BusinessDay 10 Feb 2020

businessday market monitor

Biggest Gainer Guaranty N29.1

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

Foreign Exchange

Biggest Loser MTNN

3.09 pc N119.6 28,140.41

Foreign Reserve - $37.9bn Cross Rates GBP-$:1.29 YUANY - 52.16

Commodities -1.17 pc Cocoa US$2,822.00

Gold $1,565.03

news you can trust I ** monDAY 10 february 2020 I vol. 19, no 495

₦3,498,618.50 +1.79

N300

Sell

$-N 357.00 360.00 £-N 469.00 475.00 €-N 390.00 396.00

Crude Oil $ 54.76

I

Buy

g

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate

364.37 306.95

Currency Futures

($/N)

fgn bonds

Treasury bills

3M 0.00 2.62

NGUS apr 29 2020 362.62

6M

5Y

0.03 3.77

-0.21

10 Y -0.08

30 Y 0.00

9.91

10.95

12.32

NGUS jul 29 2020 363.55

NGUS feb 24 2021

@

g

365.71

g

Growing signs of economic distress set to force FG’s hand on reforms N T

Pension fund assets hit N10.22trn as FG borrows 71% of fund

Modestus Anaesoronye

LOLADE AKINMURELE

here’s growing anxiety over an economic relapse which is set to force Nigeria to dust the cobwebs of much-needed

reforms after at least four years of delay, according to sources close to the government.

With the exception of militant attacks on oil pipelines, some of the factors that contributed to Nigeria’s economic recession are

circling again.

Oil prices are falling as demand slows, inflation is headed north with the controversial border closure and economic growth looks poised to be tested by problems of old as well as

the more recent Coronavirus outbreak which will have big implications for oil demand and trade in Nigeria, given China is the country’s biggest trading Continues on page 46

igeria’s pension fund assets hit N10.22 trillion as at December 31, 2019, an increase of 18.28 percent from N8.64 trillion at the end of December 2018.

From the total fund under management by the Pension Fund Administrators (PFAs), the Federal Government borrowed 71.87 percent, amounting to N7.344 trillion, through different kinds of bonds and Treasury Bills (securities).

This is contained in the National Pension Commission (PenCom) monthly report released on Friday.

Breakdown of investment of the pension funds assets as at the Continues on page 46

Inside L-R: Ariyike Daramola, product manager, secondary markets, The Nigerian Stock Exchange (NSE); Taiwo Yusuf, fund manager, Meristem Limited; Sulyman Sulyman, graduate trainee, NSE; Oluwole Abegunde, GMD, Meristem Nigeria; Jude Chiemeka, head, trading business division, NSE; Abisoye Oludipe, team lead, group retail services, Meristem Nigeria; Harding Udoh, managing partner, Tiqian Limited; Sulaiman Adedokun, MD, Meristem Wealth Management Limited, and Oluwatoyin Alake, head, secondary markets, NSE, at the Smart Investment Workshop themed ‘Using Pic by Pius Okeosisi Exchange Traded Funds (ETFs) as a Proxy for Investing in Nigerian Equities’ in Lagos.

Investors court Nigeria’s electricity market on new reforms P. 45

2

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

3

4

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

5

6

Monday 10 February 2020

BUSINESS DAY

NEWS

CBN to begin recycling of paper banknote waste

Two killed, houses burnt in Taraba as Jukun/Tiv crisis escalates

… 100 tons of paper banknote wastes generated weekly

t least two persons were killed and several houses burnt when gunmen attacked Ibua village along Wukari-Ibi road in Ibi local government area on Thursday night.

Residents who spoke to our correspondent said the attackers invaded the village at about 7:30pm, killing two persons and injuring many others.

Tondo Aga told our correspondent on the phone that the attackers shot sporadically before burning the village.

Another eyewitness, Ya

HOPE MOSES-ASHIKE

C

entral Bank of Nigeria (CBN) is planning to commence recycling of paper banknotes waste, which it says enhances economic activities in the country in addition to environmental sustainability.

Presently, the bank carries out banknotes disposal operation in 12 disposal centres across the country weekly, where about 100 tons of paper banknote wastes are generated.

These wastes are destroyed through open air burning in sites owned by the bank or rented, usually from the respective state governments. Paper banknote wastes disposal by open air burning impacts negatively on the environment thereby causing pollution and health hazards, say experts.

In pursuance of its sustainability initiatives the CBN

has reviewed the current method of banknote wastes disposal through open air burning with the aim of adopting more environmentally sustainable method, thereby reducing its carbon footprint.

Consequently, the apex bank has issued a request for proposal for the recycling of paper banknote waste. “Central Bank of Nigeria is seeking proposals from accredited recycling companies interested in utilising paper banknote wastes in its recycling process,” the CBN management said.

The purpose of this Request for Proposal (RFP) is to solicit competitive proposals from reputable companies that can recycle CBN paper banknote wastes into useable products that can be beneficial to the nation while adhering to Health Safety and Environment (HSE) Standards.

Recycling is the process of converting waste materials into reusable objects to prevent wastage of potentially useful materials, reduce the consumption of fresh raw materials, minimise energy usage, avoid probable air pollution (from incineration)

and water pollution (from landfilling).

It has been identified as the most environmentally sustainable method of banknote waste disposal that could be explored. In this mode, the banknote wastes would be recycled by converting the wastes into useful products.

The Central Bank of Nigeria therefore invites reputable companies to submit sealed bids for the purchase of Paper Banknotes briquettes on monthly/quarterly contract basis from May, 2020 and until further notice.

NATHANIEL GBAORON, Jalingo

A

Minister alerts Window 7 users against risk GIFT WADA, Abuja

N

igeria’s Minster of Communications and Digital Economy, Isa Ali Ibrahim, on Friday raised the alert on the risks of using Windows 7 powered devices for internet-based services that require the use of sensitive information. He advised that the best way to remain secure was to use the latest Operating Systems available.

In a press statement circulated through his technical assistant, Mukhtar M. Sadiq, the minister explained that, with the official End of Support (EoS) of the Microsoft Windows 7 Operating System (OS), which came into effect January 14, 2020, Microsoft will no longer provide technical support and security or software updates for the platform.

“Systems running on Windows 7 OS will continue to work, however they will be progressively more vulnerable to viruses and malware,” he said.

In order to prevent users from breach of privacy and loss of critical data, he advised users to keep security software and all other applications up to date, and be more sceptical on downloads and emails accessed.

Restating his commitment to ensure cybersecurity, the minister promised to henceforth identify, contain and alert the general public on important event and measures to ensure that people can feel safe online.

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tor, said he was sitting in front of his house when suddenly he saw armed men trooping into the village from the Wukari axis. “I escaped through the back door and ran to the nearby police check point but there was nobody to report to,” he said.

Taraba State Police public relations officer, ASP David Misal, who confirmed the attack, told our correspondent that gunmen suspected to be Jukun youths carried out the attack.

“Information available to us indicates that gunmen suspected to be Jukun youths attacked a Tiv village in Ibi Local Government Area and killed two persons.

Monday 10 February 2020

BUSINESS DAY

7

NEWS

Imo tells oil producing communities era of marginalisation is over IHEANYI NWACHUKWU

I

mo State Governor Hope Uzodinma has reassured the people of Ohaji/Egbema and Oguta local government areas – both oil producing communities in the state that the era of marginalisation is over and a new dawn with huge prospects awaits them.

Governor Uzodinma, who spoke when he received stakeholders of the oil producing communities at the Government House, Owerri, expressed displeasure over the deplorable state of communities in the area despite the huge amount of money that going into Imo State Oil Producing and Development Commission (ISOPADEC) monthly from the 13 percent derivation fund.

He warned that the era when few people sit in their homes and share the money meant for development of the communities was over.

The governor also assured that his administration would set up a monitoring and evaluation committee to ensure that projects were executed in

line with contract specifications.

He promised that the new board of ISOPADEC, which will soon be constituted, shall be made up of people of integrity and proven track record and ready to help drive the desired change and foster prosperity in the area.

On restiveness among the youths, Governor Uzodinma regretted that despite the huge human capacity in the area, some people only identify youths of Ohaji/Egbema and Oguta with thuggery and violence.

He challenged them to get it right now that a brother and friend is the Governor. “We must agree that we want the best for ourselves, we must begin to have change of attitude, thuggery and militancy must be resisted, and the time to harness our potential is now,” he said.

The Governor assured that Adapalm which used to be the pride of the state will be reactivated and its lost glory restored with the appointment of Kalu Austin Egwuagu, a retired brigadier general,) as the Board chairman.

Proposed Kwale Industrial Park’s landowners Edo re-certifies 300 cooperatives to check scams to get over N800m compensation MERCY ENOCH, Asaba

L

andowners of the 1,000 hectares of land that would house the proposed Kwale Industrial Park in Delta State would get more than N800 million compensation from the state government.

The state commissioner for information, Aniagwu Charles, who made the disclosure to newsmen in Asaba, said this formed part of the approvals made by the state executive council meeting presided over by Governor Ifeanyi Okowa, last Tuesday.

Charles, who was with his youths development counterpart, Ifeanyi Egwuyenga, stated that the council appreciated the people who made their land available for the park, for partnering Okowa’s administration in the speedy development of the state.

He recalled that to ensure the development of the Kwale Industrial Park, there was a road show in China that resulted in investors coming to invest in the proposed project.

He said while the council commended the landowners for agreeing to part with their land for development activities, he expressed confidence that the multiplier benefits of

www.businessday.ng

having the Kwale Industrial Park were enormous.

The area is strategically located for investors to have quick returns on their investments, he said.

Commissioner for youths, Egwuyenga, in his contribution, said the Exco approved Rural Youths Skill Acquisition targeted at the illiterate and semi-literate youths in rural communities, adding that the programme would be strictly domiciled in the local governments.

“There will also be community business schools to manage their training, which they will attend on a weekly basis to ensure that the youths know how to give back to the society.

“Tertiary Institution Entrepreneurship Programme which is strictly a core entrepreneurship programme designed for the state owned tertiary institutions targets those with business innovation who are having challenges of setting up their businesses.

“Government will give them opportunities to go through incubation period after which government will set them up with viable businesses for them to be employers of labour,” the commissioner said.

https://www.facebook.com/businessdayng

T

he Edo State government has recertified 300 cooperative societies as part of measures to eliminate the use of proxy cooperatives to swindle members of the public.

Speaking at a stakeholders’ meeting in Benin City, the Edo State commissioner for wealth creation, cooperatives and employment, Felix Akhabue, said the move would streamline the activities of cooperative societies, which are key to stimulating economic development.

Akhabue noted that cooperative societies possess the unique feature of galvanising all segments of the society for economic prosperity, adding, “As part of moves to sanitize cooperative societies in Edo State, the state government has re-certified 300 of them.”

He said the challenges faced by stakeholders in the state include the prevalence of proxy cooperative societies which rely on their registration in defrauding members of the public.

He said, “Some persons used questionable cooperative societies to access loans provided by governments after which they dis-

@Businessdayng

appeared and till date, the money has not been recovered.

“The Edo State cooperatives database has been cleaned up with about 300 registered cooperative societies vetted and certified as against the 18,000 that populated the database in the past. The elimination of dormant and proxy cooperative societies will help the ministry to project and recommend only active cooperatives for financial assistance and benefits.”

He assured the stakeholders in the sector of plans by the state government to protect cooperative societies from financial fraud, while ensuring transparency and accountability in their operations.

President of God’s Gift Minerals Multipurpose Cooperative Society, Ehigbobo Ehimen, expressed appreciation to the state government for the efforts to create a new order through the recertification exercise.

He urged the cooperators to key into the new order to enhance growth and ensure genuine cooperative societies benefit from funding opportunities.

8

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

9

10

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

comment

comment is free

11

Send 800word comments to comment@businessday.ng

First leadThe very last salute for Admiral Patrick Seubo Koshoni (2)

Bashorun J.K Randle

P

atrick Seubo Koshoni attended St. Finbarr’s College, Akoka where he came under the tutelage of the legendary Rev. Denis Joseph Patrick Slattery.

Seubo was a very bright student and accomplished sportsman (football, tennis and squash). His choice of the Navy for his career was somewhat a surprise. He rose rapidly and capped it by rising to the pinnacle – Chief of Naval Staff.

Long after Kakawa Street, he was now ensconced at his official resi-

dence at Queen’s Drive (now Lady Oyinkan Abayomi Drive) in super exclusive Ikoyi. He had married his long-standing girlfriend Deroju Akintoye (a princess from a Lagos Royal family) on 19th November 1966. They were blessed with four children Patrick Gbetigan; Kenneth Meyinse; Leonard Sepodosesi and Rowland Viyan.

We were all so proud of Seubo.

The only exception was Peter. I was just about to enter the Cathedral Church of Christ, Marina when I bumped into Peter. He was holding a newspaper with the photograph of Admiral Patrick Seubo Koshoni, the new Chief of Naval Staff on the front-page. Before I could say a word, Peter declared.

“Of course, J.K. Randle I recognise you. I know you and Patrick Ani (ex-King’s College) are chartered accountants. This country is finished.

Finito. I am emigrating to the United States of America or Canada. Can you imagine Sunny Kuku is a doctor, so is Samuel Adeniyi-Jones? Even George Amu is a Bishop!! God have mercy. Segun Osoba is Governor of Ogun State and now Patrick Seubo

Koshoni is Chief of Naval Staff. I understand you are the Chairman of KPMG Nigeria and Chairman of KPMG Africa as well as President of the Institute of Chartered Accountants of Nigeria [ICAN]; Chairman of Musical Society of Nigeria; Chairman Eko Hotels Limited; Chairman of Grant Advertising; Pro-Chancellor and Chairman of the Governing Council of Lagos State University etc. I have read all your books – “The Godfather Never Sleeps” and all the other twenty books.

It was quite a scene – right there on the hallowed steps of the church.

Everyone was in stitches.

As if he was not done yet, he added: “Benjamin Ohaeri (ex-St. Gregory’s College) is now a doctor and Tunde ColeOnitiri (Ex-King’s College) is now a Professor of Medicine.”

Then he was back to George Amu. “Even George sef is a Bishop for real.” He was in hysterics.

“No wonder the country is in turmoil and disintegrating at the edges.”

The least I could do was to assure

‘

The least I could do was to assure Peter that with Seubo in the Supreme Military Council all hope was not lost.

The ship of state would land safely. Patrick Seubo Koshoni was resplendent in his spotless white uniform with impressive epaulettes and a chest-full of service medals

Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Nigeria’s new tax reforms: Implications for the health sector

P

resident Muhammadu Buhari signed the Finance Bill (now Act) into law on January 13, 2020. The bill was presented to the National Assembly in October 2019 alongside the 2020 Appropriate Bill and passed in November 2019. Reflecting key recommendations of various stakeholders across government, industries and civil societies particularly the National Tax Policy Implementation Committee and the President Enabling Business Environment Council, the act seeks to support enterprise growth, facilitate strategic investments and raise government revenue. It represents one of the most comprehensive tax reforms the country has designed with key changes to existing laws on personal and corporate income taxes, valueadded tax (VAT), petroleum profits tax, capital gains tax, customs and excise tariff as well as stamp duties. It also enables the government collect taxes from digital service providers based outside Nigeria. These reforms build on the 2016/17 review of the National Tax Policy and recent improvements in tax administration.

The Act requires individuals and enterprises to obtain Tax Identification Numbers (TIN) to operate business accounts, thus facilitating a potential expansion of the formal sector and the tax base. While small-size companies are exempted from corporate income tax (CIT), medium and large enterprises will now pay 20 percent and 30 percent CIT rates, respectively. The law makes the regulatory environment more receptive to insurance companies which can now carry forward losses indefinitely. There is also an increase in the VAT rate from 5 to 7.5 percent - with a VAT compliance threshold of N25 million.

While the law includes specific exemptions to reduce the negative impact of VAT increase on the populace, government revenue is expected to grow - with 85 percent of the VAT revenue going to the state and local governments based on current revenue sharing formula.

Domestic resource mobilisation is an integral element of sustainable financing for development and a foremost objective of the government through the Strategic Revenue Growth Initiative. With the current population

growth rate, significant physical and human capital development gaps, it is an urgent priority for the country to diversity its revenue sources to bridge these gaps. Nigeria relies mainly on oil revenue to fund implementation of the annual budget but the picture may be changing: oil and gas sector contribute roughly half of total national revenue as nonoil revenue rises steadily. According to the International Monetary Fund, the country’s non-oil revenue averages 3-4 percent of Gross Domestic Product (GDP). VAT contributes less than 1 percent of GDP compared to ECOWAS average of 4 percent. The tax-to-GDP ratio is less than 10 percent compared to the international minimum threshold of 12.75 percent and sub-Saharan Africa average of 18.7 percent. According to the World Bank, public debt-to-GDP ratio averages 20 percent and debt servicing consumes a significant percentage of current revenue, shrinking the fiscal space to invest in sustainable development.

In addition, a 2019 Oxford Martin School Working Paper shows that Nigeria may already be a post-oil state: this requires a paradigm shift across institutions from consumption and oil-focused distributive model of resource allocation to a highly productive multisectoral landscape hinged on macroeconomic stability and peaceful coexistence. The evidence is compelling: Nigeria urgently requires a comprehensive tax overhaul to address the revenue challenge of governments at national and subnational levels while lifting millions out of poverty.

Although there is limited information on the models of impact on various sectors, the tax changes have short- and long-term implications for sustainable domestic resource mobilization, government allocation to the health sector and investments in the private health sector.

Public financing for health Public financing is central to achieving universal access to high-quality health services for all but households bear the brunt of healthcare payments in Nigeria. The National Heath Act (NHA) requires government to devote at least one percent of the consolidated national revenue to the Basic Healthcare Provision www.businessday.ng

Fund (BHCPF), alongside other domestic and external financing sources. The BHCPF is additional resources allocated to the health sector to ensure primary health services are available to the populace especially the vulnerable population. It is a platform that harnesses the collaborative efforts of governments at national and subnational levels to finance costeffective interventions so that citizens can access high-quality essential health services at primary health facilities across the country.

It is also intended to facilitate an expansion of pre-paid, risk-pooling mechanisms which help to reduce the burden of out-of-pocket healthcare payments. Based on existing accountability framework, communities can demand for improvement in health services and contribute to health system development.

Although BHCPF implementation is still in its early stages, it is promising health investments that can fast track progress towards health for all Nigerians.

An increase in government revenue as a result of the new tax reforms could have a direct impact on health sector allocation and BHCPF. It is commendable that the federal government makes budgetary provisions for the BHCPF in compliance with the NHA and several states have begun building and/or strengthening institutions such as primary healthcare agencies and health insurance agencies so that supply- and demand-side reforms can translate to increase access to health services for the populace. An increase in revenue at subnational levels through VAT increase could result in increased health investments, with new allocations as counterpart funding for the BHCPF. These allocations are unlikely to be automatic due to a wide range of competing priorities, so health stakeholders particularly parliamentarians and civil society leaders have crucial advocacy tasks ahead to ensure higher revenue translates to better health investments.

Increased human capital investment (in health and education) is linked to improved productivity and economic development.

While it also creates jobs for workers within these sectors, these investments can help build the social contract required for produc-

https://www.facebook.com/businessdayng

Peter that with Seubo in the Supreme Military Council all hope was not lost. The ship of state would land safely. Patrick Seubo Koshoni was resplendent in his spotless white uniform with impressive epaulettes and a chest-full of service medals.

There was no hint of our nightclubbing and bar-crawling – Kakadu; Caban Bamboo; Maharani; Dressler and of course Tinnaz parties at J.K. Randle Memorial Hall.

When I visited Seubo at his Calabar base, he hosted me to a superlative dinner. He regaled the guests with tales of our long past marathon boozing sessions. Sedowe his brother was the undisputed champion. He would drink any contender “under the table”. Legless. “Egbon” as we all fondly called him was an advertisement for serious drinking: “O mu nkan!!”

Admiral Patrick Seubo Koshoni will be buried on Thursday 13th February 2020 in his full uniform with his boots on.

May his soul rest in perfect peace.

Abiodun Awosusi tive government-citizen interactions including tax collection and compliance. Nigeria’s overwhelming reliance on oil revenue to finance government budget and systemic corruption may have perpetuated a cycle of weak tax collection, poor human capital investments and low tax compliance because of lack of shared accountability. One way the government can break this vicious cycle is to demonstrate commitment to ensuring well-being of citizens through access to high-quality health services. Although civil society organizations have played a vital role in holding government accountable for improvement in the health sector for decades, the emergence of active citizens requires a robust social contract – which is currently non-existent. The health sector must be a crucial focus of investment to build a healthy, productive workforce.

Nigeria’s current health insurance coverage is less than 5 percent. Most of those covered are in the formal sector – mainly civil servants working in government agencies and employees of the organised private sector on private health insurance. Very few are covered with existing pockets of community health insurance schemes. Although there is no national law for mandatory health insurance, several states have developed legislative frameworks to make health insurance compulsory. Administration of health insurance tends to be easier for the formal than the informal sector because of the fragmented nature of the latter. Widespread use of the TIN by businesses and individuals can facilitate a transition of many opaque businesses into the formal sector, creating new opportunities for health coverage expansion. Health insurance is not a subscription service for diagnostics and drugs for a particular disease. Rather, it is a pre-paid risk-pooling mechanism that allows cross-subsidy between the rich and poor, and between the relatively healthy and unhealthy.

This pool can contribute to a reduction in out-of-pocket payments made by households for essential health services and improve the productivity of businesses as public financing for health increases across states.

@Businessdayng

12

Monday 10 February 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Tough choices on OMO Patrick Atuanya

O

pen Market Operations (OMO) bills sold by the Central Bank of Nigeria (CBN) were originally a tool for liquidity management by the apex bank, but along the line it somehow became an investment outlet for all comers including Pension Funds, Asset Managers, Insurers, Foreign investors and other institutional investors in the Nigerian fund management space.

The CBN Recently decided to return the tool to its original use when it banned all classes of investors (except banks and foreign investors) in both the primary and secondary markets from buying or trading OMO securities.

Naturally as these other class of investors could not participate in the purchase of OMO bills, they moved their considerable firepower into Nigerian Treasury Bills (NTB), leading to a flood of liquidity and resultant high demand (bid to cover ratios exceeding 4x in some instance), meant a crash in fixed income yields.

For instance 1 year FG Treasury Bills yielded 4.52 percent as at Thursday 0ctober 6, according to FMDQ data.

Not everyone is happy over this outcome however. For one some Pension Funds have grumbled over Financial Repression taking place.

Financial repression comprises “policies that result in savers earning returns below the rate of inflation” in order to allow banks to “provide cheap loans to companies and governments, reducing the burden of repayments”.

The yields on Treasury bills are now largely below inflation (which is in double digits) leading to negative real returns. Today 90 percent of the yield curve is below inflation, while a year ago all yields along the curve were above inflation (see chart).

There is also the valid argument about the fairness of seemingly favouring Foreign Investors (some of whom earn real returns in excess of 16% per annum in dollars) over domestic ones.

Feyi Fawehinmi, a U.K based accountant and social media influencer calls it the world’s first race based monetary policy. We wouldn’t go as far as that but would note that while the CBN has the legitimate mandate of price stability to pursue, there are also real world consequences they should be viewing carefully.

Then there is the huge cost of the policy itself. Estimates range between N1.7 trillion and N2trillion as the interest payments per annum on OMO bills issued between 2018 and 2019.

Fitch ratings in a note released in Decem-

ber revising Nigeria’s outlook to negative said: “…risks stem from the central bank’s policy of attracting portfolio investments in its short-term Open Market Operations (OMO) bills through high yields and hedging instruments offered to non-resident investors at low cost, despite a wide spread between the naira and dollar interest rates. As a result, non-resident holdings of the CBN’s OMO bills soared to $17 billion by end-August, equivalent to 40% of foreign-currency (FX) reserves at the time.”

The CBN has not published its audited 2018 and 2019 annual reports so these are estimates but if the numbers are close to accurate then one can clearly see the problem.

Fitch notes that challenges to the durability of the current policy setting are underscored by increasingly complex regulatory measures taken by the CBN to reconcile its competing objectives of attracting foreign investments in OMO bills and spurring bank lending.

After the CBN barred non-bank residents from participating in the OMO market, it sepa-

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

On Okada bans and protection from government

T

he Okada ban is on my mind today. As you no doubt have heard, Okadas and Kekes have been restricted from certain major roads in four key local government areas in Lagos. The restriction essentially cripples both services as it will be essentially impossible to use them to get around Lagos. The restrictions are problematic to many Lagosians because of the absence of alternatives. For the past week I have seen a lot of photos of people walking around Lagos. Even seen photos of people resorting to using horses. The morale of the story is that the alternatives to the previously ubiquitous Okadas and Kekes are non-existent. So, what are people supposed to do?

The ban is even more curious from the perspective of the bike hailing companies who had made a lot of investments last year with some even reportedly agreeing deals with government on license fees.

They seem to have been caught blindsided by this move too. The message from that group seems to be focused not directly on the impact on transportation and logistics in Lagos but on the message it sends to future investors: beware; the rug could be pulled from under your feet

rately imposed a floor on bank loan-to-deposit (LDR) ratios to support credit growth.

The recent hike in LDR and introduction of weekly monitoring would help to cap the scope to which banks could create OMO assets, while the increase in the cash reserve ratio (CRR) to 27.5 percent at the last monetary policy committee (MPC) meeting, will help to sterilize the large maturity from OMO bills from non-bank investors which would have ultimately found its way to bank balance sheets.

Amidst all these the CBNs gross foreign exchange (FX) reserves are down $1.8 billion in 2 months (between Dec 2019 and February 2020) Last year FX reserves fell by 12 percent between June and November as lower OMO market liquidity due to a narrower range of participants likely dampened net portfolio inflows, according to Fitch.

Nigeria’s current account (CA) balance has also shifted to deficit from a long-standing surplus, pointing to deteriorating macroeconomic imbalances and adding to external vulnerability.

Fitch expects the CA will record a deficit of 1.6 percent of GDP in 2019, its second-weakest level in 24 years, after a surplus of 2.6 percent in 2018.

Central Banks around the world are battling with tough choices over the impact of their chosen policy responses. In the U.S critics have said that the effect of the expansion of the Feds balance sheet and low interest rates is to punish savers and contribute to inequality. Central Banks in Europe and Japan are also battling with impact of negative interest rates on the financial system, especially on banks, insurers, Pension Funds and savers.

The Nigerian central bank is then not alone in navigating tough choices. The hope is that there is a plan for unwinding the CBNs balance sheet, that would not wreak havoc on the real economy!

before you know what hit you. That concern is valid, and it is what I want to focus on today.

We have all heard the stories of businesspeople who make investments only for overnight policy changes to render their business plans futile and turn their investments to dust. As is commonly joked about in the financial sector, “you are always one circular away from your business shutting down”. But then if you know that your business could be wiped away then why make those investments in the first place. Indeed, that is the situation we find ourselves in where even countries much smaller than us are able to attract more investments. Ghana, with only a fraction of our economy and population, has consistently attracted more foreign direct investment than the whole of Nigeria. So, what do we do about it?

The key question is a simple one if you break it down to the basics. What are the rules and what protects you and your business from government? On this Okada and Keke issue, for instance, are there rules that restrict what government can or cannot do? If the rules have been broken is there a way to seek redress?

The answer for both questions is rather www.businessday.ng

ECONOMIST

unfortunate.

On the rules the constitution is very clear. The government is in charge of all aspects of the economy. According to the constitution any economic activity you partake is done at the pleasure of the government. I am no lawyer, but it seems pretty cut and dry. To paraphrase; “The State shall, within the context of the ideals and objectives for which provisions are made in this Constitution … (b) control the national economy in such a manner as to secure the maximum welfare, freedom, and happiness of every citizen on the basis of social justice and equality of status and opportunity; (c) without prejudice to its right to operate or participate in areas of the economy, other than the major sectors of the economy, manage and operate the major sectors of the economy”. Seems very clear to me.

According to the constitution the government has a license to do whatever as far as the economy is concerned. But I must admit I am not a lawyer.

But even if you did decide that the government does not have the rights to take certain actions like unilaterally banning Okadas, where can you go to seek redress? The problems with our judicial

https://www.facebook.com/businessdayng

NONSO OBIKILI system are very clear to everyone. If people wanted to fight to protect their rights through the courts the journey is a very rough one.

So, where does that leave us? It leaves us with the investment landscape we have where everyone knows you have to come in, schmooze with the government in power, and make your money before the government in power leaves and the policy positions change. Sometimes they change even before the government leaves. Unfortunately, the types of investments we need in Nigeria cannot function that way. So wahala dey. Like I keep saying, economies do not function independent of society. Economies are built on the very same rules that govern society. And our current set of rules have plenty problems.

Dr. Obikili is the chief economist at BusinessDay

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

13

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Commercial papers surge: A lesson for regulators

editor Patrick Atuanya

Make the rules, hands-off but watch closely

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

O

f late, there’s been a renewed interest in the Nigerian debt market.

The likes of Flour Mill of Nigeria and Nigeria Breweries have lately sought to raise a cumulative sum of N65 billion via commercial papers (CPs) – an unsecured promissory note with a fixed maturity of not more than 270 days – and issuance of bonds in a bid to take advantage of the liquidity glut particularly as maturities of debt securities are expected to peak in this month.

This interest can be ascribed to the unorthodox policy measures of the Central Bank of Nigeria (CBN) which have distorted the market. The exclusion of non-bank corporates and individuals from the primary and secondary OMO market – a market where short term government debt is sold by the CBN – has seen yields priced lower in the fixed income market, making it cheaper for government and companies to

borrow. Also, coupled with the underperformance of the Nigerian stock market, the appetite of local investors in search of investable assets offering higher yields, including corporate debt securities, has increased.

Six years ago, the Commercial paper (CP) market was almost non-existent. It took the intervention of FMDQ – a private securities exchange – in response to favourable regulations of the CBN to revive the market. Since then, the value of CPs listed on FMDQ had grown to N1 trillion as at June 2018. This has provided issuers an alternative to raising capital via debt and given investors access to one more portfolio investment diversification option.

The surge in the CP market holds some critical lessons. It does not only demonstrate how innovation, a response to low yields and uncertainty, happens in financial markets but also how the adoption of technology to drive transparency, governance, integrity and efficiency has spurred the development of other debt capital

market instruments as in the case of FMDQ. To spur economic growth and development, regulators (both fiscal and monetary) must understand that their primary objective is to put in place market-friendly regulations, get out of the way and leave the private sector to drive growth. Just like the responsibility of a of the FIFA and its referees in football. The governing body sets the rules, gets out of the way but keeps its eyes fixed on the ball, technological trends and innovations. Similarly, regulators of the economy can ensure a free-flowing game that isn’t susceptible to rigging.

Being a money-market security sold to obtain funds to meet shortterm debt obligations, the issuance of commercial paper favours larger (blue-chip) companies with good credit ratings. Despite its short tenure the issued CPs will help Flour Mills and Nigerian Breweries reduce considerably their refinancing risk – the possibility that a borrower cannot refinance an existing debt.

Flour Mills, for example, says that proceeds from the commercial paper will be used to refinance existing short-term debts and increase the efficiency of its balance sheet. Nigerian Breweries also stated that the aim is to raise up to N45 billion to support the company’s short-term funding needs.

While this resonates with the objective of the CBN to spur lending to the private sector and stimulate economic growth faster than two percent, it however, leaves smaller companies which account for a larger percentage of the Nigerian private sector with no means of taking advantage of lower borrowing cost in the fixed income space.

Although the CBN’s policy to increase commercial banks’ loanto-deposit ratio to 65 percent was meant to cater for this challenge, the interest rate environment in Nigeria remains unfavourable for most small businesses, the largest employers of labour across all sectors and account for almost half of goods and services produced in the economy.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria.

01-2799100 Legal Advisers The Law Union

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

OUR Core Values

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

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

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

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

14

Monday 10 February 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Nigeria suffers from acute crises of leadership and followership global Perspectives

OLU FASAN

I

t would be simplistic to say that running a country is not rocket science. It can be complex. Yet, human government is about the ability of human beings, not celestial angels, to govern in a way that guarantees stability, generates prosperity and increases general welfare. Thus, the quality of a country’s governance is directly proportional to the quality of its people.

David Hume made this point powerfully in his treatise: “Of the Jealously of Trade” (1758). He argued that with specially endowed resources and geniuses, no nation should lack manufactured goods to export, adding that “and if, notwithstanding these advantages, they lose such a manufacture, they ought to blame their own idleness, or bad government; not the industry of their neighbours”. In other words, Hume was saying that every country’s greatest assets are its people, and that the quality of a country’s economic and political governance depends on the quality of its people.

But when we talk of “people”, we must, in the context of governance, divide them into leaders and followers. Here, leaders are those with the power and authority to run a country, and followers are the governed. Now, my first point is that both leadership and followership are critical to the success of any country; my second point is that, sadly, both have failed utterly in Nigeria. This country has acute and chronic problems of leadership and followership. Let’s start with leadership.

Centuries ago, the ancient philosopher Cicero wrote about how to run a government, and one of his principles is that “those who govern a country should be

the best and the brightest of the land”. He argued that “If leaders don’t have a thorough knowledge of what they are talking about, their speeches will be a silly prattle of empty words and their actions will be dangerously misguided”. Plato addressed the same issue in The Republic. He argued that each political community has three principal functions: to ensure that it is governed well, that it is adequately protected, and that it can sustain itself in material terms. The task of a society, he posited, is to allocate citizens to each of these three functions. But how? Well, Plato said the strongest should protect the nation (that is, form its military arm); those with the greatest artistic and technical abilities should provide for it (that is, run businesses, etc), and “those with the most intelligence should rule it”. So, for Cicero and Plato, the key to governing a country well is to put “the best and the brightest in the land” or “those with the most intelligence” in charge.

This is where followership comes in.

For in a democracy, it is the duty of citizens to protect against bad leadership by making sure that only those with the necessary intelligence and ability are elected into political offices. Sadly, in Nigeria, the citizens don’t perform this critical duty of followership. They rarely elect competent people into political offices, and yet, after every election, they spent the next four years complaining bitterly about bad leadership even though their action or inaction facilitated it.

Recently, someone tweeted the following about President Buhari: “National unity – failed; economy – failed; security – failed; rule of law – failed; human rights – failed”, adding, “What’s Buhari doing in Aso Rock please?” Yet, this is a president who was re-elected for a second term with 15,191,847 votes and 56% of the total votes. I couldn’t help replying to the tweet. “How did he manage to secure a second term?” I asked, quoting Joseph de Maistre, “Every nation gets the government it deserves” and George Carlin, “Ignorant citizens elect ignorant leaders”!

Let’s face it, how many of President Buhari’s most vociferous critics on social media and elsewhere voted in last year’s election? In the whole country, only 27m

people, out of the 82m registered voters, about 34%, voted. In the South, where Buhari was deemed to be unpopular, most people didn’t vote, with the turnout being less than 25%. Indeed, in Lagos State, only 18.5% of the 5.5m people who collected the Permanent Voter Card voted.

Given Buhari’s appalling performance in his first term, he shouldn’t have been re-elected. Of course, his victory was by default because his main opponent, Atiku Abubakar, was not liked in the North and not trusted in the South. But there were competent candidates in last year’s presidential election – people like former deputy Central Bank governors, Obadiah Mailafia and Kingsley Moghalu – that should have done better in the election if Nigerians really cared about competent leadership. Yet, Mailafia, who came a distant fourth nationally, secured a miniscule 97,874 (0.36% of the total votes) and Moghalu got an inconsequential 21,886 (0.08%)!

