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news you can trust I **WEDNESDAY 11 JULY 2018 I vol. 15, no 94 I N300

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Teleology awaits NCC’s approval for licence transfer Jumoke Akiyode-Lawanson

eleology holdings limited has completed the payment of $351 million, bided to take over ownership of the debt ridden 9mobile telecommunications and now awaits a transfer of license by the Nigerian Commu-

Completes $351m payment for 9mobile Cash flow seen holding up

Continues on page 38

Pages 19-22

World Cup Result Analysis

L-R: Ayodele Akinwunmi, alumnus, Lagos Business School EMBA; Yinka David-West, director of faculty, Lagos Business School; Uchenna Uzo, director, MBA Programmes, Lagos Business School; Claire Omatseye, president, Lagos Business School Alumni Association, and Aderayo Bankole, head, corporate communications, Lagos Business School, at a press briefing on Lagos Business School Global Ranking as the 48th in EMBA, in Lagos.

aving come to the realisation that a fragmented opposition may not be able to dislodge the ruling All Pro-

MICHEAL ANI & OLALEKAN IPELE

he upward growth trajectory anticipated in Nigeria is to have very little impact on the revenue of businesses as a significant number of CEOs KPMG surveyed expect moderate corporate growth across board. Key findings from the survey show that 76 percent of the CEOs

gressives Congress (APC) from power, the People’s Democratic Party (PDP), the splinter group from the APC - reformed APC, former President Obasanjo’s African Democratic Congress (ADC) and 36 other political

parties merged on Monday to form the Coalition of United Political Parties (CUPP) to solidify the opposition and increase its chances of wrestling power from the ruling party. Not that the phenomenon of

Endurance Okafor & Oluwatosin Dokunmu

opposition mergers and coalition is new though in Africa. In the 1990s, it was realised that losing parties in some countries garner up to 60 percent of the

he Central Bank of Nigeria (CBN) seems to have given up its quest to meet the 80 percent set financial inclusion target which was projected to be achieved by the year 2020. The apex bank, in its refreshed exposure draft on Financial Inclusion asserts that the target may not be feasible as stated in the Na-

Continues on page 38

In Nigeria’s fragmented politics, rise of coalitions make parties increasingly irrelevant

Chris Akor

...see organic growth strategy as vital

CBN throws in the towel, says 80% financial inclusion target not feasible

States Competitiveness and Good Governance Awards 2018 nominees 1 - Belgium 0

Nigeria’s CEOs expect revenue growth of less than 2%

Continues on page 38

Inside

France

fgn bonds

Treasury Bills

2 BUSINESS DAY NEWS

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Wednesday 11 July 2018

FUNDS

FBNQuest funds are top performers in H1

B Anthony Osae-Brown, Editor, BusinessDay

Views from Singapore -The airport is really a shopping mall

magine being able to take your step ahead of its immediate neighfamily to the Murtala Muham- bours, Changi airport is already mad Airport on weekends for planning a terminal 5, which will shopping just the same way you be called the Jewel Changi Airport. will go to Ikeja Shopping mall on Scheduled to open in 2019, this new the weekend. That sounds unusual terminal has been planned to be but that is the concept on which the ‘world class lifestyle destination.’ It Changi airport is run in Singapore. is going to a mixed use complex with We visited the place yesterday and a glass and steel façade, filled with management told us how they have themed gardens, retail shops, food been able to grow the Changi airport outlets and other modern amenities as usual. Yip says the airport is also into the sixth busiest in the world. Speaking on the philosophy that going to have the world’s largest indrives how the airport is run, Jaisey door water fall and in the evenings, Yip, Associate General Manager, there will be lighting displays. It will Cargo and Logistics Development, also have the unique restaurants Changi Airport Group said that vi- and shops and world class hotels sion is to make the airport a place that will accommodate those having where everyone can spend quality overnight stay at the airport. But it is not just the passenger time and leave with ‘memorable’ experiences. She says that the idea end driving the Changi airport. The is to position the airport as not just freight business is also huge. It is called the Changi Airfreight Centre an airport but as a ‘lifestyle’ hub. The airport has been designed (CAC) and Airport Logistics Park. and built in a way that it is part of Yip says that CAC is located on a 70 the tourist attraction that brings hectares’ land within a free trade people to Singapore. Those who zone near the Changi Airport. We use the airport are not just those were able to visit the perishable with plans to fly out of the country goods handling session of the CAC, but people who are also looking for called Coolport. According to Yip a great place to relax, looking for Changi Airport has been ranked exciting things to see or just have as the 7 th busiest airport for intera great shopping experience. This national freight globally handling is why the airport has about 400 more than 2.21 million tonnes of retail shops and 140 food outlets. cargo on an annual basis. Yip says that the three key sucThere are also 24-hour movie theaters in two of the terminals and cess factors that have made the play grounds for kids. The airport Changi airport excel are; operationalso has themed gardens across its al efficiency, connectivity to key citfour terminals, art installations and ies around the world and of course, capabilities. Singapore is ranked as transit hotels and lounges. Because of these facilities, Sin- the number one airport in the Asia gapore residents living close to the pacific in terms of logistics perforairport, actually come to the airport mance and number five globally. on weekends with their families to eat, The indices used in these ranking shop and relax. Our Singapore guide a including; customs, infrastructure, told us that the airport ensures that it international shipments, logistics provides a lot of fun activities over the competence, tracking and tracing weekend to attract residents to the air- of cargo and finally timeliness. No port. She also says that prices of items need to say that Nigeria will rank at the airport are also comparable very low on all the indices. The airport was also ranked in to what you get in town, so that also makes it attractive for residents to use the 2018, ‘Air Cargo Excellence Rethe airport as a shopping destination. port’ as the ‘Best Global Airport for Passengers staying at the airport performance, value and facilities. for more than five hours can get Yip explains that the philosophy that a free two-hour tour of Singapore guides Changi airports handling of for free. Passengers can also watch cargo is that every cargo needs a latest blockbuster movies in any of personalised touch. The big picture the 24-hour movie theatres at the is to ensure that Singapore becomes airport for free, in case they have a trusted and reliable hub for cargo. The cargo business has also shorter waiting periods. Not surprisingly, the Changi air- been carefully structured to support port has become the leading airport the key sectors of the Singapore in Asia Pacific handling 62 million economy as well as the Asia Pacific passengers per annum. Passenger economy. The main items handled traffic has grown consistently since by the freight business is linked to 2014. Yip disclosed that because the the fact that the country is located Changi airport has been positioned in a highly populated region. The as a lifestyle hub, retail revenues and key cargoes are pharmaceuticals, airlines revenues are now almost at perishables, mainly food items and par. And this significant retail rev- vegetables. The Asia Pacific region enue is now used to subsidise aero population will hit five billion in revenue to ensure that the airport 2050 with the population rising by remains competitive in the region 900 million people, who will need and is able to attract more airlines to be fed. The cargo business is being to use Singapore as a base for their positioned to be the logistics hub that will support this higher population. operations in the Asia Pacific. Also, in line with Singapore’s overall strategy of always being one Continues on wwwbusinessday online.com

usinessDay did a yearto-date analysis on the performance of 74 funds distributed over six broad portfolio classes traded on the Security and Exchange Commission (SEC) using monthly data from 29th December 2017 to June 22nd 2018, with a view to evaluating the stock/fixed income selection skills of the fund managers. While some mutual funds where seen performing well, others were moving in southward trajectory. BusinessDay’s year-to date analysis on equity fund managers in the period under review, showed that FBNQuest Capital Asset Management topped the gainers chart with 10.1 percent increase in its unit price from 173.31 to 190.81. Other top gainers were; Stanbic IBTC Aggressive Fund (Sub Fund) with 6.8 percent increase in its unit price, from 2,047.05 to 2,186.37 and United Capital Asset Mgt. Ltd with 4.3 percent in its unit price from

0.93 to 0.97 in the same period. “They performed well because they were not holding DANGCEM at market rate, considering DANGCEM had 30 percent of the NSE market capitalisation and was down 3 percent in that period. As a result if the overall market was going down theirs would not have not gone in the same direction,” Wale Okunriboye, Head, Investment Research at Sigma Pensions said. The equity fund managers that therefore lagged the best performers were; First City Asset Management Plc with a 2.1 percent decrease in its unit price from 1.43 to 1.40, Chapel Hill Denham Mgt. Limited with a 2.9 percent decrease from 12.69 to 12.31, Meristem Wealth Management Limited with a 3.9 percent decrease from 14.21 to 13.66 and AXA Mansard Investments Limited with a 1.60 decrease from 152.77 to 150.32. Johnson Chukwu, MD of Cowry Assets Limited said ordinarily, any good fund manager should have

a good performance, because a portfolio investor will first identify the instrument that qualify for investment in their portfolio, that is those instruments that have very good fundamentals. “The selectiveness of investors in picking instruments into their portfolio is such that any good portfolio or fund manager should ordinarily outperform the market index,” Chukwu said. Meanwhile, amongst the various bond fund managers, FBNQuest Fixed Income Fund topped the gainers chart with 7.7 percent increase in unit price from 1,149.09 to 1,238.09 between December and June 22nd 2018. Other top gainers were; United Capital Asset Mgt. Ltd with 5.7 percent increase in unit price from 1.57 to 1.66 and Stanbic IBTC Asset Mgt. Limited with 5.4 percent increase from 176.45 to 186.05 same period. Continues on wwwbusinessday online.com

L-R: Ewariezi Useh, managing director, downstream, Aiteo Group; Emmanuel Ukegbu, chief operating officer, Aiteo Eastern Exploration and Production Company; Simbi Wabote, executive secretary, Nigerian Content Development and Monitoring Board, and Ransome Owan, group managing director, Aiteo Power, at the 2018 Nigeria Oil & Gas Conference where Aiteo Group emerged Indigenous Oil & Gas Company of the year, in Abuja.

Abuja Rail Mass Transit takes off Thursday after 11 years … as Buhari commissions project JAMES KWEN, Abuja

or the Abuja Rail project its better late than never. Eleven years since its initiation, the Abuja Rail Mass Transit system will commence operation Thursday. This is as President Muhammadu Buhari commissions the recently completed first Phase of the Abuja Light Rail Project on Thursday. Buhari also flags - off the railway services signalling the commencement of operations of the longawaited rail services in the Federal Capital Territory, FCT Abuja. Muhammad Bello, Minister of Federal Capital Territory said, the Phase, which comprises Lots 1A and 3, is only an integral part of the six Lots which form the scope of the FCT railway system. Bello announced that the event takes place in the Abuja Metro Station, in the Central Business District – the flagship of the twelve completed railway stations under the package. He explained that the 45.245km

…FCTA solicits NRC partnership

of standard gauge rail line running between the Nnamdi Azikiwe International Airport to the Abuja Metro Station is the first of its kind in West Africa. According to a Statement by Chief Press Secretary to the Minister, Cosmas Uzodinma, “the project, which was completed by the present Administration, has been in the works for over 11 years. “Inherited at 63 percent completion, the remaining 37 percent was fast-tracked to completion within the two years of the current Administration by dint of resolute commitment to prudent management of resources. “The commissioning would mark formal commencement of rail service and the fulfilment of a long awaited dream for a modern state-of-the-art mass transit systems for the FCT,” he said. Meanwhile, the Federal Capital Territory Administration, FCTA has solicited the partnership of the Nigerian Railway Corporation, NRC to ensure a hitch free operation of the Abuja rail mass transit system. In a meeting with officials of

NRC ahead of the take-off of the rail transport services, FCT Minister, Muhammad Bello stated that the administration would require the support, supervision and guidance of the regulators for a smooth take-off. Bello, who disclosed that some skeletal staff have already been employed to start some of the operations, added that the expertise and experience of NRC would also be indispensable. “Based on your observations and your guidance, we will really appreciate support from you so that we start a skeletal thing as we don’t want a situation whereby Mr. President commissions the project on the 12th of July and we just shut up shop. “We intend to run it from the Airport to the Central Business District gradually for the people to know about it and for us to go through the learning curve,” the Minister stated. Responding, General Manager of NRC, Fidet Ohiria, pledged the support of the Corporation towards the successful running of the Abuja Light Rail Project through capacity building, personnel and certification. Continues on wwwbusinessday online.com

Wednesday 11 July 2018

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Wednesday 11 July 2018

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BUSINESS DAY

6 BUSINESS DAY NEWS Nigeria may pay more for petrol importation ... as oil may spike above $150bpd

igeria may pay dearly for not fixing her refineries as she may start importing fuel at prices higher than the current payment to import a litre of fuel. This is because it is feared that the price of crude oil may spike above $150 per barrel in the nearest future. The fear being expressed is based on the fact that most international oil companies globally have refused to invest because their shareholders are more interested in getting returns currently as against making investment. By the time the impact of this lack of investment translates into shortage of crude in the global oil market, it would certainly lead to a rise in price of the commodity, as demand might be higher than supply. Nigeria with four malfunctioning refineries has depended on imported fuel for several years, and this has denied her the money she should have invested on other parts of the economy. Nigeria imported 22.5387 billion litres of petroleum products worth over N3.24 trillion from refineries abroad in 2017. The amount is enough to build 88 units of 20,000-barrel capacity modular refineries.

“The petroleum products importation statistics for 2017 reflected that 17.31 billion litres of premium motor spirits (PMS), 4.28 billion litres of automotive gas oil (AGO), 340.33 million litres of household kerosene (HHK), 592.73 million litres of aviation turbine kerosene (ATK) and 15.61 million litres of low pour fuel oil (LPFO) were imported into the country in 2017,” the executive summary of the 2017 Petroleum Products Imports and Consumption (Truck out) statistics released by the NBS, stated. The costs were borne by the Nigerian National Petroleum Corporation (NNPC), sole importer of petrol through crude swap contracts, and some private importers of diesel, kerosene, aviation fuel and LPFO. According to Sanford C. Bernstein & Co, oil investors may regret urging companies to cough up cash now instead of investing in growth for later, as the dearth of exploration is setting the stage for an unprecedented crude price spike. Companies have been compelled to focus on boosting returns and shareholder distributions at the expense of capital expenditures aimed at finding new supplies, analysts including Neil Beveridge wrote in a note on Friday. That is causing reserves of major producers to fall, and the

NEPAD transforms into African Union Development Agency

CBN demands valid court order for release of BVN information

t the recent 31st Ordinary Session of the Assembly of African Union Heads of State and Government in Nouakchott, Mauritania, African Heads of State and Government received severalreports,includingthestatus of the implementation of the AU InstitutionalReformspresentedby PresidentPaulKagameofRwanda. President Kagame is the current chair of the African Union and the champion for the AU Institutional Reforms process. During the summit in Nouakchott, a decision was officially taken on the transformation of the NEPAD Planning and CoordinationAgencyintotheAfricanUnion Development Agency. The Assembly approved the establishment of African Union Development Agency as the technical body of the African Union with its own legal identity, defined by its own statute. The statue will be developed and presented for adoption at the next AU Summit in January 2019. The Assembly commended the leadership of Senegalese President, H.E Macky Sall, current chairperson of the NEPAD Heads of State and Government OrientationCommittee,forreinforcingthe credibility of NEPAD that has been acknowledgedintheinternational community, including the G20 and the G7. The current reforms at the AU are an affirmation by member states of their commitment to the NEPAD Agency as the Union’s own instrument established to champion catalytic support to countries and regional bodies in advancing the implementation of the continent’s development vision – as articulated in the seven aspirations and 20 goals of Agenda 2063.

HOPE MOSES-ASHIKE

OLUSOLA BELLO

industry’s reinvestment ratio to plunge to the lowest in a generation, paving the way for oil prices to surpass records reached last decade, according to Bernstein. “Investors who had egged on management teams to reign in capex and return cash will lament the underinvestment in the industry,” the analysts wrote. “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008.” The world’s oil majors including Royal Dutch Shell plc and BP plc navigated the price crash of 2014 by cutting costs, selling assets and taking on debt to help satisfy investors with hefty dividends. The biggest, ExxonMobil Corp, was punished by shareholders earlier this year after compounding disappointing results with a massive spending plan and a lack of buybacks. The oversupply of crude globally in recent years has masked “chronic underinvestment,” Bernstein said in the report. Oil has rebounded to the highest in more than three years as the Organisation of Petroleum Exporting Countries and its allies started curbing output at the beginning of last year to trim a global glut. The producers aim now to pump more to help cool the market, but disruptions from Libya to Venezuela are keeping prices elevated.

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Monday 09 July 2018

World Population Day: Edo urges global action to ensure development surpasses population growth

Gowon to chair IoD Nigeria’s 2018 tourism, hospitality forum

overnor of Edo State, Godwin Obaseki, has called on world leaders to take decisive action to ensure development efforts meet and surpass the pace of population growth, to reduce inequality and engender inclusive growth across the world. Obaseki, who said this in commemoration of the World Population Day marked every July 11, noted that growing population should not be seen as a curse, but a challenge for developing countries to articulate innovative pathways that would drive inclusive and sustainable development. According to Obaseki, “The World Population Day reminds us of the need to be circumspect in a number of policy issues, especially as it affects population growth and its implications for economic development and social cohesion. “On a day like this, it is imperative to make the case for planned parenthood and family planning so as to ensure that the world’s population doesn’t become untameable.” Noting that this year’s theme for the day, Family Planning is Human Right, makes it imperative for families to determine the size and spacing of their children, he said it behoves government to provide structures for individuals to dream and actualise their dreams.

“Due to its economic implications, growing population has been a double blessing for developing countries, such that many are still grappling to articulate policies to manage the growth and the attendant socio-political as well as economic fallouts of a bulging population. “However, we cannot wish away the import of human life. Hence, even as the debate and policy actions are tweaked to contain population growth, governments and world leaders should take critical actions to ensure that development meets needs of people, in such a way that they would be assured of support structures to carve out their destinies and live happy, fulfilled lives.” The governor said the state government had undertaken a number of development initiatives to help in delivery of affordable, accessible healthcare, quality basic education and expand the space for wealth creation so as to deepen inclusive growth and development. He added that the state government would not relent in its efforts in industrialising the state, attracting investments to open up new vistas for economic expansion and deepen reforms to ensure that people have opportunities to express themselves and earn decent wages.

n its bid to increase awareness and grow domestic tourism in Nigeria, the Institute of Directors (IoD) Nigeria will be highlighting the critical role of tourism and hospitality to economic development in its 2018 Tourism and Hospitality Forum. Theme, “Domestic Tourism as a Catalyst to the Growth of Nigerian Economy,” is scheduled to hold on July 12 in Lagos, and will be chaired by Yakubu Gowon, a former head of state. Dele Alimi, DG/CEO of the institute in a statement, said the forum would create an opportunity for stakeholders in both public and private sector of the economy to discuss the problems in the Nigerian tourism and hospitality. According Alimi, the minister of information and culture, Lai Mohammed, will be the special guest of honour, while Ben Murray-Bruce, founder of Silverbird Group, is the keynote speaker. Abiodun Jaji, chairman, Tourism and Hospitality Committee of IoD Nigeria, said the forum would engage participants on real-life case studies and interactive sessions. According to Jaji, the forum was meant to highlight the activities and actions needed to meet the strategic focus of domestic tourism growth in Nigeria, increase domestic spend by Nigerians over time, and enhance the level of the culture of travelling within Nigeria among Nigerians.

entral Bank of Nigeria (CBN) on Tuesday mandated the provision of valid court order as a pre-requisite for releasing Bank Verification Number (BVN) information to applicants. This follows an amendment to the regulatory framework for BVN operations and watch-list for the Nigerian financial system by the CBN yesterday. In a circular to deposit money banks, switches, money operators, and payment solution service providers, microfinance banks and others, signed by Dipo Fatokun, director, banking and payments system department, the amendment takes immediate effect. Section 1.6 of the framework: Eligibility for access to the BVN, which states that, “the following entities may have access to BVN information subject to approval of the CBN,” has been amended to read, “the following entities may have access to BVN information after providing a valid court order, subject to approval of the CBN.” TheobjectivesoftheRegulatoryFrameworkforBVNOperations inNigeriainclude,toclearlydefine the roles and responsibilities of stakeholders, to clearly define the Bank Verification Number operations in Nigeria; to outline the process/operations of the watchlist; and to Define access, usage and ownership of the BVN data, requirements and conditions. The CBN in collaboration with the Bankers’ Committee proactively embarked upon the deployment of a centralised Bank Verification system and launched the BVN, in February 2014.

L-R: Vivian Mbagwu; Kelechukwu Mbagwu, chairman, planning committee; Adeyoyin Adesina, chief executive officer, Corona Schools’ Trust Council; Jimi Agbaje, old student of Corona Apapa, and Onanuga Adenike, representing minister for education, during the 60th anniversary of Corona School Apapa in Lagos.

Banks’ deteriorations in financial soundness indicators reversed – CBN HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) on Monday said there had been some improvementsinthebankingsystem as the deteriorations in financial soundness indicators had been halted, and in some cases reversed. In a statement at the last Monetary Policy Committee (MPC) meeting,AdamuEdwardLamtek, deputy governor, CBN, and MPC member, noted that industry return on asset (ROA) and return on earnings (ROE) rose quite significantly to 21.57 percent and 2.14 percent, respectively, in April, from 11.78 percent and 1.28 percent in February 2018. Likewise, the non-performing loans (NPLs) ratio moderated slightly in April.

“These positive developments are broadly connected to the improvement in the macroeconomic conditions, including stableexchangerateanddeclining inflation. Interestingly, banking system stability is required for proper financial intermediation (including credit flow to the real sector), which is needed to support recovery in output,” Lamtek said. From a financial stability standpoint, he said inflation threats or risks to the naira exchange rate stability were to be mitigated upfront in order to sustain and deepen the resilience of the industry. Adenikinju, Adeola Festus, MPC member, said the domestic economic fundamentals remain largely positive and encouraging. Adeola also noted that the

balance sheet of the banking sector had also improved relative to the last MPC meeting. However, he said it was clear that banks were more eager to strengthen their balance sheet than commit to new credits. The continuous preference of banks for relatively safer fixed income assets rather than direct lending to the real sector of the economy remains a critical challenge to current policy stance. “In general, the banking system witnessed growth in aggregate deposits in the first quarter of 2018. However, there was no corresponding increase in credit. This implies that more liquidity in the system may not mean more credit as is widely believed in the short term. The high operating expenses in the banking system need to be carefully addressed to

reduce the high cost environment which in my view impacts more on lending rates than even the MPR,” he said. Aishah Ahmad, MPC member, noted in her MPC statement that the banking sector NPLs concentrated in a few sectors, remain a bit higher, while credit to the private sector contracted by 0.16 percent in April 2018, compared to the provisional annual growth benchmark of 5.64 percent. “Bank lending rates also remained significantly high – all indicative that the banking industry requires more impetus to substantially reflect the benefits of the ongoing recovery. Thus, the monetary authority must work with the relevant financial institutionstoentrenchinnovative measures to safely increase credit to the real sector,” she said.

Wednesday 11 July 2018

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Wednesday 11 July 2018

BUSINESS DAY

10 BUSINESS DAY

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

hen wise people hear that a stitch in time saves nine, they don’t just pass in a hurry without a thought given to the adage. They normally pause, often unconsciously, and run their thoughts through events around them, contemplating the tear they may have and the possible ways to stitch it. But those who are not that contemplative do not really pay any mind to such an adage. They inevitably face the consequences of their disregard for wisdom as they come. Bad loans have always been a source of concern for both regulators and operators in the finance industry. Both parties are aware of the pervasive implications of loans made out to client or customers that fail to get repaid at the times they ought to be paid. They know the damage such loans could do to the health of their institutions. There are many things that happen at the lending office before a loan finally goes into the thrash can of bad debts. The Central Bank has issued Prudential Guidelines, for various aspects of banks’ operations. These include the thorny issue of effective risk management, the lingering issues of proper corporate governance, know your customer (KYC), money laundering, financing of terrorism, loan loss provision-

Wednesday 11 July 2018

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Bad Loans and their write off ing, different peculiarities associated with an industry as wide as finance and banking, and other sectoral needs of the economy. The guidelines normally require deposit money banks to develop, and have their board of directors approve comprehensive credit policy, which must address among other issues, loan administration, disbursement and appropriate monitoring mechanisms, and action plan against any eventuality of non-performance of loans. Such a credit policy should be reviewed from time to time; at least every few years. Prudential guidelines are so critical to the health of any financial sector in the world that they are monitored and updated regularly as the industry evolves, and the global economy revolves in its dynamism. They go as far as stipulating the tenure of external auditors in banks for the obvious reason of the consequences of familiarity and capture. In some countries they set a maximum period of about 10 years from date of appointment after which the audit firm shall not be reappointed in the bank until after a period of about another 10 years. This shows the importance, which central banks rightly attach to credible audit reports as instruments of good corporate governance. There is a natural tendency of human beings to show off their performance, especially when such performance is good. It has both announcement and ego values. This tendency is part of the dress code of deposit money banks. It is also growing among the other categories of banks to be dressed up prim and proper at all times. However, things may not always be as rosy as we want them to be or as presented. Besides, the core duty of image and reputation managers

Microfinance institutions often fail to write off bad loans for a number of reasons. It could be that they are afraid of regulatory rigidities about capital impairment and other legal issues. This could also be a result of their desire to show exaggerated profits and look good to their clients and the general public. Failure to write off bad loans will distort the statistics on loan recovery, which are important indicators of effective management of a lending programme is to maintain a consistently good and rising profile for the institution. This is why many financial institutions will go a long distance to keep a good image, and that sometimes, implies understating the record of non-performing loans. In the revised prudential guidelines for Nigerian banks, issued by the Central Bank, loans are classified based on performance, into specialised and non-specialised loans with differing loan loss recognition and measurement criteria. These requirements are such that non-performing, non-specialised loans are classified into Substandard (overdue by greater than 90days); Doubtful (overdue by 180-360days); and Lost (overdue by greater than360days). For nonperforming specialised loans, the classification is into Watchlist, Substandard, Doubtful, Very doubtful and finally, Lost. There is no doubt-

ing the difficulty lenders have with recognition and acceptance that a loan is bad. Worse still, they find it hard to accept that a loan is lost. So, the tendency is rife to carry a bad loan in the books for a long timeas though it were good. Some financial institutions tend to delay or completely avoid writing off bad loans from their books. But keeping the books clean by weeding off lost loans is not only a measure of sound banking practice but the hallmark of good corporate governance. There is however, a certain danger that haunts a financial institution, especially microfinance institution that understates its nonperforming loans. Microfinance institutions often fail to write off bad loans for a number of reasons. It could be that they are afraid of regulatory rigidities about capital impairment and other legal issues. This could also be a result of their desire to show exaggerated profits and look good to their clients and the general public. Failure to write off bad loans will distort the statistics on loan recovery, which are important indicators of effective management of a lending programme. Recovery rates are important story-tellers on the health of both a lending institution and the industry as a whole. Delinquency ratio is known to be low in microfinance because the poor have proved that they can be trusted even more than the rich. In 2005, when I presented my book on microfinancing, as part of the United Nations’ International Year of Microcredit, I went a considerable length to drive home this point, indicating that the ownership and control of the instruments of coercion by the rich, has advanced their tendency to dishonesty. Impunity fuels corruption at all levels. Meanwhile, the fear of the law, especially in societies where justice could be bought and sold in a

criminal justice market place, has made the poor even more worthy of trust. They are probably the only people who obey the law in such societies. It was the activities of the rich, and not the poor, that forced Nigeria, and many other countries, to establish Bad Banks like AMCON, to clean up the mess crated in the banking industry by the rich. There are yet no bad banks for microfinance banking, hence the need for proper reflection of the loan loss situation in the sector. Delay or outright refusal to write off a bad loan has the effect of reducing the recovery rate. This is like shooting oneself in the foot. Not only does it affect donor confidence, it also impairs capital inflow to the industry. If we assume for example, that a microfinance bank made loans of 100 units of money annually and 10 per cent of it is never paid back and not written off, the implication will be a false deteriorating picture of the recovery ratio. This ratio is measured by dividing the value of collections by the amount falling due during the year (less accumulated old bad debts that occurred in the past). The practice in some institutions is to measure the ratio by dividing the collection amount by the amount disbursed plus the total accumulated bad loans from previous years. This is wrong or fraudulent. Failure to write off a bad loan enlarges the denominator, which has the effect of reducing the ratio that measures loan collection performance. This low ratio is a bad testament for everyone in the industry. Regulators must have their eyes wide open to see when this financial engineering is taking place. Next week we show how the eagleeyed regulator should fish out this misconduct or error, where it exists.

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Is your organization immune from today’s turbulence?

urbulence in today’s business world does not recognize or respect industry leaders. Regardless of your organization’s performance in the time past, your robust strategic plan, core strategies, managerial experience and brand recognition, your organization would not still be immune from turbulence. Unexpectedly, many organizations have the notion that when they create stability, their immunity is set in motion. With that mindset, many organizations endlessly struggled to create stability. However, today, things have changed. No organization can pre-

dict any more what can happen next. The business world being in a VUCA moment is more than a reality. Therefore, pursuing stability should no more be the focus; we need to move from stability to change. Today, customer needs, expectations, and experiences are all changing by day. The entire business landscapes are changing and the turbulence organizations are facing is rising exponentially. Like I earlier said, no sector is immune – be it private, public, and governmental. So, a critical capability not only the people at the top should have but for everyone to have is not the ability to create

stability but the ability to learn fast, adapt and respond to changes that are coming to us. Now the big reality is that being able to learn fast, adapt fast, and create value fast in the midst of uncertainties is not something that comes easily. It will only come through agility and this is why agile people and agile organizations view change as an opportunity and not a threat. In the midst of any circumstance, they have learnt to ask: what is the best thing to do in this circumstance? Bill Gates was right when he said, “Success today requires the agility and drive to constantly rethink, reinvigorate, react, and reinvent”. No matter how we look at it, in these tough and disruptive times we are in, it might be extremely difficult to succeed and thrive without agility. This is why leaders and organizations should be serious and intentional in building a culture of agility. Now, as someone who leads people, and who has a thorough understanding of the complexities, disruptions and turbulence your business is facing, critically ponder on the following issues below and ask yourself “how is your organization faring currently in all the issues

raised?” Let’s look at the issues: • Is the current level of agility in your organization sufficient to meet your quest for new growth and increase in performance as the business terrain deepens in turbulence? • To what extent has your leadership team articulated a clear intent to develop agility in your organization? • To what degree is agility represented in measures used to evaluate your organization’s performance? • To what degree does your leadership team demonstrate steadfast alignment and unity around critical issues? • How active and skilled is leadership in shaping the organization’s culture toward agility? • Does your leadership team serve as effective role models for personal resilience, and the ability to create agility work environments for others? • What level of confidence exists regarding your organization’s ability to address uncertainty? Now, more than ever, as organizations grapple for breath amidst tough times and uncertainties, there is one thing your organization can

do that will be most strategic and rewarding and that would be to crystallize a culture of marketplace and organizational agility with your people. When will your organization start this journey? By attending our Building Organizational Agility in Tough Times Workshop holding on the 16th - 18th of July, 2018 in Parkview Astoria Hotel, Parkview Estate, Ikoyi, your executives, senior managers, functional managers and managers will learn how to build a culture of agility that will reposition your organization for success in these tough times. If your organization really wants to succeed in these tough times, you can’t afford to miss this opportunity to learn what it takes to build your organizational agility. Click the link http://mclgroup. net/clients.php to see what board of directors and CEOs that attended our rare capabilities programs are saying. We look forward to making a memorable agile learning experience for you and your team. Let’s join hands in building agile organizations.

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How technology is driving urban mobility: The Uber example LOLA KASSIM Lola Kassim is the General Manager West Africa, Uber and writes in from Lagos, Nigeria

n many bustling urban cities around the world, policy makers and regulators are becoming increasingly focused on creating sustainable solutions that effectively address the rising vehicular congestion that these cities experience. In Lagos, Nigeria, traffic and congestion is something inhabitants grapple with on a daily basis. According to recent reports made by Governor Akinwunmi Ambode, the population of Lagos State now stands at over 24 million - equivalent in number to 30 African cities combined. By 2050, it is estimated that the population of Lagos could top 35 million. These growths will no doubt put additional pressure on the city’s infrastructure. Perhaps a crucial question is: how will the inhabit-

ants of Lagos get from point A to B? What transportation systems and infrastructure are needed to serve the rapidly burgeoning population? Last year, Governor Ambode reinforced this sentiment in his plans to replace the yellow buses popularly known as “danfo” with a more efficient bus transport system in Lagos State. This is no doubt a positive development as it is indicative of an intention to reduce congestion and pollution, as well as pave the way for an efficient mass transportation system that would move Lagos faster towards its goal of becoming a Smart City. In envisioning Lagos as a Smart City, specifically within the transportation and mobility sectors, it is important to begin to think of a city where we have fewer vehicles on the roads and there is convenient access to other mobility options such as rail, waterways, air, etc., for people to move around. We must also begin to think about the fact that fewer cars on the roads naturally means a decrease in carbon emissions and congestion. This also means that places in cities previously set aside and designed around cars, such as wide roads for high traffic volumes as well as

At Uber, we believe that a better future is within our grasp. One of our core objectives is to support and complement existing public transportation infrastructure space-intensive parkades and parking lots, can be given back to the city and its people. What could this mean for a city like Lagos? Think of a greener, less congested, and more liveable city. At Uber, we believe that a better future is within our grasp. One of our core objectives is to support and complement existing public transportation infrastructure. Through cars registered to use the Uber App, we are helping commuters cover the “last mile” of their journeys around the world. In cities like Amsterdam and London, for example, over 25% of Uber rides during morning rush hour go to and from local train stations, further establishing that people use Uber to complement existing forms of transportation. We believe that shared mobility enabled by technology has the po-

tential to contribute to better and more efficient cities. This is why we are partnering with public transport providers and other app-based mobility solutions (such as car and bike sharing services) around the world. In the near future, it will be entirely possible to complete certain journeys across cities utilizing many options made possible via the Uber Platform App. A rider’s daily commute could be completed using one or more options like a shared JUMP bike, uberPOOL or, uberX. While not all of these options are currently available in Africa - it does mean that some of the solutions to creating less congested cities already exist. And for a megacity like Lagos, this is definitely a positive development. Uber is expanding its offerings to help create a new future of transportation - one that reduces individual car ownership, expands access to transportation and helps governments plan future transportation investments. From bikes to pooled rides, we are always looking to offer more ways to get around without needing to own or buy a car. A year ago at the first Uber Elevate Summit, we announced our initial

partnerships with companies that make aircrafts, high speed chargers and manage major real estate portfolios. We also unveiled a collaborative plan with the cities of Dallas and FortWorth to create the first metropolitan area in United States with an urban aviation rideshare network. At this year’s Elevate Summit, our CEO Dara Khosrowshahi affirmed an upward shift in the mobility conversations saying: “We think cities are going to go vertical in terms of transportation, and we want to make that a reality.” With products like uberAIR we want to make it possible for people to push a button and get a flight uberAIR takes that approach and our technology to new heights. Technology is increasingly at the core of how people move around their cities and we must harness it is to create sustainable options to drive transportation systems around the world. As Lagos, Nigeria and indeed the whole of Sub-Saharan Africa make the move towards enabling smart cities - technology will play a critical role in improving urban mobility.

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How trade wars penalize Asian currencies

DAN STEINBOCK Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world. He is the founder of Difference Group. He has served as Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see www.differencegroup.net

n January, I gave a global economic briefing on the outlook of the Philippines in the Nordic Chamber of Commerce in Manila. At the time, the peso was still about 50.80 to U.S. dollar. Among other things, I projected the peso to soften to 54 or more toward the end of the year, which I considered largely the net effect of normalization in advanced economies, elevated trade friction worldwide, as well as fiscal expansion (the Duterte investment program). While skeptics thought the projection was too “pessimistic,” the peso is today around 53.40 to U.S. dollar and has occasionally almost exceeded 54.00. In this view, depreciation pressures are typical to many currencies in emerging Asia, most of which are likely to continue to soften in 2019, including the peso. The onset of trade wars Through his 2016 campaign, Donald Trump pledged tougher

trade policies. When he arrived in the White House in Januar y 2017, he buried the Transpacific Partnership (TPP), initiated talks about the future of the North American Free T ra d e A g re e m e nt ( NA F TA ) , suspended the US-EU free trade talks (TTIP) and intensified attacks against Chinese trade and investment. In the global markets, these moves translated to occasional fluctuations, while increasing uncertainty about the global economic outlook. Initially, the U S-Chines e Summit in April 2017 seemed to offer some trade relief. Nevertheless, things changed quickly as Trump directed his administration to take a closer look first at Chinese steel and aluminum and later at intellectual property rights and the technology sector – particularly vis-à-vis national security. With the most hawkish administration since the Reagan rearmament era, these directives resulted in the kind of reports that were only to be expected in early 2018, when the Trump administration began a steady escalation of the US-Chinese trade war, starting in March. Last week, the White House made the “largest trade war in history” official, while starting to escalate trade friction with Europe. Unsurprisingly, almost all Asian currencies are now taking hits not just from expected directions (rate hikes by the U.S. Federal Reserve, the anticipated end of the European Central Bank’s quantitative easing), but also from more less-expected directions (U.S.-Chinese trade

war, the nascent U.S.-EU trade wa r, a n d e s ca lat i ng rh e to r i c among the NAFTA partners; U.S., Canada and Mexico). Impact on Asian currencies In Asia, the net effect has been as projected half a year ago. Among high-income economies, exportled currencies – Korean won (KRW, -5.1%), Taiwanese dollar (TWD, -2.7%) and Singaporean dollar (SGD, -2.3%) – have weakened relatively most against the U.S. dollar. The same goes for the currencies of upper-middle income economies, including Chinese yuan (CNY, -1.5%) and Thai baht (, THB, -1.4%), respectively. Among lower-middle income economies, it is those currencies that represent the relatively fastest-growing countries – Indian rupee (INR, -7.5%), Philippines peso (PHP, -7.4%) and Indonesian rupiah (IDR, -5.0%) – that have weakened relatively most against the U.S. dollar. Since these currencies also represent twin-deficit economies, they will remain relatively vulnerable in adverse scenarios. Nevertheless, these twin deficits should not be compared with that of, say, the U.S. Unlike advanced economies that take more debt to sustain unsustainable living standards, rapidlygrowing emerging economies seek to exploit twin deficits in the medium term to accelerate economic growth in the long term. Yet, twin deficits come with exposure that should keep government leaders alert. In the early phases of the trade wars, those countries – Taiwan, Singapore, Indonesia, Korea, and Malaysia - that export relatively

more to China than to the U.S. tend to be better positioned. The reverse case implies greater relative vulnerabilities, which is why Vietnam has resumed the depreciation of its dong. Other Asian countries tr y to avoid U.S. trade wrath by fostering strategic ties with the White House (Taiwan, Korea). Still others seek to hedge their bets by seeking greater balance between Chinese economic cooperation and U.S. security ties (Philippines, Malaysia). The worse is still ahead It is a highly dynamic landscape. Among the high-income countries, the Trump administration has offered Seoul strategic relief from the trade war, thanks to Seoul’s cooperation in the Koreas’ nuclear talks, which will provide some cushion against won’s further weakening, in the short-term. Among the upp er-middle income countries, the Chinese central bank (PBOC) pledged last week it would keep the exchange rate stable, which put something of a damper on dollar increases. Since China accounts for more than a fifth of the Federal Reserve’s tradeweighted dollar index , more than any other country, it can subdue dollar rallies. A m o n g t h e l ow e r- m i d d l e income economies, those countries that have strong domestic demand (India, Philippines) are relatively more insulated from trade wars than commodity producers (Indonesia) and exporters (Vietnam). In the long run, there is no safe haven from the trade wars, however. Here are some unsettling sce-

narios for the coming months: If the trade war between the U.S. and China will continue to worsen, it could penalize both U.S. and Chinese GDP by 0.25% by the year end. If similar trade war expands between the U.S. and Europe, the implications will be worse to the U.S. but weaken Germany, France and other EU core economies and thus undermine the fragile European recovery. If comparable trade friction will extend to Japan, which, despite huge monetary injections by the Bank of Japan (BOJ), has already lost two decades amid secular stagnation, the adverse impact could harm global economic prospects. If the NAFTA talks were to collapse, U.S. economy would take still another hit, but so would both Canada and Mexico, which could compel them to broaden their ties with Asian economies. In brief, the elements of a perfect storm are now possible, if not probable yet, especially if the adverse trends will converge. Even in an incremental scenario – one that would mean continued but not disruptive deterioration – economic damage would prove far more substantial in 2019, or worse. How the major economies will respond to trade war escalation in the coming weeks will determine what’s ahead for all of us in the next few years. • The commentary was originally released by The Manila Times on July 9, 2018.

