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Oando: Story of an energy company built on leverage

Directors earned jumbo pay as company struggled

OWEDE AGBAJILEKE, JAMES KWEN, Abuja, & INIOBONG IWOK, Lagos

Continues on page 34

Nigerians set agenda for NASS as new Senate president, Speaker emerge today

BALA AUGIE & OLUFIKAYO OWOEYE

lobally, funding business operations is as important as the business itself. Different companies adopt different models to fund their operations. Two of the most used models include debt finance, which means money is borrowed from external lenders such as banks, and equity finance, which means owners of the business investing their own money, or funds from other stakeholders, in exchange for partial ownership. Interestingly, companies also adopt the leveraged buyout model to either acquire more assets or expand their operations. Oando plc, one of the major players in Nigeria’s upstream and

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s the inauguration of the Ninth National Assembly and election of PresidContinues on page 34

APAPA GRIDLOCK

47 L-R: Adeyinka Adekoya, MD/CEO, Wapic Insurance plc; Aigboje Aig-Imoukhuede, chairman, and Mary Agha, company secretary, at the company’s 60th annual general meeting in Lagos, yesterday.

Governor Babajide Sanwo-Olu’s promise: “I will rid Apapa of gridlock in the first 60 days of my government.”

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news How Nigeria’s N170trn dead capital can lift 93m out of poverty

L-R: Peter Obi, PDP vice presidential candidate; Chidi Onyemelukwe, PDP deputy governorship candidate in the Anambra State 2017 election, and Oseloka Obaze, PDP governorship candidate, during the sitting of the reconstituted Presidential Elections Appeal Panel at the Court of Appeal in Abuja, yesterday. NAN

…value 19 times more than 2019 federal budget OLUWASEGUN OLAKOYENIKAN

igeria is so broke yet so rich. If Nigeria leveraged a whopping N170 trillion lying fallow in dead capital, it could lift 93 million of its people out of extreme poverty, create jobs and rely less on expensive borrowing. Dead capital are assets that cannot be easily transferred, where title is uncertain, so cannot be converted to their most valuable social and economic use, and cannot be used as collateral, so prevent investment in other businesses. The Nigerian economy slowed in the first quarter of 2019 by 2.01 percent from 2.38 percent recorded in the preceding quarter, data from the National Bureau of Statistics (NBS) show, while the World Bank Group forecast an annual growth rate of 2.1 percent for country in 2019. This implies that at the current annual population growth rate of 2.7 percent, Nigeria will keep getting poorer and would take about 100 years to double Gross Domestic Product (GDP) per capita at 3.5 percent annual growth rate. Besides the over 93 million Nigerians currently living in extreme poverty – $1.9 a day – which keeps rising, over 20 million of Nigeria’s workingage population sought for jobs but could not secure one as of the third quarter of 2018, according to NBS data. To reduce this growing unemployment and extreme poverty, Nigeria’s economy is expected to grow 6-8 percent per annum. This could only be achieved if the country invests at least 26 percent of its GDP size into the economy

every year. At the current annual level of N129 trillion GDP in nominal terms in 2018, a total investment of at least N34 trillion channelled into the Nigerian economy per year would help the nation overcome its poverty and unemployment challenges. While revenue continues to dwindle on the back of falling prices of crude oil – Nigeria’s main source of foreign exchange earnings – in the international market, causing domestic savings to grow lean, Nigeria would most likely find solace in foreign investment which include both direct and portfolio. This is because Nigeria “currently does not have enough domestic savings for this – we only have about half the investment required”, said Andrew Nevin, chief economist at PwC Nigeria. But since seeking foreign capital could further worsen Nigeria’s N24.39 trillion total public debt as at December 2018, it challenges Africa’s largest economy to look within and leverage the value in its untapped domestic capital inherent in its economy. “This means if we could unlock N10 trillion a year of this and invest, it would make an enormous contribution to the Nigerian economy,” Nevin said. Just like the story of a young man held back by capital to start up his impressive business despite inheriting his late father’s landed property, growth in different sectors of the Nigerian economy has been hampered with the real estate sector being the worst hit.

•Continues online at www.businessday.ng

Heads of state, business leaders converge on Maputo for US-Africa Business Summit ONYINYE NWACHUKWU, Abuja

reparations are well underway in Maputo ahead of the 12th USAfrica Business Summit which will host African leaders, over 1,000 United States and African private sector executives, international investors, senior government officials and multilateral stakeholders. The summit being organised by Corporate Council on Africa and the Government of Mozambique under the theme ‘Advancing a Resilient and Sustainable U.S.-Africa Partnership’ is scheduled to hold between June 18 and 21, 2019 in Maputo, capital of Mozambique. Mozambican President Filipe Nyusi will open the summit which will be attended by some other African heads

of state, including Rwandan President Paul Kagame, Namibian President Hage Geingob, and Mswati III, Kingdom of Eswatini, according to a mailed note to BusinessDay from the organisers. Also confirmed to attend include Kenya President Uhuru Kenyatta, President José Mário Vaz of Guinea-Bissau, Malawian President Peter Mutharika, Zambian President Edgar Lungu, President Mokgweetsi Masisi of Botswana, Prime Minister Ruhakana Rugunda of Uganda, Zimbabwean President Emmerson Mnangagwa, and President Teodoro Mbasogo of Equatorial Guinea. Nigerian business leaders, including Africa’s richest businessman Aliko Dangote, Jim Ovia, among others, have been invited as keynote speakers. Nigerian President

Muhammadu Buhari has also been invited to participate at the summit. The summit will provide a platform for US and African business and government leaders to engage on key sectors including agribusiness, energy, health, infrastructure, ICT, finance and more. Private sector and government decision-makers will be able to network, meet potential business partners and explore new business opportunities. Delegates will also be encouraged to help shape effective US-Africa trade and investment policies. The summit is coming against the backdrop of a renewed commitment by the US administration and African governments to develop business-friendly initiatives and policies that foster greater economic engagement since

the last US-Africa Business Summit in 2017. “This month’s summit is specifically designed to facilitate and elevate businessto-business and business-togovernment engagement,” the organisers said. “The Maputo event will address today’s most important challenges to investors in Africa by facilitating high-level roundtables, sector-focused discussions, as well as private meetings. Besides country forums discussing doing business in Africa, there will be countless opportunities to meet new business partners.” CCA’s US-Africa Business Summit is regarded as one of the essential conferences on doing business and investing in Africa.

•Continues online at www.businessday.ng

NPA approves 10% discount on harbour Foreign exposure drives 3 brokers to top NSE list in 2019 dues for vessels calling eastern ports …responsible for almost half of total value of trade AMAKA ANAGOR-EWUZIE

s part of its efforts to increase patronage at the eastern ports, the management of the Nigerian Ports Authority (NPA) has approved 10 percent discount on harbour dues for ships calling all concession terminals at the eastern ports. The ports that will benefit from this initiative include Calabar, Rivers and Delta Ports, said Jatto Adams, general manager, corporate and strategic communications of the NPA, in statement sent to BusinessDay. “The Authority, however, wishes to clarify that this discount will only apply to harbour dues payable by the following types of vessels/ cargoes: Container vessels

with at least 250 Twenty-foot Equivalent Units (TEUs); general cargo vessels with at least 16,000 Metric Tons (MT); combo vessels with at least 16,000 MT and RORO vessels with at least 250 units of vehicles,” the statement said. According to Jatto, the discounts would not apply to vessels coming in ballast, vessels calling at private jetties, and vessels carrying liquid bulk. He further said the application of the discount would take immediate effect. Stakeholders have been calling on government agencies operating in the nation’s seaports to review tariff and charges on ships calling ports in the eastern part of the country with imported cargo to encourage effective utilisation and patronage of these ports. www.businessday.ng

Endurance Okafor

tanbic IBTC Stockbrokers Limited, Rencap Securities (NIG) Limited, and CSL Stockbrokers Limited topped the Nigerian Stock Exchange (NSE) list of best stock-brokers by their value of transactions for the week ended June 7, 2019. Checks by BusinessDay revealed that the three brokers, driven by their exposure to foreign investors, outperformed the other 126 registered brokers on the Lagos bourse to report trade value of 49.29 percent. “These brokers help foreign investors, mostly institutional investors, to buy stocks on the Nigeria market and this helps to boost their value of transactions,” a Nigerian analyst based in the US told BusinessDay on the condition of anonymity.

Ayorinde Akinloye, equity research analyst at CSL Stockbrokers, said “foreign investors mainly buy the premium stocks which have high prices; for example, foreign investors will not but Tier-2 banks except Stanbic”. According to NSE data analysed by BusinessDay, out of the total value of trade at N20.46 billion reported by the NSE top 10 brokers between June 3 and 7, 2019, Stanbic, Rencap and CSL stock-brokers recorded a share of N12.4 billion, leaving the remaining N8.6 billion for the rest brokers to struggle for. A brokerage company buys and sells orders submitted by investors. Its main duty is to act as a middleman that connects buyers and sellers to facilitate a transaction. Brokerage companies typically receive compensation by means of commission (either

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a flat fee or a percentage of the amount of the transaction) once the transaction has successfully completed. Other stock-brokers that made the list of the NSE top 10 by the value of transaction in the review period included Cordros Securities Limited, EFG Hermes NIG Limited, Cardinalstone Securities Limited, Coronation Securities Limited, Chapel Hill Denham Securities LTD, FBN Quest Securities Limited, and EFCP Limited. The brokers made the NSE list with shares of 11.9 percent, 8.80 percent, 3.27 percent, 2.59 percent, 2.56 percent, 2.01 percent and 1.69 percent, respectively, of the total N20.46 billion reported by the top 10. “It is the intrinsic company shares that they traded. For example, if a stock-broker traded 1 million units of Dan@Businessdayng

gote at N190 per share, the value will be higher compared to another that has done 20 million units of, say, Lasaco Insurance. So it depends on the shares that they traded,” Henry Ogbuaku, asset manager, Growth and Development Asset Mgt Ltd, said. A further analysis of the data from the NSE revealed that six of the brokers on the top 10 list by the value of transactions reported also made the list of the top 10 brokers by volume. Other brokers that made up the list of top 10 by volume of transactions were Magnartis Finance and Investment Limited, Capital Trust Brokers Limited, Morgan Capital Securities Limited, and Readings Investments Limited.

•Continues online at www.businessday.ng

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FMBN SCORECARD 2015-2019:

The Buhari Years of Historic Transformation in the Delivery of Affordable Housing to Nigerian Workers

4. SMS and email notification services to NHF customers.

By Zubaida Umar

he Federal Mortgage Bank of Nigeria (FMBN) has delivered recordbreaking achievements in the past four years as a vital institutional tool of the President Muhammadu Buhari Administration in the delivery of affordable housing to Nigerians nationwide. The achievements are a result of Mr. President’s clear vision for the development of the Nigerian housing sector, apparent by his appointment of a competent and reform-minded Board of Directors and Executive Management Team for FMBN under the leaderships of Dr. Adewale A. Adeeyo, OON and Arc. Ahmed M. Dangiwa, fnia, ficen respectively. It is noteworthy that the Bank’s historic strides in the past four years (2015-2019) have found direction under the Buhari Administration’s broad agenda, which is in tandem with its corporate mandate to, amongst others, advance affordable home ownership through the supply of sustainable long-term liquidity to the Nigerian mortgage market; promote a viable primary mortgage market and; the management of the National Housing Fund (NHF) - a contributory savings scheme designed to mobilize long-term funds from Nigerian workers, banks, insurance companies and the Federal Government to advance concessionary loans to NHF contributors. Across all corporate performance indicators, including loan disbursements, delivery of housing stock, funds mobilization, available loan products, mobilization of new contributors to the NHF scheme, and the refund of NHF contributions, the Bank surpassed previous records of achievements. Some of the significant areas of performance improvement are highlighted below.

Muhammadu Buhari President Federal Republic of Nigeria

Refund of NHF Contributions to Retirees In a move that marks a radical departure from the perennial problem of delayed refund of NHF contributions to retirees, in the last four years, FMBN recorded over N23 billion as payout of NHF contributions to 181,436 qualified contributors. This accounts for 70% of cases of the cumulative number of 257,396 refund applications successfully processed and 82% of the cumulative sum of N28 billion refunded since the NHF scheme was established. The significant improvement in the rate of NHF refund arose from the review of the Bank’s internal processes and Management’s commitment to improved efficiency in service delivery to Nigerian workers who are its customers.

N147.3 billion Mortgage Loan Disbursement Under the four years of the Buhari Administration, FMBN disbursed the total sum of N147.3 billion for affordable housing finance through the National Housing Fund (NHF) Scheme. This comprises • Estate Development Loans totalling N66.3 billion for the construction of 1,726 housing units; • NHF Mortgage Loans totalling N36.6 billion granted to 5,030 beneficiaries; • Home Renovation Loans totalling N22.7 billion granted to 27,618 beneficiaries; and • Ministerial Pilot Housing Scheme loanstotallingN21.7 billion for the construction of 1,619 housing units.

Remarkably, the total loan disbursement of N147 billion between 2015 and 2019 represents over 70% of total loan portfolio of N210.6 billion advanced by the Bank since commencement of the NHF Scheme 24 years ago. This translates to an annual average of N36.75 billion (or more than 600% increase) during the Buhari years compared to an annual average of just N6 billion in previous years.

The drastic downward review of equity requirement for accessing the NHF mortgage loan has made it more accessible and affordable to Nigerian workers within the low- and medium-income brackets. The implication now is that workers who contribute to the National Housing Fund (NHF) consistently and are up-to-date are eligible for up to a N5 million loan without having to put down a single kobo as equity, while those seeking for loans above N5 million to N15 million will only put down 10% as equity.

Introduction of FMBN’s‘Rent-to-Own’ Homeownership Scheme Still in a strategic effort designed to make homeownership more accessible and affordable for Nigerian workers, the FMBN recently introduced the ‘Rent-to-Own’Homeownership Scheme. The scheme offers an easy and convenient payment arrangement towards homeownership for Nigerian workers. It makes it possible for a Nigerian worker to instantly move into an FMBN-owned housing property as a tenant and conveniently pay towards ownership of the property in monthly or annual instalments over as long as 30 years at an interest rate of just 9%! According to Arc. Ahmed Dangiwa, the Managing Director/Chief Executive of FMBN, “the rent-to-own housing product is designed to make sure that any worker who collects a salary should be able to live in his own home Easing Access and Affordability for NHF and pay conveniently over periods as long as Loan Products 30-years. This is a massive relief, especially In an historic move aimed at breaking given how little workers earn.” longstanding financial barriers to homeownership by low- and medium-income Leveraging on Technology earners in Nigeria, the FMBN reduced the Another notable achievement of the FMBN equity requirement for NHF contributors during the first tenure of the Buhari Adminwishing to access NHF mortgage loans. istration is the launch of FMBN Digital PlatWith effect from 2018, the following are forms. The Digital Platforms have ushered in the more affordable and accessible equity a new era of transparency and accountability in the operations of the National Housing requirements for NHF mortgage loans: • Mortgage loans of N5 million and Fund (NHF) by empowering contributors under attract zero (0%) equity with real-time access to information on contribution, a downward review their NHF accounts. Key components of from the 10% previously required as the FMBN Digital Platform Solutions Suite of services include the following: loan down payment; and 1. The *219# USSD Short Code service • Mortgage loans of over N5 million via GSM mobile networks to the maximum amount of 2. The NHF Mobile Apps available on N15million now attract a flat equity android & iOS platforms contribution rate of 10%, down from 3. The online Self-Service Kiosk via the the 20% and 30% previously Bank’s web portal(www.fmbn.gov. mandatory to access the loan ng/nhfmobile) and facility.

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The platforms enable contributors to receive instant notifications, check records of NHF contributions on the go, update NHF personal records, check NHF balance of contributions, register and retrieve NHF numbers, request for statements of account, calculate home affordability and mortgage payments, and obtain latest NHF-related information from the FMBN Bulletin Board online service. The greater transparency, clearer disclosure and convenient access to records of contributions from the comfort of homes and offices or while on the go via personal computers or mobile phones, has boosted confidence in the NHF scheme. As affirmed by the FMBN Managing Director, Arc. Dangiwa, “on assumption of office, we audited the system and discovered that most employers under-remit deductions, remittance schedules of deductions are not provided, contribution records are not updated or maintained in passbooks and most contributors do not know the status of their contributions. Having critically evaluated the issues, we decided to automate the process to give contributors unfettered access to information pertaining to their contributions and the policies associated with the Scheme for greater efficiency, transparency, accountability and service delivery.” Implementation of the National Affordable Housing Delivery Programme for Nigerian Workers In a move aimed at strengthening stakeholder participation and confidence in the operations of the National Housing Fund (NHF), the FMBN in conjunction with the Nigerian Labour Congress (NLC), Trade Union Congress (TUC) and the Nigerian Employers’ Consultative Association (NECA) embarked on the National Affordable Housing Delivery Programme for Nigerian Workers. The Housing Programme aims at a structured and sustainable approach to affordable housing delivery for Nigerian workers nationwide. About 2,800 housing units are to be delivered in fourteen (14) sites across the six geopolitical zones of the country, in addition to Lagos and Abuja, in batches of a minimum of 200 units per zone. House types include finished semi-detached bungalows as well as 1-, 2and 3-bedrooms in blocks of flats. Conclusion The Buhari Years (2015-2019) represent a period of unprecedented transformation, high-performance and impact at the FMBN in the pursuit of its mandate of deepening access to housing finance, and providing access to affordable housing for low- and medium-income earners. This is a result of the visionary policy direction and strong support the Bank has enjoyed under the Buhari administration. The stellar results and increased impact of the Bank are helping to change the longstanding narrative from negative to better corporate performance, improved transparency, greater efficiency and service improvement. As the Buhari administration re-strategizes for a second term in office, FMBN still remains poised to sustain the momentum of reform, high performance and impact, with the objective of driving delivery of affordable housing and promoting the development of a more vibrant mortgage finance market in the country. Umar is the Group Head, Corporate Communications at FMBN.

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The regulated and regulators: Who is in charge? STRATEGY & POLICY

MA JOHNSON

lobally, industries are regulated to some extent and Nigeria is not an exemption. One may want to ask who is a regulator. The Oxford Dictionary (7th Edition) says that a regulator is a person or an organization that officially controls an area of business or industry and makes sure that it is operating fairly. They are also to enforce standards required in businesses and protect consumers as well as investors. Regulators are supervisory bodies watching over the activities of firms in Nigeria’s industry. Regrettably, most of the regulators are not effective. Why, you may ask? Officially, they are regulated from above by established political process. Unfortunately, the political process is so ineffective at regulating regulators that they essentially become unregulated. The situation is so bad that the regulated is now regulating the regulator. If this is not true, what has the National Insurance Commission (NAICOM) done to ensure that insurance companies do not default on payments of life premium when due? I know two “big” insurance companies that have not paid premium due on life assurance and non-life insurance customers promptly to some of their customers since 2017. In fact, I was fortunate to collect the balance of my life assurance premium from one of these companies using my tweeter account, and the timely intervention of a popular TV station after telephone drills and visits to the headquarters of the insurance company for few months. My tactics aside, I

was almost “technically” defeated by the insurance company. Thank goodness for the “recovery strategy” applied to collect my money. With a life assurance policy, I thought erroneously, that I was preparing myself for retirement after serving my country for almost 35 years. What I got was a very good dose of embarrassment.NAICOM knows insurance companies that are unable to pay their clients promptly. What is NAICOM doing about these challenges in the insurance sector? The banks are operating their own show in their respective kingdoms. What measures has the Central Bank of Nigeria(CBN) taken to ensure that charges paid by customers to banks are controlled? A friend told me: “This is business, don’t complain.” “Why shouldn’t I complain?”Or is the CBN a toothless regulator unable to control the excesses of banks under its jurisdiction? It is no news that within the first quarter of 2019, Nigerians have already paid billions of Naira as account maintenance and stamp duty charges to banks in our dear country. Since the CBN says customers should report cases of exorbitant charges by banks, I am reporting my displeasure in this article. The CBN as a regulator has to convince customers why the “neck shave”given by banks to clients on a daily basis is necessary. At times, one wonders if it is a crime to save money in the bank. Yet, banks are waiting for 80 percent financial inclusion by 2020. The CBN has revised its National Financial Inclusion Strategy (NFIS) with a major objective of promoting a financial system that is accessible to all Nigerian adults at an inclusion rate of 80 percent. But can the CBN ensure good implementation of NFIS? What about the Federal Inland Revenue Service (FIRS)? FIRS is waiting for companies to pay tax. I am of the opinion that tax paid must be properly utilised for the benefit of the citizens. With tax, transparency and accountability must be

the watchwords of those organizations that are charged by law to collect and manage tax payers’ monies. Since the early part of the year 2019, FIRS has placed stoppage on the accounts of companies that have not paid their taxes or those whose tax remittances have been queried. The restriction has not been lifted on many of these accounts because the FIRS computer system is down. Most entrepreneurs affected are waiting for the FIRS computer system to work so that they can pay their taxes and have access to their cash.What has disabled the FIRS from ensuring that its computer system is functional? As I was searching for answers to said questions, the SEC released a report of its investigations into the operations of Oando Plc. This investigation, according to SEC, took almost two years to conclude. The findings as alleged “revealed serious infractions such as false disclosures, market abuses, misstatements in financial statements, internal control failures, and corporate governance lapses stemming from poor board oversight, irregular approval of directors’ remuneration, unjustified disbursements to directors and management of the company, related party transactions not conducted at arm’s length, amongst others.” So SEC has gone ahead to constitute an interim management team to oversee the affairs of OandoPlc because the Group CEO, directors and other affected board members have been sacked and barred from being directors of public quoted companies for the next five years. As usual, Oando Plc has secured a court order restraining SEC. The board and management of Oando Plc deserves fair hearing. But this is an issue that cannot be swept under the carpet with the All Progressives Congress’s broom. In Nigeria, we have always focused our attention on corruption in the public sector without beaming our searchlight on some “corporate boys” who play

‘

Many of the extant regulations governing the actions of regulators are archaic and will require a thorough and immediate review

the “Chop-I-Chop” game with other people’s money. Whatever happens in Oando and other publicly-quoted firms is of public interest. This is another failure of corporate governance. Let us not deceive ourselves, the private sector cannot be absolved of any blame when it comes to corruption in Nigeria. The issue of concern is that there is too much impunity in the corporate environment in Nigeria. Under protection and cover by influential politicians who are to carryout oversight functions of these regulators, some “corporate boys” display arrogance and behave as though they are above the law of the country. As long as those who mismanagepublicly-quoted firms go unpunished, there will be no accountability in Nigeria’s private sector. From the foregoing, I align myself with views expressed by a scholar that: “Regulators being governmentgranted monopolies with a captive “client” base are unregulated. There is no robust regulation of their performance. There is no quality-assurance regulation of the job these regulators do. They are not accountable to the public in a meaningful way. In theory, agencies are regulated by the political process, but the political process is so ineffective at regulating the regulators that the regulators are de facto unregulated.” In order to eradicate corruption and improve ease of doing business in Nigeria, state and federal lawmakers need to do more in their oversight functions over public and private sectors instead of struggling with state governors and Mr President over mundane political issues. Many of the extant regulations governing the actions of regulators are archaic and will require a thorough and immediate review.Over to you members of the 9th Assembly. Thank you! Johnson is an author and a retired naval engineer who has passion for African development and good governance

Brexit and Africa

rexit, combined with the trade wars involving the world’s two powerhouse economies, China and the USA, is a major factor in generating global uncertainty at present. Uncertainty is bad for global business, which also impacts African countries, including Nigeria, the biggest economy on the African continent. From an African perspective these factors could however play to the continent’s advantage as we see potentially a modern “scramble for Africa.” European countries, as shown by the unprecedented recent approaches of Theresa May, British prime minister; Angela Merkel, German Chancellor; and pres. Emmanuel Macron from France, are keen to invest and develop closer links with Africa, while China has its Belt and Road Policy targeting the continent and Japan is holding TICAD – Tokyo International Conference of Africa’s Development – later this year. The US too, through the

Overseas Private Investment Corporation (OPIC), is seeking significantly increased investment in Africa. The UK indeed intends being the biggest investor amongst the G7 in Africa, and others are following suit. Decisive and strategic action needed So in an uncertain world Africa should be able to take advantage, by acting decisively and strategically. One way may be through the Africa Continental Free Trade Area (AfCFTA) agreement. The AfCFTA agreement came into force on 30 May and will make Africa the largest free-trade area in the world by population. The trade agreement was given the go ahead on April 29 as 22 countries have now ratified its adoption. The African Union and African Ministers of Trade must now finalize work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an Extra-Ordinary heads of state and government summit on 7th July 2019. www.businessday.ng

Whilst Nigeria, the biggest economy on the continent, has not yet signed or ratified the agreement, recent statements of the government concerned about “the train leaving the station” may hint at movement towards joining. Closing the gap Regardless of Brexit and AfCFTA, the key concerns underpinning growth and development in Africa remain power, infrastructure, and education. With a pan-Africa gap of $170 billion per year in infrastructure, the benefits driven by free trade, including industrialisation, will not be capable of full exploitation unless this changes. Progress towards closing this gap can be made, assuming that African countries drive a clear and certain strategy and policy, put predictable regulations in place, and deal with currency fluctuations and control corruption. The future of English law As to the legal market, there have been a number of debates around the future use of

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Andrew Skipper

English law, arbitration and enforceability of judgments post Brexit. Broadly speaking there is no reason not to continue using English as governing law post Brexit. All the same reasons for using the system still stand, including its sophistication, its long history of jurisprudence, and that it is well-recognised around the world, and commercially aware. Each contract will continue to need to be taken on its merits. In addition, for arbitration Brexit will not impact the enforcement of arbitration awards – generally these are dealt with under New York Convention. This will be unaffected by Brexit and London will continue to be as important as a seat for international arbitration. Andrew Skipper, partner Hogan Lovells

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Jobs, jobs, jobs (3)

Rafiq Raji

was the keynote speaker at an economic dialogue on Nigeria organised by Konrad Adenauer Stiftung (KAS) and the Delegation of German Industry and Commerce in Nigeria (AHK)on 23 May 2019. Titled “Road to Economic Development: Challenges and Opportunities”, the dialogue was aimed at shaping the priorities of the incoming second administration of President Muhammadu Buhari. The following is the third part of the highlights of my speech. What is to be done in the immediate term? Power and data. Any diligent Nigerian can be gainfully employed if he or she has access to electricity and internet data that are readily available, reliable and cheap. If the authorities want to create jobs, power and data should be like air for the citizenry: almost free for the poor. Thus, the government should do the following right away. Raise power tariffs “Power is expensive” is a better narrative than “there is no power”. At about 4,000MW on average, Nigeria’s current power generation level is about 10 percent of South Africa’s 50,000MW (rounded for simplicity). Despite this deficiency and myriad others, Nigeria’s 2018 gross domestic product (GDP) of $397 billion puts it ahead of South Africa’s more advanced$368 billion

economy. Imagine how much bigger Africa’s biggest economy could become if it were able to ramp up its power generation to South Africa’s current level. However, that would only be possible if the Nigerian government allows the electricity business to be a lucrative one for private actors. It should allow power firms set their own tariffs for an extended period; akin to the typical concession periods of 20-30 years. That is, a time long enough for profit-seeking agents of the economy, domestic and foreign, to see investing in the power sector as a huge opportunity. The price-setting process could still be coordinated by the electricity industry regulator, of course. But it should be one that makes power executives leave the room with a smile on their faces. What about the poor? There are currently 5 major power tariff classes; namely: residential, commercial, industrial, special and street lights. We know where the rich live. And we know how much they currently spend on generators and diesel. They wouldn’t mind higher tariffs if you can guarantee them 24-hour power supply. Businesses won’t mind, either. Charge businesses and the rich with tariffs high enough to subsidise the poor. I do not need to elaborate on how constant, reliable and abundant power would engender economic activity. Because if power is regular and cheap for the poor, artisans can earn a living. And if power is abundant because it is a lucrative business, manufacturers would produce more and hire more. It is a virtuous cycle. Scale-up legacy& budding economies The mainstream view about manufacturing foreign direct investment (FDI) migrating from China and else-

where, where wages are rising, to African countries where wages are relatively low, is increasingly unlikely. The informed view is that wages are not low enough in many African countries to compensate for inefficiencies like poor infrastructure, unskilled or semiskilled labour and consequent low productivity. In other words, as labour-intensive manufacturing has been migrating from China to emerging Asian countries like Vietnam, where wages are also now rising, the expected next transition to lower wage jurisdictions in Africa might be a pipe dream. And in any case, in the unlikely scenario that this changes, automation might have become so widespread that the thesis would have become irrelevant or untenable. So should African countries give up on industrialisation? Not necessarily. African manufacturers could aim to cater for domestic consumption. And with the African Continental Free Trade Agreement (AfCFTA) in force by end-May, they could also aim to serve the continent. So, fast moving consumer goods, cement, petrochemicals, and so on, are industries that could still be developed. Yes, you guessed it. Nigeria should sign the AfCFTA right away. Aliko Dangote, Africa’s richest man, is a good example of what is currently feasible. If you look at his portfolio of manufacturing endeavours, which mirror the aforementioned, it is only cement that he is probably able to export currently. And it is largely to neighbouring African countries. Dangote’s soon to be completed crude oil refinery in Lagos would probably also enable him export fuel and petrochemicals; likely to other African countries as well. These are the types of manufacturing that could now

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“Power is expensive” is a better narrative than “there is no power”… Imagine how much bigger Africa’s biggest economy could become if it were able to ramp up its power generation to South Africa’s current level

be reasonably hoped for. In other words, Dangote’s industrial endeavours already exemplify Nigeria’s currently feasible or optimal manufacturing possibilities frontier. So, the authorities should enable more Dangotes. Put simply, our industrial development goal as a country should no longer be to be part of global value chains (GVCs) as being advocated by mainstream experts. This is because recent and likely future trends of nationalism and automation would likely make current GVCs not very “global” pretty soon. In the Nigerian case, the agricultural value chain, from the farm to the factory gate, is still viable and would accommodate a lot of jobs. Nigeria could also begin to develop new industries. With lithium, a key input for batteries of electric vehicles (EVs), which Nigeria has in abundance in the north central state of Nassarawa, the authorities could certainly aim to make Nigeria an intergral part of the battery segment of the global EV value chain. The movie industry (or Nollywood), which reportedly already employs more than 1 million people, could also be scaled-up. Other sectors of the entertainment industry probably employ just as much. And certainly, stronger intellectual property laws and enforcement could easily double that number; talk less of other more substantive measures. Of course, it is important to mention that Nigerian banks are already doing their bit to enhance the creative industry; with affordable loan facilities, for instance. What needs to be done is to find ways to scale-up that effort as well. “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Why government must support the use of electric vehicles on Nigerian roads

echnologies in transportation are changing rapidly, with electric vehicles set to sweep through the industry over the next five to ten years. The need for the Government and organizations in Nigeria to understand the challenges and opportunities for electric vehicles in order to take advantage of this new wave of technology is very essential for us to grow our economy and improve the living conditions of the Nigerian environment. It is stated that Electric vehicles hit a 5 million milestone in December 2018 and the global ratio of Battery Electric Vehicles(BEVs) rose to 69% in 2018.As of September 2018,the United States had One million plug-in cars, with California as the largest in United States of America plug-in regional market with 537,208 plug-in cars sold until December 2018.There were more than one million lightduty passenger plug-ins registered in Europe through 2018,with Norway as the leading country with over 296,000units registered by the end of 2018 and Norway has the highest market penetration per capita in the world and also has the world’s largest plug-in segment market share of new car sales,49.1% in 2018 and as of 2018,10% of all passenger cars on Norwegian roads were plug-ins. As of January 2018 there were 375 plug-in cars which represented 0.2% of all registered vehicles in South Africa, the only African country on the list. There was no record of the number of plug-in cars on Nigerian roads. This calls for the need to upgrade and electrify mobility in our nations road trans-

portation sector together with its economy ,national security ,consumer and environmental benefits which are quite enormous. The importance of the role of government in helping to cordinate, accelerate and unlock the huge potentials that lies within this new innovative idea will definitely go a long way in adding value to our economy. Nigeria as the supposed giant of Africa cannot afford to continue in the current trend of slow growth and economic uncertainty in its adoption of electric vehicles in transforming mobility on our roads and achieving a better environmental sustenance.It was stated that the Nigerian state oil firms spent $5.8billion on fuel importation in 2017 as it tries to combat fuel shortage, the wastage of this amount was a big threat to national security, balance of our trade and integrity of our nations fuel security by a total dependence on importation of fuel despite being one of the world’s largest producers of crude oil. The need for our government to support the use of electric vehicles sales in Nigeria has the potential of improving our nations GDP as well as create thousands of additional job opportunities.Government intervention also has the potential of putting households and businesses in a position to benefit through lower costs in road transportation and also achieve a cleaner environment. The adoption and use of a high number of electric vehicles on our roads will also cause high reduction of fuel and maintenance costs. The reliance on fuel importation to move goods across the nation would also be highly

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reduced by the elimination of millions of barrels of imported fuel per year. Our nation is well positioned to capitalize on cheap and reliable energy through the transition of mobility in our roads to electric vehicles with the prospects of benefiting from this national advantage and also accelerate the transition of the energy market to new generation of distributed power production and storage. The complex interface between the transport, energy and power sector in the realization of this innovative change means there has to be a well coordinated synergy and cooperation across all the levels of government which will give our nation the opportunity to align with the international adoption of this technology in the near future to attain a better quality of life. Furthermore, because we are blessed with diverse natural resources and minerals which are part of the requirement for the production of batteries which are cobalt, lithium and other materials.Nigeria is properly positioned to compete globally across the value chain of the expanding electric vehicle industry. Another benefit of the government support to this project is increase in the use of electric vehicle on our roads which will lead to increase in the efficiency of the road transportation sector and its impact will be felt throughout the economy through the need for a national plan to embrace and support the transition to electric vehicles usage which is one of the needed tool to drive the initial sales,and this will provide assurance for private sector investments in the charging infrastructure to

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Festus Okotie drive the needed change we desire. Over the long-term, we need to make sure we are electric vehicle ready, proper planning for the integration of electric vehicle in our electricity and energy forecasts,infrastructure and road transportation planning systems.The changes in this sector are very essential as one of the key enabler of other future mobility technologies that are connected to transportation and automated vehicles. There is also need for us to ensure that policies, regulations and infrastructures are put in place not only to support the electric evolution but also to support the automated revolution which is one of the modern ways of driving change globally in road transportation and the need to ensure that our policies and regulations are fit for the purposes and will not slow or hinder the desired growth we expect in creating an innovative and exciting advancements in the mobility of our road transportation sector. Okotie, a maritime transport specialist, writes via fokotie. bernardhall@gmail.com, Fokotie@bernardhallgroup. com

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Tuesday 11 June 2019

BUSINESS DAY

EDITORIAL Publisher/CEO

Imperative of having capable regulatory bodies

editor Patrick Atuanya

he Federal Government inaugurated on June 3 the boards of five regulatory agencies in the health sector. Seventy two persons took oath to serve diligently on the boards of the Community Health Practitioners Registration Board of Nigeria (CHPRBN), Health Records Officers Registration Board of Nigeria (HRORBN), Medical Laboratory Science Council of Nigeria (MLSCN), Medical Rehabilitation Therapists (Reg) Board of Nigeria (MRTBN) and Optometrists and Dispensing Opticians Registration Board of Nigeria (ODORBN). Their appointments come at a time when decisions of regulators underscore their significance and highlight the imperative of having competent regulatory bodies in the country. Regulatory bodies are some of the often-overlooked institutions within the panoply of government but with outsize importance to the economy and society. They carry out their function in the background. They manifest only when the situation demands. When they do, they take decisions whose impact reverberates across personal, corporate and institutional lives for many years. The implications of such decisions could range from the financial to the personal and

Frank Aigbogun

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)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

professional. Breach of an innocuous rule by MTN and the dynamics of the season led the Nigerian Communications Commission to impose a humungous fine on MTN Nigeria Communications that threatened the existence of that leading foreign investor and trade relations between Nigeria and South Africa. It delayed the listing of MTN on the bourse as well as sent signals that may not be positive to other investors. Regulatory action. Regulatory action is currently at the heart of the matter of Oando Nigeria Plc and the Nigerian Stock Exchange. A leading indigenous oil and gas firm, Oando has raised issues about the approach of the Securities and Exchange Commission, its fairness and the appropriateness of the strictures the regulator imposed on it. It is playing out in the courts, of law and public opinion, with consequences for the economy and perceptions of the investment climate in our country. These and other examples bespeak the importance of the role of regulator. Whether it be in medicine and health generally, in manufacturing, in food and beverage, education or another sphere, the regulator is becoming ever more pronounced. Their actions have a tremendous impact. From NAFDAC through the National Universities Commission to the Architects Registration Council or the Council of Registered En-

gineers of Nigeria, regulators are now ubiquitous and cast a long shadow with extended reach. The growing power and influence of regulators should compel increased stakeholder attention. Governing boards have legislative, judicial and executive powers. They make rules, receive reports on infractions or compliance, investigate and pass judgements. They effect actions based on the reviews. A significant consideration, therefore, should be to ensure that only persons worthy in character and learning serve on the boards of regulatory agencies. They must continually update themselves and be on top of developments in the sectors they supervise. They should be clear about the purpose and problems their agencies seek to solve. Flexibility and agility are critical. Regulators must be able to apply the most effective means and processes in their decisions with no dependence on “the way we have always done it”. Their ability to respond to novel and emerging risks would enable the professions to keep in step with public opinion. When they update, they can also guide the occupations. Regulators must contend with the Machiavellian question on love and fear. Is it better to be loved than feared or feared than loved? Neither. They should aim for trust and respect. Trustworthiness comes from competence,

honesty and reliability. Regulators should set transparent standards and processes with accurate and clear communication about how and why they make decisions. There should be timely and consistent decision making that follows the rules. Our regulators must be curious. They should question, learn and seek evidence more so in regular times than during a crisis. They should be a repository of high-quality data and sophisticated analytical tools and skills. Even so, humility is essential. They should know their limits and emphasise networking as well as international collaboration and cooperation. They should realise that there are problems that existing regulations cannot solve. Assistance can come from any branch of the stakeholder tree. Absence of bias is a desideratum. Our regulators must offer fair, independent and the unbiased decision that shows that they value the perspectives of practitioners and the public. They should also be proactive. The nature of their function means that they often act after the fact in matters of sanctions. However, modern regulators are prioritising proactivity. A gram of prevention is better than a kilogram of cure. Finally, the boards should have men with the courage and conviction to be independent arbiters. The growing importance of regulatory boards demands no less.

