BusinessDay 10 Jul 2019 by BusinessDay

Race to construct Bonga South West FPSO tightens as 3 bidders emerge STEPHEN ONYEKWELU

…Shell may undertake FID by 2020

fter nearly two months extension, contractors have started a renewed race to meet the July 31 deadline to submit their techni-

cal and commercial bids aimed at supplying a floating production, storage, and offloading vessel for Shell’s $10 billion Bonga South West Aparo (BSWA) project.

news you can trust I **WEDNESDAY 10 july 2019 I vol. 16, no 350 I N300

People familiar with matter say if bids are submitted this quarter, clarification talks proceed as planned and costs meet the expectations of all partners in the

deep-water project, Shell Plc. may attempt to take a final investment decision (FID) next year. Three contractors with active interest in supplying the 150,000

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barrels per day FPSO include South Korea’s Samsung Heavy Industries, with a base-case proposal, said to involve using the SHI-MCI yard in Lagos which most recently handled the FPSO

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Insurers look to hedge underwriting losses as claims hit N160bn in 2018 Boards, shareholders fret over non-performance 3 CEOs asked to step down

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ollowing major claims experienced in the 2018 financial year which resulted in huge underwriting losses and poor bottom-lines for most insurance companies, operators are more than ever before cautious of the businesses they admit into their books. Last year saw insurance companies in Nigeria paying claims in excess of N160 billion from total premium income of N400 billion, a 14.3 percent increase over the 2017 claims figure of N140 billion. Operators say the claims came mostly from oil and gas risks, particularly Egina FPSO claims in the neighbourhood of

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Presidential election tribunal: PDP witness alleges party defeated APC in Katsina INIOBONG IWOK

Ronke Kuye, managing director, Shared Agent Network Expansion Facility (SANEF)/ guest speaker, delivering her paper, at the 2019 digital pay expo with the theme “Finclusion: Aligning Expectations with the DFS Business Case” in Lagos, yesterday.

People’s Democratic Party (PDP) witness, Tuesday, alleged that his party won elections in the

2019 presidential polls in Katsina State, with 33,000 votes. The witness, Sallisu Yusuf, who claimed to be the state chairman of the PDP, was

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Wednesday 10 July 2019

BUSINESS DAY

news FG repays 40% cash call arrears but poor fiscal, regulatory terms turn away investors ISAAC ANYAOGU

ven though the Federal Government has repaid $2 billion or 40 percent of the $5.1 billion cash call arrears it negotiated with International Oil Companies (IOCs), an inability to establish fiscal and regulatory reforms has kept investors away. Cash call is the amount the Federal Government is required to pay or remit as its own share of production costs to facilitate the production of crude oil in partnership with some IOCs, namely, Shell, Chevron, NAOC, ExxonMobil, and Total, also called Joint Venture partners. Oil majors are holding back on taking investment decisions to develop Nigerian oil fields because of uncertainty about what fiscal terms to use and the difficult operating environment in Nigeria, analysts say. “Investors are uncertain about what regulatory and fiscal terms to apply since the PIGB was not passed,” said Bank Anthony Okoroafor, chairman, Petroleum Technology Association

of Nigeria (PETAN), an association of leading local producers. President Buhari withheld assent to the Petroleum Industry Governance Bill (PIGB) over concern the regulatory agency it sought to create, the Petroleum Regulatory Commission, would retain 10 percent of generated revenue which could lower the revenue of other tiers of government. The bill was sent back to the 8th National Assembly which completed sitting last month. According to lawmaking rules, the new assembly would begin work afresh on the bill. Lawmakers in the previous assembly could not agree on fiscal terms and even though the Ministry of Petroleum Resources began work on the bill, it remains stuck in the National Assembly. BusinessDay checks at the Ministry of Petroleum Resources indicated that work on the fiscal bill has been suspended and the consultants hired to work on it have left the ministry.

MARKETS

Bank stocks sell-off on CBN’s lending order LOLADE AKINMURELE

ank stocks have been selling off since the Central Bank of Nigeria (CBN) announced plans to force commercial banks to maintain a loan to deposit ratio (LDR) of 60 percent, or effectively lend at least 60 percent of their deposits to customers. Investors, spooked by the potential downside of the July 3 order by the CBN, have largely sold some of the country’s largest banks. The big lenders are down by an average of 2.19 percent since July 3.

…as investors price in worst case scenario Guaranty Trust Bank has been the biggest loser, after sliding by as much as 6.7 percent since July 3. First Bank follows with a 2.4 percent decline. United Bank for Africa (UBA) and Zenith bank are down 1.64 percent and 0.26 percent respectively. Access Bank however has been unfazed by the new regulation. Investors are interpreting the regulation by the CBN as negative for the banks and that has fuelled the sell-off. Investors are well aware that there is a risk that the new regulation could lead to banks underwriting high-risk loans which could lead to fur-

ther asset quality deterioration and destabilisation of the industry, at a time when the regulator has limited scope for further bail-outs. However, Ronak Ghadia, Director of Sub-Saharan African Banks, at EFG Hermes research points out that based on conversation with the management team of some the banks, the LDR will be calculated using gross loans and not net loans as indicated earlier. On this basis, the impact of the regulation will be even less than earlier estimates. Access, FBNH and Zenith’s LDR ratios were already above 60 percent as at the

First Quarter (Q1) of 2019, while GTB and Stanbic’s (Q1) 2019 LDRs were moderately below the threshold. “UBA is the only bank with an LDR significantly below the regulatory threshold. Likewise, GTB and Stanbic would have to grow their loan book by a modest 1.5 percent and 0.5 percent respectively to meet the 60 percent LDR threshold while UBA would have to increase its credit portfolio by 8.8 percent, hefty but manageable,” Ghadia said in a July 9 note to clients.

•Continues online at www.businessday.ng

Insecurity worsens as Shi’ites invade National Assembly, shoot two policemen OWEDE AGBAJILEKE & James Kwen, Abuja

igeria’s numerous security challenges worsened yesterday as angry members of the Islamic Movement of Nigeria (IMN) stormed the National Assembly Complex in Abuja and shot a policeman and a civil defence officer. Multiple eyewitness accounts allege the members of the IMN (Shi’ites) disarmed one of the security officers before shooting the two security operatives. The National Assembly Complex is located on the Three Arms Zone, a stone throw from the Presidential Villa and the Supreme Court in Abuja, Nigeria’s federal capital. The Shi’ites are protesting the continued detention of their leader by the Federal Government. The Nigerian authorities have detained the Shi’ite leader, Ibrahim El-Zakzaky, and his wife since 2015 in defiance of court orders that they be granted bail. Nigeria, Africa’s most populous country with almost 200 million people, is almost evenly split between

a mainly Muslim north and a predominantly Christian south. Muslims in the north are overwhelmingly Sunni, but there are an estimated 3 million Shi’ites. Eyewitnesses say in an attempt to disperse the crowd, the protesters were teargassed by security agents, leading to pandemonium as some visitors and staff were caught in the crossfire. Angered by the resistance, the protesters launched a reprisal attack and reportedly snatched a gun from one of the security agents. One of the policemen, whose identity is yet to be known, was reportedly shot in the head. He was rushed to the National Assembly Clinic and was still unconscious as at the time of filing this report. However, more reinforcements were made and the protesters were repelled.

L-R: Oscar Onyema, chief executive officer, Nigerian Stock Exchange (NSE); Segun Ogunsanya, CEO/ managing director, Airtel Nigeria, and Awuneba Ajumogobia, member, Airtel Africa Board, during the sounding of the closing gong, at the Airtel Africa listing held at the NSE headquarters in Lagos, yesterday.

Airtel jumps 10% in first trading after listing 3.75bn shares …emerges third-most capitalised company on NSE OLUWASEGUN OLAKOYENIKAN

irtel Africa Plc, the second largest telecommunication company in Africa by subscriber base, recorded an impressive start Tuesday on the Nigerian Stock Exchange (NSE) after listing •Continues online at 3.75 billion ordinary shares. www.businessday.ng The shares of the telecoms

firm, which were listed at N363 per share at the Lagos bourse at 2:18 PM Nigerian time after an Initial Public Offering (IPO), gained 10 percent, the daily acceptable increase on the NSE, to close at N399.30 per share. “The gain is not reflecting market sentiment,” said Paul Uzum, a Lagos-based stockbroker.

Uzum maintained that the market would correct the price of the telco’s stock in the coming trading sessions and narrow the chances for price arbitrage. As a result of the price gain, the stock led the pack of gainers at the local bourse with Cadbury and Japaul Oil and Maritime Services rising 4.37 percent and 4.35 per-

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cent to close at N11.95 and 24 kobo, respectively. Airtel Africa has embarked on a cross-border listing of its shares on the NSE and the London Stock Exchange (LSE). The primary listing was performed at the London bourse on Friday, June 28, while the NSE served as the secondary market for the stock. “When Airtel was listed in the market, we saw a lot of trades taking place,” Charles Fakrogha, stockbroker at the NSE and head of investment banking at CityCode Trust Ltd, told BusinessDay. “However, it is too early to judge the market sentiment of the price of Airtel.”

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A failing stock market imperils poverty reduction plan Small Business handbook

Emeka Osuji

ne of the high points of the second-term swearing in ceremony of President Muhammadu Buhari on May 29, 2019, was the absence of any kind of speech to the citizens. Traditionally, leaders make statements on accepting office, even if for the symbolism of it or just to reassure stakeholders of positive leadership in the days ahead. The president had been advised by his handlers to reserve his speech till the newly approved Democracy Day, which was fixed for June 12, 2019. This action heightened expectations and tended to increase the importance of the expected speech, which ordinarily should have nothing to signally recommend it, beyond the many political platitude that politicians offer all over the world; mostly without the intention to give effect to them. When the D-Day came on May 29, the president spoke and promised to move 100 million people out of poverty over the next ten years. To pull 100 million Nigerians out of poverty is not wishful thinking in a country like Nigeria and the president felt it was a good step to take towards his next four years. Unfortunately, he could not appease his critics. They charged that the president had no business making such a promise in a coun-

try where average incomes have been on the decline for the past four years; and the IMF predicts it will not improve over the next six years. As a result, not a few people controverted the speech and found fault with it, especially on the strategy for achieving the objective of lifting 100 million people out of poverty, which though not expected to be stated in the broadcast, was not apparent from it. Nigeria is currently losing steam relative to its peers, being one of the most fragile states by the Funds of Peace report. Out of 178 countries in the world, Nigeria is number 14 while Ghana is number 110, on the list of countries that are dangerously imperilled by the risk of instability. The ranking is such that the higher the number the less fragile a country is. So Nigeria tends to lower numbers towards Yemen and Somalia, who are at numbers one and two, respectively. Nigeria’s underperformance, among its regional peers, in most economic indicators, has given rise to much cynicism among the people. Her records do not give any hope for a quick turnaround, especially as the economic and social policies of government remain the same. Doing the same thing, using the same technology, and expecting a different result, they say, is a sign of mental disorder. While Ghana lags behind Nigeria at number ten on the top economies list in the continent, it is growing faster and recording GDP growth rates averaging over 6 per cent in the recent past. Nigeria is growing at 2 per cent. This is to say nothing about the non-existence of a recognizable population policy, which has resulted in the

influx of dangerous aliens using hordes of cattle to intimidate the natives, and have now taken up arms against the citizens. Unemployment in Nigeria is 23 per cent while in Ghana it is less than three per cent. Youth unemployment in Ghana is 13 per cent. In Nigeria, it is 36 per cent. Nigeria currently leads the world in the number of abjectly poor people living within her borders. Meanwhile, Nigeria has been touted as having the most endowment in Africa in several areas. And to prove that the talk about Nigeria’s potential for greatness is not a joke, records have it that two Nigerians, who happen to be Igbos, are probably the brightest scientists on the planet today. Professor Gabriel Oyibo, who has proved to be smarter than the great Einstein, one of the greatest scientists that lived, by solving the equation Einstein could not solve is a Nigerian. The other one is Prof Emeagwali, the world famous computer genius. What else could a people ask for? Unfortunately, there are signs that things are not going to look up in a hurry. The plan of government to pool a good number of us out of poverty appears to be headed for the rocks, given the rate at which livelihoods are being wiped out on the Nigerian Stock Exchange. The Stock Exchange has been on a retreat, following the conclusion of voting in the country’s general elections. The exchange has actually been losing money for some time, even prior to the elections. However, things appear to be getting worse as Nigerians adjust to the second term mandate of the present administration. Reports have it that the last four days lead-

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There is a long standing history of the role of declining stock markets in economic collapse. The stock market crash of 1929 was a leading factor that precipitated the Great Depression of the 1930s

ing up to the end of June, saw the Exchange shed over N291 billion of people’s savings. Somehow, this rapid loss of the wealth of citizens does not appear to have attracted much attention in the polity. Some comments have been made on the issue but not in any serious manner, reflective of the likely consequences of such a major decline. There is a long standing history of the role of declining stock markets in economic collapse. The stock market crash of 1929 was a leading factor that precipitated the Great Depression of the 1930s. Even recent crashes in Europe and Asia have links to poorly performing exchanges. Nigeria, by its structure, political-social conduct and indeed economic policy direction, gives good reasons why the economy cannot sustain meaningful growth. Wasteful financial conduct and the absence a cohesive national integration and leadership effort, have coalesced to create a sense of haste and urgency to grab from the state and national treasuries. State and national economic policy direction appear to be in disarray, while priorities are deliberately misplaced for selfish reasons. The loss of family wealth at the stock exchange is negatively impacting aggregate demand. Soon, consumer spending is likely to shrink so low as to instigate another recession. When that happens, or even if it does not, the assured effect of a declining stock market will surely put a wedge between the benevolent government and the 100 million immiserated Nigerians hoping to say goodbye to poverty …over the next ten years! Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

A lie is a lie, white or otherwise

ntegrity can be defined simply as moral soundness, character and honesty but to further enrich this definition permit me to add credibility, trustworthiness and consistency. I came across a wonderful definition by John Maxwell which really hit home and it goes like this: “Integrity commits itself to character over personal gain, to people over things, to service over power, to principle over convenience, to the long view over the immediate.” Contrary to popular belief, character isn’t formed during times of crisis. It merely comes to the fore at such times. Your past actions and inactions mould your character over time and come to a head when you find yourself under pressure. The pressure just brings out what’s already in you. For a man who has spent the better part of his life cutting corners, lying and cheating to get ahead, what do you think his default mode will be when faced with a crisis? Of course it would be to lie and scheme his way out of it. “Men

acquire a particular quality by constantly acting a particular way” said the brilliant mind called Aristotle. Integrity needs to speak even in the little things and that’s why my wife and I as a matter of principle have always tried to avoid telling our children “white lies”. We do our best to avoid travelling that all too familiar road of telling our child that if she stops crying we will give her sweets when we get home if we know very well that we don’t have any sweets at home. We won’t promise to buy our son that latest Fifa game that he’s been pining for if he passes his exams if we know that we won’t be able to do so at that time. Yes, they may not like it but the result is that they can go to sleep on anything that we do promise them. They know our ‘Yes’ is ‘Yes’ and our ‘No’ is always ‘No’ because over time we haven’t given them any reason to doubt us. Don’t get me wrong, children deserve to be rewarded for doing good(even if it’s not all the time as sometimes it should

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be reward enough to know you’ve done well) and we do that too where necessary but we just believe it’s dishonest and deceitful to promise something you have no intention of doing even if it’s to a child. In fact, especially to a child. “For we are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of man.” – 2 Corinthians 8:20 I think it’s common know that children copy your actions and not your narrative therefore lecturing them about honesty and the need to be forthright on one hand and then telling them ‘white lies’ over and over again on the other hand only teaches them that that is the way to go. Deceit is obviously the best way to get what you want in life. “Your reputation and Integrity are everything. Follow through on what you say you’re going to do. Your credibility can only be built over time and it is built from the history of your words and actions.” – Maria Razumich-Zec

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Character Matters with Daps

Dapo Akande That’s why the Bible says in 1 John 3:18, “Let us not love with words of speech but with actions and in truth.” Those white lies you tell your child over time gradually erode trust and confidence in you because sooner or later the child will come to realise that she can’t take you at your word. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

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comment What Nigeria must do to benefit from the AFCFTA

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lanrewaju Rufai

fter months of delay, President Muhammadu Buhari on Sunday finally signed the African Continental Free Trade Agreement (AfCFTA). President Buhari’s decision to finally sign the agreement after months of deliberation is laudable, given the opposition mounted by labour unions to the agreement whose goal is to deepen economic integration among African countries. The African Continental Free Trade Agreement (AfCFTA) is a trade agreement between 54 African Union member states which aim is the creation of a single market for goods and services, free movement of capital and business travelers and a singlecurrency union. These initiatives are expected to engender the growth of local businesses, boost intra-African trade, and spur industrialization across the continent. By aiming to economically unite the continent, the African Union hopes to create the world’s largest free trade zone covering more than 1.2 billion people and a combined GDP of $2.5 trillion. The need for deeper economic integration among African countries cannot be overstated. According to research by the African Development Bank, only 15% of international trade

by African countries takes place between African countries, compared to around 47% in America, 61% in Asia and 67% in Europe. However, the AfCFTA is expected to radically change that. In fact, implementation of the agreement is expected to boost intra-African trade by 60% by 2022. Thus, by encouraging African countries to trade with each other, the African Union hopes to trigger industrialization and manufacturing across the continent and, in turn, create vast employment opportunities. Given this background, the decision by the continent’s largest economy and most populous nation to finally sign the AfCFTA is highly welcome. Prior to Nigeria’s signature, there had been apprehension about the effects the refusal of the continent’s largest economy and population to sign the agreement could have on the entire initiative. Nigeria’s reluctance was based on fears that the agreement could hamper the growth of local industries and encourage the proliferation of cheaper products from across the continent. However, following extensive consultations, the Buhari administration has taken the right decision to sign the agreement, particularly considering that Nigeria stands to benefit immensely from the AfCFTA if the nation plays her cards right. The benefits which could be accruable to Nigerian and Nigerian businesses from the AfCFTA are significant. The AfCFTA offers barrierfree continental market access to businesses. Therefore, by becoming a signatory to the treaty, Nigerian manufacturers, traders and consumers will now be exempt from tariffs on good produced and traded within the continent. This will help to facilitate

trade and reduce transaction costs which could boost the volume of the nation’s non-oil exports. Given the federal government’s intention of diversifying the economy from a reliance on crude oil, the AfCFTA provides a veritable opportunity for the achievement of this desire. Furthermore, with the impending onset of tariff-free intra-African trade and the elimination of other trade barriers, local Nigerian manufacturing companies can now find it easier to export their products to other African countries, a relatively untapped market. For instance, small and medium Nigerian enterprises can now freely export their goods and services to other African countries without the constraints which used to plague such adventures. Also, the availability of a Dispute Settlement Mechanism will help to resolve differences arising out of the AfCFTA and could drastically reduce discriminatory business practices against Nigerian businesses. However, to fully capitalize on the opportunities presented by the AfCFTA, Nigeria will need to improve its global competitiveness and general business environment. Currently, many businesses in Nigeria survive and thrive not because of the Nigerian business environment but in spite of it. Businesses in Nigeria are generally plagued by structural inefficiencies which hamper their competitiveness and strain their growth. As such, Nigerian businesses often struggle to compete favourably with peers from other nations. Generally, crippling challenges including dilapidated infrastructure, multiple taxation and lack of access to financing all combine to ensure that Nigeran businesses are not as competitive as they could be.

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If Nigeria is to capitalize on the opportunities presented by the AfCFTA, the Nigerian business environment must change from one which stifles growth to one which enables it

Therefore, if Nigeria is to fully capitalize on the opportunities presented by the AfCFTA, these lingering issues will need to be swiftly addressed. In addition, the ease of doing business in Nigeria needs to improve. Nigerian businesses are often constrained by overbearing regulatory bodies, multiple taxation and generally inefficient government policies. In fact, Nigeria remains far behind several other African countries on several business competitive measures. For instance, while the process of registering a business in Nigeria has historically been a herculean task, it takes just 6 hours to register a business in Rwanda. Given such reality, it will take more than empty rhetoric to position Nigerian businesses to take advantage of the opportunities presented by the AfCFTA. Overall, if Nigeria is to capitalize on the opportunities presented by the AfCFTA, the Nigerian business environment must change from one which stifles growth to one which enables it. Successful, innovative companies must be encouraged to look beyond the local market. To actualize this, the structural deficiencies inherent in the local Nigerian economy must be eliminated, ease of access to financing must be improved, while policy inconsistencies must also be addressed. Most importantly, the nation’s infrastructure gap needs to be urgently bridged, otherwise many Nigerian businesses will stand no chance of survival in fiercely competitive global market. Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Starting a business while you are working a full-time job

here are tons of people everyday who are either looking to transition from paid employment to starting their own businesses or starting businesses while fully employed. Based on this, there are a good number of things to consider and put in place when starting a business and having a full time job. The first question to ask is: “Why are you looking to start your own business?” Is it because? • No time with family and friends? • You loaded with debt? • You are underpaid? • Overworked with no raise? • Bad economy? A lot of us get asked this question all the time by our friends, family and even on social media. But when asked why you haven’t got started the answer usually results to timing or fear of starting a business. Most people are stuck with their “full-time job,” which doesn’t allow them to have the energy or time to start a business. Also, there are other obligations to attend to such as family, friends, social life or other activates. While looking to start businesses though fully employed, consider the following: 1. What Sacrifices Are You Willing to

Make to Get What You Want? Starting a business is by no means an easy task. It takes a lot of time, energy and a lot of patience. When running your own business it’s not like a regular 9-5 job when you punch in and punch out and most times get paid no matter what the outcome may be. At a job, usually all you have to do is “show up,” instead you getting paid based only on performance. With a business, you only make money when you produce results. If you truly want to build a successful business you will have to make it your #1 priority. You have to be willing to give up some things. The bottom line is, you have to be willing to make sacrifices to achieve your goal of success. 2. Don’t Make This a Hobby We all have hobbies like cooking, bodybuilding, football, music, etc.… but honestly we can’t think of anyone we know who actually sets goals with their hobbies to hit targets and deadlines. If you are interested in turning your hobby into a business it is very much possible. If you want your ideas and hobbies to flourish into a thriving business, you need to set realistic goals and hold yourself accountable to them. You should be planning out your next steps with dates and be specific to the smallest detail.

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Yes, you have a busy life with a job, family, and kids. But at the same time don’t get caught up with procrastination or putting thing off until the next day. Set concrete goals that will help you get past putting things off. 3. You have to create a Schedule If you want to manage your business effectively around your life, scheduling is highly important. The majority, don’t have a “system” in place to manage their life. Before you quit your job it is important you have at least 3 months of earnings as backed up security. You don’t want to quit your job if you don’t have a backup or a plan B especially if you have a family or others depending on you for provision. At least 3 months of earnings saved and making sure your business generate enough cash flow to live off of it for a few months first. After you accomplish that, then you can quit your job. In business, your income will always fluctuate month to month, as in an office job a weekly paycheck provides consistency and security. 4. Set realistic daily, weekly and monthly goals Now, we understand the importance of creating a schedule and the reasoning behind why you shouldn’t make your business into a hobby. Now, let’s get started working on

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Nkechi Alade goals for your business. The best solution is to create daily, weekly and monthly goals. Daily goals will be your smallest goals or to-do-list. Every evening before going to bed you should get organized by making a list of goals you intend to complete for the next day. This exercise should take no longer than 5 – 10 minutes of your time. You can use a daily planner like or an online app so you can cross them off after completed. Is Starting Your Own Business Worth It? Absolutely YES, but it’s definitely not easier than a 9-5 job. Being an entrepreneur or owning a business actually helps you to grow and the potential is much greater. If you’re considering starting your own business, do get in touch and let us get started. Alade is a principal Business Consultant at Elvaridah Limited

Wednesday 10 July 2019

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

Making the livestock plan work for Nigeria “

our months after official approval by the National Economic Council on January 17, 2019, there has been official silence on the implementation of the trillion Naira National Livestock Transformation Plan. First introduced in June 2018, NEC sealed the deal on the plan following a memo from Agriculture Minister Audu Ogbeh. The lofty objectives of the National Livestock Transformation Plan require strict and active implementation and information to stakeholders at every stage and milestone.” BusinessDay called attention to the tardiness in the implementation of the National Livestock Transformation Plan in April 2019. It is now back on the front burner following a failed coup that sought to transmute the NLTP into a land grab scheme. We call attention again to the imperative of faithful implementation of policy and timeliness in doing so. We noted further: “The National Livestock Transformation Plan (2018–2027), is ‘a multifaceted intervention that will modernize livestock management in Nigeria and help achieve improved productivity and security.’ According to the Federal Government, ‘The

National Livestock Transformation Plan (NLTP) is a comprehensive one that covers everything from Economic Investment to Humanitarian Interventions to Conflict Resolution and Strengthening of Law and Order. “ To underscore its scale and significance, the National Economic Council approved a N1trilllion Federal Government initial investment. Government states, however, that the NLTP would be a public-private sector project. It believes that the project would attract additional investments of N2trillion and quadruple that figure over the initial lifespan of ten years. Government assured that “the implementation of the Plan will be coordinated at both Federal and State Levels. This multi-level partnership is critical to the success of the Plan.” Many issues require urgent attention as Government finally reverts to implementation of the NLTP. One is the matter of data. Nigeria does not have the statistics of its livestock, both cattle and others in the livestock value chain. A census of national livestock, state by state, should be one of the first tasks of the implementation team. Such a baseline study would provide a basis for planning and fund allocation. The NLTP premise is of publicprivate partnership. The muddying of

the waters with Ruga Settlements has now positioned it as a wholly government interventionist scheme. There is need to go back to the fundaments and have government serve only as accelerator rather than sole funder. Livestock management as part of the agriculture value chain is still a private business venture. It should remain so. Scale matters. The advantages that huge scale offers are the critical selling point and justification for government intervention and direct engagement. It is also one sure way of ensuring that the NLTP delivers visible impact in increased livestock count within a determined time frame. Projects under NLTP should be huge scale and high impact, not small lots. Small lots would do only if they are in such large numbers as to collectively deliver scale. Value exchange should be a driving force and one of the ways to ensure that the NLTP delivers on the goal of ending herder-farmer clashes. Let each region concentrate on its comparative advantage. The South should grow and provide rich fodder for the cattle in the North in exchange for meat from the North. Utilise all assets. Fingers across Nigeria keep pointing in the direction of the vast land resource in the Sambisa Forest. It served in the past

as a reserve for keeping many species of animals. There is now a national need to explore and exploit what that space offers for animal husbandry to the benefit of all Nigerians. Beyond Sambisa, deploy all spaces such as the ranches built in the past by various governments across the regions. Information and communication are essential to delivery of this policy. Because of the many sensitivities it attracts, made even more so by the failed introduction of the Ruga Settlements scheme, Government should prioritise sharing of information about the NLTP with all stakeholders. First is to douse the fire lit by Ruga. Next is to do Communication, Information and Enlightenment on what the NLTP can and cannot do as well as what it would realistically deliver. Fairness is critical. NLTP must implement measures that speak to its goal of justice and reconciliation. Ruga Settlement scheme failed primarily for favouring one side to the conflict. NLTP should identify victims of the clashes or terrorism, attend to them on all sides, while delivering on its mandate of enabling an environment of peace for livestock production. It should deliver increased productivity and higher numbers for Nigerian livestock. Ahead.

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Nigeria: Things are falling apart!

Franklin Ngwu

gainst all warning of making a wrong decision, but filled with optimism of an emerging better Nigeria under PMB Presidency, I returned to my beloved country with four other friends to join hands and contribute our quotas in making Nigeria great. With each of us possessing a PhD, minimum of two Masters’ degrees, many years of work experience and a burning patriotic disposition, our decision to return seemed in order. Alas, as they thought us in Sociology, context (especially leadership) matters a lot and sometimes determines all plans and economic outcomes. As at today, almost three years of doing our best to contribute, of the five of us that came back, only two including yours sincerely are still in Nigeria. The other three all resigned their jobs in May/June and relocated back to the UK and Canada! In unison, they all maintain that there is no hope and future with the way the country is going under PMB. While one informed me that about 50 employees resigned from his former employer in the last 12 months and relocated to Canada, the other confirmed that one of the big banks in

Nigeria lost over 120 of its employees to Canada in the last one year. Things are falling apart and everybody is leaving, they all said and many of the privileged ones making money in Nigeria all have alternative homes outside. The sad situation of our dear country was further affirmed in a burial of an elderly man I attended recently. Another aged relation of the deceased upon dropping sand on the casket of the deceased and bidding him final farewell, passionately beckoned on him to inform renowned Chinua Achebe that his novel should have been published this year as things have really fallen apart in Nigeria! While I have been accused and labeled an incurable Nigerian optimist, I must admit that in a recent sober assessment of our economy and nation, I am inclined to agree that things are really falling apart. There is really no aspect of our life as a nation that is encouragingeconomy, culture, religion, social relations and security. It is also the same in every sector of the economyagriculture, manufacturing, financial, transport, etc. Not only have we consistently performed badly in almost all key economic indicators, we seem to have worsened with our very prominent positions such as the poverty capital of the world and 6th most miserable nation among many others indices. While Academic Staff Union of Universities (ASUU) describes our current education policy as wicked and criminal against the needs of the youth, the Central Bank of Nigeria (CBN) in the absence of a clear economic development plan from the federal government seems

‘

While I have been accused and labeled an incurable Nigerian optimist, I must admit that in a recent sober assessment of our economy and nation, I am inclined to agree that things are really falling apart

to be providing the monetary, fiscal and supply-side policies of the government. In normal circumstances, the CBN is supposed to provide mainly the monetary policy plan of the government. Lamentably, as if we don’t have many socio-cultural and economic challenges to grabble with, our government seems to derive joy or some benefits in creating more crisis. Even in the presence of more convincing, popular and better policy options, the government prefers ones that creates more tension, exclusion, disunity, inequality, unemployment, insecurity and underdevelopment of the country. Clear examples include the recently suspended but not cancelled RUGA plan and the election of the principal officers of the National Assembly, the wasteful and very limitedly impactful trader money programme, the current education plan and most regrettably the unwillingness of PMB government to appreciate, discuss and execute the restructuring of the country even with its overwhelming and convincing benefits. As the main task of the government is to provide or address the key challenges of the populace, the question that is bothering many Nigerians is why our government continues to carry out policies with negative consequences for the country. After blaming the past government for all the failures of the last four years, it is sad to note that the second term is almost starting like or worse than the first term. Interestingly as criticism and alternative views are now coming from individuals and quarters that cannot be described as PDP or other opposition parties, we

implore the government to consider and heed some of the alternative and popular suggestions in the interest of Nigeria. I particularly further implore PMB, Vice President Yemi Osinbajo, and key members of the government to appreciate that they have been elected to serve Nigeria and all Nigerians and not sections of Nigeria or some specific interests. Based on the actions and inactions of the government, there is a growing wide perception that the government is not for all Nigerians but for particular sections and interests. In their quiet moments and conversations with God and their conscience, a key question that they should ask is why such perception is growing with our dear country intensely divided and increasingly falling apart with almost every youth preferring to leave the country. While other countries, including some African nations are clearly on the direction of sustainable economic growth, we are just running round in circles and unserious about our present and future. As power is temporal and short, our current leaders should be concerned about the impacts of their actions and inactions and the kind of legacy they are creating. As PMB, VP Osinbajo and other key members of this present government will be referred to as former in less than four years’ time, I pray and implore them to do their best to be on the good sides of our minds and history. Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng,

Is Nigeria still a regional hegemon?

n the eve of the 12th Extraordinary Summit of the African Union Heads of State that took place on the 7th of July 2019 in Niamey, Niger; the federal government announced that it would sign the Africa Continental Free Trade Agreement (AfCFTA). This created audible sighs of relief around the region. Nigeria’s delay in signing that treaty – and its entry into force without her ratification – had raised questions as to whether Nigeria was abdicating her leadership role on the continent and, more importantly, whether she can still be regarded as a regional hegemon. Long before now, Nigeria was accepted as a regional hegemon – a natural leader and voice for the African continent and West Africa in particular. That position devolved on her via her oil riches, demographics, Afrocentric policy assertiveness and the respect she had garnered as a responsible and proactive stakeholder in global affairs. The residual effect of the latter subsists as evidenced by the recent unanimous election of its incumbent permanent representative as the president of the 74th session of the United Nations General Assembly. Still Nigeria’s influence continues to wane in many important respects. Foreign policy begins at home. Whereas Nigeria is a recognized democracy, her seeming inability to use the democratic process to address its major political, economic and security challenges has adversely affected public confidence in, and international perception of, the stability of the country. Nothing illustrates this deficit of democratic process better than the number and frequency of military operations that have been launched

to address various domestic challenges. Equally, the high degree of lack of bipartisan orientation and discernible weakening of national cohesion portray Nigeria as a country experiencing severe turbulence. Nigeria’s dismal ranking in global indices of terrorism, fragility, corruption, insecurity, as well as the regional index on governance confirm this disturbing picture. This unpromising national context is further reinforced by the recent disclosure that Nigeria intends to close as many as 80 out of its 110 diplomatic missions due to paucity of funds. This was disclosed in early 2019 during the defence of the Foreign Ministry’s budget in the Senate, where it was revealed that the 2019 appropriations would only sustain 30 missions thus leaving 80 missions with zero-budget for FY2019. In actuality, the 2019 capital vote of N4.123billion for the missions reflected N7.209billion or 64 per cent reduction from the 2018 allocation of N11.333billion. Last May, four missions in Sri-Lanka, Serbia, Ukraine and Czech Republic were closed, in what appears to be the first step of Nigeria’s retrenchment of its global diplomatic presence. Pragmatic and cost-saving as it seems, such closures contribute to diminution of influence by reducing contacts, and trade representations since these missions serve a first line of interactions in the promotion of national strategic interests. Additionally, mission closures translate into lesser effectiveness of ancillary foreign policy institutions and agencies, such as Technical Aid Corps (TAC), Foreign Service Academy (FSA), Institute for Peace and Conflict Resolution (IPCR), Nigerian Institute for

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International Affairs (NIIA) and Directorate for Technical Cooperation in Africa (DTCA), which are all under the supervision of the ministry. Nigeria’s active support for the liberation struggles in Southern Africa, in particular the fight against Apartheid, earned her a “frontline status”. In the 1980s and 90s Nigeria was renowned for international peacekeeping. In so doing, she played a critical role in consolidating peace in Africa and beyond. Nigeria led and singularly funded the first OAU peacekeeping operations in Chad in 1980. She played pivotal peacekeeping leadership and contingent roles in Namibia, Angola, Sierra Leone, Liberia and later on Sudan, racking up at its zenith in 2008 over 6000 military, civilian police and experts’ deployment. Whereas Nigeria once was placed among the top 5 troops, police and experts contributing countries to UN Peacekeeping Operations; as of May 2019, she was contributing a paltry 338 military, police and mission experts, in eleven UN missions placing it at the 43rd position. The drastic reduction of Nigeria’s contribution to UN Peacekeeping Operations was in response to its rising domestic security challenges. Nigeria retains her niche as Africa’s largest economy with a GDP of $376.284bn, ahead of South Africa, ($349.299bn), Egypt ($237.037bn) and Algeria ($178.287bn). However, she has failed to capitalize and translate such economic strength either in effective regional leadership or membership of growing blocs or economic networks. By contrast, South Africa is a member of G20, BRICS, and IBSA (India, Brazil and South Africa). It ought to be disconcerting that

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Ejeviome Eloho Otobo & Oseloka H. Obaze* since the inception of the African Union in 2002, Nigeria has not managed to secure an election into any of the Commissioners’ position at the African Union Commission. At a time when the regional and global contexts are marked by much uncertainty and myriad challenges, Nigeria’s leadership role, especially in Africa, is all the more important and greatly needed. However, Nigeria’s regional hegemon position is under severe assault. A combination of factors is driving the onslaught including, her deteriorating fiscal situation, weak economic growth, domestic insecurity, a lack of robust elite consensus on the desired direction for the country, and a regional environment in which several actors – regional and extra regional – are jostling for influence. Nigeria’s status as a regional hegemon risks further regression, absent the restructuring of its governance arrangements, creatively tackling its myriad security challenges, promoting inclusive economic growth, making significant strides in adapting new technologies to enhance its development pathway. The Africa in which Nigeria’s leadership was automatically acknowledged no longer exists. Nigeria will need to work much harder to re-assert its influence and be accepted again as a pre-eminent regional actor. *Otobo is a Non-Resident Senior Expert at the Global Governance Institute, Brussels. Obaze is MD/CEO Selonnes Consult – a policy, governance and management consultancy firm, in Awka.