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

On transforming agriculture in Nigeria

n various pronouncements, the Federal Government of President Muhammadu Buhari has projected itself as focused on the primacy of the development of agriculture. It makes the case with multiple claims of successes in crop production, often citing rice as number one. The evidence says otherwise. The Summit of Northern Groups in a communique on March 24, 2018, following a meeting at Arewa House, Kaduna disputed the claims of success in agriculture. The sixteen groups stated, among other things, “Agriculture shows limited glimps es of recovery, but almost entirely through efforts of peasants and antiquated processes.”The National Bureau of Statistics states that“the agricultural sector in the first quarter of 2018 grew by 3.00% (year-onyear) in real terms, a decrease by 0.38% points from the corresponding period of 2017 and also a decrease by 1.23% points from the preceding quarter”. The contribution of agriculture to GDP also declined from 26.13% to 21.65% in Q4 2017. It fell by 3.0 per cent in 2018 compared to 4.2 percent in Q4 2017. Beyond the issues of claims

that cannot stand s crutiny, agriculture must be a critical success factor for Nigeria. The country must devise policies and actions to increase productivity in this vital area. BusinessDay recommends that adding value to agriculture should be the policy direction and focus of the government to make up for lost ground and realise its potential. Agriculture is a s ector of prime importance in every economy. Its economic contributions flow from being a source of livelihood to the majority of workers to serving as a primary source for food and nutrition. The agricultural sector held sway in Nigeria from pre-independence, independence up to the end of the civil war. Its contribution to GDP averaged 57% and fetched 64.5% of exports. Oil took over in 1970, and the country’s focus shifted off the farms. Nigeria’s Top 5 agricultural products are cassava, yam, maize, sorghum and millet. The principal exports are cocoa, oil seeds and oleaginous fruits, fruits and nuts, milk, cream and milk products and spices. In turn, the country imports fish, wheat sugar, molasses and honey, milk cream and milk products, fixed vegetables, fat and oil. Our agricultural production is characterised by low yields and growth mainly through

expansion of land. Productivity suffers from the absence of the application of technology. The Agriculture Promotion Policy (APP) of the Federal Government focuses on resolving food production shortages and improving output quantity. The Economic Recovery and Growth Programme pushes this by specifying targets. It projects self-sufficiency in tomato paste in 2017, rice in 2018 and wheat in 2019. Nigeria needs more than buzz on agriculture. There must be a focused effort to enhance the value chain by moving into processing, marketing and other value-adding activities. The business of agriculture involves farming, supplies and inputs, finance, markets and marketing, storage, logistics and processing. Nigeria still plays mainly in farming, a low returns area. Nigeria is currently the sixth largest producer of cocoa, but the country processes only 30% of the 248, 000 tonnes of cocoa beans it generates. Experts say increased concentration on processing, creating and building brands, and other activities in the value chain would increase production by at least 70%. Ghana invested in better processing and moved up the ladder as global number two from the fourth position.

Research and development is necessary to increase the value of our foods. In the 80s and 90s, Nigerian firms such as Guinness and Nigerian Breweries invested in alternatives to barley while Cadbur y Nigeria built a patented cereal conversion plant to convert sorghum for use in the production of Bournvita and its confectioneries. Greater collaboration is needed between industry and research. Agriculture also needs the enabling environment of macroeconomic stability, controlled inflation and peace and public order. It requires stable exchange rates based on market fundamentals to enable the purchase of inputs. Infrastructure is critical. We expect that given the challenge of desertification and the search for land and water by herdsmen, the government would invest considerably in irrigation, roads and expansion of water routes. The Federal Ministry of Agriculture and Rural Development committed to pursuing enabling legislation to boost domestic content for food so that there would be 10% cassava flour substitution for wheat in bread and blending of 10% ethanol with petrol. It has not happened three years later. So much to do in adding value to agriculture. Time is running out.

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Wednesday 11 July 2018

BUSINESS

COMPANIES & MARKETS

DAY

‘We account for about 42% of market share with six other operators’

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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

Non-oil income growth to help stabilize debt to revenue ratio at 30% – FSDH

…forecast inflation rate to drop to 10.94% in June HOPE MOSES-ASHIKE

easures to grow nonoil revenue will help to achieve and sustain a comfortable debt service to revenue ratio below 30 percent says FSDH Research, a subsidiary of FSDH Merchant Bank Limited. Nigeria’s total public debt (domestic and external) increased to N22.71 trillion in the first quarter of 2018 from N12.60 trillion in the fourth quarter of 2015 according to Debt Management Office

(DMO). The research based firm notes that the growth in the debt stock is mainly driven by external debt and was accelerated by the devaluation of the Naira. “Nigeria cannot afford another level of devaluation, otherwise it will worsen the debt position”, said Ayodele Akinwunmi, head of research, at the company’s Monthly Economic and Financial Markets Outlook, themed, ‘Public Debt Vulnerable to Exchange Rate Movements’. The domestic debt stood at N15.96 trillion, accounting for 70.28 percent of the total public debt, while

the external debt stood at N6.75 trillion, accounting for 29.72 percent of the total public debt. The ratio of external debt to total debt at 29.72 percent is lower than the target of 40 percent. Meanwhile, the revenue of N813 billion from the Federation Account Allocation Committee (FAAC) to the FGN in Q1 2018 was the highest in two years. FSDH Research analysis shows that the ratio of domestic interest payment to the FGN revenue from the FAAC stood at 79 percent as at Q1 2018. The average in the last two years is 60 percent. FSDH Research expects

Delta Airline flies 17.7m passengers in June, highest in operation history IFEOMA OKEKE

elta in June flew more customers than any other month in the company’s history, with nearly 17.7 million flying on mainline and Delta Connection flights around the world. The airline also ended the quarter with a record 50 million customers flown in the three months from April to June. While June 30, 2017, still holds the record for most customers flown on a single

day at more than 646,000, the Friday before the 2018 Fourth of July holiday wasn’t far behind with just a thousand fewer customers flown. Still, June 2018 was a busy month, racking up six of the top 10 consolidated passenger days of all time — the remaining four days all happened in summer 2017 — proving yet again that it’s summer, not the Thanksgiving and winter holidays, that takes the cake for busiest days of the year. “We’ve made a commitment to our customers to be a reliability leader,

delivering a safe, on-time product and the 80,000 employees of Delta are doing just that. “We’re seeing customers fly Delta in record numbers this summer and it’s a resounding testament to the hard work and focus of our employees,” Dave Holtz, Delta’s Senior Vice President — Operations and Customer Center said. Based on the current schedule, Delta and Delta Connection expect to operate 6,092 flights system wide on July 20 — the highest one-day total for the year.

Shareholders fault Oando’s 2017 financial result, demand forensic audit report

hareholders under the aegis of Proactive Shareholders Association of Nigeria (PROSAN) have faulted the 2017 full year result of Oando Plc, describing below expectation. The group also lamented the inability of the company to pay dividend to its shareholders for the fifth consecutive year. Taiwo Oderinde, national coordinator of PROSAN, said in Lagos on Friday that members of his association, who are shareholders of Oando Plc, have suffered substantial financial losses as a result of

the company’s poor performance. According to Oderinde, “As responsible and concerned shareholders of Oando Plc, we took up the task to protect the company and draw the attention of the general public to the recent audited financial report of the year ended December 2017, which was released to the public and our findings are summarized below: “Oando Nigeria Plc has for five consecutive years suffered incredible losses with the record breaking loss in the year 2014; the first ever in the history of our capital market.

There is no different between the 2016 and 2017 audited financials,” Oderinde said. “The company has continued to accrue debts to the point that its liabilities still surpassed its assets just like the year ended 2016. For example, it was reported that Axxela took a N1.5 billion loan/facility to finance the Central Horizon Expansion pipeline’s term loans among others. In addition to that loan, Oando Trading Ltd accessed over N217.2 billion ($700 million) foreign denominated loan as a short line trade finance facilities in 2017 alone,” Oderinde alleged in the statement.

interest rates and yields in the global financial market to increase further as the normalization of monetary policy in advanced countries continues. This development has two major implications. Firstly, countries or corporates that plan to raise money from the international debt market may pay higher interest rates because of rising yields. Secondly, countries in emerging markets may adjust the yields on their fixed income securities to sustain the interests of investors, both local and foreign, in the instruments. The Federal Open Market Committee (FOMC) of the United States Federal

Reserve (The Fed) increased the Federal Funds Rate (Fed Rate) by 25 basis points to 1.75%-2.00% at its June 2018 meeting. The increase in the Fed Rate is in line with the expectation of FSDH Research. Two more rate hikes are expected in 2018, possibly in September and December, as the fundamentals of the US economy improve. The research team observed an inverse relationship between the movements in yields on FGN Bonds and US Treasury Notes over the last twelve months. The strategy of the DMO to issue more of longterm debt than short-term debt and to increase the

proportion of the external debt in the total debt stock, was the major reason for the inverse yield movement. “We expect the relationship to change as additional rate hikes are announced in the US and the Federal Government of Nigeria (FGN) starts to fund the 2018 budget deficit”, he said. FSDH Research forecasts a further drop in the inflation rate to 10.94 percent in June 2018. “We expect the inflation rate to drop to a single digit in August provided there is no food shortage in the country due to of the current rising crisis in the food producing areas in the country”, Akinwunmi added.

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Wednesday 11 July 2018

COMPANIES & MARKETS ‘We account for about 42% of market share with six other operators’ Bayo Adeoku is the chief executive officer of Electronic Payplus Limited (Epayplus) a smart card and payment solution company which has been in operation for the past 13 years. He speaks in this interview with Iheanyi Nwachukwu and Micheal Anih. Excerpt:

ou have an installed capacity of about 12 million cards per annum. For a company that is innovative what are your long term projections and are you comfortable at this level. If you look at the total volume of banking cards in Nigeria, it is just about 15 million per annum so having 12 million; to me I can say it is very sufficient. However, we are working with the government to produce the national identity card and we are the only company that has done that and what we are trying to do is to produce them locally for the federal government. Yes we are going to expand the capacity very soon as we are working with the federal government to produce the National ID card. We have done that in the past but were majorly imported; this time around we are going to be producing them locally. If you have 12 million cards per annum and the total industry production is about 15 million what your production share of the market is. The fact that we have the 12 million cards annually does not mean that we utilize them fully, in Nigeria today our share of the market is about 42 percent with 6 operators in the market. When we started smart card business nine years ago in Nigeria we were the sixth but now we are the second biggest in terms of market share, the biggest is about 2-3 percent higher than us. With the work you are doing with the federal government in terms of identity cards, if you add up to that, what will be your projection in the next 10 years. The federal government has through the names in the National identity commission wants to issue cards to 150 million Nigerians, if they have to do that and you add that to the banking business as well it means that in the next couple of years we should be talking about 200-300 million card and by the way they want us to issue it within a space limit which means we really need to invest in technology so as to be able to scale up capacity and like I said we are in discussion with them to be able to do that. Investment in technology requires a lot of capital how are you scouting that out? As a management, we have shareholders who are willing to always invest anytime we approach them. More so, we have development banks in Nigeria that we have partnered with over the years that has helped our business to grow. In addition, we have worked with bank of industry over the last five years to grow our capacity.

I see you have a lot of capable partners like Interswitch. How has it been working with all these partners? It has been nice and very interesting being that the business we do requires that you work with other partners such as the card association, the Visa and master card and verve. We are satisfied working with them. Again as part of our innovation we are currently working with China unionpay to start issuing China unionpay card in Nigeria. Electronic PayPlus I am very sure will be the first company to do that as well we have 2-3 customers that are already partnering with us to be able to do that. Also you have to work with the various processors that your customers might have so that is why you see us working with Interswitch, working with unified payment, working with network international from Egypt, working with global payment from USA and this is to enable us service all the various customers that we have because they all have different processors Your backward integration helped the country to save a lot of forex outflows. What would you like government to do in terms of reforms? There are a lot of things as we are a member of Manufacturers Association of Nigeria (MAN) and we have sent representation to them. We are here in Lakowe and there have not been light in Lakowe. In Electronic PayPlus we haven’t had public electricity for two years, we have three generator that we run and we spend N40million on diesel annually which if we were able to save that, would have impacted on our productivity and ability to do other things. Secondly is the government tax regime. The federal inland revenue has this tax that they call withholding tax to me it is double taxation they said it is to guard against tax default and so your principal is supposed to deduct it up front and when they do, you can then use it to service your corporate income tax whenever you want to pay and what happen is that there is always credit with them and they don’t allow you to use it to do any other thing it is a very big challenge as it kills a lot of small scale businesses if you take us for example we have withholding tax credit of up to about N350 million with FIRS which I am supposed to use to pay my corporate income tax which I pay annually but I have never been able to utilize the entire amount every year and by the time I start operation the following year, it grows again so it keeps growing and growing so

Bayo Adeoku

in my opinion, the federal government has to adjust that tax law to be able to use it for other forms of tax we have made representation to the MAN which we are part of, we have also written to the tax office in Lagos if they can address this issues, I am sure it will help not just Electronic pay plus but the country as a whole. There have been report on driving financial inclusion in the country, a Mackinsey report said that the country of the future is that which is thinking towards financial inclusion where people don’t have to queue in the bank to do the transaction and thus the argument on whether it should be a “Telco led” or a “Bank led” or even a partnership what is your opinion regarding this, and if this falls through how will this impact on your business. I strongly believe that the Telcos should not be allowed to lead it may be because I am in the financial industry yes they claim they have the customers but this is financial transaction that we are talking about which is not their core competence it is not their business they know how to switch telephone conversation that is their business not financial transaction so that should be left for the banks and the financial institution however, they can collaborate by leveraging on the customers that the Telco has and the infrastructure that they also have to service their customer that way we will have a win situation for the two of them. We have seen despite technological boom globally, in the Nigerian space we are still lagging behind, as a key holder in the technological financial space, what will you say is the biggest risk limiting

investment in that space? I beg to disagree with you a little in that regard, Nigeria is leading in terms of technology in the financial sector. A lot of Nigerian banks are doing wonders with the USSD technology today that when you talk about it in Europe they marvel at what we have been able to do with it because they believe that it is not safe, but what the Nigerian banks have been able do is to build security into the platform to the extent that when you do USSD transactions you still have to add your PIN and you have to have a OTP and all of that. So we are in the forefront of that. Majorly, there is no investible fund in Nigeria and that is what is impacting. There are a lot of software developers in Nigeria, Nigerians are very innovative, and they can develop whatever it is that operates in the industry anywhere else. We have a lot of talent here and that is why you see the likes of face book founder and all of them coming into Nigeria. As a company, Electronic PayPlus is going to be introducing some new financial products into the market within a couple of weeks from now. Can you tell us what those products are? That is confidential for now. It will be unveiled on July 13th, it is a Friday. What we are trying to do is to create a platform of people who have a need and givers, an ecosystem for people to interact and help each other. As a people, as Africans, as Nigerians we like to help each other, the communal life, some of us were sent to school by community, everybody on the street contributes money for your school fees and then you went to school. So what we are trying to do is to create a formal way for

you to do all of that. Every day when you open the papers you see, this boy needs an heart plant, this boy needs this, this boy need that but there is no formal way of doing all of this, once I read it in newspaper, I don’t know who to contact I don’t know how to go about it. So as a company we want to create a platform to resolve all of that. The whole thing was developed in house, some of our foreign partners were here a couple of weeks back and they met us, testing, and they were so amazed that this was developed locally without any foreign input. In terms of technology, we can do, if not better than any other person worldwide. The challenge is being able to take it into the market, the challenge is having the right investible fund to be able to market this globally and make it well known and accepted. You have said some very innovative things about being innovative, you are out to compete globally and you have a lot of local talent, where do you get your talent and how do you develop them? You have to search very well, the talent are there available locally in Nigeria but most importantly, after identifying those talent, you have to give them an enabling environment, you have to let them take ownership and that is what we have learnt to do here. Give them and say “this is your thing, and I’m here for encouragement.” Every successful organisation consist of three kinds of people, you have the dreamers, the thinkers and the doers. In Electronic PayPlus they call me the Chief dreamer because that’s what I do, I dream, 24 hours but I have been blessed to have good support in thinkers and doers. When I wake up with new ideas, I just say this is what I am dreaming about, like I said they call me Chief dreamer they know that is what I do, okay he has come with one of his dreams, no problem. I just give it to them and they go take ownership, I sit them down and say “this is yours, for all we know we can spin this off tomorrow as a company on its own as a subsidiary and you will probably be made the MD of that company, so you take ownership and if you need any support, I’m here” and they go out and do it. We send them on trainings regularly, both local and international and all of that, we are never shy of doing that. The introduction of Chip and PIN card helped fraud; do

you know the rate at which it reduced it? Well, can’t say precisely the volume or percentage but I can tell you it has reduced drastically, very drastically. Today, if you have a Chip and PIN the possibility of fraud is reduced greatly except if you are careless with your PIN. What happens today is that to be able to clone a Chip and PIN card, you need collaboration from different teams from the banks, probably, the one that does PIN generation, card activation, not only that you need to collaborate with the personalisation company like us. It is a cycle and hardly will you find all of them to agree to do that fraud. So the easiest way is from people who misplaced their PIN or you get to the ATM and ask someone to help input your PIN and all of that and that’s what we see happen mostly. Electronic PayPlus is going to be introducing a biometric based transaction validation card, which we believe is more secure than Chip and PIN because it said that fingerprints are not the same for two different individuals. Fingerprints will be needed to validate transactions for your card. As the Chief dreamer of this institution, do you dream to have a Nigerian based HQ or African say maybe in Ghana or South Africa? We will probably be based in Nigeria. Everything will be based in Nigeria. Five years ago, you were the fifth, today, you are the second, five years from now, where will you be? Not five years, December this year, I will be number one that is my target. We have a target we are working on and we are taking it up every day. And what are you putting in place to achieve that? A lot of things, like I said, it is not just about smart cards for us. Every couple of years we expand our coast, we do a strategy session to review our business model and we ask ourselves questions. What we are trying to do here is to build a legacy an institution that will live after all of us. That will be very sustainable to the future and for you to build that kind of institution, you need innovation, and you need to constantly review your business model, to regenerate your business. For us, it is a continuous exercise. We are doing a lot of things; today we launched the AP, a wholly owned subsidiary company of Electronic PayPlus that is going to be rolling out these new solutions that we are talking about.

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COMPANIES & MARKETS Nigeria to host 2018 AFREXIMBank AGM GODSGIFT ONYEDINEFU, Abuja

igeria’s Minister of finance, Kemi Adeosun will lead the Nigerian team and government to host the Investment Forum/Trade and exhibitions during AFREXIMBank 2018 Annual General Meeting, AGM. The annual general meeting set to kick off on the July 11 at the Transcorp Hilton Hotel Abuja, will end on July 14 with the Annual

General Meeting of Shareholders of the Bank. AFREXIMBank will also be celebrating her 25th anniversary at the meeting. Afreximbank is the foremost pan-African multilateral financial institution devoted to financing and promoting intra and extra -Arican trade, it has approved more than $51 billion in credit facilities for African businesses, including about $10.3 billion in 2016. Other participants expected at the Meeting are the Banking Industry professionals, Trade and Trade Finance practitioners and other stake-

holders involved in economic development across Africa and beyond. The meetings will also be attended by business and political leaders and reputed to be among the most important gatherings of economic decision-makers in Africa. Series of events have been lined up to mark the 25 anniversary celebration, including performances by some of Africa’s best known artistes. Nigeria Afropop star, Davido and the San Vincente CarnivalTroupe from Cape Verde are among confirmed performers.

Aiteo adjudged Company of the Year at Nigeria Oil and Gas Awards

he Aiteo group was declared Indigenous Oil and Gas Company of the Year at the Nigerian Oil and Gas (NOG) Awards held recently in Abuja. Organised by London-based CWC Group and now in its 18th edition, the NOG is Nigeria’s most prestigious annual oil and gas industry event which draws key players across the Nigerian Energy sector. It is a viable platform for networking, sharing ideas, and exploring new opportunities and innovations in the industry. This year, hundreds of industry professionals were gathered from both the public and private sectors. Responding to the award, Benedict Peters, Aiteo’s CEO and executive vice chairman attributed the company’s emer-

gence as the indigenous oil and gas company of the year to the depth of its human resources, and sustainable investments in the industry, and the Nigerian economy. “We remain committed to our vision of shaping the future of sustainable energy in Nigeria and beyond, strategically deploying resources and technologies that lead to sustained economic development and value for all stakeholders. This honour from the NOG is fulfilling, particularly coming from our peers and a reputable industry platform. We dedicate this award to the highly committed, talented and industrious people working at Aiteo and making things possible on a daily basis.” Peters added. In the CSR arena, Aiteo gives

back to the local communities in which it operates through grants and donations, seed capital and philanthropy. It has also supported several social investment projects, including special focus on supporting the study of engineering in host communities and sports. In sports, Aiteo has become the foremost financier of football in the country after a string of contributions to the Nigerian Football Federation (NFF) and the Super Eagles. To support local football, Aiteo took over the sponsorship of the Federation Cup, Nigeria’s oldest football tournament, now renamed Aiteo Cup. On the continental stage, Aiteo partnered with the Confederation of African Football(CAF) to sponsor the African Football Awards in January this year.

Business Event

L-R: Susie Onwuka, head, Consumer Protection Council (Lagos Office); Ajay Awasthi, chief executive officer, Spectranet 4GLTE; Joy Okuna, assistant director, National Lottery Regulatory Commission (Lagos Office); Mike Ogor, head of marketing, Spectranet 4GLTE, and Adenike Oyebamiji, legal officer, Lagos State Lotteries Board, at the Spectranet World Cup Promo Draw in Lagos

L-R: Yusuf Nuraeni Ajadi, student, Ijinle Project; Oduleye Maria, student, Ijinle Project, Kabiru Durojaye, veteran trainer on Yoruba male traditional outfits and Adenike Ibrahim, student At Ijinle Project, During The Press Interactive Session With Ijinle Project an initiative of the Government State Of Osun to train citizens of Osun on authentic Yoruba male outfits in Lagos.

AEMPIN retools African public sector managers for global competitiveness JUMOKE AKIYODE-LAWANSON

he Amer icas Em powerment Institute (AEMPIN), a world leading capacity building institute has collaborated with Texas Southern University to train and equip more African public sector managers with the right intellectual knowledge to compete on a global scale. AEMPIN is a public, nonpolitical, non-profit educational institute serving a global constituency. The institute recently trained and graduated 68 workers; 25 of which were participants of a mini-MBA in strategic management and leadership course, 13 of them, participants of certified telecoms managerial specialist course and 30 participants of emerging trends and improved effectiveness in public service delivery course at its campus in Houston, Texas, United States of America. Nadine Jenkins, international program director of AEMPIN confirms that the in-

stitute has trained over 20,000 officials from 51 different countries and has conducted trainings in both U.S and abroad. According to her, AEMPIN has trained more African corporate executives than any other school in the world under its scholarship programs. “AEMPIN empowers capacity to foster economic development and upward mobility, while promoting and supporting strong governance through emerging trends and international best practices. “We are a world leading capacity building firm with over 16 years’ experience in providing specialized and highly rated training in the areas of information technology, utility, governance, regulation, law, leadership, management, finance, public procurement, and telecommunications”, Jenkins added. AEMPIN also provides consulting services to developing countries in the empowerment methodology and the designing of their economic and government policies, in efforts

to further support and promote good and efficient governance through emerging trends and international best practices. “Scholarships given to participants allow the institute to expand its works and worldwide mission. Scholarships are utilized to help subsidize and sponsor individuals from foreign governments, which have both the desire and commitment to raise the level of proficiency of its staff and therefore the effective governance of its people, but simply do not have the necessary budgets to train every official who should be trained. Education remains the highest and greatest investment a government can undertake. No country can graduate from being a developing country to being an emerging country to being a developed country without adequate capacity empowerment. We are determined to empower as many as qualified for our scholarships based on available funds”, Jenkins explained.

L-R : Anselm Alokha , zonal business manager Nigerian Breweries East Zone; Wogwu Micheal , winner, star lager united We Shine Promo and Peter Ani, brewery manager, Ama Breweries at a regional prize presentation in Enugu recently

L-R; Akano Issac from Abuja, Mobolaji David from Osun State, Blessing Anthony of Nigeria Communications Commission (NCC), Ojulari Peter from Ondo State and Nwarisi Nsirim Sonny from Rivers state, batch four winners in the Glo GO Russia promo who departed Nigeria for Russia on Saturday.

Politics & Policy

Abaribe to Nigerians: Get your PVCs, vote out APC in 2019 18

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‘OBJ, IBB, others backing R-APC to unseat Buhari, support Atiku’ INNOCENT ODOH, Abuja

acts have emerged t hat f o r m e r P re s i dent Olusegun Obasanjo(OBJ) former military President Ibrahim Babangida (IBB), former Chief of Army Staff, Theophilus Danjuma and other retired colleagues and some disgruntled politicians and interest groups are allegedly sponsoring the Buba Galadima- led Reformed All Progressives Congress (R-APC). The R-APC, a breakaway faction of the ruling All Progressives Congress (APC), which was hitherto called new Peoples Democratic Party (nPDP), emerged forcefully last Tuesday, following what the interest groups referred to as the ‘unpardonable political sins’ of President Muhammadu Buhari and the need to salvage Nigeria from the “rudderless leadership of President Buhari.” An insider within the political fold of former President Obasanjo, told BusinessDay on condition of anonymity, that the retired generals are so furious at the way President Buhari is running Nigeria that most of them who backed him in 2015 have regretted and are poised to stop him in the 2019 general election. Former Vice President Atiku Abubakar is said to feature prominently in the calculations of the kingmakers of Nigerian politics as even Obasanjo, who was hitherto said to be so vehement against Atiku’s ambition has now lessened his hardened position against the former Vice President. The nPDP was one of the legacy parties that formed the APC coalition but in recent times its members had been at loggerheads the main APC over issues of marginalization and alleged persecution of their members, which the anti-Buhari retired generals and interest groups have latched on as a ‘masterstroke’to undo the president. According to the source, the RAPC is “one of their strategies to cause serious schism in the APC and give room for some members, especially governors and National Assembly members to defect to a coming political alliance probably fated to produceAtiku Abubakar as President in 2019.” “Last Tuesday’s announcement of the R-APC by Buba Galadima, Kawu Baraje and others in Abuja, sent shock waves within the APC such that even when the new

United against Buhari? Former President Olusegun Obasanjo (R) exchanging pleasantry with former Vice President, Atiku Abubakar at the Gusau Institute on ‘A New Era for China-Africa Cooperation’ at the Transcorp Hilton Hotel, Abuja recently

APC National chairman, Adams Oshiomhole, threatened to punish the ‘rebels,’ the party is said to be in serious dilemma because such threat will further alienate the estranged members and deepen the cracks in the party,” the source said. Obasanjo and Babangida have in their respective letters to Buhari, lamented that President Buhari has failed to manage the economy well leading to widespread joblessness, hunger and hopelessness in the land. They also raised the vexatious attitude of Buhari’s alleged divisive politics and his clannish and nepotistic appointments that favoured mainly his Fulani ethnic stock. However, the most critical factor in the criticisms of the Buhari government by the former leaders was his alleged lukewarm attitude to the widespread killings going on in the country allegedly perpetrated by the Fulani herdsmen. Danjuma had expressed revulsion over this issue when he recently raised alarm that the Nigerian security forces are colluding with the killer herdsmen to wreak havoc on indigenous Nigerian people, which was an indictment on Buhari. The R- APC echoed the same sentiments in their statement on Tuesday. Chairman of the R-APC, Buba Galadima said“we are sad to report that after more than three years of governance, our hopes have been betrayed, our expecta-

tions completely dashed. The APC has run a rudderless, inept and incompetent government that has failed to deliver good governance to the Nigerian people. “It has rather imposed dictatorship, impunity, abuse of power, complete abdication of constitutional and statutory responsibilities, infidelity to the rule of law and constitutionalism. It has failed to ensure the security and welfare of our people and elevated nepotism to unacceptable height. The APC has failed to deliver on its key promises to the nation. There is no evidence of any political will to reverse the decline of our party, while leaders who have created these circumstances continue to behave as if Nigerians owe our party votes as a matter of right,” he noted. He also made the insinuation while fielding questions from newsmen that the President of the Senate Bukola Saraki and the Speaker of the House of Representatives, Yakubu Dogara are members of the R-APC, adding that the two leaders will surely contribute immensely to the emergence of a new leader to topple Buhari. It is believed that the recent victory Saraki secured in the Supreme Court, which quashed his corruption charges at the Code of Conduct Tribunal, had emboldened the President of the Senate as he is now poised to lead many of his political disciples to quit the APC and probably return to the

PDP that is being primed to enter into a coalition with others parties to form a grand alliance. Atiku favoured Abubakar Atiku’s bid to lead Nigeria as president in 2019 under the People’s Democratic Party (PDP), received a massive boost following the launch of the R-APC, which followed a trail of events that appear to count in favour of the Turakin Adamawa. Atiku got strategic support from former military President, Ibrahim Babangida after a recent meetingwith the man Nigerians preferred to call “Maradona” especially now that coordinated effortsare being harnessed to defeat President Buhari in 2019. Atiku also met former President Olusegun Obasanjo at a recent function at the Gusau Institute on “A New Era for China-Africa Cooperation,” in Abuja, which pundits said is a boost for Atiku’s campaign for 2019 as Obasanjo is said to have lessened his much touted hardened position against the ambition of the former Vice President. A source, who was privy to a meeting Atiku and Babangida had in Minna, Niger State recently, told BusinessDay on Tuesday that the meeting was very “fruitful in furtherance of Atiku’s continued engagements and consultation, which has further strengthened the presidential bid of the former Vice President.”

The source added that the meeting with IBB has the potential to draw all other democratic forces angling to unseat President Muhammadu Buhari in 2019, especially the coming Grand Coalition of political parties and interest groups, which are said to be looking at Atiku’s direction to provide the political clout needed to oust what he called the “the unbelievable incompetence and clannish leadership of President Buhari and the ruling All Progressives Congress (APC).” “Some of those people angling for grand coalition have started looking at the directionof Atiku and I think it is the culmination of the interplay of forces,and the preponderance of opinion both of politicians and common people is that we are desirous of change and the person best wired to provide leadership is Atiku,” he said. The source stressed that Atiku’s appeal cuts acrossregional and party lines and all manner of diversities adding that “Atiku is not a man you can pigeonhole in just one enclave; he is suited for the general desire of the Nigerian people to extricate the country from the backwardness the APC has plunged Nigerian masses.” On the recent visit of another political heavy weight, Rabiu Musa Kwankanso to Atiku, the source noted that the astute politics of the former Governor of Kano and his massive followership across the country is a plus to the Atiku presidential campaign, adding that Kwankwaso has the intention to back Atiku’s candidature in 2019. When reminded that Kwankwaso isalso said to be eyeing the Presidency and could pose as a formidable rival of Atiku, the source noted that “Atiku does not see Kwankwaso as a rival; he can provide support for an Atiku candidacy in the general election.” On the widely reported feud between former President Olusegun Obasanjo and Atiku, the source dismissed the purported feud is a “media creation”. He said “politicians don’t make enemies, they don’t discountenance another. I think Obasanjo has realised the direction the pendulum is swinging and as a man who truly loves and has passion about Nigeria, he is also desirous to cast his lot with Atiku, who is best suited and best wired to extricate Nigeria from the pit into which the Buhari administration has thrown Nigeria politically, economically and socially.”

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Politics & Policy

Executive Order 6: Has Buhari assumed the role of a prosecutor, judge? OWEDE AGBAJILEKE, Abuja

he recent Executive Order signed by President Muhammadu Buhari has come under serious scrutiny. The Executive Order Number 6 of 2018 on the Preservation of Suspicious Assets Connected with Corruption and other Relevant Offences is aimed at seizing assets of corrupt persons and institutions in Nigeria. The President signed the Order into law a day after he disclosed that he would take steps to retool his anti-corruption crusade. Specifically, it gives the Attorney General of the Federation as well as law enforcement agencies the power to seize and freeze the assets of any person against whom allegations of corruption have been made pending the outcome of investigations. Consequently, politically exposed persons who would be denied access to their properties by virtue of the Order include former Niger State Governor Babangida Aliyu, ex-Nasarawa State Governor Aliyu Akwe Doma and his counterpart from Oyo State Adebayo AlaoAkala, former Works Minister Adeseye Ogunlewe, PDP chieftain and former Governor of Benue State Gabriel Suswam, immediate past Federal Capital Territory Minister Bala Mohammed among others. A list released by the Presidency revealed that it will affect a total of 155 cases in various trial courts across the country. Some of the cases are being handled by the Nigeria Police Force, Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and other related offences Commission (ICPC), National Drug Law Enforcement Agency (NDLEA), National Agency for the Prohibition of Trafficking in Persons (NAPTIP). A breakdown shows that the EFCC is prosecuting the highest number of corruption cases with 61 trials in several courts across the country, followed by Nigeria Police Force which is prosecuting 49 cases. Others are ICPC 29, NDLEA 14 and NAPTIP three. Executive Orders are orders issued by a president and directed towards officers and agencies of the government. The ability to make such orders is also based on express or implied Acts of the Legislature that delegate to the President some degree of discretionary power. Historically, they have their origin in the United States of America. The first executive order was issued by George Washington on June 8, 1789, addressed to the heads of the federal departments, instructing them “to impress me with a full, precise, and distinct general idea of the affairs of the United States” in their fields. However, the recent Executive Order signed by Buhari has elicited mixed reactions. Justifying the move, some pro-

Buhari

ponents believe it will prevent dissipation of assets pending litigation. The Chairman, Special Presidential Investigative Panel for the Recovery of Property, Okoi ObonoObla, cited Section 5 and 315 of the 1999 Constitution (as amended) to back the President’s action. According to him, the two constitutional provisions confer wide discretionary powers on the President to issue orders in certain matters. His words: “It goes without saying that executive powers vested on the President by Section 5 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) gives the President great latitude of powers to issue executive orders on any policy issue. “For instance, under Section 315 of the 1999 Constitution, the President and other appropriate authorities have the power to “make such modifications in the text of any existing law, as the appropriate authority considers necessary or expedient to bring that law into conformity with the provisions of this Constitution. “The executive order on corruption is quite revolutionary and indeed unprecedented. It has once again shown glaringly the political will of the administration of President Muhammadu Buhari to fight corruption resolutely and squarely”. It appears there are more opponents against the Order, if comments of lawyers and commentators are anything to go. Critics say the move is an attempt by the President to usurp the powers of the judiciary by assuming the role of a prosecutor and a judge by denying suspects access to assets seized by agencies investigating them. They argued that the new Order contravenes Section 36 (5) of the Constitution which presumes that an accused person is presumed innocent until proven guilty. In his reaction, a Lagos-based

human rights activist and lawyer, Inibehe Effiong, expressed concern that the Buhari administration will use the new Order to witch-hunt perceived political enemies. He posited that the move is also an attempt to bypass the National Assembly following delay in passing the Proceeds of Crime Bill currently before both chambers. He went further to stress that if the government wants to prevent dissipation of assets pending litigation, it could only do so by complying with Sections 20-33 of the EFCC (Establishment) Act and Sections 43-49 of the ICPC Act. The legal practitioner also took a swipe at the Attorney General of the Federation, Abubakar Malami, for not giving the President proper legal advice. In a statement signed by him, Effiong said: “Section 44(1) of the Constitution is clear: only an Act of the National Assembly can deprive a person of his property in pursuance of criminal investigation and prosecution. “The current Attorney General of the Federation is possibly the worst in history. Buhari may be ignorant of the law but not the Attorney General. The President cannot usurp the judicial powers of the Court under Section 6 of the Constitution through Executive Order. It is illegal. “Presumption of innocence is a fundamental right guaranteed by Section 36(5) of the Constitution. This government keeps sending signals that it is populated by ignorant people who do not know what they are doing. It is rather sad the Vice President is a Senior Advocate of Nigeria. “There are provisions under the law on how to deny suspects access to suspicious properties: Sections 20-33 of the EFCC (Establishment) Act 2004 and Sections 43-49 of the ICPC Act, etc, makes ample provisions for this. Buhari is chasing shadows”. Citing a similar attempt by the Federal Government to seize funds

in bank accounts not linked to Bank Verification Number (BVN), which was stopped by a Federal High Court in Abuja recently, the lawyer said: “This government has not learnt any lesson from that defeat. You cannot fight corruption outside the law. This so-called fight against corruption will continue to suffer because this government does not know what it is doing. “I want us to know that no government lawyer will cite Buhari’s “integrity” in court as an authority upon which the court should base its decision and convict. This government is playing to the gallery and acting both naively and ignorantly”. He said Section Section 315 of the Constitution does not empower the President to make Executive Order indiscriminately, adding that it applies to existing laws (Decrees and Edicts promulgated by the military before the coming into force of the 1999 Constitution). Also, describing the Order as dead on arrival, another legal practitioner, Kenneth Ikonne, said it goes beyond the scope of the powers granted the President by Section 315(2) of the 1999 Constitution. Ikonne also stated that it is an attempt to usurp the powers of the Legislature, describing the President’s action as null and void. “This particular Executive Order No. 6 is arbitrary and whimsical. The power granted the President under Section 315 (2) is merely for the purpose of enabling him to: ‘.... at any time by Order make such modifications in the text of any existing law....to bring that law into conformity with the provisions of this Constitution. “In proceeding to enact a brand new and far-reaching legislation purportedly acting pursuant to section 315, the President clearly went beyond the scope of the powers granted by the section. It is grotesque and odious to read into a constitutional provision what is not there and appropriate powers

not conferred. Buhari merely rubbished the separation of powers principle enshrined in the 1999 Constitution and usurped the powers of the Legislative branch of government which alone has the exclusive powers to make laws. “Section 315 does not by any stretch of the imagination give the President the Power or discretion to displace the legislature as he has done with his Executive Order No. 6, initiate and pass legislation in flagrant disregard of section 4(1) of the Constitution which provides that “the legislative powers of the Federal Republic of Nigeria shall be vested in the National Assembly...’ “Executive Orders can therefore clearly not be used to circumvent and breach express provisions of the Constitution. On the contrary, the clear and express intendment of section 315 is that in applicable cases, the President can only modify the text of an already existing statutory provision so as to bring it in conformity with the provisions of the Constitution”. While describing the Order as hypocritical, former aide to expresident Goodluck Jonathan, Reno Omokri, punctured the list of politically exposed persons released by the President. He wondered why those who have been fingered in one shady deal or the other in the present administration were not on the list. These, he listed to include: former Bayelsa State governor Timipre Sylva, Chief of Army Staff Turkur Buratai, chairman of the defunct Presidential Task Team on Pension Reforms Abdulrasheed Maina and the sacked Secretary to the Government of the Federation Babachir Lawal. Already, the main opposition Peoples Democratic Party (PDP) has said it was considering a legal action against the asset seizure Executive Order imposed by the President. In a statement issued by its National Publicity Secretary, Kola Ologbondiyan, it described the order as illegal, unconstitutional, reprehensible and a dangerous step towards a descent to fascism. The party described the asset seizure Executive Order as total disregard to the provisions of 1999 constitution. “Already, our lawyers are considering a legal action against the Federal Government on the illegality of Mr. President’s action in the interest of Nigeria and Nigerians.’’ The party said that the Nigerian constitution did not, under any section, confer such fascist powers on the President under democracy. Ologbondiyan said the unilateral Order was a travesty of justice and rule of law “as it vehemently seeks to hijack and usurp the powers of both the legislature and the courts’’. From all indications, the Presidency has resolved to implement the Order despite stiff opposition, even as the PDP prepares to challenge the President’s recent action in the law court.

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Politics & Policy

Abaribe to Nigerians: Get your PVCs, vote out APC in 2019 Chairman, Senate Committee on Power, Steel Development and Metallurgy, Enyinnaya Abaribe, spent five days in custody of the Department of State Services (DSS). In this interview with journalists when he paid a courtesy call on the national leadership of the People’s Democratic Party (PDP) in Abuja, the outspoken senator bared his mind on his ordeal. OWEDE AGBAJILEKE was there. Excerpts: Why are you in the PDP national headquarters? came to my party office to specially thank members of the National Working Committee led by our great chairman, Uche Secondus and thank him specifically for the great show of support by my party when I was undergoing the ordeal of dirty politics. Where we are today in Nigeria, I can only make one recommendation to Nigerians. And that recommendation is: get your PVCs ready because we have to vote out this government. There is no other way we can do it because as you can see, this government is descending into tyranny. When I was arrested and I was taken to my house for it to be searched, in the warrant of arrest for the search of my house, what they said was that I was a sponsor of terrorism. And I wanted to know subsequently how I would sponsor terrorism and they put there in bracket that I was aiding and sponsoring a proscribed organisation ‘IPOB’. And so, everybody in Nigeria knows that I signed the bail bond for Nnamdi Kanu of IPOB. And if signing the bail bond means that I am now a sponsor of IPOB, what it means also is that every Nigerian should be ready. For every little thing, they will find a reason to hold you because this government has lost the confidence of the people. And all that they are doing now is nothing but intimidation and trying to make sure that strong voices and voices who are saying that enough is enough, enough of these killings, enough of the impunity, enough of everything, they will like to silence

a proscribed body. Nigerians can use their tongue to count their teeth to know the real reason. They said I shouldn’t talk, so I am now talking in parables.

You said the only way to get rid of this government is by Nigerians coming out en masse to get their PVC and vote them out. Are you saying that the National Assembly cannot impeach the President? Well, I am just a member of the National Assembly. That is a question that will go to the National Assembly spokesperson, not a single person outside of the National Assembly. But I know that the best and legitimate way to get out a government that you don’t like is that you vote them out. And I pray, I hope and I believe that come 2019, this government will be voted out of power.

You have been very vocal against the Federal Government, especially on the floor of the Senate. Do you think your outspokenness must have instigated your arrest? Well, the ostensible reason like I have said, is that I am a sponsor of

Do you have confidence that the present INEC as constituted can deliver free, fair elections in 2019? Let me say that the present INEC as it is constituted are also people on the brink of history. What they do and what they don’t do will have an effect on whether we have a country or we don’t have a country. And so, I believe that when people are challenged and confronted historically at defining moments for the nation like we have today, they will rise up to expectation. How were you treated during your detention with the DSS? Let me also say that I was treated very well. I was treated cautiously. And I also have the sense that the patriotic people who work within the DSS understood what was going on and they treated me very well.

the labour movement at this time. These are very challenging times. I also know that sometimes, government positions are misunderstood or portrayed differently by some government functionaries. As an insider and now a key player in the governing party, I am very clear that my responsibility is to influence policies in a way that will benefit the Nigerian worker. There is no sitting on the fence because government is the management of sets of biases. Whatever you call it, government and governance is value driven. “I am happy to be the APC Chairman, particularly under President Muhammadu Buhari. Even though he is not a former union person, those who are familiar with his policies, know that his source of strength is the ordinary people, the masses, the poorest of the poor. If he has strong opponents, it is among the establishment, a section of the political elite who do not agree with his rigid commitment to anti-corruption.

