Wednesday, April 10 2019 by BusinessDay

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Cargo backlog piles up at airports, seaports over Customs server breakdown T T

IMF revises Nigeria’s GDP forecasts to 2.1% for 2019 ... cuts global growth outlook ... Brexit, softening oil prices main risks for Nigeria

AMAKA ANAGOR-EWUZIE & IFEOMA OKEKE

he Federal Government which targets moving Nigeria to a sub-100 score in the 2020 World Bank Ease of Doing Business ranking, from its current 145 position, might do well to first tackle gridlock and

Importers squeezed as delays create demurrage cost Phone prices up 25% as dealers run out of stock

inefficiency at the nation’s air and seaports. BusinessDay has learnt that the volume of uncleared cargo

and goods at the nation’s main seaports and airports has increased astronomically following the recent server breakdown

at Tin-Can Island and Apapa Ports, as well as two months Continues on page 38

HOPE MOSES-ASHIKE in Washington DC

he International Monetary Fund (IMF) on Tuesday revised marginally upwards Nigeria’s real Gross Domestic Product (GDP) growth rate projections for 2019 to 2.1 percent from its January estimates of 2 percent. This comes as the fund cut its outlook for global growth to the lowest since the financial crisis amid a bleaker outlook in most major advanced economies and signs that higher tariffs are weighing on trade. The 2019 global growth rate would be the weakest since 2009, when the world economy Continues on page 38

Inside Fidelity Bank realigns for next growth phase, appoints new executive directors P. 2

L-R: H.E. Mohammed Sanusi Barkindo, Secretary General of OPEC; H.E. Mahaman Laouan Gaya, Secretary General of African Petroleum Producers’ Organization (APPO); H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea; H.E. Dr. Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources of Nigeria and President of APPO during the 2019 APPO Awards held in Malabo, Equatorial Guinea where Dr. Kachikwu was conferred with an Outstanding Life Leadership Award for his contributions to the Global Oil and Gas Sector. He is the first in the world to ever hold the Presidency of OPEC, GECF and APPO, concurrently. He dedicated the award to the Nigerian President, Muhammadu Buhari, GCFR.

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NEWS Nigeria dithers as strict reforms lift millions out of poverty in China, India MICHAEL ANI

hina and India, two of the world’s most populous countries, have been able to cut down by more than half the number of their citizens living below the poverty line, despite having five times Nigeria’s population. China has a population of 1.4 billion while India’s population is put at 1.3 billion as at April 9, 2019, according to data from Worldometers, a World Bank data clock that tracks population across countries. These compare with Nigeria with an estimated population of 199 million. Both China and India were able to reduce poverty through strict policy reforms, especially by developing a robust health and educational system. “Both countries took a bottom-up approach to achieving inclusive growth and development,” said Aminat Olayinka Olohunlana, a financial, economic and public policy analyst at the University of Lagos.

“Education was massively invested in, business environment was conducive, investment climate was well developed and infant industries were protected,” she said. Furthermore, there was a shift from a traditional-based ideology to a knowledgebased economy that made these countries start to invest in their intellectual capital, she added. Ayodele Akinwunmi, head of research at FSDH Merchant Bank, said China and India undertook a lot of reforms in education and health to ensure that the rate of poverty came down in both countries. “Today, when people talk about the treatment of diseases, they go to India for surgical operations and for remedy of any form of ailment. They also took time to bring about financial inclusion by providing credit to people at the bottom of the pyramid,” Akinwunmi said.

ANALYSIS

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Mobile internet subscription grows by 18.9% in 3yrs ... as industry rakes in N182bn monthly data revenues JUMOKE AKIYODE-LAWANSON

eavier investment in widespread, quality data coverage by telecommunications operators has resulted in higher percentage of total revenue growth coming from mobile data services, as telecommunications operators add approximately one million new data subscribers and Nigerians spendanaverageofN182billion monthly on mobile internet services, BusinessDay finds. According to data on the Nigerian Communications Commission (NCC) website, Nigeria in January 2019 had over 113.8 million GSM internet data subscribers. About 70 percent (79 million data subscribers) spend an average of N1,000 on monthly data subscription which amounts to N79 billion for telcos. Fifteen percent of those subscribers spend at least N3,000, which amounts to an additional N48 billion; and 10 percent spend N5,000 (N55 billion) or more on data, bringing up the total of monthly data revenues to about N182 billion for telcos in Nigeria. The numbers are steadily growing year-on-year (YoY) and Nigerians’ spend continues to increase with deepening broadband penetration, cheaper smartphones, over the top (OTT) services and voice-over internet protocol VoIP such as WhatsApp calls,

Skype, FaceTime, etc. Numbers from NCC data show that Nigerian telcos gain approximately one million new internet subscribers every month. In January 2016, the four major telecommunications providers – MTN, Airtel, Globacom and 9mobile – had a total of 95.7 million data subscribers. The year saw a decline in these numbers due to the country’s economic recession and numbers dropped to 89.9 million in February 2017. However, with recovery, the numbers rose to just over 100 million in January 2018 and from then on, there was a continuous increase in numbers, currently standing at 113.8 million subscribers. “Data revenues will continue to increase for telcos because of the contribution of value-added services which have been significantly used especially by Nigerians who need to make international calls,” Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), told BusinessDay in a telephone interview. “The rise of mobile money, e-business and e-commerce, the use of 4G services for CCTV, and the changes in consumer behaviour and social media will also further contribute to the growth of data revenues for telcos,” Teniola said.

L-R: Aliko Dangote, president, Dangote Group; Paul David Hewson, popularly known as Bono; Vice President Yemi Osinbajo; Isaac Adewole, minister of health, and others, during a courtesy visit by members of One Campaign led by Hewson, to Osinbajo, at the State House, Abuja.

Operators excited as Nigeria’s off-grid market attracts new $300m funding ISAAC ANYAOGU

ith over $300 million in new funding coming into Nigeria’s off-grid sector in the coming months, the energy gap in Africa’s biggest economy is creating opportunities for massive investments, having proven to become the sector with the most capacity to attract new investment. Wiebe Boer, CEO of All On, an impact investment firm seeded by Shell, said the massive challenge of energy gap in Nigeria also means there is a massive commercial opportunity. And investors seem to be falling over themselves to

dow tomorrow (Thursday) through Electrifi. There is the AfDB’s Off Grid Energy Fund. DeutscheBank is coming with a debt fund. Sterling Bank is the first Nigerian commercial bank to lend to the space in a serious way,” Wiebe said. “Persistent Energy Capital now has an office in Nigeria. Acumen has moved from Accra to Lagos and is actively seeking off-grid energy investment opportunities. Leading local PE firm Verod just made a big investment in Daystar. Helios has invested significant capital in Starsight. NorFund and Breakthrough Energy Ventures have both just made their first investments in the Nigerian off-grid

energy space. It is big and is only going to get bigger,” he added. Quentin Antoine, senior investment officer at ElectriFI, told BusinessDay on the sidelines of the conference that the company would announce a new $30 million fund for operators in the solar home system, mini-grids and industrial/commercial off-grid space in Nigeria. ElectriFI, a specialist debt and equity financing partner for small scale private companies focusing on generation capacity from sustainable energy sources, has opened an office in Nigeria. The com-

Continues on page 38

Fidelity Bank realigns for next growth phase, appoints new executive directors ENDURANCE OKAFOR

s part of corporate realignment and repositioning for the next growth phase, the Board of Directors of Fidelity Bank Plc has announced the appointment of three new Executive Directors. The Board which met in Lagos recently, approved the appointments of Gbolahan Joshua as Executive Director/Chief Operations and Information Officer; Obaro Odeghe, Executive Director, Corporate Bank and Hassan Imam, Executive Director, Northern Directorate, subject to the approval of the Central Bank of Nigeria (CBN). Gbolahan will have executive responsibilities for Operations, Technology, Digital Banking, Investor Relations, Strategy and Business Transformation. Obaro on his part •Continues online at will oversee all the bank’s www.businessday.ng corporate banking business www.businessday.ng

take position. “There is capital ready to be deployed to finance the takeoff of the sector. Just in the last month, three off-grid energy companies in Nigeria have raised around $10 million each – this would have been unheard of two years ago,” Boer said in a keynote address at the fourth edition of the Nigerian Energy Forum. “There is over $200 million in grant capital coming through the REA’s Nigeria Electrification Programme. There is another $80 million in debt capital coming through the EU/AFD’s SUNREF programme through Access and UBA. The EU is announcing another funding win-

Hassan Imam

Obaro Odeghe

Gbolahan Joshua

covering Energy, Power, Manufacturing, Telecoms, Fast Moving Consumer Goods, Construction and Real Estate. Hassan will supervise all Commercial, SME, Consumer and Public Sector businesses of Fidelity Bank in the North Directorate, comprising 18 states and Abuja. The elevation of the 3 erstwhile General Managers to Executive Directors, is consistent with the bank’s new succession strategy of grooming leaders from within. “Over the years, we have

worked assiduously at proactively preparing our people and growing the talent and leadership pool in the bank, so that when opportunities arise, we do not always have to look outside. I am most delighted that our 3 new EDs were all appointed from within,” said Fidelity Bank CEO, Nnamdi Okonkwo. The strong and cohesive Board of Directors of Fidelity Bank is chaired by Ernest Ebi, former Deputy Governor, CBN. The Board has 3 female Executive Directors; the larg-

est on any bank Board and is comprised of seasoned businessmen/technocrats as members. “We welcome Gbolahan, Obaro and Hassan to the Board. Collectively they have with them, varied and deep industry knowledge and relevant experiences that will not only deepen but engender even more robust discussions and engagements at Board level” said Chairman, Fidelity Bank, Ebi. Gbolahan attended Kings

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NEWS Smooth transition imperative to consolidate Lagos’ economic gains - Ambode JOSHUA BASSEY

utgoing governor of Lagos State, Akinwunmi Ambode, says smooth transition to the next administration in Lagos is imperative given Lagos’ status as Nigeria’s economic and commercial powerhouse. The governor stated this, Tuesday, at the inauguration of a 20-man transition committee saddled with the responsibility of planning and ensuring a seamless transition to a new government in Lagos. Ambode is billed to constitutionally exit power as the 14th governor of Lagos State on May 29, 2019, when he would have completed a four-year tenure that started on May 29, 2015. The governor would be handing over to Babajide SanwoOlu, governor-elect of Lagos State. Both are of the same political party - All Progressives Congress (APC). Inaugurating the committee at the state secretariat, Alausa, Ikeja, Ambode, represented by Tunji Bello, secretary to the state govern-

ment, said a smooth transition was imperative to ensure that the machinery of government continued to run without hitches, considering the importance of Lagos to the nation’s economy. “In about seven weeks from now, the tenure of this administration will come to an end and a new administration will commence under the leadership of Babajide Sanwo-Olu. “A smooth transition is imperative. Our state is a delicate one with very significant importance in the economic and social stability to our nation. To maintain this stability, build on the solid status of our state and give the next administration a smooth take-off, it is imperative to put in place a transition committee whose major responsibility will be to ensure a seamless transition to the next administration come May 29, 2019,” he said. The governor commended Lagosians ‘for keeping faith with the progressive ideals of the APC in the last two decades as well as with his administration. He expressed the optimism that the incoming

administration would build on the achievements recorded so far. ‘Let me use this opportunity to once again express my profound appreciation to all Lagosians for keeping faith with this administration and the rare privilege to serve. Government is not a sprint or a short distance race. It is an unending race. “For us in Lagos State, it has been a progressive race in which every successive administration builds upon the achievement of the past administration. He charged the committee chaired by the deputy governorelect, Obafemi Hamzat, and Tunji Bello, to accord the assignment the diligence and commitment it deserved. Members of the committee include Hakeem Muri-Okunola, head of service; Adeniji Kazeem, commissioner for justice; Akinyemi Ashade, commissioner for finance; Ade Akinsanya, commissioner for works and infrastructure; Obafela Bank-Olemoh, special adviser on education, and Yetunde Onabule, special adviser on urban development, among others.

INEC to commence registration of new voters in Kogi, Bayelsa

… begins work on polls for both states Iniobong Iwok

ndependent National Electoral Commission (INEC) says it would commence the registration of new eligible voters in Kogi and Balyelsa states in November. This was disclosed Tuesday by Festus Okoye, INEC national commissioner and chairman of the commission’s committee on information and voter education, in an interview with BusinessDay, noting that the registration was necessary so that eligible voters who had attained the voting age since election was last conducted in both states are captured. Governorship elections are staggered in some states as a result of litigations over previous polls that led to disruptions in the assumption of office by the governors. The states concerned are Anambra, Bayelsa, Edo, Ekiti, Kogi, and Ondo. Gubernatorial elections will hold in Bayelsa and

Kogi in December and November this year, respectively. The INEC commissioner added that the commission had started preparing for gubernatorial elections in both states, which will hold in 2019, stressing that it was working assiduously to publish the timetable and schedule of activities for the elections. According to Okoye, “We will commence the registration of new voters in Kogi and Balyesa States in November. Don’t forget that the gubernatorial elections are coming up in those states soon, so we are targeting those who just clocked 18 years between the last election and now.” Okoye denied media report that the commission would soon commence the distribution of Permanent Voters Card (PVCs), stressing that it was not an immediate priority of the commission. “Distribution of PVCs is not our immediate task, we are just

rounding off with the general elections and we have to take stock and plan for the forthcoming Kogi and Balyelsa governorship elections”, Okoye said. INEC’s national chairman, Mahmood Yakubu, had on Monday, April 7 at its defence of the 2019 budget proposal before a session of the Senate and House of Representatives committees on electoral matters, stated that the commission was in the process of publishing the timetable and schedule of activities for governorship elections in Bayelsa and Kogi. Yakubu presented a budget proposal of N45.4 billion for the commission in 2019, stressing that it was preparing for elections in the two states in the year. “This year we are going to conduct two end-of-tenure elections into the offices of the governors in Kogi and Bayelsa state,” Yakubu said.

Dangote Group offers pocket friendly prices at Enugu Trade Fair

ompanies under the stable of Dangote Group are adding colour to the ongoing 30th Enugu International Trade Fair with an array of edible goods on display. The Group’s participation is part of strategies to grow market share and expand customer reach in the Southern part of Nigeria, as the Group’s wellbranded pavilion has become the toast of visitors and shoppers at the Fair. Companies in the Group offering consumer goods at the fair are Dangote Sugar Refinery, NASCON Allied Industries plc (Dangote Salt), and Dangote

Flour Mills. Other companies from the stable who have established a help desk at the Group stand to handle inquiries include Dangote Cement and Dangote Fertilizer. Some products on display include sugar, baking flour, wheat and semolina meals, pasta, salt and seasoning. Dangote Sugar is offering customers different sizes of granulated sugar packs, while NASCON Allied has on display several flavours of the Dan q seasoning range and stew/soup mix. Enugu Trade Fair has become a veritable venue for introduction of new innovations to Dan-

gote products and that visitors to the Group’s pavilion will have the opportunity of buying products of these companies at reduced prices. Dangote Flour is offering customers a wide range of products at discounted prices. Buyers are going with several gifts as reward for purchasing Dangote Flour products. For those not ready to purchase whole cartons of te products, there are special packs containing different products. Dangote Group is of the view that the trade fair is coming at an appropriate time, as Easter is approaching while schools are going on vacation.

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NEWS Oil rally on turmoil in Middle East, North America, Libya not sustainable - industry sources … say Nigeria should seize short-term opportunity Endurance Okafor

he five-month high record of global oil price fuelled by rising political tension in Libya, US sanctions against Iran and Venezuela, coupled with OPEC’s ongoing supply cuts, is not sustainable, industry sources say. Oil prices rose to a fresh record at $71.32 a barrel, on Tuesday, around 5:18am local time, the highest since Novem-

ber 2018. The West Texas Intermediate (WTI) or the US crude also hit a high going back to November 2018 at $64.79. “The rally will be for a short term. If any of the major factors changes, prices will crash again,” Ayodele Oni, Partner, Energy Practice Group, Bloomfield Law Practice, told BusinessDay. The new record of the global oil price surpasses Nigeria’s budget benchmark by $11 considering it is pegged at $60 per barrel.

Calculation by BusinessDay revealed that with the current oil prices Nigeria could be saving $11.7 million in a day in its excess crude account. This was calculated by multiplying the estimated daily production level of about 1.7 million barrel per day by the addition $11 to the global oil price. According to Wunmi Iladare, Ghana National Petroleum professor and chair, University of Cape Coast, Institute of Oil and Gas, the factors pushing the price of oil as of now are the geo-

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political turmoil in the various countries involved. “Oil production has not come down neither has the economic growth picked up where oil and gas are consumed. So I am not going to really put much weigh on the current dynamic beyond, the geo-politics of oil and gas suppliers,” Iladare said. He added that the oil rally is only for short term, “as there is no high demand for petroleum products, and so nothing has really changed.” He added: “Oil prices in situations like this get

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to its peak and go down faster that it goes up.” According to industry sources, other factors that fuelled the rally are the fact that US shale production has slowed down, the Venezuelan chaos persists and most recently, the rising political tension in Libya. The escalating fighting in oilrich Libya threatens to disrupt exports in the country and is fuelling concerns over further supply cut. Resurgence in fighting around the Libyan capital of

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Tripoli this week has driven US forces to pull out of the country and is providing a new upside risk to global oil prices, underscoring the OPEC producer’s importance to markets and the fragility of its supply. Rebel forces loyal to renegade Khalifa Hifter, a General who effectively controls the country’s breakaway east, launched a surprise offensive against the home of Libya’s UN-recognised government last week in a move that risks plunging the country back into civil war.

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Emeka Iheioha and the Committee of Imo patriots SMALL BUSINESS HANDBOOK

EMEKA OSUJI

his column is known for or its consistency and focus on small business development and informal credit markets. Today, we make an exception and ask for the indulgence of our readers to bring in something fresh from one of Nigeria’s most maligned and ridiculed states - Imo. The story of Imo is so sordid that even the nation’s ruling party, the APC, which also controlled the state, disowned its governor, and couldn’t be bothered if it went to the opposition, just to dissociate itself from the circus playing in Owerri. Something needed to happen and it did recently. Something worthy of mention happened in Owerri, the capital of Imo State, exactly one week ago; precisely on Wednesday last week. The Governor-elect, the Emeka Ihedioha, had made a clarion call to Imo citizens to join him to rebuild the state and the response was overwhelming. Businessmen, professionals, intellectuals and others who are involved and accomplished in their different fields of human endeavour all turned out to answer him. He had asked them to come and help him set up the kind of

government they expect, will propel the fulfilment of his election manifesto and deliver the good governance he promised the people. The inauguration of the Transition Technical Committee (TTC) on Wednesday, has attracted so much interest in and around Imo State. Even before they were officially empanelled, the social media was awash with very positive stories about the TTC and its comprehensive assemblage of highend professionals, entrepreneurs and tested business leaders. The team is led by Ernest Ebi, a former Deputy Chief Executive of a top ten bank and former Deputy Governor of the Nigerian Central Bank. Clearly, the people of Imo State will show more than a passing interest in their conduct and work of the Transition Committee. The citizens congratulated, praised and urged the members to give their best. Indeed, the job of salvaging Imo from a group of pretenders, rejected even by their own political party, cannot be a tea party. As the Governorelect said in his inaugural speech “This assignment is a very critical one”. Without doubt, the people were waiting for Emeka Ihedioha and he has come. It is easy to wonder or even ask what is so special about the Emeka Ihedioha Technical Transition Committee (TTC); after all even the failed outgoing administration of the state had such a committee to usher in his government. Of course, most governments begin with a transitional arrangement. They set up committees and teams of experts, even across political party lines, to give them an outsider’s viewpoint on what they already know. Sometimes, such committees are merely a propaganda tool, as those setting them up

had already made up their minds on everything they want to do, or not to do. That is true. However, the current TTC, which Ihedioha inaugurated has many differentiating features. Incidentally, yours truly has been involved in, at least, two previous transitional committees in and outside the state, prior to this one and could claim some experience in this regard. To start with, the governor-elect did what was actually novel. He wrote a personally signed letter to each person he nominated to the committees and followed it up with personal phone calls to put a personal touch to the nomination. As he said on the floor of the plenary session, following the inauguration, he knew everybody he invited either personally or by reputation. What does this say? It tells me that the members of the TTC were not contributed by party big whigs to represent them at the committee. The governor-elect did, and in accordance with his knowledge of the people. This again says something about the hands on preparedness of Ihedioha. He knows where the human resources of the state are hidden and will fish them out to help him enhance his work. Secondly, the governor-elect sat by the various committees for much of the day fielding questions and explaining his intensions as expressed in the terms of reference, which he gave the sub-committees. He did not use aids and supporters to explain his thoughts to the members. He let them embrace him in a sound game of mutual respect. Evidently, the experience he has garnered while serving the nation at various levels came handy both in his, choice of humane words, humility as reflected in his courtesy to members

‘

This assignment is a very critical one”. Without doubt, the people were waiting for Emeka Ihedioha and he has come

and his clarity of vision as reflected in the themes of the terms of reference. Undoubtedly, the people of Imo State have waited for this day. The past eight years have been full of regrets. Those who wrote the blue print and policy guidebook for the disaster that was the outgoing government will tell you the man never respected the people. There was evident and utter disdain for superior knowledge and the government treated very disdainfully, people with any kind of acknowledge, intellect or success records. Indeed, there seemed to have been a kind of serious disregard or hatred for intellectuals and accomplished people – a natural consequence of inferiority complex. But Emeka Ihedioha sounds well. He reads and writes well and he is not afraid to work with brilliant people. He has always done so and has demonstrated it by the calibre of people he called to share his vision, even at this transitional stage. The people of Imo State have been made the butt of all jokes in Nigeria over the last few years. Even states, whose leadership failed likewise managed to keep their pride and avoid “iberiberism”. Not Imo state. It is one place people put little or no value on knowledge but expect to make progress in a knowledge-driven world. The natural consequence is “iberiberism”; people with dreadful knowledge deficit brandish native intelligence as a good alternative to modern education. They convert their primitive local words to elements of the English vocabulary and try to popularize ignorance. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

New perspectives on frontier markets and their evolution VINCENT NWANMA

rontier markets have been in the news lately: they are the centres of attraction in the world of investment. Funds are pouring into them as investors search for higher returns across the globe. In Nigeria, for instance, foreign investment rose 37.5 percent to $16.81 billion, up from $12.2 billion the year before. These rising funds flow will continue into these markets as the attractiveness lasts. As at Monday, April 1, 2019, returns on different asset classes favoured the frontiers. Bond yield on the benchmark 10-year bond for Nigeria stood at 14.24 percent; Kenya 12.25 percent, and Egypt 16.6 percent. Compare these with returns in the more mature markets in America, Europe and elsewhere. USA on the same day had a yield of 2.4 percent for a 10-year bond; Germany, the largest economy in Europe, had -0.047 percent; China (3.13%). These lower rates are driven by the economic realities of these countries, including their stable outlooks and comparatively lower risks. Long before the concept of frontier markets entered into the lexicon of the financial markets, its significance had been acknowledged in the Nigerian economy, as “undeveloped” as the economy was then. Farmers knew it and some of them operated on the concept to their advantage in terms of yields. Frontier markets evoke images of remote or far-flung, difficult-to-reach centres of economic activity

with reference to a certain point, usually the known location. Perhaps we can best explain the concept of Frontier Markets from the description given of Unoka by the priestess of Agbala in Chinua Achebe’s book, Things Fall Apart: You Unoka are known in all the clan for the weakness of your matchet and your hoe. When your neighbours go out with their axe to cut down virgin forests, you sow your yams on exhausted farms that take no labour to clear. They cross seven rivers to make their farms; you stay at home and offer sacrifices to a reluctant soil. Go home and work like a man. Okoye was also a musician. He played on the ogene. But he was not a failure like Unoka. He had a large barn full of yams and he had three wives. And now he was going to take the Idemili title, the third highest in the land. Frontier regions have always held great prospects for those brave enough to venture in there. We see this in the continued struggle by foreign investors for the untapped markets in Africa, be it in commodities or telecommunications, infrastructure, consumer goods, or the financial sectors. Nigeria has benefited and continues to benefit from the rush for the African market, appropriately dubbed the last frontier market. This is a region previously shunned by investors who found comfort in the low but stable returns of the ageing markets of the West. The savvy international investors can no longer ignore the attractive business opportunities in Africa. Just as the world has generally progressed through the extension of what economists call the Production Possibilities Curve (PPC), so it is in the world of business. The PPC graphically illustrates the expansion of man’s reach

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to attainments previously considered unthinkable. Each advance in science and technology pushes the curve further to the right, as the possibilities open to man increase. Each discovery in management or economics broadens the knowledge space, ushering humanity to higher levels of possibilities in the way we make use of resources to achieve greater results. It was the same in traditional societies. When you saw a man with barns bursting with yams, you would know how farther afield he had ventured from the easy-to-clear, fallow grounds. Clearing the thick bush there and preparing the farm would cost a lot in terms of manpower, and time and money. And this is quite in consonance with the positive correlation between risk and reward in the business world. Those who take the risk get the reward. However, the above perception needs to be put in context. First, it does not mean blind forage into uncharted waters. Good investors do not necessarily invest because the risk is high, or, as some analysts say, their ``appetite for risk’’ is high. Somehow, this is a professional jargon within the investment community that tends to confuse the average reader. Rather, they invest even in such risky circumstances because they are able to identify, analyse and quantify such risks, so they know exactly what they are up against. So, those who take the risks based on knowledge of the environment and its riskiness get the reward. This is the underlying reason for the positive correlation between risk and reward. But there is an irony in the high-interest rate environment prevalent in the frontier and emerging markets. Investments pour in because of high rates of return. Yet governments in the countries are increasingly looking

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outside for funds, hence their rising preference for Eurobonds, which attract relatively lower costs, as a means of raising funds. The high rewards begin to flatten as more and more investors, armed with information about the local markets, join the fray, as economic theory tells us. But for now, the rewards are still high here in Africa, available for those with deep enough pockets and resource to unearth the secrets. The recognition of the existence of markets in what is now euphemistically called Emerging Markets or Frontier Markets came through battles that challenged the centre-periphery dichotomy similar to what prevailed in the global media. Antoine van Agtmael, an author, has a fascinating story on the emergence of what has come to be known as Emerging Markets. But his first encounter was in 1974, with a boss at Bankers Trust Company in New York, who told him quite bluntly: “There are no markets out of the United States.” He recounts in his book, The Emerging Markets Century: How A New Breed of World-Class Companies is Overtaking the World. Back in 1974, the perception then was that there were no markets outside the United States, in the technical sense that in most other societies then, there were no institutions or structures that carried out the functions of markets as we know them today. Remember that outside the US and perhaps Western Europe then, every other part of the world was either under communist rule (which formed the Second World), or were simply classified as the Third World. Nwanma, a Knight-Bagehot Fellow and World Bank Scholar, is Deputy News Editor at BusinessDay

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You oppress me? I oppress you back CHARACTER MATTERS WITH DAPS

DAPO AKANDE

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You kill me? I kill you back” my wife would retort in quite a commendable effort at mimicking a Chinese accent. Those who are conversant with the old, atrociously mimed Chinese kung fu films, where the whole storyline from beginning to the end revolves around one thing and one thing only, revenge; will know exactly what I’m talking about. She never fails to crack me up when she does that. Abi? Tell me now. How do you intend to kill someone who beat you to it by killing you first? Hilarious. I was not only dumbfounded when some years ago, some so-called elders and traditional rulers of one of our oil rich states asked our then President, Baba himself, to hands off their “Governor General”; a man the UK authorities had already indicted on money laundering charges; but I was disappointed and even more disturbed because I didn’t hear or read anywhere in the media where the “poor” ordinary indigenes of the state offered a contrary opinion. Should we take this to mean they were in agreement with their leaders who insisted this “Governor General” was their own and should be left for them since they had no complaints about his alleged offence? This man was reputed to have helped himself to more than a billion US dollars from the state’s coffers and all they could say was “Leave him, he’s one of ours”? Hmm.

Very few, if any voiced out that he took “our” money. Why don’t many see the state’s resources as our resources? Most seem to see it as belonging to nobody except those “lucky” enough to scoop some for themselves. I believe this may be an overhang from the days when the perception of newly independent African states was that this form of government was an oyibo thing, totally alien to us. It therefore represented a cake which noone in particular could lay a claim to but was free to be plundered by anyone lucky enough to be given the chance. They felt detached from it though they were actually an integral of it. Even now, there are some penniless people out there who barely see a connection between their pitiful state and the wanton profligacy of the leaders, and when they do, the rationalize it by attributing it to fate. God wasn’t sleeping when these leaders got there so it’s obviously their “time”. Their time to make it. So how can they begrudge him that? Certainly no more than they would expect others to begrudge them when it’s their time to also “blow”. I believe that’s the current lingo. Oppressor consciousness. When “oppressee” looks forward to becoming an oppressor also. When men empathise with their oppressors despite the hardship they put them through. Sounds bizarre but it’s true and our society is a classic example. Am I the only one who hears those who should ordinarily be out in the streets protesting over sickening tales of profligacy and callous looting, offer words such as, “they should leave him now. Shebi he has returned some of the money.” In defence of their siren blazing oppressors? I was so glad when I came across literature which categorized and shed light on this peculiar phenomenon of recycling oppression. At least, this

meant we had company. For a Brazilian philosopher to have examined this to a point where he coined a term for it, meant it wasn’t peculiar to us alone. Oppressor consciousness is a highly destructive character trait which not only repeats itself from generation to generation but usually results in regression. Until I came across this, I erroneously feared the whole nation was suffering from Stockholm Syndrome; where our supposedly leaders have held us all hostage, with some beginning to sympathize with their leaders’ “cause”. Paulo Freire, the brilliant Brazilian philosopher who diagnosed this condition was struck by how often the oppressed adopt the oppressor’s consciousness and even admire and envy the oppressor. In Freire’s view, “we often even internalize the oppressor’s view even though we suffer oppression from that very view...when things get too bad (too oppressive), the oppressed often rise up and overthrow the oppressors. However, when they do this, it is almost always so that they themselves can now become the oppressors.” Precisely what 90% of African governments have been doing from their day of independence till date. We often find ourselves imprisoned by our own inordinate desires or ambition. The desire to oppress by the average Nigerian forestalls any cohesive move to resist their oppressors or to eradicate oppression entirely. If that happens, who will they oppress when they too get there? Over the years, as the average Nigerian has become increasingly accustomed to being dehumanized and devalued, might has gradually become accepted as right. At least, that’s how it appears. I remember having a chat with a friend, the owner of a popular supermarket in Anthony Village back then. He

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we often even internalize the oppressor’s view even though we suffer oppression from that very view

recounted a conversation he had with a mechanic when a government official’s convoy passed them by. My friend shook his head in total bewilderment, trying to understand why a supposed “servant” of the people would move around with so many vehicles when he can only sit in one. To make matters worse, he saw nothing wrong with the way his police escort (also public “servants by the way) in the leading vehicle brandish assorted whips as a clear warning to motorists not quick to part way for their principal to pass. As my friend looked back up from the ground, still trying to comprehend the need for such acts of barbarism, he couldn’t help but notice the look of excitement on the face of his mechanic. Confused, my friend asked him why he was grinning from ear to ear and he quickly responded with, “Oga, don’t you know who that was? It was so and so! Oga, na dem dey enjoy dis life pass. Kai! If na me, my motor go block everywhere. My siren sef go pass dis one. Dey go see.” As my friend stood there motionless, just staring at him, he wondered if this wasn’t a lost cause after all. Where does one start from? While some us endure sleepless nights thinking of what we can do to skew this society to become more in favour of the downtrodden, for want of a better term, they are thinking of they can get “there” to oppress us all; including those they see as their mates. It’s crazy! Contrary to what one might expect, many have no interest in Nigeria becoming more egalitarian. Come to think of it, where’s the fun in that? Vicious circle, vicious cycle, it’s all the above. Changing the nation...one nation at a time. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Public relations in the post digital age: Implication for practitioners ANURIKA AZUBUIKE

very day, we see the many changes that the post-digital age brings to business. New industries are springing up, consumer habits are changing, and industries we are accustomed to, are evolving at an accelerated rate. The public relations industry is not any different. With a history as far back as 50 B.C., the business of public relations has become a legacy business. The key problem with legacy businesses operating in the new age is that they are quickly becoming obsolete. There are schools of thought arguing for or against public relations becoming obsolete. The truth is that perception and reputation will always have to be managed. Relationships with customer segments and key stakeholder groups will always have to be considered and executed seamlessly. It will be unwise to play the ostrich concerning these changes. The industry will require a continuous re-invention to remain relevant to the evolving organizational structures and changing consumer habits. The ‘how’ of public relations is threatened by new industries, a new workforce of the future, and clients’ changing requirements which is largely influenced by the changes in the marketplace. Like with most other businesses, public relations companies would have to keep doing the nuts and bolts work at the core of the trade. But they also have to be ready and agile enough to compete in a fast-changing environment, one

that’s almost hard to predict. Prior to the digital age, traditional public relations practices consisted of the creation and distribution of press releases, trade show participation, and relationship building through philanthropic efforts and press agentry to gain media exposure. Companies focused more on disseminating information to the public than on the how or why. Measuring results proved difficult as well. The technological boom has redefined the roles public relations professionals perform within an organization and how results are being measured. In spite of the changes the digital age has brought, there are some core fundamentals of PR that haven’t and will likely never change. Excellent storytelling, great relationships, and a strong brand identity have always been and will always be essential, but how they are put to use has been forever altered. Some of these alterations currently waver between small and big changes. To make changes today, however, there are three key practices that PR practitioners must be in tune with. The first is the Dynamism of the modern media landscape. What this means is that what was once a small, consistent and niche group has ballooned. Beyond influential core news platforms, talkability and buzz leveraging new media tactics are increasingly important. News channels have expanded to include social media, blogs, and even comedy shows. Every single touchpoint of a story has become a channel for information dissemination. PR practitioners must stay in tune with this and expand their horizon beyond media contacts. Modern PR teams have to keep track of who is writing, talking, tweeting, and making videos about relevant topics. It can help you

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target just the right pitch with pertinent content for each person who might be in the position to share your brand’s messages. The second key practice today’s PR practitioner must stay in tune with is Measuring Impact and Return on Investment. Before the digital boom, measuring the success and impact of PR was very difficult. So difficult, in fact, that many brands simply didn’t do it. PR was seen largely as a nice to have cost element that didn’t in any way tie back to revenue. While that was the general perception, it was not true. Being consistently seen and heard meant that a business was building momentum in the minds of customers and key stakeholder groups, keeping them top of mind when it came to their area of operation. Unfortunately, there was little to no metric to prove this. The Advertising Value Equivalency (AVE) measurement metric became commonplace as a way to measure public relations value. AVE refers to the cost of buying the space taken up by a particular article, had the article been an advert. This measurement meant that PR executives would sit with a ruler and a bundle of newspapers to measure the size and space in column inches, of a piece of coverage and match that to the measure of the equivalent of advertising. Today, AVE festers as a public relations metric. Though, AVEs are still valid today, they are slowly changing.Communication Directors and PR managers in organizations are now constantly asking the question, ‘What does this really mean for our company?’ What this means for PR practitioners today is that the measurement of PR must be related to a campaign’s objectives, key messages, sentiment

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and what these mean for how an organization is perceived. The ability for PR practitioners to track the behavior of people who connect, act or react to a story changes the game. Thanks to digital, PR outcomes can be measured based on a number of metrics including website traffic, reach, impressions and audience reactions. The third key practice for today’s PR practitioner is Analytics and Reporting. Based on the need to measure ROI, the modern PR report is swiftly moving from being activity-based to becoming outcome-based. Spreadsheets are rapidly giving way to interactive PR reports that analyze a client’s share of voice and the general sentiment across industries. Company Executives can now get a real-time look into the impact of PR without any time wasted. What this means for PR practitioners is that if they do not heed the validation of the power of analytics tie to what their clients want, they will clearly be at a disadvantage. The implication of these changes combined is that there are more opportunities for PR professionals to disseminate and expand communications for clients using different elements and channels such as events, experientials, videography, social media, digital, infographics; all of which before now were majorly a prerogative of advertising and marketing functions. There has never been a one-size fits all approach, and so the industry continually evolves to meet the changing needs of clients and their audiences as well as leverage the new and emerging channels available to reach these audiences. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

Azubuike is lead consultant, Quadrant MSL.

A Par

Wednesday 10 April 2019

BUSINESS DAY

EDITORIAL PUBLISHER/CEO

Frank Aigbogun EDITOR Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri

125 years: First Bank and the first law of business success

he milestone celebration of a bank of many milestones provides an occasion for reflection on its contributions to Nigeria in various areas. Congratulations to the board, management, staff, shareholders and customers of First Bank of Nigeria Plc on 125 years of the institution. Its longevity speaks to strength and dynamism. The first recourse of most respondents is to define the overall goal of business as operating profitably. Deeper reflection shows that this is a wrong diagnosis. Records show businesses that operated profitably and went down before the ink recording their success had dried. The primary objective of business is to operate in such a manner as to ensure a continued stay in business. One hundred and twenty-five years after its incorporation, the trajectory of one of Nigeria’s foremost business enterprises proves that sustainable operations are a principal and principled objective of business worth pursuing. Sustainability is the first law of business success, and the promoter of sustainability, First Bank plc, is the proof of concept. From its base on the then

evolving Lagos marina in 1894, and subsequent offices in Calabar and Zaria, First Bank plc now operates in ten countries across three continents. Its records show it currently has 758 business locations, has issued about ten million cards while deploying approximately 3000 ATMs and runs with 7, 616 employees. First Bank has total assets of more than N3.3 trillion, customer deposits of N2.6 trillion. Capital adequacy ratio of 18.9% is well above the mandatory base of ten per cent recommended by the regulator. Until the Access-Diamond bank combination, First Bank Plc was the biggest bank in Nigeria. It continues to play as one of the most significant corporate and retail financial institutions in sub-Saharan Africa and proudly answers to its self-description as “the premier and most valuable bank brand”. Officials of First Bank of Nigeria plc hoisted a flag March 31, 2019, to symbolise its 125th birthday. They also staged a road walk, customer forums and several other events. They have good reasons to celebrate. Since the effort of shipping magnate Sir Alfred Lewis Jones, the Bank of British West Africa has borne different names reflecting ownership and legal demands. It

introduced modern banking to the countries that made up Englishspeaking West Africa. It was Bank of West Africa, Standard Bank and First Bank. Managing Director Dr Adesola Adeduntan declared triumphantly during the celebration: “As a longstanding institution, which even predates Nigeria as a unified entity, FirstBank is entrenched in the nation’s development; woven into the very fabric of society, with our involvement in every stage of national growth and development.At the amalgamation, independence and through the seasons ever after, we have been here marching handin-hand with you and our dear nation. We have enabled financial, technological, industrial and societal advancements, achieving very many firsts over time.” The bank has played pivotal roles in financial services in Nigeria and West Africa. It was in its salad days the financial services regulator and banker of last resort for English-speaking West Africa. It financed the expansion of the railways in Nigeria. It listed on the Nigerian Stock Exchange in 1971 and played significant roles in the growth of electronic payments and mobile banking. The market regards First Bank

as one of the most credible institutions in the land with high corporate governance standards and commitment to best practice. It is one of the few institutions in Nigeria with standards certification from the International Standards Organisation (ISO) in Information Security Management Functions (ISO/IEC 7001-2005) and Business Continuity Management System. With growth has come expansion and diversification. First Bank is part of a diversified holding group that plays in several fields. These include merchant and mortgage banking, securities trading, and asset management. Others are trusteeship services, insurance and brokerage. First Bank is proof of the value of a good name in the business. Regulatory shakedowns strengthened its sinews and enhanced its reputation. It has also kept pace with changes in technology and other support services. An abundant and overflowing trophy cabinet attests to the highperformance credentials and regard of the market for this eponymous bank. We toast to the next 125 years of First Bank and urge it to continue treading the right path. Its call now is to do more and better in financial intermediation for the economy.

