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30 firms seek registration as payment service banks A T

Africa’s political lesson in booting incumbents ignored in Nigeria to Buhari’s advantage CHRIS AKOR

LOLADE AKINMURELE

he Central Bank of Nigeria’s (CBN) move to open the banking system to nonfinancial companies and register mobile money operators could be the biggest innovation to hit Nigeria’s

As Fintechs, Telcos scramble for financially excluded Nigerians Paris-based Orange also linked

beleaguered financial services industry in decades, and it is attracting a lot of takers. No less than 30 business

names are currently undergoing registration as payment service banks at the Corporate Affairs Commission (CAC), in a move

that could prove a game changer for tens of millions of financially

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s at the last count, there are almost 79 presidential aspirants contesting for the presidency in 2019 on different political platforms. All of them claim to be motivated to enter the race by the failure of the Muhammadu Buhari government to reform education, health care, or even arrest the rapid spread of poverty across the land. They claim they could not countenance, and Nigeria may not survive another four years of the Buhari government. However, examples from Africa and even Nigeria has shown that opposition fragmentation and disunity most times helps the incumbent win elections as the fragmented opposition just divide the votes and end up Continues on page 46

Inside BusinessDay Excellence in Public Service Awards holds January 31 P. 2 L-R: Bola Ajomale, MD, NASD plc; Aramide Abe, founder, Naija Startups; Uyi Akpata, country senior partner, PwC Nigeria/keynote speaker; Bukky Akomolafe, commercial manager, Travelstart, and Abayomi Awobokun, CEO, Enyo Retail and Supply, at the BusinessDay Top 100 Fastest Growing SMEs in Nigeria, with the theme, Innovation and technology in Entrepreneurship a Stimulant for Economic Growth and Exhibition in Lagos. Pic by Pius Okeosisi

BusinessDay Man of the Year to be unveiled Friday, December 14 P. 46

2 BUSINESS DAY NEWS

Oil traders, service companies crowd out local banks in upstream debt transactions

ISAAC ANYAOGU

he investment space for Nigerian banks in the upstream sector is expanding to include international banks, service companies and trading houses of international oil companies who are now providing debt transactions and contractor financing into the Nigerian oil and gas sector as funding appetite of Nigerian banks dips. Nigerian banks reported in 2016 that the energy sector accounted for almost 40 percent of their non-performing loans due to slow recovery of oil prices which knocked off profitability forecasts of up-

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... Energy sector NPLs slide to 20% stream projects they funded. These agencies, analysts say are filling the vacuum through innovative financing schemes. “This is becoming the trend in the oil and gas sector,” says Ayodele Oni, energy lawyer and partner at Bloomfield Law firm. “It is driven by the fact that the Nigerian government as well as the banks are cash-strapped, so it makes to use creative funding techniques to keep projects alive in the industry.” Oni further said that oil servicing companies are now willing to forego payment for services rendered during the drilling of an oil well for a share of the profit from the

discovery and sale of crude oil of the oil trading industry since from the well. crude prices tumbled from a In January, Vitol, the 2014 peak of around $115 a world’s largest independent barrel to less than $50 in 2016. oil trader, led a $530m oil- Ramping traded volumes have for-loan deal with Shoreline, been seen as a way to raise earna Nigerian energy company, ings and competition. as the commodity trader beIndigenous companies too gan a programme to extend operating in the oil and gas large financing facilities to sector are also taking advanprivate players as well as cash- tage of funding from IOCs. In strapped states. May, Osagie Okunbor, chairThe five-year agreement man of Shell Companies in with Shoreline Energy will Nigeria said 290 Nigerian give Vitol preferential access contractors received loans to physical cargoes, amount- valued at over N472 billion ing to at least 30,000 barrels a under the Shell Contractors day of crude produced in the Support Fund (SCSP). oil-rich Niger Delta. •Continues online at Analysts say these pre-pay deals have become a major part www.businessdayonline.com

How OPEC seems to be losing control over oil prices DIPO OLADEHINDE & ISAAC ANYAOGU

lthough they were able agree on a production cut, the last meeting in Vienna is a clear writing on the wall that the Organization of Petroleum Exporting Countries (OPEC) can’t unilaterally dominate the energy markets as it had done for the last five decades. When Saudi Energy Minister Khalid al-Falih leaves Vienna on Friday, he may be beset by other bigger worries than the current oil price crisis. The first is that Russia, rather than Riyadh, has become more powerful in OPEC without even being a member; the other is that the United States oil exports were hitting record highs last week. OPEC members with help from Russia reached a prelimi-

nary deal to cut oil production and boost the market, following two days of gruelling negotiations, although Iran was able to secure an exemption from cuts as a result of U.S sanctions. Feyi Akinsanya an oil expert at Szotyola Energy Services said the last OPEC meeting showed clearly that politics has more influence on the members other than the discipline to their membership. “The OPEC structure is such that everyone gets to have an equal vote. But the Russians get to have a super vote and virtual veto power,” Femi Akinbobola an energy analyst at Sofidam Capital limited said. Akinbobola explained that while US shale output is predominantly light, sweet crude, there are also other middle barrel, medium grades com-

ANALYSIS

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BusinessDay Excellence in Public Service Awards holds January 31 CYNTHIA EGBEBOH, Abuja

B Demola Sogunle (l), chief executive, Stanbic IBTC; Salamatu Hussaini Suleiman (2nd r), non-executive director, Stanbic IBTC Bank; Atedo Peterside (2nd l), founder/former chairman, Stanbic IBTC Holdings plc, and Yinka Sanni, chief executive, Stanbic IBTC Holdings plc, at the 2018 Stanbic IBTC clients’ year-end appreciation dinner, held in Lagos. Pic by Pius Okeosisi

What you need to know about Open Market Operations HOPE MOSES-ASHIKE

ften, we hear that a Central Bank will conduct open market operations (OMO) on a specified date. Most people often wonder what this OMO means. Here is what you need to know about OMO. What is OMO? OMO is the acronym for Open Market Operation. It simply means the buying and selling of government security, which enables a central bank to control the supply of money in the banking system. A government security is a bond or any other debt instrument issued by a government authority with a promise of repayment after maturity. In Nigeria, the Central Bank of Nigeria (CBN) uses OMO to supply or mop-up excess liquidity from the banking system. Any example of OMO auction? OMO remained the major instrument for liquidity management in the first half of

2018, and was used to moderate excess liquidity, boost tradable securities, and deepen secondary market activities. CBN Bills at the open market amounted to N13.97 trillion in the first half of 2018 compared with N3.70 trillion, in 2017. In the same period, a

It is usually as a result of monthly disbursements to the three tiers of government by the Federation Accounts Allocation Committee (FAAC), high volume of CBN Bills maturities and the frequency of auctions. Recent OMO auctions OMO maturity worth N684.8bn hit the banking system last week, which resulted to money market rates trending lower to a single digit band. Consequently, the overnight inter-bank rate, which is the interest rate at which banks lend and borrow from each other declined to 8.71 percent on Thursday from 13.08 percent on Wednesday. Also, the Open-Buy-Back, which is a money market instrument used to raise short term capital declined to 7.79 percent on the same day from 12.00 percent the previous day. A report by Afrinvest Securities Limited show that activity in the money market significantly increased in the week that ended the month of November, as the CBN floated a series of OMO auctions as well as the scheduled T-bills

EXPLAINER

total of N11.65 trillion was subscribed to while N9.74 trillion was sold respectively as against N4.59 trillion and N3.87 trillion, in the corresponding period of 2017. Consequently, the cost of liquidity management rose to N848.32 billion, although moderated by the over 300 basis point decline in yields in the review period, compared to N577.46 billion in the corresponding period of 2017. The tenors of the OMO auctions ranged from 73 to 365 days, at stop rates of between 10.9000 and 14.4000 per cent. In the preceding year, the tenors were between 140 and 364 days at stop rates of between 16.0000 and 18.6000 per cent. What causes excess liquidity that warrants mop-up?

Primary Market Auction to curtail the expected boost to system liquidity from FAAC inflow (N405.6bn), coupon payment and maturing instruments. System liquidity at the start of that week stood at N355.1 billion, lower than N637.9 billion at the close of the prior week, due to an OMO auction floated by the CBN on Monday last week. Liquidity level trended lower to N118.0 billion by Wednesday before rising to as high as N586.7 billion on Thursday following an OMO maturity of N443.8 billion which hit the system. The CBN on Thursday conducted special OMO, which dried up funds in the baking system resulting to a jump in overnight rate to 26.08 percent on Friday from 8.71 percent on Thursday. The Federation Account Allocation Committee (FAAC) disbursed the sum of N741.84 billion to the three tiers of government in September 2018 from the revenue generated in August 2018, according to the National Bureau of Statistics (NBS).

usinessDay Media Limited, organisers of the prestigious annual BusinessDay Excellence in Public Service Awards, yesterday announced the awards ceremony will now hold on January 31, 2019. The 2018 edition of the awardswhichwasearlierscheduled for December 10, 2018 was postponed “due to unavoidable circumstances”,according to the Awards Committee. “The 2018 BusinessDay Awards, the second in the series of the awards, is aimed at recognising ministers, heads of government departments and agencies in Nigeria who have recorded remarkable successes in executing the mandates of their individual institutions. This year, the Awards Committee,has extended the awards to members of the National Assembly who have also distinguished themselves in the per-

formance of their duties both as lawmakers and representatives of their individual constituencies’,the committee said. The Committee noted that theglitzandglamourassociated with the awards ceremony will notbediminishedonaccountof thepostponement.Overtwentyfive individuals had been pencileddownfortheawardsbefore the postponement. Last year, 19 persons received the awards at a grand dinner chaired by former head of State, and a retired army general, Abdulsalami Abubakar. Public office holders including six ministers and 13 heads of federal parastatals on November 30, 2017, received the BusinessDay 2017 Excellence in Public Service Awards for showing exceptional performance in public service. The Excellence in Public Service Awards is organised by BusinessDay Conferences, an

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Be afraid; be very afraid

Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

he podcast by the founder of Oodua People’s Congress [OPC], Late Dr. Frederick Fasehun has gone viral. CNN even carried it as “BREAKING NEWS” “It has become difficult for me to keep quiet as the nation [Zimboda] continues to plunge deeper from one crisis to another. We all go to bed every night in fear, not knowing what our lives will be next minute. The news is still fresh in our minds how an Army General was declared missing only for his body to be found in a well and his car in a pond just a few weeks ago. If a General of the Zimbodian Army can suffer such a fate, how much less the average Zimbodian? This country Zimboda is the only place that we all can call home no matter where we are or how far we may travel. But as all of us can see, this home of ours is on fire and none of us can rest or go to sleep while it burns. As of today, many are the challenges facing this nation. Where do we begin? Is it electricity, water, security or education – just name them? We lack them all. Every four years, politicians come to us using poverty as a weapon to hold the people hostage, promising us these very things that we lack and

OLUSEGUN OWADOKUN Olusegun Owadokun, CFA, is Senior Analyst, Corporate & Municipal Ratings Agusto& Co. Limited

fter the challenging o p e ra t i n g e nv i ro n ment that dotted 2016, the Nigerian Oil & Gas (Upstream) Industry has rebounded, posting relatively better results in the financial year ended 31 December 2017 (FYE 2017). This was quite evident in the fact that most industry players grew their topline in 2017 on the heels of the depressing results of 2016. The change in the fortunes of most operators was attributed to the rally in crude oil prices in 2017 after the global oil price crash of 2014 to 2016. For instance, one of the key players in the Nigeria Oil & Gas (Upstream) Industry, Seplat Petroleum Development Company Plc grew its turnover by 106% year-on-year (“yoy”) to US$417.4 million1 in 2017. In the same vein, OandoPlc grew its exploration and production (“E & P”) business to N103.5 billion in 2017, representing a 34% yoy rise over prior year. The scenario also plays out for the global oil majors such as Shell, ExxonMobil and Total, who equally recorded relatively exciting results over the last

we fall for their tricks and lies hook, line and sinker.” Front page “Vanguard” newspaper November 16, 2018 i.) “Apprehension over N6.1 Trillion Loss To E-Fraud As Annual E-Payment Transactions Hit N97 Trillion” ii.) “Saudi Identifies Jamal Khashoggi’s Killer, Seeks Death Penalty.” Front page “The Guardian” newspaper November 16, 2018 “Independent Corrupt Practices AndOther Related Offences Commission [ICPC] Probes National Broadcasting Corporation [NBC] Boss Dr. Ishaq Moddibbo Kawu Over Alleged N2.5 Billion Digital Switchover Fraud” Front page “The Punch” newspaper November 16, 2018 i.) “Carpenter Nabbed For Allegedly Raping Autistic Girl In Ondo” ii.) “Edo Pastor Arraigned For Abducting, Sleeping With Chorister” iii.) “Federal Special Anti-Robbery Squad Shot Me In The Leg, Man [Adetiba Sunday] Tells Panel” iv.) “Father Raped 17-Year-Old Daughter For Six Years – Doctor” Henry Ford (Founder of the Ford Motor Company, and the sponsor of the development of the assembly line technique of mass production) “Money doesn’t change men. It merely unmasks them. If a man is naturally selfish or arrogant or greedy, the money brings that out. That is all.” Front page “Daily Trust” newspaper November 16, 2018 “U.S.$ 500 Million Debts: The House Of Representatives Committee On Nigerian Maritime And Safety Agency [NIMASA] Threatens

‘

As of today, many are the challenges facing this nation. Where do we begin? Is it electricity, water, security or education – just name them? We lack them all

’

Twelve Shipping Companies With Arrest.” Ogbeni Rauf Aregbesola (Governor of Osun State) “The Essence Of Governance Is To Deliver Prosperity.” Front page “The Nation” newspaper November 16, 2018 “How Bureau De Change [BDC’s] Assist Politicians To Loot, By Ibrahim Magu Acting Chairman Economic And Financial Crimes Commission [EFCC]. “These politicians transfer looted funds from government accounts to BDC’s accounts; in 10; 20 millions in about 75 transactions in one day. This is done with only paper work, no physical cash. The BDC operators now take the money to the politicians’villages and also buy properties for them in and outside the country.” Video [Brutal and Disgusting] The Chinese are killing their parents because they are taking too long to die. Remembering November 18, 1949 – Elder Nathaniel Okoro “On Friday, November 18, 1949,

in a mysterious moment of sheer senselessness at Iva Valley, Enugu, the colonial cops shot and killed twenty-one colliery workers and a bystander and injured fifteen others over a peaceful labour dispute. The massacre was so shocking it galvanised Zimbodians to end colonialism. By Sunday, November 20, 1949 Enugu shut down for one week: churches, cinemas, markets, schools...everything!! The rich, the poor, the radicals, the indolent, the politicians, the business community and the civil servants, everyone became a rebel against this crime of colonialism. Bottom line: Enugu became the cradle of a nationwide struggle for independence. Zimboda’s independence did not come on a platter of platinum; it came with the supreme sacrifices of Enugu coal miners and Enugu residents of 1949.” Front page editorial “Nigerian Tribune” newspaper July 30, 2018 “THE AUDITOR-GENERAL’S DAMNING REPORT” “The recent report by the Auditor-General of the Federation (AGF), Mr. Anthony Ayine, detailing blatant violations of audit law by several government ministries, departments and agencies (MDAs) is the latest proof that the Muhammadu Buhari administration’s trenchant rhetoric on integrity and financial transparency is at cross-purposes with the reality. In the run-up to the March 2015 presidential election, candidate Buhari strove to set himself apart from the rest of the field by insisting that his presidency would take a dim view of corruption and financial malfeasance. While Nigerians were realistic enough not to expect a miracle, the Auditor-

General’s report shows that, in certain important respects, the Buhari administration has been worse than its predecessors. The key highlights from Mr. Ayine’s report make for grim reading, and show that MDAs’ compliance with the provisions of the Financial Regulations (FR) 3210(v) regarding submission of audited financial statements has been at its most sketchy in the first two years of the current administration. For instance, as of December 27, 2017, only 51 audited financial statements for 2016 and 149 for 2015 were submitted to the office of the Auditor-General. Furthermore, as of April this year, 109 agencies had failed to submit any financial statements beyond 2013, while 76 agencies last submitted for the 2010 financial year. A whopping 65 agencies have never submitted any accounts since the current system of fiscal reporting was inaugurated. A defender of the Buhari administration might argue that it inherited a system which allowed agencies to get away with doing little or nothing, and that the only thing the current administration might be said to be guilty of is allowing an already decadent system to degenerate further. That may be true. But it is precisely this kind of degeneration that President Buhari pledged to stem both on the campaign trail and since taking the reins of power. The blame for this lies squarely at its doorstep. If the Buhari administration cannot make governmental bodies under its direct supervision accountable, how does it propose to combat corruption in the entire country?

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The Nigerian oil, gas (upstream) industry on rally with healthy margins sustained one year. These key players have ridden on the momentum in 2018 posting impressive nine months’ results. Seplat’s turnover rose by 104% yoy to US$568 million for the nine months ended 30 September 2018 (“9M 2018”). As a result, Seplat posted an impressive gross profit margin of 54% in 9M 2018 (9M 2017: 45%) and profit before tax margin of 37% on the back of a loss before tax margin of 0.9% recorded in the corresponding period of 2017. Similarly, OandoPlc’s E & P turnover grew by 56% yoy in 9M 2018. Movements in oil price volatility remain the single most important determinant of Upstream Industry’s performance The recovery in topline performance among Industry players could be attributed first to the single most important determinant of success in the Upstream Industry – oil price. There is a strong positive correlation between the Industry’s earnings growth and oil prices. Periods of sustained oil price regime are almost always associated with the boom period for Industry operators and the converse is sadly very true for them. Higher oil prices not only result in generally better profit

margins for operators, they also encourage the players to invest in profitable capital expenditure to develop and expand their oil reserves. This ultimately assures of the sustainability of earnings and invariably the going concern of the E & P companies. Another key factor that influences the Industry’s performance is geo-political risks associated with the incidence of militancy in the oil-rich Niger Delta region of the country. It is a known fact that militant activities in the region have been responsible at various times for disruptions to production, leading to declaration of force majeure by E & P companies. These activities also result in pipeline vandalism, making it difficult for operators to export their crude oil for sale to their foreign trading partners. In May 2016, the country recorded a low crude oil production of 1.67 million barrels per day2 (“mbpd”) due principally to pipeline vandalism and production disruption linked to militant activities. The third element that has a serious impact on the performance of Industry centres on the passage of an omnibus Industry legislation, popularly referred to as the Petroleum Industry Bill (“PIB”). The PIB seeks to address the fiscal, administrative, legal and social

issues around the Industry in general. Most Industry stakeholders, for example, have attributed the stall in the country’s proven crude oil reserves, which have stood unchanged at about 37 billion barrels for almost a decade to the lack of adequate investments in the Upstream Industry caused by the prolonged delay in the passage of the PIB. Unfortunately, none of these factors fall under the direct control of Industry’s operators. They are largely influenced by external variables. Some of these variables include: Oil price volatility is influenced by a host of external factors It is an incontrovertible fact that the Upstream Industry swims or sinks depending on the direction of crude oil prices which are extremely hard to call. The commodity’s prices are determined by a complex interplay of different variables including demand/supply dynamics; health of the global macro-economy; OPEC influence bordering on output control with a view to regulating prices; the level of global inventory or stock of the product; the appreciation/ depreciation of the United States dollar; technological innovations; and other factors such as weather and natural disasters.

Despite the unpredictability of global crude oil prices, we believe the current rally in oil prices is sustainable in the short to medium term with the OPEC Reference Basket (“ORB”) to average about US$65 per barrel in 2018. This is hinged on the assumption that OPEC will sustain its current policy on production cuts as well as the growing demand for oil from emerging economies like China and India. Respite from the militants in the Niger Delta region Following the testing start of the current administration of President Buhari regarding the issue of militancy in the Niger Delta, which led to oil production challenges, the Industry seems to have turned the corner with oil production averaging 2.1 million barrels since November 2017. We expect production to remain stable at1.1million barrels in the near, as any pockets of unrest in the oil-rich region have been curtailed by the government, at least for the time being.

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What happens to the Naira after ‘the next few months’?

Anthony Osae-Brown For feedback, send Whatsapp message to 08152060502

odwin Emefiele, the governor of the Central Bank of Nigeria (CBN) was recently at an event where he promised that the apex bank will continue to defend the Naira in the next few months. In the words of the CBN governor ‘the CBN is determined to maintain its stable exchange rate policy stance over the next few months given the relatively high level of reserves.’ The governor went on to emphasize the stand of the apex bank by stating that ‘sustaining a stable exchange rate is of overriding importance to us even as we continue to put measures in place to shore up reserves.’ What is clear from the governor’s position is that they are not going to allow the Naira to depreciate, at least ‘in the next few months.’ The CBN is also passing out an indirect warning to currency speculators that it is going to tap into its ‘buoyant’ reserves to stop any attempt to undermine the Naira by taking a position on a Naira depreciation. The governor is responding to a recent pressure which

has seen the Naira depreciate from its stable N360/N363 to the US$, where it has stayed for most of this year, to a low of N370, the lowest rate since August 2017. The fall has seen speculators already betting that the naira could fall further as oil prices continue to show signs of weakness in the international markets. At a recent private discussion with about 10 senior executives of Nigerian companies, most of them had a negative outlook on the Naira. The consensus view was that the exchange rate of the Naira to the US$ would fall to about N400 to the US$ by the end of the first quarter of 2019. There was one or two divergent opinion. One person was of the opinion that the exchange rate would stay at N370 by first quarter of 2019 and another person believed it could fall as low as N500 or even lower. This pessimistic view of the Naira is mainly driven by both developments in the global environment as well as uncertainties that is hanging over the Nigerian economy mainly due to policy inertia and the forthcoming 2019 elections. In the global environment, the main concern remains crude oil prices, which has dropped sharply since October from its high of US$81 to its current low of US$60s. The inability of OPEC to reach a consensus on cutting production this week means that the outlook for crude oil prices is now even bleaker. For Nigeria,

‘

The deduction from Emefiele’s statement shows that the apex bank will do all it can to prevent a collapse of the Naira before the election. His position may shift post-election, if oil prices fail to rebound following the depletion in external reserves

’ this is a familiar challenge. Oil accounts for 95 percent of export earnings and essentially the main contributor to the external reserves the CBN is relying on to maintain a stable exchange rate. A low oil price in the international market would severely weaken the capacity of the CBN to stand behind the Naira. Already, there is noticeable pressure on the reserves. In October only, the CBN took out US$2.2 billion from the external reserves to defend the naira. The external

reserve is down about US$6 billion since October to a current level of about US$41 billion. The expectation is that the CBN will report a higher reserve base at the end of November due to the inflows from the US$2.8 billion Eurobond issue it made in October. But the apex bank could burn most of that new dollar inflows by early 2019 as it is forced to increase its interventions in the foreign exchange market in a bid to prevent a sharp fall in the Naira. By early 2019, based on current intervention trends, the external reserves could be below US$40 if oil prices remain at current levels. And that is where the concern really is. When the external reserves fall below US$40 billion, what happens to the Naira if oil prices fail to rebound to the highs of US$70 and above, which has been enjoyed for most of 2018? Are we likely to see a re-enactment of the 2016 foreign exchange management crisis that eventually saw the naira collapse from an exchange rate of about N199 to the US$ to almost N500 to a dollar? The chances of another sharp depreciation of the Naira is real. It is most likely to happen after the 2019 elections and not before. The deduction from Emefiele’s statement shows that the apex bank will do all it can to prevent a collapse of the Naira before the election. His position may shift post-election, if oil prices fail to rebound following the depletion in external reserves.

But how investors react to the outcome of the 2019 elections could also have an impact on the exchange rates. If investors like the outcome of the elections in 2019 and open their books to make new investments in the country, a sharp fall in the Naira can be prevented. But if investors do not like the outcome of the elections, then they are unlikely to open their books to new investments. That will leave the CBN as the main supplier of foreign exchange into the market, leading to a further depletion in the external reserves and consequently a weaker Naira. Emefiele, whose first tenure as CBN governor comes to an end around May/June 2019 would wish that he does not end his first tenure on a shaky Naira note. But that is unlikely to happen. Keeping the Naira stable and consequently avoiding another spike in inflation will occupy the last few months of his stay in Abuja. If he is given a second term, his main task will be to ensure that the naira does not collapse. Whether he will succeed at it depends largely on oil prices and also how investors interpret the outcome of the 2019 elections and the policies whoever wins in 2019 rolls out immediately. For now, future of the Naira is not really looking bright. The CBN has guaranteed a stable naira in the ‘next few months.’ Beyond that, the Naira is likely to find a ‘new level.’ Send reactions to: comment@businessdayonline.com

Inside ‘public relations, thoughts and deeds’

Stanley Olisa Stanley Olisa is a Media and Communications Strategist with Caritas Communications

he public relations landscape in Nigeria has come a long way. It has not only grown over the years but the kind of innovation and spend that the industry has recorded is tremendous. For instance, as at 2007, TV ad spend in Nigeria was estimated at N20.5billion. Just five years later, in 2012, an estimated N49.4billion was expended on TV adverts alone. This pattern was replicated across media channels and platforms. But beyond spending on ads, the media industry has swelled in ‘soft power.’ Indeed,

knowledge has increased in the industry with trainings, videos, seminars and books pushing the frontiers of understanding and know-how in the industry. Two weeks ago, a new book was presented to the public. It is of a different category because it is inundated with case studies, history and copious experiences. Authored by Adedayo Ojo, the Managing Director/Chief Executive Officer of Caritas Communications, the 128-page book‘Public Relations Thoughts and Deeds’ has been described as remarkable. The book is a fascinating inroad into the niceties of corporate communications and captures the fulcrum of public relations practice in a refreshingly different fashion. It eruditely explores the world of public relations, progressing from the generic to the specifics which define the proper practice of the profession. In the last few years, the practice of public relations has been marked by the emergence of divergent technological innovations with some disruptive

tendencies. These dynamics are redefining the art of image management. Thus, Adedayo Ojo combines the experience of both traditional public relations and the very contemporary practice in bringing to bear the twists and turns, as well as the nitty-gritties that have shaped the profession in the last couple of years. ‘Public Relations Thoughts and Deeds’ actually lives its title, both in content and style. The book features the thoughts and experiences (deeds) of the author. It treats public relations from two informed perspectives: that of an agency owner and that of a consummate practitioner. Though not voluminous, its content has the capacity to provoke the reader to appreciate the abundant need for every organization to incorporate PR into its business strategy. Ojo elegantly presents insights, drawing upon his varied multisectoral communications background. It opens with an up-to-date explanation of prevailing concepts and variables of public relations, as it details academic definitions across many schools of thought, comparing the old

model public relations with the new model PR. The author then takes a trajectory into how public relations was birthed and evolved into the status it has now. This exposes the reader to the historical relevance of the profession, giving them a sense of how PR grew through the years, factoring all the challenges that the practitioners had to grapple with just to raise the standards of the profession. The book then goes on tonarrate the inputs of major influencers as well as the role of the government in ensuring that this profession enjoys a reputable status in Nigeria. Similarly, Ojo narrates his professional voyage, its vicissitudes and the requisites for becoming a thorough-bred, full-fledged public relations professional. He also paints an accurate and realistic picture of how to start and profitably manage a public relations agency, aligning it with both local and global touchstones. With chapters like ‘From Iwe Irohin’, ‘Interventions’, ‘My Life in PR’, ‘Enter Caritas’, ‘How We Do Our Work’, ‘Who Do They Say We Are’, Ojo is redirecting

the PR narrative, challenging the practitioners and giving them a resource that they can always bank on whenever they need to refresh their professional knowledge or even advance their career with a professional exam. With a chatty, dramatic style, the NIPR-certified Ojo has made another contribution to the growth of PR practice in Nigeria, and has dared other practitioners to convert their experiences(deeds) into a book to guide the new breed of PR professionals. Recently presented to the public in a colourful event which brought together some very brilliant minds both in the industry and the communications landscape,“Public Relations Thoughts and Deeds” will educate, empower and activate the productive nerves of its readers, adding value to the industry and the professionals who will shape it for the future. It is certainly a reference point for individuals who are in the business of corporate communications and reputation management. Send reactions to: comment@businessdayonline.com

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Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Monday 10 December 2018

The endangered Nigerian middle-class

rom independence in 1960 to the early 1980s Nigeria grew a solid and robust middle class of professionals – Doctors, teachers, professors, Engineers etc – who were financially secure, lived in GRAs around the country, could afford to educate their children up to university levels (then our universities were still centres of excellence), visited cinemas and prestigious restaurants and social clubs often, shopped in exclusive shopping malls and could buy new cars easily. Then came the structural adjustment programme (SAP) and the devaluation of the naira. The unintended consequence was the decimation of the salaries of the middle class. Imported goods became expensive and out of the reach to all but the elite. New cars automatically went out of the rich of the middle class and they had to resort to buying used vehicles popularly known as Tokumbo in Nigeria. Gradually, those professionals (majority of them) who had the opportunity to relocate abroad left and those who couldn’t leave or didn’t want

to leave were demoralised. Also, the desired locations of the middle class became run down and shabby. By the time Nigeria returned to democracy in 1999, the middle class had all but vanished. However, by the turn of the 21st century, a noticeable change occurred. Through the work done by the democratic regime of President Olusegun Obasanjo, the middle class was gradually restored and began to grow in leaps and bounds to such an extent that Nigeria became an attractive investment destination to many auto firms (to set up assembly plants) and large chain super-market stores. However, the progress has now firmly been cut short. Due to the deliberate policy choices and inactions of the government, of course, sparked by low oil prices and scarcity of foreign exchange, the naira has taken such a severe hit that the country was thrown into recession. Not only the poor were affected. True, prices of consumer goods and services consumed mostly by the poor have tripled. But the steep decline in the value of the naira has also affected the prices of luxury and aspirational goods and services demanded by the middle class

also. Just like it happened in the late 1980s and 90s, Nigeria’s robust but fragile middle class that expanded greatly from 2002 due to deliberate government policy is now shrinking and at the risk of disappearing entirely. Their fat salaries have been eroded by the steep decline in the value of the naira and they can hardly afford to shop in foreign boutiques and stores in Victoria Island and Ikoyi again. Even the fanciful cars they had always bought is now largely above their reach and they had to make do with imported used (Tokunbo) cars. To drive the nail into the coffin of the middle class, a deliberate government policy has now priced Tokumbo cars out of the reach of the middle class. The justification was the implementation of the National Automotive Industry Development Plan (NAIDP) of 2013 meant to grow the volume of locally assembled vehicles by raising tariffs on imported cars. However, the devaluation of the naira has made rubbish of that policy. But how does the government care? It has gone ahead with the implementation of the policy charging 35 percent import duty and another 35 percent

surcharge, making it a total of 70 percent of the market price of the vehicle. The new charge, which applies to a unit of any imported vehicle, irrespective of the model or brand, makes importation through the land borders (smuggling) far cheaper than through Nigerian seaports. But it is not only the people that are suffering. By implementing such punitive tariff regime on imported vehicles, the government has ceded most of the revenues it should be making to Benin Republic, which has taken advantage of the Nigerian government’s irrational policy action to lower its duty on imported vehicles. What is more, the current structure now provides a rich avenue of corruption to customs’ officials who give genuine customs’ documents to these smuggled vehicles for a fee. We are baffled that the government can be so retrogressive and almost irrational in policy decisions. The lack of effective demand for new cars has stymied any plans to establish vehicle assembly plants in Nigeria. The plan is now helping to price out used cars from the reach of Nigerians and Nigeria is being turned to a dumping ground for accidented and damaged cars.

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Monday 10 December 2018

BUSINESS DAY

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Mueller, she wrote

Credit comes A widening Gulf later

Much of the Mueller report is already public. What does it say? The hundreds of published pages from the Special Counsel’s office and the House intelligence committee read like a Le Carré novel

HE MUELLER investigation has been running for 81 weeks and counting. For much of that time it has offered those yet to get over the 2016 election a chance to fantasise about an alternative ending to the Trump presidency, one in which the good guys get the bad guys and justice is served. The market for this is so strong that there is even a podcast dedicated to investigation speculation, called “Mueller, she wrote”. Lawfare, a wonky legal blog, has become so popular that it has a merchandise section selling Lawfare-branded babygrows. Yet the investigation is widely misunderstood. Many Americans seem to be waiting for a final report from Robert Mueller’s team, at which point something will happen. Both those assumptions are wrong. The report, when it eventually comes, will probably not be made public. And the judgment on what that report means for the president will be political, rather than legal. It will rest on the views of Republicans in Congress. And many of them would rather not think about it. Interviews with Republican congressmen, staffers and strategists in the wake of the most recent guilty plea from Michael Cohen, the president’s former lawyer and fixer, suggest few have paid it much attention. “I don’t think our members of Congress give a shit about Don Junior, the president’s family, people around the president,” says one. Another likens the party’s situation to the fable of the frog: the water is hotter, but colleagues have adjusted to it. Some quietly calculate that their political futures depend on publicly supporting a president whom they deplore. Yet the widespread indifference in one party does not mean the special counsel’s investigation is inconsequential. Its seven guilty pleas or convictions are real enough. What has already been revealed, in the hundreds of pages of documents published by the special counsel’s office and the report by the House intelligence committee, is startling. These documents contain a cast of characters that seem drawn from

Monday 10 December 2018

Qatar quit OPEC because of politics, not oil Kuwait and Oman fear that Saudi Arabia will target them next

ATAR WAS the first Arab state to join OPEC after its founding in 1960. Now it will be the first to leave. On December 3rd the emirate’s energy minister, Saad al-Kaabi, said his country was quitting the oil cartel to focus on gas production. The decision takes effect on January 1st. A tiny country of just 2.7m, Qatar is the world’s largest exporter of liquefied natural gas. It is a minor producer of oil, pumping about 600,000 barrels per day. Of the 15 OPEC members it ranks 11th and generates less than 2% of the cartel’s output. Qatar has little use for OPEC, and vice versa. a novel by Eric Ambler or John le Carré: the Maltese professor who vanished, the Azerbaijani would-be pop star and his billionaire father, the financier who smashed a glass in another man’s face in a bar fight, the shady Brits. Though parts are redacted, it is usually possible to infer who is who. ******** “has a unique and colourful background, and described for the committee his path from Wall Street banker to white-collar criminal to government informant.” Hello, Felix Sater. In other words, much, perhaps even most, of the Mueller report has already been published. What does it say? The Department of Justice asked Mr Mueller to investigate “any links and/or co-ordination” between the Russian government and individuals associated with the Trump campaign. Start with the links. One set ran through the Trump Organisation, which was attempting to build a tower in Moscow, a project that continued throughout the Republican primaries of 2016. A second set ran through Michael Flynn, a former national security adviser, who took it upon himself to establish a private line of communication with the Russian ambassador in Washington, after Mr Trump won the election. There are three more links, which look more like Russian intelligence operations. One went via an enthusiastic Russian member of the National Rifle Association (NRA), Maria

Butina, and her sponsor, Alexandr Torshin, then the deputy governor of Russia’s central bank. Emails from May 2016 provided to the House Intelligence Committee show that Mr Torshin contacted the campaign, offering an “overture from President Putin.” Both Russians exchanged emails with the president’s eldest son. But the hoped-for meeting, at an NRA gathering in Kentucky, never happened, partly because Jared Kushner counselled against it. Ms Butina has since been indicted as a spy. Then there is the link that ran through New York, where Donald Trump junior, Mr Kushner and Paul Manafort, then Mr Trump’s campaign chairman, met a Russian lawyer claiming to have embarrassing information about Hillary Clinton. That meeting apparently proved disappointing. Still, Don junior made misleading statements about it and his father dictated a statement about what had been discussed, which was issued in the son’s name and was later found to be false, too. The final known set of links runs through London, and involves a fifth-rate foreign-policy adviser to Mr Trump, George Papadopoulos, and an equally distinguished Maltese academic and grifter, Joseph Mifsud. Mr Mifsud ran an institute called the London Academy of Diplomacy, which did not exist, and boasted of his links to the Russian

government. The pair met in Rome in March 2016 and then twice in London. In April Mr Mifsud told Mr Papadopoulos that the Russian government had “dirt” on Mrs Clinton. That leaves one last channel, about which there has been much speculation but little proof. Russia’s military intelligence arm, the GRU, which was responsible for hacking into the Democratic National Committee’s email server, used WikiLeaks to publish its material. For the past two years investigative journalists have been trying to find out whether anyone from the Trump campaign co-ordinated with WikiLeaks over the release of the stolen material. Don junior did send a message to WikiLeaks on Twitter, asking for advance notice of a future release of material, but apparently received no reply. The special counsel’s indictments have not yet shed any light on this last channel, either. Grifters and fixers So much for the links. How about the co-ordination? As so often, Mr Trump said the thing out loud that others would only whisper: “Russia, if you’re listening, I hope you are able to find the 30,000 emails that are missing,” he told a rally in July 2016. Other expressions of a desire to work together were more private. Offered dope on Mrs Clinton from the Russian government before the New York meeting, Don junior wrote, “If it’s what you say I love it.”