“President Buhari and the APC government believe in the unity of the Nigerian worker. At a time when a good section of the political class has become ethnic champions, religious bigots and divisive tendencies, President Buhari believes we need pan-Nigerian institutions; people who organise, mobilise and affiliate above all these primordial sentiments, which the labour movement represents. “You can count on this government that nothing will be done to undermine the unity of Nigerian workers. I will be your in-house agent to ensure that governance and government instrument are used for the good of the greatest number of our people in the shortest possible time,” Oshiomhole stressed. Speaking earlier, the TUC President, Comrade Bobboi Bala Kaigama assured the APC National Chairman of TUC’s support and cooperation. Kaigama described Oshiomhole as a bridge-builder.

Abaribe

the voices. The National Assembly of which I am a very proud member is now besieged. Yesterday, it was Senate President sponsoring armed robbers, the other day, it was Dino Melaye sponsoring some gun runners, the other day it was Shehu Sani sponsoring murderers. Today, my own is sponsor-

ing terrorism. And so everybody should get ready. They will find something that they will hang on your head. I want to also thank Nigerians for saying ‘No’ because we got so much tremendous support. I will not be able to mention all the names of all the people who contributed in one way or the other. But like those of us

who are in the struggle continue to say, aluta continua.

Oshiomhole promises to champion workers welfare JAMES KWEN, Abuja

ll Progressives Congress (APC) National Chairman Adams Oshiomhole has promised to use his position to influence government policies in a way that will benefit the Nigerian worker. Oshiomhole equally assured labour unions in the country that the President Muhammadu Buhari administration is committed to the implementation of an improved National Minimum Wage for Nigerian workers. He also said President Buhari remained committed to worker’s welfare, the fight against corruption and the unity of the country, despite resistance from a section of the political elite. The APC helmsman gave this indications while addressing a delegation of Trade Union Congress, TUC led by its President, Comrade Bobboi Kaigama and President

of the Nigerian Labour Congress, NLC, Comrade Ayuba Wabba who paid him a solidarity visit at the APC National Secretariat, Abuja. “The trade union movement and the working class represent part of the constituency that President Buhari believes in. That is why on occasions like this, I can safely assure the TUC and NLC that if you hear any voice within the APC family talking in a way as to suggest that President Buhari’s government will superintend over abolition of the National Minimum Wage, that will be the individual’s wishful thinking. President Muhammadu Buhari will not dismantle any of the gains that the working class has achieved over the years. “One of which is the idea of a National Minimum Wage to provide a social club below which no Nigerian workers should be engaged. I think there is no better evidence of this than the fact that even at a time many people were calling for the abolition of the National Minimum Wage,

President Buhari decided to set up a panel to review upward the existing National Minimum Wage. As they say, action speaks louder than words. “My understanding of the Nigerian condition is deepened by the fact that I had the opportunity as a factory worker and an industrial union leader and later as President of the Nigeria Labour Congress (NLC). “I am very proud when people acknowledge that what qualifies me for the present position is the rich trade union background where I was able to manage a pan-Nigeria institution and mobilise the people for a good course without recourse to ethnic, religious and primordial sentiments. “That is the challenge of the political class today because many are still afflicted by these primordial sentiments. I am very proud of those values that I had to imbibe as a union leader. I know the struggles that we waged together. “I also want to thank you for the leadership you are providing for

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States Competitiveness and Good Governance Awards 2018 What are the awards all about?

They are meant to engender good governance at the grassroot; encourage state governments to open up rural economies for businesses with a view to making agriculture a lucrative business; promote judicious use of our scarce resources and ensure that each state has infrastructure that will aid the ease of doing business objectives. Before 1999 the conditions of the Nigerian economy and state economies were pathetic, as infrastructure was in a bad state. The Nigerian economy remained mono-product driven with the oil and gas sector as the major source of over 80 percent of the nation’s revenue; the export of nonoil goods was fairly non-existent while unemployment was very high. To ensure that the Nigerian citizens get value for their money, and in order to ensure the judicious use of the scare resources, West Africa’s premier financial and business newspaper, BusinessDay, decided that some metrics

that capture developmental strides in all the states must be set to gauge the performance of public officials, most especially, state governors. This informed the coming on board of the States’ Competitiveness and Good Governance Awards. The motive of the project is to engender competition among state governments in Nigeria so that Nigerians can get the real dividend of democracy. The quantitative aspects of the awards are anchored by BusinessDay Research and Intelligence Unit (BRIU), while the qualitative aspects such as onsite inspections, interviews, interactions with the people and government officials are carried out by the Awards Committee which, comprises the editorial team and distinguished Nigerians. The state governors who have distinguished themselves are nominated for different award categories after an extensive research by BRIU and the Awards Committee.

Icons of Good Governance

Governor: Ezenwo Nyesom Wike, Rivers State

Political Party: People’s Democratic Party (PDP) Educational qualifications: B.Sc, LLB, BL Ezenwo Nyesom Wike was born 24th August, 1967 to the family of Reverend and Mrs. Nlemanya Wike. He is a native of Rumuepirikom in ObioAkpor, Rivers State, Nigeria. He holds degrees in Political and Administrative Studies as well as Law. After a brief working period with private legal practice, Chief E.N. Wike was elected as the Executive Chairman of Obio/ Akpor Local Government Area for two terms from 1999 to 2002 and 2004

to 2007. While in office, he served as Deputy President, Association of Local Governments of Nigeria, ALGON, in 2004 and was later elected the President of ALGON. He also represented Africa as a member of the Executive Committee of the Commonwealth Local Governments Forum. Between October 26, 2007 and May 28th 2011, Chief N.E. Wike served as the Chief of Staff, G ov e r n m e nt Hou s e, Port Harcourt under the then Governor Amaechi’s tenure and was also appointed the DirectorGeneral of his re-election Campaign Organization. On 14 July 2011 President Goodluck Jonathan appointed him as the Minister of Education of State of Federal Republic of Nigeria. Rivers State has emerged one of the leading destinations of investments in Nigeria measured by capital importation, FDI, bilateral MoUs enhanced through the promotion of the ease of doing business. His administration has constructed and rehabilitated over 11 major roads; raised the standards of primary healthcare centres and hospitals while thousands of jobs have been created in agric, SME and other sectors.

Governor: Akinwunmi Ambode, Lagos State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc, M.Sc, FCA Akinwunmi was born on June 14, 1963 in, Epe, Lagos State. He began his education at St. Jude’s Primary School, Ebutte Meta in Lagos in 1969. In 1974, while still in Primary 5, he sat for the National Common Entrance Examinations and was admitted to Federal Government College, Warri in the same year. Ambode spent 7 years in Warri, where he completed his Ordinary and Advanced Levels and had the distinction of achieving the second best result in all of West Africa in the Higher School Certificate Examinations in 1981. Ambode proceeded to the University of Lagos where he studied Accounting, graduating at the age of 21 in 1984. He completed his mandatory National Youth Service Corps year serving with the Central Bank of Nigeria (CBN) in Sokoto State. Ambode commenced his career at the Lagos State Waste Disposal Board (now LAWMA)

as Accountant Grade II. He enrolled for the Institute of Chartered Accountants of Nigeria (ICAN) exams and at the same time was awarded a Federal Government Scholarship to pursue a Masters Degree in Accounting at the University of Lagos. By the time he was 24, he had qualified as a Chartered Accountant and had completed his Masters Degree programme in Accounting, specializing in Financial Management. In 1998, Ambode was awarded the US Fulbright Scholarship for the Hubert H. Humphrey Fellowship program, in Boston University, Massachusetts, USA. His Fellowship Year was spent studying Public Leadership with emphasis on Finance and Accounting. During this programme Ambode had professional internships at The Federal Reserve Bank of Boston, the Cabinet Office of Administration and Finance (Governor’s Office), and City of Boston Treasury Office as well as with the World Bank and IMF. Ambode became the governor of the largest state economy in Nigeria and the fifth biggest economy in Africa, Lagos State in 2015. He has left no stone unturned in his bid to transform the state into the third biggest economy in Africa. To achieve this, infrastructure development and urban renewal is key. He has since constructed the over 100 roads, lay-bys, bridges particularly the Pen Cinema Flyover, the world class Oshodi Transport Interchange, new Art Theatres, Epe and Badagry Marina projects, Airport Road, Abule-Egba to Oshodi BRT lane, LAKE Rice project, among others. More importantly, the night economy has returned in Lagos, the centre of excellence.

Award Categories

1. Promotion of Made in Nigerian Goods 2. SME Development 3. Economic, Social and Youths Development 4. Ease of Doing Business 5. Sports Development 6. Agriculture Development 7. Tourism Development 8. Healthcare Development 9. Rural-Urban Infrastructure Development 10. Housing Development 11. Transparency in Governance 12. Peace and Security 13. Education Reforms & Development 14. Governor of the Year (Overall, North, South) Venue: Transcorp Hilton Hotel Abuja Date: July 19, 2018

Governor: Ibrahim Hassan Dankwambo, Gombe State

Educational qualifications: BSc, PGD, MSc, PhD, FCA, FCIB, FCIT, FNIM Political Party: Peop l e ’s D e m o c r a t i c Party(PDP). Ibrahim Hassan Dankwambo was born on 4th April 1962 at Herwagana Ward in Gombe City, Gombe State. He attended the Ahmadu Bello University Zaria and Graduated with Bachelor of Science degree in accounting. Later, he bagged a Doctor of Philosophy Degree (Phd) from Igbenideon University, Okada. No doubt, Dankwambo has transformed Gombe State going by his numerous programs for

the different sectors of the State’s economy. Despite the proximity of the state to Borno, he has ensured that the state is insulated from crisis. In addition, he supported farmers by procuring quality seeds, thrasher machines, water pumps, and Nap sack sprayers while distributing fertilizers to farmers at highly subsidised rates. His administration has constructed a technology incubation centre for SMEs in the state, recruited graduates as teachers in secondary schools, and NCE holders as teachers in primary schools; this is in addition to procuring and distributing the tricycles and Suzuki cabs and buses as poverty alleviation measures. Dankwambo added the New Snake Bite Hospital, an ultra-modern women and children hospital, and a cottage hospital in Hinna to boost the State’s health sector. He also built modern primary schools for IDPs, and a government girls’ secondary school to reduce the pressure on existing ones.

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Icons of Good Governance

Governor: Ogbeni Adesoji Rauf Aregbesola, Osun State

Political Party: All Progressives Congress Educational qualifications: HND, FNSE, FNIM, FNATE, FCMCIN Ogbeni Rauf Aregbesola was born on 25th May 1957. He had his primary and secondary education in Ondo State, and later attended The Polytechnic, Ibadan, studying Mechanical Engineering and graduating in 1980. Rauf Aregbesola has a wealth of exp er ience garnere d through wide exposure in the private sector, such as the Nigerian External Telecommunications, now Nigerian Telecommunications Ltd. and Lagos Airport Hotel, before establishing his own Engineering Services Com-

Governor: Udom Gabriel Emmanuel, Akwa Ibom State

Political Party: People’s Democratic Party (PDP) Educational qualifications: B.Sc, ACA, ACTI Udom Gabriel Emmanuel was born 11 July 1966 in Akwa Ibom State, Nigeria. He attended Secondary Commercial School, Ikot Akpan Ishiet; School of Arts and Science, Uyo, and the University of Lagos where he obtained his bachelor’s degree in Accounting, in 1988. In addition to his academic laurels is a certificate in Advanced Management

pany, Aurora Nigeria Limited, in 1986, handling numerous projects for both government and private organizations in most States of the Federation. He is a Fellow of the Nigerian Institute of Management (FNIM), Nigerian Society of Engineers (FNSE), Nigerian Association of Technological Engineers (FNATE) and Certified Marketing Communications Institute of Nigeria (FCMCIN). A reformer, in spite of paucity of funds, Ogbeni Aregbesola has changed Osun’s status from a primarily rural economy to an emerging urban economy which now has one of the lowest unemployment rates in the country. He was able to achieve these through rural-urban infrastructure development which opened up the opportunities in the state’s rural economy to investors, education reforms, social and economic empowerment. His massive empowerment projects through OYES, OYESTECH, OREAP has led to the engagement of thousands of residents in the state in income-generating ventures. Above all, his administration registered 24,000 cooperative societies in order to boost economic growth in the state.

Program he obtained at INSEAD Business School in Fontainebleau, France. He is a Chartered Accountant by profession and trained with Price Waterhouse Coopers as well as a Fellow of the Nigerian Institute of Management. His industry experience spans several firms including Diamond Bank and Zenith Bank. He also served as a audit manager of Price Waterhouse Coopers; Executive Director Africa Finance Corporation (AFC); Director, Nigerian Inter-Bank Settlement Systems (NIBBS); NonExecutive Director, Zenith Bank, United Kingdom; Zenith Bank- Gambia ; Zenith Bank-Sierra Leone; Zenith Insurance; Zenith Pensions and Custodian; Zenith Securities; Zenith Trustees and Zenith Registrars. A sports promoter, Gov. Emmanuel has turned Akwa Ibom to the home of the Nigeria Supper Eagles; successfully saw the establishment of Nigeria’s first ever electric metering firm; syringe factory just as he has passionately promoted youth and sports development in his state.

Governor: Rt. Hon. Aminu Waziri Tambuwal, Sokoto State

Political Party: All Progressives Congress

Educational qualifications: LLB, BL Rt Hon. Aminu Waziri Tambuwal was born on January 10, 1966 to Waziri Tambuwal in Tambuwal Village in Sokoto State. He attended the Usman Dan Fodio University, Sokoto, where he studied Law, graduating with an LLB (Hons) degree in 1991. He completed his one year compulsory legal studies at the Nigerian Law School, Lagos, from where he obtained the BL degree and was subsequently called to the Bar in 1992.

Governor: Oluwarotimi Odunayo Akeredolu, SAN, Ondo State

Political Party: All Progressives Congress (APC) Educational qualifications: LLB, BL Work Experience: • Secretary NBA, Ibadan Branch 1985-1986, • National Publicity Secretary NBA 1988-1989 • Vice Chairman, NBA Ibadan Branch 1992-1994 • Member, Council of Legal Education 1997-1999 • Attorney General and Commissioner for Justice, Ondo State 1997 • Chairman, Legal Aid Council of Nigeria 2005-2006 • National President NBA, 2008-2010 • Member, Council of Legal Education 2008-2010 • Member of Council, International Bar Association 20082010

He has attended several courses abroad, including International Legislative Drafting in Tulane University in 2005. He attended the Stanford Graduate School of Business in 2008, and the Kennedy School of Government at the Harvard University, USA. Governor Tambuwal gave education the highest attention with the allocation of the lion share of the State’s budget to the sector in 2017 in line with UNESCO’s recommendation. It is also not surprising that his administration has trained 300 indigenes on grain/food security at the Henan University of Technology. He has also established a leather industrial cluster in Sokoto in partnership with UNIDO and set up a textile factory and the Kware Cement Factory through PPP arrangement. Also, the agricultural sector got a boost under his administration as the Kware Irrigation Scheme abandoned for close to 90 years has been resuscitated. He developed grazing reserves to enhance meat and milk production and to end clashes between farmers and herdsmen.

• Member of Council, Pan African Lawyers Union 2008-2010 • Member, National Judicial Council, 2010-2012 Profile Oluwarotimi Odunayo Akeredolu, Aketi as fondly called, was born on 21st July, 1956 in Owo, Ondo State to Late Rev. J. O Ola Akeredolu of Owo and Lady Evang. Grace Akeredolu of Igbotu Ese Odo Government Area of Ondo State. He started his primary School education at Government School Owo before proceeding to the famous Aquainas College Akure in 1968. He also attended Comprehensive High School Ayetoro for his higher Secondary School Certificate. Oluwarotimi proceeded to the prestigious University of Ife now Obafemi Awolowo University (OAU) IN 1974 where he obtained his LLB degree in 1977 and BL from the Nigerian Law School in 1978. Since graduation from the Law School, he has had a tremendous law career. In 1998, and as a mark of recognition of his industry, erudition, service and brilliance, he was conferred with the title of the Senior Advance of Nigeria, (SAN). In a bid to restore Ondo State’s lost glory in education, the state government has embarked on the reforms of the education sector, ease of doing business just as the state has recorded a number of new investment inflows.

Governor: Professor Benedict Bengioushuye Ayade, Cross River State

Political Party: Peoples Democratic Party (PDP) Educational qualifications: LLB, B.Sc, M.Sc, MBA, PhD Senator Benedict Bengioushuye Ayade was born in March 2, 1969. He attended the prestigious University of Ibadan for his doctorate programs where he won the Best Doctoral Dissertation Award in Environmental Microbiology. He was a member of the Nigeria

Governor: Mallam Nasir El-Rufai, Kaduna State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc (First Class), PGD, LLB, MBA, D.Sc (honoris causa) Work Experience: CEO/Founder, Project Management Consulting Firm Worked in AT & T; Motorola Inc., Network Systems International BV Director General, Bureau of Public Enterprises (BPE) Minister, the Federal Capital Territory from 2003 to 2007 Profile: Mallam Nasir El-Rufail was born in 1960 in Faskari LGA of Katsina State. He obtained his first degree in Quantity Surveying (First Class Honours) from Ahmadu Bello University Zaria. He then

Association of Petroleum Engineers and the Cross River State Poverty Alleviation Board. As a man of the people, he has constructed 5,000 housing units for the internally displaced people of Bakassi, constructed a garment factory that has created thousands of jobs, and another 21 megawatts power plant to ensure regular supply of electricity for businesses in the state. In addition, his administration is credited with the completion of Sub-Saharan Africa’s first monorail that connects the Calabar Convention Centre with Tinapa Business and Leisure Resort, while his policies have enhanced investment-friendly policies that has attracted investments to the state. He recently inaugurated the 260 km dual carriage Calabar-Katsina-Ala superhighway.

founded and successfully ran a Project Management Consulting firm from 1982 to 1988 with his partners, handling civil engineering projects across Nigeria. He also held management positions in two internatinal telecommunications companies, AT&T Network Systems International BV and Motorola, Inc. The appalling state of education in the state before assumption of office propelled him to reform the state’s education system. The results may not be immediate, but there is a consensus of opinions that the decision was in the right direction and it is in the interest of all Nigerians. In addition, the current administration in Kaduna State has facilitated the regulation of the water sector, checked substance abuse, and ensured better primary healthcare services for the people. He has also curtailed street begging and hawking, given a facelift to the Kaduna Master plan, and the strengthened the State Vigilance Service. In terms of empowerment, Mallam El Rufai’s administration has recruited several teachers, KATELEA marshals, and health workers. The state now parades international brands such as Olam, Vicampro, Flour Mills and the Dangote Group.

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States Competitiveness and Good Governance Awards 2018

to the Minister of Defence. 2009-2011: Executive Secretary of Chad Basin Commission. 2011-2015: Deputy Governor of Kano State. 2015-Date: Executive Governor of Kano State

Icons of Good Governance

Governor: Okezie Victor Ikpeazu, Abia State

Political Party: Peoples Democratic Party (PDP) Educational qualifications: B.Sc, MSc, PhD Work Experience: Deputy General Manager, Abia State Environmental Protection Agency (ASEPA) General Manager, Abia State Passengers Integrated Manifest and Safety Scheme Chairman, Obingwa Local Government Area Adjunct Senior Lecturer,Biochemistry Dept, Ebonyi State University HOD,Applied Biochemistry Dept, Enugu State Universityof Science & Technology Admin Manager, Cash Bond Investment & Credits Ltd, Lagos Lecturer, Calabar Polytechnic

GA, Science Laboratory Technology Dept; University of Maiduguri Profile Okezie Victor Ikpeazu was born in 18 October 1964 to the family of Late Pa Ishmael and Deaconess Bessie Ikpeazu of Uhuebere in Umubiakwa Village, Isialaukwu Mbato community in Obingwa Local government Area of Abia State, Nigeria. He was at the University of Calabar where he lectured while pursuing a doctorate degree in Biochemical Pharmacology. He obtained his PhD in 1994. He served as a Masters’ Degree External Examiner, to the Department of Biochemistry, University of Nigeria. His programs have cut across all the facets of Abia State economy. The schools of nursing and midwifery at Aba, Umuahia and Abariba have been given a facelift just as the Child/ Maternal Healthcare Centre at Abia State University Teaching Hospital has been renovated. He is at the forefront of championing SME development and ‘Buy Made in Aba’ Campaign which has generated over N3 billion revenues to Aba entrepreneurs in the last two years.

Governor: Muhammadu Badaru Abubakar, FCNA, Jigawa State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc, NIPSS Muhammadu Badaru Abubakar was born in 1962 in Babura town of Jigawa State. He obtained a Bachelor of Science degree in Accountancy in 1985 from Ahmadu Bello University. In 2006, Alhaji Abubakar went to the prestigious National Institute for Policy & Strategic Studies, (NIPSS), Kuru Jos. His administration’s emphasis is on openness, accountability and transparency. He has made some giant strides in leadership, recording such major achievements as attracting $100m investment for sugar production from the Lee Group, commissioning Danmodi Rice Mills, and establishing a computer-based training (CBT) centre at Binyaminu Usman Polytechnic, Hadejia. In addition, he rehabilitated the College of Health Science and Technology, Jahun; he has also empowered women through micro-credit schemes.

Governor: Godwin Nogheghase Obaseki, Edo State

Political Party: All Progressives Congress (APC)

Educational qualifications: BA, MBA, CFS G o d w i n No g h e g h a s e Obaseki was born on 1st of July, 1959 in Benin City, Edo State to the families of Obaseki and Gbinigie of Owina Street, Ogbelaka Quarters. He attended the prestigious Columbia University and Pace University both in New York where he bagged an MBA in Finance and International Business respectively. Obaseki is a Fellow of the Chartered Institute of Stock Brokers, Nigeria. He is also an alumnus of the Lagos Business School’s Chief Executive Program.

Governor: Mohammad Abdullahi Abubakar, Bauchi State

Political Party: All Progressives Congress Educational qualifications: LLB Barrister Mohammad Abdullahi Abubakar was born on 11 December 1956 . He began his career in the civil service where he rose through the ranks to become the Bauchi State Attorney General and Commissioner for Justice. He ran for public office as Governor of Bauchi State in 2015 under the platform of the All Progressives

He established Afrinvest West Africa Limited (then SecTrust) in 1995 and the company was later appointed correspondent stockbroker for Nigeria by the International Finance Corporation (IFC) in the same year. He leaves no one in doubt as regards the focus of his administration with the numerous successes he has recorded. # For instance, he has signed a technical capacity development agreement for “Electrify Edo Program” with Siemens AG, Ossiomo Power Limited, and Benin Electricity Distribution Company (BEDC), to train youths on the practical aspect of electrical and electronics engineering. In addition, he has engaged 4,200 youths across the state in employment and established the Edo State Ministry of Mining. Governor Obaseki’s administration has rehabilitated 35 strategic roads within seven months in office, and kick-started the development of a seaport at Gelegele.

Congress, the state’s opposition party. Due to negligence overtime, Bauchi State lost its place as the headquarters of West Africa’s tourism industry. This is already changing for the better. On assumption of office, Barrister Abubakar set in motion eforms that have made the different wildlife resorts in the state tourists’ delight. Above all, partnership with Arik’s Air now ensures that tourists can fly directly into the state from Lagos, the nation’s commercial capital. The state is endowed with Sumu Wild Life, home to Zebras, Giraffes, Wildebeests, Impalas, Monkeys and other herbivores; Yankari Resort and Safari, the home to critically endangered West African lions, buffalo, hippopotamus, roan and hartebeest; and the tomb of Alhaji Sir Abubakar Tafawa Balewa, the first and only Prime Minister of Nigeria.

Governor: David Nweze Umahi,

Ebonyi State

Political Party: People’s Democratic Party (PDP) Educational qualifications: B.Sc Dave Umahi Nweze was born on 1st January 1964 in Ebonyi State. He attended Umunaga Primar y S chool in Ubur u from 1971-1977 where he

Governor: Rt. Hon. Lawrence Ifeanyi Ugwuanyi, Enugu State

Political Party: People’s Democratic Party (PDP) Educational qualifications: BSc, MSc, MBA Rt. Hon. Ifeanyi Ugwuanyi

Governor: Abdullahi Umar Ganduje, Kano State

Political Party: All Progressives Congress Educational qualifications: NCE, BSc, MA, MPA, PhD Work Experience: 1975-1976: NYSC, Teacher at Oleh College, Delta State. 1976-1976: Education Officer II, Ministry of Education, Kano State. 1976-1978: Gumel, Lecturer I, Advanced Teachers College. 1978-1979: Lecturer II, Bayero University Kano. 1979-1981: Personnel Manager, Norait Limited Kano. 1981-1993: Federal Capital Development Authority (F.C.D.A). 1994-1998: Commissioner, Ministry of Works, Housing and Transport. 1999-2003: Deputy Governor of Kano State. 2005-2006: Special Assistant

bagged his First Leaving Certificate with Distinction. Engr. Umahi started his secondary education at Ishiagu High School in 1978 and in 1979, transferred to the prestigious Government Secondary School, Afikpo, passed his WASC Examinations in Division 1 grade with excellent Alpha performances in all his subjects.

Profile: Abdullahi Umar Ganduje was born on December 25, 1949 at Ganduje village in the present day Dawakin Tofa Local Government Area of Kano State. An erudite Ganduje has two master’s degrees; he also has a PhD in Public Administration from the University of Ibadan. Since he assumed office, he has focused programs on transforming Kano State into the commercial nerve centre of Nigeria. His reforms ensured that the Kano State gross domestic product (GDP) stands at about $20 billion and that makes it the second largest state economy in Nigeria. Enhancement of ease of doing business in the state has engendered strong and diverse SMEs which contribute about 70 percent of the state’s output and employment ; infrastructure development leading to the construction of Nigeria’s first ever 3-level flyovers/underpass, housing development and inter-state business promotion.

He got admission into the Anambra State University of Science and Technology where he obtained a Bachelor of Science Degree in Civil Engineering in 1987. Between 1988 and 1989, he did his National Service in SAIPEM SPA in Benin City. Gov. Umahi worked

with SCC Nigeria Limited; an Israeli Company (Water Engineering Giant) and rose to the position of Project Engineer. It was here that his managerial and technical competence was brought to the fore in his supervision of the historic Umuahia Water Project and the Ndie g oro Aba Flood Control Measures between 1988 and 1990. Since becoming the governor, Gov. Umahi’s touch can be felt in every segment of the state particularly in areas of infrastructure, healthcare and t ou r i s m d e v e l o p m e nt. This has changed the state of transport, agriculture and healthcare ser vice delivery in the state.

was born in Enugu on March 20, 1964. He holds an MBA in Finance and another MBA in Accountancy from the Enugu State University of Science and Technology (ESUT). Before he went into politics, he was the Chief Executive Officer of Premier Brokers Limited, the prime Insurance broking firm in the South East zone of the country owned by the five states in the zone and ACB Bank. His programs have touched

every sector of the state’s economy. Among the major projects executed by his administration are roads construction and rehabilitation across the state. He commissioned the Enugu Free Trade Zone, procured and distributed ICT equipment to all the states’ secondary schools; empowered traders towards reducing poverty and crime in the state while the Heliu Estate was inaugurated through the PPP scheme.

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Icons of Good Governance

Governor: Senator Umaru Jibrilla Bindow, Adamawa State

Political Party: All Progressives Congress (APC) Educational qualifications: National Diploma Senator Bindo Umaru Jibrilla was born on June 16, 1963 in Adamawa state. He holds a National Diploma in Business Administration. He is an industrialist who has established three companies in Mubi, employing about four hundred people. He was elected as the senator representing Adamawa North senatorial district in the senate and was the Vice Chairman of Senate Committee on Defence and Army/ Science and Technology.

Governor: Abdulfattah Ahmed Kwara State

Political Party: All Progressives Congress Educational qualifications: B.Sc, MBA Alhaji Abdulfatah Ahmed was born on 29 December 1963 in Share, Ifelodun Local Government Area of Kwara State. He had his secondary school education at Government College, Funtua, Katsina State (1973-1978) and then proceeded to the School of Basic Studies of Kwara State College of Technology (now Kwara State Polytechnic), Ilorin (1978-1980) for his ‘A’ Levels. He earned his B.Sc. in Chemistry in 1986 from the University of llorin and a Master of Business Administration (MBA) degree in 1992 from the same university. He was an Assistant Manager at District Savings and Loans, Lagos, between 1991 and 1993;also worked for Guaranty Trust Bank Plc as the Head of Institutional Banking Group for the Northern region in 2003. Before, he became the governor, he had served in

Governor: Willie Obiano, Anambra State

Political Party: All Progressives Grand Alliance (APGA) Educational qualifications: B.Sc, MBA Willie Obiano,a native of Aguleri in Anambra East Local Government Area, was born on August 8, 1957. He attended the Holy Trinity Primary School and Christ the King College, both in Onitsha, for his primary education and West African School Certificate Examination. He proceeded to the University of Lagos where he earned his B.Sc. in Accounting Second Class Upper in 1979 and an MBA in Marketing in the year

different capacity such as Commissioner for Finance, Planning and Economic Development, among others. He was appointed as the commissioner for Finance and Economic Development at the start of Abubakar Bukola Saraki’s Kwara State Administration till 2009. H He was appointed a member of board of directors of the International Aviation College, Ilorin, Chairman of the Millennium Development Goals implementation committee and Chairman of Songhai Farms Holdings Ltd. Gov. Ahmed has undergone several courses including Corporate Governance course at the Manchester School of Business (2006), Capital Budget Strategies and Techniques, London (2004) and Public Finance Management Course at J.F. Kennedy School of Government, Harvard University USA (2004). From roads, water, to agriculture, health, housing and education, Government Ahmed’s administration has recorded giant strides in Kwara Statein spite of paucity of funds, the present administration in Kwara State has continued to invest in urban and infrastructural development in the state. The state government also intervened on some Federal roads to ease the economic activities of the state. The roads include: Patigi-Kpada-Rogun Road (On-going), dualization

1993. He won the John F. Kennedy Award for Essay. Apart from academic award, Willie Obiano has also bagged several professional awards such as Distinguished Banker of the Year 2012 Award. He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN); Member, Harvard University, USA CLASS, Member, Harvard Business School, Boston USA and Stanford University. Governor Obiano’s vision for agriculture in the state has started to materialise. His partnership with the International Fund for Agricultural Development(IFAD), the Federal Government and Anambra East, Anambra West, Ayamelum, Awka North and Orumba North local government areas, as well as other top-notch agric projects, has transformed agriculture in Anambra State through jobs creation, vegetables export among others. His magical touch is also felt in infrastructure development, healthcare service delivery and education development in the state.

of Offa Garage-Dangote Road (South link road); Ilorin, Fate Road to GSS Roundabout, Kaiama-Kishi Road (Ongoing) and Ilesha-BarubaGwanara road.

Governor: Kashim Shettima, Borno State

Political Party: All Progressive Congress (APC)) Educational qualifications: B.Sc, M.Sc Alhaji Kashim Shettima was born on 2nd September 1966 in Shettimari, Shettima Mustafa Kuttayibe, Borno State. He attended the Lamisula Primary School Maiduguri between 1972 and 1978, and Government Community Secondary School, Biu in 1978 where he got the West African School Certificate Examinations (WAEC) in 1980. He was admitted into the University of Maiduguri where he obtained the Bachelor of Science (Honours) degree in Agric Economics. He then attended the University of Ibadan from 1990 to 1991, gaining a Master’s Degree in

Governor: Hon. Henry Seriake Dickson, Bayelsa State

Political Party: People’s Democratic Party (PDP) Educational qualifications: LLB, BL

Governor: Yahaya Bello, Kogi State

Political Party: All Progressives Congress Educational qualifications: B.Sc, MBA Yahaya Bello was born on June 18, 1975 in Agassa, Okene LGA. He had his primary education at the LGEA Primary School, Agassa. He enrolled at Agassa Community Secondary School in Agricultural Economics. He was promoted to lecturer II in the Department of Agricultural Economics, University of Maiduguri in 1993, although he started lecturing by 1991. Gov. Shettima worked with the Commercial Bank of Africa as an Agricultural Economist at its Ikeja Office, Lagos State (1993-1997). He then became a deputy manager, later manager, at the African International Bank Limited, Kaduna Branch (1997–2001), and was appointed Deputy Manager/Branch Head of the Zenith Bank’s Maiduguri Office in 2001, becoming General Manager five years later. In mid-2007, he was appointed Commissioner of the Borno State Ministry of Finance and Economic Development. Later, he became Commissioner in the Ministries of Local Governments and Chieftaincy Affairs, Education, Agriculture and later Health under his predecessor as Borno Governor Ali Modu Sheriff. Housing deficit in his state was aggravated by Boko Haram insurgency and his administration has risen to the occasion through infrastructure development such as roads, bridges, hospitals and construction of affordable housing units for the residents of Borno State.

Hon. Henry Seriake Dickson holds a Bachelor of Law (LLB Hons) degree from the Rivers State University of Science and Technology, Port Harcourt. He was called to the Bar in 1993, having earned his Barrister of Law (BL) from the Nigerian Law School, the same year. His Excellency had a stint as a Police Officer with the Nigerian Police Force before his voluntary withdrawal from service to actively practice Law. Governor Dickson served as Attorney General and Commissioner for Justice, Bayelsa State from 2006 - 2007. He also served as a member of the Federal House of Rep-

resentatives, representing Sagbama/Ekeremor Federal constituency of Bayelsa State from 2007 – 2011. Hon. H. S. Dickson is a Member of the Nigeria Bar Association, International Bar Association, Chartered Institute of Arbitrators (U.K) Nigerian Chapter and a Member of the Chartered Institute of Taxation of Nigeria. Hon. Dickson has touched every sector of the Bayelsa State’s economy particularly the health sector which now boasts of an internationally recognised specialist hospital which can reverse stroke, Bayelsa Diagnostic Centre, and referral hospitals in some of the local government areas.

1989. Changing school five times, he finally settled in at Government Secondary School, Suleja, Niger state, and sat for his Senior Secondary School Certificate Examination (SSCE) in 1994 at the school. He got a Bachelor’s degree in Accounting and a Master’s degree in Business Administration from Ahmadu Bello University (ABU) in 1999 and 2004 respectively. He became a Chartered Fellow of the Association of National Accountants of Nigeria (ANAN) at Jos in 2004. He spent his NYSC year at the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) in 2002 and was retained. He was subsequently appointed as Revenue Officer and then promoted to Accountant within a short

period. He later attained the post of Assistant Chief Accountant before leaving the commission. He is the managing director of FairPlus International Limited and the chairman of Kogi Youth Arise Forum. Many states in the North Central geopolitical zone have had their fair share of attacks from insurgents. Kogi State, being the confluence state and the melting points of tribes and ideas, has sustained peace and ensured security of lives and property. This is coming from no less a person than His Excellency, Yahaya Bello, the Executive Governor of the state, through his ingenious mobilisation of the grass root and provision of support for the nation’s security apparatuses.

Governor: Abubakar Sani Bello, Niger State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc Governor Bello was born on 17 December 1967. He is the eldest child of the Nigerian billionaire and former military Governor of old Kano State Col. Sani Bello (rtd) . He attended St. Louis Primary School, Kano between 1974 and

1979. He later went to the Nigerian Military School from 1980 - 1985 after which he was given admission into the University of Maiduguri where he graduated in 1991 with a B.Sc degree in economics. Bello has worked in several parts of the country starting from his NYSC days where he was posted to serve in Port Harcourt in the marketing department of NICOTES Services as a supervisor. Prior to becoming the governor of Niger State, he was involved in various businesses. On assumption of office, he left no one in doubt about his desires to empower the people of Niger State. This he started doing through the $450 million sugar production MoU between the state and Dangote plc; the N18 billion MoU with the Hungarian investor, Osetertrade Engineering on the integrated farming project; the $3.25billion MoU with All States Investment Limited on fish farming; and the UNICEF’s N1.3bn with the state for the provision of basic necessities of life for children and women, among others.

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Botswana ranching model points way for Nigeria JOSEPHINE OKOJIE

ver 70 percent o f B o t s w a n a’s population lives in rural areas and earns a living from agriculture. Because of the dry climate, livestock production dominates agricultural activities. Although both Nigeria and Botswana have a rich history of pastoral agriculture, unlike Nigeria, Botswana as a nation has decided that there must be a change in its method of animal husbandry. Bostwana currently has more cattle than human population, but the country has adopted a ranching technique similar to the one practiced in South Africa, Australia, and Argentina. Most of its ranches are mediumand large-sized cattle ranches fitted with a flavour of modern global dairy practice. The ranching initiatives are mostly driven by the private sector. Apart from being a major source of dairy products, these ranches create thousands of jobs for the Botswana people and also function as tourist centres. Experts say Nigeria can adopt the framework to tackle its farmer/ herder conflicts while addressing issues of climate change as a lasting solution to the decades-long conflicts.

While it is important to build ranches, some experts say this should be undertaken by individuals since cattle-rearing is a private business. “Ranching is good and it is the solution to Nigeria’s farmers/ herders crisis but it should be a private investment and not the government setting up ranches,” Henry Olatujoye, national president, National Palm Produce Association

Boost for mechanised agric as Dizengoff delivers 50units of tractors JOSEPHINE OKOJIE

izengoff Niger ia has delivered 50 units of 75HP CASE IH tractors to the Nigerian market to boost mechanised agriculture in the country. The deal which will see the leading Nigeria’s leading tractor company, Dizengoff, deliver the 50 units of tractors in 2 batches within 30 days, with the first sets of tractors to be delivered immediately and the second batch at the end of August. Antti Ritvonen, CEO and country manager, Dizengoff Nigeria, assures customers of the organisations commitment to supporting their operations. “We assure you of our best in class after sales support, to minimize any downtime. We are determined and committed to providing quality machinery services to all of our tractor owners in Nigeria,” Ritvonen said in a statement made available to Nigeria. “With our exclusive partnership agreement with CASE IH in the delivery of tractors in Nigeria, in addition with technical support in the areas of training, after sales service support and constant supply of genuine spare parts. We are committed to provide the best possible solution at a most affordable

price to all the Nigerian farmers,” he further said. In a similar statement, Damisa Enahoro, commercial manager-Tractor & Implements, Dizengoff Nigeria, said “we are excited as a company to be able to share our technical know-how and quality service delivery, coupled with our many years of experience in providing agricultural solutions to the Nigerian farmers.” “Our robust after sales support services; from training of personnel, servicing of the tractors to ensuring availability of genuine spare parts, has been our unique advantage over other companies. We are also confident in the CASE IH brand of tractor, knowing it is a world class tractor, with over 175 years of providing excellent and superior machineries,” he said. Enahoro explained that through this delivery, farmers across the country, both large scale and smallholder farmers can begin to have increased access to tractors for their farming operations. “This tractor initiative with tractor service provider will help increase the income of our farmers, reducing production costs and help create opportunities for farmers in the country. One of the issues limiting the increase of food production in the country is poor level of mechanization.”

of Nigeria. “Ranching is a business and should be treated as such in Nigeria. The Federal Government is the problem of the farmers/ herders crisis. The government have no business establishing ranches for herders. All they need to do is provide the environment for investors to invest in ranches,” Olatujoye said. Nigeria recently unfolded a 10-

year National Livestock Plan as a way of checking incessant clashes between farmers/herders which have claimed innumerable lives and properties. Also, the government announced moves to create 94 ranches in 10 pilot states under the Plan and has budgeted a whopping N179billion for the project. About N70 billion of the budget will be disbursed between now and

the expiration of the Buhari’s first term in office. Bu t a l o t o f s t a ke h o l d e r s applauded the move of establishing ranches but noted it must be a private sector investment while the government provides the enabling environment. Chryss Onwuka, professor of ruminant animal nutrition and president, Nigerian Society for Animal Production said “within the confines of the ranch, the animals can be sustained. You will be sure you can get feed and water for them, providing all these within the ranch. This will minimise the movement outside the ranch in search of water and feed, in the course of which destruction of farmlands and communal clashes occur.” “In their nomadic herdsmen tradition, once their fields start thinning out and water becomes less available, they start moving towards regions where there is enough food and water. And all these tell on their cattle energy which in turn reflects on their weight gain, bringing about weight losses which they had hoped to gain by moving,” Onwuka said. “The little potential they have for weight gain is lost in the course of transiting from one place to another. If they were sedentary, then their restricted movement would have translated into weight gain,” he said.

We will not import rice in the next one year says Osinbajo ... FG working on agro allied value chains, warehouses AKINREMI FEYISIPO, Ibadan

ice President, Yemi Osinbajo has said that Nigeria will stop importing rice into the country within the next one year owing to the Federal government interventions in rice production. Osinbajo also added that the country will be self sufficient in tomato paste, millets and other grains production. “We only import 2 percent of rice into the country presently and this is because we are funding agriculture and production of rice locally,” he said. He noted that Nigeria was spending $5 million yearly on the importation of rice before the FG government intervention programme

to boost local rice production. According to him, today, only two per cent of rice consumed here are imported while the remaining 98 per cent are locally produced, since we came to power, we have been funding agriculture and encouraging our farmers across the country so as to be self sufficient in food production. T h e V i c e P re s i d e n t w h i l e addressing youths at a town hall meeting in Ibadan stated that such was achieved through the current administration’s policy in agriculture aided by the Anchor Borrowers’ Programme(ABP). Osinbajo stated that the nation’s agricultural sector has improved tremendously, while maintaining that one of the goals of the present administration is to ensure that all

Nigerians have food in their table at the appropriate time. He noted that this necessitated the home grown school feeding which is responsible for the feeding of 8.2 million school children in a day. “Malnutrition is one of the problems among children, that is why, we said no child should go hungry, we are feeding 8.2 million school children in all the states where we are implementing the program in a day and in Oyo state, in all the primary schools across the state, we are feeding 230,000 primary school children in a day,” he said. While saying that milling of rice is one of the problems noted that government is working on creating more warehouses and agro allied chains. He however said that government will create more centres where serious agriculture are taking place in the country. He identified transportation as one of problems of movement rice and other farm produce to other parts of country stressing that was why locally produced rice is still expensive. “Transportation is still the problem; moving rice from say Kebbi to Oyo State or Lagos and other area will be more expensive,” he added.

