BusinessDay 11 Mar 2019 by BusinessDay

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APC wins Lagos, Kwara, Gombe, leads in Ogun ...INEC suspends Rivers elections ...as PDP wins Kano, Abia, Enugu, Ebonyi JOSHUA BASSEY, INIOBONG IWOK, Lagos, ADEOLA AJAKAIYE, Kano, OWEDE AGBAJILEKE, JAMES KWEN, Abuja, & RAZAQ AYINLA, Abeokuta

he Independent National Electoral Commission (INEC) on Sunday officially announced Babajide Sanwo-Olu of the All Progressives Congress (APC) winner of the Saturday, March 9 governorship election in Lagos State. From the results declared across the 20 local government areas of the state, Sanwo-Olu won by a landslide, defeating his major challenger, Jimi Agbaje of the opposition People’s Democratic Party (PDP), with 739,141 against 206,141 votes. Congratulating Sanwo-Olu, Babatunde Fashola, minister of works, power and housing and a former governor of Lagos State, also extended greetings to the PDP candidate. “Well Done JK (referring to Jimi Agbaje), Congrats BOS (reContinues on page 47

₦1,361,448.97

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BUY

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$-N 357.00 360.00 £-N 466.00 475.00 €-N 402.00 407.00

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Market I&E FX Window CBN Official Rate Currency Futures

($/N)

FGN BONDS

TREASURY BILLS

Spot ($/N)

360.42 306.90

-0.04 12.42

-0.13 14.24

0.03

NGUS MAY 29 2019 362.05

14.20

NGUS AUG 21 2019 362.50

10 Y 0.07

20 Y 0.12

14.31

14.25

NGUS FEB 26 2020 363.40

Buhari targets quick win with gas flare commercialisation programme P OLUSOLA BELLO & LOLADE AKINMURELE

resident Muhammadu Buhari would have helped himself to a quick win, in a broad push to step up the pace of economic reforms in his

EOI deadline for off-takers now March 15

second term, when the Nigerian Gas Flare Commercialisation Programme (NGFCP) reaches its final execution point this year. The gas flare commercialisa-

tion programme, which seeks to bring an end to gas flaring in Africa’s largest oil producer, will see investors bid for the approximately 178 gas flare sites

spread across Nigeria’s Niger Delta region. President Buhari approved

Continues on page 47

Inside Nigeria’s FX market at its most liquid in 4yrs P. 2 L-R: Hakeem Belo-Osagie, chairman, Metis Capital Partners; Peter Tufano, dean, Saïd Business School, and Aigboje Aig-Imoukhuede, founder, Africa Initiative for Governance (AIG) and Coronation Capital, at the Oxford Business Forum Africa in Oxford, at the weekend. See story on A5

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Focus shifts to interest rate as banks intensify loan buying

L-R: Zubairu Mu’azu, commissioner of police, Lagos State; Eyitayo Ogunbodede, vice chancellor, Obafemi Awolowo University/2019 state returning officer for Lagos governorship election, and Felix Daramola, acting HOD, electoral operation, INEC Lagos, during the collation of 2019 governorship and state house of assembly election result in Lagos, yesterday. Pic by Olawale Amoo

…target retail, corporate customers HOPE MOSES-ASHIKE

eposit money banks (DMBs) in Nigeria have intensified competition to acquire retail and corporate customers following a strategic focus around loan refinancing. The banks are making reasonable efforts at acquiring the loan liabilities of target prospects from other banks, with an offer for discounted interest rates. Expectedly, banks making the bold move are majorly those that are reasonably liquid to take such risks for an enhanced customer base. They cut across the tier-1 and tier-2 lenders. BusinessDay learnt these banks meet both large and small corporates as well as individuals with various categories of existing loans, preferably the soft loans offered to salary earners. Very simply, their targets are the salary accounts of the prospects. A director in one of the tier-1 banks told BusinessDay on the phone that the strategy is an opportunity for collection and credibility. The director explained that banks target certain names with credibility and also look at the entire value chain of distributors and staff of a company. The Central Bank of Nigeria’s latest publication of the applicable rates for each of the DMBs as at June 22, 2018 shows that banks charge between 4.20 percent and 20.5 percent for prime lending and between 20.4 percent and 41.5 percent for max lending. Total value of credit allocated to the private sector of the economy by the banks stood at N15.13 trillion

as at the fourth quarter (Q4) 2018, a decline of N455 billion from N15.58 trillion at the end of the third quarter (Q3) 2018, according to the National Bureau of Statistics (NBS). The banks that are liquid target customers of cash-strapped banks with incentives in form of lower interest rates and afterwards, restructure the loans. “This is a form of loan refinancing. It makes a business sense where customers have loans with high interest rates which they contracted in periods of high interest rates,” said Taiwo Oyedele, head, tax and regulatory services, PwC. The CBN has kept its monetary policy rate (MPR) at 14 percent since July 2016, when it lifted the rate by 200 bps. The regulator has also kept unchanged the liquidity ratio at 30 percent, cash reserve ratio at 22.5 percent and +200/-500 basis point asymmetric corridor around the MPR. “Now that rates are trending downward, a bank can refinance such loans at a lower rate and still make money in the process. Overall, it is a reflection of the intense competition in the sector which is good for customers and the economy in general,” Oyedele said. The aggressive loan push by banks has further intensified following the continued drop in Nigerian Treasury Bills yield. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said banks offering lower rates to customers is a market strategy.

•Continues online at www.businessday.ng

Nigerian pension industry growth points the way to insurance sector ... Pension assets stand at N8.4trn, insurance N703bn MICHEAL ANI

ith over N8.4 trillion sitting as Asset under Management (AUM), the Nigerian pension industry has a lot to teach the older insurance sector. Making the Contributory Pension Schemecompulsoryin2004hashelped the Nigerian pension industry grow its assetfromzerotoashighasN8.4trillion as at end of November 2018, according to data obtained from the National Pension Commission(PenCom), the industry regulator. But the same meteoric growth has not been recorded in the insurance sector, despite having a headstart over the pension industry. With only about N703 billion assets under managementcomparedtopension industry’s N8.4 trillion, industry experts blame the insurance sector’s woes on its non-mandatory nature. “Two fundamental things made the pension industry successful,” said Misbahu Yola, managing director, FCMB Pensions Limited, formerly Legacy Pension. “The pension industry is backed by law that you must open an account and your employer must contribute and if you don’t follow it you are in trouble. That is the major fundamental pushing up the pension industry, but this is not the case with the insurance sector,” Yola told BusinessDay in an exclusive

interview. Prior to the enactment of the Pension Reform Act, 2004, the Nigerian pension industry was in an abysmal state, bedevilled with several problems, including unfunded benefits and retirement budgets recorded annually. These factors coupled with a lower penetration rate in the private sector exposed the industry to vulnerable shocks in light of resource constraints. However, with the enactment into law of the Pension Reform Act, 2004 by the then President Olusegun Obasanjo, the industry was able to scale up and eliminate the problems associated with pension schemes in the country. “The insurance sector potentially is supposed to be bigger than the pension, but in Nigeria, it is smaller,” said Wale Aokunrinboye, head of research at Lagos-based Sigma Pension. “In other countries where the laws are enabling, it forces everything to be insured and because of that, the insurance companies have large stash of cash,” he said. Aokunrinboye explained that one reason the pension industry has come up is that its regulatory environment is a bit firm, and predictable, and as such gives people confidence to put down money.

•Continues online at www.businessday.ng

Monday 11 March 2019

Nigeria’s FX market at its most liquid in 4yrs

…As foreign investors flood bond market after Buhari’s victory …I & E window trades climb 120% to $4bn in one week LOLADE AKINMURELE

here are reasons to suggest that Nigeria’s foreign exchange market is at its most liquid since 2015. FX trading activity between Nigerian banks and their clients rose to a four-year high in February, as foreign investors pile into the bond market after a somewhat successful presidential election that saw President Muhammadu Buhari secure a second term in office. Total foreign exchange transactions in the month of February settled at a record $8.15 billion, implying a daily turnover of $407.38 million, according to figures released by FMDQ OTC, a securities trading platform. That’s about the most liquid the fx market has been since 2016 when acute foreign exchange shortages sent foreign investors fleeing and contributed to the country’s first economic contraction in a quarter of a century. The situation has been much better since then, and on the evidence of the recent fx activity, investor confidence is probably at its best since then. The increased foreign inflows in the past one month is no wonder the naira has strengthened to N357/$ in the parallel market from N363 at the beginning of the New Year, while

the Central bank’s external reserves have improved to $43 billion as at the end of February from $40 billion in January. Increased autonomous foreign inflows put less demand on the CBN’s dollar reserves. Most of the foreign cash that has piled into Nigeria since February went to fixed income government securities especially one year treasury bills, judging by the recent decline in yields. Since the start of the year, yields on government treasury bills are down some 200 basis points on average, with most of that decline happening in February, the month when Nigerians handed President Buhari a second term. Buhari beat his closest contender, Atiku Abubakar by a margin of 3.9 million votes. Tracking FX inflows through the Investors & Exporters (I&E) window confirm strong foreign portfolio participation in the fixed income market, post-election. Some $4.28 billion was traded in the week-ended March 1, 2019 at the I & E window, an increase of 120.62 percent or $2.34 billion. The increased activity is attributable to the relatively peaceful conclusion of the presidential elections and investors’ expectations for a stable currency following President Buhari’s win, according to Tejumade

Olajide, an analyst at FMDQ. Prior to the conclusion of the elections, investors adopted a wait and see approach due to the heightened uncertainty surrounding the Nigerian economy and financial markets. “However, the election results signalled continuity in economic policies adopted by the incumbent party with respect to the current foreign exchange regime, and that has instilled renewed investors’ confidence in the Nigerian markets,” Olajide said in a March 10 note to Business Day. The equities market has not been as attractive for foreign inflows compared to the fixed income market. Unlike in 2015, there has been no post-election rally in the equities market this year, as stocks remain flat since Feb 27. “Right now, in the short term, the only catalysts we see for the equities market will be earnings releases, corporate actions and investors looking for strong dividend payouts and yield,” said Lanre Buluro, a director of sales at investment bank, Chapel Hill Denham. Zenith Bank (11.4% dividend yield) and Dangote Cement (8.2% dividend yield) already came through and could be a signal for more to come.

Poor structure, data limit bank lending to mining …as investors weigh risks, cost JOSEPH MAURICE OGU

igerian deposit money banks (DMBs) appear cautious of the solid minerals sector, data from the National Bureau of Statistics (NBS) show. Of the total credit allocated by banks to private sectors of the economy in fourth quarter (Q4) 2018, mining got the lowest. Different sectors of the economy got a total credit of N15.13 trillion in the review period, out of which mining and quarrying

got N20.7 billion or 0.14 percent, according to an NBS report on the Banking Sector Credit to Private Sectors in Q4, 2018. Although the 0.14 percent recorded in Q4, 2018 was a considerable improvement from Q3 when lending to the mining sector was 0.04 percent, it still shows the extent of neglect suffered by the mining sector. Banks complain of lack of organisation, poor data and bankability of the industry. As such, the sector gets fewer loans as artisanal miners claim they are

unable to access even the N5 billion intervention fund provided for the sector. Shehu Sani, president, Miners Association of Nigeria, told BusinessDay recently that the sector is poorly funded. The unattractiveness of the mining sector to investors is partly responsible for the low patronage as potential investors weigh the cost and risk involved. Also, the nature of the mining industry makes it difficult for outsiders to understand it. “Our banks are always running away from any sector they feel

Continues on page 47

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Monday 11 March 2019

FG spends N7.9trn importing fuel in four years ISAAC ANYAOGU

o keep the bulk of middle-class Nigerians, mainly residents in Lagos and Abuja, happy the Federal Government sank N7.9 trillion importing petrol to augment supply from the country’s rickety refineries, data from the National Bureau of Statistics (NBS) show. This is more than Nigeria’s entire 2017 budget of N7.2 trillion and 5 percent of the country’s current gross domestic product.

NSE, Meristem launch indices focused investment products for growth, value creation MODESTUS ANAESORONYE

he Nigerian Stock Exchange (NSE) and Meristem Securities Limited, a capital market conglomerate offering investment banking, wealth management, stockbroking, registrar and trustees services, have launched two new style indices - the NSEMeristem Growth Index and NSE-Meristem Value Index. These indices will be available real-time on the NSE’s website from March12, 2019. The style indices are designed in response to demand for customised indices to support product development and investment management. Broadly, the style indices will provide a benchmark for the market to gauge the performance of value stocks and growth stocks listed on the Exchange. Jude Chiemeka, divisional head, Trading Business Division of the NSE, said, “We are pleased to collaborate with Meristem Securities in the development of the first style-focused indices to be publicly launched in Nigeria. The introduction of the NSE-Meristem Growth and NSE-Meristem Value Indices is a laudable and innovative effort, which is long overdue. “These indices provide products strategists and asset managers the leverage to create investment vehicles that democratise professional asset management for the benefit of investors, while still following the tenets of classic investment philosophies: growth and value. The indices are available for licensing and the investing public is encouraged to take advantage of the benefits they provide.”

Petrol subsidy cost rose by nearly 50 percent from N1.97 trillion in 2017 to N2.95 trillion last year; the highest spend since NNPC’s management of fuel subsidy came under scrutiny in 2006. Further analysis indicates petrol imports accounted for 22.4 percent of Nigeria’s total imports in 2018, up from 20.6 percent in 2017, 18.4 percent in 2016 and 17 percent in 2015. Petrol imports have risen from an average of 35 million litres per day in 2015 to around 86.4 million litres daily in February 2019, according to data obtained

from the Pipelines and Product Marketing Company, a subsidiary of the NNPC. Data from the PPMC and the DPR showed that petrol import averaged 55.1 million litres per day (lpd) in the first nine months of last year, compared with 48.5 million in the same period in 2017. Petrol imports averaged 49.2 million lpd and 49.8 million lpd in 2015 and 2016, respectively. The volume of petrol NNPC claims it imports into Nigeria has followed an upward trend undeterred by the country’s first recession

in 25 years, a bruising 40 percent duty on vehicles which crashed imports by nearly 90 percent, weak purchasing power of Nigerians, rising unemployment and the country having the largest number of the world’s poor. Analysts say this raises major questions about both sincerity and competence of the NNPC. “There are two big questions that need to be answered,” analysts at SBM Intelligence, a Lagos-based risk consultancy led by Cheta Nwanze, said in a note to BusinessDay. “First, what is driving the

significant variations in the daily consumption in different reporting months, even after accounting for seasonal variations where demand is likely to be elevated? Second, how much exactly does the NNPC spend on subsidising petrol? “Nigerians deserve to know the answers, considering the facts that fuel subsidy has become a hot button issue and the NNPC is not noted for accountability and transparency,” the organisation said. But answers from both the Federal Government and the NNPC have been contra-

dictory when they are not totally illogical. At the height of fuel crises in December 2017, Yemi Osinbajo, Nigeria’s vice president told reporters in Lagos that the NNPC was bearing the cost of subsidy as part of its operational cost. Yet, the Federal government budgeted N305bn for subsidy in its 2019 budget. Rising petrol subsidy also contradicts claims of improved power supply by Babatunde Fashola, minister of Power, Works and Housing as next to transportation, the bulk fuel supply is used to augment poor power supply.

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Why we must build a wall around Lagos (and Nigeria must pay for it) II

Bashorun J.K Randle

nyway, Obi went on to St. Gregory’s College and thereafter gained admission to Howard University, to study architecture. According to him, he runs a flourishing architectural practice in Philadelphia and he has expanded into the hospitality business where he has reaped a huge fortune. His message was direct and poignant: he owes his success to Lagos. It was Lagos (not America) that made him what he is. His wife, Ancora is American and they have two sons who are engineers and a daughter who is a doctor (with paediatrics as her specialty). Obi literally brought the roof down when he revealed what had hitherto been a closely guarded secret – he and I used to follow masquerades “Bamgbose”; “Ajolojo”; “Salumogi”; “Oya”; “Lapampa”; “BajulaiyeIneso”; “Ulasi”; “Alapasonpa”; “IgaOloweSalaye”etc all over Lagos. This was in addition to vigorously practising acrobatic stilts dancing when we were kids. Perhaps, it was inevitable that Professor Sheila Maclain would interject with her distinctly Afro-American combative dissertation: “We owe it to posterity to tell our story the way it is from our own black perspective. This is a serious moment

of history (and for history). All over America, the image of Nigeria and Nigerians revolves around Advance Fee Fraud (“419”). Even more worrying are the tales being peddled around about the inferiority of black people compared with white people. I quote Professor James D. Watson: “All our social policies are based on the fact that their (Black people) intelligence is the same as ours - whereas all the testing says not really”. Then came the distress call by Professor Lateef Akindele of Georgetown University: “Another angle to it is the notion that we just need to peel off our skin and what erupts is primitiveness. I don’t want to spoil the party but someone needs to explain to me why the government of Nigeria would appear to have done nothing to counter the terrible damage done to the image of the country by the eye-witness report of Nima Elbirgir on CNN of Nigerians (perhaps some of them Lagosians!) being auctioned as slaves in Libya.” The climax of the evening were the three riveting videos/podcasts which were attributed to CBS. The first one had already gone viral as it caught an immigration officer red handed demanding bribe in dollars from an American visitor. The second one was on the police which according to Rotimi Fasan’s auditors’ report performed poorly: “Our uniformed personnel are poorly paid, kitted and housed, yet they are assigned weapons albeit decrepit and obsolete, with which they can at least do a lot of damage to their superiors in uniform and unfortunate ‘bloody civilians”. What was probably a pirate edition of another CBS bombshell captured two young men who were arrested in Surulere, Lagos for undisclosed reasons. In the commotion that ensued, it was the

Chief Imam of Surulere who intervened vigorously and protested that the two young men were regular worshippers at his mosque. In fact, they had just finished praying together. Hence, if they were to be arrested, he must accompany them to the police station. All three were bundled into the van and driven off at top speed to the nearest police station. From there, they were driven to the SARS (Special Anti-Robbery Squad) station where they spent the night sleeping in the open air as the cells were already full. Mosquitoes had a feast (or banquet) all night. In the morning, they were moved to Kirikiri Prison which rejected them as there was no more room. Next stop was Badagry Prison where they were dumped pending trial. The Chief Imam was immensely distressed at the number of inmates, some of them teenagers as young as fourteen years old, who were awaiting trial. The Chief Imam managed to get access to a mobile which enabled him to raise the alarm. Apparently, the matter spilled over into social media and it took the intervention of the Chief Judge of Lagos State before all those who had been wrongly arrested for minor infractions were released. Regardless, the Chief Imam was incandescent with rage and kept protesting that if someone of his status could be treated so diabolically, what would the police do to mere mortals? Before we could hear the police side of the tragic event, the scene shifted to cultism in Lagos. The brilliant son (a medical student) of a Chartered Accountant, Chief Patrick Ebere somehow got involved in cultism at the University of Lagos. During a violent clash between his gang and another gang the son of a powerful Lagos Chief ended up dead. The police swiftly arrested all the culprits. The rest of the story is somewhat hazy but putting “two and two together” suggested that the bereaved

‘

Our uniformed personnel are poorly paid, kitted and housed, yet they are assigned weapons ... with which they can at least do a lot of damage to... unfortunate ‘bloody civilians

father insisted that his son’s death must be avenged. Perhaps, it was pure coincidence that Chief Ebere’s son died in police custody and a heartbroken Chief Ebere died shortly afterwards. CBS will have to offer the police the right to reply. Anyway, the camera zoomed off to the shocking scene of a lady who stripped bare on Bourdillon Street in broad daylight and was gleefully dancing the “Shaku Shaku” dance. Again, on the Marina, just before the exit that leads to the Cathedral Church a man had stripped completely naked while passing cars tried to avoid hitting him. It was chaotic. Something else that the camera captured were the piles of rubbish everywhere along with giant potholes as well as epileptic electricity supply and totally inadequate water supply even in the most exclusive parts of Lagos – Ikoyi; Victoria Island; Banana Island; Lekki etc. Even more riveting were the photographs of a mobile community “of tankers and trucks” that had been blocking the access route between Apapa Ports and the rest of Lagos. Some of them had been parked on Eko Bridge for several weeks, perhaps, months. Somehow, the drivers had devised their own unique survival strategies that extended to having their prayers, meals, baths, haircuts, pedicure etc in their trucks and their environs. Perhaps, the camera lingered too long on the activities of sex workers/ ladies of the night who availed the truck drivers of their services after nightfall. However, the government appears to have paid skant attention to the toilet needs and waste disposal of the truck/ tank drivers who have resorted to the most primitive means of both body and waste disposal. Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Prosperity and growth: How do they go hand in hand? GrowthView

Christina Wehbe Money & Sustainability | Impact Leader| Corporate Honesty

ompanies talk about market ‘share’ or being a market ‘leader’, and as we know, a leadership role is rarely a stagnant position. Being a leader is also defined differently - for some, it is about having the largest stake, highest revenue or the most customers in that market. For others, it is about having sustainable and long-term growth trajectory (personal growth as much as revenue growth). This article will discuss, how we can both achieve growth and be sustainable. Some questions are, why do businesses want to enter the African market, especially Sub-Saharan Africa (SSA) and Nigeria specifically? Is it to fit the demand from their clients on sustainable products and contribute to global prosperity; or is it to achieve a greater market share and be the first-mover in a specific African country? Yo u r s k i l l s i n c o m p a r i s o n t o others:Comparative advantage is not only about strength, it’s about agility in the market. The question is, how will companies adapt to the new target of sustainability? The impact-driven ecosystem is still being defined and at its infancy

on a corporate level, despite the concept having been a global focus for decades. The concept of sustainable development (which includes prosperity), evolved overtime and it’snota new economic thought.It started before the 19thcentury and is rooted in our human nature to help. The theories further evolved with religion or spiritual writings, such as Buddhism, and was formalised in the mid-1900s, when the United Nations was officially created. Therefore, corporate sustainability isn’t a newly invented business term. It is the fruit of decades of commitments, debates, and leaders coming together with the common goal of tackling pressing humanitarian, social and economic issues. Overall, people coming together to contribute to global prosperity. Let’s stop - pause - and think on how we can both grow and contribute to prosperity. What am I good at as a company? How will I add value and increase the ROI (return on investment) for my investors with sustainable products? What is my market strategy to enter in Nigeria or emerging markets? How agile are my people and management to adapt in to this new context? It is not a new era, such as the digital era, where companies ‘would like to’ incorporate a social strategy to their business model. It is an overall shift in how markets and governments are interlinked, tied with a common thread of sustainable growth - that is rooted in our values as human-beings to do better in this world. “Making your business model sustainable is now the big topic - and finding a way to do it meaningfully, without impacting your bottomline is the struggle the market is seeing.” Trust your investment: Economic prosperity can be achieved once we understand

our individual values and communicate them - as discussed in the previous column of GrowthView“Economic benefit of collaboration - A value not shared in the game of monopoly”. Now this article is about the values which we have based on trust. The same applies when we elect someone into office, there is an intrinsic value of trust. Do you trust your representative to engage on your behalf? Are your values aligned to the values of your government? Without trust, we cannot achieve either growth or prosperity. Your money will contribute to prosperity: Shareholders are shifting their investments in stock markets, away from equity investments and increasingly turning them towards sustainable and impact investments. “Our choices and decisions as individuals, aligned with our values will drive tangible change in our economies - both in Nigeria and internationally.” As we discussed earlier, prosperity and collaboration are shaping how businesses build their strategies, what is most important to a company is its bottom-line. So, how can a corporate strategy in emerging markets, achieve greater returns and adopt a value-driven business model? Values on Prosperity: Communicating and defining values is the first stage. Once we understand what we individually want, need and are interested in, then companies (same as people) can design a new business model aligned to these values. For example, the priorities I have as a mother with my children, or as the father working to support my family - these are long-term values. Similarly, what values have I nurtured over the years and want to help others with? Corporate Strategies: These seek for the “next-generation” business model, which focus

on sustainability. How will they know their comparative advantage? Similar to a presidential election, knowing your values, your strengths and where you have competitive advantages in comparison to your opponents. Choose clear sector and impact goals: Health, educationand women economic empowerment contribute to both prosperity and growth. These sectors are measurable and tangible. As individuals, let’s communicate these priorities to help donors, corporates and governments turn their investment priorities to these growth sectors. “What” to fund and “where”, are the big questions posed by C-levels, as they see the equity market dipping and UHNW (ultra-high net worth) investors asking for their money to achieve a social and economic impact. In sum, prosperity and growth go hand in hand, as long as we communicate and take our time in building-out sustainable investments. It is for companies to identify the high-return sectors that will benefit from the local skills, viable demand and comparative advantage globally. Some key takeaways for both individuals and businesses: 1. Donors &corporates to be transparent on their 2019 strategies 2. Investors should share their values 3. Identify your comparative advantage 4. Invest actively rather than passively 5. Sustainability does not stop growth Wehbe is passionate about helping others and fighting poverty & injustice. She is the founder of GrowthView. She writes from Zurich, Switzerland. E: christina.wehbe@gmail.com. https://www.urbanemerge.com/people https://www.qeh.ox.ac.uk/alumni/christina-wehbe

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comment Disrupters at the gates Patrick Atuanya

t the height of the 2008/2009 global financial crises largely caused by the securitization of sub-prime mortgages into asset-backed securities packaged and sold by Wall Street Banks, Jim Cramer, a former hedge fund manager, and host of CNBC’s Mad Money, constantly bemoaned the fact that bankers managed to muck up something (banking) that should be as easy/boring as making money through playing the spread or lending money at rates higher than the cost of the money they lend. Nigerian banks at the time(2008/2009) also succumbed to a home grown financial crises, not caused by securitisation and inflated asset prices, but by lax risk management. The banks that survived the subsequent Central Bank intervention, takeovers and move to clean up the sector through AMCON, appear stronger than ever today. Three banks (Zenith, GTB and StanBic) have released Full Year 2018 results as at Friday March 8th, and they

posted combined after tax profits of N452.4 billion. Look a little bit closer though and Nigerian banks are looking increasingly vulnerable to new disrupters at the gates of their pretty profitable banking empire. New Fintech credit platforms (RenMoney, KiaKia, Paylater, among others) are popping up and beginning to provide individuals and businesses with the cash flows required to meet urgent obligations. Paylater, a 2-year old credit company with a mobile app that has been downloaded one million times, disclosed in its newsletter in January that it disbursed 591,560 loans valued at N13 billion in 2018. Kiakia, another 2 year old company disclosed in December that it disbursed over $1 million in peer-to-peer loans, while RenMoney with 140,000 customers has disbursed N50 billion in loans and attracted N170 billion in fixed deposit inflows. One major theme running across these platforms is the use of technology and promise of a seamless and simple process, whether it’s for loan applications or savings and investments. It’s a no brainer in a sense, as traditional banking services often don’t resonate with young people or an increasingly mobile-first younger generation. Current banking services also seem overly complex and come with often repetitive demands for personal information. The big kahuna though that would really disrupt the Nigerian financial services landscape and should be giving banks sleepless nights is the promise of mobile money or Payment

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Service Banks (PSBs), which Telecommunication Companies (TelCos), seem set to drive. PSBs can be thought of as strippeddown versions of traditional deposit money banks, with a focus on onboarding more of the excluded and marginalised population. Unlike deposit money banks (DMBs) and microfinance banks (MFBs), from day one, PSBs will likely have a heavy reliance on technology via digital financial services, complemented with a strong agent banking model, which is meant to reduce overhead costs. In a world where everyone with a phone is a potential customer, TelCos look poised to take full advantage. The country’s mobile operators; MTN, Airtel, Globacom and 9mobile recently announced their commitment to deepen financial inclusion to at least 90 million customers in about 2 years, once issued payment service banking (PSB) or mobile money licenses. The four TelCos combined have some 173.6 million customers, compared to the 21 DMBs with about 30 million bank accounts with unique bank verification numbers or BVNs. The TelCos also have the resources to deploy in the coming fight. MTN Nigeria recently released FY 2018 results which showed it has 21.6 million smartphone users on its network, Ebitda margins of 44 percent and revenues eclipsing the N1 trillion mark. No DMB in the country currently boasts such revenues. The World Bank Global Findex Database estimates that 118 million Nigerians did not have bank accounts in 2018, leaving financial inclusion rates at 40 percent, one of the lowest

‘

The four TelCos combined have some 173.6 million customers, compared to the 21 DMBs with about 30 million bank accounts

in the world. So how can banks prepare for the coming storm? Nigerian banks currently follow a traditional model that relies on mobilising cheap deposits, investing most of it in high yielding risk and tax-free Treasury Bills to juice Net Interest Margins (NIMs), and lending mostly to blue chip names. Loan growth has been muted for the past 2 years, while profits soared. This means most banks don’t connect to the average person beyond receiving his/her salary in a bank or saving money they can get on demand. This should be worrying signs for lenders, as while the model has worked in the past, banks should not be betting on it for the future. While traditional banks are large organizations that have made huge investments in legacy infrastructure like physical branches, the changing financial services landscape is an opportunity to re-evaluate their business models and appeal more to younger people, who often have fundamentally different needs and expectations. The potential disruption of Nigeria’s financial services industry will ultimately be positive for the consumer and the country as a whole. Continued innovation in the space (by all) will ensure that Nigerian banks, who might in the near future not have the luxury of a double digit risk free rate, cheap cost of funds and elevated issuance of government paper, will continue to make money and be profitable. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Nursing poverty and breeding crimes: Poor extension service and the surge of banditry in northern Nigeria Bankole Allibay

t is not uncommon to connect the breakdown of law and order to political machinations and ethnic insensitive narratives. Often, majority of the citizenry believe that crime of this volume is a plug and play process, deployed by the negative elements in the society to destabilise peace and propel dangerous political manoeuvres. Hardly do the root cause of the long-term vulnerabilities of the main victims who unfortunately in many instances are also the main actors in this narrative make it to the mainstream discourse. This is not surprising; the root causes are often a product of long-term neglect which is gradually bearing the fruit of current agonies. This discussion looks to examine the chain reaction of a poor extension practices in Nigeria, essentially the northern part of the country and how their underperformance has led to the vulnerability of many households, leading to crime and violence and banditry. Statistics reveal that that approximately58.75% of farmers (i.e. crop farmers) in Nigeria are from the Northern part and the middle belt area of the country. At full percentage, about 85% of these farmers are mainly producing for consumption, barely having anything to sell except the meagre percentage they use for exchange to maintain their food sovereignty. Personal surveys in

several locations in Northern Nigeria reveal that many of these households suffer food security issues annually. In some instances, households would have nothing to eat until they go to work as labourers to other families who have favourable locations to farm. This picture does not begin to paint the hardship that rural farmers in remote locations suffer. Given an average birth rate of 78births per 1000 women and an average family size of10 human beings per household, these hardships come with great human cost, even without any form of violence and banditry. The agricultural extension service unit of the Ministry of Agriculture is an agency of the state that is responsible for the dayto-day midwifing process of ensuring the farmers have the right information, support and strategy to farm sustainably, guidance on external support such as credit facilities among other value adding capacity programmes. The extension service providers are also expected to collaborate with other state and non-state actors such as research agencies and human capital development institutes and family welfare actors such as PPFN and others to ensure a healthy family and lifestyle. The Federal Ministry of Agriculture has a total of 11,000 extension workers in Northern Nigeria. This works out to be 500 farmers per extension worker. To be productive, an extension worker should only serve an average of 25 farmers at any point in time. This will give room for research, training and capacity building and hands-on support with individual farmers. Due to the overwhelming number of farmers’ households to each

extension worker, arguably, about 80% of the farmers do not get to see an extension worker through a 12-calendar month, which constitutes two farming season, early rain and late rain. Given the gap in service delivery, significant number of farmers in remote locations run a challenged family with significantly stretched value and control. Personal studies reveal that the household’s heads only have minimal control due to limited resources. Often, due to the hardship, the female children are given out as child bride, the sons travel out of the community in search of other livelihoods. In some cases, just as the female children becomes a stranger on the bed of an older spouse, the young male children become streets urchins under the control of a mullah, who is only interested in using them for alms collection. These automatically convert these children to street children. Because survival comes first, proliferation of small arms from the Sahelian nations, severe economic situation and lack of safety nets to serve as economic shock absorbers, these children are a readymade child soldiers waiting for willing manipulator. For the record, this discussion does not conclude that all children born in remote locations in Northern Nigeria would go through this experience. The import here is to trace the genealogy of the ready-made child soldiers that are recruited into different forms of banditry and terrorist activities in Northern Nigeria. They were not born violent, neither have they brought up to raise hell. They are a

vulnerable set of lads whose youthful exuberance has been explored by the negative elements in the society, who capitalise on their lack of safety nets. In retrospect, provided there was an enabling environment with adequate support structures for the farmers, it is evidential that these children would have grown up with their parents; this would have kept them useful within their immediate society, unavailable for the destructive elements. This trend is an ongoing situation, and many will still go this way the next dry season, when the families hit the peak of their vulnerabilities due to hunger and lack of support for the family. Interestingly, it is easier, cheaper, and more sustainable to combat poverty and vulnerability than to procure arms. The government needs to invest significantly in agriculture extension service offices using modern technologies such as block chain system and other cashless solutions in input and supply, to support the farmers, plug the vulnerability gap and invest significantly in agricultural value chain systems. These activities are far cheaper than buying guns, bullets and mortar in the future. And it all starts from a very functional, creative and responsive extension service, a robust, cashless and transparent safety net solution and a participatory food security and land use planning country-wide would also help proactively manage the surge of banditry, which is gradually consuming the global north of Nigeria gradually. Dr Allibay is Global Social Performance Lead Translantic Development Limited

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Monday 11 March 2019

Nigeria’s dismal health statistics

igeria likes to boast of its status as Africa’s biggest economy, but its health statistics indicate the country is not only far behind its peers and other smaller countries in Africa, but it shows, in a classic way, the callousness of its politicians and government officials who go abroad to treat even common ailments while abandoning the people they govern to die in decrepit hospitals that now serve more as morgues than places for accessing healthcare. A 2014 World Health Organisation (WHO) report on healthcare delivery, which surveyed 200 countries, placed Nigeria at an abysmal 197th position, just ahead of Congo Democratic Republic, Central African Republic (CAR) and Myanmar. Its verdict was damning: “Nigeria lacks a serious approach to healthcare.” In 2016, President Muhammadu Buhari promised to end the practice of spending the government’s hard-earned cash on treating officials overseas, especially when Nigeria had the expertise. But three months later, the president himself flew to the United Kingdom to treat a common ear infection, an action the then president of the NMA described as a “national shame” considering that Nigeria had more than 250 ear, nose and throat (ENT) specialists, as well as a national

ear centre. Well, the president has continued to frequent UK hospitals and last year, spent more time in the UK than in Nigeria, treating an undisclosed ailment. Even the President’s wife and daughter have complained about the quality of healthcare available to them at the presidential villa. While the president’s daughter raised alarm that the Aso Rock Clinic, which is supposed to cater for the immediate health needs of the first family, ministers and presidential aides, Mrs Buhari said she was advised by her aides not to bother using the facility but go abroad for treatment if she feels unwell. If the health facility at the seat of power in the country is that decrepit, what would one expect in other parts of the country? In February, Nigeria was ranked 187 out of 191 countries in the world in assessing the level of compliance with the Universal Health Coverage (UHC), as very few of the populace is health insured, whereas even government provision for health is almost negligible. Available figures show that Nigeria’s budgetary allocation to the health sector in 2018 was a mere N340.45 billion (less than $1 billion), representing only 3.9 percent of the budget. On a per capita basis, N1,800 ($5) is what the 2018 budget provides for the health of each of Nigeria’s 190 million citizens. This is completely dwarfed by South Africa which proposed a health budget of R205.446 billion ($17.1 billion)

in 2018, represents $299 per head when compared to its population of 57million. Yet, Nigeria supposedly holds the title of the continent’s largest economy. According to the World Health Organisation, Maternal mortality rate in Nigeria is 814, per 100,000 live births only outperforming Chad with 856, Central African Republic; 882, and Sierra Leone; 1360. War torn countries like Somalia and Democratic Republic of Congo even outperformed Nigeria. Also, while Botswana and Mauritius have the proportion of births attended by skilled health personnel as 100 percent, Nigeria is again down the pyramid with 35 percent, competing with countries like Eritrea, Ethiopia, South Sudan, and Chad. The statistics get worse, for every 1000 births in Nigeria, 108 infants (and children) die before the age of five, and again, the country sits comfortably close to the bottom of the ladder in Africa. Data from WHO world health statistics 2017 further shows that over 72 million Nigerians are at risk of malaria, with 380.8 at risk out of every 1000 Nigerians, whereas, malaria has ceased to be a health concern for many other countries. Yet, Africa’s largest economy shares the three bottom slots on the continent with Burkina Faso and Mali. The figures for cancer are even more mind-boggling. Nigeria has a cancer death ration of 4 in 5, one of the worst in the world. According

to the WHO, over 100, 000 people are diagnosed with cancer annually in Nigeria, and about 80, 000 die from the disease, amounting to 240 daily. Furthermore, cervical cancer, which is virtually 100 percent preventable, kills one Nigerian woman every hour while breast cancer kills 40 Nigerian women daily. What is more, due to the terrible working conditions, Nigerian doctors have been deserting the country in droves in search for better working conditions in other countries. According to the Nigerian Medical Association, more than 40, 000 out of the 75,000 registered Nigerian doctors were practicing abroad while over 70 percent of those in the country were thinking of picking jobs outside. BusinessDay research shows that an average of 12 Nigerian trained doctors register for practice in the UK every week. While experts are calling for better working conditions and greater investments in medical training, the Minister of Health, Isaac Adewole, is on record saying Nigeria doesn’t have shortage of doctors and that it can’t even train all its doctors, advising some to take to tailoring, business and politics. With such standoffish and inconsiderate posture, we do not need a soothsayer to tell us that Nigeria’s health statistics will continue to deteriorate while the government busies itself with the manufacture of alternative facts to look good before its teeming supporters.

