BusinessDay 11 Jul 2019 by BusinessDay

CBN reduces banks’ daily excess cash deposit by 73.3% to N2bn …Lenders may lose 8.5% revenue …May prefer to earn zero interest on their funds

HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) on Wednesday reduced the amount of excess cash that banks and merchant banks (dis-

count houses) deposit with it, which is known as Standing Deposit Facility (SDF), by 73.3 percent to N2 billion from N7.5 billion since 2014. In a circular, FMD/DIR/

CON/OGC/12/019, to all banks and discounts houses on ‘Guidelines on Accessing the CBN Standing Deposit Facility’ and signed by Angela Sere-Ejembi, director,

financial markets department, the CBN said the remunerable daily placement shall not exceed N2 billion. The circular published on the CBN’s website yes-

terday stated that the SDF deposit of N2 billion shall be remunerated at an interest rate prescribed by the Monetary Policy Committee (MPC) from time to time.

“Any deposit by a bank in excess of N2 billion shall not be remunerated,” the CBN

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businessday market monitor FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

Foreign Exchange

Foreign Reserve - $45.13bn Biggest Gainer Biggest Loser Cross Rates - GBP-$:1.25 YUANY-N52.38 AIRTELAFRI MTNN Commodities N133 3.06pc N359.4 -9.99pc 29,256.60

Cocoa

Gold

Crude Oil

US$2,509.00

$1,419.00

$63.60

news you can trust I **thursday 11 july 2019 I vol. 17, no 351 I N300

MARKETS

Investors’ wishes at odds with history as market may further decline in H2 IFEANYI JOHN

₦4,035,861.38

+9.53 pc

Buy

Sell

$-N 358.00 361.00 £-N 457.00 463.00 €-N 400.00 4060.00

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Market I&E FX Window CBN Official Rate Currency Futures

($/N)

Spot ($/N)

360.75 307.00

-0.08 11.23

NGUS sep 18 2019 361.03

6M -0.44

0.00

10 Y 0.04

20 Y 0.00

11.93

14.27

14.28

14.24

NGUS dec 24 2019 361.48

NGUS jul 29 2020 362.53

De-United, Indorama, Dangote, Guinness to lead Nigerian export charge on AfCFTA

f historical performance is ever a fair indicator of future performance, then investors should be getting ready for deeper market selloffs as BusinessDay analysis shows that in the past 30 years, the Nigerian Stock Exchange All Share Index typically declined 80 percent of the time in the second half of the year after a negative performance in the first half of the year. Interestingly, 2019 is only

ODINAKA ANUDU & LOLADE AKINMURELE

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Inside FG’s domestic borrowings push Nigeria’s total debt to N24.95trn in 3 months P. 2 NASS invasion: Senate asks police to secure federal parliament P. 2

fgn bonds

Treasury bills

L-R: Laoye Jaiyeola, CEO, Nigerian Economic Summit Group (NESG); Udeme Ufot, board member; Asue Ighodalo, chairman; Lazarus Angbazo, board member; Victoria Uwadoka, corporate communications and public affairs, Nestle; Niyi Yusuf, board member, NESG, and Segun Ogunsanya, board member, at the launch of NESG new corporate identity in Lagos. Pic by Olawale Amoo

igerian export companies such as De-United Foods, British American Tobacco, Indorama Eleme Fertiliser & Chemicals and Dangote Group, among many others, can now grow their margins, expand operations and earn bigger foreign exchange as the African Continental Free Trade Area (AfCFTA) offers them an opportunity to consolidate foothold on the continent. The benefits are even extended to government-owned Nigerian National Petroleum Corporation (NNPC)/Petroleum Investment Management Company (PPMC), which now has the chance to expand export of naphthalene, a chemical product obtained from petroleum distillation. This product was Nigeria’s biggest export product in the second half of 2017,

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Thursday 11 July 2019

BUSINESS DAY

news Dangote Cement floats another N50bn Commercial Paper OLUFIKAYO OWOEYE

ement manufacturing giant, Dangote Cement plc, has announced plans to raise additional N50billion in its 11, 12 and 13 series of its 150-billion Commercial Paper Programme to support its short term funding requirements. A Commercial Paper is a money-market, debtfinancing security issued by large companies to meet short-term debt obligations. It is often offered in the short term, usually not exceeding 270 days and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note. A Commercial paper is not usually backed by any form of collateral, making it a form of unsecured debt. As a result, only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the

debt issue. Details show that the series 11 has a tenor of 90 days with the effective yield of 13.25 percent discounted at 12.83 percent with a maturity date of 10 October 2019. The Series 12 also has a 180-day tenor with an effective yield of 13.5percent and a discount rate of 12.65percent with a maturity date of 8th January 2020. The Series 13 offers CP of 270 days with an effective yield of 14.00percent, and a discount of 12.69percent is expected to mature on the 7th April 2020. The offer had opened on 9th July 2019 while the offer’s application list would close on 11 July 2019. The minimum subscription is N5 million and subsequently in multiples of 1000. The paper is rated Aaa by global rating agency, Moody’s and AA+ by Africa’s Number 1 rating agency, Global Credit Rating Co.(GCR)

•Continues online at www.businessday.ng

Airtel falls 10% on price discovery to reverse NSE debut surge OLUWASEGUN OLAKOYENIKAN

hares of Airtel Africa plc slumped by 10 percent, the maximum daily allowable loss on the Nigerian Stock Exchange (NSE), in an anticipated stock reversal after its N1.36 trillion flotation on the NSE, causing the firm’s value to close weaker than its listing price. The stock of the telecommunications firm, which opened at N399.30 Wednesday, fell to a low of N359.40 per share as at the close of business at the Lagos bourse, a development that shaved its market value to N1.35 trillion and kicked off its price discovery. “That downtrend is line with expectations,” Gbolahan Ologunro, equity research analyst at CSL Stockbrokers, told BusinessDay. “We had expected that the market would take a cue from what happened on the London Stock Exchange (LSE), that didn’t play out in the first trading day because of some imperfections in the market.” Airtel Africa embarked on a cross-border listing of shares on the NSE and the London Stock Exchange (LSE). The primary listing was performed at the London bourse on Friday, June

28, with a disappointing debut trading which wiped off 15 percent from its listing value, while the NSE served as the secondary market for the stock. A similar bearish trend was observed on the firm’s stock on LSE as it lost 0.69 percent to settle at 72 pence. The telecoms company, owned by India’s Bharti Airtel, listed 3.75 billion ordinary shares at the Lagos bourse Tuesday at N363 at 2:18 PM Nigerian time to become the third-largest company on the NSE by market capitalisation after Dangote Cement and its main rival MTN Nigeria. But within 12 minutes to the close of business, Airtel Africa gained 10 percent in its maiden trading session at the NSE. “All participants were not aware about the official listing at that time,” Ologunro said, pointing out that the short period of trading drove the “artificial gain” in Airtel Africa. Paul Uzum, a Lagosbased stockbroker, had said the gain was not reflecting market sentiment, noting that the market would correct the price of the telco’s stock in the coming trading sessions and narrow the chances for price arbitrage.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Herbert Wigwe, GMD/CEO, Access Bank Plc; Obafemi Hamzat, deputy governor, Lagos State; Babajide Sanwo-Olu, governor, Lagos State, and Folashade Jaji, secretary to the state government, during a stakeholders meeting on proposed regeneration of the LekkiOniru axis,in Lagos, yesterday.

NASS invasion: Senate asks police to secure federal parliament …as House urges Buhari to grant Shiites’ demands …Shiites continue protest in Abuja, say they are ready to die OWEDE AGBAJILEKE & JAMES KWEN, Abuja

he Senate on Wednesday condemned Tuesday’s attack on the National Assembly by protesting members of Islamic Movement of Nigeria (IMN), popularly called Shi’ites. The Shi’ites, while protesting the continued incarceration of their leader, Ibrahim Elzakzaky, by the Federal Government on Tuesday invaded the National Assembly, disarmed security operatives, killed two persons, damaged parked vehicles and vandalised structures. The Senate described the invasion by the Shi’ites and the wanton destruction carried out by the IMN as the desecration of the sacred National Legislative Institu-

tion of Nigeria. Adedayo Adeyeye, chairman, Senate ad hoc Committee on Media and Public Affairs, stated this while addressing journalists on the issue. Adeyeye noted with concern the “unwarranted affront on the Federal Parliament” which, he said, led to the abrupt adjournment of the House of Representatives’ plenary. “While the National Assembly is a public place for Nigerians, citizens must follow proper channels and protocols if they have cause(s) to access its premises. Senate hereby calls for security beef-up within the National Assembly and other institutions henceforth,” Adeyeye said. On its part, the House of Representatives on Wednesday urged President Muhammadu Buhari to urgently

grant the demands of the Shi’ites to forestall further breakdown of law and order from the group. The House of Reps, which was forced to adjourn plenary as a result of the invasion, also resolved that an ad hoc committee be constituted immediately to investigate the unfortunate incident. The committee, when constituted, is mandated to find out the involvement of security operatives who manned the entry points when the attack occurred. The House further called for review of internal security of the National Assembly and to employ adequate measures to prevent further security breaches. Also, the House resolved that urgent ways be evolved by the authorities to compensate families of the victims and those whose vehicles were destroyed.

The Green Chamber reached these resolutions sequel to a motion of urgent public importance moved by Minority Leader of the House, Ndudi Elumelu, on the attack of Shi’ites on the National Assembly. Leading the debate, Elumelu noted that the invasion has exposed the porous nature of the NASS security system. According to him, visitors were granted unhindered access to the NASS premises without proper checks and verifications. Ruling, the Speaker, Femi Gbajabiamila, condemned the invasion and described it as totally unacceptable and granted all the prayers in the motion. Meanwhile, scores of Shi’ites on Wednesday in Abuja made good their threat as they embarked on another protest, vowing to die for the cause of their religion.

•Continues online at www.businessday.ng

FG’s domestic borrowings push Nigeria’s total debt to N24.95trn in 3 months … lower external debt proportion threatens DMO’s management strategy OLUWASEGUN OLAKOYENIKAN

he continuous borrowings by the Federal Government of Nigeria (FGN) from domestic sources have sent the country’s total public debt portfolio to N24.95 trillion in the first three months of the year, latest figures obtained from the Debt Management Office on Wednesday show. The country’s debt stock rose sluggishly by 2.3 percent in the first quarter of 2019 from N24.39 trillion attained as of December 31, 2018. This compares to a growth of 4.5 percent recorded in the same period a year earlier. At the current level, it implies

Nigeria increased its total debt burden by N560 billion between year-end 2018 and March 31, 2019. “The total public debt-toGDP ratio was 19.03 percent which is within the 25 percent debt limit imposed by the government,” the DMO pointed out in a statement that accompanied the debt figures. Checks by BusinessDay revealed that DMO could not sustain the progress made last year towards achieving a target debt stock mix of 60:40 (60 percent domestic and 40 percent external) through its debt management strategy as growth in domestic debt outstripped increase recorded in external borrowing, a move

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that could hamper the debt agency’s target by year-end 2019. Although the domestic debt profile of the 36 states of the federation and the Federal Capital Territory, Abuja (FCT) grew the most of all the debt components, the increase in the Federal Government’s domestic debt stock largely drove the country’s total debt growth in the first quarter of this year. The Federal Government, mainly through the fixed income market, borrows from local investors to finance key projects in its budget. Of the total N8.92 trillion earmarked for various expenditures in the 2019 budget, N802.82 billion would be sourced locally while the same amount would @Businessdayng

be sourced externally, according to the Budget Office of the Federation. The states and the FCT jointly grew their total domestic debt by 3.1 percent to N3.97 trillion as against N3.85 trillion recorded as at December 2018, but the Federal Government increased its domestic debt stock by 2.65 percent amounting to N339 billion to stand at N13.11 trillion as at end-March 2019. As a result, the surge in the Federal Government’s domestic debt stock accounts for 60.5 percent of the total increase recorded in Nigeria’s total public debt of N24.95 trillion for the review period.

•Continues online at www.businessday.ng

Thursday 11 July 2019

BUSINESS DAY

news Leveraging global best practices in business growth outlines maiden customer experience summit KELECHI EWUZIE

mid the economic challenges that businesses go through in attracting and retaining customers, discussions that centre on customer insights to drive customer satisfaction, effective contact management operations will take centre stage at the maiden edition of Customer Experience (CX) West Africa Summit in Lagos. The summit will congregate speakers, panellists to discuss exhaustively the power of Customer Experience Management as a tool for business growth leveraging different principles of customer experience. Debbie Akwara, convener and founder, Neetch Company, Nigeria’s first boutique Customer Experience Management firm, says over 10 customer experience experts, business executives and business owners will be on hand to share business growth successes they have achieved by leveraging

customer experience management. Akwara, while speaking at a press conference in Lagos to announce the summit scheduled for July 12, 2019, with the theme: The Transformational Power of Customer Experience Management (CEM) In Business Growth said customer service/experience enthusiasts from financial services, telecommunications, logistics, hospitality, education, ICT, real estate, aviation, retail, fashion, e-commerce sectors will be attending. She said workshops and discussions on how to create the right business and customer processes to grow a business would be addressed. According to Akwara, breakout session on how to manage customer feedback and use customer insights to drive customer satisfaction and retention as well as how to effectively manage contact centre operations to grow a business will be handled by professionals”.

Lagos, Access Bank mull PPP to tackle gridlocks in V/Island-Lekki axis … as Admiralty, Lekki-Ikoyi tollgates allow free ride today JOSHUA BASSEY

agos State government and Access Bank plc are leveraging Public Private Partnership (PPP) arrangement in finding a solution to the challenge of gridlocks around Victoria Island-Lekki axis in the drive to further enhance businesses and social life in that area. This is also as the Lagos State governor, Babajide Sanwo-Olu, who undertook a tour of areas withtrafficanddrainageproblems along the Lekki-Ajah corridor on Wednesday, said the government and its consultants were working to ensure that the Lekki-Ikoyi link bridge tollgate become fully automated from October 1 this year. Already, the partners and stakeholders have begun deliberating on a study commissioned by Access Bank, tagged “Victoria

Island-Lekki Circulation Study,” said to have taken four months to analysetrafficpatternsonthataxis, causes of gridlocks and possible solutions, submitted by Planet Project Limited, an indigenous engineering/construction firm consulting for the partners. Present at the presentation of the study at Four Points by Sheraton Hotel, on Wednesday were GovernorSanwo-Olu,hisdeputy, Obafemi Hamzat, managing director of Access Bank, Herbert Wigwe, his counterpart from Fidelity Bank, Nnamdi Okonkwo, former commissioner for Lagos waterfront infrastructure, Segun Oniru, as well as top functionaries of the state government. The study has identified five major trouble areas within that axis requiring overhaul of the current traffic architecture. The areas include Muri-Okunola

roundabout, Sandfill junction, Akinbolade Street connecting Oniru, Ligali Ayorinde, just as it suggested the need to create one addition access road and dualisation of Akinbolade Street to allow for better traffic flow. Abiodun Otunla, managing director of Planet Project, who presented the study, said some of the solutions might also involve removalofidentifiedroundabouts along the Lekki-Ajah corridor, but more importantly, fixing rehabilitation of some of major streets in Victoria Island, some of which are riddled with potholes and further worsened by collapsed drainage system. The study also suggested the useofconcreteinsomeoftheroad junctionsasagainstasphalt,which has weak resistance to water. The state governor, SanwoOlu, who believed the implemen-

tation of the proposed solutions would go a long way, gave the commitment of his administration to solving the traffic challenges in line with his electioneering promise. “The whole idea is to improve the time that people spend in traffic in order to enhance business and social life,” he said. Meanwhile, vehicles plying the Admiralty and Lekki-Ikoyi link bridge tollgates would be allowed free passage today, Thursday, July 11. Sanwo-Olu, who announced this on Wednesday, said the essence of opening the two tollgates between 6:30am and 9:30am as well as 4:30pm and 8:00pm was to enable the government and its consultants do the traffic analysis on the Lekki-Ajah to determine the best solution to the intractable gridlocks around that axis.

Hygeia holds 2019 confab to arouse awareness on depression, health insurance MICHAEL ANI

ygeia, a Health Management Organisation (HMO), will on Thursday, July 11, hold its 2019 health and exhibition conference. The conference would focus on helping to sensitise the public on the rising incidence of suicide, caused by depression and create awareness on the need for accessible and affordable quality health care services through the use of health insurance plan. “Part of what we are seeking to do this year is to help in reducing the incessant cases of suicide in the country,” Obinnia Abajue, CEO for the firm said, adding that “In addition, we are also looking to see how we can make health insurance work.” In recent time, there has been a surge in the number of suicide cases in the country as many Nigerians are finding it difficult to survive in an economy that holds the mantle

of being the poverty capital of the world. Some 90 million people currently leave below the poverty trap ($1.9 per day), according to data from the world poverty clock, and this has further widened the inequality gap between the have and have not. About 42 suicide cases have been reported within the first six months of the year. In 2018, the World Health Organisation said Nigeria is 30th most suicide-prone (out of 183 nations) in the world. The country was also ranked 10th African country with higher rates of suicide, leading countries like Togo (ranked 26th), Sierra Leone (11th), Angola (19th), Equatorial Guinea (7th), Burkina Faso (22nd) and Cote d’Ivoire (5th). This year’s conference is themed: “Healthcare in Nigeria: Transformative solutions”, and is scheduled to hold on Thursday, July 11, 2019 at Oriental Hotel, Lekki – Epe Expressway, Victoria Island, Lagos by 9am.

L-R: Pius Olanrewaju, national treasurer, Chartered Institute of Bankers of Nigeria (CIBN); Abubakar Suleiman, CEO, Sterling Bank plc; Uche Olowu, president/chairman of council, CIBN; Mojisola Bakare, general manager, Sterling Bank/ council member, CIBN, and Wumi Adeniyi, council member, CIBN, during the CIBN Stakeholders Engagement with the bank in Lagos.

NNPC pledges closer ties with Governors’ Forum GSK Nigeria appoints Kunle Oyelana as MD to grow economy

SK Consumer Nigeria plc has appointed Kunle Oyelana as its new managing director, effective June 1, 2019. The appointment of Oyelana was announced at the 48th annual general meeting of the company held recently. Oyelana brings over 20 years’ experience in the pharmaceutical industry where he has held roles of increasing responsibilities across Africa and Asia. He has a track record of success in the development and effective implementation of robust strategies with a keen focus on delivering sustainable growth in diverse markets. In his previous role as a commercial director for the Classic and Established Products (CEP) portfolio for GSK in the Africa and developing countries of Asia region, he provided stimulus for the over 40 markets in the region to

achieve strong double-digit growth of key assets in a challenging environment. While serving as the marketing and commercial excellence director for Nigeria and previously for Kenya, East Africa, he led the rapid deployment of Commercial Trade Channel strategies and effective utilization of multiple channels and platforms to deliver exceptional customer engagement and sustained business growth. Kunle Oyelana, who also leads the GSK Pharmaceutical Nigeria business, has a strong focus and drive to deliver outstanding business performance while strengthening controls and developing talent. He holds a Bachelor of Pharmacy and an MBA from Obafemi Awolowo University in Nigeria. He is also an alumnus of Strathmore Business School in Kenya and IMD in Switzerland. www.businessday.ng

Olusola Bello

he Nigerian National Petroleum Corporation (NNPC) has expressed its readiness to continuously work with the Nigerian Governors Forum (NGF) in order to grow crude oil production, renewable energy and generate more revenue for the country. A release signed by Ndu Ughamadu,thecorporation’sgroup general manager, Group Public Affairs Division, noted that the Group Managing Director of the corporation, Mele Kolo Kyari, made this commitment when the chairman of the NGF, Kayode Fayemi, led the Governor of Sokoto State/the Forum’s deputy chairman, Aminu Waziri Tambuwal, on a business visit to the NNPC Towers in Abuja. Kyari said the NNPC was ready toworkforNigeriansthroughtheefficient exploration and exploitation of the nation’s abundant hydrocarbon resources, noting that the NGF was an important and critical stakeholder to the successes of the corporation’s operations.

“It is our job to deliver value for the teeming population of this country. The NNPC has no excuse but to deliver on its mandate by touching the lives of Nigerians in manypositiveways.Wewill ensure steadyandunimpededsupplyand distribution of petroleum products and we will also ensure that the NNPC remittances to the Federation Account Allocation Committee (FAAC) are enhanced,” Kyari assured. He said NNPC’s operations would continue to drive the levers of production that would ensure steady generation of royalties and petroleum profit taxes from all its partners in the oil and gas value chain. The NNPC’s helmsman stated that the corporation would work with the National Assembly and the NGF to ensure that appropriate legislations were put in place to guarantee a fiscal environment that would promote inflow of investment into the nation’s Petroleum Sector.

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Murder: Senate asks FG to issue travel alert to Nigerians OWEDE AGBAJILEKE, Abuja

he Senate has urged the FederalGovernmenttoissue travel alert to Nigerians travellingtoSouthAfricaoverthekilling of Elizabeth Ndubuisi-Chukwu, a Nigerian who was allegedly killed in a hotel in South Africa. This comes as it charged the South African government to unravel the circumstances leading to the death of the Nigerian citizen. It also resolved to send a highpowered delegation to the Parliament of South Africa to register its displeasure on the handling of the matter. These resolutions were reachedfollowingamotionmoved by the Senate Minority Leader, EnyinnayaAbaribeonWednesday. Theupperlegislativechamber, however, rejected an additional prayer calling on the Federal Governmenttocutdiplomatictieswith South Africa on the matter. Recallthatlastmonth,Ndubuisi-Chukwu, a deputy director@Businessdayng

general of Chartered Insurance Institute of Nigeria who was in South Africa to attend the conference of the African Insurance Organisation was found dead in her hotel room in Johannesburg. Although initial report indicated that she died of cardiac arrest, autopsy by South Africa’s Department of Home Affairs and theDepartmentofHealthrevealed that she was strangled. In his lead debate, Abaribe said: “This is not the first time Nigerians have died in suspicious and curious circumstances In South Africa.” Intheirseparatecontributions, lawmakers called on the Nigerian government to redefine its foreign policy with the former apartheid country. Inhissubmission,SenateChief Whip, Orji Uzor Kalu, tasked the FederalGovernmenttotakemeasures to stop what he described as the endless killing of Nigerians doing legitimate businesses in the country.

Thursday 11 July 2019

BUSINESS DAY

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Thursday 11 July 2019

BUSINESS DAY

news

NAFDAC bans importation, production, Eva Water: Laboratory reports did not indicate any health threat - NAFDAC sale of Sniper, other brands CALEB OJEWALE

ational Agency for Food and Drug Administration and Control (NAFDAC) has announced the immediate ban on importation and manufacture of 100ml pack size of agricultural formulations of Dichlorvos, with immediate effect. Originally an agricultural formulation for pest control, Dichlorvos is the name of the compound used to describe popular brands such as Sniper, Tankill, Gladiator Liquid, Executor Liquid, Smash Super Liquid, DD Force, Glovan, Philopest, WonderLiquid,Rid-Off,NOPEST and SUMODDVP. These products, according to a statement from Moji Adeyeye, director-general of NAFDAC, are misused as household insecticide and direct misapplication on agricultural produce. The abuse and misuse of the 100ml of these products are associated with serious Public Health hazards such as cancer and respiratory disorder. Beyond this, however, the products have in recent times become the tool of choice in committing suicide. There have

been other tragic cases of misuse, such as a recently reported incident, where a corps member used Sniper to wash her hair in order to eliminate lice, an action being attributed as the cause of death, 10 days to her birthday. NAFDAC in the statement expressed concern at the “recent trend in the abuse and misuse of 100ml Sniper insecticide and other brands of agricultural formulations of Dichlorvos to commit suicide.” Exercising its mandate, which among other things includes manufacture and sales of chemicals in Nigeria, the agency announced an immediate ban on hawking of all agrochemical formulations (the likes of Sniper). NAFDAC has also given a twomonth (up to August 31, 2019) notice to brand owners/distributors to recall and withdraw their products from open markets and supermarkets that do not have garden corner/shelves to the agro dealer outlets. The sales of Sniper insecticide and other Dichlorvos brands in open markets and supermarkets nationwide are prohibited with effect from September 1, 2019, according to the NAFDAC directive.

ANTHONIA OBOKOH

n advance to the public alert issued on two batches of its Eva Water (75cl) brands by the National Agency for Food and Drug Administration and Control (NAFDAC), the Nigerian Bottling Company (NBC) has commenced withdrawal of the affected batches, produced on 220519.14.27 AC4 and 230519.15.15 AC4, respectively. According to a press statement made available to BusinessDay, NAFDAC wishes to inform the general public on the true situation with Eva Water produced and bottled by the NBC. “Following discovery of a default in two lots of Eva bottled water (75cl pack size) produced between 22nd and 23rd May 2019 at the NBC ultra modern factory at Asejire in Ibadan, the company immediately initiated a recall of the affected lots and voluntarily notified NAFDAC as is expected of every responsible quality-driven organisation with high priority for Food Safety and safety of its consumers,” it states. The statement also reveals that after thorough investiga-

tion of the company’s processes supported with detailed laboratory analysis of the water and all other products produced at the factory, NAFDAC is satisfied that adequate corrective and preventive actions are in place to guarantee the quality and safety of Eva water and indeed all Coca Cola products that are registered by NAFDAC. “It is important to highlight that there is no cause for alarm, as the laboratory reports did not indicate any health threat; the recall was purely precautionary and it is standard food safety practice all over the world. “A recall is initiated when there is strong reason to believe that a potentially contaminated food has reached the marketplace whether confirmed or not,” according to the statement. However, the agency is reassuring to note that the NBC demonstrated a high sense of responsibility in voluntarily reporting the problem and in the recall process. NAFDAC urges all companies and stakeholders to think of the customers’ safety first just like what NBC has done in this case. This is exemplary and should be emulated by all manufacturers.

Deloitte takes ‘Best Company to Work for in Nigeria’ prize FRANK ELEANYA

igeria’s oldest indigenous accounting firm and a DTTL member, Deloitte, has been named the “Best Company to Work in Nigeria, 2019’ by the Great Place to Work Institute, a San Francisco-based firm that rates companies based on feedback from their staff. It is the second time the accountingfirmisemergingthewinner of the award, having received it in 2015 for the first time, according to a statement BusinessDay received. The award, globally acclaimed, represents the voice of 100 million employees coming from 45 countries across six continents. Fatai Folarin, CEO of Deloitte West Africa, described the award as recognition of the company’s commitment to providing a conducive environment which

is critical to becoming the undisputed leader and ensuring that the firm continues to create value for clients and make an impact that matters. It also represents the definitive employerof-choice and workplace quality recognition any company can receive. “Deloitte is consistently working on ways to ensure that the workplace is conducive and friendly for nurturing talents,” he said. The firm in its statement described the milestone as a “point of national pride.” Deloitte also won awards in twoothercategories:BestPractice Awards in Nigeria (2019); in the “Best Quality of Life” category “Large Organisations” and Best Practice Awards in Nigeria (2019); in “The Most Fun and Friendly Workplace” category “Large Organisations.”

Access Bank wins 2019 Nigerian Healthcare Excellence Award

ccess Bank has again emerged winner at the Nigerian Healthcare Excellence Award (NHEA) 2019 as the ‘Outstanding Healthcare SME-Friendly Bank of the Year.’ At the award ceremony held recently in Lagos, the bank was recognised for the fourth time by the NHEA consecutively after winning the most healthcare friendly bank award in 2016 and 2017 and as the Outstanding CSR health project of the year in 2018. The NHEA is an initiative of Global Health Project and Resources in partnership with Anadach Group. The annual NHEA is organised to recognise and commend institutions that have made laudable contributions towards the growth and development of the healthcare sector in Nigeria. The policy framework for achieving global standards

of healthcare across Nigeria while encouraging market leadership and inspirational performance is also a major focus of the award. Commenting on the award, Omobolanle Victor-Laniyan, head, sustainability at Access Bank, said, “Access Bank has an unwavering commitment to significantly improve the health sector in Nigeria. Therefore, as a Bank, we have studied the health sector and identified inadequate financing as a causal factor for the poor healthcare system in Nigeria.” This discovery, she maintained, has led the bank to create products to solve that problem. “An example is our MHSS product, which provides our customers with the finance and support that they need for their special medical procedures. www.businessday.ng

Conditional Cash Transfer: Edo trains facilitators, as 11,000 persons benefit in first phase

o fewer than 11,000 persons in Edo State are to benefit from the first phase of the Conditional Cash Transfer (CCT) programme being implemented by the Federal Government under the National Social Investment Programme (SIP). Focal person, Edo State Social Investment Programme, Osayuwame Aladeselu, disclosed this at the beginning of a four-day Orientation, Implementation and Enrolment Training workshop for local government councils’ Cash Transfer Facilitators (CTFs) in Benin City, the Edo State capital. The training of the facilitators marks the commencement of the CCT programme in the state. Aladeselu noted that 11,000 beneficiaries drawn from six local government areas would be trained on livelihood skills to assist them spend the money wisely, adding, “We just commenced the CCTprogrammeinEdoStatewith the training of facilitators drawn from the benefiting LGAs, who will sensitise the beneficiaries on the electronic means of money transfer.” The facilitators will also train beneficiaries on business opportunities, urging them to take the programme seriously, she said.

She explained that the poverty mapdevelopedbytheWorldBank was used in the selection of the six local government areas from where beneficiaries for the first phase of the programme will be drawn. National programme coordinator, CCT programme, Temitope Sinkaiye, said the programme was designed to reduce poverty and socioeconomic vulnerabilities among poor households in the country. Sinkaiye maintained that the facilitators were being trained on how to use mobile application for enrolment of the CCT beneficiaries. She added that the N5,000 monthly stipends would be paid electronically to the beneficiaries through mobile money operators residing in rural communities. Vice chairman of Edo State Association of Local Governments of Nigeria (ALGON) and chairman, Etsako Central LGA, Akhigbe John, commended the federal and state governments for supporting the local government councils to alleviate the plights of vulnerable persons. He assured that local council chairmen in the state would support the initiative to ensure it succeeds in the state.

L-R: Darlington Ofor, deputy national president,1, Chartered Insttute of Transport Adminiatration of Nigeria; Bashir Jamoh, national president; Calitus Ibe, deputy national president, 2, and Oluropo Owolabi, national vice president, at a press conference of the institute in Lagos.

Appetite for Alaro City, Lagos, soaring - promoters … model for modern mixed-use city JOSEPH MAURICE OGU

ppetite for Alaro City, the new mixed-income city being built at the Lekki Free Zone (LFZ), has remained strong as investors and prospective homeowners have continued to turn to a development that has been widely hailed as the next phase of Lagos. The project, more than twice the size of Victoria Island, is a joint venture between the Lagos State Government and Africa’s largest new city builder, Rendeavour. Alaro City, launched in January, is planned as a 2,000-hectare integrated mixed-use, city-scale development with industrial and logistics locations, complemented by offices, homes, schools, healthcare facilities, hotels, entertainment and 150 hectares of

parks and open spaces. The phase one of its residential plots has already been sold out; and the phase two sales are on-going, the company announced in a recent statement. Businesses are also taking advantage of the mixed-use characteristics of the new city going by the several facilities under construction at the site. More than ten businesses, spanning across national and multinational firms, are currently investing in the city. According to Odunayo Ojo, CEO, Alaro City, the new city, located in the northwest quadrant of the LFZ, lies in the growth path of Lagos and aims to serve as a model for what a modern mixed-use city looks like. “We expected high uptake of the plots, but the rate at which

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they sold out has been exceptional,” he said. Strategically located at the LFZ, it is mouth-watering for investors to leverage the benefits that the city brings. According to Ojo, Alaro City is situated in a prime location in the Lekki Free Zone, making it one of the most exciting development projects to come to Lagos State. “The location and exclusive benefits have undoubtedly been key selling points for buyers,” he said confidently. Another key attraction, according to him, is the pedigree of the city’s developers. Rendeavour, seen as the biggest new city builder in Africa, is currently building seven new cities in Nigeria, Kenya, Ghana, Zambia and Democratic Republic of the Congo. @Businessdayng

Stephen Jennings, founder/ CEO, Rendeavour, said the company was committed to investing huge capital in the project, thereby making it to improve the economy of Nigeria and Africa, and to meet the aspirations of Africa’s burgeoning middle classes, and serve as a catalyst for further urban development. “As a master developer, Rendeavour invests over $250 million in each project, creating the infrastructure and living and working spaces that will help sustain and accelerate Africa’s economic growth,” he said. Real estate and tax experts say the city is also attracting investors as a result of the fact that it is in a tax-free zone within an axis that has become one of the highest appreciating real estate areas in the country.

Thursday 11 July 2019

BUSINESS DAY

NEWS

W/African waters remain world’s most dangerous spot for pirate attacks - IMB reports AMAKA ANAGOR-EWUZIE

ulf of Guinea, which houses the coasts of Nigeria, Guinea, Togo, Benin and Cameroon, has remained the world’s most dangerous spot for pirate attacks, the International Maritime Bureau’s (IMB) latest report reveals. According to report, out of the 75 seafarers taken hostage onboard or kidnapped for ransom worldwide this year, 62 were captured in the Gulf of Guinea. The IMB report states that 73 of all kidnappings at sea, and 92 percent of hostage-takings, took place in the Gulf of Guinea. “Armed pirates in these high-risk waters kidnapped 27 crewmembers in the first half of 2019, and 25 in the same period in 2018.” IMB further reports that two chemical tankers were hijacked and out of the nine vessels fired upon globally, eight were off the coast of Nigeria, Africa’s top oil producer. “These attacks took

place on average of 65 nautical miles off the coast – meaning they were classified as acts of piracy but there were some encouraging signs of improvement. IMB, which commended the Nigerian Navy for actively responding to reported incidents by dispatching patrol boats, states that there was a welcome and marked decrease in attacks in the Gulf of Guinea for the second quarter of 2019. While recognising that many attacks go unreported, IMB had so far recorded 21 incidents around Nigeria in 2019, down from 31 in the same period of 2018. IMB further states that naval vessels from Equatorial Guinea and Spain also intervened in May 2019 when a Nigerian tug was hijacked 41 nautical miles off Luba, Equatorial Guinea. “Soon after, the pirates used the tug to launch an attack on a Maltese heavy load carrier. The crew retreated into the ship’s

citadel, a safe room for protection against attackers. When the navies responded, the pirates left the vessel and the crews were freed,” the report reveals. IMB however urges seafarers in the region to remain vigilant and report all suspicious activity to regional response centres and the IMB PRC. “Because early detection of a suspicious craft is key to prevent boarding and give time to raise the alarm and retreat into a citadel, if needed,” said an IMB spokesperson. Meanwhile globally, the IMB Piracy Reporting Centre (IMB PRC) recorded 78 incidents of piracy and armed robbery against ships in the first half of 2019, compared with 107 incidents for the same period of 2018. Overall, 57 vessels were boarded successfully, representing 73 percent of all attacks. Pirates killed one person, took 38 crewmembers hostage, and kidnapped a further 37 for ransom.