Recently, in a bizarre interview, Chris Ngige, Minister of Labour and Employment, chided Dr Moghalu for daring to want to be president, saying: “You have not carried politics bag. You have not served anybody in politics. Why would you jump into presidential race?” Clearly, to Ngige, someone who was a former deputy governor of Central Bank of Nigeria and has considerable international exposure must still “carry politics bag and learn from his master” before he can become president of Nigeria. In other words, it’s not possible for a Barrack Obama or an Emmanuel Macron, people who break the mould of the old patrimony, to emerge as president in Nigeria.

But it’s not the views of people like Ngige that should matter. What do Nigerians at large think or want? Do they want visionary and competent leaders? Even if people like Moghalu and Mailafia didn’t win last year’s election but secured millions of votes, it would have sent powerful signals that the people wanted, as Cicero and Plato prescribed, one of Nigeria’s best and brightest or one of its most intelligent to run the country. But they failed that critical test of followership.

Yet visionary and competent leaders matter. In their report on state fragility,

‘

Given Buhari’s appalling performance in his first term, he shouldn’t have been re-elected.

Of course, his victory was by default because his main opponent, Atiku Abubakar, was not liked in the North and not trusted in the South

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

Edo Òkpa ‘Nó, A mere slogan?

I

n spite of linguistic transformation by the different ethnic groups in present day Edo State over the years as a result of migration from the old Benin Empire, some words and phrases in the languages of the migrants have not changed. Edo Òkpa ‘Nó and Unuedo are some of the common words whose meaning cut across the various Edoid languages and dialects in the state from Okpameri to Bini, Etsako, Owan and Esan.

Edo Òkpa ‘Nó, was the theme of a town hall meeting organised a few days ago by Unuedo Renaissance, a body of professionals from Edo State resident in Lagos, with the governor in attendance. Edo Òkpa ‘Nó, simply means “Edo is one” or “Edo indigenes are one”. The theme is very apt except that it requires greater scrutiny not because the shared ancestry of the various groups in the state is a subject for contention but in spite of the near homogeneity of the various peoples in Edo State, governance in the State evidently lacks distributive justice. The agelong question of social political injustice, the permanent and sometimes spasmodic alienation of groups within the state, raises a certain level of ambiguity in, and calls to question the objective utility of the thematic marker that headlined the event.

In my attempt to reconcile the superfluous romance with that theme vis a vis the politics of exclusion in Edo State, I immediately dismissed it as an aspirational platitude, a mere slogan or at best a reconciliatory tantalizer to rally the

indigenes in the ensuing fratricidal war between an allegedly overbearing political godfather and an estranged son. If that is (was) the essence, the theme essentially loses its soul. However, I realized that the organizers, some of whom I know from a distance, will not yield to such little mindedness. I honestly think the town hall meeting was a genuine call for subscription to a shared destiny by a group of concerned professionals desirous of using available citizen participatory channels to influence the Edo State government for the common good.

However, beyond the altruistic yearning of a concerned group, the political actors in Edo State must equally subscribe to the ethos of Edo Òkpa ‘Nó and that immediately brings into particular focus the travails of Akoko Edo, particularly the Okpameri people who constitute about 60% or more of the LGA’s land mass and people. Okpameri itself is a natividation of Okpamakhin, its earliest form from Edo Bini. It means ‘one we are.’

The Okpameri people in Akoko-Edo Local Government Area, comprising of 25 towns and villages, is one major group that has for so long suffered systemic deprivation in the politics of Edo State. The last time there was visible state presence was during Professor Ambrose Alli’s administration in the defunct Bendel State when the government of Alli opened up the area with roads, secondary schools and pipe borne water from Ojirami Dam. Today in Okpameri, the roads have become deplorable (in fact there www.businessday.ng

are no roads anymore, literarily), good drinking water is a tale from abroad, electricity is a dreamer’s wish and people travel distances to access primary healthcare facilities. The few schools that exist are not worthy to be called schools.

Sometimes, one wonders whether the government is aware that this area exists in the state. Politics of exclusion alienates the people and dehumanizes both the rulers and the ruled. However, in recent times, after the era of Ambrose Alli, Governor Obaseki seems to be favourably disposed to developing the area. The area has produced the Chief of Staff, a Commissioner, the Deputy Speaker, and EDSTMA Boss.

Obaseki deserves commendation in this regard.

However, the area remains the oldest and largest LGA in Nigeria arguably. In the sharing of national and state resources, the area has been short-changed since its creation.

Let’s be clear, the demand for the provision of social needs can be overwhelming especially for a government with severely constrained revenue profile and government neglect is not peculiar to one group alone. However, it becomes utterly distressing when lack of resources becomes an alibi for the perpetual neglect of certain communities. And the difference for some groups is that while they are sometimes made to hold the short ends of the stick, Okpameri people have had no stick to hold for so long, if they ever had. No community or group deserves such traumatizing neglect in the hands

https://www.facebook.com/businessdayng

Professors Paul Collier of Oxford University and Tim Besley of the London School of Economics said that leaders need three tools to transform their countries. These are narratives, actions and institutions.

But only visionary and competent leaders can effectively deploy these tools. Take narratives. Good leaders are first-andforemost communicators; they inspire the people through good narratives about a shared prosperous future. But it takes a visionary leader, a leader with great ideas, to use the right narratives to inspire and mobilise the people. Sadly, Nigeria has never been governed by a visionary leader.

Then take the second tool: actions.

Narratives are not enough; they must be matched with credible actions, that is, policies. But only competent leaders, those with high intelligence, can take the right actions or develop the right policies to move a country forward. Has Nigeria been governed by any of its best and brightest? Again, sadly, no!

What about the third tool, institutions?

Professors Collier and Besley said: “Good leaders change policies, but great leaders build institutions”. Of course, they are right. But where are the great leaders to build institutions in Nigeria? For instance, it takes an intelligent leader to know that Nigeria can’t make progress with its deeply flawed politico-governance structure and, thus, must be restructured.

But where are such leaders? None, so far!

All of which brings us back to followership. It takes the citizens to elect the right leaders, and it takes them to put pressure on leaders to perform. Every country needs a critical mass of enlightened citizens, who are censorious and can act as a checking mechanism on bad leadership.

Sadly, Nigeria doesn’t have such citizenry.

Instead, it has passive, compliant and alienated citizens. Nigeria’s deep crisis of leadership is worsened by its deeper crisis of followership. Little wonder progress eludes it!

GLENN UBOHMHE of government for whatever reason or for no reason at all.

Although Mr. Godwin Obaseki’s administration is not resting in its oars in addressing developmental challenges across the state, but the feeling of systemic marginalization and deprivation by some groups in the state persists and this was sufficiently echoed during the town hall meeting. Some of these concerns are inherited realities which one administration may not be able to redress due to resource and time constraints; but concerted efforts be made to correct the injustice.

Edo Òkpa ‘Nó should not just be a nice-tohave slogan, Edo Òkpa ‘Nó should reflect in deed and substance. If the theme is to be made plausible and acquire intrinsic relevance, the ethos must be fully subscribed to by every government irrespective of which group produces the Governor. Edo State needs an Edo Governor (who sees the entire state as his constituency irrespective of group affiliation), not a governor who is tribalistically Okpameri, Bini, Esan, Owan, Etuno, Ijawo, Etsako or any other group within the state.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Glenn Ubohmhe (FCA, FCTI) lives in Lagos.

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

15

• Utilities • Managing your Tax

The merging of your worldly goods son that is left with little or no influence regarding how money is spent.

Even if you do not earn at all or earn much less than your spouse, responsibilities should be shared.

If you are efficient at paying the utility bills or managing a bank account, then that can be your role. Ideally all decision-making shouldn’t be in one spouse’s hands.

Major financial decisions should be discussed with input from both parties even if one makes the final decision. Even if you paid for everything, you both own everything.

Do you have a family financial vision?

At least once a year, try to come together without distractions to discuss your vision, plans and priorities for your family. Built into family goals should be individual goals that you both respect and will work towards. Will one of you go back to school? Will one be setting up a business that will not generate any income for some time? As a couple, you should communicate your expectations and ideas about raising and educating your children even before they are born.

Update your insurance If you and your spouse have separate health plans, compare the two plans and see whether it makes sense to continue both or maintain a more comprehensive policy from one company.

This is a good time to discuss life insurance; in marriage, and certainly where one party is the primary

www.businessday.ng

‘

Debt brought into marriage can be a major source of friction if not handled openly and honestly; it is best to deal with it together and seek to bring it under control along with other family financial goals

‘

W

hether you are in a serious relationship, are formally engaged, or married, money is an essential part of our everyday lives and is a topic that should be discussed regularly. It is also a major cause of stress in relationships, particularly marriage, where it takes on an even greater significance not just for the couple, but for the state. Indeed, the State views married people as a financial unit. When you get married, you don’t just merge your family history, furniture and live under the same roof; you also merge your financial future. Here are a few practical issues to consider: What’s in a name?

Many women, the world over, are opting to retain their maiden names; indeed in some societies, a citizen is required by law to retain their maiden names while they may opt to use their husbands name socially. In Nigeria, it is still more common for a newly married woman to change her name on all her important documents although increasingly, professionals, celebrities and members of prominent families are opting to hyphenate their last names, with the bride deciding to use both her maiden name and her new partner’s last name.

Should you decide to adopt your spouse’s name or a hyphenated name, update your records; there are so many documents to work through; your international passport when due for renewal, drivers’ license, investments, your will and other legal documents. Notify your employer, creditors, insurance agents, and bankers who will need to see your certified marriage certificate as legal proof of your new status before any changes can be effected.

Mutual Respect When you are committed to a long-term relation-

ship, you and your partner owe it to one another to have an honest conversation about each other’s finances, goals, and fears.

You both come from different backgrounds and histories, so naturally you may view money differently depending on your experience with money in your formative years. The way your parents treated money would have had an impact on you either negatively or positively.

A frugal person married to a spendthrift could be a recipe for disaster if the issue is swept under the carpet and spending styles are not addressed with sensitivity. Make an effort to understand your partner’s money personality. If you are very different, don’t judge them on how they regard money. Learn to accommodate them and work together to make money work for you as a team.

Work as a team In our very patriarchal society, there has been the age-old expectation that the male members of the family are the natural breadwinners. Today, in many families, roles are shared or there is a female breadwinner. This can cause friction if the financial relationship is not handled with wisdom as issues of ego, anxiety and control come into play.

Where one partner dominates all financial matters, whether male or female, this can leave the other feeling insecure or inadequate. That dominance can disempower the per-

breadwinner, a life insurance policy is appropriate as a sudden loss of income can be devastating to a young family.

Bring your debt under control Many people don’t discover the extent of their spouse’s financial obligations until they are married. Debt brought into marriage can be a major source of friction if not handled openly and honestly; it is best to deal with it together and seek to bring it under control along with other family financial goals.

Joint, separate accounts or a combination?

If you like to maintain a certain level of independence without your partner scrutinizing the minutest detail of personal spending, separate accounts may be more appropriate.

Having a joint account combined with individual accounts for personal expenses is a common compromise as each partner takes some responsibility

https://www.facebook.com/businessdayng

for the household budget, yet is still able to retain some autonomy. Partners contribute a certain amount of their monthly salary into the joint account to cover routine household expenses such as food, utility bills, and larger expenses such as rent or mortgage payments, school fees, and family vacations. If you earn significantly more or less than your spouse, it’s only fair to contribute amounts in proportion to your respective incomes to reflect this imbalance.

There is sometimes confusion about the difference between a joint account holder and an authorized signatory. It is important to note that whilst an authorized signatory is able to operate the account, the main account holder can choose to remove or change their access at any stage. If the main account holder dies, the other signatory to the account would cease to have access to any money because the account would form part of the deceased’s estate.

Estate Planning and marriage Estate planning is never a nice subject to discuss but it is a necessary one.

You may have completed a next of kin form when you first started work and put down your father, mother, brother or sister as your next of kin. Quite often we forget who was designated unless your company’s HR department is meticulous about circulating the forms each year for staff to reflect changes in their lives and beneficiaries. Update the beneficiary designations on your employers “next of kin” form, bank accounts, retirement savings account, insurance policies and your will. This is doubly important especially if this is not your first mar@Businessdayng

riage.

One advantage of a joint account with the “right of survivorship” is that if one of two joint account holders dies, the surviving account holder is entitled to the account. Assets such as bank accounts, brokerage accounts, and property titled in both your names will usually pass to your spouse without going through the probate process. Seek legal advice as to the best way to title your accounts and other property.

Every relationship is different. What suits one couple may not be the ideal solution for another. A system that has worked for a time, may no longer be appropriate as your relationship and obligations evolve, so be prepared to modify it as appropriate; if a system isn’t working, just change it.

Remember that money matters need not be all serious and tense. Build in some fun, that joy of giving, the lovely experiences that memories are made of and that make working hard worthwhile.

When a couple is committed to a joint financial future whilst still maintaining their own individual perspectives and goals, their relationship and potential for success is strengthened.

HAPPY VALENTINE’S DAY!

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

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

16

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

17

18

Monday 10 February 2020

BUSINESS DAY

In Association With

Meet the new boss

What it takes to be a CEO in the 2020s The rules of management are being ripped up. Bosses need to adapt

O

N PAPER THIS is a golden age for bosses. Chief executives have vast power. The 500 people who run America’s largest listed firms hold sway over 26m staff. Profits are high and the economy is purring.

The pay is fantastic: the median of those CEOs pockets $13m a year.

Sundar Pichai at Alphabet has just got a deal worth up to $246m by 2023. The risks are tolerable: your chances of being fired or retiring in any year are about 10%. CEOs often get away with a dreadful performance. In April Ginni Rometty will stand down from IBM after eight years in which Big Blue’s shares have trailed the stockmarket by 202%. Adam Neumann got high in private jets and lost $4bn before being ousted from WeWork last year. The only big drawback is all those meetings, which eat up two-thirds of the typical boss’s working hours.

Yet CEOs say the job has got harder. Most point the finger at “disruption”, the idea that competition is more intense. But they have been saying that for years. In fact the evidence suggests that, as America’s economy has become more sclerotic, big firms have been able to count on cranking out high profits for longer.

Nonetheless, bosses are right that something has changed. The nature of the job is being disrupted.

In particular, CEOs’ mechanism for exercising control over their vast enterprises is failing, and where and why firms operate is in flux. That has big implications for business, and for anyone climbing the corporate ladder.

Few subjects attract more voodoo analysis than management.

Even so, studies suggest that the quality of an American firm’s leadership explains about 15% of the variance in profitability. But boards and headhunters struggle to identify who will do a good job (see Briefing). Perhaps as a result, they tend to make conservative choices. About 80% of CEOs come from within the company and over half are engineers or have MBAs. Most are white and male, although

that is changing slowly.

This tiny elite faces big changes, starting with how they control their firms. Ever since Alfred Sloan shook up General Motors in the 1920s, the main tool that CEOs have wielded is the control of physical investment, a process known as capital allocation. The firm and the CEO have had clear jurisdiction over a defined set of assets, staff, products and proprietary information. Think of “Neutron” Jack Welch, who ran General Electric between 1981 and 2001, opening and shutting plants,buyingandsellingdivisions,and ruthlessly controlling the flow of capital.

Today, however, 32% of firms in the S&P 500 of big American firms invest more in intangible assets than physical ones, and 61% of the market value of the S&P 500 sits in intangibles such as research and development (R&D), customers linked by network effects, brands and data. The link between the CEO authorising investment and getting results is unpredictable and opaque.

Meanwhile the boundaries of the firm, and the CEO’s authority, are blurring. Uber’s 4m drivers are not employees and neither are the millions of workers in Apple’s supply chain, but they are mission-critical. Big firms spent $32bn last year on cloud services from a few powerful vendors.

Factories and offices have billions of sensors pumping sensitive information to suppliers and customers. Middle-managers talk business on social media.

Even as CEOs’ authority is being redefined, a shift is under way in where firms operate. Generations of bosses have obeyed the call to “go global”. But in the past decade the profitability of multinational investment abroad has soured, so that returns on capital are a puny 7%. Trade tensions mean that CEOs face the prospect of repatriating activity or redesigning supply chains. Most have only just begun to grapple with this.

The last change is over the purpose of the firm. The orthodoxy has been that they operate in the interests of their owners. But pressure is coming from above, as

A BalkaninbeInvesting rail

Why HS2 should go ahead Britain is poised to decide whether to build an expensive

F

politicians such as Bernie Sanders and Elizabeth Warren call on CEOs to favour staff, suppliers and clients more; and from below, as both customers and young workers demand that firms take a stand on social issues. Alphabet has faced rolling staff protests.

CEOs are experimenting, with underwhelming results. Reed Hastings at Netflix preaches radical autonomy. Staff decide their expenses and do without formal performance reviews, an idea that at most firms would cause chaos. Others assert authority by reviving the 1980s cult of celebrity. Sometimes it works: Satya Nadella has rebuilt Microsoft using “empathetic leadership”.

Often it does not. Mr Neumann’s stint as WeWork’s party-animalin-chief ended in fiasco. Jeff Immelt, the ex-boss of General Electric, has been accused of “success theatre” by making himself a jet-setting star as its cashflow fell by 36%.

Keen to show they are engaged, bosses are publicly weighing in on issues like abortion and gun control. The danger is hypocrisy. Goldman Sachs’s boss wants to “accelerate economic progress for all”, but it faces a huge fine for its role in the 1MDB corruption scandal in Malaysia. In August 181 American CEOs pledged to serve staff, suppliers, communities and customers as well as shareholders. This

is a promise, made during a long economic expansion, that they will not be able to keep. In a dynamic economy some firms have to shrink and shed workers. It is silly to pretend there are no trade-offs. Higher wages and more cash for suppliers mean lower profits or higher prices for consumers.

The very model of a modern CEO What, then, does it take to be a corporate leader in the 2020s?

Every firm is different, but those hiring a CEO, or aspiring to be one, should prize a few qualities. Mastering the tricky, creative and more collaborative game of allocating intangible capital is essential. A CEO must be able to marshal the data flowing between companies and their counterparties, redistributing who earns profits and bears risk.

Some firms are ahead—Amazon monitors 500 measurable goals— but most CEOs are still stuck clearing their email inboxes at midnight.

Last, bosses need to be clear that a firm should be run in the long-term interest of its owners. That does not mean being crusty or myopic. Any sensible business should face up to the risks from climate change, for example. It does mean avoiding mission creep. CEOs in the 2020s will have their hands full with their own company, so forget trying to run the world too. And if, in between meetings, you find time to smoke weed at 40,000 feet, don’t get caught.

OR THE country that invented railways, Britain has shown remarkably little interest in them lately. New networks have been built around Europe in the past few decades, but the only significant stretch of track laid in Britain in a century is the 67-mile (107km) HS1 railway that links London to the Channel Tunnel. Indeed, the country has half as much track as it had in 1963. Yet while Britain has an almost American reluctance to invest in railways, its commuting patterns are European: 10% of journeys are by rail, compared with 9% in Germany and less than 1% in America. The result is a lot of angry commuters.

Britain’s big problem is that, because it has built no new high-

speed lines, it runs fast intercity trains on the same track as slow commuter ones. Long gaps have to be left between slow and express trains. The need to make way for high-speed trains thus limits the number of commuter services, and vice versa.

Eight years ago, the government decided to rectify this by building a new 345-mile railway from London to the north of England. Though branded as High Speed 2, its principal job was to boost capacity rather than speed. At the time, this newspaper argued against it. Although we supported the idea of investment in train capacity, we believed that there were better projects to spend money on than HS2.

Spooked by the costs—now put at around £100bn, against an original estimate of £42bn—and by the fury of 21 Tory MPs whose rural constituencies the track would slice Continues on page 19

Monday 10 February 2020

BUSINESS DAY

19

In Association With

America’s presidential election

The Democratic primaries will be a contest between radicals and repairers

The repairers have the better case

I

T WAS A devastating contrast. As the Iowa caucus turned into a fiasco (Democrats blamed the software), President Donald Trump hailed an “American comeback” in the state-of-the-union message and basked in his acquittal by the Senate over impeachment.

With the economy roaring and his approval ratings ticking up, Mr Trump looks likelier than ever to triumph in November. Compare that with the Democrats after Iowa, in which no candidate won the backing of much more than a quarter of caucusers.

Democrats agree that ending Mr Trump’s bombastic tenure is their priority. But their champions, now trudging round New Hampshire eking out votes before next week’s primary (see article), are starkly divided over what to offer Americans in his place.

The left argues that America has stopped working for most people and thus needs fundamental restructuring. Moderates recommend running repairs. A lot rests on which side prevails—the radicals or the repairers.

Any of the front-runners could yet end up as the nominee: the radicals, Bernie Sanders and Elizabeth Warren; or the repairers, Pete Buttigieg and Joe Biden (despite his bad day in Iowa).

So at a pinch could Michael Bloomberg, another repairer, who is spending gargantuan sums before Super Tuesday next month. But on every count the repairers have the better of the argument. They are more likely to beat Mr Trump, to achieve things and, most important, to do what America needs.

It is striking that all of the plausible nominees are campaigning to the left of President Barack Obama in 2012 and Hillary Clinton in 2016 (see Briefing). They all have ambitious plans on climate change; and, with the exception of Mr Bloomberg, are sceptical of free trade. Nevertheless, Mr Sanders, who calls himself a democratic socialist, and Ms Warren, a capitalist, are distinctly more militant in both style and substance.

This is partly a matter of degree, as health policy shows. All Democrats want the number of Americans without health insurance, which has risen from 27m to 30m under Mr Trump, to be reduced, ideally to zero. The repairers would expand Obamacare’s market-based system

until everyone was covered. Mr Sanders and Ms Warren, by contrast, would nationalise health insurance, revolutionising health care, a $3.8trn business accounting for 18% of GDP and which employs 16.6m people.

There is also a fundamental difference about the role of government. Take labour rights, for instance. All Democrats evoke a mythical golden age when people were rewarded fairly for a day’s work. The reformers would increase minimum wages to, say, $15 an hour and spend more on education and retraining. The radicals would force any largish firm to put workers on its board— Ms Warren would give their representatives 40% of the seats, Mr Sanders 45%. Mr Sanders would require firms to transfer 20% of their equity to workers’ trusts.

Both would create a system of federal charters to oblige firms to operate in the interests of all stakeholders, including workers, customers and the local community as well as shareholders. Such a government-mandated shift in corporate power has never occurred in the United States.

This radicalism is based on three misconceptions. The first is that Mr Trump showed in 2016 that you win elections through the fervour of your base rather than making a coalition. That is unlikely to work for Democrats in 2020. Presidential elections tend not to be kind to candidates who pitch their camp far from the political centre. Voters perceived Hillary Clinton as more extreme than Donald Trump in 2016, and

it did not end well for her. In a 50:50 country, marginal handicaps matter.

Mr Trump would have fun with Mr Sanders, who wishes to double federal spending overnight and, perhaps more important to the president, honeymooned in the Soviet Union.

It was no accident that in his state-of-the-union message Mr Trump pointed to Juan Guaidó, the Venezuelan opposition leader who was his guest for the evening, and reminded Congress that “socialism destroys nations”. Few voters are hankering to own the means of production in suburban Philadelphia or Milwaukee, where the presidential election will probably be decided.

Another misconception is that a radical who did get into the Oval Office would accomplish much.

Some Democrats say that the intransigence of the Republican Party means an approach built around compromise is worthless. The pursuit of incremental change, they reckon, is an admission of defeat at the outset. They are right that the two parties in Congress have forgotten how to work together. Today’s Senate is likely to accomplish less than any other in the past half-century.

Their idea is to take on Mr Trump’s reality-TV populism with redblooded economic populism.

That might thrill activists and terrify Wall Street, but it would be both unproductive and selfdefeating. Democrats believe in the role of government. They are condemned to try to make it work, not demonstrate that it cannot.

The last misconception, and the most important, concerns the substance of what the radicals would like to achieve. Ms Warren takes her faith in government to extremes. If she had her way, the state would break up, abolish or impose fresh regulations on about half of the firms owned by shareholders or private-equity groups. Mr Sanders would go even further. Both candidates treat private capital as if it operates with sinister intent, even as they embrace the state as if it were benign, capable and efficient.

That is naive. Just as thriving businesses at their best invigorate and enrich, so government at its worst can be capable of heartless cruelty and indifference.

There are moments when the United States has required something like a revolution—before the civil war, say, or in the years running up to the passage of the Civil Rights Act. This is not one of them.

Unemployment is as low as it has been since the mid-1960s. Nominal wages in the lowest quartile of the income scale are growing by 4.6%. Americans are more optimistic about their own finances than they have been since 1999.

Instead America needs repairing—lowering the cost of housing and health care; moving to a low-carbon economy; finding a voting system that rewards consensus, not partisanship. For that, national politics needs to become boring again, not to be an exhausting, outrage-spewing fight between Mr Trump and the most extreme candidate the Democratic Party can muster.

Why HS2 should go ahead...

Continued from page 18

through, the government is considering cancelling the project. A final decision was due as The Economist went to press. We now believe the line should go ahead—not because £8bn has already been spent, but because the circumstances have changed.

Rail is an increasingly important part of the transport mix. Climate change is putting a premium on carbon-efficiency. At the same time, passenger numbers have exceeded forecasts. The government had expected passenger volumes to increase by 17-21% in the decade from 2011; actually, they were up by 24% within just seven years and are expected to go on growing at a similar clip. The costs of other, cheaper ways to boost capacity, such as double-decker carriages and longer trains, have increased, along with the cost of engineering wider tracks and higher tunnels, and of buying more property around stations. Meanwhile interest rates are so low these days that the government can borrow longterm for virtually nothing.

The benefit-to-cost ratio (BCR) calculated for HS2, at around one, is hardly a ringing endorsement.

But just as the costs of big transport projects are often underestimated, so are their long-term benefits. The extension to London’s Jubilee tube line, for instance, was approved with a BCR of less than one, but recent analysis suggests that it has been more like 1.75. And that includes only the revenues that go directly to the railway, not the economic consequences of the revival of London’s Docklands area, which the tube line made possible.

The main point of HS2, similarly, is its impact on the cities and towns along its route and beyond.

Boris Johnson, the prime minister, is on a mission to boost growth in northern and western areas left behind by the country’s lopsided, London-centred pattern of growth.

On its own HS2 won’t make that happen, but doing so without a new railway would be tough. The success of the “Northern Powerhouse” rail scheme, to link the north’s big towns, depends on it.

20

Monday 10 February 2020

BUSINESS DAY

In Association With

Three strikes

Hong Kong’s economy is in peril, but its financial system is not Its property market and finance industry are somewhat insulated from local worries

A

S THEY REPAY their debt to society, many Hong Kong prisoners are put to work making useful items like road signs, uniforms, furniture—and the surgical masks that now obscure the faces of almost everyone on the city’s subdued streets. To help stop the spread of the Wuhan coronavirus, which has infected over 28,000 people worldwide, prisoners will now be employed round the clock, boosting mask production by as much as 60%.

That, sadly, is one of the few economic ventures that is still expanding in this thrice-struck city.

Its GDP shrank last year for the first time in a decade, thanks to the trade war and anti-government protests.

The coronavirus now poses a third threat. Some economists have slashed their growth forecasts for Hong Kong by more than for the mainland (see article).

Hong Kong’s economic fate is of international concern. Vast sums of global capital flow in and out of its asset markets and its borderstraddling banks. Some speculators now fret about its financial resilience, noting its exorbitant property market, where prices have tripled in ten years, and top-heavy banking system, which has assets worth 845% of GDP. As protests intensified last year, bets against Hong Kong’s currency, which has been firmly pegged to the dollar since 1983, became unusually popular. The city’s monetary officials proclaimed

no reason to worry. But that is the kind of thing you have to say only when others suspect that it is not entirely true.

The fear about Hong Kong’s domestic economy is warranted.

Much of the city’s livelihood depends on the economic virtues of openness and propinquity. It excels as both an entrepot and a rendezvous, where people from far-flung places can gather in jampacked proximity. It thrives on human interaction. But so does the

virus. Thus efforts to impede the disease, such as discouraging visitors and gatherings, also paralyse the economy.

Unfortunately the government lacks authority just when it needs it. By so gravely mishandling the recent social unrest, it lost the public’s trust. It now struggles to convince people that it is doing all it should to stop the disease. Some hospital workers have gone on strike, demanding a complete closure of the border with the mainland (see ar-

ticle). Others are furious about the shortage of masks. A more credible government might advise people that they do not need to wear one unless they are ill. But such advice would be scorned in Hong Kong.

It has run out of masks because its government has run out of trust.

These justifiable fears for Hong Kong’s local economy do not, however, extend to its banks or its currency. Precisely because its property market and its financial system have become partially divorced

from its local economy, they are somewhat insulated from domestic travails. And its banks have grown so big partly because they serve mainland firms with global ambitions, whose fortunes are decided outside Hong Kong. Most lenders are well-capitalised and mortgage lending is tightly controlled.

Hong Kong’s currency peg is also heavily fortified. Foreignexchange reserves are twice as large as the money supply, narrowly defined. In principle, the banks would run out of Hong Kong dollars to sell to the monetary authority before it would run out of American dollars with which to buy them. In practice, interest rates would spike long before then.

That would make holding the currency more rewarding and betting against it more expensive.

It would also inflict pain on the economy. For the peg to survive, the government would have to endure the agony longer than speculators could endure the expense. During the Asian financial crisis in 1997 (when overnight interest rates briefly reached 280%), Hong Kong showed how far it was willing to go. The peg’s survival back then has made it more likely to survive future tests, too. Hong Kong has built a reputation for competence and integrity with international investors. What a shame that the government has squandered its reputation for those very qualities with its own population.

Conscious coupling

More Africans are marrying spouses of different ethnicities Education and urbanisation are only part of the explanation

I

N 2018 A dating app was launched targeting African diasporas in America. CultureCrush was described by its founder as an “inclusive ecosystem”. And if that were not romantic enough, the app promised to be the first to allow users looking for love to search mates by “nationality, ethnicity and tribe”.

For lonely hearts in Chicago or New York it may well be a useful feature. But in Africa, love, or at least marriage, is increasingly transcending ethnic boundaries. That is according to several studies published in the past two years, all of which find that it is becoming more common for Africans to get hitched to partners from other groups.

A paper published in January

by Juliette Crespin-Boucaud of the Paris School of Economics found that the share of marriages that are “interethnic” ranges from 10% of the total in Burkina Faso to

46% in Zambia. The average share in the 15 countries she looked at is 20%. Another study, published as a working paper in 2018 by Sanghamitra Bandyopadhyay and Elliott Green, respectively of Queen Mary University of London and the London School of Economics, found a similar figure among a sample of 26 countries: 22%.

All researchers note that younger generations are more

likely to spurn ethnic barriers.

About 17% of women’s first marriages in 1984 were interethnic, rising to 26% in 2014, according to Ms Bandyopadhyay and Mr Green.

Urbanisation is one reason for the increase. In cities there are more people from different backgrounds with whom to consort than in villages. It is harder for nosy relatives to interfere. Educa-

tion matters, too. More schooling means higher incomes and more choices.

Yet there is more to the trends than schooling and cities, says Ms Crespin-Boucaud. Also important are changing cultural attitudes. These days marrying outside one’s group is less likely to be taboo. Why this has happened faster in some countries (such as Uganda) than others (such as Niger) is unclear.

Whatever the reasons, boundary-spanning marriages are good news, and not just for the happy couples. Another paper, published in 2018 by Boniface Dulani of the University of Malawi and three co-authors, suggests that children of mixed marriages are less likely to vote along ethnic lines. Ethnically driven politics has been used to explain many African woes, from conflict to corruption. So if love can blur these boundaries, all the better.

This article appeared in the Middle East and Africa section of the print edition under the headline “More Africans are marrying spouses of different ethnicities”

Monday 10 February 2020

BUSINESS DAY

COMPANIES & MARKETS

21

Company news analysis insight

BANKING

Wema Bank’s Q4 profit surges 32.5%, grows loan OLUFIKAYO OWOEYE

W

e m a B a n k ’s 2 0 1 9 full-year gross earnings for the period ended 31 December grew 28percent from N71.5bn in Q4 2018 to N91.54bn the same period in 2019.

Profit for the year spiked 32percent to N4.4bn in 2019 from N3.32bn the same period in 2018.

Interest Income which is the amount earned by the bank for lending increased to N67.79bn from N57.63bn. Interest expense spiked to N43.89bn from N30.64bn reducing net interest income by 11percent by the end of 2019 full year at N23.89bn from N26.99bn.

Loans and advances to customers increased 14.6percent to N289bn from N252.18bn, while,

Customer deposit also grew by 57 percent from N369.19bn in Q4 2018 to N579.13bn in Q4 2019.

The bank ’s net fe e and commission income up by 23 percent from N6.51bn in full year 2018 to N7.99bn in fullyear 2019, net trading income up by 167 percent in 2019 to N14.79bn from N5.53bn in 2018.

Other operating income was down by 60 percent from N1.82bn in 2018 to N0.73bn in 2019. Impairment Charge was up by 17 percent to N4.12 bn in 2019 from N3.51 bn in 2018. Other Operating Expenses up by 9 percent in 2019 from N17.62bn to N19.28bn.

Staff Cost up by 21 percent from N12.34bn in 2018 to N14.87bn in 2019.

Wema Bank’s balance sheet also had a very encouraging growth in the 2019 financial year as all

the four parameters grew by double-digit except Shareholders Equity that had a 6 percent growth.

The Asset Base of the bank grew by 48 percent year-on-year.

NDIC Premium increased to N1.74bn from N1.19bn, the Deposit Insurance is a system established by the Government to protect depositors against the loss of their

insured deposits placed with member institutions in the event a member institution is unable to meet its obligations to depositors, it ensures that the depositor does

not lose all his money in the event of a bank failure.

AMCON Levy increased to N2.75bn from N2.45bn.

Shares of Wema Bank closed at 71kobo at the close of trading on Friday.

L-R: Folashade Ambrose Medebem, CPASD director, Lafarge Africa/EBO president; Muhammadu Sanusi II, emir of Kano; Andreas Voss, vice president, EBO; Mary Ojulari, deputy MD, Westar Associates Limited, and Laurence Ricca, executive secretary, EBO, on a courtesy visit to the HRH the Emir of Kano.

AVIATION

2019 was worst year for global air freight demand in 10 years – IATA IFEOMA OKEKE

T

he International Air Transport Association (IATA) released full-year 2019 data for global air freight markets showing that d e ma n d , m e a su re d in freight tonne kilometers (FTKs), fell by 3.3 percent compared to 2018 while capacity (AFTK) rose by 2.1 percent. This was the first year of declining freight volumes since 2012, and the weakest performance since the global financial crisis in 2009 (when air freight markets contracted by 9.7 percent).

In the month of December, cargo volumes contracted 2.7 percent year-on-year while capacity rose 2.8 percent.

Air cargo’s performance in 2019 was dampened by weak growth in global trade of just 0.9 percent. The sector’s underperfor-

mance was also due in particular to slowing GDP growth in manufacturing-intensive economies. Softer business and consum e r confidence, along with falling export orders, also contributed to air freight struggles.

There are signs that confidence and orders could pick up in 2020.

It is too early to say what long-term effects will be seen from the impact of restrictions associated with combatting the coronavirus outbreak.

“Trade tensions are at the root of the worst year for air cargo since the end of the Global Financial Crisis in 2009. While these are easing, there is little relief in that good news as we are in unknown territory with respect to the eventual impact of the coronavirus on the global economy.

“With all the restrictions being put in place,

it will certainly be a drag on economic growth.

