make our National Assembly work on a part time basis with significant

reduction in the number of National Assembly members. A suggestion will be to have only one chamber (upper or lower) with each state having only two to three members. Fifth and most important is the need to pursue devolution of powers particularly transferring some items from the exclusive legislative list controlled by the federal government to the concurrent and residual lists controlled by the state and local governments. This will help liberate our economy enhancing more private sector participation through the reduced regulation that can be achieved. Sixth is the urgent need to address the emerging political risk particularly the 2023 presidency. Irrespective of the economic policies we formulate and adopt, their effectiveness will largely depend on the creation of a stable and peaceful political environment. With threats and counter threats already emanating from different political groups, it is important for PMB and APC to nib the emerging crisis now by making a guiding statement on which zone the presidency will go to. It can start with an unambiguous statement that it will be zoned to the South. It can also go further to state that from an objective and critical assessment of the socio-political and economic factors, the zone that will create the best socio-economic impact and stability for Nigeria at this critical situation is the South East! Just a clear statement like this will engender unprecedented stability and prosperity for Nigeria. As we cautioned since 2015, we are again suggesting what will help in rescuing our dear nation for total collapse and we implore PMB to heed to the counsel. His legacy will be everlasting, and Nigeria will forever be indebted to him! Dr. Ngwu, is an Economist/Associate Professor of Strategy, Risk Management & Corporate Governance, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@ lbs.edu.ng

CAMA Act 2020: Appraising the legal, commercial & political implications on NGOs and religious bodies (2)

he provisions & the treaties Nigeria is a signatory to several conventions. Some of these are the AU Convention on Preventing and Combating Corruption 2003 (AU Convention), the International Convention for the Suppression of the Financing of Terrorism (CFT Convention), 1999, the UN Convention against Transnational Organized Crime (Palermo Convention), 2000 (together, the Treaties). Under the Treaties, Nigeria has an obligation to adopt the requisite legislative and other measures necessary to combat corruption, illicit enrichment, and other related offences in public and private spheres. Nigeria is also obliged to guarantee access to information and adopt anti-bank secrecy laws. See Articles 9, 11 and 17 of the AU Convention and Articles 4 and 8 of the CFT Convention. Nigeria is further obligated to institute a comprehensive regulatory regime for all entities, financial and non-financial, which are susceptible to money-laundering, in order to detect and deter all forms of money-laundering, with emphasis on record-keeping and reporting of suspicious

transactions. See Article 7 of the Palermo Convention. Thus, to the extent that the Provisions complement Nigeria’s extant legislative efforts on corruption, money laundry, terrorist financing, etc. and absent any violation of customary international law, the Provisions comply with Nigeria’s international obligations. See Articles 26 and 53 of the Vienna Convention on the Law of Treaties 1969. Not sure the Bodies can claim religious or political persecution. See Articles 6 and 14 of the CFT Convention. Thus, the thought of dragging Nigeria to the international community on the basis of the Provisions may not be apt. The commercial & the political implications Nigeria ranks 146 out of 180 countries in the 2020 Global Corruption Index. Sleaze continues to smear our image and hurt our foreign investment drive, with ultimate negative impact on our job creation and development plans. Recent events have suggested that public servants launder money through the Bodies because of the lax regulation thereto. CAMA seeks to change

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the narrative by strengthening regulation, instilling transparency and accountability and freeing slush funds for beneficial use. Thus, at present, we can only imagine the huge economic benefits this change will bring. Again, the passage of CAMA has confirmed the danger involved in having a casual attitude towards governance. Due to their apathy, CAMA was infused with radical provisions which the Bodies now found existential. Being an existential struggle, especially for the religious bodies, it is expected that never again will the Bodies be politically docile. This can only translate into a more politically charged populace, which is a very factor needed for meaningful change. Recommendations & conclusion Approaching the court or petitioning world bodies may not be the best option. It is wiser to approach the parliament to amend CAMA, and particularly seek to include safeguards ensuring (a) suspension or removal orders are not granted ex parte and (b) persons of dissimilar belief and orientation are not used as replacements. Just like corporate entities, the Bodies should forthwith step up

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Isaac Ibikunle

their monitoring and lobbying endeavours in the parliament and other power corridors. That somebody is your member is no more a guarantee that (s)he will look out for you. CAC may want to complement CAMA by quickly coming up with the requisite regulations setting out inter alia the procedure for the required reporting regime. Now than ever, the existing (sane) political and civil structures need to form synergy with the religious bodies. They should by now be a willing bride. On the whole, it is a new dawn. Ibikunle is an Associate at Olaniwun Ajayi LP, Lagos.

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BUSINESS DAY

Wednesday 09 September 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Trust deficit spurs Nigerians’ outrage against good policies Consistency in people-oriented and market-stimulating policies can fixed it

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

he inability of most Nigerians to identify an economic growth policy is not surprising given the trust deficit and lack of confidence policy makers have built over the years. This is such that any move by the government is treated with suspicion and causes outrage among the people. On the back of ending wasteful subsidies and deregulating Nigeria’s downstream petrol and power sectors, prices of petrol and electricity have risen to be cost reflective. While these longawaited critical reforms will impact the economy positively ultimately, Nigerians have instead focused on and reacted ignorantly to the immediate hurt the policy brings on them. Are they to be blamed? Of course, no. It is understandable that many Nigerians are not economically literate enough to understand why experts will canvass for ending every iota of subsidy in the economy and the benefits thereof. But, imagine having an economy where, over the years, poli-

cies have always yielded positive results, corruption at its barestminimum and Nigerians welfare always topped the FG’s priorities. With that, Nigerians would have supported government policies on the back of a track record of trust and confidence even if they were not economists who have understanding of the causes and effects of such policies. The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have also demonstrated ignorance. They said they were in talks with civil society allies and relevant organs of Labour towards embarking on strike over the petrol price hike. According to Ayuba Wabba, president of NLC, “clearly, the action of the federal government is most insensitive and an affront on the Nigerian people who are bearing the heavy burden of the COVID-19 pandemic. We will resist this latest move to impoverish the working people.” The timing of the move to end subsidies may have come at a time Nigerians are battling the negative effects of the COVID-19 pandemic – from job losses, shrinking wallets

to inflationary pressures and lower purchasing power. However, just like the popular saying, the best time to have ended the subsidy would have been years back. But the next best time is now. If keeping the petrol subsidy actually had an impact on the livelihoods of the poor, then it has failed after Nigeria became the poverty capital of the world in 2019, overtaking India for the first time despite having only a third of the Asian country’s population. Some 87 million Nigerians are categorised as poor as they live under $1.90 a day. Why continue to waste huge funds on subsidising consumption when such funds can be directed into more productive areas with direct impact on businesses and households. The government spent four times more money last year, N730.9 billion, subsidising fuel than building new schools, health centres and equipping new science labs. Also, Nigeria still suffers huge gaps in infrastructure which will require about $100 billion annually for the next 30 years to effectively tackle the challenges. Nigeria can’t avoid wasting funds anymore. There is a lot to do to get Nigeria

on the path to prosperity. Keeping the domestic price of oil artificially low with the fuel subsidy has discouraged additional investment in the oil sector, according to a Brookings Institution report in 2012. This is why despite issuing multiple refinery licences, Nigeria still does not have a single wellfunctioning refinery. The problem for investors has been how to recoup their investment under the artificially low-price structure. It is our expectation that the federal government should learn from reactions of Nigerians against price hikes in petrol and electricity prices. It is a reaction based on lack of trust and years of sufferings. The rich and the powerful – especially in government – in Nigeria have in the past got together to run the country and the market for their benefit, hence, even when they mean well –which they rarely do – Nigerians find it hard to believe them, leading to uproars. Trust can’t be built in a day, but with consistency in delivering market stimulating and peopleoriented policies, it will be restored gradually.

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Wednesday 09 September 2020

BUSINESS DAY

COMPANIES&MARKETS The Companies and Allied Matters Act 2020 - what you need to know UDO UDOMA & BELO-OSAGIE

Part 10 – Company administration

Background he Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (“CAMA 1990”) was initially made law in Nigeria in 1990 as a decree of the military government. It was modelled on the English Companies Act 1985. For thirty years, there were no significant amendments to the CAMA 1990, notwithstanding that England has, over the past three decades, amended and replaced its own Companies Act. Nigerian companies had to, essentially, rely on a 30-year old law to govern the way businesses operate in our dynamic and exponentially evolving global community. However, this all changed on Friday the 7th of August 2020, when President Muhammadu Buhari, gave his assent to the Companies and Allied Matters Act 2020 (“CAMA 2020”). In the course of a 12-part series, Udo Udoma & BeloOsagie will provide a review of the provisions of the CAMA 2020, highlighting changes that have been introduced into the body of Nigerian company law by this groundbreaking legislation. Company administration The CAMA 2020 has introduced company administration into the body of Nigerian company law. Administration is a process that involves the appointment of an administrator to manage the company’s assets, with a view to rescuing the whole or part of the company’s undertaking as a going concern. As an alternative or a precursor to winding up, administration provides the possibility for a company to survive its financial troubles and continue trading as a going concern. Immediately the appointment of an administrator takes effect, no legal action (including legal proceedings, execution, distress etc.) may be instituted or continued against the

company or the company’s property, except with the permission of the Federal High Court (the “Court”) or the consent of the administrator. This moratorium protects the company from enforcement proceedings and legal action from its creditors, thereby enabling the administrator focus on implementing measures that are aimed at rescuing the company. Even though the rescue of the business is the primary objective of administration, an administrator may pursue some other course such as achieving a better result than the creditors as a whole than would be likely if the company were put into liquidation or realising property in order to distribute to secured or preferential creditors if the administrator is of the opinion that it is not reasonably practicable to rescue the company or that the other objectives will yield a better result for the company’s creditors. The administrator may in fact decide that it is best that the company be wound up or explore a compromise with creditors through a creditors’ voluntary arrangement. How does a company go into administration? A company can go into

administration upon an order of the Court appointing an administrator. An application for an administration order can be made by: i. the company; ii. its directors; iii. one or more creditors of the company; iv. the designated officer of the Court appointed to act as receiver; v. a liquidator; vi. the holder of a floating charge in special circumstances; or vii. a combination of any of the persons listed in (i) to (iv) above. Administration can also be commenced out of court. This happens where an administrator is appointed by either the company itself, its directors or the holder of a floating charge that meets the stipulated conditions. Where an appointment is made out of court, the person that appointed the administrator is required to file a notice of appointment, and such other documents as may be prescribed, with the Corporate Affairs Commission (the “CAC”), and in some instances, the person is also required to file a notice of appointment and such other documents as may be pre-

scribed, with the Court. The Administrator The administrator must be a qualified insolvency practitioner, whose remuneration and expenses are payable out of property, which is in the administrator’s custody, in priority to the claims of holders of a floating charge. Two or more administrators may be appointed jointly or concurrently. It is noteworthy that the administrator is not an agent of the person that appoints him; upon appointment, an administrator becomes an officer of the court and an agent of the company. An administrator is required to perform his/her functions as quickly and efficiently as possible. Process of administration Within 60 days of appointment, the administrator is required to prepare a detailed schedule of assets and submit a copy to the person who appointed him. The administrator is also required to send a notice of their appointment to the company, obtain a list of the company’s creditors, and send a notice of their appointment to each creditor of whose claim and address the administrator is aware. The administrator is also required to publish a notice of

appointment at the CAC, not later than 14 days of his appointment. The administrator may issue a notice to an officer (or former officer), any founder or any employee (or former employee) of the company, requiring such person(s) to provide a statement of the affairs of the company. Having considered the state of the company’s affairs, the administrator would circulate a proposal to the creditors for achieving the purpose of the administration. Where the proposal is not approved by the creditors, the administrator will apply to the Court for further direction. Effects of administration While a company is in administration: • every business document issued by or on behalf of the company or the administrator, as well as the company’s website, must state the name of the administrator and clearly indicate that the company is in administration; • no resolution may be passed for the winding up of the company, and no order may be made for the winding up of the company, except in limited circumstances; • all pending winding up petitions will either be dismissed or suspended, except in limited circumstances; • a receiver appointed by the holder of a floating charge will vacate office; • no steps shall be taken to enforce security over the company’s property or to repossess goods in the company’s possession under a hire purchase agreement, except with the permission of the administrator or the court; • a landlord may not exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company except with the consent of the administrator or the permission of the court; • the administrator may remove or appoint a director, whether or not the appointment is to fill a vacancy; • neither the company nor

an officer of the company may exercise management powers without the consent of the administrator; and • the administrator is empowered to take custody of all the property to which he thinks the company is entitled. Bringing administration to an end The appointment of an administrator expires at the end of a period of one year from the date on which the appointment took effect, except where it is extended by the court for a specified period (prior to expiration) or extended for a period not exceeding six months with the consent of each secured creditor of the company (and qualified preferential creditor(s) where applicable). Prior to the expiration of the administrator’s term (or any extension thereof), the court may, upon an application by the administrator or a creditor, order the cessation of the appointment of the administrator. Administration will also come to an end before the statutory period, where the administrator files a notice at the Court and the CAC, stating that the objective of the administration has been sufficiently achieved. Depending on the circumstance, an administration may also end through a public interest winding-up or upon the application of a creditor. Depending on the circumstance, an administration may lead to a creditors’ voluntary liquidation or the dissolution of the company. This series was produced by Udo Udoma & Belo-Osagie for general information purposes only and does not constitute legal advice and does not purport to be fully comprehensive. If you have any questions or require any assistance or clarification on how the subject of this guidance note applies to your business, or require any company secretarial or business establishment services, please contact us at uubo@ uubo.org

IFC releases $39m for Engee manufacturing recycling plant in Ogun MIKE OCHONMA

ngee PET Manufacturing Company Nigeria Limited; a plastic bottle manufacturer has been granted $39million loan by the International Finance Corporation (IFC) to build a new plant. The conglomerate are manufacturers of polyethylene terephthalate (PET) resin used in the packaging of soft drinks, bottled water and other household and

pharmaceutical products. With the raw material as plastic waste targeted at recycling tons of used plastic bottles per year, it will tremendously contribute to the promotion of recycling activities the country. Nigeria produces an average of 2.5 million tons of plastic waste per year. With this development, the company is now ready to green its plastic packaging in the country. Set up in 2014 as a Greenfield joint venture,

Engee PET Manufacturing Company Nigeria Limited (E-PET) employs about 500 people. Engee said in a statement that, the financial institution stated that its support is being provided under a financing plan that includes a $24 million senior “A” loan from the IFC and a $15 million subordinated loan from the Private Sector Blend Facility, provided by the International Development Association.

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IFC’s financing is for the construction of a continuous polymerization PET resin plant in Ogun State, southwestern Nigeria. The facility, which is expected to be fully operational within 2 years, will derive more than 20 percent of its raw material from local plastic waste, helping the country to strengthen the plastic bottle recycling and manufacturing sectors. “The plant’s collection, cleaning and treatment processes are sufficient to accel-

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erate the evolution of plastics recycling in the country and support jobs along the recycling value chain. This will be a great victory for the Nigerian economy and its environment,” said Alexander Gendis, managing director, Engee Manufacturing. According to estimates, Engee Manufacturing’s new plant is expected to double the number of recycled plastic bottles in Nigeria by redeploying up to 30,000 tons of used plastic bottles per year. @Businessdayng

Even so far, the challenge for the recycling sector remains huge in Nigeria. According to official figures, Nigeria generates some 32 million tons of waste per year, of which 2.5 million tons are plastic waste. The country’s disposal, recycling and waste management system is very inefficient, especially for plastic and non-plastic waste, most of which (70 percent) ends up in landfills, sewers, beaches and water bodies.

