Monday, Aug 10 2020

With CAMA 2020, FMDQ sets sight on derivatives trading ...positions Nigeria’s Financial Market for Transformation

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igeria’s financial market and the economy, as a whole will receive the long-awaited boost to spur economic development and the repositioning of Nigeria as a

compelling destination of capital following the Presidential assent of the Companies and Allied Matters Bill 2020, consequently introducing the Companies and Allied Matters Act (CAMA) 2020,

which has repealed and replaced the 30-year old CAMA 1990.

This historic act by the President, Muhammadu Buhari, on this important piece of legislation, is expected to usher in a new wave of innovative

developments, significantly improving the ease of doing business in Nigeria, and ushering in a new paradigm in the Nigerian financial market, according to FMDQ Plc. In a statement, FMDQ said “with the increasing sophistication of the global financial markets, comes the need for domestic markets to

develop their architecture and infrastructures to support requisite advancement as well as align with international standards, and the new CAMA 2020 will position Nigeria and its capital market at par with its international counterparts.

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Biggest Gainer SEPLAT N321.00

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Foreign Reserve $ 35.705bn Cross Rates GBP-$:1.32 YUANY - 54.72 Commodities Cocoa US$2,501.00

Gold $2,058.54

news you can trust I * *MONDAY 10 AUGUST 2020 I vol. 19, no 624

₦5,459,743.89

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+0.41

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N300

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$-N 467.00 475.00 £-N 585.00 600.00 €-N 535.00 545.00

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www.

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386.00 381.00

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i re c t i nv e s t o r s have shunned Lagos State in the last six years, preferring rather to set up plants in Ogun State, a neighbouring state with cheaper doing business environment.

BusinessDay’s analysis of

data provided by the Manufacturers Association of Nigeria (MAN) shows that Ogun dwarfs Lagos in new real sector investments by 23 percent between 2014 and 2019.

The elephant in the room is the constant harassment of corporate organisations in Lagos by touts unleashed by local governments to collect multiple

taxes and levies. BusinessDay recalled that in a December 2019 investigation that micro, small and medium businesses paid 13 different levies and taxes in Mushin, Oshodi and Ikeja local governments in Lagos. Such taxes ranged from television and radio tax to local government levy, ‘land levy’, ticket levy for hawkers, and LA-

3M 0.00 1.20

12m NGUS jul 28 2021 421.79

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Investors dump Lagos as Ogun becomes new industrial hub D Odinaka Anudu & Gbemi Faminu

fgn bonds

Treasury bills

SAA fees, among others.

Investors complain that traffic and Apapa port congestions in Lagos make movement of trucks and lives difficult. They say the land tenure system in Lagos has been tougher, making business expansion onerous.

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6M

5Y

0.00 1.70

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10 Y 1.06

30 Y 0.28

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9.08

10.43

36m NGUS jul 26 2023

60m NGUS jul 30 2025

495.26

581.52

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Inside

Landlords struggle with rent collection as COVID-19 erodes tenants’ income P. 2 Nigeria’s herbs farming gains traction as COVID-19 causes surge in demand P. 29 Stanbic IBTC, Heirs entry to disrupt Nigeria’s insurance sector, retail space P. 29

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news With CAMA 2020, FMDQ sets sight on derivatives...

Continued from page 1

“Chief of the several impactful provisions in the CAMA 2020, is the inclusion of netting and bankruptcy remoteness provisions which signal the birth of a new financial market in Nigeria. “ The game changing provisions will cure critical legal deficiencies that hitherto hindered the rapid growth of the financial markets, with the netting provisions addressing the credit risk challenges, operational and legal bottlenecks of gross settlement for spot and derivatives transactions, and the bankruptcy remoteness provisions tackling the uncertainty around the finality of settled transactions whilst securely ring-fencing collaterals placed in execution of financial contracts.

In particular, the Act will be instrumental to the successful takeoff of the derivatives market in Nigeria, a much-desired development, which will provide, amongst others, a wide range of risk management opportunities, enhanced market liquidity, improved price discovery, reduced risk capital charges and transaction costs as well as increased financial markets stability.

As far back as 2015, FMDQ Holdings PLC in line with its mandate to build a thriving derivatives market in Nigeria, facilitated a feasibility study on the introduction of derivatives in the Nigerian financial market, and the findings showed that the critical success factors for a derivatives market include, but are not limited to, effective management of counterparty risk through the activation of a central counterparty (CCP), and adequate legal framework, both of which have been fully addressed in the CAMA 2020.

Leveraging on its aspiration to deepen the Nigerian financial market, and transform it to be globally competitive, operationally excellent, liquid and diverse, in line with the ‘GOLD’ Agenda, FMDQ Group has, since its inception, engineered the requisite architecture towards improving the diversity and depth of the market, as well as promoting an environment within its markets, for innovation and market development to thrive.

From an over-the-counter (OTC) market launched in 2013, to a full-fledged Securities Exchange, to a vertically integrated financial market infrastructure (FMI) group, FMDQ Group has developed a sustainable market architecture through its wholly owned subsidiaries - FMDQ Securities Exchange Limited, FMDQ Clear Limited,

FMDQ Depository Limited and FMDQ Private Markets Limited – towards building, in collaboration with the regulators and market stakeholders, a developed financial market in Nigeria.

According to the Chief Executive Officer of FMDQ Group, Mr. Bola Onadele.

Koko, “the CAMA 2020 sets the tone for the actualisation of key innovations in the market, providing enabling legal backing for netting, bankruptcy remoteness and attendant regulatory frameworks for the smooth functioning of financial markets in Nigeria.

“With FMDQ Exchange as a market organiser for the fixed income, foreign exchange and derivatives markets in Nigeria, and given the domestic and global call to improve participation in the markets by providing hedging opportunities to support investor interest, the Exchange is set to support the establishment of a well-functioning derivatives market in Nigeria, following its launch of a Derivatives Market Project in 2017, and the planned activation of derivative products, in 2020, to hedge interest rate risks, in addition to the existing currency risk hedging product, the OTC FX Futures product.

“To ensure the successful activation of the derivatives market, FMDQ Clear, Nigeria’s first central clearing house (CCH), is well positioned to providing the much-needed CCP services, upon regulatory approval, and has proactively set aside a default resolution reserve with a near-term target of N20 billion, which will enable the novation of financial transactions in the Nigerian financial market to a wellcapitalised Clearing House, thereby de-risking counterparty risks prevalent in derivative contracts, provision of clearing services for spot and derivatives products towards ensuring settlement finality for financial market transactions, and introduction of even greater efficiency and stability to the Nigerian financial markets.“ He further stated that the contributions of all the Nigerian financial system regulators in the market development cannot be overemphasised; with the foresight of the Securities and Exchange Commission (SEC) over the years, in approving the registration of the FMDQ Entities, the erstwhile OTC market in 2012, FMDQ Clear in 2017, and FMDQ Depository and FMDQ Exchange, both in 2019, providing the market with a one-stop shop

Continues on page 29 www.businessday.ng

Members of the Holy Cross Cathedral in Lagos yesterday when the church reopened for worshipers .

Pic by Pius Okeosisi

Landlords struggle with rent collection as COVID-19 erodes tenants’ income Endurance Okafor

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he impact of COVID-19 on individual, household and organisation incomes has left many landlords cash trapped as many tenants have either defaulted or delayed in paying their rents, a survey by BusinessDay shows.

Also affected by the outbreak of the deadly virus, property owners in Nigeria’s residential, commercial office spaces and retail facilities say they are unable to collect rent from many of their tenants, even after granting some rent relief.

“For the past two months, many of my tenants have been telling me stories whenever I ask for

… as demand for affordable property surges my rent and I don’t even know what to do,” a property owner who simply identified himself as Mr Afolabi tells BusinessDay at Yaba, Lagos.

Apart from the frosty relationship that may arise between landlords and their tenants, the impact of COVID-19 on Nigeria’s rental market could mean that going forward, rental properties will suffer from lack of maintenance and sustainability and new investments in build-to-let or buy-to-let properties will see a decline.

Despite the gradual reopening of the Nigerian economy following the fiveweek lockdown in Lagos, Ogun and Abuja, a lot of Nigerian businesses and

individuals who have been affected my COVID-19 are not expected by experts to recover in 2020.

“The economic effects of COVID-19 have been very severe on many households in Nigeria because of the massive strain the prolonged knockdown has added on many businesses,” Freeman Osonuga, expert at Property Broker, says.

According to the managing director, Adloyalty Business Network, with no bailout from the government for businesses to cushion the adverse effects of the pandemic, many businesses are as a result struggling with lots of workers laid off and massive slashes in takehome of those workers who

are not sacked.

“The attendant effect of this is that there has been a lot of delays and defaults in rent payments,” Osonuga states, adding that some landlords have been kind enough to give their tenants some months free of their rent while others have resorted to giving the defaulting tenants more time to pay up.

Analysis of data by Muster, a pro-tech company that offers shared housing services, reveals that tenants who are working in hospitality and film production industries (some of the sectors that were hit hard

by COVID-19), are the ones who delayed in their rent

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Nigeria’s foreign reserves to shrink further as debt servicing, imports mount pressure on FX Cynthia Egboboh, Abuja

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s the Nigerian economy gradually opens up after disruptions caused by Covid-19 pandemic, experts are of the opinion that the accumulated demand for foreign exchange (FX) for imports, debt servicing, among others, may cause further decline in foreign reserve that dropped to $36.1 billion in July.

According to the Central Bank of Nigeria (CBN), foreign reserves dipped from $36.6 billion to $36.1 billion between May 29 and July 9, as a result of increased demand for foreign currency alongside a fall in supply associated with the decline in the price of oil, which is Nigeria’s main source of foreign exchange earnings.

Speaking with BusinessDay, experts say the foreign

reserve position may worsen as Covid-19 pandemic eases off and countries open up borders for travels and imports, schools resumption as well as debt servicing, which will obviously lead to increased demand for FX, thereby exerting more pressure on reserve.

Obadiah Mailafia, a former deputy governor of the CBN, says the demand for FX is already high as businesses that are gradually opening up can barely access letter of credit from banks, adding that pressure is likely to increase as Nigeria government is paying so much to service debt.

Mailafia stresses that the decline in foreign reserves at this time should trigger a more proactive measure in financial resource management, as not so much revenue is expected from the dwindling oil prices.

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“There is need for us to be very watchful, careful and vigilant at this time as we are beginning to see pressure on the demand for FX coupled with decline in oil prices, which may continue for some time.

“There is need for the government to be more proactive in managing the financial resources, build more investor’s confidence as well as address the issue of banditry that scare investors,” he states.

Factors that often drive the foreign reserves are oil prices, travels, and if our level of imports commences fully, it will bring more pressure on the foreign reserve, he says.

Nigeria has since collected an unprecedented $3.4 billion loan from the IMF, and the CBN in trying to comply with critical conditions given by the lender has begun moving the of@Businessdayng

ficial exchange rate towards the Investors and Exporters (I&E) window as naira further weakens amid less FX inflows.

Muda Yusuf, directorgeneral, Lagos Chamber of Commerce and Industry (LCCI), in response to a question, states that the decline in foreign reserves, particularly as earnings remain low on poor oil prices, is of great concern. Yusuf foresees increased demand for FX in coming months, which could then lead to further drop in reserve.

He says efforts should be heightened to stimulate policies to attract foreign currencies and investments into the country so as to increase overall resilience to shocks.

“With the pressure from accumulated demand, there are chances that the reserve may decline further, and this is a concern for us already.

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news FG pledges economic prosperity as CEOs canvass friendlier FX, Right of Way Odinaka Anudu

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emi Osinbajo, vice president of Nigeria, has said that the Economic Sustainability Plan (ESP) with a stimulus package of N2.3 trillion will give fillip to the economy across various sectors.

Speaking at a presidential dialogue organised by the Lagos Chamber of Commerce and Industry (LCCI) at the weekend, via zoom, Osinbajo said the stimulus package amounting to 1.5 percent of the Gross Domestic Product (GDP) is replete with opportunities for micro, small and medium scale enterprises (MSMEs) to expand their activities in manufacturing and local

production and to participate in supply chain activities across various industrial and service sectors.

Osinbajo explained that as broadband facilities are vital in positioning Nigeria to take advantage of cutting-edge developments in robotics, 3-D manufacturing, artificial intelligence and smart devices, the ESP had paid attention to total national broadband coverage to revivify the economy.

“Our aim is to continue to improve our national ranking in the World Bank Doing Business Index ranking to below 100 in the coming years,” he said, stressing that arbitrary assessments by government agencies, inspections and intrusions often for contrived reasons must stop.

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Nigeria moved 15 places to 131 in World Bank Doing Business ranking, but challenges of poor infrastructure, multiple taxes and corruption still hurt businesses.

Niyi Adebayo, minister for industry, trade and investment, said the realities of today’s challenges demand that Nigeria domesticate production under its special economic zones (SEZs), agro-processing zones and other backward integration projects.

He explained that promoting the digital economy is no longer an option, in the light of its capacity for growth, job creation, and in mitigating the impact of the Covid-19 pandemic on other sectors.

He disclosed that the Presidential Enabling Business Environment Council (PEBEC) has successfully implemented over 150 reforms to make business easier MSMEs, which account for 90 percent of registered businesses in Nigeria and contribute nearly 50 percent of the country’s GDP. However, chief and senior executives of corporate bodies, in their responses, canvassed competitive and friendlier business environment to enable them create jobs and revive the slowing economy.

Tunji Oyebanji, CEO of 11 Plc, a major player in the oil and gas industry, stressed the need for an open and transpar-

ent foreign exchange access for petroleum products, canvassing full deregulation of the petroleum sector.

Alan Sinfield, CEO of 9Mobile, commended the Federal Government on the recently launched national broadband plan, and some states for reducing Right of Way (RoW) fees.

He said the steps would help telecoms players to deploy their fibre infrastructures to grow the economy, especially in the light of the pandemic.

Adenike Ogunlesi, CEO of Ruff ‘n’ Tumble, an indigenous lifestyle brand, urged the Federal Government to support the garment industry to enable them create more jobs and earn foreign exchange. She called for policies that would enable them have access to sophisticated machines and power, saying, “There is no time to industrialise Nigeria than now.”

Soromidayo George, director, corporate affairs and sustainable business at Unilever Plc, called for sustainable ease of doing business in the country and the need for the government to closely re-examine the impact of the closure of Nigeria-Benin border, while supporting manufacturers sourcing inputs locally.

On her part, Dupe Olusola, CEO of Transcorp Hotels, said the tourism industry needs some stimulus package to stay afloat.

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Race for WTO DG: Can Okonjo-Iweala win against the odds? Yes, she can! global Perspectives

OLU FASAN

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f having an outstanding CV and a global profile is enough to win the contest for the next DirectorGeneral of the World Trade Organisation, WTO, Dr Ngozi OkonjoIweala would be a shoo-in for the top job. Truth is, of the eight candidates for the DG post, Okonjo-Iweala has the most intimidating and awe-inspiring credentials.

Nigeria’s two-time finance minister and later foreign minister, Okonjo-Iweala is also a former managing director of the World Bank and the first female and African candidate for the presidency of the World Bank. She is currently chair of GAVI, the Vaccine Alliance, and sits on the Boards of Standard Chartered and Twitter. Okonjo-Iweala has been named more than 10 times as one of the top 100 people in the world and awarded honorary degrees from 15 universities worldwide. She is truly a global icon, a world citizen!

When she ran for the World Bank presidency in 2012, major Western publications, such as the Economist and the Financial Times, wrote editorials supporting her candidature. She lost only because the presidency of the World Bank traditionally goes to an American, while a European always leads the IMF. Thankfully, that is not the case with the Director-General of the WTO. Since its establishment in 1995, the WTO has had DGs from Europe, Oceania, Asia and South America. But no African has led the organisation. Of the eight candidates vying to be the next DG, three are from Africa, two each from Europe and Asia and one from North America. So, can Dr Okonjo-Iweala secure the top job, based on her overwhelming credentials?

To be sure, everyone recognises Okonjo-Iweala’s outstanding abilities. Former

British Prime Minister Gordon Brown said she “can be relied on to successfully apply her skills as an economist, public policy-maker, negotiator and convener to the toughest job in the world.” He said she would “make an outstanding success of running a great global institution of the status of the WTO”, adding that “she is respected across the whole of the world.” In her endorsement, Julia Gillard, former prime minister of Australia, described Dr Okonjo-Iweala as “an excellent negotiator and leaders”, who “would be a wonder choice” for the WTO job.

But would her intimidating CV and global profile be enough to win her the contest? Well, the truth is: an intimidating CV is not enough. Politics will also play a key role, and that includes how other countries see a candidate’s country.

In their book “The New Sovereignty”, the international jurists Abram and Antonia Chayes argue that a country that lacks reputation as a reliable partner “jeopardises its ability to reap organisational benefits”. Unfortunately, Nigeria does not have a reputation as a reliable partner; it is viewed as an isolationist which has little regard for regime rules.

For instance, Nigeria signed the Marrakesh Agreement establishing the WTO in 1994, but, to date, has not domesticated the WTO rules and obligations. Indeed, in the mid-2000s, some prominent politicians, led by Audu Ogbeh, a former chair of the then governing party, PDP, held meetings across the country calling for Nigeria’s withdrawal from the WTO. And for five years, between 2000 and 2005, Nigeria did not pay its annual subscriptions to the organisation. Even today, Nigeria’s failure to comply with WTO rules is a regular subject on the agendas of the various WTO committees.

Surely, such perceived unreliability could jeopardise Nigeria’s “ability to reap organisational benefits”, namely, in this case, its ability to produce the next DG of the WTO! That is one of the odds facing Dr Okonjo-Iweala’s candidature.

Then, there is the question of the preferences of the individual WTO member-states. A candidate whose country is regarded as a strategic partner by most WTO member-states is likely to

attract more support than the one whose country has few friends. Unfortunately, Nigeria has few genuine friends or allies at the WTO. According to the Financial Times, the two leading candidates to lead the WTO are Dr Okonjo-Iweala and Ms Amina Mohamed, Kenya’s former foreign affairs and international trade minister, who has also been an assistant SecretaryGeneral of the United Nations and deputy Executive Director of the United Nations Environment Programme, UNEP. Ms Mohammed is a through and through WTO person, who has chaired all the WTO’s influential bodies, including the 10th WTO ministerial conference in Kenya in 2015.

Both Dr Okonjo-Iweala and Ms Mohamed are suitably qualified for the job, although Okonjo-Iweala has better credentials and global profile and has held far more challenging domestic and international roles than Ms Mohamed.

However, supporters of Ms Mohamed say she is stronger on trade than OkonjoIweala, whose specialities are global finance and international development.

But Okonjo-Iweala is not a novice on trade. She played a key role in negotiating the ECOWAS trade liberalisation scheme.

But here’s the question. If, say, the United States and the European Union were to choose between Okonjo-Iweala and Mohamed, what would ultimately influence their decision? Well, I think whether they have a strategic relationship with either candidate’s country would play a critical role.

The US is currently negotiating a comprehensive Free Trade Agreement (FTA) with Kenya, while its relationship with Nigeria on trade is frosty. Similarly, while Kenya has signed an Economic Partnership Agreement (EPA) with the EU, Nigeria has doggedly refused to do so. From a strategic relationship point of view, it would not be surprising if the US and the EU prefer the Kenyan candidate to the Nigerian one, especially when either can do the job.

The truth is that a country that can win the friendship of other nations through strategic relationships would find it easier to call in favours when it matters than a country that has few genuine friends.

Sadly, Nigeria is in the latter category!

Indeed, Nigeria has few friends in

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The truth is that a country that can win the friendship of other nations through strategic relationships would find it easier to call in favours when it matters than a country that has few genuine friends. Sadly, Nigeria is in the latter category!