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How Nigeria can bridge $1.3bn annual dairy import Stories by Josephine Okojie

igeria can only bridge its estimated annual $1.3 billion dairy import when the Federal Government provides the needed infrastructure to drive investment and help reduce cost of production, experts say. Nigeria has failed to grow its dairy industry in recent years despite efforts by the government to boost local production owing to the lack of competitiveness of manufacturers which is stalling the hope of ever having a flourishing dairy sector. The farmers’ situation is further worsened by the low productivity of local cattle breeds and increasing tension and conflicts between herders and farmers. Experts say that the inability of local manufacturers to compete could halt investments in the sector and progress made by the government in boosting local milk production to meet domestic demand. “We are not globally competitive in dairy production. It cost about N300 to produce a litre of milk in Nigeria as against imported powdered milk which is about N150 per litre,” Muhammadu Abubakar, managing director, L &Z Integrated Farms Limited told BusinessDay.

Amina Abubakar Bello (m), First Lady of Niger State; Roland Oletu Oroh (4th r), host, AgNet &director, Nigeria Agribusiness Register and awardees during the Optimizing the Nigerian Shea Industry for Global Relevance conference held recently in Abuja.

“This is coupled with the fact that the Federal Government had lowered the tariff on imported milk last year and with the difficult operating environment, then how can local dairy farmers compete with producing a litre of milk at N300?” Abubakar asked. Livestock productivity in Africa’s most populous country is among the lowest globally. Holstein Friesian, a breed of dairy cattle from Netherlands average milk yield is 35-40 litres per day while Nigeria’s most popular cattle breed Bunaji (white Fulani) has an average milk yield of 1-2 litres per day.

This underscores the need for the government to prioritise breed improvement for farmers to increase their yields per litre. Africa’s most populous country dairy industry comprises milk, cheese, yoghurt, ice-cream, butter and infant formula. A report by Agusto & Co. says that the milk segment remains the largest in the industry, accounting for an estimated 61 percent of the industry’s turnover. “The problem we have in the sector is not just production but the harnessing of the milk and getting it at a right quality to the processing centres is also a problem,” IIan

Bones, manager, Milky-Way Farms said. “There are little dairy infrastructures for farmers in the country and all this factors make it difficult for Nigerian farmers to compete and this as well is hindering the growth of the industry,” Bones said. Nigeria imports over 95 percent of finished and raw milk. The country spends an average of $481 million (N173bn) on milk importation yearly, accounting for six percent of total food import in 2016, according to the country’s livestock policy document.

BATN Foundation, BoA sign MoU on ‘Wealth is Here’ initiative Olufikayo Owoeye

ritish American Tobacco Nigeria Foundation has signed a partnership agreement with the Bank of Agriculture (BoA) on Wealth is Here campaign. The Wealth is Here campaign, an initiative of the BATN Foundation was created to revive hope and patriotism in the Nigerian youth about their country and most importantly inspire entrepreneurial interest in the agricultural sector. Speaking at the event, Ololade Johnson-Agiri, general manager, BATN Foundation said that the Wealth is Here campaign is intended to redeem Nigeria’s glorious past which was built on the pillar of a thriving agriculture. “The Wealth is Here campaign is a reminder of Nigeria’s glorious past in agriculture. It is a call to Nigerians to seek out opportunities in the agricultural sector. In this initiative we have identified some solutions to bridge the gap mitigating their involvement in this sector,” she said. “We see a future where we will all thrive and survive. The Bank of Agriculture believes in this future

too. In our partnership, BATN Foundation will leverage on BOA’s technical strength to fully develop and promote the Wealth is Here initiative. BOA will provide linkage to credit facilities for farmers or groups who emerge successful in our projects,” she added. Als o sp eaking dur ing the signing, Abimbola Okoya, executive director, BATN Foundation said the signing of the MoU highlights the

commitment of both organisations to work together towards the attainment of a joint mandate in promoting sustainable agricultural development in the country. According to Okoya, the foundation has implemented about 200 projects and invested over NI.5billion towards the socio economic development in Nigeria. On his part, Olabode Abikoye , e x e c u t i v e d i r e c t o r, B O A

L-R: Tokunbo Afolabi, Lagos coordinator, Bank of Agriculture (BOA); Olabode Abikoye, executive director, BOA ; Abimbola Okoya, executive director, British American Tobacco Nigeria Foundation (BATNF) and Ololade Johnson-Agiri, general manager, BATNF during the signing of a Memorandum of Understanding (MoU) between BATN Foundation and BOA recently in Lagos. www.businessday.ng

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commended BATN’s corporate social responsibility initiatives and for steeping into the gap to meet the needs of farmers and youth cross the country. “We are honoured to be a part of this initiative. We are humbled that you deemed us fit as a worthy partner to take this step with you. BATN Foundation is a huge partner for any corporate engagement. I am happy that BATN Foundation is identifying what the critical need is and is stepping into the gap to feel that need,” Abikoye said. “What BATN has done is to give hope to our teeming youth and convince them that they can prosper in Nigeria and do not need to go leave the country for greener pastures. We identify with that as a development finance institution that has a rural economy as our primary focus. We appreciate the gesture BAT has made,” he said. He further noted that it will continue to leverage on BoA’s technical expertise. “This will eventually lead to reversal of rural-urban migration currently witnessed,” he said. Abikoye added BoA will continue its various interventions in the agriculture. @Businessdayng

Nigeria’s national dairy output per annum is 700, 000 metric tons while the national demand is put at 1.3 million metric ton annually, leaving a gap of 600,000MT, according to the Federal Ministry of Agriculture. To ensure that Nigeria’s dairy farmers become competitive as their global counter parts, Industry experts called on the government to support the industry by bridging the huge infrastructural gaps to reduce local production costs for farmers. “Infrastructure in the dairy industry currently is zero and we cannot grow the industry without it. This is what the government is supposed to focus on and not cutting down tariffs,” Abubakar who was earlier quoted said. “We can only compete with the imported milk producers when the enabling environment to drive down production cost is provided. All we ask is a playing level field,” he added. An August 2014 report by Agusto & Co. notes that the dairy sector has emerged the second largest segment in the food and beverage industry (behind poultry) in the country, with estimated revenue of N347 billion in 2013, and compounded annual growth rate (CAGR) of 8 percent over the last three years. The sector leads the food, beverage and tobacco sector, say experts.

FG signs MoU to enhance food safety management Josephine Okojie

he Federal Government through the Federal Ministry of Agriculture and Rural Development (FMARD) has signed a memorandum of understanding (MoU) with the National Biosafety Management Agency (NBMA) in order to enhance food safety in the country which is one of the major agenda of the present administration. M o h a m m e d B e l l o U m a r, permanent secretary in the Ministry, signed the MoU on behalf of FMARD recently in Abuja. Umar emphasized the need for the interagency collaboration saying that the Federal Government is determined to diversifying the economy to the non- oil revenue g e n e rat i n g s e c t o r s i n w h i c h agriculture is one of the key sectors which the present administration is focusing in ensuring food safety for it teaming population. “ There is urgent need for improvement of the output of agricultural commodities as this can be achieved with Genetically Modified Organisms (GMOs),” he said.

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CBN invests N36bn in Nigeria’s poultry industry ONYINYE NWACHUKWU, Abuja

he Central Bank of Nigeria (CBN) announced that it has so far invested some N35.9 billion in the countr y’s poultr y industry, in an effort to close huge demand gap which continues to fuel smuggling from neighbouring Benin Republic. CBN governor, Godwin Emefiele, said that the apex bank was prepared to check the smuggling by investing heavily in the poultry subsector and in turn meet the demand and conserve foreign exchange. At a meeting with vicechancellors on the UniversityBased Poultry Revival Programme in Abuja on Monday, Emefiele said the country’s chicken population is about 165 million which p ro d u c e a p p ro x i m a t e l y 650,000MT and 300,00MT of eggs and meat, respectively.

“The demand situation is estimated at over 200m birds, while the demand for eggs and meat are about 790,000MT and 1,500,000MT respectively, thus leaving a huge demand gap which unfortunately, is met by smuggling,” said Emefiele,

who was represented at the event by Joseph Nnanna, CBN deputy governor on economic policy. Emefiele further reeled out figures which estimate that over 1.2 million MT of poultry meat is smuggled into Nigeria from Benin Republic by some

Nigeria loses yam produce to improper fertiliser application, poor storage - Osadebamwen IDRIS UMAR MOMOH, Benin

s e m w o t a I k p o t o k i n Osadebamwen, a professor of Soil Science, in Ambrose Ali University (AAU), Ekpoma - Edo State has said that the country is losing million tons of yams produced annually due to improper application of fertilizer without soil testing and poor storage. Osadebamwen made the remarks, while delivering the University’s 79th inaugural lecture w ith the theme, ‘Maintaining Soil Fertility for Sustainable Crop Production in Nigeria: The Soil and Crop in Partnership’. He opined that the improper application of inorganic fertilizer without soil test has resulted to nitrogen and potassium ratios imbalance He noted that it is not only application of fertilizer that causes the susceptibility to poor storage quality but improper application of type and the ratios of application. According to him, in Nigeria, yam consumers are complaining bitterly that yam produced with the application of inorganic fertilizers do not stay long in storage before they deteriorate when compared to yam produced without the application of inorganic fertilizers.

“This is especially true for yams produced in the middle belt of Nigeria which is the food basket of the nation. This problem may have arisen because of the imbalance of Nitrogen and Potassium ratio both in soil and the crop,” he said. “ The har vested yams become easily susceptible to microbial attack especially fungal and bacterial attack, indicating potassium inadequacy and or imbalance and excess nitrogen,” he added. The soil science expert, who said that chemical fer tilizers alone cannot sustain crop needs on poorly buffered kaolinitic soils, noted that integrated application of organic and inorganic fertilizers are key to sustainable soil fertility management. He said an integrated soil fertility management can be achieved through the use of grain legumes, which enhance soil fertility through biological nitrogen fixation and application of chemical fertilizers. “Nitrogen fixing legumes are the basis for sustainable farming systems that incorporate integrated nutrient management “S o i l f e r t i l i t y ca n b e further improved by incorporating cover crops that add organic matter to the soil. This leads to improve www.businessday.ng

soil structure and promotes a healthy and fertile soil”, he added. H e h o w e v e r, recommended the establishment of organic and organo-mineral fertilizer manufacturing companies in all the states of the federation. He also called for the establishment of soil testing laboratories in all the states of the federation. He said the soil testing laboratories would provide services for the assessment of the quality of soils and recommend site and crop specific fertilizers as well as eliminate indiscriminate and blanket application of fertilizers and raise crop productive. Osadebamwen, also called for the provision of detailed soil map in the country with emphasis on potential agricultural productive areas. He said the detailed soil map will allow for sustainable intensification of agricultural production and settlement of food security. He also called for the provision of fertilizer to farmers at highly subsidized rates as well as the training and employment of more extension workers to assist the farmers particularly the illiterate ones in the use of farms inputs such as fertilizers.

unscrupulous Nigerians. “This is really unfortunate, and we are poised to stop it,” he assured. The governor also, raised the concerns that access to low cheap, long-term funding was still a major to the country’s poultry industry, and must

be resolved. According to him, “The Central Bank of Nigeria, has, through interventions, such as the Commercial Agriculture Credit Scheme, Real Sector Support Facility, etc been able to address the problem appreciably. “For example, the sum of N35.9 billion has been released to 166 projects under Commercial Agriculture Credit Scheme, N507 million to 433 farmers and N238m for 112 projects under AgriBusiness Small and Medium E nt e r p r i s e s Inv e s t m e nt Scheme.” Emefiele announced that the CBN also recently financed the pioneer e g g -p ow d e r p ro d u c t i o n company in Nigeria to the tune of N2 billion under the Differentiated Cash Reserve Requirement-Real Sector Support Facility (DCRR-RSSF) window. He noted that the opportunities for the expansion of the poultry

industry was enormous and should be utilized to the advantage of the nation’s economy. But another major challenge is that “Per capita consumption of chicken is still very low at 2.5kg in Nigeria, when compared to Brazil and South Africa at 30kg and 40 kg respectively, while per capita consumption of eggs in Nigeria is 60 eggs per annum compared to 250 to 300 eggs per annum in most advanced countries.” “The school feeding programme of the present administration also remains a huge potential yet to be fully tapped,” Emefiele said. Sharing his optimism in a remark, Ezekiel Ibrahim, President of the Poultr y Association of Nigeria, said the CBN has been pragmatic in dealing with some of the key economic issues bedeviling the country, and that the interventions would help raise the much needed productivity in the sub-sector.

‘We are committed to attaining food sufficiency in Nigeria’ REMI FEYISIPO, Ibadan

eronica Obatolu, executive director of the Institute of Agricultural R e s e a rc h a n d T ra i n i n g (IAR&T), Ibadan, has said that the institute would continue to strive to secure safe and adequate food for the growing Nigerian population. While reiterating the institute’s commitment in achieving food sufficiency in the country, she said it would also provide the necessary technology for environmental sustainability. Obatolu, a professor gave the assurance while speaking at a seminar organized for staff of the institute, tagged

‘A Paradigm Shift in IAR&T’s Agriculture for Food and Nutrition Security.’ According to her, our focus should be on the efficiency and effectiveness of technology and also to have innovative thinking to address institutional barriers to technology change. Speaking at the seminar on the new research focus held at the institute premises affirmed that millions of Nigerians are dying annually due to what she referred to as hidden hunger, lack of micro elements in their daily diets. She insisted that every Nigerian has the right to adequate food, both in quality and in quantity, to satisfy their daily needs in terms of nutrients requirement.

She however, called on the Federal Government to do everything within its means to tackle hunger in the country through sustainable agricultural policies and programmes. “ He a l t h c o m e s f ro m the farm and not from the pharmacy. Agriculture has its important role in fighting malnutrition; our soil and the fertilizer strategy must enhance human nutrition and food security,” she said. Also speaking at the event, Funso Sonaiya of the faculty of agriculture, Obafemi Awolowo University (OAU), Ile-Ife, urged researchers in agricultural research institutes to come together to find solutions to the high rate of hunger in the country.

Kwara to harness agric potential to alleviate poverty SIKIRAT SHEHU, Ilorin

h e Kw a r a S t a t e government has reiterated its determination to harness the agricultural potential in the state to tackle poverty among its people. Kayode Alabi , deputy g o v e r n o r, Kw a r a S t a t e made this known recently in Ilorin while receiving members of friends of AbdulRahman Abdulrazaq Forum during a courtesy visit to his office. Alabi said the state government would utilise the abundant human and natural resources abound in its quest

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to empower the people. He further explained that Kwara is blessed with vast land that is good for agriculture, calling on the people to embrace farming. “We will face agriculture, if Kebbi state could go into partnership with Lagos to engage in rice production, there is nothing stopping us here to explore our potentials and advantages,” he said. Alabi called on the people to maintain peace as such would give the state sustainable meaningful development. The deputy governor also urged the people to shun divisive tendency such as @Businessdayng

religion to deter the progress and growth of the state. He equally charged members of the forum to always pray for the success of the present administration and offer useful advice as nobody is an island of knowledge. Earlier, Taiwo AbdulMalik, director general of the forum, described the success and the coming into power of the present administration as destined. AbdulMalik who later presented a blueprint on how to develop the state, informed that the forum had over 120 associations and over 74,000 members under its umbrella.

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Market

Delayed cabinet formation hurts Nigerian stocks amid dampened mid-year earnings expectation ISRAEL ODUBOLA

he failure of Presi d e n t Mu h a m madu Buhari to appoint cabinet members six weeks after being sworn in for a final-four year term is weighing on the country’s stock market, and has made investors develop some form of scepticism towards the Lagos bourse. The delay in forming executive council members may further hurt equity pricing in the short-term as investors are pricing in economic uncertainties and lack of a clear-cut in policy direction in their stock valuation. Ideally, value investors take position in cheap stocks with strong fundamentals ahead each earning season, but reverse is the case for this half-year period, as the equities market closed in red territory in five trading days out of six (to Monday July, 8). Some corporates have announced their closed period to enable them consider their financial scorecards for the first-six month of the year, which would have prompted value investors to find their way back into the market, but

they seem showing apathy till they understand the policy direction of the Buhari-led administration Analysts at Lagos-based investment house, United Capital Plc in their note to clients, maintained that investors’ sentiments would be divided between those taking positions ahead of mid-year earning period and those awaiting clarity on the polity environment “We expect sentiments to be caught between bargain hunters that are taking position ahead of the sec-

ond quarter earnings season while seeking fundamentally sound stocks trading at cheap valuations, and market pessimist awaiting clarity on the polity environment” Stocks at Customs street ended their five-day losing streak to gain a marginal 0.07 percent after Monday’s trading, but has lost N141 billion so far in second half of the year. Three out of five sectors closed in green, with insurance stocks leading with pack with 0.96 percent gain, thanks to Wapic’s activeness

on the bourse as 84.9 million units of the insurer’s stock worth N34 million exchanged investors’ hands. According to analysts, the

enlistment of Airtel Africa, Nigeria’s third-largest telco by market share, will boost activities on the domestic bourse in near-term, however, the absence of positive trigger will continue to hurt the market. “We expect the market to maintain its bearish trend as investors stick to a risk-off approach towards investing in the domestic equities market” said analysts at Lagos-based investment firm, Afrinvest Securities. The Nigerian equities market has failed to keep up with emerging markets peers, and has shed seven percent since the start of the year, making it one of the worst performers in the space, even as emerging market stocks gained 10 percent year long. Sworn in Wednesday May

29 2019, Nigeria’s 77-year-old leader, Buhari, faces a long list of challenges including fragile economic growth, low economic competitiveness, hostile business environment, high unemployment and insecurity among others. It took the former military leader almost six months to appoint cabinet members after the 2015 general elections. A delay opposition party say it contributed to the slow response to the global oil price crash that pushed Nigerian to a recession in 2016. But some investors wish Buhari had borrowed a leaf from his Senegal’s and South Africa’s counterparts – Sackey Mall and Cyril Ramaphosa, whom immediately hit the ground running by appointing ministers within days of being sworn in to office.

Markets

Nigeria’s market capitalisation to GDP ratio declines 2pcts in 2018 SEGUN ADAMS

igeria’s stock market saw a U-turn on Buffer Indicator as market capitalisation to Gross Domestic Product fell in 2018, after the ratio seemed to be improving from a steady decline in the 3 years to 2017. The Market Capitalisation to Gross Domestic Product is a measure of the total value of all publicly traded stock in a country divided by its Gross Domestic Product (GDP). The metric was popularised by Warren Buffet, chairman and CEO of Berkshire Hathaway, and is a broad way of assessing whether a Stock market is overvalued or undervalued, compared to a historical average. It is a form of Price/ Sales valuation multiple for

an entire country. G enerally speaking, where the valuation ratio ranges between 50 and 75 percent, the market can be said to be modestly undervalued, and fairly valued if the ratio falls between 75 and 90 percent. A market is also said to be modestly overvalued if it falls within the range of 90 and 115 percent. The ratio for Nigeria fell to 7.93 percent in 2008, from 9.9 percent in the year before. Nigeria’s stock market shed some 18 percent in 2018 as investors turned to less risky developed market assets following a tight financial condition across most of Europe and America and domestic political risk intensified. On the other hand, the domestic economy saw an uptick of 1.9 percent last year.

Since the ratio rose to 15.65 percent in 2013, the stock market has represented a decreasing percentage of Nigeria’s economy until a 2.54 percent point increase in 2017 held signs of a rebound. In 2017, the domestic equity market gained about 42 percent. On average Nigeria has a market capitalisation to GDP ratio of 11 percent in the last decade, while emerging market peers like China has 56.4 percent, Brazil 47.5 percent, India 74.15 percent and Egypt 26.26 percent. While the Market Capitalisation to Gross Domestic Product provides a good gauge for a stock market valuation, analysts say among other things, shortcomings include mismatching flow and stock variables and ignoring the trends in companies’ revenue and profit.

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

Wednesday 10 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Banking

UBA rates CWG high for outstanding work efficiency MODESTUS ANAESORONYE

he United Bank for Africa (UBA) has classified CWG Plc as an outstanding vendor in its Vendor’s Performance Evaluation exercise for the year 2018 covering July to December. In a letter titled ‘UBA Ve n d o r P e r f o r m a n c e Evaluation Review-Letter of Commendation’ and signed by both; Opeoluwa Okosun, assurance manager and Eugene Inotu, head, Assurances, UBA noted that CWG plc performed outstandingly in the process review, with particular emphasis on some key performance indicators such as Responsiveness/ Delivery Timeline, Quality of Products/Services, Price Reasonableness and Compliance with UBA Plc Policy, the prestigious bank rated CWG ‘outstanding’. “Kindly be informed

that your Company’s performance during the period under review was rated Outstanding. We use this medium to thank you for the continued service to UBA Plc and look forward to a continuous mutually beneficial relationship,” part of the letter reads. The bank added that it instituted the bi-annual vendors ‘evaluation exercise, which allows to evaluates its vendors performance level as it relates to the services provided and customer satisfaction.It added that it has repeatedly communicated its expectations and commitment for an efficient and objective vendor management system/process in various forums and occasions. CWG Plc’s Service Delivery Team and the entire Management are indeed elated at this Commendation as it shows that the expertise and commit-

ments of the organisation to excellence were yielding the desired results. This commendation was particularly on the expertise shown by CWG on its ATM Support process for UBA. Adewale Adeyipo, acting group CEO/MD - CWG; immediately communicated his appreciation to the entire team for all their efforts, wrapping up his note to them in the words of Colin Powel, saying excellence is not an exception, it is a prevailing attitude. That is the Attitude of the CWG of today, as we continually deploy technology solutions that enable growth for our clients and the economies, we operate in. Excellence is therefore the prevailing Attitude at CWG. CWG Plc is the largest Systems Integration Company, operating out of four African Countries; Nigeria, Ghana, Uganda and Cameroun.

L-R: David Suh, MD, Samsung Electronics West Africa; Damilola Sanya, business development manager, Technology Distributions; Ike Eyisi, executive director, operations, SIMS Nigeria; Dakore Egbuson Akande, award winning actress, and Remi Ogunsan, HOD, Consumer Electronics, at the Launch of the New Samsung 8K QLED TV in Lagos

L-R: Amarachi Iheanacho, president, University of Jos Chapter of Junior Chambers International (JCI); Grey Gozem Ejikeme, deputy vice chancellor administration, University of Jos; Adetola Juyitan, national president, JCI Nigeria, and Elizabeth Bassey, Collegiate chairman, JCI Nigeria, at the courtesy visit by JCI to the management of University of Jos

Education

Verraki advocates new outlook for Nigeria’s education sector GBEMI FAMINU

oremost business solution consulting firm, Verraki has reiterated the need for a new outlook for Nigeria’s education system, in a bid to foster a clearer path to sustainable development in the country. Toluwaleke Adenmosun, head of the service practice for Verraki Nigeria, stated that the education sector is critical in enabling transformation in the country, adding that both formal education and skill acquisition are necessary for achieving growth and enabling development. Speaking on sustainable financing for innovative teaching and learning at the 5th edition of the NEDIS education innovation summit held recently in Lagos, Adenmosun stated that

“addressing the issue of financing education requires a clear strategy that explains what the focus is on, and a clear understanding of what type of education is to be provided.” She disclosed that in its aim to develop learning activities, the business solutions firm is committed to partnering with the government to create an Africa that represents its potential and also belongs to Africans, adding that “it is time for Africans to make Africa an enabling and developed continent.” She said. Speaking further she said “we are investing a lot more in post 12 stages of education which should not deter the foundation of learning, rather emphasis should be placed on the kindergarten to 12 years stage because it serves as the

foundation of learning and it provides room for accountability.” She reiterated that technological innovation should be embraced and initiated into the education system. “The opportunities available in technological innovation and connectivity should be embraced in other to foster growth and development in all areas” “over the years we have worked with and supported organizations l i ke Ju n i o r Ac h i e vement Nigeria (JAN), Fate Foundation, etc. we are also actively involved in skill acquisition and development activities as our plan encompasses the learning system as a whole. We also have programs that provide a platform to achieve affordable education through improved ease of payment,” Adenmosun added.

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L-R: Oby Ezekwesili, senior economic adviser, Africa Economic Development Policy Initiative; Praise Fowowe, premier creator and trainer, Family Systems Engineering; Audrey Joe-Ezigbo, executive director, Falcon Corporation Limited, and Esther Akinnukawe, chief human resources officer, MTN Nigeria, at the 2019 Power Summit of the Queen of the Rosary College Onitsha, Alumni Association, Lagos Chapter, in Lagos where Akinnukawe spoke about Building a Strong Family Base Towards National Development.

L-R: Lanre Fadayomi, chief operating officer, Nuture Technology; Uchenna Okezie, MD, Nuture Technology; Omololu Somuyiwa, brand ambassador, Moneybag; Amechukwu Okezie, chairman, Nuture Technology, at the MONEYBAG.NG- Media launch in Lagos

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Wednesday 10 July 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

OIL& GAS

Enyo Retail & Supply expands fleet with acquisition of new vehicles FRANK UZUEGBUNAM

nyo Retail and Supply has announced the acquisition of brand new trucks to improve logistics and facilitate safe distribution of its products across Nigeria. The new range of trucks include global brands such as Mercedes Benz, FAW and Iveco Genlyon; all equipped with 45,000 litres - built to modern safety and technology standards. In addition to strengthening distribution efficiency, the acquisition of these trucks aims to improve the state of trucks running local and inter-district delivery. Commenting on the acquisition, the Chief Executive Officer of Enyo Retail and Supply, Mr. Abayomi Awobokun, expressed the

company’s interest in the standardization of the state of trucks used to deliver fuel products not only across states. “The acquisition of worldclass product delivery trucks is a strategic investment for us at Enyo Retail and Supply; as we aim to set a standard for safe distribution of products. We are all aware of the dangers posed by bad trucks for our customers and the society; that is why we have invested in quality distribution trucks to improve customer confidence in our processes and procedures; to create a safe environment free of disaster trucks,” Awobokun said. Abayomi noted that the company was able to identify that efficient logistics is the

key to customers’ service delivery, hence the need for new delivery vehicles. “We are committed to achieving our goal of revolutionizing the downstream oil and gas industry; and in pursuing this, we are offering exceptional service delivery and operational efficiency - that is safe and technology driven.” Since inception, ENYO Retail & Supply has continued to successfully provide fuels retailing with over 60 operational world-class stations at strategic locations across 17 states in Nigeria, serving over 60,000 customers daily whilst being the premium distributor of Castrol lubricant and its cooking gas range, Superior Liquefied Gas (SL - Gas).

L-R: Cosmas M. Maduka, founder/CEO, BMW Group, Coscharis Motors Limited; Nnenna Obiejesi, CEO, Nestoil Group, Nigeria; Kunle Elebute, senior partner, KPMG Nigeria/chairman, KPMG Africa; Yinka Sanni, CEO, Stanbic IBTC Bank; Tokunbo Fagbemi, MD/CEO, Nigerian Aviation Handling Company Limited (NAHCO), and Dada Thomas, MD, Frontier Oil Limited presenting the 2019 KPMG CEO Outlook Report, at the KPMG CEO Roundtable in Lagos, recently

OIL& GAS

Oil, Gas industry tops agenda at Valuechain award ceremony MIKE OCHONMA

ll is now set for the 2nd Valuechain Magazine Public Lecture and Awards coming up today at Fraser suites Abuja. The event which is organized to commemorate the Magazine’s first year anniversary will have “The Nigerian Oil and Gas Industry in the Last Four Years: Achievements, Gaps and Prospects.” as the theme. According to the organisers, the choice of the theme was informed by the need for the stakeholders in the oil and gas industry to appraise the progress recorded by President Muhammadu Buhari administration in its first term of office. Musa Bashir Usman, publisher/editor-in-chief of Valuechain Magazine, ‘’We believe that the aforementioned theme is an apt topic at this time for a number of reasons. Firstly, there is a need

to address the issue in the delay in the passage of the Petroleum Industry Bill (PIB), which would serve as a legal framework for the effective management and regulation of the petroleum Industry. Secondly, with a new influx of private sector investments into local refining such as Dangote refinery, reducing over-dependence on imported refined petroleum products will become a reality’’. Thirdly, through the Marginal Fields Allocation and Divestment of Exploration and Production (E&P) Assets, a major transition in oil fields discovery is apparent, from purely international oil companies to increasingly indigenous participation. Finally, with viable economic prospects such as the exploration campaign in the inland basins to discover new hydrocarbon reserves, and a proposed NigeriaMorocco gas pipeline to supply

natural gas to the European market, it is vital to address the scope of all that has been attained over the last four years in the Industry, and advise on the necessary steps to procure a secured economic future for Nigeria. The event BusinessDay gathered provides the opportunity to appreciate the present government achievements in the industry, beam searchlight on the gaps that still exist, which is detrimental to old and new investments, and highlight the abundant opportunities that are waiting to be harnessed in the country’s oil and gas industry. Apart from the public lecture, the event will also feature the launch of the Valuechain Sickle Cell Foundation and presentation of Awards to some distinguished Nigerians whose contributions to the oil & gas industry is immeasurable.

Company release

E-Terra Technology reaffirms commitment to reducing e-waste in Nigeria

s our lives and busin e s s e s c o nt i nu a l l y transform with technology, so also does the associated challenges occasioned by the improper disposal of these devices at their end of life or obsolete period. Often times, these items, electronic waste (e-waste) are not properly handled by trained personnel with efficient machinery, capable of containing its numerous components, which results in severe environmental hazards such as air pollution, ground water contamination, food pollution and ecological degradations. Ifeanyi Ochonogor, the CEO, E-Terra Technologies Ltd, and President, E-waste Relief Foundation (ERF) in a recent presentation at the inaugural stakeholders’ meeting of players in the e-waste

industry themed “Circular Economy Approaches to the Electronic Sector’ held in Lagos, reiterated Pax Romana’s call to end the e-waste crisis in Africa by maintaining the best example of a fledgling industry in recycling and data destruction systems. Ochonogor also enumerated E-Terra’s accomplishments, amongst which are three ISO Certifications 9001, 14001, 18001, numerous domestic and international awards where he stressed the urgent need for concerted enlightenment and education on the dangers of ewaste and the need for proper handling and disposal of same through the combined efforts of government and industry stakeholders. As a growing business in a Greenfield area, E-Terra continue to strive to chart its path and break barriers in spite of www.businessday.ng

the many hurdles it face, thus E-Terra and others in the ewaste category will need all the support and collaborations to enable it achieve the desired outcome. However, the effort of E-Terra and the e-waste Relief Foundation was recently heralded in the May 2019 edition of the Economist- New Horizons. Furthermore, Ochonogor expressed concerns on generation of hazardous e-waste, “The high rate of generation of non-recyclable fractions from e-waste can be stemmed if manufacturers replace hazardous substances upstream in the design and manufacture stages. Many global electronics manufacturers have developed their own restricted or reportable substances lists, with hazardous substances either already phased out or in the process.

L-R: Louis-Pius Dushie, head of finance and strategy, Inlaks; Olufemi Muraino, executive director, Inlaks, and Joe Anokye, CEO, National Communications Authority, at the Ghana Information Technology and Telecoms Awards (GITTA)

L:R: Ademola Ojolowo, business director, CMC Connect BCW; Yomi Badejo-Okusanya, group managing director, CMC Connect Limited; Raheem Olabode, executive director, CMC Connect Limited, and Tola Odusote, deputy director, Re-Ignite Public Affairs, at the unveiling of the new corporate identity of CMC Connect Burson, Cohn and Wolfe (BCW) formally CMC Connect Burson Marsteller (BM) recently.

L-R: Udeme Ufot, group managing director, SO&U, and Chris Ogunlowo, creative director SO&U, at the presentation his Creative Personality of the Year Award by Marketing Edge to Ufot.

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Wednesday 10 July 2019

BUSINESS DAY

cityfile More victims of Ijegun pipeline explosion die JOSHUA BASSEY

2019 Batch B’ Stream 1 Corps members, during the closing ceremony of their Orientation at the NYSC Permanent Orientation Camp, Kubwa in Abuja.

Traffic offences: CDHR tackles LASG over ‘barbaric’ penalties, seeks review

ommittee for the Defence of Human Rights (CDHR) has urged the Lagos State House of Assembly and Governor Babajide Sanwo-Olu to review the traffic offences and penalties in the state. Alex Omotehinse, chairman of CDHR, Lagos State chapter, who made the call, said that the governor should be cautioned on the new schedule of executive order on traffic offences leading to penalties such as impounding of vehicles and imprisonment of offenders among others. “If the governor really means to address traffic

congestion in Lagos, we believe what he ought to have done first is to, as a matter of urgency, start the repair of roads in the state, rather than creating room for the exploitation of Lagos road users. “The governor should also know that laws are made for man and not man for law. We, therefore, state without any reservation that this so-called executive order is purely anti-people, is uncalled for, is barbaric, is unacceptable. “We call on the speaker and all members of the Lagos House of Assembly to quickly checkmate the governor and call him to order. The CDHR will resist

any form of anti-people agenda in the state, and if the assembly fails to do the needful within 21 days (starting from Sunday, July 7,) the CDHR will mobilise the good citizens of Lagos State in a million man march to protest this antipeople so-called executive order,” Omotehinse said. The rights activist, who noted that the new penalties were far higher than what the traffic law prescribed, urged the Lagos assembly to checkmate the executive arm. “By this singular act of the Sanwo-Olu-led government, there will be increase in number of prison inmates. The Lagos State prison that has already

been congested based on the criminalisation of minor offences such as street trading, crossing of expressways etc, will be more congested. “This has made several citizens being imprisoned for their inability to pay fines of just N10,000 some of whom should have been converted to community service. The committee contended that the executive order was an invitation to anarchy in Lagos, “because few days after the announcement, it was widely reported that 13 drivers of 7up company were charged to court for assaulting some LASTMA officials,” he said.

en more victims of July 4 pipeline explosion in Ijegun area of Lagos have died while still on admission in hospitals. The state government, which confirmed the death on Monday, attributed it to severe and high degree burns suffered from the inferno. Titilayo Goncalves, the permanent secretary in the ministry health, however, said over N10 million has been expended by the government on medical treatment of the victims as at Monday, August 8. According to Goncalves, three of the victims died at the Lagos State University Teaching Hospital (LASUTH), Ikeja while seven died at Gbagada General Hospital. Shefurtherdisclosedthatout of the 22 victims rescued by the Lagos State Ambulance Service (LASAMBUS), nine were taken to LASUTH, 12 to Trauma and Burns Unit of Gbagada General Hospital and one to Alimosho General Hospital. “Unfortunately, due to the high degree of burns suffered by these victims which is almost at 100 percent, we lost 10 of them. “But we are doing everything to ensure that addi-

Accident claims 19 in Kano

ineteen persons reportedly lost their lives while seven others sustained injuries when four vehicles collided at Dinyar Madiga village few Kilometres from Takai town in Kano State. Zubairu Mato, sector commander of the Federal Road Safety Corps (FRSC), who confirmed this on Monday, said that the accident occurred at about 06:01pm on Sunday. He said that collision involved four vehicles; a bus belonging to Kano line mass transit, a Sharon, Golf and Honda Civic coming from opposite directions.

