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news you can trust I **MONDAY 10 SEPTEMBER 2018 I vol. 15, no 136 I N300

Sell

Foreign Exchange

$-N 357.00 360.50 Market Spot ($/N) £-N 460.00 468.00 I&E FX Window 362.78 €-N 410.00 418.00 CBN Official Rate 306.20

3M 6M 0.78 0.43 12.54 13.31

Currency Futures ($/N)

fgn bonds

Treasury Bills 0.00

10 Y 0.23

20 Y 0.00

15.08

15.33

15.26

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 363.05

0.00 363.50

0.00 364.40

Outrage after Attorney General calls MTN $8bn refund a ‘penalty’ Nigeria sees net Seeks payment into GTB UK dollar account Bank stocks lose N256bn in 7 trading days FX outflows of

$900m in August

LOLADE AKINMURELE & EMEKA UCHEAGA

letter from the Attorney General’s office regarding the $8.1 billion dividends repatriated by MTN, has left business leaders scratching their heads, after the AG referred to the sum as a penalty. The Sept 3rd letter personally signed by the Attorney-General Continues on page 35

President Muhammadu Buhari (r), with Yafu Qiu, chairman of Ruyi Group, a leading Chinese Textile and Garments Group. Qiu reiterated Ruyi’s commitment to invest $2 billion in Nigeria through their Special Economic Zones during his meeting with Mr. President in the recently concluded Forum on ChinaAfrica Cooperation (FOCAC).

Inside The Week Ahead: Political jockeying intensifies, NSE plays P. 2 dead, bond investors see value

When the Germans P. 22 came to town

Five insurers make NAICOM Tier one list ... as Commission offers palliative for higher retention Modestus Anaesoronye

nsurance regulator, the National Insurance Commission (NAICOM) after final assessment of the underwriting companies under

the new Tier-Based Minimum Solvency Capital (TMBC) may have settled for five insurance companies as Tier I levels. BusinessDay investigations

show that the regulator has settled for one composite insurer, three general business insurers and one life insurer. According to the Commis-

sion, companies have been given October – December 31, 2018 to procure and have in place adequate reinsurance treaty arrangement for the forthcoming

Malami’s tax letters raise questions on corporate ‘extortion’ ...Page 37

Continues on page 35

... largest this year on monthly basis ... FX reserves fall to $45.46bn HOPE MOSES-ASHIKE, Oghogho Edosomwan & Cynthia Ikwuetoghu

igeria saw investors increasingly accelerate the pace of movement of funds out of the country in the month August, according to senior Treasury officials, familiar with the matter. Continues on page 35

Nigeria is 5th least peaceful country in SSA – GPI …violence cost economy $121.1bn in 2017 …16th most violent country in the world Endurance Okafor

he security challenges facing Nigeria has made the country one of the least peaceful in the world, the 2017 figures from Global Peace Index (GPI) published recently has shown. As compiled from the twelfth Continues on page 37

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Monday 10 September 2018

The Week Ahead: Political jockeying intensifies, NSE plays dead, bond investors see value emeka ucheaga Politics spirants continue to pick nomination and expression of interest forms Politicians intending to run for public office will continue to pick up their nomination and expression of interest forms during the week. More drama may unfold as shock declarations of interest occur during the week. Many incumbents may be feeling quite uneasy as the competition for their seats continue to increase on a weekly basis. Aspirants to visit elder statesmen to secure political backing Party aspirants may spend most of their week journeying from one state to the other seeking the support of elder statesmen for their political ambitions. The meetings will provide more opportunity for photo ops than concrete support. Nevertheless, aspirants will want to be seen by the public as taking their ambitions seriously and covering necessary grounds to secure the backing of political influencers in the country. More APC states to adopt direct primaries method for selecting party candidates This week will certainly see direct primaries method for selecting party candidates dominate political discussions as more states opt to adopt direct primary elections for aspirants to secure party nominations. Incumbent state governments will most probably try to push against the direct primaries election voting but it seems their interests may take a back seat over party interest this time around. Economy and Markets Inflation may finally enter 10

percent territory We expect to see another decline in the rate of inflation in the country although we don’t expect headline inflation to drop by more than 20 basis points. Core inflation will probably flatten and most of the drop in the inflation rate will be attributed to more declines in food inflation. At least if not anything the week may end with good news from National Bureau of Statistics when the inflation report is published on Friday. Sanction pandemonium may send NSE index lower towards 33,000 points Analysts expect the market selloffs to continue well into the new week as there has been more confusion than resolution in the MTN saga which has caused bank stocks to drop precipitously since last week. The stock market index shaved almost 1,000 points last week as it was only 37.4 points shy from hitting our forecast of 34,000 points. This week is unlikely be any different; another red week doesn’t seem naively pessimistic at all. We see the market tanking another 3 percent to around 33,000 points during the week. Foreign investors could return to scoop higher treasury yield The foreign capital outflows in the country could reverse during the week as investors higher yields in treasury bills are bound to keep fixed income investors distracted from rising country risk. Investors are bound to pick up the gilt security feeling more confident that they have secured sufficient risk premium for the time been. Local investors may also be eyeing the money market space as equity market performance continues to worsen almost on a daily basis.

E-payment transaction could put pressure on commodity prices BUNMI BAILEY

he Improvement in the value and volume of E- payment transaction systems may lead to higher commodity prices in the coming months, according to Financial Derivatives Company (FDC) financial monthly report, a firm that offers quality quantitative and qualitative research to provide insight for investment decisions. “The improvement in E-payments as seen between June and July will lead to an increased in the velocity of money in circulation or money in supply which would eventually lead to increase in commodity prices.” The report arrived at this conclusion after analysing the value and volume of transaction made in June and July 2018. The E-payments can be done through cheques, point of sales (POS), National Electronic Funds Transfer (NEFT) and instant payment (NIP). An electronic payment (e-payment) can be simply defined as paying for goods or services on the internet. According to the report there were mixed movements in the Epayment transactions. The volume of transaction of cheques, declined marginally by 2.3 percent to 715,400 in July from 732,100 in June but the

value rose by 4 percent to N413.5 billion in July from N397.6 billion in June. The volume and value of transactions for POS both rose for the months under review. The volume rose by 3.3 percent to 24.1 million in July from 23.3 million in June and the value increased by 1.8 percent to N185.0 billion in July from N181.1 billion in June. NIP increased by 5.2 percent to 61 million in July from 57. 9 million in June with its value increasing by 0.004 percent to N 6.4trillion in July from N6.4 trillion in the previous month . Analysts supported the forecast that the ease of payment has led to an improvement in the payment system and can put pressure on the commodity prices. Ayodeji Ebo, MD, Afrinvest Securities Limited said, “The improvement in payment system can pressure commodity prices due to the ease of payment. The advert of retail outlets that integrate with online payment solutions for the purchase of goods and services can also boost demand due to the ease of purchase.” “However, in the long run, this could bolster production and normalize prices,” Ebo added. Also from the report, government spending is expected to pick up in the coming months due to pre-election activities which would further put pressure on prices.

L-R: Oluyemi Rufia, head, SME advisory, FCMB; Tosin Faniro-Dada, head, Lagos Innovates; Olu Akanmu, executive director, retail banking, FCMB, and Frank Aigbogun, publisher/CEO, BusinessDay, at the official launch of the Bridge season 2 organised by BusinessDay in Lagos. PicbyPiusOkeosisi

Lagos, Rivers record highest number of newly registered voters W Jonathan Aderoju

ith the 2019 general elections only a few months away, various permutations have been stirred up within political camps. The major and recent happenings in the country have been between the two main political parties, All Progressive Congress (APC) and People’s Democratic Party (PDP) to boost support across board ahead 2019. According to a report released by the independent national electoral commission (INEC) as at 26th August 2018, about 16.8 million Nigerians registered newly with about 1.1 million people placing requests for new voters’

card due to wear and tear. Lagos and Rivers states stand out when it comes to the number of newly registered voters. Presently, over 725,437 and 705,921 voters are newly registered in Lagos and Rivers states respectively. Abia and Ogun states came closer with 547,606 and 518,730 voters respectively. This was followed by Enugu and Cross River states, with 516,155 and 507,976 respectively. Out of the 16.8 million newly registered voters, over 3.9 million voters were captured under the 2017 post Automated Fingerprint Identification System (AFIS) while the remainder of 9.7 million is the cumulative Continuous Voters Registration (CVR) for 2018. In terms of geographical distri-

bution, the South-South seems to be taking more interest in the upcoming election. Over 2.65 million new voters have been registered so far in the region, the highest in the country. South West and South East followed closely with 2.33 million and 2.28 million registered voters. Also the INEC data reveals that roughly 7.4 million new females voters registered compared to 6.2 million males who registered. This INEC reports shows that eight states contributed over half of the total uncollected PVCs with five of these states being in the South West and interestingly APC strongholds Lagos, Ogun, Osun, Ondo and Oyo states while the

Continues on page 37

Multiplicity of tax collectors a big issue, stakeholders tell FIRS Sobechukwu Eze & David Ibidapo

ressure from different bodies besides the Federal Inland Revenue Services (FIRS) on tax payers, demanding Value Added Tax (VAT) and stamp duties is alarming business stakeholders, who have expressed concerns and confusion about the multiplicity of VAT and Stamp duties collector bodies. During a stakeholders meeting with FIRS management on Thursday at Oriental Hotel, Lagos in which BusinessDay was in attendance, there was much debate on the authority of some of these bodies coming to clients offices with Economic and Financial Crime Commission (EFCC) demanding for VAT and stamp duties to be paid into specified accounts which isn’t FIRS’. A stakeholder who spoke to BusinessDay but did not want to be disclosed said that “this new development causes confusion as firms are no longer sure about who has the right authority to collect these taxes to avoid paying to the wrong agency.” It was gathered from the meeting that some agencies such as NIPOST, Ministry of Justice among others accompanied by EFCC go to offices claiming taxes are to be paid into

stipulated account that is not FIRS’s and threatening closure if not done. A representative from KPMG explained that “taxpayers are confused and traumatized at the moment, the last reform of the tax laws was done 11 years ago and has become out-dated to handle some of the prevailing issues there is a need to instigate annual tax reforms as this will boost efficiency and effectiveness of tax administration.” In response to this, Tunde Fowler, Executive Chairman of FIRS apologized saying that “until the law that permits other bodies to collect taxes is reviewed, VAT and Stamp duties paid through these bodies are all remitted to the same federation account.” He stated also that taxpayers being approach by other bodies should inform the FIRS to ensure awareness and clarification. Jokingly, the chairman stated that “i will personally escort any taxpayer arrested by the EFCC on this account.” A representative from PWC at the meeting said that “it is important to know that if we have laws, they are going to be reinforced and he is glad to see that the FIRS was looking into some provision of the laws which would enable them have the opportunity to identify some laws which are no longer fit for purpose to be worked on.” The PWC representative pleaded

that “the FIRS and the State authorities should try as much as possible to stick to due process in whatever they do. He made an instance of when people report accounts frozen after 7 days warning which is not meant to be, according to the law.” In a speech presented by Fowler, he reiterated the commitment of FIRS to improving tax revenue generation and tax administration in the country. Speaking with BusinessDay analysts at stakeholders meeting with FIRS, Fowler said “I still see us meeting up with the tax to GDP ratio projection of 15 percent by the end of the year.” However, some stakeholders were of the opinion that FIRS should focus more on tax to sector GDP to capture individual sectors contributions to tax revenue. Moses Hammed, a research analyst at Investment One Financial Limited said that “I think our Tax to GDP ratio of about 6 percent is one of the lowest in the world.” “However, with the introduction of VAIDS in July 2017, we should see the nation’s tax to GDP ratio improve with FIRS reporting significant improvement of 42% y/y in revenue collection at the end of H1 2018.” According to FIRS, the country’s tax base has grown from 13 million in 2015 to 19.3 million in 2018.

Monday 10 September 2018

BUSINESS DAY

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Monday 10 September 2018

Forex demand pressure pushes down external reserves to $45.46bn HOPE MOSES-ASHIKE

…As CBN boosts FX market with $303m, CNY 46.58m

igeria’s external reserves have declined to $45.46 billion as at September 6, 2018 from the recent peak of $47.86 billion as at last May 10, 2018. The continued drop in external reserves is a reflection of persistent demand for foreign exchange from foreign investors for capital repatriation. Central Bank of Nigeria (CBN) last weekend

injected $303.91 million into the interbank retail Secondary Market Intervention Sales. This is in addition to the sale of CNY 46.58 million in the spot and short-tenored forwards. The figures obtained from the CBN last Friday showed that the US dollardenominated interventions were only for concerns in the agricultural and raw materials sectors. Meanwhile, naira depreciated against the U.S dollar

Many feared dead after Boko Haram attack in Borno

any people are feared dead after an Islamist militant attack on the northeast Nigerian town of Gudumbali, two residents and a vigilante said last weekend. The Nigerian government in June ordered thousands of people who fled the decadelong war with Boko Haram to return to Gudumbali, one of the most dangerous areas of northeast Nigeria. Officials cut off food and other aid to those who refused. There is mounting pressure to show progress in the war against Islamist groups ahead of a presidential election, according to sources familiar with the situation. The militants struck Gudumbali in the Guzamala region of Borno state on Friday, wearing military uniforms and firing upon Nigerian soldiers and residents, sending both the troops and the civilians fleeing, the witnesses said. The Nigerian military did not immediately respond to request for comment. “Many civilians lost their lives, we don’t have casualty figures for now,” said Mohammed, one of the residents, whose first name is being used because the military threatens reprisals against those who speak to media. “Thousands of people fled their homes.” The vigilante, Baba Ali Musa, said the militants came on motorbikes and in pick-up trucks mounted with anti-aircraft guns, while others fired rocket-propelled grenades on the town. “They came towards the town shooting sporadically,” he said. “They were saying if you know you’re an innocent person just leave the town, our target is not you, or if you wish to stay with us, it’s no matter, you can stay with us.” Nigeria’s northeast is home to two Islamist insurgencies: Boko Haram and its breakaway group, Islamic State in West Africa (ISWA), now considered by security experts the stronger of the two.

across segments of foreign exchange market. The local currency weakened marginally by N0.05k to close at N362.78k per dollar on Friday as against N362.73k traded the previous day at the investors and exporters forex window, data from FMDQ indicated. Naira also lost its value marginally at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) by 0.07 percent as it traded at N362.62k per dollar on Friday from N362.37k/$

on Thursday. It traded stable at the CBN’s official window at N306.20k since Tuesday. Isaac Okorafor, director, corporate communications at the CBN, said that the exercise which was in tune with the CBN guidelines were for the payment of Renminbi denominated Letters of Credit for agriculture as well as raw materials. He added that the sales in the Chinese Yuan were through a combination

of spot and short-tenored forwards, arising from bids received from authorized dealers. While noting that availability of Renminbi was sure to ease pressure on the Nigerian foreign exchange market, Okorafor attributed the relative stability in the foreign exchange market to the intervention of the CBN as well as the sustained increase in crude oil prices in the international market. He further assured

that the CBN would remain committed to ensuring that all the sectors continue to enjoy access to the needed foreign exchange by Nigerians. It will be recalled that the Bank on Tuesday, 4th September, 2018 intervened to the tune of $210 million to cater for requests in the wholesale segment of the forex market. Meanwhile, $1 exchanged for N361 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY 1 exchanged for N53.35.

Monday 10 September 2018

BUSINESS DAY

Monday 10 September 2018

BUSINESS DAY

Monday 10 September 2018

BUSINESS DAY

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COMMENT

Monday 10 September 2018

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Bending the arc and heart of history BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

s confirmation that history has its own unique immunity system, those who are determined to bend its arc and heart have a monumental task to contend with. Here are some snippets from Public Broadcasting Service (PBS): i. Front page headline: “The Mail on Sunday” newspaper (July 8, 2018) Shareholders protest against auditors on rise as kpmg is singled out by watchdog “Shareholder protest votes against company auditors have taken off since the financial crisis.” Data from corporate governance agency Minerva Analytics showed that there had been 80 occasions in the past five years when a protest vote of more than 20 per cent was registered for UK companies. That happened only nine times in the five years leading up to 2008. Auditors are facing increasing scrutiny amid criticism from audit regulator the Financial Reporting Council (FRC) that audits are getting worse. KPMG came in for special criticism where the FRC said there had been ‘an unacceptable deterioration in quality’. That has prompted investment advisers to warn companies of the risk of auUGOCHUKWU JOSEPH AMASIKE Amasike is a Lagos based lawyer. He wrote via email: ugoamasike@ yahoo.com

n line with the calls for the devolution of power to the states, there have also been calls for a review of the legal regime that governs the Nigerian Electricity Supply Industry, with a view to engendering the full participation of states in the provision of electricity to the Nigerian people. The Nigerian Electricity Supply Industry consists of a number of stakeholders, and prominent amongst them is the Transmission Company of Nigeria (TCN), which is responsible for the transmission of electricity across an inter-state transmission-network, otherwise known as the “national grid.” The TCN since its establishment has made concerted efforts to expand the national grid, however, in spite of its best efforts, the transmission of electricity and the entire NESI has remained fraught with challenges, ranging from liquidity-challenges, to obsolete transmission and distribution

tomatically reappointing auditors. Adviser ISS told shareholders at Premier Foods, which is audited by KPMG, last week: ‘Given the FRC’s comments, shareholders may wish to seek assurances from the company as to how it will be responding to the FRC’s findings. KPMG declined to comment but has said it was ‘disappointed’ by the FRC findings and insisted it is “taking action to resolve this.” ii. Front page headline “Financial Times” newspaper (August 11-12, 2018) “I’m not strange. I’m extraordinary – 76-year-old Junichiro Koizumi, former Prime Minister of Japan” “When I was Prime Minister, I thought we needed nuclear reactors. Then in 2011, seven years ago, on March 11, we had the Tohoku earthquake, Tsunami and meltdown at the Fukushima reactors. I realized that I had been deceived. Nuclear supporters say it’s safe; it’s cheap; and it provides endless clean energy. It’s all lies. I promoted nuclear power as Prime Minister. I was wrong. “I know I have been called a weirdo, which I neither resent nor enjoy. In the eyes of politicians, maybe I seemed strange. But to regular people, aren’t politicians the weirdos? Just because I like films and kabuki (traditional Japanese theatre) and classical music as well as Elvis Presley, does that make me weird? I just like them. As for the English translation of the Japanese word, ‘henjin’ which translates literally as ‘strange person’, my take is: I’m not strange or eccentric. I’m extraordinary!!” iii. Heather Huhman “Don’t start with roaring flames – they need kindling, logs, access to

‘

As confirmation that history has its own unique immunity system, those who are determined to bend its arc and heart have a monumental task to contend with

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air and finally a spark.” iv. Front page headline: “The Times” newspaper (July 17, 2018) “Deloitte substituted after Arsenal row” The auditor of a magic circle law firm has resigned after the two businesses blamed each other in a row over negligent tax advice on the sale of a large stake in Arsenal FC. Linklaters, the law firm, and Deloitte are being sued for more than £11 million by Lady Nina BracewellSmith, a former Arsenal shareholder, over their advice on the sale of her 16 per cent stake in the north London football club. Lady Nina turned to the law and accountancy firms when she was approached by Stan Kroenke, the American sports billionaire and majority shareholder of Arsenal, to sell her stake in 2011. Last summer she filed a lawsuit at the High Court accusing both firms of professional negligence. She claimed that their advice was negligent as it resulted in the loan notes being sited in the UK instead of overseas, exposing her to capital

gains tax liabilities in the UK. She said that the error had resulted in losses of more than £10 million and had prompted her to move to Monaco to avoid further taxation at a cost of £1.25million. Linklaters and Deloitte have pointed the finger at each other for the tax advice in court documents. Linklaters said that it was not responsible for the commercial terms or the tax aspects of the deal and argued they were the responsibility of Deloitte and Lady Nina. Deloitte claimed that it “did not have any duty to check” where the loan notes were based and said that “Linklaters knew or should have known “as it had advised Lady Nina on the legal documentation in relation to the sale. A spokesman for Linklaters confirmed that Deloitte was no longer auditing the law firm and that Deloitte had stepped down due to a conflict of interest. Linklaters has since handed its audit contract to PWC. Last year Linklaters paid Deloitte almost £2 million for audit and non-audit services including tax advice. v. Front page headline: “Vanguard” newspaper (August 9, 2018) “Old boys decry admission racketeering at king’s college” “Vice Chancellor, Federal University, Oye, Ekiti, Professor Kayode Soremekun, former Principal, King’s College, Mr. Sylvester Onoja and other Old Boys of King’s College have lamented admission racketeering in the institution. “Speaking to mark the 19821988 set of KC Old Boys Association held on the school’s campus, many stakeholders decried that unlike decades ago when admission was strictly by merit, these days it’s no more the same.

“According to them, year in, year out, the school gets admission list from government, governors, senators and a host of other persons without following the admission due process. Soremekun, 67-71 set of KC who was one of the discussants at the 30th Anniversary symposium said: ‘Something terrible has happened to the admission system of King’s College. List from the government, lawmakers and other quarters flood the school for admission every year. It was not like that before; KC has to go back to the old system of admission that was strictly by merit.’ “Having identified some of the problems of KC, Soremekun urged other sets of the school to emulate the 82-88 set who put programme together to revamp the situation. “On his part, Onoja who was the principal of KC decades ago said in those days as the principal of KC, he dismissed in one day, during assembly, over 400 students who could not produce their admission letters. According to him, because of the strict standard of admission in those days, it took the space of about 34 years to admit a northerner to the school. Such northerners when they were admitted, he noted were always brilliant and exceptional academically. ‘It took the space of 34 years after the first northerner was admitted before another could pass KC admission,’ he said. “While contributing as a discussant on the theme: ‘The King’s College Conundrum: Where Do We Go From Here’ he further stressed that he does not subscribe to the expansion of the institution, adding that it would reduce its academic quality.” Send reactions to: comment@businessdayonline.com

Federalism and the case for the decentralization of electricity transmission infrastructure that conspire to keep Nigerians in darkness. As a result of these inefficiencies, Nigeria which has an available capacity of 8,000 megawatts (mw), only manages to transmit and distribute an average of 4,000mw. There are those who have suggested that the development of mini-grids is the solution to the myriad of problems confronting the NESI. However, as laudable as the mini-grid initiatives are, the deployment of mini-grids would still be insufficient to meet Nigeria’s anticipated demand, which the Federal Ministry of Power, Works and Housing puts at 19,100mw. Furthermore, doubts have been raised about the economic viability of minigrids in Nigeria and according to studies conducted by Nextier Power, a management consultancy agency, “minigrid developers would have to charge poor rural customers tariffs of about $0.55 - $1.00 per kilowatt (approximately N200N360 per Kilowatt), which is significantly higher than the N28 the Distribution Companies are

presently charging grid-connected customers.” The argument against the development of regional grids has been its capital-intensive nature and yes, it is true that the development of regional grids will be relatively expensive, but what is even truer is that regional grids will help solve our seemingly intractable power problem. It is also noteworthy that projects of this nature, with their strong economic and social impact, are bankable projects that lend themselves to Public Private Partnership (PPP) funding, and so interested state governments and their partners would not need to break the bank to develop them. It is noteworthy that the World Bank in its 2017 State of Electricity Access Report, China, via its regional grid-based electricity transmission system has succeeded in providing 900 million people with access to electricity. It is submitted that the fundamental problem of the NESI is its faulty business model, which is predicated on a flawed legal and regulatory regime that derives its validity from an equally defective and counter-productive political-

economic system, as embodied by the 1999 constitution and ancillary legislations. Thus, whilst appreciative of the government’s sincere efforts to force our overlycentralized electricity industry to work, it is submitted that the most pragmatic solution to the myriad of problems confronting the NESI is to effect the total liberalization of the Nigerian power sector, particularly the transmission segment, with a view to establishing regional transmission grids and engendering a truly liberalized and competitive electricity market. Thus, to achieve this goal, it is vital to amend the 1999 Constitution, which makes electricitytransmission the exclusive preserve of the federal government, and the EPSRA 2005, with a view to effecting the devolution of power to the states of the federation, for the purpose of engendering their full participation in the provision of electricity, and to permit them or private firms to build and maintain inter-state electricity transmission grids. The reality of the Nigerian situation is that economic activities are domiciled within the states and this has a

direct implication for the involvement of state governments in the provision of critical infrastructure that are incidental to the creation of the enabling environments for businesses to thrive. It is submitted that the deleterious centralization of its electricity industry has stunted our development, and as Nobel laureate, Professor Wole Soyinka recently noted, “centralization... has been the bane of the nation on any level you choose and nothing will answer the necessity of a harmonious relationship and development of its parts, other than a severe curtailment of the control of the centre over the functioning of its parts.” In conclusion it is submitted that if Nigeria is to achieve its goal of uninterrupted, constant and reliable power supply, then the just and equitable devolution of constitutional power and resources to the states and the concomitant decentralization of electricity transmission should be effected. Send reactions to: comment@businessdayonline.com

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Who turned our attorney general into a tax collector?

ANTHONY OSAE-BROWN Osae-Brown is the editor of BusinessDay @osaeB

t is interesting the news coming from the business community. Letters are going out, not from the Federal Inland Revenue Service (FIRS), but from the office of the Attorney General of the Federation and Minister of Justice, Abubakar Malami demanding for tax payments. It is no news that MTN Nigeria is one of the entities that has received such a letter. Even though, there are strong indications that other companies have received similar letters, they have so far not gone public with the information. But the MTN Group, in a filing on the Johannesburg Stock Exchange (JSE), where the company is listed, and is mandatorily required to make any disclosure that could have an impact on its profitability and viability, explained the company’s encounter so far with the office of the Attorney General (AG) over alleged tax obligations that the company was yet to pay. In the statement released on the JSE, MTN disclosed that

SURAJ OYEWALE, ACA Oyewale, a chartered accountant and public policy analyst, has over a decade experience in the Nigerian oil and gas industry

he news, early this week, that President Muhammadu Buhari has refused to assent to the Petroleum Industry Governance Bill (PIGB) and has returned it to the Senate, struck me like a thunderbolt, not because it shattered my professional forecast that the bill will come into force before the end of this administration, but because it has set back the petroleum industry reform by at least 2 years. Some industry watchers had ruled out the possibility of the president assenting to that bill based on his body language since the bill was sent to him few months back but I found myself always defending him on the ground that signing such bill requires thorough review and the president has not exactly been around in the last few months. At every

“The Nigerian AG has in recent months been engaging various corporates in Nigeria on an assessment of tax compliance relating to, inter alia, import duties, VAT and withholding taxes on foreign imports/payments. In this process his office made a high-level calculation that MTN Nigeria should have paid approximately USD2,0 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years and he requested MTN Nigeria to do a self- assessment of the taxes in this regard that have been actually paid.” “In August 2018 MTN submitted comprehensive documentation to the office of the AG. MTN Nigeria has also completed an initial assessment of the full period which indicates that total payments made to the tax authorities in regard to these foreign imports and payments in aggregate are USD700 million. There are valid reasons for the differences between the actual payments and the AG high-level assessment.” “We were notified by the office of the AG last week that they have not accepted the documentation presented and they have given notice of an intention to recover the USD2.0bn from MTN Nigeria. Based on the detailed review performed MTN Nigeria believes it has fully settled all amounts owed under the taxes in question.” Th e re a re s e ve ra l i ssu e s raised by the MTN statement released to the JSE. The first is that the office of the AG

‘ It clearly smells of

arbitrariness. There is nowhere in the tax administration process in the country that the office of the AG is given a role either at the state level or at the federal level in tax administration

’

served the tax default notification on the MTN. This notice did not emanate from the FIRS which is statutorily required to collect corporate income taxes. The notice, from all indications, was not based on any calculation done by the FIRS but by the Office of the AG apparently through consultants it employed for a fee on the amount to be recovered, which creates a perverse incentive for those doing such tax audit. It is also important to note that MTN sent in a response to the findings of the audit but the company’s response was rejected by the AG’s office. It is not clear if the AG’s office offered any reason for the rejection of MTN’s response. In all these exchange of communication between the AG’s office and MTN, there is

no where it is mentioned that the FIRS or even the Customs, or the Ministry of Finance were brought in to authenticate the figures arrived at by the AG’s office. Instead, it is now understood that the AG has served a payment demand for US$2 billion despite the fact the company clearly disputes how the AG arrived at its figures. One of the characteristics of a good tax administration system is the fact that it must be certain and not arbitrary. It is not clear where the AG’s office is deriving its powers to calculate and impose tax on companies in the country. It clearly smells of arbitrariness. There is nowhere in the tax administration process in the country that the office of the AG is given a role either at the state level or at the federal level in tax administration. If a tax obligation needs to be enforced, the concerned institutions may seek legal advice from the office of the AG but that is not even compulsory since tax authorities at both the state and federal level actually have legal advisers appointed into their boards. It is not clear when the position of the Chief law officer of the federation transformed into the position of the Chief Tax auditor of the Federation. There are reasons institutions exist. If the AG is suspicious of the tax declarations made by companies, he should have asked Auditor General of the Federation to carry an audit of the process. The Auditor General’s office should have the competence, the capacity and

also the legal standing to carry out such an audit. Certainly, it would be difficult to explain that lawyers have suddenly developed accounting skills. Businesses thrive when there is a level of certainty in the environment in which they operate. The AG’s actions in the last one week are creating a high level of uncertainty in the business environment. In an environment of uncertainty, businesses tend to become pessimistic and close the tap on new investments, which then translates to slower economic growth, loss of jobs and rising poverty. Businesses want to know that when dealing with tax obligations, they are dealing with the FIRS or the State Internal Revenue Service or the Customs, when it comes to import duties. How do you want to tell businesses that after dealing with these bodies that are statutorily mandated to collect taxes, levies and duties, they still have to consider dealing with the AG’s office to decide whether what they paid is accurate or not? The AG’s office is not a tax collecting agency and should not be. It is an anomaly for companies to be submitting tax documents to the AG’s office, instead of the FIRS or SIRS any other agency mandated to collect tax or levies. It is even stranger when the demand to pay tax is coming from the AG’s office. What should come from the AG’s office is a court service, and definitely not a demand for tax payment.

