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news you can trust I ** wednesDAY 10 june 2020 I vol. 19, no 581
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Unemployment rate may reach 40-45% by end 2020, says LCCI
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igeria may be facing its worst unemployment crisis since independence as helpless employers retrench millions of
workers due to the pervasive impact of COVID-19 on their margins. Weeks of lockdown have hiked logistics costs for employers, forcing reductions in output, revenue and profits. Bars and clubs are still under lock and key,
pushing brewers to the brink while hurting their capacity to retain workers. Firms struggle to move their products to customers as many open markets across Nigeria remain partially open. Movement of raw materials and finished goods is increasingly
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Nigeria faces acute job losses as COVID-19 incapacitates employers ODINAKA ANUDU & JOSHUA BASSEY
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being restricted by states and security agents, preventing them from reaching their markets. Consumer wallets are becoming emptier due to lack of regular salary payment and loss of profContinues on page 31
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These numbers show Nigeria’s poor outing among West African countries in COVID-19 fight MICHAEL ANI
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igeria has some of the worst coronavirus statistics among countries of the Economic Community of West African States (ECOWAS), according to data published by the West African Health Organisation (WAHO), a specialised institution in the region responsible for health issues. Among the 15-member countries of ECOWAS, Nigeria, which has about half of the region’s population and accounts for over 70 percent of regional GDP, has recorded far more number of infected cases and deaths, as well as a low number of people who have recovered from the virus, BusinessDay analysis of the data published on Monday shows. This is an indication that Africa’s largest economy needs to step up its game in the fight against the coronavirus pandemic. Nigeria with a total of 12,486 confirmed cases of the virus has recorded 3,959 recoveries (or Continues on page 31
Inside
Basheer Mohammed (r), federal commissioner, National Commission for Refugees, Migrants and Internally Displaced Persons (NCFRMI), at the launch of #FaceMasksByIDPs campaign at Durumi IDPs Camp in Abuja, in collaboration with The Skilled Women Initiative, to protect Internally Displaced Persons (IDPs) from COVID-19 while providing sustainable livelihoods for women in IDP camps. NAN
FMDQ, FSD Africa, CBI hold session on green financing opportunities for P. 30 agribusiness
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Wednesday 10 June 2020
BUSINESS DAY
DIGITAL DIALOGUES
CONFIRMED SPEAKERS
A NATIONAL CONVERSATION: MAPPING NIGERIA’S RESPONSE TO COVID-19
ZAINAB SHAMSUNA AHMED
Minister of Finance, Budget & National Planning
DR. DOYIN SALAMI
Chairman, Economic Advisory Council
OWEN OMOGIAFO
President & Group Chief Executive Officer, Transcorp.
EYO EKPO
CEO, Excredite Consulting Ltd.
CHINWE EGWIM Senior Economist, FBNQuest
MR EDWIN DEVAKUMAR
Group Executive Director, Dangote Industries Ltd.
PROF. AKIN ABAYOMI
IBUKUN AWOSIKA
DR. TUNJI ADEGBESAN
Commissioner, Ministry of Health, Lagos State
Chairman, First Bank of Nigeria Limited
Founder, Gidi Mobile
BASHORUN J.K. RANDLE
NDIDI OKONKWO NWUNELI, MFR
PROF. MAURICE IWU
Chairman, J.K. Randle International
SUTURA AISHA BELLO
Co-Founder, Sahel Consulting
PROF. ABDULSALAM NASIDI
PPP Component Lead, UK Nigeria Infrastructure Advisory Facility(UKNIAF)
Provost of Health Sciences, University of Africa
SIM SHAGAYA
TEJU ABISOYE
Founder, ULesson
Acting Executive Secretary LSETF
DR. LUCY SURHYEL ONYECHE TIFASE CEO, Siemens NEWMAN Independent Director/Governance & Performance Improvement Advisor
Nigeria
ADEFUNKE ADEYEMI
HAJIYA SALAMATU SULEIMAN
Regional Director, Africa, International Air Transport Association (Iata)
Former Minister of State for Foreign Affairs
President, Bio Resources Development and Conservation Program
DR. WIEBE BOER CEO, AllOn
PETER OBI
Former Governor Anambra State
REMI ADEKOYA Former Political Editor, Warsaw Business Journal
PROF. SULEIMAN ELIAS BOGORO Executive Secretary, TETFund
DR. YEMI KALE
OLISA AGBAKOBA, SAN, OON
ENGR. MANSUR AHMED President, Manufacturers Association of Nigeria (MAN)
Member, Advisory Panel, Nigeria Natural Resources Charter. Fmr Vice President, World Bank, Africa
PROF. PAUL COLLIER
DR. KALU IDIKA KALU, CON, OFR
PROF. CHRISTIAN HAPPI
Senior Partner, Olisa Agbakogba Legal
Professor of Economics & Public Policy, Blavatnik School of Government, & Director of The Int’l Growth Centre
DR. CHRISTOF
Statistician-General, WALTER National Bureau of Co-Founder, Statistics Agramondis Agricultural Consultancy
CHINENYE OFFOR
FOLA LAOYE
CEO, WellSpring Health
Former Minister of Finance
BOYE OLUSANYA Group COO, Flour Mills of Nigeria plc
DR. OGHO OKITI
Founder & CEO, Health Markets Africa
Managing Director BusinessDay Media Ltd.
DR. ALIYU MODIBBO UMAR
UKINEBO DARE Managing Director Edo Jobs
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SANI DANGOTE
CEO, RED For Africa
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DR. OBIAGELI EZEKWESILI
Former Minister of Petroleum
DR. EFOSA OJOMO
PROF. ABUBAKAR SIDDIQUE MOHAMMED
Co-Author, The Prosperity Paradox, & Global Prosperity Lead, Clayton Christensen Institute
Vice chair,ANAP Foundation, Covid-19 Think Tank
MADIHA AFZAL, PHD
ERNEST NDUKWE, OFR
PATRICK NWAKOGO
David M. Rubenstein Fellow, Foreign Policy The Brookings Institution
OTTO ORONDAAM Founder, Slum2School
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Head, Commercial Banking, Union Bank
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Wednesday 10 June 2020
BUSINESS DAY
NIGERIAN COMPANIES REINVENTING FOR THE NEW NORMAL Spotting innovators in a crisis A BusinessDay Supplement
I
n the wake of COVID-19, companies have sought to introduce innovations that minimise the disruption caused by the pandemic. In the space of two months, they have applied a range of tactics to protect their workers, while maintaining services to customers and generally keeping the engine humming.
Business development
This being unfamiliar territory, organisations are making new rules as they go along, learning fast, and making quick adjustments. In this context, what used to be known as the learning curve has become the learning plateau with a steep vertical climb.
Detection of fraud and cyber-crimes
Already, some companies have caught attention for their practices in a number of areas. Their experience holds valuable lessons for others searching for ways to pilot through this brave new world. To showcase these innovative companies, BusinessDay will be publishing a special supplement, Nigerian Companies Reinventing for the New Normal on June 29, 2020. The supplement would serve as a playbook of leading practices for management protocols and business continuity planning. Consisting of interviews, profiles and thought-leadership essays, it will appear in a comprehensive post-event report after A National Conversation: Mapping Nigeria’s Response to COVID-19, a two-day BusinessDay Digital Dialogue scheduled to hold on June 16-17, 2020. The supplement will focus on those companies leading the way through agile re-engineering, and intelligent adaptation of systems, processes and procedures in their:
Cash flow planning Commercial credit Corporate governance Corporate communications CSR project selection and interventions Facility management Financial risk management Human Resource management, including hiring and
appraisals IT platform Legal services Management structure Marketing and customer engagement Meetings Post-lockdown reopening safety and reassurance. Procurement, vendor management and outsourcing Sales Supply chain management Telecommuting protocols
Organisations in the public and private sector that are taking the lead by implementing new practices to assure continuity with teachable lessons for their sectors are invited to feature in the supplement. Submissions are expected to demonstrate their relevance to managing in a crisis that other companies can learn from. The deadline for submissions to appear in the supplement is Friday, June 19 2020.
FURTHER INFORMATION To find out how your organisation can feature in the Nigerian Companies Reinventing for the New Normal supplement please contact: Kristabel Eriaye
0802 557 6094
kristabel.eriaye@businessday.ng
Noel Ezekwe
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Promoting structural transformation in Nigeria through government coordination of investments CHAMBERS UMEZULIKE
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ecent macroeconomic trends in Nigeria suggest the velocity at which Nigeria must structurally transform and industrialise. The trends encircle gross fiscal deficit which has necessitated severe budgetary cuts; burgeoning and unsustainable debt profile; reduction in government revenues and foreign exchange earnings; and poverty preponderance. While the global COVID-19 economic implications contributed to sharpening this macroeconomic crisis, the evolving global energy dynamics suggested that recession 3.0 and other subsequent series (if a cogent effort is not taken) are imminent for Nigeria, as a rentier state. The most sustainable way for Nigeria to address these challenges both in short and long terms is through economic diversification, industrial restructuring and export structure upgrading. Considering the latter, the manufacturing exports share of total exports in the country from 1960 to 2015 averaged less than 2 percent annually. Nigeria simply manufactures just a nanoscopic fraction of items on its exports list. Depending on commodity rents since its independence has always inferred occasional and inevitable economic crises. Previous efforts to improve the country’s performance in manufacturing have failed to produce anticipated results from the days of development planning (import substitution and big push) and structural adjustment (openness and macroeconomic stability) to the fourth republic. Although measurable macroeconomic progress was made in the first few years of the present republic, specific industrial progress from then till now has been slow. Factors responsible for the failure of the country’s industrial policies include inadequate political will, the Dutch disease, and the inability of
the government to coordinate investments for industrial upgrading and diversification. To turn the tide, Nigeria can still be transformed structurally despite its constraining business environment and non-Weberian bureaucracy. To do this, it must first pick winners - select priority industries that can spearhead its industrialisation quest and the improvement of manufacturing sector performance. The importance of this selection is that industries require specific hard and soft infrastructure (industrial inputs). The type of infrastructure needed for automobile assembly is distinct from the one needed for the textile industry or for attracting tourism. To this end, Nigeria evidently has fewer administrative and financial resources to embark on large scale provision of industrial inputs for each industry. This rationalises the essence of identifying new and existing industries and prioritising the government’s limited resources to facilitate the development of those industries for quick successes. Tax revenues from firms in these selected industries, once they prosper, would provide the government with more resources to improve country-wide infrastructure, for instance. In selecting these industries, factors such as local comparative advantage, low capitalintensity, large domestic markets, transferable labour skills, existing supply chain and raw materials in the domestic economy, should be considered. Following this, the government must appropriately coordinate investments for industrial restructuring and address market failures. This starts from developing a longer, multi-year, legislated industrial agenda which should have clear targets in terms of employment projections, industrial outputs, foreign investment and export growth targets. Such an agenda must also have a high political profile and the ingredients of transparency and accountability with a focus on effective citizen engagement so that citizens are enabled to hold the
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The Nigerian government must provide simultaneous improvements in financial, legal, and educational institutions, and in hard infrastructure so that firms in the priority industries can become competitive and reach the production possibility frontier
government accountable in the implementation of this agenda. In this light, the Nigerian government must provide simultaneous improvements in financial, legal, and educational institutions, and in hard infrastructure so that firms in the priority industries can become competitive and reach the production possibility frontier. This entails the establishment of deliberation councils for industrial policymaking which should compose relevant bureaucrats, private sector representatives, academics, media and other relevant subsects. The councils should meet regularly, dialogue, so that the government can easily extract the specific binding constraints for industrial growth and productivity from firms, and work with the private sector to address them. These councils should be independent of political influences and would make the industrial policy process more effective by improving information flows between the government and the private sector, and amongst the private sector. A central budget to address market failures in priority industries should also be set up. To limit rent-seeking through such dialogues, their processes should be transparent. Gone are the days when it was advised that governments need to keep private firms at arms’ length to minimise corruption and rent-seeking. While the government’s autonomy from private interests is important, it must have to engage the private sector to elicit industrial information in a more systematic manner. Third, in line with this, the government should compensate first-movers in new and high-productivity industrial activities for externalities, in a way to stimulate entrepreneurs to cost-discover. Uncertainty about new products that can be profitably produced in an economy is a major obstacle to industrial upgrading and diversification. As such, subsidising cost-discovery could be done through tax incentives; setting up mechanisms for risky finance
Beyond tribe, country
I
t disheartens to write this piece. I am, without any iota of unbelief, incapable of quieting this desire. I admit my anxieties with respect to my beloved country are somewhat long – this is one. The uptrend in tribalism and tribalistic mindfulness is that anxiety. It roars suspicion, injures many. I often restrain myself from speaking in the extremities of opinions. It’s more attractive to err on the path of balance. Too good or too bad, isn’t always exactly correct, I oftentimes debate. The state of Nigeria today should beggar moderation of concern. Well-meaning citizens should flap their gums against tribe over country. The nation is either striding in the wrong direction or it is, at best, static with the exception of population growth. Let’s not muff it! Tribalism, a massive ill of our nation, predates the subsisting generation. Obafemi hymned it. Ahmadu lauded it. Nnamdi was a bit circumspect about it. The leaders that emerged subsequently covertly or overtly have continued to fuel the embers of this anti-nationhood malaise. The unwitting bit is that when Nigeria bleeds, the tribe’s haemorrhage even more. In present-day Nigeria, illadvisedly, tribalism has morphed, reflecting the policy slant of the various governments. For Heaven’s sake it is 2020! In a few months, Nigeria will trudge on to its sixtieth Independence anniversary, ill-fated to have been led by largely tribe-leaning leaders. Most of them are epically skilled at disuniting us. They ignite its fires for private advantages with no genuine
concerns for the led and for the polity. They too define Nigeria to the extent of their kith and kin or at best, through the binoculars of tribe and region. What a pathetic view! Their failure to acknowledge the cheering Nigerianness across tribes, in all of us is ceaselessly giving traction to the unrelenting mount of this societal malady. Nigeria is not a foot away from the views, thought-windows and acts that shaped it in the 1960s. The discussions, unashamedly, have remained about: which tribe; which ethnicity and whose turn. Not about Nigeria or not even about Nigerians. The disquiets of the previous two generations are still the qualms of the extant one. Tribalism is entrenched. “Nigerians” easily slip into tribalistic posturing. It provides a brilliant umbrella for incompetent, small-eyed leaders. It is quickly seen along the corridors of power at both state and federal levels. It gives a great boost to hate-spreading. It is destructively dictating and reshaping our national ethos, belief and value systems. Excessively hugging one’s tribal ways easily elaborates intolerance; diminishes and poisons the socio-political space for country good. It is not the conscious dislike, disapproval or intolerance of persons or views that suffer another tribal belongingness that worries me rather it is in the unconscious or subconscious morsel that the thoroughness of tribalism is exposed. The subconscious element gets us sleepwalking into it. Subliminally, we articulate our views, act, react and design policies driven by it. Its grip is
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harder; its reach, shorter. Tribal consciousness obscures our sense of nationhood, justice and equity. Nigerians are still tribally prejudicial and bigoted in both political and social affairs but not so much economic (some pretext here?). In truth, we have to embrace the disheartening fact we have just a few true Nigerians under strong nationalistic searchlights. I know one – Dike Chukwumerije. Tribe has become the emergent identifier and solidifier of the individual, not nationality. In Nigeria, we have Yoruba, Hausa, Igbo, Fulani, Ijaw folks etc. They belong first to tribe. They are not Nigerians. The “true” Nigerians mostly live outside the country. They gangly walk the streets of Europe, America and Asia. I have seen and listened to countless “rich” tribalistic minds. It does not matter the ethnicity; their slants bear the same coloration. The arguments of the broader, the better do not appeal to them with respect to the Nigeria project. As “Nigerians”, we incredibly defend our tribes and ethnic groups in our opinions, actions and contributions. It does not matter if our propositions are right or wrong. Enmeshed in banality, their arguments are predominantly immoral, sectional and unpatriotic. They are below common-sense gushes; greatly rupturing peaceful inter-ethnic/ inter-tribal social relationships, business partnerships and scale economies. Many have fallen short of the understanding that tribal slants over national concerns, on many counts, borderlines folly of extremely risky shades; they rarely add that
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and investment guarantee; internalising coordination and labour training externalities; covering part of the costs for feasibility studies, business proposal developments etc. These subsidies should be subject to ex-ante performance requirements so that bad projects could be phased out (a sunset clause). Compensating first movers is because of the asymmetry between the high cost of failure and limited gains of success of their attempts. Their failure provides a learning curve for other firms looking to explore such industries. On the flip side, their success attracts imitators who reduce the rents they earn, presenting high social returns but low private returns from entrepreneurial attempts thereby reducing appropriability of cost discoveries. The high social returns from firstmover success present the case for inducing them to cost-discover especially in high-productivity activities. This all plays a role in helping the country acquire technological capabilities in new productive activities where it might not have had a comparative advantage. Examples of such successful attempts include the salmon industry in Chile, ICT in India, textiles in Bangladesh etc. With this set up in place, the government must then rigorously seek foreign investors from East Asia where a rise in factor costs are making firms less competitive. Governments must also use special economic zones to circumvent binding constraints to firm growth and unconducive business environments. Post-Oil Nigeria requires fostering an environment that promotes entrepreneurship and investment in non-traditional economic activities. This is critical to economic growth and convergence, as well as Nigeria’s future! Umezulike is an International Development Professional and Development Economics Researcher. He can be reached through chambers. umezulike@gmail.com and on Twitter via @Prof_Umezulike
Tony Monye
good something to our lives. Let’s hug a bit of honesty and discard the tribal cloak. Some things defy explicability. Being Nigerian is one. The geo-space called Nigeria cannot be wrong. The people and their leaders are. I am in the hope that Nigeria will grow into an ethno-blind society, where all tribes live in harmony with one another. Having divergence of opinions and outlooks gives more opportunities for new learning. If we regard our diversities as some big gifts, Nigeria will sparkle in a few years from now. Good signs are emerging. The upcoming generation appears less tribal, more national. Their views and actions certainly will define the country’s fate. The country urgently needs focused, wellintent, visionary leadership with sensibilities to “Project Nigeria”. Nigeria needs broadminded leaders with ability to engage its citizenry, explain the ills and misnomers of tribalism. Straightaway, every citizen needs to redefine Nigeria in its broadest understanding. It sells an inviting delusion to think somehow Nigerians will become non-tribal at the right time without everyone putting in the work. What orientation are you - tribal or national? The answer isn’t in your head. It’s in your heart. Monye, The Convener, The Lunar Leadership Society
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Time to create your own monopoly Small Business handbook
Emeka Osuji
A
s Peter Thiel, founder of PayPal said in his book titled Zero to One, “every moment in business happens only once”. That moment comes and those who set forth at dawn, (as Wole Soyinka would say), are the ones that would grab it and become the “new lions in the jungle” moving and shaking the forest. That kind of moment is right ahead of us. Rather than think of the pandemic as the end of the road for the small business, I rather reckon that the opportunity to experience that powerful moment of change is close. Even more apt is Thiel’s comment that “the next Bill gate will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network”. Indeed, they will not. Rather they will create completely different and new kinds of innovative products and services. Is creating a Tabula Rasa for innovative companies to write on, especially in the technology field. The future belongs to those that invest wisely in these areas so as to create things completely new as suggested by Thiel.