RUGA: Suspension good but not enough- Cleric MIKE ABANG, Calabar

hairman, Christian Council of Nigeria, SouthSouth Zone, Tunde Adeleye says the suspension of the controversial RUGA settlement project still leaves to be desired, noting that what Nigerians want is outright cancellation of the project.

Adeleye, who is also the archbishop of Ecclesiastical Province of Niger-Delta (Anglican Communion), made the assertion on Monday while briefing newsmen on the 2019 Synod at the Cathedral Church of The Holy Trinity, Anglican Communion, Calabar, the Cross River State capital. “The suspension of conwww.businessday.ng

troversial RUGA settlement project is a welcome development. But it is still dangerous and scary because the Arewa Youths have given the Federal Government an ultimatum to restore it. The president of Ohanaze has just ordered the Igbo’s to be prepared to defend themselves .The Yoruba leaders have in-

sisted that such a thing will never be allowed to be executed in the Southwest. These show that peace has not yet come. “We are now sure of the details of National Livestock Transformation Plan (NLTP) regarding the movement of cows in the country .Nigeria is a multi-religious country, and no religion should be

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tional lives are not lost and we will continue to do all in our might to provide intensive care for the remaining and from reports received they are responding to treatment. She said treatment of victims with high percentage of burns requires intensive care andmanagementwhichshould followsometreatmentprotocol. “This is why I am appealing to families of the victims to be calm and cooperate with our health workers as they care for their loved ones. The victims are being provided with adequate and quality care in our facilities free of charge in line with Governor Babajide Sanwo-Olu’s directive. “Also, they are being closely monitored and cared for by our specialists to ensure their full recovery and rehabilitation”, Goncalves said. Also, the Chief Medical Director, LASUTH, Adetokunbo Fabamwo, said that the hospital and its annex, the Trauma and Burns Unit, Gbagada General Hospital, were providing the necessary care and support needed to aid the victims’ quick recovery. The July 4 pipeline explosion at Ijegun had claimed two lives on the spot, destroyed several houses and property, and left 13 casualties.

a state religion. Christians will need to wake up and fight against this through prayers.” The archbishop lamented that Nigeria is now divided along religious lines even as there is attempt to promote one tribe above others. “This explains why herdsmen are able to freely kill and maim people without inhibition and the Fed@Businessdayng

“The victims who lost their lives included 14 male adults, three female adults, two male children while seven were injured”, he said. Mato attributed the accident to speed limit violation and bad state of the road. According to him, the accident occurred when the drivers were dodging potholes which led to loss of control. He said the victims were evacuated to Takai General Hospital where the doctor on duty confirmed 19 dead while the remaining seven victims were currently receiving treatment. NAN eral Government seems helpless in the matter.” Adeleye restated the position expressed by other Nigerians that the RUGA project is not in tandem with the constitution because, according to it, land is kept in trust with the state government. “So it totally negates our laws and it is dangerous because there is no way you can juxtapose it with our culture and tradition as a people,” he said.

Wednesday 10 July 2019

BUSINESS DAY

BANKING

In Association with

OMO maturity boosts banking system liquidity with N105.2bn Stories by HOPE MOSES-ASHIKE

n inflow from Open Market Operation (OMO) maturities worth N105.2 billion is expected to bolster banking system liquidity this week. This will be in addition to the current system liquidity of about N840.0 billion as at Friday last week, making a total of N945.2 billion. “We expect to see a sustenance in the bullish run stemming from a strong system liquidity as well as sustained OMO auction by the Central Bank of Nigeria (CBN)”, analysts at Afrinvest Securities limited said. Excess liquidity in the system, arising, mainly, from matured CBN bills and fiscal injections were consistently mopped-up through OMO auctions. Consequently, major money market rates trended in tandem with the level of liquidity in the system. The CBN’s economic report for the month of May 2019 revealed that the total value of money market assets outstanding in May 2019 was N12.49 billion, showing an increase of 0.9 per cent, compared with 4.1 per cent increase

in the preceding month. The development was attributed, largely, to the 16.0 per cent, 2.9 per cent and 1.2 per cent increase in Bankers Acceptances, Commercial Paper and FGN Bonds outstanding, respectively. Money market rates were generally stable and moved in tandem with the level of liquidity

Sterling Bank emerged best place to work in Africa

terling Bank Plc has been adjudged as the third best place to work in Nigeria and on the African continent at the 2019 edition of the annual Great Place To Work (GPTW) awards which held in Lagos recently. The bank also clinched the Best in Leadership (Large corporate) and Best Workplace for millennial generation. This indeed is a significant improvement as the bank won the workplace with Best Quality of Life at the 2018 edition of the awards. Temi Dalley, chief human resources officer of Sterling Bank while receiving the award, described a “great place to work as an enabling environment, where employees trust the people they work with, derive a sense of meaning from their work and take pride in the overall success of their organization.” According to her, “at Sterling, creating a workplace where our employees do not want to escape from is always on the front burner of our people strategy. We pride ourselves in our culture as we keep improving on our employee experience through bespoke employee offerings and engagements. Our agile way of working which includes Flexi-time and Flexi-place, accelerated career routes, bespoke reward systems and deliberate investment in capacity building of our workforce, has helped

in keeping not just the Millennials but our entire workforce mix.’’ Overall, about 96 firms and women who have distinguished themselves in various industries and top management levels received certification and awards at the ceremony after a rigorous selection process. The organizers said the event attracted entries from more than six African countries including Kenya, Cote D’Ivoire, Senegal, South Africa, Namibia and Egypt. Also speaking at the event, Kunle Malomo, group managing director/CEO, GPTW, said the awards were not aimed at recognizing only winners, but also to instil best practices in work places, adding that the company’s vision entails expanding the good workplace culture across Africa and that the coming editions will feature about 300 companies and more than 100 persons. Malomo said the awards that started six years ago has become a huge success, stressing that the company is aiming at taking it to all the states in the country, as it will be expanded to 100 award categories. In his words, “We are in 22 countries across the world. We decided to expand our scope as most multinationals whose subsidiaries won the awards in Nigeria requested that the certification should be carried out in their sister companies domiciled outside Nigeria.

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in the review period. Provisional data from the report indicated that movements in banks’ deposit rates were mixed, while lending rates trended downwards in May 2019. With the exception of the 6-month and 12-month deposit rates, which declined to 10.26 per cent and 10.56 per cent, respectively, from its preceding month’s levels of 10.36 per cent and 10.70 per cent, all other rates of various maturities, rose from a range of 3.70 per cent – 9.71 per cent in the preceding month to a range of 3.71 per cent – 9.82 per cent in May 2019. The weighted average prime and maximum lending rates fell by 2.28 percentage points and 0.1 percentage point to 16.64 per cent and 30.76 per cent, respectively, in May 2019. Consequently, the spread between the average term deposit and the maximum lending rates narrowed by 0.21 percentage point to 21.97 percentage points at end-May 2019. Similarly, the spread between the average savings deposit and maximum lending rates narrowed by 0.20 percentage point to 26.78 percentage points at the end of May 2019. The average inter-bank rate, which stood at 13.98 per cent at end-April 2019, fell by 8.84 percentage points to 5.14 percent at the end of May 2019. The Open-buy-back (OBB) rate,

which stood at 16.15 per cent in the preceding month, fell by 7.81 percentage points to 8.34 per cent at the end of May 2019. Similarly, the Nigerian inter-bank offered rate (NIBOR), for the 30-day tenor, fell to 11.62 per cent in the review period, compared with 12.08 per cent at the end of April 2019. With headline inflation at 11.40 per cent in May 2019, all deposit rates remained negative in real terms, while lending rates were positive in real terms. The report showed that Aggregate credit to the domestic economy (net), on monthonmonth basis, grew by 3.7 per cent to N32,898.5 billion at the end of April 2019, compared with 4.0 per cent growth at the end of the preceding month. It, however, contrasted with 0.1 per cent decline at the end of the corresponding period of 2018. The development showed an increase of 3.4 per cent and 3.8 per cent in net claims on the Federal Government and claims on the private sector, respectively. Relative to the level at endDecember 2018, aggregate credit to the domestic economy (net) rose by 19.3 per cent, compared with the growth of 15.1 per cent and 5.1 per cent at the end of the preceding month and the corresponding period of 2018, respectively.

Heritage Bank advocates partnership in technological, infrastructural development

eritage Bank Limited has called for stronger partnership between Nigeria and Russia for technological and infrastructural development. Ifie Sekibo, managing director/Chief Executive Officer made this call recently at the side-lines of the just concluded 2019 Annual Meetings of the African Export-Import Bank (Afreximbank) in Moscow, Russia. He noted that Africa and Nigeria in particular has a lot to learn from the Russian Federation. He stressed that Nigeria can leverage on stronger ties with Russian to enhance development in the area of infrastructure, aviation, technology, solar, hydropower energy and mining. “If we carefully listen to the Minister of Foreign Affairs of the Russian Federation, Sergey Lavrov, he said the Russian investment in Africa had increased over the years to almost $20 billion in 2018. This clearly shows Africa and Nigeria especially need to key into these investments and get the best out of it”, Sekibo said. “What we are seeing in Russia today is a testimony that they are giants in several areas of development and Nigeria has a lot to learn

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and gain and learn from them. Today Nigeria suffers from huge infrastructural deficit and a lot could be achieved from other countries of the world including Russia”. “Russia is advanced in technology and in mining and I feel such cooperation with them will help Nigeria harness its mineral resources. We have huge mineral resources deposit in a lot of states in Nigeria and we can tap from the wealth of experience of Russia either in training of geologists or mining practises”. Also speaking on the importance of Nigeria being part of African Free Trade Area Agreement, AFCFTA, Sekibo said it is important for Nigeria to quickly join forces with other African countries on the agreement being the biggest economy in Africa. “Nigeria today is seen as the Big Brother when it comes to the economy and African trade and we cannot shy away from such agreement. Such agreements give access to big markets and improved competitions among the member countries”. “I feel strongly that Nigeria has a lot to gain if AFCFTA is signed. I also believe if it is properly leveraged on, it will do us better as a nation”, Sekibo said.

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Wednesday 10 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Tugboat, security patrol vessel, jargon barges, crew boats to top demand in next four years amaka Anagor-Ewuzie

ugboat, security patrol vessel, jargon barges, crew boats have been listed as vessels that would be in high demand in the Nigerian oil and gas industry over the next four years (2019-2023), the Nigerian Content Development and Monitoring Board (NCDMB), has said. The NCDMB was quoted in the Nigerian Maritime Administration and Safety Agency (NIMASA), 2019 Nigeria’s Maritime Industry Forecast as saying that Nigeria can only drive local content development in the Nigerian maritime sector, if Nigerian ship owners acquire the listed vessels that can guarantee good business and return on investment. This projection comes with high hopes and opportunities for Nigerian ship owners to regain its pride of place in the nation’s lucrative shipping business that is presently dominated by

foreign ship owners. According to the NIMASA report, these vessels will account for 66 percent of vessels demand between 2019 and 2023 while the industry spend on the above mentioned vessels is projected to be $1.6 billion,

equivalent to 51 percent of the total spend. It is also projected that 519 marine contracts in Nigeria will be executed within the 4-year period. Within the period, the volume of transaction for category one vessels would

Buhari signs bill establishing Chartered Institute of Transport Administration amaka Anagor-Ewuzie

ollowing the passage of the bill establishing the Chartered Institute of Transport Administration of Nigeria (CIOTA) by both chambers of the National Assembly, President Muhammadu Buhari has signed the bill into law by giving his Presidential Assent to the bill. Bashir Jamoh, president of CIOTA, who disclosed this in Lagos recently, commended the President for the speedy response to the bill, according to a statement signed by Nnamdi Eronini, national secretary of CIOTA. He said the Presidential assent showed how seriously the Buhari-led administration takes issue of transportation, adding that the institute would continue to do all it could to bring to fore, steps to address areas of concern that would enhance transportation in Nigeria. “The Bill establishing

CIoTA in Nigeria has got the much awaited Presidential assent and this goes to show that this government is willing to tackle the issue of transportation through studies. As an institute, we would continue to do our best to bring to the front burner germane issues that would grow our transport sector especially through the enhancement of intermodal transport system,” he said. Explaining the bill, Jamoh said the Act that establishing the institute charged it with the responsibility of advancing the study, training and practice of transport management and administration in Nigeria. This, he said, afforded members of CIOTA an avenue to continuously contribute to matters regarding transportation in Nigeria, a duty that he promised the association under his watch would be dedicated to. “This bill assures members of the professional www.businessday.ng

be 49 percent with projected spending of $1.65 billion as against 23 percent in category two with projected spending of $1.04 billion and 28 percent in category three vessels with expected spending of $519 million.

Comparatively, in the last four years (2014-2018), expenditure on marine vessels cost Nigeria about N1.09. Findings show that the industry spent $2.21 billion on category one marine vessels accounting for 73 percent of total funds spent

on marine vessels. Also, the category two vessels expenditure stood at $393 million, which is 13 percent while $437 million, equivalent 14 percent, was for category three vessels. Meanwhile, the least demanded vessels in these periods are water bus, support vessels and among others. The NIMASA repor t however noted that the downstream sector presents opportunities considering the huge logistics required to meeting Nigeria’s daily energy demand. “Other opportunities across the value chain include vessel construction, repair and maintenance, auxiliary services for catering companies, waste management and others hinged on growing indigenous ship ownership,” the report added. “The economic benefits for marine vessel transactions are enormous and extend into other sectors. Thus, the need to help stakeholders review and plan their business models in the near future,” it further stated.

Olugbade, Ndahi join SIFAX Group’s management team

status of the institute and encourages others to join us as we strive to help the government revamp the entire transport sector,” he said. IOTA Nigeria is an affiliate of IOTA United Kingdom which was established as The Institute of Transport Administration, founded in 1944 as The Institute of Traffic Administration. By a special resolution passed on 29 January 1981 the Institute’s membership resolved to change its name to The Institute of Transport Administration. The objectives are geared towards broadening and improving the knowledge, skills and experience of its members in the practice of efficient and effective transport management, using all spheres of transportation including road, rail, sea, air as well as pipelines. Bashir Jamoh was elected the President of the Institute in February 2019 and he promised to make IOTA a chartered institute.

IFAX Group has announced the appointment of Ibraheem Olugbade and Edward Ndahi as executive director and Group chief security officer (CSO) in line with the company’s continuous efforts to strategically position for better service delivery. Olugbade, Nigeria’s former alternate permanent representative to the International Maritime Organisation (IMO) in London between 2011 and 2016, will oversee all the company’s inland container depots. He holds a Post-Graduate Diploma in Maritime Transport Management from the Nautical Institute for Technology, Rivers State University of Science & Technology, Port Harcourt and Master Class Revalidation Certificates from the University of Tasmania, Australia and Australian Maritime College Launceston, Tasmania. He also possesses 1st Mate & 2nd Mate Certificate of Competency from Arab Maritime Transport Acad-

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Ibraheem Olugbade

Edward Ndahi

emy, Alexandria, Egypt and a National Diploma in Nautical Science from Maritime Academy of Nigeria (MAN) Oron. His professional experience spanned various maritime organisations, both locally and internationally, including the Nigerian National Shipping Lines (NNSL); the Nigerian Ports Authority, where he served as an Harbour Master and rose to become an assistant general manager; and Nigerian Maritime Administration and Safety Agency, where he was deputy director, Maritime Survey & Certification as well as director, Maritime Safety & Security. On the other hand, Ndahi is a seasoned security pro-

fessional with over 17 years’ experience. He possesses an Ordinary National Diploma in Public Administration and BSc in Public Administration from the University of Maiduguri and BSc in History as well as International Studies from Ekiti State University. He began his career as a detective with the Department of State Security (DSS) and moved to become the chief security officer for Camitel Nigeria Limited, Abuja; district security supervisor for Shell Petroleum Development Company; CS O- Transcorp Hilton, Abuja and deputy sergeantat-arms, operations at the National Assembly Commission, Abuja.

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Wednesday 10 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

‘Cargo-clearing procedure is very tough with Customs having multiple units’ Tony Anakebe is the managing director of Gold-Link Investment Ltd., a clearing and forwarding company. In this interview with AMAKA ANAGOR-EWUZIE, he speaks on the present cargo clearing procedure in the ports particularly the contribution of multiple Customs units in delaying timely delivery of consignment to importer’s warehouses. He also spoke on other issues. Excerpts:

Port business in H1 everal factors affected business activities in the first half of 2019. One of such was the political atmosphere, which started with the 2019 general election, inauguration and delay in passage of the 2019 budget. As a result, the ports have not been booming as they used to, but we have been hoping that things will normalise. However, without full established government structure, the economy and the port would not move forward. Government needs to put their houses in order because the economy is stagnant and Nigerians are suffering. The government is yet to put the cabinet together and budget implementation is yet to begin. The non-implementation of the budget creates an atmosphere of uncertainty in the business environment as importers find it difficult to make business decision due to lack of clear-cut economic direction. Also, port users have been encountering a lot of problems in Apapa for many years now and these problems are still there. Importers are losing money through demurrage and delays in clearing goods, and government has done anything to ameliorate the plight of the people. Therefore, government needs to do something as soon as possible because if

the port problems continue, it will affect the manufacturers, businesses and the economy at large. Maritime industry is next to oil and gas, therefore neglecting the port is neglecting the economy. Customs N326 exchange rate for cargo clearing The Nigeria Customs Service (NCS) does not go back on policies. What Customs did was to adjust the import value of all imported goods from N306 to N326. Customs is implementing till date. This does not mean that the Central Bank of Nigeria (CBN) has adjusted the rate of Naira against the dollar, which remains N306 in the official market. Cargo dwell time at the ports There are several bottlenecks hindering smooth and timely clearance of goods at the ports. It takes a minimum of two weeks to clear cargo with genuine documents out from the ports. Now, the clearing procedure is very tough with Customs alone having about eight different units that must authorise the release of the consignment including other government agencies that delay cargo clearance at ports. As far as we continue to multiply the units of officers from the same agency like Customs, we will only continue to breed corruption in the ports. Imagine eight different

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Tony Anakebe

Customs units that one must go through before clearing one container. They include Enforcement, Valuation, Customs Intelligent Units, Residence, Taskforce, Strike Force and Abuja Alert including the Federal Operations Units that mounts checkpoint right at the port gate. Why multiply all these units? If not the protest by Licensed Customs Agents, the management of Customs wanted to deploy another taskforce to ports. Government needs to make it easier for Nigerians to take delivery of their consignments within 48 hours rather than enrich shipping companies through demurrage accumulated from time wasting, which is being repatriated to their home countries. To clear and get documentations for a container

including obtaining the PreArrival Assessment Report (PAAR) takes close to one month. After Customs examination inside the port, the cargo owner will come outside the port gate to start all over. One wonders why our authorities would prefer to enrich foreign shipping companies rather than our importers and businesses. Cargo inspection in Nigerian ports The Nigeria Customs still does 100 percent physical examination till date, meaning that scanning machines have remained non-functional till now. For instance, if a terminal like TICT has 500 containers for examination, all would be inspected physically, and the question is: how many Customs officers can be deployed to take

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care of that? After the examination, the report would be sent to Assistant Controller for release after which it would be taken to Deputy Controller. In Dubai, agents have no business meeting faceto-face with Customs as the agents pays the duty, scan the document to Customs and within two to three hours, the agents would pick his cargo. They pay attention to paying correct duty and bringing in the right cargo while the rest of the authorities do their jobs online. Our cargo inspection system is still like that of 18th century but we are in the 21st century. Their Standards Organisation and others go online to see what is coming and going out. Our import processing system is back to the dark edge. Initially, about five years ago, the scanners made things easier for Nigerians when the former President Obasanjo’s administration introduced it and the shipping companies compiled. The system favoured them because it enabled them to bring in more goods into the country. The scanning machines were not maintained and our system has become a highly disorganised system. There is no seaport in the world, including Togo and Benin that are not making use of scanning machine. Technology has taken over even in the management of the ports such that

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the importer gets to the port and sees when the consignment would be discharged, which is usually accurate. But, in Nigeria today you cannot be guaranteed that the ship would berth same day it was projected to. Movement in and out of Apapa recently The access roads to Apapa have been neglected for years, no holding-bay for empty containers and truck parks. The truckers and tank farms have made the Apapa situation worse. There is no sane country that situates tank farms this close to the seaports. Several tank farms are springing up within and around Apapa. These farms receive nothing less than 500 trucks a day. The biggest problem is no serious infrastructural development within Apapa. Apapa needs infrastructural development because having taskforce or task team will not solve the traffic problem. We need roads and there is need to build a bypass road in and out of Apapa. The extortion is still there because removing Navy and Army to bring Police does not solve the problem. Last week, we loaded a container that the transporter borrowed N50,000 from me to send the truck inside the port to load the container. This money is being given to the police and others mounting the checking points, as bribe.

Wednesday 10 July 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

New CBN target for MFBs means credit to SMEs, financial inclusion - analysts

…as over 57,472 new accounts could be created monthly Stories by Endurance Okafor

he new policy by the Central Bank of Nigeria (CBN) that will ensure Microfinance Banks (MFB) open new 64 accounts per month is an initiative that will not only improve credit for Small to Medium Enterprises (SMEs) but also spur financial inclusion, analysts have said. As part of attempts to reach its financial inclusion target, Nigeria’s apex bank on June 20th 2019 anchored a goal of 64 new customers per branch every month for microfinance banks in the country. According to Gbolahan Ologunro, a Research Analyst at Lagos-based CSL Stockbrokers, the move by CBN is geared towards improving the flow of credit to the SMEs while also including them into the formal financial sector. “What CBN is trying to achieve is to improve credits to SMEs, considering Microfinance Banks are set up for the purpose of providing traditional banking services to SMEs,” Ologunro explained. The other objective is to “spur financial inclusion by bringing those small enterprises that are yet to be included into the formal financial sector to the bank-

ing net.” he added. In a letter addressed to all Microfinance Banks on the revised national financial inclusion target, the apex bank said one of the resolutions reached at the recently held stakeholders’ forum was the setting up of the target for the MFBs to ensure each of their branches are able to open 774 new bank accounts per annum. “Consequently, all MFBs are hereby requested to implement the above resolution and disseminate same to all their branches (where applicable) to ensure concerted efforts towards achieving the overarching target of 80 percent financial inclusion by the year 2020,” the CBN instructed. On October 23, 2012,

Nigeria’s apex bank in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from 53 percent in 2008 to 20 percent by 2020. Recall that in 2018 the industry regulator revised the NFIS with the major objective of increasing the percentage of adult Nigerians who own bank accounts and use formal financial services from the baseline figure of 46.3 percent in 2010 to 80 percent by 2020. Microfinance banks, over the last six years of implementation of the strategy, have contributed significantly towards the realization of the stated objective. As at the

end of 2018, 63.2 percent or 63 million Nigerians were financially served leaving an inclusion gap of 36.8 percent or 36.6 million adults Nigerians that need to be included. “The target is achievable, and it is good for both parties; the MFB and the SMEs, because it will be a win-win for all parties. But for some of the MFBs to get the new accounts, they would have to use credit as an incentive because the market will soon be saturated,” an industry player who asked not to be quoted said. Given it is less than 6 months to the end of the target date, the apex bank has become expedient for all stakeholders to double efforts towards the realisation of the targeted 80 percent

inclusion rate. Thus, it stated that in a bid to mobilise stakeholders on the revised NFIS and accelerate progress towards the achievement of the target, it had held stakeholders‘ forum for all financial service providers in the six geopolitical zones in the first and second quarters of 20l9 which was attended by representatives of MFBs. “The objective of the forum was to expose stakeholders to the detailed provisions of the Revised Strategy (NFIS 2.0) and their expected roles/responsibilities in the financial inclusion agenda,” it said. According to the data by the central bank, Nigeria has 898 microfinance banks, if each of the banks opens 64 accounts monthly, new 57,472 accounts will be created with the exclusion of their branches. “The high rate of sourcing for funds from micro finance bank will still continue to hinder the flow of credit to SMEs , however, some SMEs will still be able to meet up the exorbitant cost of obtaining funds because the bigger commercial banks have more stringent requirement to access loans,” an analyst form the financial industry said on the condition of anonymity. Godwin Emefiele, the governor of CBN, said over

the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the Payment Service Bank (PSB), the apex bank intended to broaden access to financial services to individuals in underserved parts of the country. “Our ultimate objective is to ensure that 95 percent of eligible Nigerians have access to financial services by 2024,” Emefiele said on Monday, as he unveiled his programme for his second term of five years. The apex bank had in October 2018 released an exposure draft in which it proposed PSB aimed at deepening financial inclusion in a country that has one of the highest exclusion rates in Africa. At least 30 business names have since applied for registration as payment service banks with the functions to: maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse but till date none have been granted licence.

‘Inclusive Fintech 50’ to raise capital for 50 early-stage Fintechs driving financial inclusion …as one third emerged from sub-Saharan Africa

etLife Foundation and Visa Inc., with global nonprofit Accion and World Bank Group member, IFC, have announced the launch inaugural list to help Fintech companies attract capital and resources to benefit the 3 billion financially underserved people globally. Launched in February 2019, the ‘Inclusive Fintech 50’, a competition organised to help early-stage Fintech companies who are driving financial inclusion to attract capital and resources. The 50 winners were selected from nearly 400

eligible applicants who demonstrate the power of financial technology to expand access, usage, and quality of financial services in advanced and emerging markets. Approximately 30 percent of the winners provide credit products to underserved segments including MSMEs, and approximately 25 percent offer infrastructure solutions like biometrics software that enable financial institutions to expand access to previously excluded groups. Fintechs offering insurance, payments & remittances services, and sav-

ings & personal financial management tools each made up approximately 15 percent of the winners. According to Marianne Mwaniki, Head of Social Impact at Visa, Inc., existing research indicates that investment capital has largely overlooked early-stage and inclusive Fintechs in several markets. “This group of winners makes clear that there are high-potential start-ups with viable products and business mo de ls -and they’re ready for investment,” Mwaniki said. A dive into the data from the by Accion revealed that

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nearly 70 percent of the winners are pre-Series A, yet the start-ups already exhibit strong product-market fit and traction, as demonstrated by their combined 8 million customers. In terms of geographic distribution, nearly onethird operate in more than one region, and another third operate exclusively in Sub-Saharan Africa. A further probe into the data of the 50 Fintech companies showed that ACRE Africa (insurance), Apollo Agriculture (credit), Awamo (infrastructure), E-Settlement (infrastructure), Hello Paisa (pay-

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ments & remittances), Inclusivity Solutions (insurance), Kwara (infras t r u c t u re ) , Ma To nt i n e (infrastructure), Numida (infrastructure), OZÉ (infrastructure), PEG Africa (credit), People’s Pension Trust (savings & personal financial management), Pezesha (credit), Pula (insurance), Riby (infrastructure) and Tulaa (credit) were the 16 start-ups from Sub-Saharan Africa that emerged winners among their global contenders. “Inclusive Fintech 50 demonstrates that there are lesser-known fintechs able to reach underserved @Businessdayng

populations with appropriate financial products,” Sarah Willis, Director of Financial Health & Inclusion at MetLife Foundation said. She added that they want “to support start-ups that are addressing the holistic needs of these target segments with the ultimate goal of improving their financial health.” Meanwhile twenty percent of the selected Fintechs operate exclusively in South Asia, and 8 percent each in North America and East Asia & the Pacific. The remainder came from Latin America & the Caribbean and MENA.

Wednesday 10 July 2019

BUSINESS DAY

PENSION today

In Association With with contributions from

Labour’s resistance to adoption of Contributory Pension Scheme in states mere ignorance - PenCom National Pension Commission (PenCom) in its commitment towards ensuring an effective implementation of the Contributory Pension Scheme (CPS) across states has continued to engage stakeholders to enable it appreciate the scheme and also address some of the challenges confronting implementation. Dan Ndackson, head, States Operations Department of the Commission, shares his thoughts on implementation challenges, efforts of the commission and compliance level across the states. Excerpts: Federal Government directed that the money should be used to first settle salary arrears and then pensions. But I can tell you that in many states, if part of the money was used to settle pensions it was insignificant sum and nothing has happened. But with the Contributory Pension Scheme, you have layers of authorities that ensure compliance. Most of the states are required to set up State Bureau or Commission that serves as their local PenCom to ensure that the law is implemented as intended. And in most of the laws, there is a provision for escalation that says, if a state government fails to comply with his own laws, that institution that has been established by the state is given powers to escalate the matter to the National Pension Commission. Most of the states’ laws empower the National Pension Commission to approach the Accountant General of the

Dan Ndackson

some other things including wrong uses, have to be paid religiously on a monthly basis. Not so many chief executives are comfortable with that. For many chief executives, their longest life span is eight years, and we have seen the government survive its two terms without paying pensions under the defined benefit scheme and nothing happens. Many governors are comfortable with that and are doing so. So, I have always called governors that adopt the contributory pension’s scheme as pro-people government, as people who have welfare of their citizens at heart because what they are doing is making sacrifices, while some others who have this money abuse it rather than invest in their people. So, because of the reluctance in people coughing out this money in order to meet the CPS, they would opt out. And looking at it, it is cheaper to adopt because once you are not in the CPS no one compels you. All of us have been in this country all this while when the Paris Fund was released, when the

‘

I have always called governors that adopt the contributory pension’s scheme as pro-people government, as people who have welfare of their citizens at heart because what they are doing is making sacrifices, while some others who have this money abuse it rather than invest in their people

‘

PenCom recently held the 2019 Second Quarter Consultative Forum for States. Please, tell us the purpose of this programme? he main purpose of this programme is to see how we can encourage states to adopt the contributory pension scheme. Second is to see how we can enhance the implementation of the scheme in states that have adopted the scheme as their model of pension administration. So, we are hoping that at the end of this meeting, like the one we hold every quarter, people will get more informed about what it takes because I am quite happy that Head of Service and Permanent Secretaries of states that have not adopted the scheme and those that have passed the law but were yet to implement it are present here. So, we are hoping that at the end of the programme, we will have people who have acquired a lot of information from their colleagues on how to proceed with implementation of the scheme in their various states. In your interaction with these states over time, what have you found as their major challenge? Could it be political or what? In adopting the CPS, challenges come from two angles. One is from the executives of the states and the second is from the labour unions. To add to that, the challenges that come from labour are as result of ignorance because it is coemployee scheme, which guarantees the employee the likelihood of him getting something at retirement much more than the old scheme the cling on to. So, even though the scheme has some challenges in some states, I link it is due to the ignorance; they do not understanding the benefits of the scheme. The greatest challenges that this scheme has are those that come from the chief executives of the States. The truth is that any state government that adopts the scheme makes a sacrifice. What sacrifice does that government make? The money that ordinarily some could have used for

Federation to deduct these contributions that they have failed to remit at source. You don’t have such in the defined benefit scheme. If the governor pays, you say thank you; if he does not pay, there is nothing you can do. In this case, who feels the impact? The retirees continue to protest. What is the effectiveness of the National Pension Commission in enforcing compliance with this scheme? Unfortunately, the constitution gives states the powers to design their pension laws. However, it is the beauty of that constitutional provision that we can let the states know the beauty of the scheme and it is those that are willing. If a state government decides to opt out, there is nothing we can do. So it is constitutional provision that allows states the independence to enact a pension law that suits their interest, and what the Commission can do is to say look, we have seen the good things that are in the Contributory Pension Scheme, tell the gospel on the beauty of the scheme, so that other chief executive who see it can implement it in their own states for the benefit of their employees. How many states have complied with the CPS to date? Well, we may not use that phrase, fully complied, but we can tell you the milestones and extent that each state has reached in doing that. If passing the law is to you full compliance, we have about 26 states as at today that have passed the law. At the moment, there is no state that is 100 percent compliant, none. Week on week bases, we give update on the milestones that each state has reached. There are about eight ranges of activities to go through in trying to comply. Some have done excellently well in eight out of nine, some have done well in three out of nine. In each parameter, it depends on what you are interested in. And we can tell you that on this parameter these are the states that have met the requirement. But it is difficult to tell you that this state has fully complied.

RC634453

Diamond Pension Fund Custodian Limited with contributions from

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

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

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Wednesday 10 July 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Loss Adjusters back insurers’ recapitalisation over gap in obligations Stories by Modestus Anaesoronye

he loss adjusting arm of the insurance industry, the Institute of Loss Adjusters of Nigeria (ILAN) are optimistic that the ongoing recapitalization of the nation’s insurance industry will strengthen their capacity to meet obligations including payment of loss adjuster’s fees. ILAN who spoke in support of the increase in new minimum capital requirement for underwriting companies said its members have been victims of the low capacity that has characterized some companies in the industry which affects payment of their loss adjusting fees. Femi Hassan, president of ILAN, said “we wish not to pretend that our underwriting partners at this time are challenged, but we believe that the recapitalization exercise will strengthen them to meet their obligations.” Hassan also said, while our expectation is not that they should increase our rates now, but we want to see them meet their immediate obligations.” But over time, we will ask for improved rates, he said smiling. The Nigerian insurance regulator, the National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paidup 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. Analysts have express concern that the loss adjusting profession faces imminent shortage of loss adjusters, if issues related to low payment scale and delayed payments from underwriters are not resolved. The loss adjusting profession is charged with the responsibility of ascertaining the extent of loss suffered by an insured and the recommendation of proper sum of indemnity payable by the underwriters to the insured. However this is steadily been eroded from the domestic insurance industry as its members are being hit hard by poor revenues resulting from their low payment scale compared with their international counterparts and the huge debts owed them by underwriting companies. The implication of this development is that, the loss adjusting firms have become less sustainable, inability to pay quality remuneration, manpower shortage and increasingly less attractive to younger generation of job seekers. Analysts fear that if the loss adjusting

Linkage Assurance promises broker partners prompt claims settlement, efficient service delivery

nderwriting firm, Linkage Assurance Plc has assured its broker partners and potential customers of the company’s commitment to prompt settlement of claims, customer satisfaction and efficient service delivery. Linkage Assurance Plc gave the assurance to Abuja Area Council of the NCRIB during its Members Evening held in Abuja. Daniel Braie, Managing Director/CEO, Linkage Assurance Plc who led top management of the Company to the event said the Members Evening Hosting is part of the underwriter’s national wide fraternization tour to its broker partners. He said that the Company plans to go round the Area Committees in all the geopolitical zones where NCRIB is established, having started off with the Lagos National body before now. Braie in his remark thanked the insurance brokers for their partnership and support to the Company, stating that their contribution has enabled the company attaint its current level of growth. The Linkage CEO noted that the Company which paid about in excess of N2.71 billion on claims in 2018 has continued to meet customers’ expectations, despite the challenging business environment. On the capacity of the firm to meet its ex-

pectations, Braie noted that the company which commenced operation 28-years ago currently operates with a shareholders fund N18 billion, with N5 billion solvency capital, “Our solvency ratio of 273 percent is one of the highest in the insurance industry”. According to him, the Company has restructured its human capital for better service delivery, “we have done some re-organisation internally to serve you better, so what you can expect from Linkage Assurance Plc is promptness, fairness and satisfaction. “We have brought in quality additional human capital to ensure that we deliver on our promise to you, having increased our capacity to do more volume business as evidence by the increase in our reinsurance treaty capacity across all classes of insurance, Braie assured. Bola Onigbogi, deputy president of the NCRIB who is also a member of the Abuja Area Committee said Linkage Assurance Plc is one of the leading insurance companies in Nigeria that adds value to the business he does with insurance brokers. “By this I mean, they add value and have what it takes to protect customer risk and pay claims promptly”. She urged the brokers to continue to partner with Linkage since the company has shown commitment in identifying with the brokers as worthy partners. www.businessday.ng

L-R: Lateef Omolabu, area committee chairman of the Nigerian Council of Registered Insurance Brokers (NCRIB), Abuja Chapter; Bola Onigbogi, deputy president of the NCRIB; Prince Feyisayo Soyewo, past president, NCRIB; Daniel Braie, managing director/CEO, Linkage Assurance Plc; Joyce Ojemudia, general manager, Marketing, Linkage Assurance Plc; another member, Abuja Area Council; and Okanlawon Adelagun, executive director, Technical, Linkage Assurance Plc during the Members Evening of Abuja Area Council of the NCRIB hosted by Linkage Assurance Plc in Abuja

profession in Nigeria is completely eroded, it would cost local underwriting firms and the country huge foreign exchange value to secure loss adjusting services from other markets. Darlington Mgbojikwe, managing director/CEO, Crawford Loss Adjusters Limited

had noted that loss adjusting profession in Nigeria was facing a difficult time and could hardly sustain itself. “This development is affecting the technical and skills regeneration since we can’t afford to bring in fresh graduates and pay them or offer necessary trainings for staff.”