Its departure is not really about economics, though. It was a political move aimed at Saudi Arabia, the most influential member of both OPEC and the Gulf Co-operation Council (GCC). The latter, which meets in Saudi Arabia on December 9th, was the Middle East’s most effective multilateral body. Unlike the Arab League, a toothless talkingshop, the GCC created an economic and customs union. But last year three members—Saudi Arabia, Bahrain and the United Arab Emirates (UAE)—imposed a trade-and-travel embargo on Qatar, another member. The dispute paralysed the GCC and left its two non-aligned members, Oman and Kuwait, increasingly nervous. Officials in those countries wonder if they could be added to the embargo, or punished in other ways. In September the powerful Saudi crown prince, Muhammad bin Salman, made his first formal visit to Kuwait. Billboards in Kuwait City extolled close relations. But his visit was Continues on page 15

Monday 10 December 2018

C002D5556

BUSINESS DAY

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A dilemma in the Horn of Africa

The promise and peril of Ethiopia’s democratic revolution

Abiy Ahmed promises liberty but must be careful not to deliver anarchy

F ANY SINGLE event sums up the confusion, danger and enormous opportunity posed by the change sweeping across Ethiopia it was when dozens of armed soldiers marched on the office of Abiy Ahmed, the new prime minister, in October. As the troops moved closer, the government shut down the internet, leaving the capital awash with rumours but little information. It looked to many Ethiopians like a coup. But when the soldiers arrived, Abiy approached them and listened to their complaints. Within a day videos were circulating showing the 42-year-old former army officer doing press-ups with the grinning troops. Abiy later said the protest had been part of a plot to kill him by opponents of his reforms. Yet with boldness and charm he turned a possible military coup into a public-relations one. Across Ethiopia, Africa’s second-most-populous country, scenes that were unimaginable a year ago are now commonplace. On a recent Friday morning in Hawassa, a regional capital, crowds of young men draped themselves in the white, red and blue flags of the Sidama Liberation Movement, a rebel group. Chanting and singing, they gathered to welcome its leaders home from exile. Farther along the highway to the capital, as the road crosses an invisible ethnic border, the colours of the flag change to yellow, green and red—those of the Oromo Liberation Front, another rebel group that has been allowed to return and contest elections, scheduled for 2020. If the democratic uprisings that swept across the states of the former Soviet Union in the early 2000s were “colour revolutions”, then Ethiopia’s counts as a multicoloured one, with flags of many hues representing its more than 80 ethnic groups. There is no mistaking the excitement that has gripped the country since April, when Abiy took office and embarked on the most radical liberalisation in Ethiopia’s history. He has made peace with neighbouring Eritrea, freed thousands of political prisoners, welcomed back armed opposition groups and promised to open up the state-dominated economy.

But he faces big challenges. As he lifts the heavy hand of the state, ethnic nationalism and violence are spreading. The economy is slowing. Much will depend on whether Abiy can use his enormous popularity to unite the country and shepherd it towards fair elections. No dirge for the Derg Ethiopia has had two previous revolutions. Neither worked out well. In 1974 students and soldiers toppled the feudal empire of Haile Selassie and replaced it with the Derg, a Marxist junta that forced peasants onto collective farms, where they starved. Seventeen years later the Ethiopian People’s Revolutionary Democratic Front (EPRDF), a coalition of ethnic liberation movements, overthrew the Derg. Although professing to be democratic and representing all of Ethiopia’s ethnic groups, the EPRDF ruled harshly and was dominated by Tigrayans, who are 6% of the population. It adopted a constitution that promised to protect human rights, then ran roughshod over it, shooting or arresting protesters and installing party loyalists at even the most local levels of government. The former strongman, Meles Zenawi, who died in 2012, boasted that the EPRDF’s “writ runs in every village”. Because Ethiopia’s economy expanded rapidly, many came to see it as a model of authoritarian development, similar to China’s. GDP grew by an average of 10% a year over the past 15, the government says. That figure is probably overstated, but the growth, from a low base, was certainly swift. In recent years, however, questions have been raised about whether the Ethiopian model is sustainable. Much of its economic growth came from state spending on roads, industrial parks, giant dams and Africa’s biggest airline. This was financed largely through borrowing abroad. The binge has pushed foreign-currency debt to

the equivalent of 350% of annual export earnings. The IMF says it is at high risk of “debt distress”. Foreign exchange is scarce. Inflation is 14%. The authoritarian regime also proved fragile. Oromos, who are about a third of the population, long resented the Tigrayans’ control of the government. Protests, which began in late 2014 in Oromia, gathered pace a year later after elections in which the EPRDF so thoroughly suppressed opposition parties that it won 95% of the vote and all the seats in parliament. A ten-month-long state of emergency was imposed in October 2016 after protesters burned foreign-owned factories and blocked roads. The crisis sparked a coup within the EPRDF. Oromos aligned with Amharas, who are about a quarter of the population (and ruled the roost under Haile Selassie and the Derg), and shunted aside the Tigrayan elite. Abiy was named chairman of the party and the country’s first Oromo prime minister. Since taking charge, he has ordered the release of thousands of political prisoners. For the first time in 13 years there are no journalists in jail. Censorship of the media has ceased. The army and police, who shot scores of people in 2015-16, now rarely use lethal force to contain unrest. Confrontations between them and protesters have declined by more than 80% since April. Abiy the reformer The shift away from authoritarianism has been accompanied by a push towards democracy. Abiy has promised a free and fair election. He nominated a respected opposition figure to head the electoral board and a renowned humanrights lawyer as chief justice of the supreme court. Experts are rewriting the statutes that all but criminalised peaceful opposition. But the revolution risks spinning out of control. The wave

of protests that brought Abiy to power also exposed the degree to which many Ethiopians do not regard their government as legitimate. District officials across Oromia and Amhara were often the first targets of violent unrest before Abiy took office. Tens of thousands have been replaced, but many are powerless in the face of young protesters. “The lower administrative structure has almost completely collapsed,” says Jawar Mohammed, an Oromo activist with vast clout. In the vacuum young men have taken to vigilantism. “Every citizen should be a policeman,” says Abdi Abkulkdar, a leader of an Oromo youth organisation in Shashamene, a town near Hawassa. In August a mob there lynched a man wrongly suspected of carrying a bomb. If they go, there will be trouble A greater threat to Ethiopia’s stability comes from ethnic tension. Since 1995, when the current constitution came into force, ethnicity has been a central feature of politics. The constitution created nine ethnically based, semiautonomous regions, but also gave each of Ethiopia’s more than 80 recognised groups the right to form its own region or to secede. In practice the EPRDF kept the federation together by shooting anyone who tried to break away. Now separatists are trying again. In recent weeks four ethnic groups have demanded plebiscites on self-rule. There have also been attacks on minority groups and ethnic cleansing, which is made easier by the fact that in most regions ethnicity is recorded on identity cards. “They had a list, they called my name,” says a middle-aged Welayta man, whose house was destroyed by a Sidama mob in June. Several Welayta men were burned alive and 2,500 were forced from their homes in Hawassa, a cosmopolitan city in the heart of what the Sidama claim is their homeland.

Qatar quit OPEC because of politics, not oil... Continued from page 14

anything but warm. Kuwait has tried to play mediator in the Qatar dispute. Prince Muhammad is unhappy with this and pressed the Kuwaitis to join the embargo. They refused. Kuwait also rebuffed his request to restart oil production in the “neutral zone”, a strip of border territory where they share extraction rights. The trip was meant to last two days. The prince returned home within hours. Around the same time, Kuwait signed a military co-operation agreement with Turkey. Kuwait downplayed the deal as a procedural matter. But Turkey has become an important actor in the Gulf, an antagonist to the Saudi-led camp. It has troops deployed in Qatar to guard against a possible invasion. Turkey’s relations with Saudi Arabia have deteriorated since October, when Saudi hitmen killed Jamal Khashoggi, a Saudi journalist, inside the kingdom’s consulate in Istanbul. No one expects Oman to join the embargo. “We have a tradition of staying neutral in everything,” says an adviser in the royal court. It has benefited from the situation, with cargo destined for Qatar moving through its Sohar port instead of Dubai’s Jebel Ali. The UAE worries that Duqm, a new port under construction on Oman’s barren central coast, will steal more business. The two have long had a troubled relationship, with border disputes and allegations of espionage. The Saudis, meanwhile, are trying to convince the Trump administration that Oman is too close to Iran. In September more than 5,000 British troops landed in Oman for a big military exercise. Oman wants its neighbours to know that it has a powerful friend, says a Western diplomat in Muscat. It is also making new allies. Although none of the Gulf states has diplomatic relations with Israel, several are racing to establish ties. Oman has moved fastest. It welcomed Binyamin Netanyahu, the Israeli prime minister, to Muscat in October. His trip allowed Sultan Qaboos to cast ties with Iran in a positive light. Oman could be an intermediary between Iran and Israel. That has quieted critics in Washington and Gulf capitals—for now.

BUSINESS DAY

C002D5556

Monday 10 December 2018 In Association With

Only human, after all

Emmanuel Macron’s problems are more with presentation than policy But he can still save his presidency

T IS A long way down from Mount Olympus. Last year Emmanuel Macron strode into power with a mandate to reform France. This week France looked unreformable. The streets of Paris have been littered with burnedout cars and glass from smashed shop windows. Parts of the countryside are paralysed, as protesters in high-visibility yellow jackets obstruct roads and blockade fuel depots. Policy U-turns are making Mr Macron look as weak as all his recent predecessors who tried to change this most stubborn of nations. The man who once promised a “Jupiterian” presidency is looking decidedly mortal. Mr Macron’s election in May 2017 seemed to herald new optimism about France, Europe and the world. Young, intelligent and bubbling with ideas to make France more open, dynamic and fiscally sober, he gave an eloquent rebuttal to the drawbridgeup nostalgia of Brexit Britain, Donald Trump’s America and the autocracies of eastern Europe. The hope for a broad renewal of the radical centre came to rest on his shoulders. When this new party, a band of political newcomers powered by social media, won a thumping parliamentary majority, the Macron revolution seemed unstoppable. He swiftly passed long-needed reforms to make the labour market more flexible, working with moderate unions and facing down obstreperous ones. His education reforms offered smaller classes in poor areas and greater citizens’ control over training. The budget was knocked into shape, meeting the

Maastricht deficit limit of 3% of GDP for the first time since 2007. Yet along the way, Mr Macron forgot that a French president is neither a god nor a monarch but merely a politician in a democracy that requires the constant forging of consent. His hauteur has led to a series of individually small but cumulatively destructive missteps—scolding a teenager for calling him “Manu” instead of “Monsieur le Président”, summoning parliament to be lectured at the palace of Versailles, talking of “people who are nothing”. Mr Macron also seems to have forgotten that, in the first round of last year’s election, 48% of voters were so unhappy that they backed extremists: Marine Le Pen on the nationalist right, Jean-Luc Mélenchon on the left and half-a-dozen less charismatic radicals. Those voters have not gone away. So it was unwise of the new president to antagonise the left-behind carelessly. One of his first moves was to slash taxes on wealth. The old wealth tax was inefficient, incentive-sapping and often avoided. But its removal should have gone side-by-side with more help for the hard-up. Likewise, his tax rises on diesel are a sound green policy, but he should have paid more attention to the people they hurt most—struggling rural folk who need to drive to work. The most damaging label that has stuck to the former banker is that he is “the president of the rich”. Many French people believe this, which is perhaps why around 75% say they support the gilets jaunes protesters. Like Mr Macron’s election

campaign, the protesters are organised via social media. Unlike it, they are leaderless and lack a coherent agenda, so they are almost impossible to negotiate with. The clashes already look to be the worst since les évènements of 1968. Mr Macron will now be banking that his decision, on December 5th, to cancel the diesel tax rises “for the year of 2019”, will take the heat out of the conflict. This seems unlikely; for a start, the protests have in part now been hijacked by thuggish extremists with an interest in the violent overthrow of capitalism. Many of even the moderate gilets jaunes are demanding

Mr Macron’s resignation, or a new parliament. And an earlier diesel tax rise which went into effect last January, has not (yet) been reversed. Only human after all The government’s reaction could backfire horribly. It may not be enough to draw the sting from the protests. But, by giving ground at all, it may show that Mr Macron can be pushed around by mobs on the streets, thus encouraging more mobs to form. There is pressure on Mr Macron to bring back the wealth tax; and further reform now looks much less likely than it did. Yet there is plenty of hard work still to do; the

next overdue project that Mr Macron plans to tackle is France’s unaffordable pension system. Does all this mean that have-yourcake-and-eat-it populism must triumph, and that reformers will always be thwarted? It is depressingly easy to conclude so. Mr Trump has won the support of his base by offering Americans tax cuts that are not affordable in the long term. In Italy the all-populist ruling coalition promises to lower the pension age that a more prudent predecessor raised, while also offering deep tax cuts. Even Vladimir Putin did not have the courage to face down Russian pensioners this year.

From scooter to slaughter

Angola’s go-to app for delivering live goats to your door In Africa, the gig economy can benefit rich and poor alike

FRICAN CITIES are tasty markets for food-delivery apps. The continent has 21 of the world’s 30 fastestgrowing urban areas, where an expanding middle class boasts smartphones and spare cash. These cities also have hideous traffic, so it’s a chore to drive a car to a restaurant. But delivery scooters can slalom through jams. These were the ingredients that made possible the rise of several food-delivery startups in Africa. Jumia Food delivers meals to urban dwellers in 11 countries. In South Africa Mr D Food competes with Uber Eats, an offshoot of the American ridehailing app. Tupuca has been bringing meals to residents of Angola’s capital, Luanda, since 2016. Like its peers Tupuca began by connecting hungry users with restaurants. Delivering prepared

food still accounts for most of its revenue. The firm’s 140 drivers make 17,000 deliveries a month for consumers who spend an average of $40 per order. Since October, however, users of the Tupuca app have begun to see other options alongside pizzas, burgers and sushi. They can buy coal, petrol, fruit and vegetables. Or they can purchase live animals, such as chickens ($7 for

a big clucker, $5 for a middling one), pigs ($124 and $103) or goats ($82 and $64). To offer these animals, Tupuca has teamed up with Roque Online, a startup named after Mercado Roque Santeiro, a huge, open-air informal market in Luanda that was closed by the nanny state in 2011. Roque Online employs an army of runners who track down the best

produce. They buy the goat, say, take it to a driver and, before too long, the animal is on its way to a party (where it will be slaughtered amid great jollity). Erickson Mvezi, Tupuca’s CEO, says the new feature is “breaking down barriers between informal and formal markets”. Luanda has a sizeable middle class, plus plenty of expats and a rich elite. But it also has millions of poor people living in slums wedged between skyscrapers. More than a third of households have at least one person living by informal vending. Through Tupuca and Roque Online they can sell to more people. In the West many people fret that the gig economy encourages insecure work. But in sub-Saharan Africa, where the informal economy is equivalent to more than a third of GDP, about twice that in rich countries, it may do

the opposite. By opening bigger markets for vendors, technology may help them grow richer, one goat at a time. No kidding.

Monday 10 December 2018

BUSINESS DAY

Monday 10 December 2018

BUSINESS DAY

CITYFile

CISLAC urges FG to extend anti-corruption fight to land allocation

imed at reducing poverty and crime in the country, the Civil Society Legislative Advocacy Centre (CISLAC) has called on the Federal Government to extend its anticorruption fight to land acquisition. Auwal Musa, executive director of the centre, made the call on the sidelines of the launch of a proposal on “Youths Combating Land Corruption in Africa’’ in Lagos. Musa said when lands for agricultural produce are taken away from the people, it rendered them jobless and as a result they became poor and could resort to violence. He said that the people whose lands were taken for purpose of development were not well compensated. Musa cited the case of Shiroro Dam where the land owners received equivalent of 20 dollars. He said that in Nigeria like many other African countries, land was sold to only rich public officials who could bribe to acquire it. He said that in some cases, women were not given the opportunity to acquire land and also land grabbers were ready to forcefully take it over. “This is sad. Government must begin to tackle the challenge. “Nigerians who have applied for land allocation in spite of meeting necessary requirements are denied access to get the land. “In the last 10 years, Nigerians have experienced extortion, forgery, cloning of land documents and allocation of land without due process in order to legitimately acquire land or its certification, ‘’ Musa said. The CISLAC executive director said that in some instance, indigenous land owners offered gratification in order not to lose their land which was their source of livelihood.

100 Libya returnees get BANTF’s starter-packs IDRIS UMAR MOMOH, Benin

ver 1000 Libya returnees in Edo have been presented with starter-packs by the British American Tobacco Nigeria Foundation (BATN Foundation) as part of its programme to empower the returnees. The foundation built the human capacity development of the returnees in the areas of fabrication and welding, tailoring and fashion design, bead making and make up artistry. The returnees were also empowered to set up their own businesses by having shops rented and a common workplace set up for them by the BATN Foundation to practice their trade cost- free for a year. Abimbola Okoya, the executive director of the foundation who presented the starterpacks to the returnees in Benin, said the human capacity development was geared towards promoting the culture of entrepreneurship and business skills amongst the returnees. Okoya listed other objectives to include provide a means of regular income, curb youth restiveness in the society and disabuse the minds of youths to embark on illegal migration. She noted that Libya slavery re-echoes the prevailing issue of unemployment in the country and the African continent, adding that the development has necessitated many young people to believe that they have better opportunities to excel anywhere but Nigeria. She noted that for Nigeria to triumph economically, her citizens must embrace her future more than they had despised her past. Okoya added that one of the way is to empower the youths because they are the hope of tomorrow. Chairman, Edo State Taskforce Against Human Trafficking Committee, Yinka Omorogbe said there are a total of 4,202 Libya returnees in the state’s data base. Omorogbe represented by Lilian Garuba, assistant secretary of the committee, however urged the beneficiaries to make good use of the empowerment tools.

FG finally completes, opens Ijora-Apapa bridge to traffic.

Ikoyi Prisons meant for 800 inmates cramped with 3,138 ... as Lagos Chief Judge frees 7 inmates JOSHUA BASSEY

he Ikoyi Prison, Lagos, built by the colonial government in 1955, with a capacity for 800 inmates, in currently cramped with 3,138 inmates, out of which 2,644 are awaiting trial, while only 494 are convicts. The situation in the prison presents a picture of what obtains in all other prison facilities across the country, as the number of awaiting trial inmates far outstrips convicted prisoners. It was learnt that many of the awaiting trial inmates have spent longer years in prison custody than the number of years they could serve for the offence they allegedly committed, if convicted. Deputy controller of prisons, Tolu Ogunsakin, disclosed this on Friday, when Opeyemi Oke, the Chief Judge of Lagos State, visited the Ikoyi Prisons, to free some inmates. Ogunsakin noted that the Nigerian Prisons Service (NPS) was in support of initiative to decongest prisons across the country, through the Presidential Committee on Prerogative of Mercy constituted by the Federal Government. He also told the Lagos Chief Judge that the introduced parole, plea and sentence bargain accelerated trials, fines and warnings would be of help in decongesting the prisons. “In spite of the large inmate population and predominance of awaiting trial persons, Ikoyi Prison is run as a genuine correctional institution for reformation and rehabilitation of offenders. “Our human resource development unit

has been deeply engrossed in training programmes aimed at equipping the inmates with useful skills to be self-reliant and ultimately law abiding citizens on their discharge. “We have been continually committed to ensuring that our inmates do not idle-away but leave our facility better than before their incarceration,’’ he said. Meanwhile, another batch of seven inmates of the Ikoyi Prisons, Lagos, have been set free by Oke. Recall that Oke had a day before (Thursday) freed nine inmates from the Medium Security Prisons in Kirikiri, Apapa. Although 13 inmates of the Ikoyi Prisons had been shortlisted for amnesty, seven were eventually released during an inspection visit by the chief judge. Oke directed magistrates in the state to deploy non-custodial sentencing for minor offenders, to decongest the prisons. The Chief Judge told the released inmates to, henceforth, be of good behaviour and stay away from crime. She advised them to desist from any act that would bring them back to prison. “Pursuant to the provisions of Sections 1(1) of the Criminal Justice (Release from Custody) Act, 2007 as well as Section 35 of the 1999 Constitution, you are hereby released from custody today, December 7, 2018. “I want you to henceforth, be of good behaviour. Make sure you don’t breach any law again. Go out there and sin no more,’’ she admonished them. Those released included one Yasau Gudu from Plateau, who had been on the awaiting trial list since 2016, for conspiracy and stealing. Gudu, who was elated for being released,

said he does not have any money for transportation back to his state but that he will board a trailer back home. The others were released, having been in custody between three and eight years. They were said to have stayed longer in custody than the number of years they would have spent if convicted by the court for their offences. She explained that those granted amnesty were qualified for release, after a thorough review of their case files. She added that Restorative Justice Centre for mediation in judicial criminal matters will commence operations in January 2019. “All simple cases need not go to the police. The restorative justice centre is a mediation centre. If there is an agreement and the guilty one can pay for a missing tooth, why go to court? This is a way of decongesting the prisons,” she said. Oke also said the chief registrar had been directed to issue a circular immediately, on her instruction, to the magistrate courts. “All magistrates would, henceforth, be monitored to ensure compliance with the directive,” she said. The chief judge urged magistrates to be very liberal, especially in giving bail conditions for minor offences. She said that the increase in the population of Lagos State has led to the high rate of crime in the state. “The number of judges we have is few, compared to the number of cases to be addressed and this is a challenge in the prosecution of judicial matters.

Yuletide: Residents upbeat as Obaseki offers rice, cow at discounted prices

esidents of Edo State are gearing up for discount shopping at the government’s food market initiated by Governor Godwin Obaseki to mitigate the impact of the nation’s current economic reality on people in the state. Special adviser to the governor on media and communication strategy, Crusoe Osagie, said the state government has undertaken to provide trucks that will be sent to farmers in villages and peri-urban areas, to convey farm produce to venue of the Food and Agric Fair, Imaguero College, in Benin City. “The farmers will not pay for the transportation of their produce to the fair, the

transportation burden will be borne by the state government. With this and other incentives, we are certain that the costs of food items will reduce significantly at the fair,” Osagie said. “We are urging Edo people and residents in the state to take advantage of the fair. “The price of a bag of rice will begin from N15,000 and the price of a big cow will begin from N150,000 while tomatoes, tubers of yam, plantain and other foodstuffs will be sold at affordable prices,” the governor’s aide added. Eseosa Igbinidu, a civil servant who resides in Benin, said she was waiting for the fair to open to shoppers.

“We are aware of the food and agric fair and the timing is also right this period of the year” she said. Other residents also expressed delight at the initiative and commended governor Obaseki for always seeking ways to make life easier for the common man. “We commend the government for trying to reduce the impact of the struggling national economy on Edo people. The idea of a food and agric fair is brilliant and it will be a win-win for farmers who have challenges transporting their produce to the market and consumers, who want more value for their money,” Ugbo Sunday said.

BUSINESS DAY

Monday 10 December 2018

Live @ The Exchanges Top Gainers/Losers as at Friday 07 December 2018 GAINERS Company

Market Statistics as at Friday 07 December 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

NESTLE

N1480

N1549

DANGCEM

N185

N184

-1

DANGSUGAR

N13.1

N13.5

0.4

FLOURMILL

N21

N20.2

-0.8

IKEJAHOTEL

N1.7

N1.87

0.17

AIRSERVICE

N6.3

-0.7

ACCESS

N7.3

N7.45

0.15

STANBIC

N47

N46.5

-0.5

N0.93

N1.02

0.09

NNFM

N5.3

N4.8

-0.5

DIAMONDBNK

ASI (Points)

30,866.82

DEALS (Numbers)

2,631.00

VOLUME (Numbers) VALUE (N billion)

178,994,344.00 1.556

MARKET CAP (N Trn

11.268

Flour Mills issues N10.11bn 3-year Series-1 bonds, N10bn 5-year Series-2 bonds ..Lists Bonds on FMDQ, NSE Stories by Iheanyi Nwachukwu

lour Mills of Nigeria Plc, the largest flour milling company, and market leader in food and agroallied products in Nigeria, has successfully registered a N70billion bond issuance programme and issued N10.11billion Series-1 and N10billion Series-2 senior unsecured fixed rate bonds (the Bonds) under the Programme. The transaction was strongly supported by the institutional investor community and oversubscribed by 190percent within the price guidance. The proceeds of both bonds, listed on Friday December 7 on both FMDQ OTC Securities Exchange and Nigerian Stock Exchange (NSE) amounting to N20.11 billion were used entirely to refinance the company’s existing debt obligations and streamline Flour Mills of Nigeria Plc debt matu-

L-R: Hajara Adeola, MD, Lotus; Patience Oniah, director-general, DMO, and Taiwo Okeowo, deputy managing director, FBNQuest Merchant Bank Limited, at the launch of sovereign Sukuk public offer investor forum in Lagos.

rity profile. The Series 1 bonds priced at 15.50percent for a tenor of three (3) years with bullet repayment at maturity, whilst the Series 2 bonds priced at 16percent for a tenor of five (5) years with a one-year moratorium on principal payment and an amortising profile. The proceeds of both is-

suances, amounting to N20.110billion were used entirely to refinance existing debt obligations of the Company and streamline its maturity profile. Notwithstanding declining market conditions with 5year benchmark yields rising from record lows of 10.45percent at the start of the year to 15.45percent highs in

September, the success of the transaction was largely due to the momentum created during very well attended investor roadshow meetings in Lagos and Abuja. The Company was able to leverage on its strong credit profile and investment grade ratings assigned by two leading, well-established rating agencies

Commenting on the listing, John G Coumantaros, the Chairman of the Board of Directors of Flour Mills of Nigeria PLC commented: “Flour Mills of Nigeria Plc is delighted to return to the capital markets with such a successful outing especially with the level of interest shown by investors. The response from the market vindicates the Company’s decision to have taken this additional step in diversifying our financing options. We are very pleased to have worked with our advisors, Stanbic IBTC Capital Limited (“Stanbic BTC Capital”) as Lead Issuing House, along with ARM Securities Limited, FBNQuest Merchant Bank Limited, FCMB Capital Markets Limited, United Capital PLC and Zenith Capital Limited as JointIssuing Houses, on a highly successful transaction.” Paul M. Gbededo, the Group Managing Director, added: “the transaction will help the Company achieve its strategic objective of sustaining its market leadership posi-

tion with our foods and agro-allied businesses, whilst fostering our vision of Feeding the Nation, Everyday.” “Optimisation of our balance sheet and reduction of financing costs remains a priority. As part of this strategy we resolved to replace short term bank loans with longer-tenored, lower priced funding. Two key initiatives under this include taking advantage of long term subsidised debt schemes and raising funding under a bond programme,”, Gbededo told market stakeholders at the Exchanges. Incorporated in September 1960 and quoted on the Nigerian Stock Exchange since 1978, Flour Mills of Nigeria (FMN) Plc. is one of Nigeria’s leading food and agro-allied companies. With a broad basket of food products, an iconic brand “Golden Penny” and a robust panNigerian production, distribution, and supply chain network, FMN is a fully integrated and diversified food and agro-allied group.

NBCC set to improve member partners within IT sector in 2019

SEC says e-dividend registration will boost market liquidity

t was a night of glitz, glamour and corporate networking as captains of industry alongside corporate players within the various sectors of the Nigerian and British trade communities gathered together at the Nigeria-British of Chambers and Commerce 41st Presidential dinner and awards at the Oriental hotel in Lagos. Akin Olawore, president, Nigeria-British Chambers of Commerce expressed his gratitude to guests and corporate members of the Chambers for their consistent support throughout the course of the year. He stated that the Presidential dinner is a special occasion for the chamber as it is a platform for mem-

he Securities and Exchange Commission (SEC) has enjoined more Nigerians to take advantage of the ongoing e-Dividend registration in a bid to reduce the unclaimed dividends profile as well as increase liquidity in the capital market and the economy. Mary Uduk, acting Director General of the SEC stated this at an enlightenment programme on e-Dividend and contemporary issues in the Nigerian Capital Market held in Enugu last Thursday. The event which had as its Theme: “Current Initiatives by the Securities and Exchange Com-

bers within the Nigerian and British business communities to network as they officially wind down activities for the year. He added, “The year 2018 has been an activity packed year for the chamber, as we have engaged in strategic partnerships and collaborations aimed at promoting business relationships between the Nigerian and British business communities whilst also adding value to our member partners which is the aim of the chamber.” Olawore stated that the chamber in its drive to add value to its members whilst providing opportunities to grow their businesses, has initiated plans through strategic collaborations which would prove beneficial for members

within the information technology sector in the coming year. Olawore intimated guests of the NBCC plaza which is the proposed permanent site of the chamber and tasked members and guests for continued support in making the project a reality. Guest speaker and chairman of the Channels Media Group, John Momoh, while delivering his speech on New Business initiatives in the digital era, commended the Nigerian British chamber of commerce for its role in providing a platform for members to come together and speak about business innovations while also promoting bilateral trade and new business models in the digital era.

mission, SEC Nigeria to Enhance Investor Value” drew participants from various segments of the society. Uduk, who was represented by Obi Adindu, head, Port Harcourt Zonal office of the SEC, disclosed that the Commission is currently leading the entire capital market industry in an effort to migrate all shareholders to an E –Dividend regime. According to her, “The essence of the E-Dividend Mandate Management System is to eradicate or reduce to the barest minimum the incidence of unclaimed dividend. Unclaimed dividend is an

undesirable feature of the Nigerian capital market which denies investors/ shareholders the gains of participating in the capital market. It denies the economy access to the huge amount of money which should have accrued to shareholders and would have gone into circulation to oil the wheel of the economy. “It is a consequence of the bottlenecks which are inherent in the erstwhile paper dividend warrant regime such as postal system inefficiency, change in investors’ addresses, poor fidelity and human fallibility in dividend payment processes, amongst others.

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BUSINESS DAY

Monday 10 December 2018

BUSINESS

Monday 10 December 2018

COMPANIES & MARKETS

DAY

‘We are committed to consistently deliver on the investment objective’

Pg. 27

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

FINANCIAL SERVICES

Verve, Paga, Quick teller, Interswitch, Orange SA, eye role of payment service banks LOLADE AKINMURELE

erve, Paga, Quick telle r, I n t e r switch and Orange S.A join MTN and Bharti Airtel on a list of 30 business names undergoing registration as payment service banks at the Corporate Affairs Commission (CAC), in a move that could prove a game changer for tens of millions of financially excluded Nigerians. For non-banks, registering a subsidiar y unit is the first step in applying for a payment

ser vice bank license under a new set of mobile money guidelines launched by the Central Bank of Nigeria in October, as it attempts to replicate a system that has succeeded in bringing large swaths of people from Kenya to India into the formal financial fold. According to data obtained from the Abuja-based CAC, the thirty business names undergoing registration include financial technology companies, Verve, Quick teller, Int e r s w i t c h, Pa ga a n d Paystack. Mitchell Elegbe, the General Managing Di-

rector of Verve, did not immediately respond to a text message seeking confirmation. The names of Telecommunication companies, MTN and Bharti Airtel also feature, as well as Glomoney and Glocash Payment S e r v i c e Ba n k s - p o ssible subsidiar ies of Globacom. An email to MTN spokesperson, Funso Aina, seeking confirmation was not immediately replied. Orange S.A . also wants a piece of the pie, CAC data showed. That confirms an earlier article by Business Day which reported in-

terest from the French telecom company in Nigeria’s mobile money market. Other business names undergoing CAC re g i s t ra t i o n i n c l u d e M P S , C r y t o, R o g e r, Zuma and Probity Payment Service Banks (PSB). Others are IFIS, Touba, Hope, G oals, MOMO, A-Tel, Wazob i a, Av e nt e l , Sw i t c h and Vela. Opening up the mobile mone y space to non-financial compani e s b rea ks t h e m o n o p o l y o f c o m m e rcial banks after years of haggling between stakeholders.