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Wednesday 10 April 2019

BUSINESS DAY

COMPANIES & MARKETS

Zenith Bank appoints Ebenezer Onyeagwu as new CEO

COMPANY NEWS ANALYSIS INSIGHT

Pg. 15

FINANCIAL SERVICES

Jaiz Bank’s bottom-line hits 3-year high on spike in investment income ISRAEL ODUBOLA

igeria’s first noninterest lender, Jaiz Bank, recorded an after-tax profit of N834.4 million in full year 2018, its highest since 2016, buoyed by a double-digit growth of 78 percent in investment income. I nvestment income which means income from investment activities, constituted 16.28 percent of the bank’s gross earnings from financing transactions, appreciated to N1.2 billion in full year 2018 compared with N684.8 million posted the year before. This was majorly driven by a huge rise of over 200 percent in income from Sukuk from N352.2 million in full year 2017 to N1.16 billion in full years 2018. As a result, the lender’s total income grew 12.1 percent to N7.06 billion in full year 2018 from N6.30 billion in the previous year. Despite total expenses climbing 14.1 percent in the review period, the lender’s after-tax profit upped to N834.4 million in full year 2018, masking a significant

expansion of 55.4 percent over N537.1 million reported in the prior year, thanks to spike in investment income and tangible decline in tax expense. Speaking on the results, Umaru Mutallab, Chairman, Board of Directors, stated that the Bank performed strongly amid slow global economic recovery and dearth of non-interest banking liquidity management instruments. “Our performance in 2018 reflects the viability of our business model. Once again, we have established our determination to stand by our customers, using our capital and deposit base to support them always” said Mutallab, adding that the lender posted 14.37 percent growth in total financing to customers. Key metrics such as return on asset (ROA), return on equity (ROE) and earnings per share (EPS) suggests that Jaiz Bank posted bettered profitability in full year 2018. ROA moved from 0.6 percent in full year 2018 to 0.8 percent in full year 2018. ROE rose mildly by 31 percent points to 6.85 per-

cent, while profit per share climbed to N2.83 compared with N1.82 in the prior year. On his part, Hassan Usman, Managing Director, averred that the Bank’s balance sheet size grew at a record high of 25 percent in the review period despite threats from global economic slowdown which severely affected the Bank-

ing sector. “We are poised to creating a responsible business that better meets our customers’ needs and a culture where employees put customers first”, he said, adding that the Bank remains committed to the growth of Micro, Small & Medium Scale Enterprises in Nigeria. A further analysis of the

result revealed that the lender’s cost-efficiency worsened as cost-to-income ratio, which measures operating cost as a percentage of operating income, increased by 1.44 percent points to 87.28 percent in the review period compared with 85.84 percent in the previous period. Jaiz Bank widened pres-

ence in Nigeria albeit at low magnitude as the bank established two more branches in the review period, bringing its total number of branches to 33. The lender was established 16 years ago, and provides Islamic banking products and services, online banking, leasing, bonds (sukuk) and guarantee.

MARKETS

NSE lose on 22 out of 31 trading days since Buhari’s re-election victory MICHAEL ANI

ince the re-election of Nigeria’s incumbent, President Muhammadu Buhari in the February 23 election, the Nigerian stock exchange has disappointed, as investors prefer to take cover in less risky fixed income securities than take position in stocks. This trend is contrary to analysts’ expectation that subdued political risk following the conclusion of the elections and the dissipating risks on interest rate hikes by the U.S Fed (two factors that largely impacted the equities market in 2018) will help trigger a bullish

performance in 2019. The performance of the equities market has seen sell-offs despite the earnings season and the decent dividend announcements that followed. Coincidentally, this is the first time since Africa’s biggest oil producer returned to democracy that a successful presidential election failed to steer up a stock rally. Since the conclusion of the election, the local bourse has lost on 22 out of 31 trading days, according to data compiled from the Bloomberg, with the All Share Index shedding 10.3 per cent within this period, to close 29,162.24 points at close of trading,

Monday. “We believe the bearish performance in the equities market is largely due to weak investors’ sentiment particularly from foreign investors, who have been apathetic towards Nigeria’s risky assets,” Analysts at Lagosbased CSL stockbrokers said in a note. “Although, we have observed that there has been improved FPI flows since the conclusion of the elections, evidenced by the record activity levels at the Investors & Exporters window, the bulk of the inflows have been directed towards Nigeria’s riskless assets in the money and debt

market”, the stockbroking firm noted. Nigerian stocks are experiencing their worst time as investors pile into the fixed income space neglecting equities despite impressive earning results coming in from publicly listed companies. Nigerian equities have been trading on a negative trajectory of 7.22 per cent this year. The rush into risk-free instrument has helped send yields to lower lows. Yields on 0ne year and 10 years bonds averaged 14.12 per cent, according to FMDQ data. “I think it is only natural reaction talking about asset classes in times of volatility and uncertainty

you would find people moving to where they see as safe what they consider safe to a great extent”, said Simpa Adaba—Head, Wealth Management Nigeria, Standard Chartered. “Also, looking at the Nigerian space, you will clearly understand that a lot of people have a history of equity in Nigeria so there is a flight to safety in times like this” Adaba said in an interview with BusinessDay. President Buhari, defeated his main challenger and candidate of the People’s Democratic Party (PDP), Atiku Abubakar in the keenly contested presidential election by over 3.9 million. CSL in its note explained that the weak

demand for Nigerian assets by foreign investors is on the back of their concerns about the structural issues that have stifled the growth of the Nigerian economy over the past three years. “Additionally, a sentiment from the foreign investor community indicates lack of optimism that the hard decisions on structural reforms will be taken by the re-elected President hence concerns remain on macroeconomic stability, weak operating environment and more importantly, the need to insulate the economy from external shocks emanating from a downturn in oil prices.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Wednesday 10 April 2019

BUSINESS DAY

COMPANIES&MARKETS The Companies and Allied Matters Act (Repeal and Re-Enactment) Bill 2019 – What you need to know (Part 6 - Netting) UDO UDOMA & BELO-OSAGIE

BACKGROUND he Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (CAMA) was enacted in Nigeria as a decree of the military government in 1990, and in the past 28 years, there have been no significant amendments to the CAMA. This is, however, all set to change if the Companies and Allied Matters Act (Repeal and Re-enactment) Bill 2019 (CAMA Bill), which was passed by the Nigerian Senate on 15th May 2018 and by the House of Representatives on 17th January 2019, is passed into law. In this series, which is scheduled to run for 12 weeks, Udo Udoma & Belo-Osagie will provide insights and digestible excerpts on the effect of key changes proposed by the CAMA Bill. WHAT IS NETTING? Netting is the process by which risk is reduced in financial contracts by aggregating two or more obligations or payments and offsetting them against each other in order to achieve a reduced single net obligation. Chapter 28 of the CAMA Bill deals with the subject of netting and is one of the innovations of the CAMA Bill (the CAMA does not contain any provisions on netting). Netting is an essential element of many qualified financial contracts such as repurchase contracts and derivatives. Derivatives are used in the financial market to hedge risks. In insolvency, the mandatory rules relating to insolvency set-off, preferences and disclaimer are, to some extent, inconsistent with netting. It is, therefore, necessary to protect obligations arising under financial contracts en-

tered into pursuant to netting agreements. The netting provisions of the CAMA Bill are based on the International Swaps and Derivatives Association, Inc. (ISDA) 2006 Model Netting Act.

that a liquidator will not be able to prevent the termination of any qualified financial contracts or the acceleration of any payment owed under these qualified financial contracts.

PREFERENCES – NEW PARAMETERS Under section 495(1) of the CAMA and section 46(1) of the Bankruptcy Act LFN 2004, a liquidator can invalidate any payment made by an insolvent party to a creditor within 3 months of its insolvency if it was made with a view to giving that creditor a preference over other creditors. Chapter 28 of the CAMA Bill, however, provides that the liquidator of an insolvent party may not avoid a payment or transfer of collateral under a netting agreement on the grounds that it constitutes a preference by the insolvent party of the non-insolvent party to the netting agreement, unless there is evidence that the non-insolvent party made such payment or transfer with intent to hinder, delay or defraud an entity indebted to the insolvent party. This provision seeks to ensure that any payment or transfer of collateral made by the insolvent party under the netting agreement during any “preference period” is not treated as a preference, and would, therefore, not be void.

ENFORCEABILITY OF QUALIFIED FINANCIAL CONTRACTS Despite the fact that derivatives are legitimate financial contracts, there are certain elements of their structure that could appear to be similar to gaming contracts. To avoid the risk of legitimate financial contracts being treated, under the law, as gaming contracts, the netting provisions in the CAMA Bill provide that a qualified financial contract shall not be void or unenforceable by reason of laws relating to gaming, gambling, wagering or lotteries.

SINGLE AGREEMENT Chapter 28 of the CAMA Bill reinforces the single agreement nature of a netting transaction, which is often set out expressly in netting agreements and, to that extent, reinforces the general affirmation of the enforceability of netting agreements in the insolvency of a party. PROHIBITION OF TERMINATION To ensure stability in the financial markets, the CAMA Bill provides

CHERRY-PICKING The netting provisions also prevent a liquidator from accepting, pursuant to the netting agreement, only those contracts that benefit the insolvent party and disclaiming (under section 499 of the CAMA) the contracts that do not favour the insolvent party in a manner often referred to as “cherrypicking”.

Business Event

L-R: Tonia Smart, ambassador, Chartered Insurance Institute; Keith Richard, Managing Director of Engagement/ CEO Personal Finance Society, Chartered Insurance Institute; Eddie Efekoha, president/chairman of council, Chartered Insurance Institute of Nigeria; Jeremy Mullen, accreditation manager, Chartered Insurance Institute, and Richard Borokini, director general, Chartered Insurance Institute of Nigeria, during the 2019 CII/CIIN work study program in London.

L-R: Gbenga Awomodu, marketing lead, Information Technology & Mobile (IM); Adetunji Taiwo, head, (IM) both of Samsung Electronics West Africa; Reminisce, Samsung brand ambassador and Solomon Osibeluwo, master trainer, Samsung Electronics West Africa, during the Launch of The Newest Galaxy A Series Smartphones into the Nigerian Market at Samsung Experience Store, in Lagos. Pic by Pius Okeosisi

L-R: Kevin Biiranee- Deputy General Manager, Thomas Isibor- Head, ACCA Nigeria and Demola OdeyemiExecutive Director, at the ACCA Approved Employer Certificate Presentation to GT Bank PLC- for Platinum Approval for Trainee and Professional Development.

Udo Udoma & BeloOsagie actively participated in the drafting of the CAMA Bill. Corporate Partner, Ozofu ‘Latunde Ogiemudia was the chairperson and Managing Associate, Christine Sijuwade was a member of the Technical Advisory Committee set up by the office of the Senate President to advise on the CAMA Bill and the bill to amend the Investments and Securities Act 2007.

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L-R: Prosper Okonkwo, CEO, APIN Public Health Initiatives; Isaac Adewole, minister of health, and Jay Osi Samuels, director of laboratory services, during a visit to the Minister in build-up to the presentation of the book, Turning the Tide: AIDS in Nigeria in Abuja.

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Wednesday 10 April 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

APPOINTMENT

Zenith Bank appoints Ebenezer Onyeagwu as new CEO SEGUN ADAMS

enith Bank, a Nigerian tier-1 lender, has announced the appointment of Ebenezer Onyeagwu as new Group Managing Director/Chief Executive Officer (CEO) with effect from June 1, 2019, subject to the Central Bank of Nigeria (CBN) approval. Onyeagwu would be succeeding Peter Amangbo whose tenure expires in May. Amangbo has been MD/CEO at Zenith since June of 2014. According Zenith, the appointment is consistent with the bank’s tradition and succession strategy of grooming leaders from within O nyeagwu who has close to thirty years cognate banking industry experience was prior to his latest appointment, Deputy Managing Director of the bank since October 28, 2016. He is an alumnus of

the prestigious University of Oxford, England where he obtained a postgraduate Diploma in Financial Strategy and a certificate in Macroeconomics. Onyeagwu , in addition, has extensive executive level business education in the United States from Wharton Business School of the University of Pennsylvania, Columbia Business School of Columbia University, and the Harvard Business School of Harvard University. He also trained at Lagos Business School of the Pan African University, Nigeria. He has spent 17 years so far with the bank, Onyeagwu worked as a Credit Analyst in the defunct Financial Merchant Bank Limited and subsequently joined Citizens International Bank Limited where he served in various capacities including Bank Head, Warri Branch and Ikoyi Branch respectively. Onyeagwu joined Zenith Bank as a senior man-

ager in the internal control and Audit Group of zenith Bank and held several other positions as he progressed in his career. For 2018 full year, Zenith financial statements filed at the NSE show that the lender grew pre-tax profit by 16.24 percent to N231.69 billion despite gross earnings paring by 15.41 percent to N630.34 billion from N745.19 billion. Profit after tax rose to N193.42 from N173.79 billion recorded in the preceding year, while earnings per share also grew 11.21 percent from the previous year to N6.15. These profits were triggered by net interest income, which increased to N277.22 billion from N159.76 billion reported in the previous year, reflecting improved macroeconomic fundamentals. At the close of trading Monday, shares of Zenith bank shed 0.73 percent to close at N20.20 per share, its lowest in 2019.

FINANCIAL SERVICES

L-R: Godfrey Adejumoh, corporate communications manager, Unilever Nigeria; Bukola Fadase, quality manager, Unilever Ghana and Nigeria; Ibidunni Ayeni (A survivor of Ita Faji Lagos Island building collapse incident), and Adesina Tiamiyu, general manager, Lagos State Emergency Management Agency, during the presentation of Unilever products and household items to victims of Ita Faji, Lagos Island building collapse incident at the Lagos State Relief & Rehabilitation Camp, Igando.

L-R: Felix Ofulue, head corporate communications, Ikeja Electric; Amusat Azeezs, CDC chairman Ojokoro; Ugochukwu Obi-Chukwu, chief commercial officer and Olajide Kumapayi, head technical operations, both of Ikeja Electric, during engagement with the Community Development Committee (CDC) chairmen across Ikeja Electric’s network, in Lagos. Pic by Pius Okeosisi

Global Accelerex drives financial inclusion with Agency Network Platform DANIEL OBI

igeria’s foremost financial technology company, Global Accelerex, has recorded another milestone with the launch of its Agency Network Platform, a revolutionary web-based business solution specially developed for agency banking business. This is in support of the Central Bank of Nigeria’s financial inclusion drive, which seeks to include the under-served and unbanked adult population in the financial network. Accelerex Agent Network platform has the unique feature to integrate with different payment channels such as PoS, Mobile App and USSD simultaneously to perform financial operations including pool account operation, cash withdrawals, cash deposits, fund transfers, account opening, bill payment and other related financial services. Speaking with newsmen recently in Lagos, Executive Director, Technology and Innovation, Stanley Ugochukwu Peters, disclosed that Global Accelerex built the robust platform

to serve all stakeholders in the agent banking ecosystem and make its business operations seamless. He added that the platform is flexible, making it possible to accommodate different agent network business requirements and various delivery models. Peters further reiterated that the Accelerex Agent Network Platform is a major revolution in the digital payment space because it was carefully designed to address the challenges agents face daily in their business operations. “ANP, as it is popularly called, is particularly ideal for super agents who bear the burden of managing sub-agents and thousands of sole agents on the field across the country. The platform makes the supervision, administration and management of super agents’ businesses simpler, easier and more convenient. In addition, ANP is a secure platform that allows for easy onboarding and relationship management of agents, including proper KYC and due diligence documentation”. The platform, he said is loaded with unique features that guarantee convenience www.businessday.ng

and seamless conduct of business. Agents enjoy Instant transaction notification via SMS. Another distinctive benefit is instant value and same day settlement. This removes all limitations to increased transaction volume, and enables the agent provide service to as many customers as possible, rather than wait till the day after the transaction to get settled. Furthermore, ANP offers the unique opportunity for multiple transactions and digital activities to be performed on the same payment Channel (PoS). This removes the current inconvenience from other platforms of conducting transactions via different channels with different payment providers. Global Accelerex has a bias for world-class technology, excellent service delivery and innovation and will continue to leverage technology to make payment systems faster, safer and more reliable. Apart from this latest value addition, it has pioneered other integrated products and solutions tailored to fit the unique needs of different business categories.

L-R: Seye Awojobi, FCIB, registrar/CEO, The Chartered Institute of Bankers of Nigeria; Attahiru Muhammadu Jega, OFR, former chairman, Independent National Electoral Commission; Uche Olowu, FCIB, president/chairman of Council, CIBN; Suleiman Elias Bogoro, executive secretary, TETFUND and Biodun Ogunyemi, president, ASUU, at the NUC/NESG Academia-Industry Collaboration Retreat held at the Bankers House, Lagos.

L-R: Chukwu Daniel, branch manager, Slot Systems Limited; Olafisayo Fapohunda, marketing executive, Redington Apple-Business; Kola Ogunwumi, marketing manager, Redington (Telco, West Africa) and Niyi Adeleke, assistant unit Head enforcement, National Lottery Regulatory Commission, at the fourth SLOT-Phone-A-Car raffle draw in Lagos

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Wednesday 10 April 2019

BUSINESS DAY

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Wednesday 10 April 2019

BUSINESS DAY

BANKING

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CBN, banks intensify lending to economy Stories by Hope Moses-Ashike

t was a giant step taken by the Central Bank of Nigeria (CBN) and the bankers’ committee last week to intensify lending to the economy. The latest report of the National Bureau of Statistics (NBS) shows that loans extended by deposit money banks (DMBs) totaled N15.1 trillion in the fourth quarter (Q4) 2018, compared with N15.6 trillion the previous quarter. “There is still a risk-driven reluctance of financial institutions to lend to the private sector (especially to SMEs), and the lack of acceptable collateral by the banks’ definition has also contributed to difficulties in accessing finance”, said analysts at FBNQuest. Deposit Money Banks (DMBs) maintain a cautious approach towards lending to the private sector, to avoid growing non-performing loans (NPLs). According to

the NBS, the total of NPLs as at Q4 2018 stood at N1.8 trillion. However, after the bankers committee meeting chaired by Godwin Emefiele, CBN governor, the CBN and the banks announced a decision to establish a N200 billion intervention fund for export businesses. Over the past twelve quarters the oil and gas sector has emerged as the largest recipient of loans from DMBs. In Q4 2018 the sector accounted for 23.5 percent of total credit. “Lending to this sector has been subdued, which we attribute to the restructuring of existing loans to longer tenors”, the analysts said. The second largest recipient of loans was the manufacturing sector, which accounted for 14.7 percent of the total, compared with 13.8 percent the previous quarter. Access to credit remains a challenge for most manufacturers. However, FBNQuest notes that large manufacturing firms are preferred recipi-

ents of the limited loans available bfrom banks. Agriculture received just 4.0 percent, slightly higher by 20bps when compared with the previous quarter. The CBN offers multiple financial interventions targeted at farmers and agriculturists. Although laudable, given the sector’s high demand for credit, these interventions

Fidelity Bank turns 60 customers to millionaires

idelity Bank Plc on Wednesday said it has produced a total of 60 millionaires under the ongoing Get Alert in Millions Savings (GAIM) Season 3 promo (GAIM 3). Nnamdi Okonkwo, managing director/CEO Fidelity Bank, stated this at the fifth monthly prize presentation in Lagos. Okonkwo who was represented by the executive director, shared services and products, Chijioke Ugochukwu said that the bank would produce 17 more millionaires before the promo closes in the

middle of the year. She said that the bank had given out N79 million to lucky customers in GAIM 3 and still have outstanding N31 million to dole out before the closure of the promo, which included grand prize of N10 million. The promo is part of the banks effort at encouraging savings culture and supporting the Central Bank of Nigeria’s financial inclusion strategy. During the computerised draw conducted under the watchful eyes of the National Lottery Regulatory Commission (NLRC),

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and Consumer Protection Council (CPC), 12 customers won N1 million each, while a grand prize winner who emerged from Lagos, won N2 million. Some of the winners in N1 million category include Dauda Olaide from Ibadan branch, Emmanuel Igwe from Ile Ife branch, Juliet Ezema, CBD branch, Paul Rosemary, Lafia branch, Oronne Roberts, SouthEast, Chukwudi Obi, Obosi branch, and Chinyere Esther Chima, Computer Village, Lagos. Chiedozie Ifeanyi Luke from Lagos, was the 13th winner who won N2 million.

have had limited impact. “We doubt that loan growth will pick up significantly, at least not until the new administration provides a clear policy direction. Furthermore, banks continue to tread cautiously regarding NPLs”, the analysts at FBNQuest added. The CBN has made several interventions in various sec-

tors such as power, aviation, real sector refinancing, and micro, small and medium enterprises, among others. The 10 year tenure loan is targeted at boosting palm oil, cocoa, sesame seeds, shear and cashew exports as well as the creative industry. On the benefit of the intervention fund, it is expected to helped generate employment, boost economic activities and bring relief to foreign exchange issues. Kennedy Uzoka, managing director/CEO of UBA who said this while briefing the media after the bankers committee meeting in Lagos said the findings of sub-committee set up by the bankers committee after its annual retreat in December 2018, was that the industry has a lot of policies but the challenge has been on execution. Consequently, the committee broke down the challenges into seven broader areas, part of which include finance, logistics and policies. “In terms of the policies

that drive export, we believe that a lot of them needs to be changed and we know about the congestion at the port, so we looked at all these things and grouped them into mediate, mid-term and long-term because some we cannot address within a very short period”, Uzoka said. Herbert Wigwe, group managing director / CEO of Access Bank plc, who spoke on the creative services and IT sectors, said a lot more work has been done and that there are four verticals of the sector which movies, music, Information and Communication Technology (ICT) and the fourth is fashion. “What we have decided to do it to take it to the next level which is basically to revisit the entire value chain of each of these verticals, right from the production facilities – all the way to the last mile in terms of capacity building, making sure that whatever is produced along each of the verticals is such that is of world class standard”, Wigwe said.

Ecobank takes ease of payment to Ariaria Market

cobank Nigeria has assured businesses in Ariaria Market, Aba of better ease in receiving their payments after transaction. Patrick Akinwuntan, managing director who launched the Ecobankpay zone at the market said it will facilitate easy, secure and convenient transactions for merchants within Ariaria and other surrounding markets. The EcobankPay Zone is a digital payment hub enabling businesses within a location adopt Ecobank’s wide range of digital products for ease of payments for goods and services. “It is our determination

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to create ease of payment and boost economic activities most especially in a town like Aba, renowned for indigenous production of shoes and textiles”, Akinwuntan said. He said the bank’s digital offering will be an opportunity for both buyers and sellers to increase their sales in an enhanced and secured way and without fear. The EcobankPay digital hub makes it easy for the seller to be paid instantly and buyers pay with ease and also have rest of mind associated with doing business without carrying cash around. “Our Xpress point is also around for you to transact

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with ease, in as much as you have your phone you can bank with Ecobank”. “The initiative of the Ecobankpay zone is to deepen financial inclusion in the communities and specifically aid business transactions between merchants and clients. EcobankPay’s unique offering is that anyone from any bank in Nigeria can pay with MasterPass, mVISA and mCASH with any phone by scanning QR code or using USSD”. “if the person that wishes to buy goods from you is coming from a bank that has mVisa and wishes to pay, the same QRcode would accept an mVisa payment and vice versa.

Wednesday 10 April 2019

BUSINESS DAY

In association with

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Nigeria’s cashew price falls 60% to lowest in 3 years JOSEPHINE OKOJIE

he price of cashew in Nigeria, the sixthlargest producer in the world, has fallen by 60 percent in the past 12 months to its lowest in 3 years, exporters said, blaming this on their inability to timely meet up with their contractual agreements. Since the commencement of the 2019 cashew season, exporters have been unable to meet up with their contractual agreements entered into on the back of a worsening Apapa and Tin Can traffic situation as well as the slow clearing process at the port. The situation has resulted in a drop in price from an average of N500,000 per ton in 2018 season to N 200,000 per metric ton in 2019 cashew season, its lowest since 2016. “The price of cashew has crashed to as low as N200, 000 per metric ton from N500,000 per ton of 2018 prices. This is the lowest we have sold since 2016,” Zacheaus Egbewusi, chief executive officer, Agri-Commodities Inspection Limited, said in a telephone response to questions. “The demand for Nigerian cashew is now very low because we hardly meet up with our supply agreement with buyers. This is because of the situation at the ports,” Egbewusi said. “The fall in price is as a result

of the situation at the port. It now takes 30 days for cashew to be cleared and shipped out of the ports currently,” he added. This has also put the country’s non-oil export under serious threat as export of cashew – one of Nigeria’s top five non-oil exported commodities continues to thin out at a time Nigeria says it is focusing on growing its foreign exchange away from crude oil. Besides cocoa, cashew is another major cash crop in Nigeria that has huge export

potentials. It has become a topnotch cash crop in Nigeria and is eaten and also serves as industrial raw materials for firms producing chemicals, paints, varnishes, insecticides and fungicides, electr ical conductress, and several types of oil. Nigeria is currently the sixlargest producer of the crop globally with production put at 160,000MT, data from the Nigeria Agricultural Ministry shows. It is exported to the United States, India, Spain and many

parts of Europe. “We cannot meet up with our contractual agreements because of the situation at the port and this is leading to cancelations,” said Tola Faseru, president of the National Cashew Association of Nigeria. “The problem at the port is giving rise to huge corruption,” Faseru said. He stressed that transaction cycles for export are taking longer than necessary and foreign buyers are beginning to question the integrity of contracts they enter

into with Nigerians. The national president stated that priority should be given to exportable commodities in line with the Federal Government’s economic diversification agenda. Nigeria currently exports 95 percent of its raw cashew nuts, leaving only an abysmal five percent for local processing and consumption. This is because there are very few factories that process the crop in the country. E x p e r t s s a y t h e c u r re n t situation of the port would have been less impactful if the country is processing its cashew nuts. “The problem emanated from last season but became serious this year and this is because we do not process our cashew nuts. This would have saved us from the situation we are in now,” Victor Iyama, national president, Fe d e ra t i o n o f A g r i c u l t u ra l Commodity Association of Nigeria (FACAN) said. “With value addition we would have been able to preserve our cashew from a situation like this,” Iyama added. Since the government renewed focus on agriculture, the crop has risen in its profile, emerging as one of the top-five exported non-oil commodities. Nigeria’s cashew is usually harvested between February-June, though farmers stock the crop and export it all year round.

Flour Millers donate wheat threshers to farmers ADEOLA AJAKAIYE, Kano

s part of efforts to boost wheat pro duction in the country, the Flour Milling Association of Nigeria (FMAN) has presented 50 units of AMAR multi-crop threshers worth about N70 million to wheat farmers in the country. The donation is part of the implementation of a Memorandum of Understanding (MoU) entered into by the Flour Mi l l i n g A s s o c i at i o n a n d t h e farmers geared at boosting wheat production in Nigeria. Speaking briefly at presentation ceremony held at the premises of the Northern Nigeria Flour Mill (NNFM) in Kano, John Coumantaros, chairman of the FMAN, said that the presentation w a s a d e m o n s t ra t i o n o f t h e association’s commitment to continuously support of wheat farmers under the Federal

G o v e r n m e n t ’s A g r i c u l t u r e Promotion Policy. Coumantaros, who was represented at the occasion by Sani Umar, disclosed that the association resolved to donate the farming equipment to farmers to assist in boosting the quality of their wheat produce. He noted that the provision of the equipment will also assist the farmers improve the market value of wheat commodity in the country and also meeting up with international standards in the production of the crop. “There is no gainsaying that self-sufficienc y in the production of wheat in Nigeria w i l l hav e a n u n p re c e d e nt e d impact on the Nigerian economy through the attainment of food security, poverty reduction and of course, save much needed foreign exchange,” he said. “In 2017, FMAN fulfilled its p ro m i s e by p u rc ha s i n g ov e r 2,400 metric tons of wheat valued at N469 million and in www.businessday.ng

2018, even before the start of harvest, we have purchased over 1600 metric tons of wheat valued at N237 million. “A l s o , a s p a r t o f t h e implementation of the agreement, FMAN presented the sum of

N20 million, as Research and Development Grant to the Lake Chad Research Institute to conduct research into enhanced wheat farming technology and m o d e r n ag ro n o my p ra c t i c e s aimed at improving wheat

Salim Saleh Muhammad, national president, Wheat Farmers Association of Nigeria and Sani Umar, member of the Flour Milling Association of Nigeria, standing in fron of the 50 units of wheat threshers presented to farmers in Kano state recently.

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varieties with good yield,” he said. Coumantaros assured farmers that the association would continue to invest to improve the local supply chain while promising that the association is fully committed to ensuring that the nation`s aspiration aimed at achieving self-sufficiency in wheat production is attained. Receiving the wheat threshers on behalf of the farmers, Salim S a l e h Mu h a m m a d , n a t i o n a l p re s i d e n t , W h e a t Fa r m e r s Association of Nigeria (WFAN), thanked the Milling Association for the donation. Sal eh sa id t h e e q u ip m e nt would go a long way in boosting the operation of the farmers, most of whom before now were harvesting their cultivated wheat manually which result in poor market quality of their product. He noted that the benefiting f a r m e r s a re d raw n f ro m t h e wheat growing belts of Kano, Jigawa, Katsina, S okoto, and Kebbi.

Wednesday 10 April 2019

BUSINESS DAY

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Stakeholders urge FG to commercialise herbivorous fish to tackle high feed cost JOSEPHINE OKOJIE

takeholders in the fishing subsector under the auspices of The Fisheries Society of Nigeria (FISON) have called on the Federal Government to commercialise the production of herbivorous fish species to tackle the high cost of feeds which farmers incur. The stakeholders who spoke at the first stakeholder meeting organised by FISON in Lagos recently, also called on agricultural research institutes to develop technologies that would help address the issue of fish feeds for farmers. Fish feeds constitute 70 percent of the total cost of production and 80 percent of the varieties available in the market are imported, exposing it to exchange rate volatility. “The cost of producing fish in Nigeria is very high and this is due to the fact that fish meal which takes over 70

percent of production cost is majorly from fish,” Lukman Agbabiaka, president, FISON and vice president, West Africa Non-State Actors for Artisanal Fisheries and Aquaculture (WANSAFA), said. “ We n e e d t o s t a r t promoting the cultivation of herbivorous fish – the

grass-eating fish species. This will help drive down farmers production cost as it is cheaper to cultivate,” Agbabiaka said. He s t at e d t hat t h e re are several of herbivorous fish species in the country but very little of them is known by farmers due to the inability of the research

IAR&T celebrates 50, highlights achievements in agric research AKINREMI FEYISIPO, Ibadan

he Institute of Agricultural Research and Training (IAR&T) has highlighted some of the institution monumental feats in the areas of soil, crop and livestock research to improve farming systems in the countr y to mark its 50 years anniversary celebration. While rolling out the achievements of the research institution, James Adediran, the executive director of the institute said the IAR&T has developed some proven technologies that have benefited millions of farming families in the country. Among the landmark achievements attained by the institute, Adediran stated were soil research, production of soil and nutrient maps for farmer’s use. Also, creating guidelines for soil management techniques, development of fortified organic

fertilisers and creating of enriched composts through partiality aerated technique within a highly reduced period of preparation. “Over 70 new varieties of maize, cowpea, soyabean and kenaf have been developed for high yielding and quality, improved cultural and processing techniques have been developed for our mandate crops including value addition. “For livestock research, we have created improved formulated feeds and housing for macro and micro livestock production as well as improved animal re p ro d u c t i o n t h ro u g h artificial insemination technique,” he said. “We have developed improve farming systems techniques, REFILS coordination f a c i l i t a t e d ; n u m e ro u s new and improved technologies promoted and disseminated.” Adediran added that over 1,200 trainings h av e b e e n c o n d u c t e d www.businessday.ng

for farmers and trainees while new technologies have been disseminated to millions of farm families through electronic and print media. “Low cost efficient sprinkler and selfpropelled single row weeder fabrication.” At the press conference to herald the 50th anniversary of the institute in Ibadan, the professor said that he was convinced that the institute has lived up to its expectations as a centre of excellence in agricultural research since it was established. “We then ask ourselves, have we done enough to showcase thus reasons for our establishment? And even celebrate at 50? I can confidently say yes, in that our breakthroughs in agricultural research are based on the level of resources available for our use. I am convinced that despite the above challenges, IAR&T has lived up to expectation as a centre of excellence in agricultural research.

institutes to develop them and also the government to commercialise these species. He noted that the herbivorous fish is very delicious and would help drive growth in the sector while also providing variety for Nigerians to select from. High cost of fish feeds has remained the major

issue limiting the country’s aquaculture production as farmers continue to spend over 70 percent of its cost on feeds. Nigeria’s fish production is currently put at 1.03 million metric tons, with artisanal fisheries having the highest with 694,867 metric tons, followed by aquaculture with 316,727 MT and industrial with 15,464MT, data from National Bureau of Statistics (NBS) shows. The country’s total annual fish demand is estimated at 3.4 million MT, implying that the country’s has a demandsupply gap of 2.4MMT. Also speaking, Folake Areola, former director, Fe d e ra l D e pa r t m e nt o f Fisheries (FDF), said that the grass cap fish species is very nutritious and delicious as it commands a high market price in the international market when compared to other cultured species. “We need to commercialise production of the grass cap to expand our fish production. There are lots of varieties of the grass-

eating fish species available in our waters,” she said. “There is mallet, which most coastal communities already know, and people love their taste. What we need to do is to develop the specie. We need these varieties.” In a paper presentation, title ‘Socio-economic benefits and product diversity in the aquaculture industry’ Professor Bamidele Omitoyin, department of Aquaculture &Fisheries, University of Ibadan, Nigeria, urged stakeholders on value addition to drive growth in the sector. Omitoyin who was represented by Friday Oslo, a lecturer in the same department, gave an example citing Iceland as a model for the country to grow its fishing industry. “Iceland has developed its fish industry through value addition. Every part of the fish is an industry on its own. From production of cod oil for pharmaceuticals to using the sink for leather amongst others,” Omitoyin said.

Kogi commissioner calls for timely release of agric budgetary allocations VICTORIA NNAKIAIKE, Lokoja

ehinde Oloruntoba, commissioner for Agriculture, kogi state has called on government at all levels for the timely release of agricultural budgetary allocations to aid the development of the sector towards a sustained food security agenda. Oloruntoba disclosed this during an advocacy visit by members of the state Public Financing of Agriculture (PFA) Budget Committee on Friday in Lokoja. He stated that the annual t ra d i t i o n o f bu dg e t i ng without timely release of the funds has a negative effect on agricultural activities as farming and food production are timely ventures. The commissioner also stressed that agriculture which is an important sector ought to be taken seriously with timely release of funds. “A n y s t e p t a k e n t o develop agriculture is a good one a step in the right direction but unfortunately, as important as this sector is, most times our leaders pay lip service to agricultural development and it is very,

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very sad,” he said. “There is need for budget d i s c i p l i n e t o p ro p e r l y channel our spending to the right sectors. Every year we embark on the usual ritual of budgeting, making projections and thinking those projections would translate into physical development,” he added. He stated that despite the renewed focus to the sector, government at all levels have failed to ensure that budgets are released timely and regularly. “In 2018 our budgetary performance in agriculture in Kogi state was 4.28 percent. With 4.28 per cent if you take a critical look at it and take away the overhead cost and salaries, it is as if we did not implement the agric budget at all.” Oloruntoba equally hinted that Gov. Yahaya Bello’s administration had resolved to move the sector to higher heights through its numerous agricultural programmes and activities cutting across the three senatorial zones. Earlier in her address, Gift Omoniwa, programme manager, ActionAid Nigeria @Businessdayng

in the state and executive d i re c t o r, Pa r t i c i p a t i n g Initiative for Behavioural Change in Development (PIBCID) hinted the visit was to enable interface between PFA and ministry with a view to building a synergy that will aid the growth of the agric sector. She also said that the PFA comprising members drawn from Civil Society Organisations (CSOs), the media and supported by ActionAid Nigeria sought to influence increas e d investment by government in the agriculture sector with a focus on smallholder women farmers. Also speaking, Hamza Aliyu of the Initiative for Grassroots Advancement (INGRA) urged the state government to release at least, 50 percent of annual budgetary allocations to the sector immediately after the budget approval to enhance development in the sector. He added that the release of only 4.28 per cent in 2018 and previous years was counter-productive which he said did not augur well for agriculture sector.

Monday 08 April 2019

BUSINESS DAY

Monday 08 April 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

The global environment is important in driving what happens to local assets STEVE BRICE is the Global Chief Investment Strategist, while Simpa Adaba is the head, Wealth Management Nigeria, Standard Chartered. In this interview with BusinessDay analyst, MICHEAL ANI, they give insight on how the global environment is shaping investment in the Wealth Management space. Excerpts:

hat is the outlook for the bond market, from a global perspective? From a trade tension perspective between the world’s two biggest nations (US and China), we are not too concerned in the short term as negotiations regarding the issue is going pretty well. From our perspective, we think a deal is going to be struck in April which will calm down tensions temporally between the two nations. In terms of the bond market outlook generally, in 2018, we saw a pretty bit of a perfect storm in terms of liquidity, we saw tightening policy thickness in terms of a rate hike, credit space widening, treasury yields going up, dollar strengthening which was quite a bad environment for bond investors in emerging markets including the challenging environment in terms of returns perspective. They have reversed their record this year as we heard information that the Fed is taking down on their rate expectation - we were supposed to have two more rate hikes—so, that should be a positive environment for bond investors generally. However, our preference is for emerging market bonds generally and the rationale for that is because generally, stocks are going to be cheaper, yields will be more attractive and the dollar--as we expected, may be slightly weaker on a global basis. That should be positive for those taking risks in emerging markets generally, particularly the bond market space. Even though our main focus is global, we still talk about the implication it can have for emerging markets. We were in Kenya a few weeks ago and now we are here in Nigeria, we expect people to be looking out for more yields and that will benefit both offshore and onshore debt markets around the frontier and emerging markets as well. Since we would be having like one more hike to about 3 per cent this year, what hope lies for emerging and frontier markets. Should we expect to see more sell-offs, outflows or more inflows in the emerging market space? We expect that the dollar does not strengthen which is our core view, then emerging market bonds should do well. We may see some volatilities which we can’t rule out that possibilities as there is a pretty big collaboration between shortterm interest rate in the U.S and equity markets volatility which can be into the risky areas and in the bond market as well. But the big picture that I will say in emerging market bonds is, if you did see any risk opportunity rallying excessively, then you can be worried about. Can you give an overview

of the Standard Chartered Wealth Management operations in the emerging market? From a bank perspective, we are Asia/ African Middle East with a vast operation of our markets in those two regions. Some of them are emerging markets. We have our big operations for instance in China, India. We also have in more frontier markets including in Africa, Nigeria. It’s our specialty and that’s what we do. We have noticed a trend in the equity market that there has been a sell-off despite impressive earnings results from quoted firms. Investors are piling to the fixed-income market. What can you say is driving investors’ sentiments in this regards? I think it is only a natural reaction. Talking about asset classes, in times of volatility and uncertainty, you would find people moving to where they see as safe to a great extent. While all asset classes have their proportions and it is essential that clients remain invested in all asset classes, in times where people are not sure, it is only natural for them to run to the fixed-income space where they have a sure bet on them. Also, looking at the Nigerian space, you will clearly understand that a lot of people have a history of equity in Nigeria so there is a flight to safety in times like this. Do you see them turning back to the equity market? Locally, even though we are not into equities, of course, there is a general understanding to how this is done. You would always see those flows. If something happens in the US while we understand the general, you will always find a scenario of people responding in the local market. But essentially, I think people are very clear on what fixed income is and I think in the last couple of months, talking about flows, we have had a lot of flows going into the fixed income space. What does wealth management mean to Standard Chartered? For us, it is a very simple term. It means, how do we help clients grow and protect their wealth? That headline essentially defines the kind of programmes that we have, it also defines our approach to investing. Furthermore, it dovetails into what it is that we do across all the products that we offer. So, it’s either we are putting something in front of you that helps you increase what you already have or we are trying to save some cost and that comes in how efficiently with price especially in the FX space. It also speaks on how do we help clients in protecting what they have invested, which speaks www.businessday.ng

more on the bank insurance business that we have? Beyond that, it is also providing convenience that comes through helping them to unlock stock that have already been invested through our lending proposition. It is really creating that scenario where it gives the client options and the flexibility to do what they need to do at any point in time with minimal manageable risk rating. So one really key defining factor for us is that we put the client at the centre of what we do. Our approach to investing ensures that we risk-rate things that we do and make sure our clients invest in things we consider appropriate for the risk capital they have expressed to us. We also have a very strong team of investment advisers that do a brilliant job in terms of giving clients advises in the context around the decision they want to take. We are already clear around what wealth means to our clients and they are quite passionate that when they earn money, they are really clear about what that particular money means to them. So, the scenario about someone saving up for one’s children’s wedding in the future or even saving up for school is solved already. The last thing they want to hear is that the money had gone in a certain way. So these things are created in such a way that they ensure that we create as much information to clients. Where ultimately, the clients take a decision for him or herself but we basically provide much support and I think our clients are much clearer about the things that they do which also speaks to us having won the wealth management banking awards in the last two years. It is only a market recognition of the fact that we have the options provided to our clients in terms of products, but we are also quit disciplined in our approach in allowing our clients go into investments and the sort of products to invest into It’s always important that investors are diversified but it is even more important this year because the economic cycle in the US is over ten years which is invariably the second longest in history. This year if it continues as we expect, will be the longest in history. It will end at some point and we will have a recession when, who knows? It may be 2020, maybe 2021, but it will happen. Hence it is important not to be excessively exposed to one single asset class but try to diversify not just domestically, but also internationally. Can you give us a history of wealth management trend in Nigeria and how has Standard Chartered been able to navigate this trend over time?