Africa! The way President Buhari nominated Dr Okonjo-Iweala by reportedly flouting the African Union’s laid-down procedures has ruffled feathers among other African countries. The Office of the Legal Counsel of the African Union publicly declared that Okonjo-Iweala’s candidature “violates the rules of the AU”, while Egypt asked the WTO to reject Nigeria’s nomination of Okonjo-Iweala.

Although the WTO dismissed Egypt’s request, the issue has needlessly created ill-feelings among African countries.

Equally, the way President Buhari unceremoniously withdrew Nigeria’s earlier nomination of Dr Ynov Fred Agah, currently Deputy Director-General of the WTO, in favour of Dr Okonjo-Iweala has caused some consternation in Geneva.

Of course, Okonjo-Iweala has a better chance of winning than Agah. But why was her nomination an afterthought?

Why was she not considered ab initio?

The shabby way Agah was dropped in favour of Okonjo- Iweala did not go down well in Geneva, where he is very popular, given, among other things, how he steered the difficult eight Ministerial Conference in 2011 to success!

The next Director-General of the WTO will, as is the tradition, be selected by consensus: no vote! A panel will consult WTO’s 164 members and ask each of them: “What are your preferences?”

There will be three rounds. After the first round, the 8 candidates will be reduced to 5; after the second, the 5 will drop to 2 for the final round.

If, as speculated, Dr Okonjo-Iweala and Ms Mohamed make it to the last 2, the question is: who will win? Based on the above analysis, my view is that it will come down to the reputation of each candidate’s country. Sadly, Nigeria has little traction internationally.

Yet, if Okonjo-Iweala makes it to the final round, WTO member-states may decide they want someone with her overwhelming credentials and global profile.

Which is why, despite the odds, she can win. But if she does, it would be in spite of, not because of, Nigeria.

I wish her success!

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

The Nigerian Code of Corporate Governance, 2018 Principle 16 - Remuneration governance

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rinciple 16 of the Nigerian Code of Corporate Governance 2018 (NCCG) deals with Remuneration Governance and provides that “The Board ensures that the Company remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term.”

Remuneration Governance is one of the most sensitive and sometimes controversial topics in corporate governance. Today, Non-Executive Directors are clearly spending more time on their Board roles with Board and Committee meetings, videoconferences, shareholder meetings and Director Development programmes among other commitments. They also need to make time to attend Board and individual Director performance evaluation. With more stringent corporate governance expectations, reputational risk is now included in the basket of an already time-consuming job. Given the vital importance of the responsibilities assigned to Non-Executive Directors, it is expected that they will devote significant time and effort to their boardroom and non-boardroom duties.

Section 267 of the Companies and Allied

Matters provides that a company is not bound to pay remuneration to Directors but where the company agrees to pay, Directors shall be paid such remuneration out of the funds of the company and such remuneration shall from time to time be determined by the company in general meeting.

The NCCG recommends that the remuneration policy should be designed to attract, motivate, reward and retain high performing human capital, to pursue the long-term growth and success of the organization. The policy is also expected to demonstrate a clear relationship between Key Performance Indicators and remuneration. However, where remuneration is linked to performance, it should be designed in a way as to prevent excessive risk taking.

The Code provides that the Company’s Remuneration Policy as well as remuneration of all Directors should be disclosed in the Annual Reports.

The decision on Non-Executive Director compensation should not be that of Management. This is to ensure that the Board is able to maintain its independence of Management and not feel beholden to the CEO for his/her “benevolence”. The Board Governance/Remuwww.businessday.ng

neration/Nomination Committee, armed with appropriate data, should make recommendations to the Board, mindful of the company’s ability to pay and sustain the compensation package as well.

As much as possible, most members of the Committee should be Independent Non-Executive Directors. Executive Directors should not be involved in the determination of their own remuneration. Committee members should have access to up-to-date- industry pay levels, structuring methods and components of remuneration of peer companies. However, while remuneration levels may take into account relevant benchmarks and market conditions, these criteria should not be used exclusively to justify levels of remuneration. Too much reliance on relative peer analysis leads to unjustified escalation in executive pay. Each plan should be tailored to the unique circumstances of the company as well as the responsibilities of the position(s) in question and the experience and expertise of the individual. (ICGN Guidance on Executive Remuneration, 2012).

There should be a balance between recommending over-generous remuneration which is not in the interest of the shareholders, and

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Bisi Adeyemi a level of remuneration which fails to attract the desired quality of human capital to the organisation.

It is expected that the remuneration of Executive Directors will be structured in a manner that will motivate them to achieve the long-term objectives of the company.

Therefore, the Remuneration Committee should offer competitive base pay combined with performance-based rewards such as bonuses linked to medium and long-term targets, shares and share options.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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For Chief JK Randle – it’s thanksgiving time again (3) Bashorun J.K Randle

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n recognition of the restrictions imposed by the COVID-19 regulations, those who would attend the Church service in Chelsea, London would be limited to only twenty. As for the reception that would follow, the same restriction would apply.

However, arrangements have been made to provide hospitality at other venues for those who would exceed the maximum allowed. For old students of St. Gregory’s College, a sumptuous dinner and plenty of champagne have been laid on in the magnificent Ballroom of Buckingham Palace, entrance through the East Gate.

In case you encounter any difficulties please contact my god-son Lt.Colonel Folarin Kuku (rtd). Only the first twenty Gregorians to arrive will be admitted – but they must pledge to vote for me at the next election for President of St. Gregory’s College Old Boys Association.

Her Majesty the Queen has graciously consented to present a copy of “August Is a Wicked Month” and “Girl by Edna O’brein to each guest.

Edna O’Brien “I was a girl once, but not anymore.

So begins Girl, Edna O’Brien’s harrowing portrayal of the young woman abducted by Boko Haram. Set in the deep countryside of northeast Nigeria, this is a brutal story of incarceration, horror, and hunger; a hair-raising escape into the manifold terrors of the forest; and a descent into the labyrinthine bureaucracy and hostility awaiting a victim who returns home with a child blighted by enemy blood.

On 14 April, 2014, 276 young girls were abducted from their school by the extremist terrorist organisation Boko Haram. The news horrified the world and yet the international community did little to help these girls.

The author of Girl travelled to Nigeria where she met some of the survivors, those who managed against all odds

to escape. This novel is based on their accumulative experiences, combining them into the fictional character Maryam. Through her eyes we witness the horrific things that were done to these young girls.

It is not an easy book to read, though it is short and quick. Knowing the experiences written about are real makes it a harrowing and heart-breaking book to read. And yet, it is ever so compelling, and beautifully written. It is a reminder of what was done to these girls.... and that there are still 112 girls still missing (as of the time of this review).

Whilst I enjoyed (in so much as one can, reading about such atrocities) this book, I feel a little uncomfortable about a white Irish woman having written it and to be the one to give voice to their ordeal. However, I assume Ms. O’Brien obtained the young woman’s permission before writing this book. Also, I hope the author intends to give at least part of the proceeds of this book to the survivors, as they struggle to build new lives for themselves and overcome the atrocities they endured. I cannot imagine going through the things they did and some still are, and no one should profit in any way from their pain.

Having said these things, I think it is incredibly important to know what happened to these young girls, for their stories to be told. We cannot forget them. We cannot forget their suffering or the fact that so many of the girls remain missing.”

The Narrator of “Girl” is kidnapped

by Jihadi fighters (Boko Haram) in Northern Nigeria. She returns bearing a Boko Haram child.

It was my late uncle, Chief Romannes Adewale Randle (not my dad) who grew up in Buckingham Palace as his mother Victoria was the god-daughter of Queen Victoria. Victoria was the daughter of Sarah Bonetta Forbes who was adopted

by Queen Victoria.

Also, as has been the custom in previous years, special prayers would be offered for the 112 missing Chibok girls who have been in the captivity of the dreaded Boko Haram since 2014.

For the rest of the year, our agenda is to refresh our family’s philanthropy and commitment to: • Ahmadiya College, Agege • Ansar-Ud-Deen College, Isolo • Holy Cross Grammar School, Lagos

• C.M.S Grammar School, Bariga, Lagos • Randle General Hospital, Surulere, Lagos • Randle Junior School, Apapa, Lagos • Randle Senior School, Apapa, Lagos • King’s College, Lagos • Lagos State University, Ojo • St. Gregory’s College, Obalende.

As well as the recovery of Chief J.K. Randle Memorial Hall; Dr. J.K. Randle Swimming Pool; the Dr. J.K. Randle Love Garden (MUSON Centre) in Onikan, Lagos; Nigeria Ports Authority Sports Club, Surulere; and vast land at Agidingbi/ Alausa, Ikeja.

We are grateful that the SecretaryGeneral of the United Nations, Mr. Antonio Guterres, has decided that henceforth, The United Nations should be recognised as a MORAL FORCE in the resolution of not only international/national grievances but also individual disputes (at the personal level). Therefore, at the next meeting of general assembly of the United Nations the following matters will be table for discussions: (i) JK Randle versus KPMG – No gratuity or pension after 34 years of meritorious service. (ii) JK Randle versus Ooni of Ife – Trespass of Land at Plot 7, Block 2, Ikoyi Foreshore, Ikoyi. (iii) JK Randle versus Zenith Bank Plc (appointment as Receiver Manager of CAMAC/Allied Energy – Moral Transgression.

Also listed for full discussion is the case of the assassination of Jamal Khashoggi—a Saudi dissident, journalist for The Washington Post, former general manager and editor-in-chief of the Al-Arab News Channel—occurred on 2 October 2018 at the Saudi consulate in Istanbul, Turkey, and was perpetrated by agents of the Saudi government.

Chief J.K. Randle was a titan in business and a legend in both sports and philanthropy.

“J.K.” had a great sense of humour.

Here is a sample: (“The Duke and The Soul Princess”) – J.K. Randle “I am sure that doctors like most professionals have to live with the discomfiture of discovering that what the public expects of them is totally unrelated to reality.

I was recently reminded of this by the experience of a mother whose little son took ill during a stormy night. The child was running a very high temperature

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Chief J.K. Randle was a titan in business and a legend in both sports and philanthropy

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

Edo 2020: What do you bring to the table?

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olitical campaigns in Edo State have become a show of dishonour. Not sure I have witnessed an election year with campaigns from parties/candidates detailing manifestos and why they seek to be elected.

The four years ritual has become an avenue for educated and highly placed citizens of the state to spit foul language in the name of campaigning for their candidate or political parties. Most disheartening is the pretentious use of religious terms to woo the already deceived populace.

It is funny how the masses are swayed into laughter of the comical outpouring forgetting that our socioeconomic future is being toiled with selfish interests. Are you not tired of seeing these comical displays by people we call our political leaders? Has it crossed your mind that politics is not played this way, or have we become stuck that we cannot deduce wrong from, right? It is time we hold these people accountable.

It is irritating to continually wake up to see video clips from respected national media houses showing very uncultured campaigns from the two frontline parties. These campaigns are NO, NO for me because I know it can be done better than what seems pleasing and suiting in their eyes.

If truly Edo is still the Heartbeat of the Nation, then Nigeria as whole would remain unhealthy as we are currently experiencing. The heart is a vital organ of the body. To heal this purported heartbeat, the people must wake up to the times of Ambrose Alli and Samuel Ogbenudia of blessed memories. Perhaps I only read about them in History and Government during high school, but their legacies speak volume till date. These men had the interest of the people at heart in their time.

The present-day political bigwigs, what do they bring to the table? Are we ever going to have a platform built on objectivity to test their intelligent quotient (IQ) and emotional questions (EQ) when election year comes? Do we just remain aloof and then endure yet another four years with politicians throwing tantrums at us like sheep with a shepherd?

We need to ask them questions that are what I know political campaigns to be. We have got to stand as a people to demand accountability and responsible governance. If they enjoyed good governance in the 60s to maybe late 80s what has changed? Why can’t they have the interest of the people and bequeath good governance to this generation and that of our children. An average www.businessday.ng

and proceeded to vomit intermittently.

The mother was in utter despair, and in total disregard of the heavy rain, screeching thunder and flashing lightning she braved the storms and rushed the child to the village “native” (or Juju) doctor.

The doctor examined the child and gave the mother some palm oil and herbs.

He was most reassuring with perfect bedside manners (minus the stethoscope) and calmed the mother with the soothing words: “There is nothing to worry about.

Your child will be fine in the morning – just hang a photograph of the Devil over the child’s bed, recite the incantations I have written for you, rub the palm oil over your child’s body and brew the herbs for him to drink. Make sure you follow my instructions exactly.

The mother went back home and did as she had been instructed; but unfortunately, she could not find a photograph of the Devil. She searched all over her hut and it was while she was scrimmaging that she came across a photograph of a fierce looking Major-General “T.I.” who until recently was the “de facto” ruler of an African country.

The mother in triumph exclaimed: “If I cannot get hold of a photograph of the Devil, this photograph will do just as well.”

Reassured, she went to sleep and so did the child. In the morning, she had to come to terms with tragedy – the child would not wake up. It was dead. The tearful mother rushed to the “doctor” and challenged him – his reassurances had proved to be false and his prescriptions had turned out to be ineffectual.

The doctor was baffled, “Impossible!” he exclaimed, “Your child could not possibly die if you did exactly as I instructed. Tell me exactly what you did with my prescriptions….” The sobbing mother then confessed that she had not followed the doctor’s prescriptions exactly – she had to substitute Major-General T.I.’s photograph for that of the Devil……

At this point the jubilant doctor protested: “That was an overdose! You are responsible for your child’s death.”

May Chief J.K. Randle’s soul rest in peace.

Kenneth Adejumoh father who is a grandfather today back in the 70s enjoyed free education up to college level (in some instances) among other things.

But today, they built a block of three classrooms without furnishing and it becomes a grand achievement. They build a hospital without fully equipped and get it commissioned in grand style on national media. After weeks, the same monument becomes a shadow of itself. Same applies to other public infrastructure. Still, the masses would support them for elective positions without demanding accountability or a visible scorecard.

Who do us? (in popular Edo slang). #Edo2020 is here, the sleaze mongers have started with campaigns of calumny. They would rather champion unpalatable phrases/sentences against each other instead of campaigning with the right tactics; showcasing the credibility of their candidate or party and why they seek or stand as the best choice. Even in the medieval periods, I have not read that campaigns were ever done this way. The place of intelligence is dragged into the mud while folly is played on political rallies/stages.

With shoulders high they hold the microphone to spit foul languages. They assemble bigwigs from across the countries for endorsement. Yet none

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has laid emphasis on why their candidate or party should be voted. In place of a working blueprint or manifesto, we have heard the following: “...

I sold a bad product to you and I have come to apologise ... Green snake under the green grass, summer has come, and we can see the snake, na to kill am (chorused)”. “...You be thief, I no be thief, … Anyone wen say we no go enter, holy Ghost Fire (chorused)”.

This is how much our politics have been reduced and no one seems to be bothered. We seem to be alright like whatever they give, we will take and endure hardship continuously. I write with frustration on the state of the political landscape and I cannot pour it all in one piece. The parties/ candidates need to grow up to embrace right campaign tactics detailing reasons they seek elective positions and not these continuous myopic and shameful campaigns of calumny. These shameful political imbroglios will only make the future bleaker with no respite in sight.

Adejumoh, a Public Relations practitioner writes in from Lagos, Nigeria.

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Understanding accounting and finance for non-finance executives

EIZU UWAOMA

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eware of little and unintelligent expenses, a small leak will sink a great ship”. Those were the words of a scientist and statesman author; Benjamin Franklin. Accounting and finance are one of those things only a few got educated in while growing up.

The truth is that money is like a sixth sense – and you can’t make use of the other five without it. - In business, we say that there are four factors of production: land, labour, capital and entrepreneurship. Arguably, the human capital is the most essential factor amongst these four. However, misappropriation of organizational funds may render every other factor of production irrelevant in the long run.

The mention of accounting and finance often sends a cold shiver down the spine of many individuals.

This is quite understandable due to the technicality and delicateness of financial records, notwithstanding, a proper understanding of basic financial terms and principles will help to prevent avoidable economic hazards in the organization.

Too many people spend money they haven’t earned, to buy things they don’t need, to impress people they don’t like. Everyday I see errors being made around financial decisions, From personal impulse spending to inefficient staffing, from not separating one’s income and expense from their businesses entity to taking out too much money by paying out what should have been either capital or retained earnings to invest back in the business directly. I see people have a budget for production with none for

marketing and sales (I guess they just assume that a good product should sell itself).

It is financial literacy to not live above your means. It’s okay to say, “I can’t afford it now”. Take pride in it. There is a saying that as most women fake orgasm, so do men fake intelligence, power and finance. That doesn’t have to be you. Everyday, I see people run out of cash from living la vida loca. I see people run into cash flow problems because they used their cash in hand for lending, or to buy land too early or even do charity. In money matters and financial management, knowing what to do at the right time is gold.

Some false notions around money can also be misleading. For example, a few people will tell you they don’t borrow or take out loans because it’s bad. Well, this is not always exactly true. Rather, don’t ever borrow money for something that doesn’t further or enhance your financial goals, or the future. I have also seen people try too much.

The fact that you have put money in a bad business unit doesn’t make you a loser when you quit. Quitting and counting your loss is sometimes the most intelligent to do, else you’re just a victim of the sunk cost fallacy; an idea that because we have invested so much in something, we have to keep pursuing it, even when it’s not working. It’s the principle behind why a gambler who’s down stays at the table, thinking he will win back his money, or why an investor keeps her money in a dwindling stock, waiting for it to go back up. Timing is key, and beyond intuition, let knowledge inspire it.

We all need an intermediate knowledge of accounting and finance to get by. Financial management helps an organization to keep track of the expenses and plan how much to spend.

It also helps you know what you own and what you owe (the difference is your net worth). Financial management helps a business to organize its operations and strategize its funding.

It also helps to take sound financial decisions that would boost the growth of the organization.

To understand it, we must start

with knowing its conventions. Accounting conventions are guidelines used to help companies determine how to record business transactions.

For example, it’s always advised that while recording transactions, that you “Debit the receiver, Credit the giver” (Double Entry Principle).

There are several concepts and conventions guiding the understanding of accounting, they include the principles of Materiality, Full Disclosure and Conservatism. Other accounting concepts include Accrual Concept (that transactions should be recognized at the time when the transaction occurs rather than when payment is made or received), Economic Entity Concept (a business is a separate entity), Going Concern Concept (it should be built to continue), Matching Concept, and Materiality Concept amongst others.

It’s also important for executives to know how to read and translate financial statements. There are four financial statements that are relevant to every organization, statement of comprehensive income, statement of financial position, statement of changes in equity and the statement of cash flows. It is imperative for every business stakeholder to identify the components of each financial statement as they relate to the whole business operations.

Another branch of Accounting is Tax Accounting. Taxes are involuntary fees levied on individuals or corporations and enforced by a government entity. It is the law. Failure to comply with these regulations often attracts stiff penalties for the organization.

Taxes in Nigeria are of two categories: federal taxes (FIRS) and state (in Lagos for example it’s called LIRS) taxes. Federal taxes include Companies Income Tax, Value Added Tax, Education Tax, etc. State taxes, on the other hand, include Personal Income Tax, Business Premises Tax, Development levy, etc.

They all have their predefined formula and percentages for calculation.

You should also be more concerned about financial accounting and cost accounting. Cost accounting helps you know your break-even point (the point where there is no profit or loss. And

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Financial management helps a business to organize its operations and strategize its funding. It also helps to take sound financial decisions that would boost the growth of the organization

Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

If you cannot sail, float

R

unning a business is a tough job.

About 80 percent of small to medium enterprises fail within the first five years. These failures are attributed to various factors including but not limited to poor structure and unavailability of funding. The numbers tell a sad story, but there’s still the 20 percent that succeed. Your business can bounce back and stay afloat with the following measures.