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FG seeks China’s support on seeds, agric training JOSEPHINE OKOJIE

h e F e d e r a l Government of Nigeria h a s e x p re s s e d i t s readiness to partner with the Province of Hunan of the People’s Republic of China on seed production, agricultural training for youths and rural farmers to enhance the country’s rice production. Audu Ogbeh, Minister of agriculture, said this in a statement made available to BusinessDay this known on Wednesday. Ogbeh while highlighting China’s growth in agriculture, technology and machineries production in the last 35 years welcomed the Chinese partnership, saying that the country possesses rich experience and expertise in agriculture which Nigeria can tap to enhance its quest for improved seed development, mechanization and tissue culture. He observed that China has made tremendous achievements in rice research and therefore called for assistance in these areas. The Minister particularly made

Audu Ogbeh, Minister of Agriculture and Rural Development having a hand shake with Xu Da Zhe, Governor of the Provincial Peoples Government of Hunan Province, China during a courtesy call by the Chinese delegation to FMARD recently in Abuja.

a case for requisite training of young people and rural farmers to aid cultivation of over 45 million hectares of land for enhanced food

production, the statement said. Idris Mamman, acting permanent secretary, thanked the Chinese government for partnering

Ekiti, EU collaborate to rehabilitate Egbe dam …over N1 billion contracts awarded …to boost agricultural activities in the state, water supply AKINREMI FEYISIPO, Ibadan

he Ekiti State Government and the European Union (EU) have collaborated to rehabilitate Egbe dam also called little Osse to boost water supply and agricultural activities in the state. As a result, over N1billion contracts have been awarded for the rehabilitation of the dam. The project which is being funded by the state in partnership with the EU under the water supply and sanitation sector reform programme phase III is expected to guarantee stable water supply to five Local Government Areas made up of Gbonyin, Ado, Ise/Orun, Emure and

Ekiti East LGA. Tunde Ogunleye, Ekiti State Commissioner for Public Utilities made this known in Ado Ekiti during a familiarization meeting with the contractors handling the projects and other stakeholders. Ogunleye said that the development would also take care of the rehabilitation of the water schemes in Aramoko, Ido-Ile, Erijiyan, Ikogosi, Ipole-Iloro, Erio and Okemesi. Represented by Olumide Ajayi, permanent secretary in the Ministry, the commissioner explained that the contractors had been given 18months to complete the projects, adding that government would not only expect timely delivery of

the tasks, but they must be of high quality and executed according to specifications. He therefore urged the contractors to be professional and ethical at all levels of service delivery in order to achieve the desired objective. Charging all benefiting communities to cooperate with the contractors, Ogunleye stressed the need for them to take ownership of the projects emphasising the need to continually support efforts at developing the state and improving the lot of the people. He assured that government would continue to collaborate with interested development partners to develop the state and make life more meaningful for the people.

Farmers allege displacement by Lower Niger Basin Authority SIKIRAT SHEHU, Ilorin

farmers’ group has alleged that authorities of the Lower Niger River Basin Authority has displaced over 1, 500 of its members at Ejiba in Kogi State from their farmland without any prior notice. Tunde Arosanyin, the leader of the group while addressing newsmen in Ilorin recently, disclosed that crops valued at N50 million were destroyed by the authority during the process. The crops allegedly destroyed, he said were cashew, cassava, maize and rice among others. According to Arosanyin, most of the farms destroyed by the Lower

Niger River Basin Authority were sponsored through loans from FADAMA III addition finance, adding that he personally lost about 32 hectares he cleared for farming. He noted that all efforts to get the management of the river basin authority to address the problem in the last one year had proven abortive. He pointed out that if the matter was not urgently addressed, it could lead to crisis, loss of job and food insecurity. Reacting to the allegation of the farmers, Jimoh Mahmud, deputy director, Agric Services of the Lower Niger River Basin Authority described the group as land invaders who were not known to the authority.

Mahmud stated that the land had been acquired by the authority between 1977 and 1978 and the customary land owners compensated. “We have land in Ejiba and it has been acquired since 1977/1978 and they were fully compensated then when land was taken from the community. “We have had the land for a long time and recently the Kogi state government approached us and we lease around 2, 000 hectares to them for their rice farming”, he said. He refuted the claim of the farmers that their crops were destroyed; saying nothing of such happened and foreclosed any consideration for compensation.

with Nigeria at this point in time when the Federal Government is looking for avenues to grow Nigeria’s agricultural sector.

He noted that the agriculture sector contributes 25 percent to Nigeria’s GDP of and cited the role which the sector played in bring the country out of recession. Earlier, Xu Da Zhe, the visiting Governor of the People’s Republic of Hunan Province, explained that the main objective of his visit to Nigeria is to develop partnership agreement with the country on agriculture and deepen friendship between the two countries. Da Zhe also stated that the implementation of the Belt and Road Initiative (BRT) programme initiated by Xi Jinping, Chinese President is on course as an instrument to foster, contribute to the development of Africa and further deepen bilateral relations with people and governments in Africa. He added that the BRT Initiative is also a development strategy aimed at enhancing cooperation and connectivity in order to play a bigger role in global affairs. A Memorandum of U n d e r s t a n d i n g ( Mo U ) w a s signed by the China government with the Kano and Jigawa State Governments.

Innovative agric takes centre stage as CBU holds lectures

udu Ogbeh, Minister of A g r i c u l t u re a n d Ru ra l Development, will be the keynote speaker at the 19th annual lecture series of the Catholic Brothers United (CBU) agribusiness forum scheduled to take place on Sunday, July 29th 2018, at the McGovern Hall of St. Agnes Catholic Church, Maryland. Ogbeh will be speaking on the theme, ‘Technology & Agricultural Revolution: A Tool for Economic Growth’. Emmanuel Okoro, president of the CBU, in a statement said the choice of the theme is apt, because the priority giving towards revamping the near moribund agriculture sector by the Federal Government. Okoro noted that technology and mechanisation are germane to diversifying the country’s economy through agriculture. The topic remains one of the best options today because technology has played a big role in developing the agric industry in developed countries and today with the right application of technology; it is possible to grow crops in a desert by use of agricultural biotechnology, he said. With this technology, plants have been engineered to survive in drought conditions, and through genetic engineering, scientists have managed to introduce traits into existing genes with a goal of making crops resistant to droughts and pests, a condition that abounds in Nigeria, he added. He also noted that with the use of mobile apps, a farmer can calculate the amount of grass available in the field, and this saves the farmer time

and money, adding that technology has turned farming into a real business, and now farmers have electrified every process. A consumer can place an order directly online, and the product will be transported from the farm to the consumer in time when it’s still fresh. This saves the farmer money and cuts out mediators who tend to buy low from farmers and sell high to end consumers. “Every farmer uses this technology in their own way. Some use it to create fertilizers, some use it to market their products, and others use it in production. So as a farmer, you have to specify what you need,” he said. “We are an Association formed to carry out works of Evangelism and in the course of this task, we undertake a lot of religious and community development activities aimed at adding value to the Church and the society at large. Some of these activities include charity works, retreats, seminars and annual lectures amongst others,” he added. And one of the Cardinal programs of the association is the Annual lecture, a program carefully articulated to address major national and international issues. Thus in choosing a topic for each year, we look at the issues and problems prevalent in the society to guide the choice of a topic that properly addresses these issues. Also in our search for an eminent personality to discuss and elucidate on the topic, we usually consider individuals with proven professional track records, as well as, the ability to proffer solutions to the issues identified, thus the choice of the agriculture minister to address the topic”, he added.

Wednesday 11 July 2018

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BUSINESS DAY

Pension Today

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Is my pension contributions safe? Are you one of those worried about the safety of your pension contributions? Are you always thinking the old pension scheme, which had challenges of embezzlement and mismanagement is the same with the current contributory scheme? Have you been asking how and when to access your pension funds? Or are you worried that government can take the money are you will not get your money back? Here are answers to some your concerns, as provided by experts in the industry. How can I be sure that my contributions are safe? ll those managing or keeping custody of pension funds and assets will be licensed and continually regulated and supervised by the National Pension Commission. What is the guarantee that the pension funds under the CPS will be well managed and not diverted for other purposes? The functions of the Pension Fund Administrator (PFA) and custodian are clearly spelt out in the Pension Reform Act 2014. The Act provides adequate safeguards against the misuse of the pension funds and assets by any operator. What happens if a PFA fails or is liquidated? The pension funds and assets in the Retirement Savings Account (RSA) are kept by the PFC and as such the liquidation of the PFA will not affect the funds and assets. Besides, every PFA is expected under the Pension Reform Act 2014 to maintain a statutory reserve funds as contingency fund to meet claims for which it may be liable as may be determined by National Pension Commission. Who can I complain to if I have a problem with a PFA? The Pension Act 2014 allows any employee to complain about any PFA to the National Pension Commission. What is the role of the government in the new pension scheme? The federal Government has established the National Pension Commission and charged it with the responsibility of regulating and supervising new pension scheme. Can the government take or use the money in my RSA for any purpose? The Government cannot temper with the pension

funds in you RSA, because the Government cannot have access to the account. Besides, the Government is primarily concerned with ensuring the safety of the money in your RSA through the enforcement of strict rules and regulations. Will inflation and devaluation of the naira not erode the value of the pension contributions? It is the duty of the PFAs to administer the contributions and invest in such a way that will ensure safe and reasonable returns on investment. The reserve fund created by the PFAs under the Act would compensate for any erosion of the value of the contributions. How compulsory or voluntary is retirement especially in the armed forces to be handled under the new scheme, if this happens before the age of 50 years? Under the Pension Reform Act 2004 as amended in 2014 a person can voluntarily retire or be compulsorily retired before the age of 50 years on the ground of medical advice, permanent disability or due to particular terms and conditions of employment. If any person retires under

any of the foregoing circumstances, he is entitled to withdraw from his RSA even though he was under the age of 50 at such retirement; provided that, in the case of retirement due to particular terms and conditions of employment, the contributor does not secure another employment after four months from the last employment. What is the minimum of pension guaranteed under the new scheme? The minimum pension guarantee shall be determined from time to time by the National Pension Commission. Is there adequate representation of all stakeholders on the board of the commission, or is it dominated by government appointees? There is adequate representation of relevant stakeholders in the board of the National Pension Commission, which comprises of Representatives of the Government, Nigeria Labour Congress, The Nigerian Union of Pensioners and The Nigerian Employers Consultative Association. Does the pension reform act reflect the application of

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Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

the principles of transparency and accountability? Yes. The new pension scheme entrenches the principles of transparency and accountability as reflected in the reporting requirement of the PFAs and PFCs to both the contributor and the National Pension Commission. An employee has the right to choose who manages his RSA and the right to receive statements of his account on quarterly basis with details of contributions made and returns on investments. What is the minimum period required by an employee to qualify for pension under the new pension scheme? There is no qualifying period for pension. If an employee works for an employer for one month, his pension contribution will be paid by the employer into the employeeâ&#x20AC;&#x2122;s retirement savings account for that month. If the employee moves on the work for another employer for another year, his pension contribution will be paid by the second employer for another 1 year and it goes on and on like that. When will I have access

to money in my RSA? Access to the RSA will only be allowed upon retirement. If an employee retires at the age of 50 years or more he/she can have immediate access to the RSA. similarly, if an employee retires before the age of 50 years due to mental or physical incapacity, he or she can have immediate access to his/her RSA. Whereas an employee who retires under the age of 50 years in accordance with the terms and conditions of employment will not access the RSA until after four months of such retirement if he/she does not secure another employment. Will gratuity be paid under the new scheme? Upon retirement, an employee can withdraw a lump sum (by whatever name called) from the balance standing to the credit of his/ her RSA provided the balance after the withdrawal could provide an annuity or fund monthly payment that would not be less than 50 percent of his monthly pay as at the date of his retirement. However, an employer may choose to pay any other severance benefits (by whatever name called) over and above the retirement benefits payable to the employee subject to the terms and conditions of his employment. Should gratuity be included in the actuarial valuation for purposes of determining accrued pension rights to be transferred from the old scheme into the RSA? If at the commencement of the Pension Reform Act 2004, the employee is entitled to gratuity (if he were to retire on that date), the gratuity shall be computed and included in the actuarial valuation as part of the accrued pension rights of such employee. Are pension contributions taxes free? Contributions to the new pension scheme are tax free. Will tax be paid on the profit made from trading with

the money in the retirement savings account (RSA) Tax will be paid on the profit made from trading with the money in the Retirement Savings Account. How will I benefit from the new pension scheme? The new pension scheme will ensure that you receive your pension after retirement without delay. How will the new pension scheme help the economy? There will be a huge pool of long term funds available for investments, which will lead to national economic development. How can I know what is happening with my money? Pension Fund Administrators (PFAs) will issue regular statements of accounts and profit from investments to the employees. Can I withdraw any portion of the amount in my RSA before retirement? Withdrawals from the RSA can only be made upon retirement. However, where an employee makes additional of voluntary lump sum contributions into the RSA, he can withdraw such money before retirement or attainment of the age of 50 years. What happens to the balance in the RSA after any initial lump sum withdrawal? The balance in the RSA will be used to procure an annuity that provides regular income to the contributor or fund a programmed withdrawal. What is a programmed withdrawal? A programmed withdrawal is a method by which the employee collects his retirement benefits in periodic sums spread throughout the length of an estimated life span. What is an annuity? An annuity is an income purchased from an approved life insurance company which provides monthly or quarterly income to the retiree during his/her lifetime.

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

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Stakeholders seek strategies to enable insurance industry key into FG’s financial inclusion agenda • seeks regulatory supports of NCC Stories by MODESTUS ANAESORONYE

takeholders in the insurance industry are seeking for strategies that will enable them key into the federal government’s financial inclusion agenda, to close the gap of the uninsured population and others without access to financial services across Nigeria. They believe that they financial services industry without insurance is incomplete as, the industry is needed to enable others service providers and consumers manage their risks and losses. According to the stakeholders who shared their views at the 2018 National Insurance Conference(NIC) organized by the Insurance Industry Consultative Council (IICC) held in Abuja, mobile phone technology will play a critical role in deepening penetration by increasing accessibility. Some of the stakeholders who shared their view also believe majority of the target consumers are poor and could hardly earn income to consider for savings, and therefore require proper understanding of their circumstances, which may empowerment or access to credit as the case may be. Part of the challenges they face according, which makes them excluded from financial inclusion Jim Ovia, chairman of Zenith General Insurance noted include premiums may be too expensive for many, products design, terms and conditions are too complex, products not customized for low income, mistrust of insurers especially given the gap between when an insurance product is bought and when

• believes technology is key enabler • thinks poor population needs empowerment

benefits may be enjoyed because sometimes the person buying the product may not even be the one that enjoys the benefits; as well as financial illiteracy which can arise as a result of lack of adequate engagement with the population as to the purposes and benefits of insurance. Ovia said that while technology will be the main enabler, there is need for collaboration among regulators including NCC, NAICOM and CBN to enable insurance reach the poor across the country. Mohammed Kari, commissioner for Insurance/ CEO, National Insurance Commission (NAICOM) said the theme of the Conference clearly reflects the direction the industry is headed, which is the retail end of the market. Kari also said the timing of this Conference could not have been more significant especially as we prepare to launch the Nigerian Insurance Industry Development Plan (NIIDP) which has Financial Inclusion as one of its major components. “How the insurance sector in Nigeria could effectively and efficiently navigate this turn to increase the number of policyholders while reducing the figure of the financially excluded are part of what the NIIDP contain. Kari said the insurance sector plays a vital role in helping to reduce the poverty line by helping entities and individuals manage their risks and protects them from negative adverse effects of unforeseeable events. To achieve this, he said NAICOM has focused on two objectives, insurance awareness campaign for the financially excluded and promoting the development of products and business models that meet the needs of the these

L-R: Mohammed Kari, commissioner for Insurance/CEO, National Insurance Commission (NAICOM); Jim Ovia, guest speaker; Temitope Akin-Fadeyi, CBN head, Financial Inclusion and Funmi Babington-Ashaye, chairman, Insurance Industry Consultative Council, during the National Insurance Conference and Launching of Insurance Industry Amended Code of Ethics in Abuja.

excluded groups. “To this extent, the Commission launched four (4) specific products lines as a bottom-up approach for the excluded and low income members of the society respectively microinsurance; Bancassurance; Takaful insurance, and now Index Based Agricultural Insurance (IBAI). On Micro insurance, Kari stated that this has been a tremendous success as we have now licensed two such Takaful operators with another three at various conclusion stages. We have also concluded the process to license two such micro insurance operators with four other applications near conclusion. It is instructive to mention that major-

ity of these applications were from outside the mainstream Insurance providers, Kari stated. Ayodele Teriba, chief executive officer, Economic Associates who chaired the panel discussion in the lead paper said the macroeconomic element of the country must be taken very seriously for financial inclusion to be achieved at the micro level. Teriba said people must have income to make savings, access credit, make payments, buy insurance, and this is only when macroeconomic stability is achieved, where there will be no devaluation of currency, where inflation is manageable and foreign reserve is regularly bolstered. “We must stabilise the ship

of macro economy by continually boosting reserves, which is how economies are governed”, not the way we are doing it in Nigeria, Teriba said. Temitope Akin-Fadeyi, head, Financial Inclusion Secretariat at the Central Bank of Nigeria said the apex bank are NAICOM have been working together to ensure insurance takes its rightful place in the financial services industry. “We believe in the value proposition of insurance, so the need for operators in the insurance industry to rise up to the challenge and take advantage of the policies and guidelines already issued by NAICOM to deepen financial inclusion, AkinFadeyi said.

Retirees fund records 13% average returns in 9-years …as PenCom assures safety of funds

etirees Fund under the Contributory Pension Scheme (CPS), which are invested in approved asset classes within the limits stipulated in the National Pension Commission (PenCom) investment regulation has returned in the average 13 percent growth from 2009 to date. Investment of retirees fund by Pension Fund Administrators (PFAs) is professionally done under the supervision of the PenCom. According to the Commission, the balances in the retirees’ RSA together with the investment income represent the total money from which the retirement benefits are paid. This is either as programmed withdrawal by the Pension Fund Administrators or annuity by life

insurance companies. The Net Assets Value of RSA ‘Retiree’ Funds increased by N6.61 billion in the fourth quarter, 2017, increasing from N556.42 billion on

30 September, 2017, to N563.03 billion as at 31 December, 2017. The Weighted Average Rate of Return (WARR) on the RSA ‘Retiree’ Funds in the fourth quarter, 2017 was 16.24 percent (annualized), an increase in performance when compared with the annualized WARR of 15.57 percent recorded in the previous quarter. The marginal increase in the WARR between the third and fourth quarters, 2017 was a combination of the yields on fixed income securities, which constituted approximately 99 percent of the total portfolio and the increase in value of quoted stocks in the portfolios. However, the total number of retirees currently receiving their pensions under the Programmed

Withdrawal (PW) increased from 165,740 in the previous quarter to 174,512 in the fourth quarter, 2017. This represent 5.29 percent (8,772) increase from the total retirement recorded via the PW. A sectoral breakdown of those that retired under the PW during the quarter shows that, the public sector had 68.91 percent (6,045) of total retirees while the private sector was 31.09 percent (2,727). During the quarter under review, 8,772 retirees were paid the sum of N21.74 billion as lump sum and N0.28 billion as monthly programmed withdrawals. The breakdown of the above position is reflected in table 3.12 below: Consequently, the Table further shows that from inception to date, a total of 174,512 retirees

have been paid the sum of N448.90 billion as lump sum and N5.91 billion as monthly programmed withdrawals. In the case of annuity, the Commission approved a total of 6,851 applications for annuity retirement plan during the further quarter of 2017, bringing the total number of retirees receiving their retirement benefits through the annuity plan to 48,539. The 6,851 retirees received N6.32 billion as lump sum payment and paid annuity premium of N35.77 billion to insurance companies cumulating to a total of N60.29 billion and N241.62 billion as lump sum payments and annuity premium respectively. The retirees were receiving average monthly annuity of N2.53 billion as at the end of December, 2017.

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E-mail: insurancetoday@businessdayonline.com

Nigeria Liability Insurance pool looks to 2018 with positivity, targets expansion in oil, energy risk Stories by MODESTUS ANAESORONYE

ot unmindful of challenges in the business environment, Nigeria Liability Insurance Pool says it looks into 2018 with positivity, even as it prepares to go into new liability areas. Edwin Friday Igbiti, chairman of the Pool said at its Annual General Meeting in Lagos that the company will delve into new areas amongst which are new emerging liability risks, such as oil and energy, as well as forming a new parallel Poll with new members. Igbiti said that 2018 is an important year for the country as it prepares for election in 2019, but stated that in spite of the uncertainties that usually accompany election cycles in Nigeria, the Pool will be well positioned to weather

the storm. Nigerian Liability Insurance Pool started in 1988 by an association of some insurance companies in Nigeria with the objective of domesticating liability risks within the industry. Then, the industry was facing the challenge of getting oversea reinsurance for liability risk and so they thought of coming together as a pool to bridge the gap and underwrite that class of risks. The pool is an aspect of reinsurance. It is not the conventional reinsurance, so you can say is a quasi reinsurance. But, their duty is to cover the risk of their members alone and not the entire industry. From the pool, members that suffer losses are assisted to pay their claims. Specifically, the pool focuses on liability aspect of motor insurance, public and product liability, liability aspect of contractors-all-risk and workmen’s compensation insurance. The pool has gone through

a lot of transformation in membership beginning from 2001 and recapitalization in 2005 and finally consolidation in 2010, now having 10 members from initial 25, earlier on. Following this transformation, there was an idea to expand the scope and horizon of the pool in terms of business it does, to make it stronger and more robust, so there was introduction of director and officers’ liability insurance, which is now part of the business where it is getting patronage. “We also have in the pipeline professional indemnity, employer’s contingent liability insurance and we are looking at their workability”. Its members are her clients and they are the shareholders. They bring their businesses every quarter, make cession to us and when there is claim we pay. They are contributors, they are shareholders and do not need to renew their membership annually.

Scib marks 40 years, celebrates integrity, professionalism, and excellence in insurance broking

et out to be a world class organization founded on integrity, knowledge, professionalism and excellent service delivery, Scib Nigeria and Co. Limited, a foremost insurance broker in Nigeria has successfully weathered the storm for 40 years. Founded by Olola Olabode Ogunlana, an insurance icon, with only one staff in 1978, Scib has grown in leaps and bounds and currently can boast of being one of the largest employers in the insurance broking sub sector in Nigeria with about 120 staff on regular payroll Shola Tinubu, managing director, Scib addressing a press conference in Lagos as part of activities to mark the 40 years anniversary of the company said taking a retrospective look, the management cannot but give great thanks to the Almighty for sustaining the company

Olola Olabode Ogunlana

through peaks and troughs of its operation since the journey began 40 years ago. “It is no news to you how challenging it is for businesses to survive in our environment over decades with all the attendant challenges and inhibiting factors, with significant macro-economic upturns and recessions. We are definitely assured that making 40 and to still be on top of your game is an achievement.” Tinubu disclosed that part of the activities lined up for the celebration include a book launch in honour of the founder of the company Olola Olabode Ogunlana. Two books titled ‘Out of the Black Pot’ and ‘The Selected Tales’ will be launched tomorrow in Lagos. Tinubu who also doubles as the president and chairman of Council, Nigerian Council of Registered Insurance Brokers (NCRIB) said that though the company has achieved a lot of landmarks in the past 40 years, but what he cherishes most is the values that the company holds dear. “The absolute focus for the first 20 years of the organisation was instilling a value system that will drive the company forward and the second 20 years has seen tremendous successes as a result of instilling those

values. With the right values everything falls into place. We take integrity far more important than any other thing and pride ourselves on our value system.” He said the staff has been infused with great leadership spirit making them stand out as well as take pivotal positions in the market or anywhere they may find themselves. Scib has carved out a niche for itself locally and internationally earning several laurels in the process. The firm is currently the representative of AON the largest insurance broker in the world in Nigeria. The organisation also won the award of best Insurance broker in Nigeria 2018 by the Lagos Chamber of Commerce and Industry. Commenting on what the future holds for SCIB Tinubu said, “Whilst our past and present records may seem heart-warming, we are not in any way deluded to believe the work is done. The future remains challenging. By God’s grace, this company under my leadership and succession will continue to benchmark global standards, comparing notes with globally rated professional companies. We shall continue to innovate and deploy strategic thinking to build our profile as a global brand”.

L-R: Jide Orimolade, managing irector/CEO, Law Union and Rock Insurance; Segun Balogun, managing director/CEO, LASACO Assurance; Adetola Adegbayi, executive director, Leadway Assurance; Edwin Igbiti, managing director, AIICO Insurance/Chairman Nigeria Liability Insurance Pool; Yinka Adekpya, managing director, Wapic Insurance; Benjamin Ajili , managing director, Royal Exchange General; Peter Aluko, general manager,CEO, Nigeria Liability Insurance Pool; and Moruf Apampa, managing director, Sunu Assurance during the Annual General of Nigeria Liability Insurance Pool in Lagos

Tope Smart, new chairman of NIA bracing exciting career in insurance

nsurance trade group, the Nigerian Insurers Association (NIA) is lucky to have the person of Tope Smart, managing director/CEO, NEM Insurance Plc lead its executive council at this time, just after Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance Plc, another erudite scholar and great brain finished his tenure. Known with ‘FIRST ’ since his young age, Smart born 14th April 1964 had his Secondary Education at Community Grammar School, OmuoEkiti where he completed his O’ level examination and emerged as the overall best graduating student in 1981. In 1987, he graduated with a Second Class Upper degree Insurance at the University of Lagos, and also won the University’s prize for the overall best graduating student in Insurance department; as well as the Unity Life and Fire Insurance Company Limited prize for the best graduating student in Insurance in the same year. Smart proceeded immediately after graduation for the National Youth Service Corps program at Everyman Insurance Brokers, Abuja where he was involved in the overall operations of the branch office, and was later offered employment as a Branch Manager with the same firm. He however left Abuja to join NigerianFrench Insurance Company Limited as one of the pioneer staff in 1989. In 1991, Smart completed his professional examination with the award of CII London where he equally won the prize for Distinction in Property and Pecuniary Insurance. He served Nigerian French in

various capacities and became an outstanding staff in the company. No wonder, he was rewarded with a double promotion and was made to head the Marine Unit of the company, a position he held till he left the company. In 1991 he left Nigerian French and joined hands with two other people to pioneer Perpetual Assurance Company Limited as Assistant Controller. He later rose to the position of a Controller, barely a year

Tope Smart

after the company commenced operations in 1992. In 1994, due to his continuous impressive results he was again promoted to the position of Assistant General Manager (Operations) of the company. In the year 1995, Tope Smart joined Vigilant Insurance Company Limited as the General Manager/ Chief Executive Officer. In view of the outstanding results posted in two years, the Board in 1997 approved his elevation to the position of Managing Director/Chief Executive Officer with shareholding in the company. Smart transformed the company from N6 million annual premium income in 1995 to an industry leader with a recorded premium income of about N1 billion

in 2005. The company was acknowledged and adjudged as one of the fastest growing insurance c o m p a n i e s i n Ni g e r i a then. The company was not only making profit but consistently paid dividends to its shareholders throughout the period. In 2007, Smart successfully spearheaded the merger arrangement between Vigilant Insurance Company Limited and NEM Insurance Plc, and was appointed the Managing Director of the merged entity. The company has since become the delight of shareholders and brokers alike. He has properly positioned NEM to be one of the industry leaders today. The company has won several awards. A visionary leader, Tope Smart, a very passionate Insurance Executive initiated the construction of a befitting edifice for NEM Insurance Plc. The building, now a pride to the Industry has contributed to the promotion of the image of the Nigeria Insurance Industry. In 2009, he set up a subsidiary in Ghana, named NEM Insurance Ghana Limited which he wanted to use as a Springboard to launch out to other West African Countries. Smart presently sits on the Board of Regency NEM Insurance and NEM Asset Nigeria Limited among others. In 2014, he was appointed by the Federal Government as Co- Chairman of Insurance Industry Transformation Committee. An alumnus of Havard Business School, he is a member of Ikoyi Club 1938. Smart an Assistant Pastor with Redeemed Christian Church of God is happily married with children.

BUSINESS DAY

Wednesday 11 July 2018

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Creating digital lab to redefine banking operations ...the FirstBank way HOPE MOSES-ASHIKE

recent forecast by Juniper Research, a leading FinTech analyst, estimates that digital banking users would reach 2 billion this year, representing nearly 40 percent of global adult population. The report says that mobile banking users would grow 14 percent year-onyear, compared to six percent for online banking. This, however, represents a window of opportunities for banks to continue to utilise technology to drive innovative financial services especially in relation to customer experience, cyber security and smooth digital channels. Godwin Emefiele, governor of Central Bank of Nigeria (CBN), had said that investment in Science, Technology and Innovation holds the key to the economic progress and development of any nation. In recent times, technology has been seen as a great disrupter of the entire financial market, especially the digital space, and this has consistently put the banking industry at an edge to develop digital products and services to meet the needs of consumers. Taking a lead on this, First Bank of Nigeria Limited, last week, launched its first digital Lab at ‘Yabacon Valley’, Yaba, Lagos. The new digital lab empowers the bank to champion innovation, create new digital products, enhance existing products and processes, while strength-

ening its capabilities and competitiveness within the industry. The digital lab is designed to serve as a platform for FirstBank to collaborate and advance with the rapidly evolving financial technology. Also, it is designed to rapidly stimulate innovative solutions to real-life challenges. It provides ‘faster and more efficient’ banking products to its customers. For FirstBank, situating a digital lab in Yaba means that Yaba is very important, as it has established itself as the silicon valley of Nigeria, or the hub of technology. “So part of the reason we used this place is that we want to operate within the IT eco system and that is in Yaba. We are not just going to be working on our own; we are also going to be collaborating with a number of FinTechs that are also located in this environment. Nearness to the supply of capabilities is also a very important factor,” said Adesola Adeduntan, managing director/CEO of the bank. “Technology is disrupting the entire financial market, especially the digital one. Our role as the oldest, the largest bank and the bank that has always continuously reinvented itself is to ensure that we are at the forefront of those people disrupting the industry,” he explained. There is a section of the lab meant for collaboration with FinTechs and non FinTech start-ups. Also, there is an area for tech tops, where key industry players from the FinTech community would be invited to give in-

Adesola Adeduntan, managing director/CEO of the bank

sightful talks on pressing issues in the financial technology space in Nigeria. Looking at the benefits of the digital lab on the economy, Adeduntan said when the velocity and the efficiency of the market is improved, the economy benefits as more people would be employed, the money in the system would circulate faster, and in a more efficient manner. Will this innovation hub increase the bank’s bottom-line? Adeduntan said, “In the medium term, yes. When you bring in new products, people will like to buy that product and then you make more money from it. When you have disruptions in the market,

if you are not part of that disruption, you are likely to be disrupted. Sometimes, it is not about making money, but protecting the money that you are making. As you are making money from it today, if you don’t get involved where everybody is migrating, you will not only lose the money from it but you could also lose the money from your entire business, so it is about innovation, it is about being in the fore front of new things.” He assured its numerous customers of safety of their funds as the bank has put in place adequate information security strategy. “When you are active in a digital space, the key component of your digital

strategy will also be your information security strategy. I can assure our teaming customers that we have a very well-defined information security strategy that we are operating that protects not just our customers but also the banking sector. Our customers should be rest assured that their funds are safe with us, the transactions is being carried out in a very secured route,” he added. The FirstBank Digital Lab will bring together technologies and methods to transform ideas into feasible solutions in record time. Speaking to journalist at the event, Chuma Ezirim, group head, e-business, called on many young Ni-

gerians who are very good at computer science or engineering, with ideas, to work with the bank to get those ideas into a reality. Lola Ekugo, head, digital Lab said, “Here in FirstBank, customers are first and we intend to carry that out here in the lab. For every product we design and process, we want to ensure that we connect directly with our customers. So, from time to time, we will invite some customers here for key things like focus groups. We have prototype of projects and products that we want to do. We want to ensure that the customers’ voice is in each and every thing that we do within the bank.” In her view about the digital lab, Boma Dagogo, quality assurance specialist, explained that the digital lab is a sub- department of the e-business group of first bank and that the bank wanted to come up with a department where it would have specialised innovations and futuristic aspirations, enabling people to think outside the box, and be freer. “It is all about being in an environment where you could think outside the box without being restricted by the ‘banking’ environment that’s basically what we have here today”. “We have the collaboration centre over there and we also have the hubs. We also have FinTechs that could come and partner with the lab in case they feel that they do not have the manpower or space to bring up innovations. We have enough space for them to come in and sit down,” Dagogo added.

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E-ticketing on NRC passenger trains underway Page 31 Boeing, Embraer in JV move over consolidation

Powdery items banned from hand luggage at UK airports Page 30

Alstom begins Nigeria journey with Lagos Blue Line rail Page 31

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Robust sales figure redefines Mercedes product quality • Over 200,000 delivered to customers worldwide in June Stories by MIKE OCHONMA

ercedes-Benz can look back on the strongest-selling quarter in the companies’ history. From April to June, 594,528 customers received their new vehicles (+1.9 percent). With this figure, more vehicles were sold than ever before in a half-year and since the beginning of the year, 1,188,832 cars with the three-pointed star were delivered to customers all over the world. Unit sales were 3.9 percent higher than in the previous highest first half-year in 2017. In the first six months, it was the premium brand with the most new registrations in several markets, including Germany, France, Russia, Switzerland, Portugal, South Korea, Australia, the USA and Canada. With 203,783 vehicles sold, June was the month with the second highest sales since the beginning of the year (-2.6 percent). Figures of last month were affected amongst other things by a fire at a US supplier where a significant lower production of the SUVs for the world market at the plant in Tuscaloosa and sales were less than planned. Britta Seeger, member of board of management of Daimler AG responsible for Mercedes-Benz Cars Marketing & Sales attributed the market performance to an outstanding team performance, adding that the team can look back on the most successful half-year in the history of the brand. ‘’With over 1.18 million cars sold in the first six months, we have laid a good foundation for a successful year 2018. The new A-Class has had

a very successful reception from the markets and the automaker launche the new C-Class in July. These two volume models will make a significant contribution to the sales success of Mercedes-Benz in the second half of the year’’. He stated. By region and market, 476,790 cars were sold in the first half of the year or (-1.5 percent) in Europe , which is slightly less than in the previous, so far best, first half-year in 2017. Almost one third of were sold in Germany, where more than 150,000 customers were able to receive their new products (-0.2 percent). In France, Spain, Sweden, Poland and Denmark, more cars with the three-pointed star were sold than ever before in the first six months of a year. It completed the first half of the year in the Asia-Pacific re-

gion with new best-ever sales, by a double-digit 12.5 percent increase to 493,358 units. Biggest contribution to this growth came from China, where 340,164 cars were sold in the first six months, and an increase of 16.2 percent. More cars than ever were sold in the first half-year in the markets of South Korea, Japan, India, Thailand and Malaysia. S-Class Saloon sales increased by 27.5 percent to 43,106 units in the first half of the year. Growth in sales of the luxury model was particularly strong in the flagship’s biggest markets of China, USA, South Korea and Germany. The Mercedes-Maybach S-Class Saloon set a new record in the first half of the year. Since its market launch, more than 30,000 units have

now been handed over to customers. E-Class Saloon and Estate demand is higher than ever before. Since the beginning of the year, sales increased to the new record number of 182,135 units (+0.1%). The long-wheelbase version of the E-Class Saloon was especially popular in the first half-year; just like the long-wheelbase version of the C-Class Saloon, it posted very strong growth and a new sales record. Despite restricted production of the GLE and GLS models last month, the SUVs achieved a new sales record in the first half of the year where a total of 422,645 units of the GLA, GLC, GLC Coupé, GLE, GLE Coupé, GLS and G-Class were delivered to customers worldwide (+9.8%) due to the bestseller amongst the SUVs, the GLC.

China lowers tariffs on imported vehicles to 15%

hile the US is considering discourage vehicle imports through increment in import duty, the Chinese government has slashed tariffs on imported light vehicles to 15 percent from 25 percent, effective July 1. As a result of this move, import tariffs for auto parts were reduced to 6 percent from around 10 percent, according to China’s official Xinhua news agency.Plans to cut the tariffs were announced by the Chinese finance ministry on May 23. However, vehicle imports from the United States will be subject to the 15 percent tariff only from July 1 to July 5 unless the Trump administration cancels plans to levy a 25 percent tariff starting July 6 on Chinese goods worth $50 billion. In retaliation for the latest U.S. tariffs, Beijing announced on June 16 that an equal value of U.S. imports, including light vehicles, will be subject to an additional 25 percent tariff starting July 6. That means importers of U.S.made vehicles would have to pay a tariff of 40 percent when clearing Chinese customs. In 2017, China imported around 1.25 million vehicles, including about 280,000 cars and light trucks, or 22 percent, from the U.S. In China, major importers of U.S.-made include American brands such as Jeep, Lincoln and Tesla, as well as international brands such as Mercedes-Benz, BMW, Lexus and Infiniti.

Auto purchase secrets to outwit dealerships

hen buying a car at a dealership, driving away with a truly good deal means you have negotiated on more than just the sticker price. The biggest secret in the car industry today is that there are discounts that the buying public don’t know about. In some markets, car buying and leasing service helps buyers negotiate competitive deals by accessing insider discounts. There are different ways dealerships can make a profit, while consumers can do few things to guarantee the best deal. At the very least, before you walk into a dealership, you need to do some research for the going rate of the car you want.

There’s no need to pay full price on the front end, or the sticker price, when it is never been easier to search for specific sales and incentives on both the dealership and automaker’s sites. Once you know what you can expect to pay on the front end, don’t stop there. You don’t want

to be blindsided by all the different products a dealership can spring on you. The back end is where it gets tricky, but it is not to say that, these products are not good products, only that you just want to prevent getting ripped off and pay a fair price for them.

Whenever you’re looking to finance a car, it’s important to know what types of rates you qualify for as it helps to shop for your car loan before you go into a dealership, get a few free quotes online and keep this information in your back pocket. Once you are negotiating the contract, a salesman can bump up the financing rates for an additional profit. Negotiate a deal below what the dealer paid. No matter how much research you’ve done, there are some deals consumers don’t have access to. Beyond the manufacturer’s suggested retail price (MSRP), you may know how much the dealer paid for the car, or dealer invoice. But there are actually discounts beneath the MSRP and

dealer invoice, called dealer holdback, which the amount is paid to the dealer by the manufacturer for every new car they sell. This incentive is provided for the dealership to make more sales, and customers do not necessarily have a right to this holdback. Armed with all this knowledge, what is the pricing sweet spot? Typically, if you can negotiate a sale price that is 7 percent to 8percent below the MSRP, Jo says you’re probably under the dealer’s invoice cost. A car buyer should not be in the showroom to strip away all the profits from the dealer, rather you are there to get a fair great deal, and for the dealer to make money is also a fair deal.

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Boeing, Embraer in JV move over consolidation

Powdery items banned from hand luggage at UK airports Stories by MIKE OCHONMA

ravellers could soon have to remove powders from their hand luggage as well as liquids. Powders such as make-up, coffee and spices are to be banned from hand luggage on flights leaving the UK in a new effort to improve airport security. The measures have been introduced in response to a foiled Isis plot to carry an explosive on board an Etihad flight from Sydney to Abu Dhabi last July. The would-be terrorists were stopped at check-in. The move, which raises the prospect of more queues and disruption for travellers, would follow in the footsteps of Australia, New Zealand and the US, where passengers were told last month to treat powders in the same way they would liquids, removing them into ziplock bags for separate scanning. Government plans for UK airports could see travellers restricted to 12 ounces (340 grams) of powder on flights, before being subjected to extra screening. A spokesperson for the Department of Transport, which says it keeps airport security under constant review, would not confirm

the plans but said, “It is for each country to determine its own security measures based on its own assessments. We work closely with all our international partners to keep aviation security under constant review.” There are concerns the new rules will cause confusion and delays at airports. In the United States, there have been reports of passengers missing flights after being held up at security over the restrictions. Mils Hills, associate professor in risk, resilience and corporate security at the University of Northampton, said it was luck that the Isis plot was disrupted, adding: “In itself, these extra restrictions are not going to create lots of disruption at airport security but it has the potential to feed into general public concerns about the safety of flying.” In the US, the Transport Security Administration (TSA) has also been screening food purchased by passengers to eat on flights. The TSA’s official line is that, it is regularly changing security methods to tackle what it describes as an evolving terrorist threat. “Terrorists are constantly trying to pack explosives into small everyday items,” a TSA

spokesman said. Powder restrictions follow in the same vein as rules governing flying with liquids in hand luggage, introduced in 2006 in response to a foiled terror plot to blow up flights between the UK and North America. Three British men were convicted for conspiring to assemble improvised explosive devices on board transatlantic jets – devices containing a liquid derived from hydrogen peroxide – and detonate them above the Atlantic. The new rules caused chaos at airports, with British Airways alone forced to cancel more than 1,500 flights. Experts have since said the restrictions which remain in place forbidding liquids, aerosols or gels in containers of more than 100ml were a knee-jerk reaction. But way back in 2016, Philip Baum, editor of Aviation Security International argued that, it is not relevant and it should never have been introduced 10 years ago. ‘’All they have succeeded in doing is creating longer queues at checkpoints where screeners are spending all of their time looking for restricted items rather than looking for genuine threats’’. He concluded.

nited States aerospace giant Boeing and Brazilian aerospace major Embraer jointly has announced that they had signed a non-binding memorandum of understanding to create a commercial aviation joint venture (JV). Under this arrangement, Boeing will hold 80 percent of the JV and Embraer the remaining 20 percent. The deal has still to be approved by shareholders, regulators, and the Brazilian government. All being well, the deal is expected to be closed by the end of next year, some 12 to 18 months after the implementation of the definitive agreements. The proposed JV would incorporate Embraer’s commercial aircraft and services business. This would be strategically aligned with Boeing’s commercial development, manufacturing, marketing and lifecycle services operations. One hundred percent of Embraer’s commercial operations have been valued, in the deal, at $4.75-billion. This means that Boeing’s 80 percent share in the JV will

be valued at $3.8-billion. “The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies’ leadership in the global market,” affirmed Embraer president and CEO Paulo Cesar de Souza. “The business combination with Boeing is expected to create a virtuous cycle for the Brazilian aerospace industry, increasing its sales potential, production, creating jobs and income, investments and exports, and in doing so, adding more value to customers, shareholders and employees.”