Air Peace boss denies accusing government of impoverishing Nigerian airlines IFEOMA OKEKE

hairman/CEO of Air Peace, Allen Onyema, has expressed shock at the report credited to him accusing the Federal Government of impoverishing Nigerian airlines, noting that such report was not done in good faith. Onyema, who granted interview to selected Nigerian journalists in Dubai to mark the inaugural flight of the airline at the weekend, said instead of criticiSing government he actually commended the current administration that made it possible for the airline to grow and be able to operate international service. He wondered what might had motivated the report when while fielding questions from journalists he commended government for removing tariff on aircraft spare parts for commercial operation and also 5

percent VAT, which had saved domestic carriers billions of naira, adding that without the support of government there would not have been Air Peace today. “I was shocked when I read that report and I dissociate myself from it. I know that journalists do interpretative reporting but I am convinced that the report was not done in good faith, recognising the fact that I gave government credit many times in the course of the interview for the support it has given us and other airlines. I was shocked. “I want the reporter to play the tape and show me where I made the statement, accusing government of impoverishing Nigerian airlines. So, I totally dissociate myself from the report and I insist that it was not done in good faith,” he said. During the interview, Onyema in response to a question on aero politics said, “Let me

make this clear, Air Peace will never be able to combat international aero-politics without the support of the government. We can only combat it if our government supports us. It is a shame that several Nigerian airlines have come here (Dubai) and they were pushed out either through unfair competition or some arm-twisting tactics, it is very unfair. The only plan we have is the plan of sustainability, to sustain our operations to the best of our abilities. That is so far we can go, if we are not being supported.” The Air Peace boss reiterated during the interview that the administration of President Muhammadu Buhari has given support to the growth of indigenous investment and businesses, adding that without government’s support the airline would not have been able to acquire the number of aircraft it has acquired so far.

Nigeria to benefit from AfCFTA by fixing power, infrastructure MICHAEL ANI & DAVID IBIDAPO

igeria would be at an advantage in the free trade agreement deal, if it fixes its epileptic power supply and poor road network limiting growth of businesses, analysts say. “For Nigeria to benefit from the deal, the country needs to tackle the electricity challenge that is weighing down on firms capacity to produce,” Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers, said. Africa’s biggest economy took a bold step in joining the league of countries in the continent that would benefit from the N3 trillion potential markets from the AfCFTA after President Muhammadu Buhari signed the deal at an extraordinary summit of the African Union (AU) in Niger

Republic over the weekend. The signing came one year after the 76-year old president expressed unwillingness to assent to the deal until consultations are done with industry stakeholders to ascertain the negative implications it could have on the domestic economy. However, while certain benefits may accrue to Nigeria from the trade deal, on a balance of factors, however, the negatives might greatly outweigh the positives unless Africa’s largest economy rightly implement certain modalities. Upon implementation, the deal would lead to the removal of tariffs on 90 percent of goods produced by 2020, while 10 percent of traded goods is expected to be phased out later. Similarly, it will ease non-tariff barriers to trade on the continent and provide economies of scale as firms www.businessday.ng

trying to sell to the bigger African market, leading to increased efficiency. Nigeria has a lot to gain from increasing access to its goods and services to a wider African market; however, many of those consulted also feared that increased regional integration would lead to unfair competition for jobs and the goods they produce. “Nigeria is still faced with the problem of poor road network that could stand as a hurdle on manufacturers, making the prices of their goods expensive in the foreign market when compared with others from other countries,” an analyst, who pleaded anonymity, said. Firms in the Nigerian economy have been faced with high operating environment ranging from epileptic power supply and poor road network that have affected their bottom line. https://www.facebook.com/businessdayng

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news Sahara Power backs AfCFTA to transform Africa’s power sector Dipo Oladehinde

ahara Power Group’s managing director, Kola Adesina, says the African Continental Free Trade Area (AfCFTA) agreement has the potential to transform the continent’s power sector through alignment of policies, tariffs, cross-border manpower collaboration and fresh injection of capital. AfCFTA received a significant boost recently after Nigeria’s President Muhammadu Buhari signed the continent’s largest economy on to AfCFTA, which is the world’s largest free trade zone covering a market of more than 1.2 billion people with a combined gross domestic product of $3.4 trillion. Signed in March 2018, AfCFTA is a free trade area agreement now in its operational phase among 54 of the 55 African Union nations. It is estimated that implementing AfCFTA will yield a 60 percent increase in intra-African trade by 2022. Commending President Buhari for signing the deal, Adesina said AfCFTA had the potential to inspire a new wave of intra-African trade, investment and cooperation that would “propel

governments and the private sector to take strategic steps towards repositioning the power industry across the continent. “The energy sector has several components along the value chain that require interconnectivity of all stakeholders to make uninterrupted power available. With AfCFTA, Africa now has a platform to critically reconsider harmonized major infrastructure developments as well as the aggregate contribution and enabling legislation, policies and tariffs required to shore up power supply across the continent.” He however highlighted the need for the continent’s political leadership to approach the implementation of AfCFTA “with one voice and a vision that is not driven by nationalistic considerations,” adding that the civil society should play a “balancing role” to ensure the agreement serves the interest of all Africans.” Noting that the dearth of inter-linked infrastructure continues to stifle economic growth in Africa, he said the new trade deal should pursue avenues for harnessing the strengths of all parties while maintaining the principle of equity and justice.

Nigerian-British Chamber installs Falowo president, chairman of council David Ibidapo

he Nigerian-British Chamber of Commerce (NBCC) has installed Kayode Falowo as its 16th president and chairman of council. Falowo was elected president at the 39th annual general meeting of the chamber, which took place on the 27th of June 2019 at the Raddison Blu Anchorage Hotel, Victoria Island, Lagos, according to a statement sent to BusinessDay. In his inaugural address at the meeting, Falowo said he would sustain and increase the pace of achieving the chambers’ objectives over the next two years. Falowo, who is an investment banker with over 30 years’ experience, became a member of NBCC in 2004 where he served as deputy president and chairman of the finance and general-purpose committee of the council. Also, he is the group managing director of Greenwich Trust Limited, a leading financial services group. He currently is the chairman for Meyer plc, Greenwich Registrars and Data Solutions Limited. He also served as a council member of the Nigeria Stock Exchange and once served as

the chairman of the Capital Market Committee on Products and Business Development. Currently, he sits on the Board of the National Association of Securities Dealers (NASD) plc, among others. According to the statement, the council attested to his dedication and support towards the chamber over the years. Also elected into the executive council as deputy presidents were Bisi Adeyemi, MD, DCSL Corporate Services, and Alan Davis, MD, James Cubitt Group. Uwamai Igein, MD, Dormai Signs; Nnamdi Okonkwo, MD, Fidelity Bank plc, and Abimbola Olashore, chairman, Lead Capital plc, were elected as vice presidents. Wole Oshin, MD, Custodian and Allied Insurance, was elected as honorable treasurer, while Joe Dada, former executive director, UACN plc, was elected as honourable life vice president. The Niger ian-Br itish Chamber of Commerce is the foremost bilateral Chamber of Commerce in Nigeria. The Chamber is accredited under the NACCIMA/CIPE, Washington, DC USA accreditation programme with over 350 corporate members who are found in all sectors of the Nigerian economy.

NESG launches new brand identity, sets for annual summit GBEMI FAMINU

igerian Economic Summit Group (NESG), a platform for public-private dialogue i n Ni g e r i a , We d n e s d a y launched its rebranded identity, described as part of alignment with its increasingly visible role as a think tank with a mandate of promoting and championing reforms of the Nigerian economy into an open and globally competitive one. Since its inception in 1993, NESG has worked on encouraging private sector investments, creating an enabling environment, establishing an economic foundation for democracy amidst many more activities. “This new brand identity is an exciting change for the NESG. It represents our evolution from being the ad-hoc platform founded by top private sector players in the early 1990’s, and led by Ernest Shonekan into a thinktank that is constantly driven to make changes and impact positively on the economic discourse of the nation and beyond,” Asue Ighodalo, chairman, NESG, said. “Over the past 25 years our talented team of colleagues and vast network of

volunteers has built a solid foundation with a strong reputation for sustaining advocacy and facilitating public policy changes in the national interest. This new branding will support our tireless work to clear the path and enable further engagements with a global focus,” he said. Speaking on the group’s rebranding, Laoye Jaiyeola, CEO of NESG, said, “The new NESG logo represents the values of sustainable economic growth, innovation and globalisation that the NESG has been associated with as well as the mandate of the NESG, which includes swiftly improving the Nigerian economy, as well as taking NESG to a global level.” The launch of the new brand identity coincides with the 25th edition of the annual Nigerian Economic Summit, which is the flagship event of the Group. The event is scheduled to take place at the Transcorp Hilton Hotel in Abuja from October 7-8, 2019. The theme for the Summit is “Nigeria 2050: Shifting Gears” and the focus is to set a new agenda for Nigeria as it ushers in the next industrial revolution and mark a critical strategic shift to a competitive private sector economy by 2050.

Opportunity for start-ups as Alitheia IDF launches Nzinga Scale Fund application Odinaka Anudu

litheia IDF has launched the Nzinga Scale Fund with the aim of investing up to $3 million along with technical assistance resources in eligible companies. Alitheia IDF a pioneering private equity fund that identifies and invests in and grows SMEs led by genderdiverse teams to achieve solid financial returns and tangible social impact for communities in Africa. The fund is seeking growth-stage, African companies based in Ghana, Lesotho, Nigeria, South Africa, Zambia and Zimbabwe in sectors that engage significant percentage of women, either as entrepreneurs, producers, distributors or consumers. Some of these sectors include agribusiness, consumer goods, health, education, and financial services. The application is available on www.alitheiaidf. com or via VC4A at www. tiny.cc/nzingascalefund. The deadline for applications is Sunday, July 28th. With offices in Johannesburg and Lagos, Alitheia IDF is the only private equity fund manager in Africa prioritising SME growth-stage companies combined with a proactive strategy to fund female entrepreneurs running innovative, unnoticed and scalable businesses in

attractive industries and markets. Led by ‘Tokunboh Ishmael, Polo Leteka and Anne-Marie Chidzero with combined experience of over 60 years in private equity, investment banking, SME financing, financial inclusion/fintech, technology and agribusiness, the Alitheia IDF team has a track record of identifying, investing and exiting African businesses that have significant economic and social outcomes. According to the Women Matter- Africa study published by McKinsey, organisations with a greater share of women on their executive committees and boards “tend to have a higher operating margin, return on equity and total return to shareholders.” Having long understood this, Alitheia continues to invest in gender diverse SMEs and aims to touch and impact up to 5 million people in sub-Sahara Africa, while addressing the gap in funding for women led businesses, and increasing the economic potential of women. The Nzinga Scale Fund is named after Queen Ana Nzinga, a 17th-century queen in Angola who demonstrated an aptitude for defusing political crises in her capacity as ambassador to the Portuguese, and later assumed power and fought for the freedom and stature of her kingdoms against the Portuguese, who were colonizing the region at the time. www.businessday.ng

L-R: Jimi Tewe, CEO, Jimi Tewe Company; Tricia Ikponmwonba, lead trainer, Business Lab Africa, and Romoke Oladejo, project manger/community manager, Business Lab Africa, at the official unveiling of Business Lab Africa in Lagos, yesterday. Pic by David Apara.

Over $40bn trade deals expected at IATF2020 - Afreximbank HOPE MOSES-ASHIKE

ntra-African trade and investment deals worth more than $40 billion as well as 10,000 participants are expected at the second Intra-African Trade Fair (IATF2020), surpassing the achievements of the inaugural trade fair held in Cairo, Egypt, said Export-Import Bank (Afreximbank). Benedict Oramah, president of the bank, spoke recently at the formal launch of IATF2020 during the African Continental Free Trade Area (AfCFTA) Business Forum 2019 held on the sidelines of the 12th Extraordinary Summit of African Union (AU) Heads of

State in Niamey. He told guests that the trade fair, scheduled for Kigali, Rwanda, from September 1 - 7, 2020, would attract more than 1,100 exhibitors from over 55 countries. “Working with our esteemed partners, we will exceed the achievements of 2018,” he said, describingIATF2018asaresounding success, not in the colourful displays exhibited, but in the showcasingofdiversityoftradable goods by about 1,100 exhibitors from 45 countries and in the execution of deals worth about $32 billion. “That trade fair resulted in a Nigerian technology company winning a $100-million contract

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to provide technology-based solutions to the South Sudanese government; an Egyptian company winning contracts in many African countries to supply and install energy generation and distribution equipment worth close to $1 billion; Egyptian and Tunisian companies signing a $50-million partnership deal to create a joint venture for assembling home appliances; and the signing of a $3-billion energy generation project between an Egyptian company and an African government, the largest-ever intra-African project executed exclusively by African entities, including financial institutions,” @Businessdayng

he noted. “The momentum created by the maiden IATF and the historic launch of the African Continental Free Trade Area (AfCFTA) will sustainthegrowthofcross-border trade and investments,” he affirmed. Also speaking, Albert Muchanga, the AU Commissioner for Trade and Industry, said the IATF was one of a set of activities planned by the African Union Commission to support implementation of the AfCFTA. The othersincludedtheAfricanTrade Observatory,aportalforreal-time information on business opportunities.

Thursday 11 July 2019

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Appraising banks’ contribution to the economy through loan to deposit ratio ISAAC ESOWE

due dates because of the harsh economic realities of the Nigeria economy. As a result of these, companies are being starved of funds for business expansion; MSMEs are also not left out in this. A survey by the National Bureau of Statistics (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) identified inaccessibility to finance as a major factor inhibiting the growth of MSMEs in Nigeria despite the sector being the largest employer of labour. The CBN recognizing this fact has started intensifying efforts to boost SME lending mostly at a single digit, but this cannot be achieved without the DMBs playing a pivotal role in actualizing or bringing this effort to reality as they are the key players in driving lending in any economy. However, the DMBs are the most reluctant lenders in major emerging markets, with an average LDR below 60 per cent. These findings are evident in the companies’ financial reports as at the end of the first quarter of 2019, which showed that only 4 banks among others met up with the 60 per cent LDR threshold —FBN Holdings, Stanbic IBTC, Union Bank and Access Bank. On the other hand, it is arguable that with the inflationary rate still in double digit value which is more than 11 per cent; extending more credit especially in the real

sector of the economy could endanger the financial system through an increase in non-performing loans (NPLs). CBN intention to boost the economy through funding of the aforementioned sector is a welcoming idea but compelling banks to lend under this present macro-economic situation without appropriate measures put in place to bailout banks should there be any default in servicing of such loans will only result in increase in NPLs which could be a risk to the financial stability considering the fact that they are just coming out from a period of high NPLs which declined in the first quarter of 2019 to 11 per cent compared to 14 per cent in recent years according to NBS statistics. The 10- year analysis from NBS showed that all banks in the country recorded an all-time high of 37 per cent in December 2009 while the lowest NPL of 2.9 per cent was recorded in 2014 which grew by 2 percentage high to 4.9 per cent in 2015. It further increased from 12.8 per cent in 2016 to 14.8 per cent in 2017 and slightly decreased to 11.4 per cent in 2018. The trend reflects the health of the banking system, higher percentage of such loans indicates that the banks have exertion in collecting interest and principal on their credit which may eventually lead to fewer profits for the banks. 12734BDN

n a bid to boost lending to the real sector and spur growth, the Central Bank of Nigeria (CBN) issued a new directive on July 3, 2019 which explicitly stipulates that bank should maintain a minimum loan-to-deposit ratio (LDR) of 60 per cent by September 2019 which will be subject to quarterly review. In line with the CBN 5-year policy thrust of improving access to credit especially to Micro Small and Medium Enterprise (MSMEs), real sector and supporting effort to diversifying the economy, the apex bank directed that the deposit money banks (DMBs) must ensure they maintain a LDR of 60 per cent, this means for every N1 banks receive as deposits, they must ensure to loan out 60 per cent of it. In other words, for every N1 received as deposit, 60 kobo should be loaned. According to a circular recently published by CBN which stated that the following sectors – SMEs, retail, mortgage and consumer lending should be assigned a weight of 150 per cent in computing the LDR, while the apex bank will provide a framework for classification of enterprises/ businesses that will fall under these categories and to facilitate greater investment in the real sector of the economy. Speaking with an industry analyst who did not want his name to be mentioned because of the sensitivity of the matter, he opined that generally, banks in Nigeria do not grant loans to the real sector and SMEs

as much partly because of the harsh operating environment which heightens risks especially the risk of paying back when lending rate is excessively high. However, to hedge against this and also increase the bank revenue, the banks in Nigeria adopted some measures. First, they lend massively to oil companies at excessively high interest rates. In the financial statement of any bank in Nigeria, the bulk of its lending goes to the oil and gas sector. This sector fluctuates with the performance of the global energy market: a lower oil price, for example, could mean lower revenue for the oil companies and consequently, the likelihood of defaulting to servicing or repaying their debt obligations falls short. As a result, those debts might be written off as a bad debt in the bank’s books of accounts. Essentially, Non-Performing Loans (NPLs) rises and it has become greatly worrisome especially in the wake of the new International Financial Reporting Standards (IFRS) rules. Second, it has become the norm for these banks to pile up deposits and grant little credit to businesses to stimulate investment and to drive economic growth. Rather, they choose to invest in riskless assets like Treasury Bills (TBs). Currently, the yield on TBs is roughly 14 per cent, one of the highest in the world. What this means is that banks rather prefer to lend money to the government through the purchases of TBs with no risk whatsoever than lending to the real sector where they are uncertain of recovering the loan as at

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Nigeria and AfCFTA: Time to stop hiding and embrace competition

David Hundeyin

ne night in September 2016 during my brief sojourn as an Uber driver, I got a request from a popular drive-through restaurant along Admiralty Way in Lekki Phase One. The rider’s name, “Denola” caught my eye. It was an unusual name, and I knew of only one person – a classmate from school – who had that name. The last thing I wanted was to run into someone I knew in that state. Nothing screamed “failure” louder than using the car that was my graduation present as a nighttime Uber while struggling to get my startup on its feet during the day, but hopefully he wouldn’t be the one. Sure enough when I pulled up, there was no mistaking the well-coiffed features and olive skin tone. He was the one. I was faced with a decision – either proceed with the trip and take the revenue (which I obviously needed), or choose my pride and lose the money. I canceled the trip and melted into the Lekki night, hoping he didn’t get a good look at the driver’s photo on his app. Keeping up appearances is deadly macroeconomics I could think of no better anecdote to illustrate Nigeria’s national reaction whenever the idea of competition and free trade comes up, especially in the context of the much-debated African Continental Free Trade Agreement (AfCFTA). Prior to President Muham-

madu Buhari’s accession to the agreement, a constant feature of the conversation around it was the idea that opening Nigeria’s economy up will lead to an Armageddon of “dumping” as cheap imports “flood our markets” and “drive local manufacturers out of business.” Like my reaction to Denola three years ago, this is an idea with very little basis in fact, but heavy on emotion and rhetoric. First of all, this idea is yet again another manifestation of our misguided sense of national importance. We imagine that there is a world of manufacturers outside just waiting for the gates of Tin Can Island Port to be thrown open, so they can pour billions of dollars worth of cheap imports into the retail cash cow that is Nigeria. After all, we have x hundred million people, so everyone wants a piece of this market. This is similar to how I imagined that the encounter with my old friend would go – I would become gist on Facebook and WhatsApp alumni groups because the fact of my situation would be so incredible to him. In reality, he might never even have taken note of who was driving and even if he did, he would probably not have reacted in the way I imagined. Who knows that trials he himself was going through at the time? Wrapped up in my selfimmersion however, I chose to let the revenue get away instead. Replace him and me with Africa and Nigeria respectively, and you can start to see the picture. Agreed, Nigeria does have a large market on paper, but how much of this market has any money for anything other than food, soap, phone airtime and other basics? These things are already present here plentifully and at dirt cheap prices. Even if some crazy foreign manufacturer decides to undercut a Nigerian soap manufacturer, how much can

you undercut something available in N10 sachets? Will people start buying more detergent and instant noodles if these already bargain basement items become cheaper? Will a South African auto manufacturer attempt to undercut Nigerian auto manufacturers, when Nigeria recorded just 10,000 sales of brand new vehicles in 2017 versus just under 50,000 in South Africa? Again, we severely overestimate ourselves and our desirability to the outside world. In reality, as has been examined several times, Nigeria has a woefully poor population and a large market of people who spend pennies and cents – a retailer’s paradise we are not! Moreover, the items that have long been presented as the mainstay of local manufacturing are already finding their way into Nigeria anyway. We have a large and mostly unmonitored stretch of border with Benin Republic, Chad, Niger and Cameroon, where smuggling is a fact of life – even with official cooperation at times. Whatever tariffs and bans we impose inside brightly lit, air conditioned offices in Three Arms Zone and Ikeja have little impact on what happens in real life. Whoever is worried about being undercut by imports is probably not paying attention because it is happening anyway – paper restriction or not. “Dumping” can be good for Nigeria In the event that there does turn out to be a category of products that find a market here after trade liberalization, on account of being cheaper than local substitutes, this can be to our benefit in the long term. Local manufacturers will be forced to compete on quality instead of hiding behind the “Made in Nigeria” emotional appeal. They will be forced to find ingenious ways of cutting their production costs while remaining competitive on quality and

‘

…when Nigeria is confronted with real competition from the outside world and it has no wall of bans, tariffs, subsidies and import restrictions to hide behind, maybe the country will have absolutely no option than to do the things that have been left undone for decades

when that is no longer possible, it will become a political issue for the government to handle. Rather than use the typical Nigerian government solution to an economic problem, which lies somewhere in between ‘subsidy,’ and ‘ban,’ the government will have to make real, long-lasting and sustainable economic reforms. One of such things is the complete deregulation and eventual privatization of the power sector. Currently, power remains one of the biggest production costs in Nigeria because its generation, transmission and pricing is still government controlled. When there is no longer any get-outof-jail-free subsidy or tariff card with which to pacify local producers, the government may then finally acknowledge that it does not have any business controlling Nigeria’s power sector. Similar loss of government control over railways and critical infrastructure like roads and airports can only lead to Nigeria as a whole being better off. In a nutshell, when Nigeria is confronted with real competition from the outside world and it has no wall of bans, tariffs, subsidies and import restrictions to hide behind, maybe the country will have absolutely no option than to do the things that have been left undone for decades. Currently, Nigeria lacks the political will to make these reforms, but maybe when we confront real competition from the outside world for the first time, things will finally get done. Of course knowing Nigeria, rather than go along with this, we are more likely to stage a “Nexit” so we can hide behind tariffs and oil-financed subsidies for a few years. As I said last week though, it is not yet illegal to dream. David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Let’s avert the looming disaster at Akanu Ibiam International Airport Enugu

egular airline passengers flying between Enugu, Abuja and Lagos are familiar with the bumpy take-off and landing due to the dilapidated runway of the Akanu Ibiam International Airport, Enugu and the ominous reminder sometimes issued by Pilots to draw attention to the danger to passenger safety posed by this runway and encourage political elites on their flights to act quickly for the safety of all concerned. My take off from Enugu on July 8, 2019 on AirPeace flight 47102 to Abuja was not different and through the flight I could not help but reflect on the length of time that this runway has been in disrepair and how much longer it may take before a disaster occurs. It is pertinent to state that this article was first written in November 2017 but its publication was withheld because soon afterwards government commenced palliative works on the runway from December 14-21, 2017 and subsequently December 27, 2017 to January 4, 2018. I first became aware of the condition of the runway of the Akanu Ibiam International Airport on Monday, November 27, 2017 when Air Peace Flight 47101 operating between Enugu and Lagos departed at 7:40am and not the scheduled time of 7:00am. No one made a fuss over this delay until the Pilot apologised and implied that departure was delayed because the runway was being cleared of pebbles that could damage the plane and endanger the lives of passengers. He proceeded to say that the runway of the Akanu Ibiam International Airport, Enugu was in urgent need of repair. These announcements immediately triggered murmurs as passengers began to compare notes on their past experiences

and the implications of the Pilot’s statements. A male passenger recounted the very bumpy landing he experienced on the same airline’s service from Abuja on November 23 while another one narrated a most unpleasant high speed approach and subsequent ‘dumping’ of the airplane on the runway on November 10 on the same airline’s flight from Abuja to Enugu. In a quick effort to absolve himself of responsibility, the rather expressive Pilot informed the passengers that airlines were wary of the Enugu airport and urged the passengers to help by getting the relevant authorities to rehabilitate the damaged runway, which constitutes a major operational hazard for airlines and passengers. Ordinarily, aircraft take-off and landing require utmost concentration, even in the most advanced countries with robust aviation infrastructure and strong instrumentation support. To underscore the above point, statistics from Boeing Corporation shows that 45% of all aviation accidents occur during take off and landing. Over the years, Nigerian Pilots have become noted for their unmatched skills in operating under sub optimal aviation infrastructure conditions that would challenge some of their most skilled counterparts in other parts of the world. Only few airports in Nigeria have the Instrument Landing System, ILS, which enables Pilots to land a plane even in unfavourable weather conditions. Consequently, our Pilots have had to rely on their intuition in some cases. One recalls a routine domestic flight within the country that was diverted to Cotonou, Benin Republic because of very bad weather. On another flight, the Pilot managed to land the plane in Lagos after a most turbulent flight during most of the 50 minutes flight from Enugu.

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On both occasions, the Pilots had not been factually advised on the weather conditions. One with whom I was acquainted claimed he would never have taken off if he were aware of the severe weather. These were very dangerous situations and ought not to have happened. Aviation accidents, though few and far in between, usually record high fatality whenever they occur even as advances in technology have enhanced standards and safety. Notwithstanding, evidence shows that 6% of airplane accidents globally from 2000-2017 have been caused by “obstructions on runways” according to an air crash statistics company, www. planecrashinfo.com. The iconic Concorde Air France flight 4590 which crashed outside Paris on July 25, 2000, within two minutes of take-off, killing all 109 passengers on-board and four on ground was caused by a piece of debris on the runway which ruptured the plane’s left tyre, a piece of which got stuck under the left wing of the plane where a fuel tank was located, causing leakage and subsequently ignited a fire that caused the aircraft to disintegrate according the root cause analysis of the crash by thinkreliability.com. The poor state of the runway of the Akanu Ibiam International Airport, Enugu underscores the lethargic approach of the Nigerian state to basic development infrastructure and the safety of citizens. What is a country’s aviation industry without rudimentary infrastructure such as runways and necessary instrumentation support for weather forecast and landing? How can we grow our economy, move people, goods and services without this basic infrastructure? Why do we have the national habit of allow-

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Frank Nweke II ing public infrastructure, roads and runways in this instance, to deteriorate so badly, undermine economic progress and claim lives before repairs may be undertaken at much higher costs, if at all? Baum, Hedlund, Aristel & Goldman, a Los Angeles based Aviation law firm estimates that about 12% of aviation accidents globally are caused by “maintenance error”, an omnibus term that covers everything from the upkeep of facilities, the terminal, the runway, equipment and the planes. If the statistic above is not grim enough, consider the assertion that ‘maintenance issues’ contributed to 42% of fatal airline accidents, in the United States, between 1994 and 2004, the world’s most advanced country with solid public infrastructure and strong regulatory institutions! How long shall we outsource basic institutional governance responsibilities to God Almighty who gave us the faculty to think and to dominate our environment? If other countries innovate, invent and manage themselves, why not us?

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Frank Nweke II is a former member of Nigeria’s Federal Cabinet, 2003-2007

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The spread of “Fulanization” fears Remi Adekoya

hen serious figures like Wole Soyinka and the Ooni of Ife start issuing calls for Nigerians to “defend their ancestral lands” and warning that the “colonial contraption known as Nigeria cannot survive another Civil War”, it would seem high time the Buhari government realized something has gone amiss. Calling on civilians to “defend” their lands is a vote of no confidence in the Nigerian state to perform its primary role of protecting life, liberty and property. It is unlikely either Soyinka or the Ooni would have issued such a remarkable statement if they hadn’t been inundated with stories of people suffering violence and its threat at the hands of Fulani pastoralists. The 30-day ultimatum issued by the Coalition of Northern Groups for the federal government to implement the controversial Ruga settlement plan seems to have further radicalized their stance. Meanwhile, in May this year, another influential Yoruba, Olusegun Obasanjo, warned

of a growing “Fulanization” agenda. While Obasanjo can be plausibly portrayed as pursuing a political vendetta against a government he wanted ousted, it would take significant ill-will to suggest Soyinka and many of the other non-politicians speaking out on this issue are doing so to achieve personal or sectarian objectives. The “Fulani herdsmen” issue is a complex one to be sure. From as far back as the pre-colonial era, nomadic pastoralist Fulanis have been present in much of the territories now known as Nigeria. In many areas, they had hitherto largely peacefully co-existed with local communities for all these years; some speak fluent Yoruba, Igbo and other southern Nigerian languages. The difference today is that Nigeria’s population has nearly quadrupled from 55 million citizens at independence to an estimated 200 million today. Meanwhile, there is no more land now than there was in 1960. Factor in advancing desertification, adverse climate change and an increasing number of people competing for ever scarcer good land, and you have the makings for aggressive human conflict. Add the growing pervasiveness of violent banditry and kidnapping in Nigeria, and you have a ready-made cocktail of fear, anxiety and heightened mutual suspicion. Combine all of this with a Fulani president who is seen as remarkably liberal in his reactions to systematic violence involving “his people” at the forefront compared to his no-nonsense

clampdown on pro-Biafran agitators, and you have all the ingredients for a conflict increasingly interpreted through an ethnic lens. A Nigerian president who does not want the spread of conspiracy theories about his or her ethnic group harbouring ethnic-domination plans must be quick to speak and act against any form of ethnic-based or even seemingly ethnic-based violence from members of their own group in particular. A Yoruba president should go out of his or her way to act against any exhibitions of Yoruba sectarianism while in office, ditto an Igbo president, and so forth. This sends a powerfully reassuring message to other groups. Justifying his controversial suspension of Justice Walter Onnoghen early this year, President Buhari argued that “if justice cannot be done and clearly seen to be done, society itself is at risk of the most unimaginable chaos.” Indeed. But if that argument held true in the case of a single individual, how much more so in the case of a sizeable group of individuals perpetrating large-scale violence and mayhem across the country? If justice is not done and clearly seen to be done in the case of numerous attacks by Fulani pastoralists on other people’s properties and lands, how does Buhari expect southerners not to believe there may exist a “recurrent internal colonization project” as Soyinka and the Ooni’s statements alleged? Surely this president has been around long enough to know the

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A Nigerian president who does not want the spread of conspiracy theories about his or her ethnic group harbouring ethnicdomination plans must be quick to speak and act against any form of ethnic-based or even seemingly ethnic-based violence from members of their own group in particular

power of perceptions. The Igbos have never had the numbers or resources to dominate Nigeria, yet that didn’t stop millions of people believing in plans for “Igbo-domination” during the colonial and post-colonial era. We all know how that ended. The same applies today with regards to talk of a “Fulanization” agenda. It is absurd to suggest an ethnic group that constitutes just 7% of Nigeria’s population could possibly overwhelm the rest of the country in any realistic scenario, even with “their man” as president. But the danger with perceptions of threat from out-groups is that they don’t need to be steeped in reality to do damage; all they need to be is plausible enough to a large enough group of people. This group can then infect others with that most infectious of human emotions: fear. Once fear penetrates the hearts of men, reason goes out the window. Neighbours turn on neighbours. The growing sense in the southern parts of Nigeria that this government is unwilling or unable to protect inhabitants from attacks by armed bandits seen as part of some ethno-ideological agenda is dangerous stuff indeed. If Buhari does not act decisively and effectively upon the growing cries of voices like Soyinka et al to tackle this crisis, then God help us all. Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

Now that President Buhari has rejected the Auto Policy/Bill

n 19th June, a Business Day reporter had “authoritatively” reported that the NAIDP bill was on the President’s desk for assent and that this was a “piece of good news”, allegedly coming after delays caused by a series of political intrigues and interventions from certain powerful stakeholders who felt threatened that their stronghold on auto trading may be affected with the passage of the bill. Last week, President Buhari rejected 17 bills passed by the 8th National Assembly – including the Nigeria Automotive Industry Development Plant Fiscal Incentive and Guarantees Bill (the Auto Policy Bill). The cabal theory - In my opinion, the Business Day write up was short-sighted and biased and I hope it was the reporter’s underinformed opinion, because if there is a cabal amongst auto dealers against the auto policy/ bill, why did Nigeria Automotive Design and Development Council (NADDC), the midwife for bringing the bill to life, advertise for a review in February 2019? Why did both the Nigeria Customs Service and the Nigeria Ports Authority call for a review of the policy? We were not against the auto policy - For clarity, most of those opposed to the auto policy and bill are opposed to it in its current structure and format. This was (and still is) because the auto policy draft bill were adventures in very basic policy formulation, strategy and legal drafting - full of assumptions and presumptions that considered only one part of the auto industry value chain and failing to acknowledge that we were dealing with an industry that the whole country (transporters, passengers, commuters and entrepreneurs) depend on. The bill as

drafted was not in the best interest of the auto industry nor the country. The now rejected bill called for the registration of auto dealers, but there were no defined guidelines for this. Interestingly, the 8th NASS that presented the bill for assent in 2018, allegedly purchased new vehicles worth N6.6bn from 32 different dealers – 30 were not registered on the BPP’s database of federal contractors and seven of the 30 are not even registered with the Corporate Affairs Commission. In fairness, the FRSC purchased 77 pick-up trucks for the Federal Road Safety Corps (FRSC) in April. Going forward we would like to see all new Ministers, Directors General, members of the National Assembly and Governors man up and buy the vehicles assembled in Nigeria. Collateral damage - The bill sought for eye watering hikes in duty rates (from 22% to 70% in one instance). A stepped increase would have been a more reasonable plan. The duty hike was pushed through without notice, then got caught in the Naira devaluation – this should have been sufficient reason for an immediate review as the increased duty saved forex, but killed off imports for the dealers, ramped up smuggling, cut into the port activity and squeezed income for the Nigeria Customs. The government saved forex and lost the support of key participants in the success of the policy. The policy was undermined by the devaluation of the naira, the economic recession, a smart move by Benin Republic in dropping its transit charges (and exploiting our porous borders) and the absence of a credit facility to help acquire the now 3 times more expensive vehicles. By the time the bill landed on President Buhari’s desk, the NADDC has issued 58 licenses,

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but not up to 10 actually assembled and in less than 1,000 unit capacity - in a market where assemblers need 50,000 units each to be competitive and profitable. Finance and forex issues - The NAC Automotive Development Fund was set up to help develop the automotive industry, including the acquisition of tools by technicians. A 2% levy was charged on all imported vehicles, auto components, spare parts and raw materials for the auto motive sub-sector. By 2015, the fund was N18bn and funds were meant to be available at 7.5% and 10%. Assuming there have been disbursements, there would have been repayments. Under a new bill, such fund should be a key component t in the funding scheme. NADDC seem determined to sign up a finance house from South Africa under the old policy without robustly exploiting the NAC fund. In addition, the government will need to resist the temptation of lip service and demonstrate real support for the development of the auto industry, including a review the inclusion of major auto components (steel, plastic and rubber) on the ”exempted from forex” list. A new, improved auto bill – It’s unlikely that old NASS will re-table the bill, since committees will definitely change and some members are not even back as Senators or Federal Representatives. Whoever tables a new bill should know that in reality, we do not need 58 assembly plants. Nigeria can survive with 10 assembly plants turning out 50,000 affordable new vehicles each, supported by the controlled importation of preowned and mechanically approved vehicles by properly registered pre-owned vehicle dealers, to be eventually phased out as assemblers attain critical mass and the used

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Bambo Adebowale car dealers convert to selling new cars – and importing 15yr old vehicles currently allowed by the government is just mechanical and environmental suicide – think 3 years, but introduced in stagers over the next 4 years. A new bill should fundamentally include a platform to offload the old vehicles, a credit facility to purchase the newer vehicles – and more proactive ways to control grey imports like certification at origin. The whole country depends on automobiles, but we need to be more creative in thinking – more buses and trucks to support the commuters, the farmers and the entrepreneurs; more realistic duty rates to reduce smuggling, greater regulation to start the phase out of used vehicles, more affordable finance options, wider engagement across the auto value chain. President Buhari has signed Nigeria up to African Continental Free Trade Agreement (AfCFTA). With 55 member states, a market of more than 1.2 billion people and a combined GDP of $3.4 trillion, the stakes are high. Nigeria cannot miss the opportunities and the auto industry should sit front centre. Any forward looking government would know that the proposed auto bill and the auto policy driving it were both flawed and we are glad that President Buhari and his advisers saw this. That bill shouldn’t have been assented to, it wasn’t. We now have the opportunity to review it. I hope it is. Adebowale is Chairman, Automobile and Allied Sector, Lagos Chamber of Commerce & Industry

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

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Now that Nigeria is on board AfCFTA, drive it with soft power

fter a year of dilly-dallying, Nigeria on Saturday, July 6, signed on to the African Continental Free Trade Area. President Muhammadu Buhari inked Nigeria into the scheme in Niamey after it had secured enough signatories to come into force. In consequence, Nigeria is a latecomer to the latest economic plan that is part of the Vision 2063 of the African Union. The Nigerian foot-dragging owed to so many factors but mainly a concern by manufacturers that other signatory nations may be a conveyor belt for dumping of products into our country. As has happened now, their legitimate interest does not and could not preclude the imperative of playing in the broader African market that the Continental Free Trade Area represents. It is noteworthy that Nigeria signed without extracting any additional concessions. The context of AfCFTA is that Nigeria and Nigerians were in the forefront in pushing the scheme. A Nigerian trade technocrat

led the drafting committee. Nigeria played key roles up until it was time for the takeoff. Indeed, President Buhari was due to attend the ceremony for the unveiling of the scheme until a lastminute cancellation. Extensive consultations followed within Nigeria with the Office of Trade Negotiation claiming it consulted 27 groups, from manufacturers to trade unions. With buy-in secured, Nigeria then joined other African countries to sign. Now the real work must commence. According to the African Union, the AfCFTA will create the largest free trade area in the world. Trade between African countries would increase by 60% up to 2022. Currently, African countries hardly trade with each other; Intra African trade accounts for only 16% of the international trade of Africa. The AU expects that a critical step would be the reduction of tariffs continentwide. There is as yet no timeline for this, but countries at least know that this would happen. Some would be more aggressive than others in managing tariffs. There would also be no quotas or other restrictions on trade. It is the open sea-

son. Countries will thrive or not on the quality and perception of their goods and services. Ni g e r i a s h o u l d d r i v e ahead with AfCFTA. Trade and collaboration are critical to the growth of the continent. Nigeria has a definitive comparative advantage in several areas with which to engage. Even with depletion over the years, the manufacturing sector in Nigeria is still active and participates in Good Manufacturing Practice standards. They manufacture world-class brands across the range, from pharmaceuticals to household goods to industrial products. Even more so, Nigeria has a comparative advantage in soft power. Our Nollywood, music, fashion and cuisine have great appeal across the continent. So, too, our education. Nigeria should drive intra-African trade deploying a mix of soft and hard power cohesively. Now is the time to activate the concept of public and private partnerships, so it becomes more than a buzzword. The ministry of trade should coordinate activities of Nigerian exporters working with other public sector organs

as well as the private sector. We should also listen to other sectors, such as services. Nigerian firms have excelled and have significant equity in various services, from banking, insurance, accounting, law, marketing communication to ICT. Nigerian goods and services have a broad and robust appeal. Many Nigerian service firms, from banking to insurance and others, have established beachheads across Africa. It should count for something positive now. We s h o u l d e m b r a c e AfCFTA . Nigeria should drive it. Nigerian firms and service providers should see the 55 countries of Africa as one enormous market. AfCFTA would mean a thorough stock-taking by all players in the Nigerian market. The call is to raise their games in all areas: products, processes, packaging, marketing and customer service as well as relationships. Our Ministry of Trade should study what the Japanese Ministry of International Trade and Industry did to position Japanese exports to the rest of the world. Plan. Prepare. Participate. Let’s play in the AfCFTA market.