30 companies undergoing CAC registration as PSBs

Continues on page 26

OIL AND GAS

NNPC, AGIP in race to meet 2019 deadline for 500mw Okapi power plant Olusola Bello

he Nigerian National Petroleum Corporation (NNPC) and Agip joint venture are working towards ensuring that the 500 megawatts Okapi phase 2 Power Plant comes on stream in the second half of 2019, in what would be a boost for electricity generation and economic activity. According to sources familiar with the joint venture, a lot of activities are going on for the new project to complement the 480 megawatts first phase, which has been in existence since 2005. “The NNPC/AGIP JV are fine tuning the Okpai Phase 2 Project to shore up the current power generation with 500 megawatts of power which will result in an increase in the country’s power generation by between 10 to 12 per cent,

provided the transmission segment is up and running,” said Maikanti Baru, the group managing director of NNPC. Baru also said the NNPC has repaired a ruptured Gas Pipeline which supplies gas to most thermal electricity generating plants in the country. Lorenzo Fiorillo, vice chairman and managing director of Nigeria Agip Oil Company/ANER said his company has a longstanding partnership with Nigeria and they would want to grow, build and develop new

opportunities for the country and support its energy journey. “We want to change and improve the energy mix of the country and the Okpai project is a testament of this commitment of our company,” he said. Fiorillo said the joint venture partners have been working for 15 years to implement the Okpai phase 2 project, which is very important to the NNPC/NAOC JV. “We have been able to find a way to achieve our target with this administration,” Fiorillo added.

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

Source:CAC

BUSINESS DAY

Monday 10 December 2018

BUSINESS DAY

C002D5556

Monday 10 December 2018

COMPANIES & MARKETS BANKING

Union Bank’s principal owner gets $10mn TLG investment Endurance Okafor

tlas Mara, a Pan-African Financial Services Group and the principal owner of Union Bank of Nigeria has signed a two-year structured-credit deal with TLG. TLG’s investment in Atlas Mara was done through its Credit Opportunities Fund and the deal was disclosed to be worth $10 million (3.65 billion), which also marks TLG Capital’s 25th transaction since inception. Zhi Heng, Head of Special Situation and Trading, who led the deal for TLG, said Africa’s banking sector is one of the most compelling growth stories in the world today and TLG wants to capitalise on it by taking strategic positions in Africa’s promising financial services markets. “This deal demonstrates our long-term commitment to promoting financial inclusion and technological innovation in Africa businesses and this transaction represents an exciting step forward in our fund’s continued efforts to support growth and job creation in the region,” Heng said.

TLG said in a statement that Nigeria has always represented an important location for the company within Africa. “Partnering with Atlas Mara provides TLG with a great longterm opportunity to back a welldiversified banking platform with presence in West, south, and East Africa,” the announcement document seen by BusinessDay reads. Led by Bob Diamond as the Chairman and John Staley as the CEO, Atlas Mara has a strong management team, with a vast experience of working with different financial institutions across Africa. “Recent reforms by the government to create a better economic environment have produced positive results. With Union Bank of Nigeria being Atlas Mara’s largest asset, we believe that the group is in a strong position to benefit from rising credit growth and consumer activity in the country,” it said. Meanwhile, recent report by Moody’s, a rating agency said Union bank is among the Nigerian mid-tier banks that will grow their earnings materially over the long-term.

L-R: Paul M. Gbededo, group managing director, Flour Mills of Nigeria PLC, Bola Onadele. Koko, managing director/CEO, FMDQ OTC Securities Exchange, Mr. Funso Akere, chief executive officer, Stanbic IBTC Capital Limited, Kobby Bentsi-Enchill, executive director and head, debt capital markets, Stanbic IBTC Capital Limited, during the listing ceremony for the Flour Mills of Nigeria PLC Bonds at Exchange Place, Lagos.

“Nigerian mid-tier banks suffered more severely than the top five largest banks from the 2016 recession and are still recovering,” says Akin Majekodunmi, Vice President and Se-

nior Credit Officer at Moody’s. “Over the longer term, though, we expect their earnings growth prospects to be positive.” Union bank raised N50 billion ($162.5 million) via a rights

issue late last year and now exhibits the highest tangible common equity in the mid-tier peer group at 21 percent of riskweighted assets. The commercial bank is

also one of the three banks which Moody’s believe are best positioned to weather current operating challenges, given their sound capital and liquidity buffers.

FINANCIAL SERVICES

AVIATION

Verve, Paga, Quick teller, Interswitch, Orange SA, eye role of payment service banks

Global passenger demand rebounds in October

Continued fromn page 23

IFEOMA OKEKE

Source:CAC

The CBN hopes the regulator y tweak will make basic financial services accessible to some 50 million people in the country who have no bank account. The regulatory guidelines however restrict the non-financial companies to accepting deposits, as they are ba r re d fro m gi ving loans and offering credit facilities. The PSB model borrows a play from the Reserve Bank of India’s playbook. Post-implementation of the model, the number of account holders in the country rose from 53 percent in 2014 to 80

percent in 2017, according to World Bank data. Hard-pressed to meet an 80 percent financial inclusion target set out in 2012, the CBN will be hoping the model replicates the success achieved in India. Subsidiaries of mobile network operators, mobile money operators, retail chains (supermarkets) and banking agents are all welcome to apply for the PSB license, provided they can meet certain requirements, including a 5 billion naira capital base, and a combined 2.5 million naira application and license fee which are non-refundable.

he International Air Transport Association (IATA) announced global passenger traffic results for October showing that demand (measured in revenue passenger kilometers, or RPKs) rose 6.3 percent compared to the same month last year. This marked a rebound from the 5.5 percent growth recorded in September, which was an eight-month low. Capacity also grew 6.3 percent and load factor was flat at 81.1 percent, matching last year’s record for the month. “October’s healthy performance is reassuring after the slower demand growth in September—some of which was attributable to weather-related disruptions. However, the bigger picture is that traffic growth has moderated compared to earlier in the year, reflecting a more mixed economic backdrop and reduced demand stimulation from lower fares,” Alexandre de Juniac, IATA’s Director General

and CEO said. African airlines’ traffic grew 6.8 percent year-on-year in October, raised from six percent annual growth in September. The upward trend in passenger demand remains strong notwithstanding challenges in the economic backdrop of the continent’s largest economies, Nigeria and South Africa. Capacity rose 5.5 percent, and load factor climbed 0.9 percentage point to 70.3 percent. October international passenger demand rose 6.3 percent compared to October 2017, up from 5.1 percent growth in September. Airlines in all regions recorded gains. Total capacity climbed 6.1 percent, and load factor increased 0.1 percentage point to 79.8 percent. European carriers’ October demand climbed 7.5 percent over 2017, which was the strongest growth among regions and up from the 5.3 percent increase for September. Capacity rose 7.0 percent and load factor edged up 0.4 percentage point to 85.2 percent, highest among regions. Given mixed signals

on the economic situation for the region, it’s unclear if the rebound is sustainable. Asia-Pacific airlines’ traffic rose 5.8 percent compared to the yearago period, up from 5.4 percent year-over-year growth in September. Capacity climbed 5.4 percent and load factor rose 0.3 percentage points to 78.9 percent. Underlying passenger demand is continuing to be supported by structural changes, including rising living standards in the region, as well as network changes that stimulate demand. Middle East carriers experienced a 4.4 percent rise in demand in October compared to last year, slowest among the regions for the seventh time in 12 months. It was, however, an increase over the 3.3 percent increase in September. Capacity increased 6.4 percent, and load factor slid 1.3 percentage points to 69.8 percent, lowest among regions. Carriers have been buffeted by policy measures and geopolitical tensions in recent years, including the ban on portable elec-

tronic devices and travel restrictions. However, while volatile, passenger volumes are trending up solidly in seasonallyadjusted terms. North American airlines’ traffic climbed 5.6 percent in October compared to the year-ago period, up from 4.9 percent growth in September. Strong momentum in the US economy is helping to drive robust international demand. Capacity rose 3.7 percent and load factor surged 1.4 percentage points to 80.4 percent. Latin American airlines were the only carriers to experience a slowdown in growth as demand rose 5.9 percent versus 6.3 percent in September. Capacity climbed 9.1 percent, and load factor dropped 2.4 percentage points to 80.4 percent. Domestic demand climbed 6.4 percent in October compared to October 2017, unchanged from September, while capacity rose 6.7 percent. Load factor slipped 0.2 percentage point to 83.3 percent. China, India and Russia led all markets with double-digit growth rates.

BUSINESS DAY

Monday 10 December 2018

COMPANIES & MARKETS

INTERVIEW

‘We are committed to consistently deliver on the investment objective’ Eno Atoyebi is the Executive Director/Chief Investment Officer of ValuAlliance Asset Management Limited. Recently, she spoke to Iheanyi Nwachukwu and Michael Ani. Excerpts:

bout ValuAlliance Asset Management Limited ValuAlliance Asset Management Limited, a member of the African Capital Alliance Group. ValuAlliance, a wholly owned subsidiary of ACA Holdings Limited, is registered and licensed by the Securities and Exchange Commission (SEC) of Nigeria as a Fund/Portfolio Manager. The ACA Group consists of two broad businesses: Private Equity (generalist funds and real estate focused funds), and ValuAlliance, the Investment Management business. While private equity is an alternative asset class, ValuAlliance focuses on the traditional asset classes of equities and fixed income. ValuAlliance is the Fund Manager of the ValuAlliance Value Fund (“Value Fund”) which is the subject of our discussion today. As the Fund Manager of the Value Fund, we would like to know what the Fund is all about and why investors should have interest in it? The ValuAlliance Value Fund was set up in 2011. It is a Collective Investment Scheme authorized by and registered with the SEC. It is a Closed-end Fund whose units are listed and traded on the Nigerian Stock Exchange (“NSE”). The principal activity and objective of the Value Fund is to achieve long-term capital growth by investing in Nigerian equities (listed and unlisted) which the Fund Manager considers under-valued, thus enabling Investors gain exposure to a concentrated portfolio of value stocks. The Value Fund also invests in fixed income instruments and other securities that may from time to time be approved by the SEC. The Value Fund’s closed end structure means the number of units in the Fund is fixed. Unlike an OpenEnd Fund where the Fund Manager can continually issue units and cancel units upon redemption, with a ClosedEnd Fund, money is raised during the primary issue, units are issued to investors, and the amount raised is managed by the Fund Manager. Investors who hold the units can trade these units on the secondary market in the same way company shares are traded. The Value Fund is one of five closed-end funds listed on the NSE. Two are equity-based fund and the other three are real-estate funds. By investing in the Value Fund, investors gain exposure to a diversified investment portfolio and benefit from the professional management and expertise of ValuAlliance. Going through the audited financial statements of the Fund for year ended June 2018, I noticed that you have exposure to shares like Zenith bank, GTB and Okomu Oil. Do we see you reviewing that composition, going by the way the market is? We typically take a long-term view on investments. I think it is important that investors understand that with investing, it is advisable to take a long-term view. In assessing an investment such as buying the equity securities of a company, it is important to understand the company so that the investing decision is an informed one. Questions about the company’s business model, strategy, sustainability of strategy and revenue, quality of management, and long-term potential are important to deepen one’s understanding of the entity. The objective of the in-depth analysis of such a company (both quantitative and qualitative) is to form a view of

the intrinsic value of the security and determine if the security is trading above or below this value. So, it is less about where the market is today and more about assessing the underlying value of securities in the portfolio or potential investments. As you know, the market is cyclical and volatile. In times of heightened uncertainty, volatility increases, which is unsettling. It is typical for investors to panic and seek to exit positions when the market is bearish. However, it is also likely that such times offer good entry points for some investors with a long-term view. The Value Fund pursues a pragmatic value philosophy. This means the Fund invests in securities which are sufficiently undervalued relative to their intrinsic value. In evaluating potential opportunities, we combine the top-down and bottom-up approaches. This ensures our assessment of each opportunity considers the operating environment, industry and company specific dimensions. Our objective is to thoroughly understand the company being assessed, and with that understanding reasonably determine its intrinsic value. Generally, when the market is bearish, one may assume this may persist for a long time. Similarly, in a bullish market, one may assume that too will persist for a long time. These biases tend to be reflected in the prices of securities. We try to analyze the situation objectively and reasonably to ensure we make the appropriate decision for the Fund. What contributes to the revenue of Value Fund? As I mentioned earlier, the Value Fund invests in quoted and unquoted equities as well as fixed income securities. The Fund’s revenue consists of dividend income, interest income, realized and unrealized capital gains from its investments. In each financial year, the Fund’s revenue is a function of the Fund’s exposure to each asset class (that is its asset allocation), as well as the performance of each asset class. For instance, if the Fund increases its exposure in quoted equities, and that asset class performs relatively better than it did in the previous year, this will positively impact the Fund’s revenue. Speaking about asset allocation, the Value Fund’s permissible asset allocation ranges are as follows: quoted equity 15% - 85%; unquoted equity 0% - 20%; fixed income 15% - 50%; money market 0% - 30% and cash 0% - 5%. Guided by these ranges, our long-term view of each asset class and available opportunities, we may adjust the Fund’s exposure to each asset class. As a layman, why should I prefer closed-end funds to open-end fund? Okay, let us look at the options available to a layman. Say you have an amount you want to invest, you could decide to put this in a savings or fixed deposit account, or longer dated fixed income instruments or buy shares in a company. Alternatively, you could invest in a collective investment scheme (either open-end or closed-end) which is regulated by the SEC. The main benefit to you is that through a fund, you can engage the services of a professional money manager. The decision of the appropriate fund to invest in depends on the objective you seek to achieve with your hard-earned money. Both closed-end and open-end funds, are efficient vehicles to invest through. While with an open-end fund, you can buy or sell units through the fund manager; with a closed-end fund, you can buy or sell units through a stockbroker.

Eno Atoyebi

In addition, there are some investment strategies that are better supported by a closed-end fund structure relative to an open-end fund structure. For example, an active allocation to unlisted securities may be better suited to a closed-end fund structure. Also, closed-end funds are less administratively demanding when compared to open end funds, allowing the fund manager to focus on managing the growth of the investment portfolio. That said, it is important to note that it may be possible to outsource the fund administration function of a fund. No doubt there is value engaging a fund manager, but the issues of fees and charges are key considerations. What is ValuAlliance Asset Management doing to make sure that investors don’t get hurt? To discuss fees and expenses it is useful to disaggregate one from the other. Speaking on fees specifically, there is the management fee paid to the fund manager and fees paid to other fund parties such as trustees, custodians and registrars. A point to make is that generally fees are trending down largely due to increased competition, and pressure from investors and regulators. For example, before we launched the Value Fund, we had contemplated an annual management fee of 1.5% of net asset value (“NAV”) which was in line with the industry. However, following engagement with potential investors, we revised the annual management fee to 1% of NAV. With respect to expenses, these include transaction costs, distribution expenses, listing costs (for closed-end funds listed on an exchange) and so on. Again, these have trended down over the years. However, transaction costs can become quite significant if fund managers trade in and out of their positions quite frequently. An important metric for funds is the expense ratio, which is the proportion of the fund assets used for fees and expenses. This varies depending on the type of fund. While the maximum expense ratio for funds in Nigeria is 5% of NAV, the SEC is keen to review this downwards. Over its 7 years of operation, the expense ratio of the Value Fund has ranged between 1.4% and 2.88% – significantly lower than the maximum of 5% of NAV. Important to note that the upper bound includes incentive fees earned by the Fund Manager. The expense ratio is a metric we continue to monitor for the Fund. Taking you back to the audited financial statements of the Fund for year ended June 2018, I noticed that the revenue declined slightly from

about N1.3 billion in 2017 to N1.1 billion in 2018. Looking at your assets, which of these assets contributed to the slight decline? The Value Fund recorded a total revenue of N1.147bn for its financial year ended June 2018. This was an 11.7% decline compared to the total revenue achieved in the previous year. Notwithstanding, the Value Fund achieved a 20% growth for its financial year ended June 2018. From the revenue lines, it can be observed that the unrealized gains from the listed equity portfolio came in at N579.8m relative to N817.3m in the previous year. While, the equity portfolio grew in the FYE June 2018, this growth was lower than that achieved in FYE June 2017. I also noticed that you are proposing a distribution of N13 per unit to your unitholders, which comes to about N417.2 million, how often do you reward unit holders? As discussed earlier, the Value Fund commenced operations in 2011 with N3.2billion raised in a public offer which was subscribed to by institutional and retail investors. This amount has been managed in adherence to the strategy communicated to investors at the inception of the Fund. There has been no additional capital raise over the last 7 years implying that growth recorded by the Fund has come only from investment returns. The Value Fund has achieved a holding period return of 127.15% which translates to a 7-year compounded annualized growth of 12.43%. This means if you invested N100 in 2011, as at June 2018 you would have received in distribution N55.8/unit and the value of your units would be worth N171.35. The growth achieved by the Fund can either be retained in the Fund and reinvested or distributed to investors. The Value Fund has consistently made distributions from inception. To date, the Value Fund has distributed a total of N1.79bn to unit holders. For the financial year ended 30th June 2018, the Fund Manager is proposing a total distribution of N417.3m. If approved by unitholders at the annual general meeting holding on the 13th of December 2018, the distribution will be made to unitholders, bringing the total distribution since inception of the Fund to N2.2bn - about 60% of monies raised in 2011. As you know, an investor’s total return is made up of cashflow from the investment and capital appreciation. Being a Closed-End Fund, the Value Fund has both a market price and the net asset value per unit. The market

price is determined by demand and supply, while the net asset value is the value of the assets held by the Fund after deducting any liabilities. The performance metrics mentioned above are based on the net asset value of the Fund. As a fund manager who manages a fund with an exposure to equity with the market down about 17 percent, what strategies are you putting in place to lure investors? It is important to remember that there are different types of investors in a market. Indeed, an important feature of a market is diversity of participants, pursuing different strategies with different time horizons. This reduces the chance that all market participants will act in the same way. When we raised the fund in 2011, it was not a great time in the market to be raising money, more so to invest in equities. Our view was that there were pockets of opportunities on the back of the massive correction the market had witnessed from the banking crisis in 2008/9. So, we took advantage of the lull in the market to deploy the monies raised. Yes, the market is currently bearish, but what does that mean for a longterm investor? It may present an investing opportunity for investors with a long-term view, who understand drivers of the current sentiments, vulnerabilities, fundamentals of the economy and are able to properly assess the opportunities the current environment presents. At your Annual general meeting, what will you be telling the unit holders if you were asked what caused the decline? The Value Fund recorded a profit after tax of N1.044bn for the financial year ended 30th June 2018; a 9% decline when compared to the PAT of N1.141bn recorded in the previous year. The Fund’s equity portfolio declined relative to the previous financial year. However, the Fund achieved a 20% growth in this financial year, bringing the total holding period return from inception of the Fund to 127%. The Fund Manager continues to focus on the investment performance of the Value Fund. In line with your long-term view as an asset manager, are you ambitious to double the growth of the fund in the next 5 years? We are committed to consistently deliver on the investment objective of the Value Fund which is to achieve long term capital growth. As managers of the Value Fund, we believe that by focusing on this objective, in a disciplined manner consistent with our investment process, the desired result will be achieved. To achieve the objective of the Fund we are constantly scanning the environment and seeking opportunities, evaluating these opportunities and determining the appropriate exposure for the Fund. Risk management is very important in how we structure the investment portfolio. It is an important consideration in our investment process. We understand that we have a fiduciary duty to the unit holders, therefore we seek to exercise judgment and reasonableness in our investment process and analysis. We will continue to focus on growing the Fund in a credible and sustainable way for the benefit of the unit holders. What should be the expectations of the unit holders from you? That we will continue to work in their best interest, consistent with the philosophy we have espoused. Your unit holders approved a

change of name from SIM Capital Alliance Value Fund to ValuAlliance Value Fund, what necessitated this change and how has this transition impacted on your business. Our company was established in 2007 as a joint venture between African Capital Alliance (“ACA”) and Salam Investment Management (“SIM”) of South Africa, thus the name, SIM Capital Alliance Limited. In 2014, SIM divested its investment in the company, deciding to focus on its insurance business. Consequently, ACA bought SIM’s stake in the company, necessitating the change of name to ValuAlliance Asset Management Limited in 2016, after necessary approvals were received from the SEC. The change in the name of the Fund was to appropriately reflect the change in ownership of the Fund Manager. The SEC’s approval was sought and received following which the Unitholders of the Fund also approved the name change at the annual general meeting held on the 19th of December 2017. With the approval of the Unitholders, the Fund’s documents were changed to reflect the new name. Also, the name of the Fund was changed on the NSE. Did that change have any impact on the company? I would say the impact of the change was minimal. The process was properly managed. There were changes to the Board composition reflecting the ownership. Governance continues to be driven by the Board, which is made up of qualified, experienced and reputable persons. The Investment Committee of the Fund, made up of the directors of the Fund Manager, Trustees and an independent member, has continued to oversee the investment process of the Fund.; and the investment team has remained committed and focused. Overall, I believe the transition has been properly managed. Apart from the fact that the company is focused on value and it is long term driven, what other things are you doing differently as a company, that will make me as an investor, invest with you, at the expense of your competitors? Our vision is to be the premier investment management fiduciary in the segments we serve. As a team, we believe if we focus on the right things, pursue our goals with discipline, purpose, and consistency, we will produce the desired outcomes for our clients. Therefore, we are committed to a disciplined approach to investing and delivering on our fiduciary relationship with our clients. At ValuAlliance, we are committed to the values of excellence, discipline, integrity, humility and contribution. These are values that are promoted across the organization. We understand that we are an investment firm, therefore we always seek to work in the best interest of the investors, committing ourselves to managing investors’ funds with a high level of diligence, and professionalism. Foraninvestor,thathasaprospect ofinvestinginotherAfricancountries, do you have anything to say? At ValuAlliance, the Value Fund is our flagship product. We also provide investment management services to high net worth and institutional clients under our wealth management service. However, we are working on expanding our product offering, with investment vehicles that meet diverse investment objectives for institutional and retail investors.

BUSINESS DAY

Monday 10 December 2018

Access Bank Rateswatch Market Analysis and Outlook: December 7 - December 14, 2018

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion)

25.71

Increased by 1.73% in Oct’ 2018 from N25.28 trillion in Sept’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

22.72 1.97

Increased by 0.72% in Oct’ 2018 from N22.56 trillion in Sept’ 2018 Increased by 1.54% in Oct’ 2018 from N1.93 trillion in Sept’ 2018

Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

11.26 14 14 (+2/-5) 42.08 58.79 1.75

Increased to 11.28% in October’ 2018 from 11.28% in September’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% December 5, 2018 figure — an increase of 1.26% from November start December 6 , 2018 figure— an increase of 1.21% from the prior week October 2018 figure — a decrease of 0.96% from September 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

7/12/18

30/11/18

30,866.82 11.27

Change(%)

0.63 0.63

0.18

0.11

55.70

Value (N’bn)

1.56

1.62

(4.07)

MONEY MARKET NIBOR Friday Rate

7/12/18

1-week Change

YTD Change

(%)

30,672.38 11.20

Volume (bn)

Tenor

Indicators

Friday Rate

Change (Basis Point)

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

(%)

58.79 4.26

1.21 (7.99)

(8.80) 39.40

2,143.00 106.55 79.02 12.71 517.25

(0.65) (4.70) 0.04 (2.08) 1.42

10.69 (18.16) 1.96 (17.09) 19.32

1,240.93 14.50 276.30

1.62 1.90 (0.45)

(5.82) (15.65) (15.71)

(%)

7/12/18

30/11/18

OBB

24.3300

16.5700

776

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

26.0800 7.4300 14.7470

17.3600 16.1250 13.9363

872 (870) 81

Tenor

1 Mnth 3 Mnths

14.24 14.29

13.11 13.04

113 124

6 Mnths 9 Mnths 12 Mnths

14.14 16.64 17.35

13.57 16.46 17.06

57 18 29

90 Days

14.9698

14.2128

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

7/12/18

30/11/18

7/01/18

Official (N)

306.85

306.80

306.65

Inter-Bank (N) BDC (N)

359.87 364.50

360.16 364.00

361.57 363.50

Parallel (N)

366.00

370.00

362.00

Indicators

AVERAGE YIELDS Friday

Friday

Change

(%)

(Basis Point)

7/12/18

30/11/18

3-Year 5-Year

0.00 15.40

0.00 15.27

0 12

7-Year 10-Year 20-Year

15.56 15.54 15.77

15.46 15.48 15.73

10 7 4

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

Friday

Change

(%)

(Basis Point)

30/11/18

ACCESS BANK NIGERIAN GOV’T BOND INDEX

BOND MARKET Tenor

Friday 7/12/18

Friday

Change

(%)

(Basis Point)

7/12/18

30/11/18

Index

2,675.75

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.40 5.21

YTD return (%) YTD return (%)(US $)

8.93 -46.83

2,673.86

0.07

8.35 5.18

0.59 0.50

8.85 -46.88

0.08 0.05

TREASURY BILLS (MATURITIES) Tenor 91 Day 182 Day 364 Day

Amount (N' million) 24,372.79 23,157.66 103,071.72

Rate (%)

11.2045 14.0155 16.8829

Global Economy In the US, the US Federal Reserve (Fed) released minutes covering their November meeting. The minutes confirmed that “almost all” members of the committee found it appropriate to again lift the target range for the federal funds rate “fairly soon”. However, the minutes highlighted that the timing of this hike was more uncertain and would be highly data dependent. The data dependency was also emphasised in a speech by the Fed chair also last week. Furthermore, the Fed chair hinted at a more cautionary stance towards further rate hikes and stated that the policy interest rate is just below “a level that would be neutral for the economy”, i.e. not supporting nor weighing on economic growth. In a separate development, China's official manufacturing purchasing managers' index (PMI) declined for the third consecutive month to 50.0 in November from 50.2 in October, just shy of contractionary territory. Demand remained weak, with the new orders sub-index falling to 50.4 in November from 50.8 in October. Meanwhile, the new export orders sub-index remained deep in contractionary territory with a slight uptick to 47.0 in November compared to 46.9 last month. Elsewhere, the Japanese economy contracted by 1.2% quarter-onquarter (q-o-q) in Q3 2018. This is down from the 3% q-o-q growth recorded in Q2 2018. Natural disasters (including flooding in July and the September earthquake) weighed on production, consumption and exports during the quarter, taking much of the blame for the poorer GDP performance.

Date

28-Nov-2018 28-Nov-2018 28-Nov-2018

Domestic Economy Businesses expressed more optimism on Nigeria's macro economy in November 2018 when compared with the level recorded in the preceding month (October), according to the Central Bank of Nigeria (CBN) monthly Business Expectations Survey (BES) report for November 2018 released last week. The report, which was posted on the apex bank's website stated: “at 25.9 index points, respondents' overall confidence index (CI) on the macro economy in November 2018 was more optimistic when compared to its level of 23.2 index points recorded in October 2018.” The businesses outlook for December 2018 showed more confidence on the macro economy at 65.6 index points. The respondent firms were made up of small, medium and large organisations covering both import- and export-oriented businesses. The positive outlook by businesses in November 2018, according to the report, was driven by the opinion of respondents from the following sectors: services (14.9 points), industrial (7.8 points), wholesale/retail trade (2.6 points) and construction (0.5 points) sectors, whereas the drivers of the optimism for next month were services (37.0 points), industrial (19.2 points), wholesale/retail trade (6.6 points) and construction (2.8points). In a separate development, non-performing loans (NPLs) of banking industry rose in Q3 2018, the National Bureau of Statistics (NBS) report on selected Banking Sector Data has revealed. According to the report, non-performing loans stood at N2.245 trillion as at the third quarter of 2018, higher than the N1.939 trillion recorded in the preceding quarter, and the N2.189 trillion recorded in the first quarter of 2018. The report also disclosed that Commercial banks' gross loans in the third quarter climbed to N15.86 trillion from N15.58 trillion in previous quarter. This implies that commercial banks' NPL ratio has increased to 14.16 % in the third quarter of 2018 from 12.45% reported by NBS in second quarter of 2018. Stock Market The Nigerian Equity Market closed last week on a bullish note driven by bargain hunting in

bellwether stocks. The benchmark equity index – All Share Index (ASI) — climbed 194.44 points to close at 30,866.82 points. Similarly, Market Capitalization rose N7 billion to settle at N11.26 trillion. This week, we expect market direction to be influenced by the Q3 GDP outturn due for release in the week by the National Bureau of Statistics. Money Market Cost of borrowing at the money market rose across most placement tenors as liquidity was slightly drained out of the market. The tight liquidity in the money market was driven largely by a net of outflow of about N114 billion. Longer-tenured interbank rates, such as the 30-day NIBOR ascended to 14.75% from 13.94% the prior week, while the 90-day NIBOR closed at 14.97% from 14.21% the preceding week. This week, we expect rates to stay around current levels, barring any significant liquidity event. Foreign Exchange Market The currency witnessed mixed performance last week across the various market segments. At the interbank window, the local unit appreciated by 29 kobo to close at N359.87/$ from N360.16/$ the week before. Similarly, at the parallel market, the local currency gained N4 to close at N366/$. Meanwhile, at the official window, it depreciated 5 kobo to finish at N306.85/$ from N306.80/$ the prior week. This week, we envisage the naira remaining close to prevailing levels as the CBN continues to intervene to supply liquidity. Bond Market Bond yields rose on the average last week. Yields on the five-, seven- and ten-year debt papers respectively increased to 15.40%, 15.56% and 15.54% at the close of last week, from 15.27%, 15.46% and 15.48% for the corresponding maturities the previous week. The Access Bank Bond index rose by 1.89 points to close at 2,675.75 points from 2,673.86 points the previous week. The rise in yields came despite muted activity in the market. This week, we anticipate that yields may moderate as dealers look to cover some of their short positions. Commodities Oil prices rose last week after the US and China agreed to a 90-day truce in their escalating trade dispute. Oil also received support from an announcement by the Canadian province of Alberta that it would force producers to cut output by 8.7%, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage. Against this backdrop, the OPEC daily basket price rose 70 cents to settle at $58.79. In a similar vein, precious metals climbed last week bolstered by the more dovish tone of US Fed Chair Jerome Powell's speech. Gold prices climbed 1.62% to $1,240.93 per ounce, while silver settled up 1.9% at $14.50 per ounce. This week, oil prices will likely be swayed by the outcome of the OPEC-Russia discussions on a possible output-cut. For precious metals, uncertainty over the future pace of US interest rate hikes will fuel safe-haven demand, keeping prices around current levels.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Dec’18

Jan’19

Exchange Rate (Interbank) (N/$)

363

364

365

Inflation Rate (%)

11.30

11.61

11.45

Crude Oil Price (US$/Barrel)

60.3

61.1

63.2

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

Feb’19

Monday 10 December 2018

C002D5556

BUSINESS DAY

This is M NEY A daily guide to your Personal Finance

Grace Agada

eople who have worked hard to accumulate a substantial amount of wealth naturally want to see it preserved after they die. Traditional experts, who are typically lawyers and estate managers,will usually advise them to split their wealth among their descendants’ But, if Rockefeller was standing right next to them, he would tellthem to ignore the experts. John D. Rockefeller’s wealth is already in the seventh generation with as many as 170 heirs. According to Forbes, the Rockefeller family maintained substantial wealth of $11 billion fortune in 2016. That’s more than 100 years after John D. Rockefeller became America’s first billionaire after founding Standard Oil Company in the late 19th century. Dividing your wealth amongst your children has been one of the commonestwaysof passing on your wealth. However, at best,you wouldmake your name a common name by

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Inter-generational wealth transfer lessons from Rockefeller the second or third generation and that’s as far as it goes.This is why your children might not know the father of the richest man in Nigeria but will know John D. Rockefeller who died in 1939. Creating an undying legacy and leaving your name on the sands of time requires strategic planning and the preparation of your heirs. Finding someone with your drive and passion amongst your children will not happen automatically as the circumstances surrounding their growth is totally different from yours. It is therefore important that you take intentional steps to protect and preserve your wealth. Dividing your wealth amongst your children dilutes your wealth power and gives your children noother choice thanto squander the enormous amount of money they can barelyhandle on their own.If you would not give your child N1billion now that you are alive, why dump it on them when you die? Leaving behind piles of money is like giving a child a loaded gun and praying he does not pull the trigger. Your best intentions can become your worst regret. So, what is the secret to the Rockefeller wealth and why has it empowered his children rather than destroy them? First off,Rockefeller never believed in splitting wealth. He kept the family money together, using trusts as a legal tool to direct how money is spent. The trust structure protectedhis wealth from taxes, lawsuits and spendthrift heirs. Rockefeller used his wealth only as a launch pad to help his children achieve their life goals. His principle was that everyone could generally succeed on their ownthey onlyneed a small nudge. This principle was what made him keep the family money together under a trust and managed by a group of financial professionals. This team of professionals worked together under the Rockefeller “Family Office,” togrow his wealth and protect it

from outside influences. Over six generations later, the Family wealth is still standing. Another thing Rockefeller did was that he turned his wealth into a private family bank that gave his children access to interest income or loan for any endeavor that the board of the family office approved. So, if a Rockefeller’s son, wanted to start a business and needed money to start, he would simply write to the family office board requesting for an interest loan from the pool of his father’s wealth. More than 150 Rockefellers currently receive interest income this way and each heir is expected to pay back, creating a constant flow of income. Rockefeller also allowed his children pursue their individual dreams. You may be tempted as a wealth creator to pressure your children into doing what you do. However, research has shown that

‘

Your heirs need to be groomed so that they can discover their own true path and build selfconfidence required for success

‘

The Solid Wealth Messenger

people are at their best when they do the things they are most passionate about. Coercing your kids to do what you want or making them yield to your pressure out of respect, is detrimental to your wealth because you will never get the best out of them. Your purpose, goals and vision

are yours alone and not your children. Finally, a very important thing Rockefeller did was to pass on his wealth with the sense that came with it. Being born into wealth has its own dark sides. Unlike, you, the wealth creator who worked hard for your

wealth, your children have been successfully shielded from poverty. They have access to the comfort that money brings and have been conditioned to easy living knowing that they will inherit wealth from you. The odds that they will experience the kind of things that propelled you to wealth would be almost non-existent. Not unless you intentionally build it into the wealth transfer process. Unfortunately, the traditional estate plan only prepares the wealth for the heirs; no one prepares the heirs for the huge financial responsibilities ahead. Your heirs may be scared to death about the huge responsibility of managing your assets. Your heirs need to be groomed so that they can discover their own true path and build selfconfidence required for success. If you fail to pass down your wisdom, experiences, values, principles and knowledge with the wealth you pass on, you would have built wealth in vain. Rockefeller understood this; he groomed his heirs early on in their lives to build character, understand business principles, finance, and values. He controlled their access to money, established family tradition and encouraged an annual family meeting that will make his children work towards a common family goal. Rockefeller’s method isn’t just for the Rockefellers. His method can be learned and implemented for your own intergenerational wealth success. Rockefeller’s wealth left his heirs better. What will yours do? This article is an excerpt of a full report containing the seven best secrets of Rockefeller wealth preservation strategies. To get the FREE report, please send as text: “Send me the Report” to 08101860042. Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

real sector watch BUSINESS DAY

C002D5556

Monday 10 December 2018

BUA’s cement expansion shows stable policies yield positive results

ODINAKA ANUDU

UA G rou p i s expanding its cement segment rapidly, thanks to a long period of policy stability in the industry. It was a simple policy of the Olusegun Obasanjo administration that led to cement renaissance in Nigeria. Before 2005/06, cement makers today, including Dangote Cement, were all traders. The only local manufacturer then was Lafarge, a French cement giant. Obasanjo summoned a meeting, which ended up encouraging backward integration in the industry and restricting imports. The Goodluck Jonathan’s administration did not tamper with this policy and rather provided the needed support necessary for cement growth. In 2014, Olusegun Aganga, the then minister of industry, trade and investment, announced that the industry had attracted $8 billion investments. The current government of Muhammadu Buhari has also continued with the policy direction, leading to more expansion and activities in the sector. This is an indication that the manufacturing sector needs a stable policy environment to grow, expand and create the desired jobs. Analysts believe that the high rate

L-R: Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI); Knut Ulvmoen, deputy president; Babatunde Paul Ruwase, president; Toki Mabogunje, deputy president, and Bayo Olugbemi, treasurer, during the 130th annual general meeting of LCCI in Lagos last Thursday

of unemployment in Nigeria is partly attributed to policy instability in many industrial sub-sectors. The manufacturing sector has 76 sub-sectors, out of which cement is one. With a stable policy in place, BUA has not only shown that it can thrive in a relatively stable environment but will be willing to expand its frontiers. Frank Udemba Jacobs, immediate past president of the Manufacturers Association of Nigeria (MAN), said many times that the sector needs policy stability to prosper. Recently, vice president, Yemi Osinbajo, commissioned BUA’s 1.5 million metric tonnes Kalambaina cement plant in Sokoto State, which gulped $350 million to build.