And, for sure, 2020 will be another challenging year for the air cargo business,” Alexandre de Juniac, IATA’s director general and CEO said.

Regional Performance All markets except Africa suffered volume declines in 2019. AsiaPacific retained the largest share of FTKs, at 34.6 percent. The share of freight traffic increased modestly for both North America and Europe, to 24.2 percent and 23.7 percent, respectively.

Middle East carriers’ traffic share held steady at 13 percent. Africa and Latin America saw their shares lift marginally, to 1.8 percent and 2.8 percent.

African carriers’ saw freight demand increase by 10.3 percent in December 2019, compared to the same month in 2018. This was reflect-

ed in the strong 2019 full-year performance, which saw Africa freight volumes expand 7.4 percent. Capacity in December grew by 10 percent and for 2019 in total, increased by 13.3 percent. Over the year, air cargo volumes have been supported by strong capacity growth and investment linkages with Asia.

Asia-Pacific carriers in December posted a decrease in demand of 3.5 percent compared to the same period a year earlier. Capacity increased by 2.8 percent. The full-year 2019 saw volumes decline 5.7 percent, the largest decrease of any region, while capacity increased by 1.1 percent. As the world’s main manufacturing region, international trade tensions and the global growth s l ow d ow n w e i g h e d heavily on regional air freight volumes in 2019.

Within-Asia FTKs were

particularly affected (down 8 percent compared to a year ago).

North American airlines saw volumes fall by 3.4 percent in December, while capacity grew by 2.1 percent. For 2019 in total, the region’s cargo volumes declined by 1.5 percent, compared to a capacity increase of 1.6 percent. Trade tensions and cooling US economic activity in the latter part of the year have been factors in the decline. The 5.6 percent fall in international year-on-year volumes in December was the weakest monthly growth outcome for the region since early 2016.

European airlines experienced a 1.1 percent year-on-year decrease in freight demand in December, with a capacity rise of 4.9 percent. The fall in December was typical of the performance for 2019 as a whole, where volumes fell 1.8 percent,

but capacity increased by 3.4 percent. Softer activity, including in the manufacturing-intensive German economy, combined with ongoing Brexit uncertainty, contributed to the 2019 result, which in international freight volume terms was the weakest since 2012.

Middle Eastern carriers’ freight volumes decreased 3.4 percent year-on-year in December and capacity increased by just 1.9 percent, the lowest of any region. This contributed to an annual result of a decline in demand of 4.8 percent in 2019 – the second greatest decline in growth rate of all the regions. Annual capacity increased just 0.7 percent. Disruption to global supply chains and weak global trade, together with airline restructuring in the region, were the chief drivers of the weaker freight outcome.

22

Monday 10 February 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

INDUSTRIAL

Berger Paints Q4 profit jumps 17% to N376m ...Plans new water-based factory OLUFIKAYO OWOEYE

B

erger paints’ Q4 revenue increased 6percent to N3.58bn from N3.37bn, cost of sales increased to N1.91bn from N1.89bn leaving gross profit at N1.66bn from N1.48bn.

Selling and distribution expenses jumped 9percent at N214.99 million from N237.37bn. Administrative expenses increased 12.85percent to N936.16million from N829.54million.

T h e p a i nt ma k-

e r ’s F i n a n c e c o s t s spiked 28.4percent to N24.61million from N19.16million, leaving profit at N376.64million from N320.51million.

Net Profit for the year increased 17 percent to N376.64million from N320.51million.

Berger Paints recently announced plans to launch a N2billion automated water-based paint factory in Lagos. Abi Ayida, Chairman Berger paints disclosed this during a visit to the Minister of Industry, Trade, and Investment, Adeniyi Adebayo in Abuja.

“The plant has adequate capacity for large volume production with derived benefits of increasing local capacity, thereby, reducing importation of finished products and consequently strengthening the naira, the fully automated factory is expected to activate the industrialisation era of the paint sector in Nigeria as this will be the trend going forward.’’ He said.

At the close of trading on Friday, Shares of Berger Paints traded at N6.75 with one year return down by 0.72percent.

L-R: Sharon Bort, officer, sustainability community, Massachusetts Institute of Technology (MIT) Solve; Mukul Mathur, country head, Olam Nigeria; Julie Greene; vice president, corporate responsibility and sustainability, Olam International, and Sarah Rawson, social sustainability officer, corporate responsibility and sustainability – Africa Region, Olam International; at the Challenge Design Workshop, co-hosted by Olam International and MIT Solve, held recently at Eko Hotel, Lagos.

COMPANY RELEASE

Stanbic IBTC to hold third edition of youth leadership series

S

tanbic IBTC Holdings plc, a member of Standard Bank Group, has announced plans to host the third edition of its Youth Leadership Series.

The Youth Leadership Series is an annual event which is fashioned after the Business Leadership Series, also organized annually by Stanbic IBTC. It is a platform designed to engage young Nigerians, thus empowering them to become the future business leaders.

The theme of this year’s event is “Techricuture - the evolution” and it is scheduled hold on Wednesday, Februar y 12, 2020.

The speakers at 2020 edition are Sam Ogbole, CEO and Lead Trainer at Farm lab; Yewande Ka-

zeem, Founder, Wandieville Media as well as Seyi and Seun Abolaji, Co-Owners of the Wilson’s Juice Company.

Sam Ogbole is popular for his innovative approach to agriculture through his ‘soilless farming’ revolution where crops are grown in the air. He is a forerunner of revolutionized agriculture which uses technology to boost food production.

In 2018, he was recognized as one of the top 7 innovators in Africa by CNN Africa and named among the top 500 in food techpreneurs by Forward Fooding in 2019.

Popularly called The Wilson Brothers, Seyi and Seun Abolaji are co-owners of The Wilson’s Juice Company, manufacturers of pure natural fresh juice. Founded in 2016, the company now successfully

distributes its product consumed across the country and has also gained attention from both local and international media.

Yewande Kazeem, 2018 fellow of the Cornell Alliance for Science and graduate of science from the University of Oklahoma, is the owner of Wandieville Media, communication and educative media company that focuses on Global Development Projects in Africa including Agriculture, Nutrition, Women and Community Development. She is passionate about impacting small scale farmers through research and technology.

The event presents an opportunity for the attendees to learn more about opportunities in the agriculture value chain, driven by technology.

Seyi Makinde (2nd l), Oyo State governor; Kehinde Ayoola (2nd r), commissioner for Environment and Natural Resources; Idowu Salawu (r), consultant, Solid Waste, and Labake Lawal, at a sensitization on the new solid waste management initiative at Western hall, Secretariat, Ibadan.

L-R: Omotayo Abiodun, public relations manager, Tolaram Group; Olaide Aromire, head of committee, Oke-Arin market; Omotunde Bamigbaye, brand manager, Hypo Bleach, and Kafilat Bello, assistant, head of committee, Oke-Arin market, during the official launch of Hypo Nationwide Sanitisation campaign against LASSA fever at Oke Arin Market, Lagos Island.

L-R: Bellanova Grazia, deputy consul, Italian Consulate Lagos; Tariq Chazli, deputy ambassador, Italian Embassy, Abuja; Alessandro Gerbino, West African director for Italian Trade Agency (ITA); Johnmark Nzemeke, Trade Analyst (ITA), and Filomena Martino, accountant attaché, Italian Consulate, Lagos, at the launch of the Italian Trade Agency in Lagos.

L-R: Abubakar Alhaji, corporate affairs manager, North , Lafarge Africa Plc; Muhammad Inuwa Yahaya, governor, Gombe State, and Ibrahim Aminu, MD, Ashaka, Cement, during a courtsey visit to the governor recently.

Monday 10 February 2020

BUSINESS DAY

23

cityfile C’ River now very hostile state- Al MIKE ABANG, Calabar

A

mnesty International (AI) has described Cross River as a very hostile state, accusing the current government under Ben Ayade is running a repressive regime.

Isa Sanusi, the media adviser to AI, said this while addressing journalists at the weekend in Calabar, the Cross River State capital. According to Sanusi, there is an urgent need for the Ayade’s administration to stop the repression and respect, protect and ensure the right to freedom of expression.

The organisation alleged that the repression and violation of human rights could dissuade investors from the state.

“Cross River is becoming a den of repression where increasing number of people are being clamped into detention. Cross River government is very highhanded and repressive. We have written to Governor Ayade several times over the situation in the state as well as continued incarceration of Agba Jalingo but he never bothered to respond.”

The press conference was held in respect of the continued incarceration of Agba Jalingo, a journalist and human rights campaigner allegedly by the state government.

The international human rights watchdog, which also accused the government of playing politics with the liberty of citizens of the state, called on the governor to release Agba Jalingo “immediately and unconditionally.”

Flanked by the organisation’s researcher, Damian Ugwu , Sanusi said by holding Jalingo in detention over ‘spurious allegations’, the state government was working against the people who voted it into power.

“We are concerned that Agba Jalingo’s trial falls short of international standards of fairness, especially because the court has allowed witnesses to be masked and trial to be held in secret. The flawed charges and sham trial of Agba Jalingo have exposed the inadequacies and manipulation of the Nigerian criminal justice system and an unacceptable contempt for human rights and the rule of law.

“The pattern of repression in Cross River State flagrantly violates the Nigerian constitution of 1999 as amended, and International and Regional Human and Peoples’ rights treaties, including the international covenant on civil and political rights and African Charter on Human and Peoples’ Rights to which Nigeria is a state party,” said Sanusi.

An overloaded vehicle impounded by the Federal Road Safety Corps (FRSC) Kwara Sector Command in Ilorin.

Residents see economic boom from reopened Maiduguri-Damboa road … appeal for deployment of more soldiers

R

NIS arrests 4 human traffickers, rescues victims

O

peratives of the Nigeria Immigration Service (NIS), Seme Border Control Post and Mazanya Border Patrol, have arrested four suspected human traffickers with four victims.

The service public relations officer, Sunday James disclosed in a statement.

James said that three of the suspected human traffickers and three victims were apprehended at Seme border on their way to Ghana.

He added that the other victim and suspect were arrested at Mazanya border patrol along Jibiya road, Katsina State making the total of eight persons respectively.

According to him, the comptroller, NIS, Seme border, Joshua Ajisafe, after thorough investigation confirmed the status of the victims as being trafficked.

“The victims were deceitfully persuaded to embark on the trip for a job but on being interrogated they were discovered to be victims of trafficking for the purpose of prostitution.

“The human trafficking, an illicit business has been on the increase under various guises but they have always been discovered by officials.

“This has been done through timely intelligence and operational synergy between officers along the national borders and airports leading to the arrests,” he said.

esidents and commuters are hopeful that the re-opening of Maiduguri-Damboa road in Borno State will result in increased business activities and economic boom for the people of the area.

The road which had been closed for months due to the activities of the Boko Haram insurgents, was reopened last week by the Nigerian Army.

The road is one of the strategic roads in Borno, and links about 10 local government areas to Maiduguri, the state capital, as well as Adamawa and Taraba States.

The district of Damboa, Zanna Maina, who described the reopening of the road as a welcome development, noted that it would bring emotional and economic relief to the people of the area and beyond.

According to him, the people of the district are happy about this development and grateful to the state governor, Babagana Zulum for the role he played.

Also, a driver, Zakari Kafa, said that the reopening of the road was a relief to commercial drivers

who operate between Maiduguri and Damboa.

Kafa noted that while the closure lasted, it took them two to three days on the road to reach Damboa, traveling a distance of about 700 kilometres; instead of 80 to 85 kilometres.

“With the reopening of this road, people will find it easier to reach Damboa; with lorries taking goods to Damboa, our economy will also grow.

“Before now, these lorries find it difficult to take goods to Damboa but with this road, they can get to Damboa within two to three hours.

“We are appealing to the Nigerian Army as well as the Federal Government to provide more personnel to help secure the road.

“If the personnel are available, people will be confident to move, but if there is no security personnel on the road, people will be afraid to ply the road.

“This road has been closed for more than 10 months now,” he said.

A commuter and businessman, Kachala Bukar, said that the reopening of the road would go a long way in alleviating the suffering

of the masses who ply the road.

Bukar said that those traveling from Maiduguri to the southern part of the state had to follow Gombe, Numan, Uba and Chibok before getting to Damboa, because of the closure of the road.

He said that the commuters usually spent up to three days on the road, adding that with the reopening of the road, people could now reach their destinations within two hours.

“We thank our governor for his effort toward ensuring the reopening of the road because before now, the masses who could not afford the cost of traveling long distance and often trek for many hours.

“We pray to God to protect him; to be able to carry out his lofty programmes for the benefit of the people.

“The security agencies, especially the Nigerian Army, have done a lot; it was their efforts that led to the reopening of this road.

“Even now, they are doing all possible to provide protection for the travelers on the road, which is commendable,” he said.

Ex-Kwara lawmaker loses bid to stop criminal trial SIKIRAT SHEHU, Ilorin

E

fforts by a former lawmaker representing Molete constituency in the Kwara State House of Assembly, Mohammed Adebayo to stop the criminal proceedings brought against him by the Economic and Financial Crimes Commission (EFCC), Ilorin zonal office have failed, as the court, on February 6, dismissed his application.

The EFCC had in July 2019, arraigned the embattled foemer lawmaker on a six-count charge bordering on land scam before Justice Sikiru Oyinloye of a Kwara State High Court, sitting in Ilorin.

One of the charges against him reads “That you, Mohammed Adebayo, sometimes in July 2013 in Ilorin within the jurisdiction of this

www.businessday.ng

honourable court with intent to defraud and obtained the sum of N950,000 from one Mary Omowunmi Kolade on the false pretence that three plots of land (situate at Malete, Moro local government area of Kwara State) which you told to her belonged to you, a representation you knew to be false punishable under Section 1 of the Advance Fee Fraud and other fraud related offences.”

Adebayo pleaded not guilty to all the six count charges.

At the last adjourned date, defence counsel, I. Abdulazeez drew the attention of the presiding judge to a letter written by the nominal complainants in the case.

He said: “The nominal complainants have written a letter to the EFCC on their intention to withdraw their petition against Adebayo.”

He prayed the court to strike out the case and discharge the defendant.

https://www.facebook.com/businessdayng

But the prosecuting counsel, Sesan Ola, opposed striking out the case, insisting that the EFCC is the complainant in the case.

“My Lord this application lacks merit, the nominal complainant is not known in law, EFCC is the complainant in this case, we have two witnesses in court; they are ready to testify.

I want this honourable court to reject the application.”

In his ruling Oyinloye said: “This application lacks merit, it is only the Attorney General of the Federation that has powers to withdraw the charge not the nominal complainants or an accused person” The judge described the steps taken by the defence counsel and nominal complainants as “very weird, uncanny and strange procedure in the administration of criminal justice system.”

The case has been adjourned February 16, 2020 for prosecution to open its case.

@Businessdayng

24

Monday 10 February 2020

BUSINESS DAY

Monday 10 February 2020

BUSINESS DAY

25

Stephen Jennings

CEOINterview

Founder and CEO of Rendeavour

Interview with Private Sector Leaders

‘Alaro City will play a role in eliminating stereotypes about investing in Nigeria’ Stephen Jennings, founder and CEO of Rendeavour, Africa’s largest new city developer, and founder of RenMoney, the Fintech bank based in Lagos, in this interview with Endurance Okafor speaks on how Alaro City, a new large-scale mixedincome city in the Lekki Free Zone being developed in partnership with the Lagos State government, will help to rid the stereotypes about investing in Nigeria and, in turn, boost foreign direct investment into the country. Excerpts:

O

ne year after you launched Alaro City, you have returned to unveil the completion of the first facility on the site. Would you say that developments are moving as planned?

We are very pleased with the progress of Alaro City, which, in one year, has seen the opening of Ariel Foods, the largest Ready-to-Use Therapeutic Food production facility in Africa, and the underlying infrastructure – tarmacked roads, first phase power, water and waste – to support it. Similarly, on our one-year anniversary, we are welcoming an additional seven wellknown Nigerian and international businesses to the Alaro City, including HMD Africa, Starium (BUA Group), Sana Industries, Loatsad, Kenol, Universal Homes and ASB Valiant.

Given our on-time delivery of infrastructure and the market’s interest in Alaro City, I would say everything is moving forward as planned.

Alaro City has recorded 16 companies in various stages of building their facilities. What is the drive for the success recorded so far?

A confluence of factors is driving the success that brought the first Nigerian and international companies to Alaro City.We have seen the same factors in our other developments, particularly in Kenya and Ghana. We are creating what we call “normal” operating environments, meaning that companies and individuals don’t have to worry about land title, infrastructure and uncontrolled development. They can move into a Rendeavour development knowing their investment is secure, with all necessary infrastructures, and simply concentrate on their families and businesses.

Alaro City follows the same model.

Whether you are Ariel Foods building a production facility, Universal Homesbuilding 500 apartments at Alaro City, or HMD Africaestablishing a distribution centre for heavy machinery and a training academy to teach technical skills, you simply get on with your business without any headaches.

People interested in living in Alaro City are also showing their appreciation for our model. Our first phase of 150 serviced residential plots sold out within months last year, prompting us to release another phase in 2020.

ing and frontier markets, I have more examples of successes than difficulties in Africa. It will take time to rid people of stereotypes. Alaro City will play a role in that, as we continue to welcome more companies and people to the city. The story of Ariel Foods building and commissioning a state-of-the-art production facility in less than a year in Nigeria – possibly faster than it could have done in Europe – will become the norm for other companies as well.

Are there other companies (foreign and local) that will be entering Alaro this year? And in total, how many companies will be set up in the modern city?

Yes. We speak to several hundred companies a year about expanding their operations in Nigeria or entering the market for the first time. In the coming months we will make additional announcements. We have a very strong pipeline of potential clients, both foreign and Nigerian.

What have been the key challenges of developing Alaro?

The biggest challenge has been to build infrastructure fast enough to meet demand.

When Dhiren Chandaria from Ariel Foods came to us to say he wanted to be operational in one year, we had to deploy power, water and waste faster than in any other Rendeavour city. Very few factories in the world get built in one year, and, when they do, usually infrastructure is already in place. In our case, we were building infrastructure in parallel to Dhiren so he could start his business.

What makes it easy for you to convince fellow foreign investors to come into Africa and Nigeria?

The opportunity of Africa and Nigeria is obvious to foreign investors, but frequently old stereotypes cause them to delay, or to deploy capital elsewhere.

We have been investing in Africa for 15 years, first as Renaissance Capital.

Today, as Rendeavour, our urban development business, and RenMoney, our consumer finance bank in Nigeria, our track record gives us credibility, which is an attraction for partners. www.businessday.ng

In the case of Alaro City, we have known Ariel Foods’ chairman Dhiren Chandaria for many years in Kenya.

When he decided to expand his business to Nigeria, we were one of the first calls he made, and we supported his market entry. Similarly, Universal Homes is already building 1,200 apartments with us in Kenya. These are two companies that understand both the opportunity of Nigeria and the opportunity provided by Rendeavour.

They are entering the market with little to no risk.

Earlier, I mentioned partnerships.

Our partnership with Lagos State Gov-

https://www.facebook.com/businessdayng

ernment is also an attraction to foreign investors, because the state has a vested interest in their success in Lekki Free Zone.

That Alaro City has been conceived and implemented over three administrations is a very clear sign of the progressiveness and continuity of successive Lagos State governments working in the interests of Nigerian and foreign investors.

What makes it hard to do the same?

Stereotypes about investing in Africa. I don’t deny that there are challenges, but after 15 years in Africa, and more than 30 years of living in and investing in emerg-

@Businessdayng

‘‘

The government will need to intensify its efforts to diversify the economy to other growthdriving, highimpact, nonoil sectors like manufacturing, agriculture and services

The Lekki Free Zone, in which Alaro City is located, has the most business friendly benefits of any Rendeavour city, with zero corporate income tax on free zone income, zero withholding tax on dividends, zero import duties and zero vat. The Lekki Free Zone is also one of the biggest catalysts for economic development in Nigeria, with

What are the key lessons you will be taking from your other developed cities that will make Alaro better?

Maintaining flexibilityand allowing ourselves to be led by the market have been the key lessonsfor us. In our early years, we learned very quickly, and sometimes painfully, that we cannot dictate the master plan of a new city. Rather, if there is large demand for warehousing and logistics, we adapt the master plan to that without affecting the planning fundamentals of the master plan of course. If there is a demand for a certain housing category, we rezone our residential land for that. Our biggest surprise so far is in Kenya, where we found an unexpected demand for new schools, and three years later we have five new schools and more than 2,500 students a day studying at Tatu City, our project in Nairobi.

large-scale investments by Dangote, Tolaram and Kellogg’s, as well as by Rendeavour.

When should Lagos and Nigeria be expecting the completion of Alaro?

Like all our cities, Alaro City is a 20year development built in phases based on market demand. During that 20-year period, districts will be delivered that cater to different market segments – businesses, homeowners, schools and healthcare.

Are there other investments (real estate, infrastructure or any other sector) other than Alaro that you are venturing into in the nearest future?

With at least 15 to 20 years of real estate development ahead of us in Nigeria, Kenya, Ghana, Zambia and DRC, we have a lot on our plate. We know our countries well, and potentially could consider additional projects in these markets. On the fintech side,RenMoney is expanding rapidly.

Strategically, we want to continue to invest in and grow RenMoney and Rendeavour.

In your journey as a serial investor in Africa, do you think that the last year shows promise for increased FDI? Also, what should state and national governments do differently to attract more FDI? I am an optimist, and when foreign investors look at Africa they cannot ignore Nigeria. So it’s a matter of what the state and national government can do to pick up the pace of FDI. A number of Sub-Saharan African countries have relied on the World Bank’s ease of doing business survey as their measuring stick. I speak to international companies that rely on that ranking when their board says “yes” or “no” to investment in a market. The ranking is not perfect or comprehensive, but it can change investor perception very quickly. Countries can also rise dozens of places in the ranking in a year by removing technical impediments to investment, such as cumbersome business visa regimes and bureaucracy when opening a business.

Nigeria has a housing deficit that is more than 20 million units. What are your recom-

Are there qualities that distinguish Alaro from your other cities? www.businessday.ng

https://www.facebook.com/businessdayng

mendations on how the country can deliver affordable housing to its low-income population?

The private sector is the best partner the government can have to build affordable housing. Private developers can deliver a quality product, but they cannot sell units below a price that gives them profit. Governments can help drive down the cost of housing further by giving tax breaks to private developers, streamlining approvals, guaranteeing partial off-take and allowing a percentage of the units to be sold on the open market.

What are the sectors, fundamentals that are likely to shape Nigeria’s economic growth this year and beyond?

Nigeria’s economy remains dependent on oil revenues, and that leaves it susceptible to external shocks, most especially oil price fluctuations. To mitigate against that and ensure that the economy grows at a rate that will help tackle poverty and drive inclusive growth, the government will need to intensify its efforts to diversify the economy to other growth-driving, high-impact, non-oil sectors like manufacturing, agriculture and services.

In addition to that, the government will need to invest in critical infrastructure such as power, a good road network, education and health as a matter of urgency. If you layer on that the right policy framework and stability in the government and polity, then Nigeria will be on its way to unprecedented growth and development.

@Businessdayng

26

Monday 10 February 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 07 February 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 348,343.21 9.80 0.51 179 7,262,969 UNITED BANK FOR AFRICA PLC 265,045.52 7.75 0.65 207 15,560,147 ZENITH BANK PLC 621,650.58 19.80 -1.00 704 58,627,893 1,090 81,451,009 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 215,371.76 6.00 -0.83 337 15,759,062 337 15,759,062 1,427 97,210,071 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,381,478.03 117.00 -1.02 91 1,470,077 91 1,470,077 91 1,470,077 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 369 9,583,319 LAFARGE AFRICA PLC. 246,449.27 15.30 0.66 76 1,138,311 445 10,721,630 445 10,721,630 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 356,008.96 605.00 - 8 1,132 8 1,132 8 1,132 1,971 109,402,910 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,538.46 3.20 - 5 44,000 5 44,000 5 44,000 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 5 44,000 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 200 64,865.88 68.00 - 9 1,105 OKOMU OIL PALM PLC. PRESCO PLC 49,850.00 49.85 - 7 70,511 17 71,816 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 9.09 32 1,154,589 32 1,154,589 49 1,226,405 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 0 0 1,903.99 2.93 - 4 247 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 40,241.51 0.99 2.06 53 4,309,045 U A C N PLC. 24,346.96 8.45 0.60 41 659,335 98 4,968,627 98 4,968,627 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,634.00 22.45 2.28 89 9,965,738 ROADS NIG PLC. 165.00 6.60 - 0 0 89 9,965,738 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,338.56 0.90 - 8 198,815 8 198,815 97 10,164,553 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,594.61 0.97 - 5 30,000 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 66,149.56 30.20 - 23 35,262 INTERNATIONAL BREWERIES PLC. 228,327.58 8.50 -2.30 16 185,366 NIGERIAN BREW. PLC. 411,840.46 51.50 - 35 114,640 79 365,268 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 160,800.00 13.40 3.47 90 826,698 FLOUR MILLS NIG. PLC. 93,488.65 22.80 3.64 47 1,799,390 HONEYWELL FLOUR MILL PLC 8,723.22 1.10 7.84 28 1,929,224 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 8 32,860 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 173 4,588,172 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 16,903.82 9.00 -7.22 33 608,166 NESTLE NIGERIA PLC. 1,093,865.63 1,380.00 - 78 251,521 111 859,687 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,817.10 5.45 4.81 57 1,492,710 57 1,492,710 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 19,852.39 5.00 10.00 59 4,244,908 UNILEVER NIGERIA PLC. 86,175.08 15.00 - 54 2,170,161 113 6,415,069 533 13,720,906 BANKING ECOBANK TRANSNATIONAL INCORPORATED 130,281.81 7.10 -4.05 77 7,927,080 FIDELITY BANK PLC 62,875.31 2.17 -0.46 107 12,630,467 GUARANTY TRUST BANK PLC. 868,219.79 29.50 -1.67 305 76,796,631 JAIZ BANK PLC 20,330.33 0.69 -4.35 35 3,934,070 STERLING BANK PLC. 48,655.81 1.69 - 49 7,508,760 UNION BANK NIG.PLC. 202,389.23 6.95 -3.47 25 247,872 UNITY BANK PLC 6,662.92 0.57 - 21 319,699 27,387.87 0.71 - 10 68,198 WEMA BANK PLC. 629 109,432,777 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,682.77 0.82 -4.65 38 1,665,601 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 18 429,558 CONSOLIDATED HALLMARK INSURANCE PLC 2,926.80 0.36 - 3 13,000 CORNERSTONE INSURANCE PLC 7,953.93 0.54 - 7 154,686 909.99 0.20 - 0 0 GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 4.00 14 1,649,026 LAW UNION AND ROCK INS. PLC. 4,768.93 1.11 9.90 25 5,709,904 LINKAGE ASSURANCE PLC 4,960.00 0.62 - 8 229,436 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 4 385,000 NEM INSURANCE PLC 11,405.89 2.16 - 3 5,500 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,906.58 0.54 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 907 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,416.30 0.33 - 17 607,355 138 10,849,973 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,561.03 1.12 -9.68 37 3,017,996 37 3,017,996

www.businessday.ng

MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,000.00 4.50 5.63 25 711,108 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 1 1,500 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 0 0 FCMB GROUP PLC. 37,427.12 1.89 -3.08 85 8,216,980 ROYAL EXCHANGE PLC. 1,286.34 0.25 - 1 7,656 399,188.76 38.00 - 12 238,676 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 15,300.00 2.55 -1.54 52 1,401,035 176 10,576,955 980 133,877,701 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,320.22 2.55 - 10 89,058 GLAXO SMITHKLINE CONSUMER NIG. PLC. 5,979.38 5.00 -2.00 54 910,584 3,743.76 2.17 - 7 53,085 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 949.58 0.50 -9.09 8 452,619 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 79 1,505,346 79 1,505,346 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 -4.55 5 146,513 5 146,513 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,206.13 0.41 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 321.84 2.98 - 0 0 287.07 0.58 - 1 155 TRIPPLE GEE AND COMPANY PLC. 1 155 PROCESSING SYSTEMS CHAMS PLC 1,455.78 0.31 6.90 29 4,436,440 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 29 4,436,440 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 1 2 1 2 36 4,583,110 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 5 2,363 BUA CEMENT PLC 1,198,798.13 35.40 1.14 25 192,968 17,220.00 24.60 - 12 27,765 CAP PLC MEYER PLC. 244.37 0.46 - 0 0 1,769.32 2.23 - 2 2,322 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 44 225,418 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 2,377.78 1.35 -4.26 8 314,476 CUTIX PLC. 8 314,476 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 52 539,894 CHEMICALS B.O.C. GASES PLC. 1,873.10 4.50 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 0 0 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,377.79 0.22 10.00 77 17,767,401 77 17,767,401 INTEGRATED OIL AND GAS SERVICES OANDO PLC 44,753.08 3.60 - 25 1,375,424 25 1,375,424 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 48,031.29 133.20 - 13 13,167 CONOIL PLC 12,491.14 18.00 - 26 55,013 ETERNA PLC. 2,803.91 2.15 -8.51 42 977,755 FORTE OIL PLC. 24,161.02 18.55 - 53 53,577 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 0 0 TOTAL NIGERIA PLC. 36,328.84 107.00 - 11 1,698 145 1,101,210 247 20,244,035 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 4 1,500 4 1,500 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 2 1,400 TRANS-NATIONWIDE EXPRESS PLC. 379.77 0.81 -10.00 2 166,803 4 168,203 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 2,000 1 2,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,328.25 1.12 - 4 78,400 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,781.64 4.05 - 0 0 4 78,400 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 871.74 1.13 -6.61 19 964,831 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 517.69 1.20 - 4 1,020,312 23 1,985,143 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 563.62 0.34 - 1 29,900 1 29,900 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

27

28

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

29

30

Monday 10 February 2020

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Eight months into insurers recapitalisation no mergers yet Modestus Anaesoronye

E

ight months gone into the insurance industry recapitalization, no clarity yet on any merger deal as almost every company is currently working on raising fresh funds to stand alone.

A few that are talking to each other are waiting till the end of first quarter 2020 to exhaust available options, before they will make formal agreements and possible signing of documents.

Activities now are tilted towards rights issues, and private placements largely from equity investors both local and international.

An industry CEO told Business Day Friday “We are not foreclosing a merger deal, as long as we can find

L-R: Fatai Adegbenro, executive secretary, NCRIB; Jane Ekomwereren, executive director, Operations, Royal Exchange General Insurance Company; Rotimi Edu, deputy president, NCRIB; Benjamin Agili, MD/CEO, Royal Exchange General Insurance Company and Bukola Ifemade, chairman, NCRIB Lagos Area Committee (LAC) at the February General Meeting of the NCRIB LAC sponsored by Royal Exchange General Insurance Company (REGIC)

those who share the same vision with us.”

According to the CEO,

merger is not a bad option for us, but it has to be right in such a way that it creates

shareholder value.

NAICOM had in a circular dated July 23rd, 2019,

sent to the all insurance and reinsurance firms titled: “Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies,” signed

by Pius Agboola, director, Policy & Regulation Directorate, NAICOM stated that the recapitalisation plan should include among others, capital status of the companies as at the last audited financial statements; board resolution on how to comply with the directives, and detailed action plan on how the funds for the recapitalisation are to be sourced with timeline and deliverables.

The circular also directed that companies intending to seek funds from the capital market were required to submit their plan of action on a file-and-use basis, just as, “companies that intend to merge or acquire another should submit their

proposal after which they must comply with Section 30 and 31 of the Insurance Act 2003.”

The Nigerian insurance regulator, NAICOM had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion, to N20 billion.

According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of this circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020.

Linkage Assurance grows profit by 902 % in Q4 Modestus Anaesoronye

U

nderwriting firm, Linkage Assurance Plc has recorded sterling improvements in both its top and bottom-lines for the fourth quarter ended 31st December 2019, despite the harsh operating environment.

In the company’s Unaudited Fourth Quarter report submitted to the Nigerian Stock Exchange

(NSE), Linkage Assurance Plc posted a Gross Written Premium(GWP) of N6.52 billion as against N5.59 billion during the same period in 2018, indicating a 21 percent increase. From the business generated in 2019 review period, the company also recorded a Profit BeforeTax (PBT) growth of 902 percent, moving from N134.7 million in 2018 to N1.35 billion during the review period.

Profit AfterTax (PAT) also grew to N930.24 million, a 421 percent increase from a loss position of N290.12 mil-

www.businessday.ng

lion during the same period in 2018.

The sterling performance according to the company has come from improved underwriting performance, as well as from investment returns, which saw the company coming out stronger during the review period.

Underwriting profit rose by 149 percent to close at N375.622 million during the review period, as against loss position of N772.48 million the previous year, while investment also grew by 10 percent, moving from N2.46

Daniel Braie

billion in 2018 to N2.71 billion in 2019.

The Company’s total as-

https://www.facebook.com/businessdayng

sets also appreciated by 7 percent to close at N24.72 billion, as against N23.15 billion in 2018.

In the statement to the NSE, Daniel Braie, managing director/CEO, Linkage Assurance Plc said the Company will continue to refine its strategy in line with the political, economic, sociological and technological changes within our operating environment.

Braie also said that the company will continue to develop innovative products, alternative channels of

@Businessdayng

distributions and strategic initiatives that will enable us achieve our corporate goals and objectives.”

“With a medium-to-long term perspective, the company believes that it will benefit from growth from these initiatives.”

“We will consolidate on the ongoing initiatives to improve our operational efficiency so as to reduce the cost of doing business, improve business processes, eliminate wastages and achieve higher margins in our core business, the Company said.

Monday 10 February 2020

BUSINESS DAY

insurance today

31

In association with

E-mail: insurancetoday@businessdayonline.com

What should insurers be doing about annuities in 2020?

A

nnuity providers should be considering how to simplify and rebrand retirement products, enhance the sales process, as well as improve public perception of the value proposition versus investment alternatives so more will opt in if given the chance.

For example, repackaging annuity products by embedding more flexibility and liquidity may go a long way toward giving customers better control of their investment.

Putting annuity features within managed accounts and building glide paths within the products to gradually shift to annuitization may also help increase their appeal.

While pending legislation for annuities is poised to drive sales in the group segment, New York State’s best interest standard, which took effect August

1 for annuities (and due to extend to life insurance sales on February 1, 2020),33 could complicate expansion plans for individual annuity sales, especially because other states and federal agencies are also considering new fiduciary measures prohibiting sellers from being influenced in their recommendations by financial compensation or other incentives.

Key questions for annuity leaders to ask As annuity leaders consider making changes to rules to enable greater annuity sales via retirement plans, insurers should be repositioning to capitalize on the resulting growth opportunities. Among the issues to address: How might you modify products and sales platforms to accommodate a future in which annuities can be key components of retirement plans.

L-R: Paschal Nwachukwu, head, Finance and Performance Management Group, Cornerstone; Adewale Foster-Aileru, group head, Strategy, Investor Relations & Enterprise Risk Mgt, Cornerstone; Olumide Bolumole, head, Listings Business Division, Nigerian Stock Exchange; Ganiyu Musa, group managing director/ CEO, Cornerstone and Tokunbo Bello, executive director, Technical/Operations, Cornerstone Insurance during the visit of the insurer to the NSE recently

What changes might be necessary in your sales compensation and distribution strategies should

Royal Exchange General targets completion of new investment Q2 Modestus Anaesoronye

R

oyal Exchange General Insurance Company Limited (REGIC), having successfully secured a first equity investment of $10 million from the InsuResilience Investment Fund (IIF) of German Development Bank (Kfw) in October 2019, the underwriting firm is on the way to meeting the new minimum capital requirement with another investment due to be completed in second quarter 2020.