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we basically allow the clients to decide where they want to put their money and their choice is within the asset classes that we offer. In that regard it is really not us creating a framework for them; it is really their decision. For instance, if they show up, and they are more comfortable with the fixed income we will still tell them to diversify because there are awesome benefits when they diversify. But the reality is, it is evenly spread and there is no huge concentration anywhere from what we see broadly which is speaking to clients behaviour and not what we are influencing. What are you going to do to bring more of your presence into Nigeria? Speaking from a wealth business perspective, we are investing in the wealth business and me coming here, is part of that investment. This is the third time I am coming to Nigeria as I have been coming every year within the past three years and I think what I’m very impressed with when I come in here is that the team is doing a very great job. So generally, we have so much confidence in the local team here and we expect that there is more to come. I think it is a good business for us and we want to continue investing in it.

R-L: Steve Brice- Chief Investment Strategist, Standard Chartered; Simpa Adaba- Head, Wealth Management Nigeria, Standard Chartered

The Nigerian franchise I will say is relatively young, 10 years at this point in terms of wealth management but became actively strong in the last 7-8 years. The simple thing is on how we help clients exhibit on their FX to invest in treasury bills, bonds. However, beyond that, I think our focus is not about the product but about the client. It involves a scenario where we are responding to what our client needs and at this point in time, our focus is on Nigeria and globally. That is access to the products that our clients have. For example, can our client get on the app and purchase our product? We have spent a lot of money as an institution trying to digitise and make sure that whatever product we have our client can access it. We are still doing that, but we are trying to revamp how our clients access it and how smooth the execution is for our clients. The products are largely still the same, but the ways it’s been approached are some of the things that have happened over the years. This is the third time I’ve been here since I’ve been coming here every year now. So, we are still trying to make sure that international perspectives that we bring as an organisation are delivered directly to clients. I’m still talking to the relationship managers and the investment advisers, giving them the opportunity to ask directly any thoughts, any concerns that they have about the environment about what we are doing. We’re just try@Businessdayng

ing to maintain that touch point; we have a monthly conference call just to keep them informed and get feedbacks. What are foreign investors’ perceptions of Nigeria? I think it’s quite normal. People on the ground are generally being more pessimistic than standing offshore and looking in. A different perspective has different value and they are much focused on, unless something is really fantastic in a country or really bad in a country. I think the global environment is very important to drive to what is going to happen to local asset particularly currencies and bonds. The international community has said okay. Last year we were worried about what’s going to happen in the election circle. It went very smoothly, I think that gave people confidence and then you got the positive dollar liquidity environment and positive external environment. That way, we are going to be seeing more money coming into the country. Tell us some of the products you offer in Standard Chartered Wealth Management offers. We run what is called the open architecture, which means we basically don’t have to manufacture our products, but we focus basically on partnering or basically risk-rating by going through a process with fund houses to try and get best in class. So we go through that process and ensure that we are happy with what’s on the ground from those institutions or those issuing houses. Then we check on what our clients have an appetite for and we match them. So essentially, there are some that

are regular, from the federal government bonds in Nigeria which everybody in Nigeria knows about, to treasury bills, to mutual funds, foreign currencies with Eurobonds. We essentially ensure that we are positioned to redistribute just about what we consider are adequately well managed in terms of risk to our clients. So, it is pretty much quite broad, those are general headlines but it has a whole lot of other things but nothing super exotic because at this point in time in the Nigerian market we are extremely to a great extent playing at a safe end. What are your clients most worried about in terms of maximising their wealth. Volatility! If you are a customer and you invested in something and you see the price moving in a particular way, you are going to get worried. So people are concerned and that is where the investment advisory team and the engagement with people come in The last you want is to throw your money somewhere and no one is attending to you. And I think we have help to demonstrate strength in that regard, whether in good times or not in good times, our investment advisors through our relationship managers as well, are able to speak to clients giving them necessary context. Because something is not going the way you want doesn’t mean you should jump out. Like we said earlier, if you are fundamentally clear about why you invested in the first place, you might

want to put more at that point. If you invest in one single stock and it goes down 30 per cent, you might be confused to know what to do but if you diversify across various asset classes, you will manage your emotions quite significantly it might be down by only 5 per cent which would definitely turn out great overtime. How does the issue of multiplicity of taxation affect investment in the wealth management space? It is not something under our purview, but of course, in terms of what we do locally is about investing in government instruments and these instruments are tax-free. So to that extent, it is pretty very clear that we don’t see double taxation as an issue in that space because we are not getting our clients to ship money abroad. They are investing in instruments and it is basically coming back. Except you are moving to another country but what we are offering in Nigeria is not taking you out it is all within Nigeria pretty much. Can you give a percentage allocation of your investments across the various asset classes? Wealth management structure in Nigeria is not an access management structure. Meaning that

How special is the year 2019 for Standard Chartered, seeing the firm tagged it a year to prepare and react We do see volatility as being the new norms. In 2017, global equity market went straight as there was no volatility. So, given that shortterm interest rate went up we expect a two-year cycle rate hike to feed into volatility. So that 2017 scenario is the least likely one for us but if we see it in equity market volatility global inferences we will say it is a viable opportunity. Because we are concentrating more on global growth, we can see central bank policies are being supported and that is why we are saying we should prepare and react. At the beginning of December, we were a little bit worried about the short-term outlook for equities, so we were a little bit anchoring down and at the beginning of January we are going to move a bit higher and that was what we meant by reacting to opportunities when they arise. So we will be monitoring the fundamentals as well as the market performance, as we go forward to see when people should take risk off the table or when should they add risk. Elections are over, uncertainties are coming down and so is the tension. What should we be expecting from Standard Chartered wealth management?

Two things: we will continue to give investment advisory in terms of allaying clients’ fears because there is always an event to turn you up. For example, you can say that you are invested on the naira but what happens on your naira investment can be impacted by what Trump does or what happens in the United States (US). So you essentially need to be in that place where you are mindful of those events and you are asking yourself, ‘how does this impact me?’ so that you will have a global view and you can realise that if people in other countries are behaving this way, then it can basically affect me. And you see that as a Nigerian investor, all you are holding are the Nigerian treasury bills (T-bills) or government bonds and then there is a sudden demand for those bonds by the auctioneers who are seeking to get better price because something has happened somewhere. It impacted people’s appetite for emerging markets and there no particular thing Nigeria did wrong; it was just that Nigeria was in the basket of the emerging markets and the international collector had taken a position on the emerging markets. When they were selling off and running back to the US, they impacted Nigeria. From that perspective, what we found to be very critical for a client is really at every stage is someone talking to him? Is he getting up-to-date information from the point where he bought his products? Did he understand the features? Did he understand the upside and the downside and beyond that as things go up and down, is he able to review his portfolio and take a decision? Is his portfolio manager engaging him? Secondly, we want to make access to our products easier, and so this year we plan to bring into the market something potentially different where people should from the comfort of their house be able to do simple things like buying T-bills, do a Federal Government bond, small-ticket sized mutual fund., etc. let the submission be able to happen on the platform and then we would see how that takes us going further. These are things we are thinking about, where we provide big things (i.e. advisory talk), and how are the products for people? We are thinking through that, especially the digital agenda. We fly in people to come and speak and provide support but beyond that are also spending a lot of money globally as a bank on digital. I am not sure everybody goes to the banking hall these days as often as we used to because we are able to do most of the things we need you to do on your phone. To that extent, we need

to create platforms and support the platform we already have that will enhance how people do this. There is no doubt about it as we are committed to this market and the market is too big to ignore. The derivative market in Nigeria is still picking up. How is the bank playing in the market given that the growth in the economy is a market that has already demonstrated a lot of potentials? We do not do derivatives because the current structure of where we are in wealth management does not include derivatives, but the reality is that the derivatives market would only take a few from the level of development in that market. So it’s going to be punctual and I think to an extent, regulators are well aware of the understanding that they have. But the market itself must understand this product. We do not create products, we look at products that already exist with the Federal Government bond for example, and the issuer is the federal government. So, we didn’t create that product, but we understand the products, the risk profile. The market is ready to do derivatives to the extent that the participants are ready for it. That will be my take about it. The mutual fund markets, how are you playing there? As I said, we don’t create these products to start with, but when clients express their interest, we can then advise. It is really what the client thinks and how they perceive things. The truth of the matter is that it is just one of the so many things that are available on the table. What is the biggest thing you are doing at Standard Chartered, broadly and in wealth? Digital is a big agenda for us, that is how to make the client experience a lot better. That has been a focus area. We have been working on it but we are not there yet. There is a lot of money that the bank is committing to make that experience a whole lot better for clients, which is the most important thing. You realise that banking is becoming more convenient and so it is not the products they are selling, but what convenience you are offering? People are not finding it interesting to come into a banking hall which is how bank started and so we are moving from that and thinking through all of the processes. So it’s really doing exactly the same thing but making it easier for the client and working through, ‘what is the client thinking right now?’ If the client can do stuff on his own, and banking is not on his own, then there is a problem.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: OGAR DAVID ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 10 April 2019

BUSINESS DAY

INTERVIEW ‘We now operate in 3 continents, 12 countries and cater to 29m clients’ AMAECHI OKOBI is the Group Head, Corporate Communications at Access Bank Plc. In this interview with FRANK UZUEGBUNAM, Okobi talks about the new brand identity of Access Bank, challenges of merging two distinct banks, customers and other stakeholders’ expectations amongst other issues. Excerpts:

What inspired the new brand visual? he visual identity was inspired by the concept of Fusion. Fusion is described as an occasion when two or more things join or are combined; the technique of joining atoms in a reaction that produces energy, for example. The powerful combination of Access Bank and Diamond Bank has the energy and the ambition to revolutionise banking in Africa and, in doing so, ensure our continent takes its rightful place on the world stage. How did you go about imagining a brand that would speak to both your old and new consumers? Our new brand fuses the Access Bank and Diamond Bank brands, bringing together the best of both banks. Bringing them together to capture the strength created through the merger meant drawing from the essence of each logo but refreshing them to create a sense of energy and forward momentum. The diamond shape is fused into the three chevrons, which radiate in all directions to create layers around a core. The logo symbolises the energy of more, our new brand promise. Our brand promise: access, more than banking, is identified by the forward direction of a single diagonal orange line, strong, purposeful, simple. Radiating from the center in all directions, it expresses our ability to move with agility. Always forward, with purpose. Our colours signify our focus on being the most trusted corporate specialist, while also capturing the vibrancy and resourcefulness of our digital and retail expertise. What were the challenges in merging two distinct banks that have different cultures, to act and move as one? From a business perspective, the combination of the two banks had clear benefits. Those similarities also exist in our cultures. When both institutions were started, both set out to change the face of banking in Nigeria. Our goal has always been to lift Africa through sustainable banking, showing individuals and businesses across the continent that ethical business is good business. Achieving that goal requires strength, determination, collaborative leadership and, most importantly, we need to embrace change. In developing our integration plans we have been careful to draw on the best of both banks, and learn from each other, particularly in how we deliver excellent service to our clients and customers. We have been working alongside world-renowned experts to develop a programme that consolidates the high-performance culture across the combined bank, and we will continue to work to ensure that everything we do is customerled, recognising that different clients have different needs. What were the initial thoughts of staff at the announcement, and how have their thoughts evolved? From the beginning, we worked hard to show the benefits of the merger and get everyone involved. Together, we are stronger and can offer more opportunities for our

Amaechi Okobi

colleagues, more products and services for our customers, and more benefits for all our stakeholders. That resonated very well with all our teams. We made sure everyone was up-todate every step of the way with newsletters, podcasts, videos and townhalls that served to answer questions and unite staff around the cause. From the beginning, everyone understood the relevance of our proposal and how it would pay off. This merger has created Africa’s largest bank by customer base. How has the bank prepared for the market, and to grow alongside Africa’s growing populace? The new Access Bank is one of Nigeria’s leading institutions, with 29 million clients,

‘‘

We are constantly looking for opportunities to generate even more value to all our stakeholders. But for now, we have a very clear strategy for growth

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including more than 13 million mobile customers, as well as more than 600 branches, approximately 3,000 ATMs and around 32,000 PoS terminals. That is a true PanAfrican champion with an innovative digital retail operation, strong international reach, and deep corporate banking expertise. Technology is a critical factor in the ability to deliver excellent service at scale, which is why digital innovation and advanced data analytics are one of the pillars of our strategy, alongside world-class standards of compliance and risk management. We understand our clients and the markets in which we operate very well. That has translated to incredible customer satisfaction and exponential growth over the years. Access Bank also has several key areas of focus to help Nigeria and the continent grow, including women, youth, entrepreneurs and the financially excluded, as well as supporting major corporates to transact business across the continent and across the world. We will further develop our position and market leadership in these growth sectors. What new product offerings should your customers expect? In addition to enhancing our financial and technical capabilities, this merger created a true customer champion. Both Access Bank and Diamond Bank had an unrelenting commitment to clients, and this did not change. We are looking at expanding offers, such as XclusivePlus, DiamondXtra and Pay Day loans, and, of course, for our customers, now everyone has access to more, as every client of the combined bank can access products and services previously only available to

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either Access or Diamond. For now, product offerings and benefits remain the same. What does change is service, which we will continue to improve. We have taken measures to make customers’ lives easier, like the integration of ATMs. With their comfort in mind, account numbers stayed the same, as did their relationship managers and all benefits they have. What has been the feedback from customers and other stakeholders, such as investors? How have they embraced the changes? The feedback has been positive all around. We have heard a lot of praise from all our stakeholders, and our customers realize that they are at the center of our business. Similarly to the communications work, we led with employees. We also made it a point to take customers, shareholders and the wider public on this journey with us. We conducted surveys around the country and listened to what our clients had to say when developing the new Access brand. For example, their input was invaluable in designing something that resonates as much as the Access and the Diamond brands did individually. With investors it was not different. We have the usual regulatory obligations, but we are in constant contact with them and seek to address their questions as often and as quickly as possible. The merger accelerated our plan to support retail growth, previously set out in Access’ five-year strategy, and we laid out the opportunities for the future. They have supported the rationale, as you could see from the overwhelming approval at the shareholder meetings. On a lighter note, Access Bank has gradually perfected the ‘art’ of mergers and acquisitions. Should we be expecting more? We have a strong track record of M&A in Nigerian banking and have previously demonstrated our integration capabilities in the successful acquisition and subsequent absorption of six institutions in the past 15 years. We are constantly looking for opportunities to generate even more value to all our stakeholders. But for now, we have a very clear strategy for growth; this merger has significantly accelerated the achievement of the five-year plan we set out for 2018 – 2022. There is a fear that mergers come with downsizing. Is there a plan in place for all staff of both banks? We have already agreed with every person in the bank their roles and responsibilities within the enlarged organisation. No one needs worry that there will not be a role for them. As I mentioned, we have developed a programme to consolidate a high-performance culture across the bank and we will seek to embed more speed, more service and more security into the products and services we offer clients. With care, appreciation, leadership and performance, we will make sure that comes through at every point of contact for every stakeholder.

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BUSINESS DAY

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Wednesday 10 April 2019

BUSINESS DAY

CITYfile Police arrest suspects over death of 3 in Rivers

A section of the construction site for the Lagos-Ibadan Standard Rail Gauge during the visit of the Minister of Transportation to the site in Abeokuta on Monday

he police in Rivers State say some suspected cultists have been arrested in connection with the death of three persons in Mgbodohia, Obio/Akpor local government area of the state. Spokesman of the police in Rivers, Nnamdi Omoni, confirmed the arrest in Port Harcourt. Omoni, however, could not give a specific figure of the arrested suspects. He said that the three persons were killed last weekend during a fight for supremacy between two rival cult groups – Iceland and Deybam in the community. The police spokesman said that preliminary investigation into the clash had shown that the fight resulted from disagreement over who should collect a certain illegal levy in the community. The illegal fee collected from those buying

land in the community is known as “bush entering or marching ground” in the state. It would be recalled that former Governor Rotimi Ameachi’s administration abolished the levy, making it illegal and punishable on conviction. According to Omoni, investigations showed that the two cult groups had the history of clashing over which should collect the illegal levy. He however said normalcy had returned to the community due to the deployment of police personnel to the area. The command’s spokesman urged the residents who had fled the community due to the crisis to return home. “I appeal to the resid e nt s o f t h e s t at e t o furnished police with meaningful information on the activities of the hoodlums in their areas,’’ he said.

aduna State government has lifted the dusk to dawn curfew it imposed on Maraban Rido and Kujama communities of Chikun local g overnment with immediate effect. The curfew was imposed since March 13, 2019 when crisis broke out there. Spokesman of the state government, Samuel Aruwan, said on Monday that

the residents were free to go about their lawful business at all hours of the day. He, however, said the 6pm to 6am curfew was still in force in the entire Kajuru local government area, adding that security agencies will continue to enforce the curfew there until further notice. The government appealed to all communities to continue to do their utmost best to preserve peace and harmony. NAN

Landslide destroys 10 KDSG lifts curfew on Maraban houses in Odi, Bayelsa Rido, Kujama communities K

SAMUEL ESE, Yenagoa

en houses among other properties have been destroyed in Odi community in Kolokuma-Opokuma area of Bayelsa. The incident, which occurred near the bank of the River Nun, on Sunday, caused panic in the community. Landslides are a common occurrence in the riverine communities of

Bayelsa State, which have also resulted in loss of farmlands, buildings and fishing grounds among others. Some residents of the community believe that underground running water due to the recent heavy rainfall may have triggered the landslide as the affected area already had steep steps running into the river. However, James Dounana, a resident attributed the landslide to marine erosion, saying it might have

been triggered by indiscriminate sand dredging from the river. “It was God’s doing that the incident happened during the day and not night. It is one of the many challenges faced by riverine communities. It started at about 7: 00 a.m with earth tremor; and two hours later, the ground gave way causing the houses to collapse. Thank God no life was lost,’’ Dounana said. Tonye Isenah, the Chief Whip of Bayelsa State House

of Assembly and memberelect for Kolokuma/Opokuma constituency I, and an indigene of Odi, visited the affected community on Monday and expressed concern over the level of destruction caused by the river erosion. Isenah expressed concern over the level of destruction caused by river erosion and called on the relevant authorities including state emergency management agency to come to the aid of the victims.

Navy intercepts N35m automotive gas oil ANIEFIOK UDONQUAK, Uyo

he Nigerian Navy, Forward Operating Base (FOB), Ibaka, in Mbo local government area of Akwa Ibom State, has intercepted 501 drums of Automotive Gas Oil (AGO) worth about N35 million, from eight suspected smugglers. The navy said the seizure was made based on intelligence reports in the early hours of April 5, 2019. According to the navy, the suspects brought in the product from Oyorokoto in Rivers State along the Calabar channel leading to Oron river with three Yamaha outboard engines.

Speaking in Ibaka during the hand-over of the suspects, the products, wooden boat and outboard engines to the Economic and Financial Crimes Commission (EFCC), acting commanding officer, FOB, Reginald Adoki said from their findings, the products were suspected to be illegally refined. He said the activity of the suspects was a clear case of economic sabotage of which the navy is committed to riding the area of, adding that the handover to the EFCC was a sign of their confidence in the commission. “From findings, the product is suspected to be illegally refined AGO (diesel). The 501 drums contain about www.businessday.ng

300 litres which give you about 150,000 litres of AGO and estimated market value of about N25 to N35 million. “We have strong evidence that the illegally refined product was gotten from broken pipes by way of crude oil theft because you need crude oil to refine to get the illegal AGO. This is a clear case of economic sabotage,” he stated. Receiving the drums of containing the product, the eight suspects and other items from the navy, Uyo zonal head of the EFCC, Abdukarim Chukkoh represented by Alex Ebbah, said, “I want to on behalf of the EFCC and my chairman, thank the effort of

the Nigerian Navy for this noble job. “We assure you we will do our best to ensure that for every crime of this nature, the suspects are brought to book and we will also give you feedback,” he noted. One of the suspects, Victor Umana from Mbo local government area, Akwa Ibom State, said the urge to better his lot led him to be a party to the deal. He said he used to load fish and crayfish from the beach for a pittance, adding that he was offered N15,000 to bring in the AGO from Rivers State and was contracted to do the job through a telephone call he received.

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Kebbi spends N280m on school feeding

ebbi State government says it has spent more than N280 million monthly, on its school feeding programmes. Mohammad Magawata, state commissioner for basic and secondary education said this at a twoday media dialogue on Cash Transfer Programme (CTP), sponsored by the United Nations Children Education Fund (UNICEF) in Birnin Kebbi. He said the programme was aimed at enhancing enrolment, retention and completion, as well as reducing the number of @Businessdayng

out of school children in the state. Magawata noted that the influx of people from neighbouring countries like Niger, Chad and Benin Republic had contributed to the increase in the number of out of school children in the state. According to him, “we are doing very much to sustain the programme; even after UNICEF completes the programmes in the northern part of the country, we can still continue through our own programmes to ensure those who are in school remain.”

Wednesday 10 April 2019

BUSINESS DAY

PENSION today

In Association with

How states stand in contributory pension scheme implementation

ursuant to the enactment of the Pension Reform Act (PRA) 2014 which mandated the participation of employees of the public service of the Federal Capital Territory, States and Local Governments as well as the private Sectorin the contributory Pension Scheme (CPS), the National Pension Commission(PenCom) has consistently been engaging various States Government, trade unions, relevant stakeholders and the general public on the full benefits of the CPS with a view to bringing them to full implementation of the Scheme. This pursuit of the Commission is yielding better result as more States Government are inching towards enacting laws to facilitate their full adoption of the CPS, while a lot is still to be done. To date, 24 States have enacted Laws on the CPSwhich are substantially in tandem with the provisions of the PRA 2014 while six (6) other States; Kwara, Benue, Plateau, Cross River, Borno and Akwa-Ibom States have drafted Bills on the CPS and are currently undergoing the legislative processes towards their passage into laws. On the other hand, three States; Jigawa, Kano and Adamawa States have embarked on the Contributory Defined Benefits Scheme while Bauchi and Katsina States have also drafted pension reform bills on the CDBS. Yobe State has however decided to continue with the Defined Benefits Scheme. Out of the 24 States with pension laws on the CPS, 5States, Lagos, Kaduna, Ondo Edo, Ekiti States, Anambra Local Government and the Federal Capital Territory (FCT)are currently remitting both the employer and employee pension contributions of their employees while 4 States namely Zamfara, Kebbi, Rivers and AnambraState remit only employee portions of pension contributions of either the State or Local Government employees. On the determination and funding of the past service benefits of the employees (accrued rights) in States that have adopted the CPS, 7 States and the FCT have conducted Actuarial Valuation while Kaduna, Osun, Delta, Lagos States, Anambra Local Government and the FCTare funding their Retirement Benefits Bond Redemption Fund Accounts (RBBRFA). However, only Delta, Kaduna, Osun States, Anambra Local Government and the FCT have opened RBBRFAs for domiciliation of their employeesâ&#x20AC;&#x2122; accrued rights. On compliance with the requirement for the procurement of a Group Life Insurance Policy for workers under the CPS,only Kaduna State and the FCT currently have valid Group

L-R: Joan Otobo, acting company secretary, ARM Pensions Managers (PFA) Ltd; Emmanuel Ikazoboh, chairman ARM Pension; and Wale Odutola, managing director, ARM Pension at Companyâ&#x20AC;&#x2122;s 14th Annual General Meeting in Lagos.

Life Insurance policies for their employees. Similarly, Lagos, Kaduna, Delta, Osun States and the FCT have commenced a hitch-free and timorously payment of pension contributions under the CPS. On the requirement forsetting up aproper administrative structure to drive implementation of the CPS in States, in line with theirrespective State pension laws, only 14 States have established the Pension Board/Bureau/ Commission to implement their pension reforms. The reluctance to establish the necessary structures to drive implementation of the reform in many States has however contributed to the poor compliance status among States in the country. The implementation of the CPS has indeed been quite challenging for the States and Local Governments, amidst the tough financial constraints occasioned by low internally generated revenues and dwindling crude oil receipts into the Federation Account. Other key challenges militating against the implementation of the CPS as observed in various States have been the lack of political will on the part of the State Governments and the inordinate allocation

of scarce resources to less impactful projects. Many State Executives would rather invest in infrastructures that could be visible and therefore serve as a means for gaining political capital than settle pension obligations to retirees. Furthermore,history has shown that accruing pension liabilities under the Defined Benefits Scheme carries very little, if any, repercussions as some State Executives had served their full terms (four years) without paying gratuity or pension and nothing happens. This contrasts with the CPS which, to some extent, has measures to guide against defaults in contributions and/or remittance by government (the employer). Other than lack of political will on the part of many State Executives, the Nigerian workersare generally apprehensive towards the CPS due to ignorance of the workings of the scheme. Many workers, including those vested with the responsibility of ensuring smooth implementation of the Scheme fail to realize that the CPS protects their interest more than the Defined Benefits Scheme. As a consequence of this ignorance, therefore, they fail to ensure timely and adequate deduction of pension contributions or remittances of same. This

leads to the phenomenon of unfunded RSAs or delayed remittances with the attendant effect of loss of income on pension assets. Another obstacle to the adoption or full implementation of the CPS in many states is the reluctance by senior public servants in the States to embrace the Scheme. The apprehension towards the CPS is worse among the senior public servants who keep shifting the goal post for the adoption of the scheme to a time when they would have retired from service under the defined benefits scheme. This has resulted in unending shifts in the commencement dates of the CPS by many States or feet dragging in the adoption of the scheme in States. The modest achievements made by some States, despite the daunting economic challenges, are a clear pointer to the fact that the Scheme is highly sustainable but requires the political will and conviction of the State Executives to succeed. The Commission, therefore is optimistic that through increased employee awareness and consultation, the State and Local Governments would exercise the required political will and fully adopt the CPS for all the employees.

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

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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diamondpfcbusday@yahoo.com

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Wednesday 10 April 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Insurers harp on career development, job opportunities in industry Stories by Modestus Anaesoronye

nsurance industry operators as part of activities to mark the Global Money Week has urged student to take a career in the industry, as the sector offers job potential because of its importance in the economic development of the country. The insurers believe that the industry in Nigeria is still at a growing stage with abundant potentials to contribute to the economic growth of the country, and so stand to be of great benefit to anyone who choses a career in the sector. The Nigerian Insurers Association and the Chartered Insurance Institute of Nigeria as part of the Global Money Week donated copies of :”Young Peoples’ Guide to Insurance” to students of Baptist Junior School and Baptist Senior Secondary School, Obanikoro as a way of promoting insurance awareness among students of secondary schools in Lagos State. Addressing the students and Teachers during the presentation ceremony recently, Lanre Ojuola, director of Operations of the Association (NIA), who represented the Director General of the Association said the gesture was in commemoration of the Global Money week. It is an initiative of Child and Youth Finance International (CYFI), an international non-governmental organization which is being championed in Nigeria by the Central Bank of Nigeria (CBN) with the 2019 theme:” Learn. Earn.

L-R: Uju Chukwu, deputy director general, Chartered Insurance Institute of Nigeria (CIIN); Soji Oni, Senior Manager Technical, Nigerian Insurers Association (NIA); Davis Iyasere, controller, Human Resources, Corporate Affairs & Administration (NIA); and Lanre Ojuola, director of operations, NIA donating books to the Principal of Baptist Senior secondary School, Obanikoro in commemoration of the CBN Global Money Week.

Save”. Speaking further on the topic and the need for the students to embrace insurance profession, he noted that insurance, being the oldest profession offers a wonderful opportunity for them to work and earn a living whilst also saving for the future. Ojuola also advised the students to embrace insurance culture at this early stage of their lives as it guarantees economic

AXA Mansard tops best performing insurance stocks YTD IFEANYI JOHN

XA Mansard, one of the four insurance companies to have released 2018 financial results, has reaped the benefits of an 11 percent increase in profits per shareholder as the market value of the underwriter increased by 11.48 percent since the start of the year. BusinessDay analysis of the insurance index performance since the beginning of the year shows an equal number of gainers and losers since January. The index is down 2.46 percent from a year start of 124.82 index points to 121.83 points at the end of trading on Friday. With seven gainers and laggards, AXA Mansard leads the insurance index with 11.48 percentage points followed by Prestige (10.0%), Cornerstone Insurance (10.0%) and Regency Allied Insurance (9.52%). Of the four Insurance companies to have released 2018 full year results, including AXA Mansard, three have seen growth in their market value since January. Custodian Investments has seen its market value grow by 8.85 percent even as it’s earning per share declined by 2.52 percent from N1.19 to

N1.16. Sovereign Insurance, the sixth best performing insurance stock, doubled profits made for each shareholder year on year but the stock performance did not mirror this performance recording a 4.76 growth in market value. A 6.25 percent year on year increase in earnings per share for Continental Reinsurance, the other company to have released 2018 full year results, failed to swing the market value of the underwriter of risk in any direction. On the flipside, Niger Insurance posted bleak 9 months performance and have lost a considerable share of market value since the beginning of the year, the company has lost 16.67 percent of its capitalization followed by Law Union and Rock Plc (-15.00 percent) and NEM Insurance with 13.70 percent decline in market value. The 15 stocks on the NSE Insurance Index include, AIICO Insurance Plc, Lasaco Insurance, Law Union and Rock Insurance, Linkage Assurance, Sunu Assurance, AXA Mansard, Mutual Benefits Assurance, NEM Insurance, Niger Insurance, Prestige Assurance, Consolidated Hallmark Insurance, Cornerstone Insurance, Regency Assurance, Sovereign Trust Insurance and WAPIC Insurance. www.businessday.ng

protection to them and their respective families should an unfortunate incident occur to the policy holder especially in case of untimely death, their continued education and economic help at old age through investment in various insurance products that guarantees good interest yield over a long period of time. Also speaking at the occasion, Uju Chukwu, deputy director general of Char-

tered Insurance Institute of Nigeria (CIIN), urged the students to choose insurance as the profession offers them the opportunity to work in any sector of the economy. “When you study insurance or you qualify as a chartered insurer, you have the opportunity to work in any sector of the economy. Whether in aviation, oil & gas, banking, manufacturing or engineering, insurance is relevant.” She said.

Mid-year renewal outlook clouded, dependent on risk, capital appetite

nce again the outlook for reinsurance rates at the mid-year renewal season is clouded and dependent on the appetites of underwriters to deploy more capacity. One underwriters acceptable rate increase is another’s unacceptable level of risk-adjusted return, and with strategies diverging further, in terms of efficiency, costof-capital, access to risk, and other factors, reinsurance is not a one-size-fits-all priced market anymore. As a result, it’s become increasingly hard to forecast where rates might sit at any future reinsurance renewal, let alone at the approaching June and July renewals. There are now so many different risk appetites and costs-of-capital in this reinsurance, insurance-linked securities (ILS) and broader risk transfer market, with a growing range of business models that affect the ability to underwrite more risks. Hence, one strategy can often accept lower price increases than another, still meeting their all-important expectations for covering loss costs, capital costs and enterprise costs. That’s not to mention the costs in the reinsurance market value-chain that can also be reduced, through use of technology, disintermediation and other techniques, all of which means one markets appetite for

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and ability to assume risk at a price, can be wildly different from another’s. But at the upcoming mid-year reinsurance renewals there is a widely held desire for rate improvements, to compensate for the impacts of loss creep after hurricane Irma, the aggregation of loss events, the record-breaking impacts of the wildfires, and at the same time a widely held recognition that rates had perhaps dropped too far this time around. Of course, it’s been reported that leading ILS fund managers are saying they will return capital to their investors, should rates, in Florida in particular, not live up to their expectations. In reality, that has been a message we’ve heard every single year and as ever the repatriation of capital is likely to be small in amount compared to that which actually gets deployed, as at this renewal the rate environment is expected to be better, with incremental gains expected quite broadly in loss-impacted regions and accounts. Because, rate increases are expected at this June renewal and we’ve spoken to reinsurance buyers who are already fully aware they will need to pay a higher rate for the protection they seek, after their key markets all suffered large losses at the hands of catas-

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Wednesday 10 April 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Allianz Nigeria employees benefits from group technical up-scaling in underwriting

ith a view to strengthening the competencies of employees, over a dozen members of staff at Allianz Nigeria have recently enrolled into the Allianz Underwriting Academy, for the first phase of a progressive up-skilling program following the integration of the local operating entity into the Group. Established in 2001, the Allianz Underwriting Academy aims to fast track staff of the global insurance giant – the Allianz Group - towards gaining insurance qualifications. The Academy’s CII prior learning accreditation award made it the first inhouse training programme within the insurance industry to achieve this status at Advanced Diploma Level. The accreditation means that, for the first time, staff passing specific personal lines or commercial (motor, property and casualty) academy modules can earn (up to a maximum of 60) credits within the CII qualification structure. This encourages and enables employees to become qualified and adds value to the internal training programme. Adekunle Giwa, head of Data Analytics & Reporting at Allianz Nigeria who aced

all his papers in the first cycle beamed: “The exams were as rigorous as they were rewarding. I am proud to be a student of the Academy and look forward to the accreditation award from the prestigious CII UK.” The programme provides a framework which enables individuals to build the skills required to fulfil career aspirations, achieve professional qualifications through study support and the Chartered Insurance Institute (CII) accreditation and to meet the requirements for Continuing Professional Development (CPD) as required by the CII. Owolabi Salami, executive director Allianz Nigeria explains that prior to the start of the program, Allianz Nigeria boasted a competent and sound technical team. “Still the exams were rigorous even for my very experienced colleagues. This is proof that the best can be made better. Our risk assessment, pricing and coverage will keep getting better. We are very proud that Allianz is the first insurer to achieve this level of accreditation from the CII. Our clear goal is to have the most technically-skilled underwriters within the industry and this affirms our commitment to achieving this objective”, he emphatically submitted.

AIICO launches free entrepreneurship development programme

IICO Insurance Plc has launched a free Entrepreneurship Development Programme, as part of its Corporate Social Responsibility (CSR). As a socially responsible organization, AIICO seeks to contribute to nation building by empowering Nigerians with the requisite knowledge and skills for entrepreneurship. This is aimed at employment generation, poverty reduction and economic growth. The programme is open to individuals who desire to have the freedom to pursue their own vision; become their own bosses; have flexible lifestyle and potentials for alternate sources of income beyond salary. While entrepreneurial opportunities are hanging low, not everyone is able to spot them and only few succeed in leveraging them. The programme helps to spot new business opportunities in Nigeria today and guides on dos and don’ts of succeeding. It is based on cutting

edge information, tools and concepts of entrepreneurship, the company said. According to Babatunde Fajemirokun, executive director/COO “Nigerians with entrepreneurial potentials and dreams of self-reliance can now take advantage of the programme to gain momentum and become viable, irrespective of challenges.” “We want to help them to see opportunities around them and equip them with the knowledge and skill to make the most of it, profitably. We have the manpower and have made adequate provisions to ensure the continuity of this programme.” AIICO Insurance Plc., a leading composite insurer in Nigeria, commenced operations in 1963. AIICO provides life insurance, health insurance, general insurance, wealth management and pension management services as a means to create and protect wealth for individuals, families and corporate customers. www.businessday.ng

Allianz Nigeria employees who just benefits from the Group technical up-scaling in underwriting

Sigma Pension seeks to broaden pension investment in ethical products Stories by Modestus Anaesoronye

o enable pension funds play in ethical investments instruments to meet expectation of contributors and retirees, Sigma Pensions Limited, a pension fund administrator (PFA) has engaged stakeholders across the financial services sector. The PFA believes that while the demand for ethical finance products being introduced by conventional asset managers, banks and insurance companies are increasingly getting higher and higher, the same cannot be said of the pension industry. Dave Uduanu, manag-

ing director/CEO, Sigma Pensions Limited said the pension fund industry cannot be left out as more and more RSA holders indicate increased interest in ethical finance products. While commending the pension regulator, the National Pension Commission (PenCom) for taking the lead with the release of guidelines for a new Fund VI (noninterest fund) in February 2019, he said Sigma Pensions has put together this event with industry experts as well as key stakeholders in the broader financial sector to brainstorm on ideas to catalyse a significant transformation in ethical investing in Nigeria. He further stated that, there has been latent desire for ethical investment

products and we at Sigma Pensions, sensitive to this customer demand, kickstarted discussions with key stakeholders in Nigeria’s budding ethical investment sector towards the formalization of the demand and supply side for pension fund investing. “On the supply side, we have continued to engage with the sell-side industry on the need for the development of a suite of liquid investment products that meet the requirements of ethical finance. At the heart of it all is the goal which seeks to provide our customers with products which meets their retirement aspirations whilst aligning with values.” Uduanu noted further that ethical investment

product in the pension industry will help crowd in a new class of institutional and retail investors into the Nigerian financial system which will help deepen the breadth and sophistication of the fund management industry. “A key tenet of robust financial markets is the existence of many players on both demand and supply having diverse opinions, desires and needs which allow for a more efficient price setting mechanism. “ Besides that, it will help drive greater financial inclusion and pension enrollment, because with the option of retirement savings products suited to ethical preferences, it is easy to see a ready outlet for raising financial inclusion.

FBNInsurance consolidates growth, records 44% BPT

BNInsurance Limited has released its financial report for the year ended 31 December 2018, indicating a general growth across various measurement indices. The company’s profit before tax (PBT) grew by 44 percent from N4.26 billion in 2017 to N6.13 billion in 2018; while the gross premium written (GPW) grew from N19.6 billion in 2017 to N26.0 billion in 2018,

accounting for a 33 percent increase. While commenting on the financial statement, Val Ojumah, managing director/chief executive officer, FBNInsurance, attributed the performance of the company to their resilience in achieving the strategic aspiration of becoming the most profitable life insurance company in Nigeria. “The 2018 result has not only moved us several steps towards this goal, it has

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also raised the bar for our performance in 2019. Given our track record of strong and sustainable growth, we are confident that FBNInsurance will wax stronger in 2019 despite the anticipated lull in economic activities due to political and electioneering activities” The company’s Return on Equity (RoE) rose to 45 percent (up from 34 percent in 2017) and achieved a post-tax Return on Assets (RoA) of 8 percent. @Businessdayng

It will be recalled that FBNInsurance last year won the 2018 Africa Re/AIO Insurance Company of the Year and was also assigned an “A+” rating by Agusto & Co. FBNInsurance is an FBNHoldings company associated with the Sanlam Group SA and was incorporated in 2010 to transact life insurance business in Nigeria and currently operates out of over 40 sales outlets and three branches nationwide.