Anchor Insurance gets NAICOM’s approval for 2018 accounts

nchor Insurance Company Limited, has announced the approval of the organisation’s audited financial statement for the year ended 31st December, 2018 by the National Insurance Commission (NAICOM) as submitted. Ebose Augustine, managing director/ CEO, quoted NAICOM’s letter which conveyed the approval details and dated 3rd July, 2019 as stating in part that “the Commission has no objection to the publication of your audited financial statements for the year ended 31st December, 2018 as submitted,” noting further that approval was “granted after a confirmation that you have substantially complied with our regulatory requirements.” He explained that the company’s financial statement was approved without any official query from the regulatory body, stating that “this outcome was a fallout of the company’s culture of getting things right the first time.” Ebose disclosed that the company known for prompt payment of claims recorded a gross premium written of N3.43 billion for the 2918 financial year as against N2.22 billion written during the corresponding period of 2017, indicating a 54.38 percent growth over the previous performance. He further highlighted that the total assets of the company during the period grew

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Ebose Augustine

from N6.2 billion in 2017 to N6.6 billion while shareholders’ fund moved from N5.07 billion in 2017 to N5.2 billion with the company’s solvency margin standing at N4.8bn. He noted that the company paid a gross claim of N756.8 million to its various affected genuine policyholders during the period as against the N540.3 million in 2017, stating that “it demonstrates our strength to accommodate any volume of genuine claims reported and by direct implication, our ability and readiness to handle any quantum of general insurance business anytime.” He explained that with the trend of results already being achieved by the company in 2019, the Management was hopeful of comfortably beating the 2018 results to the delight of the owners of the company at the end of the year.

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Wednesday 10 July 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Global insurance premium grows in excess of $5trn

PILA boosts effort towards human capital development ...launches learning centre

Stories by Modestus Anaesoronye

report from Swiss Re has determined that g l o b a l i n s u rance premiums passed $5 trillion for the first time ever in 2018, a figure which represents 6 percent of world gross domestic product. Swiss Re says this landmark figure was based mostly on solid growth in the non-life sector, particularly in China and other countries in emerging Asia. Looking forward, Swiss Re says life premiums will rise by 2.9 percent, well beyond the 0.6 percent annual average of the previous 10-years, with a bounce back in China the main driver. In non-life, global premiums are forecast to grow by 3 percent, with emerging Asia playing a lead part in

Motor Accident display at Jabi Lake Mall, Abuja portraying the importance of insuring your car and other assets. This display is part of the “Live with Freedom Campaign” powered by NAICOM, NIA and all the insurance companies in Nigeria.

that growth, supported by solid growth in advanced markets. Overall, Swiss Re’s report states that China will contribute most to life and non-life premium growth over the next two years, and its share of global premiums will

reach 20 percent by 2029, up from around 11 percent currently. Furthermore, Swiss Re says China remains on course to surpass the US as the largest insurance market by the mid-2030s. With the growing importance of the market in

China, Swiss Re has also announced the opening of its Swiss Re Institute China Centre in Beijing. “The establishment of Swiss Re Institute China Centre will support our Group’s growth ambitions in China,” said John Chen, Head Swiss Re China.

CHI Essay competition initiative continues talent discovery for insurance industry

onsolidated Hallmark Insurance Plc’s initiative ‘The National Essay Competition” for higher institutions offering insurance and actuarial science in Nigeria, now at its eight year has continued to identify and empower young talents for the nations’ insurance industry. The project, which is the brain child of Eddie Efekoha, the managing director/CEO of the underwriting company has over the years identified young talents through participation in the exercise, whom many today and employees of CHI and other leading insurance compa-

Eddie Efekoha

nies in Nigeria. Exciting to note that, not only has this ignited the quest for knowledge and research in many of the institutions offering insurance as course of study in Nigeria, it has raised the consciousness of young talents seeking career in insurance. Besides that, the various institutions have been also regularly challenged to up their game in terms of the quality of students they produce because it has again become a thing of pride to win the annual essay competition being organized by the Consolidated Hallmark Insurance Plc. The 2018 Edition of the Essay which focused on financial inclusion in the insurance industry for the external category, and digital appreciation by millennials for the internal category, which award held in Lagos on Monday further elicited the excitement that is building up year after year for the competition. The first prize for the external category who won N250,000 cash and opportunity for employment after www.businessday.ng

graduation went to Korede Bolaji Amole of the Federal Polytechnic, Offa; Second prize of N150,000 went to Balogun Obabiolorun Kosi of the Lagos State University, Ojo; and Ernest Oyemike Orjieh of the University of Lagos, Akoka came third winning N100,000.00. Eddie Efekoha, who congratulated the winners, their parents and their various institutions, said this is one of the Company’s efforts to complement the role of the Chartered Insurance Institute of Nigeria (CIIN) to regenerate the manpower need of the insurance industry by identifying and empowering young talents. He urged the higher Institutions to remain professional and ensure that submissions by students are original and independent, pointing that their products will tell what their institutions are offering to the students. Mohammed Kari, commission for Insurance commended CHI for their contribution towards human capital development for

the industry, stating that the exercise will widen the knowledge and interest of the younger people to take up careers in insurance. Bayo Samagboye, one of the essay assessors decried the declining quality of submissions by students of the various institutions, urging the schools to up their game and ensures that their products meet the human capital need of industries. The focus which is to select among undergraduates intellectual sound minds through the Company’s annual essay competition is targeted at getting people that will replace the industry’s aging workforce. This the company believes does not only increase human capital supply to the industry, it creates awareness about the sectors activities thereby making a lot more people embrace insurance as a career or part of life. Following a merger in 2007, Consolidated Hallmark Insurance Plc emerged as one of the top ten General Business and Special Risk Insurance underwriters in Nigeria.

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he Professional Insurance Ladies Association (PILA), Abuja Chapter, has launched its Tutorial Centre, as part of its contributions towards the development of manpower and professionalism in insurance industry. The centre, known as ‘PILA Insurance Tutorial Centre’ is situated at Business Throne Plaza, Joseph Gomewalk Street, Gudu District, was officially launched in Abuja last week, even though, it has since commenced operation on 1st of July, 2019. Speaking at the launching of the centre, the President, PILA, Ose Oluyanwo, said the centre offers lectures for Certificate, Diploma and Advanced Diploma at highly discounted fees, while it also provides reading room facilities, sale of text books as well as training rooms for the insurance industry and the general public. Stating that PILA is an association that is poised for great strides and visibility, she added that, the association is always at the forefront of promoting growth of female insurance practitioners and the insurance industry at large. Abuja chapter of PILA, according to her, was inaugurated in 2005, out of the desire to increase and promote insurance knowledge in Abuja in particular and Nigeria in general. The chapter, she said, was established to encour-

age forthrightness in ladies, foster insurance Ethics, Professionalism, gender mainstreaming and equal opportunities in the insurance sub-sector of the economy. To her, “creating opportunities for continuing education, intellectual growth and professional knowledge of members is the main drive of PILA. These shared values with our umbrella body-Chartered Insurance Institute of Nigeria (CIIN) is actively ensuring insurance awareness and campaign programmes to schools, Organisations, both in public and private sectors, National Youths Service Corps(NYSC), markets, among others.” Similarly, the President, CIIN, Eddie Efekoha, saluted the courage of the Insurance Ladies body, stating that PILA has added professional contents to the activities of the institute since inception, promising them of CIIN’s support in all their activities. Applauding PILA for contributing its quota to the development of manpower for the insurance industry, he said, this gesture, will go a long way to ensure that there are more insurance professional in the industry. “A lot of candidates who have applied for CIIN exams have challenges and the study centre is a seed in this direction that will yield multiple results, in the areas of manpower growth and development in the near future, Efekoha said.

Experts see reinsurance pricing increase for long

nderwriters are confident that re/insurance pricing increases will be sustainable regardless of the outcome of the 2019 hurricane season and should hold for two years, according to Peel Hunt. The firm observed that underwriters generally appear to be pleased with how the rate cycle is evolving, given the absence of knee-jerk reactions and the perceived sustainability of rates going forward. Nevertheless, whilst the rate momentum is positive, many underwriters argue that it could go further and are looking to gain further increases in 2020. This is particularly true @Businessdayng

in lines such as specialty, where Lloyd’s and the PRA are trying to support returns across the Lloyd’s Market. Peel Hunt believes that short tail underwriters are more geared to this rate momentum, although large casualty writers such as Beazley and Hiscox are also benefitting. In the Lloyd’s Market, underwriters have reported healthy mid to high single digit rate increases in marine, aviation, property and engineering over the past six months. Even casualty is starting to see meaningful rate rises as market discipline returns, analysts noted, with credit & political risk and cyber being the only areas of rate softening.

Wednesday 10 July 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Instant feedback hurts our performance NICOLE TORRES A NEW STUDY SHOWS THAT IT CHANGES OUR BEHAVIOR — BUT NOT FOR THE BETTER. asha Shunko of the University of Washington and her colleagues, Vivek Choudhary of INSEAD and Serguei Netessine of Wharton, analyzed data on 382 Singapore residents who, in the hope of getting an insurance discount, agreed to let an app monitor and rate their driving. The researchers found that driving scores were 13.3% worse on trips people took right after reviewing their ratings than on trips taken when people hadn’t reviewed them. The conclusion: Instant feedback hurts our performance.

Professor Shunko, defend your research. Shunko: The drivers we studied had installed a mobilephone app from Raxel Telematics that scored them on behaviors like speeding, braking, accelerating and so on. They could see how they performed on each trip and get an overall score, and if over six months they kept that score above 70 (out of 100), they’d qualify for an insurance discount. Most drivers never looked at the feedback. But when we examined the performance of those who had, we found that, on average, their driving got worse on their next trip. That’s not to say that no one improved after getting those ratings; some people did. But looking at the feedback corresponded with significantly more dangerous behavior — for example, an 18% increase in the distance covered while speeding. HBR: But doesn’t research generally show that feedback improves our performance? The findings are mixed, and different factors can play into whether it has a positive or negative impact. For example, we know that people process feedback as it relates to their goals. So if you learn that you’re way ahead of a target you set for yourself, you’ll respond differently than when you hear you’re not meeting that goal.

Why did you choose to study drivers who were getting feedback? Apps like the one in our study are a modern way of providing feedback and have been gaining popularity in the automotive and insurance industries. Their goal is to improve people’s driving skills and make the roads safer, but it’s not clear they’re actually delivering those benefits. Our analysis showed higher variations in the trips that drivers took right after they’d reviewed their feedback, which indicates they were trying to change something in response to the information they’d gotten. We saw more jumps in behavior. And on average, those were jumps into more-dangerous driving. Why would feedback make someone’s driving worse? We’re running further experiments right now and don’t have the exact answer yet, but we have some theories. Say your goal is to achieve this minimum score of 70, which will give you an insurance discount. If the feedback tells you you’re almost there, that could motivate you to improve. But if you’re already over your goal, especially by a substantial amount, then you might relax and not work as hard. That may be one potential mechanism. Another may relate to how far you are from your target. If the feedback shows you’re 50 points below where you want to be, you might see your goal as unattainable and give up. Did drivers respond differently to negative and positive feedback? There was a slight difference. The overall response to feedback, whether it was positive or nega-

tive, was to get worse. But the drop in performance was smaller with negative feedback. If drivers saw that they weren’t reaching their goal, their subsequent performance still fell, but not as much as that of drivers who saw they were meeting or exceeding their goal. We also noticed that people who saw that their driving was getting worse were more likely to keep reviewing their feedback. It seems that learning you’re not doing well is more motivating than learning you’re doing fine. People in the study chose whether or not to look at their feedback. Could the people who reviewed it just be worse drivers? We didn’t find a correlation between feedback-seeking behavior and initial level of performance. Both good and bad drivers occasionally chose to review their scores. How do you know it was the feedback that was making them worse, and not something else? We took care to establish that feedback was really causing drivers to perform poorly. We tried to control for everything else we could observe about those trips: location and time of day, both of which affect congestion; mileage, because you might perform differently on a short trip than on a long one; and so on. We also controlled for how frequently people were driving, because being on the road all the time might make you a better driver. Finally, we used instrumental variable regression to identify our causal effect. How might the real-time or immediate feedback you

can get from an app work differently from other types of feedback? The feedback you get at work is usually an annual or a monthly review of everything you’ve done in that period. Or it’s about your performance on a task or project you’ve finished. Maybe you can apply it next time, or maybe it’s no longer applicable because you’ve moved on to another task. That’s very different from what we’re studying. Apps can give you almost instantaneous feedback, which you can respond to right away, while it’s still fresh in your mind and relevant. You have an opportunity to change your behavior. Whether you change for better or worse is another question. A few studies on real-time feedback have shown that it can generate positive results, however. For example, in one experiment, people given real-time data on their hot water usage reduced their consumption by 22%. So if I want to give someone feedback, when should I do it? What you should really do is provide individualized feedback, because no single approach is going to work well for everybody. Some people prefer to get feedback right away; others might want to wait until later. Some people respond better to feedback in the form of social comparison — your performance is better or worse than your neighbors’. Some people are more motivated by feedback that compares them only against themselves — you did better or worse than you did last week. In experiments we’re running now in collaboration with J.D. Power and Raxel Telematics, we manipulate the last two forms of feedback — giving people a social and a self comparison — because the app in our initial study didn’t provide that. The users didn’t have any information about other drivers, and although they could remember or look up their own earlier performance, we didn’t highlight it. We’re interested to see if that extra information makes a difference. Do some people just reject any kind of feedback at any time? Most people believe that they’re good drivers, and many surveys show that, on average, we tend to overestimate our abilities. That

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type of overconfidence may make you less likely to believe feedback and therefore make you reject it. You looked at performance on trips after drivers reviewed their scores. But how did feedback affect their driving over the course of the program? We found that the feedback didn’t have an impact on long-term performance. So one of our conclusions is that the effect of feedback is very short-lived. It lasted for about two trips, but then it faded away. Is this consistent with other research on immediate feedback? We just tend to forget it? Our study is one of the first to focus on this specific issue. Most of the existing research has looked at situations in which there’s a delay between feedback and performance and there’s no real insight into whether the recipients have even looked at what they were given. We were able to track both whether the drivers reviewed their scores and their performance on the very next trip. Do you think your findings would extend into other contexts where people receive real-time feedback? Some of the behaviors we observed will. These driving apps are similar to the ones you see for fitness and diet, for example — and might have some of the same problems. And I think the general conclusion that we’re trying to highlight — not all feedback is equal — will for sure translate to other settings. How can I use feedback to make my performance better, not worse? One experiment we did indicates that focusing on what you’ve done well in the past — your best previous performance — is a good way to understand what you need to do to succeed, while thinking about an average performance would have less impact. You want to set a high reference point for yourself.

Nicole Torres is a senior associate editor at Harvard Business Review.

Wednesday 10 July 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

6 causes of burnout, and how to avoid them ELIZABETH GRACE

HAPPINESS ou’re perpetually exhausted and annoyed, and feel unaccomplished and unappreciated. Everything in you wants to quit your job. But is that the best choice? There’s research that can help you decide. Various models help explain and predict burnout, which is now an official medical diagnosis, according to the World Health Organization. One, the “areas of worklife” model, identifies six areas where you could experience imbalances that lead to burnout. As a time management coach, I’ve seen that some individuals can make positive shifts in one or more of these areas and then happily stay in their current position, while others discover that the mismatch is still too great and decide it’s time to move on. Here are the six areas that can lead to burnout and how you can attempt to remedy each one: — WORKLOAD: When your workload matches your capacity, you can get your work done, have opportunities for rest and recovery and find time for professional growth. When you chronically feel overloaded, these opportunities to restore balance don’t exist. Assess how you’re doing in these areas:

planning your workload, prioritizing your work, delegating tasks, saying no and letting go of perfectionism. Reducing your workload can significantly reduce feelings of burnout. — PERCEIVED LACK OF CONTROL: Feeling like you lack autonomy, access to resources and a say in decisions that affect your professional life can take a toll on your well-being. Ask yourself: What exactly is causing me to feel this

way? For instance, does your boss contact you at all hours? Are your workplace’s priorities constantly shifting? Once you know, ask yourself what you can do to shift this situation and what won’t change no matter what you say or do. — REWARD: Do the rewards of your job match the effort and time you put in? If you feel they don’t, determine what you would need to feel properly appreciated. For example, perhaps you need to ask

for a raise or promotion. Maybe you need more positive feedback. Or perhaps you need to take advantage of the rewards you’ve already accrued, such as comp time. — COMMUNITY: Who do you work with or around? How supportive and trusting are they? In many cases you can’t choose your colleagues and clients, but you can improve the dynamic. It could be as simple as taking the time to ask others how their day is going —

and really listening. Burnout can be contagious, so to elevate your individual engagement, you must shift the morale of the group. If that seems impossible, you may want to consider a job change. — FAIRNESS: Do you believe you receive fair and equitable treatment? For example, do you get acknowledged for your contributions? If a lack of fairness exacerbates your burnout, start by speaking up. And if the response still seems inequitable, consider bringing that up in a polite way. — VALUES MISMATCH: Ideals tend to be deeply ingrained in individuals and organizations. Ask yourself: How do my boss, my team and my organization make decisions and invest resources? Do I feel good about those underlying motivations? Do they seem open to change? If not, you may need to look for a more congruent opportunity. Burnout is a multifaceted issue that requires a multifaceted solution. Before you quit, really think through what exactly is contributing to your burnout and attempt to make changes.

Elizabeth Grace Saunders is the founder of Real Life E Time Coaching and Speaking.

5 ways to foster a global mindset in your company growth, since taking internal processes and infrastructure global can take time to catch up with the company’s outward expansion. — RECOGNIZE THAT ORGANIZATIONAL CHANGE TAKES TIME: If you get frustrated because you’re already a successful international company but global growth still seems harder than it should be, just remember that your company and its employees are likely on the right path to learning what it means to be a truly global company. The organizational work required to become a global company usually lags behind the outward measure of expansion, but the good news is that the former enables even more of the latter.

NATALY KELLY CONNECTING any companies talk about “going global,” but becoming a strong global brand isn’t just about expanding to international markets. It’s also about succeeding in those markets and avoiding cross-cultural mishaps. While business leaders tend to focus on capturing as much foreign market share as possible — by adding new languages, launching more offices, supporting new currencies — this is only part of the puzzle. Companies also have to be operationally ready to reach their full international potential. This means leaders must simultaneously work on embedding a sense of global thinking into their corporate cultures and the ways they operate on a daily basis. There are several ways you can start: — MAKE GLOBALIZATION A MANTRA: Research shows that to bridge the gap between strategy and execution, it’s important to focus on what employees think, as opposed to just what they do. In your quest for employees to “think global,” you might want to brand the initiative internally (using terms such as “global readiness,” “global-friendly” or “global-first”) to get employees into the habit. You can also designate global “champions” or “ambassadors” on

various teams to help others design better global processes. — INFUSE MORE INTERNATIONAL EXPERTISE: The single best way for a company to speed up the process of going global is to accumulate more international experience. The most obvious approaches are to hire more people with international experience; elevate and empower existing employees with international experience; and encourage current workers to gain more international experience . Additionally, you can place key hires in offices outside www.businessday.ng

your country and connect international offices. You want each office to take on its own culture and flavor, but to avoid silos forming, you’ll need to ensure that employees truly know what your company stands for and what you believe in, so that everyone is aligned and moving in the same direction. — CREATE AN INTERNATIONAL STEERING GROUP: This group would be responsible for identifying challenges to your international businesses and creating plans to solve them. At least one delegate from every function should attend

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its meetings, including C-level executives and vice presidents. — WATCH OUT FOR LEGACY SYSTEMS AND PROCESSES: One of the biggest hurdles that companies face when they are international, but not yet global, is their past decision-making. Often, a process, a piece of software or a vendor that was chosen years before the international business was thriving can hinder progress and prevent a company from moving forward globally. This is especially true for companies that have experienced higher-than-average international @Businessdayng

Nataly Kelly is the vice president of international operations and strategy at HubSpot.

Wednesday 10 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

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ModernTravel

Roads

Car freaks prefer hybrids as choice SUVs MIKE OCHONMA Transport Editor

espite the world looking for ways to deal with the imminent threat of catastrophic climate change, more and more buyers are choosing SUVs as their family cars. These models emit more CO2 and use more fuel than a smaller hatchback equivalent, because they’re generally larger and heavier. While some high-end manufacturers are launching pure-electric SUV models, those cars will be out of most buyers’ price range. There are new models that are much more affordable, and yet both offer the benefits of electrification with hybrid powertrains. Such vehicles are the Toyota RAV4 Hybrid which runs on combustion engine. It has been around since 1994. In terms of design and engineering, Toyota RAV 4 powertrains measures a total output of 215bhp with combustion engine that develops 176bhp and its motor produces 118bhp, with a quoted total output of 215bhp. It uses a 2.5-litre four-cylinder engine with its electric motor and, like all other Toyota hybrids; it sends power to the wheels via a CVT automatic transmission. The RAV4 sits on the Toyota New Global Architecture (TNGA) platform, a set-up designed to integrate electrification at its core, alongside improvements to body rigidity and lightness. It is also used to build the Japanese firm’s C-HR, Corolla and

Prius models, and here it features MacPherson struts at the front and double wishbones at the rear. Interior build quality is good, and leather seats come as standard laced with other nice materials around the cabin which is quite similar to its competitors in terms of build and material quality. With the mo del ver y w ell equipped, too, with the RAV4 features adaptive cruise control, heated leather seats, LED lights, a powered tailgate and satellite navigation among its list of standard kit. In times of driving experience, it follows a similar recipe to the marque’s other hybrid models, so it is no surprise that it drives similarly to other models based on the TNGA platform.

The electric motor means that driving around town is relaxing, because the car relies on battery power at low speed. It’s almost silent in traffic, and the engine only kicks in when you pick up the pace. In terms of running cost, Hybrids are great for company car drivers due to their low CO2 emissions, which translate to lower expenditures on maintenance bills. Inside, there is more than enough leg and headroom in the back for even tall adults to sit comfortably, because the Toyota’s rear seatbacks are quite reclined. Few people will complain about the space inside, though, and while the cubbies in the RAV4 are a little smaller, there is still plenty of space to store anything and everything a family might need.

The RAV4 is exceptionally well equipped for safety kit, with AEB, lane-keep assist, blind-spot warning, reversing cameras, adaptive cruise control and parking sensors fitted as standard. The Toyota has one extra airbag, which helped it to score slightly higher in its Euro NCAP crash test. Toyota’s five-year, 100,000-mile warranty is among the best of any car manufacturer and beats the threeyear cover on its rivals’’. When it comes to ride comfort and handling, because the Toyota pretty evenly matched in this area, the RAV4 is slightly more settled at speed and the main reason to choose it over competition is that, the driving position is more comfortable.

Chartered Institute of Transport Administration articulates road map development

ollowing the recent enactment of the act establishing the Chartered Institute of Transport Administration of Nigeria (CIOTA) by the Federal Government, the executive council of the institute has articulated strategic road map for its development and growth. The National President of the institute, Bashir Jamoh disclosed this at a maiden press conference held in Lagos on Monday. He said under the strategic direction, “We will built a reputation as a world class institute of transport administration by providing and advancing top notch study, training, certification and practice of transport management and administration in Nigeria and other related matters.” Jamoh also said the institute would expand the transportation practice footprint across the country by becoming a reputable institute nationwide based on the mandate of the act establishing it.He added that, the six geo-graphical zones will be duly covered to lead specific transportation- related initiatives from the roads in the East, North-Central where a lot of mining is presently going on while in Lagos, the hub

L-R: Darlington Ofor; 1st Deputy National President ; Bashir Jamoh; National President, Calitus Ibe; 2nd Deputy National President and Oluropo Owolabi National Vice President all of the Chartered Insttute of Transport Adminiatration of Nigeria, at a press conference of the institute in Lagos on Monday

of the South-West there would be focus on pipelines, cable transportation and aviation. The institute also intend to establish valuable partnerships and strategic alliances with all target stakeholders such as the Federal Minister of Transport and other related MDAs in aviation, roads, rails, maritime, pipelines, transport, labour and National Union of Road Transport Workers (NURTW). The president said they would continue to train professionals www.businessday.ng

and also advise government and all stakeholders to adopt and implement global best practices in transport administration. Jamoh also appreciated the 8th National Assembly for passing the bill and President Muhammadu Buhari for assenting to the bill in a bid to make it an act. Jamoh had during his investiture as President of the institute promised that his administration would prioritise the attainment of a charter status for the institute in a bid to make it a voice in

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the scheme of things in Nigeria’s transport sector. He said the attainment of charter status had been a long struggle and a lot of hard work, which involved building on the legacy of his predecessors because institutional building is a continuum. CIOTA is a professional body dedicated to broadening and improving the knowledge, skills and experience of its members in the practice of efficient transport management or an intermodal mode basis covering road, rail, air and pipeline/petroleum. It was founded in 1944 in Great Britain and organised throughout the vast transport industry worldwide as an association of professional transport managers and administrators with more than 30,000 membership strength. Since its incorporation as an autonomous transport professional body on September 22, 1986 under the Land Perpetual Succession Act Cap 98. The institute has grown steadily within Nigeria to more than 2,000 memberships and has attracted transport professionals from all sectors of the industry. @Businessdayng

NAJA 2019 Training Workshop July 26

ll is now set for the 2019 Nigerian Auto Journalists Association (NAJA) training workshop scheduled to hold on Friday July 26, 2019, at the Golden Tulip Hotel, along the Murtala Muhammed International Airport road, Lagos. Expected as special guests during the training are Aliyu Jelani, directorgeneral, National Automotive Design & Development Council (NADDC) and Boboye Oyeyemi, Corp Marshal of the Federal Roads Safety Corps (FRSC). The annual training workshop which is designed to boost human capacity for journalists reporting the automotive sector in the country is the fourth edition in the series. Already Toyota Nigeria Limited, CFAO, Weststar Associates, Mercedes Benz, Stallion Motors, Mandilas, Pirelli and others have indicated interest to be part of the training programme. Others involved include: LASACO, AXA Mansard and Cars45 among others. During the one day event, automotive journalists will be taken through topics like basic areas on mechatronics, issues that borders on the automotive policy, zero tariff and the role of insurance in the automotive industry. According to the organising committee of the automotive journalists’ workshop and capacity building pro-

Jelani Aliyu, DG, NADDC

gramme, the event will also provide avenue for critical stakeholders to ventilate their perspectives on some of the burning issues that relates with the auto industry and the way forward. According to Julie Chi-Nwaoha, chairperson of this year’s event, the auto industry is one fundamental industry in Nigeria that one cannot ignored because of the huge contributions to the nation’s economy. She emphasised that there is need for consistent training and retraining because of its benefit to the motoring journalists that are reporting the beat. On how the training can benefit journalists and stakeholders, the chairperson said “There is no way we can finish the training and remain the same. “Journalism is wide and we must open ourselves to consistent training and retraining. It is important that journalists writing about the automotive sector are well informed; they must be well educated and empowered to write effectively without fears”, Chi-Nwaoha added. Also commenting on the training programme, Chairman of NAJA, Mike Ochonma said the training workshop will be an eye opener to members as knowledgeable and competent instructors will be on hand to give their best to members. The NAJA training workshop is an annual training programme organised to refresh the minds of practicing auto journalists on the trend of auto journalism worldwide. Members of the association are motoring journalists that cut across the newspapers, television and online media organisations including bloggers from across the country.

Wednesday 10 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

ANAMMCO looks to Chinese brands for survival …Calls for patronage of local auto assembly plants REGIS ANUKWUOJI, Enugu

Lagos rail district battling with train derailments MIKE OCHONMA Transport Editor

he Lagos rail district said it is battling to contain the the challenges confronting it as a result of passenger and freight train derailments along the corridor in recent times which BusinessDay gathered is affecting the downtime of the corporate fleet customers making use of the services. Speaking with BusinessDay on telephone last Monday, Jerry Oche, the Lagos rail district manager (RDM) of the Nigeria Railway Corporation (NRC), he stated, that, there is nothing strange with cases of derailments as the occurrence is part of the hazards experienced in the rail transport industry all over the world. He however added that, the most important thing is the response of time of railway authorities in tackling the problem as quickly as possible in other not to disrupt the operations of the organisation. BusinessDay checks reveal that the frequency of derailments have increased since the commencement

of the $1.5 billion Lagos-Ibadan standard gauge rail project as most of the narrow railings on which the passenger and freight trains ply have been disaligned in the course of the project. A derailment occurs when a vehicle such as a train runs off its rails. This does not necessarily mean that it leaves its track. Although many derailments are minor, all result in temporary disruption of the proper operation of the railway system, and they are potentially seriously hazardous to human health and safety. Usually, the derailment of a train can be caused by a collision with another object, an operational error, the mechanical failure of tracks, such as broken rails, or the mechanical failure of the wheels. Our reporter had last week reported that, there was a decrease in the number of passengers it conveyed both in its mass transit train, (MTT), diesel multiple units (DMU) and the express train passenger trains especially between April and May this year. A breakdown of the volume of passenger conveyed on the mass transit train services (MTT) shows that in January, it moved 130,244, February 141,244, March 162,440 with a decine

to 138,673 in April and 131,641 in the month of May. The diesel multiple units (DMU) service passenger movement recorded 11,705 in January, 9,231 in February, dropped further to 7,025 in March, and later rise to 11,379 in April and dropped to 10,868 passengers that used the service in May. For the premium express train passenger service, a total of 1,572 passengers used the service in January, for the month of Fenruary it recorded 668; 1,110 in March and 1,433 in April followed by a sharp drop to 267 passengers in May. A summary of total passenger moved from the different departure points under the Lagos district shows that between January and May, the MTT conveyed carried 70,4242, DMU 50,208 while the Express train service moved a total of 5,050 paseengers. On the causes of the decline in the number of passengers carried on return trip from April to May for the mass transit train (MTT), diesel multiple units (DMU) and Express train services, Jerry Oche stated that a number of factors accounted for it which is normal in the course of its operations.

Tough time awaits tricycles, motorcycles without drivers licence

he Federal Roads Safety Commission (FRSC) last Monday started a clamp down on motorcycles and tricycles operating without number plates and their drivers operating without the class “A” driver’s license. The move is in ursuant to the need to curb the growing rate of crimes and crashes associated with motorcycles and tricycles and the quest to improve upon the existing National Drivers and Vehicles Database. Corps Marshal Boboye Oyeyemi said the clampdown order on riders of motorcycles and tricycles without class A rider licence is in tandem with the provisions of Section 10 Sub Section 4(h) and (i)of the FRSC (Establishment) Act, 2007. In order to ensure an easy process of acquisition of the number plates and the Class “A” Drivers license, the Corps Marshal has notified Motor Licensing Authorities (MLAs) across the country to make the processes less cumbersome for applicants so that motorcycle and tricycle operators can have a smooth and hitch free process of acquisition of the Uniform Licens-

ing Scheme Products. According to him, applicants who desire to acquire fresh class “A” License must first present themselves for driving test at the Vehicle Inspection Office before advancing to the capturing unit for continuation of the process. On the reason for the clamp down on August 1, 2019, Bisi Kazeem, the FRSC spokesman said the Corps is not ready to take excuses any more as far as Class ‘A’ License and number plate registration are concerned. Accordingly, “All tricycle and motorcycle operators must be licensed before they could be allowed to operate so as to enhance www.businessday.ng

established processes for fishing out untrained and unqualified drivers on the roads. He said that the growing reports of crimes associated with motorcycles and tricycles has made the clampdown imperative so that the successes already recorded by the Corps through the proactive deployment of the National Vehicle Identification Scheme, especially in the area of national security Intelligence would not be undermined. It will be recalled that the Corps Marshal had earlier issued an express directive to FRSC offices nationwide to engage the relevant stakeholders and associations on the proposed clampdown.

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nambra Motor Manufacturing Company Ltd. ANAMMCO, owners of DONGFENG Motor Truck in Nigeria has appealed to government at all levels to reduce unemployment through patronage of locally produced goods. ANAMMCO is previously known as assemblers of Mercedes Benz trucks in the past, and later moved to assemble Shacman trucks under contract assembly with Transit Support Services Limited, all in the quest to oil the operations of the age-long assembly plant running. Olakan Sanyaolu, the sales manager, stated this at the auto plant’s vehicle production observation day where Em-power program students posted to ANAMMCO were conducted round the company’s facilities. ANAMMCO, he said, is capable of employing over 3000 workers out of the employment market in the

job and look for something else to make a living. Narrating that some equipments has to be either renovated or the companies go for new ones that are not easy to come by because most machines now have gone digital and computerized. They called on the government to wake up and do the needful by patronising the local automobile industries saying that ANAMMCO has all the facilities, the experience and capacity to give the country quality products in terms of trucks and busses and on third party arrangement. Responding on the quality of the product the manager explained that it is what is keeping them in the business despite the fact that every equipment is acquired.” One major thing is that of productive process here and the quality of our product always stands us out”. He said. He said their tanker and buses

Em-Power students being conducted round the assembly plant

sense that, it has different departments that can take skilled and unskilled workers in various fields and ready to meet the trucks and buses needs because it has the capacity. The plant can produce in single shift 7,500 units of trucks and 1000 units of buses, “ so if government can just give us the contract to build buses for Mass-Transit, you can imagine the kind of employment market it will bust open both directly and indirectly based on the fact that it was going to use local material producers”. He however lamented that instead of giving contracts to indigenous motor assembling and manufacturing companies to create employment and reduce poverty and hardship, government prefer giving out those employment out to Chinese and other foreign countries who in turn returns them here with an increased costs. “Imagine what will happened if 5000 buses were given to ANAMMCO to produce ,the number of people that would be involved in the production locally, the glass companies, the foams, Rubber, leaders and companies involves in other components would engage workers. Not to talk about those that would be employed directly”. He lamented that, many technicians in the auto industries are wasting away since most companies folded up and some machines scraped by the companies and many have forgotten the @Businessdayng

last for more than 20 year and that the company pay strick adherence to SON’s rules and regulations. On why the em-power students are taken round the companies facilities starting from the entry point of SKD to final inspection Godwin Ezeatu, the ANAMMCO institute training manager said that it does not only assemble vehicles, but also trains technicians for both public and private companies . He said the company has it as a custom to have vehicle observers’ day; a day set aside by by the company for all the new intakes to go round the production departments to observe the process of assembling trucks from chassis to final inspection. Ezeatu said it was aimed at facilitating learning; it will help the students to know the process of assembling the vehicles, identify major components of motor assembling and also help them differentiate between Completely Knocked Down (CKD) and Fully Built Unit (FBU). He said that about 100 students on em-power program are taking basic automobile training in ANAMMCO. The students he said would be issued with certificates from NABTEB at the end of the 12 months program. Some of them may be tetained while some would decide to start their own business. This is the 3rd batch of students that have passed through the training institute on Em- Power program.