It is said that a successful man is one that can lay a firm foundation with the bricks that others throw at him. The pandemic has thrown a lot of bricks at entrepreneurs and businesses, and indeed, all of us. The question now is who among the victims of the pandemics stone throwing will seize the moment and make something good out of the bricks. That is the subject of our present write up today. One big positive impact of the pandemic, whose full implications are yet to unfold, is the rapid increase in technology acceptance and adaptation among Nigerians. Even the most “technology shy” people among us have suddenly learnt, not just to attend virtual online meetings but even to convene such meetings themselves. That’s a lot of gain for the future of this country. We are going back to more serious pursuit of technology, like we did when Obasanjo wanted to “Computerise all Nigerian Schools” but stopped short, as we always do. It is a good thing we take this opportunity to dig deeper in the technology space. Technology has been the major driver of human activity despite the setbacks of the dot.com era. When in March 2000, the NASDAQ composite technology stock index rose above 5000 points, it was a pull factor for investors to go into that space. However, when those gains vapourized with the speed of a rocket and fell to 1,114 in October 2002, most people thought the end had come for investors in the technology field. It was so bad that analysts coined new terms to show how far away from it investors wanted to be. Such terms reflected a negative
outlook for the sector, including “moving from click to brick” – a concept that reflected the dismay of people with the technology industry. It evidenced the desire of investors to move away from it and go back to conventional businesses. However, those who moved in or remained, with inquiring minds, have done things, of which the original champions of Silicon Valley could not dream. Every earth shaking event, like this catastrophic pandemic that is in the process of redrawing the global economic map, creates opportunities for those whose eyes are on the ball. It paves the way for those who are able to use the bricks it throws at them to build a bridge to something new. Undoubtedly, companies are going to have a hard time, and some products may fail forever – technology will rout them off their stand. Some of the failures may not necessarily be a result of the disruptions wrought by the pandemic. They are likely to fail as a result of new technologies thrown up by the pandemic and the new and better ways of doing things. The job of any corporate leader at this time is to remain at the cutting edge and forefront of the unfolding technology breaks. The difference between good and bad product failures lies in the ability of companies and entrepreneurs to profit from the new insights that will be available from the catastrophe, which should naturally help to inform the next product development era. The drive towards more technology application could help companies create, not just their own Blue Oceans but even their own monopolies.
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The difference between good and bad product failures lies in the ability of companies and entrepreneurs to profit from the new insights that will be available from the catastrophe, which should naturally help to inform the next product development era
Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii
The secrets to a long and happy life (2)
A
s counsel for a long and happy life, the people of Okinawa in Japan said one thing which I found particularly fascinating and it was this. They counted an “adequate” amount of stress as a major contributory factor to their celebrated longevity and general state of happiness. In their estimation, insufficient stress is almost as damaging to man as too much stress. Science has for long shown that the body wears down faster during times of crisis and sustained stress has been proven to have a degenerative effect on neurons which can lead to memory loss, depression and even high blood pressure. The popular saying amongst people in the medical field is that 70 percent of illnesses are caused by stress. Don’t quote me but in our dear country where the majority of people have sadly become inured to unending suffering, this may well be closer to 90 percent! However, reciting from the book, Ikigai the Japanese Secret to a Long and Happy Life, “After observing a group of test subjects for more than twenty years, Dr. Howard S. Friedman, a psychology professor at the University of California, Riverside, discovered that people who maintained a low level of stress, who faced challenges and put their heart and soul into their work in order to succeed, lived longer than those who chose a more relaxed lifestyle and retired earlier.” This goes against the grain of common belief that those who live best and longest are those who are “fortunate enough” to live a totally stress-free life. As if to confirm this, many of the supercentenarians (those 110 years old and above) interviewed as part of the research for Ikigai, attributed their unusually long-life span to, “living intense lives and working well into old age”. Man needs to be adequately stretched in life for life to have meaning and this will subsequently determine both the quality and length of life. And so, the “profit” referred to
in the scriptures which says, “the plans of the diligent leads to profit” refers not just to economic profit, but profit to the quality of man’s life. This means that when a man fails to plan his life and fails to make certain things a way of life, such as being diligent and working “sufficiently” hard, it’s inevitable that his life will be missing something which God has intended he should enjoy. This also means that where God states with much grief that His people perish due to a lack of knowledge, part of what He means is that by not taking the time to familiarise ourselves with His instructions, coupled with our propensity to disregard the ones we do know, we deny ourselves the abundance of profit inherent in those instructions. And so, we perish when we really shouldn’t and fail to live our best life; this best life being very different to what we have come to believe the best life should be. I’m yet to be convinced that there exists in this world, any greater manifestation of wisdom than to adhere to Godly admonition, always given for man’s benefit. According to the people of Okinawa and the word, “Ikigai” which in a fairly rough translation means, “the happiness of always being busy”, a long, successful and fulfilling life is a goal one can only hope to attain by being routinely busy and not from living a “life of Rily” by loafing off, enjoying the “good” life and avoiding anything even remotely taxing. This Japanese life philosophy of Ikigai, is what the French may call one’s raison d’être - one’s purpose for existence or finding one’s life purpose. The lasting benefits of this discovery to body, mind and spirit can hardly be matched by any other. To borrow the words of the authors of Ikigai, “having a clearly defined Ikigai brings satisfaction, happiness and meaning to our lives”, and I find myself in agreement with the Japanese who believe this ultimately translates to good longevity. Driven by his own personal experience of
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how he survived the dreaded World War Two concentration camp Auschwitz, Victor Frankl, the famed Austrian Neurologist developed Logotherapy, a concept of psychology which says the driving force of every individual is to find meaning in life; and that this meaning will be found when one discovers one’s purpose. He went on to posit that, “our health depends on the natural tension that comes from comparing what we’ve accomplished so far with what we’d like to achieve in the future. What we need, then, is not a peaceful existence, but a challenge we can strive to meet by applying all the skills at our disposal.” Frankl came to this conclusion when the manuscripts of his life’s work was confiscated by vindictive German soldiers as he arrived at Auschwitz. Looking back a little later in life, he realised that what fuelled his will to survive the cruel treatment meted out to him there was his goal to write the manuscript all out again. He faced the stark reality of an imperilled legacy and he was not going to allow it. He found a reason to live. As if to buttress this point, in his book, “Man’s Search for Meaning” Frankl reproduced one of Nietzsche’s most famous quotes which says, “He who has a why to live for can bear with almost any how.” And there was Frankl’s Ikigai. As we approach the dénouement of this article, I find the following quote by Frankl to be quite apt: “Everything can be taken from a man but one thing: the last of the human freedoms—to choose one’s attitude in any given set of circumstances, to choose one’s own way.” You’ll agree with me that he didn’t fail in living out his own submission. It’s time now for us to return to the likes of Friday, who I mentioned in Part One of this article, came to see my wife and I as the lockdown began to take a bite. He pleaded with us to find work for him to do within our house
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From the ashes of the destruction caused by the pandemic, great companies will arise; and by original thinking and innovation, new technologies will burst. Winners will be those who create their own new dominant products and services and by extension, their own monopolies. The truth is that the economic Fallacy of Division is still operative in the affairs of man, in the sense that what is good for society as a whole may not be good for its members as individuals. Competitive markets may be good for the entire economy but for individual economic agents, like firms, monopoly is the safest way to success. There is nothing good about competition. If you can create your own monopoly why look for competition, with all the troubles of strategy and market share it brings. Society may complain of the many ills of monopoly, such as excess capacity (inefficiency), markup (usury) and the deadweight losses that it occasions, but a well-regulated monopoly promises a better prospect for corporate social responsibility to the community. Again workers of a monopoly are often better rewarded. They are not pushed into chronic diseases like high blood pressure and diabetes, chasing the competition. Instead they are afforded more opportunity to think about workers’ health and products as well as to innovate. Governments are there to antitrust monopolies into line. For this new normal create your own monopoly.
Character Matters with Daps
Dapo Akande
so he could take care of himself. “Anything,” he said. You may recall our response which was that we had nothing for him to do for the moment but went ahead to give him the little change and provision we could. You may also remember that we saw Friday when we stepped out an hour or so later and though we met him drunk, we still asked him to come the following morning as there was something he could do for us after all. Like I said last week, Friday is yet to come. Contrary to the essence of the Japanese Ikigai and Frankl’s theory which says adequate stress and a goal to live for are the secrets of longevity and happiness in life, to the likes of Friday, the good life means taking the path of least resistance and grabbing any pleasure that may come their way. Such people need no enemies in the village, as that would just be an overkill. Indeed, life may have thrown Friday a lemon but at liberty to choose what to do about it, the thought of converting it into lemonade just seemed too much like hard work. Changing the nation...one mind at a time Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. Contact: dapsakande25@ gmail.com
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Zuckerberg, Trump and the protests: Facebook’s muddled makeover Ahead of a divisive election, the decision not to censure the president has prompted a staff backlash
Hannah Murphy
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arlier this year, Mark Zuckerberg told Facebook investors in a rare personal revelation that he no longer cared about being liked. Having seen his reputation take a battering in recent years, the boyish social media titan admitted that he now strived to be “understood” above all else. “In order to be trusted, people need to know what you stand for,” the Facebook boss said. For a brief period after the outbreak of coronavirus, Mr Zuckerberg appeared to see a chance to be appreciated again. He embarked on a charm offensive, seizing on the pandemic as an opportunity to rehabilitate Facebook from the persistent criticism that the platform’s content is helping to poison political life. On a personal level, Mr Zuckerberg has been the generous benefactor: livestreaming informative chats with experts and donating money and stockpiled masks to the relief efforts. At the company’s recent virtual shareholder meeting, he elevated Facebook’s mission beyond merely “connecting people”; instead, it was aiding the “health response” with new data efforts and information sharing and boosting the “economic recovery for small businesses” by offering grants and handy online tools. But after weeks of pandemic-related philanthropy and product announcements, the attempt at an image makeover has been shortlived. Over the past fortnight, Mr Zuckerberg has faced one of his most defining tests yet: whether to follow the lead of smaller rival Twitter and censure — or censor — contentious content from the most powerful figure in the western world, President Donald Trump.
Mr Zuckerberg opted for inaction, citing a commitment to “freedom of expression”. Like other social media companies, Facebook is wary of being drawn further into a political argument ahead of what is likely to be the most divisive presidential election in the US in recent times. Mr Zuckerberg has already opted for the platform to steer clear of fact-checking political advertisements. The industry is also keen not to antagonise Mr Trump, who thrives on claiming that social media platforms are biased against Republicans and has ordered a review of the 1996 law that gives them immunity from being sued over content that they publish. Indeed, Mr Zuckerberg’s decision not to follow Twitter’s lead on challenging the president’s postings was praised by some conservatives. But for the growing band of Facebook critics who argue that the company’s pursuit of profits over principles has been harmful to democracy, the move appeared to prove their worst fears were correct. “What Facebook is doing is purely a business decision,” says Roger McNamee, a former adviser to Mr Zuckerberg who has since become a vocal critic of Silicon Valley. “Facebook . . . is ubiquitous, and as a result it must always align with power to eliminate the political risk to business. That creates real issues because Facebook’s influence on our national conversation is so huge.” Path to a ‘super app’ On paper, Facebook has had a bumper year. Although its shares did drop in March when the pandemic began to rattle markets, they have since rallied and reached all-time highs last month after the company announced a new ecommerce play, Facebook Shops, which Deutsche Bank analysts say could represent a $30bn-a-year revenue opportunity. As the pace of growth in developed markets begins to stall, the company has been busy diversifying into potentially lucrative emerging markets, with significant new investments in India and Indonesia. While advertising revenues have been hit by the pandemic, user engagement has risen handsomely under lockdown.
Meanwhile, Mr Zuckerberg has consolidated power internally, replacing the founders of the company’s WhatsApp and Instagram platforms with trusted lieutenants. He is now forging ahead with plans to merge his three apps into one interlinking system, with all messaging encrypted, and introduce payments tools. Cast as a “pivot to privacy”, it takes Facebook one step closer to some of the Asian so-called “super apps” such as WeChat — where users never have to leave the platform to send messages and money or shop, giving the company more lucrative data to feed into its targeted advertising model. But its future success will rely, in part, on Mr Zuckerberg’s effort to bolster his public image — which began to take a hammering following revelations about Russian interference in the 2016 US elections on the platform and the Cambridge Analytica data leak. As chairman, chief executive and controlling shareholder his position heading up Facebook is guaranteed. But Mr Zuckerberg’s latest decision not to fact-check or remove controversial posts by Mr Trump has spurred anger from a new, more challenging genre of critic: his own staff. Twitter lead As protests escalated in the US over the death of George Floyd, Mr Trump took to Twitter with a warning that “when the looting starts, the shooting starts”. The phrase was originally coined by a Miami police chief in the 1960s who promoted police brutality against the black community. Shortly after, Twitter — which had already decided to fact check two of Mr Trump’s recent posts — decided to add a warning label in front of the president’s tweet for “glorifying violence”. When the same phrase from Mr Trump was posted on Facebook, Mr Zuckerberg refused to take any action, arguing that private companies should not be “the arbiter of truth”. In a testy company-wide virtual meeting, he told staff that he believed the phrase had “no history of being read as a dog whistle” for violence by vigilantes and therefore did not breach its rules. His stance garnered support on the right. According to Jesse Blumenthal, vice-president of tech and innovation
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Facebook . . . is ubiquitous, and as a result it must always align with power to eliminate the political risk to business. That creates real issues because Facebook’s influence on our national conversation is so huge
FT
COVID-19 revelation on fight against hunger and poverty
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an Africa achieve digital transformation by 2030? “The answer is yes. And Africa is going to do it before 2030. Our leaders are committed, our young people are dynamic and coming up with fantastic innovations and creativity. The infrastructure we are building, infrastructure regionally and trans-continentally.... We are lowering the prices. Our partners are shouldering all the efforts. So, my answer is yes, yes, and yes.”- Amani Abuou – zaid, African Union Commissioner. Oxford Poverty and Human Development Initiative (OPHI) in conjunction with the United Nations Development Program (UNDP) in 2018, developed a new version of the global Multidimensional Poverty Index (MPI). This global multidimensional poverty index covers 105 countries, which are home to 77 percent of the world’s population, or 5.7 billion people. Twenty-three percent of the populations, that is, 1.3 billion are identified as multidimensionally poor. Eighty-three percent of all multidimensional poor people in the world
live in sub-Saharan Africa and Asia. Two-third of MPI poor people are children, aged 0-17. Eighty-five percent of MPI poor people live in rural areas. And 46 percent of those who are MPI poor live in severe poverty. Distribution network “In World Bank’s lobby, there is a giant inscription that reads ‘Our Dream is a World Free of Poverty’. I think the key to bringing about that world is getting quality data into the hands of people who can use it to make the world better’’. –Haishan Fu, Director, World Bank Development Data Group. It is high time we look at digital ways of solving hunger and poverty problems in the world. And one of those ways is through digital literacy and sound distribution systems (logistics). According to Jasmine Crowe (Ted speaker), 821 million are hungry globally; that is, one in nine people on earth. In the United States alone nearly 40 million experience hunger every year, including more than 11 million children.