Wednesday 10 April 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Operational Transparency RYAN W. BUELL

t has long been believed that the more contact an operation has with its customers, the less efficiently it runs. As the argument goes, separating customers from internal processes through physical distance, time or the introduction of technology enables companies to perform more efficiently and, in turn, create more value for consumers. But my research shows that when customers are cordoned off from a company’s operation, they are less likely to fully understand and appreciate the value being created. As a result, they are less satisfied, less willing to pay, less trusting and less loyal to the company over time. One solution that my colleagues and I have investigated is the introduction of operational transparency — the deliberate design of windows into and out of the organization’s operations to help customers understand and appreciate the value being created. To determine when and how to design such windows, managers must understand when and how customers want to open up operations to scrutiny — and when they would prefer that work be undertaken behind the scenes.

At most Starbucks drive-through locations in the United States, the intercom has been replaced with a video monitor and camera system. When customers place an order, they come face to face with the barista as he or she rings up the order and marks instructions on each cup.

BEHIND THE CURTAIN Why does operational transparency seem to have a unique power? We found that when people can see the work that was going on behind the scenes, they perceived that more effort went into the delivery of the service. They also believed that the service provider had more expertise and was being more thorough. They appreciated that effort and quality, and they in turn valued the service more. Although companies generally strive to make services appear as effortless as possible, examples of organizations beginning to experiment with various forms of operational transparency are becoming more abundant. When customers use an ATM to withdraw money from their BBVA bank accounts in Spain, the ATM’s full-color screen displays visual representations of the currency being counted, sorted and arranged for distribution.

THE RISK OF BACKFIRE For all its benefits, operational transparency doesn’t always deliver positive results. There are circumstances when it can repel customers. But even in such instances, managers should think twice before opting for complete opacity. Operational transparency should be carefully considered when: — IT REVEALS THINGS PEOPLE GENUINELY DON’T WANT TO SEE: In the case of services that people aren’t really interested in or find unappealing, companies should look for ways to use transparency to change the way people think about and engage with a service. For example, the city of Halifax, Nova Scotia, switched to clear trash bags in 2015 so that everyone could see what was being thrown away. Curbside waste collection fell by more than 30%, and recycling rates increased nearly 20%.

— IT ENGENDERS ANXIETY: Showing customers every step while their credit is being evaluated for a loan amplifies anxiety. When transparency makes us feel watched, it can hold us back; but when it helps us feel engaged, it can move us forward. For example, my Harvard Business School colleague Michelle Shell and I found that when customers who were transparently being evaluated for a loan were also provided with an easy way to contact a support person with questions throughout the process, the probability they would move forward with the loan, if offered, increased. — IT SHATTERS OUR FAITH IN THE RELATIONSHIP: When transparency reveals that a company isn’t evenhanded or that its practices violate implicit social norms, it makes customers understandably upset. Consider the ubiquitous marketing practice of personalizing ads. Tami Kim, along with Kate Barasz (of HBS) and Leslie John, found that when companies are transparent about targeting online ads on the basis of things we’ve revealed about ourselves, we appreciate the personalization. But when the transparency instead shows that they customize ads according to things

they’ve inferred about us, it makes us upset. — IT DESTROYS THE MAGIC: Sometimes we want to suspend our disbelief, and providing too much transparency would make that impossible. Retailers that sell high-end jewelry or musical instruments often keep redundant inventory off the floor to give the pieces we see a special, one-of-akind mystique. The illusion that our ring or guitar is unique enhances our experience. — IT EXPOSES AN INEFFECTIVE PROCESS: When transparency reveals employees who are incapable, indifferent or powerless to deliver on the value proposition of the firm, customers can become incensed. Think back to the last service interaction you had where two employees were visibly chatting with each other instead of helping you. — IT REVEALS THAT A COMPANY’S BEST EFFORTS YIELD POOR RESULTS: When people can see that a lot of behind-the-scenes effort went into creating an inadequate outcome, it reinforces their impression that the company is bad at what it does. — IT SHOWS THAT THE COMPANY’S PRODUCTS OR SERVICES ARE INFERIOR TO COMPETITORS’: A fundamental tenet of business still applies: If your customers find that your products are of poor quality, overly expensive or otherwise less attractive than your competitors’ offerings, they will do business elsewhere. — IT HIGHLIGHTS A LACK OF PROGRESS: Uncertainty about our status makes our skin crawl. That’s why progress bars are ubiquitous online. We like to have the feeling of moving forward, and transparency that demonstrates the opposite can be frustrating.

around supply-chain sustainability. Visibility into such problems can cause a customer backlash. To that end, transparency functions as a test of sorts: If you don’t want people to see how you treat your employees or the planet, you probably need to make some changes. On the other hand, when transparency reveals that companies are operating sustainably, it can have a powerful effect. — IT’S DECEPTIVE: Transparency is helpful when it reveals work, but when the illusion of transparency is used to deceive or manipulate, it can backfire. BRINGING OPERATIONAL TRANSPARENCY TO YOUR ORGANIZATION Given all the potential advantages and pitfalls of operational transparency, managers should be thoughtful about how they implement it. They should consider the following factors in designing their initiatives: — WHAT TO REVEAL? A great place to start is to think about moments in the process that could be easily showcased with minimal effort. For example, one dessertfocused restaurant introduced operational transparency by suspending a tilted mirror from the ceiling above the pastry chefs who were plating and finishing desserts. — WHEN TO REVEAL? Transparency boosts value perceptions most when it reveals work as it is happening or just after it has been completed, rather than showing work that has not yet occurred. — HOW TO REVEAL? Transparency implementations work best when they’re visual — ideally giving customers actual windows into the process so that there’s no question about the credibility of what’s being shown.

— IT REVEALS THAT THE COMPANY’S OPERATIONS HARM WORKERS OR THE ENVIRONMENT: News coverage of the 2013 collapse of Rana Plaza, which killed and injured thousands of Bangladeshi garment workers, and the 2010 Deepwater Horizon oil spill, which released millions of barrels of oil into the Gulf of Mexico, casts spotlights on inhumane working conditions and subpar environmental standards that reshaped corporate initiatives

Ryan W. Buell is the UPS Foundation associate professor of service management in the technology and operations management unit at Harvard Business School, where he is the faculty chair of the transforming customer experiences executive education program. Buell’s research focuses on how operations can be designed to better engage customers, and he has worked with companies worldwide on the development of more engaging service models.

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Wednesday 10 April 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

Five ways to get the most out of your design team LEAH BULEY

ccording to the latest data from Nielsen, the average American spends more than 11 hours a day looking at a screen of some kind. This finding has vast implications. Today, whether you are a bank, a retailer, a hotel chain or a carmaker, you are also a technology company. The primary touchpoint between you and your clientele is often digital. In this context, design has become a key differentiator in the battle for customers’ hearts and minds. More and more organizations have begun to invest in their design practices — some in very high-profile ways. Capital One has opened a series of research labs in cities across the U.S. as a way to deliver digital banking services tailored to modern consumers. IBM has invested more than $100 million to expand its digital design practice, including 1,000 new employees and 10 experience labs. Consulting firms like McKinsey, Deloitte and Ernst & Young have acquired design shops in order to meet the growing demand for expertise in the field. A recent study by my company, InVision, finds that organizations that have mastered design have seen outcomes that go far beyond improved product usability and customer satisfaction. Our data is based on a survey of more than 2,200 organizations, from small businesses and nonprofits to large enterprises and the Fortune 500. We asked each company about the specific behaviors their design team engages in, as well as the outcomes they see as a result. Our goal was to discover which processes separate companies that are simply practicing design from those who are truly using it. We identified five natural levels of design maturity. Those at Level 5 are characterized by having achieved tangible benefits through their use of design, and have effectively institutionalized design to achieve those benefits repeatedly throughout the organization. Ninety-two percent of the companies that ranked at Level 5 said they were able to draw a straight line between the efforts of their design team and their organization’s revenue. Eighty-five percent of those organizations said they’d delivered cost savings through design, and 84% said that design had improved their time to market. One of the aims of the study was to identify the specific practices and behaviors associated with these kinds of concrete

business benefits. We found that companies that achieve more business benefits through design exhibit some specific and markedly different behaviors than those that don’t. At the most design-mature companies, the entire organization — including the executive team — participates in design. This means that key stakeholders from outside the design team get involved in user research, work in shared software, and develop product ideas jointly. What’s more, the organizations that saw the most concrete benefits treat it as a decisionmaking tool, whereas those who saw the least approach design in a way that’s limited to improving the aesthetics of their app or website. Level 5 companies design processes to test and learn what best supports their customers’ needs. They also use design to strategize where and how to play in their market. Here’s a list of best practices based on the anonymous responses in our study, as well as some real-life examples from companies that are living them. — HIRE EXPERIENCED DESIGN LEADERS. Leaders who can create and share a vision, inspire their team and the rest of the organization, and advocate for design at the executive level are essential. Nearly two-thirds of the Level 5 companies in our study have teams led by design leaders who are directors and above, who likely have greater influence with executives. They www.businessday.ng

are also likely to be more accountable and better positioned to develop strong partnerships with leaders in other functions. The more senior the design leadership, the greater the impact on the bottom line. — TAKE THE HANDCUFFS OFF DESIGN. When compared to the Level 1 companies in our study, design leaders at the Level 5 organizations were nearly three times more likely to be involved in critical business decisions and to be peers with their counterparts in engineering and product management. They were four times more likely to own and develop key product and features with key partners, and nearly twice as likely to report directly to the CEO — underscoring the importance of empowering one’s design team within the context of the larger product team. — RUN EXPERIMENTS, LOTS OF THEM. We found that the design teams at Level 5 companies have substantially more robust experimentation practices. They’re more likely to do concept testing, A/B testing, and beta tests. They’re also more likely to have the processes in place to quickly recruit customers for research and test their engagement with the products at hand. Lastly, they’re more likely to have standardized behaviors around measuring the success of experiments, which come with substantially more reported business benefits. — HAVE MEASUREMENT

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MECHANISMS IN PLACE. Design ROI is notoriously difficult to quantify, but Level 5 teams are more likely to measure standard indicators like NPS, design team operations measures, and initiative-specific indicators. USAA, for example, has developed a design score card that details everything from engagement with compliance and legal to the accessibility of designs. Many companies also use Google’s HEART framework, a series of user-centered metrics that allow designers to measure the user experience on a given app or website on a large scale. — ENCOURAGE BROAD DESIGN ADOPTION. Lots of organizations have one or two areas where the design team is functioning at a high level, but an organization with a mature design practice should expect to see a coherent design culture, with practices, principles, quality standards and tools that enable design at scale reaching throughout the organization. Keystone indicators include: Do people outside the design team actively participate in the design process? Do they have a lot of contact with the design team? Are those interactions substantive? Note that while crossfunctional team workshops are a good start, key partners in product and engineering should be actively working with designers to shape requirements, prioritize scope and deliver on shared goals. At Google, the re@Businessdayng

lationship between disciplines is viewed as a partnership, where accountability for the work is shared between engineering, product and design. As companies invest more and more in their design practices, business leaders must be aware of these behaviors to understand if their organization is effectively using design as a business driver, or if they’re just going through the motions. What’s more, as product design continues to evolve, it’s incumbent upon all of us who work in the design field to champion best practices, point to examples of what great looks like and educate our industry stakeholders about the conditions under which design can flourish. This study shows that design is capable of incredible things, and it’s only by working together that we can truly unlock its potential.

Leah Buley is the Director of Design Education at InVision, a leading digital product design platform.

Wednesday 10 April 2019

BUSINESS DAY

BOOK SERIALISATION

W H Y N OT Citizenship, State Capture, Creeping Fascism, and Criminal Hijack of Politics in Nigeria

Continued from yesterday

Chapter I

A Haunting Metaphor ur clear purpose was to set the agenda for the 2007 elections, and, in the event of a statement, which we thought plausible in 2007, become a swing factor. Even with our agenda limited as it were, we wanted to run a serious campaign. I was going to campaign in every state of the federation. As the typical campaign involved courtesy visits to traditional rulers, governors and prominent citizens in every state the candidate visited, I asked my friends in Kaduna who were setting up my visit to Minna to book an appointment for me to call on General Ibrahim Babaginda, the former President. Ibrahim Usman had asked Mohammed Haruna to help out. The feedback I got spoke volumes. General Babaginda had said to those who came that I was a friend who required no appointment to visit him. About my presidential bid, he had simply said “Pat is good, the kind of President Nigeria needs. The trouble is that Pat is 30 years ahead of his time in this our environment.” When Babangida’s wife died a few years later and Ibrahim Usman and I went to express our condolences, he turned to Ibrahim as we were leaving and said “Stay close to him. He is the future.” Was that ‘Maradona-talk’ or did he think 30 years early was now looking like in my lifetime? As we left, I reflected again on the visit to Gombe during the 2007 campaign when the Emir shocked us by urging me to continue to run if the outcome was not favourable, because, in his words, “Nigeria will not make progress until someone like you becomes President.” The Emir, a retired Federal Permanent Secretary had broken the tradition of polite-talk at those courtesy calls because he believed people like me should continue to patrol around those walls of Jericho until they fall. With Adams Oshiomhole helping make the election of a Godwin Obaseki who would fit my mould, and a few others here and there, it made sense to wonder if the crack was not widening. So, the visit of the Jonny Esike team met me still debating whether it was a timely call and whether the nature of the drafting was like the acceptance of the University of Nigeria, Nsukka Alumni positions. Those kinds of drafts had determined just about every other leadership position, outside of promotion at work, I had ever held. In each case a sense of duty compels you to say yes. Had

the time come for an American-type Sherman declaration? I was of one mind to make a Sherman declaration, as in American politics when a possible candidate says, ‘If drafted I will not run, and if elected I will not serve.’ Fiddles Akpoimare captured well my reluctance that evening as they left my office. I had been there before and seen people urge you on whilst promising that they would pawn all their valuables to fund the campaign only for them to then retreat to their comfort zones whilst you have mortgaged all that was possible to so do. In the end, I felt the legacy of the pooling of effort to push down the wall was worth the troubles it could bring me. When I computed in the fact that a friend, Adams Oshiomhole seemed poised to become Chairman of the party and former Lagos State Governor Bola Ahmed Tinubu who I had worked well with and who had urged me to run for Governor of Delta in 2011 with assurance of his full support, in every manner of campaign need, was leader of the party. I thought the idea may not be so troublesome. I had said I would not run in 2011 and had chosen in 2015, at Tinubu’s urging, to work getting the party ready to win in 2015 at the federal level. Those assumptions of support would prove to be the worst misjudgements of my engagement in public life. They led me down an intense track of touring Delta, visiting the good, the bad and the ugly; taking horrendous risks, and stretching mind and body. The endurance test with scheming people that cost plenty of money and encounters with people who think politics is about how well they can mine your pockets, labelling you ‘stingy’ even as they are spending what they have extorted from you. How can they expect good government from people they try so hard to frisk? I www.businessday.ng

kept asking myself. The nature of the politics was guarantor of Governance failure. I had truly entered a laboratory necessary for figuring out how to save a people. It was clear such a road would be bumpy. I never stopped reminding

myself that the self-image I had set for myself from quite early on in life was that of a freedom fighter. Composing the freedom fighters battle song may not be as elegant as Mozart scoring a symphony but both stir the soul. I was left to chant my battle matching and battle cry chants in a lonesome corner of a rain forest. But duty was duty! So, while the best of friends and relations were asking, ‘Why run,’ my essence was screaming, ‘Why not?’

Chapter II

Back To The Beginning How, why and when did I became so passionate about saving Nigeria and working for it to claim its glory?

From newspaper features, columns and reports dating back forty years, it seems like a suffocating height of evidence about views that my passion for a progressive and respected Nigeria, and service to neighbour for that purpose, goes all the way back to my teenage years. But who stoked the fire and what has sustained it even when it has been materially, and sometimes, reputationally costly? I think it is hard to precisely locate the times and sources of the drivers of my disposition on the Ni-

‘‘

Those kinds of drafts had determined just about every other leadership position, outside of promotion at work, I had ever held

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geria project, but a few experiences stand out as possible shapers of my destiny. One that I have referred to in the past, came between ages 7 and 10 – these were days spent in provincial Gusau in the deep North West in the early 1960s. My father worked for British Petroleum and in those days Gusau, which hosted a petrol tank farm supplied by rail, it was the largest town before the railway terminal town of Kaura Namoda. My father was transferred there from Kano in 1962. The local Catholic church, Our Lady of Fatima, was assigned to the Dominican Order and the school attached to it was where I had the bulk of my primary school education. I was an altar boy who showed up almost every morning to serve at Mass before riding my bicycle home to get ready for school and be dropped off by my father. The Dominican priests and brothers dominated my horizon. They were predominantly American and they were quite proud of the US President of the day, the first Catholic to be elected President of the United States, John F Kennedy. He would become my hero and role model. I won quite a few prizes from a variety of competitions organised by the priests. The typical gift would be a book on Kennedy. At 8, I read books most adults had little inclination towards. Great quotes like “Ask not what your country can do for you but what you can do for your country” became my mantra. Kennedy quotes were coming out of my mouth, ears and eyes. I was impressionable and Kennedy made an impression on me so much that I still remember where I was and what I was doing when news of his assassination reached me. These building blocks of character had another stone set on the masonry of the Dominican influence. Parents and teachers of an amazing range that worked hard and stayed honest and very devoted to the ideals of the spirit of Nigeria. However, these would compete with experience from a pogrom in the convulsions of 1966 in Northern Nigeria that makes many of today’s violent conflict seem like kindergarten exercises coupled with a horrifying civil war, which I experienced from both sides. A third of the time, I saw the evil of war inside Biafra and then witnessed the massacre of Anioma people, which reached its peak in Asaba between October 1967 and August 1968 affected my humanity much. Then from mid-1968, I was a Lagos boy who saw the war on television as a distant dysfunction. The activist in me came alive as soon as I got into the University of Nigeria, Nsukka (UNN). As a precocious 17-year old, I lived that adage that if at 18 you were not communist, something was wrong with your heart but if at 40 you still are, something was wrong with your head. I refused to be a Marxist even at 17, thanks to the impact of those Dominican priests, but I was a passionate fighter against injustice. Such was the commitment that I missed celebrating my 18th birthday.

Wednesday 10 April 2019

BUSINESS DAY

BOOK SERIALISATION It is a story I have told many times. Shortly before I entered the university, student protest at the University of Ibadan resulted in the police killing one of the students, Kunle Adepeju. Continuing protests for justice to be served resulted in the closure of four of the five universities in the country at the time. Most of the students at UNN who had lost three years as a result of the civil war wanted to be left out of the matter. So normal activities continued in Nsukka. Some of us saw that as poor display of solidarity and chose to challenge the Student Union leadership. Under the leadership of Bassey Ekpo Bassey, we founded the Student Democratic Society (SDS) and engaged in planning meetings to provoke protests. At 6am, one quiet harmattan morning in February of 1974, we began marching round the campus calling out other students to join us. Many called us names and asked us to go and prepare for class. We ended up in front of the home of the Vice-Chancellor Professor Herbert Kodilinye, instead of the gate that we planned to block. The Vice-chancellor met us and conceded we hold a rally/town hall meeting for the whole student community. That town hall meeting is much remembered by the rousing speech given by a student activist then reputed to be Nigeria’s first professional undergraduate because he had spent up to a decade in the university. Pinnick, or Chairman P, as he was fondly known, began his speech by saying “Today, February 6 1974, will be remembered as a day when a people who were physically demobilised, after the civil war, were finally mentally demobilised.” This was about 8:30pm and that was when I realised that it was my 18th birthday. All of my life, from that early age, has been about a struggle for justice, a democratic society and prosperity for all through a democratisation of entrepreneurship. During my protest days as a student leader at the age of 19, I first attracted national attention by forcing a broader engagement on foreign policy during the liberation struggle in southern Africa. I would next put on my protest gloves as a youth corper. Drawing from the acclaim from being able to get the then Foreign Minister, Joseph Nanven Garba, to come to Nsukka to be challenged by students on foreign policy, in my role as an executive of the student union, I made a quick transition to investigative journalism as the National Youth Service Corps (NYSC) secretariat posted me to the Newbreed Organisation, publishers of Newbreed magazine. It was the leading magazine publishing company of that era and it championed speaking truth to those in power. I fit the bill early at Newbreed. By December of 1977, my research report that was a cover story on the Radio Kaduna controversy was said to have hastened Chief Ayo Ogunlade’s departure from the cabinet of General Olusegun Obasanjo who was head of state at the time. The publisher of Newbreed, Chris Maduaburochukwu Okolie, gave me much credit, assigning me to

big stories and using me as yardstick for evaluating the older and more experienced correspondents and editors. That would put me in the pathway of trouble. Just before my one-year NYSC assignment ran out, I had been part of a cover report on the Obasanjo government titled, The Drift Begins. That report led to the Obasanjo government proscribing Newbreed magazine. The proscription came shortly after I left Lagos for graduate study in United States, literarily the day after my service year ended. But I had also completed work for the front page of the maiden edition of the business magazine of the Newbreed stable, The President magazine. It was an interview I had conducted with a banker, Otunba Subomi Balogun. The setting for what could be called ‘the dual mandate of fighting for good government and proselytising the spirit of enterprise’ had come into place. From graduate school in the US, I could tell a future for Nigeria that did not seem so wholesome. And I spent so much time thinking about what form of intervention would be best to claim the promise of independence. In 1980 my father, at the age of 52, succumbed to cancer and I had to return to Nigeria for the funeral. That year, the revolution in Iran which resulted in the ouster of Shah Mohammad Reza Pahlavi had pushed oil prices past $40 a barrel, a number hard to imagine in those days. Appropriately, two of the leading international weekly news magazines had exactly the same words on their cover, ‘The world over a barrel.’ That was unprecedented. The revolution in Iran had created oil supply scarcity and prices had gone through the roof. Nigeria was making a fortune from crude oil sales. When I arrived Lagos, I found a country inside a barrel. It was hard to navigate the neighbourhoods of Lagos because there were parties

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The fight was for democracy so that the people could find their voice and government would be for the people and by the people

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everywhere and the more you could cordon off your street and use it for the party the more successful your show of wealth was. Lagos had become the biggest dustbin I had ever seen, as cans of Beer imported from just about everywhere, were littered everywhere with some being tossed out of moving buses. The chaos and looming challenge of misuse of the windfall from oil was setting Nigeria up for a structural crisis. I tried to raise my voice, but it obviously was not loud enough. It was not long before the chicken came home to roost. The importance of my voice being loud and helping others find their voice became a major part of the cross I cut myself to carry. When in 1984 Nigerians began to get on the queue to buy basics like sugar, milk, vegetable oil and similar consumer items which came to be referred to essential commodities, I could have celebrated being vindicated but I was concerned that we had learnt nothing. I would raise my voice again and again in the coming years and became a target of state terror, surviving two assassination attempts. The fight was for democracy so that the people could find their voice and government would be for the people and by the people. As it has turned out, the democracy we fought for has set life up to imitate art as it mirrored Fela Anikulapo Kuti’s mockery of the experience as ‘Dem-all-crazy.’ Across the country, Governors were raping their States and then deciding who will continue the rape, often on their behalf, when term limits stop their direct romp. What we must not shy away from admitting is that most Nigerian political parties are in the firm grip of criminal elements who see access to public office either as a business from which to reap big returns, a path to totally dominate others (the new fascism), or as an arena of transactions for fully personal trading objectives. The ‘common good’ features very little in their thinking except as rationalisation of purpose even when goal displacement is so palpable. That Nigerian civil society and media are yet to fully comprehend the depths to which their politics have fallen and to fashion a fight back to rescue the Nigerian people is probably the big question for now in Nigeria. Part of the personal validation of my decision to respond to the call to engage is to find an optimal track to wake the Nigerian people up to what they are confronted with. It is a task I feel some responsibility for because of the sacrifices I have made in the quest for the democracy that has already been rendered meaningless in Nigeria. That sense of responsibility has come with a price, the price comes largely from personal danger I have faced, the exclusion from rightful economic opportunity, and the actual cost of propping up institutions of democracy from out of my own pocket. None does more to highlight that than the history of Patito’s Gang. Patito’s Gang and the Democratic Ethic Within six months of the return to democracy in 1999 it was clear that quite a few things were not go-

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I began to think of a platform that could grow the marketplace with ideas and enable the speaking of constructive truth to those in power

ing right. The President was hardly in town and many challenges were showing up. Many murmured that President Obasanjo was chasing the Nobel Peace Prize rather than running the country. The economy seemed to be tottering even though oil prices were rising and bringing much comfort to Nigeria’s foreign reserves. I got a bit of a testimonial on this when the Chief of Staff to the President reached out to me with an invitation to a private dinner with President Obasanjo. I was not sure what I owed for the invitation, but I showed up. True to the criticism of a travelling president chasing the peace prize, he came back that same evening from a foreign trip. The dinner turned out not to be as private as I thought. Also, present were the Vice President Atiku Abubakar, Secretary to the Government of the Federation, Ufot Ekaette, Finance Minister, Adamu Ciroma, Chief Economic Adviser, Philip Asiodu, Professors Dotun Phillips and Ibrahim Ayagi. When the President turned from small talk to the purpose of the meeting, he said the government was under fire for having no economic strategy. He turned to me and wondered why that should be so when he and I and a small team spent a lot of time working on policy when he was a candidate. I was taken aback because the feedback I had received from those close to him was that he constantly complained that I was a member of the Alliance for Democracy (AD) and was working with Lagos State Governor Bola Tinubu. I got that from Waziri Mohammed and Oby Ezekwesili. I had told Oby that I was not a member of AD and that I had a citizen’s duty to assist any governor that asked for my input into their work. I had assumed that perhaps those policy prescriptions from our policy team in daily meetings with candidate Obasanjo in December of 1998 had been discarded. President Obasanjo finished the meeting with the request that I join the Chief Economic Adviser and the two professors to produce an

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economic road map and capture it in a document similar to Muammar Gaddafi’s Green book. I went away from that night’s meeting convinced that there was a problem with policy implementation and the practice of democracy in general. I began to think of a platform that could grow the marketplace with ideas and enable the speaking of constructive truth to those in power. Patito’s Gang was designed for social engineering. It aimed to create a new tribe. Nigeria was in the middle of many Tribal wars. The tribes that were not able to find cooperation to sustain the tribe within a frame of values often retreated to the tribe of language, kinship, affiliation, and geography. The primordial tribe Those were the oldest tribes, the ethnic tribes. But new tribes had surely crystalized, even if they generally had a crisis of identity. As I quietly processed the nature of the group gathered for dinner at the Presidential residence, I could not but keep probing into the interests assembled and how or why those interests could serve the common good of Nigerians. The tribe gathered there was the tribe of capture, state capture; and their agents incorporated to ensure enough acceptance of the authority of the kingpins of capture, for the legitimacy to continue to play the self-claimed Guardian Class role. The Guardian Class had grown from among a group of young military men into whose laps fell power during the Civil War of 1967-1970. I have dubbed them the class of 1966 because that was the year of their break in to share in the legal plunder that the nascent Nigerian State was, six years after Independence from Britain in 1966. The group I was having dinner with at the instance of President Obasanjo did not share ethnic linkages. They neither spoke a common language, except the legacy of the English language left by the British, nor did the geography of their origination fit the North, South, East or West tag. But they were a tribe; a tribe that professed the indivisibility of “One Nigeria” and concentration of power in the central Federal Government, the deployment of discretion for the prosperity of themselves and their friends. But they were people smart enough to understand legitimacy. So, they were anxious the economy at the time was perceived as not working for the people. That dinner seemed to me scurrying for legitimating attributes. A buoyant economy was important for retaining legitimacy. True love of the people would require more. Over dinner was the tribe gathering to review an existential threat a wobbly oil economy not producing growth in 1999. I could see the essential difference between the politicians of 1959 and the politicians of 1999. The 40 years may not be wilderness years as such, but in that generation, much had changed, especially with the ascendancy of state capture and the class of 1966 as the class of capture. Continues on Thursday

Wednesday 10 April 2019

BUSINESS DAY

XECUTIVE MOTORING

Massilia Motors unveils the new Mitsubishi L200 Pickup Pg 33

Ranger rewrites rulebook in trend-setting technologies …Scales litmus test in S/Africa, raises bar in LCV segment MIKE OCHONMA In George, South Africa

ord is raising the bar further in the ultra-competitive light commercial vehicle (LCV) segment with the launch and test-drive of the New Ranger for 2019 in George, South Africa. The historic event which had BusinessDay motoring editor in attendance also attracted 18 other motoring journalists from the SubSahara Africa and South Africa. Featuring an extensive range of mechanical, technological, feature and comfort upgrades, the new line-up will make the Ranger an even more compelling choice amongst workhorse and leisureoriented pick-up customers. For every new model under its portfolio that is launched, Coscharis Motors, franchisees of the Ford brand in the country in line with its policy collaborates with Ford Motors to sponsor selected motoring reporters for media test drives of latest models in markets where it has its partners across the globe. This year, Ford Motors Company South Africa, invited journalists from Kenya, Mozambique, Tanzania, Botswana, Malawi, Zambia, Senegal, Ghana, Ivory Coast, Madagascar and Zimbabwe including South African automotive journalists to come and hand a personal driving feel of the Pick up vehicle that comes in many derivatives. According to Doreen Mashinini, general manager in charge of marketing at Ford Motor Company Sub-Saharan Africa (SSA) region, “The current Ranger has been a fantastic success story for Ford in Sub-Saharan Africa, and is the leading LCV export to markets in Europe, the Middle East and the rest of Africa,” says. “The New Ranger introduces fresh exterior and interior design cues that build on its ‘tough truck’ image, complemented by the adoption of new technologies that further bolster the Ranger’s established reputation for supreme safety, convenience and comfort,” she adds. The model line-up has been revised for New Ranger, with the new XLS series slotting in above the entry-level Base and XL versions. The XLS offers superb value for money along with an impressive list of standard features. The Ranger Limited makes way for an enhanced XLT specification in SSA, and the range is topped off as usual with the exclusive and luxuriously appointed Ranger Wildtrak. Built tough with very captivating modern design and continuing on the Ranger’s proven ‘Built Ford Tough’ heritage, the assertive styling of the 2019 model delivers

an even more powerful presence on the road. The latest model offers the opportunity to provide greater differentiation in the series. Accordingly, the front-end design of the popular XLT series has been updated to have a more horizontal feel, with the centre grille bar now divided into two, giving it a more precise and wellcrafted look. The lower bumper also presents a sense of solidity and strength through the centre beam that runs into the outer fog lamp areas. With a wider lower grille the new bumper complements and harmonises well with new front end. The same design execution has been applied to XL and XLS

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Featuring an extensive range of mechanical, technological, feature and comfort upgrades, the new line-up will make the Ranger an even more compelling choice amongst workhorse and leisure-oriented pickup customers

variants. The very popular Wildtrak, which now comes with HID headlamps and LED daytime running lights, has been intentionally kept more familiar with the vertical aspect ratio grille that also incorporates the ‘nostrils’ in its design. Along with a split centre bar and additional venting holes for cooling, the new design is more aggressive in its application but remains true to the Wildtrak DNA. The Wildtrak lower bumper surface is more chiselled than before, again reinforcing its ‘tough truck’ image with a wider lower grille and silver accented skid plate. The larger, more aggressive fog lamp bezels are pushed further outboard, again accentuating width and incorporating LED fog lamps that give a greater level of distinction for the Wildtrak. A striking new Saber Orange exterior colour makes its debut on the Wildtrak, matched to a unique dark, titanium-effect finish for the trapezoidal grille and distinctive outboard air intakes. The same titanium-effect accent colour extends to the side mirrors, door handles, side air vents and load-bed rails for a bold and sporty appearance. The comfortable and car-like interior is now delivered with an Ebony Black environment, and the painted surfaces are given greater shine and depth. The Wildtrak’s updated interior delivers a more upscale, sporting appeal featuring dark-satin chrome elements, a gloss-finish decorative spear and upscale partial-leather seats embossed with Wildtrak graphics. The seats have also been redesigned to be both sportier and more luxurious, incorporating additional leather content, ‘Mettle’ carbonlike weave accents and ‘Saber Orange’ stitching.

The powerful, tried and trusted five-cylinder 3.2-litre Duratorq TDCi engine continues to lead the range, delivering impressive performance and outstanding load-lugging abilities with a peak power of 147kW matched to 470Nm of torque. Its reliable and efficient 2.2-litre TDCi engine remains a key part of the New Ranger line-up across the single cab, supercab and double cab models. It continues in the two existing levels: 88kW/285Nm with a five-speed manual gearbox for the base-spec models, and 118kW/385Nm for the more upmarket versions, available with a choice of six-speed manual and automatic transmissions on selected derivatives The dependable 2.5-litre fourcylinder Duratec petrol engine is also available in selected models, providing 122kW of power and 225Nm of torque, combined with a five-speed manual gearbox. As evident in its improved ride refinement and comfort during the intensive all-day test drive in the city of George, South Africa, the Ranger is already highly regarded for its impressive ride and handling characteristics, the 2019 model range has benefitted from further improvements that result in significantly improved ride quality more akin to that of a sport utility vehicle (SUV) than a pick-up. A key change has been the relocation of the front stabiliser, or anti-roll bar, from the tight confines in front of the fully independent suspension to a new position behind the axle. This new set-up optimises the design and performance of the stabiliser bar, resulting in improved roll control – which, in turn, enables a decrease in front spring rates, thereby giving the Ranger better ride performance and comfort.

Compared to the outgoing Ranger line-up which used a single front damper setting across the range, four damper rates have been developed for the New Ranger. These settings have been tuned according to the front kerb weights of the individual models based on the body style, engine and drivetrain (manual vs automatic, 4x2 vs 4x4). At the same time, the standard tyre pressure has been reduced from 240 to 210 kPa. Combined, these refinements provide a plusher ride over rough surfaces by better isolating the occupants from the road inputs. They also improve vehicle handling over corrugated surfaces, give better steering precision and control, and benefit the vehicle posture and ride performance when laden. The exceptional towing capacity of up to 3,500kg remains unchanged, as do the impressive load capacity of up to 1 199kg (on selected SuperCab models), the 800mm water wading depth and 230mm ground clearance. Apart from the leading-edge technology and safety, the new Ranger continues to rewrite the rulebook by introducing trendsetting technologies to the pick-up segment, and the New Ranger is no exception. The innovative Semi-Automatic Parallel Park Assist (SAPPA) currently available on Ford’s Everest SUV is now standard on the Ranger Wildtrak. The system uses ultrasonic sensors on the front and rear bumpers that search for and identify parking spaces that are big enough to parallel park the vehicle. A combination of the Ranger’s electric power-assisted steering (EPAS) and sensors are used to steer the vehicle safely and perfectly into place, while the driver simply operates the gears, accelerator and brake.

Wednesday 10 April 2019

BUSINESS DAY

EXECUTIVEMOTORING

Massilia Motors unveils the new Mitsubishi L200 Pickup MIKE OCHONMA In George, South Africa

n its bid to continuously satisfy its teeming customers in Nigeria, Massilia Motors, sole distributor of Mitsubishi vehicles in Nigeria and a joint venture between CFAO and Chanrai Group, has revealed the all new Mitsubishi L200 Pickup. Unveiled in an impressive event which held at the Landmark beach, Victoria Island, Lagos, the award winning pickup was launched by top officials of Massilia Motors led by Thomas Pelletier, the managing director and CFAO Country Delegate. The defining moment of the event was when the curtain LED screens slid open and the L200 pick-up emerged on the podium to the delight of customers, celebrities and automotive journalists. Guests at the event experienced the immense benefits of the L200 during a test drive session anchored by MC Gideon Okeke and music provided by popular Nigerian disc jockey, DJ Xclusive. Addressing the enthusiastic gathering, the company’s chief executive welcomed everyone to the first automotive beach party launch. He also stated: ‘’Massilia Motors started business three years ago and so far, it has been a successful story with the Mitsubishi L200 as a major contributor. The model is very important to us because it represents 80 per cent of our sales, and I am optimistic that customers will like the new generation L200”. The

Mitsubishi L200 pickup gained popularity through its constant evolution in the last 40 years thanks to its driving dynamics, running costs, standard kit and attractive prices. Thomas Pelletier who maintained ‘’In terms of value for money, we are the best because we do not compromise in quality delivery and our Mitsubishi

cars have been tried and tested over the years”. Our after-sales support is backed by qualified technicians who have been adequately trained by the Japanese manufacturer. On his part, Massilia Motors general manager for Sales, Tunji Itiola explained that the Mitsubishi L200 is the best-selling model in the brand’s line up and the

L200’s market share significantly increased in 2018. According to him, the enhanced rugged exterior features and advanced safety features are prominent inclusions in the new vehicle which comes in three variants: single/double cabins 4x2 and double cabin 4x4 powered by 2.4 litre engine. The new pickup is already available in Massilia showrooms

and dealers nationwide. The L200 is used as a utility vehicle in a wide variety of applications such as construction sites, Fast Moving Consumer Goods distribution, oil field sites, among others. Aside the new Pick-up truck, the company also distributes the legendary Pajero, Pajero Sport, Outlander, Eclipse Cross and ASX.

Travelport trains travel agents on efficient service, revenue generation SIKIRAT SHEHU, Ilorin

ravelport, a Global Distribution System (GDS) responsible for service provider to air travel agencies has sensitized members of National Association of Nigeria Travel Agencies (NANTA) Kwara/Ogbomosho branch in Ilorin, the Kwara State capital. The program, aimed at enhancing efficient service delivery to clients and as well boost their revenue generation through introducing additional services. Chidera Nnozie, assistant manager, Product and Strategy Planning Travelport Nigeria, who spoke to journalists stated that “we are a GDS company that provides computer reservation system for travel agents to enable them book travels like airlines, hotels, rails and car for any destination of their choices. “Most times travellers do not understand that there is software agents use to get them tickets to anywhere in the world and that software

Femi Aderemi, MD Temple Group Limited, Segun Obayendo, Segun Ogunnaike and Uwe Hassenkamp at the Temple Group Management retreat to chart a framework for sustainable development in computerised vehicle inspection for the country. is called reservation system. And we are travelport here in Nigeria has computer reservation system called the Galileo.” Nnozie explained that the sensitization programme was targeted at exposing the travel agents of the benefit of keying into the Galileo reservation system and other

products that can add value and increase their revenue derivation so that they can become better travel consultants. “We are here to empower them to become better professionals to meet the growing need in a fast space technological world to move with other travel agencies. They

can be better described as the men behind the scene to provide service to agencies to better the transport sectors. ,” He said The assistant manager stressed that another vital reason for partnering NANTA is to ensure drastic reduction of fraudulent activities in the sector. He advised travellers

to always patronise association as the only recognized travel agencies in the country to avoid quacks and fraud in the country. On his part, Opeyemi Olufunsho, the Account Manager of Travelport, submitted that Ilorin environment is still a virgin market with a lot of potential in terms of travel business. “We decided to come here to grow the business for the agents and ours as well. “There are lots of travel agencies here but usually go directly to airlines to get tickets for their clients but we are offering them a very smart way by carry out a lot of transactions operating from their offices. Furthermore, James Abiodun Olawale, the coordinator of NANTA Kwara/Ogbomosho Chapter, James lauded the Travelport for the training through exposing them to the Galileo system. He appreciated their western zone executives for facilitating the training, adding that the training will add value to their businesses.