Secure your cash-flow To state the obvious, money has to come in from somewhere. I steered clear of investors in the first few months after starting REACH by saving up for over 6 months. Depending on the kind of business you run, you might choose to go a different route to find some capital - this could be sourced from your family, investors or the banks. Business ventures all need funding. The next step, of course, is how you spend this money.

Track the numbers How much are you spending monthly?

On what? How has it improved your business? If your business is still budding, you really don’t need that fancy (and expensive)

employee weekend retreat. Instead, push the money into building your team, your brand, rewarding loyal customers, your sales and so much more that’s crucial to your business thriving. And when your business yields those returns, then you can reward yourself.

How much did it cost you to acquire each customer? How long did it take to convert?

Lucky for small businesses, many free analytics tools exist to do just that. Make it a habit to track and assess your efforts and respond to the numbers as soon as you can, afterall, numbers don’t lie.

You cannot grow what you do not measure.

Focus on quality This applies to your product and your human resources. You don’t want to skimp on quality hires, just because you want to save money. Poor hires will drag you and your business down. Consider the money you spend, an investment in your business and watch your enterprise flourish.

The same goes for your product or service. Clients will always appreciate good www.businessday.ng

quality because it translates into value for their money. Have a clear value proposition - even if you are in a saturated market, find it. Set yourself apart from your competitors and make sure your customers never stop hearing and experiencing why you’re better.

Which would you rather have: a N500 pair of slippers you have to replace every week?

Or a N1500 pair that lasts a year?

Tighten customer service It might seem cliche, but the customer really is king. Never forget, your business exists to meet a need. Keep your customers happy and your business will stay afloat. If you’re at the stage of your business where you are the team, get yourself a free Customer Relationship Management tool that simplifies your work. You should be accessible, timely and must help them solve their problem.

B2B or B2C or B2B2C, remember that people buy trust. Build a relationship with your clients and show them that you’re paying attention. Like many things, people change, so as your clients evolve, let your service adapt to constantly meet their needs throughout the user lifecycle.

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after which you begin to make profit) and even how best to price your goods.

Two common methods are cost-based pricing and value-based pricing. When a company uses cost-based pricing, the company sets a price at a percentage above the cost it incurs to manufacture the product or to provide the service.

Value-based pricing takes a different approach, considering the potential value the product or service will bring to its customers.

Beyond Cost Accounting, Financial Accounting knowledge is also key. It’s from it that we generate your income statement. It’s safe to say that what the lame man calls income is not income but just revenue. Income and revenue is not the same thing. Income is only gotten after you subtract cost of goods (production cost) from that revenue (which gives you your gross profit, and when expressed in ratio of that over revenue in percentage gives you your gross profit margin, the higher the margin, the more investors may see your business as likely profitable) and then you minus your expenses (ranging from selling cost expenses, to general expenses to admin expense) from it, and perhaps taxation. At this point you have an Income statement.

The net income at the bottom of an income statement may help advice on cash flow projections, which eventually can help you get a snapshot of the health of your finances through the balance sheet. All these are a major pointer to your overall business balance score card (the finance and first quadrant, of the 4 quadrants. The other being structure, innovation and stakeholder experiences).

In conclusion, we all need a considerable knowledge and best practice of accounting and finance to stay afloat.

And they can be likened to the eyes of a business. It must be delicately cared for and diligently managed. Let’s help you seek financial and business literacy today via consulting. Your business life matters to us.

Money Brain with JR

JR Kanu

Above all, never forget why you went into business. Whatever the reason, let every step you take, keep you on the road to achieving that goal.

Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www. reach.africa. His company builds software to help young people and companies to manage and grow their money.

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BUSINESS DAY

Monday 10 August 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Nigerian lives matter: Stop the killings

editor Patrick Atuanya

Nigeria must act swiftly to end lingering acts of terrorism

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

I

nsecurity and terrorism in Nigeria have lingered too long, especially in states in the north and the Middle Belt (Borno, Gombe, Yobe, Adamawa, Bauchi, Kano, Kaduna, Kogi and Niger).

It exposes the country’s failure in the fight against insurgencies over the years and neglect of the lives of precious Nigerians.

The exact cause of these acts of terrorism aren’t entirely clear.

Whether it is a state-sponsored or groups which have rebelled against their government or religiously motivated terrorist groups, it speaks volume of deficiencies in Nigeria’s security system.

The alarming rate of unrest, killings and destructions in the northern part of the country is worrisome given the devastating effects of insecurity on the economy at large. Hence, calls for swift action. Sadly, even internally displaced persons in their camps who seek refuge from harm are also targets.

The global terrorism index ranks Nigeria 3rd lagging Afghanistan and Iraq. The index measures the impact of terrorism.

Nigeria currently sits comfortably in the extreme group flagged “very high”. Although Nigeria scored 8.597 in 2019, a slight improvement from 8.60 index points in 2018 and 8.66 in 2017, Nigeria is projected to hit 8.90 index points by the end of 2020, according to global macro models and expectations of analysts at Trading Economics. This isn’t good for a country that is looking to attract foreign capital needed to jumpstart and grow its economy.

The fight against terrorism isn’t a fight the Nigerian federal government can embark on alone but needs the support of the international community. Turning down requests to help from international countries willing to help isn’t a wise decision.

To be able to identify the hideouts of the extremists, you need satellites and drones among others.

Likewise, to surmount these extremists, Nigeria military officers need to approach from an intelligent point of view. However, irrespective of our intelligence and strategies to fight terrorists, without sufficient and sophisticated weapons the battle is lost before being executed. Some of the extremists have more sophisticated weapons. This aberration must be

corrected if Nigeria is to put an end to terrorism.

There are those who believe that there is a corruption angle to terrorism in Nigeria. Questions about how these terrorists are funded remain unanswered and raises suspicion among Nigerians.

Likewise, it is important we pay attention to the state of mind of our officers. Are they physically and, most importantly, emotionally prepared for the battle? What is their salary? Do they have regular supplies while at camp? What is the quality of these supplies?

Fundamental to the challenges of terrorism Nigeria currently face is the lack of education especially in the northern part of Nigeria.

Education illuminates, it opens your eyes to the errors of illiteracy and improves reasoning.

How do we begin to educate the poor in these areas on the importance of educating girls, improving their lot in life rather than condemning them to be child-brides who bear children they cannot cater for? Most of these children in a bid to survive become targets for the ever-recruiting terrorists.

Also, how is the government encouraging the populace by help-

ing to provide means of livelihood so that the terrorists do not sway them with their “offers”? We need a systematic strategy. It will be unwise not to realise that the terrorists may have an edge in recruitment of new intakes than the military does.

Take for instance, if 10 militants or terrorists or bandits are killed, another 16 can replace them in a jiffy. If 10 army officers are killed, you cannot immediately recruit 10 not to talk of 16.

In between the time you are trying to get new officers, the extremists have formed a legion. Another question is: what procedure is used to recruit the army officers sent to battle? How do you ensure you are not recruiting a terrorist? What background checks are in place?

The truth is, issues with terrorism in Nigeria are heterogeneous and cannot be overemphasised or trivialised. The lives of the military officers positioned to fight them cannot be belittled and the links between militant groups, terrorists and the likes could further intensify regional security concerns if adequate long-term, result oriented measures aren’t put in place. Most importantly, the lives of Nigerians matter and must be protected.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

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

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

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Monday 10 August 2020

BUSINESS DAY

COMPANIES&MARKETS

Drugmakers’ handed profit boost on increase demand for covid-19 healthcare Photizo Properties reopens Oasis Garden …Fidson, May & Baker see biggest half -year profit in 5-years OLUFIKAYO OWOEYE & AREO OLUWAFADEKEMI

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isted pharmaceutical companies recorded a significant boost in profits and revenues for the period ended 30th June on improved demand for health care amid coronavirus pandemic Analysis of recently released results of three drug makers show that revenue jumped 14percent for period ended June 2020 while profits ballooned 96percent within the period.

In the thre e months April –June, Fidson, makers of Astymin, printed a 16.17percent jump in revenue at N4.45billion from N3.83billion recorded in the same period in 2019. Net Profit for the period under review surged 166percent at N348.68million from N131.04million in the same period in 2019.

Fidson’s revenue for the first six months of the year increased 11.31percent, to

record the highest half-year revenue in the last five years tracked by BusinessDay, at N8.2billion from N7.37billion in half year 2019, with net profit skyrocketing by 81.43percent to hit N500.64million from N275.94million in same period in 2019.

Neimeth Pharmaceuticals nine months results for the period ended 30th June show revenue increased 42.12percent from N1.41billion in third quarter 2019 to N2 billion in 2020, with net profit standing at N237.63million from 31.07million. Also, within April-June, which is Neimeth’s third quarter revenue increased 93.94percent to N840.87million from N434.59million in the same period in 2019. Net Profit within the three months ballooned by 606.32percent at N181.03million from N25.63million in 2019.

May & Baker revenue in April-June increased slightly 2.57% to N2.24billion from N2.18million, net profit increased 151.91per-

cent to N396.09million from N157.24million. Six months revenue increased 11.31% to N8.2billion from N7.37billion, net profit also increased N50.9percent to N438.89million from N290.83million.

In the heat of the pandemic, the National Agency for Food Drug Administration and Control (NAFDAC) ordered the local manufacturing of Chloroquine for emergency stock for possible clinical trial treatment of coronavirus in the country.

Interestingly while the pandemic slowed down activities in major sectors of the economy, drug makers have the pandemic to thank for putting them back on the path of profitability.

The huge deficit of local medical supplies and pharmaceutical products meant investment opportunities for the sector players, also substantial amount of intervention by the Central Bank of Nigeria to healthcare companies as part of stimu-

lus package to manage the health crisis, which included access to a N100bn fund, as well as lower borrowing rates, came as a boost to most companies in that sector thereby raising investor’s appetite in their stocks.

In an industry laden with several landmines, the last few years have been a challenging period for drug-makers in Nigeria. Some have shut down their operations, others lucky to be alive are still struggling to stay afloat in a challenging macro-economic environment, scarcity of foreign exchange to import raw materials as most players still depend largely on imports to access raw materials and cash strapped consumers.

Drug-makers have also battled the effect of drug smuggling through the nation’s porous border posts, while drug faking and adulterated medicines continue to thrive in quack medicine kiosks and roadside medicine shops.

Meristem half year outlook offers solution to expected global recession Modestus Anaesoronye

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oremost capital market conglomerate, Meristem Securities has launched its economic outlook report for the second half of the year. The outlook report titled ‘Unmasking Value in a Scourge’ thoroughly analyzed the position of the global and domestic economy, with a comprehensive focus on trends and activities within various economic sectors that could help avert a prolonged global recession.

The outlook highlighted in depth the effect of the COVID-19 pandemic and the resultant consequences to capital flow reversals, external reserves, exchange rate, inflation and other macroeconomic variables as it relates to the domestic economy. Meristem at the outbreak of the COVID-19 pandemic mid-March had offered forward guidance to investors on strategic investment prospects that existed within the capital market, emphasizing that pocket of opportunities existed within the fixed income environment.

“In this new outlook report, ‘Unmasking value in a scourge’ further extends the scope on valuable strategies that investors could adopt to realize value across various asset classes., says Sulaiman Adedokun, managing director, Meristem Securities.

Speaking on the report Adedokun, said “The Meristem research outlook has been able to unearth profound insights for our clients, investors and the general public, who seek to revise their investment strategies for the remaining part of the year. We congratulate our efficient team of analysts who have been able to delineate every section of global and domestic economies to offer a refreshing view of the investment landscape and thus predict a course of action amid a pandemic that has exhausted some global and economic superpowers’.

Responding to questions from journalists about the outlook for various sectors of the Nigerian economy, Sulaiman Adedokun commented ‘The business models of some companies have benefitted from the outbreak of the pandemic for example healthcare, telecoms and technology stocks saw their share price appreciate while firms operating in sectors like oil & gas, aviation and hospitality were the worst hit.

Notwithstanding, our outlook for the telecoms sector is largely positive, given that the implementation of social distancing and remote working policies have accelerated the adoption of technological solutions across the country. We expect this to positively impact data revenue in subsequent periods. However, the growth in top line will

Poka, assures quick return on investment IFEOMA OKEKE

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hotizo Properties Limited has reopened Oasis Garden Poka Epe, urging investors to be rest assured of their investment. On 2nd of August 2020, investors, realtors gathered to celebrate the grand reopening of Oasis Garden, Poka, Epe, one of the estates of Photizo Properties Limited.

The event was graced by Ayodele Kolawole Ailru, the Oba of Poka Epe, accompanied by some of the members of his cabinet.

In his speech, he gave assurance to incoming investors on the credibility of the company, urging them to be rest assured of their investment especially on Oasis Garden Poka, Epe. He therefore called on investors to key into this investment as it yields quick return on investment.

Patrick Oriyomi, the MD of Photizo Properties Limited, while giving a brief history of oasis garden, said it was first launched in October 2018, and barely two years after they

be tempered by weaker voice revenue (which contributes 65 percent to revenue) due to shrinking subscriber wallets, along with growing adoption of cheaper VoIP (Voice over Internet Protocol) alternatives like WhatsApp calls.

Meristem offers a wide a range of services that cater to all classes of investors regardless of the stage in their financial journey, services like stockbroking, wealth management and financial advisory help clients to access various opportunities within the capital and via Meritrade, an online stockbroking platform. Investors can trade stocks from anywhere around the world as well as better manage their shares and enjoy access to the most exclusive market research.

Meristem for the past 16 years have been consistent in value creation and innovation within the capital market space.In 2018, the Nigerian stock exchange awarded Meristem as the best digital broker of the year. In 2018 also, Meristem became the first Nigerian asset management firm to attain compliance with the Global Investment Performance Standards (GIPS) by the CFA Institute. Still in 2018, Meristem received two nominations from Business Day, for the best Money market Fund and Equity Fund.

In 2017, Meristem handled the single largest trade in the history of the Nigerian Stock Exchange.

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have gathered to celebrate its reopening.

Shading more light on the estate, he said Oasis Garden is located at Poka, Epe, and it shares neighbourhood with Atlantic Hall School, Epe resort, Otedola Housing Estate.

Highlighting its benefits, he said, the estate promises quick return of investment, prime location, kiddies zone, drainage system and so much more.

Also present at the relaunch were investors who had acquired properties in Oasis Garden when it was newly launched, expressed their amazement at the progressive development going on the estate. Asaaju, an investor who is currently building on his land advised other investors to follow his footsteps.

Oasis Garden is currently sold at a giveaway price of N4,000,000 as payment plan is spread across 3-12 months.

Estates under the development of Photizo Properties Limited include Wexford Estate, GracevilleEstate,locatedatIbejuLekki, Lagos and Oasis County, the Haven City in Epe, Lagos.

Monday 10 August 2020

BUSINESS DAY

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15

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Monday 10 August 2020

BUSINESS DAY

In Association With

The absent student

Covid-19 will be painful for universities, but also bring change They need to rethink how and what they teach

I

N THE NORMAL run of things, late summer sees airports in the emerging world fill with nervous 18-year-olds, jetting off to begin a new life in the rich world’s universities. The annual trek of more than 5m students is a triumph of globalisation. Students see the world; universities get a fresh batch of high-paying customers. Yet with flights grounded and borders closed, this migration is about to become the pandemic’s latest victim.

For students, covid-19 is making life difficult. Many must choose between inconveniently timed seminars streamed into their parents’ living rooms and inconveniently deferring their studies until life is more normal. For universities, it is disastrous. They will not only lose huge chunks of revenue from foreign students but, because campus life spreads infection, they will have to transform the way they operate (see Briefing).

Yet the disaster may have an upside. For many years government subsidies and booming demand have allowed universities to resist changes that could benefit both students and society. They may not be able to do so for much longer.

Higher education has been thriving. Since 1995, as the notion spread from the rich world to the emerging one that a degree from a good institution was essential, the number of young people enrolling in higher education rose from 16% of the relevant age group to 38%. The results have been visible on swanky campuses throughout the Anglosphere, whose better universities have been the principal beneficiaries of the emerging world’s aspirations.

Yet troubles are piling up. China has been a source of high-paying foreign students for Western universities, but relations between the West and China are souring. Students with ties to the army are to be banned from America.

Governments have been turning against universities, too. In an age when politics divides along educational lines, universities struggle to persuade some politicians of their merit. President Donald Trump attacks them for “Radical Left In-

doctrination, not Education”. Some 59% of Republican voters have a negative view of colleges; just 18% of Democrats do. In Britain universities’ noisy opposition to Brexit has not helped. Given that the state pays for between a quarter and a half of tertiary education in America, Australia and Britain, through student loans and grants, the government’s enthusiasm matters.

Scepticism among politicians is not born only of spite. Governments invest in higher education to boost productivity by increasing human capital. But even as universities have boomed, productivity growth in the rich-country economies has fallen. Many politicians suspect that universities are not teaching the right subjects, and are producing more graduates than labour markets need. Small wonder that the state is beginning to pull back. In America government spending on universities has been flat in recent years; in Australia, even as the price of humanities degrees doubles, so it will fall for subjects the government deems good for growth.

There are questions about the benefits to students, too. The graduate premium is healthy enough, on average, for a degree to be financially worthwhile, but not for everybody. In Britain the Institute for Fiscal Studies (IFS) has calculated that a fifth of graduates would be better off if they had never gone to university. In America four in ten students still do not graduate six years after starting their degree— and, for those who do, the wage premium is shrinking. Across the world as a whole, student enrolment continues to grow, but in America it declined by 8% in 2010-18.

Then came covid-19. Although recessions tend to boost demand for higher education, as poor job prospects spur people to seek qualifications, revenues may nevertheless fall. Government rules will combine with student nerves to keep numbers down. Last month the Trump administration said new foreign students would not be allowed to enter the country if their classes had moved online. Sydney, Melbourne, UNSW and Monash, four of Aus-

tralia’s leading universities, rely on foreign students for a third of their income. The IFS expects losses at English universities to amount to over a quarter of one year’s revenues.

The damage from covid-19 means that, in the short term at least, universities will be more dependent on governments than ever. The IFS reckons that 13 universities in Britain risk going bust. Governments ought to help colleges, but should favour institutions that provide good teaching and research or benefit their community. Those that satisfy none of those criteria should be allowed to go to the wall.

Those that survive must learn from the pandemic. Until now most of them, especially the ones at the top of the market, have resisted putting undergraduate courses online. That is not because remote teaching is necessarily bad—a third of graduate students were studying fully online last year—but because a three- or four-year degree on campus was universities’ and students’ idea of what an undergraduate education should look like. Demand for the services of universities was so intense that they had no need to change.

Now change is being forced upon them. The College Crisis Initiative at Davidson College says that less than a quarter of American universities are likely to teach mostly or wholly in person next term. If that persists, it will reduce the demand. Many students buy the university experience not just to boost their earning capacity, but also to get away from their parents, make friends and find partners. But it should also cut costs, by giving students the option of living at home while studying.

Back to the mortarboard Covid-19 is catalysing innovation, too. The Big Ten Academic Alliance, a group of midwestern universities, is offering many of its 600,000 students the opportunity to take online courses at other universities in the group. There is huge scope for using digital technology to improve education. Poor in-person lectures could be replaced by online ones from the best in the world, freeing up time for the small-group teaching which students value most.

AAbandoning Balkan betrayal hope

Official economic forecasts for poor countries are too rosy Over-optimism at the IMF and the World Bank can have serious consequences

M

OST PEOPLE, when presented with bad news, tend to play it down. Even professional economic forecasters are not immune to the temptations of hope. In February more than 500m people in China were experiencing some form of lockdown, and covid-19 had spread to Italy. Yet the IMF said that in its base-case forecast global GDP growth this year would be only 0.1 percentage points lower than previously expected. By April it had cut its forecast by 6.2 percentage points, to -3%. By June it had sawn off another 1.9 percentage points. Just a week later an informal poll of about 40 IMF staff found that two-thirds

expected another downward revision in October.