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Is Nigeria bedeviled by the “ungoverned space” syndrome? Ejeviome Eloho Otobo and Oseloka H. Obaze

ngoverned space is a new concept applied to an old problem, namely the lack of effective government presence in parts or places within its territory. Ungoverned space is a direct reflection of the inability the state to effectively perform its minimal statutory functions: exercise of monopoly of use of force; full territorial control; and provision of basic social services. Many analysts think of ungoverned space in strictly security terms. In reality, however, ungoverned spaces are also marked typically by significant absence or limited provision of basic social services, making such places vulnerable to the control of criminal networks, radical extremists or other groups that offer alternatives to state authority by addressing, or spearheading agitations against, long held political, economic or social grievances of particular communities. Contrary to popular belief, ungoverned spaces occur as much in a national context as in sub-regional or regional context. Indeed, the so-called ungoverned sub-regional spaces are nothing more than an aggregation of ungoverned national spaces. When

such spaces lie in contiguous border areas between countries, it exacerbates the challenges of ungoverned spaces. Experts have identified six drivers of violent conflicts, which are also pertinent to ungoverned space. These include lack of quality governance and transparency, ethnic rivalry, religious extremism, mismanagement of land and natural resource, declining economic conditions and proliferation of small arms and light weapons. Grappling with the manifestation of the ungoverned space syndrome in Nigeria, warrants acknowledging that effectiveness of state presence or lack thereof makes all the difference. Four clear manifestation of ungoverned space currently pertain to Nigeria. The first is banditry and kidnappings, which have extensively taken hold in various parts of the country. Indeed, besides the wellknown kidnap of the Chibok Girls and Dapchi Girls, very few parts of Nigeria are exempt from menace of banditry and kidnappings. The second is terrorism; over time, Boko Haram and its affiliates have successfully plotted and carried out suicide bombings and military-style attacks in Nigeria, notably in the Northeast. Such attacks are aimed at, but are not limited to soft targets like motor parks, churches and mosques, restaurants and schools. Military and other government installations are also targeted. Whatever progress has been made in curtailing Boko Haram’s atrocities is periodically

undermined by spasmodic attacks. The third is herdsmen and farmers clashes. Violent clashes between cattle herders and crop farmers remain a major source of conflict and insecurity in Nigeria. Well over 4000 lives were lost between 2010 and 2019 from herdsmen and farmers clashes. Whereas the festering clashes are generally attributed to conflict of interests over scarce resource such as land and water, ambiguous policies and inaction on the part of the government are perceived as exacerbating the crisis. The cumulative effect of Boko Haram and herders attacks have led to huge internal displacements, estimated at two million internally displaced persons (IDPs). The fourth is piracy and militancy. Insecurity within the Niger Delta region and Nigeria’s continental shelf remains a cause for concern due to piracy and militancy. Of the recorded fifty-three incidents of piracy in the Gulf of Guinea in 2016, thirty-four occurred within Nigerian territorial waters. In 2017, fifty-six mariners were kidnapped off the coasts of the Niger Delta. These numbers exclude foreigners and Nigerians kidnapped for ransom in the oil-rich Niger Delta. The resort to military response seems to be the preferred intervention method for addressing conflicts in ungoverned spaces. This choice of force over dialogue overlooks unwittingly, expert warning that “failure to appreciate the way these areas are governed can lead to flawed policy

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Yet ungoverned spaces do not occur because of lack of military presence. They persist because of lack of wellfunctioning institutions that can promote dialogue, foster reconciliation, adjudicate economic, social and political disputes; and provide basic services to various communities

choices.” Yet ungoverned spaces do not occur because of lack of military presence. They persist because of lack of well-functioning institutions that can promote dialogue, foster reconciliation, adjudicate economic, social and political disputes; and provide basic services to various communities. This prevailing lacuna explains the paradox of several military operations, for example, Operation Crackdown, Operation Lafiya Dole, Operation Pulo Field, and Operation Crocodile Smile existing alongside pockets of ungoverned spaces. While the military may offer “hard power” security, they are not equipped or trained to undertake or play the “soft power” role that other institutions can provide, including civilian police problem solving duties. Is Nigeria bedeviled by the “ungoverned space” syndrome? This is no longer a rhetorical question. Ungoverned space does not imply absence of governmental authorities at various levels. Instead, it suggests that various tiers of government are unable to fulfill the full spectrum of state functions. The manifestations of ungoverned spaces in Nigeria underscore an important fact: a clear nexus exists between the state’s inability to protect and to provide for constituent communities and the emergence of ungoverned spaces in Nigeria. Otobo is a Non-Resident Senior Expert at the Global Governance Institute, Brussels. Obaze is a public policy expert and Managing Director/Chief Executive Officer Selonnes Consult, Ltd. Awka.

The SEC and its not so good intentions

have watched the Oando and the Securities and Exchange Commission (SEC) faceoff unfold over the last week and one thing is clear, the SEC may have started off the investigation into Oando with all the right intentions, but along the way they seem to have lost their way. In 2017, the SEC received petitions from two individuals against Oando, which as capital market watchdogs they were obliged to investigate. The Commission rather than make a decision based on its initial findings decided to verify through a more thorough investigation in the form of a forensic audit which lasted 18 months. Following the conclusion of the audit, the SEC released what can only be described as a summary of the investigation findings; a summary, and sanctions which were able to fit into a 6 paged letter from SEC to Oando. A letter that Oando received a few hours after the SEC had already published its far reaching sanctions, not findings on its official website on Friday, May 31. By Sunday, June 2, SEC announced to the media that Oando would have an interim management team lead by Mr. Mutiu Sunmonu and on Monday, June 3, police were in Oando’s head office on the orders of the acting SEC Director General to manage law and order, one would assume this was an alternative way of saying manage the transition from the existing Oando principals to interim management team. It’s a lot to happen in the space of 4 days and therein lies the problem. As the regulator of the capital market, SEC is well within its rights to ask for an audit and for transparency and independence get a 3rd party to conduct this audit. In this instance it got Deloitte & Touché to carry out the audit. Under the International Standards on Auditing (ISA) 2007 Section 63, point 4.2g the auditor, in this case Deloitte Nigeria must communicate in writing to management, the Directors and the audit committee all material weaknesses identified during the engagement. The written communication should be made prior to the issuance of the auditor’s report on internal control over financial reporting. The same requirement is made in the Institute of Chartered Accountants Nigeria (ICAN) Technical Guidance on Assurance Engagement

to Report on Internal Control over Financial Reporting, page 35, point 1 under ‘Communicating Certain Matters’. Let’s assume that Deloitte Nigeria decided it wasn’t within its remit to share identified deficiencies with Oando as they had been hired by SEC to carry out the audit, and thus expected that SEC would share findings with Oando before the issuance of a final report and sanctions. The reason why the ISA and ICAN ask that findings be communicated before the issuance of a report is because the ensuing engagement will impact the final contents of the report. Strike 1, if only for Deloitte’s credibility the report should have been shared with Oando. Precedence from other SEC investigations shows that SECs procedure is to share its findings with the investigated party, allow them defend themselves and then make a decision on final outcome of investigation. Strike 2, SEC cannot at a whim decide against dialogue with the investigated party, a process SEC itself has instituted so as to enable it make a fair judgement and deliver appropriate sanctions. For the Commission to share its findings and penalties first via a press release on its website speaks to a lack of respect for the organisations it is here to regulate; I am of the belief that the Commission has a job to do and has no business in being emotional in the delegation of its duties. However, SEC has a duty of care - a moral or legal obligation to ensure the safety or well-being of others – SEC cannot honestly say sharing first with the whole world Oando’s alleged infractions and penalties was morally the right thing to do. Strike 3, SECs duty of care is first to the market and so it must act like its actions have been thought through, actions that must not cause panic in the market. By releasing its sanctions via a press release on a Friday afternoon without prior engagement it must have foreseen push back from Oando and the attendant effect on the market. It took SEC 18 months to conclude the investigation into Oando and two days to constitute an interim management. I want to believe that the interim management was constituted so swiftly to ensure there was no vacuum when Oando’s

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executive management and Board members resigned as per the directives of the SEC. However the speed and process of execution makes this questionable. The news was broken to the general public first, again this issue of duty of care, if not for the organization then shareholders who were still reeling from Friday’s news. Oando has said that to date they have not received any communication from SEC re the interim management nor has SEC published any information regarding this on their website. How do you successfully transition the management team of a company without prior engagement, without some kind of handover? Every organization has its own peculiarities in addition to day to day operations management – what was SECs plan especially when bringing in an individual who had never worked in Oando and also had no idea of ongoing transactions, business operations, etc? How was Mutiu Sunmonu supposed to effectively head an interim management team when thrown in the deep end without a life jacket? Strike 4. Bearing in mind the SEC letter gave Oando until the 1st of July to carry out an Extra-ordinary General Meeting (EGM) to appoint new Directors, and didn’t stipulate that Wale Tinubu, Group Chief Executive and Omamofe Boyo, Deputy Group Chief Executive resign immediately the assumption is that they had up until the 1st of July to put their house in order. And if they didn’t have this time, that SEC would engage them, other senior executives and the Board accordingly to ensure a management transition that wouldn’t negatively impact the capital market. Lest I forget this interim management was made up of only 1 person, Mutiu Sunmonu, a man who sits on the Board of three oil and gas companies – Petralon, Eroton and San Leon Energy. What was the rationale behind asking a man who sits on the boards of competitors to head Oando’s interim management? Mutiu has an excellent track record in the oil and gas sector but he is not the only experienced oil and gas professional, there are many not working for what Oando would deem the competition that could have been elected to take on this role. Strike 5.

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James Fajemirokun The arrival of armed police on Oando’s premises on Monday, despite only receiving the letter from SEC after the close of business on the last day of the work week, Friday. Was the expectation that the arrival of the interim management team would cause a ruckus at Oando and thus the need for armed police men to ensure there were no scenes between the existing management team and the interim management team? Once again the SEC’s intentions might have been good but the approach to date and their continued silence implies otherwise. They have not followed due process, they have not acted responsibly or shown a duty of care, they have acted in haste without thinking of the long term ramifications and public perception. Whether Oando is indeed guilty of the infractions levelled against it no one knows and increasingly no one cares because the light is now being shone on SEC and whether they acted appropriately. SEC as a regulator understands more than anyone or organization the importance of adhering to laws, policies and processes and thus the expectation is that at the very minimum they would live by the rule book they ask that others also live by. Sins can, and should be forgiven, but if there are no concerted efforts to stop sinning then should the sinner continue to be forgiven? The SEC has a limited window to reverse this situation and the first step is in speaking up; if they don’t they show themselves to be a regulator that acts carelessly without regard for organisations, the capital market and the shareholders that they are here to protect. Let us elevate our conversations so they are less about the perceived guilt of Oando but instead they focus on whether SEC has acted as an impartial, transparent and credible capital market watch dog. If they haven’t we must call them to order if not your company could be next. James Fajemirokun is a civil rights activist

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Tuesday 11 June 2019

BUSINESS DAY

COMPANIES & MARKETS

Company news analysis insight

Oil & Gas

Nigeria’s trade surplus slows as crude oil export weakens …export growth to remain weak in subsequent quarters - Afrinvest

David Ibidapo

vident in Nigeria’s trade surplus is the revenue challenge that currently faces its federal government as crude oil export weakened in the first quarter of 2019, against crude oil prices which increased 27.11 percent to $68.39 from $53.80 during the period. According to merchandise trade data released by the National Bureau of Statistics (NBS), Nigeria’s trade balance remained in a surplus in the first three months of the year. It, however, moderated 4.8 percent to N831.6 billion in the same period from N873.8 billion in Q4 2018. During the review period, imports expanded faster than exports. While Nigeria has maintained a trade surplus position since the fourth quarter of 2016 on a year-on-year basis, trade surplus plunged 53 percent from N1.7 trillion in Q1 2018. Imports continued to accelerate, increasing 25.8 percent and 3.4 percent on year-on-

year and quarter-on-quarter basis respectively, driven by an expansion in the importation of capital goods and industrial supplies against fuels and lubricants import which contracted during the period. According to a report by Afrinvest, “Imports growth moderated in Q1 2019, compared to the average of 69.5 percent in the previous quarters which was partly due to import of large-

sized one-off capital equipment. Although we expect sustained growth in imports driven by industrial and household demand, we expect the pace to moderate in subsequent quarters.” Meanwhile, Nigeria’s export contracted 3.9 percent to N4.5 trillion in Q1 2019 from a year earlier, driven by a 5.7 percent y/y moderation in crude oil exports to N3.4 trillion.

“We attribute this to a reduction in oil production which contracted 1.0 percent y/y to an estimated 1.96 mb/d in Q1 2019 and oil price which was 5.8 percent lower at US$63.3/bbl,” Afrinvest stated. However, exports rose 1.8 percent from previous quarter, supported by improved oil production even as oil prices moderated. The NBS revised downwards the crude

oil exports data for Q4 2018 to N3.6 trillion from N4.2 trillion, and in turn total trade data to N18.5 trillion in Q4 2018 from N19.1 trillion. For non-oil exports, there was a moderate 4.6 percent increase y/y to N604.4 billion, although this was faster at 159.9 percent on a q/q basis. “We expect exports growth to remain weak in subsequent quarters mainly due to weak oil prices,” Afrinvest explained. Continuous slowdown in export growth against faster growth in import levels tend to create a trade deficit possibility going forward as witnessed in the first 3 quarters of 2016. A push factor to this reality is Nigeria current weak crude oil production stage below production capacity of 2.3 million b/d and building downward pressure crude oil price in the international market, hence, posing a threat to the revenue base of the federal government. Late into Q2 2019, crude oil began to reverse to dip 15.12 percent to $63.29 as at Friday last week.

MARKET

FSDH recommends issuance of zero-coupon bonds for debt management HOPE MOSES-ASHIKE

SDH Research, the re s e a rc h a r m o f F S D H Me rc h a n t Bank Limited, is recommending issuance of zerocoupon bonds, in order to manage the high interest expenses on the debt of the Federal Government relative to its current revenue. In a Monthly Economic and Financial Markets Outlook : ‘Economy in Need of Boosters: Priorities for a Second-Term’, FSDH Research said such bonds and other bond issue going forward, should be tied to specific projects that have economic value addition to the country. And there should be a mechanism to assess that debt contracted is used for intended projects. The firm asked the government to consider crude oil swap arrangements with construction companies either local

or foreign, for road or rail construction across the country. This will help to accelerate the development of road and rail transportation in the country and also reduce direct government expenses on such projects. Eventually, such projects will improve competitiveness of the Nigerian economy. Presenting the report to Journalists in Lagos, Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said, there is the need for urgent passage of all the bills in the Oil and Gas sector and such bills should be signed into law. This he said will bring about more clarity in the Oil and Gas sector and enable investors take longterm investments in the sector. It will also help to attract Foreign Direct Investments into Nigeria and will also create jobs in addition to increasing the revenue for the country. Available data from the

CBN shows that Foreign Direct Investments accounted for only 11 percent of the total capital importation into the country between 2010—2018. Foreign Portfolio Investments accounted for 70 percent of the total capital importation during the period while other investments accounts for 19 percent. The high FPIs reduce the effectiveness of any exchange rate management regime. This is because of the distortions that are usually associated with the Foreign Portfolio Investments particularly in small developing countries like Nigeria. FSDH research asked government to engage Nigerians in diaspora and sell investments opportunities to them, both debt and equity in government instruments and entities in order to drive foreign remittance inflow. Nigeria is among the countries with lowest growth in the foreign remittance inflows between 2008 and 2018,

according data from the World Bank. “Government should continue to implement policies and strategies that will end and maintain security of lives and

properties in the country”, Akinwunmi said. The firm said the Federal Government needs to appoint members of the cabinet with their respective portfolios in

the month of June. This will enable them start the implementation the Next Level Growth and development agenda of the Federal Government of Nigeria (FGN).

L-R: Tony Onyema, MD, Techno Oil Limited; Yomi Osinbajo, vice present of the Federal Republic of Nigeria; Collins Onyema, MD, Techno Gas and Power; Nkechi Obi, executive vice chairman/CEO, Techno Oil Limited, at the formal commissioning of the Techno Oil LPG Cylinder Manufacturing Plant by Vice President Osinbajo in Lagos.

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

Tuesday 11 June 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

BANKING

FCMB’s Benoit tasks African countries on generation of more local wealth MICHAEL ANI

he Chief Executive Officer and Executive Director of FCMB Bank (UK) Limited, James Benoit, has urged African economies to look more inward by creating wealth that will ensure sustainable development of the continent and reduce over reliance on foreign remittances. While admitting Nigeria’s dependence on diaspora remittances may not disappear any time soon, he advised that its proportion in the total budget has to reduce as soon as possible to achieve the country’s growth agenda in the near future. The international banker and investor, while fielding questions with the media, stressed the need for African countries and their leaders to eschew excessive regulation which is responsible for unnecessary bureaucracy hindering growth. Speaking about what is needed to be done to fasttrack growth in Africa, Mr. Benoit said: “There is no fast-track because it is part of the problem. We need to stop thinking of fast track, one-off game changers.” According to him, Africa has a major demographic

challenge which will be its growth engine or else drown it. “Red tape bureaucracy must be cut, youth must get education or trade, and other skills and the empowerment of women must all be addressed. The continent must also be joined up to trade among itself rather than just export which is low valueadded,” Benoit added. The Chief Executive of FCMB Bank (UK) Limited whose 27 years of international banking experience spanning North America, Asia Pacific, Africa, Middle East and Europe has impacted on the inroad the financial institution is making in the United Kingdom and across the African continent, emphasised that the critical role of technology in Nigeria’s economic growth and advancement must be accorded priority consideration. He explained that the extent of adoption of technology would depend a lot on its accessibility, with requisite infrastructure deliberately built for that purpose. The Banker added, technology will not serve any major purpose if it is not used by Nigeria’s growing middle class or deployed to produce services for export among others. Mr.

Benoit reiterated more specifically, the importance of educating or training the youth and ensuring medical care is accessible, so they can healthily contribute. FCMB Bank (UK) Limited, an award-winning trade finance bank is said to have financed over hundreds of millions of dollars trade across nearly 2 dozen countries in the past 24 months. The institution’s vast knowledge of those markets helps it to manage transactions that many other banks, including big global banks will not do. The Bank has the compliance and credit appetite to do so since it is an African bank by shareholding and with experience of the African market. FCMB Bank (UK) Limited had obtained the Variation of Permission (VoP) from the UK Regulators: The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) last year; allowing the Bank to include retail (deposit and investments) servicing in its product offering. The approval extends the Banks services from its corporate, commercial and institutional customers to include High Net Worth Individuals (HNWI) and Small and Medium Enterprises (SMEs).

L-R: Obot Akpan, marketing manager, Business Development Group; Philip Ayeni, deputy managing director; Yele Okeremi MD/CEO, and Seyi Osifalujo, executive director/chief technical officer, all of Precise Financial Systems at the 25th anniversary of the company in Lagos recently

L-R: Paul-Harry Aithnard, MD, Ecobank Cote d’Ivoire; Alexis Aquereburu, advisor to the president of Togo; Kodjo Adedze, minister of trade, industry and private sector promotion, Togo; Ade Ayeyemi, group chief executive office, Ecobank Transnational Incorporated; Emmanuel Ikazoboh, chairman, Ecobank Transnational Incorporated; Darko Hajdukovic, head of multi-asset primary markets and investment funds at London Stock Exchange, during the opening of the London Stock Exchange by the ETI Group Chairman and CEO after successful $500 million Eurobond issuance on Friday

CSR

Dangote Refinery boosts educational development in host communities TEMITAYO AYETOTO

n a bid to bridge the gap in Nigeria’s education sector and enable it contribute effectively to economic development, Dangote Refinery and Petrochemicals has taken up a proactive measure by embarking on an integrated tripartite approach to boost quality of education in the public schools around its host communities. This approach includes a scholarship programme for students, a Train-The-Trainers Capacity Building Initiative for teachers and school infrastructure projects to improve the quality of education in the communities. To ensure students receive quality education, Dangote Refinery and Petrochemicals organised a capacity building programme for secondary school teachers and principals in Ibeju-Lekki area of Lagos, in collaboration with NurtureHouse Limited, a company founded to strengthen quality education through enhanced teaching, learning and capacity development of teachers. The training sessions were delivered using practical, handson approach to learning. They provided participants with opportunities to collaborate as well as practice knowledge and skills

acquired. At the end of each session, each participant was guided on reflective practices and action planning to encourage implementation of skills acquired when they return to their schools. Teachers were exposed to 21st century best practices in “Cognitive Development and Impact on Learning” as well as “Effective Pedagogical Skills”. The personal action plans produced at the end of the two-day Professional Development Programme are expected to motivate the teachers to implement their plans. Adenike Olaoye, group social specialist, group health, safety, social and environment (HSSE), Dangote Industries Limited, said the capacity building programme underlines the huge impact the company has in ensuring quality education in the host communities. According to her, the programme has kick-started a positive ripple effect that would be felt in the host communities for years to come. “This initiative and many more happening in the host communities are being driven by the Group HSSE department of Dangote Industries. The teachers’ training is part of the education and training component of our Community Development Plan (CDP) for our

host communities. Ultimately, the CDP aims at building the capacities of local institutions within the communities so they become self-sustaining communities that can drive its own development thereby ensuring sustainable development,” Olaoye said. Ayopeju Njideaka, chief executive officer, NurtureHouse Limited, said the programme was structured to help teachers gather new 21st century skills and also for administrators to understand what their roles were. “This programme will enable the 21st century teacher deliver quality education. We had two days for teachers and one day for educational administrators. For the administrators, we trained them on instructional leadership. Leadership of education is no longer about sitting in the office and taking attendance. It is actually about ensuring that quality teaching and learning is practiced in the classrooms,” Njideaka said. “The training is expected to motivate teachers and principals to work positively. Once a motivated adult walks into a classroom to teach, the students will also be motivated and teachers will be renewed with even more skills to teach them better. Ultimately, learning outcome is expected to improve,” she said.

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L-R: Stella Nweke, head, Skills Acquisition and Entrepreneurship Development (SAED), National Youth Service Corps (NYSC); Jessica Aletor, acting head, communications, stakeholder management and promotions, Lagos State Employment Trust Fund (LSETF); Adewumi Oni, acting director of programmes and coordination, LSETF; Prince Mohammed Momoh, Lagos State coordinator, NYSC, and Funsho Alabi, head, Micro Enterprise Start-Ups, LSETF, after the Memorandum of Understanding (MoU) signing between LSETF and NYSC to provide funds for corps members in Lagos.

L-R: Attai Oguche, deputy marketing manager, Tecno Nigeria; Alex Iyk Mbamalu, One of the Lucky winners from Abuja, and Luke Pan, brand manager, Tecno Nigeria, at the presentation of the cheque of one million naira each to the lucky winners of the TECNO Light Up your Dream 3 Raffle draw in Lagos.

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Tuesday 11 June2019

BUSINESS DAY

Media business Marketing agencies begin to cut workers’ salaries to hedge harsh environment Stories by Daniel Obi Media Business Editor

igeria’s marketing agencies that are seriously affected by the economic downturn under the present administration have started to cut workers’ salaries to stay afloat, BusinessDay has gathered. The percentage of the salaries’ cut differs, but according to a source, the average is 25 percent across cadres in the agencies. A particular agency operating in Lagos informed its workers about this development and said it is a measure to sustain the business in the difficult time. Apart from this measure, another company is downsizing. The agencies’ tough time is exacerbated by the cut in companies’ marketing communication budgets and delay in payments for jobs executed, developments that are informed by the challenging times. “One of the factors keeping some agencies from sinking is affiliation” they entered into with foreign partners. This is allowing them to execute some businesses, another source told BusinessDay. Assessing what the media agencies are going through, Segun McMedal, President of Lagos chapter of Nigerian Institute of Public Relations said it will be difficult to divorce the larger economy from marketing communication industry. “It is tough out there and this naturally translates whether agen-

cies are getting businesses or not” According to him, such downsizing is to fit in. The tough time, he said is not limited to marketing agencies but even the manufacturers in Nigeria and the signs still don’t appear to be good, he said. Today, Nigerian companies appear to be overburdened by the difficult operating environment, occasioned by poor infrastructure

and unfriendly policies that have eroded their margins. Companies in Africa’s biggest oil producer, suffered greatly from a recession that occurred in 2016 owing to a global collapse in oil prices. The fall in the oil prices caused a huge dollar shortage for the oil dependent nation since it gets 90 percent of its foreign earnings from oil. The dollar shortage caused the

Central Bank to devalue the naira, which dealt a deeper blow to most manufacturing companies since most of their raw materials are sourced abroad. The situation seems to have gotten bad for most companies especially giving the high inflation environment that has eaten deep into consumer’s purse. Feeling in the industry is that

L-R: Yeside Ogunremi, chief technology officer, 9ijakids, Peju Njideaka, Chief Executive Officer, NutureHouse Ltd and Titi Adewusi, Co-Founder, 9ijakids at TOSSE Education Show 2019 in Lagos.

unless dramatic things happen to bolster the economy, such as full implementation of 2019 budget of N8.9 trillion, support for infrastructure, improvement in electricity supply, security, support for agriculture, massive support for SMEs and improvement in non-oil export, many sectors including the marketing communication industry will continue to face headaches. This will also have reverberating effect on employment rate. Highlights of the 2019 budget include: capital expenditure of N2.094 trillion and recurrent expenditure of N4.055 trillion. Looking at agriculture sector that supposed to be the backbone of the nation, Mike Nzeagwu, a communication expert, expressed displeasure at frequent killing of farmers in certain parts of Nigeria, an unfortunate development that has put clog in that promise. He said if budgets such as that of 2019 are fully implemented, it will give real sector fillip to function well and improve the operators’ capacity and when this happens, both employment and other sectors such as marketing communication will thrive. According to other stakeholders, months ahead do not appear to be bright for the agencies as their clients are still hard hit by unfavourable environment. Many of them suspended product promotions and brand campaigns because of harsh environment.

Media expert links future of PR to disruptive innovation

he Chairman and Lead Consultant of TPT International, Adetokunbo Modupe has said that disruptive innovation remains the critical life support that will define the future of Public Relations (PR) practice in Nigeria. Modupe, a key note speaker at the 2019 edition of Brandcomfest in Lagos recently, explained that “the future will be service driven as no one will own anything.” Modupe who spoke on Digital Disruption and the Future of Public Relations Practice, noted that in no distant future, material possession will have a little significance in today’s global market as real-time lending equips practitioners with the many benefits of ownership. “Uber doesn’t own any vehicle, Airbnb doesn’t own any real estate. Facebook, as the world’s most popular social platform, almost creates no content. Ali baba, as the world’s most valuable retailer, has no inventory,” he said. Quoting Clayton Christensen

who described disruptive innovation as a technology or concept whose application significantly affects traditional market or industry functions, Modupe maintained that disruptive innovation is like a virus which does not happen suddenly, but surely will change the ways things are done “An example is how the internet as a disruptive innovation has caused the remodelling of the book selling industry. All the big book selling chains market share have been swallowed by Amazon because without having to

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own brick and mortar stores, it can display its inventory,” he said. He also pointed out other dimensions of disruptive innovation to include a process by which a product, service or culture takes root slowly and it is sometimes ignored but relentlessly climb up to displace tradition, citing the local example of Cowbell versus Peak Milk. According to him, the future of Public Relations practice will be anchored on three C’s of Culture, Concept and Content. While em-

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phasising that the world is now divided into two – The Physical and The Digital, Modupe explained that culture remains the willingness to unlearned traditional ways of doing things, learning to adjust to global culture, which is driven by technology cannot be over emphasized. He added that Concept can be deliberate, accidental or a fall out of conversation mood. “With the cultural adjustment and alignment, comes the challenge of idea generation. What will differentiate successful practitioners will definitely be how big and compelling your ideas are. If your agency is known for great ideas you will remain relevant,” Modupe noted. While reminding the gathering that substantial part of PR business is storytelling – creating content, managing content and leveraging content, the TPT Lead strategist emphasised that the world has moved from traditional media to new media and now to every media. “Until recent times, content con@Businessdayng

sumption was predictably from established media platforms. But not anymore as the number of smart phone users may equal the number of publishers. What will determine who and how your content is received is the content itself,” he told the audience. His paper was thereafter dissected by a panel of discussants made up of seasoned practitioners such as Uche Ajene, Managing Consultant, Quadrant MSL; Amaechi Okobi, Group Head, Corporate Communication, Access Bank and Bolaji Okusaga, Managing Director, Precise Communication. Others include Ayeni Adekunle, Founder, BHM; Adebola Wiliams, CEO, Red Media and O’tega Ogra, Group Head, Corporate Communications, BUA Group. The Panellists agreed with Modupe that strategic innovation holds the key to the future of PR and marketing communication industry in Nigeria and enjoined practitioners to brace up for the challenges of the ever changing world.