The first investment resulted in a N3.6 billion injection, in exchange for a 39.25 percent equity stake in REGIG, which strengthened the company’s balance sheet for bigger businesses.

Ben Agili, managing director/CEO, REGIC who made the disclosure when the company

hosted NCRIB Lagos Area Committee’s Annual Meeting said the company was making significant progress in securing the required capital to comply with the new NAICOM recapitalisation rules and is confident that new investment will be completed by Q22020.

According to him, towards end of 2019, a number of investors issued letters of investment interest, saying that REGIC was facilitating a detailed due diligence exercise for the benefit of these investors.

Agili said in addition to achieving the required shareholders’ funds from a regulatory perspective, the increased capital will allow REGIC to increase its risk retention and grow her investment income He said REGIC, as part of her business diversification strategy has made significant progress in championing product www.businessday.ng

innovations in the following areas, amongst others: Agricultural Insurance; Digital/Mobile Insuranc; .Royal Titanium Motor vehicle insurance; as well as Entertainment Insurance “Our new corporate strategy now hinges on the use of digital technology to expand our operations and service delivery by disrupting the market place. Innovation now plays a critical part of our corporate DNA, stating that we aim to evolve as an insurance company with insurtech capabilities, he said “Our journey for corporate renewal and operational transformation is targeted at building an enduring insurance company of tomorrow; one which is able to disrupt itself today, innovate and build upon its current foundation to remain in business firstly and secondly contend for the spot of market leadership”.

the best interest standard be more broadly adopted?

What kinds of educational and marketing ef-

forts are you planning to increase consumer understanding and comfort levels with annuities ver-

sus other retirement investment options? Copied from Deloit 2020 Insurance Outlook.

SUNU Assurances Nigeria boots staff morale for higher productivity Modestus Anaesoronye

S

UNU Assurances Nigeria Plc., a member of SUNU Group has announced the promotion of 37 members of staff for their hard work and dedication.

The company has the vision to be a leading African Insurance Company, as it is on a mission to be an insurance company recognized for excellent client services using cutting edge technology, motivated workforce and good business ethics to meet stakeholders’ expectations, the company said.

The promotions, which took effect in January 2020 is part of efforts to encourage outstanding members of staff to keep up the hard work and remain dedicated and focused on the organization’s goals. The elevation which cuts across various levels ranged from Executive to Senior Manager Level in different departments of the company.

Speaking about the pro-

https://www.facebook.com/businessdayng

motions, Samuel Ogbodu, managing director/ CEO; said “This is a necessary step in rewarding high-performing employees who have been the backbone of SUNU Assurances Nigeria through the years. These promotions reflect SUNU Assurances’ commitment to excellence as we strive to build a high performing team that requires we recruit, retain and recognize individuals for their sterling contributions. The members of staff who were promoted

Samuel Ogbodu @Businessdayng

exemplified high standards of integrity. They’re passionate team players who consistently develop new strategies that exceed clients’ expectations while growing our business.”

The company is currently in the process of finalizing its recapitalization as mandated by the National Insurance Commission. Although the deadline for the recapitalization exercise has been extended to December 2020, the company aims to hit its target before the set deadline.

SUNU Assurances Nigeria Plc. is a member of SUNU Group http and it has the vision to be a leading African Insurance Company. It is on a mission to be an insurance company recognized for excellent client services, using cutting edge technology, motivated workforce and good business ethics to meet stakeholders’ expectations.

This is being driven by innovative service delivery, products development, cost management, customers experience and ensuring proper balance in all dealings.

32

Monday 10 February 2020

BUSINESS DAY Harvard Business Review

MondayMorning

In association with

What will it take to stop coronavirus?

Ranu S. Dhillon and Devabhaktuni Srikrishna

A

new respiratory coronavirus, 2019nCoV, is rapidly spreading throughout China, where authorities have imposed an unprecedented travel lockdown in 16 cities with a combined population of over 50 million.

With no vaccine or treatment, the most effective way to stop 2019-nCoV’s spread is to limit transmission by identifying infected individuals as quickly as possible and isolating them for treatment before they can infect others. Because 2019-nCoV, like SARS, causes common symptoms such as a fever and coughing and can only be distinguished from more routine illnesses with laboratory testing, the same playbook used against SARS could be adapted to counter 2019-nCoV: — CONTACT TRACING. People who have been around someone with a confirmed infection should be identified and monitored. If they develop any symptoms, they should be isolated and treated until laboratory testing can be done to determine if they have 2019nCoV. — SCREENING WITH CLINICAL CASE DEFINITION.

Because there are likely many unreported cases, we need to use a clinical case definition, a checklist of symptoms and risk factors suggestive of infection, to screen people not known to be contacts of infected people but who have concerning symptoms. Those who screen positive should be isolated and treated until tested and, if positive, quarantined until they are no longer capable of transmitting infection.

These strategies are already being implemented. However,

if it turns out that asymptomatic transmission — transmitting the disease by someone who displays no symptoms — is possible, all contacts and people who have been exposed to areas with known transmission would also need to be tested, regardless of whether they show any signs of illness. If people without symptoms are capable of transmitting the virus, it would be impossible to test entire city populations. These daunting challenges could be mitigated by using additional

approaches not employed during the SARS crisis: — HOME-BASED ISOLATION. A system could immediately be established to take test samples from patients with concerning symptoms who are not severely ill and then send them home with protective respirator masks, instructions on hand-washing to prevent the further spread of the disease and orders to remain at home until the test results come back.

— RAPID DIAGNOSTICS. Another measure that could

prove essential is the development of rapid, “point-of-care” diagnostic tests that do not require specialized equipment or technicians and can provide results within minutes.

The 2019-nCoV epidemic is evolving by the hour. We need to move swiftly to respond to this threat.

(Ranu S. Dhillon is an instructor at Harvard Medical School.

Devabhaktuni Srikrishna is the founder of Patient Knowhow.)

How family businesses can attract nonfamily talent leveraging these cultural identities, family firms can gain a competitive advantage in hiring. Family businesses often go above and beyond to create a culture of caring and concern for all employees.

— SIGNAL STABILITY AND LONGEVITY. While some prospective employees may be concerned by the limited promotional opportunities within family firms, the family’s involvement may reassure others of the firm’s strength and permanence.

By highlighting their strengths instead of attempting to mitigate their weaknesses, family businesses can attract talented employees and avoid human capital deficits.

Will Tabor and James Vardaman

A

lthough family members are often committed to the family business, they sometimes lack the skills and fortitude necessary to maintain it across generations.

In response, family firms are increasingly hiring nonfamily employees to help their businesses survive and grow. How can family businesses attract quality nonfamily employees?

Contrary to the conventional wisdom, our findings suggest that the answer is not to rely on traditional corporate hiring practices. Our findings suggest that a winning strategy for family businesses is to embrace their inimitable “familiness” and highlight those cultural aspects that positively differentiate them, such as caring, trust and loyalty. Our research points to three specific ways

family businesses can leverage this “familiness” to attract quality nonfamily personnel: — LEVERAGE NETWORKS. Because of the family’s ties and history in a community or in-

dustry, family business leaders typically have vast social networks. Instead of relying on the latest recruitment fads and trends, family businesses should look to these networks

to identify like-minded, industrious recruits who share the family’s values.

— BUILD A FAMILY. Integrity. Tradition. These qualities embody many family firms. By

(Will Tabor is an assistant professor at Belhaven University.

James Vardaman is an associate professor at Mississippi State University.)

Monday 10 February 2020

Harvard Business Review

BUSINESS DAY

MondayMorning

33

In association with

Constraints don’t have to be constraining Laura Huang

T

here’s an exercise I used to do with stu‑ dents in my entre‑ preneurship course: I would give each team of students an envelope with $5 inside and tell them that this was money they could use as start‑up capital to cre‑ ate any type of profit-generat‑ ing venture. At the end of one week, they would present their venture to the rest of the class and reveal how much they had earned in profit.

The goal of the session was for students to hone their en‑ trepreneurial instincts by trying to identify opportunities. But which teams made the most in profit? Those that didn’t use the $5 at all.

We have a tendency to fo‑ cus on constraints and to think of them as a kind of adversity.

But in fact, constraints can be a form of advantage. When we own our constraints, magical things can happen — and the constraints can become tools to propel us forward.

So what kinds of companies did these teams who ignored the $5 and therefore saw them‑ selves as “constraint agnostic” start?

One of my favorites was a team who hosted a “moving dinner”: each course — appe‑ tizers, main course and dessert — was at a different location, with a different set of people.

Participants paid a flat fee in advance, which covered the preset menus that my students had arranged with each estab‑ lishment. The students kept the

profits. The problem they had identified and aimed to solve: Networking isn’t always fun, and meeting new people isn’t always easy.

Constraints are inevitable, yes. But rather than accept‑ ing them, we can discover and pay attention to them. We can recognize their value. In many ways, we need them. When we

notice constraints but we don’t let them define our possibili‑ ties, we can actually flip them to create an advantage.

A few weeks after the course ended, I received an invitation from one of my students: The moving dinner had been such a success that they decided to make it a monthly event. They were in the process of coordi‑

nating the next one, and they wanted me to attend. They charged me the discounted price of $5 — and I had a won‑ derful time.

(Laura Huang is an associate professor of business admin‑ istration at Harvard Business School.)

How schmoozing helps men get ahead promoted. Make an effort to en‑ gage with your manager when‑ ever you get the chance, and even create those opportunities if possible. If you’re shy, you’ll have to make an effort. If you’re a woman, you might have to try even harder.

Some advice if you’re man‑ aging an organization: To run a profitable business, you prob‑ ably want to promote the em‑ ployees who are best at their jobs, not just those who are best at schmoozing with their bosses.

Zoë B. Cullen and Ricardo Perez-Truglia

C

onsider the significant gender gap in promo‑ tions in companies around the world. McKinsey data shows that, in the United States, 48% of entry-level em‑ ployees are women, but female representation falls to 38% at middle-management, 22% at the C-suite level and 5% at the CEO level.

Anecdotal accounts sug‑ gest this gender gap arises, at least partly, because men can schmooze with more powerful men in ways that are less acces‑ sible to women. According to the old boys’ club hypothesis, a male employee transitioning to management should advance more quickly, because he’d have better access to a valuable network of male leaders.

Our evidence was consistent with this: Male employees ad‑ vanced further in an organiza‑ tion after they were assigned to male managers, relative to how they would have fared if they were instead assigned to female managers. In contrast, a man‑ ager’s gender had no effect on

(Zoë B. Cullen is an assistant professor at Harvard University.

Ricardo Perez-Truglia is an as‑ sistant professor at the Univer‑ sity of California Los Angeles. female employees’ careers, and female employees assigned to female managers didn’t seem to enjoy the same advantage.

Were men able to advance faster under male bosses because they were able to schmooze more easily? Evi‑ dence suggests this was the case. We also collected survey data on how employees and

managers socialized. Did male employees interact with their managers more after they got assigned to a male boss? The data says yes.

The problem with this malemale advantage is it can gener‑ ate a self-perpetuating cycle: Men are more likely to be pro‑ moted under male managers, hence they are more likely to

become managers themselves and pass on the same advantage to their male subordinates. Our back-of-the-envelope calcula‑ tions suggest that schmoozing with the manager may be re‑ sponsible for one-third of the gender gap in promotions.

Be aware that your relation‑ ship with your manager may affect your chances of being

Brought to you courtesy of First Bank Nigeria

34

Monday 10 February 2020

BUSINESS DAY

real sector watch How Nigerian manufacturers can outshine African peers in era of AfCFTA, by MAN ODINAKA ANUDU

T

he Manufacturers Association of Nigeria (MAN) has outlined ways in which local manufacturers can outshine African peers when the implementation of the African Continental Free Trade Area (AfCFTA) begins in July.

According to MAN, the Federal Government must show readiness in addressing issues of infrastructure deficit, policy flip-flops and regulatory pressure on businesses, if the country must take something from the trade deal.

Speaking at an annual media luncheon held in Lagos last Thursday, Mansur Ahmed, president of MAN, said supply-side constraints in the economy must be fixed immediately to make Nigerian manufacturers competitive and robust in the AfCFTA regime.

“For the gains of AfCFTA to be realised, government must show readiness in addressing the supply side constraints in terms of lack of infrastructure,” he said.

“Policies and regulations should not be too harsh for businesses to operate. Regulations should be seen as a way of assisting businesses to grow

which ultimately enhances competitiveness and boosts the economies,” he further said.

The AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for

goods and services on the continent.

It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 bil-

lion people and exposing each country to a $3.4 trillion market opportunity on the continent.

Ahmed said in view of this, the Nigerian government must lead by example by ensuring that policies were industry-friendly to

L-R Jean Bankole, United Nations Industrial Development Organization (UNIDO) representative to ECOWAS and regional director, Nigeria Regional Office Hub, presenting a copy of the UNIDO -Nigeria Country Programme for Inclusive and Sustainable Industrial Development (2018-2022) to Babajide Sanwo-Olu, Lagos State Governor, during a courtesy visit to the governor in Lagos recently.

guarantee a competitive intra-African trade.

“We cannot achieve competitiveness without the provision of infrastructure such as good road networks and electricity, not only within African countries but also across the borders,” he warned.

“There is also the aspect of provision of soft infrastructure – like visa, tariffs, and foreign exchange – that will help ease up the process of carrying out business transactions between countries,” he noted.

He explained that the issues must be addressed since the AfCFTA was not just about trade in goods but also trade in services.

“As you may be aware, modern industry competitiveness depends, to a great extent, on provision of adequate and efficient infrastructure. From the availability of power and energy to transport and logistics, the role of infrastructure cannot be overemphasised in trade and economic development on the continent,” he further said.

He pointed out that transportation alone was vital to enhancing competitiveness in trade, stressing the need to address gridlock challenges faced at the nation’s seaports in Apapa and Tin Can, Lagos.

“For instance, due to

poor infrastructure, it will cost a business owner in Nigeria more to transport goods from Lagos to Kano than it will cost a Chinese business owner to transport the same goods from China to Lagos,” he disclosed.

“Speaking of infrastructure, electricity is a vital input for manufacturing process to the extent that it constitutes up to 40 percent of the cost of production.

Increasing the tariff of this core input will have drastic negative effect on the Gross National Product (GNP); Gross Domestic Product (GDP), disposable income, consumption, consumer price index, employment, and government revenue from corporate taxation,” he warned.

“Similar to this is the uneven pricing of this commodity across DisCos, which if not corrected, will lead to uneven development in certain parts of Nigeria as the percentage increase in tariff differs,” he said.

He appealed to the Federal Government, as a major stakeholder in the electricity industry, to concentrate on developing processes and polices to attract significant investment to encourage large-scale generation and significant improvement in transmission and distribution of power.

FMN eyes wider market reach as 5 distributors get 30-ton trucks Gbemi Faminu

F

lour Mills of Nigeria (FMN), a giant player in the FastMoving Consumer Goods (FMCGs) industry, has awarded each of its top five distributors a 30-ton truck for significant contributions to the company’s sales.

Devlin Hainsworth, MD, Foods, FMN, said the move aligned with the company’s commitment to appreciate the distributors for their hard work, and also celebrate its landmark existence for 60 years.

“This is one of FMN’s ways of celebrating people who have stayed with them and contributed to sales significantly,” he said.

“We mentioned the top five at our last dealers’ conference some months back

and we want to recognise them. 2020 marks a special landmark as FMN clocks 60, and we want to mark it by really thinking about our relationship with our key dealers, many of whom have been with us through the entire journey,” Hainsworth further said.

He noted that the gesture would improve and grow the partnership and relationship from a secondary level to a primary level, including freight, logistics and many more, adding that the award of five 30-ton trucks underscored the reward of a commitment targeted at continuing the good relationship with the partners while feeding the nation.

Jeevan Bansal, commercial head, retail sales, FMN, said rewarding distributors was an annual activity after a full year running from April to March. He said the prizes www.businessday.ng

varied but were always significant, with the aim of celebrating distributors contributing significantly to the growth of the company.

“These trucks were given to the top five dealers of Flour Mills of Nigeria across the country, for the B-B and the B-C business. They are the

https://www.facebook.com/businessdayng

biggest dealers. This is a step forward to grow our business to the next level, and their success is FMN’s success.

The same goes for us as well.

@Businessdayng

This is further to help them in ensuring that we go a step closer to the retailers and to speed up product delivery to the market,” he said.

“They have contributed significantly in terms of volumes and value to the business and it reflected in the last financial year,” Bansal further said.

Speaking to one of the five winners and a major distributor of FMN in Ilorin, Elizabeth Ajibola, MD, Mount Olive Limited, a food distribution company, said having worked with FMN for over 20 years, she could vouch for the company’s track record of delivering its promises and was thrilled with her win. She, however, advised the company to improve on listening to its partners.

FMN has a market share of 32 percent in the flour milling market, according to a KPMG wheat sector report.

Monday 10 February 2020

BUSINESS DAY

35

real sector watch

Fidson stays afloat amid challenges in pharmaceutical industry Gbemi Faminu

F

idson Healthcare Plc is on a road to rebound following the release of its 2019 financials. Despite having a dip in its revenue, its income for the year experienced a rebound from the loss recorded in the same period in 2018.

The unaudited full-year report of Fidson as of December 31, 2019, showed that the company’s revenue suffered a decline, as it realised a total of N14 billion, representing a 13 percent decline from the N16 billion recorded in the corresponding period of the previous year.

The company generated its revenue from three areas which were: over the counter (OTC), ethical, and consumer products, all of which recorded lower proceeds when compared with the previous year. Earnings from the sales of ethical products generated the most for the company as it contributed N7.8 billion to its revenue while the OTC products contributed N6.1 billion. However, the consumer products contributed the least with N2

million.

The company’s gross profit also dropped by 17 percent to N5.8 billion, from N6.3 billion in 2018. However, its operating profit increased marginally to N2.11 billion from N2 billion realised the previous year. Its total comprehensive income improved and grew significantly to N312 million from a loss of N97 million in the previous year.

The company experi-

enced rebound amidst declining sales, as well as several challenges experienced by their counterparts in the industry and other sub-sectors of the economy. These challenges range from a high rate of drug smuggling, lack of adequate power supply, logistics worsened by congestion and bad roads at the nation’s busiest port, Apapa and Tin Can. In addition to this, infiltration of fake drugs into the

market as well as the use of non-orthodox medication has continued to thrive owing to poor and misplaced regulation, as well as harsh economic environment which has weakened consumer purchasing power.

However, analysts believe that going forward, the firm will experience more financial growth considering its partnership with other industry players which will spur business expansion in

the company’s activities.

In the second quarter of 2019, GlaxoSmithKline (GSK), one of the top players in Nigeria’s manufacturing industry, announced that it would shut down its production facility in Agbara by the third quarter of 2021, and picked Fidson Healthcare Plc as its preferred local contract manufacturing partner as part of the changes in its consumer healthcare supply chain operating model.

It will transition the manufacturing of its wellness and respiratory products from the third quarter of 2021.

In July 2019, Fidson announced its alliance with Ohara Pharmaceutical, a leading Japanese healthcare company as the firm acquired a 21.75 percent stake in Fidson with N700 million to support Fidson in fulfilling its commitment to provide the Nigerian market with latest healthcare products and services.

The drug maker recently introduced Chlorpheniramine Maleate Syrup for allergy and common cold.

Nigeria’s drug makers have invested N300 to N500 billion locally in new plants, vehicles, buildings and personnel.

They share 35 percent of the African drug market and over 70 percent of the West African market, according to PMG-MAN. Fidson is an ultra-modern manufacturing plant in Ogun State since 2016.

The pharmaceutical industry is challenged by poor competitiveness resulting from tough doing business environment in Nigeria.

Swiss Pharma sold its assets to Biogaran-Servier in March 2017 two years after obtaining the World Health O r g a n i s a t i o n ( W H O ) ’s prequalification that should have enabled it to win international bids. Evans Medical Plc was taken over by the defunct Skye Bank.

In 2014, companies like Emzor, GSK, and a number of others earned $7.708 million from export of medicines to the African market, according to the International Trade Centre (ITC).

Four years later, however, the companies made only $708,000. Naira has weakened from N199/$ in 2014 to N360/$ in 2018 (80.9 percent), but export earnings fell by a whopping 989 percent. Fidson is among the few that are bracing the odds in the industry.

Guinness begins water intervention project to impact 10m Nigerians ODINAKA ANUDU

G

uinness Nigeria, a subsidiary of Diageo Plc and a leading beverage and alcohol producing company, has announced a long-term water intervention project across five states in Nigeria.

In addition to providing clean portable water in these states, the multinational organisation is also supporting the FG to intensify hand washing culture in public places to halt Lassa fever.

The beneficiaries of the 10-year project are: Edo, Kano, Kebbi, Nasarawa states and FCT. This was disclosed by Titilola Alabi, Diageo in Society manager, Guinness Nigeria, when the Organised Private Sector on Water, Sanitation and Hygiene (OPS-WASH) met Suleiman Adamu, minis-

ter in charge of water resources, last Tuesday in Abuja.

Speaking on the announcement, Alabi said, “In this financial year, we have committed to establishing five new water schemes in Abuja, Edo, Kano, Kebbi and Nasarawa states. We have chosen the communities in these states carefully following a Needs Assessment and for the benefit of a larger population.”

“Currently, our water of life project, created to provide water to under-served communities by solar-powered water systems, is providing water to over 1 million Nigerians. We have 33 of such water schemes across 22 states,” she said.

In his remarks, Nicholas Igwe, national coordinator, Organised Private Sector WASH, noted that the role of private sector in scaling up water and sanitation services in the country could not be www.businessday.ng

over-emphasised. He called for more commitment from all stakeholders, especially with respect to Corporate Social Responsibility and how WASH access could promote value chain in job creation.

According to Igwe, the private sector had commenced discussions with the Nigeria Diaspora Commission to see how one million Diasporas could adopt one toilet each for one household. He said the private sector was the engine of the country, hence the possibility of harnessing their full potential for the benefit of the country.

Zaid Jurji, UNICEF Chief of WASH, appreciated Nigeria’s efforts and its momentum toward ending open defecation in the country. He expressed concern that current efforts must tally with increasing population, adding that an average of $5.7 million was needed to achieve water and sanitation services in one lo-

cal government area. He said this would cover all costs and other benefits.

“We are close to 200 million people and with the increasing population, if every year there is an increase of services for five million people, it is barely enough.

We are competing with natural population increase. So, if we do five million people, we have done nothing. We are just breaking even, so anything to be measured towards the achievement of the Sustainable Development Goals (SDGs) must be done beyond that. This is to give you the scale of the problem,” Jurji stated.

He further explained that “with our unit of intervention, we have been working for so many years now with the Ministry of Water Resources and at the state level.

Every local government area requires an average of $5.7 million to achieve water and

https://www.facebook.com/businessdayng

sanitation services.”

He assured that UNICEF would continue to support organisations and communities to promote sustainable development goal such as ending open defecation practice and overall hygiene promotion in the country.

He, therefore, urged organisations to coordinate their activities to halt duplication of efforts, promotion of effective implementation and monitoring for the programme success.

Earlier, while welcoming the team, the minister pledged government’s commitment to partner with the private sector in financing and improving corporate social responsibilities in the fight against open defecation practice in the country.

According to him, the role of the private sector in the revitalisation of the WASH sector could not be overlooked, being the engine room for @Businessdayng

economic growth. He noted that they were the key players when it came to creating innovative structures, which promoted financing of WASH services. However, he expressed worry about lack of water and sanitation in institutions and public places.

The minister said the federal government had targeted a zero open defecation goal by 2025, saying with commitment from all stakeholders, this would be achieved.

According to him, the lack of synergy among development partners’ interventions had led to groundwater depletion largely from unregulated activities.

“There is urgent an need for sanity in the water resources sector. We need to measure all social impacts of current interventions. It’s not just about figures and monies, we need to synergise all efforts for the benefit of all Nigerians,” Adamu said.

36

Monday 10 February 2020

BUSINESS DAY

Access Bank Rateswatch

Market Analysis and Outlook: February 7– February 14, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

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

26.41 2.20

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019 Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

Inflation rate (%) (y-o-y)

11.98

Increased to 11.98% in December 2019 from 11.85% in November 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

37.73 56.09 1.77

February 6, 2020figure — a decrease of 2.1% from January start February 6, 2020 figure— a decrease of 3.92% from the previous wk December 2019, figure — a decrease of 1.34% from November 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

Change(%)

7/2/20

31/1/20

NSE ASI Market Cap(N’tr)

28,067.09 14.62

28,843.53 14.86

(2.69) (1.61)

Volume (bn)

0.30

0.35

(12.82)

Value (N’bn)

6.39

4.21

51.79

Friday Rate

Change

(%)

(Basis Point)

NIBOR Friday Rate (%) 7/2/20

31/1/20

OBB

5.5000

14.0000

(850)

O/N CALL 30 Days

6.3300 7.0000 10.9780

15.3300 13.0833 9.7226

(900) (608) 126

90 Days

9.9409

9.5803

36

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

7/2/20

Friday

1 Month

(N/$)

Rate (N/$)

7/2/20

31/1/20

7/1/19

Official (N) Inter-Bank (N) BDC (N)

306.95 364.02 0.00

307.00 363.75 0.00

307.00 364.07 0.00

Parallel (N)

360.00

360.00

362.00

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.)

Tenor

Friday

Friday

Change

(%)

(%)

(Basis Point)

7/2/20

31/1/20

0.00 8.25 9.91 9.74 11.08 12.32

0.00 7.99 10.09 9.76 10.99 12.24

0 26 (18) (2) 8 9

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.

(%)

56.09 1.86

(3.92) 1.64

(12.98) (39.14)

2,865.00 98.15 67.94 14.73 554.25

2.61 (2.73) (0.96) (0.20) (0.98)

47.99 (24.62) (12.34) (3.91) 27.85

1,566.35 17.80 256.70

(0.82) (0.34) 1.56

18.88 3.55 (21.69)

Friday

Friday

(%)

Change

(%)

(Basis Point)

7/2/20

31/1/20

1 Mnth 3 Mnths

3.00 2.88

3.01 3.23

(1) (34)

6 Mnths 9 Mnths 12 Mnths

3.91 4.24 4.52

3.72 4.55 5.17

19 (31) (64)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

AVERAGE YIELDS

3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

1-week Change (%)

MONEY MARKET Tenor

Indicators

Friday

Friday

Change

(%)

(%)

(Basis Point)

7/2/20

31/1/20

Index Mkt Cap Gross (N'tr)

3,784.92 11.83

3,604.80 11.26

5.00 5.00

Mkt Cap Net (N'tr) YTD return (%)

8.05 54.08

7.59 46.75

6.14 7.33

YTD return (%)(US $)

-1.73

-9.09

7.36

TREASURY BILLS (MATURITIES) Amount (N' million)

Rate(%)

Date

91 Day

49,839.65

3.5

29-Jan-2020

182 Day

54,592.59

4.5

29-Jan-2020

Tenor

364 Day

125,203.92

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

6.5

29-Jan-2020

Global Economy In China, trade surplus contracted to $47.21 billion in December 2019 from $56.80 billion in the same month of the prior year, revised data from the General Administration of Customs shows. Imports jumped 16.5% the most since October 2018, boosted in part by higher commodity prices. In addition, exports surged 7.9%, the first increase in five months, amid strengthening global demand and trade talks with the US. Considering 2019 full year, the trade surplus widened to $424.9 billion from $350.9 a year earlier, with exports rising by 0.5% and imports falling 2.8%. In a separate development, the Central Bank of Brazil voted unanimously to trim its key benchmark rate by 25 bps to 4.25% during its February 2020 meeting, following a 50-bps cut in December. It was the fifth consecutive rate cut bringing borrowing costs to its lowest on record, amid global economic slowdown, the coronavirus outbreak, and a slow recovery in the domestic economy. Policymakers said that the current stage of the business cycle needs support and added that the continuation of the monetary easing process is appropriate after an easing cycle that started in July 2019. The Committee added that next decisions will continue to be data dependent. Elsewhere, the Reserve Bank of India (RBI) left its key lending rate unchanged at 5.15% during its February meeting, stating it was maintaining an "accommodative stance" to support growth amid rising inflationary pressure. The reverse repo rate at which RBI borrows from banks too was kept unchanged at 4.9% and the marginal standing facility (MSF) rate and the bank rate at 5.4%. The bank also said that there is policy space available for future action. Policy makers lowered their outlook on growth for the first half of the year to a range between 5.5% and 6.0%, down from an earlier prediction of between 5.9% and 6.3%, it also expects inflation to cool down to between 5% and 5.4% in the first half of this fiscal year.

Domestic Economy The manufacturing Purchasing Managers' Index (PMI) stood at 59.2 index points in January 2020, indicating an expansion in the manufacturing sector for the 34th consecutive month. The index grew at a slower pace when compared to the previous month (60.8 points) as shown in the latest PMI report by the Central Bank of Nigeria. A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Eleven of the subsectors surveyed recorded growth during the month, electrical equipment subsector remained unchanged while printing & related support activities and nonmetallic mineral products recorded declines. In a separate development, the Nigerian Stock Exchange (NSE), launched a new index called the “Growth Board” for the small and medium enterprises.

The Chief Executive Officer while speaking at the launch, said the growth board aimed to encourage companies with high growth potential to seize the opportunity of raising long-term capital and promoting liquidity in the trading of their shares. He stated that the board also presented an avenue for companies in their growth phase to leverage the NSE's platform and varied products and services to achieve their long-term business objectives.

Stock Market Trading indicators slid further last week compared to preceding week after highly capitalized stocks suffered huge losses on continued selloffs by investors repositioning their portfolios and taking advantage of the pullbacks to position in high dividend-paying stocks. Consequently, the All Share Index (ASI) declined 2.69% to end at 28,067.09 points from 28,843.53 points the prior week. Similarly, market capitalization dipped by 1.61% to

N14.62 trillion from N14.86 trillion the prior week. This week, we expect that investors might take advantage of the current undervalued state of the market to position their portfolio.

Money Market Rates at the money market went in varying directions as short dated placements dipped while the longer tenored rates jumped. The decline seen in short-term rates was due to net open market operations (OMO) credit of about N191 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled lower at 5.5% and 6.33% from 14% and 15.33%. The slightly longer dated instruments such as 30-day and 90day Nigeria Interbank Offered Rate (NIBOR) closed at 10.98% and 9.94% from 9.72% and 9.58% the prior week. This week, we expect all rates to remain at single digits due to OMO and bond maturity of about N1 trillion.

Foreign Exchange Market Last week, the Naira held steady against the greenback except at the Nigerian Autonomous Foreign Exchange (NAFEX) where it depreciated against the dollar. The official rate marginally appreciated ending at N306.95/$, a 5 kobo gain from the prior week whilst the parallel market remained steady at N360/US$.

NAFEX lost 27 kobo to close at N364.02/US$ from N363.75/US$ the preceding week. This week, we expect rates to trend around current levels without a significant change due to the expected apex bank's intervention.

Bond Market Average bond yields went northwards across most segments in the week ended February 7th, 2020. The market observed mild demand for some select maturities while market players quoted high bids given the reduced system liquidity. Yields on the five-, twentyand thirty-year debt papers finished at 8.25%, 11.085 and 12.32% from 7.99%, 10.99% and 12.24%. The Access Bank Bond index increased by 180.12 points to close at 3,784.92 points from 3,604.80 points the prior week. Activities at the bond market might pick up due to the OMO and bond maturity set to hit the market this week.

Commodities Oil prices continue to take a hit as the toll of cases and death from the coronavirus climbs.

China's oil demand amid the coronavirus outbreak is likely inflicting the worst oil demand shock to markets since the financial crisis of 2008-2009, with Chinese demand plunging by 20% compared to the typical demand for the season. Bonny light, Nigeria's benchmark crude dipped 3.92% or $2.29 cents to close the week at $56.09 per barrel.

In a similar vein, precious metal prices declined marginally tracking muted global cues. Consequently, gold lost 0.82% to $1,566.35 per ounce while silver declined 0.34% to $17.80 per ounce. This week oil prices might gain respite as media reports emerged that Chinese scientists may have found a treatment against the disease.

Precious metal might experience losses as expected positive US economic data filters in this week.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Feb’20

Mar’20

363

362

362

Inflation Rate (%)

12.01

12.06

12.1

Crude Oil Price (US$/Barrel)

58

59

60

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

www.businessday.ng

https://www.facebook.com/businessdayng

Apr ’20

Exchange Rate (NAFEX) (N/$)

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

Start-Up Digest

37

In association with

Two entrepreneurs show why fashion design is lucrative business Gbemi Faminu

A

degoke AwaladeOlogbenla and Olabowale Elizabeth Erinle are showing why the fashion design business is a lucrative venture.

Aw a l a d e - O l o g b e n l a , young and innovative fashion designer, is a graduate of Sociology from Crawford University. He is also the chief executive officer of St. Calypso Couture International, which deals in premium fashion, ready-to-wear collections, footwear production and general fashion merchandise.

He started his business in 2008 during his third year in the university and was inspired to go into the fashion world because of his love for designs.

“Growing up with an industrious parent birthed my passion for fashion in 2008,” he says. “I grew up being conscious of my appearance and looks. This led me to start sketching my own designs, creating new looks and making money with my creativity,” he says.

Unlike most entrepreneurs, Awalade-Ologbenla started his business with zero capital, which goes to show that there are many businesses in the country that can be started with little or no money.

Awalade-Ologbenla’s secret was that he so advertised himself that he got a major contract worth almost N300, 000. This opened doors for larger contracts and more opportunities.

He says that although running a business can be difficult, he has been able to

Olabowale Elizabeth Erinle

Adegoke Awalade-Ologbenla

record ample growth and even operates on a larger scale while fostering partnership deals with other enterprises.

Because he runs his business on a large scale, he gets raw materials in large quantities from major markets in Lagos and sometimes outside the country such as from Turkey and China.

Ologbenla further says his company creates affordable outfits to suit clients’ tastes while being prompt both in delivery and time. These have allowed continuous patronage and generous referrals, he admits.

The young entrepreneur reveals that since its establishment, the company has attained high-profit margins and an extended customer database. It has over 10 permanent workers and 15 ad hoc staff members. He plans to expand his business by having the biggest bespoke and ready-to-wear garment factory in Nigeria. He has an eye on 30 percent of the Nigerian population, he tells

Start-Up Digest.

Despite the love for fashion, the entrepreneur says he faces challenges relating to epileptic power supply, inadequate funding for business expansion, unfavourable exchange rate and the high tariffs.

He urges the government to address issues around high duty and tariff charges and unfavourable forex. He points out that providing business grants and encouraging skills acquisitions will go a long way in supporting the growth of businesses.

The entrepreneur attends trainings and workshops both digitally and physically as he believes there is a room for improvement. He believes that such trainings and certifications improve his business as he tries to deliver global values while running a local brand.

Advising other entrepreneurs, he says, “There is no shortcut to success. You have to learn by the ropes, be accountable, smart, different and know when to quit and, above all,

nothing is impossible.”

On her part, Olabowale Elizabeth Erinle is a young and innovative fashion designer.

She is the chief executive officer of Zabethrin Clothing, which is a fashion house where custom-made outfits are designed and created at affordable prices.

Although she has her bachelor’s degree in Estate Management from the University of Lagos, she enrolled in a fashion house to pursue her passion. She started her business in October 2017 after her National Youth Service.