Wednesday 09 September 2020

COMPANIES&MARKETS

BUSINESS DAY

Business Event

Inside Nigeria’s bitumen irony OLUWAMAYOMIKUN DEJI-OMOTAYO

igeria is home to the second largest bitumen deposit in the world; spanning about 120km. Nigeria is also home to some of the worst roads in the world. How ironic. In July 2020, the Minister of Works and Housing, Babatunde Fashola revealed that the Federal Executive Council (FEC), with the President Muhammadu Buhari presiding, approved a new policy on the local production of bitumen. The apparent need for this new policy emerged from the review of a policy memorandum which revealed that a substantial amount of the bitumen used in road construction in Nigeria is imported; costing billions of dollars. The aim of the new policy is centred around further diversifying the economy and stimulating growth through the local production of bitumen. Somehow caught unaware by the obvious … In Ondo state alone, about 16 million barrels of bitumen are available for extraction. The bitumen reserves in the country are estimated at about 42.7 billion metric tonnes with the expectation that the locally produced bitumen will be sold at less than 50% of the current price of imported bitumen. This

places the local industry at an advantage with an available supply at a cheaper rate to service the existing demand for bitumen of about 500,000 metric tonnes. Billions of dollars are leaving the nation’s coffers annually to pay for value we have the resources to create ourselves. Bitumen was first discovered in Nigeria as far back as the 1900s with the first exploration efforts made in 1905. Bitumen has always been here. We have been aware of its existence for over a century so the need for exploration should have been birthed alongside its discovery, given its importance. There is an abundance of bitumen deposits in the country and a billion-dollar market exists for it to be traded, yet, there has been no sufficient and lasting effort to explore this resource for many decades. Leaving these reserves untapped does not limit the conversation to what we could generate if only we harnessed this growth potential – the opportunity cost- but it also creates room to shed light on the other costs of this inaction; the environmental damage. It is quite interesting to discover that the earth is practically bleeding bitumen and begging to be exploited. In bitumen-rich environments, the people are faced with the challenge of a degradation

of their farmlands and the quality of their arable soil. Bitumen can be found so close to the surface that it actually seeps through. Communities in Ondo state, where the largest bitumen deposits in the country can be found, have been crying out for years for investors to flood their communities and bring about growth, development, employment and generally a better life for the citizenry by utilizing their wealth of natural resources. These communities have been trapped in a vicious cycle of unmet expectations and dashed hopes. When we look at this plainly, we see that in the failure to offer them the chance at a better life, we are inadvertently eroding the quality of their current one. These are not new discoveries. These are not new problems. So, as exciting as the new directive for local exploration of bitumen is, it gives rise to question “why now?”. We have clearly waited all this time so why now? Resource curse … who will deliver us? There has been more chatter about bitumen exploration in recent years and steps taken geared towards this vision. In 2017, the Ondo state government was awarded an oil block license to explore bitumen to kick-start something new.

FG explains crucial role of Dangote Fertiliser to agricultural agenda OLUSOLA BELLO

he Federal Government has asserted that Dangote Fertiliser Limited is very important to the achievement of its Agricultural Transformation Agenda, aimed at boosting food security in the country. Besides, the construction of the Fertiliser plant has been fully completed and is set for commissioning in the next few months. The Minister of Agriculture and Rural Development, Muhammad Sabo Nanono, who stated this during a facility tour of the Dangote Fertiliser plant in Lagos at the weekend, called on the company to assist the Federal Government’s agricultural mechanisation scheme as well as extension services for small scale farmers. According to him, Dangote support is needed for the success of the mechanisation scheme, which he said, is expected to cover 632 local government areas across the nation. “It is very clear that Dangote, in one way or the other,

will help in this programme by the Federal Government.” he said. Nanono said Aliko Dangote’s investment in fertiliser production will contribute to improved farm yields and agricultural productivity, which are critical to Nigeria’s longterm food security. The Minister commended Dangote for keying into the Federal Government’s Presidential Initiative on Fertiliser aimed at bringing down the cost of fertilisers across the country. “The capacity of Dangote Fertiliser is enough to change the way fertiliser is being used in this country. We are going to complement his efforts and support him in this regard. The challenge of the supply of fertiliser is going to be solved by the Dangote Fertiliser plant. I can now go home and sleep,” he said. According to him, the Federal Government wants to make sure that Nigerians have enough food to eat. We can only achieve the objective with enough fertiliser in the country. I am extremely proud of Aliko Dangote for what he is doing in this country. I think no other person has probably www.businessday.ng

done half of what he is doing in the area of investment. If we can have just additional two of his type, this country will be completely different. I think all we have been trying to do as far as agricultural development is concerned, has been captured by the Dangote Fertiliser plant. Nigeria has a potential for agriculture. Obviously, Dangote Fertiliser is going to help the government and the farmers, he said. He added that the Federal Government wants to make sure that Nigerians have enough food to eat. We can only achieve that objective with enough fertiliser in the country. That’s why we consider Dangote Fertiliser as a partner in progress in achieving food sufficiency in the country, he said. Nanono stated that the small-scale farmers are going to benefit from Dangote Fertiliser. “There is need for us to support small scale farmers who have been helping the government in respect to food security. Once the small-scale farmers get all the necessary support, there will be agricultural revolution in this country.

L- R: Churchill Kalu, trustee secretary and project implementation consultant; Gift Chikere, program officer, Dew of Hope Foundation; Oluleye Ayodeji, CEO, Dfortune Pest Solutions Limited, and Peter Ayewoh, chief commercial manager, Dfortune Pest Solutions Limited, during the donation of 504 units of hand-sanitizer to social impact cause by DFortune Pest Solutions Limited to Dew of Hope Foundation in Lagos. Pic by Pius Okeosisi L- R: Churchill Kalu, trustee secretary and project implementation consultant; Gift Chikere, program officer, Dew of Hope Foundation; Oluleye Ayodeji, CEO, Dfortune Pest Solutions Limited, and Peter Ayewoh, chief commercial manager, Dfortune Pest Solutions Limited, during the donation of 504 units of hand-sanitizer to social impact cause by DFortune Pest Solutions Limited to Dew of Hope Foundation in Lagos. Pic by Pius Okeosisi

L-R: Gerald Adewole, director special duties, National Council for Art and culture; Isa Abduwahab, ICT expert, and Segun Runsewe, DG, NCAC, during the inauguration of creative industry covid 19 initiative implementation subcommittee in Abuja. Pic by Tunde Adeniyi

L-R: Kayode Odumosu, company secretary, Abucoop Microfinance Bank Limited; Arokodare Michael, chairman board of director, and Jegede Emmanuel, MD/CEO, during the 10th year anniversary Abucoop Microfinance Bank Limited in Abuja. Pic by Tunde Adeniyi

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BUSINESS DAY

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Wednesday 09 September 2020

BUSINESS DAY

insurance today

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Recapitalisation if properly handled will lead to growth of insurance business - Borokini Richard Borokini has retired as the Director-General of the Chartered Insurance Institute of Nigeria, having joined the Institute in March 2016 and served for four eventful years. In this interview with Modestus Anaesoronye, he shares his experience as CEO of the Institute, his achievements and challenges. Excerpt: Congratulations Sir on the successful completion of your appointment as the DG of CIIN. How was it working in this Institute all these while? t has been an exciting experience. It gave me an ample opportunity to serve the industry after working in various insurance companies rising to the post of Managing Director of a leading insurance company in Nigeria, Royal Exchange General Insurance Company. Would you say from your experience here, that the Institute was meeting its set goals? I can affirm that the Institute has been meeting the goals for which it was established. The Institute is established by the law to determine the standards of knowledge and skills to be attained by persons seeking to become registered members of the insurance profession in Nigeria and review those standards from time to time as circumstances may permit. So far so good the Institute has fulfilled this mandate by conducting examinations twice a year and graduating qualifying students from the examinations. To date, we have produced close to 3,500 associates and 217 Fellows. We have consistently held seminars , conferences and other educational programs for the benefit of our members and the financial services sector e.g Breakfast seminars , Professional Forums, Educa-

Richard Borokini

tion Seminars , Mentorship programs for young insurance professionals. For the social well being of our members, we have held such programs like the fitness, annual Picnics and the elders forum. ln the last few months because of the outbreak of the Covid 19 pandemic some of this programs are now being held virtually. For example the last Mentorship Program for Young Professionals was held virtually and we had over 120 participants. This will be the trend for most of our programs in the new normal

What was difficult for you to achieve as the DG, and what were your hindrances? Reaching the target set for Membership. Although we tried to increase the penetration from 8,000 in 2016 to 12 ,000 in year 2020. This is still far from the targets. The major hindrance is raising the level of awareness for insurance and the Institute that will cause people to embrace our profession. Are you comfortable with the state of the insurance industry today? If not, what are your frustrations? The industry certainly

has made some progress but a lot still need to be done to increase our contribution to the GDP which is very low. We need a collective effort to do this. We should not compete on price, but on the value of our product offerings. Give your view on what the insurance industry will be in the next five years? In the next five years, we should have doubled what we are producing as an industry which will affect our contribution to the GDP. Our insurance professionals should be able to measure up with their peers anywhere in the world in terms of knowledge and disposition. Richard Borokini has seen it all, both as a player and now a kind of regulator, what next are you planning to do after CIIN? I will be actively involved in sharing knowledge to the young ones and offering professional services to the industry as a lawyer and Chartered Insurance practitioner. Also i will now have ample opportunity to write books which i loved to always do and most importantly have more time to serve God. What is your view on the ongoing recapitalization in the insurance industry? If it is properly handled, it will lead to the growth of the industry. The regulator should work with the operators on how best to implement this without causing much disruption.

Report shows North-East performed lowest in insurance compliance Modestus Anaesoronye

eport on level of compliance to different compulsory insurances in Nigeria show that North-East is lowest, while South –West is highest with Lagos leading by Sate level. This was shown in a report titled: “Nigeria Insurance Digest 2018” released by the Nigeria Insurers Association (NIA). Compulsory insurance products in the country are Third Party Motor Insurance,

Group Life Insurance, Builders Liability Insurance, Occupiers Liability Insurance, Building Under Construction and Health Care Professional Indemnity. The report further showed Yobe State as the poorest compliant state with only N689 million insurance gross premium written or insurance sold out of a total of N413.8 billion recorded sales by 58 insurance companies. The North West also complied less as the industry recorded N14.2 billion while the operators recorded N39.1 billion in the North Central www.businessday.ng

region of the country. On the other hand, the South-West is the most compliant with gross premium written of N329.1 billion recorded sales out of the total N413.8 billion insurance sold. Meanwhile, Lagos State continued to lead in the statutory and regulatory compliance. It emerged as the most insurance compliant state as insurance companies sold policies worth N196.5 billion out of N413.84 billion recorded in 2018. Compliance in the SouthEast is also poor with only

N5.7 billion gross premium written or insurance sold. The operators recorded N24.8 billion in the SouthSouth with Rivers State emerging as the most compliant going by a sale of N5.5 billion and Bayelsa State at the bottom going by N142 million sales. The state has always led in the purchase of all insurance products, especially the compulsory insurances in the country, Aside Lagos, insurance companies sold a total of N329.1 billion in the SouthWest.

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Unitrust Insurance introduces Travel Policy with COVID-19 Cover Modestus Anaesoronye

nitrust Insurance Company Limited in collaboration with Swan International Assistance (SIA) a travel medical assistant provider with vast international presence in various countries, is now able to offer cover for certain events relating to COVID-19 across a wide range of its underwritten travel insurance according to an official announcement. The new added Covid 19 feature is aimed at protecting customers against the financial implications of a COVID-19 hospitalization. “We have been working intensely with our partnersto ensure we have the best features the policy offers. We’ve got your back with our 24/7 assistance and a range of prescreened hospitals to help you get the right attention and care,” Mr John Ijerheime (Managing Director/ CEO) said. He further added that the Travel Insurance Solution is available online to

enable customers to conveniently purchase their travel insurance policy from any part of the world. Unitrust Insurance travel insurance covers the following features a 24/7 Medical assistance in the event insured falls ill with COVID-19 while on holiday; Emergency medical expenses due to covid-19; Emergency medical evacuation and repatriation due to covid-19; Leisure sport activities ; Loss of Passport or Baggage; Repatriation of Mortal remains and Emergency Dental Coverage Unitrust Insurance Company Limited is one of the leading general insurers in Nigeria with a track record of serving our clients that dates back over 34 years. Founded in 1981 whilst commencing service in 1986, the organization celebrated its 34th year of committed service within the insurance industry on August 13th, 2020. Unitrust provides General Insurance services to create and protect wealth for individuals, families, and Business.

Top Insurance CEO’s, others gear up for Dive In Nigeria 2020 Modestus Anaesoronye

ive In, a global movement in the insurance sector to support the development of inclusive workplace cultures has unveiled its line-up of speakers for the Dive In Nigeria 2020. These reputable speakers will drive the conversation around the festival theme, “Promoting Inclusion & Diversity in the Nigerian Insurance Industry for a Quantum Leap.” The event is scheduled to take place on Thursday 24th September 2020 on a virtual platform. Already, industry stakeholders within the Insurance and Finance sectors are preparing to grace this event as it is reputed to bring to the fore, solutions and ideas that drive growth, promote gender diversity within the sector globally. The Inaugural event in 2019 discussed the importance of empowering women by listening to the journeys of female managing directors and this year 2020 ‘Dive In’ takes it a level up. Facilitating Dive In 2020 Virtual event in Nigeria is, financial broadcast journalist and business anchor at CNBC Africa, Esther Awoniyi. Billed to speak on the panel of esteemed industry leaders and in no particular order is the award-winning insurance powerhouse, Fun@Businessdayng

mi Omo, new managing director, Enterprise Insurance; AdetolaAdegbayi, executive director, General Insurance Business Division, Leadway Assurance Company Ltd. And Nike Anani, co-founder African Family Firms. The other two notable speakers include Corneille Karekezi, group MD/CEO, African Re; and Ibitunde Balogun, executive director Tangerine Life Insurance Limited. Speaking on the event, Adegbayi, said: “Our world is evolving and our society remains dynamic, calling for an ever-increasing need for inclusion, be it in terms of gender, race/tribe, or culture and from a very carefully balanced view of the demand for responsibilities and obligations which are deeply embedded within our physical environment and the human psyche.” She further explained that the ‘Dive In’ Festival will spur participants to break boundaries in risk management and insurance, seeing new possibilities in the face of new trends. “The Dive In Nigeria edition comes at no better time than now, to create awareness about inclusion and gender diversity. It is imperative as an industry to foster diverse and inclusive teams for productivity and, as an advocate for this important discourse, I am excited to share my story and be part of the change this festival hopes to bring.” She said.