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Geopolitics

Too challengers Statesmany of despair

The new scramble for Africa

This time, the winners could be Africans themselves

HE FIRST great surge of foreign interest in Africa, dubbed the “scramble”, was when 19th-century European colonists carved up the continent and seized Africans’ land. The second was during the cold war, when East and West vied for the allegiance of newly independent African states; the Soviet Union backed Marxist tyrants while America propped up despots who claimed to believe in capitalism. A third surge, now under way, is more benign. Outsiders have noticed that the continent is important and becoming more so, not least because of its growing share of the global population (by 2025 the UN predicts that there will be more Africans than Chinese people). Governments and businesses from all around the world are rushing to strengthen diplomatic, strategic and commercial ties. This creates vast opportunities. If Africa handles the new scramble wisely, the main winners will be Africans themselves. The extent of foreign engagement is unprecedented (see Briefing). Start with diplomacy. From 2010 to 2016 more than 320 embassies were opened in Africa, probably the biggest embassybuilding boom anywhere, ever. Turkey alone opened 26. Last year India announced it would open 18. Military ties are deepening, too. America and France are lending muscle and technology to the struggle against jihadism in the Sahel. China is now the biggest arms seller to sub-Saharan Africa and has defence-technology ties with 45 countries. Russia has signed 19 military deals with African states since 2014. Oil-rich Arab states are building bases on the Horn of Africa and hiring African mercenaries. Commercial ties are being upended. As recently as 2006 Africa’s three biggest trading partners were America, China and France, in that order. By 2018 it was China first, India second and America third (France was seventh). Over the same period Africa’s trade has

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more than trebled with Turkey and Indonesia, and more than quadrupled with Russia. Trade with the European Union has grown by a more modest 41%. The biggest sources of foreign direct investment are still firms from America, Britain and France, but Chinese ones, including state-backed outfits, are catching up, and investors from India and Singapore are eager to join the fray. The stereotype of foreigners in Africa is of neocolonial exploiters, interested only in the continent’s natural resources, not its people, and ready to bribe local bigwigs in shady deals that do nothing for ordinary Africans. The stereotype is sometimes true. Far too many oil and mineral ventures are dirty. Corrupt African leaders, of whom there is still an abundance, can always find foreign enablers to launder the loot. And contracts with firms from countries that care little for transparency, such as China and Russia, are often murky. Three Russian journalists were murdered last year while investigating a Kremlin-linked mercenary outfit that reportedly protects the president of the wartorn Central African Republic and enables diamond-mining there. Understandably, many saw a whiff of old-fashioned imperialism. However, engagement with the outside world has mostly been positive for Africans. Foreigners build ports, sell insurance and bring mobile-phone technology.

Chinese factories hum in Ethiopia and Rwanda. Turkish Airlines flies to more than 50 African cities. Greater openness to trade and investment is one reason why GDP per head south of the Sahara is twofifths higher than it was in 2000. (Sounder macroeconomic policies and fewer wars also helped.) Africans can benefit when foreigners buy everything from textiles to holidays and digital services. Even so, Africans can do more to increase their share of the benefits. First, voters and activists can insist on transparency. It is heartening that South Africa is investigating the allegedly crooked deals struck under the previous president, Jacob Zuma, but alarming that even worse behaviour in the Democratic Republic of Congo has gone unprobed, and that the terms of Chinese loans to some dangerously indebted African governments are secret. To be sure that a public deal is good for ordinary folk as well as big men, voters have to know what is in it. Journalists, such as the Kenyans who exposed scandals over a Chinese railway project, have a big role to play. Second, Africa’s leaders need to think more strategically. Africa may be nearly as populous as China, but it comprises 54 countries, not one. African governments could strike better deals if they showed more unity. No one expects a heterogeneous continent that includes both anarchic

battle zones and prosperous democracies to be as integrated as Europe. But it can surely do better than letting China negotiate with each country individually, behind closed doors. The power imbalance between, say, China and Uganda is huge. It could be reduced somewhat with a free-trade area or if African regional blocs clubbed together. After all, the benefits of infrastructure projects spill across borders. Third, African leaders do not have to choose sides, as they did during the cold war. They can do business with Western democracies and also with China and Russia—and anyone else with something to offer. Because they have more choice now than ever before, Africans should be able to drive harder bargains. And outsiders should not see this as a zero-sum contest (as the Trump administration, when it pays attention to Africa, apparently does). If China builds a bridge in Ghana, an American car can drive over it. If a British firm invests in a mobiledata network in Kenya, a Kenyan entrepreneur can use it to set up a cross-border startup. Last, Africans should take what some of their new friends tell them with a pinch of salt. China argues that democracy is a Western idea; development requires a firm hand. This message no doubt appeals to African strongmen, but it is bunk. A study by Takaaki Masaki of the World Bank and Nicolas van de Walle of Cornell University found that African countries grow faster if they are more democratic. The good news is that, as education improves and Africans move rapidly to the cities, they are growing more critical of their rulers, and less frightened to say so. In 1997, 70% of African ruling parties won more than 60% of the vote, partly by getting rural chiefs to cow villagers into backing them. By 2015 only 50% did. As politics grows more competitive, voters’ clout will grow. And they will be able to insist on a form of globalisation that works for Africans and foreigners alike.

Nigeria’s state elections are more violent than national ones The stakes are high, the rules are ignored

HE BESPECTACLED young woman from Kano, northern Nigeria’s largest city, laughs shyly before she speaks. But scars above her eyebrow and on her forearm hint at a dark past. As a member of a Yandaba gang— politically linked hoodlums who terrorise the city—she would get high before brawling with rival parties’ gangs or, during elections, grabbing ballot boxes from polling stations. Most of Nigeria’s 36 states, which elect their governors and state legislators on March 9th, have

some equivalent to the Yandaba. These straddle the boundary between party cadres and criminal gangs. They embody the rottenness of state politics in Nigeria. Governors run their states like personal fiefs, amassing fortunes and grooming protégés once they have hit the two-term limit. Although outsiders often pay little attention to them, many in Nigeria fear the upcoming state elections could be bloodier than the presidential poll, in which at least 39 people died (it was won by the incumbent, Muhammadu Buhari). Since states are in charge of budgets for education and health, their elections are also more important. When it gained independence from Britain in 1960 Nigeria was divided into three regions. These were later split into four regions before being sliced up into 12 states in 1967 as the government tried to prevent the secession of one of the regions, Biafra. It was brought to heel in a bloody civil war. In the years since then the country has been further diced Continues on page 15

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Can Kenyatta fix it?

Nairobi’s planners are knocking the city down to save it

Poor planning and corruption take their toll

Continued from page 14

UNICIPAL AUTHORITIES in Nairobi spent much of last year knocking things down. Shopping malls, petrol stations and apartment blocks were levelled; bulldozers cut through slums, leaving tens of thousands homeless. All this destruction may seem rather wanton in a poor city. Yet the government-backed body overseeing it, the Nairobi regeneration task-force, insists that the only way to save the Kenyan capital is to wreck bits of it. Nairobi is unrecognisable from the sleepy town it was at the turn of the century. In the past 12 years land prices have soared more than sixfold in 24 of the city’s 32 suburbs and satellite towns, according to HassConsult, a local real-estate agent. What caused it all is disputed, though some developers whisper that the return of dirty money from the West after the 2008 financial crash fuelled the frenzy. Far more money could be made in Kenyan bricks and mortar than in richworld stockmarkets. Why bother investing in the Nasdaq (returns of 210% since 2007) when an acre in Juja, one of Nairobi’s satellite towns, would have fetched you 1,428%? Whatever the reason, many Nairobians cheered the sprouting of the skyscrapers. The boom created jobs for the poor, drove middle-class growth and made the rich richer still. In a city that, like others in Africa, aspires to be a new Dubai or Singapore, what’s not to like? Plenty, say urban-planning campaigners. Much of the construction has been unregulated, threatening all manner of problems. With the connivance of corrupt officials, the rich and politically connected built where they pleased. Parks and school playing fields were grabbed. River reserves, and sometimes the rivers themselves, have been partially concreted over, turning Nairobi’s waterways into mosquito-infested open sewers. With nowhere for the water to go, deadly floods wash over the city in rainy seasons. Land set aside for roads has suffered a similar fate, complicating efforts to tackle the city’s spirit-sapping traffic jams. Sky-hugging tower blocks have mushroomed in lowrise residential suburbs: neighbours and zoning regulations be

damned. “I was told I could go as high as I liked as long as my pockets were deep enough,” says one project manager. Nairobi, once known as “the Green City in the Sun”, has precious few green bits any more. Environmentalists, health experts and engineers are gloomy. Reports crossing the desk of Uhuru Kenyatta, Kenya’s president, warn that the city’s iffy water supply and colonial-era sewers are barely coping, says a presidential adviser. A sanitation crisis looms. To try to fix the problem, Mr Kenyatta formed the Nairobi regeneration task-force in 2017. It has identified 4,000 buildings for demolition. Many have already come down, potentially unclogging rivers and freeing space for roads. Yet it will take more than knocking down a few high-rises to reverse a rotten legacy. Nairobi’s population, 3.1m when the last census was taken in 2009, may have added 1.5m since. Developing infrastructure to keep pace will be tough. Nairobi’s richer districts have expanded, but so too have its poorer ones. More than half its people live in slums. Shanties will have to be uprooted to let roads, railways and power lines expand. Knocking down buildings in well-heeled areas can cause resentment; taking from the poor may be incendiary. When 10,000 people were uprooted in Kibera, a slum, last July, riot police flanked the bulldozers. The government is attempting to deal with some of the problems. A project to build 200,000 low-cost houses in Nairobi is under way. But given how fast

Nigeria’s state elections are more violent...

the city’s population is growing, little headway will be made in reducing the housing deficit, says Nashon Okowa, who chairs the Association of Construction Managers of Kenya (ACMK). Besides, such schemes have failed before. Plans to ease traffic congestion are in the works, from bus lanes to rapid-transit corridors and commuter trains. Yet these sometimes seem poorly conceived. A measure to ban most public transport from the city centre in December caused gridlock and was quickly abandoned. Urban-planning experts say that for Nairobi and other African cities to become the modern metropolises their people dream of, four issues need to be tackled. The first is a skills shortage. Kenyan universities churn out ever more adept planners, but the Nairobi County Government lacks the budget to hire them, so the best often go into the private sector or abroad. Washington Ochieng, a Kenyan who helped develop the EU’s Galileo global navigation satellite system, knows more than most about fixing congestion. But because he heads the Centre for Transport Studies at Imperial College, his expertise benefits London rather than Nairobi. Insufficient government investment is a second problem. A loan of $208m from the World Bank to upgrade Nairobi’s transport infrastructure had to be dropped in December after austerity measures were taken to reduce debt. Third, enforcement is hard in societies where the rule of law is weak. Congestion-fighting

measures tend not to work if drivers ignore traffic lights. This leads to the fourth and biggest problem: corruption. When the demolitions began, Mr Kenyatta promised that no illegal development would be spared, even if it was owned by members of his own family, whose property holdings are said to be vast. Yet the logic of the demolitions was often opaque: buildings belonging to bigwigs were allegedly left standing. Those whose buildings were destroyed, whether investors in the city or shack-owners in the slums, were therefore peeved. “Most of the houses torn down here had been given permits by the district commissioner,” says Josiah Omotto, an activist in Kibera. Arbitrary rules deter private investment and hurt property rights. Few know where they stand. Zoning laws are murky. Nairobi’s last functioning master plan was drawn up by British colonial authorities in 1948. There have been efforts to replace it, most recently in 2013, but these are either not enforced or deliberately thwarted by dodgy officials who know that administrative chaos is the best way to extract bribes. “A government that has a record of rent-seeking doesn’t wake up one day and say goodbye to rent-seeking,” says Mr Omotto. For real change to happen, a culture of corruption that has long been endemic in city-planning departments must end. There is little evidence that it has. “Today, construction that is clearly illegal is still being approved,” says Mr Okowa of the ACMK.

into 36 states, several of which are failing. In Borno, in the northeast, jihadists control much of the countryside. In Zamfara, in the north-west, bandits have gone on a kidnapping spree. Governance is often abysmal. At the end of 2017, according to BudgIT, an NGO, only two states generated more than half of their revenue internally, instead of relying on federal handouts. Debt exceeded annual revenue in 31 states. Kano’s governor, Abdullahi Ganduje, was filmed last year pocketing stacks of hundred-dollar bills. (He says the video is fake.) His predecessor, Rabiu Kwankwaso, spent $200m building three “mega-cities”, one of which he named after himself. Their expensive bungalows are empty aside from the occasional squatter. Before him came Ibrahim Shekarau, who thought polio vaccines were a Western plot to make women infertile. Checks on governors’ power are feeble. Although each state has its own legislative assembly and electoral commission for local polls, Maliki Kuliya, who served as Mr Kwankwaso’s justice commissioner, says that these are “just appendages of the executive”. As a result, political parties usually matter less than the politicians who constantly switch between them. Mr Kwankwaso, for instance, looms large over Kano’s politics. He has amassed followers, called the Kwankwasiyya, who wander the streets sporting his distinctive red cap. Not to be outdone, Mr Ganduje—a former Kwankwasiyya who fell out with his mentor—has strived to build up his own personality cult, the Gandujiyya. The two groups rely on Yandaba gangs to swell their ranks and provide muscle. The election pits Mr Ganduje against Mr Kwankwaso’s son-inlaw. Both sets of supporters have been busy, holding frequent political rallies. Kano’s residents live in fear of such events, during which the gangs go on rampages, attacking each other and snatching purses and phones from passersby. “Politicians ask for your votes while their followers steal from you,” sighs Michael Sodipo, who runs an NGO that helps young people leave the gangs behind.

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Monday 11 March 2019 In Association With

Don’t be evil

Vladimir Putin wants to stifle the internet Google should not help him

OMETIMES IT SEEMS as if Vladimir Putin’s presidency has been made for television. His bare-chested exploits on horseback, microlight flights with cranes and the fighting in Ukraine and Syria were planned with the cameras in mind. Having helped turn a little-known KGB officer into a patriotic icon, television has sustained him in power. But recently, there are signs that the spell of Russia’s gogglebox is weakening. Meanwhile, ever more Russians look to the internet for their news. Russia’s state-controlled broadcast channels must now compete with social-media stars, YouTubers and online activists (see article). Over the past decade trust in television has fallen from 80% to below 50%; 82% of 18- to 44-year-olds use YouTube and news is its fourth-most-watched category. Some vloggers have audiences that dwarf those of the nightly newscasts. Mr Putin’s government is attempting to gain control over social media through legislation, intimidation and new surveil-

lance infrastructure. However, this needs the co-operation of Western internet platforms such as Facebook and Google, which owns YouTube. Increasingly, the government is ordering them to take down politically objectionable material or demanding private data about their users. Internet companies should resist collaborating in state oppression—in the interests of their own profits, as well as of Russian democracy. One reason Western platforms should stand their ground is to

keep faith with their own professed beliefs. The days when people thought the internet would naturally spread democratic values are over. But Silicon Valley’s liberalising mantras are not entirely hollow: rising internet use is making Russia’s information space more competitive. Alexei Navalny, an opposition leader banned from television, has millions of viewers on YouTube. Abroad, Mr Putin is known as a master manipulator of social media, but at home he is fighting to

contain its political impact. Another reason for Western platforms to resist being co-opted is that they can. Unlike China, whose rulers quickly recognised the internet’s threat and built a “Great Firewall”, Russia allowed it to grow intertwined with the outside world. A new law on “digital sovereignty” would let the Kremlin censor or cut off the national internet, but actually doing so would be technically and politically hard. Russian internet companies have servers abroad. Young Russians catch the YouTube habit when they are tots, because parents rely on it to entertain them. A big march is planned in Moscow on March 10th in defence of the internet. Foreign internet companies do not have an entirely free hand. Western internet giants have servers in Russia. However, the Russian government would rather cajole the likes of Google than cut them off. This gives Western companies clout. They should use it. The internet companies’ longterm self-interest matches their principles. Complying with mor-

ally dubious government demands threatens their reputation. When news emerged that Yahoo, a web portal, had been telling the Chinese government about its users, its reputation suffered. So far, Facebook and Google have resisted Russian requests to reveal users’ identities. Announcing a pivot to a more privacy-friendly stance this week (see article), Facebook’s boss, Mark Zuckerberg, said his firm would not store sensitive data “in countries with weak records on human rights”. Google has been fined for not removing banned websites from search results. But in the first half of 2018 Google acceded to 78% of the Russian government’s requests to remove material. The firms could do more to stand their ground. Russia’s first internet connections were set up in 1989 at the Kurchatov nuclear institute, by scientists who wanted closer contact with the West. They called their network “Demos”. Today’s internet companies should make sure the internet remains a tool for building democracy, not dismantling it.

Sex and religion

British Muslim parents oppose LGBT lessons in primary school The parents seem to have won the latest battle in a new culture war

HEREAS AMERICA has culture wars between secular liberals and conservative Christians, cultural battles in Europe increasingly pit secular liberals against conservative Muslims. A noisy skirmish over sex education in a Muslim district of the English Midlands could be a sign of things to come. Since early February parents have been demonstrating outside Parkfield Community School in Birmingham because their children, aged between four and 11, have been receiving lessons about same-sex relationships. The “No Outsiders” classes, pioneered by Parkfield’s assistant head, Andrew Moffatt, are offered for use in schools, libraries and parent-teacher groups across England, and cover topics grouped under buzzwords like equality and diversity. Things came to a head on March 1st when hundreds of children were kept away from Parkfield in protest. Mr Moffatt, who has received a medal from the queen for his work, came in for a barrage of threatening messages, some implying that the teacher, who is gay, has been using pupils as guinea pigs in an unwanted social experiment. Parkfield was backed by Ofsted,

point. He confirmed that schools must promote equality. But they “will be required to take the religious beliefs of their pupils into account when they decide to deliver certain content”, he added. That will be tricky in Birmingham, where more than a third of children are Muslim and conservative strands, like the Deobandis and Salafis, enjoy much influence.

the schools inspectorate, whose boss said it was vital for children to be aware of “families that have two mummies or two daddies”. But on March 4th the school seemed to be backing down. Parents received a letter saying No Outsiders lessons would not be taught for the rest of the term, and promising consultations over future lessons. The school’s

bosses maintained they had never intended to hold the controversial classes between now and the Easter holidays. The head of the trust which runs the school, Hazel Pulley, insisted that the lessons would resume in the summer term. The row has split the Labour Party that dominates the city’s politics. Shabana Mahmood, the MP for Bir-

mingham Ladywood, urged the authorities to understand the parents’ position. It was “all about the ageappropriateness of conversations with young children in the context of religious backgrounds”, she said. Fellow Labour activists denounced her defence of “bigotry”. But Nick Gibb, the schools minister, seemed to hint that she had a

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Apis Partners targets fresh Nigeria deals before year-end (1)

Pg. 23

C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

BANKING

Stanbic IBTC sees profit hit 5-yr high as bad loans recover … Personal Banking segment swings positive for first time in 2yrs SEGUN ADAMS

tanbic IBTC Holdings has a recovery in bad loans to thank for a stellar financial performance in 2018. Stanbic’s financials show that Profit after Tax surged 53.86 per cent to a five-year high of N74.44 billion. That is more than double the figure for 2014, as impairment write backs and non-interest income fuelled an uptick. “The biggest thing for Stanbic is that its non-performing loans have been coming down,” said Wale Okunrinboye, head of research at Sigma Pensions told BusinessDay. Non-Performing Loans halved from 8.64 per cent in 2017 to 4 per cent owing to improvement in Nigeria’s economy in 2018, reducing the risks Stanbic was exposed to. Okunrinboye further explained that Stanbic’s aggressiveness in taking provisions for loans meant that ‘as asset quality improved, there were large recoveries which meant impairment regions were lower than expected.’’

Source: Stanbic IBTC Presentation

A net impairment writeback on financial assets of N2.94 billion buoyed income after credit impairment charges of Stanbic IBTC rose 25 percent to N183.75 billion in 2018, compared to 2017. “We will continue to grow performing loans conscientiously and sustainably across our focus segments,”

the company said in an investor presentation note, March 8. “The aim is to ensure that quality loans are booked early in the year to enable the business enjoy the interest income benefits,” the note read. Stanbic’s shares gained 3 per cent to N48.00, 17 per cent above 52-week low set

in September last year, as it announced double-digit growth in net earnings in 2018. Shares of the tier-two bank have risen 0.1 per cent so far in 2019, lagging the Nigerian Stock Exchange Year to Date return of 1.84 per cent, gained N1.40 and bringing the company’s valuation to N491.547 billion, Thursday. On Friday, the stock closed flat at N48. Paul Uzum, a broker on the Nigerian Stock Exchange asserts that foreign investor apathy towards the equities market has heightened since the election result was announced, a factor that may not see stocks gain so much despite good results announced. “For now, the reaction of the market is muted despite good results from the likes of GTB, Nestle and Stanbic,’’ Uzum added. The equities market closed 0.35 per cent lower, to extend a bearish performance which was recorded in Wednesday’s trading session. On Friday, the market slumped 0.27 percent, according to NSE data. Stanbic’s gross earn-

ings for the 2018 financial year grew 4.67 percent to N222.36 billion, a figure which indicates a slowdown in gross income compared with the 35.8 per cent growth recorded in 2017. Net interest income, the difference between earnings on interest-bearing assets and the cost of servicing liabilities, declined by 6.87 per cent to N78.21 billion on the back of a 4 per cent drop in interest income and a 2.2 rise in income expense in 2018. Non-interest income, on the other hand, surged 15 per cent to N102.6 billion even though fees and commission expense skyrocketed 303 per cent in the full year period. Despite an 11 per cent upswing in operating expenses, Stanbic IBTC reported a jump in its gross profit by 44.12 per cent to extend its impressive year on year growth of pre-tax income that has consistently grown since 2015. Stanbic IBTC, a member of the Standard Bank Group, focuses on the three key businesses - Corporate and Investment Banking, Personal and Business

Banking and Wealth Management. Personal Banking saw a profit of N581 million in full year 2018, compared to a loss of N16.5 billion in corresponding period of 2017 while Corporate and Investment Banking corporate recorded a 11.96 percent growth in profit after taxes to N51.22 billion in 2018. Wealth Management, the third arm, recorded an 18.2 percent improvement in earnings supported by a 19.0 percent growth in assets under management. For 2018, Stanbic proposed a final dividend of N1.50, a 200 per cent increase from the previous year with dividend yields at 3.1 per cent based on Thursday’s closing price. Gbolahan Ologunro, a Lagos-based equity analyst at CSL Stockbroker believes that investors have already priced in the full year performance into Stanbic stock which gained 3 per cent Thursday. However, he says the improved dividend is ‘’a good signal for investors who like to receive cash flow arising from dividend pay-out’’

TELECOMS

MTN shares jump most in more than 2 years amid $1.1 bln disposal plan ENDURANCE OKAFOR & OLUFIKAYO OWOEYE

hares of African Telecoms giant, MTN Group gained the most since 2016 on the start of its plans to raise $1.1 billion from asset sales to prop up balance sheet coupled with declared dividend. The south Africa-based wireless carrier said in its 2018 financial statement on Thursday, that its board has declared a gross final dividend of 325 cents per share, bringing the total dividend for the year to 500 cents per share. The telecom company also revealed that it agreed to sell its 53 percent stake in Botswana’s Mascom to Econet Wireless Zimbabwe Ltd. for $300 million. The market cheered both announcement as the company share prices went up by 18 percent on the Johannesburg stock exchange from ZAR7,606 it traded at the

open of the market, Thursday, 07 March 2019 to ZAR 8,980 at the close of the market. The trade represents the most daily MTN has reported since June 2016, although the stock is still down by 28 percent in the last 12 months, valuing the carrier at 166 billion rand. The sale of its Mascom’s stake follows a disposal of its Cyprus unit for $294 million last year. This now leaves the telcom company with 21 markets across the Middle East and Africa. Other businesses now on the market include ecommerce services, which includes Nigerian online retailer Jumia Technologies AG. and Travelstart.co.za. MTN is also looking to sell its interest in IHS Towers Ltd., the company as compiled from the statement by the telecom. “We are simplifying the group, we are reducing risk, and improving returns,”

Group president and CEO, Rob Shuter said. “That will generate some returns that will be helpful for our gearing and other priorities.” According to the company’s financials for the year ended 31st December 2018, the group revenue increased by 10.2 percent and service revenue increased by 10.7 percent, supported by growth in MTN Nigeria (up 17.2%), MTN Ghana (up 23.0%), MTN South Africa (up 4.2%) and MTN Uganda (up 8.9%). “MTN Nigeria extended the strong performance evidenced at the interim period and reported full-year results ahead of expectations, with double-digit growth in voice revenue (+18,7%*) driving strong service revenue growth and the further widening of the EBITDA margin,” the report read. MTN Nigeria recorded N453.1 billion Earnings Before Interest, Taxes, Depreciation and Amortization, EBITDA,

in 2018. Figures from MTN Group’s 2018 full year investor presentation showed that the Nigeria subsidiary of the group company have joined the ranks of firms with over N1 trillion in revenue in the country. Revenue in Nigeria rose from N887 billion in 2017 to N1.03 trillion in 2018 an increase of 17.1 percent year on year. The communications company also attracted additional six million subscribers to its network in the year. This was despite the margin being negatively impacted by once-off legal costs related to the resolution with the CBN as well as the planned listing costs. These costs totalled R194 million. “MTN Nigeria is clearly benefiting from deliberate investments in our network, cost optimisation initiatives and human capital,” the company said. Meanwhile, on 24 December 2018, MTN South Africa

announced that MTN Nigeria had successfully resolved the matter with the CBN related to the notional reversal of a 2008 private placement transaction. Although the tax dispute between MTN Nigeria and the Attorney General is yet to be resolved and will come before the Nigerian courts on 26 March 2019. The audit committees of both MTN Nigeria and MTN Group have assessed the Attorney General claims and remain of the view that all taxes due have been

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: David Ogar

paid, and as such no provision or contingent liabilities need to be raised. We will vigorously defend our position on this matter. MTN Nigeria expects to list its shares on the Nigerian Stock Exchange in the first half of 2019, “subject to regulatory approvals.” According to the company the listing will be achieved “via a listing by introduction and will be followed by a public offer once market conditions are conducive,” MTN said.

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Apis Partners targets fresh Nigeria deals before year-end (1) With presidential elections now behind Nigeria and the economy recovering from 2016’s contraction, UDAYAN GOYAL, co-Managing Partner at Private Equity firm, Apis Partners LLP, in this interview with Business Day’s LOLADE AKINMURELE, spoke of the firm’s investment plans for Africa’s most populous nation in 2019. Excerpts:

hat has changed since your last visit to Nigeria? I can’t precisely remember the first time I visited Nigeria, but it must have been at least 10 years ago. Since then, the Nigerian economy has evolved with the biggest change being how diversified it has become. When I started visiting Nigeria, it was a very resource driven economy with little diversification. Since then, a robust ecosystem has emerged comprised of small, midsized and large companies, particularly in the financial services space where we invest in. These days, with the growth of financial technology, there is a larger pool of companies Apis can invest in. However, I think Nigeria is still lagging in terms of financial inclusion. There are only 36 million bank account owners in a country of 200 million people and a bankable adult population of close to 90 million. Many countries have solved that with the use of mobile money, which has helped ease access to financial services. There are different ways of tackling financial exclusion, but I believe that the rise of new fintech companies could help to close that gap. In 2018, Nigeria regressed in terms of financial inclusion. It went from a 44 percent financial inclusion rate to 41 percent, according to the World Bank. What is the solution for Nigeria and what will be the impact of the Central Bank of Nigeria’s regulatory tweak to allow telecommunications companies to move into the mobile money space? I met with a few of the Telco CEOs during my last trip to Lagos and most of them informed me that they are now applying for the new Payment Service Bank license. This is a good development because mobile penetration is high in Nigeria and smart phone penetration, while still low, will likely increase. Smart phone penetration will increase as mobile data costs decline as seen in other countries and I’m confident that this trend will happen in Nigeria too. I think the Telcos will play a bigger role but appropriate planning and execution is required for them to achieve success. There have been challenges in countries with multiple mobile money providers.

For example, Tanzania and many other countries where there isn’t one dominant player, interoperability between the different mobile money platforms has been challenging. One of the key success factors for Kenya was that Safaricom was a dominant provider when it launched MPesa, with about 85 percent market share when it launched. As such, it’s very important that the regulators to ensure that platforms are interoperable; otherwise adoption will be low in a fragmented market like Nigeria. Another challenge the payment service bank could face is the lack of a sustainable economic model. India is a good example because it also has a similar regulatory regime where companies can apply for a payment bank license. The results have been subpar as running a payment service bank profitably is difficult given they are not allowed to extend credit, which is profitable segment for financial institutions. Due to this restriction on PSBs, it may be that the long-term viability of PSBs may be limited. It’s been our experiences that some companies move in this space without a considered strategy. Using the Indian example again, many companies that secured licenses returned them because

the economic model wasn’t viable. Safaricom entered the Indian market and launched MPesa, but didn’t succeed because the economic model didn’t work and because India has a very high penetration of bank accounts and so individuals with bank accounts had no need for a mobile wallet. As a result, adoption was low. In Nigeria, there is the bank infrastructure and ability to move money between bank accounts relatively cheaply. So, the question becomes, “What is the economic model for mobile wallet or payment banks

In Nigeria, there is the bank infrastructure and ability to move money between bank accounts relatively cheaply

and how are these banks going to be profitable?” At the end of the day it’s all about sustainability.

as you offer credit to consumers, you build healthy financial ecosystem.

What happened in India? Were the PSBs later allowed to extend credit? Wallets failed in India. PayTM has now become a payment bank and is trying to make wallets viable in the bank environment but ultimately will become a full bank and once it does, is going to extend credit. One of the things the Indian regulators did was that they made moving money instantly in real time from account to account virtually free- whereas in Nigeria it’s not virtually free. That needs to happen in Nigeria. I think at the end of 2015, the Reserve Bank of India came up with a regulation that said the KYC for mobile wallets would nearly identical as that for bank accounts. Once the KYC process for wallets becomes the same as for bank accounts, the economic model for wallets starts to dissipate very quickly. Basically, the government wanted everybody to have a bank account and then use the bank account as the primary method of moving money around. This makes perfect sense but you need to have the right infrastructure to do that. So, I think that the way that market has moved is what we call a bankdriven market and I think that’s where that market will end up. In Nigeria, there’s an opportunity to do that but the cost basis for banks in Nigeria is designed for servicing low income customers. That’s why the Telcos need to build infrastructure that allows them to service low-income customers and by doing so, improve financial inclusion. I think to do that successfully, you also need to build a credit product for the payment banks because that creates the right revenue streams to allow for long term sustainability. At the moment, MPesa is not sustainable in the long term because the cost of moving money in MPesa isn’t cheap. There’s a cost but because MPesa has become ubiquitous and everyone has it, they put up with the cost of moving money. Airtel in Kenya teamed up with Equity Bank to try launch an alternative to MPesa and create competition that would bring the cost down. However, I think that if you build the infrastructure, the cost start relatively low right from the beginning, the adoption rate would be high. Then, you can have companies such as Branch, Tala in Kenya and others that will start to offer credit to consumers. As soon

What happens if the banks lobby to ensure that PSBs are not able to grant loans? This is an interesting point. I wonder if the banks would lobby against PSBs being allowed to grant loans. I’m not sure if banks are interested in customers below a certain income level. The cost of serving the customers move small amounts here and there may not be attractive to the banks. I’m not sure they’ll be interested in serving this segment given that they get so much business already from Corporates and the more affluent demographic in Nigeria. Can the allure of attracting low cost funds spur the banks to target the underserved market? True. However, I think that’s more on the deposit side. The truth is that there is an interesting situation here because Nigeria is a country with relatively high interest rates compared to other markets and that means that one of the things banks make money from is investment income which in many markets you don’t make money from anymore as interest rates are super low because in most markets you make money on the asset side, not from liabilities like deposits. I do agree that some banks will be interested in mobilising cheap deposits that reduce their cost of funding. However, what I’ve seen in other markets is that as you add more liquidity to the system, the real value added is on the asset side not on the liability side. That’s because liabilities would become very commoditized from that perspective so a GTB or an Access bank or a Diamond Bank would focus much more on the asset side than on the liability side over time because they can always attract deposits given the level with interest rates here. You seem very passionate about financial inclusion in Nigeria, why is it that you have not invested in any of the fast growing fintech companies here as you have done in Kenya, India etc. We have four companies with operations in Nigeria, though they are not headquartered here. One is a microfinance bank, which is in ten countries across Africa including Nigeria. The company has a national MFB license in Nigeria, and we hope to expand our presence across the country in the medium term.