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The United State Environmental Protection Agency (EPA) estimates that food waste has more than doubled between 1970 and 2017. This begs the question: if food waste doubled why, when the number of hungry people is on the rise? One can attribute this situation to lack of a sound distribution network (logistics) capable of conveying the food to those in need of them. In 2016, France became the first country to ban supermarkets from throwing unused food away; instead they were directed to donate them or risk the chance of being fined. In 2017, Italy followed suit. One thing is to put these measures in place another is to beef up the distribution network so that the donated food gets to the group that needs them in recorded time. Almost every country faced with poverty and hunger challenges also face lots of food wastage. This could be linked to a poor preservation system, inadequate means of identifying those that need them, and poor distribution network. Therefore, relevant authorities, nongovern-
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policy for Stand Together, a conservative political group affiliated with billionaire Charles Koch, fact-checking political speech is logistically challenging and not scalable. “[Facebook users] are looking for someone to deputise . . . to hold politicians accountable,” says Mr Blumenthal. “[But] it’s a fool’s errand. You can’t just wish that tech can push a button and solve political problems. At the end of the day politicians, including the president, are responsible for their actions, not the tools they use.” But the backlash internally was swift and unforgiving. Dozens of the nearly 50,000-strong staff — some in senior positions — took the unprecedented move of protesting publicly on Twitter, castigating their employer for giving the president a platform “to incite violence” and for being tone deaf. “Honestly, why is this guy in charge? Tech CEOs should not be making oneoff content policy decisions, least of all for those who might regulate them,” one Facebook employee, Nick Inzucchi, wrote on Twitter. “Mark is just not doing a very good job. He needs to sit down, be humble, and empower someone who gets it.” Some staff staged “virtual walkouts”, others threatened to resign; a handful did so. A group of former staff published a furious open letter. The mood inside the company was “riotous”, says one Facebook employee. “I’ve seen a couple of times now that Mark doesn’t uphold his principles. Zuck has told us over and over that calls to violence would not be tolerated on the platform, even if they were by the president of the US,” Timothy Aveni, a Facebook software engineer who quit over Mr Zuckerberg’s inaction, told CNN. Mr Zuckerberg capped the week of employee unrest by publishing a post he hoped would draw a line under the matter; pledging to review its content policies relating to threats of state use of force, review its decision-making process and explore options such as adding warning labels to posts. But it lacked specifics, adding the caveat that the company “may not come up with changes” off the back of the reviews.
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Uzoanya Nnanyereugo R.
mental organisations, civil society organisations, religious bodies, philanthropists and government policies should address hunger and poverty from this angle. Every community should be provided with a van and a driver from the community. So, in times of infectious disease like COVID-19 or in any other occasion where the need arises each community could come with their van to collect and convey whatever is due to them down to their communities where they will be distributed. Secondly, since security agents patrol with their van round all communities in their jurisdiction in line with their duty, their vans could be used to convey things meant for the people to them especially in times of great need.
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Wednesday 10 June 2020
BUSINESS DAY
Editorial Publisher/Editor-in-chief
Frank Aigbogun
Converting private properties to isolation centres is a bad idea Another example of bad thinking, bad products
editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
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ot only has the COVID-19 pandemic, which has halted activities in the global economy, revealed the dilapidated state of the Nigeria health care system, it has also unravelled the incompetence of most Nigerian politicians. Part of the purported Infectious Diseases Bill which gives power to convert private properties to isolation centres is a stark example of bad thinking. The Infectious Diseases Bill sponsored by the Speaker of the House of Representatives, Femi Gbajabiamila, Pascal Obi and Tanko Sununu, sought to empower an agency of the federal government to convert any property in the country, including private properties, to isolation centres was read at plenary on Tuesday 28th April 2020, before it hurriedly passed first and second readings on the same day. This is coming amid the shortage of isolation centres in the country owing to the rise in the number of coronavirus patients across the country. As of Friday, the number of patients was 2,170,68 have died while 319 have so far recovered.
We believe this Bill is draconian and poorly drafted. It demonstrates again how bad laws and policies are foisted on the country with no second thoughts given to their consequences. Bad laws and policies don’t fall from the sky. They are made by people and are a reflection of the depth and quality of their thinking. A Bill to give power to requisition hotels and other private buildings as isolation centres is unacceptable and we urge the President to reject it. Nigeria’s inadequate health facilities and amenities stems from the federal government’s inability to fix the health system over the years; hence, private individuals shouldn’t be subjected to such laws except they willingly offer their properties. We understand the need for more isolation centres given the surge in COVID-19 cases in Nigeria, however, there are other options to explore. There are several government-owned buildings or seized assets rotting away across the country which can readily be refurbished for isolating coronavirus patients. For example, the Ikoyi Federal Secretariat in Lagos. Nigerians will not dispute the proposition that the abandoned Federal Secretariat has
become a national embarrassment. For this magnificent edifice in the heart of a city like Lagos to be lying fallow speaks volumes of the quality of leadership in the country. Billions of naira donated by private individuals and organisations during this pandemic could be channelled to making well-equipped, massive isolation centres out of such buildings across the country. It’s absurd how hotels and privately-owned buildings are being targeted. Owners of such hotels, for example, risk losing their businesses post COVID-19. Potential customers of these hotels may fear lodging there given the thought that such hotels have been used to accommodate COVID-19 patients. This hurts an intangible asset, the goodwill of the hotel. Also given the history of the Nigerian federal government, such buildings may not return to the state they were before requisition and owners may not be adequately compensated for damages. Nigeria can learn from China in its response to fighting COVID-19. In Beijing and Wuhan, 1,000 bed capacity hospitals were built respectively in days. Nigeria must look beyond
providing temporary measures and respond to current health crisis with more long-lasting solutions. Refurbishing abandoned national buildings into hospitals is one of such. While we continue the fight against COVID-19, it is important to note that policies and laws made during this period must be critically analysed before being enacted given the fragile state of the Nigerian economy. Unfortunately, the Infectious Diseases Bill, exposes a chasm in how our lawmakers’, recent owners of brand-new Toyota Camrys, arrive at their decisions. It shows how they (and policymakers too) “lack the philosophical equipment to deal with the material goods they are so eager to consume”, as the unnamed character of Teju Cole’s novel, Every Day is for the Thief, laments. Our lawmakers drive Toyotas but do not develop the thinking necessary to make such products in Nigeria. Cole’s narrator concludes that, “Part of the philosophical equipment is an attention to details... a commitment to precision, an engagement with the creative and scientific spirit behind what one uses.” Yo shinai, yo kangai: good thinking, good products is the motto of Toyota.
GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan
EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong
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Corporate governance
Directors and conflict of interest Olaniran Osotuyi
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e rarely think about what it means to be a director of a company. More often than not, the trappings of the office typically steer appointed directors’ attention away from the obligations imposed on them and expectations which arise from holding the office. Yet circumspect people may, notwithstanding the apparent benefits and knowing the obligations and risks attendant to holding such office, avoid the office. Here, our focus is on perhaps the most enduring label which has been impressed on directors from earliest periods of the emergence of companies-the fiduciary, some its implications and how those implications, having failed to evolve, have increasingly become ineffective in addressing the concerns which they were developed to address. It would not be surprising that most directors are not even aware that they are described as fiduciaries much less know what that means. As a director, being fiduciary implies a duty to act in good faith in the best interest of the company, to avoid conflict of interest and not make secret profits. In other words, directors must be loyal to and care for the company over and above their personal interests. Simply stated, yet the implications are far reaching- but just in the rules. Interestingly the market reality sharply contrasts with what statute books and securities exchanges rules prescribe. A proper (maybe even not so thorough) scrutiny of most listed companies will almost certainly unearth a confounding number of transactions where insiders have direct or thinly veiled financial interest. Strict rules-based systems clearly have not been useful in restraining directors (and other insiders) in engaging in conflicted transaction-the absence of disputes on this appears to confirm the general acceptability. At the core of the duty
is the understanding that each director, and collectively the board constitute part of a unique class of people called insiders who, given their vantage position relative to “outsiders” know the real position of the company. This naturally creates an incentive for abuse and here is the point on which the board must be well-informed. Most directors assume that abuse of position only occurs when something (usually funds) that belongs to the company is unlawfully taken for personal benefit. Sometimes, it is that simple- but most of the times, it is more complex and not as brazen. The commonest form of abuse occurs when directors or insiders profit directly or indirectly at the company’s expense, for the benefit of the director or an entity or person controlled by the director. The real concern with dealings of this nature is when a director is entering into a commercial arrangement with the company which he serves, the propensity is that the director will do so on terms tilted to favour the director at the expense of the company. This remains so despite the legal requirements for disclosure and exclusion of directors with interest in voting on transactions where they are interested. In addition, the tendency for directors to vote to authowww.businessday.ng
rise such transactions casts significant doubt on the continued relevance of the rule against self-dealing by directors if in all or most cases, the transaction is approved anyway. Other circumstances of abuse which are less obvious occur where a director uses information obtained in virtue of his position as a director to undertake a commercial dealing. Our thinking is that
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For boards to be accountable in a meaningful form, there should be a reinforcement of the liability framework by extension of liability to each director who approved conflicted transactions that unfairly shifted value
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the application of the rules must be discriminatory if they are to be meaningful. Specifically, while the egregious violation of the rule against conflict of interest has resulted in serious scandals like Enron and WorldCom in 2002, the enduring utility of the rules is not only questionable but potentially destructive in the context of a small company dealing in groceries whose majority shareholder (who doubles managing director) enters into a service contract to make product deliveries to customers. Yet a pattern of the pernicious conflict breaching transactions may be emerging in Nigeria which ought to be tackled based on pragmatic application of the law, rather than the traditional straitjacket rule-application system. First, there does not appear to be any real value for the rule to be applicable to privately held companies, save of course those established for charitable purposes which are by default prone to abuse. Most private companies in Nigeria are owner-managed and the need for operational integration, efficiency and tax liability management more often than not drive the recourse to self-dealing transactions, rather than selfserving greed. For a public company on the other hand, the actual or potential dispersion of @Businessdayng
interests is high so much that whether listed or unlisted, it is not enough that the director(s) interested in the transaction are excluded from voting on the transaction; real objectivity requires that not only the approval but the negotiation of the offending transaction should be entirely handled by independent directors. There is no use having directors representing other major shareholders vote because it only creates a vicious cycle of benefit trading. For boards to be accountable in a meaningful form, there should be a reinforcement of the liability framework by extension of liability to each director who approved conflicted transactions that unfairly shifted value. In connection with listed companies, greater attention must be paid to ensuring that rules of the exchange, codes of corporate governance are actually complied with. This is to ensure that insiders do not “distribute dividends” before the dividends are actually distributed. In sum, though holding office as a director involves the intricate balancing of interests, of the company, of shareholders and the directors-within the strictures of ancient rules; rules regulating these delicate relationships must be developed taking into account the nuances of the target market in which they are to operate and applied pragmatically applied if they are to achieve any meaningful impact and not collectively ignored.
Olaniran is a Senior Associate and Team Lead at Olaniwun Ajayi LP
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COVID-19: Ekiti threatens return of total lockdown MARK MAYAH
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kiti State government on Tuesday expressed worry over the lackadaisical attitudes being exhibited towards the preventive guidelines to contain the spread of Covid-19, threatening a return of total lockdown in the state. The state government says it may have to return to lockdown season, if guidelines of the containment of the disease as stipulated by World Health Organisation, such as obeying interstate movement ban, social and physical distancing, mandatory use of face masks and hand sanitizers, as well as other protocols, are not adhere to. Muyiwa Olumilua, commissioner for information, said this while giving update on the COVID-19 situation in Ado Ekiti, on Tuesday. Olumilua said the governor, Kayode Fayemi, was also disturbed by the porosity of Ekiti borders, which he said accounted for the upsurge in the number of COVID-19 active cases in the state. “Governor Kayode Fayemi was not interested in inflicting hardship on Ekiti people and that was responsible for why he reopened economic activities between Monday and Friday. “As of now, Ekiti has nine active cases and we are not happy
with the ways social distancing, use of sanitizers, face masks and infrared thermometers were being disobeyed in public places. “We are still maintaining that stand that banks, shops, shopping malls, eateries, market men and women must keep to all these guidelines to prevent community spread of COVID-19 in Ekiti. We are still at a stage where we have not had community spread because those who came to infect our people here came from outside the state. But should our people refuse to abide by the protocols, we will be left with no other option than to return total lockdown to avert community spread,” the commissioner said. On the reopening of schools, Olumilua said a committee comprising government’s delegates, Parents Teachers’ Association and proprietors of schools was being mulled by Governor Fayemi to interact and come up with recommendations that could facilitate easy return of students to schools. “We are not in a hurry to reopen schools, because we knew that we have to provide all necessary facilities like running water, sanitizers and infrared thermometers in all schools in order not to endanger the lives of our pupils. The committee will soon begin work and their recommendations will be implemented to help in this regard,” Olumilua stated.
UN commends Nigerian Navy, NIMASA on antipiracy war …says country sending ‘strong, valuable message’ to world
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he International Maritime Organisation (IMO), the specialised shipping regulatory agency of the United Nations, has delivered a glowing appraisal of Nigeria’s effort to stem piracy in its waters and the Gulf of Guinea, commending the country for sending a “strong and valuable message” to the global community. IMO also commended the new director-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), Bashir Jamoh, for his brave and dynamic approach to maritime security, in a letter addressed to him by the Secretary-General, Kitack Lim, amid recent arrests and first-time prosecution of suspected pirates under the country’s new antipiracy law. Lim said he was impressed by Nigeria’s efforts “to address maritime security threats in the region,” adding that Jamoh’s “leadership and proactive response” to maritime security issues was laudable. Jamoh had told the IMO Secretary-General at a previous virtual meeting following the arrest of some pirates by the Nigerian Navy, in partnership with NIMASA, that piracy in the region was being sustained by powerful foreign collaboration. He appealed for support from the international community to complement the steps being taken by Nigeria. “I would also like to reiterate my congratulations to the Nigerian Navy on the successful capture and arrest of pirates from the fishing trawler Hailufeng 11, and more recently on the rescue of the crewmembers of the containership Tommi Ritscher,” Lim stated in the letter. “Those actions, together with all the other initiatives you highlighted in
our meeting, including progress with the Deep Blue Project, send a strong and valuable message to the international community with respect to the considerable efforts your Government is making to curb piracy and armed robbery against ships in the Gulf of Guinea,” he added. Jamoh had during the virtual meeting bemoaned the adverse effect of foreign collaboration on Nigeria’s antipiracy effort. He said, “The recent arrests of pirates have opened our eyes to a new and even more dangerous dimension to the issue of piracy and armed robbery in our waters, and that is the issue of foreign collaboration. The arrests involved Nigerians and other nationalities, whose identities I cannot disclose because the cases are under investigation. “Piracy is taking an international dimension. We now know that pirates and other maritime criminals in our waters and the Gulf of Guinea operate with strong backing from powerful international collaborators. “So we earnestly desire the cooperation of the international community, individual countries, organisations, and individuals to stem the ugly tide of insecurity in our waters. “We will continue to do our best and update IMO as we make progress with our strategies.” The IMO Secretary-General retreated the organisation’s readiness to assist NIMASA in the training of personal and technical assistance, and also declared his willingness to talk to other member countries to assist in that respect. He said IMO would help to deal with the issue of synergy in laws regarding piracy with other neighbouring countries. www.businessday.ng
Rauf Aregbesola (m), minister of interior, cutting the tape at the inauguration of newly procured 10 Digital Fire Trucks at the Federal Fire Service (FFS) headquarters in Abuja, yesterday. With him are Georginia Ehuriah (l), permanent secretary, Ministry of Interior; Ibrahim Liman, comptroller-general, FFS; Emmanuel Olugbuo (r), president, Afrodezt Global Services Limited, and others.