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Electricity conundrum: An unusual feedback from President Buhari

ik MUO

s I write this, I am in a celebratory mood! Writers are usually happy to receive feedbacks on their interventions and when such feedback comes from an ordinarily taciturn person like PMB, it is something to really celebrate. My last piece( Electricity paralysis: from whence comet our help, BusinesDay 4/7/19) received a feedback from our president and it was through a public declaration, not through his customary body language. Before releasing the feedback, I need to, as in our character, give some ‘background to the study’ In its manifesto, which is ‘opendential’( and thus cannot be denied), the APC rightly noted that ‘The crisis in the power sector is one of the major causes of the present collapse of the industrial sector and the inability of small-scale industries to thrive and pledged to vigorously pursue the expansion of electricity generation and distribution of up to 40,000 megawatts in four to eight years…’ In 2016, the APC-FGN initiated the Power Sector Reform Programme to among other things, ‘enhance service delivery, resolve customer complaints and RESET Nigerian electricity industry for future growth’. In the last four years, PMB and his officials had insisted that we have had a wonderful electricity experience, with BRF, on one occasion claiming that

power generation had doubled in the past 3 years, a claim debunked openly by TCN. He them went ahead to make the sacrilegious and escapist statement that the Federal Government is not responsible for your electricity woes’! The last, most notable public intervention on the matter by our president was when he asked his ‘frenemy’ the Ota farmer, and who allegedly spent $16bn on electricity: ‘where is the power’? By the way,it was during the same occasion that he reaffirmed Abacha as the first Saint from Nigeria Then, as led by the spirit, I started my random musings on electricity, and by the influence of the same spirit, PMB read it ( I am sure!)and rather than send me a private feedback, he decided to give the feedback to the whole world. He might also have been influenced by the royal aura of the Oba of Benin, who had visited him with his council of traditional rulers and chiefs to lament about the pathetic electricity situation in his domain. It is a record-breaking confession because it is not in the character of PMB-APC to admit failure; everything has always been ‘double-double’. You now see why I am ecstatic: That President Buhari responded directly to my interventions on the electricity sector by admitting in the market square that our best is not good enough! I have been carried away by the response from PMB that I nearly forgot the feedback from other weighty sources. Sir Chudi Illoh, a Lagos based oil and gas expert said that ‘The fundamental problem with our electricity is regulatory. The Gencos, TCNm DisCos and the Bulk Buying unit are all operating as disparate units. No single articulate objective with milestones that the regulator ERC will channel the different units to key into. No penalty for their collective failures to invest to improve what they met on

ground…those that had access to bank facilities drew on same to acquire the assets without any proper feasibility studies. Almost all the banks with these exposures are presently in serious troubles. All the organizations involved in generating, bulk buying, transmission and distribution are all owing one another and waiting for government bailouts. The solution is not in sight; Pitiable! Another salvo: ‘there was a time when 1990 was the projected year for for stable electricity. Fela even referred to it in one of his songs. Then it turned to the magical year 2000 and almost 20 years later, the situation is worse’. This is from Barrister Osinibi of faculty of Law, OOU, who challenged the various universities of technology and professors of engineering to generate non-DisCo related electricity, ‘even if for the exclusive use of the universities’ Bode, my unusual auto-consultant chipped in that ‘Electricity, after oil, is the tool for syphoning the national treasury and as long as the consumers of electric facilities are not ready to negotiate( I dare say, fight!) for fairness, the taskmasters will continue to modernize their whipping strategies’. The quality of the grammar is not the reason I called him unusual. In the past 37 years I have been owning and driving cars, Bode is the only mechanic I have seen who would give you a detailed written account of how your money was spent and return the balance! Rotimi, one of my former MBA students blamed the government for privatizing such a strategic sector of the economy, arguing that the situation was better when government was in charge and recommended that the government should take back the sector. Well the government’s hands and legs are still in it electricity-pot. and that may well be part of the problems. Emeka Onwujiobi was pessimistic, arguing that to answer my question will take

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The fundamental problem with our electricity is regulatory. The Gencos, TCNm DisCos and the Bulk Buying unit are all operating as disparate units

more than 10 years especially given the blame-trading tendencies of the present government. For those who think 10 years is an eternity, I will share my views about the grandfather of the DisCos, NEPA, in 2004. That was 15 years ago!( next week) Other Matters: Certificatemania, economic empowerment and other forms of madness In the ‘good old days’ education was the surest rout to economic empowerment, via public service employment. People with First School Leaving Certificate( completed or attempted) were COTMA’s( Court Messengers), primary school teachers, clerks and all that. As the number of that class of graduates got saturated, the WASC or its equivalent became the surest route to employment in both private and public sectors. Teacher Training Colleges and Colleges of Education also boomed, producing qualified teachers for the bourgeoning educational sector. By the time people of my generation came on board, degrees and their equivalents had taken over. Then, there were jobs to be picked and by the time I finished ‘corpering’ in 1980, our usual comment was ’I don’t have a job; I am teaching’, indicating that teaching was not a job! Then suddenly, just suddenly, everything scattered. The economy started dancing awilo, SAP came calling and the private sector started shrinking while the public sector became the exclusive reserve of the PEPs( politically exposed persons) and their people. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@yahoo.com ;muo.ik@ oouagoiwoye.edu.ng ; 08033026625

Nigeria’s stake in Russia’s Africa Agenda?

ussia has once sought global domination decades ago and failed woefully. A political, philosophical and economic arrangement intent on rivalling the capitalism of the west was bet on to build an empire to lead its envisioned world order. In proper context, the Union of Soviet Socialist Republic is not Russia as it housed a number of eastern states which together formed a super power that self-destruct in 1991. But Moscow today symbolizes what the USSR had been - a threat to the West. In 2017 Russian President Vladimir Putin said the breakup of the Soviet Union was “the greatest geopolitical catastrophe” of the 20th century, Pew Research writes. “Tens of millions of our fellow citizens and countrymen found themselves beyond the fringes of Russian territory,” Putin said in a 2005 speech. Many Russians share the same sentiments; the number of which in 2017 rose to its highest since 2005 as more number of Russians regretted the breakup of the USSR, the Levada pollster revealed. The poll revealed that sentiments of citizens of the Eastern state is that Moscow’s status has weakened since the totalitarian socialist system of the USSR crumbled and the older population especially reminisce its former glory. Russia does so too, and is planning to do something about it! The Kremlin is crafting and perfecting it’s agenda and whilst it cannot adopt the USSR playbook a hundred percent, is sure about it’s current plans for global influence and the role Africa would play in the melancholic script. Four years ago, Nigeria sought Russia’s help to help fight against the Boko Haram insurgents which have caused major security

concerns to states in the in the north eastern region. Nigeria’s request was made after its government lost faith in the commitment of American and British partners in curbing the menace of Islamic extremist group, hence Mansur Dan-Ali, Nigeria’s Defense Minister, at the 8th Moscow “Conference on International Security” held April 24 recommended Russia as Nigeria’s main supplier of arms and ammunitions. However evidence elsewhere in Central Africa suggest there might be several layers to the pact, maybe unbeknownst to Nigeria, but with important consequences for the most populous black country. The global agenda among the world’s superpowers has Africa at its centre; China is pursuing an economic end that involves building ties with the developing world to guarantee an alliance that would wane western power and result in a widespread adoption of the Chinese influence. United States on the other hand is employing its age-long bag of tricks of threatening sanctions and promising aid to keep developing nations (a category most African nations fit) in check. But Moscow has shown a different plan altogether; One treasuring instability and conflict as gold, very strategic and might not necessarily rely on the commercial benefit of pitching its tent in economic viable regions of Africa or entering trade deals to secure the affection of the continent; a plan that should keep Nigeria on its toes. In similarity of purpose to China, Russia is seeking to usurp Western influence after their 2014 sanction on its economy due to the annexation of Crimea. The move by the west showed a vulnerability in Moscow’s strength

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in world affairs but the Eastern Europe nation is scheming a comeback. Russia had previously not looked in the direction of Africa before the turn of the millennium but has done so increasingly in recent times, a move that, on the face, promises balance and mutual gains but exploit Africa’s trust-just like other super powers have. In 2017, Central African Republic called for help fearing an escalation of ethnic conflict it was not well-equipped to quell and Russia offered to help the central African nation. Since CAR had been restricted by the United Nations in 2013 from shipping weapons into its country without the approval of the U.N. Security Council’s CAR sanctions committee, France, the former colonial masters of CAR had offered to help, although this was met with much resistance by Russia. France had contemplated assisting CAR in purchasing old weapons but had to consider releasing weapons it had seized from Somalia because the original plan to buy arms was quite expensive. Being a member of the U.N. Security Council’s CAR sanctions committee alongside France, Russia was able to frustrate the proposal of France and instead offered to give CAR its own weapons. Russia, in a show of strength, wrestled power from France in placing itself strategically in the latter’s former colony. Notably, France’s foreign ministry advised that Russia strictly respects the guidelines of its arms embargo exemption in ensuring the weapons can be accounted for and do not end up in the black market. But Russia which sent CAR weapons and as many as 500 military trainers, employed private contractors and mercenary groups, which were officially banned in Moscow, to carry out its activities.

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TEMISAN ADIO

In an interview with Voice of Africa, Kiril Avramov, a post-doctoral research fellow at the University of Texas at Austin’s Intelligence Studies Project explained that mercenaries should be viewed as “an instrument which allows plausible deniability but also hardpower projection, which has multiple uses in contested areas.” The activities of Russia began to cast doubt in the minds of international observers who feared an agenda of Moscow centered on exploiting the conflict in CAR for its own selfish ambition. The murder of three Russian journalists investigating activities of a Russian security firm The ‘Wagner Group’, a paramilitary organization operating in CAR. Russian officials denied the existence of the Wagner Group which is said to have more than 2,000 mercenaries- perhaps as unwittingly predicted by Avramov-and refused to comment if its slain citizens were journalists. But exiled Russian tycoon Mikhail Khodorkovsky claimed the Russians killed in CAR were indeed journalists working on a project called “Russian Mercenaries” The project was sponsored by a media outlet linked to Khodorkovsky. Maybe a coincidence, or perhaps as was suggested by CAR government, the journalists died at the hands of rebels, but more recent events suggest something more sinister. • To be continued Adio, a political commentator, writes from Lagos

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Thursday 11 July 2019

BUSINESS DAY

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Thursday 11 July 2019

BUSINESS DAY

BUSINESS TRAVEL How to grow cargo volumes, economic activities in PH international airport - PrimePort MD Otunba Femi Adewunmi is the founder and MD of PrimePort Logistics, a Port Harcourt based Logistics Company specialising in clearing, forwarding and haulage. With real expertise is in importation and exports, PrimePort provides an end-to-end logistics solution. In an interview with IFEOMA OKEKE, Adewunmi talks on how cargo volumes can be developed in Port Harcourt International airport and how the operations of Turkish Airlines into will spur economic development in the South-South region, amongst others issues. With Turkish Airline recently operating into and from Port Harcourt International Airport, do you think this will spur economic activities in the destination? rimePort Logistics welcomes Turkish Airlines into Por t Harcourt International airport. Turkish Airline has made a very smart move and I think their move to Port Harcourt is going to be very successful. There has always been a gap in the SouthSouth region. Most of the current airlines that come to Port Harcourt, such as Air France and Lufthansa, focused on the business market, such as the oil and gas market. So, there is a gap in the lower middle end of the market, such as the people that go on holidays, students and traders. These people have been neglected, so they tend to travel to Lagos to board an Ethiopian Airlines, Turkish Airlines, Etihad flights, amongst others. This often discourages people, as people who would have travelled more frequently will think about the distance of going to Lagos and the additional cost of flights and other logistics. So, this is a fantastic move by Turkish Airlines and it is going to draw a lot of business into Port Harcourt and surrounding States and cities such as Owerri, Enugu, Okwa, Calabar, Abia, Aba, Warri and Bayelsa. These places are between three to four hours from Port Harcourt. Hopefully, this will draw all the other type of markets, other than oil and gas into Port Harcourt and increase their business activities in that area. It is going to be very successful and I am hoping that it will bring in some other value airlines, so they can also tap into the opportunities. Once there are more people coming into Port Harcourt, there is more opportunity and businesses. Everybody in this region will benefit and the cost of logistics and importation will be relatively cheaper because you can ship closer to the place of use, rather than take it to Lagos and start trucking it for 24 hours to other states. It is more environmentally friendly for Port Harcourt to be that hub. In terms of cargo, it is going to create the demand. There are lots of opportunities in the South-South that are untapped. We in the clearing, forwarding and importation busi-

Otunba Femi Adewunmi

ness hope that this will start gaining more traction. It will increase options for Port Harcourt. Before, we were restricted to two or three cargo airlines, now we have more. Cargo can be included in the passenger flight. What are economic activities going on now in Port Harcourt that could encourage traffic? In the oil and gas industry, there are lot of projects going on now. The NLNG train 7 project, the rehabilitation of NNPC refineries, the new Total Gas project. We are very optimistic that Turkish Airlines will do well and these projects will bring in more airlines and we want to see Turkish Airlines quickly bring in cargoes planes. Do you also think Turkish Airlines’ presence in Port Harcourt will increase investment in oil and gas? I think the market for Turkish Airlines is going to be different. I think it will be traders and personal travel. It could supplement the oil and gas a bit but I don’t think it will be significant for oil and gas because most if the traffic from oil and gas is from Huston, Singapore, Dubai, Netherlands and UK. Turkey is more of shipping and textiles. It might help the marine industry because there are lots of marine businesses there. In your little ways, what are you doing to ensure export of www.businessday.ng

Nigerian products or commodities are encouraged? We are service providers and we provide services to exporters and importers and we cannot on our own drive export but what we can do is to ease exports. This is to ensure the logistics flow and the cost of providing those logistics services in such a way that it induces and helps exports is provided. We cannot impact directly because we are just a service provider but as a company, we provide export services to freight forwarders. Fifty percent of our earnings in Prime-

“

port Logistics is in direct inflow. We partner with freight forwarders to provide export services to them. By providing these services to foreign partners, we are been paid in forex and that money is coming back into Nigeria. How do you think the government can encourage exportation through our airport and ports in Port Harcourt? I think the government is already doing a lot. We are not an industrial country and our farming is predominantly in the north and I think every area needs to specialise in what is available in that area. Because of the pollution caused by our oil and gas on the environment, South-South is not a very friendly area for farming to thrive. However, they can look for ways to export by products of oil, which is some petro-chemicals, fertilizer and industrial fishing amongst others. The government is an enabler. They need to focus on policies, improving ease of doing business, reducing corruption amongst others. These are some of the things the government is doing and it takes time. I think the SouthSouth should focus on what we have. Farming cannot be for every single part of Nigeria. We need to leverage our strength and look for avenues to drive them. Lagos handles about 70percent of air traffic. Do you think there is a market for other international carriers who wish to join Turkish Airlines, Lufthansa and Cronos Airlines in Port Harcourt? The potential in the SouthSouth is huge and a lot of it is un-

We are focusing and encouraging direct importation into Port Harcourt and we have made a lot of difference since we started in 2014. We have impacted the kind of volumes that come. Lagos is doing more than what they are supposed to be doing and that is why we have challenges in Lagos

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tapped. There is a lot of gap in the market and everything is focused on Lagos and Abuja. This traffic going to Lagos is potential traffic that can come to the South and it is not coming because there are lot of historical issues. That is why my company and some few others are thriving to ensure Port Harcourt gains back its position as a hub. The problem with Port Harcourt is that there is no volume, so the airlines won’t come. The structure is not there. Do you put the structure first and then hope that the traffic will come? So, we are focusing and encouraging direct importation into Port Harcourt and we have made a lot of difference since we started in 2014. We have impacted the kind of volumes that come. Lagos is doing more than what they are supposed to be doing and that is why we have challenges in Lagos. Port Harcourt is under performing because the traffic is going somewhere else. So it needs to be spread more, so it is a win-win situation. Functional ports appear to be focused in Lagos alone. What do you need to do to decentralise these ports? There are two main ports in Port Harcourt and there are various other privately managed ports and jetties. Sadly, everybody only knows Lagos and don’t see the value of coming to Port Harcourt because of perceived problems of militancy and insecurity. However, those things are no longer there, they are just perceptions. I have been in Port Harcourt for many years and I have no problems and I have not experienced any problem. We are successful here. There is less competition and opportunities in Port Harcourt. What kind of cargoes does Port Harcourt currently export, especially with the deliberate efforts by the federal government to drive exports? The main export cargo traffic in the South-South is in repair and return of oil and gas equipment. A lot of people send equipment for repair and bring back. Exports are also predominate equipment that expatriates or companies want to use to do something and they take it back, especially when they are not in Nigeria. There are some farm produce but the airport do not have a refrigerator and there is a limit to what can be done without the facilities.

Thursday 11 July 2019

BUSINESS DAY

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BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Banking

Nigerian apex bank’s 60% LDR directive, credit negative for lenders - Fitch ...raises rated-banks’ loan growth forecast to 10% ISRAEL ODUBOLA

he New Yorkb a s e d Fi t c h Ratings has faulted the Central Bank of Nigeria’s recent directive to have the country’s lenders give out at least 60 percent of deposits in loans, saying it is credit negative for the banking industry. Fitch, one of the big three credit rating agencies, believes that the guideline will compel banks to turn on their lending tap to riskier borrowers, thereby putting banks’ asset quality at risk. “Due to the new loanto-deposit ratio (LDR) requirement, we have raised our 2019 loan growth forecast to an average of 10 percent for Fitch-rated banks compared with 1 percent growth in 2018” Recall that the Central Bank of Nigeria last week mandated deposit money banks to maintain a minimum loan-to-deposit ratio of 60 percent effective September 30, 2019 in a bid to spur lending particularly

small and medium-sized enterprises, retail, mortgage and consumer lending. Erring banks will be sanctioned by depositing additional cash reserves equal to 50 percent of the lending shortfall. To have the apex bank’s 60 percent LDR target achieved within the space of three months could be tough for lenders espe-

cially if customers’ deposits continue to grow at current level. The current 57 percent LDR of Nigerian lenders is 3 percent short of CBN’s new target, and one of the lowest compared to emerging markets peers – India (79%), Kenya (76%) and South Africa (94%), according to figures compiled by Bloomberg.

Nigeria’s low LDR ratio indicates that banks are risk averse towards the economy that is yet to fully recover from the 2016 economic slump that skyrocketed lenders’ default loans. For instance, despite the deposits received by the five big banks (First Bank, Zenith, Access, UBA and GTB) rose to a five-year high at N18.7 trillion in the first quarter of 2019, LDR

dipped to a five-year low at 54 percent as banks’ prefer investing cash in the fixed income market to disbursing funds to real sector. “It is unlikely that there is sufficient demand from good-quality borrowers for banks to meet the target without relaxing their underwriting or pricing standards” said Fitch, adding that lenders continue

to battle with high impaired and other problem loans, which is partly the cause for muted lending since 2016. The current economic conditions do not support banks increasing their loan book, even as rapid lending during sluggish economic recovery could worsen lenders’ asset quality. Regardless of the risks associated with rapid loan growth, Fitch urged Nigerian lenders to comply with the 60percent LDR target, saying penalty for erring might drag performance. “Depositing cash at the central bank is highly unattractive for banks as they receive no interest on it, in contrast to the high yields they can earn by holding treasury bills and government bonds” The rating firm said it will monitor how lending develops in the third quarter at individual bank and sectoral levels, maintaining that fast loan growth in the face of Nigeria’s hostile operating environment could hamper lenders’ asset quality and capitalization, two key sensitive indices for rating.

Health

NSE lists 586.4m additional units of Fidson shares SEGUN ADAMS

he Nigerian Stock Exchange (NSE) has advised the investing community of its listing of additional 586,360,250 ordinary shares of Fidson which was allotted by way of a Rights Issue. The additional shares were listed on the daily official list of the NSE on July 1, 2019. According to a statement issued by the exchange on Monday July 8, the additional shares were from Fidson’s Rights Issue which took place in the first

quarter. Around May, Fidson opened for subscription a Rights Issue involving the issuance of 750,000,000 ordinary shares of 50 kobo each at N4.00 per share on the basis of 1 new ordinary share for every 2 ordinary shares held as at 28 December 2018. The Rights Issue was in a bid to raise N3 billion for the company, of which the company said about 60 percent of the issue proceeds would be used to clear expensive short term debts and reduce finance cost. The Right Issue was 78.18 percent successful.

A Right Issues is a process by which a company raises capital by offering additional new shares in the company to existing shareholders. The additional shares are offered at a discount to the market price on a stated future date and in proportion to their existing holdings. While the shareholders are not obligated to subscribe, an eventual increase in the total number of share units would dilute holdings of owners that waive their right. According to the exchange, with this listing of the additional 586,360,250

ordinary shares, the total issued and fully paid up shares of Fidson Healthcare has now increased from 1,500,000,000 to 2,086,360,250 ordinary shares. In Q1 2019, Fidson recorded a decline in revenue of about 2 percent from N3.61 billion in the corresponding period of 2018. The company pared profit to N144.9 million in the same period. H o w e v e r, I m o k h a Ayebae, Head of Finance and Accounts, Fidson Pharmaceutical, said the company’s revenue is expected to reach N20 billion in 2019 and N23 billion in 2020.

Ayebae who made the disclosure during Fidson’s Fact-Behind-the-figures at the NSE in April said profit before tax to hit N3.4 billion by the end of 2019. Increase in volume owing to expanded production at Fidson’s WHO compliant factory helped the company grow its revenue by 15 percent to N16 billion in 2018. On the heels of a rise in cost of sales and finance cost owing to company specific and industry wide challenges, Fidson was unable to translate revenue gains to improve its bottom-line as the company

noted a loss of N97 million last year. Ayebae at the presentation said Fidson would also use the capital raised to inject fresh working capital into the business in order to take advantage of market opportunities to grow the business. Fidson is a Lagos-based pharmaceutical manufacturing company that develops and manufactures a wide range of pharmaceutical products such as anti-infective, anti-arthritis, endocrinology, gastrointestine, anti-retroviral, cardiovascular, pain relievers and consumer goods.

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

Thursday 11 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Technology

Hollaport app launches in Nigeria to drive mobile money penetration ISRAEL ODUBOLA

ollaport, a new p a y m e n t- i n messaging platform that brings a mix of social media excitement with financial technology, has been introduced to drive mobile money penetration in the country. The two-in-one app which gives its users the ability to boost their social interaction through chatting, receiving and sending of money and other numerous services was launched on Saturday at Zone Tech Park, Gbagada, Lagos. Speaking during the launch in Lagos, Kabiru

Rabiu, the Managing Director, Hollaport, stated that Hollaport App was solely an indigenous platform designed to meet the needs and yearnings of Nigerians, especially the unbanked in rural communities across the country. Rabiu pointed out that there were a lot of unbanked areas in Nigeria, adding that the platform would create the opportunity for Nigerians in remote communities to partake in the various banking transactions. He disclosed that the journey of the app started two years ago and was borne out of the need to ease financial transaction and increase financial inclusion as well as transfer money and make

payments not only in Nigeria but throughout the African continent. According to him, Hollaport is a Nigerian paymentin-messaging platform designed to provide both social and financial solutions to its numerous users through technological aids. “The application has two major features at the moment. It has chat and payment features but we are going to include additional features in the nearest future. We have airtime top-ups, cable, electricity, and data subscription and paycode – a technology that enables users to withdraw cash from ATM without the need to have a card or bank account.

L-R: Simi Nwogugu, executive director, Junior Achievement (JA) Nigeria; Ololade Awogbade, head, citizenship and sustainability, Union Bank; Sola Adesakin, partner, Booksmart Financial Solutions; Helen Brume, group head, oil and gas, Union Bank Nigeria Plc; Ngover Ihyembe-Nwankwo, head of client coverage, Rand Merchant Bank, and Adaora Ude, head HR and administration, Sigma Pensions Limited, after an empowerment session, at the 2019 Leadership, Empowerment, Achievement and Development Camp for Girls hosted by JA Nigeria in Lagos. Pic by David Apara

Felix King Foundation launches Market Moni, empowers rural widows DANIEL OBI

elix King Foundation has empowered over 200 widows under the foundation’s newly launched Market Moni programme. The women are from eight communities in Esan central Local Government Area of Edo State, a statement has said. The programme which took place recently at the Esan Central Local Government Area, Irrua Edo State with Esan Central LGA chairman, Edokpa Idemudia Waziri; Betty Okonoboh, wife of the former speaker of Edo State House of Assembly and Pastor Henry Eiremiokhae, Edo State Coordinator for the foundation in attendance. Widows Market Moni is an empowerment scheme for rural widows by the Felix King Foundation. The scheme is

a grant for rural widows with young kids and elderly widows without children to take care of them. Widows are encouraged to form themselves into groups, just like the traditional village women meeting group. The foundation said each group is given a trade support grant of up to N500,000. The groups are thereafter upgraded into a corporative, same as market corporative format for sustainability and development, the statement further said. Each established coorporative will get additional support in areas of coorporative business formation like; cassava mill , Palm oil mil, Phone charging hub store , etc as deemed relevant to the need of the community and the corporative business opportunities. Through these coorporative, members will have access

to more money to grow their individual markets, the statement further highlighted. Speaking at the cheque presentation ceremony, the executive chairman of Esan Central LGA, Edokpa Idemudia Waziri said, “I am sure, our brother, Felix King who set up this foundation, is not the richest person in Esan land or in Edo central but he deems it fit to give out to the less privileged. This is a noble course and we must support it.” Reassuring on the market moni programme, the foundation founder, Felix King said, “I feel so emotional looking at these women and the tears of joy rolling down their cheeks and looking at how grateful they are and what impact this market moni programme is going to have in their lives as well as giving them that opportunity to hope again,” he added.

Eko innovation center commits to mentor, fund commercially viable tech-driven start-ups KELECHI EWUZIE

ko Innovation center founder, Victor Gbenga Afolabi says the center is committed to incubate, accelerate, mentor and fund innovation and technologically driven start-ups. He said the center was set up to see how technology can be used to scale up Lagos State and Nigeria’s economy, adding that only start-up that has commercial viability, strong social impact and footprint with a minimum thresh hold of 10 million people will be considered for admission. Afolabi while speaking at an evening of ‘Conversations on Moral leadership’ organised by the center in Lagos said we want to through this center solve many of the gaps in this

eco-system around mentoring and funding. “We have business clinics, faculties that are going to spend a minimum of 18 months and three years with the cohorts that come in here teaching and providing shared services from tax management, procurement, admin and finance”. “We want to ensure that companies that come into the incubation, have more chances of survival because of the strong hand holding mentorship role that will be provided for them. The center is all about from mentor to commercialisation”, he said. Jacqueline Novogratz, founder/CEO, Acumen, a nonprofit global venture capital fund whose goal is to use entrepreneurial approaches to address global poverty while

speaking said the establishment of the Eko innovation center demonstrates a climb of social entrepreneurs who wants to get serious and solve the problems in the world. She pointed out that the founder of centre represents the kind of role models that Nigeria need for the kind of inclusive capitalism inspiring entrepreneurs are all yearning for. On the organisation of the event, Afolabi observes that leadership and morality to a large extent has impacted people and start-ups ability to attract patient capital. According to him, “The lack of proper leadership have made it difficult for enterprises to attract the kind of capital funding required for their acceleration and scale-up and those are the things we want to solve”.

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L-R: Richard Borokini, director-general, Chartered Insurance Institute of Nigeria; Obabiolorunkosi Balogun of Lagos State University, second prize winner; Eddie Efekoha, MD/CEO, Consolidated Hallmark Insurance (CHI) plc; Amole Korele of The Polytechnic, Offa, first prize winner; Benedette Ogbonna, representative of commissioner for Insurance, and Ernest Orjieh of University of Lagos, third prize winner, at CHI plc annual essay competition 2018 prize presentation to the winners in Lagos

L-R: Okechukwu Enelamah, former minister, Industry, Trade, and Investment; Joe Ezigbo, MD/CEO, Falcon Corporation Limited; Audrey Joe-Ezigbo, executive director/co-founder, Falcon Corporation Limited and president, Nigerian Gas Association; Ben Akabueze, director-general, Budget office of the Federal Republic of Nigeria, at the Falcon Corporation Limited 25th Anniversary event which recently in Lagos.

L-R: Demola Sogunle, chief executive, Stanbic IBTC Bank; Oscar Onyema, CEO, The Nigerian Stock Exchange (NSE); Yinka Sanni, CEO, Stanbic IBTC Holdings Plc; Jordi Borrut Bel, MD, Nigerian Breweries plc, and Sade Morgan, corporate affairs director, Nigerian Breweries plc, at the 2019 NSE Corporate Challenge tagged ‹ Let›s e- race Cancer› in Lagos.

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Thursday 11 July 2019

Innovation

BUSINESS DAY

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

With AfCFTA, its swim or drown for tech startups Stories by FRANK ELEANYA

igeria’s President Muhammadu Buhari, on Sunday, signed the African Continental Free Trade Agreement (AfCFTA), bringing to a close months of uncertainty and bickering and potentially opening up new opportunities and headaches for ambitious tech businesses across the continent. Nigeria, Africa’s largest economy, had held off penning signature on the historical agreement due to concerns at home that Nigeria could be flooded with low-priced goods, confounding efforts to encourage moribund local manufacturing and expand farming. The Nigerian Manufacturers Association, one of the most powerful trade groups in the country, mounted stiff opposition to the agreement culminating in the setting up of a committee by the presidency. The committee was tasked with coming up with recommendations that ensure that businesses are protected under the AfCFTA regime. The committee finally submitted their report recently which eventually led to the turnaround. While signing the agreement, the President said “As African leaders, our attention should now focus on implementing the AfCFTA in a way that

develops our economies and creates jobs for our young, dynamic and hardworking population.” Although Ghana gets to host the secretariat of the AfCFTA in recognition of Kwame Nkrumah’s contributions to African unity, a paper in 2012 presented by two UNECA specialists, said the agreement have the potential to unite Africa’s 1.3 billion population, create $3.4 trillion economic bloc and lead to around 52.3 per cent boost in intra-African trade by 2022. The AfCFTA is a dream come true for tech businesses with plans big enough to expand their innovative solutions beyond their home countries. It could also be

nightmare for small startups without the capital and technical capacity to withstand the competitive challenge it will create. “Easier mobility will favour technology because the younger demography of those in tech will be more mobile within the continent,” says Collins Onuegbu, executive vice-chairman of Signal Alliance. “It’s an opportunity for a country like Nigeria with large market offered by its size to attract smart businesses from Africa to locate in and take advantage of our market.” It also means increased pressure for smaller technology businesses without sufficient capital to scale their

Despite US ban, South Africa not backing away from 5G plans with Huawei

outh Africa’s President Cyril Ramaphosa, on Monday, said the country will not back down from its 5G plans with Huawei despite pressure to do otherwise. The second largest economy in Africa maintains a healthy economic relationship with both the United States and China. The US had recently placed a ban on Huawei sparking off a trade war with China that has affected many businesses. At the maiden edition of South African Digital Summit, the President described the trade war between the two countries and the US action on Huawei as an indication

of protectionism tendencies capable of causing a setback of its 5G network ambitions and other telecommunication plans. Ramaphosa who described Huawei as the “victim”, disclosed that telecommunication operators in South African had expressed concerns about the trade war. “Telecom companies got together and wrote me a letter saying that this tussle between the US and China around the company called Huawei is going to hurt us because we can’t go to 5G and only HUawei can lead us to 5G,” Ramaphosa said. Hauwei and Rain, a mobile data-only network had in February launched

the first 5G commercial network in South Africa. In the first phase of the roll out, Rain said it deployed 20 new base stations in Johannesburg and Cape Town, covering the main districts of the two cities. “We support a company that is going to take our country and indeed the world to better technologies, and that is 5G,” Ramaphosa said. “We cannot afford to have our economy to be held back because of this fight. We are pleased that at the G20 Summit, China and US were able to meet and they said they will relax some of the constraints being imposed on Huawei, so that it can continue to deal with other various companies.”

business. For instance, while Nigeria’s commercial capital, Lagos is home to some 500 tech businesses, only 44 startups were able to attract a total investment of $110.9 million in the first half of 2019, according to data from TechPoint. A difficult business environment made worse by a recessive economy, multiple taxation, returned invoices, poor technology infrastructure and policy flip flops has contributed immensely to the high failure rate in the tech ecosystem. In a January interview with Punch, Leo Stan Ekeh, founder of Zinox said the current failure rate of startups in Nigeria is at 75 per cent.