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COMPANIES & MARKETS

Udayan Goyal

In Nigeria, there is the bank infrastructure and ability to move money between bank accounts relatively cheaply

and how are these banks going to be profitable?” At the end of the day it’s all about sustainability.

as you offer credit to consumers, you build healthy financial ecosystem.

BUSINESS DAY

C002D5556

CEO INTERVIEW

Monday 04 February 2019

C002D5556

BUSINESS DAY

MISBAHU YOLA

Managing Director/CEO, FCMB Pensions

Interview with Private Sector Leaders

‘Pensions have become a significant portion of the financial sector since the reforms of 2004’ MISBAHU YOLA, managing director/CEO, FCMB Pensions, started off as a general manager in 2006 in Legacy Pension, two years after he joined the board as an executive director. In January 2011, he became the managing director/CEO - a position he has held for over eight years now. In this interview with OSA VICTOR OBAYAGBONA and MICHEAL ANI, he speaks on the advantages of the synergy between former Legacy Pension and the present FCMB Pensions, the growth, challenges and prospects of Nigeria’s pension industry. Excerpts:

ow has the journey been so far? I have been in FCMB Pension since 2006, which at that time was called Legacy Pension. It was incorporated in 2005 - I wasn’t there then - was granted licence in January 2006, but I joined them in September 2006, which is basically eight months after they started operations. So, I have been here since then. I started off as a general manager in 2006. Two years after I joined the board as an executive director. In January 2011, I became the managing director - a position I have held for over eight years. The acquisition by FCMB was in November 2017, but the name changed from Legacy Pension to FCMB Pension effected at the end of last year. FCMB has increased its majority shareholding in Legacy Pension. What is the implication of this to you as an insider who has been there from the start? I think what people should know is that FCMB has been a shareholder since 2008. They started by holding 25 percent, and has been the single largest shareholder since then. So, the acquisition now is to increase their majority stake, which they did in 2017. Off course, the implication is that we will - as Legacy Pension, leverage on our own pension experience along with the strength of the FCMB Group since they have been a banking group for more than 30 years - started as a stockbroking organisation and became a merchant bank, then a universal bank and what we call now a commercial bank. So, they have got a lot of experience with over 200 branches, and with staff strength of more than 5,000. The advantage of this synergy is obvious as they offer us spread in terms of location with their over 200 branches; not only that, they offer us experience in financial services, so we can cross-sell products. It is a financial services group as they have commercial banking, asset management, stockbroking, micro finance bank, and trustee business. By adding pension, it is just like completing the brochure as it were in the financial services chain, and you know that pensions have become a significant portion of the financial sector since the reforms of 2004, from deficit of N1.7 trillion for the Federal Government to an aggregate of over N8.2 trillion in pension asset. For us, FCMB offers strength financially, it offers spread, it offers experience, and part of what we do as a pension funds administrator is investment, so there are also some investment skills that we can tap from FCMB. With the Federal Government’s approval for the military to start handling their own pension, do you think this act will shrink the pension industry? The N8 trillion assets are not in banks; they are invested in various asset classes, primarily Federal Government

securities. So, you have FGN Bond and the Treasury Bills, as they account for about 70 percent of the pension assets. It is not as if the money is sitting in bank, as we also have investment in the equities space that is not in banks. The money that is actually in bank deposit is less than 15 percent and the money is not sitting idle in the bank. It is making returns because part of what is allowed for the pension asset is bank deposit. Secondly, only the Armed Forces have exited the scheme, every other group is still within the scheme. It’s just that they may have their own PFAs, but they are under the umbrella of the Contributory Pension Scheme and they are still supervised by PENCOM, and are subject to the rules and regulations that guide us. The para-military has not exited the scheme and haven’t got any PFAs. To exit the scheme, you need to amend the law, which is what the military did; they had to go to the National Assembly, but to have the PFAs, you will need the condition for licensing before PENCOM can agree to give you a licence. Talking about the current one, which is the Nigerian University Pension Management Company, I guess it is part of the agreement between the Federal Government and ASUU. They have been granted a licence to operate a PFA under the umbrella of PENCOM, subject to the same rules and regulations. It is natural that if they take something from us who are already registered contributors, it dents a bit of our business. However, it is worthy to note that even in the University Pension Management Company, it is voluntary. For them, it is not compulsory to join a University Pension Management Company, you can choose to remain in your existing PFAs. Whether you are a new staff or an existing staff, you can choose to remain or not, and the National Pension Scheme has released a press statement in that regard.

The advantage of this synergy is obvious as they offer us spread in terms of location with their over 200 branches

One of the main reasons FCMB increased its stake in Legacy Pension is to tap into the microcredit space. Can you give us a breakdown on the extent the company has gone on this mandate? First of all, the micro pension itself is a totally different sector because it is going to be dealing with small savers, the self-employed and the informal sector - like the artisans, that is, people that are not in the organised private sector or public sector. I feel everything depends on regulation, and PENCOM has released a framework on how that is going to be done and there is lots of work that remains outstanding. The regulator and us are working on the final issue on how it is going to be done, however, it hasn’t been launched yet. Part of what we are working on is on how we can identify people because you need identity to be able to operate effectively in that space. When you collect money from people to open accounts for them, how do you identify them, how do you register them, how do you collect money from them and how do you pay them when they want to get paid. You know they are not like you and me? Yes, they have their various artisans’ groups but you still must find a way of identifying and grouping them. So for me, there are still a lot of final issues that must be put in place because you need to identify the kind of people that you are dealing with. We are working with PENCOM on possible ways that will be easy for them; because the micro credit is voluntary hence we want to make it attractive and easy to do because if you make it hard, like to register or to move money, people would be discouraged. For people it is not mandatory for, you need to make it convenient for them to get in, and you know for us in the organised private and public sector, under the current PFA or guideline of PENCOM, you cannot access this savings except under three conditions. Either you are retired, or you lost your job and haven’t got any in the last four years, or in the case of death that the balance in the account is being transferred to the next of kin. Those are for you and me that are in the organised sector that have regular income. However, remember that the informal sector might not have regular income or the kind of savings that we have, and in recognising that, PENCOM has it that they can take 40 percent of whatever they put in from time to time. But in our own case, you cannot take that except in one or more of those conditions above. In the case of micro pension, it is not so and this is due to the fact that we want to encourage them because this set of persons don’t have regular income. How do you see the increase in the stake impacting your customer base as well as on your Asset Under Management?

have a list from operators showing the ones that are not remitting and those remitting. They then appoint recovery agents who go to these companies asking details of the remittances made by them. We have seen it severally that they have sanctioned companies, they have imposed fines and companies that have not remitted for certain period of time are forced to remit their outstanding contributions plus interest, and that is only fair on the employees. So, PENCOM has the list of every agent - they are lawyers, accountants in the recovery agents who have been doing this job. For the Federal Government, it is a different thing as it is between them and PENCOM. If you look closely in the newspapers, PENCOM has been reminding employees of their rights to put pressure on their employers and blow whistle if they are not remitting to their pension accounts. Bear in mind also that there is no perfect system, there are always challenges, what you do is find ways to overcome such challenges overtime. It is only 12 years old, some countries have run organised pension funds for over 100 years and they have accumulated assets worth hundreds of billions of dollars. We have made significant progress but it is still a short time in the life of a country and the scheme. There is a lot more to be done, there are challenges on the road but I am sure that with continuous awareness, things will be done perfectly well. However, bear in mind that the economic challenges in the country are also challenges.

We have Asset Under Management of about N275 billion as at end of January 2019, and a customer base of 400,000. With an increase in stake by FCMB, apart from the fact that we have access to a wider branch network, more importantly, we have more brand recognition, which the FMCB brand is known for because they have been around for over 30 years. It gives us spread with over 200-branch network all over Nigeria, which can help to attract people, as people can work into any FCMB Bank across the country to ask on issues about the insurance and they will be attended to. Also, there are expertises that we can tap or share in terms of information, investment skills and in terms of access to employees thereby creating a synergy before us all. What is FCMB Pension doing or preparing to do to get the informal sector? We are arranging ourselves for it. It should also be worthy to note that before now, FCMB already had a micro

finance bank because they have been in retail business for many years and this pension business that we are in is also a retail business. So, there will be a lot to tap from and all I can say for now is that when that time comes, the market is going to see us roll out several strategies to get the informal sector in. What lessons do you think the Insurance Industry can learn from the success of the Pension Industry? Two fundamental things made the Pension Industry successful. One is that the Pension Industry is backed by law that you must open an account and your employer must contribute, and if you don’t follow it you are in trouble. That is the major fundamental pushing up the Pension Industry, because if it wasn’t compulsory, we won’t be here talking. The industry would not be here without the Pension Reform Act that made it mandatory. You can see that from states that haven’t had their own law they don’t do it properly, as there is no compulsion. You have many states that haven’t done anything on the pension reforms hence if the Federal Government had not done it, we won’t be talking about it. Secondly, the structure of the regulator,

the National Pension Commission as you know has a strong form of regulation for it to work, because law is one thing but regulatory details the nitty-gritty of how to do a thing, what you can do, what you cannot do, and what the sanctions are if you violate the rule. Hence, if any industry does not make all the laid down rules, there is no industry that will make the kind of progress the Pension Industry has made. What is the industry doing to address the issue of non-remittances by states, and even private bodies? First of all, pension is not under the concurrent list; hence, the Federal Government cannot make law for any state in terms of pension. But several states have done it while some others have not done any at all. In terms of those that have complied and registered and their employers are not doing anything at all, we as operators do not have powers to prosecute them. As we do not make the laws, it is the National Pension Commission that has the right to prosecute any violator of the scheme and they are doing that but you may not see them. They have appointed recovery agents and

There is an agitation for PFAs to invest in infrastructure. What do you think the challenges to this could be? Infrastructure investment is allowable under the investment guideline through certain instruments like an infrastructure bond or an infrastructure fund. But what is never allowed is a direct investment into infrastructure, hence as a PFA, we cannot just go and start building a road or a bridge, as it has to be through a bond or through a fund. However, the major challenge with infrastructure is that it is a public thing, a public facility. To do that efficiently you need the cooperation of everyone, including the government. You have to also find what the best route to do this is, because it is supposed to be liquid so you are able to get in and out, or you can sell or you can buy easily because pension is good with cash. That is why we put it via instrument that can be converted easily into cash. The challenge of getting those things done in government is perhaps what has been a constraint in that regard. There is also the challenge of availability of this infrastructure fund or infrastructure bond because we as PFAs have to annualise the risk before we can put money in those things. In most cases, infrastructure investment is one of the riskiest things you can do, particularly in an environment like ours where policy

changes can make things very difficult. Hence, before you can do things a little directly in infrastructure, so many things have to be put in place, particularly a very tight legal agreement; an example is the Lekki-Epe Expressway. However, having said that, we are beginning to see attractions in infrastructure investment. For example, the Federal Government offered two Sukkuk bonds. Those are really infrastructure bonds because they are tied to specific projects, they do not go into the treasury of the Federal Government to finance deficit, it is specifically for certain infrastructure projects. Also, there are one or two private entities that have floated infrastructure bonds that PFAs have invested in. There is actually the one that deals in power in Lagos that PFAs made investments in. There is also an infrastructure debt fund that was floated by one of the investment banks. So, there are investments in that regard and it is getting tractions. Having said that, recall I said about 70 percent of pension asset that has been invested in government securities (treasury bills and bonds), and I think about 40-45 percent in Bonds while about 25-30 percent is in Treasury Bills. If they are in FGN Bonds, it means the government have borrowed it, and government borrows to finance budget deficit, hence, indirectly, we can argue that in financing budget deficits, one way or the other, it gets into infrastructure. There are lots of works that would swallow such money, but I think we are on the right track; however, a lot of things have to do with policies. If you make the right policies, and you make the environment friendly and more importantly, you stick to contract terms, you will get the private sector to come in. All you need is the right regulation, they will bring the money because money goes where it is needed. You don’t need to start going to call for foreign investments because there is so much money to be made here in Nigeria with the so many deficits and with our population. Do you think the N1 billion capital regime for the Pension Industry is enough to provide good services given the high interest rate environment alongside the cost of doing business? What you need to understand is that PFAs are not banks. In banking, the capital is there because they are lending depositors’ money. What the regulator wants to see in the game is in the people who are lending, what their own capital is. If there are losses, the capital should come in first but in our own case, the pension asset and the company are totally different. They are not on the same page, so, what we require as capital is much lesser than what a bank would require because we are not lending. What we require for PFAs essentially are services; because we do not lend, but you need the offices, staff, facilities, particularly communication and ICT facilities. Remember, it was N150 million in 2006, became N1 billion in

2011. So, for now I do not see any challenge in that but the PFAs by themselves have been retaining their funds, and so when they make profits, they do not take everything out to pay dividend. The N1 billion is the paid up capital, but in terms of shareholders’ funds the operators have more than N1 billion, which is just the capital requirement. The key things are having outlets where you can reach the potential contributors, you need the staff and you need the communication and information technology, those are what are require because we do not lend money so we do not need capital or have capital adequacy ratio. It is a different kind of business. Are you doing anything in the private equity space? Private equity is one of the asset classes allowed for investment going by the guideline of PENCOM, which is five percent maximum. But for the entire industry, I do not think the asset should be more than 1 percent, which is about N80 billion. Private equity space is an asset class that is riskier and that is why the percentage allocation by the industry is smaller, because it requires more expertise and knowledge of how it works. That is why we haven’t seen lots of traction in that area. There is a lot of risk in it and the knowledge and the skills available are not like what you want to have, maybe that is why it is small. I am sure you understand that private equities mean you take your money, give it to somebody to invest in different companies, either invest alone or invest and manage those companies, and after a while – five, six years, they will exit. If they are successful, you will get something, if they are not successful, you take it so. Hence, there is a lot more risk because it is more like running a business. It is totally different from when you put your money in government securities, or in the bank, or treasury bills or equities. Also, exiting a private equity is

not as easy as exiting a public equity or exiting a bank account, so there is a lot more risk and that is why exposure to the industry is minimal. What is the percentage of FCMB Pension in the industry, and how do you hope to shore it up? We occupy 4 percent of the industry. However, leveraging FCMB Bank, we have an organic growth to tap into the opportunity, which is already presenting itself. Which one are you exposed to is it a merger or an acquisition? We are not exposed to anything. Merger or acquisition, I guess are two sides of the same coin. It is just bringing two businesses together, just that in the case of acquisition, there is a bigger company swallowing the smaller one. What are your projections like in the next 5 years? In the short term, what we are doing is aligning the brand and the culture with the FCMB Group so we can become part and parcel of the growth. In the medium term, we want to double our asset under management. In the long run, we want to be a top-tier player - one way or the other - because we recognise pension now at N8 trillion, you can imagine what the number will be in 10-20 years from now. It will be a bigger player than what it is now. Your advice to your contributors First of all, I must say I appreciate our contributors for choosing us, and we assure them that we will manage their funds and administer their pensions in the best possible manner. We would strive to give them more outlets like we have with FCMB Bank; we will make things even better. I will say that if they have any issues they should let us know, we are here to resolve issues if there are any, to answer questions or to clear any doubt.

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After $8m investment, Lexsz breaks new ground in plastics, recycling Odinaka Anudu

fter investing $8 million to acquire over 40,000 square metres of land along Lagos-Ibadan Expressway in 2011, Lexsz Plastics Limited has broken new ground in plastic industry and waste recycling, becoming one of West Africa’s leading players. Oba Olufemi Akowe, executive director of Lexsz Plastics Limited, said at a press conference in Lagos that the company employs over 400 Nigerians and has passed the ISO9001 quality management system certification for advanced production equipment and sound management system. He said the company has four production lines that refine and process wastes and plastics for the entire West Africa. Akowe explained that since the company started operations in 2011 in the country, it has relied majorly on waste supply from individuals, government agencies, clean dumping sites and its own waste as raw materials for recycling. Most of the materials recycled are PET bottles.

L-R: Gabriel Idahosa, vice president, Lagos Chamber of Commerce and Industry (LCCI); Muda Yusuf, director-general, LCCI; Babatunde Ruwase, president, LCCI, and Toki Mabogunje, deputy president, LCCI, during a press briefing to set agenda for President Muhammadu Buhari recently in Lagos .

“The production scale of PET bottles and preforms per year amounts to over 100,000 tonnes to meet the major chemical company, Yangtze River Delta Region of China enterprises’ demand for a large number of raw materials,” he said. The executive director explained that the firm, which was established in 2003 in Yemen capital of Sanaa, generates its own electricity and has produced successful start-ups in waste collections.

“We have, since we started, developed a robust partnership with private sector operators involved in packing and clearing domestic wastes from the cities and villages,” he said. He pointed out that the introduction of the company’s domestic production equipment has enabled it to create production lines for West Africa’s largest plastics recycling and processing enterprises. The PET bottle stands out as one of the most dynamic

pack formats in the retail packaging marketplace, particularly in its stronghold of soft drinks where it accounts for 77 percent of all packaging unit volume gains over 2004-2009, according to the Euromonitor International. Waste-to-wealth recycling is gaining traction both locally and internationally. Currently, the company recycles and exports, earning foreign exchange from it, but it is now looking inwards to support Nigeria’s manufacturing landscape.

Nigerian firms need to start converting cocoa into chocolates—MAN

ansur Ahmed, an engineer and president of the Manufacturers Association of Nigeria (MAN), has said that there is a need to deepen manufacturing sub- sectors to ensure that commodities like cocoa are converted into chocolates. “There is a need to deepen the sub-sectors,” Ahmed said in an interview in Lagos. “ You produce cocoa, turn it into cocoa butter and export it. What you get from that cocoa butter, manufacturers of chocolate will make literally a thousand times more than you do,” he said. Cocoa is Nigeria’s biggest non-oil export, occupying about 22 to 25 percent of

the entire exports. Nigeria ranks joint fifth with neighbouring Cameroon in cocoa production, churning out 210, 000 metric tons in the 2016-2017 season, according to data from the International Cocoa Organisation (ICCO). Cadbury is the biggest chocolates/tea maker in Nigeria. Ahmed said in leather and footwear industry, there is tremendous capacity which is not being fully exploited. “We are stopping at the production of wet leather,” he said. He explained that value addition is key to success in manufacturing. “If you take the process from hides to finished leather and compare the

value that is added from that finished leather to a pair of women’s handbags, the difference is huge,” he explained. He further said that one of his goals is to work with the National Council and the government to ensure that manufacturers continue to grow the sector both in depth and scope through increase in value addition. He stressed the need to constantly improve on the technology of manufacturers to grow output. “It is not enough to have a factory; you must also watch what technology is doing to that factory,” he cautioned. “If you don’t update your technology, very soon your processes will become ob-

“We recycle and export to China,” he disclosed. “We are dealing basically in fibre materials and are working on making them available as raw materials to local companies, especially textile firms,” he stated. The company, based in Ogun State, serves the surrounding states covering a broad range of features and numerous recycling sites in the areas. “The company’s products not only save a lot of energy and resources, but

they are effective for environmental protection in Lagos,” Akowe said. He further explained that the firm has created millions of opportunities for the country to earn foreign exchange and create jobs for numberless unemployed Nigerians. He urged the governments of Lagos and Ogun to create the convivial atmosphere for businesses to thrive. “We have been critical stakeholders to Lagos State Lagos Waste Management Authority, Ogun State Environmental Agency as well as Osun State,” he said. He explained that his company contributes to the economy by paying taxes to both federal and state governments without default, adding that it will now be focusing its attention on other key areas. “At Lexsz Plastics, the growth and development of the Nigerian plastics is our concern,” he said. “There is nothing wrong with becoming the major market leader in this sector. We believe strongly in the growth and development of the Nigerian economy and we are poised to take advantage of the potential in this market,” he added.

Value of inventory in H1 of 2018 estimated at N149bn solete and therefore your products will not be competitive.” He said Nigeria’s manufacturing sector must be supported to raise its contribution to the gross domestic product (GDP). He pointed out that the manufacturing sectors of Malaysia, Indonesia, Brazil and South Africa contribute double digit to the GDP while Nigeria’s remains single digit. “Manufacturing sector contributes something in the range of 30 percent of their countries’ GDP. Now, here we are contributing less than nine percent. So clearly, we have a long way to go to raise the level of contribution of the sector to the GDP,” he added.

h e va l u e o f inventory of unsold manufactured goods stood at N149.23 billion in the first half of 2018, according to the Manufacturers Association of Nigeria (MAN). This number represents a N10.36 billion or 6.5 percent reduction from N159.59 billion obtained in the corresponding period of 2017. It also reflects a drop of N12.3 billion (7.6 percent) from N161.53 billion recorded in the second half of 2017. “Inventory of unsold finished goods in

the sector within the period was induced by low real consumption due to inflationary pressure, smuggling, counterfeiting and cloning of Nigerian manufactured products as well as high cost operating environment,” MAN said, in its Economic Review. Inventory as used here is the value of goods not sold within the first six months of 2018. In the Basic Metal, Iron & Steel Fabricated Metal group, inventory was valued at N28.41 billion or 19.03 percent, while it was N24.36 billion or 16.2 percent in the chemical and pharmaceutical sector.

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Is China de-industrialising Nigeria? ODINAKA ANUDU

huks Anim owns a small-s cale shoe manufacturing company in Lagos. His factory produces boots, sandals and slippers, supplying them to schools and traders in south-western Nigeria. He has been a shoemaker for 12 years and has made a name for himself. He employs 13 workers, four of which are apprentices. But barely three months into 2019, he has lost three of his main customers. Two Chinese businessmen were in Nigeria around December of 2018 and were able to convince Anim’s customers to look outwards. The businessmen now exports shoes from China directly to Anim’s customers at cheaper rates. “I used to sell a pair of shoes to them for N2, 000 ($5.5),” Anim said. “But I learnt that the Chinese businessmen sell theirs for N1, 200 ($3.3).” Anim is already thinking of sacking seven of his workers and cutting down production as a hedge against this shock. “If we should produce our quality of shoes and sell at that Chinese rate, we would all die,” he said. He explained that no shoemaker would stay afloat after losing three of their major customers. Like Anim, a number of entrepreneurs are seething at the sight of Chinese businessmen in Nigeria because of their experiences at different points in time. In Aba, one of Nigeria’s main industrial cities, shoe-

makers complained in 2017 that cheap Chinese exports were “killing their business”. This is not limited to shoes, but is extended to other areas of manufacturing. In 2015, the only surviving brake pads and lining maker, Star Auto Industries, collapsed and blamed its woes on cheap Chinese imports. “It is difficult to compete with China, with substandard, cheap brake pads,” Chidi Ukachukwu, CEO of the firm, told BusinessDay after the collapse of his company. “I am not happy that import duty on brake pads fell from 25 percent to 10 percent. This has been the situation since 2004 and government has done nothing about it,” he said, adding that duties had always been designed to favour Chinese and Asian products. Many entrepreneurs in

Nigeria, especially manufacturers, blame their struggles on Chinese businesspeople. Their grouse is that Chinese entrepreneurs import cheap products, thereby beating local producers that have put much labour and resources into the production process. Nigerian manufacturers provide their own energy and import some of their raw materials from abroad. The question now arises, is China de-industrialising Nigeria? Samuel Ojimbe, managing director of a manufacturing servicing company, answered in the affirmative. “You see, they are only interested in the market which Nigeria offers,” he said. “They are not interested in setting up factories locally,” he said. “The moment you ask them whether they want to set up local factories, they evade the question,”

he added. Ojimbe’s position, however, may not stand the test of time because there are many Chinese manufacturing companies in Nigeria. Examples of such are Western Metal Products Company Limited (Wempco), Inner Galaxy Steel Company, Hongxing, and Lifemate, among many others. The Lekki Free Zone is virtually owned by Chinese manufacturers who enjoy several incentives for producing for export. John Kolawale, an Ogun State-based businessman, believes that China uses substandard products to “kill local firms in Nigeria”. “They send inferior products to us at cheaper rates, making it difficult for our local companies to compete favourably with them,” he said. However, Ede Dafinone, chairman of the Manufacturers Association of Nigeria

Export Group (MANEG), said if anyone should blame Chinese for importing substandard products or killing local companies, Nigerians too should not be spared. “The truth is that it is a mix of Nigerians and Chinese that are importing fake and substandard products from China. Nigerians go there and make their request and Chinese manufacturers give them what they want,” he said. Nigeria offers a demographic advantage for China, with almost 200 million people seeking to satisfy their utilities and needs. More than half of this population are young people, below the age of 30, who live mainly in urban areas, statistics shows. China was Nigeria’s biggest import partner in the fourth quarter of 2018, with a share of N900.4 billion, representing 25.1 per cent of the total imports, according to Nigeria’s statistics agency, the National Bureau of Statistics (NBS). China exports virtually everything from leather to electric bulbs to Nigeria. Incidentally, the NBS data show that China is not on the list of top ten export destination countries for Nigeria. Such data explain why Nigerians feel that China is only interested in dumping its products to Nigeria, while restricting Nigeria’s export. “Apart from flooding the Nigerian market with products that are not durable, some of their products can kill,” Haruna Maiya, a civil servant in a north-western Nigerian state, said. Haruna may have made allusions to electrical products from China, especially

cables, which have many times been reported to have caused fire outbreaks. “ Nig er ian cables are strong, good and durable, but Chinese cables are often substandard,” Frank Jacobs, former president of the Manufacturers Association of Nigeria (MAN), said in a 2016 interview. But several analysts say Chinese businesspeople are not de-industrialising Nigeria as they are only seeking new markets. “They are only businesspeople looking for markets for their products,” a Chinese businessman told BusinessDay. “There is even a Go-Out policy in China which even encourages Chinese firms to invest in places like Africa,” he said. “So, it is a Western propaganda against China. We also employ Nigerians,” he added. Charles Uzua, an investment analyst, based in Nigeria’s capital Abuja, said China could not have been de-industrialising the country when its firms were investing in all key industrial sectors. “Is it railway, energy or manufacturing? They are all there,” he said. “Yes, there are few unscrupulous elements from China, but it is wrong to just label them all as bad elements.” Muda Yusuf, directorgeneral of Lagos Chamber of Commerce and Industry (LCCI), said it was a question of regulation. “It is a question of strengthening our own institutions to make sure they do what they are supposed to so,” Yusuf said.

FMCG firms driven by improvement in packaging industry Gbemi Faminu

igeria is a good market for cons u m e r g o o d s, with many FastMoving Consumer Goods (FMCG) firms able to record positive sales. Good and efficient packaging, especially the flexible type, has helped to boost a number of them. Many companies are able to record increased sales based on the attractiveness and designs of their products. Packaging represents a significant part of Ni-

geria’s FMCGs, which are products that are bought over the counter, including foods, drugs, shoes, plastics, phones, and electronics, among others. Many consumers are attracted by packaging designs. The country’s packaging industry has seen 12 to 14 percent growth over the last decade, driven majorly by innovations in FMCG market that is valued at over $40 billion. Nigeria has a viable demography, comprising a growing middle-class and creative and vibrant youths which support the growth

of packaging and FMCGs. Urbanisation has continued to spike, as the majority of the population in the cities prefer packaged foods to traditional ones owing to increased work pressure, traffic gridlocks and social demands. One key segment of the packaging industry that has seen growth in recent times is food packaging, which has spiked on back of emergence of retail shops such as Shoprite, Spar and online shops like Konga, Jumia, etc. According to Euromonitor International, Nigeria’s food packaging segment is

one of the best-performing industries in the country, despite the economy and consumer spending power stagnating over 2014 and 2015. Euromonitor adds that most of the leading companies in the food packaging segment are local players, such as Promasidor Nigeria Ltd, Dufil Prima Foods Plc, and Yale Foods Nigeria Ltd, while long-standing Nigerian representatives of multinationals such as Cadbury Nigeria Plc and Nestlé Nigeria Plc also have a strong presence. “Developing alongside

the increased demand for newer types of products is the fast growth of the modern retail channels (supermarkets and hypermarkets),” Euromonitor International said in its 2018 report on Nigeria’s food packaging. A Purchasing Managers Index report released by the Central Bank of Nigeria (CBN) says that the manufacturing sector is influenced indirectly by improved packaging of products by manufacturing firms. For instance, in an effort to continuously provide value to its consumers, Nestlé

water rebranded its appearance and launched its new package in January 2019. Dauda Titilola, a staff member of Nestlé, explained that “the rebranding can be likened to a makeover, which makes it more attractive to our consumers.” Olawale Ojo, a sales expert said, “People will buy things based on what they see. An attractive package will encourage them to buy, and good quality will keep them coming back.” Consumers are of the belief that rebranding also means better quality and are encouraged to try it.

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Live @ The Exchanges Market Statistics as at Friday 08 March 2019

Top Gainers/Losers as at Friday 08 March 2019 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N11.1

N11.65

0.55

ZENITHBANK

N24.6

N24.95

0.35

DANGFLOUR

AFRIPRUD

N4.61

N4.8

0.19

GUARANTY

N5.6

N5.7

0.1

OANDO

Opening

STERLNBANK UBA

ASI (Points)

Closing

Change

N78.15

N75

-3.15

N11.35

N10.45

-0.9

N37.65

N37.3

-0.35

VOLUME (Numbers)

N2.48

N2.35

-0.13

VALUE (N billion)

N7.75

N7.65

-0.1

MARKET CAP (N Trn

DEALS (Numbers)

31,924.51 3,110.00 233,293,742.00 2.270 11.905

Total transactions on NSE decline by 3% in January to N122.08bn Stories by Iheanyi Nwachukwu

he total value of transactions at the Nigerian Stock Exchange (NSE) decreased by 3percent in January 2019, from N125.86 billion recorded in December 2018 to N122.08billion, a recent report at the NSE shows. On a monthly basis, the Nigerian Stock Exchange (NSE) polls trading figures from market operators on their Foreign Portfolio Investment (FPI) flows. As at January 31, 2019, total transactions include transactions by foreign and domestic investors –domestic investors are

further categorised into Retail and Institutional investors. The value of the total transactions executed in the domestic market by retail investors’ outperformed Institutional investors by 8percent. In January 2019, the total value of transactions executed by foreign investors outperformed those executed by domestic investors by 10percent. Total foreign transactions increased by 11.27percent from N60.08 billion in December 2018 to N66.85 billion in January 2019. Foreign outflows also increased by 5.20percent from N37.11 billion to N39.04 billion with a corresponding increase in foreign inflows which increased by 21.07percent from N22.97 billion

to N27.81 billion between December 2018 and January 2019. A comparison of the current and prior month (December 2018) transactions revealed that the total retail transactions increased by 6.27percent from N27.91 billion in December 2018 to N29.66 billion in January 2019. The Institutional composition of the domestic market reduced significantly by 32.45percent from N37.87billion in December 2018 to N25.58 billion in January 2019. This indicates a higher participation by retail investors’ over their institutional counterparts in January 2019. Foreign transactions which stood at N1.539trillion in 2014 de-

LSEG grows operating profit by 15% to £931m ...Proposed final dividend increased to 43.2 pence per share

ondon Stock Exchange Group Plc has released its preliminary results for the year ended December 31, 2018 which shows total revenue increase of 8 percent to £1.911billion (2017: £1.768 billion). David Schwimmer, CEO, LSEG said, “Since joining LSEG, my early impressions of its strengths have only been reinforced. The Group is distinguished by its open access and customer partnership approach, a set of world class businesses across the capital markets lifecycle and a team of committed colleagues.” “LSEG continues to be well positioned in an evolving macroeconomic and regulatory landscape. Our businesses, including those perceived to be most exposed to Brexit, such as clearing, continue to perform very well, with no change in our market

position. “We have delivered another year of strong performance across the Group, with a 9percent increase in income and 17percent growth in both adjusted earnings and proposed dividend. We have continued to invest in new initiatives, developing our information services business and increasing our majority holding in LCH, as well as taking a minority stake in Euroclear,” Schwimmer noted. He said, “The strategic positioning of each of our businesses has reinforced for me the continued opportunities for growth. We will continue to invest in our businesses and to increase Group-wide collaboration to better meet the needs of our clients and to continue to drive strong returns for our shareholders”. Total income went up by 9percent to £2.135billion (2017: £1.955 billion);

FTSE Russell delivered 15percent revenue growth (up 8percent on an organic constant currency basis). LCH OTC revenues went up 16percent (up 17percent on a constant currency basis). Adjusted operating expenses well controlled with 2percent increase (up 6percent including depreciation) reflecting continued investment in growth and efficiency. Adjusted operating profit was up 15percent at £931 million (2017: £812 million); operating profit went up by 20percent at £751 million (2017: £626 million); adjusted Earnings before interest, tax, depreciation and amortization (EBITDA) increased by 17percent at £1,066 million (2017: £915 million). Adjusted Earnings Per Share (EPS) up 17percent at 173.8 pence (2017: 148.7 pence); basic EPS of 138.3 pence (2017: 153.6 pence).

clined to N1.219trillion in 2018. Over the twelve (12) year period, domestic transactions decreased by 66.68percent from N3.556trillion in 2007 to N1.185trillion in 2018. Total foreign transactions accounted for about 51percent of the total transactions carried out in 2018, whilst domestic transactions accounted for about 49percent of the total transactions in the same period.

Global market indicators FTSE 100 Index 7,104.31GBP -53.24-0.74% S&P 500 Index 2,723.47USD -25.46-0.93% Generic 1st ‘DM’ Future 25,314.00USD -189.00-0.74%

Deutsche Boerse AG German Stock Index DAX 11,457.84EUR -59.96-0.52% Nikkei 225 21,025.56JPY -430.45-2.01% Shanghai Stock Exchange Composite Index 2,969.86CNY -136.56-4.40%

Stocks gain N36bn in one week

espite pockets of profit taking recorded at the Nigerian Bourse, the value of listed stocks still increased by N36 billion in the trading week ended March 8, 2019. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) which tracks the performance of the market increased by 0.31percent to close the review week at 31,924.51points from 31,827.24 points recorded the preceding weekend. Also, the value of listed equities increased to N11.905 trillion, from a low of N11.869 trillion the preceding weekend. All other indices fin-

ished higher in the review trading week with the exception of the NSE Insurance, NSE Consumer Goods, NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods indices which depreciated by 1.30percent, 1.02percent, 2.56percent, 1.09percent and 1.72 percent respectively. Twenty-four (24) equities appreciated in price, lower than 26 in the preceding week; 37 equities depreciated in price, lower than 38 equities in the preceding week; while 107 equities remained unchanged higher than 104 equities recorded in the preceding week.