Send reactions to: comment@businessdayonline.com

PIGB Rejection as fatal blow to oil sector reforms occasion the discussion came up, I always argued - almost lonely - that the president will sign the bill. I think the fact that the provisions of the bill largely align with the position of Ibe Kachikwu, state minister of petroleum, on restructuring the industry influenced my optimism. I had formed my optimistic outlook based on my reading of the situation, principally informed by: one, Minister Ibe Kachikwu that I expected to be the principal adviser to the president on the bill is aligned to the bill from past public speeches; two, the executive would want to use the passage of the bill as an easy political point ahead of the elections (“PIB came into fruition during my tenure”); and three, almost every expert agrees that the regulatory and institutional framework of the industr y needed restructuring which is central to this bill. Therefore, there is a strong reason for me to believe the bill will be signed. That was the basis of

my case. I have been proved wrong. I honestly think whoever advised Buhari to reject that bill has done a great disservice to oil and gas industry in Nigeria. The reports say that Buhari rejected the bill on the grounds that, one, it whittles down his power as petroleum minister and, two, he did not see any fiscal terms in the bill. The second is too ridiculous to be believed (as even anyone with the slightest knowledge of developments on PIB knows that there is now a separate bill – Petroleum Industry Fiscal Bill – that takes care of the fiscal terms of the universal bill), so I will assume the press misquoted their source on that. It is too incredible that the advisers to the president will not know this. On the first ground, while it is true that the PIGB reduces the powers of petroleum minister, that is actually one of the best things about it. The clamour for the reduction of powers of petroleum minister through the PIB predates Buhari. I do not

think the president will want us to keep having emperors and empresses like Dan Etete and Diezani Madueke as petroleum ministers. If Buhari chose to be petroleum minister, not all subsequent presidents will go that route, so why does a law that seeks to prevent petroleum ministers from becoming the alpha and omega of the industry become a problem? I fear the president is erroneously personalizing some things here. Buhar i is getting fatally wrong advice on this PIGB, which the current National Assembly has done a very good job of after 10 years of dilly dallying. The unspoken force behind this rejection, I strongly suspect, is the entrenched interest of some folks in the institutions this bill dismantles and reorganizes in accordance with the best practices in other parts of the world (Saudi Arabia, UAE, Norway, China etc). The bigger problem is that, with the current impasse between the executive and legislative arms of government, this

bill will not see the light of the day in the next two years. Having come this far with the passage of the bill after a decade of lethargy, it is bad news that the bill is returned to the National Assembly. Even sadder is the fact that the three other associated bills – the Petroleum Industry Fiscal Bill, the Petroleum Host and Impacted Communities Bill and the Petroleum Industry Administration Bill –which have all reached advanced stage of passage, and very critical to oil and gas investments in Nigeria, especially the fiscal bill, will also be dealt huge blow. I think this is sad news for the petroleum industry not just in Nigeria, but globally. There is no perfect law in the world. I strongly believe the current version of the PIGB is good enough to achieve a better management of the petroleum industry in Nigeria. It would be good if the president has a rethink on this matter. Send reactions to: comment@businessdayonline.com

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Monday 10 September 2018

Positives from the debate of the vice presidents

or the first time in a long while, the Nigerian political space came alive in the first week of September not for any piffle talk or abuse but on account of a spirited debate on restructuring and the performance of governments, past and present. The debaters were former Vice President Atiku Abubakar and incumbent Vice President Prof Yemi Osinbajo. They traded ideas, perspectives and the facts as it appeared to them. Commendations to the distinguished gentlemen for conducting their debate, through lectures and point-counterpoint in response, in a civil manner. There was engagement. There was sparring in the best traditions. They articulated issues clearly and succinctly. The debate is a refreshing departure to the aridity of the current political climate where parties are campaigning ahead of a general election without any manifestoes or clear agenda. Not one of the parties has articulated any philosophy, ideology or programme. There is no vision or mission, no promises. Nigerian politics has become so cynical and unfeeling about the citizenry or the future of the nation that the parties have reduced it to merely a matter of

collecting the votes, by hook or crook, and assuming power. No wonder the poor performance of elected officials across all levels. Governments in the land, without a compass, now celebrate the mundane and the inane as “achievements.” A Local Government chairman recently rolled out the drums to commission building a staff toilet. It contrasts sharply with the character of politics in the First and Second Republics. Parties then had a semblance of ideological orientations and philosophical grounding. They had programmes such as the “Four cardinal programmes” outlined by the Unity Party of Nigeria or the One Nation, One Destiny platform of the National Party of Nigeria. Analysts could point to one party as for the right of centre and the other as left of centre with one welfarist. Analysing and characterising our parties and candidates must be a tough call for students of Political Science today. The preceding is the background against which to view the debate of the Vice Presidents. The subject was the necessity or otherwise for the restructuring of the federation, an issue that has been on the front burner in the last 18months at least. Vice President Yemi Osinbajo kicked off the case. In an address, he dismissed the call for restruc-

turing, stating that Nigeria needs more. He said,“the problem with our country is not a matter of restructuring”. Osinbajo canvassed the view that “geographical restructuring” would lead merely to the creation of additional states. Creation of states is not beneficial, the VP further stated, in a situation where existing states cannot meet their obligations. He said he was all for fiscal federalism. Many groups, individuals and media organs challenged the Vice President’s assertion. Former Vice President Atiku Abubakar wrote a reply. That, in turn, caused Osinbajo to issue a counterpoint and clarification of his stand. According to Osinbajo, “I argued that what we require now was not geographical restructuring but good governance, honest management of public resources, deeper fiscal Federalism, and a clear vision for development.” Atiku in further response outlined his concept of restructuring. He cited a long history of engagement with the topic. “I have been in the forefront of the discourse on restructuring since the 1995 Abacha Constitutional Conference, and to the best of my knowledge, there has not been any term like ‘geographic restructuring’. It is a strange concept, not only because it is not what the restructuring debate is all about, but also because the words of the Vice President,

which prompted my response where clear, unambiguous and unequivocal.” In Atiku’s words, restructuring is about devolution of powers and resources to the states; matching grants from the federal government to the states to help them grow their internally generated revenue position; the privatisation of unviable federal governmentowned assets. It also includes “a truly free market economy driven by the laws of demand and supply; replacing state of origin with state of residence, and passing the PIGB so that our oil and gas sector will run as a business with minimal governmental interference.” The two Vice Presidents have started off a good practice. We urge them to continue in this direction. As politicians are wont to do, they threw darts and barbs at each other. That also is welcome as similar engagement in the past, locally and internationally, have added to the grammar of politics. We need more of these debates. There are many issues canvassed at the 2014 National Conference that call for the attention of the Federal and State governments and the political class. More of these debates would be beneficial to the country and would enable the return of a culture of civility, and ideas as the primary tool for winning the votes and allegiance of citizens.

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Monday 10 September 2018

BUSINESS DAY

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Monday 10 September 2018 In Association With

Has finance been fixed?

The world has not learned the lessons of the financial crisis Banks are safer, but too much of what has gone wrong since 2008 could happen again

HEN historians gaze back at the early 21st century, they will identify two seismic shocks. The first was the terrorist attacks of September 11th 2001, the second the global financial crisis, which boiled over ten years ago this month with the collapse of Lehman Brothers. September 11th led to wars, Lehman’s bankruptcy to an economic and political reckoning. Just as the fighting continues, so the reckoning is far from over. Lehman failed after losing money on toxic loans and securities linked to America’s property market. Its bankruptcy unleashed chaos. Trade fell in every country on which the World Trade Organisation reports. Credit supplied to the real economy fell, by perhaps $2trn in America alone. To limit their indebtedness, governments resorted to austerity. Having exhausted the scope to cut interest rates, central bankers turned to quantitative easing (creating money to buy bonds). Just as the causes of the financial crisis were many and varied, so were its consequences. It turbocharged today’s populist surge, raising questions about income inequality, job insecurity and globalisation. But it also changed the financial system (see Briefing). The question is: did it change it enough? To splurge is human One way—the wrong way—to judge progress would be to expect an end to financial crises. Systemic banking meltdowns are a feature of human history. The IMF has counted 124 of them between 1970 and 2007. There is no question that they will occur again, if only because good times breed complacency. Consider that the Trump administration is deregulating finance during an economic boom and that the Federal Reserve has not yet raised counter-cyclical capital requirements. Even when prudence prevails, no regulator is a perfect judge of risk. A better test is whether the

Slow train to Jerusalem

Why Israel still moves on Ottoman-era railway tracks The old line follows a donkey track

SRAELI politicians and entrepreneurs like to present their country as a global centre of transport technology. That was underlined last year by Intel’s purchase for $15bn of Mobileye, which develops software for self-driving cars. But driving from Tel Aviv to Mobileye’s headquarters in Jerusalem, only 55km (34 miles) as the drone flies, can be an hour-long crawl along a

likelihood and size of crises can be reduced. On that, the news is both good and bad. First, the good. Banks must now fund themselves with more equity and less debt. They depend less on trading to make money and on short-term wholesale borrowing to finance their activities. Even in Europe, where few banks make large profits, the system as a whole is stronger than it was. Regulators have beefed up their oversight, especially of the largest institutions that are too big to fail. On both sides of the Atlantic banks are subject to regular stress tests and must submit plans for their own orderly demise. Derivatives markets of the type that felled AIG, an insurer, are smaller and safer. Revamped pay policies should prevent a repeat of the injustice of bankers taking public money while pocketing huge pay-packets—in 2009 staff at the five biggest banks trousered $114bn. Yet many lessons have gone unlearned. Take, for example, policymakers’ mistakes in the aftermath of the crisis. The state had no choice but to stand behind failing banks, but it took the ill-judged decision to all but abandon insolvent households. Perhaps 9m Americans lost their homes in the recession; unem-

ployment rose by over 8m. While households paid down debt, consumer spending was ravaged. It has taken fully ten years for the countervailing economic stimulus to restore America’s economy to health. Many of Europe’s economies still suffer from weak aggregate demand. Fiscal and monetary policy could have done more, sooner, to bring about recovery. They were held back by mostly misplaced concerns about government debt and inflation. The fact that this failing is not more widely acknowledged augurs badly for the policy response next time (see Free exchange). Stagnation has, inevitably, fed populism. And, by looking for scapegoats and simplistic solutions that punish them, populism has made it harder to confront the real long-term problems that the crisis exposed. Three stand out: housing, offshore dollar finance and the euro. To share divine The precise shape of the next financial crisis is unclear—otherwise it would surely be avoided. But, in one way or another, it is likely to involve property. Rich-world governments have never properly reconciled a desire to boost home ownership with the need to avoid dangerous booms in household credit, as in the mid-

2000s. In America the reluctance to confront this means that the taxpayer underwrites 70% of all new mortgage lending. Everywhere, regulations encourage banks to lend against property rather than make loans to businesses. The risk will be mitigated only when politicians embrace fundamental reforms, such as reducing household borrowing, with risk-sharing mortgages or permanent constraints on loan-to-value ratios. In America taxpayers should get out of the rotten business of guaranteeing mortgage debt. Sadly, populists are hardly likely to take on homeowners. Next, the greenback. The crisis spread across borders because European banks ran out of the dollars they needed to pay back their dollar-denominated borrowing. The Fed acted as lender of last resort to the world, offering foreigners $1trn of liquidity. Since then, offshore dollar debts have roughly doubled. In the next crisis, America’s political system is unlikely to let the Fed act as the backstop to this vast system, even after Donald Trump leaves the White House. Finding ways to make offshore dollar finance safe, such as pooling dollar reserves among emerging-market countries, relies on international co-operation of the type that is fast falling out of fashion.

jammed motorway. Going by train is a poor alternative. That takes an hour and 40 minutes and ends at an isolated temporary station. Exactly 126 years since the first train arrived in Jerusalem from the Mediterranean coast, a new high-speed rail link, built at a cost of 7bn shekels ($2bn), is scheduled to start running between Tel Aviv and Jerusalem on September 24th. But with just three weeks to go, Israel’s transport ministry is not sure it will be ready. The inauguration has already been postponed twice. This is par for the course for a project that started in 2001 and was originally planned for completion by 2008. If the line from Jerusalem does open this month, it will run only as far as Tel Aviv’s Ben Gurion Airport. The rest of the route will not be electrified until next year. The promise of reaching Israel’s capital from Continues on page 15

Monday 10 September 2018

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BUSINESS DAY

In Association With

Mud, glorious mud-slinging

The race to be president of Nigeria has Politicians are throwing themselves into the fray. Voters look away

MINU TAMBUWAL, a state governor normally too bland to attract much attention, is running for president of Nigeria. Like a dozen other serving and former governors, a senate president and a former vice-president, Mr Tambuwal said he was bowing to the demands of the people, who apparently wanted him to defect to the opposition People’s Democratic Party (PDP) and challenge the incumbent, Muhammadu Buhari, in an election that is scheduled for February. Many Nigerians felt a sense of déjà vu. Four years ago, Mr Tambuwal was one of a number of bigwigs who deserted the PDP and helped propel Mr Buhari (pictured above) to victory. Government may be a shambles in Nigeria, but politics is thriving. In the election in 2015 one government agency is alleged to have diverted more than a $1bn intended for the fight against jihadist groups in the northeast to fund the electoral campaigns of ruling-party politicians. Private donors supporting Goodluck Jonathan, the previous president, paid the disgraced (and now defunct) British consulting firm Cambridge Analytica to produce extraordinarily inflammatory social-media campaigns showing people being hacked to death or burned alive and claiming that Mr Buhari would impose sharia, or Islamic law, if he were elected. Many of the international political consulting and public-relations firms that coined it in 2015 are again seen trailing their candidates through the lobbies of hotels in Abuja and London. The flacks are as fickle as the Big Men they serve. Some lobbyists are now working for the very people they sought to trash last time. They will have their work cut out, no matter which politicians are writing their paycheques. Start with Mr

Buhari, who faces a surprisingly tough contest for reelection given the widespread euphoria that greeted the start of his first term. He came to power after promising to end a jihadist insurgency, diversify the economy from oil and reduce corruption. Mr Buhari’s popularity has since dipped, not least because he spent much of 2017 in London receiving medical treatment. Although Nigeria’s army made gains against jihadists in his first few months in office, it has since become bogged down. Soldiers guard towns and patrol the roads, but insurgents still rule the countryside. Ordinary voters are also angry that Mr Buhari appears to have made slow progress in curbing corruption. Some businessmen, particularly those used to getting juicy government contracts that involved little work but lots of money, complain that he has been too successful at curbing graft. If Mr Buhari is a hard sell to voters, so too are his main rivals. Bukola Saraki, the senate president, was educated at a posh British private school and the London Hospital Medical College. He thinks he knows what ails Nigeria: he has a 19-point programme to

save the country and insists he would lead “a dynamic government of action” that would not conduct “business as usual”. Sadly, his tenure as president of the senate showed little of this promise. It was marked by allegations of corruption, which he dismisses as smears by rivals. The flagship oil-reform bill that he shepherded was returned first by his own legal department and then by the presidency because it contained dozens of errors, inconsistencies and contradictions. A bill supposedly intended to encourage investment in, and root out corruption from, the industry that generates almost all of Nigeria’s exports turned out to be one that would have increased the scope for political meddling. Yet Mr Saraki’s prospects were given an unexpected boost when Lawal Daura, the head of the State Security Service, sent armed officers in ski masks to the National Assembly as part of a bungled and in any case pointless plot to remove Mr Saraki from office. Mr Daura was immediately sacked, but the sight of armed troops surrounding a building that symbolises Nigeria’s return to civilian rule in 1999 raised uncomfortable memories of its years of military rule, including a stint under Mr Buhari, then a general.

Mr Buhari, for his part, is being feted by foreign leaders. He was in China this week, where members of his staff were pushing their hosts to begin work on key road, rail and other infrastructure projects, including a hydroelectric dam in Mambila that was first mooted 30 years ago. He has also played host in recent months to Emmanuel Macron, the president of France, Angela Merkel, Germany’s chancellor, and Theresa May, the British prime minister. Yet the red carpets and honour guards have done little to boost his popularity at home. Voters are losing interest in mainstream politicians and parties. Turnout in recent by-elections has been low and there is not much excitement on the street about the presidential election next year. In a rare recent newspaper article, Mr Buhari’s taciturn but influential chief of staff, Abba Kyari, extolled progress the government had made in improving security and diversifying the economy. Mr Kyari appealed to Nigerians to ignore the slick campaigns peddled by political consultants and “not [to] be fooled by the packaging” but to look at what is inside it. The real challenge may be to get them to look at all.

Burmese generals should stand trial... Continued from page 14

its business centre in less than half an hour is still remote. The delays are partly because of a seven-year row with environmental groups worried about damage to nature reserves. Politics is also partly to blame. Germany’s Deutsche Bahn was originally supposed to have advised on the project, but pulled out in 2011 amid a controversy over a few miles of track that pass through areas occupied by Israel in 1967. And funding rows between the transport minister and the treasury delayed the purchase of carriages. As a result, there will be only one or two trains an hour from Jerusalem until 2020. The current rail link between Jerusalem and Tel Aviv has remained nearly unchanged since it was inaugurated under the Ottoman empire in 1892. The first line was the initiative of a Jewish businessman and was financed by French Catholics to help pilgrims travelling from the port of Jaffa to the holy city. It was upgraded by the British in 1920 and again by Israel. But it follows much the same winding route along an ancient donkey trail. Trains going up along the single-track railway through the Jerusalem Hills often have to slow to 25kph on the bends and to wait in passing loops for the train coming the other way. Plans for a new line were mooted in 1971, but the government invested in motorways instead. It has also lowered taxes on new cars, leaving Israel’s roads four times more clogged up than those of other rich countries in the OECD. Time to change track.

BUSINESS DAY

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Monday 10 September 2018 In Association With

Jacob Zuma’s legacy endures

South Africa slips into recession Bad news about the economy may hamper Cyril Ramaphosa’s plans to reform it

HEN Cyril Ramaphosa became president in February, replacing the disastrous Jacob Zuma, South Africans felt a brief thrill of “Ramaphoria”. Half a year later, a chillier reality has set in. South Africa officially entered a recession on September 4th after its economy contracted for a second straight quarter. The picture was gloomy all round, especially in farming, which was badly hit by drought. The rand, already roiled by a sell-off of emerging-market currencies, plunged to depths not seen since the worst moments of Mr Zuma’s tenure. South Africa last dipped into recession in 2009, after the global financial crisis and in the year Mr Zuma took power. (A recession announced last year was narrowly avoided in a later data revision.) Since then growth has stagnated. Mr Zuma seemed more interested in enriching his friends and family than boosting the economy. Unemployment has ballooned to a fright-

ening 37.2%, using an expanded definition that includes people who have simply given up looking for work. It is much higher among young people. A significant recovery is not expected to come soon. The ruling African National Congress (ANC) is pushing a spending package that includes infrastructure projects and subsidies for farmers. How the government would pay for this is a mystery. Tax collection slumped under Mr Zuma; key parts of the revenue authority were dismantled and tax evasion soared. To help narrow a yawning budget deficit, Mr Ramaphosa’s government increased value-added tax earlier this year. But that is hurting consumer spending, a big part of the economy. Further trouble might lie ahead. A review of the country’s credit rating for rand-denominated debt by Moody’s, a ratings agency, is due in October. Should Moody’s cut them to junk, South African bonds would be turfed from global

indices, prompting a sell-off. The rot of the Zuma years is proving stubbornly hard for Mr Ramaphosa to expunge. With an eye on national elections next year, he has flirted with populism. His party’s rush to change the constitution to allow land expropriation

without compensation has stolen thunder from left-wing rivals, such as the Economic Freedom Fighters, but dismayed investors. To quell public anger over high petrol prices, Mr Ramaphosa’s government has frozen them temporarily. But with oil prices rising and the rand

likely to remain low, this will only defer the pain. A strong mandate for Mr Ramaphosa in next year’s polls would allow him to embark on trickier reforms needed to boost growth. But bad economic news will not win him any votes.

White flight

Donald Trump’s approval ratings are pulled down by college-educated whites His current numbers are only just above the low point of December 2017

NYONE wondering how long it takes Americans to digest the news that their president has been implicated in a conspiracy to commit federal campaign-finance violations now has an answer: about two weeks. In late August Michael Cohen, Mr Trump’s longtime fixer, pleaded guilty to eight criminal charges, directly implicating the president in several. Since Mr Cohen filed his guilty plea and Paul Manafort, Mr Trump’s former campaign chairman, was convicted on eight counts of tax and bank fraud, Mr Trump’s approval rating has sunk to its lowest level since April 2018. Mr Trump’s handling of Senator John McCain’s death may also be contributing to the slump in support; the president played golf last weekend while the nation mourned the loss of Mr McCain. Though it is hard to be sure, this looks like a case of the (not-fake) news cycle doing its work. According to The Economist’s weekly survey of 1,500 Americans by YouGov, a polling firm, 53% of voters disapprove of the president’s job performance

while 40% support the Republicans. These are awful numbers for Republicans: the president is contagious. Those who are sceptical that Mr Trump’s base of stalwart supporters—the 2030% of Americans who “strongly approve” of the job he is doing—will ever leave his side are missing the forest for the trees.

while 38% approve, just two points above his all-time low in December. Other pollsters have found similar numbers: a survey released by Emerson College pegs the president’s support at 38%, while polls from ABC News and Investors Business Daily both find a modestly lower 36%. What is more, the share of voters who say they “strongly disap-

prove” of Mr Trump has increased by five points, from 37% to 42%, over the past few weeks. These numbers approach an alltime low for Mr Trump, when he polled consistently around 36% in our survey. The decline in the president’s numbers stems largely from a change among college-educated whites (see chart). These vot-

ers will have a disproportionate weight in the upcoming midterm elections to the House of Representatives, both because they show up at polling booths and because so many of them live in marginal congressional districts. In the same poll, 49% of college-educated whites support Democratic candidates for the House (the generic ballot),

Monday 10 September 2018

BUSINESS

COMPANIES & MARKETS

DAY

CWG’s ‘ATM as a Service’ concept gains traction, inks deal with two banks

Pg. 18

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

Four days to go in Mutual Benefits N2bn rights issue Modestus Anaesoronye right to purchase new shares

hareholders of Mutual Benefits Assurance Plc wishing to consolidate their position in the underwriting firm can still take advantage of the firm’s ongoing rights issue due to end by close of business this week. The N2 billion rights issue, which commenced on 6th August specifically, will close on Friday 14th September 2018. A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. More specifically, this type of issue gives existing shareholders securities called “rights,” which, well, give the shareholders the

at a discount to the market price on a stated future date. Analysts have predicted that the insurance sector holds the key to growth of the financial services market, as the industry have a lot of untapped potential. According to a PwC report the opportunities for growth in Africa’s insurance industry are huge despite recent economic and political uncertainty. Therefore, with the country’s population of over 180 million, and insurance penetration of less than 0.5 percent to the GDP, there is no doubt that there is interesting future for strategic investors, given ongoing reforms and transformative projects taking

place in the industry. The underwriting firm Mutual Benefits Assurance Plc is offering to its existing shareholders 4,000,000,000 ordinary shares of 50 kobo each at 50kobo per share on the basis of one new ordinary share for every one held. Shareholders of the company had approved the Board of Directors’ proposal to raise additional equity at an Annual General Meeting (AGM) held in Ibadan on June 27, 2018. Acceptance List for the Rights Issue opened on Monday, 6, August 2018 and will close Friday 14, September 2018. The Rights being offered are tradable on the floor of The Nigerian Stock Exchange for the duration of the Issue. The insurance company,

3Invest future of real estate summit seeks technology, policy considerations CHUKA UROKO

s technology continues to penetrate almost every facet of human activity, professionals and sundry stakeholders who will be gathering for the up-coming annual 3invest Real Estate Unite (REU) summit are to consider how this innovative and transformative application will help the future of real estate. The summit will also be looking at how good policies and regulatory frameworks can influence growth of this sector which is one of the major components of the national economy, and a driving force for the growth of the country’s Gross Domestic Product (GDP). Arguably, real estate is a transformative sector of any economy and an effective tool for job creation and poverty alleviation. It contributes meaningfully to the development of the economy just as it is capable, if well structured, of fast-tracking economic growth and development. “To point the way forward for the growth of this sector, the REU summit will be connecting the dots between policy frameworks, legal and regulatory issues, and real estate growth in Nigeria. It will also be taking a look at the future of real estate by exploring technology as an innovative and transformative tool while trying to determine what the real demand is in relation to commercial real estate”, explained Ruth Obih-Obuah, CEO, 3invest Limited in a statement at the weekend. “Considering the future of the property market and how

to unlock the advantages that abound in the real estate sector, we will continue with our commitment to driving the growth of the sector”, Obih-Obuah assured. In the last six years, 3invest has been gathering different levels of stakeholders for the REU summit. This year, it will be hosting what it calls an ‘Industry Town Hall’ tagged ‘The Conversation Summit’. Here, stakeholders in the public and private sectors, industry players, legal practitioners, investors and other individuals will be gathering to engage in robust discussions on new developments and how to unlock bottlenecks stifling the growth of the real estate sector in Nigeria. “We must think deeper and strongly advocate for collaboration between public and private sectors. It is our duty to make the government see that we are innovators, giving them vital reasons they should collaborate, and making it clear that real estate is a transformative industry with potential to alleviate poverty and create jobs” said Kunle

Omotola, Partner at Adekunle Omotola and Co. To underscore the place of real estate as a valuable asset class, ProTech (property technology) which is an equivalent of FinTech (Financial Technology) is now being used to improve this sector. As a result, part of the REU Summit agenda s to seek ways by which PropTech, currently being applied globally by property companies, can be applied here too. Luqman Edu, CEO, Filmo Realty, will be providing insights on how PropTech innovation and digital transformation are currently being deployed by global property companies across different stages of the property sector, but also how it shapes the future of real estate and how the industry is ready to embrace it. ‘’Basically, we will be looking at the future of real estate and PropTech as an innovative and transformative tool; we should be thinking of areas where we have issues and see how we can apply technology to reduce them and make the real estate practices more efficient”, Obih-Obuah explained.

a general business and life insurer, has an authorised share capital of N10billion with a paid up capital of N4 billion. The company provides insurance coverage across several sectors including aviation, oil and gas, marine cargo and hull business and other nonlife insurance underwriting, including motor, fire and special perils, goods-in-transit, engineering insurance, retail and micro insurance, amongst others. Akin Ogunbiyi, chairman of the Company had said that the proceeds of the offer will be used to fund the Company’s recapitalization and growth plan, provision of additional working capital and financing the expansion of IT facilities to support the Company’s enlarged operations. On plans for 2018, he said “We will consolidate on the modest achievements re-

corded in 2017 by commencing our IT transformation blueprint in 2018.” This he said will help to eliminate slack time in its processing and ultimately enable them to focus more on customer delights and satisfaction. He further said “Our strategic aspiration is to become the number one insurance company in Nigeria in terms of growth and profitability.” “Despite the tough business environment we have been able to bounce back to profitability and delight our shareholders. Dividend of N0.02kobo per share will be paid to our esteemed shareholders who have stood by us over the years” He assured that going forward dividend payment will be sustained, while urging shareholders to take up the right issue. The Company’s financial

performance for the year ended 31, December 2017, shows that top line growth was combined with prudent management of expenses, which resulted in a 224.9 percent growth in profit before tax to N1.34 billion in 2017 from a loss position of N1.1billion in 2016. Group’s total assets grew by 12.1 percent from N51.5billion in 2016 to N57.7billion in 2017. Gross premium written also appreciated by 16 percent from N12.14 billion in 2016 to N14.03 billion in the review year, while underwriting income also grew by 10percent to N11.78 billion in 2017 versus the 2016 figure of N10.70 billion. Net claims paid by the Group in 2017 stood at N5.15 billion from N3.35 billion in 2016, resulting in a 54 percent increase from the previous year.