The case is not helped with the silo mentality of most founders. It has meant that local tech startups are not strong enough to dislodge big competitions. In many cases they end up as the lunch of the big and foreign competitions. Onuegbu however says with AfCFTA, new generations of African businesses will be built with Africa in mind and not the current silo thinking for most businesses born in Africa. Although there are many reasons to be excited, the reality however is that AfCFTA is still a paper agreement, it has not yet begun, even with majority of the leaders signing up for it. It still has to map out strategies for continent-wide trade facilitation, a common external tariff and full liberalisation. Archie Matheson, head of Policy & Analytics at Botho Emerging Markets Group estimates that most of the AfCFTA plans are likely to take effect between 5 to 8 years depending on how fast negotiations are agreed upon. “Therefore, it is unclear what the impact of AfCFTA will be, and when it will start to be felt,” he wrote. “Even so, it is highly likely that the inclusion of exempt will limit intra-African trade gains. Given the narrow range of industries and produce in many African countries, a few exemptions could easily end up covering a high proportion of a country’s exports,

Why Nigerians’ data plans are vanishing quickly

yo m i d e O ye t o l a a mother of two starred at the SMS alert on her phone for the third time and could not believe the message she was reading. The 2 Gigabyte (GB) data plan she bought three days ago from her bank’s mobile application for N2000 ($5.53) was now remaining 200 megabyte (MB). She had upgraded her plan after repeatedly seeing her 1.5GB vanish in two days. “I don’t know what is eating my data?” Oyetola who earns a monthly salary of N80, 000 as an executive secretary complained to her colleague at work the next day. For two days, 7 to 8 July, 2019, thousands of Nigerians took to twitter to express their anger at the rate their data were vanishing. A hashtag #ReviewYourDataRates that started with a tweet from Henry Shield, head of Mission, Leadership and Accountability Initiative calling Twitter influ-

encers to a “national agitation” gained momentum and became a trending topic. As it turns out, many more Nigerians are in Oyetola’s shoes. “I spend no less than N5000 f or data with @MTNNG for less than 2 weeks at times.” said Ijeoma Odimegwu from her handle @ijeoma_odimegwu, “@Gloworld network is absolutely terrible in my area. @AirtelNigeria rates are as high as MTN.” Another user identified as Omotore tweeting the handle @mamakun said “I am almost spending N2500 per week for data on @AirtelNigeria. I am not a heavy browser. @ MTNNG is even worse; IGB in less than 24 hours and my phone was not in use.” Hundreds of others had similar complaints. Usually, when a subscriber buys a monthly subscription it is in hopes that it would last for the duration of the month. But this is never the case for

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

so restricting potential new regional trade.” Additionally, Nigeria tech startups may find themselves at a disadvantage as a result of poor technology and general infrastructure compared to peers from more advanced African countries. The cost of creating solutions without proper or advance infrastructures ultimately impacts the down-line. Niyi Yusuf, managing partner at Verraki told BusinessDay that while there may be infrastructure constraints, it should rather propel tech startups to upscale and play to global standards as the “Nigerian standard” will not be enough to succeed in the other 54 countries in Africa. “There will only be one standard – the global standard,” says Yusuf. He added that the war for affordable talent will become more intense and technology companies will have to be more strategic and deliberate in the way they attract, develop and retain talents. “There is a lot to be done by several countries in Africa to improve the efficiency of their markets,” says Onuegbu. “The pressure from Africa will force local policy makers to improve ease of doing business for their local businesses. Nigeria as an example must work on its ease of doing business to attract the right kind of investment into its economy and avoid being the dumping ground for finished products.”

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various reasons that have more to do with the user than the quality of service the internet provider is giving. One of the easiest ways to monitor your data is to set limit and alerts for your data consumption every month. This is often easier said than done, because there is always the temptation you face while on social media platform like Facebook or Instagram for instance. You can also turn off autoupdates which eats hundreds of megabytes in seconds. For Android, simply go to settings in the Google Play Store, tap the menu, settings and autoupdate apps features. The mobile version of a websites not only offers a better readability and smoother scrolling, you also read content at far less data than you would on desktop version of the website. Finally, don’t download files as they are. Find time to compress them first before downloading.

Thursday 11 July 2019

BUSINESS DAY

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Thursday 11 July 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open 28 – 06–19)

31,924.51 29,851.29

N13.206 trillion

29,966.87

Week close (5– 07–19)

29,270.95

N12.902 trillion

29,966.87

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,251.12 1,209.18

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

782.29

1,255.68 1,213.90

366.87

123.75

622.33

253.23

1,965.27

1,087.80

1,058.27

346.90

122.55

604.68

251.34

1,914.69

1,123.49

1,045.52

781.58

Percentage change (WoW)

-2.32

-1.55

-3.35

-0.09

Percentage change (YTD)

-6.87

7.47

-16.02

-1.54

-3.33 -14.34

-5.44 -13.04

-0.97 -3.11

-2.84

-0.75

-19.25

-16.84

-2.57 -14.29

3.28

-1.55

-9.24

-13.41

NSE expels 38 dealing member firms in 5 months Iheanyi Nwachukwu

he National Council of the Nigerian Stock Exchange (NSE) approved the expulsion of 38 Dealing Member Firms between January 4 and May 17, 2019. A circular to NSE dealing member firms identified the expelled firms to include Andruche Investments Plc. The Exchange had previously revoked the licenses of the affected firms. Angela Eccles Limited was also expelled. Other expelled firms are: Associated Trust Investment & Finance Limited, B e ave r S e c u r i t i e s L i m i t e d , Betraco Securities Limited, Cobal Ventures Limited, Corporate Focus Securities Limited, and Financial Intermediaries Limited. Also affected are GF Securities Limited, IB Finance Limited, Integrated Securities, Integrated Ve n t u re s Ni g e r i a L i m i t e d , Intercommerce and Consultant Limited, Investment & Capital Development Company Limited, Investment Trust Company Limited, and Kamrash Securities Limited. Lakeside Asset Management Limited, M & F Investment & Securities Limited, Milestone Investment Services Limited, Millennium Investment Trust Limited, Moji Securities & Investment Nigeria Limited,

Morgan Trust Asset Management Plc (formerly known as IMB Morgan Plc and formerly known as IMB Securities Plc), and Multibank International Securities Limited were also expelled. Nationwide Finance and International Securities Limited, Novelty Investment Limited, Optimus Finance and Securities L i m i t e d , Pab o d Fi na n c e & Investment Company Limited, Pabofin Securities Limited, Path Securities & Investment Limited, Shiroro Finance Limited, Tassel Finance & Investment

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Company, Unique Securities & Finance Services Limited, Upper Credit Securities and Investments Limited, and Wellsfargo Capital Limited and Westland Investment Limited whose licenses were previously revoked by the Exchange were also expelled as Dealing Member firms of The Exchange. Olufemi Shobanjo, Head, Broker Dealer Regulation, NSE who advised dealing members not to engage in any activity with the above mentioned firms reminded them of reminded of the provisions of Rule 6.12 (a)(3): Specific

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Actions Requiring Prior Consent of The Exchange, Rulebook of The Exchange, 2015 (Dealing Members’ Rules) which states that “a Dealing Member shall not be allowed to do any of the following without the prior written consent of The Exchange: Employ any of the following: Directors, Authorized Clerks or other persons including Principal Officers such as the Chief Executive Officer, Chief Finance Officer, Chief Compliance Officer and Chief Risk Officer, who have been indicted by The Exchange or the Commission.

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Also, the NSE asks Dealing Member not to employ “any person who was an officer or employee of a Dealing Member expelled from The Exchange; any person expelled, as an Authorized Clerk or its equivalent, from any other exchange; any person refused admission as a member of the Chartered Institute of Stockbrokers (CIS) or any person expelled from its membership; any person expelled as a member of any Professional Association or Institute; any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty”. The list of expelled dealing members increased in May as Mercov Securities Limited, a Dealing Member Firm that did not comply with the requirements of the Minimum Operation Standards of the Exchange was expelled and its Dealing Member License revoked. Also, Resano Securities Limited, another Dealing Member Firm that did not comply with the requirements of the Minimum Operation Standards of The Exchange was expelled and its Dealing Member License was revoked. Transafrica Financial Services Limited, another Dealing Member Firm that did not comply with the requirements of the Minimum Operation Standards of the Exchange was expelled while its Dealing Member License was revoked.

Thursday 11 July 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

Equity market pares prior gains… YTD return at -6.9%

he local bourse drew the curtain for the previous week on a bearish footing as interest for equities continue falter. O v e ra l l , t h e N S E A S I depreciated -2.3percent to close at 29,271.0 points while the year-to-date (YTD) return worsened to -6.9percent. Consequently, market c a p i t a l i s at i o n t r i m m e d N148.5billion to finish at N12.9trillion. Activity level was downbeat as average value and volume of stocks traded for the week shed 64.5percent and 42.1percent respectively to end at N2billion and 204.9million units respectively. Performance across sectors remained broadly bearish as all sectors under watch closed in the red territory save for the Industrial Goods (+3.3percent) sector indicator trended northwards for the week buoyed by CCNN (15.5percent), CUTIX (+10percent), and WAPCO (+14.2percent). On the flip side, the Banking

Money Market : CBN resumes OMO mop-up System liquidity level stayed buoyant in the prior week as sizable naira inflows outweighed the overall outflows. At the start of the week, due to the elevated liquidity level, the CBN returned to the OMO market after 3-weeks. Notably, despite healthy subscription levels at the Tuesday auction, the Apex bank surprisingly did not allot any bills as it opted for a “No sale.” Total OMO mop up for the week came in at N664.1billion. This was in addition to outflows via the weekly wholesale FX funding sales. Overall inflows were in the form of Jun-19 Bond maturity, OMO maturity and FAAC distributions. Meanwhile, inflows from Nigerian Treasury Bills (NTB) maturity and Retail FX refunds were later mopped up via NTB and retail FX funding sales. In all, average interbank funding rates (OBB & O/N rates)

(-5.4percent), Consumer Goods (-2.8), Insurance (-1.0) and Oil & Gas (-2.8percent) sectors trended southwards over the week dragged by sell off in GUARANTY (-11.9percent), INTBREW (-6.8percent), MBENEFIT (-13percent), MOBIL (-7.1percent), NEM (-5.3percent), NESTLE (-3.2percent), and ZENITH (-2.3percent). Also, the secondary listing of Airtel Africa’s IPO on the NSE which was meant to take place last Friday (July 5th, 2019) was postponed to enable the Telco meet its listing requirements. Investor sentiment as gauged by market breadth was underwhelming, closing at 0.5x as only 19 stocks advanced against 42 decliners. This week, risk for equities is unlikely to change significantly with the expected listing of Airtel broadly driving performance.

started the week on a high of 8.54percent but trended lower to end at 4.2percent. Looking at the result of both OMO and NTB auctions, we note that investors are keenly interested in the long-dated bills - Bid-to-cover; OMO (3.7x) and NTB (5.4x) - as they look to take advantage of the highest yields on offer in a now normalized fixed income environment. No t a b l y , O M O ra t e s remained largely attractive relative to NTB rates as average OMO rate printed 46bps higher than NTB rates. Elsewhere, the impact of the elevated level of liquidity outweighed the resumption of OMO sales by the CBN as average yields at the secondary NTB market declined 19bps w/w to 11.9percent. This week, the CBN should maintain its liquidity tightening stance due

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to expected OMO maturity on Thursday. We expect interest at the secondary market to remain strong, driven by elevated liquidity in the system. Bond Market: A bullish week at the secondary market On w/w basis, activities at the domestic secondary bond market stayed bullish as average bond yields (excluding the now matured Jun-19 note) fell circa 20bps w/w to close the week at 13.8percent. The bullish performance was largely spurred by investors looking to reinvest funds from the Jun-19 Bond maturity and coupon payments. Nigerian sovereign Eurobond market sustained the prior week’s bullish trend as the foreign investors continued to seek for alpha in high yielding Emerging Market (EM) assets. Consequently, yields on FGN dollar bonds moderated across the curve and average yield declined by 18basis points (bps) week-on-week (w/w) to 6.2percent. Similarly, interest in Corporate Eurobonds was largely positive as 4 of the 6 corporate notes we track recorded decline in yields. However, the positive performance was weighed by the sell-off that continues to trail First Bank of Nigeria Ltd (yield up 3.6percent) early redemption announcement. Additionally, yield on the 2021 Ecobank Nigeria dollar note inched higher by 9bps w/w as investors reacted negatively to Moody’s change in Ecobank Transnational Incorporated’s (the parent company) outlook from stable to negative owing to financial challenges in the Ecobank Nigeria subsidiary, the Group’s largest subsidiary. Thus, the average yield for the corporate Eurobond segment advanced by 50bps w/w to 8 percent. This week, we expect interest in the bond space to moderate, especially if the CBN ramp up its liquidity mop ups. In the Eurobond space, the sustained dovish chorus by global central banks is expected to continue to spur interest in EM/FM assets (Nigeria inclusive). FX : Relative stability persists, turnover at I&E touched a new high The FX market continues Continues on Page 23

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

Sigma Pensions canvasses financial literacy to complement Govt plan on financial inclusion Modestus Anaesoronye

ne of the leading Pension Fund Administrators in Nigeria, Sigma Pensions, has reiterated its commitment to improving financial literacy among young Nigerians as part of efforts to compliment government plan on financial inclusion. Adaora Ude, head, Human Resources and Administration, Sigma Pensions said the pension administrator ’s focus was on training young people on the benefits of saving and investments. She noted that building an allinclusive economy requires the promotion of financial literacy among teenagers and youths in the country. Ude made the comment at a panel during this year’s LEAD Camp, a workshop organised by Junior Achievement Nigeria (JAN) for secondary students girls about to enter university in Lagos yesterday. Ude said: “We partnered with JAN last year, because we are interested in what they are doing with young people, both female and male young Nigerians. And it’s really about

introducing financial literacy to them at an early stage.” “For us at Sigma Pensions, we believe you have to start early, to groom people, to talk about savings and help them incorporate that saving culture. We realised that retirement and pensions are two different things. Retirement is the end of the line, but pensions is about saving, about today. So you have to start early and talk to people about cultivating a savings culture. And that’s why we are starting with young people.” She further said: “We have gone to different schools, NYSC camps, to talk to young people about savings and what this partnership does for us is to put in the forefront. It is an opportunity to speak to young people about savings culture, so that by the time they get work, it’s not novel to them because they have already started. It is best to encourage

the young ones. The future is the youth and they will be the ones to run this country tomorrow.” Ude was on LEAD Camp’s ‘Women in Finance’ panel, along with other highly successful women in Nigeria’s financial space.“ You need to step up and show up,” she encouraged the girls. “Listen to people, your parents, do your research and try to experience school, experience the environment. Don’t box yourself into a corner.” Sigma Pensions, which has, for over a decade, been d e d i c a t e d t o p rov i d i n g exceptional value to its stakeholders, is a JAN board member. JAN is reputedly the world’s largest network of organisations dedicated to empowering students on financial literacy, work readiness and entrepreneurship through experiential, hands-on programs

FCMB provides support for customers aspiring to study abroad

irst City Monument Bank (FCMB) in partnership with MOD Education, has organised a two-day International English Language Testing System (IELTS) training in Lagos to help candidates seeking globally recognised and approved language skills. It is required to pursue and fulfill academic aspirations in tertiary institutions abroad, and some schools in Nigeria. Olu Akanmu, Executive Director, Retail Banking at First City Monument Bank (FCMB) while responding to media enquiries, said the Bank was very deliberate in packaging this programme. While commending the effort of the Federal government of Nigeria towards accelerating development in various spheres, he underscored the need to prioritize education as a sector that deserves a very critical and urgent rescue. Seeing quality education as the fulcrum for true economic reactivation and sustainability, Akanmu said,

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“the education programme FCMB has partnered with MOD to execute, is focused on young people and persons who aspire to study abroad or at some high-quality institutions of international standard in Nigeria. This begins with proper and standard acquisition of spoken, written and listening language skills to aid the process of admission and provide ease in learning. Th e e xe rc i s e i s p a r t of FCMB’s commitment towards the Nation’s social and economic development through quality education. Immediate beneficiaries are children of FCMB’s customers and the Bank’s young customers who aspire to pursue their studies abroad or in any indigenous Higher Institution of international standard”. The sessions which held on the 26th and 29th of June, hosted over 13,000 registered candidates who were in attendance, with thousands outside Lagos who @Businessdayng

live-streamed to participate in the programme. It featured interactive sessions with leading examiners and experts with decades of experience and information on how to prepare and succeed in the IELTS exams. Dele Owolowo, education enthusiast and skilled academic trainer, of the International Development Program (IDP) Australia was able to shed light and proffer solutions in various aspects of the exams that candidates had issues with. He shared necessary tips and techniques required by participants to improve their reading, writing, speaking and listening skills in preparation for the exams. Also present to handle sessions, were the Group Operations Manager, MOD Group (owners of MOD IELTS Test Centre), Farouk Oyebanjo and Head of IELTS Nigeria Operations, Kazeem Tijani. One of the participants at the event, Shola Akinyemi Continues on Page 23

Thursday 11 July 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Analysis

Airtel Africa adds N1.36trn to NSE market cap Iheanyi Nwachukwu

ast Tuesday July 9, 2019 the much awaited listing of Airtel Africa Plc finally happened on the Nigerian Stock Exchange (NSE). The listing adds about N1.36trillion (about $4.44billion) to the Nigerian Stock Exchange market capitalisation, making it the third-most capitalised company on the NSE, after Dangote Cement (N3.042trillion) and MTN Nigeria (N2.626trillion). Airtel Africa successfully raised global capital of $750million (N270billion) via Initial Public Offering (IPO) by way of book building and its secondary listing on the Nigerian Stock Exchange. Airtel Africa Plc listed 3,758,151,504 ordinary shares on the Main Board of The Exchange. Airtel Africa Plc advanced by a maximum limit of 10percent or N36.3 on the first day of its listing on the Nigerian Stock Exchange (NSE). The gain came despite a late listing of Telco’s shares at about 2.18 pm Nigerian time. The share price had increased to N399.3 from a listing price of N363, following a total trade valued at N39.9 million. The proceeds from Airtel capital raise will be used to reduce its net debt. The shares, which were listed at an offer price of 80 pence per ordinary share on the main market of the London Stock Exchange (LSE) were later listed at N363 per ordinary share on the Main Board of The Nigerian Stock Exchange, making Airtel Africa the first telecom company to simultaneously list on both Exchanges. The secondary listing marked the conclusion of a price discovery through a book building process that ended on June 28, 2019. Further price discovery is expected to continue on the floor of the Exchange where demand and supply will determine the price of the Telco’s shares. Airtel Africa is a leading provider of telecommunications and mobile money services, with presence in 14 countries spread across East, Central and West Africa (including Nigeria). In their presentation ahead of the listing, the company said it sees substantial market potential (including data and mobile money opportunity). This is evident in its presence in underpenetrated geographies with promising macroeconomics, demographics and teledensity; as well as significant mobile data and mobile money opportunities supported by favourable market dynamics. Airtel’s leadership position in Africa is supported by its proven support from globally recognised shareholders. The company said it is well-diversified and leading mobile operator with scale across footprint; adding that its wellsuited platform efficiently monetises data and mobile money potential. “Our performance shows on our remarkable growth story. We have right sized and simplified operational model. This is in addition to margin expansion and strong cash flow generation underpinned by top line growth,” said the Chief Executive Officer of the firm, Raghunath Mandavawho was represented by the Managing Director and Chief Executive Officer of Airtel Nigeria, the Nigerian subsidiary of the firm, Segun Ogunsanya at the Fact Before the Listing held at the NSE. He said, Airtel Africa has customer centric vision and mission driving unique strategy. “Our strategy is led by strong and experienced management team. We have clear growth strategy, shaped by clear market catalysts and based on 8 key pillars. Our multiple upside opportunities in fixed broadband and enterprise

segment will fuel additional growth”, he said. Airtel’s listing on the Exchange reaffirms its long-term commitment to expanding opportunities for Nigerians in addition to providing everyday services to them. It also deepens the telecoms and technology sector for investors and provides an opportunity for a wider group of Nigerians to be part of the African telecoms growth story. “This listing is a promising development in Africa with Airtel Africa being the second company to have its ordinary shares listed on both the London Stock Exchange and the Nigerian Stock Exchange”, said Oscar Onyema, CEO, Nigerian Stock Exchange. He said at the facts behind the listing presentation of Airtel Africa Plc that it gives credence to the successful partnership between the two exchanges and “we encourage similarly situated companies to explore the different opportunities for raising capital on the Exchange’s platform.” According to Onyema, the listing shows the confidence Airtel Africa has “in our platform, which has a total market capitalisation of N25.20trillion across various asset classes.” The professional parties to the transaction particularly the Nigerian Joint issuing housesBarclays Securities Nigeria Limited and Quantum Zenith Capital & Investments Limited, the brokers to the offer -Barclays Stockbrokers Nigeria Limited; Quantum Zenith Securities & Investments Limited and Chapel Hill Denham Securities Limited, among others took the labouring paddle and worked tirelessly towards the goal of now listed Airtel Africa Plc. Airtel Africa’s listing on the NSE not only showcases the company as an established player in the African Telecommunication Industry, but enables it to actualize its strategic vision “To enrich the lives of customers”. Onyema said the listing was a result of many months of hard work by all parties to the transaction. “The Nigerian Stock Exchange will continue to support the Telecom Industry and the real sector by promoting efficient capital formation and allocation, enabling industries to raise long-term funds for growth and expansion of their business to reduce unemployment and sustain Nigeria’s economic growth and development.

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“These are evident in the increasing number of capital market instruments traded on the exchange and the tremendous increase in the size of market capitalization,” he stated. The listing would not have happened without The Nigerian Stock Exchange, the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN) and PENCOM coming together to support the transaction. The CEO of the NSE said the level of collaboration has been very supportive of the Nigerian capital market and the economy at large. The company’s business segments are divided into three main areas: Mobile Voice, Mobile Data, and Airtel Money. Asides the above, the company also offers enterprise and Value-Added Services (VAS) in the fourteen (14) countries in which it operates. The mobile voice segment, alongside the mobile data segment, constitutes the core areas of the Airtel business. The company offers local, national and international call services through tailored offerings to its small, medium and high usage subscribers. The mobile voice segment is the largest contributor to revenue, representing 62.2percent as at year end 31 March 2019. Also, the Company offers mobile data services through 2G, 3G and 4G technologies. It has increased the focus of its mobile data services offerings to its 3G and 4G networks which may be bundled together with its voice service offerings. The data segment contributed 22.2percent to group revenue in year end March 2019. Together, the mobile voice and mobile data segments accounted for 94.8percent of total revenue and 92.7percent of underlying EBITDA. The company sees the data and mobile money segments as long-term drivers of value hence, it has employed various strategies to drive mobile data and mobile money adoption across its markets. Airtel offers mobile money services to its customers across the all its 14 operating countries. Through partnerships with local institutions, the company has provided financial solutions (mobile wallet) that enable bill payments, funds transfer and receipt, as well as microloans to its customers. The Airtel Money business line accounted for 5.2percent of revenue and 4.1percent of underlying EBITDA as at year end March 2019.

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Equity market pares ... Continued from Page 22 to enjoy relative stability across the three windows we track. The parallel market remained unchanged w/w while the I&E and Official windows marginally declined by 2bps apiece to settle at N360.8/1$ and N306.9/1$ respectively. Daily turnover at the I&E Window touched a new high during the week and averaged $265.7mn, resulting in a 16.9percent w/w hike. We imagine this is due to the resumption of OMO auctions by the Apex bank. Also, external reserves remained at the $45billion region. We expect the local unit to stay at current levels in the absence of pressures on oil prices as the CBN maintains its stance to defend the naira. Global equities higher, Lagarde to hop from Washington to Frankfurt In the week to end 5th July 2019, major global equity indices recorded broad w/w gains as sentiments rode on the euphoria of the truce reached between the US and China over the previous weekend. During the week, major indices in the US markets briefly touched new highs before moderating slightly lower. Yet, concerns surrounding the sustainability of the truce continued to linger, especially on the recent re-awakening of trade jitters between the US and EU. Reports that IMF’s Lagarde is set to replace Mario Draghi as the ECB president triggered a buoyed sentiment for equities in Europe. Expectations are that she could be more inclined to easier monetary policy, which would fuel riskon sentiments. Within the BRICS-classified emerging markets, all equity indices except the South African JALSH (-1percent w/w) closed upbeat, w/w. In India, presentation of the 2019 budget and expectation surrounding BRAZIL’s pension reform bill stood in the limelight. Interestingly, crude prices shed 3.8percent w/w to $64per barrel (/b )even as OPEC+’s signed a new treaty. Specifically, OPEC and its allies agreed to maintain its existing price-supportive production cuts till Mar-20. However, crude oil prices declined amid global growth worries and the potential impact on demand growth.

FCMB provides support... Continued from Page 22 commended FCMB and MOD Education Limited for the opportunity afforded the teeming population among Nigeria’s young people who aspire to go to school and graduate, properly educated and prepared with contemporary learning and productive skills to contribute their own quota towards the nation’s development. Akinyemi said, “to be sincere, I’ve always wondered if I would ever get the opportunity to attend any form of class or training before attempting the IELTS exams based on my tight schedule, but FCMB handed this opportunity to me completely free of charge, and on a platter of gold. The consultants who facilitated were very eloquent and understood every aspect that we Nigerians usually have serious challenges with. For this reason, I would like to say a big thank you to FCMB for always being the bank that provides opportunities for Nigerians.” Another participant, Adaeze Chukwu stated that, “I am really happy I was able to attend. I set aside the date since the day the event was announced and made up my mind that nothing was going to keep me away. And today, I can confidently say that I am ready to take on the IELTS exams. Thank you FCMB”. FCMB has explained there are other services available to Nigerians who aspire to study home or abroad. These include- assistance and guidance on admission processes, Study Abroad Loans, Students Living Allowances and Remittance Services.

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Thursday 11 July 2019

BUSINESS DAY

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Thursday 11 July 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

CSR is a business imperative, says Hauwa Abbas

tive (SLNI) was founded in 2009 as an NGO committed to uplifting the underprivileged in the society. It was created against the backdrop of giving comfort, hope and clarity to the less privileged in communities through positively touching the lives of women, children, and youths. Silver Lining was established in the belief that everyone deserves basic health care for quality standard of living. We are impacting lives in fourteen states in Nigeria with head office in FCT, Abuja and state office in Dutse, Jigawa state. Some of the things we do include: Provision of free healthcare services

& International level, partnering with both Governmental and Non-Governmental Institutions. Examples include the Health Sector Reform Coalition (HSRC), National Vaccine Summit Partners and committee members, National Immunisation Financing Task team (NIFT), Women Advocates for Vaccine Access (WAVA), Scaling up Nutrition Network to mention a few. That feeling of accomplishment It’s 100%. I am grateful to have recognized this as a calling at an early age. The fulfillment from what I do cannot be measured. Her other interests I support individuals and groups to reach their potential through coaching as a certified performance coach. Since 2015, I have partnered with the Nigerian Prison Services to provide coaching and trainings to inmates as a correction program path. I have actively participated in leadership and governance since 2007, by promoting democracy through election observation, conducting voter education training, encouraging women in politics and advocating to religious leaders to educate their followers with the right information. In my free time I enjoy painting, cooking and enjoy watching movies. SNLI also has a project on men-

for pregnant women, mothers and children in rural communities in order to reduce pregnancy related, maternal and childhood mortality in these communities and Nigeria as a whole. Provision of health and moral support for families living with HIV/AIDS in rural communities in Northern Nigeria. Raising awareness and educating people living in rural communities on health related issues especially preventable communicable diseases. Providing support for orphans and vulnerable children in healthcare as a way of reducing childhood mortality in Nigeria. Empowering communities to be self-sufficient through a wide range of empowerment and social development programs. SLNI is playing strong in the civil society/NGO ecosystem We are recognised as a major stakeholder in the Reproductive, Maternal, New-born, Adolescent Health (RMNCAH) sphere in Nigeria and this has led to SLNI’s representation in various committees as well as being members of groups that cater specifically to development issues both at the National

tal health Our mental health project is focused on adolescents and youths. A healthy, well-informed adolescent will ultimately transition into a healthy and well-formed adult. We believe that over the years, the society has operated under a lot of assumptions about the needs of young people. Some of these assumptions may have turned out to be true eventually but we do not have to assume when we can ask them. Our strategy is getting young people to be part of the conversations from start to the finish. This demographic bears a heavy burden of the many health challenges in the country from early marriage, prescription drug abuse, to unwanted pregnancy. Our intervention is done through a broad range of activities that include social and other media forum interactions, health campaigns, conferences, town hall meetings in all six geopolitical zones in Nigeria. She is “Global Breastfeeding Innovator” Global Breastfeeding Innovator is recognition by Healthy Newborn Network (HNN). In 2017, new waves of breastfeeding innovators were selected across the

Stories by ONUWA LUCKY JOSEP

igeria is poor. No, spell that in capital letters: POOR! But even that is an understatement, going by the fact that as of last year, according to the World Poverty Clock (which has this extremely annoying habit of ticking without fail) Nigeria became, officially, the world capital for extreme poverty. Of the 596,608,482 extremely poor people in the world, (as of July 8th, 2019) Nigeria’s immodest (outsize, yes) contribution to the pool is 96,942,241. The World Poverty Clock insists that if the current trend continues, the talk about Nigeria meeting the SDGs would be a misnomer. Rather than decrease, extreme poverty now currently 44.2% would have increased to 45.5% by 2030. Now, we don’t know any Nigerian alive looking forward to that kind of future. Sad as it is, however, that poverty is pervasive nationwide, it still has its most unadulterated concentration in the Northern part of the country. Little wonder therefore that Hauwa Abbas’ Silver Lining for the Needy Initiative (SLNI) is focused on the 14 Northern States in Nigeria. “Our focus states are in the Northern states due to high rate of (disease) outbreaks, illiteracy and poverty in the region”. Hauwa Abbas, a young Nigerian who wears several caps, is a public health advocate, certified performance coach and a humanitarian. With a background in International Relations and Politics and over a decade of experience in community engagement, governance and advocacy, her strategic thinking and implementation ties in with her interest and expertise in leadership roles, stakeholder engagement, research, training and capacity building. Hauwa who professes to “enjoy seeking new opportunities for growth and providing more value to others” has worked with indigenous and international organizations managing donor funds to support systems and effectively engage individuals and government at national and state levels. As well as sitting on various boards and national committees working on development issues, she is also the Charter President of the Rotary club of Abuja Federal, established in 2015. Her commitment and dedication have seen her rewarded with numerous international awards and accolades. One thing she is sure about is that Corporate Social Responsibility (CSR) is good for business. For which reason, businesses shouldn’t think of it as a dispensable. It ought to be ingrained in the corporate DNA. She is full of praise for the corporates that have supported her endeavour through the years and believes the benefit has been mutual .Settle down and enjoy the read: Why her NGO is named Silver Lining for the Needy Initiative (SLNI) I wanted a name that represents hope despite any unpleasant situation. There is a lot of wisdom when you decide to remain hopeful in difficulties. The term “every cloud has a silver lining” suggests that every setback has the opportunity to bring a positive outcome in due time. What exactly SLNI does Silver Lining for the Needy Initia-

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world. Each was seen to be taking on some of the biggest barriers to breastfeeding in new ways. They were recognized for setting ambitious goals – from 100% human milk NICUs, 24/7 access to lactation support via phone, “smart” breast pumps and private pods for public breastfeeding, to advocating – all in pursuit of the singular mission of making breastfeeding compatible with modern life. I was the only Nigeria awarded that year with the title The Activist. For years, Nigeria had one of the lowest rates of exclusive breastfeeding on the planet (17%) this contributed to the burdens of child death. Through many platforms, I advocated for Nigerians to increase the rate of exclusive breastfeeding and this attracted global breastfeeding support. My team is committed to routinely educating expectant mothers and their support system about the benefits of exclusive breastfeeding for the first 6 months, traveling to primary health centers and food markets across the country, especially during the first week of August World Breastfeeding week. SLNI is grateful it enjoys a slew of corporate sponsorships To mention a few, John Hopkins, IVAC, Aso Savings and Loans PLC, Newton and David, Mobil Producing Nigeria Unlimited, Studio 24, Chocolate City Group, Glaxosmithkline (GSK). Our media partners have also been supported and contributed to our growth. Nigerian Television Authority (NTA), Africa Independent Television (AIT), Aljazeera, Diplomat Magazine, Netherlands, Punch Newspaper, Leadership Newspaper, Daily Trust Newspaper, Guardian Newspaper and others media partners. Our sponsors have identified our strengths, have seen our impact and believe in our ability to deliver. Success stories she likes to share Since the inception of the organization, SLNI has demonstrated and recorded unprecedented success in the delivery of its projects and objectives through the initiation and

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implementation of various community development, interventions programs and activities. Every program comes with its own set of success stories. Currently, we are on our Second round of the US President’s Emergency Plan for AIDS Relief (PEPFAR) grant funded by Center for Disease Control (CDC) & Institute of Human Virology Nigeria (IHVN) to conclude in September 2019. We provide care and support to orphans and vulnerable children and their households. Since 2018, we have supported 409 women from rural communities with seed funds to scale up their businesses. We have trained adolescents in skills acquisition classes for makeup, bead making and hair dressing skills. The beneficiaries are able to use the profit from their businesses to support their household. Her education and family background have clearly had an influence I come from a diverse family; a great asset when relating with people from different cultures, beliefs and religion. My educational background has been a great stepping stone although I remain committed to continuous learning. Both have been an added blessing to what I am doing, however anyone with a vision, determination and passion can serve humanity. And yes, CSR ought to be a business imperative Corporate Social Responsibility (CSR) is a business imperative. Fortunately, top businesses in Nigeria are keying into achieving the benefits and are committed to CSR as part of their business strategy. Many top companies are also leaders in various CSR contributions on the micro and macro level, this has the power to improve their business reach. Being socially responsible appeals to consumers and employees and makes an impact on society. For this business strategy to be effective the partnership has to align with the corporate vision, be transparent and sustainable. Nigeria needs more privately owned companies that have more freedom to seek credible nonprofit partners with structure that reflect their business values while addressing social, humanitarian and environmental challenges. For the business this can enhance their reputation in the local community. For companies that want to take CSR a step further, over the years, ExxonMobil, Studio 24 and ASO Savings and Loans have partnered with SLNI, the beauty about the partnership was beyond monetary; the management agreed to engage their staff as volunteers throughout the partnership. Such partnerships have a huge impact on the organisations, the employees and the community members.