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This is M NEY A guide to your Personal Finance

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

Financial freedom or financial abuse? Nimi Akinkugbe

n Friday 8th March International Women’s Day was celebrated across the world. It is in recognition of women’s achievements – from the political to the social – while calling for gender equality. In many countries, March is considered to be “Women’s month.” Nigeria is no different and throughout the month several activities and events showcase the strides that our women have made. The theme for International Women’s Day 2019 is #BalanceforBetter,” because parity benefits us all. Equality is not a female issue; it is an economic and social imperative says Forbes. We know that gender parity won’t happen overnight, but across the world women are making positive gains day by day. Even as we make strides for parity and income equality, a dark subject is still very much evident. Financial abuse is very prevalent in our society, even thought it is often hidden behind the veil of what might seem to be a “normal” relationship. Because of the embarrassment caused by this form of abuse, women in this situation seldom talk about it. Who would want to admit to having to account for every single kobo spent, or having to ask for money even to purchase the most personal of necessities? Financial abuse has discernible signs. Here are some of them: Account for every kobo spent, or else… A woman in such a relationship must account for every kobo that she spends. She must write a detailed list and provide receipts or evidence of all that she has purchased for the family; there is seldom anything left for herself. If she fails to account for everything, there could be unpleasant consequences. This may involve being given less money for even the most basic necessities, or she will have to beg for money, or worse… domestic violence. It becomes far easier to be extra careful with the meager house keeping allowance she receives, and forfeit the hope of any niceties, than to face what could be dire consequences.

No personal bank accounts permitted The woman must rely on her spouse or partner for her very existence. She is not allowed to have a bank account, a debit card or any access to money. She can receive calls on her mobile phone but seldom has credit to be able to make any calls to reach the outside world. She has no savings whatsoever, no current account; no money at all. She is totally dependent and must rely upon her spouse to make all financial decisions that affect both her and her children both now and in the future. Control of career choices Women in financially abusive relationships are often forced to follow a career path that their spouse or partner has chosen for them as opposed to what they desire for themselves. This is a form of control that keeps them from achieving financial stability and independence. Many women in these situations tend to be stay-at-home moms or if they are permitted to work, it is only with the express permission of their spouses. Often, as a woman begins to make some progress in her career, she is given an ultimatum and forced to quit her job. Her spouse is much more comfortable for her to be in a job that is not a true reflection of her educational background, her intellect or her experience. Not allowed to work She is not allowed to work or to run a small business. Working or accomplished friends or those with businesses are discouraged from visiting her home as they are considered a bad influence. Her movements outside the house

are carefully monitored by staff including the driver; this ensures that she does not visit people that are not pre-approved. She works but must submit all her income to him If she has a job, her entire salary must go to her husband or partner who credits the funds into a separate account that she is not a signatory to. She must submit a list of everything that she needs which he will carefully scrutinize and determine what he will part with. The sum that she is given seldom covers all that she needs to take care of herself and her children. She is the sole breadwinner Interestingly even women that are the sole breadwinners in a household can be financially abused. The men in these relationships control all aspects of the family finances. Even though they do not earn, they are in charge of all the money coming into the home. As she is responsible for all the family finances including rent, school fees, etc., she works non-stop to keep the money coming in and to give her family the best possible chance. Threat of abandonment Threatening to leave or denying financial support, knowing fully well that the woman has no money of her own, is another form of abuse. Control is established, as the women will comply due to fear that her daily needs will not be met. So, she just continues to “behave” under the shadow of her deep-seated fears of being made destitute, if she dares to step out of line. A child a year In this situation, the woman is permanently pregnant which

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Women must come together with men to tackle these pressing issues. By joining forces, we can collectively help women to realize the limitless potential that they offer economies the world over

makes it impossible for her to return to work particularly when her posse of children increases and it becomes difficult to afford adequate childcare. Her life’s work is thus laid out for her: she must take care of her family and may never know what financial independence means. Are you or someone close to you in a similar situation? Even though the above sounds dire, here are a few ideas to consider. Education empowers. There are many excellent on line courses that will keep your mind active and improve your skills from the confines of your home. Friends or relations may be willing and able to assist with the enrollment fee since you have no money. If you receive some housekeeping allowance perhaps you can try to save some of it. It will seem that there is nothing left but with careful budgeting, you can prioritize and try to save something. Every little bit adds up as you start to build savings. Even if you aren’t allowed to earn an income, volunteering will help to give you a sense of fulfillment and give more meaning and purpose to your life. This is a time to identify your skills, talents…those skills that have been buried over the years; this is the time to revive them. Identify them, nurture them, invest in them and eventually you will be able to leverage on them to begin to earn some income. Assuming communication and counseling have been explored, and particularly if the financial abuse is accompanied by physical abuse, you must seriously consider leaving, but with a plan. Close family, friends, and your local church or mosque may be able to provide some shortterm support until you are back on your feet. “Africa’s greatest untapped resource” Women must come together with men to tackle these pressing issues. By joining forces, we can collectively help women to realize the limitless potential that they offer economies the world over. When you empower a woman, you empower not just the individual, but you empower her children, her family, her community and her country.

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Monday 11 March 2019

Obasanjo, unrepentant critic, at 82 RAZAQ AYINLA, Abeokuta

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am concerned as a democrat who believes that with faithful and diligent practice of democracy, we can get over most of our political problems and move steadfastly and surefootedly on the course of stability, unity of purpose, socio-economic growth and progress for all.” The above was the opening paragraph of former President Olusegun Obasanjo’s speech in his January 2019 world press conference themed ‘Points for Concern and Action’ held at the Olusegun Obasanjo Presidential Library (OOPL) in Abeokuta, the Ogun State capital. There, the former president for the umpteenth time requested eligible voters in the country to vote out President Muhammadu Buhari and All Progressives Congress (APC), which brought Buhari to power in 2015. That was not the first time the former president would ask Nigerians to go against the political party and the man he helped to bring to power, having fallen out with former President Goodluck Jonathan, whom he also helped to bring to power. Obasanjo, who was Nigeria’s democratic president on the platform of People’s Democratic Party (PDP) between 1999 and 2007, handed over the mantle of leadership of the country to Umar Musa Yar’Adua and Goodluck Jonathan as president and vice president, respectively, in 2007, but Yar’Adua’s ill health and subsequent death set the grounds for Jonathan to become president in 2010, contested for presidency and won in 2011. But accusations of corruption and gross incompetence against Jonathan and the PDP, coupled with political crises within the then ruling party, gave Obasanjo and some opposition party members a vantage political position to rain criticisms on the Jonathanled Federal Government. The unfolding situation would later consume Jonathan and the PDP, giving way for sudden emergence of the newly merged political party, the APC. The emergence of APC and Muhammadu Buhari as ruling party and president whetted Nigerians’ appetite for good governance in accordance with the change mantra of APC. Alas, Obasanjo would soon turn 360° and begin strong criticisms against the man and government he helped bring to power due to insecurity, poor economic and political policies and alleged nepotism.

Mangosuthu Buthelezi (l), founder, South Africa’s Inkatha Freedom Party/guest lecturer, presenting a portrait to Olusegun Obasanjo, former Nigerian president/celebrant, and his wife, Bola, at a lecture marking Obasanjo’s 82nd birthday at Olusegun Obasanjo Presidential Library in Abeokuta, Ogun State.

The former president went ahead with the criticisms and used every opportunity available to get at APC and Buhari for incompetence and bad governance, hoping to change the political status quo. He would later adopt erstwhile Vice President Atiku Abubakar, presidential candidate of the PDP in the February 23 election, as his preferred candidate. The last bombshell released by Obasanjo was requesting President Buhari to return to his home town, Daura in Katsina State, based on alleged continued ill health and incompetence that had given room to bad political and economic policies that had hindered desired economic growth and development as well as alleged acute nepotism and favouritism as against merit. Against all the criticisms and antics of opposition parties, President Buhari was reelected as Nigeria’s president for another four years. Barely one week after Buhari’s declaration as president, the unrepentant critic dropped another bombshell. On Tuesday, March 6, 2019, Obasanjo clocked 82 years and he used the birthday event to host families, friends and relatives, far and near, where he was humble before his Creator and offered praises profusely to thank his God. Different speeches and comments were delivered by the eminent personalities in attendance, including Peter Okebukola, professor and di-

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In a democracy, you criticise a policy, a government or a leader. Democracy is not a family affair; even if it’s my brother that is there, and he is not doing what I believe he should do, he must be criticised

rector, Centre for Human Security and Dialogue of Olusegun Obasanjo Presidential Library (OOPL); Akin Mabogunje, professor and chairman of birthday event; Mangosuthu Buthelezi, member of South African Parliament and president of Inkatha Freedom Party of South Africa, among others. But one comment attracted Obasanjo’s reaction, which was the statement made by Oba Adedotun Gbadebo III, Alake and Paramount Ruler of Egbaland. The Alake requested the former president to stop criticising President Buhari, saying Obasanjo should fight less at 82. Alake of Egbaland, though younger in age, was Obasanjo’s school mate at Baptist Boys’ School at Oke-Eegunya in Abeokuta and was also Principal Staff Officer to Major-General Tunde Idiagbon, the Chief of Staff at the Supreme Headquarters from January 1984 to September 1985. “You all know that I was an officer under General Buhari, so each time Obasanjo criticises my boss, I always stand to say, my senior (OBJ), please leave the president alone!” the Alake said. “At 82, Baba is still fighting on, please fight less and be a consultant to everybody,” he said. But Obasanjo was unimpressed and quickly responded politely to the principal monarch who reigns over Obasanjo’s Abeokuta home. The unrepentant critic in Obasanjo responded to the supposed advice given to him by Oba,

explaining that there would always be room to criticise a policy, government or a leader if such a leader is not doing well. “In a democracy, you criticise a policy, a government or a leader. Democracy is not a family affair; even if it’s my brother that is there, and he is not doing what I believe he should do, he must be criticised that is what democracy is all about, criticism. “So when I say something, I know what I am saying. So if I say anybody in government in Nigeria is not doing well, let that government prove that it is doing well. “It’s not anything personal, so Kabiesi (monarch), your boss, Buhari, there is nothing personal between him and me. Just as you say, he is your boss. I am his boss with all due respect. Now the point is that I have been in that position longer than any Nigerian will ever be there. “So when I say something, I know what I am saying. Kabiesi, any time you say, leave my boss alone, I say he is your boss, but I am also his boss so you can also ask your boss to leave his boss alone and do the right thing,” Obasanjo said. But, in a congratulatory message signed and issued by Garba Shehu, presidential spokesperson, President Buhari declared that Obasanjo always gave a good account of himself and inspired his juniors with his wit and other leadership skills. “Nigeria’s successful transition to democratic rule in October 1979 was one of Mr Obasanjo’s remarkable contributions to national development. “As he celebrates his 82nd Birthday Anniversary, I wish Chief Obasanjo more good health, knowledge and wisdom in the service of Nigeria and humanity,” Buhari said. Meanwhile, Buthelezi, who delivered a lecture at the event entitled “Colonialism, Apartheid, Freedom and South Africa Rising”, said, “Dr Obasanjo continues to offer us the benefit of his vast experience, wisdom and insight for the sake of freedom, democracy, social justice and economic growth. “And who is better to write on a subject of such central importance to Africa than former President Olusegun Obasanjo? “Under his leadership as President of Nigeria, the GDP of Nigeria grew phenomenally. Any president who can secure economic growth for their country, provides their people with the two things most needed: development and hope. “So much from Dr. Obasanjo’s leadership, and we continue to learn from him. He has had a deep interest in South Africa for several decades.”

Monday 11 March 2019

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Government Enterprise & Empowerment Program

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With TraderMoni, FG is spurring productivity at the grassroots

n line with the Federal Government’s plan to diversify the Nigerian economy beyond crude oil, attention has been turned to microbusinesses in the informal sector. Rather than focus solely on the formal sector, the Muhammadu Buhari administration is working with an overlooked, yet critical, contributor to the Nigerian economy. The informal sector remains vital to reducing unemployment; it also bridges several gaps between the formal sector and the masses. There are different data on the number of players and economic contributions of the informal sector to the Nigerian economy. However, one thing remains clear: there are millions of players in this sector. The informal sector not only provides jobs, and puts food on many families’ tables, it also adds its own quota to the economic well-being of the nation. According to the United Nations Development Programme (UNDP), the informal economy in Nigeria is estimated to account for 57.9% of Nigeria’s rebased GDP. However, one recurring challenge for the sector in Nigeria remains lack of access to capital. Consequently, many rely solely on supplier credit which usually has negative implications for their businesses: reduced profits and an inability to expand their businesses.

far, over 1.5 million Nigerians have benefitted across the country. By targeting these people, the FG enhances financial inclusion which will give the beneficiaries an opportunity to not only have a knowledge of how their businesses are expanding but also contribute their quota to the growth of the economy. Through these investments, the FG also charts another path to digitise and harness the potentials of the informal sector in a way that it ultimately contributes to weaning the national economy of crude oil. By choosing to invest in Nigerians at the bottom of the pyramid, this administration, through the GEEP products, is charting a new course for Nigeria: one where every Nigerian regardless of educational qualification, political class or economic status is empowered to pursue their entrepreneurial aspirations. TraderMoni beneficiary in Oyo state

Grace Daniels, Food-stuff seller in Oyo “With this ten thousand naira, I will add some extra gallons of palm oil to my business. Even small extras sacks of yam flour,”

Ifeoma Obi; foodstuffs trader at the Dutse Ultramodern Market, Jigawa “I will add the loan to my capital, buy more stock fish and maggi so that I can expand my business...”.

Many members of the informal sector are largely unbanked for several reasons. They do not have the luxury of time, the collateral needed to access loans nor the turn-over to repay the high interests on bank loans. Thus, money exchanges hands for products/services.

It then moves between the market to either buy more products, pay for the goods bought on credit or to meet personal needs. While different parts of the Nigerian economy are being digitised, the informal economy remains largely cash-based. This makes it complicated to track transactions, monitor profits and trace growth of the businesses. In order to maximise the benefits of the sector, the sector needs to be better understood and even more organised. More than this, the sector needs to be mapped in a way that better connects it with the formal sector and makes it more sustainable for players to be recipients of credit. In response to these, in 2016, the FG provided a lifeline through the Government Enterprise and Empowerment Programme (GEEP) which targets petty traders and artisans who make up a large chunk of the informal sector. With GEEP, the Federal Government is taking steps to gain a better understanding of the activities in this sector. Over 4,000 TraderMoni enumerators across the country meet traders at their trading posts, educate them about the scheme and enumerate them by taking their details. TraderMoni emphasises the Federal Government’s decision to diversify the economy through a deliberate peopledriven, technology-focused approach. So

Nasiru Hassan, a suya seller and beneficiary in Maiduguri. “I go buy better net for my business...I go open account make I fit collect another one after I don pay this one”

Behind GEEP are faces of real change, and stories of hope: “I have been selling in this market for over twenty years, this is the first time a government will do something like this. There are several people who have come and made promises but we did not see the money,” - Bunmi Olujobi, a meat seller, a TraderMoni beneficiary.

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SUNU Assurances names Samuel Ogbodu MD/CEO …as Adeleke Hassan becomes ED, Technical & Operations

L-R: Muftau Oyegunle, director Leadway Capital & Trusts Ltd; Tunde Hassan Odukale, director Leadway Capital and Trusts ltd; Morenike Akinwande-Tomori, head, Private Trusts, Leadway Capital and Trusts;. Fehintola Obatusin, director, Leadway Capital and trusts ltd; and Ayo Wuraola, managing director, Leadway Capital and trusts Ltd, during the launch of Will online platform by Leadway Capital & Trust Ltd in Lagos

Challenges of Nigeria’s marine insurance mirror global situation Stories by Modestus Anaesoronye

he Nigerian maritime insurance market, like the global market is fraught with challenges. While the local market is battling the prevalence of fake operators and fake certificates, causing the industry to lose huge premiums, and also erosion of confidence, the global market is facing huge losses as result of catastrophe events and terrorist attacks. The marine insurance business, usually reported together with aviation risks, according to the Nigerian insurance industry report, contributed just N22 .09 billion in 2017 out of the industry’ ‘s nearly N300 billion

premium. The Nigerian Insurers Assurance however has secured the approval of the National Insurance Commission (NAICOM) and the Central Bank of Nigeria (CBN) to digitalise marine insurance business. Besides, it is already working with some partners including the NIBBS to drive marine insurance through the USSD code, just as it has done with motor insurance policies. Tope Smart, chairman of NIA disclosed this to journalists in Lagos, adding that the effort would check and eradicate fake insurance in marine business, as well as restore consumer confidence. Sean Dalton, the International Union of Marine Insurance (IUMI) Cargo

Committee Chair, reported late last year that despite global cargo premiums amounting to $16.1 billion, the cargo line has been unprofitable for several years with rising loss ratios and expense ratios and this is of great concern to underwriters. Speaking at IUMI’s annual conference in Cape Town, Dalton explained that growth in global merchandise trade was expected to remain strong in 2018 and 2019. Whilst this was positive for cargo marine insurers, continued growth was dependent on various factors, political and economic, and there were some serious concerns. An increasing number of countries were restricting or restraining international trade and this was creating

a protectionist operating environment. 2017 was the worst year for natural catastrophe losses in the history of the insurance industry. Hurricanes Harvey, Irma and Maria all caused cargo losses, particularly with an increase in static risk cover. Sean Dalton explains: “The cargo insurance market is starting to firm but it still has a way to go. Many cargo accounts were severely affected by events in 2017; and 2018 looks set to be another very active year. “Nat-cats and large/ outlier losses, such as the Tianjin port explosion in 2016, have demonstrated the need for the cargo market to price realistically for such losses and develop risk adequate premiums.”

he Board of SUNU Assurances Nigeria Plc has announced following the approval of the National Insurance Commission (NAICOM), the appointment of Samuel Oghenebrume Ogbodu as the managing director/CEO of SUNU Assurances Nigeria Plc. Similarly, NAICOM granted a provisional approval for the appointment of Adeleke Emmanuel Hassan as executive director, Technical & Operations. Samuel Oghenebrume Ogbodu is a chartered insurer and a member of the Society of Fellows of the Chartered Insurance Institute of Nigeria. He is a seasoned professional with track record of success in surpassing revenue, cost, profit and business growth objectives. He started his career at the Nigerian Life and Pension Consultants and later joined Law Union and Rock Insurance in 1987 as head of Special Risk department. Ogbodu was part of the team that set up Sovereign Trust Plc in 1994. He contributed immensely to the growth and development of the company and by dint of hard work, commitment and resilience, rose to the position of executive director/chief operating officer. Ogbodu has special skills in turnaround management and projects with 100 percent success rate. He is an alumnus of Lagos State University, Lagos Business School and University of Lagos. He is a member of the prestigious Ikoyi Club 1938, IBB Golf and Country Club, Abuja and Institute of Directors (IOD). He is married and blessed with children. Adeleke Emmanuel Hassan is a consummate and sea-

soned chartered insurer with over 25 years cognate experience in the insurance industry, spanning from broking to underwriting businesses. He started his career at Ark Insurance Brokers Limited and later joined Hogg Robinson Nigeria Limited in 1991 where he rose to become a Senior Manager/ Head, Energy Risk Department. Hassan joined Equity Assurance Plc (Now SUNU Assurances Nigeria Plc) in 2003 where he rose to become the General Manager, Marketing and Business Development. Hassan is an Alumnus of Ambrose Alli University and the Lagos Business School.

Samuel Ogbodu

Adeleke Hassan

He has attended numerous seminars and courses locally and overseas in the course of his career. He is a member of the Society of Fellows of the Chartered Insurance Institute of London, Associate Member of the Chartered Insurance Institute of Nigeria.

Monday 11 March 2019

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Insurance industry set to grow FY2018 African Alliance rebrands, focuses on fundamentals faster than inflation delivering excellent customer service Ifeanyi John

e are days into the month of March, a time when a vast majority of the nation’s corporations are expected to report their full year sales and earnings. In anticipation of expected results, the insurance sector has been forecast to improve fundamentals faster than inflation. When industry fundamentals grow faster than the general price levels in a country, there is an indication of real growth in that industry as the value of profits made are not eroded by time. Stakeholders are also glad as higher dividends will be expected from these companies. The country’s underwriters of risk listed on the stock market made a combined N17.96 billion in profits from a premium income of N189.54 billion as at September 2018, N3 billion less than the full year earnings of the 23 insurance companies in 2017. At this pace, the companies are set to earn close to N24 billion from an estimated premium income of N252.08 billion for the year ended 2018. This puts the growth rate of both the forecast 2018 industry gross premium income and earnings at 18.43 percent and 14.48 percent when compared to 2017 performance, well above the full

Modestus Anaesoronye

A year inflation rate of 2018 at 12.14 percent. AIICO, Sovereign Trust Insurance and Prestige Assurance were the companies that had already outperformed full year earned premium income by the end of September 2018. These companies were on track to grow premium income at the end of the 2018 financial calendar by an average of 40 percent. The insurance sector has in the past ten years achieved an average growth rate of 35.07 per cent in both life and non-life classes of business. A breakdown of this showed that life business recorded a higher growth rate of 27.64 per cent, while non-life grew by 7.43 per cent in the last 10 years. Amidst economic challenges of the country, it seems the insurers are protected and weather the storm efficiently. Eddie Efekoha, man-

aging director, Consolidated Hallmark Insurance in 2017 stated that insurance firms had to grapple with challenges of epileptic power supply and dilapidated infrastructure such as roads and other public facilities, all which according to him, exposed the industry to increased cost of operations. According to Agusto & Co, the industry has satisfactory capitalisation ratios which are expected to further strengthen on the back of anticipated changes in capital requirements for operators across different segments, although it notes that a number of fringe players remain undercapitalised. The leading Pan African credit rating agency in Nigeria for over 26 years has assigned a “Bb” rating to the Insurance Industry in its newly published 2019 Nigerian Insurance Industry report.

Leadway Capital moves to close gap in the ‘trust space’ …launches online platform for writing Will Modestus Anaesoronye

eadway Capital and Trusts Limited, a subsidiary of Leadway Assurance Company Limited has launched a digital Will writing service platform that will serve various categories of the Nigerian publics. This is coming on the heels of a perceived gap in the trust space, which according to the company remains a major issue in the Nigerian society and this is evident in the number of legal tussles for the estate of dead people for lack of a proper estate plan. According to the company, an important point to note in life is that “an Estate Plan is for everybody: single, married, divorced, with or without children, young

adults and the elderly” and this was the take away at the launch by Leadway Capital & Trusts Limited latest product last week. The launch of the products ‘iWill’, which took place at L’eola Hotel, Ikeja was part of the company’s effort to educate the public on the need and benefits for every person to have a Will or, a structured estate plan in place. Ayo Wuraola, managing director, Leadway Capital & Trusts, at the event, spoke on the brand’s offering of a quick and convenient way to write a Will either on-line or through their representatives who are trained professionals equipped with information to assist customers complete the process of writing their Wills easily and

quickly. With a written Will, you ensure your loved ones are provided for and that the distribution of your properties as you deem fit are validly documented thus promoting easy succession. Morenike AkinwandeTomori, head, Private Trusts, says she understands the true human need for people to provide and secure a better future for nuclear and extended family members, as well as sometimes for friends, associates, charities and other interests, should the unexpected happen. “The launch of a Will writing service that is available online and via direct partners is our solution to help the teeming populace document their intention for when they eventually pass on.

frican Alliance Insurance Plc, Nigeria’s foremost insurance company has launched a new corporate brand identity and refreshed logo. The new identity reflects its focus on delivering excellent customer service, as well as an emphasis on maintaining a strong digital presence. The launch event took place on March 8, 2019, at the George Hotel, Lagos. The new corporate identity will mark the company’s first major rebrand since its launch in 1960. Since inception, the company has remained a toptier brand of choice and one of the three leading life insurance companies in Nigeria, offering retail and corporate services to its large customer base. Its new identity features a new logo and new website, following the recent relocation of its headquarters to its current Ikoyi residence. Speaking at the launch, Funmi Omo, managing director, African Alliance Insurance Plc expressed optimism about the company’s focus stating that customers will have begun to experience dramatic upgrades across all service touch points.

to continue providing a secure future for every Nigerian, in line with our purpose statement,” she said. Tony Okocha, acting chairman of the company said the rebranding project aligns with the vision to make African Alliance a more competitive brand, that is anchored on professionalism, innovation and technologically driven

services. Okocha stated that rebranding will redefine the company’s next growth, being the first major rebranding after 60 years of its establishment. Tagged “the diamond,” the new logo takes on a diamond shape and reinforces the company’s mantra of life as a special gift to be treasured. The colours remain two

Funmi Omo

“The African Alliance Insurance has been serving customers in the life insurance space for 60 years. This shows the depth of trust our customers have in us, and this new and refreshed corporate identity signifies our pledge

shades of blue reinforcing the professionalism of its people. Beneath the logo is inscribed the tag line “With you for life,” reiterating the company’s commitment to providing a secure financial future at every point in life.

Allianz Nigeria shines with 4-star customer ratings Modestus Anaesoronye

he recently launched Allianz brand in Nigeria is leaving no stone unturned in seeking a position of dominance in the local insurance market. Apart from triggering an integrated advertising campaign across many traditional and contemporary platforms, the global insurer is determined to make its impact felt by the insurance consumers they cater to. “We are ecstatic that in our first full month as Allianz Nigeria, our customers have rated us 4 stars across different performance metrics,” beamed Uti Ellu, Head of Customer Experience at Allianz Nigeria. The firm which was recently launched following acquisition by world leading insurer, Allianz, undertook a strategic audit of the business performance across many customer touchpoints over the last couple of months. “Our objective was

simply to make feedback from our retail customers more intuitive and digital by default”, explains Tunji Oshiyoye, group head of Retail Operations and Client Services at Allianz Nigeria. “We launched an API that integrates to our insurance suite and generates a link to rate the company, following any consumer interaction such as policy inception or claims settlement,” he clarified. The customer receives an email prompting him or her to follow a link and rate their satisfaction level on a 1-5 scale. The aggregated score from the nearly 500 customers that have rated the company puts the company at 4 stars effectively scoring 80 percent in customer satisfaction. “Whereas we find this very encouraging, we will not rest on our oars”, Ellu enthuses. “As one of the world’s most trusted insurance providers, we are duty-bound to provide the highest levels of customer satisfaction possible.” She explained that in the coming months, the

rating prompter will be tailored to the particular phase of the customer journey in order to elicit very specific and actionable customer feedback. The Allianz Group is one of the world’s leading insurers and asset managers with more than 88 million retail and corporate customers. Headquartered in Germany, Allianz customers benefit from a broad range of Personal and Corporate insurance services, ranging from Property, Life and Health insurance to Assistance services to Credit insurance and Global Business insurance. The Allianz Group is one of the world’s largest investors, managing over 650 billion euros on behalf of its insurance customers, while their asset managers – Allianz Global Investors and PIMCO – manage an additional 1.4 trillion euros of third-party assets. In 2017, over 140,000 employees in more than 70 countries achieved total revenue of 126 billion euros and an operating profit of 11 billion euros for the Group.

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

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

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

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

22.72 23.29

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

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

11.37 14 14 (+2/-5) 42.63 66.03

Decreased to 11.37% in January 2019 from 11.44% in December 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% March 6, 2019 figure — an increase of 0.34% from March start March 8, 2019 figure— a decrease of 3.49% from the prior week

Oil Production mbpd (OPEC)

1.79

January 2019 figure — a increase of 2.99% from December 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

08/03/19

01/03/19

31,924.51 11.91

31,827.24 11.87

Volume (bn)

0.23

0.34

Value (N’bn)

2.27

3.75

Friday Rate

NSE ASI Market Cap(N’tr)

MONEY MARKET NIBOR Tenor

OBB O/N CALL 30 Days 90 Days

Change(%)

Indicators

08/03/19

Energy 0.31 0.31 Crude Oil $/bbl) Natural Gas ($/MMBtu) (31.78) Agriculture Cocoa ($/MT) (39.47) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Change Gold ($/t oz.) Silver ($/t oz.) (Basis Point) Copper ($/lb.)

66.03 2.89

1-week Change

YTD Change

(%)

(3.49) 3.21

2.44 (5.43)

2191.00 97.35 73.01 12.12 440.25

(2.54) (1.57) (0.27) (4.64) (4.08)

13.17 (25.23) (5.79) (20.94) 1.56

1294.67 15.13 288.70

(1.17) (2.76) (2.24)

(1.74) (11.98) (11.93)

(%)

08/03/19

01/03/19

9.17

17.42

(825)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

10.08 10.25 11.00

16.33 12.29 10.66

(625) (204) 34

Tenor

183

1 Mnth 3 Mnths

10.31 11.88

9.46 10.64

85 123

6 Mnths 9 Mnths 12 Mnths

13.96 14.45 14.41

13.04 14.87 15.70

92 (42) (128)

13.03

11.20

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

08/03/19

01/03/19

08/02/19

Official (N) Inter-Bank (N)

306.90 360.49

306.85 361.03

306.70 361.73

BDC (N) Parallel (N)

0.00 360.00

361.49 361.00

Friday

Change

(%)

(Basis Point)

08/03/19

01/03/19

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

Global Economy China recorded the third consecutive month of contraction in the manufacturing sector as the manufacturing purchasing managers' index (PMI) fell to 49.2 in February from 49.5 in January 2019, according to the National Bureau of Statistics (NBS). This marked the weakest PMI reading since February 2016 (49.0). The decline in February was partially the result of the scaling back of production due to the Lunar New Year holiday. According to the NBS, the production sub-index fell to 49.5 in February from 50.9 in January.� The sub-index for new orders saw a one percentage point increase to 50.6 in February 2019 from 49.6 in January 2019. Meanwhile, the new export orders sub-index ended at a 10-year low of 45.2, down from 46.9 in the previous month. In a separate development, the Japan economy expanded 1.9% year-on-year in the Q4 2018, after a 2.4% contraction in the previous quarter. According to the Cabinet Office, the economy was boosted by a rebound in household consumption and an upward revision of business spending following a series of natural disasters. Elsewhere in Brazil, government data reported that the trade surplus widened to $3.67 billion in February 2019 from $2.99 a year earlier with imports falling more than exports due to sluggish domestic demand. It was the highest surplus for the month of February since the series began in 1989.

Friday

Change

(%)

(Basis Point)

08/03/19

01/03/19

3-Year 5-Year

0.00 14.77

0.00 14.36

0 41

7-Year 10-Year 20-Year

14.29 14.30 14.28

13.90 14.19 13.93

39 11 35

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

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

Friday

Change

(%)

(Basis Point)

08/03/19

01/03/19

2,798.65

2815.60

(0.60)

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

8.39 5.29

9.26 5.86

(9.39) (9.68)

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

13.93 -41.86

14.62 -41.14

(0.69) (0.72)

Index

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

24,372.79 38,751.85

11.3102 14.4753

27-Feb-2019 27-Feb-2019

364 Day

51,995.03

17.6385

27-Feb-2019

Domestic Economy According to the newly released foreign trade report by the National Bureau of Statistics (NBS), the total value of Nigeria's merchandise trade in Q4 2018 was N8.61trillion. This represented a decline of 5.1% from the figure recorded in Q3 2018 (N9.07 trillion), but a 42.09% increase over the figure in the corresponding quarter of 2017 (N6.06 trillion). The value of total imports fell 14.99% or N631.6 billion in Q4 2018 compared to Q3 2018, but rose 69.6% over the corresponding quarter of 2017. The value of total exports in Q4 2018 increased by 3.52% or N5.02 trillion against the level recorded in Q3, 2018 and 28.46% higher than its value in Q4, 2017. The increase in export value and decrease in import value (relative to Q3 2018) resulted in a favourable trade balance of N1441.0 billion, or 125.5% over the preceding quarter. Nigeria's major exporting trade partners were India (15.5%), Spain (11.3%), France (9.9%), South Africa (6.8%), and Netherland (6.3%). The nation's major importing trade partners were China (25.1%), United States (10.4%), Netherlands (9.1%), India (6.5%), and Belgium (5.5%). In another development, the Central Bank of Nigeria (CBN) revealed in its monthly business expectation survey report that the overall confidence index on the macro economy for the month of February 2019 stood at 22.1 index points. The optimism on the macro economy was driven by the opinion of respondents from the services, industrial, construction and the wholesale/retail trade sectors. The firms that were surveyed identified insufficient power supply, unfavourable economic climate, high interest rate, unclear economic laws, financial problems, unfavourable political climate and insufficient demand as the major factors constraining business activity in the current month. Stock Market Performance gauges on the local bourse experienced a turnaround as bullish sentiments persisted throughout the week. Bargain-hunting pushed prices higher in financial services, oil & gas and consumer goods sector. The All share Index (ASI) increased slightly by 0.31% to 31,924.51 points from 31,827.24 points the preceding week.