By and large, economic forecasters are a sunny bunch. They rarely predict a downturn. Human nature, incentives and political pressure get in the way. Yet rosy forecasts by theIMF and the World Bank can have serious consequences. That is especially the case in poor countries today, where covid-19 is ravaging economies, and governments, international organisations and investors are using forecasts to guide their decisions.

IMF and World Bank projections can be very influential in some countries. They can affect governments’ spending and borrowing plans.

Investors may lend more cheaply to countries expected to grow rapidly.

And the forecasts determine whether the fund and the bank think a country’s debt is sustainable, which in turn determines whether it qualifies for a bail-out.

The fund tends to be optimistic.

Continues on page 17

Monday 10 August 2020

BUSINESS DAY

17

In Association With

No way to run a country

A big blast should lead to big change in Lebanon It is past time to reform the broken state

S

O POWERFUL WAS the explosion that rocked Beirut on August 4th that people in Cyprus, 240km (150 miles) away, thought they had suffered an earthquake. Scores of people died and thousands were injured in the blast, which left the port in ruins. The Lebanese government says it was caused by 2,750 tonnes of ammonium nitrate, which can be used as fertiliser or as an explosive (see article). This appears to have been confiscated years ago from an abandoned Russian-owned cargo ship heading to Mozambique.

Customs officials proposed exporting the stuff, giving it to the army or selling it to an explosives company— but they needed the judiciary’s approval. Their repeated requests were met with silence. So the material sat in a warehouse at the port.

What kind of government leaves a mountain of explosive chemicals lying around unsafely for the better part of a decade? The same kind that cannot agree on a budget for 11 years and that let its central bank run a Ponzi scheme to defend its unrealistic currency peg. The kind which is so deluded that it relies on aid, loans and remittances, spending far more than it collects in taxes. The kind

that is controlled by an out-of-touch elite who fiddle and extort while the economy burns. In short, it is the government of Lebanon—and it is in desperate need of reform.

That much was clear even before the explosion showered Beirut with broken glass and pieces of rubble.

For months Lebanon has been mired in a debilitating economic crisis, because of a rotten banking sector and a collapsing currency. The Lebanese pound has lost about 80% of its value on the black market against the dollar.

Because Lebanon imports so much, inflation has spiked. The government defaulted on its debts months ago. The economy was weak before

covid-19 forced politicians to lock down the country for two months earlier this year. Now it is in a coma.

The poverty rate is expected to rise from 45% in 2019 to more than 75% by the end of this year. Many businesses have gone bust. Those that reopened had to close again recently because of a new surge of infections.

Without answers, the government asked the IMF for help. The fund wants a modest show of good faith, such as a new law on capital controls or a reform of the lossmaking electricity industry. But Lebanese officials cannot even agree on the severity of the crisis. They have spent weeks bickering over

how to estimate the losses racked up by the central bank. IMF officials have looked on with dismay. Even some in the government have had enough. On August 3rd the foreign minister quit, saying that Lebanon risks becoming a failed state. “I participated in this government on the basis that I have one employer named Lebanon,” Nassif Hitti wrote in his resignation letter, “and I found in my country many employers and conflicting interests.”

It is a new way of describing an old problem. For decades Lebanon has carved up political power among its religions and sects as a device for keeping the peace between them.

Though designed to ensure that all Lebanese have a say in government, the system has been captured by an entrenched elite. This elite hands out government jobs based on sect. With power guaranteed, it can plunder ministries. The waste associated with its patronage schemes costs Lebanon 9% of GDP each year, says the World Bank. Corruption is rife. Residents of Beirut note that the explosion occurred in the city’s port, known locally as the “cave of Ali Baba and the 40 thieves”, owing to allegations of theft, bribery and embezzlement at the governmentowned facility.

A bigger dose

The world is spending nowhere near enough on a coronavirus vaccine Far better to spend far too much

C

ONSIDER THE following thought experiment. If you fail to eat a pizza within an hour, you will die from hunger. What do you do? Most people would immediately order a pizza—and not just one Margherita, but lots of them, from several different parlours. In order to maximise the chances that at least one pizzeria got you what you needed in time, you would not care that some of the pizza would be sure to go to waste.

The world is hungry for a vaccine against covid-19. So far about 700,000 deaths have been recorded from the disease, and the total is increasing at a rate of roughly 40,000 a week. If you also include unrecorded deaths, the actual numbers are much higher. Meanwhile, the global economy is experiencing its sharpest contraction since the Great Depression, of perhaps 8% of GDP in the first half of 2020.

In the face of this catastrophe, scientists look likely to produce a vaccine much faster than almost anyone could have predicted at the start of the pandemic. Yet global efforts to manufacture and distribute vaccines do not measure up. A mere $10bn or so has been devoted to the cause—the equivalent of ordering one pizza, rather than the several that are needed.

The figures are murky, but on a

rough estimate the world has bought about 4bn doses of covid-19 vaccines for delivery by the end of next year, which is in theory enough to give half the planet one dose. In practice, however, far fewer people will secure protection from the disease. Some of the vaccines in production will fail to get regulatory approval, and a potential candidate that reaches a large-scale clinical trial—as several have—still has a 20% chance of failure.

Others will be approved but may not provide full protection. They may not be suited to the elderly, for instance, or they may stop people dying from covid-19 but not from passing it to others. Other vaccines will require more than one dose in order to be

effective. Because of these contingencies, even those countries, such as Britain and America, that have bought more than two doses for each of their citizens have still not bought enough.

Instead of seeing unproven vaccines as an extravagance, the world needs to think of them as an insurance policy. Research suggests that if ten or more vaccines are in development, there is a 90% chance of finding one which works. Once one of these candidates proves to be effective, billions of doses will need to be distributed quickly. But it is impossible to know in advance which candidate will succeed. Governments should therefore help pharmaceutical firms produce vast

quantities of a range of different vaccines—ideally, numbering tens of billions of doses in all—long before regulatory approval is or is not granted. The winning vaccine could thus start to get to people quickly, even as doses of failed vaccines might be thrown away unused.

That may seem deliberately and needlessly lavish. Yet even boosting vaccine funding tenfold to $100bn or more, in line with the most ambitious proposals, pales in comparison with the $7trn which governments across the world have spent or pledged since the pandemic began in order to preserve incomes and jobs. The real extravagance would be to wait until a successful vaccine candidate emerges before rushing to boost production. In terms of the economic output that is saved, to say nothing of lives, it would make sense for the world to spend as much as $200bn on bringing forward an effective covid-19 vaccine by just one week.

For some, the prospect of such a heavy investment raises fears of “vaccine nationalism”, in which rich countries outspend poor ones in an attempt to corner the market for their citizens. The world as a whole can wring the most benefit out of limited supplies of vaccine by pooling resources and allocating doses on the basis of need—health-care workers first, vulnerable people next, and so forth.

Official economic forecasts for poor countries are...

Continued from page 16

Its one-year-ahead growth forecasts for developing countries in 19902016 were, on average, 0.42 percentage points above subsequently published GDP figures. Most of the optimism comes from failing to predict downturns. Even once a recession has begun, forecasters are still slow to accept the news (see chart).

Such errors can drastically change debt dynamics. Take a country expected to have public debt of 50% of GDP in 20 years’ time. If annual economic growth is 0.5 percentage points less than predicted, and nothing else changes, then the debt ratio could instead be 90% of GDP. In a recent study Paul Beaudry of the University of British Columbia and Tim Willems of the IMF even link overoptimism to future fiscal crises. They find that overestimating average annual growth by a percentage point for the next three years, as the IMF does about 40% of the time, reduces growth three years later by a full percentage point. Governments and firms seem to celebrate good forecasts by racking up debt. Trouble sets in.

Predicting growth, and especially downturns, is fiendishly hard. Getting it right is not helped by forecasters having little incentive to spot clouds on the horizon. Analysts fear that gloom could become self-fulfilling. Standing out from the crowd and wrongly calling a recession damages a forecaster’s reputation more than failing to predict one along with everyone else. Then there is “pushback from governments”, says Maurice Obstfeld, who was the fund’s chief economist in 2015-18.

Internal pressure to nudge up forecasts in order to justify a lending package is also “definitely an issue ”, says Mr Obstfeld. A paper by Giang Ho and Paolo Mauro of the fund in 2014 found that forecasts were especially optimistic when countries were just about to enter a programme.

The fund’s Independent Evaluation Office (IEO) acknowledges that forecasts tend to be rosy in high-profile bail-outs, but notes that these are usually corrected at the programme’s first review three months later. (By then, of course, the agreement has already been signed.)

18

Monday 10 August 2020

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Nigeria’s top CEOs earn N292.40 bn dividend

SHORT TAKES N312m

…Dangote, Rabiu, Ovia, top earners

After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

BALA AUGIE

D

irectors of bellwether companies have re wa rd e d t h e m selves generously out of distributable profit and market participates have warned that it is important for stewards to conserve cash so as to overcome COVID-19 headwinds.

The top executives of companies from banks to industrial goods to oil and gas received a combined dividend of N292.40 billion in 2019, according to data gathered by Markets Intelligence.

Digging the numbers shows the take home pay of Aliko Dangote, Africa’s richest man and Chairman Dangote Industries Limited (DIL); Jim Ovia, Founder of Zenith Bank, and Abdul Samad Rabiu, Chairman and founder of BUA Group, make up 98 percent of total industry figure.

Aliko Dangote, who owns 80 percent of company’s total ordinary shares outstanding of 17.04 billion, received total dividend of N272.40 billion. He owns these shares through Dangote Industries Limited, a parent company of its subsidiaries. The company has a free float of 20 percent that allows it ownership of 80 percent of the entity.

Jim Ovia earned N12.64 billion in dividend and as a majority share holder he owns 2.94 billion shares out of 31.39 billion shares available

P.E

5

Aliko Dangote

Jim Ovia

Tony Elumelu

for allotment.

Abdul Samad Rabiu, received total dividend of N54.72 billion, as he possesses 93 percent of the 33.31 billion total ordinary shares outstanding of the company through Damnaz Cement Company Limited, BUA International Limited, and BUA Cement Company Limited.

Free float, also known as public float, refers to the shares of a company that can be publicly traded and are not restricted (i.e., held by insiders). In other words, the term is used to describe the number of shares that is available to the public for trading in the secondary market.

While rewarding stewards of companies out of distributable is in line corporate objective, a generous to executive in the face of economic

tempest has been criticized by investors across the globe.

For instance, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, advised banks to halt dividend payment for now. She said it is important for lenders to have a strong capital buffers against macroeconomic shocks caused by the coronavirus pandemic.

The coronavirus pandemics have ravaged economies across the globe, battering cash flow of oil majors and operators in the hotel and hospitality business.

When revenue shrinks at a unprecedented rate due to macroeconomic shocks, profit slumps and cash flow reduces. The dire consequences for a quoted company are that its value deteriorates

and investors dumps shares and pack their money in save haven assets.

The need for directors of companies to conserve cash for the rainy day so as to fund future expansion plans rather than engage in dividend jamboree ca not be overemphasize in the a world that is becoming increasing volatile.

Interestingly, the earnings season kicked start two weeks ago and result that were published showed 70 percent of corporate recorded decline revenue and profit while Unilever Nigeria, International Breweries, Transcrop Hotels fell off the cliff as they recorded losses.

The environment and business landscape has been scotching since the introduction of the Exporters’ and Importers’ window introduced in 2017 combined with a rebound in crude oil price helped the county exit recession in the third quarter of 2017.

A weak consumer spending, decrepit infrastructure, slow construction activities, hefty levies, and poor regulations have hindered Nigerian companies from thriving and contributing to the economy.

The International Monetary Fund (IMF) has announced that the Nigerian economy would witness a deeper contraction of 5.4 percent and not the 3.4 percent it projected in April 2020.

The domestic economic growth had slowed to 1.87 percent in the first quarter, and the current market realities could tip the country into another recession.

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 10 August 2020

BUSINESS DAY

Government Enterprise & Empowerment Program

Blessing Mohammed, a beneficiary of the Covid-19 relief loan

19

Brought to you by

Isioma Otodo, provisions and household items trader

GEEP provides COVID-19 relief to 87,614 petty traders …eyes 412,386 traders in 2nd phase odinaka Anudu

T

he Government Ent e r p r i s e a n d Em powerment Program (GEEP) has provided palliative microloans for 87,614 petty traders hit by COVID-19 pandemic in Nigeria.

In line with the vision of the Federal Government to curb poverty and boost productivity in different parts of Nigeria, thousands of petty traders in 20 states across the country were reached in the first phase of disbursement.

The second phase of the disbursements will target 412,386 petty traders across the country.

COVID-19 has disrupted eco-

nomic activities due to movement restrictions and lock-down directives across the country.

This led the Federal Government in April 2020 to leverage its GEEP infrastructure in disbursing palliative microloans to petty traders and artisans. These palliative microloans have helped petty traders revive their business, as the government eases lockdown measures nationwide.

GEEP is one of the social intervention programmes, comprising TraderMoni, MarketMoni and FarmerMoni, and executed by the Bank of Industry. It is a completely digitised programme where all eligible traders are captured into a database, verified via phone and facial recognition technology,

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and receive disbursements in mobile wallets.

All petty traders who received the palliative microloans enjoyed the 3-month moratorium, directed by President Muhammadu Buhari.

A number of beneficiaries shared their relief at getting these loans, expressing appreciation to the government for supporting them at a time like this.

Blessing Mohammed, a plantain seller at Obalende, Lagos, complained that business has literally stopped since the coronavirus pandemic started “I have not been able to restock my small plantain business because nobody was making any purchases. I was at the

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neighbourhood shopping place where we sell our goods to people in the community and I noticed the loan registration was going on. I registered and I got the alert on my phone. It was a market day, so I was able to rush and buy plantain from the market. I am able to sell to people in our community and I will repay the loan quickly because there is no interest attached to it,” she said.

Isioma Otodo, a micro trader in Lagos, had words of gratitude for the government.

“I sell groundnut oil, macaroni, indomie, maggi, pepper, salt and other things. You know we earn a living from daily buying and selling, but people have not been able to come out

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because of the coronavirus. We got a message from our local government to register for this loan. The loan will help our business now that the lockdown has been lifted. The good part is that the loan is interest free, so I can pay back within the 6 months period. We thank the Federal government for this loan.”

Mrs Taiwo, another petty trader in Lagos, said she saw a message encouraging traders to register for GEEP and had to leverage that. She explained that the money she got from GEEP is a big relief at this time, expressing appreciation to the Federal Government for supporting her at this period of economic downturn occasioned

by COVID-19.

20

Monday 10 August 2020

BUSINESS DAY

Start-Up Digest

In association with

Amid economic downturn, Idowu Kikelomo finds gold in event industry Odinaka Anudu

K

ikelomo Olayeni Idowu has found a multimillion naira opportunity in the event industry. Her journey of success did not happen overnight. Like every true entrepreneur, she went through the mills to become what she is today.

Idowu is the founder of Kyksie Drapes Events and Interiors Limited.

She had a background in Early Childhood Education from the University of Ibadan, but her love for aesthetics, which she says runs in her family, prepared her for a path on entrepreneurship.

“I started about 11 years ago— that was in June, 2009. But before then I was privileged to be trained at a reputable event company here in Nigeria, but they have since relocated to UK,” she says.

“This was at a time when Nigerian universities were on a very long strike action. I started with training in decoration and cakes, borne out of the sight of the beautiful designs at events, especially wedding receptions.”

Being born into a family filled with party vendors, she had the opportunity to plan parties before she started.

Back then, she would look for opportunities to assist in church decorations and other family events.

“I remember always getting to wedding ceremonies very early to experience the tidying up of decorators and vendors. I would always be fascinated about how they achieved the entire beautiful ambience. Today, I have found myself in the space I love,” she says.

The event stylist and interior decor expert has, through hard work, distinguished the Kyksie brand through her various offerings such as event styling(decorations), event

Kikelomo Idowu

planning and coordination, event consultation, interior decorations, among others.

The entrepreneur says

Phillips Consulting to empower entrepreneurs, startups with new micro courses Daniel Obi

R

o b Ta i w o, m a n aging director of Philips Consulting, is planning to empower entrepreneurs with new micro courses.

According to him, that t h e d e m o c ra t i s a t i o n o f learning is fast merging with an increasingly globalised workforce, and the future would belong to those who can learn at pace and deliver a unique set of skills from anywhere and to anyone.

Ta i w o, a c c o r d i n g t o a statement, said this at the launch of the Virtual Instructor-L ed Training (V.I.L.T) platform tagged ‘Micro Courses,’ launched in Lagos recently.

According to him, “With a mission to drive the future of work in corporate Nigeria by democratising learning, Philips Consulting has launched a bouquet of services designed to help individuals, teams, and corporates prepare for the necessary change.”

He said, “They include tools that motivate people to thrive in the workplace, whilst learning about emerging technologies of the future. Our micro

course platform was recently launched to cater to the different categories of learners in Nigeria to upskill the employed, create more employable youth, and drive national growth and business sustainability.”

Speaking at the launch, the managing director said that there is a huge window of opportunity to understand, manage and transition into this new future that will lead the fourth industrial revolution in Nigeria.

But preparing for this requires a high level of agility and responsiveness, as well as timely and deliberate actions to drive businesses forward, he stated.

“This future is driven by a gig-economy where everyone can figure things out in a few clicks, posts, or tweets.

This economy has radically reshaped the labour market, and because of this, talent is less inspired to remain committed to formal employment. The core areas of focus for employees should be the employee experience, flexible modes of work, innovative engagement, and a virtuous well-being cycle,” he explained.

According to him, people need to know ‘how to work’ in the ‘future of work,’ exwww.businessday.ng

plaining that working in a new revolution with a multigenerational workforce requires higher technical, social, cognitive, emotional, and adaptive skills.

He further said the most critical of them is the need to unlearn, learn and iterate on the fly.

“Hybrid leaders are in higher demand than ever to tackle new and undiscovered problems. The top skills needed for this new normal must be accessible to anyone who seeks to thrive. Therefore, people from all backgrounds and demographic must take a new approach to continuous, bite-sized, scalable, and accessible virtual-enabled learning that equips them with these new skills,” he enthused.

He said Nigeria was 6th in the world for the highest number of internet users in the first quarter of 2020, demonstrating that when provided with the opportunity, the ability of the average Nigerian to harness technology was beyond contestation. He, however, said that such endeavour must be geared towards using digital learning to up-skill the workforce and empower entrepreneurs and startups.

she has been serviced CocaCola Company, Nigeria Society of Engineers, Alaafin of Oyo’s children, among

other top clients.

Interestingly, her impact in the industry has earned her numerous awards which include: Pera Awards of Recognition, 60 Most Influential Personalities in Ibadan, 40 Under 40 Persons Awards, Blingz Magazine Decorator of the Year Award as well as Ibadan Prominent People’s Award.

On the brand’s contribution to Nigeria’s economy, she says, “We have been able to contribute to the economy by reducing unemployment in the little way we can. We provide training, employ young people, undergraduates and young single mums.

We also engage in charity work through the Atinubi Initiative, our NGO which focuses on women and preterm babies.”

Highlighting her success secret, Idowu says her trust in God, consistency, determination, integrity, innovation and good and disciplined team have brought her this far.

Explaining some of her challenges and how she was able to navigate through them, she says economic instability, uncooperative clients, as well as set-backs in the importation of some of her decor accessories are some of the challenges.

“We employ the services of experts to give us possible solutions to wade through economic instability when it arises.