Thursday 11 July 2019

BUSINESS DAY

Corporate Social Impact

Who spoke at your graduation? Do you remember? (4) Donald Trump (Net worth: $3.1 billion)

Child Abuse Helplines And Contacts In Lagos Call 112

“T

he heroes and legends of every generation have always had to confront new perils and defeat new dangers. No one can foresee all of the challenges this class will face, but we do know that, with absolute certainty, you are going to be ready to serve. You are going to be ready to lead. You are going to be aiming at the absolute highest point. And you are ready to ‘Fly, Fight, and Win.’ Always win. Always. You exemplify the grit, the guts and the grace that make America’s Air Force, by far, the best in the world. And in the words of your class motto, ‘Conquer Mind, Conquer All.’” –United States Air Force Academy

he Nigeria Police: 08127155162, 08081775590 Lagos State Domestic and Sexual Violence Response Team: 08137960948 Primary Health Board: 08093311009 Mirabel Centre (LASUTH, GRA, IKEJA): 08187516199 Ministry of Youth & Social Devt. (Block 18, The Secretariat, Alausa, Ikeja – Child Protection Unit 08172457792 (Courtesy Lagos State Domestic Violence Response Team)

•(For feedback, contact us at csrmomentum@gmail.com/ 08023314782)

Oprah Winfrey at Colorado College (Net worth: $2.6 bil ion)

“I

especially appreciate and resonate with your class motto – the quote from Angela Davis, which says, ‘You have to act as if it’s possible to radically transform the world, and you have to do that all the time.’ I’m here to tell you that you actually do get to transform the world every day by your actions. Small steps lead to big accomplishments. And I’m here to tell you that your life isn’t some big break like everybody thinks it is or waiting on the big break. It’s actually about taking one significant, life-transforming step at a time.” –Colorado College

“Come Home and Build”, AU Ambassador tells African-Americans

he African Union ambassador to the US, Dr. Arikana Chihombori-Quao has called on African Americans to “come home” and contribute to Africa’s growth and prosperity. A good call, yes! In a scene reminiscent of the legendary Marcus Garvey ‘Back to Africa Movement’, the ambassador while speaking to an audience of Black entrepreneurs at a Power Networking Conference in Houston, Texas, urged them to “wake up, organize, go home and take what is rightfully ours.” The Zimbabwe-born Dr. ChihomboriQuao whose formal designation is permanent representative of the African Union Representational Mission to the U.S., practiced as a medical doctor for 29 years in Tennessee where she was founder and CEO of Bell Family Medical Centres in the US. The politically astute doctor enjoined African Americans to return home to Africa with the skills and expertise they’ve acquired over time to help build African economies, while pointing out that out that “If the implementation of the African Continental Free Trade Area is going to succeed, it must include the children in the diaspora.” Very true. A position every serious African should hold as well. The Africa Continental Free Trade Agreement (AfCTA), to which Nigeria finally signed on last week at the AU Summit in Niamey, Niger, is a new pan-African trade zone that was proposed in March 2018 and that aims to enable intra-Africa

trade among the 55 countries in Africa. It is worthy of note that intra-African trade while worth about $170 billion in 2017, accounted for only 15 percent of the continent’s trade, according to the Financial Times. intraEuropean trade, by comparison, is 67 percent while intra-Asian trade is 58 percent. The African Continental Free Trade Area, which came into effect at the end of May, aims to slash tariffs on 90 percent of goods across a market of 1.2 billion people. Chihombori-Quao believes that the contracts for massive construction projects which are currently going to companies in China and Europe should be going to “the children of Africa” in the diaspora. In giving Diaspora Africans their marching order, she said plaintively “So while the rest of the world is strategizing about how to get into Africa, guess who

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is still sleeping like grasshoppers? us, the children of Africa. I’m here to say, my brothers and sisters, we must wake up. We have got to wake up, organize and go home to take what is rightfully ours.” “If we don’t organize in order for us to participate in the development of Africa, let’s not complain when the contract to build the Cape-to-Cairo highway goes to China. Let’s not complain when the highway from East Africa to West Africa goes to some European company,” she said. In ending her moving address, she pleaded with African Americans to stop complaining about Africa when they can contribute to change her fortunes. (Try look up H.E. Dr Arikana Chihombori Quao’s videos on YouTube. She seems descended from a long line of Africans who says as it is)

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5 Students to Represent Nigeria at Global Robotics Olympics

osi Ugoji, Isaac Ibidun, Gbemileke Ogunrayewa, Sonia Bendrewere and Toluwaniyin Ojo-Osagie are the five students who will represent Nigeria at the First Global Robotics Olympics in Dubai in October this year. They came out tops from a try-out session whichhad over 50 secondary schools in attendance. The FIRST Global Robotics Challenge founded by philanthropic inventor, Dean Kamen, aims to inspire a passion for science and technology, as well as leadership and innovation among youths globally. This year’s theme, ‘Ocean Opportunity’ draws attention to the critical issue of ocean pollution to educate everyone on the need to take action to preserve oceans and wildlife. A core tenet of the Challenge being to promote collaboration and cooperation as humans take on some of the world biggest problems, each team will be required to build a robot that will join forces with other robots from other teams to take out pollution from the ocean. Faisal Jarmakani, the Managing Director, Aramex Nigeria and co-sponsor of the First Global Olympics said, “Our continued sponsorship of the First Global competition is a testimonial of our belief in Nigeria and the Nigerian youth. As a nation with a growing youth population, this platform will further catalyse our potential @Businessdayng

to solve our own problems and some of the world’s greatest challenges using technology.” The National Coordinator of the Programme, Mrs Remi Willoughby, believes that “In Africa, we need children that can think and collectively find solutions to their problems. By guiding these children to develop the skills to be critical thinkers and problem solvers, Africa and indeed Nigeria, will learn to solve its own problems by itself. This is the only way we can compete evenly in a technology-driven world.” Jarmakani hinted that the decision to co-sponsor the project with his brother, Omar Jarmakani, was based on the need to encourage Nigerian youths to embrace technology and robotics. Pending when the competition will commence in October, the Mrs Willoughby, who is also the CEO, Roboglobal Educational Consulting said the selected students would be taught the rudiments of robot design through tutorials in maths, physics and engineering including programming especially using Java. These, she said, would be carried out by competent instructors. You might recall that at the inaugural First Global Olympics in Washington DC, United States in 2017, Nigeria was 25th out of the 163 teams and 3rd out of the 41 countries in attendance

Thursday 11 July 2019

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

MALL

Is your loyalty card faithful to you? …as retail outlets woo customers with reward cards OLUFIKAYO OWOEYE & BUNMI BAILEY

gozi Adaeze, 42, a housewife, shops regularly in one of the popular supermarkets around Iyana-Ipaja, a suburb of Lagos. As part of the reward of being a loyal customer over the years, she now enjoys a reward card which she could use to make a purchase based on points accumulated. “The more I shop, the more points I get. I was even surprised when they started sending me newsletters on new products and prices,” she told BusinessDay. The urban population in Nigeria is growing at 4.6 percent per annum. By implication, an increasing number of Nigerians now participate in the cash economy and have become consumers. However, one would ex-

pect that this would translate to booming sales and profitability for major retail outlets and supermarkets in the country. Sadly, this is not the case. The recent economic recession in the country, the worst in 25 years, left several consumers with a shrinking wallet while supermarkets and other retail outlets battle with low patronage from customers. BusinessDay check shows that major supermarkets now have an incentive programme to reward their loyal customers. A visit by BusinessDay to Spar store on Opebi, Ikeja area of Lagos, reveals that every customer enjoys a point for every N200 spent which can be used to shop once the points get to 500 and above. It also affords loyal customers to shop for free with their points. “All our regular customers have loyalty cards as it is their reward,” a shop attendant at

Spar told BusinessDay. At the popular Ebeano Supermarket, customers that purchase N200,000 worth of goods enjoy a loyalty card of N2,000 with which such customers can make a purchase at that price. “And if it is N400,000, then you have N4,000 free purchases. All you have to do is a request for it and under two minutes it will be avail-

able. We started giving out these cards last year when we opened our branch; other branches are also doing it. It helps attract customers and it has been cool so far, people have been appreciating it,” Paul, a staff at Ebeano, told BusinessDay. At Hubmart stores in Ikeja GRA, a point is equivalent to as low as N100. This is to incentivise customers to shop

more and get more points. Customers, however, expressed divergent opinions on the new initiative by the supermarket.Nike Adeosun, a customer, said the reason she does not use her loyalty card is that she does not think the reward is that great. “I feel they just give you loyalty cards just to get your information and send news-

letters, so you are not really getting value for the loyalty,” she said. Another customer, Ruth Orji, said she enjoys and gets value for the loyalty reward system programme. “I remember when I wanted to buy my foundation and I didn’t have enough cash, the foundation was N6, 000 but I had N4,000, so they used my accumulated points of N2,000 to add to the N4,000 I had,” she said. The retail space has become very competitive with various outlets churning out initiatives that could boost sales and profitability. Femi Adelu, a research analyst, said the introduction of loyalty cards is expected to revive the sluggish growth in the economy. “This is not new as most retail stores in other climes adopt this same incentive, but what is important is the value the customers get in exchange for their points,” he said.

CONSUMER SPENDING

Beer drinkers downgrade to cheap brands as economic woes bite BALA AUGIE

he scampered into the empty hall with a scowl on her face. Madam Elizabeth Johnson has every reason to be unhappy as her beer parlor has been as calm as a grave yard since last year. The 51 year old seller said she struggles to sell a cartoon a day and she has asked her staff to leave since their wage bills was becoming an unbearable liability. Six years ago, her joint was so busy that one would have to squeeze himself to pass through and the spacious bar was so full that white plastic chairs had to be arranged outside for thirsty customers to sit and drink. “ l feel sad watching my business crumble before me. Times are hard and a lot my customers have lost their jobs while the traders are complaining of slow business activities,” said Johnson.

It is not surprising that Madam Elizabeth knows when workers salaries are paid. This is because the Maya man (a popular name for lovers of alcohol) can be chatty under the intoxication of liquor, and where more than two, three, and four meet every day, there exist a fellowship. One beer to rule them all, one beer to find them, one beer to bring them all and in the darkness they shall find themselves. Madam Johnson is one out of thousands of beer parlous operators hit by low patronage as consumer spending continues to dwindle, forcing many Nigerians to switch to affordable alternatives like local sachet alcoholic drinks. The local alcoholic producers are Intercontinental Distillers Limited, IDL, makers of Eagle Schnapps, Chelsea Dry Gin, Action Bitters, and Bull London Dry Gin, Grand Oak Limited, marketers of the Lord’s Dry www.businessday.ng

Gin and Regal Dry Gin, Euro Foods and Distillers Limited, producers of Sabrina. The economy hasn’t recovered from the precipitous drop in crude oil price of mid 2014 that stoked a severe dollar scarcity that paralyzed business activities and tipped the country in its first recession in 25 years. “Our macro-economic research suggests that upper middle-class earnings

are falling in real terms and that there is downward pressure on private sector wages generally,” said analysts at Coronation Merchant Bank Limited in a recent not to client. “Price is the key battle ground and companies with the lowest price points are prospering,” said analysts at Coronation Merchant Bank. While the combination of the introduction of a new

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foreign exchange policy by the central bank and the rebound in oil price and output helped the country exit recession in 2017, economic growth has been sluggish as more people have become more miserable. Over 50 percent of a population of 200 million lives on less than $1.90 a day, while unemployment rate is at all time high of 23 percent; little wonder the country displaced India to be become World’s poorest country. Gross domestic product expanded by 2.01 percent in the three months through March from a year earlier that compares with 2.4 percent expansion in the fourth quarter. Inflation increased to 11.40 per cent (year-on-year) in May from 11.37 per cent recorded in April. Brewers are the hardest hit from a harsh and unpredictable macroeconomic environment as revenues have continued to recede while margins have been @Businessdayng

beaten down, resulting in weak valuation. To further exacerbate the already anaemic position of these firms the security situation in the middle-belt of the country that disrupted the supply of raw material components such as barley, sorghum, maize, rice and wheat. For the first three months through March 2019, Guinn e ss Nig e r i a’s re ve nu e dipped by 3.78 percent to N33.60 billion while net income fell by 44.02 percent; net profit margin, a measure of efficiency, reduced to 5.15 percent in March 2019 from 9.25 percent the previous year. International Breweries recorded its worst results in 3 years as it posted a loss after tax of N3.98 billion in the first quarter of 2019, brought on by high cost of production. Nigerian Breweries’ net margins reduced to 10.52 percent in the period under review from 21.15 percent as at March 2018.

Thursday 11 July 2019

BUSINESS DAY

Retail &

consumer business COMPANY

NBC allays fears over contaminated EVA water as NAFDAC orders recall of two batches OLUFIKAYO OWOEYE

igerian Bottling Company (NBC) makers of Eva Table water have reacted to concerns over two batches of its water drink. According to NBC, it voluntarily notified the National Agency for Food Drug Administration and Control NAFDAC of two batches of Eva water produced from May 22-23 this year at its Asejire Plant in Ibadan, one of the company’s 8 manufacturing plants across the country, with batch number 220519.14.27 AC4 and 230519.15.15 AC4 which did not meet the quality standard. “The company reported a change in colour of the product from colourless to light green in the batch and presence of particles to NAFDAC on June 20, 2019,” the statement said. NBC further noted that it has commenced the withdrawal of the affected batches and cooperating with NAFDAC in their investigation. The batch numbers can be found around the neck of the bottle. Eva Premium Table water is one of Nigeria’s popular brands of bottled water and owned by soft-drink giant, Coca-Cola. In a statement issued by the NBC Director, Public Affairs and Communications, Ekuma Eze said the Nigerian Bottling Company is aware of the Public Alert No. 0011/2019 issued by the National Agency for Food and Drug Administration and Control.

“We had commenced the w ithdrawal of the affected batches which are 220519.14.27 AC4 and 230519.15.15 AC4, prior to the NAFDAC announcement and are cooperating with the agency in their investigation. “We regret the inconvenience this issue may have caused our consumers, and we request consumers in possession of prod-

ucts with the stated batch numbers to return them to our nearest offices or distributors/ dealers for replacement.” NBC, however, assured consumers that there were no issues with other batches of Eva Water, adding, “We reassure our consumers of our commitment to the highest quality standards, product safety, and consumer satisfaction.”

NAFDAC had earlier ordered the softdrink giant to recall of the two batches due to a change in colour and presence of particles. While the production of Eva Premium Table Water 75cl at Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo State has been suspended pending the outcome of the investigation being conducted by the Agency.

consumer spending

Consumer goods firms’ mid-year performance may remain unimpressive as headwinds persist BUNMI BAILEY

igerian listed consumer goods firms witnessed a tough first quarter as dampened consumers’ wallet in the light of fragile economic recovery, smuggling of cheap products, insecurity in the Northern part of the country, Apapa gridlock and among others weighed on their earnings performance, a trend analysts say will resurface in their mid-year performance. Analysis of the first quarter financial results of eight consumer goods players revealed that five firms including Unilever, PZ and Dangote Sugar posted declines in their revenue. According to Ayorinde Akinloye, analyst at CSL Stockbrokers, the insurgency in the northern region of Nigeria constrained firms’ distribution system, which consequently led to reduced sales revenue. “For example, about 40 percent of Unilever ‘s revenues comes from the north, so if anything happens in the north they are go-

ing to be seriously affected and it showed in their Q1 revenue performance,” said Akinloye, adding the only positive thing for them was the stability in the foreign exchange market. Revenue of Unilever dipped 21 percent to N19.2 billion in the first three months of

2019, from N24.3 billion in the previous comparable period. PZ Cussons’ top-line contracted by 13 percent from N63 billion to N55 billion in the first nine months ranging from June 2018 – February 2019. Note that PZ financials period is different from the rest of the companies Among the brewers, while Nigerian Breweries and International Breweries saw revenue jumped 3 percent and 35 percent respectively, Guinness’ top-line shed 4 percent. Food processers like Dangote Sugar and flour revenues declined by 7.3 percent and 13.6 percent respectively. “Most of them highlighted the delay in terms of clearing goods and the cost. For some companies that is meant to keep their goods for 30 days in terms of inventory days but because of delay in the port it will take 90 days and that is going to be a major cost to them. And then we didn’t see enough election spending that would make consumers have money to spend on products,”Ayodeji Ebo, MD of Afrinvest Securities limited said on phone. According to a H2 outlook report by

Afrinvest Research, the consumer goods index declined the most, falling 16.9 percent in the first half of the year as the traffic gridlock in Apapa coupled with dumping of goods, took toll on the revenue and earnings performance of companies in the sector. The report also added that the heightening inflationary pressure and currency weakness weighed on consumer purchasing power which resulted in weaker demands. Akinloye said that he does not expect a fantastic year for consumer firms as the major problems that they facing is not something that can clear in six months. But others are of the view that the firms would do well if the polices from the government is effectively and urgently implemented. “If we see an increase in minimum wage which will increase money in circulation to boost demand, improvement in infrastructure, fixing of the Apapa port and the Central Bank of Nigeria (CBN) action to tackle smuggling, then we would see positive improvement in their performance,” Ebo said.

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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Thursday 11 July 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Disconnection of parts of gown estate from distribution network by Ikeja electric plc: matters arising AYODELE ONI

n February 17 2017, it was reported by the tabloids that residents of Gowon Estate (the “Estate”) located in Idimu, Lagos State disrupted the operations at the Ikeja Electric Plc (“Ikeja Electric”), Akowonjo Business Unit over a three (3) week blackout allegedly occasioned by the indebtedness of a military quarters situated in the Estate. The members of the Estate, in barricading the offices of the Akowonjo office of Ikeja Electric asserted that the Estate had been disconnected from the feeder by Ikeja Electric and thrown into darkness as a result of Ikeja Electric’s inability to collect outstanding electricity bills from the military quarters. It is unclear how this dispute was resolved between the parties. Fast forward to June 2019, it was reported that Ikeja Electric had disconnected and cut off power supply to seven streets in the Estate in protest against the alleged manhandling of one of its officials by a customer.

Ayodele Oni

Additionally, it was reported that apart from disconnecting the affected streets from the 33KVA hightension line, Ikeja Electric also shut down the transformer.

The actions of the Ikeja Electric in disconnecting the seven (7) streets within the Estate have created widespread outcry as to the rights of a distribution utility to unilaterally

disconnect a community from the distribution network. The purpose of this article is to outline the provisions of Nigerian electricity laws vis-à-vis the actions of Ikeja Electric as well as proffer suggested solutions to the larger issues relating to the acts of violence meted out staff of power utility companies. It proceeds to consider the propriety or otherwise of the action of Ikeja Electric in disconnecting all those affected and its general implication on the Nigerian power sector. Right of a distribution company to disconnect a community from its distribution network According to members of the Estate, Ikeja Electric officials had a problem with a particular building which was initially used as a hotel but later converted to a residential premises. The reports indicate that the owner of the building in question was upset that Ikeja Electric was still billing the building as if it was still being used as a hotel as opposed to a residential unit. The owner is purported to have assaulted an official of Ikeja Electric and this was what prompted Ikeja Electric to discon-

nect the seven (7) streets within the Estate. This then raises the pertinent question as to the legal basis for a distribution utility to disconnect a community from its distribution network plunging the community into perpetual darkness. General Obligation of the Distribution Companies to provide Customers with Electricity The primary legislation guiding the Nigerian power sector, and the connection of end-users is the Electric Power Sector Reform Act 2005 (the “EPSRA”). Section 67 (1) (a) of the EPSRA stipulates the one of the primary obligations of Distribution Companies (“Discos”). It provides that a Disco shall be licensed to (amongst other things) carry out the “connection of customers for the purpose of receiving the supply of electricity”. Furthermore, the licence terms and conditions issued to the Discos mandates that a Disco shall supply electricity to every customer connected to its distribution system except for distribution system constraints or shortage conditions.

Continues on page 30

AfCFTA Diary: SBL and the long road to signing THEODORA KIO-LAWSON

he African Continental Free Trade Area (AfCFTA) agreement was first signed in March 2018 by 44 African countries excluding Nigeria. This agreement, when ratified will become one of the world’s largest trading blocs. It is also the biggest trade agreement signed since the World Trade Organisation (WTO) was established, bringing together 1.3 billion people with a combined gross domestic product (GDP) of more than $2 trillion in a single market. Only a few days ago, Nigeria made the bold move to join Africa’s Free Trade Area, as President Muhammadu Buhari’s officially signed the Africa Continental Free Trade Area (AfCFTA) agreement at the summit of the African Union on Sunday, after a long-drawn and blustery attempt to “understand” the implications and impact of the AfCFTA on the Nigerian economy. In this edition, we take a retrospective look at how Nigeria’s largest community of business lawyers

- the NBA Section on Business Law (SBL), engaged and worked with the federal government in the last one year, to bring to fruition the signing of this strategic trade agreement. MARCH 2018 Business lawyers join stakeholder consultations across Nigeria he federal government inaugurated a nationwide stakeholder sensitisation team to engage them on the implications of signing the Africa Continental Free Trade Area (AfCFTA) Agreement. The objective was to help government understand the true impact of the agreement on Nigeria and Nigerians based the existing domestic and regional policies as it relates to trade. In carrying out this exercise, approximately no fewer than 34 groups and associations were sensitised and consulted, while approximately 3,017 natural persons were engaged in the various sessions and meetings. The Nigerian Bar Association Section on Business Law (NBASBL) was a critical part of these

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engagements. The sensitisation witnessed the emergence of diverse opinions with many stakeholders supporting the AFCFTA. During these consultations, stakeholders raised key issues including need to check abuse of rules of origin, Smuggling arising from difficulties in border controls, un-quantified impacts of legacy preferential trade agreements, abuse of rule of origin, low capacity to conduct international trade, low capacity and capabilities of local business to conduct international trade, cost of finance, insufficient energy; infrastructure and transport logistics issues, to mention a few. JUNE 27-29, 2018 SBL provides platform for AfCFTA engagement at 12th annual business law conference …Bar associations to maximize opportunities from free trade he Section on Business law (SBL) at its 12th annual business law conference in June 2018 provided a platform for further

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stakeholder consultations on the endorsement of the African Continental Free Trade Area (AfCFTA). Discussing the theme, ‘Bringing Down the Barriers: Law as a Vehicle for Intra-Africa Trade’, the conference resolved that bar associations and large law firms in Africa with the support of their governments, must position the legal profession to maximize the benefits of free trade by seizing the initiative to reorganize the profession and guide the inevitable disruption to the profession that will be enabled by the AfCFTA, artificial intelligence and local competition by global law firms.

Ambassador Chiedu Osakwe, Chief Trade Negotiator & DG, Nigerian Office on Trade Negotiations copy

It was also agreed that the Section on Business Law should deepen the understanding of trade law within Nigeria by establishing a specialist Trade Law Committee within its organisation and facilitate training seminars on international trade law and negotiations for public and private sector lawyers. Since then, the Section has worked closely with the Nigeria Office Trade Negotiations (NOTN), and has been involved in all consultations and stakeholder engagements across the country towards the signing of the AfCFTA.

Okechukwu Enelamah, former Minister of Trade & Investment

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Continues on page 31

Immediate Past chairman of the NBA-SBL, Olumide Akpata

Thursday 11 July 2019

BUSINESS DAY

BD LegalBusiness LEGAL INSIGHT COSON v. MCSN: let the music pay who exactly?

FRANK OKEKE & TITILADE ADELEKUN ILESANMI

opyright is an exclusive right given to the creator of original contents. It empowers content owners to determine how their content can be used by third parties and fees to be paid for the usage of such content. Using copyright without authorisation from the copyright owner will amount to copyright infringement: section 19 Nigerian Copyright Act (NCA), Cap. C28 Laws of the Federation (LFN), 2004. In the famous case of African Songs Ltd v. Sunday Adeniyi Adeyeye (aka King Sunny Ade (KSA)) Suit No: LD/1300/74, the Defendants were found guilty of the continuing illegal reproduction of KSA’s works, with KSA being awarded N500 million compensation for copyright

infringement in 2017. Collective Management Organisations/ Collective Societies (CMO) are agents of copyright owners, involved in licensing and collecting license fees on behalf of authors, for remittance to copyright holders as royalties: section 39(1) NCA. They represent the interests of musical artistes, producers, publishers, record-labels, authors and performers by guaranteeing users pay for copyright usage. For example, how many malls, radio stations, hotels etc. will Davido have to visit to enforce his right and demand royalty for playing his songs? CMOs help administer copyright of people by granting licenses and ensuring payment is made for copyright usage. Currently, the Musical Copyright SocietyofNigeria(MCSN)andCopyright Society of Nigeria (COSON) - COSON’s license was recently

suspended - are the only CMOs in the Nigerian Music Industry (NMI). Representation by a CMO requires that the artiste is registered with a CMO, thus granting the CMO powers to act on his behalf. They operate using a fee schedule, for instance blanket licences, which allows users tomakeuseoftheentirecontentsrepresented by the CMO for a prescribed period. This article seeks to highlight the rights and duties of persons using music to promote business. CMOs in the NMI: The Jour-

ney So Far Licensing of CMOs The Nigerian Copyright Commission (NCC) has been empowered by the NCA to grant licenses to CMOs to operate and act on behalf of copyright owners. In 2009, MCSN, COSON and Wireless Application Service Providers Association of Nigeria Ltd (WASP) all applied to be CMOs for the NMI. However the NCC approved only COSON’s application as being the only entity which complied with statutory requirements. MCSN continued carrying out other ancillary functions by protecting the copyright of artistes under its repertoire, including filing plethora of cases against infringers. For instance in MCSN v. Adeokin Records [2007] 13 NWLR (Pt. 1052), 616, MCSN instituted an action against the Defendants for copyright infringement of the

song “Ojumo Re”, which MCSN claimed it was the owner, assignee and exclusive licensee on behalf of its member. However, the case was dismissed on grounds that MCSN was not a CMO and thus lacked the locus standi. MCSN’s Approval as a CMO However, in the landmark decision of MCSN v. Compact Disc Technology Ltd & 2 Ors. 30 (2018) LPELR-46353(SC), the Supreme Court (SC) had to decide whether the Appellant had the locus standi, and if it required a license to operate as a CMO. The SC in reversing the decision of the Court of Appeal(CA), held that by virtue of the Appellant being the owner, assignee and absolute licensee of the copyright in the works in issue, it had been vested with the requisite locus standi to institute the action. To be continued next week

Disconnection of parts of gown estate from distribution network by... Continued from 29 Condition 30 of licence terms and condition additionally requires that the supply of electricity to the customers shall be in an efficient and economical manner. Flowing from the above, there is a primary responsibility on the part of the Discos (including Ikeja Electric) to ensure that customers are duly connected to the distribution network so as to get electricity from the national grid. Can Distribution Companies Disconnect Customers from the Distribution Network? The Nigerian Electricity Regulatory Commission (“NERC”) established by the EPSRA as the regulator of the Nigerian power sector, has been granted the authority (via section 32 of the EPSRA) to make regulations governing the Nigerian Electricity Supply Industry (“NESI”). One of such regulations is the Connection and Disconnection Procedures 2007 (“NERC Connection Regulations”), which provides in succinct details, the circumstances under which a Disco is allowed to disconnect a customer from the supply of power. Specifically, Regulation 5 of NERC Connection Regulations contemplates that a customer may be disconnected ONLY in the event that a customer has not paid the amount correctly billed for that supply address provided by the customer. It further provides for the prerequisites before such disconnection can take place. For the avoidance of doubt, Regulation 5(1) NERC Connection Regulations reads: “A Distribution Company may only disconnect supply to a customer’s address when the Customer has not paid the amount correctly billed for that supply address by the relevant payment date: PROVIDED the... a. Payment date is clearly shown on the bull; b. Payment date is at least 10 working days from the date of delivery of the bill to the supply address or a delivery address provided by

the customer, which is acceptable to the Disco; c. Payment date has not been suspended by a subsequent payment date issued to the same Customer for the same supply address; d. Period between the payment date and the date of disconnection is not less than 3 months; e. Disco has verified from its records that the bill has not been paid; and f. Disco has given the Customer a written warning that the electricity supply shall be disconnected if payment is not made by the payment date and the warning contains the date of its delivery to the supply address or any other address provided by the customer and a telephone number and/or addresses acceptable to the Disco, where the customer can request assistance for paying the outstanding bill. Aligned with this, the Disco licence terms and conditions provides that a Disco shall not lessen or discontinue the supply of electricity to a customer except in the following cases: a. The customer has failed to pay charges lawfully due; b. The customer has failed to comply with conditions of supply and has failed to remedy such default within a period of fourteen (14) days of notice to do rectify such default. A careful reading of Regulation 5 (1) NERC Connection Regulations and the Disco licence terms and conditions will reveal that Ikeja Electric is precluded from resorting to self-help by unilaterally de-energizing paying customer(s) in a bid to ‘punishing’ certain customer(s). Furthermore, Regulation 6 of the NERC Connection Regulations provides that a customer may be disconnected by a Disco without notice where: (i) the customer is connected to the Disco’s network illegally; (ii) where the Disco determines that the customer’s installation is dangerous to its network or capable of interrupting supply to end-users; (iii) where the customer’s meter cannot be read for 3 consecutive months. www.businessday.ng

By implication, the actions of Ikeja Electric in disconnecting the 7 streets within the Estate may be deemed to be arbitrary particularly as it has not been established that: The 7 streets were in default of payment to Ikeja Electric. The 7 streets were connected illegally to the Disco’s network; The connections of the 7 streets have not been adjudged to be dangerous to the Disco’s network The meters of the households on the 7 streets have not been read for 3 consecutive months. It is important to note that the provisions of the laws and regulations do not permit a distribution utility operating in Nigeria to disconnect a community due to acts of violence carried out on staff/personnel of such distribution utility. What Options are/were available to Ikeja Electric? It is important to mention that from a regulatory perspective, the draft NERC Regulation on Electricity Theft and Other Offence permits officers authorized by NERC to enter into any place or premises where such officers believe that electricity has been, is being, or is likely to be used unlawfully. This Regulation is however in draft form and is yet to be promulgated into law. On the state level, section 52 (5) of the Lagos State Electric Power Sector Reform Law 2018 (the “Lagos State Law”) provides that “any person who willfully or unlawfully obstructs, restrains, prevents and harasses or injures any person lawfully carrying on his duties of generation, transmission and distribution of electricity commits an offence and on conviction is liable to a pay a fine of not less than N 1,000,000 or a term of imprisonment of not more than 5 years or both”. There are also provisions in the relevant penal laws and under tort principles and rules. Thus, penal provisions of several laws including those of the Lagos State Law ought to have been the proper recourse of Ikeja Electric for claims on harassment of its officials being that the Lagos State Law would

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be applicable to the affairs of the Ikeja Electric. They may also sue for torts. Would Distribution Companies incur liabilities for unlawfully Disconnecting Customers from the Distribution Network? From the foregoing paragraphs, it can be rightly asserted that the customers of Discos, are not without legal protectionundertheextantlegalframework, even when in default of payment for electricity supply. It is, therefore, rather disturbing that Ikeja Electric followed the path it did in disconnecting the 7 streets within the Estate. A careful reading of the extant provisions of NERC Connection Regulations suggest that Ikeja Electric failed to comply with the mandatory preconditions stipulated in the extant legal framework for electricity distribution in Nigeria before taking matters into its own hands and resorting to self-help in carrying out the disconnection activities. Fortunately, the customers are not without remedy for the arbitrary actions taken by Ikeja Electric. Regulation 11 of the NERC Connection Regulations provides that any Disco which disconnects electricity supply to a customer’s premises in violation of the NERC Connection Regulations commits an offence and is liable on conviction to pay the customer a penalty of between N1,000 – N2,000 per day or part of the day depending on the customer classification. It remains to be seen if this provision would be bought to bear on Ikeja Electric. ROLE OF SMART METERS IN THE NESI It can be argued that the currently discord relating to the disconnection of the Estate largely stems from the fact that the particular customer in question did not have pre-paid smart meters installed on his premises. No doubt, the dispute as to the electricity bills being paid by the said customer arose from exorbitant estimated bills charged by Ikeja Electric. The NERC Smart Metering Regulations 2017 (“Smart Metering Regulations”) advocates for the adoption @Businessdayng

of smart metering systems operation in Nigeria. The NERC Meter Asset Provider Regulations 2018 (“MAP Regulations”) mandate that Discos shall be responsible for meeting its metering obligations. The MAP Regulations further require that Discos engage with Meter Asset Providers (for the procurement of adequate smart meters) to steer the NESI away from post-paid meters to prepaid meters, thereby improving collection efficiency of electricity bills by Discos. The combination of the Smart Metering Regulations and the MAP Regulations ought to drive the massive influx of smart meters into the NESI to ensure that issues such that that witnessed in the Estate can be avoided or totally eliminated. We understand the plight of Disco’s when it relates to the billing of customers and the ensuring effectiveness in the value chain by reducing energy loss and theft. However, it is crucial that these smart meters are deployed thereby allowing customers to “Pay as you Go” for electricity consumed and effectively scrap estimated billings by Discos. Taking into consideration these developments which have evolved as safeguards for participants in the NESI, particularly Disco’s, it is alarming to find that the Discos have resorted to self-help remedies in the recovery of their costs. CONCLUSION This article has provided a background to the legal issues surrounding the disconnection of customers in the Estate as well as access the legality of the actions taken by Ikeja Electric. It is important that distribution entities comply with the provisions of applicable laws in their operations. Additionally, the deployment of smart meters is essential to reduce incidents of customers venting out as a result of estimated bills which are considered outrageous by such customers. •Ayodele (ayodele.oni@ bloomfield-law.com) is a Partner at Bloomfield Law Practice and specializes in international energy investment law.