Similarly, Market capitalization contracted by 0.31% to N11.90 trillion from N11.87 trillion the prior week. This week, we envisage market volatility prompted by profit-taking in the midst of more earnings expectation. Money Market On average, rates in the money market headed southwards in the week ended March 8, 2019. Market was liquid as significant inflows flooded the market due to demand for government treasury bills by international investors. Accordingly, shortdated placements such as Open Buy Back (OBB) and Over Night (O/N) rates eased to 9.17% and 10.08% to 17.42% and 16.33% respectively the previous week. Conversely, longer-tenured interbank rates, such as the 30- and 90-day NIBOR rose to 11% and 13.03% from 10.66% and 11.20% the previous week. Rates will likely head north this new week due to Secondary Market Intervention Sales (SMIS) and FX auction. Foreign Exchange Market The naira posted mixed performance in the various market segments for the second consecutive week. At the Investors' and Exporters window, it gained 54 kobo to settle at N360.49/$ from N361.03/$ the previous week. The parallel market remained unchanged at N360/$ from the prior week. In contrast, at the official window, it dipped by 5 kobo to settle at N306.85/$ compared to N306.8/$ the prior week. The relative stability of the local currency continues to be supported by the apex bank in its fight to keep the currency exchange rate stable. This week, we envisage the naira remaining at prevailing levels. Bond Market The previous week saw an uptick in bond yields as counterparties closed their open positions which were in profit. Demand also slowed during the week leading to a rise in yields. Yields on the five-, seven-, ten- and twenty-year debt papers settled higher at 14.77%, 14.29%, 14.30% and 14.28% from 14.36%, 13.90%, 14.19% and 13.93% respectively the previous week. The Access Bank Bond index fell by 16.95 points to close at 2,798.65 points from 2,815.60 points the previous week. We expect a bit of buying this week in view of the release of the revised bond calendar for the upcoming auction. Commodities Oil prices retreated as US crude oil stockpiles rose much more than expected last week, with inventories up by 7.1 million barrels to 452.93 million barrels, according to a weekly report by the US Energy Information Administration (EIA). Bonny light, Nigeria's benchmark crude, shed $2.9 to close at $66.03 a barrel, 3.5% lower from the prior week. In a similar vein, precious metal prices declined as the European Central Bank slashed its forecast for Eurozone growth and extended a pledge to hold off on interest-rate hikes until at least late this year, pressuring the euro and providing a boost to the U.S. dollar. Consequently, gold prices declined 1.17% to $1,294.67 per ounce last week. Silver prices also settled lower by 43 cents, or 2.8%, to $15.13 per ounce. This week, we expect crude oil prices to remain pressured due to high US inventories and the dismal outlook for growth by the OECD. For precious metals, prices are likely to rise, buoyed by weak US economic data. MONTHLY MACRO ECONOMIC FORECASTS Variables

Mar’19

Apr’19

May’19

Exchange Rate (Interbank) (N/$)

364

365

Inflation Rate (%)

11.5

11.55

11.6

Crude Oil Price (US$/Barrel)

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

Monday 11 March 2019

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Watchlist

hirteen companies will pay a combined dividend of N527.92 billion to shareholders as they continue to remain profitable amid a tough and unpredictable macroeconomic environment. It is paramount directors of companies reward owners out of distributable profit because some investors are attracted to a dividend payment. But Francisco Modigliani and Metro Miller in their 1958 Irrelevance Theory stated that dividend is irrelevant because the value of a firm is expected stream of future earnings discounted at the present value. A breakdown of payment shows Dangote Cement Nigeria Plc, the largest producer of the building material in the country, and most capitalized firm, has proposed a final dividend of N16 per N0.50 ordinary shares, totalling N272.64 billion. This translates into a payout ratio of 70.17 percent, as the cement maker continues to maintain an aggressive policy. It has a dividend yield of 8.21 percent. Zenith Bank of Nigeria Plc’s has declared a final dividend of N2.50 on every ordinary share, totalling N78.50 billion, and it has a yield of 11.22 percent. The lender’s profit before tax increased by 16 percent to

N231.68 billion in December 2018 as against N199.32 billion recorded the previous year. The uptick at the bottom line was largely driven by improved efficient as evidenced in optimization of cost to income ratio, cost of risk, and reduction in interest expense. Guaranty Trust Bank (GTBank) Plc has proposed a final dividend of N2.45 on every N0.50 ordinary shares, totalling N72.10 billion, and a yield

of 7.40 percent. Stanbic IBTC Holdings Plc will pay its owners a final dividend of N1.50 on every N0.50 shares, totalling N15.36 billion, and it has a yield of 2.06 percent. The lender has the strongest return on asset equity in the entire banking industry as full year profit spiked by 28.15 percent to N43 billion while net profit margin increased to 16.10 percent in December

2018 from 13.82 percent as at December 2017. Nestle Nigeria Plc will be pay shareholders N36.50 for every No.50 shares held, totalling N28.93 billion, and a yield of 3.87 percent. The consumer goods giant has been recording strong margins and double digit growth in profit as it continues to use its diversified product brand to increase share of the market.

57.1 points

The company, like most of its peers, has a payout ratio of over 100 percent. Seplat Corporation Petroleum Development Company (“Seplat) Plc has proposed a final dividend of N15.25 on every ordinary share, totalling N8.97 billion while yield stood at 3.02 percent. The upstream oil and gas giant’s net income dipped but it posted stellar numbers at the operating levels, thanks to strong growth in revenue. A sluggish economic growth couldn’t hinder companies from rewarding their owners, but they would have done better if the economy is benign. The consumer goods firms are more expose to macroeconomic shocks as they grapple with low consumer purchasing power and a decrepit infrastructure that balloon cost of production. In terms of income, Nigerians are becoming increasingly poorer, with 8,000 citizens jumping into the extreme poverty train on a daily basis, according to Brookings Institute. With 87 million Nigerians living below the $1.90 baseline, almost one out every two national (44 percent) lives in extreme poverty. Incidentally, India, which is second in the poverty pedestal, has 57 million people that are extremely poor, representing just 4.4 percent of its 1.3 billion population.

.. RoAE hits 35 percent as net income jumps by 54%

018 was a year full of uncertainty but also full of surprises as Stanbic managed to dethrone GTBank as the most efficient bank in Nigeria based on return on equity. Little wonder why Stanbic presently surpasses GTBank and Zenith on a valuation standpoint as investors are willing to pay more for every stock in Stanbic than

its peers, evidenced in its superior price to earnings ratio and price to book ratio which stood at 6.86 and 2.2 respectively versus GTBank (PE: 5.55, P/B 2.1) and Zenith (PE:4.26, P/B: 0.96) as at market close on Friday. The return on average equity of Stanbic IBTC outperformed its peers as the stellar growth in net income outpaced both GTBank and Zenith Bank. Stanbic grew its post-tax income by 53.9 percent from N48.4 billion in

2017 to N74.4 billion at the end of 2018 while Zenith grew by 11.3 percent from N173.8 billion to N193.4 billion and GTBank by 10 percent. This led to new rankings in terms return of average equity as Stanbic now topped the leaderboard with an RoAE of 35 percent and GTBank fell to second position with 30.9 percent while zenith was at 23.7 percent based on reported 2018 financial statements by publicly listed banks. The net profit margin of

GTBank remains the highest in the industry as it grew from 40.1 percent in 2017 to 42.5 percent in 2018 but Stanbic went from third to second best in terms of net margin. Stanbic’s net profitability improved from 22.8 percent to 33.5 percent and Zenith Bank ipso facto lost its position as its net profit margin grew at a slower pace from 23.3 percent to 30.7 percent. The three banks with combined assets of N10.9 trillion improved profitability,

Manufacturing PMI for February 2019 stood at 57.1 index points, indicating 1.4 points decline compared with 58.5 points recorded in January 2019. Production level PMI in February 2019 stood at 57.5 points, Employment level PMI – 56.3 points and New Orders PMI - 56.9 points.

14.99% The value of total imports fell 14.99% in Q4 2018 compared to Q3 2018, but rose 69.6% over the corresponding quarter of 2017. Imported Agricultural products were valued at N8.7 billion in Q4 2018.

N39.15 trillion

Stanbic IBTC dethrones GTBank as investors’ darling in banking industry IFEANYI JOHN

P.E

SHORT TAKES

13 firms to pay N527.92 bn to shareholders BALA AUGIE

weathering the storm of lower interest income across board. A reduction in writebacks had a major impact on the bottom line of the banks as the impairment charges declined by an average of 84 percent. Total gross earnings of the three banks reduced from N1.37 trillion to N1.28 trillion but the bottom line soared as combined post tax profits grew by 15.97 percent from N390.1 billion to N452.4 bil-

A total volume of 616, 528, 697 transactions valued at N39.15 trillion were recorded in Q4 2018. NIBSS Instant Payment (NIP) dominated the volume of transactions with 228, 209, 423 valued at N23.57 trillion.

Continues on page 36

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

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

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Markets Intelligence

Seplat mispricing offers “free lunch” for investors IFEANYI JOHN

ule number 1 in investing – there’s no free lunch for investors. Rule number 2 – don’t always believe rule number 1. While rule number 1 stems from the proponents of the efficient market hypothesis which argues that all stock prices fully reflect all public and privately held information available on the company and no one can take advantage of any mispricing, many investors and academics have argued that markets are not always efficient, and the inefficiencies does bring opportunity to make real investment profit. There are numerous examples of market inefficiencies in literature but last week, one showed up on the Nigerian Stock Exchange. According to a recent investor note by EUA Intelligence, Seplat’s dual listing provided an arbitrage opportunity that could easily have passed the test for “free lunch” status. The Nigerian indigenous E&P giants was listed on both the London and Nigerian Stock exchanges at £1.24 and N619 respectively at the opening of markets on Wednesday, 6, March 2019. This put the market capitalization of the company at £722.11 million (N343.17 billion) and N359.023 billion (£755.46 million) on the London and Nigerian Stock Exchanges respectively. Thus, there was a price parity discrepancy of about N15.84 billion (£33.35 million) which calls into question the validity of the efficient

market theory. The publication stated that “an arbitrage opportunity is created when a company listed in two exchanges trades at different prices. Prices ought to converge rapidly on both exchanges to eliminate the arbitrage opportunity and allow the companies fully reflect an identical market valuation on both exchanges. While a frequent price divergence is

not abnormal since transaction cost and exchange rate volatility must be considered, a price divergence of as much as 3 percent which we observed in Seplat is material enough to present a profit windfall to arbitrageurs.” Theoretically, the stock price of a dual-listed company should be approximately the same in both jurisdictions, after taking currency

differences and transaction costs into account. Otherwise arbitrageurs would step in and exploit the price differences. However, price divergences do occur from time to time, especially when trading hours do not overlap and there has been a significant price move in one market. In simple terms, the arbitrage opportunity can be best described through a hypothetic case of an investor who borrowed 1 million shares from a shareholder in Nigeria and sold on the bourse at N619 with the promise of the return of a share certificate amounting to 1 million shares at a certain period plus a prorated interest of 17.5 percent per annum (2.2 percent risk premium on 12 months Nigerian T-Bills) for that period. The investor will have N609 million in cash after adjusting for the 1.52 percent average trading cost when selling shares in Nigeria. Converted at the BDC pound exchange rate of N470, a total of £1.29 million will be realized and transferred into an online UK brokerage account at no cost. At £1.25 per share, 1 million shares could be bought on LSE and a profit of £40,000 less £72 buying cost and 0.05% tax on shares bought will lead to realized profit of £36,923 or N17.35 million. However, analysts say in the real world, the 3 percent arbitrage opportunity is only available if the Nigerian Stock exchange was a sophisticated market and had a functioning derivative market where risks of possible change in currency and stock prices could be hedged.

“While we agree that the arbitrage opportunity is real, exploiting it could be very difficult as a 3 percent change in the price of the stock on any of the exchanges during the transaction could lead to heavy losses for the investor. There are too many moving parts and the Nigerian market is not sophisticated enough to hedge risks against said parts,” according to the equity research firm, EUA Intelligence. The Nigerian Stock Exchange, NSE, is on track to introduce guidelines for creation, listing and trading of derivative products on its platform. It noted that the creation would facilitate hedging of investment risks and diversification of asset portfolios within the market. The Exchange disclosed, in a notice signed by Tinu Awe, General Counsel/Head Regulation of the NSE, that “In the cash markets, investors are typically exposed to asset price risk. In the absence of short selling and the supportive securities lending options, investors are highly susceptible to significant diminution in portfolio values once there is a reversal of a bull trend.” As at the close of trading on Thursday, March 7, 2019, the market prices had converged and the opportunity for arbitrage lost. The prices had corrected to £1.28 and N596.9 with market capitalization of £744.38 million (N351.24 billion) and N350.84 billion (745.21 million). It is expected that investors may now be observing the stock for the next price divergence which offers possibility of yet another free lunch.

Continued from page 35

2017 to 49.49 percent at the end of 2018 calendar. GTBank posted a cost to income ratio (CIR) of 36.3 percent which was 2.42 percentage point less than 37.2 percent CIR achieved in 2017. Zenith followed with 46.4 percent, a 9-percentage point increase in from the 42.3 percent in 2017 and Stanbic lagged behind with a 52.9 percent CIR as against 49.8 percent efficiency ratio posted in 2017. Based on our analysis, Stanbic IBTC appeared to be the most diversified company has nine direct subsidiaries, namely, Stanbic IBTC Bank plc, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Asset Management Limited, Stanbic IBTC Capital Limited, Stanbic IBTC Investments Limited, Stanbic IBTC Stockbrokers Limited, Stanbic IBTC Ventures Limited, Stanbic IBTC

14 insurers’ stock price below 50 kobo 14 months after NSE lift cap ISRAEL ODUBOLA

ourteen insurers still have their share price below 50 kobo after the removal of par value price floor of 50 kobo by the Nigerian Stock Exchange (NSE) in January, 2018. The new pricing rule introduced last year specifies that the price of every shares listed on the Exchange shall be determined by the market forces and equities may trade below the minimum price floor of 50 kobo per unit. Under the new pricing methodology, the NSE classified stocks into

three different groups, A, B and C. According to the rule, stocks in Category A comprise equities that are priced at N100 and above. Equities in this category require 10,000 units to move the price, while the tick size – mark up or down limit – for this group was pegged at10 kobo. Stocks in category B consists of equities that are priced at N5 and above but below N100. The volume required to move their price was pegged at 50,000 units, while the minimum tick size was put at five kobo. Stocks in category C, which consists of over 67 percent of companies listed on the NSE, comprises equities that are trading below N5. The volume

required to move their price was put at 100,000 units. According to the Exchange, the new policy is meant to improve liquidity and efficiency in the market. Majority of insurance stocks were severely hit following the introduction of the new pricing policy as they became more exposed to poor valuation. Checks on the share price of listed insurers revealed that Goldlink, Wapic, and 12 others traded below half of N1 at close of business Tuesday, March 8. Universal, Standard Chartered, Guinea & African Alliance lie flat at 20 kobo, the least in the industry. Four insurers including AIICO, Linkage assurance, Law union and Prestige assurance trade above 50 kobo, but less than N1. Top players, Custodian investment and AXA Mansard trade above N1, while price per share average 66 kobo for the industry. The new par rule value policy now permits quoted entities to trade as low as one kobo which many industry operators believe may result in acquisition or change in management structure of under-performing insurance firms. Insurance companies going forward would have to ensure their business model become less vague as investors do not like uncertainity or blur lines in making their decisons. This would help lure invvestors to the sector, although it is not suffucient to overturn their luck ocvernight as insurance culture in Nigeria remains poor.

lion. “This shows the resilience of these banks as they continue to thrive regardless of varying economic conditions. In 2017, we saw the banks take advantage of higher yields and made more trading gains even though they saw impairment charges rise as a large percentage of loans to energy and the telecoms sector were non-performing,” an equity analyst at EUA Intelligence explained. Although the combined deposits from customers in the three banks grew by 9.6 percent from N6.40 trillion in 2017 to N7.02 trillion in 2018, a slowdown in loan creation caused the loans to customers as a percentage of total deposits to decline in the banks. The combined loan to deposit ratio reduced from 69.17 percent in

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Gideon Olanrewaju: The food entrepreneur, with eye on healthy nutrition Josephine Okojie

igeria’s problems create multi-billion naira opportunities. It is, therefore, no surprise that Gideon Olanrewaju, co-founder of BikeAndBlend, is making money from solving one of these problems. Malnutrition and obesity remain two big challenges in Nigeria. According to the United Nations International Children’s Emergency Fund (UNICEF), malnutrition is a direct or underlying cause of 45 percent of all deaths of under-five children in the country. To change this narrative, Gideon and his fiancée Temilade Salami co-founded BikeAndBlend to provide Nigerians daily nutritional requirements for their development. They focus more on children through their 100 percent organic fruit drink variants provided at affordable prices. Gideon, who studied Nutritional Biochemistry from Ladoke Akintola University, was inspired to establish the business in 2017 as a result of his own personal experience while studying for his master’s degree in the United Kingdom. The young entrepreneur was restricted to high cholesterol fast foods upon his arrival to the United Kingdom for his programme. This made him gain lots of weight in four months, as he was becoming obese. To shed off some fat, Gideon joined a challenge that involved fruit blending race competition for students. He succeeded in this and lost 27kg afterwards by eating healthy. “To shed off fat, I joined a 60-day fitness challenge that involves fruit blending race competitions among students and this was my first encounter with Blender Bicycles,” he recalls. “I lost over 27kg afterwards and

I was intrigued to adopt such a fitness-nutrition idea into Nigeria,” he adds. “Using pedal-powered blender bicycles, BikeAndBlend provides health-conscious customers with organic, instantly prepared 100 percent fruit smoothies as healthy alternatives to sugar-sweetened and carbonated soft drinks,” he says. In 2018, Gideon and Timilade established BikeAndBlend. The initial start-up capital was N5million, which was raised from their personal savings, family and friends. Gideon and Timilade, the co-founder, used the initial capital in securing a warehouse, equipment and raw materials. The fruits and vegetables are sourced from smallholder farmers and open markets across the country. “We currently source our organic, locally grown fruits and vegetables for our events from small- scale fruit farmers and in the open markets,” he says. Since starting, the business has grown and it now attracts various invitations to multiple events on weekly basis. “We are managing to attract invitation to multiple events on weekly basis now, but we are coping,” Gideon says. The business currently has two full-time employees and two parttime employees. Gideon states that innovation has driven the continual existence of the business despite tough economic environment in the country. “Innovation is the vital key behind our continual existence,” he says. “By creating new and innovative products and packages, we continually engage different stakeholders within the fitness and nourishment industry to ensure brand relevance and value addition,” he explains. Also, the flexible pricing strategy has made BikeAndBlend remain in business. Answering questions on the

Gideon Olanrewaju

challenges confronting the business, the young entrepreneur says seasonality of fruits, inadequate storage facility and short shelf life remain the biggest issues. “With huge volume of demand, refrigeration doesn’t prevent fruits from spoilage, as we often tend to buy in large quantities to save cost and stock up for subsequent events,” he further explains. Another major challenge is the

unavailability of blender bikes in local markets. Importing them has shot up the company’s production price. “The peculiarity of our business is built on the innovation of our blender bikes and because we have a few bikes which were actually imported at a high cost, our service delivery and other services are somehow affected,” he says.

He also identifies huge infrastructural gap as a major challenge limiting the growth of the business. The graduate of Ladoke Akintola University urges the government to bridge the huge infrastructural gaps in the country to drive industrialisation and production of machines in the country. He says that the firm plans to secure partnerships with corporate organisations and government at all levels for implementation of wellness programmes to drive nutrition in the country. Similarly, it plans to launch a franchise model. “We are launching a franchise model that will result in the opening of more outlets in various high traffic locations such as shopping malls and plazas, restaurants and cafes, market stalls, hotels and universities,” the young entrepreneur discloses. Gideon, who is a serial entrepreneur, has been honoured with a 2015 YALI Tech Camp Alumnus, a 2016 Teaching Fellow of the African Leadership Academy and a 2018 UNESCO Young Leader Award. On his advice to young entrepreneurs, he says, “When you set out to do business in Nigeria, you must love what you do to become successful in it. Passion and grit are key in running a successful business in Nigeria.” “Also, be fearless in your execution but strategic in your planning. Funding may not be readily available locally but it should not be a stumbling block from meeting your goals and setting milestones. “Research on funding opportunities within your sphere and learn to leverage on the power of social media to increase visibility about your brand. And never stop trying our new ideas on how best to produce your goods or deliver your services. Lastly, pay close attention to customer satisfaction and feedback. It’s key for your long term returns,” he concludes.

Why MSMEs need single-digit loans ODINAKA ANUDU

icro, small and medium businesses require single-digit interest rates to expand their operations, create more jobs and explore offshore markets. Experts say a fashion designer who gets, say, N200,000 loan or grant will be compelled to engage one or two other persons than a large enterprise that gets N100 million. “Requests come to us every day, but we cannot meet up because we don’t have money to buy good machines,” said Ken Anyanwu, sec-

retary of the Association of Leather and Allied Industrialists of Nigeria (ALAN),told Start-Up Digest in Aba, Nigeria’s industrial city. In the first half of 2018, average interest rate charged to Nigerian manufacturers stood at 22.9 percent, representing 0.25 percentage point higher than 22.65 percent recorded in the same half of 2017, according to the Manufacturers Association of Nigeria (MAN). Thirty-seven million small and medium businesses (SMEs) are the worst hit, with many of them seeking offshore funds and equity to pump cash into their business. Nigeria’s monetary policy rate

(MPR), which is a benchmark interest rate in the country, has remained 14 percent for almost two years. Deposit money banks lend as high as 25 to 35 percent, according to BusinessDay checks. The monetary policy committee (MPC) of the South Africa’s Reserve Bank met in March last year and cut interest rates by 25 basis points. The current repo rate (central bank lending rate to commercial banks) in South Africa is now 6.5 percent while the prime lending rate (lending rate to customers) is 10 percent. Similarly, Kenya Central Bank’s monetary policy committee cut the determining bank rate in late July to

9 per cent from 9.5 per cent. BusinessDay gathered that Kenyans now borrow at an interest of 13 per cent (as against from 13.5 percent earlier) in line with the interest rate capping rule that limits lending rates to 4 percentage points above the CBR. Zambia is one of the emerging countries in SSA and its central bank cut benchmark lending rate by 50 basis points to 9.75 percent in February this year, citing lower consumer inflation and weaker economic growth, according to Reuters. In October 2017, the central of Ethiopia raised its benchmark interest rate to 7 percent from 5 percent.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Monday 11 March 2019

Start-Up Digest

How Phebean helps young women build careers in audio production Gbemi Faminu

hebean Oluwagbemi is the chief executive officer of Audio Girl Africa, a start-up that helps young, creative and passionate African women to build careers in audio production and technology. She is a recording and sound mixing engineer and also works as an employee at Azusa Productions— as a live and studio sound engineer. A dogged fighter and entrepreneur, she thrives in the industry defined and dominated by male folk. The young entrepreneur tells Start-Up Digest that Audio Girl aims at training and inspiring young women through carefully designed workshops, internships, engaging online contents and mentorship. Phebean graduated in 2012 from the University of Ibadan, where she studied Chemistry Education. After her National Youth Service Corps, she decided to set up Audio Girl Africa on the 16th of January 2018 with Aramide Bada, who is a co-founder. She was inspired to start the business by the desire to create

Phebean Oluwagbemi

a platform where women would have the chance and opportunity to train and work as sound engineers without any sort of gender disparity. “I figured out at one point that I was always the only girl on a live set in the midst of many men, and I realised that they were very few women in audio production, es-

pecially in Africa,” she says. “I will like to create and witness a world where there are equal percentages of both men and women in the audio industry,” she adds. The entrepreneur started her business with N300, 000, which she raised from her savings, financial aids from friends and

contributions from business partner. Ev a l u a t i n g h e r b u s i n e s s growth since she started, Phebean says that it has been a gradual progress, rather than an exponential growth. “We have had a couple of successes, successful workshops and girls who are dedicated to the profession,” She says. Currently, Audio Girl Africa is yet to have an employee but has volunteers. Phebean explains that she plans to expand the business to include event planning and boot camps to encourage publicity. She currently works on building a stronger network with major industry players, stakeholders, especially those in audio talent recruitment. She also intends to engage in developmental activities for herself and her business, which include registering her business and acquiring more certificates. She says what makes her distinct in the field is creating a platform for young, savvy, skilled and passionate women and girls to delve into audio production and see it as a career choice too. The entrepreneur discloses that as much as she enjoys what she does, there are some challenges which can be very dis-

couraging. “One of the major challenges is that the business is capital intensive,” she says. “It is a male-dominated world. Therefore, convincing clients is hard work and sometimes people will want to cheat you.” “Getting partnership, sponsorship and publicity is also difficult as well as getting approval from schools to start up audio classes,” she explains. She has been able to wade through challenges, especially with the help she gets from professionals who help with advice and volunteers to teach and train during their workshops. She is also succeeding, thanks to her ability to personally curate and create contents herself. She pleads with the government to include Audio Technology into the educational curricula, provide easily assessable financial aids and help with trainings. She is inspired by women who have dared to take up challenges in a male-dominated world, especially in the sound engineering space. She is an ardent believer of teamwork and creativity. Advising other entrepreneurs, she states that consistency and hard work are important in whatever they do.

Business Opportunity

Establishing industrial starch plant for export

f the present policies of discouraging imports and encouraging exports are sustained, exports would continue to rise, which will in the long run strengthen agricultural sector to generate income for this country. The only area that government should do a lot of work is in the provision of infrastructure such as power supply, potable water, good roads, and research centers. From our research, industrial starch (whether from corn, cassava, potato, rice etc) is one of the fast selling products in the international market. For this product to attract very high demand and higher prices, it must be well processed, maintaining very high acceptable international standards. The demand for industrial starch is worldwide. This product is highly demanded in Netherlands, France, United Kingdom, and Federal Republic of Germany. It is also widely demanded in Taiwan, Asia, and USA. The local demand is also encouraging. Prospective investors will be given detailed information on the foreign buyers of these products

for further business relationships. Starch can be produced in dry or wet forms. Both wet and dry starch is needed in the Europe. Starch has a lot of industrial uses. It could be used as food in the preparation of bread, macaroni, custard, sauce, snacks, pap. The industrial uses include textile, bookbinding, glue making, paperboard, batteries, cosmetics, paint and soap. Starch is also used in weaving, spinning, dye works, paperboards, dressing paints, leather adhesive, paste stamps and carpets. It can also be used in artificial honey, fruit juice sweets, beer, and canned fruit confectionaries and in pharmaceutical industries. Because of the wide uses to which starch can be put to, total global demand are over 18 billion metric tons per annum. The supply on the other hand has not been encouraging in the international market. Apart from Zaire and Brazil, which supplied a total of 18.2 million metric tons in 1999 and 26.5 metric tons in 2001, the gap has been longing for bridging. There

is a wider gap of need for starch for industrial uses locally. Therefore, there is plenty of cassava and other root crops or tubers in Nigeria, for the production of world starch requirement. The major plants and equipment needed are cassava peeler, sifter, slicer, grater, extractor; pulveriser and dryer (if dry starch is required) hammer mill/disintegrator, automatic or semi-automatic weighing and packaging machine and sitches/seakers. The production capacity of the machine under consideration is around 10 tons of starch per day of two shifts. This implies that about 75, 000 metric tons will be produced in a year. It should be noted that this product is demanded in metric tons by end users. It is, therefore, advisable that the end product should be packed as such. It is also advisable to maintain the international market water content standard of about 8 percent. The product is packaged in 100kg jute bags for export. How the products should be preserved to avoid producing irritating odours

will be discussed when we are contacted for further clarifications by prospective investors. Realizing however, that our industrial capacity utilisation cannot be full, the capacity is placed at 50 per cent, resulting in total annual income of $9.4 million (N752 Million). Having considered the availability of raw materials, convincing technological position, government encouragement to nonoil export oriented investors and availability of human resources, as well as huge profit margin from exporting this product, it is clear that this is good business. Investment Cost (N’000) Preliminary Expenses 250 Plant & Machinery 7, 560 Fixtures & Fitting 250 Working Capital (3 months) 3, 000 Contingencies 1, 500 Generating set 2, 000 Utilities 500 Total 15,060 Funding Implementation To handle the implementation of this project professionally, prospective investors should embark

upon a detailed and bankable feasibility studies. The writer is readily available for the feasibility studies and packaging of a bankable feasibility studies reports/ business plans. Construction of the factory will take place, followed by procurement and installations of all the required machinery and other basic assets. The writer will guide prospective investors professionally to ensure that good packaging, quality products and efficient/effective management are installed for profits. The writer will also assist in the sourcing of the required funds (where necessary) and obtaining NAFDAC approval. For further enquires, detailed & bankable feasibility studies, please contact. Uba Godwin, Global Trust Consulting Group, 56, Ishaga Road (1st floor), Surulere, Lagos Tel: 01-4721550, 08023664368, 08034494437 Email:ubagodwin@yahoo.com

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Start-Up Digest

Meet Mosunmola Akinpelu, Lagos-based makeup artist Gbemi Faminu

osunmola Akinpelu is the chief executive officer of Beholderplus, a Lagos-based makeup centre. Although wife and mother, she is a 200-level undergraduate of the National Open University of Nigeria (NOUN) where she studies Accounting. She describes her business as one that beautifies women and helps in increasing their confidence. She explains that she has always been interested in making people feel and look good, so did not have a problem becoming a makeup artist. She started her business with N10,000, which she got from her savings and her sister . She started by getting basic makeup products which she used on clients. She saved her profits, invested in trainings and acquired more quality products which helped her to fully establish the business. Although she is an administrative officer in a private hospital, she still works on her business, which she says has been making progress.

Mosunmola Akinpelu

The entrepreneur says that she is able to get referrals and widen her clientele because of hard work and determination. Mosunmola explains that even when she was pregnant, she was

still going for jobs. When she put to bed, she sometimes carried her baby along. She has assistants and interns who work with her and she pays them. The entrepreneur also

Kenechukwu Okafor: The creative footwear maker Josephine Okojie

enechukwu Chibuikem Okafor is a Mechanical Engineering graduate of Landmark University, Ilorin, Kwara State. He is the founder and CEO of Ezra Footwear, a startup shoe manufacturing business. Kenechukwu was inspired to establish his business by his parents and his love for leather products. The achievements of his parents motivated him on a daily basis and, in 2016, he decided to establish Ezra Footwear to realise his dream and prove that locally-made shoes can compete with imported ones. He is also the founder of Ezra Farms. He started his business with his entire savings and it has gone

Kenechukwu Okafor

relatively well for him, as demand for his products has grown. He tells Start-Up Digest that he sources his raw materials from local markets across the country and also imports some. “We source most of our materials from local markets most times and also imports from Indonesia,” the footwear maker says. Kenechukwu is once a winner of the Entrepreneurs Organisation, Global Students Entrepreneurship Awards (EOGSEA) in Nigeria and he represented the country at the global finals in Germany. Answering questions on the challenges facing his business, Kenechukwu says that rising cost of raw materials has remained the major issue, adding that prices of materials needed for production of footwear have doubled over the past three years.

He states that this has increased his production cost with customers not wanting to pay more despite rise in costs. He further says that his inability to meet with huge demand for his products is a big issue, calling for funds for expansion. The young entrepreneur calls on the government to improve the ease of doing business in the country so that cost of production can decline and the country’s products will become more competitive. He notes that the footwear industry has the potential to diversify the country’s economy away from oil and earn huge foreign exchange for Nigeria. The young entrepreneur says that the country has what it takes in terms of raw materials and the needed skills to become a footwear manufacturing hub in Africa. When asked about his expansion plans, Ekenechukwu says, “I have scheduled a lot of expansion plans which I have already started working on through the help of my parents who have been supporting me from the beginning. Currently, I am making efforts to secure more machines for production and also expand the factory space.” “I also intend to start training other youths on footwear manufacturing. I am saving towards achieving all these within the shortest possible time,” says Kenechukwu. On his advice to younger entrepreneurs, he says, “My advice for other entrepreneurs out there is that we all go through bad days. I have been through a lot of bad times. What matters is not how hard you fell but how you got back up.”

facilitates trainings for people whenever she is free. “I use quality products because I deal with the face, which is one of the most delicate parts of the human body,” Mosunmola says. “I get my products from verified makeup stores in Lagos and abroad,” she adds. Speaking on challenges, she says that she prefers foreign products because, to her, they have better quality and are preferred by clients. Therefore, she spends more money on purchasing them. She further explains that most of these products are available abroad so she spends the scarce foreign exchange buying them and having them delivered. She says the business is capital intensive as major instruments and products are expensive and almost unaffordable. She urges the federal government to help ease the business environment for start-ups and encourage them with grants and single-digit interest rate loans. She also says that the foreign exchange rate should be made more favourable, especially for small businesses. She explains that she is an advocate of customer satisfac-

tion and maintains a friendly relationship with all her clients. She attends all kinds of trainings available, including webinars and seminars to ensure she develops herself and her services. Speaking on her business expansion plans, Mosunmola says, “I intend to incorporate fulltime cosmetology, have my own branded products for makeup and skin care and expanding my business internationally.” “I want to have an institute that will serve as a training ground for those who want to learn makeup and cosmetology,” she discloses. “I also want to work on getting my professional degrees and becoming a chartered accountant in the nearest future,” she adds. She explains that juggling the positions of a family woman, a business owner and an employee is tasking but her family helps her and she tries to make time for each role so that none is adversely affected. Mosunmola says she is inspired by God, Oke Maduewesi of Zaron Cosmetics, and her family. Her life values are hard work, consistency and self-development. Advising other entrepreneurs, she says that determination and hard work are compulsory for success.

LevelSet debuts in Nigeria to drive mentorship …collaboration for entrepreneurs, others Josephine Okojie

evelSet, a global initiative, has launched in Nigeria to drive and increase mentorship and collaborations among black entrepreneurs and professionals across the globe. Tope Ajala, co-founder, LevelSet, said during the launch in Lagos recently, that the organisation offers a career defining programme for black entrepreneurs and professionals looking to jumpstart their businesses in a globally competitive environment through mentorship and collaborations. “Everyone wants to be successful on their own and this is great but you will be bigger and better if you bring people along the journey and that is what LevelSet is all about,” Ajala said. “At LevelSet we allow people come through this journey globally by collaborating with others who are ahead in that particular sector or career,” she said. She stated that the platform wants to bring various black communities together to help each other, by older entrepreneurs mentoring start-ups in order for them to avoid certain mistakes they made during their entrepre-

neurship journey. “We want to change the levels and how black communities are perceived. Blacks are perceived differently in various continents.” Ajala noted that apart from connecting entrepreneurs and professionals to mentors, the platform also connects mentor with other professionals and business owners to grow their network globally. “LevelSet also provides support for mentors through regular check-ins, local events and guidance to improve their leadership skills,” she said. “We want to change the levels and how black communities are perceived. Blacks are perceived differently in various continents,” she added. She said that the platform has in place a mechanism that streamlines and vets people coming on board as mentors and mentees. Speaking on some of planned initiatives of LevelSet, she said the platform will provide big co- workspace for mentors and mentees to come together and collaborate. Ajala urged start-ups that want to be mentored to come on board by registering on the platform and select what best suits their businesses.

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Why is customer service so bad? because it’s profitable STEVE BLANK

t’s a familiar scenario: A service provider fails to live up to your expectations and you feel some restitution may be in order. Yet when you call customer service to voice a complaint, you’re faced with an automated voice menu, put on hold or told that the agent is not authorized to refund your money. There’s some evidence that customer queues may be unavoidable at times. Caller complaints tend to arrive randomly, making it impossible to staff agents to handle unpredictable fluctuations in call volume. But our research suggests that some companies may actually find it profitable to create hassles for complaining customers, even if it were operationally costless not to. We examined the incen-

tive structures within customer service departments at over a dozen companies in finance, technology and travel services. We found that these companies

screen complaining callers by using a hierarchical organizational structure. By forcing customers to jump through hoops, the organization helps curb its

redress payouts. We found that most involve at least two levels of agents. For example, one Indian call center forbade Level 1 agents from offer-

ing any monetary refunds. These agents could only offer replacement items or provide information on the status of an order. Any caller insisting on a refund was told to call the U.S. headquarters during normal business hours, generating additional tasks for any customer seeking more compensation from the call center manager, or Level 2 agent. This design relies on the fact that some consumers are not willing to incur this hassle. When this happens, the company is off the hook for the additional payout. So what about the idea that frustrating customers has consequences on customer retention and longterm reputation? Some companies have little regard for their reputation, especially those who control a large market share. Unfortunately, this means companies with few com-

petitors may find it worthwhile to alienate angry customers in order to save on redress costs. Of course there may be other advantages to a hierarchical structure. But overall, our research shows that the benefit of curbing redress costs can explain the widespread use of hierarchical call centers at many customer service departments. This may help us understand why some of the most hated companies in America are so profitable, and why customer service, unfortunately, remains so frustrating.

(Anthony Dukes is an associate professor at the University of Southern California. Yi Zhu is assistant professor and Mary & Jim Lawrence Fellow at the University of Minnesota.)