Tuesday 11 June 2019

BUSINESS DAY

Marketing & Pr We are organising Baby Fair to deepen Nigeria’s baby care industry, economy - Benson The private sector has come up with Baby Fair in Nigeria, a marketplace for convergence of industry and institution players in baby products and services. In this interview, the Communication Director of the Nigeria Baby Fair, Jide Benson gives more insight behind the thinking of the fair. Excerpts. The upcoming Baby Fair appears as brilliant initiative, but what informed the decision to come up with the idea? hank you for appreciation of the initiative. The Nigeria Baby Fair is motivated in part by a video that went viral on instagram about two years ago in which children where crawling on a basketball court. The video elicited a lot of interesting reactions and we latched on to it to create something. As we got to work to give form and structure to the idea, we realised that there are many baby and mother fairs around the world and the size of the Nigerian market can cater for such a fair. A lot of remarkable things are happening in the sector and the opportunities are enormous. When is the fair scheduled and who are the exhibitors expected at the fair? The fair is slated for 1st – 3rd of August, 2019 and it will feature an array of stakeholders, products and service providers in the baby and childcare industry. In essence any business organisation or individual that makes and sells diapers, toys, games, children’s clothing, baby food, groceries, toiletries, sweets, biscuits, beverages, accessories and educational items. Financial institutions that offer products for infants and toddlers, those that offer paediatric, counselling or nanny services, you run a crèche, daycare, playgroup, kindergarten, maternity services and many more are the people that will be exhibiting. From all I mentioned that’s the entire value chain of the industry. Apart from the exhibitions, are there other side attra ctions during th e three-day fair? Oh yes! There are a number of activities on the side lines. There will be master classes on an array of topics - parenting, family finance, caring for children with special needs, managing the mingling and other topics that our partners and sponsors want to include. There will also be baby crawling and walking competition, smiling and laughing competition, dads and mum will be made to perform some of those tasks that they usually do as morning or school runs. We will get dads to change diapers, make baby foods and

Jide Benson

more, it will be nice to see dads that are hands on. Those are some fun parts of the fair. Participating companies will also have an opportunity to pitch their business. Some companies think they have established market and perhaps don’t need fairs, what advice do you have for them? On the contrary, almost all those we have met and interacted with have received the idea of the fair well or may be it is the way we have been communicating it. A company and its brands cannot be too established that it will not want to continue to own or increase market share. In the business world, new entrants into markets have taken over from established leaders. We have had positive engagements and some of those who have signed on are big players in their space. My advice to any organisation that may be thinking they are established is to watch their back. Security is a major issue in the recent time, what efforts are in place to secure exhibitors, visitors and properties at the fair ground? Security is a major line item in our planning. There are three levels of security; the police, private security outfit and plain clothe operatives. Another interesting thing is that we would be having child and home security providers as part of the exhibitors; you will be amazed at the kind of innovation that www.businessday.ng

has become part of domestic security architecture. I am sure you have heard or come across stories of what children have gone through in the hands of their care givers whether they are nannies or relatives. Do you think similar fairs/exhibitions have achieved their intended purpose for companies in Nigeria? The objectives for participating companies are different, some are participating to make sales, some for exposure, and some to network or make contacts. The objectives are different as you would imagine. Some of those that will be at the fair will only be coming to do demos or to handout fliers and brochures at their stands because the products

“

A company and its brands cannot be too established that it will not want to continue to own or increase market share. In the business world, new entrants into markets have taken over from established leaders

or services they are offer are not to be bought off the shelf. What economic benefits does the fair portend for companies, institutions and the general economy? The key benefit for the economy is deepening the economy. The trading and transactions that will take place during the fair is flow of money and exchange of value. Participating financial institutions will meet parents and guardians looking to open savings or investment plans for the children and wards. Small businesses will make sales, get exposure, make contacts and those looking for distributors will find. The event is happening at the end of a school session and many people will need to shop for the next school year. The fair is a niche one and I must tell you that the team which I am a part of has been amazed at the kind of things happening in the space. We have received a lot of kudos indicating that it’s something the market has been waiting for. Our vendors appear to be more upbeat than we are. From your research, what is the value of baby care product industry in Nigeria? Do you think the value will rise as Nigeria’s population grows? I can confidently say that the industry is worth billions of naira, we don’t have exact figures but from our interactions with fast moving consumers good companies the size is huge and the potential for growth too. The value is sure to rise because as population grows so will the need of the population. Women that where hitherto seen as house wives or sit-at-home mums have taken advantage to become value creators. During the meet and greet for exhibitors which held recently, we met some stakeholders who wowed us with some of their products ranging from crochets, bissonets, breast pumps, baby hair care specialists and the like. It was such a delight to behold because they expressed delight at the idea of a niche fair that focuses on the industry in which they are operating. Some of the blogs focused on baby and parenting came about as a result of mothers deciding to spend time at home to raise their children. Having said that, we intend to commission a report after the fair with a research firm and the report will serve many purposes

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Rivers government lauds Eunisell for role in local league development

ivers State government has commended global chemical and specialty fluid management company, Eunisell, for its continued support of Rivers United FC and the development of domestic football in Nigeria. Eunisell is longest standing sponsor of a club in the NPFL. Speaking at a special event tagged: ‘Eunisell Rivers United FC Celebration Day’, in the Rivers State capital, Port-Harcourt, Rivers Commissioner for Sports, Boma Iyaye in a statement noted that not many clubs in the country have had the luxury of getting the kind of backing which the club has enjoyed from Eunisell. He charged the team to raise its game, by winning and ensuring it becomes a club to reckon with in Nigeria and on the continent. “Eunisell has done immensely well for Rivers United, looking at the huge funds the firm has invested in the team. Also speaking, Rivers United General Manager, Okey Kpalukwu, observed in the statement that with the partnership between the club and company, Eunisell’s consistency with being the shirt sponsors for five seasons, which no other company has done

in this country, is of immense benefit to both the brand and the club. He added: “Before we came into this deal with Eunisell, our jersey was not seen on the streets, nor was it in any shop. “Right now, we have our jerseys in shops and being worn openly on the streets. I don’t know most of the people that I see wearing our jerseys. What that means is that the club is now more accepted by the people and even at the grassroots level. Eunisell is now a pride of every Rivers United FC fan as there is nowhere you go in the state that you won’t see a supporter wearing our team jersey.” Okey also used the occasion to call on corporate organisations to follow the lead of Eunisell, by investing more in the local league, in order to help improve it. Also speaking at the event on behalf of Chika Ikenga, Eunisell’s General Managing Director Charles Etuk CFO, stated that the company’s involvement with the club is borne out of the fervent desire to contribute to the success of football in Nigeria, adding that the relationship narrative, is one of mutual advancement and they are still striving for higher standards of excellence.

Honeywell restates commitment to CSR, donates to orphanages

s part of its Corporate Social Responsibility programmes, Honeywell Flour Mills Plc has made products and cash donations to some orphanage homes. The foremost producer of wheat based products also restated its commitment to positively impact on humanity by giving back to the society through CSR activities. Managing Director, Lanre Jaiyeola, who in a statement stated this during a visit to some orphanage homes in Lagos and Ogun States where the company donated its products, noted that Honeywell Flour Mills will continue to support good cause in the society especially those that have direct impact on human development. Jaiyeola, represented by Tomi Otudeko, Head Innovation and Sustenance, Honeywell Group noted that Honeywell will continue to seize opportunity to make its impact felt in the society, listing such opportunities to include support provided sporting events, entrepreneurship programs, vulnerable groups, etc. “It is our own way of adding value to the people that we believe should have needs within the society, and our own way to alleviate poverty, suffering in the land”, he said. @Businessdayng

Among beneficiaries of latest gestures are the SOS Village, Ijebu Ode, Ogun State, Little Saints Orphanage and Bethesda Home for the Blind, in Lagos. Jaiyeola said “every good organization should have a corporate social responsibility on its objectives because we cannot do anything without the people we are serving. Everything is not just about buying our products, we should also be seeing to be improving the welfare of the people we are serving. We should be giving back to the community and there are so many ways we have been doing that”. He said “in Honeywell Flour Mills Plc, we believe in giving back to the society we live in, giving back in our little way, to support the less privileged and needy in our society, that is in line with our own corporate social responsibility goals and objectives. So, every year, we visit selected orphanages and homes. We also provide little support in terms of products, donations and cash because we know that people running those homes sometimes are doing quite a lot, they are taking care of abandoned children, orphaned children, disabilities of different kind. They need to be supported”.

Tuesday 11 June 2019

BUSINESS DAY

Putting ourselves out there How do we prove our specialness? By Ruth David, Who You Want Should Want You Back s business owners and entrepreneurs, we spend a lot of time creating our “sales pitch” for clients/customers/ investors. We do not do that for prospective talent. That is ironic because, without first communicating our appeal to competent hires, we deprive ourselves of the human capital to fulfill the promises we make to the clients/ customers/investors. We decided last week that formulating our Employee Value Propositions (the things our businesses can supply to meet our future employees’ needs) was an essential thing. Differentiating yourself in your EVP is a must. However, communicating it is the most important piece of the puzzle. When you formulated your Employee Value Proposition, shey you figured out what makes you special? Tell us eh. If you can’t, you might as well have built the most beautiful house in Lagos but painted it with some magic substance that makes it in-

visible to everyone. To be competitive in the recruitment process, you have to understand and advertise the qualities that make you the most attractive choice. When you showcase why the position is worth having, you attract people who are truly interested in filling it and who are the most qualified for it. The Proof is In the Pudding Your key EVP is not what you say but the track record that you show. If your company has created an initiative to upskill its workers by granting a month’s leave in the middle of the year so they can take a marketing course, that is a far better proof point than just showing interviewees a document that says your company is focused on professional development. Why? Because it is tangible. Because it is something your current employees can attest to. And because employee testimonials from current members of your staff will go further than any advertisement you craft, job description you write, or public relations messaging you pay for. Let’s take it back to relationships. When you finally meet the man and woman of your dreams,

after they have been informed by the emissary of all your wonderful qualities, you will naturally put your best foot forward. But what is more convincing? When a guy tells you he has never been unfaithful to a girlfriend before, or when you meet someone who used to date him who has nothing but good things to say? When you tell a prospective girlfriend that you have an entrepreneurial spirit, will she be more convinced by the fact that you have a copy of The Economist on your bedside table, or when she sees the little kiosk you opened when you were only seventeen? You Get Points for Trying Your EVP should be something tangible, no matter how small, that shows that you have at least attempted, in some small way, to walk the walk that you are talking. Enter the recruitment process with proof of your work-life balance initiatives, your generous maternity leave policy, your team culture, etc. Now, those of you with small companies, or fledgling businesses that have not been around long enough to establish a track record or put any long-term policies into place, might feel a little discour-

aged. However, even without a long tangible track record, the values that your company embodies will show in your mission and vision statement, in the things you have prioritised in your company, and in the way you relate to existing employees and interacted with former ones. Presentation vs Packaging In this country, unfortunately, we are champions of ‘packaging’. We promise things we are optimistic about delivering, but have absolutely no proof that we can execute. When communicating your EVP — whether in the job listing you put in newspapers, the job description you put online or the word of mouth vacancies you share with your network — ‘photoshopping’ your image might attract candidates. The mirage might even get the best people through your doors for an interview. If you are terribly lucky, it might even get them into your company. But it will not keep them for long. If the communication of your EVP is dishonest and disingenuous, sooner or later it will show itself. And the backlash and ill-will it creates will have consequences.

Achieve the Objective The point of a successful recruitment process is to leave you with employees who will be motivated and dedicated. The point of communicating your EVP is to get you employees who can thrive in the environment you have created. When you miscommunicate your EVP or misrepresent yourself, you create the perfect storm for D&D (distress and distrust). When your purpose is not to mislead anyone directly but, because of some failure in communication or lack of clarity in the way you presented the job, you end up with an employee that cannot thrive because their motivators are not being met. Communicating your EVP correctly and clearly is of ultimate importance in the recruitment process, and if you can master this step you are much more likely to meet your recruitment goals.

•Ruth David is the Partnerships Coordinator at WAVE, an organization focused on rewiring the education-to-employment system to create a level playing field for every African youth to access the skills and opportunity to become what they imagine.

Single parents face a challenge to stay in work Childcare costs and lack of flexible work mean UK single parents fare less well than other Europeans

fter her marriage ended, Joanne Jacobs*, 40, moved from the US to London, where some of her family live. She now lives with her three-year-old daughter and works full-time as a consultant. She has joined the growing ranks of lone parents in employment in the UK — up to 69 per cent in the first quarter of this year, from 44 per cent in 1996. This increase is in part the result of targeted government policy initiatives. In the late 1990s, the British government introduced the New Deal for Lone Parents programme which aimed to reduce unemployment by providing training, subsidised employment and voluntary work to the unemployed. Then in 2003 the government introduced working tax credits, a means-tested benefit for lowincome workers which helped to top-up wages. Subsequent caps on unemployment benefits until a claimant is working 16 hours a week have moved even more people, including lone parents, into the labour market. But despite the increase of lone

parents in the UK joining the workforce, they still fare far less well than their European counterparts. In 2018 the employment rate for lone parents in the UK was 10 percentage points lower than that of the general population, according to official statistics released in April. This is the widest gap in the EU, bar Malta. The poor employment rate for single parents is particuwww.businessday.ng

larly striking given the UK’s stronger labour market, resulting in a wider gap in the UK between single parents and the general population than in the rest of the EU. Across the eurozone last year, 74 per cent of single parents were in employment, 5 percentage points higher than in the UK. In Germany, the employment rate of lone parents was 77 per cent.

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In the UKloneparentsinlow-paid jobs and those managing to maintain a better paid professional career face significant challenges. Higher childcare costs and a lack of flexible work contribute to making the UK’s employment rate of lone parents the lowest of any major EU economy. It ranks 22 among the 28 EU countries. Furthermore, regardless of whether they are in work or not, there are more single parents in poverty in the UK than in any other EU country. Childcare issues A lack of flexible and affordable childcare contributes to lone parents staying out of the workforce and remaining in poverty. According to a survey from the UK’s Department for Education, nearly half of the non-working lone mothers do not have a job because of childcare or flexibility issues. Nearly two in three non-working single mothers in the UK say they would work if affordable good-quality childcare was available. Ms Jacobs, for example, despite a good income, cannot afford to live alone in a home near her daughter’s school. To make ends @Businessdayng

meet she is considering living with another single mother to share childcare and housing costs. Childcare is needed, she says, “not just for the day-to-day during office hours, but if you have to travel for work, if you are ill, or would just like to spend an hour a week in a gym class or socialise every now and then away from the house”. Pettrina Keogh was forced to move to reduce childcare costs. Currently working for a tech company, she became a single parent when her son was two. When she and her partner split up both were in full-time work and employing a nanny outside nursery hours. Ms Keogh’s partner continued to help with mortgage payments, but once they decided to sell their house and cut financial ties, she needed to fund a mortgage and childcare on her own. “Continuing with costly fulltime childcare once I only had my own salary and minimal child maintenance to rely on became impossible,” she says. “How was I going to reduce childcare costs unless I moved close to my family who were at the other end of country?”

Tuesday 11 June 2019

BUSINESS DAY

Executive education is evolving rapidly shows new FT rankings By Andrew Jack, FT

external review. The rankings showcase 80 providers of open-enrolment programmes and 80 of custom programmes around the world. There is also a combined ranking of the top 50 executive education providers, based on data from their performance in both the open and the custom rankings. Of course, such tables can only ever provide a partial snapshot of the quantity and quality of offerings. For example, they do not capture the growing number and variety of corporate providers and consultants offering specialist training for executives, such as PwC, McKinsey and Egon Zehnder. Nor do they include many boutique training courses or purely online offerings. The expansion in providers highlights important evolutions in the sector, which is experimenting with different ways to deliver training (including onand off-site, informal, coaching and peer-based alongside classroom lectures and case studies), and the relative merits of “practical” applied discussions with practitioners versus researchbased teaching by independent www.businessday.ng

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In order to maintain their influence at a time of fierce competitive provision and increasing internal pressure on performance, business schools — like other education providers — are having to innovate in what they teach, how they teach it and how they demonstrate effectiveness

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ny business is benchmarked on multiple aspects of its performance, whether tracking internal processes or through financial valuations. So it is no surprise that there is plenty of demand for data to assess the growing and increasingly diverse range of training options for executives. After all, Unicon, the consortium for university-based executive education, an association of 113 leading business schools offering open and custom programmes, carries out its own yearly review highlighting the diversity of practices among its members. Between them these schools report annual revenues of about $2bn. CarringtonCrisp, a UK education consultancy, published a survey recently that highlighted still larger revenues from a far broader range of providers, with aggregated opinions on some of their relative strengths and weaknesses. The most important factor raised by respondents when selecting training programmes was to ensure they would help participating staff have an impact at work. Both these initiatives steer clear of publicly assessing and naming individual providers, while the FT’s executive education rankings do just that. The methodology is transparent and these rankings provide a starting point to help explore the range, content and quality of options on offer. This year there were some one-off changes in the collection method for the numbers, which are largely based on surveys canvassing judgments from participants. The underlying information gathered and the way it has been analysed remains unchanged from previous years, and has been subject to both internal and

academics. The FT rankings rely on the willingness of schools and participants to take part in our surveys (for which we are grateful), and the answers to our questions reflect individuals’ perceptions. In aggregate, these rankings impose a single order on a complex range of issues. That is why the rankings’ tables are supplemented by our broader coverage on executive and business education, including in the accompanying articles in this report and throughout the year in the Financial Times. Many local and regional companies, for example, will be less interested in the global rankings

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than in identifying potential training institutions nearby. That eases costs and logistics, and often reflects local cultural factors and needs — such as in our profile of schools in Brazil, which have a shared interest in dealing with specific local conditions such as high taxes and corruption. Multinational groups may be keen to explore a range of training options across different continents, reflecting their own geographical footprints and the desire to test different providers with a range of specialisms. There are growing demands by schools and their corporate clients for more meaningful ways to track the impact of @Businessdayng

their investments in training; to explore effective ways to teach and integrate learning into busy schedules; to understand how to rapidly translate meaningful, rigorous research into action; and to explore new formats including partnerships between different providers. In order to maintain their influence at a time of fierce competitive provision and increasing internal pressure on performance, business schools — like other education providers — are having to innovate in what they teach, how they teach it and how they demonstrate effectiveness. Anyone exploring these rankings is encouraged to read around and beyond the single printed list, and to explore the data using the interactive version online. That will allow them to regroup and select subsets of schools by factors including location, diversity, partnership with others and assessments of follow-up, design and facilities. We invite readers to join the discussion both on the most important trends in executive education, and how best to measure and capture them using rankings and other approaches.

Tuesday 11 June2019

BUSINESS DAY

EDUCATION Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

IB diploma graduands urged to imbibe the right attitude to achieve excellence KELECHI EWUZIE

he 2019 graduating class of International Baccalaureate Diploma Programme, the sixth form of Greensprings School, Lagos has been encouraged to imbibe the right attitude to learning and life in order to achieve excellence as they journey into the next level of their academic pursuit. Adewale Abiru, Justice, Court of Appeal, Jos Division and guest speaker at the prize day and graduation ceremony of the school held in Lekki campus disclosed that graduating from the IB programme for the students is the beginning of a new stage of which they are going to be a major player in terms of what happen to their lives. He observes that it is not the diploma that they acquire that will count at this stage; rather it is the skills they acquired that will matter, adding that all the classes, lab assignment and essays they undertook are to prepare them for the challenges ahead. According to him, “The education you acquired here is only a dress rehearsal for a life that is yours to live. Some of you may struggle more than others in transiting period between this stage and the next, but I am assured that with the ability to discern, ability to focus, multi task and the ability to properly manage your time, the struggles will be very temporal” Abiru urged the 22 graduating class to constantly remember what they came for, the pains they went through to get to where they are and the people that sacrificed for them to get there

Lai Koiki, executive director, Greensprings School, congratulating IB Diploma graduates Class of 2019

and who are interested in their success. “You must live your life with integrity and not give in to negative peer pressure, trying to be something that you are not. Success is to make yourself and loved ones proud and to move closer to your dreams at different stages of your life”. He said. He further pointed that the students should

Postgraduate professional studies: CIAPS offers $50,000 worth Commonwealth scholarships KELECHI EWUZIE

s part of its contribution to boost post graduate professional studies for Nigerians, The Centre for International, Advanced and Professional Studies (CIAPS) has announced a 50,000 United State Dollars scholarship scheme for the 2019 Postgraduate Commonwealth students. The CIAPS Commonwealth Scholarships are part of the new CIAPS Scholars Scholarship programmes, which will directly benefit students entering postgraduate professional education in July 2019. According to a statement made available to BusinessDay, Anthony Kila, Centre Director, CIAPS said there are a total of Fifty (50) scholarships available, worth a total of Fifty Thousand Dollars (USD50,000) adding that each successful applicant can receive up to One Thousand Dollars to pay his or her tuition fees at CIAPS for the duration of the postgraduate professional study. Kila said that these scholarships are funded by individuals and corporations who like CIAPS are dedicated to the advancement of knowledge, learning and understanding in the service of society. According to him, “Our aim is to identify and help students who are pursuing higher learning so that they can use the skills acquired in playing a part in making their societies and the world a better place”

He further said that students will be selected on the basis of a Test consisting of a Personal Statement and Interview advising that a good personal statement must not exceed 1000 words and it will be a chance to tell us about yourself, why you think you deserve this scholarship and how you think it will help you serve yourself and society once you graduate. Kila in the Statement pointed out that in order to be eligible to apply for the scholarship which closes on June 15, 2019, students must fulfill certain conditions some of which that such a student must be aged 22 to 30 with a degree or equivalent and must have graduated with a minimum of 2.2 or equivalent GPA. Other are such a student must have a desire to study for international professional courses that can lead to creation of jobs and wealth; be ready to commence study by 6th July 2019. Be Commonwealth citizens or be residents in a developing Commonwealth country. Be willing to study full time, weekdays in Lagos, Nigeria; Refugees or families of people working with organisations linked with developing Commonwealth countries are also considered and each applicant must meet 6 of these 7 criteria in order to be considered as eligible. Courses slated for these scholarships are in the areas of Banking & Finance Business Development, Production & Operation Management, Digital Business Management, Health, Education, Media, Office management and Events Management.

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expect ups and down during their university lives. He however prays they have more ups than downs. Stressing that when the downs come, they will have the strength of character to persevere and overcome them. Lai Koiki, Chief executive officer, Greensprings School observed the IB programme is a very rigorous programme and

a such is so well sort after, adding that it is a programme that people that wants shortcuts don’t go for. Koiki opines that universities in developed economies prefer offering admissions to students that have passed through the IB diploma because they know already that the ground work has been done in preparing the students for University life. “The students in the course of the IB programme learnt time management. These students have being pushed and tried with a lot of works, a lot of deadlines. These are the things they are going to experience when there is nobody there to check them in the university”, she said. Jennifer Sunkanmi-Qazzeem, IB principal, Greensprings School Lagos said the IB programme started in 2010, adding that the graduating class of 2019 are unique because they have gotten for themselves the highest number of scholarships from foreign Universities so far since the programme started. On her part, Obidinma Egbokwu, the valedictorian with an estimated 188,000 dollars worth scholarships from universities abroad said during the course of the IB programme, she gained more confident and found better ways to study effectively and retain more information. On what made her excel, Egbokwu opines that one thing she did different was that she stopped doubting herself and surrounded herself with people who were like minded and did a lot of group studies which really helped her excelled.

Ogun government decries deplorable state of schools …pledges to revive education sector RAZAQ AYINLA, Abeokuta

gun state government under the leadership of Dapo Abiodun has expressed concerns over the deplorable state of schools across the State, pledging to rejuvenate and reposition the education sector in the state. Speaking on the new government’s agenda on education during familiarisation visits in both Abeokuta South and North local government areas of the State capital, Noimot Salako-Oyedele, deputy governor of Ogun state, said that the familiarisation visits to schools were aimed at getting first hand information and making on the spot assessment of the teaching personnel and facilities available at various schools of learning across the state. Salako-Oyedele who was accompanied by the Permanent Secretary of the State Ministry of Education, Science and Technology, Olu-Ola Aikulola, on the familiarisation visits, said, “If you want to learn and excel ,there is need to reposition the educational sector to where it used to be. “Ogun State is where we breed excellence, hence, the need to provide proper learning facilities, so we need to tackle these challenges with immediate effect”.

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She said education is paramount in the agenda of the present government, adding that Dapo Abiodun-led administration in the state would leave no stone unturned in ensuring that over bloated population, lack of toilet facilities and teaching aids, became a thing of the past. “Education is the pivot on which every other profession rest and therefore it must be given its pride of place, productivity cannot be achieved under this condition and something needs to be done, this is where we come in and I promise things will change”, she assured. At St. Peters’ College, Olomore, Abeokuta, the Deputy Governor promised students with special needs, that competent and specialised teachers would be posted to the school for effective learning. Earlier, the Permanent Secretary, Ministry of Education, Science and Technology, Olu-Ola Aikulola, said that the State Ministry, in its bid to improve the sector over the time, had undertaken the training and retraining of teachers in the state, to enhance efficiency. BusinessDay reports that the schools visited include; Rev. Kuti Memorial Grammar School, Isabo, NUD Primary School, Oke- Ijeun, Government Technical and Vocational College, Idi- Aba and St. Peters’ College, Olomore, among others.

@Businessdayng

Tuesday 11 June2019

BUSINESS DAY

EDUCATION ‘Science practical offers students opportunities to develop skills for university applications’ Juan Visser is the regional director at Cambridge International. In this Interview, he speaks on the value that Cambridge International has over the years placed on science practicals as part of its science examinations. On the back of a successful A level Biology practical activation in Lagos, he examines how Practical Science is at the heart of studying scientific subjects. He speaks with Kelechi Ewuzie. Excerpts: What is Cambridg e International hoping to achieve with this A level Biology activation? ambridge International is unique in the value it places on science practicals as part of its science examinations. At Cambridge International A Level, practical work is compulsory and counts towards a final grade. This is because it is sound preparation for studying science at university. To demonstrate how conducting a practical enhances the classroom learning experience, we invited journalists to take part in an A Level Biology practical experiment at a Cambridge School. How significant is this A Level Biology practical experiment to the students as it relates to the general learning outcome for them to compete globally? Practical Science is at the heart of studying scientific subjects. Each experiment helps students develop a sound understanding of how biology concepts and processes work, how the different areas of biology fit together as a course of study and gives them valuable op-

portunities to develop their skills and understanding as individual learners. Practicals can also give students an advantage with their university applications. What do you think are the most important steps students should consider as they approach practical based learning as against only theoretical ones to help shape their innovative minds in the future? Students have the opportunity to look across different aspects of a practical activity: planning an experiment or investigation, collecting, recording and presenting observations and measurements; analysing and interpreting their findings, and evaluating their methods and the quality of the data to suggest improvements to the experiment. What are some of the practical experiments that you offer at Cambridge International? Students gain marks in practical papers for the: manipulation of apparatus, measurement and observation; presentation of data and observations; analysis, conclusions and evaluation. Students will be expected to decide on the range of values

Juan Visser

for an independent variable, to include concentrations, temperature and pH. They would be expected to collect quantitative and qualitative data, presenting appropriately and draw conclusions based on their analysis and evaluation. Students are expected to be familiar with light microscopy and the use of photomicrographs.

Greenwood House School receives COBIS membership status …Wins APEN Spelling Bee Competition KELECHII EWUZIE

n recognition of the quality of education to students and the opportunities created for teachers to excel, Greenwood House School (GHS), an independent, co-educational nursery and primary school in Ikoyi, Lagos has received the Council of British International Schools (COBIS) membership status. COBIS is an organisation in service of British International Schools around the globe. This membership indicates total quality assurance and reiterates Greenwood House School’s commitment to excellent all round quality education for students and its dedication to teacher training.

Ronald Cilliers, Principal, Greenwood House School expressed delight on the COBIS membership, saying “This membership status simply attests to the quality of education that we provide for our students and the opportunities we create for our teachers to excel. We will continue to put our best foot forward in educating our students and providing a solid educational foundation for them”. Meanwhile GHS has emerged the winning school in the Association of Private Educators in Nigeria (APEN)/ Grace Schools Senior Primary Spelling Bee Competition. The competition tagged “Super Spellers” had 51 participants from several schools in Lagos and held at Grace Schools, Gbagada, Lagos recently. www.businessday.ng

Fitrah Adegbite, a 10-yearold Primary 5 student who represented Greenwood House School in the competition defined his achievement as a result of the intense support and training given to him by his teachers at Greenwood House School. He was very happy that his hard work and commitment paid off. Commenting on the student’s performance in the spelling bee competition, Titilola Ekua Abudu, the Cofounder and Administrator of Greenwood House School explained that the school is always committed to giving their students the best education. In view of this, the teachers spend quality time preparing the students for competitions like this and the management is highly impressed about the success of the spelling bee.

Would you say the lack of A Level Biology practical experiment in most schools in Nigeria is the reason most students fail to produce their best in most science related subjects?. Access to practical experience is an important part of teaching and learning in biology, and learners benefit from taking part in different

forms of practical activity. However, our learners all over the world demonstrate positive achievement in their courses through their theory as well as their practical assessment. How many A Level Biology practical experiment do you carry out in a year and what is Cambridge International doing to ensure more students get interested? We support teachers to deliver practical science through our support materials, on the School Support Hub, through the information and guidance available on the website and through our training. We offer a wide range of science syllabuses to suit students with different abilities and career aspirations – whether they want a core science grading or wish to take their science studies further. Is this science media activation the first in Nigeria, if yes, kindly share name of the school. Yes it is the first. It was held at Oxbridge Tutorial College What are the criteria in picking school for science activation? We approached schools that offered Cambridge In-

ternational A Level Science subjects. What is the difference between Cambridge International A Level practical and Cambridge O Level practical? Cambridge O Level courses are designed to support progression between Cambridge O Level and Cambridge International AS &A Level Biology, so where subject content develops between Cambridge O Level and Cambridge International A Level the practical activities progress in line with this. We have many commonalities between the requirements for practical assessment across the different levels of qualifications, but we would expect students at AS & A Level to demonstrate more independent learning skills and investigate more complex situations than at A Level. Advanced Practical Skills require candidates to plan experiments and investigations, collect, record and present observations, measurements and make estimates, draw conclusions and evaluate methods and the quality of data and suggest possible improvements.

Anambra, three others record perfect scores as NECO releases 2019 Cowbellpedia result

nambra, Benue, Ogun and Rivers States with two representatives each, recorded 15 perfect scores as the National Examinations Council (NECO) announced the result of the 2019 Cowbellpedia Mathematics Qualifying Examination. The scores were recorded by14 schools from 10 states and the Federal Capital Territory, Abuja. While twelve of the high-flying students emerged from the junior category, the remaining three came from the senior category. Schools represented in the junior category by these outstanding students include Gloryland Secondary School, Benin City, Edo, State; Grundtvig International Secondary School, Awka, Anambra State, which has two candidates scoring 100 per cent; Graceland International School, Port Har-

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court, Rivers State; Nigerian Tulip International College, Abuja; Nigerian Tulip International College, Kaduna; Makurdi International School, Mount Saint Gabriel’s Secondary School, Makurdi, both of Benue State; Princely Academy, Abeokuta, and Universal Scholars Secondary School, Ota, both in Ogun State. Others are Topfaith International Secondary School, Uyo, Akwa Ibom State; and Wites and School, Lekki, Lagos State. The three candidates with the perfect score in the senior category are from Marist Brothers’ Juniorate, Uturu, Abia State; Bibo Oluwa Academy, Ilesa, Osun State; and Jesuit Memorial College, Port Harcourt, Rivers State. The 15 perfect score recorded this year is also groundbreaking as it rested the 2016 @Businessdayng

feat of six perfect score. A total of 56,073 students, comprising 29,073 (junior category) and 27,000 (senior category) sat for the qualifying exam in 203centres across the country. With Stage One over, 108 students (54 each for junior and senior categories) will now proceed to the second stage, which is the Television Quiz Show. That phase will run through preliminary, semifinals and finals with the best six students in each category competing for the grand prize. Anders Einarsson, managing director, Promasidor Nigeria Limited, had announced at the flag-off of the competition that the winner in each of the junior and senior categories will receiveN2 million in addition to an all-expense paid educational excursion outside the country.

Tuesday 11 June2019

BUSINESS DAY

Markets + Finance

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

MTN Nigeria surmounts macroeconomic headwinds as profit margins surge ...Fourth largest Nigerian company by profit BALA AUGIE

TN Nigeria Plc has surmounted the tempest brought on by poor regulatory environment and economic lethargy as it recorded a stellar performance. This means the telecommunications giant has the financial strength to reward shareholders and investors in form of share appreciation and steady dividend payments as evidenced by strong cash from operating activities and robust earnings. Companies are going through trying times as decrepit infrastructure, double taxation, and low consumer purchasing power continues to undermine growth. The country hasn’t recovered from the precipitous drop in crude oil price of mid 2014 that stoked a severe dollar scarcity that saw it slip into its first recession in 25 years. While the introduction of a new foreign exchange by the central bank and rebound in crude oil price and output helped the country exist a recession in the last quarter of 2017, over half of its 200 million live below $1.98 dollar a day. Nigeria is ranked 146 among 190 economies in the ease of doing business,

Ferdi Moolman, CEO MTN Nigeria

according to the latest World Bank annual ratings. Lack of policy direction on the part of the federal government has led to investors dumping Naira assets, hence, resulting in outflow of investment. Amid these monument challenges, like a flower that blooms under the sun, MTN Nigeria continues to thrive as evidenced in a solid working capital position, steady growth in revenue and profit, and reduction in debt. For instance, the telecommunication giants’ sales increased by 17.11 percent to N1.03 trillion in December 2018 from N887.17 billion the previous year. A breakdown of top lines

shows income from Airtime and Subscriptions were up 21.52 percent to N676.38 billion in December 2018 as against N556.57 billion the previous year. Income from data was up 41.41 percent to N165.17 billion as at December 2017. MTN Nigeria is cost leader and its ability to curtail costs is responsible for improved margins and profitability. It successfully reduced commission-to-sales ratio, due to shift to digital airtime sales. Also, operating expenses (direct and indirect cost) ratio fell to 75.33 percent in December 2108 from 78.01 percent the previous year: this means the company has spent less on costs to generate each unit of revenue. Total operating expenses were up 13.07 percent to N782.62 billion in the period under review, slightly higher than April inflation figure. The telecoms giant is leveraging on the proliferation of smartphone device and the country’s growing population as profit after tax increased by 79.69 percent to N145.68 billion in December 2018 from N81.01 billion as at December 2017. It is generating more in earnings before interest, taxes, depreciation, and amortization, as a percentage of revenue, which means it has a strong operating efficiency. Earnings before interest and taxation (EBIT) moved by 35.38 percent to N266.13

billion in the period under review from N195.92 billion as at December 2017. NTN Nigeria has utilized the resources of shareholders in generating higher profit while it is has also been able to turn top line (sales) impressive performance into bottom line (profit) growth. Net margin increased to 14.02 percent in the period under review from 9.13 percent the previous year. EBIT margins, otherwise known as operating profit margin increased to 25.61 percent in December 2018 from 22.08 percent the previous year. The telecoms giant has an excellent deleveraging strategy as the proportion of debt in its capital structure has waned, while earnings are enough to pay interest expense. Debt to equity ratio (D/E) fell to 122.84 percent in December 2018 from 225.80 percent the previous year while total debt (short term and long term) has reduced by 31.31 percent to N175.30 billion in the period under review from N254.82 billion the previous year. Times coverage ratio stood at 3.95 times operating profit, which means operating profit can over finance costs three times; the ratio is higher the 1.50 times international bench mark. If MTN Nigeria were part of the NSE 30- the lists of most liquid firms- its N145 billion net income would be the fourth largest in the country. The company has spent N201.01 billion on capital expenditure as at December 2019, and it intends to spend more on its future expansion plans. The telecoms giants’ ongoing capex plan is focused on the network superficially; 4G rollout in major cities across the country to improve network quality. 3G densification and expansion countrywide to improve availability, reliability, data speed and overall user experience. MTN remains market leader in Nigeria MTNN is undoubtedly the market leader in the Nigerian telecommunications market.

According to Nigerian Communications Commission (NCC), the firm has the largest market share by subscriber base, with c.37 percent market share as at March 2019 while Globacom (27 percent), Airtel (26 percent) and 9mobile (10 percent) follow in that order. MTNN contributes c.50 percent to the total revenue generated in the industry. The telecommunications sector which contributes c.9.9 percent to GDP and recorded a strong growth of 11.3 percent in FY 2018 still holds growth prospects given Nigeria’s large population (197 million) and expected growth (adding 5 million a year until 2022). Analysts are of the view that MTN, given its market leading presence and superior brand name is well positioned to benefit from the growth in the sector. “ We see strong growth potential for MTN considering mobile penetration rate of 81 percent (as at Q1í2019) which could help in driving voice (accounting), for 74.9 percent of revenue as of Q1 2019) and data revenue (ac-

BD MARKETS + FINANCE Analysts: BALA AUGIE www.businessday.ng

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counting for 16.6% of revenue as of Q1 2019),” said analysts at CSL Stock Broker Ltd. M TN ’s Under valued shares are attractive compared to African peers MTN Nigeria’s shares are attractive and undervalued compared to peers in Sub-Saharan African after it received regulatory approval from the Securities (SEC) and NSE to list 20.3 billion units of shares at a price of N90 per share. Based on a listing price of N90, and a market capitalization of N2.0 trillion and an EBIDTA of N150 billion, the telecoms giant’s listing implied for ward EV/EBITDA prints at 3.4x, while forward P/E ratio for prints at 9.5x based on market capitalisation of N1.8 trillion and annualised net income of N193.8 billion, according to data gathered by analysts at CSL Stock Brokers Limited. That compares with African peer average (which includes MTN Group, Vodacom, MTN Ghana, Safaricom, Sonatel and TIM Participacoes forward EV/EBITDA prints at 5.6x and while forward P/E ratio prints at 12.4x.