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COMPANIES & MARKETS CWG’s ‘ATM as a Service’ concept gains traction, inks deal with two banks

he ATM as a Service concept, initiated by Nigeria’s leading System Integration Company (CWG) Plc about two years ago, is gradually gaining traction, as it has signed supply deals with two financial institutions in Nigeria. According to CWG, these deals with the undisclosed financial institutions are a testament to the soundness of the concepts model and how it fits well into the innovativeness required to support banks in boosting the competitiveness for customer satisfaction with banking operations in Nigeria with respect to ATM services. “The gradual acceptance of the ATM as a Service (AaaS) concept is backed up with signed deals between the company and three financial institutions in Nigeria; one of the tier 1 banks, a commercial banks and microfinance bank in the country,” as disclosed

by Adeshile Adekanbi, CWG’s product manager, ATM & POS, adding that the concept is sure to be adopted by more financial institutions as the platform has embedded more innovations. With every innovation out of the stables of CWG Plc, AaaS was initiated with the aim of allowing banks focus on their core competencies whilst allowing technology platform providers such as CWG drive their ATM Businesses. Technology Platform provider, CWG, will thus provide a specified set of infrastructures and aligned responsibilities to drive efficiency of operations, whilst the banks responsibilities will also be as aligned with their capabilities and competencies. CWG has added innovativeness for improved revenue generation and have set a model that will in effect support the Apex bank’s strategy of closing the gap on

financial inclusion by 2020. “The value-added services integrated into the AaaS platforms is sure to drive usage and overall satisfaction to all concerned stakeholders” Adeshile revealed. Responding to queries about the possible deviation of the ATM as a Service initiative from the company’s normal ATM support business, where it presently supports 30 percent of ATM base in Nigeria; Adeshile responded that regular ATM business is a foundation on which the ATM as a Service concept is riding and it does not take away from the other, but gives room for more business opportunities depending on the capacity of its banking clients. “We have in place separate teams, trained and prepared for these innovative extensions, whilst some of our other skilled and experience staff across varying competencies in the group are constantly

Nala, Virtual Identity, Wallet.ng win Ecobank 2018 Fintech Challenge Iheanyi Nwachukwu

ala, Virtual Identity and Wallet.ng dazzle judging panel to be the three winners of the competition; All 11 finalists were officially inducted into the Ecobank Fintech Fellowship programme to explore commercial partnerships with the pan-African banking giant. Nala, from Tanzania, beat the ten other finalists to emerge as the overall winner of the competition. Virtual Identity from South Africa and Wallet.ng from Nigeria were the first and second runners up. They won cash prizes worth $10,0000, $7,000 and $5,000 respectively. This year’s Fintech Challenge was keenly contested with applications from over 412 innovative fintech entrepreneurs from across Africa, Europe, North America and Asia. Winners of the 2018 Ecobank Fintech Challenge were announced at a ceremony held at Ecobank’s headquarters in Lome, Togo on 30th August 2018. Nala, based in Tanzania, is a mobile money application

that works offline, without an internet connection. Nala provides a unified user experience in which multiple financial services can be connected on one application. It can host multiple SIMs, enabing users to manage their spending and take control of their finances. Second placed Virtual Identity is an innovative platform designed to disrupt traditional customer onboarding for banks. The process is fully digital, creating a virtual video conferencing link between the agent and the customer. Its easy to use web-based solution allows the client to complete tedious KYC processes from anywhere, making it both convenient and time saving. The third placed prize winner, Wallet.ng, is a start-up providing an alternative bank for a growing generation of digital natives. Its core strength is building a banking platform that is as native to customers’ devices as Facebook and WhatsApp. Ade Ayeyemi, Ecobank Group CEO praised the finalists for their innovative solutions and welcomed them to the Fellowship: “We are proud of the impressive start-ups that made

it to our 2018 final. They are shining examples of the entrepreneurial spirit and creativity that will propel our continent’s global competitiveness in the commercial services markets, and I sincerely expect some, if not all, of them to be the business titans of tomorrow. They have my congratulations and we look forward to working closely with all eleven Fellows over the next year to deliver innovative banking services at better price-points that will improve the lives of Africans.” All eleven (11) finalists were inducted into the Ecobank Fintech Fellowship, a one-year business program where they can explore opportunities for commercial partnerships with the Ecobank Group, to launch and scale products across Ecobank’s 33 country markets in the continent. Launched in 2017, the second year of the Ecobank Fintech Challenge brought together fintech start-ups and innovators, policy makers, investors and development organisations from across the world to network, witness the 2018 finalists’ exhibitions, and celebrate the induction of the finalists into the 2018 Ecobank Fintech Fellowship.

L-R: Adewale Adeyipo, executive director, sales & marketing, CWG Plc; Richard Amafonye, chief information officer, WEMA Bank Plc; Henry Erigha, business director, financial services institution, CWG Plc, and Nicholson Aleke, product and business lead, mobility services, CWG Plc, during a Courtesy Visit to CWG Head Office in Lagos.

available to provide continued support,” he explained. This is yet another product that CWG has put out,

showing it bears up to its mandate on deploying technology solutions that enable economic growth across the

African continent as the ATM as a Service concept is set to roll-out in other African countries.

AIICO launches online customer self-service portal Modestus Anaesoronye

IICO Insurance Plc, a leading insurance Company in Nigeria has launched a self-service portal and also revamped its multiple payment channels for customers. This novel initiative is aimed at enhancing our clients’ experience and facilitating deeper engagement. Babatunde Fajemirokun, executive director/COO, reiterated the Company’s commitment to listening to clients and deploying cutting-edge technology solutions to improve overall service delivery. He stated, “We are constantly pushing the boundaries to cre-

ate unique customer experience and seamless service. The self-service portal will enable customers’ access up-to-date information about their policies at their convenience, anywhere, anytime every day.” With a visually appealing interface, this hands-on and interactive self-service platform provides customers the ease of policy status checks, payments for policy renewal and account management options conveniently. With the portal, customers can also set up recurring payments for automated renewals of their policies. Olusanjo Shodimu, chief information officer, explained that the objective is to engage with customers on a more personal

level which ultimately leads to a memorable experience with the company. To achieve this, AIICO has partnered with leading payment platforms such as Flutterwave and Interswitch. Premium remittance and other forms of payments can be effected via the revamped multiple payment channels comprising Point of Sales Terminals (POS), PayDirect (across various bank branches in Nigeria), QuickTeller website and the e-business portal on AIICO’s website. This also aligns with the Company’s strict policy against all forms of cash transactions. AIICO Insurance Plc remains committed to leveraging state-of-the-art technologies for continuous improvement in its service delivery and operations.

CSR-in-Action, others partner on strategies for conducting effective community outreach

he Seventh Civil Society Organisation Professionalism, Effectiveness and Therapy (CSOCPET) workshop organised by CSR-in-Action and Access Bank with the theme ‘’Collaboration: Conducting an Effective Community Outreach’’ was aimed at building capacity amongst civil society groups to enable them deliver effectively on their mandate of promoting social good. The event was put together by CSR-in-Action’s College of Sustainable Citizenship (CSC) and CSR-in-Action Advocacy and held at Access Bank head office. As in previous years, the

training featured participants from different civil society organisations across the country and had dual sessions with Olusesan Samuel Kayode, team lead, Training and Advocacy, Freedom Foundation, facilitating the first session and Michael Sunbola, President and Founder, Lagos Food Bank Initiative, facilitating the second session. Bekeme Masade, chief executive, CSR-in-Action stated that her organisation’s commitment to driving civil society excellence necessitated the organisation’s partnership with Access Bank to conduct the yearly workshop. She said: “I am happy at the

success that the training has garnered over the years as participants have often attested to how the training has impacted measurably on their work. In this 7th year, we are particular about creating lasting impact in communities through effective outreaches.’’ She added that one of the reasons why C-PET was set up was to achieve professional success in a sector that is typically chided for unprofessionalism. Finally, she expressed her profound appreciation to Access Bank for aiding their vision by partnering with and supporting them over the years to ensure that the workshops are a success.

Monday 10 September 2018

BUSINESS

DAY

COMPANIES & MARKETS Ariston launches instant water heater product in Nigeria

riston Thermo, a global leading group in the thermal comfort industry, has launched the Pronto Neo Electric Instant Water Heater into the Nigerian market. The Pronto Neo Electric Instant Water Heater is a portable, best-in-class home product that will change the way Nigerians use and heat water for various purposes at home. It is the result of an intensive research and development programme. As its name suggests, the product is engineered for faster heating - as soon as the heater is switched on. Pronto Neo features an elegant Italian design water heater, with a rare combination of technology and style. It was designed for young people, new couples, people living in rented apartment. and, in general anyone who is not using a water heater. Ariston Pronto Neo does not require complex technical installations and breaking of walls. Ariston seeks to replace inefficient sources of water heating such as: boiling rings, gas stoves and other stressful means of heating water. Pronto Neo is both

cost and time-saving. Gaurav Bisaria speaking at the launch in Lagos, the country manager of Ariston Thermo Heating Technology Nigeria Ltd, said: â&#x20AC;&#x153;Our lifestyles are getting fast paced than ever before, we at Ariston Thermo understand that. We are delighted to bring Pronto Neo to Nigeria, which is tropicalised for African Markets. We continue to set the benchmark in the industry by introducing innovative, state-of-the-art technology and aesthetically designed products every year. This new offering bears testimony to our ability of constantly offer innovative and customized solutions based on consumer insights. We continue to invest and look at opportunities on how to expand the category.â&#x20AC;? Ariston Thermo Group is the global leader in thermic comfort solutions for domestic, commercial & industrial spaces. All over the world, Ariston Thermo is synonymous with comfort, energy efficiency and respect for the environment, thanks to its high efficiency products, its plants in compliance with the most advanced

production standards and excellent pre- and after-sales customer support services. The 1.57 billion group Euro employs 7000 people worldwide and manufactures over 7 million products per year, and over 36million components. With 26 state-of-the-art production units in 15 countries, Ariston Thermo Group has a global presence in 150 countries with Ariston as its flagship brand. Over 6 million households choose us every year and more than 250 million people experience the comfort of Ariston Thermo products. The company invested over 79 million Euros across 23 R&D centers in 15countries. The company has significant presence in Europe and Asia, with production sites in Belgium, Canada, China, France, Germany, India, Italy, Netherlands, Russia, South Africa, Switzerland, Tunisia, U.S.A, Uzbekistan and Vietnam. There is now a major thrust on Renewable energy, through solar water heaters and systems. By 2020, the group aims to have 80 percent of its business coming from high efficiency and renewable solutions.

Business Event

Vice President Yemi Osinbajo (l), and Zainab Ahmed, minister of state for budget and national planning, during the inauguration of TraderMoni in Utako Market, Abuja.

Rolayo Akhigbe, divisional head, transaction banking, First City Monument Bank (FCMB), receiving an award on behalf of the bank from Babatunde Ruwase, president of Lagos Chamber of Commerce & Industry (LCCI), during the Export Business Symposium organised by LCCI and supported by FCMB held in Lagos.

FirstBank introduces educational solutions to support schools growth

irstBank has announced its FirstEdu educational solution specifically designed to support schools in need of improvement and growth in meeting their medium and long-term goals. The FirstEdu product includes FirstEdu portal and FirstEdu loan. FirstEdu loan is targeted at private Nursery & Primary, Secondary and A-Levels schools. The product offers opportunity for private schools to access flexible funding to meet urgent cash flow needs, replace old furniture and equipment, as well as refurbish dilapidated buildings and classroom blocks. With this product, school owners/ proprietors can stay ahead of competition in providing educational services and support to the target population by maintaining acceptable standard infrastructure at all times. The product enables customerâ&#x20AC;&#x2122;s access up to N20 million facilities with no tangible

collateral, apart from domiciliation of school fees account with the Bank. This reduces the cost of borrowing to the customer and eliminates the challenges posed by the provision of additional demanding collaterals. On the other hand, FirstEdu portal is a robust web-based enterprise portal that enables educational institutions (private Nursery & Primary, Secondary, A-Levels schools and Tertiary Institutions) manage academic, administrative, professional, logistics and payment challenges. The basis for its robustness is to take the stress of logistics and payment challenges off schools, as they focus on meeting the year-long and medium-term objectives of their school(s). The product features and benefits include; e-Learning, virtual library and facilitation of exchange programmes with foreign educational institutions; academic & student events/time-table/calendar

management; school fees payment via the internet; online information and result checking; interactive community forum between students and teachers. It also affords applicants the opportunity of enrolling from the comfort of their homes or any location around the world; no licensing, installation and maintenance cost and plugs avenues for revenue leakages amongst others. According to Abiodun Famuyiwa, group head, Products & Marketing Support, First Bank of Nigeria Limited, with FirstEdu, private schools across the various tiers of education in Nigeria; elementary, secondary and tertiary, have the right tool to boost their business to the level they desire. Customers and stakeholders are enjoined to visit any FirstBank branch or contact us on our social media channels for further information on FirstEdu.

BUSINESS DAY

Monday 10 September 2018

REAL SECTOR WATCH C002D5556

BUSINESS DAY

How crisis forced re-think in Nigerian manufacturing sector ODINAKA ANUDU

h e 2 0 1 6 f o reign exchange crisis forced a re-think in Nigeria’s manufacturing firms. A number of manufacturers, whose focus was on the local market, began to look outwards. Large enterprises such as Nigerian Breweries, Guinness, Cadbury, Dangote, FrieslandCampina WAMCO and many others began to play more prominent roles in the West African market. Many firms earned foreign exchange and set up overseas departments to beat the FX situation. More so, rather than depend so much on imported raw materials, manufacturers had to look inwardly for their raw materials. Brewers

started substituting imported barley for locally available sorghum. Grains began to dry up in northern Nigeria as local food and drinks manufacturers resorted to the use of maize

for production. Local input preference, which was 47 percent in the second half of 2014, rose to 52 percent in the corresponding period of 2015, and to over 60 percent in the

same period of 2016. Also, manufacturers had to retool their factories and modify their machinery to suit the use of more local inputs in the face of prohibitive cost of raw materials

NEPC commends Wells Hosa for using technology to produce tomato

he Nigerian Export Promotion Council (NEPC) has hailed an indigenous producer of tomato, Wells Hosa Greenhouse Farms Limited, for deploying greenhouse technology to produce exportable tomatoes. Olusegun Awolowo, executive director, NEPC, said the technology would enable Nigeria to start exporting tomatoes, thereby ending the era of tomato diseases. He said this at the first harvest launch of Wells Hosa Greenhouse Farms Limited in Edo State. “The company wants to create wealth for the people in Edo State and also job opportunities. It is a good idea to use the green house

technology, because allyear-round, they would be growing and you can see the massive project he has embarked on and I believe if it is not the biggest in Africa it will be the biggest in West Africa. From green house technology, you will not get any form of tomato diseases because they are covered and restricted and those are the kind of tomatoes we can export because it is easy to get into supermarkets across the world.” He said the number of local tomato producers had increased, courtesy of the federal government’s ease of doing business, expressing hope that more local products would find their way on the shelves of Nigeria’s stores and supermar-

kets across the country. “This technology will help to satisfy our local consumption and already most of our stores and supermarkets are filled with made-in-Nigeria goods because everybody is now producing and the ones that their goods are exportcertified would be taken abroad,” he said. Heineken Lokpobiri, minister of state for agriculture, said the Federal Government had endorsed greenhouse farming to boost food production in the country, saying that before the administration of President Muhammadu Buhari, agriculture was seen as a government’s programme, but stressed that with Wells HosaGreenHouse Farms

initiative, Nigerians were seeing it as a business and investment. Idahosa Wells Okunbo, chairman, Wells Hosa Greenhouse Farms Limited, said agriculture was key to changing the Nigerian narrative, pointing out that with green house technology, the country could produce quality and exportable products for local and global needs while also creating wealth and job opportunities in the country. “People are seeing tomatoes, but I am seeing more than tomatoes. I am seeing jobs for the youths and empowerment. I am seeing food security for the country and export of our tomatoes to earn foreign exchange. It is a project that is scalable and which we can also replicate across the country. Regardless of the weather, we can produce all kinds of tomato fruits and vegetable obtainable anywhere in the world. For me, it is a breakthrough and I thank God for using me as a vehicle to make this project achievable. Our narrative in Nigeria has to change. For me, agriculture is the only way we can change our narratives, create jobs for our children, and attain our manifest destiny”, Okunbo, a retired military officer, said.

importation. “What our members are doing is to retool and modify their machines to suit local inputs,” Frank Udemba Jacobs, president, Manufacturers Association of Nigeria, told BusinessDay in 2016. “We are increasingly looking inwards, embracing resource-based and import-substitution industrialisation. While we keep exploring local inputs, we know this could need retooling and adjusting of machinery. We encourage those with the capacity to go into backward integration due to foreign exchange challenges,” Jacobs, who is the CEO of Jacobs Wines, said. Several large corporations changed their machines, while a number of players in light industries

used domestic fabricators to produce cheap equipment that could fit into domestic inputs, according to John Kachikwu, CEO of John Tudy Interbiz, a food processor and exporter to the United States. “We changed machines because the foreign equipment we had could not blend with local raw materials we were getting,” said Kachikwu said. A manufacturer of an Enugu State-based chemical firm said he was fabricating more of light machines locally, while using more of local inputs. These prove that necessity is the mother of invention. In the face of FX stability, experts want manufacturers to consolidate on the gains made in the past two years, rather than overlooking the lessons learnt.

‘More Chinese manufacturers willing to set up factories in Nigeria’ ...transport, energy also attractive to China ENDURANCE OKAFOR

businessman has said that more factories in China are desirous of setting up local plants in Nigeria to strengthen an already vigorous bilateral trade relationship between the two countries. “There are companies that are interested in moving their factories to produce locally here and also there could be some joint projects in multiple fields which could be in oil & gas and also in some other commodities,” Binu Pillai, chief operating officer of Meorient International, said at the just concluded China Homelife Show in Lagos. Pillai disclosed that Chinese investors were also eyeing Nigeria’s transportation and energy sectors. “If I have to highlight, the transportation industry is one sector we are looking at and energy is another sector,” he said at the event, which attracted about 160 Chinese manufacturers to Nigeria. Also speaking at the event, Mu’azu Ruma, general manager of Nigeria Export Processing Zones Authority (NEPZA), said Nigeria- China bilateral trade is a win-win for both countries. When BusinessDay asked

if the importation of cheap Chinese products into Nigeria would not negatively affect the made-in Nigeria products, Ruma replied that there were safety measures to ensure that Nigeria would not be an importing country. On whether or not the Chinese manufacturers have started setting up factories in Africa’s most populous nation, Ruma said, “We told you that we have free zones all over Nigeria and what it means is that instead of importing the finished goods from China, the Chinese are coming to set up here in the free zones like Lekki Free Zone, Snake Island and others. All these are platforms and zones provided for domestication of production in Nigeria.” On why China Home Life was held in Nigeria, Pillai said, “We organise shows like these in 13 different countries such as Brazil, South Africa, India, Dubai, Jordan, and Turkey. Our focus is on emerging markets. And why we are now in Nigeria is because there is a special focus on the country. “You know that Nigeria’s president went to China to negotiate further support for both countries. We want to provide a platform for trade and investment for investors, traders and manufacturers,” he stated.

22 BUSINESS DAY FEATURE

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Monday 10 September 2018

A cross section of Nigerian and German delegates at the talks

When the Germans came to town BISI DANIELS

s President Muhammadu Buhari met with Chancellor Angela Merkel behind closed doors last week, a lively Business Round Table was holding in The Brown Room, one of the many meeting rooms in Villa. It was there the secret behind the success of German businesses was revealed by the visitors. It could not be ignored; it dominated the talks for several minutes. “Size is not why our businesses are successful; we are successful because we are mostly family businesses, not just small-scale enterprises,” a member of the German delegation, who is a founder and CEO of a company, said. “German businessmen are extremely focused, extremely serious, and we also focus on communication.” Some other members of the 16-member business delegation, led by Dr Ulrich Nussbaum, Secretary of State, Federal Ministry for Economy and Energy spoke in the same vein. These founders and/or CEOs of successful German brands spoke passionately about Mittelstand, said to be the backbone of the German economy. The Mittelstand are a core of small and medium-sized firms, many of which have existed for generations and noted for their durability and resilience. According to Wikipedia, Mittelstand companies are “highly focused, achieving unprecedented efficiencies by designing a business model with a razor-thin focus and learning to do the

one thing really well”; then to “compensate for their razorthin focus, they diversify internationally and enjoy great economies of scale”. Although the term could be more loosely applied, Mittelstand companies share the following features: Family ownership or family-like corporate culture, generational continuity, long-term focus, emotional attachment, flexibility, and lean hierarchies. Among other things, the German delegation was also apprised of the strength of the Nigerian economy as well as opportunities for investments and partnerships. On the Nigerian side were Dr. Okey Enelamah, Minister of Industry, Trade and Investment, who chaired the talks, Finance Minister Kemi Adeosun, Segun Awolowo, CEO of the Nigeria Export Promotion Council and members of the private sector, among others. In his opening remarks, Enelamah enjoined participants of the round table to take advantage of the Forum to partner with the government to build synergies that will translate to increased trade and investment flows between Nigeria and Germany, help establish and strengthen business relationships, and provide practical lessons. He explained the objectives of the forum as: “presenting the case for why we believe that Nigeria is the investment destination of choice. And we believe the German business community will continue to take advantage of the massive investment opportunity that Nigeria represents. Nigeria remains the number one investment destination in

Africa, with announced investments of US$66.36 Billion in 2017. Apart from our domestic market of over 180 million, the largest in Africa, we are also the main gateway to the regional West African consumer market that is about as large as ours. “Discussing and learning about two underlying strengths of the German Economy – the small and medium scale businesses (SMEs) and technical training. “It is a well known fact that Germany enjoys a leading position among the world’s exporting nations because of your successful SMEs. Germany boasts an exceptional number of ‘hidden champions’ - companies which rank among the top three on the global market or are European leaders but are little known to the public. It is estimated that SMEs in Germany constitute more than 3.6 million companies and provide more than 60 percent of all jobs in your country.” He said the Nigerian government is committed to building on our core advantages and using examples from countries like Germany to deliver a sustainable and inclusive economy. “We believe that our role is to create the enabling environment for investors and businesses to thrive,” he stated, adding that there has been a renewed emphasis on building out the hard and soft infrastructure to make Nigeria one of the most attractive places for business.” In a presentation, Awolowo, Executive Director/Chief Executive Officer of the Nigerian Export Promotion Council, highlighted

Nigeria’s economic performance under the Buhari administration and outlined foreign investment opportunities and incentives in Nigeria. He said Nigeria’s zero-oil plan is aimed at generating “ an extra US$25-30 billion from non-oil exports, and eliminate the country’s over dependence on crude oil prices.” “Germany is expected to play a significant role in providing foreign investments to boost the Nigerian exports agenda,” he added. Towards the end of the forum, President Buhari and his guest, Chancellor Merkel, joined in from an adjoining room. It was interesting to behold the two powerful leaders draped in simplicity, and as they took their seats among their respective delegations; their optics showing contentment about the success of the day. After a briefing of the two leaders by Dr, Enelamah, they commended the outcome of the deliberations. The forum had started earlier in the meeting room of Vice President Yemi Osinbajo with the signing of Memorandums of Understanding between the two countries. They were: •MoU between the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, (NACCIMA) and the German-Africa Business Association. Deputy national president of NACCIMA Saratu Abubakar, signed on behalf of Nigeria, while Stefan Liebing, of German Africa Business Association, signed on behalf of the German business delegation. •Agreement between the

Nigeria Incentive-Based Risk Sharing System for Agricultural Lending, NIRSAL, and the PETKUS Technologie GmbH, a company that specializes in post-harvest agricultural value chain which was signed by Aliyu Abdulhameed and a representative of PETKUS Technologie GmbH, Peter Huser. •The MOU between Nigeria and Volkswagen was signed by the Dr. Enelamah on behalf of the Federal Government of Nigeria, and Mr. Thomas Schaefer, Head of Volkswagen sub-Saharan operations for the establishment of an automotive hub in Nigeria. •Speaking after signing the MOUs, Enelamah said the agreements would increase collaboration between Nigeria and Germany to grow small and medium enterprises in Nigeria. “We want our MSMEs to learn from the German experience and be as important. The other area of German excellence is the technical area- technical education, technical training and technical development. It’s also an area of great interest to Nigeria,” Enelamah said. Theresa May A few days before the visit of the Germans, British Prime Minister Theresa May led a delegation to Nigeria. Both in Abuja and Lagos, where they visited trade and investment featured prominently in his meetings. “I was in Abuja and also in Lagos to see the thriving business community here. We want to see increased trade between Nigeria and UK, increased investment, bringing jobs here in Nigeria, jobs in the UK.” Speaking on her visit to Lagos, Governor

Akinwunmi Ambode said it centred on in improving investment in the state and the country in general. FOCAC in China In China where President Buhari attended the 7th Summit of the Forum on China-Africa Cooperation (FOCAC) shortly after the visit of the Germans, trade and investment also got prime attention. Indeed about 100 Nigerian businesses and 300 Chinese firms participated in the Nigeria-China business forum which took place a day after President Buhari began his visit, President Buhari expressed satisfaction with the fruitfulness of FOCAC, disclosing that Nigeria has gained from China the execution of infrastructure projects worth $5bn across the country in the last three years Conclusion So in less than two weeks, Nigeria had high-profile engagements with three of the world’s leading economies. Industry, Trade and Investment Minister unpacks the implications for Nigeria: “Naturally, these are strong stimuli to trigger excitement. The leaders of those powerful nations demonstrated belief in the potentials of the Nigerian economy; and endorsement of our efforts in exploiting the potentials in the various sectors of the economy for the benefit of all Nigerians. “They also see in the economy investment opportunities for their nationals, which they didn’t mince words about. “For sure, Nigeria is a strong economic force for partnerships in trade and investment. The several MoUs signed in the last few days testify to this.

BUSINESS DAY

Monday 10 September 2018

Police recover rifle, magazines in Enugu forest

CityFile

... arrest suspects

he police have recovered a Light Assault Rifle (LAR) with three magazines containing 60 rounds of live ammunition and a bayonet buried underground in a forest in Ehamufu community, Isiuzo local government, Enugu State. Arrested alongside the recovery is one Chibuike Odo, suspected to have hid the weapons for armed robbery operation. Ebere Amaraizu, spokesman of Enugu police command said that the suspect was arrested recently. Amaraizu said that the feat was achieved by the command’s operatives of the Federal Special Anti Robbery Squad (FSARS) working on a well coordinated intelligence and information gathering. “Intelligence information further gathered that the said arms, ammunition and bayonet are used by two gunmen identified as Chibuike Odo from Mgbuji village in Ehamufu community and one Emma said to be the leader of the gang and recently released from the prison custody but now at large. “The notorious gang became a thorn in the flesh of the Ehamufu inhabitants as it embarked on killing of persons seen in the bush. It allegedly killed one Militus Ede, a dolmer operator inside Ehamufu forest in June, 2018. “They also killed another person inside the bush the same June, 2018. Meanwhile, following the directives of the Commissioner of Police, Mohammed Danmallam, one of the suspects

Labourers rest after a day’s job at Goza market in Abuja on Friday. NAN Chibuike Odo, was promptly nabbed through intelligence information by the operatives of the FSARS Enugu, state command,’’ he said. The spokesman, however, said that the police had intensified manhunt on the fleeing leader of the gang identified as Emma from Amede village in Ehamufu community. He noted that the suspect, who is a tailor by

profession, blamed his involvement in armed robbery on Satan. Amaraizu said that the suspect further revealed that the rifle, ammunition and bayonet belonged to the leader of the gang who took to killing of persons seen inside the bush. “A full scale investigation has been intensified into the unfortunate incident,’’ he added.

Flooding: 3 Lagos communities cut off JOSHUA BASSEY

ome communities in Ikorodu area of Lagos State have been cut off following the persistent rainfall in the state and attendant flooding which has rendered the road leading to the areas impassable. Motorists plying the Agric-Isawo-Arepo Road had difficulty at the weekend accessing the three communities of Isawo, Igbo Olomu and Arepo because of the flooded road. Commuters using tricycles and motorcycles were forced to disembark and wade through the water to board vehicles at the other end to get their destinations. Commercial motorcyclists were seen ferrying commuters and residents across the flood. “If you are coming to Isawo in a commercial bus or motorcycle from Agric Bus Stop, they will drop you at Oke Afa junction; you will then take another bus or motorcycle to continue the rest of the journey.

“People pay between N100 and N150 for assistance to carry them on their back across the water especially pregnant women,’’ the acting Baale of Isawo, Bada Bakare, told NAN. He, however, appealed to the Lagos State government to construct a bridge at Oke Afa on the Agric-Isawo Road for easy passage. “Whenever it rains, commuters, motorists and residents find it difficult to ply the road because of flood. Bakare also appealed to the government to direct the contractor handling the road– Hitech Construction Company Ltd — to create a temporary bridge on the road. Apini Olanrewaju, a resident, also lamented the hardship commuters experience on the road, saying the fares have been increased by more than 100 per cent because of the condition of the road. “I spend not less than N750 as fares when it rains which used to cost N200.” Reacting, Owolabi Adisa, the chairman, Com-

mittee on Agric-Isawo Road Project, urged the government to intervene without further delay. Adisa said the slow pace of work on the road was affecting socio-economic activities in the area and also causing security problems. “We appreciate the good work of Governor Akinwunmi Ambode in awarding the reconstruction of the road but there is need for a bridge on the road,” he said. Adeola Alonge, the secretary, Road Transport Association of Nigeria (RTEAN), AgricOwutu branch, commended the state government for embarking on the rehabilitation of the road but called for its speedy completion alleviate the sufferings of the people. According to him, some of their members whose buses are old cannot put them on the road until the rainy season is over. Also, the chairman, Tricycle Association of Nigeria, Owutu Isawo unit, urged the government to prevail on the contractor to speed up work on the road.

Police nab 37 robbers, kidnappers in Kaduna, Nasarawa

o fewer than 14 suspected armed robbers and two kidnappers have been arrested by the police in Kadauna in the last two weeks. Ahmad Abdulrahaman, the Commissioner of Police (CP) in charge of Kaduna disclosed during a press conference in the state last weekend. Abdulrahaman said the command also arrested three people involved in currency counterfeiting and a motorcycle thief within the period. According to him, the command will work strictly based on international core values of policing with integrity and within the rule of law. “The police under my watch will respect the diversity of the state, display courage, show compassion and demonstrate professionalism and shun corruption,” he added.

He listed items recovered from the suspects to include, one locally fabricated gun, two dane guns, six live cartridges, 1366 live 7.62mm ammunition. “Also, large bundles of counterfeit US Dollars, three motorcycles, one cutlass, eight wrist watches, one Knife and assorted charms were recovered. In a related development, 23 suspected armed robbers and kidnappers have been arrested in Nasarawa, Yahaya Bello the state CP, said on Friday. Bello told newsmen in Lafia that the suspects were arrested following distress calls and privileged information from courageous members of the public. According to him, 17 of the suspects were arrested on August 2, for alleged armed robbery

and kidnapping around Mararaba Udege in Nasarawa local government area of the state. Bello added that four others were arrested on August 9, at Kadarko in Keana local government area by a combined team of F-SARS operatives, counter terrorism unit and conventional policemen. The CP said that the four of those arrested were believed to be among the gang terrorising commuters along Lafia-Makurdi road. He, however, said that two policemen sustained severe injuries during one of the operations. The police chief said that one Ali Mohammed was arrested along Akwanga-Keffi on August 29, with an Ak47 riffle while allegedly on his way to Dogon Daji village in Kaduna State to avenge the killing of his brother.