Dukia Gold refinery launches Nigeria to a new pathway for jobs, trade, forex creation ... offers opportunity for artisanal miners to sell gold at global price HARRISON EDEH, Abuja
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igeria’s Vice President Yemi Osinbajo on Tuesday said the official launch of Dukia Gold and Precious Metals Refining Company has opened new pathway for job creation, trade and foreign exchange earnings for the Nigerian economy. The Vice President also noted that the project, which is first of its kind in Nigeria and West Africa, offeredwiderangeofopportunitiesfor artisanalminersandthosetradingin gold and precious metal business to haveabetterdealthroughswapping theirgoldformoneywithatechnical support of Heritage Bank through their ‘Heritage Bank Centres.’ “It is said that Nigeria has potential reserves of N200 million ounces of gold and the launch of this expansive project, Dukia Gold, creates the opportunities for us to mine these reserves properly, trade responsibly and refine locally. What we are looking at here is an extremely valuable newsourceoftrade,jobsandforeign exchange,” Osinbajo said at the officialcommissioningofDukiaGold&
Precious Metals Refining Company Limited, an event monitored by Zoom-Meet & chat. The project, the vice president said, will create primary employment for local artisanal miners and mining co-operatives, and across the solid minerals value chain. “Off-take agreements between DukiaGoldandLocalMiningCommunities and owners of recyclable gold will be a useful provider of jobs in our post-Covid economy,” Osinbajo stated. AccordingtoOsinbajo,thepositive multiplier effect of the company is expected to extend even further as the firm will also encourage the emergence of smaller-scale mining companieswhoforthefirsttimewill have a transparent and welcoming market for their mined gold and precious metals. “This is set to create jobs and unleash the economic potential of mining communities,” the vice president emphasised. “With this project, we are also commissioning the nationwide Dukia-HeritageBankGoldandPrecious Metals Buying centres - part of valuable private sector collabora-
tion.Thisprovidesasustainableway for Nigerians to exchange their gold Jewellery and other precious items for cash,” he said. “This system of exchange not only helps encourage a culture of recycling, but will also serve as a complementary source for the raw materials needed for Dukia Gold and Precious Metals Refining Company. These buying centres would also enable the responsible management of some electronic waste,” he said. Olamilekan Adegbite, minister of mines and steel development at the launch, said friendly policies of the President Muhammadu Buhari-led administration to serve as a business friendly regulator was already yielding results through providingtheenablingenvironment for businesses to thrive. According to the minister, “This launchpointstooneofthemeasures put in place by the government to foster growth and bring about optimisation of Nigeria’s mineral value chain. The imitative will bring aboutefficiencyandtransparencyto physical trading and transactions of mineral commodities, resulting
in accurate data aggregation and reporting.” The minister noted that buying centres with minimum guarantee price thresholds also ensures that artisanal miners receive the right pricing for their goods relative to illegal off takers while breaking the status quo of illegal mining and increasing the royalty revenue accrual to the federal government. “At present, there are over 400 licensed mineral buying centres nationwideinvolvedinthepurchaseof preciousandmetallicmineralssuch as gold, lead zinc, tin and columbite. “The Ministry has licensed two gold refineries .Duke is one of the two duly licensed gold refiners in Nigeria. They have developed an encompassing ecosystem, consisting of nationwide DukiaHB Buying Centres alongside the virtual Purchasing Platform that together form an integral piece.” Bose Owolabi, managing director, Dukia Gold and Precious Metals Refining,saidthelaunchhadunravelled opportunities for 200 million ounce of gold, which with proper value addition could get about $200 billion economic opportunities.
N186bn for health sector omitted as revised 2020 budget approval suffers set back in Senate Solomon Ayado, Abuja
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enate on Tuesday stepped down consideration of the N10.509 trillion revised 2020 budget forwarded to it for consideration by President Muhammadu Buhari due to omission of N186 billion proposed for the health sector. The Senate had given expeditious consideration to the revised 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). The revised 2020 budget was expected to be passed by the Senate on Tuesday before it was jettisoned during plenary. Trouble for the revised budget evolved when, as listed on the Order Paper, the president
of the Senate, Ahmad Lawan, called on the chairman of the Appropriation Committee, Jibrin Barau (APC, Kano North), to lay the report. Barau also stunned the Senate by informing his colleagues the refusal of the Budget Office to capture the entire N500 billion intervention fund for COVID-19 in the Appropriation Bill. Also, he said while N314 billion was captured as part of the intervention fund, the balance of N186 billion proposed for health sector was not captured, saying, “Upon making such observation at committee level, we quickly inform the Budget Office of the omission last week. “Though the Budget Office as part of excuses given for the
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omission said since the entire N500 billion was captured in the MTEF/FSP documents already passed by the Senate, that there was no need for it to be fully captured in the budget. “But we rejected that excuse in line with sections 80 and 81 of the 1999 Constitution, which empowers the National Assembly to appropriate every single Kobo for the executive before spending. “On the strength of our superior argument, the Budget Office admitted wrongness of the omission but promised to write a letter to us to be used as evidence of helping them to include it. “But the expected letter never came till now, making us not to be ready for presentation of any report now. @Businessdayng
“If by the end of today , the office still refuse to send the letter to us, we shall be left with no other alternative than to print out our report today based on proposals contained in the Appropriation bill for consideration in plenary tomorrow,” he said. Angered by the development, the Senate president, Ahmad Lawan, said: “The Senate hereby advise those responsible for the budget documents and expected letter to do the needful without further delay. They need to be meticulous and responsible. “The National Assembly cannot be a destination where lack of efficiency on somebody’s job would be entertained.
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Nigeria’s troubles mount as PIB passage may have failed June date … as deep-water projects postponed Olusola Bello
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he trouble of Nigeria appears to be mounting as the passage of the Petroleum Industry Bill (PIB) may not be realisable any longer this month, while substantial volume of deep-water projects are being shifted forward. The PIB was first brought before the National Assembly in 2008 but has yet to become law. The government has changed the Bill’s structure several times, and in February 2020 stated that it hoped it would be passed by mid-2020, which now seems improbable “There are not many people outside the petroleum ministry - perhaps (even) the presidency - who have seen the new Bill,” says Ekpen Omonbude, a petroleum and mining economist and group managing director of oil and gas services provider Eraskorp, who worked on four versions of the Bill between 2008 and 2012. He spoke with Petroleum Economist. “I would imagine the industry is likely to push back against it, or at least request consultation,” Omonbude says.
Decisions on developing new deepwater fields, which have a breakeven price of around $60 per barrel, are being postponed. Similarly, shortterm projects that provide quick returns and are based on discretionary spending are also on hold. “It is still believed in some quarters that Shell wants to go ahead with Bonga Southwest, and Total would like to develop Preowei because it is such a small field that you can tie back to the existing infrastructure. But for a bigger project such as Owowo, it is doubtful if ExxonMobil will develop it because the company has better projects in its global portfolio,” says Gail Anderson, research director at consultancy Wood Mackenzie. “Nigeria’s deepwater projects are already delayed because of a lot of fiscal uncertainty, and this increase in government share from deepwater production makes it harder for IOCs to sanction new projects,” says Anderson. “IOCs will start announcing shut-ins in the near term, should the macro picture not improve,” Omonbude states.
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According to Petroleum Economist, following the royalty increase, Wood Mackenzie put back its estimates for the start dates for all Nigeria’s new deepwater fields. For example, Preowei is now expected to begin production in 2025, Bonga Southwest in 2027 and Owowo in 2029. In an attempt to boost state income, Nigeria’s President Muhammadu Buhari in January amended the 1993 Deep Offshore and Inland Basin PSC. Before these changes, royalties ranged from zero to 12pc based on the field’s water depth. The zero-rate has been scrapped, with royalties now calculated based on the chargeable volume of the crude and condensates produced per field The government increase of value added tax, cut fuel subsidies and raise electricity prices, the naira, which the government devalued by 15 percent in March, will probably weaken further, making dollar-denominated oil income worth more in local currency terms. But all these measures would not be enough to mitigate the precipitous drop in crude prices and oil revenue.
COVID-19 pushes down Nigeria’s foreign trade to N8.30trn in Q1, 2020 Cynthia Egboboh, Abuja
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otal value of Nigeria’s foreign trade shows negative balance for two straight quarters, staying at N8.304 trillion in Q1, 2020, representing 17.94 percent decrease from N10.12 trillion recorded in the previous quarter, as the coronavirus pandemic took a toll on international trade. The National Bureau of Statistics (NBS) on Tuesday put the import component of trade at N4.221 trillion, representing 50.8 percent, while the export component was N4.082 trillion, indicating 49.2 percent of the total trade. A trade deficit of N138.98 billion was recorded during the quarter, NBS says, marking two consecutive quarters of negative balance of trade, as the value of imports surpassed exports. “It is worth noting that the
consecutive quarters of negative trade balances occurred against the backdrop of a global slowdown in economic activity as a result of the COVID-19 pandemic. “The global health crisis resulted in several countries implementing varying degrees of restrictions with respect to international trade, travel and tourism,” the data office states. According to the report, even though the value of total imports reduced by 21.08 percent in Q1, 2020 compared to the value recorded in Q4, 2019, the value of imported agricultural goods was 12.02 percent more in Q1, 2020 than in Q4, 2019. Also, the value of manufactured goods and raw materials imports decreased by 31.98 percent and 8.49 percent, respectively, in Q1, 2020, compared to Q4 2019, while the value of solid minerals
imports was 15.65 percent higher in Q1, 2020. Similarly, the value of total exports in Q1, 2020 stood at N4,082.9 billion, representing a 14.42 percent decrease relative to Q4, 2019, but the value of raw material, agricultural goods exports grew by 60.17 percent and 85.36 percent in Q1, 2020. Other exports such solid minerals, manufactured goods, crude oil exports decreased in the period by 16.3 percent, 12.72 percent and 18.86 percent, respectively. “Exports by section revealed that mineral products accounted for the largest proportion of exports, amounting to N3,478.1 billion or 85.2 percent. This was due to the crude oil component of this section. The next major section was vehicles, aircraft and parts, which amounted to N406.3 billion or 9.95 percent of total exports.”
No going back on Executive Order 10, says Malami Felix Omohomhion, Abuja
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ttorney-G eneral of the Federation (AGF) and minister of justice, Abubakar Malami, said on Tuesday that there was no going back on the Executive Order 10, which gave financial autonomy to state judiciary and legislature. The minister said President Muhammadu Buhari’s administration came out with the Executive Order No. 10 in order to deepen democracy from
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grassroots and ensure effective implementation of the doctrine of Separation of Powers. In a statement by Umar Gwandu, special assistant on media to the AGF, he said the re-enforcement of the constitutional provisions on the autonomy of the state legislature and judiciary as contained in Section 121(3) of the 1999 Constitution of the Federal Republic of Nigeria necessitated the Executive Order No 10. State governors have since
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the Order last month mounted pressure on the Federal Government to rescind the decision, arguing it was against some provisions of the Constitution. However, Malami in the statement, noted with appreciation that the governors had agreed to the constitutionality of the autonomy of the state legislature and judiciary, maintaining that the essence of the Order was to see to the implementation of the autonomy.
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AfDB names 100 finalists for IDEATHON #AfricavsVirus challenge SEGUN ADAMS
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he African Development Bank (AfDB) has announced the Top 100 Solutions finalists for the #AfricaVsVirus Challenge ideathon aimed at creating home-grown solutions to the health and economic problems faced by African countries due to the COVID-19 pandemic. The #AfricaVsVirus challenge is part of the bank’s continent-wide response to the COVID-19 pandemic and attracted around 25,000 participants from across Africa and beyond who pitched their ideas on the online platform. Participants in the 72hour Ideathon curated 750 solutions from which the Top 100 Solutions were announced. The 20 best solutions from the finalists will
be awarded further technical assistance and will be beneficiaries of a pool of in-kind prizes, worth more than $1 million to be announced in September. “The quality of ideas and the level of engagement from participants during the online challenge showcases that innovation and a passion to find solutions are among Africa’s greatest resources,” said Jennifer Blanke, the Bank’s Vice President for Agriculture, Human and Social Development. “We’re looking forward to the next phase of the #AfricaVsVirus competition that will aim to boost the viability of the top solutions.” Participants under the auspices of more than 4,000 moderators and mentors, addressed challenges across public health and epidemiology, vulnerable populations, businesses & economy, com-
munity, education, entertainment, government support, environment and energy and food security. This makes the #AfricaVsVirus Challenge one of the largest online brainstorming events ever conducted on the continent to seek out African solutions to African challenges. Judges evaluated submissions based on several criteria, including the relevance of solutions, the implementation plan, and the impact and quality of the team. The experts included: Yana Watson, Global Managing Partner Emeritus at Dalberg Global Development Advisors; Ada Osakwe, Creative Food Entrepreneur and Investor at Agrolay Ventures; and Vanessa M. Moungar, Director for Gender, Women and Civil Society at the African Development Bank Group.
COVID-19: AfDB unveils strategic roadmap to assist African countries in addressing food security Adeola Ajakaiye, in Kano
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frican Development Bank (AfDB) has unveiled a strategic roadmap of projects and programmes to assist African countries in tackling the nutrition and food security aspects of the COVID-19 crisis through a raft of immediate and longer-term measures. The strategic roadmap entitled ‘Feed Africa Response to COVID-19 (FAREC)’ paves the way for a comprehensive intervention to build resilience, sustainability and regional self-sufficiency in Africa’s food systems and help farmers cope with coronavirus-related disruptions to the agricultural value chain. A statement made available to BusinessDay by the bank states that Jennifer Blanke, the bank’s vice president for agriculture,
human and social development, states the bank’s resolve to support the agriculture sector through laying out specific measures geared at addressing challenges faced by African countries across all aspects of the agriculture sector, as Africa cannot afford a food crisis in the wake of the COVID-19 pandemic. A report released alongside the roadmap was said to have recommended immediate, shortand medium-term solutions for the agriculture sector including - support of food delivery for the most vulnerable; stabilisation of food prices; optimisation of food processing; extension support services, and provision of key agricultural inputs through smart subsidies. According to the report, the bank will prioritise policy support to enhance the movement of
inputs and food, to establish food security task forces in countries, and to strengthen the capacity of regional organisations to monitor multi-country initiatives. “The pandemic has worsened volatility in the price of food staples and complicated food system actors’ investment decision-making. The confluence of impacts risks deepening food insecurity and malnutrition. According to the World Food Programme, over 40 million West Africans face food shortages in the coming months. “FAREC forms one part of the Bank’s COVID-19 Response Facility (CRF) of up to $10 billion. The CRF is the Bank’s primary channel to deploy financial and technical measures to cushion African economies and livelihoods against the health, social and economic impacts of the pandemic,” the statement explains.
CA-COVID takes awareness campaign to grassroots to sustain fight against pandemic BUNMI BAILEY
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oalition Against Covid19 (CACOVID), a joint effort of private sector leaders to support theNigeriangovernmenttocombat Covid-19 crisis, has commenced a grassroots awareness campaign to help forestall further spread of the disease to suburbs and other rural communities in Lagos and Rivers states as well as in Abuja, the Federal Capital
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Territory. The awareness campaign is to further strengthen the efforts of the government in the fight against community spread of COVID-19 pandemic in Nigeria through inter-personal and sustained enlightenment campaign that will help to educate people in communities on the recommended hygiene protocols to keep individuals and families safe.
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The pilot phase of the campaign in local government areas across Lagos, Rivers and Abuja will address the fragmented understanding in our more remote areas of how the disease spreads in community and how to prevent it. Speaking on the importance of the grassroots campaign at the flagoff event on Monday, June 8, 2020, Tony Chiejina, one of CACOVID-19 communications coordinators, said: “The realisation that our communications efforts so far have not successfullyreachedoursemi-urbanandrural communities, triggered the campaign todirectlyengageandaddressallofthe misconceptionsaboutcovid-19andits transmission, as well as to encourage immediate adoption of safe personal hygiene practices.”
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FMDQ, FSD Africa, CBI hold session on green financing opportunities for agribusiness … in boost for Nigerian agric sector HOPE MOSES-ASHIKE
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he implementation partners of the Nigerian Green Bond Market Development Programme (the Programme) – FMDQ Holdings PLC (FMDQ Group or FMDQ), Financial Sector Deepening (FSD) Africa and Climate Bonds Initiative (CBI) – are set to facilitate a stakeholder engagement session as part of the green financing capacity building efforts for market participants in the Nigerian financial market. The webinar session themed “Green Financing Opportunities for Agribusiness” and scheduled to hold
from 11:00am on Thursday, June 11, 2020, is targeted at current and potential issuers, as well as other stakeholders within the sustainable finance sphere in the Nigerian agribusiness sector, and will focus on expert discussions to demystify the concept of green bonds and green financing, highlight opportunities in the agribusiness sector and support that can be obtained under the Nigerian Green Bond Market Development Programme. The webinar could not have come at a better time given the renewed importance of sustained supply of food and agricultural produce to communities and families
across the world. FMDQ, FSD Africa and CBI formalised a Cooperation Agreement in March 2018 to develop the sub-national and non-sovereign green bond market in Nigeria. The Parties formally launched a three-year Nigerian Green Bond Market Development Programme in June 2018 to support the development of guidelines and listing requirements for green bonds in Nigeria, develop a pool of Nigeria-based licensed verifiers to support issuers, facilitate engagement and capacity building sessions with extant and potential issuers and investors, and support broader capital market reforms that have and/or will
have an impact on the nongovernment bond market in Nigeria. Since its launch, the Programme has seen the achievement of some key milestones, including but not limited to the development of the Green Bond Issuance Rules launched in November 2018; the issuance of Africa’s first Climate Bond Certified Corporate Green Bond – the Access Bank PLC N15.00 billion Green Bond in March 2019, amongst others. The Programme Implementation Partners have also successfully delivered knowledge bridging and capacity building training sessions across capital markets stakeholders, impacting over 450 beneficiaries so far.
Ibrahim Odunmboni (l), acting MD/CEO, LAWMA, and Mojibola Oladunni, regional business executive, institutional banking, Sterling Bank plc (Lagos region), during the donation of 5,000 reflective uniforms to LAWMA in Lagos.