Tuesday 11 June 2019

BUSINESS DAY

property&lifestyle Office Space

Time to take wasting Federal Secretariat Ikoyi to ‘next level’ CHUKA UROKO

fter over three decades of wasting away, serving no purpose other than sitting on prime land in a prime location, time has come for the old Federal Secretariat in Ikoyi, Lagos, to be taken to the next level in line with President Muhammadu Buhari administration’s ‘next level’ agenda. A national monument, in its own right, the federal secretariat represents a colossal waste in the midst of scarcity and want. It is one of the ‘dead assets’ in Nigeria that makes the need and call for land and property ownership reform in the country not only imperative but also urgent. Nigeria has a rigid traditional land tenure system that hampers full scale economic activities on land. This system is reason for the country’s low industrialisation, housing development, agriculture, and other economic and productive activities that lead to improved standard of living, job creation and economic growth. The same rigid land tenure system is reason for the huge waste the federal secretariat in Lagos have become just like other national monuments scattered all over the country. The secretariat, which provided office space for fed-

eral civil servants while Lagos served as federal capital, was part of the Federal Government’s properties in Lagos that were offloaded into the property market between 2003 and 2006 by the Olusegun Obasanjo administration in the country. Wale Babalakin’s Resort International Limited which acquired the property had the intention of redeveloping it into residential apartments that would have provided homes for a good number of families but was stalled by the Lagos State government. By that singular action, over 50 families have been denied the opportunity of owning their own homes. Taking an average of eight persons comprising father, mother, four children and two dependants, per family, it means that about 400 persons would have had shelters over their head. This would also have helped to reduce the country’s housing demand-supply gap which is put officially at 17 million units. This figure is already a subject of debate as some experts argue that because of population growth, especially with the yearly increase in the number of young people leaving school and needing their own homes. Of all the 36 states of the federation plus the federal capital territory, Lagos with its larger than size population, has the highest housing

CHUKA UROKO

deficit estimated at three million units that requires about 200,000 houses to be built every year for the next 10-20 years to bridge. It is expected that the state would support any private sector initiative that would put additional housing unit on its housing market to help close its housing supply gap. But this consideration seems not to have been given to Resort International Limited. Among other things, the state government demanded that Resort International must obtain a fresh Certificate of Occupancy (C of O) from the state government, irrespective of documents issued by the Federal Government on the property. The company was

also required to apply for the consent of the Lagos governor on the property; apply for a change of use as well as a development permit. Resort International had considered the demand by the state government inconsistent with the Development Lease Agreement (DLA) which it had entered into with the Federal Government in 2006 which granted it 99 years’ lease to redevelop the secretariat complex into luxury apartments. It therefore, took the Federal Government to an Arbitration Tribunal where it claimed that it had suffered damages totalling N88 billion as a result of the breach of a clause of the DLA by the

government. Though the Tribunal, chaired by Fred Adeniyi Coker, an architect, supported by a legal practitioner, Yusuf Alli, a Senior Advocate of Nigeria (SAN), and former Attorney General of the Federation, Abdullahi Ibrahim, ordered FG to pay N54 billion in damages to the company, it is still hazy whether this ruling has been complied with. Even though people are worried about all the pussyfussy movements around this monument, they are more concerned about the waste it has been subjected to, hence the need for the current government to step in to resolve all the issues around the asset so that it could be put to use.

Interior Decor

Zebra blind design in window fittings excites users as suppliers turn to local assembling Temitayo Ayetoto

ince users’ attraction to window blinds shifted from corporate use to residential interior decoration, Zebra blind, a window fitting popular known as ‘Day and Night’ appears to have won the heart of users, topping demand for varieties numbering seven. The thriving market from this users new found love, BusinessDay understands, is chief among reasons suppliers have now turned to local assembling of window blinds to widen their profit margin. Suppliers initially favoured importing assembled window

blinds from Turkey and China, which the landing cost turned out to be higher and often lacked precision in fittings. In choosing shades, users basically consider the function of the room it will be used; how much control they want over light and the size of window. They also looked at special features like material texture, hence the need for services of those who could get the precise size of their window rose. “Everything you see regarding window blind is assembled here but most of the raw materials are imported. This is because when coupling it there, it could be very expensive and most times you may not get the

Opportunities for builders, buyers as AIHS attracts 400 exhibitors, 20,000 participants

exact size of your window,” Kalu Ikwuonwu told BusinessDay. “Some who get the already made wooden blind either get it longer or shorter. We have to resize and fix for them to give the house a befitting decoration. That’s the idea. Sometimes we dispatch some experts that know how to install it,” he added. Don Fazano, a supplier company said the demand has been buoyed by taste which spread across different income categories. Different functions of light shade are required during day and night. At night, one may need the shades to retain more light within the room for privacy, but may need protection from harsh rays and still want to let in natural light during the day. Day and night window blind provides both. However, demand is seasonal and usually higher in festive periods when people like to change the settings of their apartments and eras of new dispensation when offices embark on furnishing. Demand also experiences uptick when developers are delivering housing projects. But Ikwuonwu said it is not as lucrative with developers as it is with

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retail buyers due to what he described as unfavourable terms. He, however, said it is lucrative, especially for an importer. “If you import all those things by yourself, it is more profitable than buying from importers. It is a very huge amount of money,” he noted. In the midst of this growing demand, opportunities abound for local manufacturers to consider making these materials locally. But away from Zebra shade, design trends for blinds range from styles to fabrics and the latest innovations. Some of these fashionable trends include Venetian blinds which are classic designs revised in a modern way. The traditional Venetian blind allows the regulation of lighting in an environment with precision and simplicity. It presents all the advantages of conventional blinds mixed with modern technologies that enable its movements, guaranteeing different levels of sun shielding. Panel track blinds Panel track blinds are now answers for large and small windows alike. When fully opened, the individual panels tightly stack together to give

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you the most sunlight possible. When closed, one can enjoy all the rich textures and fabrics that come in. Not only do gliding panels look amazing as window treatments, but they can also be used as a unique and stylish room divider. You can choose either a cord, wand, or motorised styles to open and close your panels. They also have the option of a centre as well as side-to-side opening. New neutrals This is a shift from the traditional neutral shades of white and beige to the deeper neutral shades of charcoal and slate grey. These darker shades still go great with any décor, but they give a much more sophisticated look. Greys beautifully define any window, while complementing any pops of colour you may add to your decor. Greys will also work well with trim colours on your window frames and other mouldings in your room. Layering blinds This variety adds a perfect finishing touch to your blinds with a sophisticated swag. The gentle folds of fabric draped along the top and sides of your windowtreatmentwillgive your blind a soft, waterfall feeling. @Businessdayng

pportunities are now open for home builders, buyers, building materials suppliers and manufacturers as the 13th edition of the Abuja International Housing Show (AIHS)) beckons with over 400 housing products exhibitors and 20,000 participants from 15 countries across the world. AIHS, easily the largest gathering of housing sector professionals and other stakeholders in West Africa, is an annual event organised in Abuja by Fesadeb Communications Limited—a real estate-focused communications outfit. The show is not just a housing, business and investment event, but also a choice destination for those seeking relevant and up-to-date information on housing, construction, mortgage, investments and real estate management. In a statement obtained by BusinessDay at the weekend, the organizers revealed that over 20, 000 participants had confirmed participation in the show, adding that over 400 local and international housing products exhibitors were also expected to showcase their latest products and innovations. “As a truly international event, participants will cut across, at least, 15 countries of the world, including USA, UK, UAE, South Africa, Kenya, Ghana, India and China. There will be a high level delegation of international diplomats and foreign ministers of works and housing including Ghana’s Samuel Atta Akyea,” Festus Adebayo, the chief executive officer of Fesadeb Communications, said. The show also anticipates about 30 local and international speakers who will be sharing their knowledge and experience based on the theme of the event—‘Driving Sustainable Housing Finance Models In The Midst of Global Uncertainty’, which will be serving as a testament on how housing finance models continue to be an invaluable experience for building professionals in Nigeria and across the globe. The organizers assure participants of fine outing as they will be witnessing elite conferences and special sessions like the CEO Forum, Housing Finance and PropTech Conferences, Not Too Young to Own a Home and Women in Housing Convention. Among the international speakers at the event to be declared open by Vice President Yemi Osinbajo are Lew Shulman, Debra Erb, Kecia Rust, Anders Lindquist and Robert Hornsby whose impact in the global housing environment are immeasurable.

Tuesday 11 June 2019

BUSINESS DAY

property&lifestyle Property Law

Property Protection Law: Land grabbing yet to see improvement 3yrs after Israel Odubola

hree years after signing the Property Protection Bill into law by the Lagos State government to curb the excesses of land grabbers otherwise known as Omo-onile and checkmate unethical practices in land-related transactions, the menace is yet to see any significant improvement. The activities of land grabbers have, for many years, been a set-back for the real estate industry as regards land purchase and property development, particularly in the south-western part of Nigeria. The perpetration of this act has disrupted genuine investments in property business in the country, and has adversely affected the ownership rights of individuals. This means that the new government in the state, being piloted by the duo of Babajide Sanwo-Olu and Babafemi Hamzat as governor and deputy respectively, has a pretty piece of work cut out for them in the state’s land administration. More than in any other state of the federation, land is a very strategic factor of production in Lagos as it attracts greater value there than anywhere else in the country. It is still not clear, between land and tax, which one is the major source of the state’s estimated N30 billion monthly internally generated revenue.

But challenges remain in the state’s land administration and thesecomeasstatutory,bureaucratic and mundane issues. Omo-oniles extort property owners for inexplicable reasons, and those who muster courage to face them end up being harassed by thugs working for them. They demand cash from property owners to reclaim land and, most times, charge them at every stage of development of their property. These nefarious acts have inflicted severe pains on a number of property owners, with some losing their precious lives while fighting for their rights. The issue on land grabbing has not been totally eradicated, but Governor Sanwo-Olu has vowed to get rid of the menace. “One major problem of Nigerian government is that they lack the will to enforce law. Government’s laws are clusteredconcept, success on paper, but failure in reality. This is why land grabbing is still on the high-side till now” said Rasheed Osinowo, ChiefExecutiveOfficer,Osinowo & Associates. Two months ago, land grabbers shot three construction workers at a construction site in the Anthony area of Lagos. Two of the victims died on the spot, and the third person was confirmed so. Also, residents of Fowoseje community in the Lakowe area of Ibeju-Lekki in Lagos had, in November last year, decried the prevalence of land

grabbers in their community. Similarly, hoodlums suspected to be land grabbers attacked the Satellite area of Ojo Local Government in July last year, and unleashed terror on residents, vandalizing properties worth millions of naira. Najeeb Adeyemi, Head of Land Valuation at Lagosbased Ewenla & Mustapha Partners, hinged the menace on lack of practicality of government policies and low awareness of the citizenry about their rights as stipulated in the law. “The problem is that most of the Lagos State laws are theoretical and have always remained so. It is not usually practical enough to tackle the problem head on,” Adeyemi said. “Another problem is awareness. Most people are usually not aware of their rights as regards the law. Another is lack of enforcement. This, to me, is usually lack of political will on the part of government to go after defaulters” A property owner, Tiwalade Obafemi, who owns an ongoing building project in the Abule-Egba area of Lagos told BusinessDay about his ordeal in the hands of land grabbers. “I bought this land early last year from a land-owning family; got the necessary documents confirming me as the legal owner of the property, but I don’t have enough funds to start work on the land. Seven months after the acquisition, the Omo-onile started disturbing me, to pay

N200, 000 as one of their family members was not initially in the picture while sharing the sale money,” he added. PPL, which was signed on August 15, 2016, by former Governor Akinwumi Ambode, prohibits forceful entry and illegal occupation of landed property, violent and fraudulent conducts in relation to landed property in the state and for connected purposes in ensuring enforcement. ThePPLsetupaSpecialTask Force Unit affiliated with the Lagos State Ministry of Justice to arrest and prosecute defaulters. The section 2, 3 and 5 of

the law abolishes forceful or violent take over of any landed property by any individual or agent. It prohibits all forms of self-help and stipulates 10 years of imprisonment for persons who resort to the use of same. Section 4 is directed at illegal occupation of property, and states that any individual in occupation of a property as an encroacher or derived title or some form of licenses from an encroacher and has refused to leave upon request by the owner would be guilty of an offence. Section 6 stipulates that the execution of any court

judgement must be done in accordance with civil process act or any other law as provided for it and not by any law enforcement agencies, vigilante or ethnic groups. Section 7 relates to the act of encroaching on a land with firearm or any deadly weapon whatsoever. Such a person if found guilty is liable to imprisonment. Section 11 of the Law is by far the most popular provision of the Law. It prohibits the request for money by anyone acting for himself or acting as an agent in regards to construction activities stating that at no point must they disrupt construction.

New residential destination for low Office design and build firm expands focus to interior business income buyers as Badagry Homes beckons Design Business

CHUKA UROKO

iding on its successful outing in office design and build business in Nigeria, Space and Array Design Limited has, in collaboration with its foreign partners, expanded its focus with the launch of a new business division at its operational base in Abuja to handle fit-outs and interiors. Space and Array Design

offers a range of workplace services from space design, office fit out, office refurbishment and workplace consultancy work. It provides full turnkey projects, creating inspirational spaces for property owners, private companies, government parastatals and building consultancy teams. “Just as great design is imperative, we ensure that client’s designs are delivered

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exactly as they imagine them; we achieve a perfect balance between aesthetics, functionality and affordability,” Frank Nwoko, the company’s Business Development Manager, noted in a statement in Lagos at the weekend. The company has, over the years, been creating exceptional commercial spaces that encourages thought collaboration in the workplace and also increases productivity

and drives business performance. It understands that workspace environment is critical to organizations culture and it’s a key element to recruiting and retaining staff. Nwoko revealed that they don’t just design and fit out spaces, but also create brands that resonate with their client’s organizational enterprise. In addition, the company focuses on experiencedriven spaces highlighted by employee-focused and specialized enhancements for developing overall wellness towards cultivating happiness and boosting morale for everyone from interns to top executives. According to the business development manager, financing office design was a huge overhead for most organizations, which is why it’s very important to ensure that space is optimally utilised. “Space and Array is renowned for its innovative approach and ‘smart space’ planning techniques and are driven by only one singular goal and that is to create inspiring workplaces,” he assured.

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CHUKA UROKO

or low income earners who have the lofty dream of owning their own homes without having to break banks, a new residential destination is beckoning. That destination is the New Badagry Homes being developed by Pertinence Limited, a relatively young but dynamic real estate development firm. The new housing scheme made up of blocks of apartments comprising one-bedroom, two-bedroom and threebedroom apartments is part of the company’s ‘City Invasion’ initiative it started in 2018 with special focus on low income earners who also desire good houses in good locations. Officials of the company explained to BusinessDay in an interview that with the initiative, they started doing something that people would not ordinarily expect in such places, believing that they were not just estate developers but also city builders. “We are in a place like Badagry where we are developing theNewBadagryHomes.Weare doingitinsuchawaythatpeople @Businessdayng

must know that we are around because we must do something so significant that must attract attention. Our aim here is to open up Badagry for estate development so that people can experience that opportunity,” Sunday Olorunsheyi, Executive Director at Pertinence, explained. Olorunsheyi explained further that they came into real estate business with full understanding of the demand-supply gap in the market which tilts towards the low income segment of the housing market. “We told ourselves that we could be a part of the solution to this problem. This was how we started to look out for the low income class people. We started with them and then the middle income people,” he said, pointing out that their heart was with the low income people which was why 60 percent of their projects so far was for this group of home seekers. He noted that some of these people could notevenafford the costof a plotof land and thatwas how they began to demystify owning a plot of land by helping them to see or understand that their first land might not even be their dream land.

Tuesday 11 June 2019

BUSINESS DAY

BDTECH

In association with

E-mail: jumoke.akiyode@businessdayonline.com

Western Digital identifies Nigeria as key market for its data storage devices Ghassan Azzi is the senior sales manager, Africa for Western Digital Corporation, a global data infrastructure company. In this interview with Jumoke Akiyode-Lawanson, he talks about the company’s plans to establish and grow business across key markets in Africa. Excerpts. Why is it important for Western Digital to be in the Nigerian market at this time? he Western Digital Corporation has seen a lot of potential coming from not only Africa but Nigeria as well. Nigeria has a very dynamic young generation, were looking at about between 0 and 25 represent 65 percent of the population. This set of individuals are all connected, through either mobile phones or other devices. Asides this young generation, now if you would look at the educated people that have graduated, there are a lot of entrepreneurs coming up unlike before. This is something we think that is actually going to grow and support our product, we want to use our technology to enable them to help them grow their business.

What does Western Digital do to ensure data is secure? Well, with the high technology that we use in our products, it depends on what the customer requires from our product. Most of our products have security you can encrypt. So whether it is a small device or a big device, a flash or a hard drive, it depends on the consumer to enable and encrypt a password to protect the data that is in the device. But our hard drives and external drives all have some form of security you can password and even some of our flash drives as well have that option. At the end of the day it is up to the customer to decide. We offer that and the customer has to approve. Is there anything you’re doing to

Ghassan Azzi

get ahead of the competition? We are ahead of the competition because we are the only company that is available in Nigeria and has a presence with distributors officially. Our products are officially distributed by our distributors whether it is a Western Digital or SanDisk product. Other brands are not always readily available as they are being brought from other countries but not officially distributed in Nigeria. So we are already ahead of that aspect with our established distribution structure. Asides establishing our network, we are consistently carrying on our brand marketing. Whilst building our brand, we are doing all the education needed and develop-

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ing the channel which shows we are much ready. What is the business strategy for Nigeria and how do you intend to meaningfully impact the economy? As mentioned earlier, we started by being a special distributor. We have two core distributors that are taking care of our products and distributing our core revenue. We also have local people on the ground and expanding to other cities in the North and South. We are going to expand from Lagos and spread all over the market. Then later on when things develop further we will put more people on the ground to help us expand the

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business and enable the companies to have access to all our products. Western digital enables people and companies to have our storage, our technology. Will that add up to the economy? That is something I cannot say, but what we do with our technology is we give the best cutting edge technology to the consumer to enable them to have data stored in more products and most importantly we give them the peace of mind that if they store that data on our product it is safe and it stays there for almost forever.

has the response been? Have you seen growth in the Western Digital since you came to Nigeria? Definitely, so since we came to Nigeria we built the SanDisk brand and we built the trust, the confidence in the brand today. The people know where they can buy not just the product but the original product, Four-six months before we started doing this with the business. So in 2 quarters maybe we will have the same effect that we have on SanDisk on WD, which is how were going in the market and the business.

How many countries in Africa does Western Digital operate in, and what’s your biggest market? Nigeria is one of our top priority countries. We already exist in South Africa, North Africa, Egypt and East Africa and look to expanding across West Africa. We are at least in 20 countries today with direct distribution existing over there with our people, marketing abroad, our technology, our education and everything. However, we are building Africa step by step. Later on, we plan to expand outside those countries as well.

Have your efforts towards grey market activities been effective? It has been very effective, being on the ground, building relationships and establishing distribution networks by visiting our distributors, having a marketing plan with us and marketing as well has been very effective to make sure that those guys buy from us and buy the original products. Another thing worthy to note is that when distributors chose to buy products from outside, if a product gets damaged, they cannot serve their clients through Return Merchandise Authorization (RMA) hence there is no return system. With our distributors and the efforts that we have put in place, if someone buys a product, for instance, a hard drive and something happens, I can go back to my distributor and say “Can I replace it?” and then the distributor is comfortable knowing he can come back to WD and say; “listen I have an RMA, can you replace this?” So there is a lot of trust in the habit of the customer that if I buy here locally then it’s better than me going to buy outside.

Do you have any office in Nigeria? As at now, we do not have an office in Nigeria, but maybe in the future something can come of it, it’s not confirmed yet but as of now no. But in the future as things develop we might have an office. However, we currently have distributors running the business through our people, local people who are here on the ground. Since you came into Nigeria how

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Tuesday 11 June 2019

BUSINESS DAY

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

IBM’s AI and cloud technology to boost agriculture, reduce world hunger Stories by JUMOKE AKIYODE-LAWANSON

ccording to the UN Department of Economic and Social affairs, by 2050, the world will need to feed two billion more people without an increase of arable land. In light of this, multinational IT company, IBM, has announced that for the first time that it is providing a global agriculture solution which combines predictive technology with data from The Weather Company, an IBM Business, and IoT data to help give farmers around the world greater insights about planning, plowing, planting, spraying and harvesting. IBM is combining power weather data – including historical, current and forecast data and weather prediction models from The Weather Company – with crop models to help improve yield forecast accuracy, generate value, and increase both farm production and profitability. The company announced the global expansion of Watson Decision Platform for Agriculture, with AI technology tailored for new crops and specific regions to help feed a growing population.

“As a farmer, the wild card is always weather. IBM overlays weather details with my own data and historical information to help me apply, verify, and make decisions,” said Roric Paulman, owner/ operator of Paulman Farms in Southwest Nebraska. “For example, our farm is in a highly restricted water basin, so the ability to better anticipate rain not only saves me money but also helps me save precious natural resources.” New crop models include corn, wheat, soy, cotton, sorghum, barley, sugar cane and potato, with more coming soon. These models will now be available in the U.S.,

Canada, Mexico, and Brazil, as well as new markets across Europe, Africa and Australia. “These days farmers don’t just farm food, they also cultivate data – from drones flying over fields to smart irrigation systems, and IoT sensors affixed to combines, seeders, sprayers and other equipment,” said Kristen Lauria, general manager of Watson Media and Weather Solutions, IBM. “Most of the time, this data is left on the vine -- never analyzed or used to derive insights. Watson Decision Platform for Agriculture aims to change that by offering tools and solutions to help growers make more in-

formed decisions about their crops.” The average farm generates an estimated 500,000 data points per day, which will grow to 4 million data points by 20362. Applying AI and analysis to aggregated field, machine and environmental data can help improve shared insights between growers and enterprises across the agriculture. With a better view of the fields, growers can see what’s working on certain farms and share best practices with other farmers. The platform assesses data in an electronic field record to identify and com-

Sophos upgrades Intercept X to tackle new blended cyberattacks

ophos, a global network and endpoint security company has boosted its Intercept X for server and endpoint detection and response (EDR). Intercept X is the industry’s most comprehensive endpoint protection built to stop the widest range of threats. By adding EDR to Intercept X for Server, IT managers can investigate cyberattacks against servers, a sought-after target due to the high value of data stored there. Cybercriminals frequently evolve their methods and are now blending automation and human hacking skills to successfully carry out attacks on servers. This new type of blended attack combines the use of bots to identify potential victims with active adversaries making decisions about who and how to attack. The SophosLabs Uncut article; Worms Deliver Cryptomining Malware to Web Servers, underscores how easy it is for cybercriminals to leverage bots to discover soft targets. The report explains an automated at-

tack that can deliver a wide range of malicious code to servers that, as a class, tend to lag behind normal update cycles. Anatomy of a Blended Cyberattack Once the bots identify potential targets, cybercriminals use their savvy to select victims based on an organisation’s scope of sensitive data or intellectual property, ability to pay a large ransom, or access to other servers and networks. The final steps are cerebral and manual: break in, evade detection and move laterally to complete the mission. This could be to quietly sneak around to steal intelligence and exit unnoticed, disable backups and encrypt servers to demand high-roller ransoms, or use servers as launch pads to attack other companies. “Blended cyberattacks, once a page in the playbook of nation state attackers, are now becoming regular practice for everyday cybercriminals because they are profitable. The difference is that nation state attackers tend to persist inside networks for long lengths of time whereas common cybercriminals are after quick-hit money making opportuniwww.businessday.ng

ties,” s Dan Schiappa, chief product officer, Sophos said. “Most malware is now automated, so it’s easy for attackers to find organisations with weak security postures, evaluate their payday potential, and use hand-to-keyboard hacking techniques to do as much damage as possible,” he added. Sophos Intercept X for Server with EDR With Sophos Intercept X for Server with EDR, IT managers at businesses of all sizes now have visibility across an entire estate. This allows them to proactively detect stealthy attacks, better understand the impact of a security incident and quickly visualise the full attack history. “When adversaries break into a network, they head straight for the server. Unfortunately, the mission critical nature of servers restrains many organisations from making changes, often significantly delaying patch deployment. “Cybercriminals are counting on this window of opportunity. If organisations do fall victim to an attack, they need to know the full context of what devices and servers were hit in or-

municate crop management patterns and insights. Enterprise businesses such as food companies, grain processors, or produce distributors can then work with farmers to leverage those insights. It helps track crop yield as well as the environmental, weather and plant biologic conditions that go into a good or bad yield, such as irrigation management, pest and disease risk analysis and cohort analysis for comparing similar subsets of fields. The result isn’t just more productive farmers. Watson Decision Platform for Agriculture could help a livestock company eliminate a certain mold or fungus from feed supply grains or help identify the best crop irrigation practices for farmers to use in drought-stricken areas. Watson Decision Platform for Agriculture is built on IBM PAIRS Geoscope from IBM Research, which quickly processes massive, complex geospatial and time-based datasets collected by satellites, drones, aerial flights, millions of IoT sensors and weather models. According to the company, the platform crunches large, complex data and creates insights quickly and easily so farmers and food com-

panies can focus on growing crops for global communities. IBM and The Weather Company help the agriculture industry find value in weather insights. IBM Research collaborates with startup IBM also works with crop nutrition leader Yara to include hyperlocal weather forecasts in its digital platform for real-time recommendations, tailored to specific fields or crops. IBM acquired The Weather Company in 2016 and has since been helping clients better understand and mitigate the cost of weather on their businesses. Also just announced, Weather Signals is a new AIbased tool that merges The Weather Company data with a company’s own operations data to reveal how minor fluctuations in weather affects business. The combination of rich weather forecast data from The Weather Company and IBM’s AI and Cloud technologies is designed to provide a unique capability, which is being leveraged by agriculture, energy and utility companies, airlines, retailers and many others to make informed business decisions.

Abioye, Fintrak boss honored at smart cities forum 2019 der to improve security as well as answer questions based on stricter regulatory laws. Knowing this information accurately the first time can help businesses resolve issues much faster and prevent them from a repeat data breach,” said Schiappa. “If regulators rely on digital forensics as evidence of lost data, then businesses can rely on the same forensics to demonstrate their data has not been stolen. Sophos Intercept X for Server with EDR provides this required insight and security intelligence.” Sophos Intercept X for Server with EDR expands Sophos’ offering of EDR, which was first announced for endpoints in October 2018. Sophos EDR is powered by deep learning technology for more extensive malware discovery. Sophos’ deep learning neural network is trained on hundreds of millions of samples to look for suspicious attributes of malicious code to detect never-before-seen threats. It provides broad, expert analysis of potential attacks by comparing the DNA of suspicious files against the malware samples already categorised in SophosLabs.

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imbo Abioye, the founder and managing director of Fintrak Nigeria Limited, an indigenous fintech company in Lagos was recently honored at the smart cities forum 2019, for his strides in Nigeria’s information technology sector. Bimbo Abioye said he appreciates this award and recognition, as it shows that the company’s impacts are being recognized. “This award is encouraging, not only to me but to the Fintrak team and other indigenous ICT firms. We appreciate this award, we didn’t see it coming but we must be honest, we thank the organisers of this event for this and we are promising them that we wouldn’t rest on our oars in providing quality financial software and solutions to Nigerians and Africans. “Over the years, Fintrak has grown to be an international company providing solutions to tons of countries outside Nigeria. With physical presence in many African countries such as Ghana, Kenya, Central Africa etc. we have tried as much as possible to make impact in the African banking ecosystem. Our solutions such as IFRS, Risk @Businessdayng

management software’s and a host of others come in English and French languages, this is to demonstrate our pan African outlook. We believe that this award is in line with our strides and that of our vision”, Bimbo Abioye added. Adebayo Shittu, the minister of communication technology encouraged the award recipients to continue with the good works, which is changing the technology narrative and adoption in the country. Yemi Osinbajo, vice president, in his opening remarks tasked Nigerians to build smart systems that would power the country as we enter the fifth industrial revolution. Speaking about the company and what has achieved over the years, Ladi Ipioye said; “Fintrak is a global financial technology organisation providing innovative technology and business solutions to financial institutions in the financial services sector and enterprises across continents. With business offices in Nigeria, Ghana and Gambia and an army of software engineers and professionals with competencies across banking, finance, audit, consulting and software development.”

Tuesday 11 June 2019

BUSINESS DAY

Investments

ENERGY INTELLIGENCE OIL

GAS

PETROCHEMICALS

Market Insight Companies Commodity Tracker Policy

POWER

Amni International plans drilling of exploration well in Tubu oil field DIPO OLADEHINDE

igerian independent oil firm Amni International Petroleum Development Company Limited is preparing to drill important exploration development well and is also aiming additional resources at its Tubu oil and gas field in shallow water southeast Niger Delta. According to an Oslo-based media, the drilling of important exploration development well is expected to kick off within weeks from now on its Nigerian assets which is aimed at increasing the company’s current production from 20,000 bpd to about 50,000 bpd and about 700 mmscfd of gas per day while the company is also aiming to spud a delayed deep-water wildcat towards the end of this year on its Central Tano block in Ghana. The undeveloped discovery is the main asset in the Oil Mining Lease OML 52 that Amni purchased from Chevron in 2013 who had previously performed a 7-well appraisal on the field. OML 52 is a shallow water block in the southeastern Niger Delta containing the Tubu oil and gas discovery. The block partially straddles Bonny Island where the Bonny oil

terminal and NLNG are located. Tubu was appraised by ChevronTexaco in the 2000s, together with comprehensive geological studies and advanced development plans. Tunde Afolabi, Chairman of Amni International Petroleum Development Company said it would cost the company over $3 billion

to develop all its assets at Tubu, Okoro, and IMA fields. “We have about 45 million barrels of oil in Tubu, about 45 million barrels of oil in Okoro, and 3.2 trillion cubic feet (tcf) of gas between Okoro and IMA. We recently went on a roadshow to get companies, financial institutions, and off takers to look at our assets and investment

opportunities, where we received a positive response,” Afolabi told BusinessYear.com last year. The chairman of Amni International who is also the CEO said the company have also reached out to banks in Europe and the US, who are currently going through the due diligence process. Afolabi said the ultimate goal

of 200,000 bpd is realizable within three to four years as Amni International is pursuing several assets in the region as well as a prospective license in Ghana, where the field could easily yield 70,000 bpd. Recall last year Reuters reported, Guaranty Trust Bank and Shell’s local arm agreed a $270-million oil-backed loan to Amni International. Amni said the loan would be used to further develop its Ima and Okoro/Setu fields. “We are excited to work with GT Bank and Shell as commercial and financial partners to enable the realisation of Amni’s ambitious plans for growth,” Amni’s chief executive Tunde Afolabi told Reuters. Amni operates OML 112, OML 117 and OML 52 in Nigeria with average production of 16,000 bopd. OML 52 is a shallow water block in the southeastern Niger Delta containing the Tubu oil and gas discovery. Indigenous company Amni International plans to develop the field with a wellhead platform tied into Amni’s existing Ima facilities, 10 kilometres to the south on OML 112. The initial phase will focus on developing the oil, with five development wells. Associated gas will be extracted at Ima, and re-routed to Tubu for re-injection.

Nigeria may not profit from China’s infinite LNG thirst STEPHEN ONYEKWELU

hina’s demand for Liquefied Natural Gas (LNG) is bound to shoot through the roof, indicating the world most populous nation’s move away from dirtier to cleaner forms of fossil fuels but Nigeria may not benefit from this demand curve. SIA Energy, a Chinese energy consulting firm estimates that demand for imported liquefied natural gas in China will more than double in size, from its current benchmark of less than 40 million tonnes per annum (mtpa) to 90 mtpa by 2030. Dulles Wang, director for Wood Mackenzie director Dulles Wang told Canadian energy news source JWN that “between 2020 and 2040, over the next 20 years, we are expecting the gas market to expand by close to 40 percent. About two-thirds of the growth, in terms of gas demand is going to come from China.” China is pushing away from fossil fuels and setting extremely lofty goals for decreased carbon emissions in the very short term as well as the long term. In order to meet the country’s lofty anticoal goals, China will need to significantly increase their imports of

liquefied natural gas, as at present just about 57 percent of the country’s natural gas demand can be met with domestic supply. “Except Chinese LNG buyers get in on Train 7, which awaits final investment decision later this year, there is no chance that Nigeria’s LNG cargoes will find their way to China. LNG projects are usually fully booked before they take off. Nigeria has very little spare capacity for the spot market”, said Victor Eromosele, former chief financial officer at Nigeria LNG Ltd. In 2018, the buzz term in the natural gas world was the alarmist cry of “stranded assets”, with headwww.businessday.ng

lines shouting that overproduction of shale oil and gas in North America would leave markets oversaturated with product and infrastructure soon to become obsolete thanks to the rise of more affordable wind and solar. Since then, there have been just as many think pieces and reports tempering the stranded asset panic with assurances that natural gas is here to stay. “U.S. LNG export to China is already seriously affected by the 10 percent tariffs in effect from last year, and we expect it to continue to be so as long as the tariff is imposed”, Per Magnus Nysveen, Rystad Energy head of analysis said.

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Increased China tariffs will create additional headwinds for U.S. LNG projects that are currently awaiting final investment decisions (FIDs). If LNG prices continue to linger around their current low level for an extended period of time, some of the more expensive LNG projects could struggle to offer competitive terms to buyers—and this could result in FID deferrals. Most of these projects need to secure long-term contracts in order to get financing for their development. China is expected to be one of the biggest contributors in sponsoring new LNG projects @Businessdayng

over the coming years, and there will be a reluctance to sign new deals with US projects as long as this trade war persists. Texas-based Cheniere Energy and China Petroleum and Chemical Corp (Sinopec) agreed late last year on a 20-year deal that would supply 2 mtpa of LNG to China starting in 2023. This deal could have been signed once the trade tensions were resolved, but due to the heightened tensions, this has not happened. Sinopec, a latecomer to China’s LNG scene compared to domestic rivals China National Offshore Oil Corp (CNOOC) and PetroChina, has said it wants to more-than-double its receiving capacity over the next six years to around 41 million tonnes annually, by building three new terminals along China’s east coast and expanding existing facilities. China’s growing hydrocarbon demand, including its insatiable natural gas and LNG demand, will see more Chinese funds transferred to oil and gas players, a predicament The U.S. found itself in after 1970 when oil production in the country peaked, then started heading south, just as consumption was gathering steam from an unprecedented amount of drivers and automobiles on the road.