The ultramodern cement plant has a 32 megawatts multi-fuel captive power plant and a coal mill, blessed with huge limestone deposits. One significant thing about the plant is that it increases cement production in Nigeria and BUA’s capacity in particular. Another critical aspect of this plant is proximity to Niger Republic, which enhances its export potential. The cement plant started three years ago when BUA engaged Sinoma at the height of foreign exchange crisis and began production in March this year. Speaking at the commissioning of the plant, Osinbajo said the cement factory is a demonstration that Nigeria has vast potential, which investors should

explore. According to him, the National Infrastructure Master Plan recommends that Nigeria needs to spend $3 trillion to bridge the infrastructure gap as well as five percent of GDP annually. Abdul Samad Rabiu, chairman and CEO of BUA Group, said at the commissioning that the new plant would be generating more power than is currently generated by the entire Sokoto State. According to Rabiu, the plant would run on coal, heavy oils or a mixture of both, and the use of coal is expected to save over 70 percent of energy costs compared with 15 million litres of fuel oil per month or 40 tonnes or even 20 trucks of fuel that could have been used per day.

He said at least 2,000 direct and 10,000 indirect jobs are required to get the plant running, adding that the $1 billion Obu Cement Complex in Okpella, Edo State, commissioned in August 2017, will be completed by end of this year. BUA is not only playing in the cement industry, but also in rice, edible oils, sugar, and real estate, among others. It operates rice milling factories with a capacity of 200,000 tonnes per annum as well as 1,000 tonnes of edible oils per day. It is planning to begin production of 2.5 million metric tonnes of steel annually. BUA Cement recently announced the completion of its newest Obu plant in Edo State, which has a capacity to churn out 3 million mtpa of cement annually. This will bring the total capacity of BUA Obu cement operations to 6 million tonnes and move the entire group’s installed capacity to 8 million mtpa. Speaking at a business forum recently, Rabiu said that the completion of BUA’s Obu Cement second line puts BUA Cement in prime position to become Nigeria’s second largest cement producer by volume in the shortest possible time. “Through a strategic combination of BUA Cement’s newer, more energy efficient plants and the proximity of our factory locations to key regional markets across Nigeria, BUA Cement has in no time become the industry leader in capacity utilisa-

tion as well as maintaining a strong presence and brand leadership position in regional markets where it operates, “Rabiu said. “The nature of the formulation of BUA Cement’s products and the product strength has seen it dubbed, ‘King of Strength’ by block makers and others in the construction industry in Nigeria,” he added. In addition, BUA Cement has also entered into a partnership with the Standards Organisation of Nigeria (SON) and Industrial Training Fund (ITF) to train thousands of block makers across Nigeria on the proper mix and techniques for blockmaking to reduce the rates of building collapse in Nigeria. The completion of the new 3million mtpa BUA Obu II Cement Plant will see BUA’s installed capacity rise to 8million metric tons by the time it fully becomes operational in December 2018. The plant has the capacity to run on multifuels – gas and heavy oils— and will give BUA Cement a stronger foothold in the South-South and South East markets in Nigeria where it has become the preferred brand of cement. By virtue of its location in Okpella, Edo State, BUA Obu Cement plants are five hours away from all the major markets across Nigeria.” BUA Group announced last year that it built a 50km pipeline to carry gas to fire its gas turbines at its Obu Cement Plant.

Nigeria’s international trade hurt by bureaucracy, sharp practices Josephine Okojie

loated bureaucratic processes, sharp practices a n d i n c re a s e d trade cost are frustrating Nigeria’s trade with other countries, trade experts say. The experts, who spoke at the induction ceremony of African Centre for Supply Chain (ACSC) held in Lagos, said that the challenges have made the Single Window initiative

introduced by the government ineffective. “ There is still much documentation involved with export and import processes in Nigeria, even with the single window portal. The old processes of pre-shipment inspection and destination inspection are still in place till date,” said Sonny Allison founder, Red Star Express Plc and board member, Association of Outsourcing Professionals of Nigeria (AOPN). “Sharp practice is also

another major challenge we all encounter in trade facilitation. The system has become corrupt to the extent that even the traders are largely involved. Our cost of doing business becomes high because traders are frustrated into paying for ever y single step,” Allison said. To address the challenges, Allison, who is also the founder and executive chair man of GMC Logistics Limited, urged the government to make the single window

platform fully functional with all stakeholders— including the banks and insurance companies— integrated into the system to ease waiting time for traders. He called on the government to prioritise trade facilitation actions and mobilise technical assistance as well as investing in well-functioning logistic sector to further facilitate trade. Obiora Madu, director general, ACSC Council, said the countr y trade

facilitation has been very slow owing to the absence of critical infrastructure such as motorable roads and rail. Madu also stated that lack of data for the industry is a major threat to the country’s drive to boost trade. “Data is a very big problem and challenge to trade facilitation in Nigeria and Africa. Logistics managers are just groping in the dark because of lack of data for the sector,” he said. He called for the col-

laboration of members in the contribution and collation of data for the industry. The director general spoke about how the vision and mission of ACSC have helped the association to grow over the years, transforming into a continental representative in the African Union Continental Free Trade Alliance. A total of seven fellows were admitted into ACSC during the induction ceremony.

Monday 10 December 2018

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BUSINESS DAY

real sector watch How government negligence hurts factories

interactive forum on Eligible Customer Regulation of the Nigeria Electricity Regulatory Commission (NERC) in June 2018. In fact, manufacturers have given up on power distribution companies (DisCos), prompting them to form a corporation known as MAN Power Development Company to cater to their energy needs. More so, rather than reduce, the number of taxes payable by manufacturers across the country is 54 as

against 37 in 2014. Multiple taxation has sacked firms such as Matna Starch from Ondo State and continues to threaten others in various states. Also, policy inconsistency still remains a big issue. After promising exporters heaven on earth, the immediate past government suspended the Export Expansion Grant mid-way. RN Global and many other firms in Kano/Kaduna axis fell to the sledgehammer of this policy somersault. Moreover, results of survey conducted by MAN shows that the average interest rate banks charged manufacturers in the second half (H2) of 2017 was 23.05 percent as against 22.65 percent in first half (H1) of 2017 and 21.4 percent in H1 of 2016. Again, Ajaokuta Steel Complex is yet to be privatised and revived many years after, prompting manufacturers to seek steel inputs from abroad. If the complex were in operations, it would provide a big source of raw materials for steel makers and other manufacturers. “Currently, I am not sure those technologies at Ajaokuta are competitive in steel making. The world has moved on. What is required now is for the privatesector to get more and more involved in the downstream and the upstream segments in the steel business,” Raj Gupta, chairman, African Industries Group, a consortium of 12 companies, including six steel plants, told BusinessDay recently.

weak consumer demand, traffic gridlock on Lagos port roads and insecurity in some parts of the country, among others”. “Our recent maritime port feedback research finds that approximately 40 percent of businesses located around the Lagos ports’ communities have relocated to other areas, scaled down operations or completely shut down. This development has very huge adverse implications for job creation, tax revenue and real economic activities,” he said. He s a i d Ni g e r i a ha s managed to remain a robust economy while main-

taining a positive growth, with a large market abundant natural resources and a productive population, stressing that there is still room for more improvement. He advised that the government should establish an encouraging environment where entrepreneurs, small and medium enterprises can flourish with ease. He said the chamber has been able to embark on various courtesy visits, including to the top three citizens of the country comprising of the president, the vice president and the senate president.

ODINAKA ANUDU

he inability of governments at various levels to pay the desired attention to manufacturing is hurting the sector, with a number of factories barely existing. A large number of manufacturing firms are struggling today because federal and state governments continue to pay little attention to ageold problems facing manufacturers. In 2014, Procter&Gamble set up a $300million diaper line in Agbara, Ogun State, which was tapped as biggest US non-oil investment in Nigeria. Four years down the line, the company shut up, citing restructuring as its main reason. But those familiar with the company told BusinessDay that the company had to shut down its Agbara plant due to high production cost incurred at the plant. Poor road network and multiplicity of taxes are two age—old problems that are hurting manufacturers in Ogun State today, where P&G operated. Roads along Agbara/Igbesa axis are bad and the government has refused to build them, despite collecting billions in taxes from manufacturers. O bi Ezeude, CE O of Beloxxi’s Industries, complained on February 8 this year, during a factory commissioning, that poor state of roads in Agbara was hurting manufacturers as vehicles and company trucks of-

L-R Mope Abudu; Olusoji Oyawoye; Nura Kakira; Obiora Madu; Ify Osineme; Sonny Allison and Jacqueline Odiadi all Board Members of the Association of Outsourcing Professionals of Nigeria (AOPN) during the organisation swearing in of Obiora Madu (middle) at the new president recently in Lagos.

ten got stuck in the mud. Government has, ironically, asked the manufacturers to bear 40 percent of the cost, while it shoulders the rest. Also, ten to 11 years after high energy cost partly sent Michelin and Dunlop packing, the issue has remained a die-hard problem that defies solution to the Nigerian government. Power sector expenditure in the manufacturing sector has been on the rise since 2014/15. Manufacturers spent N51.35 billion on

alternative energy sources in the second quarter (H2) of 2017; N66.03 billion in the first half (H1) of 2017; N62.96 billion in H1 of 2016, and N69.99 billion in H2 of 2016, according to the Manufacturers Association of Nigeria (MAN). Average daily electricity supply in H1 of 2017 declined to five hours, from seven hours supplied in the corresponding period of 2016 and eight hours in the H2 of 2016. There was, however, a nine-hour average

power supply in the second half of 2017. “It is no more news that manufacturers in Nigeria currently self-generate as much as 13,000MW through alternative sources of energy in order to stay afloat. In fact, cost of alternative electricity generation alone constitutes about 40 percent of our production cost. With such high costs, made-in-Nigeria products will hardly be competitive,” Frank Jacobs, immediate past president of MAN, said at a special

LCCI urges FG, states to accelerate diversification Faminu Gbemi

he Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to encourage and accelerate the process of economic diversification in the country and reduce its reliance on a particular source of generating revenue in order to avoid crisis that can cripple economic development. Speaking at the 130th annual general meeting of the LCCI held in Lagos on Thursday, Babatunde Paul Ruwase, president

of LCCI , stated that data obtained from the National Bureau of Statistics showed that the economy grew by 1.5 percent in the second quarter of 2018, from the 1.95 percent gotten earlier in the first quarter. He explained that the data released show how delicate the Nigerian economy is and how urgent it is for the government to accelerate economic diversification process, considering that the oil market, which is the major revenue generating source, has been experiencing constant decline in prices from $86 per barrel to $60 per barrel. Ruwase said rapid

population growth rate of three percent can result into economic crisis if not well handled. He stated that interest rate remains high as commercial banks’ lending rates stay between 20 and 35 percent. Ruwase passed a message to the federal government using the 2019 World Bank ease of Doing Business report, which ranked Nigeria 146th position out of 190 countries assessed, signifying a decline from 145th position in 2018. “In 2018, businesses experienced frequent incidence of regulatory challenges, leading to increased

burde n on bu sine ss e s, higher cost of operation, waste of executive time and reputational consequences. These manifested in form of arbitrary fines and charges, sanctions and frequent summons of corporate executives by the National Assembly. The regulatory environment was a major source of distraction for many corporates during the outgoing year. It also adversely impacted the confidence of investors.” “We also had to contend with the usual constraints of the business environment. There was high interest rate, weak GDP growth,

BUSINESS DAY

Monday 10 December 2018

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BUSINESSINTELLIGENCE

BUSINESS DAY

In association with

The CEO as a leader – Getting it right

BISI ADEYEMI.

EO Selection is a major responsibility of the Board and it is imperative that the Board gets this right. Selecting the right CEO can be laborious and contentious. It is suggested the Board should first consider the leadership requirements for the role before considering the candidate capabilities. The following tips by Harry Jansen Kraemer Jnr. are useful in determining competencies: Self-Confidence: A leader that will be truly comfortable in his/her skin. Have clearly defined personal values, is confident about these and believes in themselves sufficiently to inspire others. Such a leader has no qualms about making mistakes and owning up to them rather than looking for who to blame. A self-confident leader

realizes that there will be brighter, quicker and more articulate people on their team and are happy to push them forward. Genuine Humility: Is the CEO approachable and relatable? Able to balance self-confidence and humility? Is not arrogant nor has a chip on his/her shoulder? Does the leader recognize that everyone on the team is important? Leadership comes with owning up to mistakes and giving others credit when they have earned it. Setting a Clear Direction: Devoid of any ambiguity, the Leader has to be able to set a clear direction for others to follow. This will entail listening to the team, getting them to buy into the vision and keeping it very simple. An Effective Communicator: Communication must be two-way. An effective leader will spend more time listening than talking. Ability to Motivate the Team: A great leader has to be passionate and full of energy and excitement that is transferable to the team. A lackluster leader will not inspire even the most talented team. Making things Happen: Ex-

ecution is key to strategy. A good leader should be able to execute – close enough to the action to ensure the business remains on track. So, whilst it is the CEO’s responsibility to envision, he or she should not be far removed from the grit. Courage to Deal with Crisis: Crisis is inevitable, and a great CEO will be proactive rather than reactive. Anticipate issues that could come up and have a great reflect. A clear articulation of the organizational values makes it easier to deal with crisis as they occur. Socially Responsible: Whilst Shareholder interest is key, a socially responsible leader will recognize that there are other stakeholders and that the interests of these have to be balanced. Finding the right balance between multiple stakeholder interests- employees, regulators, customers, community and shareholders is the hallmark of a socially responsible CEO. The performance of the Company is intricately linked to the CEO’s performance and inevitably, the CEO’s performance (or a lack thereof ) is

measured against the Company’s performance. Thus, when CEOs stumble or fall, they pull their companies down with them. Having appointed the right CEO, the Board should clearly define key performance indicators (not only financial performance), approval limits and reporting expectations amongst others. Assuring CEO autonomy should not be an excuse to limit performance appraisal to the company’s financial performance. As the day-to-day running of the Company is delegated by the Board to the CEO, it is imperative that the Board conducts a regular evaluation of the CEO’s performance to ensure that she remains on course in actualizing the Board’s mandate. The evaluation of the CEO helps to create a balance between a relationship of trust and support, with one of accountability. A bi-annual rather than an annual appraisal is recommended as this would give the Board real time assessment of the CEO’s effectiveness and by implication the performance of the Company in general. It is also recommended that the

evaluation process be handled by the Governance Committee (also called the Nomination or Remuneration Committee) made up of a majority of Independent Directors and led by the Board Chairman. This Committee will have the responsibility of defining the KPIs and agreeing them with the CEO. Feedback from the CEO performance evaluation process is important to the CEO as well as the Board. Through the evaluation process the CEO gains a clear understanding of the Board’s expectations of his/her role, gets an opportunity to clarify any misconceptions around performance and receives welldeserved and positive feedback on accomplishments. The CEO also receives constructive feedback in areas that require improvement. The evaluation process also provides a basis for compensation decisions.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.

2019 DCSL OPEN ENROLMENT TRAINING CALENDAR

BUSINESS DAY

Stocks

Currencies

Commodities

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Rates + Bonds

Economics

Funds

Week Ahead

Monday 10 December 2018

Watchlist

ECONOMY

Listed insurers premium hits five year high of N172.62 billion in Q3

P.E

SHORT TAKES $8.134 billion In August, the central bank ordered MTN and its banks to bring $8.134 billion back into Nigeria, sending the company’s shares plummeting. The regulator alleged the firm had sent the funds abroad in breach of foreign exchange regulations.

14 percent Nigeria’s central bank kept its main interest rate at 14 percent on Thursday, its governor Godwin Emefiele said.

25 years

BALA AUGIE

isted insurers’ gross premium income has been rising steadily since 2014 despite operating in a difficult economic and political condition, as the industry continues to play catch-up to some sub-Saharan African countries. The charts show the cumulative gross premium income (GPI) of 19 largest insurers listed on the floor of the bourse increased by 11.54 percent to N172.76 billion in September 2018 from N152.35 billion as at September 2017, according

data compiled by Markets and Intelligence. But the 11.54 percent growth in the period under review is lower than the 22.23 percent recorded in the third quarter of 2017 - the country existed recession in the third and fourth quarter of 2017- while it is higher than the 8.06 percent and 6.57 percent recorded in the 2016 and 2015 financial years. A breakdown of the figure shows Aiico Insurance’s GPI was up 15.97 percent to N25.92 billion in September 2018, from N22.35 billion the previous year. AxA Mansard Insurance’s GPI grew by 25.74 percent to N24.711 billion

in the period under review from N19.65 billion the previous year. Continental Reinsurance’s GPI has been increasing since 2014. Revenue was up 21.33 percent to N26 billion in the period under review as against N21.43 billion. Consolidated Hall Mark’s GPI was up 19.14 percent to N5.20 billion in September 2018 from N4.30 billion the previous year. Despite the improvement in revenue among listed insurers, the country’s insurance penetration as a percent of GDP is just 0.27 percent, a figure that is abysmally poor when compared with the figures of six

Sub-Saharan countries, according to a 2016 insurance sector report by PricewaterhouseCoopers “African insurance industry poised for growth” For instance, South Africa insurance penetration to the economy is 14.28 percent; Namibia; 6.87 percent, Mauritius; 6.40 percent, Morocco; 3.48 percent, Kenya 2.80 percent, and Tunisia 1.97 percent, according to PWC. South Africa insurance market has been buoyed by high literacy level, a burgeoning middle class that crave for consumption, and the introduction of innovative products that meets the needs of consumers. Nigeria’s insurance in-

dustry is fraught with challenges such as high poverty rates, lack of innovation, lack of trust, poor risk management, which are major impediment to growth of the industry. An industry expert who didn’t want his name mentioned said that government has been lethargic in enforcing the compulsory insurance, which is why premium income has not been growing at a blazing speed. Experts also added that for insurers operating in Nigeria to achieve exponential growth, they will have to find innovative and cost effective ways to increase penetration.

Nigeria emerged from its first recession in 25 years in 2017 but continues to suffer from sluggish growth and high inflation.

1.50 percent Economic growth dipped to 1.50 percent in the second quarter, continuing a slowing trend that began in the first quarter.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: SAMUEL IDUH )

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 Email the BMI team patrick.atuanya@businessdayonline.com

Monday 10 December 2018

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BUSINESS DAY

Markets Intelligence

Zenith Bank dividend yield highest compared to peers Z MICHEAL ANI

enith bank shares have the highest dividend yield compared to other industry peers, BusinessDay calculation shows. BusinessDay took an industry analysis on the dividend yield of the five Tier 1 banks -Zenith, United Bank For Africa (GTBank), Guar-

antee Trust Bank (GTBank), Access Bank and First Bank Holding) that are listed on the Nigerian stock exchange. Key findings from the survey has shown that, of the five banks, Zenith bank has a dividend yield of 11.68 percent, this compares with UBA; 11.33 percent, Access; 8.72 percent, GTB; 7.74 percent, and FBN Holdings, 3.19 per-

cent. “Despite the headwinds in the macroeconomic environment amidst tough operating conditions, Zenith bank has shown resilience and delivered impressive returns to shareholders,” said Gbolahan Ologunro, an equity research analyst at Lagosbased CSL Stockbrokers. “The fundamentals of the

tier-one lender remain strong underpinned by its healthy asset quality, strong capital buffer and stringent risk assessment framework. These, in conjunction with its huge asset base have enabled it to consistently pay dividends to shareholders over the years”. “Furthermore, we estimate a full year 2018 DPS of N2.60, which translates to a dividend

yield of 11.2 percent based on its last closing price of N23.20 as of close of trading on Friday. In our view, despite the bearish trend in the nation’s bourse, the dividend yield (11.2) percent on the stock is quite attractive, thus it presents a good opportunity for investors interested in cash flows arising from dividend payment,” said Ologunro.

Two Nigerian Banks market cap fall below cost of national banking license … Analysts say these banks could be acquisition targets for bigger banks IFEANYI JOHN

his year, two Nigerian banks have seen their market capitalization on the Nigeria Stock Exchange fall below the minimum capital base of N25 billion required to own a national banking license in Nigeria. The banks are Unity Bank (₦ 8.06 billion) and Wema Bank (N 21.2 billion) with a combined market capitalization of just ₦ 29.26 billion, less than 10 percent of the market capitalization of Tier 2 lender Stanbic IBTC which closed the day with a market capitalization of ₦ 505 billion on Thursday. The drop in the market capitalization has no effect on the banking operations or the securities of their license. In 2016, Wema Bank profit after tax fell from ₦ 2.56 billion to ₦ 2.25 billion in 2017 despite the economic recovery that occurred in 2017. However, analysts told BusinessDay that the bank seems to be on track to post profit after tax in the region of N3 billion after declaring H1 2018 profit

after tax at N1.56 billion. The stock has taken a severe beating this year like many other bank stocks, collapsing from a year high of N1.54 in February to N0.55 Friday, signifying a drop of around 66.2 percent from its year high. After a prolonged delay in the release of financial results, Unity Bank finally released its 2017 annual report along with quarterly financial results in 2018 in the third quarter this year. Third quarter results showed that Unity Bank’s profit after tax declined by 76.1 percent from ₦ 2.44 billion in Q3 2017 to ₦ 585 million in Q3 2018. Low profitability and poor asset quality continue to be a drag on the tier 3 lenders as it currents carries a negative book value of -₦ 242.3 billion. Unity Bank is the only bank on NSE with a negative book value. Earlier in March, private equity firm, Milost Global Inc disclosed their interest in acquiring Unity Bank in a $1 billion offer withdrew their interest in the bank in very controversial circumstances.

After the deal failed, Unity Bank sold about ₦ 400 billion worth of its bad debt to Frontier Capital Alternative Asset, a unit of Lagos-based advisory and investment firm, Frontier Capital Group. In a n i nt e r v i e w w i t h

Bloomberg, Chief Financial Officer of Unity Bank, Ebenezer Kolawole said “the disposal to Frontier Capital Alternative Asset Limited of the toxic assets cut the ratio of non-performing loans to near zero from almost 50 per cent

and helped to shore up Unity Bank’s liquidity.” The bank’s stock which rallied to ₦ 1.92 kobo in February during talks of capital injection by Milost has now dropped to 69 kobo as at Friday.

BUSINESS DAY

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Monday 10 December 2018

Markets Intelligence

9 bank director’s emoluments/salaries hit N4.5 billion in Q3 DAVID IBIDAPO

usinessDay analysis of emoluments received by 9 Nigerian banks’ directors for the period of nine months ended 2018 amounted to N4.5 billion. A total of nine banks were analysed to include Guarantee Trust Bank (GTBank), Zenith Bank, Diamond Bank, First Bank, Wema Bank, Sterling Bank, Stanbic IBTC, Union Bank and Fidelity bank. During the period, Zenith’s Directors’ emolument increased by 67 percent to N1 billion in September 2018 from N605 million as at September 2017. Stanbic IBTC and Wema Bank recorded an increase in directors’ emolument by 16 percent, and Wema to N338.20 billion and N23.35 billion respectively. Some banks recorded growth in their net profit between 2017 and 2018, which may help justify increase in director’s emolument. First bank on the other hand recorded a slight decline in its net profit by 0.23 percent to N44.9 billion from N45 billion in in September 2017. During the same period, director’s emolument declined by 9 percent to N1.8 billion from N2.03 billion, accounting for 4.1 percent of total net profit for the period. However, some banks recorded

impressive growth in net profit, but director’s emoluments declined during the period. These banks included GTBank, Sterling Bank, Union Bank and Fidelity bank. GTBank recorded the biggest decline amongst others after it

dipped 24 percent. While Union Bank declined 20 percent, Fedility Bank declined 4 percent, Sterling Bank dipped 3 percent respectively. Furthermore, amongst deposit money banks that grew both their net profits and emoluments dur-

ing period under study, Wema bank plc recorded the lowest emolument growth. Wema Bank grew its net profit the highest by 73 percent from N1.5 billion to N2.6 billion. Meanwhile director’s emolument recorded for the period grew slightly

by 4 percent. Stanbic Ibtc came second on the chart recording a net profit growth of 59 percent to N59.7 billion from N37.6 billion. Meanwhile, director’s emolument increased by 16 percent to N338 million from N292 million.

Opec agrees to cut output by 1.2m barrels a day

Trade war concerns keep US stocks under pressure

Brent crude rallies 5% after oil cartel defies Trump’s call to keep prices low

lobal stocks put in mixed performances at the end of a turbulent week dominated by uncertainty over the US-China trade dispute and mounting concerns about global growth. Wall Street proved unable to hold its initial gains, even as energy stocks rallied strongly in tandem with oil prices after news that Opec and its partners had agreed to lower production. But European and Asian stock indices mostly ended firmer — albeit well off the day’s highs — as buyers stepped back in after some savage falls on Thursday. Those were largely driven by heightened worries about US-China relations following the arrest of the chief financial officer of Huawei, on charges of violating US sanctions. The arrest came just days after an apparent trade war “ceasefire” was agreed by the US and China at the G20 meeting in Argentina. “While the Huawei case was clearly a blow, I believe [presidents} Xi and Trump will aim to separate the Trade War from the Tech War,” said Allan von Mehren, chief analyst at Danske Bank. “On the Chinese side, the challenge is that the Huawei case puts domestic pressure on [president] Xi not to be too soft on the US. But I think he will go for reaching a trade deal as the Trade War hurts the Chinese economy, and that he will fight the Tech War with other tools.” With such a focus on the trade dispute this week, yesterday’s US jobs report had a relatively muted impact, although the dollar drifted lower. Nonfarm payrolls rose by 155,000 last month, some way below the consensus forecast, and down from October’s 237,000 increase. The jobless rate held steady at just

pec and its oil producing allies have agreed to cut production by 1.2m barrels a day, defying Donald Trump’s calls to keep output high and sending crude prices rocketing 5 per cent higher. The deal was hammered out at the Opec secretariat in Vienna on Friday following two days of fractious talks, with Saudi Arabia, Opec’s largest producer and de facto leader, pushing as many members as possible to join the cut. The Saudi pressure comes despite the US president’s exhortations for Riyadh to maintain low prices, which Mr Trump has likened to “a big tax cut” for the world, and reflects the kingdom’s need for higher oil revenues to meet its ambitious domestic spending plans. Brent crude, the international benchmark, jumped as much as 5 per cent to above $63 a barrel, while US benchmark West Texas Intermediate gained 4.3 per cent to $54 a barrel. Khalid al-Falih, Saudi Arabia’s energy minister, insisted the reduction, which came after 48 hours during which negotiators warned a deal may be unreachable, would help the US despite Mr Trump’s objections. “The biggest oil and gas producer is the United States,” Mr Falih said. “[US shale] producers are probably breathing a sigh of relief.” Opec delegates said the deal was aimed at damping concerns about an emerging supply glut that has pushed prices 30 per cent lower in the past two months. Ann-Louise Hittle at consul-

tancy Wood Mackenzie said the cuts, which are bigger than some analysts had expected, would “help tighten the market by the second half of next year.” The higher volume cut agreed is in line with what traders and analysts said would be necessary to balance supplies with demand next year. The cuts will be taken from October production levels and will last for six months. The breakdown between each country will not be disclosed to the oil market, delegates said, in a sign of the tensions in the alliance. One delegate said the 1.2m b/d cut would be split 800,000 b/d for Opec members and 400,000 for countries outside the cartel, including Russia, which have allied with Opec since 2016. Iran, Saudi Arabia’s regional rival, was initially asked to make a “symbolic” cut, even though its exports have fallen due to USimposed sanctions last month. But it eventually won an exemption from the broad agreement. Libya and Venezuela, which have seen drastic fall-offs in production due to internal strife, were also granted an exclusion. Given the uncertainty around the troubled production of smaller countries, such as Iran and Venezuela, Gulf delegates privately say the curbs will ultimately be bigger than 1.2m b/d, with Saudi Arabia bearing a large portion of the reduction. Russian energy minister Alexander Novak, who was seen as key to clinching a deal and who met with his Saudi and Iranian counterparts

on Friday morning, said it was important for producers to send a “strong signal” to the market. “[We have] shown that we can react to oil market challenges both on the way up and the way down,” Mr Novak said of the joint cuts that have been in place since 2016. Mr Novak said the talks were “long and difficult”, partly as a result of a geopolitical climate that was more intense than prior years, including sanctions against big producers and trade tensions. Nigerian oil minister Emmanuel Ibe Kachikwu said Mr Trump should be “happy” the countries had reached a deal, arguing higher prices would be good for the world economy and the US Treasury, which would see more revenue from oil company taxes. Saudi Arabia and Russia have ramped up production to record levels in recent months in response to demands from the US to keep output high and prices low as it reimposed sanctions on Iran’s energy exports. “Opec is an independent organisation that must take care of its members interests but also try and provide stable markets,” said Thamir Ghadhban, Iraq’s oil minister when asked if the deal showed Mr Trump could not dictate to Opec. He added that Opec was a “non-political” organisation. Washington’s decision in November to issue waivers to many buyers of Iranian oil has meant output from global producers, including fast-growing shale production from the US, has overwhelmed demand.

Oil jumps after producers agree output cut; payrolls report has muted impact

3.7 per cent, while average hourly earnings increased by 0.2 per cent in November, keeping the annual growth rate unchanged at 3.1 per cent. “Today’s job report is consistent with what the Federal Reserve is looking for: steady job gains, further downward pressure on the unemployment rate leading to modest wage pressures,” said economists at BoA-Merrill Lynch, “This should leave the [Federal Open Market] Committee comfortable with raising rates at the December meeting and shift towards greater data dependence as labour market conditions begin to cool to more sustainable levels.” Indeed, markets this week increasingly moved to factor in the possibility of the Fed pausing its rate-rising cycle next year in response to an expected slowdown in global economic growth. Such concerns helped push the yields on two- and three-year US Treasuries above that on the five-year note this week. The inversion was viewed by many as warning of an impending economic slowdown. The gap between two- and 10-year Treasury yields, a more powerful indicator of recession, briefly fell below 10 basis points to the lowest level in 11 years. “The bond market is sending some clear signals here about lower future growth and inflation expectations,” said Katie Nixon at Northern Trust. “We think the Fed will take notice.” A volatile week for oil markets ended with sharp price gains after Opec and its allies agreed to cut crude output by 1.2m barrels a day, in a bid to curb concerns about an emerging glut of supplies. Brent rose as much as 6.1 per cent before trimming its advance, and was heading for a hefty gain over the week.

BUSINESS DAY

Monday 10 December 2018

Start-Up Digest

In association with

Keji Ogunjobi: Emerging cleaning entrepreneur ODINAKA ANUDU

eji Olufemi Ogunjobi is the chief executive officer of Easiclean Top Managers, which focuses on general cleaning and fumigation services. Keji started this business in 2013 and was motivated by her husband, mother and determination not to be idle. “I did not want to be idle,” she says. “My mother and my husband also played big roles. I just left the corporate world and also just relocated from Port Harcourt to Lagos State, and I thought of what to do that will not take my time and will also give me money and satisfaction,” Keji explains. The entrepreneur believes in starting small and growing big. This prompted her to start by meeting with different people who were in the business. From them, she learnt the art of cleaning. As someone with a background in marketing, she was able to source jobs for them before launching hers. “It is a wide spectrum business with so many horizons and if you channel your energy right, it is a profitable business,” she discloses. She initially started without an office. But today, she has a physical office in Nigeria’s commercial city, Lagos. With five permanent staff and other ad hoc members in her employ, Keji is redefining the postconstruction cleaning services.

