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Oil majors shy on Nigeria, look elsewhere for growth opportunities ... Book strong results despite low oil prices STEPHEN ONYEKWELU

il majors are fine-tuning their growth strategies either for petrochemicals, gas or energy transition programmes, but Nigeria is not a high priority investment destination. According to their full-year 2018 financial results released recently, ExxonMobil, Total and Chevron booked strong results despite a 40 percent decline in the value of oil prices in the fourth quarter of 2018. Some of the oil majors reported earnings similar to 2014 when oil prices surged above $100 on the back of strong investment in technology, diversifying markets and product offerings, thereby beating expectations of most analysts. But with the exception of Total and Royal Dutch Shell, other Continues on page 38

Inside Leading the battle for P. 13 better health Nonso Obikili writes on ‘Keeping faith with P. 35 democracy’

L-R: Matthew Azoji, managing director, Neimeth International Pharmaceuticals plc; ABC Orjiako, chairman, and Florence Onyenekwu, company secretary/general manager, finance, at the 60th annual general meeting of the company in Lagos. Pic by Olawale Amoo

How reforms, financial flows can ease Nigeria’s liquidity shortage I LOLADE AKINMURELE

n a world awash with liquidity with investors globally looking for where to put money to work to earn a decent return, Nigeria can’t seem to attract foreign capital and is instead dealing with a shortage of liquidity in its domestic economy.

By not taking the steps needed to unleash massive inflows of foreign direct investments (FDI), Abuja is being needlessly exposed to liquidity shortages and the economy is at risk of sustained sub-par growth, according to leading economist, Ayo Teriba. “Such liquidity shortage is to blame for recession, stagnation,

negative per capita real GDP growth since 2015, devaluation, weak currency, rising unemployment and rising incidence of poverty,” said Teriba, CEO of Economic Associates. “Nigeria must put an end to these setbacks by taking steps to embrace financial globalisation and join the liquidity race in

order to regain its place among peers. The government needs to open new spaces for foreign investors to unlock Greenfield FDI,” he added. As surprising as it sounds, there are limited opportunities for Foreign Direct Investors looking to park their cash in Continues on page 38

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Buhari, Atiku offer distinct pathways to Nigeria’s economic future CALEB OJEWALE

igerians will in five days’ time go to the polls to elect a president for the next four years. Although there are over 60 candidates vying for the president of Africa’s largest economy, analysts have said the contest is between Muhammadu Buhari, incumbent president and candidate of the All Progressives Congress (APC), and Atiku Abubakar, a former vice president and flag-bearer of the People’s Democratic Party (PDP). Some commentators say they do not see a difference between the APC and PDP candidates. Buhari and Atiku are similar in many ways. Both are septuagenarians. Both are Muslims from Nigeria’s northern region. And both are of the Fulani ethnic stock. But it is in their plans for Nigeria and Nigerians that Buhari and Atiku differ as both offer a completely different pathway to economic prosperity, security, national pride, and the fight against corruption. Analysts say the two major candidatesofferNigeriansachoicebetweena private sector-led economy and a statist regime, between clear, measurable developmentplansandoptimisticrhetoric, and between appointments by merit and appointments through nepotism.

Buhari, 76, takes pride in being seen as an “upright, modest man” and often expresses what could be described as a disdain for successful people, perceiving most wealthy people as corrupt. For the APC candidate, poverty appears to be a symbol of uprightness. Atiku, 72, on the other hand, has earned for himself reputation as a successful businessman, even though enmeshed in controversies on account of perceptions that his wealth has been a product of personal enrichment from public funds. The former vice president has, however, insisted he is not guilty of any wrongdoing, even describing himself as the mostinvestigated politician in Nigeria. BusinessDay analysis of the policy documents of the two candidates shows that Atiku, perhaps due to his business inclination, favours a private sector-led economy, and his “Let’s Get Nigeria Working Again” document highlights a policy priority to build a broad-based, dynamic and competitive economy with a GDP of US$900 billion by 2025. Buhari, on his part, has since inauguration in 2015 demonstrated an aversion for the private sector, exhibiting more of statist tendencies and creating an environment that

Continues on page 38

World Bank annual report shows $67bn in commitments for partner countries IHEANYI NWACHUKWU

he World Bank Group’s loans, grants, equity investments and guarantees to partner countries and private businesses reached $67 billion in 2018, representing an increase of about 8.1 percent compared to N62 billion in 2017, its recently released annual report shows. Out of the record $67 billion in financing commitment for partner countries in 2018, $19.8 billion went to subSaharan African countries. In line with its mission to end extreme poverty by 2030, boost shared prosperity, and realise a world with opportunities for all, the World Bank Group committed N58.19 billion, N59.77 billion, and N64.185 billion to its partner countries in 2014, 2015 and 2016, respectively. The International Bank for Reconstruction and Development (IBRD) saw strong demand from clients for its services, with commitments rising to $23 billion in fiscal 2018. Meanwhile, the International Development Association (IDA) provided $24 billion to help the poorest countries – the largest year of IDA commitments on record. In the review year, World Bank leveraged IDA’s strong capital base and launched the inaugural IDA bond. Investor demand for the $1.5 billion bond reached more than $4 billion. By combining IDA’s traditional donor funding with funds raised in the capital markets, this financial innovation will expand IDA’s ability to support the world’s poorest countries, including efforts to prevent conflict. The International Finance Corporation (IFC) provided more than $23 billion in financing for private sector development last year, including $11.7 billion mobilised from investment partners. Of this, nearly $6.8 billion

went to IDA countries, and more than $3.7 billion was invested in areas affected by fragility, conflict, and violence. Marking its 30th year of operation, the Multilateral Investment Guarantee Agency (MIGA) has become the third leading institution among the MDBs in termsofmobilisingdirectprivatecapital to low- and middle-income countries. This year, MIGA issued a record $5.3 billion in political risk insurance and credit enhancement guarantees, helping finance $17.9 billion worth of projects in developing countries. New issuances and gross outstanding exposure, at $21.2 billion in 2018, almost doubled as compared to fiscal 2013. The World Bank approved $16.5 billion in lending to Africa region for 138 projects in fiscal 2018, including $1.1 billion in IBRD loans and $15.4 billion in IDA commitments. Revenue from Reimbursable Advisory Services agreements with nine countries was $7.5 million. Key focus areas of the World Bank strategy for Africa include raising agricultural productivity, increasing access to affordable and reliable energy, building resilience to climate change, promoting regional integration, and boosting human capital. The international community is racing to achieve the Sustainable Development Goals in less than 12 years, with trillions of dollars needed to deliver on the promise. Overlapping crises, from climate change to pandemics, natural disasters to forced displacement, threaten to erase hardearned development gains. And historic economic changes, in part from technological advancement and disruption, present risks for countries, but also opportunities if they have made the necessary investments in their people, communities, and economies to take advantage of them.

•Continues online at www.businessday.ng

L-R: Matthew Kukah, bishop, Catholic Diocese of Sokoto; Ifeoma Utomi, wife of the founder, Centre for Values in Leadership (CVL); Pat Utomi, founder, CVL; Yakubu Gowon, former head of state, and Eugene Nagbe, representing the President of Liberia, at the CVL16th Annual Lecture and International Leadership Symposium in Lagos.

Govt hypocrisy shows as trucks return to Lagos roads after Buhari’s visit JOSHUA BASSEY & CHUKA UROKO

ours after President Muhammadu Buhari, his presidential campaign entourage and chieftains of the ruling All Progressives Congress (APC) visited Lagos to canvass votes ahead of Saturday’s presidential polls, petroleum tankers and container-carrying trucks have again been unleashed on Lagosians. The return of the trucks on Lagos roads shows the hypocrisy and selfdeceit of the current government, which was able to keep the tankers and trucks off the roads for the duration of the president’s visit. Days to the APC rally which held at the Teslim Balogun Stadium, Surulere, the trucks which usually line up the long stretch of Ikorodu Road, Eko Bridge, Ijora Olopa, Apapa-Iganmu Road, Eric More Road, Iganmu Bridge and part of Lagos-Badagry Expressway had all disappeared. The Federal Road Safety Corps (FRSC) and the Lagos State government had barred the trucks from entering Lagos between Friday and Saturday to guarantee free movement for Buhari and his entourage. The presence of the trucks on Lagos roads puts the national economy at great risk. The worst-hit is Apapa, which harbours the country’s two busiest seaports that account for about 75 percent of all the export and import activities in the country. Apapa in the last five to six years has garnered notoriety for its congestion and gridlock caused by heavy influx of tankers and trailers which have, within this period, occupied all bridges and roads leading to the

port city with spillover effect on the surrounding areas such as Surulere, Yaba, Lagos Island, Oyingbo, etc. Many businesses in Apapa have died. Others strong enough to cope with the excruciating pains of staying back are doing so at great cost. Many importers now prefer to clear their cargo in neighbouring countries because doing that through Apapa ports is no longer profitable and sustainable. Yet government, which rakes in stupendous revenue from the ports and collects tenement rates from residents whose houses have lost their value, looks away. The impression the federal and Lagos State governments have always given to the Apapa residents and business owners in the port city is that their case is helpless. One task-force after another has been set up to rid Apapa of its breathtaking gridlock without success. Everything seemed to have come to a head when Acting President Yemi Osinbajo flew into Apapa in July 2018 and gave a 72-hour presidential order to the trucks to vacate the roads and bridges, but the trucks remained adamant and nothing happened. But as the nation’s commercial capital prepared for President Buhari’s visit, Apapa wore the look of sanity as the trucks totally disappeared from the roads. Trucks already in Lagos were forced to leave while others still on their way were barred from entering the city. BusinessDay checks on Friday showed that from Maryland through the whole stretch of Ikorodu Road into Apapa through Western Avenue or Eko Bridge, the roads were completely free, with Lagosians asking

where all the trucks went to and what made them vacate. On Sunday, a day after Buhari’s visit, however, BusinessDay checks showed that the trucks had returned to the roads, especially around Alaka inward Eko Bridge. By Sunday afternoon, the trucks were taking over both lanes inward Eko Bridge leading to heavy traffic build-up on the axis, forcing the residents to ask why the sudden appearance of the tankers and containers if they could be kept away from the road ahead of the visit by the president. Observers say the sanity that returned to Lagos and specifically Apapa roads on Friday and Saturday showed it is possible to make Apapa a sane environment if government really wants to make that happen. “By getting the trucks off the roads on Friday and Saturday, the government demonstrated that it can be done. It smacks of hypocrisy that the trucks are returning after Buhari’s visit and government people don’t seem to care,” said a Lagos resident on condition of anonymity. Ayo Shola-Vaughan, a retired brigadier-general and chairman, Apapa G.R.A Residents Association, described the latest development as sad and deliberate. He also accused the Nigerian Ports Authority and the task force put in place to regulate how the vehicles access the ports of complicity in the whole issue. Shola-Vaughan vowed that the residents would take legal action against the NPA and the owners of shipping companies after the expiration of the 21-day ultimatum on the matter.

5 reasons Nigeria might not just be Africa’s heavyweight ISRAEL ODUBOLA & SEGUN ADAMS

or years, Nigeria has been referred to as the giant of Africa basically because of its population size of about 200 million and its weight as Africa’s biggest economy in terms of real GDP. Alargepopulation,whichrepresents an abundance of human resources, ought to be advantageous. Many countries including China and India have maximallyutilisedtheirlargepopulation as reflected in their development. Taking into consideration the

BRICS – a group of five major emerging economies of Brazil, Russia, India, China, and South Africa – one thing that comes to mind is almost all of them are largely populated. While Brazil and Russia have the biggest population in Latin America and Europe, respectively, China and India are the most populated countries inAsia.Thisnaturallyraisesthequestion whyAfrica’smostpopulousnationisnot a member of this group, pointing to the fact Nigeria has not taken full advantage ofitshugepopulationfigure,whileagood numberofitsbestbrainsarecontributing

to the growth of other economies. HavingthebiggesteconomyinAfrica isnotanimpressiblefeatasthecountryis currentlythepovertyheadquartersofthe world, inhabiting the highest number of extremely poor across the globe. This largely indicates that Nigeria’s growth is not ‘pro-people’, according to some development experts. Comparing the economic transformationincountrieslikeRwanda,Ethiopia, and Ghana to Nigeria, it is clear the country needs to improve on critical

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General T.Y. Danjuma and the other generals with nine lives Bashorun J.K Randle

he select audience at the preview of Max Chuck Black’s film: “BLACK ROARING LIONS” was about to erupt into a standing ovation at the super opulent Beverly Hills Hotel, Sunset Boulevard, Beverly Hills, California, United States of America when matters were brusquely interrupted. The protest had to do with what many would have accepted as no more than poetic licence or slight exaggeration. However, Professor Vera Halpin from Stanford University would have none of it. She insisted that on Friday 13th February 1976 when Lt. Colonel B.S. Dimka assassinated Nigeria’s Head of State, General Murtala Mohammed, the Chief of Army Staff, then Major General T.Y. Danjuma who was next on the assassin’s list (by T.Y.’s account) escaped death twice, not thrice as was portrayed in the film. The rest of us could not really figure out what the fuss was all about. Julien Assange of WikiLeaks and Edward Snowden the former CIA consultant who is living in exile in Moscow have gone viral with their report that the

trigger for the assassination of General Murtala Mohammed (who took over from General Yakubu Gowon on 30 July, 1975) was the massive demobilisation programme to rid the military of thousands of soldiers who had been hurriedly recruited during the Nigerian Civil War which lasted from 1967 to 1970. However, a formidable contributory factor was the rapid promotion of T.Y. Danjuma, who was catapulted into the plum job of Chief of Army Staff – over and above his peer group including the likes of Alani Akinrinade. While Akinrinade took matters calmly, Brigadier Ilyasu Bisalla was seething with rage and consumed with jealousy of T.Y. Danjuma’s superstar status. Ironically, Bisalla and Danjuma had been best friends in the army and T.Y. Danjuma was Bisalla’s Best Man at his wedding. Anyway, when Dimka was eventually captured he fingered Bisalla as the main sponsor of the aborted coup d’état. As Chief of Army Staff, Danjuma’s office was on the sixth floor of the “Republic House”, Customs Street, Lagos. Bisalla’s office was directly below on the fifth floor. As news of the assassination of General Murtala Mohammed and his Aide-De-Camp, Lieutenant Akintunde Akinsehinwa filtered through at about 8 o’clock in the morning, what Bisalla was expecting to hear was that Danjuma had similarly been gunned down in his military car as he drove to work from Ikoyi to Marina. It was with considerable shock and enormous panic that Bisalla learnt that Danjuma was safely in the office and had proceeded to rally the troops. First to get on the radio with his nationwide broadcast was Brigadier

Alani Akinrinade, the General Officer Commanding [GOC] of the Second Division based in Kaduna. He emphatically disassociated his troops from the attempted coup d’état. Of course, Bisalla pretended that he had no prior knowledge of the attempted coup. What he did not know was that instead of driving in his official car, Danjuma got into a boat in Ikoyi in order to avoid the traffic jam and landed at the Marina Jetty. He simply walked across the road to “Republic House”, acknowledged numerous salutes from his subordinates and got into the lift which took him directly to his office. The news of the coup d’état threw the entire nation into grief, despair and confusion. Murtala’s number two, then Major-General Olusegun Obasanjo (the Chief of General Staff, Supreme Headquarters) could not be located. Hence, Danjuma who was number three in the military hierarchy took charge. He was livid at the treachery, betrayal and looming anarchy. Let us skip his encounter with officers who were suspected of participating in the coup. Those who were dragged before him in his office were given the full dose of his anger according to the film. The action moved swiftly to Bonny Camp (military cantonment) in Lagos which Danjuma considered as the safest place from which to launch a counter attack. Little did he know that Captain Joe Kasai who was in charge of Bonny Camp was one of the brains behind the coup! What was most riveting and alarming was when captain Kasai ordered a sergeant to launch a hand grenade into the room where Danjuma had assembled loyal officers, what saved

‘

...what saved Danjuma’s life for the second time on Friday 13th February 1976 was the response of the defiant sergeant. “If you want to kill them, you should throw the grenade yourself.”

Danjuma’s life for the second time on Friday 13th February 1976 was the response of the defiant sergeant. “If you want to kill them, you should throw the grenade yourself.” The scene then shifted to Danjuma giving orders to then Colonel Ibrahim Babangida who was the commander of the armoured corps to proceed to “Radio Nigeria” in Ikoyi from where Dimka was intermittently broadcasting his message of victory (successful coup d’état) followed by military music to a bewildered nation. According to the film, the order given to Babangida was that he and his troops should demolish the entire building (regardless of the human causalities, especially the civilians who were trapped inside). Those civilians included Mr. Christopher Kolade (the Director-General) who would much later become Nigeria’s High Commissioner to the United Kingdom and Mrs. Rosaline Tugbogbo (wife of Otunba Adeoye Tugbogbo). However, Babangida who had come close to death during the civil war, with a bullet still lodged in his body till today, chose to put his own life in danger by confronting Dimka having assured the assassin that he (Babangida) was unarmed. It was a very heroic but very dangerous strategy. Anyway, it appeared to work as Babangida survived the close call with death and thereby confirmed his status as one of those generals with nine lives. In the meantime, Dimka slipped out of “Radio Nigeria” after delivering a totally incoherent message imposing a curfew all over Nigeria: “Dawn to Dusk” (instead of dusk to dawn). Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Can partnerships help us achieve the 17 UN SDGs? GrowthView

Christina Wehbe Partnerships | pareto efficiency | aligning to the SDGs

“Children are a great example for all. They are pareto-efficient simply by talking to each other openly and using easy words. Can corporates do the same?” n the 1990s, we would exchange comic books, VHS, DVDs and CDs with our friends. The simple example is magazines. When one person finished reading it, he passes it on to someone who wants it. Why can’t this trading efficiency and gain be achieved in today’s economy? Let’s take specifically the example of CD bartering to illustrate how cooperation and trade efficiency can solidify the United Nations 17 SDGs. Children are a great example for all. They are pareto-efficient simply by talking to one another openly and using easy words. Can corporates do the same? Example of CD swapping Let’s say, I have the Michael Jackson CD at home. My friend hasn’t listened to it yet and has another CD I like, the Britney CD. So, my friend Alicia and I speak at school and offer to swap CDs for a bit or maybe even decide to exchange them for good. The outcome is that we are both better off and have greater gains without spending more money. This is only possible If we speak to each other. I wouldn’t know otherwise,

that she has the Britney Spears CD and she wouldn’t know that I am bored of listening to my same songs over and over. Now, how can companies shift their business model to partner efficiently? When information is shared, your competitive advantage confirmed and a common goal identified - can we start talking about market efficiency. Speaking to your neighbour (as in GrowthView – article 2) is the first step, then engaging is the second step to achieve greater gains. An added benefit from this, is that both children happier, which is in itself an impact. Economically they didn’t spend more - the two kids didn’t ask their parents for pocket money or didn’t work their part-time job to get the CD. We should remember that satisfaction is linked to happiness, which is derived by the expectations we set in comparison to others. When kids simply swap toys, it increases satisfaction and lowers possible inequality as they each got what they wanted. So, by swapping CDs you listen to new tunes, spend less and feel more prosperous! Win - win - win. Both children swapped CDs, and you’ve achieved social gain and economic gain. Sounds simple? So why don’t we do it in our society and in markets? So ultimately, can pareto efficiency be achieved with global priorities such as the 17 UN SDG goals? On a global scale finding that pareto optimal point is possible– when companies, governments and people coming together to understand each ‘players’’ need and align to common denominator, common impact goal. Example of impact projects in Nigeria A more to-date example is a top-tier bank looking for impact investment opportunity in Nigeria as part of their thematic Fund in Renewable Energy. They partner and talk with a global computer software company,who is looking for CSR and impact initiatives in West

Africa to facilitate data-driven clean water projects. Finally, we have a donor, that is funding market development programmes that take an inclusive and private sector approach. How can all these 3 players benefit of pareto efficiency? E | Engage with other players Start the dialogue(i) the software company by sharing intel of rural needs for renewable energy, the distribution constraints and key private sector partners. (ii) the donor acting as the neutral connector and independent link to the local government and the UN. (iii) The bank investing in off-grid energy SMEs and providing access to finance bringing UHNW capital investment. E | Explain what you want It is an ecosystem. Renewable energy is linked to financial services (access to finances) so that local businesses can manufacture, supply and distribute affordable micro-grids. Explain what your aim is. Then, we can explain a common gain (outcome). In this case, it is for people in Nigeria to have more job opportunities, healthier living standards and access to better services. They benefit from social and economic gain with an effective allocation of resources. What are the tangible gains & outcomes from this example? › All players: revenue (cross-sales) › All players: social impact › Nigerian market: investments and economic growth › Software company: measurable impact to evidence to the UN › Bank: Return on Investment (ROI) and Social Impact (SROI) Each individual would be worse off. All 3 players, individually, would be worse off if they hadn’t come together; despite them having different preferences and values.

So, in practice, how do we get these players to all come together? Communication and information sharing to achieve a COMMON GOAL. This game theory applies now to how we see corporates, banks, governments and international agencies are coming together under the same Sustainable Development Goals. We share intelligence, knowledge, data and know-how to help us solve the complex problems of poverty, high consumption of goods, limited to no job opportunities, hunger, lack of infrastructure and most importantly knowledge and capacity to provide health and education to our future generations. Remember, that impact investment and corporate sustainability is NOT the only solution. We need more than investments. We need to build an ecosystem and holistic framework within companies to measure the impact of their individual initiatives. Finally, to link initiatives and projects that can be scaled through collaboration, under the same UN SDG priority. Knowledge of local social and economic landscape is critical to invest and linking initiatives through partnerships. Stay tuned, the next GrowthView will discuss what equitable, prosperity means in this context! Key take-aways: 1. Together we can do more The UN is asking for impact evidence 2. 3. Speak-up Be open to be efficient 4. 5. Let’s aim to have greater gains for all Wehbe is the founder of GrowthView. She writes from Zurich, Switzerland. E: christina.wehbe@gmail.com. Cell: +41 79 950 4760 https://www.urbanemerge.com/people https://www.qeh.ox.ac.uk/alumni/christina-wehbe

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comment How do nations get rich? Patrick Atuanya

ately I have been having a recurring nightmarish thought. What if Nigeria’s growth rate gets stuck at the current miserable 2 - 3 percent per annum level for the next one, two or three decades? Running the numbers, 2 percent per annum average growth rate gets you to a $1 trillion economy in 40 years (2060) , growing at 3 percent gets you there a decade earlier in some 30 years’ time (2050) starting from the current base (size of Nigeria’s economy) of $400 billion. Of course this is cold comfort for a couple of reasons, first of all for the estimates to pan out the assumption is that the N/$ exchange rate stays stable (at N360/$1) over that time period, which would be largely unrealistic given the economic history of Nigeria. Secondly the United Nations (UN) recently projected that Nigeria’s population would hit the 400 million mark by 2050. When looking at nations, econo-

mists often use GDP per capita as an indicator of the average economic well-being within a country or a measure of a nation’s standard of living. This means that even an optimistic exchange rate influenced trillion dollar economy (by 2050/60) would still leave Nigeria’s gross domestic product (GDP) per capita at $2,500, roughly the same levels as it is today. By comparison, in 2017, World Bank data shows that the United States had a GDP per capita of $59,531; in Canada it was $45,000; $29,742 in South Korea; $8,826 in China; and $9,821 in Brazil. These nations however were not so wealthy in recent pasts. In 1960 these countries had GDP per capita of USA ($3,007), Canada ($2,294), South Korea ($158.24), China ($89.52), and Brazil ($210). The growth seen in South Korea, China and Brazil is particularly striking. Nigeria is also unfortunately plagued by rising poverty. Some 86.9 million Nigerians are now living in extreme poverty (according to a report by the World Poverty Clock) representing nearly 53 percent of the estimated 189 million people, a problem that will likely worsen given the rosy population projections. Interestingly whether for people or nations, the key to escaping poverty lies in rising levels of income. So how do nations raise income levels of their citizens and grow wealthy? Various theories abound. Scott A. Wolla writing in a paper published by the Federal Reserve Bank of St. Louis, USA notes that achieving higher rates of economic

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growth, which is a sustained rise over time in a nation’s production of goods and services, is dependent on increasing total factor productivity (TFP). Wolla argues that to increase TFP and escape poverty, two things matter the most for countries, Institutions and Trade. Institutions matter because they protect property rights (the ability of people and businesses to own land and capital), engender free markets and promote the rule of law. For trade Wolla’s point is that it provides a broader market for a country to sell the goods and services it produces. Many poor nations, including Nigeria however, have trade barriers that restrict their access to trade. Recent research (Mutreja, Piyusha; Ravikumar, B. and Sposi, Michael J. “Capital Goods Trade and Economic Development”) suggests that the removal of trade barriers could close the income gap between rich and poor countries by 50 percent. Mike Milken, a pioneer ing American investor, who developed a formula rooted in American free market values in the 1960s to describe national prosperity observed that “prosperity in any society depends on the leveraging effect of financial technology on the sum of human capital, social capital and real assets.” An April 2015 paper by Stanford University economist Charles Jones tries to answer the question “Why are people in the United States, Germany, and Japan so much richer today than 100 or 1000 years ago? Why are people in France and the Netherlands today so much richer than people in Haiti and Kenya? Jones again zeros in on produc-

‘

...that to increase TFP and escape poverty, two things matter the most for countries, Institutions and Trade

tivity and misallocation. According to Jones misallocation at the micro level can show up as a reduction in total factor productivity (TFP) at a more aggregated level. The essence of this insight is quite straightforward: when resources are allocated optimally, the economy will operate on its production possibilities frontier. When resources are misallocated, the economy will underperform or TFP will be lower: a given quantity of inputs will produce less output. Scanning through these theories sheds a lot of light the steps that Nigeria should be taking to grow wealthy and increase the incomes of its citizens, which does not include gimmicks like the Trader Moni scheme. In Nigeria productivity is low in a lot of sectors, resources are routinely misallocated by all levels of Government and sometimes the private sector and trade policies often have an overall negative impact on the economy. For most firms in Nigeria things that affect productivity negatively include, inadequate electricity supply, limited access to finance, multiple taxes and regulations and poor transport infrastructure. Tackling these issues that restrict productivity, removing unhelpful trade barriers and import bans, building up our institutions, promoting the rule of law, respecting property rights and engendering free markets would be a major step forward in accelerating growth and increasing the wealth of the Nigerian nation and people. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

The executive director: Surplus to requirement?

Bisi Adeyemi

n law there is no real distinction between the different categories of Directors. “It may be “unhelpful and even misleading to classify company directors as “executive” and “non-executive” for purposes of ascertaining their duties to the company or when any specific or affirmative action is required of them” – Re Elgindata Ltd. It is however an established practice to classify Directors according to their different roles on the Board. Executive directors have “executive responsibility” for running the company’s

business. They are company employees and have statutory responsibilities as Directors. Typically, they have responsibility for specific aspects of the business – Operations, Risk, Credit, HR & Admin, IT, etc. and report to the Board in respect of these specific business areas. They are usually technically competent in the area of oversight and responsible for the day-to-day running of the Company. As employees of the Company, they are expected to devote their whole time and attention to the work of the Company. Led by the CEO, they constitute the Executive Management team. As with non-executive directors, executive directors are expected to contribute to the robustness of deliberations on the Board to engender optimal decision making. The full complement of the Board’s diversity reckons with the skills set and experience executive directors bring on board. It will thus be a disservice to the Board and the enterprise if the only view the Board gets to hear from the Management side is the CEO’s. The argument that team spirit at the level of execute management should preclude an Executive Director from expressing a different view point, reservation about a proposal or sharing a different perspective begs the question of the relevance of appointing ex-

ecutives to the Board. Whilst it is expected that the executive team will come to the Board with a “common position” – regardless of the “minority opinion”, a significant concern should be brought to the attention of the Board. If all executive directors do is present reports on their respective portfolios and agree with “Management’s position”, then perhaps the Board seat could be better utilized by a Non-Executive Director? As functional heads, they can be invited to provide updates to the Board on their respective portfolios as required, or otherwise report to the Board through the CEO. Clearly one is not advocating dissonance or acrimony as this would not in any way promote Board effectiveness. However, to the extent that the ultimate duty of loyalty is owed to the entity, all Directors irrespective of which side of the divide they belong, are expected to act in the best interest of the enterprise. It is instructive that the Companies and Allied Matters Act does not distinguish between executive and non-executive Directors in spelling out the duties and responsibilities of Directors. Many Executive Directors are appointed to the Board via promotion and lateral hiring. More often than not, they are unable to

strike a balance between their management of the company, their fiduciary duties and the independent state of mind required of a Director. As a fiduciary, a Director is expected to consider the best interest of the Company and not what is “right for the Management of the Company”. To perform optimally, executive directors need to be properly prepared to step up to the Board. Relevant leadership and director development training programmes are imperative. An independent mindset – as aspirational as it sounds – is required of all Directors. The confidence to speak up and candidly, ability to contribute to healthy debate and conversational intelligence are desirable traits in an Executive Director. The Board Chair has a responsibility to ensure that all Directors contribute to Board deliberations and in this regard will need to draw out less vocal Directors. It is not out of place for the Chairman to encourage executive directors to share their perspectives on proposals before the Board and they in turn should have the courage to speak up where they have legitimate concerns. Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions tobadeyemi@dcsl.com.ng

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Monday 11 February 2019

Mobile money can be a win-win for banks and telcos in Nigeria

obile money as used in some African countries is as simple as it sounds, yet, capable of very sophisticated applications. In Ghana for instance, it has applications from purchasing treasury bills, Initial Public Offerings (IPOs), health insurance, to even the basic money transfers and digital service payments. Mobile money in Ghana has gone beyond just achieving financial inclusion. It has also immensely redefined consumerism and flow of money within the $47 billion economy. At the end of 2017, mobile money transactions hit $32 billion, according to data by the Bank of Ghana, a figure that represents 68 percent of the country’s GDP. Users not only get to deposit and withdraw via mobile money, but there is also provision for interest accruals, between 1.5 per cent and 7 per cent as approved by the Ghanaian Central Bank, subject to whatever each telecommunications company can negotiate with each partner bank. In the 2017 State of the Industry Report on Mobile Money by GSMA, it was noted that the 2015 regulatory guidelines from the Bank of

Ghana have allowed customers to accrue interest on mobile money deposits, resulting in exponential growth in total deposits in that market. Mobile money is however not functioning in isolation of the formal financial sector, that is, commercial banks. At least in Ghana, mobile money is linked to banks, as different telecommunication companies work out modalities with partner banks. For the mobile money agents, they also have to visit a bank in order to get ‘eCash’ for their mobile money accounts. Without visiting the bank, they cannot get it, ensuring the banks benefit from the system. The mobile money system is bridging the gap between the banked and the under-banked population while providing convenience in transactions. Registered mobile money accounts in Ghana are now 23.9 million out of an estimated 28 million population. At the end of 2017 the Bank of Ghana in its report, stated there were 11.1 million active mobile money accounts. The number of registered mobile money accounts, at 23.9 million is almost double the number of bank accounts, which was 12.5 million in 2017. The active registered agents of the three (3) mobile money operators (MMOs) in 2017 stood at

151,745 and showed a growth rate of 41.27 percent over the previous year’s position of 107,415. Despite this, banks do not appear to consider the mobile money system as a threat. The financial service providers have buy-ins structured into the operation of the mobile money system, which invariably makes it beneficial to them. Ghana’s central bank in a 2017 report even alluded that “The growth in mobile money emanated from productive collaboration between mobile money operators and banks.” The volume of mobile money transactions soared from 266.2 million in 2015, to 550.2 million in 2016, and the growth continued in 2017 with a 78.4 percent increase to 981.5 million transactions. Similar growth has been occurring in value of mobile money transactions, from GH¢ 35.4 billion in 2015, growing to GH¢78.5 billion in 2016, and then a 98.51 percent growth to GH¢ 155.8 ($32 billion) in 2017. While cheques continued to be the major non-cash retail payment instrument in terms of values of transactions, value of cheques cleared as a percentage of total value of non-cash retail payments dropped from 60.21 per cent in 2016 to 49.33 percent while value of mobile

money grew from 31.02 per cent in 2016 to 42.81 per cent in 2017. The volume of mobile money transactions represented 97.50 per cent of total volume of noncash retail payments. However, in terms of value of transactions undertaken in 2017, cheques continued to maintain its lead with GH¢179.6billion ($36 billion), while mobile money followed closely with GH¢155.8 billion ($32 billion). Despite the best efforts by the Central Bank of Nigeria, the country largely remains a cash based society. With mobile money however, the CBN’s cashless policy will be bolstered, while also creating an opportunity for commercial banks to collaborate with the telecommunication companies in electronically circulating unprecedented cash volumes. Even though the telecommunication networks will be facilitating transfer of cash value among users (and other payment destinations), the banks will still be the custodians of this cash. They will be able to shore up their cash holdings, lend more, and expand their operations. With mobile money, Nigerians will be incentivised to spend more money, and the banks just like Telcos, can cash in on this opportunity.

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Monday 11 Febraury 2019

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13 NEWSFEATURE BUSINESS DAY

Leading the battle for better health

Profile Aigboje Aig-Imoukhuede

his week sees that launch of what could become the most significant breakthrough in tackling Africa’s chronic health deficit. The African Business Coalition for Health (ABCHeallth) composed of some of the continent’s most successful entrepreneurs and philanthropists will work with governments and multilateral organisations to mount an assault on Africa’s nagging health deficits. If successful, this could change the face of Africa. Anver Versi talks with Aigboje Aig-Imoukhuede, founder of the organisation to find out how it all came about.

igboje Aig-Imoukhuede will settle for nothing short of total victory over Africa’s major health deficits. “The war on health shortfalls has been won in Europe; it has been won in America and it is being won in Asia,” he says. “It has not been won in Africa – despite some significant advances. Africans are still dying of treatable illnesses in their millions. This must change.” He sees the African Business Coalition for Health (ABCHealth), to be launched this month during the AU Summit in Addis Ababa, as the command centre for the war. The C-in-C, to maintain the military metaphor, is the legendary entrepreneur and philanthropist Aliko Dangote; commanders will include the likes of Zenith Bank’s Jim Ovia, UNECA’s Vera Songwe, the UN’s Amina Mohamed, Olusegun Obasanjo, leading figures from Africa, who Aig calls ‘the usual suspects’. The ‘usual suspects’, he explains are some 50 leaders, Africans and non-Africans who ‘are one person removed from everything of significance that happens on the continent regarding health’. These are individuals, he says, who in their personal capacity, in official or unofficial roles, are involved in some way or another with the positive developments taking place on the continent. Rwanda’s Paul Kagame and Nigeria’s Ngozi Ikonjo-Iweala are examples. He wants to bring in the leading African and multinational companies into the mix and expand the list. His experiences on the board of organisations like the Global Business Coalition for Health (GBCHealth), the Aliko Dangote Foundation, Friends of Global Fund, Africa and the Private Sector Health Alliance of Nigeria (PSHAN) have convinced him of the tremendous power of the private sector to deliver results when cash and capacity strapped ministries cannot. I had first met and interviewed Aig during the roaring decades of Nigerian banking straddling the millennium when a clutch of exceptional banker/entrepreneurs were taking the industry beyond horizons anybody had ever dreamt of. Even amidst this galaxy of talent, the tall, soft-spoken young man who had set the industry on its head by taking Access Bank from virtually nothing to becoming a major international institution in record time, had stood out in his leadership style and corporate culture. The bank’s philosophy he told me then, was to “seek to do good in all aspects” not only in the way it conducted its business but also in the ecosystem “in which we operate and from which we derive our sustenance”. His focus on art, health, education and governance as part of the company’s CSR was considered ‘edgy’ by others in the industry who felt he was venturing into

unconventional waters instead of sticking to the tried and tested, especially when the Bank dedicated 10% of its profits to these causes. Audacious determination We reflected on this when I went to meet him at his pile in the English countryside late last month for this piece. I wanted to know how the banker had become so immersed in health. He said his mother has been a major influence. “She was an activist for women’s rights and forced me to get involved in social issues. The lesson never went away and it emerged in Access Bank’s approach to philanthropy at a time when the concept of ‘sustainability’ was beginning to emerge and was virtually unknown in Africa.” But the Bank’s foray into social issues and Aig’s audacious determination to move a mountain – to raise human capability of all those around him much as he had raised himself from a modest beginning to the position he now found himself, did not go unnoticed. He received a call from Ngozi Okonjo-Iweala, who was then Nigeria’s Minister of Finance asking him to join the board of a new organisation, Friends of the Global Fund, Africa. “She told me

Aigboje Aig-Imoukhuede

that there were similar organisations for America, Europe, Japan but Africa, which was the major beneficiary of the Fund, did not have one. She gave me 24 hours to make up my mind. It was not easy to say no to Okonjo-Iweala so I accepted.” This set into motion the next step in his journey. He got a call from Mark Moody-Stuart, then Chairman of Shell to have lunch with him. Moody-Stuart told him he was chair of an organisation called GBCHealth whose stakeholders included such global figures as CNN’s Ted Turner,

Aig sees the African Business Coalition for Health as the command centre for the war on Africa’s major health deficits. ‘It’s a war we can win,’ he says

Britain’s Richard Branson, several icons of business and entertainment, and he invited Aig to join the board. “I was not interested in joining organisations for the sake of it; if I agreed, then I wanted to immerse myself fully into what it was doing,” he told me. This opened up a whole world of how global corporations were deeply involved in solving major health issues. One of these was the AIDS pandemic that was sweeping the world. The UN appealed to the private sector and it responded with campaigns such as ‘Red’. European Airlines put a travel tax on tickets to raise funds to battle the scourge. Marshalling the troops Closer to home, companies like Marathon Oil, the American exploration company was committing huge resources to eliminate malaria in Equatorial Guinea while Standard Chartered and Chevron were working on other sustainability issues in Africa. Aig was determined to move the concept of Private Sector global coalition to Africa. In the meanwhile, he had joined the board of the Aliko Dangote Foundation. “Aliko has been my mentor, not only in business, but especially in philanthropy. I have not seen anyone more committed to changing the agenda on health in Africa like Aliko. He is totally passionate about it and his passion is contagious.” When early in 2018 UNECA invited him to be part of a government-private sector forum, he accepted but said he wanted to be involved in health and “I told them I would be bringing GBCHealth with me.” There was enthusiastic support of his dream of replicating GCBHealth in Africa – the Aliko Dangote Foundation pledged $1.5million, and ABCHealth was ready to roll “Advanced countries built their capacity to solve their own problems,” he says. “It is time we did the same. ABCHealth is not about the business of health but you don’t want to be disconnected from the industry. Should we not raise funds to make bed-nets in Nigeria, or Kenya instead of getting them from Vietnam? “Non-communicable diseases will get worse. There is no vaccine for cancer – the nature of treatment requires an ecosystem with a knowledge of nuclear physics. That is the ecosystem we need to build. We should be like Israel and fashion our own solutions to our problems,” he adds. In the battle for better health, he says, “troops from abroad are not so motivated because they are not fighting for themselves. We must fight with our own troops; outside help and support is always welcome, but it’s our fight and ABCHealth will be in the vanguard. It is a war we can win.” Don’t underestimate the ability of this soft-spoken man to make dreams come true. He does that for a living.