Tuesday 11 June 2019

BUSINESS DAY

ENERGY INTELLIGENCE Explainer

How production sharing contracts work and why Nigeria’s need a review STEPHEN ONYEKWELU

igeria is stuck with production sharing contracts (PSC) with fiscal terms that have been described as unfavourable to Africa’s biggest crude oil producer and calls for a review. PSC is an arrangement used in the upstream sector for the exploration and development of petroleum resources and refers to an agreement between a contractor and a government whereby the contractor bears all exploration risks, production and development costs in return for its stipulated share of (profit from) production resulting from this effort. The costs incurred by the contractor are recoverable in case of commercial discovery. This means PSC is a fiscal regime existing in the exploration and production of hydrocarbons. Metaphor of crop sharing Imagine a landlord who owns a vast expanse of land believed to be fertile and could produce certain kinds of cash crop for export. But the landlord has three problems to resolve. The first is that the patches of land on the vast expanse are not equally fertile and this needs to be determined. Secondly, the landlord has neither technical nor financial competence to solve the first problem. Third, the landlord needs to find someone who has these competencies.

When the landlord finally finds someone with the needed competencies, they have to agree that at harvest, both landlord and the one brought in for technical and financial competences will be paid using a corresponding measure of crops produced according to a predetermined formula. This is the basic principle governing production sharing contracts. Nigeria adopts PSCs In the early 1990s, when Nigeria sought to increase its petroleum production through the exploration and development of the offshore and inland basin, the Federal Government adopted the PSC as the most appropriate upstream petroleum contract that would be suitable for the award of acreages. PSC was considered fitting as it would not bring about any financial burden on the government like the joint venture (JV) arrangement where there were challenges of meeting cash call obligation. Prior to the 1990s, Nigeria used the PSC arrangement in 1973 for the development of two oil prospecting licences. Key areas for review There is no universal model or standard PSC, each developing country with hydrocarbon deposits has developed its variant of the contract over the years. The 1973 PSC covered two oil prospecting licences

(OPLs). A number of shortcomings were associated with this PSC. It was executed when Nigeria had little or no knowledge about the concept of a PSC and the model terms that could benefit the country. The amended 1973 PSC was replaced with another PSC in 1994, which had the basic terms in the model PSC that was used in the award of acreages in the 1991 licencing round in Nigeria. In the early 1990s, when the Federal Government offered the first set of deep offshore and inland basin acreages, it stipulated that all new petroleum exploration contracts would be on a PSC basis. In response to the demands of foreign investors, the Federal Government on the 23rd of March

1999 enacted the Deep Offshore and Inland Basin Production Sharing Contracts Act. The PSC Act was enacted to demonstrate the Government’s commitment to the PSC arrangement. Section 19 of the Act backdated the commencement date of the Act to the 1st of January 1993 so as to make it applicable to the 1993 PSCs executed before 1999. Between 1991 and 2007, five licencing rounds (1991, 2000, 2005, 2006 Mini, and 2007) have been conducted by the Government in which three different models of PSCs have emerged from the PSCS executed and they are 1993 PSC, 2000 PSC and 2005 PSC. Taiwo Adebola Ogunleye, Department of Business Law, Faculty

of Law, Obafemi Awolowo University, Ile-Ife has argued that the negative aspect of this Act is that it has removed the flexibility that is usually associated with PSC and has effectively tied the hands of government by specifying the rate of taxes and royalty without stipulating a convenient way to review these provisions without having to amend the Act through legislative process. Section 16 of the Act provides for a periodic review of the Act and a review of the provisions if the price of crude oil exceeds $20 per barrel. It, however, did not prescribe how it should be done whether by a regulation or by an executive order. The absence of a mode of review has created ambiguity and a lacuna in the Act.

Nigeria’s Crude oil exports decreased by 7.78% in Q1 2019- NBS …5.67% lower than Q1 2018 DIPO OLADEHINDE

ata from the National Bureau of Statistics (NBS) has showed Nigeria’s crude oil exports which still cover a huge chunk of Nigeria’s total export of 74.45 per cent recorded a decline in the first three month of 2019 (Q1,2019) of 7.78percent compared to the last three month of 2018(Q4 2018). This implies that despite the decline, Nigerian economy is still reliant on crude oil for foreign exchange earnings and by extension government revenue. According to the latest data from the state’s statistical agency, Nigeria recorded a total crude oil export of N3.3 billion in Q1 2019 which was 7.78 percent lower than Q4 2018 and 5.67percent lower than Q1 2018. How the oil and gas sector performs matters because slightly over 50 percent of revenue projections for the 2019 fiscal year is predicated on strong growth in the sector. The proposed federal government budget is anchored around revenue projections of N6.97 trillion for the 2019 fiscal year. Further, breakdown revealed in January 2019 Nigeria’s total crude oil export was valued at N1 billion, while in February and March the country recorded N1.12 billion and N1.19 bil-

lion respectively. From the oil sector, the Federal government is expecting revenue of about N3.73 trillion, while N710 billion will come from the proceeds of government equity in Joint Ventures. A shrinking oil sector will pose more difficulties to the federal government’s ability to spend. And government still remains the largest spender in Nigeria’s economy. Also, the value of other oil products exports which represent 12.22percent of Nigeria’s total export decreased by 1.42per cent compared to Q4 2018, and 1.44 percent compared to Q1 2018 while energy goods exported decreased in value by 1.3 percent www.businessday.ng

compared to Q4, 2018 but increased by 2.17 percent when compared with Q1 2018. The Nigerian oil and gas industry is currently experiencing declining reserves owing to reduced exploration due to the absence of clear fiscal policy, experts have continually said. This has retarded investments flows into the sector. Militancy in the Niger Delta, Nigeria’s major oil producing area has caused much concern also. The sector suffers from an investment gap of $100 billion and in the last two years, according to Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, the sector has drawn in $40 billion, which

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represents 40 percent of the total gap. “Banks are sceptical about lending to the oil sector because of the large volume of non-performing loans on their balance sheets due to previous lending to the sector. This has also affected commencement of new projects”, Ayodele Oni, energy partner at Bloomfield Law Practice said. “It is also a no-brainer that investors are sitting on the fence because the Petroleum Industry Governance Bill has not become law, no clarity in the sector yet.” The federal government projected N3.73 trillion as oil revenues figure was derived from two presumptions; first, that in the year, oil will sell at a projected US$60 per barrel; second, that oil production will hit 2.3 million barrels per day. Daily crude oil production estimate of 2.3 million barrels per day is the same amount as budgeted for the 2018 fiscal year. But average daily oil production, according the first quarter GDP report stood at 1.96million barrels per day (mbpd), lower than the average daily production of 1.98mbpd recorded in the same quarter of 2018 by -0.02mbpd but higher than the fourth quarter 2018 production volume by 0.05mbpd. The level of oil output during the quarter was the @Businessdayng

highest recorded over the past one year and the second highest since mid-2017. Lack of exploration and production has made the sector to stagnate. Nigeria’s African oil producing peers, such as Angola, Uganda and Ghana have clear plans regarding oil licensing and bid rounds but not Nigeria. In Nigeria, stakeholders in oil and gas industry are still left guessing about when a major licensing round or at least a marginal fields bid round will be held amid a lull in exploration activities. Similarly, Oni has said the government loses a huge amount of revenue daily by not conducting a licensing bid round but this loss is not truly only accountable to the protraction in conducting a bid round. “Nigeria has lost more from nonproducing marginal field licences which it has estimated could cumulatively produce an average of 90,000 bpd of crude,” Oni, energy partner at Bloomfield Law Practice said. Some of the factors militating against producing marginal fields range from inappropriate due diligence to technical or financial challenges and it is pertinent that these challenges be addressed before conducting another bid round, experts have said.

Tuesday 11 June 2019

BUSINESS DAY

offgrid Business

Our cold storage units have increased customers’ income by 50% - Ikegwuonu Farmers lose nearly 40 percent of harvest to inability to preserve produce. Market women selling fruits and vegetables also record massive losses for the same reason. ColdHubs, established solar-powered walk-in cold rooms in 2015 and is helping cut these losses and delivering value to farmers and market women says Nnaemeka Ikegwuonu, the firm’s CEO in this interview with ISAAC ANYAOGU.

rom 2015 till now what milestones have you achieved? ColdHubs have being able to deploy five operational ColdHubs, with three in Imo state, two are in kano State from from which the startup is further expanding by doing another set of 35 right now. Two operational ColdHubs will be going to Akwa Ibom for Fish preservation which will be its first entering into fish storage funded by Allon energy impact investors, additional five cold rooms will be going into Abuja and Imo state that is being supported by the Swiss foundation, another 20 is being supported by USAID, and while another seven by UKAID, but the great thing there is from an operational ColdHubs the company boasts of 450 customers. When it’s first started market women easily say they don’t put tomatoes in fridge because it will spoil, however those women are ColdHubs chief customers today. The company have being able to increase its customers income by an estimated 50 percent which was done by investigated study. ColdHubs have also created 10 new jobs for women by recruiting and training them to be hub operators mad market attendants in the markets and is also deploying 35 new cold rooms which will serve an estimated 3,500 farmers, wholesalers and fishermen.

Nnaemeka C. Ikegwuonu - CEO However, if you are able to fill that coldroom up from day one you can generate that income within 12 months but considering the fluctuations in currency and FX, with one ColdHubs you can breakeven in 24 months (two years) that’s is giving room for FX challenges and so on.

What has being ColdHubs acceptance level? The acceptance can be seen from the perceptive that all of our ColdHubs are filled up like we are filled to 150 crates everyday across all our operational sites. When we started this work, we received about two to three baskets of tomatoes every day while in some we received one basket, however today we have being able to achieve more because we started what we called the post harvest educational model. We develop educational comic, translated into Ibo, Hausa and Yoruba which we use to conduct a five days training class as we enter into a market or farm on the whole value chain of post harvest management which build relationship and enhance acceptance, which of cost is the game changer. How has the regulatory environment being? And how can we make it better? Nigeria has the challenge of power, and for me if you want to solve the power challenge, we need to start thinking about how to make the off-grid sector perform very well. We have a 40 feet container filled of batteries in Onne port and part of our challenges is that we pay 20 percent duties on those batteries; we also pay

You alluded to having support from some international agencies earlier, cumulatively can you put a figure to amount of funding has come in? Cumulatively it will be difficult to put a figure on it because we have not concluded our negotiations with USAID we don’t know the actual funding they will be extending to us. For example the funding from Allon was to build two ColdHubs while the UKAID funding was for seven cold rooms. One cold hubs cost $27,000 to build which include cost of power infrastructure, solar panels, battery, inverters, shipping, clearing from custom and bringing from Onne seaport which will move to our warehouse and many more.

duty on imported solar and imported inverter. The point is the regulatory environment does not encourage small and medium scale enterprise in any way, because you are going to pay a credible amount of money to clear goods which you could have use to support the deficient power sector in Nigeria or support National development, because it’s actually power that drives the economy or key to industrialization. Unlike everywhere else in the world were its always friendly, regulatory environment its seems harsh in Nigeria and when I talk about regulation am not talking about Nigerian Electricity Regulatory Commission (NERC) or Ministry of Power am taking about this little agencies that we interface with everyday in the course of doing business. Part of what we are doing at ColdHubs is we are building lot of refrigerated warehouses across the country. The second phase of our development is food logistics, which involves bringing food in a safe and hygienic model from the north to the southern part of Nigeria and also takes apples and grapple imported from South Africa from the southern part of Nigeria up to the northern part of Nigeria. For example from Kano to Owerri there are more than 30 checkpoints from touts, community youths, police, civil defense among others waiting to harass businessmen. So it’s like everybody is against a businessman. Frankly speaking it’s very difficult to do business in Nigeria and the government can do better by easing the ease of doing business by making policies and program friendly. Majority of the funding in the sector have being foreign investment why don’t we have local investors? First, majority still doesn’t believe in renewable energy, secondly there is no real hard financial data yet on the returns that can be interrogated back and front. For example, the banks return can be interrogated, the Oil and gas sector which have all witness shocks can be interrogated unlike the OffGrid sector which is yet to witness any shock.

LevelTen Energy raising $20.5 million shows Nigeria how to attractive investment in Renewable energy DIPO OLADEHINDE

he news of Washington based renewable startup firm LevelTen Energy raising $20.5 million in Series B funding holds much lessons on how much funding Nigeria can raise in its renewable energy space if the right fiscal and monetary policies are put in place. The fund raising by LevelTen Energy will be an eye-opener for Nigeria’s energy stakeholders who are faced with a big challenge of attracting funds to a country who despite having bountiful renewable energy resources is yet to make any significant addition from renewables to boost electricity supply. The round which brings the total investment of LevelTen Energy to $27.3million, will allow the company use the funds for new headcount, product development and international expansion to expand its footprint internationally. “Historically, excessive market opacity, cost and risk prevented all but a select group of Fortune 500 buyers from signing utility-scale power purchase agreements. This exclusionary problem is one we’re committed to addressing,” said Bryce

Smith, CEO and founder of LevelTen Energy told TechStartup.com. Investors in the round included the venture arms of utility and energy companies like Constellation Technology Ventures (the investment arm of Exelon Corp.), Equinor Energy Ventures and Total Ventures. The financing was led by Prelude Ventures, with participation from other financial investment firms including Element 8 Fund, Founders’ Co-op, Techstars Ventures and Wireframe Ventures. Overall, companies have procured more than $1 billion of renewable energy through LevelTen. The company has also aggregated a procurement deal for Bloomberg, Cox Enterprises, Gap, Salesforce and Workday.

LevelTen Energy, a renewable energy procurement company was founded in 2016 to expand the market for renewable energy by facilitating frictionless clean energy procurement for corporate and other large buyers that is able to reduce the cost, complexity, and risk of renewable energy power purchase agreements through analytics and process best practices. Stakeholders believed in Nigeria the government has not demonstrated the political will to make investment into renewable energy more attractive to private investors. And two issues stand out in this regard namely, cheaper financing and lower taxes. For instance, the current Central Bank of Nigeria (CBN’s) benchmark lending rate of 14 per cent and commercial bank lending rate of 20-25 per cent are considered too high for investors who require capital to startup businesses such as in renewable energy. In contrast, the rates are substantially lower in other countries that have moved far in the development and usage of renewable energy such as China, US and India. While it is about 9.45 per

Analysts: Isaac Anyaogu (Team Lead), Stephen Onyekwelu, Dipo Oladehinde

cent per annum in India, for instance, the lending rates are at average of 4.3 per cent per annum in the US and China. From an investment point of view, renewable energy also holds promises. Although, most renewable energy technologies have high up-front capital cost compared to conventional energy alternatives, renewable energy sources have low operational and maintenance costs; they are also more easily replenished. “It’s not a quick money market, its capital intensive and there are no quick solutions to it. Proper Off grid solutions takes a while to recoup investment and you have to be more innovative .you have to work really hard to get your money market but it is the solution to Nigeria’s energy problem,” The team at Lagos based renewable energy firm Rensource, told BusinessDay. From a strategic and investment point of view, as well as from a technological and environmental perspective, renewable energy sources are acknowledged globally as viable option to diversify power generation mix and significantly boost electricity supply.

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email: isaac.anyaogu@businessdayonline.com, stephen.onyekwelu@businessdayonline.com, oladehinde.oladipo@businessdayonline.com

Tuesday11 June 2019

BUSINESS DAY

Live @ The Exchanges Stocks shed N48bn as investors sell Unilever, CCNN, 18 others Stories by Iheanyi Nwachukwu

he Nigerian stock market closed on a negative note on Monday June 10 after carrying over last week’s bearish sentiment into the new week. As a result, the value of listed stocks on the Nigerian Stock Exchange (NSE) depleted further by N48billion. Only fourteen (14) stocks gained against 20 losers. While the week got off to a slow start with no drivers to boost market performance, some analyst foresee another session of mild declines on Tuesday. Amid the absence of any catalyst capable of influential the direction of the market, the current market levels, analysts said pose an attractive entry point for unexposed investors. Top on the list of stocks that investors offered for sale include Unilever Nigeria Plc, CCNN Plc, MTN N Plc,

Dangote Flourmills Plc, and NAHCo Plc. The valued of listed equities decreased from N13.402 trillion to N13.354trillion, down by N48billion. At the close of trading by 2:30pm on the 9th floor of the NSE, the shares of Unilever Nigeria Plc took the topmost loser’s position. It decreased from N30.95 to N28.6, down by N2.35 or 7.59percent. Cement Company of Northern Nigeria Plc followed on the list of top losers. Its share price decreased from N15 to N13.5, after losing N1.5 or 10percent. MTN Nigeria Communications Plc declined from N136.5 to N136, losing 50kobo or 0.37percent. Also on the offer side included the shares of Dangote Flourmills Plc which was down from N16.4 to N16, losing 40kobo or 2.44percent; while NAHCO Plc decreased from N3.39 to N3.06, losing 33kobo or 9.73percent. The NSE All Share Index (ASI) decreased by 0.36per-

cent, from 30,432.13 points to 30,322.19 points. On the gainers table, Forte Oil Plc stocks led other advancers after moving from N25.75 to N26.5, adding 75kobo or 2.91percent. UAC-Property Development Company Plc rallied from N1.5 to N1.65, adding 15kobo or 10percent; GTBank Plc went up, from N30.4 to N30.5, adding 10kobo or 0.33percent. UAC of Nigeria Plc also gained, from N6.3 to N6.4, adding 10kobo or 1.59percent; followed by Flourmills Nigeria Plc which moved up from N13.9 to N13.95, adding 5kobo or 0.36percent. The stock market’s yearto-date (ytd) negative returns widened to 3.53percent. Investors exchanged 247,392,557 units valued at N3.484billion in 3,434 deals. Zenith Bank Plc, GTBank Plc, ETI Plc, Custodian Investment Plc and FBN Holdings Plc were actively traded stocks.

SEC adheres to Court Orders, suspends Oando’s proposed AGM

he Securities and Exchange Commission (SEC) and the Economic and Financial Crimes Commission (EFCC) have agreed to collaborate in combating crime in the Nigerian capital market. This agreement was reached when the Management of the SEC met with the Management team of the EFCC at the EFCC Corporate Headquarters in Abuja weekend. Acting DG of the SEC, Mary Uduk who led the team, said the visit was necessary in order to close ranks in the face of re-awakening of Ponzi schemes, cybercrime and other fraudulent activities that have engulfed the market in the last few years. Uduk also stated that the visit was aimed at revisiting the Memorandum of Un-

derstanding (MoU) signed between the SEC & EFCC on January 19, 2017. According to Uduk some areas where the MoU seeks Cooperation of both Agencies includes training, secondment of middle cadre officers of the SEC to the EFCC and those of the EFCC to the SEC, cross boarder asset seizure, repatriation of stolen funds from the Capital market and prosecution of offenders amongst others. “We have had reasons to work together on some cases in the past. There is no better time for the SEC and EFCC to collaborate more closely than now” she added. Responding, the Acting Chairman of the EFCC, Ibrahim Magu thanked the Executive Management of the SEC for the gesture and stressed

the need to strengthen collaboration between both agencies. Magu also assured the SEC team of the EFCC’s support in ensuring that clauses embedded in the MoU are executed given the magnitude of fraudulent activities currently on going in the country. He reiterated the need for joint training of staff of both organizations, and said there is need to review the MoU in order to achieve both organisation’s objectives. On the rising spate of Ponzi schemes in the country, Magu stressed the need for more sensitization campaigns between the SEC and the EFCC to ensure unsuspecting Nigerians do not continue to lose their hard earned money.

Lafarge further delays release of its audited result

afarge Africa Plc is optimistic that all the issues relating to the late filing of its audited financial statements for the year ended December 31, 2018 will be fully resolved and the audited financial statements will be submitted to the Nigerian Stock Exchange (NSE) not later than June 28, 2019. The company disclosed this in a notice dated June 10, signed by Adewunmi Alode, its Company Secretary and released to the investing public at the Nigerian Stock Exchange. At N10 per share, Lafarge Africa Plc stocks have declined by 19.7percent this year underperforming the

NSE All Share Index (ASI) which is down by 3.53 percent year-to-date (Ytd). Lafarge Africa Plc added that the approval of the Nigerian Stock Exchange has been sought for the delay/late filing of the Audited Financial Statements. “This is to notify our esteemed shareholders and other stakeholders of a further delay by Lafarge Africa Plc to release/publish its annual Audited Financial Statements for the year ended 31st December 2018 as required by extant Rules of the Nigerian Stock Exchange”, the statement by Lafarge Africa Plc reads. According to the statement, “the delay is neces-

sitated by pending actions required for the resolution of key matters relating to the closure of the Company’s annual Audited Financial Statement for the year ended 31st December 2018.” Lafarge Africa Plc had earlier this year concluded a Rights Issue, which it said recorded 100percent subscription. Lafarge Africa issued to existing shareholders 7,434,367,256 ordinary shares of 50 kobo each on the basis of six (6) ordinary shares for every seven (7) ordinary shares held as at December 4, 2018 at N12per share. The Rights Issue which had opened on December 17, 2018 closed on January 28, 2019.

Tuesday 11 June 2019

Solid Minerals BUSINESS RJC endorses Kian Smith Gold Refinery Stories by JOSEPH MAURICE OGU

esponsible Jewellery Council (RJC), a standard setting and certification organisation, recently endorsed Kian Smith Gold Refinery, the first-ever gold refinery company in Nigeria, to its membership. RJC, which covers all parts of the jewellery supply chain from mine to store, developed standards and provides certification that confirms the compliance of companies with social, environmental and ethical standards. With the endorsement of Kian Smith, it shows that the company has complied with the world standard in gold chain, including procurement and processing. Nicole Smith, Event Manager, Gold West Africa, said the company has demonstrated its compliance in adhering to the global ethical

standard in gold supply chain. “It is increasingly important in the global markets to show transparency and conflict-free in sourcing for minerals,” she said. According to Smith, a big component of responsible sourcing is not just about the legality of the source, but also ascertaining that chemicals harmful to lives and the environment are not involved in the gold value chain. In this regard, the company has been working and educating suppliers around the country to make sure that they meet all requirements necessary to comply with Organisation for Economic Cooperation and Development (OECD)’s responsible supply chain guidelines. Presently, there is no gold standard recognised in Nigeria or the West African region. Later this month, the company will be having a conference that is centred on gold chain,

where it plans to discuss and tackle the possibility of having ECOWAS region to adopt uniform international standards for gold. At the conference, the Standards Organization of Nigeria (SON) will be shedding some light on its recent efforts in gold standard while United Nations Industrial Development Organization (UNIDO) will be speaking about its efforts to address environmental issues in Nigeria and the West African region. Fagbemi Aremu, a local miner resident in Ilaro, Ogun State, said, though he has not come in contact with the company, the news he had heard about an incoming gold refinery company would give value to their work, instead of being exploited by foreign buyers. “With this company, we will have more money and our economy will be improved,” Aremu said.

BUSINESS DAY

POLITICS & POLICY Okowa congratulates Oborevwori, Ochor on their emergence as speaker, deputy ...Seeks Assembly’s co-operation for a stronger Delta FRANCIS SADHERE, Warri

elta State, Governor Ifeanyi Okowa, on Monday congratulated the member representing Okpe Constituency, Rt. Hon. Sheriff Oborevwori and his Ukwuani Constituency counterpart, Hon. Ochor Christopher Ochor on their election as Speaker and Deputy Speaker of the 7th Delta State House of Assembly. Governor Okowa in a statement in Asaba lauded members of the 7th Assembly for their choice of Sheriff Oborevwori and Ochor Christopher Ochor as Presiding Officers of the 7th Assembly, noting that the duo will bring their experience to bear in the discharge of their duties. The governor also congratulated other members of the House for their victory at the 2019 polls and urged

them to bring their extensive knowledge and understanding of law making to the service of the state. “As governor of our dear state, I promise to give my total support to the House and anything that will be required to ensure that you discharge your responsibilities fully without any inconveniences”. According to the governor, members should be proud of their emergence to represent their various constituencies from the teeming population and therefore, they are duty bound to work for the overall interest of the state. “Our people have entrusted us with this special mandate with a resounding victory in the last elections, the least we can do for them is to ensure that we make good laws for the good governance, security of lives and property and ensure service to the people for a Stronger Delta, adding “We need to understand that as representatives

of the people, we must always consult with our constituents who sent us to the House and as messengers that we are, it is expected that we return home often to brief them on our representation.” “On behalf of the government and people of Delta State, I congratulate you all on your success at the polls and I wish you God’s help in yet another phase of your continuing service to the good people of Delta State,” the statement added. This followed the re-election of the speaker and his deputy. The Speaker also appreciated members-elect of the House for their show of solidarity and reposing confidence in him to carry on. “I sincerely thank you my dear colleagues for the trust placed on me to once again serve as Speaker of this noble Assembly for a second term. By this show of love and trust, we have today set an indelible record in the history of our State Legis-

Sanwo-Olu appoints acting Chief Judge …As Justice Oke bows out INIOBONG IWOK

B Source: The Ghana Chamber of Mines, Minerals Council South Africa

Ghana is top in Africa gold mining, as Nigeria loses out

hana has taken over from South Africa as Africa’s leader in the gold mining industry, data from both Ghana Chamber of Mines and Minerals Council South Africa, show. The data which cover a period of 2014 to 2018 show that, though Ghana’s output has not increased fantastically since 2014, South Africa’s productions have, however, dropped drastically over the same period. The reason for the shrinking of South Africa’s output has been attributed to the regular strikes, high cost of production and the difficulty of having to mine from the deep site mines in the country, which has been described as having the world’s deepest mines. Meanwhile, the biggest economy in Africa, Nigeria, is still struggling to get its house together in the mining indus-

try. Characterised with artisanal miners, unregulated mining activities and banditry, Nigeria is yet to make significant returns from its deposits of gold across over 15 states. With the current insecurity in the country, especially in Zamfara and other mining sites, Adamu Adamu, CEO, Adamu Resource, said that cumulatively, Nigeria loses several billions of naira on daily basis as a result of the loss in revenue, expenditure on security, displacement of miners and equipment, and loss of lives and properties. According to Adamu, if Nigeria had taken mining seriously like Ghana and South Africa, mining would have contributed significantly to the country’s Gross Domestic Product, probably ranking high in the mining index in Africa. “But presently, Nigeria is not known as a mining coun-

try,” he said by telephone to BusinessDay. Due to the challenges of mining in South African, some big players in the industry such as AngloGold Ashanti and Gold Fields are considering moving their interest to other countries, including Ghana. Hilary Nwagwu, a retired university don, said such companies are not looking towards Nigeria because Nigeria has not put in place what investors in the mining industry are looking for. Insecurity, geological mapping, modern laboratories, consistent government policy are some of the things investors in the industry look out for before going to invest their money in any country. According to him, if Nigeria had invested in mining industry over the years, the country would have been a choice destination for the miners leaving South Africa.

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abajide Sanwo-Olu, Governor of Lagos State has appointed Justice Kazeem Alogba as the Acting Chief Judge of the state. The appointment, however, follows the exit of Justice Opeyemi Oke, who is retiring from the state judiciary after statutory years of service. The outgoing Justice Oke’s tenure ends today, June 10, 2019. In a move which is in accordance with constitutional provisions, Governor SanwoOlu, approved the nomination of Justice Alogba, who is the most senior judge in line, to preside over the state

judiciary in acting capacity, pending the approval of the National Judicial Council (NJC) and confirmation by the Lagos State House of Assembly. In a statement by Gboyega Akosile, deputy chief press secretary, Sanwo-Olu said Alogba’s appointment would take effect from Tuesday, June 11, noting that the instant appointment of the Acting Chief Judge was necessary to prevent a vacuum in the state judiciary. According to the statement, “In accordance with Section 271 (1) and (4) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), His Excellency Babajide Sanwo-Olu,

Governor of Lagos State has appointed Honourable Justice Kazeem O. Alogba as the 17th Chief Judge of the state with effect from Tuesday 11th June 2019, in acting capacity. “Prior to his appointment, Justice Alogba was the most senior of the 58 Justices in the state judiciary, who was next to the outgoing Chief Judge, and had chaired the Committee on the review of the High Court Civil Procedure Rules, which culminated in the new High Court of Lagos (Civil Procedure) Rules of 2019 that came into force on 31 January 2019”. Justice Alogba is expected to be sworn-in on Thursday, June 13, in the Governor’s Office, Alausa at 10am.

Akwa Ibom assembly elects new speaker, other principal officers ANIEFIOK UDONQUAK, Uyo

he Akwa Ibom State House of Assembly has elected Aniekan Bassey of the People’s Democratic Party (PDP) from Uruan State constituency as its new speaker, bringing to an end months of debate on who would lead the 7th Assembly. All members of the assembly were elected on the ticket of the PDP though one member representing Essien Udim state constituency has yet to be issued with the Certificate of Return by the Independent National Electoral Commission (INEC). The motion for the nomi-

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nation of the new speaker was moved by Nse Essien from Onna State constituency and was seconded by Mark Esset from Nsit Atai state constituency. There were no other nominations. The party had zoned the position of the speaker to Uyo federal constituency which comprises four local government areas of Uruan, Nsit Atai, Uyo and Ibesikpo Asutan councils, according to sources close to the party. Checks showed that while Ibesikpo Asutan Local Government has produced the current Head of Service recently appointed by the governor, its representative was @Businessdayng

no longer in contention for the position. Similarly, the current member of the House of Representatives, Emmanuel Ekpenyong elected on the platform of the PDP hails from Uyo Local Government making the state council constituency ineligible to produce the speaker according to inside sources. Findings also showed that the speaker might have been elected after he had received the backing of the party and the need to ensure fairness in the distribution of political appointments in the state as Uruan Local Government has yet to have any key political appointee.

Tuesday 11 June 2019

BUSINESS DAY

INTERVIEW The main challenge of Islamic banking is lack of financial infrastructure - Hassan Usman Jaiz Bank is an Islamic-based financial institution that commenced specialised banking activities in Nigeria a few years ago. In this exclusive interview with BusinessDay team, the Managing Director/Chief Executive Officer (CEO) of the bank, HASSAN USMAN, speaks on the impact of the 2016 economic recession on the banking sub-sector, treasury functions, as well as the succour the FG’s issuance of two tranches of SUKUK brought to bear on the bank, and other financial and regulatory issues. Excerpts:

Looking at 2018, how did the bank fare and how has it been faring since the beginning of 2019 till this month? ur budget in the last two years has been constrained. You know we had a recession, so, it has touched every household and we try to minimise our cost because the infrastructure for Islamic financing is not yet 100 percent available. We are still struggling to ensure that the financial infrastructure to operate with is made available. Luckily, the federal government issued the first and second tranches of SUKUK, which brought some succour to us and to our business. But we are looking at the Central Bank to provide a shorter end of the instrument which is the heart of every bank-the treasury function. The treasury function is about trading in securities and making sure that your liquidity is not sitting idle but it is invested. For five years, we had nothing. We had to leave our liquidity at zero account. Also, you need liquidity in case you have short needs so that you can go to the market and get it and if you don’t have instrument to access the market, then it means you have to keep more than adequate liquidity to forestall any rainy day and that is not how a bank should run. Because of that, our capacity to generate good revenue was constrained due to lack of financial infrastructure. Yes, 2018 just like 2017 was also tough but if you see our financials, you will notice that we have recorded a decent growth in profitability during the period. It could have been better if we have had those instruments but we are still happy that we have recorded something that is significantly better than 2017. Like you asked, in 2019, we are even more positive that it will be better than 2018. This is so because our first three months have proved to be better than the other periods. Did you introduce new products for customers? One significant area that we are developing is what we call the bottom of the brand. Financing people at that level, we are working to perfect the process to do micro lending at the grade one level starting with women groups. As you can see also, our association with the Bank of Industry is encouraging us to look at the small and medium enterprises but our real passion is while being a commercial bank, we will like to see how we will reduce the level of financial exclusion in the economy. This is one of the great areas where we will like to play a role. We want to do this through agency banking as well as through interventions with women groups directly in those locations that we see the highest level of financial exclusion. What are your projections for 2019 looking at what you did last year? In terms of growth, we will do better than 2018. That is the much I can say for

Hassan Usman

now. I will like us to first of all, release our first quarter performance, then I can give details. What do you see generally as the main challenge in operating an islamic banking in the country? From my point of view and experience, the main challenge of islamic banking is lack of financial infrastructure. As at today, with the issuance of the SUKUK, we still have not overcome that. As I said, SUKUK is a medium term instrument. Treasury is about the immediately I need cash. I need an instrument to either liquidate or leverage on. I have cash that I don’t need to use today; I need to make it to work, so the inefficiency in the system is what we hope to overcome with our engagement with the central bank. We believe that soon we will be able to overcome this. Is it a function of regulation or lack of regulation? What gives the other banks freedom to operate and you are at a disadvantage? The conventional banking in Nigeria is like 130 years old. The instruments, treasury bills, contracts between banks, etc. They have like 23 banks. They have contracts that are standardised which are used to borrow or lend. It could be overnight, seven days or 30 days or whatever. So, you have these contracts in the forms of treasury bills, bonds, etc. So, these are infrastructures that you require for a smooth operation of the treasury. These instruments are not available for Islamic financing. One of them has been made available which is the longer end which the federal government issued and we hope that they will continue to issue so that they will deepen that market because right now we have just one or two issues .Most people that buy, keep the certificate because, it is not transparent . You don’t have standard contracts that you will do because you don’t have counter www.businessday.ng

parties that are doing the same type of business as we do. You don’t have the short end instrument that is used in the conventional market which is the treasury bill. Now, the treasury equivalent for Islamic finance can be done by the central bank and it is possible as it has been done elsewhere. The Gambia has had treasury bills based on Islamic principles for the last 15 years. Tell us more about SUKUK and how can it be expanded? The SUKUK is similar to a bond. The difference is that, in the case of the Nigerian SUKUK that the federal government issued, they are based on assets. The principle is that, you have an asset which the SUKUK holders invested to produce and then they give it out to the federal government on lease and the federal government now pays rentals and also agrees that, at the end of the tenure that is, seven years, they will buy these assets off from the SUKUK holder and therefore there will be transfer. The remuneration for the SUKUK holders is the biannual rentals that they receive from federal government. Basically you can say SUKUK is an asset-backed bond .The conventional bond is a borrowing instrument which the federal government takes money and promises to pay with interest. A SUKUK is a leasing arrangement in our own case. There are some SUKUK that are different ,but the SUKUK that we use to do bond is based on an Ijarah contract which is a leasing contract which says, raise this money, a hundred billion, you put to develop roads and these roads are on lease to the government . So, it is left to the government to either use it as normal service otherwise it will have to take from the treasury and do the roads anyways .So the price for that is to pay a coupon which is the rental; six months basis which pays the SUKUK holders and then at the end of tenure of the Islamic bond, they will now buy the roads at a principal amount which

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is now returned to the SUKUK holders . How can SUKUK be expanded? The expansion is a plan to be done by the government. For SUKUK to be expanded you will have to have a portfolio of borrowings. You have to have the projects budgeted, so you identify which of these projects that you want to finance by SUKUK. The more you have such projects the more you will be able to expand it. Now, you can also expand it by sub nationals also going into that area like the state government and then getting the discipline around it to ensure that it has the same grade or close to the sovereign SUKUK. You can also get corporate to do that when they have expansion projects. Within your operations, are you allowed to initiate a SUKUK bond? We try to create awareness but you know, the SUKUK is a capital market and you have to have the permission of the Securities and Exchange Commission and the Central Bank of Nigeria. You know in Nigeria, we don’t do universal banking anymore as there are restrictions as to what level of involvement we can have in the SUKUK issuance. You can be a party but we will not be a financial adviser to the issuing house. You have been around for a while formally as a General Manager and now the Chief Executive Officer. How much have you done in terms of reforms? One of the significant things we have done is to remain focused because this is a business that requires patience. You know, there might be turbulence on the way but there is light at the end of the tunnel and because you hold to that, you have this compass that this business, although challenging because of the lack of the enabling environment, it will get to the point where it will be a major player in the Sub Saharan Africa. That is our vision. That vision will hold and I can just see it happening. I don’t have any doubt that this bank is going to grow significantly and it will be a major player in the Nigerian financial system. Looking at the global financial market of the non-interest banking system generally, what lessons would you want Nigeria to learn? The perspective is that there are a number of things that are wrong with the way capitalism is been run and this is not me saying it .At the end of the day, whether world adopts some of the principles of Islamic finance or they don’t, they will still have to be more conservative in conventional finance and learn from what the Islamic finance is doing that is working towards reality that financing and investment are mirroring each other. This is the message and I think it is resonating all over the world that there is some element of better reality when you do Islamic financing because you are actually financing real goods and services. You are not creating paper investment. I believe Nigeria is not where it @Businessdayng

should be in terms of non-interest banking. How do you foresee the country as an expert in this? Once you have the infrastructure in place, you will see more players come into the system. A banker doesn’t have to see his cash lying in the central bank. He doesn’t have that patience. But once you have the infrastructure, you will have more players because it will make sense to them to generate the liquidity and then be able to invest. Secondly, as you create more awareness and people see the value, like for us, we started with one branch and now we have about 40 branches. Really financial infrastructure awareness, and then when you have the stability in the economy. Those are the ingredients that will push the system to go forward and create momentum. I believe that in our own case, by the time we make a good job out of the financial inclusion that we are looking at, then, we would have met half of the expectations of the initiators of the organisation which is to make a difference in the welfare of the people and I think that we are on the right track . Related to the question on the global opportunities , somebody said a lady had a problem with one of the banks regarding mortgage, and one of the management staffers told her that to Muraba. I would want you to explain this further... The menu of products we have are also tailored towards the nature of the transaction that you are bringing to us. Now, if you bring a transaction that is for a commodity that is perishable, for example, you want to buy rice, the only way we can get you rice is to buy it and sell to you because we cannot lease it because, you are going to consume it. Anything that is perishable doesn’t have a long life span. You need five bags of fertilizers, we buy the fertilizer, we add a mark up like if we buy for N10,000 we will ask you to pay N11,000 within 90days for instance. You take the fertilizer and you pay us in 90days. This is what we call cost plus contract. And in Arabic it is called Muraba but for the purpose of the public, we just call it cost plus sell. We look at the product you want, and we satisfy it through a sell .If you come with a product that is maybe high value and also durable, that we can hire it out, and then we can go with the hiring mode which we call an Ijarah. We can do a lease to own it. A lease to own typically operates like conventional lease but the difference is that we own the asset and that is the basis for our getting a return on it but you also have a promise that when you bring a capital, you can buy it away from us. Significantly, what will happen is that we will give you a possibility which you can call an instalment schedule just like a conventional bank will give you when you are doing a finance lease and part of the schedule is that there is a rental element and there is the principal amount that you will pay for buying it.