By forging this strategic partnership, the two aviation giants will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders – and for Brazil and the United States, assured Dennis Muilenburg Boeing chairman, president and CEO. The important partnership clearly aligns with Boeing’s longterm strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate its growth plans. The JV will be one of Boeing’s Centres of Excellence for commercial aircraft “end-to-end” design, production and support. It will be completely integrated into the company’s wider manufacturing and supply chain. Although the US group will have management and operational control of the JV, its management, including its president and CEO, will be based in Brazil. As a result of the agreement, Boeing and the JV will be able

to offer customers a full, very complementary, range of commercial airlines ranging in capacity from 70 seats to more than 450 seats, plus freighters. The operational and financial aspects of the deal will be finalised in the coming months. Embraer and Boeing are also planning to create a separate JV for defence products and services, especially Embraer’s new generation KC-390 multi-mission (including air lift) aircraft. This will be aimed at promoting these products and developing new applications and markets for them.

World’s most luxurious cruise ship launch hit by long delay

he launch of S cenic Eclipse, the highly anticipated “discovery yacht”, and a contender for the world’s most luxurious cruise ship, has been delayed by five months. The ship, due to launch at the end of August, will now be unveiled in late January 2019. Scenic founder and chairman Glen Moroney blamed construction issues for the delay. Eclipse and identical sister ship Sister Eclipse II are both under construction Uljanik shipyard in Pula, Croatia. “Despite the best efforts of our build supervision team to make up construction time, we are not

prepared to compromise the quality of the vessel and potentially impact guest experiences to meet the original launch date,” said

Moroney. He confirmed that passengers pre-booked on an Eclipse voyage would receive a full refund and

consideration of any other reasonable associated costs incurred. Those who re-book during the next two years will be given a cruise credit to the value of 25% of the cost of their cruise. Scenic Eclipse is the first ocean cruise ship from Scenic. Every one of the 114 suites will have a private veranda and lounge area. There will be 10 dining options on board, and a discovery fleet, which will include Zodiacs, kayaks, e-bikes, helicopter and a submarine, to help guests explore destinations including the Arctic and Antarctica. Scenic is not the only cruise line to suffer delays in construc-

tion. Hurtigruten has pushed back the launch of its two hybrid vessels currently under construction in Kleven shipyard in Norway. The first, Roald Amundsen, was originally due to launch in July 2018 but has been put back to May 2019, which has had a knock-on effect on second ship Fridtjof Nansen, originally slated for launch in 2019. The launch of tall-ship cruise line Star Clippers’ Flying Clipper - the largest masted sailing ship in the world - has also been delayed. The launch was originally due to happen in August 2017 and a new date has still not been announced.

Wednesday 11 July 2018

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BUSINESS DAY

Local and global rail news as it breaks

E-ticketing on NRC passenger trains underway … While global digital revolution pursues ticketless future Stories by MIKE OCHONMA

arring any hitches any hitches along the line, the Nigerian Railway Corporation (NRC) will commence e-ticketing for passenger train services by August and September this year for those travelling public keen on enjoying its services. While making this known recently, Fidet Okhiria, managing director of the NRC said that so far, nine companies bidded for the cost to build solution for the project. He noted that with this development, prospective customers can make bookings for ticket to enjoy train services. Tenders were signed last two weeks by all the bidders involved at the headquarters of the NRC, Ebute-Metta, Lagos. Some of the companies that bidded according to Okhiria are: Turn Around Engineering Limited, Secure ID Limited, Catamaran Nigeria Ltd, Soft Alliance and Resources Ltd, Nexant/Innovea Backbone Connectivity Network Nigeria Ltd, First Index Project and Services Ltd and Euphoria Press Ltd. The NRC managing director also disclosed that the test run of the ineffective 32 year-old Itakpe -Warri Standard gauge railway line will commence soon preparatory to commencement of full train service in that axis. He also disclosed that the Nigerian Railway Corporation will from next month or September commence movement of fuel from Lagos to Dagbolu, near Oshogbo

in Osun state. Meanwhile, at the global front, there are very strong indications that the digital revolution will soon affect rail operations at a station and ticketing level. This was stated by Enrico Trapazzo, Trenitalia passenger affairs deputy director at Africa Rail, held in Johannesburg recently. Trenitalia is an Italian rail and mobility group. When this is affected, barrierless ticketing will enable passengers to walk straight through a station and directly onto a train without using a ticket of smart card. The WiFi based system proposes connecting passengers’ smart-

phones to the rail station’s WiFi network, which will automatically recognise where and when they got on and off the train, creating ‘live’ tickets for each journey. Using a special account on an app, passengers will be charged for the journey they have selected. They will also be able to track their journeys in real time, or look over their previous journeys in the app. It is also expected that personal bots will replace ticket counters and websites, which are more than 20 years old. An Internet bot is an application that performs an automated task. Rather than passengers going to a ticket counter or website, en-

tering their details and searching for tickets and services, a personal bot will be able to book tickets on their behalf. This bot will also be able to tell customers if there are any major disruptions on the railway and help plan other routes if there are any available. Another innovation is flexible tickets which allow passengers to select a range of times they are available to travel, instead of having to select a fixed time. Instant refunds would also be possible for passengers affected by delays, seeking compensation, through a mobile phone system called ‘c2c Automatic Repay’.

Alstom begins Nigeria journey with Lagos Blue Line rail

rench multinational; Alstom has signed a number of agreement with the Lagos state government , through the Lagos Metropolitan Area Transport Authority (LAMATA),for both Phase 1 and Phase 2 of the Lagos Blue Line metro, in Nigeria. As part of Phase 1, Alstom will ensure the electrification of a portion of the line with third rail (a method of providing electric power to a railway locomotive through a semi-continuous rigid conductor placement), as well as substations. Following Phase 1, Alstom and the Lagos government intend to work jointly on Phase 2 of the project, which entails structuring financing from export credit agencies to provide metro trains, communications-based train control signalling, the operation and control centre, passenger information services and the ticketing

system in the stations. According to Abiodun Dabiri, managing director of LAMATA, “The Blue Line project is of strategic importance for the city of Lagos as it allows people to travel safely and fast across longer distances.

The integration with existing transport systems such as bus or boat lines, and future metro lines, will largely contribute to the global transport plan for Lagos, which aims to reduce traffic congestion and make Lagos a smart city,”.

Considering the increasing transport demand in the city, the Blue Line metro aims to address mobility challenges, stimulate economic growth and job creation, while improving the environment and air quality in the city. Lagos has 22-million inhabitants and is facing severe traffic congestion. When operational, the rail corridor will carry 400,000 passengers a day initially, with capacity to increase to 700,000 passengers a day at full completion. Didier Pfleger, senior vice president for Alstom Middle East and Africa added that the Blue Line will contribute to positioning the city among the showcases of sustainable mobility in Africa. The Blue Line will comprise a 27 km line with 13 stations from the cities of Okokomaiko to Marina. Phases 1 and 2 of the line will cover a distance of 12 km and have five stations. This project is the first reference for Alstom in Nigeria.

Brazil prepares for early renewal of railway concessions

he Brazilian government announced last week that Vale and MRS Logistics will invest in the construction of two new railways in exchange for the early renewal of other concessions currently held by these companies which expire in the next decade. Conditions for the renewal of the concessions were approved at the second meeting of the Council of the Investment Partnership Programme (PPI), but the renewals have not yet been endorsed by the Court of Auditors of the Union (TCU). Under the proposals, Vale will build a the 383km Campinorte Água Boa section of the so-called Central - West Integration Railway (Fico) at a cost of Reais 4bn ($US 1bn) in return for the automatic renewal of its Carajás Railway (EFC) and Vitória - Minas Railway concessions. Fico is a long-planned project, which was included in the erstwhile Growth Acceleration Programme (PAC), but was eventually abandoned by the government, despite having an environmental permit from Brazilian Institute of Environment and Natural Resources (Ibama) and a TCU endorsement to be tendered as a common project. MRS Logistics will invest about Reais 5bn in the construction of a 53km stretch of the northern section of the Ferroanel de São Paulo ring line between Perus and Itaquaquecetuba. The project will divert freight trains away from lines currently shared with suburban trains operated by Paulista Metropolitan Trains Company (CPTM). Under the government’s proposals, the Fico infrastructure would be transferred to state ownership with competitive tendering for an operating contract. No decision has yet been made on whether the Ferroanel line will remain with MRS.

“The integration with existing transport systems such as bus or boat lines, and future metro lines, will largely contribute to the global transport plan for Lagos, which aims to reduce traffic congestion and make Lagos a smart city”

32 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 11 July 2018

Supported by:

BusinessDay Radio programme; Financial Inclusion Today Aired yesterday by 11:30am on Rhythm 93.7 FM ENDURANCE OKAFOR Theme: SERVICE PROVIDERS POWERING FINANCIAL INCLUSION: VISA ith special guest; To py s t e r Muga, Senior Director at VISA, Financial inclusion Sub Sahara Africa. BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde Speaking on what Visa is currently doing to drive financial inclusion, specifically in Africa and more particularly in Nigeria, Topyster Muga, Senior Director at VISA, Financial inclusion Sub Sahara Africa said VISA has taken a lot of time to think about what to do in contributing in financial inclusion in the region and there are five key things that they are doing; The first thing is that they are significantly investing in financial inclusion to look at the six strategic priorities that VISA has globally. One of them is called Expanding Access; it is a key strategic pillar for the company which just means getting more and more people and businesses to get access to financial services. “If you look at the VISA brand promise which is ‘the best way to pay and be paid for everyone everywhere’ we have acknowledged the fact that we have not yet reached everyone everywhere and the time is right to be able to meet more people and more businesses in Africa and particularly in Nigeria where there is a lot of opportunity,” Muga said. In that regard they are investing in the people, they are investing in technology, and they are investing in marketing, in consumer education, and are also investing in the distribution of products that is relevant to the Nigerian people. The second thing they are doing apart from significantly investing is taking time to really understand the needs of the market, is that they spend a lot of time doing research, the recent research that they sponsored was rolled out by Dalberg, which focused a lot on the small businesses and is publicly available it is called ‘Small Merchant, Big Opportunity.’

“It has very good insight that came out particularly from the Nigerian market where we were able to understand better the small and medium business’s needs what they require as far as financial services are concerned.” “One of the ways we have been able to reach out to our consumers to know what they want can been seen in what we rolled out in Nigeria, mid last year, we rolled out a mobile based Visa payment called mVisa and this was one of the ways to reach more people and people were saying if you look at the small businesses that will traditionally want to accept cards. When they look at the cost of accepting a card they will be required to pay about $200 to a Point-of-Sale (POS) device provider or the banks to be able to start accepting card payments.” Muga explained. “With the recent Visa on mobile, mVisa that we launched, small businesses does not necessarily need to start looking for $200 to get a POS machine but all the need is a Quick Response (QR) code which is a piece of paper printed with the merchants details displayed at the merchant/small business location and customers can be able to make a payment from their mobile. Then the other thing we are doing is to provide robots and scalable technology, an example is the mVisa which is basically a mobile based way of paying through the Visa network and as you know Visa is a payment technology company that connects over 3.2 billion cardholders globally, and over 46 million merchants accept this card payment whether face to face or online,” Muga said. Through the same Visa network, the company have been able to come up with a mobile best way of doing it. Instead of using traditional physical Visa card, paying at a traditional POS device at the merchants location they are putting this in the mobile banking menu that the customer has. “Through this kind of technology we are enabling all the banks customers within Nigeria that are connected to the Visa network and all the merchants that are connected to the Visa network to be able to make

inter-operable payments. It is quite scalable and we have been able to roll that down to Nigeria and in Kenya, Rwanda and India and very many other African countries that are going to be live in the next three months like Uganda, Tanzania, Gambia, Ivory Coast as one of the ways of leveraging the technology,” the guest cited. When asked the feedbacks they have been getting from the merchant banks in Nigeria compared to the other African markets she said in Nigeria, one of the things that the small business have been saying is that VISA have been offering them a way of paying but VISA also want to do more with phones because what is happening with the small businesses is that most of them are not owner operated so maybe the owner of the shop is working somewhere else but they have employed someone in the shop and the owner of the shop does not have visibility of her inventory levels or order levels. So they are telling VISA that they want value added services, in addition to the payment, they want to have more information. What is the customer paying for, what are the stock levels in my shop? If someone is selling foodstuff, maybe basket of rice, they want to know what the movement is, what is the most popular one. That has made VISA to think about providing value added services to the payment which they are tirelessly working on to really improve on the offer so that beyond the payment the company is also enabling other digital services. “The other thing the businesses are asking for is the

access to credit, which is one of their biggest pain points. They are looking for working capital loan that they can be able to order more stocks, open more shops apart from having only one shop most of them want to have two to three in different locations.” “We are working with banks to figure out how we spur these businesses in a way that will enable them to borrow from the bank conveniently and use that to grow their businesses. These are the first two; the roll out to bring in the value added services and interesting thing that is coming out particularly from the suppliers of these small businesses especially the FMCGs; what they are saying is that if they are able to work with a company like Visa and partner Banks who are interested in the mass segment then they are willing to start offering discount to the small businesses when they are ordering stocks so long as they are able to do it digitally because it helps them to be more efficient in their planning when they are manufacturing foodstuff or hotels restaurants and cafeterias where they are thinking about how much to produce.” She explained. She said the customers are able to plan better when they are able to see a pre order coming in from the small businesses. VISA said it is working on that to be able to meet these needs and will continually refine their offerings to the small businesses so that they will be able to really make it relevant to them instead of pushing to them what doesn’t make sense. “The Banks will tell you that the reason why access to finance for some of those

businesses is a bad thing is because some of them, there are lapses in their credit worthiness, lack of proper record keeping and all of those things, it makes it very difficult to extend credit to some of those SMEs.” On the specific initiatives VISA is looking into to boost financial literacy among those businesses so that they know what they need to do better to be able to access loans at very affordable interest rates, the guest said they have partnered with third party organizations that actually go out and talk to the merchants one after the other and one of the organizations they partnered with has worked a lot with mobile money operators across the region so they have very good experience in that segment. “We realized that you cannot just send an SMS to the small businesses or consumer and expect they do or understand what you are telling them through the SMS. So we are backing that up with foot soldiers who are going from one shop to another to talk to the merchants and consumers to explain how the products work and to your question on improving the credit worthiness’s which is the second step that is coming soon is really to be able to do more business on their phone either using USSD or the app and that will be able to collect more information to understand the business better which we then use for scoring to give credit.” She said “The banks are fairly open to that and apart from the banks also the microfinance banks are quite keen to tap into that because they feel that this is a huge segment to tap into the informal sector and help in formalizing it as well as providing affordable credit. The alternative that these small businesses have they eventually go to loan sharks and they pay ridiculous amount of interest to access credit. We believe that there is a way to make it cheaper for them by increasing their credit worthiness through digital transactions.” “The last thing we are doing apart from those four that I have mentioned is actually with the government. The government launching a Financial Inclusion strategy kudos to the Nigerian

central bank which was the amongst the first to launch its Financial Inclusion strategy way ahead of the many other countries and what I have been able to see in the Nigerian banks is that they have been able to come up with other initiatives.” The guest on the radio show said. She however said that VISA has a technology that already enables interoperability between banks which is waiting on an approval by the Central Bank for the Agency banking. The conversation is said to be ongoing with CBN, and VISA is constantly updating on what they are doing and some of the upcoming initiatives that she has already mentioned. “We will continue working with them so that we keep them close and enable that CBN achieves the objectives that have been sent by the National Financial Inclusion Strategy.” On what VISA expects from the regulators and other stakeholders that could really help drive financial inclusion in Nigeria the company representative said; “as you correctly pointed according to the World Bank Findex Report there is still a huge gap in the Nigerian market and there are a number of things that could be done by the stakeholders both from the private and the public side. First of all, to focus on this understaffed segment, I looked at Nigeria when I was looking at the same report you mentioned, the gap between men and women that are financially included is 30 percent. The men have a 60% inclusion the women 30 percent, so there is a really huge effort required to address the needs of the women. Why they do not accept financial inclusion maybe because they don’t have the right education or maybe their husband’s are not allowing them to have bank accounts. In fact, I usually joke and say financial inclusion is everyone’s responsibility not just the responsibility of the central bank or the responsibility of the banks or the mobile operators; it is everyone’s responsibility because it starts from the household. If the husband does not allow the mother to have accounts then he is financially excluding them which again do not work best for them,” Muga mentioned.

Wednesday 11 July 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

Ghana’s change of tack holds lessons for boosting financial inclusion in Nigeria OLUWATOSIN DOKUNMU

hana’s ability to creatively tweak its regulation to allow telecommunication companies double as dedicated mobile money providers is one that Nigeria could borrow a leaf from to attract some 40 million adults into the financial fold. Accra’s change of tack means non-bank entities can be licensed as financial services providers and are supervised by the Bank of Ghana in an arrangement that once shut them out of the mobile money market and gave exclusive right to commercial banks to play in that space. In the new arrangement, Ghana’s mobile money operators from MTN to Airtel and Tigo are required to set up subsidiaries that would engage in the business of mobile money, independent of their core operations. That decision resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014. “From our interviews with Bank of Ghana staff, there was much resistance by commer-

cial banks to the development of mobile money banking by Telcos but the regulator overcame that through a form of legal creativity,” said Obadiah Mailafia, a former deputy governor of the Nigerian central bank who recently did a survey on financial inclusion in Ghana. “The BOG allowed the Telcos to float independent companies in which they were major shareholders. The companies became legal entities independent of the Telcos, able to do essentially banking business while not being commercial banks in the full sense of the word,” Mailafia added. By 2016, there were six main digital financial services providers across GhanaMTN, Tigo, Airtel, Vodafone, Fidelity bank and e-Zwich. MTN, Tigo, Airtel and Vodafone were all mobile network operators offering mobile money services throughout Ghana. In addition to these DFS-oriented financial services providers, there are more than 27 commercial banks, some 60 nonbank financial institutions, 138 rural and community banks, 503 licensed MFIs and hundreds of licensed individual susu collectors that have become active across the country. “The Ghanaian model

has worked very well and is a model that Nigeria should replicate. NCC should sit with the CBN and get the Telcos to set up independent companies that are not necessarily Telcos but can play in the digital space,” Mailafia said. “I hear they are thinking in that direction, because many companies want to come in with billions worth of investment but are restricted by the framework,” the former CBN deputy governor said. Nigeria does have a mobile money market, but one that is exclusively bank-led, as opposed to the model in Ghana as well as in Kenya and Uganda. That has meant the Nigerian mobile money market is not growing at the same pace as its East African neighbors and Ghana.

The percentage of Nigerians with access to financial services reduced to 40% in 2017, down from 44% in 2014. That compares poorly to the inclusion rates in other African countries; 84% in Kenya, 78% in Uganda and 58% in Ghana. “It is safe to say that Nigeria is playing catch-up when it comes to achieving inclusion and must look to learn from success stories like Ghana and Kenya if we are to achieve our goal of 80% inclusion by 2020,” said Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON) centered on Financial Inclusion. Another influential decision taken by the Bank of Ghana in the process of tweaking its regulatory environment to leverage mobile money, “was the decision to allow interest

to be accrued on mobile money deposits,” Adebayo said. Mobile banking is so popular in Accra that the value of deposits and withdrawals by Ghanaians using mobile phones for banking almost doubled in 2017, according data published by the central bank. The value of mobile transactions rose to 155.8 billion cedis ($34.6 billion) last year from 78.5 billion cedis in 2016, according to the Bank of Ghana said. The volume of deposits and withdrawals rose another 78 percent to about 982 million. The growth in the use of phones for banking in Ghana comes as mobile money continues to expand across sub-Saharan Africa, but one that looks to be eluding the region’s largest economy, Nigeria. The central bank said at a BusinessDay conference in 2016 that a favorable model for banks and the Telcos to operate as mobile money providers is in the works, but nothing has happened yet. Since the emergence of mobile money, financial systems regulation has been a keenly discussed theme due to the critical role it plays in the economy in general. Mobile money usually struggles in markets where mobile network operators are

prohibited from participating. According to GSMA, from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as mobile network operators (MNOs). Some argue that Nigeria’s resistance to allowing the telcos play a more active role in the mobile money space must give way to move the needle on financial inclusion. “If we analyse the number of bank branches in Nigeria using the World Bank’s financial access survey, we see a high of 6.5 branches per 100,000 adults in 2010, falling to under 5.5 branches per 100,000 adults in 2016. It is clear that traditional banking is not the answer to the financial inclusion conundrum, a fact now acknowledged by the banks themselves,” said Adebayo. “The commonly accepted solution to financial services for the poorest people, in the remotest locations, is to find service providers who already serve the bottom of the pyramid, who already have geographic proximity and to allow them to leverage this access to provide financial services. This is what has worked in Kenya, Uganda, Rwanda and Ghana.”

The critical role of trust in financial inclusion IBUKUN TAIWO & OLAYINKA DAVID-WEST

igeria’s financial inclusion aspiration of 80 percent by the year 2020 is failing. This assertion is based on the latest findings by the World Bank Global Findex and Intermedia. Measurement indicators published by both institutions agree that financial inclusion is on the decline - between 2014 and 2017, more people abandoned their bank accounts. While the reasons for this exodus and decline in inclusion are debatable, there are several reasonable causes and trust is definitely one of them. The role of trust Trust is a powerful driver of human behavior and a foundation of relationships - be it human-to-human, or between humans and institutions. When it comes to money, the role of trust is even more pronounced. Trust in finance is like trains on a track. To onboard or attract new customers to the formal sector, financial service providers (FSPs) must first earn consumer’s trust. Regulatory authorities also have a role

to play in this by developing frameworks which protect consumers while enforcing compliance by financial institutions. But, it does not stop there. An emerging body of work is highlighting the fact that it is the frequent usage of financial services, not merely opening up accounts, that will enable us see the true benefits of financial inclusion. But active or frequent usage will remain elusive and the formal sector will continue to experience this churn of customers if trust is not established. Building trust The first and most important element of trust building is what is called “fulfilling your promises”. In all relationships, trust is developed when parties can be counted on to deliver on what they have promised. The expectation placed on formal financial service providers is that they are a more secure means of keeping money, the customer’s savings will accrue interest and customers can later avail themselves of loans and short term credit facilities. That’s the sell. However, does the theory match the experience? The dissonance between what

customers are promised and what they usually experience is responsible for the lack of trust, and often leads to the churn in bank customers. Trust is built on experience. It doesn’t matter how good the marketing is, if consumers are having first hand experiences with unsatisfactory services from financial service providers, financial inclusion will suffer. If providers will successfully onboard customers, they need to work on delivering the services they promised, at the right time and quality. Past experience is one of the most important considerations when it comes to trust. A bad experience at a bank will impact a consumer’s willingness to engage with it and use its products and services

in the future. Why is this important? Nigeria is at a critical junction in her financial inclusion journey. We’re less than two years away from the 2020 deadline and financial inclusion has declined. Stakeholders in the industry are considering ways to tackle this problem but unless we fix the underlying consumer trust issues, financial inclusion campaigns would not be effective. People just don’t trust banks. In fact, even banked individuals regularly express displeasure with their financial service providers. How does an ecosystem begin to win back the trust of the unbanked populace when banks are seen as unfair players, with hidden fees, high prices and unfulfilled promises?

Trust building for financial inclusion Improve customer service. Customer service is the backbone of trust building. Sam Walton, the Walmart founder, once shared a critical pillar in building trust with customers, “The goal as a company is to have customer service that is not just the best but legendary.” Even after onboarding new customers, providers have to work at building the relationship by investing in efficient customer service systems, taking into consideration the diverse literacy levels and cultural peculiarities of their customers. Educate consumers. As kids, we were taught to look right, left and right again before crossing the road. That’s because crossing the road is risky and life threatening. Yet, we want people to engage financial services without adequate enlightenment. The results could be disastrous. The ecosystem has a responsibility to educate people (especially the unbanked) on how financial services work, making it clear to them the requirements, hidden charges etc.

Complaints resolution. When a transaction goes wrong, customers need a viable course of redress. This involves knowledge of all available channels of lodging complaints and seeking resolutions of problems in a timely fashion. Customers also need to be empowered to know what to do when their providers are not fulfilling their promises. These mechanisms helps build consumers’ confidence in the system and reassures them that their money is secure. Conclusion Trust, and the lack thereof, is one of the reasons why our financial inclusion efforts are not yielding the desired impact. If the financial services sector is going to see success in penetration of their products and services, we need figure out ways to cross the chasms of distrust in the consumers’ mind. In what other ways can this be achieved? Please share your contributions with us at sustainabledfs@lbs.edu.ng, or Twitter: @SustainableDFS.

Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

BUSINESS DAY

SHIPPING

C002D5556

LOGISTICS

Wednesday 11 July 2018

MARITIME e-COMMERCE

Logistics experts hinge haulage business growth on good road network …Call on FG to repair dilapidated roads Stories by UZOAMAKA ANAGOR-EWUZIE

orried by the deplorable state of road network across the country, logistics experts have called on the Federal Government to upgrade the state of the roads by repairing the bad portions of the roads. According to them, following the underdeveloped state of Nigerian rail network and inland waterways as an alternative means of transportation in Nigeria, movement of cargo and passengers depend on road as the major means of transportation. However, the state of the nation road network has continued to be a huge obstacle to the growth of haulage business in Nigeria. Adewale Adetayo, general manager, SIFAX Haulage & Logistics Limited, urged the Federal Government to fix the major dilapidated roads

Silvano Bellinato, (l) director of INTELS Nigeria Limited presenting gifts to the best graduating trainee of the company’s Women Empowerment Programme Scheme Synergy (WEPSS), Evelyn Ogbuenyi, during the graduation of 77 trainees in Onne, Rivers State last Friday.

scattered around the country to boost the fortunes of the

haulage sector. According to him, many

FOU Customs recovers over N8.6bn from anti-smuggling operations in six months

ollowing its antismuggling operations, the Nigeria Customs Service (NCS), Federal Operations Unit, Zone ‘A’, said it has intercepted various contraband with a duty paid value (DPV) of N8.2 billion in six months, from January-June 2018. Also, the unit through its interventions recovered over N405 million from duty payments and demand notices on vehicles and general goods that tried to cut corners from seaports, airports and border stations through wrong classification, transfer of value and underpayment of duty meant for the coffers of the Federal Government of Nigeria. The recovered revenue brings the total revenue generated by the unit to over N8.6 billion. A statement signed by Jerry Attah, Public Relations Officer of the unit, said that in the period under review that 107 suspects were arrested in connection to 596 different seizures made by the Unit.

According to him, the seizure comprises 34,652 bags of foreign parboiled rice, equivalent to 58 trailers; 167 units of exotic vehicles including Toyota Prado, Lexus; Toyota C-HR , Toyota Camry LE, Toyota Prado, Toyota Hilux, Ford F150, Pajero Jeeps, Mercedes Benz ranging from 2015-2018 models respectively. Others include 8,987 cartons of frozen poultry products; 4,586 jerrycans of vegetable oil; 3,463 cartons of different pharmaceutical; 370 parcels and 98 sacks of Indian hemp weighing 1,350kg, as well as other general merchandise. “Remarkable among the seizures was the interception of 460 sacks of pangolin scales weighing 12, 264kg and 218 elephant tusks. The pangolin and elephant tusk alone is valued at N2.7 billion with two Chinese nationals arrested as suspects, making it the highest seizure of such endangered species in the history of FOU Zone A,” the statement said. Continuing: “In order to

ensure full implementation of the Government policy of banning the importation of rice through land borders, we re-strategised our operational modalities and beam our searchlight at the Creek, Water side, and at various locations in southwest zone and this resulted to massive rice seizure within the period under review,” Mohammed Uba, Customs Area Controller of the unit, said in the statement. Uba commended the officers for putting their lives on the line while making these seizures. He further thanked other agencies that were always on ground to give the necessary operational support to Unit including, most especially the Nigeria Army, Police, DSS among others. The controller further charged his officers to be professional and diligent in performing their statutory responsibilities; most especially in the area of antismuggling operations by making sure all revenue linkages are blocked.

potential investors in haulage business are scared away

because of the risks their investment will be exposed to given the deplorable condition of major highways in the nation. “The haulage business has a very huge potential but not much attention is paid to it. The sector currently accounts for over N200 billion in turnover with an estimated growth rate of 10 percent per annum,” he said. Continuing, he added: “Nigeria ranks 90 out of 160 countries in the Logistics Performance Index and this is very poor. One of the major challenges confronting the sector is that of bad road. If you consider the road landscape in Nigeria, the Federal Government has about 18 percent of the road network, state government holds 16 percent and the local governments, 68 percent. The sad thing is that more than 70 percent of the traffic on the road is basically on the Federal roads.” Adetayo said that the sector will experience a quan-

tum leap in growth and investment, if the federal roads can be fixed. Proper implementation of the Ease of Doing Business, Adetayo added, will encourage more local and foreign investment in the sector. “A good number of the trucks plying the country’s roads are rickety in nature, thereby putting the lives of other road users and goods at risk. In his view, Emma Nwabunwanne, a Lagosbased importer, who acknowledged that the poor condition of many Nigeria roads, confirmed that this affected the movement of cargoes from the ports to the importers warehouses. Nwabunwanne however, called on the Federal Government to perfect plans and upgrade the condition of the roads in order to help importers in the movement of their goods especially in the areas of transport cost reduction and safety of goods on transit.

INTELS graduates 77 women from WEPSS empowerment scheme

NTELS Nigeria Limited, Nigeria’s oil and gas logistics giant, on Friday, graduated 77 women from its Women Empowerment Programme Scheme Synergy (WEPSS). WEPSS is a Corporate Social Responsibility (CSR) programme of INTELS established in 2013 with the vision of empowering 5,000 community women over a 20-year period through training in fashion design and tailoring. Currently, more than 700 women drawn from various communities in the NigerDelta region and other parts of the country have been empowered through the project. Silvano Bellinato, INTELS director, who led other top management staff of the company to the colourful graduation ceremony on Friday, commended the trainers and trainees for their commitment to the realisation of the vision of the scheme. Bellinato said INTELS made substantial investment in developing the women empowerment centre, which is equipped with modern and specialised machines, cutting edge technology and staffed

by well-trained personnel. “To ensure that participants get the best of training, we built a 5,000-square metres garment manufacturing facility at the Federal Lighter Terminal, Onne for the purpose of the WEPSS training. The training facility demonstrates our commitment of giving back to our host community and Nigeria in general,” he said. According to him, WEPSS is run by a team of highly skilled indigenous manpower. “We have so far produced over 50,000 garments within the WEPSS manufacturing infrastructure. These apparels include shirts, T-shirts, skirts, trousers, jackets, uniforms and coveralls. “In line with our commitment to the upliftment of our communities’ socio-economic status and backed by its success over the years, WEPSS has evolved into an intensive tailoring training program for the women,” he said. Nancy Freeborn, project head for WEPSS, described the just concluded training session as the most outstanding since the inception of the programme. “Ever y year, INTEL S absorbs a minimum of

200 trainees who undergo intensive four and a half month training, at the end of which they are able to make men’s short sleeve shirt and trouser as well as women’s blouse and skirt. They are also taught how to use specialised machines and to work safely with them,” he said. This, according to her, was the first session for 2018, which lasted for four and half months and it turned out to be the most outstanding set we have had at WEPSS. The best graduating woman known as Ogbuenyi Evelyn Okwudili was awarded with start-up kits which include an industrial sewing machine, steam iron, chair, scissors, seam ripper, box of tailors, chalk and a measuring tape. Expressing her gratitude to INTELS Nigeria Limited, Ogbuenyi said that she was surprised to be called up because we were about five trainees who were going for that spot. She further expressed gratitude to INTELS and her trainers, adding that she plans to advance her training and to start off sewing business.

BUSINESS DAY

Wednesday 11 July 2018

Leadership

SHAPING PEOPLE INTO A TEAM

The leader’s Calendar: How CEOs manage time company locations, meeting external constituencies, commuting, traveling and at home. Altogether, the CEOs in our study worked an average of 62.5 hours a week. Why such a grueling schedule? Because it is essential to the role. Every constituency associated with a company wants direct contact with the person at the top. As much as CEOs rely on delegation, they can’t hand off everything. They have to spend at least some time with each constituency in order to provide direction, create alignment, win support and gather the information needed to make good decisions. Travel is also an absolute must. You can’t run a domestic company, let alone a global one, from headquarters alone. As a CEO, you have to be out and about.

IME IS THE SCARCEST RESOURCE LEADERS HAVE. WHERE THEY ALLOCATE IT MATTERS — A LOT. In the lexicon of management, the CEO is the epitome of leadership. Yet surprisingly little is known about this unique role. While CEOs are the ultimate power in their companies, they face challenges and constraints that few others recognize. Running a large global company is an exceedingly complex job. The scope of the organization’s managerial work is vast, encompassing functional agendas, business unit agendas, multiple organizational levels and myriad external issues. It also involves a wide array of constituencies — shareholders, customers, employees, the board, the media, government, community organizations and more. Unlike any other executive, the CEO has to engage with them all. On top of that, the CEO must be the internal and external face of the organization through good times and bad. CEOs, of course, have a great deal of help and resources at their disposal. However, they, more than anyone else in the organization, confront an acute scarcity of one resource. That resource is time. There is never enough time to do everything that a CEO is responsible for. Despite this, CEOs remain accountable for all the work of their organizations. The way CEOs allocate their time and their presence — where they choose to personally participate — is crucial, not only to their own effectiveness but also to the performance of their companies. Where and how CEOs are involved determines what gets done and signals priorities for others. It also affects their legitimacy. A CEO who doesn’t spend enough time with colleagues will seem insular and out of touch, whereas one who spends too much time in direct decision-making will risk being seen as a micromanager and erode employees’ initiative. A CEO’s schedule (indeed, any leader’s schedule), then, is a manifestation of how the leader leads and sends powerful messages to the rest of the organization. A crucial missing link in understanding the time allocation of CEOs — and making it more effective — has been systematic data on what they actually do. Research on that has tended either to cover a small handful of CEOs, like

the 1973 study in which Henry Mintzberg closely observed five chief executives (some of whom led nonprofits) for five days each, or to rely on large surveys that cover short periods (such as our Harvard Business School colleague Raffaella Sadun’s 2017 study based on daily phone surveys with 1,114 CEOs from a wide variety of companies in six countries over one week). Our study, which we launched in 2006, offers the first comprehensive and detailed examination of CEO time use in large, complex companies over an extended period. To date, we have tracked the time allocation of 27 CEOs — two women and 25 men — for a full quarter (three months) each. Their companies, which are primarily public, had an average annual revenue of $13.1 billion during the study period. These leaders were all participants in the New CEO Workshop, an intensive program that every year brings newly appointed CEOs of large companies to Harvard Business School in two cohorts of 10 to 12 each. In total just over 300 CEOs have attended it. In the study each CEO’s executive assistant, or EA, was trained to code the CEO’s time in 15-minute increments, 24 hours a day and seven days a week, and to regularly verify that coding with the CEO. The resulting data set reveals where, how and with whom the CEO spent his or her time and on what activities, topics and tasks. Because it also covers what CEOs do outside of work, we have visibility into how CEOs balance work and personal life. In all, we collected and coded data on nearly

60,000 CEO hours. After CEOs completed the timetracking phase, we shared their data with them, comparing it with anonymized data of the other CEOs we had studied up to that point. These intensive debriefings often included the CEOs’ reflections on the pressures they faced in managing time, and on their mistakes and lessons learned. We also shared our accumulated data with the participants in each New CEO Workshop. In our discussions, CEOs routinely described managing time as one of their greatest challenges. The observations, questions and personal approaches to allocating time they shared further enriched our understanding. In this article we will do three things: First, we’ll provide a descriptive analysis of the data. How much time do CEOs spend at work versus on personal activities? How much do they spend in meetings versus thinking and reflecting alone? How much do they rely on email versus face-to-face conversation? Do they spend more time inside the company or outside, more with customers or investors? We’ll answer those questions — and many more. Second, we will offer prescriptions for how CEOs can manage their time more effectively across their many responsibilities. One of our most striking observations is that the way leaders allocate their time varies considerably. Some of this variation reflects differences in their businesses and management practices. However, many time allocation decisions, such as participation in

company rituals that offer limited return, reflect legacy norms and cultures, as well as a CEO’s own habits. In our debriefings the CEOs all acknowledged that there were important areas where they could be using their time better. On the basis of these discussions and those with the hundreds of other CEOs in our workshops, we are convinced that every leader can improve his or her time management. Finally, we will reflect on what our rich data reveals about the overall role of the CEO. A CEO has to simultaneously manage multiple dimensions of influence, which all contain dualities, or seeming contradictions, that effective CEOs must integrate. Understanding this broader view of the role is essential to success and also provides an important perspective for managing time well. While our research focuses on the CEO role in large, complex companies, its findings have implications for all leaders (including executives of nonprofits) looking for ways to use their time and influence more effectively. THE JOB IS ALL-CONSUMING CEOs are always on, and there is always more to be done. The leaders in our study worked 9.7 hours per weekday, on average. They also conducted business on 79% of weekend days, putting in an average of 3.9 hours daily, and on 70% of vacation days, averaging 2.4 hours daily. As these figures show, the CEO’s job is relentless. About half (47%) of a CEO’s work was done at company headquarters. The rest was conducted while visiting other

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MAKING TIME FOR PERSONAL WELL-BEING. Given that work could consume every hour of their lives, CEOs have to set limits so that they can preserve their health and their relationships with family and friends. Most of the CEOs in our study recognized that. They slept, on average, 6.9 hours a night, and many had regular exercise regimens, which consumed about 9% of their nonwork hours (or about 45 minutes a day). To sustain the intensity of the job, CEOs need to train — just as elite athletes do. That means allocating time for health, fitness and rest. We paid special attention to the 25% of time — or roughly six hours a day — when CEOs were awake and not working. Typically, they spent about half those hours with their families, and most had learned to become very disciplined about this. Most also found at least some hours (2.1 a day, on average) for downtime, which included everything from watching television and reading for pleasure, to hobbies like photography. The CEO’s job is mentally and physically demanding. Activities that preserve elements of normal life keep CEOs grounded and better able to engage with colleagues and workers — as opposed to distant, detached and disconnected. CEOs also have to make time for their own professional renewal and development (which our data showed was often the biggest casualty of a packed schedule). And they must be careful, as our colleague Tom DeLong puts it, not to become “like race car drivers and treat home like a pit stop.”

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Wednesday 11 July 2018

NEWS FG, oil companies’ indebtedness to NDDC hits N2.787trn, $458m Election, budget discipline seen stimulating activities in real estate in H2 2018 I KEHINDE AKINTOLA, Abuja

CHUKA UROKO

he February 2019 general election coupled with discipline in implementing the provisions of the 2018 budget, especially the provisions for capital projects, will be stimulating activities in the real estate sector in the second half of 2018, close watchers of the sector have said. The real estate sector, unlike other key economic indicators, has been lagging behind long after the wider economy came out of recession in the second quarter of 2017. Analysts note that the sector is yet to exit recession, having been recording negative growth since the last quarter of 2016. In the last 24 to 30 months, the sector has been grappling with widening vacancy rates and falling rents, rent payment arrears and reduced up-take of new office and retail spaces. A quarter one 2018 report by the Nigerian Bureau of Statistics (NBS) shows that the sector plunged deeper into recession in this quarter. A breakdown of the report shows that the sector contracted by -9.40 percent in Q1 2018 from -5.92 percent in Q4 2017 and -4.12 percent in Q3 2017. This contraction is -6.3 percentage points worse than the -3.10 percent reported in the comparable period of 2017. However, it is expected that as politicians embark on electioneering campaign and a lot of money is pushed into

the financial system by way of printing posters, organising conferences, placing adverts in both print and electronic media, wooing the electorate for votes with consumables and cash, the impact will be positive on real estate. “All these will put a lot of money into people’s pocket; people will feed well, pay children’s school fees and the next thing to think about is how to pay their house rents and, in some cases, how to own a home,” Femi Akintunde, GMD/CEO, Alpha Mead Group, affirmed in an interview. He stressed that the coming election was going to be an advantage to real estate because a lot of money was going to come out. “The current government knows that they have to spend their way to win the election and come back. They have to convince Nigerians why they should still vote for them,” he said. It is also expected that the Federal Government will be committed to implementing the provisions of the 2018 budget, which is made up of 34 percent capital expenditure. “If you look at the budget, a lot of big projects are being rolled out, like the East-West Road, Niger Delta Development Commission; Ministry of Niger Delta is getting a large chunk of money. A lot of money is going into power and roads infrastructure,” an analyst that craved anonymity, said.