Wednesday 09 September 2020

BUSINESS DAY

BANKING

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How top banks performed in H1 2020 Stories by HOPE MOSES-ASHIKE

anking and financial sector recorded yearon-year growth of 28.4 percent based on second quarter GDP numbers published recently by National Bureau of Statistics (NBS). The banking sector accounts for over 38.0 percent of total activity on the Nigerian Stock Exchange and the sector has remained resilient, emerging as the best performing as part of the boarder financial services sector. Reviewing the first half of 2020 financial results of top banks, Ayodeji Ebo, managing director, Afrinvest Securities Limited said GTBank’s gross earning also referred to as total revenue or top line, increased by 1.5 percent year-on-year from N222 billion in the first half of 2019 to N2225 billion in the first half of 2020 while profit after tax or bottomline declined by 4.9 percent year-on-year to N94 billion from N99 billion in the first quarter of 2019. The loan impairment loss, which refers to the provision made for loans that may not be gotten back, surged by 209 percent yearon-year to N7 billion from

N2 billion reflecting the impact of Covid-19 on their loans. Despite the increase in the cost to income ratio of GTBank to 45 percent due to higher regulatory charges – that is the cost that banks are mandated to incur by law – the bank remains the most cost-efficient. The bank increased loans and deposit by 8% and 27 percent respectively between December 2019 and June 2020. The bank declared an interim dividend of N0.30 translating to a dividend yield of 1.1 percent based on the current share price of N26.55k. qualifica-

tion date is September 15, 2020 and payment date is September 21, 2020. Zenith Bank Plc posted an impressive audited half year result. Gross earnings improved by 4% year-onyear from N332 billion to N346 billion. Profit after tax advanced by 17 percent year-on-year from N89 billion to N104 billion supported by 55 percent year-on-year reduction in income tax expense. The bank increased loans and deposits by 16 percent and 15 percent respectively between december 2019 and June 2020.

Union Bank explains position on Lokoja branch closure

nion Bank Nigeria Limited said it will respond to the closure of its Lokoja branch by the Kogi State Internal Revenue Service through the appropriate channels in an effort to ensure fair and proper assessment, and subsequently, prompt resolution of the situation and reduce the inconvenience to customers According to the statement, “As an institution with a proven track record of responsible corporate citizenship, it takes civic obligations seriously. For the benefit of our customers, the press, and members of the general public, we wish to state the following, with regard to the abovementioned incident. “Occasionally, as in this case, we may disagree with state entities over the objectivity of tax assessments carried out relating to our

business. These are typically resolved through rigorous professional reviews and audits, and sometimes through legal channels.” The bank added that, “We are therefore disappointed that in this instance, the Kogi State Internal Revenue Service has chosen to escalate the issue rather than work through a professional review process to seek a prudent resolution. “We are directing our re-

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sponse through the appropriate channels as our objective is to ensure fair and proper assessment, and subsequently, prompt resolution of the situation to reduce the inconvenience to our customers.” The bank then urged customers impacted by the closure to choose convenient digital channels - UnionOnline, UnionMobile and *826# - which are available 24/7 for their banking needs.

Non-Performing Loans (NPL) which refers to loans with interest and or principal payment outstanding for more than three months reduced to 4.7 percent despite the Covid-19 impact due to the restructureing of the loans. This is a strategy to help customers with difficulties in meeting up with their obligations. The cost to income stayed flat at 50 percent. Zenith declared an interim dividend of 30 kobo, a dividend yield of 1.7 percent based on the share price of N17.40k. Qualification date is september 16, 2020 and

payment date id september 22, 2020. UBA’s gross eranings increased by 2% year-on-year from N294 billion in the first half of 2019 to N300 billion in the fist half of 2020 while profit after tax dipped 22 percent in first half of 2020 to N44 billion from N57 billion in first half of 2019. This is the stipest yearon-year profit after tax decline among the top banks. The decline in profitability can be attributed to the 150 percent and 21 percent year-on-year increase in loan impairment charges and operating expenses. UBA declared an interim dividend of 17 kobo resulting in a dividend yield of 2.6 percent based on the share price of N6.45k. qualificationdate is September 15, 2020 and payment date is September 23, 2020. Stanbic IBTC Holding Plc grew both its top and bottom lines. The bank’s gross earnings increased by 7.8 percent year-on-year from N117 billion in the first half of 2019 to N126 billion in the first half of 2020. Profit after tax was up 25 percent to N45 billion from N36 billion in 2019 despite the 1,250 percent year-onyear increase in laon impairments. The PAT was helped by reveunue from trading gains

in FX and fixed income secrities, which increased 27 percent year-on-year to N69 billion. However, the bank cut its interim dividend to 40 kobo from N1.00 in 2019, translating to a dividend yield of 1.1 percent based on its share price of N38.00. qualification date is September 15, 2020 and pyament date is september 30, 2020. In a similar positie trend, Access Bank Plc grew its gross earnings by 22 percent year-on-year from N324 billion in the first half of 2019 to N397 billion in the first half of 2020, boosted by a whopping 191 perceny yearon-year jump in non-interest income. Non-interest income relates to income from other sources apart from loans, bonds, and treasury bills. The bank’s PAT dipped marginally by 1.4 percent year-on-year to N61 billion in the first half of 2020 from N62 billion in the first half of 2019 on the back of significant y-o-y increase in loan impairment charges and operating expenses. The bank proposed an interim dividend of 25 kobo resulting in a dividend yield of 3.9 percent based on the current share price of N6.45k. qualification date is september 17, 2020 and payment date is september 28, 2020.

Ecobank Nigeria set to boost regional trade

cobank Niger ia, a member of the pan African banking Group has concluded plans to host its first Regional Trade Conference. The virtual forum with the theme “Facilitating Regional Trade in the emerging AFCFTA era” is slated for the 22nd of September. The conference, which will feature presentations and panel discussions by highly experienced subject matter experts and thought leaders in relevant industries, will provide an opportunity for exporters and importers within Africa to engage, creating a marketplace experience. The Ecobank Nigeria ‘Africa Trade Conference 2020’ earlier slated for March was postponed due to the lockdown restrictions following the outbreak of the COVID-19 pandemic. Announcing the new date and

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movement of the conference to an online platform in line with current realities, Sunday Abah, head, trade finance, Ecobank Nigeria stated that due to its unrivalled footprint across Africa, Ecobank is uniquely positioned to facilitate cross border trade within the region leveraging its comprehensive trade solutions and various payment methods available across its network within Africa. According to him, “Ecobank’s unique intra-Africa trade solutions enable settlements of international transactions and mitigation of payment risk while providing regional solutions such as issuance of payment guarantees to exporters without the need for a letter of credit and its related costs to the importer. Ecobank works closely with clients in structuring transactions, settlements, financing and risk @Businessdayng

mitigation” he noted. Further, he said “Our trade products and solutions are designed around two broad areas; trade finance and trade services. Trade Finance enables our customers benefit from adequate and well mitigated credit facilitation in the area of Import finance, export finance, bill discounting, trade loans, distributor finance, payables and receivables finance, structured trade and commodity finance amongst others while our trade services, offer our customers the advantage of speedy turn around and error free processing of their import letter of credits, import collections, avalised bills, Customs bonds, export collections as well as their local purchase orders and payment invoices, via our electronic trade platforms OMNI e-Trade and OMNI eFSC (electronic financial supply chain)”.

Wednesday 09 September 2020

BUSINESS DAY

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BUSINESS DAY

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Wednesday 09 September 2020

BUSINESS DAY

AGRIBUSINESS

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How low mechanisation hinders Nigeria’s agric potential Josephine Okojie

ow level of agricultural mechanisation on farms across the country has continued to limit the capacity of farmers to expand their cultivation areas, perform timely farming operations, and achieve economies of scale in food production. Stakeholders in the sector stated that for the country to attain a high level of food su f f i c i e n c y a n d re d u c e dependency on food imports, it had to improve the level of agricultural mechanisation. Available statistics show that Nigeria is one of the least mechanised farming countries in the world with the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation ( FA O ) ’s 1 . 5 h p / h e c t a r e recommended tractor density. “Mechanisation is a very critical issue and it must be at the center of the country’s food security plan,” said AfricanFarmer Mogaji, CEO of Xray Consulting. “If far mers continue to use crude equipment, their poverty can never be

eradicated. Farmers need to farm and harvest their produce using mechanisation to boost their productivity and profits, thus, impacting their livelihood,” Mogagi said. He noted that young people will only find agriculture attractive when it becomes fully mechanised and take it up as a profession. With the continual drift of the young population from the rural to urban centers in search of white-collar jobs and away from the drudgery

NEPC commends Cross River Green Money Initiative in Agriculture Mike Abang, Calabar

he Nigerian Export Promotion Council (NEPC) has commended the Cross River State Government for it Green Money Initiative in Agriculture towards revamping the State economy through diversification in the wake of the COVID-19 pandemic. Olusegun Awolowo, chief executive officer, NEPC said this at a recent capacity building workshop with the Theme ‘Enhancing Global Market Access for Cross River Green Money Initiative’ organised by NEP C in collaboration with a Cross River State market oriented Agriculture Initiative held in Calabar the state capital. Awolowo said undoubtedly, Cross River i s r i c h i n a g r i c u l t u ra l p ro d u c t i o n w i t h h u g e potential in cocoa and other exportable products, which he said can generate

employment for the teaming youth and women, support wealth creation and further boost the economy of the state. The CEO who was re p re s e n t e d by Ud u a k Ekukowoh, the director -international export office Abuja, further disclosed that exporting can increase the country’s ability to compete in the domestic market while also allowing Nigeria to diversify its markets in such a way that and also hedge its farmers against global commodity price volatility. “At the national level, Nig e r i a mu st d i ve r si f y its export earnings and move away from its overdependence on oil as the only s ource of foreig n exchange revenue,” he said. “We are living witnesses to the challenges the recent global crash in oil price has created in the implementation of the 2020 budget apart from the distortions and structural imbalance we have seen in the past,” he added. www.businessday.ng

of manual farm labour, selfsufficiency in food production is becoming a herculean task. “Currently, more than 70 percent of farm labour is provided by human power; over 20 percent is provided with draft animal power and less than 10 percent by mechanical power,” Elesa Yakubu, national president, Tractor Owners and Operators Association of Nigeria (TOOAN), told BusinessDay. In Nigeria, a significantly

higher proportion of the farming area is still cultivated by hand tools. The International Food Policy Research Institute (IFPRI) reckons that Nigeria is still at the early stage of agricultural mechanisation. But experts acknowledge that mechanisation of powerintensive operations has been slow. When by the Food and Agricultural Organisation, Nigeria had only 30,000 tractors.

African largest economy is currently adding 1,000 new ones each year, which is still not considered sufficient in replacing the aging, worn out, and broken down ones, the government says. This means on a per capita basis, Nigeria ranks 132nd out of the 188 countries worldwide measured by FAO / United Nations in terms of the number of tractors in the country. Nigeria has fewer tractors than minnow countr ies like Serbia & Montenegro, with 400,000, Pakistan with 320,000, or Uzbekistan with 170,000 tractors. But, it is not that Nigerian farmers are not interested in using mechanisation; they are faced with some challenges that limit their use. Ademola Adefemi, who runs a 10-hectare of maize and cassava in Ogun State said, “I love using tractors for tilling the land and ploughing but most times it is difficult to get it on time because other farmers want to hire it too. The few tractors we have are not given to farmers because government officials prefer keeping them instead of leasing it out to farmers.” The Federal and State governments try to provide tractors to farmers under

different agric mechanisation schemes but most of the efforts are being frustrated by civil servants, who ensure such schemes never benefit ordinary Nigerian farmers. “Recently, I visited a government office for tractor hiring and I discovered that there were 17 tractors that have not been used. Only two tractors are being leased to farmers and I had to queue for three weeks before I could hire a tractor,” Adefemi. He noted that it is very challenging because most farmers depend on rainfall for their cultivation which is time-bound. Iceland with a population of 364,134 people has more tractors per hectare of cropland than any other nation in the world. They have 37.2 tractors per 1,000 people, while Nigeria has 0.223. This means that Iceland has almost one tractor for each farmer and 166 times more mechanised in their farming than Nigeria – Africa’s most populous country. Nigeria needs a minimum of 746, 666 tractors equipped with tillers and other support gadgetr y to sufficiently mechanise agriculture going by best practices, according to the Ministry of Agriculture.

Three Crowns commences family dance off with ‘Jara’ campaign

n another bold, unique and very exciting move, Three Crowns, Nigeria’s leading low cholesterol and heart-friendly milk, will take its care for mothers in Nigeria to a new and thrilling height through a family challenge which the brand has themed Family Dance Off. The challenge, which will hold all through the month of September, 2020, would be staged digitally, in keeping with the new normal occasioned by COVID-19. Omolara Banjoko, marketing manager, Three Crown, explained that dance choreography in traditional attire will be showcased o n t h e b r a n d ’s s o c i a l media handles as a guide. Consumers online will then be invited to recreate their own video showing their mums and family members performing their own dance steps in their preferred attire. “Posted and properly tagged videos will be collated and judged to reveal top five (5) entries which will be selected and posted on the brand’s page for followers to pick the top three (3) winning

families,” Banjoko explained. According to her, entries will be judged based on synergy and creativity of the routines, with Jara reward for participation, freebies and offline shopping vouchers are guaranteed for winners. It would be recalled that Three Crowns recently unveiled ‘Jara to the Heart of the Home’ campaign, through which it has been s h ow ca si ng i t s u n i qu e care for all mothers across trade channels including the open retail market and neighbourhood stores in Lagos, Abuja, Ibadan, Ilorin, Aba, Benin and Enugu till October 2020.

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To participate in the campaign, shoppers are required to buy products worth N3,000 or N5,000 within a selection of Three C row n s p ro d u c t ra ng e including the refill pouch, big family pack refill pouch and evaporated milk in cans; to win free sachets of milk and lots of gifts. This offer is valid while stocks and gifts last. T h e Fa m i l y D a n c e off Challenge is a special part of the campaign that highlights Three Crowns’ care for the heart and, in particular, mums’ hearts; while inspiring different things which a healthy heart

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can do. Chioma Otisi-Igwe, b ra n d ma nag e r, Th re e Crowns, said that the Family Dance Off is among other things, “an expression of the brand’s desire to keep mums hearts healthy through an active lifestyle and a healthy nutr ition,” adding that similar challenges like it have always been among the features of the brand’s annual Mum of the Year, MOTY campaign. She also emphasized the fact that Nigeria’s very rich culture, particularly its various attire, is a very significant part of the Family Dance Off. Three Crowns is a leading Nigerian milk brand from the stable of FrieslandCampina WAMCO, Nigeria’s foremost dairy company for over 60 years. The Company believes that milk is an essential nutrient for every individual. As Nigeria’s leading low cholesterol milk brand, Three Crowns has nourished mothers and their families for more than 30 years with essential vitamins and minerals that support their well-being.