Tuesday 11 June 2019

BUSINESS DAY

Interview

Nigerian developers teach foreigners how to repackage apps Yele Okeremi, MD/CEO, Precise Financial Systems (PFS) and president, Institute of Software Practitioners of Nigeria (ISPON) spoke with Endurance Okafor on the eve of PFS’ 25 years of celebration of innovation in Lagos, on how Nigerian Fintech sector is teaching foreigners on how to repackage applications, and other issues. Excerpt:

does Fintech. What is your view? Everybody talks about Fintech and most of them that are doing Fintech are doing payment technology (paytech) and not Fintech. A company should be run in a way that if you can think, you would eat; if you can work, you would eat. The biggest business in Nigeria is politics. The Nigerians who are brilliants are looking for employment. If you are not into politics, you are into oil and gas. If you are not into oil and gas, you are speculating with Forex or bitcoin. That’s not creativity. Smart countries create egalitarianism. Egalitarianism does not mean equality. It only means equal opportunities. Take a look at a country where the lawyers are doing well. The construction firms are doing well. Agriculture is doing well. The textile industry is doing well. You would have created more employment. This is how the smart economy runs.

s the president of ISPON, looking at the software industry, what would you say is

missing? I would say it is necessary for us as practitioners in the industry to up our games. The reason why it is difficult for some of us to up our game is that they don’t have the resources. I can give an example of how to get a particular certification. If a company wants to have that certification, you must have $250,000 before you can have such it. Without adding human resources to it, there are internal challenges and there are still external challenges. These are the factors that are constraints to the industry. Externally, we don’t have market access. Those who want to buy applications are the federal and state governments, firms in the oil and gas, telecom, the banks, etc. They have so many funds that they can buy anything and pay a premium price. So, they look at you as a Nigerian firm and would rather buy substandard applications than patronise you. Most of the applications that come into the market cannot even solve our local needs. Many times, Nigerians software developers have to teach the foreigners how to repackage the applications and sell them back to us. How long will it take a Nigerian software firm to become a trillion dollars business? When they say a company is a trillion dollars business, what does it mean? Is it in valuation or revenue? Is it an asset or balance sheet? The valuation of any company is never really anywhere in the world. Company valuations are only driven by two factors: fear and greed. I can start a company that only manufactures mobile phone and then value it at $1 billion. For a Nigerian company to become a $1 trillion business, it is not easy because of the combinations of several factors. Every company you see today they all started as a local company. There is no company that becomes a global company, which was not once a local company. The likes of General Electric, Ford Motors, etc, they have started as local companies in their country. They have all become global because of the conducive and thriving environment they have

Yele Okeremi

access to. As such, the environment promotes and feeds them and they have become big global companies today. The environment does everything including providing subsidy, rebate and tax incentives to these companies in order to allow them

‘‘

I have led PFS for 25 years. I am happy. My major desire is to have a company even long after I have moved on; a company that is doing well; that is creating value for humanity; that is solving challenges and making the world a better place

to thrive. But what is our experience in Nigeria? It is your own brother that will tell you that your software is not good and he will go ahead to buy a much lower application abroad. These Nigerians will travel to Georgia and Estonia to purchase the software. What is the population of Georgia and Estonia? These are some of the issues we have raised in the past. We have said it before and we will continue to say it. Even if our people can’t do it, are we saying that if they have the opportunity, they can’t do it? But what do we have? The environment is a constraint to many of us. Most of the companies you see in Nigeria today have been bought over because when they are bought over, they have more market access. Let me give you an example. When Prime Minister of UK, Theresa May visited Nigeria whom do you think accompanied her on the tour? They have established businesses and serious businessmen. The same thing applies when the US President Donald Trump travels. Even if he goes on a trade mission but when our president travels, who goes with him? He travels with politicians. Our system is not ready to support progress. What are the things we need to create the right system for the country?

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Create market access first. That is what we need to do. You say you want to consume what you produce and stimulate the production of what you consume. You have a virtual cycle. So if a government wants to buy the application for its employees, let the government gives itself three years. Then benchmark yourself against the best in the world. So if a Nigerian company scores 66% out of 100%, give the Nigerian company an opportunity to perform and then give the company three years to improve. That is what most developed nations do. What is the best approach to get Nigerians financially included? The problem with financial inclusion is that people think that financial inclusion is about creating products. People will remain financially excluded because they are financially disempowered. We still have a large population of Nigerians living below $2 a day. So, how do you want to empower these people? The first solution to financial inclusion is about financial empowerment, which means you would get 90% of Nigerians engaged in meaningful work. More than 75% of Nigerians are not financially empowered. Fintech has become a buzzword and everybody now @Businessdayng

You have once called for Office of the Chief Information Officer General of the Federation. What would be the duties of such an office? The office of the CIO becomes the custodian of government data. You see, a situation where the minister talks about this data, and another one come and give another wrong data on the same information. That can only because they both don’t have a single source of truth. Yet, they work for one government. There should be a central control where all data comes. So when the Ministry of Health wants information, the same information is open to all other ministries. There will be a concerted strategy for the nation. There will be efficiency in how things are done. The way to tackle corruption is to bring transparency to the system and remove discretion through automation. That’s the function of the CIO General. So, he can tell Nigerians what Nigeria will be in the next five years. People deliberately bring legislation and policies to disenfranchise people. What is your vision for PFS in the next five years? I have led PFS for 25 years. I am happy. My major desire is to have a company even long after I have moved on; a company that is doing well; that is creating value for humanity; that is solving challenges and making the world a better place.

Tuesday 11 June 2019

BUSINESS DAY

news Oando: Story of an energy company... Continued from page 1

downstream oil sector, over the years has adopted

the leveraged buyout funding model. A leveraged buyout is an acquisition of a company or division of another company financed with a substantial portion of borrowed funds. In a leveraged buyout, a company is acquired by a specialised investment firm using a relatively small portion of equity and a relatively large portion of outside debt financing. Some portion of the debt incurred in a leveraged buyout is secured by the assets of the acquired business. Broken down to simple terms,aleveragedbuyoutcanbe likened tobuyingahousewhich requires part payment in cash and a loan for the remaining amount. And most of the times loan forms a major part of the entire transaction. The “down payment” is called equity (cash) and the “loan” is called debt. Oando was listed on the Nigerian Stock Exchange (NSE) in 1992 and on the Johannesburg Stock Exchange (JSE) in 2005, making it the first African company to have a dual listing, otherwise known as cross-border listing. Oando’s CEO, Jubril Adewale Tinubu (JAT), studied Law at the University of Liverpool, graduating in 1988, and by 1989 he had earned a Master’s of Law from the London School of Economics. He has since garnered many years of professional experience, having started out working in his family’s law firm. Coincidentally, JAT tops the list of highest earning CEOs of listed companies on the nation’s bourse. Figures from the company’s 2018 financial results show that he earned a total of N568 million per annum in 2018, representing a 67 percent increase in his executive compensation compared to

the previous year. History of loans and borrowings Though a trained lawyer, JAT had his eyes on the oil and gas business. He, alongside his friends Jite Okoloko and Mofe Boyo, established Ocean and Oil Ltd and acquired a shipping boat called “The Carolina”. They got a microfinance institution to loan them $100,000 at 10 percent interest rate per month, which they used to purchase the boat. In 2000, during the privatisation programme of former President Olusegun Obasanjo, Ocean and Oil Ltd won the bid for30percentofUnipetrol,which the government put up for sale. Again in 2002, the ‘three musketeers’ led Unipetrol to acquire a 60 percent ownership of Agip Oil and obtained a syndicated loan of N8 billion from a consortium of banks led by First Bank Nigeria to pay for the acquisition of Agip. In 2003, Unipetrol Nigeria plc merged with Agip Nigeria plc and was rebranded “Oando”. Jite Okoloko, however, left the group and is currently group CEO/managing director of Notore Chemical Industries plc. Oando then embarked on its first rights issue in 2004. The company initially planned to raise N5 billion. However, buoyed by the frenzy and hype that came with the birth of the indigenous integrated energy company, the rights issue was over-subscribed by N11 billion. Still basking in the euphoria of the over-subscribed rights issue, it launched an audacious move in 2005, which was to list on the Johannesburg Stock Exchange, a feat never recorded by any African-owned company. Technically, the listing on the JSE gave the group access to more capital to fund rig ownership, invest in upstream assets, and expand its midstream business.

In 2011, Conoco Philips (COP), an American oil company, was divesting from OML 131 and valued its stake at about $1.7 billion. To show its commitment to acquiring the asset, Oando needed to pay about $435 million, representing 25 percent of the purchase consideration. In 2012, through a reverse listing, JAT led Oando to acquire a Canadian entity known as Exile Resources Incorporated. It later changed its name to Oando Energy Resources (OER). A reverse listing is an acquisition of a listed company by a private company, resulting in the private firm listing its shares on a stock exchange. It is basically used by private firms to list their shares on the stock exchange without having to pay the expensive cost of public listings and going through tough regulatory scrutiny. In July 2014, Oando (OER) successfully paid $1.79 billion for the acquisition of COP, one of the biggest oil deals ever to take place in Nigeria. The new acquisition increased its production capacity to an estimated 50,000bpd. In December 2015, Oando plc announced that it had reached an agreement to buy the minority shares of Oando Energy Resources (OER), its Canadian listed subsidiary. The deal was worth about US$13.7 million and implied an equity value for the company of approximatelyUS$955.3million. Oando in June 2016 announced that it had secured a N94.6 billion restructuring loan facility from 10 domestic banks as part of its plans to restructure its finances and return to profitability, a huge deal for a company that reported losses of over N180 billion in 2014 and another N45.6 billion in the first nine months of 2015. Also in 2016, Oando plc announced that it had secured a $210 million recapitalisation deal for its downstream operations by HV Investments II B.V. (“HVI”).

HVI is a joint venture owned by Helios Investment Partners (“Helios”), a premier Africa-focused private investment firm, and the Vitol Group (“Vitol”), the world’s largest independent trader of energy commodities. Directors’ pay and shareholder returns Directors of Oando Nigeria plc were earning jumbo pay even as the oil and gas giant was grappling with huge operating expenses, spiralling debt, and recurring losses. Analysts say the regulator should strengthen the boards of the audit committee of a company because they are in charge of fixing and presenting salaries of executives at the annual general meeting. This means the Companies and Allied Matters Bill, still at the National Assembly, will have to be tweaked to solve the corporate governance quagmire in most corporate entities. The challenge is that where you have dominant shareholders who likely compose the directors, the interest of minority shareholders may not be taken to account, according to Johnson Chukwu, managing director and CEO, Cowry Asset Management Ltd. “Elections to the board of audit committee should be based on knowledge and competence,” said Chukwu. Investors and shareholders are asking themselves why stewards of a company should be paid so much while they are getting little value. The directors of Oando were paid N1.31 billion in salaries and emoluments in December 2014, but the company recorded a loss of N183.25 billion, when a sharp drop in crude oil price of mid2014 dealt a blow to cash flow. Total debt in the balance sheet stood at N247.33 billion that year, from N255.28 billion as at December 2013. The debt was 5.48 times total equity as heavy losses eroded shareholders’ funds.

Similarly in 2015, directors were handed N1.78 billion in pay, while the company recorded a loss of N48.15 billion. In 2016, directors’ pay of N1.93 billion was 55.13 percent of N3.49 billion net profit. Total debt stood at N246.10 billion in December 2016, and debts were 2.67 times total equity. In 2017, directors were paid N1.47 billion in salaries and emoluments, while net income stood at N13.15 billion. In 2018, the most interesting of the years under trend analysis, directors were paid N2.08 billion. A breakdown of this figure shows executive directors went home with N1.43 billion while other called emolument was N652.12 million. Total debt in the balance sheet stood at N348.71 billion in the period under review as against N360.05 billion the previous year. Total debt for 2018 was 1.25 times total equity. An analyst who didn’t want his name mentioned said top executives at Oando shouldn’t have been compensated when the company was going through troubles. In saner climes, directors’ pay is often benchmarked with the company’s share performance. As of June 2013, Oando’s share price was trading at N29.50, but it is trading at N3.85 as at June 10, 2019, as investors continue to dump shares following the recent Securities and Exchange Commission (SEC) probe. The SEC gave a directive for the resignation of the firm’s board members, and also barred the group CEO, Wale Tinubu, and his deputy from being directors of companies for five years. This is after the capital market regulator concluded investigation into the activities of the company and alleged infractions and other market violations. However, the Federal High Court has restrained the SEC from removing Wale Tinibu and Omamofe Boyo as Oando

plc’s Group CEO and Deputy CEO, respectively. The court also restrained SEC, its servants or agents from taking any step concerning the commission’s letter dated May 31 and also restrained the commission from imposing a fine of N91.13 million on Tinubu. Ready to correct past mistakes No doubt, Oando has transformeditselfinthepastfewyears from a mere fuel retailer to oil producer and now competes withmultinationalssuchasShell and ExxonMobil, but its growth has been largely built on debt. Its high financing costs coupled with lower oil prices hit its profits. It posted losses including a record $1.10-billion loss in 2014. Recently in an interview, Tinubu revealed that Oando has paid over 77 percent of the acquisition debt and plans to pay off the rest in 12 months which would allow it to resume dividend payments to its shareholders, noting that Oando would be left with total debt of $300 million. Oando’s losses narrowed to N18.3-billion in 2018 while its auditor Ernst & Young questioned its “going concern” status, saying that its current liabilities were in excess of its current assets. Oando said in a note to its 2018 accounts it would reclassify some current liabilities as long-term liabilities to remedy its working capital by June and swap N27.5-billion of debt into equity. It also plans to sell up to $200 million via a rights issue by October and cut its stake in its upstream unit to raise $275 million in 2020. Tinubu further said he was confident with the capitalraising initiatives and that over the next 24 months Oando would raise funds as plans were far advanced. How soon will the company weather the storm and return to the path of profitability? Only time will tell.

Nigerians set agenda for NASS as new... Continued from page 1

ing Officers hold today,

Nigerians have called on the bicameral legislature to immediately revisit the Electoral Act (Amendment) Bill, Petroleum Industry Governance Bill, and constitution amendment bills. They also listed other critical bills which the federal lawmakers should prioritise to include the Industrial Development (Income Tax Relief) Amendment Bill, Stamp Duties (Amendment) Bill, National Housing Fund Bill and National Transport Commission Bill. Those who spoke to BusinessDay on the matter also called on the Assembly to be patriotic and review jumbo allowances which continue to raise concern, considering the fragile state of the nation’s economy. They also want the lawmakers to immediately revisit critical bills which the Eighth National Assembly (2015-

2019) was unable to pass or which were rejected by President Muhammadu Buhari. In an interview with BusinessDay on Monday, Eze Onyekpere, lead director, Centre for Social Justice, called on the National Assembly to immediately draw up a legislative agenda which will contain what it intends to achieve in its lifetime. Today will witness the election of four principal officers – Senate President, Deputy Senate President, Speaker of the House of Representatives and Deputy Speaker. As of the time of filing this report, 13 lawmakers-elect have indicated interest to vie for the four positions. They include seven senators-elect in the Senate out of which two are running for the seat of the Senate presidency and the remaining five for the position of deputy Senate president. In the House of Representatives, five members-elect www.businessday.ng

L-R: Francis Idachaba, director, academics planning, Covenant University; Ephraim Nwokonneya, director, research and development, Nigerian Communications Commission (NCC); Yetunde Akinloye, director, legal and regulatory services, NCC; Oluwole Familom, deputy vice chancellor, academics and research, University of Lagos; Funke Opeke, CEO, Main One, and Aderounmu Adesola, dean, Faculty of Technology, Obafemi Awolowo University, Ile-Ife, at the NCC forum on Emerging Technologies Research and ICT Innovation themed ‘Developing Nigeria’s Tech Eco-System: Imperative for Improving Local Content’, at the University of Lagos, yesterday. Pic by Olawale Amoo

are contesting for the seat of speakership and one for deputy speakership position. As of the time of filing this report, aspirants for position

of Senate President include the Majority Leader in the Eighth Senate, Ahmad Lawan (APC, Yobe) and his predecessor, Ali Ndume (APC, Borno).

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Those aspiring for the seat of Deputy Senate President are Ovie Omo-Agege (APC, Delta), Robert Boroffice (APC, Ondo), Kabiru Gaya (APC, @Businessdayng

Kano), Orji Uzor Kalu (APC, Abia) and Francis Alimikhena (APC, Edo).

•Continues online at www.businessday.ng

Tuesday 11 June 2019

BUSINESS DAY

news

CBN raises exchange rate for payment of Findadmission introduces ‘News Feed’ to help admission seekers Customs duty by N20 to N326/$ AMAKA ANAGOR-EWUZIE

entral Bank of Nigeria (CBN) has increased the exchange rate for the payment of import duty to the Nigeria Customs Service (NCS) by N20 to N326 at the ports. B u s i n e s s D a y u n d e rstands that the officers of Customs at ports commenced the implementation of the new exchange rate with immediate effect on Monday, while Customs sources confirmed that the valuation department at all commands had equally adjusted the exchange rate on their systems. Confirming this, Tony Anakebe, managing director of Gold-Link Investment Limited, said in a telephone interview that the implementation of the new exchange rate, which started on Monday, took both importers and their agents by

surprise. According to Anakebe, there was no pre-notice to that effect as import duty skyrocketed immediately Customs commenced implementation as required by the CBN. Emmanuel Onyeme, public relations officer, Association of Nigeria Licensed Customs Agents (ANLCA), Tin-Can Island Port chapter, also confirmed that all transactions and cargoes that were cleared from the port starting on Monday were already paying N326 per dollar. Onyeme lamented that the new exchange rate would definitely add to the cost of clearing cargo from Nigerian ports as well as the prices of goods in the market. He argued that the policy should not had commenced with immediate effect because several agents had already accepted jobs from

their importers based on the old rate of N306 per dollar. “The new rate took place at the ports today. It is already affecting our transaction with Customs because if the former exchange rate was N306 and they increased it by N20, with this, some extra money would be added to it,” he said. He said, a vehicle that pays a duty of N300,000, will definitely pay more given the current increase in the exchange rate. “So, the new rate will affect the cost of clearing, especially for those who have collected jobs at the rate of N306. “And if the importer is selling his car for N1 million, with the additional cost, he is going to add whatever the extra cost is to it. The Customs have already changed the rate on their system and every job that was captured on Monday had to pay the new rate.”

indadmission, Africa’s leading online platform for students seeking admissions abroad, has launched a News Feed that enhances information dissemination about tertiary institutions across the world. TheNewsFeed,whichissimilar to Facebook and LinkedIn News Feed, is a one-stop-shop for all African students aiming to further their education in other countries. Many students from across Africa long for education abroad but have been going about it the wrong way due to lack of right information, hence, many have missed admission, while only a few are able to get into their desired schools. According to the 2016 UNESCO Institute for Statistics, the number of African students seeking higher education abroad grew from 343,370 (in 2006) to 427,311 (in 2014) constituting about 24% growth in students’ mobility abroad. From 2013 to 2014 alone, itroseby9%.Thistrendshowsthat more and more Africans are seeking admission abroad every year.

Through the Findadmission News Feed, Universities from different countries around the world will be able to post information, updates and news about their institutionwhilestudentsfromAfrica will be able to comment, like or share the post among themselves. Findadmission,whichhasbeen thebridgebetweenteemingAfrican studentsandschoolsintheUS,UK, Canada and every other part of the world added the new feature to ensure that African students can interact with their choice schools before application to increase their chances of admission. Speaking on the new feature, Findadmission’s founder and President, Folabi Obembe, said information to be posted by institutions would include and not limitedto:Informationabouttheir school; Admission requirements; Scholarship opportunities; News on African students doing well in their institution; and information about their visit to Africa. According to him, representatives of someoftheinstitutionsabroaddo come to African countries but the

studentsdon’tgettoknowaboutit. “This is a new feature added to Findadmissionplatformtoensure students in Africa have unfettered access to the wealth of study opportunities available worldwide and also have the opportunity to network with admission officers in different institutions around the world on their palm,” he said. ObembenotedthatFindadmission is not a social media platform but a platform that allow students fromAfricatosubmitanapplication toinstitutionsaroundtheworldthat ensures that the universities they want also want them, giving them 95% more chance of acceptance. “We added these features because we realise that is already been used on Facebook but due to the fact that Facebook is overcrowded with so many information, it becomes very difficult for prospective students to gain access to such information. Having a News feed that is dedicated to studying abroad is very important as it gives more targeted information to those that need it most” Obembe said.

Nigeria receives N4bn from Rotary, $150m grants to support polio eradication Jonathan Aderoju

otary has committed to raising $50 million a year to be matched 2-to-1 by the Bill and Melinda Gates Foundation, amounting to $150 million for polio eradication annually. Rotary is giving $100 million in grants to support the global effort to end polio, a vaccinepreventable disease that once paralysed hundreds of thousands of children each year. To support polio eradication efforts in endemic countries, Rotary is allocating half the funds it announced to Afghanistan ($16.3m), Nigeria ($10.2m – N4bn) and Pakistan ($25.2m). According to Tunji Funsho, chair of Rotary’s Nigeria PolioPlus Committee, “Routine im-

munisation in high-risk states is helping us prevent new cases of wild polio.” Funsho said, “Although the polio infrastructure has become stronger and allows us to also respond to other serious health concerns, we must remain committed to ensuring the political and financial support necessary to ending polio in Nigeria and around the globe for good.” The funding comes as Rotary and its partners in the Global Polio Eradication Initiative (GPEI) address the final and most pressing challenges to ending poliovirus transmission, and as Nigeria approaches three years without any reported cases of wild poliovirus, bringing the Africa region closer to polio-free status.

Devon Troy Copper launches, adopts result-driven approach SEGUN ADAMS

n a bid to address pertinent client satisfaction issues in the digital communications industry, a consortium of social and creative entrepreneurs has announced the launch of Devon Troy Copper (DTC), a full-service digital communications agency. DTC offers a unique mix of strategic services such as Social Media Community Management, Influencer Marketing & Talent Management, Digital Marketing & Strategy, Copywriting & Design, Reputation & Crisis Management. The brand’s management and workforce comprise of seasoned professionals with technical knowhow from numerous sectors and are primed to provide potential clients with bespoke solutions that will reinvigorate their businesses and disrupt the industry at large. According to Chidi Okereke, head of business, “DTC is positioned to provide cutting-edge service to clients across several sectors including finance, fast moving

consumer goods, federal and state governments, information and communications technology and entertainment. Our activities pivot around optimum value extraction and overall client satisfaction. “We have painstakingly identified top talents across the country to collaborate with us in achieving this goal and can categorically affirm that our team is capable of delivering on the mandate. “Also, we have a unique management team led by famed entrepreneur and Board chairman, Adetoro Fowoshere; award winning brand influencer and marketing director, Anda Damisa; renowned influencer marketing executive/ CEO, Olayinka Ahmed, and executive creative director, Samson Adebayo.’’ Although DTC commences operations in Lagos as a digital communications agency, the principal objective of the brand is to mature into an integrated reputation management firm incorporating the mainstream media into its operations, Okereke says. www.businessday.ng

L-R: Miguel Lineas, director; Gregory Ovie Jabome, chairman; Ahmed Babatunde Popoola, managing director/CEO, and Kelechi Nwagbo, company secretary, all of CRC Credit Bureau Limited, at the company’s 2019 annual general meeting in Lagos.

Buhari applauds Italian support for repatriation of looted funds Tony Ailemen, Abuja

resident Muhammadu Buhari on Monday in Abuja welcomed the offer by Italian government to assist in the recovery and repatriation of illegally deposited Nigerian assets in foreign countries. President Buhari stated this when he received a delegation from the Italian Parliament led by Vito Petrocelli, a senator and chairman, Senate Committee on Foreign Affairs at State House, Abuja. The Italian Ambassador to Nigeria, Stefano Pontesilli, who accompanied the delegation, while conveying the message of the Italian government had told the Nigerian leader: ‘‘We are

willing to cooperate with your administration 100 percent on illicit assets repatriation.” Responding, President Buhari commended the Italian government for demonstrating ‘‘open-mindedness’’ and willingness to cooperate with Nigeria on the issue of repatriation of stolen funds. The President, while acknowledging the good wishes of the Italian government in the aftermath of the February 23 presidential election, told the delegation that his second term in office would consolidate on the progress recorded in the last four years in the country. He also used the occasion to remind developed countries to do the needful on reviving Lake Chad. ‘‘Lake Chad is now 10 per-

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cent of what it used to be. At least, 30 million people around it benefit from fishing, farming and animal husbandry. ‘‘The drying up of Lake Chad has forced some people to defy the Sahara Desert and the Mediterranean in their bid to get to Europe,’’ he said. Buhari thanked the Italian government for its policy of accommodating displaced persons, particularly African refugees. He also appreciated the Italian delegation for emphasising the cordial relationship between Nigeria and Italy and the need to establish a ‘‘bilateral committee on friendship’’ that would identify areas of cooperation and work collectively. Earlier, Petrocelli had told Buhari that the delegation, @Businessdayng

included a Nigeria-born Italian senator, Senator Tony Chike Iwobi, who is also the vice chairman, Senate Committee on Foreign Affairs. The Nigerian is also the first African to be elected into the Italian Parliament, and was in the country to attend to the June 12 Democracy Day celebrations. He also congratulated the Nigerian leader on his re-election. The President and the delegation, which also included Italian investors, discussed a range of bilateral and global issues including migration, Sustainable Development Goals (SDGs), infrastructure development, anti-corruption and the need to strengthen inter-parliamentary relationship between Nigeria and Italy.

Tuesday 11 June 2019

BUSINESS DAY

NEWS

Fresh investment opportunity CNN’s ‘Marketplace Africa’ meets International Monde awards NB gold for product quality entrepreneur Tony Elumelu as FG opens June Savings tional high quality and prestheissuesthatwefaceashumanity, TEMITAYO AYETOTO Bonds for subscription tigious brand with its quality your community issues… then we Daniel Obi OLUWASEGUN OLAKOYENIKAN

he Federal Government of Nigeria (FGN) has offered for subscription two-year and three-year Savings Bonds for the month of June, creating an additional investment opportunity for low-income earners in the country. FGN Savings Bond is a fixed-income instrument issued monthly to deepen savings and investment opportunities for the Nigerian populace and diversify funding sources for the government. The bond is also targeted to enhance financial inclusion in the country as income earned from it is exempted from taxes. The Debt Management Office (DMO), which is offering the debt instruments on behalf of the Federal Government, said the twoyear tenor would be offered at 11.418 percent per annum, while the three-year tenor would be offered at 12.418 percent per annum. The debt office noted that the two-year savings bond would be due on June 19, 2021, while the three-year savings bond would mature on June 19, 2022. Although the interest rates on the bonds are lower when compared with 11.745 percent and 12.745 percent issued on both tenors in May, they still remain higher than the national inflation rate which rebounded by 11.37 percent in April.

According to the stateowned debt agency, interested investors are expected to bid for the instruments at an auction slated to commence on Monday, June 10 and run through Friday, June 14, with a settlement date of June 19. In order to participate in the bidding process for the retail savings product, DMO advised investors to contact any of the 129 stock-broking firms appointed as distribution agents by the office. The bonds are offered at N1,000 per unit subject to a minimum subscription of N5,000 and in multiples of N1,000 thereafter, subject to a maximum subscription of N50 million. The DMO assured that the bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of the country, implying there is no risk of default. Furthermore, the debt office guaranteed a bullet repayment of the principal on the maturity date with quarterly interest payment dates of September 19, October 19, March 19, and June 19. In addition, bondholders can use their investment as collaterals to obtain loans, while those who do not wish to hold on to the securities till the maturity date can trade their investment at the secondary market such as the Nigerian Stock Exchange.

n ‘Marketplace Africa’,host Eleni Giokos interviews Nigerian economist and entrepreneur, Tony Elumelu. In 2010,theentrepreneurstartedThe Tony Elumelu Foundation, which todayhasbecomeoneofthelargest philanthropic initiatives in Africa. Elumelu tells the programme why helping businesses has a significantimpactontheeconomy of a country. He says: “We believe that we have to encourage these businesses.Wehavetomakeprovisions for these businesses to grow in order to grow the economy, in ordertoprovideevenotherjobsfor otherpeople.Itstartsarippleeffect. One person is providing jobs for a hundred other people, and each of them in return providing jobs for another set of hundred people, andthatwilldeveloptheeconomy. Not just in Nigeria.” Along with his wife Awele Vivian Elumelu, Tony Elumelu aims to create a million jobs within the next decade through his foundation. He tells CNN: “We’re hoping to create a million jobs through the intervention of 10,000 young Africanentrepreneurs.Youneedto understand that big corporations, perse,don’treallycreatemorejobs. Itissmallandmedium-sizedenterprises. What’s important is to have great ideas and we evaluate your ideas. If we think your ideas can be scalable, your ideas can succeed, you’re going to address some of

support those entrepreneurs.” The foundation also plays a vital role in encouraging women to pursue a career in business. Elumelu explains to Giokos how work has specifically been done to target women: “In communities, we still find that it’s the men that are empowered. It’s the men that are funded. It’s the men that are trained to go into these businesses to succeed. “So, this why the foundation had to do more work to reach out to women. It hasn’t just happened overnight… There’s been a lot of what’s been done on the part of the foundation. We’ve targeted women to encourage women to believe in themselves, to step out. To come out and know that the economy needs them, the society needs them because if we have the women, then we have a better chance of developing the economy.” When asked about the future of the foundation, Elumelu tells the programme how there is still much to do: “In a twinkle of an eye, the ten years will be gone. So now we’re beginning to look at What’s next? What else can we do? This is the main focus of the foundation now. Some are beginning to think of other programmes we can go into so that when this happens to pass by, the foundation still has another major programme. So, watch this space.”

nternational Monde Selection Awards, an independent professional jury comprising about 70 international experts who taste and test products from all over the world in a completely independent way, has awarded three brands of Nigerian Breweries (NB) gold prizes. The brands are Gulder, Goldberg and Star Lager. The awards were conferred on the three brands recently at the 58th Annual Awards Ceremony of Monde Selection held in Rome, Italy. This year more than 1,000 companies from 90 countries presented no less than 3,000 products to Monde Selection juries. Each product was evaluated individually to establish its global quality profile and grant the product the quality award it deserves. Gulder, which introduced a new label and packaging last year, Goldberg, the premium quality lager beer brewed to golden standards and Star Lager, the first locally-brewed Nigerian beer, all won Gold Quality Awards at the 2019 Annual Awards Ceremony, a statement said. It is not the first time NB brands are receiving accolades from international organisations. In 2014, Amstel Malta was recognised as an interna-

awards from the International Taste and Quality Institute (iTQi) and the Monde Selection Quality Award, while Maltina, Star, and Fayrouz have all been recipients of Advertising Association of Nigeria (ADVAN) Awards for Marketing Excellence, respectively, at different times. Since inception in 1946, NB has been home to a wide array of alcoholic and non-alcoholic brands, which have set the bar for excellence in the brewing industry. The company is home to the most decorated brands, and the market leader by volume. Dedicating the awards to staff and consumers, Jordi Borrut Bel, managing director/ CEO, NB, said in the statement, “We couldn’t have won this award without the hard work and dedication of the Nigerian Breweries team. Goldberg, Gulder, and Star are some of our most prestigious brands and we are proud of their startling success in the Nigerian market. “We appreciate this honour and promise our consumers and stakeholders that we will not only continue to raise the bar but will also set out with innovative and exciting ways to consistently win with our brands.”