Political, herdsmen risk may derail Nigeria’s optimistic H2 economic outlook BUNMI BAILEY

n the second half of the year (H2), analysts are optimistic that Nigeria’s economy will continue to do better if political risk, alongside the current insecurity situation caused by the herdsmen, is controlled. Nigeria was in recession for five consecutive quarters but returned to positive growth of 0.72 percent in the second quarter (Q2) 2017 from -0.67 percent in Q1 2016, according to data from the National Bureau of statistics (NBS). “Broadly, on the Gross Domestic Product (GDP) growth rate, we are beginning to see recovery expectation towards the second half of the year. It may likely recover faster than what we had last year,” Ayo Akinwunmi, head of research, FSDH Merchant Bank, said in a telephone response. “The second half of the year should grow faster than the first half provided political risk and the current risk such as the herdsmen crisis are controlled because they have negative impact on the economy,” Akinwunmi said. The rate of inflation has seen a downward trend for

the 15th consecutive month to 11.6 percent in May from as high as 15.1 percent in January. “We expect that it will drop possibly to a single digit. However, it is still predicated on the Federal Government to look at what they are going to do to tackle the crisis. Because, if you look at the latest GDP year-on-year numbers, you will see that agriculture grew to the lowest in the last eight quarters. “This means there may be an impending food supply crisis, and if there is supply shortage, this will trigger more crises. It might likely have an impact on inflation rate, but by and large all things being equal we expect that it will continue to tread downwards a little bit,” he said. Dolapo Ashiru, a stockbroker, said, “If you compare the first half of this year to the first of last year, there is a major difference as this time last year we were stepping out of recession. Our recovery is basically on the back of higher crude oil prices not majorly because of government policies. “Since the beginning of the year the economy has been improving on the back of improved dollar liquidity, lower inflation rate, higher crude oil prices and production.

ndications emerged on Tuesday that Federal G ov e r n m e n t a n d o i l companies owe Niger Delta Development Commission (NDDC) total sums of N2.787 trillion and $485.336 million. Nsima Ekere, managing director, NDDC, disclosed this at the opening of investigative hearing into all outstanding sums due to NDDC, chaired by Ahmed Chachangi. Breakdown of the amount showed that Federal Government defaulted in the remittance of 15 percent of federal allocation due to Niger Delta member states to the tune of N1.317 trillion out of total sum of N1.932 trillion since 2000 to date. In addition, the Federal Government paid total sum

of N45.091 billion leaving outstanding indebtedness of N1.362 trillion due to NDDC from the Ecological Fund. According to Ekere, out of total sum of $500.003 million and N516.149 billion due to be paid by the 45 registered oil companies to NDDC between the period under review, the sum of $4.544 million and N407.860 billion were paid so far, leaving outstanding indebtedness of $458.336 million and N108.290 billion. On the efforts made so far to recover the fund, Ekere said the Commission dragged some of the erring contributors to court, including NLNG, adding that the Commission was working with DPR and NAPIMS to update list of new companies coming into the industry. He also urged the House to

give the Commission the power to sanction in the next amendment of the NDDC Act. He alleged that NLNG had refused to provide details of its full annual budget to NDDC with the view to determine the statutory of 3 percent levy provided for in the NDDC Act. He debunked report that NLNG owed paltry sum of N300 million, just as he challenged NLNG to produce evidence of its annual budget. He also noted that the present administration had initiated reform, which resulted into Works Bank grant of $200 million, which was yet to be accessed. While declaring the investigative hearing open, House speaker, Yakubu Dogara, explained that the exercise was to ascertain whether those funds were utilised in compliance with the

provisions of the extant law. Dogara, who was represented by Pally Iriase, deputy chief whip, noted that the NDDC Act was initiated as part of efforts geared toward facilitating rapid, even and sustainable development of the region to an economically prosperous, socially stable, ecologically regenerative and politically peaceful region. “It is common knowledge that the NDDC has been greatly constrained in carrying out its objectives in the region, in view of the various complaints and allegations against the authorities of the Commission. “The House is determined to verify these allegations, with a view to getting all the facts to enable us make necessary resolutions that will change the trend of things in the region,” Dogara assured.

L-R: Clare Omatseye, president, Healthcare Federation of Nigeria (HFN); Tunde Folawiyo, chairman, ACT Foundation; Osayi Alile, CEO, ACT Foundation, and Yaw Nsarkoh, executive vice president, Unilever Ghana and Nigeria/keynote speaker, at the 2nd ACT Foundation breakfast dialogue, with the theme “Fostering Ownership: Driving Sustainable Impact in Communities Across Africa” in Lagos, yesterday. Pic by Olawale Amoo

Dakuku calls for collaboration FG to close 3rd Mainland to diversify economy Bridge for repairs MIKE ABANG, Calabar

irector-general of Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside, has called for serious collaboration with stakeholders in the sector to ensure the environment is made conducive enough for continuous growth premised on sustainable development as well as present opportunities for investors both as public and private partnership. According to Peterside, this applies especially to investments in maritime infrastructure, shipping and ancillary services, offshore services, ship building repairs, as well as marine and bunkering services. Peterside disclosed this in Calabar, the Cross River State capital, Tuesday, at the second stakeholders interactive session, titled ‘Harnessing Maritime Potentials in an Untapped Environment, Opportunities, Threats and Role of Government.’ He said the threats associated with piracy, sea robbery, and infrastructural challenge, low capacity development and so on, would be surmounted if we (government, business community, local commu-

nity) play our various roles sincerely. In the past two years, the agency has greatly impacted the industry in the areas of Maritime Safety and Security through the International Ship and Port Facility Security (ISPS) code, he said. Nigerian ports now have a compliance rate of almost 80 percent, as 114 port facilities out of the total 145 in Nigeria are fully complaint. With the maritime surveillance and domain awareness, the agency can now achieve a complete profile analysis, which includes the flag, registered owner, operator, beneficial owner and movements over a period. The system, he said, enables the agency to take swift decisions, in real time, on any targeted ship. The agency also recently acquired six fast intervention vessels for Search and Rescue and Enforcement. He said the Nigerian Maritime Domain, especially the Niger Delta region, is vastly endowed with huge maritime resources that include crude oil, abundant mangrove forests, marshes, natural gas, tar sands and sea grasses, but the country was yet to maximise them for economic development and wealth creation.

JOSHUA BASSEY

ederal Government has begun consultations towards the closure of Third Mainland Bridge in Lagos, to allow for the rehabilitation of some sections of the bridge. The federal controller of works in Lagos, Adedamola Kuti, disclosed this to journalists on Tuesday, saying the ministry of works was planning a meeting with stakeholders today to discuss how to manage traffic during the repairs. He, however, did not specify the exact date the bridge would be closed to traffic or how long the repairs would last. According to Kuti, stakeholders attending the meeting to discuss the repairs include traffic regulatory agencies, transport unions, truck owners and drivers’ unions, law enforcement agents, among others. “The Federal Executive Council has approved the maintenance work on the Third Mainland Bridge in Lagos State. The project

has taken off already and in carrying out the work, we may at certain times be shutting down the bridge for maintenance. “At the moment we may begin with tests on the bridge, so, we may shut it by 12 midnight on Thursday and carry out tests and some repairs and open it to traffic by midnight on Sunday,” he said. He said six other damaged bridges across the state were already undergoing maintenance and rehabilitation, saying, “We have contracts on maintenance of some of the bridges in Lagos. “We are completing maintenance work on the expansion joints on the Coconut Bridge. We are expecting the contractor to start work on the Independence Bridge in Lagos. “There is repair work going on currently on the Apapa Bridge, that is, Ijora/ Leventis Bridge. Maintenance work is ongoing on the Ijora-7up Bridge; we are also changing the expansion joints.

DAY BUSINESS Wednesday 11 July 2018

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Thursday 12 July 2018

BUSINESS DAY

InfraCredit promoted to league of Harvard Business School cases We hope that the Harvard Business School case will attract more global capital inflows into Nigeria’s infrastructure investment, which is profoundly needed. – Chinua Azubike

Chinua Azubike, InfraCredit CEO

I n f ra st r u c tu re C re d i t Gu a ra nte e Company (InfraCredit) has joined an elite circle of African companies by having a case study about its mission and operations published by the Harvard Business School. It would now form part of the curriculum at the renowned business school. The case which is titled Infrastructure in Nigeria : Unlocking Pension Fund Investments was co-authored by John D. Macomber, a senior lecturer in finance, and Pippa Tubman Armerding, director at Africa Research Office. Both are senior faculty at HBS. Each year, HBS publishes about 350 cases. Only a tiny fraction is devoted to organizations outside North America, Europe and Asia. Often characterized as the defining pedagogical experience of an HBS education, the case method has been described as ‘a profound educational innovation that presents the greatest challenges confronting leading companies, non-profits, and government organizations and places the student in the role of the decision-maker.’ On an average, HBS sells 10 million cases per year. Its dominance in the field is evidenced by the fact that 80 per cent of the case studies used by business schools around the world are written by its faculty. Macomber and Armerding identify the scale of financing required to close the infrastructure finance gap in Nigeria, as well as the challenges facing developers of projects with long-term profitability recovery. It is estimated that Nigeria would need to spend up to $3 trillion over the next 30 years to shore up its gaping infrastructure deficit. In the short-term, the National Integrated Infrastructure Master Plan projects that Nigeria would need to make infrastructure investments of over $127 billion in the next five years. The case investigates two central issues that would determine InfraCredit’s capacity to meet its ambitious goals: the funding options available to the company to support its growth, and the obstacles that must be overcome if the appetite of the country’s pension funds for infrastructure debt securities is to grow. Established last year, InfraCredit was conceived as a quasi-private credit enhancement provider by the Nigeria Sovereign Investment Authority (NSIA) in collaboration with GuarantCo, a member of the Private Infrastructure Development Group. Essentially, its mission is to catalyze long-term local currency debt capital formation for investment in infrastructure

projects by providing guarantees of timely payment for holders of debt securities issued by eligible infrastructure entities. At its launch, Uche Orji, managing director and CEO of NSIA spelled out its mandate. ‘InfraCredit will enhance Nigeria’s capacity to attract and unlock pools of capital from pensions and insurance for infrastructure investment in key sectors of the economy.’

Until InfraCredit guaranteed Viathan Funding’s N10 billion issue, which paid a coupon of 16 per cent over a ten-year period, a tenor that long for a corporate infrastructure entity had never been done before.

The vision was that by providing credit guarantees to developers/operators of eligible infrastructure assets, it could reduce their cost of local currency debt capital, and significantly extend the tenor of their debt, thereby quickening the country’s infrastructure deficit catch-up rate. InfraCredit enjoys an AAA credit rating from Agusto & Co and GCR, a first for a domestic local currency guarantor in SubSaharan Africa. This constitutes its key credit strength, which it deploys in lending its balance sheet by guaranteeing transactions . Under its mandate, eligible projects will broadly fall under any of ten activities: agricultural, energy, gas distribution, ICT/Telecoms, infrastructure, inputs to infrastructure, social infrastructure, transportation, waste management, and water distribution & treatment. From a low base of 25 per cent of GDP today, InfraCredit’s goal is to pump up the country’s infrastructure stock to 70 per cent in line with international benchmarks within 30 years. The first transaction successfully completed by InfraCredit within its first

Source: National Integrated Infrastructure Master Plan (NIIMP)

year of operations was for Viathan Funding, a special purpose vehicle of Viathan Engineering, a provider of captive and embedded power solutions based in Lagos. Viathan needed funds to expand its generation capacity, build a compressed natural gas plant, and pay off short-term expensive loans. At the time, bank loan rates went as high as the mid-twenties. I n f r a C re d i t g u a r a n t e e d V i a t h a n Funding’s N10 billion issue, which paid a coupon of 16 per cent over a ten-year period. Until then, a tenor that long for a corporate infrastructure entity was unheard of. This transaction exposed the main benefit that InfraCredit brings to mobilising private capital for infrastructure debt issuers; InfraCredit enhanced Viathan’s credit from a BBB- credit rating by Agusto & Co. and Global Credit Rating (GCR) to an ‘AAA’ rating, and crowded in sixteen institutional investors including twelve pension fund administrators. To finance infrastructure development, the local debt capital markets needs to be relatively developed. In today’s environment, accelerating the development of domestic capital markets in emerging markets, particularly for local currency debt, is more crucial than ever as global financial reforms have transformed banks’ willingness and ability to lend, and recent events have highlighted the potential repercussions of borrowing significantly in foreign currencies, at least for businesses

that are not export-focused. In its corporate presentation, the company hinted at the size of its ambition. It plans to grow its aggregate guarantee portfolio of corporate infrastructure bonds from the current N10 billion up to N510 billion by 2021. A quantum leap of that proportion implies the assumption that with the successful operations of InfraCredit, new local bonds issuance will undergo a faster annual growth rate in the future than has historically been the case. Data from FMDQ indicates that from 2013 to date, corporate bond issuances, which today stand at N327 billion, have grown by a sluggish c.23% compounded annual growth rate which is significantly low given the huge deficit in funding required to plug the infrastructure gap. In his comments on the HBS case, Chinua Azubike, CEO of InfraCredit said ‘We are very honoured that Harvard Business School has chosen InfraCredit as a model for its MBA students. It is a great privilege that in such a short space of time since we began commercial operations, our mission and activities have been judged worthy of attention by the world’s leading business school. We are committed to fulfilling our mission and its long-term sustainable impact. In the end, we hope that the case will attract more global capital inflows into Nigeria’s infrastructure investment, which is profoundly needed.’

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Teleology awaits NCC’s approval for licence... Continued from page 1

nications Commission (NCC) in order for the consortium of banks to hand over operation to the new owners.

BusinessDay confirmed on July 10, 2018, that Teleology made the final payment of $301 million, following the initial $50 million paid as a non-refundable deposit in March 2018 to show commitment on the sale of 9mobile. One of the bank managing directors being owed confirmed to BusinessDay that “we have seen the money.” Teleology and United Capital Trustees signed the Share Purchase Agreement (SPA) and Loan Purchase Agreement (LPA) on 21st March 2018 after receipt of confirmation of the non-refundable deposit and the Central Bank of Nigeria (CBN) and NCC were present at the ceremony. Although the final decision on when 9mobile licenses and operations will be legally transferred to Teleology lies in the hands of the NCC, teleology has played its part by fulfilling all obligations as directed by Barclays Africa, the financial adviser to the owed banks. Sources tell BusinessDay that

there are two processes involved in the sale, one of which is the payment which Teleology has fulfilled and the other is getting the NCC to transfer the license rights to the new owners which may hold up the sale for a while because 9mobile is said to be owing the NCC debts of up to N8 billion including spectrum fees of N2.4 billion and payments of 2 and a half percent of gross revenues which have not been fully cleared since the crises erupted. “However the company has been able to pay N2.4 billion out of the N8billion and has arranged a payment plan for the outstanding N5.6 billion. NCC might on this ground decide to delay license transfer to the new owners until all debts have been cleared,” a source familiar with the deal told BusinessDay. Sources tell BusinessDay that 9mobile had believed since they have paid the spectrum fees they would be allowed to conclude the transaction with Teleology. “9mobile has provided a payment plan to NCC for the balance of N5.6 billion being owed to the regulator,” another source told BusinessDay.

Notwithstanding, it has been observed that the ability for 9mobile to pay out the sum of N2.4 billion to the telecoms regulator, even after recent strain on the business shows that the company is still viable and has strong cash flows at the top line. The CBN Governor Godwin Emefiele said last year that 9mobile revenues were holding up at about N16 billion a month. Efforts to reach Umar Garba Danbatta, executive vice chairman, NCC and Tony Ojobo, director of public affairs NCC proved abortive as neither of the two answered phone calls or replied text messages sent to ask if NCC had been notified of the said payment and how long it will take for regulatory approval of license transfer to the new owners.

Recall that BusinessDay exclusively reported in May 2018 that Teleology’s Nigerian shareholders Omar Farouk Edewor and Mohammed Edewor who are also the directors of the company are in talks with financial advisers to source equity in-order to pay up the balance of its $301 million financial bid for 9mobile.

Continues on wwwbusinessday online.com

L-R: Chinyaka Oha, representing minister of Federal Capital Territory (FCT); Benedict Oramah, president, African Export Import Bank (Afreximbank), and Kemi Adeosun, minister of finance, at the ground breaking ceremony of Afreximbank’s Abuja office, yesterday.

Nigeria CEOs expects revenue growth... Continued from page 1

of 25 top Nigerian companies

are confident about the country’s growth prospects over the next three years, however 88 percent of them are projecting topline revenue growth of less than 2 percent. “I think it all boils down more to the purchasing power of consumers, which we have seen is a major challenge especially given the fact that we still have sectors like real estate still in recession,” said Abdul Bello, Group Managing Director / CEO of United Africa Company of Nigeria. “Opportunities are however emerging and we are seeing some growth even though not at magnitude most of us expect.” Nigeria, Africa’s largest economy just exited a recession owing to the collapse in oil prices which slid two-decade low to $28 per barrel in January 2016 coupled with renewed militant attacks in the Niger-delta region of the country which sent production levels to near a decade low of 1.2 million barrels in the same year. Wole Abayomi, head of tax at KPMG stated that if the trend in average oil price increase continues, coupled with stability in the FX market and full implementation of the government’s Economic Recovery and Growth Plan (ERGP), the economy should start accelerating. “Every industry is impacted by the dynamic changes in the economy and in my interaction with clients, it is increasingly clear that the prospects for the company is directly linked to the health of their industry,” Abayomi concluded. For Paul Gbededo, CEO Flour Mills of Nigeria PLC, infrastructure is a critical area to look out for. He reiterated the need for policies that are consistent, sustainable, inclusive and enforceable stating that

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total votes casts. Consequently, beginning from 2000 in Senegal, opposition coalitions or mergers have swept incumbents out of power more easily than expected. Also, in Nigeria, the then ruling party was so entrenched that it boasted it will continue to hold power for the next 60 years. But a merger of the major opposition parties in 2014, comprising a splinter group from the PDP led to the defeat of the then ruling party- the first in Nigeria’s history – in the 2015 elections. However, like Kingsley Moghalu, also a presidential aspirant of the Young Progressive Party avers, the coalition or mergers usually do not have an agenda to improve the lives of Nigerians but are just vehicles to capture power and advance personal interests. In Nigeria, political parties are merely a means to get to power and wealth and party members do not have any ideological leaning or principles and jump from one party to another. The ultimate goal is to gain ac-

cess to the treasury and dispense patronage – result of Nigeria’s oil propelled prebendal politics. “It is interesting to note the MOU signed yesterday by the PDP and over 30 other parties. On the face of it, it is a legitimate move; after all, we are a democracy. However, we must be clear about what it represents: power for the sake of power, without any real agenda to improve the lives of Nigerians,” Moghalu said in press statement emailed to BusinessDay on Tuesday. Political parties perform key functions in the political system like political education and socialisation, acting as a vehicle for aggregation of interests and, of course, serving as a vehicle for attaining power. But a key function of political party is its role in moderating contest for power between its members and helping to bring about orderly change of government when it becomes necessary. In South Africa, the ANC’s ability to peacefully ease out an obstinate Jacob Zuma out of office and immediately get its party leader, Cyril Ramaphosa, elected as

president by parliament showed the pre-eminence of the party and its ability to discipline all party members regardless of rank or position. Even in a less organised polity like Zimbabwe, it is the same kind of party cohesiveness and supremacy that prevented a spiral into anarchy the moment the veterans got fed up with Mugabe. Although Mugabe spurned all threats and cajoling by the Generals who staged a peaceful coup d’état to peacefully hand over power, he quietly acquiesced the moment his party, ZANU-PF, ordered its members in parliament to pass a vote of no confidence on him. However, such orderly changes are not always possible in polities with weak party systems like Nigeria, Kenya and Uganda, where parties serve only as vehicles for capturing power without the capacity to moderate contest for power among its members and ensure discipline. In such polities as Nigeria, Uganda and Kenya, politics is often based on personalities and not on parties thus making it difficult to rein in recalcitrant politicians and effect peaceful change.

Continues on wwwbusinessday online.com

it is important that government creates the enabling environment for growth. The Managing Director of Shell petroleum development company of Nigeria Osagie Okunbor said, “Resolving the security situation in the Niger delta, shortening contracting cycles and right legal and fiscal environment will be critical enablers for investment and growth in the industry.” On the strategies for this growth to emerge, CEOs believe that organic growth, outsourcing and strategic alliances are the key strategies for growth over the next three years as 3 in 5 of the CEOs say organic growth is one of their top two strategies for growth while 28 percent ranked it as first. However, this growth trajectory is not without threats as 88 percent of the CEOs agreed that operational risk is among the top three threats to their organizations growth while 48 percent of the CEOs say the same for talent risk. Kunle Elebute, Senior Partner, KPMG in Nigeria and chairman, KPMG Africa said the issue of getting the best talent to stay in order to fit into client standard is a major risk being faced by companies in the country. “We have noted several ways that can help cushion talent risk and they include making entry barriers higher such that the best talents can be selected, investing heavily in both local and offshore trainings, growing the businesses to accommodate this talents,” he added.

The CEOs are confident that their existing leadership team is fully equipped to oversee the radical transformation their organisation requires with 100 percent saying they are personally prepared to lead such a change. Continues on wwwbusinessday online.com

CBN throws in towel, says 80% financial... Continued from page 1

In Nigeria’s fragmented politics, rise of coalitions...

Wednesday 11 July 2018

tional Financial Inclusion Strategy (NFIS) of 2012.

The economic recession in the country as well as the insecurity in northern Nigeria is said to have hampered the progress of financial inclusion in the country, as they were never anticipated in the course of drafting the NFIS in 2012. “Nigeria is not on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012,” the apex bank disclosed in its website on Friday, 6 July 2018. The impediments to achieving this target have been ascribed to economic constraints, insecurity issues in the northern part of Nigeria, obsolete strategies, among others. Dolapo Ashiru, a Lagos-based financial analyst said the CBN’s target is supposed to be based on some certain assumptions, and as such the failure of the apex bank had led to the excuses stated as to why it cannot meet its target. “North East Nigeria is not the whole of Nigeria, if they had driven financial inclusion in other parts of Nigeria, that could have made up for the exclusion rate witnessed in the northern part of Africa’s largest economy which is as a result of the security crisis,” Ashiru said in a phone response. According to CBN’s 2016 financial inclusion figures, just 58.4 percent of Nigerian adults were financially included with only 48.6 percent using formal financial

services. This showed that Nigeria lagged in its inclusion targets of 80 percent (overall financial inclusion rate) and 70 percent (formal financial inclusion rate) of Nigerian adults by 2020. The NFIS defined 15 targets for channels and products as well as 22 key performance indicators (KPIs) related to these targets, but Nigeria still lags across all these measures. Also, the slow uptake of digital financial services and limited rollout of national identity numbers restricted financial service providers to meet the know-your-customer (KYC) requirements, as compiled from the CBN’s statement. Ayo Akinwunmi, Head of Research at FSDH Merchant Bank said it is a wakeup call for the federal government of Nigeria because if they are saying the insecurity in the northern part of the country is one of the reasons as to why they cannot achieve the set target, it means that the crisis is beginning to have negative impact on the Nigerian economy. “This is because CBN cannot resolve that crisis and a lot of banks are closing down from those areas and the economic activities are also

nothing to write home about in those places. So if the crisis cannot make CBN to attain 80 percent target by 2020 it implies that it is having another dimension of risk to the Nigerian economy,” Akinwunmi said. Continues on wwwbusinessday online.com

Wednesday 11 July 2018

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NEWS

FG threatens to revoke licence of oil firms over unfair labour practices JOSHUA BASSEY & KEHINDE AKINTOLA, Abuja

inisteroflabourand employment,Chris Ngige, on Tuesday threatened to revoke the operational licence of any labour contractors that promote unfair labour practices in the oil and gas sector. Ngige, who read the Riot Act in Abuja during an interactive session with the newly elected National Administrative Council Members of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), said the ministry would not renew the licence of erring company under the new reform. According to Ngige, the ministry has commenced reform process of granting and renewing Recruiters Licence to Labour Contractors with the aim of ensuring adherence to expatriate quotas and eschew unfair labour practices. Ngige said: “I thank you for taking interest in job creation in theOilandGasSectorandforobserving some lapses on the part of Labour Contractors licensed by the ministry. “We have started reforming the process of granting and re-

newing Recruiters’ Licence and we will not grant or renew the licence of recruiters who compromise by aiding and abetting ‘yellow dog’ contracts, as any recruiters found abusing expatriate quotas will have his licence revoked or not renewed.” The minister emphasised that this move was in line with the Executive Order of the present administration to ensure that jobs that were reserved for the locals were not given to expatriates as well as protect indigenous products over foreign products. He added that on the part of the ministry efforts were in place to close up identified gaps in the operationalguidelineandlabour laws in the oil and gas sector. “In 2016, despite the shortfall in the oil revenue, the Federal Government brought both the InternationalOilCompaniesand theworkerstogethertoagreeand fashionedoutwaystoensurethat there is no job loss. “This is something to cheer because all parties agreed and we were able to save jobs in the oil and gas sector. We were never happywhenpeoplelosetheirjob because the pressure will always come back to the government. “Today,oilpriceshavepicked up and activities have com-

menced so we expect new jobs to be created in the oil and gas sector,” the minister said. He affirmed that the desire of workers for decent work was in tandem with the change agenda, aimed at improving the living standards of Nigerian workers and promoting decent work agenda as well as ensure that harmonious milieu that would enhanceproductivity,occupational safetyandhealthwasmaintained at workplaces by channelling accrued revenue from crude oil to other sectors thereby steering the nation’s economy on new part of profitable diversification. “The Federal Government is now wiser because revenue accrued from the oil and gas sector will now be channel towards steering the economy in other profitable direction such as agriculture,skillsacquisition,mining, educationandentrepreneurship so as to prepare for the raining day.Thepreviousadministration made the mistake of not saving or making concrete efforts at diversification,” he said. He appreciated NUPENG for keeping faith with the Federal Government in 2016, when it moved to ensure appropriate pricing of the pump price of the petrol, saying,

NYSC certificate controversy: Lagos PDP, CACOL urge Adeosun to resign INIOBONG IWOK

agos State chapter of the People’s Democratic Party (PDP) and the Centre for Anti-Corruption and Open Leadership (CACOL) have called for the resignation of Kemi Adeosun, minister of finance, as she has refused to defend herself over allegations that her National Youths Service Corps (NYSC) certificate was forged. In a statement to the media Tuesday by CACOL and signed by the president, Debo Adeniran, noted that the minister’s action if found guilty was a set back to the country and the present administration’s antigraft war, while also calling for her prosecution by relevant government agencies. The statement states further that previous reports had shown that the finance min-

ister was colluding with some members of National Assembly to cover up the certificate fraud, while adding that the nation could not attain it dream destination if public office holders were not individuals with integrity and the requisite qualification. “What should not be encouraged, under any guise, is a reign of impunity as the country steers towards consolidation of its democratic culture. This scandal in which Mrs. Adeosun is presently enmeshed is a vindication of CACOL’s position taken as far back as 2015 that she was not morally upright to hold public office based on her past. “We recollect that this scandal - which was first broken by Online Newspaper - had resulted in the Finance Minister becoming vulnerable to blackmailing former members

of the National Assembly. “She was reported to have approved fictitious budget head-sum on several occasions and actually authorised the disbursement of huge sums of money that were not approved by President Muhammadu Buhari to the National Assembly. If this is found to be true, it is not only criminal, but also a clear violation of fiscal discipline and accountability. “The nation is presently facing a lot of challenges which require the present administration’s undivided attention-ranging from Fulani herdsmen-farmers crisis to banditry, social dislocation and economic crunch and cannot therefore afford to be bogged down by any distractions or controversy arising from the recklessness of any public official.

Reps to probe non-remittance of over N100bn June allocation KEHINDE AKINTOLA, Abuja

ouse of Representatives on Tuesday unveiled plans to investigate the immediate and remote causes of nonremittance of over N100 billion oil revenue into the Federation Account over the past six months by Nigeria National Petroleum Corporation (NNPC). The resolution was passed sequel to the adoption of a motion of ‘urgent public importance’ on the need to ‘investigate the current under-remittances to the Federation Account by the corporation,’ sponsored by Ossai Nicholas Ossai. In his lead debate, Ossai expressed displeasure over NNPC’s failure to meet its financial obligation for

the monthly Federal Accounts Allocation Committee (FAAC) meeting, where representatives of the Federal, States and Local governments shared funds accrued to the federation account. While noting that NNPC has over the years defaulted in meeting its obligation, he argued that the action of the Corporation had negatively impacted on government businesses across the country. The lawmaker said he was aware that the issue was coming when crude oil price had risen appreciably in international market above the oil benchmark, implying that the slow pace of government activities was not caused by poor revenue from oil but likely as a result

of some individuals not doing what they were supposed to do. Th e Re p re s e nt at i v e s member expressed concern that many less resources endowed states and local governments, depended on these allocations for monthly payment of salaries and allowances of their workers. According to Ossai, the action of NNPC had led to suffering of many Nigerian workers, as they were not able to get their salaries for the month of June. While calling for the intervention of the House, he noted that if necessary action was not taken, NNPC would rise up in no distant month to declare no revenue from the nation’s oil and gas business under its care.

L-R: Charles Kie, managing director, Ecobank Nigeria; Olivier Laouchez, chairman/CEO, Trace TV; Emmanuel Macron, president of France, and Akinwunmi Ambode, governor, Lagos State, during Macron’s visit to the Afrika Shrine in Lagos.

Finally, National Assembly transmits PIGB to Buhari for assent OWEDE AGBAJILEKE, Abuja

ational Assembly has transmitted the muchawaited Petroleum Industry Governance Bill (PIGB) to President Muhammadu Buhari for assent. The development comes about four months after the Senate adopted the harmonised version of the PIGB. A source close to the office of the Senate president told BusinessDay that a clean copy of the Bill was sent to President Buhari on July 3, 2018. It would be recalled that while the Senate passed the bill on May 25, 2017, the House of Representatives passed its version on January 25, 2018. However, both chambers set up conference committees to harmonise the two versions. In March 2018, both legislative chambers passed the harmonised version of the PIGB. But due to some contentious clauses, the National Assembly Legal Directorate returned the document to both chambers for further legislative action.

CORRECTION OF NAME

Consequently, the two chambers passed the harmonised bill last month. The PIGB seeks to unbundle the Nigerian National Petroleum Corporation (NNPC), provide for the establishment of the Federal Ministry of Petroleum Incorporated, Nigerian Petroleum Regulatory Commission, Nigerian Petroleum Assets Management Company and National Petroleum Company and Petroleum Equalisation Fund. The bill bulkanises the NNPC and creates the National Petroleum Commission, which takes over the functions of the Department of Petroleum Resources (DPR). If signed into law, the Nigeria Petroleum Regulatory Commission will take over the functions of the Petroleum Inspectorate, Department of Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory Agency (PPPRA). The bill empowers the Commission to administer and enforce policies, laws and regulations relating to all aspects of petroleum operation; monitor

CHANGE OF NAME

This is to inform the general public that my name was wrongly written as Shaibu Emmanuel On My VOTERS’S CARD instead of my correct name which is Omada Abraham as written on my DRIVER’S LICENSE. All banks and genral public please take note.

I, formerly known and addressed as Roland John now wish to be known and addressed as Ofime Ronalson. All former documents remain valid. General Public please take note.

I, formerly known and addressed as Anakuba Agatha Obianuju now wish to be known and addressed as Anakuba Obianuju Goodness. All former documents remain valid. General Public please take note.

I, formerly known and addressed as Adoyi Aladi Patience now wish to be known and addressed as Anthony Aladi Patience. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Mr. Olusa James Ayoor now wish to be known and addressed as Mr. Daves James Ayoor. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Mossa Francis Nduka now wish to be known and addressed as Joseph Francis Nduka. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Marcelina Nnenna Nwiboko now wish to be known and addressed as Marcelina Nnenna Okonkwo. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Akinseli Damilola Adedoyin now wish to be known and addressed as Mrs Jemiseye Damilola Adedoyin. All former documents remain valid. General Public please take note.

and enforce compliance with the terms and conditions of all leases, licences, permits and authorisations issued in respect of any petroleum operations; define and enforce approved standards for design, construction, fabrication, operation and maintenance for all plants, installations and facilities utilised or to be utilised in petroleum operations; establish, monitor, regulate and enforce health and safety measures relating to all aspects of petroleum operations; establish the framework for the validation and certification of national hydrocarbon reserves; advise the Minister on fiscal and other issues pertaining to the petroleum industry; undertake evaluation of national reserves and reservoir management studies.

CHANGE OF NAME

I, formerly known and addressed as Imoh Emmanuel Christian now wish to be known and addressed as Imoh Titus Ogar. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Eke ThankGod Ekenechukwu now wish to be known and addressed as Eke ThankGod Samuel. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Nwenyi Chinyelu Perpetua now wish to be known and addressed as Mrs Nnaji Chinyelu Perpetua. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Zomagbo Hannah Afi now wish to be known and addressed as Yunus Hannah Afi. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Obioma Rosemary A now wish to be known and addressed as Arukwe Rosemary Onyinyechi. All former documents remain valid. General Public please take note.

Wednesday 11 July 2018

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Wednesday 11 July 2018

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BUSINESS DAY

FINANCIAL TIMES Stocks to watch: Ocado, TP ICAP, Softcat, Equiniti, FCA, PepsiCo

Norway’s oil fund sells out of Warren Buffett-owned utility

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World Business Newspaper

Donald Trump’s Supreme Court pick is a Republican stalwart Brett Kavanaugh served in George W Bush White House and investigated Bill Clinton KADHIM SHUBBER

hen Brett Kavanaugh was nominated by Republican President George W Bush to be an appeals court judge in 2003, his political record angered Democratic senators. Mr Kavanaugh had spent years in the Bush White House, and before that he had worked on Kenneth Starr’s controversial investigation into Bill Clinton. He had helped draft the report recommending Mr Clinton’s impeachment. “You could not think of another nomination, given Mr Kavanaugh’s record, more designed to divide us,” said Democratic Senator Chuck Schumer in 2004. It took three years before he was finally confirmed to be a judge on the influential Washington DC appeals court. Now, Mr Kavanaugh, 53, is President Donald Trump’s pick to fill the Supreme Court seat being vacated by Anthony Kennedy, and faces yet another bruising confirmation process. Although Republicans control the Senate, their margin is slim, with little room for error, and Mr Kavanaugh’s long record in politics and on the courts will give Democrats plenty of material with which to make trouble. A Washington veteran with strong academic credentials, Mr Kavanaugh was born in the nation’s capital in 1965. Both his parents studied law and his mother served as a judge in Maryland. His path to the Supreme Court took him through Yale University and Yale Law School, after which he clerked for two appeals court judges and then Justice Kennedy. He had a brief stint in the Department of Justice’s office of the solicitor general, which handles the government’s litigation in the appeals courts. Then, in 1994, he joined the Starr investigation. Mr Kavanaugh’s time on the highly charged probe boosted his profile as he became known as Mr Starr’s “protégé”. He led the part of the investigation looking into the suicide of Clinton aide Vince Foster. When Mr Starr recommended Mr Clinton’s impeachment to Congress in 1998, Mr Kavanaugh argued against including graphic details of Mr Clinton’s affair with White House intern Monica Lewinsky. Bob Woodward, in a 1999

book, quoted Mr Kavanaugh saying: “The narrative shows how pathetic Clinton is . . . that he needs therapy, not removal. It’s a sad story. Our job is not to get Clinton out. It is just to give information.” Years later, Mr Kavanaugh appeared to have regrets about the Starr investigation and the effect it had on the Clinton administration. In 2009, he wrote an academic article arguing that Congress should give sitting presidents a temporary reprieve from civil lawsuits and criminal investigations. The article did not argue that the Supreme Court was incorrect in ruling in 1997 that Mr Clinton was not immune from civil litigation, but rather that Congress should pass a law giving the president effective immunity from prosecution and even questioning by prosecutors while in office. His view was in part shaped by his own experiences in the Bush White House. “The job of president is far more difficult than any other civilian position in government,” he wrote, calling for the commander-in-chief to be “excused from some of the burdens of ordinary citizenship while serving in office”. He said: “The indictment and trial of a sitting president, moreover, would cripple the federal government.” After serving on the Starr investigation, he was briefly a partner at Kirkland & Ellis before joining the Bush administration in 2001, first as associate counsel and later as staff secretary. He was eventually rewarded with an appeals court position in 2003, but was not confirmed until 2006. His record after 12 years on the court shows him to be a solid conservative who has ruled against government agencies such as the Environmental Protection Agency and said the structure of the Consumer Financial Protection Bureau was unconstitutional as it restricted the president’s ability to fire the director. He is known as a defender of presidential authority, with a broad view of the government’s power to detain suspected terrorists and prosecute them in military commissions as opposed to federal courts. He has argued in favour of the National Security Agency’s metadata collection programme, against net neutrality, and against restrictions on firearm sales.

Germany heads for political dogfight over replacing the Tornado Whether Berlin opts for a European or US aircraft, one of its allies will be angered

TOBIAS BUCK AND PEGGY HOLLINGER

he first Tornado fighter jet roared across the sky over Germany in 1974, ushering in a new era for the country’s air force. The twin-seater combat aircraft served as the backbone of the Luftwaffe in the closing stages of the cold war and the turbulent years that followed. In 1999, a squadron of German Tornados took part in combat missions above Bosnia — the first by the Luftwaffe since the

end of the second world war. Now the ageing plane is heading for retirement — leaving the government in Berlin with a difficult choice that touches military, political and even nuclear sensitivities and that is bound to antagonise at least one of Germany’s closest allies. The government will decide this year which model should replace the Tornado when the 85-strong fleet goes out of service, starting in 2025. One of the tasks the new aircraft Continues on page A4

EU’s Tusk hits back at Trump criticism ahead of Nato summit EU Council president calls on the US to ‘appreciate its allies’

JIM BRUNSDEN

U Council president Donald Tusk has rejected Donald Trump’s criticisms of European defence spending, urging the US president not to denigrate a contribution that has included the death of more than 800 European soldiers in Afghanistan. Speaking ahead of a meeting of Nato leaders in Brussels on Wednesday and Thursday, Mr Tusk said he wanted “to address President Trump directly”, as the US leader “for a long time now has been criticising Europe almost daily for, in his view, insufficient contributions to the common defence capabilities and for living off the US”. “Europe was first to respond on a large scale when the US was attacked and called for solidarity after 9/11,” Mr Tusk said, referring to the September 11 2001 terrorist attacks. “European soldiers have been fight-

ing shoulder to shoulder with American soldiers in Afghanistan. 870 brave European men and women sacrificed their lives, including 40 soldiers from my homeland, Poland.” Mr Tusk was speaking alongside EU Commission president JeanClaude Juncker and Nato secretarygeneral Jens Stoltenberg, ahead of a summit that is expected to be among the most tense in the history of the Atlantic alliance, with Mr Trump determined to pressure countries to spend more on their military capabilities. Mr Tusk’s comments appeared to have been provoked by a tweet from Mr Trump as he prepared to travel to the summit, saying “the US is spending many times more than any other country in order to protect them. Not fair to the US taxpayer.” The EU Council president said that he wanted “to dispel the American president’s argument which says that the US alone protects Europe

against our enemies and that the US is almost alone in this struggle.” He said that Europe spends “many times more than Russia and as much as China [on defence].” “I think you can have no doubt Mr President that this is an investment in common American and European defence and security, which cannot be said with confidence about Russian and about Chinese spending.” Mr Tusk said that his comments were made both in view of the summit and of a forthcoming meeting that Mr Trump will have with Russian President Vladimir Putin. “It is always worth knowing who is your strategic friend and who is your strategic problem,” Mr Tusk said. “First of all, dear America, appreciate your allies, after all you don’t have that many. And dear Europe, spend more on Europe defence because everyone respects an ally that is well prepared and well equipped.”

Erdogan gains power to appoint Turkey’s central bank governor Markets unnerved as Turkish leader issues first decrees under new executive presidency LAURA PITEL

ecep Tayyip Erdogan has gained the power to appoint the governor of Turkey’s central bank and hundreds of other senior officials, unnerving markets as the country’s new executive presidency comes into force. The Turkish leader issued his first set of presidential decrees just hours after being sworn into office, triggering the transition to a muscular system of governance that Mr Erdogan has sought for years. The new model, which was narrowly approved by a contentious referendum last year, has abolished the role of prime minister and given unprecedented powers to the president. Turkish stocks and bonds tumbled as investors fretted about the new system and Mr Erdogan’s decision to appoint his son-in-law Berat Albayrak to head the newly formed treasury and finance ministry while sidelining Mehmet Simsek and Naci Agbal, two market-friendly figures

who held senior posts in the previous government. Turkish stocks fell 2.3 per cent on Tuesday — their worst one-day loss in a month — while bank shares plunged almost 4 per cent. Sovereign dollar bonds fell as much as 4.6 cents. The lira was trading at 4.72 to the dollar on Tuesday, having plunged more than 3 per cent in the hours after the new cabinet was unveiled on Monday “The risk that Turkey could be heading for a full-scale currency crisis, after barely avoiding it only a few months ago when the lira was falling precipitously, has resurfaced,” said Piotr Matys, an emerging markets currency strategist at Rabobank. “By giving Mr Albayrak such a prominent role at a crucial time for Turkey and ousting market-friendly Simsek and Agbal, President Erdogan has reignited market concerns that his administration may implement unorthodox policies, which include lowering inflation by cutting interest rates.”