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Mobile is pushing the boundaries under a new leadership to attract subscribers back to its platform after going an entire year without growth in voice subscribers. April figures released in June showed that 9Mobile has broken its one year run of losses as voice subscribers rose to 12,568,088 from 12,123,185, adding 444,903 for the first time since February 2019. The new-found growth also takes 9Mobile’s market share to 6.6 percent in April from 6.1 percent in March and 6.5 percent in February. The company which recently announced a significant repositioning of its brand with the appointment of seasoned
ISAAC ANYAOGU
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ne week after BusinessDay reported that unmetered electricity customers were still reporting excessive charges despite an order by NERC limiting distribution companies (DisCos) from charging outrageous bills, the commission has threatened to sanction erring DisCos. The Nigerian Electricity Regulatory Commission (NERC) posted on Twitter on Tuesday that the DisCos have 14 days beginning from June 4, 2020 to explain why they should not be sanctioned over their alleged non-compliance with the order. NERC had issued the directive on Transitional Capping of Estimated Bills issued to Unmetered Customers by DisCos in February, placing a cap on estimated bills that could be issued to R2 and C1 unmetered electricity customers, but it has failed to enforce the order. The absence of enforcement has led to gross abuse, such that power companies trying to recover losses caused by COVID-19 have continued to pile ‘crazy’ bills on long-suffering unmetered customers. The pre-existing estimated billing regulation was ham-
pered by the inadequate level of metering of feeders and distribution transformers which form the source data for the effective application of the estimation methodology, according to NERC. Hence the new order cancelled it. Therefore, the regulator following a public hearing imposed an energy cap on the bill of unmetered customers within a business unit at the average of vending of customers of the same tariff class within the same area. NERC said the order had the objective to introduce parity in the treatment of unmetered R2 (Residential) and C1 (Commercial) customers with their unmetered counterparts and protect them from arbitrary billing and expedite metering of those in the customer class. According to data from the commission, 62 percent of over 10 million electricity customers do not have meters. But DisCos are reeling from the impact of COVID-19. In April, some DisCos wrote to NBET, which manages the money pool in the electricity supply industry, warning that COVID-19 was having a ravaging impact on their business operations and constrained their ability to pay for the electricity contracted to them to sell and recover cost.
WTO receives Okonjo-Iweala’s nomination for DG … extends nomination to July 8 ANTHONY NLEBEM
9Mobile’s hunt for growth pays off as April figures end one year decline in market share FRANK ELEANYA
NERC to sanction DisCos for failing to cap estimated bills to unmetered customers … after BusinessDay report
telecoms expert, Alan Sinfield, as substantive chief executive officer (CEO), told BusinessDay it is cooking a plan to return on the path of growth. “Over the next weeks and months, we will unveil our short and long-term plans and other business initiatives to put 9mobile on the path of growth,” said Chineze Amanfo, team lead, PR at 9Mobile. Sinfield is the first substantive CEO of 9Mobile since the Etisalat exit and the rebranding of the company two years ago. His experience in the telecoms sector includes a couple of years as chief information officer and chief customer services officer at Orascom Telecom (IraQna). He is not new to the office of chief executive, as he has served as CEO for four years at Ooredoo (Starlink), a subsidiary of the listed Qatari www.businessday.ng
Telecommunications Group, operating in Qatar. Prior to April 2020, the last time 9Mobile recorded growth in the voice segment of its business was in February 2019. Beginning from March of the same year to March 2020, the telecommunications company has seen thousands of subscribers exit its platform. Data from Nigerian Communications Commission (NCC) show that the company lost over 10,000 subscribers in March to close the first quarter of 2020 in red. Unfortunately, 9Mobile was unabletorepeattheAprilgrowth in its data subscriber segment where the company has now gone four years without recording growth and lost more than 8 million subscribers since 2016. In April 2020, the telco’s data subscribersdroppedto7,459,943
from 7,762,068 in March. Gbenga Sesan, executive director of Paradigm Initiative, a social enterprise that connects underserved people and groups with ICT-enabled opportunities, told BusinessDay that the focus on data over voice is affecting nearly every operator in the sector. “Etisalatmayhavebeenharder hit because they positioned themselves as the ‘data telco’ whileotherswerestilladvertising as ‘voice telcos’, but it may also have to do with their internal business challenges,” Sesan said. The outbreak of the COVID-19 pandemic has put the telecommunication sector in the spotlight as nearly every company depends on the use of the internet to conduct its operations. Data usage among individuals and organisations has skyrocketed.
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he World Trade Organisation (WTO) on Tuesday accepted the nomination of Ngozi Okonjo-Iweala as one of the candidates for the office of the director-general of the organisation. Okonjo Iweala, one-time Nigeria’s minister of finance, was nominated for the post by President Muhammadu Buhari, according to a tweet by Tolu Ogunlesi, presidential aide on digital and new media, on June 5. The WTO announced on its website that “Nigeria, on 9 June 2020, nominated Dr Ngozi Okonjo-Iweala for the post of WTO Director-General to succeed the current DirectorGeneral, Mr Roberto Azevêdo, who has announced he will step down on 31 August 2020”. Egypt had opposed Okonjo-Iweala’s nomination, arguing that it was a violation of the executive decision of the African Union (AU) which had set a deadline of November 30, 2019 for African countries to nominate candidates. @Businessdayng
It claimed that OkonjoIweala’s nomination was late and should not be recognised. The WTO, however, said on Tuesday that nominations are still open till July 8, 2020. “According to the timetable announced by the Chair of the General Council, David Walker, the nomination period will close on 8 July 2020,” WTO said on its website. “Shortly after the nomination period has closed, candidates will be invited to meet with members at a special General Council meeting, present their views and take questions from the membership,” it said. Other candidates nominated by their respective governments for the post of WTO director-general to succeed the Roberto Azevêdo are Jesús Seade Kuri (Mexico), who was nominated on June 8, and Abdel-Hamid Mamdouh (Egypt), who was nominated on June 9, according to the WTO. The World Trade Organisation (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
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news Nigeria faces acute job losses as COVID-19... Continued from page 1
its by firms, especially small
businesses. The supply chains have been dislocated while misery deepens in Nigeria, world’s poverty capital, according to the Brookings Institution, suppressing the capacity of consumers to afford what is being offered by firms. “Many companies are not in production today,” said Ambrose Oruche, acting director-general, Manufacturers Association of Nigeria (MAN), which has over 2,500 firms employing more than 100,000 workers. “There are high job losses already and nothing much will happen until we are back to normal.” Orucheexplainedthatmany manufacturers can only pay workers part of their salaries, with others furloughing staff. HefurthersaidthattheNigeria Customs Service has raised import duties for food, basic metals and other raw materials from 5 percent to 20 percent, stressing that the action would only cripple an already stressed manufacturing sector. He asked the government to create a stimulus package for manufacturers as other economies have done to save firms from total collapse. Nigeria’s unemployment rate as of the third quarter of 2018 stood at 23.1 percent, according to the National Bureau of Statistics (NBS). Chris Ngige, minister of labour and productivity, said in May that unemployment could reach 33.5 percent in 2020. It was not clear how he arrived at that number, but current retrenchments in firms could validate that claim. Forty-two percent of hitherto employed Nigerians have lost their means of livelihood to COVID-19 pandemic, according to a June 2020 report by the NBS. Timothy Olawale, directorgeneral, Nigeria Employers’ Consultative Association (NECA), told BusinessDay that jobs have already been lost in critical sectors of the economy, noting, however, that averting more job losses requires that the government adopt urgent measures to mitigate the debilitating effect of COVID-19 on businesses and employers of labour. NECA is the umbrella body of employers in the formal sector of the Nigerian economy and one of the five interest groups that constitute the Organised Private Sector (OPS). Olawale said while the effort of the Central Bank of Nigeria (CBN) in providing stimulus to businesses is commendable, “we make bold to say that much more could be done to keep businesses afloat and further reduce the risk of massive job losses”. He noted that governments in other climes have taken specific measures to protect local industries and guarantee job security for their citizens and Nigeria must do same.
“In Australia, government provided tax-free cash flow for employers. Up to $25,000 is available to help pay wages or for investment to protect against downturn in activity. This is excluding wage subsidy and instant asset write-off for businesses with turnover of less than$500million,”Olawalesaid. “In China, SMEs were exempted from payment of pension contributions, unemployment and work injury insurances, while same had been halved for large companies and also extension on the tax reporting period, exemption from import tax on goods and materials,” he said. The International Labour Organisation (ILO) had projected over 22.7 million jobs may be lost globally as a result of the COVID-19 pandemic. In Nigeria, even before the outbreak of COVID-19, the unemploymentsituationhadbeen worrisome, and NECA believes it doesn’t have to get worse. The situation could worsen poverty in Africa’s most populous country where 87 million people live from hand to mouth. BusinessDay found that some employers are thinking of adopting more technology, which will see job losses. Others said they could change their business. “Some of my friends are thinking of moving their brickand-mortar business online. Others I have spoken with said they could just change their business or move them to new locations,” said Ike Ibeabuchi, CEO of MD Services Limited, who produces chemicals and runs a services firm. According to a survey done by the Lagos Chamber of Commerce and Industry (LCCI) on the impact of lockdown of businesses, 64 percent of employers said they lost below N500,000 daily, while 16 percent lost between N500,000 and N1 million each day during the five-week lockdown. Similarly, 12 percent lost above N5 million each day, while 7 percent incurred betweenN2millionandN4million loss daily during the period. The LCCI found that 63 percent of respondents planned to downsize operations to minimise losses while 18 percent were willing to cut capital spending. “This suggests that unemployment rate is expected to increase drastically post-lockdown except government takes urgent steps to support business owners towards surviving and ensuring business continuity,” LCCI said in the report breakdown signed by Muda Yusuf, its director-general. The chamber explained that cost-cutting measures adopted by firms today might see unemployment rate surge to 40-45 percent by end of 2020. “This has ripple effect on the Gross Domestic Product given that private consumption by households accounts for about 60 percent of national output,” LCCI further said. www.businessday.ng
Members of the Project Board/Sterling Committee for the environmentally sound management and disposal of polychlorinated biphenyls in Nigeria during their inauguration by the minister of environment in Abuja, yesterday. NAN
These numbers show Nigeria’s poor... Continued from page 1
31.7 percent of total posi-
tive cases) as of June 7. That’s poor when compared with the country’s next-door neighbour, Ghana, which has had a recovery rate of 37.7 percent. Ghana with a total of 9,638 confirmed cases has reported 3,636 recoveries. For Senegal, which is the third highest infected country in the region, more than half of its infected patients have so far recovered from the virus. Some 2,588 or 59.8 percent of its 4,328 coronavirus cases have recovered. Similar cases hold when compared with Guinea, Côte d’Ivoire, Mali, Niger, Sierra Leone, Burkina Faso, Cape Verde, Togo, Liberia, Benin and the Gambia. The aforementioned countries have had a recovery rate of 69.1 percent, 48.6 percent, 56 percent, 89.1 percent, 62 percent, 86.8 percent, 48 percent, 50 percent, 54 percent, 57.9 percent and 80.8 percent, respectively. Nigeria’s recovery number was only much better than Guinea Bissau whose recovery rate was calculated at 11.2 percent. Critics say the Nigerian government has to do more in liberating its citizens from the disaster that accompanies the virus, especially since the country has opted to reopen its economy for businesses to commence gradually. “Nigeria was never prepared for the pandemic as it got the timing of the response wrong at different levels,” Debo Odulana, founder/CEO at Doctoora E-Health Ltd, a real estate start-up operating an online marketplace for healthcare. “The poor statistics in deaths and recovery cases show two things. First is that a lot of people are dying before they get admitted and the second being that a lot of people are spending too long on admission because their conditions have deteriorated
before they were admitted,” Odulana said. He explained that because of the lag in testing and the inability of the government to upscale the country’s health infrastructure, the virus was quick to get into community transmission before it was officially announced, hence it put the country in a space where it had to cater for more people than the available resources. “If you look at Lagos, for example, where testing is higher, we are seeing a better picture but other states that have contributed more to the deaths, for a significant period, they were either not testing or providing the capacity of treatment,” Odunlana said on phone. In terms of deaths from the virus, Nigeria has far more deaths, accounting for about half of the total 772 deaths in the region. BusinessDay analysis of the figure shows that Nigeria has the sixth highest number of deaths as a percentage of infected cases. In Nigeria, three out of every 100 persons infected with the virus die from it. Nigeria’s death-to-confirmed cases ratio is only better than Liberia (8.4 percent), Niger (6.7 percent), Burkina Faso (6 percent), Mali (6 percent), and Gambia (3.8 percent). However, the death per 100 infected cases in Nigeria, at 3 percent, is higher when compared with Ghana (0.5 percent), Senegal (1 percent), Guinea (0.6 percent), Côte d’Ivoire’s (1 number), Guinea Bissau (0.9 number), Cape Verde (0.9 number), and Benin (1.1 number). Nigeria has done far lower testing when compared with many other countries in the region due to its limited number of testing centres, yet it has been slow in on-boarding the private sector to assist in ramping up testing. The World Health Organisation (WHO) has warned that countries must carry out aggressive testing in order to
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help in tracing and isolating early those who must have been infected with the virus. AsofJune8,Nigeriahasdone 78,244 tests for the virus, data from the Nigerian Centre for Disease Control (NCDC) show. As a percentage of the population, Nigeria has only conducted 380 tests per one million population, data compiled from Worldometer show, lower than Ghana’s 7,588, Senegal’s 3,245, Cote d’Ivoire’s 1,228, and Guinea Bissau’s 763. Nigeria has defended the slow pace of testing for the coronavirus, saying authorities have adopted a strategy of “managed acceleration” and won’t pool samples to multiply testing capacity as is currently being done in Ghana, which has rolled out one of the largest testing programmes in the region. But health experts still say there needs to be more testing done in order to get the curve flattened. Saliu Oseni, national deputy secretary, Nigeria Medical Association (NMA), said the only parameter that looks close to realistic in Nigeria’s COVID-19 numbers is the death rate. His position was based on Nigeria’s insufficient testing capacity that would enable it get a true picture of those infected with the virus. “We are not testing enough to enable us monitor people that have symptoms, meaning we might be having more cases of the virus than the numbers published,” he said. Oseni explained that though Nigeria has not been doing badly in the fight against the pandemic, he believes the country can do better. “If the recommendations of the association were keenly taken from the beginning, we might not have had the high cases we are seeing as we could have succeeded with the first lockdown. However, we are here because we didn’t succeed with that,” he said. Oseni said the steepening curve is due to the backlog test that is coming as the country @Businessdayng
is running the test of disease contracted weeks ago. He said the government should improve on its testing capacity, and also improve on the timing of test results to be not more than 24-48 hours so that a patient infected with the virus can be treated immediately. Since the first index case was reported in late February, Nigeria has recorded some 12,801 cases of infection, 4,040 of which have recovered while 361 have died. With the lag in testing, health experts say the country is yet to reach its peak in COVID-19 numbers. The country’s health sector is currently overwhelmed due to poor infrastructure to meet an increasing number of cases. Nigeria’s over 8,000 active coronavirus patients are jostling for 6,994 available bed-spaces. As confirmed cases of the virus rise, the government is proposing a rationing of bed-spaces such that those infected with mild cases of the virus will be treated at home while those with underlying health conditions such as diabetes, cardiovascular diseases and hypertension would be treated in isolation centres. Odulana of Doctoora said Nigeria has to admit that the pandemic situation is here to stay, and thus design its healthcare model or health system to be able to cater for COVID-19 cases He admonished that the same way the country has centres for HIV management, tuberculosis management and malaria control, it should have a portion of its health system directed at managing COVID. This might require the government to rethink the health stricture by having dedicated COVID treatment centres and dedicated home isolation centres, he said. “Reducing the infection spread boils down to citizens playing their role as well as the government making strict the needed guidelines to ensure social distancing and proper hygiene are upheld,” he said.
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Wednesday 10 June 2020
BUSINESS DAY
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Wednesday 10 June 2020
BUSINESS DAY
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Farmers find solace in CBN’s interest rate cut Josephine Okojie
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o revive the N i g e r i a n e c o n o m y which has been battered by the COVID -19 outbreak and low oil price, the Central Bank of Nigeria (CBN) in its May Monetary Policy Committee (MPC) meeting slashed the country’s benchmark interest rate by 100 basis points to 12.5percent from 13.5percent, first easing since March 2019 and the largest since 2015. The measure by the apex bank is to spur lending to the economy which faces imminent recession. Farmers in the country have lauded the move of the apex bank on the recent interest rate cut, saying it is the right step as it will help businesses survive the difficult moment of the virus outbreak and low oil price. They added that it will also spur lending to the agricultural sector as agr i bu si n e ss e s ca n now access loans at a
cheaper rate with a longer moratorium period. “The move by the CBN is a good one for the economy as it will stimulate borrowings for investments,” s a i d A f r i ca n Fa r m e r Mogaji, head-agribusiness group, Lagos Chamber of Commerce and Industry. “With this and the p re v i ou s re d u c t i o n o f interest rate on intervention funds as well as the
N50billion credit facility and extended moratorium by the apex bank, farmers and other actors in the sector will be able to access cheap credits,” Mogaji said. He stated that the recent policies by the apex bank will stimulate economic growth as a cut in the benchmark lending rate reduces banks’ lending rates to borrowers. The monetary policy rate
(MPR) is the benchmark interest rate that is used to determine banks’ lending rates and the cost of credit for borrowers, he says. The agricultural sector recorded a 2.2percent growth rate in the first quarter of 2020, contributing N3.7trillion to the country’s gross domestic product for the period. The sector ’s overall contribution to the country’s
GDP in real terms for the period stood at 21.9percent in the first quarter of 2020, slightly higher than its contribution in the first quarters of 2019 and 2018 respectively. Experts say that agricultural contribution to the GDP can be further boosted with the measures undertaking by CBN to support businesses, noting that the extension on loan moratorium and reduction of interest rate on intervention funds will further boost farmers’ output. Prince Olabode Adetoyi, chief executive officer of Hi-Nutrient Limited gave kudos to the apex bank for its recent interest rate cut and extension on loan moratorium among others. Adetoyi says it will help farmers especially in the poultry subsector who have been negatively impacted by the COVID-19 pandemic recover from the economic fallout of the virus. He stated that if the lower interest rate is combined with our measures by the g o v e r n m e n t , f a r m e r s’
productivity will be boosted, leading to the sector contributing more to the country’s economic growth amid and post COVID-19. “We give kudos to the government for coming up with various measures to support businesses, especially on the benchmark interest rate cut and extension of loan moratorium, this will ensure businesses survive amid the pandemic,” Adeoti who is also the vice president of the Nigerian poultry association said. He called on the apex bank to ensure that money d e p o s i t b a n k s re d u c e their lending rate as the benchmark rate has been reduced. He noted that banks a re q u i c k t o i n c re a s e interest rates anytime the benchmark rate is increased but will fail to reduce it when there is a cut. He added that much more is still needed to be done to support farmers and ensure that the sector creates jobs and diversify the economy away from oil.