Wednesday 10 July 2019

BUSINESS DAY

INTERVIEW How Talabi is improving children’s reading culture in Nigeria Olubunmi Aboderin Talabi is an author and the founding publisher of Clever Clogs Books, which focuses on the production of Nigerian-themed children’s picture books, she has published various books and has also served on the board of various companies including the Punch newspaper and the Daily National newspaper. In this exclusive interview with Gbemi Faminu, she speaks about Clever Clogs and her love for writing.

What inspired Clever Clogs? have always desired to have a sustainable and scalable platform through which well-written, beautifullyillustrated, colourful, painstakingly-produced and culturallyappropriate, children’s picture books for young Nigerian readers could be created.

event. The children loved the wide variety of books. The parents were enthralled by the workshops. The exhibitors made impressive sales. I was in awe, watching a dream come true. For me the event belies the notion that Nigerians don’t like to read. Young children love bright and colorful books. Access to books needs to be improved. There is a need for additional conducive public reading spaces. For the Akada Children’s Book Festival, we converted the front lawn of the British Council Ikoyi into a pop-up library. The kids loved it. The authors had a place to do their book readings. It was a unique, immersive, out-ofthe-classroom learning experience for the young participants.

How has your company influenced reading among children? Clever Clogs books are inspiring. They promote the love of reading, amongst children. Our work spreads the message that children’s books are also important; bedtime stories have a role to play in cognitive, development; and books can be fun and useful all at the same time. Reading does not have to be a boring chore. We boost interest in reading through various methods which include Our Akada children’s book festival, organizing book reading tours across the country, organizing workshops for children, parents, teachers, book writers, and illustrators and also our library support program. As an author, how will you rate Nigeria’s education system? We need to improve and this improvement is all-encompassing. Education must receive due attention from the government, there is a need to increase the percentage of funds allocated to the education sector, teachers must be continually trained and the profession should be modified to attract the best and the most qualified. How would you rate the literary abilities of children in Nigeria? I have come to realize that children are incredibly perceptive. They have amazing minds unsullied by toxins or stress so they are able to reason rapidly and grasp the basic concepts clearly explained. What they read, see, and hear, repeatedly impacts their behavior which is why it is important to have easily accessible positive books with happy, helpful and healthy content created specifically for developing minds. What inspires you and your activities? That would be the desire to see more culturally-relevant children’s picture books readily available in Nigeria and easily accessible to

Will the festival become an annual event? If we can get the level of support we need, yes, certainly we will do this again. It is not a cheap endeavour. This year we had a venue sponsor that allowed us to use their premises without charge. It made a huge difference. We were able to make attendance free so that anyone that wanted to visit the festival would not face a financial hurdle. Hopefully the second edition of ACBF will have enough sponsors so that the event will not be run at a loss.

Olubunmi Aboderin Talabi

all who want to read whether they are in rural or urban areas. It is important for all children to see people who look like them and live in similar environments as theirs, portrayed in good quality books. It boosts their self-esteem when the hero of a story or the place where the story is set bears relevance to them. Some think-tanks refer to it as here and now realism. Children love to read entertaining, well-produced books with age-appropriate “here and now realism”. So far, your books have been targeted at children, any plan(s) to venture into novels for adults? There are probably 100 times as many writers for adults as there are writers for children in Nigeria. The children book market is saturated. What we need are more children’s books. There is a lot of work to do, for and in the children’s literature sector, so I am sticking with my area of focus until further notice. What sort of things interest you? I love to read. I am also fascinated www.businessday.ng

by clever people who are able to clearly explain what they mean; strategic people who are able to see the outcome of a particular course of action, and by focused people who do not allow situations to deter them from their goal. I learn a lot from all of them. In April, you hosted The Akada Children’s Book Festival. Describe the experience? The festival was an event for children, their parents, teachers, as well as for those who create childappropriate content. It was a fun, family affair which featured popup kids’ library; author-led book readings & book signings; book exhibitions; opportunities to meet and greet authors; a writing competition; information forums for parents; workshops for upcoming authors; soft skills master classes for teachers; interactive and engaging workshops for children; a play area and more. The turnout and the reception were beyond expectation. Over 1000 people attended the one-day

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What other activities will Clever Clogs engage in to boost child literacy in Nigeria and Africa generally? We will continue with our five-fold plan which is book festival, reading tours, workshops, social media engagement, creating reading materials to enhance an interest in reading and hopefully set in motion the series of events that could potentially lead to Lagos becoming the reading capital of the world in our lifetime. Furthermore, this will create an opportunity for parents to bond with their children; and creates occasions for self-published children’s picture book authors to be seen, read and appreciated. Besides being an author, what other things do you engage in? I am the Publisher of Clever Clogs Books. I sit on the Board of Punch Nigeria Limited, publishers of the Punch Newspapers and I volunteer extensively at Women in Management, Business and Public Service (WIMBIZ). I am currently the chairperson of the Executive Council for WIMBIZ. @Businessdayng

With your experience in leadership as a business owner, what challenges do you encounter? As we all know the challenges of running a business in this environment are manifold including an overburdened infrastructure, unreliable and costly power supply, heavy traffic, unavailability of certain key resources locally, multiple taxations, layers of bureaucracy, talent acquisition, talent management, talent retention, exorbitant rent, double-digit interest on loans and so on. Nevertheless, the rewards can be there if you survive the initial start-up years. Who is your mentor? I have several mentors. My uncle from whom I learnt frugality and financial management, my former boss who is probably one of the best business managers in the world and certainly one of the best people managers that I know, my older sister who is one of the most judicious and empathetic leaders I have come across. The list goes on. How do you juggle the roles of a wife, mother, and business owner? Thank God for a very loyal support network, true wealth is in the quality of your relationships with the people around you, take the time to cultivate those relationships. Everyone is important from the most humble worker to the brightest CEO, from the jovial mechanic to the calm and patient nanny. Everyone in your support system is vital. Recognize who those key players are for you and nurture those relationships. Having a strong support system is certainly a chief factor in any person’s ability to achieve their goals. What advice will you give to women in the same shoes? Preserve yourself for the long run, take care of your health, remember to take the time to breathe and don’t waste time comparing yourself with other people. You see the outer packaging, everything looks smooth, like a swan gliding across the water. But underneath the water, that swan is paddling furiously. The one you are admiring might well be envying you so don’t try to run someone else’s race. Figure out what is important to you and find the balance that works for your unique set of circumstances.

Wednesday 10 July 2019

BUSINESS DAY

INterview

MCC Canadian curriculum, a stronger bridge to studying abroad, says Ebi Obaro 21st century education is holistic education that does not dwell on just the academics, but also put into consideration the ability to survive, thrive and excel in the world outside the classroom or lecture room. It is about developing soft skills, like being a good team player or being able to relate with other people constructively. In this interview with SEYI JOHN SALAU, Ebi Obaro, president Maple Canadian College (MCC) and CEO of Maple Education Canada, a frontline education marketing company, while unveiling MCC in Lagos states that soft skills help students build capacity and ability to survive in the world more importantly than certificates. Excerpts

hat informed the establishment of MCC; we have fantastic colleges in Nigeria, what is special about the Canadian college? We started by recruiting Nigerian students to study in Canada and have done it for about 18 years. We have a history; we know what happens to our students. We discover that students who go after they get their WAEC certificate to universities in Canada, lot of them struggle in the university; not because they are not brilliant, not because they are not smart; it’s because there is a gap in the curriculum. Now, look at the way English was taught today; I said to myself, is this English? I wasn’t taught English like that and if a student is coming from Nigeria even after the WEAC certificate and enters an English Grade 12 class; for once, you will be lost. So, that gap exists and it manifested in our students - some end up spending six years for a four year programme. Some drop out ; some change programme and they spent lot of money and parents get frustrated, and to make matters worse, some go into depression, while some come back home. In order to address that we thought why don’t we bring this programme here so that parents will understand the need for their children to start with the Grade 12 programme, so that the gap can be corrected and when the students get to a university in Canada they will be comfortable because they have gone through the programme and would understand better. What is so unique about the Grade 12 programme; what is the selling point especially for parents? The grade 12 class is the last class of high school, and that is the pre university class: that is the class where students are prepared for university in terms of their career and personal planning – what do I want to be in future, do I want to be a doctor ; what does it take to be a doctor, what do I study, how much do doctor earn, what is the job like; so, that year is when you prepare not only to go to university but also start preparing your career path : it bridges the gap. So, it is good for our students to start from that class in order for them to do well. So, the value is covering the gap and being academically prepared for university, and also saving money. If your child spends four years in university in Canada and comes out with nothing, you probably would have spent $120, 000within those four years. But, if your child does grade 1 2 p ro g ra m m e h e re b e f o re g o i n g , 9 9 percent of the students do well, except if they are not serious. So, the guarantee is that when you scale through the grade 12 you can get admission easily in any Canadian university? Exactly, but remember admission to Canadian university is based on academic excellence on grades; if you don’t pass; you don’t get into any university; so you must pass.

Academy means we have the credibility with the government of Canada; from the Ontario government and also they are going mark all the tests that are done here, we can’t mark any of the test. Every teacher here will have a partnering teacher in Canada, and when they are having difficulty in understanding a subject, they can reach out to a teacher in Canada and that teacher is going to explain – so there is that connection, which if we were where all by ourselves we will not have that. Our principal is a Canadian with many years of teaching experience; so that is the beauty of this partnership. What is your word of assurance to parents, guardians, and prosp e ctive students?The assurance is this – the programme has integrity and it will be taught very well; we will make sure that the experience that our students get here is exactly what they will have in Canada in terms of academics. When they get to Canada they will not feel like they have missed out of anything. So, our assurance to our students and parents is that it is money well spent – you have to make sure that your children are prepared for university in Canada. It is one thing to send your children to study in Canada and be boasting about but it is another thing for your child to be academically prepared to face education, and even Canada as a whole is not easy for a first timer or a 15 years old to venture thousands of miles away; it can be very overwhelming but in order to help them mature not only academically, but physically, the assurance is that this programme is the best option for them. Again, because they want to go to Canada, it is better to do a Canadian programme, not a British or American programme.

Ebi Obaro

What is the visa success rate? For undergraduate students, the visa success rate in my company is over 90%, the 10% is based on funds – like maybe they look at the parents’ bank statement and found out they can’t afford it. And if they are convinced that you cannot afford to send your child to study in Canada, they will not give visa because the government is not interested in your money rather they are interested in the success of the students when they get there both academically, emotionally, physically and other wise. They want students who are not only academically good but also students whose parents and sponsors will be able to sponsor their children. What is the vision and mission statement of MCC? The vision and the mission that we have here is to ensure that our students who go through this college excel so that when they get to university in Canada they will do well and be more mature. We are not only going to teach academic subjects, we are going to bring in extracurricular activities that will help them to know that being a Nigerian is not a bad thing. We want our students to be proud of their heritage when they leave this college and go to Canada; to know what www.businessday.ng

Africa history is, to hold their heads high in Canada to say am a Nigerian and not to be ashamed about where they come from, and to also know that they can come back to this country because this is a developing nation. All the things they learn; the expertise, experience in Canada, they can bring back to the country. What is the level of value Rosedale Academy is bringing onboard as a partner in this project to ensure it succeeds? Bringing a Canadian programme to Nigeria is not something anybody can do; I can’t just set up this school and say I want to teach OSSD; am going to give a certificate – the Canadian government is very interested in making sure that the credibility of the programme is maintained, and we can’t just do it without having a partner in Canada – like Rosedale Academy, they are expert in delivering off shore grade 12 programme. So, we have to partner with them to bring this programme here, to help us with the teaching and training of our teachers here in Nigeria. We believe that we should use Nigerian teachers too, because Nigerian teachers are good, they are well trained; they just need to learn how to teach this programme because it is different from the WEAC certificate or curriculum. So, partnering with Rosedale

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Any plan to upgrade MCC to a full fledge university? Yes it’s possible to have a Canadian university in Nigeria; there is a Canadian university in Dubai. I have been there and when I got there, I felt wao; and am already thinking about having a Canadian university in Nigeria. We all know the quality of Canadian university education – some people might not get visa, some might not be able to afford it, but the important thing is the qualification, which is what we are looking for. Although some people want the Canadian experience – they want to be in Canada, if that is not feasible, why not a Canadian university in Nigeria. That is possible. Do you handle students who have their first degree in Nigeria and are interested in post graduate programmes in Canada? Yes, that is done under Maple Education Canada – we started and still are requiting Nigerian students into Canadian schools and represent over 55 Canadian schools, and the company has four emigration consultants, which means we can represent our students and process their travel documents. So, we process admission for students into Canadian colleges, high schools, universities, for both undergraduate and postgraduate students.

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Wednesday 10 July 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

Motorcycle hailing firm MAX.ng raises $7.5 Mln to expand operations Stories by MICHAEL ANI

he uMunthu fund managed by Goodwell Investments, via its West Africa partner Alitheia Capital, has acquired a share in MAX.ng, the pioneer appbased motorcycle hailing in West Africa. MAX.ng has raised about $7.5 million from a group of investors including NovaStar Ventures, world-leading Japanese motorcycle and marine hardware manufacturer – Yamaha, Bill Gates-backed Breakthrough Energy Ventures, Africabased Zrosk Investment Management and other partners. The current round brings the total funding raised by the mobility startup

to $9 million. Existing investors include Techstars, Olive Tree Capital, Venture Garden Group, RightSide Capital Management, Shell Foundation and Angel investors such as Greg Schroy and Michael Lazerow. MAX.ng is a mobility platform that connects users to a network of vetted professional motorcycle-taxi drivers (known as MAX Champions) via mobile apps. The firm is building technology infrastructure and financial services to make mobility safe, affordable and accessible to 1 billion Africans, according to Adetayo Bamiduro, Co-founder and CEO “Building safe, affordable, massmarket transportation in Africa isn’t just about building mobile apps. It is about

creating financial, technology and operating infrastructure where it doesn’t exist,” Adetayo said MAX grew rides 17 times in 2018 and targets an $ 80 billion market across Sub-Saharan Africa. The mobility startup provides safe, affordable and accessible rides, helping its customers weave through Africa’s mostly unpaved and congested roads quickly and safely. It has completed over 1,000,000 trips and is one of Jumia’s largest delivery partners in West Africa. MAX plans to use the funding to expand to 10 cities across West Africa, scale its technology infrastructure, deploy mobile payments in partnership with Mastercard, introduce an electric

fleet and deploy new vehicle categories, including 3-wheel tuk-tuks. MAX.ng plans to scale its Operations and Engineering teams to support hyper-growth. MAX.ng, which has a strong presence in South-West Nigeria, intends to grow its geographic footprint rapidly, adding customers across Nigeria, Ghana, and Ivory-Coast. “MAX is at the intersection of mobility and financial inclusion – two important priorities for the uMunthu Fund. We are glad to be supporting MAX. ng and believe in its mission to address the mobility challenge in major cities across Africa, while also empowering everyday citizens”, commented Mobola Onibonoje, head of the uMunthu West Africa investment team.

AfCFTA to encourage private equity expansion into African markets

here are huge potentials for Private Equity (PE) funded companies looking to expand operations into other markets in Africa, thanks to the African Free Continental Trade Agreement (AfCFTA), The trade agreement would help in boosting transaction across the continent, a chief executive officer in one of Nigeria’s PE investment firm told BusinessDay. “With AfCFTA, there will be free movement of goods and services across Africa as such, companies can better expand operations to other potential markets in the region,” the CEO said on condition that name won’t be mentioned in print African leaders launched a continental

free-trade zone on Sunday that if successful would unite 1.3 billion people, create a $3.4 trillion economic bloc and usher in a new era of development. After four years of talks, an agreement to form a 55-nation trade bloc was reached in March, paving the way for Sunday’s African Union summit in Niger where Ghana was announced as the host of the trade zone’s future headquarters and discussions were held on how exactly the bloc will operate. It is hoped that the African Continental Free Trade Area (AfCFTA) - the largest since the creation of the World Trade Organization in 1994 - will help unlock Africa’s long-stymied economic potential by boosting intra-regional trade,

strengthening supply chains and spreading expertise. “The eyes of the world are turned towards Africa,” Egyptian President and African Union Chairman Abdel Fattah al-Sisi said at the summit’s opening ceremony. “The success of the AfCFTA will be the real test to achieve the economic growth that will turn our people’s dream of welfare and quality of life into a reality,” he said. Africa has much catching up to do: its intra-regional trade accounted for just 17 percent of exports in 2017 versus 59 percent in Asia and 69 percent in Europe, and Africa has missed out on the economic booms that other trade blocs have

experienced in recent decades. Economists say significant challenges remain, including poor road and rail links, large areas of unrest, excessive border bureaucracy and petty corruption that have held back growth and integration. Members have committed to eliminate tariffs on most goods, which will increase trade in the region by 15-25 percent in the medium term, but this would more than double if these other issues were dealt with, according to International Monetary Fund (IMF) estimates. The IMF in a May report described the free-trade zone as a potential “economic game changer” of the kind that has boosted growth in Europe and North America, but it added a note of caution.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 10 July 2019

BUSINESS DAY

POLITICS & POLICY Ishaku spites fire, says Nigeria’s democracy is embarrassing, insulting Nathaniel Gbaoron, Jalingo

araba State Governor, Darius Dickson Ishaku has described the version of democracy being practised in Nigeria as an embarrassing and insulting one that has no respect for the rule of law. The governor gave the assessment on Tuesday in Jalingo while reacting to the recent siege of his private residence in Abuja by the Nigeria police. He said the All Progressives Congress (APC)’s government under President Muhammadu Buhari was

not living according to the tenets of the constitution of the Federal Republic of Nigeria. Ishaku, who condemned the Nigeria Police for the biased and selective justice, also described the type of democracy practised in Nigeria as “nonsense and disgraceful”. The governor, whose voice was emotion-laden, wondered why the police would invade the private residence of a serving governor who is covered by immunity and only the PDP will condemn the act while the APC and its governors watch the impunity. “I feel very bad that the

democratic government of APC is not living according to the tenets of the constitution; it is disgraceful, embarrassing and insulting. “I am shocked that only PDP could talk about the siege on my house; APC didn’t talk about it. Can somebody walk into an APC governor’s house and search it? “They broke the door of the gate, broke all the doors of my house, threw out my children who I used two years to beg to come back to Nigeria, and now one of them has gone back; am still begging him to come back to Nigeria. It is nonsense,” Ishaku reacted.

Assembly backs Makinde on dissolution of OYSIEC, sack of Oyo council chairmen REMI FEYISIPO, Ibadan

yo State House of Assembly has declared the election conducted into the 35 local council development areas (LCDAs) by the state electoral umpire on May 12, 2018 as “unconstitutional, ultra vires, null and void.” They also threw their weight behind the decision of Governor Seyi Makinde to dissolve the Oyo State Independent Electoral Commission (OYSIEC). At the plenary yesterday, the Assembly held that the election contravened section 5(a) of the OYSIEC law 1999 that empowered the electoral commission to organise elections into local government councils not LCDAs. They argued that the powers of the OYSIEC were limited to conducting election into local government councils alone and not LCDAs. The plenary presided over by Speaker Adebo Ogundoyin, held that “the election negated the provisions of section 4(a), part II, third schedule to the 1999 constitution of the Fed-

eral Republic of Nigeria (as amended) which recognised conduct of election into local government areas.” The positions of the lawmakers were part of the day’s resolutions from a matter of urgent public importance presented by the House Majority Leader, Sanjo Adedoyin titled: ‘Need to Review the Activities of OYSIEC over conduct of local government and local council development areas election in conformity with provisions of the laws’. Also, the Assembly stated that Makinde’s dissolution of OYSIEC was in public interest and preservation of the sanctity of the nation’s 1999 constitution. Majority of members also asked the executive to urgently reconstitute the OYSIEC to organise fresh elections into local government councils. On his part, Dele Adeola (Iseyin/Itesiwaju constituency) noted that section 201 of the constitution recognised only 33 local government areas in the state, hence conducting election into 35 LCDAs amounted to illegality.

According to him, conducting election into the LCDAs amounted to legalising illegality which should be corrected. He accepted that LCDAs served the purpose of bringing government closer to the people, but said administrators should rather have been appointed to manage LCDAs rather than they having elected chairmen. However, the Assembly adopted Adeola’s prayers that the activities in the local government areas in the past one year be investigated. The Speaker Ogundoyin thereafter, announced the setting up of an eight-man ad-hoc committee headed by Ademola Popoola (Ibadan South East II state constituency) Minority Leader, Asimiyu Alarape, who raised objection to the resolutions, argued that the Assembly had in 2002, during the Lam Adesina administration, approved the creation of additional local government areas and its nomenclature was only changed to LCDAs during the Eighth Assembly.

Imo government suspends creation of new autonomous communities approved by Okorocha SABY ELEMBA, Owerri

mo State Government has announced the suspension of the 50 new autonomous communities approved for creation by the immediate past governor of the state, Rochas Okorocha. This was according to the state government official statement which announced the suspension of the 50 new autonomous communities,

the former governor, Rochas Okorocha, created them few days to the end of his second tenure, on political reasons. According to the official statement signed and issued by the Secretary to the State Government, Uche Onyeagocha, in Owerri, the state government has also suspended all kingship coronation ceremonies, with regards to the new autonomous communities. www.businessday.ng

The Secretary to the State Government in that statement, said that the present administration must probe the creation of the new communities and the scheduled coronation of their selected traditional rulers. It further stated that all letters of recognition issued to the affected communities by the Okorocha administration from January 1, 2019 had been withdrawn. https://www.facebook.com/businessdayng

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Wednesday 10 July 2019

BUSINESS DAY

Solid Minerals business

news Ekweremadu, Nwodo, Tuggar, others to grace 2nd Annual Igbo Cultural Festival in Germany MICHAEL ANI

igeria’s immediate past deputy Senate president, Ike Ekweremadu, president-general of pan-Igbo socio-cultural organisation Ohanaeze Ndigbo, John Nnia Nwodo, and Nigerian Ambassador to Germany, Yusuf Maitama Tuggar, are among special guests expected at the 2nd Annual Igbo Cultural Festival and Convention in Nürnberg, Germany on August 17, 2019. The 2nd Annual Igbo Cultural Festival and Convention being organised by Ndi-Igbo Germany (NIG) e.V, the apex body of all Igbos living and working in the Federal Republic of Germany, is scheduled to hold at Löwensaal am Tier Garten, Schmausenbruck Str. 166, 90480 Nürnberg, Germany, according to a press statement signed by Oge Ozofor, NIG coordinator, and Joe-blaise Nnaemeka Akanazu, the event committee chairman and NIG deputy coordinator.

Mining disaster in DRC holds lessons for Nigeria’s minerals industry JOSEPH MAURICE OGU

he mining disaster in southern Democratic Republic of the Congo (DRC) is a big lesson for Nigeria which is exploring solid minerals potential. At least 41 artisanal miners were killed when part of a copper and cobalt mine owned by Swiss-based mining giant Glencore collapsed recently in southern Democratic Republic of the Congo (DRC), the governor of Lualaba, Richard Muyej, has said. The accident was caused by the ill-equipped clandestine artisanal diggers who have illegally infiltrated mining sites, thereby digging without restrictions and supervisions causing the old terraces to give way and causing materials to fall. Mining activities in Africa are dominated by artisanal miners who are unregulated. In Nigeria, mining activities are largely dominated by artisanal miners whose activities are not regulated. Because of this, their activities usually pose serious risk to the environment, community, economy and to themselves as well. Oyewola Oworu, consultant geologist, Walled Resources Ltd., said mining has different stages of development: open pitch mining and underground mining. What people engage now is mainly artisanal mining, where handful of holes are dug under the ground, known in Hausa language as “loto.” Because these holes are not monitored and checked, they do collapse which ob-

viously lead to disaster. “The holes do collapse,” Oworu said. Making sure that miners do what are expected of them and to protect miners accordingly are the responsibilities of mining inspectorate, say experts. But because artisanal miners are not within the purview of the law, they are not mandated to be protected by the mining inspectorate. “Mining inspectorate cannot be protecting illegal operation. That is the major problem we have,” Oworu said on a telephone conversation with BusinessDay. To curb the activities of the artisanal miners and to make sure their lives are not at risk requires conscious efforts from the government through the relevant agencies, otherwise, Nigeria may continue to lose the lives of its workforce on the ground that the miners are unregulated. Oworu said there are adequate law in the country to regulate and monitor the activities of the artisanal miners, but Nigeria only lacks implementation and enforcement. “The laws are there,” he said, adding that “the problem is supervision to make sure that miners are doing the right thing.” Kabir Mohammed Kankara, national president, Miners Association of Nigeria (MAN), said Nigeria cannot experience such disaster because the mining sector of the country has not grown to such a level where big holes are dug underground, as it is in other mining developed countries such as DRC. The big holes leading to the collapse were products of years of mining activities. Mining activities are relatively new in Nigeria, Kankara said. “But what happened in www.businessday.ng

DRC is an eye opener for us to start putting measure into place. We do not have to wait until it happens to us before we can learn,” he said. Dele Ayanleke, national secretary, MAN, said apart from the handful of security challenges currently facing Nigeria, mining sites across the country are safe, without any fear of disaster. “Apart from banditry and kidnapping, our mining sites are safe,” he said. Nelson Eke, security consultant, Software Securities, said the security and policing of any nation has gone beyond mere using of hard ware equipment. The security apparatus now include listening and paying attention to the people’s needs. According to him, a lot of people go into illegal mining because there is no job for them to do. Many of them are not lettered, who just merely need some money to survive. “The so-called illegal miners do not even know the worth of what they carry. They just need something to feed on,” Eke said. According to him, if alternative jobs are provided for these artisanal miners, illegality in the mining sector will drastically reduce, thereby giving room for government to properly regulate the few existing ones. “Do not be surprised that these illegal miners are just exchanging their precious metal for a bottle of soft drink,” he deposited. Elsewhere in the continent, mine disasters have cost the lives of numerous miners, especially unauthorised artisanal miners who operate without safety standards or regulations. Nigeria needs to put his house in order before mining disasters catch us unaware, Eke said.

Also expected at the event are Suleiman Dauda Umar, Nigerian Consul-General in Frankfurt; Bianca Ojukwu, wife of the late Gburugburu Ndi Igbo and Ikemba Nnewi, Chukwuemeka Odumegwu Ojukwu; Innocent Chukwuma, CEO of Innoson Group of Companies, and His Majesty Eze Chukwuemeka Eri, Eze Akajiofo Igbo. Others are Chukwuemeka Ezeife, former governor of Anambra State; Prof Mazi Ojiaku, Mike Okiro, former Nigerian IGP; Emmanuel Iwuanyanwu, Ahaejiagamba Ndigbo; John C. Ejinaka, former Nigerian Consul-General Frankfurt; governors of the five South-Eastern states, among others. Themed ‘Reawakening the Igbo Spirit in the 21st century’, the organisers said the objective of the event, among others, is to provide a forum for Ndi-Igbo Diasporans and other stakeholders to network and consult on issues of economic importance and to enable an atmosphere of better, broader

cooperationbetweentheGermanNigerian business communities with the aim of boosting investors’ interest and facilitating pragmatic exchange of expertise and transfer of technology to our homeland. “The event is part of our initiatives to expedite the integration of NigeriansinGermanyintonational development, by synchronising theactivitiesofourdiasporagroups with home-based organizations,” the organisation said in the press statement. “The event is an opportunity todemonstrateourunity,toshowcasetherichnessofourculture,our resilient and adaptable spirit, our unanimity in identifying with the highstandardofourforebearsand heroes of past,” it said. The statement said Ndi-Igbo Germany (N.I.G) e.V will also use the opportunity to host and honour distinguished sons and daughters of Nigeria who, in spite of all odds, have distinguished themselves in their various fields of endeavour.

SMEDAN, CAC, NAFDAC, SON partner on MSMEs business clinic IDRIS UMAR MOMOH, Benin

mall and Medium Enterprises Development Agency of Nigeria (SMEDAN), on Tuesday, said the agency was partnering regulatory agencies to implement the open-air Micro, SmallandMediumbusinessclinic to improve the ease of doing business in Nigeria. Director-generaloftheagency, Dikko Umaru Radda, made the disclosure at a capacity building programme for Business Membership Organisations (BMOs) with the theme, “Unlocking Business Membership Organisations (BMOs) growth to drive global competitiveness.” Dikko, represented by Friday Okpara, director, Policy, PartnershipandCoordination,SMEDAN, said the partnership was geared towards ensuring MSMEs meet the regulatory requirements and standards. He listed the regulatory agencies partnering SMEDAN to include Corporate Affairs Commission (CAC), Standards Organisation of Nigeria (SON) and the National Agency for Food and DrugsAdministrationandControl (NAFDAC). The agency is partnering CAC

to implement the incentive on the cost of registration of business name, which now stands at N5,000 only. Dikko, who said similar capacitybuildingprogrammesforBMOs were held in Imo and Kano states in 2017, noted that Edo State was chosen for this year programme due to its strategic position as the gateway to the South-South and South-East of the country. He said the choice of the state was also occasioned by the state governor, Godwin Obaseki’s disposition and resolute to frugally applythestate’sresourcestocritical sectors such as infrastructure and education that had put the state on the path of prosperity and sustainable development. “Yours Excellency, your economicdevelopmentplanofopening up investment opportunities with priority given to initiatives that priorities the state’s competitive advantage in agriculture and human capital development is commendable “Your dedication has triggered a renewed drive to create cities with modern facilities, industrial hubsandbusinessclustersthatwill strengthen the MSMEs towards global competitiveness. “The vision being concretized

under your administration is to reposition the state as the nucleus ofmicro,smallandmediumenterprises in Nigeria,” he said. The SMEDAN boss opined that Nigeria must work to ensure standardisation of its product in order to benefit more in the African Continental Free Trade Area (AfCFTA) agreement and to meet global competitiveness. He however lamented that in spite of the nation’s dominance in the ECOWAS region in size and population, it real GDP growth for 2018 was only 1.9 percent and 2 percent in 2019, attributing the development to the operational inefficiency and the zero value addition to raw materials by the MSMEs in the country. In his goodwill message, Edo governor, Godwin Obaseki, stressed the need to diversify the economy by putting appropriate policy in place and collaboration with the private sector. Obaseki, represented by the permanent secretary, Ministry for Wealth, Cooperative and Employment, Joe Edionwe, said the state hadputmeasuresinplacetojumpstart its economy and charged the participants to make the best out the programme and add value to their products.

How Nigeria can gain from AfCFTA, says NECA JOSHUA BASSEY

igeria Employers’ Consultative Association (NECA) has backed Federal Government’s decision to sign the African Continental Free Trade Area (AfCFTA) agreement, saying Nigeria stands to gain from the trade deal if necessary measures are adopted to maximise the opportunities it will throw up. Timothy Olawale, director-generalofNECA,whospokeexclusively withBusinessDayonTuesday,noted that having endorsed the free trade pact, it behoves on Nigeria to take precautionary steps to making sure the economy benefit maximally ratherthanlosetotheAfCFTA. President Muhammadu Buharisignedthetradedealonbehalf ofNigeriainNiamey,NigerRepublic, Sunday, July 7, during the 12th extraordinarysessionoftheAfrican Union (AU), where the right to

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host the secretariat of AfCFTA was ceded to Accra, Ghana. According to Olawale, NECA and the larger organised private sector endorsed the signing with pre-conditionsonwhatgovernment must do to ensure that Nigeria optimisesorreapsthemaximumbenefit derivablefromtheagreement. “These will mitigate the fear of Nigeria becoming a dumping groundforforeigngoods,ensurethe competitivenessandsustainabilityof our local manufacturing industries and encourage foreign investors’ inflowintothecountry,”hesaid. The DG explained that the Nigerian government would be expected to improve generally on infrastructure, chief among which werepowerandroadnetworkand ofcourseresolvethelingeringissue ofinsecurity,whichhasbecomean albatrosstobusinessesandsafetyof personnel all over Nigeria. “These would create a condu@Businessdayng

cive environment for businesses to thrive and be competitive with the expected result of job creation and improved earning exports for the country as well,” he said. President Buhari had in 2018 withheld his signature to the African trade deal, as local manufacturersexpressedfearsitwouldhurt theeconomyandputtheeconomy at the receiving end. About 24 countries have so far ratified the AfCFTA, which seeks to liberalise trade among African countries. It is targeted at a ‘borderless’Africaforthepromotionofgood andservicesacrossthecontinent. The AfCFTA is expected to be the world’s largest free trade area since the formation of the World Trade Organisation (WTO) with a potential market of 1.2 billion people and a Gross Domestic Product(GDP)ofabout$25trillion across all 55-member states of the African Union.

Wednesday 10 July 2019

BUSINESS DAY

news Edo Speaker to House of Reps: Don’t be dragged into illegality by desperate persons

peaker of Edo State House of Assembly, Frank Okiye, has called on the House of Representatives not to allow themselves to be used by anyone to achieve their personal agenda. According to the Speaker, the Edo House of Assembly was duly inaugurated on June 17, 2019, and since then the business of law making has been going on without any hindrances. He said, “May I state that apart from the fact that the

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Edo Assembly complied with the Nigerian Constitution in the inauguration of the House, there also exists a court order with suit number FHC/B/CS/70/2019, FHC/B/M/285/2019, ordering the National Working Committee of the All Progressives Congress (APC), Inspector General of Police, the Commissioner of Police in Edo State, Mallam Lanre Issa-Onilu, all defendants, their servants and agents, not to interfere, disrupt or obstruct the constitutional duties of members of the

Edo House of Assembly.” The speaker said, “We welcome the decision of the House of Representatives to investigate all the issues surrounding the inauguration of the Edo State House of Assembly. We are confident that they would not find anything contrary to the provisions of the Constitution. “We humbly advise them to be guided and not get involved in petty politics to fan the ego of an aspiring Godfather.”