Markets were also rattled by an emergency decree ahead of Mr Erdogan’s inauguration that removed a stipulation that the term of the central bank governor lasted five years. A new decree issued early on Tuesday under Mr Erdogan’s new powers reimposed a term limit of four years. The same decree listed scores of offices whose holders would be chosen directly by the president, granting him the power to reshape the Turkish state according to his own vision without any process of review. They range from the heads of the national intelligence agency and the national security council to senior prosecutors, the head of the police academy and the head of the national statistics agency. Among Mr Erdogan’s first appointments was a new head of the armed forces after his decision to select Hulusi Akar, a four-star general, to the position of defence minister. He will be succeeded in the role of chief of the defence staff by General Yasar Guler, who was formerly head of Turkish land forces.

BUSINESS DAY

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NATIONAL NEWS

FT Germany heads for political dogfight...

JPMorgan issues bleak warning on Brexit damage

Continued from page A3 will have to replicate is the ability to carry and deploy US nuclear weapons — one of the core capabilities still provided by the Tornado and its most contentious by far. Defence officials agree there is no time to develop a new plane, meaning the lucrative contract will go to the maker of one of four existing aircraft: the Eurofighter, which is built by a consortium of German, British and Italian groups; or one of three US-made plans — the ultra-modern F-35A (Lightning II), the F-15E (Strike Eagle) or the F/A-18E/F (Super Hornet). The size of the order has yet to be determined but is likely to be worth billions of euros. “This is a real fork in the road,” said François Heisbourg, a French defence analyst. “The decision will impact the future of the nuclear mission, the long-term future of the aerospace industry in Europe as well as defence relations between Germany and America on the one side and Germany and the rest of the Europe on the other.” The politics of the looming decision are delicate in the extreme. At a time when Germany is under attack from President Donald Trump over the level of its defence spending and yawning trade surplus with the US, handing the order to a US company would deliver obvious political rewards. “It would be a sign of goodwill at a very difficult moment in the German-US relationship,” said Christian Mölling, a defence expert at the German Council on Foreign Relations in Berlin. “It would be a symbol for Trump. We could say: ‘Look! We are buying from you!’” Claudia Major, a defence analyst at the German Institute for International and Security Affairs in Berlin, said: “Buying American means hoping for American security guarantees — and it would strengthen the transatlantic relationship.” But the downsides are also clear: buying a US aircraft would make Germany more reliant on the US at a time when doubts over Washington’s commitment to its European allies are on the rise. It would also deliver a severe blow to Europe’s — and Germany’s — defence industry, with potentially grave long-term consequences. Only last year, the French and German governments agreed to build a new fighter plane from scratch, a landmark project dubbed the Future Combat Air System. However, the new aircraft would go into service no earlier than 2035. Without the Eurofighter to keep factories humming in the meantime, the continent’s aerospace industry could end up badly weakened. “A possible order of the Eurofighter would secure the preservation of expertise in military aviation in Germany and Europe. It would also keep value added at home,” a spokesman for the defence ministry in Berlin said. Opting for the Eurofighter, however, has one obvious drawback. One of the pillars of Nato’s nuclear deterrence doctrine is known as “nuclear sharing”. Under this, countries that do not have nuclear weapons provide pilots and aircraft to carry US warheads stationed in their own territory.

Wednesday 11 July 2018

Jamie Dimon says departure has potential to ‘hurt everybody a bit’ MARTIN ARNOLD

J Warren Buffett, founder of PacifiCorp’s parent company Berkshire Hathaway, which could also be excluded by Norway’s $1tn oil fund © Reuters

Norway’s oil fund sells out of Warren Buffett-owned utility Wealth fund pulls investment because of PacifiCorp’s use of coal RICHARD MILNE

he world’s largest sovereign wealth fund has taken aim at Warren Buffett’s energy companies, excluding one from its portfolio and putting two others under observation because of their use of coal. Norway’s $1tn oil fund has sold out of the bonds of US utility PacifiCorp while it has placed its parent company Berkshire Hathaway Energy and fellow electricity group MidAmerican Energy under observation, meaning that it could exclude them from its portfolio in the future. The actions mark the latest in the oil fund’s ethical investment process that has seen it sell out of more than 100 companies due either to product exclusions — such as from makers of tobacco and nuclear weapons — or those related to conduct such as environmental damage or child labour. The fund is on its fourth round of exclusions for companies that derive more than 30 per cent of their business from coal and the three companies were part of its examination of its fixed-income portfolio

whereas previous exclusions focused on shareholdings. That review also led to the exclusion of Tri-State Generation and Transmission, a US electricity seller. The oil fund owned $164m in bonds in Berkshire Hathaway Energy as of the end of last year, $129m in PacifiCorp, $43m in Tri-State, and $33m in MidAmerican. Among other notable actions announced on Tuesday, the fund also excluded JBS, the world’s largest meatpacker that has been engulfed in corruption allegations in Brazil. It owned $143m worth of shares in JBS at the end of 2017, the last date for which it had disclosed its position. Former JBS chairman Joesley Batista and his brother Wesley, the company’s chief executive, signed plea bargains last year admitting to corruption, including bribing more than 1,800 politicians over several years. The brothers almost brought down President Michel Temer in May 2018 after Joesley submitted a tape to prosecutors in which he allegedly discussed bribes with the Brazilian leader. The oil fund also decided to ex-

clude Luthai Textile, a Chinese owner of clothes factories, for systematic human rights violations while it placed Nien Hsing Textile, a Taiwanese company, under observation for the same reason. Finally, it said it would follow the efforts of Indian chemicals group UPL to rid itself of child labour through its active ownership process for the next five years. The oil fund owns 2.3 per cent of UPL, shares worth $137m at the end of 2017. The fund’s ownership approach is followed closely by many other investors. Among the companies excluded are groups such as Airbus, Boeing, Japan Tobacco, Rio Tinto and Wal Mart. The fund recently laid out the results of its exclusions, saying it had lost out on just under NKr30bn ($3.7bn) in returns since 2006 because of the product exclusions on the likes of coal and nuclear weapons, equivalent to lowering the return by 0.1 percentage points a year for the past decade. But exclusions for bad conduct — such as Duke Energy and Posco for severe environmental damage — had boosted returns by an average of 0.04 percentage points each year.

Deutsche Bank to pay activist shareholder for advice German bank says Cerberus will bring in expertise to boost profitability OLAF STORBECK

eutsche Bank will pay one of its largest shareholders, the US activist investor Cerberus, for advice on restructuring its operations. A person familiar with the matter told the Financial Times that Cerberus will be restricted in buying or selling Deutsche’s shares while advising the management board. The person stressed, however, that the lender does not see a conflict of interest between the dual role of Cerberus as a shareholder and an adviser to the lender, arguing that the commissioning was similar to “hiring McKinsey”. Deutsche said in a statement on Tuesday: “Bringing in the acknowledged expertise of Cerberus Operations Advisory Company will support us on the path to achieve attractive returns for our investors.” According to a person familiar with the internal deci-

sions at Deutsche, Cerberus had approached Christian Sewing, the bank’s chief executive, and offered its consulting expertise. “Christian thought that’s a good idea,” the person said. Cerberus could not immediately be reached for comment. Cerberus’s advisory role was first reported by the Wall Street Journal. The US activist has made a series of investments in the German banking sector in recent years. It bought its stake of about 3 per cent in Deutsche in November, after taking a 5 per cent stake in Commerzbank, G ermany’s second-largest listed lender, in July last year. Earlier this year, the buyout group teamed up with a consortium of investors including JC Flowers to acquire German lender HSH Nordbank. Discussions between Cerberus and Deutsche about a potential consulting commission

started when John Cryan was still chief executive. The formal decision was taken a few weeks ago by the management board. The lender’s supervisory board was not involved in the matter, according to a person familiar with the internal proceedings. The contract was approved by the lender’s internal legal and compliance department. The Cerberus team that is advising Deutsche will be headed by former JPMorgan banker Matt Zames, who was named president of Cerberus in April and, according to a statement by the investment group then, “will lead a number of strategic investing and operating initiatives, including overseeing all investments in the financial services industry”. Jorg Eigendorf, Deutsche’s head of communications, wrote on Twitter that “by definition, Cerberus hasn’t been activist with us. And for the time being they cannot be — even if they wanted to.”

PMorgan Chase’s chief executive has added to the pressure on UK prime minister Theresa May by warning that Brexit could be “tough for the British people”. Jamie Dimon said the UK economy could suffer such a significant downturn after it leaves the EU that it “will have an impact on global growth, and so Brexit could hurt everybody a bit”. Coming a day after two senior cabinet ministers resigned in protest at Mrs May’s Brexit negotiating plan, Mr Dimon’s comments underline how business leaders are losing patience with the lack of progress in deciding the terms of the UK’s exit from the EU. “We still do not fully understand what Brexit is, its economic effects and how its effects will play out: these are huge question marks that will stay for a long time,” Mr Dimon told the Italian newspaper Il Sole 24 Ore. “I do think that, because of Brexit, some businesses across the financial and manufacturing sectors will be relocating from the UK to other parts of Europe, including Italy,” he said. JPMorgan last week became the latest big bank to begin moving staff out of London ahead of Brexit, telling its UK employees that “several dozen” of them had been “asked to consider relocation from the UK” around the end of this year. Mr Dimon had a message for the new populist Italian government, warning of the dire consequences of attempting to withdraw the country from the eurozone. “Because of the way it has been designed, the European Monetary Union would be hard to reverse without causing catastrophic events,” he said. “This does not mean that Europe should not fix itself. There are many regulatory issues that remain to be solved, and the fact that Brexit happened should make the dialogue between European countries easier.” The JPMorgan boss also had stern words about the potential “bad outcome” of US president Donald Trump’s threats to impose tariffs on imports. “President Trump has been warned about this by the business community in the US,” he said. “The impact of tariffs on trade can offset the benefits that US growth is having from tax reform, but we do not yet know to what extent.” Mr Dimon has previously warned that JPMorgan’s 16,000-strong UK workforce could be reduced by 4,000 after the UK quits the EU. JPMorgan had banking licences in Frankfurt, Dublin and Luxembourg and was adding staff in other locations including Paris, Madrid and Milan, it said in a memo to UK staff last week.

Wednesday 11 July 2018

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Stocks to watch: Ocado, TP ICAP, Softcat, Equiniti, FCA, PepsiCo HSBC tips Ted Baker to come back into fashion BRYCE ELDER

cado reversed an opening drop to lead the FTSE 100 gainers after management hinted at a wider rollout of its delivery technology. The optimism countered weaker than expected half-year results from Ocado due to higher costs — largely tied to investment in its technology licensing business, but also on staff bonuses linked to the share price, which has nearly trebled in a year. Tim Steiner, Ocado’s co-founder and chief executive, said on the post-results conference call that the group was exploring opportunities to address the global market as well as working on a number of applications outside of retail. “The market opportunity in grocery and beyond is huge, as is our ambition,” he said. TP ICAP led the FTSE 250 fallers on a profit warning, which it blamed on Brexit and regulation costs, and a reset of synergy targets from its 2016 purchase of ICAP’s voice-broker business. The interdealer broker also announced the departure of chief executive John Phizackerley with immediate effect. The net effect of the headwinds was to reduce forecasts for TP ICAP’s 2019 adjusted earnings by about a third. Sky was in demand after the FT reported that 21st Century Fox was preparing to make another bid for the broadcaster soon as this week. Softcat climbed after the IT infrastructure specialist said its operating profit for the fiscal full year ending July would be “materially” ahead of expectations. Management had already said in May that third-quarter performance had been strong, so the update suggested a further acceleration in recent months. Credit Suisse upgraded Softcat to “outperform” in response, saying: “Importantly, the growth is broad based and is primarily driven by rising gross profit per customer. We see this as payback on the investments into sales and broadening the group’s capabilities, giving the group greater scope to capture increased wallet share with customers. While there will always be questions around the sustainability of such strong

momentum, the broad-based nature of the growth suggests that current momentum will continue for the foreseeable future.” In the US, PepsiCo was in demand after posting a secondquarter earnings per share of $1.61, beating the consensus forecast by 9 cents, and reiterating full-year guidance. Lower central costs helped support margins while organic sales growth was stronger than hoped at Frito-Lay North America, Pepsi’s snacks business, and its Europe and SubSaharan Africa division Sellside Stories Barclays downgraded both Temenos and Computacenter to “underweight” as part of a European IT services sector review. Outperformance over the second quarter “has left us struggling to justify the valuations attached to some of the higher-quality names, while value tech is looking increasingly tempting”, Barclays said. Temenos, the banking software maker, has reached an “unjustifiably high” valuation of 40 times 2019 earnings without the prospect of further upgrades, and increasingly tough year-onyear comparisons and slower than anticipated progress in the US skewing risk to the downside, said Barclays. On Computacenter, the broker argued that outperformance over the past two years had been driven largely by a re-rating rather than earnings upgrades. “We are concerned that, with this earnings performance having been driven by supply chain as opposed to recurring services, Computacenter could be at peak valuation with increasingly tough comparisons.” Barclays upgraded Atos to “overweight” as part of the same research. An excellent performance for Worldline, the ecommerce payments business majority owned by Atos, left the group’s IT services division valued at just nine times net operating profit after tax, it said. “We do share long-term concerns around its US infrastructure exposure, but the second quarter should be the low for the US and overall the business should be stable versus the first quarter. We therefore see the deep discount valuation as a buying opportunity.”

Wall Street adds to July rally as earnings season kicks off PAN KWAN YUK

S stocks opened higher on Tuesday as the start of earnings season provided traders with a welcome distraction from the ongoing concerns over a global trade war. The S&P 500 climbed 0.3 per cent to briefly hit a near-four month high of 2,791.70 — led by gains in the energy and telecoms sector. The Dow Jones Industrial Average, which notched its best day in a month on Monday, tacked on 0.4 per cent to 24,862. The Nasdaq Composite advanced 0.2 per cent to 7,768.91. Should the gains hold, the moves would mark the fifth consecutive day of gains for the three benchmark gauges. While the markets continue to

monitor developments on the trade front between the US and other major economies, the focus this week is likely to move to earnings. PepsiCo kicked off the second quarter reporting season with better than expected sales and adjusted profits, sending its shares 4.2 per cent higher in early trading. Analysts are forecasting another bumper quarter of earnings for corporate America. Credit Suisse is penning in second-quarter earnings per share growth of 23.4 per cent, with the energy sector, slightly weaker dollar and tax gains expected to provide the tailwinds. The dollar — as measured by the DXY index — was up 0.3 per cent at 94.30. Treasuries were largely unchanged, with the yield on the 10year note at 2.8637 per cent.

Eurozone house prices rise at fastest pace since financial crisis Region’s banks act to squeeze supply of credit to would-be mortgage holders CLAIRE JONES

ouse prices across the eurozone are rising at their fastest since before the global financial crisis, forcing the region’s banks to squeeze the supply of credit to would-be mortgage holders. Eurostat reported on Tuesday that house prices in the 19-member currency area rose 4.5 per cent in the year to the first quarter of 2018 — a level last seen in early 2007. Five countries — Latvia, Slovenia, Ireland, Portugal and Slovakia — saw double-digit price rises. With the European Central Bank almost certain to keep its benchmark interest rate at a record low of zero for at least another year, authorities across the region have had to introduce other measures to tighten control on bank lending. In Ireland, where prices have risen 12.3 per cent over the past year, the central bank at the begin-

ning of 2018 imposed a stricter cap on the size of loans banks can make based on borrowers’ incomes. In Portugal, where prices are up 12.2 per cent, the central bank will from July introduce a series of caps based on people’s incomes and the value of a property in proportion to the borrower’s deposit. In Latvia, Slovenia and Slovakia — which have seen house prices rise 13.7 per cent, 13.4 per cent and 11.7 per cent respectively — the authorities have already introduced constraints based on the value of the property. The ECB has said it intends to keep interest rates at their current record lows “at least through the summer of 2019”. The central bank for the eurozone has repeatedly denied that the boom in real estate prices presents a threat to financial stability of the entire region and believes the risks can be contained in certain areas within

the currency area. Mario Draghi, the president of the ECB, told lawmakers in Brussels on Monday: “National authorities continue to be very active as regards residential real estate; a large majority of member states have at least one measure in place to target vulnerabilities in this sector.” In some member states, however, authorities have struggled to impose measures to limit mortgage lending due to a public backlash. The Dutch central bank wants to tighten the loan-to-value ratio further, requiring borrowers to put up higher deposits, but has encountered some political opposition. In the Netherlands, where prices have risen 9.3 per cent over the past year, the central bank is concerned about the financial stability risk associated with a wave of interest-only mortgages taken out over the past decade.

Pound recovers poise after weak data and political drama Wall Street stocks tick higher as investors look towards earnings season MICHAEL HUNTER AND HUDSON LOCKETT

n terms of the detail, the market is no nearer to being able to consider the implications of Brexit on the UK economy and, of equal concern, companies are reining back investment until those ramifications can be understood” — Richard Hunter, head of markets at Interactive Investor. “Unstable domestic politics doesn’t help. To lose one senior cabinet minister may be regarded as a misfortune, but to lose two looks like carelessness.” Hot topic The pound is back above the flatline, moving up from intraday losses that followed weak economic data, as investors bet that the cabinet accord on Brexit will survive two senior ministerial departures. Sterling is up 0.1 per cent overall at $1.3256 having been as low as $1.3222, after the weaker-thanexpected data serving as a reminder of the complex economic fundamentals faced by UK assets The currency lost as much as 0.7

per cent to $1.3188 during the previous session after Boris Johnson’s resignation as foreign secretary, which followed the departure of David Davis as Brexit secretary. Both ministers voiced disappointment with the cabinet’s agreement on proposals for the terms of the UK’s departure from the EU, reached on Friday, and seen as opening the way for a soft Brexit. “The question for markets to try to gauge now is the likelihood that Brussels will accept the prime minister’s proposals. “Mrs May is rid of two hardcore Brexiters. In the long term, this points towards a softer Brexit, which will calm market nerves.” Derek Halpenny, European Head of Global Markets Research at MUFG The FTSE 100 is flat as the pound turns round, with London stocks underperforming a trend for stronger European bourses. The yield on 10-year UK government debt is up 3.4 basis points at 1.292 per cent, with that on two-year gilts up 3.3bp at 0.749 per cent. Equities

Wall Street stocks are higher for the third consecutive session amid hope that upcoming corporate earnings will be upbeat enough to keep attention away from the international trade dispute. Higher crude prices are helping energy stocks make the biggest overall contribution to Europe’s rally. The Stoxx index tracking oil and gas producers is up 1.4 per cent. Frankfurt’s Xetra Dax 30 is up 0.5 per cent, with the Europe-wide Stoxx 600 up 0.4 per cent. Tokyo’s Topix gained 0.3 per cent, while in Hong Kong the Hang Seng ended the day flat. Sydney’s S&P/ASX 200 finished down 0.4 per cent after briefly rising to its highest point in 10½ years. Forex and fixed income The dollar index is up 0.2 per cent to 94.285 moving off month-lows hit during the previous session when its wider rally looked tired. It is up 2.4 per cent over the year to date. The euro is down 0.3 per cent at $1.1708. Japan’s yen is 0.2 per cent weaker at ¥111.08 per dollar.

PRIVATEEQUITY & FUNDRAISING People & Perspectives Page A7

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Six-way race opens up in bid for Abraaj’s $1bn healthcare fund LOLADE AKINMURELE

eloitte, the provisional liquidators of scandal-tainted Abraaj Holdings and investors in its healthcare funds, are reportedly weighing bids from six companies to snap up the $1bn healthcare fund. Colony, TPG and Cerberus Capital are frontrunners in the race to manage the $1 billion fund, according to a Reuters report, ahead of today’s (July

11) key court decision whether to approve Colony Capital’s deal to take control of four funds belonging to the Dubia-based private equity firm. The other three vying to run the healthcare fund, could not be immediately identified. Colony, TPG and Cerberus were also not immediately available to respond to emails seeking comment. Abraaj had used 44 per cent of its capital for investments

with a focus on developing healthcare systems across Africa and South Asia. It had made a total of nine investments that included 25 operating hospitals, 17 clinics and 32 diagnostic centres covering 1.9 million patients, according to its website. Over the years, Abraaj has backed leading chain of diagnostic labs in Egypt; and Acibadem, a leading hospital operator in Turkey. Th e World Ba nk

is one of several institutional investors that have their cash stashed in the $1 billion Abraaj healthcare fund. Abraaj Holdings, once one of the developing world’s most influential investors which holds investments worth over $2bn in sub-Saharan Africa alone, successfully filed for provisional l i q u i d at i o n i n t h e Cayman Islands last month after battling allegations of misused funds.

Abraaj, which once managed nearly $14 billion, started to come under closer investor scrutiny when it was accused earlier this year by institutional investors including the Bill & Melinda Gates Foundation of mismanaging the healthcare fund aimed at investing in hospitals and clinics in parts of Asia and Africa. The buyout firm’s woes aggravated when a pension fund based in Kuwait said in a legal filing that Abraaj

was unable to repay a $100 million loan and asked that the firm be liquidated. Auctus, another creditor, said the firm owes it around $300 million. Following these developments, Abraaj filed for provisional liquidation to get time for debt restructuring. Abraaj is reported to have received a $125 million offer from Cerberus to buy its private equity business after Colony NorthStar dropped out of discussions.

Health, consumer goods lead way of attractive sectors for PE ENDURANCE OKAFOR

takeholders and experts in the Nigeria private equity industry cited the Health, and Consumer Goods sectors as some of the most viable areas of the Nigerian economy that private equity investors should look into for future investment, as it will make quick return and growth, considering they are also some of the most challenged sectors. This was disclosed at the Ernst & Young (EY) Private Equity Breakfast Session with the theme: Value creation in an uncertain economy. On the aim of the meeting, Mustapha Kelani, Senior Manager, Transaction Advisory Services at EY said it was organised in order to bring together private equity investors and company owners who would like to get investment from private equity investors. “We have seen that a lot of private equity clients of ours are looking for attractive businesses to invest in and also to know these businesses where they can invest. So this forum will enable both the private equity investors and the companies seeking capital to know what they are looking for, so that gap can

be bridged,” Kelani said. Speaking on the opportunities in the health sector Ayo Shonibare, Consultant Urologist and Transplant Surgeon at Vantage Medical Centre said there is systematic lapse and several gaps, which ranges from provision to quality. “So really to anyone looking for growth and quick return on investment, the health care sector is the place to look at,” Shonibare explained on a panel session. On the statistics that formed the basis for encouraging investors to tap into the health sector, the doctor explained that Nigeria is 187 out of 190 in terms of healthcare indices as reported by WHO and so it means Nigeria is only better than 3 countries with good health care system. He also cited the life expectancy ratio in the country which is at 52 and 53 for both female and male respectively. “For the doctors in the country there have being massive brain drain, about 87,000 doctors were registered by the Nigeria medical council and only 35, 000 practises in the country. This year alone 1500 doctors applied for exams to move to England and 1000 of them have passed and so they are

going. In terms of health insurance, less than 5 percent of the total population of Nigeria have health insurance while for the largest HMO in the country, they have only got about 300,000 subscribers, and per each Nigeria, only 5 dollar is made available for health care spending as compared to South Africa’s $250, Shonibare concluded. Meanwhile, few months ago, HealthPlus, Nigeria’s leading retail pharmacy chain got investment from Alta Semper Capital LLP, a private equity manager based in London. The investment was about $18 million. The investment as gathered from a source will enable the company to expand its retail footprint and enhance its competitive position. Speaking on the second viable sector ripe for private equity investors to tap from, Bimbo Ogundare, Senior Manager, Transaction Advisory Services at EY said there are huge opportunities for the consumer goods sector and most particularly the food and beverage space, as the Fast Moving Consumer Goods (FMCG) have the challenge of expanding their capital, supply chain, and pricing. Continues on page A7

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 11 July 2018

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People & Perspectives OPIC launches $1bn fund for Africa infrastructure investment Connecting regulatory dots in Nigeria’s Private equity industry T

PRIVATEEQUITY & FUNDRAISING

COMPANIES & MARKETS

LOLADE AKINMURELE

As far as legal and regulatory developments in Nigeria’s private equity industry go, it appears that the dots are finally beginning to connect and a number of regulatory reforms point to this reality, says Olubunmi Abayomi- Olukunle, Lead Transaction Counsel Private Funds, Finance and Investments at Legal firm, Balogun Harold. Abayomi-Olukunle however carefully notes that the state of securities law locally does not yet encourage capital formation/accretion, “at least not to a significant degree as to encourage a momentous increase in the number of locally-domiciled funds or to give comfort to global LPs who would have otherwise been comfortable with investing in funds domiciled locally.” That means the impact of these regulatory developments may only be a little more than marginal, at least for the more established funds. “However, in terms private equity deal structuring & M&A, the amendments are very significant,” he tells BusinessDay’s Lolade Akinmurele.

he issues around putting in place an enabling framework for capital formation, will perhaps not go away anytime soon, he admits, unless industry organisations, strategically engage the securities regulators on this point. In this piece, he highlights some of the regulatory developments that will have an impact on the deal making and fund structuring landscape in Nigeria. 1. Limited Partnerships Private equity deal and fund structures sit at the very core of the risk and return dynamics of private equity investments. Nigeria’s Senate recently approved certain amendments to Nigeria’s company law which should have a far-reaching effect on fund and deal structures available locally. The amendments are significant for private equity firms, looking to do deals in Nigeria, in two key areas. The first is with regards to fund formation and fund raising. When the bill becomes law. Nigerian fund managers will be able to set up private equity or venture capital funds using limited partnership structures at the federal level and with legal effect throughout Nigeria. Before now, it was not possible to set up a private equity fund using a limited partnership structure at the Corporate Affairs Commission in Nigeria. Although, Lagos State had passed a limited partnership law (‘Lagos LP Law’) allowing businesses to set up limited partnership structures within Lagos State, the Lagos LP law, has a number of challenges, the least of which is the fact the Lagos LP law is of limited application, having only been passed by the legislature in Lagos State. As a practical matter, the implication of the limited application of the Lagos LP Law is that the protections which Lagos LP Law affords limited partners and general partners may not avail them, where a legal action is filed against a Lagos domiciled LP structured fund, outside of Lagos State or in a Federal Court. Perhaps, the greater concern with the Lagos State LP Law is that the

constitutional right of Lagos State to enact the Lagos LP Law is now the subject of litigation at the Federal High Court, (‘Court’) in the case of Babalola vs. AG Lagos. Although the Court is yet to reach a final decision on this issue, we find upon a review of the court documents, that there may be some merit in the action filed by the plaintiff in this matter, although we hope that the Court will find otherwise. The implication of a decision of the Court in favour of the Plaintiff in this case may have severe consequences for fund managers who have already set up private equity funds using the Lagos LP structure and have not put in place contractual mechanisms for mitigating risks of this nature. For one, such a decision may mean that limited partners can be jointly and severally liable for the liabilities of the relevant fund, much like a general partnership. This eventuality will go against the grain and essence of private equity fund formation using a limited partnership structure and may expose GPs to litigation, in the absence of contractual mechanisms for allocating risks of this nature in the constitutional documents. It may be prudent for affected GPs to commission a legal opinion on the prospects of this court action and to determine the legal structures available to mitigate the effect of a possible decision by the court in favour of the Plaintiff. It may also be prudent for concerned GPs to join this action with a view to filing pertinent briefs, as this will provide them the opportunity of being heard by the Court. It is in the light of these developments that the recent move by the senate approving the registration of limited partnerships at the federal level and as a federal matter, is very significant for Nigeria’s private equity dealmakers. 2. Financial Assistance The second reason why the amendments to Nigeria’s company law is relevant for Nigeria’s private equity industry relates to deal structuring. Before now, target companies were prohibited from providing financial assistance to prospective

investors, including private equity investors. In a practical sense, this means that a target portfolio company could not directly or indirectly, provide a guarantee, security, indemnity, loan or any form of credit or even gift, to a private equity or strategic investor, to facilitate the acquisition of its shares. With the proposed amendment, target companies will now be able to provide financial assistance to investors with the approval of its shareholders. This is important for the local industry because private equity dealmakers should now be able to use leverage more creatively as a deal structuring tool. To the extent that it will now be possible to deploy the assets and cash flows of a target as security for debt/ financing, we expect that fund managers will be more comfortable to consider implementing more leverage or LBO-type investment and exit structures, assuming a favourable interest rates environment. 3. Multi-Fund Pension Structure Nigeria’s pension regulator commenced the implementation of the multi-fund pension funds management structure in Nigeria on July 2, 2018. In practical terms, the new structure mandates Pension Fund Administrators (PFAs) to implement a multi-fund structure that splits the erstwhile RSA Active fund into three different funds, alongside a fund IV (Retiree Fund). (Collectively, the Funds). The new structure is a significant departure from the current approach which classifies all active contributors into a Retirement Savings Fund. This is significant for private equity fundraising in Nigeria because one of the key objectives of the new amendments is to encourage PFAs to invest in Variable Income Instruments (VIIs). Nigeria’s PFAs have historically been conservative about VIIs in favour of federal government securities. As of March 2018, pension fund allocated 69.5% of a total pension funds to Federal Government securities, specifically FGN Bonds and treasury bills. The approach

of regulators to encouraging pension investments in VIIs is to stipulate that the difference between Fund 1 to Fund IV, will be the fund’s overall exposure to VIIs. The exposure to VIIs is defined to mean the sum of a PFA’s investments in “Ordinary Shares and participation units of Open Close-ended and Hybrid Funds; Real Estate Investment Trust; Infrastructure Funds ; and Private Equity Funds comprising its current holdings and any future financial commitments to the acquisition of participation units in these Funds”. Other things being equal, we expect that the implementation of the multi-fund structure should drive pension fund allocation to local private equity funds, as a subset of VIIs. At the very minimum, we expect that, as a result of the amendments, PFAs will be more inclined follow the asset class and its varied structures, more closely and to establish/update internal private equity programs that will underpin own private equity strategies. However, we don’t expect that from a fundraising perspective, the gains will be immediate, as there are still other issues with PFA investment in private equity. Central to these issues, is the underlying concern as to whether pension investments in private equity in Nigeria will be able to deliver a premium over listed equities or FGN securities, in a consistent manner. In our view, unlocking pension funds for private equity in Nigeria may well depend on a fund manager’s fund structure. We think that private equity funds that are keen on local pension funds, may well consider alternative private equity strategies, like private debt funds, fund of fund structures and secondaries, because of the prospect that these private equity strategies, by their nature, are in relative sense, ‘de-risked’. Overall, it will be important for private equity funds looking to access local pension funds to structure their funds and fund terms to accommodate some of the more realistic concerns of PFAs.

he Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, today launched its Connect Africa initiative which will invest more than $1 billion in projects that support transportation, communications, and value chains in Africa over the next three years, the company said in a statement July 3. The announcement comes as OPIC’s President and Chief Executive Officer Ray Washburne embarks on his first official travel to the continent. Washburne will visit Zambia, Rwanda, South Africa, Uganda, and Kenya where he will meet with Heads of State and visit several OPIC projects supporting economic development in Africa. “Africa is home to many of the world’s fastest-growing economies and presents both a great need for investment and a great opportunity for American businesses,” Washburne said. “But, too many barriers remain to the flow of goods and services. By focusing on connectivity, we’re not only helping build means for economic development, but also laying the foundation for future trade partners.” Connect Africa will focus on three areas in order to further integrate Africa into the global market: Transportation and Logistics • Infrastructure development

supports commerce by making it easier and more efficient to move goods within countries and across borders. Connect Africa will focus on facilitating investments in roads, railways, ports and airports, as well as logistics, including elements such as vehicles, warehouses, and cold storage units. Information and Communications Technology • Technology is transforming the way people work, communicate, access information, and educate their children. The initiative will focus on technologies that provide access to information through telecommunications, including internet, wireless networks and mobile phones. Value Chains • Africa requires greater investment in order to better take advantage of global and regional value chains. The initiative will focus on facilitating investments supporting processing raw materials and helping products reach consumers. Sub-Saharan Africa is a region of focus for OPIC, comprising more than one-quarter of the Agency’s $23 billion active portfolio. As part of its Fiscal Year 2019 budget proposal, the Trump Administration highlighted the need for the United States Government to modernize its approach to development finance to help grow aspiring partners, promote economic relationships, and increase investment in regions important to American interests.

Health, consumer goods lead... Continued from page A6

The sector is said to be viable owing to the large, young and ever growing population of Africa’s largest economy. Meanwhile, with about 200 million population, Nigeria is said to be the most populated nation in the Africa continent and is projected by the United Nation to have the potential of becoming the world third most populated country by the years 2050 While on the sectors of the Nigeria economy where the advisory arm of Ernst &Young see investors tapping any time soon, Ogundare said the most talked about sector by PE investors for investment is the consumer market, as well as the financial services; insurance companies, pension companies. “There is also a lot of interest in Fintech because we are going more digital, as there now a lot of people with smart p h o n e s a n d t h e y a re smartly connected and anything that leverages that as a platform is set to go,” Ogundare told BusinessDay in a chat.

Meanwhile, there has already been an investment in the sector mentioned by the senior manager this year. ARM Pension Managers (PFA) Limited, the second largest pension fund administrator by assets under management in Nigeria got investment from LeapFrog Investments, a private-equity investor, as compiled from the company’s statement on Friday, 15 June 2018. Although, the worth and terms of the investment by the private-equity firm in ARM Pensions was not made know to the general public. Stakeholders at the private equity session put together by EY said due to the forthcoming election next year, a lot of private equity investors are looking at closing their deals this year, as such there is likely to be a lot of deal transacted this year due to political uncertainties surrounding the 2019 elections. Meanwhile, a survey track by BusinessDay revealed that about N232 billion worth of private equity deals have already been transacted this year.

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CityFile

Lack of parental guidance promoting drug abuse among youths- NDLEA YOMI AYELESO, Akure

ommander of the National Law Enforcement Agency (NDLEA), Ondo State command, Haruna Gagara has attributed emotional and psychological stress, lack of parental guidance, and ignorance as some of the factors contributing to the increasing rate of drug abuse in the society. Speaking on the topic ‘combating drug relatedissues’ on Round Table programme on Orange FM in Akure, which was monitored by our reporter , the NDLEA boss noted that the desire of teenagers to be accepted by friends and parental neglect of their responsibilities are predisposing factors promoting drug abuse among the younger generation. Highlighting some of the achievements recorded by the agency since his assumption of office early this year, Gagara said over 120 suspects had been arrested with 13 convictions. According to him, over 14,000kilograms of various hard drugs like Cannabis, Cocaine among others have been seized,

and over 300 Skuchis which is a mixture of dangerous substance have also been seized. He added that the two major dealers of drug in Akure have been arrested, noting that over 120 hectares of Cannabis farm have been destroyed and assured that effort is ongoing to further destroy more farm that has been discovered. The NDLEA boss while reacting on codeine syrup usage commended the effort of the state government for setting up a task force committee on drugs with the inclusion of Pharmaceutical Society of Nigeria, and NDLEA. He therefore charged parents to create time for their children by carrying out surprised routine search of their rooms so as to know if they are into drugs usage. He further enjoined parents to provide for the needs of their children but not to the extent of pampering them. To the youths, Gagara charged them to use their time positively, to stay away from drugs and equip themselves with drug education, and report those into drugs to NDLEA.

Flood: Bello seeks FG’s help to check gully erosion

overnor Abubakar Bello of Niger has called on the Federal Government to assist in tackling gully erosion confronting the state. The governor made the call when he visited RafinGora village, to condole with the people over the recent floods that claimed the lives of eight persons in two villages and rendered many homeless. Eight persons, mostly children, died following a downpour on July 3 in Rafin-Gora and Gangare Saji communities in Kontagora Local Government area of the state. Bello also appealed to the Federal Government to intervene on the state ecological situation, adding that the situation was beyond the financial capability of the state. “The recent flood was devastating because it claimed the lives of innocent people as there was no proper concrete drainage in the area. We need Federal government assistance, especially in

communities experiencing gully erosion. “I am made to understand that, officials from National Emergency Management Agency (NEMA) have visited the area to assess the damage done, probably to see the assistance they could offer,” he said. The governor said that residents of the affected areas would be resettled temporar ily, pending when intervention from the Federal Government would come. Bello urged other communities experiencing gully erosion to relocate whenever the threat of flood was high. “My major fear is that, most rains are usually at night when the people are sleeping, this can be difficult to control. “My advice to communities with threat of flood is to vacate the area temporarily to avoid further disaster. He said the affected residents would be relocated before finding a lasting situation to the problem. NAN

Members of the National Board of Trustees for Christian Mission for the deaf, Ibadan, during a protest at the Governor’s office over alleged illegal acquisition of the land earmarked for their proposed University along Lagos-Ibadan Expressway in Ibadan on Monday. NAN

Police begin profiling of suspected cult members in Lagos JOSHUA BASSEY

…says parents to be invited for interrogation

he police in Lagos are commenced the profiling of the 137 suspected members of cult groups arrested in some parts of efforts to check the illegal activities of cultists in the state. The 137 suspects, according to the police, were arrested during initiation and marking of their annual ritual day (on July 7) under the guise of having a birthday party, at different locations in Ikorodu and Ogombo areas, suburbs of Lagos. Imohimi Edgal, the Commissioner of Police (CP) in Lagos, said the suspects ignored the earlier warning by the police not to converge in any part of the state to mark

their 7/7 date. “This command had on July 5, 2018 warned cultists preparing to observe their sacred day called the “7th day of the 7 month”, not to converge on any part of the state. We also encouraged good Nigerians to give information about this group of persons anywhere they are seen. “Based on credible intelligence available to the command and which was communicated to the Officer In-Charge, Anti Cultism, 120 suspects were arrested at Ikorodu where they were observing 7/7,’’ Edgal said. He explained that the suspects were undergoing initiation rites preparatory to unleashing

mayhem on the larger society. According to him, 17 suspected cult members were also ar rested at Ogombo, Aja area of the state during initiation rites and celebration of the 7/7 date. “I have ordered that they should be profiled, after which their parents and guardians will be invited for questioning. “We are also using this opportunity to warn parents, guardians and those that have some form of mentorship to dissuade these youths from cultism. “We want to put them on notice that it is their responsibility to know who their children associate with and that this

particular police administration will not tolerate any form of cultism,” he said. The police boss said that one big banner with 07 and black axe logo, a yellow keg containing three litres of liquid substance and six other small kegs with similar contents suspected to be mixture of different dangerous drugs were recovered from them. “Other exhibits are one big clay pot, one small calabash and one locallymade cut to size pistol. “ They are going to be divided into smaller groups where files will be opened for them and they will be charged to court after profiling,” he said.

PLSG creates makeshift clinics for IDPs

lateau State government has created makeshift clinics in camps where Internally Displaced Persons (IDPs) who escaped the recent attack by suspected herdsmen in three local government areas of the state are taking refuge. Kunden D e yin, the commissioner for health said in Jos, Monday that t h e ma ke s h i f t cl i n i c s were created to cater for the health needs of the IDPs.

According to Deyin, cases that cannot be handled in the clinics are being referred to the state’s Specialist Hospital for further evaluation. He explained that the government has also begun a need assessment of those on routine drugs, especially the elderly persons in the camps w h o w e re o n c e r t a i n types of drugs such as diabetes and hypertensive drugs. The assessment, he noted, would enable

the state government to known the number of persons on the various drugs, so that such drugs could be provided and dispensed to such persons in the various camps. He added that his ministr y was working with the ministry of water resources to ensure the provision of potable water in the camps in order to forestall an outbreak of water borne and gastrointestinal diseases such as cholera and di-

aorrhea. According to him, the ministr y is also working with the ministry of environment to ensure proper sanitation in the camps. Gunmen on June 24 attacked Barkin-Ladi, Riyom and Jos South local government areas of Plateau, killed over 100 people, destroyed properties and displaced others, forcing the displaced to take refuge in camps created by the state government.

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NEWS YOU CAN TRUST I WEDNESDAY 11 JULY 2018

Opinion Nigeria’s growing poverty and the decimation of the middle class

CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

key “trust-building mandate” for the government as articulated by Nigerians is to “drive economic prosperity, investigate corruption and support the poor”.The Edelman Trust Barometer 2018 that included Nigeria for the first time captured this in a survey in 2017. As we shared last week, trust is at the heart of the disconnect or connection between government and citizens. Unfortunately,

trust for the government keeps eroding based on actions and inactions with harmful consequences on citizens. Most Nigerians agree that one area in which the government of President Muhammadu Buhari has failed them the most is in the economic arena. Validation of this viewpoint emerges every day. Reports and economic statistics point to an increasingly desperate economic scorecard. The World Poverty Clock reports that Nigeria overtook India in February 2018 as the country with the largest number of poor people. The stat is that 82 million Nigerians or 42.4 percent of Nigeria’s population live in extreme poverty. World Data Lab is the originator of the World Poverty Clock. The Clock tracks poverty estimates in about 99.7 percent of the countries of the world. It uses data from the International Monetary Fund (IMF), World Bank, United Nations and the gov-

ernments of the countries of the world. Using the composite data, it estimates the rate at which poverty reduction is happening globally and also how many more people are becoming extremely poor. The World Bank in turn defines living in extreme poverty as living under $1.90 (N684) per day. It notes naturally that “people living in extreme poverty are unable to meet their minimal needs for survival”. Tackling poverty is the first item in the Sustainable Development Goals the United Nations outlined in 2015. It states that goal as to “eradicate extreme poverty for all people everywhere by 2030”. Poverty eradication was among the myriad of promises the ruling party outlined in its manifesto in 2014 going into the 2015 elections. It promised to create jobs. It promised to tackle the fundamental economic rates of inflation, exchange and interest. It has failed woefully on all counts.