Keji Ogunjobi

“Having weighed my options over the years, I realised that the business is a bit risk-free. Some people were also security conscious, especially for their female children. So, I narrowed it down to post-construction where my team and I will just go to the site, clean up and go afterwards,” she elucidates. The entrepreneur started with the commission got from a job. “In this business, money is not a problem. It is your ability to get people’s approval. Social media can also contribute, but, initially when I started, I had to approach people and convince

them. I later had to narrow it down to post-construction cleaning and then I went to sites to hand out my flyers and I followed up,” she says. For her, economic lull does not, in any way, affect this business. This is because people will always build houses regardless of the economic situation. “Even if there is war, people will still build,” she quips. Keji is a wife and mother. Many may wonder how she combines business with family. The entrepreneur provides an explanation. “Work is work, no matter what. People try to leverage other peo-

ple’s time and knowledge. At times, when a job is demanding and it affects my children, I ask my friends or family to help.” She further says that Lagos is a land of opportunities. For her, anyone who does not work will not eat in the mega city. “But once you are known, jobs will look for you.” She is a participant of the Lagos Chamber of Commerce and Industry (LCCI) Mentoring Programme, which turned out to be her breakthrough. “LCCI was my breakthrough. It made me aware of some facts like having my business card always; the importance of accountability, finance management, advertisement, and proper business structure,” she says. “LCCI through its mentorship has helped a lot. They taught us what percentage of tax to pay and also how to pay it.” Where will the entrepreneur like to be in the next five years? She says her next move is to collaborate with real estate owners and companies. If given an option to choose between being an entrepreneur and working for someone, Keji says she will always want to be an entrepreneur. “I have always been an entrepreneur, even while in the corporate world. I am a cleaner, designer, stylist, and I sell fabrics.” She will also be happy if all her children eventually become entrepreneurs. “I would love them to become entrepreneurs. That is why I am

teaching them at young age to know the value of money and work for it.” Like other entrepreneurs in the country, Keji faces some daunting challenges. “The biggest challenge is visibility,” she says. “I want the brand to be well known.” She tells Start-Up Digest that she is able to handle any amount of contract in her industry. She is equally following up with changes taking place in her industry in terms chemicals and their applications. When asked to evaluate her growth since starting, the entrepreneur says her margins have grown 300 percent. Many entrepreneurs in the country have mentors. Hers is Ibukun Awosika, chairman of FirstBank of Nigeria, motivational speaker and business magnate. She has a piece of advice for her younger self. “Keep your eyes on the prize. With the right information and right steps, you will get your destination.” She tells those willing to start the business to go for proper training and attend symposiums that will help them grow their business. For unemployed Nigerian youths, she counsels: “A Chinese man once said that dollars are on the street of Lagos. If you are determined and you want to be different, do not wait for a white collar job. Start whatever you can, but just ensure you get busy.”

Develop strong foundation, leverage technology, TPLDA urges SMEs Gbemi Faminu

wners of small- and medium-scale enterprises (SMEs) have been advised to leverage technology while creating a strong foundation for growth. The advice was given at the maiden edition of the Phoenix Learning and Developmental Academy (TPLDA) Business Master Class, where Olanrewaju Babatunde Aduloju, lead consultant and chief executive officer, told business owners and youths to set their priorities right and make use of the social media to develop themselves and their business. Also present as a speaker was Wonu Okoye, chief executive officer of Big Startup, a business coaching platform, who stated that Nigerian youths were enterprising, innovative and hardworking. Okoye stressed that there was a need to grant everyone an opportunity to be successful, advising

all unemployed youths to get busy and not stay idle. She urged them to read widely, make research about various things and develop people network. She further encouraged them to maximise and take advantage

of all media platforms, most especially the social media. She stressed the need to seek internship at organisations and learn. Using herself as an example, she said that she was initially

scared of failing but overtime learnt from each failure, which eventually paid off. On the ease of doing business in Nigeria, Aduloju stated that Nigerians were hardworking but limited by various factors, majorly finance. He cited an example with the difficulty encountered in obtaining loans from banks to set up a business and the high rate of interest attached. Making reference to the ongoing promo of business registration with the sum of N5, 000 in place of the regular N10, 000 for a period of 90 days due to expire on the 31st of December 2018, he commended the government but said that more should be done to improve and ease the business environment, especially for SMEs. In order to improve the ability of trained experts in various sectors of the country’s economy, he further advised the federal government to develop the available technical schools and make necessary contributions towards the advancement of the educa-

tional sector in order to produce more experts and a competent workforce for the country. The TPLDA Business Master class is a one-day interactive forum aimed at helping start-ups and business owners overcome challenges facing their business. The TPLDA was established in 2010 and started full operations in 2015.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

BUSINESS DAY

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Start-Up Digest

Steven and Adeola: Leveraging technology to produce beautiful imagery Josephine Okojie

picture is worth a thousand words. As a result, lots of young people in Nigeria are going into the business of photography. With the high numbers of social and business events taking place in the country, lots of entrepreneurs now leverage technology to build rich and diverse collection of imagery for customers. Let us look at two of them. Adeola Abdulrasheed Adeola Abdulrasheed is the founder of Cameraman.ng, a start-up that connects users to professional photographers and videographers within their locality. He is a UI x UX designer and photographer. Adeola was inspired to establish Cameraman.ng out of his passion for capturing memories. While still an undergraduate, he built D’AwareImages to capture existing memories in school. As a result of its success, he was inspired to venture into photography. “I started and successfully built D’AwareImages while still in school because I love to capture memories.0 This developed my interest in photography,” he tells Start-Up Digest. After his tertiary education, Adeola picked up a job in photography. He succeeded in acquiring skills, rompting him to establish Cameraman.ng in 2017. The graphics designer started his business with N200, 000, an amount he was able to raise from family and friends. After few months of starting, he won €1000 in the Co-Creation Hub Next Economy Acceleration Programme challenge. The Yaba Tech graduate tells Start-Up-Digest that he used the money to further expand the business and develop its scope in the Nigerian photography market. The young entrepreneur says that despite the large numbers of already established talents in the country’s photography business, Cameraman.ng has been able to create a niche market for itself by leveraging technology, stating that the business has continued to grow since starting. “We outsmart our competitors by leveraging technology to deliver photogra-

Adeola Abdulrasheed

phy services with the fast automated booking system and affordable packages for all categories of customers using reliable professional photographers and videographer,” the young entrepreneur says. Speaking on how the platform connects users to photographers and videographers across the country with just a click, Adeola says, “Cameraman.ng instantly matches you with professional photographers and videographers with just a few clicks around your locality.” “We have made the platform easy and affordable to users who are willing to capture and record every beautiful moment of their events,” he explains. On how the photographers and videographers are selected by the organisation, he says, “For the photographers and videographers, we have created a form that allows us to vet them and know who is fit for the platform because we have pledged to give our users the very best. We also invite them to a physical meeting to get a better knowledge of who they are and their personalities.” Answering questions on the challenges confronting the business, he says that funding remains the major challenge confronting the business, noting that a lot of youths with entrepreneurial skills are limited because of the absence of funds to see their ideas to fruition.

Steven Nwadike

He adds that the country’s huge infrastructural gap is also another challenge facing his business, urging the government to provide key infrastructure such as power, good road network, good and affordable office spaces and forums for learning and collaboration, especially for start-ups. Adeola further says that his business plans to expand its solutions across the continent. “We are all about capturing irreplaceable moments. Of course, everyone has a day in their life they want to capture forever, so we want to capture it for them at a great price.” The entrepreneur believes he currently works with an ‘amazing’ team that has brought the business to its current position, among whom are Ademosu Adetutu, who has seven years’ experience in brand design; Abdulazeez with vast knowledge in technology, and Bosun Tijan,i who is their mentor. On his advice to other entrepreneurs, Adeola says, “Your mind is a soil: what you plant grows. So, always push yourself to the limit and you would realise you can still push further. Never stop; keep on keeping on.” Steven Nwadike Steven Nwadike is a cofounder of Tringoo, a technology start-up that connects users to vetted professional photographers. Steven, who spent his

early years in Aba, Nigeria’s entrepreneurship hub, was inspired by his parents and his environment to become an entrepreneur at an early age. “I have always been keen and interested in business from my early childhood. I used to accompany my dad to his shop in Ariaria International Market every Saturdays. I also assisted my mum in managing her restaurant after returning from school,” Steven says. While an undergraduate, Steven co-founded his first tech business with other partners to provide digital solutions to students on campus. After graduation, he took entrepreneurship classes at Seedstarts Academy in Lagos to deepen his entrepreneurial skills. Upon graduation from his entrepreneurship class, he studied the business model of Uber and decided

‘

I have always been keen and interested in business from my early childhood. I used to accompany my dad to his shop in Ariaria International Market every Saturdays

’

to replicate it on a different market. This prompted him and some friends to establish Tringoo in 2018. “I started the business alongside three of my founding team: Zenith Wogwugwu, Dominion Effiong and Ehma Ugbogo in January 2018,” the Computer Science graduate says. Steven tells Start-UpDigest that he started his business with the money he and his cofounders got from their personal savings. He says that after two months of operation, Tringoo got a grant of N250, 000 from the British Council, an amount that has been used to further grow the business. Cu r re n t l y , t h e f o u r co-founders are building the business with a bootstrapped budget. Since starting, the business has grown in its six months of operation. “We are now having more jobs weekly compare to the jobs we used to have before. Ninety percent of the jobs we get are referrals from clients who have used our platform before,” he says. The young entrepreneur says that the biggest challenge confronting his business is the country’s difficult operating environment. He notes that huge infrastructural gaps have continued to drive the cost of production, making it difficult for businesses to survive. He also identifies lack of mentorship as a major challenge affecting his business, saying that most of the

people he has approached for mentorship are too busy to operate in that space. Steven further points at lack of adequate finance as one of the big challenges hurting his business. “Nigerian investors expect early-stage start-ups to earn six digits revenue monthly before they invest in them. Most of the investors do not want to take a risk with startups until such businesses have attained massive traction,” he states. He calls on the government to create an enabling environment to increase the survival rates of businesses in the country. He urges the government to make huge investments in the country’s power sector, noting that no economy can grow with adequate power supply and infrastructural facilities. Steven also urges the Federal Government to provide more funding for entrepreneurship, noting that a lot of ideas are yet to be realised owing to inadequate finance. Answering questions on some of the business expansion plans, Steven says, “We are planning to have a physical presence in five major cities in Nigeria by next year and then in two years’ time expand to Ghana, Kenya and South Africa. With regard to product development, we are already building and testing some key features that will benefit both the photographers on our platform and our customers.” He explains that the tech sector can help in diversifying the country’s economy. “The technology industry is already playing a major role. Many technology hubs are springing up in the country and the tech ecosystem is growing tremendously. “Technology is no longer acting as an enabler but now as a major sector that has the capacity to turn the Nigerian economic situation around. A lot of foreign investors are already investing in some big start-ups here in Nigeria. This is a sign that the technology space is going to play a key role in the diversification of the Nigerian economy,” he further says. On his advice to younger entrepreneurs, he says, “Execution is everything. Always keep building, test it fast in the market, learn and re-strategise.” “Seek partnerships from the right people. It is critical to the success of any business,” he adds.

BUSINESS DAY

Monday 10 December 2018

Start-Up Digest 12 Nigerian start-ups win big in Google Impact Challenge in Africa Jonathan Aderoju

t an event held in Lagos, Johannesburg and Nairobi, Google announced the winners of the first Google impact Challenge in Africa. This comes as partial completion of Google’s commitment to grant a total of $20 million that will be spread over the next five years to non-profits that are working to improve lives across Africa. Each entrant pitched its enterprise to an independent judging panel, which voted on the winners. The results of the public vote determined the people’s choice winner. In each of the three participating countries, the top four winners will receive $250,000 each. Three of these winners were selected by the panel of independent judges; one winner was selected through a public vote (people’s choice). The remaining eight runner-ups will receive $125,000. At the Lagos event, Nigeria had a total of 12 winners and runners-up, which consists of the judges and

people’s choice. The Cece Yara Foundation won in the judge’s category. This enterprise provides a safe platform for

free access to healing and justice, for children experiencing sexual abuse in Nigeria. HelpMum was also on the

HOPE MOSES-ASHIKE

...to double number of beneficiaries in 2018

roject Enable Africa, a Nigerian civic organisation, has trained 20 people living with disabilities in Information Telecommunication Communication (ICT) to promote their rights through the acquisition of technology related skills and employment opportunities. The fellows who were trained on web design and programing and were admitted as fellows in commemoration of the 2018 International Day of Persons with Disabilities. “Last year, we set up and launched a disability friendly ICT hub and basically what we have done is to put resources that is total inclusive and accessible in support of the US consulate and Access Bank,” Olusola Owonikoko, project director, Project Enable said. “We understand that the society we live in, people do not deliberately go out of their way to make

resources available for persons with disabilities and that is why we have chosen this population to work with. “We have trained 20 persons with disabilities that have been admitted as fellows. Now we have won the Google Impact Challenge Funds Competition in Nigeria where we have more access to resources and this will enable us move into a bigger hub to train more people,” Owonikoko said. He noted that the 20 fellows will have the opportunity for them to become entrepreneurs or take up employment in corporate organisations. He added that with the $250,000 won from the Google Impact Challenge, the organisation will increase its numbers of ICT hub for people with disabilities to other states of the federation. Also, speaking during the event, Russell Brooks, consulate public affairs officer, U.S. Consulate, who was representing John Bray, US Consulate General, explained that

preneurs by 2025. Also on the list was Bunmi Adedayo Foundation, which offers continuous in-service training for public primary school teachers. Solar Sister Nigeria was equally there. It empowers women entrepreneurs from underserved communities to build clean energy businesses. Rural Development and Reformation Foundation (RUDERF) was among the winners. It economically empowers females to become skilled artisans, utilising creative recycling technology as a major tool. Also in it was the Roothub Tech 101, which has a training programme to equip disadvantaged youths in rural areas of Nigeria with digital skills. Seed Tracker – IITA, which is a digital app to enhance quality seed production and access to seed markets was also part of the wining team. The Nigerian event was graced by the wife of the Vice-President of Nigeria, Dolapo Osinbajo, who is a patron of Google Impact Challenge in Nigeria.

Nigerian professionals to sponsor SMEs for IATF Egypt

Project Enable Africa trains 20 disabled entrepreneurs in ICT Josephine Okojie

judge’s category. It uses low-cost innovations and the power of mobile technology to tackle maternal and infant mortality in underserved and remote areas in Nigeria Project Enable Africa was likewise on the category. It promotes access of persons with disabilities and their caregivers to ICT skills and opportunities. In the people’s choice category, there was Vetsark, a data science technology that protects crops and livestock from pests and diseases. For the runner-ups ($125k each), there was BudgIT Foundation, which raises a community of active citizens that track and monitor government projects in their communities to ensure quality service delivery. There was also LearnFactory Nigeria, which makes Education Accessible, Affordable, Engaging and Delightful for all kids through technology and borderless classrooms. The Junior Achievement Nigeria was also part of it. It offers entrepreneurship and digital skills training for secondary school students to create 10,000 young digital entre-

the United States, as part of its foreign policy, works to remove barriers and create a world in which disabled people enjoy dignity and full inclusion. According to him, promoting disability rights is an integral part of the promotion of human rights. “In pursuing diplomacy that is inclusive and empowering of persons with disabilities, the United States opposes discrimination against persons with disabilities everywhere and in all its forms. If we permit anyone in our society to be accorded less than their full human rights, we are all diminished as a result,” Brooks stated. At the event, Joe Okei-Odumakin rights activist and President of Women Arise, and Omobolanle Victor-Laniyan Access Bank’s head of sustainability, emphasised the importance of the full and equal participation of persons with disabilities in all spheres of society. Project Enable Africa announced a second cohort that will be trained next year.

he Association of Professional Nigerians in Egypt (APNEG) has announced sponsorship of four Nigerian small businesses to participate in the inaugural Intra-African Trade Fair (IATF) taking place in Cairo, Egypt from 11 to 17 December. The trade fair, which is being organised by the African ExportImport Bank (Afreximbank), in collaboration with the African Union Commission, and hosted by Egypt, has attracted more than 1,000 registered exhibitors from 41 countries and is expected to be attended by more than 70,000 visitors. APNEG President Obi Emekekwue said that the association selected the four growing Nigerian companies - Clothing Africana, Proach Shoes, Shoeplanet Multi Concepts Limited and Renyam Nigeria Company – as the beneficiaries of the sponsorship after a competitive process that involved extensive review of the company profiles and products by members

of APNEG. He said that the sponsorship would cover the travel and accommodation costs of representatives of the companies for their travel from Nigeria to Egypt to participate in the trade fair as well as the cost of providing them with exhibition booths. Emekekwue said that the decision to sponsor the small businesses to the trade fair was part of APNEG’s commitment to fostering improved economic ties between Nigeria and Egypt, noting that the participation would expose Nigerian products to the Egyptian market and would enable the small businesses to make useful contacts. Proach Shoes manufactures high quality made-in-Nigeria shoes while Renyam Nigeria Company specialises in agricultural products, including ‘acha’ (hungry rice), honey, livestock, beans, maize, millet, and vegetables. Clothing Africana is a fashion and styling outfit based in Lagos while Shoe Planet Multi Concepts Limited is a madein-Nigeria designer, producer and marketer of high quality bags, shoes and other fashion-related products.

Union Bank deepens SMEs capacity on sales, accounting ANTHONIA OBOKOH

nion Bank of Nigerian Plc recently concluded a series of business seminars for Small and Medium scale Enterprises (SMEs) as part of its efforts to support the growth of small business operators in the country.

The seminars took place in seven locations across the country including Aba, Lagos, Anambra, Kano, Kaduna, Abuja and Oyo. In a statement made available to BusinessDay, the sessions themed ‘Managing a successful small Business’ was designed to provide practical knowledge and guidance in addressing challenges small businesses face in Nigeria.

The workshops included modules on sales and marketing, governance, succession planning and capacity building. In addition, attendees were equipped with relevant digital marketing and accounting skills to enable them compete favourably in the Nigerian marketplace. Paul Aseme, head of retail segments, Union Bank, said the

bank’s focus is to provide support for SMEs, while highlighting the role of small and medium scale enterprises in boosting a nation’s economy. “Union Bank has been known for its contribution to the growth of Nigerian businesses. Recognising the role of SMEs in driving Nigeria’s economic growth, these seminars were organised to equip

business owners with the knowledge and skills they require to establish a strong foundation for their business, widen their exposure and expand their business connections,” Aseme said. Participants who attended the seminars appreciated the bank for the free training which they stated is sure to boost their businesses and the SME sector as a whole.

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Monday 10 December 2018

In association with

Is employee engagement just a reflection of personality? DAN SCHAWBEL

o s t people would like to have a job, a boss and a workplace they can engage with, as well as work that gives them a sense of purpose. But how much of engagement is actually just personality? A recent meta-analysis provides some much needed datadriven answers. Although the authors examined only the impact of personality on engagement — without considering the known contextual influences on it — their results were rather staggering: Almost 50% of the variability in engagement could be

predicted by people’s personality. In particular by four traits: positive affect, proactivity, conscientiousness and extroversion. In combination, these traits represent some of the core ingredients of emotional intelligence and resilience. So if you want an engaged workforce, perhaps your best bet is to hire people who have an “engagable” personality? There are four important caveats to consider: For starters, being more resilient to bad or incompetent management may be helpful for an individual employee’s well-being, but it can be damaging for the wider performance of the organization. Frustrated employees are often a

warning sign of broader managerial and leadership issues that need to be addressed. Second, at least half of “engagement” still comes from contextual factors about the employees’

work; issues or experiences that are common to all employees in an organization. So while one employee’s opinion might be heavily biased by the personality of that individual, a collection

of views (like those often captured in organizational surveys) are more representative of the shared issues and challenges that people face. Third, the most creative people in your organization are probably more cynical, skeptical and harder to please than the rest. Many innovators also have problems with authority and a predisposition to challenge the status quo. This makes them more likely to complain about bad management and inefficiency issues, and potentially more likely to disengage. Last, anything of value is typically the result of team rather than individual performance, and great teams are not made of people who are identi-

cal to each other, but of individuals who complement each other. If you want cognitive diversity — variety in thinking, feeling and acting — then you will need people with different personalities. If we can combine what we know about engagement with what we know about personality, then we can help each person more effectively navigate their organizational reality — leading to better, more effective organizations for all.

est toys. Imagine a studio where kids can design and create toys. Imagine becoming THE place for children’s birthday parties. The absolute best way of knowing you’re providing time well spent is to charge admission for gaining entry to at least parts of the store — as the old Toys “R” Us once did for the Ferris wheel in its former flagship store in Times Square in New York City. In addition, Toys “R” Us could create a toy club that parents would value so much they’d pay a membership fee. The club’s fees could include the ability to return toys past their useful life or age-appropriateness and

upgrade them via customized recommendations based on each individual child. By changing its business model to offer — and charge for — time well spent, the new Toys “R” Us can carve out a lasting and valued role in the toy business for decades to come.

(Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup. Lewis Garrad is the growth markets lead for Mercer|Sirotat. Didier Elzinga is the CEO and founder of Culture Amp.)

What a Toys “R” Us Comeback Could Look Like KEVIN M. DULLE AND B. JOSEPH PINE II

oys “R” Us is being resurrected for the holiday season. But the environment that caused the toy chain’s demise has not changed. It still must compete with Walmart, Target and especially Amazon, a competition based on price and convenience that it could not win. Retailers today face two choices: offer consumers time well saved or time well spent. Toys “R” Us failed at the former strategy in its first incarnation. In coming out of bankruptcy, the company must pursue a time-wellspent strategy, offering places where both par-

ents and their kids enjoy great experiences. For the reborn company to have a chance, it must turn 180 degrees and embrace a parent- and kidcentric strategy. It must become a stager of toy-

playing experiences — enticing consumers into its new places by offering experiences that both parents and kids value. Imagine venues designed around toys themselves with never-ending play

experiences — one with spots where children can play with Lego sets and participate in gaming tournaments. Imagine a testing lab where vendors pay to have children play with their latest and great-

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(Kevin M. Dulle is director of experience innovations at NewGround and founder of The thINKing Canvas. B. Joseph Pine II is a co-founder of Strategic Horizons.)

Monday 10 December 2018

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Monday 10 December 2018

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Monday 10 December 2018

LegalPerspectives

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With

BUSINESS DAY

Odunayo Oyasiji

Case Review

Alhaji Abba Satomi Saleh V. Bank of the North Ltd.

hat to note: This is a Supreme Court matter that w a s d e t e rmined in 2006. It touches on banking law (proof of payment of money) and company law (liability of agent of a company). Fact The respondent is a banker and the appellant is a customer of the respondent bank. The appellant being a businessman and licensed buying agent that is based in Maiduguri was doing business under the name and style of “Alhaji Abba Satomi Saleh and Sons”. According to the respondent bank, the appellant opened a current account with the bank on March 18, 1971. In November 1973, the appellant was granted overdraft facilities on two accounts i.e. his personal account and on LBA Account (Licensed Buying Agent account) in the sum of N3000 and N12,000 respectively. The facilities were increased to N400,000 in 1981. The indebtedness of the appellant to the respondent as at September 30, 1988 stood at N2,041,078.73 interests and charges inclusive. The bank regularly sends letters and statements to the appellant to remind him of his indebtedness to the bank. It must be noted that the appellant on different occasions both orally and in writing admitted that he was indebted to the bank. However, on March 3, 1988, May 24, 1988 and July 11, 1988 the appellant denied that he was indebted to the bank. He further alleged that it was the bank that was indebted to him to the tune of N1,506,510.00 being the total amount of 8 cheques that was debited against his account without his authority. He alleged that the officials of the bank mishandled his accounts and that two of them were retired as a result. The trial court entered judgement in his favour while the court of appeal gave judgement in favour of the bank. The customer being dissatisfied with the judgement appealed to the Supreme Court. Issues for determination The appellant raised only one issue for determination i.e. “Was the court below right

having regard to the pleadings, the evidence on the printed record and the’ circumstances of this case to have reversed the findings and judgment of the trial court?” The respondent formulated a similar issue for determination of the matter. Arguments/Submissions The main argument of the appellant was based on complaints that the Court of Appeal decided to set aside the judgement of the trial court which it claimed was given after evidences were properly reviewed and the court came to the conclusion that the bank had not established that the appellant truly owed the bank the amount claimed. It must be noted that the basis for the judgement of the court of appeal was that the appellant did not proof the payment of the 400,000 naira overdraft by putting forward relevant documents like tellers and cheques. The bulk of the respondent’s argument on the other hand was centred around the fact that the Court of Appeal was right in upturning the Judgement of the lower court as the appellant/customer never adduced any relevant evidence as proof of repayment of the loan in dispute. Also, the trial court unjustly dismissed the banks case despite several documentary evidences tendered to establish that the customer was still indebted to the bank. The

trial court gave three reasons that are not tenable for doing the foregoing- that one of the three witnesses was not with the bank when the respondent opened the account with the bank, that he believed that the respondent paid the amount he claimed to have paid and that the respondent truly manipulated his account. Judgement The court held with regards to proof of payment (i.e. that the appellant didn’t present relevant documents to show repayment of the loan) that “The best way of proving payment of money into a bank account is by the production of bank teller or an acknowledgement showing on the face of it that the bank has received the payment. A bank teller duly stamped with the official stamp of the bank and properly initialled by the cashier, constitute prima facie proof of payment of the sum therein indicated and a customer, after producing such a teller or receipt needs not prove more unless payment is being challenged”. With regards to the liability of the agent of a company, the court held that “It is settled law, that a company such as the respondent bank herein is a juristic person and can only act through its agents or servants. Any agent or servant can consequently give evidence to establish any transaction en-

tered into by a juristic personality. Even where the official giving the evidence is not the one who actually took part in the transaction on behalf of the company. Such evidence nonetheless relevant is admissible, will not be discountenanced or rejected as hearsay evidence. The learned trial Judge was clearly in error to have ignored the evidence led by the respondent’s witnesses on the ground merely that they were not around when the appellant opened its account with the respondent bank. In a situation such as this, where the appellant claimed to have repaid the loan overdraft against the statements of accounts tendered by the respondent bank showing non-payment by the appellant, the proof of payment by the mere “ipse dixit” of the appellant cannot be sufficient proof of repayment of the debt”. Also, the court further held on the issue of the Court of Appeal interfering with the verdict of the High Court that “this court has on several occasions warned against interfering with conclusions of trial court on facts. Trial court has many advantages a Court of Appeal never has. It sees the witnesses, hears them and assesses their demeanour and makes findings in line with what in law is admissible. It is the trial court that can assess the veracity of a witness before it…. It is not the function of the appellate court to inter-

fere with the findings of trial court on facts. There are however, exemptions to this rule. If findings are not supported by evidence that finding shall be set aside by the appellate court; also when the finding is supported by evidence but that evidence is by law not admissible or the finding is perverse it will be set aside by the appellate court.” The Supreme Court therefore dismissed the appeal filed by the appellant/customer of the bank and upheld the decision of the Court of Appeal. Conclusion Proper and relevant evidences must be produced before the court in support of a claim that loan has been repaid. The proper or relevant evidence in this situation is the production of duly stamped tellers or cheques. The mere word of mouth cannot be relied upon. Therefore, it is important to always keep evidence of payment in case of dispute. Furthermore, a witness who is a staff of a bank cannot be discredited on the basis that such a witness was not there when the transaction which is the subject of the litigation was being concluded. In this case, the approach of the trial court to the evidences given by the witness was faulted. The evidence given by such a person will not be regarded as hearsay evidence.

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30 firms seek registration as payment service... Continued from page 1

excluded Nigerians. For non-banks, registering a subsidiary unit is the first step in applying for a payment service bank license under a new set of mobile money guidelines launched by the CBN in October, as it attempts to replicate a system that has succeeded in bringing large swaths of people from Kenya to India into the formal financial fold. According to data obtained from the Abuja-based CAC, the thirty business names undergoing registration include financial technology companies, Verve, Quick teller, Interswitch, Paga and Paystack. Mitchell Elegbe, the General Managing Director of Verve, did not immediately respond to a text message seeking confirmation. The names of Telecommunication companies, MTN and Bharti Airtel also feature, as well as Glomoney and Glocash Payment Service Banks- possible subsidiaries of Globacom. Orange S.A. also wants a piece

of the pie, CAC data showed. That confirms an earlier article by Business Day which reported interest from the French telecom company in Nigeria’s mobile money market. “We have a game changer in our hands,” said Obadiah Malaifia, a former deputy central bank governor. “More than 20 percent of financially excluded Nigerians could have access to formal financial products and services for the first time in their lives,” said Malaifia, a development economist who has done extensive work on how to increase financial inclusion in Nigeria, especially drawing on lessons from West African neighbour, Ghana. Other business names undergoing CAC registration include MPS, Cryto, Roger, Zuma and Probity Payment Service Banks (PSB). Others are IFIS, Touba, Hope, Goals, MOMO, A-Tel, Wazobia, Aventel, Switch and Vela. Opening up the mobile money space to non-financial companies breaks the monopoly of commercial banks after years of haggling between stakeholders. The CBN hopes the regulatory

tweak will make basic financial services accessible to some 50 million people in the country who have no bank account. The regulatory guidelines however restrict the non-financial companies to accepting deposits, as they are barred from giving loans and offering credit facilities. PSBs can be thought of as stripped-down versions of traditional deposit money banks, with limited functionality and a focus on on-boarding more of the excluded and marginalised population. Unlike deposit money banks (DMBs) and microfinance banks (MFBs), from day one, PSBs have a heavy reliance on technology via digital financial services, complemented with a strong agent banking model, which is meant to reduce overhead costs. The PSB model borrows a play from the Reserve Bank of India’s playbook. The concept of Payment Banks was first introduced in India in 2013 when a committee on Comprehensive Financial Services for Small Businesses and Low Income Households was formed, and the committee recommended a new bank category called Payment Banks.

In 2014, invitations were sent out for interested parties to apply. The following year, the RBI granted licenses to 11 applicants, despite receiving a total of 41 applications. That could hint that not all the companies that will apply for a PSB license in Nigeria will get one. Of the 11 licensed PSBs in India, three have given up their licenses, while six PSBs have commenced operations, albeit only four are prominent. The reason some of the PSBs walked away was primarily because of challenges with their earnings potential and a lack of infrastructure, particularly power, which increased the cost of PSBs and reduced their reach. Nigeria would also need to pay attention to addressing an infrastructure deficit if the PSBs must succeed and more people are financially included. Post-implementation of the model, the number of account holders in the country rose from 53 percent in 2014 to 80 percent in 2017, according to World Bank data. Hard-pressed to meet an 80 percent financial inclusion target set out in 2012, the CBN will be hoping the model replicates the success achieved in India.

Monday 10 December 2018

Subsidiaries of mobile network operators, mobile money operators, retail chains (supermarkets) and banking agents are all welcome to apply for the PSB license, provided they can meet certain requirements, including a N5 billion capital base, and a combined N2.5 million application and license fee which are non-refundable. Temitope Akin-Fadeyi, head of the financial inclusion secretariat at the CBN says Fast Moving Consumer Goods companies and other interested parties can apply for a payment service bank license if they met the required criteria. “As regulators, we are after providing a level playing field for interested parties to move the needle on financial inclusion,” Akin-Fadeyi said at the Lagos Business School and Business Day financial inclusion conference, Thursday. “Fast consumer goods companies and other interested parties can apply for a license,” Akin-Fadeyi said. “We want everyone that is interested and able to drive financial inclusion ahead of 2020 when we expect to achieve the national target of 20 percent exclusion,” AkinFadeyi added.

BusinessDay Man of the Year to be unveiled Friday, December 14

s 2018 comes to an end, BusinessDay will be unveiling its Man of the year award come Friday, December 14th 2018. Nigeria’s leading, daily business newspaper will be giving accolade to one of the country’s greatest personality and in arriving at the choice of the ‘Man’, the company had to follow with keen interest the rising

profile and impressive career path of the awardee. The Man of the year award will be informed by BusinessDay’s perspective of whom the most deserving citizen was in the outgoing year, and as such it aims to give recognition and highlight the impacts and influence of the awardee’s on the larger society through the acknowledgement.

How OPEC seems to be losing control over... Continued from page 2

Eroton CEO, Ebiaho Emafo (l), and NNPC representative, Tolu Derin-Adefuwa (r), presenting a scholarship award to a beneficiary.

Africa’s political lesson in booting... Continued from page 1

fighting one another rather than fighting together to end the rein

of the incumbent. Across Africa, the spectacle of opposition winning election was so rare until the turn of the 21st century when they got the trick and changed tact. In 2000, a group of opposition parties in Senegal joined forces to defeat to defeat President Abdou Diouf of the Senegalese Democratic Party to bring about the end of 40 years of one-party dominance in the country. Shortly after, in 2002, Kenya’s opposition repeated the trick and deposed the incumbent. The numbers were obvious already from previous elections. In the 1992 and 1997 elections, the opposition parties cumulatively garnered over 60 percent of the votes cast but still lost the election to the incumbent. In 2002, they came together under the National Rainbow Coalition (NARC) to defeat the Kenyan African National Union (KANU) that had ruled the country since independence in 1963. Since then, opposition parties have mastered the art of pre-electoral coalition and unity to confront entrenched and often dominant parties. This strategy has successfully changed governments in Senegal, Liberia, Malawi, Madgascar, Mali, Mauritius, The Gambia and even Nigeria.

Faced with the prospect of a long rule by the governing Peoples Democratic Party (PDP) since the return to democratic rule in 1999 and a weakened and fragmented opposition, the Nigerian opposition parties came together to form the All Progressives Congress (APC) that successfully ended the rein of the PDP that had previously vowed to govern Nigeria for 60 uninterrupted years. As the disenchantment with the Buhari regime gained momentum, over 39 political parties came together last year to form a coalition – Coalition of United Political Parties (CUPP) to wrestle power from the APC. They also agreed to present just one presidential candidate. However, the coalition has gone awry and everyone is going at it alone. Regardless, many see the 2019 presidential election as a clear contest between Atiku Abubakar of the PDP and the incumbent, President Muhammadu Buhari of the APC. “I do not think for a second, nor do those campaigning outside of the APC and PDP think they have any chance of becoming President,” said Ogho Okiti, president and CEO of Times Economics Consulting, based in Abuja via phone. “There is no credible third force opposition in the country. The other candidates will only split the votes of the opposition and will help the cause

of the incumbent,” he concluded. Opeyemi Agbaje, CEO of RTC Advisory Services Limited believes it is a clear contest between the two parties, despite all the reservations Nigerians may have. He believes all the younger candidates are only helping to ensure the re-election of the incumbent who is deeply unpopular in the southern and north central parts of the country. “Buhari has lost the southern youth votes that helped him to power in 2015. These may now either vote for an Oby Ezekwesili, Fela Durotoye, Kingsley Morghalu or Omoyele Sowore, further fragmenting the opposition vote,” he said on phone to BusinessDay. The fears expressed are probably genuine. Most of the candidates and platforms lack visibility, financial capacity and grassroots structures like major parties. What is more, time and resources are critical to mobilisation and campaign and they do not have these. Most of them do not have the resources to campaign far and wide into every nook and cranny in the country and most of them came so late into the race, usually through obscure parties that even the most enlighten struggle to mention. Which leads to the question about their real intentions of contesting for the presidency. “I do not believe these candidates are as naive as they want us to believe and I know they know they do not stand any realistic chance of winning,” said Agbaje.

ing out from around the country that compete more with the type of oil that the Saudis mainly export which will further reduce their influence on global market. Emmanuel Afimia energy analyst at Afimia consulting said the only time OPEC will lose grip completely is when the alliance with Russia and other non OPEC members who are parties to the output cut falls apart. OPEC’s waning influence can also be seen from the fact that even if it manages to cut production, others like the US might just step up theirs. Last month, the US emerged as the world’s largest crude oil producer as

it became a net exporter for the first time in its history. OPEC itself acknowledged this implicitly in its November report, when it said that demand for crude from OPEC members is forecast to decline by 1.1 million barrels a day in 2019. For OPEC the world is a different place from the heady days of 1973 as Qatar’s exit, and the inflexibility of Russia a non-member on whom it is heavily reliant to enforce production cuts to prop up prices are clear signs of its diminishing importance.