NUPENG decries military occupation of oil firm JOSHUA BASSEY

he National leadership of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has condemned the deployment of military personnel to the premises of an oil and gas firm in Warri, Delta State. Williams Akporeha, president of NUPENG, who spoke with journalists in Lagos, called on the Chief of Army Staff to withdraw the soldiers from the premises of Sterling Energy Exploration Company (SEEPCO) and its drilling arm, British Oil and Gas Ltd (BOGEL). ``NUPENG as an organisation has written to the Chief of Army Staff that soldiers be removed from the work site, that what we have on ground is not a terrorist situation but an industrial relations matter “Our prayers right now is that those soldiers be redeployed or else we shall have no option but to embark on a nationwide industrial action,’’ Akporeha said. He also called on the Delta State governor to wade into the matter, adding that, the union had directed its members in Warri to shut down over intimidation by their employer and harassment by the military. Akporeha alleged that over 2,000 of its members had been sacked by the oil and gas companies for agreeing to be members of the union, describing the action as oppressive and high handedness. He said that the firm had seven land rigs drilling in Kwale, Warri but that only two of them belonged to the union, adding that, efforts by the other five groups to be unionised was resisted by the multinational corporation. He added that, the firm owned by Indians forced workers with the help of the military into accepting working conditions that were not in line with Labour laws of Nigeria. He urged Nigerians to rise up against the practice which no Nigerian could do same in any other country.

Cleric decries non-recognition of national heroes IDRIS UMAR MOMOH, Benin

ohn Okhuoya, a cleric with Church of God Mission International, has decried the non-recognitions of heroes and heroines that fought for the growth and survival of the country. Okhuoya, made the remark at the 50th celebration of church in Benin, the Edo State capital. He specifically stated that the late Archbishop Benson Idahosa deserves a national posthumous award for his numerous contributions to the social-economic development of the country. The chairman, organising committee of the celebration, said the church will keep reminding those in the corridors of power to do the needful and reward those who have contributed to the growth and survival of the country. “How can we quantify what he has done to this nation. We are passionate about it. We feel that Papa has not been properly honoured; not even one university even if it is posthumous. “People should be touched, let those in the corridors of powers, and let us do something to honour this man. Papa deserves a national honour, papa deserves recognition. We have approached some persons and it appears that our efforts will not be in vain. “But this medium is to provoke people to know that there is something that can be done. We are not relenting and we will keep pushing the matter until papa is given the right place of honour in this country”, he said. He observed that, if a day could be set aside to honour the late Martin Luther King, the church also hope that one day, the Federal Government will also set aside a day to honour the late archbishop who did the country proud internationally and locally.

BUSINESS DAY

Monday 10 September 2018

BUSINESS DAY

Monday 10 September 2018

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

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.50

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

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

24.81 22.28

Decreased by 1.41% in June 2018 from N25.17 trillion in May’ 2018 Increased by 0.34% in June 2018 from N22.21 trillion in May’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

1.90 11.14 14 14 (+2/-5) 45.51 77.76

Decreased by 1.56% in June 2018 from N1.93 trillion in May’ 2018 Decreased to 11.14% in July’ 2018 from 11.23% in June’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% September 5, 2018 figure — a decrease of 0.26% from Sept ember start September 7, 2018 figure— an increase of 3.12% from the prior week

Oil Production mbpd (OPEC)

1.67

July 2018 figure — an increase of 4% from June 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

7/09/18

31/08/18

34,037.91 12.43

Change(%)

34,848.45 12.72

(2.33) (2.33)

0.16

0.38

(59.48)

Value (N’bn)

2.10

9.79

(78.51)

MONEY MARKET NIBOR Friday Rate

Indicators

7/09/18

1-week Change

YTD Change

(%)

Volume (bn)

Tenor

Global In the US, the manufacturing purchasing managers’ index (PMI) was revised higher to 54.7 in August 2018, higher than preliminary estimate of 54.5 but lower than the 55.3 reported in July. According to Markit, who reports the US PMI figures, this is the lowest rate of expansion witnessed since November 2017. The rates of output and new order growth eased up but remained stable. Business confidence on the other hand reached the highest seen in three months. In a separate development, India’s GDP expanded by 8.25% year-on-year in Q2, higher than 7.7% reported in the previous quarter. It is the strongest growth rate witnessed since the first quarter of 2016. It was majorly driven by household spending, financial, real estate and manufacturing activities according to the Ministry of Statistics and Program Implementation. Elsewhere in Brazil, consumer price index declined to 4.19% in August 2018 from 4.48% in July. The Brazil Institute of Geography and Statistics reported that it is the lowest inflation rate seen in the past three months and was majorly due to slowing in the prices of transport and housing. Month-on-month inflation rate dropped 0.09%, following a 0.33% increase in July on the back of lower transportation cost.

Friday Rate

Change (Basis Point)

Energy Crude Oil $/bbl) 77.76 Natural Gas ($/MMBtu) 2.78 Agriculture Cocoa ($/MT) 2,299.00 Coffee ($/lb.) 103.15 Cotton ($/lb.) 81.31 Sugar ($/lb.) 10.86 Wheat ($/bu.) 510.75 Metals Gold ($/t oz.) 1,201.15 Silver ($/t oz.) 14.15 Copper ($/lb.) 261.60

(%)

3.12 (5.12)

20.63 (9.03)

(0.48) 0.44 (1.50) 1.88 (6.33)

18.75 (20.78) 4.92 (29.16) 17.82

(0.25) (3.02) (3.08)

(8.84) (17.68) (20.20)

(%)

7/09/18

31/08/18

OBB

3.0000

6.0000

(300)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL

3.8300 3.4417

6.8300 12.9167

(300) (948)

Tenor

11.7612 12.5782

12.7192 13.1472

(96) (57)

30 Days 90 Days

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

7/09/18

31/08/18

7/08/18

Official (N) Inter-Bank (N)

306.20 358.40

306.15 357.45

306.00 352.02

BDC (N) Parallel (N)

359.80 361.00

360.00 361.00

360.00 360.00

Friday

Change

(%)

(Basis Point)

7/09/18

31/08/18

3-Year 5-Year

0.00 15.07

0.00 14.45

0 62

7-Year 10-Year 20-Year

15.18 15.01 15.29

15.08 14.83 15.14

10 18 15

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

(Basis Point)

31/08/18

10.85 11.81

11.25 11.72

(39) 9

6 Mnths 9 Mnths 12 Mnths

12.81 13.06 13.14

13.36 13.40 13.78

(55) (34) (64)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

7/09/18

31/08/18

2,609.81

2,620.69

(0.42)

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

8.43 5.33

8.42 5.34

0.11 (0.24)

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

6.24 -49.19

6.69 -48.72

(0.45) (0.47)

Index

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day

24,960.59

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

Change

(%)

7/09/18

AVERAGE YIELDS Friday

Friday

(%) 1 Mnth 3 Mnths

BOND MARKET Tenor

Friday

182 Day

44,993.79

364 Day

137,000

Rate (%) 11

Date 29-Aug-2018

12.3

29-Aug-2018

13.0456

29-Aug-2018

Domestic The National Bureau of Statistics (NBS) revealed that Nigeria’s total merchandise trade stood at N6.56 trillion in the second quarter of 2018, representing a contraction of 8.89% compared to the N7.21 trillion recorded in the preceding quarter. In the report titled: “Foreign Trade in Goods Statistics (Q2 2018),’’ it stated that the total value of export trade in the second quarter, amounted to N4.46 trillion, indicating a decline of 4.9% relative to the N4.69 trillion registered in the preceding quarter. Meanwhile, total imports stood at N2.11 trillion corresponding to a -16.3% decrease from N2.51 trillion in Q1. Overall, the trade balance in Q2, 2018 was a surplus of N2.34 trillion - an 8.4% rise over the N2.17 billion in Q1 2018. In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 57.1 index points in August 2018. This indicates an expansion in the manufacturing sector for the seventeenth consecutive month. The index grew at a slightly faster pace when compared to the previous month (56.8 points). This was contained in the latest PMI report by the Central Bank of Nigeria. A composite PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Thirteen of the fourteen subsectors surveyed, recorded growth during the month. The transportation equipment subsector declined in the month under review. Stock Market Sentiment remained bearish last week on the Nigerian Bourse amid an emerging market sell-off that has caused foreign investors to shun Nigerian equities. The All Share Index (ASI)-the main index that tracks share prices at the Nigerian Stock Exchange (NSE) dropped by 810.54 points, representing a loss of 2.3% to close at 34,037.91 points. Aggregate market capitalisation of quoted equities also declined by N290 billion to close at N12.43 trillion. This week, we expect the

market remain largely downbeat due to a continued absence of bullish triggers. Money Market Rates declined further at the money market last week due to buoyant liquidity in the system. Short-dated placements such as Open Buy Back (OBB) and over Night (O/N) rate dropped to 3% and 3.83% respectively from 6% and 6.83% the previous week. This decline came on the back of inflow from Federation Accounts Allocation Committee (FAAC) of N351 billion and net open market operations (OMO) inflow of N105 billion. Longer dated placements also retreated. The Call, 30-day and 90-day NIBOR closed lower at 3.44%, 11.76% and 12.58% from 12.92%, 12.72% and 13.15%% the previous week. This week, combined inflows from Retail Secondary Market Intervention Sales refund and OMO maturities of about N576 billion is expected to drive rates lower. Foreign Exchange Market The naira-dollar exchange rate at the interbank window depreciated marginally by 95 kobo to close at N358.40/$ from N357.45/$ the previous week. Similarly, the local unit depreciated at the official market by 5 kobo to settle at N306.20 from N306.15 a week prior. At the parallel market, the local currency remained unchanged at N361/$. The weakening in the currency comes even as CBN maintained its weekly dollar injection into the interbank foreign exchange market. This week, we expect the naira to remain around prevailing levels at the CBN window, supported by the apex bank’s regular intervention. Bond Market Bond yields rose for the second consecutive week as investors moved their portfolios from the bond market to the higher yielding treasury market. Yields on the five-, seven-, and ten- and twenty- year debt papers closed at 15.07%, 15.18%, 15.01% and 15.29% from 14.45%, 15.08%, 14.83% and 15.14% respectively the previous week. The Access Bank Bond index declined by 10.89 points or 0.42% to close at 2,609.81 points from 2,620.69 points the previous week. This week we expect that yields will trend higher if the treasury market yield remains more attractive than government bonds. Commodities Oil prices rose last week following the evacuation of two Gulf of Mexico oil platforms in preparation for Tropical Storm Gordon. Bonny light, Nigeria’s crude oil benchmark, edged up.1% to settle at $77.76 a barrel. In contrast, precious metals prices advanced, as the dollar hit a one-week high on the back of intensifying global trade tensions and economic worries in emerging markets. Gold prices declined 0.25% to $1,201.5 per ounce. In line with gold, silver prices also notched downwards 3% or 44 cents to settle at $14.15 per ounce. This week, ongoing emerging market weakness may weigh on oil market sentiment and prices. For precious metals, the potential new US import tariffs on Chinese goods may drive prices lower. MONTHLY MACRO ECONOMIC FORECASTS Variables

Aug’18

Sept’18

Oct’18

Exchange Rate (Official) (N/$)

358.28

360

Inflation Rate (%)

9.34

9.00

Crude Oil Price (US$/Barrel)

76.75

76.00

77.00

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

Monday 10 September 2018

Stocks

Currencies

C002D5556

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

NAICOM’s new tier based capitalization to bolster insurer’s profitability ratio

he new Tier based capitalization rules introduced by National Insurance Commission (NAICOM) will boost insurers’ profitability ratios, curb undue under-pricing of risk, and there will be more concentration of underwriting firms in businesses they are good at. Analysts say the new rules will force managers to think of how to use the capital at their disposal to generate a good return for investors, as some of them do not have the capital to take on more risk. “It will definitely underpin profit margins because owners will be very strict. Owners will want to know how management run their business,” said managing director and CEO of an insurance firm who doesn’t want his name mentioned because the topic is sensitive. “Now most organization knows the tier they belong to, we should be thinking of how to increase capacity to take more risk. We have to be creative, and there has to be investment in technology,” said the anonymous CEO. Analysts say the new rules imposed by regulator will curb under-pricing of risk, as firms are undercutting themselves in terms of pricing. They added that it will lead to concentration of insurers in certain areas and for those in such areas will definitely make more profit. A of firms are underwriting businesses that are risky, and claims they

incur from such ventures could wipe out the entire shareholders’ value, which means downgrading some from oil and gas business is a blessing in disguise. The new 3 tier based recapitalization introduced by the commission means composite insurance companies that are now interested to play in the Tier 1 category are expected to increase their capitalisation from N5 billion to N15 billion, while those interested in the same tier but operating life business are required to recapitalize from N2 billion to N6 billion. Non-life insurers planning to play in this tier are expected to improve capitalisation from N3 billion to N9 billion. But some stakeholders

say the inconsistent policy of the regulator and hasty move to conduct the sector’s recapitalisation may cause some insurance companies serious problems and have negative effects on the economy. They repudiated the requirement that 2017 solvency accounts of companies should be presented for the recapitalization, when announcement was made August, 28. But such regulations are needed in country where slow growth in premium income, higher expenses, and low investment returns are tipping insurers to the edge of profitability. The cumulative average profitability ratio of 20 largest insurers quoted on the floor of the bourse fell to 16.05 percent in June 2018 from 22.70 percent the previous year. Investors and credi-

P.E

SHORT TAKES 57.1

ECONOMY

BALA AUGIE

BUSINESS DAY

The Purchasing Managers Index (PMI) of the manufacturing sector of the economy grew at 57.1 index points in August compared to 56.8 recorded in the month of July. The Central Bank of Nigeria (CBN) on Friday released the PMI reading for August, which shows a 17 consecutive month of expansion. The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change. The further from 50 is greater the level of change.

tor use the profitability ratio to know the extent to which a firm has utilized each Naira invested premium income in generating higher sales. The higher the ratio, the more efficient a firm is. Drilling down the figures shows AXA Mansard Insurance Plc’s profitability ratio fell to 19.62 percent in June 2018 from 35.43 percent as at June 2017 while pretax profit dip by 19.04 percent to N1.87 billion in the period under review. Wapic Insurance Plc’s Seplat Petroleum Developmargins fell to 6.0 percent ment Company Plc, said on in June 2018 from 18.77 Wednesday August 29 that its $350million 9.25% Senior percent the previous year Notes due 2023 were listed while net income fell by and admitted to trading on 53.62 percent to N240.51 the International Securities million. Market of the London Stock Mutual Benefit Insur- Exchange. The Notes were issued on March 21, 2018 ance Plc’s profit margin and listed on the Euro MTF fell to 13.80 percent in the market of the Luxembourg period under review from Stock Exchange 16.37 percent the previous The unaudited half year (H1) year while net income financial results for Seplat Petroleum Development declined by 8.25 percent Company Plc for the period to N1 billion. ended June 30, 2018 as re Linkage A ssurance leased by The Nigerian Stock Plc’ s profit margin fell to Exchange shows the com42.42 percent in June 2018 pany grew revenue by 160 from 161.11 percent in the percent to N104.794billion, previous year while net from N40.317billion in the income dipped by 69.26 corresponding H1 period of 2017. percent to N750.01 million in the period under review. But some firm buck the trend as they recorded im- The annual report of PZ Cusproved ratios. Aiico Insursons Plc for the year ended ance Plc is profit margin 31st of May 2018 reported a increased to 15.25 percent double digit drop of 47.7 perin June 2018 from 10.65 cent in the after-tax profit on percent in June 2017 while Friday, hit by a surge in the net net income spiked by 93.80 finance cost of the company by 434.1 percent. percent, thanks to foreign The expected uplift in trading exchange gains. did not materialise, while N.E.M insurance Plc’s competitive pressure inprofit margins increased creased for the company as PZ to 40.45 percent in June Group posted a Net finance 2018 from 33.88 percent cost of N651.72 million, 434.1 the previous year while percent from the Net finance income of N195.09 million net income was up 21.08 posted in the last fiscal year percent to N1.78 billion as in 2017. at June 2017

$350 million

47.7%

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

BUSINESS DAY

C002D5556

Monday 10 September 2018

Markets Intelligence ECONOMY

Snap shot of Banks’ HI financial performance BALA AUGIE

n the second quarter, banks earnings indicated there was slight improvement in customer deposits, loan growth was subdued, interest income came in weaker, and net interest margin contracted. Also, profitability grew at a slow pace as higher Cost of Funds (CoF) pressured margins. The slow growth in earnings is not unconnected with the sustained moderation in the yield environment, poor appetite for loan growth and higher rates on deposits placement. Zenith Bank delivered optimal pricing for its interest-bearing assets and liabilities even in a declining yield environment as net interest margin (NIM) increased to 10.10 percent in June 2018 from 8.60 percent the previous year. It is unsurprising that Guaranty Trust Bank (GTBank) has continued to lead peers in cost efficiency over time, with a cost-to-income ratio of 38.39 percent as at in the period under review. Credit quality is deteriorating among Nigerian banks with tier 2 players being the hardest hit. The significant growth in coverage ratio among tier 1 players is due to IFRS 9 conversion. Among peers, GTBank leads with the lowest cost of risk (CoR) of 0.29 percent as at June 2018, following a faster decline in impairment charges than compared to loans. The decline in impairment charges stems from payoff of some of the bank’s loans (particularly in the

upstream oil & gas sector), which led to contraction in the loan book. Additionally, there has been an

improvement in impairment on financial assets as the economy exited recession in the first and second

quarter of 2017. The cumulative loan loss expense of 10 largest banks that have released half year results fell by 72.77 percent to N106.33 billion from N146.12 billion the previous year. Access Bank’s 4.70 NPLs- contained within the regulatory limitis the lowest in the industry. NPL coverage ratio improved to 105.0 percent in the period under review, from 106 percent the previous year. First City Monmement Bank (FCMB) Plc has an excellent risk management strategy as it NPLs of 5.70 percent is the lowest among tier 2 players. Capital Adequacy Ratio (CAR) was slightly up for lenders in ourcoverage as risk-weighted assets expanded, probably reflecting the forward-looking impact of the IFRS 9 adoption in Jan-18. Analysts at United Capital say they expect a slight uptick in the yield environment (compared to H1-18) to support interest income on government securities, especially for the tier-1 banks. “We maintain our position that appetite for risk assets will be muted by events in the socio-political space as observed in H1-18. From all indication, the transition to IFRS 9 will pressure risk-weighted assets and lower CAR in 2018.Finally, we expect the lower yield environment to trigger local debt issuance by banks,” said analysts at United Capital Ltd. We believe the low yield environment means banks will have to curtail costs to bolster profit while other revenue channel like fees and commission has to be exploited.

Nigeria stock market suffers 11 percent correction as country risk escalates EMEKA UCHEAGA

he Nigerian market declined by 0.21 percent on Thursday to take year to date losses to -11 percent. Analysts say that the 10 percent correction is as a result of the heightened political risk in the country, slow economic growth and higher regulatory risk in the country. A correction is a movement, almost always temporary and happening in reverse that accounts for at least a 10 percent adjustment to fix the overvaluation of a stock, bond, commodity or index. Sometimes market tends to correct for increased risk within the macro environment. The 9 months market performance now makes 2018 the worst pre-election year ever. 1998 which is the second worst pre-election year saw market decline by 10.61 percent after the first 9 months of the year. In 1998, unusual political uncertainty arising from a

planned regime change from military rule to democratic government whipsawed Nigeria’s capital market. Although the stock market got off to a blistering pace early in the year, the bullish run began to rescind barely 3 weeks into the New Year. The selloff that then ensued has now made 2018 the worst market performance in Nigeria since 2015 when the stock market declined 11.46 percent in the first 9 months of the year due to declining crude oil prices. The selloffs were deepened in the past week as sanctions by the Central Bank of Nigeria on four banks saw market decline 3 out of the 5 trading days last week as investors sort to derisk their portfolio from exposure to banks. NSE banking index is down 14.05 percent year to date. Consumer goods have been the worst performers on the index as the consumer goods index has dropped by 18.27 percent this year while the

industrial goods index is down by around 17.16 percent. The oil and gas sector appear to be doing better than the other large cap indices as it is only down -13.14 percent.

The outlook for the stock market is bleak as further corrections may occur to account for election risk and fresh regulatory sanctions if they do appear again.

BUSINESS DAY

Monday 10 September 2018

Start-Up Digest

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Onyeka Akumah: Co-founder of Farmcrowdy, Travelbeta Stories by ODINAKA ANUDU

f you are looking for a multitalented entrepreneur in Nigeria, then have a close look at Onyeka Akumah, co-founder of Farmcrowdy and Travelbeta.com. Farmcrowdy is an online platform that gives Nigerians the opportunity to invest in agriculture by selecting the kind of farms they want to sponsor. It pulls funds from investors and uses them to secure hectares of land. The firm then plants seeds, insures farmers and farm produce, completes the full farming cycle, and sells the harvest. It then pays the investors returns on their investments. While the farm process is ongoing, sponsors or investors can keep track of the full-cycle by getting updates in text messages, pictures and videos. “We signed on up to 1,500 farmers five months after starting,” Akumah said at the BusinessDayorganised Agribusiness &Food Summit held in 2017. “When we sponsor a farmer, the money an investor brings is not given to the farmer,” Akumah said. The firm manages investors’

Onyeka Akumah

money and ensures farmers keep up with evolving developments and modern realities, he said. He said farmers say what they need and the firm provides them. “We go there (to the farms) and monitor what the farmer does. We have extension agents and hire supervisors to monitor the farm process,” he added. Akumah said Farmcrowdy was

LCCI holds seminar to position MSMEs for global competitiveness ODINAKA ANUDU

he Small and Medium Enterprises Group of the Lagos Chamber of Commerce and Industry (LCCI) has announced plans to hold its annual SME seminar, which is targeted at positioning small businesses for development and global competitiveness. The annual seminar, according to the LCCI, is scheduled to take place on Wednesday, September 12 at the LCCI Conference and Exhibition centre, Lagos. Muda Yusuf, director general of the LCCI said, “The strategic role of MSMEs in building a strong economy cannot be over-emphasised. MSMEs play important roles

Muda Yusuf

in job creation, promotion of an inclusive economy, creativity and innovation, income redistribution among others.” Yusuf stressed that the event is expected to provide a platform that will enable various stakeholders deliberate on key aspects of global competitiveness, enterprise development and other SME-related issues. He also emphasised that seasoned professionals and notable business experts from organisations such as Sterling Bank, Olanihun Ajayi Law Firm, Connect Nigeria, Credit Bureau, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and Standards Organisation of Nigeria (SON) will make presentations at the event.

focused on empowering over 50,000 small-scale farmers to expand their operations, improving food security and engaging over two million African youths in agriculture. Farmers or investors are asked to register on the firm’s website. Investors are asked to put their money on farms of their interest and are also put through farm metrics on the promise that they

can get up to 25 percent return on investment (RoI). “We approach community leaders to give us the farmers they can trust. We don’t just get into a community and sign off a farmer,” he explained. “We monitor a farmer and provide the inputs. We educate them on the inputs needed on a hectare of land. We have partnerships with fertilizer producers. We also have partnerships with insurance companies to protect farmers from unforeseen circumstances,” he stated. He pointed out that many farmers are not aware of modern practices that will enable them to do more. Apart from Akumah, the startup also has Eric Yong, Peter Grouev, Africanfarmer Mogaji, Akindele Phillips, Jimoh Maiyegun, and Tope Omotolani, among others, as team members. Prior to Farmcrowdy, the entrepreneur had launched Travelbeta.com, one of Nigeria’s leading online travel agencies with over 300,000 hotels and flights to over 900 destinations worldwide. He had also founded a leading digital management business called Anozim Group with three subsidiaries focused on internet marketing, online publishing and

digital media sales clients. In addition to being the CEO of Farmcrowdy, he is on the board of leading tech start-ups in New York and Lagos—including CoSign and WaraCake. He was named 2017 Tech Startup CEO of the Year at the Nigeria Technology Awards as well as one of the Top 20 Young Entrepreneurs to Watch in Africa by the African Youth Forum in Egypt. In 2017, he was appointed to the E-Agric Stakeholders Forum by the Federal Ministry of Agriculture. The entrepreneur graduated from the Sikkim Manipal University, India, where he obtained a distinction in his first degree in Applied Information Technology. He decided to fuse Digital Marketing with the skills and learning experience he had acquired while focusing on the user experience and the customer journey of selling products and services online. Prior to his current role at Travelbeta.com, he has been involved in Konga.com as former vice president of marketing; Jumia.com as former director of marketing in Jumia.com; Wakanow.com as former online marketing manager, as well as e-marketing coordinator for Deloitte in West, East and Central Africa and Webmaster for British Council in Nigeria.

LSETF opens funding window for micro enterprises ... application closes September 30 ODINAKA ANUDU

n line with its mandate to provide access to financial and institutional support to micro, small and medium enterprises (MSMEs), the Lagos State Employment Trust Fund (LSETF) has announced the opening of its loan application process for small businesses and startups operating in the state. Applicants intending to secure N500,000 can now apply for the loan at 5 percent interest rate under the LSETF Loan Programme, which started on September 3. Interested applicants can obtain application forms at the LSETF liaison offices across the 20 local government offices in Lagos State and can submit completed application forms at the same location or apply online via the LSETF website, www.lsetf.ng from today. As part of the requirements for application, interested applicants are expected to attach alongside their application forms, proof of residency registration with the Lagos State Residents Registration Agency (LASRRA), tax identification, training certificate (for Startups), passport photographs and details of guarantors. In addition, existing micro enterprises are expected to show proof of sales evidenced by sales records or bank statements for six months. Speaking on the opening of the loan application, Akintunde Oye-

bode, executive secretary of the LSETF, said the process is entirely free and open to all small business operators who are residents of Lagos State, irrespective of their tribe, gender, religion or political affiliation. “This loan application window is a follow up to our existing loan programme where the fund has disbursed almost N6 billion to approximately 7,000 beneficiaries. The month-long application window is now possible following the process optimisation we carried out as a result of the huge backlog we had to deal with, having recorded an overwhelming response to the open and rolling application process we had running before. Going forward, the LSETF applications will be accessible at periodic windows as we have it now. So I call on qualified small businesses to apply as soon as possible before the close of the application window,” Oyebode said. “I am very proud that the process for obtaining these loans has been transparent, merit-based, free and fair. This is a testament to the integrity of the LSETF team, who have demonstrated exemplary adherence to our core values and their unwavering commitment to help small businesses expand and create jobs. To this end, I am pleased to note that the existing beneficiaries have been able to put more than 24,000 people to work within the last two years,” he added. In addition to accessing the

loans, LSETF also provides beneficiaries with professional business trainings, helps promote their businesses through public procurement opportunities, fairs, exhibitions and awareness programmes. LSETF will also work to help create an enabling environment for small businesses operating in the state by working with relevant government ministries, department and agencies to address any issue, procedure or policy that hampers the smooth operations of their businesses in the state. LSETF was established by Governor Akinwumi Ambode of Lagos State to fund micro, small and medium businesses in the state. It is targeted at disbursing N25 billion to small businesses in the state.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

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Funders chase start-ups as entrepreneurs sustain innovation ODINAKA ANUDU

che Abiakam has been a fashion entrepreneur since 1996. Abiakam has secured the trust of customers through her Joagh Athletics. Last year, she applied and got N5 million loan from the Lagos State Employment Trust Fund (LSETF). Abiakam secured the loan because of her innovation. She was able to create 100 brands without external funds and ensured they were found on Jumia Nigeria, Jumia Ghana, Jumia Kenya, Konga Nigeria, and Dressmeoutlet.com, among others. Like Abiakam, local and international funders are searching for innovative start-ups who are able to break with the norms to create a change in their industries with their own resources. Banks, local and international investors and grant providers are seeking the right start-ups to put their money. But these must be start-ups with innovative ideas that change the way things are done, disrupting the traditions and norms of their industries. In 2017, Agriko attracted $250, 000 from investors three months after starting. Agriko started in July and got this fund in October.

Agriko currently supplies 33,000 litres of natural fruit drinks every month in the Lekki area of Lagos. “Over the coming months, we aim to increase our distribution capacity to about 250,000 litres of natural fruit drinks across Lagos and expand the product line to include agricultural produce such as banana, potatoes, plantain, pineapples, mangoes, tomatoes and onions,” Wole Oluyemi, founding director, told Start-Up Digest last year. Also last year, the Nigerian Economic Summit Group (NESG)

invited entrepreneurs to pitch their ideas before investors. At the end, L & L Foods, a food processing and packaging firm, emerged winners and went home with $15,000. First runner-up was Accounteer, which enables entrepreneurs to manage their administration themselves even when they are not experts. The startup went home with $10,000. MyPadi.ng, a hostel booking platform for students, was the second runner, walking off with up $5,000. Still in 2017, Nigerian-based

start-up, Andela, which invests in Africa’s most talented engineers, secured $40m in Series C Funding led by pan-African venture firm, CRE Venture Capital. In 2016, Wi-Fi provider Tzeti got $2.1 million from an investor, while e-commerce start-up Cars45 secured $5 million. Similarly, Fintech firm Lydia got $1.25 million. In 2015, Travelbeta.com, a Nigerian travel booking website co-founded by Onyeka Akumah, raised $2 million in a seed round led by Altheus Limited. Mark E ssi e n , f ou n d e r o f hotels,ng, had earlier raised

$250,000’s seed fund from Spark, but the fund almost finished along the line because most of it was going into salaries. He was able to secure another $1.2m from international investors EchoVC Pan-Africa Fund and Omidyar Network. Techpoint reported in the second quarter of 2018 that local and foreign investors pumped about $73.7 million into Nigerian startups within the quarter, with FinTech getting 75 percent of the total. Cellulant, payment platform, received $47.5 million, followed by a service firm, O-Mobile Multimedia Limited, which got $10,000,000. Also, PiggyBank got $1.1 million, while logistics startup TradeDepot received $3 million. More so, Kobo360 got $1.2 million in June 2018. A 2017 report by Global System for Mobile telecommunications Association (GSMA) showed that out of the $560 million invested in technology startups in Africa in 2017, Nigeria got $114.6 million. Africa’s most populous country ranked third after South Africa and Kenya, which got $167.9 million and $147 million respectively. The three countries accounted for 76 percent of the total funding that came into the region in 2017, the report said.