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Battle of the big men

Too many challengers The World Bank’s new leader

A Nigerian election pits an ex-general against a tycoon

Muhammad Buhari has disappointed. His opponent could be worse

Why Malpass should get the job

Despite being a bank critic from oil services to property, and an anti-globalist

OTHING SEEMS awry on arrival at the Ajaokuta Steel C o m p a ny n e a r Lokoja in central Nigeria. Nestled in scrubland are rows of depots, mills and furnaces; the complex covers 800 hectares, or four times the size of Monaco. Inside the main building workers amble through the foyer, barely noticing a suggestion box. Your correspondent is, however, tempted to leave a note that reads: “How about making some steel?” Since construction of the state-owned firm began 40 years ago, it has received $8bn in public money without producing a beam. Corruption and mismanagement have gone on for so long that Ajaokuta has more than 10,000 pensioners on its books. There is no more colossal symbol of Nigeria’s squandered potential. On February 16th Nigerians will go to the polls in the largest democratic event in African history. Fully 84m people are registered to vote in the country’s sixth general election since military rule ended in 1999. Yet the prospect of consolidating democracy in Africa’s most populous country has not elevated the campaign. Too many Nigerians have been let down by politicians to ditch their cynicism. Muhammadu Buhari, Nigeria’s president, has promised to revive Ajaokuta. Yet he made the same commitment in 2015. In total Mr Buhari has delivered on just seven of the 222 pledges he made as a candidate, according to the Centre for Democracy and Development, a Nigerian think-tank. These promises came in three areas. The first was corruption. Despite having 27 agencies with a mandate to clean things up

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Nigeria remains filthy. The latest report by Transparency International, a watchdog, finds no sign of corruption ebbing under Mr Buhari. In fact, his administration has used the prospect of protection from prosecution to entice opponents to join the All Progressives Congress, the ruling party. Together these turncoats had N600bn ($1.7bn) worth of corruption allegations hanging over them. Mr Buhari’s record on security is little better. After taking office he oversaw a military offensive against Boko Haram, the terrorist group that in 2015 controlled an area of the northeast the size of Belgium. However, in the past few months the army has suffered setbacks. An attack last month in the town of Rann killed 60 people and forced another 30,000 to flee to Cameroon. Nor is the north-east the only problem. Last year more people were killed in clashes over land between farmers and cattle-herders than were slain by Boko Haram. In the northwest armed bandits killed 371 people and displaced 18,000 in the first seven months of 2018. Across Nigeria, 7.7m people need humanitarian aid and 2m have had to leave their homes. Mr Buhari’s third set of prom-

ises concerned the economy. Alas, Nigerians are poorer today than in 2015. Unemployment has risen from 8.2% to 23.1%. The president is partly the victim of low oil prices; the black stuff provides 70% of government revenue. But his statist instincts have made matters worse. Interest payments are set to reach 80% of federal government spending by 2022. Though Nigeria’s government has three space agencies, it can barely run a power grid. The country generates less electricity than the city of Edinburgh. Atiku Abubakar, the main challenger to Mr Buhari, is also in his 70s. His slogan is: “Let’s Get Nigerians Working Again”. Citing Margaret Thatcher, he says he wants to privatise state-owned firms. But his plans are short on detail. Many fear privatisation would be a smokescreen for enriching his cronies. Though he has not been charged with any crime in Nigeria, in 2010 a US Senate committee alleged that Mr Abubakar’s (fourth) wife helped him bring “over $40m in suspect funds” to America. Mr Abubakar, a former big man in the Nigerian customs service, denies that he is corrupt. His various businesses,

make him the largest employer in his home state of Adamawa. His vast fortune allows him to donate copiously to charity. He has a deep patronage network across the country. That will help ensure the presidential election is closer than it was in 2015, when Mr Buhar i w on by more than 2.5m votes. “It’s going to be a bare-knuckle fight,” says Matthew Page of Chatham House, a think-tank. Elections in Nigeria are largely shaped by which political machine runs most effectively. Mr Buhari can depend on a lot of support in the north. Mr Abubakar’s People’s Democratic Party will sweep most of the south-east. Much will depend on turnout in these core areas and on who can win swing votes in the south-west. Some worry that the tightness of the race will encourage rigging. Recent elections in Anambra and Ekiti states saw widespread vote-buying; it is likely to happen again. Another concern is how easy it is to change the tallies when the results are sent from Nigeria’s 120,000 polling units to counting stations. Then there is the spectre of thugs or police intimidating voters. Four times Mr Buhari has blocked reforms that would strengthen Nigeria’s electoral commission. Such intransigence frustrates Samson Itodo, a founder of the “Not too young to run” campaign, which is trying to clean up elections and make political involvement easier for the three-quarters of Nigerians who are under 35. “We are tired of these same old leaders,” he says. “We are laying the foundation for a revolution in 2023.” Until then, Nigeria will be stuck with mediocrity.

T HAS LONG been obvious that the boss of the World Bank should be chosen on merit, not by nationality. When President Harry Truman picked its first head in 1946, India was still a colony and the People’s Republic of China did not exist. America provided most of the institution’s capital and it was felt that its creditors on Wall Street needed the reassurance of an American at the helm. Today China is the second-biggest economy and America provides less than 17% of the bank’s capital. But America still picks the bank’s president as part of a deal with European governments who choose

the head of the IMF. True to this anachronistic tradition, President Donald Trump this week named David Malpass, a senior official at America’s Treasury, to fill the vacancy created by Jim Yong Kim’s early departure on February 1st. Uncomfortably, Mr Malpass has been a vocal critic of multilateral institutions such as the World Bank, IMF and World Trade Organisation, which he believes have tied America’s hands. Nonetheless, despite his views and his passport, it would be a mistake to oppose him. Accepting him will not be easy for the bank’s staff or for its other shareholders (who in principle could veto the appointment). Mr Malpass does not hide his misgivings about the institution he aspires to lead. To him, it is part of a sprawl of international organisations, vulnerable to mission creep, which pamper their staff and put their own growth above the countries they serve. He believes the Continues on page 15

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Big oil and the environment

The truth about big oil and climate

Even as concerns about global warming grow, energy firms are planning to increase fossil-fuel production. None more than ExxonMobil

N AMERICA, THE world’s largest economy and its second biggest polluter, climate change is becoming hard to ignore. Extreme weather has grown more frequent. In November wildfires scorched California; last week Chicago was colder than parts of Mars. Scientists are sounding the alarm more urgently and people have noticed—73% of Americans polled by Yale University late last year said that climate change is real. The left of the Democratic Party wants to put a “Green New Deal” at the heart of the election in 2020. As expectations shift, the private sector is showing signs of adapting. Last year around 20 coal mines shut. Fund managers are prodding firms to become greener. Warren Buffett, no sucker for fads, is staking $30bn on clean energy and Elon Musk plans to fill America’s highways with electric cars. Yet amid the clamour is a single, jarring truth. Demand for oil is rising and the energy industry, in America and globally, is planning multi-trilliondollar investments to satisfy it. No firm embodies this strategy better than ExxonMobil, the giant that rivals admire and green activists love to hate. As our briefing explains, it plans to pump 25% more oil and gas in 2025 than in 2017. If the rest of the industry pursues even modest growth, the consequence for the climate could be disastrous. ExxonMobil shows that the market cannot solve climate change by itself. Muscular government action is needed. Contrary to the fears of many Republicans (and hopes of some Democrats), that need not involve a bloated role for the state. For much of the 20th century, the five oil majors—Chevron, ExxonMobil, Royal Dutch Shell, BP and Total—had more clout than some small countries. Although the majors’ power has waned, they still account for 10% of global oil and gas output and 16% of upstream investment. They set the tone for smaller, privately owned energy firms (which control another quarter of investment). And millions of pensioners and other savers rely on their profits. Of the 20 firms paying the biggest dividends in Europe and

America, four are majors. In 2000 BP promised to go “beyond petroleum” and, on the face of it, the majors have indeed changed. All say that they support the Paris agreement to limit climate change and all are investing in renewables such as solar. Shell recently said that it would curb emissions from its products. Yet ultimately you should judge companies by what they do, not what they say. According to ExxonMobil, global oil and gas demand will rise by 13% by 2030. All of the majors, not just ExxonMobil, are expected to expand their output. Far from mothballing all their gasfields and gushers, the industry is investing in upstream projects from Texan shale to high-tech deep-water wells. Oil companies, directly and through trade groups, lobby against measures that would limit emissions. The trouble is that, according to an assessment by the IPCC, an intergovernmental climate-science body, oil and gas production needs to fall by about 20% by 2030 and by about 55% by 2050, in order to stop the Earth’s temperature rising by more than 1.5°C above its pre-industrial level. It would be wrong to conclude that the energy firms must therefore be evil. They are responding to incentives set by society. The financial returns from oil are higher than those from renewables. For now, worldwide demand for oil is growing by 1-2% a year, similar to the average over the past five decades—and the typical major derives a minority of its stockmarket value from profits it will make after 2030.

However much the majors are vilified by climate warriors, many of whom drive cars and take planes, it is not just legal for them to maximise profits, it is also a requirement that shareholders can enforce. Some hope that the oil companies will gradually head in a new direction, but that looks optimistic. It would be rash to rely on brilliant innovations to save the day. Global investment in renewables, at $300bn a year, is dwarfed by what is being committed to fossil fuels. Even in the car industry, where scores of electric models are being launched, around 85% of vehicles are still expected to use internal-combustion engines in 2030. So, too, the boom in ethical investing. Funds with $32trn of assets have joined to put pressure on the world’s biggest emitters. Fund managers, facing a collapse in their traditional business, are glad to sell green products which, helpfully, come with higher fees. But few big investment groups have dumped the shares of big energy firms. Despite much publicity, oil companies’ recent commitments to green investors remain modest. And do not expect much from the courts. Lawyers are bringing waves of actions accusing oil firms of everything from misleading the public to being liable for rising sea levels. Some think oil firms will suffer the same fate as tobacco firms, which faced huge settlements in the 1990s. They forget that big tobacco is still in business. In June a federal judge in California ruled that

climate change was a matter for Congress and diplomacy, not judges. The next 15 years will be critical for climate change. If innovators, investors, the courts and corporate self-interest cannot curb fossil fuels, then the burden must fall on the political system. In 2017 America said it would withdraw from the Paris agreement and the Trump administration has tried to resurrect the coal industry. Even so, climate could yet enter the political mainstream and win crossparty appeal. Polls suggest that moderate and younger Republicans care. A recent pledge by dozens of prominent economists spanned the partisan divide. The key will be to show centrist voters that cutting emissions is practical and will not leave them much worse off. Although the Democrats’ emerging Green New Deal raises awareness, it almost certainly fails this test as it is based on a massive expansion of government spending and central planning (see Free exchange). The best policy, in America and beyond, is to tax carbon emissions, which ExxonMobil backs. The gilets jaunes in France show how hard that will be. Work will be needed on designing policies that can command popular support by giving the cash raised back to the public in the form of offsetting tax cuts. The fossil-fuel industry would get smaller, government would not get bigger and businesses would be free to adapt as they see fit—including, even, ExxonMobil.

Why Malpass should get the job Continued from page 14

bank has also become too close to China, especially the country’s Belt and Road Initiative (BRI), which aims to build infrastructure and other links around the world (and in space). The bank, Mr Malpass fears, could be viewed as endorsing China’s geopolitical ambitions. Nonetheless, the choice could be worse. Mr Malpass is one of the best-qualified members of Mr Trump’s government. He has served in three administrations and speaks four languages. He helped forge an unlikely agreement passed in April last year to increase the bank’s lending capacity. The reforms he has been urging on the bank during his time at America’s Treasury are mostly unobjectionable and reassuringly unoriginal (more transparency, better measurement of results). America’s allies can be relieved that Mr Trump’s administration cares enough about the World Bank to pick one of its few remaining grown-ups to lead it. The bank’s shareholders must also know that, if they were to reject Mr Malpass, Mr Trump could turn violently against the institution. That would scupper the chances of America’s Congress ratifying the agreed capital increase. It would also jeopardise future American contributions to the World Bank’s fund for helping the neediest countries. What of Mr Malpass’s hostility to China? He is right to fret about elements of its BRI, which is a mix of chequebook diplomacy, white elephantitis, export promotion and mutually beneficial investment. But that is no reason for the bank to steer clear of it altogether. In so far as China’s global initiatives are furthering the bank’s goal of eradicating poverty, the bank should offer whatever guidance and assistance it can. The bank’s shareholders will have to impress on Mr Malpass that the institution cannot abet American attempts to contain China’s economic rise.

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Monday 11 February 2019 In Association With

Thus spoke Netanyahu

An odd Hebrew word says a lot about Israeli politics Binyamin Netanyahu appeals to his supporters’ resentment of the elite

T IS NOT easy to translate the Hebrew word davka. It means something like “despite it all” and “because of ”, but with a sense of deliberate precision: I was at home all day, but the delivery man came davka during the half-hour when I was out. It can connote an intent to irritate: my girlfriend knows we disagree about politics, but she always davka brings it up. In 2003 Ariel Sharon, a pugnacious former prime minister, cited a young American explaining the word to friends back home: “Davka means doing or thinking something both in spite of and because of a given situation.” Curiously, Binyamin Netanyahu, Israel’s prime minister, has chosen as his campaign slogan “Davka Netanyahu”. In December Israeli police recommended that Mr Netanyahu be indicted for bribery and breach of trust. The prime minister says the charges are a witch-hunt by lefty prosecutors and journalists. Many supporters of his hawkish Likud party

come from religious or workingclass backgrounds, and many are Sephardi Jews, descended from immigrants from the Arab world, rather than Ashkenazi Jews, who trace their roots to Europe and are typically richer. Mr Netanyahu’s davka is an invitation to his supporters to stick a finger in the eye of the elite: vote for me not just despite the corruption charges, but because of them.

This populist way of thinking is becoming familiar all over the world. At its heart lies the politics of resentment. Backers of President Donald Trump enthusiastically call themselves “deplorables”, embracing a term Hillary Clinton used to describe some of them. In Britain, Brexit supporters suggest that, in case of a second referendum, the Leave campaign should employ the ral-

lying cry “Tell them again”. Such slogans appeal not to the merits of the cause, but to supporters’ resentment at being a target of condescension. The great philosopher of resentment was Friedrich Nietzsche, who thought it had a lot to do with Jews. In “On the Genealogy of Morality”, he describes the politics of resentment as a Jewish invention that lies at the core of Judeo-Christian ethics. In pagan morality, according to Nietzsche, the good is synonymous with the excellent and the powerful: rulers and gods are good because they are beautiful and strong. Judaism and Christianity, resentful of pagan rule, inverted this morality. They saw the weak masses as good, whereas precisely (davka!) the strong rulers were evil. This “slave morality”, Nietzsche thought, was behind all of Western civilisation. He detested it. Nietzsche’s account of morality’s evolution is a fascinating mess with little relationship to historical reality. However, his analysis

of resentment was picked up by thinkers like Sigmund Freud and Hannah Arendt, and has become crucial to the understanding of populism and authoritarianism. Still, it is strange that the politics of resentment should be employed davka by Mr Netanyahu, who is an unlikely underdog. The scion of a renowned Ashkenazi family, Mr Netanyahu grew up in America before returning to Israel to serve in an elite commando unit—a crucial distinction in a society where military service affects social class. He has been a dominant figure in Israeli politics for more than two decades. He and Likud have helped pull Israel’s political centre in a hawkish direction, winning power and all but ending the prospects for a Palestinian state. The real political outcasts in Israel are surely Likud’s opponents, the remnants of the peace movement. They are the ones who must urge their dwindling band of supporters to continue hoping for the seemingly impossible, davka.

You say you want a federation

A political union for east Africa? Regional leaders have big ambitions but short tempers

FRICA’S REGIONAL institutions do not lack ambition. The African Union’s master plan promises a rich, peaceful continent criss-crossed by high-speed trains. Eventually. Its target is 2063, a date well past the likely retirement date of all the bigwigs who signed the plan. The East African Community (EAC), by contrast, has no time to waste. It wants to form a single currency by 2024. At a recent summit, heads of state discussed drafting an east African constitution, with the ultimate goal of political federation. The EAC is the most successful of Africa’s regional blocs. Since its revival in 2000 it has established a customs union and the rudiments of a common market. But its leaders are getting ahead of themselves: deepening rifts have put the project in jeopardy. Four of its six members (Rwanda, Burundi, Uganda and South Sudan) are led by ex-rebels, some with competing interests in the Congolese borderlands to the west. The recent summit was postponed twice because Burundi, which has fallen out with Rwanda, refused

to attend. That quarrel goes beyond mere words. In 2015 Pierre Nkurunziza, the Burundian president, fought off a coup. His government accuses Rwanda of backing it. In 2016 UN experts reported that Burundian refugees were being recruited to fight against their home government. In December the same experts said that arms and men were also flowing through Burundi to undermine Rwanda. Rwanda’s president, Paul Kagame, is also on bad terms with Yoweri Museveni, his Ugandan counterpart. The rift is personal. Mr Museveni fought his

way to power in the 1980s with the help of Rwandan refugees; Mr Kagame, who grew up in a Ugandan refugee camp, was his military intelligence chief. Later, as presidents, the former comrades launched two wars in Congo, then fell out over the loot. By 2000 their soldiers were firing at each other, 600km from home. Relations are again dicey. Last year Mr Museveni sacked his police chief, who was later charged by an army court with aiding the kidnap of Rwandan exiles (among other things). The abductees, including one of Mr Kagame’s former guards,

had been illegally sent back to Rwanda and imprisoned. Rivalry between Kenya and Tanzania, the two largest members, is more straightforward. Together they account for threefifths of the region’s population and three-quarters of its GDP. Yet commerce between them is hobbled by a trade war. Although both are meant to be in a common market, Tanzania has imposed tariffs on Kenyan sweets. Kenya has retaliated by taxing Tanzanian flour. Tanzania, which is sliding towards protectionism, also objects to a proposed trade deal between the EAC and the EU, which Kenya is keen on. As the only EAC countries with coastlines, both vie for investment in infrastructure: in 2016 Uganda decided to route an oil pipeline through Tanzania, to Kenya’s chagrin. Some worry that the escalating tensions could cause history to repeat itself. The first East African Community collapsed in 1977. More likely, the region will continue to make faltering progress on trade, where the spread of cross-border business creates its own momentum. But po-

litical issues are trickier. Leaders who brook no dissent at home have little taste for compromise abroad. Each wants integration, as long as he is in charge.

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Pg. 19

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

DEALS

MTN set to pocket $600m from Jumia IPO LOLADE AKINMURELE, with agency report

nline retailer Jumia is planning an initial public offering i n Ne w Yo rk t h i s y e a r and its largest shareholder MTN hopes to make $600m from selling its holding during the IPO. The public offer could value the business at about $1.5 billion, according to people familiar with the matter. MTN could be selling Ju m i a i n Ne w Yo r k a t about the same time as an IPO of its Nigeria unit in Lagos, a move the carrier agreed to as part of a $1 billion regulatory fine in 2016. The latter will be done in tw o stages, w ith an introductor y listing in the first half of this year followed by a sell down of its majority stake, Chief Executive Rob Shuter

said on a recent call with investors. M TN and Jumia declined to comment. MTN had been weighing a listing or private sale of its shares in Jumia, people familiar with the matter said last August. A U.S. IPO would catapult Lagos, Nigeria-based Ju m i a i n t o t h e g l o b a l spotlight after seven y e a r s o f r a p i d g ro w t h across Africa, where it provides an Amazon.com Inc.-like service and has platforms in 13 countries. Ju m i a i s a r a r e s o called unicorn in Africa -- a private company valued at more than $1 billion -- being one of only three, according to research firm CB Insights. The company was set up by French entrepreneurs Sacha Poignonnec a n d Je re my Ho d a ra i n 2012 to take advantage of rising internet use in t h e w o r l d’s l e a s t c o n nected continent, as well

as a lack of availability of items such as designer watches and sunglasses in Lagos stores. Jumia will tell potential investors that twothirds of Africa’s 1.2 bill i o n p e o p l e st i l l d o n ’ t have access to the internet, providing plenty of potential for sales growth

a n d p ro f i t ab i l i t y , s a i d one of the p e ople. Internet giants such as Alphabet Inc.’s Google and Facebook Inc. are among those striving to extend connectivity to the more remote and poorer parts of the continent. A successful listing of b oth Jumia and the

Nigeria unit could help MTN reduce debt, which increased to 69.8 billion rand in June from 57.1 billion rand at the end of 2017. The rising liabilities and a dispute over n o n -p a y m e n t o f b a c k taxes in Nigeria is weighi n g o n t h e c o m p a n y ’s share price, which has

fallen by almost a third in the last 12 months. O t h e r Ju m i a s h a r e holders include Goldman Sachs Group Inc., Millicom International Cellular SA, Orange SA and Africa Internet Group, a venture backed by Goldman, MTN and Rocket Internet SE.

BANKING

Funke Opeke resigns from Atlas Mara Board as group remains bullish on African markets OLUFIKAYO OWOEYE

an African Banking Group, Atlas Maria, has announced some major shakeup in its management. In a review of its strategic options, the group announced that Former Barclays Chief Executive, Bob Diamond, will step down as chairman of Atlas Mara. In other changes, founder and CEO, MainOne, Funke Opeke, and Hisham Ezz Al-Arab resigned as directors of Atlas Mara to focus on their leadership responsibilities with other companies Bob Diamond however remains a non-executive director at the group, and will be replaced by Michael Wilkerson, the chairman of Fairfax Africa Holdings Corp., which owns 49 percent of the firm. It would be recalled that Diamond took over

the position two years ago on a temporary basis as the firm struggled to contain expenses that were engulfing income. Within the period he helped secure financing from Fairfax Africa and increased Atlas Mara’s stake in its Nigerian banking unit, Union Bank, to 49 percent from 31 percent. Atlas Maria recently announced the acquisition of a

35% stake in GroCapital, this would give Atlas Mara its first presence in South Africa and allow it to accelerate initiatives in digital banking and agricultural finance. Among the strategic decisions announced by the firm, Atlas Mara will seek to eliminate duplication created by past acquisitions that result in lower costs. Also, Dubai will for the time being remain as

the company’s corporate headquarters while it shifts key functions and personnel closer to its operations in Africa. The group further noted that it had received “indications of interest for certain banking assets” and that it will sell off businesses that do not show signs of becoming leaders in their markets but revealed that Nigeria

is central to the company’s overall strategy. “Nigeria remains a flagship market for Atlas Mara and is central to the company’s overall strategy,” Diamond, said his confidence in Atlas Mara is as “strong” as ever, has been looking for ways to revive confidence in a company that’s shares have tumbled about 80 percent since they started trading in 2013. That hindered Atlas Mara’s ability to make acquisitions as slumping commodity prices and volatile currencies weighed on Africa’s economic growth in 2016, spurring the firm to cut costs that nearly matched income. “Atlas Mara continues to focus on investments in core markets where a path to market leadership is clearly achievable,” the firm said, adding it “will seek to partner, exit or reduce risk exposure elsewhere.”

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

Atlas spent $55 million in acquiring a 13% stake in Union Bank from the Clermont group. The Clermont Group is part of the UGPL consortium that bought a majority stake from AMCON in 2012. Prior to the rights issue by Union Bank in 2017, Atlas had a 42% stake in the bank. After its conclusion, it then purchased additional shares bringing its total holding to 48%, and later increased to 49%. Atlas Mara Limited (formerly known as Atlas Mara Co- Nvest Limited), founded on November 28, 2013, by Bob Diamond and Ugandan Billionaire entrepreneur, Asish Thakkar, is an Africa focused financial services holding company. Atlas has over 1,600 employees, an asset base of $2.5 billion and operations in 7 African countries namely Botswana, Zimbabwe, Tanzania, Mozambique, Rwanda and Nigeria.

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Monday 11 February 2019

COMPANIES & MARKETS APPOINTMENTS

NAHCO appoints new directors after modification in shareholding structure ISRAEL ODUBOLA

igerian Aviation Handling Company Plc (NAHCO Aviance), a diversified enterprise with interests in aviation cargo, aircraft handling and crew transportation among others, has appointed two Non-Executive Directors and one Executive Director after modifying its shareholding structure a month ago. Tajudeen Shobayo and Solagbade Alabi were appointed as Non-Executive Directors of the Company effective from January 29, 2019. In addition, Olumuyiwa Olumekun was also appointed as an Executive Director effective from February 11, 2019. Last month, Lufthansa Commercial Holding transferred all of its 97, 453, 125 ordinary shares of NAHCO Aviance to Godsmart Nigeria Limited, which made the latter the major shareholder of the Company with 26.95 percent shareholding. Tajudeen Shobayo is an alumnus of the University of Liverpool, United Kingdom

and a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN). He has attended several professional courses on economics and valuation, capital budgeting, project management, deal implementation and relationship management among others in Nigeria, Netherlands, France, United States and United Kingdom. Solagbade Alabi, a Former Group General Manager at Nigerian National Petroleum Corporation in 2009, holds a Bachelor’s Degree in Mechanical Engineering from the University of Lagos. He is also a Fellow of Nigerian Society of Engineers. He has attended various professional courses on business transformation, effective leadership, petroleum economics, project controls and management among others, at various international institutes including Harvard Business School and INSEAD. Olumuyiwa Olumekun is an alumnus of the Lagos Business School. He was an Executive Director at Redstar Express (FedEx) where he directed sales, marketing operations, strategy, business development, customer service and information

L-R: Yetunde Oyeneyin , Novastis Limited; Tunji Akintade, chairman, AGPMPN Lagos chapter; Olapeju Adenusi, general manager, Lagos State Health Management Agency, and Jide Idris, commissioner for health, Lagos State, at the Lagos Chamber of Commerce and Industry stakerholder’s Pic by Olawale Amoo. engagement on Lagos State Health Insurance Scheme in Lagos, yesterday.

technology. He has managed clients, which included major banks, oil & gas, aviation, logistics, FMCGs and public sector. He also attended courses in IESE Business School, Spain and Harvard Business School, Boston. Analysis of its unaudited financial statements for nine

months ended September 30, 2018 revealed that the Company posted stronger profitability performance given the elevation in revenue, profit before and after taxation and earnings per share. Revenue appreciated by 21.81 percent year-on-year to 6.78 billion, an uptick from

5.56 billion posted in the similar period of 2017. Profit after tax stood at 421.4 million for the period under focus, indicating 151.4 percent expansion from 167.62 million reported a year prior. Earnings per share appreciated to 26 kobo in the period of concern compared

to 10 kobo twelve months earlier, indicating that shareholders’ gain on each unit of share grew by 16 kobo. NAHCO Aviance serves more than 35 airlines at nine airports across Nigeria. The company handles about 70 percent of domestic and foreign airlines operating in the country.

BANKING

MARKETS

Capital market operators react negatively NDIC’s move on Fortis MFB

Citi launches Global Depositary Note Capabilities on Ghanaian Debt Securities

David Ibidapo

n a re a c t i o n t o t h e s u d d e n l i q u i d at i o n of Fortis microfinance ba n k by t h e Ni geria deposit insurance corporation (NDIC), capital market operators have raised concerns on the methods adopted by regulatory bodies i n ha n d l i ng d i s t re s s e d financial institutions rather than an outright liquidation. Th i s t h e y c l a i m w i l l p ro t e c t t h e i nt e re s t o f dep ositors, shareholders and the economy at large. A sudden liquidation of a financial institution can instigate a contagion effect, “most times a negative effect on other financial institutions, i n d u s t r y a n d e c o n o my a t l a r g e .” A n a n a l y s t who pleaded anonymity opined. “Liquidation will affect the ex isting banks that have business relationship with Fortis Microfinance Bank ; which can extend to other

b a n k s ,” M a l a m G a r b a Kurfi, Managing Director of APT Securities and Funds explained. He reiterated further the need to have appointe d a n e w ma nag e m e nt or resale of the bank as a better option for the entire economy rather than liquidation. Last financial filing o f Fo r t i s m i c ro f i na n c e b a n k a c c o rd i n g t o t h e Nigerian stock exchange (NSE) market was its nine months ended 2017 financial statement in which it recorded a profit after tax of N73.7 million, 83 percent decline from corresponding period in 2016. I n 2 0 1 7 , Fo r t i s n i n e month’s interim results clearly showed that with a customer deposit of about N7.9 billion, with less than 10 per cent of its total deposit which amounted to N440 million in its bank accounts. However, the NSE susp e n d e d t h e b a n k f ro m t r a d i n g i n N o v e m b e r, 2018, due to non-comp l i a n c e w i t h p o s t l i s ting requirements after it

traded last on the 27th of July 2018. Boniface Okezie, National Coordinator of Progressive Shareholders A s s o c i a t i o n o f Ni g e r i a (PSAN) said, “shareholders remained the victims without any compensation.” He further reiterated the need for regulators to device other means of solving the problems in t h e f i na n c i a l i n d u s t r y , “rather than aggravating it, most especially microfinance banks.” NDIC also confirmed the liquidation action on its official website stating that, “NDIC, the official liquidator of Fortis Microfinance Bank whose license was recently revoked, has concluded arrangement to close the bank and its branches and pay the insured depositors.” “ We a r e , t h e r e f o r e , calling all depositors of the bank to visit the b a n k ’s b r a n c h e s a n d meet NDIC officials for the verification of their claims, commencing f ro m Fe b r u a r y 4 t i l l 8 , 2019,” NDIC said.

ENDURANCE OKAFOR

iti’s Global Issuer Services business, acting through Citibank, N.A. in its capacity as a depositary bank, last week announced that it has expanded its Global Depositary Note (GDN) product capabilities to Ghanaian government debt securities. Ghana represents the 22nd country, globally, in which Citi facilitates access to local debt securities via its GDN depositary bank function. GDNs are a debt security version of the traditional equity-based depositary receipt (DR) structure, facilitating convenient cross-border access to local debt securities for brokerdealers and institutional investors, namely in the United States for qualified institutional buyers (within the meaning of Rule 144A) and outside the United States for nonU.S. persons (within the meaning of Regula-

tion S). GDNs represent particular local debt securities, replicating the characteristics of the respective local bonds while trading in U.S. dollar terms and settling in Euroclear, Clearstream or the Depository Trust Company (DTC). Citi launched its first GDN program in Peru in 2007 and has since expanded its product offering to contemplate debt securities issued in 21 additional countries, including the Dominican Republic, Costa Rica, Mexico, Ecuador, Colombia, Uruguay, Chile, Paraguay, Guatemala, El Salvador, Jamaica and Panama (in the Latin America region); Ghana, Nigeria, Kazakhstan, Ukraine, Zambia, Uganda, Rwanda and Turkey (in the Europe, Middle East and Africa region); and Vietnam (in the Asia Pacific region). “We are delighted to extend our GDN depositary bank capabilities to Ghanaian government debt securities.”

said Dirk Jones, Head of Global Issuer Services at Citi. “The GDN program provides international investors with an additional mechanism through which to access the local bond market in Ghana.” The Government of Ghana is supportive of initiatives that are aligned with our objective to continuously develop the domestic capital market,” said Hon. Deputy Minister, Charles Adu Boahen of the Ministry of Finance. “The GDN product is an example of such an initiative, as it is designed to promote liquidity and investor diversification of Government debt securities.” Citi is a leading provider of depositary receipt services. With depositary receipt programs in 62 markets, spanning equity and fixed-income products, Citi leverages its global network to provide crossborder capital market access to issuers, intermediaries and investors.

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INTERVIEW

We want to attract more Swedish Companies to Nigeria The Swedish Government has been passionate about seeing a sizeable number of Swedish companies play an active role in the Nigerian economy. To achieve this, the Swedish Ambassador Inger Ultvedt, in this interview with Olusola Bello explained steps being taking to ensure the two countries return to the times when their bilateral relationship engendered robust economic benefits. Excerpts:

fforts to ensure that more Sw e d i s h c o m panies participate in Nigeria We h a v e b e e n w o r king for some years to promote Swedish businesses in Nigeria and many of our companies have been here before independence. However as of today, some of them are more global. Sweden is a very innovative countr y. We have a lot of new innovations and ver y many Nigerians know about these innovations which are in textiles and there are lots o f i n n ov a t i v e s o l u t i o n s within the energy sector, e sp e c ia l ly i n re n ewab le such as wind. Ni g e r i a c a n l e v e r a g e on this to improve electricity supply. Mission in Lagos We a re i n L ag o s t o meet with some Swedish business delegations that are going to Accra, Ghana and we hope to do this t y p e o f m e e t i n g w e a re having Ghana in Nigeria sometime in 2019. I cannot however say exactly when our energy delegation would be coming to Nigeria. Sweden has election in September, so we are waiting for our government to be formed and you know we want some politicians to come with us. Our last energy delegation was October 2016 and we had our minister of trade and other delegations. They had a fruitful meeting with the Nigerian g ov e r n m e nt o f f i c i a l s a s well as the private sector. Outcome of meetings Usually, it opens doors for new business relations. For instance, you know very well that ABB was doing serious businesses here in the 60s and 70s. Now t h e y hav e c o m e back in full force with a new office in Lagos, where technologies and innovations are developed. The company is very active in the areas of transmission, distributions. We have a lot of high tech companies. We planned to have innovation day here in Nigeria where all the various aspect of innovations in the ICT would be exhibited. Trade volume between

Nigeria and Sweden The trade volume between the two countries in 2011 was $30 billion but it has now dropped to $1 billion. This is a shame. We are quite upset about this development. We have big trade deficit with Nigeria because we buy so much oil from Nigeria. So Nigeria is making so much from Sweden now. But it used to be balanced. So we are eager to come back and reposition things so that the trade volume would be such that both parties would be happy about. There are global companies with Swedish origin but deliver goods and services from other European countries or Australia to Nigeria. These are not captured in the trade statistics between Nigeria and Sweden. So in reality, the business between Sweden and Nigeria is much bigger than we can see in our statistics. Services are not really well documented today. We are big in music and have content in Nollywood.

innovative things Sectors to watch We are looking at mini ng a n d t h e h e a l t h s e ctors. There is company that p ro d u c e c o s m e t i c f ro m Sweden. It has some consultants in Nigeria ; these consultants are women working from their homes. These women probably would not have livelihood because they have nowhere to keep t h e i r c h i l d re n . T h i s re ally has great social impacts on the lives of these people. We have high tech solutions on the security side, and also road safety solutions. Vision for Nigeria– Sweden relationship I would like to see more businesses from both sides because we have been here and have a l o t o f c a p a c i t i e s . We believe in building capacities. Local content is not possible in all areas because the society is not so advanced. We have

L-R: Dirk Mampe, vice president, Personal Care Solutions, BASF; Lekan Ogunbowale, director of industry, Lagos State; Stefan Traumann, consul general, German Embassy, Lagos; Donato Sudati, head of sales, Emerging Europe BASF; Ijeoma Nnankwo, director, drug evaluation and research, NAFDAC, and Jean- MarcRicca, MD, BASF West Africa, at the commissioning of BASF personal care application technology laboratory in Ilupeju, Lagos, Pic by Pius Okeosisi

L-R: Gbenga Awe, group head, Agric Finance, Heritage Bank; Tope Dare, executive director, infrastructure business unit, Inlaks; Lynda Omerekpe, founder/CEO, Cash Your Passion, Africa; Bridget Okonofua, president, Unique Women in Agriculture Cluster Initiative, and Olagoke Balogun, founder/CEO, SoFresh NG, during the Agro Money Conference in Lagos.

L-R: Temitope Iluyemi, director of government relations & public policy, P&G Sub Sahara Africa; Ogochukwu Ofoegbune, principal, Federal Science and Technology College; Adil Farhat, managing director, P&G Nigeria, and Bawa-Allah representing the president of the Nigerian Academy of Engineering, Fola Lasisi at the Donation and Handover Ceremony at Federal Science and Technology College, Yaba, Lagos. Pic by Pius Okeosisi

Inger Ultvedt

We don’t really see thes e captured in the statistics. There are a lot of Nigerian musicians that go to Sweden to produce music. This is not organised because it is private initiative. There have been films shut in Sweden as well as in Nigeria. Nigeria is such a huge country you have so many talented people that engage in sole initiatives to go abroad and do a lot of

students exchange now. Unfortunately more students want to go to Sweden than we have Swedish students want to come to Nigeria. But once they come here they find it very interesting and meet a lot of interesting people. Nigeria needs to promote herself as a conduc i v e e nv i ro n m e n t . T h e countr y has to do more in promoting all the good things she has to her favour.

L-R: Dipo Awojide, lecturer, Nottingham Business School, and founder of the Been-There-Done-That Hub (BTDT Hub); Bridget Oyefeso-Odusami, head, marketing and communications, Stanbic IBTC; and Yinka Sanni, group chief executive, Stanbic IBTC Holdings PLC, during the Stanbic IBTC’s Masterclass Session on ‘Money Management Tips For Your Enterprise’ at the Social Media Week Lagos 2019 on Friday. Pic by Pius Okeosisi

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TraderMoni set to begin N15,000 disbursements as more beneficiaries pay back

ith hopes of higher loan values, many beneficiaries of the TraderMoni N10,000 loan have completed their repayments just as many others have started the repayment process. Access to Capital is one of the major challenges Micro, Small and Medium Enterprises (MSMEs) face in Nigeria. Historically, less than 1% of bank loans have gone to Nigeria’s SME sector. This is why the TraderMoni loans target petty traders and artisans at the base of the pyramid; the program aims to enable the growth of this sector by providing easy access to affordable credit and by making more petty traders and artisans financially included so they can access other financial products to help their businesses scale. Speaking with one of the beneficiaries, Ogunnubi Folashade, a beverage seller in Iwo market - Osun state, attested to how easy the repayment process was. In her words, “It was easy for me to pay back the loan, I met with one of the TraderMoni agents who sold the repayment scratch card to me. I loaded it just the same way I load airtime on my phone and that was how I repaid my entire loan”. She is one of several people who have paid back their loans in anticipation of the N15,000 disbursements. She expressed her intentions to use the next loan to continue to grow her business citing how the first was very helpful. “I was able to increase my stock by purchasing the goods in larger quantities and reduced wholesale prices” she said. Mrs Folashade stated emphatically that the loan has helped many of her counterparts in petty trade. She expressed her confidence in beneficiaries’ willingness to pay back

as every one of them anticipated the change in level they can experience with increasing credit worthiness and access to greater financial support. Another beneficiary, Adamu Usman, a fish trader in Sabon Gari Janguza market, Kano State also confirmed the ease of the repayment process. For him, repayment represents the opportunity to grow his business, and possibly expand into other goods. The Tradermoni loans graduate from N10,000 to N15,000, N20,000, N50,000 and N100,000. Beneficiaries automatically qualify for the next tranche as they back the preceding loan amount and to facilitate easy repayment, the Bank of Industry has made available a

plethora of repayment options: one of which is to repay into any commercial bank in the country; all they have to do is walk into any bank and inform the bank of their intent to pay their “BOI-GEEP” loan on PayDirect. Another option is to purchase repayment scratch cards readily available with the TraderMoni agents deployed to the 2260 markets currently covered. These cards are currently available in N430, being the estimated weekly repayment proposed for the first N10,000 loans. However, sources at the Bank of Industry confirm that the cards will also be rolled out for the repayment of MarketMoni loans. MarketMoni is the second of the three GEEP loan products. It is targeted at more established

traders and, as with all GEEP products, provides interest free, collateral free loans to traders. However, unlike TraderMoni loans where bank accounts are not required as a criteria for eligibility, MarketMoni beneficiaries must provide their BVN to be considered for the loan facility. The BVN serves as a digital collateral to drive repayments compliance. MarketMoni loans start at 50,000 and go up to 300,000. As beneficiaries pay back the preceding value, they immediately qualify for the next. Beneficiaries are happy at the fact that the repayment process has been made so easy through the purchase of a scratch cards. As such, they do not need to go extra miles and

spend longer hours on queues at the bank, all that is needed can be reached within their immediate market community, and in some markets, through the same agents that registered them for the loan. To encourage more repayments and just as designed, our sources at the Bank of Industry (BOI) confirm that the Bank is set to begin disbursing the second tranche of the loan to qualified beneficiaries. This is great news for those who have paid back, and for many others who are on the repayment journey. GEEP, through its loan products, is proving to be a workable model for expanding financial inclusion, and for boosting the MSME sector with affordable credit.

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Penetration to rise as NAICOM targets five micro insurance licenses by year-end

FBNInsurance projects 30% growth in 2019

…receives more application for license

ast growing insurance company, FBNInsurance Limited has projected a 30 percent growth in its business in 2019, in spite of the uncertainty in an election year. Val Ojumah, managing director/CEO made this known while speaking with journalists in Lagos. He said the company grew by over 40 percent in 2018 and he is optimistic that this growth trajectory can be sustained this year. Specifically, he reiterated the company’s commitment to a customer-centric culture which ensures that FBNInsurance partners with its customers, individuals and businesses, in the mitigation of their risk. He also said that the company believes in creating value for its customers by providing excellent customer service. He added that the company has progressively delivered strong financial performance every year since it commenced operations in 2010. Ojumah said: “based on unaudited 2018 financial reports, our revenue grew by over 40 percent, relative to audited 2017 reports. This growth rate is well above the industry growth rate – estimated to be approximately 10 percent. As we launch into the 2019 financial year, we are confident that we would maintain this strong growth trajectory given our strategic focus on profitable market segments. Our track record over the years tells a consistent story of continuous business growth and expansion. For instance, our audited 2017 financial statements showed robust growth across various performance metrics such as profit before tax (PBT) which grew by 37 percent from N3.1 billion in 2016 to N4.3 billion in 2017 while gross premium written (GPW) grew from N9.9 billion in 2016 to N19.6 billion in 2017, representing a massive 98 percent growth.

Stories by Modestus Anaesoronye

he efforts to take low-cost insurance policies to the grass roots under the micro insurance platform will soon receive a boost with the National Insurance Commission’s (NAICOMs) current move to facilitate licensing of core players. “The Commission will conclude approval of one by the end of February, while three or four others would have received approval by the first half of the year, while we hope to increase it to five or six by end of the year”, Sunday Thomas, deputy commissioner for Insurance, Technical, said in a telephone conversation with BusinessDay. Thomas said the NAOCOM is eager to see the micro insurance companies take off to drive grass roots insurance. “Certainly, we must list something off the ground, and we are working towards it seriously, Thomas assured. Thomas said that this approval was in a bid to increase insurance penetration and acceptance in the country, adding that it would also complement the commission’s efforts on insurance penetration. Ayodele Iyun, an insurance practitioner in a presentation titled ‘Micro-Insurance: Nigeria’s Untapped Insurance Market,’ said low insurance awareness and inaccessibility to insurance services, especially by the low income earners and the poor has over time been identified as one of the major factors responsible for Nigeria’s low insurance rate. He said there is a general

L-R: Richard Borokini, director general, Chartered Insurance Institute of Nigeria (CIIN); Isioma Chukwuma, past president / council member, CIIN; Eddie Efekoha, president, CIIN; Ovie Agas, secretary to the State Government, Delta State; and Sunny Adeda, past president/council member, CIIN during a courtesy call and donation of Insurance textbooks by the Institute at the Delta State Government House.

perception amongst most low income persons in Nigeria that insurance is only meant for the wealthy who can afford it, and this trend has left majority of the people in this class that accounted for the larger percentage of country’s population ‘’ Uninsured” and vulnerable to numerous perils. He further observed that with the recent level of success achieved in developed countries and some African countries in the area of Micro-insurance, this breakthrough once again provides the Nigeria insurance industry the opportunity to explore the potential inherent in the micro-insurance market which has been left untapped over a long period of time. The Concept of Microinsurance Micro-insurance is intended to protect the poor in the society, particularly

the low-income earners mostly earning their living in the informal sector. Low income persons live in risky environments and are exposed to numerous perils. Severe weather can wipe out a family’s crop and leave them nothing to eat until the next harvest. The death of a breadwinner can force children out of school and into the labour market. Micro-insurance is intended to help low income families cope with these and other risks. Micro-insurance, according to Craig Churchill (2006) is a mechanism to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risks involved. Micro insurance operations can be likened to the regular insurance; however the focus is basically on the low income

earners. Micro insurance entails the development of insurance products to cater for the micro businesses, individuals with a very modest or below-average lifestyle, and individuals with personal effects that are not so valuable. Simply, it is insurance that focuses on the needs and assets of the poor. The group of people who do not belong to those normally regarded as “high net-worth individuals”. Micro-insurance can cover a variety of different risks, including illness, accidental injuries, livestock, death and property loss – any risk that is insurable, as long as the product is affordable and accessible for low-income households. Micro-insurance can be packaged as a single cover or several covers can be infused together into a composite product.