We’ve been able reduce our dependence on foreign purchases and source for local options to ease the delay from suppliers. We have submitted to learning better ways as far as client management skills are concerned, by engaging experts in this field,” she discloses.

The entrepreneur advises aspiring and budding entrepreneurs in Nigeria to keep giving their best to whatever their hands find to do.

“Trust God to make it big.

Work not to compete but to be the best version of yourself,” she says.

Digital Conversation set to train 1m entrepreneurs in Africa Josephine Okojie

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he Digital Conversation, an online platform that enables operators of small and medium scale enterprises (SMEs) to leverage innovative solutions to scale their businesses, has launched a new initiative to train over one 1 million African youths.

As part of the new initiative, Samson Olatunde, founder, Digital CEO Tribe, is expected to tour some Africa countries through 2020 till 2023 in its drive to onboard them.

Speaking to journalists on the organisation’s 2023 agenda to ‘Empower One Million African youths,’ Olatunde said the new initiative is part of efforts to help empower businesses in Sub-Saharan Africa and enable them to leverage 21st century’s digital tools.

He stressed that the agenda to equip Africans digitally is premised on the need to leverage the current pandemic outbreak fallout to reposition the continent’s teeming innovators in line with Frontiers Emerging Markets (FEM) across all

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sectors.

“It is aimed at entrepreneurs, CEOs, SMEs, startups, and marketing professionals who want to develop their digital skills.

Professionals who want to develop and enhance their businesses and services using digital tools.”

Explaining the new strategies towards achieving this enormous task, the young coach disclosed that his organisation has been streamlined into Digital CEO Africa Summit, Digital Conversation, and the Digital Profit Masterclass.

“The goal to empower young people is fair and sustainable in the future.

Digital CEO Tribe is the brilliant initiative of founders and our team. Digital CEO Tribe is Africa’s largest community of digitally savvy professionals. Despite the slow digital revolution in the country, the team is relentless in its quest,” he says.

“Digital CEO Tribe has various initiatives. One of it is Digital CEO Africa Summit which is helping individuals and organisations across Africa to be relevant,” he further said.

“For the last five years, the summit is touring Af@Businessdayng

rica countries and exposing youths to a world of opportunities using digital tools,” he added.

The summit, which in its previous edition, has been hosted in 15 Nigerian universities, and a university in Ghana, and Burkina Faso respectively and has empowered over 200,000 youths since its start.

According to the founder, as challenges in the continent’s labour markets keep growing, the organisation’s Digital CEO Africa Summit is increasing its quest to reduce skills gaps among youths, as it continues to recognise the challenges faced by unemployed youths while providing them with the opportunity to collaborate and transform themselves into digital influencers.

Since its start, the Digital Conversation has hosted key industry leaders and successful entrepreneurs.

The event promotes promising entrepreneurs and showcases their achievements.

It has also provided more than 3,000 attendees the opportunity to be creative and build a network to share ideas and opportunities.

Monday 10 August 2020

BUSINESS DAY

21

real sector watch

Noodle makers scramble for market share as demography offers opportunity Gbemi Faminu

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i g e r i a’s y o u t h f u l population is providing a big market for noodle makers which many refer to the boundary between a solid meal and a snack.

With 44 percent of Nigerians between 0-14 years and over 70 percent in 0-30 years’ bracket, young Nigerians are whetting their appetite with noodles as it is easy to cook and faster for urban dwellers.

According to Euromonitor international’s November 2019 report, noodles has grown very strongly over the last 20 years to become an important staple, consumed by practically all urban households on a regular basis.

Dufil Prima Foods, also known as De-United Foods, made revenue of N206.17 billion in 2018 as against N171.8 billion the year before. Profit before tax was N23.16 billion in 2017 and N13.74 billion in 2018. Analysts say the company controls 75 percent of the noodles market, making it a clear leader.

“Over the review period (20132017), revenue growth has been driven by a combination of expansion in production capacity, higher traded volumes, upward price adjustments, and more recently, business acquisitions. This equated to a fiveyear Compound Annual Growth Rate of 24%,” a corporate ratings report on Dufil at FMDQ said.

But the company must be mindful of Flour Mills’ Golden Penny Noodles, which is gaining traction in the southern and northern part of Nigeria. Flour Mills’ 2019/20 annual report released on March 20, 2020, showed that Group’s revenues grew by 9 percent yearon-year (YoY) from N527.4 billion a year ago to N574 billion in 2020.

According to the report, agroallied arm of the group company contributed the most revenue.

Revenue from the agro-allied increased by 20 percent from N88.1 billion the previous year to N105.5 billion in 2020.

The food segment ( including noodles) reported contribution increase by 7 percent.

According to Paul Gbededo, CEO of Flour Mills, “The food business recorded accelerated growths within the business-to-consumer (B2C) segments in line with projections, as our focus to improve customer experience saw the introduction of a range of new products and our strategic marketing and promotional activities to win over new market segments yielded the desired result.”

The noodles industry has experienced acquisitions at various times. In 2018, Dufil acquired 100 percent of the food production line of May & Baker Nigeria plc, which covers its noodles business under the brand name Mimee Noodles.

The deal was valued at N775 million. Similarly, in 2017, Dangote Noodles Limited, a unit of Nigerian company Dangote Flour Mills, sold two of its production plants at its Ikorodu and Calabar factories to

Dufil for N3.7billion.

Although of Japanese origin, noodles have become prominent among Nigerian consumers due to its relatively affordable and instant meal nature usually made from common wheat. Data from the World Instant Noodles Association (WINA) shows that Nigeria is currently among the largest consumers of instant noodles, with 1.92million servings as of May 2020, ranking 11th position in the global demand for noodles ranking.

As of 2004, Dufil was already producing one million cartons of Indomie per month and by 2010, it had a production capacity of one billion packs of Indomie noodles in diverse flavours. Today, it has 15 manufacturing plants in the country and thousands of local distributors in various geo political zones of the country.

Dufil is eyeing higher market share with its chicken, onion, peppersoup, oriental and relish flavours, which can be found in different packs.

The Golden Penny Noodles is also fighting for consumer loyalty

through utter satisfaction. Today, the brand has grown to be among the top three in the Nigerian noodles market providing various sizes and flavours ranging from the 70g, 100g, and 150g size and chicken to jollof flavours.

At the launch of the Golden Penny Jollof in 2019, Chiaka Eluchie, category manager for Golden Penny Noodles, said the Jollof Chicken Flavour was produced in line with consumer needs and preference in mind, as the company put so much research into the product, which was considered as the most appealing flavour to Nigerians, She also stated that the Nigeria noodles market value was worth N190 billion, growing consistently year on year, fuelled by rapid population growth rate. The company leverages its alliance with the Northern Nigeria Flour Mills, which has three manufacturing units with a combined capacity of 1,200 metric tons per day, to expand its reach in the northern market.

Similarly, the Honeywell Noodles has consistently remained part of the big players in the country’s food industry, wielding 12 percent

of the noodles industry, according to Lanre Jaiyeola, managing director/CEO, Honeywell Flour Mills.

The brand was launched into the Nigerian market in November 2010, providing diverse flavours over the years, ranging from the chicken to the curry chicken, onion chicken and spicy chicken.

According to its website, in a bid to cater to its increasing clientele, it has consistently upgraded its production facilities, starting with the construction and installation of a 200 metric tonnes wheat mill at the Tin Can Island site. It is on a continuous re-modelling exercise to increase the milling capacity to 360 tonnes per day. The company carried out an expansion project, a twin mill facility of 1,000 MT per day which was completed in 2013.

Currently, production capacity is now 2,610 MT per day.

Coming after these three brands are a host of other brands who are partially struggling to get their own independent part of the market share as well as loyal consumers.

A survey carried out by BusinessDay on noodles consumers revealed that nine out of 10 Nigerians from age 35 below are loyal consumers of the staple, spending between N60 and N350 each depending on the size and flavour.

Tope Adenuga, a student of University of Lagos, enjoys her noodles according to her mood and schedule.

However, she said spicy noodles well garnished with protein and vegetables were her favourite.

Adenuga further said she enjoyed barbeque flavour with spices.

Faith Bassey, a noodles vendor at Apapa, said that her customers had different requests on the kind of noodles they wanted. She stated that some preferred it spicy and sometimes with a blend of peppersoup, while others wanted the ones well garnished with seafood and other vegetables.

US-based Nigerian engineer develops smart coolers that preserve food for 6 days

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lufemi Agbato, a USbased Nigerian engineer, has developed smart coolers with a capacity to preserve food and drinks for six days.

The technology that evolved from an MBA business research has metamorphosed into a company, DAM Coolers, now deploying into the global mart the novel cooler boxes which are much lighter and trendier than many others.

The DAM coolers have thinner walls, thus affording users more volume for their food or drinks in less area.

While Agbato and his team keep investing creativity and zeal in the enterprise, the market is already according them a great promise as some individuals and organisa-

tions have already started embracing the coolers. DAM Coolers has also initiated a live crowdfunding campaign page to which it welcomes everyone.

A preorder scheme it has been attracting positive responses, with a good number of products already subscribed to and pre-ordered.

Speaking about the company, Agbato notes that DAM Coolers is an outdoor company with a fun attitude and innovative approach to creation.

“We like to describe our products as ‘Efficient, Versatile and Practical.’ Or, as we say at DAM Coolers: Light.Tight.Right,” he says.

DAM’s flagship product is the DAM25 and DAM35 Hard Sided Vacuum Insulated Coolers using Vacuum Insulated Technology to www.businessday.ng

keep its contents much colder for longer periods of time, while being lightweight and lower profiled to give a lean look. It comes in two sizes: the DAM25 and DAM35,

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which are 23.9 liters and 32 liters respectively.

One of its major offerings is the Softcool Series – Softcool 15 and Softcool 20— described as DAM’s

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most utilitarian cooler in the line-up.

“They can keep your drinks and food cool or hot for the entire day and more, at the beach or picnic while giving you all the efficiency and utility you need. With removable shoulder straps and backstraps (Softcool 20), it presents multiple options for mobility, which makes the cooler bag the ideal choice for all of outings,” the company says.

A visit to DAM Coolers’ website shows that it caters for those who desire to enhance their lifestyles with activities and recreation such as beach going, party going, camping and outdoor adventures, with other dutiful activities such as going to work or school, food storage, cold chain transport and food delivery also accommodated.

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Monday 10 August 2020

BUSINESS DAY

INSIGHT NEXIM Bank: A 3-year scorecard of effective reforms and excellent results Recently, the current executive management of the Nigerian Export Import Bank (NEXIM) under the leadership of Abba Bello clocked three years in office. In this analytical piece, Terhemen Ikyaave, a public policy analyst, captures the initiatives that underpin the remarkable turnaround of the export bank from a point of insolvency to profitability as well as its repositioning as a key driver of non-oil exports.

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he volume of goods and services that a nation produces and sells to other countries impact the strength of its local economy. A strong export base promotes national self-reliance, creates jobs, ensures efficient resource allocation and capital formation for a country.

A good example is the South East Asian Tigers. The rapid growth and transformation of the economies of Hong Kong, Singapore, South Korea, and Taiwan owe their origin to the export-led strategy that their governments implemented between 1965 and 1995.

The good news is that Nigeria is on the same path, albeit with mixed results and plenty of room for improvement. Since 1986, Nigeria has pursued an export led strategy. This includes emphasis on non-oil exports such as Cocoa, Groundnut, Cotton, Palm Produce, Rubber and Grains owing to perennial fluctuations in the prices of oil in the international market.

One institutional component of this export strategy was the establishment of the Nigerian ExportImport Bank (NEXIM) in 1991 to ensure sustainable growth of nonoil exports. Designed as an export credit agency, NEXIM provides finance and risk bearing services to exporters and has over the years played a leading role in defining the country’s export market.

In April 2017, the Buhari administration appointed a new management for the bank under the leadership of Mr. Abba Bello, a seasoned banker with over 28 years’ experience. The team inherited a huge portfolio of non-performing loans, weak internal processes, dwindling confidence in the bank by partners – regional and international- and a lack of professionalism in the conduct of the bank’s business.

Three years on now and the turnaround is remarkably manifest. From implementing a strategic re-alignment of business focus, aggressive debt recovery drive to the execution of bold initiatives to bolster its impact on non-oil exports, the Abba Bello management team is breaking new ground and repositioning the bank as a catalyst for growing the country’s non-oil export market.

NEXIM: From Insolvency to Profits To start, the Abba Bello Management Team has successfully steered NEXIM from the brink of insolvency to profitability in three years. From posting a loss of N8.03billion in 2016, another loss of N569m in 2017, the bank has reversed the trend to record consecutive profits of N1.09billion in 2018 and N2.03bn in 2019.

Tapping Growth Potential of the Maritime Sector Next is the historic breakthrough in NEXIM bank’s efforts to open the country’s maritime industry. Early this month NEXIM, in line with its

Abba Bello, MD/CEO, NEXIM Bank

target to develop inland waterways, boost maritime trade and enhance the volume of Nigeria’s exports, successfully facilitated the consummation of a tripartite pact between Sealink Consortium and the federal government.

The deal consolidates efforts to establish a regional shipping company through a public private partnership (PPP) that will see the increased use of Nigeria’s waterways for transporting goods. The execution of the partnership will promote trade and mitigate the transport and logistic challenges that have increased cost of trade transactions. It will also help relieve pressure on Nigerian roads, introduce cost efficiencies in transport logistics and enhance regional trade between Nigeria and other countries.

“The idea behind the MoU is to facilitate export of the solid minerals out of the country, building efficiencies in our sea transport system. SEALINK will serve in the evacuation of the raw materials from the hinterlands through the inland waterways. For us, this is a milestone. Providing effective logistics; providing diversification sources for the nation’s economy and creating jobs” Abba Bello, NEXIM MD/CE said.

Under the terms of the deal, Sealink is not only expected to foster maritime transportation of goods from inside the country but will also facilitate trade within West Africa. The partnership is of historic significance in part because there are currently no vessels that facilitate trade between neighbors in West Africa. Sealink is thus, positioned to fill the gap.

Revamp of CBN Intervention Programs to Boost Exports The past three years have also seen stronger collaboration between NEXIM Bank and the Central Bank of Nigeria in the management of two intervention schemes to boost funding support to the non-oil export sector, www.businessday.ng

under a new philosophy of Produce, Add Value and Export (PAVE).

First is the N500bn Non-Oil Export Stimulation Facility (NESF) that was initiated by the CBN, in collaboration with NEXIM to help redress the declining export financing and reposition the sector to increase its contribution to economic development.

The facility is designed to improve access of exporters to concessionary finance to expand and diversify the non-oil export baskets; attract new investments and encourage re-investments in value-added non-oil exports production and non-traditional exports; and shore up non-oil export sector productivity and create more jobs. Other impact areas include supporting export-oriented companies to upscale and expand their export operations as well as capabilities; and broadening of the scope of export financing instruments.

Within the past three years, due to process enhancement and an aggressive drive to make a difference, the Abba Bello Management team have processed loans under the scheme totaling N39.45bn to 27 export companies.

Second is the N50billion Export Development Fund (EDF). The fund is structured to stimulate and increase funding, especially to Small and Medium Enterprises (SMEs) towards facilitating regional industrialization for value added exports and broadening Nigeria’s export basket and market destinations. Since the CBN released the funds to NEXIM in February 2018 the bank has deployed a total of N52.9 billion to support 62 strategic export related projects.

Another notable initiative of NEXIM is the ECOWAS Trade Support Facility. Though launched a few years ago by the previous management, this initiative has been taken to the next level under the Abba-led administration. The export financing framework

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is designed to support small traders operating in the regional market to further the regional protocol under the Economic Community of West African States (ECOWAS) Trade Liberalization Scheme (ETLS). The bank is now poised to assist Nigerian exporters to upscale their products in readiness for the commencement of the African Continental Free Trade Area (AfCFTA) Relatedly, NEXIM is the national guarantor under the Inter-state Road Transit Scheme (ISRT), designed to prevent diversion of goods transported by road to other ECOWAS countries, to prevent revenue leakages in member countries. Given that the operationalization of the ISRT scheme requires inter-agency cooperation, the Bank is forging necessary alliances with other government institutions and other ECOWAS countries for successful implementation of the programme.

NEXIM is also promoting an export trading company, called NEXPORTRADE Houses Limited, in partnership with the export group of the Manufacturers Association of Nigeria (MAN) and the Nigerian Export Promotion Council (NEPC). The Abba led administration is currently working with other stakeholders to rebrand and retool the operations of the company.

NEXPORTRADE provides a platform for SMEs to trade in the regional market by providing warehouses in other African countries where SMEs can display their goods to enhance their access to the regional market.

Equally important is NEXIM bank’s introduction of a State Export Development Programme. Through this programme, NEXIM is working with every state of the federation to develop at least one exportable commodity in furtherance of government’s objective under One State One Product programme. The initiative is also targeted at promoting regional industrialization and poverty alleviation. Under the scheme, the bank has earmarked at least N1billion under favorable terms and conditions to each state of the federation for offer to the target beneficiaries, which are mostly SMEs. The State Export Development Programme also includes an Aggregator scheme, whereby the Bank provides support to a large exporting company, who in turn could support a large number of farmers under an outgrower arrangement. This ensures that the bank supports the entire export value chain, particularly in the agricultural sector.

NEXIM bank is also a major partner of the Nationwide MSME clinic, being conducted by the Presidency under the office of the Vice President.

Under the initiative, NEXIM bank has reached out to many SMEs and made vital contributions towards the provision of common facility centers towards assisting SMEs to upscale their products, thus increasing their domestic and international com@Businessdayng

petitiveness.

In December 2018, the bank signed a tripartite agreement with AFREXIMBANK and Nigerian Export Promotion Council for a partnership to provide $1 billion financing to support Nigeria’s trade and investments in other African countries. The Bank has since agreed modalities for the disbursement of the fund with Afreximbank and has started processing applications from exporters with focus on the regional market.

MASS as a Diversification Compass To ensure fidelity to the bank’s mandate as well as align corporate actions towards deliberate results and impact, the Abba Bello Team on resumption developed a new corporate strategy 2018-2022, which aims to make the Bank one of the leading export financing institution in Africa. In doing this, the bank revalidated its target sectors, described by the acronym MASS, which stands for Manufacturing, Agro-processing, Solid Minerals and Services. This MASS agenda serves as a corporate compass that guides institutional efforts designed to support the Buhari administration’s diversification strategy.

Driving Value Addition NEXIM bank within the past three years has also made remarkable strides in supporting exporters to embrace value addition in the lines of exports. The push is in line with its PAVE philosophy which stands for “Produce, Add Value and Export” with the objective of helping Nigerian exporters earn more.

This renewed drive is significant.

For instance, Nigeria is the largest producer of shea in the world but has no major footprint in the export of shea products. The story is the same for many other Nigerian exports like leather, cocoa etc.

NEXIM is orchestrating change. In 2018, one of the companies funded by the bank did the first major export of shea butter out of Nigeria. The Bank is also supporting operators in the leather industry to move up the value chains by producing leather products such as shoes, belts and bags.

Overall, the remarkable efforts of the Abba Bello Management team to reposition NEXIM bank are not only timely but necessary. Against the continuing turmoil in the global oil markets, the resulting negative impact on the country’s finances and trade balances along with the wide ranging effects on the economy, the country cannot wait much larger to engineer that drastic weaning off its dependence on oil. NEXIM therefore requires encouragement and increased support of government, partners, and stakeholders to lead the push in unleashing the potentials of non-oil exports as drivers of economic growth.