NNPC to commence export of petroleum products - Baru Tony Ailemen, Abuja

… says will partner EFCC to check frauds capacity to deliver on the export plans “We expect that as we have stabilised the supply of fuel to the economy, they will make sure they start exporting products to neighbouring countries. I am so convinced that this team will deliver,” he said. Also speaking on his mission, Kyari said his mission was to make the nation’s oil company a global companyofexcellenceanddeliver the benefits of oil and gas industry to the citizenry Kyari, a geologist and until recently, Nigeria’s representative to the Organisation of Petroleum Exporting Countries, OPEC, also promised to fight corruption and other unwholesome practices in theoilandgassector,bypartnering with the Economic and Financial Crimes Commission EFCC to tackle the challenges of graft in the industry. With Nigeria’s current spending of about N700bn in unex-

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igerian National Petroleum Corporation (NNPC) is to commence the export of petroleum products to Nigeria’s neighbours. TheoutgoingGroupManaging Director of the NNPC, Maikanti Baru disclosed this on Tuesday while fielding questions from State House Correspondents after formally“introducing”thenewGMD, Kolo Kyari, to President Muhammadu Buhari, at the Presidential Villa, Abuja. Baru said with the level of stability attained in the petroleum industry, especially in the supply of fuel, the new NNPC management team should be able to commence export of petroleum products to Nigeria’s neighbouring countries, within the shortest possible time. Baru, who did not give further details, however, assured that the incoming NNPC management team headed by Kolo Kyari has the

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plained fuel subsidy, which is estimated to hit N1.149T in 2019, unproductive spending in turnaround maintenance on the nation’s refineries, Kyari promised to focus on ensuring that he delivers within “the shortest possible time and in the most efficient way.” Kyari said he understood the gravity of his assignment and the trust that goes with it. “I understand the gravity of the assignment given to me, the trust that is associated with this work and the high expectations of Mr President for us to make the company, a global company of excellence and to deliver to the citizenry the benefits of the oil and gas industry,” he said. “I assure all of us that we will do this work with integrity. I will ensure that by 2023 Mr President will look back and confirm that he has not misplaced his trust first of Dr. Baru and transferring it to us is a testament of the confidence Mr President has for the corporation.”

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Wednesday 10 July 2019

BUSINESS DAY

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Wednesday 10 July 2019

BUSINESS DAY

news Insurers look to hedge underwriting losses as claims hit ... Continued from page 1

N50 billion. Other major claims in the industry were also from aviation and maritime risks, which many companies lament pushed their bottomlines to negative during the 2018 financial year. Analysts have noted that insurance companies are grappling with declining underwriting profit arising from falling rates due to unhealthy competition and craze to get few available businesses, particularly corporate accounts. In this vein, operators in a bid to survive resort to rate cut, which has further eroded premium volume, underwriting profit, and put more pressure on bottom-lines. Consequently, claims are rising at a rate never witnessed in the industry,

particularly since the last economic recession when many Nigerians have resorted to taking advantage of every opportunity in their hand to earn extra income or reduce expenditure. Incidentally, insurers have seen increasing claims filing at the slightest loss (accident) cases, especially on motor insurance policy which hitherto was ignored by most insured members of the public. Some of the operators who spoke to BusinessDay said they were being cautious on the type of risks they take because the claims are coming in droves. “We have to watch our back so that we do not erode our shareholders’ fund,” one of the chief executives, speaking anonymously, said.

Meanwhile, while the industry was grappling with these challenges, companies’ boards were looking behind the numbers and this has seen no fewer than three employee chief executives relieved of their jobs over what has been described as non-performance, while some others are seriously under watch. At the annual general meetings of majority of the insurance companies held this year, one common excuse that was given to shareholders as reason for high underwriting losses was oil and gas claims, particularly on Egina loss, which many of the companies participated in. Remi Babalola, chairman of Law Union and Rock, providing clarifications to shareholders during the

company’s Annual General Meeting in Lagos, said many of the companies took part in the big claims that befell the industry in 2018. “We should be happy that our company was able to meet its claims obligation to our customers because that is why we are in business,” he said. But Tola Adegbayi, executive director, general business at Leadway Assurance Company Limited, said the case of Egina, for which they are lead underwriters, is not uniquely different from any other risk in the market. “I hear people say it is the biggest claim in the market; it is not, because we have had bigger claims before now,” Adegbayi said. She, however, added, “We encourage underwriters to take adequate risk management through reinsurance, but you see some greedy ones will take

risks and fail to reinsure adequately and these are the people that will be complaining about huge claims.” Insurance is about paying claims, and that is what you owe to customers, she said. Owolabi Salami, executive director, Allianz Nigeria, said, “It’s not every risk we accept. If the pricing is not good we reject it because you can’t be sure when the claims will come, but definitely it must come.” He noted that a lot of companies today will have problem asking for new capital from their shareholders because they must justify why they need to be given more money, and that will depend on what dividends have been paid in the past. According to Salami, checkmating rate cutting and poor pricing would become effective when

boards are able to sack CEOs when they fail to perform, and then lessons will be learnt about appropriate pricing and creating shareholder value. On rising claims and importance of reinsurance, analysts at A.M. Best note that reinsurance partnerships are the cornerstone that provides the capacity for insurers to profitably write businesses. They note that this has enabled the Caribbean market weather two years of heavy catastrophic losses with little or no major operational impact. “These longstanding partnerships have proven to be extremely resourceful in the context of prudent catastrophe risk management, given that exposure to natural disasters is the greatest peril faced by carriers operating in the Caribbean,” the agency said.

Presidential election tribunal: PDP witness alleges ... Continued from page 1

speaking during his cross examination by APC lawyers at the Presidential Tribunal on Tuesday. The witness also told the court that he voted without accreditation on February 23. Yusuf alleged that presiding officers who were supposed to have taken reports of complaints from electoral officers were forced out of the polling units during the election. Yusuf ’s claim was intended to prove his allegation that elections were marred by widespread irregularities, crisis and electoral fraud. The witness, who gave a breakdown of votes allegedly polled by the PDP and

the APC, said the party secured 905,000 votes across Katsina State while the APC had 872,000 votes. Another witness, Sallisu Funtua, a local government collation agent, read through his written statement to show that he had reported cases of election irregularities in various parts of his local government, resulting in the cancelation of results in at least two polling units. Atiku Abubakar and his party, the PDP, are challenging Buhari’s victory and have tendered 26,175 exhibits to the tribunal. E a r l i e r o n Mo n d ay , the PDP presented Buba Galadima, a former ally of President Buhari, as its witness at the tribunal.

L-R: Tolu Odukoya-Ijogun, head brand, marketing and communications, FSDH Group; Eniola Badmus, brand ambassador, FSDH Asset Management Ltd, and Mayowa Ogunwemimo, managing director, FSDH Asset Management Ltd, at the Ambassador Endorsement ceremony in Lagos.

Race to construct Bonga South West FPSO tightens as 3 bidders emerge Continued from page 1

integration work on Total’s Egina project. A consortium of China’s Offshore Oil Engineering Company (COOEC) and Italy’s Saipem are also in the race. Iain Esau and Xu Yihe, analysts at Upstreamonline. com, an online platform that provides oil and gas news reported July 4 that an informed source said COOEC would build the topsides but would outsource hull fabrication work to other yards in China. Saipem will deal with the challenging local content aspect of the project. A third group believed to be preparing to submit bid documents is China’s CIMC Raffles and Monobuoy, a Lagos-based engineer-

ing concern with a United States of America parent company. CIMC was previously expected to tie up with Kavin Engineering and NOV, and it is not known if these two contractors remain involved. However, the Samsungled group will be the bidder to beat because it has access to the only yard in Nigeria able to build and integrate FPSO topsides, a key factor in satisfying stringent local content requirements. It would have to navigate its thorny relationship with the Lagos Deep Offshore Logistics Base (Ladol), its joint venture partner in the SHI-MCI yard. The most likely scenario www.businessday.ng

will see Samsung use the SHI-MCI yard for BSWA, although experts have said that the Korean giant could propose other options. For years, Niger Dock has been touted as a possible facility that could be upgraded to handle FPSO and topsides work. On February 14, Shell Nigeria Exploration and Production Company (SNEPCo) had announced the release of Invitation to Tender (ITT) to contractors for the development of the Bonga South West Aparo (BSWA) oil field. The project’s initial phase includes a new FPSO vessel, more than 20 deep-water wells, and related subsea infrastructure. The field lies

across Oil Mining Leases 118, 132 and 140, about 15km southwest of the existing Bonga Main FPSO. The ITT is for engineering, procurement and construction contracts for the 150,000 barrels per day project in the Gulf of Guinea. “This is a new vista for deep offshore oil and gas exploration in Nigeria based on a revised commercial framework embraced by government and the project investors,” Bayo Ojulari, SNEPCo’s managing director, said on 14 February 2018 a day after the execution of the Heads of Terms by the Nigeria National Petroleum Corporation (NNPC), SNEPCo and its Unit partners, revising the terms of

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the OML 118 Production Sharing Contract, in a media release of February 14, 2019, signed by Bamidele Odugbesan, media relations manager at Shell Plc stated; obtained from the super oil major’s website. Ojulari said, “SNEPCo has concluded OML 118 negotiations with the NNPC. We now have a clear commercial framework, supported by the government and project investors, toward a potential Bonga South West Aparo Final Investment Decision (FID).” BusinessDay rang Odugbesan at 12:57 pm on Tuesday but he was in a meeting and could not immediately comment before press time. McDermott, Saipem, Subsea 7 and TechnipFMC are among those set to submit bids by the end of this @Businessdayng

month for the project’s EPC2 package which will be worth upwards of $1 billion. B S WA’s u m b i l i c a l s , single-point mooring system and subsea production system are subject to separate bid processes, with TechnipFMC, BHGE, and OneSubsea thought to be chasing the latter, which is centred on more than 20 wells. However, many project watchers are doubtful that the scheme will progress as planned unless the FPSO costs, in particular, can be reined in, and Shell and its partners can finalise an agreement with Nigeria’s government on a new production sharing contract for the asset.

•Continues online at www.businessday.ng

Wednesday 10 July 2019

BUSINESS DAY

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BUSINESS DAY

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BUSINESS DAY

NEWS INEC to de-register non-performing political parties, ‘at appropriate time’ Iniobong Iwok

ndependent National Electoral Commission (INEC) says political parties that violate the constitutional requirement before their registration would be deregistered “at the appropriate time” before the commencement of electioneering for the 2023 general elections. About 91 political parties are officially registered in Nigeria; however, most of them lack national spread and capacity to win elective positions in the country. In most cases, their founders often use these parties as bargaining chips for political patronage. But with the conclusion of the 2019 general election, there has been increased agitation by political stakeholders for INEC to reduce the number of parties. This, they say, is part of the reforms needed to sanitise the electoral system ahead of the 2023 general election. Festus Okoye, INEC national commissioner and chairman, Information and Voters Education Committee, in an interview with BusinessDay in Lagos, Tuesday, said that the parties were aware of the constitutional requirement they must meet in order not to be delisted. According to Okoye, “We have the power to deregister po-

litical parties. At the appropriate time, the commission will look at the number of political parties that we have and see which ones are in violation of the provision of their registration and in good standing.” “The moment we see the see anyone that is in violation of the guild lines the commission would use its constitutional power to do the needful,” Okoye said. He, however, denied insinuations that the commission lacked the constitutional power to deregister non-performing parties in the country, stressing that INEC would soon carry out a review to check which of them violated these provisions. “We have never said we don’t have the power to delist political parties which are not performing; section 225A of the Constitution gives INEC the power to delist parties which do not meet the constitutional requirement which they were registered,” he stressed. He said the parties know these conditions, adding, “The moment you fall off these conditions you will be deregistered. “If you don’t have five percent in the presidential election you can be deregistered if you don’t win a certain number of seats in the National Assembly you can be delisted,” he pointed out.

Investment drive: FG commences environmental, social impact assessments for Edo Modular Refinery … Edo councils share N3.09bn allocation in May

ederal Government has commenced Environmental Impact Assessment for the proposed Edo Modular Refinery being developed by Edo Refinery and Petrochemicals Company Limited, a firm floated by the Godwin Obaseki-led Edo State Government to refine petroleum products in the state. A statement by permanent secretary, Federal Ministry of Environment, on behalf of the Minister, said the exercise is in accordance with the provisions of the Environmental Impact Assessment (EIA) Act E12 LFN, 2014 and entails public display of the draft EIA report in centres across Edo State and Abuja. According to the statement, “In accordance with the provisions of the Environmental Impact Assessment (EIA) Act E12, LFN, 2014, this makes it mandatory for proponents of all new major development activities to carry out Environmental Impact Assessment (EIA) of their proposed projects, the Federal Ministry of Environment hereby announces a 21 working days public notice for information and comments on the ESIA draft report submitted by Edo Refinery and Petrochemicals Company Limited.” The project, according to the statement, involves the development of 6000 barrels per day Modular Refinery where crude stock will be refined into finished products such as Kerosene, Diesel, Naphthalene and Petrochemicals. “The plant will be fitted with state-of-the-art infrastructures such as sewage and effluent

treatment plants, storm-water drains on a land take of 5.1 Ha. The proposed project is planned to be implemented in two phases of 1000 and 5000 barrels per day respectively.” The display centres, according to the statement, are Edo State Ministry of Environment and Sustainability, State Secretariat, Benin, Edo State; Headquarters of Ikpoba-Okha Local Government Area, Ologbo, Edo State; Federal Ministry of Environment, Environment House (Brown Building), Independence Way South, Central Area, Abuja FCT. The duration of the display runs from 8th June to 5th August, 2019, between 8am to 4pm. The ministry directed that all comments received should be forwarded to the Minister of Federal Ministry of Environment on or before July 31. Meanwhile, Edo State Joint Account and Allocation Committee (JAAC) has declared N3.085 billion as the gross allocation that accrued to the 18 Local Government Areas in the state for the month of May. The committee said Internally Generated Revenue (IGR) from the 18 local councils for the month of May stood at N190.79 million. Addressing journalists at the end of the JAAC meeting presided over by Governor Godwin Obaseki at the Government House, in Benin City, chairman, Oredo LGA, Jenkins Osunde, said the total deduction made from the gross allocation was N1.68 billion while net allocation was N1.41 billion. www.businessday.ng

Why Nigeria is target of major investment decisions in Africa - Gambian developer Chuka Uroko

igeria’s strength arising from its large population and relative strong economic disposition is not lost on most African countries that see the country as the continent’s big brother. This view was reflected in the submissions of Mustapha Njie, a Gambian real estate developer, who spoke in an interview with BusinessDay in Banjul, the Gambian capital, at the weekend. Njie, a frontline businessman in The Gambia with strong bias in real estate investment and development, disclosed to BusinesDay that Nigeria was always the centre piece and target of their investment decisions whether in The Gambia or Nigeria where he had made considerable investments. Nigeria’s population, which is about 50 percent of the popula-

tion of the entire West African countries put together, is a huge market any investor could not gloss over, Njie said. “IhavealwaysidentifiedNigeria as the big boy of Africa. This is reflected in the country’s GDP and its population. So, it makes sense that anythingyouaredoing,investment wise, you must target the country and its people,” he explained. Njie’s company, Taf Africa Global, is registered in eight African countries with strong footprintsinNigeriaandTheGambia. According to the developer, thecompanyhasinvestedcloseto a billion dollars in their ambitious housingandmixed-userealestate projects scattered in various parts of the two countries. Over the weekend, a Nigeria trade delegation comprising investors from diverse sectors of the economy was in The Gambia at the instance of Taf Africa Global to

explore investment opportunities in the country. Isatou Touray, the country’s vice president, assured the visiting investors of not only the safety of their investment but also that the country was now ready and open to business after the dark days of dictatorial leadership in the country. They were offered tax incentives and hassle-free access to land for investment in real estate, manufacturing, energy, tourism and agriculture. Njie told the investors that a new project in the country, GIETAF, a joint venture between Taf Africa Global and the Gambian government, offered immense opportunities for investment in various sectors of the country’s economy. He hailed the Africa Continental Free Trade Area (AfCFTA) agreement, which Nigeria signed

attheweekend,sayingithadgiven Africa the biggest economic bloc in the world because the continent was now borderless and anybody could move from one country to another to do business freely. Henotedthathiscountry,The Gambia, was a small one that was why they needed ‘big brothers’ from Nigeria to come and invest, not only to help the country and its economy to grow, but also to empower its citizens by creating jobs for them. “I want to liken The Gambia to Dubai, which like us, has no natural resources but is a success story. Much of the investments you see in Dubai are owned by foreigners. We want to replicate that here. We want The Gambia to be the Dubai or Singapore of West Africa, and we want Nigeria to play a leadership role here,” he pleaded.

Nigeria requires private finance to bridge $3trn infrastructure gap by 2024 - AfDB Cynthia Egboboh, Abuja

frica Development Bank (AfDB) says despite the $45 billion foreign reserves and a pension fund of about N8 trillion, Nigeria still requires a considerable amount of private finance to bridge its infrastructural needs of about $3 trillion by 2024. Speaking at Africa Investment Forum, in Abuja on Tuesday, Ebrima Faal, senior country director at the AfDB, said private sector finance was needed to bridge the huge infrastructure gap and create opportunity to exhaust numerous options for sound, innovative and economically viable growth for Nigeria as well as the African continent at large. “We are hosting the Nigeria roadshow to bridge the Africa infrastructure investment gap through the provision of debt and equity finance, project development, technical and advisory services,” Faal said. According to Faal, the roadshow was held to ensure that key industry players and policymakers maximise opportunities to connect, engage and close high-impact deals which will prepare Nigeria to attract viable investments at the Africa investment forum in November 2019. Faal stressed that Nigeria had five deals worth $7 billion from the total deal in 2018, adding that West Africa accounted for 36 Percent of the deals closed at the 2018 Africa investment forum, with 19 projects worth $16.1 billion presented and 16 projects valued at $13.1 billion secured as investments. “Nigeria was very visible at the 2018 investment forum. Out of 63 boardroom deals presented at the forum, Nigeria had five deals worth $ 7 billion. This represents 14.9 percent of the total deals accounted for the continent and 43 percent of deal accounted for the region. We can do better,” he said. Kayode Fayemi, governor, Ekiti State, in his remarks, noted that with $3 trillion infrastructure gap in Africa, it is inevitable to seek the private sector participa-

tion in ensuring investment that could bridge the Gap. He said private sector funding was critical in bridging this gap and particularly creating jobs for the jobless population. Fayemi speaking further, stressed on the need for the government to ensure an enabling business environment that could attract viable investments and greater private sector par-

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ticipation. “Nigeria is opened for business,” he told those attending the summit, adding, “Though the government has championed some programmes to create a conducive business environment, these programmes need to be upheld and sustained to attract more investments and greater private sector participation.”

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Taiwo Adeniji, senior director, Africa Finance Corporation, said infrastructure development had remained a major issue for the continent as it has often led to a cut down in total GDP by 2 percent and reduced productivity by 40 percent. “Africa has a massive infrastructural deficit in all sectors and we want to change this narrative,” he assured investors.

Wednesday 10 July 2019

BUSINESS DAY

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Wednesday 10 July 2019

BUSINESS DAY

NEWS

Nigeria strengthens cross-border immunisation SON seizes substandard materials with focus on nomadic populations worth N38m in Lagos Jonathan Aderoju

n renewed efforts to vaccinate children traversing in and out of Nigeria, the World Health Organisation (WHO) is supporting the government in an initiative to improve supplemental and routine immunisation activities in the North Western region, which has a significant nomadic population. Nomadic pastoralists live beyond the reach of established health care programmes that are designed to serve sedentary populations. As a result, these groups are often underimmunised and out of the reach of existing disease surveillance activities. Speaking on the intervention, Gwanda Mairakuma of Maiadua Local Government Area in Niger Republic, said, “With this intensified commitment, vaccination activities have reduced the number of complications associated with measles infection on our children.” Difficulties have been experienced in the past in tracking and reaching nomadic populations with services such as

sensitisation on early disease reporting, immunisation activities and access to general healthcare services due largely to the nature of their movement, which often involves settling in hard-to-reach transit camps. Reaching the nomadic population in the cross-border areas of the North Western region has been particularly difficult due to the nature of the population, which involves settling in hard to reach and sometimes security compromised areas, making the zone the highest with under-immunised children in the country. Jigawa and Katsina states in particular are maximising efforts in reaching these populations by identifying major migrant groups and characterising the movement of nomadic populations in the region for effective administration of vaccines. In collaboration with Katsina State government, WHO has intensified efforts to reach nomadic communities across the state with immunisation services, sensitisation on prompt disease reporting and on the need to access healthcare services.

NAFDAC indicts National Eye Centre over application of wrong injection

JOSEPH MAURICE OGU

tandard Organisation of Nigeria (SON), Monday, seized building materials stocked in a warehouse at Ajayi Street, Ojodu, Lagos, worth N38 million. SON stormed the said warehouse Monday morning to confiscate some building materials considered to be substandard, and they included roofing sheets and roofing zinc galvanisers. Obiora Manafa, director, inspectorate/compliance monitoring, SON, said a special joint taskforce was inaugurated by the director-general of SON with the aim of eradicating substandard roofing sheets from the markets, and that was what the monitoring team was out to achieve. According to Manafa, the taskforce was given 13 points term of reference but the overall mandate was to eradicate substandard products from Nigerian markets. On assessing the said warehouse, Manafa said the organisation was able to identify some substandard roofing sheets, galvanised and steel roofing sheets, which would were evacuated away for destruction, in accord-

ance with their mandate. The galvanised roofing sheets, Manafa said, did not meet up to the standard stipulated by NIS-180, which pegged the minimum thickness of galvanised roofing sheets at 0.15mm. “We have seen that most of the things here are below the minimum thickness,” he said, adding that the organisation would not keep such substandard products in the market. Reeling out some of the dangers associated with substandard products, Manafa said substandard products would not give consumers true value for their money, which the organisation was not ready to compromise. In addition, importing cheap substandard products would under-price the local manufacturers, which meant they would not be able to compete favourably in the market. The resultant effect would be to sack workers and eventually force them out of market, a situation, which was not healthy for the economy. “Once you use this type of roofing sheets to build your house, any little wind will blow it off, that is one thing we do not want to encourage” he said.

Apapa Customs records 95,229.15MT of exports with N14.3bn FOB in H1 … generates N203.3bn in revenue tion will result to port congestion AMAKA ANAGOR-EWUZIE and accumulation of demurrage igeria Customs Service charges. (NCS), Apapa Area 1 Meanwhile, Abba-Kura said Command, says it re- the revenue generated by the corded a total export of goods Command in H1 exceeded the of 95,229.1 metric tons with N176.7billiongeneratedthesame Free on Board (FOB) value of period in 2018 by N26.5 billion. $46,613,453.75, equivalent to “This feat was made possible by over N14.25 billion in the first six strict adherence to professionalmonths, January to June 2019. ism through sensitisation of ofThe Command also an- ficers as to their responsibilities in nounced total revenue of approxi- line with the standard operating mately N203.26 billion for the procedures for optimal revenue period under review, which rep- collection. resents 54.5 percent of its annual “Other factors include perirevenue target of N372.56 billion. odic stakeholder engagements, Speaking with newsmen in open-door policy, prompt resoLagos on Tuesday at the mid- lution of disputes by the Dispute year briefing, Muhammed Abba- Resolution Committee, as well as Kura, Customs area controller maintaining the right synergy and of the Command, said most of collaboration with sister-agenthe exported items were mostly cies,” he said. mineralresourcesandagricultural In area of anti-smuggling, the produce including sesame seeds, command seized 29 containers cashew nuts and others. of various items that contravened Abba-Kura, who said export trade procedures, with a cumulatrade through the port had been tive Duty Paid Value (DPV) of on the rise, pointed out that ex- N418.4 million. porters must ensure that all docuThe items include tomato ments needed for exports were paste, vegetable oil, tramadol, readily available before bringing ladies and girls’ fashion footthe cargo to the ports. wear, armoured glasses without According to Abba-Kura, End-User Certificate, as well as bringing the goods to the port drilling pipes labelled in foreign beforecommencingdocumenta- language.

… costing 10 patients their eyesight CALEB OJEWALE

ast month, 10 patients at the National Eye Centre, Kaduna, lost their sight following the administration of Avastin 100mg injection, an injection actually meant for cancer treatment. Thisdecisionhasnowbeenfound wanting by the National Agency forFoodandDrugAdministration and Control (NAFDAC). The said Avastin injection, according to NAFDAC, was registered in Nigeria for metastatic colorectal cancer, metastatic breast cancer, advanced metastatic or recurrent non-small cell lung cancer, advanced and/or metastatic renal cell cancer, ovarian cancer and cervical cancer. “Therefore, the use of Avastin injection at the National Eye Centre was an off-label use,” said NAFDAC in a statement sent to BusinessDay, “that is, it is not indicatedonthelabelbythemanufacturer or approved for treatment of eye ailments by NAFDAC.” The statement further noted that Avastin 100mg injection

manufactured by F. Hoffmann-La Roche, Kaiseraugst 4303 SwitzerlandisregisteredbyNAFDACwith NAFDAC Registration Number A6-0123. Avastin 400mg injection manufactured by F. Hoffman-La Roche, Mannheim, Germany is also registered with NAFDAC Registration Number A6-0101. However, the product, as evidenced by the usage in Kaduna, appears to be wrongfully administered on patients, for purposes other than what it is labelled for. The NAFDAC statement follows an investigation after a report of the incident was made, and circulated in the media. According to NAFDAC, a team was constituted to investigate the situation, and members of the team met with the management of the National Eye Centre, Kaduna. One packet of Avastin injection in stock at the hospital was taken for laboratory analysis to ascertain the quality of the product, and the report of analysis revealed that the Avastin injection conforms to quality specifications.

Eunisell reiterates commitment to reduce marginal field owners’ challenges

ne of Nigeria’s leading oil and gas production solutions firms, Eunisell, has reiterated its commitment to assist marginal oil field owners overcome complex technical and financial challenges. Speaking at the Nigeria Oil and Gas Conference and Exhibition (NOG 19) in Abuja, Eunisell’s group managing director, Chika Ikenga, said this would help the government achieve its local content programme objectives. “We are proud to be a Silver Sponsor at NOG 19 in Abuja. Achieving the objectives of the local content programme is a vital factor in sustaining Nigeria’s

economic development and oil industry growth. “Eunisell brings in its own assets and resources to help achieve early cash flow and accelerate the marginal oil field development. Our track record speaks for itself. We are there to help build viable, Nigerian oil and gas businesses,” Ikenga said. The marginal field development programme and the recent divestments of fields by IOC’s have increased the participation of Nigerians in the oil and gas industry. The gap in technical and financial resources that have fallen out of recent developments is being closed by Eunisell’s unique production solutions. www.businessday.ng

L-R: Mohammed Ajiyah, board member, Digital Bridge Institute (DBI); Aminu Abdullahi of Nigerian Communications Commission (NCC), representing the executive vice chairman of NCC; Uwem Asomugha of the Ministry of Communications; Alfie Hamid, Cisco regional manager for Africa, and Viola Askia-Usoro, acting administrator, DBI, at the Cisco Networking Academy (Africa Safari 2019) held at DBI, Lagos campus, yesterday.

INEC seeks media guidance to improve electoral process OLUWASEGUN OLAKOYENIKAN

n a bid to improve the administration and management of elections in Nigeria, the Independent National Electoral Commission (INEC) has sought the views of the media, civil society groups, and organisations on critical issues in Nigeria’s election process that could be improved on. The issues, INEC said, may not be at the front burner of the lawmakers, but were needed to appraise the challenges in the 2019 general elections, adjust or jettison some of the processes that failed to deliver expected results. “There are issues which many of you felt you could

raise for INEC for the improvement of the electoral process but only if you had access to us,” Mahmood Yakubu, INEC chairman, said at a review meeting for line editors in Lagos on Monday. Yakubu noted that the avenue had been created for the press to air their perspectives on a number of issues, as they don’t just analyse events, but were also citizens of the nation. “This period offers us the opportunity to make suggestions and recommendations on how to properly and convincingly domicile credible elections in Nigeria,” Festus Okoye, INEC national commissioner, stated while delivering his address. “We must be careful not to fall into

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the trap of believing that every electoral challenge must be solved through constitutional or Electoral Act amendment.” Part of the issues the electoral umpire presented for media critique was a constitutional and legal framework for the registration and regulation of political parties. INEC pointed out that the toughest condition for the registration of political parties in the country was the requirement of having an office in the Federal Capital Territory, Abuja. As a result, the electoral commission sought to know if the number of parties should be regulated through legislative interventions or place a threshold on the conditions for getting on the ballot. The issue of deregistration @Businessdayng

of political parties trailed closely. “Are the conditions ambiguous and leave room for multiple interpretations?” INEC inquired. It further asked if deregistered political parties and their sponsors could be allowed to re-apply for new registration and be registered within 30 days as prescribed by law for new entrants. On the possibility of shortening timelines provided for the activation of the courts and disposal of all pre-election matters, INEC asked if there was “a possibility of altering the constitution and moving timelines backward to make for the determination and disposal of all preelection matters before the conduct of elections”.

Wednesday 10 July 2019

BUSINESS DAY

tax issues Improving tax administration in Nigeria: Building on recommendations of the forum on taxation Olufemi Babem

he financial crisis faced by Government at all levels in Nigeria, evidenced by their inability to fund budgeted expenditure and increasing debt profile, has forced many of them to focus on ramping-up internally generated revenues through taxes. For example, the Federal Inland Revenue Service (FIRS), the tax collection agency of the Federal Government of Nigeria, grew its tax collection from N4trillion (i.e., about $13 billion) in 2017 to NGN5.3trillion (that is, about $17.3billion) in 2018. The amount collected in 2018 represents about 7percent and 73percent of the total GDP and budgeted revenue for the year respectively. Nigerian constitution provides for fiscal federalism – with each tier of government having its tax institution to administer the taxes collectible by that tier of government (Federal, State and Local government). Thus, tax administration in the country is decentralized. While the FIRS administer and collects taxes due to the Federal government (e.g., income tax on corporate entities), the States Boards of Internal Revenue (SBIR) of each state of the federation collect taxes due to the state government (principally income tax on employees and individuals resident in that state). The Local Government also administers the collection of duties and levies as specified in the relevant laws. Expectedly, the multiplicity of tax authorities often creates inefficiencies and gives rise to disputes related to taxing rights. In addition; the low degree of responsiveness of tax authorities to the rapid changes in business and commerce, rapid maturity of digitisation, adoption of aggressive tax revenue generation/ collection schemes, and lack of uniform tax rules and practices by all the tax authorities contributes to the middling perception of tax administration in Nigeria. In the 2018 ease of doing business report issued by the World Bank, Nigeria ranked 157 out of 192 countries surveyed with respect to ease of paying taxes, far below Rwanda and South Africa, as examples, which were 35 and 46 respectively on the ranking. Having an effective, efficient and fair tax administration system in Nigeria is fundamental for improved tax collection, and reduced burden of compliance on tax payers. In many advanced tax jurisdictions, the tax authorities are changing from the traditional role as tax collectors to becoming growth partners for business, by contributing to the overall ease of doing business. This change is facilitated by digitalisation and leveraging new technology tools. In 2016, the Forum on Taxation (FTA) produced three reports on how tax authorities can leverage

technological and business developments to improve tax administration. The FTA, which was established in 2002, brings together tax administrators/commissioners from member countries of the Organisation for Economic Co-operation and Development (OECD) and some non-OECD countries, to share information and experiences, and suggest practical solutions to tax administration issues. The central themes of the reports are; use of data, changing customer expectations and the role of emerging technologies in tax administration. I have discussed below, the relevance of some of the recommendations of the FTA to the improvement of tax administration in Nigeria. (i) Leveraging technology to improve tax coverage: Tax authorities in Nigeria should begin to leverage new technology to increase tax coverage and tax payer engagement. The Internet, portal solutions, mobile platforms, social media, cloud services and Big Data are some of the new technologies changing the way business is conducted, and it is only reasonable that tax authorities leverage these technologies to improve tax administration. Tax payers now require multiple engagement channels and access platforms to tax authority services. The proliferation of inexpensive smart devices is simplifying access to on-the-go services that are more convenient. Therefore, in addition to creating online portals for filing of tax returns, payment of tax and storage of tax payers’ information; tax authorities have to consider real-time applications to enable tax payers perform these activities (and more) anywhere, anytime. For instance, a Mobile Application can enable a business/individual to register and obtain a tax identification number without having to submit hard copy documents to the tax authority or appear physically in any of their offices for this purpose. It can facilitate seamless and real-time reconciliation of tax assessments issued by the tax authority. Social media applications like twitter could be used for rapid information dissemination and tax payer engagement. Furthermore, Nigerian tax authorities need to build capacity for real-time collection of tax payer data. There has to be a deliberate change from the traditional methods of data/information collection to a digital model. Instead of capturing and analyzing transactions after they have occurred, transactions can be reviewed on a real-time or near real-time basis, thus improving the accuracy of submissions by tax payers and reduction of the need for routine tax audit/tax investigation exercises. To assist them in this journey, they would need to improve their level of digital maturity, and adopt a systematic approach to identify the technology that will create the most impact on tax compliance, payment of tax and general service delivery. www.businessday.ng

(ii) Increase focus of Micro, Small and Medium Scale Enterprises (MSMSE) Tax authorities need to develop initiatives to promote tax compliance by micro, small and medium scale enterprises (MSMEs). Based on the National MSMEs Collaborative Survey, MSMEs constitute over 90percent of businesses in Nigeria, and employ about 60million people. These companies also contribute about 50percent to Nigeria’s gross domestic product (GDP). The above statistics are estimates, and the reality may far be above these figures, considering the poor data capturing culture in the country. Given the level of operation of these strata of economic space, the impact of regulatory rules and cost of tax compliance (as a percentage of turnover) is typically high. Therefore, MSMEs expect a simplified compliance process, certainty about their tax obligation, and customized/personalized tax service offerings. For many MSMEs, the mobile devise is often the first (and sometime only) point of access to the internet. In fact, a number of the entities in this group conduct their businesses from their mobile devises. Therefore, the tax authorities would have to partner with mobile operators and online business/trading platforms to provide tax information and simplified tax compliance capabilities. Furthermore, because of the amount of structured and unstructured data constantly generated by MSMEs, tax authority would need to adopt Big Data technology and advanced analytics techniques to gain insights into the behavior and needs of MSMEs, and adopt a predictive model to improve their tax compliance, and as a consequence, the tax yield from this group. For example, based on data collected from all sources, the tax authorities can predict the tax risks associated with certain types of MSMEs and develop tax products/services tailored to address the risks. (iii) Enhancing data mining capabilities of the tax authorities Following from the above, tax authorities must improve their data mining capabilities. Actions and decisions should be based on insights obtained from quality data. Tax authorities have to see data as

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an asset that requires careful and active management, as with other types of asset. Traditionally, tax authorities are data-rich organizations. Data is received by the tax authorities almost on an hourly basis; in the tax returns submitted by tax payers, information/returns supplied by third parties, information collected from tax audit or tax investigation exercises, research conducted, amongst others. Unfortunately, data and collected by the tax authorities is often fragmented and stored on multiple (unconnected) devises, making it difficult to perform a comprehensive analysis for decision making. Each tax authority has a set of data collected on a tax payer, and within each tax authority, different teams have different sets of data collected on the same tax payer. The data are stored on stand-alone systems or storage devises. To turn data into asset, it has to be in suitable format for analytics purposes. Therefore, tax authorities must re-assess the way data is collected, evaluated and managed. It would be ideal to establish a harmonized data center for the collation, sharing and storage of all taxpayer information in designated single files, which can be accessed by all tax authorities in Nigeria. This initiative should have been driven by the Joint Tax Board (JTB), an institutional “warehouse” where both the FIRS and SBIR converge to discuss, agree, harmonize and set the agenda for the Nigerian tax space. A single taxpayer file provides a centralised location where all data collected or received from various sources can be stored to form a comprehensive taxpayer profile. This will allow the data to be better organized for entry, access and sharing. This single file will significantly help address the twin issues of multiple taxation and tax evasion. Proper governance structures would be put around the data center to ensure only authorized access and security. With the use of advanced analytics techniques (e.g., statistical and machine learning techniques), tax authorities can extract value from the wealth of data. In addition to using advanced analytics for tax payer profiling and audit case selection, it can be used for tax debt manage@Businessdayng

ment, tax policy impact assessment, and compliance tracking. However, tax authorities need to put proper strategies in place to deal with the structural integration of advanced analytics into current operating teams, as well as the cultural integration concerns. (iv) Tax authorities must begin to do more with available data Having an efficient data mining and integration system in tax administration is desirable. However, it is perplexing to do nothing with available data! As previously indicated, data is a tool for decision making. Tax authorities must act on data and information gathered for the benefit of all. This is the only way that the resentment of a few, loyal tax paying populace, against the large unpatriotic tax evading populace can be doused. To do nothing with such data will only increase the trust deficit in the system. A case in point is the “Project Light House”, which we understand that the FIRS embarked upon around 2017, in preparation for the launch of the Tax Amnesty program (Voluntary Assets and Income Declaration Scheme – VAIDS) of the government. VAIDS ran for a year from 1 July 2017 to 30 June 2018. Significant data was mined and gathered in the “Project Light House” process, with a view to leveraging it for proper and accurate tax assessment of those who had, hitherto, refused to selfassess themselves prior to, and in the cause of, the VAIDS. Eight months after the program ended, there are no indications that the FIRS has, or will leverage such data to chase these tax defaulters and bring them to justice. Yet, armed with reliable data and a network of tax authorities in other jurisdictions via the instrumentality of the Automatic Exchange of Information (AEI), Nigeria is yet to prosecute any tax defaulter post-VAIDS. Conclusion The process of improving tax administration in Nigeria requires a deliberate change of culture and processes of the tax authorities, both at the federal and state levels. Each tax authority would need to consider what people, process and technology changes are required to improve service delivery. Focus must also shift from mere collection of data for assessment purposes, to extracting value and insights from data to improve service delivery and for economic planning. In conclusion, the decision on what new technologies and advanced analytics to adopt should be a business driven decision, wherein the tax authorities need to prioritise the challenges to be addressed given their budget, capacity and resource constraints. Olufemi Babem is an Associate Director at KPMG Advisory Services, Lagos, Nigeria. e-mail: olufemi.b ab em@ ng.kpmg.com twitter: @Fbabem

Wednesday 10 July 2019

BUSINESS DAY

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Wednesday 10 July 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper HARRIET AGNEW in Paris

he Paris Criminal Court on Tuesday cleared Orange chief executive Stéphane Richard of any wrongdoing in a longrunning case alleging fraud and misuse of public funds by businessman Bernard Tapie. Prosecutors had sought five years in prison for Mr Tapie, but he and four other defendants were also acquitted on Tuesday. The acquittal of Mr Richard, on trial for complicity in fraud, secures his position at the head of France’s largest telecoms group. In April, French state prosecutors had called for a three-year jail term for Mr Richard, as well as a €100,000 fine and a five-year ban on any work for the state, which has a 13.4 per cent stake in Orange and is its largest shareholder. “Employees are relieved to know that we can keep our boss Stéphane Richard at the head of Orange,” Sébastien Crozier, president of the union CFE-CGC Orange, told the Financial Times. “This will allow Mr Richard to focus on the future of Orange and the challenges ahead, including fibre, 5G, the group’s digital strategy, the Orange bank, and cyber security.” In a statement to Orange’s employees, Mr Richard said that he welcomed the judg-

Orange chief Stéphane Richard acquitted in long-running fraud case Paris court clears telecoms company leader of any wrongdoing in Tapie action

ment w ith “deep satisfaction” and said that he had not ceased “to say forcefully that I was a stranger to any fraudulent scheme”. He added: “I am obviously happy that my innocence has finally been recognised by the courts.” The trial relates to a €403m payout to Mr Tapie made by the French state in 2008 when Mr Richard was chief of staff for Christine Lagarde, then finance minister. Ms Lagarde last week announced she would step down as head of the International Monetary Fund after she was nominated to succeed Mario Draghi at the helm of the European Central Bank. Mr Richard was alleged to have misinformed and disobeyed Ms Lagarde, but consistently denied all the charges against him. Ms Lagarde was found guilty in 2016 of negligence in public office. Mr Tapie said he had been defrauded by Crédit Lyonnais, the now defunct state-owned bank, when it encouraged

him to sell his stake in sports equipment group Adidas for less than it was worth in 1993. Under President Nicolas Sarkozy, the state agreed to

settle with Mr Tapie through arbitration, but the resulting €403m payment was criticised as a cover t reward for Mr Tapie’s support of Mr Sarkozy

during his election campaign. A Paris court later annulled the arbitration decision and ordered Mr Tapie to repay the money.