Wednesday 10 April 2019

BUSINESS DAY

SHIPPING

LOGISTICS

MARITIME e-COMMERCE

Negligence, poor reforms render Nigerian ports’ contribution to GDP insignificant AMAKA ANAGOR-EWUZIE

ollowing the inability of the Federal Government to pay ser ious attention to the development of the nation’s seaports and ensure their full reform, the ports have failed to make an impressive contribution to the nation’s Gross Domestic Product (GDP), analysts say. To them, the contribution of Nigeria’s ports to GDP is not well captured as it was usually lumped into the transport sector’s contribution to GDP, which accounted for 1.8 percent of GDP in 2018, making the ports’ contribution very small. However, statistics show that revenue from the ports is about the third- highest, just behind oil and revenue generated by the Federal Inland Revenue Service (FIRS). For instance, the Nigerian Ports Authority (NPA) declared revenue of N300 billion in 2017 as against N162.2 billion in 2016, while the Nigeria Customs Service (NCS), declared revenue of over N1 trillion in 2018. Also, reports say that ports enable the world, countries, corporates and individuals to make a lot of money. The port facilitates the movement of goods from where they are produced to where they are needed, and it is a wealth creator as well as an agent of economic growth and development. “Government is building new ports in Lekki and Badagry but the old ports are not being upgraded to international standard. The Apapa ports have become a dungeon of sort for importers’ and exporters’ nightmare,” Ray Echebiri, veteran media

practitioner, told newsmen in Lagos recently. Speaking on the presentation titled, “Why the Ports Matter and Why Journalists Should Pay Attention,” Echebiri, who pointed out that Singaporean ports account for 7 percent of the GDP, said government’s neglect had created inefficient and uncompetitive ports in Nigeria. This, he said, was evident in the fact that port infrastructure including port access roads are fast deteriorating. According to him, Nigeria does not have any development plan for the ports as various administrations have not paid enough attention to developing them. E x p l a i n i n g f u r t h e r, Echebiri said the President Olusegun Obasanjo administration’s National Economic Empowerment and Development Strategy did not give the port a mention. “President Goodluck

Jonathan’s Priority Project Policies and Programme, which listed 41 priority projects for the transport system, did not list any single port project among the priority list. It only had Key Performance Indicator (KPI) for the port subsector, focused on linking all the seaports and ICDs to rail and roads,” Echebiri said. “The Buhari’s Economic Recovery and Growth Plan (ERGP) only mentioned the ports in passing as the plan does not have any strategy for the development of the nation’s seaports,” he added. He however noted that the ERGP recognised the fact that the nation’s transport infrastructure stock including the ports is inadequate for the size of the economy. “The ERGP also noted that the nation’s transport infrastructure lags behind peers.” In a different forum,

Frank Ojadi, a university don, bemoaned the noncapturing of the maritime sector in the GDP, describing it as worrisome and disturbing. In his lecture in Lagos, the Lagos Business School (LBS) lecturer described the Nigerian maritime sector as weak and unlikely to compete favourably with contemporaries around the world. According to him, “you cannot pin down what the Nigerian maritime industry contributes to the GDP, and this is because 80 to 90 percent of the vessels that come into the country are foreign-owned. “The foreign vessel owners repatriate the profit accruing from the shipping business in Nigeria to their various countries, thereby making it difficult for Nigeria to retain the money in the economy,” Ojadi added.

NSC wins World Bank 2019 Doing Business ranking award

n recognition of the immense contribution of the Nigerian Shippers’ Council (NSC) to driving the Presidential Enabling Business Environment Council (PEBEC)’s overall reform initiatives in 2018, the Council was adjudged winner of the “World Bank 2019 Doing Business Ranking Award”. Also, Adaora Nwonu, the NSC’s Reform Champion at PEBEC, received a special recognition award as the

Reform Champion of the Nigerian Shippers’ Council on the World Bank 2019 Doing Business Index. The awards were given during the second annual PEBEC Awards, which took place at the State House and was hosted by Vice President Yemi Osinbajo, the PEBEC chair. Jumoke Oduwole, senior special assistant to the President on Industry, Trade & Investment / PEBEC secretary, said the PEBEC Awards

was aimed at acknowledging and appreciating the efforts of specific arms of government, sub-national governments, ministries, departments and agencies (MDAs) of the Federal Government, as well as the private sector stakeholders, who contributed significantly to the ease of doing business intervention of this administration. According to her, the collaborative efforts and continuous support of these

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stakeholders have significantly contributed towards improving Nigeria’s business climate and its overall competitiveness in line with strategic objective of the Economic Recovery & Growth Plan (ERGP). While presenting the Award to Hassan Bello, executive secretary/CEO of the NSC, Vice President Yemi Osinbajo congratulated the Council and urged the awardees to keep up the excellent work.

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Three reasons Presidency declined assent to Transport Commission Bill - Bello

he National Transport Commission (NTC) Bill, which was worked on by the National Assembly, was sent back by the President Muhammadu Buhari on three grounds including the removal of safety issues because the bill is purely economic regulations. Secondly, the President also said that the royalty to be paid to the commission as source of funds which was pegged at 10 percent should be reduced to five percent. Thirdly, Buhari also asked the National Assembly to look at the freight stabilisation fee, which was put at three percent to be reduced to one percent just like it is in the Nigerian Shippers Council (NSC) Act. Speaking to BusinessDay in an interview, Hassan Bello, executive secretary of the NSC, said that all the grey areas in the bill have been

weeded off, and the bill would soon be transmuted to Mr President again for signing. “Actually, the comments made by Rotimi Amaechi, Minster of transportation, and Mr President have been noted in the bill and what we have now is a clean bill. And we have to commend the National Assembly’s interest in the NTC,” Bello said. According to him, NTC is an industry bill and not Shippers Council Bill. “It is not that Nigerian Shippers Council is going to transmute into NTC. No, Shippers Council will be the nucleus where other stakeholders like the Nigerian Ports Authority (NPA), Aviation, and Railway will come to constitute the National Transport Commission. “We hope that Mr President will assent to the bill after he is satisfied with all the corrections that have been made,” Bello prayed.

IMAN special task force promises to generate massive revenue for govt … Implores NASS to pass its commission bill

he Importers Association of Nigeria (IMAN) special taskforce on Monday said it has capacity to help the Federal Government generate over N6 trillion annually if the bill for National Commission for Prohibition of Imported Items on Small, Light Weapons and other Related Offences, presently in the National Assembly is passed into law and assented by President Muhammadu Buhari. IMAN, a non-governmental organisation, initiated the taskforce to assist government agencies in curtailing illegal importation into Nigeria. Speaking in Lagos on Monday, Osita Okereke, director general of the National Task Force (NATFORCE) said the bill if signed into law would create jobs for teeming Nigerian youths and also help secure the country from importation of small and light arms. According to him, the commission would not rely on government for funds but would rather help government generate revenue and also block loopholes in the system. @Businessdayng

“We will not be a liability to government because we will generate money more than the Nigeria Customs Service (NCS). We have to send a proposal to the President on how we intend to generate N6 trillion a year for the government,” he said. Okereke, who doubles as the president of the Importers Association of Nigeria (IMAN), was optimistic that the association would soon be confirmed as a commission. “Before the end of the month, IMAN will be a commission that will protect genuine importers. He said the bill, which had been passed by the current House of Representatives, is still awaiting the Senate passage. “The bill has suffered for over seven years in the National Assembly because some people do not want it to come to being. “O u r m i s s i o n i s t o checkmate importers bringing in prohibited items and protect genuine importers. We will also safeguard Nigeria from criminal activities. We are only going to fight against people, who fight against Nigeria,” Okereke assured.

Wednesday 10 April 2019

BUSINESS DAY

Shipping

Logistics

Maritime e-Commerce

Here are top investments, business opportunities in Nigeria’s maritime sector amaka Anagor-Ewuzie

ver the years, maritime transportation has made the movement of cargoes of all type and volume possible, especially by engendering economies of scale through massive cargo transportation, which has positively impacted global logistics value chain. Statistics show that about 90 percent of world merchandise/trade by volume is carried by seas while over 60 percent of all imports to West Africa are Nigeria-bound. Therefore, a recent report by the Nigerian Maritime Administration and Safety Agency (NIMASA), tagged Nigerian Maritime Industry Forecast 2019-2020, which described the port as an enabler of economic growth and prosperity, listed the following business opportunities for potential investors: Ship financing: Shipping is capital-intensive as critical maritime assets are usually long-term assets that have longer life span and gestation periods. This is why Nigeria’s Maritime Industry Forecast states that government intervention in the sector is essential to source funding required to unlock the acquisition of these maritime assets. However, prospective investors should seek innovative financing models, while new sources of funding should be explored away from existing traditional models. “Effectiveness of seeking and securing financing will, however, only be achieved with adequate evaluation and provisioning for risks, appropriate leverage levels and use of financing struc-

Vice President Yemi Osinbajo (m) presenting the World Bank 2019 Doing Business Ranking Award to Hassan Bello (l), ES/CEO of the Nigerian Shippers Council (NSC) and Adaora Nwaonu (r) of the NSC during the PEBEC second annual awards in Abuja recently.

tures most suitable to a maritime asset at hand. According to the forecast, capital market remains critical for the enhancement as well as the promotion of shipping business growth and creation of corporate value. Ship building and ship repairs: The maritime industry in Nigeria holds a lot of promise for economic development, one of which is the gradual migration of Nigeria’s oil and gas exploration towards deep offshore, off the coast and in the coastal waters. This would increase the demand for more offshore support vessels including the FPSOs, tankers and platforms. The NIMASA forecast revealed that a capacity audit of ship building and ship repair yards in Nigeria has been commissioned as this subsector remains under-developed and has

potentials of reducing capital flight, if vessels are drydocked in country. There are huge investm e nt o p p o r t u n i t i e s i n building of vessels to meet national and Cabotage requirement such as Barges, Tugboats, Crew Boat, Fishing Vessels, Merchant Ships, Tankers, House Boat, Offshore Support Vessels, Crew/Supply Vessel, SelfPropelled Barge, Supply Vessel, Patrol Boat, Dredgers, Multipurpose Vessel, A.H. TUG, Jack up Barge, Muster Barge, Floating vessel, Lift Boat and Patrol Vessel. Investments in the form of funding, technology and human capacity building are some opportunities to be explored by both local and international investors. “Dry Docking remains a critical area of investment with over 3,500 vessels operating in Nigerian waters and largely been dry-docked outside the shores. Nigeria

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has quite a few ship yards in operation but the capacity remains at an all-time low,” the forecast stated. Marine insurance: The role of insurance in the growth and development of the economy cannot be over emphasised. This is because insurance has the ability to mitigate the impact of risk and positively correlates with growth as investors and entrepreneurs cover their exposures and incur more risk abilities. “An overview of the insurance industry shows that motor, general accident and marine insurance contributes positively to the development of the insurance market in Nigeria by their positive coefficients. “Hence, marine insurance will continue to exert significant influence on the insurance business in Nigeria. For marine insurance to thrive, underwriters must adopt a realistic approach

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to the enormous build-up of exposures in the maritime trade,” the forecast advised. “Nigeria’s marine subsector is one of the most under-developed compared to peers and a number of critical factors that have the potential to drive growth in the area such as technological disruption, mergers and acquisition, recapitalisation to underwrite big transactions in the industry have been identified as game changers for investors. Also, ship owners are called upon to look into establishing a Protection and Indemnity Club (P&I). For intending investors, huge opportunities abound in the subsector. Research and development: The forecast stated that maritime industry is yet to leapfrog in the use of technology because the sector is still very much humandriven. A number of innovation and new technology approaches are taking place globally and even locally in the oil and gas sector. Thus, investment opportunities exist in setting up training and research centres to scale up activities in the maritime sector. Maritime Law and Law of the Sea experts: Law relating to activities at sea is based primarily on Maritime Law and the Law of the Sea. Maritime law is the law of things, activities and events related with the sea. Specifically, it deals with matters concerning sea going personnel, ships and other seagoing vessels, charter contracts and ocean transport, ship ownership and sales, maritime safety incidents at sea and marine insurance. “The law of the sea on

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the other hand is the law of maritime space. It defines its zones as well as the rights and obligations of States in these zones, especially in regard to environmental protection and law and order at sea. These maritime law experts are there to inform and advice, act on behalf of clients, draft legal documents where necessary. Manpower and human capacity development: The availability of manpower is crucial to development of Nigeria’s maritime and shipping sector. Large opportunities exist in establishment, upgrading of facilities and management of maritime institutions. Nigeria as a country is making heavy investments in human capacity development in the maritime industry which implies an increase in local participation in shipping, especially shipping operations. The forecast has it that there are on-going discussions and plans driven by government for Nigeria to re-float a national shipping fleet. “The implication of this development is that its crystallisation will see Nigerian flagged vessels trading with other countries of the world. “As expected, this would come with the benefit of employment generation, sea-time for cadets and competitive cost of doing business. We need to train our the young generation to develop cross- disciplinary skills required in today’s world by providing professional development courses focusing on advanced maritime technologies, cyber security, maritime and port management, supply chain management, etc.

Wednesay 10 April 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 09 April 2019

Top Gainers/Losers as at Tuesday 09 April 2019 LOSERS

GAINERS Company

Closing

Change

N20

N19.05

-0.95

DEALS (Numbers)

ETI

N11.25

N10.5

-0.75

0.2

DANGCEM

N185.5

N185

-0.5

VOLUME (Numbers)

N5.7

0.1

DANGSUGAR

N13.75

N13.45

-0.3

VALUE (N billion)

N2.38

0.08

NEM

N2.33

N2.1

-0.23

Closing

Change

N43.2

N46

2.8

N31.55

N34

2.45

N60

N60.2

ACCESS

N5.6

MAYBAKER

N2.3

STANBIC GUARANTY

Company

ASI (Points)

Opening

NASCON

MARKET CAP (N Trn)

29,149.46 3,634.00 374,026,184.00 3.057 10.948

First Aluminum to delist from NSE after 27 years …says not benefiting from being listed Stories by Iheanyi Nwachukwu

irst Aluminum Plc has explained to shareholders its proposed voluntary de-listing from the main board of the Nigerian Stock Exchange (the voluntary delisting) after 27 years of being a listed company. First Aluminum Nigeria Plc is one of the first Nigerian listed companies. The company commenced operation with the production of Aluminum sheets. The company has since introduced Aluminum roofing in Nigeria as well as marketing Aluminum products needed in the engineering industry as well as for packaging. In 1991, First Aluminum Plc took its present name, First Aluminum Nigeria Plc and was listed in the daily official list of the Nigerian Stock Exchange in 1992. The company said that over the last 7 years, there has been little or no trading activity on the shares held by the minority shareholders. “The purpose for listing First Aluminum was to raise capital for the Company as well as provide liquidity to its shareholders. The current illiquidity nature of the market has rendered this primary corporate objective unattainable for First Aluminum. “Over the last 12 months,

there has been a significant fall in average daily trading volumes to 2,918 units between July 2017 – June 2018 and further dip to 2,816 units (July 2018 - Dec 2018). Neither the Company nor any shareholder is benefiting from the continued listing on the NSE”, First Aluminum Plc said. “The share price was stuck at 50 kobo for about six years between June 2011 and June 2017, and thereafter experienced further diminution, both in share price and trading volumes. Over the last eighteen (18) months daily average volume ranged between 2,815 to roughly 2,918

units during the period July 2017 to December 2018”, the notice to shareholders reads. A cash consideration of N0.55 per share (“Exit Consideration”), being the highest amount at which the Shares of the Company sold on the floor of the Exchange within 6 months prior to the approval of the Voluntary Delisting by the general meeting of the Company in accordance with the Rules of the Exchange - will be paid to every Exiting shareholder in exchange for their First Aluminum Nigeria Plc shares. “Where a shareholder desires to remain a shareholder of First Aluminum Nigeria

Plc such shareholder shall be free to do so and there is no obligation to trade their shares. The shareholders of First Aluminum Nigeria Plc may elect to accept the Exit Consideration between May 10, 2019 and August 9, 2019. “Shareholders are not benefiting from the continued listing as they are not getting exit opportunities and their investments have been locked up, thereby finding it difficult to dispose of their shareholding. Neither the company nor its shareholders have benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value.

L-R: Bashir Ali, head of department Mathematics, Nigerian Defence Academy, Hi Uwadia, team leader, students of NDA, and Bassey Achibong, divisional head Financial Inclusion, Securities and Exchange Commission during the Educational visit of the Students of Nigerian Defence Academy to Securities and Exchange Commission in Abuja.

Nigerian bourse moderates losses

he record level of losses on the Nigerian Stock Exchange (NSE) were tempered at the close of trading on Tuesday April 9 as the All Share Index (ASI) decline marginally by 0.04percent. The stock market has decreased by 1.58percent week-to-date (wtd) and 7.26 percent year-to-date (YtD). The NSE ASI printed at 29,149.46 points from preceding day high of 29,162.24 points. Likewise, the value of listed stocks decreased slightly from N10.953trillion to N10.948trillion, represent-

ing N5billion loss. In 3,634 deals, stock investors exchanged 374,026,184 units valued at N3.057billion. Sterling Bank Plc, Chams Plc, FBN Holdings Plc, UBA Plc and GTBank Plc were actively traded stocks on Tuesday. “There was an early session dip in the index, however, a spike in STANBIC followed, helping the ASI to a mild recovery. Market activity slowed as the daily volume traded and turnover declined 18percent and 42percent respectively”, said Lagos-based analysts at Vetiva. www.businessday.ng

In their April 9 equity note, they stated what will shape the market on Wednesday. “While we do not expect any respite for the Nigerian bourse, we cannot rule out the possibility of investors taking position on beaten down prices across the board. “However, in the event the index sheds points, we anticipate a mild decline as bearish indicators soften (1.5x negative versus 2.3x negative on Monday),” the analysts stated. Nascon led on the losers table after its share price decreased from N20

to N19.05, losing 95kobo or 4.75percent; ETI Plc followed from N11.25 to N10.5, losing 75kobo or 6.67percent; while Dangote Cement Plc was down from N185.5 to N185, losing 50kobo or 0.27percent. Meanwhile, Stanbic IBTC Holdings Plc share price advanced most, from N43.2 to N46, up by N2.8 or 6.48percent, followed by GTBank Plc which rallied from N31.55 to N34, up by N2.45 or 7.77percent; and Nigerian Breweries Plc which increased from N60 to N60.2, adding 20kobo or 0.33percent.

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Global market indicators FTSE 100 Index 7,425.57GBP -26.32-0.35% S&P 500 Index 2,883.15USD -12.62-0.44% Generic 1st ‘DM’ Future 26,191.00USD -143.00-0.54%

Deutsche Boerse AG German Stock Index DAX 11,850.57EUR -112.83-0.94% Nikkei 225 21,802.59JPY +40.94+0.19% Shanghai Stock Exchange Composite Index 3,239.66CNY -5.15-0.16%

NGO nurtures children investors with innovative competition

etermined to nurture future investors, a frontline NonGovernmental Organization (NGO), The I Create Club organises annual entrepreneurship competition among primary schools in Nigeria on innovation and creativity. This year’s competition, in line with the National financial inclusion strategy of the federal government, was supported by Vitafoam Nigeria Plc, a leading manufacturer of rigid foams and allied products. Vitafoam’s Group Product Manager, Rachel Ogolo, explained that the company was driven by creativity, innovation and the urge to give back to the society, at all levels. Ogolo noted Vitafoam’s support for the lofty vision of The I create club was informed by the need to expose our children to the relevance of innovation and creativity as necessary attributes of an entrepreneur. According to her, a good entrepreneur is also a good investor. She explained that the role of mothers as building block of the nation cannot be ignored as they play pivotal roles in the upbringing of children. An expert in financial management and former Chief Executive Officer of Chevron Close Pension Fund Administration, Obafunke Adeyefa who spoke on “balancing your Finances” advised mothers to have streams of income and intentionally cultivate a good savings habits to support their family during a time of emergency. “In order to balance your finances, it presupposes that you have a stream of income. Every woman needs to have a strong income base. This will serves as security for the family against un@Businessdayng

planned event. You need to cultivate the habit of intentionally saving because savings and investment will help you against your later years of unproductivity. Also, you must have projects that you are saving towards and avoid getting into debts”, Adeyefa said. The catch-them -young entrepreneurship competition is also consistent with The I Create Club’s Corporate Social Responsibility (CSR), which places premium on nurturing children investors and entrepreneurs as leaders of tomorrow. The Club hosted an Award Ceremony for the outstanding pupils, on “Letter to Mom” and production of frame at Sheraton Hotels, Lagos, at the weekend. The event was lazed with the celebration of Mother’s Day which focuses on virtues of motherhood. A female panel discussed good parenting, balancing of finances, fashion and how to keep up with good looks and fit as mothers. Addressing the participants at the ceremony, the founder and initiator of The I Create Club, Eniola Afolayan stated that creativity knew no boundary and that was why this year’s child challenge was taken to a different level to focus on what made mother special to a child. The theme for this year is “letter to Mom: Dear Mom. Afolayan explained that the whole idea was to discover children whose write-ups indicated that a bond exists between them and their mothers. She stated further that this brought about the need for the children to undergo a lesson in recycling as they were taught how to transform old cartons to how to frame personalized letters to their mothers.

Wednesday 10 April 2019

BUSINESS DAY

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Wednesday 10 April 2019

BUSINESS DAY

NEWS Cargo backlog piles up at airports... Continued from page 1

embargo on clearing of imported phones at the airports. The Nigeria Customs Service’s Direct Trade Input (DTI) system broke down last week in both Tin-Can Island and Apapa Ports, leaving importers and their agents stranded as they were not able to take delivery of their consignments when due, BusinessDay findings revealed. Consequently, a Customs releasing officer, who had about 100 cleared containers to release in a day, was only able to release about 50 containers due to the interruption in the server for two to three hours per day. At the end of the day, the remaining 50 were carried over into the next day, thereby creating a backlog of uncleared containers in the ports as the number of containers the same officer had to release the next day increased from 100 to 150, without guarantee that everything would be released the next day. The breakdown of the system compounded the woes of importers and exporters who

currently deal with inadequate capacity,infrastructure,redtape and corruption at the ports. Meanwhile,pricesofphones and other mobile devices have gone up by 25.4 percent as dealers told BusinessDay that Customs had since February placed an embargo on clearing of phones at the airports. BusinessDay market survey shows that a Samsung tab, which used to cost between N200,000 and N210,000, now costs between N250,000 and N265,000, representing 25.4 percent increase. “Customs’ server has been down for some time now and it is delaying a lot of containers from being released. It has been fluctuating for a while now. The system is no longer stable as it used to be, but Customs assured us last week that it would be taken care of,” Tony Anakebe, managing director, Gold Link Investment Ltd, a Lagos-based clearing and forwarding company, told BusinessDay in a telephone interview. According to him, import-

ers have paid over N300 million as demurrage and storage charges caused by the delays from the server breakdown. He said the problem lasted for over one week and varied from command to command, meaning that it has occurred in both Tin-Can Island and Apapa Ports at different times. “Formerly, when Customs wants to release cleared containers through its online release procedure, it used to go freely but when the server is down, importers and agents would be stranded and just like when commercial bank’s server is down, the cargo owner would be asked to wait till the server comes up,” he explained. Anakebe, however, said the development now compounds the officers’ workload and piles up demurrage and storage cost for the importers, who must pay the shipping company and terminal operator for not taking delivery of the consignments. Uche Ejesieme, Customs public relations officer, TinCan Island Port Command (TCIP), confirmed to our correspondent that the server breakdown was a general Cus-

toms problem and not peculiar to Tin-Can Island Port alone. “Actually, Customs had a problem late last week and it had to do with the breakdown of the server used by the Direct Trade Input (DTI). But the problem has been ratified because Webb Fontaine, the service provider, moved into action and the problem was ratified early morning on Monday,” Ejesieme said. “Bearing in mind the importance of the server to cargo clearance at ports, the engineers of Webb Fontaine worked round-the-clock to ratify the issue. And as we speak, the system is up and running and no issue has been recorded again since on Monday,” he added. DTI affords shipping companies, importers, exporters and Custom agents (the declarants) the opportunity to submit manifestanddeclaretheirgoods electronically to Customs. Funsho Adekunle, a phone dealer at Computer village, Ikeja, Lagos, told BusinessDay that phone dealers are forced to buy phones from other dealers at very expensive prices because their goods have been

trapped at airports for months. He also disclosed that the price of a Tecno Phantom 8, which used to cost between N120,000 and N125,000, soared by 14.3 percent to N140,000. “The slow clearance of mobile devices by the Customs has lingered since February and if this continues, it may drive many small businesses out of the market,” Adekunle added. A source at the Murtala Muhammed International Airport (MMIA) Customs command, who craved anonymity, told BusinessDay that the delay in clearing mobile devices at airportswasduetorecentmigrationfromAutomatedSystemfor Customs Data (ASYCUDA) to the Nigeria Integrated Customs Information System (NICIS II), which requires the importers or agentstoprovideFormMbefore their goods will be cleared. The source said Customs stopped clearing of phones for a while but has resumed since three weeks back. “This is the third week that we started clearing phones. The decision to stop the clearance of mobile devices was as a result of a circular we received from headquarters,

Operators excited as Nigeria’s off-grid... Continued from page 2

pany has a €215 million impact investment facility for renewable energy companies active on- and off-grid in emerging markets. In a sign that the dollar rain is not letting up, Ketil Karlsen, head of the European Union Delegation to Nigeria and ECOWAS, said the EU is committing $165 million to Nigeria’s off-grid sector while pledging the EU will not interfere with regulation and operation of the market in Nigeria. According to Wiebe, Nigeria’s energy gap is a massive social problem with ripple effect in virtually all parts of the economy. “And there is no better way to solve a massive social prob-

lem than one that makes money along the way,” he added. Nigeria’s energy demand is expected to double over the next 10 years and consumers are willing and able to pay for alternate sources of power. This presents massive opportunities but the sector is constrained by poor government policy including an obnoxious solar panel tariff enforced last year by the Nigerian customs. Policy implementation has also proved untidy with government ministries failing to converge around a plan. While the Ministry of Trade and Investment is granting the sector pioneer status, Customs is enforcing new tariffs. This limits the ability of the sector to thrive even with massive potential. A recent research from the Rural Elec-

IMF revises Nigeria’s GDP forecasts... Continued from page 1

shrank. It’s the third time

the IMF has downgraded its outlook in six months. TheIMFalsoprojectsamoderation in Nigerian consumer pricesto11.7percentin2019and 2020 from 12.1 percent in 2018. Gita Gopinath, chief economist and director of the research department at the IMF disclosed this in the latest World Economic Outlook, at the ongoing IMF Spring meet-

ing in Washington DC. “Nigeria growth was reasonablystronglastyearandwethink that things will improve a bit going forward,” Gopinath said at a press briefing in Washington. The IMF said Brexit and softening oil prices are the main risks for Nigeria. “What’s very important is the oil price so to the extent that other global risks transmit into a weakeroilpriceorthereareother developmentsthatareoilmarket specific that would be a factor

Fidelity Bank realigns for next growth... Continued from page 2

College Lagos and holds a Bachelor’s Degree in Accounting. He is a Chartered Accountant and has attended several executive and banking specific programs in leading educational and professional institutions including Harvard, IMD, and Euromoney. He has

20 years of comprehensive experience across various areas of Assurance and Banking including, Operations, Technology, Digital Banking, Strategy, Business Transformation, Finance, Treasury, Mergers and Acquisitions Obaro attended Edo College Benin and holds a Bachwww.businessday.ng

L-R: Oluwole Daniel Adeuyi, conference chair, Nigeria Energy Forum; Ketil Karlsen, EU ambassador to Nigeria and ECOWAS; John Funso-Adebayo, national chairman, Nigeria Institute of Electrical and Electronics Engineers (NIEEE), and Wiebe Boer, CEO, All On, after the opening keynote speeches at the 2019 Nigeria Energy Forum in Lagos.

demanding that all imported phones must show true value of the phones and receipts, to enable us give the appropriate duty,” the source said. “It is not every phone that is imported that goes through the normal clearance process. Because of the issue of Form M, the invoice will be used to come up with a uniform value,” the source added. “In a bid to cut corners, some importers started sending their goods through other airports and when we discovered that, Customs had to block all loopholes until the issues were resolved,” the source further disclosed. A staff at Nigerian Aviation Handling Company plc (NAHCO Aviance), who does not want his name in print, said importers and agents have suffered great loss since the development despite several meetings the firm held with Customs in a bid to resolve the issue. The source said the development has lingered for some months and has affected clearance of cargo at various airports, especially airports in Lagos, Abuja, Kano and Enugu. opportunities left in the world anywhere, in any sector, at this scale,” Wiebe said. Operators say all the government needs to do is consolidate on these gains. “The government has done their part – putting in place the right regulations, securing significant capital from the World Bank, the African Development Bank and others, and supporting private sector actors in important ways. Every major development partner in Nigeria is contributing as well in an increasingly coordinated and collaborative manner,” Wiebe said. Apart from foreign funding, local investors are participating. Sterling Bank is funding new projects. Shell has made substantial capital available through All On, and the Bank of Industry has also provided significant funding.

trification Agency and think tank based abroad suggests

that mini-grids alone are a $10 billion opportunity in Nigeria.

“Taken together, I doubt there are many commercial

weighing on Nigeria,” she said. The IMF chief economist said the monetary policy of Nigeria needs to be tightened further. “For monetary policy, it’s to stay tight for some more time. It has to be well communicated and transparent”. According to her, there has been some convergence on the exchange rate front, there is also much more that needs to be done there and the structural reforms, all of these has to be put in a context of reforms that help boost private sector performance.

Nigeria’s current account balance is expected to shrink to 0.4 percent in 2019 from 2.1 percent in 2018 and to decline further to 0.2 percent in 2020 according to IMF projections. In sub-Saharan Africa, growth is expected to pick up to 3.5 percent in 2019 and 3.7 percent in 2020 (from 3.0 percent in 2018). The projection is 0.3 percentage point and 0.2 percentage point lower for 2019 and 2020, respectively, than in the October 2018 WEO, reflecting downward revisions for Angola and Nigeria

with the softening of oil prices. The world economy will grow 3.3 percent this year, down from the 3.5 percent the IMF had forecast for 2019 in January. “This is a delicate moment” for the global economy, Gopinath, said. A projected pickup in growth next year is precarious, she said. Theglobalvolumeoftradein goods and services will increase 3.4 percent this year, weaker than the 3.8 percent gain in 2018butreducedfromtheIMF’s January estimate of 4 percent,

the fund’s report showed. Globaleconomicgrowthwill recover in the second half of this year,beforeplateauingat3.6percentfromnextyear,accordingto the Washington-based fund. A series of encouraging developments have boosted optimism about the world economy in recentweeks,includingthedecisionoftheFederalReservetoput interest-rate hikes on hold and encouraging data from China’s manufacturing sector and the U.S. job market.

elor’s Degree in Agriculture and an MBA. He has gained exposures from top global educational and professional institutions including Harvard, Wharton and Kelloggs. He has 24 years of banking experience across various areas of Banking including; Corporate Banking, Commercial Banking, SMEs, Consumer Banking, Institutional Banking, Trade Finance

and Operations. Hassan on his part, holds a Bachelor’s Degree in Economics, has two Masters’ Degrees and an MBA. He has attended programs in Harvard, Stanford, Wharton and other leading international educational and professional institutions. He has 25 years of comprehensive experience across various areas of Banking

including; Commercial Banking, Consumer Banking, SMEs, Institutional Banking, Trade Finance, Operations, Treasury and Risk Management. Fidelity Bank is a fullfledged commercial bank operating in Nigeria, with over 4.2 million customers who are serviced across its 240 business offices and various other digital banking channels.

Focused on select niche Corporate Banking sectors as well as Micro Small and Medium Enterprises (MSMEs), Fidelity Bank is rapidly implementing a digital based retail banking strategy which has resulted in an exponential growth in deposits and a corresponding surge in customer enrollment on the bank’s flagship mobile/ internet banking products.

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•Continues online at www.businessday.ng

Wednesday 10 April 2019

BUSINESS DAY

NEWS

Group, Auchi Polytechnic bicker over employment of 250 staff IDRIS UMAR MOMOH/CHURCHILL OKORO, Benin

roup, under the aegis of Equity and Justice (EJ), and the authorities of Federal Polytechnic, Auchi, have disputed over employment of staff. The group in a statement made available to newsmen in Benin City on Monday, said the recruitment of 250 staff by the Rector of the institution was at variance with the enabling laws as regards recruitment into the federal public service. The statement signed by Izuagie John, director of publicity of the group, however, called on the Federal Government to sanction the Rector of the school, Sanusi Jimoh, for employing 250 staff without following due process. John said the Federal Government’s employment enabling law stated that all vacancies should be advertised in at least two newspapers circulating nationally,

giving prospective candidates a minimum of six weeks within which to apply. The Rector had at the March 30, 2019, convocation of the institution said a total of 250 staff had so far been employed to strengthen the staff capacity of the institution to deliver efficiently on its academic and support services. The Rector also said the staff were employed as part of practical steps towards solving the acute manpower shortage besetting the school. According to Rector, the staff have settled into their duties and early indications show that they will be a great asset to this institution. In the statement, the group described as “more worrisome” when the Rector allegedly employed his son and placed him above his qualification and competence.

PSC approves dismissal of 9 senior officers, reduction in rank of 6 others Innocent Odoh, Abuja

he Police Service Commission (PSC) has approved the dismissal of nine senior police officers for gross misconduct, stressing that the dismissal takes immediate effect. The Commission also approved the reduction in rank of another six officers for different cases of misconduct. A statement issued on Tuesday by the head of press and public relations of the PSC, Ikechukwu Ani, said the Commission’s decisions were part of the outcome of its 5th Plenary Meeting held in Abuja on March 26 and 27, 2019, and presided over by its chairman, Musiliu Adeola Smith, a retired Inspector General of Police. The Commission also approved the punishment of severe reprimand for five others and reprimand for another five. One officer, CP. Austin Agbonlahor, was however exonerated. Those dismissed are; Abdul Yahaya Ahmed, a superintendent of police, who will also be prosecuted; Adamu Damji Abare, another SP who also had his pro-

motion from SP to CSP withdrawn before his dismissal. The Commission further requested the IGP to furnish it with information on the punishment awarded to other officers mentioned in the Police Investigation Reports involving SP. Abare with regards to irregularities in the conduct of the 2011 Recruitment Exercise. Others are; DSP Osondu Christian, DSP Samson Ahmidu and DSP Pius Timiala, who will be prosecuted and whose promotion from DSP to SP was withdrawn. Four ASPs were also dismissed for various wrong doings. They are Agatha Usman, Esther Yahaya, Idris Shehu and Usman Hassan Dass. Oluwatoyin Adesope and Mansir Bako were reduced in rank from SP to DSP, while Gbenle Mathew; Tijani Saifullahi; Sadiq Idris and Alice Abbah were reduced from the rank of DSP to ASP. The Commission’s decisions have been conveyed to the IGP for implementation in a letter signed by Nnamdi Maurice Mbaeri, permanent secretary and secretary to the Commission, the statement said.

Police assure safe rescue of Lagos fire service boss, others JOSHUA BASSEY

he Police say it is working with the Lagos State government and other relevant security agencies to secure safe release of the abducted director of the Lagos State Fire Service, Rasaki Musibau, and others. Unknown gunmen abducted Musibau and six others on Saturday night at about 8pm on Iwoye Bridge, along Itoikin-Epe Road. Zubairu Muazu, the state commissioner of Police, who briefed the press after a State Security Council meeting presided by Governor Akinwunmi Ambode, on Tuesday, confirmed that security agencies

were working round the clock to rescue the abductees. Muazu briefed alongside heads of other security formations in Lagos, saying they were optimism ongoing efforts to rescue the kidnapped victims would yield positive outcome. He would, however, not comment on the modus operandi being adopted by the security operatives. “I can confirm that there was incident of kidnapping involving the state director of fire service and all the security agencies in the state are working towards the safe release of the victims. For now, this is all I need to say about the kidnap but we are working to ensure their safe return,” the police commissioner said. www.businessday.ng

L-R: Steve Fahey, managing director, Alpine Metal Tech; Ekpe, general manager, Aerodrome Rescue and Fire Fighting Services; Sabiu Zakari, permanent secretary, ministry of transport; Mohammed Abdulsalam, rector, Nigerian College of Aviation Technology, Zaria, and Hadi Sirika, minister of state aviation, briefing the media shortly after acceptance and pre-shipment inspection and test of a simulator in London.

Senate approves 2019-2021 MTEF/FSP after 155 days … to receive 2019 budget report Thursday OWEDE AGBAJILEKE, Abuja

he Senate on Tuesday finally approved the 20192021 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), after spending 155 days with the Legislature. This comes as the Senate is set to receive the report of the 2019 budget on Thursday. The upper legislative chamber approved all the critical projections in the MTEF/FSP as proposed by the Executive. The MTEF/FSP, an annual, rolling three year-expenditure planning sets out the mediumterm expenditure priorities and provides the basis for the preparation of the annual national budget. The lawmakers retained the

oil output of 2.3 million barrel per day, oil price benchmark of $60 per barrel, an exchange rate of N305/$1, GDP growth rate of 3 percent and inflation growth rate of 9.98 percent. Other Executive proposals for 2019 adopted by the Senate include: proposed expenditure of N8.83 trillion, FGN retained revenue N7.92 trillion, fiscal deficit N1.86 trillion, new borrowings N1.65 trillion, statutory transfers N492.4 billion, debt service N2.14 trillion, Sinking Fund N120 billion, total recurrent (nondebt) N4.72 trillion, personnel costs (MDAs) N2.29 trillion, capital expenditure N2.86 trillion, Special Intervention N500 billion, among others. The Senate adopted the proposals as recommended by the Committee on Finance in its re-

port, presented by its chairman, John Enoh (APC, Cross River). It would be recalled that President Muhammadu Buhari had on November 6, 2018, sent the MTEF/FSP to the National Assembly for approval. Although, Enoh admitted that crude oil production output stood at 2.0 million barrels as of December 2018, he explained that the 2.3 million daily target was achievable “due to the continuous efforts of all stakeholders in checkmating the issues of oil facilities vandalism and other vices associated with such regard.” While recommending an exchange rate of N305/$1, the committee encouraged the Central Bank of Nigeria (CBN) “to continue adopting strategies that will aid the strengthening of the naira

and bridging the gap between the official and parallel market rate of the foreign exchange.” Meanwhile, the Senate has given the Appropriations Committee till Thursday to submit the 2019 budget report. Speaking after the vice chairman of the Appropriations Committee, Sunny Ogbuoji (APC, Ebonyi), disclosed on the floor that only 24 out of 61 sub-committees had submitted their reports, Saraki insisted that the budget report must be presented on Thursday, April 11 ahead of the April 16 approval of the money bill. According to him, the Appropriations panel will be forced to use Executive submissions if the sub-committees fail to submit their reports to the Appropriations Committee by Wednesday.

FG plans additional coaches for Abuja-Kaduna rail corridor Stella Enenche, Abuja

inister of transportation, Rotimi Amaechi, says two additional coaches will be added to the Abuja-Kaduna rail line to take care of the high passenger traffic that is presently being experienced along the corridor. Amaechi, who made this known during a routine inspection of the ongoing Lagos-Ibadan rail project, said the additional couches would be moved from Itakpe-Warri

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rail line to Abuja train service. “I have given directives that they should move two additional coaches from Warri to Abuja because there are not too many passenger on Itakpe-Warri rail service because it heads to nowhere, it stop at Itakpe,” he said. Nigerians will only enjoy the full benefits of Abuja-Kaduna rail service when it is connected to Lokoja-Itakpe corridor, he said. The minister said the LagosIbadan rail project is experiencing delay at kilometre 121 to 134 due to

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high level of under ground water, bad soil and under ground rocks. He said the May Presidential train ride from Lagos to Ibadan might no longer be visible till June. “It is 50-50 because we can actually push them and achieve it. We can if we want to but what is the benefit of getting May when they said we should give them till second week in June. What is the difference? “We need to look at the stations, signalling and telecommunications because if we fin-

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ish the tracks because we have agreed that the tracks will finish between May ending and first week of June, and there is no station not signalling, we will still have to go back to do that,” he said. Commenting on why the government is mounting pressure on the Chinese contractors, he said, “The rush is not because of APC. As a minister, I am Minister of Transport for APC and PDP. It was not about APC, I always knew that we would win.