Ikyaave is a public policy analyst based in Abuja Email: terhemenikyaave@gmail.com

Monday 10 August 2020

BUSINESS DAY

23

feature FG’s Marginal Fields Awards: Taming the vultures As the Department of Petroleum Resources (DPR) recently released guidelines for the award and operations of marginal fields in Nigeria, in the second marginal fields bid round, fears of likely political interference is rife and negative feelings rise as dodgy ‘vultures’ who secure and resell awards are circling. Dipo Oladehinde reports

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iscussions surrounding the 2020 marginal fields awards have again brought to the fore the need to ensure transparency in the entire process to avoid the mistakes that bedeviled the only such exercise which was conducted about 17 years ago, under the Olusegun Obansanjo administration.

Those who are insistent on the removal of the usual opacity around such business deals overseen by agencies of government, say if Nigeria must get global respect, it must earn it through such activities as the next bid rounds, which ordinarily draws the attention of the international business community.

Currently overseen by the Department of Petroleum Resources (DPR), headed by Mr. Sarki Auwalu, the agency recently announced commencement of the marginal fields bid round for 2020.

Vultures which are already gathering around are not tamed, highly connected individuals who secure the award can then shop around marketing the same awarded asset to raise the money required for the signature bonus payment.

It subsequently released the criteria and procedure for the process, dubbed the ‘guidelines for the award and operations of marginal fields in Nigeria’, in the second marginal fields bid round, after the award of 24 fields to 31 indigenous in 2002/2003.

However, out of the 24 fields, as of today, it was learnt that only nine are operational due to the alleged choice of unqualified persons and companies to run them, with about 15 now fully abandoned.

In 2013, the federal government also failed to successfully see through a planned bid round, despite having released the guidelines to oversee the process at the time.

The most basic definition of a marginal field in the country as is any field that has been discovered and has been left unattended for a period of at least 10 years, from the date of first discovery or anyone socalled by the President of Nigeria.

In essence, they are non-producing or un-appraised fields within the oil and gas acreage already covered by a petroleum licence, which the licence holders have considered as not being profitable for development. The federal government intends to sell 57 of such fields in the current round of bids.

In what has been described as a bold move, however, the government announced that the bids are only open to wholly or substantially indigenous companies.

The process of getting a marginal field can be quite tortuous.

To pre-qualify, an interested party is expected to submit a field-specific technical and commercial bid based on relevant and available data. They will, among others, pay the statutory fees which include the amount for data prying, data leasing, competent persons report

President Muhammadu Buhari fees and field specific report fees.

The DPR will then evaluate the bids which give preference to companies who demonstrate financial, technical and managerial capacity or the ability to manage or develop in that direction in the short term and recommend awardees/preferred bidders to the Minister of Petroleum Resources, and subsequently to the President.

In essence, companies that are awarded fields are expected to immediately pay the signature bonus specified in the award, as a necessary condition for release of the field, among other requirements.

As it stands, the federal government appears to be desperate to sell out the fields to shore up its dwindling revenues and could rake in about $5.7billion if the process starts and ends as planned.

But before the big dough starts rolling in, interested bidders are expected to cough out non-refundable chargeable fees as follows: application fee of N2 million per field and bid processing fee of N3 million per field.

Others are data prying fee of $15,000 per field, data leasing fee of $25,000 per field, competent persons report of $50,000 and $25,000 for fields specific report.

With the above, interested bidders are expected to pay a total of $115,000 in statutory fees and another N5 million in local currency.

But there already fears that what is currently happening to the power sector which seems not to have made any substantial progress since its privatisation years ago, may be replicated in the latest bid rounds, if the process is not well handled or if political interference is allowed to come to play.

With the entire process for the 2020 bid round schedule , having commenced since June 1, a lot of efforts appears to have gone into making a success of it, however, the DPR, experts say, must show that that those who are eventually selected have the capacity to deliver.

Already, industry players are seeking some clarity concerning the www.businessday.ng

pre-qualification criteria and how they will be weighted in selecting applicants that will participate at the application stage.

They are also worried about whether the process will be independently handled by the DPR devoid of any political manipulations and it is yet unclear what the actual pre-qualification criteria are and how these will be weighted in selecting applicants that will participate at that stage.

There are fears that if the prequalification criteria are not strictly adhered to, it will open the door to a political crony system and insiderdealing that has hitherto plagued the previous award system.

Furthermore, there are worrisome concerns that if the process does not run transparently and the vultures which are already gathering around are not tamed, highly connected individuals who secure the award can then shop around marketing the same awarded asset to raise the money required for the signature bonus payment.

Industry players have also raised issues over the legal challenges of revoking 11 marginal fields, disclosing that there are legal arguments around the government’s ability to also include recently revoked marginal fields in this process, given that there have been injunctions on the inclusion of the revoked fields.

As it is, the transparency and integrity of the process will be a key ingredient to engender confidence of investors and a litmus test for the widely acclaimed integrity of President Muhammadu Buhari.

On this, the government must do all within its power to ensure that the bid round meets international best practices and ensure the emergence of companies with proven track record of technical/ commercial competence and financial capacity of winners to deliver.

The federal government must avoid allocation of fields to politicians who have no track record of performance and who in nearly all cases never develop these fields

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many years after purportedly winning them. At the end of it all the country ends up the loser for it.

Accordingly, it must also be emphasised that the states where these fields are located need to be carried along and given a sense of belonging or the same issues that led to the Niger Delta crisis will ressurrect.

Overall, the companies who can develop these fields and add value to national wealth creation should be the overriding criteria to win and the agency handling the process, should be compelled to ignore political interference from Abuja in carrying out the bid round.

But the Director of DPR, Auwalu, has assured Nigerians and the international business community that the federal government will ensure maximum transparency throughout the process. Auwalu said that it was understandable why Nigerians seemed to be impatient about the upcoming award of the fields, adding that for 17 years, the country had not had any such rounds.

“There are lots of questions on marginal fields but people need to know that this is an opportunity for Nigerians. Marginal field is not something we can shroud in secrecy.

“Nigerians deserve to know because this has been 17 years that it was last done. So people are hungry.

They will be given the opportunity to prepare and participate” he assured.

He also dispelled insinuations the federal government was desperately in need of money and so would flunk the process just for quick cash.

On this, he says: “If we want to raise funds, we could have asked the NNPC to divest from some assets to raise money. We need serious investors and that is why we are not imposing high costs on the forms; it has taken 17 years to get to this point.”

To avert situations where investors are edged out of deals after securing the oilfields, the DPR said it had activated sustainability plans for the marginal field programme.

Auwalu posited that the condi@Businessdayng

tions put in place will protect the interest of all investors, stressing that any disagreement arising among awardees and their partners postaward would first be referred to the Nigerian Oil and Gas Alternative Dispute Resolution Centre in DPR. He acknowledged that the success of the bid round conducted in 2002/ 2003 was endangered with litigations and other challenges, which hampered the development of some of the awarded 24 marginal oilfields to the detriment of the nation.

“We have learnt from the mistakes made in the past, and have come up with workable solutions to ensure that the objective of the development of our marginal fields is achieved.

“This time around, our awardees will be credible investors with technical and financial capability.

“There are also the post-general award conditions. This deals with transfer of interest post-award. It means awardees cannot transfer more than 49 per cent interest to another party post-award.

“The conditions also include termination of rights of interest holders, which gives the minister the power to withdraw the interest of a party who fails to meet its obligations in terms of joint awardees” he noted during a webinar.

Another key issue which seems not to be under consideration in the current process is an alleged deal negotiated with the Niger Delta militants during the Umar Yar’Adua administration’s efforts to return peace to the region.

He was said to have agreed with the agitators that 10 per cent of royalties were supposed to go to the oilbearing communities under trusts and offering residents of the region 10 per cent of all oil and gas ventures in an effort to end the unrest that had hampered oil production.

He eventually directed the Ministry of Petroleum to document the plan, which eventually found its way in the draft Petroleum Industry Bill (PIB), which has been in the works for a while.

Added to that, oil industry experts have warned that the rush to sell off the marginal fields may backfire if all the issues are not first sorted out.

Mr. Joe Nwakwue, National President, Society of Petroleum Explorers (SPE), Nigeria, faulted the timing at a time the Covid-19 has left businesses gasping for breath.

He insisted that the government should take time and review the existing laws, address other challenges facing the programme and bemoaned the likely political interference in the entire chain, including fiscal uncertainty and poor regulation that could negatively affect the process.

More importantly only fields should be should to only competent and proven investors with capacity to add value and whose foreign partners must be proven with a track record of performance.

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Monday 10 August 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Money matters in your youth any other expense.

Set a realistic savings goal and start to save at least 10 percent of your income in an interestbearing account or a money market mutual fund. Ideally you should try to accumulate up to 6 months’ worth of your living expenses; or up to 12 months if you can.

Invest for the longterm One concrete way to invest for the future is to get on the property ladder. You are never too young to get started. Start small and build; it may be a plot of land to start with. Mortgages are available once you start to earn steady income at a particular level, but interest rates can be prohibitive so plan to pay off any loan as early as possible.

Buying property involves leg work, doing your due diligence and most importantly, selecting an experienced real estate advisor to help you avoid the common mistakes many make whilst investing in this important asset class.

Most people do not have the time or the inclination to select individual stocks; with a relatively small sum of money to invest each month, a stock market mutual fund may be the ideal investment to start to address your longterm goals. The stock market continues to present significant discounts in the prices of some leading blue-chip stocks.

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‘

It is the desire of most parents to ease the path for their children. Whilst it’s nice to receive assistance from your parents, don’t let it shortcircuit your own ambition, motivation and drive

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nternational Youth Day is celebrated August 12th each year.

The 2020 theme is “Youth Engagement for Global Action.” It seeks to highlight the ways in which the engagement of young people at the local, national and global levels is enriching national and multilateral institutions and processes.

Financial literacy is a core life skill for participating in modern society and our increasingly complex world. Financial illiteracy in youth leads to ill equipped adults. The life-long skills in financial knowledge imbibed early, gives them the best chance for long-term financial independence. Here are a few money tips to set you on the path to financial freedom: Set SMART goals Many young adults face the dilemma of making far reaching choices regarding their future. Some feel compelled to make decisions that they may later regret. Some drift without much of a plan or purpose; this is where parents, guardians, teachers and indeed all of us can play a role as mentors to guide and point in the right direction by exploring innate potential, natural strengths, talents and abilities. By establishing clear goals, you can make realistic plans for your life.

Start with a budget Budgeting is a very effective way of keeping track of your expenses. Create a budget so that you can see exactly where your money is going. Start by adding up the essentials, transportation, food, rent, school fees etc.

Before the lockdown, there was the tendency to eat out almost daily, or pick up take away meals, and generally have a lifestyle that you perhaps can’t afford just yet. This is the time to commit to save and invest for the future. The key is to live below your means and spend less than

you earn even as things begin to ease up.

Use debt judiciously It is better to borrow for things that have lasting value such as your personal development and education, or in assets such as property, rather than for clothes, gadgets and luxuries.

Your employer, family, friends and banker might consider lending you money. Be meticulous with repayment and don’t abuse this trust. If you are struggling to repay, approach lenders and be honest about your situation; they may be able to adjust the terms. It is about credibility; building a solid credit history from now is important.

Start to build savings Things happen and it pays to be prepared for the unexpected. Once your debt is under control, build some emergency savings. So many young people have lost their jobs or taken pay cuts; you need a fallback, a cushion to tide you over such uncertain times.

Don’t wait until you have that windfall to start to save. No matter how little you earn, save something; even the smallest amounts add up over time.

Automating your savings by setting up a direct debit makes saving much easier.

The mantra “pay yourself first” involves treating savings as part of your monthly “expenses” that must be considered before

It may seem absurd to talk about your retirement when you have barely gotten started. Even if your company doesn’t have a pension scheme in place, make your own voluntary contributions to a Retirement Savings Account. A pension alone can hardly sustain your standard of living; you do need to build a diversified portfolio of investments, to set you up for long-term financial security.

Choose your life partner wisely Your choice of a life part-

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ner is one of the most significant decisions that you will ever make. Do your partner’s moral and ethical values match yours? Whilst you don’t have to agree on every single financial issue, compatible goals and values as well as openness and trust are key, as you merge not just your lives, but your finances.

The company that you keep matters greatly. If you surround yourself with motivated, ambitious, positive friends, it is more likely to rub off on you.

Networks and mentors are usually sited as ingredients for sustained success. Take relationship building seriously.

Invest in yourself You are your greatest asset. Be deliberate about building the skills that you need. There is an increasing demand for digital skills as a prerequisite to enter most roles. Education will always matter; equip yourself and keep learning and improving by reading widely, attending seminars and other learning events. Seek certifications as appropriate.

Embrace your strengths, talents and gifts.

That thing that you love to do for free may well be the key to moving from passion to profit and establishing the business that you have dreamed of.

Invest in financial knowledge Seek professional advice so that your own unique situation can be carefully considered and you can be guided appropriately. You also owe it to yourself to build your own knowledge.

Knowledge is power and there is a plethora of information in books and the online and print media.

Armed with the required knowledge, you will find that you become far more intentional about your finances and are less easily swayed by peer pressure and the need to keep up with the Jones’.

Health is wealth Don’t be one of those that expend all their energy and health creating wealth only to spend years in ill health spending all that wealth to regain your health. It is those intentional daily steps that you take now that will help to sustain you in the future.

Eating healthy foods, exer@Businessdayng

cising, not smoking, limiting alcohol, are important immediate steps to take.

The COVID-19 Coronavirus lurks around us.

Don’t be complacent about the protocols; wear a mask, wash your hands often, use a sanitizer, keep your social distance, avoid crowds, seek medical assistance if necessary. Protect yourself and others.

Protect your wealth Don’t forget to protect the wealth you are creating. Sadly, the need for insurance usually becomes glaring only after loss.

Protect yourself and your assets with car insurance, homeowners or household insurance, health insurance and life insurance particularly if you are the primary breadwinner of a young family.

Earn your independence It is the desire of most parents to ease the path for their children. Whilst it’s nice to receive assistance from your parents, don’t let it short-circuit your own ambition, motivation and drive. Your parents provided you with a sound education; now you are no longer a child; earn your independence and start to take charge of your life. The choices that you make in your youth, will largely determine how your life will be in the future.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 10 August 2020

BUSINESS DAY

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Monday 10 August 2020

BUSINESS DAY

Live @ The Exchanges Nigeria stocks gained N180bn in one week Iheanyi Nwachukwu

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igeria stocks climbed by +1.41 percent in the trading week to Friday August 7 on renewed optimism that companies’ earnings will begin to improve as the nation’s economic activities pick up. The NSE ASI rose for five straight days, thanks to investors who showed interest in banking, oil & gas stocks.

The record gain valued at about N180billion helped erase this year’s losses (-6.71percent). The value of listed stock on the Nigerian Stock Exchange (NSE) increased to N13.063trillion from week open low of N12.882 trillion, while the NSE All Share Index (ASI) increased to 25,041.89 points from 24,693.73 points at the beginning of the review trading week.

The market enjoyed some level of renewed interest as more bellwether

companies recorded relatively fair half-year (H1) earnings results, in addition to the stability seen recently in the crude oil market.

In the review trading week, NSE Banking Index increased most by +4.94 percent, followed by NSE Oil & Gas Index which increased by +4.81 percent.

Except NSE Insurance Index (-0.28percent), other sectoral indices closed the week in green –NSE Consumer Goods (+0.72percent), and NSE Industrial Goods (+0.10percent).

FBN Holdings lists benefits of N25bn capital injection into FirstBank

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BN Holdings Plc said it is injecting N25 billion capital into the group commercial banking arm, FirstBank Limited.

The Group Managing Director of FBN Holdings, UK Eke said it is in line with the Group’s mandate of delivering greater value to shareholders and strengthening the resolve to consolidate its leadership in the banking sector. He made this assertion during the Q2 investor and analyst conference call.

Giving further insight into the capital injection, the Chief Financial Officer of FBN Holdings, Wale Ariyibi, said: “FBN Holdings injected N25 billion into First Bank of Nigeria Ltd (FirstBank) as equity capital. This capital injection has cleared all regulatory approvals. However, this is not the total amount received as consideration for selling our 65 per cent holdings (investment) in FBN

Insurance. The N25 billion is made up of two parts: net proceeds of sale of stake in FBNI, which is gross proceeds less professional fees, charges and other cost of sale and FBNHoldings’ own funds.”

According to him, with the injection, FirstBank leveraged this Tier 1 Capital with its existing Tier 2 capital to increase its Capital Adequacy Ratio from 15.3 per cent as at Q1 2020 to 16.53 per cent as at Q2 2020.

Meanwhile, speaking further on the Q2 financial performance of FBN Holdings Plc, Eke said the Group delivered a very robust financial performance which demonstrates the resilience of the Group and the successful execution of its strategy. According to him, they have delivered earnings growth, strengthened their balance sheet; maintained a strong liquidity profile; consolidated their leadership in e-banking whilst also keeping their costs

under control amidst the a very challenging period for the sector and the economy as a whole.

“From the financial performance, gross earnings was up 5.8 per cent yearon-year, profit after tax for the period was up 56.3 per cent on the back of strong growth in non-interest income. The progress made in our non-interest income was driven by good treasury management activities benefiting from the increased volatility as well as increasing market share in the e-banking segment,” he said.

According to him, FirstBank has made significant progress in agent banking, increasing its agent banking network by over 100 per cent to 59,024 agents within the period. Similarly, it crossed the N5 trillion threshold for value of transaction processed, as we processed 5.71trillion compared to N1.61trillion in the prior period.

GLEIF reaffirms CSCS as the sole Local Operating Unit for Nigeria

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he Global Legal Entity Identifier Foundation (GLEIF), the independent global body responsible for coordinating the issuance and management of Legal Entity Identifier (LEI) has completed its Annual Accreditation Verification (AAV), upholding Central Securities Clearing System (CSCS) Plc as the sole Local Operating Unit (LOU) for Nigeria and commending the Nigeria’s

capital market infrastructure for its adherence to global standards in issuance, administration and management of LEI. The annual certification exercise, a thorough process instituted by GLEIF, is an assessment exercise aimed at monitoring and accrediting the compliance and performance of all LOUs, globally.

In his report, the Chief Executive Officer of GLEIF, Stephan Wolf

noted, “GLEIF reviewed the updated controls as documented by CSCS Nigeria and rescored the related sections. All sections passed the requirements.

CSCS Nigeria has met the minimum requirements of the AAV process. GLEIF wishes to emphasize the importance of ensuring full compliance with all GLEIF requirements as a basic requirement for continued accreditation and the ability to issue LEIs”.

FGN Savings Bond offer opens today

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ubscription for the FGN Savings Bond offer opens today Monday August 10 and closes on Friday, August 14, 2020. The Debt Management Office (DMO) had announced the resumption of its offer of the Federal Government of Ni-

geria Savings Bond (FGN Savings Bond) effective August 2020.

The DMO had suspended the monthly offers of the FGN Savings Bond in April 2020 due to the restrictions on activities and movement as part of measures adopted by the

Government to curtail the spread of COVID-19.

Investors are encouraged to continue saving through the FGN Savings Bond, as they attract good incomes and are secure, being a Sovereign instrument, whilst also, contributing to national development.