Smallholder farmer inclusion: Nigeria, data and the path to food security TEMITAYO AYETOTO
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ver the last couple of weeks, there have been a lot of conversations around the executive summary of the 2019 Poverty and Inequality in Nigeria re p o r t re l e a s e d by t h e National Bureau of Statistics. Coming at a time when the coronavirus pandemic has clearly shown the level of inequality that exists within the Nigerian society, this document brought with it proof of the many issues that have earned Nigeria the sorry title of poverty capital of the world. One of the revelations that this document made was the uncanny relationship b e t w e e n ag r i c u l tu re i n Nigeria and poverty. Every president Nigeria has had since democracy became our norm has implemented one agricultural development programme or the other, often backed by a large number of local and international partners, who believe in the agric sector being the key to the economic diversification the country dearly needs. But to have the report show that the highest poverty numbers in a country with over 70
million poor people were in households that depended on agriculture alone for their income explains how much work still needs to be done in the sector, especially for smallholder farmers. Kola Masha is one of the entrepreneurs committed to fixing Nigeria’s smallholder farmer challenge through his company, Babban Gona. For him and his team, low economies of scale resulting from many different factors such as p o or access to finance, land issues, lack of extension services, and more, remain the reason Nigeria’s smallholder farmers experience low levels of productivity, as low as 20 percent yield for the average Nig er ian far mer, which continues to threaten the country’s food security. The reason these smallholder farmers are pivotal to Nigeria’s food security can be found in the participation numbers for agriculture in Nigeria. A 2017 survey of the Consultative Group to Assist the Poor (CGAP) showed that more than 80 percent of farmers in Nigeria are smallholders and they still account for more than 90 percent of the agricultural outputs of the nation. Even www.businessday.ng
without considering poor smallholders’ welfare a food security threat given how low their productivity levels are, it is an underemployment issue as the agric sector employs about 70 percent of Nigeria’s labour. The coronavirus pandemic border closures and restricted movements have hugely exposed our already weak food security levels, leading to price hikes in the market and a strain on consumers, thus showing why there is an urgent need to empower more smallholder farmers. This week, Kola was joined for a discussion by Uka Eje, whose company, Thrive Agric, shares a similar vision as his, which is to get smallholder farmers the access they need to resources which are crucial to their work and the growth of the agricultural sector. Alongside them were Ndidi Nwuneli, managing partner at Sahel Consulting, where they offer in-depth research and advisory services to farmers, and Debisi Araba who is African Region director, International Center for Tropical Agriculture, and an environmental policy expert. In any conversation about inclusivity of smallholder farmers, data often takes centre stage because it is
easier to solve a problem when it is clearly defined and understood. As Ndidi Nwuneli put it, we need to know who needs what, where they are, what they need most, how that impacts the sector, the nation and much more. The reason this is extremely important can be seen in how fundamental and foundational it is, especially for resource allocation. For instance, while we have a good estimate of how many people work in the agricultural sector, across different demography and gender, there is still a problem with knowing in very fine details what the chief challenge for smallholders in each locale is, and the extent of the impact it has on the efforts of those in other locales in preventing a looming food scarcity. Different surveys have shown that poor access to market, poor access to finance, and inadequate knowledge of improved farming practices are the three biggest challenges to smallholders. While these findings form a step forward t ow a rd s u n d e r s t a n d i n g the smallholders’ plight, quantifying the problem in statistics, such as required investment to reach a possible
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solution per region or locale, the number of affected farmers per issues, etc, paints a better picture and brings a target solution closer. In Nigeria’s proposed 2020 budget, agriculture gets a meagre 1.72 percent allocation, which covers both capital and recurrent expenditure. This very poor a l l o cat i o n , c o n s i d e r i ng the fact that Nigeria has been signed to the Maputo agreement to allocate 10 percent of its annual budget to agricultural development since 2003, will do little to lift smallholders out of the problems they face, given the poverty scale. More so, it is a small amount in relation to the spread of problems it is meant to cater to. This explains why Debisi Araba from the International Center for Tropical Agriculture (CAIT) opined that a lack of focus on exact goals we want to achieve might even be a bigger issue than the lack of access that exists, and might be making collaborative efforts with local and international partners less effective. His stance remains that investing in vital infrastructure such as sustainable power will boost food production as well as reduce transaction @Businessdayng
costs for farmers, but more importantly, collaboratively tackling issues such as land degradation and soil fertility will go a long way to help farmers increase productivity, as the work they do at CAIT to restore soil fertility in many regions has shown. Clearly, a lot of support is needed to make agriculture work as a business in Nigeria. Uka Eje’s ThriveAgric currently has 18,500 farmers within its network spread across regions, who they support with key resources through crowdsourced investments from individuals who bet on the projected yields of these farmers. The key goal for agritech companies like his is to help smallholders gradually grow their farming businesses, better improve their lives, those of their families and the people who work with them. The agritech template has not only provided a means for more people to invest in smallholder farmers and support their growth, it has also provided a framework for measuring productivity levels and the key levers leading to proportional development. The growth for all parties involved is indicative of what can happen when we put smallholders first.
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Wednesday 10 June, 2020
BUSINESS DAY
Live @ The Exchanges Market Statistics as at Tuesday 02 June, 2020
Top Gainers/Losers as at Tuesday 02 June, 2020 LOSERS
GAINERS Company
Opening
Closing
Change
N41.5
N43.2
1.7
N4.1
N4.51
0.41
N14.55
N14.95
NEIMETH
N1.94
PRESTIGE
N0.64
BUACEMENT BOCGAS DANGSUGAR
Company
ASI (Points)
Opening
Closing
Change
N213.9
N192.6
-21.3
DEALS (Numbers)
REDSTAREX
N3.81
N3.56
-0.25
0.4
FIDSON
N3.25
N3
-0.25
VOLUME (Numbers)
N2.13
0.19
FBNH
N5.5
N5.35
-0.15
VALUE (N billion)
N0.7
0.06
CADBURY
N7.65
N7.5
-0.15
MOBIL
MARKET CAP (N Trn)
25,335.15 4,137.00 268,740,447.00 1.121 13.216
Global market indicators FTSE 100 Index 6,335.72GBP -136.87-2.11%
Nikkei 225 23,091.03JPY -87.07-0.38%
S&P 500 Index 3,207.53USD -24.86-0.77%
Deutsche Boerse AG German Stock Index DAX 12,617.99EUR -201.60-1.57%
Generic 1st ‘DM’ Future 27,277.00USD -250.00-0.91%
Shanghai Stock Exchange Composite Index 2,956.11CNY +18.34+0.62%
BUA Cement, other stocks push market to new highs Stories by Iheanyi Nwachukwu
N
igeria’s equities m a r k e t strengthened further on Tuesday June 9 as investors chose to take further position in attractive counters like BUA Cement Plc, BOC Gas Plc and Dangote Sugar Refinery Plc. In the absence of any
external shocks, market watchers expect Nigerian equities to strengthen further, though the possibility of profit taking cannot be ignored. The local bourse had earlier this week reacted positively to the optimism around the crude Oil market as well as improving global indicators. Brent crude was down 52 cents, or 1.3percent, at $40.28 a barrel by 1340 GMT on Tuesday. West Texas
Intermediate (WTI) crude fell 27 cents, or 0.7percent, to $37.92. Increased bargains on the Bourse put additional gain of N45billion in investors pockets as evidenced in the value of listed stocks which increased from N13.171trillion the preceding trading day to N13.216trillion. The NSE ASI rose by +0.34percent from 25,249.90 points recorded the preceding day to 25,335.15 points on
Tuesday. In 4,137 deals, stock traders exchanged 268,740,447 units valued at N1.12billion. The stock market’s negative return year-to-date (YtD) stood lower at to -5.61 percent. BUA Cement Plc increased from N41.5 to N43.2, after adding N1.7 or 4.10 percent. BOC Gas Plc rose from N4.1 to N4.51, up by 41kobo or 10 percent while Dangote Sugar Refinery Plc rose from N14.55 to N14.95, adding 40kobo or 2.75percent.
FMDQ Exchange admits Dangote Cement’s N100bn Commercial Paper Notes
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MDQ Securities Exchange Limited (FMDQ Exchange) has approved the quotation of the Dangote Cement Plc N34billion Series 15 and N66billion Series 16 Commercial Paper (CP) notes under its N150billion Domestic CP Issuance Programme on the Exchange’s platform. This comes on the back of note-worthy debt issuances on the Exchange, including the recently quoted Flour Mills of Nigeria N30billion CP notes, Sterling Bank N15billion CP notes and the United Capital N5.32billion CP notes, amongst others. Despite the economic headwinds associated with the transition of businesses into the “new normal” in view
of the COVID-19 pandemic, the Dangote Cement CP issuance and subsequent quotations on FMDQ Exchange – remarkably, the largest CP issuance by a non-financial institution in Nigeria – is another testament of the efficient listings and quotations service offered by FMDQ Exchange as well as the Exchange’s continued efforts to position the Nigerian capital market to support corporates and businesses seeking to raise capital to finance their funding needs. FMDQ Holdings Plc (FMDQ Group or FMDQ) has through its subsidiary, FMDQ Exchange, continued to provide the required support to governments, corporates, and individuals through the delivery of inwww.businessday.ng
novative and dependable capital market solutions. As with previous notes issued under the Programme and like all other securities listed, quoted and traded on the FMDQ Exchange platform, the Dangote Cement CPs shall be availed global visibility through FMDQ Exchange’s website and systems, as well as through their inclusion in the FMDQ Daily Quotations List, in order to ensure and maintain information transparency. Through the Listings and Quotations Compliance function at FMDQ Exchange, investors are guaranteed continued disclosure of the issuer’s obligations to enable this important category of market stakeholders make
informed decisions. In line with the Group’s vertically integrated market structure, investors are also provided a secure securities depository for the lodgement of their assets via FMDQ Depository Limited, thus ensuring an efficient and seamless flow of transactions from start to finish on FMDQ. FMDQ Group is Africa’s first vertically integrated financial market infrastructure (FMI) group which provides a one-stop platform for the seamless and cost-efficient execution, risk management, clearing, settlement and depository services, as well as data and information services across the debt capital, foreign exchange and derivatives markets in Nigeria.
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BUA Cement Q1 pre-tax profit rises by 26.2%
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n e o f A f r i c a’s leading cement manufacturers, BUA Cement Plc, has announced a 25.1percent increas e in revenue of N54billion in its financial results for the first quarter (Q1) ended March 31, 2020. BUA Cement ’s profit before Tax (PBT) increased by 15.7percent from N17.4 billion, as at Q1’2019 to N20.1 billion in Q1’2020 while Profit After Tax (PAT) in Q1 2020 stood at N19.8 billion – a 26.2percent increase of from N15.7 billion in Q1’2019. This was contained in a filing on the Nigerian Stock Exchange. Speaking on the results, the Managing Director/CEO of BUA Cement Plc, Yusuf Binji said the excellent performance in the Q1 financial results amid the outbreak of the COVID-19 pandemic is yet another landmark of the company since its listing on the Nigeria Stock Exchange. The company’s performance was buoyed by an increase in production capacity from 5million metric tonnes at the end of Q1’2019 to 8million metric tonnes currently; its strong product differentiation strategy which translates to an increasing appreciation of BUA Cement product offering and a growing distribution network across existing and new markets. Binji said: “The turn of the year w itnessed the achievement of yet another milestone, with the completion of listing requirements of the Nigerian Stock Exchange (NSE), emerging the thirdmost capitalised company on the exchange; with a market capitalisation of N1.2 trillion ($3.3 billion) and the de-listing of the shares of CCNN Plc. @Businessdayng
Subsequently, BUA Cement was included as a constituent of the MSCI frontier market index in February. “Undoubtedly, the outbreak of the COVID-19 pandemic will have broader ramifications to the world and indeed the world economy, even as governments institute measures to curtail further spread of the virus. Nationally, Nigeria has not been immune to the wave of the virus; with the government instituting safety measures whilst building capacity, in preparedness for possible high number of cases. “In response to the global pandemic, we implemented our “COVID business continuity program”, built into our corporate governance framework. This minimises disruptions along the value chain; prioritises the safety of workers and customers; and assesses probable scenarios a prolonged lockdown would have on the business. “Clearly, our strongshowing epitomises the effect of further growth in output but most importantly, a growing appreciation of the value and service offering we continue to afford customers in the market place: with sales revenue increasing by 25.1percent (y/y) to N54 billion. We continue to anticipate changes to customer and market behaviour, aimed at further strengthening our value model, even as we continue our push into ‘new markets’. “As the COVID-19 virus makes landfall, we believe the current measures in place, should help minimise plausible downside risks; nevertheless, poised to take advantage of an upturn in market activities”, Binji added.
Wednesday 10 June 2020
BUSINESS DAY
35
MARITIMEBUSINESS Shipping
Logistics
Maritime e-Commerce
Long waiting time, absence of holding-bay impeding barge operation in Nigeria …As NPA issues new operational licenses amaka Anagor-Ewuzie
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ong waiting time at port terminals and absence of holding-bay to drop empty containers have been identified as challenges confronting operators of barges used in lifting cargoes from Nigerian ports. According to them, barges spend a minimum of four days at terminals, which translates into cost for owners or operators of barges. Edeme Kelikume, Barge Operators Association of Nigeria (BOAN), told Daily Trend News recently in an interview that one of the biggest challenges confronting barge operation in Nigeria is absence of holding-
Suspected Ghana flagged vessel with International Maritime Organisation’s (IMO) number 7419755 and registration number 316880.
bay for dropping of empty containers. He also pointed out that barges spend at least four days at the port terminal
while evacuating containers and such challenge results to additional cost for operators, who must have hired cargo handling equipment.
Piracy: NIMASA hands over suspected vessel, crew to Ghanaian, Korean govts amaka Anagor-Ewuzie
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he Nigerian Maritime Administration and Safety Agency (NIMASA) has handed over to Ghanaian authorities for further investigation and possible prosecution, a fishing vessel called Marine 707, suspected to be involved in illegal activities in the Gulf of Guinea. The government also handed over 51 crew members including 48 Ghanaians and three South Koreans to the government of Ghana and Korea respectively. The vessel, which was authorised to fish in Ghana and Benin waters, was arrested by the Nigerian Navy on the 18th of May, 2020 around southwest of Lagos waters with her Automatic Identification System (AIS) switched off after being suspected to be used for piracy or being used as a mother ship by pirates. Speaking during the official hand over of the Ghanaian flagged vessel and the crew to the respective authorities, Bashir Jamoh, director general of NIMASA, said the Navy and NIMASA partnership which is now hinged on intelligence, has put Nigeria on a pedestal of winning the
war against piracy and other illegal activities at sea. Jamoh, who was represented by the agency’s commander, Maritime Guard Command, Aniete Ibok, disclosed that though preliminary investigations could not establish that the vessel and her crew were directly linked to piracy, however the vessel still ran afoul of international laws for shutting down its AIS for 36 times in the last in six months, three of which were on Nigerian waters. “We are handing over this vessel in the spirit of bilateral cooperation both countries enjoy. We have done our preliminary investigations and yet to establish concrete evidence against the vessel but again, we would not know what she would be doing whenever she turns off her AIS which occurred 36 times without being logged in her record book in line with international protocols,” he said. Jamoh warned individuals or organisations thinking of perpetuating any illegalities on the Gulf of Guinea to be ready to face the full wrath of the law with the Antipiracy law in place along with Navy, NIMASA partnership that is waxing stronger. “We have improved our intelligence sharing with relevant agencies and in no distant www.businessday.ng
time, piracy will be a thing of the past in the Gulf of Guinea because we have a robust Antipiracy law that will deal with perpetrators of illegalities on our waters,” he said. While receiving the vessel and the crew on behalf of the Ghana Maritime Authority, David Ako Sowah, Second Secretary Consular of Ghana in Nigeria, commended Nigerian authorities for being professional in handling the case. He described what Nigeria is doing as one that would benefit the entire countries in the Gulf Guinea. “As the big brother in this region, Nigeria has done well in showing a lot of maturity in handling this case and I want to assure you that Ghana would also look into more collaboration with Nigeria to ensure that the Gulf of Guinea remains safe for maritime activities,” he said. Kim Ln-taek, consular general of the Republic of Korea in Nigeria, commended the party involved in handling the case. He said his finding from the Captain of the ship who is a Korean was that the AIS was bad. He noted that the vessel and her crew erred by not following the protocols of logging it in the record books when the AIS was down but he was happy that the case has been resolved up till this point.