Experts task African leaders on finance, How NIPOST’s digital product can boost e-commerce, strengthen start-ups cannot cause us any harm.’’ Ad- tom Organisation has also not mentorship for agriprenuers MICHEAL ANI egbuyi said. relented in her drive to ensure JOSEPHINE OKOJIE, Kigali

xperts at the African Green Revolution Forum (AGRF) in Kigali, Rwanda, have charged African leaders on finance and mentorship for agriprenuers to scale up the continent’s agriculture and achieve food security. “Africa has a short time to create jobs for its fast growing youth population. Governments on the continent must give commitment in terms of investments and provide mentorship for youths to scale up agriculture,” Fred Swaniker, co-founder and Trustee, African Leadership Academy, said. “Africa has an unusual advantage but it is yet to capture them. The opportunities we have as a continent is how to let the youths think differently about agriculture and move beyond raw material production by making them see opportunities in value addition,” Swaniker said. He stated that Africa can only attract youths into through a holistic approach that looks at the entire entrepreneurial ecosystem. He added that ideas, team and capital are important in the entire entrepreneurial ecosystem. “The mixture of ideas, a team and capital brings about entrepreneurship. We need to identify people with innovative ideas and bring venture capital to unlock the vast potentials on the continent.”

With a population 1.2 billion and potential to reach 2.5 billion by 2025— where youths will account for 60 percent the population— experts foresee danger in Africa if nothing is done to stem youth unemployment. Agriculture is the sector that creates jobs for over 80 percent of the workforce in Africa, but youths have found it less attractive owing to the drudgery involved and the lack of innovation and technology in the sector. “Employment trends in Africa are not only a problem to Africa but globally. The continent’s labour force growth rate is 3 percent per annum and 60 percent of working poverty youths with a per capital income of $3.10,” Carla Henry, senior technical specialist, International Labour Organisation (ILO) said. “Africa has to invest in human capital development,” Henry said. Similarly, Alex Ariho, CEO, African Agribusiness Incubators Network (AAIN), said, “Our solutions have to start at home and our leaders must start believing in the young people. This has to start at the leadership level if we really want to take agriculture to the next level. “The response model must be able to speak to each category of youths on the African continent. We need to create assemblies of mentors to nurture the emerging start-ups coming out of the continent agricultural space,” he added.

he Nigerian Postal Service (NIPOST) has launched the Digit a l Ad d re s s i n g Sy s tem (DAS) to support the ecommerce industry and boost growth of start-ups in the country. Speaking at the launch of the product in Lagos, Adebisi Adegbuyi, postmaster general of the federation, said the organisation was mindful of the importance of ‘address verification’ in the quest for national development, hence the need to carry out the project, stressing that it would help to revolutionise the way business of courier and e-commerce are conducted and solve the problem of insecurity in the country. “The government has seen the need for a proper address verification system and has come up with a design that will ensure that we know where ever ybody lives,” Adegbuyi said. “The service is capable of assisting the country in the fight against terrorism because terrorists are not spirits, they live somewhere,” he said. So, if we know where they live by virtue of the technology we are going to deplore, it simply means we know where you are and you

According to him, NIPOST is partnering with critical other agencies like Niger ia Identity Management Commission (NIMC), Federal Road Safety Commission (FRSC), Nigerian Communications Commission (NCC) and banks, on the project in ensuring that crimes committed under anonymity becomes thing in the past. On his part, Adebayo Shittu, minister of communications, said ‘the DAS is a game changer not just to the e-commerce industry alone but to the country at large and will help in the repositioning of NIPOST as a top revenue generating and impactful government agency within the next two years. “I can say confidently that with the multifaceted reforms that we are bringing on board, NIPOST would be number one leading government agency with the most impactful influence on every Nigerian. “As of today, those in the forefront of bringing large money into Federal Government’s coffers are the Customs, FIRS, NNPC and a few others, but that will change in the next two years,” Shittu said. The e-commerce has been in focus of the Universal Postal Union (UPU) working groups for many years. The World Cus-

that new modalities are established to cope with the emerging trends. However, there are many barriers to the growth of crossborder e-commerce, such as complexity of the postal product offering, lack of adequate infrastructure support, and outdated and inefficient postal– customs–transport processes, the security challenges, high cost of doing business, as well as lack of collaboration between stakeholders. Nigeria is more of a cash economy and this carries with it, the quality and security challenges for the ecommerce sector. For the sector to thrive, it must ensure that it provides at least basic robust and secured electronic payment platform that will guarantee online payments and reduce the risk associated with ecommerce. Konga’s CEO, Shola Adekoya, once confirmed a 300 percent increase in orders in states where Pay on Delivery (POD) was allowed and a drastic reduction of orders as soon as it was stopped coupled with abnormal amount of failed payments. He alluded to the fact that successful delivery went up to 91 percent instead of about 60 percent within two months of discontinuing POD.

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This is M NEY A daily guide to your Personal Finance

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10 estate planning mistakes to avoid

state plans are not just for the rich and famous, but their celebrity highlights and indeed exaggerates powerful estate planning lessons that can apply to everyone. We were all shocked that Aretha Franklin died intestate. One would assume that someone so accomplished, with considerable wealth, and who most likely had access to a team of advisors, and who had an adult child with special needs would have formalized her wishes for her estate. We can only hope that the courts and her family won’t have too much difficulty locating all her property and assets so that they can tidy up the estate for beneficiaries in the best possible way and as soon as possible. The vast majority of Nigerians do not have an estate plan in place. Do you? Your lovely family might seem so close knit, and you feel certain that absolutely nothing can go wrong. Yet so much can. Here are some estate-planning mistakes for all to avoid: 1. Not having an estate plan. The biggest single estate-planning mistake is not having one. There are several estate planning tools so it is inexcusable to do nothing. You have loved ones, people you care about. Why would you put them through so much stress in addition to the grief of losing you; it leaves them in a shroud of un-

certainty and confusion. Without specific instructions from the deceased, an estate may be subject to long drawn-out court battles as family members fight for what they feel should be their share. A will is the simplest estate-planning tool. It is simply a letter of instruction appointing someone to be in charge of your estate and specifying how you want your estate to be distributed or divided. 2. Don’t die intestate If you die intestate, that is, without a will, the expensive probate process kicks in; it is also fraught with long drawn out delays. Why give away significant sums from your estate after having built assets over a lifetime of hard

work. Your estate will be distributed according to the laws of intestacy. This could be devastating to your spouse and children. Family members and the courts will decide who will raise your minor children. This may not be the person that you would have wanted to raise your kids particularly if you are a single parent. 3. Procrastination There is a fear of dwelling on our mortality that makes people postpone this important task even though it is the surest thing of all. We cannot wish it away. If you are young and single and have no dependents and haven’t gotten round to doing anything about your estate, you can probably be forgiven, but only for a while. Many young singles are building extraordinary businesses that are built to last. Anyone with significant assets, and a family to protect; children or a spouse, should at least have a will and as early as in their 30s or 40s. 4. Not planning for minors and young adults Do you want money to go outright to your children? If they are minors, their guardian (someone you didn’t select, will be making all financial decisions on their behalf. Select a guardian for your minor children. Young adults may get

unfettered access and control of their inheritance from the tender age of 18. Most 18 year olds are not equipped to make the right financial decisions particularly for large sums of money. In addition, inheriting too early has its challenges and makes it difficult for some children to be motivated or driven to success. Indeed, they are more likely to finish their inheritance in a short time. A trust is an outstanding estate-planning tool; it avoids probate, and enables the seamless transfer of wealth to loved ones, controlling the long-term distribution of your assets. With all wishes clearly spelt out, beneficiaries inherit directly and expenses are minimised. An important advantage is that designations of your assets are private. By relying primarily on a will, bequests are public as wills are filed with the courts as a public record. 5. Leaving untidy records Are your financial records disorganised? You can imagine a family in grief having to go through the stress of trying to find a will or other evidence of estate planning. If you are the primary or sole breadwinner, surely our spouse should have an idea of where your money is. Keep your documents organised and secure. Where are your bank state-

ments, brokerage statements, insurance policies, title documents, etc.? We are taught to guard our passwords and screen names jealously. Does anyone in the world have access to these? What is the point of having a will if it cannot be located? A will should be kept securely but where it can be found. Courts might assume that there is no will and then the long probate process begins. 6. Failure to update an estate plan Signing a will is just the beginning of the process, not the end. Things happen; life is full of events and estate planning documents and beneficiaries should be updated as your financial and personal situation changes. Failing to periodically update an estate plan or make changes to beneficiaries after a marriage, birth, divorce, remarriage, death or other life changes can cause problems; this could include disinheriting heirs. Buying and selling property or a business requires that changes are made to your will or trust. A successful young man forgot to change the designation on his insurance policies; he had put his father as sole beneficiary. His wife and three children inherited nothing. Beneficiary designations on retirement accounts or insurance policies should be reviewed to be sure they are actually in accordance with your wishes. 7. Not putting your wishes in writing It is important to put all bequests in writing if you want them to happen. Alleged promises to “trusted” servants or extended family members can lead to a lawsuit being filed against an estate. 8. Not planning for estate taxes Poor estate planning will force your heirs to have to sell valuable property or precious items because they just don’t have the liquidity to pay those taxes. With careful planning taxes can be minimised whilst legal obligations are met. 9. Failing to be clear about keepsakes and

heirlooms Individuals often fail to be specific about personal property in their estate planning, which can lead to fights over precious family heirlooms, artwork and other items of sentimental value, from a tablecloth to a rug or tea set! Which items should go to whom? Don’t assume that your children will “just share all your personal effects equally,” without squabbling. Be as specific as you can, particularly for keepsakes. 10. Not leaving instructions for your funeral How do you want your funeral to be? Did you know you can say who attends and who doesn’t?! If you wish to be buried like royalty, do designate funds specifically for that purpose so that you can have a “befitting” funeral and your descendants don’t go into debt or bankruptcy from funeral expenses. Intestacy often leads to ugly public family feuds. Do the right thing. Tidy up your affairs. Don’t leave your life’s work to chance. Plan instead to leave a lasting legacy.

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

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Why we procrastinate when we have long deadlines MENG ZHU “Can you get that to me by the end of the day?” isn’t a request employees like to hear. But for many people, having shorter deadlines instead of longer ones might actually help them complete a task and see their work as being less difficult. Parkinson’s Law states that “work expands so as to fill the time available for its completion.” Our findings suggest that managers need to view deadlines more comprehensively. First, whereas Parkinson’s Law suggests that longer deadlines lead people to set easier goals and therefore decrease effort, we found that longer deadlines increase an assignment’s perceived difficulty. Second, while Parkinson’s Law makes a prediction only about time commitment, we found that longer incidental deadlines increase

monetary commitment. As a result, when an assignment also includes a budget, it might be better to set a shorter deadline than a longer one. These findings related to only single deadlines, and many of us balance multiple deadlines of varying lengths at a time. My colleagues Yang Yang and Chris Hsee and I designed a separate study to consider how individuals respond to a group of deadlines. We concluded that when faced with multiple deadlines for tasks that vary in importance, people regularly pursue less-important assignments with shorter deadlines rather than moreimportant assignments with longer deadlines. In our article in the Journal of Consumer Research, we called this the “mere urgency effect” to reflect how limited time windows affect the ways individuals choose what tasks to complete.

These studies showed us that people’s tendency to procrastinate on what is important in order to finish less-important urgent assignments reflects a basic psychological preference.

Many of us know this intuitively; we constantly check and respond to emails rather than work on the revenue report or our team project. This may happen because important tasks are more

difficult and further away from goal completion, urgent tasks involve more immediate and certain payoffs, or people want to finish the urgent tasks first and then work on important tasks lat-

er. However, our studies go one step further by showing that we may prioritize urgent yet trivial tasks even when these reasons are controlled for. We behave as if pursuing urgent tasks has its own appeal, independent of objective consequences. These patterns are important for managers and others setting deadlines to recognize, in large part because our findings reveal ways to game the system: Short deadlines on urgent tasks elicit attention. When deadlines are distant, managers can shift people’s attention away from the deadline and toward the final outcomes of everyday tasks. Reminding employees of the final payoffs of different tasks is an effective way to do this.

(Meng Zhu is an associate professor of marketing at the Johns Hopkins Carey Business School.)

Your corporate purpose will ring hollow If the company’s actions don’t back it up GRAHAM KENNY

t’s impossible to miss the simultaneous occurrence of two current corporate trends. The first is the rise of the idea that to motivate employees you need to supply them with a “corporate purpose.” The second is the astronomical rise in CEO and senior executive pay. To avoid a corporatepurpose exercise being viewed by employees as a cynical joke, there are certain preconditions that must be met. The major ones are addressing excessive CEO and senior executive pay, and treating employees and other stakeholders fairly. As a recent example take the announcement that

the CEO of Australia’s Domino’s Pizza has become the country’s highest paid executive. This is the same organization where some franchisees got caught systematically underpaying vulnerable staffers, and charging for visa sponsorships, in order to meet their financial goals. While Domino’s details its mission, vision, and values on its website, it stops short of a purpose statement for good reason. It would seem incongruous to espouse “purpose” in a situation where the law is allegedly being broken and there are accusations of fraud. The pattern at Domino’s Pizza has a precursor in 7-Eleven, and has again been discovered at sev-

eral expensive Australian restaurants operated by high-profile and welloff chefs. They’ve been caught shortchanging their employees. It’s pretty hard for senior management in these

businesses to espouse “higher purpose” to improve customers’ lives when the very people who put in to make this happen are not meeting their “basic purpose.” It’s also difficult to espouse

corporate purpose if you’re cheating customers. In Australia, we have been watching a Royal Commission into Misconduct in the Banking, Superannuation and Fi-

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nancial Services Industry. Among the results that have gobsmacked the public is the revelation that Commonwealth Bank staff knowingly charged clients for financial advice for years — after the clientshad died. Cultures like this come from the top. It works just fine for the bank CEOs, making them among Australia’s highest-paid executives, but not so well for bank customers, as we have discovered. Articulating corporate purpose is a great idea. Before you launch your purpose campaign, put your house in order.

(Graham Kenny is managing director of Strategic Factors and president of Reinvent Australia.)

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Four strategies for overcoming distraction CHRIS BAILEY

n the flurry of statistics that exist around personal productivity, there’s one I find especially alarming: The average person is distracted or interrupted every 40 seconds when working in front of their computer. Our brain’s attentional system is programmed to respond to anything that’s pleasurable, threatening, or novel. We even have a novelty bias, wherein our brain is flooded with a pleasure chemical, dopamine, whenever we focus on something new. So how can you gain back control? After reading hundreds of studies, interviewing dozens of experts, and running the gambit of self-experiments , I learned that countless strategies can help us mitigate distraction.

Here are four of my favorites. 1. CREATE A DISTRACTION-FREE RITUAL. For my distraction-free mode, I enable a distractions blocker on my computer (I use an app named Freedom), put on noise-canceling headphones, leave my phone and tablet in another room, grab a coffee, and set an intention for what I want to accomplish. After focusing for 45 minutes, I treat myself to a 10-minute all-you-can-eat distraction buffet. 2. SET THREE DAILY INTENTIONS. First thing in the morning, ask yourself: What three things will I want to accomplish by day’s end? Part of what makes this rule so powerful is that three things fit comfortably within our attention at once, and prioritizing them ensures that these tasks stand out from a laundry list of other, less

important things. 3. WORK ON HARD STUFF, AND DO MORE OF IT. Sometimes distractions come from internal and external factors, but other times they happen because we’re not be-

ing challenged enough by our work. Assess your busywork level. If it’s high, that’s usually a sign that you have the capacity to take on more-challenging projects, and perhaps even more work in general.

4. SET AN ARTIFICIAL PROJECT DEADLINE. It’s up to you to introduce a novel and threatening factor to long-term projects lacking urgency. Have an entire afternoon to write a monotonous report? Give

yourself 50 minutes.

(Chris Bailey is the author of “Hyperfocus: How to Be More Productive in a World of Distraction” and “The Productivity Project.”)

How discrimination against female doctors hurts patients CHRISTOPHER G. MYERS AND KATHLEEN M. SUTCLIFFE

he systematic discrimination against female medical school applicants is not only sexist and scandalous in its own right — not to mention devastating for the women denied access to the profession they desired — but it constitutes a potential threat to patient safety and public health. Accumulating evidence shows that women deliver superior care. Other research has demonstrated that these differences in outcomes may be particularly pronounced for female patients. Evidence suggests that female physicians bring unique perspectives to their practice that can improve care. Female physicians tend to engage in more preventive care and more effective doctor-patient communication. Re-

search has also found that female physicians engage in more evidence-based care practices and score higher on medical school examinations relative to their male colleagues, factors that may account for their better outcomes.

But there are other issues at play. A recent study of surgeons and other operating room team members revealed that the percentage of women on the team was directly associated with more cooperative behavior, with a substantial

drop in cooperation when the number of men exceeded 50%. In light of this evidence, it is reasonable to conclude that any practice, bias, or treatment that keeps women from entering and advancing in medicine is

actually denying patients opportunities to receive higher-quality care. Biases that disadvantage women are observable even within the clinical components of medical training, resulting in different experiences for men

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and women during medical school and residency training. Despite these implicit and systematic barriers, female physicians continue to persist and achieve better outcomes than their male colleagues. A second implication is that male physicians can learn from their female colleagues. Not only will women benefit from having more female physicians in leadership positions, but men will benefit from the education they receive from these women as well. Allowing things to continue as they have for women in medicine sets our society back not only in gender equality but also in terms of the progress we should be making in medical care. (Christopher G. Myers is an assistant professor at Johns Hopkins University. Kathleen M. Sutcliffe is a Bloomberg Distinguished Professor at Johns Hopkins University.)

BUSINESS DAY

Monday 10 September 2018

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

Market Statistics as at Friday 07 September 2018

LOSERS Opening

Closing

Change

GLAXOSMITH

N13.1

N14.3

1.2

MOBIL

N179

N180

DANGSUGAR

N15.1

N16

0.9

DIAMONDBNK

N1.23

N1.33

0.1

N2.4

N2.49

0.09

MAYBAKER

Company

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Closing

Change

DANGCEM

N224

N223

-1

UBN

N5.85

N5.3

-0.55

N23.15

N23

-0.15

N21

N20.9

-0.1

N5.35

N5.25

-0.1

WAPCO ZENITHBANK OANDO

ASI (Points)

34,037.91

DEALS (Numbers)

2,715.00

VOLUME (Numbers)

155,953,026.00

VALUE (N billion)

2.103

MARKET CAP (N Trn

Foreign transactions on Nigerian Bourse drop by 64.68% …domestic investors now account for 75.24% Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) said trading figure from major custodians and market operators on their Foreign Portfolio Investment (FPI) flows show 64.68percent decline in foreign transactions for the month of July as against June level. Foreign transactions which stood at N102.41billion as at June declined to N36.17billion in July. As at January, it was N166.39billion, according to recently released figures at the Nigerian Bourse. Analysis of transactions for the period ended July 31, 2018 shows domestic investors have 75.24percent control of the stock market (N109.9billion) while foreign investors account for just 24.76percent.

The domestic composition of transactions on the Exchange between January and July 2018 also shows the institutional composition of the domestic market reduced by 20.91percent,

from N56.24billion in June to N44.48billion in July 2018 while the retail composition increased by 124.66percent, from N29.12billion to N65.42 billion within the same period.

“This indicates a significantly higher participation by retail investors over their institutional counterparts in July 2018”, the NSE noted in its report on domestic and

Billy Nya, Senior Technical Expert, Sub-Saharan Africa, SWIFT; Solomon Osuoza, Regional Country Manager, West Africa, SWIFT; Patrick Ajunwok, Executive Secretary/CEO, Association of Corporate Treasurers of Nigeria (ACTN); Zeal Akaraiwe, CEO, Graeme Blaque Advisory Services & Member ACTN Governing Council; Eghosa Nehikhare, General Manager, Venture Garden Group at the breakfast meeting of ACTN held recently in Lagos.

foreign portfolio participation in equity trading for the month of July. Total transactions at the nation’s bourse reduced by 22.21percent from N187.78billion recorded in June 2018 to N146.07billion (about $478.3 million) in July 2018. The cumulative transactions from January to July increased by 54.38percent from N1.129trillion recorded in 2017 to N1.743 trillion in 2018, according to NSE. This data confirms exit of foreign portfolio investors from the Nigerian stock market which resulted to market loss in excess of N1trillion. Recent first-half (H1) earnings releases at the Lagos Bourse did little to improve market sentiment, further evidence of the preelection blue. The market witnessed remarkable pullback of some foreign investors as a result of uncertainty ahead of next year’s general elections.

12.426

Stanbic IBTC Holdings subsidiary surrenders licence as Venture Capital Manager

tanbic IBTC Holdings Plc has informed the Nigerian Stock Exchange (NSE) that its subsidiary, Stanbic IBTC Ventures Limited (SIVL) has applied to the Securities and Exchange Commission (SEC) to surrender its licence as a Venture Capital Manager. “This surrender is entirely voluntary and the Commission has granted a “No Objection” to SIVL’s application”, the Holdco said in a notice at the NSE. “We also would like to state that SIVL does not have any Venture Capital obligations with any of its clients and the surrender of its licence would not impact negatively on the Stanbic IBTC Group as SIVL will still continue to operate as a going concern”, it further added.

SWIFT berths with new application to Corporate Treasurers Adeosun, Adesina, Oteh make list of 44 keynote speakers, thought leaders for ASEA Conference WIFT, a global discuss issues on eco- automating transaction

provider of secure financial messaging services has introduced to corporate treasurers, its new application called ‘SWIFT for Corporates’ which equips companies with tools and services to run their treasury operations efﬁciently, control their cash and risk, and support their business evolution. The new application was introduced to corporate treasurers at the September 6, 2018 breakfast meeting organised in Lagos by the Association of Corporate Treasurers of Nigeria (ACTN) in partnership with SWIFT. The ACTN through its breakfast meetings provides the forum for corporate treasurers to meet regularly to interact and

nomic policies, policy directions and their impacts as well as enlighten the treasurers on new developments within the financial markets, said Patrick Ajunwoko, executive secretary/ CEO, ACTN. “SWIFT for Corporates provides you with a single channel through which you can communicate with all of your banks, whatever the size of your business. We make it possible for you to access the ﬁnancial world securely, conveniently and cost effectively - in a way that is appropriate to your scale, complexity and resources”, said Billy Nya, Senior Technical Expert, Sub-Saharan, Africa, SWIFT. He added, “With SWIFT for Corporates,

and information flows also rely on complete, accurate and reliable data flowing through the SWIFT network thanks to a comprehensive reference data directory - SWIFTRef – providing affordable and accessible payment reference information for suppliers, customers and financial counterparties across more than 200 countries.” “SWIFT for Corporates connects your organisation to the global financial community. You can exchange a full range of financial messaging and reporting with banks including both domestic and international payment and collection instruments”, Nya further told the corporate treasurers at the breakfast meeting.

he Nigerian Stock Exchange (NSE) said that over 44 keynote speakers and thought leaders have confirmed to speak at the 22nd Annual African Securities Exchange Association (ASEA) Conference scheduled to hold on November 26 and 27, 2018 at the Oriental Hotel, Lagos, Nigeria. Among the growing list of influential speakers are Kemi Adeosun, Minister of Finance; Akinwunmi Adesina, President, African Development Bank (AfDB); Arumah Oteh, Vice President and Treasurer, World Bank; Oscar Silva, Chairman, Davos International Advisory, Benedict Okey Oramah,

CEO Afrexim Bank; Patience Oniha, Director General, Debt Management Office; Nandini Sukumar, CEO, World Federation of Exchanges (WFE); Abimbola Ogunbanjo, President, Nigerian Stock Exchange, Aigboje Aig-Imoukhuede, Chairman, Coronation Capital and Ex-Officio, the Nigerian Stock Exchange, among others. The two-day conference themed “Champions on the Rise: Africa’s Ascension to a More Sustainable Future”, will feature nine sessions and two special sessions. The conference will discuss burning issues around Africa’s global competitiveness, emerging technologies and inclusive growth, within the broader perspectives of

sustainability. Dimensions to cover include: Green growth; Redefining Business Models: African Capital Markets in an Era of Customer-Centricity; Cloud Banking; FinTech for Africa - Driving Innovation and Efficiency in the 4th Industrial Revolution; Galvanising Domestic Finance for the SDGs in Africa; Driving Africa’s ‘Real’ Economy: Innovative Solutions for Market-Based SME Financing; Pathways to Inclusive Growth in Africa: Digital Finance; Financial Literacy; Inclusion and the Democratisation of Wealth; African Capital Markets – A Facilitator of Affordable Housing in SSA?; as well as RegTech and the Future of Regulation in Africa.

Monday 10 September 2018

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BUSINESS DAY

NEWS Outrage after Attorney General calls MTN $8bn... Continued from page 1

of the Federation said: “Pursuant to the penalty amount charged

on MTN Nigeria Communications Limited by the Central Bank of Nigeria on 28th August, 2018 in the sum Eight Billion, One hundred and Ninety Seven Dollars and Sixty Three Cents ($8,134,312,397.63) being infraction of Forex remittances with irregularly issued Certificates of Capital Importation issued between 2007 and 2015. The Office of the Honourable Attorney-General of the Federation and Minister of Justice hereby request that the said amount referenced hereto are to be paid into the: CBN OAGF FGN ASSET RECOVERY USD ACCOUNT.” The letter, exclusively seen by Business Day, is in conflict with statements made by the governor of the Central Bank of Nigeria (CBN) Godwin Emefiele, who said that the money should be returned. By using the term “penalty charge” the AG insinuates that MTN ought to pay an $8.1 billion fine for legitimately earning money from doing business in the country and seeking to distribute profits earned to their foreign investors, lawyers tell Business Day. A penalty is a punishment imposed for breaking a law, rule, or contract. It is also unclear how the AG has become a receiver for sanctions or penalties delivered by the CBN on corporate institutions. According to reliable sources, this account the AG requested payment be made into is used by the Federal Government to receive monies loot-

ed by corrupt government officials found in foreign banks. “All recovered loots are sent into that account and once it enters there, it doesn’t come out. MTN must be very careful,” three people familiar with the matter said. Since last Wednesday when CBN asked MTN to return a total of $8.1 billion that it said was illegally repatriated between 2007 and 2015 back into the country, the Abuja-based regulator neverreferredtotherefundasapenalty. Once MTN refunded the money, the CBN was in turn expected to pay the telecommunication company the naira equivalent of the said sum at the prevalent exchange rate at which the money was initially repatriated out of the country. However,theAGs3paragraphletter instructedMTNtopay the $8.1bn into a hitherto unknown account, contrary to expectations that the CBN would manage the process since the apex bank is the regulator and not the AGF. The four banks accused of aiding MTN in the illegal repatriation- Standard Chartered, Stanbic IBTC, Citi bank and Diamond bank- say they have been debited with the N5.87 billion fine slapped on them by the CBN. Two days after the banks were debited on Tuesday, the AG also wrote asking them to pay into a specified ‘asset recovery fund’ but it is unclear whether the fine will also be transferred from the CBN to the said account. MTN’s share price has been battered in the past week. ThisiscausingoutrageinSouthAfricawithsomecallingitanexpropriation. Paul Theron, who runs Vestact

in Johannesburg, said in a letter to clients this week: “This pathetic, nationalistic and immature attitude will severely weaken Nigeria’s economy in the years to come. “MTNhasbeentheirmostcommitted foreign investor in recent decades, by a mile. Thanks to these acts of wantonhighwayrobbery,nolargecorporate will commit to building a serious business in Nigeria for decades to come.” As of Friday, the Johannesburglisted telco’s share price was down 32 percent, wiping off a whopping $4.3 billion- almost half of the total claims of $10 billion- from its market capitalisation, since news of the illegally repatriated cash first broke Wednesday, August 28. Moody’s Investors Service placed the company’s rating of Ba1, four steps into junk territory, on review for downgrade on Thursday, citing the “uncertainty around the potential implications” of the Nigerian penalties. MTN faces an uphill battle to convince investors that it won’t cough up the $10 billion worth of claims made against it. Amid the unending saga, Nigeria’s biggest banks have been battered, even though they were not directly involved in the illegal repatriation. Guaranty Trust bank has lost a whoppingN116billionsinceAugust28, afteritssharepriceisdown10percentto N35asofFridaySeptember7fromN39. Stanbic IBTC, one of the banks directly affected, is the second largest loser after seeing N44 billion wiped out of its market capitalisation in the said period. First Bank’s market capitalisation has declined 7 percent decline

to N323 billion from N348 billion, which implies that Nigeria’s largest bank by assets has surrendered N25 billion in market capitalisation. Zenith and UBA are both down 6.8 percent and 5.4 percent, losing N47 billion and N15 billion respectively in market capitalisation. Access and Fidelity are down 2.7 and 2.9 percent respectively, wiping N7.3 billion and N1.2 billion off their market capitalisation. Surprisingly, Diamond bank, which is one of the affected banks, has gained 0.8 percent in the period as its share price has gone from N1.30 to N1.33, giving it a valuation of N30.8 billion as against N30 billion, August 28. “If the banks move in sync at a time such negative news hit the market, then it is fair to say there is a contagion effect,” said Rafiq Raji, chief economist at Macroafricaintel. The NSE banking index, which tracks the stocks of listed lenders, slumped 9.85 percent last week compared to the previous week, according to NSE data, although rising political tensions ahead of next year’s elections and a broader emerging market sell-off have led to foreign capital outflows which has dampened stock prices. Sources familiar with the matter said that MTN met with the Vice President of Nigeria, Yemi Osinbanjo, along with the company’s lawyer to discuss the repatriation and tax bill issues. “The VP appeared to be weighed down by everything he heard,” the sources said.