She was inspired to go into the fashion world because of her love for fashion and modesty. “I was inspired by my love for fashion and penchant for transforming ordinary pieces of fabric into remarkable attires,” she tells Start-Up Digest.

She says that her love for what she does gives her inspirations to make innovative and beautiful designs from any piece of fabric.

She learnt the art of clothmaking from a fashion de-

signer close to her while she developed herself using her mum’s sewing machine. She made outfits for herself and later started getting orders from others. She then built her clientele from there and eventually set up this business with N500, 000, which she got from her savings, from her siblings and profits from few jobs she got initially.

Elizabeth says her company creates affordable outfits to suit her clients’ tastes while being prompt both in delivery and in making distinctive designs. This, she says, is why her customers keep coming back while also recommending others.

She further states that since its establishment, the company has recorded tremendous growth both in terms of profits and number of customers.

She has been able to register her business legally and has employed four full-time staff members.

She operates in Lagos and gets her materials locally from major markets and also online

platforms. With the aid of social media, she is able to advertise her products and get more customers. These have helped grow her business to succeed.

Speaking about her business expansion plan, she says, “I intend to create an affordable, ready-to-wear outfit, easily accessible to people, and establish a fashion empire that will serve as an institute.

I also want to incorporate sale of fabrics too.”

Elizabeth also attends trainings and workshops both digitally and physically as she believes there is still room for improvement. She gets these trainings and certifications to improve herself and her business.

Despite the love for her work, Elizabeth still faces some challenges.

“I find it difficult to access adequate and necessary funds to acquire some important tools. Cost of production is also high for me due to the epileptic power supply,” she says.

Although she is able to work round these challenges, she asks that the federal government and capable organisations help micro, small and medium enterprises (MSMEs) through grants, low-interest loans, workshops, and sponsored trainings. She also asks that they set up necessary infrastructure to reduce the cost of production and aid faster and neater work.

The entrepreneur says she is inspired by God and herself. Her life values are hard work, honesty, consistency and self-development. She advises other entrepreneurs to build their people- network, be courageous, take risks and dare to be different.

LSETF seeks partnership with private sector to enhance job creation Gbemi Faminu

T

he Lagos State Emp l oy m e n t T r u s t Fund (LSETF), in its drive to boost economic growth through wealth creation and employment opportunities, has called for collaboration with key players in the private sector in order to expand its reach and impact.

Speaking at the maiden edition of LSETF‘s Employment Summit themed ‘Showcasing Leading Practices for job creation,’ Ifueko Omoigui Okauru, chairman, board of trustees, LSETF, said the LSETF was tasked

with providing funding as well as leverage for businesses to thrive, adding that it had enabled capacity building, provided support and access to finance for budding entrepreneurs.

“The LSETF has been able to support over 16,000 individuals, providing loans for over 11,000 beneficiaries, generating employment and capacity enhancement trainings for over 5,000 and workplace voucher for 127 individuals,” she said. She pointed out that beneficiaries had been able to generate over 100, 000 jobs directly and indirectly.

Okauru said data from www.businessday.ng

the National Bureau of Statistics (NBS) showed that Lagos had been able to drive job creation and entrepreneurship higher than other states in the country and created the most jobs in the country resulting in a 6.7 percent drop in unemployment rate in the last quarter of 2018.

She urged stakeholders in the private sector to collaborate with the LSETF to boost its capability and reach among entrepreneurs as well as among those who can generate employment.

Babajide Sanwo-olu, governor, Lagos state, in his remarks, said that the goal

of every forward- thinking government was to provide an enabling environment for productivity and prosperity to thrive. He said that this could be enabled by evolutionary economic advisory for wealth creation and employment generation which will allow sustainable improvement in the living standards of citizens.

Sanwo-Olu who was represented by Yetunde Arobieke, commissioner, Lagos State Ministry of Wealth Creation and Employment, said Lagos was an attractive hub for investment and a city of opportunities which called for the necessity to

https://www.facebook.com/businessdayng

create an enabling environment as well as necessary amenities to serve the growing population.

“We are on a scheme to provide entrepreneurs and our productive population with the opportunity to build capacity drive for the benefits of women, children and everyone in the state,” he said.

He disclosed that as part of its mandate, the LSETF had disbursed N7.3 billion in loans and supported many businesses through its various innovative programmes which had driven a significant drop in the unemployment rate of the state. @Businessdayng

Arobieke, in her own remarks, said the state government, through the LSETF, was taking another important step towards deepening efforts and approaches to galvanise innovative ways to expand capability to facilitate employment generation while stimulating the same across Nigeria and Africa at large.

Arobieke, who was represented by Boladele DapoThomas, permanent secretary of the ministry, said unemployment was a global issue which also affected developed countries with global economic headwinds and a continuously increasing workforce.

38

Monday 10 February 2020

BUSINESS DAY

Start-Up Digest

How Chizoba Alu makes money from saving lives ODINAKA ANUDU

C

hizoba Alu, a University of Port Harcourt graduate of Science Laboratory Technology with specialisation in Physiology and Pharmacology, is making money from saving the lives of many Nigerians.

She is the CEO of Steripro Nigeria Limited, which she started in 2017. The firm was set up to change the way medical packaging was done in the health sector in the country. It was also a platform meant to ensure proper sterilisation of sensitive materials used in hospitals.

“Prior to that time, I had been in the paid employment where I tried to create a change in the health sector,” she says.

“The more I went in, the more I saw things that were not done right,” she confesses.

She wants to change the way medical packaging is done in the health sector and promote excellence in theatres and central sterile services departments (CSSDs). She has a new set of packaging materials that are hygienic and meet international standards.

Something prompted the

Anambra State-born entrepreneur to take medical packaging very seriously.

“In my journey in the health sector, I discovered that CSSDs are non- existent in many hospitals. In teaching hospitals, they have them, but CSSDs are nonexistent in most of the general hospitals. It is the operating theatres that do most of the sterilisation instruments they use,” she explains.

“Having moved around, I discovered that the materials they are using to package the surgical instruments are not of right standards. You find that most of the general hospitals, teaching hospitals, federal medical centres and leading private hospitals use brown envelopes, which are just wrapping sheets with no microbial barriers. In other words, they cannot prevent microbes from entering the instruments. I also discovered that some teaching hospitals and federal medical centres use the papers to wrap sensitive things. I also discovered, again, that some use calicos and re-use them many times. Sometimes, the sight of these calicos is horrible and these are things they use to package instruments that will be used on human beings,” she laments.

She had to take the bull by the horns to change this

Chizoba Alu

phenomenon.

“This is why I asked, ‘What can I do differently?’ ‘How do I come in?’ This was how I started doing research. Some medical personnel said they were using envelopes because those were what they knew,” she says.

But use of envelopes is a recipe for disaster as it can transmit infections from one person to another, she says.

She says if a HIV-virus patient goes through surgery and the instruments are not

sterilised, there is a possibility that the next patient that is going on surgery will get that virus.

She, however, says that when the right packaging materials are used, the instruments will be sterilised properly, which, in turn, prevent microbes from feeding on the products.

“We started going on awareness training, moved round general hospitals, medical centres and went to the ORs to train the nurses on

the availability of these products and why they needed to use the m,” she says, when asked how she started.

Her campaign is yielding fruits as a number of hospitals and healthcare centres now realise the danger of the traditional use of envelopes and other unhygienic materials during surgeries and treatment.

“The reception has been very good,” she says.

“It is not as if some of them do not know what is right. Some make excuses for themselves; some make excuses for patients and for the hospitals. Right now, I am not only trying to sell the products. I want to make sure that you and I can actually be on that operating table and feel secure,” she says.

So far, over 40 hospitals have accepted her message.

“When I started, I went to elite private hospitals. But at some point, I had to change a strategy to reach others,” the 40-year-old entrepreneur says.

Being from the SouthEast part of Nigeria, she has been able to get 15 hospitals to accept her message and products.

“A teaching hospital in the South-East has phased out brown paper completely.

They said they did not know a product like ours existed.

They also use our surgical parts,” she discloses.

Alu says that the hospitals complained initially that her products were expensive, but later realised that they were relatively cheaper.

“I asked them to go back and do the cost analysis on what they were using and the consequences, side by side with what I was offering them. It was at that point that some of them went home and did the cost analysis and told us to bring the products.”

“I said to them, ‘Sell safety to the patients because this life does not have any duplicate. If I know I am going to get a value from what I am paying for, obviously I will pay for it. Remove that brown paper which you buy at N50, because you end up giving them HIV virus for life. The cost of life is not N50. We are trying to create a change in perception,” she says.

The entrepreneur combines her role as a mother and entrepreneur so well that neither is affected. She attributes this to good planning.

She is a mentee of the Lagos Chamber of Commerce and Industry (LCCI)’s Mentorship Programme. She says the mentorship programme has changed her perception about business and money, enabling to properly.

First Halal expo to attract over 200 Making money from recycling of pet bottles, nylons SMEs, exhibitors from 30 countries Business Opportunity ODINAKA ANUDU

R

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

According to Luther Kington Nwobodo, researcher and CEO of Zeugnis International, recycling of PET bottles and nylon is a gold mine.

In an interview with StartUp Digest, he said the country has the capacity to produce more millionaires if the citizens can understand the opportunity in the business.

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

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

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

by Euromonitor International.

The tendency to spend

many hours in traffic in major Nigerian cities has also driven the growth of the industry.

The population of Nigeria is booming, and infrastructure and services are failing to keep up with the growth. Mismanagement of the public water system has compounded the problem, leading to warnings of a looming water crisis in Nigeria, especially Lagos.

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

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

But this has created enormous opportunities as water is bottled in PET bottles.

The major area of this opportunity is recycling. Hence it is now possible to recycle these bottles and even nylon into more advanced products for industrial use.

Only few entrepreneurs have studied the business and

www.businessday.ng

want Nigerians to get more involved.

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

The training will take place on 14th March at the Lagos Chamber of Commerce and Industry, Ikeja.

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

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

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

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

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

…as Nigeria yet to gain from $2.7tn halal market

A

t least 30 countr ies, over 200 exhibitors, comprising of stakeholders and small and medium enterprises and 50,000 visitors, are expected at the 2020 Halal Conference and Exhibition holding in Abuja between 8th to 10th of June, 2020.

It is the first Halal expo to be hosted in Nigeria to highlight the import of halal economy, which has gained traction all over the world.

The expo, being organised by the Abuja Chamber of Commerce and Industry (ACCI) and Abuja Trade Centre (ATC), would attract visitors from countries such as Indonesia, Malaysia, United Arab Emirates, Kingdom of Saudi Arabia, Korea, Thailand, Bangladesh, Morocco, Algeria, among others.

Jude Chime, the executive director of ATC, said the halal economy was a huge sector which had remained largely untapped in Nigeria.

https://www.facebook.com/businessdayng

The exhibition covers over 30 sectors such as: consumer electronics, ICT products, house hold products, electrical appliances, fashion and accessories, digital and consumer products, interior and home decor, light, lamp and electrical appliances, fashion, among others.

It would provide dedicated business to business (B2B) window for licensing, branding, franchising for all the exhibitors, while creating potential for Joint Ventures and the opportunity to collaborate with regional as well as global healthcare brands while understanding global trends in Halal food market.

“When you talk about Halal, it is not just about the food and beverage, it is about lifestyle, it is about your way of living. It is about what is permissible for consumption, it is the way of life permissible.

“If you go to countries like Morocco, they have @Businessdayng

about 80 million Muslims but they are currently benefitting from the Halal economy. Currently, they are exporting to over 23 countries courtesy of the Halal industry. Malaysia is doing over $7billion in halal food and beverage. So those are the opportunities that we need to tap into,” Chime further said.

“We need to promote our SMEs too, we have to further encourage them to go into exportation, to go into manufacturing halal food, to export to the other parts of the world. The halal industry/economy as at 2017 was worth over $2.2trillion but now it is about $2.7trillion. So it is a very huge economy. So these are opportunities that the chamber is trying to position the various stakeholders to look at. This is one of the essence of having the exhibition.

Currently we have visited, as part of the consultation a whole lot of stakeholders in the industry.”

Monday 10 February 2020

BUSINESS DAY

39

abujacitybusiness Comprehensive coverage of Nation’s capital

FCT Minister assures investors of business friendly environment James Kwen, Abuja

T

he Minister of Federal Capital Territory (FCT), Muhammad Bello has assured investors of business friendly environment in Abuja where huge investment opportunities abound.

Bello urged the private sector to partner with the FCT Administration, especially in the area of public transportation and waste disposal, adding that the administration has taken various steps to ease pro-

cedures for partnership and collaborations.

According to him, the FCT presents huge investment opportunities in waste management, transportation, real estate, entertainment industry and agriculture as the Administration, amongst others.

The Minister spoke at the FCT Business Made Easy Lituation Event organized by the Presidential Enabling Business Environment Council (PEBEC) NAF Conference Centre, Abuja.

He said interactions,

such as the Lituation Event, between government and those that invest in the city, were very apt as well as important and would go a long way in encouraging government/citizenry collaborations and ultimately, building the FCT of “our dreams”.

Bello said, “you will also notice that as a means of easing transportation, the airport station on the Abuja Light Rail is connected to the main terminal, through a concord where you just walk across and if you need to catch

a domestic flight, there is also a thoroughfare that you will follow. These are all done to ease movement within the city, which ultimately will also positively affect businesses”.

Earlier, in her address, Special Adviser to the President on the Ease of Doing Business, Jumoke Oduwole said that the Lituation Event was intended to connect all stakeholders across the Nigerian Business landscape at the subnational level, especially young entrepreneurs with government agencies and business regulators.

L-R: Auwa Musa Rafsanjani, executive director, CISLAC; Eze Nwagwu, convener, Say No Campaign; Jaye Gaskia, executive director, Praxis Centre, and Chido Onumah, coordinator, African Center for Media and Information Literacy, during a press briefing on the 2017 annual audit report of MDAs in Nigeria held in Abuja.

Pic by Tunde Adeniyi

AMAC Legislative Council lifts suspension on Chairman ... vows to continue investigation James Kwen, Abuja

T

he Abuja Municipal Area Council (AMAC) Legislative Council has set aside the suspension of the Council Chairman, Adamu Candido over allegations of corruption and abuse of office.

The Council however, vowed to investigate the allegations and reiterated its previous resolution, mandating the Committee chaired by James Diko, representing Gui Ward to investigate the matter and report back in two weeks for further legsilative ac-

tion and urged the Committee to be objective and transparent.

The AMAC Legislative Council took made these decisions at its resumed sitting, barely a week after a previous legislative proceeding turned violent, sequel to the invasion by suspected hoodlums who snatched the mace.

Leader of the AMAC Legsilative Council, Abubakar Baushe, addressing the lawmakers said as elected representatives of the people, they are obliged to ensure the enforcement of the rule of law in the Council and www.businessday.ng

appreciated members for ensuring law and order during the crisis.

According to him, the lifting of the suspension followed a peaceful resolution between the Legislative and Executive arms, brokered by the House of Representatives Committee on FCT and Anciliary Matters, bringing to an end the recent crisis that rocked the Council over the purported suspension of the Chairman.

Baushe r uled that, “we are not going to work alone, as we have also involved professional investigators who are renowned

for this kind of thing, like Independent Corrupt Practices Commission (ICPC) and Economic and other Financial Crimes Commission (EFCC). This is to make sure that justice would prevail either in favour of or against the Chairman. And at the end we will give Nigerians the report”.

Recall that a petition was submitted to the Legislative Council by the Civil Society for Human Rights and Rehabilitation on the 21st of last month accusing the Chairman of misappropriation of funds and abuse of office.

https://www.facebook.com/businessdayng

Gold Health Initiative donates handwashing station to Abuja School James Kwen, Abuja

A

Non-G overnmental Organisation, known as Gold Health Initiative has donated a hand-washing station to Sharing Prosperity School located at the New Kuchingoro Internal Displaced Persons (IDPs) camp in the Federal Capital Territory (FCT).

Executive Director of the NGO, Morolayo Akpuluma at the commissioning of the project, said the facility would encourage the children to keep proper personal hygiene so as to prevent transmission of germs and combat childhood mortality.

Akpuluma lamented that there had been numerous cases of diarrhea and cholera cases and deaths among underfive children, especially at IDPs camps, as this was been linked to poor sources of drinking water.

The Director also urged the children to be ambassadors of hand washing in their school, homes and communities, noting that station was built because the NGO understand the need to teach the kids how to wash their hands in the correct way. “ Th e re a re c e r t a i n hand wash techniques they need to learn and

above that we noticed that they also need a place where they can wash they can have soap and water to wash their hands and this in turn would stop disease outbreak.

“We have a lot of virus flying around like the Lassa fever and Coronavirus and the basics of preventing and controlling these outbreaks is to teach people good personal hygiene.

“We are working towa rd s bu i l d i ng m o re hand-washing stations for densely populated areas like this. We are starting small but we are hoping to get funds to do a lot more than what we did today because this is the basis of controlling and preventing infections.

“We also have to do a follow up because we need to evaluate that what we are doing is right.

We want to make sure that there are less students that miss school because they are sick. It is a good thing if one can reduce the amount of sick people by 20 per cent”.

Head teacher of the school, Luka Yathuma also lamented that it had been difficulty in getting good and portable water for the kids and appreciated the foundation for the kind gesture, adding that it would go a long

Abuja court orders Army to reinstate, pay benefits to sacked officer Godsgift Onyedinefu, Abuja

T

he National Industrial Court sitting in Abuja has ordered the Nigerian Army Council to immediately reinstate Mohammed Suleman to the rank of a Colonel he was in 2016 before his unlawful compulsory retirement.

The Court presided over

by Sanusi Kado also ordered the Army Council to pay all his salaries and allowances due to him from 2016 till date.

Delivering judgement in a suit instituted by Sule@Businessdayng

man against the Nigerian Army and eight others, Kado held that the purported retirement effected through a letter of June 9, 2016 was unlawful, illegal, unconstitutional and of no effect whatsoever.

The presiding Judge rejected the claim that the Army Officer was compulsorily retired from the Army on account of overstay of 18 years in the service, adding that there was no evidence to the falsehood adduced to justify the unlawful act of the Army.

40

Monday 10 February 2020

BUSINESS DAY

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

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

BADMN stocks make up 50 percent of NSE total market cap

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

BALA AUGIE

A

s the earnings season gathers momentum with every hour, some stocks are making up a bigger piece of the pie than ever before.

The BADMN (an acronym for the mentioned companies) block of BUA Cement Plc, Airtel Nigeria Plc, Dangote Cement, MTN Nigeria telecommunications Plc, and Nestle Nigeria Plc, now account for 52.43 percent of the Nigerian Stock Exchange (NSE) total market capitalization of N14.40 trillion.

The listing of MTN Nigeria, Airtel Nigeria, and BUA Cement added impetus to a beleaguered stock market as the country’s current economic fundamentals have failed to bolster investor confidence.

The BADMN have an attractive valuation that makes their stocks alluring to investors. They also have strong earnings and there are upside potentials in the various industries they operate in.

Dangote Cement, the largest producer of the building material and most capitalized firm in Africa’s largest economy, has a dividend yield of 9.41 percent and trades at a price to earnings ratio of 7.50 times earnings.

The cement maker has a market capitalization of N2.89 trillion, which is 20.44 percent of the total market capitalization of NSE ASI Index.

The country’s huge infrastructure deficit and the zeal of government to spend copiously to bridge it will spur demand for building

P.E

5

material, hence adding impetus to Dangote Cement’s earnings.

While Nestle Nigeria operates in an industry vulnerable to the vagaries of macroeconomic uncertainties, it has been keeping staying afloat and refusing to sink as it continues to record double digit growth in earnings and margins.

The consumer goods giant’s arrays of market penetrating products have been supporting growth.

Its market capitalization of N1.09 trillion is 7.56 percent of the total NSE ASI total market cap.

Airtel Africa has been recording strong growth in earnings since it listed on the Nigerian bourse last year, and its market capitalization of N1.12 trillion is 7.77 percent of the total market cap of the NSE

ASI Index.

The telecommunication giant announced its audited financial statement for 2019 that saw earnings beat analysts’ estimates.

Revenue was up 12.40 percent to $2.52 billion as at nine month period 31 December 2019 from $2.29 billion as at December 2018.

The growth in revenue was largely driven by improved performance in Nigeria, East Africa and the rest of Africa. Revenue growth also got a boost from customer base, which was up 9.40 percent to 107.10 million, and ARPU growth of 2.20 percent.

MTN Nigeria, the country’s largest telecommunications company by mobile subscribers, has a trading multiplie of 13.91 times

earnings while dividend yields stands at 2.52 percent.

The telecommunication giant has a market capitalization of N2.38 trillion, which is about 16.52 percent of the total market cap of the entire NSE ASI index.

After two consecutive runs of a bearish run in the equities market (2018-17.84 percent and 2019 -14.60 percent), this year has begun on a positive note as the NSE ASI returned 4.53 percent.

The impressive run so far is amid poor corporate earnings as companies are grappling with tough regulatory environment, while the foreign external reserves have been dipping on the back of unstable crude oil price.

The consumer goods industry, which was a major drag on the index last year, started the year on a wrong footing.

Unilever Nigeria, Guinness, UACN, and Nacon Allied Industries recorded a sharp drop in revenue and profit as HoneyWell Nigeria and International Breweries recorded losses.

Analysts say the key determinants of Nigerian capital markets remains oil price, the smooth Continues on Page 41

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

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

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

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

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

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

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

MARKETS INTELLIGENCE Focus : International Breweries growing debt pile BALA AUGIE

T

otal debt of International Breweries Nigeria Plc has risen to a level that represents 84.15 percent of its enterprise value.

A company finances its operations with a combination of debt (money borrowed from financial institutions) and equity (money it raises from shareholders).

While debt is cheaper to borrow due to the benefits of tax shield, too much of it most times result in deteriorating margins as huge interest expense or finance cost erodes operating profit. What this means is that a loss is inevitable as sales continue to grow at snail pace.

International Breweries’ capitalization ratio stood at 22.22 times or 2,222 percent as at December 2019, which

implies for every N1 in equity there are 22.22 in debt on the books.

The company’s capitaliza-

tion ratio was 41.09 percent or 0.41 in 2014, and then it jumped to 7.74 times or 774 percent in 2018.

The capitalization ratio compares total debt to total capitalization (capital structure). The capitalization ratio reflects the extent to which a company is operating on its equity.

This ratio helps in the assessment of risk. The companies with high capitalization ratio are considered to be risky because they are at a risk of insolvency if they fail to repay their debt on time. Companies with a high capitalization ratio

may also find it difficult to get more loans in the future.

International Breweries’ total liabilities to total asset ratio (another capitalization ratio) stood at 0.97 times or 97 percent, and a ratio above 50 percent means there are more debt than equity in the balance sheet of an entity.

The company recorded as loss of N9.13 billion to end 2019 financial year as sales reduced by 5.26 percent, the first drop at the top lines (revenue) in 5 years.

The brewer’s total equity or shareholders’ fund dipped by 72.61 percent to N9.57 billion as at December 2019, while it has a negative retained earnings of N686.15 million.

A negative retained earnings means a company has been recording recurring losses.

Analysts say the brewer will have to grow sales and beer volumes in order to cover all its obligations, but the current

Outflow from NSE continues for 2nd year in a row as foreign investors flee risk assets IFEANYI JOHN

F

oreign investors’ appetite for Nigerian securities appears to be abating as foreign outflows from Nigeria’s capital market exceeded inflows for the second consecutive year in 2019.

The Nigerian Stock Exchange’s Domestic and Foreign Portfolio Investment Report 2019 published by the Nigerian Stock Exchange shows that foreign outflows from the country was as high as N523.42 billion Naira in 2019, compared to an inflow of only N419.13 billion. This translated to a net outflow in foreign investment in the capital market of up to N104.29 billion.

The investment loss trend has now worsened for the second year in a row after Nigeria moved from a net for-

eign inflow of funds in 2017 by around N336.94 billion to a net outflow position in 2018 of N66.2 billion.

In 2018, Nigeria saw foreign outflows of N642.65 billion compared to foreign inflows of just N576.45 billion, representing a net outflow of about N66.2 billion. Analysts told BusinessDay that the net capital outflow was triggered by preelection selloffs which caused stock prices to collapse and foreign investors to repatriate their funds due to increased political risk in the country.

Since the Nigerian Stock Exchange All Share Index began to trend downwards in January 2018, it has barely been able to recover as the poor stock performance has led to increased market selloffs and more foreign capital repatriation from our capital markets. www.businessday.ng

Since reaching the 45,000 mark, the All Share Index has declined precipitously to just 28,067 points at close of market last Friday, representing a stock market decline of about 37.7 percent due largely to a total net foreign outflows of N170.4 billion over the last 2 years in the Nigerian capital market as well as the increased political and economic risks in the country.

Foreign investors dash for the exit doors in the local bourse is also having an impact on the foreign external reserves as more and more foreign outflows from the country is gradually depleting Nigeria’s foreign reserves. In the last 7 months, Nigeria’s external reserves has now dropped by up to $7 billion, causing investors to worry that a possible devaluation of the currency may be at hand in order to protect the external reserves

from further depletion.

In July 2019, foreign external reserves rose to a multiyear high of $45 billion but has since dropped to $37.7 billion as at February 2020. Analysts have now told BusinessDay that the speed of capital flight out of the country could still increase due to low confidence that Naira will remain stable despite continued declines in the foreign reserves.

While the stock market has risen about 4.5 percent year to date, analysts opine the buying pressure may be domestic led as investor’s position for dividend payments in the coming months.

If foreign investors continue to abscond Nigeria’s capital market in mass, the investment community and Central Bank of Nigeria may soon have a large problem on their hands.

https://www.facebook.com/businessdayng

economic macroeconomic environment has not been supporting growth.

Weak consumption spending as a result of slow wage growth, poor job creation, and eroding impact of double digit inflation has hindered a lot Nigerians from hitting the bars.

According data from Fitch solutions, household income is estimated to have grown by 8.8 percent year on year y/y to $4,252 in 2019 from US $3,908

41

in 2018 .2019’s 8.8 percent year on year growth is lower than the 10 .7 percent year on year (y/y) growth in 2018.

However, double digit inflation continues to hurt consumers’ ability to increase expenditure which in turn continues pressure consumer companies’ revenue.

The year 2019 marked the 7th consecutive year of inflation growing faster than income growth.

High unemployment rate at 23 percent as at the third quarter of 2019 continues to hurt consumer ability to increase expenditure which in turn continues to pressure brewers.

However, there is light at the end of the tunnel for International Breweries as parent company, Anheuser-Busch InBev, world’s largest brewer, plans to inject capital into its Nigeria’s operations via a rights issue of N165 billion.

BADMN stocks make up 50 ...

Continued from Page 40

running of the banking system, and the health of the economy.

Asides global risk, a major risk facing Nigerian capital markets in 2020 stem from recent policies of the CBN and their possible negative impact on banking sector profits,’’ said analysts at CSL Stock Brokers Limited. ‘’Oil price risk and in effect currency risks t and out as an extraneous factor that could deteriorate, hence, a sharp fall in the oil price would have negative implications,’’ adds analysts at CSL Stock Brokers Limited.

Oil prices have been dragged down by concerns over demand in China after the coronavirus outbreak that has killed over 300 people while 28,0123 have been hospitalized.

In order to bolster the price of the commodity, OPEC and its allies have @Businessdayng

been holdings meeting to discuss the possibility of an output cut. It could cut about 500,000 barrels a day.

U.S West Texas Intermediate (WTI) fell 0.49 percent to trade at $50.70 as of Friday, its lowest level in 5 months Brent Crude was down 0.0.1 percent, trading at $54.92 per barrel as of Friday.

The volatility in global macroeconomic environment combined with lack of policy direction on the part of government is undermining the country’s foreign direct investment and external reserve.

Nigeria’s external reserves recorded a decline of $4.47 billion as of the beginning of 2019 $38.07 billion as of December.

The drop in reserves can be largely attributed to decline in oil receipt and the intervention of the CBN in the foreign exchange market.

42

Monday 10 February 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday Monday 07 February 2020

Top Gainers/Losers as at Friday 07 February 20202020 LOSERS

GAINERS Company

Company

Closing

Change

N118.2

N117

-1.2

CADBURY

N9.7

N9

-0.7

0.45

CILEASING

N6

N5.4

-0.6

VOLUME (Numbers)

N35.4

0.4

GUARANTY

N30

N29.5

-0.5

VALUE (N billion)

N5.45

0.25

N7.4

N7.1

-0.3

Closing

Change

N22

N22.8

0.8

MTNN

JBERGER

N21.95

N22.45

0.5

DANGSUGAR

N12.95

N13.4

BUACEMENT

N35

VITAFOAM

N5.2

FLOURMILL

ASI (Points)

Opening

Opening

ETI

DEALS (Numbers)

MARKET CAP (N Trn)

28,067.09 4,243.00 303,933,286.00 6.385

Global market indicators FTSE 100 Index 7,463.50GBP -41.29-0.55%

Nikkei 225 23,827.98JPY -45.61-0.19%

S&P 500 Index 3,333.83USD -11.95-0.36%

Deutsche Boerse AG German Stock Index DAX 13,503.21EUR -71.61-0.53%

Generic 1st ‘DM’ Future 29,126.00USD -202.00-0.69%

Shanghai Stock Exchange Composite Index 2,875.96CNY +9.45+0.33%

14.618

Stock investors lost N239bn in one week …NSE ASI down 2.69% Stories by Iheanyi Nwachukwu

T

he Nigerian Stock Exchange (NSE) All-Share Index (ASI) and market capitalisation depreciated by 2.69 percent and 1.61percent respectively to close the week ended February 7, 2020 at 28,067.09 points and N14.618trillion respectively.

In the preceding week ended January 31, the ASI closed at 28,843.53 points, while the value of listed stocks stood at N14.857trillion. In the review week, investors lost about N239billion.

All other indices finished lower with the exception of NSE Insurance index which appreciated by 0.23 percent while NSE ASeM Index closed flat. Fifteen (15) equities ap-

preciated in price during the review week, lower than seventeen (17) equities in the preceding week.

Forty-nine (49) equities depreciated in price, higher than 44 equities in the pre-

ceding week, while 99 equities remained unchanged, lower than 102 equities recorded in the preceding week.

The market recorded total turnover of 1.478billion shares worth N20.295billion in 23,263

deals in contrast to a total of 1.561billion shares valued at N26.073billion that exchanged hands in the preceding trading week in 21,444 deals.

The Financial Services industry (measured by vol-

ume) led the activity chart with 1.199billion shares valued at N13.728billion traded in 15,183 deals; thus contributing 81.14percent and 67.64percent to the total equity turnover volume and value respectively.

The Consumer Goods followed with 68.225million shares worth N2.444billion in 2,312deals, and Conglomerates industry with a turnover of 60.095million shares worth N242.213million in 922deals.

Trading in the top three equities – Zenith Bank Plc, FBN Holdings Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 621.150 million shares worth N11.275billion in 6,718deals, contributing 42.03percent and 55.56 percent to the total equity turnover volume and value respectively.

NSE lists International Breweries 18.266bn shares

T

he Nigerian Stock Exchange (NSE) has listed the International Breweries Plc’s Rights Issue of 18.266billion Ordinary Shares of 50 kobo each at N9 per share. With this listing of the additional 18.266billion ordinary shares, the total issued and fully paid up shares of International Breweries Plc has now increased from 8.595billion to 26.862billion ordinary shares of 50 kobo each.

The additional shares listed on The Exchange arose from International Breweries’ Rights Issue which was on the basis of 17 new ordinary shares for every 8 ordinary shares held as at November 6, 2019.

The shares were listed on the Daily Official List of The Nigerian Stock Exchange on Friday February 7, 2020.

Stanbic IBTC continues impressive impact in education

NSE, Meristem highlight benefits of Exchange Traded Funds

tanbic IBTC Bank Plc, a subsidiary of Stanbic IBTC Holdings Plc, continues to make impressive impacts in communities where it operates. The financial institution, as part of its CSR activities, recently renovated buildings and upgraded facilities at the Community Comprehensive High School, Olambe in Ogun State.

Stanbic IBTC’s CSR activities at the school involved reroofing and painting of the school’s buildings, provision of a standard library furnished with books, provision of Flip Chart kits as well as provision of 100 desks and chairs, amongst others.

OladipupoOyefuga, Head, Market Risk, Stanbic IBTC Bank Plc, led the staff of the Internal Control Department of the bank to commission the projects.

Oyefuga described Stanbic IBTC as being passionate about contributing to the growth of education in the country.

Speaking in the same vein,

he Nigerian Stock Exchange (NSE) on Friday, February 7, 2020 hosted capital market stakeholders and members of the investing public to a Smart Investment Workshop.

The workshop themed, “Using Exchange Traded Funds (ETFs) as a Proxy for Investing in Nigerian Equities” was hosted in partnership with Meristem Wealth Management Limited and had in attendance young, savvy members of the investing public and capital market stakeholders.

With the growing demand

S

Head, Internal Control, Stanbic IBTC Bank Plc, Taiwo Ala, said that the bank embarked on the project as part of activities for the 2019 Internal Control Awareness Week.

He noted that the project would support effective teaching and learning of the students especially against the background that the school is a community secondary school majorly financed by community donations.

Fakunle Adenike, Principal, Community Comprehensive High School, expressed her profound gratitude to the management of Stanbic IBTC Bank Plc for renovating and upgrading facilities in the school.

www.businessday.ng

…as a smart investing tool

T

for cost-effective, low-risk, diversified and income generating investment instruments, The Exchange has identified the ETFs segment as a viable investment option for investors, particularly younger players who are new to the capital market.

This workshop was, therefore, held in line with The Exchange’s commitments to deepen capital market activity through innovative and value-driven products and services, as well as provide opportunities for in-depth investor education.

Speaking on the growth of the ETFs market segment, Os-

car N. Onyema, Chief Executive Officer, NSE, said, “Today, the NSE is the second largest ETF market in Africa with a current market capitalisation of N6.9billion. From a single ETF tracking the price of Gold in 2011, the market has deepend with 10 ETFs currently offering exposure to equities, fixed income, commodities as well as thematic and smart investment solutions.

The ETFs market segment is radically reshaping the assetmanagement industry; gradually eclipsing old-fashioned stock pickers given its ability

to replicate passive investing styles.”

“With the market witnessing low yields, we have seen an increasing appetite for equities, and ETFs present investors with an alternative channel to maximize investment and minimize the risk that comes with investing in equities. Consequently, The Exchange is resolute in its goal to collaborate with market stakeholders to not only increase listed ETFs, but also provide the necessary sensitization and capacity building that will boost activity in the market.”

NSE appointed executive committee member of Financial and Information Services Association

T

he Nigerian Stock Exchange (NSE) has been appointed as Executive Committee (EC) member of the Financial and Information Services Association (FISD), a division of the Software and Information Industry Association (SIIA).

The appointment which is for a two-year term, beginning January 2020, will have Olufemi Balogun, Head, Market Ser-

vices Department represent the Exchange. This appointment was communicated to NSE by Tracey Shumpert, Director of Member Services on February 4, 2020.

SIIA is an umbrella association representing 800+ technology, data and media companies globally. Industry leaders work through SIIA’s divisions. As a division, FISD is a global forum for industry

https://www.facebook.com/businessdayng

participants to address issues and challenges that impact the key players in the value chain including consumer firms, third party groups, and data providers. Through in-person and online business development opportunities, peer networking, corporate education, intellectual property protection and government relations, FISD supports members to identify the trends that will @Businessdayng

shape the industry segment, and create education opportunities and initiatives to address them.