…assures customers of prompt claims payment

Given the market potential of the life insurance industry in Nigeria, we expect an equally productive 2019.” Many have pondered about the strategy behind the swift rise to prominence of FBNInsurance within a few years. Ojumah believes there is no singular factor responsible for the company’s performance, rather he holds the view that the company’s success has been as a result of multiple factors and initiatives that have been coherently deployed. He said, “Our performance can be attributed to a combination of factors, including our continued penetration of the retail insurance space, the strength of our brand, a deliberate cost optimisation culture, a disciplined risk management philosophy, consistent improvements in service delivery across various customer touchpoints, the use of emerging distribution channels, a commitment to prompt settlement of claims and well-motivated staff. “ In addition, and probably

Val Ojumah

most importantly, we adopt, a “You First” mindset, as a critical component of our business strategy. This mindset implies that we put our customers first in the process of carrying out our business operations. We understand the importance of being there for customers, especially when they need us most, such as during claims settlement.” FBNInsurance has been recognised for its outstanding and consistent performance over the years.

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In association with E-mail: insurancetoday@businessdayonline.com

NEM tops on EPS, ROE and combined ratio BALA AUGIE

nsurers in Africa’s largest economy are operating in a tough and unpredictable macroeconomic environment that makes it practically difficult for them to grow premium at a blistering pace. Mounting claims and underwriting expenses, and low investment returns, are hindering firms from delivering a higher return to shareholders, which is why the industry contribution to GDP is abysmally poor. Amid these monumental challenges, some insurers have been experiencing growth trajec-

tory as they continue to surmount macroeconomic headwinds. For instance, of the 19 listed companies that have released third quarter results, N.E.M Insurance has the strongest return on equity (ROE) and earnings per share (EPS) while AXA Mansard’s shares have gained the most since the start of the year. N.E.M’s ROE of 15 percent, though lower than the 17.48 percent recorded the corresponding period (Q3) of 2017, eclipse peer rival AIICO’s ROE of (13.88); AXA Mansard, (12.52); Cornerstone Insurance, (8.25 percent); Mutual Benefit Assurance, (7.74 percernt), and Lasaco, (6.48 percent).

N.E.M’s EPS of N0.53 is the largest among peer rivals. Its net margin of 25.12 percent, tough lower

than the 27.14 percent recorded last year, overshadows AIICO’s (8.39 percent); Mansard, (18.21 percent); Wapic, (5.26 percent); Cornerstone, (15.09 percent); and Lasco, 15.41 percent. Also, the insurer’s combined ratio of 41.80 percent is the lowest in the industry- this means it spent less on claims expenses in generating each unit of revenue-, this compares with AIICO’S combined ratio of 110 percent, Wapic, (121.20 percent), Mansard, (98.20 percent), Mutual Benefits, (89.20 percent), Cornerstone, (94.40 percent), and Linkage, (112 percent). A combined ratio lower than 100 percentr shows a company is more profitable and efficient. N.E.M has an attractive valuation as their share prices are trading below their intrinsic value. It has a price to earnings (P/E) ratio of 4.26 times, this compares with Sovereign trust insurance’s P/E ratio of 70 times, and Standard Alliance’s 44.44 times, respectively.

AXA Mansard’s recorded a 40.15 percent growth in net premium income, this compares with N.EM’s growth of (2.73 percent); Wapic, (24.76 percent); AIICO, (17.91 percent); Lasaco, (36.15 percent), and Mutual Benefit, (9.55 percent), and Prestige, (24.72 percent). The performance of insurers in Africa’s largest economy has been below par as they’ve not been able to turn each Naira invested in sales into higher profit. Also, because a lot of them are undercapitalized, they are not able to take on more risk and grow earnings at blistering pace. Lack of liquidity has hindered operators in the industry from investing in short term government securities and bonds when yields are favourable. Despite the country population of 200 million, insurance penetration is 0.30 percent- one of the lowest figures in the world-, this compares with South Africa (14.7%), Kenya

(2.8%), Angola (0.8%) and Egypt (0.6%). Similarly, the sector’s insurance density (a measure of industry gross premium per capita) is still one of the lowest when compared to peers – South Africa (US$762.5), Egypt (US$22.8), Kenya (US$40.5) Angola (US$30.5) and Nigeria (US$6.2). The National Insurance Commission (NAICOM) is unable to formulate policies that will unlock the opportunities in industry. For instance, the regulator capitulated to the tumultuous uproar by operators under the aegis of Independent Shareholders Association of Nigeria (ISAN) as it jettisoned the three tier recapitalization. The aim of the policy was to ensure that insurers undertake risk commensurate with their capital bases. Foreign companies have insisted that only firms with capital base not less than $9 billion can underwrite their risks. Leadway Assurance Limited, the largest insurer by revenue and asset, has a shareholders’ fund of N55.03 billion as at December 2017, this compares with N1.02 trillion total equity of tier 2 lender Sterling Bank as lenders are liquid enough to take advantage of a high yield environment. Similarly, AXA Mansard, the most capitalized insurance firm in the country, has a market capitalization of N19.3 billion, this compares with N59.39 billion market cap of Tier two lenders- Fidelity Bank.

Understanding insurance as an effective means of risk management Modestus Anaesoronye

any people lack knowledge about what insurance means and its benefits in our daily lives and activities. And this explains why the level of insurance penetration is low in this part of the world. The consequence therefore is that people will continue to lose valuables when there is no replacement or compensation when losses occur. Here, this article explains primary concepts about insurance. Who then is an insurer? An individual or company who, through a contractual agreement, undertakes to compensate specified

losses, liability, or damages incurred by another individual. For this benefit the customer pays the company a fee, called a Premium. An insurer is frequently an insurance company and is also known as an underwriter. Who is a policyholder? A policyholder is a person or an entity that has purchased/acquired an insurance policy and has the right to exercise all privileges under the contract of insurance, except where restricted by the rights of an assignee. A policyholder may or may not be the insured, or the sole or one of the beneficiaries of the policy. Also called policy owner. Who is insurance broker?

An insurance broker is a specialist in insurance and risk management who acts on behalf of individuals or entities who want to buy insurance. Brokers act on behalf of their clients and provide advice in their interests. Sometime an insurance broker will act as agent of an insurer, but where this occurs, the situation should be fully explained to you. A broker will help you identify your individual business risks to help you decide what to insurer, and those risk you can manage in other ways. An insurance broker may specialize in one specific type of insurance or industry, or they might deal with many different types.

Insurance brokers can give you technical advice that is useful if you need to make a claim. Who is an underwriter? An underwriter is a professional that has the ability to understand, access and rate the risk appropriately. This ability is gained not only through theoretical studies but also as a result of years of experience dealing with similar risks. The underwriter’s job is to protect the Insurance Company from acquiring nonprofitable business by assessing a risk and determine appropriate rate of premium to charge. Who is an insurance agent? An insurance Agent is a person authorized to act

on behalf of an insurer for the purpose of arranging an agreement. Why do insurance companies use agents? Insurance companies use Agents to take insurance to the doorsteps of the insuring public. Agents make the transaction convenient for the customer by serving as a link. They assist the customer in explaining the terms and conditions of the contract between them and the insurance companies. How do insurance companies deal with fraudulent agents? When a Agent is fraudulent, Insurance Companies report them to the law enforcement agencies as well as to the National Insurance Commission (NAICOM) for

investigation and possible cancellation of his/her license. Customer obligation To avoid fraudulent agents, customers could exercise care by avoiding cash transactions. Customers could pay for their insurances by cheque, through bank debit notes, or pay directly to the insurance company. Where cash transaction takes place, the official receipt of the insurer should be obtained from the agent. It is difficult to assure that an agent is not fraudulent. However, it is advised that anyone dealing with/ through an agent should ensure the status of such contracts are verified with the insurance company every non and then.

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Access Bank Rateswatch Market Analysis and Outlook: February 8th – February 15th, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.81

Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

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

22.72 23.29

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018 Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

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

11.44 14 14 (+2/-5) 43.18 61.94 1.75

Increased to 11.44% in December 2018 from 11.28% in November 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% February 6, 2019 figure — a decrease of 0.41% from February start February 8, 2019 figure— no change from the prior week December 2018 figure — a decrease of 0.63% from November 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

08/02/19

01/02/19

31,529.92 11.76

30,636.36 11.42

Change(%)

2.92 2.92

Volume (bn)

0.72

0.27

167.14

Value (N’bn)

12.21

4.41

176.59

MONEY MARKET NIBOR Tenor

Friday Rate

Change (Basis Point)

(%)

08/02/19

01/02/19

OBB

18.6700

11.0700

760

O/N CALL 30 Days

19.4200 16.6429 12.1999

11.8600 10.8750 13.2457

756 577 (105)

90 Days

13.1353

13.4221

(29)

Friday

1 Month

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

(N/$)

Rate (N/$)

08/02/19

01/02/19

08/01/18

Official (N) Inter-Bank (N)

306.70 361.64

306.75 362.71

306.90 365.09

BDC (N) Parallel (N)

361.49 361.00

362.00 361.00

363.50 361.00

Indicators

02/02/19

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

Friday

Change

(%)

(Basis Point)

08/02/19

01/02/19

3-Year 5-Year

0.00 14.90

0.00 15.12

0 (22)

7-Year 10-Year 20-Year

14.72 14.76 14.65

14.85 14.89 15.01

(14) (13) (36)

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

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

YTD Change (%)

61.94 2.58

0.00 (7.86)

(3.91) (15.58)

2,263.00 104.05 72.89 12.72 515.00

3.81 (2.57) (1.75) (0.24) (0.87)

16.89 (20.08) (5.95) (17.03) 18.80

1,311.00 15.77 282.30

(0.78) (1.44) 2.12

(0.50) (8.26) (13.88)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

08/02/19

01/02/19

1 Mnth 3 Mnths

11.58 12.24

12.05 12.02

(47) 22

6 Mnths 9 Mnths 12 Mnths

13.97 16.71 17.44

14.33 16.72 17.48

(36) (1) (4)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

AVERAGE YIELDS Friday

1-week Change (%)

BOND MARKET Tenor

Global Economy In the US, trade deficit contracted to $49.3 billion in November of 2018 from an upwardly revised $55.7 billion in the prior month. It is the lowest deficit in five months according to the Bureau of Economic Analysis as imports plunged the most since March of 2016 from a record high value reached in the previous month. Total exports notched down 0.6% month-over-month to $209.873 billion. Total imports dipped 2.9% to $259.186 billion from a record high of $266.881 reached in October. The goods deficit with China decreased to $37.9 billion from a record high of $43.1 billion in October. Elsewhere in the Eurozone, the economy advanced 0.2% quarter-on-quarter in Q4 2018, same as the previous quarter, lowest since Q2 2014. Among the Eurozone economy, Lithuania's economy grew 1.6% (vs 0.1% in Q3), Latvia's GDP expanded 1.1% (vs 1.8% in Q3) and Spain's economy expanded (0.7% vs 0.6%). GDP growth rates in France, Belgium and Austria were unchanged at 0.3%, 0.3% and 0.4% respectively according to European Statistical Office. Italy's economy shrank by a steeper than expected 0.2% (-0.1% in Q3) in Q4 due to a fall in domestic demand, throwing the economy in a recession. In a separate development, the Reserve Bank of India reduced its benchmark interest rate by 25 basis point to 6.25% from 6.5% during its February meeting. It also shifted its stance to “neutral” in an attempt to boost a slowing economy as inflation rate remains well below its mid-point 4% target.

Index

Friday

Change

(%)

(Basis Point)

08/02/19

01/02/19

2,752.52

2,727.76

0.91

8.80 5.49

0.91 1.17

11.05 -44.67

1.00 1.04

Rate (%)

Date

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

8.88 5.55

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

12.05 -43.63

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

Amount (N' million) 28,018.96 58,684.52 167,932.67

11.3102 14.4753 17.6385

30-Jan-2019 30-Jan-2019 30-Jan-2019

Domestic Economy The Federation Account Allocation Committee (FAAC) disbursed a total of N3.19 trillion (trn) to the Federal Government of Nigeria (FGN) in year 2018 while states received a total of N2.57trn within the reference period. The amount disbursed to the FGN comprised of N2.8trn as Net Statutory Allocation, N156.98 billion (bn) as Valued Added Tax (VAT), N10.66bn as Nigerian National Petroleum Corporation (NNPC) refund to FGN and the distribution of N128.41bn from the foreign exchange (FOREX) equalisation fund. Delta and Akwa Ibom states received the highest allocation of N213.63bn and N202.37bn respectively in 2018 while Osun and Cross River states received the least allocation of N22.84bn and N36.95bn respectively. In a separate development, businesses expressed less optimism on Nigeria's macro economy in January 2019 according to the Central Bank of Nigeria (CBN) monthly Business Expectations Survey (BES) report for January 2019 released last week. The report, which was posted on the apex bank's website stated: “at 25.9 index points, respondents' overall confidence index (CI) on the macro economy in the aforementioned period was less optimistic when compared to its level of 30.5 index points recorded in December 2018.” The businesses outlook for February 2019 showed more confidence on the macro economy at 62.1 index points. The respondent firms were made up of small, medium and large organisations covering both import- and export-oriented businesses. The positive outlook by businesses in January 2019, according to the report, was driven by the opinion of respondents from the following sectors: services (13.0 points), industrial (10.9 points), wholesale/retail trade (1.5 points) and construction (0.5 points) sectors. The surveyed firms listed insufficient power supply, high interest rate, unfavourable economic climate, unclear economic laws, financial problems, insufficient demand, unfavourable political climate and competition as the major factors constraining business activity in the reference month.

Similarly, Market Capitalization increased by a similar rate at 2.92% to N11.76 trillion from N11.42 trillion the prior week. This week, short term profit booking is imminent while volatility continues, as investors and traders reposition for 2019 dividend declaration season which is expected to shape market performance after the elections. Money Market Money market rates settled in differing directional performances in various segments. The rise in short-dated rates was a function of tight liquidity in the market as the market is estimated to have closed in a negative position due to the OMO auctions conducted during the week. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates rose to 18.67% and 19.42% to 11.07% and 11.86% respectively the previous week. Call rates also climbed, to close at 16.64% from 10.88% the prior week. In contrast, Longer-tenured interbank rates, such as the 30-day and 90-day NIBOR edged down to 12.20% and 13.14% respectively from 13.25% and 13.42% the prior week. This week, rates are expected to slightly trend lower on the back of retail refund. Foreign Exchange Market The local unit appreciated against the green back across all market segments monitored last week. At the official window the naira gained 0.02% to close at N306.70/$ compared to N306.75/$ the previous week. Similarly, Investors' and Exporters window, it gained 30 kobo to settle at N361.64/$ from N362.71/$ the previous week. At the parallel market the naira remained unchanged at N363/$. The stability of the local currency continues to be supported by the intervention of the apex Bank at the expense of the nation's foreign reserves. This week, we envisage the naira remaining at prevailing levels, as the CBN continues to support the currency. Bond Market Average bond yields tapered for the second consecutive time as market participants took strategic positions across select maturities. Emphasis was on the long end of the curve. Yields on the five-, ten- , seven- and twentyyear debt papers closed at 14.90%, 14.72%, 14.76% and 14.65% from 15.12%, 14.85%, 14.89% and 15.01% respectively the previous week. The Access Bank Bond index jumped by 39.24 points or 1.44% to finish at 2,769.94 points from 2,730.70 points the previous week. Market is expected to sustain the buying interest in the near term barring any impactful news. Commodities The price of the OPEC basket of crude oil increased by 1% week-on-week to close on Friday at $61.57/barrel. Despite concerns regarding global oil demand, a number of factors contributed to the higher oil price. These are: Opec supply cuts in January, continued sanctions against key producers and a dwindling in the number of oil rigs in the US. The rig count was down by 14 last week. On the other hand, precious metals slumped as Dollar continued to strengthen over stronger US job data. Gold prices dropped 0.78% to $1,311 per ounce last week, while silver prices settled lower by 23 cents, or 1.4%, to $15.77 per ounce. This week, optimism expressed by President of the U.S. over a possible trade deal with China might push oil prices higher. Precious metals prices are expected to rise as threat of another US government shutdown supports the safe haven asset. MONTHLY MACRO ECONOMIC FORECASTS

Stock Market The local bourse was bullish last week as the market was boosted by expected positive earnings reporting season. The All share Index (ASI) expanded by 2.92% to 31529.92 points from 30,636.36 points the preceding week.

Variables

Feb’19

Mar’19

Apr’19

Exchange Rate (Interbank) (N/$)

364

365

Inflation Rate (%)

11.5

11.61

11.7

Crude Oil Price (US$/Barrel)

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

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

A daily guide to your Personal Finance

Ten money tips for couples ‘ Even the best system is not live? What financial commitments do you have to parents and / or siblings? Do you have insurance to protect your assets, health and life? How many children would you like to have? What sort of education would you like for your children? Will you both work or live on one person’s income? Will one partner hold a corporate job whilst the other is in business? Will you both be in business? Will one person pay all the bills or will you share in proportion to your income? How do you envision your retirement? Too many questions? Of course plans will change, but it does help to have discussed things so that when the time comes you are better prepared. Planning ahead brings you closer to achieving your goals, and even better, it brings you closer as a couple. 6. Set individual and joint goals When a couple comes together as a team to consider joint short, medium and long term goals, apart from their individual goals, there is a powerful avenue for bonding as they share hopes and dreams, write them down, and work together to achieve them. Don’t try to tackle too many at once; just focus on say the two or three that are most important at this stage of your lives; this makes it easier to achieve

always appropriate for every circumstance, so plan to modify your system as your relationship and financial situation evolves and find an arrangement that works best for both of you

‘

hen couples are dating, it feels as though love will smoothen out any difficulties; time usually tells a different story and money is often at the root cause of friction. One of the things that will determine your success as a couple is the way you handle your finances. Here are ten tips to help your money relationship along. 1. Talk about money You would do well to consider having the money conversation fairly early and certainly once your relationship appears to be leading to a joint future. Discussing money might not be romantic but try to broach the subject before committing. Money can be a very emotive topic; that’s why people tend to prefer to avoid it. Ignoring it, leads to both parties making assumptions about roles and responsibilities. Addressing money issues when there is no immediate pressure to make decisions should make things easier; the earlier the better. 2. Your money personality Our attitudes to money have a lot to do with our backgrounds, our parent’s money behaviour, childhood experiences etc. It is quite common for couples to have different attitudes towards money. If one is a big spender whilst the other is a frugal saver, for example this can cause conflict, if each party is not considerate of their partners wants and needs. One might be prepared to stake even the family home for the prospect of “that” deal, whilst the other prefers to build slowly and steadily over decades. You do not need to have identical views on money to be able to build a successful future together, but if you have some understanding of how your partner views money, you can adjust, adapt, accommodate or resolve the money issues. Financial compatibility encompasses attitudes to set-

ting goals, budgeting, borrowing, spending habits, saving and investing. 3. Look out for tell tale signs Action speaks louder than words; there will be some traits that you can deduce just from your partner’s lifestyle. When someone is a really big spender, and lives way above their means, without the income or investments to back it up, you ought to be concerned. Does he or she spend without any thought for the future or about the consequences of their spending decisions? 4. Is your partner in debt? Debt in itself is not the problem; it is about what they have borrowed for and if they owe and dodge friends, family and everyone else. Debt in marriage affects your partner, this is why couples should find ways to manage their debt together and work towards being debt free. 5. Envision the future There is so much to talk about. Talking about money too early might make your significant other nervous that you may be a “gold-digger,” but once you get a sense that your relationship is going somewhere, here are some ideas for the money conversation: What are your career goals and aspirations? How much do you earn? Do you have any savings? Are you in debt? How much? Where do you wish to

them. If you are just starting out together, this may include saving towards your wedding unless your parents are willing and able to foot the bill, renting your first home, or buying a car. If you are already married with a young family, goals tend to be saving for your children’s education, buying property etc. 7. Build in some fun Successful financial management was never meant to smack of drudgery and tedium. Be intentional about building fun into your plans, such as a weekly or monthly date night or periodic vacations. Avoid allowing existing debt or other financial problems getting in the way of quality time; it doesn’t have to be anything extravagant; a cozy meal, a picnic at the beach, or a movie night out are always lovely

experiences. 8. Joint accounts, separate accounts or a combination? When it comes to combining finances, there is no one size fits all; some couples merge their finances, whilst others prefer to keep their finances separate. You don’t have to combine finances immediately. Take some time to learn about each other’s spending habits. With a joint account, if both of you are working there should be some agreement about how each will contribute to the kitty and how money will be managed. It is rare to have a sole breadwinner these days with the lofty goals you have for your family’s future. Even the best system is not always appropriate for every circumstance, so plan to modify your system as your relationship and financial situation evolves and find an arrangement that works best for both of you. 9. Your children’s education Home ownership and educating children tend to be the largest and most prolonged expenses you will have. Remember that the most expensive or most “fashionable” school that “everyone else’s” child goes to, is not necessarily the best one for your child; an important part comes from your own interaction with them at home. Don’t go broke over your children’s education and jeopardize your financial security. Identify a school that you can afford, and that gives a sound basic education with committed teachers and standards. Leading insurance companies of-

fer excellent Educational Savings Plans that are worth considering. 9. To do list Newly weds and young families have some important to dos. There is a need to review and update a variety of documents. This may include emergency contacts, next of kin forms, health insurance, wills, retirement plan beneficiaries, life insurance, investment accounts etc. 10. Ssshh…Money Secrets? Communication, openness and transparency are important ingredients for successful relationships. Money secrets can derail a couple’s goals and indeed threaten the marriage itself. In reality, however, it is not always possible in every marriage to achieve the transparency and cooperation that you desire, but ideally this is what couples should strive for. Your financial life will be a life-long journey. If it is approached with a spirit of sharing and support, you have a better chance at a fulfilled life in partnership. Considering money matters together provides a great opportunity not only for strengthening the relationship but also for fulfilling and celebrating mutual goals with a sense of direction and purpose. Join us at our upcoming seminar “Romance and Finance: Relationships and Money on Saturday 23rd February 2019, at The Wheatbaker, Lawrence Road, Ikoyi, Lagos. Lets talk about Love and Money. Spaces are limited. Registration is required at: https ://www.moneymatterswithnimi.com/romance-and-finance-seminar-registration/ 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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Live @ The Exchanges Top Gainers/Losers as at Friday 08 February 2019 GAINERS Company

LOSERS Opening

Closing

Change

Company

SEPLAT

N530

N560.5

30.5

DANGCEM

NESTLE

N1470

N1500

N82

N85

OKOMUOIL FLOURMILL PZ

Market Statistics as at Friday 08 February 2019

N19

N20

N11.3

N12.15

0.85

CCNN INTERLINK

Opening

Closing

N190

N185.5

-4.5

N22.45

N22

-0.45

N3.6

N3.24

-0.36

ETRANZACT

N3.25

N2.93

-0.32

ETI

N14

N13.7

-0.3

Stock investors gain over N330bn on increased bargains … year-to-date returns now +0.32%

Stories by Iheanyi Nwachukwu

he Nigerian stock market gained approximately N334billion in the trading week ended Friday February 8 as more investors leveraged attractive entry opportunities created by many value stocks that are currently priced low. No fewer than fiftythree (53) equities appreciated in price in the review week, higher than 16 in the preceding week. Twentyone (21) equities depreciated in price, lower than 50 equities in the preceding week, while 94 equities remained unchanged lower than 102 equities recorded in the preceding week. The Nigerian Stock Exchange (NSE) All Share Index (ASI) appreciated by 2.92percent week-onweek (wow) to close at 31,529.92 points as against 30,636.36 points the preceding week while the value of listed equities –

the market capitalisation closed at N11.758 trillion from a low of N11.424 trillion in the preceding trading weekend. The year-to-date (ytd) return stood positive at 0.32percent. All other indices finished higher with the exception of the

Change

NSE Industrial Goods Index that depreciated by 0.66percent. Regency Assurance Plc recorded the highest gain after its share price increased from 21kobo to 25kobo, adding 4kobo or 19.05percent; followed by that of Dangote Flour Mills Plc which increased from N5.80 to N6.85, adding N1.05 or 18.10percent; while Guaranty Trust Bank Plc increased from N33.70 to N38.65, adding N4.95 or 14.69percent. On the losers list, Royal Exchange Plc occupied topmost position after its share price declined from 30kobo to 26kobo, down by 4kobo or 13.33percent; Guinea Insurance Plc followed after its share price

declined from 23kobo to 20kobo, losing 3kobo or 13.04percent; while that of Champion Breweries Plc decreased from N1.80 to N1.62, losing 18kobo or 10percent. The stock market recorded turnover of 1.894 billion shares worth

N26.884 billion in 19,213 deals in contrast to a total of 1.452 billion shares valued at N14.788 billion that exchanged hands the preceding week in 19,318 deals. The Financial Services Industry (measured by volume) led the activity chart with 1.498 billion shares valued at N19.724 billion traded in 12,581 deals; thus contributing 79.10percent and 73.37percent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 144.426 million shares worth N4.552 billion in 2,484 deals, followed by Conglomerates Industry with a turnover of 143.320 million shares worth N220.050 million in 998 deals. Trading in the Top Three Equities namely, United Bank for Africa Plc, Zenith Bank Plc and FBN Holdings Plc (measured by volume) accounted for 791.318 million shares worth N10.817 billion in 5,046 deals, contributing 41.79percent and 40.23percent to the total equity turnover volume and value respectively. Also traded during the review week were a total of 6,590 units of Exchange Traded Products (ETPs) valued at N55,711.29 executed in 2 deals compared to a total of 668 units valued at N58,897.50 that were transacted the preceding week in 21 deals. A total of 2,668 units of Federal Government Bonds valued at N2.886 million were traded in 14 deals compared with a total of 4,336 units valued at N4.308 million transacted the preceding week in 26 deals.

ASI (Points)

31,529.92

DEALS (Numbers)

5,752.00

VOLUME (Numbers)

723,796,543.00

VALUE (N billion)

12.209

MARKET CAP (N Trn

11.758

How to be successful at Trading Global Markets

hen trading, the more risk you are willing to take the greater the potential reward. However, many inexperienced traders have taken this too far and it has been their downfall. Risk management is a key factor in becoming a successful Pro in Global Market Trader. According to Eagles Global Markets (EGM) an award winning brokage firm that offers its users both MT4 and Cloudtrade platform to enable them trade in USD or Naira recommends the following as the best practices to consider when trading; 1. Make It Affordable: Don’t invest more than you can afford to lose. Don’t gamble away your hard-earned trading account: invest it in a way that is intelligent and

consistent. 2. Get information and resources from a reliable source : A great resource would be the EGM free weekly webinar with their Chief market analyst, where At the start of the week, they give their clients the heads up on significant events that should drive markets during the week and

discuss market themes for the trading week, and also identify outlook bias and possible trading strategies on focused instruments. 3. Determine Your Risk Tolerance: This is a personal choice for anyone who plans on trading any market. Most trading instructors will throw out numbers like 1%, 2% or on up to 5% of the total value of your account risked on each trade placed, but a lot of your comfort with these numbers is largely based on your experience level. The following is an example of risk tolerance when placing a trade:

4. Determine Your Timing: Knowing the time the global markets open and closes in the different time zones, is essential to become successful trader in the Global Markets.

5. Have a clear plan; This regulates your trading activity. A good trading plan is crucial to your trading success. Look at every angle of the trade and create proper entry and exit strategies. Just like any effective plan, the strategies must be backed by proper tools, timelines, and information. There are a number of order types, such as the trailing stop, if/then, and order cancels order (OCO), designed to help traders manage risk and protect potential profits. 6. Know how to analyze the Markets: Price chart plot the recent prices of a currency pair on a graph and provide a snapshot of market movements over a particular period of time. Line charts are one of three common chart types used to view the changes in price movements over a period of time. While Bar and candlestick charts provides detailed information about the price movements of a currency pair.

7. Watch the News: Certain news events like employment or inflation reports can create abnormally large moves in the market that can create gaps. Gaps are sharp breaks in price with no trading occurring in between. Gaps primarily occur over the weekend because it is the only time the forex market closes. Trading Global Markets can be a rewarding and exciting challenge, but it can also be discouraging if you are not care-

ful. EGM offers a trading platform to trade over 1,000’s of financial instruments in major markets globally, and earn passive income daily. For more information visit: www.eagleglobalmarkets.com Follow EGM on Facebook, Instagram & Twitter @egmarkets Open Free Trading account today https://lnkd.in/gjnwQMz Call: 09082908872 Email: support@eagleglobalmarkets.com

Monday 11 February 2019

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Week Ahead

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Watchlist

Analysts are upbeat on oil and gas firms’ full year earnings BALA AUGIE

il and gas firms are expected to deliver full year profit margin of 9.26 percent from 2.36 percent recorded in the corresponding period of 2017, according to data gathered from Bloomberg Terminal. Similarily, Bloomberg Intelligence also expects full year return on equity (ROE) of 24.59 percent as against 7.36 percent the corresponding period of 2017. Experts are of the view that firms third quarter will be a reflection of full year results because the environment was uncharacterically benign for the most part of the year. This is because there were no disruptions of oil facilities in the Niger Delta region and fuel scarcity brought on by delay in the payment of subsidy monies. Seplat Petroleum Devel-

opment Corporation Plc has done a good job by adjusting its budget to the lower oil price environment. Crude’s collapse forced Nigerian upstream oil and gas companies to slash spending, reduce costs, and delay projects, a decision that has paid off as some of them delivered double digit returns to their owners. Seplat’s free cash flow surged by 685.13 percent to

$99.70 million in September 2018, from $12.70 million the as at December 2017. Cash flows were beaten down in 2016 when oil prices were at an all-time low of $23 per barrel while damages to Forecado terminal by Niger Delta militants resulted in loss of investment. Brent crude oil trades at $62 as at 2:00 pm while West Texas Intermediate stood at $55 a barrel, according to data

gathered from Bloomberg. Global ratings agencyFlitch- has upgraded the Seplat to ‘B’ after further progress in de-risking its business. “The stable outlook reflects Seplat’s comfortable debt position and its ability to grow the business both organically and inorganically in the coming years without weighing on the rating,” according to the ratings agency. The proportion of debt on the capital structure of the company is low as debt to equity ratio fell to 34.86 percent in September 2018 from 51.66 percent the previous year. Analysts at Afrinvest in their 2018 upstream oil and gas outlook placed Buy ratings on Seplat, but added that

Corporation (NNPC) changed the template such that the corporation is sole importer of petroleum products. The new template is however a boon for companies because they are no longer borrowing to cover subsidy costs; it means they can better manage liquidity without the need to lock horns with government over prompt payment of subsidy monies. However, the fact that NNPC now handles importation means it will now dictate margins to the companies, hence industry operators will have to manage costs to improve profitability. Total Nigeria Plc recorded profit margins of 2.82 percent in September 2018, this compares with 1.98 percent recorded the corresponding period of 2017. However, return on equity fell to 10.87 percent in the period under review from 41.12 percent the previous year. Mobil Nigeria Plc or 11 Plc’s profit margin fell to 6.19 percent in the period under review from 6.62 percent the previous year while return on equity increased to 38.03 percent in September 2018 as against 31.45 percent the previous year. Forte Oil’s net margin in-

P.E

SHORT TAKES N39.9bn N39.9 billion ($110 million) of 119-day OMO bills due June 6 were sold. The OMO bills have a yield of 11.9% and settled February 7. The sale is a reopening of previously issued securities with N21.27 billion outstanding.

58.5 points Manufacturing PMI for January 2019 stood at 58.5 index points, indicating 2.6 points decline compared with 61.1 points recorded in December 2018. Production level PMI in January 2019 stood at 59.3 points, Employment level PMI at 56.4 points and New Orders PMI at 63.6 points.

N264.38bn

future earnings will depend on stable oil production and an improvement in uptime to an average of 80.0%, the success of the company’s diversification in its export rout, and stability in oil prices above $50.0/barrel and persistent improvement in gas production. Downstream oil and gas companies are adjusting to a new business model after Nigeria National Petroleum

creased to 21.60 percent in the period under review from 17.37 percent recorded in the corresponding period, thanks to N9.0 billion profit realized from disposal of one of its subsidiaries. NSE oil and gas index is down -5.68 percent, underperforming NSE ASI of 0.32 percent Continues on page 28

The IGR of the 36 states of the federation plus FCT hits N264.38 billion in the third quarter of 2018, compared to N279.78 reported in 2018 half year. 17 States recorded growth in IGR.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

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

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Markets Intelligence

Conoil, medview, and Lafarge, tops FDC least favourite stocks BALA AUGIE

onoil Nigeria Plc, Medview Airline Nigeria Plc, and Lafarge Africa Plc are Financial Derivatives

Company’s least favourite stocks as companies as election tenterhooks force investors to hold onto their money. We have decided to dig deep into the financial statement of these firms, with a view to provid-

ing investors with more information that will enable them make strategic investment decision. Lafarge Africa is beleaguered by huge debt and rising leverage ratio after it incurred foreign exchange losses relating to the acquisition of UNICEM. Also, competitions from rival firms like Dangote cements and Cement Company of Northern Nigeria (CCNN) has resulted in slow sales. Lafarge Africa’s recorded debt to equity ratio of 7.50 percent in the third quarter of 2014, but the ratio has been rising steadily as it finally touched down at 380.17 percent as at September 2018. This means that the company is highly geared and the proportion of debt in the capital structure of the firm is high. The cement maker’s profit was N31.75 billion in 2014, but it recorded a loss of N10.37 billion as at September 2018. It plans to future profit and reduce its debt burden by raising capital from existing shareholders. “Lafarge is struggling with low efficiency, weak fundamentals and stiff competition,’’ said analysts at Financial Derivative Company. Medview Airline’s recorded its first loss in three years as it continues to struggle with receding sales. The company made a loss of N1.52 billion as at September 2018 from a profit of N1.1 billion the previous year. The airline operator is not well positioned to take advantage of the open sky agreement, according to Financial Derivative Company.

Treasury investors enjoy 560 basis point inflation premiums, at least for now IFEANYI JOHN

reasury yields rising is a gift to fixed income investors, but rising yields is also a bane to investors who are already holding guilt instruments because it means that the market value of the instrument is declining. This is the precarious position local investors find themselves as rising yields in the last few months has driven treasury yields from around 13 percent mid last year to 17 percent as contractionary monetary policy coupled with election risk in Nigeria is driving treasury yields near levels last since 2017. On Friday, the 1-year treasury bill is traded in the secondary market at a yield of around 17.04 percent, compared with last re-

ported inflation which currently sits at 11.44 percent as at December 2018. This translates into a 560-basis point premium for investors, making the one year note the most attractive in the market. Yields on Nigerian bonds for the 5-year, 10 year and 20-year note traded within the 14.6 percent to 14.9 percent range on Friday as the yield curve remains inverted despite shrinking fears of a recession in 2019. Even the spread between the 6 months and 1-year treasury bill is almost 300 basis points, causing investors to worry about what the wide spreads and yield curve inversion could mean. An inverted yield curve is generally considered by economist to be a sign that a recession is near. The yield curve last inverted before the economic recession in 2016 and

remained inverted until the first half of 2018. Maju Eldad, an economist, told BusinessDay that rising yields could be a sign that investors expect inflation to rise within the coming months. The International Monetary Fund (IMF) earlier predicted that inflation rate in Nigeria will probably rise to 13.5 percent in 2019. That translates to a 2-percentage point increase from the last reported inflation rate. Bismark Rewane also predicted a 13 percent year-end inflation on the back of “increased money supply that will drive up commodity prices in Q1, fallout from election which could raise output and push commodity prices, infrastructural developments in Q3 and increased Christmas demand in the last quarter of the year in his FDC 2019 outlook report.

Analysts are upbeat on oil and gas firms’ full ... Continued from page 27

Monday 11 February 2019

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Start-Up Digest

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In association with

Olanrewaju: Breaking barriers in Nigeria’s logistics industry Josephine Okojie

pe Olanrewaju is a Nigerian entrepreneur and founder of Kennie-O Cold Chain Logistics (KCCL), a start-up based in Kwara State and focused on helping farmers and processors transport their fresh fruit and vegetable produce to any part of the country, using excellent end-to-end cold chain logistics while preserving their natural nutrients. Ope was inspired to establish Kennie-O Cold Chain Logistics (KCCL) after suffering a major loss from his investment in poultry production in 2013. He started his entrepreneurship journey as an agripreneur in the poultry industry. The business then suffered a major loss when an outsourced cold chain truck hired to transport his processed chicken to clients outside Kwara State malfunctioned. This led to spoilage and eventual rejection of the products by customers. It also led to a total collapse of the business, and that shifted his interest to the logistics industry. He identified a huge opportunity in the industry and decided to

Ope Olanrewaju

venture into it. In 2014, he established his own cold chain logistic business. “We were into the poultry business and I ran a broiler production and processing business,” he recalls. “I supplied over five tons of frozen chicken per batch to major retail stores across the country,” Ope says.

“In 2013, we outsourced a cooling truck to deliver our products to customers and retail stores and it malfunctioned and the products got spoilt. Our customers rejected them and this led to the total collapse of the business then,” Ope says. “We wanted to change the narrative of logistics business in the country and help farmers like me

transport their products while ensuring that their natural nutrients are preserved,” he explains. “Today we are actively promoting freshness and food safety in Nigeria as well as helping several businesses in the nutrition value chain to deliver fresh and nutritious foods to their clients anywhere in the country,” he says. To start the business, Ope sold all the equipment of his poultry business and used the proceeds to invest into the new business. Since starting, he has not taken any loan from money deposit banks but has been able to secure some grants. In 2018, Ope emerged as the SUN Business Network Africa nutrition winner and his business was given a grant, training and mentorship. Since then, the start-up has become one of the fastest growing logistics businesses in the country as hunt for more nutritious food increases daily among the younger population. “We have been able to acquire two cooling trucks and we recently got a fully automated packing house under lease. Our market has been well tested, proof of concept validated,” he boasts. Answering questions on the organisation’s expansion plans, the young entrepreneur says that

Kennis-O Cold Chain Logistics plans to purchase a solar-powered refrigerated mobile cooling truck in the first quarter of 2019. He stated that the goal of the organisation is to increase Nigeria’s food preservation rate and reduce wastages by five percent within the next five years. Speaking on the challenges confronting his business, the young entrepreneur says that the biggest challenge confronting his business is the country’s poor road infrastructure. He notes that huge infrastructural gaps have continued to drive the cost of production and increase delivery time, thus making it difficult for the business. Similarly, he identifies poor power infrastructure as another major challenge. “The main roadblock of growth in the cold chain industry is high energy consumption cost,” he says. Ope urges the government to develop the country’s infrastructure to drive growth and industrialisation. He also calls for the stimulation of policies to drive and unlock economic growth and development. On advice to younger entrepreneurs, he says, “Execution is everything. Always keep building, test it fast in the market, learn and re-strategise.”