Wednesday 09 September 2020

BUSINESS DAY

FEATURE Marginal oil fields:

How to meet FG’s low-cost order through ‘third party cost savings’ – Leesi Gborogbosi Experienced oil industry expert and management consultant gives an insight Ignatius Chukwu

Nigerian oil industry expert, Leesi Gborogbosi (PhD), floats a template to help bring down oil production cost through what is known as ‘third party costs savings’ system. The Federal Government in June 2020 pegged crude oil production cost per barrel at $10 whereas it had been about $18. This was in the face of oil price crash to below production cost levels due to a freeze in industrial activities all over the world. The economic freeze was induced by the coronvavirus pandemic. This situation seemed to open the eyes of Nigerians that high production costs can no longer be sustained. As oil companies grapple with the order for a drastic reduction of costs, industry experts and management consultants have started digging into their bags of tricks to find the formula for reduced, competitive, and sustainable production cost scheme in Nigeria. Gborogbosi, a management consultant who worked for over 26 years in Shell, has boldly come out with his formula for low cost production and how this could serve as savings tool for marginal field investors and bidders. Gborogbosi says the new task is to help bring down operational costs in the oil industry so Nigeria’s oil sector could cope with increasing global competition. He has thus pinned down what he calls ‘third party costs savings’ as the area of interest. According to him, ‘third party costs’ are costs that companies incur in their business relationships with third parties (e.g, contractors). Whereas an oil company would have a range of costs it incurs incompany with its own staff, there are costs passed to an oil company by its contractors and partners that have huge bearing on overall cost of production per barrel. Now, companies are expected to take actions that would touch these ‘third party costs’ to arrive at the FG cost objective to arrive at same overall business goal (under-$10 production cost per barrel). “When this is done, we can then say the company has achieved at ‘third party cost savings’. The expert whose doctoral degrees are in strategy and business studies from IE Business School, Madrid, said: “In the oil and gas industry, companies that manage their costs effectively will gain competitive advantage. The oil market has less manoeuvrability. Oil cartels

Leesi Gborogbosi

determine international price oil. He said; “Cost profile is one of the key areas that oil and gas companies can have flexibility. In some companies, you may find that about 70 per cent of their costs come from third parties through contracts and procurements.” Dr Gborogbosi, the CEO of Gabriel Domale Consulting, said his firm helps companies in Africa to grow by providing insights to leaders that transform institutions. He gave technical definition of ‘third party costs savings’ concept as; “The difference between the latest estimates for the third party spends and the annual planned budget. Third-party costs savings for projects is determined over the full lifecycle and on an annual basis.” He said it is challenging to manage the process of third party cost savings, but that by engaging rated and experienced consultants, these challenges could be overcome. He is one of those who have had hands-on experience on similar cost-saving initiatives environment. On cost implications of this type of cost management, the expert whose doctoral dissertation focused on how managers can collaborate with host communities to create mutual benefits and execute strategy, said solutions are available. With about three decades of finance leadership experience in the oil and gas industry working with expertise in finance, strategy, corporate governance, cost reduction, transformation, institutional www.businessday.ng

reforms and leadership training, he said operators and investors spend a significant portion of their capital expenditure on field development. “The assumptions as stated by Department Petroleum Resources (DPR) are that there will be seven key implications for the field developers including ownership of the asset, low investment cost, lower risk of development, early time to production, shared infrastructure, regulatory support, and scalability.” O n l o w i nv e s t m e n t c o s t , Gborogbosi said this is projected at between $50m and $100m as opposed to capital investments by the major oil companies. He hinted that for marginal fields now under bidding, the time between investment and production is between 18 and 24 months. He said investment in the marginal field is scalable; thus investors can start small and grow big. On shared infrastructure as an example, he said operators are encouraged to collaborate on common usage of facilities to ensure optimum utilisations for crude transportation and export. “Regulatory Support: Government will enforce regulatory practices of general application. However marginal field producers will enjoy significant support to enable growth in line with government aspirations.” Gborogbosi analysed the cost implications of marginal field investment where he mentioned what he termed assured marginal economics, exploratory well drilled, portfolio rationalization,

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and president’s discretion factors. Challenges in cost savings: Gborogbosi used his experience to illustrate the challenges rampant in trying to create third party cost savings. He said at one time, the organization he worked for expressed the desire to have a uniform and clear definition of the third party cost savings (TPCS). This was to aid common understanding and shared vision across the organisation. “Responding to request by the leadership of a business function for support to enable the delivery of cost reduction program, the finance team took on the responsibility of designing and developing a robust structure for reporting cost savings. “We had the challenge of setting stretched targets. Our team had to secure the buy-in of project cost managers to ensure planned cost savings targets were delivered. “There is the need to have the “third party cost savings” signed off timely to have a transparent process for the organisation-wide cost reduction programme. “Another key challenge is to get the managers in your company to agree on the distinction between cost savings and cost avoidance. We can define cost avoidance as the reduction in budget scope. “As managers are the ones expected to deliver on cost savings, they are often tempted to adopt cost avoidance approaches. And in some cases this may be good savings behaviour, it is in itself, not cost savings.” He went on: “I discuss this cost savings strategy by using an example of how I successfully executed the strategy to achieve third party cost savings at a leading multinational E&P oil and gas company in Nigeria. “Managing ‘Third Party Cost Savings (TPCS)’ is a key component of executing a company’s cost reduction programme. Receiving commendation from management is a sign that the work can be cascaded across the organisation.” He mentioned categories such as Senior leadership support : “Senior leadership need to fully support the third party cost reduction programme. This makes the entire organisation focus on the cost reduction programme. This focus led to the organisation having a competitive advantage in best costs and project delivery on schedule. Strategic levers: To achieve third party cost savings, we will adopt six strategic levers. These include contract optimization reviews, category management and technologydriven cost reduction initiatives, @Businessdayng

among others. Cost savings structure: Our detailed process flow-maps provided the needed transparency to the cost savings process and aided a better understanding of cost savings. We provided a structure for defining cost savings, capturing, verifying, and reporting of actual cost savings achieved. The organisation adopted the cost savings template and the reporting structure as best in class. Removal of barriers and resistance; “This removed barriers and resistance to the organisation’s cost reduction programme. This work enabled the assessment of the level of cost savings performance. Our work enabled the organization to have the assurance that the cost savings programme will be delivered. “With this transparency and understanding of the cost savings process, managers will be willing to undertake more cost savings projects. They will identify new cost savings projects to replace other projects that are not delivering on the plan. “Cross-functional collaboration: We provided advisory to the contracting and procurement leadership and finance function that the innovative and sustainable solution is to have greater collaboration between the contracting and procurement function and finance function in driving the cost ambition programme.” He talked about a shared vision and said: “Organise third party cost savings workshops for the business managers, business finance managers, contracting and procurement leadership team. Some of the outcomes of the workshop will be a better understanding of the “third party cost savings (TPCS)” process; timely sign-off of cost savings achieved.” He advised that any changes that are to the “cost savings” guidelines should be cascaded across the organisation, and an agreed verification process by all key parties. He talked about responsible parties: “The project and finance managers should review the cost savings that will be reported. The project manager, contracting and procurement manager, and finance manager should off on the 3rd party spend savings. Conclusion: Marginal field investors and operators need expert advice to avoid the pitfalls that earlier investors fell into that made them to pull out from the marginal fields. He however said choosing the right adviser is the tricky part.

Wednesday 09 September 2020

BUSINESS DAY

INTERVIEW ‘I am humbled to be named first Black Canadian Minister of Justice and Solicitor General’ On August 25, 2020, KAYCEE MADU was sworn in as the first Black Canadian Minister of Justice and Solicitor General of Alberta Province. In an exclusive interview with KEMI AJUMOBI, Associate Editor, BusinessDay, he shares on being the first black Canadian Minister of Justice and Solicitor General, how Nigerians in the diaspora are changing the narrative despite the varied international beliefs about Nigerians, and the Nigerian legal system vis-à-vis what obtains in developed countries like Canada, among other matters. Excerpt:

eing First Black Canadian Minister of Justice and Solicitor General I feel humbled and privileged to have been elected to serve the good people of EdmontonSouth West as their member of the legislative assembly. I was excited but humbled to be named the first Black Canadian Minister of Justice and Solicitor General, Provincial Secretary, and keeper of our Province’s Great Seal. This role makes me the chief law officer in our province, responsible for the justice system, law enforcement, and the safety and security of our citizens. Raised in the SouthEastern part of Nigeria, graduated from University of Lagos, relocated to Canada; through separate journeys, what have you learnt? While I have experienced adversity in my life, it has helped make me stronger, better, and more successful. These experiences also confirm my belief that one must never allow today’s obstacles to prevent them from pursuing their dreams. Nigerians in the diaspora, changing the narrative Nigerians are some of the most brilliant people in the world; they have exemplary work ethics and are forward thinkers. While there is no question that there are bad apples who are involved in fraud, drugs, and other malfeasance, that is true of any society. In fact, there is a saying that no society on earth is devoid of the bad ones. So while this is true of Nigeria, it is also true of all nations on earth. My disappointment, however, is that many of Nigeria’s systems, including its politics, leadership, and institutions, do not reward hard work and merit. For the country to make progress it must pursue better politics and a public service based on meritocracy. Nigeria must respect the merits of all her peoples and regions. Migration of Nigerians to Canada, other western countries The large migrations of Nigerians to Canada and other Western countries is a direct indictment of the abysmal failures of the country’s governing institutions and political leadership. In countries with functional democracies like Canada, nearly all of today’s Nigerian leaders

Kaycee Madu

would not come close to the corridors of political power. To put it bluntly, Nigeria’s political leaders often lack the understanding of what it means to govern and the critical role of the public service in the development of a nation, amongst other failures. Did you ever think you would be in such a position in a ‘foreign’ country? I have always known that if I work hard and abide by the rules, I could achieve my most full potential because I live in a society that values hard work and meritocracy. Having uprooted my adult life from Nigeria, I knew it would be challenging to settle into a new Law profession, raise a family, and adapt to Canadian life. But I also know that this is a country that values merit and that as long as I work hard and conduct myself in a manner that respects the rule of law, I would have a chance to succeed and make up for the lost years. The Nigerian legal system In my estimation, the Nigewww.businessday.ng

rian legal system needs to be revamped. Tribalism, nepotism, corruption and political interference have caused so much damage to the justice system in Nigeria. There can be no justice for ordinary citizens in Nigeria within the system that currently exists.

the democratic international community.

Advice to young lawyers My advice to young lawyers is simple: work hard, discipline your legal mind, and make yourself an effective and competent lawyer, but above all, do not compromise your integrity because that will erode public confidence in the justice system. My hope is that today’s young lawyers will fight for an independent, fair, and uncompromised legal/ judicial system. My hope is that a new generation of leaders will assume the mantle of leadership of the country so Nigeria can become what the founding fathers envisioned: a successful and robust country based on merit, a true superpower on the continent, and a responsible member of

Kaycee Madu was elected to the Legislative Assembly of Alberta, representing the constituency of Edmonton-South West, on April 16, 2019. He was appointed as Minister of Justice and Solicitor General on August 25, 2020 and previously served as the Minister of Municipal Affairs. Madu has been a Lawyer for 16 years, practising in both Nigeria and Alberta. He operated a Law office with his wife and has worked for Legal Aid Alberta. He volunteers with the Edmonton Community Legal Centre and the Lawyer referral program of the Law Society of Alberta. Madu was awarded the Premier’s award of excellence in the bronze medal category in 2009 with a team of his colleagues at the Government of Alberta, where he worked as a senior technical advisor focusing on legislative and regulatory reviews, operational and strategic public policies, issues management and stakeholder consultation. Born and raised in the southeastern part of Nigeria, Madu graduated from the University of Lagos with a bachelor of Laws honours degree in 2001. He and his wife, Emem, migrated to Canada in 2005 and have three children. Madu enjoys poetry, soccer, travelling and strategic military studies. He volunteers with Alberta’s Nigerian and Igbo communities.

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Practising Law in Canada and Nigeria, what differences abound? Although both Canada and Nigeria are common law ju-

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risdictions, the experience of the practice of law is completely different. One of the main differences I can point out is that there is more rigorous and comprehensive regulation of lawyers by the Law Societies in Canada than in Nigeria.

Wednesday 09 September 2020

BUSINESS DAY

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Wednesday 09 September 2020

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

FRSC issues travel advisory as year-end safety campaign begins MIKE OCHONMA

Apapa gridlock upbeat amid NRC freight haulage shutdown …CCECC to resume EBJ to seaport rail project Sept 15 MIKE OCHONMA Associate Editor

u s i n e ss a c t i v ities in and out of Ap a p a s e a p o r t and its environs may worsen once again as resurgence of long queue of trailers may take another dimension following the scheduled shutdown of movement of containers out of the port on the narrow gauge by the Nigerian Railway Corporation, (NRC). The scheduled suspension of haulage activities is to pave way for resumption of tracks laying on the ongoing standard gauge rail project being executed by the Chinese Civil Engineering & Construction Corporation (CCECC). Recall that, during the last inspection tour of the project by Rotimi Amaechi, Nigeria’s minister of transportation

and accompanied by Lai Mohammed, the information minister, the CCECC project managers disclosed that, there are plans to shutdown the narrow gauge line from September 15 to November 14, 2020 in readiness for resumption of project works from the Ebute Metta Junction (EBJ) to link Apapa seaport. Confirming the development to BusinessDay on telephone chat last Monday, Fidet Okhiria, managing director of Nigeria Railway Corporation said that necessary paper works and further talks are ongoing between the NRC and the CCECC to tidy up losed ends to ensure hitch-free resumption of operations along the corridor by the project team. Recall that work on the EBJ standard gauge rail line extension to Apapa which was an addendum to the $1.5 billion Lagos-Ibada standard

gauge was suspended last April following the outbreak of the coronavirus pandemic in March this year. Hassan Bello, executive secretary, Nigeria Shipper Council (NSC) said last week in Abuja that if not for COVID-19 ravaging the global economy, the rail to port standard gauge project which would have facilitated movement of containers out of Apapa port and reduce the perenial traffic gridlock within the port corridor would have been completed. According the NSC boss, ‘’If not for COVID-19, we will not be having gridlock; we would have connected the rail to the ports. The CCECC would have linked not just Apapa, but Tin Can with rail’’. Maritime industry follwers say, connection of rail access corridor into the Apapa seaport is significant and crucial to the movement of contai-

nerised goods, because for every trip the wagon makes, 38 trailers carrying either 40 pieces of 20 feet containers or 20 pieces of 40 feet containers are out of the port; and this will have the potentialof easing off container traffic by road dependingon the frequency. Last April, NSC reactivated evacuation of cargoes from Nigeria’s largest container terminal, APM Terminals in Apapa port by rail. The move was the end result of a meeting brokered between APM Terminals and the NRC where a standards operational procedure (SOP) was agreed upon between the two parties. The meeting was part of an effort to enhance operational efficiency and to encourage multimodal approach to cargo evacuation especially during the peak period of the Covid-19 crisis.

s the Federal Road Safety Corps begins its nationwide end of the year campaigns with the theme; ‘Drive Safe and Stay Safe’, the corps marshal, Boboye Oyeyemi has called on the motoring public to make this year’s ‘ember’ months unique and crash free by adhering strictly to road traffic regulations. He said road traffic crashes are avoidable and road crash free society is possible when best road practices are applied. Oyeyemi cautioned motorists to note that the end of the year is not naturally tragic and are not in anyway different from other months of the year, only that there seem to be an increase in vehicular movement witnessed during the season. Debunking the myth that the last four months of the year commonly referred to as ‘ember months’ are hazardous for motorists, the he said that, it is very possible to drive without a crash as long as motorists obey and adhere strictly to traffic laws and ensure constant maintenance of their vehicles. According to him, “With the rapid infrastructural development going on in the rail transportation sector under the present administration of President Muhammadu Buhari, commuters are advised to maximise that alternative means of transportation by patronising the train stations where available, as this will drastically reduce the pressure on the road transportation sector” He advised the traveling public must to start thinking about transport sharing as early as possible, to reduce pressure on the road

as this will further reduce incidences of road traffic crashes. Family and friends are further admonished to plan and travel in phases, so as to avoid cluster of traffic during the ember months. Oyeyemi also warned that all travelling protocols for Covid-19 must be strictly adhered to. Noting that the enforcement on 50 percent carrying capacity for all vehicles targeted at creating adequate physical distancing is still in place, and the Corps will not spare any fleet operator caught violating these directives. He maintained that fleet operators must religiously follow all safety precautions, observe preventive measures against the dreaded virus, and comply with every travelling directives already in place. “Terminals and parks should double efforts in providing adequate running water with soap and sanitisers in their parks and terminals. While maintaining physical distancing, all vehicles must have sanitisers inside them and avoid as much as possible, the use of air conditioner among others”. While speaking on the need to imbibe caution when choosing the vehicles to board especially for long distance trips, Oyeyemi advised travelers to patronise safe and secure mass transit companies that have been duly certified to operate. This is to make room for redundancy plans in the event of vehicle breakdown. He said that night trips are not as safe as day trips and travellers must try as much as possible to plan their trips within the hours of the day because of visibility and fatigue factors on the side of the driver.