The Executive Committee of FISD, which is an equitable representation by each of the three FISD broad constituencies -- exchanges, vendors and user firms, is charged with representing FISD membership and setting the broad direction for FISD activities.

Monday 10 February 2020

BUSINESS DAY

43

NEWS

FIRS moves to block tax evasion ploy by multinationals ... says $10bn evaded in taxes by multinationals CYNTHIA EGBOBOH, Abuja

T

he Federal Inland Revenue Service (FIRS) says it has shifted focus to detecting and blocking tax avoidance efforts by multinational corporations operating in Nigeria.

Disclosing this at the FIRS management retreat in Abuja on Friday, Muhammad Nami, executive chairman, FIRS, said this had become necessary considering huge losses to Nigeria currently put at about $10 billion through profit shifting by multinational corporations.

Nami explained that the FIRS 2020 revenue target of N8.5 trillion, which is slightly lower than the 2019 target of N8.80 trillion, was achievable with the ongoing reforms and business process re-engineering taking place in the service.

He said, “These reforms are aimed at improving both filing and payment compliance, re-activation of dormant taxpayers through aggressive information gathering and sharing and blockage of leakages.”

He stressed that the retreat, titled ‘Repositioning FIRS for efficient service delivery’ was apt, as the service going forward would be

anchored on four cardinal pillars including; Rebuilding FIRS institutional framework, robust collaboration with stakeholders, building a customer (Taxpayer)- centric institution, and data centric institution.

The chairman said, “The N8.5 trillion target is broken into oil tax target of N3.698 trillion and non-oil tax target of N4.807 trillion. One may look at this target as ambitious, but I can assure you that it is achievable and realisable.

“We have revised the organisational structure of the service that reflected management aspirations, reviewed TCC’s administration process and issuance program to general public.

“We gave ourselves a target of a minimum of $5 million staff-to-revenue ratio and 10 percent tax to GDP ratio over the next four years.”

Solomon Olamilekan Adeola, chairman, Senate Committee on Finance in his remark, said there were outlined agenda at the Senate to monitor the progress or otherwise of every revenue generating agencies with a view to correct lapses and resolve challenges.

He said the momentous occurrences indicate the Federal Government intention of

repositioning the service for efficient service delivery to expand the revenue base of

the government. “The Senate will not shy away from legislative interventions where nec-

essary as well as a robust oversight of all revenue generating agencies. The ultimate goal is to ensure that government

Delta supports NYSC with 700-capacity hostel, other projects MERCY ENOCH, Asaba

D

elta State government has inaugurated a 700-capacity headspace hostel it built for the National Youth Service Corps (NYSC) members in the state, promising continued support to the service in terms of more projects that would make lives of the corps’ members posted to the state comfortable.

The inauguration came about a week of the state’s commencement of payment of N33,000 monthly allowance to serving NYSC members in the state.

Inaugurating the 700-capacity hostel at the NYSC Permanent Orientation Camp in Issele-Uku, the state governor, Ifeanyi Okowa, recalled that the camp was in a poor state when he visited in 2018.

He expressed delight that the camp had begun to wear a look befitting a place where Corps members spent time before being deployed to parts of the state for primary assignment. “This is a dream come true and we thank God that we are witnessing this great transformation of the orientation camp.

“As a government, I believe that we should improve

on the facilities that we have in this orientation camp as we are collaborating with the Federal Government in different ways.

“Just few days ago, on Monday, a Court of Appeal was inaugurated in Asaba, I am happy that we have the Court of Appeal and it has been described as apparently, one of the best in the country.

“These partnerships are in the best interest of our people and in the best interest of our state and here at Issele-Uku is the first point of call for members of the NYSC who are posted to Delta State.

“The graduates numbering thousands who are posted to Delta, apparently, will work in Delta State and will impact on the state and its people, so, it is only human that we make them comfortable to bring out their best to serve the state and our nation.

“I appreciate the work of the contractors that worked here to see that these projects are completed for inauguration today; it is my hope and expectations that when we leave in 2023, this NYSC Camp will be totally a changed environment that will be comfortable for the Corps members. www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

have revenue for needed development in all sectors and address the issues of recurrent budget deficit.

44

Monday 10 February 2020

BUSINESS DAY

NEWS

Obaseki seeks improved access to education to Don canvases setting up special Minimum wage: NLC deploys national body to protect women’s right officers to unyielding states tackle female genital mutilation … 13 states paying, 16 signing agreements

E

do State governor, Godwin Obaseki, has identified basic education as an effective instrument in tackling female genital mutilation (FGM), noting that his administration will not relent in increasing access for girlchild education in the state.

Governor Obaseki said this in commemoration of International Day of Zero Tolerance for Female Genital Mutilation, a United Nationssponsored annual awareness day, as part of efforts to eradicate the global menace.

The governor said FGM was a violation of girls’ fundamental human right and cannot be justified by any cultural or religious myth, adding that more access to education was needed to stop FGM and end the suffering it inflicts.

The governor decried that despite the country being signatory to global declarations and policies that protect the rights of women and girls, which safeguards them from gender-based violence, FGM was still practiced in parts of Nigeria.

“On the International Day of Zero Tolerance for FGM, we reaffirm the commitment

of the Edo State government to end this violation of human rights and stop suffering of tens of millions of girls across the world.

“This effort is especially critical because female genital mutilation leads to longterm physical, psychological and social consequences, which violates women’s rights to sexual and reproductive health, physical integrity, non-discrimination and freedom from cruel or degrading treatment. Female genital mutilation is never safe, no matter who carries it out or how clean the venue is.

“Hence, we are calling governments all over the world to take a cue from the basic education approach of the Edo State Government in tackling this menace. This is because all over the world, education is a key driver of development and prosperity.

“Access to education, especially to the girl-child, is a necessary tool in addressing the issue as it allows for the introduction of new concepts and the exchange of ideas, along with access to various sources of information and technology that foster social relations and developments,” he said.

SIKIRAT SHEHU, Ilorin

A

professor of Islamic law at the Faculty of Law University of Ilorin, Abdulrafiu Oyewumi Omotosho, has stressed the need to set up a special body to promote and defend the rights of women in Nigeria.

This, according to Omotosho, will serve as a first step alternative dispute resolution for women who cannot afford the cost of litigation in Sharia’ah court.

Omotosho, who stated this last Thursday while delivering the 191st inaugural lecture of the University at the school auditorium, recommended that women should take proactive measures to ensure that they were familiar with their rights, saying it was only when they know about their right - they can demand for it.

In his lecture titled: “She Has A Lion Share Under The Islamic Law,” the inaugural lecturer urged the Federal Government and the Nigerian Supreme Council for the Islamic Affairs (NSCIA) to embark on

www.businessday.ng

massive education of the general public on the rights of women in the society, why they should be protected and empowered.

The inaugural lecturer had while calling on Muslim community and other relevant bodies to make known the rights of women and the girl child according to Islamic law, emphasised that there was need to break away from the status quo, where women were seen and treated as sub-human beings despite the fact that they were the pillars of life.

He pointed out that, the law restored their honour and dignity, and granted them privileges they never enjoined before “they have equal right with men as daughters, mothers, sisters and wives. They have freedom to do any lawful thing.”

The varsity don, however, advised women to be courageous and fearless in demanding for their rights, as he expressed believe that until Christians, Muslims and other faiths in Nigeria learn about one another’s traditions and cultures, there might never be respect for one another, and speculation and suspicion will continue.

https://www.facebook.com/businessdayng

to pay, others unyielding JOSHUA BASSEY

N

igeria Labour Congress (NLC) is deploying national officers to states where negotiation and implementation of the N30,000 national minimum wage are facing hitches.

This comes as the Trade Union Congress of Nigeria (TUC) is playing down on its threat to disrupt activities in states that failed to pay the minimum wage by January 31, 2020.

So far, 13 states are paying, while 16 are negotiating or at the point of sealing agreements with labour to pay the new wage.

The national officers, according to the NLC, will strengthen the capacity of state councils of the congress to engage their respective governments on why the implementation of the new wage can no longer be delayed.

The NLC had given state governments up to end of December 2019 to

@Businessdayng

negotiate the consequential salary adjustments arising from the new national minimum wage and implement it accordingly.

The union arrived at the decision to deploy its national officers during the National Administration Council (NAC) meeting which held in Abuja on February 4.

In a communiqué issued at the end of the NAC meeting and signed

by Ayuba Wabba, president, and Emmanuel Ugboaja, general secretary of the NLC, respectively, the NLC commended the Federal Government for keeping to its promise to implement the new minimum wage, including payment of arrears. It also commended 13 state governments who have begun the implementation, saying this shows that “wherever there is a will, there will always be a way.”

The NLC said it placed high premium on the implementation of the new minimum wage in states alongside the consequential adjustments.

Monday 10 February 2020

BUSINESS DAY

45

news Investors court Nigeria’s electricity market on new reforms STEPHEN ONYEKWELU

I

nvestors are taking positions in Nigeria’s electricity market and staking big deals at the industrial, commercial and residential segments, on the back of reforms that private-sector players consider attractive.

Nigeria’s off-grid electricity market is estimated at over $9.20 billion and offers infinite opportunities for companies willing to take a risk in a market where over 75 million citizens are without access to reliable electricity.

Local and international investors see opportunity in the off-grid sector and are making early bets, BusinessDay reported last year.

Rubitec Solar was the biggest beneficiary with €500 million from GIZ, a German development agency.

The Nigerian off-grid market has been enabled by the Mini-Grid Regula-

tions of 2017 issued by the Nigerian Electricity Regulatory Commission (NERC).

The regulation enables minigrids with distributed power of 100 kilowatts (kW) and below to operate without a permit. But a licence is required for distributed power of over 100kw and genera-

tion capacity up to or more than 1 megawatt (MW).

“This regulation has been very successful. It sets out clear rules regarding the requirements for setting up a mini-grid, made the licensing process simpler and returns on investment clearer,” Wiebe Boer, chief executive officer of Shell-backed All On, an impact investment company, said.

“The regulation comforts investors because it specifies the rules of engagement with electricity distribution companies.”

All On is the only local investor focused solely on Nigeria’s off-grid energy sector. The company has invested millions of dollars in 21 companies and two funds. These companies are in the Solar Home System, Solar Arnergy System and mini-grid segments and the result thus far is close to 30,000 new power connections for low-income Nigerians and small and medium enterprises (SMEs).

Twelve months ago, Copenhagen-based A.P. Moller Capital with a market capitalisation of $24.14 billion set up shop in Nigeria to fill the growing gap among industrial electricity customers who consume a minimum of 2-5MW per hour (MW/hr) and self-generate power at costly rates.

CBN intervention boosts cotton output as pyramids return ODINAKA ANUDU

T

he Central Bank of Nigeria (CBN) is ramping up intervention programmes with an eye on boosting the industrial sector of the economy and food security.

A miracle is already happening in the once forgotten cotton industry, with the apex bank approving N19.2 billion to fund the establishment of nine ginneries across the country, leading to a return of cotton pyramids.

“We are improving the links between cotton farmers and ginneries, by ensuring that ginneries are able to off-take the high-quality cotton produced by these farmers. The same support will be extended to the textile and garment firms,” Godwin Emefiele, CBN governor, said in October 2019 at the signing of a Memorandum of Under-

standing (MoU) with critical interest groups in the Cotton, Textile and Garment (CTG) subsector in Abuja.

The Nigerian textile industry is challenged by smuggling, poor competitiveness and lack of high quality cotton. But experts say the springing up of ginneries could help few surviving textile firms to stay afloat.

Apart from cotton, several large corporates in the palm oil industry have received the apex bank’s N30 billion intervention fund with a view to reducing $500 million annual import.

Emefiele said in September 2019 at a stakeholders’ meeting in the nation’s capital that PZ Wimar, Biase Oil Company Ltd, Eyop, Okomu Oil Company, Presco Oil Company and SIAT Ltd had all benefitted from the fund, adding that application for Ada Palm in Imo State was being expected.

Emefiele pointed out that annual demand for palm oil in Nigeria was 2.5 million metric tons of which only 1.25 million metric tons were produced locally, leaving a gap of 1.25 million metric tonnes per annum.

“This gap is currently being met through imports,” he said. “The Central Bank of Nigeria Oil Palm Initiative is aimed at closing the gap and also positioning Nigeria to incrementally export oil palm products to neighbouring African countries and beyond.”

Emefiele said closing the identified gap would require bringing about 312,500 hectares under modern cultivation at an estimated yield of 4 metric tons per hectare.

“Our target is to ensure that a minimum of 1.4 million hectares of land is put under oil palm cultivation in three years,” he said.

At the Bankers Committee meeting in April 2019, it was disclosed that the Federal

•Continues online at www.businessday.ng

More cost for importers, exporters as foreign shipping firms slam surcharges on cargoes AMAKA ANAGOR-EWUZIE

M

anufacturers who bring in raw materials for production and export their finished goods through the seaports as well as farmers who export their produce to other countries would be paying higher freight cost following the new surcharges imposed on cargoes by major international shipping liners.

These surcharges come in the form of Bunker Adjustment Factor, Currency Adjustment Factor, War Risk Surcharge, Congestion Surcharge, Peak Season Surcharge, Extra Risk Insurance Surcharge, Freight Rates Surcharge, Port Operations Recovery Surcharge, among others.

CMA CGM, the French shipping giant and one of the major liners that call Nigerian ports, recently announced that effective from February 23, 2020, farmers exporting containerised sesame cargo from Tin-Can Island and Apapa Ports to seaports in Asia, India, Middle East Gulf, Red Sea, Oceania and sub-Saharan Africa would pay Peak Season Surcharge (PSS) of $50 per 20-foot and $100 per 40-foot container.

Government planned to give N200bn intervention fund to boost the production of oil palm, cocoa, sesame seed, shea and cashew through the Central Bank of Nigeria.

The bank has already funded thousands of rice farmers to support the government’s policy on food security, import-substitution and improved health.

Billions of naira has been rolled out for the project through the Anchor Borrowers Programme to boost local food production, employment and agro value chain.

“Lots of rice farmers are increasing their production areas because there is a huge market for paddy,” said Aminu Goronyo, national president, Rice Farmers Association of Nigeria, told BusinessDay recently.

“This is because millers are patronising rice farmers now and off-taking all that they produce immediately,” Goronyo said.

Farmers wanting to export containerised sesame exports from Onne to the above-mentioned destinations would also pay same PSS of $50 per 20-foot and $100 per 40-foot container starting from February 24, 2020.

In terms of imports, CMA CGM announced that starting from February 10, 2020, Nigerian cargo that originates from ports in the United States and is bound to arrive at Apapa and Tin-Can ports would pay PSS of $1,500 per container of dry cargo, reefer (refrigerated), Out of Gauge (OOG) cargo and break bulk cargo.

The French shipping liners said it would from February 17, 2020 apply General Rate Restoration (GRR) of $500 per 20-foot and $1,000 per 40-foot container of dry, reefer, OOG and break bulk cargoes from Asia including China, South Korea and Taiwan to all West African ports including Nigeria.

Surcharges are supposed to be temporary measures by shipping lines involved in the shipment of goods worldwide to address peculiar challenges of shipping at destination and are subject to removal when the situation normalises, according to the United Nations

Continues on page 46 www.businessday.ng

President Muhammadu Buhari (r) shaking hands with former President Olusegun Obasanjo at the 33rd AU Summit in Addis Ababa, yesterday.

NAN

Banks cut charges amid intense competition …as economy struggles HOPE MOSES-ASHIKE

A

s the economy continues to grow sluggishly, the quantum of money that used to flow into the banks has reduced as customers no longer do much business amid salary delays, forcing banks to cut charges under intense competition to retain or acquire new customers.

The Central Bank of Nigeria (CBN) on December 22, 2019, reviewed downward most charges and fees for banking services as contained in the new Guide to Charges by Banks, Other Financial, and Non-bank Financial Institutions, which took effect from January 1, 2020.

Banks Standing Deposit Facility (SDF) declined by 7.18 percent to N1.93 trillion in the fourth quarter of 2019 compared to N2.081 trillion in the third quarter of 2019.

SDF is a window at the CBN where lenders deposit their excess liquidity.

Also, currency-in-circulation (CIC) declined by 7.9 percent to N2.2 trillion in January 2020 from N2.4 trillion in December 2019, data obtained from the CBN indicated.

Deposit money banks are seen going beyond complying with CBN’s new charges to offering little or zero fees on transitions done through their various electronic channels.

Standard Chartered Bank

https://www.facebook.com/businessdayng

(SCB), for instance, has removed charges on most of its transactions. Consequently, transfers from one SCB to another SCB account or from an SCB account to accounts in other banks are free of charge on all its channels.

The bank’s SMS notification alerts on all transactions are also free of charge. The Visa Debit/ATM Card is free for first issuance to its new clients, while monthly card maintenance fee is free for both Savings and Current account customers.

“You can also use your SCB Debit/Credit card to withdraw from any ATM within Nigeria at no cost and this is irrespective of the number of withdrawals.

This is applicable to both @Businessdayng

SCB ATMs and other Banks’ ATMs,” the banks said in a notice to its customers.

Uju Ogubunka, president, Bank Customers Association of Nigeria (BCAN), said the banks are becoming realistic on what is happening in the economy.

He explained that the economy is not growing, people are not doing business as they used to do, salaries are not paid as at when due, and there is impairment in the financial capacity of people.

“When there is excess money, you go to the bank and deposit it. The amount of money that used to flow into the bank is no longer the same and that is a challenge

Continues on page 46

46

Monday 10 February 2020

BUSINESS DAY

news Pension fund assets hit N10.22trn as FG borrows...

Continued from page 1

end of December shows that Federal Government securities including FGN Bonds took N5.35 trillion, equal to 62.39 percent, Treasury Bills took N1.88 trillion, equal to 18.40 percent, Sukuk Bonds took 0.82 percent, Agency Bonds 0.11, and Green Bonds 0.15 percent.

From the analysis, money market securities received N1.172 trillion of the total funds under management, equal to 11.47 percent, with N1.055 trillion going into banks’ L-R: Benedict Okey Oramah, president, African Export-Import Bank; Obafemi Hamzat, Lagos deputy governor; Joseph Sanusi, former CBN governor; Pat Utomi, founder, Centre for Values in Leadership (CVL); his wife, Ifeoma; Philip Shuaibu, deputy governor of Edo State, and Umar Namadi, Jigawa State deputy governor, at CVL Annual Lecture and International Leadership symposium on Intra-African Trade.

Growing signs of economic distress set...

Continued from page 1

partner.

The International Monetary Fund is said to be planning a fresh downgrade of Nigeria’s economic growth forecast to 2.1 percent in 2020 from an earlier estimate of 2.3 percent. Economists are carefully studying what the Coronavirus outbreak, if sustained, will mean for commoditydependent economies like Nigeria and most of their initial thoughts are negative and could see them return with downgrades for Nigeria’s economic growth this year.

As dark clouds gather over the economy, sources close to the government say critical reforms on how to grow the economy sustainably are being considered with renewed vigour.

Although no timeline was given, some of the reforms likely to happen include a unified exchange rate as well as the revival of plans to sell down some of the government’s stakes in Joint Venture

oil assets, refineries and other downstream subsidiaries such as pipelines and depots.

“The economy is in worse shape than even the data show and the government is set to do something about it,” one of the sources said.

Over time, Nigeria has shown a penchant for delaying action until there are no other options left.

Ditching the longstanding N306/$ rate which the government continues to use in its transactions despite being much weaker than the N364/$ market rate would help boost inflow of Foreign Direct Investment, according to investment bankers, while the sale of JV assets will be a boost to government revenue.

While they are good first steps, these may not be enough to forestall an economic relapse, according to sources with knowledge of the matter who say the government must find a way to incentivise private investment on a large scale and end its

wasteful subsidy on petrol.

An economist who did not want to be named in order to speak freely said the economy was always toeing a dangerous path by failing to restructure and diversify the revenue base.

“Data show Nigeria has made little progress in achieving structural reforms and that is always going to be a problem when things with big implications for oil happen out of nowhere, like the Coronavirus outbreak,” the economist said.

Old promises to reduce the economy’s over-reliance on oil exports have failed to materialise and Africa’s largest oil producer could be facing a similar crisis like in 2016 when oil prices bottomed and the economy slumped into a first recession in 25 years.

Four years later and oil is under pressure again, this time from the deadly Coronavirus disease that is spreading across Europe from China.

The disease which has interrupted economic activity in China, the world’s secondlargest economy and biggest

buyer of crude oil, has put a huge dent in demand for oil and dragged prices down.

That’s a blow for oil-dependent Nigeria which continues to depend on exports of the commodity to fund around 70 percent of its annual budget and for foreign exchange inflows.

The price of Brent Crude has already crashed below the budget benchmark of $55 per barrel. It fell as low as $54 Sunday, February 9, according to Bloomberg data.

The five-quarter-long economic recession that happened on the back of low oil prices in 2016 is still fresh in the mind of the current government.

It was during the first tenure of President Muhammadu Buhari, who, in 2019, secured a second four-year tenure that runs until 2023.

Economists, who point at key macroeconomic indicators from GDP per capita to FDI, say the economy hasn’t fully recovered from the recession.

The economy averaged 2.2 percent growth in 2019 with fourth-quarter GDP data release slated for February 24.

the tariff increase would be seen across all trades with an increase range of $50-$200 per 40-foot equivalent unit of container, reflecting the increased fuel cost.

There is need for a serious regulatory body to regulate the activities of shipping companies and all other service providers in the ports, Anakebe said.

Nigerian importers paid a whopping $166.9 million on Peak Season Surcharge and $267.1 million on congestion surcharge in 2017 alone, according to statistics from the Nigerian Shippers’ Council.

The Council also estimated thatmorethanN2billionisrepatriatedbyinternationalshipping firms in a quarter of every year, confirming that the surcharges amount to huge sums of capital flight from Nigeria.

Hassan Bello, executive secretary, Nigerian Shippers

Council, said recently that cargo owners must be consulted before new charges are imposed on them by shipping lines.

“If foreign ship owners insist that we cannot be part of the negotiation, we use legislation. We need to consider the negative effect of the surcharges on our individual economies and fight against them,” Bello said at a forum held in Abuja on arbitrary increase in charges by shipping firms.

According to him, these charges are affecting African economies through inflation because all the charges are passed to the final consumers by way of rise in prices of commodities. Such extra charges and subsequent rise in inflation result in poor standard of living because rise in market prices of goods would make them unaffordable to many, he said.

instruments, translating to 10.33 percent.

Domestic ordinar y shares investment, which has been dropping over time as result of poor state of the capital market, during the period under review received N55.89.51 billion, equal to 5.41 percent of the total invested funds.

Meanwhile, the total monthly pension contributions received from contributors from both the public and private sectors amounted to N5.45 trillion as at the end of second quarter 2019.

This shows an increase of N169.90 billion representing 3.22 percent growth over the total contributions as at the end of the previous quarter.

During the second quarter also, the total contributions received from the public sector amounted to N72.42 billion (42.63 percent) while the private sector contributed N97.48 billion (57.37 percent).

A review of the aggregate total contribution received shows that N2.73 trillion or 50.09 percent of the con-

Banks cut charges amid intense...

Continued from page 2

More cost for importers, exporters as foreign...

Continued from page 2

Conference on Trade and Development (UNCTAD). However, some of these charges have assumed permanence without justification or basis for negotiation.

Industry operators say these surcharges will take a toll on shippers in the country as well as consumers who will eventually bear the cost in form of increased prices of goods.

Nigeria’s economy is estimated to lose an average of N150 billion annually to arbitrary surcharges slammed on Nigerian-bound imports from Europe, America, Asia and ports in sub-Saharan Africa as well as exports originating from Nigeria to these countries, according to Nigerian Shippers’ Council.

“Shipping companies are milking Nigerians by impos-

ing unnecessary surcharges and demurrage charges. Unfortunately, monies generated by these foreign shipping firms are not retained in our economy because these funds are repatriated to their home countries,” said Tony Anakebe, managing director, Gold-Link Investment Ltd. Following the implementation of the International Maritime Organisation (IMO) 2020 sulphur cap, Maersk, the Danish shipping operator, also imposed bunker surcharges on freight to cushion the effect of high cost of fuel with very low sulphur fuel oil (VLSFO).

Maersk notified customers, in an advisory note, that it would raise bunker prices as its operational costs have significantly increased.

The shipping giant said www.businessday.ng

https://www.facebook.com/businessdayng

tributions came from the public sector, while the private sector contributed the remaining 49.91 percent (N2.72 trillion).

The aggregate total pension contributions of the private sector increased from N2.62 trillion as at first quarter of 2019 to N2.72 trillion as at the end of the reporting period, representing a growth of 3.72 percent. The aggregate total pension contribution of the public sector increased by 2.72 percent from N2.66 trillion to N2.73 trillion over the same period.

The pension industry also recorded a 1.78 percent growth in the scheme membership during the second quarter of 2019, moving from 8.63 million contributors at the end of the preceding quarter to 8.79 million. The growth in the industry membership was driven by the Retirement Savings Account (RSA) scheme, which had an increase of 153,572 contributors representing 1.79 percent. However, membership of the Closed Pension Fund Administration (CPFA) Scheme declined by 58 members to stand at 23,258, while the Approved Existing Scheme (AES) membership remained unchanged at 40,951.

The RSA registrations grew to 8,722,609 as at second quarter 2019 from 8,569,037 as at first quarter 2019, representing a growth of 1.79 percent (153,572).

The growth can be attributed to the increased level of compliance by the private sector as a result of the various steps taken by the PenCom to improve compliance and coverage, as well as marketing strategies of the PFAs.

to the banks,” Ogubunka said.

GTBank has also reduced its transaction charges as seen from one of its customers.

“I did a transaction of N20,000 and GTBank charged me N10. I did another transaction with another first generation bank and I was charged N25,” a bank customer who does not want to be named told BusinessDay. Ayodele Akinwunmi, relationship manager, corporate banking, FSDH Merchant Bank Limited, said there has been reduction in the transaction charges on electronic banking channels in order to encourage cashless transactions, adding that customers would benefit from this.

Following the new CBN guidelines which took effect from January 1, 2020, customers are to pay N10 for transactions below N5,000.

Transaction from N5, 001N50,000 is to attract N25 @Businessdayng

fee and above N50,000 is pegged at N50, instead of N50-N52.50k charged on all transactions before the new guidelines.

The CBN at end of its Monetary Policy Committee (MPC) meeting last month increased the Cash Reserve Ratio (CRR) by 500 basis points to 27.5 percent in January from 22.5 percent since 2016.

Godwin Emefiele, governor of the CBN, said this would help address monetary-induced inflation whilst retaining the benefits from the Loan to Deposit Ratio (LDR) policy, which has been successful in significantly increasing credit to the private sector as well as pushing market interest rates downwards.

The CBN in October 2019 raised the LDR of banks to 65 percent after the September 30 deadline given to the banks to meet its 60 percent directive.

Monday 10 February 2020

BUSINESS DAY

47

INTERVIEW

‘Real estate investments create opportunities for economic gains’ Olisa Omera is founder and chief executive of Xymbolic Development Limited. In this interview with Josephine Okojie, he speaks about the real estate industry and his momentous journey so

W

hat prompted you to switch from engineering to real estate?

I got interested in real estate while I was at university. In 2014, as an undergraduate with high prospects of graduating with a first-class, I knew I did not want a nine to five hours job, rather I desired to be an entrepreneur. I had sold petroleum products such as kerosene, which was funded with the money I got from scholarships and even taught of having a laundry business at some point. To my mother and friends, it just didn’t make sense that a brilliant student would want to pursue a career in business rather than a well-paying corporate job.

One day, I stumbled on a book title ‘Rich Dad, Poor Dad’ by Robert Kiyosaki and that created a paradigm shift in my mind on business and financial independence.

Three years later, I met a real estate baron, Tony Aspire who introduced me to the real estate business and that was how I started.

At what point in your life did you feel it was time to launch Xymbolic and Land & Houses?

Immediately I graduated from the university. I have never applied for a job before.

My sister and mother got worried at some point that I was going past the required age of employment in Nigeria.

Prior to diving headfirst into real estate, I sold petroleum products for an American company. It was a networking company, but I had a different idea of how the business could add more value to clients. I wanted to sell innovative petroleum products and build a team to do the same. So, I quit and started investing all my funds into real estate. I invested all my earning as a corps member in knowledge acquisition on how to run the business.

At first, I started with my first company called Land & Houses and I was running the operations with two employees from the comfort of my small living room which was converted into an office then. Soon, the returns started coming in triples. It was at that moment I got the inspiration to launch Xymbolic Development Limited in 2016.

From the inception, I started a live video channel with my phone on Facebook titled ‘Real Estate live with Olisa. The first video was with a lawyer and I remembered being scared that no one would watch it. 15 minutes into the video, we had no presence online. In the end, we had 37 people watch that video that day. Finally, we moved it from Facebook to Youtube just like Land& houses.

What projects are you currently working towards with the company and what is your vision for these projects?

Our first project is the Enclave. Our new project set to be launched in February is called “The Nook”. It’s going to be exceptional because we are not just providing housing solutions; we are also solving the problem of epileptic power supply by providing solar

What differentiates Xymbolic from other real estate companies in Nigeria today?

We are empathetic and passionate about our client’s needs. We offer real estate services beyond the functionalities. Being customer-centric drives the business. Our clients are our number 1 priority. We listen to them, their complaints and suggestions, and we refine our processes based on the feedback we get from them.

How do you see the future of real estate in Nigeria?

The future of real estate is technology. We are now in the digitalisation era – a world for data science. That is why Xymbolic is looking forward to launching a digital network investment solution, where people can invest anywhere in the word without any physical ownership. We want to provide a virtual ownership platform that enables them to liquidate anytime, and this will be backed up by real properties.

energy as an alternative. It is going to be a noiseless community.

How did Xymbolic kick off from what it was then to the big enterprise it is now?

I started with a million naira I had set aside.

A lady invested two million naira and we gave her equity. It wasn’t enough though but we had to strategically manage what we had.

What were the challenges you faced starting as an amateur in a highly competitive business landscape?

Allow me to preface my answer by saying when your eyes are on the prize, challenges are just stepping stones to your final destination. The prize for me was never the money but being able to add value to my clients and become a disruptive force in the real estate world.

The first challenge was money. I started with little or no capital. There were days of hunger strike because I was investing all I had on knowledge acquisition. I always felt the need to start my business when I have the money for it until I met Tony Aspire on Facebook. I reached out to him and he convinced me to attend his seminar on real estate business. That event reignited my fire to start Xymbolic. Then, there was the issue of paying salaries at the initial stage and financing other expenses. I had to make more sales to pay my employees to a point I forgot to pay myself.

Secondly, the issue of trust became a challenge. The real estate business in Nigeria is finally gaining momentum and individuals are comfortable entrusting www.businessday.ng

developers with their money. I had to show I was capable of selling first as a relator, before moving on to becoming a real estate developer.

What inspired the name of your real estate company ‘Xymbolic’?

The word ‘symbol’ stands for anything identifiable. However, replace the ‘S’ with ‘X’ and it means we stand for something, not just anything. We are the X-factor of the Nigerian real estate business. We aspire to create innovative solutions to properties.

Creating value propositions for our clients is of paramount importance. We want to change the notion that the aim of real estate is to become a landlord. There are more dimensions to it. We want young people to understand that they can have full ownership, as well as invest without owning brick and mortar.

What is your take on Nigerians in diaspora investing in real estate back home?

The idea is to own a landmark in your country. Beyond that, real estate investment in Nigeria is a lucrative one because regardless of the economic fluctuations, the land keeps appreciating as opposed to other parts in the world. A million naira on Nigerian soil today will not be the same in the next 2 years. For example, a plot of land in Mona Field, Sangotedo, Lagos State was selling for 8 million in 2017, Shoprite was built there and sales went up to 12 million naira. It is always a wise decision to invest in real estate here because the marker doesn’t control the price, the demand does.

https://www.facebook.com/businessdayng

From your experience of building a real estate empire from nothing, what would be your advice to young emerging real estate realtors and developers?

Go for it! Failure doesn’t happen when you start something and it didn’t yield the expected outcome. Failure happens when you don’t try at all. I had so many ideas like the laundry and petroleum business that I could have thrived in, but I killed the ideas because I allowed other people to project their fear onto me. So, learn to keep quiet about your goals. Start something first, and when you are halfway in it, you can talk about it to others.

Success is like a marathon. The guy with a billion naira feels he is not successful because he wants more. Success is a feeling.

Like when I acquire a property, allocate it, knowing people can trust me and I can deliver is fulfilling. Success is a journey; it is not a destination for me.

What is the future of real estate in Nigeria?

This market will continue to grow with continued innovative solutions to real estate.

Currently, Nigeria has a total population of about one hundred and ninety million, and the housing deficit is still at two million. According to the chief economist of PwC, from 2018 to 2050, and by 2050, Nigeria’s population will increase by an extra two million. What happens to the housing deficit then? How would we solve that housing problems? Therefore, it’s either we have new real estate developers emerging in the future, or the Government swing into action to bridge the gap, or a partnership with the Government and private sector happens to solve these housing problems. However, for Xymbolic, we are invested in growing the industry with the innovation of disruptive technology to advance client’s needs in real estate and help the younger generation investment in real estate, for liquidation anytime they want.

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

A1

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

A7

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

A3

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

51

52

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

53

54

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

55

Monday 10 February 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

EU faces acrimonious summit over budget dispute

Poor countries are demanding richer states pay more to close Brexit gap Sam Fleming and Mehreen Khan

E

U efforts to clinch a budget deal this month risk being derailed by widening divisions between rival camps of member states, diplomats are warning.

European Council president Charles Michel is convening a highstakes EU leaders summit from February 20 with the goal of hammering out an agreement on the multiannual financial framework (MFF), the seven-year EU budget that must be settled before the end of the year.

Diplomats fear that an acrimonious summit would poison already fraught relations between richer and poorer member states over the bloc’s spending plans.

These budget talks are proving more bloody than most after Brexit blew a €60bn hole in the MFF — the UK was the second-biggest net payer in the EU. Richer EU governments now face demands to stump up more money to close the Brexit gap, fund new priorities such as climate change, and avoid cuts to prized agricultural subsidies and catch-up spending for poorer regions.

Some diplomats warn that a stalemate at the summit, which could last up to four days, would all but ensure that no deal is reached until much later this year. Others think the February meeting will be the traditional “summit that fails” — mirroring budget negotiations of years gone by.

Charles Michel has staked his early reputation as new European Council president on clinching a budget deal this month © John Thys/AFP

“The net payers will have to show they fought for every penny,” said a senior diplomat who was involved in the last round of EU budget talks in 2013.

Rival camps held meetings last week to reiterate their demands.

The so-called frugal states of the Netherlands, Austria, Sweden and Denmark — who are among the biggest net payers — are demanding a budget of no more than 1 per cent of EU gross national income. The European Commission has proposed 1.1 per cent — the equivalent of €1.25tn over seven years. Although the difference of hundreds of bil-

lions of euros is only a few basis points of the EU’s entire wealth, it has laid bare divisions between richer northern states and poorer States from the south and east.

“Everyone is digging in on their positions,” said one diplomat.

Stefan Lofven, Swedish prime minister, warned last week that “countries are too far away at the moment”.

Mr Michel has staked his early reputation as new council president on clinching a deal this month.

The Belgian has summoned every EU leader to Brussels ahead of the summit to warn of the costs of delay:

frozen spending plans in 2021, the potential loss next year of cohesion money — designed to help poor regions catch up with the rest — and a huge credibility blow to an EU that is promising to act like a “geopolitical power”.