Redwire educates SMEs, entrepreneurs on measuring returns on social media investments Desmond Okon

s social media continues to be the new business driver, helping businesses to create brand awareness, connect with customers and boost the sale of products and services, Redwire Marketing Group has shared insights on tools and methods that will help businesses measure returns on social media investments. At a panel discussion session held Thursday in Lagos, in collaboration with the Social Media Week, participants, including conglomerates and start-ups, had the opportunity to gain knowledge on suitable social media platforms for their businesses. Themed ‘Measuring Returns on Your Social Media Investments –tools, methods, case studies’, the session raised and answered questions relating to influencer marketing. Social media is one of the areas with the highest growth rate and more Nigerians are now leveraging on it for digital marketing purposes while also increasing opportunities for brand-consumer interactions across all business verticals. Nigeria had 57.7 million internet users in 2014. This figure was

projected to grow to 76.2 million internet users in 2017. However, in 2018, a report, ‘Digital Trends for Nigeria in 2018’, conducted by Terragon Group placed the total number of internet users in Nigeria at 100.5 million people, with some 22 million of them actively using social media for a whole lot of activities. Many are, however, perplexed as to the efficacy of how clicking a mouse or tapping the screen of a smartphone could translate to patronage. “A lot of businesses come up today, and you still hear people tell you things like: ‘Why should I invest in social media?’ ‘How far is social media going to take me?’ or ‘If I am pumping money into

an ad, am I going to get sales immediately?’” said Doyinsola Ajayi, marketing strategist, Redwire Marketing Consulting, while speaking to BusinessDay. “So, we decided to do this event to answer the most important questions that people have. We saw the need to actually address social media issues, and we decided to collaborate with Social Media Week, being an internationally acclaimed event, to make this happen. So we brought stakeholders, SMEs, business owners, entrepreneurs to the same room to address possible social media issues that they actually have,” Ajayi said. Temitayo Eyitayo, creative director, 24 Apparel, said the

only way to connect social media marketing to sales “is you tying it back to your initial objectives, and sometimes you also have to be careful the kind of product you are selling”. “Some products have instant sales. For some products, it will take a few months before you start selling because of the type. So with that, it just comes down to you looking at your business and products and then determining how long it should take. So there is no blanket response that if you spend 10,000 online, you’ll start getting response by day two, and by day seven, you will have sold out, no. It’s more complex than that,” Eyitayo said. Chiamaka Ogbuekwe, founder/ CEO, Social Prefect Tours, advised start-ups to grow organically and put in work to provoke sales, adding that Instagram offers better tools for business growth. “Whenever you start a business, you know that it takes time to actually grow. So you need to be consistent, you need to take your time, and keep putting out quality content with good images. You have to put in the effort to do proper branding. It doesn’t happen overnight,” Ogbuekwe said. “Instagram is very effective in driving sales for SMEs and I see that because it really depends on

how your brand is perceived, and how much work you put into your branding, and there is no overnight success,” she said. On the flipside, Demola Adetona, founder, Expose Nigeria, argued that despite the slow reception of information on Facebook, its enthusiasts can stand out if only they can invest in good content and make more collaborations, which he described as ‘the new competition’. “You can stand out on Facebook through collaborations and investing in your content,” Adetona said.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

Aisha Kasumu: Changing the face of make-up industry Gbemi Faminu

t is often said that looking good is good business. Make-up has become a necessity which many people, especially ladies, use to enhance their beauty and complement their dressing. Not many people can apply make-up for themselves. They, therefore, engage the services of make-up artists. Aisha Kasumu is a seasoned make-up artist based in Lagos. She is the chief executive officer of Beauty and Hairstyling by Aisha. A graduate of Mass Communication, the University of Lagos, Aisha started her business during her second year in school. She has always had a flare for make-up and enjoyed making people beautiful. Therefore, make-up came to her naturally. She started her business with N5,000, which she got singlehandedly by working. She started

Aisha Kasumu

by getting basic make-up products which she used on clients.

She saved her profits, invested in trainings and acquired more

quality products to fully establish her business. Today, her business is worth millions of naira while she engages in training as well as sale of make-up products. Presently, she has partners, assistants and interns whom she engages, especially when she has lots of clients waiting. In addition to this, she trains no fewer than 15 people monthly, both online and physically. “I use quality products because I deal with the face, which is one of the most delicate parts of the human body,” Aisha says. “I get my products from verified make-up stores in Lagos and abroad,” she adds. Speaking on challenges, she says that lack of regular power supply is a problem. She requires constant electricity whenever she is at work, the entrepreneur says. She explains that sometimes it may be difficult to get original products of some brands in the Nigerian market, adding

that her encounter with some difficult clients can be discouraging. She urges the federal government to help ease the business environment for start-ups and encourage them with grants and cheap, single-digit funds. She discloses that she is an advocate for customer satisfaction and maintains a friendly relationship with all her clients. She attends all kinds of trainings, including webinars and seminars to ensure she develops herself and her services. Speaking on her business expansion plans, Aisha says she intends to incorporate full-time cosmetology, have her own branded products and expand her business internationally. Her mentors are business moguls who started small and have built empires, especially those dealing with beauty products and cosmetics. Advising other entrepreneurs, she says that they should start first and not give up.

prospective investors.

differ only in terms of time consumption per output, weight and structure morphology. The plant in mind has production capacity of 4000-4, 500 plastics cup per two shifts per day of 5,000-6,000 plastic plates per day. This may be packed in dozens for sales. Appointed distributors would be needed for products distributions and sales.

Business Opportunity

Investing in plastic manufacturing plant

lastics products such as household plastic items, gift items, plastic cups, toys, seats, tables, bags, among others, are daily consumables. The demand is very high that the available producers in the country cannot satisfy the market. Apart from local buyers, the entire ECOWAS sub regions rely wholly on Nigerians for their plastic wares. In this investment, profile prospective investors are educated on how to invest successfully into this lucrative venture, putting all the necessary inputs into consideration such as technical, marketing, operational and financial requirements into consideration. The writer will guide prospective investors in setting up this project from feasibility studies, site planning, procurement and installation of machines, development of marketing strategies and recruitment of experienced manpower to manage the project for profit. Please call 08034494437, 08023664368 for detail discussion. Plant & Machinery One of the economic efficiencies of measuring the mechanical productivity of plant and machinery of a firm, or a proposed venture, is not only a function of its life expectancy, rate of depreciation, energy consumption per unit of output, but also adoption of a simple plant to produce different quality products. The plant in mind is capable of producing four varieties of plastic products of desired sizes. What is needed involves fixing different moulds into the injection moulding plant. Competition Survey findings have revealed that,

most Nigerian industrialists and project promoters are not fully aware of these economic efficiencies of injection moulding plant. The few numbers of firms and industries utilizing injection-moulding plant that can only produce single plastic product can justify this belief. It implies that the plant in mind would produce different products to meet seasonal demand. This means if there is any project to be considered for implementation in terms of production multiplicity of plant at all, plastic plates, cups, bowls and spoons production should be the one. Raw Material The major raw materials required are thermo-plastics of high fluidity such as high-density polyethylene and others. The beauty of this project is that

both the injection moulding plant and raw materials are available locally, which signals the easiness of sourcing both the fixed and variable inputs. Location Theoretically, this project may be sited in any state in the federation without location constraint of raw material procurement. Project implementation involves acquisition of factory house, purchase and installation of plant and machinery, recruitment of appropriate personnel and other accessories. Projected Cost of establishment The initial cost of the project is estimated based on the capacity. It can be on small, medium and large scale plants. The project can be scaled down depending on many factors that will be discussed with

Technical Feasibility The production technology of plastic products is simple, though mechanical. The materials suitable for injection molding are thermoplastics of high fluidity. The granules are introduced through a hopper, into the cylinder in which they are heated, above their softening pint, by means of a heating jacket. Moving piston plasticizers forces the material through a nozzle into the mould. Different kinds of moulds are used to produce different plastic products. The extruded material is cooled and is taken off by means of suitable devices designed as to prevent any subsequent deformation. The theoretical analysis of production technology of plastic products remains the same, but they

L-R: Chije Eke, investor relations manager, Nigeria, EB5 Capital; Oluwatoyin Akomolafe, president, Nigerian-American Chamber of Commerce (NACC); Akpan Hogan Ekpo, immediate past director-general, West African Institute for Financial and Economic Management; Joyce Akpata, director-general, NACC; Temi Dada, senior investment analyst, EB5 Capital (R); at the NACC 2019 February Breakfast Meeting held in Lagos recently Hotel, Victoria Island, Lagos on 7th February, 2019.

Implementation There are two markets for plastic products; the domestic and foreign markets. Households in general, canteens, industries, hospitals, clinics and hotels form the domestic market, while the neighboring West African countries constitute the foreign markets. The market viability shows that plastic plates, cups, bowls and keg are cheaper and durable when compared with sister glass products with high price disadvantage, and their fragility. More so, the cross elasticity of demand for plastic products shows a perfect elasticity of substitution for glass products in all ramifications of their uses. For profitability 4, 000 plastic cups are assumed per day. Given 250 working days per annum, 83,333 dozens of plastic cups would be produced per year. Assuming a conservative price of N100 per dozen, N5, 499,978 would be annual gross revenue. In view of the above theoretical facts and figures, this project is strongly recommended for investment. Project Estimate Uba Godwin Global Trust Consulting Group 56 Ishaga Road (1st floor) Surulere, Lagos Tel: 08023664368, 08034494437 E-mail: ubagodwin@yahoo.com

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Start-Up Digest

Meet Olubokun, chief chef of Teelicious Catering management. She then decided to do what gives her joy. While Omotayo was growing up, she would sit for hours with her grandmother in the kitchen to learn new delicacies and most of the time she would be taking online classes about new meals. She began to get encouragements from her friends who supported her to achieve her dreams. “Well, for the kind of business I do, it is hard to make a lot of money because in our country today, most people do not have enough money to take care of themselves, talk more of patronising me,” she explains. Speaking on the challenges she faces, the young entrepreneur says she needs more funds to set up standard environment for clients, and electric supply to enable her use her storage facilities effectively. “I need a lot of finance to get quality foodstuffs and means of delivery to my clients,” she says.

Jonathan Aderoju

motayo Deborah Olubokun is the chief executive officer and chef of Teelicious Catering Service and Eatery. The 28-yearold entrepreneur hails from Ondo state and has a Bachelor of Science degree in Banking and Finance from Adekunle Ajasin University. She started her business with her personal savings and kind gestures from friends and used the profit from the work to obtain more equipment for her work. Omotayo has also had the opportunity to work for some clients who today recommend her for more jobs. “I derive joy when I get positive feedback from my customers or clients all over Lagos,” she tells Start-Up Digest. The young entrepreneur was motivated to embark on the catering business and take it as a profession when she discovered her love for cooking and home

Omotayo Deborah Olubokun

Skool Media commissions tech centers in Lagos

…invests N500m in digitalisation of Nigerian educational sector Gbemi Faminu

n a bid to improve the education sector in Nigeria, Skool Media has commissioned technology learning centres in Lagos. Speaking at the commissioning of Skool Media Technology Experience Center (SMTEC) in Queens College, Yaba, Moses Imayi, project director, Skool Media, said the institution was targeting making quality education accessible to everyone while ensuring the adoption of technology and digitalisation of education in Nigeria. “The conceptualisation to the development of an experience centre across school locations is a defining moment in the history of the educational sector as it is expected to be a collaborative work space for computer-based learning and indeed an opportunity for students to engage with technology and become globally competitive,” Imayi said.

He said the development of the technology experience centre was a collaborative effort for computerbased learning and an opportunity for students to engage with technology and become globally competitive. “The tech experience centre is expected to be an inspirational yet enriching environment that would support both teachers and students to be resourceful,” he said. He explained that the key aim was to make learning fun and seamless while engaging with technology and innovation and yet being highly productive. Speaking to journalists, he stated the world had moved from the traditional age of chalk and blackboard to the 21st century process of learning, involving learning digital skills such as coding, gamification hackathons, use of search engines, creative thinking and problem solving skills, among others. He added that approximately N500 million has been spent in investments and infrastructure set

Moses Imayi, project director, Skool Media (middle), and other participants, during Skool Media commissioning of tech centres in Lagos recently

up across 23 project locations in the six geo political zones. Sonny Echono, permanent secretary, Federal Ministry of Education, represented by Abubakar. K. Isah, director for ICT, commended Skool Media for its efforts in improving the education sector in the country. He said it was important to evaluate all the beneficiaries and see how effective the programme had been for them, adding that all that was learned by beneficiaries would be fully utilised and reflective on teaching and learning processes. Yakubu Oyinloye, principal, Queens College, applauded Skool Media for its efforts, stating that it had taken the education process at both spectrums to an advanced level while granting access to wide and broad knowledge extending to global standards. Gloria Akinsanya, head girl at the school, who was one of the beneficiaries, said the programme had aided her learning process through easy access to research, participation in online competitions and gave her an advantage of becoming a young programmer. She added that it was very useful for all students, especially the out-going senior students who needed access to information on requirements for admission into undergraduate programmes and scholarship opportunities. Skool Media, since its establishment in 2013, has collaborated with schools, learning centres and the Ministry of Education, with the aim of reforming and improving spectrums of education in the Nigerian educational sector through the incorporation of technology and digital skills.

She urges the government to look also in the direction of providing start-up funds for entrepreneurs and to resolve power issues facing the country. On her long-term goals, she says,“ I am looking at expanding Teelicious Restaurants, mostly in area of traditional foods with our local wine. I also plan to make contacts with top chefs in the country.” She is yet to have permanent staff. However, she has friends who help out whenever there is a huge task to be accomplished in a short period. “I get little assistance from friends and family when needed, but I intend to get help soon as the business expands and the customer base increases over time.” Advising other entrepreneurs and youths, she says, “Never despise the days of little beginnings and put your passion into play because it goes along way. Do not be discouraged by the hardship in the country because at the end we will be fine.”

Banks have funds at 8% interest rate but SMEs can’t access them—Ekpo ODINAKA ANUDU

kpan Ekpo, professor of Economics and Public Policy at the University of Uyo, Akwa Ibom State, has said that some deposit money banks have funds at seven to eight percent interest rates but small businesses can hardly access them. Speaking at a February Breakfast Meeting organised by the NigerianAmerican Chamber of Commerce (NACC), Akpan urged banks to ensure that the micro, small and medium enterprises (MSMEs) have access to cheap loans like well-known names in the country. He stressed that this would create jobs and have multiplier effect on the economy in terms of job creation and GDP growth. He said there was no bearing between the Monetary Policy Rate (MPR) and actual lending rate, as banks lent at 20 to 30 percent even when the MPR was 14 percent. MPR is the benchmark interest rate set by the central bank. In his review of 2018 Nigerian economy and projection of 2019, he said economic performance of Africa’s largest economy would be determined by the outcome of its elections. “Investors are watching,” he said. “If everything goes fine, election takes place, and everybody accepts all the results, we may have an economy to forecast,” he said. He said Kenya was yet to recover from the aftermath of its presidential election despite that the country was now calm. He projected that the economy might grow at three percent, but said that it was not enough to haul the majority of the citizens out of poverty trap. “We have to grow at 10 percent or more, sustain it for 15 years to reduce

poverty,” he said. He said most economic indices in the about country now were not good enough, pointing out that if the numbers did not change, the country might find itself in twin recession. Twin recession or double-dip recession is used to describe a situation where the gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. “No economy survives from twin recession,” Akpan said, adding that it was only an economy earning foreign exchange outside of crude oil that would survive. Nigeria is going into election on February 16 as the poverty capital of the world, with 87 million extremely poor people. According to the Brookings Institution, Nigeria is now the poverty capital of the world, with a record 87 million people living in extreme poverty and 8,000 people sliding into extreme poverty on a daily basis. Akpan said the political environment must be secure for investors to come. “The greatest problem with forecasts is the polity and governance,” he said. On his part, Oluwatoyin Akomolafe, president of NACC, quoted the World Bank as saying that Nigeria GDP growth remained largely unimpressive and still exhibited the same pattern of the pre-crisis period of 2017. “As at the third quarter of 2018, the combination of unemployment and underemployment rates reached an all-time high of 43.3 percent, with an estimated 49.1 percent of the country’s population living below the poverty line,” he said. “Hence, staying well-informed and understanding the implications of the changes that had occurred, the measures to be employed and the prospect for the future is important to us all,” he added.

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McKinsey’s ‘Three Horizons’ model defined innovation for years. Here’s why it no longer applies Steve Blank

’m a big fan of McKinsey’s “Three Horizons” Model of innovation. When first articulated by Baghai, Coley and White in 2000, in “The Alchemy of Growth,” the “Three Horizons” model was a breakthrough. However, in the 21st century the model has a fatal flaw that risks making companies lag behind competitors — or even putting them out of business. The model described innovation occurring on three time horizons. Horizon 1 ideas provide continuous innovation to a company’s existing business model and core capabilities in the short-

term. Horizon 2 ideas extend a company’s existing business model and core capabilities to new customers, markets or targets. Horizon 3 is the creation of new capabilities and new business to take advantage of or respond to disruptive opportunities or to counter disruption. Each horizon requires different focus, management, tools and goals. While traditional analysis suggests that Horizon 3 disruptive innovations take years to develop, in today’s world this is no longer the case. In fact, it’s the speed of deployment of Horizon 3 products, strategies and capabilities that are a devastating upset to the status quo. For incumbents, there are four ways to counter rapid disruption:

— INCENTIVIZE EXTERNAL RESOURCES TO FOCUS ON YOUR GOAL. Combine the existing strengths of a company or agency and its business model by acquiring external innovators who can operate at the speed of the disrupters. Google, for example, bought Android. The risk here is that a mismatch of culture, process and incentives may strangle the newly acquired innovation culture. — RAPIDLY COPY THE NEW DISRUPTIVE INNOVATORS AND USE THE INCUMBENT’S BUSINESS MODEL TO DOMINATE. The risk here is that copying innovation without understanding the customer problem can result in solutions that miss the target. — INNOVATE BETTER

THAN THE DISRUPTERS. This is extremely difficult for large companies or government agencies as it is as much a culture and process problem as a technology problem. Startups are born betting it all. The trap of the Three Horizon model is not recognizing that today many disruptions can be rapidly implemented by repurposing existing Horizon 1 technologies into new business models — and that speed of deployment is disruptive and asymmetric by itself. In the 21st century the attackers have the advantage, as the incumbents are burdened with legacy.

(Steve Blank is an adjunct professor at Stanford University.)

Help your team understand what data is and isn’t good for Joel Shapiro

eaders today increasingly turn to big data and advanced analytics in hopes of solving their most pressing problems, whether it’s a drop-off of repeat customers, a shift in consumption patterns or an attempt to reach new markets. What works with locomotives and oil rigs, however, can be far less effective when it comes to influencing people’s behaviors. With social systems and the behaviors generated by large groups of individuals — who does what and under what conditions — it is far harder to identify solutions to problems. This points to the shortcoming of using data analytics

alone for solving problems that arise from individual behavior. Here are five important considerations that everyone who works with big data needs to understand:

— DATA CAN DETERMINE THE “WHAT” OF A PROBLEM: Data analysis is helpful in determining patterns of behavior, both positive and negative — for example, the success of an

organization or enterprise in motivating people to engage in certain activities. — DATA RARELY REVEAL THE “WHY”: In the aggregate, individual behaviors show up in the data, reveal-

ing patterns among certain demographics and groups. Data may prompt people to make assumptions, though they are only guesses about the rationale of others’ behaviors, not a reliable basis for determining the best solution to address a problem. — THE “WHY” NEEDS A QUALITATIVE APPROACH: Whether the social group involves current customers, potential customers, vendors or any other population, the only way to discover the “why” is to engage with them in qualitative research such as interviews, focus groups and observation. — CONSIDER TEMPORAL AND OTHER FACTORS: They also influence behavior, making solutions more difficult to find and less likely to remain effective

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over time. — RIGOROUS TESTING CAN FIND THE RIGHT SOLUTION: With big data analysis and smaller-scale qualitative research combined, organizations can gain deeper insights into both problems and their causes, which can then help inform solutions that are likely to produce a desired result. The best way to know the effectiveness of a solution is to conduct randomized testing using two similar groups: one that is offered the solution and one that is not.

(Joel Shapiro is clinical associate professor and executive director of the program on data analytics at Northwestern’s Kellogg School of Management.)

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MAN eyes 2000MW stranded electricity …wants intensification of resource-based industrialisation ODINAKA ANUDU

h e Ma n u f a cturers Association of Nigeria (MAN) needs the 2,000 megawatts of electricity stranded at the national grid, but wants the federal government to relax requirements for the uptake. In a review of 2018 economic performance, the association says the challenge with the slow uptake of the stranded electricity has to do with stiff conditions for accessing the stranded power, especially the one that expects that Eligible Customers should not owe any of the distribution companies. MAN notes that there is already a legal dispute between the association and the some DISCOs over poor management of the Multi Year Tariff Orders, which led to the claim by the DISCOs

that some manufacturers owe them. “Manufacturers are expectant that government will not allow any increase in electricity tariff in the face of inadequate supply,”

MAN says. “We also expect that government will support stakeholders on the electricity value chain to improve generation, transmission and distribution,” MAN

states, urging the federal government to intervene in the impasse between MAN, DIsCos and Nigerian Electricity Regulatory Commission (NERC) to resolve associated issues.

BASF targets market share with standard technology lab Gbemi Faminu

ASF West Africa (WA), a global brand in personal care and cosmetics products, is targeting a bigger market share in the sub-region with a state-ofthe-art technology laboratory. The first of its kind in the country, the laboratory is expected to bring BASF closer to consumers and enhance customer satisfaction through various innovative solutions for sustainable development of the industry. Speaking at the commissioning of the personal care application technology laboratory in Lagos, Dirk Mampe, vice president, personal care solutions, Europe, stated that “With our broadened presence and the investment in a new application laboratory in sub-Saharan Africa, we can provide on-site technical expertise and market insights to our customers

and support the local development of tailor-made products for the specific needs of African hair and skin.” He said meeting specific requirements of consumers in different markets were key for business growth. Jean Marc Ricca, managing director for BASF West Africa, said that the expansion of BASF’s operations in West Africa, including the opening of the new personal care application laboratory, clearly demonstrated BASF’s commitment to West Africa and the confidence it had in Nigeria and the whole region. While answering questions on revenue generation, Osa Igbinoba, head of sales for Africa personal care, stated that the company provided quality products which met market requirements, adding consumers had no problem paying for the value obtained from the products. He explained that establishment of the lab would reduce the need

for importation of cosmetics. He further said that these products were in high demand, stressing that due to the need for quality and presentation, as well as value and trusts, most consumers tended to prefer imported products. But with a closer reach to the manufacturers and consumers, there would be a better understanding of requirements for the hair and skin care products market in the sub- Saharan Africa. Speaking on maintaining healthy competition among rival clients, Igbinoba stated that the market was very large and heterogeneous so consumers needs varied, adding that the company worked to meet the specified requirements of each manufacturer which had helped them to maintain a healthy competition among all the clients. He further stated that in order to fully understand and meet the requirements of the market, the

staff would be made up of nationals equipped with global standard trainings in collaboration with international competence and expertise. Speaking on challenges, Mampe, on his part, stated that raw materials would be imported as the cosmetics and personal care market had a fragmented product portfolio with a lot of requirements which might be economically impossible to achieve, especially with the company’s high hope of becoming the prevailing partner to all the local customers in sub Saharan Africa. He said there were plans to fully use locally made raw materials in future, stressing that although the sub- Saharan African market was growing at a quick pace, it would be disappointing to base rewards on short-term gains. The BASF started operations in Nigeria 53 years ago and has continued to offer quality service to manufacturers in the cosmetics industry.

In the face of falling nonoil export proceeds, MAN says it believes that the starting point to increasing nonoil export is improving the productive capacity in the real sector, particularly the manufacturing sector. The National Bureau of Statistics (NBS) report shows that the contribution of non-oil exports to total export in 2015 was 12.1 percent, falling to 4.0 percent in 2016 and 4.6 percent in 2017. “We expect that in 2019, government would intensify the resource-based industrialisation programme, which involves the resourceful utilisation of the abundant natural resources in the country for domestic production,” the association says. “We also expect development of key selected mineral resources through backward integration, especially those with high interindustry linkages such as iron ore, zinc-led, bitumen,

lime stone and coal.” It calls on the government to encourage private sector investment in solid minerals development for domestic utilisation with appropriate incentives. MAN also calls for the intensification of backward integration in the agricultural sector to produce more industrial input supply for other sectors. It further urges the government to strengthen the Bank of Agriculture to continue to lend for agricultural production, while resuscitating the petrochemical industry by encouraging domestic refining of crude petroleum. “ There is a need to strengthen the various public research institutes in Nigeria through adequate funding programmes and support the commercialisation of research output. “It is also important to encourage private research institutes in the country through appropriate funding.”

Royal Electronics set to launch Burj Khalifa AC Gbemi Faminu

oyal electronics, a leading brand in home appliances and electronic products, in an effort to continue satisfying customers with quality and affordable products, is set to unveil into the electronics market its newest home appliance known as Burj Khalifa Smart Inverter AC, named after the beautiful skyscraper located in Dubai. The Burj Khalifa Smart Inverter AC, which speaks class and quality with its unique and stylish design, is multifunctional, serving as an ornamental masterpiece while providing extra fast cooling in less than 30 seconds. It is consumer and energy bill friendly as it reduces energy consumption by 70 percent and can be powered with 130 volts, which is the first of its kind. Built with deep research and brilliant innovations, it is equipped with artificial intelligence. It is able to switch and adjust to the weather conditions of the environment and eventually maintain the most suitable temperature required.

The Burj Khalifa comes with a four-way swing, which allows long distance and equal airflow supply in a room while maintaining a constant suitable temperature and operating with an extremely low noise. Built with a copper condenser, it is maintenance friendly and its spectacular cover and gold fin design with dual filter make it able to prevent contact with dust particles or dirt from the environment coupled with its self-cleaning capability. The Royal ‘s Burj Khalifa Smart Inverter AC, is another combination of quality and affordability as it is built with the R410A eco-friendly gas, available to the middle and high income earners and comes with a warranty of 10 years. Royal E le ctronics is known to always build innovative electronic products, and is committed to providing quality and affordable products for consumer satisfaction for everyone regardless of their economic condition, which it has been able to keep up since its establishment in 2006. The product is distributed by Sims Nigeria Limited.

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We will transform Chi products into billion-dollar brands—Coca-Cola president Coca-Cola Company recently completed a 100 percent acquisition of Chi Limited’s juice, dairy, snacks, ice tea, and retail segments. ODINAKA ANUDU had an exclusive interview with Peter Njonjo, president of West Africa business unit of Coca-Cola, after the deal. Njonjo shared the details of the transaction with him. Congratulations on this transaction. How much change should we expect in Chi Limited? ou have to look at what it is that we have acquired. One is that we have acquired the talents—the talents that exist in Chi. You know there is something they are doing right that makes the company successful. The second thing that we acquired is the brands. So far, the brands have resonated with the consumers and they have developed relationships with the brands. So, if you acquire a business and you start significantly changing the brands, there is a risk of you not deriving the benefits that you set out to achieve as a result of acquiring the brands. In companies where we have been successful globally, we acquired the business and, to a great extent, let it continue running. We then figure out what we can get from the Coca-Cola Company that is relative to the new organisation and we just give them that. We do not try to change them, because when you try to change them, you lose why you acquired them. That is, for us, our commitment. You will not see much change from the products standpoint. But you will see a lot more investments going into Chi, focusing on distribution and how we work with our customers. We will train people more, because if you are to grow fast, you will invest in talents. So, we will invest in people. There will be a lot of investments that will come to Chi, but that change will not translate into something that the consumer will see as a distinct difference.

What specific investments should we expect in Chi from Coca-Cola? We are active in the process doing due diligence. Immediately we have an understanding of what we need to invest, we will let you know. Investment is determined by lots of things. For example, last year was a tough year because of issues around naira devaluation and pricing. Of course, demand was not very high last year. But now, we are beginning to see a lot more growth happening. We will not be shy to make sure we make the right investments. At a point when we will have more clarity, we will share with you.

Having acquired Chi, what will now be Coca-Cola’s share of the Nigerian beverage market? I try to be very philosophical when it comes to market share. I see market share as a zero-sum game. We want to think about the market with the way we grow the pile. And the way we want to grow

Peter Njonjo

the pile is, if you think about how much Nigerians spend every day, N310 billion, you will get what is called personal consumption expenditure. Out of that, 60 percent is food and beverage. Commercial, non-alcoholic and ready-to-drink is less than 1.5 percent. The objective is, instead of talking about 1.5 percent, we can grow this number to two percent. And how much of that incremental growth can we capture? Because then, there is actually expansion on the usage of our brands. That is the way we are thinking about market share. I think about it from the growth standpoint. Can you tell me the financial details of this deal? In all honesty, for us, we enter into mergers and acquisitions (M&A) across the world. What you will find is, between two parties, there are normally requests or covenants. For us, as we entered into this conversation, TGI being a private company would want the transaction to remain silent. As a private entity in this part of the world, we would also want the transaction to remain silent. Does that mean we are keeping it away from regulators? That is impossible because we

will have to get certificate of capital importation and how do you get that if the CBN does not know how much is involved? We need to have LCC approval and you will have to disclose the details. Everyone who needs to know in government knows how much has been transacted. How will this acquisition impact your margins? We have a very high exposure to commodities. Juice is a commodity; milk is a commodity, and sugar is a commodity. So, when you have huge exposure, it is about how you manage it. That does not mean it is a less profitable business, but it means it is a different business. It is like somebody who has been selling bicycles buying a car company. If you ask him to estimate his margins, he may not be able to do so immediately. That is why we want to maintain them as separate companies. NBC is a franchisee of the Coca-Cola Company, and Chi is a subsidiary of CocaCola Export Corporation. All these are distinctions that are very clear. Having finished acquisition of Chi, which other company are you eyeing in Nigeria?

After acquiring Chi, I don’t know how many other opportunities will be there in the beverage industry that can give us the synergy that Chi gives us. I think the most important thing is, how can we drive the success of Chi in Nigeria? As we mentioned, Nigeria is a huge market. Right now, there has been a lot of focus on Lagos, but how do we go outside Lagos and reach other parts of the country? And how do we get to other parts of the continent? For example, if you think about the Vietnams of this world, it is very similar in terms of population dynamics with Nigeria. So, the key question is, what can we do to be successful in Nigeria and then build these brands and push them to other parts of the continent? As we mentioned, our objective is to ensure that Chi and Hollandia become billion-dollar brands. For us to achieve that, you need to have a different mindset. We are already in South Africa and we are already launching in Democratic Republic of Congo (DRC). We will be launching in Ghana. In Ghana, we are already exporting from here. We have trucks driving up and down in Accra. For us, it is a huge commitment.

Let me ask you, how much Coca-Cola do Nigerians drink? We do not usually look at the market from that aspect. We look at the market from the standpoint of per capita consumption. When you look at per capita consumption, it is low. What Nigeria makes up for is the number of people who consume. There is a lot of wealth concentrated in Lagos. You will find out that a lot of manufacturing and distribution happen in Lagos, and outside of Lagos, it is down a little bit. With Coke, there is an opportunity, but there is a lot to do. How much local input sourcing should we see with this acquisition? Actually, right now, there is not much local material sourced locally— even in oranges. This is down to the fact that we don’t have large-scale agricultural projects that can competitively produce some of them here. One of the things we want to do is to pursue partners that we can work with to start developing some of these large-scale projects that allow us to source these materials locally. Right now, if you look at Chi and what we do with NBC, we have a decent critical mass to start thinking about local projects. Some of these projects are long-term commitments. They involve

getting the right partners, putting down infrastructure, and ensuring that off-take agreements are well structured. It is quite a bit of work that needs to go in on that space. On the dairy side, it is a lot more longer term, because you need to have the animal with the right yield in terms of milk, which can survive in the Nigerian environment. So, there are many challenges that we will have to overcome. But one of the things that we have to do is to work with government and private sector in some of these projects. We also have development partners that we can work with to finance some of these projects. What is the likely impact of this acquisition on the Nigerian economy? I would look at it from different perspectives. From the employment standpoint, we will even maintain the workforce that we have in Chi today. The key thing is that as business grows, we may continue to create jobs. We also look at jobs from indirect standpoints. If you think about expanding distribution outside of Lagos, it means that our new partners will hire people and buy goods. The retail side of it is, we increase what we have and this will have a lot of impact. From the tax standpoint, our intent is to pay more taxes. We have been very committed to payment of more taxes. As revenue and profitability grow, so will our contributions to Nigeria from tax standpoint. From the Foreign Direct Investment standpoint, Chi may not have the cash-flow. So, there will be some investments that will come in from outside of Nigeria that will support the growth aspirations that we have. Again, it will have an impact in the area of investor confidence. Imagine a situation where investor confidence is going down, and a company like Coca-Cola comes in and invests in Chi. It simply gives impetus to investors and they will begin to see positives in Nigeria.

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Keeping faith with democracy ECONOMIST

NONSO OBIKILI

he elections are finally here and barring any last-minute changes, will hold on Saturday. Nigerians will get to choose leaders and representatives who will run the country for the next four years or so. The focus so far has been on the candidates running for president but let us not forget that we will be voting for our senators and members of the federal house of representatives as well. And two weeks after, we will also vote for state governors and members of state house of representatives. All those elections are important and should not be taken lightly. On the presidential front the main contenders are the APC incumbent Buhari and the candidate for the PDP, Atiku, although one cannot rule out the candidates from other parties as well. At the very least the “third force” candidates look set to do better than at any other previous electionand may even throw up some

bigger surprises at the other contests. Unfortunately, the winner takes all nature of our democracy means doing better may be nothing more than a symbolic victory. On the policy front the two major parties appear to be heading towards some kind of ideological difference. We often complain about how both parties tend to say the same things and do the same things, but this may be the first election in a while where the policy proposals are very different. The Buhari proposal looks to continue the state interventionist policies while the Atiku proposal looks more towards the private sector and markets. Of course, both candidates are not too ideological and its one thing to make proposals and another to implement them. The proposals of the other candidates are interesting as well. Moghalu proposes a more radical transformation of the entire economy. Ezekwesili, who technically is still in the race and will be on the ballot, proposes a renewed focus on human capital. The proposals by Sowore, Durutoye, Fasua, and the others are all worth reading as well. I am not sure Nigeria’s democracy has matured to the point where policy issues are most important, but we are surely once step closer. These elections alsocome at a time when some are questioning the usefulness of democracy. Lured by the

‘

The Buhari proposal looks to continue the state interventionist policies while the Atiku proposal looks more towards the private sector and markets

rise of China and other Asian tigers who have made tremendous progress over the last few decades under nondemocratic regimes, some ask if our democracy can deliver that kind of rapid transformation. Unfortunately, most forget that for every Lee Kuan Yew or Xi Jinping you have a Robert Mugabe, Kim Jong-un, Omar AlBashir and Augusto Pinochet. For every benevolent dictator you have two ruthless ones who ran their countries to the ground. If you had to guess which type we would get then I know where my money would lie. Democracy gives us the opportunity not just pick our leaders but also to remove or at least restrain leaders whose actions we do not accept. This means the leaders we choose can’t do whatever they want, for good or for ill. They may not be able to implement the kind of rapid transformation in Singapore, but they also probably wouldnot be able to turn the country into a Venezuela or Zimbabwe. You don’t need to look far for evidence of this. Faced with a similar crisis in the 1980s it took us sevenyears under various dictators to accept that trying to fix exchange rates was a bad idea. Under democracy this time around it took us eighteen months thanks to a lot of “noisemakers” who may have been rounded up and jailed under a dictator. Eighteen months is bad, but still progress.

Democracy is also not without its merits. Since the transition to democracy we have seen the Nigerian economy transform and grow to the largest economy in Africa and with significant improvement in the quality of life for many, at least until 2015. Still there are challenges, with many others falling into poverty, many without jobs, and large parts of the country increasingly becoming ungovernable. The challenges are many but every four years we get the chance to have our say on how to try to move the country forward. The path to development is unknown and democracy increases the chances that we will somehow figure it out. On Saturday we have the chance again to make our voices heard and cast our votes towards moving the country forward. Although, as we do,we must remember that everyone has the right to vote for whoever they want for whatever reason.Nigeria is a diverse country with multiple interests and maturity means being able to accept that my choices may be different from yours even if we all want the same thing, a better country and a better quality of life.Good luck to all the candidates and I am looking forward to getting on with life after the elections. Dr. Nonso Obikili is Chief Economist at Business Day.

Nigeria president battles perceptions of frailty in poll race - FT Neil Munshi, Kano

ani Abacha Stadium in Kano swelled with tens of thousands of Nigerians standing in the sun for hours as they awaited the arrival of President Muhammadu Buhari. Thunderous cheers erupted as the 76-year old former general shook a broom above his head — a symbol of his party and its claim to be sweeping Nigeria clean. The huge crowd at last month’s rally exemplified Mr Buhari’s near-mythical status in the country’s populous north, whose votes will be key to determining the winner of a presidential election on February 16. But the president’s demeanour also betrayed some of his greatest vulnerabilities in a closer-than-expected race against former vicepresident Atiku Abubakar, the main opposition candidate. The speech lasted all of a few minutes, as have many of Mr Buhari’s campaign addresses. Critics have used such brevity to question whether the president — who has spent months at a time in London seeking treatment for an undisclosed ailment over the past few years — is physically or mentally up to running Africa’s most populous nation for another four years. At a recent televised townhall he seemed to struggle to understand the questions and his vice president answered for him so frequently that the an-

chor was forced to intervene. Along with campaign trail memory lapses and a near fall, the episode gave more fodder to opponents sceptical about his health. Mr Buhari even felt compelled to publicly address one conspiracy theory that he had died and been replaced with a clone, joking at a meeting with Nigerians in Europe in December that “it’s [the] real me, I assure you”. The president’s supporters insist that he remains a guiding force, and that his is just a soldier’s reticence – the same that he exhibited as the country’s disciplinarian military ruler for 20 months in the 1980s. Critics, however, claim that the country is not run by Mr Buhari but by “the cabal” of unelected power-brokers who have long surrounded the president. Even Mr Buhari’s wife Aisha echoed that sentiment in a 2016 BBC interview, suggesting the government had been hijacked by “a few people” who determined presidential appointments. A senior politician close to the president did not dispute that close allies largely drive policy. But he insisted that this was part of Mr Buhari’s style of governance. He focuses on a few themes — anti-corruption, national security and state-led growth — and allows his appointees to meet those ends however they see fit. “General Buhari doesn’t delegate, he abdicates,” the politician said, indicat-

ing he did not see it as a problem. His supporters argue that the style has led to some unfortunate freelancing by subordinates who have overseen troops killing scores of unarmed protesters, fined foreign investors billions of dollars, and used security forces to influence state elections. They have even attempted to shut down the national assembly. Mr Buhari is trusting to a fault, his allies say, and reluctant to eject anyone from his inner circle. Critics accuse him of being soft on those who have served him poorly

or been accused of corruption. On stage at the Kano rally Mr Buhari locked hands with a state governor who was the alleged subject of a series of viral videos in which a man reported to be him is seen accepting stacks of hundred dollar notes. But the president may have found his perfect foil in Mr Abubakar, who has long been dogged by accusations of crony capitalism and corruption, which he denies. Despite allegations of graft among some of Mr Buhari’s closest associates, the president retains a reputation for incorruptibility. He won in

2015 largely because his predecessor’s government was accused of looting billions of dollars from the country’s coffers. This year was supposed to be different. Mr Buhari has overseen lacklustre economic growth, a spike in joblessness and plummeting purchasing power. He campaigned on a promise of robust national security, but deadly crises have flared up across the federation. But Mr Abubakar’s nomination has allowed the president’s campaign to raise the spectre of Mr Abubakar and his People’s Democratic party

returning Nigeria to the graftridden 16 years in which they ruled before Mr Buhari’s 2015 victory. Mohammed Alonge, a 43-year-old who repairs mobile phones in the northern city of Kaduna, said he voted for Buhari in 2015. “Four years down the line, this government deserves more time. I’m not denying the faMct that there are economic problems in the land; I’m not denying the insecurity,” he said. But despite his own concerns about the president’s health, he added: “I don’t trust this man Atiku, so I would rather continue with Buhari.”

L-R: Yemi Osinbajo, vice president; Muhammadu Buhari, president; Akinwunmi Ambode, governor, Lagos State; Adams Oshiomhole, national chairman, All Progressives Congress (APC), and Babatunde Fashola, minister of power, works and housing, during PMB meets organised private sector in Lagos.

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Things fall apart... Continued from back page

faithfuls who publicly invite the biggest rogues to come over to APC (and many obliged) in order to enjoy immunity poisoned the waters further and make us wonder if our President (supposedly high on integrity) is really aware of what is going on around him. Meanwhile, the strongest arguments against Atiku were also those that were bandied around by some of his new friends who were his erstwhile political enemies. All ofasudden,they would have us forget everything bad that they told us before about Atiku. To hold off the Atiku challenge, PMB needs substantial votes from sections of the country that he has indirectly and needlessly told he can never trust to head sensitive security posts. Meanwhile, at election time, the cabal/ kitchen cabinet have taken a temporary back seat, whilst leaving the “untrusted” to lead from the front. The cabal are presumably waiting in the wings to take over and dominate proceedings once again if victory is achieved. If the baboons locked the monkeys out from the dinner table for long periods, when the monkeys were still required to lead the reelection campaign, it is unclear why the monkeys would be let back in after a second and final term is secured. PMB’s campaign has been beset with missteps and personal blunders. Even when interviewers chose to inexplicably handle him with kid’s gloves he managed to misunderstand basic questions and/or to commit one gaffe after another on the campaign trail, thereby portraying himself (to Undecided and swing voters) more like a patient in need of help/sympathy, than a political icon/strongman. Atiku has not taken full advantage of PMB’s missteps either. When PDP’s rickety campaign platforms are not collapsing on account of overcrowding, they have often projected a song and dance spectacle that may be fun to watch for sycophants, but fails to convince the huge army of undecided/swing voters that the change Atiku promises will be in the right direction. Projecting an air of “business as usual” is in my

humble opinion a needless gamble that needs to be corrected. In the belief that every Saint has a past and every Sinner, a future, Atiku would sound more convincing if he was bold enough to admit that he is a past sinner who is now “born again” - a later day economic reformer that is no longer interested in perpetuating past errors which include a measure of profligacy. He could then dare anybody without sin to come forward and throw the first stone. Tough statements on what he will no longer tolerate and the potrayal of a lean and professional team around him would probably be more reassuring and appealing to the Undecided than the monotonous carnival atmosphere that currently trails him. So, PMB is in the lead, but Atiku has momentum because of some recent important endorsements and also on account of the fact that the bulk of the Undecided reside in the four zones where PMB is weakest. In the final week before the Presidential elections the APC faces a “Catch 22” situation. They can hide PMB away to ensure no more embarrassing public gaffes and gamble that Atiku (even with a powerful closing campaign) will still not catch and overtake PMB or they can send PMB out on a final push on the campaign trail and risk more gaffes which may create further doubts in the minds of the huge army of undecided voters and tilt them towards Atiku. Wheeling PMB out without allowing him to speak is a terrible option. A case of dammed if you do and dammed also if you don’t ? Meanwhile, our selected Governorship Polls show APC leading PDP in Kano and Lagos States, but with PDP leading APC in Rivers and Sokoto States. Full details of all these poll results will shortly be made available on the Anap Foundation website.