Buhari blames insecurity on failure of local intelligence gathering Tony Ailemen, Abuja

resident Muhammadu Buhari on Monday assured that the security challenges were not beyond the capabilities of the nation’s law enforcement agencies, even as he blamed the leadership at the community levels for failures of intelligence gathering. The President, while speaking when he hosted the leaders of Zamfara Advocacy Group at the Presidential Villa, on Monday, assured that security agencies were capable of safeguarding the country, its people and property. He described as “unfortunate” the “failure of local leadership in intelligence gathering,” and enjoined community and traditional leaders to monitor closely the activities of people in their domain with a view to assisting law enforcement agencies secure the communities. The military and the police have been taking drastic measures to check the activities of some local elements threatening the peace of the communities, including preventing farmers from going to their farms, he said. According to Buhari, “I assure you, I get daily reports from people in the field and traditional

rulers. I also meet regularly with the leadership of the security agencies, and they have been directed to deploy their personnel to secure the society.” Commending the new governor of Zamfara State, Bello Matawalle, for being proactive in addressing the security challenges, the President urged royal fathers to go back to their cultural roles. Speaking on behalf of the delegation, Usman Balarabe, while congratulating President Buhari on his re-election, said the “situation in Zamfara remains dire,” citing increased attacks, deaths, injuries and displacements. According to Balarabe, “We are here because we believe Mr President and his administration can put in place solid measures to bring about peace and security, and also mitigate the endemic poverty that has made this region one of the poorest in the world.” The delegation, which also included the wife of the governor of Kaduna State, Asia Mohammed Ahmed, and journalist, Kadaria Ahmed, called for greater collaboration among stakeholders, securing the borders, and permanently situating a major military presence in the state, among other suggestions. www.businessday.ng

L-R: John Delano, managing partner, Akindelano Legal Practitioners (ALP); Atiku Bagudu, governor, Kebbi State; Olusegun Awolowo, MD/CEO, NEPC; Sadiq Usman, director, Flour Mills of Nigeria plc, and Mudashir Olaitan, director, development finance, CBN; all panellists speaking on ‘Achieving Self-Sufficiency and a Thriving Export Industry Through Agriculture’ at the 7th edition of the ALP Seminar Series.

Akindelano Legal Practitioners organises Fintech seminar SEGUN ADAMS

he Role of FinTech and Digital Finance in Nigeria’s Economy and the Banking Sector is coming to the fore at the next Akindelano Legal Practitioners (ALP) seminar. Oluyele Delano, a senior advocate of Nigeria and managing partner at ALP, disclosed this at a recent press conference. According to Delano, banks and Insurance companies can no longer ignore the FinTech and Digital Finance Space, especially given the size and pace of

transactions in the industry in Nigeria over the last 12 months. The seminar is scheduled to hold June 20, 2019. Delano said it was worth observing that the industry experienced major funding announcements, and new policy directions. Across Africa, over $560 million was invested in tech companies in 2017, and of the $114 million reportedly raised by tech companies in Nigeria, 75 percent went to FinTechs. Nigerian FinTechs have raised over $95 million according to publicly available data.

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As the Fintech ecosystem increases, the industry will have occasion to consider its practical legal and regulatory issues, he said. The 2019 ALP Seminar also seeks to explore these boundaries over panel discussions by experts in the industry, considering the following areas: Financial Inclusion; The Challenges for FinTech and Digital Finance in Nigeria and the Data Economy. The international guest speaker is Kobi Bendelak of InsurTech Israel, founder and CEO of Reshef Insurance Brokers, with 22 years’ @Businessdayng

experience in the banking and insurance industry. Other keynote speakers and panellists include Ronke Kuye, MD/CEO SANEF; Andrew Nevin, Pwc; Akeem Lawal, Interswitch; Konstantinos Tsanis, Wema Bank; Ayotunde Coker, Rack Centre; Esale Diel Efina, Yemi Keri, Heckerbella ; Bode Pedro, MD/CEO, Cassava Nigeria; Adegbola Abudu, Capricorn Digi; Jason Mycroft – Palmpay; Adefolu Majekodunmi, Asseco Software; Aderemi Adejumo, Comercio Cloud, and Zino Afiegba, Women’s World Bank, and many others.

Tuesday 11 June 2019

BUSINESS DAY

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38 BUSINESS DAY

Tuesday 11 June 2019

NEWS

Liberalising power sector will earn Nigeria $30bn investment in 3 years - Chike-Obi HOPE MOSES-ASHIKE

xecutive vice chairman, Alpha African Advisor y, Mustafa ChikeObi, on Monday assured that liberalisation of the power sector would on the long run attract over $30 billion of investment in the next three years and enable Nigerians have cheap electricity supply. According to Chike-Obi, since it is believed that ever yone deser ves electricity much as everyone deserves to have telephone or nice car, the only way to lift the society to that point is to charge the people who need electricity the most, the market price. At t h e m o nt h l y c a p a city building forum of the Finance Correspondents Association of Nigeria (FICAN), Chike-Obi threw a challenge that if the power business was made profitable, where-

by tariff on electricity was removed and power companies allowed to sell to any person they wish to sell to, at market determined price, it would guarantee Nigeria a $30 billion worth of power sector investment in three years. In some places in Ikoyi Lagos, residents get about 90 percent of power supply and they are paying roughly N50 or N60 per kilowatt-hour, for instance, he said. He said a power generating set costs about N160 per kilowatt hour with its attendant inconveniences. According to Chike-Obi, “Most people who have generating set will be happier to pay N160 per kilowatt hour of electricity, but government said no. We can only charg e Nig er ians N60 p er kilowatt-hour, yet nobody has it. Nobody is looking for it and nobody is interested in more investment into it to create more power.

President Muhammadu Buahri (r) receiving a souvenir from Vito Petrocelli, chairman, Italian Senate Committee on Foreign Affairs (m), during the visit of an Italian Parliamentary delegation to the Presidential Villa in Abuja, yesterday with them is Tony Iwobi, vice president, 3rd permanent committee, Italian Parliament. NAN

Media stakeholders wade in, resolve NBC/DAAR faceoff

AIB cautions airlines on prompt report of … DAAR to appoint Ombudsman for news balance accidents, serious incidents … as Air Peace refutes AIB’s claims, says incident was reported IFEOMA OKEKE

he Accident Investigation Bureau (AIB) has expressed its displeasure over the persistent failure of some airlines to report accidents or serious incidents to the Bureau as mandated by Law. In a statement issued Monday the Bureau said on June 5, 2019, it received notification about a serious incident involving a Boeing 737-300 aircraft with Registration Marks 5N-BUK, belonging to Air Peace Limited from a passenger onboard. “It was reported that the said incidentoccurredonWednesday, 15th May 2019, while the aircraft was on approach to Murtala Muhammed International Airport, Lagos,fromPortHarcourt.Theaircraft was said to have experienced a hard landing as it touched down

on the runway (18R). “Upon receipt of the notification, the Bureau visited Air Peace Limited office and confirmed the said occurrence. The Bureau further conducted a damage assessment on the aircraft, which revealed that the aircraft made contact on the runway with the starboard engine cowling as obvious from various scrapes, scratches and dents, an evidence of tyre scouring on the sidewalls of the No. 4 tyre as well as bottoming of the main landing gear oleo struts. There was also visible damage to theright-handenginecompressor blades,” the statement said. AccordingtotheBureau,uptill date,ithasreceivednonotification of the incident three weeks after the date of occurrence, contrary to ICAO Annex 13, which guides the operations of aircraft accident investigation procedures.

Daniel Obi

igerian media stakeholders have resolved the lingering feud between DAAR Communications plc, owner of Africa Independent Television (AIT) and Ray Power FM, and National BroadcastingCommission(NBC). Concerned about the suspension of the broadcast licence of DAAR Communications by the NBC, the President of the Nigerian Press Organisation (NPO) comprising of the Newspapers Proprietors Association of Nigeria (NPAN), Broadcasting Organisations of Nigeria (BON), The Nigerian Guild of Editors (NGE) and The Nigerian Union of Journalists (NUJ), convened a meeting last Sunday of all parties to resolve the issues in the national interest. According to a statement by Nduka Obaigbena, chairman/ editor-in-chief, ThisDay/ARISE Group, who is also president of

Lafarge further delays release of its audited result … sets June 28 target for submission, as stocks down 19.7% Ytd Iheanyi Nwachukwu

afarg e Afr ica plc is optimistic that all the issues relating to the late filing of its audited financial statements for the year ended December 31, 2018, will be fully resolved and the audited financial statements submitted to the Nigerian Stock Exchange (NSE) not later than June 28, 2019. The company disclosed this in a notice dated June 10, signed by Adewunmi Alode, its company secretary, and released to the investing public at the NSE. At N10 per share, Lafarge Africa Plc stocks have declined by 19.7percent this

year underperforming the NSE All Share Index (ASI) which is down by 3.53 percent year-to-date (Ytd). Lafarge Africa added that the approval of the NSE has been sought for the delay/ late filing of the Audited Financial Statements. “ Th i s i s t o n o t i f y ou r esteemed shareholders and other stakeholders of a further delay by Lafarge Africa Plc to release/publish its annual Audited Financial Statements for the year ended 31st December 2018 as required by extant Rules of the NSE,” the statement by Lafarge Africa reads. According to the statement, “the delay is necessitated by pending actions www.businessday.ng

required for the resolution of key matters relating to the closure of the Company’s annual Audited Financial Statement for the year ended 31st December 2018.” Lafarge Africa had earlier this year concluded a Rights Issue, which it said recorded 100 percent subscription. Lafarge Africa issued to existing shareholders 7,434,367,256 ordinary shares of 50 kobo each on the basis of six ordinar y shares for every seven ordinar y shares held as at December 4, 2018 at N12per share. The Rights Issue, which opened on December 17, 2018 closed on January 28, 2019.

NPO, the meeting was attended by elders and patrons of NPO, including Ismaila Isa Funtua and Sam Amuka. Also in attendance were Ishaq ModibboKawu,director-general/CEO,NBC; the following people from DAAR Communications Plc: Raymond Dokpesi, Founder and Chairman Emeritus; Raymond Dokpesi, Jnr, Chairman of the Board; Tony Akiotu, GMD; Donatus Anopuo, CompanySecretary;TosinDokpesi , MD, AIT, and Nduka Obaigbena, President and NPAN and NPO. At the meeting, it was said that the NBC restated its commitments to freedom of expression and the constitutionally guaranteed role of the media under sections 22 and 39 to hold governments accountable, which states, amongst others, that the press, radio, television and other agencies of mass media are to uphold the fundamental objectives contained in the 1999 constitution and ensure the responsibility and accountability of the Govern-

ment to the people. The NBC also raised concerns about the non-adherence of the DAAR Communications group (AIT/Ray Power) to the Nigeria Broadcasting Code, despite repeated interactions on same. The regulator cited lack of editorial balance by DAAR Communications as well as the lingering issue of non-payment of national network license fees by DAAR Communications. DAAR Communications defended its position saying that it gave its team freedom to make editorial commentary on issues of the day relying on Section 39 of the Nigerian Constitution guaranteeingfreedomofexpression,freedom toholdopinionsandtoreceiveand impart ideas without interference. DAARstatedithadmadesome payments on account to the NBC but acknowledged that there were some defaults in the payment plan they submitted to the NBC, and explained that the defaults were due to decisions jointly reached at

BON meetings by all broadcasters to engage and renegotiate the cost of license fees with NBC, in view of the current difficult economic realities affecting the industry. But theNBCinsiststhatlicensefeesare statutoryandthusnon-negotiable. After an exhaustive dialogue, all parties resolved that DAAR Communications would work out a new realistic payment plan with the NBC, and ensure prompt payments in accordance with the new plan;thatDAARCommunications wouldappointanOmbudsmanto ensurebalanceinitsnewscoverage especially political commentary; it would also take full editorial responsibilityfortheuseofcontent sourced from social media outlets. It was also resolved that NBC would immediately lift the suspension of the broadcast licence of DAAR Communications, and DAAR Communications would withdraw its case in court against theNBC.Allpartieswilltakenecessary steps to work together to build confidence in the public interest.

Obaseki elected vice chairman Progressives Governors Forum

… as Edo Innovation Hub lists gains

n recognition of Governor Godwin Obaseki’s growing political clout across the country, engrained in his clean politics and peoplecantered policies, members of the Progressive Governors Forum (PGF) have elected the Edo State governor as their vice chairman. The PGF comprises all state governors of the All Progressives Congress (APC), with the Kebbi State governor, Abubakar Atiku Bagudu, as chairman. Recall that Obaseki last week had a robust meeting with President Muhammadu Buhari on the 2020 gubernatorial election in Edo State, among other issues. Obaseki will now work with all APC governors and other leaders across the country to galvanise the party towards more electoral victories and the

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timely delivery of the dividends of democracy. In the meantime, the Edo Innovation Hub marks its oneyear anniversary this June, an the state government says the milestones being recorded at the hub are changing the technology ecosystem within the state and the South-South geopolitical zone, providing room for capacity building and technology-driven solutions to everyday problems. Senior special assistant to the Edo State Governor on Skills Development and Job Creation and head, Edo State Skills Development Agency (EdoJobs), Ukinebo Dare, in a statement, said the state government is working closely with major stakeholders in Nigeria’s technology space to ensure more high-impact innovations are birthed at the @Businessdayng

hub to boost wealth creation among Nigerians. She said aside regular, government-backed trainings on Information and Communication Technology (ICT), coding and Artificial Intelligence, the hub plays host to the SouthSouth Innovation Hub, which is a regional centre for innovation created by the Vice President’s office under its Social Investment Programme (SIP). She noted, “We are marking the one-year anniversary of Edo Innovation Hub, also known as Edo Innovates. There is no denying that we have recorded immense success in the area of capacity building in the technology ecosystem. The hub is an expression of Governor Godwin Obaseki’s desire to groom youths to become change agents using technology.”

Tuesday 11 June 2019

BUSINESS DAY

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40 BUSINESS DAY

Tuesday 11 June 2019

NEWS

Ahead inauguration: Tension in Edo assembly as police take over premises IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

head of the inauguration of the seventh Edo State House of Assembly, a combined team of security personnel made up of Police and Nigerian Security and Civil Defence Corp (NSCDC) on Monday took over the premises of the Assembly complex. The security agencies also locked up the main entrance and two exit gates of the complex thereby preventing members of staff from gaining access to the complex with their vehicles. Danmallam Mohammed, commissioner of police, in charge of the Edo State Police Command, led the team of police officers. The vehicle parking lot was empty as the staff paid to park their vehicles at the premises of the Edo territorial headquarters of the Nigeria Postal Service (NPS) and the State

Health Management Board. More than 10 vehicles belonging to the Edo State Police Command and that of the NSCDC with officers were stationed at the main entrance to the Assembly, while over five were also stationed at the two exit gates located at Airport Road and beside the State Health Management Board. It was gathered that the action of the police was nconnected with the leadership tussle between the state governor, Godwin Obaseki, and his predecessor, Adams Oshiomhole, the national chairman of the All Progressives Congress (APC). At the valedictory session of the sixth Assembly last week, six members loyal to the national chairman of the party were absent. It was alleged that the security personnel were deployed to the Assembly by the state governor with a view to forestall the incoming

lawmakers loyal to Adams Oshiomhole sitting to elect principal officers, especially the speaker, order than his preferred candidate. The governor is said to be rooting for Frank Okiye, representing Esan North-East 1, while Oshiomhole is rooting for Victor Edoror, representing Esan Central Constituency. The two contenders are both from Edo Central Senatorial District, and the position of the speaker was zoned to the senatorial district with a view to balance the state political leadership equation. It is learnt that of the 24-member House, about seven incoming lawmakers are loyal to the state governor, Godwin Obaseki, while 17 members are for Oshiomhole. It is also learnt that the governor was yet to transmit letter of proclamation to the Clerk of the House for the inauguration of the seventh Assembly.

Ignorance worsens cases of hepatitis in Nigeria ANTHONIA OBOKOH

... 60% more prone to contract Hepatitis B

edical experts have warned that Nigerians need to understand hepatitis and take the disease more seriously, saying the prevalence of the infection is high and lack of awareness about the chronic viral infection has been linked to high number of death. Hepatitis affects millions of people worldwide, causing acute and chronic diseases. At least, there are about five viruses that can cause hepatitis. The three most common are hepatitis viruses A, B and C. “An average Nigerian is 60 percent more likely to contract Hepatitis B Virus, a national prevalence of about 15 percent; the virus has infected about 27 million Nigerians and less than 5 percent know they are infected,” said Tasiu Ibrahim, a medical doctor and a fellow of the Kashim Ibrahim Fellows (KIF) on Monday at the rollout of a five-day sensitisation campaign against Hepatitis B Virus (HBV), as part of the fellowship Community Service Week (CSW) in Kaduna. According to Ibrahim, the disease is three times more

infectious than HIV/AIDS because it leads to liver failure, cancer and ultimately death in infected persons. “The objective of the campaign is to raise awareness on HBV, provide free voluntary screening and counselling and engage stakeholders to advocate for policy change regarding the virus. “Hepatitis B infection, caused by the HBV is commonly transmitted via body fluids such as blood, semen and vaginal secretions,” he said. The World Health Organisation (WHO) says viral hepatitis B and C are major health challenges, affecting 325 million people globally. They are root causes of liver cancer, leading to 1.34 million deaths every year. “Hepatitis B and C are chronic infections that may not show symptoms for a long period, sometimes years or decades. At least, 60 percent of liver cancer cases are due to late testing and treatment of viral hepatitis B and C. Low coverage of testing and treatment is the most important gap to be addressed in order to achieve the global elimination goals by

2030,” says the agency. Findings show that the virus can have mild or no symptoms, however, experts prompt the government to highlight the need for education about its symptoms, which include the disease progresses, chronic hepatitis can lead to progressive liver failure, swelling of the lower extremities, confusion, and blood in the faeces or vomit, dark urine, itchy skin, yellow skin, whites of the eyes, and tongue. Larne Yusuf, a Lagos-based medical practitioner, says efforts should be made to enhance public education about improving sanitation, hygiene practices and food safety. “Hepatitis is an inflammation of the liver, which if left untreated can be life threatening. It can be prevented and controlled, though recovery might take a little time. But it is also advisable that people get vaccinated against the virus,” Yusuf says. Hepatitis C is contagious, it is the most common bloodborne disease and most people with hepatitis C do not realise that they have it, he states.

Rivers lauds Eunisell for role in local league development Anthony Nlebem

he Rivers State government has praised leading global chemical and specialty fluid management company, Eunisell, for their continued support of Rivers UnitedFCandthedevelopment of domestic football in Nigeria. Eunisell is the longest standing sponsor of a club in the NigeriaProfessionalFootballLeague. Speaking at a dinner to celebrate the partnership of the club at a special event, tagged: “Eunisell Rivers United FC Celebration Day,” in the Rivers State capital, Port Harcourt, Boma Iyaye,RiversStatecommissioner for sports, notes that not many clubs in the country have had the luxury of getting the kind of backing the club has enjoyed from Eunisell. Iyaye charged the team to raise their game by winning and ensuring they become a club to reckon with in Nigeria and on the continent. “Eunisell has done immensely well for Rivers United looking at the huge funds they haveinvestedintheteamTeams like Kano Pillars, Rangers, and Enyimba, who have won two continental championships, don’t have this kind of sponsorship. “SoweoweEuniselladutyby winning trophies and playing in the CAF Interclub competitions as a medium to showcase the brand globally,” he said. Also speaking, Rivers United general manager, Okey Kpalukwu, observed that with the partnership between the club and

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the company, Eunisell’s consistency with being the shirt sponsors for five seasons, which no other company had done in this country,wasofimmensebenefit to both the brand and the club. Kpalukwu said: “Before we came into this deal with Eunisell, our jersey was not seen on the streets, neither was it in any shop. “Right now, we have our jerseys in shops and being worn openly on the streets. I don’t know most of the people that I see wearing our jerseys. What that means is that the club is now more accepted by the peo-

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ple and even at the grassroots level. “If you see someone putting onourjersey,itmeanstheyhave an idea of the club’s existence and by extension, our sponsor, Eunisell. We also spot our jerseys when we travel outside the country to play. So people abroad are aware too. The shirt sponsorshiphasreallyhelpedto expose our brand …it’s a symbiotic relationship. “Eunisell is now a pride of every Rivers United FC fan as there is nowhere you go in the state that you won’t see a supporter wearing our team jersey.”

Tuesday 11 June 2019

BUSINESS DAY

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Tuesday 11 June 2019

BUSINESS DAY

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Tuesday 11 June 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Aswath Damodaran

s an investor, the two words that you should dread the most in a financial statement are “adjusted earnings”, as companies take accounting earnings and tweak them for sundry items. In the process, they almost always turn big losses into smaller ones, and losses into profits. One adjustment that is consistently made to get to adjusted earnings, or ebitda, is the adding back of stock-based employee compensation, with the rationale that it is either a non-recurring operating expense or, more frequently, that it is a non-cash expense. The adjustment has its biggest impact at young, high-growth companies, which are among the most prolific users of equity compensation. Uber, for instance, reported $172m in stock-based compensation expenses in 2018, but the usage of employee options and restricted stock is widespread, with the cost tallying to $1.1bn at Amazon and $1.7bn at Apple in the most recent year. Lest you think that this is a phenomenon unique to technology companies, Wells Fargo and JPMorgan Chase had $2.4bn and $1.9bn in equitybased compensation respectively, during the most recent 12 months. In short, as an investor, you can run but you cannot hide

Why investors should be wary of stock-based compensation If an employee is paid with options or restricted stock, it will hit your share’s value from this phenomenon. There was a leap in the usage of stock options by publicly traded companies in the 1990s. This was driven by flawed accounting practices, bad legislation and the public listings of young, money-losing firms. In particular, accounting rules allowed companies to give options to employees and to show no cost, at the time of the grant. Not surprisingly, companies treated options as free currency and gave away large slices of ownership to employees. It is ironic that just as accountants have come to their senses and started treating stock-based compensation as operating expenses, that companies and analysts have nullified the impact by adding these expenses back to get to adjusted earnings. It is also telling that as the accounting treatment of stock options has become more rational, companies have not reduced stock-based compensation but have shifted to restricted stock as their preferred mode. To the question of whether stock-based compensation is an operating expense, I offer you Warren Buffett: “If options aren’t a form of compensation, what are they? If compensation isn’t an ex-

If a company chooses to pay an employee with options or restricted stock, that action will affect the value of investors’ share of equity © Bloomberg

pense, what is it? And if expenses should not go into the calculation of earnings, where in the world should they go?” Stock-based compensation is an expense that should be recognised when granted and as employees have to continue to be compensated, it is an ongoing operating expense. To those who argue that it is non-cash, note

that unlike depreciation, which is truly non-cash, stock-based compensation is closer to in-kind compensation. Assume that you own a business that has an overall value of $100m and generates $10m in annual income, and that you hire me as your manager. Assume also that my compensation is $1m and that rather than pay me with cash,

you give me 1 per cent of the business as compensation. While you may maintain the fiction that this is a non-cash expense and that your income is still $10m, you are now entitled to only 99 per cent of that income in perpetuity. In effect, your share of the business is worth less and it will get even smaller over time, if you continue to pay me with equity.

The battle in Israel to create an unhackable phone Salesforce to buy data analytics firm Tableau in $15.7bn deal Politicians and intelligence agencies are using the IntactPhone Mehul Srivastava

early a decade ago, a young Israeli entrepreneur made a pair of bets — one on a company that claims it can hack any smartphone in the world and the other on a company that went on to develop a smartphone that is nearly unhackable. Today, those two companies, whose offices are less than hour’s drive apart in Israel’s northern tech corridor, are leading forces in the shadowy battle between surveillance and privacy. NSO Group, which is still run by the entrepreneur Shalev Hulio, is now valued at $1bn and its flagship product Pegasus is used by governments and intelligence agencies around the world to remotely and secretly hack smartphones. Often the very same governments and intelligence agencies also turn to Communitake Technologies, the designers of the chunky custombuilt IntactPhone, to keep their own secrets out of reach of NSO’s technology. “If this is an arms race, think of this technology like the Force in Star Wars,” said a cyber technology dealer, who has sold both offensive and defensive cybertechnology to governments. “If companies like NSO are the Dark Side of the Force, then people like Communitake are the Jedis.” When Mr Hulio first invested in Communitake, it had developed code that could remotely access a phone and root through its inner workings.

With some 50 or so employees, Communitake chose a high-minded path: it licensed the technology to the likes of BlackBerry and Nokia so they could help users fix their phones remotely, and only after the phone’s owners permitted access. But Mr Hulio foresaw that a second market, for mining smartphone data surreptitiously, was going to become very lucrative, and made a parallel investment in NSO, whose software worked similarly, but without asking for any consent. “Tech savvy terrorists and criminals [were concealing their communications and] going dark,” said Mr Hulio in a statement, adding that NSO was quickly approached by the intelligence community. “Our technology could be key to preventing a terrorist attack.” By 2012, Communitake and Mr Hulio went their separate ways — his work at NSO was going to be “a shadow on our company,” said Ronen Sasson, Communitake’s chief executive. “While it was hard to leave behind a very successful company, it was an easy decision knowing we could help create a technology that would go on to save an untold number of lives,” said Mr Hulio. Communitake also changed course, setting off to build a phone that no one, even NSO, could hack. Communitake does not market itself as the anti-NSO, but at least one country that has bought NSO’s software has equipped its senior officials with IntactPhones after testing the two technologies against each other, said one person familiar with the contract. www.businessday.ng

Acquisition will bolster dominance in managing information and analytics of blue-chip companies Eric Platt, James Fontanella-Khan and Tim Bradshaw

alesforce has agreed to pay $15.7bn for Tableau Software, in the biggest deal to date for the highly acquisitive cloud software group run by Marc Benioff. Salesforce said on Monday it would buy Tableau, which makes data analytics software that turns raw data into visualisations, in an all-share deal. The valuation is net of cash. Salesforce has bought dozens of companies since it was founded in 1999 by Mr Benioff, a former Oracle executive. Last year, it paid $6.8bn for Mulesoft, a data integration platform. Mr Benioff has attracted attention for aggressive acquisitions, even mulling a bid for Twitter. Outside Salesforce, he and his wife bought Time Magazine for $190m last year. Salesforce’s move comes at a time when the San Franciscobased cloud computing company has been forced to ramp up investment because of mounting competition from Oracle, Microsoft and other large rivals. The deal will help Salesforce bolster its growing dominance in managing the data, information and analytics of its blue-chip customers, an industry that it expects

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will be worth nearly $2tn by 2020. The acquisition is just the latest multibillion-dollar deal in the enterprise software market, after IBM paid $34bn for Red Hat and SAP bought Qualtrics for $8bn late last year. Just last week, Google spent $2.6bn just last week on Looker, a younger rival in data analytics. Tableau, which was born on the campus of Stanford University, has more than 86,000 customers, including telecoms group Verizon, US airline Southwest and streaming video service Netflix. The company’s products allow organisations to visualise big data in chart or map form without writing any code. Salesforce said it expected the deal would bolster its revenues in fiscal 2020 by as much as $400m. Tableau last year reported a loss of $77m on sales of nearly $1.2bn. “Tableau helps people see and understand data, and Salesforce helps people engage and understand customers,” said Mr Benioff. “It’s truly the best of both worlds for our customers — bringing together two critical platforms that every customer needs to understand their world.” The company said it would give class A and B stockholders of Tableau 1.103 shares of Salesforce, worth $177.88 apiece based on the closing share price of Salesforce @Businessdayng

on Friday. Shares of Salesforce fell 4 per cent to $154.15 in pre-market trading on Monday. Tableau rose more than 30 per cent to $168.42. Once the deal is completed, Tableau will continue to operate independently from its Seattlebased headquarters under the leadership of its existing chief executive Adam Selipsky. The transaction is expected to close by the end of October. The boards of both companies have approved the transaction. As part of the all-stock deal, Salesforce will offer to buy all outstanding shares of Tableau. The three founders of Tableau — Christian Chabot, Patrick Hanrahan and Christopher Stolte — have agreed to sell their shares as part of the deal. “Tableau is widely viewed as the gold standard in the next generation [business intelligence]/ visualisation market and has driven share gains against legacy [business intelligence] vendors,” said Tyler Radke, an analyst at Citi who follows the stock. Bank of America provided financial advice to Salesforce, while law firm Wachtell, Lipton, Rosen & Katz and Morrison & Foerster provided legal counsel. Goldman Sachs and law firm Cooley advised Tableau.

Tuesday 11 June 2019

BUSINESS DAY

NATIONAL NEWS

Donald Trump renews attack on Federal Reserve policy

US president calls rate policy ‘very, very disruptive’ and argues it helps China Pan Kwan Yuk

resident Donald Trump has renewed his criticism of the US Federal Reserve, saying the central bank was being “very, very disruptive” by raising interest rates too fast and giving China an edge in trade negotiations as a result. “[China] devalue their currency, they have for years: it’s put them at a tremendous competitive advantage. And we don’t have that advantage because we have a Fed that doesn’t lower interest rates,” Mr Trump said in an interview with CNBC on Monday. “We should be entitled to have a fair playing field but, even without a fair playing field — because our Fed is very, very disruptive to us — even without a fair playing field we are winning.” The comments mark the latest diatribe from Mr Trump over the Fed’s monetary policy. The president has been a strident critic, having repeatedly called for the central bank to cut interest rates. He has over the past year called the Fed his “biggest threat” and said he was “not even a little bit

happy” with chairman Jay Powell. The latest criticism comes even as traders have over the past month sharply ramped up their expectations for Fed to cut rates by as many as four times this year in response to US-Chinese trade tensions and slowing global growth. In his comments to CNBC on Monday, Mr Trump described the Fed’s decision to raise interest rates in December as “a big mistake”. “They raised interest rates far too fast. That’s No. 1,” said Mr Trump. “No. 2: they did quantitative tightening: they were taking in $50bn a month. Fifty billion a month. And they’ve now eased that, but it’s still $25bn a month, which is ridiculous. Now, China’s doing just the opposite. They’re pumping money in. So I’m winning, but I’m not winning on a level table.” The remarks did little to move the markets, with Treasury yields and stock futures hanging on to their gains. Yield on the benchmark 10-year note remains up 4 basis points at 2.1258 per cent, while S&P 500 futures were 0.5 per cent higher.

US tech CEOs join campaign for abortion access Microsoft, Apple, Amazon and Alphabet absent from the list of almost 200 signatories Andrew Edgecliffe-Johnson

lmost 200 US executives have signed an open letter arguing that restricting access to abortions is “bad for business”, putting pressure on state politicians over a polarising issue companies had long preferred to avoid. The campaign brings together CEOs of technology companies Slack, Square and Yelp; fashion retailers Eileen Fisher and Diane von Furstenberg; and Bloomberg chairman Peter Grauer alongside leaders of scores of smaller companies. Organised by advocacy groups including the American Civil Liberties Union, Naral and Planned Parenthood Federation of America, it comes in response to “heartbeat laws” introduced in several US states this year which would prohibit abortions once doctors can detect a foetal heartbeat, as soon as six weeks after conception. The letter, published in the New York Times, frames access to abortion as an issue of workplace equality and economic prosperity and follows a trend of business leaders becoming more willing to join the most sensitive political debates. “Restricting access to comprehensive reproductive care, including abortion, threatens the health, independence and economic stability of our employees and customers,” it reads: “It impairs our ability to build diverse and inclusive workforce pipelines, recruit top talent across the states, and protect the wellbeing of all the people who keep our businesses thriving day in and out.” The “Don’t Ban Equality” campaign follows threats by television and film producers to boycott Georgia if a new anti-abortion law takes effect in the state where Netflix made Stranger Things and Walt Disney filmed Black Panther. Sta-

cey Abrams, a prominent Georgia Democrat, has been among those arguing that a boycott will harm local workers and urging Hollywood instead to fund groups helping local women. The new letter makes no mention of individual states, or of threats to cancel investments. America’s most valuable companies, including Microsoft, Apple, Amazon and Alphabet, are absent from the list of signatories, despite having become more vocal on other political issues ranging from immigration to gay rights and gun violence. “Business is a powerful platform and can truly make a difference, especially when we speak collectively,” said Eileen Fisher, founder of the eponymous retailer. She did not want “to further divide this already divided country”, she added, but she was not afraid of alienating some customers. “I acknowledge that some of our customers may not share this perspective. To me, the vital opportunity is that women keep talking with one another and find common ground.” “I don’t recall a letter with so many CEOs stepping out on the particular issue of reproductive rights and abortion,” said Louise Melling, deputy legal director of the ACLU, adding that she hoped the signatories would “embolden” others to speak up. “As with all issues there comes a moment of recognition . . . They recognise they can’t just sit on the sidelines any more,” she said of the CEOs who had signed the letter. Support from business leaders was valuable to campaigners, she added, because “it is a statement of their economic power and it’s also a way of showing to politicians as well as the country that this issue matters to employers and it matters to the public”. www.businessday.ng

Former Nissan chairman Carlos Ghosn’s 108 days in pre-trial detention pale by comparison with the 966 days spent by Nobumasa Yokoo © AFP

Fate of Olympus financier shines light on Japanese legal system Nobumasa Yokoo’s 966 days in pre-trial detention echo treatment of ex-Nissan boss Ghosn Kana Inagaki and Robin Harding

lmost three years of detention before trial. Eight-hour interrogations in harsh physical conditions. New charges brought at the last minute. It may sound like dystopian fiction but that is what happened when Japanese financier Nobumasa Yokoo declined to confess. The prosecution of former Nissan chairman Carlos Ghosn has shone a spotlight on Japan’s criminal justice system, but his initial 108 days in detention pale by comparison with the 966 days Mr Yokoo — a leading figure in the fraud scandal at medical equipment maker Olympus — spent locked up before his trial. The methods Mr Yokoo described in an interview with the Financial Times highlight concerns about so-called “hostage justice” and the extreme pressure applied to extract confessions in Japan. “I’ve never met Carlos Ghosn, I don’t know him and frankly I don’t know what he did,” he said at a press conference. “But I do note a striking

parallel in our cases, especially in the way the prosecutors chose to arrest him for one charge and then drag things on by arresting him on another charge.” Mr Yokoo’s case was overseen by the same prosecutor who is now pursuing the ex-Nissan chief. Mr Ghosn is living in Tokyo under strict bail conditions as he awaits trial on charges of financial misconduct. He has denied all charges. The long detention of Mr Ghosn has prompted international outrage and put Japan’s justice system, which boasts a 99.97 per cent criminal conviction rate, in the dock. Prosecutors say they lack other investigative tools, such as wiretaps or subpoena powers, so extracting a confession is all important. At a briefing in January, Shin Kukimoto, deputy chief prosecutor, denied criticism that the long detention period and intensive interrogations lasting up to eight hours a day could create an environment for forced confessions. “We listen properly to claims made by the suspect,” Mr Kukimoto said at a briefing. “We don’t do the kind of interrogation

that forces a confession.” Not everyone agrees that this is the best approach. “Japan has long relied too heavily on confessions. There was criticism but it stayed inside the country,” said Shuhei Sugimoto, a criminal defence lawyer. “But now, the Japanese system is facing pressure from where it had least expected, and that international criticism could be a catalyst for change.” Mr Yokoo was a retired Nomura banker when he became embroiled in the Olympus affair, which began in 2011 when Michael Woodford, the company’s chief executive, exposed a long-running scheme to hide losses via dubious acquisitions. Mr Yokoo, a financial adviser to Olympus, was found guilty of abetting the falsification of financial statements, money laundering and defrauding a separate company called Gunei. He must report to prison imminently after an appeal to Japan’s supreme court failed earlier this year. Mr Yokoo maintains his innocence but irrespective of guilt, his case shows the pitiless treatment meted out to any defendant in Japan who does not confess.