Thursday 11 July 2019

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

AfCFTA Diary: SBL and the long road to... Continued from page 29

MONDAY OCTOBER 22, 2019 NBA-SBL Chairman, others inaugurated into AfCFTA committee for impact and readiness assessment he Chairman of the Nigerian Bar Association Section of Business Law (NBA-SBL), Seni Adio, SAN alongside other critical stakeholders, were on Monday October 22, 2018 inaugurated into the Presidential Committee for Impact and Readiness Assessment of the Africa Continental Free Trade Area (AfCFTA), by President Muhammadu Buhari. The committee was charged with the responsibility of addressing risks associated with signing the agreement. Its terms of reference include, the assessment of the potential costs and impact of the AfCFTA for Nigeria in relation to the benefits, identify the short, medium and long-term measures to prepare Nigerian businesses for the takeoff of the AfCFTA trading bloc and a back-up plan that covers selected scenarios; and, review the trade remedy options to safeguard the Nigerian economy from predatory and other unfair trade practices The scope of its impact assessment included, inter alia, the potential impact on government revenue (for weighted and nontrade weighted revenue), coherence between fiscal policy, structural and monetary policies. The assessment would also include impact on Nigerian businesses, domestically and regionally, for both trade in goods and trade in services.

the fifteen (15) Member-states of the ECOWAS are Signatories to the AfCFTA.

OCTOBER 24, 2018 Validation of the Nigerian

NBA-SBL Chairman, Seni Adio, SAN and other members of the Presidential Committee on Impact and Readiness Assessment

Draft Market Access Offer for Trade in Services n October 24, 2018, the Chairman of the Nigerian Bar Association Section on Business Law (NBA-SBL), Seni Adio, SAN, as co-chairperson of the Nigerian Coalition of Services Industry (NCSI) was invited by the Nigerian Office for Trade Negotiations (NOTN) to validate

the Nigerian Draft Market Access Offer for Trade in Services (Schedule of Specific Commitment) – This is expected to have great impact on the AfCFTA. In the photo below, Ambassador Chiedu Osakwe, Director General, NOTN, alongside an officer of the trade office, witness the signing by the Chairman of the NBA-SBL.

NOVEMBER 2-3, 2018 The Africa Trade Forum was hosted in Lagos by Nigeria’s Ministry of Industry, Trade and Investment, and co-hosted by the United Nations Economic Commission for Africa (ECA), The Rockefeller Foundation, and the African Union Commission (AUC) and the Nigerian Bar Association Section on Business Law. The Forum brought together stakeholders from across the continent, from political and governance spheres, the private sector and entrepreneurs, philanthropies, academia, researchers, and development partners, to discuss the process for realizing the African Continental Free Trade Area (AfCFTA). AfCFTA across the continent he Agreement Establishing the African Continental Free Trade Area (AfCFTA) was signed in Kigali, Rwanda, at the 10th Extraordinary Summit of the African Union (AU), on 21st March 2018, while 49 Signatories and 7 Ratifications, have been witnessed so far. Since then, African Union (AU), in partnership with the United Nations Economic Commission for Africa (UN-ECA), had engaged in serious drive to sensitize stakeholders on AfCFTA. Thirteen (13) of

T Ambassador Chiedu Osakwe, Director General, NOTN, alongside an officer of the trade office, witness the signing by the Chairman of the NBA-SBL.

Chairman of the NBA Section on Business Law speaking on the opportunities for lawyers post AfCFTA.

The panel at the African Trade Forum which held in Lagos, Nigeria.

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Growth opportunities for AfCFTA Market opportunities for growth for Nigerian exporters of goods and services; scope for industrialization through economies of scale in a single market; the mechanism for resolving trade disputes; cooperative mechanisms for regulating and promoting intra-African trade; and, the AfCFTA as a platform for Nigeria’s continued leadership in Africa as Africa remains the centerpiece of Nigeria’s foreign policy. Opportunities for business lawyers & trade experts The Chairman of the Nigerian Bar Association Section on Business law (NBA-SBL), Seni Adio, SAN, at the last Africa Trade Forum in Lagos organised by Nigeria’s Ministry of Industry, Trade and Investment, in collaboration with the United Nations Economic Commission for Africa (UNECA); the Rockefeller Foundation; and the African Union Commission (AUC), urged business lawyers and legal practitioners generally to stay at the forefront of ongoing reforms, as the signing of the AFCFTA is expected to open a new vista of opportunities not just for practitioners in the area of trade law but for all lawyers. As stated earlier, the resolution at the 12th Annual Business Law Conference, was to the effect that bar associations across the continent, must position the legal profession to maximize the benefits of free trade by seizing the initiative to reorganize the profession and guide the inevitable disruption to the profession that will be enabled by the AfCFTA, artificial intelligence and local competition by global law firms.

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Thursday 11 July 2019

BUSINESS DAY

BD LegalBusiness PHOTOFILE Ǽlex 2019 Lecture: Strong Men Vs. Strong Institutions

ǼLEX Legal Practitioners and Arbitrators on Wednesday July 3rd 2019 held the 2019 edition of its Annual Lecture themed, “Strong Men Vs Strong Institutions – Strengthening Democracy In Nigeria” at the Agip Recital Hall, of Muson Centre, Lagos Nigeria. (See BusinessDay July 4th, 2019 for full report). The lecture featured discussants and participants from the private and public sector, as well as the civil society, who all advocated for strong and transparent institutions with strong men, a viable legislature, an independent judiciary, an independent press; a vibrant private sector and a conscientious civil society, to give life to Africa’s vision of democracy. PHOTOS BELOW

Guest Speaker, Professor Patrick L.O. Lumumba speaking at the Lecture.

Chairperson, Hon. Justice Aloma Mariam Mukhtar

L-R: Former Director of Public Prosecutions (DPP) in Lagos State, Fola Arthur-Worrey during the plenary session.

Hon. Justice Aloma Mariam Mukhtar (L) receiving a presentation from Aelex Partner, Lawrence Fubabra Anga

(L-R) Dr. Joe Abah during the plenary session. Aelex Partner, Funke Adekoya SAN gives an appreciation to the audience at the lecture

Prof. Patrick L.O. Lumumba (L) being presented with an award by Lawrence Fubara Anga, AELEX Partner.

Fola Arthur-Worrey (L) being presented with an award by Aelex Partner, Lawrence Fubara Anga Dr Joe Abah (L) receiving a presentation from AELEX Partner, Lawrence Fubabra Anga

L-R: Former President of the Nigerian Bar Association, Dr. Olisa Agbakoba, SAN; Former NBA Lagos branch chairman, Alex Muoka; and Aelex Partners, Funke Adekoya, SAN and Theophilus Emuwa.

L-R: Fola Arthur-Worrey, Dr. Joe Abah, Hon. Justice Aloma Mariam Mukhtar and Professor Patrick L.O. Lumumba

L-R: Lawrence Fubara Anga, Partner, Aelex, Fola Arthur-Worrey, Dr. Joe Abah, Hon. Justice Aloma Mariam Mukhtar and Aelex Partners, Theophilus Emuwa, Funke Adekoya SAN and Olanipekun Orewale.

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Some members of Lecture Planning Committee @Businessdayng

Thursday 11 July 2019

BUSINESS DAY

cityfile EFCC arrests ‘native doctor’ in Ibadan REMI FEYISIPO, Ibadan

Muhammed Abba-Kura, controller, Apapa Area Command, Nigeria Customs Service, (l) and other officers of the service display to journalists some seized bags of rice imported from Thailand and falsely declared as wood processing equipment, in Lagos on Tuesday

Police smash five-man kidnap gang in Imo SABY ELEMBA, Owerri

he police have arrested five suspected kidnappers implicated in the abduction of some persons in Imo State. The suspects include Peter Onuoha, Justice Eke, Praise Goodluck (female), Goodluck Felix, all from Ohaji, in Egbema local government area state, as well as Stephen Amadi, from Umadiemi in Nkwerre. The suspects are alleged to have conspired and

kidnapped their victims, including Nnaka Innocent, Chukwuma Ejike, Nwangwu Chiamaka, Ephraim Amadi, Geoppreegha Emmanuel as and Udenwa David. The suspects were paraded at the Imo State police headquarters, Owerri, by Commissioner of Police (CP) in charge of Imo command, Rabiu Ladodo and Frank Mba, force public relations officer, who was in Imo State on official assignment. The police said items recovered from the suspects

include two single barrel long guns, one doublebarrel shot gun, two live cartridges, 27 expended cartridges, one matchet and iron saw. Others are one police beret, two sets of police uniform, a pair of police boot, one police belt and one handcuff. Mba said the police tracked the suspects following a tip-off on July 4, that a gang of kidnappers were holding some victims hostage at their hideout in forest in Ohaji. On receiving the infor-

LASG tasks cooperatives on poverty alleviation JOSHUA BASSEY & SEYI JOHN SALAU

ag o s St ate g overnment has urged registered cooperative societies in the state to come up with innovative strategies to lift millions of residents out of poverty just as it assured of its support. “I wish to assure you of the support of the state government as you develop innovative strategies that will enhance your productivity and increase the prosper ity of your members,” said Governor Babajide Sanwo-Olu at the Lagos State Cooperative Federation (LASCOFED) 2019 luncheon/ merit awards. The annual event which held in conjunc-

tion with the state ministry of commerce, industry and cooperatives, was to commemorate this year’s international day of cooperatives. According to SanwoOlu, cooperatives are enterprises centred on people and characterised by democratic control which prioritise human development and social justice within the workplace. He said that cooperatives must strive to promote employment and decent work in all sectors of the economy. “Globally, it has been recorded that cooperatives employ or are the main source of income for more than 279 million people,” said Sanwo-Olu. Represented by Omobolanle Ogunmola, the permanent secretary www.businessday.ng

in the ministry of commerce, industry and cooperatives, the governor stated that the theme of the 2019 celebration, “cooperatives for decent work” was in tune with the United Nations Sust a i nab l e D e ve l o p m e nt Goal 8 that seek to secure d e c e nt w o rk a n d e c o nomic growth, which is aimed at ensuring global citizens have access to decent jobs. “The cooperative institution is seen as a solution that is not only durable but contemporary, resilient and relevant, and therefore significant in establishing a solid defence of the collective interest and democratization of the entrepreneurial s e ctor,” Sanw o-O lu said.

mation, operatives of the command stormed the kidnapers’ hideout and engaged them in exchange of gun fire, resulting in the death of three suspects while two escaped with gunshot wounds. He further disclosed that the victims were rescued unhurt, including a pregnant woman. Other suspects were armed robbers arrested in their various hideouts in the state, who will be charged to court after thorough investigations, Mba said.

Abia reads riot act to fraudulent workers UDOKA AGWU, Umuahia

ublic servants in Abia State who are due for retirement have been directed to submit their documents for immediate processing or face the wrath of the law. Okechukwu Ihedioha, permanent secretary, Bureau of Establishment and Pensions, Office of Head of Service in a circular requested those concerned to adhere strictly to the rules and make their submissions to the office of the HOS, adding that no public servant was above the rules and regulations guiding the service. In a circular no.HSA/EST/ RR/196/26 captioned: retention and payment of salaries to retired officers non retention of annual retirement rosters, Ihedioha warned on the dangers of over-staying in office by serving public officers beyond the statutory retirement age of 35 years of service or 60 years of age. It further directed directors/heads of administration of MDAs to immediately forward the annual retirement rosters to the office of HOS, warning that defaulters would be heavily sanctioned.

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peratives of the Economic and Financial Crimes Commission (EFCC) Ibadan zonal office have arrested a self acclaimed native doctor, Fatai Aliu, alleged to be notorious in duping people under the guise of possessing spiritual powers to solve their problems. Aliu was arrested by the operatives of the commission on Monday during a raid on his abode at Kisumu Estate in Odo-Ona Elewe area of Ibadan, the Oyo State capital. Before his eventual arrest, the EFCC had worked on several intelligence reports linking him to a series of fraudulent acts involving large sums of money.

He was also accused of engaging in money doubling through which he would collect money from his victims with the promise of using his spiritual powers to multiply the sums for them, but would instead divert same to his personal use. The raid led EFCC operatives to his shrines located in a thick forest around the Ibadan-Ijebu-Ode Expressway and Kobomoje area of the town where frightening voodoo items were sighted. Items recovered from the suspect include three exotic cars- two Toyota Corolla and Honda Pilot. Aliu also has in his possession three luxury buildings within Ibadan and land documents which were also recovered as exhibits. The suspect is currently undergoing interrogation.

Sachet water producer bags 1 year

n Osogbo Magistrate Court has s entence d one Shodipo Olujimi, to one year in prison for forgery. Olujimi, who owns a sachet water factor y (Genesis Water) in Ile-Ife, was convicted for forging a laboratory results and presenting same to Standards Organisation of Nigeria (SON), as proof that his water was safe for consumption. The convict was also said to have forged a N25, 000 bank deposit teller, being penalty for his failure to submit genuine laboratory test report, using the same forged teller to obtain receipt from the agency. Olujimi, who was arraigned on a two-count charge on May 22, 2018, h o w e v e r, p l e a d e d n o t guilty. Olofindare Adeleke, the prosecution counsel, had told the court that the convict on July 2014 presented a forged laboratory report on his sachet water, with intent to deceive SON to approve his sachet water. Adeleke said that after diligent investigations, the report was found to be forged. He said the offence was punishable under Section 467 of the Criminal Law Cap. 34, Vol. II Laws of Osun State, 2003. Adeleke said the convict on February 24, 2015, forged a N25, 000 Zenith Bank deposit teller number 1557310, being noncompliance fee imposed on his factory. @Businessdayng

He told the court that the convict used the same forged teller to collect payment receipt with number 211681 from SON. Adeleke further said that the teller was discovered to be forged when SON could not find the said amount in its account, and was also confirmed as fake by Zenith Bank. Counsel to the convict, R. A. Ugwu, pleaded with the court to be lenient with his client, being the bread winner of the family. According to Ugwu, the convict holds a Masters degree and a first offender. The magistrate, Modupe Awodele, said she was convinced beyond reas onable doubt that the laboratory result and bank deposit presented to SON were forged by the defendant. Aw o d e l e, w h o c o n victed Olujimi on the two-count charge, said it was sad that many people might have us e d their hard-earned money to purchase the untreated water, which might have resulted in some death. “ The convict should have pleaded for forgiveness and not mercy. He is wicked and did not deserve mercy. It is a presumption in law that anyone who is in a possession of a forged document is a forger. “I hereby sentence the accused to six months in prison on count one and six months on count two. The sentences are to run concurrently,” Awodele said.

Thursday 11 July 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Shell boss advises govt on royalty, tax on deepwater projects Stories by Olusola Bello

hell Nigeria Exploration and Petroleum Company has advised that federal government should be considerate on what it take as royalty from deep water projects so as not to discourage investors from putting -in the necessary resources to achieve the potentials in such terrains. Bayo Ojulari, managing director of the company in a interview with BusinessDay opined that stakeholders are debating the issue of royalty and tax with the National Assembly (NASS), in respec of investment in the oil industry and that Nigeria should fast track business activities. He said the issue around Production Sharing Con-

Hybrid Energy System panels for power solution for Jubaili Bros Engineering Limited

tract, PSC, is also before NASS and may soon be resolved by all stakeholders to make it convenient for operators in Nigeria’s oil and gas space. He said: “for every barrel, you pay royalty, you pay cost

for doing business and tax as well. You have to take out these three and whatever is left, if the government takes 50% from it, the investors can as well pack their bags signifying the end of business. When there is a high

Hybrid Energy System makes debuts in Nigerian market

ybrid Energy System, an energy solution capable of reducing emission and save cost has been introduced into the Nigerian market. The Photo-Diesel Genset Hybrid System is a combination of renewable energy with traditional diesel generators. It reduces fuel consumption and lower operations cost while helping to reduce emission. The system consists of PV modules, diesel gensets, inverters and intelligent controllers. This combination ensures that the maximum amount of solar energy is fed into the system at any given time. It offers a flexible modular structure,that can be easily upgraded if load demand increases. According Rami Suleiman, BusinessDevelopment Manager, Jubaili Bros Nigeria Limited, the company marketing the product in the country, he says, by adding renewable solar energy to its

core generating sets business, the company is committed to provide complete turn-key Power solutions in Nigeria, Africa, Asia and Middle East. Jubaili Bros Engineering Limited he said utilises this Hybrid system at it factory in Oregun, Lagos, where all it Marapco diesel diesel gensets are manufactured for Nigeria. “The hybrid system has not only reduced fuel cost but has also reduced the amount of CO2 emission by112 tons annually, substantially benefiting the environment”. He said to facilitate the introduction of the new hybrid the company is offering attractive financing options. The advantages of the system includes : hybrid delivering big savings in overall running cost in just few years, lower fuel consumption, therefore reducing operating costs, less reliance on fossil energy and therefore cleaner environment,lower maintenance costs among others.

He said solar integration solution is for the future because it still needs a lot of time to be affordable by customers. To provide efficient service to customers and give full solution to end users, he said the Jubaili Bros has associated itself with major energy companies all over the world, saying that diesel/ solar hybrid solution works hand in hand. The solution he said does not use battery as it gets its power from the sun during the day. It can live up to 25 years because it is a long lasting solution and can also be upgraded to higher consumption in future. The challenge for solar integration is funding because of higher interest rates which makes it uneconomical for most customers for now as it requires huge capital. He however stated that solar solution is still the best energy solution adding that with hybrid systems companies can reduced their diesel consumption by 70 per cent.

royalty there is no profit and if government says there is royalty which is taken from production and another 50% taken what is left cannot cover cost?”. He however said these issues are currently ongoing

at NASS, and all stakeholders have made their views known about the issues. “This is democracy and we should not bastardize what we have. Since the debate is on, it is hopeful that the final passage of the bill will be something that will work for the nation. But NASS cannot be forced to pass bills”. The Shell boss said when we think about issues around policy, we should know that as a country, we are competing against other countries which are what gives him concern. He said by the privilege he has working with an international company, he knows what is happening in other areas and also wishes that things should be done faster so that we don’t lose out in investments. The money will not be kept in the bank forever.

Nigeria needs to move faster and the process we are following is the right process but we need to move faster in order not to delay investment, he said. Shedding more light on the general believe that Nigeria government is not benefitting from PSC contracts, he explained. “Today, for production we do at the Deepwater we will pay tax. Tax and EBT, then you deduct your cost, after it has been deducted, Nigerian National Petroleum Corporation, NNPC, takes its own share and it gives contractor a percentage. So, anybody saying in terms of PSC, Nigeria is not getting anything does not understand the process. The question is that Nigeria should get more and people are clamouring for more,” he said.

Regulatory framework in power sector is stifling investments

egulatory framework in the power sector is stifling investments rather than encouraging it, Chukwueloka Umeh, executive director of Nestoil, has said. He bemoaned the situation in which only one power plant has been built despite issuance of licenses to at least 100 licensees, a reflection of poor regulation and disincentive to investors. He noted that government has been trying to regulate the power sector into existence despite having not done true privatisation. According to him, many of the licensees were not building plants due to the unfriendly regulations that make it difficult to recoup investments in the power sector. In a chat with journalists on the sidelines of the ongoing Nigeria Oil and Gas (NOG) conference in Abuja The Nestoil boss who on the sideline of the just concluded Nigeria Oil and Gas (NOG) conference in Abuja

noted that quick fixes will not address the issues in the power sector but a review of regulations that will drive investments. “Generating companies need to be able to charge a tariff that allows them to generate power by gas and the government should not be telling private companies this was what they should charge and then competition should be what drives the price and tariff down. “Let Gencos compete amongst themselves, likewise Discos. Market forces will drive down the prices, just like it happened with the deregulation of the telecoms sector. The government simply needs to create an enabling environment and then step out of the way to let private companies compete for business. “The government believes that they are helping the masses by fixing prices. In reality, they are not. The government should not be the one telling us how much to sell our power

because you know, it would never be a question of capacity anymore”, he added. Speaking in the same vein Ernest Azudialu-Obiejesi, Nestoil’s group managing director said the Nigerian power deficit will not improve if the Federal Government does not take the drastic step of completely allowing market forces to determine costs. He said a willing-buyerwilling-seller scenario that allows gas producers to sell to off takers at commercially viable rates is what will encourage investments in the gas sector. He said the successful deregulation of the Telecommunications sector in Nigeria was a good case study that the Oil and Gas industry should emulate in order to stimulate exponential growth in that sector. According to Azudialu, the Telecoms sector is growing in Nigeria because Government regulations are relaxed enough to allow competition to drive pricing and product offerings.

seek to drain global inventories to a lower level. The extension highlights the perpetual battle that OPEC+ finds itself in against U.S. shale growth. Cuts have only granted more space for shale, but top OPEC officials are confident in the strategy. “I have no doubt in my mind that

U.S. shale will peak, plateau and then decline like every other basin in history,” Saudi oil minister Khalid Al-Falih told reporters at OPEC’s Vienna headquarters. “Until it does I think it’s prudent for those of us who have a lot at stake, and also for us who want to protect the global economy and pro-

vide visibility going forward, to keep adjusting to it.” According to Bloomberg, Saudi Aramco is beginning to restart preparations for an IPO, after shelving those ambitions months ago. Aramco had preliminary talks with banks, but work may pick up later this year, Bloomberg said.

Oil markets unimpressed by OPEC+ deal

s expected, OPEC+ agreed to extend the production cuts, this time for nine months, pushing the 1.2 mb/d deal to the end of the first quarter of 2020. At the same time, some restless OPEC members balked at what has largely become a decisionOlusola Bello, Team lead,

making process between only Saudi Arabia and Russia. The extension was largely assumed by traders, so there was little impact on oil prices. OPEC+ also agreed on a charter that would allow them to continue to cooperate beyond the nine-month deal. OPEC Secretary-General said

Graphics: Joel Samson.

the cooperation with the select non-OPEC countries could last for “eternity.” Also, Saudi Arabia said it would measure its success against an inventory target, using the 20102014 average rather than the trailing five-year average. That is a more ambitious objective, and will ultimately mean they

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Thursday 11 July 2019

BUSINESS DAY

ENERGYREPORT

Weighing Maikanti Baru’s NNPC achievement against his set out goal in three years Stories by Olusola Bello

hen Maikanti Baru, former Group managing director of the Nigerian National Petroleum Corporation (NNPC) came on board on July 4, 2016, he set out to achieve some goals that he believed would enhance efficiency in the day-to-day operations of the corporations and by extension the oil and gas industry. As he stepped aside last week, it was a thing of mixed feeling for industry operators as some said he made some giant strides while others claimed he could not achieve much in within the corporation. In examining his tenure, starting with his agenda when he came on board we will now juxtapose what he set out to achieve with what the realities on grounds are today. He presented a12 Business Focus Areas (BUFAs) on which he planned to institutionalise efficiency, profitability and growth in the corporation. These are, Settling Joint Venture Cash Call Arrears; Focusing on frontier exploration; Undertaking oil and gas infrastructure development, Developing new ventures; Ensuring security of NNPC assets; Developing new business models; Boosting production and reserve growth; Growing Nigerian

Petroleum Development (NPDC) crude oil production; Gas development; Developing renewable energy; Focusing on frontier exploration; Undertaking oil and gas infrastructure development among others In no particular order let’s look at what his administration has been able to achieve and what it fail to achieve within a space of three years. As at the time he was appointed group managing Director of the NNPC in 2017, average daily production was at 1.86million barrels. This Pitched against the lowlevel average daily crude oil production of 1.2million barrels in 2016; but in 2018, Nigeria’s crude oil average daily production recorded an upward swing of about 2.06million barrels. Since then, Nigeria has maintained a line of consistent year-onyear improvement. Indeed, Nigerian Petroleum Development Company (NPDC), NNPC’s upstream flagship company, was a major contributor to the industry’s success story in 2018, declaring 52 per cent daily crude oil production growth in 2018 compared with the company’s 2017 performance. NPDC’s average production from the company’s operated assets alone grew from an average of 108,000 barrels of oil per day (bod) in 2017 to 165,000bod in 2018, a feat regarded as the strongest

Maikanti Baru

production growth within the Oil Industry in recent times. The NPDC’s equity production share closed at over 207,000bod, representing about 10 per cent of national daily production, was no less impressive. The company’s last average weekly production of 332,000 barrels per day makes the target of 500,000bod for 2023 achievable. In addition to this, NPDC is now the largest supplier of gas to the domestic market, delivering over 700mmscfd of gas to the Escravos-Lagos Pipeline System. These desired results were outcomes of initiatives put in place by the management team under Maikanti Baru. These initia-

IBEDC signs agreement with seven Meters Asset Providers ...as Ikeja Disco rolls out meters

badan Electricity Distribution Company (IBEDC) has signed a memorandum of understanding with seven Meter Asset Providers. The Chief Operating Officer of IBEDC, John Ayodele at the signing ceremony said the company is committed to providing prepaid meters to its teeming customers across its franchise: Ibadan, Oyo, Osun, Ogun, Kwara and parts of Kogi, Ekiti and Niger. The COO in his words “the success of MAP is our own success, where there is commitment we are sure to overcome”. He added that the new meters that would be rolled out will be of the same quality as the current meters in use. The seven meter providers are; New Hampshire Capital Limited (for Oyo, Ogbomosho, Challenge Business Hubs) Protogy Global Service (for Dugbe, Mo-

lete, Ojoo, Montan Business Hub), Tinuten Nigeria Limited (for Ikirun, Ile-Ife, Ilesa Business Hub), Computer Warehouse Group Plc (for Baboko, Jebba, Omu-Aran Business Hubs), Memmcol (for Ota, Sagamu, Sango, Ijebu-Ode Business Hubs). The providers also include Integrated Resources Limited (for Apata, Ijeun, Olumo Business Hubs). The Meter Asset Provider scheme was flagged off by the Federal Government in March 2018 to bridge the metering gap in Nigeria. In the same vein Ikeja Electric Plc (IE) has commenced the roll out of meters for customers in the Shomolu Business Unit under the Meter Asset Provider scheme. The Disco, which has just completed the installation of meters for all residents of Unilag Estate in Isheri, announced that it has also www.businessday.ng

commenced metering of Magodo residents and will extend the service across the Business Unit in the next few weeks. This exercise is part of the company efforts to bridge the metering gap under its network. It is also in line with the directive of the Nigerian Electricity Regulatory Commission (NERC). Acting Chief Commercial Officer Ikeja Electric, Ugochukwu Obi-Chukwu, explained that Ikeja Electric is deploying meters in phases, starting with Shomolu, Ikorodu and Abule-Egba Business Units. The second phase will includeAkowonjo, Ikeja and Oshodi Business Units. “We have commenced metering in University of Lagos Estate, Magodo and some other areas as a pilot scheme. It is the unique demography of these areas that has made the survey of customers very easy” he said.

tives included Asset Management Team (AMT) structure, Strategic Financing, Units Autonomy and security architecture framework. His administration saw through the achievement of 200,000 barrels per day by the Egina Floating Production Storage and Offloading (FPSO) which was completed and sailed away to location in August 2018. The project achieved First Oil on 29 December, 2018. The management said it was able to save $1.7billion from renegotiating Cash Call Areas of $6.8billion to $5.1billion with the corporation’s Joint Venture (JV) partners in the last three years. Already,

the corporation has defrayed $1.5billion of the arrears. Tidying up the Cash Call issues has led to increased commitment and enthusiasm to invest in Nigerian Oil and Gas Industry and has also boosted NNPC’s credit profile internationally. Other milestones achieved by NNPC in the Upstream Sector include: reduction in contracting cycle for Upstream Operations to nine months from an average of 24 months, with the corporation targeting a six months cycle; lowering of production cost, from $27/barrel to $22/ barrel; and improving on the security situation in the Niger Delta through constructive engagement and dialogue with relevant stakeholders. In the Midstream, Nigeria achieved an average national daily gas production of 7.90bscf in 2018, translating to 3 per cent above the 2017 average daily gas production of 7.67bscf. Domestic gas supply capacity was marginally stable at about 1700mmscfd with an average of 1.3bscfd supplied to the domestic market, Key gas pipeline infrastructure projects on which significant progress had been made in their execution include: Escravos-Lagos Pipeline System (ELPS II), Obiafu/ Obrikom-Oben (OB3), and Odidi-Warri Expansion Pipeline (OWEP). Maikanti Baru was however not able to bring the refin-

eries to full production as the country continued to import Premium Motor Spirit (PMS) order wise called petrol or fuels at very high cost because product has been heavily subsidised. The country recorded huge lost through what the NNPC described as under recovery cost. NNPC says it is committed to the rehabilitation of the nation’s three refineries in Port Harcourt, Kaduna and Warri, to boost their capacity utilization. In March, the first phase of the rehabilitation of the 210,000 barrels per day capacity Port Harcourt Refinery complex that comprises the 60,000 barrels per day old Refinery built in 1965 and the 150,000 barrels per day, new Refinery, was kick-started. In the Downstream Sector it has assumed dominance as marketers have left the importation of PMS for the corporation because of the harsh operating environment. The oil marketing companies blamed the NNPC for taking away their margin through ex-depot price. His tenure also witnessed one of the worst supply shortages early 2018. However many of the corporation’s depots had been resuscitated and put into use through decanting of over 140 Million litres of PMS nationwide, with systems 2B and 2E pipelines supplying petroleum products to the South West, SouthSouth and South East regions having been resuscitated.

MOMAN says deregulation remains best option

he Major Oil Marketers Association of Nigeria has said total deregulation of the downstream sub-sector remains the best option, as no marketers is getting foreign exchange at N305 to a dollar for importation of petrol Its chairman, Tunji Oyebanji who made the clarifications on the sidelines at just concluded Nigerian Oil and Gas conference in Abuja. Oyebanji said this against the backdrop of the Chief Operating Officer, Downstream, NNPC, Henry IkemObih claimed that marketers were given forex intervention schemes at N305 to a dollar, rolled out by the Central Bank of Nigeria and co-managed by the NNPC had been extremely successful. The MOMAN boss said none of its members are getting foreign exchange at N305 to a dollar for the importation of Premium Motor Spirit, also known as petrol. According to him, I don’t know who is getting it at that 305, so, if NNPC is given some

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marketers at that rate, I want to believed is not a transparent thing. I don’t know who is getting it. ``If we are getting it 305 for importation of petrol, we will be importing but we are not getting it, when the scheme started, that was the plan and CBN was the one handling it. `` Eventually, the NNPC took over it, and we don’t know who is getting it at N305. So, maybe he can enlighten us by publishing the names of those who are getting it,” he said. Oyebanji, who also the managing director of 11Plc (formerly Mobil Oil Nigeria Plc), said: We are not importing petrol at all but if we want to import Automotive Gas Oil (diesel) or Aviation Turbine Kerosene (aviation fuel), we have to go and buy at N330 or N346. ``You can’t compete because the NNPC is bringing everything at N305; so, it is not a level-playing field at all. ``If we are getting forex at 305 may be, we be able to import but again technically, for the country as a whole @Businessdayng

does it truly makes sense, in the market dollars is being sold at N360. ``So what Nigeria should be earning for every dollar it generates should be N360 that’s really the market value so every time you are selling at N305 you are also subsiding and it’s a loss to the country. So, we all have to determine what we want to do. The MOMAN chief said for now, there is no other alternative for marketers to commence importation of petrol until Dangote refinery come on stream, which might ease supply and reduced fuel importation. ``Marketers can’t import fuel because if the price remains at this level it was, how can marketers import when the landing cost is more than pump price, for now, only NNPC can absorb that. ``And indirectly it’s you and I that are bearing the cost because the money would have been put in other things, we are all used to drive with cheap fuel that’s what we seem to like.

Thursday 11 July 2019

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Thursday 11 July 2019

BUSINESS DAY

MADE in aba Sealink Project to formalise trade at Aba business corridor — NEXIM Bank …to start before end of 2019

GODFREY OFURUM, Aba

he proposed regional Sealink Project, spearheaded by the Nigerian Export Import Bank (NEXIM), will start operations before the end of 2019, says Ugoenyi Kalu, head, Lagos Area office of NEXIM Bank. Kalu, who represented Abba Bello, managing director, NEXIM Bank, said at a one-day capacity building workshop in Aba, Abia State, that the project would encourage formal trade within the Aba finished leather cluster. The training, which centred around export financing, was organised by the Nigerian Export Promotion Council (NEPC) for exporters and intended exporters in the industrial city. The project would also enhance Nigeria’s export to Economic Community of West African States (ECOWAS) countries, which has remained muted for several years at about 12 to 15 percent. The Aba finished leather cluster, made up of shoe, belt and bag manufacturers, is waiting for the take-off the regional Sealink Project to formalise their trade. Aba-made shoes and other finished leather goods are popular in Cameroon, Cote d’Ivoire, Gabon and other West, East and Central African countries, however, these transactions are done unofficially. Ken Anyanwu, national secretar y, Association of Leather and Allied Industrialists of Nigeria (ALAIN), an association of shoe, bag and belt makers, told BUSINESSDAY that the data currently used for policy

and advocacy in the leather sector are estimates, stressing that no accurate and verifiable information on the activities of the sector are available for use. These include finished leather goods needed by Nigeria annually, finished leather produced and e x p o r t e d f r o m Ni g e r i a annually, Nigeria’s finished leather goods production capacity, quantity of products exported from the country and the number of persons engaged in production in the sector. The regional Sealink Project, a partnership between NEXIM and the Federation of West African Chambers of Commerce and Industry (FEWACCI), will connect West and Central Africa sub-regions, according to NEXIM, and foster indigenous participation of African nations in the maritime sector. BusinessDay gathered that 700 containers have been registered in Sealink, which is expected to provide immediate impact on basic road infrastructure, which has slowed African and Economic Community of West African States (ECOWAS) trade levels by 20 percent, according to available statistics. The total project cost is estimated at $60million, with $36million to procure vessels, equipment, office space and other infrastructure. About $24million will be the working capital to cover the general and administrative expenses. BusinessDay also gathered that the project would make Nigeria a maritime hub for West and Central Africa and enable NEXIM achieve its planned revenue growth by improving intra-regional trade

levels to about 15 per cent annually. NEXIM recently signed a tripartite memorandum of understanding (MoU) for the partnership in the project, between the National Inland Waterways Authority (NIWA), NEXIM and Sealink Promotional Company Limited. Bello, at the signing ceremony, explained that the regional Sealink project was initiated in 2011 to remove the huge logistics challenges and non-tariff measures along the ECOWAS trade corridor. According to him, NEXIM’s strategic interest to promote the project was to bridge the infrastructure gap, to promote and enhance trade

connectivity as well as spur Nigeria’s regional and global trade competitiveness. He described the agreement as a historic one aimed at deepening the partnerships between NEXIM and NIWA, on the one hand, and NEXIM and the Sealink on the other. He said the agreement would boost the realisation of one of the priority projects under the ECOWAS Community Development Programmes. The interest to pursue the project, he said, was driven by the desire to encourage formal trade and enhance Nigeria’s export to ECOWAS, which has remained muted for several years at about 12-15 per cent.

To realise these objectives, he said, NEXIM introduced the ECOWAS Trade Support Facility (ETSF) designed specifically to achieve intra-regional trade and development objectives. Also, the facility was to help increase Nigeria’s trade flow within the ECOWAS sub-region, especially trade in manufactured goods to broaden national export basket. He stated that the support was targeted at facilitating formal/recorded trade within the sub-region and promote exports by small traders as well as micro, small and medium enterprises by integrating them into the formal sector of the economy.

It was also to deepen the current payment systems and trade instruments in the ECOWAS region, he added. “As a trade policy bank, NEXIM’s strategic interest and partnership in the regional Sealink Project is to promote and diversify exports as well as enhance trade connectivity in line with the government’s objective to diversify the economy,” he said. Also, the bridging of the maritime infrastructure gap is expected to significantly enhance exports of bulk solid minerals, thereby boosting the gross domestic product(GDP) contribution of both shipping and solid minerals sectors, from current levels of about 0.2 per cent,” he stated.