Nigeria sees net FX outflows of $900m in... Continued from page 1

Sources tell BusinessDay that

L-R: Amaechi Okobi, group head, corporate communications, Access Bank plc; Herbert Wigwe, group managing director/chief executive officer, Access Bank plc; Colette Otusheso, group head, Accelerate TV, and Micheal Ama Psalmist Akinrogunde, winner of best short film/online video, Africa Magic Viewers’ Choice Awards (AMVCA), presenting the award at Access Bank Headquarters in Lagos.

Five insurers make NAICOM Tier one... Continued from page 1

2019 annual insurance year, to

support their technical capacity to underwrite and retain more businesses and minimize capital flight. Meanwhile, to ensure that there is increased capacity to retain more risks within the domestic market, NAICOM has offered palliatives such that companies within the lower Tier levels can participate in some risks at higher Tiers. According to NAICOM’s explanatory notes on the Tier based policy, insurers may provide reinsurance support to higher tier categories on the provision to the Commission of an acceptable reinsurance treaty. “Insurers are free to subscribe to any local or regional pooling arrangement, in any class of business irrespective of their tier categorization,” the commission said in an advertorial Friday. The commission is also opening the window for licensing of new companies in Tier 1 category to encourage further capacity support,

according an advertorial by the Commission on Friday. NAICOM said it has as at August 30, 2018 issued letters of advice, intimating each company on the solvency assessment Status, of their company as at December 31, 2017. As at, 1st January and 1st July of each year, new categorization shall take effect based on half –year and annual audited accounts for each period ended June 30th and December 31st. In the new Tier-Based Minimum Solvency Capital, Tier 3 companies are those that fall within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business. Companies in this category will be limited to underwriting only risks in life businesses in the following areas - Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwriting risks in these areas - Fire, Motor, General Accident, Engineering (only classes covered by

compulsory insurance), Agriculture and Miscellaneous Insurances. Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing minimum capital. For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for nonlife, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Suretyship Insurances. Tier 1 companies are those whose paid up capital has increased by 200 percent, above the existing minimum requirement. Life companies in this category will have capital of N6 billion, and will underwrite all Tier 2 risks and Annuity. While for non-life business, the paid up capital will be N9 billion, and will underwrite all Tier 2 risks and Oil & Gas (oil related projects, exploration & production), and Aviation Insurances. Composite companies in Tier3 will maintain N5 billion; Trier 2 N7.5 billion and Tier 1 will have N15 billion.

BusinessDay gathered that when MTN was first informed of a new $2 billion tax bill by the AG, the telecoms firm immediately got in contact with global accounting and audit firm, KPMG, to perform an internal audit of the company which will help in confirming or refuting the claims of the AG. After a month, KPMG provided their findings to MTN, who then delivered 80 boxes of documents to the AG’s office which MTN claims settled 96 percent of all issues raised by the AG. MTN then went to National Communication Commission (NCC), Nigeria Customs Service (NCS) and Federal Inland Revenue Service (FIRS) to enquire if there were any outstanding dues the company owed to the government agencies. After the necessary investigation, all three government agencies told MTN that there were no outstanding charges, sources say. MTNshareholdersinfarawaySouth Africa and the world over are feeling all thebruisesfromthemarketroutcaused by the saga between the mobile operator and the Federal Government. BusinessDay also gathered that MTN Nigeria has communicated with its staff, informing them that the company is engaging with the Nigerian government to come to an amicable understanding. The letter was necessary to ease the worries of about 1,800 staff of the company and the security of their jobs after their company was slammed with the biggest sanction ever in Nigerian history.

there were net outflows of $900 million from the country last month, consisting of $500 million of inflows and $1.4 billion of outflows. There has been a steady drop in FX trading on the Investors & Exporters (I&E) windows, according to FMDQ data compiled by BusinessDay. Banking sources tell BusinessDay thatthetrendwhichhadbeenexpected due to uncertainty relating to the 2019 Presidential elections, has also been worsened by the ongoing MTN saga. Total turnover at the I&E FX Window had been declining since May 2018 when $6.4 billion was traded. This fell to $3.93 billion in June, and further declined to $3.39 billion in July, according to data from the FMDQ OTC security market. Analysts say the surge in net FX outflows is set to worsen into yearend as the banks with the largest source of foreign inflows in the second quarter of 2018, (Stanbic IBTC, Standard Chartered, Citi Bank), were the same banks sanctioned by the central bank of Nigeria (CBN). “Capital importation is dominated by multinational banks to the tune of 83%. These banks have unfortunately been penalised purportedly for documentary lapses in the MTN saga,” said Bismarck Rewane, CEO of economics consulting firm Financial Derivatives Company (FDC). Latest data from the CBN shows that external reserves fell below the $46 billion level to $45.46 billion as at September 6, 2018. This comes as total external debt has more than doubled to $22.07 billion today from $10.32 billion in 2015. “Capital flight coupled with political uncertainty will increase the risk premium. The external reserves depletion is expected to continue, leading to exchange rate pressures. We see higher levels of naira liquidity and lower interest rates in the near term, combined with budgetary spending likely to push external reserves towards $44 - $45 billion by

the end of September.” The CBN on Friday, September 07, 2018, injected the sum $303.91 million into the interbank retail Secondary Market Intervention Sales. This is in addition to the sale of CNY 46.58 million in the spot and shorttenored forwards. The figures obtained from the CBN on Friday, September 07, 2018 showed that the US dollar-denominated interventions were only for concerns in the agricultural and raw materials sectors. “Investors are pulling out of the economy as a result of political and regulatory risk. Looking at the problem MTN is having, this will discourage foreign investments in the country as the environment is not regulatory friendly. Going forward, the further decline in foreign reserves will put pressure on the FX rate causing the value of naira to drop,” said Dolapo Ashiru, a stock broker. Meanwhile, naira depreciated against the U.S dollar across segments of foreign exchange market. The local currency weakened marginally by N0.05k to close at N362.78k per dollar on Friday as against N362.73k traded the previous day at the investors and exporters forex window, data from FMDQ indicated. Naira also lost its value marginally at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) by 0.07 percent as it traded at N362.62k per dollar on Friday from N362.37k/$ on Thursday. It traded stable at the CBN’s official window at N306.20k since Tuesday. Isaac Okorafor, director, corporate communications at the CBN, said that the exercise which was in tune with the CBN guidelines, were for the payment of Renminbi denominated Letters of Credit for agriculture as well as raw materials. He added that the sales in the Chinese Yuan were through a combination of spot and short-tenored forwards, arising from bids received from authorized dealers. Meanwhile, $1 exchanged for N361 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY 1 exchanged for N53.35.

BUSINESS DAY

Monday 10 September 2018

C002D5556

BUSINESS DAY

NEWS

Malami’s tax letters raise questions on corporate ‘extortion’ Iheanyi Nwachukwu

he tax bills issued to companies from the Attorney General of the Federation (AGF) has finally brought forth the question of whether the Federal Inland Revenue (FIRS) willingly gave-up its role or was subjugated to achieve a now perceived ‘corporate extortion’ plot as headlined in various boardroom meetings. Nigeria’s high profile blue chip companies have not been spared lately with letters that emanated from the Attorney General’s office demanding hefty back taxes like the one recently served to the local unit of South-Africa based mobile phone operator, MTN Group. This ugly development is coming on the heels of markets witnessing remarkable pullback by some foreign investors as a result of perceived uncertainty ahead of next year’s general elections. “It is the role of FIRS and State Internal Revenue Services (FIRS) to administer taxes, while the AGF has the power to interfere in tax disputes. But in this case, there is no dispute yet. That is what is raising questions about the role AGF played in the whole scene”, a Lagos-based tax lawyer who chose not to be mentioned told BusinessDay on phone. He said, “While physical collection of the taxes is the role of the agencies, it is the role of AGF to interpret the tax laws and resolve disputes.” Also speaking on the issue, a tax expert in one of the ‘Big Five’ auditing firms said, “I don’t see why the AGF should write the letters first because it is only when FIRS wants

to prosecute that it sends the AGF.” “In this case, the FIRS did not establish a tax dispute; or is it that FIRS had reached-out to the Companies first? For AGF to be issuing letters, they shouldn’t have,” she said. “I don’t want to talk. It is just extortion. AGF is adopting extortionist approach. It will even get worse. This is what you see in this government, anybody wakes up and arrogates power to himself. I will not be surprised when the Nigeria Security and Civil Defence Corps (NSCDC) start arresting people saying they are evading taxes,” said Eben Joels, partner at Stransact LLP, a US CPA and Tax firm. “It is clear the AGF doesn’t have enough on his table. My point is that we are in a very serious trouble right now there in Nigeria. It is unfortunate that people are allowing their eyes to be covered while integrity is a mere rhetoric. What is happening now is small. It will be worse. It is a grand theft and fostering a scheme of deception,” the Boston-based tax expert said. He told BusinessDay that many companies should have expected this to come “when the FIRS started sending consultant auditors to go and audit theirbooks,knowingverywellthatsuch is against FIRS establishment Act. How do you think elections will be funded? It is unfortunate they have seen MTN and others like that as major cash cows”. “When I was practicing in Nigeria, I sent FIRS consultant auditors packing because they don’t have the constitutional backing to look at my clients’ books. It is unfortunate that most of the auditing firms chose to work for FIRS to remain in business. The objective is to extort money from people in the name of tax.”

Beer, malt demand hit by weak consumer spending as sales slide in August JONATHAN ADEROJU

he purchasing power of consumers in Africa’s largest economy has continued in a downward trend, dragging down the sales volume of beer and malt drink producers in August. The overall outlook for consumer spending was negative in second quarter of 2018, as more consumers were pessimistic in their spending outlook, but have a positive outlook for the next quarter and the next 12 months, according to a Q2 2018 Consumer Expectations Survey (CES) by the Central Bank. The index fell to -6.3 points which was 10.7 points lower than the index in Q2 2017. The report stated that consumers attributed the moderation in their outlook to worsening economic conditions. “The beer market declined by 3.50 percent especially larger (-5%) and stout (-3%) respectively. The malt market is also declining along with beer, and was down by 25 percent,” said Bismarck Rewane, the CEO of Financial Derivatives Company (FDC). However the rate of beer in consumption decline is beginning to slow and this could be as a result of salary arrears being paid in some states which eventually would have made people go for premium and value products, analysts say.

The big winners have been the Alcoholic spirits as reports show that alcoholic spirits and distilled product market mainly rum and gin grew at 15 percent. This is as a result of the cheap products that can be acquired even for as low as 50 naira per sachet. The FDC report showed that supermarket traffic declined in line with liquidity tightness, this is could also be as a result of consumers preferring to purchase their alcohol from beer parlours instead of the supermarkets at cheaper rates. Consumer Expectations Survey showed that majority of consumers nationwide believe that the next 12 months would not be an ideal time to purchase big-ticket items like motor vehicle and houses. Recall that Consumer spending fell by -0.99 percent in 2017 according to figures obtained from National Bureau of Statistics (NBS) as Nigerian consumers struggled to keep up with rising expenses amid an unfriendly economic environment with double digit inflation and unemployment. Guinness Nigeria reported half year 2018 net sales of N70.6 billion as compared to its 2017 half year that was N59.6 billion showing a 19 percent increase in net sales. While the Nigerian Breweries half year turnover for 2018 was N 172 billion as compared to its 2017 which was N 180 billion showing a 4.5 percent decline in net sales.

L-R: Afolabi Oke, committee member, 24Hours Praise, Trinity House; Deji Popoola, chairman: Ituah Ighodalo, senior pastor, Trinity House, and Tosin Alao, music director, at a press conference to announce the Power of Pic by Olawale Amoo Praise 24Hours (POP24) in Lagos, yesterday.

Nigeria is 5th least peaceful country in... Continued from page 1

edi tion of the GPI report, which ranks 163 independent countries and territories according to their level of peacefulness, Africa’s largest economy came at the bottom red occupying 148th position making it the 16th most violent country in the world. This is compared to its African peers; South Africa at 125th position, with 2.328 score, Kenya at 123 spot with 2.354 score while Nigeria reported a score of 2.873. MeanwhiletheGPIscaleseescountries with 1-1.8 as most peaceful while those with 3-4.2 as the least peaceful. In the Sub Saharan Africa (SSA) region, Nigeria was more peaceful than only four countries in 2017, as it occupied the 5th most violent position in the region. The most peaceful countries in the region were; Mauritius with a score of 1.548 making it the 20th most peaceful in the world, Botswana with 1.659 score followed, and it also ranked 29 in the world. Sierra Leone, Madagascar and Ghana made the top five list with 1.74, 1.766 and 1.772 scores respectively and they also ranked 35, 38 and 41 in the world respectively. “Of the 14 West African nations, the overallscoresofonlytwo–NigerandNigeria–deterioratedlastyear.Therewere substantialsub-regionalimprovements in the domain of Safety and Security, including Liberia by eight per cent, the Gambia by 5.9 per cent, and Ghana by 5.5 percent,” GPI said in the report. While the most violent countries in the sub-Sahara Africa region for the year under review were; Central African Republic with a score of 3.236 and a world rank of 155, followed by Democratic Republic of Congo with 3.251 score and 156 world position. Somalia and South Sudan occupied the region’s bottom position with scores of 3.367 and 3.508 and world positions of 159 and 161 respectively. Meanwhile, the results of the 2018 GPI report showed that the global

level of peace deteriorated by 0.27 per cent in the last year, making it the fourth successive year of deteriorations, of which Ninety-two countries deteriorated, while 71 countries improved. “The 2018 GPI reveals a world in which the tensions, conflicts, and crises that emerged in the past decade remain unresolved, especially in the Middle East, resulting in this gradual, sustained fall in peacefulness. Underlying the fall in peacefulness, six of the nine regions in the world deteriorated in the last year,” the report cited. A further analysis of the figures reveals that Europe, which has been the world’s most peaceful region since the inception of the index, deteriorated in peacefulness for the third straight year, due to increased political instability, impact of terrorism and perceptions of criminality. “Peacefulness deteriorated across allthreeGPIdomainsoverthepastyear, with the largest deterioration occurring in the Ongoing Conflict domain,” as compiled from the 2018 GPI report. Meanwhile, under the on-going domestic and international conflict domain, Nigeria scored 153 out of the 163 countries that appeared in this class from most peaceful to least peaceful , outperforming just 10 countries. For Societal safety and security domain, out of 163 countries, Nigeria was at 147 spot, this means the country was more peaceful than 16 countries in the category. While for militarisation domain, Africa’s largest economy was at 98 spot out of the 163 countries, thereby doing better than 65 countries all for the year 2017. The report however cited that, for the past ten years, countries with the largest improvements in peace recorded seven times higher per capita GDP growth than those that deteriorated the most. “The global economy would be US$13.87 trillion larger than its

Lagos, Rivers record highest number of... Continued from page 2

remaining three included Edo, Rivers and Imo states. Recently, the Nigerian political space was excited with news of massive defections from the ruling APC to the opposition PDP. It is not going to be a new development that

this trend will continue till next year 2019 when the election will be held. Recall that this was a similar situation that played out prior to the 2015 election that led to the defeat of the then ruling party the PDP. But beyond this, the issue of

current level if low peace countries achieved GDP growth equivalent to highly peaceful countries,” the report disclosed. Meanwhile, the economic impact of violence in Nigeria for the year 2017 amounted to $150.2billion (PPP) while the violence cost Africa’s largest economy a whopping $121.1billion (PPP) for the same year under review and this was 11 percent of the country’s GDP (PPP) in the period. The GPI also disclosed that it was $618.7 million (PPP) per capital. The global economic impact of violence was $14.76 trillion PPP in 2017, equivalent to 12.4 per cent of global GDP, or $1,988 per person. “The economic impact of violence has increased by 16 per cent since 2012, corresponding with the start of the Syrian war and rising violence in the aftermath of the Arab Spring. Syria, Afghanistan and Iraq incurred the largest economic cost of violence as a percentage of their GDP at 68, 63 and 51 per cent of GDP, respectively.” The economic cost of violence as explained by GPI is the economic impact of violence including the direct and indirect costs of violence as well as an economic multiplier applied to the direct costs. The economic cost of violence includes only the direct and indirect costs. Per capita and percentage-of-GDP results are calculated using the economic cost of violence. The countries that were however rated as the most peaceful includes- Iceland with 1.096 score, New Zealand, Austria, Portugal, Denmark, Czech Republic , Canada, and Singapore with scores of 1.192, 1.274, 1.318, 1.353, 1.372, 1.381, 1.38 and 1.391 respectively. While those that are most violent in the world in the year 2017 were; Turkey, North Korea, Pakistan, Ukraine, Sudan, Russia, Central African Rep, Dem. Rep Congo, Libya, Yemen, Somalia, Iraq, Afghanistan and syria with 3.155, 3.236, 3.251, 3.262, 3.305, 3.367, 3.425, 3.508, 3.585 and 3.6 respectively. security of voters on the day of election and the gradual incursion of “vote-buying syndrome” into the local and national polity does not only portends grave danger for Nigeria’s edging democracy but are undoubtedly important factors that will determine the outcome of the upcoming 2019 general election.

BUSINESS DAY

Monday 10 September 2018

Live @ the Stock exchange

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BUSINESS DAY

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Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 261,798.14 9.05 0.55 148 6,862,557 UNITED BANK FOR AFRICA PLC 270,175.43 7.90 0.63 157 6,390,275 656,186.72 20.90 -0.48 306 19,678,048 ZENITH INTERNATIONAL BANK PLC 611 32,930,880 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 323,057.64 9.00 -0.56 155 7,611,582 155 7,611,582 766 40,542,462 BUILDING MATERIALS DANGOTE CEMENT PLC 3,800,033.15 223.00 -0.45 22 77,046 LAFARGE AFRICA PLC. 199,488.85 23.00 -0.65 36 232,470 58 309,516 58 309,516 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY LTD 354,832.07 603.00 - 13 1,610 13 1,610 13 1,610 837 40,853,588 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 76,217.41 79.90 - 20 404,142 OKOMU OIL PALM PLC. PRESCO PLC 60,050.00 60.05 - 2 1,000 22 405,142 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 - 2 10,000 2 10,000 24 415,142 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,164.81 0.44 - 7 5,048 225.71 0.58 - 0 0 JOHN HOLT PLC. S C O A NIG. PLC. 2,111.93 3.25 - 0 0 48,371.11 1.19 -2.46 47 2,084,293 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 31,694.26 11.00 - 23 112,522 77 2,201,863 77 2,201,863 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 33,000.00 25.00 - 6 27,070 165.00 6.60 - 0 0 ROADS NIG PLC. 6 27,070 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT CO. LIMITED 4,079.48 1.57 - 2 5,217 2 5,217 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 24,014.43 9.00 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 0 0 8 32,287 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 14,093.09 1.80 - 2 97,300 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 192,753.69 88.00 - 31 65,078 INTERNATIONAL BREWERIES PLC. 275,067.58 32.00 - 5 9,510 NIGERIAN BREW. PLC. 742,912.20 92.90 -0.11 85 2,617,129 123 2,789,017 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 39,250.00 7.85 - 22 144,129 DANGOTE SUGAR REFINERY PLC 192,000.00 16.00 5.96 23 504,513 FLOUR MILLS NIG. PLC. 88,158.16 21.50 - 28 88,486 HONEYWELL FLOUR MILL PLC 11,895.30 1.50 -3.85 26 1,831,312 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 1,158.30 6.50 - 0 0 NASCON ALLIED INDUSTRIES PLC 52,988.77 20.00 - 12 93,996 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 111 2,662,436 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,875.93 10.05 - 8 36,782 NESTLE NIGERIA PLC. 1,188,984.38 1,500.00 - 15 879 23 37,661 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 3,377.28 3.24 - 8 202,000 8 202,000 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 53,601.44 13.50 - 18 36,674 UNILEVER NIGERIA PLC. 268,866.25 46.80 - 18 101,435 36 138,109 301 5,829,223 BANKING DIAMOND BANK PLC 30,803.32 1.33 8.13 45 3,495,566 ECOBANK TRANSNATIONAL INCORPORATED 357,816.25 19.50 - 26 524,891 FIDELITY BANK PLC 49,257.15 1.70 -0.58 97 10,812,805 GUARANTY TRUST BANK PLC. 1,030,091.27 35.00 0.14 226 27,192,694 JAIZ BANK PLC 15,321.41 0.52 -1.92 32 5,730,442 SKYE BANK PLC 8,050.57 0.58 9.43 66 7,868,103 STERLING BANK PLC. 41,746.11 1.45 -8.28 69 5,750,281 UNION BANK NIG.PLC. 154,339.99 5.30 -9.40 27 626,162 UNITY BANK PLC 9,234.58 0.79 - 6 29,436 WEMA BANK PLC. 21,987.45 0.57 -9.52 41 3,573,636 635 65,604,016 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE COMPANY PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 6,167.88 0.89 4.71 55 1,962,672 AXAMANSARD INSURANCE PLC 24,150.00 2.30 - 2 25,329 CONSOLIDATED HALLMARK INSURANCE PLC 2,660.00 0.38 - 1 6,270 CONTINENTAL REINSURANCE PLC 16,596.39 1.60 - 5 104,162 CORNERSTONE INSURANCE COMPANY PLC. 3,976.97 0.27 8.00 8 1,002,475 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 1,964.80 0.32 - 0 0 INTERNATIONAL ENERGY INSURANCE COMPANY PLC 487.95 0.38 - 1 4,142 LASACO ASSURANCE PLC. 2,270.26 0.31 -6.06 13 655,744 LAW UNION AND ROCK INS. PLC. 2,320.02 0.54 -10.00 12 1,128,031 LINKAGE ASSURANCE PLC 5,600.00 0.70 -1.43 11 1,548,351 MUTUAL BENEFITS ASSURANCE PLC. 2,160.00 0.27 7.41 23 805,570 N.E.M INSURANCE CO (NIG) PLC. 17,478.46 3.31 - 52 1,655,000 NIGER INSURANCE CO. PLC. 3,018.40 0.39 - 3 152,607 PRESTIGE ASSURANCE CO. PLC. 1,832.36 0.48 - 1 6,992 REGENCY ALLIANCE INSURANCE COMPANY PLC 1,533.81 0.23 - 24 1,898,200 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 -8.00 31 12,659,716 STANDARD ALLIANCE INSURANCE PLC. 3,744.20 0.29 -9.37 5 506,100 STANDARD TRUST ASSURANCE PLC 4,483.72 0.48 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE COMPANY PLC 5,280.00 0.33 - 5 15,657 VERITAS KAPITAL ASSURANCE PLC 3,882.67 0.28 - 0 0 WAPIC INSURANCE PLC 5,219.27 0.39 8.33 41 2,224,065 293 26,361,083 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,658.62 1.60 - 2 10,000

2 10,000 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,914.00 1.17 - 2 34 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 5,664.87 0.50 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2 34 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 11 36,918 CUSTODIAN INVESTMENT PLC 31,762.07 5.40 - 8 48,818 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 35,644.88 1.80 -4.44 40 2,478,608 411.91 552.20 - 0 0 NIGERIA ENERYGY SECTOR FUND 1,337.80 0.26 - 11 1,517,913 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 455,115.35 45.00 - 18 175,021 18,000.00 3.00 - 38 485,452 UNITED CAPITAL PLC ValuAlliance Value Fund 3,312.39 103.20 - 0 0 126 4,742,730 1,058 96,717,863 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 959.35 0.27 3.85 14 1,875,300 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 14 1,875,300 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,000.00 6.00 - 24 218,463 17,101.03 14.30 9.16 13 190,483 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 2,440.20 2.49 3.75 18 1,138,503 1,139.49 0.66 10.00 2 135,376 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 411.96 1.90 - 0 0 57 1,682,825 71 3,558,125 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 20,300 2 20,300 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 680.40 6.30 - 0 0 381.11 0.77 - 4 840 TRIPPLE GEE AND COMPANY PLC. 4 840 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 - 0 0 E-TRANZACT INTERNATIONAL PLC 16,590.00 3.95 - 1 2,500 1 2,500 7 23,640 BUILDING MATERIALS BERGER PAINTS PLC 1,898.34 6.55 - 8 17,486 19,845.00 28.35 - 3 954 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 38,831.34 30.90 - 0 0 FIRST ALUMINIUM NIGERIA PLC 696.42 0.33 - 3 36,350 361.24 0.68 - 0 0 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 2,364.38 2.98 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 14 54,790 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,531.45 4.01 - 23 330,951 23 330,951 PACKAGING/CONTAINERS BETA GLASS PLC. 38,997.82 78.00 - 2 25,000 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 25,000 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 39 410,741 CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 3 13,751 3 13,751 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 0 0 0 0 3 13,751 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,628.30 0.26 8.33 15 1,073,456 15 1,073,456 INTEGRATED OIL AND GAS SERVICES OANDO PLC 65,264.92 5.25 -1.87 60 1,776,983 60 1,776,983 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 0.56 14 557,006 CONOIL PLC 16,863.04 24.30 - 10 13,828 ETERNA PLC. 8,150.90 6.25 - 8 65,600 FORTE OIL PLC. 27,352.10 21.00 2.38 109 1,127,546 MRS OIL NIGERIA PLC. 8,701.65 28.55 - 0 0 TOTAL NIGERIA PLC. 64,407.29 189.70 - 12 2,936 153 1,766,916 228 4,617,355 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,818.75 1.93 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 541.12 0.46 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,212.76 5.45 - 3 5,963 TRANS-NATIONWIDE EXPRESS PLC. 365.70 0.78 - 0 0 3 5,963 HOSPITALITY TANTALIZERS PLC 674.44 0.21 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 4,718.87 2.27 - 6 118,630 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 51,302.73 6.75 - 1 1,000 7 119,630 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,280.00 0.44 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 779.16 1.01 - 2 20,000

Monday 10 September 2018

BUSINESS DAY

Monday 10 September 2018

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Forget any hope of major reforms in Nigeria, EIU tells investors …says economy of Africa’s largest economy will continue to struggle DAVID IBIDAPO & MICHAEL ANI

Nigeria country forecast report just released by the Economist Intelligence Unit (EIU) says Nigeria’s economy will continue to struggle as there would be no significant reforms in the Nigerian economy between 2018 and 2022. The economic forecast in its opening line stated, “The sort of fundamental structural reforms needed to propel the economy onto a higher growth path is unlikely during the forecast period.” The report which has been circulated among the global client base of the EIU which, includes top investors around the world said Nigerians should expect a stiffly contested presidential election in February and even ventured to suggest that the ruling APC may lose the presidential poll.

Reforms such as the liberalization of foreign exchange markets or market led pricing in the energy sector have long been canvassed, the authors of the forecast said. However, the EIU believes that there is little or no chance this will happen leading to a practically impossible reform of the sector. Also, the EIU identified trends like persistent corruption as major hindrances to reforms or higher growth in the Nigerian economy with major reference to politicians and members of political elite directing flows of scarce resources to favour specific geo-ethnic and political constituencies as well as for illicit personal gains. The EIU said that most importantly, due to powerful patronage network built up over decades around the control of oil resources and revenue, weaknesses in the

structure and management of the Nigerian National Petroleum Corporation (NNPC) and other reforms of the oil sector, will not be tackled as fast as possible. On the deficiencies of government fiscal policies, areas which raise major concern includes the fact that more of government spending is directed to recurrent programs rather that capital investments. According to EIU forecast, “spending in priority areas such as capital investment will come up against excessively complicated administrative procedure as well as delays to budget formulation and implementation.” It said, “the upcoming general election will see increased government spending to GDP, however, the elevated spending will be driven by populist, recurrent programmes with the usual

undershoot on capital outlay”. Also according to EIU forecast, while spending to GDP of the country increases, government retained revenue to GDP will remain as low as 3.8 percent. Despite pronouncements of the federal government of Nigeria (FGN) of plans to shift focus from oil revenues to non-oil revenues, EIU remains pessimistic on the growth of government revenue to GDP. The EIU said efforts to raise non-oil revenue tax by widening tax coverage and moving to collect overdue taxes will yield some improvements though, in a longer period of time than stipulated period by the government. “Despite total government debt being low as a share of GDP compared to other emerging markets; it sits against diminutive retained revenue base,” EIU added.

FirstBank provides medium, long term educational solutions to schools MIKE OCHONMA

irstBank has announced its FirstEdu educational solution specifically designed to support schools in need of

improvement and growth in meeting their medium and long-term goals. The FirstEdu product includes FirstEdu portal and FirstEdu loan. FirstEdu loan is targeted at private Nursery

& Primary, Secondary and A-Levels schools. The product offers opportunity for private schools to access flexible funding to meet urgent cash flow needs, replace old furniture and equipment, as

well as refurbish dilapidated buildings and classroom blocks. With this product, school owners/proprietors can stay ahead of competition in providing educational services.