Rolls Royce Cars Nigeria offers free checks to privilege owners MIKE OCHONMA

olls-Royce Motor Cars Lagos, exclusive representative of the iconic luxury brand in Nigeria is offering a special package designed specifically for all Rolls-Royce Ghost motor cars owners in the country to get a bespoke aftersales service at no cost to the owners. The exclusive package is to enable owners of the Rolls-Royce Ghost in Nigeria enjoy their favourite luxury item especially during this pandemic that has restricted movements for some time.

More importantly for us is that, we adhere strictly to all the Covid-19 health protocols for both the home and workshop service as we put premium on our customers and staff in terms of safety. This offering allows customers an option to have this service delivered in the comfort of their home or alternatively the dealership will come and take the car to our workshop, all at no cost to the customer under strict precautionary measures. Explaining further on this special offering, Cosmas www.businessday.ng

Maduka Jnr. executive director, ownership services, Coscharis Group said, ‘’We guarantee top notch ownership service for all Ghost owners leveraging on the expertise of our Rolls-Royce

certified technicians that will deliver the service with the right tools and original parts. This ultimately gives the customer the peace of mind for a seamless package that resonates with the

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luxury brand’’. Maduka Jnr said that, as a result, some customers that have shown interest had enjoyed this special package exclusive for RollsRoyce Ghost Car owners which started early in the month of August while more have equally indicated their interest to be part of this to keep their luxury car in good shape. The special health check offering will last till end of this month. Rolls-Royce Motor Cars Lagos owned by Coscharis Motors Plc is the exclusive franchise owner for RollsRoyce vehicles sales and @Businessdayng

services in Nigeria. It currently has showrooms and workshops located both in Lagos and Abuja Rolls-Royce Motor Cars is a wholly-owned subsidiary of the BMW Group and is a completely separate company from Rolls-Royce plc, the manufacturer of aircraft engines and propulsion systems. Over 2,000 skilled men and women are employed at the Rolls-Royce Motor Cars’ head office and manufacturing plant at Goodwood, West Sussex, the only place in the world where the company’s super-luxury motor cars are hand-built.

Wednesday 09 September 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

NIMASA pushes for review of Nigeria’s crude oil affreightment policy …favours CIF in place of FoB amaka Anagor-Ewuzie

etermined to create jobs for Nigerian ship ow ners, the Nigerian Maritime Administration and Safety Agency (NIMASA) has again revived efforts to change Nigeria’s crude oil affreightment policy from Free on Board (FOB) to Cost Insurance and Freight (CIF). Bashir Jamoh, directorgeneral of NIMASA, disclosed this in Lagos when he received a delegation from the Nigerian National Petroleum Corporation (NNPC) led by Billy Okoye, the newly appointed Group General Manager, Crude Oil Marketing Division of NNPC. Affreightment is a legal term used in shipping. A contract of affreightment is a contract between a shipowner and a charterer, in which the ship-owner agrees to carry goods for the charterer in the ship, or to give the charterer the use of the whole or part of the ship’s cargo-carrying space for the carriage of goods on a specified voyage or voyages or for a specified time. The charterer agrees to

R-L: Bashir Jamoh, director general, Nigerian Maritime Administration and Safety Agency (NIMASA) making a presentation to Billy Okoye, group general manager, Crude Oil Marketing Division of NNPC, during a courtesy visit by NNPC to the Agency in Lagos recently.

pay a specified price, called freight, for the carriage of the goods or the use of the ship. According to a statement signed by Philip Kyanet, head, Corporate Communications of NIMASA, Jamoh, who had recently paid a similar working visit to the Group Managing Director of NNPC, Mele Kyari, at the corporation’s headquarters in Abuja, appreciated NNPC for accommodat-

ing the Agency’s interests in transactions where the maritime regulator relied on data from the national oil company. He also disclosed that the Agency was working towards the implementation of a National Maritime Security Strategy in order to improve security on Nigerian waters and to reduce the cost of shipping. “Since 2018, NIMASA

has been championing moves for a change in the terms of trade with regard to transportation of Nigerian crude oil, from FOB to CIF to ensure greater benefits for the country from its oil resources. A technical committee involving NIMASA, NNPC, and other stakeholders would be set up to develop a template for the desired change, with workable timelines,” he added.

Olanrewaju, ex-chairman of CRFFN frowns at Council’s failure to conduct election amaka Anagor-Ewuzie

pparently not pleased with the way the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) is being managed since his exit, Hakeem Olanrewaju, former Governing Council chairman, has frowned at the failure of the Council to conduct fresh election to bring new leaders onboard. He claimed that the present leadership of the Council instead of focusing on election is seeking ways to elongate its tenure instead of electing new leaders. Speaking to newsmen in Lagos recently, Olanrewaju, who doubles as the managing director/CEO of Talod Oceanair Freight Limited,

argued that the present call for all freight forwarders to come forward and register properly with the requisite credentials ought to have started since 2018. “Issuing such professional notice, at this crucial time, when the tenure of the third Governing Council has elapsed since July, 2020 is wrong. The right thing should have been the Notice of Election into the Governing Council and the Electoral Guideline. One may begin to consider this administrative notice on the grounds of legitimacy and viewed as move to coaxing the practitioners while the real issues are left unattended to,” Olanrewaju said. He wondered why up till now, there has not been any denial of the news making rounds that the Governing www.businessday.ng

Council of CRFFN has tenure elongation agenda up its sleeves even as he warned against any violation of the provisions of the Act that established the Council. “It is obvious that the CRFFN Act 16, 2007 is an extant law of the federation, as such pending the conclusion of the amendment process presently on going at the National Assembly relevant provisions is extant. Therefore, the governing council is hereby encouraged not to truncate nor make mockery of its two years statutory elective succession as provided in the act,” he said. According to Olanrewaju, it has been a subject of professional discussion at different forum, whether or not the CRFFN is supposed to be an agency of the gov-

ernment or an independent self-sustaining professional regulatory council. He called on the government to come out clear on what it really want to achieve with the establishment of the council as he alleged that the supervisory ministry, subtly changed the modus operandi of the council. The CRFFN is empowered by Act 16 of 2007 to regulate and control the practice of freight forwarding and promote the highest standard of competence, practice and conduct amongst practitioners, ensuring professionalism and best ethical practices. Registration with CRFFN is mandatory for persons, organizations and associations involved with freight forwarding in the country.

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Under FOB trade terms, Nigeria has no reasonable control over the delivery of its crude oil as regards carriage, insurance, and other ancillary services. But under the CIF arrangement, the country maintains ample control over the distribution of its oil, which can be leveraged to enhance the competitive advantage of indigenous shipping operators. Jamoh commended the synergy between NNPC and NIMASA, saying that 70 percent of the Agency’s revenue comes through the sale of crude, which means that the cooperation between NIMASA and NNPC cannot be over-emphasised. “The Maritime Intelligence Unit recently established by the Agency is part of efforts to ensure a proactive approach to security on our waters. The focus is to try to nip maritime attacks in the bud by tracking the criminals from the pre-planning and planning stages. The ultimate aim is to develop a National Maritime Security Strategy that would help to minimise the cost of insecurity, which NNPC bears on behalf of the country, in the shipment of Nigerian crude,”

he said. Jamoh however recalled that NNPC granted NIMASA’s requests and generously pledged to cooperate with the agency in actualising the move during his recent visit to the corporation even as he prayed for the continuation of such mutual understanding. “We appreciate the NNPC for accommodating NIMASA in its processes. We do not delay vessels in the search for information on them because of the confidence we have in NNPC’s capacity to readily supply such information to NIMASA,” he noted. Jamoh however appealed for more local content in the transportation of the country’s crude in line with the provisions of the Coastal and Inland Shipping (Cabotage) Act. Earlier, Okoye declared NIMASA as a ‘critical stakeholder in the business of crude oil sale’. He said his goal was to get the two agencies of government interfacing more closely with each other in order to resolve the challenges and ensure seamless movement of crude as well as petroleum products in the country.

SIFAX Group donates computers, fans to Apapa General Hospital amaka Anagor-Ewuzie

IFAX Group, a group of companies with investment in Maritime, Aviation, Oil & Gas, Haulage & Logistics, Financial Services and Hospitality, has donated some items to the Apapa General Hospital. The items include five laptops, six desktop computers and 18 wall fans. At the official handover and presentation of the equipment to the hospital’s management, Olumuyiwa Akande, Group Head, Corporate Communications of SIFAX Group, said the donation of the items is in furtherance of the company’s philosophy of supporting critical government institutions, especially in the education and health sectors as well as providing better access to health care for Nigerians. “SIFAX Group believes that without good health, @Businessdayng

it will be difficult for Nigerians to be productive and make giant strides in their different endeavours. Our public health institutions are important in delivering this health care and that is the reason we decided to support the Apapa General Hospital in order to improve the quality of the hospital’s service,” he said. According to him, SIFAX’s philosophy to give back to the society was borne out of the fact that government alone cannot meet all the needs of the society. “Corporate organisations and public-spirited individuals have a critical role to play in this regard.” Responding after receiving the items, Ajibola Keshinro, chief medical director, Apapa General Hospital, appreciated SIFAX Group for the kind response, adding such items will upscale the hospital’s capacity to respond well to its responsibilities.

Wednesday 09 September 2020

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

How Glo, 9Mobile, UP subsidiaries can leverage PSB services for financial inclusion boost ing agents and partnership with industry players to deepen access.

Endurance Okafor

he Central Bank of Nigeria (CBN) recently gave an official node to telecommunication operators’ push to offer mobile money services in Nigeria through the final approval for three firms to operate as Payment Service Banks (PSBs). The three firms are Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB. The apex had issued Approval-in-Principle (AIP) to the three subsidiaries in September 2019. “Three Payment Service Banks (PSB) have been granted final approval to operate as PSBs following compliance with licensing requirements: a. Hope PSB b. Moneymaster PSB c. 9 PSB,” the CBN said. According to the apex bank, its decision to give way for Telcos to offer financial services is in furtherance of its mandate to promote a sound financial system in Nigeria and the need to enhance access to financial services for lowincome earners and unbanked segments of the society. Before now, only banks and licensed financial institutions were allowed to provide financial services. Although telecom operators and other fintech companies indicated interests to operate in the market, the CBN policy would not allow them. The regulator eventually shifted because

Michael Adenuga, chairman/CEO, Globacom

of the increasing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access. Meanwhile, as at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people countries like Kenyan and other African peers were seeing an explosion in mobile money wallet usage, an initiative that has put those countries ahead of Nigeria. While the National Financial Inclusion Strategy (NFIS) of the central bank seeks to ensure that over 80 percent of the bankable adults in Africa’s most populous country have access to financial services by 2020, the data by EFInA shows the industry regulator needs

Agada Apochi, MD/CEO, United Payments

to include 16.8 percent of the financially excluded population to achieve its 20 percent exclusion target. The Central Bank had in a circular on July 2018, lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the NFIS. Not only was the country not meeting its targets, but it was also declining in growth. For instance, while Nigeria achieved 60.3 percent in 2012, it declined to 58.4 percent in 2016 against a target of 69.5 percent translating to financial exclusion of about 41.6 percent. Like in Kenyan, Ghana and some other part of Africa where mobile money has played a huge role in financial inclusion growth, analysts expect the PSB initiative in Nigeria to broaden access. “We know that this new

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Alan Sinfield, CEO, 9Mobile

development (PSB) will further improve the country and the people going forward,” Alan Sinfield, CEO of 9mobile said, adding that the 9mobile is happy to be among the first PSB to provide all Nigerians with access to banking services and open up a digital world of possibilities to improve everyday lives. While Glo, 9Mobile, UP subsidiaries will leverage PSB licence to among other things; maintain savings accounts and accept deposits from individuals and small businesses; carry out payments and remittance, issue debit and prepaid cards, the companies can help broaden Nigeria’s financial inclusion drive through the following measures. Enabling financial service touchpoints in rural areas According to EFinA’s 2018 Access to Finance Survey,

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financial exclusion is highest in rural areas. This is because the traditional model of delivering financial services (the bank branch) is not sustainable in those areas. But, through PSB services the barrier of distance to a financial access point will no longer be on the list of challenges restricting financial inclusion. The structure of PSB as outlined in the guidelines and regulation circular issued by the Central Bank says that payment service banks shall operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25 percent financial service touchpoints in such rural areas. Glo, 9Mobile, UP subsidiaries are expected to leverage the deployment of Point of Sale devices; bank-

@Businessdayng

Leveraging mobile and digital channels Since there are more Nigerians with mobile phones than bank accounts, PSB companies can leverage on the country’s already established mobile phone infrastructure to deepen financial inclusion. According to the CBN, PSBs are expected to leverage on mobile and digital channels to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services. The rapid penetration of Nigeria’s financial services has been noteworthy, and the increasing ownership of smartphones, especially among the lowincome groups, has been instrumental in reforming the financial services landscape. Jumia’s 2019 mobile report shows that Nigeria had over 172 million mobile subscribers in 2018, a 6.4 percent improvement as compared to the 162 million recorded the previous year. Going by the recent circular by the Central Bank, PSBs are envisioned to facilitate high-volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion and help in attaining the policy objective of 20 per cent exclusion rate by 2020.

Wednesday 09 September 2020

BUSINESS DAY

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Wednesday 09 September 2020

BUSINESS DAY

news BusinessDay to hold Investing and Capital Markets Conference Iheanyi Nwachukwu

ll is set for the 2020 edition of BusinessDay’s Investing and Capital Markets Conference holding Thursday, September 10, 2020, with the theme ‘New Perspectives on Asset Allocation and Behavioural Finance in Volatile Markets.’ Yearly, BusinessDay Media Limited and the Nigerian Stock Exchange (NSE) jointly host the Investing and Capital Markets Conference. The conference, which starts at 10am with opening remarks by Frank Aigbogun, publisher, BusinessDay Media, will be followed by a welcome address by Oscar Onyema, CEO, NSE. It will be followed by a presentation by Erik Renander, portfolio manager, HI EMIM Africa Fund on “Chasing Alpha on a treadmill? A fund manager’s view of trend and bends in Nigerian markets”. There will also be a fireside chat with Lamido Yuguda, director-general, Securities and Exchange Commission (SEC), and Oscar Onyema. Thereafter, a presentation by Haruna JaloWaziri, CEO, Central Securi-

ties Clearing Systems plc. The Panel 1 titled “Row, row, row your boat: An investor’s guide through choppy markets,” which will be moderated by Omobolanle Adekoya, partner, Capital Markets and Accounting Advisory Services, PwC, will feature Haruna Jalo-Waziri; Nnamdi Nwizu, co-managing partner, Commercio Partners; Ete Ogun, MD, Anchoria Asset Management, and Uche Val Obi, a senior advocate of Nigeria/ managing partner, Alliance LP. This will be followed by a presentation by VFD Group. The Panel 2 themed “Is it all in the mind? Interpretations and perceptions of market events against performance,” which will be moderated by Tosin Ajose, lead advisor, Deal HQ, will feature Lilian Olubi, CEO, EFG Hermes Nigeria Limited; Niyi Adenubi, executive director, Institutional Business and Investor Relations, VFD Group, and Bunmi Asaolu, head of equities, FBN Quest. There will also be a presentation by Guy Czartoryski, head, research, Coronation Asset Management, titled “Rediscovering Risk: Not so bad after all”.