What Nigerian consumers expect from Aba artisans Maurice Joseph Ogu & Gbemi Faminu

igerian consumers h a v e h i g h expectations of Aba shoe and textile makers. BusinessDay interviewed a cross-section of consumers who gave different views of what they want from manufacturers from the industrial city and local producers in general. Oyedeji Dolapo, a Lagosbased entrepreneur, said lo cal pro d u ce rs s h oul d improve the quality and durability of their goods. “Most of the goods I have come across are of inferior quality and lack attractive packaging,” Dolapo said. Temiloluwa Fakunle, a fashion designer, said they should let their prices match the quality of their products.

Solape Aina, a teacher, said they are doing their best and some of them give value for money, but advised them to be more innovative. “Innovation is key in this industry,” Aina said. One million pairs of shoes are produced by more than 80,000 leather makers in Aba each week. With 48 million pairs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion. T ra d e r s f ro m We s t African neighbours storm the industrial city every week to buy different product designs, just as Southern African schools are beginning to place orders directly from the shoe makers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly www.businessday.ng

or through their Nigerian proxies, BusinessDay was told in Aba. The business is already online, with the likes, of Gada Africa, Jiji.ng and abanaijamade.com.ng, among others, handling marketing and distribution of those shoes, including

belts and trunk boxes, after online orders are taken. Online shops take 20 to 50 percent cuts from sellers, BusinessDay gathered from the shoe makers. Robinson Echefu, a commercial motorcyclist, said he likes Aba products but stressed the need for

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improvement in quality. He said he is in love with clothes and shoes made in Aba. “But the only problem is that they fade quickly,” he admitted. “If Aba people make quality clothes and shoes, I will be willing to buy them at any amount. What I want is quality, not necessarily reduced price. For example, I bought one made-in-Aba shoes. The leather is good; the quality is good. It looked like foreign, so I did not mind paying more for it. Today, I am still enjoying it. I look good and feel good about it such that my friends want to buy such,” Echefu narrated. Ruth Ndidi, a Lagos-based Nigerian consumer said, “They have the right quality and their prices are okay. That is why many people can @Businessdayng

afford it.” Adunni Folarin, a shoe and bag seller in Lagos, said she buys local shoes and bags and they do not give her any problem. “ T h e s o u rc e o f y o u r products matters. I buy from trustworthy, good people. I buy from good sources to resell because I can afford to disappoint my customers,” she said. Irene Abidemi, petroleum marketer in South-West Nigeria, said she buys local shoes, sandals and bags and even markets them for the producers because they are good enough “I feel our government should encourage them. The person who sells to me is a University of Lagos (Unilag) graduate. He makes good products.”

Thursday 11 July 2019

BUSINESS DAY

news Continued from page 1

De-United, Indorama, Dangote,Guinness to lead Nigerian export...

said the Nigerian Export Promotion Council (NEPC). With AfCFTA, Nigerian export-oriented companies, which are some of the biggest in Africa, stand the chance to enjoy economies of scale, with lower production costs and increased expansion featuring prominently. Export-led SMEs, which form at least 80 percent of the lot, can tap into regional export destinations and use them as stepping stones for expanding into overseas markets. Aba shoemakers who are exporting informally

have the opportunity to re-organise themselves to take advantage of free trade benefits. The South African example might help. Due to free trade, large car makers in South Africa source leather for seats from Botswana and fabrics from Lesotho, under the preferential Southern African Customs Union trading regime, a United Nations Economic Commission for Africa’s document shows. “Mostly multinationals and large enterprises are in a better position to gain from AfCFTA because their economies of scale will improve. They have the

Investors’ wishes at odds with history ... Continued from page 1

the sixth time in the last three decades that the stock market has declined in the first half of the year after bearish sentiments pulled the market lower by -4.66 percent in H1. According to data compiled from Central Bank of Nigeria’s Statistical Bulletin, the other five times a negative performance was reported in the stock market during the first half of the year were 1998 (-8.51 percent), 2008 (-3.52 percent), 2009 (-14.59 percent) and 2015 (3.46 percent), all resulting in a full-year negative double-digit return performance. 2005 was the only year that the stock market declined in H1 and then rebounded in the second half of the year. In H1 2005, the stock market declined by -9.56 percent before appreciating by 11.69 percent in H2, leading to a full-year performance of 1.01 percent return. “Historically, the first half of the year is typically a good period for investors and the second half is typically less impressive as investors scramble to own shares in the first half of the year to pick up dividends which they typically sell in the second half of the year. If the market doesn’t do well in the first half, it’s unlikely investors will be willing to enter in the second half of the same year as sentiments may become more bearish,” said Tochukwu Okafor, a lecturer in Banking and Finance Department at Covenant University. The “H1 optimism rally” and the “H2 pessimism rally” have become a norm in the Nigerian market since year 2000. In the first half of the year since 2000, the stock market has delivered positive returns in 16 out of 18 years while in the second half of the year, the market

has rallied only nine times out of the last 18 years. This means that if you were a probability-driven technical investor, you will easily see that there is an 88 percent chance of an upside in the stock market in the first half of the year and a 50 percent chance of suffering a market loss by staying invested in the second half of the year. Obinna Uzoma, a Lagos-based economist, explained that “it is unlikely that the market is going to suffer a selloff in the second half of the year based on historical trend as the past performance is not always indicative of future results”. “There has just been a lack of confidence in the economy and policies that drive the market,” he said. The equity market started the year on a negative note with the All Share Index (ASI) of 31,430.50, declining by 4.66 percent in H1’19 (+0.09 percent ; H1’18) to 29,966.87. On the other hand, the market capitalisation recorded 12.67 percent increase from N11,720.72 billion to N13,205.54 billion in H1’19, buoyed by the listing of 20.35 billion units of MTNN shares on Thursday, May 16, 2019, thereby contributing about N1.83trn to market capitalisation making it the second most capitalised stock on the Nigerian Stock Exchange, following Dangote Cement. On a sectoral basis, all segments of the market closed negative for H1’19. Specifically, the negative performance of 4.66 percent recorded in ASI was driven by YTD losses in banking stocks (-8.10 percent), insurance stocks (-0.90 percent), consumer goods stocks (-14.90 percent), oil and gas stocks (-15.70 percent) and industrial goods stocks (-11.1 percent) www.businessday.ng

big market and the capacity,” Muda Yusuf, directorgeneral, Lagos Chamber of Commerce and Industry (LCCI), said in a telephone interview. “The continental trade is more about economies of scale and the amount of what you produce. The higher you produce, the lower the unit cost, which is why small companies will benefit but not as much as large firms,” Yusuf said. Nigerian companies dominate about 60-70 percent of the West African market, according to the Manufacturers Association of Nigeria Export Group. British American Tobacco Nigeria Limited has dominated the tobacco space in Africa, earning $145.48 million in 2017 from exporting tobacco products to Liberia, Guinea, Ghana, Cameroun, Cote d’Ivoire and Niger, according to the CBN Annual Report. De-United Foods In-

dustries Limited exports noodles to Ghana and Cameroon. In 2017, it earned $30.568 million from exporting to these countries, including the United States. Analysts say the AfCFTA provides an opportunity for companies like De-United to double or triple their earnings with free trade across the continent. Guinness Nigeria Plc will be a big beneficiary with some of its products selling like cakes in some African countries. The brewer earned $15.06 million just for exporting Malta Guinness and Guinness FES to Ghana and Cameroon, including the United Kingdom. Dangote Agrosacks Limited sells printed cement sacks (S50 X 69 X 11cm), printed laminated cement sacks to Djibouti, Ethiopia, Ghana, Sierra Leone. It earned $15.5 million in 2017 exporting to these markets. Beta Glass shipped out bottles estimated at $14.134

million to Sierra Leone, Ghana, Liberia and Cape Verde. Beta Glass’ 2016 financial statement showed that the company made N1.913 billion foreign exchange gain that year owing principally to its export sales focus to Cameroon, Cape Verde, Gambia, Ghana, Guinea, Liberia and Sierra Leone. Dangote Cement Plc will be one of the biggest beneficiaries, being an exporter of cement to Niamey, Niger Republic, Togo and Ghana. Its export of Dangote Portland Limestone Cement (42.5R) to these countries was estimated at $21.496 million. Bismark Rewane, CEO of Financial Derivatives, said the AfCFTA would favour Nigeria, Kenya, Egypt and Ghana, among others, but warned that any government that is not effective would fail within the AfCFTA environment. “Nigeria will benefit. But it will forced to be effective because if not, people can easily go to Cotonou to set

up plants,” he told Channels TV, adding that government failures would be glaring under the trade arrangement. Friesland Campina Wamco Nigeria exported $3.87 million worth of Full Cream Milk Powder Peak (12x400g), Full Cream Unsweetened and Evaporated Peak Milk (96x30g) to Ghana and Sierra Leone. BUA is also another company that can expand export to West Africa. Chairman Abdul Samad Rabiu said in July 2018 that he would export to Niger and other neighbouring markets. Promasidor is leveraging the West African market to export its Sunvita, Cowbell Chocolate, Loya milk, Miksi milk and Top Tea, among others. Unilever Nigeria Plc is also exporting to Ghana and Cote d’Ivoire. It earned $8.13 million from shipping out Omo Multiactive Relaunch Powder and Sunlight Sensation Pink.

•Continues online at www.businessday.ng

L-R: Paul McGrath, chairman/managing director, ExxonMobil Companies in Nigeria; Ahmed Lawan, senate president; Enyinnaya Abaribe, senate minority leader; Udom Inoyo, vice chairman, ExxonMobil Companies in Nigeria, and Umar Suleiman, a senator, during ExxonMobil management courtesy visit to the senate president in Abuja.

CBN reduces banks’ daily excess cash deposit ... Continued from page 1

said in the circular which takes effect from today July 11, 2019. Reacting to the development Uche Olowu, president/chairman of council, Chartered Institute Bankers Committee (CIBN), said the CBN is trying to change the behaviour of banks towards lending to the real sector of the economy. Olowu who spoke with BusinessDay by phone said banks have to look for alternative way of making sure they direct credit to the real economy. “We are going to be better for it as we are going to have the productive sector to put

the excess cash,” the CIBN president added. Before now, banks have had preference for keeping their idle funds with the CBN as well as transacting on government securities rather than lending to the productive sector. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said this means that the amount of excess money that Nigerian banks can place with the Central Bank of Nigeria (CBN) to earn overnight interest rate of 8.5% per annum has been reduced from N7.5 billion to N2billion. Any amount in excess of N2billion will not earn interest

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income for banks. “This, in a way, will reduce the interest income of banks going forward. It will also force banks to trade more with one another in the interbank market than before”, Akinwunmi said. He said It may also reduce the cost of managing system liquidity for the CBN as the apex bank will now have access to more funds from the banking system at no cost than before. In addition, interbank interest rates may drop further as a result of increased system liquidity. This is part of the efforts of the CBN to increase banks’ credit to the real sector of the @Businessdayng

economy in order to stimulate growth of the economy. In his response, Ayodeji Ebo, managing director, Afrinvest Securities limited said, this is another regulatory pressure on the banks in a bid to get them to lend. The reduction of the SDF from N7.5bn to N2.0bn may lead to revenue loss (8.5% on N5.0bn in a year is N425m assuming the average deposit placed with the CBN daily N7.5bn and above). This may not translate into improved lending as the banks will prefer to earn zero interest on their funds than risk the funds.

•Continues online at www.businessday.ng

Thursday 11 July 2019

BUSINESS DAY

POLITICS & POLICY Why I am setting up anti-corruption agency in Oyo - Makinde …Says corruption knows no political party REMI FEYISIPO, Ibadan

overnor Seyi Ma k i n d e o n We d n e s day forwarded the Oyo State AntiCorruption bill, 2019 to the State House of Assembly for legislative action, declaring that his decision to set up an anti-graft body is in fulfillment of his campaign promise. Governor Makinde, who formally presented a copy of the draft bill to his Special Adviser, Legislative Matters, Hon. Samuel Adejumobi, for onward transmission to Oyo State House of Assembly, further restated his resolve to waive his immunity to appear before the anti-corruption agency if he is found wanting in any way. A statement by the Chief Press Secretary to the Governor, Taiwo Adisa, indicated that the Governor also charged Permanent Secretaries in the state to be accountable as the purse-keepers of

Seyi Makinde (m), Oyo State Governor signing the bill for a law on Anti Corruption Agency for onward transmission to the State House of Assembly, with him from left, Samuel Adejumo, special adviser on Legislative Matter; Bisi Ilaka, chief of staff; Rauf Olaniyan, deputy governor; Amidat Agboola, head of service; Tara Adefupe, director general, Due Process, and W A Gbedegesin, permanent secretary, Ministry of Justice,at Executive Chamber Governor’s Office, Ibadan.

Oyo state. He declared that those who would want to politicise his move to set up the anticorruption agency should think twice because according to him, corruption knows no

political party According to the governor, corruption does not edify a state but promotes stagnation, adding: “and we want Oyo state to be out of stagnation.” Makinde said: “We are here

Alli, new IPU boss canvasses support for Makinde’s administration REMI FEYISIPO, Ibadan

he newly elected National President of the Ibadan Progressive Union (IPU), Olayinka Alli has called on the people of Oyo State to give maximum support to the administration of Governor Seyi Makinde in order to move the state to an enviable position, stressing that development can only thrive in an atmosphere of peace and tranquility. Alli made this disclosure during the Annual General Meeting of the Union held in Ibadan, where new executive officers emerged. Speaking after the election,

the newly elected president promised to run an open policy among the members of the union, whom he urged to join hands with his tenure to move the ancient city forward. The union felicitated with the new governor for being found worthy by the people of Oyo State to occupy the exalted position. Olayinka said: “We pledge the full support of our union to the newly inaugurated administration in the state and call on the people of the state to give their support towards the success of the administration. “We pray for God’s guidance and wisdom for the governor to take the state to a

greater height as we all know that it is not easy to direct the affairs of a diverse and richly blessed state like Oyo State, but we also thank God that he has given us a governor who has the capabilities to take up the job and achieve uncommon feats.” Alli also congratulated Mankinde’s predecessor, Abiola Ajimobi on his successful eight year tenure as the governor of Oyo State. At the election, Olayinka Alli emerged as the national president of Ibadan Progressive Union, Muritala Alayande was elected as the first Vice President while Kayode Arowolo emerged as the second Vice President.

to sign for transmission to the legislature, the executive bill for anti-corruption in Oyo state. We are transmitting the bill today in fulfillment of a promise that I made during the campaign that during my

watch in Oyo State, it will be zero tolerance for corruption in Oyo State. “While I was making my inaugural address, I also put a rider on it that as the Governor of Oyo state, I am ready to wave my immunity to appear before the agency if I am found wanting in the course of my duty to the people of Oyo state. “The Permanent Secretaries are here, you are the purse keeper for the ministries and the ones responsible for all the spending, of course, the commissioners would soon be here but they are not the ones to account for the spending in your various ministries. Of course, they will give instructions and try to help me run the affairs of government to the extent of our promises to the people and also the agenda of our government. “But we will hold each and every one of you accountable for the ministries that are been administered by you and I also want to be

held accountable by anyone here. I am working from the standpoint here that nothing, absolutely nothing is hidden in this whole case. “If people think they have hidden anything, it is the only thing that they can start and finish by themselves only and I don’t think there is anything like that in this place. “For whatever that has to be done, there will be one, two or three participants. So, I can’t even start the process and finish it by myself alone. So, there must be accomplices and people who are ready to support me to do something that is not edifying, so if I think such things are hidden, I will be deceiving myself and it is the same for everybody. “I know people may also try to put political coloration to this, corruption doesn’t know a political party and what corruption does is to stagnate our development and we want Oyo State to be out of that stagnation. We want Oyo State, just like we have always been a pacesetter state.

Senator warns against division in Ondo APC Iniobong Iwok

he Chairman of Elders Forum in the Ondo State chapter of the All Progressives Congress (APC), Senator Nimbe Farukanmi, has cautioned gladiators within the APC against further polarisation of the fold. The elder statesman warned that the consequences of a divided APC in the state would not benefit any individual or group, who professes to love the party. According to him, “I want to make a personal appeal to all stakeholders in the party

to team up and promote peace. APC in Ondo State should not be allowed nor encouraged to be divided.” He said it would be a great sacrifice for aggrieved individuals and groups to sheath their sword and embrace peace in the interest of overall wellbeing of the party. According to a release signed by the State Publicity Secretary, Alex Kalejaye, the party elder spoke when he received the State Chairman, Ade Adetimehin, who was on a courtesy visit. The party chieftain further emphasised unity as a desirable strength which the party needs to win next

year’s governorship election in the state. “We should encourage unity so that we can be together; our strength lies in unity, and working towards the same goal,” he said. Farukanmi commended the state chairman, and the State Working Committee for going round the state to effect reconciliation, even at the grassroots, describing it as a worthy effort. “It is a good thing that you are going round the state and reconciling aggrieved members of the party. I will only advise that you make sure the move is genuine and total,” he said.

committee was set up headed by the governor of Kaduna State, Nasir El-Rufai. That committee has submitted its report; that report has been presented to us in the caucus and the president was there; the president endorsed the outcome. I want Nigerians to please, give us time. “I hope and pray that at the right time, the government or the party would send that report to National Assembly for debate. “I would say with all au-

thority that restructuring lies with the National Assembly. The president is not a military president, he cannot change anything by decree; sovereignty in Nigeria now is vested in the National Assembly. “Those agitating for sovereign national conference must go through the National Assembly and unless the National Assembly surrenders part of its powers by an Act, there can never be sovereign national conference.”

Only National Assembly can restructure Nigeria - Osoba …Urges Nigerians to be patient with government Tony Ailemen, Abuja

ormer governor of Ogun State and chieftain of the ruling All Progressives Congress (APC), Segun Osoba Wednesday said the power to restructure Nigeria lies with the National Assembly, urging Nigerians to be patient with the current administration Osoba, while speaking with State House Correspondents

after a closed door meeting with President Muhammadu Buhari at the Presidential Villa, Abuja, expressed confidence that the reports of the APC committee on restructuring will be tabled before the National Assembly, before the expiration of the Buhari administration. He disclosed that the report has received the approval of the President, adding that “the report of the committee on Devolution of Power and true federalism www.businessday.ng

set up by the APC and chaired by Kaduna state Governor, Nasir El-Rufai, will be implemented.” The former governor, who recently turned 80 years, said he was at the Villa to present his book – ‘Battlelines: Adventures in Journalism and Politics’ to Buhari, who featured in it prominently, maintained that the APC even had restructuring as devolution of powers from the Federal Government to states, enshrined in its manifesto.

Osoba appealed to Nigerians, especially statesmen and other activists agitating for restructuring of the country, to be patient with the President and the APC, adding that steps would be taken to get the National Assembly start debate on legalising the relevant aspects of the report. “But I can tell you, all this noise about restructuring, we APC put devolution of power, true federalism in our manifesto and we’ve moved far from there to where a

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Thursday 11 July 2019

BUSINESS DAY

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Thursday 11 July 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

GEORGE PARKER & SEBASTIAN PAYNE in London & DEMETRI SEVASTOPULO in Washington

im Darroch, Britain’s ambassador to the US, resigned on Wednesday after Boris Johnson refused to support him following the leak of confidential diplomatic cables in which he criticised US president Donald Trump. Sir Kim spoke to Prime Minister Theresa May at 11.30am to announce his decision to quit, telling colleagues that he felt that Mr Johnson would sack him if, as expected, he becomes prime minister later this month. Foreign Office minister Alan Duncan said Mr Johnson had “thrown our ambassador under a bus” and said the behaviour of the Tory leadership frontrunner was “contemptible”. Mr Johnson had refused to support the beleaguered ambassador in a televised leadership debate on Tuesday night. “Kim watched the debate and realised he was being undermined,” said one person briefed on the ambassador’s decision. Peter Ricketts, a former head of the Foreign Office, wrote on Twitter that Sir Kim had been an outstanding public servant. “It should not have ended like this. He has been taken out by an act of political sabotage. What does this say about the state of our country?” Mrs May announced Sir Kim’s departure to a silent House of Commons and made an implicit

UK ambassador to US resigns after Boris Johnson refuses to back him

Kim Darroch steps down following leak that revealed his criticism of Donald Trump

attack on Mr Johnson, saying: “I hope we will reflect on the importance of defending our values and principles when they are under pressure.” Referring to the ambassador — who was labelled a “pompous fool” by Mr Trump on Tuesday — the prime minister said: “He has given a lifetime of service to the UK and we owe him a huge debt of gratitude.” Emily Thornberry, the shadow foreign secretary, said Sir Kim had been “bullied out of his job” by Mr Trump’s tweets and Mr Johnson’s remarks during the debate on Tuesday night. “It makes a laughing-stock out of our government, and tells every one of Britain’s brilliant representatives abroad that the next Tory prime minister will not stand up for them,” she said. Sir Kim has been under huge pressure since Mr Trump said on Monday he would refuse to deal with him, following the leak of diplomatic cables in which the ambassador labelled his administration “inept” and “dysfunc-

tional”. Mrs May issued a statement of full support in her ambassador but Mr Johnson, repeatedly pressed on whether he would retain Sir

Kim in Washington if he became prime minister, refused to answer. He said on the ITV leadership debate programme on Tuesday that he was “not going to be so

presumptuous” on what date Sir Kim would leave his job. “I alone will decide who takes important and politically sensitive jobs,” said Mr Johnson.

German chancellor Angela A mild-mannered Mexican finance minister’s bitter resignation Merkel seen shaking again The manner of Carlos Urzúa’s departure exacerbates investor worries over president’s policies JUDE WEBBER in Mexico City

Veteran leader blames ‘residual anxiety’ over past episode put down to dehydration GUY CHAZAN in Berlin

erman chancellor Angela Merkel was seen shaking in public for the third time in just over three weeks, raising renewed fears about the state of her health. Ms Merkel appeared to experience another trembling fit while receiving the Finnish prime minister Antti Rinne in Berlin on Wednesday. She later said she was “very well” and there was “no need to worry”, blaming it on residual anxiety over a first bout of shaking on June 18. “It’ll go away one day just as it arrived,” she said. Ulrike Demmer, Ms Merkel’s spokeswoman, said the chancellor had met Mr Rinne as planned and would appear at a press conference with him later. “The chancellor has kept all her appointments over the last three weeks and is in good form,” she said.

Video footage of the official reception for Mr Rinne showed Ms Merkel shaking as the German national anthem was played, although it appeared to be less serious than the first attack on June 18, which occurred when she received the new Ukrainian president Volodymyr Zelensky. At the time she put it down to the heat — temperatures in Berlin were at nearly 40C — and dehydration. The weather in the capital was much cooler on Wednesday. She was also seen to tremble during a swearing-in ceremony for Germany’s justice minister, Christine Lambrecht, on June 27. She clasped her arms to control the shaking, but rejected a glass of water offered to her by an official. Asked about the state of her health on the sidelines of the G20 summit in Japan, she refused to say whether she had consulted a doctor about the trembling fits, saying only: “I have nothing special to report. I feel fine.” www.businessday.ng

or Mexico’s finance minister Carlos Urzúa to resign from the government after just seven months was a bad enough sign for investors. But for the usually mild-mannered Mr Urzúa to quit in such bitter fashion laid bare the deep rifts in President Andrés Manuel López Obrador’s administration — and potentially heralded more turmoil in one of the world’s most important emerging markets. “In this administration decisions have been taken without sufficient basis . . . all economic policy should be based on evidence,” said Mr Urzúa in a letter that excoriated his president. He said his job had been rendered impossible by having unqualified officials and irrational policies foisted upon him. “I don’t think I’ve ever seen a letter like that from a public official. That was one very pointed, brutal letter,” said Alberto Bernal, chief global strategist at XP Securities. With his criticism, the outgoing finance minister zeroed in on the tension in Mexico’s govern-

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ment between the president — a veteran leftist who sees himself on a mission to sweep away the pro-market neoliberal policies of the past four decades — and more market-friendly technocrats who have tried to rein in their boss’s more populist instincts. The inference of Mr Urzua’s resignation is that populists closer to Mr López Obrador’s own sensibilities have the upper hand in the administration. “The reasons for his departure are more worrisome than the resignation itself,” BBVA Bancomer economists wrote in a note to clients. Mr Urzúa’s exit sparked a sharp sell-off that initially pushed the peso and stocks about 2 per cent lower Mr Urzua’s departure deprives Mr López Obrador of a minister who could persuade the business community and international investors that stability would ultimately be respected and public finances protected, even as the president pushed ahead with decisions that have pointed in the opposite direction. They include Mr López Obrador’s cancellation of a half-built airport and his insistence on pur-

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suing the construction of an $8bn refinery by Pemex, the financially strained state oil company. It comes as Mexico’s economy is under wider pressure. Growth has screeched to a halt and job creation has slumped, while Mexico must contend with the pressure being applied by US president Donald Trump’s administration over migration and a worsening atmosphere for international trade. Arturo Herrera, Mr Urzúa’s deputy and a former World Bank official, will now step into his former boss’s shoes. But his body language as he stood beside Mr López Obrador in a video aired on social media — stiff shoulders, tense expression — belied his claim to be “very excited” at taking on the job. Mr Urzúa did not name the causes of his displeasure but analysts said his targets were clear: chiefly Alfonso Romo, the president’s chief of staff, and Rocío Nahle, the energy minister and one of the cabinet’s chief leftist ideologues, who has convinced Mr López Obrador that the oil refinery is feasible. Mr Herrera has said Mexico cannot afford the project.

Thursday 11 July 2019

BUSINESS DAY

NATIONAL NEWS

Sicily’s young people struggle to find jobs and training Italian island suffers from eurozone’s highest rate of youth economic inactivity DAVIDE GHIGLIONE in Palermo & VALENTINA ROMEI in London

he streets of Palermo brim with economic vitality as tourists and locals bustle and vendors sell arancine — deep-fried stuffed rice balls, a local speciality — and yell at each other from their market stalls. But Sasha Taormina is struggling to make a living. “The job market is dead,” she said. “It is almost impossible to be economically independent here, especially if you are young and you are a woman. I think I will have to leave eventually if I want to find a real job.” The 32-year-old, who has a master’s degree, occasionally picks up casual work as a waitress and distributes flyers, earning about €300 a month. She is not the only young Italian who is struggling because of the lack of job opportunities. One in four Italians aged 15 to 34 is not in education, formal employment or training (Neet) — more than 3m people in total. In Sicily, Italy’s largest island, the proportion rises to 42 per cent. While Sicily is an extreme case, Italy has the largest proportion of Neets in the EU, even higher than the troubled Greek labour market. Italy and Greece are the only eurozone economies that have not returned to their pre-crisis peak levels, and both have unemployment rates above the EU average. “Economies that are still lagging behind create a series of knock-on effects, including unemployment, in particular for that part of the population trying to find a job for the first time,” said Fabio Lo Verde, a sociologist at the University of Palermo. “They are the most fragile and exposed to exploitation.” And women are particularly badly hit: the share of idle 15 to 34-year-old women is nearly 30 per cent across Italy, 11 percentage points above the EU average. “The high drop-out rates [among students] combined with the lack of job opportunities contribute to Italy’s very high share of young Neets,” said Mauro Pisu, an economist at the OECD. Transition from school to work is particularly difficult in Italy. Only half of those who completed their education three years ago are in work, the second-lowest proportion in the EU after Greece. Even among those with a university degree, employment rates in the first three years after graduation remain near the bottom of the EU league table. In an effort to tackle the problem, Italy signed up for the EU’s youth guarantee scheme in 2014 and has since enrolled 1.4m young Neets. The programme is a package of measures that aim to help young people into education or work, including training and counselling. However, the number of people

who complete the programme remains low, according to the European Commission. Only 13.6 per cent of Italy’s Neets are covered by the scheme, the commission estimated, compared with about 70 per cent in France, Germany and Belgium. Italy needed to make “more efforts to ensure full-scale implementation”, it added in its latest assessment, published last year. Many of those signing up for the scheme “did not see any concrete proposal of work and training and they returned to the Neet group”, said Francesco Seghezzi, director at ADAPT Foundation, an Italian labour market think-tank. “More than 50 per cent received an internship proposal [but] only in a few cases was that then converted into a real employment contract.” The project has “failed to significantly reduce the number” of idle young Italians, he said. Barbara Lezzi, Italy’s minister for the south, blamed Sicily’s woes on “years of ineffective, if not absent, policies for the south of Italy”. She said: “We do think investments and infrastructure are the key to tackle the problem and we have to continue working towards that direction.” Rome’s coalition government has shown little interest in the problem. The anti-establishment Five Star Movement has pledged to introduce a universal basic income for poor Italians but many young people would fail to qualify for it. Matteo Salvini, leader of the rightwing League, suggested that encouraging older people to retire earlier would open up jobs for young people. Mario Sancataldo, a 25-year-old from the Sicilian town of Bagheria, said he had never had a proper job. Since gaining his high school diploma in hospitality management seven years ago he has not earned more than €500 a month; at present he is unemployed and lives with his grandmother. The prevalence of worklessness among young people makes it easier for unscrupulous employers to exploit them, he said. “If you want to work, you must adapt, and I did — sometimes even working 14 hours a day for €40, and without signing any contract. Employers know how desperate young people can be, and use that to pay you even less.” That has repercussions for other areas of life: the lack of a secure income makes it hard for adult children to move out of their family home and have offspring of their own. Italy registered the lowest number of births on record last year, as well as the highest ever number of emigrants — weighing on the country’s weak growth prospects and fragile public finances. “My dream would be to find an ordinary job and go live by myself,” Mr Sancataldo said. “But it seems impossible.” www.businessday.ng

Hassan Rouhani, Iran’s president, claims the British operation came after an order from hawks in the Trump administration and US regional allies © AP

Rouhani says UK will face ‘consequences’ for seizing Iranian tanker Iran’s president describes operation as ‘very cheap, wrong and a mistake’ NAJMEH BOZORGMEHR in Tehran & MARK ODELL in London

ran’s president has warned Britain it will face “consequences” for seizing an Iranian supertanker carrying oil last week, an operation Tehran claims was in response to a request from the US. “I tell the British that it is you who began maritime conflicts and you should be aware of the consequences,” Hassan Rouhani said in a cabinet meeting broadcast on state television on Wednesday. “This means Britain is directly responsible for whatever happens after this [incident].” British marines boarded the tanker off the coast of Gibraltar last Thursday on suspicion that it was transporting Iranian oil to Syria in breach of EU sanctions. Tehran called the move an act of “piracy” and denied that the destination was Syria. Iranian officials argued that EU sanctions could apply only to the bloc’s members, not Iran. In strongly worded comments on Wednesday, Mr Rouhani said

what Britain did was “very cheap, wrong and a mistake”. It will be “to your loss”, he added, saying the British operation came after an order from hawks in the Trump administration and US regional allies. Hardline media in Tehran have urged the government to retaliate by stopping British oil tankers from operating in the strategic waters of the Strait of Hormuz, rather than summoning the British ambassador to Tehran. The threat by the Iranian president came after the top US military commander said the Pentagon was talking to a number of countries about putting together a naval task force to “ensure freedom of navigation” in waters close to Iran and Yemen. General Joseph Dunford, chairman of the joint chiefs of staff, said the US would provide “command and control” for the operation. He did not specify which countries were involved in the initiative. The US has a sizeable naval presence in the region centred around the headquarters of the fifth fleet in Bahrain. The UK Ministry of Defence said

it was “continuously monitoring the security situation in the Gulf” but denied reports that a Royal Navy ship that is based in the region had been ordered to escort British oil tankers through the Strait of Hormuz. The dispute with the UK comes as tensions between the west and Iran escalate amid a battle to save the 2015 nuclear accord that Tehran signed with world powers. It follows the shooting down of a US drone by Iran last month, which claimed that it entered the country’s airspace. Iran announced this week that it would go ahead with its previous threats to increase uranium enrichment levels in protest at the reimposition of US sanctions and European states’ failure to deliver on promised economic dividends under the landmark deal. The International Atomic Energy Agency (IAEA), the UN watchdog, has confirmed that Iran has gone beyond the 3.67 per cent enrichment limit. The US has urged the IAEA board of governors to meet on Wednesday to discuss the Iran crisis.

James Dyson buys Singapore’s most expensive flat Asking price for Brexit-supporting billionaire’s ‘super penthouse’ was $79m SIDDARTH SHRIKANTH in Hong Kong

ames Dyson, the British inventor and prominent Brexit supporter, has bought a luxury flat in Singapore that is said to be the country’s most expensive penthouse, months after controversially relocating his company’s headquarters to the city-state. Sir James, founder of technology company Dyson, and his wife Deirdre bought a 99-year leasehold on the “super penthouse” in Wallich Residence on June 20, according to Singapore Land Authority property records seen

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by the Financial Times. The asking price for the penthouse is listed at S$108m (US$79m) on the developer’s website, however, local media have reported that the billionaire paid S$73.8m for the property. Either figure would comfortably exceed the S$60m Facebook co-founder Eduardo Saverin paid for a super penthouse at Sculptura Ardmore, reportedly the most expensive apartment sale in Singapore at the time. Guoco Land, the property developer of Wallich Residence, confirmed the purchase but did @Businessdayng

not provide a sale price. Sir James’s 21,108 sq ft threestorey apartment has five bedrooms and includes a private pool on the 64th floor, a wine cellar that can hold 600 bottles and a “Wallich Butler service” available 24 hours a day, according to the developer’s website. It is located in Singapore’s tallest building in the Tanjong Pagar financial district. “Given the decision to locate the headquarters in Singapore and the growing focus of the company’s business in the region, of course James Dyson has bought a property there,” Dyson said.

Thursday 11 July 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Fed chair cements case for cut in interest rates S&P 500 reaches new record on expectations of further monetary policy easing JAMES POLITI in Washington

ay Powell, the chairman of the Federal Reserve, has cemented the case for the US central bank to cut interest rates based on mounting risks to the US economic outlook, in dovish testimony to Congress that fuelled expectations for a rate cut this month. Despite a strong jobs report for the month of June and last month’s new truce in the trade war between the US and China, Mr Powell said “uncertainties about the outlook have increased in recent months”, particularly internationally. “Economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the US economy. Moreover, a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent that we currently anticipate,” Mr Powell said in prepared remarks. Mr Powell’s statements to Congress were delivered as investors are betting that Fed monetary policymakers will move as early as late July to cut its main interest rate

by at least 25 basis points from its current level of 2.25-2.5 per cent. However, Mr Powell did not commit to any timeframe for possible monetary easing, nor did he point to the scale of the interest rate cuts that would be required to protect the US economy from the growing risks to the expansion. The S&P 500 index jumped as much as 0.8 per cent to 3,002.98, crossing the 3,000 threshold for the first time, before easing back to be 0.4 per cent higher by midmorning in New York. The Nasdaq Composite and Dow Jones Industrial Average also touched new records. US sovereign debt yields and the dollar pulled back immediately on the release of the testimony. Two-year Treasury notes, seen as particularly sensitive to monetary policy, rallied sharply. The yield, which moves in the opposite direction of the price, was recently down 5 basis points to 1.86 per cent. At the longer end of the curve, the 10-year yield was flat at 2.061 per cent, having hit 2.113 per cent earlier in the day. The fall in Treasury yields also knocked the US dollar, leaving it down 0.31 per cent against halfa-dozen major developed market currencies. S&P 500 futures were up 0.24 per cent.