How will we prevent aI-based forgery? OREN ETZIONI ecent developments in artificial intelligence point to an age where forgery of documents, pictures, audio recordings, videos and online identities will occur with unprecedented ease. AI is poised to make high-fidelity forgery inexpensive and automated, leading to potentially disastrous consequences. Automated forgery is already prevalent on social media, as we witnessed during the 2016 U.S. elections. Twitter has uncovered tens of thousands of automated accounts linked to Russia in the months preceding the 2016 election, according

to The Washington Post. Facebook estimated that fake news spread by Russian-backed bots from January 2015 to August 2017 reached potentially half of the 250 million Americans who are eligible to vote. When attempting to decide whether an item is genuine, it’s natural to consider its source. Yet it turns out that a website, an email address and even the origin of a phone call can be easily faked or “spoofed.” On the internet, we rely on digital signatures. A digital signature is a computer method (based on cryptography) of ensuring that an item wasn’t tampered with after it was

signed. Automated messages between websites can also be authenticated by digital signatures, but digital signatures are not widely used to certify the authorship of emails, social media posts, images, videos, etc.

should be enabled by default in our email software, word processor, smartphone cameras and in any production of digital content. Our browsers, social-media applications and other media-reading software should highlight whether content is signed, and by whom. Finally, and perhaps most challenging, we need to promulgate the norm that any item that isn’t signed is potentially forged. The specter of AI forgery means we need to act to make digital signatures de rigueur as a means of authentication of digital content. First, we need to certify signatures, which can be done by central

authorities, or via more democratic computer methods such as encryption and blockchain. Second, we need to make the acts of signing and verifying signatures as seamless as possible. Signing

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(Oren Etzioni is the chief executive of the Allen Institute for Artificial Intelligence and a professor at the University of Washington.)

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Monday 11 March 2019

CITYFile Kaduna: 24 arrested as police recover 8 guns

A Truck laden with 40ft container had a mechanical fault and lost control at Savoil Bus Stop, at Anthony Village, in Lagos State.

NAN

Accidents claim 1,538 lives in Q4, 2018 JOSHUA BASSEY

t least 1,538 Nigerians were confirmed killed in various road accidents in the fourth quarter of 2018, the National Bureau of Statistics (NBS), has disclosed. According to the NBS Road Transport Data released via its website at the weekend, a total of 2,532 road accidents were recorded in the period under review. The report said 92 per cent (1,422) of the 1, 538 people that died were adults, while the remaining eight per cent (116 people) were children. It further said that 79 per cent (1,209) of the figure that died were males, while 21 per cent (329) were females, while a total of 8,406 Nigerians were injured in road accidents in the period.

According to the report, 93 per cent (7,815) of the 8,406 injured persons were adult, while the remaining seven per cent (591) were children. A further breakdown of the injured persons, according to the NBS, showed that 74 per cent (6,194) were males, while 26 per cent (2,212) were females. The report identified speed violation as the major cause of road accidents in the fourth quarter, 2018 which accounted for 52 per cent of the total road accidents reported. It said dangerous driving and wrongful overtaking followed closely as they both accounted for nine per cent and eight per cent of the total road accidents. The report put estimated total number of vehicles in the country as at fourth quarter, 2018 at 11.82 million with the

total population estimate of Nigeria at 198 million people in 2018. According to the report, Nigeria’s vehicle per population ratio is put at 0.06. Meanwhile, data on the category of vehicles involved in road accidents in the quarter reflected that 60.18 per cent of vehicles were commercial (2,407). It said 38.30 per cent (1,532) of the vehicles involved in road accidents were private, while 1.50 per cent (60) were government and the diplomatic had one. The report said a total of 185,883 national drivers licenses were produced in the quarter under review. It said Lagos and FCT produced the highest number of drivers’ license, while Zamfara and Kebbi States produced the least number of national drivers’ license.

Police parade 18 suspects for sundry offences in Oyo ... two arrested for diverting truck-load of tricycles AKINREMI FEYISIPO, Ibadan

he police in Oyo State have arrested two persons for allegedly diverting a truck loaded with 24 units of brand new tricycles from Lagos to Ibadan. The driver of the truck, Adenuga Michael (21) and his motor boy, Saheed Yekini (27) were among 18 criminal suspects paraded by the Commissioner of Police (CP) in charge of Oyo State, Shina Olukolu, for various crimes, including robbery. According to the CP, Michael and Yekini on February 14, 2019 were caught off-loading brand new tricycles from a Mark truck with registration number KTU 400 XB at their hideout in Odo Ona Kekere area of Ibadan. The police chief said that Yekini, the

motor boy, confessed to have diverted the truck carrying 24 tricycles originally meant to be transported from Apapa wharf to Isolo area of Lagos, to Odo Ona Kekere area of Ibadan. “The duo were arrested following information received at SARS office that some hoodlums were sighted attacking trailer drivers in their hideout Odo Ona Kekere area of Ibadan”, he added. Upon receiving the information, a team of SARS led by Okusola Aremu, swung into action and in the process the two suspects were arrested. Likewise, a 40-year man, Kola Abiola, was arrested for allegedly hijacking a truck laden with fuel at Soka area of Ibadan. Olukolu said: “On 2nd of March, 2019 at about 0700hr, upon information received by SARS squad in the state

that some hoodlums who specialise in hijacking trucks carrying petroleum products were sighted along Ibadan/Lagos Expressway and had diverted one trailer loaded with 33,000 litres of PMS to Soka area of Ibadan. “Sequel to this information, a team of operatives swung into action and in the process, one of the criminals who was later identified as Kola Abiola, was arrested. He also confessed that one unidentified other member of the gang nicknamed ‘Action’, who is still at large brought the products to him. According to him, the hijacked PMS had been siphoned into 16 drums and 12 kegs while the truck had been taken to an unknown destination. The CP said that the product recovered from the hideout was transferred to SARS office at Dugbe area of Ibadan.

aduna police command says it has arrested 24 suspected criminals and recovered eight guns and live ammunition. The Commissioner of Police in the state, Ahmad Abdurrahaman disclosed this at a recent press briefing in Kaduna. Abdurrahaman said the arrest followed a special operation by the command to rid the state of criminals. According to him, among those arrested were two people suspected of kidnapping. He explained that other suspects were arrested over criminal conspiracy, armed robbery, receiving stolen property, car snatching, house breaking, theft, illegal possession of firearms, thuggery, among others. Abdurrahaman said the exhibits recovered from the suspects included, three pistols, 15 rounds of 9mm ammunition, one dane gun and four locally made guns. Other items recovered include five Toyota cars, 10 laptop, a Galaxy tap, one Samsung duo handsets, one new wrapper, a wristwatch, sword, a long sickle, drum and one cutlass. The CP added that the command also recovered an army camouflage jacket, police mobile force Denim trouser, two black lane yards, two police belts and two decoders. According to him, the suspects have made useful statements and would be charged to court on completion of investigations.

NGO kits indigent pupils with uniforms AKINREMI FEYISIPO orldSmith Life Builders Foundation (WOLIBUF), an Ekiti Statebased nongovernmental organisation (NGO) has distributed N100,000 worth of school uniforms to indigent students in some public primary schools in Ikere local government area of the state. Olukemi Akinleye, founder of the NGO, while presenting the school uniforms to the pupils at St. Marks Anglican Church Primary School and All Saints Anglican Primary School, both at Ikere-Ekiti explained the reason behind the gesture to include desire to give succour to the less-privileged with the aim of impacting their lives and in the long run give them better tomorrow. Akinleye, who said the programme, code-named “Kit-The-Kids” has been assisting the children in areas of needs, expressed the confidence that the new school uniforms will not only boost the morale of the beneficiaries, it would also encourage regular attendance at school. She assured the remaining pupils who have registered for the free uniform but are yet to receive to be patient as theirs would soon be delivered. Responding, the permanent secretary, State Universal Basic Education Board (SUBEB), Folakemi Oladimeji, represented by the director, Academic Services of the Board, Christianah Bamikole lauded the donors and advised the pupils to be good ambassadors of their respective schools. The headmistress of St. Marks Anglican Primary School Ikere, Folakemi Bosede, on behalf of the pupils and the schools thanked WOLIBUF for fulfilling its promise to assist the indigent pupils.

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Experts, stakeholders want Buhari to consolidate on little wins in agric sector TEMITAYO AYETOTO

he economic diversification drive anchored on repositioning the nonoil sector through the development of agriculture is one policy experts and stakeholders agree has been effective in boosting robust participation in the sector in the first four years of President Muhammadu Buhari. With the government flashing messages that oil revenue would not continue to be reliable for desired sustainability, agriculture has gained traction among corporate and individual entities who have picked on different value chains to extract value. A higher number of Nigeria’s farming population has been active in farming via the widening of financial window facilitated by government’s signature scheme, the Anchor Borrowers’ Programme. Even

while it is not near self-sufficiency yet, Nigeria has now been touted as the largest producer of rice in Africa in a latest overtake of Egypt. Also, through proxy farming concepts introduced by agric-tech platforms, more farmers have had access to investments from individuals with idle funds, while the international community has also signalled interest in Nigeria’s agric business space with MoUs signed to commence investment. These are the little wins that experts and stakeholder want President Buhari to consolidate on in the next four years so that underlying issues besetting self-sustaining production capacity are addressed holistically. Taiwo Olaniran, associate director and agric-business lead, PwC Nigeria, who commended the continuity of the Agricultural Transformation Agenda of former President Goodluck Jona-

than’s administration under the Agricultural Promotion Policy (2016 to 2020), said the government needs to pursue the APP more vigorously with a view to correcting the defects. “The government needs to do a thorough assessment of the APP to determine how far we have gone to achieve the set-out policy. And for areas where we have not made progress as expected, we need to examine what went wrong. We need to come up with action plan to remediate those areas with setbacks,” he told BusinessDay in an exclusive interview. The quest for an agricultural sector that can conveniently vie with oil in terms of revenue generation, Olaniran said, will only be feasible with increased budgetary allocations to facilitate the provision of infrastructure and following through on friendly agric policies that boost investment confidence.

Arbitration Tribunal awards Nigeria $1.69bn over row on Brass, Forcados oil assets DIPO OLADEHINDE

n Arbitral Tribunal sitting at the Lagos Court of Arbitration has delivered a ruling in favour of Nigerian government by awarding the sum of $1.69 billion in the arbitration between the Atlantic Energy Drilling Concepts Nigeria Limited and Atlantic Energy Brass Development Limited over major oil assets such as OMLs 26, 30, 34 and 42 (Forcados) and OMLs 60, 61, 62 and 63 (Brass). This move is believed will strengthen the resolve of the Nigerian government in its drive to recover other lost or stolen crude over the years. According to Nigerian Lawyers, the Tribunal affirmed submissions by lawyers of NPDC that Atlantic

Energy was indebted to NPDC for failure of Atlantic Energy and Atlantic Brass to perform their financial obligations under the respective Strategic Alliance Agreements (SAA). The Tribunal dismissed claims by Atlantic Energy and awarded the sum of $1.69 billion, $200,000 and of N1,500,000 (as costs) in favour of Nigerian government’s Nigerian Petroleum Development Company limited (NPDC) by the plaintiffs within 21 days from ruling for the Forcados and Brass Assets in question. The negotiations which started in 2011 saw NPDC entered into several SSA with Atlantic which created obligations for Atlantic to remit to the government the revenues from the crude oil lifted with respect to OMLs

26, 30, 34 and 42 (Forcados Assets) and OMLs 60, 61, 62 and 63 (Brass Assets). Lead counsel of NPDC in his submission relied heavily on professional service company KPMG Audit Report of the crude oil lifting’s in OMLs 26, 30, 34 and 42 (Forcados Assets) and OMLs 60, 61, 62 and 63 (Brass Assets); and dwelt on the principle of avoidance of unjust enrichment by the Atlantic Energy of the petroleum assets of the Government owned NPDC. The milestone decision is one of the single largest Awards ever in a Nigerian Arbitration and also settles the question of impact of non-payment of signature bonus on lifted crude oil as well as the principles of Unjust Enrichment in Crude oil lifting and recovery.

Fueltrax sponsors Nigerian-American Naval officer to NASCAR Outdoor Race JUMOKE AKIYODE-LAWANSON

ueltrax, a United States (US) company that has pioneered and led the maritime industry in marine fuel management systems, will be sponsoring a Nigerian-borne US Naval Academy graduate and US Navy officer, LT Jesse lwuji, for a marine race competition in Las Vegas, US. The sponsorship will see Iwuji making his first ever Las Vegas Motor Speedway start in the NASCAR Gander Outdoor Truck Series Race, making him the only current military member racing in NASCAR that entire weekend and doing so with Reaume Bros Racing.

Pleased with the sponsorship, the CEO of Fueltrax, Anthony George, said: “It’s always been a passion for my wife Michelle and I to give back to young men and women and help them reach their dreams. lwuji is a big dreamer and a hard worker and we are honoured to help him continue on his journey to success in NASCAR.” The West Africa operations manager of Fueltrax, Bene Okorie, said: “We are so grateful for our Nigerianbased marine operators and proud to support lwuji both as one of our very own from our community, and as a first-generation American pursing his dreams. Nigerians everywhere should be

proud of Jesse’s success.” Meanwhile, Citracks, a locally-based service partner for Fueltrax in Nigeria, has expressed its excitement over the sponsorship deal, adding that it will further boost marine operations management both in Nigeria and in the US, more so that over 50 percent of Fueltrax operations are based in Nigeria. Head of operations at Citracks, Frances Ogujawa, said: “We partnered Fueltrax to oversee system installation because they set the standard for Electronic Fuel Management System (EFMS) in Nigeria, making the services that we both provide our clients more reliable and easier to support locally.

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

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 173,567.83 6.00 0.83 204 11,012,610 261,625.57 7.65 -1.29 170 11,933,716 UNITED BANK FOR AFRICA PLC 783,342.52 24.95 1.42 632 46,687,346 ZENITH BANK PLC 1,006 69,633,672 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 290,751.87 8.10 -0.61 165 16,748,268 165 16,748,268 1,171 86,381,940 BUILDING MATERIALS DANGOTE CEMENT PLC 3,322,898.94 195.00 - 62 103,862 112,320.90 12.95 -0.38 43 621,991 LAFARGE AFRICA PLC. 105 725,853 105 725,853 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 351,242.56 596.90 - 5 153 5 153 5 153 1,281 87,107,946 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 - 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 - 0 0 76,312.80 80.00 - 4 528 OKOMU OIL PALM PLC. PRESCO PLC 75,000.00 75.00 - 8 2,490 12 3,018 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,770.00 0.59 - 3 16,600 3 16,600 15 19,618 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 900.08 0.34 - 2 1,100 JOHN HOLT PLC. 202.36 0.52 - 1 5,000 1,903.99 2.93 - 0 0 S C O A NIG. PLC. 52,842.39 1.30 1.56 74 6,251,103 TRANSNATIONAL CORPORATION OF NIGERIA PLC 23,050.37 8.00 0.63 40 395,151 U A C N PLC. 117 6,652,354 117 6,652,354 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 10 7,893 165.00 6.60 - 0 0 ROADS NIG PLC. 10 7,893 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,729.08 1.82 - 0 0 0 0 10 7,893 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 12,135.72 1.55 - 3 48,150 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 147,084.21 67.15 - 14 16,920 INTERNATIONAL BREWERIES PLC. 232,088.27 27.00 - 3 31,000 NIGERIAN BREW. PLC. 599,767.65 75.00 -4.03 80 486,567 100 582,637 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 52,250.00 10.45 -7.93 70 1,776,076 DANGOTE SUGAR REFINERY PLC 174,600.00 14.55 -0.34 42 391,949 FLOUR MILLS NIG. PLC. 77,907.21 19.00 - 42 239,145 HONEYWELL FLOUR MILL PLC 10,229.95 1.29 - 16 232,759 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 52,988.77 20.00 - 50 1,742,621 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 220 4,382,550 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,660.22 11.00 - 9 20,840 NESTLE NIGERIA PLC. 1,196,910.94 1,510.00 - 22 7,141 31 27,981 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,003.38 4.00 - 20 348,288 20 348,288 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 46,256.06 11.65 4.95 71 1,937,372 UNILEVER NIGERIA PLC. 222,331.71 38.70 - 17 99,367 88 2,036,739 459 7,378,195 BANKING DIAMOND BANK PLC 56,048.14 2.42 -0.41 89 12,650,328 ECOBANK TRANSNATIONAL INCORPORATED 256,893.72 14.00 - 19 205,170 FIDELITY BANK PLC 66,931.78 2.31 0.87 83 7,442,386 GUARANTY TRUST BANK PLC. 1,097,782.99 37.30 -0.93 237 10,517,658 JAIZ BANK PLC 17,678.55 0.60 - 13 332,408 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 67,657.48 2.35 -5.24 26 535,561 UNION BANK NIG.PLC. 203,845.27 7.00 0.72 37 920,268 UNITY BANK PLC 10,520.40 0.90 -3.23 15 871,050 33,174.04 0.86 1.18 50 5,450,767 WEMA BANK PLC. 569 38,925,596 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,920.45 0.71 -1.39 23 1,396,468 23,100.00 2.20 - 1 10,000 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 - 5 379,400 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,387.79 0.23 -4.35 10 594,270 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 0 0 1,228.00 0.20 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,270.26 0.31 - 9 448,773 LAW UNION AND ROCK INS. PLC. 2,234.09 0.52 - 1 1,600 LINKAGE ASSURANCE PLC 5,040.00 0.63 - 2 52,923 1,840.00 0.23 8.70 7 885,000 MUTUAL BENEFITS ASSURANCE PLC. NEM INSURANCE PLC 12,673.21 2.40 -1.23 7 526,837 NIGER INSURANCE PLC 1,780.08 0.23 - 4 44,900 PRESTIGE ASSURANCE PLC 2,906.58 0.54 - 2 37,313 REGENCY ASSURANCE PLC 1,733.88 0.26 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 4.17 33 62,378,115 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 2,582.21 0.20 - 0 0 STANDARD ALLIANCE INSURANCE PLC. SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 3 442,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 -8.70 4 522,000 WAPIC INSURANCE PLC 5,620.75 0.42 5.00 21 1,924,417 132 69,644,016 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,544.29 1.55 4.73 13 547,837

Company 13 547,837 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 1 2,200 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 2,200 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,600.00 4.80 4.12 62 1,874,733 35,291.19 6.00 - 4 251,345 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 41,981.75 2.12 0.47 43 2,007,252 1,646.52 0.32 - 2 82,838 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 491,546.54 48.00 1.04 33 1,993,598 18,420.00 3.07 2.33 63 2,458,100 UNITED CAPITAL PLC 207 8,667,866 922 117,787,515 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 1,030.41 0.29 - 4 49,533 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 4 49,533 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 7 18,837 7 18,837 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,425.00 4.95 - 1 100 13,752.58 11.50 - 14 106,583 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 2 678 1,215.46 0.64 -8.57 9 283,705 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 26 391,066 37 459,436 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 300,200 2 300,200 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 381.11 0.77 - 0 0 TRIPPLE GEE AND COMPANY PLC. 0 0 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 0 0 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 0 0 2 300,200 BUILDING MATERIALS BERGER PAINTS PLC 2,391.04 8.25 - 3 6,664 CAP PLC 23,800.00 34.00 - 4 1,640 249,726.52 19.00 - 9 32,756 CEMENT CO. OF NORTH.NIG. PLC FIRST ALUMINIUM NIGERIA PLC 612.00 0.29 - 3 9,000 MEYER PLC. 286.87 0.54 - 9 156,938 1,999.41 2.52 - 1 1,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 29 207,998 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 3,962.97 2.25 - 5 68,457 CUTIX PLC. 5 68,457 PACKAGING/CONTAINERS BETA GLASS PLC. 39,497.79 79.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 34 276,455 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 1 100 1 100 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 2 900 2 900 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 3 1,000 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 -4.76 35 10,968,605 35 10,968,605 INTEGRATED OIL AND GAS SERVICES OANDO PLC 70,859.05 5.70 1.79 57 1,602,404 57 1,602,404 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 61,301.19 170.00 - 17 30,497 CONOIL PLC 15,960.90 23.00 - 7 2,600 ETERNA PLC. 5,738.24 4.40 - 6 14,391 FORTE OIL PLC. 36,469.47 28.00 - 40 117,795 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 0 0 TOTAL NIGERIA PLC. 67,904.37 200.00 - 26 58,827 96 224,110 188 12,795,119 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 16,576.10 1.70 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,947.48 5.00 - 2 6,075 TRANS-NATIONWIDE EXPRESS PLC. 304.75 0.65 - 2 20,100 4 26,175 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 4,427.84 2.13 - 1 50 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 45,222.40 5.95 - 1 4,500 2 4,550 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 217.73 0.36 -10.00 3 127,795 LEARN AFRICA PLC 1,118.60 1.45 - 0 0 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 875.76 2.03 - 7 70,241 10 198,036 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 895.16 0.54 - 0 0 0 0

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PDP alleges non use of card readers in Kaduna, as APC coast home to victory Abdulwaheed Adubi, Kaduna

Situation Room calls for independent inquiry into conduct of 2019 elections OWEDE AGBAJILEKE, Abuja

he Nigeria Civil Society Situation Room has called for an independent inquiry into the conduct of the 2019 General Election. Specifically, the coalition said the election failed to meet the threshold set for credible polls in the country. In a press conference in Abuja on Sunday, Convener of Situation Room, Clement Nwankwo, said the probe should include: procurement, logistics management, activities and conduct of security agencies, particularly the military, abuse of process by INEC officials among others. He emphasised that the independent inquiry “is urgently needed to identify challenges and recommendations towards repairing the damaged credibility of Nigeria’s electoral process”. According to him, the election failed to meet five out of the eight criteria earlier published by the Situation Room for the measurement of the credibility of the exercise. He also called for adequate compensation for families of voters,

…Assures perpetrators will be brought to justice

there was reports from various local governments that card readers were not used in the northern parts of the state. “We have cases of snatching of ballot boxes in areas like Chikun. Giwa, Birnin Gwari. That of Birnin Gwari was so shameful such that ballot boxes were snatched throughout the night. No voting there, but just to fill the ballot boxes with ballot papers thump printed in favour of APC. “As we are Talking now, I can say without any contradiction, Kagarko and Sanga local governments are under siege due to

INEC officials and security agents who lost their lives in the national and state elections. “Situation Room calls on INEC to take the lead in pushing for reforms in the electoral process. Of immediate importance is the need for INEC to call out publicly institutions, individuals and events that may have undermined its ability to carry out its mandate. It is also important that INEC is honest in admitting its own failures. This is needed urgency in restoring faith in the election process. “There must be individual accountability for violence and manipulating of the election process. This is a collective duty for all law enforcement agencies in Nigeria. We cannot as country afford to permit this level of impunity and disruption of the election process. INEC should lead on this and transparently inform Nigerians where it encounters challenges,” he said. Recall that the Independent National Electoral Commission (INEC) had conducted the national elections on February 23 as well as the state elections on March 9, 2019.

the desperate move of the ruling party to rig the elections results. “We have cases where results were forcefully changed in the local government areas especially in Rigasa. “We are only going to accept the results that are calculated from the polling units. “ We want to call on the security agencies to look into what the security operatives are doing at every point of assignment and let them know that democracy is seriously under threat and that the will of the people is being pushed to the background.

overnor Abiola Ajimobi of Oyo State has condemned the pockets of violence that characterized Saturday’s election, which led to the death of a member of the House of Representatives, Temitope Olatoye, and others, as highly depressing and regrettable. This is coming as the candidate of PDP, Oluseyi Makinde is coasting to victory in the governorship election held in Oyo State on Saturday. The governor said he was saddened by the turn of events, which he said was antithetical to the pervading peace in the state. According to Ajimobi, the desperation and do-or-die that attended the election was uncalled for since the candidates in the governorship and Assembly election were in the race to serve the people and not themselves. In a statement by his Special Adviser, Communication and Strategy, Bolaji Tunji, on Sunday,commiserated with the families of Olatoye and others who reportedly lost their lives in the election but however assured the citizens that the perpetrators would be brought to justice irrespective of their political affiliation and status. The governor warned that the state government would not allow

Card reader use would have averted election violence, fraud, says Dickson Samuel Ese, Yenagoa

igeria is treading a dangerous path under the APCled government, noting that the country had never experienced the level of disrespect for the rule of law which had crippled its critical institutions such as the INEC and security services. Governor the Henry Seriake Dickson of Bayelsa State has expressed regret over President Muhammadu Buhari’s refusal to sign the Electoral Amendment Act into law saying it would have averted political violence and electoral fraud in the country. Dickson who was speaking as a guest in an interactive programme on Radio Bayelsa in Yenagoa on Sunday said Nigeria is treading a dangerous path under the APC-led government stressing that the level of disrespect for the rule of law being experienced has crippled critical institutions. He noted that the Independent National Electoral Commission (INEC) and the security services are some of the critical institutions that have been crippled by the flagrant disregard for the rule of law. Condemning what he described as invasion of Bayelsa State by the Nige-

Monday 11 March 2019

Ajimobi expresses sadness with election violence, killings Akinremi Feyisipo, Ibadan

eople’s Democratic Party, PDP, Kaduna Chapter has alleged irregularities in the gubernatorial and State Assembly elections, saying that the process was marred with malpractices. PDP alleged non use of Card Readers in some local government areas as stipulated by the Independent National Electoral Commission, INEC. Meanwhile, All Progressives Congress, APC is already coasting home to victory, winning seven local government areas out of 11 declared by the returning officer, Prof. Muhammed Yahuza Bello. According to the results announced APC had won the following local governments areas: Makarfi, Kudan, Ikara, Kubau, Giwa, Soba and Kauru. The PDP who is still maintaining second on the list was left with Jaba, Kajuru, Kachia and Kaura local government areas. While briefing newsmen at NUJ secretariat on Saturday, the state Chairman of PDP says: “it is unfortunate that a place like Zaria local government, there was a public purchase of vote by government officials. “This thing was going on in front of security agencies. “I want to make it clear that

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rian Army and violation of the right of the people to vote, he said the army’s statutory responsibility is to protect the nation’s territorial integrity. Dickson, however, noted that the army has now assumed the sickening and disgraceful role of terrorising innocent communities all in a bid to rig elections in favour òf the ruling APC in the country. Singling out the Nigerian Navy for maintaining its integrity during the elections, the governor said the army was engaged in hijack of election materials thereby spearheading alleged plot to rig the elections in favour of unpopular APC candidates. He noted that the army’s role was pronounced at Kolo, Imiringi, Otuasega, Otuokpoti and Ayama communities in Ogbia, Nembe Bassambiri, Peremabiri in Southern Ijaw, Kolokumma/Okpokuma, Agbere in Sagbama and other communities across the state. Dickson warned that he could call out the people across all communities in the state for peaceful protests over the infamous role of the army in snatching of ballot boxes and rigging of the elections in Nigeria and Bayelsa State as the acts were contrary to the provisions of the Electoral Act.

any individual or group to truncate the had-fought peace and security that the state had enjoyed in the last eight years. Ajimobi said, “I’m greatly saddened by the pockets of violence that attended yesterday’s (Saturday) election; although the circumstances surrounding the violence and loss of lives are still hazy. It is heartrending that Hon Olatoye and others had to die because of election. “Nobody’s ambition should be worth the blood or life of any citizen. I’m, therefore, appalled that some unscrupulous politicians and their followers have turned this contest into a do-or-die affair, which is alien to democratic norms in saner climes. “We struggled hard for this democracy, and for it to be entrenched we must eschew every act of bitterness, desperation and foul play during elections. In life, you win some contests and you lose some. If we imbibe this philosophy, we will take every victory and defeat with equal measure of equanimity. “I have been in regular touch with all the security agencies since yesterday and they have assured me that the situation had been brought under control. May I use this opportunity to implore them to redouble their efforts and ensure the safety of lives and property going forward.”

INEC declares Abdulrazaq winner of governorship poll in Kwara SIKIRAT SHEHU, Ilorin

bdulrahman Abdulrazaq, the governorship candidate of the All Progressives Congress (APC), in Kwara State has been declared winner of the election held in the state on Saturday March 9, 2019 where 35 candidates jostle for the seat. The Independent National Electoral Commission, (INEC), Returning Officer, Professor Liman Mohammed Sanusi declared that Abdulrahman Abdulrazaq polled APC 331, 546 of the total votes cast to defeat his closest rival, Razak Atunwa of the Peoples Democratic Party, (PDP), who polled PDP 114,754. The result showed a margin of 216,792 votes between the APC and PDP contestants. The election conducted in the 16 local government areas of the state was peaceful, as there was no report of violence. Though, the exercise witnessed voters apathy.

Monday 11 March 2019

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BUSINESS DAY

NEWS Buhari targets quick win with gas flare... Continued from page 1 the Flare Gas Regulation, which

is the legal basis for the implementation of the NGFCP, in 2018. The first bid round for the flared gas was targeted for completion in the third quarter of 2018, but the process suffered a delay. Inlatestdevelopments,thedeadline for expressionofinterest(EOI)byinvestors seeking to be off-takers of the flared gas has been extended to March 15, according to a source close to the Federal Ministry of Petroleum Resources. While some 700 prospective investors have registered with the Department of Petroleum Resources (DPR), about 200 have actually indicated Expression of Interest as at last weekend for the NGFCP, our source said. Investors that would be off-takers of the gas being flared by joint venture companies would save the country some $800 million annually and provide an estimated 300,000 indirect jobs. The gas flared can also provide additional 3,000 megawatts (MW) of electricity to the country per day. Justice Derefaka, the NGFCP manager, said $3.5 billion worth of inward investments was required to accomplish the flared gas commercialisation target by 2020. One source familiar with the matter told BusinessDay that the interest shown so far has been encouraging but expressed hope that more investors would step up to the plate before the deadline of March 15, so that the

country can actually benefit from monetising gas flaring within the shortest possible time. “Investors are already registering for the programme and Expression of Interest has been indicated by many investors,” said Derefaka. He said whoever is interested should go the website of the programme and apply. Another source at the Ministry of Petroleum Resource told BusinessDay that immediately after the deadline, the DPR would begin the evaluations of the proposals submitted by interested parties and this would lead to the selection of those that meet the criteria laid down by the government. “We want to be sure that it is those investorsthatareseriousthatareactually selected for the programme,” he said. Some stakeholders have recently called on the Federal Government to release the framework for the gas flare commercialisation programme. They also want the government to hands off the pricing of gas and allow the forces of demand and supply to determine the price. This action, they said, would allow for active participation of the private sector operators since the idea is to market associated gas, emphasising the importance of the right price for gas. Key driving principles of the NGFCP are to reduce gas flaring, benefit Niger Delta communities, impact the Nigerian economy, present a marketdriven solution for the flares, and make

it bankable for investors and lenders. The NGFCP has been designed to implement various government policy positions on gas flaring, commitments for stricter regulation of flaring, and a pathway to ultimate flare-out, including the Paris Climate Agreement. The goal of the NGFCP is to attract competent third parties to access and use flared gas through a competitive open bidding process. President Buhari was given a second chance to restore and stabilise the economy after emerging winner of the presidential election on February 23. Although there was a combination of uncertainty, confusion and anxiety following Buhari’s election victory, that has faded as focus returns to macroeconomic conditions. Buhari’s re-election suggests continuity, something that offers the nation a chance to build on its economic recoveryandgrowthstrategy,analystssay. Buhari faces an extensive to-do list within a four-year timeframe, including rekindling economic growth, boosting infrastructure and, most importantly, diversification. On top of all of this, there are external risks in the form of trade tensions, slowing global growth and lower oil prices, all of which have the potential to threaten the nation’s recovery. In recognition of the hurdles that lie in wait, the 76-year-old has since said the next four years would be “tough”, and finalising the gas commercialisation programme could be viewed as a right step in the right direction for an economy still growing sluggishly two years after exiting a recession.

L-R: Abimbola Balogun, wife of the founder, FCMB Group; Abimbola Ogunbanjo, president, The Nigerian Stock Exchange; Olasubomi Balogun, founder, FCMB Group, and Yakubu Gowon, former head of state, at the evening of tributes in memory of Jonathan Long, a former chairman/managing director of FCMB in Lagos.

APC wins Lagos, Kwara, Gombe, leads in... Continued from page 1

ferring to Sanwo-Olu),” Fashola

said in a tweet on Sunday. Lagos Sate Governor Akinwunmi Ambode described Sanwo-Olu’s victory as a reward for vigorous campaign. Kunle Koye, a chieftain of the PDP and senatorial candidate of the party for Lagos East, however, said the results did not reflect the will of Lagosians, alleging the ruling APC intimidated voters in PDP strongholds and also engaged in widespread vote buying. INEC also suspended the governorship, state House of Assembly and supplementary elections in Rivers State “until further notice” following what the commission described as “widespread disruption of elections”. It set up a fact-finding committee to assess the situation and report back within 48 hours. “These initial reports suggest that

violence occurred in a substantial number of polling units and collation centres, staff have been taken hostage and materials including result sheets have either been seized or destroyed by unauthorisedpersons.Inaddition,safety of our staff appears to be in jeopardy all over the state and the commission is concerned about the credibility of the process,” Festus Okoye, INEC national commissioner and chairman, voter education and publicity, announced in statement on Sunday. In Kano, Abba Kabir Yusuf of the PDP defeated Gov. Umar Ganduje of the APC with 1,011,145 votes against 963,087 votes. In Ogun State, Dapo Abiodun, APC governorship candidate, won 11 out of 15 LGAs declared by INEC, while results of the remaining five local governments were still being collated as at press time. The results released at the governorship election collation centre at

the INEC Headquarters in Abeokuta and presided over by the Ogun State Collation Officer and Vice Chancellor of the University of Ibadan (UI), Abel Idowu Olayinka, showed that Abiodun had polled 169,984 votes while Allied People’s Movement (APM) scored 130,504 votes, showing a margin of 39,480 votes. Consequently, the APM rejected the results of the polls, alleging gross manipulation of the poll results. In Kwara State, APC’s Abdulrahman Abdulrazaq was declared winner of the governorship election. Abdulrazaq polled 331,546 votes to emerge as winner of the highly anticipated election following the ‘O To Ge’ movement in the state, while Abdulrazaq Atunwa, his counterpart and flagbearer of the PDP, polled 114,754 votes. Collation in Imo State started late, with the PDP in the state protesting the delay, alleging a ploy by INEC to subvert the collective will of the Imo electorate.