“It is a battle for a few hundredths of a percentage point of national income. [It’s] unthinkable that national budget discussions over these orders of magnitude would take nearly two years,” said Gert Jan Koopman, Brussels most senior budget official.

Despite the urgency, Mr Michel’s message had not been heeded by

EU leaders, said a number of national diplomats.

“Charles Michel took a huge risk by scheduling the summit.

Until now he has failed to convince leaders that the time for a deal has come. But hopefully he can create enough momentum at the summit to move the discussion forward,” said a senior diplomat.

The central question is what the budget ceiling will be. Net recipient countries such as Poland, Hungary and Spain want no cuts to development aid. Others, such as France and Ireland, have demanded that the Common Agricultural Policy is protected.

Under its presidency, Finland proposed cuts of 12 per cent to cohesion cash compared with the previous MFF, and a 13 per cent reduction in agriculture spending, allowing it to boost spending in notionally more modern priorities such as research and climate change. But net receivers have argued that much of the development money is used to fund their economic transition towards lower emissions.

The frugal states also want to hold onto lucrative budget rebates.

Germany is anxious to get the discussions settled before it takes up its presidency in the second half of the year — a period that officials expect will be heavily consumed by talks with the UK over the shape of its EU trade agreement.

“History tells us you don’t do it on the first try — you need at least two,” said one diplomat.

Boris Johnson to give go-ahead to Britain’s HS2 rail project Decision will be welcomed by business leaders but likely to anger some Tory MPs

Jim Pickard and Gill Plimmer

B

oris Johnson will end the uncertainty hanging over Britain’s High Speed 2 rail line by giving the final go-ahead for the controversial project as early as Tuesday in a move that will be welcomed by many business leaders.

But the decision will anger dozens of Tory MPs who believe the scheme is a wasteful white elephant after its estimated cost spiralled to £106bn, from a figure of £56bn projected as recently as last summer.

The prime minister is expected to announce the go-ahead for the first phase of HS2 from London to Birmingham while reviewing its second phase to Leeds and Manchester.

Douglas Oakervee, an industry veteran who was last summer commissioned to carry out a review of

the project for Downing Street, suggested that elements of the second phase could feature some trains travelling at conventional speeds.

The move will come ahead of a cabinet reshuffle — expected on Thursday — in which Mr Johnson will remove some “underperforming” ministers and promote fresh faces.

However, the idea that the prime minister will oversee a huge overhaul of the machinery of Whitehall has been played down in recent days.

Mr Johnson is ploughing ahead with HS2 because cancelling the project would appear to fly in the face of his promise to narrow Britain’s north-south divide and be a champion of infrastructure.

He recently told a schoolboy interviewer that: “In a hole the size of HS2, the only thing to do is keep digging. That’s what you’ve got to do. It’s a big hole.”

The government will try to aswww.businessday.ng

suage fears about the cost of HS2 by insisting that it will still be able to fund smaller, local transport projects with a faster delivery schedule.

Many Tory MPs are concerned that HS2, which will not be completed until 2040, will not deliver immediate political benefits, in contrast to more modest local projects.

A senior government source acknowledged those fears, saying: “What we want to do is show that infrastructure is about all projects — not just the biggest ones — for all parts of the country.”

Robert Jenrick, communities secretary, told Sky News on Sunday: “There will also be more local investment that makes a real impact on people’s lives . . . reopening some [rail] lines . . . filling in potholes, building local roads, regenerating town centres.”

Andy Street, Conservative mayor of the West Midlands, who has championed HS2 as a way

https://www.facebook.com/businessdayng

to narrow regional economic inequalities, admitted “there is a real political issue here” and predicted that the announcement would be wrapped into a wider package of infrastructure investments elsewhere.

Mr Street told the BBC’s The Andrew Marr Show that he expected Downing Street to give the go-ahead in principle for the entire scheme while only giving the direct go-ahead for the first phase.

Mr Johnson had been advised

by Dominic Cummings, his senior aide, that the project had become a disaster zone. But Mr Street said: “Let’s see. We don’t know the announcement yet . . . I needed to get in there and battle hard. Yes Dominic Cummings was against it, so let the battle begin frankly.”

We must now recognise that the strategic business case for another high-speed connection is simply too strong to reject @Businessdayng

Christian Purslow, chief executive of Aston Villa HS2 is designed to reduce journey times from London to Birmingham from 80 minutes to 45 minutes and from London to Manchester from 128 minutes to 68 minutes.

Christian Purslow, chief executive of Aston Villa football club, said it was time for the government to press ahead with the project. “The stalling and dithering has been going on for too long,” he said.

“We must now recognise that the strategic business case for another high-speed connection is simply too strong to reject.”

Grant Shapps, transport secretary — who is expected to keep his job in the reshuffle — will today order West Midlands Trains to deliver a £20m package of improvements.

Other announcements are expected to involve “freeports” — customs-free zones — and more money for bus services.

Monday 10 February 2020

BUSINESS DAY

56

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED Siobhan Riding

A

pplications for fund management licences in Singapore are up more than a tenth in the past year as asset managers look to fireproof their Asia operations in the wake of Hong Kong’s anti-government protests.

Global investment houses have traditionally established significant bases in Hong Kong, using it as a launch pad to expand across the region.

But months of violent demonstrations in the Chinese territory, as well as fresh fears linked to the spread of the deadly coronavirus emanating from China, are spurring asset managers to strengthen their operations in the nearby financial hub of Singapore.

Hugh Young, head of Asia at Standard Life Aberdeen, whose Asian operations are concentrated in Singapore, said that the Hong Kong turmoil had led to more interest in Singapore among senior fund executives.

“There is more reason for senior people not to want to be in Hong Kong today than there was one year ago,” he said. “But at this stage it will be more like one or two senior staff members moving to Singapore rather than the whole Hong Kong office.”

The Monetary Authority of Singapore (MAS) received about 200 applications from fund managers seeking authorisation last year — up from 180 the year before, according to people familiar with the situation.

Three Hong Kong-based hedge funds — Myriad Asset Management, Nine Masts and Pinpoint — confirmed to FTfm they had newly established entities in Singapore.

All three pointed to business op-

Hong Kong turmoil triggers Singapore fund licence surge New fund management applications rise 10% in city-state financial hub

The Monetary Authority of Singapore received about 200 applications from fund managers seeking authorisation last year © F11photo/Dreamstime

portunities rather than the Hong Kong unrest as their motivation.

However, interest in Singapore underlines how the Hong Kong protests threaten to chip away at its competitive position and status as Asia’s principal fund hub.

Maria Gabriela Bianchini, a Singapore-based consultant who advises hedge funds on regulation, said a growing number of fund groups were looking at opening satellite offices in Singapore to give them flexibility should the protests become worse.

“Asset managers are very nervous, as are their investors,” said Ms Bianchini. “The continuation of the protests and the fact that there have been several incidents where uninvolved staff have ended up caught between the police and protesters, has led some groups to push forward with plans to open a second office in Singapore, which can be further expanded in the event of increased tensions.”

Panic over the coronavirus in recent weeks is prompting some groups to accelerate their plans to

move staff to Singapore, said Ms Bianchini, noting that while Singapore had a similar number of confirmed cases, there was greater faith in the country’s response to the outbreak.

She cautioned that the expense of setting up a fund management entity in Singapore — the MAS requires groups to have two full-time front office staff on the ground and commit significant regulatory capital — meant that for now only the most well-resourced fund groups were taking the plunge.

Weekly newsletter S i g n u p t o t h e w e e kly FTfm newsletter and receive the best of the FT’s asset management coverage delivered to your inbox every Monday morning.

Sign up here with one click Will Tan, a recruiter a Principle Partners, said: “The candidates who used to be interested in Hong Kong roles won’t move there any more, but they will consider Singapore.”

Hong Kong is of strategic importance to global asset managers as a gateway to China — a key focus for groups as the world’s fastestgrowing fund market prepares to open up to international investment houses.

While many groups previously serviced mainland China from Hong Kong, an increasing number view the liberalisation of the Chinese market as a reason to shift more staff to Shanghai, with the Hong Kong protests serving as an additional factor.

Ms Bianchini said Hong Kong would continue to be Asia’s preeminent financial centre but “on a two-year view, will be negatively affected and business is likely to go to Singapore or to Shanghai”.

The MAS declined to comment on new applications. But it said the number of fund managers authorised in Singapore stood at 892, compared with 780 at the end of 2018.

France’s Covéa in talks to buy Agnelli-owned PartnerRe for $9bn Approach comes as reinsurance industry is undergoing a resurgence Arash Massoudi, Oliver Ralph and James Fontanella-Khan

F

rance’s Covéa is in exclusive talks to buy PartnerRe, the Bermuda insurer controlled

by Italy’s billionaire Agnelli family, in an all-cash deal that would be worth $9bn, people close to the discussions said.

A deal would mark the latest example of consolidation in the sector and a return to dealmaking for Covéa, which has been searching for an acquisition in the reinsurance industry for the past two years.

People close to the talks said the negotiations between the two companies are exclusive and follow an unsolicited approach from Covéa to buy PartnerRe at the start of the year. A tie-up may be agreed within the next few weeks and no deal is guaranteed. News of the talks was first reported by Bloomberg.

Exor’s decision to consider a sale comes less than five years after it acquired PartnerRe for $6.9bn after winning a hostile takeover battle against rival bidder Axis Capital. At the time the move was driven by John Elkann, scion of the Agnelli family, who was seeking to diversify the Italian group’s investments away from heavy industry and into financial services.

Buying PartnerRe would allow Covéa, led by chief executive Thierry Derez, to diversify its earnings. The company is mostly focused on personal and business cover in France, although it also has operations in the US, UK and Italy. Partner Re would give it access to a new multinational customer base.

The French insurer, which is owned by its customers, made

a hostile takeover bid for Parisbased reinsurer Scor in 2018.

That move was forcefully rebuffed by Scor and a bitter battle that ensued led to multiple lawsuits being filed.

Covéa did not respond to requests for comment. Exor confirmed the talks in a brief statement. “There is no certainty that they will result in a transaction,” it said. “Exor will refrain from further comment until the final outcome of the discussions is known.”

The approach for PartnerRe comes as the reinsurance industry — which sells insurance to other insurance companies — is undergoing a resurgence. Several years of expensive natural disasters have led to rising prices for cover.

Share prices of companies such as Swiss Re, Munich Re and Scor — all rivals to privately held Partner Re — have been rising since the middle of last year.

The specialist insurance and

reinsurance industry has been consolidating during the past few years. In 2018 Axa spent $15bn buying XL Group, which operated in some of the same markets as Partner Re. Axa’s shareholders initially had some reservations about the deal.

A strong return on Exor’s purchase of PartnerRe would represent a big win for Mr Elkann, whose decision to pay a lofty premium to acquire the reinsurer was greeted with some scepticism at the time of the takeover.

The 43-year-old Mr Elkann, who runs Exor on behalf of his family, has been transforming the holding company during the past several years and moving it out of capital-intensive, industrial businesses. In December, Exor agreed to a deal that will see Fiat Chrysler Automobiles merge with French rival Peugeot, creating the world’s fourthlargest carmaker.

57 BUSINESS DAY

FT

Monday 10 February 2020

ANALYSIS

Private equity and Britain’s care home crisis A battle over care home provider Four Seasons raises troubling questions for a sector Boris Johnson has pledged to fix Gill Plimmer

A

t the Whitchurch Care Ho m e, e merg enc y buzzers went unanswered, some medicines were not dispensed and many of its frail and elderly residents had not been given a bath, shower or a wash for a month, an official inspector’s report found. A broken elevator meant residents on the second floor could not be taken to hospital appointments.

The dismal conditions at the care home in Bristol, south-west England, found in January last year, were a sign of the financial pressures on its manager Four Seasons, Britain’s second-largest care home provider.

Four Seasons’ owner was, until two years ago, Terra Firma, the buyout group owned by private equity veteran Guy Hands.

Since December 2017, when Four Seasons failed to meet a £26m debt interest payment, the fate of the company and its 16,000 residents has lain in the hands of its largest creditor — the Connecticut-based hedge fund H/2 Capital Partners, which was set up by Spencer Haber, who made his fortune in the 1990s as a property dealmaker at the nowdefunct Wall Street bank Lehman Brothers.

Four Seasons’ troubles have now deepened and more of its 320 homes have been taken over or closed, including the Whitchurch, where local authorities were forced to step in last April and find alternative accommodation for the residents. But if its slow-burning financial crisis is unsettling for residents and their families, it also points to deeper issues in England’s strained social care system, which has since the 1980s outsourced state-funded provision to the private sector.

The problems at Four Seasons are in part a result of a long-term decline in fees paid to providers for social care, an issue that Prime Minister Boris Johnson is under pressure to redress in next month’s Budget.

But there are also growing

questions over the public accountability of some of the larger private equity-owned care homeowners, with their short-term investment focus and labyrinth structures, involving scores of subsidiary companies, many of which are listed offshore.

“What has happened is that care homes have become financialised,” says Nick Hood, analyst at Opus Restructuring & Insolvency, which has advised several care home chains. “Their owners are playing with the debt and expecting returns of 12 or 14 per cent and that is simply unsuitable for businesses with huge social responsibilities.”

Global private equity, sovereign wealth and hedge funds have piled into the sector in the past three decades, lured by the promise of a steady government income and the long-term demographics of Britain’s ageing population.

Three of the biggest chains — HC-One, Four Seasons and Care UK — are in the hands of buyout groups.

Now the sector is in crisis. All three have been up for sale in the past two years and not found buyers. Hurt by a state mandated rise in the minimum wage, and a decline in funding for local governments, which pay for 60 per cent of their residents, their owners are clamouring for more support.

Those care homes that take in state-funded residents under Britain’s means tested social care system are subsidising them by charging higher fees for residents who pay for their own accommodation. Hundreds have closed in recent years, putting pressure on hospitals, or leaving the elderly stranded in their houses.

A new set of social care proposals has been promised by the prime minister this year — but there have been 12 consultation and policy papers as well as five independent commissions since 1998, all trying to grapple with the issue of how to provide a sustainable adult social care system, which costs the government more than £22bn a year.

Martin Green, chief executive of Care England, which represents private care homes, says the sector

has endured “chronic underfunding for many years”.

“Ultimately more independent care homes may close, with terrible consequences for residents forced to find new homes and staff losing their jobs,” he adds.

But there are also calls for more scrutiny of the industry’s finances.

“The corporate debt burden has definitely contributed to the social care crisis,” says Mr Hood. “No one thinks twice if a department store loads itself up with debt, makes a profit and then takes a commercial bet that may or may not fail. But in this case most of the money to fund the trading at Four Seasons and the other care home operators is coming from taxpayers or from middle class people running down their savings — and the people who suffer when it goes wrong are elderly and infirm.”

The story of Four Seasons is also the story of the three decades since state-funded care for the elderly was outsourced by local authorities, which used to run care homes, to the private sector. William Laing, founder of healthcare consultancy Laing Buisson, says such a wholesale transformation “would have been unthinkable in the National Health Service”.

“The fundamental difference is that social care is largely staffed by low-paid workers with weak representation by unions and professional organisations,” he says.

Four Seasons was started by Robert Kilgour, a former hotelier, who converted a disused building in Fife in Scotland into a care home in May 1989. The prime minister, Margaret Thatcher, had just forced local authorities to put social care services out to competitive tender, creating opportunities for investors.

“There was a shortage of beds and the banks really liked it because you had a secure income from the government,” says Mr Kilgour, who quit the business in 2004 and now runs the Renaissance care home chain in Scotland.

During the 2000s, Four Seasons changed ownership four times in a pass-the-parcel game whereby almost all the sellers made a profit because the next buyer was pre-

pared to pay more and cover the cost by issuing debt — a so-called leveraged buyout.

When Terra Firma bought the chain in a £825m deal in 2012, there was still £780m of outstanding borrowings hanging over the business.

Keen to avoid a repeat of the 2011 collapse of Southern Cross, then Britain’s largest care home chain, Terra Firma injected £390m of equity. But the high interest costs weakened its balance sheet and strained its financial viability. “They overpaid for it and loaded it with borrowings,” says Mr Kilgour. Terra Firma declined to comment for this article.

Tracing the finances at Four Seasons is all but impossible; the company’s sprawling structure consists of 200 companies arranged in 12 layers in at least five jurisdictions, including several offshore territories.

But the most recent figures for Elli Investments, the group’s holding company, for the quarter ending 31 March 2019 show that it carries around £1.2bn of interestbearing debt and loans from unspecified “related” parties.

Four Seasons argues that £545m of this is a legacy of its purchase by Terra Firma and neither the debt nor the interest on it will be paid.

But even if that debt is put to one side, the residual borrowings of some £625m is equivalent to almost £2m per home or some £39,000 per bed each year. That amounts to £71 a week per bed going towards debt repayment or around 8 per cent of the average £860 a week paid per resident.

Furthermore, even as Four Seasons hurtled towards insolvency in 2016, directors’ pay totalled£2.71m, of which the highest paid received £1.58m.

In 2017 five company directors shared £2.04m, and the highest paid received £833,000. An additional £325,000 was paid that year to an unnamed director for “restructuring services”. “It is unlikely to be all the non-productive cash that has flowed out of the business,” says Mr Hood.

Peter Folkman, a former board member of the British Private Eq-

uity & Venture Capital Association who teaches at Manchester Business School, calls it the “football player problem”. He adds: “There is a lack of shame around executive pay which is writ large in care homes where many staff are on the minimum wage.”

The payouts may not seem excessive relative to other companies. But other financially stressed and lossmaking government outsourcers have faced criticism over pay and dividends, whereas none of the care home operators are listed, protecting them from public scrutiny.

“Pay packages like this are completely inappropriate for an activity like social care, where revenue comes largely from the government,” says Mr Folkman.

“There are no clear criteria for performance, it happens within complex group structures and it is just not clear who is paying how much for what.”

Now Four Seasons is the business no one wants. H/2 Capital, which bought the debt at deep discounts from 2015 onwards, initially appeared keen to take on the entire portfolio of care homes, engaging a new board in October 2018.

But Mr Haber appeared to lose enthusiasm after losing to Terra Firma in an acrimonious court battle that gave the private equity group ownership of 24 of Four Season’s most lucrative care homes, which had been bought separately. “Terra Firma walked off with the crown jewels,” says one person close to the case.

That division has since been sold, cutting Terra Firma’s loss on its care home venture to around £425m.

Meanwhile, Four Seasons care homes continued to close. In October, the company started playing hardball with landlords — refusing without warning to pay rent. Since then the business has shrunk further.

H/2 may still take on the company’s 185 freehold homes. But many of the leasehold sites still need to be renegotiated, raising the potential for further closures,

Continues on page 58

58

Monday 10 February 2020

BUSINESS DAY

FT

NATIONAL NEWS

Payments groups join forces to survive Big is better in a sector where fixed costs are high and the threat from new rivals is growing Robert Armstrong and Nicholas Megaw

J

oin or die. That appears to be the motto of the payments services industry, which is integrating vertically, horizontally, geographically — and quickly. The latest merger came last week, when Worldline agreed to buy Ingenico for $7.8bn, forming the largest European payments company in a sector dominated by US-based giants.

Like previous tie-ups, this one joined companies with strengths in different parts of the payments valuechain. Worldline is strongest in payments software for merchants, while Ingenico — long mooted as a takeover target — specialises in merchant hardware and online transactions.

The tie-up follows a blizzard of payments mergers in just the past few years, including FIS’s $43bn acquisition of Worldpay; Fiserv’s $39bn purchase of First Data; Global Payments’ $21.5bn deal for TSYS; and a series of smaller transactions. All of these companies help merchants accept in-store or online payments and route them though credit card networks or allow banks to accept payments from those networks — or, after consolidation, both.

“Imitation is the sincerest form of flattery,” said Jeff Sloan, Global Payments chief executive, in an interview.

He said that the Worldline deal “validates our strategy” of seeking greater scale to enable more investment in technology.

A number of factors make the logic of consolidation compelling in the payments industry, once a sleepy backwater of finance that has emerged in the past few years as one of its most exciting sources of growth.

Like many finance businesses, fixed costs — namely the required technology investments — are high, while the marginal costs of processing more transactions are negligible. Companies processing lots of payments therefore enjoy higher margins, and can reinvest the profits in better technology to extend their advantage over smaller rivals.

“You need to do [deals] because the amount of investment needed to keep up is going to make you unprofitable otherwise,” said an investment banker who has worked on several European payments deals. “If

Elliott, founded by Paul Singer (left), built its stake over the past few months. The hedge fund has met SoftBank chief executive Masayoshi Son (right) in recent weeks © Bloomberg/FT montage

you don’t invest you’ll be out of the market very soon.”

Darrin Peller, payments analyst at Wolfe Research, said companies have also come under pressure to better reach smaller merchants in different industries and markets, as providing services to the largest retailers has become increasingly commoditised.

“Value-add services and software matter for small business,” he said.

“These mergers enable companies that had one offering to offer three or four to a small business, and small businesses pay more per transaction.”

The greatest driving factor in a wave of transactions that has driven three consecutive years of record dealmaking in the sector may be the sheer amount of money at stake. Companies that establish oligopolistic positions at the heart of payments networks are nearly impossible to dislodge.

They benefit from a global trend of consumers moving away from cash to electronic payments, driven by the ubiquity of smartphones and the rise of online shopping.

The Visa/Mastercard card network duopoly is the ultimate example of

this. Both companies have grown their revenues at double-digit annual rates over the past decade and their shares, some of the hottest on Wall Street, enjoy very high valuations. Both networks’ shares trade at price/earnings ratios over 30, three times the rating of JPMorgan, the best-performing bank.

FIS, Fiserv and Worldpay have price/earnings ratios in the 20s, but aim higher. Mr Sloan said when his company bought TSYS that the deal made it “a kind of mini-Visa or Mastercard.”

All of this means that there are undoubtedly more deals to come, particularly in Europe, where the industry remains fragmented.

Italy’s Nexi, which was originally set up by a consortium of Italian banks before being sold to private equity groups Advent and Bain, listed its shares last year and has already purchased another payments business from Intesa Sanpaolo. It has been linked with Italian peer Sia, and also shares its major investors with Nets, which is active across the Nordic region and Germany.

Other European groups, including

Adyen, the Dutch newcomer, could also have a role to play in consolidation, according to industry insiders.

Nor is US consolidation finished.

Mr Sloan of Global Payments said that “now the integration [of TSYS] is in good shape, we have a full pipeline of deals we’re looking at — as we approach the spring and summer I’d expect to see more activity.”

It is hard to see what will stop the industry from consolidating into a small group of powerful players. A widespread economic downturn would hit the pace of growth, but executives are confident that processing volumes would continue to rise thanks to the structural shift away from cash payments.

Specialists are also facing renewed competition from banks — which used to dominate the sector — with lenders such as Royal Bank of Scotland, Santander and Bank of America all investing in the space.

Mr Sloan said banks could benefit “in certain markets” that complement their existing corporate banking services, but said competing with international specialists such as Global

Payments was “a much higher bar”.

A bigger fear, familiar across other parts of the financial sector, would be encroachment by major tech platforms. Tencent, Ant Financial and Alibaba have already transformed payments in China, while US groups like Google and Amazon have been increasingly moving into financial services.

So far the Chinese groups’ initiatives in Europe and the US have been limited to providing services for Chinese tourists. Meanwhile executives have hoped that western tech giants will be put off by the heavy regulation that comes with running payments networks.

Nonetheless, some believe that the real threat for these companies is the likes of Amazon, Google and Apple.

“Payments companies just intermediate between Visa and Mastercard — who own the systems — and the final consumer,” said the European investment banker. “If tomorrow morning Apple decides to say, ‘I don’t have to go through these payment companies any more’, this is what would really hurt these guys.”

be residents in something awash with debt and either going bust or skimping on care — whether that’s private equity or anyone,” he says. “Regulators should do more to ensure that operators have a stable financial base and prevent excessive profit extraction.”

Mr Hood agrees that better regulation is needed “at the very least”. He says the watchdog — the Care Quality Commission — should require the entire corporate structure to be held within the UK to ensure “full public disclosure and scrutiny of an operator’s

finances”.

“That way the government can ensure that these businesses pay their fair share of taxes in return for the huge contribution to the sector from the public purse,” he adds.

But Kate Terroni, chief inspector of adult social care at the CQC, says that for now it has no authority to introduce minimum capital requirements or to intervene to prevent business failure. “Our powers are to provide a notification to assist local authorities who are responsible for ensuring continuity of people’s care,” she says.

Private equity and Britain’s care...

Continued from page 57 particularly in the north-east of England where more homes are reliant on taxpayer-funded residents.

“We continue to make progress in our negotiations with landlords across our leasehold estate, as a first stage in putting Four Seasons into a sustainable position,” says Four Seasons. H/2 Capital was unavailable for comment for this article.

Thirty years since private capital was brought in to improve ser-

vices for the elderly, the business model is under pressure.

While 84 per cent of care homes run by local authorities were rated good or outstanding, this compared with just 77 per cent of for-profit homes, according to a LaingBuisson analysis of regulatory reports last August.

Now the government faces a “stark choice”, says Care England’s Mr Green, who is calling for at least £4bn a year to stabilise the industry in next month’s Budget.

“Either put in significant amounts www.businessday.ng

of investment or seek that money from elsewhere. That includes investors, who obviously need to seek a return.”

But even some private equity voices are now calling for reform.

Jon Moulton, the private equity veteran who ran Four Seasons in the early 2000s, believes that regulators should be taking stiffer action, requiring care home chains to hold a certain amount of capital, much like the Financial Conduct Authority requires of banks.

“There is no easy answer but I would not want my relations to

https://www.facebook.com/businessdayng

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

59

60

Monday 10 February 2020

BUSINESS DAY

NEWS

ITA opens Nigeria office to strengthen Italian, Nigerian trade relation SEYI JOHN SALAU

L L-R: Bayo Olugbemi, MD/CEO, First Registrars and Investor Services Limited; Funmbi Akinluyi, director, Emerging Africa Capital (EAC) Limited; Joe Mekiliuwa, director; Nike Akande, group chairman, EAC Limited; Toyin Sanni, group CEO, EAC Limited; Segun Sanni, MD, Emerging Africa Asset Management Limited, and Olubusayo Adeniyi, MD, EAC Trustees Limited, at an event organised by the EAC Limited to unveil investment opportunities in Lagos.

Currency-in-circulation declines 7.9% in Jan. HOPE MOSES-ASHIKE

C

urrency-in-circulation (CIC) declined by 7.9 percent to N2.2 billion in January 2020 from N2.4 billion in December 2019, according to data obtained from the Central Bank of Nigeria (CBN).

The decline is as a result of the recent increase in Cash Reserve Ratio (CRR) by 500 basis points to 27.5 percent in January from 22.5 percent since 2016, said Abiodun Keripe of investment research, Afrinvest Securities Limited.

The CBN’s Monetary Policy Committee (MPC) at the end of its first meeting of the year announced the increase in the CRR. Godwin Emefiele, governor of the CBN, who announced the increase, said the MPC was confident that it was fortuitous as it would help

address monetary-induced inflation whilst retaining the benefits from the bank’s Loan to Deposit Ratio (LDR) policy, which has been successful in significantly increasing credit to the private sector as well as pushing market interest rates downwards.

Currency is issued to Deposit Money Banks (DMBs) through the branches of the CBN and unfit notes retrieved through the same channel.

Currency deposited in the CBN by the DMBs are processed and sorted into fit and unfit notes in line with the Clean Notes Policy.

Banks’ credit to the private sector grew by N2 trillion between May 2019 and December 2019, according to the CBN. At the end of November 2019, CIC rose by 9.9 percent to N2,203.27 billion, in contrast to the decline of 0.4 percent at end of third quarter

Tony Elumelu Foundation disburses first tranche of $5m partnership commitment from AfDB

T

he Tony Elumelu Foundation (TEF) has disbursed $2.5 million seed capital to the African Development Bank-sponsored beneficiaries of the 2019 TEF Entrepreneurship Programme, being the first tranche of the $5 million partnership commitment from AfDB. The remaining $2.5 million is expected to be disbursed to the entrepreneurs before the end of this first quarter of 2020.

The AfDB commitment follows the recent $8.5 million disbursement from the United Nations Development Programme (UNDP) to 2,648 entrepreneurs in the Sahel region and Africa more broadly, and further accelerates the economic empowerment generated by the Tony Elumelu Foundation.

In 2019, the Foundation significantly increased the scale and reach of it impact, with the number of beneficiaries of its flagship Entrepreneurship Programme rising from its annual commitment

of 1,000 to 5,150, in collaboration with global and African partners.

With its commitment to strengthen small and mediumsized enterprises and develop young entrepreneurs, AfDB joined the growing list of global development institutions benefitting from the Tony Elumelu Foundation’s unique model of identifying, training, mentoring and funding entrepreneurs and start-ups across Africa. The partnership demonstrates the implementation of the AfDB’s 10-year “Jobs for Youth in Africa” strategy, launched in 2016, to support the creation of 25 million meaningful jobs across the continent.

The partnership illustrates TEF’s willingness to share its infrastructure and know-how with others who share the mission to empower young African entrepreneurs and TEF’s goal of creating millions of jobs, as well as generating billions in revenue to catalyse economic growth across the continent.

2019, according to the CBN’s economic report for the fourth quarter of 2019.

The development, relative to the level in the preceding quarter, reflected, mainly, the increase in its currency outside banks’ component, and seasonal factors.

Total deposits at the CBN amounted to N14,350.54 billion at end-November 2019, indicating an increase of 3.6 percent above the level at end of third quarter 2019. The rise was attributed to 14.3 percent and 3.1 percent increase in the deposits of the Federal Government and the commercial banks, respectively.

Of the total deposits at the CBN, the shares of the Federal Government, banks and private sector deposits were 47.4 percent, 35.9 percent and 16.7 percent, respectively.

Reserve money grew by 5.0 percent to N7,353.36 billion at end November 2019,

in contrast to the decrease of 13.5 percent at the end of third quarter of 2019. The development reflected the increase in Federal Government and banks’ deposits with the CBN. The total stock of currency (issuable and non-issuable) in the vaults of the bank as at the end of December 2018 stood at 1,718.57 million pieces, compared with 1,284.10 million pieces in 2017, indicating an increase of 33.83 percent. As at end-December 2018, the total issuable notes (newly printed notes and Counted Audited Clean notes) stood at 496.61 million pieces, compared with 256.61 million pieces in 2017, indicating an increase of 240 million pieces or 94.0 percent.

The increase was attributed to the volume of new notes supplied by NSPM plc, the CBN’s report said.

Nigeria leverages technology to drive critical sectors TONY AILEMEN, Abuja

P

resident Muhammadu Buhari on Sunday in Addis Ababa, Ethiopia, said Nigeria was leveraging science and technology to drive critical sectors of the economy.

Nigeria recognises the centrality of science and technology in the development process and will ensure adequate resource allocation for research and development, President Buhari.

The president stated this while speaking at a breakfast meeting of the Commission on Science and Technology for Sustainable Development in the South (COMSATS) organised by the President of Ghana, Nana Akufo-Addo in his capacity as chairperson President Buhari said technology was aiding Nigeria’s advancement in critical sectors of the economy, noting that his administration was conscious of the relevance of science and technology in national de-

www.businessday.ng

velopment and as such had a ministry dedicated to the sector, headed by a scientist. ‘‘We are concentrating on encouraging our students, at the primary and post primary levels, to love and study more of science related subjects rather than arts, political science and history,’’ the Nigerian leader said at the meeting on the margins of the 33rd AU Summit.

The president acknowledged that while finding resources to fund science and technology related ventures could be a challenge, Nigeria was aware of the huge benefits and would continue to do it best to ensure adequate resource allocation for research and development.

In his remarks, the Ghanaian president said as an inter-governmental organisation made up of 27 member states, COMSATS was playing a leading role in cultivating an enhanced culture of scientific and technological cooperation among member states.

https://www.facebook.com/businessdayng

everaging the strategic growth initiative of the Italian government to grow its economy, especially across West Africa region, the Italian Trade Agency (ITA) recently opens its Nigerian office to strengthen the Italian/Nigerian trade relation.

ITA says the office, located at the consulate in Lagos, is to key into the dynamics of Nigeria, which will help Italian companies catch the growing demand for quality in Nigeria.

As Nigeria continues to seek for measures to rebalance its economy away from reliance on oil and gas, diversifying into other sector of the economy to add value to its raw materials to make it fit for export into other markets.

The ITA will leverage adding value to Nigeria’s raw material through the technical know-how of Italian companies, since Italy already has a developed technology to do such. “The trade between Italy and Nigeria is at the

stage where it offers ample margins for growth; we on the one hand rely on raw material supply from Nigeria to Italy and import from Italy to Nigeria of mostly technology, and other goods in the furniture sector; finish goods sector, but still the market share we have in Nigeria is below the average market share we can enjoy in other markets,” says Alessandro Gerbino, trade commissioner for Ghana, Nigeria and Cote d’Ivoire.

According to Gerbino, the Accra office is the headquarters for West Africa, while the agency is developing its network across the region.

Hence it is a priority for ITA to be in Nigeria, being the biggest economy in Africa.

“The size of the economy requires our direct presence here,” Gerbino says.

Speaking on the initiative of the ITA to deepen trade relation with Nigeria, Gerbino notes that for the first time, the agency is bringing Italian companies to Nigeria by having the first Italian national pavilion at the Nigerian exhibition scheduled for March.

EY West Africa appoints new leader

E

Y has appointed Anthony Oputa as the new regional managing partner for the West Africa and Nigeria country leader, effective July 1, 2020. With this appointment, Anthony will become a member of the EY Africa Executive Leadership.

Anthony will succeed Henry Egbiki, who is the current regional managing partner for West Africa and Nigeria country leader, a role he assumed in 2005. Henry will retire as the regional managing partner for West Africa and country leader Nigeria on June 30, 2020.

Anthony joined EY as the Financial Services Sector leader and chief operating officer for West Africa in August 2018. Since joining EY, he has demonstrated his passion and ability for growing and enhancing the EY brand in the market.

Prior to joining EY, Anthony was the deputy assurance leader in one of the BIG four professional service firms. He is a highly respected professional with over 20 years’ experience focus on the Financial Services Sector.

Expressing his congratulations over Anthony’s appointment, Henry says: ”I am delighted that Anthony has been chosen to succeed my role. He is well qualified and positioned to take on the role of a Country Leader and Regional Managing Partner for West Africa. I am confident that Anthony will take the EY brand to greater @Businessdayng

heights and continue building a better working World for our clients, our people and our community.”

Though he has a primary focus on offering a broad range of assurance and business consulting to the Financial Services Industry, he possesses deep knowledge and understanding of other sectors as well as markets in West Africa.

Anthony has worked with a portfolio of local and multinational clients including some of the largest banks in Nigeria and West Africa, providing assurance and other advisory services and dealing with technical issues. He has significant experience managing large audit and non-audit clients. He is a regular thought leader on the development of the Financial Services Industry and often quoted in the press as well as at conferences.

Anthony is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and a graduate of Accounting from the University of Jos.

Monday 10 February 2020

BUSINESS DAY

61

NEWS

Local tractor manufacturers fear FG’s $1.1bn Brazil deal will destroy indigenous efforts … demand for review or inclusion IGNATIUS CHUKWU

T

he recent deal of opening the Nigerian tractor market to Brazilian manufacturers in a $1.1 billion loan deal has created panic within Nigerian manufacturers who say the investments in recent years may be wiped off.