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now wish

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to be known and addressed as

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as Yekeen Yusuf Olasupo. All

Bende Deborah Kelechi. All for-

as Okekeocha Peter Uchenna. All

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mer documents remain valid.

former documents remain valid.

General Public please take note.

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Wednesday 10 April 2019

BUSINESS DAY

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BUSINESS DAY

Wednesday 10 April 2019

NEWS Mining Association names foreigners as Zamfara bandits, demands operational timetable JOSPEH MAURICE OGU

he Miners Association of Nigeria (MAN) says the majority of illegal miners operating in Zamfara State and parading themselves as miners are mostly foreigners from Burkina Faso, Chad, Niger Republic and Ghana. The association made this known in a statement signed by its national president, Kabir Moh’d Kankara, and made available to newsmen in Abuja, in a reaction to the ban on mining activities in Zamfara by the Federal Government. “Field repor ts have it that these armed-banditsturned-illegal-miners are mostly from neighbouring countries of Burkina Faso, Chad, Niger Republic and even, Ghana,” the statement said. According to Kankara, investigation shows that the bandits operate with high level of sophisticated weapons, which suggest that the bandits have powerful local and foreign personalities as their sponsors. “We therefore expect our security apparatus to beam their searchlights on such people and make no sacred cow of anyone or group that may be found culpable in the commission of these murderous crimes and eco-

nomic sabotage,” he said. According to Kankara, MAN had, at different fora and through various media, echoed the cr ies of their members who hold l e g i t i mat e m i n i ng t i t l e s with huge investments in the affected areas, but had practically been chased out by fully armed bandits. Although the association saw government ’s intervention coming rather late despite several calls on the authorities for intervention so as to save people’s huge legitimate investments in the area, it was, however, a move in the right direction. The association charged government to provide more security for them and their business, saying that the peculiarity of their business demands extra security since mining takes place mostly in the jungle. The statement said the association welcomes any measure aimed at restoring the sanctity of human lives and the security of the investments of their members “who have been legitimately licensed by the government super visor y and regulatory agencies.” While appreciating the intervention of the security agencies, Kankara wondered why the operation did not have timeline in its operational timetable.

Alakija Foundation’s Annual Lecture Series debuts in Lagos

he Dr Funmi Alakija Foundation (DFAF), committed to the growth and consolidation of the Alakija’s vision for health care in Nigeria, sets to launch its annual series in April this year. The annual lecture series is in furtherance of one of its stated objectives to “advocate for improved medical performance in Nigeria’’ and the first lecture, “Understanding the New Age of Genomics,” will take place in Lagos on April 18, 2019. The Foundation says the lecture will address pertinent issues in the fascinating new world of genomics, which is widely acknowledged as the “future of medicine”. Professor Akin Abayomi will deliver the lecture, with Dr Abiodun Eke-Aluko and Dr Olajide Idris as discussants. The DFAF was founded September 18, 2018, to honour and remember the good works of the late Dr Funmi Alakija. Dr Funmi Alakija had dreams of helping mankind and improving hu-

man capital development and wellbeing. Her desire was to see improved primary healthcare services in Nigeria that compete with global standards, and the Foundation has been formed to implement her work and ideas, especially in the area of medical care for the less privileged. In line with that goal, the foundation held its first outreach on Saturday, November 24, 2018 in the disadvantaged Aboki Estate, Lagos, in partnership with The Destiny Trust, Wellahealth, Doctoora and Sanitary Aid Nigeria organisations. The outreach, which was tagged ‘Hands of Care’ aimed to provide free healthcare services to the 200 children living in the Estate. Some of the issues that were identified before the outreach were poor personal hygiene, malaria, parasitic worm infestations (helminthiasis), skin infections, and respiratory tract infections. During the outreach programme, DFAF provided doctors, medications and insecticide-

treated nets to the Aboki community; whilst The Destiny Trust and other partners provided personal hygiene items such as toothpaste, toothbrushes and sanitary pads. “Plans are already in hand for the 2019 outreach program, which will also aim to achieve significant and sustainable medical impact,” the foundation said. In addition to its outreach, DFAF is currently financially supporting one full-time MBA student at the LBS. The student was selected after a rigorous selection process in conjunction with LBS and is a qualified medical doctor who is interested in the field of medical management. The Foundation is able to sponsor MBA students with the help of a generous charitable donation made to the LBS by the thriving medical practice that Dr Funmi Alakija established, Q-Life Family Clinic. The clinic’s decision to make this donation on behalf of DFAF was in recognition of the fact that Dr Alakija was a proud alumna of LBS, having completed the

Advanced Management Program (AMP) program in 2000. Not only did she love the school and its staff, but her husband, Dr Ade Alakija, is, himself, a 1997 graduate of LBS’s first MBA class. DFAF was established and led by an Incorporated Trustee of relatives, friends, and associates. The foundation was set up to fulfill eight key objectives which include, but are not limited to, providing suggestions that enhance medical care across the country; advocating for improved medical performance in Nigeria; directly meeting the medical needs of disadvantaged peoples and groups across Nigeria; providing education, counsel, and mentorship in our schools and communities; and helping to establish and rehabilitate health centres and facilities that ensure the Foundation’s objectives are carried out successfully. Dr Funmi Alakija graduated from the University of Lagos College of Medicine in 1983 and began her working life at the Lagos State Government Health Centre.

Nigeria, Japan sign $14.2m grant to strengthen disease diagnostics SeyiJohn Salau

igeria and Japan on Tu e s d ay i n Ab u ja exchanged notes on a $14.2 million grant aid project that will strengthen the diagnostic capacity of t h e Ni g e r i a n C e n t re f o r Disease Control (NCDC), a statement signed by Akpandem James, special adviser ( Me d i a ) t o t h e Mi n i s t e r Budget and National Planning, Udoma Udo Udoma, has said. According to the statement, the signing ceremony carried out by the Udo Udoma for Nigeria and the A mb a ssa d o r o f Jap a n t o Nigeria, Yukata Kikuta for Japan, was witnessed by Isaac Adewale, a professor and minister of health. “The total cost of the project is put at JPY 1,580,000,00 (One billion five hundred and eighty million Japanese Yen), which is an equivalent of $14.246 m i l l i o n ,” t h e s t a t e m e n t quoted Udoma as saying. Udoma noted that the project is in line with the objectives of the Economic Recovery and Growth Plan (ERGP), which has been

‘investing in our people’ as one of the three broad objectives. “Under the ERGP we are committed to improve the accessibility, affordability and quality of healthcare. We are therefore appreciative of the Japanese Government for supporting this project which is directed at improving healthcare in Nigeria”, he said. While noting that Nigeria, like many other African countries, has had outbreaks of infectious diseases from time to time, the Minister said the Nigerian Government is determined to address emerging public health threats whenever they may occur. He stated, however, “given the limited resources that we have, we therefore appreciate this support given by the Government of Japan to improve and strengthen the work of the NCDC.” He reiterated Nigeria’s commitment to achieving sustainable economic development as set out in the ERGP and was appreciative of the support the country continues to receive from the Japanese government. www.businessday.ng

L-R: Muazu Zubairu, commissioner of police, Lagos State; Olatunji Disu, commander, Rapid Response Squad (RRS), and Akinwunmi Ambode, governor, Lagos State, during official decoration of Disu as deputy commissioner of police at the Governor office, Alausa Ikeja, yesterday.

Migration: African governments tasked to prioritise economic growth, education Temitayo Ayetoto

frican governments have been charged to prioritise effective policy implementation in the areas of economic growth and education, as migration quest remains life goals of most young Africans in advanced countries. During 2019 Ibrahim Governance Weekend, Mo Ibrahim, chairman of the Mo Ibrahim Foundation, said while governments must remain receptive to the pursuit of better opportunities by other African in their territories, they should also ensure that their primary citizens were supported with the enabling environment to thrive. Migration in Africa and around the world, he said, is largely based on aspiration than the common belief of desperation. “Africans leaving their home countries are looking for the chance to work and

contribute to their host countries,” he said, speaking on the theme: “Setting the Picture Right on African Migrations.” “African governments should welcome migrants while ensuring that their own citizens - our continent’s greatest asset - have opportunities they deserve.” The Ibrahim forum brings together a coalition of African and global leaders to deliberate issues critical to the continent’s future. The theme explored African perspectives on migration, highlighting that human mobility is not a recent phenomenon but a dynamic that has contributed to progress over many centuries. For Ellen Johnson Sirleaf, former Liberia president, the rise in the population of Africans youths seeking to jet out should not only be seen in the light of the migrant crisis, but also considered in the context of knowledge and skills

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exchange as well as economic boost. “There is no migrant crisis. The majority of those who cross borders do so legally, carrying with them capital, knowledge, skills and technology. They pay taxes and they form a sizeable part of the gross domestic product (GDP) of their host countries.” On the contrary, Vera Songwe, executive secretary of the United Nations Economic Commission for Africa pictures the migration as induced by lack of economic opportunity. She explained that the conversation on migration is essentially a conversation on governance and what leaders need to do to ensure Africans do not troop outside the continent. She noted that “80 percent of those Africans migrating say they are doing do because they don’t have jobs because our countries don’t have the right business or policy environments”. @Businessdayng

However, in 2017, migrants represented only 3.4 percent of the global population, a marginal increase from 2.9 percent in 1990. African migrants in 2017 amounted to 2.9 percent of the continent’s population and represented around 14 percent of the global migrant population, much less than Asia and Europe’s shares, 41 percent and 24 percent in 2017. Also in 2017, the top ten bilateral corridors in Africa accounted for less than the single bilateral corridor between Mexico and the US, Africa itself hosting a growing part of the global migrant population over 67 percent since 2000. Akinwumi Adesina, president, African Development Bank Group, highlighted the importance of involving more young Africans in agriculture, noting the continent needs to take advantage of the great demographic asset and turn it into an economic powerhouse.

Wednesday 10 April 2019

BUSINESS DAY

NEWS Investors urged to harness global digitisation, empower startups, SMEs OLUFIKAYO OWOEYE

he Annual Investment Meeting (AIM), a platform for Foreign Direct Investment (FDI), has kicked off in Dubai. On the sidelines of the meeting was the Future Cities Show, which witnessed the presence of H.E. Abdulla Alsaleh, undersecretary of Ministry of Economy along with President of Bolivia, Evo Morales, and President Muhammadu Buhari of Nigeria Speaking at the opening ceremony, Adeeb Al-Afifi, director of the National Programme for SMEs and Projects, Ministry of Economy, says AIM Startup offers a great platform to business, entrepreneurs, banks and financial companies to network and connect with right individuals. “AIM has started today under the theme – Harnessing Global Digitisation to Empower Start-ups and SMEs, and in partnership for National Program for SMEs and Projects as both are the fruits of innovative ideas that help in boosting the national economy. This event is a great opportunity for startups and young companies to know more about investment opportunities and close them,” Adeeb Al-Afifi states. A 2018 survey conducted by Bayt.com and YouGov Siraj showed that 71 percent of respondents below 35 would want to become entrepreneurs compared with 58 percent of those aged 35 and up who said they would consider entrepreneurship.

Walid Farghal, director-general of Strategic Marketing and Exhibitions, organiser of AIM Startup, notes that the UAE was a fertile ground for startups against the backdrop of its steady economic development and numerous business incentives and support in line with Vision 2021. The UAE’s economy is predicted to expand to 3.7 percent in 2019, as per the latest estimates of the International Monetary Fund, while the government continues to develop an entrepreneurial ecosystem conducive to startups. “We have a number of young talents in the country who are eager and inclined to use their skills in establishing unique startups with significant socio-economic impact. AIM Startup is a platform to give them an international venue to meet and engage with investors, expand their networks, and learn and explore opportunities as they work to turn their dreams into a reality by starting their own businesses,” Farghal says. At the AIM Startup event, young entrepreneurs from different parts of the world exhibited their innovations at while the Future Cities Show focused on five leading future city solutions, namely AI, blockchain, smart infrastructure, smart mobility, and sustainability. It also provided a platform to ensure that the latest technological projects had the opportunity to secure medium- to large-scale investments.

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African economies more service driven amid weak structural change ISRAEL ODUBOLA & SEGUN ADAMS

oncerns have been raised over the ongoing transition of African economies from traditional agriculturebased to service-oriented, as a number of them are leapfrogging the industrial stage of structural change. The implication of this, according to experts, is that countries will miss out on inherent productivity gains from high impact sector to industrial sector and the opportunity to create more jobs. A f r i c a n D e v e l o p m e nt Bank (AfDB) notes in its 2019 Regional Macroeconomic report that “Africa has lagged behind in the shift from agriculture, and its structural transformation has been less productive than that of other regions because it is fuelled largely by expansion in services rather than manufacturing.” Structural change or transformation connotes the trans-

formation of an economy from low productivity and labour intensive economic activities to higher productivity and skill intensive industries. Data from the bank show a declining trend in the relative importance of agriculture, as resources are reallocated towards the service sector, a trend the bank says has made Africa lagged behind other continents in developing its economy. For instance, between 1950 and 2005, agriculture’s share in Africa’s GDP fell from 43 percent to 28 percent, and shift went to the direction of services, which grew from 34 percent to 45 percent, faster than industry rising from 22 percent to 27 percent Co r ro b o rat i ng ea rl i e r stance, Olusola Arawomo, development expert at Obafemi Awolowo University, maintains that structural change in the region driven by services as unviable as other structural issues remains unaddressed “Growth from the services sector without a formidable industrial base cannot stand

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the test of time. It is unsustainable,” Arawomo asserts, adding that West Africa may have recorded higher growth if labour from agricultural sector is tweaked towards “high-impact” industrial sector rather than services. In West Africa, services led the pack with 2 percent points of the region’s 3.3 percent growth in 2018, dominating economic growth in two-third of the region’s 15 countries. Its share in regional output average 54.3 percent compared with industry (23.2%) and agriculture (22.5%). The region is yet to record significant influences of increased service sector growth on its unemployment, poverty and living standard, unlike other advanced nations like United States and China, where the sector has sped up economic convergence. According to Olayinka Olohunlana, a Lagos-based economic analyst, bulk of services including real estate, hospitality and public services offered in the region are non-tradable, and their

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immobility hinders internationalisation of trade. “The few tradable services such as financial consulting exhibits low productivity level, also services have a history of employing few skilled workforce. This means it can only accommodate minimal opportunities,” Olohunlana explains. Even the manufacturing sector tipped to deliver higher growth than services is not in good shape, as the former is dominated by a cluster of informal, small firms that are generally less productive than formal organised firms. And for services sector, which is the ‘happening sector’ in the global economy, to favourably compete with peers in the advanced space, reviving the industrial and agriculture sectors remain imperative. “Manufacturing and agriculture sectors have to undergo intensified restructuring to create a concrete platform for the services sector to operate. By this, growth will be inclusive,” Olohunlana says.

Wednesday 10 April 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

IMF welcomes PSB, says CBN should implement it Stories by Endurance Okafor

he International Monetary Fund (IMF) has welcomed the Central Bank of Nigeria’s plan to give Telcos mobile money operators’ licenses to render payment service to financially excluded Nigerians. IMF said in its recently published Article IV Consultation that CBN should leverage the potential for mobile payments to include a wider range of the population into the financial sector. “The roll-out of Payment Service Banks guidelines that allows licensing of telco subsidiaries is welcome and should be implemented,” IMF said. Nigeria currently has 36.8 percent of its adult population excluded from the financial cycle, this translates to a population of 36.6 million adult Nigerians who at the moment are not included in the financial net, with 44.1 percent male and 55.9 perecnt female, 2018 data by EFInA, financial sector development organisation as analysed by BusinessDay show. The CBN has a set target to ensure that only 20 percent of the country’s adult population are financially excluded by the year 2020. Less than two years to that deadline, the regulator of the country’s financial institutions has about 16.8 percent gap it need to close. In the quest to drive this course, the apex bank on the 5th of October 2018 released

an exposure draft guideline in which it proposed Payment Service Banks (PSB) aimed at deepening financial inclusion in a country that is lagging its African peers in financial inclusion rate. The Washington-based IMF also mentioned in its Article IV that reforms to increase the use of mobile payments system could substitute for a potentially more difficult build-up in traditional financial infrastructure and therefore help accelerate the provision of financial access to a wider part of the population. This is important because according to IMF “closing gaps in financial development and inclusion in Nigeria could yield additional real per capita GDP growth of more than 0.8 percentage

points per year.” The Gross Domestic Product (GDP) figures by the state funded NBS, for the year 2018 suggests that Nigeria had a negative real economic growth considering the annual growth rate at 1.9 percent is less that the population growth rate of about 3 percent. This means there was no growth on per capital income basis, and the country’s annual GDP growth rate has remained below its annual population growth rate for more than 3 years, NBS data analysed by BusinessDay show. IMF therefore cited that range of further reforms could help leverage the potential of the mobile payment system in Nigeria to include a wider range of the

population into the financial sector. BusinessDay sur ve y showed that the Telco-led model in driving financial inclusion in African countries reported tremendous progress owing to the already existing large customer base of the Telcos. Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more higher population, remains at 1 percent owing to its bank-led model. Ghana’s decision to have a Telco-led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in

Ghana to 58 percent in 2017 from 41 percent in 2014. This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent. Some of the reforms as suggested by IMF include the need for routine cash payments to be digitised, particularly from and to the government. Enforcing consumer protection, such as by safeguarding client funds, mistaken and unauthorised payments, by requiring fee disclosure, and ensuring data protection and privacy, will be also important, the Fund said in its Article IV report. The international organ-

isation also suggested that Nigeria’s apex bank should consider reviewing, revisiting, and enforcing tiered know-your-customer (KYC) regulations. To do this it said MNO subsidiaries would need to follow already introduced tiered KYC regulations to offer mobile money products. “The integration with National ID systems will allow stricter monitoring of transactions, which would need to be accompanied by CBN standards for training on AML risks for mobile money agents,” IMF explained. The 73-year-old Fund concluded that leveraging mobile payments to target low-income individuals and women would help address inequities in financial access across demographic groups. This strategy it said would ideally be combined with initiatives aimed at increasing awareness and digital financial literacy skills as part of the adoption, operationalisation, and implementation of the financial education strategy. At least 30 business names are currently undergoing registration as payment service banks with the functions to: maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse.

Paga provides financial services for 12m customers in 10 years

ince it was founded in 2009, Paga, one of Nigeria’s leading mobile money companies, has served over 12 million customers and processed over 72 million transactions. Born out of the frustration with needing to carry cash everywhere in Nigeria and the inability of individuals to make payments efficiently, Paga has processed transactions worth $4.6 billion within the 10 years it has been in existence. “I started Paga with one goal: to solve the ‘use of cash’ problem — cash

is still king around the world — and that needs to change. Cash is very expensive to clean, manage, and store. In high-risk countries like Nigeria, carrying sums of cash around poses a security risk,” Tayo Oviosu, Paga’s founder and CEO, said. The company has also raised $34.7 million since its inception, attracting investors such as Tim Draper, one of the earliest internet investors, Flourish, a venture of the Omidyar Group, and the Global Innovation Fund, amongst others. Since its commercial www.businessday.ng

launch in August 2012, Paga has developed into a sophisticated Omni channel payments platform offering users a safe and convenient way to send and receive money, and pay their bills. Customers are able to use Paga on any mobile phone and on any network, Paga’s mobile app or website, or through any Paga agent. The innovative wallet allows users to link multiple bank cards and also fund the wallet directly in order to access funds from one world-class secure location. https://www.facebook.com/businessdayng

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“We are very proud to celebrate this milestone,”Tayo said. At Paga, the company says they are making life possible for their customers because they want to make payments so seamless that their customers can focus on what they really care about. “Whether that is ensuring that your wife is admitted to the hospital for treatment, or ensuring your daughter is allowed into school because payment was made on time, I’m incredibly proud of what our team has achieved so far,” Tayo explained.

Wednesday 10 April 2019

BUSINESS DAY

POLITICS & POLICY

I am leaving a viable, secured state behind – Okorocha Saby Elemba, Owerri

mo State Governor, Rochas Okorocha says he is leaving behind a viable and secured state, and that his administration in the state from 2011to 2019 saw the disappearance of kidnapping, armed robbery, ritual killings, baby factories, militancy and other organised crimes in the state. The governor spoke when he received the new Commander, 34 Field Artillery Brigade (FAB) Obinze Brigadier-General Yusuf Tukura who called on him at the Government House Owerri, adding that he would not be happy to hear that these crimes are back to the state when he had left office. He explained what he is going to the Senate to do, stating that he would pursue the policy of free education so that the children of the poorest in the society would have hope of survival in the country and to rebuild the political bridge that has linked the South-East with the

rest of Nigerians. “I am going to the Senate to promote the course of ordinary Nigerians. These are some of the things I am going to the Senate to do, otherwise, I have no business there,” he said. According to him, “I also want to use the opportunity in the Senate to rebuild the political bridge that has linked the South East with the rest of Nigerians. The political bridge is somehow faulty and it is dutifully incumbent on me to rebuild this bridge so that Igbo will play a recognised role in the politics of the Federal Republic of Nigeria”. He told his guest that the state government had enjoyed a very good working relationship with all the past army commanders and is hopeful it will continue as the state, Imo, has been, through the efforts of his rescue mission government, in partnership with other Security Agencies in the State. For him, “The transformation you have seen in Imo State eight

Lagos guber poll: LP, AD heads for tribunal …Allege INEC massively rigged election for APC Iniobong Iwok

he Lagos State chapter of opposition Labour Party (LP) and the Alliance for Democracy (AD) has alleged that the March 9 gubernatorial election in Lagos State was massively rigged by the Independent National Electoral Commission (INEC) in favour of the ruling All Progressives Congress (APC). INEC declared the candidate of the APC, Babajide SanwoOlu, winner of the election; after polling 739,445 votes ahead of Jimi Agbaje, his closet rival and candidate of main opposition People’s Democratic Party (PDP) who scored 206,141 votes. However, few weeks after the election, the two parties at a joint press conference Sunday night, alleged that the 2019 election was the worst election the countr y ever conducted, stressing that the March 9 gubernatorial election in Lagos State was characterised by flaws, intimidation of voters, vote buying and cloning of Permanent Voters’ Cards (PVCs). Gubernatorial Candidate of the Labour Party, Awamaridi Ifagbemi said the party had petitioned the election tribunal for the cancellation of the gubernatorial election result, stressing that the election was marred with irregularities, while the APC cloned PVCs of members of the opposition parties across the state. The gubernatorial candidate accused INEC and security agencies of colluding with APC

to undermine the election. According to him, “The governorship election was not free and fair it was rocked with a lot of corrupt practices, a lot of irregularities. So, we are saying that the election should be nullified and declared invalid and another election should be made to happen in Lagos State. “As a gubernatorial candidate I could not vote; my PVC was taken at INEC office and cloned; I went to the INEC office in Alimosho, the EO told the staff to look for it but they could not find it after a week. “Days to the election, I was told that APC agent came and were distributing PVCs, they claimed they collected it from INEC office”, Ifagbemi said. Lagos state AD chairman Kola Ajayi, on his part disputed the number of votes given to the party’s gubernatorial candidate by INEC in the election, accusing INEC of short-changing the party and its agent in the distribution of election materials. He said the commission rigged the election to favour the APC. “We knew that there were manipulations, vote buying, cloning of PVCs and all sort of things. The position of AD is clear; our party is not an appendage of any leader in the APC, and it is not true. There is nothing like negotiation; we campaigned more than any other party,” he said. According to him, “The figure given to AD we rejected it. We have more than 10, 000 members in Lagos State, even more than 50,000; for them to write 3,000 is robbery, there was no governorship election in Lagos State.” www.businessday.ng

Rochas Okorocha

years down the line is as a result of sacrifice. A leader who does not make sacrifices has no business

with leadership. What you are seeing in Imo is a product of sacrifice. Sacrifice of self, sacrifice of comfort

and personality, denial of yourself who you are, that you might serve your people well”. “I will advise you Brigadier general to set a target for yourself on what you want to achieve in Imo State as the Commander in the state. You have brought us message of peace and so we want you to maintain peace and tranquility. You should serve Imo people as your own home. Today, you are in Igbo land as a Brigade Commander so you are automatically an Igbo man now; it is the attitude that will guarantee peace in Nigeria”. In his speech earlier, BrigadierGeneral Tukura said he had come on the courtesy call to inform the governor that he has assumed the Command of the Brigade, and to familiarise himself with the governor. He informed that he was in the state in 2011 and is back in 2019 and commended the governor for the transformation that has taken place in the state between 2011 and 2019.

Hamzat seeks citizens’ role, support in building ‘greater Lagos’ CHUKA UROKO

bafemi Hamzat, the Lagos State deputy governorelect, says the incoming administration in the state would require citizens’ role in building and developing ‘Greater Lagos’ which was their campaign mantra and the priority of their mission in government. Hamzat believes that good governance does not begin and end with good government, explaining that if all Lagos citizens agree that they want to live in a greater Lagos, then each and every one of them has his or her own part to play. The deputy governor was a guest speaker at the 19th edition of a public lecture/luncheon Obafemi Awolowo University Muslim Graduates’ Association (UNIFEMGA) in Lagos last weekend where he spoke on ‘Human Development, Energy and Enabling Infrastructure: Imperatives For Sustainable Economic Growth and Inclusive National Development’.

He assured that, for a well structured and all round development, the incoming administration in Lagos State, to be led by Babajide Sanwo-Olu, would be revisiting and making use of the already existing state’s infrastructure master plan. Recalling his experiences in both private and public services over the years, Hamzat said their administration would tackle traffic management and transportation, health and environment along with education and technology. He disclosed that there were plans towards making Lagos a 21st Century economy, boost entertainment, tourism, sports sector as well as the state’s security architecture, stressing that to achieve all of these, there was need for solid foundation which he hinged on infrastructure. The deputy governor-elect further assured that their government would not be able to achieve any of their goals without a good plan for infrastructure development and renewal, assuring that they would build on existing plans.

“Accordingly, as far as infrastructure expansion is concerned, there is already a Lagos master plan in place. I was part of the state exco when it was implemented by former governor Bola Tinubu, and also as Commissioner of Works and Infrastructure under Babatunde Fashola administration. “In the Babajide Sanwo-Olu administration’s commitment to a Greater Lagos, we will not need to reinvent the wheel but rather just build on the good work of our predecessors,” he said. “It is a blueprint that has demonstrably worked when you note, for example, that the Lagos State government has created over half a million jobs through infrastructure development and renewal alone,” the deputy governor-elect added. He noted that Lagos infrastructure growth was strategic and not happenstance, adding that Nigeria would definitely become a global economic player, and with the massive economic activities and natural endowments in the state, Lagos State was key to that growth.

INEC refutes claims of non-payment of ad-hoc staff Iniobong Iwok

he Independent National Electoral Commission (INEC) in Lagos State has refuted claims by some ad-hoc staff engaged for the conduct of the 2019 general election in the state that they had not been paid their allowances. In a statement to journalists, Tuesday, and signed by the commission’s state Public Relation Officer (PRO), Femi Akinbiyi, the Commission noted that payment had been made to all ad-hoc staff engaged for the conduct of the general elections, stressing that those

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alleging that they were being owed were either among those whose account details are not correct, or not engaged by the commission. INEC further stated that payment of allowances to ad-hoc staff was carried out immediately after each election, while urging any ad-hoc staff that had not been paid to contact the Electoral Officers (EO) of the Local Government Area where they worked. According to the statement, “The attention of the Independent National Electoral Commission Lagos State has been drawn to the report on some Ad-hoc staff going round some media houses claiming that they have not been @Businessdayng

paid their allowances for the job they carried out during the just concluded general election in Lagos State. “The Commission therefore, wishes to state that it commenced payment of all Ad-hoc staff engaged during the last general election immediately after the conclusion of each election. “Most of those claiming they have not been paid are either among those whose account details are not correct, and their banks have sent the money paid into such accounts back to the Commission, or those that were not engaged but claimed to have been engaged by the Commission”.

Wednesday 10 April 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

EU signals long Brexit delay as May lobbies Merkel and Macron Diplomats discuss a new date as late as March 2020 but insist on tough conditions for UK ALEX BARKER

he EU is shifting towards a potentially long delay to Brexit, with debate still raging over conditions to maintain pressure on Westminster and guard against the UK disrupting the bloc from within. At a meeting on Brexit in Luxembourg, almost all ministers from the 27 remaining member states left open the possibility of an extension beyond the summer, as long as Britain showed it had a credible political plan and would not damage EU interests. “It is up to the UK to decide [when it leaves],” said Stef Blok, the Dutch foreign minister. “If more time is needed to avoid a hard Brexit, then we should allow for more time.” An EU summit on Wednesday is expected to approve a delay to Britain’s April 12 exit date, but also to provide a framework to limit damage to the EU and map out Britain’s path to approving an exit deal. One senior EU diplomat involved in deliberations said talks were “moving to the long end” but that the final decision of leaders would be hard to predict. Diplomats are discussing a postponement that could run into

2020, with a clause allowing the extension to be shortened if the UK approves a withdrawal treaty. Potential dates include December 31 and March 31. During the ministerial meeting, Germany, Ireland and the Netherlands suggested that such a deadline may avoid the EU being dragged into repeated discussions of whether and how long to extend the process. It is less than three weeks since the EU agreed to push back Britain’s original exit date of March 29. But the issue remains the subject of intense negotiations with France, which has not ruled out a long delay but is demanding that London agree to strict terms regarding holding elections to the European Parliament, the UK’s future behaviour within the bloc and a political process to agree an exit deal. Theresa May, Britain’s prime minister, who has requested a delay until June 30, was travelling to Berlin and Paris on Tuesday. She held a preparatory meeting with Angela Merkel, German chancellor, who has indicated she is relatively open-minded about a delay, and was later due to see French President Emmanuel Macron, the EU leader most sceptical about a long postponement.

IMF cuts global growth forecast as trade tensions take toll

he global economy has slowed sharply since last summer and will rely on a “precarious” boost from a few emerging markets to reverse the loss of momentum, the IMF has predicted in its latest economic forecast. Cutting its outlook for 2019 and 2020, the fund judged that advanced economies would “continue to slow gradually” into next year while emerging economies would play a more positive role, led by an end to crisis conditions in Turkey and Argentina and stabilisation in the all-important Chinese growth rate. Global growth slowed sharply in the second half of 2018 from 3.8 per cent in the first half to only 3.2 per cent, the IMF said with industrial production and world trade hit hard. Growth rates would have fallen further without consumer sentiment holding up strongly. Gita Gopinath, IMF chief economist, said it was “a delicate moment for the global economy”. “While a global recession is not in the baseline projections, there are many downside risks,” she said. Activity softened amid an increase in trade tensions and tariff hikes between the United States and China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies. This slowdown led the fund to sharply cut its forecast for 2019, with the world economy now expected to grow 3.3 per cent in 2019, down 0.4 percentage points since the last full

forecast in October 2018. The projected growth rate for 2020 was down 0.1 percentage point to 3.6 per cent. The risk of further downward revisions is high, the IMF said, still concerned about an escalation in global trade tensions, further shocks to the European economy and a potential failure of China’s recent stimulus. Ms Gopinath said: “Tensions in trade policy could flare up again and play out in other areas such as the auto sector . . . growth in the eurozone and China could surprise on the downside and risks surrounding Brexit remain high.” If risks materialise, “this may require synchronised, though countryspecific fiscal stimulus complemented by accommodate monetary policy”. The IMF urged countries to resolve trade differences, which it said “have taken an increasing toll on sentiment”, and be ready to use fiscal tools of tax cuts and public spending increases to inject spending directly into economies if the slowdown continues. The forecasts came in the IMF’s twice-yearly World Economic Outlook, published on Tuesday, which suggested that financial markets had recently become too optimistic about the global outlook since the start of the year. Although the fund expects a recovery in global economic performance it stressed the maths behind the improvement suggested it was almost entirely dependent on Turkey and Argentina emerging from recession and leading “a precarious recovery in emerging market and developing economies”. www.businessday.ng

Senior French officials have privately suggested review clauses — potentially at two or three month intervals — that would allow Britain’s membership to be cut short if the EU decided Britain was breaching an agreed code of conduct on how it would use its votes at ministers meetings. Some

European capitals are unconvinced such clauses would be legal. Amélie de Montchalin, France’s Europe minister, said that an extension would not be “automatic” and wanted guarantees that Britain would not disrupt a “European project that is ambitious”. Michel Barnier, the EU’s chief

negotiator who is sceptical about a longer delay, described the extension as “a last opportunity to achieve this orderly withdrawal”. “Saying more time might be needed or less time depends on the type of pressure you want to exert,” he added. “That is what is the discussion is all about.”

Uber’s long list of legal woes ahead of its stock market listing

World relying on ‘precarious’ boost from emerging markets to stabilise economy CHRIS GILES

Company still has serious unresolved legal and regulatory challenges SHANNON BOND

o company in recent history has come to the public markets under more of a legal shadow than Uber. In the coming weeks, documents will be made public for a stock market listing that could value the ride-hailing app at more than $100bn. But those documents will include lengthy disclosures on its pending lawsuits and government investigations, including any lingering issues dating back to its days under its hard-charging former chief executive Travis Kalanick, said lawyers and corporate governance experts. “With Uber, given their previous CEO and history, there are more risk factors than with other [companies],” noted Jay Ritter, an expert in initial public offerings at the University of Florida. At the top of that list of risk factors is the very structure of Uber’s business, which relies on a workforce of drivers which the company does not consider employees — and therefore does not have to meet regulations about pay and benefits. That has kept labour costs down for Uber and its peers in the gig economy but it has set off legal claims from workers who want better terms and invited scrutiny from regulators around the world. “I can’t think of a bigger risk to them than the idea that these

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people will become employees,” said John Coffee, a securities law expert at Columbia University. In March Uber agreed to pay $20m to settle a long-running fight with drivers in California and Massachusetts who were pushing to be considered employees. The company will continue to consider them as independent contractors, but said it would make some changes to how it removes drivers from its platform, and allow appeals against removal. But classification, among other questions about its business model, is a battle the company is fighting across many fronts. “The Securities and Exchange Commission may require additional disclosures or warnings,” said Mr Coffee. “[Uber] may have to say, what would be the costs to us next year if every one of our drivers is classified as an employee. That figure could be unpleasant.” In Europe, the app’s low-cost UberPOP service, which allowed amateur drivers to pick up rides, has been banned in several countries. Last month Uber settled an UberPOP case in the Netherlands for €2.3m. Under its current chief executive Dara Khosrowshahi, Uber has taken a more conciliatory approach to countries such as Germany, which it had largely abandoned in 2016 after regulators said it was operating an illegal taxi business. It is now expanding @Businessdayng

there again by partnering with licensed car services and taxi operators — a model it is also pursuing in Japan. “As they enter new markets in the US and everywhere else, they are always going to have to contend with regulatory issues of some sort,” said Carl Tobias, a law professor at the University of Richmond in Virginia. “The labour relationship won’t be settled for a long time.” Mr Khosrowshahi, who was appointed in August 2017 with a mandate to take Uber public, has worked hard to resolve several legal and regulatory hurdles. Two years ago Uber was struggling to deal with accusations of a sexist and toxic work environment, a social media campaign urging people to #deleteUber, an embarrassing video of Mr Kalanick berating a driver and a flood of executive departures. It was also under mounting legal and regulatory pressure, including a lawsuit from Alphabet’s Waymo accusing it of stealing trade secrets and multiple federal investigations into issues including foreign bribery and software used to avoid government stings. Before the end of 2017, Uber would also disclose a massive data breach that it had failed to report for more than a year. The cascading scandals generated boardroom drama, leading to Mr Kalanick’s resignation in June 2017.

Wednesday 10 April 2019

BUSINESS DAY

NATIONAL NEWS

Fintech start-up Branch raises funding for EM lending push New alliance with Visa helps loan provider pursue new markets TIM BRADSHAW

ranch International, a Silicon Valley-based start-up that offers loans to first-time borrowers and customers without bank accounts in Africa, India and Mexico, has raised $170m in new financing. The deal, which is made up of a combination of equity and debt, forms part of a new alliance with payments group Visa. “It’s tough to convince VCs in Silicon Valley to invest in something for Africa, and it’s tough to get lenders to lend due to the risk,” said Matthew Flannery, Branch founder. Branch is vying with its California-based rival Tala to become the first provider of financial services to the emerging middle class in developing markets, who are underserved by traditional banks. This latest round brings Branch’s total financing to $260m, comprised of $100m in equity and $160m in debt. The company started operating in Kenya in 2015, led by Mr Flannery, who had previously co-founded Kiva, the microfinance non-profit platform. Branch collects data from potential borrowers’ Android smartphones, including the contents of their text messages, address books and other apps they have installed, to assess their likely creditworthiness. Interest rates can range between annual rates of 12-180 per cent, with rates highest for first-time borrowers then falling as customers repay more loans. “To use a few buzzwords, we literally are using deep learning to do the underwriting,” Mr Flannery

said, referring to one form of artificial intelligence that also analyses how borrowers use the Branch app and contact networks. “If people are careful using the app, if they look at the financial screens, the repayment plans, the terms and conditions, then they almost never default.” Branch expects to lend about $350m this year, usually in small loans of $20-$40, which are primarily financed by its own borrowings. The new venture round, which was led by Foundation Capital and Visa with participation from existing investors such as Andreessen Horowitz and Formation 8, will be used to develop new markets after recently expanding from Africa into India and Mexico. “We want to set an example that this is a good market,” said Mr Flannery. “You can invest in low-income people in India.” Branch is expanding in the wake of infrastructure such as smartphone penetration, low-cost mobile payments systems like M-pesa, and government biometric databases. Its new partnership with Visa will offer “virtual” prepaid debit cards to 2m people that allow Branch customers to withdraw their loans using a cash machine, even if they do not have a bank account. “By focusing on digitising payments, we aim to build a more digitally inclusive ecosystem,” said Otto Williams, Visa’s vice-president of strategic partnerships, fintech and ventures. Charles Moldow, a general partner at Foundation Capital who is joining Branch’s board, said the company was “poised to become the cross-border financial super-app”.