Monday 10 August 2020

BUSINESS DAY

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Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 07 August 2020 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. 231,043.97 6.50 2.36 131 5,309,711 UNITED BANK FOR AFRICA PLC 224,006.21 6.55 1.55 183 8,601,229 ZENITH BANK PLC 530,600.74 16.90 1.20 303 11,337,465 617 25,248,405 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 181,271.23 5.05 0.99 288 22,964,189 288 22,964,189 905 48,212,594 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,412,009.80 118.50 - 144 593,835 144 593,835 144 593,835 BUILDING MATERIALS DANGOTE CEMENT PLC 2,416,343.95 141.80 - 54 177,196 LAFARGE AFRICA PLC. 189,266.60 11.75 0.43 134 10,771,960 188 10,949,156 188 10,949,156 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 205,955.60 350.00 - 63 5,897 63 5,897 63 5,897 1,300 59,761,482 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 2 630 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 10,139.42 3.80 - 2 2,200 4 2,830 4 2,830 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,642.99 113.50 9.98 1 102,000 1 102,000 1 102,000 5 104,830 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 5,000 OKOMU OIL PALM PLC. 73,451.07 77.00 2.74 73 4,216,317 PRESCO PLC 48,000.00 48.00 - 13 57,510 87 4,278,827 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,860.00 0.62 - 20 190,874 20 190,874 107 4,469,701 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 202.36 0.52 - 1 300 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 24,795.27 0.61 -1.61 44 5,514,930 U A C N PLC. 17,864.04 6.20 -9.49 109 4,365,954 154 9,881,184 154 9,881,184 BUILDING CONSTRUCTION ARBICO PLC. 206.42 1.39 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 23,839.20 15.05 - 31 208,990 165.00 6.60 - 0 0 ROADS NIG PLC. 31 208,990 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 17,817.57 0.96 - 20 491,055 20 491,055 51 700,045 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,438.02 0.95 - 2 5,000 GOLDEN GUINEA BREW. PLC. 829.98 0.81 - 0 0 GUINNESS NIG PLC 30,884.40 14.10 4.44 132 1,089,436 INTERNATIONAL BREWERIES PLC. 84,615.52 3.15 - 40 882,082 NIGERIAN BREW. PLC. 255,900.87 32.00 - 62 366,170 236 2,342,688 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 142,800.00 11.90 3.48 65 422,898 FLOUR MILLS NIG. PLC. 79,137.33 19.30 0.52 88 1,582,413 HONEYWELL FLOUR MILL PLC 8,326.71 1.05 - 15 62,740 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 4 70,500 NASCON ALLIED INDUSTRIES PLC 26,494.38 10.00 - 6 20,635 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 178 2,159,186 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 12,396.13 6.60 - 23 88,612 NESTLE NIGERIA PLC. 931,371.10 1,175.00 - 103 150,558 126 239,170 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 7,192.35 5.75 - 20 157,281 20 157,281 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 16,874.53 4.25 - 17 236,633 UNILEVER NIGERIA PLC. 64,344.06 11.20 - 22 52,757 39 289,390 599 5,187,715 BANKING ECOBANK TRANSNATIONAL INCORPORATED 77,985.59 4.25 - 62 1,172,318 FIDELITY BANK PLC 52,154.63 1.80 4.05 92 7,854,590 GUARANTY TRUST BANK PLC. 716,649.21 24.35 2.53 516 27,174,069 JAIZ BANK PLC 16,794.62 0.57 -3.39 10 391,969 STERLING BANK PLC. 34,548.50 1.20 5.26 166 12,640,790 UNION BANK NIG.PLC. 157,252.07 5.40 8.00 45 1,311,685 UNITY BANK PLC 6,896.71 0.59 - 8 166,110 WEMA BANK PLC. 20,058.72 0.52 1.96 16 338,665 915 51,050,196 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 200,000 AIICO INSURANCE PLC. 10,197.18 0.90 -3.23 25 1,761,147 AXAMANSARD INSURANCE PLC 16,590.00 1.58 - 23 394,531 CONSOLIDATED HALLMARK INSURANCE PLC 3,333.30 0.41 -8.89 9 721,200 CORNERSTONE INSURANCE PLC 8,101.23 0.55 - 5 70,402 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,757.62 0.24 - 5 356,800 LAW UNION AND ROCK INS. PLC. 4,468.18 1.04 - 0 0 LINKAGE ASSURANCE PLC 3,800.00 0.38 - 3 308,888 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 - 9 6,836,432 NEM INSURANCE PLC 9,874.54 1.87 - 9 38,931 NIGER INSURANCE PLC 1,547.90 0.20 - 1 1,000 PRESTIGE ASSURANCE PLC 3,180.60 0.50 - 0 0 REGENCY ASSURANCE PLC 1,533.81 0.23 - 3 228,953 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 1 1,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 31,000 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 7,917.25 0.33 3.13 23 941,911 119 11,892,195 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,858.30 1.25 0.80 9 909,597 9 909,597

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,671.82 1.36 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,380.00 4.19 - 31 282,323 29,409.32 5.00 - 7 64,080 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 450.00 0.30 - 0 0 40,001.48 2.02 6.32 85 5,012,202 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,595.06 0.31 - 0 0 STANBIC IBTC HOLDINGS PLC 346,663.92 33.00 - 29 98,198 18,180.00 3.03 0.66 103 5,132,865 UNITED CAPITAL PLC 255 10,589,668 1,298 74,441,656 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 1 50 888.28 0.25 - 18 18,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 19 18,050 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 7,135.35 3.42 - 23 296,371 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,278.35 5.25 - 30 397,451 MAY & BAKER NIGERIA PLC. 5,261.97 3.05 8.93 41 1,841,762 3,456.47 1.82 2.25 27 1,793,183 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 121 4,328,767 140 4,346,817 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 - 1 1,000 1 1,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 764.87 0.26 - 1 100 1 100 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 216.00 2.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 247.48 0.50 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 1,033.13 0.22 - 11 1,256,347 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 11 1,256,347 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,307,836.72 348.00 - 19 934 19 934 32 1,258,381 BUILDING MATERIALS BERGER PAINTS PLC 1,753.43 6.05 - 1 70 BUA CEMENT PLC 1,337,641.99 39.50 - 23 16,567 CAP PLC 11,900.00 17.00 0.29 25 928,315 MEYER PLC. 265.62 0.50 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 49 944,952 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 3,047.09 1.73 - 17 461,641 17 461,641 PACKAGING/CONTAINERS BETA GLASS PLC. 30,773.28 61.55 - 4 1,580 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 1,580 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 1 1 1 71 1,408,174 CHEMICALS B.O.C. GASES PLC. 1,877.26 4.51 - 3 4,137 3 4,137 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 4 843 4 843 7 4,980 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 4.76 17 1,717,481 17 1,717,481 INTEGRATED OIL AND GAS SERVICES OANDO PLC 29,213.82 2.35 0.86 36 1,169,515 36 1,169,515 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,104.17 175.00 - 29 17,796 ARDOVA PLC 15,825.15 12.15 - 39 199,620 CONOIL PLC 11,727.79 16.90 - 20 28,501 ETERNA PLC. 2,477.87 1.90 - 35 606,214 MRS OIL NIGERIA PLC. 3,794.59 12.45 - 5 5,332 TOTAL NIGERIA PLC. 26,856.18 79.10 - 26 10,735 154 868,198 207 3,755,194 ADVERTISING AFROMEDIA PLC 887.81 0.20 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 1 1,000 1 1,000 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,381.18 3.65 - 10 234,250 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 0 0 10 234,250 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 2,000 1 2,000 HOTELS/LODGING CAPITAL HOTEL PLC 3,763.54 2.43 - 0 0 IKEJA HOTEL PLC 2,328.25 1.12 - 2 67,400 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 0 0 2 67,400 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 199.58 0.33 - 3 5,520 LEARN AFRICA PLC 794.59 1.03 9.57 6 274,573 STUDIO PRESS (NIG) PLC. 1,070.79 1.80 - 0 0 UNIVERSITY PRESS PLC. 478.86 1.11 - 2 100,000 11 380,093 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 779.12 0.47 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Monday 10 August 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

US added 1.8m jobs in July as Covid-19 surge slowed rebound

Unemployment rate drops slightly to 10.2% but pace of job gains slows Demetri Sevastopulo in Washington and Colby Smith in New York

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he US unemployment rate fell to 10.2 per cent in July while employers added fewer jobs than June, as the economic rebound from the pandemic was hindered by a jump in Covid-19 cases in the American south and west.

The fall in the jobless rate from 11.1 per cent in June was slightly better than economists had expected. According to the US labour department, employers added 1.8m jobs in July, a much slower pace from 4.8m in June.

The labour department said the employment conditions “reflected the continued resumption of economic activity that had been curtailed due to the coronavirus pandemic and efforts to contain it”.

The economy saw “notable job gains” in several industries, including leisure and hospitality, which accounted for one-third of new jobs overall as more people travelled compared with the height of the lockdowns in the spring.

The retail sector added 258,000 jobs, with roughly half that coming in the clothing sector. The healthcare sector added 126,000 jobs, driven in part by increased employment at dental clinics.

While the economy added back some of the jobs it had lost amid the pandemic, the deceleration in the labour market recovery came as the White House and Democrats divided sharply over how much Congress should provide in a new aid package for the millions who are still out of work — still 10.6m

The US economy saw ‘notable’ gains in industries including leisure and hospitality, retail and healthcare © AFP via Getty Images

more than February before the pandemic struck the US. Ron Temple, head of US equities at Lazard Asset Management, welcomed the slight improvement, but stressed that the real message was that the economy remained a “disaster for many Americans”.

Mr Temple said the report did not include the impact of the expiration of $600-a-week unemployment benefits last week. “It would be easy to get too optimistic or complacent given the strong data, but let’s recognise that part of the reason things have been as good as they are is because of all of that intervention.”

But Jim Paulsen, chief investment strategist at the Leuthold Group, said he was more optimis-

tic about the economy after this week’s employment data, which served as a “reminder that we can have hotspots and partial re-closings in places around the country, but while that is going on, there have been a lot of cool spots that were opening up further.”

The number of unemployed fell 1.4m to 16.3m in July, the government said. The jobless rate declined for many segments of the population, including Caucasians, AsianAmericans and Hispanics. But the percentage of African-Americans out of work showed little change at 14.6 per cent.

The data underscored the continuing impact of the rise in coronavirus cases over the summer, which has taken the US death toll

to more than 150,000. The labour department on Thursday said the number of people applying for jobless benefits last week remained stubbornly above 1m.

The stakes are high for Donald Trump, who had been relying on a strong economy and low unemployment to help his re-election.

Now, he faces a tough battle against Joe Biden, the presumptive Democratic presidential nominee, as he struggles to respond to a crisis that has severely hit his approval rating and balance the need to protect public health without causing further economic damage.

“Great Jobs Numbers!” the president tweeted on Friday.

Mr Biden slammed the president, saying the US was “in a deep-

er economic hole than we should be because of Donald Trump’s historic failure to respond to the pandemic”.

The jobless situation has put Democrats and Republicans at odds as they hash out what would be the fifth rescue package since the start of the pandemic. Nancy Pelosi, the Democratic speaker of the House, on Thursday said both sides remained “far apart” after another day of talks.

Democrats argued that Mr Trump is abandoning Americans at a time of crisis, while the president accuses them of pushing Congress to rescue cities and states that are badly run by Democrats. Some Republicans said the jobless benefits are a disincentive for workers to return to their jobs.

Mr Trump has also accused Democrats of playing politics with the stimulus talks in an effort to ensure that Americans remain in economic pain, thereby boosting Mr Biden’s odds of winning the White House.

Democrats counter that the high level of unemployment underscores the need for more assistance — including the renewal of the $600-a-week benefits.

John Barrasso, a Wyoming senator who serves in the Republican leadership, said Republicans had different views on the details of the rescue package, but unanimously opposed the $3.4tn plan that Ms Pelosi and Chuck Schumer, the top Senate Democrat, have been pushing.

“There are things that unify us — that Nancy Pelosi’s visit to fantasy island and handout heaven is not going to work,” Mr Barrasso told the Financial Times.

Trump’s TikTok and WeChat order wipes $75bn off China tech stocks Tencent shares plummet as fears grow White House could ban all dealings with tech group Hudson Lockett in Hong Kong

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h i n e s e te c h n o l o g y stocks lost more than $75bn in value on Friday after US President Donald Trump unveiled executive orders targeting popular social media apps TikTok and WeChat.

Shares in Tencent fell as much as 10.1 per cent in Hong Kong after Mr Trump issued an executive order that gave US companies 45 days to halt transactions with its WeChat app. A separate order targets transactions with ByteDance’s hugely popular video-sharing platform TikTok. Tencent’s stock recovered some of those losses to close down 5 per cent. In total, the sell-off lopped off $75.7bn in market capitalisation from Chinese technology groups listed in Hong Kong.

Shares in Tencent fell as much as 10.1 per cent in Hong Kong on Friday © Reuters

Equity traders said the broad scope of Mr Trump’s statements left open the possibility that the US could bar all dealings with Tencent and ByteDance.

That could potentially deliver a serious blow to Tencent’s US gaming business. The company also owns stakes in companies www.businessday.ng

including electric car maker Tesla, games group Epic Games and music streaming business Spotify.

The losses extended beyond the companies named in the bans. Chinese internet groups Alibaba and JD.com fell as much as 6.7 per cent and 5 per cent,

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respectively. ByteDance, which has been in talks with Microsoft over a mooted sale of TikTok’s business in the US and elsewhere, is not listed on the stock market.

Blocking transactions with WeChat in the US would not seriously impact Tencent’s earnings, said Andy Maynard, a trader at China Renaissance in Hong Kong, but the wording of the executive order was “so ambiguous it can mean anything”.

If the US does ban all transactions with Tencent, “it’s a different ballgame, and that’s what the market is uncertain about at the moment”, he added.

The sell-off also follows a banner year for Tencent, which has profited as more users have flocked to its games during coronavirus-induced lockdowns.

Even after Friday’s fall the company’s stock was up more than 40 per cent for the year to date. @Businessdayng

“Tencent’s share price had already gone up significantly in the last month,” said Dickie Wong, head of research at Kingston Securities. “After this announcement from Donald Trump it was the perfect time for profit taking.”

The move to potentially bar dealings with some of China’s largest technology companies contrasts with a seemingly more conciliatory approach taken by the White House in recent days.

The Trump administration had given a September 15 deadline for Microsoft and ByteDance to negotiate a deal.

Mainland China’s tech-focused stock benchmarks also fell on Friday. The ChiNext index in Shenzhen shed 2.3 per cent while Shanghai’s Star 50 dropped 3 per cent. The benchmark CSI 300 index of large stocks listed in both cities fell 1.2 per cent while Hong Kong’s Hang Seng fell 1.6 per cent.

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News With CAMA 2020, FMDQ sets sight on derivatives...

Continued from page 2

for the end-to-end execution of financial market transactions.

In addition, the Central Bank of Nigeria (CBN) introduced in 2016, with FMDQ Exchange, the OTC FX Futures market, ahead of the launch of other derivative products, which fostered stability in the FX market, with circa US$50bn worth of contracts so far executed on FMDQ Exchange and cleared

by FMDQ Clear.

Market analysts say that with improved regulatory landscape, adoption of liberalised markets - especially in foreign exchange, promotion

of improved risk management standards and financial markets stability, catalysed by the emergence of a derivatives market and a functioning CCP, the Nigerian economy is bound to witness a more attractive financial system that will galvanise foreign capital flow, improve trading and funding liquidity of the markets, attract human capital and cause reduction in cost of capital, thereby boosting the nation’s reserves, engendering the much-desired economic transformation, and ultimately positioning Nigeria and Nigerians for prosperity.

Stanbic IBTC, Heirs entry to disrupt Nigeria’s insurance sector, retail space ... announcement sends jitters Modestus Anaesoronye

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he coming of Stanbic IBTC Holdings and Heirs Holdings into Nigeria’s insurance industry will cause a major disruption in the country’s insurance space.

Analysts say both intuitions have large insurance buy that have been managed over the years by other insurance companies, but with their coming on board, there is the tendency that they will move such accounts to their subsidiary.

Besides that, they argue that the new insurance companies will take advantage of their group’s large customer base to grow their retail sales, thereby increase competition among companies.

For example, Stabic IBTC has a large customer base from banking, pensions where it is the largest player with over 1,709,000 registered clients assets under management worth over N2 trillion.

While Heirs on the other hand is also a conglomerate with investment portfolio in power, oil and gas, financial services, hospitality, real estate and healthcare sectors.

The news of their coming, announced about two weeks ago in a National Insurance Commission (NAICOM) advertorial, has sent jittery into the market, with some players already raising concern on new market completion.

NAICOM in an advertorial published on Thursday, July 24, announced that four firms - Heir Insurance Limited (General); Stanbic IBTC Insurance Limited; Heirs Life Assurance Limited and Enterprise Life Assurance Company Nigeria Limited have indicated interest to operate in Nigeria.

The publication said, “The

NAICOM has received applications from the under listed companies for registration as insurance companies to transact insurance business in Nigeria.

“In fulfilment of the statutory provisions of extant laws for the registration/licensing of Insurance Companies, the general public is hereby informed that the Commission has commenced the process of registering the companies.

Members of the public are requested to submit/report any objection or otherwise against these registrations to the Commission within 21 days from the date of this publication, please.”

Meanwhile, the companies have also picked chief executive officers: Heir Insurance Limited (General), Olaniyi Stephen Onifade: Stanbic IBTC Insurance Limited, Akinjide Orimolade; Heirs Life Assurance Limited, Abah Okoriko, and Enterprise Life Assurance Company Nigeria Limited, picked, Fumilayo Abimbola Omo. An insurance CEO, who does not want his name mentioned, says, “I expect that their coming will change the market structure, particularly with Stabic IBTC and Heirs that already have brokerage firms that are also doing very fine.”

The CEO however states that the space is big enough for every one after all we have only done less than 1 percent, stating that there are lots of untapped opportunities in the industry particularly in the retail space.

Anselem Igbo, chief executive, Stanbic IBTC Insurance Brokers Limited, says during a virtual interactive session with journalists that insurance penetration in the country is at an all-time low and this is not favourable for the well-being of individuals, businesses and the economy in general. www.businessday.ng

Investors dump Lagos as Ogun becomes...

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were responsible for Nigeria’s jump to 131 from 146 in 2020 World Bank Doing Business Report, the challenges faced by businesses in the state arise mainly from local governments and those claiming to represent them, manufacturers say.

Out of N3.353 trillion pumped in new investments in manufacturing and agro processing sectors in six years, Lagos got N928.02 billion while Ogun welcomed N1.682 trillion within the period. BusinessDay analysis shows that while Lagos got 27.67 percent of the total investments, Ogun got 50.16 percent - an indication that the state is now Nigeria’s industrial hub. Thirty-four states and the Federal Capital Territory shared the remaining 22.17 percent, reflecting their unattractiveness to investors.

“There are a few landmarks in Ogun State. Manufacturers and other investors have more room for expansion in Ogun than Lagos,” Ambrose Oruche, acting director-general of MAN,

told BusinessDay on the phone.

“Secondly, comparatively, there are fewer taxes and levies in Ogun, and, thirdly, Ibadan DisCo is a little bit better in electricity supply than Ikeja and Eko DisCos (both in Lagos),” he explained.

He pointed out that Ogun’s proximity to Lagos had also provided an advantage, with the state leveraging opportunities in Lagos’ weaknesses.

A breakdown of the data shows that out of N691.77 billion worth of investments made by manufacturers in 2014, Ogun got N514.87 billion, whereas Lagos got N100 billion. In 2015, out of N489.45 billion total new investments made by manufacturers and agro processors, Lagos got N29.79 billion as against Ogun’s N430.56 billion.

Also, Lagos got N94.83 billion value of investments in 2016 while Ogun received N351.13 billion out of N614.55 billion total investments. But things changed in 2017. Out of a total of N508.98 billion investment made in 2017, Lagos received N235.61 billion as against Ogun’s N94.32 billion.

MAN’s data further show that out of N552.64 billion

investment in 2018, Lagos welcomed N287.16 billion whereas Ogun got N186.47 billion. More so, a total of N496 billion investments were made in 2019, out of which Lagos got N180.63 billion and Ogun, N105.05 billion.

In 2017, Frank Udemba Jacobs, former president of MAN, told BusinessDay that manufacturers found Ogun a good investment destination due to the government’s commitment to industrialisation.