•Continues online at www.businessdayonline.com

BusinessDay Excellence in Public Service... Continued from page 2

arm of BusinessDay Media Limited, publishers of BusinessDay and BD Sunday newspapers, as part of its leadership thought initiative and commitment to the development of the nation, to reward, recognise and celebrate some distinguished ministers, heads of departments and agencies for their selfless services to the nation. The 2017 Awardees were Kayode Fayemi, former minister of mines and steel development and now executive governor of Ekiti State; Emmanuel Ibe Kachikwu, minister of petroleum resources; Audu Innocent Ogbeh, minister of agriculture and rural development; Enyinnaya Okechukwu Enelema, minister of industry, trade and investment; Babatunde Raji Fashola (SAN), minister of power, works and housing; and Adebayo Shittu, minister of communications technology. Godwin Emefiele, governor, Central Bank of Nigeria (CBN); Aliyu Abdulhameed, managing director, NIRSAL;

Umaru Ibrahim, managing director, Nigeria Deposit Insuance Corporation (NDIC);MaikantiBaru,groupmanaging director, Nigerian National Petroleum Corpoartion(NNPC);YemiKale,Statistician General of the Federation, National BureauofStatistics;andPatienceOniha, DirectorGeneral,DebtManagementOffice (DMO) bagged the awards for their exceptional performance. Others were Boboye Olayemi Oyeyemi, Corps Marshal, Federal Road Safety Corps (FRSC); Sharon Ikeazor, Executive secretary, The pension transitional arrangement directorate (PTAD); Mohammad Babandede, Comptroller-General, Nigeria Immigration Service (NIS); Yewande Sadiku, Nigerian Investment Promotion Commission (NIPC) and Uche Orji, managing director, Nigeria Sovereign Investment Authority (NSIA). The management and staff of the Nigerian Ports Authority (NPA), led by Hadiza Bala Usman, also won the excellence award.

Monday 10 December 2018

LegalPerspectives

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E-commerce models in Nigeria- Jumia, Konga and Jiji

The role of e-payment systems in doing business in Nigeria (1)

ADETOLA ADELEKE,

Lead partner, crowncourt Attorneys

ROTIMI ADENIYI-AKINTOLA, of Perchstone & Graeys

they spend on paper and postage. The convenience of e-payments can also help businesses improve customer retention, in comparison with those offering only traditional means of payments. The direct impacts of e-payments on GDP, are well known and documented. In 2016, a report by Moody’s Analytics on “The Impact of Electronic Payments on Economic Growth” stated that the explosion of e-payment resulted in an added US$460 million to Nigeria’s GDP from 2011 to 2015. According to Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Nigeria could save as much as US$9 billion - N3.24 trillion by shifting government payments alone from cash to digital systems. She was further quoted as saying that such a shift creates the potential to help reduce corruption, increase revenues, and generate investments in health and education. What this means is that digital tools could be a decisive factor for Nigeria in meeting the 2030 Sustainable Development Goals. If the expected effect of the shift of government payments alone to

e-payment would result in such huge gains, the impact of a similar shift in the private sector would certainly drive economic growth to seismic proportions. However, despite the adoption of digital payments, cash continues to be utilized as the mainstream mode of payment in Nigeria, especially for lowvalue transactions. Cash remains hugely popular in Nigeria, due to the anonymity it affords, the lack of adequate modernised payment infrastructure, and challenges with access to banking systems for the majority of Nigerians (financial inclusion). Other systemic challenges include the poor state of basic infrastructure; particularly electricity/power and telecommunications infrastructure. Low literacy levels, infrastructure vandalism, and security issues mount further pressures on the shift to more advanced payment systems. Nonetheless, efforts to surmount these obstacles abound, and the opportunity to develop secure and efficient e-payment instruments to drive further economic growth, exists for Nigeria.

LOCUS CLASSICUS Couturier v Hastie (1856) 5 HLC 673

rinciple: A contract will be void and unenforceable where the subject of sale had already perished or not in existence at the time of the contract. Fact: Couturier agreed with Hastie with regards to the sale of corn which was being shipped from Salonica to England. The owner of the cargo (Corturier) sold the cargo to Hastie. However, the corn had already perished (as a result of decay) and the shipmaster had disposed it even before the cargo was sold by the owner to Hastie. The owner of the cargo took steps to ensure that the buyer pays for the goods on the ground that

he had already acquired title to the goods and therefore bore the risk of the goods being damaged, lost or stolen. The court

Odunayo Oyasiji

Case Review

ountries the world over are witnessing the rapid evolution of payment systems. These changes follow the technological shift from traditional modes of payment such as cash, cheques and cards, to the digital frontier of virtual currency and mobile platforms. According to Capgemini and BNP Paribas World Payments Report, global non-cash transactions broke a decade-long record for growth in 2014-2015, with growth volumes in excess of 11%; to reach more than 433 billion. Two regions fuelled this increase: emerging Asia with a growth rate of 43.4% and CEMEA (Central Europe, Middle East, and Africa), with 16.4% growth. Nowhere has the growth of e-payment been more evident than in Africa. The swell of different means of electronic payments (e-payment) and mobile payments continues to have a direct impact on local economies in Africa. Whilst Kenya remains the continentleader in this regard, thanks to the emergence of the likes of MPesa, Nigeria has also witnessed a sizeable increase in the volume of e-payments in recent years. However, without significantly increasing the rate of financial inclusion in the country through innovative methods, some of which are discussed below, Nigeria runs the risk of never fully actualizing the expansive potential of e-payments on her economy. Electronic or “E”-payments have significant economic benefits for individuals and businesses alike. Electronic payment lowers costs for businesses, as the more payments they can process electronically, the less

BUSINESS DAY

held that the contract was void as the subject matter of sale was not in existence at the time the contract was made.

umia, Konga, Uber and Jiji are major examples of platforms in Nigeria currently operating the e-commerce model. A typical visit to any of the websites welcomes the visitor to varying advertisements of the sale of different brand of items classed under various categories which can be termed as invitation to treat or invitation to make an offer. It is worthy of note that a typical e-commerce transaction involves four major stages; the customer search stage, the ordering stage by the customer, the online payment stage for the goods and services, and finally, the delivery stage. Some other stages such as inquiry, complaints, return of goods, etc may however come in at some point within or along the major stages of the ecommerce. On the websites of Jumia and Konga, there is a terms and conditions column where the conditions of using the site are expressly spelt out for prospective customers. Jumia specifically attempts to situate the ingredients of contract in its terms of use in the following wordings: “Both parties agree that browsing the

website and gathering information regarding the services provided by the seller does not constitute an offer to sell, but merely an invitation to treat. The parties accept that an offer is only made once you have selected the item you intend to purchase, chosen your preferred payment, proceeded to the checkout and completed the checkout process. Both parties agree that the acceptance of the offer is not made when the seller contacts you by phone or by email to confirm that the order has been placed online. Your offer is only accepted when we dispatch the product to you and inform you either by email or by phone of the dispatch of your ordered product.” The above term on the Jumia website sums up the ingredients of a traditional contract as we all know it. It is arguable that the above term as to when the contracted is consummated may be an unfair term. This is because according to the terms the offer made by the buyer is not even accepted e On the international scene, we have reviewed the website of American e-commerce giant Amazon, it has no such provision under its terms of use; but just like our Nigerian Jumia and Konga, they all have included the capacity to contract as a condition for transacting on the platform.

Coastal and Inland shipping (Cabotage Act) (amendment) bill, 2016

he above bill is still pending before the national assembly. However, there has been call from different angles on the urgent need to pass the bill into law. This is because Nigeria is losing a lot of money due to illegal participation of foreign ship-owners in the maritime industry. The loss is occasioned by the deficiency in the definition vessels under the 2003 Cabotage Act. The Act in its section 2 defines vessels as “any description of vessel, ship, boat, hovercraft or craft, including air cushion vehicles and dynamically supported craft, designed, used or capable of being used solely or partly for marine navigation and used for the carriage on, through or under water of persons or property without regard to method or lack of propulsion”. It must be pointed out that the above definition does not expressly state what a vessel is. It only gives a description of what could be used to identify a vessel. Foreign shipowners have capitalized on the lacuna in the law to argue that an oil rig does not fall into the category of a vessel under the Cabotage Act. This issue came up in the case of Noble Drilling (Nigeria) Limited v The Nigerian Maritime Administration and Safety Agency (“NIMASA”) and The Minister of Transportation (Suit

No. FHC/L/CS/78/2008)- the Federal High Court held that the definition of vessel in the Cabotage Act does not include an Oil rig as it was not expressly stated in the Act. Due to the foregoing and the loss that this is likely going to bring to the country in terms of loss of revenue, filling the lacuna in the definition of a vessel in section 2 of the Cabotage Act seems to be one of the aims of the bill under consideration. The bill in its section 13 specifically brings an oil rig under the definition of a vessel when it stated that ” “Vessel” includes any description of vessel, ship, boat hovercraft or craft, including air cushion vehicles and dynamically supported craft, designed, used or capable of being used solely or partly for marine navigation and used for the carriage on, through or under water of persons or property without regard to method or lack of propulsion and include rigs, floating, production, storage and offloading platforms (FPSOJ floating, storage and offloading platforms (FPSO)”. It is very important that the national assembly should prioritize the passage of the bill as it will help in generating more revenue and end all controversies with regards to the meaning of vessels.

BUSINESS DAY

Monday 10 December 2018

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Live @ the Stock exchange Prices for Securities Traded as of Friday 07 December 2018 Company

Symbol

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Current Price

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 215,513.39 7.45 2.05 56 3,231,828 UNITED BANK FOR AFRICA PLC 256,495.66 7.50 -3.85 98 5,991,383 ZENITH BANK PLC 739,387.43 23.55 0.21 198 11,055,892 352 20,279,103 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 272,804.23 7.60 -0.65 154 3,789,408 154 3,789,408 506 24,068,511 BUILDING MATERIALS DANGOTE CEMENT PLC 3,135,453.36 184.00 -0.54 55 320,389 LAFARGE AFRICA PLC. 108,417.85 12.50 -0.80 68 993,949 123 1,314,338 123 1,314,338 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 352,419.45 598.90 - 5 359 5 359 5 359 634 25,383,208 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 68,681.52 72.00 - 11 18,100 62,150.00 62.15 - 4 11,500 PRESCO PLC 15 29,600 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,560.00 0.52 - 2 17,608 2 17,608 17 47,208 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 714.77 0.27 - 3 7,000 JOHN HOLT PLC. 155.66 0.40 - 1 144 1,903.99 2.93 -9.85 7 101,926 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 46,338.71 1.14 -0.87 38 1,673,531 28,812.97 10.00 - 21 57,152 U A C N PLC. 70 1,839,753 70 1,839,753 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 27,720.00 21.00 - 26 201,143 ROADS NIG PLC. 165.00 6.60 - 0 0 26 201,143 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,845.63 1.48 - 3 30,450 3 30,450 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 1 250 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 21,612.98 8.10 - 1 1,200 2 1,450 31 233,043 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,448.90 1.59 - 3 50,414 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 159,897.95 73.00 - 27 70,054 INTERNATIONAL BREWERIES PLC. 253,148.13 29.45 - 9 17,970 NIGERIAN BREW. PLC. 639,752.16 80.00 -0.12 51 2,283,935 90 2,422,373 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 31,500.00 6.30 -0.79 35 5,029,991 DANGOTE SUGAR REFINERY PLC 162,000.00 13.50 3.05 26 201,059 FLOUR MILLS NIG. PLC. 82,827.67 20.20 -3.81 47 792,146 HONEYWELL FLOUR MILL PLC 9,119.73 1.15 - 32 1,064,501 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 855.36 4.80 -9.43 8 157,200 NASCON ALLIED INDUSTRIES PLC 47,689.89 18.00 - 11 25,900 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 159 7,270,797 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,749.01 9.45 - 13 42,881 NESTLE NIGERIA PLC. 1,227,824.53 1,549.00 4.66 25 27,284 38 70,165 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 3,398.13 3.26 - 15 148,049 15 148,049 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 43,278.20 10.90 - 25 152,706 UNILEVER NIGERIA PLC. 223,480.71 38.90 - 17 229,630 42 382,336 344 10,293,720 BANKING DIAMOND BANK PLC 23,623.60 1.02 9.68 82 14,305,004 ECOBANK TRANSNATIONAL INCORPORATED 284,418.04 15.50 -3.12 36 1,198,089 FIDELITY BANK PLC 55,631.61 1.92 -1.03 68 6,660,553 GUARANTY TRUST BANK PLC. 1,027,148.15 34.90 -0.29 170 7,727,102 JAIZ BANK PLC 12,964.27 0.44 - 7 332,000 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 48,367.90 1.68 -1.18 547 11,908,632 UNION BANK NIG.PLC. 155,796.03 5.35 0.94 21 284,564 UNITY BANK PLC 8,065.64 0.69 - 2 1,900 WEMA BANK PLC. 21,215.96 0.55 3.77 13 496,879 946 42,914,723 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 - 16 460,441 21,000.00 2.00 - 4 74,999 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,660.00 0.38 - 1 2,000 CONTINENTAL REINSURANCE PLC 18,152.30 1.75 - 6 76,250 CORNERSTONE INSURANCE PLC 3,240.49 0.22 - 1 1,000 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 1,913.74 0.50 - 0 0 GREAT NIGERIAN INSURANCE PLC GUINEA INSURANCE PLC. 1,535.00 0.25 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 2,123.80 0.29 7.41 5 481,937 LASACO ASSURANCE PLC. LAW UNION AND ROCK INS. PLC. 2,019.28 0.47 - 1 17,512 LINKAGE ASSURANCE PLC 4,880.00 0.61 - 3 21,800 MUTUAL BENEFITS ASSURANCE PLC. 1,840.00 0.23 - 2 23,473 NEM INSURANCE PLC 12,409.18 2.35 - 4 39,252 1,547.90 0.20 - 2 22,387 NIGER INSURANCE PLC PRESTIGE ASSURANCE PLC 2,637.45 0.49 - 1 100 REGENCY ASSURANCE PLC 1,400.44 0.21 5.00 5 464,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 2,582.21 0.20 - 0 0 STANDARD ALLIANCE INSURANCE PLC. SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 3,500 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 - 5 1,150,728 WAPIC INSURANCE PLC 5,353.10 0.40 -2.44 19 745,009 76 3,584,388 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,315.62 1.45 -3.33 12 650,000 12 650,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,452.00 1.06 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 5,664.87 0.50 - 0 0

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Trades

Volume

UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,420.00 3.71 -1.07 45 1,488,697 CUSTODIAN INVESTMENT PLC 29,997.51 5.10 1.96 14 673,713 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 29,902.09 1.51 0.66 75 22,436,560 NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 ROYAL EXCHANGE PLC. 1,029.07 0.20 - 0 0 STANBIC IBTC HOLDINGS PLC 470,285.86 46.50 -1.06 25 2,192,872 UNITED CAPITAL PLC 16,860.00 2.81 0.71 44 2,102,246 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 203 28,894,088 1,237 76,043,199 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 888.28 0.25 - 1 22,656 1 22,656 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,350.00 4.90 - 1 99 GLAXO SMITHKLINE CONSUMER NIG. PLC. 17,340.21 14.50 - 11 24,207 MAY & BAKER NIGERIA PLC. 2,352.00 2.40 - 9 74,116 1,001.37 0.58 - 6 33,451 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 329.57 1.52 - 0 0 27 131,873 28 154,529 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 22,000 2 22,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 680.40 6.30 - 0 0 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 1,033.13 0.22 -8.33 2 100,400 E-TRANZACT INTERNATIONAL PLC 16,590.00 3.95 - 0 0 2 100,400 4 122,400 BUILDING MATERIALS BERGER PAINTS PLC 1,883.85 6.50 - 3 2,000 CAP PLC 22,050.00 31.50 - 4 20,538 CEMENT CO. OF NORTH.NIG. PLC 20,735.18 16.50 - 8 48,275 FIRST ALUMINIUM NIGERIA PLC 633.11 0.30 - 0 0 MEYER PLC. 313.43 0.59 - 1 34,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 16 104,813 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,469.80 1.97 - 10 17,113 10 17,113 PACKAGING/CONTAINERS BETA GLASS PLC. 34,148.09 68.30 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 5 2,500 5 2,500 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 31 124,426 CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 1 465 1 465 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 1 160 1 160 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 2 625 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 6 1,566,172 6 1,566,172 INTEGRATED OIL AND GAS SERVICES OANDO PLC 64,021.77 5.15 -2.91 50 60,370,053 50 60,370,053 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 63,032.05 174.80 - 13 13,890 CONOIL PLC 15,613.92 22.50 - 12 38,572 ETERNA PLC. 5,477.41 4.20 - 15 49,670 FORTE OIL PLC. 23,444.66 18.00 - 53 466,790 MRS OIL NIGERIA PLC. 7,833.01 25.70 - 3 2,405 TOTAL NIGERIA PLC. 67,225.32 198.00 - 18 10,329 114 581,656 170 62,517,881 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,818.75 1.93 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 447.02 0.38 - 6 14,928 6 14,928 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,593.79 4.40 - 3 5,140 TRANS-NATIONWIDE EXPRESS PLC. 276.62 0.59 - 3 8,487 6 13,627 HOSPITALITY TANTALIZERS PLC 674.44 0.21 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,887.35 1.87 10.00 1 100,000 7,862.53 3.50 - 0 0 TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC 46,362.46 6.10 - 0 0 1 100,000 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,280.00 0.44 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 972.03 1.26 -2.33 3 1,035,864 LEARN AFRICA PLC STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 6 38,100 UNIVERSITY PRESS PLC. 914.59 2.12 - 9 99,960 18 1,173,924 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 447.58 0.27 - 2 19,957 2 19,957 SPECIALTY INTERLINKED TECHNOLOGIES PLC 852.12 3.60 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0 TRANSPORT-RELATED SERVICES GLOBAL SPECTRUM ENERGY SERVICES PLC 4,600.00 5.75 - 1 2,850 NEWREST ASL NIGERIA PLC 3,994.20 6.30 -10.00 4 165,885 NIGERIAN AVIATION HANDLING COMPANY PLC 5,538.59 3.41 -5.28 12 559,570 17 728,305

BUSINESS DAY

Monday 10 December 2018

BUSINESS DAY

Monday 10 December 2018

BUSINESS DAY

Monday 10 December 2018

BUSINESS DAY

Monday 10 December 2018

At the BusinessDay Top 100 Fastest Growing SMEs in Nigeria

L-R: Cindy Otuonye, Sotoic Investments Limited; Azeezat Balogun, Sotvic investments limited; Aboegum Daniel, Kobo logistics; Adebowale Jolaoso, Kobo logistics.

L-R: Nse Abasi King, Daneff Food Chain, Awoyemi Afolakumi and Sanwo Timileyi both of Crystal Hills Technology Hubs; , .

R-L: Saheed Oseni, and Koledafe Shakirat, both of Workbay executive.

L-R: Okey Azubike, Nwakama dredge nigeria limited; Martina Osague, Meristein registras and probate services.

L-R: Ope Obayemi, Biznurture financial services limited; Ife Ibitokun,biznurture financial services limited.

L-R: Olaurewaju Ibirogba, Meristem registras and portable services; Chikodi Osondu Anyawu, Wapic insurance plc.

L-R: Jimi Akande; Ladi Daodu, CEO, Sierra Capital and Okafor Obiora, 0f Carm Proville.

L-R: Segun Abiona, founder Ncole and Giovanni; Ronke Abiono, co-founder, Nicole and Giovanni; Joyful Magaji, co-founder Weiduit Global.

L-R: Bukola Joseph, Niyod Group; Joy Azumara, CEO, Prima Donna; Ama Apakama, MD, Regachi limited.

R-L: Oneal Lajuuwomi, Wavelength Integrated Power Service Limited; Temiloluwa Fakunle, Sapient Vendors Limited; Walter Emiedafe, Saprent Vendors Limited.

L-R: Saileowa Ibironke, Micromedia Limited; Adebola Famorori, Fusion Group Limited; Ronke Bamisedun, BWL Agency.

L-R: Elegbede Olatayo, Boaaman Nigeria; Nene Bejide, Blanche Aigle Communications; George Onyewuchi, Fidelity Bank; Stanley Ogbuze, regional SME coordinator Victorial Island regional bank.

L-R: Anthonio Pinheiro, director of ANDEBCA Operations; Bukky Akomolafe, commercial manager, Travelstart; Frank Aigbogun, publisher/ CEO, BusinessDay , and Abayomi Awobokun, CEO, Enyo Retail and Supply.

L-R: Saintgermain Onwukeme, Dochase Adx; Uchenna Minnis, EGM, chief market analyst; Gbite Oduneye, co-founder, EGM, and Temitayo Sanusi, operation director , EGM.

L-R: Aramide Abe, founder Naija Startups; Abayomi Awobokun, CEO, Enyo Retail and Supply, and Solape Hammond of Impact Hub Lagos.

L-R: Omounmi Akande; Tracy Batta, and Olufumilayo Oduwaye, both of Smoothie Express Limited.

L-R: Onyeka Akumah, CEO , Farmcrowdy and Tomiwa Ogunmodede, head of marketing, farmcrowdy.

Pius Apere, former MD of Linkage Assurance Plc, with other participants at the registration

Uyi Akpata country senior partner, PwC Nigeria/keynote speaker, during his speech

L-R: Bola Njideofor and Kenny Njideofor, both of Southbridge.

Pictures Pius Okeosisi

BUSINESS DAY

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Monday 10 December 2018

Wanted: President capable of fixing interest rate dilemma HOPE MOSES-ASHIKE

igeria needs a president with a clear blueprint on dealing with interest rate dilemma. Analysts believe that 2019 presents an opportunity for Nigerians to elect a president with the knowledge of how monetary policies are formulated, articulated and implemented. There is no doubt that over the years, high interest rate, which is the cost of borrowing money from a lender or the reward for saving, has been a major challenge in the country. Nigeria’s benchmark interest rate has remained at 14 percent since July 2016 when it was increased from 12 percent. In view of this, the focus of whoever will emerge the winner of the upcoming general election should be on how to address this problem that has resulted in high cost of credit to the real economy. However, analysts from the financial services sector have come up with some suggestions on how the government can tackle the issue of high interest rate. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said provision of adequate infrastructure in the country, mainly power, electricity and transport network will help to reduce the cost of doing business in Nigeria, attract investments and develop the non-oil sector in such a way that there will be increased supply of foreign exchange, reduced demand for foreign exchange and increased revenue for the country. “All these factors will help to reduce the risks inherent in the economy, ensure stable exchange rate and reduce inflation rate. Then interest rate can drop. Without these measures, interest rate will continue

Buhari

to rise. High interest rate is one of the prices a country pays for the risks inherent in its economy,” Akinwunmi said in an emailed response to BusinessDay. The country witnessed a sharp drop in crude oil prices around July 2014, which fell to as low as $30 per/barrel in late 2015/ early 2016. Apart from that, there were other major shocks that adversely affected the economy. These included geopolitical tensions, global growth slowdown, and U.S monetary policy normalisation. The Central Bank of Nigeria (CBN) at the time embarked on a cycle of tightening to rein in inflation. Inflation rate is currently at 11.28 percent from as high as 18 percent in January 2017. Ayodeji Ebo, managing director, Afrinvest Securities Limited, sees high interest rate as a complex problem interlinked with several economic variables. Ebo said the best way is to create an enabling environment that would

de-risk the business operating environment. This can be achieved by improving infrastructure as well as easing the process of doing business. “This will lower the credit risk premium over risk free instruments, hence reducing the maximum lending rate. As long as the operating risks remain elevated, the lending rate will remain high”, Ebo said in an emailed response. One of the advantages of high interest rate environment is that the cost of borrowing by corporates and individuals as well as inter-bank lending rates is high. What the banks usually do is to transfer the cost of borrowing from the Central Bank of Nigeria unto their customers, making loans expensive and less accessible. Credit to the private sector declined by 0.1 per cent to N22.275 trillion at the end of June 2018, in contrast to an increase of 0.02 per cent at the end of the corresponding period of 2017, according to the CBN’s half year 2018 economic

report. The development owed, wholly, to the decline of 1.1 per cent in claims on the core private sector. In a recent report by the CBN, 23.5 percent of Nigerian households expected interest rate to rise on bank loans and savings over the next 12 months, while 14.6 per cent believed that the rates will fall. However, more respondents (61.8 per cent) of the respondents either expected no change or had no idea. Since June 2009, the National Bureau Statistics (NBS) conducts the inflation attitudes survey on quarterly basis, to sample the views of households on how they view the price changes of goods and services in the last twelve months, and their expectations of price changes over the next twelve months. Respondents’ opinions were used to explore the general public’s understanding of monetary policy framework. The Q3 2018 Inflation Attitudes Survey was conducted during the period September 24 -October 4, 2018, from a sample size of 1,770 households randomly selected from 207 enumeration areas (EAs) across the country, with a response rate of 96.9 percent. The percentage of respondent households who felt that interest rates had risen in the last 12 months declined by 3.1 points to 29.3 points in the current quarter when compared to 32.4 points attained in Q2, 2018. On the other hand, 7.0 per cent of respondents believed that interest rates had fallen, 18.1 per cent of the respondents were of the opinion that the rates stayed about the same in the last 12 months, while 45.4 per cent of the households had no idea. The result revealed that more households had no idea on the direction of interest rate in the past 12 months. On the other hand, the respondents were asked whether it would be in the interest of Nigerian economy for interest rates to rise or fall. The

results showed that 34.4 per cent indicated that it would be best for the Nigerian economy if interest rates fell, while 15.6 per cent opted for higher interest rates. The results further revealed that 11.1 per cent thought that it would make no difference, while 38.3 had no idea. These responses revealed that while most of the respondents favored lower interest rates for the Nigerian economy, while the majority had no idea whether it should rise or fall. Results of survey conducted by the Manufacturers Association of Nigeria (MAN) shows that the average interest rate charged manufacturers (including SMEs) by banks in the second half (H2) of 2017 was 23.05 percent as against 22.65 percent in first half (H1) of 2017 and 21.4 percent in H1 of 2016. Many banks are unwilling to offer loans to MSMEs and those that do often provide same at above 20 percent. Though experts say funding is not the biggest challenge facing small businesses, they unanimously agree that it is among the top four. Nigeria has 37 million MSMEs that are expecting the government to recapitalise development finance institutions in the country. The Bank of Industry (BoI), for instance, lends credit to entrepreneurs at about nine percent. The focus of the BoI is the industrial and valueadding sectors such as manufacturing, agro processing, entertainment and export, among others. The Bank of Agriculture (BoA) also lends to farmers and those in the agric value chain. Ideally, BoA is supposed to lend to farmers at a single-digit rate, but the bank has been cash-strapped for a long time now. The bank officials are unhappy that they are not in charge of the Anchor Borrowers Scheme, which ordinarily could have increased the relevance of the bank, BusinessDay understands.

Nigeria needs devolution of powers to federation units—Don SIKIRAT SHEHU, Ilorin

u n z a l i Ji b r i l , emeritus professor, pro-chancellor and chairman of the council, AlHikmah University, has said that Nigeria needs devolution of powers, responsibilities and resources from the centre to the federation units Jibril also said that restructuring Nigeria will take the country fifty years back, stressing that the

country must restore accountability and good governance to the system for sustainable development of the nation. Jibril, while delivering his lecture of 8th convocation ceremony of AlHikmah University, Ilorin, spoke on the topic, ‘To Re- Structure or Not To Re- Structure Nigeria: That Is The Question.’ According to the convocation lecturer, the confusion in the restructuring debate arises out of the assumption on the part of the pro-

tagonists that a return to regional structure automatically includes a return to less centralised federation where the federal units have more autonomy. “But the truth is that there is a world of difference between the regional structure and over centralisation. “In this, there should be no holds barred and we can accommodate the whole range of demands from state police to restore control. As a corollary to the envisage reform,

we must restore accountability and good governance. This can be achieved without restructuring Nigeria into six or more geopolitical region s which would only take us fifty years back,” he said While expressing surprise at which Nigerian elite seem less concerned about more critical issues such as accountability than they are with restructuring, he said, “We may return to all the lofty ideals of First Republic, such as fiscal federation and the derivation

principle but without restoring accountability and good governance, we would simply lead to enriching a few individuals and improvising our communities. “Our overall governance score is 49. 9 and our rank is 33rd out of 54 African countries. We recorded only a modest improvement of 2.8 between 2008 and 2017. Our score on transparency and accountability is 34.5 and our rank is 30 out of 54. Accountability is very low in Nigeria.”

Monday 10 December 2018

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57 NEWS

BUSINESS DAY

Stakeholders want revamp of automobile sector Liquid Telecom connects Addis Ababa to Abuja with new terrestrial fibre optic cable DESMOND OKON

leading pan-African telecoms group, Liquid Telecom, has connected Addis Ababa, the Ethiopia capital, to Abuja, Nigeria’s capital, through a new terrestrial fibre optic cable that will significantly boost internet connectivity in Nigeria and also across Africa. Strive Masiyiwa, group executive chairman of Liquid Telecom’s parent company Econet, who spoke with BusinessDay on the side lines of the ongoing Africa 2018 Forum in Egypt, said plans were on to ensure that the fibre optic cable was ready by January ahead of the Africa Union Summit in Addis Ababa. He also disclosed plans by Liquid Telecom to build four data centres in Nigeria, three in Lagos and one in Abuja. The company would be investing more than $400 million in the data centres over the next three years. The investments are part of the “One Africa” network aimed at connecting the connecting the continent with fibre cables to drive internet connectivity. At the Africa 2018 Forum, Liquid Telecom also announced that it is investing

US$400m in Egypt over the next three years as part of a major partnership with Telecom Egypt which includes network infrastructure and data centres. The investment announced today at the Africa 2018 Forum was made during a signing ceremony between the two companies. This historical agreement was signed by Amr Talaat, The Egyptian Ministry of Communications and Information Technology and Group Executive Chairman of Liquid Telecom’s parent company Econet, Strive Masiyiwa. It was witnessed by Sahar Nasr, Egyptian Minister of Investment and International Cooperation. Telecom Egypt will use the network to connect Egyptian businesses to the rest of Africa, whilst also partnering with Liquid Telecom to build data centres across Egypt. Following an initial investment of $50m in data centres and cloud services, Liquid Telecom plans to invest an additional $350 million in broadband and financial inclusion initiatives, as well as high capacity data centres. These will be similar to some of the best-in-class data centres in South Africa.

Liquid Telecom’s expanding network is almost 70,000km in length and is linked to more than 600 towns and cities in 13 countries across Africa. It is also part of the wider ‘One Africa’ broadband network which has been strongly supported by the African Union leadership and President Kagame, chairman of the African Union. President El-Sisi welcomed the development as a major milestone in connecting the African continent with Egypt and said he would continue to push the initiative during his tenure next year as Chair of the AU’s 54-nation body. This follows the signing of a landmark partnership agreement with Telecom Egypt to mark the completion of Liquid Telecom’s award winning ‘Cape to Cairo’ network. This network represents the first direct land-based terrestrial fibre link from Cape Town to Cairo. The $400 million investment will enable Liquid Telecom to significantly expand its position as a connectivity and cloud solutions provider in North Africa, serving businesses in the region with world-class network and data centre services.

verwhelmed by the litany of challenges clogging growth in the automobile sector, stakeholders want a revamp through the intervention of the government in terms of better policy formation and automobile infrastructural development, and possibly through the creation of a separate ministry for the automobile sector. Some high-profile personalities, who spoke exclusively with BusinessDay at a ceremony that celebrated and awarded excellence in the industry, organised by the Nigerian Automobile Annual Award (NAAA) in Lagos, said the deplorable state of the roads, exorbitant import duties, lack of clear cut policies, and the influx of substandard goods had impeded growth in the sector, and hampered quality of service delivery. Hence, the swift intervention of the government. Speaking with BusinessDay, Obasi Ifeanyi, convener of NAAA, said, “The improvement of the automobile industry lies more on the government in terms of banning substandard goods, because, if substandard goods keep coming into the country, quality of ser-

vice delivery will be very poor. “Many Nigerians are ‘dancing’ with death on our roads without knowing because we rely mostly on substandard parts. So improvement on the substandard part is way of revamping the industry by clamping down on producers and marketers of fake parts in Nigeria.” Ifeanyi lauded the government over the ban on importation of cars through the land borders, saying it would improve the economy by making it possible for the local cars manufacturers to grow and thereby create employment for the youths in the automobile sector. “We have local manufacturers of vehicles in Nigeria that can produce vehicles for Nigerians and give employment to our youths. But if we keep bringing in vehicles, it means we are killing our industry. So I encourage the government to continue or place a heavy duty on importation of vehicles,” he said. According to Dayo Adeola, chairman, D.T AutoCafe, government need to pay a more serious attention to the sector in the provision of adequate infrastructure, and ensuring firm policy statements that cannot be easily tinkered with by politicians. “The National Automo-

bile Design Development Council (NADDC) should be empowered to make proper recommendations towards local production of cars, and those recommendations should become a national policy that cannot be tinkered with by any politician. We want a continuum in policy,” Adeola said. “The road transport system deserves a separate ministry so that it can be properly and efficiently handle. This is because of the importance of the road transport system. The majority of Nigerians travel through the road more than any other transport system. So if that particular area is what is servicing the population the most, it shows it’s important and deserves a special attention” he adds. However, while government’s effort was emphasized, Adeola also said private investors needs to contribute their own quota in developing the “all important sector.” “To the private investors, we need more enlightened investors. We need more trainings for people on maintenance. We also need to brace up for the future because the world of automobile is changing rapidly towards cars that now run on battery. So, what are we doing about it?”