Tripoli airport targeted as battle for Libyan capital rages EU foreign policy chief Mogherini calls for truce in North African country HEBA SALEH

ripoli’s main airport came under attack from forces loyal to General Khalifa Haftar, the warlord who has launched an offensive to capture the Libyan capital, as the EU’s foreign policy chief called for a truce in the North African country. An official at Mitiga, Tripoli’s only functioning airport, on Monday confirmed the air strikes, according to the Reuters news agency, as clashes continued between Gen Haftar’s forces and the militia groups defending the city, home to the UN-backed government led by prime minister Fayez al-Sarraj. There were unconfirmed reports that three missiles had hit the runway of the former military facility that has been used for civilian traffic since 2014 when fighting wrecked the international airport. Gen Haftar’s self-styled Libyan National Army has reached the outskirts of Tripoli after a rapid sweep westwards across the oil-exporting country. The LNA, which has spread from its base in eastern Libya, over the weekend launched air strikes against other targets in southern Tripoli. Its forces have also been targeted at least once by air strikes from groups loyal to Mr Sarraj. Federica Mogherini, the EU foreign policy chief, said European foreign ministers who met on Monday were united in calls for a truce. All sides in Libya “should go back to the negotiating table under the auspices

of the UN and make sure that the Libyan people get what they really want, which is peace and stability for their country,” Ms Mogherini said. However, there have been tensions between France and Italy over Libya in the past. Paris has supported Gen Haftar as a partner in the fight against terrorist groups such as Isis in the Sahara, while Italy has taken the side of the Tripoli authorities to secure its efforts to stem illegal immigration. However, Reuters on Monday cited an unnamed French presidency official as saying that Mr Sarraj should remain the key player in Libya and underlining the need to try to conclude a negotiated peace process. Ghassan Salamé, UN special envoy for Libya, visited Mr Sarraj on Monday to signal the UN’s support for his embattled administration. Mr Salame has been working to organise a national conference aimed at fostering reconciliation between Gen Haftar and the UN-backed government. The UN said about 2,800 people have been displaced by the clashes in Tripoli since the LNA launched its offensive on Thursday. It called again for a truce to evacuate the wounded and civilians trapped by the fighting. MSF, the international charity, said it was extremely concerned for civilians, migrants and refugees held in detention centres in Tripoli. It said that 600 vulnerable people, including women and children, were trapped inside the Ain Zara centre in the capital, which it said was the centre of “active fighting”. www.businessday.ng

Several thousand demonstrators have vowed to remain in front of the army headquarters in Khartoum until Mr Bashir steps down © AFP

Sudanese protests create cracks in military unity Members of armed forces intervene to protect demonstrators from security services DAVID PILLING

udanese soldiers have intervened to protect demonstrators demanding the overthrow of President Omar alBashir in a sign that the security apparatus around the 30-year-old regime is fracturing. Video footage showed some soldiers firing warning shots in the air after members of the security services and militia loyal to Mr Bashir moved to break up a two-day sit-in in front of the army headquarters in Khartoum. One soldier was killed in the confrontation, according to protest organisers. Several thousand demonstrators, who include young professionals, have vowed to remain in front of the compound until Mr Bashir steps down, marking a new phase in street protests that have jolted the country for the past three months. “It is clear that the army tried to avoid confrontation with the demonstrators. The army is trying to protect them,” said Rashid Saeed, a spokesman for the Sudanese Professionals Association, which has been at the forefront of the protests, which began in December. “We cannot say the army is speaking as one block. You have soldiers and junior officers who are clearly supporting the demonstrators and the ousting of Bashir,” he said. “But you have generals in the army headquarters, militia and members of the

security forces who are still supporting Bashir.” Demonstrations were sparked by public fury over rising bread prices but have since spread to 35 cities and escalated into unprecedented calls for Mr Bashir, an ageing autocrat, to step down. Armed men loyal to Mr Bashir, 75, moved to break up demonstrations in the early hours of Monday morning after a day during which the embattled president was in discussions with his military and civilian advisers. Leaks from that meeting — itself a sign of splits among the president’s entourage — had already indicated that a decision had been taken to break up the sitin before it became entrenched. All sides are acutely conscious of how events unfolded in Algeria where last week mass demonstrations forced President Abdelaziz Bouteflika to step down. In Khartoum crowds shouted “the army is protecting us” and “one nation, one army” when soldiers intervened to shield demonstrators, according to Reuters. Protesters read out a statement calling for Mr Bashir to step down unconditionally and urging the international community to support the demands of what they called the “Sudanese revolution”. Hassan Ismail, the information minister, contradicted reports the protest was continuing, saying that demonstrators had been successfully dispersed. “The crowd in front of the general command has been cleared completely, in a way that resulted

in no casualties among all parties,” he said. “The security apparatus are coherent together and working with positive energy and in harmony.” However, witnesses and video shared on social media suggested the protest continued unabated. Mr Bashir is reluctant to step down partly because he faces charges by the International Criminal Court over alleged genocide and human rights abuses in Darfur, a region in western Sudan. Attempts to negotiate immunity for Mr Bashir have been thwarted by both internal and external opposition. Several countries, including Saudi Arabia and Egypt, have offered him exile, according to people familiar with discussions. Even if the president, who was installed in a 1989 coup, steps down, it is unclear what would follow. Protest organisers have explicitly opposed a military coup. “Inside the army, the pressure is very strong to move in and to take power, but this is not a solution for us,” said Mr Saeed of the Sudanese Professionals Association. “If the army takes over it would be a military coup. We are asking the army to be on the side of the demonstrators and help the opposition forces and its allies to take power through peaceful transitional government in which the army would be represented.” Those demands had been presented in a written memorandum, but there was no formal dialogue between protesters and the armed forces, he said.

Sub-Saharan Africa’s slowdown in growth will not last — World Bank CHELSEA BRUCE

ub-Saharan Africa’s economic growth slowed to just 2.3 per cent last year, down from an average of 3.3 per cent in the five years previously. But a recovery in the region’s agricultural and mining sectors, as commodity prices bounce back, is expected to boost the region’s output over the next two years, according to a report published by the World Bank on Monday. Regional growth has recently been held back mostly by a weak performance in sub-Saharan Africa’s three largest economies —

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South Africa, Nigeria and Angola — which account for almost 60 per cent of its overall economic output. Both Nigeria and Angola saw their oil production fall in 2018 — a resource which accounts for roughly half of government revenue for their respective economies. In Nigeria, growth in nonoil related activities was also disappointing. Meanwhile, South Africa’s recovery from recession was restricted by low levels of investment, echoing a drop in business confidence. Despite data releases so far suggesting sub-Saharan Africa’s @Businessdayng

growth remains modest this year, the World Bank is expecting the regional economy to grow by 2.8 per cent — a level not seen since 2015. “Our forecast for a rise in growth by 2020 is largely due to an anticipation that commodities and metal prices will continue to recover,” says César Calderón, lead author of the World Bank’s Africa’s Pulse report. “In South Africa, we expect structural reforms will help boost consumer and business confidence and assist in the recovery of the country’s manufacturing sector.”

Wednesday 10 April 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Jefferies and Credit Suisse set to lose on Israeli cyber security deal Investors balk at $510m loan backing acquisition of NSO, which has been criticised by Amnesty ROBERT SMITH

efferies and Credit Suisse have got their fingers burnt underwriting the leveraged buyout of a controversial Israeli cyber security company, which Amnesty International recently criticised for allegedly providing spyware to target political dissidents. The two Wall Street banks have faced difficulty selling a $510m loan backing UK private equity firm Novalpina Capital’s acquisition of NSO Group, despite an otherwise hot market for leveraged loans. Investors have balked at the deal because of corporate governance concerns over the Herzliya-based company, which is being sued by a Saudi dissident who claims its software was used to spy on murdered journalist Jamal Khashoggi. NSO has said that the suit is “completely unfounded”. Jefferies and Credit Suisse now look set to lose money on their decision to back the debt deal, according to bankers and investors, after being forced to offer the loans at just 90 cents on the dollar — one of the steepest discounts to face value the leveraged loan market has seen in years. People familiar with the matter said the two banks had also not yet fully sold the deal, even though it is due to formally close on Tuesday. This raises the prospect that the underwriters will have to hold some of the debt on their balance sheet, potentially weighing on the banks’ capital position. Jefferies and Credit Suisse both declined to comment. The botched deal shows how some investment banks are underwriting debt for increasingly high-risk borrowers in an effort to win business in the crowded market for US leveraged loans, which are generally provided to companies already carrying lots of debt. NSO says that it helps government intelligence and law enforcement

agencies to prevent and investigate terrorism and crime. Sales of its so-called “Pegasus” software, which exploits weaknesses in smartphones to track encrypted messages, accounted for about three-quarters of the company’s more than $250m in revenues last year, according to an investor who has seen the presentation to potential buyers of the loan. The investor added that Novalpina was putting $246m of equity into the group, with $114m coming from NSO’s management team. A spokesperson for NSO said that the company was “committed to the ethical and responsible use of our technology”. NSO has also previously denied its software was used to track Mr Khashoggi. Amnesty International wrote an open letter to Novalpina in February raising concerns that NSO’s software was being used to target people “solely as a result of their criticism of governments”. Novalpina’s founder Stephen Peel, a former senior partner at private equity heavyweight TPG, stepped down from the board of international human rights group Global Witness the same day. Mr Peel wrote a letter in response to Amnesty last month that outlined the private equity firm’s due diligence into NSO, which he said found no evidence to “substantiate the misuse allegations”. A spokesman for the group told the Financial Times that NSO’s software had “saved thousands of lives, helping prevent suicide bombers, stop drug and sex trafficking rings and rescue kidnapped children”. That argument has done little to assuage leveraged loan investors. The investor considered it would be “almost impossible” for most collateralised loan obligations to buy the loan, as they have to regularly report their holdings publicly. These structured investment vehicles are normally one of the biggest buyers of such loans, fuelling a boom in riskier debt that has worried policymakers worldwide.

Standard Chartered to pay $1bn to settle Iran sanctions probe Bank customer opened account with suitcase containing £500,000 in cash KADHIM SHUBBER, CAROLINE BINHAM AND DAVID CROW

tandard Chartered will pay $1.1bn to settle allegations that it violated Iranian sanctions and had lax dirty money controls that permitted one consulate customer to open an account with a diplomat’s suitcase containing more than £500,000 in cash and another customer to export military-grade equipment to two war zones. StanChart processed dollar payments for a correspondent bank that reportedly later had ties to Isis, according to findings published on Tuesday by a group of enforcement agencies on both sides of the Atlantic. Iran was not the only country whose sanctions the bank’s Dubai branch broke, with US watchdogs pointing to breaches pertaining to Myanmar, Cuba, Syria and Sudan. The penalty — larger than the $900m that the bank set aside — comes seven years after StanChart first paid a $667m fine and signed a deferred prosecution agreement to avoid criminal charges on similar grounds. That DPA has been extended on several occasions and the bank said on Tuesday that it would now have a DPA with US prosecu-

tors running until 2021. The global settlement draws a line under a five-year long investigation into alleged sanctions breaches involving processing and clearing $600m of transactions for Iran-based clients, with a particular focus on the emerging-markets bank’s Dubai branch and its London headquarters. StanChart insisted on Tuesday than none of the failings detailed by the agencies occurred after 2014. It said that it took “full responsibility for the violations and control deficiencies outlined”. Bill Winters, the bank’s chief executive, said: “The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today.” The settlement on Tuesday included the US Department of Justice, New York Department of Financial Services, Manhattan district attorney, Department of Treasury, Federal Reserve and the UK’s Financial Conduct Authority. The FCA’s penalty was the secondhighest ever meted out for lax dirtymoney controls. “Global financial institutions serve as the first line of defence against money laundering and the financing of terrorist activities,

and those that fail to foster a strong compliance culture will be held accountable,” said Linda Lacewell, acting financial services superintendent at DFS. US authorities have also been scrutinising the role of two of the bank’s former employees in the alleged sanctions breaches and could bring criminal charges against them, according to people familiar with the matter. If prosecutors do proceed with criminal charges against the former employees, it would mark one of the rare occasions when individual bankers have been prosecuted in the US over alleged sanctions violations. On Tuesday, the DFS said a StanChart manager was “found to have advised an Iranian front company located in Dubai how to evade detection by changing its corporate name and then opening a new account”. The DFS said a senior US compliance officer and a senior UK compliance officer “utterly failed to take steps to ensure that transactions from Iran were blocked”. Having settled the investigation, StanChart intends to press ahead with plans to buy back its own shares for the first time in a generation, according to people briefed on the lender’s plans.

Stocks shy of highs as growth Wynn withdraws $7.1bn takeover bid for Crown Resorts US gaming company ends talks less than 24 hours after Australian group said it had received bid concerns limit sentiment MICHAEL HUNTER AND SIDDARTH SHRIKANTH

lobal stock indices were shy of their recent highs on Tuesday, as a stark list of risk factors prompted a more cautious feel to trade. The International Monetary Fund cut its forecast for world growth, White House rhetoric on potential tariffs on imports from the EU and the stubborn prospect of a disorderly withdrawal from the bloc by the UK muted the mood. Wall Street’s S&P 500 fell 0.7 per cent, with sentiment facing a further test when banks start their first-quarter earnings season later this week. The Europe-wide Stoxx 600 was down 0.3 per cent overall, with brisk-

er moves for shares at the centre the Trump administration’s attention. Airbus lost just over 2 per cent after news that the US was considering putting tariffs on civilian aircraft as part of an $11bn series of measures aimed at EU products. Engine maker Rolls-Royce fell 1.1 per cent Frankfurt’s Xetra Dax 30 fell 0.7 per cent per cent and London’s FTSE 100 was down 0.2 per cent. Brent crude slipped from fivemonth highs which were touched as fighting in Libya intensified, raising the prospect of further supply-side tightening. Opec supply cuts, sanctions against Venezuela and Iran, and expectations of strengthening global demand have helped it over the $70 mark last Friday for the first time in 2019. It slipped back to $70.93 by the start of trade in the US. www.businessday.ng

DON WEINLAND , ALICE WOODHOUSE, JAMIE SMYTH AND JAMES FONTANELLA-KHAN

ynn Resorts, the Las Vegas gaming giant created by billionaire Steve Wynn, has abruptly terminated talks to buy Australia’s Crown Resorts, less than 24 hours after Crown disclosed it had received a A$10bn ($7.1bn) bid. A takeover, if agreed by Crown shareholders, would have marked the end of an era for the Packer dynasty, which has played a central role in Australian business for almost a century. But the early leak of the talks, which emerged in the Australian press, came as the two sides were still trying to negotiate a series of sensitive issues, said a person briefed on the situation. “Following the premature dis-

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closure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” Wynn said in a statement on Tuesday. The talks came as both casino operators face leadership challenges. James Packer, Crown’s former executive chairman, stepped down from the company’s board last year citing mental health issues. Steve Wynn resigned as chairman and chief executive of Wynn in February last year after sexual harassment allegations against him. A combination would have faced serious challenges to complete, since the sexual misconduct investigation in the US could result in Wynn being stripped of its gaming licence in Massachusetts — a key market where Wynn is planning this year to open a $2.6bn hotel and casino called the @Businessdayng

Encore Boston Harbor. The Massachusetts probe suggested that executives at Wynn actively concealed the allegations against Mr Wynn. Wynn’s offer, comprising half cash and half Wynn stock, would have valued Crown at A$14.75 a share. Crown shares jumped 20 per cent on Tuesday to close at A$14.05 before the talks were called off. Some analysts said the proposed deal, which represented a premium of 26 per cent over Crown shares’ closing price on Monday, was hard to justify. “They have an ongoing sexual misconduct investigation in the US and they don’t know how much the fine from the Massachusetts Gaming Commission could be for this . . . There is too much going on,” said Eunice Lee, an analyst at Bernstein in Hong Kong.

Wednesday 10 April 2019

BUSINESS DAY

ANALYSIS

Orders for first Saudi Aramco bond top $100bn Record demand for an emerging-market debt deal highlights ‘scarcity value’ ROBERT SMITH AND SIMEON KERR

audi Aramco’s debut international bond sale has drawn a record-breaking $100bn of orders from investors, confirming Saudi Arabia’s speedy rehabilitation in financial markets after the outcry over the killing of Jamal Khashoggi last year. The Saudi state-backed oil producer — which last week revealed it was the world’s most profitable company — opened up the six-part bond sale to investor orders on Monday. By that stage it had already received more than $30bn indicative orders across a series of investor meetings in Europe, Asia and the US, three times more than the $10bn expected deal size. The now $100bn of orders has smashed records for an emerging-market bond sale, surpass-

the killing of Mr Khashoggi, the journalist, in the Saudi consulate in Istanbul last year. A Riyadh conference in October, dubbed “Davos in the desert,” was boycotted by several prominent business leaders — including Jamie Dimon, the chief of JPMorgan Chase, which is now leading the Aramco bond sale alongside fellow US investment bank Morgan Stanley. One investor following the deal said that the flood of demand also reflected the scarcity value of the debut bonds. Saudi Aramco’s treasurer has told investors that the company does not need to raise the money, because of its “fortress-like corporate position”, and is focused solely on opening up the historically secretive group to public investors for the first time. The state-backed oil company is marketing the new bonds at a

ing the $67bn of demand Saudi Arabia itself saw in its wildly popular 2016 government bond market debut. Aramco’s order book is also now approaching some of the biggest seen even in developed market debt deals, with US pharmacy group CVS Health drawing $120bn for a bond sale backing its acquisition of Aetna last year. Anthony Simond, an investment manager at Aberdeen Standard Investments, described Aramco’s bond sale as a “one-ofa-kind emerging markets deal”, which had drawn strong demand from large US fund managers that typically invest in highly rated corporate bonds. “The roadshow was all about Aramco comparing itself to the oil majors that investor base knows well, which was definitely a different pitch to the usual state-owned enterprises that talk up to their links to the sovereign,” Mr Simond added. The bond sale is intimately tied to Saudi Crown Prince Mohammed bin Salman’s vision to open up the desert kingdom’s economy to the wider world, after his grander plan of listing a stake in Aramco on stock markets faltered. Neither banks nor investors have been deterred from taking part in the high-profile deal despite displays of outrage over

price in line with Saudi government bonds. As debt issuers typically seek to reel in borrowing costs shortly before deals close, that suggests Aramco may lock in an even cheaper price than the Saudi government. That would be highly unusual, given the oil producer’s close links with the Saudi state. But Aramco may still achieve this feat as to the yields on offer are at a healthy premium to those of major US oil producers such as ExxonMobil and Chevron. While credit rating agencies rate Aramco in line with the Saudi government, in the single A bracket, the oil company has told investors that Moody’s would have given it a top-notch triple A rating if it were a standalone company, as it produces enough cash each year to cover its debt many times over. A banker close to the bond issue said investors were generally drawn towards the parts of the deal with the longest maturities, seeing a chance to buy 20- and 30-year bonds at relatively higher yields. The rush of demand for the Aramco deal has also depressed yields on Saudi Arabia’s government bonds over the past week, reflecting a rise in prices. The country’s 30-year US dollar bond yield has fallen about 0.2 percentage points to 4.58 per cent. www.businessday.ng

Pacific islands: a new arena of rivalry between China and the US

Beijing is making its presence felt in a region that the US navy considers strategically vital KATHRIN HILLE

he three dozen men and women sitting under huge Poinciana trees listen intently to Joyce Konofilia. A candidate in last week’s general election in the Solomon Islands, she was campaigning in a squalid settlement on a hillside above the capital city of Honiara where few residents have access to electricity and even fewer have jobs. But when Ms Konofilia, an Australia-educated tourism consultant, had finished her stump speech, the first question from her audience was about foreign policy. A local elder rose and asked: “Do you support switching diplomatic relations from Taiwan to China?” The Solomons, an archipelago of 630,000 people north-east of Australia grappling with poverty, corruption and occasional ethnic strife, is being hit by the full force of a rising China which claims Taiwan as part of its territory and over which it has mounted a diplomatic campaign to isolate Taipei. While Chinese immigrants have dominated the local retail sector since the first arrivals in the 19th century, their community has swelled to more than 5,000 people over the past few years and threatens to establish a dominant position in the local economy. Chinese stateowned enterprises are building infrastructure projects, partly with Chinese loans, and bring in Chinese workers instead of offering badlyneeded jobs to locals. Similar forces are at play across the entire group of Pacific island nations as a new great power competition ignites more than 70 years after Japan and the US clashed in the second world war. Map showing geopolitical fight for the Pacific Islands The region’s vast maritime expanses have long been controlled by the US Navy, whose base in Guam is central to its ability to project power in the western Pacific. China, however, is now making its presence felt. Beijing is attracting countries with promises to boost their development, but which might also enrich local politicians and raise fears of new colonial-style domination. In western capitals, China’s Pacific push has raised concerns that Beijing has military designs on the region. Although China is challenging western power in other parts of the world, the calculations are different in the western Pacific, which contains economically weak countries with tiny islands and small populations that boast large maritime terri-

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tories. If relatively small investments allow Beijing to gain influence over a number of governments in the region, China could then access or even control vast waters of vital strategic importance to the US. “We are seeing everything from small-scale economic engagement to full elite capture. What is their aim? In the Pacific, there is nothing really economically worth a candle for China,” says Euan Graham, executive director of the Asia department of La Trobe University in Melbourne. “This is a pre-conflict type of shadow game, a geopolitical non-war version of island-hopping. The Pacific has become strategic again for the first time since World War II.” It is an uncomfortable reality for Solomon islanders to find themselves again on the frontline of clashing great powers. It was in Guadalcanal that the US started its main counteroffensive against Japan in the second world war. The seabed of Ironbottom Sound, the strait north of the island, is littered with the wrecks of warships. “Once again things are starting to resemble what happened a long time ago,” says Leliana Firisua, a tribal chief and influential political figure. “It was not our war, but they came to Guadalcanal and we became victims. Now it’s a competition between third countries again, between China and the US, and China’s influence is being felt. The fallout has started affecting the region.” The most immediate concern for Washington is Chinese attempts at gaining influence in Palau, the Federated States of Micronesia (FMS) and the Marshall Islands. These microstates have so-called compacts of free association (Cofa) with the US — agreements that give them subsidies and visa-free US residence for their citizens in exchange for the right to base its troops on their territory and block other countries from doing so. In the Marshall Islands, Cary Yan, a Chinese investor, has leased large tracts of land on Rongelap, one of the atolls worst affected by US nuclear bomb tests. Mr Yan proposes to create a special economic zone which his company says would issue Marshall Islands passports to residents on its own. While he has not built anything yet, he has sold the idea to potential investors in China as a way to gain US residence rights. The project had unexpected political consequences last year when supporters launched a noconfidence vote against president Hilda Heine hoping to replace her with someone more China-friendly. She narrowly survived the vote. In Chuuk, one of the FMS states, local politicians who have land dealings with Chinese investors are @Businessdayng

pushing for independence — a move which could collapse the country’s association with the US and present an opportunity for Chinese military interests. In Palau, parliamentary speaker Sabino Anastacio, who is involved in a hotel project with Chinese partners, has become an advocate of switching diplomatic ties from Taiwan to China. As well as building these relationships, China’s oceanographic research vessels have frequently criss-crossed the waters around these island states and close to Guam, where the US navy houses submarines that patrol the western Pacific. They map the seabed, observe marine life and climate patterns, and plant buoys and sensors that record how sound travels under water in different locations. “The primary driver is seabed mineral exploration, but there are also clear military uses,” says Ryan Martinson, a China expert at the US Naval War College. “The area these vessels’ activity is concentrated in is where possible submarine warfare between the US and China would take place.” China’s People’s Liberation Army has been building so-called antiaccess and area denial (A2AD) capabilities that aim at keeping the US military out of a conflict in waters that it considers its “core interests”, especially Taiwan and the South China Sea. “They are extending A2AD faster now,” says Alex Neill, a China expert at the International Institute for Strategic Studies. “China needs to develop its ability of navigating those waters to make their seaborne nuclear deterrent work.” The US is starting to take notice. Washington agreed with Australia in January to build a joint military base on Manus Island in Papua New Guinea, the South Pacific country with the largest Chinese presence and recipient of massive aid from Beijing. The US is also ramping up funding to the Cofa states and has called on leaders not to switch diplomatic recognition from Taiwan to China. However, few countries want to be caught in a geopolitical contest. “Pacific island countries don’t want to be in a situation where they have to choose sides, and even Australia would still like to think it can work with China,” says James Batley, former Australian High Commissioner to the Solomons. Although Beijing’s total assistance to the region accounts for only 4 per cent of its global aid programme, the Chinese government uses aid strategically: it focuses on building infrastructure, and the average size of its projects is much larger than that of other donors, according to the Lowy Institute.

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Wednesday 10 April 2019

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BUSINESS DAY

OIL

Nigeria: FPSO Allan to get anchoring upgrade Page 50 GAS

Market: Shell sets precedent with deal linking gas prices to coal Page 51

Debrief

Buyers waiting for Nigeria’s crude prices to drop

Market Insight

FRANK UZUEGBUNAM

Oil prices rise 1.5 percent, touches $70 per barrel Page 55 OPEC weekly basket price DAY

PRICE

5/4/19

69.02

4/4/19

68.76

3/4/19

69.12

2/4/19

68.83

1/4/19

68.31 Source: OPEC

ull crude oil spot market has impacted on Nigeria as buyers await the country’s crude price drop. Traders said prices were due for a downward correction after high official selling prices set the tone in March and April. European refiners are interested in light Nigerian grades, which suit seasonal demand for summer gasoline grades. However, Europe has held back from paying steep prices indicated for May, preferring to buy competing regional grades that cut out shipping costs. Offer levels for Nigerian

crude remain unchanged despite weakening demand. Brass River and Qua Iboe is going at dated Brent plus $2.20 a barrel while Bonny Light is at dated Brent plus $2.30 a barrel, a price potential buyers see as somewhat ambitious. About 30-35 cargoes of Nigerian crude were left from the April and May programmes although the bulk are May loading of which about 10 cargoes or 60 million barrels are for Aprilloading. Nigeria’s Bonga crude sees first sale to US buyer in six months. The cargo of Nigeria’s distillate-rich Bonga crude is due to move to the US from the May loading program, traders said, after a near six-month hiatus. According to US customs data, the last cargo of Bonga ar-

rived in the US in December. Over the course of 2018, US imports of Bonga dropped to 36,272 b/d in December from 112/532 b/d in January. That trend was consistent with a general decrease in US imports of Nigerian crude. US imports of Nigerian crude have dropped from 506,000 b/d in mid-November 2017 to 7,000 b/d by the start of last month. Bonga, which has a gravity of 29.4 API and a sulfur content of 0.25 percent, is known for yielding a high percentage of gasoil and distillates. “Bonga is a bit special, as it is the only grade that has seen interest from the US Gulf Coast recently, particularly given that Nigerian exports into the US decreased dramatically over the last year,” a crude trader said.

Meanwhile, in January 2019, production of crude oil for Nigeria was 1.954 million barrels per day. The country, which was exempted from the previous Organisation of Petroleum Exporting Countries (OPEC) production cuts deal, agreed to a quota under the current accord. With a reference level of 1.738 million bpd, the country was given a new quota of 1.685 million bpd. In February, Nigeria pumped 1.88 million bpd, 190,000 bpd above its cap, according to S&P Global Platts’ survey of industry officials, analysts and shipping data. The data for March indicates Nigeria has not yet mended its ways as it boosted output once again, this time by 90,000 barrels per day to a three-year high of 1.92 million bpd.

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Outlook

Nigeria: FPSO Allan to get anchoring upgrade

Brief Republic of Congo: Oil output to peak at 350,000 bpd without new finds

he Yinson floating production, storage and offloading unit (FPSO) Allan will receive an anchoring system upgrade prior to deployment at the

Scana Offshore, a subsidiary of Incus, said it will deliver hull engineering services and reinforcement of chain stoppers, as well as other key components and a complete monitoring system. The

to 55 meters. Anyala is estimated to have 2P resources of 218 million barrels of oil and 175 Bcf gas, while Madu is estimated to have 2P resources of 89 million barrels of oil and 739 Bcf gas. First production is

Anyala and Madu fields within leases 83 and 85 offshore Nigeria later this year. Norwegian FPSO systems provider Scana Offshore said it has been awarded a contract in connection with the modification of anchoring equipment to increase capacity and monitor anchoring forces.

fabrication and integration work will be completed at a yard chosen by Yinson, it added. The FPSO will be delivered in the third quarter of 2019. Yinson in late February 2019 contracted with First E&P to bareboat charter and operate the FPSO at Anyala and Madu fields, in water depths of 35 meters

planned for the fourth quarter of 2019. First E&P, a Nigerian company, in 2015 acquired Chevron’s 40 percent interest in OML 83 and OML 85 and became operator of the assets. The remaining 60 percent interest is held by Nigerian National Petroleum Corporation (NNPC).

he Republic of Congo expects its oil production to peak this year close to its current 350,000 b/d level and to start to fall shortly afterward, unless new discoveries from the country’s latest licensing round materialize, Benjamin Makaya, upstream head of the state SNPC oil company said. “There will be exploration drilling maybe this year or next year,” Makaya said on the sidelines of an industry event in Malabo, Equatorial Guinea, referring to the three recent production-sharing contracts OPEC’s newest member, the Republic of Congo awarded three offshore PSCs to Total, Kosmos and Perenco last year under the first phase of its latest licensing push. After declining from 320,000 b/d in 2010, new deepwater developments have reinvigorated Congo’s oil production, with Total’s Moho Nord adding 100,000 b/d after coming on stream in 2017. This year, Makaya said further upstream infill development drilling is expected on Eni’s Marine XII fields, which contain around 6 billion boe in place in subsalt reservoirs. The Republic of Congo currently exports three main crude grades; heavy sweet Djeno, light sweet N’Kossa and heavy Yombo. The grades are popular with Chinese refiners.

Angola: Kaombo Sul FPSO starts production

otal announced it has started producing from Kaombo Sul, the second floating production, storage and offloading (FPSO) unit of the Kaombo project, located on Block 32, 260 kilometers off the coast of Angola’s capital Luanda, in water depths ranging from 1,400 to 2,000 meters. Kaombo Sul, which has started pro-

ducing eight months after sister ship Kaombo Norte came on stream, will add 115,000 barrels of oil per day (bopd) and bring the overall production capacity to 230,000 bopd, equivalent to 15 percent of the country’s production, the French supermajor said. The associated gas from Kaombo Sul will be exported to the Angola LNG (liquefied natural gas) plant.

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“Leveraging the experience of Kaombo Norte, Kaombo Sul started up in the best possible conditions,” said Arnaud Breuillac, President Exploration & Production at Total. “This second FPSO stands out as an excellent example of standardization to reduce costs and improve efficiency. Its start-up will contribute to the group’s cash flow and production growth in 2019 and beyond.” “This achievement demonstrates once again Total’s commitment to Angola, as the group develops short cycle projects on Block 17 in parallel and prepares to drill an exploration well on Block 48,” Breuillac added. The full Kaombo development consists of six fields spread over an area of 800 square kilometers. Gengibre, Gindungo and Caril were connected to the Kaombo Norte FPSO, while the three fields, Mostarda, Canela and Louro, have been connected to Kaombo Sul. The project comprises a large subsea

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system including 59 wells (with over 60 percent of them already drilled), and the two FPSO units which were converted from very large crude carriers (VLCC). Total is Angola’s leading oil operator, producing an average of 211,000 bopd in 2018 from Blocks 0, 14, 14K, 17, and 32, as well as Angola LNG. In addition to the Block 32, which started up production in July 2018 with Kaombo Norte, Total operates Block 17 (with a 40% interest) where investment decisions were taken in 2018 to launch three new satellite projects: Zinia 2, Clov 2 and Dalia 3. Total is a partner in Blocks 0 (10 percent), 14 (20 percent), 14K (36.75 percent) and 16/06 (65 percent), as well as in Angola LNG (13.6 percent), and in different exploration licenses. In 2018, the group signed a risk service agreement with Sonangol for the deepwater Block 48 exploration license, which Total will operate.

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Market: Shell sets precedent with deal linking gas prices to coal

Mozambique: MHI secures significant work with Rovuma LNG

itsubishi Heavy Industries (MHI) became the first big contractor to secure significant work, agreeing to supply H-100 gas turbines sand compressor packages for the Rovuma LNG Phase 1 project in Mozambique. The award marks a major milestone for both Rovuma LNG and those hoping to benefit from future gas infrastructure in the remote region and the infrastructure is on the way, as Tanzania alone has six identified fields showing somewhere between 3 trillion and 6 trillion cubic feet of 3P gas reserves. The MHI agreement with ExxonMobil (onshore) and its co-venture partners, including Eni (offshore), still awaits a final investment decision, but it is expected shortly. The Japan-based contractor will supply the main liquefaction compressors, and Mitsubishi Hitachi Power Systems will provide dual-shaft, 120 megawatt H-100 gas turbines as the mechanical drivers. According to MHI, Rovuma LNG will be “one of the world’s largest natural gas liquefaction plants in Mozambique’s remote northern area. The project plan is for two liquefied natural gas trains, each expected to produce at least 7.6 million metric tons of gas per year. “This project will allow us to demonstrate the benefits of MHI’s LNG solution in terms of lower production costs, increased productivity, reduced complexity and lower lifecycle costs, while significantly reducing plant emissions,” Seiji Izumisawa, MHI chief executive said. “The (host-government agreement) will establish the fiscal, legal and commercial terms for the Onshore part of the LNG Project, just as the (production sharing agreement) defines these items for the Offshore part of the project,” Equinor has stated. Equinor has drilled in Tanzania’s Block 2 since 2011, and 15 wells have yielded nine discoveries and estimated volumes of 20 trillion cubic feet of gas in-place. They spent $2.1 billion over six years and retain a 65 percent interest in the block (ExxonMobil 35 percent, TPDC 10 percent). ExxonMobil and Eni in adjacent Mozambique are slightly out front with two to four potential LNG trains planned, and MHI now starting things rolling at plant estimated to cost upwards of $25 billion. Mozambique “Area 4” gas sales are now in place.

oyal Dutch Shell agreed to sell liquefied natural gas (LNG) to a Japanese utility at prices that include a link to coal, the latest innovation in the booming LNG market where buyers are seeking to diversify risks. In what Shell and its customer, Tokyo Gas, said is the world’s first such contract, the 10-year deal includes a pricing formula that is based on coal indexation. By diversifying its price exposure for LNG, which has historically been linked to oil, costs of the fuel will be stabilized, Toshio Kawamura, a general manager with Tokyo Gas, said. This type of deal would allow a utility to align the pricing of its LNG with changes in the coal market, and therefore better compete in its own power market, said Christopher Goncalves, chair of the energy practice at Berkeley Research Group. This is “a risk management strategy for somebody who is competing with coal-fired generation in the home market,” Goncalves said. “That is attractive in places which have a lot of coal-fired generation, such as China, India and Japan.” Coal and natural gas face off as power generation fuel in several markets. In the US, cheap and abundant gas has

decimated coal’s share from more than 50 percent as recently as 2008 to less than 25 percent last year, according to the Energy Information Administration. In Europe, utilities must add the cost of carbon emissions, which weighs more on coal users because it emits nearly twice as much carbon dioxide. The rivalry has not been as prevalent in Asia, where coal is typically the cheapest fossil fuel and most utilities in the region lack the ability to switch quickly to gas. Buyers like Japan, South Korea and China usually pay a premium for gas that is liquefied and shipped on ocean-going

tankers. Spot LNG in early 2014 cost nearly $80/boe more than coal, but has tumbled to a discount as wide as $12 last month, according to Bloomberg calculations. The deal also highlights a growing diversity of pricing options in the LNG market as demand and spot trading booms. It is Shell’s second foray into unorthodox gas pricing recently. The company earlier announced a deal with NextDecade Corp. to buy US LNG, which is usually linked to the American gas benchmark Henry Hub, on a Brent oil-linked basis.

Equatorial Guinea: Equatorial Guinea targets joint offshore project with Cameroon

quatorial Guinea is targeting a final deal with Cameroon to jointly develop gas condensate discoveries on their maritime border following a key investment decision by Noble Energy to develop a nearby gas hub, Gabriel Obiang Lima, Equatorial Guinean oil minister said.

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Equatorial Guinea and neighboring Cameroon agreed in 2017 to jointly develop their Yolanda and Yoyo gas condensate discoveries as a single resource but progress on a unitization deal has since stalled. Recently, Noble Energy took a final investment to monetize gas from its Alen

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gas condensate field, a project which includes a key pipeline connection from the asset to Equatorial Guinea’s existing LNG plant. The deal is key to keep the Punta Europa complex, home to LNG and LPG plants and the Malabo power station, well supplied with gas for the coming years. When the Alen’s gas condensate flows come on stream as scheduled in the first quarter of 2021, liquids separated at Punta Europa of around 40,000 b/d can be sold to Cameroon’s Limbe refinery, Obiang said. In return, Obiang said Equatorial Guinea wants Cameroon to commit gas flows from the Yoyo-Yolanda fields to feed the Punta Europa’s LNG plant. “We will definitely be focused on sending the liquids to the Cameroon market. They are interested in talking about joint development in the area. So if the commercial structure works, they will be more motivated to bring associated gas from Cameroon,” Obiang said. Alen has been producing some 7,000 b/d of condensate via a nearby floating production, storage and offloading vessel since 2013. Obiang said talks to agree on a unification deal with Cameroon for the Yoyo-Yolanda are “going very well.” Equatorial Guinea is struggling to halt the decline in its oil production with new projects to offset an average 10 percent annual decline in output from its existing fields.

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Ghana: Ghana paying ‘almost $500m annually for excess capacity’

South Africa: South Africa ponders on additional financial support for Eskom

outh Africa’s government are considering a variety of additional financial support measures for struggling state power firm Eskom, Pravin Gordhan, Public Enterprises Minister said. Eskom, which has implemented some of the most severe power cuts in several years this year, is battling for survival after a decade of steep decline during which its costs soared and electricity sales stagnated. South Africa’s government said in February that it would give Eskom a 69 billion rand ($4.9 billion) bailout over the next three years to help it service its 420 billion rand debt mountain. But energy experts say the bailout is insufficient to make Eskom financially

sustainable in the long term, especially since South Africa’s energy regulator awarded Eskom smaller tariff hikes than it asked for. “A variety of options are before us, and serious consideration is being given to all of them at the highest levels of government,” Gordhan said. Anton Eberhard, chairman of an Eskom task team appointed by President Cyril Ramaphosa, said his team was looking at some kind of debt relief for the utility, which supplies more than 90 percent of the power in Africa’s most industrialised economy. “Some kind of new innovative financing facility is something that the team is looking at, a blended finance facility which could involve a concessionary component,” Eberhard added.

ormer Chief Executive of the Ghana National Petroleum Corporation (GNPC), Alex Mould, has revealed the country’s power generation capacity is in so much excess it has become a liability adding that power challenges are both a consequence of both technical with financial constraints. Government officials have maintained the recent power cuts in parts of the country are temporary because they are the result of technical issues but energy experts have countered this saying financial challenges in the sector point to a bigger problem. He said the country should not be going through power cuts because, since 2016, Ghana took firm steps to ensure there was enough capacity. “In fact, we have over-capacity. What people do not know is that we have so much capacity that we are paying almost $500 million a year for not using the capacity,” he said. Ghana currently has close to 4,420MW installed capacity, nearly 100 percent more than it needs. The country needs only 2,500 megawatts at peak hours to power homes or businesses. “Technical issues are when you have plants that are not maintained properly and these plants require periodic main-

tenance and when that is not done, they sometimes go off in an unplanned manner. Also, you have capacity constraints. On the financial side, when you are not able to raise the necessary letters of credit to bring in crude oil or pay for fuel consumption from the purchase of gas,” Mould said. “The problem now is either inadequate planning, unavailability of free gas or because you cannot raise the required letters of credit from your banks to be able to bring in crude oil” he said.

Brazil awards Siemens contract for LNG-to-power project

he Brazilian government has awarded global energy solutions provider, Siemens, a contract for the turnkey construction of a new combined cycle power plant in the state of Rio de Janeiro. The project is the integrated LNG-to-power development GNA 1 of Gás Natural Açu in the Port of Açu. Siemens is providing an equity investment and owns one-third of the project company Gás Natural Açu (GNA) together with Brazil logistics company Prumo Logística S.A. and BP. In addition, the company signed a long-term service agreement and will operate and maintain the plant to help ensure reliability, availability and operational performance. With a capacity of approximately 1.3GW, the power plant will provide affordable and clean energy for Brazil. Construction of the project already started in 2018 and is slated for opera-

tion at the beginning of 2021. “Our participation in GNA demonstrates Siemens commitment to new commercial strategies that address the

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evolving challenges of an increasingly demanding energy market,” said Lisa Davis, CEO Siemens gas and power. GNA1 is the first fully integrated

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LNG-to-power project of this scope for the company, including the construction of a 1.3GW power plant as well as an LNG import and regasification terminal, a substation and a transmission line to connect the plant to the grid. Siemens developed the project together with its partners BP and Prumo and is building the combined power plant turnkey in consortium with the Brazilian construction company Andrade Gutierrez. For the project, Siemens is responsible for the delivery of the complete power island with three H-class gas turbines, one steam turbine, four generators and heat recovery steam generators and instrumentation and control systems. The company will also provide longterm service and operation and maintenance for the power plant. The service scope includes advanced remote monitoring and diagnostics, part of the company’s Digital Services portfolio.

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Oil majors take position in booming battery storage market STEPHEN ONYEKWELU

nergy transition from fossil fuels to renewables has set the stage for a boom in the battery market and oil majors are taking advantage. French oil and gas supermajor,Total, wants to capture more of the growing Chinese battery market and has struck two separate deals to gain market shares in the world’s largest electric vehicle (EV) market and the world’s top liquefied natural gas (LNG) demand centre. To achieve this, Total’s subsidiary Saft has signed an agreement with China’s privately held Tianneng Group to create a joint venture (JV) to expand their lithium-ion battery production, the supermajor has said.