Poor structure, data limit bank lending to... Continued from page 2

is risky, and they always identify mining as one of the risky sectors,” said Sani. “Banks have not provided support, maybe because they do not understand the industry,” Patrick Odiegwu, partner, Anthracyte Limited, a general earth science company, told BusinessDay recently. Muda Yusuf, DG, Lagos Chamber of Commerce and Industry (LCCI), said the mining sector is still not attractive to investors because the cost of investing in the sector is still very high. Because of the risks involved in investing in the mining sector, banks are not willing to risk their money in the sector. “No bank wants to expose its credit to a very risky sector. The sector is too risky,” Yusuf said. Akinade Olatunji, general secretary, Nigerian Mining and Geosciences Society (NMGS), said the banks are not lending also because of the long-time investment required in the sector. “We know the kind of money banks want to make immediately. Mining sector isn’t ‘a quick win’ sector. The gestation period of investment in the mining sector is a bit longer than the normal service or in normal manufacturing sector. So, Nigerian banks are configured towards quick profits. That’s the basic problem,” Olatunji said. The absence of reliable geological information about the locations of different mineral resources available in the country also adds to making the sector very risky. “We don’t have facilities to determine the locations of all these mineral resources because there are specialised equipment to get very good geological information as to what mineral exists and where,” said Yusuf. “Government needs to do something concrete to mitigate the risk of investing in the sector,” he said. The experts said many banks are still ignorant about the mining sector, which is why the capacity to evaluate the risks in the sector is lacking in most of the financial institutions. “Even the banks don’t have “From the results so far collated from 18 local government areas, we can confirm with certainty that our governorship candidate, Rt. Hon. Emeka Ihedioha, has won in 15 local governments. The local governments are as follows: Ideato North, Oru West, Obowo, Mbaitoli, Owerri West, Owerri North, Ikeduru, Owerri Munucipal, Ngor Okpala, Ahiazu Mbaise, Aboh Mbaise, Ezinihitte, Oguta and Orsu,” the party said in a statement signed by Ray Emeana, state secretary. “Once again, we wish to alert the security agencies, INEC, election observers, Imolites and Nigerians in general of a deliberate delay of the announcement even when collation has been concluded in about 20 LGAs. There is no reason collation, announcement of results and declaration of Rt. Hon. Emeka Ihedioha as the winner of the governorship election should tarry till this moment,” it said. The PDP called on INEC to de-

much knowledge about mining sector. They don’t have much competence. If you want to lend money to a sector, you must have a good understanding of how the sector works and operates,” Yusuf said. “You expect that when they don’t have information, they wouldn’t want to dabble into that area,” Olatunji said. Commercial banks usually turn down loan requests from investors because they (banks) are not always willing to give money for mining operations in Nigeria, BusinessDay gathered. The only lending to the sector seems to come from the Federal Government-owned Bank of Industry. “I’m aware that investors are approaching banks regularly but they don’t receive favourable response from the banks. It’s only the Bank of Industry that’s trying to put together some money in the mining sector,” Olatunji said. Reminded that lending to the mining sector improved from Q3 to Q4 2018, Olatunji said further checks would reveal it is actually BoI that gave the loans and not the commercial banks. “The commercial banks are running away from mining, seriously, which is not good,” he said. But a few bankers who spoke with BusinessDay debunked the claims, saying banks’ unwillingness to venture into the mining sector has to do with the sector’s informal approach and the uncoordinated nature of mining activities in the country. The bankers spoke anonymously for business reasons. “Mining sector isn’t regularised and formalised in Nigeria. Most of the miners are illegal. And you don’t expect banks to do business with illegal people,” said a bank manager in one of the new generation banks. “We haven’t seen a document showing the direction of mining industry in Nigeria. If we see, we’ll invest in the sector. So, we don’t understand how the sector works,” said another banker. Confronted with the allegation that banks run away from the sector because of the long-term nature of investment, the banker said, “Show us the project. If it’s viable, we’ll invest in it. Time duration isn’t the issue.” clare Ihedioha the winner of the governorship election without further delay to “douse the tension that has engulfed the entire state and also satisfy the already charged and jubilant Imo electorate and save the state from crises”. INEC also declared Gov. Ifeanyi Ugwuanyi of the PDP winner of Saturday’s governorship election in Enugu State, securing a second tenure. Ugwuanyi won in the 17 local government areas of the state, polling 449,935 votes against his closest rival, Ayogu Eze of the APC, who polled 10,423 votes. In Abia, Okezie Ikpeazu of the PDP also secured a second term, polling 261,127 to defeat his rivals. In Ebonyi, Gov. David Umahi of PDP won the election in all the 13 local government areas of the state, defeating his closest challenger, Sonni Ogbuoji of the APC.

•Continues online at www.businessday.ng

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Address these economic pressure points for inclusive growth, FSDH Research tells FG HOPE MOSES-ASHIKE

SDH Research has highlighted some pressure points in the Nigerian economy that the Federal Government of Nigeria must quickly address in order to stimulate broad based and strong inclusive growth. Some of the current economic pressure points include weak disposable income, high unemployment rate, and weak infrastructure development in the economy that may not support the growth ambition of the government. Other points are economic depression in the real estate sector of the Nigerian economy, fragile foreign exchange market and weak revenue generation for the Federal Government leading to large fiscal deficits. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said this in Lagos at a

monthly economic and financial markets outlook presentation with the topic ‘Economic Realities: Policy Options.’ The Nigerian economy is not expanding enough to lift citizens out of poverty, Akinwunmi noted, adding that it needs to expand faster than it is at the moment. FSDH Research sees removal of all administrative delays in obtaining licences and approvals, including titles to landed properties for building and agricultural purposes as policy option for the government. The firm said government should support the provision of long-term mortgage loans at concessionary terms for her workers to activate the economic activities in the real estate sector in Nigeria. Other policy options include investment in data generation in the solid mineral sector as well as urgent restructuring, deliberate and consistent investments in the nation’s edu-

cational system to enable it provide relevant trainings that are needed in the modern digital age. “We observed critical skill gap in the nation’s educational system, particularly in the public schools at all levels. The sector can create more jobs for teachers and administrators and can also attract foreign investments and save foreign exchange earnings,” the FSDH said. FSDH expects the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to maintain the current tight monetary policy stance when it meets on March 25 - 26, 2019. The firm expects the February 2019 inflation rate to drop marginally to 11.31 percent from 11.37 percent in January. “FSDH Research believes inflation rate in double digits, as we predict in 2019 and through 2022, may not justify a reduction in the monetary policy rates,” it said.

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Monday 11 March 2019

I will continue to put interest of ordinary Edo people first – Obaseki

asking in the euphoria of the massive votes for candidates of the All Progressives Congress (APC) in the House of Assembly election, on Saturday, March 9, Edo State governor, Godwin Obaseki, says he will continue to put the interest of ordinary Edo people first in the development of the state. Obaseki said this at the Omega Fire Ministry International Church Benin Branch 1, when he led members of his cabinet to a thanksgiving service for the violence-free election in the state. According to Obaseki, it is God that gives power through the people and that is why I have chosen to serve the ordinary people, even if I am going to be governor for one day. The people will remain his priority despite the fact that some people want him to do otherwise, he said. “Many people are not happy with me but I don’t care because if you, the ordinary people are with me, they cannot do me anything. It is you, the people

that matter. It is you that will keep me in power. When God decides to keep me in power, it is you that will make it possible, even if it is one day I have left to spend in office, I will use it to serve you because governance is about the people,” he said. The governor expressed gratitude to God for the violence-free election in the state, and emphasised that though victory was important, “it is not as important as the violence-free election record we have achieved. “Under my watch, I have run three successful elections and we have not recorded the death of any soul due to these elections. We are happy for this success.” He assured that his administration would continue to work with the church and religious leaders who know and feel the pulse of the people. “As a governor, I want to work closely with the Church because it is difficult to sit in Government House and feel the pulse of the people. Men of God are the right people to work with because they

are always with the people and know what they pass through daily.” He explained that the Edo State House of Assembly election had shown that Edo electorates are appreciative of the effort his administration has made to make life better for them. He promised to improve on the lives and standards of living of Edo people and added that he will be more focused now to develop the state further and make life better for them especially the youths. “The youths are the future of this nation and as a government, the bulk of our resources must go to the young people. The youth have the energy, they have the intellect, all they need is direction to succeed and this government is ready to give that direction,” he pledged. He noted that his administration was not about building roads alone but also focused on affecting lives through empowerment programmes for the citizens, particularly women.

Experts, participants push frontier in global agric as SIMA 2019 ends SEGUN ADAMS

T L-R: Bassey Ametie, head, business-to-business, Union Bank: Temitope Anwo, CEO, Creative Haands: Segun Osofisan, director, Abso Agro Allied: Linda Ochugbua, digital sales manager, BusinessDay Media; Bunmi Afolabi, DG, NigerainBritish Chamber of Commerce, and Oluwabori Babatunde, management consultant, KPMG, at the BusinessDay Movie Hangout with her Digital Subscribers in Lagos. Pic by David Apara

NSE, Meristem launch indices focused investment products for growth, value creation MODESTUS ANAESORONYE

ment and investment management. Broadly, the style indices will provide a benchmark for the market to gauge the performance of value stocks and growth stocks listed on the Exchange. Jude Chiemeka, divisional head, Trading Business Division of the NSE, said, “We are pleased to collaborate with Meristem Securities in the development of the first style-focused indices to be publicly launched in Nigeria. The introduction of the NSE-Meristem Growth and NSE-Meristem Value Indices is a laudable and innovative effort, which is long overdue. “These indices provide

products strategists and asset managers the leverage to create investment vehicles that democratise professional asset management for the benefit of investors, while still following the tenets of classic investment philosophies: growth and value. The indices are available for licensing and the investing public is encouraged to take advantage of the benefits they provide.” Shedding more light on the purpose of the indices, Oluwakemi Akinde, group head, Investment Research, Meristem Securities Limited, said, “The indices are benchmarks to track the perfor-

mance of growth and value stocks that are traded on the floor of the NSE, thereby contributing to the deepening of the equity capital market by providing a leverage for fund managers to build investment products. “Furthermore, the indices serve as more appropriate benchmarks for fund managers with same investment philosophies help in effective performance attribution, and facilitate better manager selection and appraisal, while also providing market data for academics to enrich studies on the performance of growth and value stocks in the Nigerian market.”

he international agri-business show in France, SIMA Paris 2019, which saw notable delegates attend from Nigeria, including the Federal Ministry of Agriculture and Rural Development, ended with expert proffering solutions to the issues around innovation and challenges in agriculture globally. In this year’s edition of the bi-annual conference, 230,000 professionals from all over the world – an attendance stable compared with 2017 - converged at Paris Nord Villepinte to dialogue and take a critical assessment of developments in agriculture. The event, held February 24 to 28, noted an increase in the number of exhibitors from abroad (up 12.5% with 42 countries represented), 25% of its visitors coming from 140 countries and its 400 international delegations. “We are very happy with the attendance at SIMA this year. Being here has enabled us to make many quality contacts with manufacturers and also other Village start-ups. This has enabled us to create synergies and forge strong links for the future,” explains Oscar Lauby, director of development of HKTC Technologies, one of the conference participants. The event this year fea-

tured round-table discussions on the major challenges facing agriculture today - such as organic farming, cropping systems of the future, agriculture in the digital age, livestock rearing and agric technology. SIMA Africa summit, one of the highlights of the conference, brought together 10 agribusiness experts to speak on increasing agricultural production through technology and mechanisation and promoting a dynamic food industry in Africa. As a platform for convergence, distributors from all over the world were brought together to consider the subject of training and the development of dealership business at SIMA Dealers’ Day. The conference offered 190 candidates the opportunity to find out about some 50 positions offered by 16 companies, with many contracts are already in the process of being signed. Also new at the 2019 SIMA was a Hackathon, organised by La Ferme Digitale with the Atos competition, enabling coders and professionals from the agricultural sector to work for 48 hours on the use agricultural spatial data. The first prize was awarded to Ohm sweet home for its Mes Parcelles (My Plots) project, which is used to improve the definition of the sun’s potential via Sentinel.

Monday 11 March 2019

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Monday 11 March 2019

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Egypt moves closer to cost-reflective power pricing DIPO OLADEHINDE

nlike Nigeria which seems to be pretending and assuming that the problem does not exist, Egypt is rather taking definitive steps towards making it electricity sector cost-reflective by embarking on another plan of increasing electricity prices in order to cover up for subsidy shortages. While Nigeria seems to be spending aimlessly on electricity subsidy, the Egyptian’s Electricity Minister

FMN deepens women participation in workplace with ‘The Amazons’ BUNMI BAILEY

lour Mills of Nigeria (FMN) has intensified efforts to build a gender-balanced world by introducing the FMN Women’s Network known as ‘The Amazons’ at its commemoration of International Women’s Day at the weekend. The theme of the event, ‘Balance for Better’, is underpinned by the idea that balance drives a better working world. In 2017, FMN for the first time welcomed a woman, Salamatu Suleman, on its board of directors after several years of having a maledominated board. “In the last couple of years or so, we have also started to see an improvement in the ratio of women participation across the board within the technical teams in the mills and in senior management positions,” said John Coumantaros, chairman, FMN. “To ensure that we keep up with the momentum, I am proud to announce that we are officially unveiling the FMN Women’s Network, aptly named ‘The Amazons’,” Coumantaros said. The initiative spearheaded by Salamatu has been carefully designed to identify and groom the next generation of women leaders in FMN. The mentorship programme will run the arm of women with the necessary tutelage and inspiration to rise to better opportunities, break the glass ceilings and take on the world. “On December 17, 2018 was born the ‘FMN Mentoring Amazons’ programme whereby Salamatu engages with the pioneer ‘Amazons’ periodically,” Paul Gbededo, GMD, FMN, said at the event.

… Nigeria can’t find the way Mohamed Shaker said in a meeting with the country’s Energy and Environment Committee of the House of Representatives that it plans to hike electricity rates of some consumer segments to compensate for a shortage of $57 billion (LE 10bn). “Even if all electricity bills are collected, the deficit will be $1.2billion (LE 21bn),” Egyptian’s Electricity Minister told the country’s national daily Egyptian Independent, pointing out that the sector is going through a difficult

stage and that the ministry will resort to increasing electricity prices in July.” The proposed increment plan which is aimed at making the Egyptian electricity system more cost reflective and profit- oriented in order to attract private investors started in July 2015 when the government hike which also continued in 2017 as electricity prices were up by 40 percent. Shaker said since June 2015, electricity had not been cut off once due to power shortage, but any power cuts

were as a result of system malfunctioning. Egypt’s government announced in 2017 that it would lift energy subsidies over five years as part of the economic reform programme sponsored by the International Monetary Fund (IMF), which includes eliminating fuel subsidies. While the Egyptian ministry of electricity seems to be solving the electricity puzzle, its Nigeria counterpart has practically run out of ideas on how to manage the crush-

ing burden of electricity subsidy. After selling the generation and distribution arms of the defunct Power Holding Company of Nigeria (PHCN) to incompetent, cashstrapped firms that cannot add value to what they inherited, the Federal government still spends heavily in the power sector as political expediency has rendered electricity tariff hike practically impossible for now. To address these systemic challenges comprehensively, the Federal government in June 2017 launched the “Nigerian Power Sector

Recovery Program: 2017 – 2021’, which lays out plans to improve the financial capacity of Nigeria Bulk Electricity Trading Company (NBET) and improve the viability of the distribution companies in the country. Ayodele Oni, an energy partner at Bloomfield law practice, said Nigeria electricity tariff can be cost-reflective like Egypt’s if it implements the “Nigerian Power Sector Recovery Programme: 2017 – 2021 documentation,” under which there is a requirement that electricity tariff must be cost-reflective.

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157 persons die on crashed Ethiopian Airlines flight to Nairobi as experts raise concerns over aircraft type ... AirPeace, Max Air order same aircraft type ... Nigerians onboard IFEOMA OKEKE

ll 157 persons onboard Ethiopian Airlines flight to Nairobi from Addis Ababa on Sunday have lost their lives in a fatal air crash. Tewolde GebreMariam, Ethiopian Airlines Group CEO, confirmed that there were no survivors from an Ethiopian Airlines flight that crashed with 149 passengers and eight crew members aboard. Flight ET302 crashed near the town of Bishoftu, 62 kilometres southeast of the capital Addis Ababa, the airline said, confirming the plane was a Boeing 737-800 MAX. The flight left Bole Airport in Addis Ababa at 8.38am (12.38pm Thailand time), before losing contact with the control tower just a few minutes later at 8.44am. Abiodun Bashua, the former UN and AU Deputy Joint Special Representa-

tive in Darfur, Sudan, was also involved in the crash. Pius Adesanmi, a Nigerian carrying a Canadian passport, was also involved in the crash. Other nationalities onboard include 13 Kenyans, 18 Canada, nine Ethiopians, eight Chinese, eight Italians, eight US citizens, seven British citizens, seven French, six Egyptians, five Netherlands, four passengers carrying UN passports and four Indians. Other passengers are from Russia, Morocco, Israel, Uganda, Yemen, Sudan, Togo, Mozambique, Sweden, Poland, Serbia, Rwanda, Nepal, Somalia, Indonesia, and Norway. Abiy Ahmed, from the Prime Minister’s office tweeted it “would like to express its deepest condolences to the families of those that have lost their loved ones on Ethiopian Airlines Boeing 737 on regular scheduled flight to Nairobi,

Kenya, this morning.” The group CEO, who was at the accident scene, expressed his profound sympathy and condolences to the families and loved ones of passengers and crew who lost their lives in this tragic accident. State-owned Ethiopian Airlines is one of the biggest carriers on the continent by fleet size. It said previously that it expected to carry 10.6 million passengers last year. Its last major crash was in January 2010, when a flight from Beirut went down shortly after take-off. It would be recalled that about six months ago, the same Boeing 737-800 MAX type of plane belonging to the Indonesian Lion Air jet crashed, killing all 189 people on board, 13 minutes after takeoff from Jakarta. Experts have raised concerns as whether her something was wrong with the fuel-efficient B737 MAX 800, fashioned after A320 aircraft.

Pistis Foundation to provide medical, surgical aid to 4,000 people in Lagos SEGUN ADAMS

istis Foundation, a non-profit social intervention organisation, is set to hold a week medical and surgical outreach to cater to about 4,000 underprivileged people in the LekkiEpe axis of Lagos State. This free event tagged “Ubomi… Restoring Lives” will commence March 18 to 22, 2018, at Pistis Annex, 3 Remi Olowude Street, by Marwa Bus Stop, Lekki, Lagos. According to Godman Akinlabi, chairman, Board of Trustees of Pistis Foundation and lead pastor of The Elevation Church, “Ubomi is how we impact the lives of those in our immediate community, who may be suffering from illnesses that may lead to avoidable deaths for children and adults.

“Healthcare in Nigeria is generally poor and it requires the collective support of government and non-governmental organisations to enhance current standards. At Pistis Foundation and The Elevation Church, we believe that greatness means service and we are happy to serve our communities and make many lives better.” Ubomi means ‘life’ in Xhosa, a South African language. It is designed to cater to indigent people who cannot afford medical/surgical fees for their health conditions. As such, Pistis Foundation will be attending to everyone who fits this profile, irrespective of religious or ethnic background, within the 4,000 person-limit, during the outreach. Being attended to will be on a first-come basis, except in emergency

cases. Pistis Foundation is working in partnership with Pro Health International, a reputable health NGO with many years of experience in offering medical and surgical aid to indigent communities across Africa to actualise this major project that will improve thousands of lives and provide otherwise unaffordable healthcare services to many. Ubomi will host over 200 healthcare professionals and volunteers providing medical consultations, health education and various surgeries. Surgeries will include general, gynaecological, dental, eye, paediatric and more. Pistis Foundation was founded by The Elevation Church with its three key focus areas as education, health and shelter.

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Stakeholders seek review of biometric process in JAMB registration … attribute 10.4% increase to cut in registration fee CYNTHIA EGBOBOH, Abuja

ducation stakeholders are currently calling for the review of the rigid nature of the biometric process in the Joint Admission Matriculation Board (JAMB) registration exercise, as identified challenges cannot be resolved except at the national headquarters in Abuja. The board, in its bit to eliminate all form of impersonation and improve the registration process in 2017, introduced the profile creation exercise to modify the biometric capturing in the registration process, which includes live picture capturing and biometrics capturing of ten fingers. However, the Board at the commencement of the 2019 registration exercise announced that it would not reschedule its examination, particularly for candidates with biometric challenges, adding that all candidates whose fingers could not

be captured at the point of registration must visit the headquarters of the Board in Bwari, Abuja, to have their issues addressed. Isaac Oloye, education analyst, speaking on the adverse effect of the biometric process on the candidates, said, “It is a bit discouraging to those who could not be captured at the point of registration. There is need for the Board to review the process of rectifying the challenges encountered at the point of registration as against making candidates visit the headquarters in Abuja to rectify such challenges. “How does the Board expect the candidates to cope with the stress of travelling the long distance, who takes care of the accommodation and feeding in the case of not being able to return back to their states? This exposes the candidates to great risks of insecurity and other risk you can think.” Oloye, speaking on the percentage increase recorded in the registration, said,

“The 2019 registration is peculiar as it is the first time in decades that the Board application fee is being reviewed downward. The slash triggered an upsurge of candidates registering for the 2019 UTME.” Yemi Tope, a registered candidate in Benin City, told BusinessDay that the registration process was easy for her but some of her friends were affected as their fingers were not captured at the point of registration and they were not allowed to travel to Abuja to rectify because of fear of safety. She said, “I was not affected but I have some friends who were affected, and they have decided to register next year because their parents will not allow them to travel to Abuja to rectify the finger capturing challenge.” Lilian Aigbe, a mother to an affected candidate, said, “I do not have any relative in Abuja, I cannot allow my child to go all the way to Abuja, where will she stay, how will she take care of her self

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Simba, TVS celebrate International Women’s Day

T ZOLA Electric names Abdallah Khamis as MD KELECHI EWUZIE

oard of ZOLA Electric, (formerly Off Grid Electric), a renewable energy brand in Africa, has announced the appointment of Abdallah Khamis as managing director (MD) of its Nigeria operations. The company disclosed this in a statement made available to BusinessDay, adding that in his new role, Khamis is tasked with the responsibility for the day-to-day operations of ZOLA’s smart storage solar business in Nigeria as well as driving the acceleration of the company’s growth in the continent. Khamis, whose appointment takes immediate effect, is the first African to be appointed to ZOLA Electric’s Global Leadership Team. Bill Lenihan, CEO, ZOLA Electric, says Khamis brings to the company his knowledge and experience having worked across Africa in senior leadership positions for bluechip companies like Coca-Cola Company, Royal Philips of Netherlands, and Bharti Communication – Airtel Kenya. According to Lenihan, “We’re thrilled to have him join ZOLA and leverage this experience to help deliver clean, affordable, reliable 24 hour power to Nigeria.” Khamis is an international Senior Executive with multiindustry and cross-country experience in leading blue-chip organisations across 39 countries in sub-Saharan Africa.

he Simba Group, exclusive distributor of TVS, Nigeria’s bestselling tricycle brand, celebrated International Women’s Day by organising an event especially for women, hosted by a Nollywood personality, Chioma Akpotha. The event also celebrated the graduation of 30 women from the latest batch of Simba’s ‘Queen Riders’ programme, attended by Ms Kuforiji, AKA Mama Keke, and representatives of MISS, a microfinance institution that helps finance graduates of the programme to buy TVS tricycles. Simba and TVS have a long association with women’s empowerment. The Queen Riders’ programmw was founded by Simba to teach women from underrepresented backgrounds how to safely ride and repair tricycles, enabling them to partake in the industry and increase their families’ disposable incomes. The Simba Training School conducts advanced courses in tricycle repair and maintenance along with the riding programs. According to Chioma Akpotha, women are equal to men, and can even rise higher – encouraging the graduating women to go forward confidently and achieve their dreams. Meanwhile, Mama Keke shared insights of the hardships she faced earlier on in her life and how she surmounted them to become a very successful businesswoman, while advising the women present on how to succeed in this industry. The event culminated with Akpotha entering and driving a ‘keke’ at the Simba Training Ground, which was met with much fanfare and jubilation from the attending crowd.

L-R: Bimbola Wright, head, coverage & corporate banking, FBNQuest Merchant Bank; Ibukun Awosika, chairman, FirstBank; Olusola Oworu, independent non-executive director, FirstBank, and Irene Netimah, company secretary, FirstBank, at the bank’s celebration of the International Women’s Day and launch of its First Women Network initiative in Lagos, during the International Women’s Day’s celebration. Pic by Pius

Nigeria female entrepreneurs spurring innovative support to improve healthcare ANTHONIA OBOKOH

n Nigeria’s healthcare entrepreneurship ecosystem, there is seemingly low visibility and support for female entrepreneurs, as gender diversity continues to grow. This is changing, as women are showing dexterity in churning out disruptive innovations aimed at improving the country’s health outcomes - especially for vulnerable populations. They are confidently making their mark in the fast-paced, everevolving health sector. The Nigerian Healthcare Innovation Marketplace (NHIM), an initiative of the Private Sector Health Alliance of Nigeria (PHN) recognised the vacuum, and created the Female Founders Network (FFN) to spur interactions, provide relevant business

World loses $160trn to gender inequality - ECA HOPE MOSES-ASHIKE

he world’s economy is said to be losing $160 trillion in wealth due to gender inequality, according to Vera Songwe, executive secretary, Economic Commission of Africa (ECA). “When you have women in positions of leadership, business does better and there’s more innovation, more value creation and more profit,” Songwe said. She said this while speaking at the launch of the Global Health 50/50 2019 Report - titled Equality Works - in Addis Ababa on the eve of the International Women’s Day. According to Songwe, political empowerment is one of the areas in which the least progress in closing gender gaps has been made, adding “And we know that policy and

politics are where decisions that affect women are made.” Songwe pointed out that gender gap in health and survival has reduced by 96 percent. Meanwhile, in the areas of economic participation and education, progress in bridging gender gaps stands at 58 percent and 95 percent respectively. The ECA chief applauded the Global Health 50/50 report as an advocacy initiative that advances action and accountability for gender equality in global health. The 2019 edition focuses on gender in the workplace. It reviews the gender-related policies and practices of about 200 organizations that are either active in global health or seek to influence it. The report reveals that gender equality in the workplace is still far from being achieved, especially regarding gender

leadership gap, gender policy gap and the gender pay gap in global health. Michel Sidibé, executive director of UNAIDS, noted that his organisation was ranked among the 17 high performers in terms of gender parity policies and practices, stating: “I’m committed to building an organization with gender equality at the centre of whatever we do. UNAIDS has achieved gender parity at professional and higher levels. We have moved from 26 percent female directors of our country offices in 2013 to 48 percent today.” President Sahle-Work Zewde of Ethiopia commended the report for being data-rich and reader-friendly. She noted that the report’s findings, especially on pay gap, are a clarion call to sub-Saharan Africa where gender pay gap is 6% higher than the global average.

support and build a sustainable community. According to the NHIM Team, “The Female Founders Network (FFN) aims to support entrepreneurs with a strong purpose by connecting them to the brightest business minds locally and internationally. The network will provide access to the Nigerian healthcare start-up ecosystem, industry specialists, fellow entrepreneurs, global partners, talent, and capital.” The team states that the value-added incentives for female entrepreneurs belonging into the FFN include that innovators will gain access to PHN’s global network, of which benefits incorporate referrals/recommendations to local and international programmes, and linkages with partners. They say selected innovations will have the oppor-

tunity to be showcased on NHIM’s online portal consisting of over 1000 users, and on its social media platforms. However, Start-ups will gain unlimited access to NHIM’s knowledge database consisting of country data and stats, research papers, and academic & business reports both local and international. The team added that entrepreneurs would gain access to NHIM’s Innovation Challenges and Hackathons where they will get opportunities to pitch their start-ups for grant funding. Also, innovators would have the opportunity to network and collaborate with other start-ups, experts and investors in the NHIM community through events, workshops, webinars, and mixers. PHN led by business leaders as the country’s foremost private sector coalition that

seeks to complement the government’s efforts to improve health outcomes in Nigeria by mobilising and leveraging private sector capabilities, resources, reach and expertise. PHN launched the Nigeria Health Innovation Marketplace (NHIM) as its innovation arm serving as a convergence platform for key players in the health innovation ecosystem. The marketplace focuses on identifying, supporting and investing in promising innovations addressing critical challenges. NHIM has made efforts to grow its community through the various components of the marketplace. In order to build a sustainable convergence platform, the marketplace is determined to cater to the needs of all key players hence the launch of the Female Founders Network (FFN).

Cybercrime: Nigeria ranks 3rd most attacked country in Africa JUMOKE AKIYODE-LAWANSON

igeria has moved from being the fifth most attacked country in terms of mobile malware attacks in 2017, to being the third most hit in 2018. According to reports by Kasperky Lab, a global cybersecurity company with deep threat intelligence and security expertise, four African countries made the list in terms of top 10 countries by share of users attacked by mobile malware – Nigeria in third place at 37.72%, Algeria in fifth place (35.06%), Tanzania in eighth place (31.34%), and Kenya in ninth place with 29.72%. Kaspersky Lab researchers have seen the number of attacks using malicious mobile software nearly double

from 2017 to 2018. Last year, there were 116.5 million attacks, compared with 66.4 million in 2017, with a significant increase in unique users being affected. Despite more devices being attacked, the number of malware files has decreased, leading researchers to conclude that the quality of mobile malware has become more impactful and precise. These and other findings are unveiled in Kaspersky Lab’s report Mobile malware evolution 2018. As the world becomes more mobile, the role of smartphones in business processes and day-to-day life is growing rapidly. In response, cyber criminals are paying more attention to how they are distributing malware and the attack vectors used. The channels through which malware is

delivered to users and infects their devices is a key part of the success of a malicious campaign today, taking advantage of those users who do not have any security solutions installed on their phones. The success of the distribution strategies is demonstrated not only by the increase in attacks, but also the number of unique users that have encountered malware. In 2018, this figure rose by 774,000 on the previous year, to 9,895,774 affected users. Among the threats encountered, the most significant growth was in the use of Trojan-Droppers, whose share almost doubled from 8.63% to 17.21%. This type of malware is designed to bypass system protection and deliver there all sorts of malware, from banking Trojans to ransomware.

BUSINES DAY

Monday 11 March 2019

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BUSINESS DAY

OPINION

EQUITIES

COVER

COMMODITES

With 2019 presidential elections over, what’s next (level)

These stocks are not creating wealth for investors

How medium income earner can save to buy a car

So my presidential election prediction was somewhat spot on – the eventual winner is over 70, from the north, and Muslim – but it wasn’t as close as I thought.

The main purpose of listing securities on any Exchange is to generate wealth for both companies and investors.

Values to tap from the reopening of Dangote’s tomato factory

Page 58

Page 59

Emeka is an upwardly mobile young man who has just gotten a well-paid job with an Investment banking firm on the highbrow Victoria Island.

Page 60

Almost two years after the largest tomato plant ran aground on supply shortages, the Dangote Tomato Processing Factory has returned to operations with fresh strategies to shrug off challenges it previously underestimated.

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Monday 11 March 2019

Opinion With 2019 presidential elections over, what’s next (level) LANRE BULURO

o my presidential election prediction was somewhat spot on – the eventual winner is over 70, from the north, and Muslim – but it wasn’t as close as I thought. The margin of victory between the two main contenders was 3.9 million votes. I am sure you have seen the postmortem analysis of how Aso Rock was

won, so I won’t bore you with the details. A key takeaway for me from this election is if you want to be president in 2023, I suggest you become very good friends with Buhari. Buhari has established for himself kingmaker status with a loyal core base of at least 11.5 million voters in the North (NW, NE, and NC). With the exception of 2007 (which was marred by massive rigging and till date no official state by state data release), Buhari poll numbers were 11.8 million in 2003 (loss), 11.7 million in 20011 (loss), 12.2 million in 2015 (win), and 11.5 million

Top performing stocks YtD

in 2019 (win) in the North. Apparently Abubakar Atiku of the PDP is going to court to challenge the results of the election. This is par for the course (and market neutral) as every election results has been contested in court but never overturned. Buhari went to court after every election he lost. So what’s next? There is likely going to be a new CBN governor. Also we expect the cabinet to be reshuffled. We are very interested in who will be ministers of Finance, Petroleum Resources, Budget and Planning, Power, Works & Housing, and Transportation. These individuals will be the key players who will shape the monetary and fiscal policy of the country. With the ruling party having a “clear” majority in the national assembly, we should expect easy and quick passage of the budget and confirmations of ministerial appointees. Unlike in 2015, we did not see a postelection rally in the equities market this year (NSE ASI has been flat since Feb 27). Was the Buhari victory baked in with investors expecting more of the same? With the political risk of the election subdued, we saw strong movement in fixed income yields days after the election. Elevated demand on both the long and short end of the curve pushed yields down with the 10 yr trading below

14% (down 100-150bps) and the 1-yr at 15.6% (down 200bps). Tracking FX inflows through the I&E window confirm strong FPI participation in the fixed income market. In the last two months $3.1 billion ($1.3 billion in January and $1.8 billion in February) came in and we believe about 80% went in to the fixed income market. We saw over N1.2 trillion demand for the 364-day at the OMO auction last week. Right now, in the short term, the only catalysts we see for the equities market will be earnings releases, corporate actions and investors looking for strong dividend payouts and yield. Zenith Bank (11.4% dividend yield) and Dangote Cement (8.2% dividend yield) already came through and could be a signal for more to come. Names we are looking forward to include FUGAZ (FBN, UBA, GTBank, Access, and Zenith), Stanbic, Lafarge, CCNN, International Breweries, Nestle, Seplat and MTN. Post earnings, internal catalysts for the markets will emerge from the actions (or inactions) and policies of the re-elected administration of Buhari. As intimated above, the timely appointments of the right personnel into the right key portfolios will send the right signal of “not more of the same”. We might have to wait till May 29 (or is it June 12?) to find out.