Janssen hosts Prostate Cancer awareness event ‘More Time for Life’

n Saturday 8th December 2018, Janssen, one of the Pharmaceutical Companies of Johnson & Johnson, invited guests to ‘More Time For Life!’, a one day health and social networking event that aimed to encourage men to be more proactive in taking control of their health in general and prostate health in particular. Prostate cancer is the most common cancer in men in Nigeria and will affect one in four black men in their life time . The event took place at Astro Turf Ikoyi. The event was aimed at not only significantly increasing awareness of prostrate health issues but also in destigmatizing conversations around prostate cancer, while empowering men and families with important information about life style modification changes that research has shown can play a role in reducing the risk of prostate cancer or improving outcomes for men with prostate cancer. Men over 40 were encouraged to take Prostatespecific antigen (PSA) and other tests, an important step in both identifying prostate cancer earlier and in understanding one’s risk profile. Research shows

Federal Ministry of Health’s National Cancer Control Plan 2018 - 2022, which sets out ambitious goals, including: of making screening services and early detection of cancer available for all Nigerians, as well as increasing cancer awareness amongst the population. National Cancer Control Plan 2018 – 2022 (Nigeria) Prostate Cancer UK . Black Men and Prostate. https://prostatecanceruk. org/get-involved/blackmen-andprostate-cancer/ prostate -cancer-and-your risk. Accessed November 20, 2018

American Cancer Society. Survival rates for prostate cancer. https://www.cancer. org/cancer/prostate-cancer/ detection-diagnosis-staging/ survival-rates html. Accessed December 4, 2018 The event which targeted senior executives intended to create a network of prostate cancer advocates with the ability to influence the prostate cancer health seeking behaviour of men in their organisations and communities. ‘More Time for Life’ partners included mDoc, Project PINK BLUE and the American Business Council.

L-R; Runcie Chidebe, executive director, Project PINK BLUE; Joseph Ishie, research and admin assistant, American Business Council; Michelle Akande, country manager Janssen Pharmaceutical Companies of Johnson & Johnson; Nneka Mobisson, Co-founder & CEO mDoc; Carmen Paping, screening manager Project PINK BLUE at the More Time For Life Event.

that when detected early the survival rate for men with prostate cancer is 98%, dropping to 29% when detected at later stages . Commenting on the event, Michelle Akande, Country Manager, Janssen Pharmaceutical Companies o f Jo h n s o n & Jo h n s o n said: Johnson & Johnson has been responding to healthcare needs for 125 years and our ambition is

to change the trajectory of health for humanity in Nigeria. Today, we are proud to be partnering with mDoc, Project PINK BLUE and The American Business Council to change the trajectory of prostate cancer in Nigeria. Overwhelmingly, late presentation to the healthcare system and poor outcomes characterize the prostate cancer experience of men in Nigeria today. Yet evidence

tells us that early detection and life style modifications can both improve outcomes for those with prostate cancer and reduce the associated risk factors of prostate cancer. It is very important that we increase our individual and collective understanding of prostate cancer. She added: ‘More Time For Life!’ is adding to the national conversation about prostate cancer and is in support of the

participants during the awareness programme

BUSINESS DAY

Monday 10 December 2018

BUSINESS DAY

Monday 10 December 2018

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Voting out Buhari, APC will be best thing for Nigeria in 2019 - Obasanjo RAZAQ AYINLA, Abeokuta

ormer President Olusegun Obasanjo on Sunday restated his stance on possible change of political baton from President Muhammadu Buhari and Yemi Osinbajo-led Nigeria’s presidency, saying what is good for Nigeria now is for Nigerians to vote out All Progressives Congress-led Federal Government. The former President Obasanjo, who was quoted to have responded to a piece of news published by News Agency of Nigeria under the headline: ‘Atiku: Obasanjo Shifts Political Gear to Neutral’ which suggests double dealing on the part of the former President, noted that only a fool would be neutral in the face of current economic crisis, nepotism, lack of focus, insecurity, corruption, among other evils which the APC government represents. Speaking in Abeokuta through a Press Release

signed and made available to BusinessDay on Sunday by Kehinde Akinyemi, Media aide to former President, Obasanjo, condemned the news report which suggested that he was either neutral or double dealing as regards who to vote for in the 2019 general elections between the two leading presidential contestants - President Buhari of APC and Atiku Abubakar of the People’s Democratic Party (PDP). The Press Statement released under the headline: “2019 Elections and Reports of Chief Olusegun Obasanjo’s Neutrality” reads, “While Chief Olusegun Obasanjo is in Cairo to attend the maiden edition of the Intra-African Trade Fair (IATF), of which he is Chairman of the Advisory Council, his attention has been drawn to a report by the News Agency of Nigeria (NAN) with the headline “Atiku: Obasanjo Shifts Political Gear to Neutral.” “It is disingenuous, if not malicious, for anyone to suggest that Chief Obasanjo was being neutral when he chose not to use the Owu Conven-

tion as a platform for political campaign but instead adopt a communal and familial approach in talking to members of his Owu family. “For the records, and as accurately reported by some media organisations, what the former President said at the Convention in Iwo was that while he would not impress any candidates on them, Nigerians should vote for credible candidates who will drive growth and development and make their lives better than it is now. “Chief Obasanjo’s statement did not suggest his neutrality. In fact, the former President believes that only a fool will sit on the fence or be neutral when his or her country is being destroyed with incompetence, corruption, lack of focus, insecurity, nepotism, brazen impunity and denial of the obvious. Chief Obasanjo is no such fool nor is he so unwise. “The former President reassures Nigerians that he will not sit on the fence when he needs to be out and active for people to

CBN, banks set up committee to oversee challenges of exporters, creative industry HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) and the Bankers’ Committee on Sunday took a decision to set up a committee to take a look into some of the challenges faced by exporters as well as the creative industry. The committee headed by a bank CEO is expected to report back in February 2019, which will be the first Bankers’ Committee meeting next year. The essence of this strategy, according to Godwin Emefiele, governor, CBN, is to ensure easy access to credit through the banks or through

the CBN’s intervention funds, by these critical sectors of the economy. “The major focus remains that there are certain critical sectors of the economy that require banking system support and we as banking industry experts need to come together to put in place strategies that will help create access or make it easy for these people to access credit from the banks,” Emefiele said, while addressing journalists at the end of the Bankers’ Committee retreat in Lagos. In 2017, the CBN and the Bankers’ Committee made available N500 billion to support export activities so as to boost export business and

generate export earnings into the country. “We took a review of it and I must confess that that aspect has not widely permeated the system and we wanted to hear from some of the export companies what their challenges were and that was the reason we set up a committee that will look into these issues”. “At this time we are determined they will get the support they need. We will make it easy for them to access the credit but at the same time must put a policy that would ring-fence export earnings in a way that if the funds come in it will be used in a way that will be beneficial to the economy,” Emefiele said.

CIBN accredits Unity Bank Academy

hartered Institute of Bankers of Nigeria (CIBN) has given the Certificate of Accreditation to Unity Bank’s Staff Training Academy. This was done at the execution of linkage agreements with tertiary institutions and presentation of certificates of accreditation to bank academies and training service providers held at the Bankers’ House in Lagos, last week. The accreditation would enable graduates of these institutions to be eligible for exemptions from various subjects in the banking professional examinations, thereby facilitating their completion of the examination in good time. Since the emergence of the new Board and Management, Unity Bank has continued to push the limits of its

transformation and growth agenda to new heights. A statement from the bank says the accreditation is one of the management’s efforts towards building a competitive workforce capable of delivering effective and efficient services to its numerous customers. Commenting on the development, Tomi Somefun, managing director/CEO, said in view of the ever-evolving financial technology companies, fuelled by advances in mobile technologies, there is a growing need for professional trainings to meet up with increased customers’ sophistication. Her words: “While the Bank is focusing on retail and SMEs and the technology to drive the various platforms and encourage savings culture, it is also developing its workforce through continu-

ous capacity building initiatives. This is in line with the two-pronged customer-centric banking approach being deployed to deliver quality banking services to Small and Medium Enterprises in the agricultural value chain.” Speaking at the occasion, president/chairman of Council, CIBN, Uche Olowu, congratulated Unity Bank for working to meet the standards for accreditation, as its Academy has attained the merits for recognition and distinction. While awarding the Certificates of Accreditation, he said it will not only enable them comply with the provisions of the Competency Framework for the banking industry, it will also go a long way in strengthening the intellectual resources and capabilities available in their institutions.

know where he stands in the best interest of Nigeria. “Chief Obasanjo reaffirms that he is on the side of what is best for Nigeria and what we have currently and as the affairs of Nigeria are being run is not the best for Nigeria, so nobody should fool himself or deceive others about Chief Obasanjo’s position. “The former President further urges Nigerians who are victims of what we have for now to stop just complaining and go out to get beneficial change. They must know that such change will not come if they remain inactive just complaining and complacent and they allow themselves to be deceived by sycophants and enemies of Nigeria. “If they do not become active and get much needed change of the current administration to a government that will improve the economy, regain the confidence of investors and generally drive growth, development and economic progress with security, what is coming will be much worse than what Nigerians currently suffer. “On his part, Chief Obasanjo will remain consistent in speaking out whenever and wherever he sees evil as he is known to do no matter whose ox is gored.

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Gender-based violence: Stakeholders charge FG to implement policies FRANCIS SADHERE, Warri

takeholders have charged the Federal Government to encourage gender justice by way of implementing the various policies on gender-based violence in Nigeria. The stakeholders gave this charge weekend in Warri, Delta State, during a stakeholders dialogue meeting on “Amplifying Women Voices Against Gender-Based Violence,” organised in support of “Orange the World Day #Hear Me Too - End violence against woman and girls.” The programme, organised by the Development Initiative for Community Impact (DICI) in conjunction with the Foundation for Partnership Initiative in the Niger Delta (PIND), was in support of the 16 days of activism against genderbased violence, which began on November 25, 2018. Tony Akpoborie, a professor of Hydrology of the Delta University (DELSU), Abraka, who spoke with newsmen shortly after the event, said the issues of gender-based violence in the society was a complicated process, noting that it

varied from one culture to another. “We live in a male oriented and dominant society where emphasis and respect is accorded to the male than the female folks. Though it is more stronger in some culture than others. Remember, each time we dehumanise a women, we are dehumanising ourselves because we all have mothers. “Many policies on gender violence are existing but implementation is the bane. Government should encourage gender justice and implement those policies to curb the menace,” he said. Also, Awhana Mercy, executive director, Hands to Help International Foundation, urged the Federal Government to see the right of women as topmost priority. She lamented that “Yahoo boys” were on the prowl molesting and killing women and girls in different ways, accusing the security agencies of doing nothing about the menace of the criminals. “Therefore, government should make a law and not an Act that anybody that molest a woman, man, boy or girl should be dealt with according to the law,” she said.

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Monday 10 December 2018

Celebrities join Zenera’s 5th FG targets 28 road projects Embrace arbitration as alternative with N100bn second Sukuk dispute resolution, CJN tells Nigerians anniversary cancer awareness walk IHEANYI NWACHUKWU

iven the success of the debut Sukuk issuance, the Federal Government of Nigeria through the Debt Management Office (DMO) is raising another N100 billion Sukuk. The FGN Roads Sukuk Company 1 plc, whollyowned by the Federal Government of Nigeria (the Issuer), is currently offering N100 billion 7-year Al Ijarah Sukuk due 2025 at a Rental Rate of 15.743 percent payable semi-annually. The offer, which opens December 6, 2018, closes December 17, 2018, while the allotment date is December 21, 2018. The DMO is the sponsor of the second Sukuk issuance while FBNQuest Merchant Bank Limited and Lotus Financial Services Limited are the financial advisers to the Sukuk, among other parties to the Sukuk issuance. Sukuk provides attractive returns similar to conventional sovereign instruments issued in the domestic market. Sukuks are specifically

structured to ensure that all funds raised are utilised on visible infrastructure project. The returns on investment in Sukuk are tax-free. “We are here to ensure that Sukuk becomes one of the major vehicles for the Federal Government to develop Nigeria infrastructure. The first Sukuk was very successful and we believe this second Sukuk will be successful as well,” said Taiwo Okeowo, deputy managing director, FBNQuest Merchant Bank Limited. The main objective of the second Sukuk, according to Patience Oniha, director-general, DMO, is to sustain the rehabilitation and construction works on the 25 key economic roads in the six geopolitical zones with three roads now added for more reach. The three new roads projects disclosed during a presentation at a forum last Friday in Lagos for the prospective Sukuk investors are: reconstruction of Bida Lambata Road in Niger State, rehabilitation of Gwoza Bamboa Road in Borno State, and construction of Ikom Bridge in Cross River State.

SEYI JOHN SALAU

hief Justice of Nigeria (CJN), Justice Walter Onnoghen, has urged Nigerians to embrace alternative dispute resolution (ADR) in dispute resolution, as arbitration is a better way of resolving dispute over litigation. Onnoghen, while speaking on the theme, “Rising Cost of Arbitration Fees: A Potential Threat to Arbitration Practice” as keynote speaker of the Nigerian Institute of Chartered Arbitrators (NICArbs), said arbitration had come to stay in Nigeria. “… Arbitration mechanism has come to stay in Nigeria because we cannot afford to lose the advantages associated with its practice. Therefore, the time to make a choice between encouraging the clients and patronising the institution and turning down their offers is now. “We can encourage them if we make the cost of the process affordable. Conversely, they can lose the appetite if we allow the cost to be rising without control mechanism in place,” he said calling on

NICArbs to as a matter of urgency, do everything possible to save the situation. According to Onnoghen, “The recent paradigm shift from litigation to arbitration is predicated on the impression that arbitration is less costly than litigation and this is one of the economic advantages of the mechanism.” The theme is timely, especially in the light of recent resolve by Nigerians to embrace the mechanism as an alternative to court proceedings, he said. “Recourse to arbitration as a method of dispute resolution has been on the increase in Nigeria, and of course the nature of the proceedings and the minimal implications were the drivers. Therefore, if the cost of the arbitration fees should be rising, then, the purpose of the institution would be a mirage,” he said. Fabian Ajogwu, the vice president, Nigerian Institute of Chartered Arbitrators (NICArbs), said the institute was building capacity knowing there was a lot the country could offer instead of exporting all of her arbitration abroad.

n celebration of its fifthyear anniversary, Zenera Consulting, with the support of Lakeshore Cancer Centre, Inspiration FM, Roding Healthcare Limited and Federal Road Safety Corps, organised a walk themed, Hope Beats Cancer, to show support for people fighting cancer as well as raise awareness on the importance of cancer screening and early detection. Indoor Designs, Westbrand Nigeria, Strategic Effects and Garden Splash also supported it. The 2.8-kilometre walk took place December 1, from Inspiration FM premises and terminated at Muri Okunola Park, Victoria Island. In attendance were popular Nollywood actor, Yomi Fash-Lanso; Ego Crooner, DJinee; TV host, Denrele Edun; music producer, Tee-Y Mix; singer and guitarist, Aramide; Mr Universe Nigeria 2018, Allison Nelson and lead pastor of The Elevation Church, Godman Akinlabi. “As we clock five as an organisation, we found a way to use our edge in branding for a good cause, and cancer came as a valuable knowledge point for us considering the low level of awareness in Nigeria. What people don’t know is that there are four

screen-able forms of cancer. You can do something about prostate, breast, colon and cervical cancer. When you detect them early enough, they are treatable and completely curable,” Meka Olowola, managing partner of Zenera Consulting, said. WHO estimates that there is over 14 million new cancer cases every year, and 8.8 million cancer-related deaths worldwide. In Nigeria, several cases of death from various forms of cancer are recorded yearly. Unfortunately, there is no reliable data on the disease in the country due to poor health infrastructure. Singer and songwriter, Aramide, said during the walk that she lost her uncle to cancer, saying, “My uncle died from cancer, and it was really painful. More than anything else, this walk organised by Zenera Consulting presents a good opportunity to actually show some support.” She also advised that people take their health seriously, to have a fighting chance against cancer. “If you feel anything strange in your body, go and get it checked out and take your health seriously, and whatever happens just keep hoping,” the two-time Headies Award winner said.

Monday 10 December 2018

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BUSINESS DAY

NLNG dividend use to finance fuel importation, CBN to leverage NIPOST to establish National MFB in 774 LGs January 2 Niger Bridge, Lagos-Ibadan rail line HOPE MOSES-ASHIKE

... as NNPC affirms right to make withdraws OLUSOLA BELLO

he Nigerian National Petroleum Corporation (NNPC) says the dividend from the Nigeria Liquefied Natural Gas (NLNG) Limited was used to finance fuel importation, 2 Niger Bridge, Mambila power project and Lagos-Ibadan rail line. The Corporation, while throwing more light on the probe of alleged illegal withdrawal from the NLNG Dividend Account by the Senate stated that there was nothing illegitimate about the withdrawals made from the account so far. At an interactive session with the media over the weekend in Lagos, Isiaka Abdulrazaq, the Corporation’s chief financial officer, said the clarification was made by the corporation’s chief financial officer, clari-

fied that the Senate probe was not about missing money as was being insinuated in some quarters, but rather an investigation into whether NNPC acted legally in withdrawing the sum of $1.05 billion from the NLNG Dividend Account to support fuel importation. He said that the funds was withdrawn to finance fuel importation, 2 Niger Bridge, Mambila hydro power project and Lagos Ibadan rail line According to him, while granting the statutory right of the legislators to carryout oversight functions, the NNPC CFO said relevant extant laws such as the Appropriation Act 2018 defines revenue from NNPC as net of cost, indicating that NNPC has the right to defray the cost of its operations from earnings. He also cited the NLNG Act which explicitly pro-

vides that NNPC could defray its cost from the dividends, as one of the legal grounds relied upon for the expenditure without recourse to appropriation by the National Assembly. Expatiating further on the matter, Abdulrazaq, according to the release, cited the case instituted by some state governments in 1999 seeking the interpretation of revenue on account of their contention that all accruals from oil and gas operations amount to revenue and should be swept into the Federation Account. The ruling on that case by the Supreme Court in 2002, according to him, was in tandem with NNPC’s position that revenue is accruals net of cost. “We have provided the legal authority on which we rely to use funds from the NLNG Dividend Account to the Senate”.

entral Bank of Nigeria (CBN) and the Bankers’ Committee will by January 2019 leverage the Nigerian Postal Service (NIPOST) to establish the National Microfinance licence banks in 774 local governments across Nigeria. This is part of efforts to enhance access to finance by Small and Medium Enterprises (SMEs), create jobs and promote financial inclusion. The NIPOST will provide the facility as its equity contribution while the CBN and the Bankers’ Committee will provide the infrastructure. Godwin Emefiele, governor of CBN, disclosed this in Lagos at the 10th annual Bankers’ Committee retreat themed ‘export-led transformation of the economy - engine for sustainable inclusive growth.’ The National MFB will operate with N5 billion capital base funded through the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS). The CBN governor said the Bankers’ Committee and NIPOST would have representation on the board of the proposed national MFB. Emefiele was concerned that access to credit by SMEs

was still a major issue despite the several real sector intervention initiatives launched by the bank, like the AGSMEIS, which he said was an initiative of the Bankers’ Committee that had so far raked in over N60 billion, but was still not being accessed by these small businesses. “Today, the central bank has N220 billion that is set aside under the micro small and medium enterprise fund. Nigerians were happy when they heard that the banks out of their magnanimity decided that 5 percent of their profit would be set aside to support Agric business and SMEs (AGSMEIS),”

Emefiele said. Speaking further, he said, “We have over N60 billion under the AGSMEIS currently in the CBN and why should that money be sitting in CBN and just be earning Treasury bill rates. It is meant for the micro small and medium enterprises and for the weak in our economy that would not ordinarily have access to knock at your door.” The proposed national MFB would be expected to engage in strategic partnership with NIPOST- leveraging on NIPOST locations- while the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL),

Stakeholders call for collaborative efforts on basic education in Lagos SEYI JOHN SALAU

takeholders at a day sensitisation workshop on basic education called for a more collaborative efforts between government and the various interest groups in the educational sector to come up with strategies and modalities to strengthen basic education in Lagos State. This was the outcome of the sensitisation workshop of community stakeholders on basic education projects in the Lagos State Universal Basic Education Board (SUBEB) 2017 action plan. Olufunso Owasanoye, executive secretary of Human Development Initiatives (HDI) in a statement, said, “Without the right enabling environment quality education cannot be made possible. Hence, the high

rate of school dropouts and out-of-school children in Nigeria.” Owasanoye stated that the project was to sensitise stakeholders in monitoring the UBE projects in Lagos, “Because it is in their communities, we want them to own it. We do not want them to be passive owners of government projects; there are so many things the government is doing for schools that deals with renovation, fencing and provision of furniture, and now that we have the action plan that specify what is expected of each schools – the needs of the school.” She opined that the monitoring team educated their members on the action plan and also ensure provision of items in the action plan was made to meet specifications in the plan. Adebodun Dosumu, the

director of social mobilisation of SUBEB, said the board wanted the community to be aware and take ownership of the projects in the 2017 action plan for Lagos state. According to Dosumu, government projects within communities will serve the people better when they take full ownership and responsibility. “In as much as it is a government project; as long as the school projects are within the community, then the community should take ownership of the projects,” she stated. She opined that projects under the action plan are selected based on request and monitoring by SUBEB project officers to develop a school development plan (SDP), stating further that prioritization of projects is done by SUBEB based on availability of funds.

Yuletide: NAMA commences flight calibration of navigational aids IFEOMA OKEKE

head of the yuletide, the Nigerian Airspace Management Agency (NAMA) says it has commenced a routine calibration of navigational facilities in 24 airports across Nigeria. In a statement issued by the agency Sunday, it

said when completed in two weeks’ time, the calibration exercise targeted at putting all navigational aids in optimal capacity would ensure that the facilities generate precise and accurate signals to guarantee the safety of air navigation in the country. Also to be calibrated and commissioned are the newly installed ILS/DME

facilities in Lagos and Port Harcourt airports. “The Nigerian Airspace Management Agency (NAMA) therefore wishes to reassure the flying public of the safety of the nation’s airspace as all necessary measures are in place to ensure safe, efficient and seamless flight operations in Nigeria,” the statement said.

64 BUSINESS DAY NEWS Hiccups in fuel supply as DAPPMA makes real threat to withdraw services OLUSOLA BELLO

... NNPC assures of enough products

here would be hiccups in the supply of petroleum products in Nigeria as the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMA) Sunday insisted that its members would withdraw their services as planned today, Monday, and refuted reaching an agreement with the Federal Ministry of Finance on the payment of the N800 billion subsidy arrears. If the 65 members of the association decided to withdraw their services the impact would be significantly felt in most parts of the country, as they mostly service the hinterlands through their coastal depots. However, the Nigerian National Petroleum Corporation (NNPC) said it had fast-tracked agreements with bulk purchase market-

ers in the country, according to a statement released weekend in Abuja by the corporation’s group general manager, group public affairs, Ndu Ughamadu. Quoting the NNPC chief operation officer, Downstream, Henry Ikem Obih, Ughamadu stated that all NNPC depots, Petroleum Products Marketing Company (PPMC) throughput partner depots, the Major Marketers depots and depots of Depot and Petroleum Products Marketers Association of Nigeria (DAPMAN) members who signed the Bulk Purchase Agreement with PPMC as well as NNPC retail stations, Major Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) filling stations, would continue to operate at maximum levels to ensure uninterrupted distribution of petroleum

products nationwide. Olufemi Adewole, executive secretary, DAPPMAN, told BusinessDay that nothing had changed from it earlier decision of closing shops today because of government refusal to pay them their money. However, another twist has been added to the saga as MOMAN, another strong association in the downstream, told BusinessDay that it was not part of the deal of withdrawing it services. Clement Isong, its executive secretary, told BusinessDay that his association was not part of the threat of withdrawing services. Olufemi Adewole, in a statement signed by him at the weekend, reiterated that there was no agreement, claiming that offers by ministry failed to meet the legitimate demands of the association.

“We refer to the press release from the Federal Ministry of Finance on December 6 following the meeting with marketers under the aegis of MOMAN, and DAPPMA, and IPMAN, said the marketers had agreed to resume operations. “We did not signed the purported document with government as claimed. We still stand by our ultimatum,” he said. He also said with the development, the ultimatum still stand, while adding that the marketers could not continue to borrow money to pay staff salaries. It would be recalled that the oil marketers on December 2 gave the Federal Government seven-day ultimatum to settle outstanding N800 billion subsidy payment debts. They said failure of the Federal Government to make the payment of the arrears would lead to depots ceasing operations across the country.

L-R: Adedoyin Shobiye, company secretary; Babatunde Rufai-Lariba, MD/CEO, Crownrise Finance plc; Abayomi J. Babalola, chairman, Crownrise Finance; Adegboyega Akinpelu, director, Crownrise Finance, and Kayode Ogunjimi, director, Crownrise Finance, at the company’s annual general meeting in Lagos.

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Funke Opeke honoured with Data Centre Dynamics ‘Business Leader of the Year’ award

he Data Centre Dynamics (DCD) Awards has announced MainOne CEO, Funke Opeke, with the 2018 Data Centre Dynamics Business Leader of the Year award at the 2018 edition at the Royal Lancaster, London, last week. The Business Leader of the Year Award recognises a company or individual that has done the most over the past 12 months to build the profile of the data centre industry to key stakeholder groups including investors, shareholders, financiers, owners, operators, the media and/or government. Selected by an independent panel of data centre experts from hundreds of entries from across the world, Opeke was recognised for her role in leading her company, MainOne to success in West Africa, taking on the task of building a Tier III certified data centre from the ground up with cables connecting it to the rest of the world, as well as her ability to assert herself, deliver results and actively take on challenges within a male-dominated field while encouraging other women in her team to do the same. Expressing her delight at winning the award, the Opeke, who was unable to attend the awards, shared a one-minute video where she thanked the organisers of the DCD Awards for the award and affirmed the company’s commitment to the digital transformation of West Africa “Digital infrastructure is so critical to improving productivity and helps build economies and we are truly committed to ensuring that West Africa is well connected with the rest of the world and that we are able to provide high quality and low latency access to services to people in our region.”

Monday 10 December 2018

Bank directors seek CIBN support on professionalism, ethics in industry HOPE MOSES-ASHIKE

ank directors, under the umbrella of Bank Directors’ Association of Nigeria (BDAN), are soliciting the cooperation of the Chartered Institute of Bankers of Nigeria (CIBN) in the area of professionalism and ethics in the banking industry. The Institute’s cooperation is necessary as BDAN is planning to hold its conference by the second quarter of 2019, where new directors would be inducted on ethics and professionalism as well as on their roles and responsibilities. Leading her new theme on a courtesy call to the governing council of the CIBN in Lagos, Osaretin Demuren, president of BDAN, explained that the aim of this induction would be to enlighten new directors on their roles and responsibilities as directors thereby complementing the efforts of the executive directors and also the efforts of the CIBN. Demuren was worried that the attendance of the BDAN at the last annual general meeting was less than what it used to be, pointing to the need for more awareness. She disclosed that the association was working to establish an alumni group for bank directors and would invite facilitators at the induction programme that it planned for especially non-executive directors. The association has chosen a theme for the conference, which is, ‘Cyber security and performance of banks the role of the board.’ Responding to what she is bringing on to make a difference to the association as the new president, she said, “The experience I have. I can always advocate for integrity, honesty, which is why we are here. Whatever CIBN is doing, we are only complementing it.

Youth entrepreneurship is key to Africa’s future - Al Sisi

Gridlock: Ambode orders strict enforcement of traffic laws

ith a majority of African nations diversifying from traditional sources of income, entrepreneurship is increasingly seen as a key to economic growth. Leading business forum Africa 2018, which kicked off in Sharm El Sheikh Sunday recognised this fact by hosting Young Entrepreneurs Day (YED), which brought Africa’s most inspiring business leaders as well as renowned captains of industries and key actors from the tech world to provide first-hand insights on business, leadership, technology and disruptive business models to support young entrepreneurs developing their business skills. Finding the right partners, mentors and investors is paramount for success-

JOSHUA BASSEY

fully scaling up your business. YED offered young entrepreneurs several opportunities to meet leading angel investors, venture capital firms, accelerators, incubators and policy-makers via its spectacular DealRoom. The YED concluded with an intergenerational dialogue attended by 5 startups and also Presidents Al Sisi of Egypt and President Kagame of Rwanda. President Al Sisi said, “We are increasingly sending a clear message to the world that Africa is the future of the world economy and more so entrepreneurship.” He highlighted the laws that have been promulgated in the country had been done to encourage youth to establish companies and empower them, and called

for the youth to never waver from following their dreams. President Kagame said the growth of Africa’s population was really not a threat but an advantage for Africa, but right investments are required to make it work. “The right investments are in our people but we need facilitation to get us where we want to go.” With more than 60% of its population under the age of 25, sub-Saharan Africa is already the world’s youngest region today - and, by 2030, will be home to more than one-quarter of the world’s under-25 population. As this young population, the best-educated and globally connected the continent has ever had, enters the world of work, the region has a demographic opportunity.

agos State governor, Akinwunmi Ambode, on Sunday ordered the Lagos State Traffic Management Authority (LASTMA) and relevant security agencies to strictly enforce the provisions of the state traffic laws to bring about sanity on the roads. Ambode also ordered the state Attorney General and the Ministry of Justice to immediately increase the number of mobile courts in the state to 20 to summarily prosecute traffic offenders. This is as he revealed that LASTMA lost a total of 18 officers on their line of duty, in the last one year, the latest being Rotimi Adeyemi, who was shot dead by a police inspector, while controlling traffic in Iyana Ipaja area of

the state last month. Speaking with reporters after a strategic session with LASTMA leadership and heads of other security agencies in Oshodi, Ambode said the government would no longer accept the violation of the state traffic laws. “Government will go down and deal squarely with any traffic offender from this moment onward. We cannot allow people to continue to commit offences for which we need to discipline for. We don’t want people to take advantage and say this is Christmas or election period, we have majority of our people to protect and we have the majority of our people to use the roads safely. So, we will not allow traffic offenders to go scot-free anymore,” Ambode said. He said aside the mobile

courts, more policemen had also been deployed to patrol the nooks and crannies of the state to ensure security and free flow of traffic. Meanwhile, the governor had commiserated with LASTMA over the killing of one of its officers, Rotimi Adeyemo. He said the incident was one too many, revealing that a total of 18 officers were lost to such unfortunate situation, and 24 permanently incapacitated in various hospitals in the last one year. “Just last week, we lost one of our LASTMA officers in the person of Rotimi Adeyemo who met his untimely death while controlling traffic. So, I have come here on behalf of government to commiserate with all the LASTMA officers in their office.

Monday 10 December 2018

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BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Government insists vote on Brexit deal will go ahead Theresa May faces almost certain defeat in Tuesday’s parliamentary vote HENRY MANCE

rime Minister Theresa May will not delay Tuesday’s parliamentary vote on her Brexit deal, Stephen Barclay, the secretary for leaving the EU, insisted on Sunday, even though the government faces almost certain defeat. Cabinet ministers and senior backbenchers have reportedly been arguing for a delay that could allow Mrs May to return to Brussels to argue for more concessions. However, asked by the BBC’s Andrew Marr if the vote was 100 per cent going ahead, Mr Barclay replied: “It is”. Downing Street also said the vote would proceed as scheduled. However, its position could ultimately change in the run-up to the vote on Tuesday evening; it could also try to appease critics by amending the motion on the deal. The government had hoped to build momentum in the days before the vote, with dozens of ministers making media appearances on Saturday. However, more Conservative MPs announced over the weekend that they planned to vote against

Mrs May’s deal. Will Quince, a pro-Brexit MP for Colchester, said he could not accept “the consequent indefinite nature of the customs union if the [Northern Irish] backstop is triggered”. He resigned as parliamentary private secretary to the defence secretary Gavin Williamson. Andrew Mitchell, the Remainbacking former chief whip, said he was also opposing the deal because it would “leave us as a rule taker” and would place the UK “in a fundamentally weak and subservient position” in future negotiations with the EU. Separately, a cross-party committee of MPs said Mrs May’s deal does not offer “sufficient clarity or certainty about the future”. Meanwhile, Donald Tusk, president of the European Commission, on Sunday tweeted : I had a phone call with PM @theresa_may. It will be an important week for the fate of #Brexit. More than 100 Tory MPs have now said they oppose the deal, meaning that Mrs May faces the worst defeat of her premiership on Tuesday.

Boris Johnson, the former foreign secretary, denied that the prime minister would have to step down if she lost. He said a Commons vote against the deal would be “a powerful mandate” to change the Irish backstop, the insurance policy agreed by the EU and the UK to avoid a hard border. Mr Johnson pointed to com-

ments from Romano Prodi, the former European Commission president and Italian prime minister, saying that Brussels would have to negotiate in such a scenario. The EU has said it will not renegotiate the withdrawal agreement, which lays out the backstop. Meanwhile, Mr Barclay rejected suggestions that the government

could seek Norwegian-style membership of the European single market. Amber Rudd, the work and pensions secretary, said that such an option was politically “plausible”, and Hilary Benn, the Labour chair of the Brexit select committee, lent his support. But Mr Barclay said it would not honour the 2016 referendum result.