How investors can access CBN’s N250bn gas intervention fund DIPO OLADEHINDE

or potential investors willing to invest in Nigeria’s gas value chain, the Central Bank of Nigeria (CBN) has given guidelines on how to access N250 billion intervention fund for the National Gas Expansion Programme (NGEP). The NGEP is seeking to promote gas as replacement fuel and also save the nation the much-needed foreign exchange expended on imported fuels by providing alternatives to petrol, diesel and kerosene. In order to attract prospective investors, the CBN entered into collaboration with the Ministry of Petroleum Resources to set up a N250 billion intervention facility expected to stimulate investment in the gas value chain. Eligible projects for loan To qualify for a loan, prospective investors must know projects eligible for financing by the intervention fund,

which is very vital in order to be shortlisted. According to the CBN, the project includes the establishment of gas processing plants and small-scale petrochemical plants; establishment of gas cylinder manufacturing plants; establishment of Liquefied Compressed Natural Gas (LCNG) regasification modular systems; establishment of auto gas conversion kits or components manufacturing plants and establishment of CNG primary and secondary compression stations. The fund would also finance the establishment and manufacturing of Liquefied Petroleum Gas (LPG) retail skid tanks and refilling equipment; development/ enhancement of auto gas transportation systems, conversion and distribution of gas infrastructure; enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets. Others are the establishment/expansion of micro-

distribution outlets and service centres for LPG sales, domestic cylinder injection and exchange, and any other mid to downstream gas value chain related activity recommended by the Ministry of Petroleum Resources. Terms of the loan For Manufacturers, Processors, Wholesale Distributors: According to the new guidelines, the CBN has set N10 billion as the maximum loan Manufacturers, Processors and Wholesale Distributor can access with working capital of N500 million per obligor. Also, the loans shall have a maximum tenor of 10 years (not exceeding December 31, 2030) depending on the complexity of the project, while each project tenor shall be determined in relation to its cash flow and life of the underlying collateral. Small & Medium Enterprises (SMEs) and retail distributors: For the above category, the CBN shall not exceed N50 million per obligor with

Winners at the 2020 Top CEOs and Next Bulls Award organised by BusinessDay in partnership with Nigerian Stock Exchange.

Lagos, Century Group, IOSH canvass... Continued from page 1

holders to address key HSE issues across Nigeria.

The gathering, which was in partnership with the Lagos State Ministry of Environment and the Institution of Occupational Safety and Health (IOSH), was aimed at finding ways to change the punitive image of HSE practice as well as unveiling inherent investment and revenue generating opportunities. The event held on the theme, “HSE in our DNA: Recycling to wealth” amid presentations by HSE experts. Akin Abayomi, Lagos State commissioner of health, gave the keynote address which he titled ‘Recycling to waste: The Impact of Waste Management and Recycling in Health.’ As a representative of the Lagos State Council and Executive Cabinet of the Governor Babajide Sanwo-Olu, he focused on how the state was managing waste generated for the general wellbeing of Lagosians in spite of the population explosion and migration. In his address, he highlighted the need for awareness of proper waste management among health workers, saying, “There is also a need for a coherent plan to design and implement a best practices medical waste system in Lagos for a sustainable future for its environment.” Through his presentation, a vivid picture of the administration’s “Themes agenda” was

painted and a critical part of that agenda is Health and Environment. According to the professor, “The minimum requirement for a healthy waste management system is to reduce and reuse our waste.” He identified recycling, composting, sanitary landfilling, incineration with energy recovery and biogas as sustainable vehicles for effective waste management. Speakers and panellists at the Century Group Powered HSE Summit drawn from the environment and sustainability, health and safety, waste management and investment opportunities categories include: The state Ministry of Environment and Water Resources, through the permanent secretar y – Aderonke Odeneye; director-general of the Lagos State Safety Commission, Lanre Mojola, and director of strategy and business development at IOSH, Richard Orton. Others include Department of Petroleum Resources (DPR) represented by the assistant director of Environment, Ejiro Ufondu; Funmi Adegbola, the CEO of Combined Training Solutions; Adewale Taiwo of the Recyclers Association of Nigeria (RAN); Ibukun Faluyi and John Flynn, LAWMA’s Essien Nsuabia;

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maximum of N5 million per obligor with a maximum tenor of five years not exceeding December 31, 2030. Project tenor shall be determined in relation to its cash flow and life of the underlying collateral while term loans shall be allowed a maximum of two years moratorium on principal repayment only. Working capital facility of one year with a maximum roll-over of not more than twice and subject to prior approval. Other terms For the two categories, the CBN notes that interest rate under the intervention will be at least 5 percent per annual till February 28, 2021, thereafter, interest on the facility will revert to 9 percent per annual effective from March 1, 2021. Concerning repayment, commercial banks monthly interests on the facility will be amortised and transferred to CBN monthly while NIRSAL Microfinance Bank (NMFB) monthly interests on the facility shall be paid monthly after the moratorium period.

Nigerian lenders tighten credit criteria, demand higher collateral amid default fears Endurance Okafor & Oluwafadekemi Areo

hile the availability of credit to households and corporates increased in the second quarter of 2020, not many Nigerians and businesses who applied for loans were able to access credit as lenders tightened their credit criteria and demanded higher collateral. According to the Credit Conditions Survey Report released on Monday by the Central Bank of Nigeria (CBN), there was an increase in loan request for household purchases as well as for corporate credit but the proportion of loan applications approved by Nigerian lenders decreased as lenders try to manage their risk exposure. “Lenders’ resolve to tighten the credit scoring criteri-

on decreased the proportion of approved unsecured loan applications in Q2 2020,” the CBN said. The Q2 credit report by the apex bank shows that lenders reported increased demand for corporate credit from all firm sizes in the three months to June and expect demand to rise further in Q3 2020. Ikemesit Effiong, head of research at SBM Intelligence, says even though the CBN has given lenders the directive to give out loans, they have to hedge their risk to ensure that they do not erode their profits. “The task of determining who more credit is worthy has become significantly challenging for these financial institutions,” Effiong says. The significant factor that influenced the demand for lending in the review period, according to the CBN, is the increase in inventory finance.

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Similarly, the CBN said it expected inventory finance and capital investment to drive demand in Q3 2020. The CBN believed that the increase in loan demand was “driven by changing sectorspecific risks, changing economic conditions, changing appetite for risk, tight wholesale funding condition and market share objectives.” On the default rate performance of both the secured and unsecured loan to households, the CBN said its survey result showed it improved in Q2, but was expected to deteriorate in Q3 2020. “More collateral requirements were demanded from all firm sizes on approved new loan applications in Q2 2020 and lenders expect to demand higher collateral from all firm sizes in the Q3 2020,” the apex bank said. According to Wale Olusi, @Businessdayng

head of research, United Capital, the impact of Covid-19 pandemic has worsened risk and uncertainties in the macro environment and as a result “businesses are not generating decent operating income, borrowers are losing creditworthiness, cost of living is increasing, alongside increasing unemployment and inflation levels.” With the first contraction in three years at -6.1 percent in the second quarter of 2020, the Nigerian economy can now be best described as one that is stagflated. The condition, which is described by slow, declining or contracting economic growth and relatively high unemployment, or economic stagnation, which is at the same time accompanied by rising prices (i.e. inflation) tips Nigeria into top six most miserable countries globally.

Wednesday 09 September 2020

BUSINESS DAY

News L-R: Ahmed Lawan, Senate president; Vice President Yemi Osinbajo; President Muhammadu Buhari; Femi Gbajabiamila, speaker, House Representatives, and Kayode Fayemi, governor, Ekiti State, chairman Nigeria Governors’ Forum, during Day-2 of the First Year Ministerial Performance Review Retreat at the Presidential Villa in Abuja, yesterday.

Why electricity meter access projects... Continued from page 1

and N60,000 for threephase meter, and this is after a good margin has been factored in.

Thirdly, the plan to make meters available to all customers has been consistently sabotaged by the DisCos who discourage the metering of their customers so they can continue the notorious estimated billing, which on the average, allows DisCos charge customers up 70 percent more than they would have charged if the customer had a meter. BusinessDay was told that the DisCos fear they would suffer revenue loss if all their customers were metered, and because of this they had worked to frustrate the well-structured MAP scheme worked out by the regulator, NERC. A senior manager in one of the DisCos said, “Generally, there is the concern that full metering will lead to a significant decline in revenues.” Another reason the meter access plan has not succeeded is that the DisCos have largely failed to invest in upgrading their vending platforms, which dispense the codes that are assigned to each pre-paid meter. These platforms need significant upgrade to be able to handle the jump in the number of pre-paid meters in their network that will arise should all consumers be supplied meters. BusinessDay learns that despite the good intention of NERC, the regulator generally does not appear to fully understand the intricate web of deception created by the DisCos to circumvent market rules or to sabotage them. According to a senior engineer, “Truth is, meter access is not being hindered by lack of cash, and it appears the people at NERC do not understand this. This explains why NERC is pushing for a CBN and World Bank funding to expand meter availability in Nigeria. “Why do you say Nigerians cannot buy electricity meters for their homes when these same Nigerian home owners have built their houses, paid for the toilets, kitchens, wir-

ing and are buying for themselves Chinese smart phones, sometimes two or three in one household; when these same Nigerians are buying Gotv decoders without the support of a bank loan. “Check very well and you will find that it is the case that these same Nigerians they say cannot pay for meters without a CBN or World Bank loan are the same people who are depositing cash for meters and having to wait for months without being supplied the meter. “So, who is financing their Gotv decoders or their Chinese smart phones or the deposit they are placing with DisCos for meters,” the engineer asked. A n o t he r s ourc e said, “NERC has to change its thinking about the issue of funding for meters and they must interrogate the entire matter of meter access very well.” Secondly, he said, “Everything must be done to bring down the price of meters significantly with NERC cracking the whip to remove DisCos from controlling the process of meter supply and deployment.” According to one Meter Access Provider (MAP) licence holder, his company was told by a DisCo that they were not needed by the DisCo to supply meters because they had them in their warehouse. The MAP licence holder was later told he had to buy meters from the DisCo subsidiary if he was keen to supply meters to the DisCo and at an agreed price, which allows the DisCo use transfer pricing to make huge profit. Two power transaction lawyers who spoke with BusinessDay confirm that some of their clients have been discouraged from pursuing contracts to supply meters to the DisCos, which had initiated the process of setting up a meter deployment business. “The DisCos set up their own related companies or buy stakes in these businesses and this has derailed investments plans,” said a lawyer who only agreed to speak on condition of anonymity. The lawyer said, “The danwww.businessday.ng

ger with allowing subsidiaries of DisCos setting up these kinds of companies to acquire procurement contracts to execute projects like metering is that it removes the scrutiny and accountability that would have been present where purely independent parties are allowed to execute the contract. It creates a conflict of interests and fosters corruption as it removes obligations for related parties to do business on ‘arm’s length basis’.” Wolemi Esan, energy lawyer and partner at Olaniwun Ajayi, said it would be difficult for DisCos to directly set up another business apart from distribution of electricity. “By the terms of their license, they are not allowed to do anything else apart from power distribution,” Esan said. Esan said MAP programme was designed in such a way as to avoid abuse through competitive bidding process, the regulator fixing the prices and a third-party vendor licensed to procure meters. However, some beneficial owners of some companies are not always visible to the public. Many are layered to hide real owners, a development the new Companies and Allied Matters Act amendment is set to correct. Prior to the privatisation of the power sector, Nigeria had a huge metering gap estimated at over 3 million in 2012. At the time of taking over in November 2013, the DisCos had a pact with the Bureau of Public Enterprises (BPE) and NERC to bridge this gap. This was not achieved hence NERC approved the implementation of Credit Advance Payment for Meter Installation (CAPMI) in March 2013, where customers pay in advance for meters as credits to be recouped from future payments for electricity. But the scheme did not work quite as expected. In September 2016, CAPMI was cancelled. Between November 2013 and June 2016, only about 500,000 meters were deployed by the 11 DisCos within their networks, with less than 35 percent of that directly done by the DisCos, NERC said. “Some DisCos were merely selling meters to their customers in the guise of imple-

menting the CAPMI. Some DisCos were reprimanded for their non-compliance to the CAPMI order, yet there was minimal improvement in meter deployment,” said Anthony Akah, the then acting commissioner of NERC. The DisCos blamed the regulator for bowing to popular discontent over tariff increase and failed to effect a cost-reflective tariff that would have made it easier for them to procure meters. They also said the exchange rate devalued in 2016 hiked the cost of meters way beyond their reach. In reality, estimated billing has provided DisCos easy access to revenue without putting in the work. DisCos did not invest in technology upgrade to enumerate customers and collect their data so, when NERC introduced the MAP programme in 2018, DisCos gave the scheme only halfhearted support and many quickly began to take position in the new meter firms. Matters worsened the next year when the Federal Government introduced a 35 levy on meters. This misguided policy and the inability to raise finance according to NERC’s 2019, fourth quarter report accounted for the slow pace of the metering programme. DisCos also said the sector required a long-term financing from multilateral organisations like development banks to fund universal metering for all electricity users. “The MAP programme tailored for extended repayment because there is no long-term fund for the MAP providers to tap into to provide long-term repayment schemes. MAP providers can only access short-term commercial loans at an average of 18-20 percent to be passed on to the repayment programme,” said Kester Enwereonu, director at Enugu DisCo in an opinion piece published in BusinessDay. E l e c t r i c i t y m e t e r s, a non-issue in poorer African countries, face undue complications in Nigeria due to insincerity of operators and poor regulation. Currently, discussions are on in government to secure a total of $350 million in financing from the World Bank and the CBN to provide meters across Nigeria.