Why Turkey’s S-400 missile purchase angers the US System has capacity to take out drones, fighter jets and cruise missiles LAURA PITEL & IAN BOTT

urkey is expected to take delivery of the first shipment of a Russian S-400 Triumph air defence system in the coming days, defying increasingly vocal warnings from the US that it faces sanctions over the $2.5bn acquisition. The S-400 — or the SA-21 Growler, as it is known within the Nato defence alliance — is one of the world’s most advanced air defence systems. When deployed as part of a wider military infrastructure, the S-400 has the capacity to take out a wide range of threats including drones, fighter jets and cruise missiles. Though US officials have warned Turkey of the consequences of proceeding, President Recep Tayyip Erdogan has gone ahead with the deal. Turkey, a Nato member, has not yet said where its two sets of S-400

systems, or “regiments”, will be deployed. Washington’s primary concern is that Turkey’s purchase jeopardises the security of Nato’s new F-35 stealth fighter jet. US defence officials say the Russian military could use an S-400 stationed in Turkey to collect sensitive data about the fifth generation aircraft, which is due to form the backbone of Nato member states’ future air operations. Turkey disputes this, arguing that it will protect the security of the F-35 by ensuring that the new S-400 system is not linked up to Turkey’s wider, Nato-integrated defence architecture. The US remains unsatisfied by this proposal. The Pentagon is expected to suspend Turkey’s purchase of 100 F-35 aircraft, which is supposed to play a key role in the future strategy of the Turkish air force, as well as halting the role of Turkish companies in producing components for the jet. www.businessday.ng

Sasha Taormina: ‘It is almost impossible to be economically independent here, especially if you are young and you are a woman’ © Valentino Bellini/FT

Slack and Spotify debuts tempt companies to cut out the middlemen Successful ‘direct listings’ cast doubt over the traditional route of an IPO RICHARD HENDERSON in New York

S stock-market listings have roared back to life after a slow start to the year, but a new way of offering shares to the public has left top executives and venture capitalists wondering about following suit. Last month, messaging service Slack bypassed convention with a “direct listing,” where shares become tradable on an exchange, but no money is raised. In doing so, it cut out many of the ways in which investment banks traditionally drum up interest among fund managers. Since then, its shares are up about 35 per cent. The deal followed Spotify, the music streaming service, which used a similar method in April 2018. At the time, the company’s chief financial officer decried the traditional share-listing model as broken, expensive and outdated, relying too much on enriching

underwriters via a first-day “pop” in the stock. Critics countered that the technique would leave the shares thinly followed and, without “lock-ups” which restrict sales in the early months, vulnerable to falls. But they have since risen more than 10 per cent. Analysts note that while the duo represents a small slice of the market, their success is likely to attract copycats, squeezing the fees paid to investment banks and shattering the club-like system behind initial public offerings, where big groups of banks band together to build investor appetite for the stock. “The days of the 7 per cent fee for a large IPO are long gone,” said Jeffrey Harte, a banks analyst at Sandler O’Neill. “Direct listings are another incremental step in the pricing pressure for the larger IPOs.” Slack paid about $22m in fees for its direct listing to Goldman

Sachs, Morgan Stanley and Allen & Co — the same trio behind the Spotify listing. Uber, by contrast, whose $72bn market capitalisation is four times Slack’s, paid $106m to 29 banks for a regular IPO. “More direct listings will dramatically change the number of underwriters in these deals and the idea of a syndicate,” said Scott Kupor, managing partner at Andreessen Horowitz, the Menlo Park, California-based venture capital firm that owns a stake in Slack. For now, direct listings are rare. Spotify and Slack stand against 226 companies that have listed via an IPO in the past 18 months in the US, raising $77.3bn, according to data from Ipreo. Yet the option may be attractive — especially for companies in Silicon Valley, one of the most fertile regions for exchanges’ listings business. Airbnb, for example, is reckoned to be considering a direct listing.

US announces significant relaxation of Huawei ban Washington to approve sales to Chinese group deemed no threat to national security KIRAN STACEY in Washington

he Trump administration has announced a significant relaxation of its restrictions on US companies selling to Huawei, saying the ban will only apply to products that are related to national security. The move marks a major victory for technology companies that have been lobbying hard to continue selling to Huawei. It follows last month’s announcement of a truce in the US-China trade war by President Donald Trump at the G20 summit. On Tuesday Wilbur Ross, the commerce secretary, said that Washington would issue licences to companies to sell their products to the Chinese telecoms equip-

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ment maker under certain conditions. Mr Ross said: “To implement the president’s G20 summit directive two weeks ago, [the US Department of] Commerce will issue licences where there is no threat to US national security.” But he clarified that Huawei would not be removed from the so-called entity list, and that companies would still need to apply for a licence. “Within those confines we will try to make sure that we don’t just transfer revenue from the US to foreign firms,” Mr Ross said. “Huawei itself remains on the entity list, and the announcement does not change the scope of items requiring licences from the commerce department, nor the presumption @Businessdayng

of denial.” Mr Trump announced in May that US companies would have to apply for a special licence to sell to Huawei, after trade talks with China collapsed. Under the terms of the ban, American companies must seek a licence to sell anything made in the US, or anything made abroad that is deemed to affect national security. Two weeks ago, however, Mr Trump announced a truce in the trade war between the two countries, following a meeting with Chinese president Xi Jinping on the sidelines of the G20 summit in Osaka. As part of that announcement, he said US companies would be allowed to sell to Huawei, but did not say how that would happen.

Thursday 11 July 2019

BUSINESS DAY

ANALYSIS

FT Critics round on Deutsche Bank for generous golden parachutes

German lender paid €52m in severance to departing senior executives in 14 months OLAF STORBECK in Frankfurt

eutsche Bank is coming under fire for the lavish golden parachutes it has paid out to top executives who left during a period of management turmoil over the past year. Germany’s biggest bank has spent more than €52m on severance pay for senior executives who were fired or left voluntarily over the past 14 months, almost matching the lender’s annual pay for the entire management board, which in 2018 stood at €55.7m.. The struggling lender has undergone a string of overhauls, culminating with the announcement on Sunday that it will cut 18,000 jobs in a historic retrenchment from investment banking activities. When weighed against the heavy job losses among rankand-file employees and the fears that Deutsche risks running short of capital if its plan goes wrong, the generous pay-offs to departing executives may act as a lightning rod for criticism of the bank. “Big severance packages for sacked managers are mad,” said

Frankfurt-based headhunter Christine Kuhl, a partner at Odgers Berndtson, adding that this rewards executives “who did a terrible job”. Deutsche’s severance pay bonanza began with the ousting of John Cryan as chief executive in April 2018 when the British-born former CEO received a pay-off of €10.9m. Subsequently, six additional board members left, cashing in at least €41m in severance pay between them, according to a Financial Times calculation based on figures disclosed in the annual report and estimates based on the bank’s standard policies. The total severance pay equals more than a fifth of Deutsche’s 2018 dividend of €227m, which the lender last weekend suspended for two years to help pay for restructuring costs of €7.4bn. Gerhard Schick, head of lobby group Finance Watch Germany, called the payments “inappropriate”, pointing to the mass lay-offs at Germany’s largest lender that started on Monday morning. “Golden parachutes for failed managers while thousands of employees are losing their jobs just do not match,” said Mr Schick.

President told Xi Jinping US would tone down criticism of China’s approach

onald Trump told Chinese president Xi Jinping last month that the US would tone down criticism of Beijing’s approach to Hong Kong following massive protests in the territory in order to revive trade talks with China. The US president made the commitment when the two leaders met at the G20 summit in Osaka, according to several people familiar with the meeting. One person said Mr Trump made a similar pledge in a phone call with Mr Xi ahead of the G20 summit. The White House and state department declined to comment. Following the Trump-Xi meeting, the state department told Kurt Tong, the departing US consul general in Hong Kong, to remove several critical comments about China from his final speech in the Asian financial hub. Mr Tong had told people he would give a speech about Hong Kong that would mention the erosion of freedoms by China in the territory, but the veteran diplomat was forced to water down the July 2 address. Hong Kong has been ruled under a “one country, two systems” formula since the UK handover of the territory to China in 1997. But critics say Beijing has taken a heavier hand towards affairs in Hong Kong in recent years, diluting freedoms in the territory. Over the past month, millions of people have taken to the streets to protest an extradition bill that if passed would have allowed sus-

Economic governance system established in 1944 is being undermined by protectionism and nationalism MARTIN WOLF in London

“W

Trump softened stance on Hong Kong protests to revive trade talks DEMETRI SEVASTOPULO in Washington & SUE-LIN WONG in Hong Kong

Martin Wolf on Bretton Woods at 75: global co-operation under threat

pected criminals to be sent from the city to mainland China for the first time. Carrie Lam, Hong Kong’s chief executive, suspended the proposed law but has rebuffed demands to withdraw it completely. US officials have expressed support for the protesters but Mr Trump has faced criticism for saying relatively little. Mike Pompeo, secretary of state, last month denied that the president was taking a soft approach on human rights to help facilitate a trade deal. He told Fox News ahead of the G20 that Mr Trump was a “vigorous defender of human rights” and that Hong Kong would probably be discussed at the Osaka meeting. Mr Trump said in a news conference at the G20 that the US and China had agreed to resurrect trade negotiations following an “excellent” meeting with Mr Xi. Last week, he said he had discussed Hong Kong “briefly” with the Chinese leader. Asked if he had a message for the protesters, Mr Trump said they were “looking for democracy” and, without naming China, added that “unfortunately some governments don’t want democracy”. Dennis Wilder, a former White House Asia official, said Mr Trump’s willingness to ease criticism of China’s Hong Kong policy was “consistent with his singular focus on the economic issues in bilateral relations with China”. He added that the president had “consistently dampened down the tougher edges of US policy on China” on a range of issues, including “criticism of China’s human rights record in Xinjiang”, which was “frustrating the China hawks within his administration”. www.businessday.ng

e have come to recognise that the wisest and most effective way to protect our national interests is through international co-operation — that is to say, through united effort for the attainment of common goals.” US Treasury secretary Henry Morgenthau Jr, closing address at Bretton Woods Conference, July 22, 1944 “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs. Protection will lead to great prosperity and strength.” Donald Trump, inaugural presidential address, January 20 2017 The conference at Bretton Woods in New Hampshire that underpinned much of today’s global economic order took place three-quarters of a century ago, between July 1 and 22 1944. The second world war was not yet won. Yet already the western powers — the US, above all — were thinking about how to organise things differently for the better world that had to lie ahead. The world has changed enormously since then. Today, the spirit that animated the conference is embattled. Yet it remains as relevant as it was in 1944. This anniversary is more than an arbitrary moment: it is an occasion for reflection, on what has gone right, what has gone wrong and what needs to happen if the spirit of Bretton Woods is to shape the world in the decades ahead or fail, as the League of Nations did between the two world wars. An impressive collection of 50 essays — Revitalising the Spirit of Bretton Woods organised by the Washington-based Bretton Woods Committee — explores the formidable challenges ahead. As Gail Kelly, former chief executive of Westpac, says: “In 2019, Bretton Woods reaches its 75th anniversary . . . [T]here is indeed a lot to celebrate. But growing and strident nationalism, coupled with ardent protectionism, are making the challenge much harder.”

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Paul Volcker, former chairman of the US Federal Reserve, encapsulates the spirit of Bretton Woods: “The belief in a common interest in international co-operation, the importance of certain basic rules of good behaviour with respect to exchange rates, and the need for development among the multitude of ‘emerging’ nations.” With the General Agreement on Tariffs and Trade, which went into effect as a provisional agreement in 1948, this idea of “certain basic rules of good behaviour” also covered trade. In economic policy, Bretton Woods means a commitment to co-operation, contractual obligations among nations and effective international institutions — the International Monetary Fund, the World Bank group and the World Trade Organization. Today, there is far more to institutionalised economic co-operation than these three institutions. The regional development banks, created on the model of the World Bank, and, more recently, the Asian Infrastructure Investment Bank and the New Development Bank, sponsored by China, also play an important role. Two informal groups of countries have also been influential: the G7, which includes the seven largest high-income economies; and since 2008 the G20, which includes the leading emerging economies and the EU. If we judge the era that followed Bretton Woods by economic performance, we have to conclude it has been a triumph. In their chapter, Nicholas Stern of the London School of Economics and Amar Bhattacharya of the Brookings Institution note that “overall, world income per capita has grown by a factor of four since 1950 as population has roughly trebled”. Between 1950 and 2017 the volume of world trade increased 39 times. The share of the world’s population living on less than $2 a day (at 2011 purchasing power parity levels) declined from about 75 per cent in 1950 to 10 per cent in 2015. Global inequality has also fallen significantly during the past few decades, largely because of the rapid rise of the large Asian emerging economies, especially China and India. Moreover, the @Businessdayng

world economy was also far more stable than it had been in the first half of the 20th century. These advances did not occur because everything went smoothly. The regime of fixed, but adjustable, exchange rates collapsed in 1971, when the Nixon administration broke the dollar’s link to gold. Inflation then exploded upwards in the 1970s, to be tamed, at substantial cost, in the 1980s. Financial liberalisation delivered waves of banking and debt shocks, which culminated in the global and eurozone crises of 2007-13. Bouts of protectionism erupted, not least in the early 1980s in the US, in response to the strong dollar and the success of Japan. A trading system founded on the principle of non-discrimination also morphed into one with a host of preferential (that is, discriminatory) trading agreements. Overall, the Bretton Woods ideal of structured co-operation worked extraordinarily well. But new challenges have emerged. Perhaps the most important is the shift away from western and, above all, US dominance, with the rise to superpower status of China. On some measures, China already has the biggest economy in the world. Also significant has been the rise of nationalism and protectionism and the consequent threat of fragmentation not just globally, but also within the west. Mr Trump’s idea of “America First” and his passionate belief in protectionism are a fundamental repudiation of the animating spirit and institutional structure of the order the US created after the second world war. The emergence of this very different spirit is, in turn, a consequence of economic changes that have undermined trust both in the idea of an open world economy and in the people and institutions that manage it. Important causal factors in high-income countries have been deindustrialisation, rising inequality, the slowdown in productivity growth and the shock of the unexpected financial crises. Today, unlike 40 years ago, it is the citizens of the high-income countries, not of the emerging world, who are most suspicious of global economic integration.

Thursday 11 July 2019

BUSINESS DAY

Garden City Business Digest Old Mutual in Port Harcourt, waves life insurance for uncertain times • Mitigating the impact of kidnapping Ignatius Chukwu

he south-south is becoming known with kidnapping and other forms of violence but many may not know that life insurance with reputable firms may be a kind of mitigation. Confessions from lucky victims indicate that concern for loved ones always eats up the minds of kidnap captives during torture in the forests. Now, Old Mutual says such anxiety has mitigation when one realizes that his loved ones can still carry on even after he is no more. Securing such assurance with a reliable firm seals it up. Giving insight into this, the south-south manager, Leonard Oyinbo, told BusinessDay at Asia Town in Old GRA during the customerdinner event that Old Mutual products are targeted at solving unique problems. “They have been developed to attend to different situations. We have something for maritime and the Niger Delta is a maritime environment. The product can deal with that. We have other products that are specific to needs.” The insurance world may not have developed a policy that directly fights kidnapping such as reconnaissance craft and rescue teams the way Insurance did to fire disasters in the old times abroad but Oyinbo has cred-

ible products that offer ease of mind to persons afraid they could die. He said loved ones are a major concern to an important man in danger but that remembering that your loved ones are provided for helps to give the victim the courage to stand and the strong mind to withstand the uncertainty. Speaking further he said: “Old Mutual has a long way to go. We are here to stay and provide fantastic service to our clients. Today’s event is all about our customer. In Old Mutual, the customer is at the centre of everything we do. We are customer-focused and having worked from January till date, looking at our success and strategic plans, we admit we cannot achieve this without our customers. So, we appreciated them for what they have done and what they will do. “Old Mutual is 174 years old, and the only reason we have got this far is because of the customers. We look back and see partnership. We see a win-win relationship between the two. We want to grow along with all our customers. That is the essence of today’s event.” He said the south-south is a unique region and environment. “It is at the centre of the Niger Delta and oil is the major product of Nigeria and this comes from here. If anything happens to oil, it happens to the entire economy. So, all our product-offering are targeted at this segment to grow their assets and achieve their long term goals. Some are for corporate assets and individual assets, all

strategically structured to satisfy the need in the lives of our clients. We identify our clients’ needs and provide tailor-made solutions.” CEO throws more light: The Group CEO (West Africa), Samuel Ogbu, offered some insight. He said Port Harcourt as a city and the areas around it are very important for the firm. “We used this evening to thank the stakeholders and create awareness that we are very much appreciative.”

He rejected the notion that insurance was for elite. “One wise man told me long time ago that life insurance is one of the few ways an ordinary man can leave inheritance to his children. If anything, it is more needed to support your family when you are not there. It is also used to protect your assets and replace them in the event of loss.” On how to penetrate the rural areas with insurance, the Group CEO said: “We share the desire of the regulator that insurance should reach out. We seek a sensible and sustainable way to do this. Insurance is for everybody and we want to reach as many people as the system can carry.” He agreed that the credibility of any insurance firm depends on claims settlement and speed of it. “We pride ourselves as a brand that responds to claims promptly. We have to be the leaders and this implies that we have to take settlements seriously as an essential obligation.” On raising capital as a raging topic in the industry at the moment, he said there is a new requirement (some N2Bn and General Insurance to N10Bn.). He said this has knock-on effect and some implications. He added that stakeholders expect returns just like in other sectors. “We have a challenge and we have to demonstrate tat we can reproduce it and I need to make a business case to say to my superiors, that is what we can make as returns on the investment.”

Resilient results: Why Showers International is different Port Harcourt by Boat

IGNATIUS CHUKWU

f any student that wants to obtain 90 per cent or more in any exam in Nigeria now is sure of it. He knows what to do; just pay. Mushroom schools abound where results are hawked. Students merely sit in to fulfill all righteousness. Students only use their time to browse blue sites, do cultism, and flaunt bravado. In top schools, the arrangement is cool; high fees by parents, good teaching, packaged lifestyle, sorting of government officials, and when exam comes, padded support is offered in exclusive environments. Results are excellent. Not in Showers. There is a school in Port Harcourt with the college in Igbo-Etche in the outskirts of the Garden City. The proprietress is ‘old school’. Ekama Emilia Akpan passed through all the burnishing stages of life and made by the scriptures. She says no way to padded results. So, she is unpopular with everyone, even some parents. Government inspectors do not seem to like her one bit; no sorting. The result is that Showers International Christian School is believed to suffer all manner of elbowing, but does the CEO care? Why?

She revealed at the 2019 graduation ceremony that the outstanding successes of her students in foreign universities and in overcoming obstacles in life encourage her to push on with her policy. She said: Life is filled with obstacles, big and small. If at every obstacle you quit, then our world would be nothing. Obstacles rather make us stronger. Some of the challenges at Showers at the moment include power supply and issues with PHED. We are bringing solar energy to solve this. We run N150,000 every month on diesel, plus other maintenance costs. Construction work is still ongoing but getting bank facilities for it has been difficult. There is need for more teachers to reduce workload but this increases cost. We therefore need to complete the first phase of teachers quarters to enable us bring in more resident teachers. We are working hard to secure funding for this. NGO: We have secured approval to float an NGO, Educate 4 Better Life, as part of our corporate social responsibility (CSR) to help bring quality education to very bright students to gain top quality education that would bring the best out of them for sake of humanity. We are encouraged by our experiment and experience in education management to know that many brains perish and get stunted due to lack of access to quality education. We encourage members of the society to adopt a child or more as you cater for your own children. Experts have warned that if we do not extend soccur to the less privileged, those we ignored may destroy those we love. Some of those we discovered and assisted in the past blasted through education to become top doctors and

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engineers and lawyers today. Success is sweet. We recorded the best result in Nigeria for Cambridge A-level 2017/18 and we have been made a partner school to the British Council in Nigeria. This is a feat many schools are yet to achieve. To obtain this award, our student, Francis Anyanwu, scored as follows: Math 97, Physics 92, Biology 79, and Chemistry 78. We have however recorded less number of A-level intakes in the past two years. A-Level provides the students the great head-start in their further education, the testimony of which is borne by the distinguished performances of our alumni even in many universities abroad. To achieve this, we will move back the A-Level classes back to the town and it will run as a day-school programme but with provision for boarding. This will cater to the economy of many parents. Our best graduating student in 2009 has just bagged a doctorate in Chemical Engineering in London University on British scholarship. She was promptly snapped up by British Petroleum on graduation of Masters and is working with them as a Chemical Engineer. Her masters and doctorate were given one of the highest ratings ever by the University, in addition to finishing

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in record time. She was the best graduating student of the Kwame Nkruma University of Science and Technology in Ghana with First Class Honours scoring 79 per cent average. Showers students have come of age with many in top positions in their chosen careers. They have matured academically, physically and spiritually. So, we are not surprised at their success stories. We record 100 per cent in most exams but the great feat is that in Showers, no cheating, no helping. The students struggle and arrive at that point when they sit confidently in any examination hall anywhere in the world and write and walk away. That is the greatest thing that can happen to any child and to any parent. Her husband, an engineer, Anthony Akpan, opened the day thus: As growing children and upcoming scholars, endeavour not to stop at this level. Discipline is what will carry you on henceforth. Fight off vices and urgings. To parents, try and push harder for your children. The guest lecturer was the professor of Mechanical Engineering, Thaddeus LebeleAlewa, who is pioneer Deputy Vice Chancellor, Maritime University of Nigeria, Okerenkeko, Delta State. He is with specialization in Thermo-Fluids, Power & Energy Engineering. He worked in the oil/gas industry, academic sector, and administrative positions, and is member of visitation panel to seven universities and external examiner to three universities. He is a researcher. He gave out the secret of success as the three Ds: Discipline, Diligence, and Determination. Do not be discouraged by the stories you hear, there is still good life to those that are good. No student suffers with first class degree well earned.

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Thursday 11 July 2019

BUSINESS DAY

Investing in Rivers State ‘Start-up South’ mobilizes governors •Optic fibre RoW to ignite SME revolution Stories by Ignatius Chukwu

che Aniche may one day be recognized as a silent innovator in his passion for business mobilization of an entire region. He has since kickstarted his passion, ‘Start-up South’ or ‘South-South Connect’. He thinks the rulers of the region are standing on a force that could propel an entire region into a big economic force, but they may not be aware. He thinks optic fibre is here to redeem the region and turn it into one business unit but the idea seems strange to many. His task is to open the eyes of the leaders of the region. Concept: The concept is to make the southsouth and east a business entity and connect them in such a way that it would be seen as one business circle. He said there are artificial boundaries erected in the minds of businesses people. So, they differentiate the cities and want to know what each city can deliver. “Our idea is to help integrate the entire south/ east. We have been doing this since the past five years; every year we do a conference to pursue this goal. We partnered with a company in 2018 on free artificial intelligence training which featured 80 persons. Artificial intelligence is the future and if we here do not do anything, everybody would head to Lagos.” He said doing this will help create opportunities for young people in the region by making businesses to thrive in it. “Young people are doing crime because they do not have

Uche Aniche

anything else. They only see criminal lords as models but can we build new models and show them. Aniche sees huge potentials and has reason to fight for south-east and south-south as an economic bloc. “A lot of people who make waves in Lagos (some abroad) graduated from here. We want to build businesses here, attract investors, and keep the youth here in the region. We spoke to a couple of our friends and they have formed an angel network called ‘South-South Angel Network’ who are ready to create investments. We already have two such businesses. They will listen to pitches from start-

ups around here and pick.’ More; “We have a conference which we move from city to city as part of connecting the south; Port Harcourt (twice), Aba, Owerri, and now Uyo 2019. We are bringing businesses from around Nigeria. Main One’s Funke Opeke has confirmed. She will give a keynote address and focus on affordable broadband. The issues include taxation that drives away Infracos (infrastructural companies). The state governments put heavy burden on them. Main One’s cables are grounded in Bonny in Rivers State because of Right of Way (ROW) issues. There is a presidential

committee led by the vice president trying to resolve the issue but such things drag in Nigeria.” If there is internet, he went on, youths will explore a lot of things. “Our goal is to say, governors, what can you people do to allow this infrastructure to come to the youths in this region? Whatever you want in tax, you will get it back multiple times if businesses spring up everywhere. The new road network is internet. So, the conference is to open the eyes of governments around here.” He said states in the north are catching up on this. “Kaduna State has caught the vision and they have built internet ROW which allows any telecomm to connect. The only condition is, look, if you pass a school, hospital, government institution/ office, give them internet.” He said this would create an internet backbone around the states of the north that would attract the youths and start-up revolution soon. “This will create internet hubs along the routes. Give them two years, there would be explosion of businesses there and they would overtake oil. Then, everybody will migrate there and our people would begin to complain.” He said Main One has gone far. “In Benin, they have partnered to put fibre. I don’t think these other states understand these things. Galaxy has done fibre and about seven states have fibre running across them but nobody is connecting because of ROW issues. Akwa Ibom State made some efforts. There is need to educate the states around here on these opportunities. Business people want to go where they make money quick, places of low hanging fruits. Funke is

connecting Cote D’Ivoire, heading to Ghana, etc. They have received some funds to connect more. They may not want to waste time with states that are proving difficult.” Uyo lunch-pad The start-up expert said: “We are inviting them to Uyo to explain these things and we hope the governors would see reason. We need to table a value proposition that can convince them. We are discussing with top officials of Akwa Ibom State Government who have some IT background. We want to put the governors on a panel and get them to discuss on national television. We want to table a schedule such as South-South Optic Development Roadmap or an Uyo Declaration for AI with Optic Fibre as a driver. The states here can collaborate and deliver fibre in the various states and cities. It is not about money but adjusting some laws to make the region inter-connected. If Main One helps to create network, some global internet giants will support because of the huge number of youths that will get on board. The governors will endorse or sign the declaration to create a road map.” He said the group would get a representative of each state to be part of the policy document to create optic fibre in each city and facebook will be interested. “Uyo conference is October 29 to November 2, 2019. All talks will end on Nov 1, but 2nd will be tour led by Goje Africa. From now till then will be organising, mobilizing probably with chambers of Commerce in each state to create what each state will gain and table them before the governors. All that is needed is to get the governors to understand what is at stake.”

Awe, excitement as Luno brings Bitcoin awareness to Port Harcourt

efore Luno Nigeria poured some light on avenue, Bitcoin represented everything fear, suspicion and unbelief. So, trading in it especially in the Port Harcourt business belt was like threading circus rope up in the sky. So, many investors that thronged the main auditorium of Golden Tulip at the GRA 2 in Port Harcourt few weekends ago must have gone there with apprehension, in fact with trepidation. Soon through the training, light and warmed seemed to bathe their souls to calm their nerves. Introductory speeches began to thaw the fears by explaining the meaning of ‘Bitcoin Wallet’, cryptocurrency, blockchain, whitepaper, etc. Port Harcourt was said to be the third city for this awareness campaign starting from Lagos and Abuja. The organizer said this was to spread the knowledge about crypto-currency. If people know better, they do better, they stated. The early speakers noted a lot of people trade from a point of ignorance.

It was made clear that Bitcoin is certainly not MMM, but because it came about the same time that MMM was raging or reigning in Nigeria, many grouped them together. It was noted however that hacking into one’s account could pose a risk, requiring security measures to protect the trader. So, Luno decided to bring a strong resource person in the emerging field to help the PH traders understand it well and trade better. Chinedu Obidiegwu, Marketing and Community Lead This young man prepared the audience for an exciting tour of the Bitcoin avenue by showing how Luno Nigeria has made itself a prepared and preferred platform. He explained that cryptocurrency is digital currency and thus is the answer to the question of security of value. “It is not controlled by any agency for now. Its value is the same everywhere unlike currencies that have different values from country to country. Bitcoin is money. This is because whatever must serve as money must satisfy the www.businessday.ng

four basic condition of money; divisible, scarce, durable, and transferable. When all Bitcoins are bought up, they start chasing each other. There is the blockchain technology and it contains your data. It cannot be altered. In Nigeria, soon, Bitcoin will be versatile. Luno started in Nigeria in 2013. They provide wallet and exchange to buy and sell.” Now, the audience seemed ready for the man they call the professor of Bitcoin. Olaleye Awe: Bitcoin inside out He described Luno as Nigeria’s most trusted exchange forum. He goes off; I heard about Bitcoin in 2016 during he MMM frenzy and I started investigating it and it became interesting. It can give much money ( such that someone who invested N75,000 in September 2017 now has N300m.) Wow! The members of the audience shifted in their chairs. There are over 3000 different coins in the block space. Bitcoin is the king of all; and if you master Bitcoin’s moves, you will

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coast well in others. Other coins crash easily. Bitcoin business is about buying and selling value. You can even buy while asleep and wake up richer. But, beware of scammers. Many persons fall to them. Cryptocurrecy has high volatility potency. For instance, between June 21 and 22, 2019, it rose by 15 per cent. It is highly risky. You must understand that there are market cycles. It fell badly in 2017 after going very high. It went so high that people bough so much. Then, it crashed. I cautioned people but they ignored it and continued to buy. It rose to N20,000 per unit but soon fell to N5,000. Why I am afraid to say buy Bitcoin and Ethereum now is because it is high and so it is dangerous to buy now. Note: It is a scam when you are offered a coin without bloackchain and no white paper. Not all cryptocurrencies are safe to trade in. Bitcoin is the safest. Bitcoin: Beyond buying and selling Luno is the only place to get Bit@Businessdayng

coin for free. As you buy and sell, note that there is the risk management aspect. There is the urge to borrow and buy. Timing is very important. Starting point: Buy when it is falling, sell when it is going up; but the business is beyond buying and selling. Training is very important because some people lost all in one hour. For instance, when you buy low and it gets lower, you need hold-on strategies. Know the seasons (as the holy book says). There is the beer market; when prices keep going down; Solution; sell lower and buy lower. When there is a bull market, prices get higher and higher. Sell when it spikes up and buy back when it reduces. Conclusion By this time, the audience was obviously saturated. Little wonder Chinedu came back on stage and eased the excitement. He said training people from city to city is what Luno offers as their own Corporate Social Responsibility. “We commit huge resources to it.”

Thursday 11 July 2019

BUSINESS DAY

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industry Insight

BUSINESS DAY Thursday 11 July 2019 www.businessday.ng

Leveraging opportunities in African Growth and Opportunity Act Odinaka Anudu, Joseph Maurice Ogu & Gbemi Faminu

n the year 2000, the United States of America opened its market for sub-Saharan African (SSA) countries through the African Growth and Opportunity Act (AGOA). The idea was that SSA countries, including Nigeria, would export up to 7,000 products to the U.S. without paying any duty or tariff. The arrangement was supposed to end in 2015 but was extended to 2025 to enable SSA countries like Nigeria, which did not take full advantage of it, to do so. The legislation significantly enhances market access to the U.S. for qualified countries. Some of the products/commodities that qualify for export to the U.S. market are poultry, bees, meat of goats, fresh, chilled or frozen, turkeys, live ornamental fish, other than freshwater, mackerel and sardines. Others are fresh or chilled swordfish other than fillets, milk and cream, yoghurt in dry form, butter, cocoa powder (sweetened or not), guava, apples, ginger, juice and pine apple, among many others. Unfortunately, of the 7,000 goods listed under the act, Nigeria has not taken advantage of the market opening to export its locally products to the U.S. market. The country has only benefitted from the petroleum products. Experts attribute this to lack of competitiveness of many companies in Nigeria. Manufacturers and exporters spend billions of naira sourcing alternative energy to keep their factories alive. Expenditure on alternative energy sources by members of the Manufacturers Association of Nigeria (MAN) in 2018 was N93.1 billion, according to the association’s economic review. The country’s poor infrastructural facilities, which include transport system, hurt exporters. Logistics is also a critical issue. Importing inputs and taking them to factories is a big issue, given the state of Apapa and Tin Can ports in Lagos. Delays and gridlocks in Apapa increase companies’ production costs, thereby lowering their productivity. Taxes paid by businesses in Nigeria today are up to 54, according to experts. Some of these taxes and levies are multiple and need harmonisation, say analysts. Funding is also a crucial issue. Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent ; Kenya is 9 percent; South Africa is 6.75 percent; Zambia is 10.25 percent, and Cameroon is 4.25 percent. Similarly, Rwanda is 5 percent; Mauritius, 3.5 percent; Algeria is 8 percent, and Senegal is 4.5 percent. Manufacturers are asking the Federal Government to recapitalise especially the Bank of Industry, which provides single-digit funding to them. Doing this, they say, will increase lending to the real sector. Today, product packaging among

SME exporters is relatively average, say experts. Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), said the major issue is lack of competitiveness. He said efforts must be made to remove business environmentrelated challenges to spur export firms. John Isemede, former director-gen-

eral, Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), once said that Nigeria needs to address its challenges inwardly before thinking of how to benefit from AGOA initiative. “Failure to do that, whether AGOA is extended for 20 years, we will continue to work for other people,” Isemede said.

Experts say the country must support exporters, having signed onto the African Continental Free Trade Area (AfCFTA). They say this is a time to promote use of renewable energy while making cheap funds available through the Bank of Industry or other development finance institutions. Brent Omdahl, commercial Counsellor, US Consulate, Lagos, told BusinessDay in an exclusive interview that participating countries, including Nigeria, need to understand the concept of AGOA, saying that, being a participating country and enjoying tax free do not mean not following due processes. Omdahl said products exported to the U.S. would still undergo and pass through necessary regulatory tests, among which are phytosanitary regulations. “There are some minimum standards that countries have to adhere,” he said. “Zero duty access does not mean you have to just start exporting. You have to organise yourself. “In exporting agricultural products, for example, such products would have to be subjected to all of the Food and Drug Administration (FDA) regulations and comply with sanitary and phytosanitary regulations.” Omdahl said the U.S. government, through the US Agency for International Development, has some small resources available to help companies locally to develop their expertise in order to take the advantage of AGOA. Lamenting, Omdahl said it is unfortunate that crude oil that has benefitted from the AGOA initiative most, which is against the original intent of the act. He said the intention of AGOA is to create the pathway for a country like Nigeria to move up the value chain. “It is the Nigerian industry that needs to organise itself,” he said. Recounting lessons US-Vietnamese bilateral agreement, which is similar to AGOA, Omdahl said Vietnam does a very good job by adding value to their products in order to meet up with the U.S. standards. In doing this, Vietnam attracted investments from Taiwan in the textile sector in order to develop their textile industry as well so as to take advantage of exporting it to the U.S., he explained. The country equally developed their furniture sector and even started importing some hard woods from the U.S. to augment their existing local woods, turning them into furniture and sending them to the US to sell in big outlets, he added. “With this arrangement, Vietnam created wealth and employment,” he said. Omdahl said Nigeria has a lot of products that can make it to the U.S. markets if properly harnessed and improved upon. “Nigeria needs to look inwards to find those products, develop them, increase their value addition, export them, and through that, create wealth and employment for the country.” “So, the question for Nigeria is, what are the products that are going to do that? I can think of some. Talk about the shoes. There is a history of making shoes here. The sky is really the limit,” he concluded.

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