“The biggest challenge that maritime industry is facing today is empty containers and the shipping lines are taking advantage of
the situation. Importers are being made to pay heavily as demurrage, yet there is no facility for dropping empty containers after offloading the imports,” he said. Continuing, he said that ports are also not receiving empty containers when importers offload the cargoes yet the shipping lines charge demurrage on empty containers that were not returned as and when due. Kelikume further noted that when barge operators spend up to four days at the terminal, they pay daily cost for the equipment that were either hired or owed. He however disclosed that the Nigerian Ports Authority (NPA) has issued new operating licenses to barge owners to evacu-
ate cargoes from Nigerian ports and help in reducing the gridlock at port roads in Lagos. This new licenses, according to him, is in addition to 36 operators registered under BOAN membership. Tony Iju Nwabunike, national president of Association of Nigeria Licensed Customs Agents (ANLCA), said the activities of barge operators contribute towards the revenue generated by Nigeria Customs Service (NCS) into the Federation account. He also said that barging is one of the most effective means of moving cargo especially in the wake of port congestion and persistent gridlock in and out of ports in Apapa.
NIWA faults Lagos attorney general on waterways jurisdiction amaka Anagor-Ewuzie
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he National Inland Waterways Authority (NIWA) has faulted the assertions of Lagos attorney general and commissioner of justice, Moyosoro Onigbanjo, SAN on the subsisting judgement of the Court of Appeal, Lagos Division on appeal number CA/L/886/2014, delivered on July 18, 2017. According to Lagos attorney general, Justice Muktar JCA had stated in the lead judgement on the case that ‘All other inland waterways within Lagos State are within legislative competence of Lagos State House of Assembly. Onigbanjo had drawn the
attention of NIWA to the assertions of the appeal court as the major plank to Lagos State Government response to the letter written by George Moghalu, managing director of NIWA, pleading to restrain Lagos legislators from setting up committee to investigate dredging activities in the state, which Onigbanjo said has the backing of the court of Appeal. To put issues in proper perspective, NIWA told the Lagos attorney general to carefully revisit the content of the judgment, which he did not accord the deep consideration. Moghalu, noted that contrary to the assertions of Lagos State Government that the Appeal court judgement
George Moghalu
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favoured its regulation of the waterways, the court had in clear terms and without any ambiguity stated that ‘items 5 in the second schedule to the NIWA Act is the relevant provision for the navigable route that falls under exclusive legislative list. NIWA Act, Moghalu stated, provides that the intracoastal route starts from Badagry, along the Badagry Creek to Lagos through Lagos lagoon to Iwopin along Omu River/Creek, Talifa kivel to Ajelete, Akata, Aboko, Oluwa River to Okitipipa and on Gbekebo, Arogbo, Ofunama Benin Creek to warri, also the canal running from Araromi through Aiyetoro through Mahin lagoon to Igbokoda. Moghalu further drew the attention of Lagos government to the fact that the route run through international and states boundaries, and therefore, is consistent with the provisions of the constitution being items on the exclusive list and that the court of Appeal held that revenue accruable from all federal route is payable to Federal Inland Waterways Authority. NIWA boss however challenged Lagos State government to furnish him with intra waterways which exists in Lagos, outside item 5, second schedule of the NIWA Act.
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Wednesday 10 June ,2020
BUSINESS DAY
Wednesday 10 June ,2020
BUSINESS DAY
37
INTERVIEW
AfDB: Supporting Adesina for second term in us interest former US executive director to the Afdb, Mima Nedelcovych
Dr Mima Nedelcovych served as the 1989 to 1993 as the U.S. Executive Director to the African Development Bank (AfDB) may we start this interview with some historical context on the relationship between the USA and
the African Development Bank? The US is the largest nonregional shareholder of the AfDB, and one of the major contributors to the African Development Fund, the concessional window. The AfDB has always had strong support from the US and that continues to be the case. What was your working relationship like with the AFDB leadership at the time, what are some of the pleasant and less pleasant experiences or souvenirs that come to mind? The pleasant experiences were seeing the AfDB take up its role as the major development institution on the continent under the visionary guidance of then President, the late Babacar Ndiaye. It was during the time I sat on the Board that the Private Sector Department was officially set up (previously the bank did not make non-sovereign loans) the African Export Import Bank was established, the African Business Roundtable was formed, and generally speaking the realization that the private sector was going to be the engine of growth was finally accepted. On the unpleasant side are memories of certain African countries falling in arrears to the very bank they should have been championing while keeping current on other MDB engagements.
‘ Considering that
Dr Adesina was literally endorsed by all African countries and was on course to get a second term since there was no challenger, some see in the U.S position a form of opposition to Dr Adesina
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U
nless the US government is holding some secret that the American public is not aware of, I see absolutely no reason why it should not wholeheartedly support the re-election of President Akinwumi Adesina for a second term at the helm of the African Development Bank, says Dr Mima Nedelcovych Former U.S. Exec Dir to the AFDB. In an exclusive interview with Pan African Visions, Dr Nedelcovych says “If competing with the Chinese in Africa is primordial to the US, then supporting the position of our African fellow shareholders in the AFDB and supporting President Adesina is in our own interests.” Adesina has established the framework for furthering the critically important role that the AfDB is playing in the development and inclusive growth of the continent, says Dr Nedelcovych. With his vision and execution of the “High 5s” for Africa, Dr Adesina has contributed tremendously to the development of the continent, and President Obasanjo and other former African Presidents have every reason to come out in public support of the champion that the current AFDB President is, Dr Nedelcovych says. On the whistleblower allegations that triggered the current tensions between AFDB partners, Dr Mima Nedelcovych says the internal inquiry did its job fully in line with statutory guidelines. “ For me, those accusations that were made public and investigated by the Ethics Committee, have been responded to in great detail by President Adesina to my full satisfaction,” says Dr Nedelcovych Dr Adesina and the AfDB have stepped up when most needed for an African institution to lead the way in the responses to the Covid-19 pandemic ,says Dr Nedelcovych who also shares his take on expectations for a second Adesina term, and how U.S -African relations have fared under the first term of President Donald Trump.
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the African continent is finally and truly becoming a very promising market for investors. What do you make of reactions from people like former President Obasanjo, the Nigerian Minister of Finance and others who have come out forcefully to speak in support of Adesina? President Adesina, in his vision and execution of the “High 5s” for Africa, has contributed an awful lot to the development of the African continent. He and the AfDB have stepped up also when most needed for an African institution to lead the way in the responses to the Covid-19 pandemic. So, President Obasanjo and the large number of former African Presidents that came out in support of President Adesina have every reason and right to come forward and publicly support their champion.
President Adesina, in his vision and execution of the “High 5s” for Africa, has contributed an awful lot to the development of the African continent, says Dr Nedelcovych
In a recent letter, USA Treasury Secretary Steve Mnuchin expressed misgivings about the outcome of an internal inquiry that cleared AFDB President Akinwumi Adesina of any wrong doing and called for the appointment of an outside investigator, what did you make of the letter and the US position? The US Governor, as does every shareholder, has the right to question management’s application of policies and guidelines as established by the shareholders themselves. Upon receiving the letter from the US Governor, the Ivoirian Governor, as the Chair of the Governing Board this year, in my mind did the exactly right thing. She took into consideration the supposition made by the US Treasury Secretary, reviewed it in the light of the formal procedures and guidelines, and concluded that the policies were followed and that the Ethics Committee cleared
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the President beyond any doubt. Furthermore, she has asked that the whole whistleblowers statute be formally reviewed, so that it may remain effective, but not become abusive to the proper conduct of the bank. She has asked that an external well-respected individual be recruited to provide an outside unbiased perspective within the next six weeks, so that this matter is cleared up and does not smear the Annual Meetings and the election of the President. The full review of the whistleblower statues and its applications will take a longer period and should not impede the normal functioning of the bank. It is at this point that the shareholders should come to agreement as how to treat similar accusations in the future, balancing the need for such a statute for proper governance with the assurances that serious charges can be properly documented and not be issued lightly or frivolously. @Businessdayng
Beyond your stint at the Bank, we know you continue to monitor developments closely, have frictions of this nature or such stark contrast in positions been common between the USA and the AFDB? Frictions are always to be found in international organizations; it is the nature of the beast as every shareholder has the right to their own opinion. Having said that, I must admit that this “disagreement” is the starkest of any I have seen in the past between the US and the AfDB. What were your impressions after reading the whistleblower report, were you convinced with the responses from Dr Adesina and do you think the internal inquiry did its job in line with statutory provisions that guide the resolutions of incidents of that nature at the AFDB? I have known President Adesina for quite some time, including in his previous positions as Minister of Agriculture in Nigeria and at the Rockefeller
Foundation, and I am fully convinced with the responses provided by him to the accusations of the whistleblowers. And yes, the internal inquiry did its job fully in line with the statutory guidelines. If there is something that the USG or other shareholders know and/or that the whistleblowers know, then that should be presented to the external individual that will be appointed to conduct the review. For me, those accusations that were made public and investigated by the Ethics Committee, have been responded to in great detail by President Adesina to my full satisfaction. Considering that Dr Adesina was literally endorsed by all African countries and was on course to get a second term since there was no challenger, some see in the U.S position a form of opposition to Dr Adesina, what information are you getting from your networks, does the US have an issue with a second term for Dr Adesina? That question is better posed to representatives of the USG. I have been out of government for over 25 years now and happily since in the private sector, where
In a recent open letter to Treasury Secretary Steve Mnuchin, Ambassador Harold E. Doley, Jr, the first ever U.S Representative to the AFDB called on the US to support Adesina, may we have your views on the letter, and do you share his call for the US to back Adesina? I am in total alignment with my good friend Harold Doley, Jr’s accolades for all that President Adesina has achieved to date, and I would add that Adesina has established the framework for furthering the critically important role that the AfDB is playing in the development and inclusive growth of the continent. As for the US backing Adesina, unless the USG is holding some secret that the
American public is not aware of, I see absolutely no reason for the US to not wholeheartedly support the re-election of President Adesina. What is your assessment of the way Dr Adesina has managed the AFDB in his first term, in what areas have you seen progress and what would you like to see from him in a second term? President Adesina came in with a very big vision and mission embodied in the High 5s that I very much supported from day 1. This was and is the necessary vision to bring the African continent into the mainstream of the world economy. The basic tenets of the high 5s that I certainly experience every day as a business person in Africa, those being that farming is a business and a growth sector, that without power you cannot industrialize, that without industry you cannot create inclusive growth and wealth, that without integration you cannot scale and be competitive, and that without those 4 you cannot achieve the 5th of improving the quality of life of Africa’s people are at the core of that mission. Big visions take time to implement and are often not easy to execute. They required structural changes in the body of the bank, which included both the reorganization and the strengthening of the professional cadre and morale in the bank. As an outside observer, champion and client of the bank, I see these changes taking root and the results beginning to give fruit. What I would like to see in his
second term is to give him and the AfDB the time to ripen those fruits to full fruition and in consonance with the fruition I see of the African continent as a whole in today’s world economy. When we last interviewed you in December 2016, you opined that the Trump Administration will discover the reality of good deals in a rapidly changing Africa, what changes have you seen in US-African relations in the first term of President Trump? The best thing that has happened is the passing of the US Build Act that has created the US Development Finance Corporation with all it new tools and authorities that could make it a major player on the continent. Furthermore, the Prosper Africa Initiative that recognized that prosperity is a two-way street, is good for American business as it is good for African business and the uplifting of the African population. The reauthorization of the US EXIM Bank is another very important element. Taken as a whole, and especially as evidenced by the goal of having “Deal Teams” at each US Embassy, coordinating all the arms and tools of the USG, will be a big boon for US businesses entering or already operating in Africa. What do you make of the fact that President Trump has not visited Africa in his first term, does this not send the wrong message to the kind of US-African relations that people like you and many others have been advocating for? As an American doing busi-
To Mima Nedelcovych ,If competing with the Chinese in Africa is primordial to the US, then supporting the position of its African fellow shareholders in the African Development Bank and supporting President Adesina is critical .
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ness in Africa, whether President Trump visits Africa or not is of no particular concern to me. What is of concern is to get the full-blown support of the USG through the Deal Teams and that those teams and the vision of that support is effectively executed. And that is why all those new instruments are important. A very astute African business colleague once remarked that the African business train is leaving the station. The Chinese have clearly gotten on board, now it is up to Americans to decide whether to board and participate in that economic growth or not. I would add that simply bashing the Chinese is not the answer, the answer for our mutual benefit is providing our African colleagues an alternative option, a solution to their problems and turning them into opportunities. We end with a last word from you on how you see this standoff between the U.S and the AFDB eventually playing out and if you do not mind a word on your company Africa Global Partners as well. The way I look at it, the African Development Bank is the continent’s most prominent and influential multilateral player and is one of the few such institutions that the US has a commanding say over the Chinese. If competing with the Chinese in Africa is primordial to the US, then supporting the position of our African fellow shareholders in the African Development Bank and supporting President Adesina is in our own interests. Two years ago, I turned over my mantle as President of the Initiative for Global Development, and returned to Chairing the two companies I have been associated with since departing the AfDB in 1993, AfricaGlobal Partners in DC and Schaffer International in Louisiana. We are both advisers and developers of projects, and our sweet spot is the nexus of agro-industry, clean energy and infrastructure. I also proudly sit on the Boards of the US owned Vista Bank Group (focused on SME lending) in West Africa, Fayus International, a Sacramento, CA based food processor and distributor operating throughout Africa, and the Niger Delta Partnership Initiative in Nigeria.
38 BUSINESS DAY
FT
Wednesday 10 June 2020
FINANCIAL TIMES
World Business Newspaper
Fed faces tricky balancing act in recession response
Central bank’s first forecasts in six months could unnerve investors expecting dovish policy JAMES POLITI AND COLBY SMITH
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ederal Reserve officials are facing a delicate transition to the next stage of their response to the pandemic-induced recession, as they prepare to release their first economic forecasts in six months at this week’s meeting. The Fed’s macroeconomic projections — which it declined to publish in March because the situation was shifting so rapidly — come after the US jobs report showed a surprising uptick in new hiring after two months of deep job losses, and in the middle of sharp rebound in stock prices. Many economists are expecting Fed officials to signal that output will shrink by a big margin this year, with interest rates remaining on hold at zero for the next few years, which would reinforce their dovish stance and determination to keep monetary policy very loose. “It will underscore that things are getting better but we are still miles away from full employment and price stability,” said Aneta Markowska, chief economist at Jefferies. “It’s probably going to take a long time before we get there so let’s not declare victory prematurely.” There is a real risk of a June 2013-type taper tantrum Krishna Guha and Ernie Tedeschi of Evercore ISI But the Fed and its chair Jay Powell face a tricky balancing act at their meeting on Tuesday and Wednesday. Any hesitation in terms of their willingness to sup-
The Federal Reserve declined to publish its macroeconomic projections in March because of rapidly changing circumstances © REUTERS
port the economy could disrupt markets, which have seen equities rally and yields on government debt rise. “There is a real risk of a June 2013-type taper tantrum with rates and longer-term yields accelerating higher if the Fed is not resolutely dovish,” Krishna Guha and Ernie Tedeschi of Evercore ISI wrote in a note on Monday. “We think the Fed will signal that it remains . . . committed to using its full range of tools to promote the recovery.” Since March, the Fed has slashed interest rates, dramatically expanded its balance sheet through asset purchases, and set up several facilities to lend to struggling entities across the US
economy. But a debate has been unfolding within the US central bank about its next steps, including whether it should be more precise and aggressive in its guidance on interest rates — tying any tightening of policy to specific milestones in the recovery — or set specific benchmarks for asset purchases. While those discussions are likely to intensify this week, the Fed has not been feeling much urgency to settle on a specific option for now, as it tries to preserve policy flexibility. “It is not difficult to look forward and see risk that could justify further Fed action — in particular the lack of fiscal help for state and local governments and the cliff in
personal income that will come after July 31 when the extra unemployment benefits expire,” said James Sweeney, chief investment officer for the Americas at Credit Suisse. “But without those forwardlooking risks being transmitted to financial markets, I don’t see a trigger for sudden Fed action.” The employment data released last Friday will offer some comfort to the Fed that the labour market may have started recovering earlier than it imagined, but will do little to change its view that the US faces a long and painful recovery laden with risks, including the possibility of a second wave of coronavirus infections and shutdowns. “They are not prone to overinterpreting one data point. They
never are and they definitely aren’t when the data is so hard to measure,” said Julia Coronado of Macropolicy Perspectives. “They are going to look at it very differently than the market,” she added. The economic and social impact of the mass protests unfolding in recent days across the US may also add a new element of uncertainty for the Fed. “The good news and the hope, of course, is that over the long term that this is a catalyst for change and more equitable and sustainable growth. That’s really important. But in the near term you can’t escape the downside risk of surging infection, which was already high,” said Diane Swonk, chief economist at Grant Thornton. The Fed meeting will offer Mr Powell a new chance to nudge Congress and the White House to reach a deal on new stimulus measures, on top of the $3tn already approved, especially since the enhanced unemployment benefits are due to run out next month and states and local governments are desperate for federal aid to avoid further lay-offs. The Fed chair’s fiscal message could be particularly important since some Republican lawmakers are balking at a big package as they sense a turnround in the economy and do not feel additional spending is warranted. “Powell’s not been shy at all, and that’s been a real pivot for him. He basically took off his Artful Dodger persona and was quite direct,” says Ms Swonk. “He’s a budget hawk yet he understands that the alternative is too costly not to do more.”