A3 NEWS

BUSINESS DAY

AfDB, NEXIM, BoI back Lagos SMEs confab

he African Development Bank, the Nigerian ExportImport Bank and the Bank of Industry are expected to back a convention of small and medium-size enterprises in Lagos. The programme, convened by the African Sustainable SME Export Trade Solutions, lists as its collaborators the Institute Of Packaging Nigeria, Connect Nigeria, Pact Universal, Atlantic Exhibition, BellAfricana and 3T Export. The CEO, ASSETS and the event coordinator, Ms Shade Bembatoum-Young, in a statement, noted that there was a growing consensus that the best way for Nigeria to make a rapid transition from constantly hovering on the brink of recession to achieving sustainable, inclusive economic growth, which she said was not dependent on a rise in crude oil prices, was by taking advantage of the weak naira and developing the non-oil export sector. Bembatoum-Young added, “The question, however, is what sustainable, consistent, tested and proven approaches can we employ to make our products and services more competitive in the domestic, regional and global markets, develop our non-oil export value chains

and earn so much more than what we are currently earning from export? “How can we create the necessary synergy to integrate and magnify the efforts of federal and state governments, their agencies, funding institutions, the private sector, civil society, and international development partners in a sustainable and inclusive manner that will best guarantee the survival of more and more Nigerian SMEs, and ensure that they become major players and catalysts in the non-oil export sector? “ASSETS and her likeminded collaborators believe that the fastest way of achieving these objectives is by strengthening value chains and collaboration.” The convener explained that an “all-hands-on-deck approach” was needed, which she said would involve the Federal Government, state governments, funding institutions and banks, the private sector and international development partners. Other stakeholders, according to her, include SME facilitators and consultants, working together to ensure that the Nigerian economy can leapfrog from the fringes of recession to export-led, inclusive, sustainable growth.

A4 BUSINESS DAY NEWS

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Monday 10 September 2018

Experts link stress, economic hardship, failing marriages to rising suicide in Nigeria ANTHONIA OBOKOH

reakdown in the ability to deal with life stresses, economic hardship, relationship breakups and mental health are among the factors speeding up suicidal cases in Nigerians at the moment. These has become a source of concern as Nigeria joins the rest of the world to mark World Suicide Prevention Day (WSPD) oday Monday, September 10, 2018. According to World Health Organisation (WHO), “The purpose of this day is to raise

awareness around the globe that suicide can be prevented,”. “Nigeria ranks 71 out of 177 countries accounting for 9.9 suicides per 100,000 populations of deaths annually”, according to data from the 2018 global Suicide rate report by World population review. The country however, has a disturbing picture to offer, as suicide rates in the country have increased over the last couple of years. Health experts say that, until Nigeria is able to enact the mental health bill, the country might not be able to properly tackle the depression scourge which is one of the reasons for

suicide. Suicide occurs throughout the world, affecting individuals of all nations, cultures, religions, genders and classes. Statistics show that the countries with the highest suicide rates in the world are incredibly diverse. Owoeye Olugbenga, a consultant psychologist and clinical psychologist at Federal Neuro-Psychiatric Hospital Yaba, Lagos, said the criminalisation of suicide was predicated on the Lunacy Law made by colonial leaders. “Our lawmakers should review the Mental Health Law in line with what obtains

Air passenger traffic up 23.9% in H1 2018 - NBS IFEOMA OKEKE

n total, 7,503,408 passengers passed through Nigerian airports in the first half of 2018, this is a 23.9percent growth from the 6,054,319 passengers recorded in the first half of 2017, according to the National Bureau of Statistics, (NBS). This significant growth in both the first and second quarters of 2018 was mainly driven by the increased passenger traffic through Abuja airports, compared with the same period in 2017 when the Abuja airport was closed during the period for runway improvements.

There was also a boost in passenger traffic in March 2018 when total air passenger was recorded at 1,721,224 (797,608 arrivals and 923,616 departures), a 62percent jump from the average passenger traffic from the previous two months (January & February 2018). The total number of air passengers declined in the second quarter of 2018 from the first quarter by 4.9percent, standing at 3,657,555. Nevertheless, the recorded total passenger in Q2 indicates a robust year-on-year growth (of 15.24percent) from the same quarter in the last year.

Of the 7,503,408 total passengers (arrival and departures) recorded in the first half of 2018, which 27.59percent (5,433,145 passengers) traversed through the nation’s international airports and 72.41percent (2,070,263) through the various domestic airports. Lagos and Abuja’s international and domestic airports accounted for 73.4percent of total air traffic passengers in Q2 2018, a decline in their combined market share in Q1 2018 (77.9percent) but an increase in combined market share over the same period last year (Q2 2017).

UN team arrives Benin, backs Obaseki’s sustained fight on human trafficking

overnor Godwin Obaseki of Edo state efforts at curbing the incidence of human trafficking and irregular migration have received renewed backing from the United Nations, as international support swells to halt activities of human traffickers and their associates. Welcoming the United Nations (UN) Special Rapporteur, Maria Grazia Giammarinaro, in Benin City, the governor, who was represented by his Chief of Staff, Taiwo Akerele, said the state government has implemented several initiatives to curb the menace,

including the implementation of the law establishing the Edo State Taskforce Against Human Trafficking. He noted, “We are doing our best to open up the system so that certain practices that undermine the participation of women in politics and governance are completely eliminated to enable social inclusion of women in politics, governance and development in the state.” Obaseki said his administration is partnering with traditional institutions to ensure the elimination of traditional practices, which undermine the roles of women in the society. UN Special Rappor-

teur, Giammarinaro said she was in Nigeria and in Edo State to assess the incidence of human trafficking and irregular migration and report back to the UN Human Rights Council and the General Assembly, with recommendation. Giammarinaro noted that the important aspect of her mandate is to drum support for significant improvement of international collaboration in the areas of investigation, prosecution of traffickers; protection and promotion of rights; survival of victims of human trafficking as well as persons vulnerable to the scourge.

Dangote emerges 2018 Nigerian risk awards winner MIKE OCHONMA

angote group has emerged winner of the 2018 prestigious Nigerian Risk Award (NRA) which recognises organisations who have made measurable impact within their sector through the effective application of good governance, risk management and internal control systems and strategies. The award was at the weekend conferred on Dangote at the 4th NRA summit attended by top executives of

both public and private sector was chaired by the prochancellor and ex-chairman of the governing council, Lagos Business School and Pan-Atlantic University, Christopher Kolade and recognised other individuals and organisations across - banking and investment; insurance and pension, telecoms and media service, oil and gas services sectors. Dangote Group was shortlisted for the award by a panel of judges made up of 14 risk management professionals and academics across 4 countries including

- Nigeria United Kingdom, United States of America and Denmark. According to NRA cochair Tunde Popoola, the panel of judges responsible for assessing all entries for the prestigious award, assessed all entries based on four criteria and went further to include a fifth and evidence-based metric to the selection process, further streamlining the process and ensuring winners have demonstrated actual value in the context of an overall risk management programme.

in other countries, especially developed nations. The bill is already with the Senate. They should make provision for the treatment of those who attempt suicide rather than get them arrested. “As the law is being repealed, the government should also fund the psychiatry hospitals. There are fewer than 500 psychiatrists nationwide to take care of 180 million people. We even have fewer clinical psychologists and psychiatrist nurses. These are not enough to take care of the psychiatry need of the nation,”Olugbenga says. Similarly, an industry

watcher says in Nigeria, suicide is more of a social and public health objective than a traditional exercise in the mental health sector. “Mental health professionals, doctors and counsellors can be reached out to manage suicidal tendencies. The proactive steps taken by several such professionals in the capacity of leaders has helped and has the potential to help save thousands of lives.” “Occurrence of suicide tends to be under-reported and misclassified due to both traditional and social pressures, and possibly completely unreported in some areas,”

says expert. Available statistics show that someone in the world commits suicide in every 40 seconds, translating to 800,000 people annually. Most suicide cases have been said to occur in low and middle-income countries with poor health systems and lack of early signs identification. According to WHO, suicide occurs all over the world and can take place at almost any age. Globally, suicide rates are highest in people aged 70 years and over while in some countries, however, the highest rates are found among the young.

Monday 10 September 2018

BUSINESS DAY

Monday 10 September 2018

BUSINESS DAY

A8 BUSINESS DAY NEWS

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AFOx seeks funding for Nigerians gaining admission into Oxford, Cambridge Universities MODESTUS ANAESORONYE

o ensure that Nigerians who gain admission into Oxford and Cambridge Universities were able to take up their studies, the Africa Oxford Initiative (AFOx) has called for funding support from business leaders and alumni members of both institutions. According to Afox, of the close to 300 African post graduate students who gained admission to Oxford on account of their excellent academic and professional records, only half of them were able to take up their places, and this was mainly due to lack of funding. Kevin Marsh, director of AfOx made the disclosure at an Evening of Networking, Drinks and Talks hosted at the residence of Laure Beaufils, deputy British High Commissioner to the UK, to introduce

AfOx to Oxford Alumni and partners in Nigeria, as well as to seek support for The Initiative’s activities and for Nigerian scholars in Oxford. Marsh opened the event with a call to alumni and business leaders to work with AfOx to support The Initiative’s activities, including funding scholarships in Oxford for brilliant Nigerian students, supporting Nigerian researchers with grants and providing career opportunities, mentoring and guidance for African students. “An Oxford education is an excellent boost to a career in global leadership, and Nigerian students who qualify should be able to take up their places with the right support.” Meanwhile, Timi AustenPeters, current president of The Oxford and Cambridge Alumni Network of Nigeria at the event announced the alumni society’s plan to raise

funds to support Nigerian students to study at Oxford and Cambridge. The special guest speaker at the event, Wale Adebanwi, who is also the current director of The University of Oxford African Studies Centre, spoke of histories of enlightenment in Lagos. He described how intellectuals in early Lagos engaged in philosophical and practical discourses to contribute to the modernisation of their societies. He recounted several stories about how some intellectuals achieved this - including Herbert Macaulay who in particular generated newspaper stories from his unique experiences and deployed them in articulating the place of tradition in modernity. He also prevailed upon Nigerian intellectuals of today to “remember that their predecessors never wavered in their embrace of the challenges of change”.

FG to partner World Bank to promote skill development in Nigeria CYNTHIA EGBOBOH, Abuja.

he federal government has disclosed its plan to collaborate with the World Bank to promote effective skill development program in Nigeria. Sunny Echono, permanent sectary, ministry of education on friday said that the government is collaborating with the world bank and other stakeholders to focus on building areas that will enhance skill development in the Nigeria education system. Echono, speaking at the 2018 international literacy day celebration titled “Literacy and skill development” held in Abuja, said that plans

are being made to equip identified skill development centers around the country, train and deploy technical teachers to centres. He said, the federal ministry of education in collaboration with World Bank and other stakeholders is focused on the area of skills development, building the capacity of technical and vocational teachers around the country”. He stressed on the need to promote literacy as a critical tool for the development and enhancement of skills and resourcefulness adding that a literate society is free from corruption, insecurity and have solution to all forms of societal vices. “Literacy is a

tool to empower individual and community for sustainable and inclusive socio economic development”. Kehinde Ayotunde, secretary general for UNESCO said that the need for skills acquisition is becoming more urgent as technology innovation, economic and environmental challenges are continuously accelerating. He said “Preparing young people and adults for jobs of which have not yet been invented is a challenge hence taking advantage of pathways between different forms of training and benefiting from greater opportunities for mobility has thus become indispensable”.

LADOL Free Zone sacks Samsung after Egina project over alleged misconduct AMAKA ANAGOR-EWUZIE

wo weeks after the first Nigerian integrated Egina Floating, Production, Supply and Offloading (FPSO) vessel successfully sailed away from the fabrication yard of the Lagos Deep Offshore Logistics (LADOL) Base, the Free Zone owner has over the weekend, announced the termination of Samsung’s sublease agreement over alleged misconduct. By implication, Samsung Heavy Industrials (SHI), the technical partner of LADOL, during the recently completed $3.8 billion Egina FPSO project for Total Exploration and Production Company is expected to relocate its technical base away from the LADOL Free Zone. BusinessDay understands that LADOL has also filed a court action in a suit Number: FHC/L/CS/1459/2018

against Samsung over alleged fraudulent activities in Nigeria. “Samsung’s dealings in Nigeria have been fraught with reckless disregard for all stakeholders including LADOL as business partners; Nigerian regulators, Nigerian workers and citizens. Samsung has persistently flouted Nigerian laws and breached contracts it duly signed with LADOL and its affiliates,” Amy Jadesimi, managing director of LADOL claimed, while speaking with newsmen in Lagos last weekend. Jadesimi listed the breaches to include refusal to abide by conditions of service for Nigerian staff and abuse of workers; violation of procedures of the Nigerian Customs Service (NCS); violation of Nigerian Immigration procedures; breaching of Nigerian Content Development and Monitoring Board (NCDMB) regulations; and refusal to remit

statutory tariffs to the Federal Government despite several demands from the Nigerian Export Processing Zone Authority (NEPZA). According to Jadesimi, “Samsung sponsors malicious and false publications about government agencies, thereby denigrating the Ease of Doing Business in Nigeria, and has persistently failed to comply with rules and regulations of the Free Zone.” She further listed other breaches to include concealing sums of money provided for in the head contract from LADOL, their local content partner; demanding huge unconscionable variations from their client (Total/ NNPC Joint Venture); exclusion of Nigerian content partner from operational activities, thereby refusing to transfer technology as well as blatant repudiation of major contractual terms in agreements duly signed with LADOL.

Monday 10 September 2018

Politics & Policy Monday 10 September 2018

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BUSINESS DAY

APC lashes Atiku, Mark on restructuring Says FG about to implement el Rufai report JAMES KWEN, Abuja

ll Progressives Congress, APC on Sunday came hard on two Peoples Democratic Party, PDP Presidential Aspirants, former Vice President Atiku Abubakar and former Senate President David Mark for using restructuring to garner political support. APC wondered why in their previous vantage positions both Atiku and Mark did not champion the idea of restructuring only to use it now to hoodwink Nigerians into voting for them. According to APC, “Atiku was Vice President and Chairman of the National Economic Council throughout the eight years of the President Olusegun Obasanjo administration. How did he not use his office to correct the imbalance in our federation he expresses today? “Senator David Mark was Senate President for eight years and never sponsored a motion on restructuring. Today he is promising to restructure the country”. APC position came on the heels of last week verbal exchanges between Vice President Yemi Osibanjo and Atiku on contentions about restructuring. Osibanjo while addressing a cross-section of Nigerians at a town hall meeting in Minnesota, the United States of America was quoted as saying the problem of Nigeria was not geographical restructuring. But in as swift reaction, Atiku stated that restructuring remains the best option for Nigeria consid-

Atiku

ering the socio-economic, security and political challenges bedeviling the nation. Also Osibanjo retorted that, Atiku’s understanding and position on restructuring was ‘vague’ while Atiku countered that, he had remained consistent and straightforward on his call for structuring, saying he had been canvassing for administrative, political and economic restructuring and not geographical restructuring. Yekini Nabena, APC Acting National Publicity Secretary in a statement stressed that, “Osinbajo in his well-articulated response to Alh. Atiku, submitted that what Nigeria requires now is not geographic restructuring but good governance, honest management of public resources, deeper fiscal Federalism and a clear vision for development”.

2019: Oyo APC adopts indirect primary AKINREMI FEYISIPO, Ibadan

he Oyo state chapter of the All Progressives Congress (APC), has adopted indirect primary election ahead of the 2019 general election in the state. This followed a motion for the adoption of indirect method for all the primary elections of the party moved by Olaide Olalere, an aspirant for the post of House of Assembly seat from Ibadan North East local government area at an extended meeting with Governor Abiola Ajimobi of the state and other APC stalwarts. At the meeting held at the Agodi Government House, Ibadan, the motion for the adoption of the indirect primary election was all affirmed and supported by other aspirants of the party. It was seconded seconded by Olanrewaju Otiti, another House of Representatives aspirant from Ibadan North Federal Constituency, another House of Representatives aspirant from Ibadan

North Federal Constituency. The duo, who spoke on behalf of all aspirants at the meeting, argued that they were satiftieed with the indirect primary election, hence the party should adopt it as the method for all its primary elections. Olalere said: “After the extensive meeting today, I am happy and we have agreed to use indirect primary elections, on behalf of all members and aspirants, I hereby moved the motion for the adoption of indirect primary election.” Otiti said: “i used this medium to support the motion for the adoption of indirect primary elections in all our primaries for the 2019 general elections in Oyo state. We have aggred to use indirect primary elections in all our primary elections.” At the meeting which ended around 4.5 a.m on Sunday were former Governor Adebayo AlaoAkala; state Chairman of the party, Akin Oke; state secretary, Mojeed Olaoya and Speaker of the state House of Assembly.

Mark

Nabena noted that, “the calls for restructuring by many politicians is often time a populist and opportunistic ploy to latch on and politically exploit simplistic public narratives on the panacea to Nigeria’s problems and not necessarily for its realism and practicability. “Past administrations have splashed billions of public funds to convene several national conferences, subsequently left conference reports to gather dust and achieved NOTHING. Bad governance, corruption, bigotry and other ills remain the limiting factors that continue to hold the country back. “We must never succumb to ethnic champions who promote campaigns to breakup the country into tiny bits or other unrealistic and unpatriotic proposals in the name of restructuring to solve our problems as a country. It is simplis-

tic and unconstitutional”. The APC spokesman explained that, “as Vice President Prof Yemi Osinbajo submitted, good governance involves transparency and prudence in public finance, it involves social justice, investing in the poor and providing jobs and opportunities for the people, particularly young people. “This remains the focus of the current administration as seen by the several social intervention programmes currently being implemented. Commendably, the President Muhammadu Buhari administration is committed to implementing a New National Minimum wage. “Also, the Government Enterprise and Empowerment Programme (GEEP) scheme, comprising: GEEP MarketMoni, GEEP FarmerMoni and GEEP Trader-

Moni is being executed by the Bank of Industry and providing interest-free loans to petty traders and artisans across Nigeria”. According to Nabena, “with the inception of the President Buhari administration, a well-articulated roadmap, considering all the issues involved in ensuring a new, well secured, better governed Nigeria with equitable distribution of resources within the component federating units, is being given serious attention. He recalled that the APC set up a Committee on True Federalism under the Chairmanship of the Kaduna State Governor, Mallam Nasir El-Rufai and the Committee submitted its report to the immediate-past National Working Committee, making its recommendations on twenty four items that Nigerians expressed views to balance our federation. The APC acting Publicity Secretary said, “these items are: creation of states; merger of states; delegation principle; fiscal federalism ; devolution of power and resources between state, federal and local governments; federating units; form of government; independent candidacy; land tenure system; local government autonomy; power sharing and rotation; resource control; types of legislature; demand for affirmation for vulnerable groups -- people with disabilities, women and youth; ministerial appointment; citizenship; state constitution; community participation; minimum wage; governance; judiciary; state re-alignment and border adjustment; circular status of the federation and referendum”.

Guber race: Amosun unveils Akinlade’s running mate in Ogun ...Names 38 other consensus RAZAQ AYINLA, Abeokuta

arely forty-eight hours after the unveiling of Ogun State All Progressives Congress (APC) consensus governorship candidate, Adekunle Akinlade, Governor Ibikunke Amosun on Saturday unveiled the deputy governor designate, Adepeju Adebajo and other 38 consensus candidates for State Assembly, House of Representatives and Senate. Governor Amosun, who met with APC leaders from the three Senatorial districts who had unanimously adopted Akinlade from Ogun west -Yewa-Awori axis of the state as the party’s consensus governorship candidate and Adepeju Adebajo as a running mate, explained that APC had used consensus arrangement to select all 40 political positions in the state, but explained that the party would not rule out primaries if there were disagreement from other APC aspirants. BusinessDay reports that Adebajo is the serving state Commissioner for Agriculture who had earlier served as managing director of La-

farge Africa PLC and was appointed as a Commissioner in 2016. She hails from both Ikenne and Sagamu local government areas of the state. The governor’s endorsement came after the state party chairman, Derin Adebiyi had announced Adebajo as the running mate to the governorship candidate, saying the elders of the party from Ogun East had met with the state party leaders among whom were the national financial secretary, Tajudeen Bello; Adebiyi, party chairman; Bayo Yakubu, Ogun East senatorial chairman; Yomi Ademefun, Ogun Central senatorial district, among others. Speaking on behalf of Ogun East senatorial district, the senatorial party chairman, Bayo Yakub, said the leaders and members of the senatorial district, agreed with the zoning arrangement and were ready to support the candidacy of Akinlade as governorship candidate had been endorsed by members of the senatorial district through a motion moved by Tunde Oladunjoye, former chairman of Ijebu East Local Government and was supported by Yinka Mafe, majority leader, Ogun

State House of Assembly, who represents Sagamu Constituency I. While asking Yakub what would be the fate of about five governorship aspirants from Ogun East senatorial district who had earlier obtained party’s nomination forms for the same political aspiration, Yakub claimed that the “disgruntled aspirants” who had collected the nomination forms for governorship from the Ogun East were not “genuine members of the party and they are on their own.” But, Governor Amosun, while meeting with the party leaders from the three senatorial districts, he congratulated them over the choice of the consensus candidates, and expressed the confidence that the party would record a landslide victory in the coming general elections. “In all our positions, we are going to have consensus candidates. We are going to make available our list, including our deputy governor. All our leaders are aware, we have sat, we are going to announce, anybody that wants to do any other thing, they are free.

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FINANCIAL TIMES Angola’s president tightens his grip on power

Private equity: Inside the fall of Abraaj

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World Business Newspaper

EU seeks new powers for money laundering crackdown Commission plans would give European Banking Authority more investigative resources MEHREEN KHAN AND JIM BRUNSDEN

russels will seek to toughen the powers of EU agencies to crack down on money laundering and terrorist financing in the wake of high profile scandals that have shone a light on Europe’s deficiencies in tackling criminal cross-border money flows. The European Commission is working on proposals that would give the European Banking Authority, the EU’s banking regulator, greater enforcement powers and more resources to investigate the activities of banks involved in illicit financing, according to senior officials. In separate plans, the commission wants to give the European Public Prosecutor’s Office (EPPO), a recently created pan-EU agency, powers to launch investigations into the financing of terrorist activity across its member states from 2025. Both initiatives, which are still being finalised, are likely to feature in European Commission president Jean-Claude Juncker’s annual “State of the Union” speech on Wednesday, and are due to be formally announced the following week. Brussels’ push to bolster pan-EU anti-money laundering (AML) powers follows revelations that as much as $30bn of Russian and formerSoviet money flowed through the Estonian branch of Danish lender Danske Bank in a single year. Dutch bank ING was also forced to pay €775m in penalties for failings in its enforcement of anti-money laundering rules earlier this month. The cases are the latest in a string of scandals exposing how criminals have exploited weak links in Europe’s banking system to launder vast amounts of cash. Latvian bank ABLV was wound up by regulators this year after US authorities accused it of “institutionalised money laundering”, including helping finance North Korea’s nuclear programme. Although many of the EU’s largest banks are already directly supervised by the European Central Bank, the policing of AML rules is not covered by that system. Instead, the responsibility for making sure that banks

carry out customer background checks and other measures required by EU law still lies largely with national watchdogs. Recent scandals have made the issue a top priority inside the commission and strengthened governments’ calls for stronger pan-EU supervision of national bodies. One EU official said the drive to clarify the responsibilities of the EBA comes after Brussels grew frustrated with how long it took for the watchdog to initiate an investigation into Maltese authorities’ handling of Pilatus Bank, a lender in Malta that US prosecutors have alleged was set up using the criminal proceeds of a scheme to evade sanctions against Iran. The EBA has some jurisdiction over anti-money laundering but has been hamstrung by a lack of resources. It has the equivalent of 1.8 full-time staff members working directly on money-laundering issues, according to a recent EU “reflection paper”. The ECB has thrown its weight behind the creation of a new body dedicated to policing enforcement of money-laundering rules but the commission is not considering a new EU body for now. “I think we need a single EU wide agency to ensure tough, effective and consistent enforcement,” Bruno Le Maire, France’s finance minister told the FT at the weekend. “We will be looking into that idea very closely.” Rasmus Jarlov, Denmark’s business minister, told the FT his government wants to enact some of the toughest AML rules in Europe after the Danske scandal. “We must draw lessons from it,” he said. “It would certainly make sense to have a discussion about the whole set-up in the EU.” Brussels’ separate designs for the EU’s public prosecutor’s office would involve radically expanding its mandate from just investigating the fraudulent use of EU budget funds to the prosecution of parties guilty of terrorist financing from 2025. Only 22 of the EU’s 28 governments have so far signed up to the prosecutor’s office and any change to its mandate would have to be agreed by all participating member states.

Wall Street cuts profit forecasts for dozens of US retailers Analysts’ downgrades cast fresh doubts on sector despite higher consumer spending ALISTAIR GRAY AND MAMTA BADKAR

all Street has taken an axe to forecasts for dozens of US retailers, renewing questions about their profitability even as consumer spending buoys

sales. Projected profits for the current quarter have been reduced for 52 — almost three-fifths — of the 89 companies in S&P’s retail index over the past three months, Continues on page A11

The issue of money laundering is set to feature in European Commission president Jean-Claude Juncker’s annual speech on Wednesday © AFP

Trump ready to launch new round of China tariffs

White House officials grapple with question of how aggressive the levies should be JAMES POLITI

onald Trump’s White House is finalising plans to impose tariffs of up to 25 per cent on $200bn of Chinese imports, a decision that could sharply escalate the trade war with Beijing. The US president has left little doubt he intends to press ahead with the new round of tariffs, but White House officials are grappling with how aggressive the levies should be. The most confrontational approach would be for Mr Trump to immediately impose a 25 per cent tariff on all $200bn worth of products designated by the US government — despite heavy criticism from vast swaths of American business and the risk of tougher retaliation from China. A softer approach — with a staggered rollout and possibly tariff rates as low as 10 per cent on certain products, has also been under discussion — to minimise the blow to US economic growth and leave an opening for negotiations with China. “We’ll make a decision on the volume, on the rate, on the timing. I don’t

want to get ahead of that curve,” Larry Kudlow, the head of the National Economic Council, said to Bloomberg Television on Friday. With hardliners such as Robert Lighthizer, the US trade representative, and Peter Navarro, Mr Trump’s chief aide on trade, gaining the upper hand in the debate within the administration, a tougher approach appears more likely. Mr Trump has also been emboldened by the recent strong jobs numbers and the soaring stock market, which have reinforced his belief that his protectionist policies are positive for the economy and financial markets. US-China tariffs in numbers Jeffrey Wright, a US analyst at the Eurasia Group, wrote in a note that he expected the $200bn tariffs to be applied in “one shot” — but there could be some wriggle room on the rate of the tariffs. “We expect officials to try to tariff consumer products at 10 per cent and industrial inputs at 25 per cent to avoid making price increases apparent to consumers,” he wrote. While business lobbyists in Washington who are closely following the

China trade dispute say any steps away from the brink would be welcome, it would take a major climbdown from Mr Trump to bring Beijing back into a real negotiation. “Even cutting the volume by $100bn would not do it. Chinese officials would understand that it’s not as bad as it could be, but it would still be viewed negatively by public opinion, and Xi Jinping cares a lot about the public reaction,” said one senior US business lobbyist. “There has to be a suspension: a good-faith effort on the part of the US to set aside tariffs would be welcomed by the Chinese and would encourage them to come back to the table,” he added. With US midterm elections approaching and Mr Trump’s Republican party struggling to maintain full control of Congress, such a volte-face appears unlikely. “The White House still sees the benefits it gets from the GOP base for getting tough with China as outweighing whatever effect their actions may have on consumer prices,” said Mr Wright. “We see no reason why that would change over the next few months.

Reinsurers in pensive mood after year of disasters The large payouts due to hurricanes and earthquakes have not led to price rises OLIVER RALPH

he reinsurance industry travelled en masse this weekend to Monte Carlo for its annual get together. But amid the cocktails and canapés, there will have been deep-rooted questions about the future of the industry after a year that has forced many people to rethink long-held assumptions, and others to get out of the business altogether. A year ago as the reinsurers gathered in the principality, all eyes were not on the Mediterranean but the north Atlantic. Hurricane Irma was bearing down on Miami, threatening widespread destruction. It is the fallout from that hurricane and other disasters that has forced much soul searching from the industry. James Vickers, chairman of broker Willis Re International, said: “[The

past year] has forced reinsurers to face the reality of a ‘new normal’. They’ve really got to do something.” Irma caused billions of dollars worth of destruction and ruined the lives of many, although it turned out not to be quite as bad as it could have been. However it was accompanied last year by Hurricanes Harvey and Maria, along with earthquakes in Mexico and wildfires in California. In all, there was $136bn of insured losses from natural and man-made catastrophes in 2017 according to Swiss Re, the third highest on record. Received wisdom in insurance is that such large payouts should be followed by sharp price increases as the industry rebuilds its capital. Many reinsurers were counting on these price rises to revitalise their profits after years of falling returns. The price rises never came. There have been some improve-

ments in catastrophe-exposed lines of business but they have fallen well short of the sort of double-digit, across-the-board increases that many in the industry were hoping for and expecting. In general, reinsurance buyers and their brokers have been able to keep costs down. That trend is likely to continue. Graham Coutts, a director at Fitch Ratings, said: “We are expecting rates to be fairly flat in 2019 — around zero to five per cent improvement.” Two main reasons exist for why prices did not react as expected. First, the costs were spread across several mid-sized events rather a single big one. The result was that the primary insurers who paid out to the customers kept more of the losses themselves and passed less on to their reinsurers. And so the reinsurers did not pay out as much as they would if there had been a single big event.

Monday 10 September 2018

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NATIONAL NEWS

FT Wall Street cuts profit forecasts...