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Covid-19: India’s case upslope shows... Continued from page 1

hardest-hit country in the world. In the last five days,

more than 1,000 people have died each day, with 1,016 deaths on Monday alone, bringing the total fatalities in the country to 71,642. Exactly a month ago, it reported a record daily upsurge of 62,170 new Covid-19 infections that pushed it to become the third country to cross the two million mark, following ease of restrictions. India as of Monday had the fastest-growing caseload, a scenario pundits term as the offshoot of hasty relaxation of lockdown, patchy test and trace system and ineffective safety precautions. The swathes of issues fuelling India’s case escalation are all familiar with Nigeria’s fight against Covid-19; but while it has yet to yield the sort of results seen in India, experts have warned that if Nigeria does not take it as a reference point of learning, the possibility of a second wave and even reinfection will be unsurprising. Just as Nigeria has observed phased relaxation of lockdown measure including lift of ban on interstate movement and reopening of its airspace to herald the rebound of the economy, India has equally implemented a similar approach. Delhi Metro Transit, the largest train network that moves an average of 2.6 million pass engers between India’s sprawling capital New Delhi and adjoining areas, resumed operations on Monday after closing down in March. But the effect has been a faster migration of cases from urban hotspots such as New Delhi to rural states like Bahir where millions throng to the cities in search of jobs and where it has proven hard to trace the virus path. Since these rural spots are some of the poorest in the country, effective quarantine of those returning to hotspot cities has been pockets of struggles as anecdotal evidence indicates. “This is a virus that came to India on international flights. It landed in cities like Delhi and Mumbai. But because of the hasty relaxation of lockdown, migrants

took the virus from cities to villages,” Shahid Jameel, a virologist said in a BBC report. “And numbers started to grow as India began reopening in June - unable to afford the lockdown any longer and testing increased. People began travelling across states, and even within states more, possibly ferrying the virus along the way.” Testing in India has also been staggered and below par across the country while isolation is not effectively followed. There is an increase of use of antigen tests, which are faster but less reliable than the RT-PCR test. A McKinsey & Company’s insight on how widespread Covid-19 testing is correlated with fewer cases demonstrates that in a surprising relationship, countries that have tested more have diagnosed fewer cases per thousand people. It proposes that testing capacity could be paired with at-scale contact tracing, embedded with privacy by design, and with quarantine facilities to help localise hot spots and prevent a broader resurgence. However Nigeria, worse than India, is behind in testing and was still targeting to test 1 percent of its nearly 200 million people across the country. Out of the 36 states, 70 percent of all tests conducted have only covered nine states including Lagos, Kano, FCT, Plateau, Oyo, Kaduna, Edo, Ogun, Rivers, Ehanire Osagie, Nigeria’s minister of health said in August. Nigeria’s 54,587 confirmed cases as of September 3 were filtered from 417,398, showing that low testing rates could be blinding the government to the true picture of things. The resumption of most social activities and the waning of safety precaution on a faulty general assumption that the virus is drying up as backed by the Nigeria’s Centre for Disease Control (NCDC) statistics pointing to a flattening of the curve is a concern for health expert. They argue that the measures of saving the economy should not give a false impression that the country has wholly exited the doldrums of coronavirus.

Lagos, Century Group, IOSH canvass... Continued from page 30

Fred Ugo from NIMASA; Jamiu Badmus and Adeola Omotunde of WAMASON, and Tosin Faniro-Dada of the Lagos State Employment Trust Fund. The analytics report reveals that well over 5000 people registered for the event globally. A total of 10 participants won Recycling Entrepreneurship trainings valued at about N2,500,000, while several @Businessdayng

others won 50 percent IOSH membership discounts and trainings with Combined training Solutions. It is the vision of the organisers of the Summit that the presentations and training initiatives will benefit the youth, regardless of discipline and educational background to recognise and embrace revenue generating and employment opportunities in HSE practice.

Wednesday 09 September 2020

BUSINESS DAY

news

FG, States, LGs shared N3.88trn in H1 2020 …as report shows 3 straight quarters of declining disbursements HARRISON EDEH, Abuja

he Federation Accounts Allocation Committee (FAAC) shared N3.879 trillion to the federal, state and local governments among other statutory recipients in the first half of 2020. A breakdown of the disbursements showed that N1.53 trillion went to the federal, N1.29 trillion to states, and N771.34 billion to the 774 local government areas of the country. The data are contained in the latest edition of the quarterly review of the Nigeria Extractive Industries Transparency Initiative (NEITI) issued by the director of communications and advocacy, Orji Ogbonnaya Orji, Tuesday, in Abuja. The NEITI quarterly review showed that the N1.53 trillion received by the Federal Government in H1 2020 was 4.28 percent lower than the N1.599 trillion it got in the first half of 2019 and 7.36 percent lower than the N1.652 trillion it received in the first half of 2018. The report further showed that, “for states, a total of

N1.298 trillion was disbursed in the first half of 2020. This was 2.8 percent lower than the N1.35 trillion disbursed in the first half of 2019, and 5.6 percent lower than the N1.375 trillion disbursed in the first half of 2020”, the report stated. For local government areas, the 2020 first half disbursements were 2.64 percent and 3.04 percent lower than the corresponding disbursements for 2019 and 2018 respectively. The report, however, noted that disbursements in Q2 2020 were 1.09 percent higher than total disbursements in Q2 2019 and 3.66 percent lower than the one for Q2 2018. According to the report, FAAC disbursements in the second quarter of 2020 stood at N1.934 trillion, as it emphasised further that this was made up of N739.2 billion to the Federal Government, N629.3 billion to state governments, and N375.4 billion to the 774 local government areas. The report pointed out that the total FAAC disbursements in the second quarter of 2020 were slightly lower than the N1.945 trillion disbursed in the

first quarter of 2020. This aligned with the projections made in the previous issue of the NEITI quarterly review which projected lower FAAC disbursement in the second quarter. The NEITI report attributed the 0.55 percent decrease in Q2 2020 to a couple of factors, namely: “rebound in oil prices in the second quarter as a result of ease of lockdowns by countries across the world and the adjustment of the official exchange rate by the CBN from N307/$1 to N360/$1 in March resulting in higher naira disbursements.” The report also revealed that FAAC disbursements in the first quarter and second quarter of 2020 were very volatile, with the difference in total disbursements between months ranging between N58.9 billion and N199.3 billion. During this period the “disbursements were very volatile in the first half of 2020, compared to 2018 and 2019. Unlike 2018 and 2019 where aggregate disbursements increased and decreased in successive months, in 2020 they fell for two straight months, increased in one month, and

then decreased for two straight months,” the report stated. The report also observed that in the months under consideration in 2020, aggregate disbursements fluctuated by large amounts, compared to 2018 and 2019. “Aggregate disbursements were N716.3 billion in January and this fell to N647.4 billion in February,” stated the report. “Thereafter, disbursements fell to N581.6 billion in March, before increasing to N780.9 billion in April. Disbursements then fell to N606.2 billion in May and to N547.3 billion in June. These figures indicate differences of N68.9 billion between January and February, N65.7 billion between February and March, N199.3 billion between March and April, N174.7 billion between April and May, and N58.9 billion between May and June. For comparison, the highest inter-month difference in the first half of 2018 was N62.9 billion, while the corresponding figure for 2019 was N63.5 billion. Thus, there have been very wide fluctuations in aggregate disbursements so far in 2020.”

Bovine tuberculosis found in cows in Abia …as govt urges residents to avoid eating cow lungs GODFREY OFURUM, Aba

bia State government has advised residents to desist from eating cow lungs in order not to contract Bovine Tuberculosis, which has been found in some slaughtered cows in the state. Ikechi Mgboji, the state commissioner for agriculture, who gave the warning on Tuesday, said that officials of the ministry discovered that some cows brought into the state about two weeks ago, were infected with “Bovine Tuberculosis”, a disease, which affects cow lungs. Bovine tuberculosis is a chronic animal disease caused by a bacteria called “ Myc o b a c t e r i u m b ov i s” (M.bovis) related to the b a c t e r i a, cau s i n g av i a n and human tuberculosis and can affect all mammals. The disease causes a g e n e ra l s t a t e o f i l l n e s s manifesting later with coughing and resulting in eventual death of the affected mammal. “ Pa r t o f o u r w o r k i n this ministr y is that any cow offered for public

c o n su mp t i o n i s u su a l l y examined, by veterinar y doctors. Two of such cows slaughtered about two weeks ago, were found to have Bovine tuberculosis (M.bovine) and there is no way to know a cow with such a disease unless they are either killed or tested. “So, we decided to alert people, who eat beef to stop eating the lungs of cows for now, but they may eat the flesh,” the commissioner said. Mg b o j i , p ro f e s s o r o f l aw , e x p l a i n e d t h a t h i s ministr y has aler ted all veterinar y doctors, who operate at the abattoirs in the state, to watch out for such disease manifestation to determine its spread and safeguard lives. He also noted that the ministry has alerted cow dealers in the state, to be aw a re o f t h e d i s c ov e r y and to allow their cows to be tested to safeguard the lives of beef consumers. He lamented that cow dealers have not been showing interest in having their cows tested to determine their fitness for human consumption, stressing that their quest for profit is a threat to human health.

CITN urges tax authorities to engage taxpayers ...as NECA asks FG to examine effect of taxation on economy Iheanyi Nwachukwu

C L-R: Tunji Akinosi, commissioner for forestry, Ogun State; Sade Morgan, corporate affairs director, Nigerian Breweries plc; Lateef Adegbola-Benson, permanent secretary, Ministry of Forestry, Ogun State, and Patrick Olowokere, head, sustainability and government affairs, Nigerian Breweries plc, after signing of Memorandum of Understanding (MoU) between Nigerian Breweries plc and Ogun State Government on the Olokemeji Reforestation Project in Abeokuta, Ogun State.

What we are doing to expand power services in Lagos- LSEB boss BUNMI BAILEY

onducting energy audits, incorporating private sector to harmonise energy sources, creating Lagos solar project, are some of the measures being adopted by the Lagos State Electricity Board (LSEB) to attain sustainable energy in Lagos. The general manager of LSEB, Mukhtaar Tijani stated this on Tuesday at a media parley held at the Lagos Energy Academy, Ikeja, adding that steps are also being taking to address frequent the issue of vandalism of electrical components, especially those aiding streetlights around the

metropolis of Lagos. “Our flagship initiative towards this effort is to conduct energy audit for facilities across the state with the aim of developing comprehensive master plan that will serve as blueprint towards our investment in energy infrastructure and clean energy technology,” “We would not be limiting the audit to government and public facilities as the strategy is to incorporate the private sector to harmonise all energy sources in the state and have an inclusive management plan that will cater for future expansion,” Tijani said. The LSEB is the implementing agency of the Lagos State ministry of energy and www.businessday.ng

mineral resources responsible for energy development, independent power projects and public lighting in Lagos. Tijani, who observed that power supply has always been an issue to Nigerians, noted that there is currently increased energy demand in the state due to expanded civilisation and population growth, thus the government is focussing on a sustainable supply, which entails optimised use of energy to minimise pollution. He further noted that part of the effort to improve the energy mix is the Lagos Solar project which is an initiative that is focused on implementing stand-alone solar power solutions for public facili-

ties. “This project is currently providing solar power to 172 public secondary schools and 11 Public Health Centers (PHCS),” He says. He said while the solar components are currently undergoing routine maintenance, the aim is to deliver additional solar systems to rural, riverine and public secondary Schools located within the rural areas. The LSEB boss added that with the successful execution of five IPPs in collaboration with the private sector, the state government was opened to more effective partnerships with private sector players in further boosting the energy mix in the state.

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hartered Institute of Taxation of Nigeria (CITN) has advised the tax authorities to engage more with taxpayers towards addressing the challenges that they (taxpayers) face in these uncertain and challenging times. Gladys Olajumoke Simplice, 14th president and chairman of council, CITN, gave this advice at the 42nd induction of new members of the institute, which held recently. The induction was the first ever virtual induction in the history of the Institute. She urged the inductees to commit to the realisation of the goals of the Institute by their active participation at the CITN programmes and activities. “Your professional conduct and depth of your technical capacity inexorably confers greater respect and value on the Institute by all those that deal with you”, CITN president added. The new members joined the taxation profession at a challenging time for all nations of the world. “The outbreak of Coronavirus has severely affected the world economy to the extent that the United Nations Development Programme (UNDP) has warned that the Pandemic is far more than a health crisis: @Businessdayng

it is affecting societies and economies at their core. It further warned that without urgent socio-economic responses, global suffering will escalate, jeopardising lives and livelihoods for years to come”, Simplice noted. “At the local scene, the negative effects of the Pandemic are glaring including the inability of taxpayers to fulfil their tax obligations as and when due”, she added. “No wonder, the Federal Government had initiated a number of proactive measures particularly, the recent approval of the Nigeria Economic Sustainability Plan (NESP) by the Federal Executive Council. Furthermore, tax authorities at the federal and state levels have been responsive in handling this situation resulting in the initiation of measures towards mitigating the effects on taxpayers. “These measures range from extending the period for filing tax returns, waivers of penalties, extension of the period for due tax payments, tax waivers for small businesses and so on”, CITN president said. She said that with these developments, “it is important as tax professionals that we should be abreast of daily developments in the tax terrain otherwise we would be on the disadvantaged side.”

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Nigeria discards petrol price band We won’t end strike until our demands as marketers get nod to fix price are met - Resident doctors OLUSOLA BELLO & DIPO OLADEHINDE

igeria’s Federal Government on Tuesday said it would henceforth no longer release guiding price bands for Premium Motor Spirit (PMS), popularly called petrol. This means that going forward, PMS price would be determined by the forces of demand and supply and the international cost of crude oil, Abdulkadir Saidu, executive secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), told journalists in Abuja. Saidu, who was represented by Victor Shidok, PPPRA’s general manager, administration and human resources, noted that the role of the agency would be to ensure that oil marketers do not profiteer, as every petrol dealer was henceforth free to source for product and fix their price. “This, however, must be in accordance with our code of conduct because as a regulator, it is our duty to protect the consumer and operators must abide by our codes,”

Saidu said. Confirming this to BusinessDay Tuesday evening, Shidok said that the PPPPA no longer has template for products but that every marketer is free to source products anywhere and bring it to sell in the country. He, however, said the agency would act as ombudsman to check any marketer that tries to fix outrageous price, adding that the price at which the marketer sells his or her product would depend on their bargaining abilities. With this move, the government has shown it is on course to fully deregulate the downstream sector of the oil industry. Nigeria’s Federal Government bowed to long-standing pressure to restructure the oil sector and remove subsidy after the country was hit by lower oil prices which have put pressure on its foreign reserves. Fu e l s u b s i d y g u l p e d N10.413 trillion in the last 14 years, from 2006 to 2019, Lai Mohammed, Nigeria’s minister of information and culture, said on Monday. President Muhammadu Buhari had on Monday, while

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REMI FEYISIPO, Ibadan

speaking at the First Year Ministerial Performance Review Retreat in Abuja, listed several negative consequences that would arise if government should even attempt to go back to the business of fixing or subsidising PMS prices. “First of all, it would mean a return to the costly subsidy regime. Today we have 60 percent less revenues, we just cannot afford the cost. The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration,” said Buhari, who was represented at the retreat by Vice President Yemi Osinbajo. Buhari had also signalled a possible further raise in the fuel pump price especially as government consolidates its ongoing oil sector deregulation and crude prices pick up. “The effect of deregulation, though, is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover we would see some increases in PMS prices. This is what has happened now. When global prices rose, it meant that the price of petrol locally would go up,” he said.

ational Association of Residents Doctors (NARD), on Tuesday, vowed not to suspend their on-going nationwide strike until their demands are met by the Federal Government. Their demands include provision of genuine group life insurance and death in service benefit for all workers, immediate payment of the medical residency training funding to all her members as approved in the reversed 2020 budget, immediate payment of the outstanding April/May and

June Covid-19 inducement allowance to all health workers, determination of the revised hazard allowance for all health workers as agreed in previous meetings with relevant stakeholders. Others are immediate payment of the salary shortfalls of 2014, 2015 and 2016, doctors working under the various tertiary institutions should be placed on appropriate salary grade level and universal implementation of the medical residency training Act of 2017 in all state tertiary institutions, and payment of all arrears owed members in federal and state tertiary health in-

stitutions, arising from consequential adjustment of the national minimum wages. Chairman of NARD, Oyo State chapter, Adedayo Williams stated that although the Federal Government had already called them for a meeting slated for Wednesday, they would, however, not call off the strike on a promissory note. “Our aim was not to endanger the lives of our patients, but we don’t want government to play games with us because a frustrated doctor that will be not able to concentrate is even more dangerous than leaving patient uncared for,” said Williams.