The manufacturers say they took loans to invest in local manufacture, taking cue from the encouragement from the Muhammadu Buhari presidency, only to be faced with a deal that would favour only foreign manufacturers. They fear that by the time Brazil dumps over 10,000 tractors in Nigeria with a loan facility of about 3 percent interest, the ones produced in Nigeria without subsidy would crash and become an economic waste.

The manufacturers say the Buhari administration in the

last tenure encouraged them with assurances of expanded markets. They say they expected the Federal Government to work with local investors and manufacturers before bringing foreign products if there is any gap to fill.

Speaking in an exclusive interview with BusinessDay in Port Harcourt, Ibifiri Bobmanuel, president, Rivers Entrepreneurs and Investors Forum (REIF), who is the CEO of BobTrack Tractors Nigeria Limited, regrets that the change of tone by the Buhari administration in agric mechanisation subsector will spell doom for local players.

The tractor manufacturer says the mechanisation revolution concept by the government is laudable but argues that the team should have worked with local manufacturers to know what is needed and what the local industry can of-

fer and how the government can boost the supply of tractors to know if foreign help and how much of it was needed.

Bobmanuel warns that if local players are not incorporated into the deal, failure would still greet Nigeria in few years to come, saying if spares and other accessories are not readily available the tractors would become idle and perish thereafter.

He urges the planners of the scheme, which he describes as laudable to broaden the scope for local players to come in, saying they would come in with local expertise to help the scheme. “Let the local players be part of the tractor to be acquired,” he states.

Bobmanuel points to the Nigerian Content regulation and Executive Order that stipulate that such schemes must satisfy certain clauses, which insist that attention must start with Nigerian manufacturers.

“The reason why Africa fails repeatedly is because we forget the home solution in anything we want to do. We do not start any scheme from what we have and bring in what we do not have. Instead, we create a brand new scheme and dump it on the local resources and kill the local effort. When the foreign one crashes, the economy would have none of both,” he says.

For instance, he says, a Federal Government agency once brought in 500 tractors. “Ask for them now and you will find that these tractors have evaporated.

This is because only four-wheel tractors can survive in Nigeria, not two-wheel ones which the Federal Government agency flooded Nigeria with. We must understand that climates are not the same. BobTrack has over $50 million investment facility, which runs in three phases,” he notes.

CCTEC-Ossiomo Power creates competition, will force BEDC to shape up – commissioner

E

do State commissioner for energy, Akin Agbaje, says the coming on stream of the 55mw CCTEC-Ossiomo Power Plant will create competition in the state’s electricity market, and force the Benin Electricity Distribution Company (BEDC) to improve its services to Edo people.

Speaking in an interview with journalists, Agbaje said the state government entered into a Power Purchase Agreement (PPA) with CCETCOssiomo Power to liberate the market, as it had become clear that the BEDC wasn’t ready for investment in the market, but only interested in recouping its expenses from customers in the state.

According to him, “When this government came on board, it discovered that power supply in Edo was in a sorry state. What was done was to identify the issues. The governor inaugurated a high-powered committee headed by the deputy governor to make some recommendations to government as to what are the challenges of electricity supply in Edo State.

“The report revealed that the distribution com-

pany, BEDC, was not up and doing in meeting its mandate. We discovered that it was not out to invest, but rather out to recoup money. Edo State at the moment gets 88MW supply of electricity. We needed more than that to industrialise. So, we had to think out of the box.”

Noting that BEDC has been resisting the change in the market, he stressed that the ministry was trying its best to explain to the power distributor that competition can only bring about improved services to Edo people.

He said, “BEDC is not happy with the fact that the system is open. We have a responsibility as a Ministry to build their confidence, informing them that the essence of opening the market is to encourage competition and improve service delivery.

“The power purchase we have with Ossiomo Power is to provide power to government institutions, such as the House of Assembly, the Government House, Secretariat Complex, hospitals, and industrial clusters. We want to electrify Benin City, to make it smart-city compliant with, the power from CCETC power plant.”

ASUU fingers FG, states over rising insecurity REMI FEYISIPO, Ibadan

A

L-R: Yeshua Russel, executive director, WEConnect; Bimpe Gisanrin, product manager, women banking, Access Bank plc; Princess Adeyinka, founder, Happy Coffee; Nwamaka Onyemelukwe, public affairs, communications and sustainability manager, Coca-Cola Nigeria Limited, and Emezino Afiegbe, senior relationship manager, Nigeria, Women World Banking, at the Breakout session on Women and Entrepreneurship, at the maiden edition of the Lagos State Employment Trust Fund (LSETF) Employment Summit. Pic by Pius Okeosisi

ECOWAS mobilising resources to combat terrorism - Buhari TONY AILEMEN, Abuja

P

resident Muhammadu Buhari has commended the renewed vigour by ECOWAS member countries to mobilise its own resources to combat terrorism.

President Buhari spoke at the ongoing High Level meeting of the African Union Peace and Security Council on the State of Peace and Security in Africa at the 33rd AU Summit.

Buhari called for new strategies by the Union to effectively prevent, manage and resolve conflicts in the face of new circumstances and emerging challenges.

The president also announced that Nigeria had fulfilled its financial obligations to the AU Peace Fund up to

2019, pledging to continue investing on peace and security on the continent.

On ECOWAS matters, Buhari declared that Nigeria was proud to continue to serve as a strong contributor to the peace roles played by the regional bloc. ‘’In Burkina Faso, we (ECOWAS) pledged to mobilise $1 billion to address the challenges of insecurity in our region and the Sahel.

In Guinea Bissau, ECOWAS successfully midwifed the general elections. ‘’Nigeria along with ECOWAS member states led in the restoration of democracy and peace in the Gambia,’’ he said, while welcoming the collaborative leadership of the AU with other Regional Economic Communities in

resolving conflicts on the continent.

On security challenges in Africa, the Nigerian leader said it was regrettable that terrorism, violent extremism and other forms of vicious conflicts had continued to cause mayhem and untold crisis on the continent.

“Nigeria condemns, in the strongest terms, the perpetrators of terrorism in Libya, the Sahel, Lake Chad Basin, and parts of the Horn of Africa.

“We reiterate that efforts must continue to be pooled to mitigate this dreadful violence and secure the future of our continent,’’ he said.

On new strategies to resolve conflicts on the continent, he said: ‘’The AU must strengthen its own capacity for

www.businessday.ng

mediation and develop an effective intervention roadmap.’’

He added that more emphasis should be placed on promoting national dialogue, reconciliation and social cohesion in order to rally all actors towards sustainable peace.

On the Peace Fund, the President reminded the meeting that drawing from the Kigali and Johannesburg Assembly Decisions, the fund is structured for the internal peace support arrangements within the continent and not as resources to subsidize the mandate of the UN Security Council.

“In this regard, my delegation will always fervently contest attempts to make Africa subsidise the primary responsibility of the UN as clearly provided in it Charter,’’ he said.

https://www.facebook.com/businessdayng

cademic Staff Union of Universities (ASUU) on Sunday blamed the federal and state governments for rise in insurgency in Nigeria.

The union said rather than treating the causes of insecurity, many states were reverting to organising their internal security networks.

ASUU chairman, University of Ibadan, Deji Omole, said, “It has been warning governments to cater for the needs of the vulnerable in the society, which appear to have fallen to deaf ears.”

Omole, a professor, said instead of budgeting for peoples welfare, Nigerian governments now spend billions of naira to buy security equipment from the countries that had invested heavily in the research and training.

According to Omole, due to years of neglect and unbridled corruption in high places, many Nigerians have come to lose interest in standards of ethical living since those leading them are mortgagers of future.

The professor of Forest Engineering stated that the union had maintained that a time would come when the children of the poor would have nothing to eat but the

rich in the society, stating that the observation was happening now.

According to the ASUU boss, poor education funding has made Nigerian students live in zoo-like hostels with sad memories for the society.

While saying that leaders benefit more with Nigeria ranking as the world poverty capital and deepening corruption, he maintained that unless the basics were treated, budgeting for weapons would increase ‘lootocracy.’

“Every year they budget for themselves. The president and his cabinet get lion share and some members of the National assembly with no brilliant contributions to economy become billionaires overnight as a result of this insecurity,” he said.

He stated that instead of attending to poverty, education and unemployment, the security forces advise on buying more weapons, stressing that they keep on churning out bad policies that impoverished more families and with no job, and bad economy, crime and criminality were reigning supreme.

He advised that governments must give electricity, tackle unemployment, attack poverty and fund education to keep children in focus on positive development attitudes.

@Businessdayng

62

Monday 10 February 2020

BUSINESS DAY

NEWS

Imo tells oil producing communities era of marginalisation is over IHEANYI NWACHUKWU

I

mo State Governor Hope Uzodinma has reassured the people of Ohaji/Egbema and Oguta local government areas – both oil producing communities in the state that the era of marginalisation is over and a new dawn with huge prospects awaits them.

Governor Uzodinma, who spoke when he received stakeholders of the oil producing communities at the Government House, Owerri, expressed displeasure over the deplorable state of communities in the area despite the huge amount of money that going into Imo State Oil Producing and Development Commission (ISOPADEC) monthly from the 13 percent derivation fund.

He warned that the era when few people sit in their homes and share the money meant for development of the communities was over.

The governor also assured that his administration would set up a monitoring and evaluation committee to ensure that projects were executed in

line with contract specifications.

He promised that the new board of ISOPADEC, which will soon be constituted, shall be made up of people of integrity and proven track record and ready to help drive the desired change and foster prosperity in the area.

On restiveness among the youths, Governor Uzodinma regretted that despite the huge human capacity in the area, some people only identify youths of Ohaji/Egbema and Oguta with thuggery and violence.

He challenged them to get it right now that a brother and friend is the Governor. “We must agree that we want the best for ourselves, we must begin to have change of attitude, thuggery and militancy must be resisted, and the time to harness our potential is now,” he said.

The Governor assured that Adapalm which used to be the pride of the state will be reactivated and its lost glory restored with the appointment of Kalu Austin Egwuagu, a retired brigadier general,) as the Board chairman.

Proposed Kwale Industrial Park’s landowners Edo re-certifies 300 cooperatives to check scams to get over N800m compensation MERCY ENOCH, Asaba

L

andowners of the 1,000 hectares of land that would house the proposed Kwale Industrial Park in Delta State would get more than N800 million compensation from the state government.

The state commissioner for information, Aniagwu Charles, who made the disclosure to newsmen in Asaba, said this formed part of the approvals made by the state executive council meeting presided over by Governor Ifeanyi Okowa, last Tuesday.

Charles, who was with his youths development counterpart, Ifeanyi Egwuyenga, stated that the council appreciated the people who made their land available for the park, for partnering Okowa’s administration in the speedy development of the state.

He recalled that to ensure the development of the Kwale Industrial Park, there was a road show in China that resulted in investors coming to invest in the proposed project.

He said while the council commended the landowners for agreeing to part with their land for development activities, he expressed confidence that the multiplier benefits of

www.businessday.ng

having the Kwale Industrial Park were enormous.

The area is strategically located for investors to have quick returns on their investments, he said.

Commissioner for youths, Egwuyenga, in his contribution, said the Exco approved Rural Youths Skill Acquisition targeted at the illiterate and semi-literate youths in rural communities, adding that the programme would be strictly domiciled in the local governments.

“There will also be community business schools to manage their training, which they will attend on a weekly basis to ensure that the youths know how to give back to the society.

“Tertiary Institution Entrepreneurship Programme which is strictly a core entrepreneurship programme designed for the state owned tertiary institutions targets those with business innovation who are having challenges of setting up their businesses.

“Government will give them opportunities to go through incubation period after which government will set them up with viable businesses for them to be employers of labour,” the commissioner said.

https://www.facebook.com/businessdayng

T

he Edo State government has recertified 300 cooperative societies as part of measures to eliminate the use of proxy cooperatives to swindle members of the public.

Speaking at a stakeholders’ meeting in Benin City, the Edo State commissioner for wealth creation, cooperatives and employment, Felix Akhabue, said the move would streamline the activities of cooperative societies, which are key to stimulating economic development.

Akhabue noted that cooperative societies possess the unique feature of galvanising all segments of the society for economic prosperity, adding, “As part of moves to sanitize cooperative societies in Edo State, the state government has re-certified 300 of them.”

He said the challenges faced by stakeholders in the state include the prevalence of proxy cooperative societies which rely on their registration in defrauding members of the public.

He said, “Some persons used questionable cooperative societies to access loans provided by governments after which they dis-

@Businessdayng

appeared and till date, the money has not been recovered.

“The Edo State cooperatives database has been cleaned up with about 300 registered cooperative societies vetted and certified as against the 18,000 that populated the database in the past. The elimination of dormant and proxy cooperative societies will help the ministry to project and recommend only active cooperatives for financial assistance and benefits.”

He assured the stakeholders in the sector of plans by the state government to protect cooperative societies from financial fraud, while ensuring transparency and accountability in their operations.

President of God’s Gift Minerals Multipurpose Cooperative Society, Ehigbobo Ehimen, expressed appreciation to the state government for the efforts to create a new order through the recertification exercise.

He urged the cooperators to key into the new order to enhance growth and ensure genuine cooperative societies benefit from funding opportunities.

Monday 10 February 2020

BUSINESS DAY

63

NEWS Marathon success, increased athletes’ War against Ansaru: Police competitiveness delight sponsor arrest 3 more terrorists

H

eadline sponsor of the Access Bank Lagos City Marathon, Access Bank plc, has expressed delight over the success of the 2020 edition of the race held Saturday, February 8.

Speaking after the conclusion of the race, Herbert Wigwe, group managing director, Access Bank, said, “Since the marathon’s inception in 2015, we have ensured that every year, the marathon gets bigger and better. A testament to our effort is the confirmation of our recentlyattained Silver Label by the International Association of Athletics Federation.

“This year, we put some measures in place to improve the overall marathon experience and we are ecstatic that

they have reaped immediate dividends. This year’s race witnessed an uptick in the quality and preparedness of the athletes, as highlighted by the manner in which the previous records were broken. Furthermore, the experience of the attendees attests to better organisation and planning on the part of the organising committee.”

The Access Bank CEO also recognised and applauded the efforts of Governor Babajide Sanwo-Olu, Lagos State government and other sponsors for their contributions towards the success of the marathon over the years. He urged them to “continue to stand by our side as we make history and build a sustainable future for tomorrow.”

The marathon, which

held for the fifth consecutive year, featured its most competitive race yet, with the men’s winner, David Barmasai finishing the 42km course in 2 hours, 10 minutes and 23 seconds.

His time was 4 minutes and 41 seconds faster than the previous record set by Abraham Kiprotich in 2018.

In the women’s category, Cherop Sharon beat Rodah Jpekorir’s 2018 record by 6 minutes and 12 seconds, clocking in after 2 hours 31 minutes and 40 seconds.

Both male and female first-place finishers of the 42km race received a sum of $50,000 in prize money, while the second and thirdplace winners received cheques of $40,000 and $30,000, respectively.

FCTA targets N3bn revenue from outdoor advertising in four months JAMES KWEN, Abuja

T

he Federal Capital Territory Administration (FCTA) is expecting to rake in at least N3 billion revenue from outdoor advertising by the first half of 2020.

Director, FCTA Department of Outdoor Advertisement and Signage (DOAS), Babagana Adam, who disclosed this at the weekend, said the Department had the capacity to generate more than the N500 million realised in 2019, but had been limited by unlawful agents bleeding the system.

Adam however said the Agency was working on advanced IT driven ways of

revenue collection in order to block leakages and prevent further evasion of advertisement taxes.

“We generated N500 million in 2019 but the plan is to hit the billion naira mark by May 2020. At the rate we are going, we will exceed that and probably we will be talking about N3billion revenue by May 2020,” the director said.

According to Adam, the Department is currently working out payment plans that will discourage agents from accumulating debts.

“The problem is that the FCT has been in limbo for so long and practitioners were allowed to owe for too long unlike places like Lagos where you dare not owe

Timipre Sylvia (r), minister of state for petroleum resources, and Charles Odita, group managing director/CEO, Midwestern Oil & Gas Company Limited, during a courtesy visit to the minister.

for one month. So what we intend to do is to introduce quarterly payment plan so agents and practitioners will not accumulate debts,” Adam stated.

He also revealed that the Agency is working tirelessly to recover the N1.9 billion outstanding debt being owed by 86 practitioners who ran advertisement on the 707 billboards across the city.

Adam revealed that the Agency may soon be delisting 45 practitioners that have failed to reconcile their debt profile with DOAS. Speaking on ways of resolving issues of double taxation on businesses, the Director said, “going forward what we intend to do is, if any of the area council collects advert revenues directly from agents and practitioners, we will calculate all the monies they have collected through the back door then deduct that amount from the allocation due to them.

“That way, the Area Councils will realise that there is no point using their own resources to collect revenues themselves when they can just allow DOAS do the collection and give them the percentage due to them.

“DOAS as an establishment of the law does not do double taxation. If an agent claims to have made payment to area councils, we investigate and track such claims.

But where the money goes to private hands with no evidence of such payment made into area councils’ accounts then such a business will have to bear the consequences, but where they have prove of payment we simply make deductions before paying allocations to that area council”.

www.businessday.ng

INNOCENT ODOH, Abuja

F

ollowing sustained mop-up operations by Police operatives at the operational bases of the Ansaru Terrorists’ Group in Kuduru Forest, BirninGwari, in Kaduna State, three more members of the Ansaru Terror Group have been arrested.

This was disclosed in a statement issued on Sunday by Force Public Relations Officer, Frank Mba. The Ansaru terrorists have come under intense police crackdown, leading to the killing of nearly 250 members of the group and mass arrest of others. Those arrested in the latest mop up operation are; Munkailu Liman Isah aka Babban Driver 32yrs, Abdullahi Saminu aka Danmunafiki, 21yrs and Aminu Usman 22yrs.

This brings the number of persons arrested to eight (8).

https://www.facebook.com/businessdayng

Mba noted in the statement that the suspects are already assisting Police investigators with useful information relating to the membership spread and makeup, criminal/operational records, logistics and general modus operandi of the terror group, the statement said.

According to the spokesman, preliminary investigation revealed that the arrested suspects were actively involved in the recent attack and attempted kidnap of the Emir of Potiskum that resulted in the gruesome killing of the Emir’s Police escorts. They were also involved in several other kidnap operations and terror attacks on commuters and other innocent citizens along some major highways, especially in the NorthWest and North Central States of the country.

“Unfortunately, investigation also reveals that some citizens, especially

@Businessdayng

those within the business community, give tacit support to the terror groups by deliberately doing businesses with them through the supply of essential goods, drugs (licit/illicit) and other services. To this end, the IGP calls for patriotism among the people, noting that this is the only way the fight against the criminal elements can truly be won.

“While Police operatives are on the close trail of other fleeing members of the terror groups and their collaborators, the IGP has expressed immense appreciation to all and sundry, especially the good people of Birnin-Gwari and environs for their understanding, cooperation and support which have resulted in the measure of successes recorded so far particularly in the fight against terrorism, banditry and other heinous crimes in the country,” the statement added.

BD Money

Monday 10 February 2020

BUSINESS DAY

COVER

INVESTING

Roses are Red, Violets are Blue, here’s a financial guide to Valentine for you

A starter’s guide to Exchange Traded Funds (ETFs)

Thank God It’s Friday (TGIF)- Valentine’s Day is in four days. A lot of Nigerians probably know this already and have thought up a thousand ways to demonstrate their undying love. In the end, the size of their purse will determine which romantic idea is best.

Putting all of one’s eggs in a basket is not a smart move, and this is why investment experts advise clients to spread risks and maximum returns by putting their money in different types of stocks or a number of assets.

Exchange Traded Funds (ETFs) is an easy way to achieving this.

Page 65 www.businessday.ng

https://www.facebook.com/businessdayng

Page 66 @Businessdayng

Monday 10 February 2020

BUSINESS DAY

65

Cover Story

Roses are Red, Violets are Blue, here’s a financial guide to Valentine for you SEGUN ADAMS

T

hank God It’s Friday (TGIF)Valentine’s Day is in four days. A lot of Nigerians probably know this already and have thought up a thousand ways to demonstrate their undying love.

In the end, the size of their purse will determine which romantic idea is best.

A research by Picodi last year suggests that 91 percent of Nigerians celebrate February 14th, one of the most commercialized holidays in the country.

From street vendors to high-end retail stores across the country, everyone prepares for it.

Red clothes, shoes, candles, perfumes, chocolate, candies, jewellery are among items that will be advertised week-long, providing alternatives and making it difficult for shoppers to decide on what to gift their loved ones.

S0 how do Nigerians Spend?

Picodi in 2019 ranked Nigeria 31 out of 38 countries based on the amount spent on gifts (in dollar terms).

While the average expenditure of N18400 on gifts (around $51) by Nigerians is less than $53 spent by South Africans, it is equal to the prevailing minimum wage (N18,000) at that time.

By gender, males, on the average, spend more-than-double what females do.

Men spend N22,154 while women spend N10,000. Recipients of these gift items are one’s significant other (62%), family (29%), friends (29%) and colleagues (0%).

What do Nigerians want?

We all have different tastes, but statistics -which are not generated from thin air- tend to tell general characteristics of a population.

That said, money (35%), gift vouchers (33%), plush toys (28%), clothing (26%) and electronic devices (25%) were voted

the worst gifts for Valentine’s Day by Nigerian women surveyed.

For the men, going to the cinema (15%), Dining in a restaurant (22%), Board games (18%), and visiting theatres (17%) were the worst ideas for February 14, although they are slightly better than doing nothing.

Overall, the most desirable gifts by Nigerians are Gift voucher (58%), Perfumes (50%), Money (42%), Electronic devices (33%), and Clothing (25%) while the least desirable gifts are Money (35%), Gift voucher (33%), Plush toys (28%), Clothing (26%), and Electronic devices (25%).

Here’s how much you should be www.businessday.ng

spending for Val Red is assumed to be the colour of love but a red bank account post-Valentine’s Day is a big concern especially for people, many who have just recovered from December spending and January bills.

Going by personal finance 101, you have 30 percent of your income to splurge on valentine.

The popular 50:30:20 rule recommends that half of one’s income is spent on needs, a third is spent on wants while a fifth should be saved and invested.

This means, if you earn N100,000 you should cap your spending at N30,000 and if you earn N500,000 you should not spend more than N150,000.

https://www.facebook.com/businessdayng

Since Valentine is not the only ‘want’ on your list, you should target a percentage lower than 30 percent to accommodate other things that you would also like to spend on.

In addition, there are a lot of ways to celebrate Valentine’s Day without breaking the bank.

They include creating hand-made gifts, cooking dinner at home, buying loved-ones books and music or making memories doing fun kinds of stuff together (hiking, karaoke, etc.) In the end, Valentine is a season where one could be forgiven for going out of one’s way for a loved one.

The best advice would be to communicate your loved ones they mean a lot to you in the way they would understand-and not to get into debt after that.

@Businessdayng

66

Monday 10 February 2020

BUSINESS DAY

Investing

A starter’s guide to Exchange Traded Funds (ETFs) SEGUN ADAMS

P

utting all of one’s eggs in a basket is not a smart move, and this is why investment experts advise clients to spread risks and maximum returns by putting their money in different types of stocks or a number of assets.

Exchange Traded Funds (ETFs) is an easy way to achieving this.

An ETF is simply an investment vehicle that tracks an underlying asset, a basket of assets, an index or a commodity. It can be bought and sold as easily as stocks.

There are varieties of ETFs like Equity Funds, Fixed-income Funds, Commodity Funds, Currency Funds, Real Estate Funds, Multi-Asset Funds, and Alternative Funds among others.

What all these different ETFs do is replicate the performance of the assets they track. A gold ETF will rise by 10 percent in a day, if gold price increase by the same extent.

The same is true about Equity ETFs which capture price movement of a select group of stocks.

As such, ETFs are an easy way to diversify your portfolio and hold multiple stocks or assets in one basket that offers benefits inherent in stocks and mutual funds.

On the NSE, there are 10 ETFs currently listed according to exchange data. Some of them include Greenwich Alpha ETF, Vetiva Banking ETF, Lotus Halal Equity ETF among others.

“These ETFs track indices that categories stocks based on certain criteria,” said Taiwo Yusuf, Head Asset Management of Lagosbased Meristem Wealth Management Ltd, at at the Smart Investment Workshop themed, “Using Exchange Traded Funds (ETFs) as a Proxy for Investing in Nigerian Equities” in Lagos Friday.

Yusuf explained that indices can be created to track stocks based on market capitalisation eg NSE 30, based on sectors eg NSE Banking 10 or it could be factor-based tracking either macroeconomic indicators or style (Value or Growth).

In the case of value, the ETF tracks a

value index (that is a collection of stocks that are priced cheaper compared to their fundamental value.).

On the other hand, the ETF could mimic a growth index (a basket of stocks that have shown consistent historic growth and potential for upside in the future).

“In the last five years, Meristem Value Index has delivered a cumulative return of 61 percent while the Meristem Growth Index has surged 50 percent,” said Yusuf.

“In the same time NSE All Share Index and NSE 30 have declined by 13.64 percent and 14.4 percent each.”

ETFs are professionally managed which means the choice of stocks that go into a basket are determined by a rigorous process that is independent of the retail investor, who still have control of the ETFs and can sell or buy as they wish.

Why Invest in ETFs? ETFs are cost effective to operate than actively managed funds because ETFs have less frequent portfolio change.

ETFs are transparent, offer diversification and are easily tradable.

They also have no minimum investment, minimum holding period and price of an ETF is very close to its Net Asset Value (NAV).

More so, the structure of ETFs allows market participants to redeem shares from the baskets of the fund’s underlying assets.

How to buy ETFs? ETFs can be bought on the NSE through any Dealing Member Firm.

They can also be bought in the primary market e.g. approaching investment houses like Meristem directly.

Ultimately ETFs are regulated by the Securities and Exchange Commission (SEC).

You can earn good returns saving money here MICHAEL ANI

I

f you are like many, at the start of 2019, you might have anticipated moving into your own house, own a car, getting married and living your dream life.

However, many of these ambitious plans might not have been achieved because “life happens.”

Notwithstanding the challenges last year pose; you need not stop from thinking big.

The year 2020 promises to be better but only for those who can “save” more from their limited resources by cutting down on some of their jumbo expenses.

While it is very okay to save in your traditional savings and/or current accounts, it is worthy to note there are some evolving fintech companies where you can save your money in and getting interest paid on them.

These companies use the monies saved on their platforms to invest in various financial securities which they use in paying as interest on the amounts saved.

You need not have any fear as your monies are insured and in case of loss, you will definitely be paid back.

In this article, we would explore various

platforms where individuals can get competitive interest rate on their savings.

CashBox CashBox is a digital savings platform located in Victoria Island, Lagos Nigeria.

The tech start-up rewards as much as 15 percent annually while allowing users to save

www.businessday.ng

as low of N100.

Users on this plan earn between 7 to 10 percent interest annually and are at liberty to suspend their savings at any time. They are also entitled to make four withdrawals at no cost, on the first day of the last month of every quarter, which is March, June, September and

https://www.facebook.com/businessdayng

December. However, any withdrawal done outside these days, attracts a 5 percent charge on the account.

Piggyvest PiggyVest is the first online “Savings & Investment” app in West Africa. It first launched as “Piggybank.ng” in 2016 as a savings-only platform.

The platform which has become popular among Nigerians, especially the youth, allows savers to earn as much as 10-13 percent on their deposits.

It offers different products like safelock, target savings-even features to allow you to save, invest or transfer dollars.

Piggyvest is also known for its Agricinvesting products that offer returns as high as 20 percent in as little as 6-9 months.

Cowrywise If you want to plan, save and invest then cowrywise is your go-to platform.

From students to working professionals, business founders, and local traders; Cowrywise community represents individuals with interest in healthy personal finance.

This platform allows individuals to save for as long as they like for interest up to 11 percent. Cowrywise also has a dollar feature but its mutual fund investment products are the talk of the town.

@Businessdayng

Monday 10 February 2020

BUSINESS DAY

Market Wrap-up

A

total turnover of 1.478 billion shares worth N20.295 billion in 23,263 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.561 billion shares valued at N26.073 billion that exchanged hands last week in 21,444 deals.

Fifteen equities appreciated in price during the week, lower than seventeen equities in the previous week. Forty-nine equities depreciated in price, higher than forty-four equities in the previous week, while ninety-nine equities remained unchanged, lower than one hundred and two equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week Week Ahead (Monday, 8th April – Friday, 12th In the equities market, the trend witnessed thisApril, week2019) is likely to persist, as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market returns. Nonetheless, we advise investors to take positions in fundamentally justified stocks.

In the money market, inflows from NTB (NGN58.43 billion), OMO (NGN440.90 billion) maturities, FGN bond maturities (NGN606.43 billion) and coupon payments (NGN47.14 billion) will hit the system on the 13th of February. Consequently, we expect the overnight lending rate to contract in the coming week due to the higher liquidity position.

In the Treasury Bills, we expect reduced activity in this market as investors anticipate higher yields from the NTB primary market auction in the coming week, with NGN154.38 billion worth of instruments on offer across all tenors of the market.

In the bonds market, the coming week would withness an uptick in demand as market players look to invest incoming maturities from OMO bills and the FEB-2020 bond.

In the foreign exchange market, with the outbreak of coronavirus exerting downward pressure on crude oil prices, possible weakened oil inflows and higher repatriation of capital have heightened fears regarding the possibility of a currency devaluation.

However, our estimate suggests that the CBN will be able to sustain its naira defense through H1-20, at least. www.businessday.ng

Cadbury’s profit grew 53.94 percent in 2019 to the most in over 5 years. The FMCG player raked in more than a billion naira mark for the first time since the 2016 recession-although growth of profit slowed.

Cadbury grew profit by 53.94 percent to N1.27bn, according to results posted on the Nigerian Stock Exchange (NSE). However, analysis of the results showed the impact of challenging operating environment remains a worrisome reality for consumer goods companies, and the importance of a zero finance cost to supporting bottom-line growth.

https://www.facebook.com/businessdayng

@Businessdayng

Company IN FOCUS

BUSINESS DAY Monday 10 February 2020 www.businessday.ng

Cadbury: sustaining momentum in trying times SEGUN ADAMS

W

ith profit at a 5-year high at least, FMCG Cadbury Nigeria Plc showed resilence last year in sustaining its recovery from a disappointing 2016 result where Nigeria’s recession hit hard on consumers and firms.

A five-quarter long contraction of the economy between 2016 and 2017 pushed Cadbury into a loss but the food and beverage maker recovered in 2017 and has stayed afloat despite the sluggish growth in the broader economy.

While early earnings releases by consumer goods firms have been disappointing so far, Cadbury has bucked the trend as it recorded strong earnings to end 2019 financial year.

The consumer goods company’sbottomline in 2019 crossed the billion naira mark for the first time since the 2016 recession-although growth slowed.

Cadbury grew profit by 53.94 percent to N1.27bn, according to results posted on the Nigerian Stock Exchange (NSE).

However, analysis of the results showed the impact of challenging operating environment for consumer goods companies, and the importance of a zero finance cost to supporting bottom-line growth.

Industry Overview In the third quarter of 2019, the output of the food, beverage and tobacco sub-sector of the manufacturing industry grew faster than national output for the first time since the third quarter of 2018.

The sub-sector GDP, which is proxy for food and beverage makers, expanded by 2.98 per-

cent compared to 2.28 percent broad economy GDP. The performance indicates increasing activities among FMCGs as the economy continues to expand from the 2016 recession.

However, the same narrative of lower consumer spending driven by shrinking GDP per head continues to have real negative impact on the performance of FMCGs in the country.

Constrained by disposable income, consumers look for value in cheaper alternatives to listed food and beverage brands-considered premium.

“Thus, while there is a fastgrowing market for consumer goods firms, the price sensitivity of consumers resulted in an increased preference for more affordable substitute products,” said analysts at Lagos-based United Capitals Ltd in a report published in the last quarter of 2019. “In response to this, some consumer goods players have introduced

smaller product units, “sachetization”, at lower retail prices to better capture the growing value segment.”

Another important theme in the consumer goods industry last year was inflation which in the first half of the year trended lower until the closure of Nigeria’s land borders forced food price up and triggered a spike in general price levels.

For the remainder of the year inflation kept r ising, weaking purchasing power although the closure of the border is expected to support full-year performance of some FMCGs. The non-implementation of the new minimum wage last year was a missing catalyst, but increase credit on the back of CBN’s LDR policy was supportive of consumer sp ending and business growth, analysts say.

The various factors that have shaped 2019 for consumer goods firms alongside company specific dynamics have seen

the likes of Nascon pare profit by 56.75 percent, its worst performance in five years.

Unilever Nigeria Plc posted a loss of in 2019 after a profit of N10bn in 2017.

International Breweries loss worsened significantly as a mix of intense competition in the brewry space, consumers switch to ‘cheap highs’, unfvaourable policy environment among other factors continued to weigh on players performance.

Honeywell on Friday announced it slipped into a loss in the nine months to 31 December 2019.

These results highlights the struggle companies still face in a growth-challenged broader economy.

Forging own path In its 2019 full-year unaudited result, Cadbury shrugged of a harsh operating environment coupled with a cashstrapped consumers to record a 9 percent jump in revenue to N39.32bn from N35.97bn recorded in same period in 2018.

The revenue growth was largely driven by the contribution of diversified product portfolio, as the company mulls the launch of more market penetrating products.

Revenue from refreshment Beverages, which includes the manufacturing and sale of Bournvita and 3-in-1 Hot Chocolate stood at N23.15bn from N21.38bn in same period in 2018. Revenue from confectioneries which involves manufacturing and sale of Tom Tom, Buttermint and Clorets, was N11.48bn from N9.53bn and lastly revenue from Intermediate cocoa products, manufacturing and sale of cocoa powder, cocoa butter,

cocoa liquor and cocoa cake dropped slightly to N4.68bn from N5.05bn.

A trend analysis of revenue segments show that confectionary picked up by most since at least 2016 to contribute 29 percent of total revenue.

On the other hand, sales of intermediate cocoa products slowed by 7 percent and accounted for 12 perecnt of revenue (down from 14%) while main beverage segement accounted for 59 percent of 2019 revenue.

The company’s sales to countries outside of Nigeria mainly in Africa and Europe fell to N4.88bn from N4.93bn as the effect of border closure by the Nigerian government continues to bite harder on the consumer goods company.

Cost of sales for Cadbury grew 11 percent and shrank gross margin by N1 to N21 from every N100 sales.

Gross profit grew 3.27 percent, almost four percent points slower year-on-year.

Operating expenses rose 10.6 percent and other income spiked 331.5 percent.

Cadbury’s EBITDA and operating profit declined by 8.9 and 19.9 percent each.

The growth in finance income and absence of interest payments pushed net interest income out of negative terriories and lifted pre-tax profit.

As a result, Cadbury grew its profit before tax from N1.22bn in 2018 to N1.54bn in 2019. A trend analysis further shows that it grew its Profit Before Tax from a loss of N562.87million in 2016 to 360million in 2017.

While profit after tax turned from a loss of N296.4million in 2016 to a gain of N299million in 2017 which ballooned to N823million in 2018 and hitting the highest record in four years to N1.26bn.

Although this is still way behind N6billion recorded in 2013.

Earnings per share (Basic), the portion of a company’s profit that is allocated to each outstanding share of common stock and an indication of the company’s health improved to 67kobo from 44kobo well behind 2014’s N1.06.

Cadbury Nigeria Plc manufactures and markets sugar confectionery, food drinks, and food products. The Company also processes cocoa and exports cocoa products via its subsidiar y StanmarkCocoa Processing Company Ltd

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