Cuomo tries to hold back insurgent tide in New York

Continued from page A10 according to a Financial Times analysis of figures collated by Bloomberg. The downward revisions come even though a humming economy has encouraged Americans to splash out on products from skirts to games consoles. After months of store closures, job losses and bankruptcies, several listed retailers are now producing some of their best financial results in a decade, spurring hopes that well-run, brick-and-mortar chains can succeed in the age of Amazon. “The pendulum swung too far: retail never died, but it’s likely not as healthy as people think, either,” said Simeon Siegel, analyst at Instinet. “After a very strong first half, it would seem management teams feel the need to reset the bar, to bring hype back to reality.” Analysts cited a wide range of factors for the forecast reductions, from investments in store upgrades denting short-term profits to the high costs of ecommerce. Some stressed there were important technical reasons behind the adjustments, including a need to account for a shorter financial year compared with 2017, and urged against reading too much into estimate changes for a single quarter. The profit downgrades stand in contrast to Amazon, whose profit estimates for the current quarter have almost doubled in the past three months. Expectations have been reined in for a wide range of traditional retailers. They range from department store Macy’s, whose forecast earnings per share for the third quarter are 24 per cent lower than three months ago, to home improvement group Lowe’s, whose estimates are 16 per cent lower. The steepest cuts have been endured by companies that are seen to be struggling, such as department store operator JC Penney and Victoria’s Secret-owner L Brands. Yet even companies whose second-quarter earnings were well received by Wall Street have had estimates reduced. They include Tiffany, which is renovating its flagship store in Manhattan. Jay Sole, analyst at UBS, said investments by the companies partly explained the lowered thirdquarter forecasts across the sector. “There’s been a lot of cutbacks in retail over the past 10 years,” he said. “This year, profits have been bigger than expected, with the consumer shopping more. Companies are taking the opportunity to reinvest these extra profits into their businesses.” Mr Sole also highlighted cost pressures. “Despite the consumer being healthy, companies are not seeing a ton of relief from cost inflation. In particular, the costs of online operations continue to rise.” Drew Wilson, portfolio manager at Fenimore, said: “The fact is that even though Amazon is not going to kill every retailer, online is going to take some capacity away. It’s still going to be a painful transition away from brick and mortar.”

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Will state governor be the next to fall victim to a progressive Democratic surge? JENNIFER BISSELL-LINSK

W João Lourenço (left), Angola’s president, takes over the leadership of the ruling MPLA from José Eduardo dos Santos, the last vestige of power held by the former strongman © Ampre Rogerio/AFP

Angola’s president tightens his grip on power João Lourenço elected leader of ruling party after his corruption crackdown JOSEPH COTTERILL

oão Lourenço, Angola’s president, consolidated his grip on the southern African nation at the weekend, assuming control of the ruling party and setting up a test of his willingness to push ahead with reform. The man supporters call Angola’s “Terminator” has already shaken up Africa’s second-biggest oil producer, one of the world’s most corrupt nations, in his first year as president. Although Lourenço replaced former strongman of 38 years, José Eduardo dos Santos, as president last September, he did not take over the leadership of the ruling People’s Movement for the Liberation of Angola (MPLA) until this Saturday. The move granted him uncontested authority in the country where the lines between party and state have long been blurred. One of the decisions now facing him is whether to broaden a crackdown on graft that to date has focused on the influence of Mr dos Santos. Mr Lourenço removed the former president’s relatives from previously untouchable positions at the helm of Angola’s state oil company, Sonangol, and the sovereign wealth fund in the past year. But patronage politics in the

oil-rich country reaches deep into the rest of the ruling party’s elite, whose members have entrenched business interests. It is widely blamed for waste that has exacerbated an economic slowdown. “Fighting the big fish — it’s when he takes over the party that we’ll see whether he can do that,” Zenaida Machado, a Human Rights Watch researcher, said. “You can’t annoy a big beast with a small stick.” The MPLA leadership was the last vestige of power held by Mr dos Santos. The former president controlled the country with an iron grip through a long civil war and the development of offshore oil reserves that enriched Angola’s elite while most of its people stayed in poverty. Few will miss him. “A lot has improved. The political and civil rights environment is less heavy. Anything is seen as better than dos Santos,” Ms Machado said. Mr Lourenço, once seen as a stolid MPLA apparatchik, has moved quickly to peel back Mr dos Santos’ influence on the economy — sacking both his daughter, Isabel dos Santos, as chief of Sonangol and his son as the wealth fund’s head. Corruption probes have been launched in both cases. The state has also tentatively allowed opposition activists to protest more freely than in the past

among other signs of permitting limited dissent. But Mr Lourenço now faces calls for wider economic reforms, including from the IMF, which is in talks on loans to bail out public finances that for years depended on crude prices staying near $100 a barrel. Over half of this year’s state budget is devoted to paying off debt. According to the finance minister, Angola owes about $23bn to Beijing, which extended loans against oil production. Scrapping the currency’s peg to the US dollar this year has shored up dwindling foreign reserves, but investors say the kwanza is still overvalued. Inflation is in double digits. The government has proposed privatising some stateowned companies and diversifying the economy away from oil. “There have been instances of pragmatic reform before, especially when the oil price has been down,” said Ricardo Soares de Oliveira, a professor at the University of Oxford. But despite better relations with international oil majors in the past year, there is little sign of deeper reform at Sonangol, seen as the apex of the sprawling system of patronage. “Sonangol’s current direction is positive but the company’s problems started before Isabel set foot there. I don’t see a willingness to deal with that legacy,” Mr Soares de Oliveira said.

Zimbabwe’s Mnangagwa appoints technocrat finance minister Tech group tries to find more users for its once-pioneering tablet whose sales have fallen JOSEPH COTTERILL

imbabwe’s President Emmerson Mnangagwa appointed a technocrat as finance minister, as he attempts to resurrect a bid to attract foreign investment left in disarray by marred elections. Mr Mnangagwa said on Friday that Mthuli Ncube, a former African Development Bank chief economist, would replace Patrick Chinamasa as he announced his cabinet after being declared the victor of July’s vote. A crackdown by security forces and opposition claims of rigging overshadowed the vote, the first held since the southern African country’s longtime strongman Robert Mugabe was toppled by the army last year. A credible result was critical to convincing western governments

in particular to back financial help, including IMF loans to lift Zimbabwe out of years of destitution and economic stagnation it experienced under Mr Mugabe. The US government especially is seen as unlikely to back IMF loans following the Zimbabwean army’s shooting dead of six civilians as it quelled protests after the vote. Formerly a powerhouse in the region, the country’s economy is bucking under harsh shortages of US dollars, the main currency in use, and a lack of investment in its decayed agricultural and industrial base. Mr Ncube, an outsider to Mr Mnangagwa’s ruling Zanu-PF, has previously proposed immediately withdrawing Zimbabwe’s ‘bond notes’, a surrogate currency that officially equals the US dollar but trades far below its value in the black market.

“The bond note currency is bad money and we know that in economics, bad money drives out good money,” Mr Ncube has written. He has also called for a drastic reduction in Zimbabwe’s state budget deficit, which is in doubledigits. The deficit is the root cause of the cash shortage, as the government has effectively printed electronic dollars without physical backing to pay its bills. “Driving it down to at least 5 per cent of GDP would be the target, 3 per cent is even better,” Mr Ncube has said. He has also supported debt relief for the country. The biggest immediate issue for Zimbabwe, however, is likely to be clearing arrears to the World Bank and other official lenders, which is necessary before the country can obtain new loans.

hile leftwing candidates are winning upset victories in Democratic primaries across the US, a progressive is struggling in the supposedly liberal bastion of New York State against a consummate establishment insider. Cynthia Nixon, the former Sex and the City actress, has campaigned for governor on a progressive pledge to clean up the “cesspool” in the state capital of Albany, attempting to connect incumbent Andrew Cuomo with the corruption convictions of some associates. But Mr Cuomo, the governor since 2011, enjoys a 36 percentage point lead in the race, according to the latest poll from Quinnipiac University. On paper, the contest should be closer. Progressive female and minority candidates have won Democratic nominations in Florida, Georgia, Maryland, Connecticut, Massachusetts and in sections of New York City, partly fuelled by rage at President Donald Trump. Most have been to the left of the party’s mainstream. Mr Cuomo also carries the baggage of Albany’s political culture, which is widely seen as corrupt. This year’s high-profile convictions have included Sheldon Silver, the former Democratic speaker of the state Assembly, for accepting illicit payments; Dean Skelos, the former Republican Senate majority leader, for bribery and extortion; Alain Kaloyeros, who worked with Mr Cuomo on economic development for a bid-rigging scheme; and Joseph Percoco, a former top adviser to Mr Cuomo, for taking bribes. While the governor, the son of former New York governor Mario Cuomo and a possible 2020 presidential contender, has not been accused of a crime, candidates for New York’s attorney-general have called for an investigation into him, too. Many of Mr Cuomo’s backers “may well know” about corruption in the state, but are judging him on other factors, said Michael Johnston, a Colgate University emeritus professor specialising in political corruption. “That doesn’t mean people like corruption, or think it’s beneficial, but after a while, as scandal fatigue sets in, for a lot of folks it gets to be like bad weather: a problem, but what can you do about it?” he said. In the age of Trump and the scandals in Washington, Mr Johnston added that Albany’s troubles “may well seem like Page 23 news”. Ms Nixon’s campaign contends the governor’s seat is not as safe as it may seem, pointing to US representative Joe Crowley’s surprise loss to Alexandria Ocasio-Cortez, a self-described “democratic socialist”, in a district spanning the New York City boroughs of the Bronx and Queens. “The polls of registered voters clearly aren’t capturing the kind of Democrats who have been turning out to vote in primaries — the most motivated, most progressive part of the base,” the campaign said. “Joe Crowley’s poll had him up by 35 points. He lost by 15.”

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ANALYSIS Germany’s rightwing news sites pose challenge to traditional media Alternative news outlets cater to readers disillusioned by consensus-driven journalism GUY CHAZAN

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Private equity: Inside the fall of Abraaj Once a trailblazer for emerging market investment, the group is now being picked over by liquidators SIMEON KERR AND HENNY SENDER

t was a deal that should have provided Abraaj Group with one of its biggest ever paydays. Instead the failure to sell a majority stake in Pakistan’s K-Electric to a Chinese group has all but crippled the Dubai-based private equity group. Had the $1.8bn sale gone through at the end of 2017, its parent, Abraaj Holdings, would have received almost $450m. It didn’t. And within six months, the holding company had filed for provisional liquidation — a Cayman Islands court-driven restructuring process — to protect itself against a winding up order brought by two creditors. It had debts of over $1.1bn, and faced allegations of misusing investor money held in Abraaj’s $1bn healthcare fund to support the business of founder Arif Naqvi. Abraaj claims that it had followed procedures, but the loss of confidence sent the firm into a death spiral. Once seen as a trailblazer for the industry, Abraaj had grown from being a Middle Eastern company to a global emerging markets specialist operating across Africa, Asia, Latin America, Turkey and Central Asia as well as its home market, with $14bn under management. Its investor list included the Bill & Melinda Gates Foundation and the International Finance Corporation, an arm of the World Bank. But for many investors, its collapse, with its estimated assets of $1.1bn unlikely to cover its debt, underscores weaknesses in the broader industry. Investment firms have exploited access to cheap debt to leverage funds and make acquisitions, and — in the case of Abraaj — to compensate for the fact that spending was running ahead of revenues at the company itself. “Abraaj could have survived the scandal,” says one adviser to the firm. “But, as usual, over leverage is the number one reason why companies fail.” Both Abraaj spokespeople and Mr Naqvi, the company’s largest shareholder, deny any wrongdoing. Liquidators are now in the process of assessing bids for Abraaj’s business as it seeks to raise funds to repay creditors and staff. Firms such as Brookfield Asset Management and Actis have tendered offers for parts of the Abraaj empire, people aware of the matter say. At the centre of this tale of rise and fall is Mr Naqvi. Until recently he was a powerful symbol of what a financial entrepreneur could achieve beyond the money capitals of the US, Europe and Asia. His decision to position Abraaj as an impact investor — combining social returns with a financial one — resonated with investors, and

helped turn the articulate, Karachiborn, Mr Naqvi into a celebrity in investment circles. Yet Abraaj executives now blame the company’s founder and fellow board members for what PwC, the liquidator of the holding company, refers to as “the long running liquidity shortfall between the investment management fees and operating expenses”. Insiders estimate this gap to have run to between $30m and $60m a year — the company was, in short, spending beyond its means and towards the end using other people’s money to do it, say executives and investors. “What he built had never existed in the Gulf, or in emerging markets generally,” says the head of one investment firm close to Mr Naqvi. “Yet today, he is accused of being a crook and his investors want to hang him.” In March last year, Abraaj hosted 500 guests for a week of discussion, including a dinner at Dubai’s Burj Khalifa, the world’s tallest building. Among those who addressed investors and portfolio managers was John Kerry, the former US secretary of state. “We are delighted you find our presence and resonance in markets to be compelling,” Mr Naqvi said in another talk. “We don’t take it for granted, and we thank you daily for the trust and support you give us.” The lavish dinner was a symbol of how high Abraaj had risen. But behind the scenes, even as the speeches were being made, the K-Electric deal — agreed in 2016 — was in trouble. Bogged down by new regulations on electricity pricing that made it less attractive to buyers, political support for the deal was also dwindling. Nawaz Sharif, who had backed the agreement, was ousted as Pakistan’s prime minister just four months later. By December 2017, Shanghai Electric Power, the buyer, was seeking an extension to complete the purchase but Abraaj was running out of time. As well as the $450m shortfall due to the delays on the Pakistan deal, the Financial Times has discovered that there were other financial pressures last year. The firm had been buying back $350m of its own shares over the years, a sign of optimism that future prospects were strong, senior executives say. It was also in talks with two buyers to sell $250m of excess holdings in its own funds, but the deals subsequently collapsed. That combined $1bn in receivables and spending had been exacerbated by years of extravagant staff and travel costs, including large entourages surrounding Mr Naqvi. In 2015, Abraaj made a $97m loss, according to financial statements. Abraaj had over the years used limited-partnership stakes in its

own funds to guarantee bank loans, the PwC report showed, restricting the group’s room for manoeuvre. And as cash flow issues worsened last autumn, Abraaj dipped into funds held by global investors in the $1bn healthcare fund, including the Gates Foundation and the IFC, both of whom asked for their money back. The subsequent realisation that the cash had been lent to another fund sparked a loss of confidence that eventually brought Abraaj down. Mr Naqvi, who has argued this unusual practice was permitted under their agreements, gave short shrift to investor concerns. And while Abraaj repaid the money with interest, the investors appointed the consultancy Ankura to carry out an independent audit to trace the money. Believing that management fees from Apef VI, a $6bn buyout fund that had already attracted $3bn by 2017, and share sales would cover debt repayments, Mr Naqvi remained confident, telling partners concerned about the brewing row with investors there was “nothing to worry about”. In December, Hamid Jafar of the Sharjah-based conglomerate Crescent Group, a founding shareholder in Abraaj, loaned the business $300m. Mr Naqvi also negotiated share sales to raise funds, including a $50m sale to an unnamed board member. “The whole thing got away from him,” says one Hong Kong-based Pakistani banker. “He was in a trap. He kept hoping that cash would come in [whether from the new fund or K-Electric], that would allow him to cover his position.” But investor concerns made that all but impossible and opened the floodgates on Abraaj, which had for years marketed itself as a safe gateway into emerging markets. Mr Naqvi in late February announced that he was stepping away from day-to-day running of the asset management business. The firm also released investors from $3bn in commitments to Apef VI. That release sparked a default in a capital facility provided by Société Générale, which responded in March by withdrawing $45m from Abraaj accounts held by the lender, sparking a further cash crunch, say people aware of the matter. The French lender declined to comment for this story. Dozens of staff were made redundant and others resigned. In May and June unsecured creditors, including a Kuwaiti pension fund and Mr Jafar, filed to wind up Abraaj in the Cayman Islands in a desperate attempt to recover debts. Abraaj responded by filing for provisional liquidation which protected it against individual creditor action, allowing liquidators time to try to sell off assets.

urder in Chemnitz: sadly no isolated case.” “Leftwing extremist kept on as pre-school teacher.” “Greece celebrates while German investors are depressed.” “How Germany finances Arab terror.” These are headlines on Tichys Einblick or “Tichys Insight” — a highly opinionated, right-leaning news website hugely popular with German conservatives. The brains behind it is Roland Tichy, former editor of business magazine Wirtschaftswoche and scourge of Germany’s politically correct, consensus-driven style of journalism. Set up in 2014, and boasting almost 1m visitors a month, Tichys Einblick is a must-read for the Berlin elite — even for liberals who need to see what the enemy is thinking. “A lot of people don’t like us, but they know they have to read us,” Mr Tichy said in an interview. Detlef Hübner, a businessman from Hofheim near Frankfurt, is a

big fan. “Very slowly, conservative voices have become a minority in the German media landscape, which I find increasingly leftwing, green and pro-regulation in tone,” he said. Tichys Einblick is among a crop of alternative news outlets making headway in Germany, where a growing number of readers feel the traditional press is too loyal to Angela Merkel, the long-serving chancellor, and her brand of moderate, centrist politics. The new outlets’ relevance is increasing as political divisions in Germany deepen, a trend highlighted by far-right demonstrations in Chemnitz following the arrest of two asylum seekers in connection with the murder of a man in the city last month. Such new media are growing across the western world. In the US, alt-right website Breitbart News and Fox News are go-to media for Trump-voting conservatives who perceive leftwing bias in the “mainstream media”. Germany’s media landscape is less polarised: more than 10m people, or about 12 per cent of the population, still watch Tagesschau, the daily 8pm news programme on the leading television channel ARD. Nevertheless, a minority feels that established media are too progovernment — a trend that peaked during the refugee crisis of 2015, when most newspapers, TV and radio stations backed Ms Merkel’s decision to keep Germany’s borders

open. “It’s a strange form of journalism when journalists defend the government,” said Mr Tichy. A study by the Hamburg Media School and Leipzig University released last year found German media were generally too uncritical in covering the crisis. “Up until late autumn 2015, hardly any editorials dealt with the concerns, fears and also resistance of a growing part of the population,” the report found. It said that contributed to distrust of the traditional media, often referred to as the “Lügenpresse” or “lying press” by the German right. In a survey released this February by the University of Mainz, 17 per cent of respondents did not trust the media at all. Such views are spreading. “The suspicion that one is being manipulated by the public broadcasters and supposedly all-powerful journalists has moved from the rightwing fringes to the middle of society,” the German media scholar Bernhard Pörksen wrote last year in Die Zeit. Older media, already suffering from falling circulation, are on the

defensive. When the news magazine Der Spiegel recently asked for readers’ opinions of its journalism, many of the 3,000 replies were highly critical and accused journalists of being cut off. “The sense of it was — you media people live in a liberal bubble . . . and there are things that you’d never question, such as the idea that the EU is a good thing,” said Isabell Hülsen, a Spiegel journalist who analysed the responses. “They said it’s easier for you to talk to the head of the IMF in Washington than with people down the pub somewhere in east Germany.” Spiegel invited 200 respondents to talk to journalists about how coverage could be improved. The results were sobering but constructive. Chart showing circulation of German daily newspapers “We just have to get used to the idea that people are reading very widely now and being exposed to information that contradicts what we write,” said Ms Hülsen. “They come and say ‘I read this on Tichy or in the NZZ or elsewhere, and if I can find this information on the web, so can you’.” The NZZ is the Neue Zürcher Zeitung, a Swiss newspaper that also has a loyal following in Germany. The paper prides itself on its economically liberal and somewhat conservative political outlook: from the start it was critical of Ms Merkel’s “open-doors” refugee policy, for example.

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 10 SEPTEMBER 2018

fivethings

Insight Rule of law: Buhari goofed, but is Nigeria rule-based? GLOBAL PERSPECTIVES

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

otives matter. And, so, when President Buhari said recently at the national conference of the Nigerian Bar Association (NBA) that “Rule of law must be subject to the supremacy of the nation’s security and national interest”, my immediate response was: Why did he say that? What was his motive? Well, Professor Wole Soyinka provided the answer, with the apt phrase “dictatorial recidivism”. Buhari, let’s remember, has a dictatorial past as a one-time military ruler. Although he is now a civilian president, purportedly a converted democrat, the truth is that he still wishes he could rule as adictator.Heconstantlycompares theconstraintsofhispresentoffice to the unrestrained powers of his dictatorial past, suggesting some hankering after that past. His ruleof-law statement should be seen in that light! However, my response to the president’s statement goes beyond mere condemnation. Of course, President Buhari misspoke with the derogation from the rule of law, but I would advance the propositionthatNigeria is, in any case, not a rule-of-law state, and, thus, the hysterical reactionstoBuhari’sstatementare hypocritical. To do this, however, we must first understand the term “rule of law”.Everyone talks about it, but what does it really mean? There are three main conceptions of the rule of law. The first is the formal or rule-book conceptions,espousedbylegalpositivists. According to this school, the rule of law is satisfied once laws meet the formal requirements of being (a)properly promulgated (b)clear, general and prospective – i.e. set out in advance – to enable individuals to plan their lives and (c) applied by an independent and impartial judiciary. Once these formal precepts have been met, it doesn’t matter whether the law is a good law or a bad law, whether it is morally sound or not, the rule oflawhasbeensatisfied.However, advocates of the rights-based or substantive conceptions of the rule of law, notably the American jurist Ronald Dworkin, argue that having laws that meet the formal requirements is not enough; the laws must also guarantee the citizens moral rights and duties with respect to one another, and political rights against the state. In reality, though, the formal and substantive conceptions of the rule of law cannot be viewed in isolation from each other, and, thus, every civilised society recognises that the rule of law must entail both the formal and substantive elements. Which brings us to perhaps the most popular conception of the rule of law, propagated by the British jurist A V Dicey. On the assumption that the rule of

law already meets the formal and substantive criteria, Dicey set out three fundamental principles that must also underpin it. The first is the absence of arbitrary power on the part of the government; in other words, nobody must be punished at the whim of the state, a breach of law must first be established before the ordinary courts. Second, no one must be above the law. As the authors of Oxford English Law put it, the rule of law means “equality before the law or the equal subjection of all classes to the ordinary law of the land administeredbytheordinarycourts”. Dicey’s third postulation is that, under the rule of law, the right to personallibertyisprotectedbythe courts through judicial decisions. All of this shows that the rule of law is a comprehensive concept; you cannot pick one or some elements of it and ignore the others. In sum, its core components are: the need for laws to be open, clear, stable and general; guarantee of moralandpoliticalrights;absence of arbitrary use of state power; equality before the law; protection of individual liberties; and an independent and impartial judiciary. Now, can anyone seriously say that Nigeria adheres to these dictates of the rule of law? The answer, surely, must be no! At the basic, formal level, lawmaking in Nigeria is opaque, and the emergent rules are often unclear and unstable, leaving citizensandbusinessestostruggle to understand what the law is, and thus unable to plan their lives or activities. Even where legal rules exist and are clear, their purposes are undermined by the unlawful exercise of discretion by law enforcement agencies, who will tell you that you are wasting your time following the rules instead of bribing to have your way!

Then, take the Dworkinian rights-based or substantive conception. Do laws in Nigeria guarantee the rights of citizens? Which justiciable political or civil rights can citizens enforce against the state in Nigeria? Truth is, the state has more rights against the citizensthanthecitizenshaveagainst the state. Even with respect to the moral rights and duties between citizens, it is near impossible for the weak to get justice against the powerfulinNigeria.Thisisacountry where a powerful person can ask the police to detain another citizenandsay:“Don’treleasehim until I say so”. That won’t happen in a rule-of-law state. What about the arbitrary use of state power? Any punishment of a citizen by the state without a breach of law first being established before the ordinary courts is a violation of the rule of law. Yet, the exercise by the government of

wide, arbitrary or discretionary powers of constraint is widespread in Nigeria. Individuals are detained without or even against courtorders,astheSamboDasuki case shows. As the NBA recently pointed out, the use of Executive Orders by the Buhari government in criminalmattersandinmatters already in court could amount to “decree-making”, which would violate both the formal and substantive requirements of the rule of law.

‘

Of course, President Buhari misspoke with the derogation from the rule of law, but I would advance the proposition that Nigeria is, in any case, not a rule-of-law state, and, thus, the hysterical reactions to Buhari’s statement are hypocritical

Equalitybeforethelaw?Forget it! Not everyone is equal before the law in Nigeria. As former US president Barack Obama wrote inhisbook,TheAudacityofHope, Nigeria has two sets of rules, “one forelitesandoneforordinarypeople”.The arrogance and impunity with which powerful people in Nigeria behave makes complete nonsense of any pretence to a commitmenttotheruleoflaw.No individual,whateverhisorherstatus, should be above the law. Two former presidents of Brazil were convictedofcorruptionandjailed.

Similar things have happened in SouthKorea.ButProfessorItseSagay, President Buhari’s anti-graft adviser, said that putting a former leader on trial in Nigeria would be divisive. Surely, then, there is no equal subjection of all classes of citizens to the ordinary law in Nigeria, which proves that Nigeria isnotcommittedtotheruleoflaw. Let’s now turn to the independence of the judiciary. The rule of law depends on the ability ofthejudiciarytomakeindependent, impartial decisions, and on the government, as well as private individuals, to comply with decisions of the court. Sadly, neither of theseisoftenthecaseinNigeria.In disputes between private parties, judges are not always independent and impartial.The US Trade Representative (USTR) once said that “the sanctity of contracts is often violated, and Nigeria’s court systems for settling commercial

disputes is sometimes biased”. When it comes to disputes between private individuals and the state, the main challenge, of course, is the unwillingness of the government to comply with the decisions of the court. As long ago as 2006, the then Chief Justice of Nigeria during the Obasanjo administration lamented “the disposition of the Executive to wantondisobedienceof,andnoncompliancewith,theordersofthe court”.So, the Buhari government is following a familiar path, well trodden by its predecessors. Of course, all over the world, there are tensions between the executive and the judiciary. President Trump criticised US judges for overturning his immigration decisions. In the UK, government ministershavecriticisedjudgesfor lenient sentences, for refusing to deport alleged terrorists or, even recently,forrulingthatthegovernment could not trigger the Brexit process without the approval of Parliament. But, despite the tensions, the accepted rule-of-law norm in all civilised nations is thatthegovernmentshouldeither appeal the decisions of the courts or comply with them. No government in any country committed to the rule of law should refuse to comply with court orders. The fact that such non-compliance is common in Nigeria is a strong evidence that Nigeria is not a ruleof law state. So, let’s be clear. President Buhari goofed with his statement that the rule of law can and must be subordinated to national security or the national interest. The rule of law is about legality and the failure to pursue national security or so-called national interest legally would seriously undermineit.TheSupremeCourt ruling in the Dokunbo Asari case that Buhari used to support his statement does not say that the rule of law can be subjected to national security; rather, it says, rightly, that individual liberties can be subordinated to national security but only within the context of the rule of law, i.e. based on pre-existing laws and after the decision of the ordinary court, not the exercise of arbitrary powers by the government. That’s the key difference! Whatever motives lay behind President Buhari’s statement, he has, unfortunately, sent negative signals to the rest of the world that Nigeria would trample on the rule of law based on some nebulous national security or national interest considerations. The sheer folly of the president’s statement was laid bare when, a few days after he made it, he had publicly to assure the visiting German chancellor, Angela Merkle, that his administration “will always uphold the sanctity of the rule of law in governing the country”, effectively rowingbackonwhathesaidatthe NBA conference. But the damage had been done. Nigeriaisuniversallyknownas acountrythatdoesnotrespectthe rule of law. The president’s comment, which ricocheted around the world, has reinforced negative perceptions about Nigeria and its investment-friendliness. It’s an own goal by a government that says it wants to attract foreign investors. Sad! Note: the rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/

for your new week

Fascinating business facts

16%

enya’s economic growth momentum for this year could be snuffed out if a widely unpopular 16 percent Value Added Tax on fuel is maintained, the country’s chamber of commerce said on Friday, pointing at higher prices of goods and transport. The tax, which came into force on Sept. 1, is part of a government bid to boost revenue collection in order to narrow its fiscal deficit and secure an extension of a standby credit facility from the International Monetary Fund. The High Court on Thursday ordered a temporary suspension of the tax, but prices at petrol stations visited by Reuters on Friday had not come back down.

$4bn

hina has agreed to restructure some of Ethiopia’s loans, including a loan for a $4 billion railway linking its capital Addis Ababa with neighbouring Djibouti, Ethiopia’s Prime Minister Abiy Ahmed has said. on Thursday. In particular, the loan for the Addis Ababa-Djibouti railway which was meant to be paid over 10 years has now been extended to 30 years confirming fears that China might be luring African nations with loans they cannot pay back.

$40bn

ack Ma, China’s richest man, is laying the groundwork for a future away from Alibaba Group Holding Ltd., the company he cofounded and turned into an e-commerce juggernaut. In an interview with Bloomberg TV, the Alibaba chairman said he is dedicating more of his time and fortune to philanthropy with the creation of a foundation in his own name focused on education, following in the footsteps of fellow billionaire Bill Gates. Ma, who turns 54 on Monday, has a net worth of more than $40 billion according to the Bloomberg Billionaires Index.

$267bn

he selloff pummeling emerging market currencies shifted to stocks last week as contagion concerns weighed on risk assets and President Donald Trump threatened to impose tariffs on an additional $267 billion of Chinese goods. MSCI Inc.’s EM equities gauge entered a bear market on Sept. 6 and had its worst week since mid-August.

26m

ext week, at its annual iPhone launch event, many analysts believe Apple will try to revive the iPad, offering a radical redesign that will remove the device’s home button and add facial recognition technology similar to that of the iPhone X. Though sales of Apple’s oncepioneering tablet have started to show signs of recovery in the past few quarters, to 11.5m in the third quarter of this year, they remain far from the 26m peak of the first quarter in 2014.

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