Manufacturing will take place at the Changxing Gigafactory, with a potential capacity of 5.5 gigawatt hours (GWh), several GWh of which are already in operation. British Petroleum (BP) is also investing in batteries. Last year, the company announced the acquisition of a $20-million stake in StoreDot, a developer of ultrafast charging battery technology. Ultra-fast charging is at the heart of BP’s electrification strategy. StoreDot’s technology shows real potential for car batteries that can charge in the same time it takes to fill a gas tank. The total size of the battery storage market will increase from $1.98 billion in 2018 to $8.54 billion in 2023. According to an estimate from GTM Research, total US storage deployment should increase from 1.2 GWh in 2018 to more than 10 GWh by 2023. Investment in battery www.businessday.ng

storage was $440 million in 2017, and will increase to $3.1 billion by 2022 to meet the surge in demand. Growth in battery storage market has been in lockstep with growth in the battery recycling market too. A recent report from Allied Market Research calculated the lithium ion battery recycling market would reach $2.27 billion by 2025. That is up from $138.6 million in 2017, which means a compound annual growth rate of almost 42 percent. This is an impressive growth rate that will necessitate better recycling methods such as the one developed by the Rice University researchers in the United States of America, especially if the methods are cheap and less harmful to the environment than established processes. A materials science lab at Rice Uni-

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versity has developed a relatively green lithium ion battery recycling process that allows for the retention and subsequent reuse of valuable component elements such as cobalt. The method involves a so-called deep eutectic solvent, a compound that freezes at much lower temperatures than its constituent compounds, that can dissolve a variety of metal oxides, and the researchers reported that it had successfully extracted a substantial portion of the cobalt used in lithium batteries. Battery recycling certainly looks like the next frontier in energy storage and electronics. As the race to make batteries more reliable and longer-lasting continues, another one is beginning that will seek to find out how to better dispose of these longer-lasting and more reliable batteries once their life is over.

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Demand for Aramco’s bond shoots above $30bn

emand for Saudi Aramco’s inaugural international bond is higher than $30 billion, Khalid al-Falih, Saudi Energy Minister said. State-owned Saudi Aramco, the world’s largest oil company, met investors recently in a global bond roadshow ahead of its planned issuance, which Falih previously said would be in the $10 billion range. The transaction is expected to attract demand from both emerging markets and investment-grade buyers, as although Aramco is state-owned its finances put it in the same league as independent international oil majors like Exxon and Shell. Speaking at an event in Riyadh, Falih said he believed demand for the bond was “north of” $30 billion. Aramco last year postponed a planned initial public offering to 2021. “The success of this bond issue will be the litmus test and a crucial precursor for the an-

Saudi Basic Industries from Saudi Arabia’s Public Investment Fund in a deal worth $69.1 billion. Al-Falih said he hopes Aramco’s SABIC acquisition will be completed within six months. The transaction will give the PIF firepower to proceed with its plans to create jobs and diversify the largest Arab economy beyond oil exports. Falih said in addition to SABIC, there will be other assets, “non-strategic assets,” that PIF may exit. “I think the vision of the PIF goes way beyond the $69 billion that Saudi Aramco will provide to the PIF, which is very bold, it’s global and domestic at the same time,” he said. PIF has invested in ridehailing firm Uber Technologies and in electric carmakers Lucid Motors and Tesla. “So do not be surprised, just as bold as they were in entering some of these investments, that they do exit,” said Falih.

Egypt to slash fuel subsidies as it nears end of IMF programme

gypt will remove subsidies on most energy products by June 15, it told the International Monetary Fund in a January letter released by the IMF as part of a review of Cairo’s three-year, $12 billion loan programme with the lender. This will mean increasing the price to consumers of gasoline, diesel, kerosene and fuel oil, which are now at 85-90 percent of their international cost. The loan programme began in 2016 and is tied to reforms that have included a sharp devaluation of the Egyptian pound and the introduction of a value-added tax. They have helped steady Egypt’s economy but also put millions of Egyptians under increased economic strain.

Fuel prices have increased steadily over the past three years. LPG and fuel oil used for electricity generation and bakeries are not included in the commitment to reaching full cost recovery through subsidy cuts. The government said in its letter that after starting to link less-used Octane 95 petrol to international prices, which it accomplished in April, it would introduce similar indexation mechanisms for other products in June, with the first price adjustments expected in midSeptember. The government noted it had also put in place a hedging mechanism to protect against shocks in oil and other commodities. In its review, however, the IMF “advised caution in us-

ing financial instruments with upfront costs that protect only temporarily against extreme price movements”, referring to hedging. Since starting the IMF loan programme, Egypt has borrowed heavily from abroad. The government committed to fully eliminating arrears held by the state-owned Egyptian General Petroleum Company (EGPC) by the end of June this year. The arrears stood at $1.043 billion at the end of 2018. Egypt said it had capped the government’s ability to borrow from the central bank via an overdraft account at 66 billion Egyptian pounds ($3.82 billion) in 2018/19, equal to 10 pct of the previous three years’ revenue, as a way of managing liquidity and reducing inflation.

Slander case relating to Nigeria corruption scandal could prompt changes at ENI

ticipated Aramco IPO within the next two years,” said Salah Shamma, head of investment, MENA equities, at Franklin Templeton. The bond follows Aramco’s agreement to buy a 70 percent stake in petrochemicals firm

PIF will be looking globally to acquire emerging companies in emerging industries, said the minister, “to create value for them, but at the same time to leverage those acquisitions and investments for the benefit of the kingdom’s strategy.” www.businessday.ng

taly’s Eni has carried out internal audits in a slander case relating in part to a Nigeria corruption scandal, and a review could prompt some management changes at the oil major. Eni and its Anglo-Dutch peer Royal Dutch Shell are on trial for allegedly paying $1.1 billion in bribes to buy Nigeria’s OPL 245 offshore oilfield in 2011, one of the oil industry’s biggest graft cases. Both companies deny any wrongdoing. Milan prosecutors opened in 2018 a separate case involving allegations that certain Eni managers had a role in exploiting false statements to discredit and slander witnesses involved in the main case. The source said Eni had conducted at least two audits on the case concerning alleged false

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statements and sought legal opinions from outside lawyers. “The audits could lead to a reshuffle of management at the group,” the source said. In comments sent to Reuters, Eni confirmed it had launched audits on internal company processes linked to the matter, adding they had been wrapped @Businessdayng

up and steps for improvement identified. Eni also denies any wrongdoing in the case opened by Milan prosecutors on the alleged making of false statements. “If there should be changes to the management structure these will be announced, as always, in the correct way,” it said.

Wednesday 10 April 2019

BUSINESS DAY

marketinsight

WEST AFRICA

ENERGY intelligence

Oil prices rise 1.5 percent, touches $70 per barrel

il prices gained 1.5 percent as strong US employment data tempered fears about weakening global crude oil demand, and on expectations that an escalating conflict in Libya could tighten oil supplies. Optimism that Washington and Beijing are approaching a trade deal also boosted crude prices. Brent crude futures settled at $70.34 a barrel, up 94 cents, or 1.35 percent. The session high of $70.46 was the strongest since November 12. US West Texas Intermediate (WTI) crude settled at $63.08 a barrel, up 98 cents, or 1.58 percent. Earlier in the session, WTI hit $63.24, the highest since November 6. Brent recorded its second straight week of gains, while WTI saw its fifth consecutive weekly rise. Crude futures also received a boost from news of a potential slowdown in crude production out of Venezuela, as US sanctions and energy blackouts hit the OPEC nation’s oil industry. Venezuelan state-owned oil company PDVSA expects its

crude upgraders to operate well below capacity this month, according to industry sources. Venezuela depends on the upgraders to convert the extra-heavy crude oil produced in the Orinoco Belt into exportable grades usable in overseas refineries. While crude production has soared in the United States to a record 12.2 million barrels per

day, according to government data released, some signs point to a near-term easing of growth. Growing optimism over U.S.China trade relations also supported prices. US and Chinese trade negotiators will continue talks by video conference as they try to reach a deal to resolve the trade war, Larry Kudlow, White House adviser said.

‘Three importers cut Iran oil shipments to zero’

hree of eight importers granted waivers by Washington to buy oil from Iran have now cut their shipments to zero, a US official said, adding that improved global oil market conditions would help reduce Iranian crude exports further. The United States re-imposed sanctions on Iran after President

Donald Trump last May withdrew the country from a 2015 nuclear deal between Iran and several world powers, accusing it of supporting terrorism and conflicts in Syria and Yemen. While the United States has set a goal of completely halting Iran’s oil exports, it granted temporary import waivers to China, India, Greece, Italy, Taiwan, Ja-

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pan, Turkey and South Korea to ensure low oil prices and no disruption to the global oil market. The Trump administration is currently in consultations with the importers ahead of a May 2 deadline when the waivers expire. “In November, we granted eight oil waivers to avoid a spike in the price of oil. I can confirm today three of those importers are now at zero,” Brian Hook, the special US envoy for Iran, told reporters. “There are better market conditions for us to accelerate our path to zero,” Hook said. “We are not looking to grant any waivers or exceptions to our sanctions regime.” Hook said US oil sanctions against Iran had removed about 1.5 million barrels of Iranian oil exports from the market since May 2018. “This has denied the regime access to well over $10 billion in (oil) revenue - a loss of at least $30 million a day,” he said. China, India, Japan, South Korea and Turkey are likely to be given waivers that could cap Iran’s crude oil exports at about 1.1 million barrels per day, US-based analysts at Eurasia Group said in January. That would remove Italy, Greece and Taiwan from the waivers list.

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OPEC Flakes Barkindo says OPEC committed to oil cuts despite market ‘improvement’

espite a steady rise in oil prices to nearly five-month highs, OPEC and its allies will not relax their crude production quotas with the market outlook still shaky, Mohammed Barkindo, the organization’s secretary general said. “While we have seen a marked improvement in market conditions since the beginning of year and the market is steadily moving towards a more balanced state, we still believe we need to see inventories levels drop further,” Barkindo said in a speech at the APPO Cape VII conference in Equatorial Guinea. “We recognize that underlying risk remains, such as ongoing trade negotiations, monetary policy developments as well as the increasingly complex geopolitical challenges in various parts of the world.” OPEC, Russia and nine other non-OPEC partners are in the midst of a 1.2 million b/d production cut that has helped oil prices recover from a massive slump in the last three months of 2018. The cut agreement is scheduled to run through June, and the coalition is divided on whether it

should be extended. A nine-country monitoring committee co-chaired by the coalition’s two largest members, Saudi Arabia, which wants to extend the cuts, and Russia, which is more circumspect, is scheduled to meet May 19 to review market conditions. The full 24-country bloc will meet June 25-26 in Vienna to decide the agreement’s future. Barkindo said the coalition was not overly concerned that it may push prices too high, given the supply and demand risks that still exist, adding that it was more important to prevent a price crash.

Saudi says May will be key to decide on extending OPEC oil supply cuts

he Saudi energy minister said it was premature to say whether a consensus existed among OPEC and its allies to extend oil supply cuts, but a meeting next month would be key. A joint OPEC and non-OPEC ministerial committee known as the JMMC is due to meet in May. Saudi Arabia and Russia are members of the panel, which includes other major oil producers that took part in a global supply-cutting agreement last year, such as Iraq, the United Arab Emirates, Kuwait, Nigeria and Kazakhstan. “JMMC will be a key decision point because we will certainly by then know where the consensus view is and, more importantly, before we ask for consensus, we will know where the fundamentals are pointing,” Khalid alFalih, the Saudi minister, said. “I think May is going to be key,” he added. Oil inventories remain higher than average but the market is on its way towards rebalancing, Falih added. Russia, which is cutting oil output in tandem with OPEC, also said production cuts would stay in place at least until June, when Washington’s next steps @Businessdayng

on reducing Iranian and Venezuelan oil exports become clearer. The United States has been increasing its own oil exports steeply, while US President Donald Trump has been pressing OPEC to lower the price of the commodity by boosting production. US policies targeting Iran and Venezuela have introduced a new level of uncertainty for OPEC as the producer group struggles to predict global supply and demand. Washington is also advancing a bill, known as NOPEC, which could expose OPEC members to US antitrust lawsuits. The NOPEC move prompted Saudi Arabia to threaten to sell its oil in currencies other than the dollar if Washington passes the bill.

Wednesday 10 April 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

Tanzania’s $30bn LNG project holds lesson for Nigeria DIPO OLADEHINDE

anzania is courting International Oil Companies (IOC) to develop a $30 billion liquefied natural gas project and the energy companies falling over themselves are the same ones that turned their noses against Nigeria’s invitation to invest in its Liquefied Natural Gas (LNG) plants. Contacts have been continuing off and on for four years, but there seems to be optimism over the chances of progress this time around as Tanzania said in March that

it plans to negotiate terms for developing a $30billon LNG project with international companies led by Norway’s Equinor. Meanwhile, Nigeria’s projects has not had a significant investment into its LNG in over two decades. Tanzania has an estimated 58 trillion cubic feet of natural gas reserves. Shell, which has made discoveries on adjacent acreage, is eager to participate in any Tanzanians’ export facility. The company and its partner Ophir Energy are developing the Blocks 1 and 4, which are estimated to hold around 16 trillion cf of recoverable gas. “It is our understanding that the objective of all partners involved in the Tanzania LNG project is to have a single,

Snapshot

Nigeria has more gas than oil so we should leverage on our gas resources and continue to put structures in place to encourage deep pockets investors to invest in Nigeria www.businessday.ng

joint project. We share the view that such a joint integrated project will result in a globally competitive LNG project, which will yield far greater benefits for the host country than a small project can,” a Shell spokesperson told Petroleum Economist. The Anglo-Dutch major said it was awaiting a decision from the Tanzanian government on the next steps, but that it was “keen to make progress”. The government of President John Magufuli has raised the bar by insisting that export projects have a strong focus on domestic infrastructure development. Contrast this with Nigeria where investors have largely been unimpressed with overtures to build new liquefaction plants. NLNG Train 7 still sputters after nearly a decade. Ayodele Oni, energy partner at Bloomfield Law practice said the major problem facing the NLNG sector is its problematic fiscal regime and its unspecific laws which will always distract deep- pocket investors from coming into the country. Oni said competition is growing across Africa and other countries are stepping up activities in their gas sector unlike Nigeria which has enjoyed the benefit from the oil and gas sector for a long time and seems to be relaxed. “Nigeria has more gas than oil so we should leverage on our gas resources and continue to put structures in place to encourage deep pockets investors to invest in Nigeria,” Oni told BusinessDay. Leading consulting firm PricewaterhouseCoopers (PwC) in its Africa oil and gas report said poor infrastructure and an uncertain regulatory framework were

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the top two challenges identified by new emerging players and markets especially in Uganda, Ghana, Tanzania, Nigeria and Kenya. “The Nigerian Government has been in the process of implementing the Petroleum Industry Bill (PIB) since 2006 and it has been estimated that uncertainty around it has cost the country $50 billion in capital projects,” PwC noted in its report. PwC noted that governments around Africa are reviewing or developing their energy policies as many countries are investigating changes in the government take, taxation regulations and state participation. Since the development of the NLNG, new projects have been too few and far between. Three LNG projects in Nigeria: Olokola LNG, Brass LNG and the NLNG’s Train 7 have been unable to reach final decision by the stakeholders as investors have pulled out. The OK LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation (NNPC) left. The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013 and has stalled since then. The difference is an uncertain investment climate worsened by regressive policies. Two years ago, politicians were seeking to amend the NLNG Act without recourse to investors thereby violating the sanctity of contract it signed with investors.

@Businessdayng

Wednesday 10 April 2019

BUSINESS DAY

Wednesday 10 April 2019

BUSINESS DAY

tax issues

FIRS extends bank accounts substitution exercise …eyes firms with N100mn and above; targets N750bn from 55,000 millionaire tax defaulters Iheanyi Nwachukwu

he Bank Accounts substitution exercise by the Federal Inland Revenue Service (FIRS) will be extended till June to get 55,000 tax defaulters with a turnover of N100 million and above into the tax net. The Federal Inland Revenue Service plans to generate about N750 billion from about 55,000 millionaire tax debtors. This target will be achieved with the bank accounts substitution exercise. “From the Bank Accounts substitution exercise, we used banking information to bring non-compliant taxpayers with N1billion and above turnover to comply. It has so far resulted in the recovery of N23.35billion. The exercise has been extended to cover those with turnover of N100 million and above”, said Tunde Fowler, Executive Chairman, FIRS. “To date, about 500 of them have come forward and they have paid and we have collected in the region of about N24 billion. We believe we should be able to go through the 55,000 before the middle of this year which will be the 30th of June”, Fowler had told the House of Representatives joint committees on finance; appropriations; and aids, loans and debt on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal

Strategy Paper (FSP). He restated that the 85 per cent of VAT collected goes to State Governments. “In terms of estimates, which we should be able to generate from this exercise alone, that will be about N750 billion. Fowler who noted that FIRS recorded an increase in Value Added Tax, VAT collection between 2015 and 2018 said FIRS is broadening its VAT collection scope with the adoption of States Accountants Generals (SAG) collection platform, VAT Auto-Collect, integration of the GIFMIS plat-

form with Ministries, Departments and Agencies, (MDAs) and through e-Service payment options.” He was however categorical that VAT is not for the poor: “Out of about N5.3 trillion, a large percentage is shared between states and local governments. In VAT, there has been a growth of over 44 percent between 2015 and 2018. And that is at the current rate of 5 per cent. “Now when you look at Africa as a continent, Nigeria still has the lowest VAT rate. When we look at the items that are not VATable, basic

food is not VATable, medicals, education. But if you decide and you have the ability to go to a restaurant to eat and drink the same thing you can buy in the open market, then you pay VAT. So VAT basically is a consumption tax and those who choose not to go to the open market to buy their food and cook at home are subject to VAT. So its (VAT) not a hardship on the low income earners because normally they don’t even go to hotels when their wives can cook at home and they can have something very nice”, Fowler said. “But the same Nigerians

who are complaining about an increase are the same ones who go to Ghana and go and pay triple the amount in VAT or go to London and pay higher amount. “So we are just saying, like the minister said that we should get used to the idea. And 85 percent of VAT goes to the State Governments who are supposed to be closer to the people. So they can use that money as approved by their State Houses of Assembly. So they can use that money on education, infrastructure, etc. “Yes, we had in increase of about 32 per cent from N4.02 trillion in 2017 to N5.3 trillion in 2018. At the Federal level, clearly we can see all the projects that are being completed, based on the available funds. I’m just saying that if we keep on the same way, the expectations cannot be different. “For those who have the ability and the desire to take the choice, of going to areas where they have to pay VAT, then they should be allowed to pay VAT. The FIRS Chairman told the committee that through enforcement activities in respect of defaulting taxpayers from various tax offices, tax audit and investigation assessments, FIRS has generated the sums of N28.51billion and $77.83million. “FIRS and the Economic and Financial Crime Commission (EFCC) Joint Tax Force

(JTF) was introduced in 2018 to enhance the fight against tax related economic fraud. As at December 2018, a total of N6.94 billion and $278,430 had been recovered by the JTF. This and other such initiatives are continuous and will be continuous going forward.’’ He said that FIRS also initiated income tax on property owners in Abuja and Lagos as part of efforts to deepen tax revenue collection and expand the nation’s tax net as well as increase the revenue base. “This project which initially targeted property owners in Abuja and Lagos has so far yielded N4.3 billion, and is being extended to other locations. In this regard, Oyo and Kaduna states have commenced. “It is important to note that this is not a property tax but rather the use of the provisions of the law to bring into the tax net companies that own properties but failed to file necessary tax returns and pay appropriate taxes due,’’ Fowler, explained. On tax audit exercise of the Service, Fowler said “This covers both the National Tax Audit (NTA) and the Pioneer Audit (PA). The NTA exercise contributed the sum of N212.79billion to tax collection in 2018. Following improvements to the audit process and resultant increased efficiency, the exercise is expected to produce increased audit yield in 2019.”

Addressing the challenges of the Digital Economy - New thinking and possible pitfalls Funke Oladoke and Victor Adegite Adeloye

Introduction ver the last 25 years, the face of businesses has been rapidly transformed by technology. What was thought as a separate sector (digital / Information Technology) has transformed every other sector to what is now known as the digitization of the economy. Unable to resolve the question of tax challenges of the digital economy, the Organisation for Economic Cooperation and Development (OECD) recently put forward new proposals. This became necessary as the ability of business entities to transact with customers internationally, without a local presence in the user’s jurisdiction, is on the increase.

Consequently, there has been a huge debate amongst tax administrators across the world on who has the taxing right over such cross border transacwww.businessday.ng

tion or at best, how should the profit be shared/allocated to the relevant jurisdictions. New challenges that arise from growing the digital

economy Traditionally, business transactions and the taxation of a business has been significantly influenced by its geographical location. The digitalization of economies has however made it difficult to say the least, on how to determine jurisdiction where a transaction has taken place and how taxes should be imposed especially in respect of cross border transactions. From the ever-growing innovation of technology, companies have greater capability of reaching different geographic markets without a physical presence. For example, a retail outlet can expand to sell to consumers in several jurisdictions through its online platform without any form of physical presence in the host countries. Ordinarily, questions arise on how sales transactions are

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subjected to tax. How does the business profit subjected to tax and which jurisdiction? To further complicate the issue, many business entities outsource almost some of their key operations, such as shipping, marketing, distribution, customer service, amongst other, to third parties, making it even more difficult to determine the taxable transactions and the profits thereon and the jurisdiction that has the taxing rights. According to the OECD, “this ‘remote’ participation in the domestic economy enabled by digital means but without a taxable physical presence is often seen as the key issue in the digital tax debate.” Amongst the common challenges that arise from the growing digital economy are: • The allocation of taxing rights (i.e. the Nexus rules) and profit shares between @Businessdayng

jurisdictions (i.e. the ‘profit allocation’ rules) • Businesses that rely heavily on intangible assets such as software and online technology platforms. In this article, we will discuss the details of each of the above-mentioned challenges resulting from the growth of the digital economy. Also, we will include details on potential solutions being debated, and their implications. The allocation of taxing rights and profit shares between jurisdictions Nexus rules are what define the relation between a business and a taxing jurisdiction. Once that relation is defined, the business will be taxed according to the tax laws of the taxing jurisdiction (state or local taxes). To be continued next week

Wednesday 10 April 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 09 April 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 202,607.79 5.70 1.79 204 9,991,038 UNITED BANK FOR AFRICA PLC 210,326.44 6.15 0.83 336 26,934,117 ZENITH BANK PLC 632,639.35 20.15 -0.25 363 23,352,135 903 60,277,290 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 258,446.11 7.20 -1.37 325 44,585,763 325 44,585,763 1,228 104,863,053 BUILDING MATERIALS DANGOTE CEMENT PLC 3,152,493.87 185.00 -0.27 69 168,228 LAFARGE AFRICA PLC. 186,045.04 11.55 - 31 92,764 100 260,992 100 260,992 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 347,182.29 590.00 - 11 20,651 11 20,651 11 20,651 1,339 105,144,696 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 2 10,000 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 2 3 10,002 3 10,002 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 3 10,002 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 76,312.80 80.00 - 8 22,695 OKOMU OIL PALM PLC. PRESCO PLC 62,750.00 62.75 - 0 0 8 22,695 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,500.00 0.50 -5.66 7 229,842 7 229,842 15 252,537 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 4 35,813 202.36 0.52 - 2 3,690 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 45,525.75 1.12 -1.75 164 21,684,436 20,601.27 7.15 - 44 431,070 U A C N PLC. 214 22,155,009 214 22,155,009 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 1 2 1 2 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 8 10,070 ROADS NIG PLC. 165.00 6.60 - 0 0 8 10,070 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,313.34 1.66 - 12 105,159 12 105,159 21 115,231 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,334.94 1.32 - 7 21,710 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 131,422.97 60.00 - 26 63,528 INTERNATIONAL BREWERIES PLC. 202,002.76 23.50 - 11 212,014 NIGERIAN BREW. PLC. 481,413.50 60.20 0.33 71 3,045,040 115 3,342,292 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 42,500.00 8.50 - 33 129,552 DANGOTE SUGAR REFINERY PLC 161,400.00 13.45 -2.18 55 593,768 FLOUR MILLS NIG. PLC. 69,706.45 17.00 - 44 226,097 HONEYWELL FLOUR MILL PLC 8,723.22 1.10 - 12 134,050 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 6 7,796 NASCON ALLIED INDUSTRIES PLC 50,471.80 19.05 -4.75 41 198,512 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 191 1,289,775 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,721.12 10.50 - 36 99,840 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 - 21 171,144 57 270,984 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,815.75 3.85 - 15 106,584 15 106,584 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 38,910.68 9.80 - 28 231,981 UNILEVER NIGERIA PLC. 201,075.19 35.00 - 24 80,971 52 312,952 430 5,322,587 BANKING ECOBANK TRANSNATIONAL INCORPORATED 192,670.29 10.50 -6.67 69 1,110,860 FIDELITY BANK PLC 53,603.37 1.85 -4.64 104 4,191,698 GUARANTY TRUST BANK PLC. 1,000,660.09 34.00 7.77 354 24,072,320 JAIZ BANK PLC 14,732.12 0.50 - 5 25,150 SKYE BANK PLC 10,687.83 0.77 - 0 0 74,855.09 2.60 0.39 75 119,718,964 STERLING BANK PLC. UNION BANK NIG.PLC. 189,284.89 6.50 - 46 369,880 UNITY BANK PLC 8,533.22 0.73 - 15 210,953 WEMA BANK PLC. 26,616.38 0.69 1.45 41 1,938,997 709 151,638,822 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,504.63 0.65 - 18 1,115,325 21,000.00 2.00 - 4 12,471 AXAMANSARD INSURANCE PLC 1,951.20 0.24 -4.00 5 682,050 CONSOLIDATED HALLMARK INSURANCE PLC CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,093.20 0.21 - 9 223,421 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 1 500 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 487.95 0.38 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC LASACO ASSURANCE PLC. 2,197.03 0.30 3.45 10 4,310,455 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 - 0 0 LINKAGE ASSURANCE PLC 4,000.00 0.50 - 5 63,000 MUTUAL BENEFITS ASSURANCE PLC. 1,760.00 0.22 - 8 209,445 11,089.06 2.10 -9.87 11 243,500 NEM INSURANCE PLC NIGER INSURANCE PLC 1,547.90 0.20 -4.76 9 1,074,158 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 1 2,000 REGENCY ASSURANCE PLC 1,533.81 0.23 - 2 75,000 SOVEREIGN TRUST INSURANCE PLC 2,001.80 0.24 4.35 4 160,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 2 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,353.10 0.40 - 29 243,884 117 8,415,211 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,109.83 1.36 - 7 83,962 7 83,962

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,240.00 3.62 - 56 542,634 CUSTODIAN INVESTMENT PLC 35,879.37 6.10 - 15 191,389 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 36,436.99 1.84 -1.60 80 4,028,424 ROYAL EXCHANGE PLC. 1,492.16 0.29 - 0 0 STANBIC IBTC HOLDINGS PLC 471,065.44 46.00 6.48 17 7,025,290 UNITED CAPITAL PLC 15,420.00 2.57 -1.15 79 2,892,473 247 14,680,210 1,080 174,818,205 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 4.55 31 11,489,000 31 11,489,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 2 1,520 2 1,520 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,075.00 4.05 -9.88 19 200,819 GLAXO SMITHKLINE CONSUMER NIG. PLC. 11,360.83 9.50 - 26 111,872 MAY & BAKER NIGERIA PLC. 4,106.06 2.38 3.48 12 166,005 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 7 88,349 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 4 451 PHARMA-DEKO PLC. 68 567,496 101 12,058,016 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 1 1 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 1 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 7.69 61 50,233,524 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 61 50,233,524 62 50,233,525 BUILDING MATERIALS BERGER PAINTS PLC 2,622.90 9.05 - 11 25,170 CAP PLC 23,590.00 33.70 - 10 6,082 CEMENT CO. OF NORTH.NIG. PLC 223,439.52 17.00 - 26 135,900 FIRST ALUMINIUM NIGERIA PLC 675.31 0.32 - 0 0 MEYER PLC. 286.87 0.54 - 2 12,682 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 2 100 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 51 179,934 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,170.38 1.80 - 30 369,328 30 369,328 PACKAGING/CONTAINERS BETA GLASS PLC. 29,173.37 58.35 - 7 4,622 GREIF NIGERIA PLC 388.02 9.10 - 0 0 7 4,622 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 88 553,884 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 4 17,438 4 17,438 4 17,438 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 6 27,298 6 27,298 INTEGRATED OIL AND GAS SERVICES OANDO PLC 60,292.35 4.85 -3.00 58 679,830 58 679,830 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 61,661.79 171.00 - 20 12,225 CONOIL PLC 15,960.90 23.00 - 20 73,538 ETERNA PLC. 5,542.61 4.25 - 38 398,941 FORTE OIL PLC. 35,101.87 26.95 - 29 128,509 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 3 6,000 TOTAL NIGERIA PLC. 66,546.28 196.00 - 14 6,682 124 625,895 188 1,333,023 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 1 100 1 100 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 3 4,500 TRANS-NATIONWIDE EXPRESS PLC. 323.50 0.69 - 3 2,450 6 6,950 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 1 1,440 IKEJA HOTEL PLC 4,698.08 2.26 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 5 162 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 6 1,602 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 199.58 0.33 - 1 50,040 LEARN AFRICA PLC 1,033.74 1.34 - 6 111,000 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 2 200 UNIVERSITY PRESS PLC. 780.85 1.81 - 6 18,513 15 179,753 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 795.70 0.48 - 1 17 1 17 SPECIALTY INTERLINKED TECHNOLOGIES PLC 766.91 3.24 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Opinion

Signs of Rwanda!

Franklin Ngwu

s the global community gathered over the weekend for the 25th commemoration of the Rwandan Genocide, our dear Vice President, Yemi Osinbanjo most commendably encouraged world leaders never to allow a repeat of the kind of genocide that happened in Rwanda 25 years ago. Further concerned by the disturbing resurgence of hate speech, racism and other identity-type problems and their causative link to the Rwandan genocide, he equally implored world leaders to stand in unison against actions or inactions that incite and cause societal disorder. While the pertinence of Osinbajo’s cautions is undoubtedly true, a patriotic assessment of our dear country shows that there are many signs of Rwanda in Nigeria that are either ignored or condoned even by the government. Rwandan genocide cannot be described as an abrupt war between the Hutus and Tutsis. It was a genocide caused by built up sentiments of hate and divisions, real and perceived feelings of marginalization and inequality that were allowed to fester even within the realms of government. Traceable to many factors such as the

perception of Tutsis as superior in addition to their higher economic power given their specialization in livestock as compared to Hutus in crop farming, a small country of about 7 million people in 1994 co-existed on the edge. With deep hatred against the minority Tutsis with only about 14% of the population, the shooting down of the plane carrying the then President Juvenal Habyarimana, a Hutu and his Burundian colleague, another Hutu on 6th April 1994 provided the required opportunity for the Hutus, with about 85% of the population, to unleash their pent-up anger against the Tutsis. Within hundred days, about a million people were killed with many more raped, maimed, injured or declared missing. As we continue to grieve over the unconscionable atrocities of the Rwandan experience and the inexcusable failings of both Rwandan leaders and that of the international community, the only way we can genuinely show lasting penitence and truly avoid a reoccurrence is to effectively address all signs similar to the ones that caused the genocide. These include all cries of oppression, marginalization, tribal persecution, negligence and other social vices that negate or suppress the freedoms and opportunities of citizens. Most unfortunately and lamentably, across the length and breadth of Nigeria, we are now more characterized with pervasive signs similar to the ones that festered and caused the Rwandan genocide. When entire villages and communities are repeatedly attacked with many killed, injured and others permanently displaced, we have signs of Rwanda. Even though that many of those killed and displaced are most of the times helpless and unable to fight back, the feelings of

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… a patriotic assessment of our dear country shows that there are many signs of Rwanda in Nigeria that are either ignored or condoned even by the government

hate, oppression and desire to revenge are deep. An encounter with my Uber driver, Jonah from Chibok is a vivid example of micro signs of Rwanda in Nigeria. After running away from Chibok about 8 years ago, Jonah is unable to return or visit his most cherished village, powerless to see or even hear from his mother and younger ones, he is left frustrated and deeply embittered while he toils for daily survival on the streets of Lagos. As we have millions like Jonah in almost all parts of the country and with no clear and convincing plan to properly address their pitiable and avoidable sufferings, we have signs of Rwanda! In addition to many killings, when elections in areas perceived to be dominated by specific ethnic group are deliberately and violently disrupted to disenfranchise the group in order to achieve preferred electoral outcomes, then we have signs of Rwanda! Moreover, as such barbarism received little or no condemnation from our leaders and treated with levity even by relevant government agencies, we are encouraging the development of negative sub-cultures and beliefs akin to signs of Rwanda! When very patriotic calls for the restructuring of the country based on overwhelming evidences that we are in a wrong direction and failing in all measures of acceptable human existence are ignored, we have signs of Rwanda. The problem is not really with rejecting calls for restructuring, the frustration is the inability of the few who reject it to provide a convincing alternative or even commit to a proper discussion on the merits and demerits of restructuring our dear country. While being in power can create illusionary appreciation of our sad state as a country, it

is important that we remember that power is transient and the appropriate legacy is to listen to wise counsels such as the rapidly growing calls for the restructuring of the country. Continuing to reject these genuine calls from South West, North Central, South East, North East, South South and even North West can only be described as allowing the feelings and sentiments that led to the Rwandan genocide to fester and grow in Nigeria. When about 21 million brothers and sisters are reported as unemployed while our leaders especially the governors continue to sequestrate unaccountable hundreds of millions of Naira every month in the name of security votes, then we have signs of Rwanda. Not only do they confiscate the hundreds of millions of naira, many of them seem to have abdicated their governance responsibilities such as job creation and provision of basic development amenities. Rather than innovatively govern their states, many prefer to junket across cities with obscene displays of very wasteful life styles while escalating the unsustainable debts of their states. In such situations which are lamentably true of many of our states, the only feelings and behavior that will emerge and grow will be that similar to the ones that caused the Rwandan genocide. Verbal appeals to world leaders to prevent a repeat of Rwandan genocide are most laudable, however, what is more appropriate is genuine and effective actions to address the signs that cause crisis and wars like that of Rwanda.

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng

Name of column: Bongonomics: If so big why so small? Bongonomics

Bongo Adi

eactions have continued to trail last week’s release of IMF’s 2019 Article IV visitation report which tracks Nigeria’s key financial and economic development over the preceding year. A Bloomberg reaction this week laments that “Nigeria is cornering the market in extreme poverty.” Whereas the population living on less than $1.90 a day has continued to fall in the largest population centers of the world including China and India, it has continued to rise in Nigeria with a smaller population. This disproportionality in poverty outcome has worsened since 2014 as population and economic growth seem to have parted ways in both direction and rate of increase. Looking at the dismal statistics from the massive dip in FDI to increasing perception of corruption by TI, Bloomberg therefore constituted poverty as a time bomb that only growth can defuse in the coming days. Urgent as the imperative of growth has become, it however noted that Nigeria is unfortunately, “going nowhere fast.” Bloomberg’s conclusion is just valid and amply supported by the IMF’s release. But it needs be said that IMF did not say anything new. Not a few economic observers have reached the same conclusion over the past 4 years. The slow growth that has followed the narrow escape the economy seems to have made from the 2016 recession is well rehearsed. It needs not be

reemphasized that this economy has witnessed several bouts of recession in its post-independence history. In the first recession ending in 1981-Q3, post recession growth jumped to 3.43. The second recession ending in 1986-Q4 saw a 10% growth. When the third recession ended in 1991, the economy registered an 8% growth. But the growth following the most recent recession of 2016 is insignificant at just 0.5%. Why this sluggish growth persists has been the crux of much policy debate. But what is not in doubt is that policy management has not been at its best. Nigeria’s real GDP growth has grossly underperformed its peers — be it middle income countries or sub-Saharan Africa. Real per capita GDP growth has performed worse on two measures: in comparison to peer countries and also in comparison to its own real GDP growth. Our real per capita GDP growth is the worse in our history as an independent nation, reaching a negative 4% in 2016. This robs off on the misery index (referring to the sum of unemployment rate, the growth rate, inflation rate minus the growth rate) and of course, every other development indicator. GDP surely does not adequately capture everything that makes life worth living, but it is still the most powerful economic indicator with a very strong correlation to others. Low per capita income translates to poverty which complicates every other indicator. Little wonder then that Bloomberg sees an impending social implosion triggered by poverty. Following from the low level of growth is worsening social and development indicators — economic performance is simply below what is necessary to improve development outcomes. For every development indicator except access to electricity, Nigeria underperforms its peer average. One wonders what the electricity situation

must be in those countries that are worse than Nigeria if we are in utter darkness for 7 to 8 of the 12 months of the year! Development indicators are mere symptoms of a more pernicious problem to be found in the macroeconomic system. Nigeria does not only underperform other countries on development outcomes. The country’s financial underpinnings (financial depth) has been gradually hollowed out over the years. Considering the macroeconomic pillars of growth, liquidity and stability, it becomes evident that the system has become captive to both inertia and paralysis. Over the past decade all measures of growth has systematically displayed marked deceleration leading up to the recession of 2016. On liquidity, we observe that except for bonds, all indicators of liquidity tightened relative to the GDP over the time frame under consideration. The economy was manifestly more liquid a decade ago than presently and this holds for both domestic and external measures of liquidity. We surmise from this that the financial system is now shallower than a decade ago. If we disaggregate liquidity into its various components comprising money, bonds, equity and reserves, we can see that relative to the size of our GDP, each aggregate pales in comparison to peer economies. For instance, Indonesia’s money stock as a percentage of GDP is 40% relative to Nigeria’s 20%. South Africa’s is more than triple Nigeria’s at 73%. Egypt is 78% and Malaysia is 130% and China’s money stock is 208% of its GDP. For bonds, Nigeria’s bond holding as a percentage of its GDP is paltry 13% compared to South Africa’s 35%. Indonesia and Egypt come at 24 and 69%, respectively. Our equity stock as a percentage of our GDP is a trifle 7%. South Africa’s is a whopping 322%.

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The Nigerian economy, despite taking the position of the largest economy in Africa by GDP, is dwarfed by other countries in the size of the key financial determinants of growth

Malaysia is 121%. Indonesia is 46%. Our overall reserve in 2017 is mere 6% of our GDP. South Africa’s is 14%. Put together, Nigeria’s domestic financial depth — that is, the sum of money stock, bonds, and equity as a fraction of the GDP — makes up a meagre 40% of the GDP. South Africa’s is 431%; China is 339%; Indonesia is 110%; Egypt is 177%; Malaysia is 307%. If we add reserve to the above, we get an indication of overall financial depth. Again, Nigeria is the least of comparator countries at just 49%. South Africa’s is 445% and other countries follow at the same margin as in the domestic case. What this implies is that the Nigerian economy, despite taking the position of the largest economy in Africa by GDP, is dwarfed by other countries in the size of the key financial determinants of growth. In fact, our financial situation is shallow rather than deep. The macroeconomic policies of recent regulatory regimes have left more to be desired in their approach to these realities. Time was when a CBN governor was aggressively bullish to engineer capital accumulation and deepen the financial system. Obviously, the banking consolidation of over a decade now was a strategic effort to power the economy. Any macroeconomic regime that fails to anticipate the integral connection between macroeconomic dynamics and the development of the real sector in a developing as well as the necessity of bullish macroeconomic policies to pursue liquidity accretion and financial deepening, simply misses the point. From all indications, our economic size is hopelessly betrayed by our monetary and financial instruments at moment. • To be continued….

Dr Adi is a Senior Economics faculty at the Lagos Business School

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