Nissan seeks to block Ghosn family Emmanuel Macron to address nation after weekend of street violence France’s president under pressure to defuse ‘gilets jaunes’ protests access to Brazil apartment next week, a government spokesman in 2019, close to an EU ceiling of 3 per DAVID KEOHANE AND BEN HALL Carmaker cites ‘high likelihood of evidence being removed or destroyed’ KANA INAGAKI AND LEO LEWIS

issan has sought to deny family members of Carlos Ghosn access to an apartment in the Copacabana neighbourhood of Rio de Janeiro in a bid to protect what the carmaker claims is potential evidence of misconduct by the arrested former chairman. In a statement on Sunday, Nissan said it was appealing against a local court decision that granted permission to Mr Ghosn’s representatives to enter the companyowned apartment to retrieve personal belongings. Nissan said it opposed the decision due to “a high likelihood of evidence being removed or destroyed”. The Japanese carmaker believes a safe in the apartment contains evidence that funds from a Nissan subsidiary in the Netherlands, called Zi-A Capital, were used to purchase the residence, a person with knowledge of the dispute claimed. When Zi-A was formed, Greg Kelly, another Nissan board mem-

ber and Mr Ghosn’s close aide who was also arrested, explained to the company’s executive committee that it would be used for venture capital investment. Tokyo prosecutors are investigating whether Zi-A, which received an investment of more than €70m from Nissan, was used to purchase personal residences in Lebanon and Brazil in 2011 and 2012. Members of Mr Ghosn’s family are seeking to retrieve family documents and personal possessions from the apartment but have said they are prepared to do so in the presence of a judge or court officer in order to ensure that the process is transparent. They are also nervous about representatives of Nissan entering the house without a court officer present, according to people familiar with the family’s thinking. Separately, Nissan suspects the safe may hold details of dealings Mr Ghosn had with prominent political and business figures in Brazil, some of whom were later Continues on page 66

rench president Emmanuel Macron will address the nation in the coming week as pressure builds on him from allies to heal the rift opened by the gilets jaunes who have shaken the country with violent and disruptive protests. Jean-Yves Le Drian, minister of foreign affairs, called on the president to “talk about the implementation of a new social contract” after a weekend in which shops were looted and cars burnt in running battles between protesters and heavily armoured riot police. In another implicit call for the president to take steps to defuse the protests, Bruno Le Maire, finance minister, told journalists that there was “a crisis of democracy, a crisis of our nation . . . and the answer has to be on that level”. The gilets jaunes, or yellow vests, are a disparate movement, sparked by anger over green fuel-tax increases, with disparate demands that focus on living standards. Mostly, they are united in distrust of Mr Macron, whom they see as ignorant of the realities of their daily lives. The president himself has stayed mostly silent, monitoring the antigovernment protests that have plunged his presidency and its reforms into a deep crisis. So far, Mr Macron has pushed his prime minister, Edouard Philippe, to the fore but the president will make “important announcements” early

confirmed on Sunday. Mr Macron will also meet a broad swath of local elected officials, unions and trade organisations on Monday morning. Mr Macron’s efforts to appease the gilets jaunes — including scrapping a planned fuel tax increase, the first major policy reversal of his tenure — have so far been deemed too little too late. “In fact everything he says is a lie, we want him to resign,” said Laetitia Belin, from Alsace, who was protesting in Paris on Saturday. According to the Elysée Palace, Mr Macron wants to bring together “all of the political, regional, economic and social forces in this grave moment for the nation, in order to hear their voices, their proposals and with the aim of mobilising them to act”. Much is now riding on the policies Mr Macron might unveil. One temptation will be to try to spend his way out of the crisis. The fuel tax about-turn will cost the French state €4bn but economists think he will have to pay more. “There will have to be a bargain with the French, to say, ‘OK we will continue with the economic reforms . . . but we will buy from you the capability to continue by increasing transfers to those on lower incomes,’” said Patrick Artus, chief economist at Natixis. Mr Artus said the government may have to abandon its plans for a deficit of 2.8 per cent of gross domestic product

cent. “The most intelligent thing he can do is a one-off public transfer to those on the lowest incomes, say of €10bn. That could push the deficit up over 3 per cent”, he said. However, Mr Artus said the French government may have room to manoeuvre, since a portion of the deficit is due to a one-off effect of how payroll taxes are applied. Without that effect, the deficit would be closer to 1.9 per cent. Mr Le Maire has said the economic cost of the protests will be catastrophic. But Gilles Moec, economist at Bank of America Merrill Lynch and a former official at the Banque de France, said the market could cope with higher borrowing. “What really matters more to international investors are steps to raise France’s potential growth, not a slightly higher deficit,” he said. So far, the French government has said it will stick to its deficit plans, implying spending cuts, tax rises or tapping a contingency reserve. It could reinstate the wealth tax, a prominent demand of the protest, after it was replaced last year, but Mr Macron has already pushed back that suggestion. The government has floated other spending measures: the creation of a commuter’s allowance for lowincome rural drivers, a special employment bonus for workers on low incomes and the reinstatement of tax breaks on overtime.

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NATIONAL NEWS

FT Nissan seeks to block Ghosn family access...

China summons US ambassador over ‘vile’ arrest of Huawei CFO

Continued from page 65

jailed on bribery and corruption charges. Nissan has seized companyowned residences in Rio de Janeiro and Beirut that were used by Mr Ghosn after Tokyo prosecutors arrested the former chairman for allegedly understating his pay in financial documents, according to people with knowledge of the developments. A separate internal investigation by Nissan alleged that Mr Ghosn used company funds for personal uses. People with knowledge of the investigations say Mr Ghosn, who remains chairman and chief executive of France’s Renault, is also suspected of using nonconsolidated subsidiaries in the Netherlands to buy personal residences in Beirut, Rio de Janeiro and Paris. The escalating legal dispute with Mr Ghosn’s family members comes as Tokyo prosecutors are expected to indict Mr Ghosn and Nissan as soon as Monday over the alleged falsification of financial statements, according to two people with knowledge of the investigation. Among the individuals that Nissan believes Mr Ghosn had dealings with is Eike Batista, formerly Brazil’s richest man. In July, the energy, logistics and real estate magnate was given a 30-year prison sentence for paying $16.6m to Sérgio Cabral, his former friend and then governor of the state of Rio de Janeiro, for help with his business ventures. Mr Ghosn is also believed to be friends with Cabral, according to the person with knowledge of the Brazilian legal dispute. Last year, Cabral was sentenced to 14 years in prison on corruption and money laundering charges. People familiar with the investigation say that none of the interrogation that Mr Ghosn has so far undergone touches on his alleged dealings with prominent figures in Brazil. Nissan has not formally accused Mr Ghosn of any inappropriate connections with Batista or Cabral. The Japanese carmaker has sought similar measures to block the access of Mr Ghosn’s family members to his residences in other cities although it has not been able to access his residence in Paris. Mr Ghosn’s Japanese lawyer could not immediately be reached for comment. A spokesman representing Mr Ghosn’s family declined to comment. Mr Ghosn has denied to Tokyo prosecutors that he intentionally understated his pay in financial documents, according to Japanese broadcaster NHK.

Monday 10 December 2018

Beijing also warns Canada of ‘serious consequences’ following detention of Meng Wanzhou TOM HANCOCK , KATHRIN HILLE AND DEMETRI SEVASTOPULO

C Emmerson Mnangagwa, Zimbabwe’s president, has tried to attract foreign investment but financial instability is still a barrier © Reuters

Foreign investors should help Zimbabwe shed pariah status

A joint foreign and domestic task force would help clear a path to financial stability GARY KLEIMAN

merging and frontier stock markets have been battered this year, with one unusual exception: Zimbabwe’s MSCI index was up more than 200 per cent in early October and is still up more than 90 per cent for the year, thanks to local investors desperate to preserve the value of their savings. Bank collapse and hyperinflation are again looming a year after longtime president Robert Mugabe was forced to resign. His successor and former deputy Emmerson Mnangagwa won his own term for the ruling Zanu-PF party at elections in July, with the opposition claiming widespread violence and vote-rigging. The president and his team, with Mthuli Ncube, former chief economist at the African Development Bank, as finance minister, have tried to shake off years of international commercial sanctions and shunning, with outreach at this year’s IMF-World Bank meetings and conferences in the US and the UK. Their return to the global investor stage is so far symbolic. They have endorsed the privatisation of state enterprises, fiscal discipline and clearance of official arrears, while the banking and multi-currency systems heavily reliant on electronic

transfers and artificial “bond notes” unravel. Foreign portfolio investors remain at a distance from the monetary chaos and lingering pariah status, when they could join their domestic counterparts in formal collaboration to press for urgent steps to hasten a return to the developing financial market mainstream. In October, an executive delegation hosted by the US Chamber of Commerce and Corporate Council for Africa in Washington proclaimed Zimbabwe “open for business”. However, banking and finance were not represented, even as presentations focused on the difficulties of accessing credit and funding normal operations in real estate, energy, agriculture and technology. Potential partners attending the roundtable noted the absence and the basic nature of the slide shows, reflecting the delegation’s inexperience at global investor gatherings. Zimbabwe’s ambassador urged participants to consider the country’s human and natural resources, after a long period in which cross-border engagement was confined mainly to the South Africans and the Chinese. A State Department official expressed the Trump administration’s view that political and economic reforms were preconditions to stronger

diplomatic and trade ties, as individuals associated with the Mugabe regime remain under asset freezes. President Mnangagwa later ramped up the rhetoric at a Financial Times event in London, where he compared planned restructuring efforts to the UK’s Thatcher “revolution” four decades ago in cutting the public sector payroll and selling off state-run companies. He promised to collect taxes and proposed a new levy on electronic transfers comprising 95 per cent of financial transactions, and targeted hundreds of millions of dollars in revenue through an anti-corruption crackdown. He talked of a “zero tolerance” campaign that had resulted in the arrests of top business and government people, with suspects going into exile to avoid investigation. As a strong signal, former president Mugabe’s energy minister was sentenced to prison for contract fraud. GDP growth this year may exceed the IMF’s 3 to 4 per cent forecast, with gold production already higher than in 2017, while the private sector will expand in farming with compensation for previous seizures. The president lauded Minister Ncube’s overtures to official creditors on debt settlement, and progress toward a full IMF programme.

John Kelly to step down as Trump’s chief of staff President says top aide will leave White House later this month

S president Donald Trump said John Kelly will leave his role as White House chief of staff later this month, the latest in a long line of senior departures from the administration. “John Kelly will be leaving — I don’t know if I can say ‘retiring.’ But, he’s a great guy. John Kelly will be leaving at the end of the year,” the president told reporters. Mr Trump said he will announce a replacement over the next day or two. “It might be on an interim basis,” he added. The retired marine corps general was brought in by Mr Trump last year to impose order on what was widely seen as a chaotic White House. He was considered to have had some success. But his relationship with the US president, who chaffed against his appointee’s style, had begun to deteriorate. Mr Kelly was forced to deny claims in a book by Washington

Post reporter Bob Woodward that he had referred to Mr Trump as an idiot. CNN on Friday reported that Mr Kelly was no longer on speaking terms with Mr Trump and would leave the administration within days. Mr Kelly’s ouster is the most dramatic of a recent shake-up in the administration following the midterm elections last month, in which the Republicans lost control of the House in one of the party’s worst ever performances. On Friday, Mr Trump announced a replacement for Jeff Sessions, who the president sacked in the days after the midterm elections. He nominated William Barr, a lawyer who served as attorney-general in the George HW Bush administration, to once again hold the top legal job in the US government. He said he would nominate Heather Nauert, the current state department press secretary, to succeed Nikki Haley as US ambassador to the UN.

On the same day he lashed out at his former secretary of state state, calling Rex Tillerson “dumb as a rock” after he had said that the president had frequently asked him to push policies that would have involved breaking the law or breaching treaties. Mr Trump said Mike Pompeo, the current secretary of state, was “doing a great job,” but that his predecessor Mr Tillerson “didn’t have the mental capacity needed” to head the state department and oversee US foreign policy. On Saturday, Mr Trump also confirmed that he would nominate four-star general Mark Milley to be the next chairman of the Joint Chiefs of Staff, to replace Joseph Dunford, a marine general, who was due to step down in October 2019. Gen Milley, a Princeton graduate, would become the fourth successive Irish-American to hold the top uniformed position in the US military.

hina has summoned the US ambassador in Beijing to demand the cancellation of an arrest warrant for Meng Wanzhou, chief financial officer of Chinese telecoms company Huawei, in the latest sign that her detention is souring relations between the two powers. Beijing also threatened Canada with “serious consequences” following the arrest of Ms Meng in Vancouver, highlighting how the stand-off is spilling over into other countries’ relations with China. Ms Meng, the daughter of Huawei founder Ren Zhengfei, was arrested on December 1 while in transit in Vancouver following on a US extradition request. According to a prosecutor at a bail hearing in the city on Friday, Washington accuses Ms Meng of lying to US banks to circumvent US sanctions on Iran. Ms Meng’s arrest immediately raised fears that the truce in the US-China trade war that presidents Donald Trump of the US and Xi Jinping of China announced a week ago would be derailed. But Robert Lighthizer, the US trade representative, said the case “shouldn’t really have much of an impact” on the talks between the US and China aimed at defusing the trade war between the countries. “This is a criminal justice matter. It is totally different from anything I work on,” Mr Lighthizer told CBS television on Sunday. The Chinese foreign ministry said it had summoned US ambassador Terry Branstad on Sunday to lodge a “solemn protest”. Le Yucheng, vice-foreign minister, was cited by the ministry as saying that the US had “seriously violated the legitimate rights and interests of a Chinese citizen in an extremely vile way”. “We urge the US to pay attention to China’s justified and solemn position, to immediately correct its mistaken actions and cancel the arrest warrant against this Chinese citizen,” Mr Le was cited as saying. The foreign ministry also summoned Canada’s ambassador to Beijing on Saturday to lodge a strong protest and call for the immediate release of Ms Meng. Failure to do so would “create serious consequences, and Canada will bear the full responsibility”, Mr Le said, adding that Canada’s detention of Ms Meng was “in disregard of the law, unreasonable, merciless and very evil”. Huawei, one of China’s most successful technology companies, has failed to make inroads in the US market because Washington has long blocked its attempts at acquiring local companies and selling its gear to major local networks. The US administration believes that the Chinese company poses a threat to national security because it is concerned Huawei could help the Chinese military, through compromised equipment, spy on America.

Monday 10 December 2018

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BUSINESS DAY

ANALYSIS

Dell: the tricky maths of a reverse merger Five years after quitting Nasdaq the technology group is to return to the public markets after a fierce fight over valuation company once valued at $18bn on the US stock market will come full circle on Tuesday when shareholders in a little-known listed entity called DVMT vote on whether to accept a reverse merger offer from Dell. If they say yes — and most observers expect them to — the computer company born in Michael Dell’s dormitory room almost 40 years ago will return to the stock market after a five-year hiatus with a hotly disputed enterprise value of as much as $100bn. Away from the glare of Wall Street, Mr Dell — who had become frustrated with the mutual funds and retail investors who dismissed his efforts to reinvent the company — celebrated the solitude of the private market, saying the company had “the freedom to invest in a future that lies beyond the next quarter”. The deal was secured with the help of Silver Lake Partners, a prominent Silicon Valley-based

raised tens of billions of dollars to target entrepreneurs who have preferred to build shareholder value outside public markets before going to the market to crystallise their gains. The question has become how public investors can grab a part of that pie. “Private equity can buy up companies, fix operations and make them more nimble,” says Jill Fisch, a professor of corporate law at the University of Pennsylvania. “But for the public investors on the other side of leveraged buyouts, there is the risk of buyouts being opportunistically timed.” The seeds for the Dell management buyout were planted in Hawaii. Mr Dell’s vacation home is not far from that of Egon Durban, a brash dealmaker who joined Silver Lake at its launch in 1999. The buyout firm had made a name for itself after lucrative bets on companies such as Alibaba and Skype. Mr Dell, who owned nearly a fifth

private equity firm. The business logic for relisting is clear. What was once a fading PC business has been transformed into a diversified technology group going head-to-head with the likes of IBM, Microsoft, Hewlett-Packard and Cisco. But Dell’s route back to the public market has proved controversial, triggering an M&A brawl that pulled in activist investors including Carl Icahn, raised questions over private company valuations and led to accusations from some shareholders that Mr Dell and Silver Lake were playing hardball in the brutal talks around the DVMT deal to squeeze every cent they could get for themselves. A spokesman for Mr Dell and Silver Lake said that they would not comment for this story in advance of Tuesday’s shareholder vote. Mr Dell and Silver Lake invested roughly $10bn in Dell, starting in 2013. Their combined stake of about 75 per cent is now worth more than $25bn. But some DVMT shareholders — including Mr Icahn, who has led opposition to the reverse merger, activist hedge fund Elliott Management, and the massive index investor BlackRock — successfully argued for improved terms for all shareholders. “Although they [Mr Dell and Silver Lake] got their pound of flesh,” says Mr Icahn, “if we hadn’t been there, it would have been three [pounds].” The reverse merger leaves perhaps $10bn of extra value accruing to Mr Dell and Silver Lake from the public shareholders of DVMT. For some, the half-decade saga has confirmed that savvy private equity firms enjoy an advantage over public market investors. US stock markets have experienced a sharp decline in IPO listings. While over the same period private equity firms such as Silver Lake have

of the company, spent $14bn on several software acquisitions in the years leading up to 2013 in an effort to turn Dell into a one-stop shop for corporate IT departments. Unfortunately, shareholders were unimpressed, sending Dell’s shares down by nearly a third between 2010 and 2012. By 2013, Mr Dell and Mr Durban struck a deal to take the company private at a price of $13.88 a share, a premium of more than 40 per cent. But shareholders were wary. Management buyouts, where chief executives have insights into the business that ordinary shareholders lack, are unpopular. “MBOs should be removed from the corporate lexicon,” says Charles Elson, a governance expert at the University of Delaware. “The CEO is both a buyer and a seller in the transaction and is hopelessly conflicted.” Investor unrest forced up the bid by a couple of per cent. Yet by the beginning of 2014, Dell was a private company and saddled with $18bn of debt — including $2bn borrowed from Microsoft. In many ways Mr Dell and Silver Lake complemented one another. The founder was a tech fanatic with little interest in the intricacies of finance. With Silver Lake glued to the numbers, he could focus on strategy. The buyout timing was also propitious. The Nasdaq index appreciated by nearly 20 per cent between the end of 2013 and the end of 2015. And though Dell did not have an official stock price, given its high leverage its private valuation would have been turbocharged. Once private, it cut costs, tightened operations and offloaded divisions. But in 2015 Dell and Silver Lake had the chance for a game-changing acquisition.

SUJEET INDAP AND JAMES FONTANELLA-KHAN

Under fire: why Nigeria is struggling to defeat Boko Haram A demoralised and underequipped army is being blamed for slow progress against militants in the northeast NEIL MUNSHI

una Custom House camp lies on the edge of Maiduguri, near one of many trenches surrounding the northern Nigerian city dug to help keep Boko Haram at bay. It is often the first port of call for internally displaced people fleeing from the largely lawless hinterlands that surround the city at the centre of one of the world’s deadliest jihadi insurgencies. Zarah Umar arrived in Borno’s state capital in mid-November, joining a wave that has more than doubled Maiduguri’s population to over 2m in recent years. She left her village near the Cameroonian border when the military took back control of it from Boko Haram the previous month after an occupation of several years by the Islamists. Many of Ms Umar’s neighbours were killed, tortured or died of starvation, she says. The jihadis imprisoned her for five months after she tried to escape. They took her two-year old son. She hasn’t seen him since. “The only thing I can say about Boko Haram is that one day god will give them justice for the things they did to us,” says the 25-year-old. “But they still control the territory around my village to this day.” It has been nearly a decade since a relatively peaceful Maiduguri-based Islamic sect transformed into one of the world’s most brutal transnational terror groups. It has been three years since President Muhammadu Buhari said they were “technically defeated” after campaigning in 2015 on a promise to destroy the group. Yet, despite multiple declarations of victory by the state, Boko Haram, while significantly degraded, continues to slaughter soldiers and citizens across northeastern Nigeria and in neighbouring Niger, Chad and Cameroon, where its fighters often hide out and civilians often flee. The crisis has left 27,000 people dead and roughly 2m displaced. It has also cost Africa’s largest economy, and its biggest crude oil producer , as much as $9bn according to the army’s top commander, Lieutenant General Tukur Yusuf Buratai. The jihadi group, which has split into two factions, appears to be escalating its attacks and building its arsenal. The security situation in north-east Nigeria is deteriorating, sparking criticism of the military’s strategy, complaints from underequipped troops despite billions in defence spending and pressure on Mr Buhari, a retired general, as he seeks re-election in February. Last month, a raid on a military base in Metele near the border with Niger and Chad left around 100 soldiers dead and more than 150 missing, according to the Reuters news agency, though the army insists the death toll was 23. In a statement last week, the army said that in recent months, it “no-

ticed daring moves by the terrorists, increased use of drones against our defensive positions and infusion of foreign fighters in their ranks. These potent threats require us to continually review our operations.” Eze Onyekpere, lead director at the Abuja-based Centre for Social Justice, says the attack on the Metele base and others raises a host of questions about the military’s strategy. “It appears to be a lack of coordination — someone will attack a military compound and for two or three hours the battle is raging and no one coming to support them,” he says. “Where is the air force? How is it that Boko Haram can travel tens of kilometres and sneak up on a military base?” He suggests that it is time for “a change of manpower at the top” of the armed forces, in a country that was under military rule for most of the 40 years after gaining independence in1960, and where two of its four leaders since the return of civilian rule were former generals. Borno state, once a series of remote, pastoral villages dotted with larger centres, is now a matrix of garrison towns spread across a territory the size of Ireland. As Boko Haram has rendered many villages uninhabitable, the military has corralled civilians into towns like Gwoza, near the Cameroon border, where the population has grown sixfold to more than 60,000 in the past few years. The influx of people, who have lost the ability to farm, trade or do business, has stretched the international aid groups that have essentially replaced meagre government services and created a malnutrition crisis. “We used to farm — beans, maize, even rice — and keep livestock. But if you go a little way out of town you get killed, so that activity has all stopped,” says Lawal Hamman, a traditional community leader in Gwoza. Viewed from the UN helicopters that are the only way NGOs can travel to garrison towns outside the relatively secure Maiduguri, the scale of the problem becomes clear. Wide trenches surround towns and in between lie vacant or destroyed villages and the faint outlines of abandoned farmland, plots either overgrown or fallow in peak harvest season. Across this landscape, dozens of fires burn — the army scorching long grasses and trees in which Boko Haram might hide, according to an aid worker. Nearly 1m people live beyond the garrison towns, in the ungoverned hinterlands of Borno, completely beyond the reach of state or humanitarian aid. “There are a million people out there and we don’t know anything about them or what their needs are,” says one aid worker in Maiduguri. The isolation has clearly made Boko Haram desperate, too, analysts say, with increased raids on villagers’ food stores and harvests. But it has not affected the militants’ strategy of targeting military installations, which they sack for equipment, likely in preparation for a major offensive before February’s elections, says Chidi

Nwaonu, of London-based Peccavi Consulting, a security group that focuses on Africa. The military, which has about 200,000 soldiers, faces security crises across Nigeria, from banditry in the north-west to brutal farmer-herder clashes in the middle belt to militants in the oil-rich southern Delta region, he says. It is deployed in at least 30 of 36 states, “and the elections bring another element of instability”. “The general context of everything is that Nigeria — it’s a horrible thing to say — is more or less a failed state,” says Mr Nwaonu. “The government has basically lost control of most of the country.” He adds that in the north-east, “the enemy has the initiative. They’re dictating what is happening . . . The Nigerian armed forces don’t have an overarching strategy and haven’t been able to impose their will on the battle.” The army’s Facebook page in recent days has been filled with posts touting successes in the fighting, accompanied by graphic images of dead militants. In a speech to military leaders and the president in Maiduguri last Wednesday, Lt Gen Buratai addressed the criticism. “It is my belief that the [army] must start to plan and strategise on how to end the operations in the north-east,” he said. “I have directed for a change from a wholly defensive posture to one where we defend in numbers and conduct offensive operations in smaller packets but simultaneously in different fronts.” The AFP news agency has reported at least 19 attempts by Boko Haram to overrun army bases since July. But the escalation goes beyond military targets. In November, the army said it had arrested a young female suicide bomber planning to attack Maiduguri. Two months ago, extremists killed two Nigerian Red Cross workers. Militants have also attacked villages and camps around the state capital in recent months. In a rare acknowledgment of the challenges facing Nigerian soldiers , Mr Buhari said last week that he was working to ensure troops were fully equipped and better paid, and recognised the need to restore morale. But Mr Nwaonu says rank-andfile soldiers are underpaid, underfed, under-equipped and overstretched. “Soldiers ask us for food, mattresses, they ask us to build watchtowers for them,” says one senior humanitarian official. “Morale is really low — in some places they refuse to leave their barracks” during an attack. In August, dozens of special forces troops threatened to shoot superiors and refused to board a plane at Maiduguri airport that would further extend their lengthy tours. The army has said it takes human rights seriously, but it and the 26,000-member strong Civilian Joint Task Force that assists it have been accused of torture, extrajudicial killings and rape which they have downplayed or denied — leading some analysts to fear that they risk losing local support.

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news you can trust I monday 10 DECEMBER 2018

fivethings

Insight Africa as a pawn in China’s ‘debt-trap diplomacy’ GLOBAL perspectives

Olu Fasan 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

wo weeks ago, I was invited by the China Development Society at the London School of Economics to speak at their “Bridging Mind Symposium”, entitled: “The true story behind Africa-China Relations”. I was in good company, with Professor Chris Hughes from LSE’s International Relations Department and Professor Machiko Nissanke from the School of Oriental and African Studies (SOAS) also speaking at the symposium. Few relationships between countries have provoked intense debate and controversy as the one between China and Africa. Western countries, particularly the US, fret that China is aggressively active in Africa, spreading its influence across the continent. Commentators have also raised concerns about creeping neo-colonialism, accusing China of capturing Africa’s natural resources and luring the continent into debt in a largely one-sided relationship in which it is the rule giver, and Africa the rule taker! Well, the starting point is to recognise the uniqueness of the China-Africa relations. It’s relatively new yet has eclipsed other relationships before it. As Professor Hughes pointed out, China’s active engagement in Africa started in the early 1990s, with the launch in 1996 of its “Going Out” strategy, under which it made Africa a primary target of the externalisation of its interests. A key driver was Africa’s rich natural resources, which China badly needed to boost its economic growth. Furthermore, China needed Africa’s large market for its manufactured goods. This became more imperative with the problem of overcapacity,followingChina’smassive stimulus after the 2008 global financial crisis. With the crisis leading to shrinkingdemandforChineseproductsinthe West, Africa became a strong target for Chinese exports. Of recent, the launch of China’s Belt and Road Initiative, under which it plans to finance and build infrastructure in more than 130 countries, has added greater impetus to China’s engagement in Africa. But economic interests apart, there is also an ideological driver, as China aimed to spread its development model, sometimes called the China Model or the Beijing Consensus, across Africa. The China Model says that a country can combine political authoritarianism and economic capitalism; that economic development and political stability can trump sound democratic system and the rule of law. China needed the popularity of the model to validate the viability of its system and saw Africa as a fertile ground. Indeed, many African countries have embraced the China Model. For example, Rwanda combines economic capitalism

and political authoritarianism, and Nigeria favours state capitalism and derogation from the rule of law; after all, President Buhari famously said that national interest supersedes the rule of law, a key principle of the China Model! Of course, Africa needs China too! First, African governments see China as a counterbalance to the “hectoring” West. They resent the West’s “Washington Consensus”,which pusheseconomic and financial liberalisation as essential policy instruments, and prefers the alternative “Beijing Consensus”, which favours government intervention, state capitalism and slow, limited reforms!Secondly, Africa is in dire need of infrastructure investment; its infrastructure funding needs are estimated at over $1.2 trillion between 2017 and 2025. Enter China, which has long made funding and building infrastructure in Africa a strategic goal. Thus, the Yen magnet, China’s money and its willingness to spend it, is a major pull factor for Africa. Finally, China’s policy of non-interference in domestic political and social issues, such as human rights, democracy and the rule of law, suits African governments better than the West’s lecturing on these issues. The result of the convergence of interests between China and Africa is the astronomical increase in economic activities between them. For instance, China overtook the US as Africa’s largest trading partner in 2009. Total China-Africa trade was worth $170bn in 2016. According to the African Union, 13% of extraAfrica exports went to China, compared with 6% each for the US and Germany, and 17% of extra-Africa imports came from China, compared with 7% from the US. China’s FDI inflows into Africa in 2017 were double those from either the US or the UK, with Chinese investment in Africa reaching $2.4 billion in 2016. From 2000 to 2016, China lent about

$125 billion to Africa. China is massively funding infrastructure projects across Africa, from railway in Kenya and hydropower station in Ghana to rail lines, roads, bridges, airport terminals, etc in Nigeria. What, then, are the problems? Why is China’s engagement in Africa controversial? Well, it’s all about the China Model which, truth be told, makes no one, except China, happy. For instance, China’s commercial practices are at the heart of its trade war with the US. When President Trump and President Xi Jinping met recently to agree a truce, China reportedly made some concessions, which included agreeing to begin immediate negotiation on “structural changes” with respect to forced technology transfer, abuse of intellectual property rights, tariff and non-tariff barriers, cyber intrusions and cyber theft. Even China sym-

pathisers, such as Lawrence Summers, former US Treasury Secretary, observed in his Financial Times column that China’s commercial practices “fail to meet international norms” and that China “is a threat to the existing international order”,with “a combination of increased domes-

‘

To be sustainable, infrastructure building should involve significant private sector investment. But in Africa it is almost entirely state-funded, following the China Model. Africa and China are, of course, kindred spirits, sharing the same views on many issues, including the failure to reform and a lax attitude to debt and borrowing

tic repressions, the concentration of power in one man, rapidly increased military spending and rhetoric about enlarging China’s role in the world”. But when it comes to Africa, the issues are more about China’s dominance and power politics. Take infrastructure funding. The opacity of the financing terms and questions about the viability of the infrastructure projects are major concerns across Africa. Chinese loans are usually backed by African natural resources, such as a loan to

Ghana to be paid back in refined bauxite. China’s offer to build the Mambilla hydro power plant in Nigeria at the estimated costs of $5.72 billion with Nigeria making no initial monetary commitment raised similar concerns about the real nature of such deals. Then, there is the fact that Chinese infrastructure aid in Africa is usually tied to service contracts, with over 70% of such contracts going to Chinese companies. As one Ghanaian put it, “Most Chinese projects in Africa are Chinese-built with Chinese labour and materials”. So, the prospects of technology transfer and job creation are limited. Even when Africans are employed, they are paid extremely low wages, verbally and physically abused and treated as inferiors, according to a research by Sara Hsu. Now, when it comes to trade,

virtually all of China’s imports from Africa are commodities, while over 80% of its exports to Africa are manufactured goods. Africa had a trade deficit of $34 billion with China in 2015, which was equivalent of the continent’s trade deficit with the rest of the world. Concerns about China’s dumping of subsidised and sub-standard products on African markets are widespread. Given that only about 13% of Chinese investment into Africa goes into manufacturing, some have also questioned why China, with overcapacity at home, is not involved in manufacturing in Africa to help create jobs, develop skills and increase Africa’s manufactured exports. Some African leaders, such as Kenyan President Uhuru Kenyatta, calling for a more balanced relationship, have said that China should manufacture goods in Africa and not just build infrastructure! But the biggest issue is China’s role in fuelling Africa’s rising debt. Firstly, there is concern about the funding of unviable, inefficient projects, which prompted the Chinese president to say recently that China would be more targeted in funding projects. Then, there is the problem of absorptive and debt-servicing capacity and the attitude of China to debt restructuring. Take the case of Sri Lanka. The country built a port with $1.3bn Chinese loan but couldn’t meet up with repayments. It was forced to hand over the port, with 15,000 acres of adjacent land, to China on a 99-year lease. This provoked the new Malaysian prime minister, Mahathir Mohamad, to cancel three China-backed projects worth about $23bn. As noted above, China lent about $125 billion to Africa from 2000 to 2016. Nigeria is one of the African countries heavily indebted to China, recently seeking an additional $6bn Chinese loan. Nigeria is, of course, also borrowing heavily from the international capital market, raising $10.2bn between February 2017 and November 2018. Professor Nissanke pointed out that the private sector (banks and the bond market) accounts for 32% of Africa’s $417bn external debt, while China accounts for 24%, suggesting that China is not the main cause of Africa’s rising debt. But one single country accounting for 24% of Africa’s external debt is hugely significant. That was before adding the $60bn pledged by President Xiat this year’s Forum on China-Africa Cooperation (FOCAC) and the massive infrastructure investment drive behind the Belt and Road Initiative, about which many African governments are enthusiastic and willing to indulge in a borrowing spree to finance their huge budget deficits and their dream infrastructure projects. To be sustainable, infrastructure building should involve significant private sector investment. But in Africa it is almost entirely state-funded, following the China Model. Africa and China are, of course, kindred spirits, sharing the same views on many issues, including the failure to reform and a lax attitude to debt and borrowing. It’s not surprising that China sees Africa as a centrepiece of its Going Out strategy and its Belt and Road Initiative.This will, of course, drag Africa into deeper debt. But, then, it is a willing pawn in China’s debt-trap diplomacy!

for your new week

Fascinating business facts

$129m

unit of Glencore in the Democratic Republic of Congo has had a ban on imports and exports from its giant copper and cobalt mine lifted by authorities there. it had been blocked on Nov.9 from exporting copper and cobalt from Congo over a dispute around payments on copper that was never actually mined years ago. Congo is asking for $129.8 million to settle the dispute. Katanga Mining and its Kamoto copper and cobalt mine is one of Glencore’s most important growth projects. It restarted production in December after a two-year hiatus. It had expected to produce as much as 300,000 metric tons of copper and 34,000 tons of cobalt in 2019, which would make it Congo’s largest copper project and the world’s biggest source of cobalt.

$300m

anzania will still receive $300 million in World Bank funding for secondary school education the presidency said after a visit by the lender’s vice president, Hafez Ghanem. The Bank blocked the funding after President John Magufuli said his government would not allow girls who fall pregnant and deliver a baby back to school. The Washington-based lender has development projects in Tanzania worth $5.2 billion.

$50bn

year after throwing down the gauntlet with an unprecedented outlay on next-generation mobility, Volkswagen AG has boosted its five-year spending plan by more than a quarter to $50 billion. With the new record through 2023, the German carmaker is highlighting the huge stakes in moving from the combustion era into an electric future. Volkswagen said it now plans more than 50 fully-electric models on the road by 2025, more than any other manufacturer. The push, including next year’s Porsche Taycan, is part of keeping old rivals and new competitors like Tesla Inc. and Uber Technologies Inc. at bay.

$1.09bn

here is a new wave of young Nigerians taking the risks involved in experiencing life in some of the country’s tourist locations including the gushing waterfalls of Ikogosi in western Nigeria but the country’s unenviable reputation for violent crime and corruption largely deters international travellers. Nigeria is thus losing out on tourism revenues to other countries perceived to be safer such as Kenya, Ghana and the Gambia. Nigeria brought in $1.09 billion from international tourism in 2016, the latest year available, according to the World Bank. By comparison, Kenya received $1.62 billion that year, Tanzania got $2.16 billion and South Africa $8.81 billion. Despite government assurances, problems persist for Nigeria’s tourism industry. Infrastructure is a major challenge: as well as decrepit roads, trains are a rarity and flights are notorious for delays and cancellations. Travel can also be dangerous. Many roads are plagued by kidnappings and accidents, police are more likely to ask for money than offer a service and deadly communal clashes have erupted across parts of Nigeria’s hinterland states, particularly this year.

1.74%

terling has just had its worst weekly performance against the dollar since the beginning of August, as the UK government grapples with political turmoil over the proposed Brexit treaty. The pound fell sharply on Thursday morning after draft proposals for Britain’s exit from the EU sparked several ministerial resignations. A small recovery on Friday morning put sterling down 1.74 per cent over the week, approaching the 1.87 per cent it fell in the week ending August 10.

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