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Picture 1: Apapa Bridge completely free of trucks on Friday, a day before President Muhammdu Buhari’s campaign visit to Lagos.

Pictures 2, 3 and 4: Apapa Bridge on Sunday, with the trucks returning hours after President Buhari’s visit.

•Peterside, a Commander of the Order of the Niger (CON), is the founder of Stanbic IBTC Bank. He is also the founder and president of Anap Foundation, a non-profit organisation that is committed to promoting good governance. Twitter: @AtedoPeterside

Pious socialist or brash... Continued from back page

ment (EPA) with the EU;remove the petroleum subsidy; and privatise state-owned enterprises, including the NNPC.Atiku says he likes Margaret Thatcher, the pro-free market reformist British prime minister. Well, Thatcher hailed Babangida and his reforms is her book, The Downing Street Years! If elected, Atiku wouldbe, since Babangida, Nigeria’s Thatcherite free-market president! But here’sthe twist to the Atiku/Babangida comparison: the negatives. According to Herbst and Olukoshi, to sustain his economic and political programmes, Babangida allowed side payments, bribes and patronage to flourish. In other words, the tradeoff for Babangida’s reforms was corruption. Atiku has already said, unwisely,that, if elected, “I will enrich my friends”, suggesting a lax attitude to cronyism and patronclient networks. He has also floated the idea of corruption amnesty, which wouldcreat-

ing a moral hazard. Of course, in fairness, Atikualso lays out an elaborate anti-graft strategy in his manifesto.Yet, it is difficult to escape the feeling that Atiku would, like Babangida, see some toleration of graft as an acceptable tradeoff for pursuing his radical economic, political and institutional reform agenda. The choice before Nigerians this week is between a pious socialist whose personal rule and dirigiste policies would scare off investors, trigger capital flight and allow the economy to run aground and a brash, laissez faire, even amoral, liberal, who would transform Nigeria’s economic and political landscapes but be a little relaxed about some slippages on the anti-graft front. If you ask me, Atiku is the lesser of two evils. But you have a choice! •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

Pic by David Apara

Monday 11 February 2019

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38 BUSINESS DAY NEWS How reforms, financial flows can... Continued from page 1 Nigeria, which is in dire need of

investments to grow the economy and provide jobs for a teeming population. That’s because Abuja has maintained its 100 percent ownership of key infrastructure, including rail transport, pipelines, power transmission, stadiums, public universities and tertiary hospitals across the country, effectively limiting options for private investment in the country. Even the oil and gas sector, which has typically attracted the larger chunk of new FDIs to the country, has come unstuck, as a set of fiscal reforms (contained in the Petroleum Industry Bill meant to unlock new investments) has stalled for decades. Incumbent President Muhammadu Buhari, who seeks a re-election at this month’s polls, refused to assent to the bill at the eleventh hour. The lack of investment-friendly reforms has been telling. FDI flows fell to $2.2 billion in 2018, the lowest in 13 years, according to United Nations Conference on Trade and

Development (UNCTAD). “What’s frustrating is that Nigeria’s loss on the FDI front has been a gain for peer countries locked in a global race for capital,” said Kyari Bukar, a former chairman of the Nigerian Economic Summit Group, a private-sector think-tank. Many of Nigeria’s peers recognise the benefits of financial globalisation and have implemented reforms to attract record inflows of FDI, by liberalising infrastructure and privatising a growing share of government ownership in infrastructure assets. With its Liberalisation, Privatisation and Globalisation (LPG) policies since 1992, India is a worthy example of this. Saudi Arabia, with its National Transformation Plan (NTP) announced in 2016 and the 16-sector privatisation programme announced in 2017, is fast becoming another exemplar. Up to the early 1990s, Nigeria had a larger stock of Foreign Direct Investment (FDI) than India, South Africa or the United Arab Emirates. Enter 2018 and Abuja has been left for dead, with India now having more

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than triple, and Saudi Arabia having more than double, Nigeria’s FDI stock. The need to privatise redundant state assets and adopt the model of the efficiently-run Nigerian Liquefied Natural Gas (NLNG), where the government owns 51 percent and the private sector holds 49 percent, is hardly a new counsel to the government, but it has fallen on deaf ears. An overbloated public sector desperate to exert itself on business is a main reason why reforms have stalled, according to Wale Okunrinboye, head of research at Lagos-based Pension Fund Managers, Sigma Pensions. “The public sector is small but looms large,” Okunrinboye said. “There is massive private capital waiting on Nigeria to get its head right in terms of implementing reforms before they start pouring in, but there has been a lack of urgency in pushing those reforms,” Okunrinboye told BusinessDay. Critics of the current government say it has acted as though it has enough cash to make the investments required for sustainable economic growth. They say President Buhari’s absence at the 2019 World Economic Forum in Davos only backs their claim.

The Nigerian government was notoriously absent as the leadership of smaller African countries from Ethiopia to Rwanda were present to sell investment opportunities at the Davos meeting which gathered elite private investors. Ethiopia’s Prime Minister Abiy Ahmed particularly shone at the Forum. Ethiopia is slowly becoming an investor’s delight on the back of a rapid set of reforms being pursued by 42-year-old Ahmed, who is bringing down age-long barriers to investment in a market seen as rival to Nigeria because of the size of its population. The results of Ethiopia’s approach are visible. Ethiopia attracted $3.1 billion in FDI in 2018. That equates to an FDI per head of $29.5. For Nigeria, FDI per head is less than half, at $11. Ethiopia was also the fastest growing African economy in 2018, after expanding 8 percent. Nigeria, on the other hand, marginally grew 1.75 percent as at the third quarter, less than the country’s 3 percent birth rate. “Nigeria must wake up from its slumber before it’s too late,” a business leader who did not want to be named said. “We must understand that financial globalisation has changed the trends of foreign resource inflows into developing countries and begin to key into it,” the business leader said. Up to the early 1990s, Official Development Assistance (ODA) or For-

Monday 11 February 2019

eign Aid was by far the largest inflow to developing economies like Nigeria, being twice as large as any other inflow. Until then, developing countries either relied on export revenue or foreign aid. However, from the mid-1990s, FDI, Remittances and Foreign Portfolio Investment (FPI) caught up with and overtook ODA one after the other, as the countries embraced Financial Globalisation. FDI overtook ODA by 1994 and remained the largest type of inflow until 2016. Remittances overtook ODA in 1996 and remained the second-largest and the most stable type of inflow into developing countries until 2016 when it caught up with FDI, and is now projected to become the largest inflow into developing countries from 2017 onwards. FPI has proved the most volatile of all inflows, often surging past ODA at different points since 1996 but perennially falling below it before surging past it again, backing an earlier claim that FPI is volatile and insufficient in building a sustainable economy. “Sadly, Nigeria is now in the FDI and Remittances relegation zones as we had much bigger shares of both in the past than we do now,” Teriba said. To salvage the situation, Nigeria must not only liberalise key sectors but privatise, by converting corporate assets to financial assets to unlock Brownfield FDI, according to Teriba.

Nigeria targets $30bn annual export... Continued from page 2

L-R: Benedict Okey Oramah, president, Afreximbank; Olukayode Pitan, managing director/CEO, Bank of Industry (BoI); Bakari Wadinga, director, representing ministry of finance incoporated, BoI, and Olufemi Edun, director, representing Ministry of Industry, Trade and Investment, BoI, during the signing ceremony for the Special Economic Zones held at the State House, Abuja.

Oil majors shy on Nigeria, look elsewhere... Continued from page 1

oil majors are betting bigger on

other parts of Africa and the world in terms of investment. Total’s 200,000 barrels per day Egina in Nigeria has started production and will export three cargoes of 3 million barrels ofcrudeeachinFebruary.Royal Dutch Shell recently took final investment decision on Nigeria’s Assa North on gas development project targeting 300 million standard cubic feet of gas perday.Thesewereaboutthebig-ticket investmentsfromtheoilmajorsin2018. ExxonMobil, however, set its investment sail for Australia and has made final investment decision to develop the West Barracouta gas field in Bass Strait to bring new gas supplies to the Australian domestic market. The Texas-headquartered oil major also has investment interests in Africa, but in Mozambique’s Area 4. Co-venture participants, including ExxonMobil, secured liquefied natural gas (LNG) off-take commitments from the partners’ affiliated buyer entities, a key milestone enabling a rapid move toward a final investment decision in 2019 on the first phase of the Rovuma liquefied natural gas (LNG) project. The company has commenced operations of a new coker unit at its Antwerp refinery in Belgium to convert heavy, higher-sulphur residual oils into high-value transportation fuels, such as marine gasoil and diesel. The new

50,000 barrel-per-day unit expands the refinery’s capacity to meet demand for cleaner transportation fuels throughout northwest Europe. British Petroleum has focused on the Clair Ridge project, west of Shetland in the North Sea. This was the sixth upstream major project to come on-stream in 2018, following earlier start-ups in Egypt, Russia, Azerbaijan, the Gulf of Mexico and Australia. BP has sanctioned the first phase of the Greater Tortue Ahmeyim LNG developmentoffshoreintwoWestAfrican countries,MauritaniaandSenegal.The Cassia Compression and Matapal gas projectsinTrinidadwereannouncedin the quarter. In January, BP announced approval of the Atlantis Phase 3 development in the Gulf of Mexico. On 21 December, BP announced final investment decision, subject to regulatory approvals, for Phase 1 of the Greater Tortue Ahmeyim LNG development in Mauritania and Senegal (BP operator 62 percent in Mauritania and 60 percent in Senegal). On 17 December, Sonangol and BP signed an agreement to progress to final investment decision on the development of the Platina field in deepwater Block 18, offshore Angola. Sonangol also agreed to extend the production licence for the BP-operated Greater Plutonio project on Block 18 to 2032, subject to government approval, and for Sonangol to assume an equity

interest in the block (BP operator 50 percent and Sonangol Sinopec International Limited 50 percent). In September, Rosneft and BP agreed to jointly explore two additional oil and gas licence areas located in the Sakha (Yakutia) republic of the Russian Federation. In December, the re-issue was completed of the Kharampurskoe and Festivalnoe subsoil-use licences to LLC Kharampurneftegaz, in which Rosneft and BP own 51 percent and 49 percent interests, respectively. Royal Dutch Shell’s portfolio in 2018 focused on Argentina shales, which has progressed 3 Vaca Muerta blocks into development and up 70,000 barrels of oil-equivalent per day with 80 to 90 percent of Shell’s interest. Shell has also acquired 310,000 acres off the Coast of MassachusettsandNewJerseywithpotential to generate 4.1GW of electricity. Chevron’s net oil-equivalent production of 2.23 million barrels per day in the fourth quarter 2018 was up 156,000 barrels per day from a year earlier. Production increases from major capital projects, primarily Wheatstone and Gorgon in Australia, were partially offset by normal field declines and production entitlement effects. “Our net oil-equivalent production grew more than 7 percent in 2018 to a record 2.93 million barrels per day. We expect that 2019 production will continue to grow by 4 to 7 percent, excluding the impact of asset sales,” said Michael K. Wirth, Chevron’s chairman of the board and chief executive officer.

has made survival difficult for many businesses. For Buhari, the government needs to retain as much control as possible to avoid the chances of corruption he thinks the private sector is likely to stimulate. Agriculture has been a sector successive governments in Nigeria have claimed will be used to diversify the economy and lift millions out of poverty, and Buhari has followed similar rhetoric so far. Buhari’s plan in agriculture is mostly hinged on the Anchor Borrowers Scheme, an initiative of the Central Bank of Nigeria to support input and jobs to 1 million farmers. The Livestock Transformation Plan aims to create 1.5 million jobs along the lines of dairy, beef, hides and skin, blood meal, and crops. There is also an Agriculture Mechanisation Policy with tractors and processors to create 5 million jobs. Noneoftheplans,however,hasspecific or measurable metrics that can be used to ascertain success or failure, neither has the president expatiated on any of this in his several campaign stops so far. Atiku, on his part, says he plans to improve the agriculture sector’s access to financial services through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) by de-risking lending to the sector by commercialanddevelopmentbanks.Healso plans to improve farming productivity throughmodernisationandmechanisationofsmall-scaleagriculturetointerna-

tional levels and offering concessional financing, tax breaks and seed funds. The Atiku campaign policy document states plans to increase agricultural output from the current level of N23.85 trillion to about N40 trillion by 2025. This would imply an annual growth in agricultural sector from 4.11 percent to 10 percent between 2019 and 2025. If elected, Atiku says his government will develop a thriving commodities trading ecosystem. This will not only aid the diversiﬁcation of the economy and foster real GDP growth, but will create jobs within the value chain of the ecosystem, thereby engendering inclusive growth. Buhari’s plans for the oil and gas sector are not clear, save for his insistence that the Nigerian National Petroleum Corporation (NNPC) will continue to be run as it is. But for Atiku, the mission appears simple: privatise the state-owned NNPC that has been grossly underperforming and is a hub of uncontrolled corruption. Government ownership of the company, Atiku opines, has been fuelling the organisation’s inefficiency. He is also aiming for more transparency and efficiency in management of institutions in the oil and gas industry. In his plans, Nigeria will start refining 50 percent of its current crude oil output of 2 million bpd by 2025.

•Continues online at www.businessday.ng

5 reasons Nigeria might not just be Africa’s... Continued from page 2

areas if it, indeed, wants to remain a nation to reckon with in coming years. Considering key performance metrics, Nigeria is a laggard among peers in Africa. Business environment A gauge to assess business environment is the World Bank’s Ease of Doing Business Rankings. This metric ranks countries against one another on how their regulatory environment supports doing business. A comparative analysis between 2017 and 2018 rankings showed that some notable African nations had improvement while for Nigeria, the

ranking deteriorated. Egypt jumped eight places higher to the 120th position; Kenya moved 21 spots higher to 61st position; Rwanda moved 12 places higher to 29th; Ghana moved six spots higher to 114th, while Nigeriadippedbyaspotto146thin2018. Little wonder the country recorded the biggest decline in FDI inflows in 13 years, at $2.2 billion, for 2018. Nigeria that used to be the largest recipient of foreign investment flows in West Africa has been dethroned by Ghana.

•Continues online at www.businessday.ng

Monday 11 February 2019

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BUSINESS DAY

CITYFile Obaseki decries assault on lady accused of phone theft IDRIS UMAR MOMOH, Benin

Fire fighters rescuing a vehicle gutted by fire during an accident at the Toll-gate area, Ota in Ogun State.

Pic by David Apara

Iju-Abeokuta train: 15 communities protest absence of access road to school

ifteen communities in Ogun State affected by the completed section of Iju-Abeokuta train of the Lagos-Ibadan rail have called for provision of access. The Federal Government on Friday in Lajire, Ogun State, inaugurated the three months free test-run of the completed rail project. The new road built for the communities was under the bridge and is currently waterlogged. Ogunwale Olukunle, chairman of Akinseku-Elefun/Jangede community, said that for two months now, children in the community could not go to school. “I really want to appreciate the government for the rail development that is passing through our community, which will help us a lot but we have a problem with access road out of the community.

“We are very happy about the school that the government built for us, the school we had was small and it was demolished because of the tracks. Now the one they built is bigger and better. “But the problem we have at the moment is the road to the school, which is under the bridge and not motorable or accessible with foot because of water,” he said. Olukunle appealed to the government to help construct a road that would allow their children attend the new school. Also, Idowu Bashiru, the chairman of Elefun/Jangede community, said they came out to appeal to government in the interest of their children’s future. Bashiru said they would be satisfied with a walkway to allow their children and wards attend school. According to him, the villages affected included Alagbayum, Abata, Gbagura,

Akinseku, Asaka, Isa, Sokan, Ijimere, Elefun and Jangede. Olarenuaju Aderekan, who spoke on behalf of the Ba’ale in the area, said the only access road can only take one vehicle at a time. He said they were happy with the administration because of their focus on infrastructure, noting that the state government had also done its own part. The minister of transportation, Rotimi Amaechi, directed the managing director of the Nigeria Railway Corporation (NRC), Fidet Okhiria, to look into the issue and resolve it. He, however, apologised to the communities for any inconveniences the project has caused them. Amaechi added that the villagers showed exemplary conduct during the project execution by not being violent.

Rivers: Indicted officials to face prosecution over 7-storey building collapse

overnor Nyesom Wike of Rivers has vowed that any official indicted over the collapsed 7-storey building on Woji Road in New GRA, Port Harcourt, would be duly prosecuted. Wike spoke during the presentation of reports by two judicial commissions of inquiry instituted by the state government. The commissions are the Judicial Commission of Inquiry on 7-storey Building Collapse and the Judicial Commission of Inquiry on Management and Affairs of Integrated Medical Industries Limited (Auto Syringe Factory). He said: “Let me assure you that we wouldn’t have wasted our time and resources setting up the commissions of inquiry. The reports will be duly implemented. “Anybody indicted for the collapsed building will face the law. If you are connected to the deaths of people, we will

prosecute you for murder.” He said that any government official serving or retired who was indicted would face the full weight of the law. The governor gave the assurance that his administration would implement the reports of the two commissions. He announced the setting up of a 7-member committee to take immediate steps for the implementation of the recommendations of the two commissions of inquiry. Wike said that the Rivers government would take measures to re-structure and professionalise the state ministry of urban development and physical planning. On the Integrated Medical Industries Limited (Auto Syringe Factory), he said that government could not be taken for granted. Adolphus Enebeli, chairman of the commission of inquiry on building

collapse, said approval process at the ministry of urban development and physical planning was a “mangled mess of procedures.” He said that the gory details of the videos were enough to force out tears from the strongest of men. The commission’s chairman said from findings, the current commission of inquiry was the most incisive x-ray of the operation of the ministry. Enebeli, urged the governor not to allow the report to be confined to the dustbin of inaction, in deference to those who died in the building collapse. Constance Green, the chairman of the second commission of inquiry, in his four-volume report, expressed the hope that the governor would implement the report, adding that the recommendations of the commission were in line with its 10-point terms of reference.

do State governor, Godwin Obaseki, has condemned the assault on one Favour Ada, over the alleged theft of a mobile phone, in the Ugbiyoko area of Benin, stressing that the state would never tolerate the reign of lawlessness or resort to self-help in managing crime. In a statement by the special adviser to the governor on media and communication strategy, Crusoe Osagie, the governor said: “The gruesome and dehumanising attack on the lady is condemnable without equivocation.” He commended the police, lawyers and members of the civil society for forming a solid campaign to fish out the lady’s attackers and urged the police to ensure that justice is served in the matter. According to him, “The campaign on violence against women and children is a major thrust of our government. So, we see this case as serious and are committed to bringing the perpetrators of the disgraceful act to justice.” Noting that the state government prioritises law and order, the governor said, “we believe that due process must be followed in addressing issues of alleged theft. The resort to self-help is unacceptable as we have established agencies of government that deal with such issues using the laws of the land.” Obaseki commended the police for the prompt response to the attendant public outcry, noting “the proactive step of the police command in arresting the attackers is commendable. I urge the police to get to the bottom of the case and ensure other persons involved in the incident are arrested, thoroughly investigated and charged to court for assaulting the young lady.” The governor urged members of the public to join in condemning jungle justice and all acts of violence which infringe on people’s fundamental human rights.

Man bags 1 year for stealing generator

Grade 1 Area Court, Karu, Abuja, has sentenced 25-year-old Isiaka Ibrahim to one year imprisonment for stealing a generator worth N120,000. The judge, Sani Mohammed, however, gave Ibrahim, resident of Wuse 2, Abuja, an option of N30,000 fine. The convict, who had pleaded guilty to the charges, urged the court to temper justice with mercy, promising that he would never commit crimes again. Earlier, the prosecutor, Vincent Osuji, had told the court that one Charles Isah of Abuja Electricity Distribution Company (AEDC), Wuse 2, Abuja, reported the matter at Maitama police station, Abuja, on January 10, 2019. Osuji said that the complainant alleged that on same date, the convict stole his generator valued at N120,000. He also informed the court that the convict was caught in the act and that during police investigation, he confessed to committing the crime. The prosecutor said the offence contravened the provisions of Sections 348 and 288 of the Penal Code. NAN

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Monday 11 February 2019

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42 BUSINESS DAY NEWS Nigeria, other central banks watch as others pick value in gold reserves www.businessday.ng

TEMITAYO AYETOTO

n a trend where cautious central banks are bolstering their gold reserves to manage rising macroeconomic and geopolitical pressures, Nigeria and other African countries appear to have pitched tent with a passive audience. Central banks buying ticked its highest point in 50 years, as net purchases rose 74 percent higher year-onyear to reach 651.5 metric tons in 2018, according to the World Gold Council (WGC). The multi-decade high in demand volume is concentrated among Russia, Turkey and Kazakhstan, and is seen as the highest level of annual net purchases since the suspension of dollar convertibility into gold in 1971. Gold demand in 2018 reached 4,345.1 tons, up from 4,159.9 tons in 2017, and was boosted in the fourth quarter by 112.4 tons of ETF inflows. The greater pool of these banks was increasingly driven to see value in gold as a diversifier on concerns over heightened geopolitical and economic uncertainty that rocked 2018. The hiccups refocused their attention on the principal objective of investing in safe and liquid assets. According to a WGC survey, 76 percent of central banks still view gold’s role as a relevant safe haven asset, 59 percent cited its effectiveness as a portfolio diversifier

and almost one fifth of central banks signalled their intention to increase gold purchases over the next 12 months. Russia, seen to be defending its reserves against dollar impact, bought 274.3 tons in 2018, the highest level of annual net purchases on record and the fourth consecutive year of over 200 tons purchases, with funding from almost total sale of its US Treasuries portfolio. Russia’s gold reserves have increased for 13 consecutive years, growing by 1,726.2 tons over the period to total 2,113 at the end of the 2018. The Central Bank of Turkey increased gold reserves by 51.5 tons in 2018, the second consecutive year of net purchases, 40 percent lower than the 85.9 tons it bought in 2017, when it re-entered the market after a nearly 25 year absence. Kazakhstan’s gold reserves rose 50.6 tons in 2018 to 350.4 tons 2018, marking the eighth consecutive annual increase. On a monthly basis, its reserves have risen for 75 consecutive months, with net purchases totalling an impressive 246.4 tons over that period. Having been passive for two years, China announced that its gold reserves had increased by just less than 10 tons in December, to 1,852.2 tons. Gold accounted for 2.4 percent of its total reserves at year-end, up from 2.3 percent at the end of 2017, while FX reserves fell $67 billion over the year to $3.1 trillion. But gold reserves in Nige-

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ria remained unchanged at 21.40 tons in the fourth quarter of 2018 from 21.40 tons in the third quarter of 2018. Nigeria’s gold reserves averaged 21.37 tons from 2000 until 2018, reaching an all-time high of 21.40 tons in the first quarter of 2018 and a record low of 21.37 tons in the second quarter of 2000. Analysts believe the country might have enough on its plate already with the struggle to grow its foreign reserve than eyeing gold “Gold tends to perform very well when addressing inflation. Last year because we had this global inflation generally, headline inflation in the US and some other countries increased and probably prompted the higher gold buying by the banks,” Omotayo Abimbola, fixed income analyst at Ecobank, said. “For, Nigeria, it might probably want to keep more cash for liquidation instead of buying. They might want to stay heavily exposed to financial securities rather than have precious metal. It depends on their reserve management strategy.” Nigeria’s foreign reserves was at $47, 361 billion as at last April, far from Russia’s $466,900 billion and Turkey’s $98,315 reserves. Amid times of market crisis, gold unlike a fiat currency can help stabilise economies. It could be pledged as collateral or sold to raise liquidity in a foreign reserve currency.

Work culture, others top millennial’s appetite for jobs … as IT/tech industry emerge best working condition MICHEAL ANI

igeria’s youthful population who are working and those seeking jobs say three underlining factors increase their productivity and enable them to stay longer and grow with the firm. This is according to key findings from a survey by Jobberman, a Nigeria job site connecting qualified job seekers with employers, titled “Millennials and the digital marketplace.” The survey captured responses from 5,380 actively employed Nigerian employees within the ages of 18-38 years using a case study of Andela, an African company known to identify itself and develops Africa’s most talented software developers. Apart from good salary, proximity to home, career prospects and job security, Millennials who responded to the survey ranked im-

proved work culture, ensuring a sense of pride, and a diverse and Inclusive Workforce as top three factors that stimulate and increase their productivity in the workforce, without frustrating their interests and ambitions. According to the report, work culture refers to shared beliefs, values, ideologies and traditions of an organisation. To ensure millennials are productive, employers should encourage improved work culture rather than rigid systems. “An employee-centric work culture boosts job ownership, being innovative, employee engagement and productivity, among millennials,” the report said. Some of the components of an improved work culture as identified by the survey include equipping millennials to work remotely, ensuring flexible work hours, group recreation or team bonding activities and extensive healthcare programs. 54.8 percent of respond-

ents consider flexible working hours as a factor that motivates them the most to accomplish their tasks at work. Employers need to understand that their employees are their biggest marketing channels and once employer’s vision and goals evoke admiration from the millennial workforce, it will encourage impact, productivity, and customer satisfaction and overall, creates a better reputation for the organisation. According to the survey, 43.7 percent of the respondents affirmed that a company’s mission and values were very important to them. “To ensure a more productive millennial workforce, employers must have strong/relatable company values/goals, commit to social corporate responsibility, encourage open communication channels and also acknowledge and reward millennials,” Ayodeji Adewunmi, CEO of Jobberman, said.

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NCC stresses need for 9mobile to get new technical partners JUMOKE AKIYODE-LAWANSON

igerian Commu n i cat i o n s Commission (NCC) has stressed the need for 9mobile to get new investors to demonstrate technical competence in managing the operations of the telecommunications company. Umar Garba Danbatta, executive vice chairman of NCC, who received the new management of the board of 9mobile led by Nasir Ado Bayero, chairman, at the NCC headquarters in Abuja at the weekend, called on the 9mobile management to address its institutional structure by ensuring that core professionals were hired to pilot its activities towards delivery of good quality of service (QoS) to its consumers, whose confidence in the fortune of the telecoms company had been re-ignited. The regulatory body said

the health of the company was of utmost importance to the industry, hence, “the interventions at the initial stage of take-over from Etisalat (now 9mobile) became necessary in order to address the decreasing subscriber base on 9mobile, save the country from image problem, instil investor’s confidence in the telecoms market and prevent loss of jobs among Nigerians. “By successfully midwifing the take-over of 9mobile by new investors, we are happy that the joint regulatory interventions have culminated in the stabilisation of the telecom industry as well as calming frayed nerves in the financial services sector of the economy. One can imagine the consequences to these two important sectors of the economy, if we had not intervened in a timely manner,” Danbatta said. The NCC chief specifically called on the management of 9mobile to ensure it runs a process-driven

operation that make all its stakeholders happy on a long-term basis in line with the provision of the 2016 Code of Corporate Governance for Telecommunications Industry, whose provisions had become mandatory on all licensees to comply with. Earlier, Nasir Ado Bayero told his host that his company was appreciative of the role NCC had been playing in piloting the affairs of the telecoms industry. “I would like to take this opportunity to thank the NCC for giving us this chance to explain and present ourselves to the Commission. We are most grateful to the EVC and we, indeed, commend the NCC’s collaborations with the CBN and Federal Government for intervening at the time they did,” he said. In his remarks, Stephane Beuvelet, acting managing director of 9mobile, who was excited that the telecom company had been put on the path of rebound,

said in the last three months of having new management and board in place, “9mobile subscriber base rose from 15.3 million to over 16 million.” Beuvelet said 9mobile subscribers stood at over 20 million before the crisis started but dropped to around 15 million in the wake of the incidence that led to its being taken over by new investors. Beuvelet added that the number of subscribers on its Long Term Evolution (LTE) platform subscribers stood at 192,000 back in November 2018, but had now exceeded 235,000. “What all these data point to is that we have actually, in a sense, restored trust in our subscribers who reactivated their Subscriber Identity Module (SIM) cards and we are quite pleased about this rebound which we are ready to sustain. However, we will continue to seek the support of the regulator in sustaining our investment in Nigeria,” he said

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FG to begin 90-day free passenger service on Lagos-Abeokuta rail corridor MIKE OCHONMA & STELLA ENENCHE

conomic and social activities between Lagos and Ogun states will soon receive a boost following the commencement of free passenger train services from Iju to Abeokuta by the Federal Government. The free train services will last for three months. Nigeria’s minister of transportation, Rotimi Amaechi, who made this known last Friday in Abeokuta to mark the completion of the Iju in Lagos and Abeokuta, Ogun State axis, said the commencement of the 59-kilometre distance passenger service was the first activation of such services along the Western corridor under Lagos-Ibadan section of the ongoing Nigerian Railway Modernisation Project. Amaechi, who was accompanied by the governor of Ogun State, Ibukunle Amosun, Adedotun Gbadebo, an Oba and the Alake of Egba land, Gbenga Ashafa, senator representing Lagos East, and other members of the National Assembly, said: “This is not a commissioning ceremony. We just decided to put the train on the track to convey passengers for three months free of charge.” The minister commended the Ogun State government and the host communities where the standard gauge rail tracks were constructed for their peaceful conduct and hospitality while the

project lasted, describing it as the third standard gauge in Nigeria after that of ItakpeWarri and the Abuja-Kaduna rail corridors. According to Amaechi, ‘‘the first rail tunnel in Nigeria is in Ogun State. This work is not free of charge, you will have to pay for it and the only way to pay is for you to vote. If you want us to take the project from Ibadan to Kano, then we need your vote. Vote for APC, that is all we are asking for but this train will run from tomorrow (Saturday) free of charge and I will compel them to do about three trips a day so that more persons can go to work in the morning and come back in the evening. “We are also trying to build our stations and in a year’s time, we would have finished the stations and everything will be running normally and then you will be paying your money.” He also promised to address some of the issues raised by communities that include access roads, provision of schools, restriction of movement of community members, lack of overhead bridge and potable water. Nobel Laureate Wole Soyinka expressed contentment over the project, disclosing that his house was very close to the rail track. Soyinka said he was at the event to see what the government used the natives’ hunting ground for, stressing that he was however contented with what he saw.

Cooking gas supply faces setback as NIMASA detains supply vessel L-R: Ariyo Olushekun, director, Central Securities Clearing Systems (CSCS) plc; Bola Ajomale, managing director, National Association of Securities Dealer (NASD) plc; Olutola Mobolurin, chairman, board of directors, NASD plc; Layi Fatona, managing director, Niger Delta Exploration and Production Company (NDEP) plc, and Ayodeji Ebo, managing director, Afrinvest Securities, at a breakfast meeting organised by NASD recently, where CSCS, NDEP and Afrinvest were recognised for their outstanding impact on the stock market in 2018.

Nigeria exceeds OPEC’s 1.69mbpd oil production quota in January OLUSOLA BELLO

espite the quota imposed on it crude oil production by the Organisation of Petroleum Exporting Countries (OPEC), Nigeria’s crude oil production for the month of January 2019 was put at 1.87 million barrels per day (mbpd), a fall of 30,000bpd from the previous month but output remains well above its quota of 1.69mbpd, which OPEC currently imposed on the country. Going by this development, the country produced a total of 56.1mbpd for the period under review. If this figure is multiply by the daily average price of crude oil in January, which was put at $56.58, it then means the

... 0.8mpbd above OPEC quota ... realises about $1.9bn as revenue total value of the crude oil produced in Nigeria was $3.1 billion. The Nigerian government owns 60 percent equity held on her behalf by the Nigerian National Petroleum Corporation (NNPC), this equity translates to $1.9 billion while the remaining $1.2 billion goes to the joint venture partners. Andy Olotu, former managing director of Schlumberger, says the country has the potential to produce higher volumes of crude if given the opportunity to do so. According to Olotu, the deepwater production must have contributed in great measure to this volume, since the NNPC is not a joint partner with those that operate under the Production

Sharing Contract (PSC), because of this not all the $1.9 billion revenue may go to the Federal Government. The country based its 2019 budget on 2.3mbpd of crude oil production, benchmarked against $60 per barrel of oil. Africa’s largest oil producer is expected to see its crude production rise by almost 20% due to the start-up of the giant 200,000bpd offshore Egina field, with exports to kick off this month. Nigeria’s ministry officials insist some of the country’s crude should be categorised as condensate, which is not subject to production limits. According to S and P Global Platts, OPEC pumped the fewest barrels since March 2015 in January,

with crude output plunging to 30.86mbpd, a fall of 970,000bpd from December as new supply quotas went into force. The month-on-month fall was the biggest since December 2016, the survey found, with Saudi Arabia and the UAE leading the group in production discipline, while Libya kept its largest oil field offline due to security risks. OPEC+ members agreed to reduce oil output under the agreement signed late last year. This agreement has achieved 76% of their required cuts in January, with their production falling 619,000bpd from October, the benchmark month from which the quotas were determined, except for Kuwait, which is using November.

OLUSOLA BELLO

he supply of Liquefied Petroleum Gas (LPG) to domestic market may encounter serious setback if Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigeria Liquefied Natural Gas (NLNG) are not able to resolve the issues arising from non-compliance with the nation’s Cabotage Law. This is because the chartered vessel by the NLNG that has been bringing LPG, otherwise known as cooking gas, to domestic market through Lagos port from Bonny was detained by NIMASA for going against the Cabotage Law, as it does not have Nigerians a part of its crew members. The implications of the non-resolution of the issue early enough is that the product could become scarce and subsequently lead to increase in price. The vessel is the one dedicated to supply of LPG to the domestic market across the country, and carries over

13,000MT. The issue got to its crescendo last week with NIMASA detaining the vessel at the NOJ, one of the berthing space especially dedicated at the NNPC owned jetty at Apapa. It was released after the intervention of prominent stakeholders including the Presidency on Saturday. However, its release does not mean the issue has been resolved. Under the Nigerian law all foreign vessels operating charter services in Nigeria waters are supposed to have a certain number of Nigerians on board as part of its personnel. The vessel - Navigator Capricorn - on lease to NLNG since last year has been having a running battle with NIMASA over their operations in Nigeria, being a foreign vessel. The vessel berthed at the jetty about 13 days ago and had finished discharging gas to major gas depots in Apapa including PPMC, Nipco, major oil company’s facility as well as 26 off-takers of NLNG and billed to sail out before NIMASA clamped down on it.

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Experts hinge Nigeria’s economic recovery on election outcome FRANK ELEANYA

… forecast exchange rate stability mid 2019

or Nigeria’s economy to be on the part to full recovery, the outcome of the election slated for February 16 will have to be deemed successful, irrespective of whoever wins the election, according to experts last week at a breakfast business meeting organised by NASD plc. Election year in any country always finds investors holding back on their level of capital commitments until

the period passes. These experts say Nigeria is no different; however, the heightened political tension in the country makes the situation more precarious for businesses and investors. Thus, a respite is likely when after the election, the winner is magnanimous in victory and the looser congratulates the victor, just like in 2015 when former President Goodluck Jonathan who lost the election called the winner, President Mu-

FG allocates land for Afreximbank’s medical centre of excellence HOPE MOSES-ASHIKE

ederal Government of Nigeria has allocated a 5.12-hectare piece of land in Abuja to the African Export-Import Bank (Afreximbank) for the development of a centre of excellence for medical services to serve Nigeria and the West African sub-region. The centre of excellence, the first by Afreximbank in Nigeria, will be completed within 24 months after a groundbreaking exercise expected to take place in December. Afreximbank is developing it in collaboration with Kings College Hospital (KCH), United Kingdom, serving as the strategic partner. Afreximbank said allocation of the land, which took place on January 29, would allow for project development activities to proceed in order to ensure the timely delivery of the project. The centre will provide specialist healthcare to improve the quality of health care for Africans and will promote intra-African medical tourism. It will also create employment and facilitate the conservation of the foreign exchange that would otherwise be utilised to seek medical treatment outside Africa. It will offer a full spectrum of medical services, including diagnostics, clinical management, post care and onsite ambulatory services, in treating oncology (cancers), haematology (blood diseases, including blood cancers, and sickle cell anaemia) and cardiology diseases. It will also provide prompt, life-saving detection and management of chronic diseases to over 50,000 Africans annually. The centre is expected to create about 500 direct jobs and to be the basis for the emergence of a comprehensive medical park with facilities to be managed by KCH.

hammadu Buhari, to congratulate him. Bola Ajomale, managing director/CEO of NASD, said businesses listed on the platform were anxious to know what the outcome of the elections would be. A successful election will mean the outlook for 2019 is very bright for the business community and investors. “A lot will depend on the outcome. If there is a quick resolution then, yes, the country will continue. If there

is no quick resolution, then we are going to be in trouble. When there is trouble or peace it will reflect on the market,” Ajomale said. Nigerian economist, Doyin Salami, noted that other indices that could put the economy on a sure footing include the fiscal policies of the new government. Should the incumbent President win the election, will there be economic reforms? Salami observed that the sluggish growth had also re-

flected in the direction of the 2019 budget. Nigeria’s economy is experiencing a fragile and weakening economic recovery pace, as the country has failed to grow higher than its population rate of 2 percent at the moment. The current economic growth rate is 1.8 percent and the Central Bank of Nigeria (CBN) has warned that the country could slip back into recession. “Expect a tighter monetary policy,” Salami said, saying in addition, a win for the incumbent was likely to see current exchange rates

as well as the interest rates maintained at the level they were, at least for the first half of 2019. This could change if the main opposition defeats the incumbent. “Will the opposition appoint a new CBN governor?” Salami said the scenario could be retaining the current CBN governor until his tenure expires by June 2019, which also gives ample time to whoever is the new president to appoint a new CBN governor. The economist expressed concerns over Nigeria’s continued dependency on oil

Monday 11 February 2019

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Trade politics major reason for rejection of Nigerian exports – economic adviser OSA VICTOR OBAYAGBONA

s a follow up to President Muhammadu Buhari’s visit to Lagos State Saturday, the Federal Government on Sunday attributed trade politics among nations as one of the major reasons some of the country’s exports were facing rejections in some destination nations. This was disclosed by Adeyemi Dipeolu, special adviser to the President on Economic Matters, Office of the Vice President, at an interactive session with the press in Lagos. Due to international politics, most destination countries opposed the country’s exports because Nigeria had taken a stand on imports from such countries, Dipeolu said. In today’s politics, it would be difficult for the present administration to harm its local industries for the benefit of a foreign nation, the presidential aide said. It could be recalled that in recent times some major Nigerian export commodities, such as yam, beans, and dry catfish, had faced rejections in the various destination nations, with the destination nations saying the produce might

not had met their import standards. A case at hand is Nigerian cocoa exports being rejected in some Asian countries leading to the exporters losing million of dollar. And in some cases, there prices are reviewed downward, and all these go a long way to discourage famers and produce exporters, and in some cases creating artificial unemployment. The presidential aide said the present administration would not allow the importation of certain goods in which Nigeria had a comparative advantage, saying some of these countries reject as retaliation, because the Nigerian government refused to allow the country to become a dumping ground. “For instance, yams said to be grown in a neighbouring country are accepted by most advanced and developing countries, whereas the yams are grown in Nigeria. The exporters buy the yams in Nigeria and export it from their own country. “It is all trade politics that will eventually balance out. So, it is better to be self-sufficient in food production than to rely on the importation of such food items,” he said. According to Dipeolu, it is not advisable for Nigeria to

deplete its foreign reserves for food importation as this can make the people to spill over the borders in search of food. To him, the Federal Government had not signed the African Continental Free Trade Area (AfCFTA) agreement in order to save Nigeria from being a dumping ground for foreign goods. He said the country needed to carry out due diligence on such agreement to ensure that the agreement would not negatively affect the local industries. On the issue of power, he said the country’s power generation had reached 8,100mw, saying the government was working on the transmission lines to end epileptic power supply in some parts of the country. “The way to go is that the government is working on gas and other environmental friendly means to provide adequate power to the people,” he said. The country’s economy was more than N100 trillion, he said, saying further that the government alone could not finance the economy, whose growth rate was on the rise, and urged private sector to come to the aid of the government to provide an enabling environment for the economy to bloom.

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Avant Halogen debuts to tackle rising cyber security, identity mgt theft CHUKA UROKO

s part of efforts at repositioning and transfor mation, Halogen Security Company Limited, an enterprise security risk management solution company, has unveiled new identity management and outsourcing solutions company known as Avant Halogen. The setting up of this new company is the company’s response to rising identity management theft and cyber security related challenges. By this action too, Halogen’s talent risk management has evolved into a full-fledged subsidiary focusing on identity management, background and due diligence checks and outsourcing solutions. Halogen services has garnered extensive experiences and supported many reputable organisations across the Nigerian business landscape to better manage outsourcing, identity management and due diligence services. To fully optimise its po-

tentials, Avant Halogen will be operating with a distinct corporate identity whilst functioning in synergy with other Halogen operating companies. As a key subsidiary of Halogen Group - Nigeria’s premier enterprise security risk management organization - Avant Halogen is structured and empowered to be the nation’s pre-eminent identity management, talent risk and outsourcing solutions provider. Avant Halogen has undergone significant transformation in the past few months and while its corporate identity shares a common emblem that visually integrates all Halogen operating companies, its vision remains that of being the benchmark centre for biometric verification, background check, digital aided identity and credentials confirmation as well as outsourcing solutions that cater to all cadres. The company is positioned to innovatively tackle identity, talent risk, verification and outsourcing issues

affecting multinational companies, institutions, parastatals, government security agencies, corporate bodies and the general public. To fully optimise its potentials, Avant Halogen, whilst operating with a distinct corporate identity, will function in synergy with other Halogen Security subsidiaries in a unique model of integrated value delivery Halogen calls the ‘power of one’. “We are delighted to announce the birth of a new company from the Halogen Group; the new company is a product of the deep transformation at Halogen Security. This is a redefinition of our unique talent risk management services. The new company is empowered to deliver best-in-class services in the area of identity management and talent risk solution for the Nigerian and the West African economic landscape,” Wale Olaoye, Halogen’s GMD, explained in a statement. “Avant’s vision will be driven by professionals with track records in the industry.