Billionaire Tom Steyer Deutsche Bank struggles to silence doubters with rescue plan enters 2020 presidential race Observers praise brutal honesty of restructuring, but investors worry about execution risks Former hedge fund manager has been pushing to impeach Trump LAUREN FEDOR in Washington

alifornia billionaire Tom Steyer, a top Democratic donor and former hedge fund manager, has said he is running for president, joining a field of more than two dozen Democrats seeking to challenge US president Donald Trump next year. In January, Mr Steyer said he would not run for president. But in a video posted on Tuesday, Mr Steyer, 62, reversed course, saying he was running for president on a platform to remove the influence of corporate money from US politics. “I think what people believe is that the system has left them,” he said in the video. “I think people believe that the corporations have bought the democracy, that the politicians don’t care about or

respect them, don’t put them first, are not working for them, but are actually working for the people who have rigged the system.” Mr Steyer, who has a reported net worth of $1.6bn, has signed Warren Buffett’s Giving Pledge, vowing to give away at least half of his money to charity. He is the founder of two political organisations: NextGen America, a progressive political action committee, and Need To Impeach, which seeks to initiate impeachment proceedings against Mr Trump. Mr Steyer announced he was entering the race just one day after California congressman Eric Swalwell dropped out. Mr Swalwell, 38, said on Monday that he was ending his presidential bid and would instead seek a fifth term as the representative for California’s 15th Congressional District, near San Francisco. www.businessday.ng

STEPHEN MORRIS in London & OLAF STORBECK in Frankfurt

or Deutsche Bank veterans, last weekend was the moment Germans took back control of their nation’s largest lender. After two decades of false starts and of Anglo-Saxontrained traders calling the shots, Deutsche has finally thrown in the towel in trying to become a European rival to Goldman Sachs in global investment banking. Instead it has laid out a path to return to its historic roots as a corporate and consumer lender. “The new vision really struck a chord with me,” a German member of Deutsche’s supervisory board told the Financial Times after chief executive Christian Sewing’s historic revamp, hailing it as the moment when “investment banking stopped being an end in itself for Deutsche”. The scale of the overhaul surprised many who praised the brutal honesty of the plan, which will result in Deutsche shutting down its entire loss-

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making global equities business, cutting 18,000 jobs and hiving off €288bn of lossmaking assets into a bad bank for sale or run-off. But big doubts remain over whether these radical efforts will be enough to change the narrative at the German giant, which has been brought to its knees by decades of hubris and poor management. “Deutsche’s restructuring is bold and for the first time not half-baked, but a real strategic shift giving up its top-tier investment banking ambitions,” said Kian Abouhossein, analyst at JPMorgan. Yet questions remain about revenue growth and its “ability to operate a corporate franchise without a European equity business”, he said. Despite an initial bump on Monday morning, the stock ended the day down 5.4 per cent, back to near the lowest in the bank’s 149-year history. Deutsche shares fell a further 3.4 per cent on Tuesday morning. Is the shrunken investment bank viable?

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The decision to close the entire equity-trading business, including in Germany, was more radical than expected. It triggered questions about the slimmed-down bank’s ability to win business from large Europe corporates, a cornerstone of its revamp. “Further client loss should be anticipated given a reduction in the ‘full service’ investment banking model,” said Thomas Hallett, analyst at KBW, with clients likely to defect to competitors that offer a broader suite of products and expertise. Without any equity sales or trading capacity, corporate clients and private equity groups could lose faith in Deutsche’s equity capital markets unit — meaning it could miss out on the lucrative business of underwriting their share sales. “There is nothing exciting about this plan . . . we worry about the ancillary impact on the client franchise,” said a spokesman for one of the bank’s top-10 investors. “If you’re an asset manager you want to trade equities through the same bank as you trade fixed income.”

Wednesday 10 July 2019

BUSINESS DAY

NATIONAL NEWS

Chinese VC spending on US biotech hit by security reviews US start-ups face tougher environment as first-half investment drops nearly 60% TOM HANCOCK in Shanghai & HANNAH KUCHLER in New York

hinese venture capital investment in US biotech companies fell by more than half in the first half of the year as Washington tightened scrutiny of funding from overseas, raising fears that US start-ups will struggle to raise funds and access the large Chinese market. Chinese investors took part in venture capital funding rounds for US biotech companies worth $725m in the first six months of 2019, down nearly 60 per cent from $1.65bn in the same period last year, according to Seattle-based data provider PitchBook. After accusing Beijing of systematically stealing intellectual property, Washington in November began subjecting any foreign investment over 5 per cent in several kinds of technologies including biotech to review by the Committee on Foreign Investment in the US, a government security committee. William Haseltine, a serial American biotech entrepreneur, said he had been forced to abandon the creation of a new company, Constructive Biology, after a Chinese investor who pledged $30m in seed money for a fabrication laboratory pulled out. “As soon as the Cfius programme went into place and [US President Donald] Trump started making a lot of noise about Cfius, [the money] began to evaporate,” he said. Chinese funding had been particularly useful to bridge the so-called valley of death between the inception of a new concept and the creation of a working prototype, he said. “What they’ve been willing to do was extremely useful: fund very, very early stage seed companies very generously — with $5m, $10m, $20m.” Mr Haseltine rejected the idea that the Chinese investors could be stealing intellectual property, arguing that biotech inventions were protected by patents. US life sciences companies

raised $20bn in venture capital funding last year, according to PitchBook, the highest amount in 10 years, due in part to a record-breaking influx of funds from China. Health, pharma and biotech was the top sector for Chinese VC investment in the US in 2018, according to consultancy Rhodium Group, with $1.5bn invested. Chinese fund managers have said they view US biotech as a potential source of high returns, and hope to use their connections in China to help companies expand in their home market, which has a huge unmet need for medical treatments. With Beijing and Washington still at loggerheads over trade, “the direction of Sino-US relations is still unclear, which is impacting the confidence of investors”, said Liu Ji, head of Chinese fund Shanghai Zhangjiang Leading Venture Capital. Most Cfius decisions remain private but in April, the committee showed its interest in health information when it forced PatientsLikeMe, a health platform that collects sensitive data, to divest the majority stake taken by iCarbonX, a Chinese company. Jeremy Levin, chair of the board of the Biotechnology Innovation Organisation, a USbased industry association, said the investment slowdown could hurt the ability of US biotech companies — which produce 80 per cent of the world’s innovative drugs — to access the fast-growing Chinese market. US companies that “are counting on being able to expand their sales into the Chinese market will not find it as easy as it was in the past”, he said. “Establishing relationships . . . does not happen overnight.” Despite the fall in funding for early-stage biotech companies, Chinese pharma groups recently have been paying record-breaking amounts to license drugs developed by US biotechs. Unlike VC deals, such licensing deals do not usually involve taking an equity stake. www.businessday.ng

British ambassador to the US Kim Darroch with Prime Minister Theresa May in Philadelphia in January

Trump renews attack on UK ambassador Kim Darroch

White House disinvites British envoy from dinner after Twitter warning by US president GEORGE PARKER & DANIEL THOMAS in London

onald Trump has renewed his attack on Britain’s ambassador to Washington, Kim Darroch, calling him “wacky”, “a very stupid guy”, and “a pompous fool” foisted on the US by the UK. The US president also stepped up his criticism of how Theresa May has handled Brexit, which he described as a failed negotiation. He tweeted: “She went her own foolish way — was unable to get it done. A disaster!” The latest salvo of tweets from Mr Trump on Tuesday will heap further pressure on the British government, which is struggling to calm an extraordinary diplomatic stand-off after Mr Trump said the US would “no longer deal” with Sir Kim. Mrs May told her cabinet on Tuesday morning that her US ambassador retained her full support, with the diplomatic leaks discussed in Number 10 for about 10 minutes at the start of the weekly meeting of her top team. Sir Kim, whose diplomatic ca-

bles describing the “inept” and “dysfunctional” Trump administration were leaked to the Mail on Sunday, was due to attend the White House on Tuesday. It is not yet clear whether he will be allowed in. The ambassador was planning to accompany trade secretary Liam Fox to a meeting with Mr Trump’s daughter, Ivanka, at which the minister hoped to calm the row. Sir Kim has already been blocked from one function: the White House immediately followed through on Mr Trump’s warning by disinviting him from a dinner with the Emir of Qatar on Monday night, at which the US president was in attendance. Mr Trump’s attack on Sir Kim has thrown down a challenge to Mrs May and whoever succeeds her as prime minister later this month. The US president has previously said that Brexit party leader Nigel Farage would make a good ambassador. Christopher Meyer, a former British ambassador to the US, told the BBC that much now depended on whether Mr Trump tried to block all access by Sir Kim to US

officials, including top senior officials, or whether the row subsided over the summer. Senior Conservatives said Britain could not “bow down” to Mr Trump, and the new prime minister will be under pressure to allow Sir Kim to conclude his term in Washington, which is due to expire in January 2020. Allies of Boris Johnson, the frontrunner to be the next prime minister, have indicated that Sir Kim is likely to be succeeded by Mark Sedwill, cabinet secretary, in 2020. They said talk of Mr Farage being sent to Washington was “complete rubbish”. Any move by a new prime minister to replace a seasoned diplomat with a political appointment would be seen as a hammer blow to Britain’s independent civil service, which has already been dragged into the political arena because of Brexit. William Hague, former foreign secretary, said the new British prime minister should stand by Sir Kim. “You can’t change an ambassador at the demand of a host country,” he told the BBC’s Today programme.

Instagram introduces anti-bullying measures Abusive commenters will be asked to think twice and can be restricted by users MARTIN COULTER in London

nstagram has rolled out two new features to try to prevent bullying, one that prompts people to think twice before posting an offensive comment and another that lets users restrict what can be seen under their photos. The hugely popular social network, which is owned by Facebook, has been under pressure to address bullying, particularly among its teenage users. Adam Mosseri, the head of Instagram, said the new tool would notify people if they tried to post

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offensive remarks under someone else’s photos. A pop-up box will also note that Instagram wants to be a “supportive” place. “This intervention gives people a chance to reflect and undo their comment and prevents the recipient from receiving the harmful comment notification,” he said. Mr Mosseri added that early tests suggested the feature encouraged people to take back their comment and share something “less hurtful” upon reflection. In a 2018 survey conducted by the Pew Research Centre, a nonprofit based in Washington DC, 59 @Businessdayng

per cent of teenagers were found to have experienced bullying online. The survey said more than one in five 12-to-20-years had experienced bullying specifically on Instagram. Meanwhile, the Restrict feature allows users to silence anyone abusive, so that their comments are not visible to anyone but themselves, unless approved by the user. Restricted users will still be able to see their target’s posts, but they will not be able to see if they are online. Messages sent by a restricted user will also be relegated to a separate spam inbox.

Wednesday 10 July 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

H2O blames ‘unfair’ media for €8bn fund outflows Natixis-owned asset manager says ‘rampage’ stemmed from questions over liquidity LAURENCE FLETCHER in London

2O Asset Management says it has seen €8bn of investor outflows from some of its funds, blaming “deeply unfair” media interest in its portfolio of illiquid bonds for sparking a “rampage”. In a statement on Tuesday, H2O said it had lost more than 30 per cent of assets in its Ucits funds. The outflows follow a Financial Times investigation last month that revealed the London-based asset manager had put more than €1bn of investor money into bonds linked to Lars Windhorst, a controversial German financier with a history of legal troubles. The firm suggested that it had staunched the bleeding, noting that since June 18, the date of the FT’s original story, it had received €869m of gross inflows. The company did not immediately specify whether the €8bn outflows took account of these inflows. Shares in H2O’s parent company Natixis fell 1.1 per cent on Tuesday. H2O ran €32.5bn in assets as at the end of last year. The fund firm, headed by bond trader Bruno Crastes, said the bonds at the centre of media attention in recent weeks accounted for a “small portion” of its overall assets, at 3.7 per cent, at the time of the FT’s original article. Asking “Why such rampage?”

H2O said that “to dispute the liquidity of a fund” created a major risk of a snowball effect, “especially in today’s over-mediated world”. It went on to liken the episode to a bank run. “Questioning the liquidity of our funds is equivalent to ascertaining the incapability of a bank to refund its deposits, with the devastating consequences which economic history has already taught us,” it said. Since the crisis erupted last month Mr Crastes has described Mr Windhorst, who has presided over a number of corporate collapses and been declared personally bankrupt in the past, as “extremely talented”. Mr Crastes has also vowed never to halt investor redemptions. H2O has been considering creating a separate vehicle to house its illiquid assets, the FT reported last month. The asset manager said on Tuesday it had been forced to lower the value of some securities following “market commotion” but that performance remained close to its peak. It added that it would “carefully study” the results of audits currently being carried out. “Our commitment to the daily liquidity of our funds was known and has just been put to the test,” it said. “Our portfolios are built in order to face all liquidity scenarios.”

Turkey’s latest stumble shows dangers of betting on risky markets Investors eyeing lira’s rise against dollar hit after central bank governor fired ADAM SAMSON

he hunt for yield is on, with gusto, and Turkey’s latest stumble underlines the risks that

entails. Investors have shifted in recent weeks towards riskier corners of the market in a bid to juice up returns while the yields on highly rated debt collapse, often into negative territory. The carry trade, in which investors borrow in jurisdictions with low yields, and then lend in countries that offer higher rates, has been a boon to the currencies of countries such as Turkey, Brazil, Argentina and Colombia. “The carry trade has found renewed interest as we are pivoting to a cutting cycle by the Federal Reserve,” said Robert Turner, an FX quant trader at RBC. Not so long ago, rising US interest rates made the dollar a beneficiary of these trading patterns. Now, buying emerg-

ing market currencies and selling the buck is an increasingly favoured bet, he added. It has paid off. Investors would have generated total returns of almost 4 per cent with a carry trade using eight high-yielding emerging-market currencies from mid-May to the end of last week, according to Bloomberg data. Clearly, however, this bears risks. Market bets for the Turkish lira to rise against the US dollar were at a record high going into last weekend, according to data on positioning compiled by Mr Turner. Those positions took a knock on Monday, when the country’s central bank governor was fired. At about 2 per cent, the scale of the drop in the lira appears modest. But as analyst Luis Costa at Citigroup pointed out, it will have delivered a “significant profit and loss disrupter, given the decent backlog of lira longs built over the last couple of months”. www.businessday.ng

The outflows follow an FT investigation last month that revealed Natixis-owned H20 had put investor money into bonds linked to controversial German financier Lars Windhorst

JPMorgan winds down Venezuelan debt in bond benchmarks Weighting to be reduced to zero in popular EM indices as US sanctions bite COLBY SMITH & ROBIN WIGGLESWORTH in New York

PMorgan is all but removing Venezuelan debt from its widely followed emerging market bond benchmarks after US sanctions froze trading in the country’s securities, raising questions over what will happen with exchange traded funds that track its indices. The US bank’s index business said that while it would maintain pricing data on the bonds, its popular EMBI gauges would gradually wind down the weighting assigned to bonds issued by Venezuela and state oil company PDVSA to zero over a five-month period beginning at the end of the month. The weighting of Venezuelan bonds in JPMorgan’s EMBI Global Diversified, EMBI Global and EMBI+ indices was 0.5 per cent, 0.9 per cent and 1.2 per cent respectively as of July 8. Even though

their weighting will now fall to zero, the fact that the country will technically remain in the indices will be a relief to some investors. “This decision will attract the broadest support in the market,” said Graham Stock, head of EM sovereign research at BlueBay Asset Management. “Some mandates would not allow investors to hold bonds not in the index, and this will make life easier for them.” The move will reduce the EM bond indices’ average yields by almost half a percentage point, as Venezuelan defaulted debts are trading at high yields. But the gradual scaled-back weighting could cause broader problems for ETFs and other passive indextracking funds. While in theory investors now have to sell down their positions, they will have to do so at a time when all US banks and asset managers are prohibited by sanctions from dealing with Venezuelan

debt, and many European and Asian ones are also wary of getting involved. Forced selling could therefore cause prices on Venezuelan debt — already trading at cents on the dollar — to crash further. “There is no parallel for Venezuela in terms of how difficult it is to divest,” said Paul McNamara, a fund manager at GAM. For this reason, Jan Dehn at London-based asset manager Ashmore said index-tracking funds that were forced to sell were “screwed”, with active managers sitting “like vultures to pick the flesh off the bones of these passive people”. The biggest EM bond ETF is BlackRock’s iShares JPMorgan USD EM Bond ETF — known by its stock market ticker EMB — which holds nearly $16bn in assets. Venezuela and PDVSA bonds account for about 1.2 per cent of the fund.

BMW shifts engine production to Germany from UK ahead of Brexit Move to ensure company complies with trade rules in event of Britain leaving EU PETER CAMPBELL in Oxford

MW has redirected engine production to Germany from the UK ahead of Britain’s departure from the EU, one of the company’s most senior executives said. As he launched the first electric Mini model in Oxford, production head Oliver Zipse said Brexit was a “bad progression” and that the company had shifted work from its Hams Hall site to make sure that its South African-built cars complied with trade rules. “Hams Hall doesn’t build any South Africa products any more, which is, of course, bad for the UK,” said Mr Zipse, who is favourite to become the next BMW chief executive after in-

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cumbent Harald Krüger last week announced his intention to step down. Previously, some Britishmade engines were exported to South Africa, where they were assembled into cars that were sold into the EU. Those UK-built engines at present fall under the EU banner, allowing them to be counted as EU content under any trade deal. While South Africa and the EU have an agreement to allow components from the other side to count towards the “local content” tally, when the UK leaves the EU its components will automatically be excluded from the total under international trade. With the UK engines excluded, the cars made in BMW’s South @Businessdayng

African facility will not clear the “rules of origin” threshold to exempt them from tariffs under the free trade agreement between the EU and South Africa. Although the quantities of BMW engines destined for South Africa are relatively limited, the shift highlights the risks facing British plants. Several other British engine sites face the same issues, such as Ford’s diesel engine site at Dagenham that exports van engines to Europe, or Jaguar Land Rover, which ships some engines from Wolverhampton to its new Slovakia assembly site. Shifting its engine production is just one preparation BMW has made for the UK leaving the EU, potentially without a trade deal.

Wednesday 10 July 2019

BUSINESS DAY

ANALYSIS

Mexican finance minister quits over differences with leftist president

Urzúa departure is serious blow to López Obrador, who maintains bullish tone on reform JUDE WEBBER in Mexico City

arlos Urzúa has quit as Mexico’s finance minister, a stinging blow to the country’s leftist president who had hoped the US-trained economist would bring credibility to his reform agenda with international investors. Mr Urzúa wrote to President Andrés Manuel López Obrador on Tuesday to announce his resignation, citing their “many” disputes and the “imposition of officials who don’t know about public finances” as the reasons for his departure. The resignation is the most serious blow to the president’s seven month-old administration, which has pursued a radical nationalist agenda and policies that have spooked financial markets, including the cancellation of a partially-built $13bn airport project in Mexico City. The peso — the president’s preferred bellwether of economic health — tumbled on the announcement and traded 1.4 per cent weaker at 19.17 to the dollar, while the Mexican stock market’s main index fell almost 1.5 per cent.

The former economics professor had been seen by financial markets as a guarantor of fiscal prudence and his departure comes as the outlook for Mexico’s economy darkens, with sharply-slowing growth and rating agency downgrades. Mr López Obrador said he had accepted the finance minister’s resignation. “He does not agree with decisions we are taking and we have the commitment to change the economic policy that has been imposed for the last 36 years,” the president said in a video posted on social media, flanked by Arturo Herrera, Mr Urzúa‘s deputy who will now take over. Mr Urzúa had looked increasingly uncomfortable over the course of his seven months in office. In his letter to Mr López Obrador, he complained of making decisions which the government did not support politically. Mr Urzúa had served as Mexico City finance chief when Mr López Obrador was mayor. He won the confidence of markets when he presented a fiscally prudent 2019 budget for the new government that promised a 1 per cent surplus.

US imposes sanctions on Hizbollah Lebanon MPs Two Lebanese members of parliament accused of being Iranian proxies AIME WILLIAMS in Washington & CHLOE CORNISH in Beirut

he US has imposed sanctions on two Hizbollah members of the Lebanese parliament accused of being Iranian proxies, marking the first time Washington has targeted sitting MPs. The US Treasury said it would freeze the assets of Muhammad Ra’d and Amin Sherri, both Hizbollah MPs, after accusing them of “leveraging their privileged positions to . . . do Iran’s bidding”. A third high-ranking Hizbollah security official, Wafiq Safa, was sanctioned as part of the same package. Mr Safa is the head of Hizbollah’s security apparatus. “This is a new kind of action because it is against Hizbollah MPs,” said a senior US administration official, who added that Hizbollah was “embedded in the Lebanese political fabric”. “There is no distinction between Hizbollah’s political and military wings, both of which take orders from Iran,” the official said. The sanctions have been imposed at a critical time for Lebanon’s government, which is led by Sunni prime minister Sa’ad Hariri. Lawmakers are tussling over how to rein in spending as the country sinks deeper into debt and its economy stumbles. Hizbollah emerged as a powerful Shia militia four decades ago, helped by Tehran,

which gained a foothold on the Mediterranean as it armed and trained the Lebanese group. Most recently Hizbollah fighters have helped the Syrian regime to survive a rebellion that degenerated into a civil war on Lebanon’s border. Bu t Hi z b o l l a h ha s a l s o evolved into a political force with wide support among Lebanon’s Shia Muslim community, with its allies winning more than half the seats in parliament last year. Mr Ra’d is the leader of Hizbollah’s parliamentary bloc. Mike Pompeo, US secretary of state, visited Lebanon in March. He urged Lebanese leaders to curb Hizbollah’s political power and accused the group of being part of “the dark ambitions of Iran”. Hizbollah has shown signs of financial distress, with its leader Hassan Nasrallah making a rare appeal to supporters for donations. US officials credited the Trump administration’s policy of punitive economic sanctions on Iran for forcing Tehran to slash its funding to Hizbollah, which the US said amounted to $700m a year. However, some analysts said the US had presented scant evidence to support such claims. They also pointed out that while Hizbollah was feeling the pinch, so too was the rest of Lebanon. Beirut has the world’s third highest debt to gross domestic product ratio, and economic growth slowed to just 0.3 per cent in 2018, according to the IMF. www.businessday.ng

Fears rise of escalation in US and EU trade dispute

Boeing and Airbus stand-off threatens to intensify as WTO poised to rule on tariffs SYLVIA PFEIFER in London

ver the past six years Airbus has turned a sprawling former US air force base in Mobile, Alabama into an industrial centre to help realise its ambitions on the other side of the Atlantic. Europe’s aerospace champion has used this hub in the American Deep South to grow its footprint in the US, home of its arch-rival Boeing. By the end of this year, Mobile will boast not just one but two assembly lines — one for Airbus’ successful A320 and a new one for the A220 jet. But Mobile is now in the crosshairs of a 15-year dispute at the World Trade Organization (WTO) between the US and the EU over subsidies both sides have given to Boeing and Airbus to develop their planes. In what is the world’s largest corporate trade dispute, both parties have threatened tit-fortat tariffs running into billions of dollars on a variety of goods from aeroplanes and their components to ketchup and tractors, cheese and whisky. Now, the dispute is threatening to intensify after the US proposed another $4bn on an additional list of goods on top of an original proposal in April to target goods worth $21bn. Although the final scale of tariffs is unlikely to be as large as those demanded by either side according to litigation experts, worries are increasing over the possible damage to trade relations ahead of a likely WTO decision on fines the US can levy this summer. Warren East, chief executive of Rolls-Royce, the FTSE 1 0 0 g ro u p w h o s e e n g i n e s p ow e r A i r bu s a n d B o e i ng planes, warned the trade tensions are “a very prevalent concern”. “It’s a global marketplace, it’s such a small market in

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terms of the number of players, people need all the players to be able to continue to trade in a relatively frictionless way,” he told the Financial Times at the Paris Air Show in June. Industry figures said a negotiated settlement was badly needed to clearly set out what was allowed in state aerospace subsidies. Paul Everitt, chief executive of Britain’s aerospace and defence industry trade body ADS, said: “The widening of the dispute to other sectors is unhelpful to the global economy; nobody will win from this process.” Airbus, in reference to the additional goods targeted by the US, said the move only “adds to the trade tensions”, and warned that it was “not creating a healthy environment for working towards a negotiated solution”. Boeing struck an uncompromising tone, saying in a statement : “Unfortunately we are on the brink of tariffs today because Airbus and the EU have ignored their WTO obligations for 15 years,” the company said. For workers at the Airbus plant in Mobile and its suppliers the stakes are high: the plant imports wings, fuselages and other structures for the A320. Such aerospace components are all on America’s list of proposed goods for tariffs. At a hearing in May held by the US Trade Representative (USTR) about the proposed tariffs, Boeing said Washington should focus its duties “on Airbus products and assemblies to the greatest extent possible” arguing it was not about punishment but about enforcing compliance with the WTO ruling. But it is also a battle about jobs. Airbus’ $600m-plus investment in the southern state has been welcomed by local politicians who do not want to see it harmed. Giving evidence at the @Businessdayng

same hearing, Mobile’s mayor Sandy Stimpson said Airbus was “the linchpin for our success in building an aircraft manufacturing ecosystem”. “These are American workers building American products, paying American taxes and raising American families,” he said. An EU case against Boeing is running about six to nine months behind the WTO. While Boeing does not assemble aeroplanes in Europe, it does have a major customer base among airlines including Ryanair and Lufthansa. The EU said in April it was seeking punitive tariffs on $12bn worth of US exports. The battle between the two companies dates back to 2004 when the US initially raised concerns with the WTO. The EU followed suit and filed a counter-case alleging illegal state aid to Boeing. The original concerns focused on subsidies given to the A380 and A350, and Boeing’s 787 and 777X jets. Aerospace analysts say it is difficult to quantify the exact impact of any tariffs on the industry as it is not yet clear at what level and where they will fall. Robert Stallard, analyst at Vertical Research Partners, said the terms “are so vague it is tough to put a number on the impact”. Any costs would likely be passed on to suppliers and airline customers, but ultimately any higher charges would be “passed on to the consumer”, he added. Other industry stakeholders warn an escalation into a trade war would be harmful to everyone and damage what is a global supply chain. A trade war will mean “higher costs, less choice and less competition on both sides. Ultimately, it is consumers that will have to pay for it,” said one European industry figure.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 10 July 2019

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BUSINESS DAY

OIL

Ghana: Tullow fails to make it to next round of competitive bidding Page 52 GAS

West Africa: BP finds more gas at Greater Tortue Ahmeyim Page 53 Market Insight

L-R: Ebiaho Emafo, managing director/CEO Eroton E & P Company Ltd; Ainoje Irune, chief operating officer Oando Energy Resources; Audrey Joe-Ezigbo, president Nigerian Gas Association & Kemi Fatogbe, director-Risk Central Bank of Nigeria, at panel discussion on Independent Producers’ Role in Spurring Industrial Development during NOG2019 in Abuja recently.

Debrief

Egypt dumps fuel subsidy. Should Nigeria follow suit? FRANK UZUEGBUNAM

Oil rises as tensions around Iran’s nuclear programme simmer Page 57 OPEC weekly basket price DAY

PRICE

5/7/19

63.55

4/7/19

63.43

3/7/19

62.69

2/7/19

63.95

1/7/19

65.71 Source: OPEC

gypt has finally exited from fuel subsidy regime with its latest push, raising domestic prices by between 16 percent and 30 percent to bring them into line with their real cost, as it nears the end of an IMF-backed economic reform programme. The reform had led to a boost in investment in the oil and gas sector especially through foreign direct investment. The price of petrol rose by 18.5 percent to $0.48 a litre, and diesel rose by 22.7 percent to $0.41 per litre. The price of cooking gas cylinders rose by 30 percent to $3.90 for domestic use and $7.80 for commercial use.

Scaling back fuel subsidies that have been a strain on the budget for decades was a key plank of a 3-year, $12 billion reform package signed with the International Monetary Fund in 2016, as Egypt’s economy struggled to recover from the turmoil that followed its 2011 uprising. Most fuel prices are now in line with their costs, though the government is still subsidising fuel for bakeries and power generation, a petroleum ministry official said. But the changes will push up prices for transport, food products and other goods. Energy subsidies had eaten up as much as 20 percent of the government’s budget in recent years. Analysts had speculated that government would wait until after the end of the

African Cup of Nations - the continental soccer championships, which Egypt is hosting until July 19, before announcing the price rises. The quest to wean Egypt from petroleum products’ subsidy started in 2016, a journey successive administrations in Nigeria have been too scared to try or when they do, it is done reluctantly. Nigeria’s fuel subsidy has spiraled out of control. The subsidy costs have grown sharply from a daily average cost of N774m in March 2018 to N2.4bn per day in May, 2018. The country may have spent about N10 trillion on subsidy between 2006 and 2018, a report by BudgIT, a public finance focused NonGovernmental Organisation (NGO) stated. The report also

indicated that the subsidy regime has opened Nigeria’s public finance to huge corruption and illegal exportation of petroleum products to neighboring countries. “Nigeria remains the only OPEC country that imports petroleum products,” Chukwueloka Umeh, executive director at Nestoil Group, said during the 2019 Nigeria Oil and Gas conference held recently in Abuja. It is a politically unpopular move to make Nigerians to pay more for fuel. But the downside of the huge petroleum subsidy payments by the government has certainly outweighed the benefits. Government should be decisive about it and set up a definite time frame to actualize full deregulation.

Wednesday 10 July 2019

BUSINESS DAY

oil

WEST AFRICA

Outlook

Ghana: Tullow fails to make it to next round of competitive bidding

The development comes on the back of a statement issued by the Ministry of Energy on announcing the successful bids received for two oil blocks on offer. The Ministry of Energy has awarded First Exploration and Petroleum Development Company Limited in partner-

ullow Oil failed to make it to the next stage in the maiden licensing round for oil blocks in Ghana. The oil company was not shortlisted as part of companies whose bid qualified for the next process in the bidding rounds.

Brief

ship with Elandel Energy Ghana Limited block 3, while Eni Ghana Exploration and Production Limited in partnership with Vitol Upstream Tano Limited block 2 for exploration. The decisions were arrived at after evaluating the bids from Tullow Oil, ENI and E and P that were received on 21st May, 2019. According to the Ministry of Energy, the four companies that have been shortlisted, have been invited over for negotiation on the detailed terms of the Petroleum Agreement pursuant to provisions of the General Petroleum Regulations. By the latest move, Tullow failed to proceed to the next stage of the licensing round. The government, through the Energy Ministry, earmarked six oil blocks for exploration and production. Three of the blocks; 2, 3 and 4 were to go through a competitive bidding process while two blocks-5 and 6-were supposed to be for direct negotiations. One of the blocks was however reserved for Ghana National Petroleum Corporation (GNPC). The bid process, which was ushered in by President Nana Akufo-Addo on October 15, 2018, begun with 16 companies putting in 60 applications for the different oil blocks put up by the government. Blocks 2, 3 and 4 are up for competitive bidding, while Blocks 5 and 6 will be awarded by government after Direct Negotiation with some select oil companies.