Factor ies are closing down. Manufacturers Association of Nigeria reports decreasing capacity utilisation, growing inventory and reduced profitability of manufacturers. Global FMCG leader Procter and Gamble closed a factory representing significant investment in the economy only recently. Nigeria increasingly faces a Malthusian challenge. Our population is growing faster than our current levels of productivity. To change the narrative and the statistics, we need visionary governments at all levels that would focus on unlocking the potentials inherent and lying fallow in our country. We have the resources in materials and men to change our story. What we lack are project drivers with vision, capacity and the trust of the people to drive the process. Thomas Malthus screamed at the challenge of growing population at a time in the economic history of the West.

A more insidious dimension to the growing poverty and a concomitant is the increasing decimation of the middle class. As job losses mount, many are crossing the thin line between the classes and going one or two steps backwards. It is significant for several reasons. The middle class are the drivers of economic and social development in most economies. Across the world, governments work to ensure that they have a sizeable and growing middle class. The middle class stand in the median between the wealthy and the poor. They represent often the most educated, most mobile and the most involved segments of society. As the ones in the middle, they have a strong interest in ensuring that governments pursue foresighted economic policies, They strive to make government work well because the quality of government directly affects their economic fate than that of

the poor. The Middle Class is central to both economic development and the health of democracy. A strong middle class promotes and encourages the development of human capital, demanding and having ever better schools and producing an educated work force. A strong middle class creates a stable source for demand for goods and services. It also fosters the growth of entrepreneurship. The bulk of entrepreneurs come from the middle classes. It is in the area of their contribution to political development that we must decry the continued decimation of the middle class. Nigeria needs an active and growing middle class to support the growth and sustenance of our democracy. They are the ones who would vote out of conviction and not because of Naira stuffed in some loaves of bread. We must work to ensure a reversal of this descent into poverty.

Capital market growth: Any role for the CBN?

UCHE UWALEKE Uche Uwaleke is a Professor of Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

ith the primary mandate of maintaining monetar y and price stability, does the Central Bank of Nigeria have any role to play in fostering the growth of the Nigerian capital market? This burning question hardly occupies centre stage in any discourse on the growth levers of the capital market. At best, it is the government that is often taken to task in the provision of enabling economic environment through appropriate fiscal policies for the capital market to thrive. The popular notion among capital market players is that the current monetary policy tightening stance of the CBN is hurting the stock market. Indeed, monetary policy easing, in the opinion of many, would improve credit delivery to the real sector, reduce cost of capital for firms leading to more job opportunities and spur the stock market. Quite frankly, not a few Nigerians expect that the positive develop-

ments in the economy in recent times (including retreating inflation) powered by a rebound in crude oil price and output ought to have provided some scope for monetary policy easing. The CBN however takes a different view. At the maiden Professor Uche Uwaleke colloquium that examined the role of the CBN in deepening the capital market in Nigeria held recently in Abuja, the CBN Director in charge of Monetary Policy, Moses Tule had opined that monetary policy easing at this time would throw up fiscal challenges in the economy and create more inflationary pressure. For instance, reducing the Monetary Policy Rate, which has remained at 14 per cent since July 2016, would trigger adverse consequences including the demand for increased wages. According to Tule, “when you reduce MPR, of course, the way the fundamentals are today, you are going to have the impact of that in other ways; which means the demand is going to be higher on the government to increase wages because inflation will erode the living wage. There will be demand on the government, and every other person in the private sector will demand for wage increase. We have to choose between having to improve infrastructure and interest rate will come down overtime and the whole economy will benefit or reduce interest rate now and then worsen inflation,” Tule had said. His arguments appear compelling especially against

the backdrop of the fact that the CBN, like its counterparts all over the world, faces what is known as the ‘policy trilemma’ or ‘impossible trinity’ which expresses the limited options available to Central Banks in setting monetary policy. In view of the primary mandate of the CBN, it will be near impossible for the apex bank to pursue lower inflation and interest rates, maintain exchange rate stability and shore up foreign exchange reserves all at the same time. Therefore, an accommodative monetary policy at this time can only be at the expense of the progress already made in the area of exchange rate stability— which is itself a prerequisite for achieving lower inflation rate and capital market growth. A lower MPR for instance is capable of putting pressure on the exchange rate and worsening inflationary pressures. Headline inflation may be receding but the current level (at 11.6 per cent in May 2018) is still in breach of the CBN’s upper reference band of 9 per cent. Besides, in view of rising interest rates in the US in particular and the lingering US-China trade tensions, a lower MPR could instigate capital flows out of the country. The latest Nigerian Stock Exchange report on domestic and foreign portfolio participation in equity trading clearly indicates that for the month of May 2018, foreign portfolio outflows increased by over a hundred per cent while portfolio inflows declined. According to the report, ‘’there was a 3.45% de-

crease in foreign inflows from N64.28 billion in April 2018 to N62.06 billion in May 2018. However, foreign outflows increased by 124.70% from N58.25 billion to N130.89 billion within the same period’’. This development is not unconnected with the normalization of monetary policy by the United States’ Federal Reserve. That said, beyond helping to stabilize the macroeconomic environment through policies that engender stable exchange rate which is desirable to attract investment in the capital market, as well as sponsoring financial literacy programmes which also has a positive effect on market performance, the CBN can play a more active role in the growth of the market. As a way of enhancing their corporate governance, the CBN can incentivise Microfinance Banks to list on the Alternative Securities Market of the NSE. This could take the form of allowing listed National and State Microfinance Banks certain privileges such as qualifying as participating Institutions for the purpose of disbursing CBN intervention funds to end-users especially given the fact that by virtue of their listing, such Microfinance Banks become subjected to a higher degree of corporate governance. It is a no brainer that the listing of Microfinance banks on the NSE will engender public trust and confidence in those institutions. With respect to the CBN intervention funds for SMEs, preferential treatment could be given to companies listed on the NSE.

These measures will encourage more listings thereby placing the stock market in a stronger position to mobilize long term funds for sustainable economic growth. Also, the CBN’s Regulatory and Supervisory Guidelines for Microfinance Banks could be amended to include ‘’foreign exchange transactions’’ among permissible activities of only National Microfinance Banks that become listed on the stock exchange. Granted that there are concerns that the CBN may be over-stretching itself by operating in too many areas, studies have shown that central banks sometimes go beyond their primary mandate to rescue economies headed for the woods. This is the thrust of a seminal book titled ‘’The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse’’, authored by Mohamed El-Erian, former chairman of the US Global Development Council, who examined the changing role of central banks as critical policy actors in national economies. To be sure, the CBN has been a major game in town with respect to the Nigerian economy. In fact, the story of the country’s exit from recession cannot be completely told without a special mention of the role played by the apex bank. Consistent with this line of thought, the CBN can help lift the capital market by acting as a market maker of last resort through helping to provide the much needed liquidity in a prolonged bearish stock market. Whenever it decides to do so, it would be

riding on historical evidence. During the Great Depression for example, the US Federal Reserve purchased large amounts of stocks in order to save companies that were either vital to US employment or to financial markets. Many years later, the Bank of Japan and the Peoples Bank of China followed suit not just to save systemically important companies but generally to rescue their stock markets. More recently as disclosed in the Wall Street Journal, the Federal Reserve’s presence was felt in the stock market in the hope of creating a ‘’wealth effect’’. Writing on ‘’Bulls and Bears: Why central banks should stabilize the stock market’’, Roger Farmer argues that ‘’Markets go up and markets go down simply because people become enthused with waves of optimism or waves of pessimism. Most, if not all, stock markets movements are caused by contagious waves of self-fulfilling prophecies and we would all be better off if they were eliminated by treasury or central bank intervention’’. The point of this article is that the CBN can support the capital market directly as part of its developmental function. The best way to go about this can be worked out in a frank discussion between the capital market regulators as well as operators on the one hand and the nation’s apex bank. In the interest of the capital market and the financial markets in general over which the CBN superintends, the time to begin this engagement is not tomorrow, not even today but now!

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

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ENERGY intelligence oil

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power

Wednesday 11 uly 2018

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POLICY

Diversified investment portfolio shows oil sector growth path Page 5 finance people appointments

PIAC urges GNPC to take a second look at its pricing policy Page 6 OPEC weekly basket price DAY

PRICE

6/7/18

75.13

29/6/18

72.4

22/6/18

71.83

15/6/18

73.85

8/6/18

73.45 Source: OPEC

L-R: Maikanti Baru, group managing director, Nigerian National Petroleum Corporation (NNPC); Isa Inuwa, COO, Corporate Services, NNPC & Tony Attah, MD/ CEO, NLNG at a plenary session during the recent Nigeria Oil & Gas Conference (NOG) held in Abuja recently.

Debrief

The 40bn crude oil reserve question FRANK UZUEGBUNAM

igeria has always had the quest to grow its strategic crude oil reserves. And for decades, the target has been the 40 billion barrels mark. In recent months, there seem to a coordinated campaign to get the message on the front burner again. Maikanti Baru, Group Managing Director, Nigerian National Petroleum Corporation, NNPC, re-echoed the mantra at the just concluded Nigeria Oil and Gas Conference (NOG) held recently in Abuja. The state oil company czar hinted

that the corporation is focused on increasing the Nigeria’s crude oil reserves by one billion barrels yearly for the next three years to achieve the 40 billion barrel target by 2020. “The outlook for the year 2018 is to increase crude oil reserves by a billion barrel at least on yearly basis by the next three years. We want to grow the crude oil reserves from 37 billion barrels to 40 billion barrels by 2020. We are also working towards increasing daily crude oil production to three million barrels per day (bpd) in the coming years”, Baru said. But these are not new rhetoric. Just like the challenges. They remain the same. The delay in

the approval of Field Development Plan (FDPs) in the oil and gas sector is still an issue. Regulatory approvals for oil and gas projects in Nigeria has remained a tough call, especially considering the many layers of bureaucracy prospective investors must pass through to begin a project. Field Development Plan is the process of turning an oil and gas opportunity into a sanctioned project. It consists of identifying and defining, as a system, all the components required to develop and operate oil and gas fields successfully. To a large degree, it defines the success or otherwise of the field. Some of the reasons at-

tributed to delays in getting approval or even outright rejection of FDPs include inadequacy of plans in addressing the entire project’s pressing issues some of which are partners working in isolation without consulting stakeholders and regulators, lack of understanding of fiscal regimes, gas utilization, project execution, contracting strategy and project economics. It is time to go beyond words. Expedited FDP approval process is vital to the development of the upstream sector. The right place to begin is for regulators to standardize approval processes for new field development and updates.

02 BUSINESS DAY WEST AFRICA Outlook Libya: Crude oil output slumps to 527,000 barrels per day

ibya’s crude oil production has halved in the past three weeks as the North African country faces a fresh struggle over control of its crude exports, stateowned National Oil Corporation said. In a tweet, NOC said that current crude production was averaging 527,000 b/d compared to June 13 when it was over 1 million b/d before rival militias clashed at the country’s key eastern oil terminals. NOC said that 12.5 million barrels of oil had been lost due to the current unrest causing a total financial loss of $920 million. Almost all of the Libyan crude production is coming from the fields in the western part of the country along with some its offshore fields. Shipments from Libya’s western ports, Zawiya, Mellitah, Bouri and Farwah, continue as normal. Around 300,000 b/d of crude from Sharara, Libya’s largest field, heads to the key Zawiya oil termi-

nal. The last three weeks have been a painful reminder that the rivalry between different factions and militias continues to threaten the stability of the country and its beleaguered oil sector. Oil production had recovered to over four-year highs of 1 million b/d earlier this year but the situation looks bleak again. NOC rivalry Libya’s prized oil sector is divided now due to a major rift be-

tween the Tripoli-based and UN-backed National Oil Corporation and the Libyan National Army (LNA), the de facto eastern authority. In mid-June, exports from the key eastern oil ports of Ras Lanuf and ES Sider were suspended due to clashes between the PFG and LNA. The LNA recaptured these ports and by June 25 it handed control of the country’s five eastern oil export terminals, Ras Lanuf, Es Sider, Brega,

Marsa el-Hariga and Zueitina, to a rival oil company, the Benghazi-based NOC East, ending a two-year pact between the LNA and NOC Tripoli. The self-declared NOC East has instructed all the ports to block crude exports not authorized by it, throwing into doubt the control, production and export of more than half of the country’s total oil production capacity. Force majeure on loadings out of Ras Lanuf, Es Sider, Marsa el-Hariga and Zueitina remains in place. The official NOC has rejected the LNA’s legal authority to determine control of the ports, threatened legal action over anyone buying oil from NOC East, and urged the United Nations and Western allies to help defend its sovereignty over oil exports. The rival NOC East is expected to face difficulties selling crude from the eastern ports as it is not internationally recognized. The US and EU have said they plan to only do business with the official NOC.

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oil

Brief China: BP offloads 130,000T Angolan oil to Shandong refiner after 2 months on water

il major BP discharged 130,000 tonnes, or nearly 1 million barrels, of Angolan crude to a Chinese independent refiner, after holding the oil on water for more than two months amid slowing Chinese demand and multi-year high oil prices. Texas, a supertanker charted by BP carrying around 2 million barrels of Angolan crude, discharged part of the cargo in mid-April at Qingdao and was slated to offload the rest at Rizhao, another port in Shandong, shortly after. Instead, the tanker had been anchored off the coast until when it discharged at the Rizhao terminal 130,000 tonnes of Cabinda crude to Shandong Qingyuan Group. Qingyuan, which is based at Linzi in the province of Shandong and operates a 5.2 mil-

l i o n - t o n n e - p e r- y e a r (104,000-barrel-per-day) refiner, is a regular customer of BP which has expanded its crude oil marketing to Chinese independent refiners over the last three years. Qingyuan has received an annual crude import quota of 4.04 million tonnes, and is one of the largest independentlyrun lubricant producers.

which began as a power struggle within the ruling party, has caused the continent’s largest refugee crisis and driven parts of the nation to the brink of famine. A decline in oil output to about 130,000 barrels a day, from 350,000 at independence in 2011, has combined with fluctuating oil prices to bring economic chaos to a country with no other main sources of revenue. Sudan’s oil minister said June 20 that rehabilitating some of South Sudan’s northern oilfields would take as long as three years and be conducted in three

phases. Sudan exports the landlocked south’s oil via pipelines across its territory to a Red Sea port. Kiir and Machar, his former deputy, agreed in 2015 to share power, but that agreement collapsed weeks into its enactment the following year, spurring a new wave of violence. Both government and rebel forces have been accused of atrocities. The US in March identified 15 oil-related entities in South Sudan that it accused of helping to fund violence, placing restrictions on their import of US equipment.

South Sudan: US envoy sees rise in oil production easing peace deal

outh Sudan’s plan to boost oil production should help it fund a forthcoming transitional government that seeks to end more than four years of civil war, Thomas Hushek, US ambassador said. President Salva Kiir and rebel leader Riek Machar, still in talks in neighboring Sudan, have agreed on a cease-fire and signaled they are ready for their second attempt at sharing power since the conflict that has claimed tens of thousands of lives began in late 2013. Also in the

pact is a commitment to work with Sudan on rehabilitating South Sudanese oil fields whose output is crucial to both nations’ economies. “It is potentially a very big asset to the country that might be acquired for paying for the mechanism of this new peace agreement that we hope to see coming out of these talks,” Hushek said, but he warned that depended on the revenue going toward “South Sudan’s development and to fuel the peace mechanism, not to fuel continued fighting.” South Sudan’s war,

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gas

ENERGY intelligence

Libya: Gas production a vote of confidence for Libya

tional companies remain confident about working in the country. “This startup will support the development of the domestic market and reduce costly liquid fuel imports,” he said in a statement. “This strategy will free up significant financial resources; essential given the enormity of challenges across the country.” The start of gas production comes less than a week after the NOC suspended operations at oil loading terminals because of challenges to its authority. Libya is fractured along multilateral lines in the wake of civil war in 2011 that culminated with the death of long-time rulerMoamar Gadhafi. The United Nations recognizes the NOC as the legitimate authority over natural resources and has called for calm and the return of authority to the NOC.

Global LNG: New spot supply, tender cancellation saps spot price

sian spot liquefied natural gas (LNG) prices declined for a third week on producers from Australia to Nigeria boosting spot supply, strong European LNG inventories and Pakistan’s cancellation of a six-cargo tender. Spot prices for August LNG-AS delivery in Asia fell to $10.10 per million British thermal units (Btu), down 20 cents from the previous week, trade sources said. Prices continued reversing from a 20-percent rally last month, driven by large concurrent global production outages and big-ticket tenders seeking more than 40 cargoes for July-September. The market was not fully out of the woods as Malaysia’s giant Bintulu complex may have shut in some

WEST AFRICA

Brief

he start of natural gas production off the coast of Libya is a breath of fresh air for a country facing significant security risks, Mustafa Sanalla, chairman of the Libyan company, said. Natural gas production started at the second phase of the Bahr Essalam project off the coast of Libya. The Bahr Essalam gas field delivers natural gas to an onshore treatment plant and then into the national supply chain. Sanalla said the startup shows interna-

BUSINESS DAY

production for planned maintenance, traders said. The 30-million-tonne-perannum, nine-train facility spent last month troubleshooting unexpected electrical faults that impeded output. Angola LNG planned to shut this month ahead of an early August restart. Australia’s Ichthys project, meanwhile, fell further behind schedule, delaying first LNG as developer Inpex patched what it called “minor issues”.

NLNG faces growing demand, changing global gas market STEPHEN ONYEKWELU

lobal demand for natural gas is forecast to grow at an average of 1.6 percent annually, over the next five years with emerging Asian markets set to lead the charge; but how would the Nigerian LNG Limited grab a profitable piece of the pie with the United States of America poised to capture 20 percent of the market? At a growth rate of 1.6 percent per annum, global gas demand will inch over 4, 100 billion cubic metres (bcm) in 2023, up from 3, 740 bcm in 2017, according to latest gas market report, Gas 2018, from the International Energy Association, a Paris-based think tank. Tony Attah, the managing director of the Nigeria LNG Limited (NLNG), cautioned at the maiden edition of the Nigeria International Petroleum Summit (NIPS) in February that delay in taking the final investment decision (FID) in different LNG projects in the country could rob the country of its place in the market. Big ticket projects like Olokola LNG, Brass LNG and the NLNG’s Train 7 have been unable to reach final investment decision by the stakeholders. By 2023, the United States will account for close to three quarters of all Liquefied Natural Gas (LNG) export growth and its global market share will jump to 20 percent, from the current position of four percent, the International Energy Agency (IEA) report stated. This effectively puts Nigeria’s aspiration to grow its traded LNG market

share to 10 percent under pressure as recently suggested by Maikanti Baru, the group managing director of the Nigerian National Petroleum Corporation (NNPC). The IEA report showed that one of the major changes expected by 2023 would be the US leading growth in gas production and export of LNG. In 2017, the World LNG Report indicated that Nigeria occupied the position of the fourth largest LNG exporter in 2016, while the US occupied the 16th position. Most new US supplies will be geared to export markets as LNG or through pipelines. The development of destination-free and gas-indexed US LNG exports will provide additional flexibility to the expanding global water-borne traded market. What the next five years will mean for Nigeria is challenging because the bulk of Nigeria’s gas

is supplied to Japan and other Asian markets in the form of LNG. The competition for these markets will intensify, with risk of production overflows. According BusinessDay analysis, Nigeria started its LNG operations 24 months after Qatar but Qatar now produces 77 million tonnes per annum, while Nigeria has not moved the needle on 22 metric tonnes per annum (MTPA). In Africa, significant gas finds in excess of 127 trillion cubic feet in Mozambique have created the potential for another African super player. Mozambique is expected to become the second-largest exporter of liquefied natural gas by 2025, as the country steps up production from 10 million tonnes per annum in 2017 to an envisaged 50 Mtpa. Mauritania and Senegal have disposed of both political and infrastructural resources to develop their new discoveries of

gas reserves as Nigeria, Africa’s largest proven gas reserves holder struggles with a burden of infrastructure inefficiencies. For Nigeria, infrastructure challenges have slowed down the development of its 185 trillion cubic feet (Tcf ) of gas reserve. The plans to build the Nigerian Liquefied Natural Gas (NLNG) Train 7 have remained on the drawing board for over eight years. Meanwhile, the final investment decision (FID) for the Tortue development offshore Mauritania and Senegal, will include a floating liquefied natural gas (FLNG) production unit, by the end of 2018. This would be the second FLNG facility in Africa. The first in the world was Malaysia, which was launched in 2016 and first in Africa was Cameroun’s $1.2 billion FLNG project, which shipped its first liquefied natural gas (LNG) cargo in May 2018.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Nigeria: GE, Niger Delta Power Holding Company (NDPHC) sign letter of intent on end-to-end power delivery

s part of its efforts to help boost power supply in Nigeria, GE, the world’s premier digital industrial company, has announced its intention to collaborate with the Niger Delta Power Holding Company (NDPHC) on the development of an End-To-End to Power Intervention (EEIP). This announcement followed a signing of a Letter of Intention (LOI) by both parties during the France-Nigeria Business Forum held in Lagos, one of several events hosted during the visit of President of France, Emmanuel Macron, to Nigeria. This event was witnessed by the French Secretary of State to the Minister of Economy and Finance, Delphine Geny-Stephann. GE’s EEIP is aimed at

delivering incremental power from the NIPP’s underutilized or stranded capacity to several industrial and commercial hubs through multiple solutions across the entire electricity value chain. Under the agreement, GE will provide End-to-End power solutions across the value chain to deliver 2.5GW of Power. The company will also provide financing support for the power projects including funding for the refurbishment of distribution and transmission infrastructure amongst other critical support services to analyze and improve the power value chain. The Letter of Intent also states the willingness of BPIFrance (the French export credit agency) to provide financing support given that the technology to be deployed in this project will be manufactured in

GE Power’s facilities in France. The collaboration will see NDPHC partner with GE to work with DISCOs, TCN and other relevant stakeholders, to identify and prioritize critical projects to reduce technical and commercial losses. The focus will be on the expansion, repair and upgrade of all critical transmission and distribution infrastructure. According to Lazarus Angbazo, CEO/President of GE Nigeria, “GE is proud to partner with an organization of high repute like NDPHC. There is an alignment in our objectives to drive positive change in Nigeria’s power industry so this partnership is a good fit and we look forward to positive outcomes in the near future.” In the same vein,

Chiedu Ugbo, MD/CEO of NDPHC expressed the company’s delight to work with GE in delivering endto-end solutions under the EEIP’s mandate. He said that the collaboration will bring about a muchneeded boost to the Nigerian power sector. GE and the Federal Government of Nigeria signed a Country to Company agreement in 2014 to achieve the country’s additional electric power generation capacity target of 10,000 MW. With the acquisition of Alstom by GE, approximately 70 percent of Nigeria’s gaspowered electricity generation currently runs on GE technology. GE delivers across the entire energy ecosystem for Nigeria’s national development, from generation to transmission and distribution as well as Multi-year service agreements.

Wednesday 11 uly 2018

power

Africa: Clean energy projects underway in Mozambique, Uganda

wo clean energy projects backed by the Emerging Africa Infrastructure Fund took significant steps forward in the last week of June. The 5.4MW Lubilia Kawembe Hydro (LKH) electricity generating station in Uganda was formally commissioned on 28 June. A day later, on June 29, a ground-breaking ceremony saw work officially begin on the 40MW Central Solar de Mocuba (CESOM) project in Mo-

zambique. EAIF is member of the Private Infrastructure Development Group (PIDG). PIDG encourages and mobilises private investment in infrastructure in the frontier markets of sub-Saharan Africa, south and south-east Asia, to help promote economic development and combat poverty. The financing of the $76 million CESCOM project was led by the International Finance Corporation (IFC). EAIF signed a participation agreement with the IFC to provide a $16.9 million B Loan, with a 16-year term. In addition, EAIF directly provided a $7 million Viability Gap Funding Grant for the project, raised from the Technical Assistance Facility (TAF) of the PIDG. CESCOM is being developed by the Oslo-based company, Scatec.

Ethiopia: AFD supports Tendaho geothermal project

he French Development Agency (AFD) has approved a €8 million grant that will be directed towards the development of the Tendaho geothermal project. It is funded by the European Union, through the European Union Africa Infrastructure Trust Fund (EUAITF). The investment grant constitutes an additional funding to this project, which already benefited from a €9 million concessional loan from AFD and a total of €7.5 million from previous EU-AITF grants. The financing will enable the completion of the drilling activities planned as part of the geothermal exploration and development effort in the Afar region.

A signing ceremony of the grant agreement took place at the Ministry of Finance and Economic Cooperation between Admasu Nebebe, Ethiopian State Minister of Finance and Economic Cooperation, Frederic Bontems, Ambassador of France to Ethiopia and Ignace MonkamDaverat, the AFD regional manager in Addis Ababa. The geothermal project is being implemented by Ethiopian Electric Power, in coordination with Geological Survey of Ethiopia.

Wednesday 11 uly 2018

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POLICY

BUSINESS DAY

Diversified investment portfolio shows oil sector growth path ISAAC ANYAOGU

n a world where oil prices have become as volatile as a teenager’s mood, the international oil companies have long learnt that being a jack of all trades, may just make you a master of all – literally. This is why successful oil companies including Statoil and Saudi Aramco have been optimising their non-oil ventures in properties, shipping, medical, insurance, construction and bio-fuels to shore up revenue during periods where dip in oil prices sets off margin erosion. The new thinking is that adopting a diversified portfolio provides a natural hedge against the inherent volatility of the upstream business. It also provides an avenue to cut cost by having these services provided in-house rather than outsource them to third parties. This is why the NNPC’s plan to diversify into the healthcare sector is as important as it is strategic. Last year, it said it had established contacts with some Chinese investors to partner in its Research and Development venture. Not

much has been heard but its boss said last week, the corporation is still interested. According to the company, other non-core oil and gas sectors that the state oil company is interested include:

Snapshot

$33.8bn

Saudi Aramco’s net income in the first six months of 2017 including from non-core oil sector investments

healthcare, shipping as well as telecommunications. The company certainly has the capacity and expertise. The NNPC already has 52 clinics across Nigeria, and many are more equipped than state-owned general hospitals that have been described as ‘consulting clinics’. This will help save billions of naira spent on medical tourism and reverse brain drain of medical professionals in Nigeria. The corporation can learn from the success of other companies. Saudi Aramco has incorporated Saudi Aramco Energy Ventures, a corporate venturing subsidiary with a mission “to invest globally into early-stage and high growth companies with technologies of strategic importance to Aramco, to accelerate their development and their

deployment in the Kingdom of Saudi Arabia.” The venture company invest in upstream and downstream oil and gas, petrochemicals, renewables, energy efficiency and water sectors. Its objective is to deploy technologies that enhance the identification and management of reserves, enhance primary energy production, improve operational efficiency, increase value capture in downstream processing, and support optimization of Kingdom energy and water consumption The company is always looking for opportunities to invest in the oil sector value chain. In April, the company and French oil major Total SA concluded plans to build a $5 billion petrochemical complex near their refinery in

Jubail to tap growing demand in the Middle East and Asia. The companies signed a preliminary deal for the construction of a 1.5 million tons a year steam cracker and petrochemicals units. The cracker will feed other petrochemical and specialty chemicals plants, to be built by other companies for $4 billion. It is investments like these, along with juicy oil wells, lower cost of oil production and prudent management that has helped Aramco become one of the world’s most profitable companies. According to figures seen by Bloomberg, Saudi Aramco churned out $33.8 billion in net income in the first six months of 2017, easily outstripping US titans like Apple, JPMorgan Chase & Co and Exxon Mobil Corp.

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ENERGY intelligence Brief Vitol to offer $650m more to Kazakhstan in oil pre-payment deal

ajor European trader Vitol is set to increase its cash-for-oil deal with Kazakhstan’s state energy firm by offering about $650 million or more to finance the Kashagan oilfield, according to sources. The additional funds will bring Vitol’s prepay-

dubbed the most expensive oilfield. It now produces about 300,000 barrels per day (bpd). Kazakhstan produced 1.85 million bpd in May. Kashagan is operated by the North Caspian Operating Company, made up of Italy’s Eni, Total, Shell, ExxonMobil, China’s CNPC, Japan’s Inpex

Wednesday 11 uly 2018

finance people appointments

PIAC urges GNPC to take a second look at its pricing policy

he Technical Officer of the Public Interest Ac c ou nt ab i lity Committee (PIAC), Dennis Gyeyir, has said the committee has found out that the price of the Tweneboa, Enyenra, Ntomme (TEN) crude for Ghana Group was lower than the estimated benchmark price. He said the Ghana National Petroleum Corporation (GNPC) needed to take a second look at its pricing and marketing policy for TEN to eliminate the significant price difference from that of Jubilee. Gyeyir said the Ghana National Gas Company received raw gas worth $ 94,776,691.97 dol-

lars from GNPC during the year under review for which payment was outstanding and Volta River Authority also received lean gas worth of $ 279,910,118.08 from GNPC, which has not been paid including an interest of $16,737,531.29. He said other findings revealed that an amount of $13,518,852.98 was wrongfully paid into the

Ghana Revenue Authority (GRA) account instead of Petroleum Holding Fund account, and that the committee had been assured that the situation would be rectified. He called on the Ministry of Finance to provide guidelines to forestall similar occurrences and the PIAC had recommended that GRA undertook annual tax audit of the partners

without delay as witnessed in the 2011 – 2015 tax audit of KOSMOS which was undertaken in 2016. The PIAC was a statutory committee established under section 56 of the Public Revenue Management in 2011 (Act 815 ) aimed at providing space and platform for the public to debate on spending prospects and management of revenue to conform to development priorities as provided under section 21 (3). The committee was mandated to monitor and evaluate compliance with the Act by government and relevant institutions in the management and the use of petroleum revenues and investments.

Petrobras suspends refinery, pipeline asset sales

ment for Kashagan to about $2.25 billion. Vitol initially won a tender in 2016 to provide $1 billion to cover KMG’s share in the Kashagan field in exchange for crude cargoes. The loan, syndicated between various international banks, was increased by $600 million in September. Kazakhstan holds a 16.88 percent in the field via KMG Kashagan (KMG), a subsidiary of KMG. Kashagan, one of the biggest oil fields to be developed in recent decades, came onstream 11 years behind schedule and was

and KMG. Privately-held Vitol has been the dominant player in Kazakh oil exports for more than a decade, taking barrels mainly to Russian ports and shipping them to European refineries. The trader first signed a pre-payment deal with KMG in 2015 for oil from Tengiz, Kazakhstan’s largest producing field. Vitol offered $3 billion in that deal. Oil pre-payments have become a key method for traders like Vitol to combat razor-thin margins and to secure long-term supplies.

razilian state-led oil producer and refiner Petrobras suspended the sale of a natural gas pipeline network and operating stakes in four refineries after a recent Supreme Court ruling, a move that will temporarily stifle potential foreign investment in the two sectors, the company said. “The competitive processes to form refining partnerships are suspended,” Petrobras said. Petrobras suspended the sales process after Supreme Court Justice Ricardo Lewandowski prohibited the government from selling stakes or subsidiaries in state-owned or state-led companies without prior congressional approval of the sale. Petrobras said that it would fight the ruling that led to the suspension. “Petrobras is evaluating all possible measures to protect its interests and the interests of sharehold-

ers, reinforcing the importance of the partnership and divestment program to the reduction of the company’s debt levels and generation of value via portfolio management,” the company said in a statement. The suspension raises concerns about whether Petrobras will be unable

to meet its $21 billion target for asset sales by the end of 2018, a key component of restoring the company’s finances after the collapse in oil prices and discovery of a massive corruption scandal at the company. Petrobras is the world’s most-heavily indebted publicly traded oil company, according to analysts. The decision also deals a blow to Petrobras’ efforts to retreat from its dominant position in Brazil’s refining segment, where the company currently operates about 98 percent of installed processing capacity. In mid-2016, Petrobras announced that it would no longer guarantee Brazilian fuel supplies and would seek to reduce its role in the sector to focus on exploration and development of the country’s offshore subsalt region. Brazil’s government under the administration of President Michel Temer

also sought to take advantage of Petrobras’ planned retreat to lure investors to the country’s refining segment and increase competition, creating the “Combustivel Brasil,” or “Brazil Fuels,” program to open up access to the downstream sector. The program, however, became bogged down as Petrobras struggled to develop a model for the refinery sales that was not unveiled until April 2018. Earlier this year, Petrobras announced a plan to sell 60 percent operating stakes in four refineries and related terminal, storage and pipeline infrastructure in two separate packages, one located in Brazil’s northeast and one in the country’s south. In mid-June, Petrobras extended a deadline to sign confidentiality agreements related to the sales until July 2. According to Petrobras, five companies had previously signed the agreements.

07 WEST AFRICA ENERGY intelligence

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marketinsight Saudi increased output pushes Brent lower

he increase in production from OPEC’s biggest exporter Saudi Arabia has pushed Brent lower. Saudi Arabia also said it would reduce the official selling price of its August barrels. US crude futures gained

86 cents, or 1.2 percent, to settle at $73.80 a barrel. Global benchmark Brent slipped 28 cents to settle at $77.11 a barrel. For the week, WTI futures lost about 0.5 percent after hitting a 3-1/2-year high, while Brent lost about 3 percent. Brent was being pres-

sured by expectations for higher Saudi and Russia production, which impacts Europe and Asia, where Brent is the benchmark, more than markets dominated by US crude prices. Saudi Arabia told the Organization of the Petroleum Exporting Countries that it increased production by almost 500,000 barrels per day last month. OPEC and its allies agreed earlier this month to a modest increase in output to dampen the oil price rally, which hit a 3-1/2 year high. The supply increase reversed some of the cuts that OPEC and other major producers put in place in early 2017 to end several years of supply glut. US markets also garnered support from a government employment report showing b e t t e r- t ha n - e x p e c t e d

OPEC Flakes growth in jobs. That blunted the impact of an escalating US-China trade war. The trade war has yet to have a direct impact on oil markets, but China has indicated it could place tariffs on US crude imports. If that happens, “Chinese demand would then shift to other suppliers. Because the oil market is already in tight supply due to the numerous outages, this would drive international prices (Brent) further up,” Commerzbank said in a note. US producers continued to bring more rigs into oilfields already producing at record levels. The US rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric Co’s Baker Hughes energy services firm. That brings the total count to 863, up 100 from last year.

UBS: Oil market at risk from supply shocks

ven with Saudi Arabia offering market assurances, concerns about dwindling spare capacity could push oil prices above $80 per barrel, Swiss bank UBS said. Members of the Organization of Petroleum Exporting Countries in June agreed to relax compliance with a multilateral production deal to address supply concerns from member states Iran, Libya and Venezuela. Security issues in Libya and chronic woes in Venezuela pushed compliance beyond 100 percent. The US government, meanwhile, is pressuring Iranian oil customers to cut exports to zero by November. For the United States, higher oil prices means higher consumer fuel prices in the world’s leading economy. Saudi Arabia’s King Salman said follow-

ing a phone call with US President Trump, both sides agreed that extraordinary efforts were needed to maintain oil market stability. “The cabinet also affirmed the kingdom’s readiness to use its spare capacity when needed

to deal with any future changes in oil supply and demand rates in coordination with other producing countries,” the official Saudi Press Agency stated. Spare capacity refers to the amount of extra oil barrels a producer can bring

BUSINESS DAY

to the market in relatively short order. Saudi Arabia is one of the few countries with any real spare capacity on hand. The largest producer in OPEC, the country has never produced more than 10.7 million barrels of oil per day and tapping into the extra million barrels per day could be risky. “A too-quick ramp-up of production over a sustained period could risk damaging reservoir pressure and strain oil fields,” Giovanni Staunovo, a commodity analyst for UBS, wrote in a research brief. Staunovo said his base case was that the oil market is vulnerable because of the dwindling spare capacity. As a result, UBS raised its forecast for the price of Brent crude oil from around $80 per barrel for the six month range to $85 per barrel.

OPEC June crude oil output rises 90,000 b/d from May to 31.99m b/d

audi Arabia lifted production in June to an 18-month high, but that was barely enough to move the needle for OPEC as a whole, as the kingdom’s gains were largely offset by turmoil in Libya and continued declines in Venezuela and Angola, according to the latest S&P Global Platts OPEC survey. OPEC produced 31.99 million b/d in June, according to the survey of industry officials, analysts and shipping data, a 90,000 b/d increase from May. This does not include

the Republic of Congo, which became OPEC’s 15th member on June 22 and will be included in the Platts survey beginning next month. The June figure is 740,000 b/d below OPEC’s nominal ceiling of 32.73 million b/d, when every country’s quota under the OPEC/ non-OPEC production cut deal is added up. Saudi Arabia produced 10.39 million b/d in June, the survey found, up from 10.01 million b/d in May and far above its quota of 10.06 million b/d. The kingdom has signaled its intention to produce up to 11 million b/d in July to meet market shortages. Iraq, OPEC’s secondlargest producer, also increased production to the highest since December 2016, by 70,000 b/d in the month to 4.54 million b/d, according to the survey.

Iranian oil minister says Trump’s order to OPEC insulting

ran’s oil minister, Bijan Zanganeh, has accused US President Donald Trump of insulting OPEC by ordering it to increase production and reduce prices, adding that Iranian output and exports had not changed as a result of US pressure. Trump had accused the Organization of the Petroleum Exporting Countries of driving fuel prices higher, and urged Saudi Arabia to pump more if it wanted Washington to continue protecting it against its top rival Iran. “Trump sends every day a new message that creates uncertainty in the market,” Bijan Zanganeh, Iranian Oil Minister said. “Trump’s order to OPEC members to in-

crease production is a great insult to those governments and nations, and destabilises the market.” Zanganeh called the tension between Tehran and Washington a “trade war” and said it had not led to changes in Iranian oil production and exports. Iran, OPEC’s thirdlargest producer, is facing US sanctions on its oil exports that are prompting some buyers to cut purchases.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 11 uly 2018

talking points

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Despised old coal missing link in Nigeria’s energy mix? STEPHEN ONYEKWELU

igeria, Africa most populous nation’s long history of romance with coal as a major energy resource was cut short due to machinery and equipment failures, geographical and infrastructural weaknesses, human resource deficiency and lack of government interest. At the peak of Nigeria’s coal age, production increased annually from 583, 487 tonnes to an all-time high of 905, 397 tonnes before 1960. After 1959, production decreased significantly each year, until today no production is recorded on book. Nigeria still holds large coal reserves, estimated to be at least 2 billion metric tonnes. Nigeria’s coal industry suffered a blow in the 1950s when oil was discovered. Up till this point, the Nigerian Railway Corporation was the largest consumer of coal in the country. However, after the discovery of oil, the Railway Corporation began to replace its coal burning trains with diesel-powered engines. An additional negative impact came when the Electricity Corporation of Nigeria began converting its power generation equipment from coal to diesel and gas as well. The Nigerian Civil War also negatively impacted coal production; many mines were abandoned during the war. Following the war, production never completely recovered and coal production levels were erratic. Attempts at mechanising production ended badly, as both the implementation and maintenance of imported mining equipment proved troublesome, and hurt production. After the civil war, the Nigerian coal industry was not able to return to its peak production, hurting industries because the cost of electricity eats away profit margins. Against the backdrop of severe shortages in much needed supply of electricity, it is inevitable that Nigeria must move from rhetoric to concrete action in the development and addition of coal-fired electricity to the nation’s electricity supply mix.

Two of the biggest cement markers in Nigeria, Dangote Cement Plc and Lafarge Plc have been investing massively in coal as source of energy to power its plants. “Companies are turning to coal for their energy needs. What we tend to forget is that coal as a major source of energy might not be clean and it is ultimately cheaper to use liquefied natural gas (LNG) rather than coal because of social and environmental concerns” Eddy van Den Broeke, founder of Abuja-based Greenville Oil and Gas Limited said at a gas development roundtable in Lagos. Interestingly, for all the new wind parks, solar farms and hydro plants that will help Europe’s biggest economy generate yet another renewable energy record in 2018, coal the world’s dirtiest power fuel still rules in Germany and sets the price for how much

factories are paying for electricity. Wind turbines will this year for the first time produce more power than plants burning hard coal as the nation’s unprecedented shift toward renewable energy has pushed output from solar and wind to more than a third of the nation’s total. Yet, it is coal prices at their highest level since 2013 that is pushing up electricity rates for the first time in six years because of the way the market works. Dangote Cement switched to using coal at its cement plants in response to disruption to gas supplies and to lower input costs. The cement producer uses 12,000 metric tonnes (MT/day) of coal. Ashaka Cement, a fullyowned subsidiary of Lafarge Africa, said coal accounted for 82 percent of its power usage over the period, while work is ongoing on its 16-megawatt lignite-fired coal power plant at

its factory in Gombe State. “Coal business is booming. I have some Chinese companies that need about a million metric tonnes (MT) of coal from me every month and I don’t meet up with the demand. Dangote Cement Plc is ready to buy up every piece of coal we excavate in Kogi state for its Obajana cement factory” Leo Nwankwo, a commodities analyst and trader told BusinessDay. “There are jobs to be created, when we develop our coal industry. I trade in commodities and coal is just one of the many commodities I trade in. When you visit our coal excavation sites in Kogi state and see the level of unemployment and poverty, I fear for this country. Let us focus on developing our economy and not let the shouts about clean energy deter us from creating jobs for our bulging youth population” Nwankwo said.