Influencer marketing report debuts in Nigeria

otts Media House, a digital agency, has released the firstever Influencer Marketing Report in Nigeria. The maiden edition of the report, which gives detailed overview of Nigeria’s social media landscape with a comprehensive data analysis and facts about influencer marketing with focus on perceptions, trends, challenges, misconceptions, and projections within the industry will continuously explore industry trends and genuine data analysis for a yearly report. With over 500 respondents and a combined effort and contribution of relevant stakeholders in the industry, who represent brands/ agencies, CEOs, content consumers, content creators, social media influencers and marketing professionals, the major goal of the Influencer marketing report is to put the Nigerian social media landscape on the global map with the objective to majorly express the state of this form of marketing in Nigeria. Tiwalola Olanubi Jnr, founder/CEO, DottsMediaHouse, speaking on the report at the social media week 2019, said the aim for The Nigeria Influencer Marketing Report was to serve as a reference material to brand managers/advertisers/social media enthusiasts and of course influencers in any future industry analysis. “The research will help brands/advertisers understand the need to take influencers marketing as a seri-

ous part of their marketing plan, while also helping influencers themselves build a better career model, and push individuals who are fit to be influencers across the nation realise their potential,” Olanubi said. DottsMediaHouse, a La-

gos-based digital marketing agency, with specialisation in delivering digital solutions to leading brands across Africa, launched in 2014 with a vision to provide a platform that creates digital success stories through effective campaigns.

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Ahead of elections, Nigerians demand better economy ENDURANCE OKAFOR

ew days to the general election, Nigerians have demonstrated in a twitter poll by BusinessDay that a better economy is top priority of the issues the next president will have to fix. Among the seven categories that attracted a total of 6,228 votes, 34.22 percent or 2,131 voters opted for the economy, and this is higher than those that voted for Gender Equality (762 votes), Education (718), Anti-corruption (704), Security and Healthcare (656 votes each) and Infrastructural (601). Responding to the poll, Ayo Teriba, CEO of Economic Associates, said, “It makes sense.” Meanwhile, an economy encompasses all activity related to production, consumption and trade of goods and

services in a country, and this applies to everyone from individuals to entities such as corporations and governments. According to Paul Uzuma, managing director of Halo Nigeria Capital Limited, the economy touches everyone, including “the rich, the middle class and the poor.” Income is one of the most significant factors in measuring economic performance, and Gross Domestic Product (GDP) on the other hand is the most commonly used measure of a country’s economic activity. “When we say economy, we are concerned with what is happening to employment,” Uzuma said. The BusinessDay survey reveals that the new minimum wage, recently increased by 50 percent, an increase after about 10 years since the last uptick to N18,000 in 2010, does

not increase real income value of the state’s citizens due to the persistent devaluation of the naira. But it however increases debt levels of states, significantly assuming debt as a major source of financing new wages. Meanwhile, the purchasing power of most Nigerians has been on the decline, restrained by a 23 percent unemployment rate. Figures by the National Bureau of Statistics (NBS) show that 20.9 million Nigerians as of Q3 2018 were unemployed, an uptick in unemployment rate to 23.1 percent from the previous rate of 18.8 percent released in the third quarter of 2017. “The two leading candidates have about a week to make the case that they are better able to create jobs. It is the one issue most Nigerians care about,” Rafiq Raji, the chief economist at Macroaf-

ricaintel, told BusinessDay. Responding to unemployment in the country, Uzuma cited the over 3 million Nigerians that lost their jobs in 2018, “considering the multiplier effect, and assuming each of these 3 million people support 4 dependants like children or aged parents, it means 15 million people have lost their livelihood.” Meanwhile, Nigeria’s GDP year-on-year growth rate stood at 1.81 percent in Q3 2018 as against its 1.50 percent reported for the previous quarter. Quarter growth was fuelled by the non-oil sector growth and contribution at 90.62 percent and 98.62 percent, respectively. The GDP growth reported for the third quarter of 2018 represents the six consecutive fragile growth reported for Africa’s largest economy since it exited a five-quarter contraction in Q2 2017.

L-R: Oluseyi Olanrewaju, chief financial officer, Vodacom Nigeria; Ijeoma Anadozie, associate director, Nigeria, The Association of International Certified Professional Accountants; Noel Tagoe, executive vice president, Academics, The Association of International Certified Professional Accountants, (AICPA) (The Unified Voice of Chartered Institute of Management Accountants and AICPA); Babatunde Osho, managing director, Metrofile, Nigeria, and Rabiu Olowo, chief internal auditor, Friesland Campina, at the launch of CIMA - AICPA 2019 Syllabus in Lagos. Pic by Pius Okeosisi

AFEX identifies poor investment in rural tech infrastructure as bane to agric funding TEMITAYO AYETOTO

olving the biggest challenge facing agriculture in Nigeria lack of access to funding - may not yield practical results without the commitment of necessary investment in core technological infrastructure within remote communities where majority of agricultural activities take place, Akinyinka Akintunde, business development manager at AFEX Commodities Exchange Limited, says. The concentration of most telecommunication infrastructure in urban centres is a challenge he says has continued to affect the penetration of banking solutions developed to ease farmers’ access to credit facilities and

flexible payment systems. Already, there is a $200 billion gap in smallholder finance globally, and 15 percent of them are in subSaharan Africa, according to data from The Human Account. Agriculture in Nigeria attracts only 1.7 percent of the total lending by banks, despite contributing 42 percent of GDP. Of the 40 million adults, who are financially excluded, 76 percent are rural dwellers engaged in agricultural activities. “70 percent of agency banking solutions is in commercial centres because they speak to people who are already tech-savvy with new and improved technology that they can ride on to make their lives easier with transactions, but are not in

these rural communities,” Akintunde says, addressing “Payment Systems: the Rural Experience” at the Exchange’s Code Cash Crop session during the Social Media Week. “When you go to where farmers cultivate their lands the most, you will discover there is absolutely little or no telecommunication facility there. We need financial products but these products cannot be made available if they don’t have a core infrastructure around them.” Although investments to promote agriculture are often dreaded by financing institutions, the AFEX manager believes avoiding it also locks up opportunity to grow the agricultural sector above 23.23 percent point.

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Monday 11 February 2019

Buhari commissions cancer centre to advance treatment in Nigeria ANTHONIA OBOKOH

resident Muhammadu Buhari Saturday inaugurated the Nigeria Sovereign Investment Authority (NSIA) and Lagos University Teaching Hospital (LUTH) advanced Cancer treatment centre in Lagos, with a pledge to ensure that facilities for the prevention, early diagnosis and treatment of the disease are available to many more Nigerians. ‘‘We are aware that up to 40 percent of funds spent by Nigerians on medical tourism is attributable to patients seeking treatment for cancer,” the President said at the inauguration ceremony of the state-of-the-art Centre in LUTH, Idi-Araba. According to the president, despite having an increasing number of citizens suffering from cancer, Nigeria until now had only two working radiotherapy machines in the country. ‘‘Working through the NSIA and LUTH we utilized a PPP model that unlocked investment capital to directly address this issue. We will replicate this model across the country to bring quality, first-class healthcare services to as many Nigerians as we can,” he pledged. Buhari said the objective of the event was not just to rejoice and cheer at the conclusion of months of hard work to achieve this purpose. Neither was it, he said, merely to celebrate the “successful completion of the most modern and best-equipped Cancer treatment centre in West Africa.” ‘‘Indeed we are proud, but we recognize that this modest effort to address the gaps in our tertiary healthcare system alone is insufficient to address all the challenges

faced by the sector,” he noted. What the nation did that day, he said, was to showcase the exploits that Nigeria can accomplish “when we are together, unrelenting in our effort to deliver a common objective.” ‘‘No one ever prays to be diagnosed with Cancer, but if they are, what we have made possible here today is the hope that a true chance of survival and good quality of life becomes part of the story of many Nigerian patients with cancer,’’ he said. The project is an $11 million-dollar investment for the rehabilitation, equipping and operation of an existing cancer centre co-located in LUTH, which will provide advanced radiotherapy and chemotherapy treatment services. Uche Orji, CEO of NSIA, said in 2016 the organisation announced its investment strategy in healthcare, which was to partner with teaching hospitals and federal medical centres in a Public Private Partnership to develop areas of excellence in healthcare. According to Orji, following months of project development, the NSIA-LUTH Cancer Centre was built in a record time of nine months and at a cost of approximately $11million. “Once it’s fully operational, the facility will be the largest outpatient cancer treatment centre in West Africa and is expected to treat as many as 80 and perhaps up to 100 patients a day,” Orji said. “It is small in the context of the needs we have in Nigeria, but it’s a start,” he noted. Chris Bode, the Chief Medical Director of LUTH, said that the Centre has three Linear Accelerators, a Brachytherapy Machine, a Treatment Planning System, and a Chemotherapy Suite.

Businesses’ optimism slides as confidence index dips 4.6 points ISRAEL ODUBOLA

he overall confidence index about the macro-economy for the first month of 2019 dropped by 4.6 points monthon-month to 25.9 points compared with 30.5 points in the previous month, according to Business Expectations Survey Report, published by the Central Bank of Nigeria. Although the confidence index for January stood positive at 25.9 points, however respondent firms in the services, industry, wholesale/retail and construction sectors stated that their activities last month were marred by insufficient power supply, harsh economic climate, unfavourable political climate, weak demand and high interest rate among others.

Other challenges identified by respondent firms include financial setbacks, lack of material inputs, insufficient demand, competition, lack of access to credit, unclear economic laws and labour law problems. The Business Expectations Survey Report, a monthly publication, measures the confidence of businesses and firms about the Nigerian economy. Emmanuel Noko, lead researcher at M&C Research Institute, posited that drop in business confidence about the economy is not unconnected to slow recovery of the economy and elevated political tensions. “Looking at recent happenings, it is obvious that slow growth is causing a lot of problems. Worse still, the pri-

ority of government right now is on elections,” Noko said, adding that structural reforms might begin in the second half of the year. Across sectors, the major drivers of optimism in January were services (13 points); industrial sector (10.9 points); wholesale & retail trade (1.5 points) and construction sector (0.5 points). The positive outlook based on type of business in January was triggered by businesses that are not import- or exportoriented (17.6 points), both import- and export-oriented (4.2 points), import-related (3.5 points) and export-oriented (0.6 points). Respondents’ outlook on the volume of total order and business activity stood on a positive note last month at 16 and 16.4 points, respectively.

Monday 11 February 2019

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Odunayo Oyasiji

By Perchstone & Graeys’ Employment Law Team

The status of the modern worker- who is my employer?

ecades of breathtaking technological evolutions have produced complex s t r u c t u re s t h a t have transformed/disrupted the world of work. These innovations have introduced novel employment arrangements, which are increasingly dynamic and somewhat independent; but at the same time present challenges, particularly with respect to the categorization of “virtual” or “technology assisted” relationships. Admittedly, these age-old arrangements had allowed principals avoid certain obligations such as pension contributions, insurance, gratuity,amongst others. It is therefore not surprising that in the wake of modern awakening in different parts of the world, workers, such as ridesharing drivers, have engaged in fierce judicial struggles to be ‘properly’ classified. Before now, the traditional work place largely entailed the execution of a paper-based contract, physical presence of the employee, and most importantly, a clear classification and structure of the employment relationship. A worker engaged as an administrative officer, for instance, was aware of the identity of his/her employer, as well as the employer’s contractual and/ or statutory obligations to him/ her. However, decades of breathtaking technological evolutions have produced complex structures that have transformed/ disrupted the world of work. The introduction of Artificial Intelligence (AI) has changed the work place structure as we understand it, and introduced novel employment arrangements, which are increasingly dynamic, employer-remote and

somewhat independent. TECHNOLOGY DISRUPTION Owing to the rapid development of technology, the modern workforce is becoming increasingly flexible, readily available on digital platforms, with assigned tasks easily executed from anywhere. Today, organizations, through digital platforms, can seamlessly engage workers from a pool of potentials, available to execute different administrative and even technical functions. Usually, these platforms are guided by a seemingly unilateral contract in the form of Terms and Conditions. These Terms and Conditions are, in most cases, accepted by a mere ‘click’, with little or no regard for the content. More often than none, these Terms and Conditions do not adequately capture the relationship of the parties; this does not, however, affect the binding nature of same, directly or in terms implied by the court.

It suffices to say that these innovations are not without their challenges, particularly with respect to the categorization of “virtual” or “technology assisted” relationships. The absence of a proper classification raises the question as to whether such engagements constitute employment relationships or independent contracts. Admittedly, some of these unclassified arrangements have allowed principals avoid certain obligations such as pension contributions. It is therefore not surprising that, in the face of modern awakening, workers have engaged in fierce judicial struggles to be ‘properly’ classified. An example is the case of Oladapo Olatunji & Anor (Representing themselves and other Uber and Taxify Drivers in Nigeria in a Class Action) V. Uber Technologies System Nigeria Limited & 2 Ors. , wherein the Claimants sought, amongst other things, for a declaration that all Uber/Taxify drivers were

Meaning of deed of gift A deed of gift is a gratuitous arrangement transferring the legal ownership and physical control of a property. The person giving the gift is the donor while the beneficiary is the donee. It must be noted that the gift deed is not in exchange for any consideration or payment. It is purely gratuitous. There are different types of gifts- intervivos gift (gift given during the lifetime of the donor), gift Mortis Causa (made in contemplation of the death of the giver) and testamentary gift (gift given out in the will of a deceased person). A gift deed that is executed and delivered to the done is irrevocable except for some circumstances. The circumstances

are – gift transferred with the intention to defraud creditors, where donor does not have the legal capacity to give out the gift, where the gift was fraudulently given out. Therefore, gift deed is a legal means of giving out prop-

employees of Uber/Taxify and as such, entitled to certain employee benefits. They contended that they were engaged subject to certain conditions (vehicle standards and maintenance, charges per trip, code of conduct, etc.), and work was periodically assigned for which they were paid ‘weekly wages’. While the Court dismissed the case largely as a result of the Claimant’s failure to provide sufficient facts and evidence to inform a substantive determination, a hint was made as to the relevance of Section 91(1) of the Labour Act in the determination of the status of an employee/contractor. The type of relationship created through the Uber App is a typical example of the various modern/outsourced relationships for which many workers now seek clear classification of their employment status. This is relatable to the multiple apps in the market today, through which cleaners, lesson teachers, admin staff, etc. are ‘hired’; which of

the parties, between the platform provider and the end-user, would be liable for the statutory/ contractual obligations arising from the engagement of workers through such digital platforms? Is the contract to personally execute the work between the owner of the digital platform and the worker, or between the worker and the end-user? Interestingly, the UK Employment Appeal Tribunal in UBER B.V v Aslam (albeit merely persuasive) recently held that there was indeed “a contract between Uber and the drivers whereby the drivers personally undertook work for Uber as part of its business of providing transportation services to passengers in the London area”; the UK Court of Appeal held that the contract between Uber and its drivers did not reflect the reality of their relationship. CONCLUSION It is hoped that, once another opportunity presents itself, the National Industrial Court would clearly define the status of the modern employee, especially with respect to the unique arrangements in the face of evolving technology. While we wait for such a clear- cut direction, it is important for parties to ensure guiding documentation is clearly defined, which aptly states the status of each party and the actual nature of the relationship, including risks and liabilities. This is especially because, whilst the court is obligated to respect the sanctity of agreements, it may disregard the written contract and determine the relationship based on the facts if, in its opinion, the written terms do not reflect the reality of the relationship.

Legal implications of occupying or managing a property used for internet fraud

erties while the donor is still alive. There have been situations where properties were shared by a rich father and deed of gift perfected while the father was still alive. This sometimes goes a long way to prevent disagreement after the death of the parents.

ection 3 of Advance Fee Fraud and other Fraud Related Offences Act, 2006 provides that “A person who, being the occupier or is concerned in the management of any premises, causes or knowingly permits the premises to be used for any purpose which constitutes an offence under this Act commits an offence and is liable on conviction to imprisonment for a term of not more than 15 years and not less than five years without the option of a fine.” The above simply shows that an occupier, owner or a person who is responsible for managing a property stands the risk of standing trial and being jailed when it is established that the premises is being used for internet fraud and the person knows. The interest of an occupier, owner or persons

managing premises should go beyond just collecting rent on the property, what the people living in the premises do for a living also matters. Any hint that the property is being used for internet fraud should be taken seriously. The penalty prescribed by the law for a situation where the owner, occupier or someone managing the premises knowingly allow it to be used for internet fraud is a minimum of 5 years and maximum of 15 years without the option of fine.

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Monday 11 February 2019

CITYFile Obaseki decries assault on lady accused of phone theft IDRIS UMAR MOMOH, Benin

Fire fighters rescuing a vehicle gutted by fire during an accident at the Toll-gate area, Ota in Ogun State.

Pic by David Apara

Iju-Abeokuta train: 15 communities protest absence of access road to school

Rivers: Indicted officials to face prosecution over 7-storey building collapse

Man bags 1 year for stealing generator

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Italy’s populists attack central bank and regulator Strains within coalition as campaigning ramps up ahead of EU elections Miles Johnson

taly’s coalition government is in sharp disagreement over protecting the independence of the Bank of Italy, after senior politicians threatened to remove its leadership. Matteo Salvini, head of the anti-immigrant League party, said the central bank and Consob, the country’s stock market regulator, should be “reduced to zero, more than changing one or two people” and that “fraudsters” who inflicted losses on Italian savers should “end up in prison for a long time”. The comments drew a strong response from Giovanni Tria, Italy’s economy minister, who said on Sunday that independence of the Bank of Italy “must be defended”. Luigi Di Maio, leader of the anti-establishment Five Star Movement, had also criticised central bankers alongside Mr Salvini over the weekend, speaking to an audience of former stakeholders in two rescued Italian banks. “We cannot think of confirming the same people who were in the directorate of the Bank of Italy if we think of everything that has

happened in recent years,” Mr Di Maio said. The coalition’s targeting of the Bank of Italy comes after central bankers issued more pessimistic economic growth forecasts for this year compared with the numbers underpinning the government’s budget. Data last month confirmed that Italy entered into a technical recession in the second half of last year, with the Bank of Italy cutting its prediction of economic growth for 2019 to 0.6 per cent compared with a 1 per cent forecast made by the government. Mario Draghi, president of the European Central Bank and a former governor of the Bank of Italy, last year warned that central bank independence was under threat by populist governments, while not making a direct reference to Italy. Mr Di Maio and other Five Star ministers have said they want to block Luigi Federico Signorini, the deputy director-general of the Bank of Italy, from renewing his term, according to a report in La Repubblica. The newspaper reported that the Italian cabinet was divided on the issue. Earlier this month the government nominated Paolo Savona,

Europe turns on spending taps as austerity comes to an end

Bloc embraces fiscal stimulus to combat sharp economic slowdown

Chris Giles

t is a sea-change that is happening almost without fanfare. Across Europe, years of often painful austerity are coming to an end, as governments ranging from the traditionally profligate to the more conservative loosen the purse strings and embrace the need for fiscal stimulus. The easing of European budgets has been visible in the budgetary plans for some time, but it is only now, with the European economy suffering an unexpected and sharp economic slowdown, that it has become one of the main avenues for avoiding a serious downturn. More by accident than design, economists believe the injection might, this time, be well-timed. Erik Nielsen, head of research at UniCredit Bank, said it showed that governments were alive to the risks that the continent’s weakening economic outlook could worsen — and that the European Central Bank was no longer the only option when it comes to addressing problems, particularly in the struggling industrial sector. “It is too early to be optimistic about the economic data,” he said. “That said, in [Europe’s government] ministries the mood and willingness to do something is very different from the austerity years.”

The continent’s fiscal stimulus is far from a huge Donald Trump-style tax cut for business, but it has shown up in the economic assessments of leading international organisations. The European Commission noted last week that a slide into recession was likely to be avoided, partly as a result of the member states’ “expansionary fiscal policy stance”. The commission’s latest figures on structural changes in eurozone members’ budgets from November do not include many of the more recent injections of money. But even at the end of last year, the three largest eurozone economies — Germany, France and Italy — were all planning a fiscal stimulus worth at least 0.4 per cent of national income in 2019. This is a significant number, but still only about a quarter of the US fiscal stimulus between 2017-2019, according to IMF figures. Economic thinking has shifted considerably since the early years of this decade, and is now comfortable with higher debt levels. This is particularly true because the burden of servicing the debt has been falling as economic growth improved. In a recent report on sovereign borrowing, the OECD said the balance between interest rates payable on government debt and the growth of advanced economies had “improved considerably and slowed growth in debt-to-GDP ratios in recent years”.

Italy’s populist government attacked leaders of the country’s central bank and its stock market regulator at a campaign event on Saturday © Reuters

who had previously served as minister for European affairs, as the new president of Consob. Mr Savona, a Eurosceptic veteran economist, had last year been blocked as the coalition’s first choice as economy minister by Italian president Sergio Mattarella. The coalition partners have

also ramped up anti-establishment rhetoric as they prepare to run against each other in the European parliamentary elections in May, a contest widely seen as a proxy for national polls. Both Mr Salvini and Mr Di Maio have also increased their attacks against targets including the EU and French president Emmanuel

Macron. In recent weeks, the League and Five Star have openly squabbled over the future of an Alpine rail line and migration, while the two leaders’ repeated attacks against France have triggered a diplomatic crisis that last week saw Paris recall its ambassador from Rome.

US companies warn investors of mounting Brexit risks Threat of disorderly exit from EU prompts growing alarm in American boardrooms

Alistair Gray and James Fontanella-Khan

orporate America is sounding an alarm over mounting Brexit risks, beefing up warnings to investors as boardrooms worry that a disorderly departure threatens international business. With less than seven weeks to go before the UK is due to leave the EU, several S&P 500 groups have for the first time put Wall Street on formal notice of the risks should London and Brussels fail to reach a divorce deal. In its “risk factors” published on Friday, defence contractor Lockheed Martin said a persistently depressed sterling after Brexit could “negatively impact the ability of the UK government to afford our products”. McCormick, the Maryland food group behind French’s yellow mustard, said no deal would lead to additional border inspections and “likely” result in an “increased cost of goods imported into and exported from the UK”. Expedia, the online travel company, noted “uncertainty as to the manner and timing of the withdrawal”. “Depending upon the outcome, we may have a material and adverse impact to our business.” US-listed companies are required to catalogue in annual filings with the Securities and Exchange Commission the “most

significant risks” facing them, and include “material changes” in quarterly updates. A wide range of potential risks is typically listed, from terrorist attacks to epidemics, and their inclusion does not mean the company believes they are likely to materialise. Several have warned about Brexit in previous filings. However, lawyers who advise some of America’s biggest companies said the extra information and stronger language in the latest batch — released in recent days after quarterly earnings — showed executives were taking Brexit risks increasingly seriously. Valerie Ford Jacob, a New Yorkbased partner at corporate law firm Freshfields Bruckhaus Deringer, said the SEC had called on US companies to provide more detailed Brexit disclosures. While banks and other financial institutions had been preparing for Brexit for several months, she added, companies in other sectors had been further behind. In its annual SEC disclosure on Friday, Cadbury owner Mondelez said: “In the case of a hard Brexit, our exposure to disruptions to our supply chain, the imposition of tariffs and currency devaluation in the UK could result in a material impact to our consolidated revenue, earnings and cash flow.” Cerner, a $18bn market capitalisation health IT company based in Missouri, said “limited

progress so far in the negotiations” increased the possibility of the UK leaving without a deal and “significant market and economic disruption”. Google parent Alphabet, while not spelling out the possibility of no deal, said it “may be unable to effectively manage” post-Brexit volatility in foreign exchange. Even US companies with limited UK operations have added Brexit to their risk factors because of the threat of global economic disruption. “US multinationals identify Brexit as one of their highest risks at the moment, even if their business has only a marginal exposure to the UK and the EU,” said Frank Aquila, a partner at Sullivan & Cromwell. Marty Lipton, a founding partner at Wachtell, Lipton, Rosen & Katz, said: “The uncertainties of the negotiations have been troubling and a matter of concern to executives and in the boardroom.” Battery maker EnerSys said the consequences for the UK and EU economies were “unknown and unpredictable, especially in the case of a hard Brexit”. Lockheed Martin said the most probable near-term effects “are likely to reflect the pressure Brexit is placing on the UK government”. The disclosure added: “Currently, we do not anticipate that Brexit will have a material impact on our operations or our financial results.”

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FT Sudan wages a vicious campaign to silence journalists

US ramps up air strikes against Somali extremist group

I grew up watching censors rip apart my father’s newspaper, now they have forced me out of Khartoum

Rise in al-Shabaab fatalities is doing little to stem the group’s influence Tom Wilson

Yousra Elbagir

he state crackdown on civil unrest in Sudan is a beast with many ferocious heads. The most vicious: a violent offensive that has seen peaceful protesters beaten, shot and tear-gassed by government forces, and a targeted assault on the doctors that heal them. As the regime’s brutal tactics to quell the popular uprising went on full display, a secondary clampdown on the media was set in motion. It has left me writing this piece from London and not in Khartoum, where I have been reporting since the protests began eight weeks ago. A week after one of our Channel 4 News reports on Sudan aired in the UK, I received a panicked phone call from the National Security and Intelligence Service head of foreign news at the Ministry of Information. The report was about a man called Yassir Ali, who had been shot by a sniper while peacefully protesting in the capital on Christmas Day. He was arrested by masked security agents while the bullet was still lodged between his lung and spine and they made it clear to him and his wife, who we interviewed in the piece, that they wanted this bullet back. The government had been systematically interrogating cameramen to find out who was filming these reports — they were careful not to approach me directly after a recent physical confrontation between me and armed forces caused a scandal. Eventually, I was told over the phone that the government was going to file a criminal case with the charge of “inciting hatred against the state” and that Yassir’s wife would be forced to stay in the country to testify against me in court. A successful conviction would have led to me receiving a sentence of life imprisonment or the death penalty. I was flown out later that night before I could be placed on a no-fly list with my movements paralysed by court proceedings. My evacuation is just one symptom of the government’s public campaign against “agitators”, a metaphor used to describe journalists covering the uprising who — by default — amplify the anti-regime chants of the protesters and expose the methods used by the state to silence their calls. Since the start of this wave of protests on December 19, 70 reporters have been arrested and six foreign correspondents have had their press accreditation withdrawn. Adam Mahdi, a reporter in Nyala, South Darfur, has been sentenced to three months in prison for allegedly violating state law. Last week, reporter Hussein Saad was reportedly dragged out of a taxi and arrested by security forces in broad daylight. Two days later, they ambushed the offices of Al-Jareeda, a newspaper, and arrested journalist Ali al-Dali. It was the third week of a governmentimposed publication ban. The next morning, Sudanese president Omar al-Bashir met with newspaper editors and announced a pardon of all detained journalists. Mr Saad, Mr Dali and 10 other jailed reporters were released over the weekend. But today, authorities arrested journalist Durah Gambo as she covered demonstrations in Omdurman and Adam Mahdi is currently serving his prison sentence in Darfur.

Friday 11 February 2019

Nigeria president battles perceptions of frailty in poll race Supporters say Muhammadu Buhari is ‘guiding force’ but question his resilience Neil Munshi

ani Abacha Stadium in Kano swelled with tens of thousands of Nigerians standing in the sun for hours as they awaited the arrival of President Muhammadu Buhari. Thunderous cheers erupted as the 76-year old former general shook a broom above his head — a symbol of his party and its claim to be sweeping Nigeria clean. The huge crowd at last month’s rally exemplified Mr Buhari’s nearmythical status in the country’s populous north, whose votes will be key to determining the winner of a presidential election on February 16. But the president’s demeanour also betrayed some of his greatest vulnerabilities in a closer-than-expected race against former vice-president Atiku Abubakar, the main opposition candidate. The speech lasted all of a few minutes, as have many of Mr Buhari’s campaign addresses. Critics have used such brevity to question whether the president — who has spent months at a time in London seeking treatment for an undisclosed ailment over the past few years — is physically or mentally up to running Africa’s most populous nation for another four years. At a recent televised townhall he seemed to struggle to understand the questions and his vice president answered for him so frequently that the anchor was forced to intervene. Along with campaign trail memory

lapses and a near fall, the episode gave more fodder to opponents sceptical about his health. Mr Buhari even felt compelled to publicly address one conspiracy theory that he had died and been replaced with a clone, joking at a meeting with Nigerians in Europe in December that “it’s [the] real me, I assure you”. The president’s supporters insist that he remains a guiding force, and that his is just a soldier’s reticence – the same that he exhibited as the country’s disciplinarian military ruler for 20 months in the 1980s. Critics, however, claim that the country is not run by Mr Buhari but by “the cabal” of unelected powerbrokers who have long surrounded the president. Even Mr Buhari’s wife Aisha echoed that sentiment in a 2016 BBC interview, suggesting the government had been hijacked by “a few people” who determined presidential appointments. A senior politician close to the president did not dispute that close allies largely drive policy. But he insisted that this was part of Mr Buhari’s style of governance. He focuses on a few themes — anti-corruption, national security and state-led growth — and allows his appointees to meet those ends however they see fit. “General Buhari doesn’t delegate, he abdicates,” the politician said, indicating he did not see it as a problem. His supporters argue that the

style has led to some unfortunate freelancing by subordinates who have overseen troops killing scores of unarmed protesters, fined foreign investors billions of dollars, and used security forces to influence state elections. They have even attempted to shut down the national assembly. Mr Buhari is trusting to a fault, his allies say, and reluctant to eject anyone from his inner circle. Critics accuse him of being soft on those who have served him poorly or been accused of corruption. On stage at the Kano rally Mr Buhari locked hands with a state governor who was the alleged subject of a series of viral videos in which a man reported to be him is seen accepting stacks of hundred dollar notes. But the president may have found his perfect foil in Mr Abubakar, who has long been dogged by accusations of crony capitalism and corruption, which he denies. Despite allegations of graft among some of Mr Buhari’s closest associates, the president retains a reputation for incorruptibility. He won in 2015 largely because his predecessor’s government was accused of looting billions of dollars from the country’s coffers. This year was supposed to be different. Mr Buhari has overseen lacklustre economic growth, a spike in joblessness and plummeting purchasing power. He campaigned on a promise of robust national security, but deadly crises have flared up across the federation.

Dollar store customers unconvinced by proposed change to pricing Activist fund says inflation has made the discounter’s $1-an-item strategy untenable Alistair Gray

Manhattan-based hedge fund manager thinks he knows what is best for Dollar Tree. Starboard Value’s Jeff Smith argues the US discount variety chain should stop insisting on pricing every item — from spatulas to sunglasses — at only $1. But 760 miles away in suburban Nashville, customers are unconvinced. “They’d lose a lot of business,” reckons Vicky Lewis, 37, laden with bags in a Dollar Tree car park. “We need more affordable stores, not less.” The nurse returned to the Nashville area recently from a lengthy stint in California and was surprised at the cost of living. She visits the Madison dollar store frequently to supplement trips to Walmart and has just spent $12 on snacks for the family. Demand from customers such as Ms Lewis has fuelled a dollar store boom. The 2008 crisis turned tens

of millions of Americans into newly frugal bargain hunters and the businesses have expanded rapidly ever since — in some areas, at the expense of local shops. The rise of discount retailing is a global phenomenon: so-called 100 Yen Shops are doing well in Japan, while the UK has several pound-store chains and the German discount grocers Aldi and Lidl are opening about 100 stores between them each year. In the US, the three largest domestic brands — Dollar General, Dollar Tree and Family Dollar — now have more than 30,000 outlets, more than double the number of Starbucks cafés. Trump-voting rural towns are a particularly favoured location, although Dollar Tree is popular in the suburbs and the dowdier Family Dollar has a foothold in gritty innercity areas. The Dollar Tree chain alone is opening stores at a rate of about six a week. Founded in 1986, the parent group now employs more than 56,000

people and is forecast to produce $23bn in revenues this year. Despite the seemingly unstoppable rise of value-focused retailing, Dollar Tree’s recent financial performance has underwhelmed. The company has struggled to revive the fortunes of the underperforming Family Dollar, which it bought in 2015 for about $9bn. Dollar Tree shares have lost 4 per cent over the past year while its rival Dollar General is up more than a fifth. Starboard, a $6bn fund that has pushed for change at other retailers including Macy’s and Staples, took a 1.7 per cent stake last month. Along with his call for the company to explore a sale of Family Dollar, Mr Smith has made his demand for it test differently priced items in Dollar Tree a centrepiece of the activist campaign. Dollar Tree was originally known as “Only $1.00” before it changed its name in 1993, but in contrast to the two other chains it has continued to sell everything for a buck.

S air strikes killed more than 100 militants in Somalia in January — one of the deadliest months since Washington’s air offensive against al-Shabaab, the Islamist extremist group, began in 2007. The casualties reflect a dramatic escalation in the use air strikes against the Somali extremist group since President Donald Trump took office. The air offensive is part of one of Washington’s most active — and least discussed — military campaigns anywhere in the world. In 2018 the US staged 47 air strikes against al-Shabaab targets — almost one a week — killing at least 326 suspected militants, according to figures compiled from statements made by US Africa Command, also known as Africom. So far this year, Africom has executed 12 strikes, killing another 115 al-Shabaab fighters, according to the statements. The surge in US air attacks, which are in support of the Somali national army, is the result of a 2017 policy change by the Trump administration that gave the Department of Defence greater latitude to authorise strikes. Previously, under guidelines established by President Barack Obama, air strikes outside of active US conflict zones needed to be vetted by multiple agencies and could only be approved if the target posed a “continuing, imminent threat” to the US. The shift has taken an unprecedented toll on al-Shabaab’s rank and file, leaving more than 500 fighters dead in the past two years. But despite its losses, the Islamist group continues to stage attacks against military, government and civilian targets inside and outside of Somalia, raising doubts over whether the US strategy can ultimately help stabilise the troubled nation. After 24 militants were killed in a January air strike on an al-Shabaab training camp north of the capital, Mogadishu, the group claimed responsibility for two separate bombings in quick succession: an attack on an Ethiopian military base in southern Somalia, and another on a shopping mall in Mogadishu that killed 11 people. “The tempo is higher, but nobody looks like they are losing” said Hussein Sheikh-Ali, a former security adviser to the Somali government and founder of the Hiraal Institute, a security think-tank in Mogadisghu. Under President Obama, the US staged fewer air strikes that targeted senior al-Shabaab officials, according Mr Sheikh-Ali. The Trump administration’s campaign, under the direct control of the Pentagon, appears to be targeting foot soldiers, he said. “It seems [al Shabaab] is losing low-level soldiers, who are easily replaceable with two to three months training.” Major Karl Wiest, a spokesperson for Africom, said the air strikes targeted personnel, fighting positions, infrastructure and equipment, as part of wider counter-terrorism operations aimed at reducing al-Shabaab’s ability to recruit, train and plot attacks in Somalia and the region.

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Have central banks lost their nerve?

The key concerns for the week ahead

FT reporters

erhaps the highest-profile pullback last week came from the Bank of England, which used its quarterly Inflation Report to cut its economic growth forecast to the lowest point in 10 years. It also scrubbed out its intention to raise interest rates several times in the coming months. Blame the usual culprit: Brexit. It remains painfully difficult to construct a sensible bullish case for sterling until the form of the bitter divorce from the EU takes shape. Budging far from $1.29 to the pound is proving to be hard work. But it is not only the BoE that has caught a dose of the collywobbles. The US Federal Reserve has also buckled in the face of market volatility. Also last week, the Reserve Bank of India surprised markets by cutting its benchmark rate by a quarter of a point. With all those nerves jangling, it is easy to understand why markets are uncertain. On that, an interesting point from Richard Falkenhall, senior currencies analyst at Swedish bank SEB: “Today, median FX forecasts for Q2 2019 are mostly pointing sideways . . . Given all the uncertainty out there, we doubt that sideways FX forecasts reflect a strong conviction of stability. This is simply evidence of indecisiveness and confusion about the future, where the FX market will head and what will be the trigger for the next major move.” Katie Martin Is it time to short the US dollar? January was a challenging period for dollar bulls, especially after the downbeat tone US policymakers sounded on the final day of the month. In February, the question is

whether it is time to take out negative bets on the dollar. After an initial softening in the greenback following the Fed’s rate decision, the broad dollar index, which measures the currency against a basket of peers, clocked up six consecutive days of gains to stand about one per cent higher by Friday evening. The rally cleaned out some of the negative bets that had been made after the Fed’s January meeting. “It’s been a rough week for dollar shorts,” said Stephen Gallo, European head of FX strategy at BMO Capital Markets. HSBC is standing by its positive dollar call, despite the change in tone from the US central bank. The dealer argues that the picture for global growth is softening, which bodes well for “safety” assets such as the dollar. “The market may have been quick to turn its back on the dollar, but we are not for turning and we remain dollar bullish,” HSBC analysts said. Eva Szalay How did US stockpickers fare in 2018? The performance of US stockpickers deteriorated in 2018 as just 38 per cent of actively managed equity funds outperformed their average passively managed peer over the 12 months to the end of December, according to the Morningstar, the data provider. That number was down from 46 per cent in 2017. Supporters of active management have long argued that quantitative easing since the financial crisis and a decade of ultra-low interest rates have artificially suppressed stock market volatility. Active fund managers kept saying their skills would shine once volatility returned to more normal levels.

HSBC’s Mark Tucker to become chair of TheCityUK lobby group Appointment comes as financial services sector worries over no-deal Brexit risk Madison Marriage, Sarah O’Connor and Patrick Jenkins

SBC chairman Mark Tucker is poised to become chair of business lobby group TheCityUK at a pivotal time for Britain’s financial services industry ahead of the UK’s imminent departure from the EU. Mr Tucker would replace Barclays chairman John McFarlane, who is due to step down this year from the organisation which represents the interests of Britain’s financial services sector. His appointment comes as many of the country’s largest banks, insurers and professional services firms ready themselves for the possibility of a no-deal Brexit. The lobby group has repeatedly warned that leaving the EU without a deal would wreak havoc on the financial services sector. Miles Celic, chief executive of TheCityUK, said last month that “the lack of clarity on the path to an orderly Brexit risks disruption and financial instability on both sides of the Channel”. “A no-deal outcome is

not in the best interests of customers in the UK or the EU,” he added. Mr Tucker has a reputation for being a no-nonsense financier. Having made his name in insurance, first at the UK’s Prudential, then running Asian life insurer AIA in Hong Kong, he has chaired HSBC since the autumn of 2017. When he was appointed to that job, colleagues described him as an “intense but very straight” negotiator who was “aggressive and capable”. His predecessor but one, Stephen Green, chaired the advisory board of The CityUK and previously chaired the British Bankers’ Association, another lobby group now subsumed into UK Finance. Mr Tucker is already on the advisory council of TheCityUK. The CityUK was conceived in the aftermath of the 2008 financial crisis as government and financiers sought to bolster the City, while also diverting attention from the banks, widely blamed for causing the crisis. The organisation claims that the financial services sector it represents contributes nearly a tenth of the UK’s total economic output, and employs over 2.3m people.

Investors demand huge fee discounts from asset managers Institutions can knock off more than 30 per cent on charges for bond funds Siobhan Riding

ond fund managers have given large investors discounts of more than 30 per cent in a sign of how a combination of low yields and pressure from passive funds has eroded the value of active fixed-income funds. Institutional investors often do deals with asset managers on fees. They negotiate a lower price for committing a certain amount of assets. A joint survey by data providers Broadridge and Refinitiv shows the extent of these discounts. It highlights the fact that bond funds are especially vulnerable. Institutional investors pay 24 basis points on average for government bond funds — 33 per cent less than the average listed price. Managers of corporate bond funds forfeit 30 per cent of their fees, charging institutional investors an average of 28bp. Nigel Birch, senior director at Broadridge, said bond funds’ lacklustre performance due to

low interest rates made investors reluctant to pay top-line fees. The number of passive bond funds, which charge a fraction of their active counterparts, has added to investors’ demands for discounts. “The question that a lot of [institutional investors] are asking is: ‘If the next 10 years are like the last 10 years, what is the value of [investing in] active funds?’” said Mr Birch. The findings, based on pricing for more than 5,000 funds and interviews with 50 investors, illustrate how active fund fees can be driven close to zero. Some passive funds already have zero fees. Fidelity Investments pioneered this model last year with zero-fee pricing for a series of passive equity funds. The US fund house could do this by using in-house indices and generating revenues by loaning stocks. Mr Birch said he expected other fund groups to offer innovative fee models so as to retain investors and protect revenues. He pointed to the potential for managers to use zero-fee

funds as “a platform for growing more holistic relationships” with investors. Fidelity saw huge inflows into its broader fund range after the launch of its zero-fee products. Mr Birch said asset managers should also consider tweaking strategies to focus on areas that are resistant to fee pressure. The Broadridge and Refinitiv survey shows that institutional investors paid the listed fee or slightly less for small-cap equity, emerging market equity and private debt funds. This reflects the growing investor interest in “new alpha” strategies, less liquid equity products that are taking ground from traditional equity strategies due to superior performance. Other asset classes that seem resistant to fee pressure include high-yield fixed income, infrastructure, private equity and hedge funds. At the other end of the spectrum, passive equity and bond funds remain vulnerable to fee pressure, despite current low charges.