Glo is Super Story’s headline sponsor on TV GBEMI FAMINU

ational telecoms company, Globacom, has thrown its weight behind the popular television drama series - Super Story. The company is now the headline sponsor of a new series of Super Story titled “Revenge,” which started running on African Independent Television (AIT) in September 2020. In a statement in Lagos, Globacom expressed its delight to

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sponsor one of the most popular soap opera in the country, as the programme has consistently promoted good family values since 2001 when it was unveiled. Globacom said, “We are delighted to support Super Story to continue to excite some of our esteemed subscribers who watch the drama series. Super Story is chock-full with viable lessons on slices of life bordering on vices, venal practices, follies and foibles. It is unique with its style of producing various in-

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teresting true-to-life stories that are believable and have distinct beginnings and endings.” Globacom has over the years been the greatest corporate supporter of arts and entertainment in the country with sponsorship of different initiatives including “Professor Johnbull,” a television drama series broadcast on the networks of the Nigerian Television Authority (NTA) in 2016 and CNN African Voices since 2010, among others.

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Sub-Saharan Africa to benefit €5bn from EU green plan

ub-Saharan Africa will benefit to the tune of five billion euros from EU Green Economy Recovery Plan, an EU official has said. Leonard Mizzi, head of unit, Directorate-General for International Cooperation and Development, European Commission made this known at the ongoing 2020 virtual summit of the African Green Revolution Forum (AGRF) hosted by Rwanda. Speaking at a panel discussion tagged: “The key role of SMEs in serving urban food markets”, Mizzi said the fund set aside for sub-Saharan Africa was part of the EU’s seven-year green plan from 2021 to 2027. The head of unit, who also specialises in rural development, food security and nutrition, said that the fund would be used to address water, health, sanitation and social economy. “In a team of European context, which is the full firepower of the European Commission, all EU member states, the EU Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD), member states mobilised 11

billion euros; European Commission mobilised 14 billion euros; EIB mobilised 14.5 billion euros; and EBRD mobilised 4 billion euros. “Sub-Saharan Africa will benefit around five billion euros. The money is a composite amount for emergency, humanitarian with a focus on saving lives but it was also made to address water, health, sanitation and social economy.” Mizzi, however, said that the region must demonstrate economic recovery strategies in line with the EU’s green recovery plan to access the fund targeted at the African Continental Free Trade Area (AfCFTA). He said that sub-Saharan nations should focus on developing local and regional markets as well as bridging infrastructure gaps. Mizzi said that the region should also ensure harmonised standards of products and trade operation, identify opportunities for SMEs, and address issues of food fortification in the region. “The EU since April is providing fiscal space through budget support and budget

support modalities. “We inject fiscal space so that African countries mobilise support which would also include loans for local companies and SMEs, and also support agrofood companies,” Mizzi said. He said that the ACFTA was a continental-driven agenda as the EU would want high quality products for its trade partners including basic food safety and standards setting. “Figures show Europe remains an important market and we will like to be a key partner in the international trade. “The key aspect of Covid-19 shows that we need to focus more on local and regional markets. “You can’t expect good flow of goods from countries to subSaharan or within the region if you have problems around road logistics, cargo logistics and port logistics. This is key, because Africa’s urban population cannot support major infrastructure gaps if it is not addressed.” Mizzi emphasised the need for harmonised standards at all agricultural value chains and trade sectors in the continent. NAN

Nitro121 marks 15 years of doing business in Nigeria DANIEL OBI

oremost brand-building and marketing communication company, Nitro 121 (formerly known

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as 141 Worldwide) has promised to continue to deliver bespoke marketing communications services to clients and other partners. The managing director of the company, Lampe Omoyele, stated this recently in a statement as the company marks 15 years of doing business in Nigeria. The agency founded in 2005 and known for creating cutting edge and engaging experiences across touchpoints have helped to build brands in the market-

place to deliver profitable growth. “As we mark 15years of operation wherein we have gone through transitions and transformation, one thing remains constant: our unwavering commitment to serve clients with uncompromised professionalism in line with our act right values, responsible, integrity, gusto, harmony and transparency, as well as a continuing drive to be innovative and impactful in the marketplace.”

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FG, States, LGs shared N3.88trn in H1 2020

…as report shows 3 straight quarters of declining disbursements HARRISON EDEH, Abuja

the 2020 first half disbursements were 2.64 percent and 3.04 percent lower than the corresponding disbursements for 2019 and 2018 respectively. The report, however, noted that disbursements in Q2 2020 were 1.09 percent higher than total disbursements in Q2 2019 and 3.66 percent lower than the one for Q2 2018. According to the report, FAAC disbursements in the second quarter of 2020 stood at N1.934 trillion, as it emphasised further that this was made up of N739.2 billion to the Federal Government, N629.3 billion to state governments, and N375.4 billion to the 774 local government areas. The report pointed out that the total FAAC disbursements in the second quarter of 2020 were slightly lower than the N1.945 trillion disbursed in the first quarter of 2020. This aligned with the projections made in the previous issue of the NEITI quarterly review which projected lower FAAC disbursement in the second quarter. The NEITI report attributed the 0.55 percent decrease in Q2 2020 to a couple of factors, namely: “rebound in oil prices in the second quarter as a result of ease of lockdowns by countries across the world and the adjustment of the official exchange rate by the CBN from N307/$1 to N360/$1 in March resulting in higher naira disbursements.” The report also revealed that

FAAC disbursements in the first quarter and second quarter of 2020 were very volatile, with the difference in total disbursements between months ranging between N58.9 billion and N199.3 billion. During this period the “disbursements were very volatile in the first half of 2020, compared to 2018 and 2019. Unlike 2018 and 2019 where aggregate disbursements increased and decreased in successive months, in 2020 they fell for two straight months, increased in one month, and then decreased for two straight months,” the report stated. The report also observed that in the months under consideration in 2020, aggregate disbursements fluctuated by large amounts, compared to 2018 and 2019. “Aggregate disbursements were N716.3 billion in January and this fell to N647.4 billion in February,” stated the report. “Thereafter, disbursements fell to N581.6 billion in March, before increasing to N780.9 billion in April. Disbursements then fell to N606.2 billion in May and to N547.3 billion in June. These figures indicate differences of N68.9 billion between January and February, N65.7 billion between February and March, N199.3 billion between March and April, N174.7 billion between April and May, and N58.9 billion between May and June.

L-R: Tunji Akinosi, commissioner for forestry, Ogun State; Sade Morgan, corporate affairs director, Nigerian Breweries plc; Lateef Adegbola-Benson, permanent secretary, Ministry of Forestry, Ogun State, and Patrick Olowokere, head, sustainability and government affairs, Nigerian Breweries plc, after signing of Memorandum of Understanding (MoU) between Nigerian Breweries plc and Ogun State Government on the Olokemeji Reforestation Project in Abeokuta, Ogun State.

What we are doing to expand power services in Lagos- LSEB boss BUNMI BAILEY

eral resources responsible for energy development, independent power projects and public lighting in Lagos. Tijani, who observed that power supply has always been an issue to Nigerians, noted that there is currently increased energy demand in the state due to expanded civilisation and population growth, thus the government is focussing on a sustainable supply, which entails optimised use of energy to minimise pollution. He further noted that part of the effort to improve the energy mix is the Lagos Solar project which is an initiative that is focused on implementing stand-alone solar power solutions for public facili-

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BUSINESS DAY Wednesday 09 September 2020 www.businessday.ng

Paul Gbededo: Delivering unprecedented growth in a turbulent economy CALEB OJEWALE

hen the Flour Mills of Nigeria (FMN) Plc made public its financial results for the year ended March 31 2020, it finished the year strong with a record 184 percent growth in Profit-After-Tax. As captured in an earlier analysis by BusinessDay, the last time the Group recorded success of that magnitude was in 2016 when it reported a growth in profit after tax of 70 percent. The group recorded remarkable growth in all three key segments of Food, Agro- Allied and Sugar, FMN. Leading the company to new heights of success in what has been a turbulent year for the Nigerian economy is Paul Gbededo, who has been CEO since April 2013. Gbededo’s 38-year career with FMN Group started at Nigerian Bag Manufacturing Company Plc (1982 – 1998). There, he acquired extensive experience serving in various managerial positions as Process Control Manager, Production Manager, General Manager Production and became the first Nigerian Production Director in 1993. A Fellow of the Polymer Institute of Nigeria and former Managing Director of FMN’s Agro-Allied Business, Gbededo was appointed the Group Managing Director /Chief Executive Officer of Flour Mills with effect from 1st April, 2013. According to his profile on the company’s website, he was educated at the Polytechnic of North London, UK, where he obtained Graduateship of Plastic and Rubber Institute and Associateship of National College of Rubber Technology in 1980, and holds MSc. Degree in Polymer Technology (1981) of Loughborough University of Technology, UK. An alumnus of the Lagos Business School’s Advanced Management Programme 3, he attended Pasta Machinery Use, Maintenance and Operation at FAVA, Italy in 2005. Gbededo who is credited for his pioneering role in fertilizer, pasta and rice production, in 1998, became General Manager/ Director in charge of fertilizer operations, pioneering development of the product, “Golden Fertilizer”. He also served as a pioneer General Manager/Director for Golden Pasta Company Limited, a former subsidiary (now a division) of Flour Mills. In July 2012, Paul was elevated to the position of Managing Director, Agro-Allied business with responsibility to implement FMN Group’s backward integration policies, programmes and initiatives. Less than two years later, he was appointed the company’s GMD/CEO.

Bright prospects in a lull economy In the year when many Nigerian companies nurse fears of revenue declines amid the country’s slow economic growth, Flour Mills of Nigeria reported a revenue increase of 9 percent year-on-year from N527.4 billion the previous year to N574 billion in 2019/2020. A BusinessDay analysis had stated that with a broad basket of food products and robust panNigerian production, distribution, and supply chain network, FMN in 2020 recorded a N7.4 billion or 184 percent increase in Profit After Tax (PAT), from N4 billion in 2018/2019 to N11.4 billion in 2019/2020. This was almost triple the 72 percent growth recorded for its Profit Before Tax. Analysis of FMN’S 2020 financials also revealed that its Agro-allied division was a major catalyst in the growth record reported in the review year as the business segment of the company reached profitability. This was largely due to the consistent and focused investments that have been made in its locally sourced segment over the last few years.. The Agro-allied segment of FMN’s business contributed the most revenue in the year under review. Revenue from the business arm increased by 20 percent , from N88.1 billion the previous year, revenue from Agro-allied rose to N105.5 billion in 2020. The increase in revenue contribution from Agro-allied division was attributable to the company’s investment strategy aimed at ensuring profitability and improving local content in the group’s product portfolio. Flour Mills in recent years invested about N100 billion in its Agro-allied business. In 2018, President Muhammadu Buhari commissioned its N50 billion Sunti Golden Sugar Estate in Niger state. The facility has been described as one of only two sugar mills in the country capable of producing crystallised sugar from locally grown sugar cane. This was an addition to the already invested N50 billion in a state-of-the-art sugar refinery in Apapa capable of refining up to 2000mt of sugar per day. When the National Sugar Development Council (NSDC) had its mid-term review in 2017, Sunti Golden Sugar scored 58 percent in the targets set in the backward in-

Paul Gbededo

tegration plan, including number of projects, new sugar factories, land developed, land under cane, out-grower farms, sugar produced and job creation. It came ahead of Dangote, which scored 45.8 percent and BUA, which scored 17 percent. Under Gbededo’s leadership, FMN’s recent giant strides have not been limited to Sugar. There have been efforts to become a major player in the palm oil value chain as well where like many other commodities, Nigeria has a significant deficit. Flour Mills of Nigeria (FMN) according to information gleaned from a factsheet, is stepping up its position in the oil palm space, with an ambitious plan for a tenfold increase of its current production within about seven years. Crude Palm Oil (CPO) production by the company, which is currently 2,700 tons, is projected to increase

‘‘

Feeding the Nation, every day, is according to the company, at the heart of its strategic decisions on what to produce, how and where factories are set up, the level of care that is put into products, and how they interact with host communities and the wider environment

to 22,000 tons by 2027, an almost tenfold increase within seven years (2020 – 2027) once the mill is commissioned and projected to grow to 52,000 tons by 2030. Located in Edo state, the palm oil investment by FMN currently sits on 11,600 hectares spread across three locations; Iguobanor and Iquiye (Agri Palm 1) and New Land (Agri Palm 2), which are 25 kilometers apart. In 2014, the company unveiled what it describes as one of the biggest, automated edible oil refineries and the first margarine plant in the country. The operation of the refinery is supported with palm oil from a 4,500-hectare oil palm plantation in Edo State together with soybean sourced by its aggregation teams across the country. A further analysis of the 2019/2020 financials of FMN revealed the Agro-allied division turned profitable following a repositioning and prior year funding of the key-value chains of Oils and Fats, Proteins and Starch businesses. Revenue was driven by volume growth predominantly in Oils and Fats (Premium Edible Oils), Proteins (Premier Feed) and Golden Fertilizer. Strong profit growth in Oils and Fats and Proteins with Gross Profits more than doubled in both segments on an annual basis (with some IFRS9 adjust-

ments in Q4 last year). With an 18 percent revenue growth in the year ended March 31 2020, the Sugar segment of FMN group was closely behind the revenue contribution from Agro-allied business. From N82.7 billion in the year before, the Sugar arm of the Group increased to N97.6 billion. The revenue growth recorded from the Sugar business was driven by an increase in volumes. The improved operational efficiency in Sunti Golden Sugar Estates by commencing mechanical harvesting, strengthening the cane haulage facilities and installing a vacuum pump condenser resulted in 15 percent increase in plant output. The Food segment of FMN business also recorded an increase in revenue contribution during the year ended March 31 2019/2020. The Food segment saw a 7 percent revenue growth from N335.6 billion the previous year to N358.4 billion. Accelerated business-to-consumer (B2C) growth due to new product launches, expansion of production capacity and regional SKUs were the major driver of the revenue increase. The company had also recently launched new products such as Auntie B pasta and semolina to ensure right regional offerings and affordability, as part of strengthening its market share in those segments. The FMN Group’s mantra, “Feeding the Nation, every day,” is according to the company, at the heart of its strategic decisions on what to produce, how and where factories are set up, the level of care that is put into products, and how they interact with host communities and the wider environment. As Gbededo told BusinessDay in an 2019 interview, “Our goal to be involved in all stages of the food value chain has over the years continued to inspire our investments in the development of critical infrastructure that is required to support our target value chains”. The company’s giant strides in recent years show it has been living true to its mantra and does not appear to be relenting. Giving value to shareholders A BusinessDay analysis had shown that following the good performance reported for the year ended March 31 2019/2020, the Board of FMN Group recommended a dividend of N1.40 per ordinary share of 50 kobo each. The proposed dividend is 17 percent increase when compared to 2019 and 40 percent when compared to 2018. According to the Company, the proposed dividend was based on confidence in the business. The total proposed dividend in 2020, although still subject to AGM ratification is N5.7billion an increase of N800 million from N4.9billion in 2019.

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