West Africa: MDL wins follow-up work in West Africa

aritime Developments (MDL) said it has been awarded a follow-up flexible and umbilical installation job offshore West Africa. The work scope is a continuation of the EN-09 project, concluded in April 2019. The project is run by DeepOcean Ghana and the offshore execution will be performed using the VLS on vessel Polar Onyx mobilized with the MDL third-generation reel drive system. The campaign aims to develop the West African discovery to deliver about 300 million barrels over a 20-year period, with 80 percent of the production consisting of oil. Dave Gardiner, MDL BD & Commercial Manager, said that “this latest award underpins our commitment to operators in West Africa who are looking to bring their discoveries online in the most efficient way possible. “By locating our market-leading reel drive system in the region, it is readily available to convert an offshore support vessel into a pipelay vessel. This eliminates the need to bring in a dedicated

pipelay vessel into the basin, allowing for smaller or isolated work scopes to become more economical. “With further field development on

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the cards for this region, we intend to strengthen our local support as guided by our clients and the operators’ requirements.”

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Libya: Military leader says only Tripoli can sell nation’s crude

ibya’s most powerful military leader said the state oil company in Tripoli has the sole right to sell the nation’s crude, a statement that might ultimately help stabilize production that has swung wildly for almost a decade because of ongoing conflict. The National Oil Corp., or NOC, in Tripoli has the “exclusive” right to export Libya’s crude, Eastern commander Khalifa Haftar said in a written response to questions from Bloomberg News. His remarks are telling because at one stage last year, he briefly handed control of key ports to another NOC based in the east of the country. Haftar pledged to continue to protect oil facilities while urging the state oil producer not to use its resources to “support terrorists and armed militias, and to avoid interfering” with his army or working against it. He denied accusations that his forces seized NOC airports, while retaining the right to use them if needed. Haftar began an offensive on Tripoli in April. Mustafa Sanalla, the chairman of the NOC in the Libyan capital, said in May that continued fighting could obliterate oil output, the country’s main source of revenue. Libya is divided between two rival governments with troops vying to control a country that holds Africa’s largest proven oil reserves. “Sale of oil is an exclusive” jurisdiction of the Tripoli NOC, Haftar said. “The issue of selling crude is governed by a number of laws and binding legislations.” The conflict is rapidly turning into another regional proxy war, pitting Egypt and the United Arab Emirates against Turkey. Libya is producing about 1.3 MMbopd, according to Sanalla, the highest level in six years. He has repeatedly warned of a potential collapse in output due to the conflict. Output has been among the most volatile of any producer in the world since the overthrow of dictator, Muammar Qaddafi, in 2011. The OPEC member’s oil production plunged by 800,000 bpd within a matter of days last June, when eastern officials blocked tankers hauling Tripoli-sold cargoes from loading, leading to the closure of eastern ports.

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Wednesday 10 July 2019

BUSINESS DAY

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ENERGY intelligence

West Africa: BP finds more gas at Greater Tortue Ahmeyim

Brief

A Tunisia: Eni to continue transporting Algerian gas through Tunisia until 2029

ni has extended their collaboration with the Tunisian government for transporting Algerian natural gas until 2029. The Italian giant said that the agreement ensured the management and modernization of the trans-Tunisian gas pipeline. The agreement represents further confirmation of Eni’s long-standing commitment to North African countries not only in hydrocarbon exploration and production but also in the management of transport infrastructure, the marketing of petroleum products, the chemical sector and renewable energy production. Under the agreement, Eni will operate the pipeline through its subsidiary Trans Tunisian Pipeline Company (TTPC) for the next ten years. The agreement follows the ones reached with Sonatrach last May for the purchase of gas and transport in the Strait of Sicily and completes the contractual framework that allows Eni to import Algerian gas into Italy. Built in the early 1980s and strengthened subsequently over several phases, the trans-Tunisian pipeline consists of two lines, 48 inches wide and around 370 kilometers long, from the AlgerianTunisian border near Oued Saf to the Cap Bon headland, as well as five compression stations. With a transport capacity of approximately 34 billion cbm per year, it contributes to the diversification of sources and the energy transition in the Italian market.

new well in the BP-operated Greater Tortue development area has encountered approximately 30 meters of net gas pay in high-quality Albian reservoir offshore Mauritania and Senegal, project partner Kosmos Energy announced. The Greater Tortue Ahmeyim-1 well (GTA-1) was drilled by the Ensco DS-12 rig in approximately 2,500 meters water depth and to a total depth of 4,884 meters, on the eastern anticline within the unit development area. The well, which is located approximately 10 kilometers inboard of the Guembeul-1A and Tortue-1 wells, has been designed as a future producer and will be used to further optimize the development drilling plans for the cross-border Greater Tortue Ahmeyim LNG project, the first phase of which was green-lighted by BP and partners SMPHM, Petrosen and Kosmos in late 2018 and is on track to deliver first gas in the first half of 2022. “The GTA-1 well confirms our expectation that the gas resource at Greater Tortue Ahmeyim will continue to grow over time and could lead to further expansion of this world-scale 10 MTPA LNG project,” said Andrew G. Inglis, Kosmos chairman and CEO. “In addition, Kosmos’ process to sell down its interest to 10 percent has received considerable interest from the

industry, with initial bids expected over the summer, and transaction conclusion anticipated by year end,” Inglis added. The Ensco DS-12 rig, working on behalf of operator BP, will now drill the

Yakaar-2 appraisal well in Senegal, which is expected to spud in the coming weeks, before drilling the Orca-1 exploration well in Mauritania, which is expected to spud late in the third quarter.

Algeria: Sonatrach says no impact on output from fire at Algerian Arzew LNG plant

lgerian state-owned Sonatrach said that the fire at the Arzew LNG production plant had no impact on the facility’s output. The fire at Arzew, which is a vast energy complex with three LNG facilities, a refinery and petrochemical plants, is “under control,” Sonatrach said. The fire broke out in one of the pro-

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duction units at GL1Z, with two workers injured. “This incident will have no impact on the production capacity of the GL1Z complex,” Sonatrach said in a statement. GL1Z is one of three LNG production facilities at Arzew in northwestern Algeria. It has three trains with a total capacity of 7.9 million mt/year, according to

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industry group GIIGNL. The second site, GL2Z, also has three trains, with a production capacity of 8.2 million mt/year, while a third facility, GL3Z, has one train with a capacity of 4.7 million mt/year. Sonatrach also operates the 4.5 million mt/year Skikda LNG export facility. The liquefaction plants have recently undergone refurbishment of equipment and de-bottlenecking by Bechtel and IHI and Itochu of Japan. Despite its LNG production capacity of some 25 million mt/year, Algeria’s LNG exports in 2018 were 10.1 million mt, according to GIIGNL. That gave it a 3.2 percent share of the global LNG market. Algeria has proven natural gas reserves of 4.5 trillion cubic metres, which amounts to about 2.6 percent of the world total, and is the world’s fourthlargest gas producer, supplying 25 percent of the EU’s natural gas imports. Sonatrach runs the largest gas field, the Hassi R’Mel, which holds about half the country’s gas reserves (2.4 trillion cubic feet).

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Wednesday 10 July 2019

BUSINESS DAY

power

WEST AFRICA

ENERGY intelligence

South Africa: South Africa weighs new support measures for struggling Eskom

outh Africa is weighing extra options to support Eskom, including swapping the financially troubled state power firm’s debt for government bonds or ring-fencing it in a special account, a senior treasury official said. Discussions are at an early stage, and it is not yet clear which option will be chosen, he said. Eskom, which supplies more than 90 percent of the country’s electricity, has this year been forced into rolling nationwide power cuts that have eroded growth in an already fragile economy. President Cyril Ramaphosa has pledged 230 billion rand ($16 billion) of support over the next 10 years but, with the firm operating at a hefty loss, officials say other measures will be needed to make it financially sustainable. Ian Stuart, acting deputy director general for the National Treasury’s budget office, said various scenarios including a debt transfer were being considered for resolving the “large and complex” issue, with implications for South Africa’s credit rating a key criterion. Moody’s, the only major credit agency that still classes South Africa at investment grade, said last year that taking on Eskom debt might under certain circumstances be ratings-neutral for the sovereign. The agency declined to comment on Stuart’s remarks. For Eskom, meanwhile, passing on all its debt obligations would probably return the firm to profit. “We are looking at which option is best both in terms of fiscal costs and

support for the reform process,” Stuart told Reuters. Support could take the form of ongoing subsidies, or the firm’s debt could be moved off its balance sheet to the government or into a special purpose vehicle (SPV). “A switch to South African government bonds will be looked at, but we have to confirm the legalities of each op-

tion and implications for ratings agencies,” Stuart said. Ramaphosa’s government is anxious to present a credible plan for rescuing Eskom without putting public finances at risk, while investors say any support measures would need to be accompanied by efforts to cut Eskom’s costs and boost its revenues.

Zimbabwe: Zimbabwe power utility says needs $14m each month for imports

imbabwe’s state-owned power utility, ZESA Holdings, which is implementing severe power cuts, needs $14 million for monthly electricity imports from the regional power market, its acting Chief

Executive Patrick Chivaura said. “If we clear our debts to (South African power firm) Eskom and (Mozambique’s hydropower company) HCB it would wipe out our (power cut) problems today, I repeat, today,” Chivaura said.

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Chivaura added that the company was seeking a government exemption to charge mining companies in US dollars to guarantee power supplies. ZESA is the only electricity generator and supplier for the public grid in Zimbabwe. For many years the company has failed to produce enough energy to meet demands. The power generation capacity in Zimbabwe is too small to meet demand from the industry and private householdings. Import of electricity from surrounding countries has eased the situation somewhat, but load shedding is used on a routine basis and some rural areas do not have electricity over long periods. Zimbabwe’s difficult economic situation causes part of the problems, as coal for power stations may at times not be produced in sufficient amounts. On the other hand, the economy is hampered by the unforeseeable energy situation. Recently the revival of the economy has increased demand.

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India plans $330bn renewables push by 2030 without hurting coal

ndia said it needs $330 billion in investments over the next decade to power its renewable energy dream, but coal would remain central to its electricity generation. The energy guzzling country wants to raise its renewable energy capacity to 500 Gigawatts (GW), or 40 percent of total capacity, by 2030. Renewables currently account for 22 percent of India’s total installed capacity of about 357 GW. “Additional investments in renewable plants up to year 2022 would be about $80 billion at today’s prices and an investment of around $250 billion would be required for the period 2023-2030,” according to the government’s economic survey presented to parliament. India wants to have 175 GW of renewable-based installed power capacity by 2022. The investment estimate reflects the magnitude of financial challenges facing one of the world’s most important growth markets for renewable energy, with government data indicating a growth slowdown in private and capital investments in the year ended March 2019. India, which receives twice as much sunshine as European countries, wants to make solar a cornerstone of its renewable expansion, but also wants to make use of its cheap and abundant coal reserves, the fifth-largest in the world. The annual economic survey warned India against abruptly halting coalbased utilities, citing risks to its banking sector and the stability of the electricity grid. “It may not be advisable to effect a sudden abandonment of coal based power plants without complete utilisation of their useful lifetimes as it would lead to stranding of assets that can have further adverse impact on the banking sector,” the survey said. Thermal power plants account for 80 percent of all industrial emissions of particulate matter, sulphur and nitrous oxides in India. India, one of the world’s largest coal producers and greenhouse gas emitters, estimates coal to be its energy mainstay for at least the next three decades. The country’s coal use rose 9.1 percent to nearly a billion tonnes in 201819. The survey said it would be difficult for a growing economy like India to migrate to renewable power supply unless “sufficient technological breakthrough in energy storage happens in the near future”. Environmentalists worry that India’s rising use of coal at a time when many Western nations are rejecting the dirty fossil fuel will hamper the global fight against climate change, despite the country’s commitment to renewable energy.

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Wednesday 10 July 2019

BUSINESS DAY

POLICY

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ENERGY intelligence

Renewable energy in Africa gets lift on EUR40m investment from European Commission STEPHEN ONYEKWELU

he African Development Bank has announced a EUR 40 million investment from the European Commission for the Facility for Energy Inclusion (FEI), a new platform for financing small-scale renewables in Africa. The announcement was made to energy sector stakeholders at a sideline event held during Africa Energy Forum, which took place in Lisbon, Portugal in June. The Bank, the European Commission, in partnership with Lion’s Head Global Partners and Fieldstone and the Lusophone Renewable Energy Association presented the Facility to participants at the Forum. FEI is a $500 million financing platform spearheaded by the African Development Bank to catalyse financial support for innovative energy access solutions. FEI On-grid, a targeted USD 400 million funds, supports improved energy access through the development of small-scale renewable energy generation and mini-grids across Africa, while the Off-Grid Energy Access Fund (OGEF), a targeted USD 100 million funds support off-grid energy distribution companies and boost their longterm capacity to access capital markets at scale. Joao Cunha, manager for Renewable Energy Initiatives at the African Development Bank said FEI had been developed to offer debt instruments, including in local currency, to compa-

nies providing affordable, clean and sustainable access to underserved communities in the Sub-Saharan region. “Through FEI, we aim to increase co-financing and private sector investment in innovative on-grid and off-grid clean energy access solutions, and consequently move faster on our “Light Up and Power Africa priority to achieve universal energy access in Africa by 2025,” said Cunha. The event was attended by the renewable energy investor community, including representatives from various Devel-

opment Finance Institutions (DFIs), international and African commercial banks, project developers and sponsors. During the event, the FEI fund managers guided project sponsors and developers in attendance through project selection criteria and financing terms of the specific FEI windows. In December 2018, the DirectorateGeneral for International Cooperation and Development of the European Commission (DG DEVCO) approved a EUR 25 million investment to FEI OnGrid window, EUR 13 million into the FEI OGEF window, and EUR 1.6 mil-

Snapshot

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lion to support the Fund’s Technical Assistance Facility, which aims to build investee capacity in structuring and executing transactions in African capital markets. These investments will provide junior equity to strengthen FEI’s capital structure, and enable FEI to fundraise from a range of commercial and private investors. “FEI is a great example of how the EU has been developing innovative financing initiatives together with financial partners such as the African Development Bank, to stimulate and de-risk private sector investments without which we won’t be able to address the growing energy demands and provide access to sustainable energy in sub-Saharan Africa,” said Hugo Van Tilborg, Head of Infrastructure, and African Development Bank Liaison at the EU. The European Commission’s contribution further underscores the African Development Bank’s focus on building strong partnerships with diverse organisations in order to provide a wide range of grant and investment instruments to fast track sustainable energy access across the continent. FEI’s off-grid window reached a $58 million first close in August 2018, with contributions from the African Development Bank, the Nordic Development Fund, the Global Environment Facility, All On and Calvert Impact Capital, Shell Foundation, USAID and the UK’s Department for International Development. FEI On-Grid is currently fundraising towards achieving the first close of about $120 million.

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Wednesday 10 July 2019

BUSINESS DAY

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ENERGYintelligence

Eni, Vitol pick up new oil block offshore Ghana

Brief

Total starts biofuel production

rench oil and gas major Total said that the first batches of biofuel had come off the production line at its converted La Mede refinery in the south of France. The bio-refinery has a capacity of 500,000 tonnes per year. It will produce both biodiesel and bio-jet fuel for the aviation industry, and Total added it would also produce premium hydrotreated vegetable oil (HVO), known as renewable diesel. Total invested 275 million euros ($310.4 million) to convert the previous loss-making crude

said, adding that the refinery at La Mede will help France curb biofuels imports. Total has said it will produce the biofuels using around 60 to 70 percent sustainable vegetable oils including rapeseed, palm oil and sunflower oil, and 30 to 40 percent from treated waste from animal fats, cooking oil and residues. Total has come under criticism from farmers who have expressed concern that imported palm oil for the refinery would unfairly compete with locally produced vegetable oil, while environmental activists

ni and Vitol have been awarded an exploration and production license in Block WB03 located in Ghana’s prolific offshore Western Basin under a competitive bidding process, the companies said in a joint statement. Italy’s Eni will be the operator of the license, along with partners Vitol, state-owned Ghana National Petroleum Corporation (GNPC) and a local registered company that will be identified during the contract finalization. The block is part of Ghana’s first oil and gas licensing round, launched in October last year. The West African nation, which became an oil producer in 2010 when it began pumping from the offshore Jubilee field, is keen to unlock its vast oil and gas resources. Ghana produces about 180,000-200,000 b/d, half of which comes from the flagship Jubilee field operated by Tullow Oil. Most of the remaining oil is produced from Eni’s Offshore Cape Three Points

block, home to the Sankofa production hub. Gas is piped from the hub to an onshore receiving terminal and used domestically in Ghana. In May, Eni and Vitol made a gas and condensate discovery with their first exploration well in the OCTP-Block 4 offshore

Ghana. Eni’s gross production in Ghana is around 70,000 b/d of oil equivalent. Ghana’s proved oil reserves stood at 660 million barrels at the end of 2017, according to the CIA World Factbook, equivalent to about nine years of production at current levels.

Saudi Aramco to restart preparations for giant IPO

refinery so that it now produces biofuels. “Biofuels are fully renewable, and an immediately available solution to cut carbon emissions from ground and air transportation,” Bernard Pinatel, Total’s president for refining and chemicals, said in a statement. When produced from sustainable raw materials, they emit over 50 percent less carbon than fossil fuels, Pinatel

against the refinery, citing the deforestation caused by palm oil production. Total said that as part of its agreement with the government, it has committed to using no more than 300,000 tonnes of palm oil per year or less than 50 percent of the total volume of raw materials needed. It said that at least 50,000 tonnes of French-grown rapeseed oil would be used in the refinery. www.businessday.ng

audi Arabia is restarting preparations for a potential initial public offering of oil giant Aramco, months after putting the planned listing on hold, people familiar with the matter said. Aramco, the world’s most profitable company, recently held talks with a select group of investment banks to discuss potential roles on the offering, according to the people. Detailed work on the IPO may pick up speed later this year or early next year, the people said, asking not to be identified because the information is private. The revived IPO plan will still face significant hurdles, including the ability of the kingdom to achieve the $2 trillion valuation it has been seeking for the company. Demand for the share sale would also likely be affected by lower oil prices as well as growing concerns among top institutional investors about pouring money into fossil-fuel companies that contribute to climate change. Saudi Crown Prince Mohammed bin Salman is also keen to list Aramco in New York, but advisers are wary of opening up the company to the risks of US

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litigation. Prince Mohammed has insisted that the IPO will still take place in 2020 or 2021. After working with banks for more than two years, Aramco formally put the IPO plans on hold last year and instead decided to buy a $69 billion stake in local chemical giant Saudi Basic Industries Corp. Aramco is planning to wait until the Sabic acquisition is completed before conducting the IPO, one of the people said. Aramco, officially known

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as Saudi Arabian Oil Co., was originally working with Evercore Inc., Moelis & Co., HSBC Holdings Plc, JPMorgan Chase & Co. and Morgan Stanley on the planned share sale. It was not immediately clear if all the banks had been approached again or if some new firms are also being considered. No final decisions have been made, and the timeline for the share sale could still change, the people said. The IPO project was first announced in 2016 as the cornerstone of the Vision 2030 plan to modernize the Saudi economy, with a target of listing in the second half of 2018. The kingdom wants to raise a record $100 billion from selling a 5 percent stake in Aramco, which would make it the biggest IPO in history and a windfall for any banks that win a role. The IPO was “never fully suspended,” though Aramco had been working on the Sabic acquisition and on raising capital, oil minister Khalid Al-Falih said following a meeting of the Organization of Petroleum Exporting Countries and its allies in Vienna.

Wednesday 10 July 2019

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ENERGY intelligence OPEC Flakes OPEC+ extends output cuts

PEC and its allies led by Russia agreed to extend oil output cuts until March 2020, seeking to prop up the price of crude as the global economy weakens and US production soars. The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which

Oil rises as tensions around Iran’s nuclear programme simmer

il prices rose, boosted by escalating tensions around Iran’s nuclear programme and betterthan-expected US jobs data. Brent crude futures were up 34 cents at $64.57 while US West Texas Intermediate (WTI) was up 18 cents at $57.69 a barrel. Tehran said it will soon boost its uranium enrichment above a limit set by a 2015 nuclear deal, known as the JCPOA. President Donald Trump, who

pulled the United States out of the deal last year, warned Iran to be careful. Recent incidents involving oil tankers in the Mideast Gulf as well as the seizure in Gibraltar of a tanker carrying Iranian oil, also supported prices. Strong US economic data also put a floor under prices. US job growth rebounded strongly in June, with government payrolls surging, the Labor Department’s closely watched employment report showed, suggesting May’s

sharp slowdown in hiring was probably a one-off. Employers added 224,000 jobs last month, the most in five months. But the US-China trade war has dampened prospects of global economic growth and oil demand. However, the lack of concrete progress in resolving the acrimonious trade war between the United States and China means the bar could be very high for the lower borrowing costs at its July 30-31 policy meeting.

Asia feels pinch from higher Middle East oil shipping costs

sian oil refiners are being squeezed by rising freight rates and insurance costs for shipping crude from the Middle East after attacks on ships in the Gulf last month, industry officials and analysts said. The Middle East accounts for more than two-thirds of Asia’s oil supply and the attacks on tank-

ers in the Gulf of Oman on June 13 have heightened security concerns among oil companies and shippers operating in the region. The war risk insurance premium (WRP) for ships travelling in the Gulf has risen 10-fold as a result, according to industry participants. Meanwhile, the freight rates for very large crude carriers (VLCC) from Gulf oil terminals to

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Asian ports have jumped about 30 percent since the attacks, according to Refinitiv data. The IOC official said its WRP has gone up to 0.4 percent from 0.04 percent while the Petroleum Association of Japan (PAJ) said late last month that the insurance rate had risen to 0.25 percent from 0.025 percent. The WRP is set as a percentage of the ship’s value, said multiple trading sources, adding that the newer the ships are, the higher the insurance cost will be. Since June 12, the cost of shipping crude from the Saudi Arabian port of Ras Tanura in the Gulf to Ningbo, China, on a VLCC has surged 27 percent to $1.24 a barrel, Refinitiv data showed. In that same period and using the same type of vessel, moving crude from the United Arab Emirates to the Indian port of Visakhapatnam has climbed 37 percent and from Kuwait to Singapore by 24 percent, the data showed.

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has overtaken Russia and Saudi Arabia to become the world’s top producer. Benchmark Brent crude has climbed more than 25 percent so far this year after Washington tight-

ened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop. The approval of the pact extension follows a decision by OPEC producers the previous day. Fears about weaker global demand as a result of a US-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries. Prolonging the output pact is likely to anger US President Donald Trump, who has demanded OPEC leader Saudi Arabia supply more oil and help reduce fuel prices if Riyadh wants US military support in its standoff with archrival Iran. A jump in oil prices might lead to costlier gasoline, a key issue for Trump as he seeks re-election next year. The OPEC+ extension comes after Russian President Vladimir Putin said he had agreed with Saudi Arabia to prolong the pact and continue to cut combined production by 1.2 million barrels per day, or 1.2 percent of world demand.

OPEC output hits new low on Trump’s sanctions, supply pact

PEC oil output sank to a new five-year low in June as a rise in Saudi supply did not offset losses in Iran and Venezuela due to US sanctions and other outages elsewhere in the group, a Reuters survey found. The 14-member Organization of the Petroleum Exporting Countries pumped 29.60 million barrels per day (bpd) last month, the survey showed, down 170,000 bpd from May’s revised figure and the lowest OPEC total since 2014, the survey showed. The Reuters survey suggests that even though Saudi Arabia is raising output following pressure from US President Donald Trump to bring down prices, the kingdom is still voluntarily pumping less than an OPECled supply deal allows it to. OPEC renewed the supply pact at meetings this week. Despite lower supplies, crude oil has fallen from a sixmonth high above $75 a barrel in April to below $63, pressured by concern about slowing economic growth. OPEC, Russia and other non-members, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from January 1 this year. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members - all except Iran, Libya and Venezuela.

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In June, the 11 OPEC members bound by the agreement achieved 156 percent of pledged cuts, the survey found, more than in May, due to lower production in Iraq, Kuwait and Angola. All three of the exempt producers also pumped less oil. The United States re-imposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers. Aiming to cut Iran’s sales to zero, Washington this month ended sanctions waivers for importers of Iranian oil. Iran’s crude exports have declined to less than 400,000 bpd from more than 2.5 million bpd in April 2018. In Venezuela, supply fell slightly in June due to the impact of US sanctions on state oil company PDVSA and a longterm decline in production, according to the survey.

Wednesday 10 July 2019

BUSINESS DAY

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ENERGY intelligence

Nigeria’s oil revenue records another monthly decline of N62bn DIPO OLADEHINDE

atest report from Central Bank of Nigeria (CBN) has revealed shut-ins and shutdowns of some terminals by the Nigerian National Petroleum Corporation (NNPC) led to another monthly drop in the gross oil revenue that comes to the federation. BusinessDay analysis of data from CBN revealed Nigeria’s oil receipts dropped to N410.18billion in May 2019, shedding N62.2billion when compared to the N472.38billion recorded in the preceding month of April 2019. “The decline in oil revenue relative to the provisional monthly budget estimate was attributed to shut-ins and shutdowns at some NNPC terminals due to pipeline leakages and maintenance activities,” CBN said in its latest report. According to the proposed budget of the 2019 fiscal year, the Federal Government projects about N3.73 trillion as oil revenues. This figure was derived from two presumptions; first, that in the year, oil will sell at a projected $60 per barrel; second, that oil production will hit 2.3 million barrels per day. Daily crude oil production estimate of 2.3 million barrels per day is the same amount as budgeted for the 2018 fiscal year.

Recall, Nigeria lost N44.6billion as a result of the drop in oil revenue occasioned by the shut-ins and shutdowns of NNPC terminals in April 2019. The report stated that the country’s oil earnings fell from the N516.88billion recorded in March to N472.28billion in April, as this also affected the gross federally-collected revenue for that month. The development, however, did not improve, as latest data from the country’s apex bank showed that the gross federally-collected revenue for May 2019 was N733.82billion and was lower than the provisional monthly budget estimate of N1.1trillion by 33.7 per cent. Similarly, it fell below the receipts in the preceding month by 7.7 per cent, as the CBN explained that the decline in federally-collected revenue (gross) relative to the monthly budget estimate was due to the shortfall in receipts from oil revenue during the review period. The bank said, “Gross oil receipts, at N410.18billion or 55.9 per cent of the total revenue, was below both the monthly budget of N640.21billion by 35.9 per cent and the preceding month’s receipts of N472.38billion by 13.2 per cent, respectively. On non-oil revenue, the CBN stated that at N323.64billion or 44.1 per cent of the total revenue, non-oil revenue fell below the provisional monthly budget estimate of N466.91billion by 30.7 per

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Snapshot Nigeria relies heavily on crude oil revenue to fund government spending. Oil accounts for about 15percent of Nigeria’s GDP but it makes up about 80percent of government revenue

cent. “It, however, exceeded the preceding month’s receipt of N322.93billion by 0.2 per cent. The lower non-oil revenue relative to the provisional monthly budget was due to the shortfalls in receipts from all the non-oil revenue components, except customs and excise duties,” the

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bank stated. It noted that of the total N667.29billion retained revenue in the Federation Account, the sums of N92.63billion, N48.76billion and N24.73billion were transferred to the VAT Pool Account, the Federal Government Independent revenue and “others”, respectively, leaving a net balance of N501.18billion for distribution to the three tiers of government. “Of this amount, the Federal Government received N239.65billion, while the state and local governments received N121.56billion and N93.71billion, respectively. The balance of N46.26billion was shared among the oil-producing states as 13 per cent Derivation Fund.” CBN added, “Similarly, from the N92.63billion transferred to the VAT Pool Account, the Federal Government received N13.89billion, while the state and local governments received N46.31billion and N32.42billion, respectively.” Nigeria relies heavily on crude oil revenue to fund government spending. Oil accounts for about 15percent of Nigeria’s GDP but it makes up about 80percent of government revenue. Thus, a decline in oil price has an adverse impact on government revenue, thereby increasing the requirement for borrowing and debt servicing and attendant impact on the funds available for capital expenditure.

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Africa: Can João Lourenço cure Angola of its crony capitalism?

The president’s pledge to wash away corruption in the oil-rich state is facing scrutiny David Pilling in Luanda

ot far from the flashy skyscrapers of downtown Luanda, the capital of one of Africa’s supposedly richest countries, is a public morgue. Celestino Chivava, who worked in the Angolan oil industry until he lost his job after the price collapse of 2014, describes how families wash the bodies of their loved ones on a slab outside. “They put perfume in the mouth to stop the corpse smelling,” he says of the capital’s do-it-yourself funeral services. “Sometimes, when the electricity goes off, the bodies get stuck together and the families have to pull them apart.” Oil-rich Angola is the third-biggest economy in sub-Saharan Africa, but it is also one of the most unequal, with a gulf separating a rich, politically connected elite from the mass of the 30m population. After the devastating civil war, which ended in 2002, its oil-fuelled economy, boosted by huge investment in infrastructure from China, became one of the fastest-growing in the world, piling on near-double digit growth over the course of more than a decade. But the southern African country also became one of the continent’s most corrupt, a crony capitalist state in which proximity to the ruling People’s Movement for the Liberation of Angola, led for 38 years by President José Eduardo dos Santos, was the single biggest factor in personal enrichment. In a 2011 audit, the IMF identified a $32bn discrepancy linked largely to “quasi-fiscal operations” by state oil company Sonangol that did not appear in official budget accounts. While a wealthy elite prospered, living a glamorous lifestyle on Luanda’s Riviera-style Atlantic coast or snapping up property and assets in Portugal, the former colonial power, the majority of Angolans live on less than $2 a day. Social indicators, from life expectancy to child mortality, are significantly worse than they should be for a country of Angola’s supposed wealth. Now there is a hint of change. Angola has a new president, handpicked to succeed Mr dos Santos, who relinquished the party chairmanship last year after giving up the presidency in 2017. Many had expected João Lourenço, a former defence minister and MPLA stalwart, to continue as usual, protecting his benefactor, preserving the supremacy of the party and maintaining Angola’s tight links with China. To their surprise, Mr Lourenço, universally known as “JLO”, has set about dismantling at least part of his predecessor’s legacy. The president has spoken of the need to help the poor in what analysts see as an attempt to shore up the MPLA’s legitimacy against an opposition Unita party that has steadily improved its electoral performance. More concretely, Mr Lourenço has waged a public war on corruption that has ensnared some of the former president’s children, including one of his sons, José Filomeno dos Santos, who had been put in control of the country’s $5bn sovereign wealth fund towards the end of his father’s tenure. José Filomeno was detained last year for alleged embezzlement, but released this March, without charge, after authorities said they had recovered control over several billion

dollars belonging to the fund. While some see Mr Lourenço’s actions as a Xi Jinping-style anti-corruption drive designed to consolidate power — or even a vendetta against his former patron — others have glimpsed a chance for Angola to correct its course. “So far, it’s more of a vendetta and less of a systemic clean-up, though I’m not closing the file on future progress,” says Ricardo Soares de Oliveira, an Angola expert at Oxford university. Mr Lourenço has already signed a $3.7bn credit facility with the IMF, the biggest ever such arrangement made by an African country and one that will open up one of the continent’s most opaque regimes to wider scrutiny. As part of the agreement, it has promised to cease the oil-for-infrastructure contracts with China that paid for a massive postwar reconstruction boom, but left the country heavily indebted. Angola’s ratio of debt to gross domestic product is close to 100 per cent, a serious restraint on its room for budgetary manoeuvre. The new president has also made sweeping changes to the oil industry in an effort to revive production that has fallen from a peak of 1.9m barrels a day a decade ago to 1.4m b/d. The idea is to use tax breaks and other incentives to persuade oil majors such as Total of France and Eni of Italy to pump more from existing wells and to entice others to explore for new reserves. As part of that reorganisation, Mr Lourenço sacked Isabel dos Santos, the richest woman in Africa and the most successful of the former president’s offspring, as head of Sonangol. The state-owned company has now been split into two, clipping its previous status as both industry regulator and operator. Oil accounts for 95 per cent of the coun-

try’s foreign revenue, making Angola possibly the most commodity-dependent country in Africa. But lower prices and falling production have squeezed the state’s coffers and plunged the economy into a four-year recession. In spite of its plentiful water and abundant arable land, Angola imports almost everything from tinned carrots to lettuce flown in from Lisbon. Many farmers abandoned land during the civil war and the oil economy pushed the kwanza, the currency, to unrealistic levels, making it uneconomic for businesses or farmers to produce even the most rudimentary items. Until a massive devaluation of the kwanza of 85 per cent last year, the elite simply imported everything they needed, from diesel to champagne. Mr Lourenço is not the first to press for economic diversification. But with dwindling oil reserves, high indebtedness and a political imperative to enact social change, advisers say he has little option but to restructure the economy and make it more attractive for foreign investors. To add to the impression of change, the president has cultivated a more modest and open public image. Unlike his predecessor, Mr Lourenço has insisted that his face does not appear on banknotes. “This is a historic moment for the country,” says Ricardo Viegas d’Abreu, transport minister and a former economic adviser to Mr Lourenço. “We have reached a stage where we can’t continue having public expenditure as the main driver of growth.” Mr Viegas grasps the magnitude of the task, particularly given what he alleges was the massive scale of corruption in the last years of the dos Santos administration. He adds: “Every stone you turn, you don’t find a pearl, you find a snake.” Yet the president, insists Mr Viegas, knows

that a new economy can be built only on what he calls “a legal framework [of], reasonable [minimal] levels of corruption for a developing country and rights, like freedom of speech”. Those, he says, “are the building blocks, but they are not that easy to put on the ground. Lourenço has shown the courage to move us in that direction.” At the central bank, an opulent colonialstyle structure with Portuguese murals decorating its domed entrance, José de Lima Massano, the governor, echoes the positive narrative. “The country is on the move. Things are really changing and changing fast,” he says, pointing to evidence from a drive to weed out undercapitalised banks to a new investment law allowing foreigners to enter Angola without a local partner. The central bank has long been associated with weak supervision — including lax oversight of anti-money laundering regulations — and poor control of financial institutions, which have often been treated as personal piggy banks by those with political connections. Mr Massano has shut several banks and instituted an auction process designed to clean up a less-than-transparent system for allocating scarce dollars. He has also stepped up the rhetoric against money laundering. Only by cleaning up their image, he says of local banks, will they be able to repair relations with US counterparts, which have severed so-called correspondent-banking relations with Angola, worsening the dollar crisis. “The fight against corruption by Joao Lourenço is very good news,” says Mr Massano. “One of the risks to those correspondent banks is that illicit money might go through their accounts, so no one dares do anything.” The central bank moved to address the underlying shortage of dollars itself, a bane of investors trying to do business in Angola, by allowing the market to determine a more realistic exchange rate. “The currency was fixed to the US dollar,” he says. “It was not sustainable and we had to do something.” Rafael Marques de Morais, an investigative journalist and notable thorn in the side of the ruling elite, acknowledges real change under the new presidency. For one thing, he says, the surveillance equipment outside his home has gone. Although the Lourenço administration has moved swiftly against parts of the old regime, he says, others tainted by corruption have remained close to power. An amnesty on laundered money deposited abroad resulted in no meaningful return of illicit funds, he adds. Defenders of Mr Lourenço say that, given the small size of the Angolan elite, the president has little option but to recycle educated technocrats. He has drawn a line under past misdeeds, goes the explanation, but will not tolerate new ones. Mr Marques has a simpler interpretation. “If you surround yourself with sharks it’s because you like sharks,” he says. “If I had to summarise what’s happening in the country I would say the president came in with very good intentions, unprecedented political goodwill — and a total lack of vision on how to proceed.”

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