Venezuela’s healthcare crisis needs emergency attention Multilateral organisations should step in to prevent outright collapse William Rhodes and Cristina Valencia

here is an unparalleled humanitarian emergency in Venezuela, one that has been recognised by multiple international organisations. Since the collapse of its oil-rich economy in 2014, the country has struggled to raise hard currency. The government is abandoning one of its two official foreign exchange rates, which had been used for food and medicine imports. The IMF predicts inflation could reach 10m per cent this year and estimates the economy will shrink by at least 18 per cent. When regime change comes, the IMF should immediately assess the economic and financial situation of the country and develop an emergency plan. Of greatest urgency will be the need for multilateral organisations such as the Inter-American Development Bank, the Organization of American States and the World

Bank to support Venezuela’s new regime in addressing one of the gravest humanitarian crises seen in the region — one that has been deepened by the imminent breakdown of the public health infrastructure and shortages of food, water, electricity, medicine and basic medical supplies. There has been a 205 per cent increase in new malaria cases after the country declared elimination; there is an almost complete lack of access to tuberculosis screenings; and the number of Aids-related deaths in the country has tripled. Food is scarce, and malnutrition and starvation are spreading, primarily among children. Locals describe frequent stock-outs of medicines, including antiretrovirals, and fear of imminent death. The Pharmaceutical Federation of Venezuela estimates the country is suffering from an 85 per cent shortage of medicine, indicating that the entire healthcare system is on the verge of collapse.

Hospitals report a lack of electricity, and more than 13,000 doctors have left Venezuela in the past four years in search of better opportunities. People cannot afford medication and its shortage has forced many to seek medicine on the black market. President Nicolás Maduro continues to refuse humanitarian aid, prohibiting shipments of medicine, food and first aid. The government refuses to take donations that other countries are offering and is turning back shipments of medical equipment and basic medication. As resources become scarce, drug prices have rocketed along with those of food and other basic necessities. According to data from the United Nations High Commissioner for Refugees, out of the 3m people that have fled Venezuela, 75 per cent refuse to return because of lack of sustenance; 68 per cent because of lack of food; 23 per cent because of a lack of healthcare services; and 14 per cent because of persecution.

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Friday 11 February 2019

ANALYSIS

Gene editing: how agritech is fighting to shape the food we eat From battling disease in banana crops to overcoming avian flu scientists are seeking wider acceptance for the technology

Brexit-hit Spanish nurses deepen NHS staffing crisis

Emiko Terazono and Clive Cookson

Hundreds threaten to leave after domestic rules hit value of UK work experience

brightly lit lab two hours north-east of London might be an odd place to find people trying to save the world’s most popular banana. But examining a Petri dish — the contents of which might contribute to that fight — are plant biologists devoted to just such a cause. The humble fruit is under attack from a pernicious strain of Panama fungus disease which is destroying plantations around the world, threatening to devastate crops and cripple a $36bn a year industry on which some developing economies depend. Impervious to chemical treatments the fungus has, over the past three decades spread to China, southeast Asia, Australia and the Middle East. Tropical plant specialists say it is only a matter of time before it reaches Latin America, devastating the farms which provide threequarters of the world’s banana exports. Now scientists believe they might be able to stop the fungus in its tracks using gene editing, which shuts down specific genes or tweaks them to work differently. Advocates of gene editing view it as not just a way to combat fungal diseases but a vital contribution to producing safer crops with higher yields to feed a growing global population. According to UN estimates, the number of people on earth will grow by almost 2bn to a projected 9.8bn by 2050. “This is a revolutionary technology,” says Ofir Meir, chief technology officer of the Norwich-based Tropic Biosciences, owner of the Petri dishes. Since the banana is a monoculture based on a single genetic clone, “you cannot breed out [disease] like you can do with other crops,” he notes, adding: “This technology was generated to fit this need.” Launched two-years ago, Tropic is one of several agritech start-ups using gene editing. This manipulation of an organism’s existing genes is distinct from conventional genetic modification which transfers whole genes between species and has met extensive opposition from environmental and consumer groups concerned about the possible long-term impact on ecology and human health Gene editing proponents hope it can avoid such criticism and the regulatory scrutiny that has thwarted the rollout of GM in the EU in particular, because it works with existing genes rather than adding foreign DNA to the plant. In the US and Canada, the initial response of authorities has been that gene edited crops will not fall under the regulatory regime of GMOs. Several gene editing techniques exist, but by far the most popular and versatile is the Crispr method — short for clustered regularly interspaced short palindromic repeats. And just six years after scientists published the first papers showing how Crispr could work in plants and animals, it is sweeping through the world’s academic and

Andy Bounds and Ian Mount

corporate laboratories. Some applications, such as more flavourful tomatoes and mushrooms that do not turn brown as they age or after they are cut — greatly extending shelf life and reducing waste — are close to being commercialised in the US. For the scientists at Tropic the immediate aim is to use gene editing to produce bananas with an extended shelf-life and coffee beans minus caffeine. But within four to six years, says chief executive Gilad Gershon, it hopes to commercialise a Cavendish banana — the variety that accounts for about 95 per cent of the fruit sold worldwide — which is resistant to the fungus known as TR4. “We’re trying to do it a bit faster, but we’re happy with the progress we’re making,” he says, “it’s very exciting.” Genome, or gene, editing is regarded by scientists as the biggest technical advance in bioscience since “recombinant DNA” technology — where genetic material from more than one source was combined — launched the era of genetic engineering in the 1970s. By the 1990s that technology had moved from the lab into agriculture. Two early entrants to the GM field are still the biggest sellers: herbicide tolerance, which enables farmers to spray their fields with weedkiller without destroying the crop, and insect resistance, which makes plants toxic to certain pests. But gene editing gives researchers a fast and reliable way to make precise changes in specific genes. The Crispr-Cas9 procedure is more efficient than previous DNA technology, lowers costs and is expected to accelerate genetic engineering across the board. Agricultural scientists are working on a multitude of gene editing projects, including low-gluten wheat, and peanuts which do not cause allergies. The technology holds promise for developing countries, which depend on certain crops that have become vulnerable to disease. Research backed by confectionery group Mars would enable cocoa, the key ingredient for chocolate mainly grown in west Africa, to withstand viruses. Howard-Yana Shapiro, chief agricultural officer at Mars, says: “Because we have broken up the ecology of so many places, biodiversity has been disrupted. Things [pathogens] that sat benign for 500 or a thousand years are now looking for new hosts.” The opportunity is not lost on

large seed and chemical agribusinesses like Bayer, BASF and Corteva, the agricultural arm of DowDuPont, which are vying for pole position in the gene engineering race, although the low cost and potentially shorter times to market have also spawned startups like Tropic which are attracting tens of millions of dollars from venture capital investors. For thousands of years, farmers and plant breeders have used selection and breeding techniques to develop crops. According to scientists, gene editing produces the same results as conventional breeding methods, where plants are crossed or DNA mutations are generated with chemicals or radiation, but with more precision and speed. Supporters had hoped the distinction between gene editing and the older genetic modification would be particularly important in Europe, which has lagged behind the Americas in the licensing of GM crops. Only two have made it through the approvals process for commercial cultivation over the past two decades in the EU: an insect resistant maize developed by Monsanto and approved in 1998; and a potato with altered starch qualities developed by BASF and approved in 2010 but later withdrawn due to a lack of demand. The European Court of Justice ruled in July that gene-edited crops should be subject to the same rules as GMOs, dashing hopes that the EU would take a more liberal attitude to the newer technology. However some legal and regulatory experts say the decision may not be as far-reaching as plant scientists fear. “I believe that the ECJ ruling does not unequivocally state that all genome edited organisms are by definition GMOs and that in fact the ruling requires further clarification to understand what it means,” says Piet van der Meer, a Dutch expert on European biosafety regulation. In the US, the initial response from the Department of Agriculture has been that gene editing will be regulated in the same way as traditional breeding techniques so long as the outcomes produced are indistinguishable. Yet despite 20 years of GM crops, and food, consumer suspicion in the US persists. According to a survey from the Pew Research Center last November, about half of US adults still believe GM foods are worse for human health than their non-GM equivalent.

he staffing crisis in the National Health Service is escalating because hundreds of Spanish nurses are threatening to leave after it emerged that domestic rules threaten to render their UK work experience worthless at home after Brexit. Spanish nurses currently build up points from work experience in other countries, which they can then use to improve their salary or job prospects in Spain. “Currently, because the UK forms part of the EU, time spent

not a place Greater Manchester wants to go.” He pointed out that even though the UK could welcome immigrants, it could not force professional regulators in other EU countries to change their rules. “A lot of my colleagues have left,” said Joan Pons Laplana, a Spanish nurse who came to the UK in 2000 and is now an NHS Digital clinical fellow. “A lot have gone to Ireland, and a lot don’t come to the UK any more.” A transition agreement, which would come into force in the event of a deal, would ease the problem. But a permanent

working in a London public hospital counts exactly like time working in a Madrid public hospital,” said Diego Ayuso, the general secretary of Spain’s nursing regulator, the Consejo General de Enfermería. “When Brexit happens, and the UK leaves, working there won’t count”, unless there is a new agreement, Mr Ayuso said, The 3,370 Spanish nurses and health visitors made up 17 per cent of the NHS’s EU nurse workforce in June 2018 — more than any country in the bloc except Ireland. There were about 280,000 nurses in service last June, with 40,000 jobs vacant. The Bolton Clinical Commissioning Group near Manchester has said that four Spanish theatre nurses at Royal Bolton hospital “indicated that they are looking to return to Spain this year”. It is preparing to advertise the jobs and checking the plans of five other Spanish nurses. Andy Burnham, mayor of Greater Manchester, told the FT he was briefed on the issue last week and feared other hospitals would lose staff. “I believe other trusts are worried,” he said. “It just shows how immediate the impact of Brexit might be. We remain implacably opposed to a ‘no deal’ Brexit. It is

deal with regulators around the EU would still be required to allow services in the UK to be recognised. NHS Employers, which represents hospitals, acknowledged the problem but declined to comment on how many nurses might go. Danny Mortimer, chief executive, said: “What we clearly need is certainty for our staff and clarity from regulators and professional bodies — and quickly. The future relationship with the EU will need to set out clearly how professional experience gained in the UK might be recognised by EU member states, and vice versa.” New regulations in Spain is one solution under consideration. The Spanish health ministry is set to introduce a draft law this year that would extend the points programme from EU countries to OECD countries, a ministry spokesman said. The Department of Health and Social Care said it was looking to put in place arrangements in the event of a no-deal Brexit “to ensure that nursing qualifications and experience gained within the UK are recognised in EU member states in the same way that they are in other countries”.

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Equities

COMMODITIES

Cover Story

How low and high volatile stocks have performed in 2019

Funding models helping grain growers secure market

What value investors need to know about banking stocks

Volatility is a proxy for risk; more volatility generally means a riskier portfolio. The volatility of a security or portfolio against a benchmark is called Beta.

Grain growers now have better financing options they can explore in funding their cultivation activities without waiting on federal government interventions like the Anchor Borrowers Programme (ABP).

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Following the massive outflow of funds from the Nigeria equities market last year on the back of global and domestic factors, including the hawkish policy stance of the Federal reserve, US-China...

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BUSINESS DAY

MARKET Money market set for N2.3trn February inflows The Nigerian money market will be awash with excess liquidity this month, as a total inflow of about N2.33 trillion is expected to hit the money market from the various maturing government securities and Federation Accounts Allocation Committee (FAAC).

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Monday 11 February 2019

Equities

How low and high volatile stocks have performed in 2019 David Ibidapo

olatility is a proxy for risk; more volatility generally means a riskier portfolio. The volatility of a security or portfolio against a benchmark is called Beta. Beta is helpful in understanding the overall price risk level for investors, particularly during market downturns. The lower the Beta value, the less volatility the stock or portfolio should exhibit against the benchmark. This year, we have seen theory take its place as more stocks above market beta of 1 currently outperformed the market. As at Friday, the Nigerian ASI was up 0.32 percent YTD. Of 11 stocks with stock beta above 1 on the NSE30 index, 5 stocks outperformed the market. This shows above a 50 percent chance of a right decision for investors who took position in more volatile stocks. Most of the highly volatile stocks that outperformed the market were more of banking stocks. According to Gbolahan Ologunro, Equity research analyst at CSL stockbrokers, “The banking stock accounts for about 30 percent of the market and most investors are attracting to these stocks because of strong earnings and dividend payments.” Leading the chart was Fidelity bank which gained 15.76 percent YTD with a stock beta of 1.04. Others included GTB (10.30%, 1.44), Diamond Bank (6.4%, 1.37), Zenith Bank (6.07%, 1.07) and Forte Oil (3.48%, 1.19). Meanwhile, if you had taken a bet on low beta stocks as at the opening of trading this year, there was an 80 percent chance you took the wrong bet.

Of 20 low beta stocks, only four stocks outperformed the market. Leading the chart was Julius Berger equity with YTD performance of 29.35 percent and a negative stock volatility of -0.22. This indicates that this stock tends to go in an inverse direction to market movement. Others include Union Bank (11.6%, 0.37), Total Nigeria (8.82%, 0.64), Okomu oil (7.6%, 0.06). This is different from trends we

noticed in the equity market in 2018. The Nigerian All Share Index dipped 17.83 percent in 2018 following massive selloff and foreign investors exit from the market in search for a safe heaven. If you had bought low beta stocks earlier in the year 2018 hoping to protect yourself from market volatility, there was a 52 percent chance you took the wrong bet. In a bear market like we experienced in 2018, these stocks

tend to outperform the market, according to conventional theory. Our analyses show that of 25 companies listed on the NSE30 index, with low beta, 12 low beta stocks outperformed the market in 2018. Meanwhile, of 6 companies listed on the NSE30 index with beta values above 1, only 3 stocks outperformed the market giving a 50 percent probability or both a right or wrong

decision on highly risky stocks. Importantly, low or high Beta simply measures the size of the moves a security makes; it does not mean necessarily that the price of the security stays nearly constant. Indeed, securities can be low Beta and still be caught in long-term downtrends, so this is simply one more tool investors can use when building a portfolio. The performance of the Nigeria stock exchange market this year is dependent on a lot of factors ranging from company, industry, macroeconomic and global economy factors, determining the volatility of company stocks as well as overall all share index movement. Over the years, we have seen the performance of Nigerian stock exchange (NSE) market largely driven by foreign portfolio investors while participation of the domestic investors still remain relatively low. Some analysts opine that negative sentiment and the risk adverse nature which prevailed after the 2008 financial market crash contributed to the low participation of domestic investors amongst other factors. “This year is a year of two (2) halves, political uncertainty will linger in the first half of the year and political risk will reduce significantly in the second half. “We should see increased investor’s appetite for risky assets,” Ologunro stated. “The high volatility we see in banking stocks is driven by high liquidity in these stocks.” Paul Uzum, a Lagos based stockbroker explained. Investors a more interested in liquid and dividend paying stocks and “we have seen that in play since January and expect this to linger throughout the year provided there isn’t any crises during and after elections.”

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; Graphics: Fifen - Famous

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Commodities Investing

Stocks near 52-week low create bargain opportunity for value investors OLUWASEGUN OLAKOYENIKAN

Funding models helping grain growers secure market Temitayo Ayetoto

rain growers now have better financing options they can explore in funding their cultivation activities without waiting on federal government interventions like the Anchor Borrowers Programme (ABP). This is as collaboration has been deepening among platforms that are digitising agricultural operations and are connecting cultivators with investments. At least 10,536 grain growers last year tapped into partnerships between AFEX, Thrive Agric, Farmcrowdy, Diageo and Dangote Rice Limited which focused on improving how cultivators of rice, sorghum, soybeans and maize access input funding. Effectively, they are also helped solve the off-taking challenge as markets with industrial consumers were secured without compromising gain for the farmers. The target is that by 2022, 1 million farmers would have been reached, $2.2 billion annual trade in volume, $600 million increase in income and 52,000 non-farming jobs. AFEX/ Dangote Rice Limited on paddy rice In this partnership for paddy rice supply, AFEX, a commodities exchange intensifying its local operation acted as the value chain manager, collateral and facility Agent. Dangote Rice Limited, a leading rice milling company in the food and beverage industry served as a financier and an off-taker. They provided AFEX with $3 million which were disbursed to farmers. The exchange monitored

farm activities till harvest, coordinated and aggregated the repayment of loans by farmers and sealed the transactions by ensuring the transfer of the products back to Dangote Rice Silos for production. In that, 5,491 farmers in north western Nigeria benefited. Diageo/AFEX on sorghum Diageo plc, a British multinational alcoholic beverages company partnered AFEX to ensure that sorghum needed for its production was supplied. AFEX identified and registered 708 farmers, trained farmers on agronomic practices, coordinated the disbursement of input and monitored farm activities till harvest. It also helped farmers’ knowledge of post-harvest-handling. At the end, the loan repayment was settled with transactions with Diageo. Thrive Agric/ AFEX on soybeans Thrive Agric, a technologydriven agricultural company also partnered with AFEX which identified the identification and registration of farmers. The exchange served as a value chain manager to Thrive who financed the training and input that were provided to the farmers. It coordinated the disbursement of these inputs to farmers, monitored farm activities till harvest, coordinated and aggregated repayment of loans and finally settled transactions. The $205,000 financing affected 708 north west soybeans farmers. Farmcrowdy/AFEX Nigerian agric tech company pushing digital agriculture also appointed AFEX as a valuechain manager to coordinate the disbursement of $324,000 to 1527 farmers in inputs and loans to farmers.

erformance at Nigeria’s equities market has remained mixed on a weekly basis since the start of the year, indicating no definite trend for the market lately. But with the 52-week low metric, value investors can sniff out bargain opportunities in the market. When market performance fluctuates, it becomes somewhat challenging to make a good investment decision. Investors can, however, clamp down on these difficulties by adopting the concept of 52-week low, a technical indicator mostly used by some traders to assess the current valuations of stocks trading at the bourse. Basically, a 52-week low, otherwise known as one-year low, is the lowest price a stock traded for in the previous year, and the percentage difference from its current price gives the stock’s proximity to the metric. The indicator evaluates a stock’s recent performance and gives an idea of its current valuation. Since it is the interest of every investor to buy low and sell high so as to book impressive returns later, stocks’ percentage change from their 52-week lows would help ascertain if a stock is undervalued which could signal bargain opportunities. Some investors are attracted to stocks trading near their 52week lows and having sound fundamentals, this is because they are often considered fit for position taking with high optimism of a bullish trend in the future. BusinessDay reviewed stocks of publicly quoted firms on the Nigerian Stock Exchange (NSE) as at the close of trade at Customs street Friday, Feb. 8 and discovered some stocks hit fresh one-year lows last week largely due to their unimpressive financial performance. While some equities were drifting closer to their lowest

prices in the last year, some others remained bullish and far from their 52-week lows despite days to the nation’s general elections. Academy Press slumped 8.89 percent last Monday to close at 41 kobo on the floor of the NSE, its lowest level in more than 13 years, after the printing and publishing firm released its financial results for the nine months ending December which saw it enmeshed in losses amounting to N178.7 million as against N121.9 million losses recorded in the corresponding period of 2017. Likewise, Guinea Insurance shed 4.76 percent Thursday to settle at a record low of 20 kobo. This could be likened to weaker investor sentiment over the controversy on the insurer’s suspension by the National Insurance Commission (NAICOM), even though it was later debunked by the underwriting firm. Morison Industries, which has remained unchanged for almost a year, was 3.77 percent near its 52-week low of 53 kobo, while the Nigerian Aviation Handling Company (NAHCO) was 4.04 percent near its cheapest price in the last one year after the aviation handling company shed 4.01 percent last Friday to close at N3.35 per share. NAHCO posted an impressive financial performance in the first nine months in 2018, growing revenue from N5.8 billion to N7.25 billion, while postprofit was up 109 percent to N601 million. Moreso, the downward trend witnessed by Ecobank Transnational Incorporated (ETI), which caused the lender to lose 2.49 percent of its market value to close at N13.70 last week, brought the equity to 4.55 percent near its one-year low of N13.20. Results for the nine months period to September 2018 reveal the bank grew profit by 31 percent to N75.72 billion from N57.95 billion. Sovereign Trust Insurance, Japaul Oil & Maritime Services and Cornerstone Insurance

were all at 5 percent close to their one-year lows. Although Cornerstone Insurance emerged from losses in the first nine months of 2018 compared to the previous year, it continued to hover around its 52-week low. Sovereign Trust Insurance recorded a decline in profit to N543 million from N668 million, while Japaul Oil & Maritime Services made N885.51 million loss in the review period. Seplat gained 5.75 percent to close at N560.50 per share last week, putting it at 7.79 percent away from N520, its cheapest price in the last one year. This is considered too close despite an impressive ninemonth period in 2018 which put sales of the Oil & Gas firm on the increase, the company also washed off its garment of losses by recording N27.97 billion profit in the period. Seplat operates in the upstream sub-sector of the Oil & Gas industry and analysts have attributed its share performance to the dwindling crude oil prices which have impacted negatively on the oil firm’s earnings. “What I see affecting Seplat is oil prices,” Ayodeji Ebo, Managing Director, Afrinvest Securities Limited, said. Meanwhile, C & I Leasing was 623 percent away from its one-year low, making it the stock with the biggest change from its one-year low on the Lagos-bourse, thanks to its recent share reconstruction involving cancellation of 1.48 billion ordinary shares of 50 kobo each, leaving 404.25 million ordinary shares of 50 Kobo each as its new total outstanding shares. This, according to the firm, was to enable it raise additional capital to expand its business and create enough room to accommodate the conversion of the Abraaj loan stock, amounting to $10 million, to equities in the leasing company. Stocks near 52-week low create bargain opportunity for value investors See Table on page 62

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Cover Story

What value investors need to know about banking stocks Valuations & analysts’ recommendations

LOLADE AKINMURELE, SEGUN ADAMS & ISRAEL ODUBOLA

ollowing the massive outflow of funds from the Nigeria equities market last year on the back of global and domestic factors, including the hawkish policy stance of the Federal reserve, US-China trade war and election concerns in the domestic economy, many investors are keen to identify cheap stocks with strong fundamentals and exciting return potentials. The consideration of choice stocks require valuation which is critical in investment decisions, making it possible to predict the future price or potential market prices for the investors to time their sales or purchase of investment. BD Money analysed banking stocks in Nigeria and compiled the ratings of various investment banks from the Bloomberg terminal. This was done to help investors select value stocks and the banking sector was preferred for our analysis because they are the most liquid and transparent in the market. Valuation Although several metrics can be advised, a notable metric to consider while picking banking stocks is the price-to-book ratio, which is the ratio of market capitalization to book value. This metric is used by value investors to identify potential investment. Conventionally, any value under 1.0 is considered a good P/B for value investors, indicating a potentially undervalued stock. However, value investors may often consider stocks with a P/B under 3.0 as their benchmark. Other yardsticks such as return on equity, return on assets, discounted cash flows and price to earnings ratio among others were used to support our analysis. The Banking Sector so far in 2019 has enjoyed a fantas-

Source: Bloomberg Terminal, NSE, BusinessDay Research tic run, despite the cloud of uncertainty hovering over the investment space, which has more recently provided bargain hunters the opportunity to take long-term positions. The Banking index outperformed the NSE All Share Index by 618 times, to be the best performing sector since the start of the year, according to data obtained on the penultimate day of trading last week. The Benchmark index, which had moderated to a 0.01 percent Year to Date return, was bested by both the Banking Index (6.18percent) and Industrial Goods (3.75percent). Paul Aluko, an analyst at MBC Capital said the consistency in the financial performance of banking institutions is one of the drivers of demand for banking stocks. He further explained that year after year, especially in 2018, players in the sector have posted good results compared to other sectors. ’’What you see is positive sentiments as investors take position in bank stocks ahead of full year results and dividend declaration,’’ Aluko told BD Money. Access Bank

The soon-to-be merged Tier1 lender enjoys a 60 percent BUY rating from investment banks, against 40 percent HOLD and no SELL. The one-year target price of the stock is projected at N9.59 while current stock price as of Thursday stood at N6.3. That leaves the bank’s upside potential at 52 percent, which implies that if an investor invests N100 million in Access bank’s shares, he/she could make capital gains of N52 million. So far in the year, Access stock has lost 7.35 percent year to date-the most of any banking stock- with the stock price gaining 1.61 percent at the close of trading last Thursday. Access is currently undervalued, with a P/B of 0.3849 timesthe fourth least in the industry. The bank’s ROE was at 16.3 percent as at the end of September, 2018, which implies that for every unit of shares held investors earned 16.3 times the value of investment. The bank had a Return on Assets of 0.5 which means it generated N0.5 profit for every naira in assets. With the merger set to be completed in about two months, the new entity to emerge would likely overtake Zenith bank as

the biggest lender by Assets, while Access sets to leverage on Diamond Bank’s retail banking competence to improve performance. First Bank First Bank is one of the most valuable banking brands in Nigeria and operates along four key Strategic Business Units (SBUs) – Retail Banking, Corporate Banking, Commercial Banking and Public Sector Banking. First Bank currently enjoys the largest market share by deposit. First Bank enjoys a BUY rating of 87.5 percent against 12.50 percent HOLD and no SELL. The one year target price is projected at N11.42 while market price as at Thursday stood at N7.45. That leaves the bank’s upside potential at 53 percent, which implies that if an investor invests N100 million, he/she could make capital gains of N53 million. First Bank has lost 6.29 percent this year although remained flat at the close of trading for Thursday. First Bank P/B as at same day was 0.3922, the second least among tier-1 banks. ROE and ROA for the entity is 9.4 and 0.24 percent respectively. UBA

Leading Pan-African Bank stands as the only bank with a perfect rating at as all 16 investment houses voted to BUY (100percent). The one-year Target price of the bank is N12.6 with its market price on Thursday at N7.35. That leaves the bank’s upside potential at 71 percent. That implies that if an investor invests N100 million, he/she could make capital gains of N71 million. So far in 2019, UBA has lost 4.55 percent and in Thursday’s trading rose by some 2.08 percent. UBA P/B is 0.5455 which shows the stock is currently undervalued. ROE for the stellar bank shows 15.9 percent returns to shareholders. Also, the lender earns N0.38 for every naira in assets. Zenith A leading multinational financial service provider and the current biggest lender by Asset, Zenith enjoys a BUY rate of 94.44 percent, compared to 5.56 percent HOLD and no SELL recommendation. The one-year target price for Zenith is N33.71 and share price as at Thursday stood at N24.45. That leaves the bank’s upside potential at 38 percent. That implies that if an investor invests N100 million, he/she could make capital gains of N38 million. Zenith ties with Fidelity as second best performing Tier-1 stock with a

Year to date of 6.07 percent- the most for any TIER 1 bank. On Thursday, zenith gained 7.24 percent to enjoy the second best daily performance after GTB. Currently undervalued, Zenith P/B stood at 0.9887- the second highest among tier-1 lenders. The lender has ROE and ROA of 23.8 and 1.1 percent respectively, indicating good profitability performance. Guaranty Trust (GTB) Perhaps Nigeria’s most innovative bank, with digital offerings that appeal to the millennials. GTB has led the pack in breaking new fronts especially redefining the importance of banking with the younger generation, GTB enjoys a BUY recommendation up to 94.74 percent with 5.26 percent voting a HOLD and no SELL. The average target price for GTB is N49.06 with share price on Thursday at N38. That leaves the bank’s upside potential at 29 percent. That implies that if an investor invests N100 million, he/she could make capital gains of N29 million. GTB gained the most of any tier-1 lender, appreciated by 10.3 percent so far in the New Year although in Thursday’s market, it gained 9.51 percent- the most of any banking stock. P/B of GTB stood at 2.1429, an indication of overvalued while ROE and ROA at 30.1percent and 1.1percent, is

the best among the Tier-1 lenders. Diamond Bank Nigeria’s leading retail bank has a BUY recommendation of 45.45 percent against 36.38percent HOLD and 18.18 percent SELL ratings. Average target price for Diamond is N1.99. So far in 2019, the stock gained 6.42 percent, and equally appreciated by 0.43 percent to close at N2.32 at end of Thursday’s trading. Diamond has a P/B ratio of 0.2425, an implying that the stock is currently undervalued. The bank’s efficiency to generate earnings from equities is weak reflective in its ROE of 0.55percent, which is the least in the industry. FCMB The stock has 40 percent BUY recommendation compared with 20percent HOLD and 40 percent SELL rating. The average 12-month target price stood at N2.02. FCMB stock gained 15.87 percent year to date. Share price jumped by 4.29 percent to close at N2.19. P/B of FCMB is 0.2427, indicating that the stock is currently undervalued. FCMB generates N8.25 profit for every N1 of shareholders’ equity and N0.46 for every N1 in assets. Fidelity Bank With an average target price of N2.4, the stock has 58.3percent BUY recommendation, 33.3 percent HOLD and 8.3 percent SELL. The stock gained 15.76 percent year to date, and emerged the lone loser in the industry at the close of trading in the penultimate day of the week, with share price declining by 2.08percent to settle at N2.35. P/B of Fidelity is 0.3538, indicating that the stock is currently undervalued. The lender generates N11.13 profit for each unit of shareholders’ equity N0.46 for every N1 in assets. Stanbic IBTC The Tier-2 lender has 57.14 percent BUY, 42.86percent HOLD recommendation and no SELL. The stock has the highest P/B in the industry at 2.2069, implying that the stock may be overvalued relative to peers. Average target price based on analysts’ expectations stood at N55.9.

MARKETS

So far this year, the stock declined 2.19percent year to date, and remained flat at N46.9 at end of Thursday’s trading. The lender has the highest ROE at 34.53percent and thirdhighest ROA of 1.10percent in the industry, making it the bestprofit performing bank among Tier-2 lenders. Sterling Bank The stock has a P/B of 0.6780, indicating undervaluation, 40 percent BUY, 20 percent HOLD and 40 percent SELL recommendation. On the average, analysts set a N2.35 price target for the stock in the next 12 months. The stock gained 31.58 percent year to date, the largest in the industry, with the price per share appreciating by 5.93 percent to close at N2.50. ROA of the lender stood at 0.19 percent. Wema Bank The stock has a P/B of 0.5195, with 33.3percent and 66.7 percent SELL recommendation. Average target price stood at N0.5. The stock gained 11.1percent year to date, and appreciated by 1.45 percent to close at N0.7. The lender generates N7.1 return for each unit of equity and N0.21 profit from every naira in assets. Eco Bank The stock has equal BUY and HOLD ratings at 42.86 percent. Average 12-months target price is N18.3. Share price remained unchanged at N14 year to date, and also close at N14 on Thursday. P/B stood at 0.5387, indicating that the stock is currently undervalued, and ROE stood at 14.8 percent. ROA settled at 0.21 percent, indicating that the lender earns N0.21 profit for every naira in asset. Disclaimer: Information provided is by no means a recommendation but serves to guide investors by providing information as accurate as possible. Hence, BusinessDay takes no liability for any loss incurred.

Money market set for N2.3trn February inflows HOPE MOSES-ASHIKE

he Nigerian money market will be awash with excess liquidity this month, as a total inflow of about N2.33 trillion is expected to hit the money market from the various maturing government securities and Federation Accounts Allocation Committee (FAAC). The Central Bank of Nigeria (CBN) continued with its tight monetary policy stance throughout January 2019 as it continued to mop up excess liquidity through the use of Open Market Operations. The goal is to curb inflation and maintain stability in the foreign exchange market. This approach led to an increase in the yields on Nigerian Treasury Bills (NTBs) in January 2019 compared with December. “We estimate a total outflow of approximately N644 billion from the various sources, leading to a net inflow of about N1.68 trillion,” Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said. FSDH Research expects the market to remain relatively liquid in February 2019. This may continue to necessitate the issuance of OMO to mop-up the liquidity in the system. Akinwunmi believes the yields on the NTBs may increase further, particularly on the long end from the current levels. NTB yields are likely to be influenced largely by the level of liquidity in the banking system, the short-term borrowing needs of the government, the need to maintain price stability and election considerations. In the fixed income market, FSDH Research expects yields in the bond market to increase above the current level. Consequently, investors with large bond portfolios may take profit and buy back later when yields increase, while those with small portfolios should take advantage of the current yields and buy gradually. Traders in the Treasury Bill market may adopt a strategy that will allow them to shift from one tenor to another in order to take advantage of movements in yields as investors are expected stay in short-tenured fixed deposits. This will enable them to switch as market opportunities arise. Investors in FGN Eurobond may

take profit on some of their investments and buy back later when the yields increase. FSDH Research notes that the current yields on some of the Eurobonds are higher than the coupon rate. In its Monthly Economic and Financial Markets Outlook for the month of February 2019 titled: ‘Global Developments in January Positive for Nigeria. How Sustainable?’ FSDH Research observed downward movement in the external reserves in early February. This may be a pointer to demand pressure at the foreign exchange market and may lead to depreciation in the value of the Naira. The current position of external reserves continues to provide shortterm stability for the value of the Naira. However, the medium-term stability in the foreign exchange market will depend on the country’s foreign exchange receipts from both crude oil and non-oil products.

The country’s external reserves increased by 0.13 percent from US$43.12 billion at end-December to US$43.17 billion at end-January 2019. There was a significant increase in capital importation via Foreign Portfolio Investors (FPI) in the Investors’ and Exporters’ Foreign Exchange Window (I&E window) in January 2019. FPI contribution in January stood at US$1.32 billion in January, accounting for 51.34 percent of total inflows, the highest contribution since April 2018. This is based on data obtained as at Monday, 4 January 2019 from the FMDQ OTC Securities Exchange. This may be a reflection of foreign investors taking advantage of higher yields on fixed income securities. The increase in the external reserves, supported by the increase in Foreign Portfolio Investors, led to an appreciation in the foreign exchange rate in January.

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Personal Finance These online savings platforms offer higher interest for savers OLUFIKAYO OWOEYE

ommercial banks are the go-to places for saving aside contribution and thrift schemes. Sadly, one of the major challenges most Nigerian savers have is that these banks offer relatively lower interest rates compared to when they give loans. Although some banks offer products with higher interest rates than savings deposit accounts, one of which is a fixed-deposit account. Interestingly, in recent times there has been a surge in the number of Fintech startups competing for a slice of commercial bank’s slice of the pie by offering online savings at a higher interest rate. For income earners looking for a high-interest saving that is better than what commercial banks offer, here are some of the online savings

platforms that are currently encouraging the saving culture in Nigeria PiggyBank This is an online and mobile app savings platform that allows flexibility savings as users can choose to save daily, weekly or monthly. After downloading the app, users can save towards a specific target or choose to place a withdrawal restriction on the account. There’s is a limit to the amount that can be saved on one’s account at a time. The platform pays interest up to 10% per annum on Core Savings which could be a periodic saving,12.4% on SafeLock which is a Fixed Savings and 10% Savings Challenge also called the Target Savings. For the Core Savings, interests are accrued daily on depositors balance and paid monthly available from the 1st of every month. For a SafeLock, interests are paid upfront into depositor’s Flex account which can be immediately accessed for free. While for the Savings Challenge, interests are paid

daily into depositor’s Flex account which can be accessed immediately for free All interest earned is paid into the Flex Account and account owners can withdraw from it at any time, without any charges. Cowrywise CowryWise is another saving and investment platform that pays higher interest rates. The good thing about this platform is that it has provision for users who just want to save without earning interests, with its halal savings option. The online savings platform pays 1015% Interest annually and it’s paid on a daily basis to the

user’s account. The platform has various savings plans this includes Periodic Plans. With these, users can set saving plan(s) to be daily, weekly or monthly for at least 3 months. These plans can also be topped up randomly with amounts outside the automated scheduled amount. Life Goals these plans help users meet commitments to long term financial goals. These are similar to periodic plans but they have a minimum maturity period of 1 year, The Save As You Earn plan is for users with irregular income flow. This plan is not automated and

Chart of the week

can only be topped up manually. Fixed Plan allows users to keep aside a lump sum of money for at least 3 months. Unlike other plans, they cannot be topped up. Interest-free Plans are for Muslims who don’t want to earn interest on their savings. They can be set up as periodic plans, life goals, save as you earn plans or fixed plan; but they won’t attract any form of interest. KoloPay KoloPay is another mobile and web application that helps users save money little by little towards planned goals over a period of time. Formerly known as MyKolo, the platform is aimed at attempting to ease the stress that comes with saving as its major aim is to help people save towards planned goals. With Kolopay users have the freedom to name the goal which they are saving towards and also the period users want to save to achieve the goal. The locked account on Ko-

loPay guarantees a 6%pa on the saved amount. Also, the Autosave feature on the platform, users can activate a standing order on debit card or bank account for a regularly debit of a particular amount to be saved in the KoloPay account at a frequency (Daily, Weekly or Monthly) while the SaveNow feature is for you if you want to save anytime you have. Wema Bank’s ALAT is the first fully digital banking platform. It has the Fixed goal plans that help users save toward a target amount of money daily, weekly or monthly. Users can also choose the target amount, the target date and the date to start saving, and the app will work out how much users need to save periodically. However, they cannot withdraw from a fixed goal until the goal is met. A Flexi goal helps to save a specific amount of money daily, weekly or monthly and can withdraw up to 50% of Flexi savings once a month.

Week Ahead Week Ahead (11th – 15h February, 2019)

Source: Bloomberg Stocks of GTB has gained the most of any tier-1 lender, having appreciated by 10.3 percent so far in the New Year. In Thursday’s market, it gained 9.51 percent- the most of any banking stock -although it gained just 1.71 percent to N38.65 at the close of trading, Friday. GTB is currently trading at a 6-month high since it peaked at N39.05 in August last year. GTB is one of Nigeria’s most innovative bank, with digital offerings that appeal to the millennials. GTB has lead the pack in breaking new fronts especially redefining the importance of banking with the younger generation.

Commodities Corn prices to be bullish in the near term due to expectations of a tighter global supply. Fixed Income Sub-national Bond with description 15.50 Ondo 14-Feb 2019, issued by Ondo State Government on February 14, 2012 will mature on Thursday February 14, 2019. T-bills worth N783.33 billion will mature via the primary and secondary markets which will more than offset T-bills worth N153.38 billion to be auctioned by CBN. Currency Naira to remain relatively stable this week at the Investors and Exporters Windows, following the commitment of the CBN to sustain exchange rate stability. Data Release The National Bureau of Statistics will release the Nigerian Gross Domestic Product by Output Report for Q4 2018 and Full Year 2018 on Tuesday February 12, 2019.