China rejects Harvard study suggesting Covid-19 was circulating last summer Scientists used satellite images and online search data to indicate early arrival of virus in Wuhan CLIVE COOKSON
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hina has angrily rejected findings by scientists at Harvard University that coronavirus started circulating in the city of Wuhan at the end of last summer — months earlier than Chinese authorities have admitted. The researchers from Harvard and Boston universities came to that conclusion after analysing satellite images of hospital car parks in Wuhan, the centre of the coronavirus outbreak, and queries on China’s Baidu search engine about disease symptoms such as a cough and diarrhoea. “We observe an upward trend in hospital traffic and search volume beginning in late summer and early fall 2019,” the scientists wrote in a paper released online
A woman has her temperature checked in Wuhan, China, in January © Getty Images
but not peer-reviewed. Hua Chunying, a Chinese foreign ministry spokeswoman, dismissed the findings when she was asked about them at a daily press briefing on Tuesday. “To derive these conclusions from phenomena such as road vehicle traffic . . . is extremely preposterous,” she added. www.businessday.ng
The Harvard scientists extracted data for Wuhan hospital parking volume between January 2018 and April 2020 and found a steep increase in traffic that began in August 2019 and peaked in December. Searches for cough and diarrhoea from Baidu users in Wuhan rose steeply over the same period.
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“This finding lines up with the recent recognition that gastrointestinal symptoms are a unique feature of Covid-19 disease and may be the chief complaint of a significant proportion of presenting patients,” the researchers said. The conventional scientific view is that the virus originated in bats and moved from a still unidentified intermediate animal host into humans in Wuhan in November or early December, possibly via the city’s live animal market. This is supported by genetic analysis of the virus, which suggests that there would have been more mutations by the time the disease was recognised later in December if it had already been circulating for three or four months. However, there have been @Businessdayng
unconfirmed reports of Covid-19 cases outside China at the end of 2019. The Harvard team said its findings “corroborate the hypothesis that the virus emerged naturally in southern China and was potentially already circulating at the time of the Wuhan cluster”. Commenting on the study, Paul Digard, professor of virology at the University of Edinburgh, said: “Using search engine data and satellite imagery of hospital traffic to detect disease outbreaks is an interesting idea with some validity. However, it is important to remember that the data are only correlative and as the authors admit cannot identify the cause of the uptick. “It would have been interesting (and possibly much more convincing) to have seen control analyses of other Chinese cities outside of the Hubei region.”
Wednesday 10 June 2020
BUSINESS DAY
39
COMPANIES & MARKETS
How Vitol was blindsided by the oil price plunge First-quarter profits at world’s largest independent oil trader drop 70 per cent DAVID SHEPPARD AND NEIL HUME
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itol chief executive Russell Hardy was in a buoyant mood in February. Oil prices had slumped as the coronavirus outbreak hammered fuel demand in China, but crude had started to recover as the disease appeared to be under control. The London-headquartered company, which is the world’s largest independent oil trader, was coming off a near-record year in 2019 when it posted net income of $2.2bn, according to bankers who have seen the privately held company’s results. “The expectation of the market today is it’s not going to get significantly worse than what we’ve seen,” Mr Hardy, 54, told Bloomberg TV on February 21. What happened next is well documented: outbreaks started to spread in Europe and by the middle of March countries around the world were locking down to ward off the pandemic. Global oil demand would fall by as much as a third, sending prices plummeting. Vitol has a reputation for being one of the best-run trading houses, making money whether oil prices go up or down. But its fate shows how even the shrewdest companies were blindsided by the Covid-19 crisis. According to interviews with multiple traders close to Vitol employees, the company endured an unusually severe test and was forced to reorient its business. Vitol’s net income plunged 70 per cent in the first quarter to $180m, according to figures seen by the Financial Times — a
Russell Hardy, chief executive, has seen Vitol under pressure during the pandemic © Reuters
far cry from the $600m the company made in the same period a year earlier. The company declined to comment. Vitol trades between 7m and 8m barrels a day of oil and refined fuels, the equivalent of the combined consumption of the UK, Germany, France, Italy and Spain. In addition to its core physical business, the company also takes on speculative financial positions. Yaoyao Liu, a Cambridge graduate known as a derivatives whizzkid in the tight-knit oil trading community, is said by three rivals to have established a position betting on a recovery in oil. The Vitol partner is said to have believed that China’s experience showed that governments could quickly get the virus under control and oil demand — and prices —
would then rebound. The bet went sour. First, a large outbreak in northern Italy spooked investors. Then Russia and Saudi Arabia fell out over how the Opec+ group should respond to the rising threat to demand. That led to a fierce price war that saw Riyadh increase supply and offer crude at huge discounts. Crude plunged from about $58 a barrel in late February to $25 by mid-March, leaving Mr Liu’s positions in the red. Bankers briefed on Vitol’s business say the company had started the year holding a relatively large amount of oil as inventory, in anticipation of strong demand in 2020. While Vitol routinely hedges its physical positions, violent swings can make these trades imperfect. The exact hit Vitol took is un-
clear. An email from a headhunter went to a rival trading house claiming that Vitol had suffered a loss as large as $1.6bn — a number that rapidly spread through the industry. Vitol demanded a retraction and got one. People familiar with the matter say the alleged loss was heavily exaggerated. But the fact the rumour was taken seriously shows how fraught a time it was. Vitol held a series of meetings with its financiers and counterparties, including banks and oil producers. The move to reassure partners was seen as notable by those involved in the meetings given Vitol’s size — it was estimated by analysts to be worth about $20bn in 2017 — and its record of profitability. As demand plummeted, the company was forced to rearrange
shipments to buyers in Asia that wished to delay taking fuel. Shipping rates also soared as Saudi Arabia tried to snap up almost every available tanker as part of its price war. The biggest fear within the company was buyers reneging on their contracts entirely, though ultimately few did. At the depths of the crisis Vitol started looking for opportunities. It added to its vast global network of onshore storage, renting more space and snapping up cheap barrels for sale later, once prices recovered. In Iraqi Kurdistan, the company was getting oil for low single-digits under its cashfor-crude loans with the semiautonomous state. By late April, oil prices were at their lowest level in 20 years. Vitol is said by three rivals to have done well in the week US oil prices fell into negative territory as the market looked at the risk of running out of storage. After Saudi Arabia and Russia called a truce in their price war, Vitol snapped up more vessels for storing oil at sea — a traditional money-spinner for trading houses when markets are weak. Vitol then called the bottom of the market, according to rivals, calculating correctly that US producers would be forced to curtail supply just as demand from motorists and industry started to pick up. Oil prices have since rallied to about $40 a barrel. Some company insiders say it could even turn out to be a bumper year, given that traders typically prosper when oil markets are oversupplied. “The mist is becoming a little clearer,” Mr Hardy told Reuters early last month. “It’s a bit easier to see the future.”
Retail investors bet on bankrupt US companies rising again Shares in Hertz surge more than 800% since car hire group filed for Chapter 11 RICHARD HENDERSON
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etail investors in the US are piling into shares of bankrupt companies, pouring money into bets that could wipe out their holdings in the latest example of the speculative wave sweeping across the US stock market. Shares in Hertz, the car hire group, and JC Penney, the US retailer, doubled in value on Monday despite both companies wading through bankruptcy proceedings that could end with stocks falling to zero. Many professional fund managers and analysts have been left stumped but a growing army of have-a-go retail traders is willing to wager that last-minute turnrounds for the companies could deliver gains on deeply depressed stock prices. Users of Robinhood, the USbased stock trading app, have bought more shares in Hertz over
Shares in Hertz, the car hire group, doubled in value on Monday © REUTERS
the past three days than in any other listed US company, doubling bets in a week, according to data tracking holdings on the platform. “When the retail investor starts to view the market as a one-way bet it’s usually an alarm bell and that does seem to be happening,” said Paul Markham, global equiwww.businessday.ng
ties portfolio manager for Newton Investment Management. Hertz filed for Chapter 11 bankruptcy protection in May, sending its shares down 80 per cent. But since then the shares have gained more than 800 per cent as retail investors shrug off news that prompted professional fund
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managers to sell. The company has $18bn of debt, and faces the prospect of selling its fleet of used cars into a shaky market. The run-up in Hertz’s stock price doesn’t “make any sense whatsoever”, said Glenn Reynolds, chief executive of CreditSights, on a call with investors on Monday, alluding to the role of retail investors. “But as long as everyone out there is having fun trading, we won’t begrudge them that.” Shares in JC Penney are up 472 per cent from the low they struck last month when the company filed for bankruptcy, buckling under the weight of its debt during coronavirus shutdowns that have kept millions of Americans indoors. A similar trend has played out in the energy sector. Shares in Whiting Petroleum leapt 150 per cent on Monday, sending the stock more than 1,000 per cent above its low in April, the month it filed for bankruptcy. Chesapeake Energy, which has faced speculation it will @Businessdayng
soon file for bankruptcy, jumped 180 per cent on Monday despite the gathering storm clouds. Investors may be holding out hope that the US government will take action to save certain companies from collapse, akin to the bailouts of the auto sector during the global financial crisis, said Mr Markham. The buying reflects “retail investors betting that there will be a big enough recovery for these companies to come out of Chapter 11 or for additional government intervention to save some of [them]”, he added. Some of the troubled stocks, including Hertz, were much weaker in early trading on Tuesday. Peter Boockvar, chief investment officer of Bleakley Advisory Group, wrote in a note that rapid rises were a clear sign of “froth” in parts of the market. “It’s great that Vegas is open again but who needs it when you have the stock market instead?”
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BUSINESS DAY Wednesday 10 June 2020 www.businessday.ng
Can New York avoid a coronavirus exodus?
As it prepares to reopen, the city will have to reinvent itself to keep talented people Joshua Chaffin in New York
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ust over a year ago, before the modern plague descended, Manhattan’s Hudson Yards threw a launch party that was Versailles-like in its overabundance of champagne, oysters, top chefs, beautiful people and other trappings of a great city. But on a recent afternoon, Hudson Yards was a ghost town. Its 1m-square-foot shopping mall was shuttered and its anchor tenant, Neiman Marcus, would soon declare bankruptcy. The Vessel public art sculpture — likened by one reviewer to a giant doner kebab, and usually teeming with tourists — was empty but for a security guard patrolling its base. The only foot traffic was a steady stream of soldiers, who had been treating Covid-19 patients at the hastily-erected field hospital at the nearby Javits convention centre. They were lined up, at six-foot intervals, to collect free meals at a Hudson Yards storefront that had been converted into a soup kitchen. Alongside them were delivery drivers, postal workers, office cleaners and others manning the frontlines in New York City’s struggle against coronavirus. The tableau is a reminder of how drastically the virus has transformed New York, which has potentially suffered more deaths than any other city in the world, in just a matter of weeks. As New Yorkers inch towards a reopening, probably next month, according to Mayor Bill de Blasio, they are contemplating with trepidation how their city will emerge from the pandemic — and what sort of future it will find on the other side. More than other large cities, New York exemplifies the urban characteristics that the virus has turned into vulnerabilities — population density, sky-high cost of living, a reliance on retail, culture and tourism and a dependence on crowded public transport. The modern history of New York City is one of periodic disasters shadowed by the fear of exodus — to other cities that are cheaper, safer, more convenient. There was the 1970s fiscal crisis and the decay that followed; the 1987 stock market crash; the September 11 2001 terrorist attacks; and the 2008 financial crisis — not to mention various hurricanes, floods and power failures. Yet in each case the doomsayers were proved wrong. The city bounced back stronger than before, and in some ways, reinvented itself. September 11, for example, gave rise to a more vibrant downtown and
set in motion Hudson Yards, a $25bn development that is North America’s largest. After 2008, the world’s financial capital morphed into a technology hub to rival Silicon Valley and strengthened its magnetic pull on a new generation of talent. “No one is working in New York because it’s cheaper or easier. Nobody. It’s because the talent is here,” says Mary Ann Tighe, chief executive for the tristate area at CBRE, the real estate services group. Carl Weisbrod, a veteran of city government who led the revival of Times Square in the late 1980s under Ed Koch and was recently appointed by Mr de Blasio to a new task force to guide the city’s recovery, acknowledges that the next 18 months will be difficult. But he concludes that “as long as New York holds on to its talent, I have no doubt whatsoever that, as an economic matter, it will recover”. Other civic leaders tend to echo that reflexive faith in New York’s future. Some even talk about a unique opportunity to reimagine the city — to clear away nettlesome business regulation built up over generations, attract new industries, or correct the social inequities exposed by the crisis. As Mr de Blasio said recently: “If ever there was a moment, a
breakpoint moment, in the city’s history, this is it. It’s time to look anew at everything we do and see what works, what doesn’t work.” No quick fix Before New York can set about reinventing itself there is uncertainty, even among its most ardent supporters, as to how the city will bridge the immediate catastrophe. Many are plagued by a troubling sense that this time is different. “This is much more complicated,” says Carol Kellermann, who ran the charitable fund created after the September 11 terror attack and also led the Citizens Budget Commission advisory group. “I think it’s going to have much deeper, longer-lasting impacts.” September 11 was brutal and devastating but the world rallied around the city and its economy resumed within days. After 2008, New York City ended up benefiting from policies that pumped vast sums of liquidity into the financial system. With coronavirus, there is no quick fix in sight. The city’s morgues are overflowing after more than 21,000 fatalities — roughly eight times the city’s toll from the 9/11 attacks — and some are forecasting unemployment will rise to 20 per cent in
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More than other large cities, New York exemplifies the urban characteristics that the virus has turned into vulnerabilities — population density, skyhigh cost of living, a reliance on retail, culture and tourism and a dependence on crowded public transport
June. Yet the city is arousing less sympathy from the nation than partisan resentment. New York feels alone. Worst of all, the very thing that distinguishes New York City and accounts for its unique alchemy — its density — is what makes it so vulnerable to the pandemic. “Other than better treatments and a vaccine, I don’t know that there’s any government policy that can make people feel safer,” Ms Kellermann says. Those with the means have left, quarantining in places such as the Hamptons, Palm Beach and Aspen. How many will have gone for good, she wonders, if the city’s cultural life is effectively closed and therefore unable to offset its high taxes and other indignities. “There’s definitely going to be urban flight,” says Winston Fisher, a third-generation developer, who voiced an ever-present fear among New Yorkers of a certain vintage about a reversion to the bad old days. “I grew up in the city. I’ve been robbed at gunpoint. I remember what 59th and 6th used to look like, Times Square,” he recalls. “New York City can be bad. Don’t forget that.” Decontamination effort To prevent that, there is an emerging consensus that authorities must create a sense of safety, just as they managed to do after September 11. Otherwise, it will be impossible to restore business — let alone bring back tourists. It is a public health challenge but also a psychological one. In the absence of a vaccine, the governor of New York state, Andrew Cuomo, has turned to former mayor Michael Bloomberg to spearhead a testing and tracing system. The hope is that as the city begins to reopen, the testers will be able to quickly find new infections and seal them off before they become outbreaks. As Mr Cuomo readily acknowledges,
it is a huge undertaking. Meanwhile, developers are rushing to refit office buildings that had been designed to accommodate a taste for everincreasing density. Elevators are being reprogrammed to respond to smartphone apps so there is no need for passengers to touch a button. Internal doors are being removed for the same purpose. A critical focus in this decontamination is the world’s biggest — and possibly most blighted — underground system. The Metropolitan Transportation Authority has begun a regime that would have been unimaginable just a few months ago: to scrub and disinfect each subway car and station every single day. “New York City and the MTA are fundamentally built on density. That density creates intellectual collaboration and culture and business and Wall Street and finance and design,” says Pat Foye, the MTA chairman, explaining the subway’s essential role as the circulatory system for a global metropolis. Mr Foye predicts that new cleaning technologies “could be real game-changers in terms of public confidence in the system”. But cleanliness will come at a cost: he estimates “hundreds of millions of dollars” in additional expense at a time when ridership and fare revenue are down by more than 90 per cent. The MTA has received $3.9bn in emergency funding from the federal government and is already pleading for another $3.9bn infusion just to make it through this year. Reality of cuts That is but one example of the fiscal challenges now lurking at every turn. Mr de Blasio, whose administration has added 30,000 workers to the city’s payroll since he took office in 2014, has estimated the budget shortfall caused by the virus shutdown at $7.4bn. Others have put it closer to $10bn. Whatever the figure, Seth Pinsky, who led economic development during the Bloomberg administration, worries that it may pose the most direct threat to a virtuous circle in which talent and companies have chased each other to the city. “The key to New York’s success over the last 20-plus years has been the first-class workforce it has been able to attract,” says Mr Pinsky, who recently took over as head of 92nd Street Y, one of the city’s leading cultural institutions. “What I worry about is that as government starts to react to the fiscal situation we are going to be forced to make cuts to basic services that are going to be so devastating that they will undermine the quality of life in the city.”
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