“Manufacturers are happy with Ogun because they get incentives from the government,” said Jacobs.

Manufacturers said during interviews that they got tax and land rebates in Ogun during the Ibikunle Amosun government, which lowered their production costs in the long run. They also said it was also easier and seamless to get certificate of occupancy (C-of-O) in Ogun than in Lagos from 2015 to 2017.

In the last six years, manufacturers have either moved from Lagos to Ogun or relocated their factories to the state, leaving only administrative offices or small plants in Lagos.

Some of the companies that have done that include Fidson Healthcare, May & Baker, Pure Chemicals, Eagle Packaging, Nycil Lim-

ited, and Dufil. Also, some manufacturers in Lagos now have other plants in Ogun to tap cheaper business environment. They include Flour Mills of Nigeria and Unilever.

Jaro Industries, a carton manufacturing company, set up a $12 million inaugurated factory in OPIC’s new Makun Industrial City, Ogun State in 2019.

“Seventy manufacturing companies were established during first four-year tenure of Governor Ibikunle Amosun of Ogun State and both existing and new companies were given some level of incentives and benefits that prompted rapid development in manufacturing sector,” said Bimbo Ashiru, former commissioner for commerce and industry.

Questions have, however, been asked concerning the sustainability of Ogun as an industrial hub, with the shutdown of Procter & Gamble’s $300 million consumer goods plant at Agbara in July 2018. As of the time they shut down, Agbara was notorious for its poor road network and multiplicity of taxes.

“The present administration must provide businessfriendly environment to ensure that investors do not exit the way they do in Lagos,” Ike Ibeabuchi, a manufacturer of chemicals, said.

Nigeria’s herbs farming gains traction as COVID-19 causes surge in demand Josephine Okojie

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ince Nigeria recorded its first COVID-19 case in late February, lots of Nigerians now consume herbs as part of their daily diets in a bid to boost their immunity against the virus.

As a result, herbs production is fast gaining traction in the country as many farmers now shift to the cultivation of ginger, turmeric, and lemongrass, among others to meet up with the current increasing demand for the crops.

Similarly, traders of herbs have seen an increase in sales owing to the recent surge in

demand.

“I usually sell between three and four bags of ginger and turmeric daily before the COVID-19 outbreak, but now I sell between eight and 10 bags,” Mohammed Ibrahim, a trader of herbs in the Mile-12 Market perishable section, says.

“Lots of people are now including ginger and turmeric in their diets to boost their immunity because of the COVID-19 pandemic, thus, causing a surge in demand,” Ibrahim states.

Prices of dried ginger have surged by 64 percent since the virus outbreak from N17,000 pre-COVID-19 per 70kg bag

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to N28,000 per bag at farmgate. While a bag of fresh ginger now sells for N12,000 as against N8,000 sold preCOVID-19.

For turmeric, a 70kg bag now sells for N13,000 as against N8,000 before the virus outbreak at the farm-gate, indicating a 63 percent rise in price.

“Before now, I do not prepare most of my meals using ginger and turmeric but since the outbreak of the COVID-19 virus, I now ensure that it is part of my family daily diets to protect us from contracting the virus,” Chika Ezeadigo, a mother of four in Ketu – Lagos, says. @Businessdayng

“I was told by my neighbour and church members that both ginger and turmeric are great immune boosters,” she says.

A 2019 study carried out by Shengying An and Guanzhong Liu among other lecturers at the College of Animal Science and Technology, Hebei Agricultural University, Baoding – China, found that ginger extracts have antioxidant ability and a great immune booster.

BusinessDay findings show that the increase in the demand has also caused ginger and turmeric farmers to expand their production areas while making its cultivation attractive for other growers.

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news

Cement makers’ costs balloon on currency devaluation BALA AUGIE

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he devaluation of the naira by the Central Bank of Nigeria (CBN) to protect the external reserves led to spiraling cost of production for cement makers who are already grappling with challenges triggered by the coronavirus pandemic.

The pass-through effect of a weak naira on gypsum-raw material component in the manufacture of cement- and gas prices, combined in tepid revenue growth, contributed to a reduction in profit margins.

Data gathered by BusinessDay shows the three dominant producers in the industryDangote Cement, Lafarge Africa, BUA Cement- that have released half-year results saw cumulative average revenue grow by 5.63 percent, which is lower than the 8.31 percent increase in the cost of sales.

That is responsible for a decline in combined average profit to 46.17 percent in June 2020 from 47.15 percent the previous year.

“Currency crisis would affect their operations so long as they require foreign exchange to import raw material. Since they are unable to get foreign currency from the central bank, they will get it at a higher rate,” said Adedayo Bakare, equity research analyst at Afrinvest Securities Limited.

But Bakara said the current crisis will not be as insidious as 2016 because cement makers have started optimising fuel mix, and this gave them the upper hand to benefit from cheap fuels such as coal.

Going forward, optimising

fuel mix is expected to spike earnings on the back of reduced energy cost.

Before the outbreak of the coronavirus pandemic from Wuhan in China, analysts had betted that the country’s huge infrastructure deficit and low cement consumption per capital would spur the industry growth.

The Covid-19 crisis and the crash in crude oil price combined with rainfalls caught the cement makers off guard just as the lockdown imposed by the government to curb the spread of the virus paralysed construction activities in the three major commercial cities (Lagos, Abjua, Ogun).

Another downsize to earnings is the reduction in capital spending by 20 percent by the government in the 2020 budget as Covid-19 the crisis has put the economy in tenterhooks.

Dangote Cement, the largest producer of the building material recorded a decline of 15 percent in sales volume in its Nigerian operations, as operating profit by a mere 1.97 percent in June 2020, which compares with 66.76 growths in 2017 financial year.

BUA Cement’s operating income was up 7.0 percent to N40.80 billion as at June 2020, and because the company went public last year, there were no available historical data to carry out trend analysis.

Analysts at CSL Stock Brokers Limited said their our outlook for the cement industry is mixed due to a plethora of factors ranging from subdued private investment in gross fixed capital formation, rising inflationary pressures on essential food items.

Worshippers in cautious excitement as churches reopen in Lagos, others still shut JOSHUA BASSEY, CHUKA UROKO, IHEANYI NWACHUKWU & INIOBONG IWOK

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autious excitement on Sunday morning trailed reopening of churches in Lagos, after about five months of closure to contain the spread of coronavirus in the state.

Checks by BusinessDay showed that while most churches in the metropolis reopened and allowed members in for worship, others made good their earlier position not to reopen.

Some of the churches which opened were the Baptists, Anglican, Catholics, Redeemed Christian Church of God, The Apostolic Church, Deeper Life Christian Bible Church, Four Square, Christ Apostolic Church, among several others.

However, others, including the Synagogue Church of All Nations (SCOAN), in Alimosho area of Lagos, led by Temitope B. Joshua, did not open for service. Asides shutting its gates, armed policemen were

conspicuously stationed at the main entrance to the church, who informed intended worshipers that the church was yet to reopen.

Also, Day Star Church in Oregun, Ikeja, did not physically open for service, as its senior pastor and founder, Sam Adeyemi ministered online. Also not opened was the Household of God Church, Oregun, led by popular musician turned pastor, Chris Okotie. Okotie had earlier kicked against the protocols of mask wearing and limiting of congregation to 50 percent, as announced by the state government. The pastor believed that wearing of face masks to the church was unbiblical.

Similarly, branches of the Mountain of Fire and Miracle Church did not open for worship on the directives of its founder, Daniel Olukoya.

The non-opening of some of the churches was in spite of the applauding of the decision of the Lagos State government to allow religious bodies resume their activities, by the Christian Association of Nigeria (CAN). Lagos CAN chairman, Apostle Alex

Bamgbola had described the reopening as a loud testimony to the prayers of church leaders.

But many other churches visited opened for services and observed the Covid-19 protocols put in place by the Lagos state government and Nigerian Centre for Disease Control (NCDC).

They include Baptist, Anglican, Catholic, Redeemed Christian Church of God, The Apostolic Church, Deeper Life Christian Bible Church, Four Square, Christ Apostolic Church, among several others.

At Four Square Church, Okiamu Street, off Governor’s Road, Ikotun, when BusinessDay visited, members were seen washing and sanitising their hands as they made their way into the church. Security personnel were also taking the temperature of members before allowing entry into the church premises. The resident pastor, Michael Abulatan, who spoke with BusinessDay said the Covid-19 protocols were observed in strict compliance to the government’s directives.

At Archbishop Vinning

Memorial Church Cathedral (AVMCC) Ikeja GRA, services were break into four, with no children allowed.

Maximum time of two hours per church service adhered. No worshipper was allowed into the church auditorium without wearing face mask; and security men ensured hands were thoroughly washed at the entrances to the church premises.

Worshippers were encouraged to register online ahead of Sunday’s service where they chose preferred service time (7am, 9am, 11 am and 6pm) to attend.

The administrators ensured that attendance per church service was at 50 percent.

Bishop of Lagos West Diocese, James Odedeji noted that the church could to ignore the guideline issued by the government, because “the church as an institution is under the regulation of the government”.

At Our Saviour’s Anglican Church, Egbe, Lagos where this reporter worshipped, worshipers queued up for their temperature check with two thermometers provided by the church authorities.

Niger Delta group petitions UN over corruption in NDDC Iniobong Iwok

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group, Restore Initiative has petitioned the United Nations (UN) over ‘massive corruption’ in the Niger Delta Development Commission (NDDC). The group also called for the prosecution of all persons linked to the corruption crisis rocking the commission.

In the petition signed by the national leader of the group, Gloria Okolugbo, which copy was made available to BusinessDay, Sunday, the group said that it was saddened that despite the vast resources of the Niger Delta, which is the mainstay of the nation, the people of the region still lived in extreme poverty.

The group alleged that several officials appointed into the Interim Management Commission (IMC) by President Muhammadu have various cases of graft to answer and have in recent times been indicted in corrupt acts.

“There have been unfolding concerns among the majority of the impoverished

and exploited people, living below poverty levels in the midst of vast oil resources in their communities which is the source of sustenance for the entire nation.

“More worrisome is the fact that some officials occupying positions in the IMC have cases of graft to answer and are continuously being found to misappropriate funds,” the group said.

The group further stated that despite reports several officials have continued to use fictitious means to collect contracts and carry out dubious acts in the agency resulting in the failure of the NDDC in its responsibility, stressing that it was a violation of the Niger Deltans human rights in which the UN should intervene.

“Therefore a corrupt act by one individual official could violate this state obligation for instance the rights of the ordinary Niger Deltan to housing, education and healthcare which these huge amounts now diverted were meant for, have grossly been violated, this is the reason we bring this before you,” the group added. www.businessday.ng

Cross-section of winners in the ongoing Dangote Cement Promo during cheque presentation in Warri, Delta State

FG evaluates Nigeria’s investment treaties to harvest benefits, avoid litigation HARRISON EDEH, Abuja

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he Federal Government is to undertake a series of reforms of Nigeria’s Bilateral International Treaties (BIT) to attract responsible, inclusive, balanced and sustainable investments.

The review of these agreements will also help the government avoid litigation such as the one involving Process and Industrial Development Limited (P&ID) where the company dragged Nigeria to court for alleged breach of contract.

The reforms will involve the development of a new model BIT, modernise existing stock of old generation treaties that would enable the government to put in place a coherent legal framework at all levels.

Director, legal department, Nigeria Investment Promotion Commission (NIPC), Patience Okala disclosed at a webinar organised by the management team of NIPC, and monitored by BusinessDay. The team was led by the commission’s executive secretary, Yewande Sadiku.

According to Okala, NIPC’s efforts at reviewing and validating some of the bilateral investment treaties that Nigeria entered into with other countries would help the country to reap maximum investment benefits from such bilateral trade deals.

She said that the review would be done in a manner that complies with global standards on labour, human rights, environment, and corporate social responsibilities.

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The review, she further noted, would also focus on an inclusive approach that would help mobilise investments and create jobs while balancing investors’ rights with obligations.

Okala explained that the move would also promote sustainable development objectives in line with the United Nations’ agenda 2030.

She disclosed that the bilateral agreement treaties to be reviewed would cover those signed between 1990 and 2001.

On P&ID, she said that a panel of three arbitrators had voted 2-1 to award the company the full sum of its claim of $6.6bn, including interest totaling $9.6 billion.

The country in 2010 under former President Goodluck Jonathan, had signed the gas @Businessdayng

processing project, but in 2012, the company began an arbitration process, alleging breach of contract.

Okala said the bilateral agreement being reviewed would help to introduce mediation and provide safeguards to investor-state dispute settlement provisions.

Yewande in her remarks at the meeting said that the coronavirus pandemic has opened an opportunity for investors in the country.

According to her, while the impact of the pandemic has made it imperative for very aggressive investment promotion by Nigeria, the best way to proactively position Nigeria was to sell the country on a sector by sector basis based on specific investments that cut across various areas.

Monday 10 August 2020

BUSINESS DAY

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Company IN FOCUS

BUSINESS DAY Monday 10, August 2020 www.businessday.ng

Flour Mills of Nigeria: Reaping investment benefits as Agro-Allied business reached profitability

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espite prevailing economic headwinds and the diff i c u l t o p e rat i n g terrain of Apapa, Flour Mills of Nigeria (FMN) Plc, owners of the popular Golden Penny Food brand and one of Nigeria’s leading food and agroallied companies reported strong growth in the year ended March 31 2020.

With a remarkable growth in all three key segments of Food, Agro-Allied and Sugar, FMN finished the year strong with a record 184 percent growth in after-tax profit. The highest profit growth rate since 2014.

The last time the Group Company recorded success of that magnitude was in 2016 when it reported a growth in profit after tax of 70 percent.

With a broad basket of food products and robust pan-Nigerian production, distribution, and supply chain network, FMN in 2020 recorded a N7.4 billion or 184 percent increase in Profit After Tax (PAT)), from N4 billion in 2018/2019 to N11.4 billion in 2019/2020. This was almost triple the 72 percent growth recorded for its Profit Before Tax. Analysis of FMN’s 2020 financial revealed that its Agro-Allied division was a major catalyst in the growth record reported in the review year as the business segment of the company reached profitability. This was largely due to the consistent and focused investments that have been made in its locally sourced segment over the last few years.

The management’s strategy has been to continue to stimulate organic growth in all segments of the business.

2 0 2 0 re s u l t : E a r n i n g s buoyed by profitable AgroAllied business In the year when many Nigerian companies recorded revenue decline amid the country’s slow economic growth, Flour Mills of Nigeria reported a revenue increase by 9 percent year-onyear (YoY) from N527.4 billion the previous year to N574 billion in 2019/2020.

The revenue reported by FMN in 2020 is in line with the company’s 2019 outlined ambitious business plan for the next five years which is targeted at doubling its business within the period to achieve a revenue of over N1.2 trillion by 2024.

The Agro-Allied segment of FMN’s business contributed the most revenue in the year under review. Revenue from the business arm increased by 20 percent

Paul Gbededo

, from N88.1 billion the previous year, revenue from Agro-Allied rose to N105.5 billion in 2020.

The increase in revenue contribution from Agro-Allied division was largely driven by the company’s investment strategy aimed at ensuring profitability and improving local content in the group’s product portfolio.

Flour Mills in the past few years invested about N95 billion in its Agro-Allied business.

In 2016 alone, it injected N45 billion in its Sunti Golden, one of only two sugar mills in the country capable of producing crystallised sugar from locally grown sugar cane. This was an addition to the already invested N50 billion in a state-of-the-art sugar refinery in Apapa capable of refining up 2000mt of sugar per day.

The strategy of the business expansion model of FMN, which has over the years diversified into fast-moving consumer goods, is not only organic growth but acquisitions and partnerships.

Breakdown of the 2019/2020 financials of FMN revealed the Agro-Allied division turned prof-

itable following a repositioning and prior year funding of the key-value chains of Oils and Fats, Proteins and Starch businesses.

Revenue was driven by volume growth predominantly in Oils and Fats (Premium Edible Oils), Proteins (Premier Feed) and Golden Fertilizer. Strong profit growth in Oils and Fats and Proteins with Gross Profits more than doubled in both segments on an annual basis (with some IFRS9 adjustments in Q4 last year).

With an 18 percent revenue growth in the year ended March 31 2020, the Sugar segment of FMN group was closely behind the revenue contribution from Agro-Allied business. From N82.7 billion in the year before, the Sugar arm of the Group increased to N97.6 billion.

The revenue growth recorded from the Sugar business was driven by an increase in volumes.

The improved operational efficiency in Sunti Golden Sugar Estates by commencing mechanical harvesting, strengthening the cane haulage facilities and installing a vacuum pump condenser resulted in 15 percent

increase in plant output.

To increase area cultivated for sugarcane production from 2,800 to 3,500 hectares FMN introduced 1.5ton Jumbo bag of sugar in September 2019 and VitaminA Fortified Sugar in January 2020.

This was combined with the improvement in distribution channels that was achieved through the deployment of smaller trucks for delivery time improvement.

The Food segment of FMN business also reported a revenue contribution increase in the year ended March 31 2019/2020. The Food segment saw a 7 percent revenue growth from N335.6 billion the previous year to N358.4 billion.

Accelerated business-to-consumer (B2C) growth due to new product launches, expansion of production capacity and regional SKUs were the major driver of the revenue increase. Meanwhile, FMN recently launched value brand products - Auntie B pasta and semolina to ensure right regional offerings and affordability also the road to market strengthening and product quality focus further enabled revenue growth.

Dividend payment Following the good performance reported for the year ended March 31 2019/2020, the Board of FMN Group recommended a dividend of N1.40 per ordinary share of 50 kobo each.

The proposed dividend is 17 percent increase when compared to 2019 and 40 percent as when compared to 2018.

According to the Group Company, the proposed dividend was based on confidence in the business. The total proposed dividend in 2020, although still subject to AGM ratification is

”

Endurance Okafor

The strategy of the business expansion model of FMN, which has over the years diversified into fastmoving consumer goods, is not only organic growth but acquisitions and partnerships

N5.7billion (N4.9billion in2019).

If approved, the dividend which will be payable on Monday 14th September 2020 to shareholders, whose names appear in the Register of Members at the close of business on Friday 14th August 2020 will not be subject to withholding tax. According to the company, shareholders who have completed the e-Mandate Activation Forms will receive a direct credit of the dividend into their bank accounts on the payment date.

Business outlook Quoted on the Nigerian Stock Exchange since 1978 FMN group strives in its purpose to “Feed the Nation, Everyday” through its five core food value chains: Grains, Sweeteners, Oils and Fats, Proteins, and Starches.

The company which creates value along the entire food chain with its “farm-to-table” model by providing inputs and knowhow to farmers, aggregating and sourcing crops and raw materials to supply its world-class processing facilities across Nigeria plans to continue to Feed the Nation every day with the focus on local content and value add.

According to FMN, it has a committed execution of the turnaround strategy for AgroAllied Division with the aim of ensuring profitability and improving local content in the group’s product portfolio. It also plans to remain focused on increasing operational efficiency with accelerated plans for cost optimizations across the group to ensure profitability in the new operating environment.

Expanding the capability of the edible oil refinery to meet up with new products development in line with our long-term strategy to stimulate organic growth and grow the reach of its animal feed products is also one of the plans of FMN, going forward.

FMN also said that it is looking at accelerating expansion in the B2C segment with multiple product offerings across its five key value chains.

“We will remain focused on increasing operational efficiency within the group as we continue to implement our accelerated cost optimization plans across all businesses to ensure profitability in the new operating environment,” Paul Gbededo, group managing director of Flour Mills, said.

The company assured its stakeholders that it will continue to focus on expanding the Food division with investments in Oils and Fats with new product offerings and additional capacity and to further grow one of the largest Animal Feed structure in Africa.

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