United Tech deal with Raytheon creates aerospace powerhouse Concerns about scale of merged entity behind critical supply of military equipment James Fontanella-Khan, Sylvia Pfeifer and Ed Crooks

nited Technologies Corp and Raytheon on Sunday agreed to an all-share merger that will create a new aerospace and defence giant and challenge the industry’s longstanding pecking order. Under the terms of the deal, UTC will merge its aerospace business with Raytheon to form a $120bn powerhouse. It will be a critical supplier of military equipment and rank as the second-largest defence contractor by revenue, after Lockheed Martin but ahead of Boeing. On completion of the deal, UTC shareholders will control 57 per cent of the new group while the remainder will be owned by Raytheon shareholders, who will receive 2.3348 shares in the new combined company for each existing share. UTC will control eight of the 15 board seats, with the rest to come from Raytheon. The deal is expected to close in the first half of 2020, soon after UTC completes the previously announced spin-off of its Otis eleva-

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tor and Carrier building-systems businesses. UTC chairman and chief executive Greg Hayes will lead the combined company and Raytheon’s Tom Kennedy will serve as chairman. After two years, however, Mr Hayes will take on both roles of CEO and chairman. The deal will provide Raytheon and UTC with scale and diversification across defence and commercial aerospace and could help the combined group weather any slowdowns. Analysts have warned that, after an unprecedented boom in commercial aviation over the past decade, weaker growth could slow production. Chart showing how the proposed merger of Raytheon and UTC would create a defence and aerospace giant Patriot-missile maker Raytheon, which has suffered a 10 per cent fall in its share price over the past year, had a market value of $52bn based on its last closing stock price, and net debt of about $4bn. Shares in UTC have risen 3.4 per cent in the past year, giving it a market value of $114bn including the units of its business that will not be part of the @Businessdayng

tie-up with Raytheon. By contrast, it has net debt of $44bn. A deal will combine Raytheon’s operations in missile defence and precision weapons with those of UTC’s Collins Aerospace, a maker of cockpit avionics and the Pratt & Whitney (P&W) aero-engines division. P&W has long been the lead engine supplier to the Pentagon — it powers the F-35 fighter jet among other military aircraft — and also makes the first-of-a-kind geared turbofan jet engine that powers the Airbus A320neo. Together, the companies employ about 180,000 people globally. The combined company will have about $74bn in sales in 2019. It expects to return $18bn-$20bn of capital to shareholders in the first three years after the transaction closes. Mr Hayes told the Financial Times that the two companies served the same markets and had complementary technologies that would strengthen each other’s businesses. “What we are creating is a technology conglomerate with great focus in the markets we play in,” he said.

Tuesday 11 June 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Opioid maker Insys files for Chapter 11 bankruptcy Group buckles under weight of legal liabilities in wake of US addiction crisis

Hannah Kuchler

he opioid drugmaker Insys Therapeutics, whose products include the fentanyl-based spray Subsys, has filed for Chapter 11 bankruptcy in the wake of a $225m settlement with the US government. The government had been pursuing criminal and civil claims against the company over its role promoting the opioid during an epidemic of abuse. Insys is also struggling to fund liabilities after being named in about 1,000 lawsuits, with potentially more to come. About 90 per cent of the group’s revenue comes from opioids that clinicians are increasingly reluctant to prescribe due to the addiction crisis. Losses were compounding at the company, which reported a net loss of $125m in 2018 on top of a $227m loss in 2017. Insys shares dropped 45 per cent in Monday morning trading in New York after it said it would pursue courtsupervised sales of substantially all of its assets and address its legacy legal liabilities. It said it intended to carry on doing business using cash on hand and operating cash flows to pay employees and fund operations. The company had $104.1m in cash, cash equivalents and short-term and long-term investments at the end of 2018. Insys had already said it was considering selling Subsys, as it tried to move away from opioids into developing pharmaceutical-grade cannabinoids. Andrew Long, who was appointed chief executive in April, said Insys had “compelling assets” and a “highly

talented team”. “We believe this process will provide us with a forum to negotiate an equitable resolution with our creditors and represents the best opportunity for our people and our business,” he said in a statement. The bankruptcy filing comes after Insys agreed last week to pay $225m to settle all the outstanding US criminal and civil claims against the company. The US government is listed as the largest unsecured creditor with the right to recover up to $195m. If the bankruptcy court does not approve the settlement, the government may be able to assert a claim of more than $1bn. In total, eight former Insys executives have been prosecuted, including John Kapoor, the founder. Along with four of his colleagues, he was found guilty last month of racketeering conspiracy, for a bribery scheme that boosted the sales of Subsys. Mr Kapoor owns 63.2 per cent of Insys stock, according to the bankruptcy filing. Insys also owes $30m to the healthcare fraud unit of the US attorney’s office for the district of Massachusetts, and a total of about $11m for counsel for Mr Kapoor. In total, there are more than 5,000 creditors and interested parties. The opioid maker admitted illegal conduct when promoting Subsys, a very powerful opioid that was designed for the worst “breakthrough” pain suffered by cancer patients but was prescribed more widely. The accusations included paying kickbacks to clinicians, encouraging them to prescribe beyond cancer patients and lying to health insurers about diagnoses.

Eight former Insys executives have been prosecuted, including founder John Kapoor, seen here leaving court in Boston last month © AP

MPs to probe UK regulator’s oversight of Woodford FCA head has said rules may need to change after fund blocked investor withdrawals Philip Georgiadis

Ps are to scrutinise the UK financial regulator’s oversight of investment funds, after the head of the Financial Conduct Authority said rules may need to change following the suspension of Neil Woodford’s flagship fund. Nicky Morgan, the Conservative MP who chairs the Treasury select committee, has written to FCA chief executive Andrew Bailey to ask for details of the regulator’s oversight of the £3.71bn Equity Income fund that blocked investor withdrawals last week. “Questions have been raised about the FCA’s alertness to the problem,” Ms Morgan said on Monday. Mr Woodford, one of the UK’s star stockpickers, suspended redemptions in the equity income fund after a steady stream of investor outflows following a run of poor performance. “The FCA must set out the details of its supervisory contact with the Woodford Fund, whether it will

investigate the events that led to the suspension of the Fund, and more broadly, how long such a suspension should be,” Ms Morgan said. The MP was responding to an article by Mr Bailey in the Financial Times, in which the regulator and bookmakers’ favourite to be the next governor of the Bank of England said that the FCA will consider “lessons” from the Woodford episode as it finalises new rules for open-ended funds investing in illiquid assets such as property. Mr Bailey said the regulator is weighing intervention in areas including banning daily withdrawals from funds holding hard-to-trade assets, and forcing funds to keep to assets in jurisdictions chosen by investors. In her letter to Mr Bailey, Ms Morgan said: “Having seen your comments […] I would also welcome an overview of the current regulatory framework for funds, any ongoing FCA work in this area, and your thoughts on where further

regulatory change may be welcome.” Ms Morgan is seeking further details on how long managers should be able to suspend funds, and when the regulator should intervene, as well as whether the FCA has an opinion on whether fees should be charged during a suspension. Last week Ms Morgan made her first intervention into the Woodford incident, saying the stock picker should waive the fund’s fees while investor redemptions have been suspended. FCA bosses are set to give evidence to the select committee on Tuesday June 25. “Questions have been raised about the FCA’s alertness to the problem. The Committee will use Mr Bailey’s response, and the FCA’s appearance before us later this month, to try to get to the bottom of this,” Ms Morgan said. The select committee had previously announced plans to probe the wider Woodford meltdown as the session with the FCA later this month.

Donald Trump questions United Technologies-Raytheon Companies see few obstacles to quick approval for deal despite US president’s comments Myles McCormick, Sylvia Pfeifer, Patti Waldmeir and Kadhim Shubber

onald Trump has waded into the planned merger of United Technologies and Raytheon, suggesting the deal that would create an aerospace and defence giant could be bad for competition in the sector. Under the deal, which was agreed on Sunday, UTC is set to merge its aerospace business with Raytheon to form a $120bn powerhouse and the second-largest defence contractor by revenue. But the US president said on Monday that it could decrease competition in a sector in which a small number of companies command strong pricing power. “When I hear United and I hear Raytheon . . . when I hear they are merging, does that take away more competition?” Mr Trump asked in an interview on CNBC. The comments by Mr Trump echo his previous intervention on AT&T’s takeover of Time Warner and could lay the groundwork for Ray-

theon and UTC to claim improper political interference if antitrust enforcers attempt to block the deal. In the case of AT&T-Time Warner, the spectre of the president’s vow to block the deal on the campaign trail hung over Makan Delrahim, the antitrust chief of the Department of Justice, when he sued to block the transaction. A federal judge cleared the deal in a decision that was upheld on appeal. Mr Delrahim has always denied any political considerations played a part in his move to block the takeover. Mr Trump on Monday said a merged Raytheon-UTC would be “one big, fat, beautiful company” that could result in higher costs for the US military. “I have to negotiate — meaning the United States has to buy things — and does that make it less competitive? Because it’s already non-competitive,” he said. The president added that the US already spent far more than “other major countries” such as China and Russia on its defence budget, insisting “part of it is that we have no competition”. www.businessday.ng

SGX plans push into foreign exchange markets Exchange seeks to capitalise on regulator’s efforts to promote Singapore as currency trading hub Philip Stafford

GX, the Singapore exchange, is planning an aggressive push into foreign exchange markets over the next five years, aiming to capitalise on efforts from local regulators to strengthen the country’s grip as Asia’s largest currency trading hub. The exchange, which is dominant in stocks in Singapore and equity derivatives across the region, made a move into foreign exchange in March by buying an initial 20 per cent stake in BidFX, a trading venue used by hedge funds and banks, for $25m. It also has an option to purchase a controlling interest. Loh Boon Chye, chief executive of SGX, said this was an opening gambit in an overhaul that should reduce the group’s reliance on domestic stocks and futures that track blue-chip equities in Japan, China, India and Taiwan.

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“Our diversification efforts over the last five years means we are truly multi-asset class: we also have forex, commodities and fixed-income. In the next five years we would like forex to be as meaningful as equity-index derivatives,” he told the Financial Times. In the last quarter to March, SGX handled 5.5m of forex futures contracts, up 48 per cent year on year but still small compared with the 50m of equity derivatives traded in the same period. Turnover at its derivatives units account for nearly half of group revenues. Mr Loh expects that tougher rules surrounding off-exchange derivatives, due to come into force over the next 18 months, will also have an effect on banks’ behaviour, because it will encourage them to use cheaper products such as cleared futures. “Another trend we’re seeing @Businessdayng

is [the convergence] of [overthe-counter] markets and listed products,” said Mr Loh. Singapore is the world’s thirdlargest FX trading hub after London and New York, according to the last triennial survey by the Bank for International Settlements, benefiting in particular from increased trading of China’s renminbi. But many traders in Singapore have complained that they are at a disadvantage to rivals in the rest of Asia because some of the region’s biggest FX marketplaces, such as the CME Group’s EBS, are based in Japan. The data that carry prices and orders take too long to cross the Pacific, they argue. Their pleas have been heard by the Monetary Authority of Singapore, the regulator, which is trying to entice more traders to set up servers and data centres on the island through incentives such as tax breaks.

Tuesday 11 June 2019

BUSINESS DAY

ANALYSIS FT Trump upends three decades of US/Mexico bridge-building Concerns rise about lasting damage of president’s mercurial approach to trade ties Michael Stott

ngry members of Congress told the US president he had abused executive power by invoking a national emergency over Mexico and demanded a rethink before it was too late. This was in Washington not last week but in January 1995. What irked Capitol Hill then was Bill Clinton’s decision to bypass stiff congressional opposition and loan Mexico $20bn of American money to help pull its economy out of crisis. The US-led bailout was part of a bipartisan diplomatic effort spanning almost three decades, beginning with the negotiation of the North American Free Trade Agreement at the start of the 1990s. The aim was to overcome more than a century of mistrust and bring Mexico closer to its big northern neighbour as a trusted and prospering ally. The policy produced results. By

Mexico in this way,” said Michael Shifter, president of the Inter-American Dialogue, a Washington thinktank, speaking after Mr Trump’s initial announcement. “He’s completely ignored what Mexico is already doing on migration at some political cost.” Arturo Sarukhán, a former Mexican ambassador to the US, said Mr Trump’s tariff threat had caused the most serious crisis in US-Mexican relations since the mid-1980s, when Washington had closed the border after Mexican drug barons kidnapped, tortured and murdered an American anti-narcotics agent, Enrique Camarena. “Trump has upended one of the basic tenets of the relationship since Nafta ratification,” said Mr Sarukhan. “In a relationship as complex as this one, you don’t contaminate one issue, such as migration, with another, such as trade. One of the fundamental principles is that you don’t create

Immigration agents check documents at a checkpoint in the outskirts of Tapachula, Chiapas state, Mexico. Mexican officials have said they would only take action to curb migration that would be both dignified and effective © AFP

2018, Mexico was the US’s third biggest trading partner, just behind Canada, with $678bn of business done between the two nations. US companies have $110bn invested in Mexico, around 1.5m Americans living there and more than 11m Mexican immigrants call the US home. Donald Trump’s sudden and unexpected threat in an evening tweet on May 30 to impose punitive tariffs on all Mexican exports within 11 days marked a dramatic shift in that policy of rapprochement. The tariffs were to start at 5 per cent and rise each month to 25 per cent unless Mexico dramatically cut migration to the US border. “Our chargé down there didn’t know whether to kill himself or jump off the building,” one former senior US official said, with a sigh. “There’s a growth of real disgust in Mexico at the way Trump is treating them.” Mr Trump backed down just as suddenly on Friday night, less than three days before the tariffs were due to be imposed, saying Mexico had agreed “strong measures” to stem migration. The following day he tweeted: “Everyone very excited about the new deal with Mexico!” Experts on the US-Mexico relationship, however, cautioned that the damage caused by Mr Trump’s threat was likely to take longer to repair. One of the main casualties was business confidence, as companies realised that the certainty of permanent tarifffree trade — upon which some have built whole supply chains — was subject to presidential whim. “He’s violated all the norms by applying pressure and threatening

these linkages that contaminate the agenda as a whole. “Trump was not seeking a deal; he was seeking a trophy”. A big concern is that the threat of tariffs will return if Mexico’s enforcement action against Central American migrants crossing its territory towards the US proves inadequate. A section of the US-Mexico joint declaration on Friday was titled “Further Action” and stated: “Both parties also agree that, in the event the measures adopted do not have the expected results, they will take further actions.” Given that Mexico has pledged to step up enforcement of migration laws along its highly porous 871km southern border with Guatemala using a National Guard that is still being hired, experts say it is highly unlikely that the record surge in migration of families from Central America north will be halted quickly enough to satisfy Mr Trump. Another risk is that the Mexican president, Andrés Manuel López Obrador, faces pressure from angry nationalists who believe he caved in to US demands too easily. “The sovereignty and dignity of Mexico have been damaged,” tweeted the head of the main conservative opposition party, Marko Cortés, after details of the agreement emerged. Mr López Obrador is vulnerable. For all the economic benefits and improvements in relations that Nafta has brought, the lopsided nature of the relationship between the world’s biggest economy and a middle-ranking emerging market has endured. www.businessday.ng

Foxconn: why the world’s tech factory faces its biggest tests As he bids to lead Taiwan, Terry Gou must respond to challenges such as the US-China trade war and a shift to niche products Kathrin Hille

ew companies epitomise the era of globalisation better than Hon Hai, the world’s largest contract electronics manufacturer. Known as Foxconn Technology Group, its formula for success includes: massive plants in China run with an abundant supply of lowcost labour, proximity to clusters of suppliers and a reliance on free trade and a seemingly insatiable global appetite for mass market devices. Over the past 15 years, Foxconn has grabbed a significant share of the orders to make personal computers and smartphones for brands such as Apple, Dell and Huawei. Along with rival manufacturers from Taiwan such as Quanta Computer, Pegatron and Wistron, it has led a constant race to make the manufacturing process cheaper, faster and more efficient. This Tuesday will be a historic day for Foxconn, when it will host an investor conference for the first time ever. On the agenda at the event in the Taipei suburb of Tucheng, which translates as Dirt City, is the looming existential challenges for a company which is both the world’s largest assembler of Apple iPhones and China’s biggest private sector employer. The immediate order of business is to explain how the company will be run after Terry Gou, the tycoon who founded it 45 years ago, steps down as chairman to enter politics and run for the Taiwanese presidency. But the even bigger issue will be how Foxconn plans to navigate two separate threats from politics and from artificial intelligence which have the potential to wreck the business model of the handful of Taiwanese electronic manufacturing services companies that dominate the consumer technology supply chain. The company is caught in the middle of the escalating trade war between the US and China — the one-time champion of globalisation now suffering as more hawkish members of the Trump administration seek ways to “decouple” the two countries’ technology sectors. But it is also trying to come to terms with the impact of AI, which is leading to a shift in the market away from the mass production that fuelled its growth towards more niche, highermargin items. Reflecting worries over these challenges, Hon Hai’s share price

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has dwindled by 51 per cent over the past two years to T$71 on Friday. Last week, Mr Gou warned of a “tsunami” in the global economy triggered by the trade war. With the US government raising tariffs to 25 per cent on $200bn of Chinese goods and blacklisting telecoms equipment maker Huawei last month, Taiwan contract manufacturing executives have been scrambling to shift at least some production out of China. That is an endeavour fraught with difficulties. “It is nearly impossible to replicate the ecosystem we have in China quickly,” says JeanFrederic Kuentz, a senior partner at McKinsey, the consultancy. “The first problem is that there is not enough manpower. The second is the network of suppliers — panel makers, moulding companies, component makers. It is a big, big headache.” The changes brought to the market by AI are at least as disruptive for the industry. Last year, global shipments of smartphones — a product that accounts for more than half of Foxconn’s revenue — dropped 4.5 per cent to 1.39bn units, and this year will see a 3.1 per cent decrease, according to Canalys, a technology research firm. Experts believe that even if growth returns next year, underpinned by the adoption of 5G, the boom days for smartphones are over. “For many functions that are on your smartphone today, you will soon no longer need it,” says Yu Kai, co-founder of AISpeech, a Chinese voice recognition start-up that Foxconn has invested in. “Some of them will be taken over by smart speakers, others by alternative home appliances, yet more by applications in your car. We may even see the day where the concept of a device becomes obsolete altogether as you interact via voice or image recognition with your environment.” Some of the new AI-powered market segments, such as smart speakers, are growing fast. Applications in the automobile industry, medical services and robotics also offer growing returns. But analysts say these segments are too small and technologically too demanding to allow Taiwanese firms to quickly replace revenue and profits from their current range of IT products. “At the moment, you have mass market products with more than 2bn units. Some of the new products will be in the tens of thousands of units. Only wearables are going to be in the hundreds of millions,” says @Businessdayng

Manish Nigam, head of Asian technology research at Credit Suisse. “There is no single new mass market product out there, so there will be consolidation among the contract manufacturers.” Analysts say a focus on scale — the very strategy that boosted Foxconn and its Taiwanese peers in the last few tech cycles featuring the laptop, the tablet and the smartphone — is now making it harder for them to adjust. “As HP, IBM, Dell, Apple came knocking on their door with huge volumes of things to be made, the Taiwanese never really diversified into the other things with low volume but much higher margins and also much higher technology threshold,” says another technology analyst. “They really completely collectively missed this. So now it’s a lot more complicated because in those niches where there is growth, it is not the EMS industry incumbents that benefit.” Some experts believe that some of the contract manufacturing companies in the region that lost much of their IT business to Foxconn a decade ago could end up being the biggest beneficiaries of the new market segments. They name, for instance, Singapore-based Flextronics and Venture, both of which have sizeable businesses making electronics hardware for the medical sector. Liu Rufeng, a vice-president at AISpeech who works with manufacturers to develop hardware solutions for its voice recognition applications, says traditional EMS firms are mostly absent from these new areas. “The hardware manufacturers that make smart speakers are often companies that were already making traditional speakers, such as TCL and Guanjie,” he says. “It is mainly Chinese companies, not the big Taiwanese EMS firms. In white goods, it’s the traditional white goods makers.” As for in-car electronics, a market segment with higher technical barriers to entry but also much higher profit margins, Mr Liu says Chinese electronics contract manufacturers including Huayang and Botai were taking the lead. Many of the big Taiwanese contract manufacturing firms are struggling to address these challenges — at a time when the US-China friction is likely to put additional strain on profit margins and is forcing some to rethink the way they organise their operations.

Tuesday 11 June 2019

BUSINESS DAY

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Tuesday 11 June 2019

BUSINESS DAY

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Tuesday 11 June 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Monday 10 June 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 223,934.92 6.30 -0.79 194 4,011,516 UNITED BANK FOR AFRICA PLC 215,456.35 6.30 0.80 146 4,994,060 ZENITH BANK PLC 635,779.00 20.25 -0.49 311 70,250,691 651 79,256,267 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 251,267.05 7.00 0.72 144 11,475,293 144 11,475,293 795 90,731,560 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,768,213.77 136.00 -0.37 142 1,793,979 142 1,793,979 142 1,793,979 BUILDING MATERIALS DANGOTE CEMENT PLC 3,220,655.90 189.00 - 40 54,299 LAFARGE AFRICA PLC. 161,077.95 10.00 - 57 345,235 97 399,534 97 399,534 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 302,107.44 513.40 - 15 18,273 15 18,273 15 18,273 1,049 92,943,346 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 3 173,000 OKOMU OIL PALM PLC. 70,589.34 74.00 - 4 659 PRESCO PLC 58,000.00 58.00 - 11 5,854 18 179,513 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 - 4 73,622 4 73,622 22 253,135 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 6 167,318 JOHN HOLT PLC. 182.90 0.47 - 1 32 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 46,338.71 1.14 -1.72 47 2,695,579 U A C N PLC. 18,440.30 6.40 1.59 80 3,082,567 134 5,945,496 134 5,945,496 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,578.00 21.65 - 16 31,980 ROADS NIG PLC. 165.00 6.60 - 0 0 16 31,980 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,287.35 1.65 10.00 34 1,611,647 34 1,611,647 50 1,643,627 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 9,395.40 1.20 - 2 16,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 2 10,094 GUINNESS NIG PLC 104,043.18 47.50 - 21 45,810 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 7 17,070 NIGERIAN BREW. PLC. 463,820.32 58.00 - 41 2,866,291 73 2,955,265 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 80,000.00 16.00 -2.44 73 895,036 DANGOTE SUGAR REFINERY PLC 138,000.00 11.50 - 63 1,040,771 FLOUR MILLS NIG. PLC. 57,200.30 13.95 0.36 41 354,927 HONEYWELL FLOUR MILL PLC 8,564.61 1.08 - 13 780,043 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,211.69 14.80 - 8 20,637 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 198 3,091,414 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,566.31 10.95 - 16 56,964 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 - 56 166,139 72 223,103 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,678.16 3.74 0.81 46 1,834,118 46 1,834,118 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 29,183.01 7.35 - 24 94,173 UNILEVER NIGERIA PLC. 164,307.15 28.60 -7.59 65 692,476 89 786,649 478 8,890,549 BANKING ECOBANK TRANSNATIONAL INCORPORATED 179,825.60 9.80 -2.00 24 18,134,665 FIDELITY BANK PLC 49,836.65 1.72 -0.58 70 6,236,859 GUARANTY TRUST BANK PLC. 897,650.97 30.50 0.33 242 23,099,981 JAIZ BANK PLC 13,553.55 0.46 2.22 17 1,887,949 10,687.83 0.77 - 0 0 SKYE BANK PLC STERLING BANK PLC. 70,248.62 2.44 -0.41 236 10,535,019 UNION BANK NIG.PLC. 203,845.27 7.00 - 31 183,236 UNITY BANK PLC 7,364.28 0.63 -10.00 16 557,021 WEMA BANK PLC. 23,530.42 0.61 -1.61 38 2,846,289 674 63,481,019 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,643.24 0.67 -1.47 13 664,100 AXAMANSARD INSURANCE PLC 20,055.00 1.91 - 3 2,037 CONSOLIDATED HALLMARK INSURANCE PLC 1,788.60 0.22 10.00 4 1,200,000 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 3 2,220 GOLDLINK INSURANCE PLC 909.99 0.20 - 1 790,531 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 -6.25 8 1,102,270 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 5 373,978 LINKAGE ASSURANCE PLC 3,760.00 0.47 -6.00 2 154,454 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 5 138,100 NEM INSURANCE PLC 10,825.03 2.05 - 14 173,300 NIGER INSURANCE PLC 1,547.90 0.20 - 1 289 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 2 163,514 REGENCY ASSURANCE PLC 1,333.75 0.20 - 4 3,090,020 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 8.70 5 279,100 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 2 5,200 WAPIC INSURANCE PLC 5,353.10 0.40 2.56 14 694,841

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86 8,833,954 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,292.76 1.44 - 6 119,930 6 119,930 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,820.00 3.41 -2.57 84 2,814,681 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 - 8 15,706,165 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 32,872.50 1.66 0.61 83 7,411,360 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 1 10,000 STANBIC IBTC HOLDINGS PLC 435,223.50 42.50 - 23 146,243 UNITED CAPITAL PLC 13,320.00 2.22 0.91 79 8,861,275 278 34,949,724 1,044 107,384,627 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 1 500,000 1 500,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 2 41,512 2 41,512 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,575.00 5.05 - 5 10,040 9,148.46 7.65 - 21 137,826 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,847.27 2.23 - 17 630,808 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 12 249,607 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 100 56 1,028,381 59 1,569,893 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 -9.09 38 7,254,107 38 7,254,107 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 2 20 648.00 6.00 - 2 4,169 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 4 4,189 PROCESSING SYSTEMS CHAMS PLC 1,643.62 0.35 -2.78 46 4,569,144 9,996.00 2.38 - 1 8,250 E-TRANZACT INTERNATIONAL PLC 47 4,577,394 89 11,835,690 BUILDING MATERIALS BERGER PAINTS PLC 1,854.87 6.40 -3.03 37 2,677,591 21,770.00 31.10 - 20 101,896 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 177,437.26 13.50 -10.00 30 549,414 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 313.43 0.59 - 2 153,333 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 1,156.20 9.40 - 1 10 PREMIER PAINTS PLC. 90 3,482,244 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,571.53 1.46 -8.75 26 653,073 26 653,073 PACKAGING/CONTAINERS BETA GLASS PLC. 37,497.90 75.00 - 8 3,136 GREIF NIGERIA PLC 388.02 9.10 - 0 0 8 3,136 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 3 131 3 131 127 4,138,584 CHEMICALS B.O.C. GASES PLC. 1,565.08 3.76 - 10 163,677 10 163,677 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 3 9,853 3 9,853 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 79.20 0.36 - 2 150 2 150 15 173,680 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,690.93 0.27 8.00 11 308,900 11 308,900 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,860.94 3.85 -3.75 147 6,709,184 147 6,709,184 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 61,301.19 170.00 - 16 50,070 CONOIL PLC 15,960.90 23.00 - 32 76,434 ETERNA PLC. 4,760.13 3.65 - 3 12,120 FORTE OIL PLC. 34,515.75 26.50 2.91 39 229,715 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 2 2,289 TOTAL NIGERIA PLC. 50,928.28 150.00 - 21 23,240 113 393,868 271 7,411,952 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 5 44,400 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 1 100 6 44,500 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 10 1 10 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 1,300 IKEJA HOTEL PLC 3,014.25 1.45 - 3 45,688 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 4 46,988 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 163.30 0.27 - 0 0 LEARN AFRICA PLC 1,033.74 1.34 - 2 35,879 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 6 105,100 8 140,979 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 464.16 0.28 - 1 200

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BUSINESS DAY Tuesday 11 June 2019 www.businessday.ng

CEO in focus

Austin Avuru: The CEO breaking new grounds in Nigeria’s oil and gas industry ENDURANCE OKAFOR

ppointed the Chief Executive Officer of Seplat Petroleum Development Company Plc (Seplat) on May 1, 2010, the Geology degree holder has served as its Managing Director leading the nascent company formed as an SPV by Shebah and Platform from the conclusion of the divestment from Shell to a dual listing on both the Nigerian and London Stock Exchanges. Haven spent twelve years at Nigeria National Petroleum Corporation (NNPC) beginning in 1980, where he held various positions including well site geologist, production seismologist, and reservoir engineer, Avuru has been able to move Seplat to its enviable position as Nigeria’s pre-eminent independent oil and gas company, which was recently migrated to the Premium board of the NSE after just four years of listing. In 1992, Avuru joined Allied Energy Resources in Nigeria, where he worked for the next ten years as exploration manager and technical manager. Fast-forward to 2002, the 60-year old established Platform Petroleum Limited and held the role of Managing Director until 2010, when his company merged with A.B.C Orjiako’s Shebah Petroleum Development Company which then gave birth to Seplat. Since then the company has been on the growth trajectory fuelled by Avuru and his assembled array of industry professionals. The 2018 audited financial statement of Seplat- the upstream oil and gas giant- showed there were improvements in key financial ratios while revenue and profit have been growing at a fast rate since 2016. For the year ended December 2018, Seplat’s revenue was up 65.18 percent to N228.39 billion, from N138.28 billion as at December 2017; eclipsing the N63.38 billion recorded in the corresponding period of 2016. Sales from crude oil increased by 61.32 percent to N180.75 billion in December 2018 as against N112.75 billion as at December 2017. The global crude price has performed favourably in 2019 compared to the last quarter of 2018, thanks to OPEC’s and allies’ output cut- which means the company’s future is bright. For the first three months through March 2019, Seplat’s profit after tax increased by 59.55 percent to N10.02 billion from N6.28 billion the previous year; the N10.02 billion figure is the highest profit in

Avuru

5 years since the company surmounted the headwinds brought about by the disruption of its gas pipeline at Forcados in 2016. The growth in the bottom-line (profit) was largely driven by an income tax credit of N4.06 billion in the period under review, The company’s operating profit can cover its interest expense at times interest coverage ratio stood at 2.04 times in March 2019, outstripping the 1.50 times globally accepted benchmark. Its deleveraging strategies have yielded fruits, as total debt on its balance sheet has reduced, further adding impetus to the bottom line since interest expense otherwise known as finance cost has been curtailed. Seplat has continued to deleverage its balance sheet so as to reduce financial risk and pave the way for future bond issuances. Its robust operating cash position means it can pay dividend, pay money owed to financial institutions, and fund future expansion plans Interest bearing loans and borrowing declined by 23.34 percent to N104.89 billion, from N136.83 billion in the previous year. A cursory look at the chart shows total borrowing has been ebbing since 2015. Debt to equity ratio fell to 20.88 percent in the period under review from 27.86 percent the previous year, showing that there has been a reduction in the level of debt in the capital structure. The upstream oil and gas giant has repaid $100 million on the four-year RCF bringing balance drawn to zero while

retaining significant headroom in the capital structure to fund growth initiatives Seplat is targeting output of 49,000 to 52,000 barrels of oil equivalent a day this year and “will probably start seeing a gradual increase in production’’ from next year on sustained expenditure and stability in the Niger Delta region. The company, meanwhile, will more than double capital spending to $200 million this year from 2018 as it seeks to take advantage of “relative stability’’ in the Niger Delta region. Seplat and NNPC have agreed to raise $700 million for a joint gas project scheduled to start production next year as the government steps up plans to reduce the country’s reliance on oil. The project, known as Assa NorthOhaji South, is one of seven to boost gas production and infrastructure development in the West African nation, the continent’s biggest producer of crude. ANOH Gas Processing Co., which is owned by Seplat and the Nigerian Gas Co., a unit of the Nigerian National Petroleum Corp., will develop, build and operate the plant in south eastern Imo State. Seplat and Nigerian Gas will provide 60 percent of the funds as equity, while ANOH will source the balance as debt. The plant, which will process wet gas from the unitised upstream fields at OML 53 and OML 21, has an initial capacity of 300 million standard cubic feet per day. It’s scheduled to begin production by the last quarter of 2020 and the first supply is

targeted in 2021, Avuru said. Nigeria’s government is encouraging investments in gas infrastructure to improve supplies to power companies and diversify the economy away from oil, which currently accounts for the bulk of revenue. Avuru, the leader of the only listed upstream oil & gas company in Nigeria, is a notable champion of Local Content Development in the Upstream sector of the Nigerian Petroleum Industry. He led the extensive campaign for indigenous E & P participation from 1996 to 2000, and as a member of the National Committee on Local Content Development, chaired the technical subcommittee that drafted the policy blueprint that has transformed into the Nigerian Content Act of 2010. Avuru’s brilliance has earned him several academic recognitions and awards. He is a Fellow and was President of the Nigerian Association of Petroleum Explorationists (NAPE). He is a co-Author of Nigerian Petroleum Business, a Handbook and author of Politics, Economics & the Nigerian Petroleum Industry. Oil industry practitioners regard Austin Avuru as an outstanding professional whose career trajectory has seen him wear many hats. One can only wonder who mentored this accomplished Nigerian. Two men come to mind. The men, who nurtured his entrepreneurial drive, provided oil and gas industry mentorship and sharpened his intellectual insight. Kase Lawal, whose Allied Energy must have opened the young Austin Avuru’s eyes to the potentials inherent in entrepreneurship, and Macaulay Agbada Ofurhie who was Avuru’s boss at NNPC and now a Non-Executive Director at Seplat are the two men that come to mind. When Austin Avuru speaks about these men in any setting, it is always with respect and a healthy dose of something approaching awe thus highlighting the need to pay homage to bosses and mentors; the same deference that many in the industry now show to Avuru who has become a genial avuncular figure and mentor. Today, Seplat is not just the biggest supplier of gas to the domestic market, it is on course to surpassing its 2019 guidance for both oil and gas production and revenue. Seplat, under Avuru’s leadership, has shown itself an example of all that is possible when a well-run Nigerian company steps up to the plate. Passionate about growing the Nigerian oil and gas sector to achieve its potentials, the chief executive of Seplat has shown that excellence is not an unachievable task to Nigerians, and neither is sustainable and ethical business practice.

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