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Live @ the Stock exchange Prices for Securities Traded as of Friday 08 February 2019 Company

Symbol

Deals

Current Price

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 192,371.01 6.65 5.56 371 32,308,958 UNITED BANK FOR AFRICA PLC 261,625.57 7.65 4.08 512 142,373,966 ZENITH BANK PLC 766,074.45 24.40 -0.20 662 147,028,394 1,545 321,711,318 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 287,162.34 8.00 7.38 411 43,424,392 411 43,424,392 1,956 365,135,710 BUILDING MATERIALS DANGOTE CEMENT PLC 3,161,014.12 185.50 -2.37 97 5,638,276 LAFARGE AFRICA PLC. 108,417.85 12.50 0.40 83 2,649,470 180 8,287,746 180 8,287,746 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 329,823.18 560.50 5.75 17 15,353 17 15,353 17 15,353 2,153 373,438,809 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 UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 - 1 150 1 150 1 150 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 150 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 3 292,500 81,082.35 85.00 3.66 27 526,828 OKOMU OIL PALM PLC. PRESCO PLC 60,000.00 60.00 - 18 68,047 48 887,375 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,500.00 0.50 - 16 657,330 16 657,330 64 1,544,705 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 714.77 0.27 - 2 2,732 186.79 0.48 - 4 2,370 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 1 700 TRANSNATIONAL CORPORATION OF NIGERIA PLC 54,061.83 1.33 3.91 296 54,539,943 26,940.12 9.35 5.06 37 960,513 U A C N PLC. 340 55,506,258 340 55,506,258 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 34,320.00 26.00 - 27 233,970 ROADS NIG PLC. 165.00 6.60 - 0 0 27 233,970 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,677.11 1.80 - 10 221,131 10 221,131 37 455,101 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,683.78 1.62 - 6 35,352 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 142,374.88 65.00 - 27 88,301 INTERNATIONAL BREWERIES PLC. 257,875.86 30.00 - 4 13,112 623,758.36 78.00 - 53 319,284 NIGERIAN BREW. PLC. 90 456,049 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 34,250.00 6.85 7.87 112 6,652,064 DANGOTE SUGAR REFINERY PLC 173,400.00 14.45 0.35 73 2,528,162 FLOUR MILLS NIG. PLC. 82,007.59 20.00 5.26 63 456,099 HONEYWELL FLOUR MILL PLC 10,229.95 1.29 7.50 46 1,949,645 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 703.89 3.95 - 1 400 NASCON ALLIED INDUSTRIES PLC 47,424.95 17.90 0.28 27 226,211 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 322 11,812,581 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 - 45 1,198,148 NESTLE NIGERIA PLC. 1,188,984.38 1,500.00 2.04 53 75,213 98 1,273,361 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,992.95 4.79 - 31 124,920 31 124,920 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 48,241.30 12.15 7.52 35 495,234 UNILEVER NIGERIA PLC. 212,565.20 37.00 - 20 50,146,520 55 50,641,754 596 64,308,665 BANKING DIAMOND BANK PLC 54,426.91 2.35 1.29 132 20,229,083 ECOBANK TRANSNATIONAL INCORPORATED 251,388.85 13.70 -2.14 87 4,417,087 FIDELITY BANK PLC 70,988.25 2.45 4.26 167 13,676,195 GUARANTY TRUST BANK PLC. 1,137,515.08 38.65 1.71 840 72,749,262 JAIZ BANK PLC 15,616.05 0.53 - 28 3,751,127 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 71,976.05 2.50 1.60 54 7,910,837 UNION BANK NIG.PLC. 182,004.70 6.25 8.80 55 43,738,768 UNITY BANK PLC 11,338.66 0.97 7.78 21 2,982,387 WEMA BANK PLC. 27,387.87 0.71 1.43 52 2,975,253 1,436 172,429,999 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,989.75 0.72 -4.00 28 1,601,199 AXAMANSARD INSURANCE PLC 21,315.00 2.03 - 9 151,384 CONSOLIDATED HALLMARK INSURANCE PLC 2,195.10 0.27 -6.90 11 1,235,229 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 -4.76 6 591,050 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 1,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 6.67 14 966,691 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 - 3 6,132 LINKAGE ASSURANCE PLC 5,120.00 0.64 - 5 169,100 MUTUAL BENEFITS ASSURANCE PLC. 1,840.00 0.23 - 5 101,702 NEM INSURANCE PLC 13,201.26 2.50 8.70 17 640,121 NIGER INSURANCE PLC 1,702.69 0.22 - 4 16,229 PRESTIGE ASSURANCE PLC 2,798.93 0.52 - 5 60,352 REGENCY ASSURANCE PLC 1,667.19 0.25 - 2 1,593 SOVEREIGN TRUST INSURANCE PLC 1,751.57 0.21 5.00 7 1,146,187 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 1,000 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 6 134,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,050.67 0.22 4.76 5 2,151,000 WAPIC INSURANCE PLC 5,620.75 0.42 5.00 23 2,626,653 152 11,600,622 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,544.29 1.55 8.39 13 246,500 13 246,500 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0

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Trades

Volume

OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,340.00 4.17 - 33 428,022 CUSTODIAN INVESTMENT PLC 36,467.56 6.20 - 6 52,338 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 43,763.99 2.21 0.91 200 23,456,993 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,337.80 0.26 - 4 379,251 STANBIC IBTC HOLDINGS PLC 481,305.99 47.00 0.21 54 2,789,814 UNITED CAPITAL PLC 20,040.00 3.34 2.45 64 2,484,848 361 29,591,266 1,962 213,868,387 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,030.41 0.29 7.41 6 469,011 6 469,011 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 1 19,687 1 19,687 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,050.00 4.70 - 8 15,786 GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,290.72 11.95 -0.42 23 298,777 MAY & BAKER NIGERIA PLC. 4,037.05 2.34 - 9 73,982 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,253.44 0.66 - 9 121,000 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 0 0 49 509,545 56 998,243 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 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. 648.00 6.00 - 1 10 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 0 0 1 10 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 0 0 E-TRANZACT INTERNATIONAL PLC 12,306.00 2.93 -9.85 1 100,000 1 100,000 2 100,010 BUILDING MATERIALS BERGER PAINTS PLC 2,144.69 7.40 - 4 8,394 CAP PLC 22,225.00 31.75 - 18 35,389 CEMENT CO. OF NORTH.NIG. PLC 289,157.02 22.00 -2.00 91 1,463,610 FIRST ALUMINIUM NIGERIA PLC 654.21 0.31 - 0 0 286.87 0.54 - 1 1,500 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 1 100 115 1,508,993 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,522.64 2.00 5.26 23 784,133 23 784,133 PACKAGING/CONTAINERS BETA GLASS PLC. 32,998.15 66.00 - 13 169,165 GREIF NIGERIA PLC 388.02 9.10 - 1 500 14 169,665 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 100 1 100 153 2,462,891 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 1 43 1 43 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 1 43 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 5.00 19 1,030,632 19 1,030,632 INTEGRATED OIL AND GAS SERVICES OANDO PLC 62,157.06 5.00 1.00 125 3,950,175 125 3,950,175 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 19 11,952 CONOIL PLC 15,960.90 23.00 - 20 104,667 ETERNA PLC. 6,129.48 4.70 3.30 20 169,771 FORTE OIL PLC. 38,683.69 29.70 0.17 51 629,311 7,055.81 23.15 - 6 2,036 MRS OIL NIGERIA PLC. TOTAL NIGERIA PLC. 75,000.37 220.90 - 22 7,493 138 925,230 282 5,906,037 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,038.70 1.85 - 2 244 2 244 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 1 325 TRANS-NATIONWIDE EXPRESS PLC. 295.37 0.63 - 1 22,000 2 22,325 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,430.01 1.65 - 12 667,644 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 10 TRANSCORP HOTELS PLC 46,362.46 6.10 - 3 2,305 16 669,959 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 247.97 0.41 - 1 200 LEARN AFRICA PLC 1,080.03 1.40 - 10 191,029 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 1,009.50 2.34 8.33 8 208,800 19 400,029 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 663.08 0.40 - 1 5,500 1 5,500 SPECIALTY INTERLINKED TECHNOLOGIES PLC 766.91 3.24 -10.00 2 2,000,600 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 2 2,000,600 TRANSPORT-RELATED SERVICES GLOBAL SPECTRUM ENERGY SERVICES PLC 4,600.00 5.75 - 0 0 NEWREST ASL NIGERIA PLC 4,089.30 6.45 - 0 0 5,441.13 3.35 -4.01 28 795,404 NIGERIAN AVIATION HANDLING COMPANY PLC 28 795,404 SUPPORT AND LOGISTICS C & I LEASING PLC. 3,654.44 9.04 - 9 31,115 7,706.17 2.30 4.55 25 1,051,688 CAVERTON OFFSHORE SUPPORT GRP PLC 34 1,082,803 104 4,976,864 3,597 350,127,204 DIVERSIFIED INDUSTRIES CHELLARAMS PLC. 2,226.61 3.08 - 0 0 0 0

BUSINESS DAY

NATIONAL DISCOURSE

ISAAC ANYAOGU

n the weeks leading up to Nigeria’s general elections, social media operators of Nigeria’s two frontline political parties, the All Progressive Congress Party (APC) and the People’s Democratic Party (PDP) are trying to outdo each other to prove who has the most crowds at political campaign stops in different cities.

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Monday 11 February 2019

Campaign crowd wars: My mob is bigger than yours Pictures of rallies of both political parties in different states show huge crowds which these paid representatives seek to pass as evidence of their candidate’s popularity. In response, the other party agents will post pictures showing bigger crowds. Many say a lot of these pictures are manipulated. With digital tools that can airbrush an obese woman into looking like a skinny model, it does not look impossible. Some of these pictures according to efforts to fact check them, indicate many are outright lies. Pictures show a candidate who is weak in a certain part of the country with huge crowds but upon examination, it will show that they were taken from a different part of the country. Analysts say this recourse to desperate propaganda is only an evidence of their insecurity.

It is not a secret that crowds at political rallies are rented. In Lagos, Muhammadu Buhari, the incumbent president and candidate of the APC will campaign in Lagos on February 14 and in many parts of Lagos on Friday, local organisers were reported promising N2,000 per head to anybody who shows up. This is by no means an APC only problem, several people report being paid by the PDP to attend rallies. This is why political pundits say the pictures of vast crowds at election campaigns don’t mean a thing. It does not confer legitimacy on a failing campaign nor on a poor candidate. Worse still, there is no guarantee that these crowds will turn up to vote on election day as Nigeria’s low election turnout record shows. The Independent National Electoral Commission (INEC)

has severally expressed concern over the low turnout of voters during elections. In 2017, it invited the media and civil society to decry the menace. Yakubu Mahmood said that since 2015, Nigeria has been recording consistent rate of low voter turnouts during elections. “In December last year when we conducted the Ifako-Ijaye Federal Constituency bye-election in Lagos, the turnout was approximately three per cent, precisely 2.9 per cent, of registered voters in the area. “On Saturday, we conducted another bye-election, very free and fair election in Eti-Osa State Constituency in Lagos. We have I83, 000 registered voters; total number of accredited voters was just above 6,000. “The percentage turnout was 3.42 per cent, which is an improvement on the 2.9 per

cent on Ifako-Ijaye, but the turnout was very low. “Though it rained on the day of election, that cannot be the only explanation, as the constituency also includes two highbrow areas of Lekki and Victoria Island,’’ Yakubu said. Political analysts say rising poverty in the country is responsible for the huge crowds at campaign rallies where many see it as an opportunity to benefit from politicians who get into office and forget about them. Many Nigerians have narrated their frustration to get Permanent Voters Cards from INEC offices in the country, difficulty in getting the commission to complete transfer in case of those who moved and political parties who depend on votes to get into office are not working with the commission to fix the problem, one analyst said.

Nigeria’s manufacturing sector and emerging realities ODINAKA ANUDU

he Nigerian manufacturing sector must become a major driver of growth and jobs, but this requires political commitment and well-articulated policy framework. In July 2018, Procter &Gamble shut its $300 million consumer goods plant in Agbara. This was until July last year the biggest US non-oil investment in Nigeria. Apart from that, Unilever sold its Blue Band brand in 2018, as Dangote relinquished its noodle product. Also, Coca-Cola closed down its Enugu plant. Many factories are barely surviving today owing to very high production costs squeezing their margins and increasing un-competitiveness of many of their brands. Analysts believe that until the country has a comprehensive, pragmatic policy framework on industrialisation, gains of the past may be reversed, even with the next government. Ajaokuta Steel Complex has gulped $8 billion public funds without producing one sheet of steel. The Senate recently approved $1 billion for the behemoth, which is seen by analysts as a total waste of money. Since 1994, successive governments have claimed that the complex is 98 percent completed, but the remaining two percent has become a hard nut to crack for successive administrations. Muhammadu Buhari’s government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the steel, despite an earlier business case

in the last administration showing that the complex could only work if properly privatised. BusinessDay checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others. Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year. Frank Udemba Jacobs, immediate past president of the Manufacturers Association of Nigeria (MAN), said over 50 percent of raw materials used in the sector would have been locally available had Ajaokuta been working. But steel makes say the technology in Ajaokuta may no longer be relevant. African Industries, for examples, argues that it is better to fund private steel firms than put energy into the resuscitation of Ajaokuta. The Federal Government says it has already got 11 buyers interested in the complex, but analysts wonder what is keeping it from selling. Similarly, the Aluminium Smelter Company, located in Akwa Ibom State, is not in operation due to a tussle between Bancorp Financial Investment Group Divino Corporation (BFIG), a consortium of U.S.-based Nigerian investors led by Reuben Jaja, and the United Company RUSAL, a Russian firm. “We need that resolved. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), told BusinessDay earlier in an interview.

MANUFACTURING Nigeria has three paper mills that are not working at optimal capacity. These include: Nigeria Paper Mill (NPM)Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company (NNMC) Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State. Studies show that Nigeria loses N180 billion annually from nonperformance of these paper mills. Nigeria spends N50 billion on the import of papers annually, according to a research done by Abimbola Ogunwusi and Peter Onwualu, director and former director-general of the Raw Materials Research and Development Council (RMRDC) Newspapers and publishing firms are struggling to import papers with limited foreign exchange, leading to very high cost of paper products. “The co-investor that bought the NigeriaPaper Mill (NPM) Limited did not buy it to help Nigeria,” said Samson Ololade Ogundele, ex-senior manager, NigeriaPaper Mill Limited, Jebba, Kwara State in Lagos, said at a stakeholders’ forum in Lagos in 2016. “I know it was valued at about N30 billion in Nigeria as at 1995, but this same mill was given to the investor at N334 million in 2008. The aim of the government in handing over the mill was to create jobs and improve the economy. The majority of Nigerians working in Nigeria Paper Mill –both junior and senior—are all casual,” Ogundele disclosed, adding that the Federal Government must re-visit the privatisation in spite of the fact that it is the only paper mill

working at the moment. As of today, many private companies are either shut down or mired in intractable legal tussles. Vita Malt in Agbara, Ogun State, is shut down. Multi Trex, a 65,000 metric-tonne cocoa processing factory, the largest in the country, has been taken over by the Asset Management Company of Nigeria (AMCON). In 2015, the only surviving brake pads and lining maker, Star Auto Industries, collapsed as it was unable to compete with cheap Chinese products and could not pay back loan borrowed from the Bank of Industry. “It is difficult to compete with Asia, with substandard, cheap brake pads. I am not happy that import duty on brake pads fell from 25 percent to 10 percent. This is the situation since 2004 and government has done nothing about it,” CEO of the firm Chidi Ukachukwu, told BusinessDay in early 2014. Today, only three textile firms out of over 120 in the 1980s are in operation. In 1980s, the Nigerian textile market was the third largest in Africa, with over 160 vibrant textile mills and over 500,000 direct and indirect jobs. In fact, by 1985, there were about 180 textile mills in the country, employing about one million Nigerians. However, the fortunes of the sector began to dwindle in early 1990s. Precisely in 1994, many textile manufacturers began to feel the pinch of unstable political situation, massive smuggling and high production costs due to poor infrastructure, taxes and levies, among others. The situation worsened in 1997, when ban on importation of textiles was lifted. There were so many out-

cries by industry players and wellmeaning Nigerians as they warned of the consequences of that policy. Inferior imported products flooded the market. Consequently, many big players in the industry could not survive. Many divested to other interests while others leased their premises to other companies. For instance, Aswani Textile leased its premises to Chellarams, manufacturer of dairy products. Afprint, on the other hand, went into oil manufacturing and car business. Enpee Industries became a packaging industry. Within six years, over 50 companies closed down while about 80,000 employees had lost their jobs. As of today, companies such as Aba Textiles, Asaba Textile Mills, Arewa Textiles, Five Star, Gaskiya, Haffar Industrial Company Limited, SpecoMills, Zamfara Textiles, Millet Nigeria Limited, among others, have all been forgotten when textiles are discussed. “What we need is the enabling environment. We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of the Nigerian Textile Manufacturers Association (NTMA) in Lagos at a Made-in-Nigeria stakeholders’ meeting in Lagos. “We had the revival loans but this didn’t work because our biggest problem has never been money,” Adereti said. Analysts say the sector needs innovation and smart techniques to cut costs. They add that until there is complete implementation of the National Industrial Revolution Plan, the sector may continue to struggle.

Monday 11 February 2019

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BUSINESS DAY

Confusion as Supreme Court hammers Rivers’ APC Magnus Abe camp says it’s all over, expects mop up No, we still have chances, APC scribe Ignatius Chukwu

onfusion seems to engulf Rivers State on whether the All Progressives Congress (APC) in the state is out of the upcoming elections finally or may still contest, after the Supreme Court Friday February 8, 2019, delivered a judgment that seemed to shut out the party in any form of electoral contest from state to the National Assembly. This seems to wipe away the jubilations that dominated the party in past one week from judgments in the Federal Appeal Court in Port Harcourt on stay of execution. The controversial lawyer, Chiweikpe Chieme, said to play roles in court that destroyed the Chibuike Amaechi faction is said to be highly hated in the camp at the moment. Efforts to contact him have so far proved abortive. The radio stations in the state are awash with conflicting conclusions over the judgment with different legal opinions offering different interpretations, the major one being that the end has come for the APC in the state in the elections. The APC spokesperson in the state, Chris Fineface, however insists the party still has chances with two more cases pending. Abe camp jubilates The Senator representing Rivers South-East Senatorial District in the National Assembly, Magnus Ngei Abe described the ruling of the Supreme Court in favour of Ibrahim Umar and other APC chieftains, who were aggrieved by their exclusion during the Party Congresses in Rivers State as a stunning victory for Democracy, to justice and the rule of law in Nigeria. Abe, in a statement issued by his spokesperson, Parry Saroh Benson, reiterated that the issue in Rivers APC had always been about inclusion, justice, respect for party members and adherence to due process. “Today, the Supreme Court again made the point that no one is above the law consequently,

Nyesom Wike

Chibuike Amaechi

Magnus Abe

Tonye Cole

it is time for us to put the interest of Rivers APC above every other interest. “The victory at the Supreme Court this morning is a stunning victory for Democracy and Justice. The God of justice has spoken and every other voice must now be silent. We had always maintained that only one valid and lawful primary election was conducted by the APC in Rivers State, because the indirect primaries did not exist in law. “With this latest pronouncement by the Supreme Court, it is now clear that the voided congresses in Rivers State, as well as the indirect primaries that it gave birth to, has been knocked down not just by the State High Court, but that position has now been upheld by two separate panels of the Court of Appeal Port Harcourt Division and two panels of the Supreme Court of Nigeria”. He said it is time for the APC to face reality and put an end to all the frivolous appeals being filed in its name, and do the right thing. The right thing, according to insiders, is for the Amaehi camp to accept him as governorship candidate and share offices. His camp also expects victory in the remaining appeals at the apex court, going by the tend of verdicts so far. The Supreme Court had on Friday again upheld the order of the High Court, and made an order dismissing an appeal filed before the Court of Appeal in Port Harcourt Division against the High

Court judgment. A five-man panel of Justices of the Supreme Court unanimously refused to tamper with the High Court judgment that before now barred the APC from conducting its Ward, Local Government and State Congresses in Rivers State, pending the determination of a suit that was filed by 22 aggrieved chieftains of the party. The request was rejected by the panel of the apex court led by the Justice, Mohammad Dattijo, and rather re-affirmed its previous ruling that validated the High Court order. In a lead judgment delivered by Sidi Barge, the Apex Court held that by virtue of section 11 rule 5 of the Appeal Court rules, the appeal against the High Court ruling having been withdrawn on the orders of the authentic State Legal Adviser of the APC, Chiweikpe Chieme, ought to have been dismissed by the Court of Appeal. Barge said that since the Court of Appeal failed or refused to make the dismissal pronouncement for the said appeal, the Apex Court has no choice than to invoke section 22 of the Supreme Court act to assume jurisdiction over the case and decide on it. According to him “It is my considered opinion that this appeal must be given a decent burial. The appeal having been withdrawn at the lower court by the respondent is deemed dismissed. This is what the lower court failed or evaded to do. Therefore by virtue of section

22 of the Supreme Court Act 2004, the lower court having failed to exercise its powers provided under order 11 rule 5, this court is bound to do so”. Nigerians will recall that Justice Chiwendu Worgu of the High Court of Rivers State had granted an order restraining the APC from proceeding with its Ward and Local Government Congresses, which the party refused to obey, the court subsequently voided the entire congresses and its products from the indirect primary.

about the pronouncement, the Rivers State Chapter of APC has to accept that decision having come from the highest court of the land. However, we make haste to state that the decision on legal representation was the only matter the Supreme Court made pronouncement on today. We expect the apex court to rule on the all-important issue of jurisdiction of whether the State High Court of Chiwendu Nworgu was right to delve into what we believe was internal affairs of the APC with regards to primaries. “We urge the mainstream media and innocent members of the public to resist the lure of mischievous individuals who are inundating the social media and entire cyberspace with jaundiced versions of today’s Supreme Court ruling or churning out outright fake news with a view to deceiving the public, deluding themselves with short-lived comfort and feathering their nests from their paymasters. “We are convinced that no harm has been done to the candidacy of our governorship candidate, Pastor Tonye Cole and the others. We believe that, by the grace of God, we shall triumph and ultimately be on the ballot for the 2019 elections. “We call on the teeming supporters of APC in Rivers State to remain calm as it will surely end in praise. All candidates of APC in Rivers State will be on the ballot and go ahead to win come February 16 and March 2, 2019.

APC: Candidacy of Tonye Cole, others not imperiled The APC said it believes that the general public deserved to be protected from calculated mischief and misinformation especially those dispensed through the social media and rumours. “Therefore, it has become highly necessary to re-state what transpired at the Supreme Court. “The apex court ruled that in line with provisions of the Constitution of the APC, the chapter legal adviser at the time the matter commenced, Chieme Chinweikpe, rightly represented the party directly or through legal appointees of his instead of Lateef Fagbemi, SAN, who was seconded by the legal department of national headquarters of APC. This means that the judgment given by Chiwendu Nworgu was a consent judgment following thereto. “Irrespective of how we feel

Taraba killings: Buhari commiserates with Gov. Ishaku, Tarabans over deaths of indigenes Nathaniel Gbaoron, Jalingo

resident Muhammadu Buhari has on Sunday commiserated with Darius Ishaku,t the families and good people of Taraba state, over the death of eight people who died at the APC, presidential rally last Thursday.

Performing the ceremony in government house Jalingo, the Taraba State capital, the president described the deaths as unfortunate. Represented by the secretary to the government of the federation Boss Mustapher, PMB said the deaths of the eight people was a lost not only to the families and the people of Taraba state but a

personal lost to him. He said their death was unfortunate considering the fact that they came out to well come him, hence the stampede The APC presidential standard bearer also urged the people to preserve sanctity as his government is focus on the public good of the country.

Governor Ishaku while welcoming the delegation appreciated the president for the show of solidarity. He commended him for the maturity he employ in handling the affairs of the country assuring him of maintaining the peaceful co existence of the people of the state. Dignitries on the entourage

were the FCT minister Musa Bello,Adamawa state governor Jibril Bindo,Sen.Yusuf A. Yusuf, Femi Adesino, Aliyu Ndome, APC guber candidate for Taraba Danladi Sani and many others. The representatives of the president earlier visited the Emir of Muri and the fimilies of the deseased.

BUSINESS DAY

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Monday 11 February 2019

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BUSINESS DAY

ABUJACITYBUSINESS

COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

UK indicates interest to develop mining for economic growth in Africa JAMES KWEN, Abuja

sing its over 150 years of mining heritage, the United Kingdom (UK) has indicated interest in developing the sector to secure sustainable economic development in Africa for the next 150 years. This was manifested at the biggest mining conference in Africa held in Cape Town, South Africa to have an industrial dialogue between key figures in mining, agriculture, finance and

government hosted by the UK’s Department for International Trade. The conference which focused on the importance of forging a holistic, responsible approach to mining to deliver mutual stakeholder value also aimed at creating a sustainable mining ecosystems which will serve both business and communities. Martin Kent, Deputy Trade Commissioner Africa, said the conference reinforced the UK’s leading position as Africa’s responsible mining partner of choice as it was an incredibly

rich discussion illustrating the breadth of British expertise and commitment to delivering partnerships and genuine collaboration. Pippa Howard of Flora and Fauna International, said, “it was really encouraging to facilitate a conversation with socio-economic issues central in helping avoid conflict with land users, but also central in evolving sustainable agricultural development. “The pragmatism and realism of the panel was refreshing, it’s vital projects are commercially viable. Projects

that don’t work economically don’t work socially”. Kate Rudd, Director Energy and Mining for DIT Africa noted that, “responsible mining is the only option for long term success and the mitigation of long term risks. Whilst there may be a time and cost implication at the outset, the return on investment is unquestionable. “I believe the UK is best placed to drive this conversation and convene responsible actors who reflect our values making the UK is the responsible partner of choice in Africa”.

NAQS to launch export certification value chain to promote agro-export CYNTHIA EGBOBOH, Abuja

he Nigeria Agricultural Quarantine Service (NAQS) said it is set to launch the Export Certification Value Chain (ECVC) to address the tide of the rejection of agriculture produce in foreign markets. Vincent Isegbe, Director General, NAQS said that the export improvement initiative ECVC is aimed at ensuring that relevant activities performed from the fields where the prospective export crops are cultivated are consistent with the international standard condition and of best quality to pass the NAQS inspection and certification test which are precondition for issuance of the phytosanitary certificate. He said “The agency will do everything necessary to ensure that Nigerian food commodities conform to international standards and requirements as laid down by the international plant protection Convention, World Trade organisation among others”. Isegbe, speaking at the NAQS media Parley in Abuja said that the mandate of NAQS is to prevent the introduction, establishment and outbreak of animal and zoonotic diseases as well as pests of plants and fisheries and their products, adding that the agency is implementing

the backward integration for better exportation of products. Gozie Nwodo, Head of Communications, NAQS, said that the Agency which is responsible for facilitating international trade in Nigeria agricultural resources will continue to ensure that Nigerian agricultural produce are of acceptable quality as well as ensure that products coming into the country are wholesome and of acceptable quality. Nwodo, explained that NAQS has made efforts in mainstreaming best practices in the Nigerian agricultural sector adding and the efforts are yielding great rewards in the nation’s economy. “Due to increased knowledge and adaptation to guidelines, Nigeria was able to export 1,983 containers of hibiscus to Mexico within the first 9 months of 2017, which yielded $35 million to the nation’s economy. Also we recently conducted a crop pest survey on pigeon peas, sorghum and groundnut and it paved way for Nigeria to penetrate the $100 billion worth pigeon peas market of India”. Nwodo also explained that the agency is working to expand the export frontiers as some underutilized but high premium emerging agro commodities such as Sesame, soya beans, cinnamon, sugar cane, honey and snail has been identified

IST orders ‘caution placed on claimant’s stock be set aside’ in case between SEC,NSE, Pet trading LTD, others L-R: Tony Ailemen, State House correspondent; Emmanuel Ehihi, advert manager (Abuja); John Osadolor, director, Northern Operations, all of BusinessDay; Jalal Arabi, permanent secretary, State House, Abuja/winner of BusinessDay 2018 Excellence In Public Service Awards; Onyinye Nwachukwu, Abuja bureau chief, BusinessDay; Mustapha Alkali, technical adviser to Arabi, and Ogechi Uzoma, conferences marketing executive, BusinessDay, during the presentation of the awards’s plaque to Arabi by BusinessDay team at the Presidential Villa, Abuja.

Stakeholders blame govt, landlords for unoccupied buildings in Abuja STELLA ENENCHE, Abuja

t is no longer news that many buildings in highbrow areas of Abuja such as Maitama, Asokoro, Wuse have remained unoccupied. The development has continued to agitate concerned stakeholders, especially against the backdrop of social housing challenge besetting the Federal Capital Territory (FCT). Investigation by BusinessDay however revealed different reasons are responsible for the incident as some players in the property business who spoke with our correspondent identified the absence of legislation, high cost of rent charged by landlords among other factors. In his intervention, an estate surveyor and valuer,

Alomaja Olajide, called on the National Assembly to facilitate the passage of a bill that seeks to regulate property in Abuja. “Asokoro is a low density area that means the kind of structures you can have there are majorly detached houses maybe semi detached. It could be a house of its own in a compound and more so, they more more of big houses it could be ambassadorial apartment, it could be a fully detached house that has some boys quarters and guest houses. “For such houses,the kind of people that can occupy them are people that are well to do. its not just an average person that can take that kind of house. An average of an ambassadorial apartment in Asokoro goes for like N15M –N20M even as high as N25M per annum for rent. so

you can imagine somebody paying that kind of money to stay in an apartment .Majority of the houses you see in Asokoro are been occupied b y Embassies , very wealthy man .They can have them as their guest house. “So high rent is one of the major factor .That is why you see that the demand for houses there are very low. Yes the government has serious role to play. There is something going on now in National Assembly on property law. If it passed to law definitely, they will be forced to give most of the empty apartments out because if you have an empty apartment, you will pay tax on them”, Olajide said. The President Real Estate Developers Association of Nigeria ( REDAN), Chime Ugochukwu, called for a definite

government policy, to ensure effective planning. He said: “ I blame the stakeholders there was no effective planning.In other countries if an individual wants to build a house ,it has to be in line with government policy. So for us we have failed to know the need of housing in Abuja so people are now allowed to build what they want and in the end,both the society, which needed a different kind of housing type and the individuals who build those houses without adequate planning,turned out to be that, they now have houses that people don’t need consequently wasting assets . Ugochukwu said there is need for the government to initiate a stakeholder meeting with a view to unveiling the best suited mechanism that will bring us out of housing deficit.

CYNTHIA EGBOBOH, Abuja

nvestment and Securities Tribunal (IST) has ordered that the caution placed on the stocks be set aside in the case between Pet Group of Companies(Claimants) and Security and Exchange Commission(1st defendant) Nigeria Stock Exchange(2nd defendant), Central Securities clearingsystem(3rddefendant), Cash-craft Asset Management Ltd (4th Defendant) Access Bank Plc (5th Defendant). Nosa Osemwengie, presiding chairman with Abubakar Ahmed and Albert Otesile as members, in their ruling in case No: IST/OA/04/18 directed that, “the caution placed on the complaints stocks which include Pet trading Ltd CHN No.C2254646PE-Account No. 76173277, Pet Gas Supply Services CHN No. C914190PE-AccountNo.47799409,PetronFernandez CHN No. C1579072FEAccount No. 75076804, Joan Pramila Fernandez CHN No. C912512FE-Account No. 77145841, Pet Telecoms Ltd CHN No. C2186675PM-Account No. 6589631 and Pet Entertainment Ltd CHN No. C2254644PE-Account No. 52815920, Pete Fernandez CHN No. C1579071FE-Account No. 67840559, Petula Fernandez CHN No. C1579072FE-

Account No. 44673057, Petferns Nig. Ltd CHN No. C2099324PNAccount No. 63045140, Pet Gas Supply Integrated Services Ltd CHN No. C2146528PA-Acct No.54154900, Pet Musicals Ltd CHNNo.C2186674PL-Account No. 5428635 be set aside as the 4th defendant was their stockbroker at all time material to the suit and the caution has been placed on the claimants stock for about 10 years and it is no longer sustainable. “The claimants, Pet trading Ltd, Pet Gas Supply Services, PetronFernandez,JoanPramila Fernandez, Pet Telecoms Ltd, Pet Entertainment Ltd, Pete Fernand Ltd, Petula Fernandez, PetfernsNig.Ltd,PetGasSupply Integrated Services Ltd,Pet Musicals Ltd had in the originating application filed before IST, accused the defendants: Security and Exchange commission(1st defendant), Nigeria Stock Exchange(2nd defendant) of placing caution on all the stock portfolioswithCentralSecurities ClearingSystemLimited(CSCS) Account No.C2254646PE, Account No. C914190PE, Account No.C1579072FE, Account No. C912512FE, Account No. C2186675PM, Account No. C2254644PE, -Account No. C1579071FE, Account No. C1579072FE, Account No. C2099324PN, Account No. C2146528PA, Acct No. C2186674PL respectively.

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Pious socialist or brash liberal: Nigeria’s choice this week global Perspectives

OLU FASAN

he long-awaited E-Day is finally here. I mean Election Day, of course. Nigerians will go to the pollsthis Saturday, 16 February, to elect the next president. There is a motley crowd of candidates, but the contest is a two-horse race between PresidentMuhammadu Buhari, of All Progressives Congress (APC), and former Vice President Atiku Abubakar, of Peoples’ Democratic Party (PDP). It’s an election that gives Nigeriansa real choicebetween two very different personalities anddiametrically oppositevisions. Unfortunately, as I told African Business magazine in an interview for its February edition, “It’s an election that isn’t going to be defined by issues but by perceptions of the individual candidates”. Yet, whosever wins,Atiku or Buhari, his ideological orientation and manifesto promiseswould define his government over the next four years. For instance, if Buhari wins, expect more of the same statist, interventionist and anti-business policies; and if Atiku wins, expect a lot of activities around economic, political and institutional reforms and a radical free market approach, but also a brash, laissez faire attitude! I have previously discussed Buhari’s 28page “Next Level” manifesto and Atiku’s 186-page “Let’s Get Nigeria Working Again” planin this column. Yahya Alfa Ba-

kar, a teacher and business consultant,did an even more thorough analysis of the two manifestos in a paper entitled “Nigeria 2019: Analysis of Policy Document”, a copy of which he sent to me. Bakar argues that while Buhari iscommitted to large (debt-financed) investments in physical infrastructure, he, unlike Atiku, has “no concrete plans for human capital development, the private sector and reform of state institutions”. Of course, a few days to an election is not the time to rehearsedetailed arguments about the candidates’ manifestos. So, this piece is not about the minutiaof Buhari’s and Atiku’s plans. Rather, it’s about their ideological orientation and behavioural traits and how these would shape the government either of them leads after the election. President Buhari is, of course, the incumbent and we already know his mindset. Truth is, if re-elected, he would not do anything differently; it would simply be more of the same. Atiku, by contrast, has never governed this country but, looking at his ideological and personality bents, one can conjecture what he would be like if he is in charge. My proposition is that a re-elected Buhari would simply entrench his moralistic, didactic and personalist approach to governance, with strong socialistic inclinations, while Atiku looks likely to be, if elected, Babangida Mark II. Let’s start with Buhari. President Buhari’s government is led by puritans and preachers. Buharihimself is puritanical, stoical and self-denying; his deputy, Professor Yemi Osinbajo, is a preacher, pastor and moralist. They areboth socialists or at least prefer socialist solutions to problems. For instance, socialists like to borrow heavily to build infrastructure; they love physical structures, white elephant projects, and would

run huge deficits anddebts to build them. Socialists also believe that the solution to poverty is income distribution, through cash transfers to the poor. When it comes to corruption, socialists aresanctimonious, claiming the moral high ground. But they are alsohypocritical. They hardly ever see corruption in their camp; they protect their comrades. For Buhari and Osinbajo, tackling poverty and corruptionis a personal crusade, butbeing socialists, they focus on symptoms and ignore the underlying structuralcauses of poverty and corruption. What’s more, like the medieval puritans and religionistswho hated merchants and traders, President Buhari has run a very anti-business government. His administration is noted forits intimidation and punitive action against businesses such as MTN and HSBC. This is a government that would not tolerate criticism from any business and that, as alleged, sentthe EFCC to snoop on the financial transactions of businesses suspected of supporting Atiku’s campaign. Let’s face it, a government whose key members could threaten foreigners with violence and death for allegedly intervening in Nigeria’s elections, as Kaduna State governor, Nasir el-Rufai, arrogantlydid last week, is ruthless, and would put self-interestabove the country’s international image and investor-friendliness. Expect more of such illiberal and aggressive behaviourfrom a second Buhari government. But what about Atiku? Well, first, he has excited local and international businesses with hiseconomic and political reform plans. Of course, most people believe that some of his promises, such as $90bn annual private-sector-driven infrastructure spending and doublingGDP to $900bn in four years, are too ambitious and can’t be fulfilled. However, many welcome his

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proposed direction of travel, especially his commitments to free market, privatisation and political restructuring. But as I studied Atiku’s programmes and his utterances,I The choice before couldn’thelp but see comparisons, positive Nigerians this week and negative, between the administration is between a pihe would run, if elected, and the regime of ous socialist whose General Ibrahim Babangida. personal rule and I have recently reread a book entitled dirigiste policies would Voting for Reform, edited by Stephan Haggard and Steven Webb. In the book, Jeffrey scare off investors, Herbst and Adebayo Olukoshi wrote a trigger capital flight entitled “Nigeria: Economic and and allow the economy chapter Political Reforms at Cross purposes”, in to run aground and which they discussed reforms under the a brash, laissez faire, Shagari, Buhari and Babangida adminiseven amoral, liberal, trations. Buhari, of course, implemented who would transform closed and draconian political and ecoNigeria’s economic and nomic policies. But when Babangida took political landscapes but over in 1985, he embraced the principle of dialogue and consultation. He rejected the be a little relaxed about recommendation of the Political Bureausome slippages on the that Nigeria should adopt “socialist socioanti-graft front economic system” in which the state held “the commanding heights of the economy”, as Buhari favouredthen, and still does. Of course, Babangida’s flagship policy wasthe structural adjustment programme (SAP).At its heart were the floating of the naira; trade liberalisation; removal of petroleum subsidy; and privatisation. Babangida removed most obstacles to open market and investment liberalisation. And, as of December 1990, according to the World Bank, his regime had sold 55 state companies, and commercialised most of the rest. Interestingly, Atiku’s economic plans bare remarkable similarities to Babangida’s. Atiku has promised to float the naira;liberalise trade and investment, e.g.by signing the AfCFTA agreement and possibly the Economic Partnership AgreeContinues on page 36

Things fall apart, but is the President aware?

Atedo Peterside

nap Foundation has commissioned opinion polls for every Presidential Poll and many Governorship Polls since 2011. The results of the extensive polls conducted, on our behalf by NOI Polls, for the 2019 Presidential elections indicate that respondents who were undecided and/or unwilling to disclose their candidate (the Undecided) at the time of the Poll (end-January) were a whopping 38% of the total voters’ sample. The Poll findings confirm that President Mohammed Buhari (PMB) of the All Progressives Congress (APC) and Atiku Abubakar (Atiku) of the People’s Democratic Party (PDP) are clearly in a two-horse race, as all other Presidential candidates polled embarrassingly insignificant numbers. The gender split of the Undecided between women and men is 49:29. The geographical split of the Undecided is also uneven - it is highest in the South East (SE), South West (SW) and South South (SS) Zones with Undecided votes of 53% , 49% and 45% respectively. Conversely, the North East (NE), North West (NW) and North Central (NC) Zones were at the lower end of the spectrum with Undecided votes of 22%, 25% and 35% respectively. Voter apathy is strongest in the SE zone where only 61% of the electorate say that

they have given some consideration to the forthcoming elections, followed by SS (73%) and SW (79%). In the NW, NE and NC Zones, the comparable statistics are 87%, 83% and 80%. This is unsurprising, because a choice of two elderly Northern Muslim candidates in 2019 might have alienated quite a few in the South. That PMB actually had an overall lead in our polls is cold comfort for his supporters because further analysis confirms that only approximately one-third of the electorate nationwide claimed to be certain to back his candidacy. Atiku was lagging behind PMB, but the fact that the Undecided votes are concentrated outside the two zones where PMB is strongest (NE & NW) must give Atiku cause to believe that PMB’s lead might not be unassailable after all. The respondents to our detailed poll tell us that top six (6) reasons for backing PMB are:- Continuity (28%), Fight against Corruption (13%), Integrity (13%), Improving Security (12%) Helping the Poor (8%) and Preferred Choice (6%). Only 2% of PMB’s backers are doing so because they expect a “Better Economy”. Meanwhile, top 6 reasons for backing Atiku are:- Change in Governance (39%), Better Economy (20%), Better Governance (11%), Preferred Choice (8%), Past Political Records (7%) and Restructuring (5%). But then both “Continuity” and “Change” have been defined poorly by PMB and Atiku respectively and so they mean different things to different voters. That only 2% of his own supporters expect a Better Economy from PMB is understandable. Records show that in every single year that PMB has been in office as Head of State (including 1984), he managed to bequeath a reduction in real income per capita on the populace. In effect, his rule or reign through

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Curiously, the best descriptions of PMB’s failures come from his family, friends and loyalists. They are the ones who told us everything that we feared but were unsure about

the years has been virtually synonymous with increased poverty levels. If PMB’s strength was supposed to be plugging leakages from the Federal Government purse and, if his political opponents are supposed to be “looters”, it is hard for some to understand why the national economy often performs better when supposed looters are in charge. The answer to this puzzle lies in the structure of the Nigerian economy; all 3 tiers of Government combined now account for only 8.54% of National Aggregate Demand as at 30 June, 2018 (latest figures available). Conversely, the Private sector now accounts for a gigantic 91.46% of Aggregate Demand. These are statistics that many business savvy people have sensed intuitively and that is why more and more businesses have stopped bothering to supply goods and/or services to the phenomenally corrupt Government sector. It is not the plugging of Government sector leakages that really jumpstarts economic activity. Rather, it is the institutionalization of an enabling business environment that stimulates all-round business confidence and new investment activity from the private sector that generates economic growth. Buharinomics (if there is any such coherent thought or body of logic over and above random and irrational/wild actions) is unpopular because it concentrates unduly on 8.54% of the economy (Government sector), whilst neglecting and/or punishing and bashing or brow-beating the much broader 91.46% of the economy (Private Sector). The biggest negative of Buharinomics is allowing rogue and/or lily-livered and incompetent regulators to harass innocent private sector businesses as they try and shake them down for unwarranted and horrendously large fines by peddling falsehoods against them. The business community then

takes fright and investors flee thereby sending the economy into a tailspin. A recent case in point was the preposterous $8bn allegation against MTN. This is where PMB’s kitchen cabinet have let him down terribly. An old man relying on an Official Deputy or his Chief of Staff as his right hand men is normal and permissible/expected. Supplanting or subverting these responsible officials via undue deference to a coterie of nepotistic and/or shady influencers who exercise real power without responsibility in the President’s name is PMB’s Achilles Heel. Discerning Nigerians do not want a “De Facto” President (or two) who never come out of the shadows to subject their archaic ideas to public scrutiny and debate. It could all have been so different for PMB. All he had to do was execute an anticorruption drive systematically without bias or favour, uphold the rule of law e.g. release the brutalised Shiite leader and stop rogue regulators from harassing the private sector. Then, many would have ignored the fact that Nigeria, under his watch, now leads the world in extreme poverty rankings and also threatens to become the illiteracy capital of the world, measured in terms number of school age children that are not in school Curiously, the best descriptions of PMB’s failures come from his family, friends and loyalists. They are the ones who told us everything that we feared but were unsure about e.g. that he is not in charge, but is controlled by 2 or 3 men, or that his anti-corruption drive is jaundiced because he uses insecticides on his political enemies whilst applying deodorant on his own equally guilty associates and friends. By bastardising the anticorruption drive, the heads of the security agencies did Buhari a great disservice. Party Continues on page 36

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