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

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Equities These stocks are not creating wealth for investors

he main purpose of listing securities on any Exchange is to generate wealth for both companies and investors. Wealth is created when listed securities are recurrently traded by the investing public. However, reverse has been the case for few companies whose stocks are listed on the Lagos bourse. Paltry or zero return is generated for shareholders of companies in this category basically because their stocks are not actively traded on the exchange. When securities are not traded consistently overtime, which also refer to trading inactivity; it results in share price depreciation, according to market experts. It then follows that shareholders of companies with low share prices need to be worried for their investment. Wealth is generated for companies when stock price advance. The appreciation in share price implies that there is high demand relative to supply because buyers compete against one other to have that stock added to their portfolio. Conversely, stock price lose value when demand is low relative to supply. This is to let shareholders with interests in these entities know that companies whose securities experience trading inactivity cannot deliver mouth-watering returns and bumper dividends. Checks by BusinessDay pointed out some companies with abysmal share prices trading on the Nigerian Exchange for long, and are not generating wealth for shareholders. Chams Plc This Lagos-based ICT firm is one of the foremost listed companies in the technology industry. Its business model anchors on identity management and provision of electronic payment solutions. Chams has been trading flat at 20 kobo since December 2018, the lowest since 2014. The company is struggling to grow revenue and profit over the years. However, a look into its financials for first nine months of 2018 showed that the company posted N53 million compared with losses of N180 million posted a

year earlier. The company has not paid dividends to shareholders in the previous three financial years. Tripple Gee & Company Plc Incorporated in 1980, the company specializes in the production of computer stationery, business forms, and office equipment. Share price of Tripple Gee remained dormant at 77 kobo for the past six months, the lowest in five years. This is reflects that investors’ lack of interest in the stock. Going further, the stock is yet to deliver exciting dividends to shareholders as its highest per share dividend in five years is 4 kobo. The company has struggled to achieve profitability in recent years. However, it grew revenue and profit margin by 10.41 percent to N546 million in the first nine months of 2018, while profit margin notched higher to 2.93 percent from 1.07 percent year-on-year. It has outstanding shares of 496 million and market capitalization settled at N381 million. First Aluminum Nigeria Plc

(FAN) This company is one of first listed companies on the Nigerian Exchange. Its stock price traded flat at 50 kobo between April 2014 and May 2017, which is about three years. The company’s shareholders have cause to worry on their investment as its share price is flat at 29 kobo, the lowest in five years. Since the start of the year, FAN lost 19.44 percent. The company did not deliver dividends to shareholders in the previous five financial years. The management of FAN disclosed intention to delist from the local bourse so they could raise funds to boost operations. According to its financial statements for the first nine months of 2018 revealed that the aluminum manufacturer reported weaker profitability evidenced by lower profit margin and earnings per share. Its profit margin fell to 0.99 percent in the said period from 2.19 percent in the previous comparable period. This means that for every N100 the firm makes

as revenue, it earned 99 kobo as profit in the first nine months of 2018. It has 2.11 billion shares outstanding and market capitalization of N612 million. Rakunity Petroleum Plc The company specializes in the marketing of petroleum products and has a share price of 40 kobo which has remained dormant for the past nine months, since July 13, 2018. The stock traded flat at 50 kobo for more than three years between March 2014 and July 2017. The oil marketing company has not been inconsistent in paying dividends to shareholders in previous five financial years. The company generated no returns to shareholders with regards to dividends in 2014 and 2016. However, its highest dividend per share was 30 kobo in 2015. A snapshot into its financial reports for nine months ended September 30, 2018 revealed that the firm’s revenue declined by 8 percent to N7.06 billion in the first nine months of 2018. Moreover, the company had a significant decline in its op-

erating profits from N83.6 million to N3.6 million at the end of September 2018. This drastically pared after-tax profit to N2.7 million in the said period compared with N57.7 million a year earlier, thereby making it one of the laggards among the listed oil firms on the domestic bourse. Japaul Oil & Maritime Services Plc Shareholders of this maritime offshore construction firm need to be concerned for their investment as share price plunged to 5-year low at 20 kobo at the close of trading Thursday March 7. This reflects investors’ disinterest in the stock as it lost 4.76 percent since the start of the year. The company is presently going through hard times evidenced by its inability to pay dividends in the previous four financial years. The maritime firm reported decline in revenue realized from degrading, offshore, quarrying and international services, and this compounded loss after taxation by 4.8 percent to N5.54 billion in the first nine months of 2018. Tantalizers Plc This company is the only listed fast food company on the Nigerian Exchange. Tantalizers have been trading flat at 20 kobo since July 2018, the lowest in five years. The company’s performance has been underwhelming considering the fact that it recorded losses between 2013 and 2016. The company posted N213 million losses in the first nine months of 2018, compared with a profit of N760 million realized in the previous corresponding period. Moreso, the company paid zero dividends to shareholders in the past five financial years. This serves as a wakeup call for shareholders with stake in the entities listed above to know that these companies are no longer valuable to investors. Holding on to these stocks for appreciation in value might never come. Worse still, there is high tendency for these securities to depreciate given their inactiveness on the Exchange. A “Sell” option means investors will be selling at a price significantly below the purchase value. Whichever way, it is expedient for affected investors to reach out to their brokers before making decision.

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Monday 11 March 2019

Cover Story How medium income earner can save to buy a car OLUFIKAYO OWOEYE

meka is an upwardly mobile young man who has just gotten a well-paid job with an Investment banking firm on the highbrow Victoria Island. As a young man, he feels the time has come for him to buy his own personal car and probably deploy it on any of the ride-hailing platforms while he uses his staff bus to work daily. In a country where the interest rate from banks is not friendly to acquire a loan scheme, he is not sure which strategy to adopt while saving to get a new car at least a clean foreign Tokunbo vehicle. For him, to continue saving with the traditional banks that offer an insignificant growth on his savings, the dream of owning a car will continue to be a mirage. Desmond Ugochukwu, an operator of an online car sale platform, said the first thing to put in mind when planning to buy a car is to have an idea of the type of car to want and also put into consideration the cost of maintaining the car vis-à-vis its fuel consumption. “Depending on how much you earn, if you are an average earner, it might take you more than a year to save up for your dream car. However, while you are saving for the car, you should also consider the fact that the car price can go up before you are ready to buy it” he said. According to him for a medium income earner with one stream of income, there might need to get another one (side hustle) to make the savings easier. “The money you make from your regular 9-5 job and the side hustle could help you get your dream car earlier than you expect,” he added. Car brands and their unique proposition According to Desmond, the Toyota Corolla brand is reliable in terms of maintenance and affordability. This explains why

a growing number of Nigerians have a crush on the car. It’s the least expensive car to service and fuel efficient an attraction for many young medium income earners in the country. He further added that the Honda Accord brand is another sedan car that has caught the attention of some young Nigerians. “Although Honda has its own peculiar problem such as the joint and upper arm problems,” he said. Interestingly, there are some savings/investment options

available for a medium income earner like Emeka on a (150k200k) salary monthly looking for an investment scheme that could take him faster his dream of buying a car. Online lending platforms In recent times, financial technology (FinTech) platforms are gradually filling the lending gap by commercial banks by creating a new way to save and also grow their deposit with appreciable interest. For example, Piggyvest (Formerly PiggyBank) has a savings

product called Safelock, an investment product that allows users to earn up to 13% per annum upfront. Users can have more than one SafeLock and give them different names such as SafeLock to buy a car. Another lending platform, Cowrywise also has an investment plan, Life Goals, which helps savers to meet commitments to long term financial goals with a minimum maturity period of 1 year. Cowrywise offers a minimum of 10% per annum and this return accrues to

savers on a daily basis. Interestingly, users can earn as high as 15% per annum on longer durations. This compares with 4.2 percent that banks give on savings account which savers can only get if they don’t withdraw more than four times within a month. RenMoney is another online savings/investment platform, with its Target Savings Account product, savers earn a 10% interest per annum on deposit to achieve a goal such as buying a car, also an investment in its Fixed Deposit product, savers earn up to 21percent interest per annum with the tenors ranging from 30 days to 360 days. Investments in Equities and Fixed income instruments An equity investment generally refers to the buying and holding of shares of stock on the capital market by individuals and firms in anticipation of income from dividends and capital gains. On the other hand, Fixed income investment is a type of investment whose return is usually fixed or predictable and is paid at a regular frequency like annually, semiannually, quarterly or monthly. Compared to the uncertain returns from equities, commodities and other investment classes, the predictable and regular returns from fixed-income investments can be used to efficiently diversify one’s portfolio. Investment in the equities market could also be an option for a medium income earner seeking to grow his savings to execute a major target such as buying a car. Although risks associated with investing in the equities market are higher compared to the fixed income instruments, the good thing is that the riskier an investment, the higher the returns on investment. Investors must carefully select stocks with very strong fundamentals with a history of growth and value. It is always advisable to seek advice from a reputable stockbroker when investing in the equities market.

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Commodities Values to tap from the reopening of Dangote’s tomato factory Temitayo Ayetoto

lmost two years after the largest tomato plant ran aground on supply shortages, the Dangote Tomato Processing Factory has returned to operations with fresh strategies to shrug off challenges it previously underestimated. It has now broadened its supply window to include greenhouse production of high yield seedlings, while retaining its partnership with thousands of local farmers. Experts see the coming on stream of this project as another door to opportunities which entrepreneurs and investors can tap from, especially in areas of growing, aggregation, preservation and transportation. If the plant begins operation at full capacity, it will be open much more to supply than local producers can currently handle, implying that more growers opting tomato can be guaranteed about off-take. Businessday understands that the factory purchases at prevailing market prices. Prices are currently low due to the glut experienced in production and the uncertainty that rented the air in anticipation of the states and local government elections. For the week ended March 8, farmers in Kano sold at to the plant at N11 per kilo, immediately following a N20 per kilo rate. Farmers began supplying the plant towards February end and in the opening week of this month, only 70 tonnes struggled to be delivered to the plant from over 2,000 tonnes churned out across fields. About 25 trucks of tomatoes journey from Kano to open markets in cities including Lagos, Calabar and Port-Harcourt among others in response to demands. Sanni Yadakwari, Tomato Growers Association of Nige-

ria secretary told BusinessDay this presents opportunities for willing investors growing as the Dangote Factory expects a supply of 1,200 metric tonnes from it daily. Where the association has only supplied 5.8 percent of what is required, 1,130 tonnes demand is waiting to be fixed. But beyond the production, preservative transportation is another value-chain experts suggest could be explored in the tomato area, since 50 percent of production perishes after harvest. Transportation is still done in raffia baskets which is a harsh carriage for the softnatured commodity. But with crates and a coldchain transportation system, wastages may drop to about 10 percent, leaving more tomatoes for fit for the kind of supply needed by factories. “Storage facility for fresh tomato is a very hard nut to crack here because going by the number of tonnage, to get a facil-

ity that can house 500 tonnes which is more than 25 trucks of tomato is a big deal. But if people can at least invest in transportation the cooling van, it will make huge difference,” Yadakwari said. Taiwo Olaniran, PwC Nigeria agric-business lead believes most crucial investment area currently in demand is the con-

struction of silos, which he said could even translate into an aggregation business for investors. Citing the case of India, he said the government can encourage investors in storage facilities allowing storage facility owners to function as aggregators, with power to influence the commodity price.

“What India has tried to do is to encourage people to invest in storage facilities. So you have big cold rooms, where farmers can bring in their products to keep,” he explained. “As a storage facility owner, you tend to function as a kind of aggregator and government then allows you to determine the price of the commodity.”

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Analysis Five takeaways from Vitafoam Plc’s AGM OLUWASEGUN OLAKOYENIKAN & OLUFIKAYO OWOEYE

itafoam Nigeria Plc, one of Nigeria’s leading manufacturers of foam and flexible/rigid polyurethane products, held its 57th Annual General Meeting, Thursday, in Lagos with a special focus on five key areas. Returning to the path of profitability The Board of the foam maker and its shareholders were in ecstatic mood over the firm’s return to the path of profitability after posting N601.92 million after-tax profit in 2018. This is considering the fact that Vitafoam Nigeria had in the last two (2) years recorded unimpressive financial performance, posting a loss of N127.69 million and N32.03 million in 2017 and 2016 respectively. Checks by BusinessDay reveal that the 2018 profit growth was largely driven by a 56.85 percent increase in the firm’s operating profit to N2.09 billion in 2018 from N1.33 billion. This is despite an upsurge in administrative expenses and distribution costs to N3.52 billion and N794.19 million, respectively. Furthermore, sales surged 10.39 percent to N19.53 billion in 2018 as against N17.69

billion recorded in the previous year, while pre-tax profit ballooned by 4,278 percent to N793.85 million from N18.13 million a year earlier. For every N100 generated as revenue by the company in 2018, it was only able to retain N3 as profit. This shows an improvement when compared with a loss of 72 kobo and 24 kobo the firm recorded for every N100 realised from sales in 2017 and 2016, respectively. Shareholders benefits The company’s shareholders approved for its Board of Directors to pay the recommended 25 kobo dividend which amounted to N260.51 million. The shareholders also approved that the

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Vitafoam’s total liabilities stood at N12.15 billion as at year-end 2018, a 21 percent increase from N10.04 billion in its book in the same period of 2017

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Board should issue bonus of one (1) new share for every five (5) units already held. Similarly, an assurance was also given by Taiwo Adeniyi, the Chief Executive Officer of the company, that Vitafoam Nigeria will continue to pay a dividend of at least N0.25 going forward, even with the issuance of the bonus share. Plans to inject more capital Bamidele Makanjuola, the Chairman of the firm, said there are no plans to approach the capital markets for rights issue as this will come with charges and an additional dividend which will weigh on the firm’s

retained earnings. The company recently got approval for an industrial loan from the Bank of Industry to the tune of N208 million into the business. This would aid the company in its expansion plans. Concerns raised by shareholders While responding to concerns raised by shareholders on some of its struggling subsidiaries, Makanjuola disclosed that efforts are on-going to return the subsidiaries to the path of profitability just like the parent firm. He assured that results from the next quarter will show

massive improvement, adding that efforts are underway to sell its Sierra Leone subsidiary but in the meantime, skeletal manufacturing will continue. In the course of the annual general meeting, the shareholders also expressed their worries over a reduction in Vitafoam’s staff strength and increasing liabilities, even as they advised on how the firm’s pillow products can be repackaged to serve customers better. The foam maker cut down on the number of its employees in 2018 to 665 staff from 668 in the previous year. This is in spite of over 6 percent increase in the company administrative expenses. Reacting to this, Adeniyi noted that the administrative expenses do not only cover the employee costs but also money expended on advertisement, which according to him, the company cannot desist from but would need to do more to spur sales. “It is as you know of my product that you will buy, if you do not know, you cannot buy,” said Adeniyi. Vitafoam’s total liabilities stood at N12.15 billion as at year-end 2018, a 21 percent increase from N10.04 billion in its book in the same period of 2017, while shareholders’ equity rose 15 percent to N3.88 billion from N3.37 billion. On the packaging of its pillow products, the shareholders advised on the use of a more user-friendly colour for its pillow products. Plans ahead Looking ahead, the Chairman disclosed plans underway to acquire a new plant for producing an expanded polyethylene sheet for construction, furniture, and packaging industries. Similarly, Makanjuola also pointed out that the company’s plans to become a key player in the automotive industry as soon as the government begins the implementation of its local content policy.

Monday 11 March 2019

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Federal government eurobond In spite of the buy pressure on the Federal Government Eurobonds late February which saw price rise to 5-7 months high, the Euro-bonds market this week turned bearish amid profit taking and a disappointing brent oil market which worried foreign investors. Across all tickers, Yields on Eurobond rose last week 333bps to an average yield of 7. 106 percent compared to 6.874 percent offered the week before.

Corporate eurobond Across board, yields on Nigerian Corporate Eurobonds fell by an average of 160bps week-on-week as Foreign Investors turned to corporate bonds. The News of shareholder’s approval of the Diamond-Access Bank merger was seen as a positive for Investors in the corporate Euro debt market which saw yields on Diamond’s dollar-denominated bonds ease 4.78 percent week on week, although Zenith yields fell the most. With Diamond bank $500m, 8.75% to mature in May, the smooth transition of the merger so far has assuaged fears of a default. Other Corporates recorded an impressive week as earnings seasons marked by good full year performance of Companies in the Euro-Bonds market including Zenith and Seplat improved investor’s sentiment.

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Fixed Income External reserves up by 0.70% as FPIs return to fixed income market … CBN injects $269.92m, CNY 31.34m into forex HOPE MOSES-ASHIKE

igeria’s external reserves, which had fallen to as low as $42.30 billion as of February 27, 2019, resuscitated last week as it recorded 0.70 percent accretion to $42.60 billion as at March 7, 2019, according to the data from the Central Bank of Nigeria (CBN). The increases were as a result of the return of Foreign Portfolio Investors into the fixed income market, af-

ter the presidential elections carried out in February. “The external reserve dropped consistently in the month of February. However, we observed that the external reserves have been rising since the beginning of March largely driven by portfolio investment”, said Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited. The current position of external reserves continues to provide short-term stability for the value of the Naira. Capital importation via Foreign Portfolio Investors (FPI) in the Investors’ and Exporters’ Foreign Exchange Window (I&E window) increased for the second consecutive month in February 2019. This provided support for the foreign exchange rate.

Last week, naira traded within tight bands of N360.00 – N361.00 per dollar as the Central Bank sustained its weekly intervention to ensure liquidity and stability of the exchange rate across all segments of the market. “Although the Apex bank’s intervention put pressure on the reserves pre- presidential election, we observed a c.US$0.2bn uptick in the foreign reserves to US$42.5 billion which has largely been driven by foreign portfolio inflows into the fixed income market”,

analysts at Afrinvest Securities limited said. In continuation of its periodic intervention in the inter-bank segment of the foreign exchange market, the Central Bank of Nigeria (CBN) on Friday, March 8, 2019, injected the sums of $269.92 million and CNY 31.34 million in the Retail Secondary Market Intervention Sales (SMIS) of the Foreign Exchange market. The dollar interventions were for customers in the agricultural, airlines, petroleum products and raw materials and machinery sectors, while the CNY 31.34 million component was for payment of Renminbi-denominated Letters of Credit for agriculture as well as raw materials. Confirming the figures, Isaac Okorafor, Bank’s di-

rector, corporate communications department, said the level of stability in the market was commendable and would be sustained by the Bank. Friday’s transaction was in addition to the $210 million injected into the Wholesale, Small and Medium Enterprises, and Invisibles segments of the market on Tuesday, March 5, 2019. Meanwhile, the exchange rates closed at the rate of N357/$1 on Friday, March 8, 2019 in the Bureau De Change segment of the market, while the Chinese Yuan, closed at N47/CNY1. FSDH Research noted that the medium-term stability in the foreign exchange market will depend on the country’s foreign exchange receipts from both crude oil and non-oil products. “Appropriate policies, some of which we have mentioned above, to attract Foreign Direct Investment (FDIs) into Nigeria, will be necessary to guarantee medium-term to long-term stability in the foreign exchange market”, Akinwunmi said. On the money market, the CBN has maintained the pace of Open Market Operation (OMOs) in recent times, holding three auctions last week for instruments worth a total sum of N645.8 billion across tenors between 91days to 192-days at marginal rates between 11.9 percent (on the shorter tenor instruments) to 13.48 percent (on the longer tenor instruments). “Given the overriding aim of the CBN to keep price levels moderate, we expect OMOs to continue apace with recent trends to limit the possibility of speculative attacks on the naira, as system liquidity is expected to be buoyed by OMO maturities worth N88.4 billion”, Afrinvest said in a report.

Week Ahead Week Ahead (11th March – 15th March, 2019) Commodities Grains – prices is expected to be bearish in the near term due to expectations of higher global supply. Sugar – Unfavourable weather conditions in Brazil is expected to drive prices up in the near term. Fixed Income Commercial paper with description “Coronation CP II 11-Mar-19” issued by Coronation Merchant Bank Limited with 14 % issue yield will mature on Monday, March 11, 2019. 182-day treasury bills worth N4 billion issued on September 12, 2018 will mature on Thursday, March 14, 2019. Currency The local currency (naira) will maintain stability in the parallel and Investors’ & Exporters’ market segments, as a result of the regular interventions of the Central Bank of Nigeria in the foreign exchange market. Data Release National Bureau of Statistics to release State Disaggregated and Mining Data (2018) on Monday, March 11, 2019. Event The Board of Directors of FBN Holdings Plc to meet on Monday, March 11, 2019 to consider the 2018 Audited Financial Statements. Transnational Corporation of Nigeria Plc to hold its Annual General Meeting on Friday, March 15, 2019 at 1, Aguiyi Ironsi Street, Maitama, FCT, Abuja.

Chart of the week MTN records biggest gain in almost 3 years on $1.1bn disposal plan

MTN shares gained the most in almost 3 years as it set in motion a $1.1 billion disposal plan in a bid to concentrate efforts on areas where its operations record growth. On Thursday, MTN agreed to sell its 53 percent stake in Botswana’s Mascom to Econet Global Ltd. for $300 million, with Nigerian online retailer, Jumia Technologies AG., Travelstart.co.za and interest in IHS Towers Ltd on the market. Consequently, shares of the Africa’s biggest wireless carrier gained 18 percent, the most since June 2016, to 89.80 rand. For full year 2018, MTN posted a revenue of N1.04 which rivalled that of Nigeria’s most capitalized company Dangote Cements’ N618 billion, ahead of its listing on the Nigeria’s Stock Exchange.

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understanding the economy of nigeria’s 36 states

he purpose of this series is to present evidencebased picture of Nigeria vis-a-vis the current presentations by politicians and various interest groups which are not backed by facts and figures. Such presumptuous speculations have driven the various national discourses or debates on the future of Nigeria, including such thorny issues as restructuring, whether fiscal, political, geographical or administrative. Facts are sacred, they say, and as such must be given priority in our search for national viability and survival.

‘Understanding the Economy of Nigeria’s 36 States’ series presents such an objective, dispassionate picture of the state of the economy and so viability and sustainability of the various component parts, sub-nationals or federating units of the country going forward. This series will serve to either buttress or discountenance some of the claims made on both sides of the restructuring argument. The series, written by Cambridge-trained economist, Dr. Ayo Teriba, looks at each state at a glance in the

context of its geopolitical zone and as it compares to other states. The data present irrefutable facts about each region and its component states and raise the question: are they viable as constituted today and going forward? Each series examines a state’s realities from the perspectives of economy, resource endowment, state of wellbeing of its populace, and its budget (revenue and expenditure profile). Today’s edition covers an overview of Kogi State and Kwara State in the North-Central region.

Kogi Kogi State Summary • Economy Kogi’s GSP was 0.67 per cent of Nigeria’s GDP in 2017, 5th in the North-Central, 14th in North and 28th in Nigeria. Services dominated 57 percent of the State’s GSP, Non-Oil Industry, 35 percent, Agriculture, 8 percent. • Endowments Kogi’s Land Area is 3.04 percent of Nigeria’s land mass, 5th in the North-Central, 14th in the North and the country. The State has neither a coastline nor a border but is landlocked with as many as ten boundaries, the most in the country, shared with nine States and the FCT: five within its region (Benue, FCT, Nasarawa, Niger and Kwara), two with the South-East (Anambra and Enugu), two with the South-West (Ekiti and Ondo), and one with the South-South (Edo).

* N433 billion Service output in Kogi State was 0.7 percent of Nigeria’s Service output, the 6th in the North-Central, 14th in the North and 28th in Nigeria. Inter-State Comparisons With a Gross State Product (GSP) of N763.4 billion or 0.67 per cent of Nigeria’s GDP in 2017, the 5th in the North-Central, 14th in North and 28th in Nigeria. Kogi State’s 4.7million Population is 2.3 percent of national population, the 3rd most populated among the States in the North-Central, 10th in the North, and 20th in Nigeria. 27,700/km2 Land Area in the State is 3.04 percent of Nigeria’s land mass, 5th in the North-Central, 14th in the North and the country. Kogi’s Revenue of N52.4billion is 1.7 percent of all States’ total revenue, 5th in the North-Central, 15th in the North, and 28th among the 36 States and the FCT.

• Wellbeing Population in the State is 2.3 percent of Nigeria’s, 3rd in the North-Central, 10th in the North, and 20th in Nigeria. Kogi is the 23rd most densely populated, 17th in literacy and has the 30th life expectancy of 47 years in the country, the State’s Per Capita GSP is the 6th in the North-Central, 15th in the North and 28th in Nigeria. • Budget In 2017, Kogi retained 1.4 percent of States’ revenue, 28th in the country; spent 1.4 percent of States’ outlays, 30th in the country, maintained an overall surplus and held 2.4 percent of States’ total debt, 16th in the country.

1. Economy Structure Kogi’s estimated Gross State Product (GSP) in 2017 was N763.4 billion or 0.67 per cent of Nigeria’s GDP in 2017, 5th in the North-Central, 14th in North and 28th in Nigeria. Services were 57 percent of the GSP, Non-Oil Industry was 35 percent, while Agriculture was 8 percent.

2. Endowments 2.1. Endowments of Kogi State Kogi State was created in 1991 from portions of eastern Kwara and western Benue states. The State has neither a coastline nor a boarder but shares as many as ten boundaries with nine States and the FCT: Niger to the North-West, FCT to the North, Nassawara to the North-East, Ekiti, Ondo, and Edo to the South-West, Kwara to the West, Anambra and Enugu to the South-East, and Benue to the East. Kogi State’s 27,700/km2 land area is 3.04 percent of Nigeria’s land mass, 5th in the North-Central, 14th in the North and the country. Major towns and cities are; Adavi, Ofu, Bassa, Dekina, Ibaji, Idah, Ajaokuta, Ijumu, Okehi, Omala, Ankpa, Igalamela-Odolu, Kabba, Lokoja, Yagba, Olamaboro, Okene, Mopa-Muro, Koton Karfe, Ogori, Omala.

* N63.5 billion Agricultural output in the State was 0.27 percent of all agricultural output in the country, the 6th in the North-Central, 19th in the North and 34th in Nigeria. • N31.9 billion in crops was 50 percent of the State’s agricultural output, • N27.1 billion in livestock was 43 percent and • N4.4 billion in fishery was 7 percent, • Forestry is Nil. * Kogi State’s N266.8 billion 2017 Non-Oil Industrial was 1.8 percent of the gross Non-Oil Industrial output in Nigeria, the 2nd in North-Central and the North, 6th in the Country. Manufacturing (majorly Cements and Food, Beverage and Tobacco) was 65 percent of the State’s non-oil output, Utilities were 30 percent.

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understanding the economy of nigeria’s 36 states 3. Wellbeing

4.1.2.1 Revenue Kogi State’s 2017 Actual total revenue of N52.4billion was 1.7 per cent of all States’ actual total revenue, 5th in the North-Central, 15th in the North and 28th among the 36 States and FCT. The revenue components in 2017 were: • Statutory Allocations of N31.3 billion was 2.1 percent of the total allocations to all States and FCT, 4th in the North-Central, 10th in the North and 19th in the country. • Internally Generated Revenue of N6.1 billion was 0.8 percent of total, 5th in the North-Central, 10th in the North and 25th in the country • Value Added Tax of N10.0 billion was 2.1 percent of States’ total, the 4th in North-Central, 11th in the North, and 23rd in the country. 4.1.2.2 Spending The State’s actual total expenditure of N51.7 billion was 1.4 percent of actual total spending by all States, 5th in the North-Central, 18th in the North and 30th in the country. The spending components in 2017 were: • Recurrent Spending of N35.2 billion was 1.3 percent of the recurrent outlays of all the States and the FCT, the least in the North-Central, 18th in the North, and 31st in the country. • Capital Spending of N16.4 billion in the State was 1.58 percent of States and FCT’s total capital outlays, 5th in North-Central, 14th in the North and 25th in Nigeria. 4.1.2.3 Deficits Kogi State is one of the only 11 States in Nigeria that had surpluses in 2017. The State made an overall surplus of N0.7 billion, the 2nd among the two States in North-Central that had surpluses, 3rd among the 3 States that had surpluses in the North and 11th among the States that had surpluses in the country. 4.1.2.4 Debt Total outstanding debt of N112.4 billion in the State was 2.4 percent of the States and FCT’s total debts, 3rd in the North-Central, 5th in the North and 16th in the country. • Domestic Debt of N102.4 billion in December 2017 was 3.1 percent of States and FCT’s domestic debts, 3rd in the North-Central and the North, 13th in the country. • Foreign Debt of N10.0 billion in December 2017 was 0.8 percent of the total foreign debts of the States and FCT, 6th in North-Central, 16th in the North and 33rd in the country. 2013-2017 Trends 4.1.3 Kogi’s Total Revenue: Total Revenue declined from N64.6 billion in 2013 to N52.4 billion in 2017. Bulk of the decline in revenue came from gross statutory allocations (GSA), while internally generated revenue and value added tax both increased.

Kogi State’s 4.7 million Population is 2.3 percent of national population, the 3rd in the NorthCentral, 10th in the North, and 20th in Nigeria. With a land area of 27,700/km2, Kogi State’s density is 169 people per km2 compared to the country average of 219/km2, 3rd in the NorthCentral, 9th in the North and 23rd in the country. Kogi is the 2nd most literate State in the North-Central and the North, 17th in the country. Life expectancy of 47 years in the State is the 6th in the North-Central, 13th in the North and 30th in Nigeria. Female life expectancy of 49 years is the 6th in the North-Central, 17th in the North and 33rd in the country. Male life expectancy of 45 years is also 6th in the region, 14th in the North and 32nd among the 36 States and FCT. The State’s N163 thousand Per Capita GSP is the 6th in the North-Central, 15th in the

Total Spending: As total Spending fell from N60.3 billion in 2014 to N51.7 billion in 2017, recurrent spending remained N35.2 billion, while capital spending also fell from N25.1 billion to N16.4 billion.

4. Budget 4.1. Fiscal Realities of Kogi 4.1.1 2018 Aspirations Kogi State’s N151.67 billion 2018 budget is 1.63 percent of all States’ and the FCT’s 2018 budget, 3rd in the North-Central, 10th in the North, and the 23rd among the 36 States and FCT. 4.1.2 2017 Realities Revenue Use: Kogi maintained enough current surpluses to fully fund capital projects and post overall surpluses. Financing: • Revenue financing: overall surplus were 6.8 percent of total revenue in 2014, 9.5 percent in 2015, and 1.3 percent in 2017. • Spending finance: overall deficit as a fraction of total spending was 7.3 percent in 2014, and 1.3 percent in 2017. • Capital budget finance: overall deficit as a fraction of the capital budget was 17.5 percent in 2014, 57.7 percent in 2015, and 4.2percent in 2017. Kogi’s Debt • Domestic debt stock has grown more than tenfold from N7.1 billion in 2013 to N102.4 billion in 2017; from 11 to 195.3 percent of revenue in 2013 and 2017 respectively. • Foreign debt stock has grown from N5.3 billion in 2013 to N10.1 billion in 2017; from 8.2 to19.2 percent of revenue in 2013 and 2017 respectively. • Total debt stock rose from 19.2 percent of revenue in 2013 to 214.6 percent in 2017.

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understanding the economy of nigeria’s 36 states

Kwara Kwara State Summary • Economy Kwara’s GSP was 0.59 percent of Nigeria’s GDP in 2017, 7th in the North-Central, 18th in North and 32nd in the country. Services was 65 percent of Kwara’s GSP, Agriculture, 29 percent and Non-Oil Industry, 6 percent. • Endowments Kwara State’s Land Area is 3.9 percent of Nigeria’s land mass, the 2nd in the North-Central, 10th in the North and the country. The State has no coastline, shares a boarder with Benin Republic and is encircled by five States; two from its region (Kogi and Niger), three from the South-West (Ekiti, Osun and Oyo).

North-Central, 15th in the North and 28th in Nigeria. Inter-State Comparisons With a Gross State Product (GSP) of N673.7 billion or 0.59 per cent of Nigeria’s GDP in 2017, the 7th in the North-Central, 18th in North and 32nd in Nigeria. Kwara’s 3.4million Population is 1.6 percent of national population, the 5th in the North-Central, 15th in the North, and 30th in Nigeria. Land Area of 35,700/km2 is 3.9 percent of Nigeria’s land mass, the 2nd in the NorthCentral, 10th in the North and the country. The State’s N59.4billion Revenue is 1.9 percent of all States’ total revenue, the 3rd in the North-Central, 7th in the North, and 18th among the 36 States and the FCT.

• Wellbeing Population of Kwara is 1.6 percent of national population, the 5th in the North-Central, 15th in the North, and 30th in Nigeria. With the 10th land area, Kwara is 32nd most densely populated, 23rd in literacy and has the 9th life expectancy of 52 years in the country, its Per Capita GSP is the 26th in the country. • Budget Kwara retained 1.9 percent of States’ revenue in 2017, the 18th in the country, spent 1.6 percent of States’ outlays, 24th in the country, incurred a deficit, and held 1.2 percent of total debt, the 30th in the country.

1. Economy Structure Kwara’s estimated Gross State Product (GSP) in 2017 was N673.7 billion or 0.59 percent of Nigeria’s GDP, the 7th in the North-Central, 18th in North and 32nd in the country. Services was 65 percent of Kwara’s GSP, Agriculture, 29 percent and Non-Oil Industry, 6 percent

2. Endowments Kwara State was created in 1967, before portions of eastern Kwara were merged with portions of western Benue to form Kogi States in 1991. Kwara has no coastline, boarders the Benin Republic to the West and is bounded by five States, Niger to the North, Oyo, Osun and Ekiti to the South, and Kogi to the East. Kwara State’s 35,700/km2 land area is 3.9 percent of Nigeria’s land mass, the 2nd in the North-Central, 10th in the North and the country. Major towns and cities are Asa, Baruten, Edu, Ekiti, Ifelodun, Ilorin, Offa, Pategi, Oyun, Isin, Oke Ero, Irepodun, Moro, and Kaiama.

* Kwara’s N197.3 billion Agricultural output was 0.82 percent of all agricultural output in the country, the 4th in the North-Central, 15th in the North and 18th in Nigeria. • N189.4 billion in crops was 96 percent of the State’s agricultural output, • N6.7 billion in livestock was 3 percent and • N1.2 billion in fishery was 1 percent, • Forestry is Nil. * N38.8 billion 2017 Non-Oil Industrial output in the State was 0.3 percent of the gross NonOil Industrial output in Nigeria, 6th in the North-Central, 14th in the North and 29th in the Country. Manufacturing (majorly Cements and Food, Beverage and Tobacco) and Construction dominated 98 percent of the State’s non-oil output. * The State’s N437.6 billion Service output was 0.7 percent of Nigeria’s Service sector, 7th in the

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understanding the economy of nigeria’s 36 states 3. Wellbeing

4.1.2.1 Revenue The State’s 2017 Actual total revenue of N59.4billion was 1.9 percent of all States’ actual total revenue, 3rd in the North-Central, 7th in Northern Nigeria and 18th among the 36 States and FCT. The revenue components in 2017 were: • Statutory Allocations of N25.2 billion was 1.7 percent of the total allocations to all States and the FCT, 7th in North-Central, 20th in the North, and the 37th among the 36 States and FCT. • Internally Generated Revenue of N20.5 billion was 2.6 percent of total, the largest among the North-Central States, 2nd in the North and the 8th among the 36 States and FCT. • Value Added Tax of N9.1 billion was 1.9 percent of States’ total, 6th in North-Central, 18th in the North, and 33rd in the country. 4.1.2.2 Spending Kwara’s actual total expenditure of N61billion in 2017 was 1.6 percent of actual total spending by all States, the 4th in the North-Central, 13th in the North and 24th in the country. The spending components in 2017 were: • Recurrent Spending of N41.6 billion was 1.57 percent of the recurrent outlays of all the States and the FCT, the 6th in the North-Central, 16th in the North, and 28th in the country. • Capital Spending of N19.3 billion in the State was 1.8 percent of States and FCT’s total capital outlays, 3rd in North-Central, 10th in the North and 18th in Nigeria. 4.1.2.3 Deficits Kwara State is one of the 25 States and FCT that had deficits in 2017. The State made an overall deficit of N1.5 billion, the least in the region, and the North, 25th among the States that had deficits in the country. 4.1.2.4 Debt Total outstanding debt of N55.7 billion in the State was 1.2 percent of the States and FCT’s total debts, the least in the North-Central, 15th in the North and 30th in the country. • Domestic Debt of N40.3 billion in December 2017 was 1.2 percent of States and FCT’s domestic debts, the 6th in the North-Central, 15th in the North and 30th in Nigeria at large. • Foreign Debt of N15.47 billion in December 2017 was 1.7 percent of the total foreign debts of the States and FCT, 3rd in North-Central, 7th in the North and 22nd in the country. 4.1.3 2013-2017 Trends Kwara’s Total Revenue: Total Revenue declined from N67 billion in 2014 to N59.4 billion in 2017. The bulk of the decline revenue came from gross statutory allocations (GSA). Internally generated and value added tax both grew.

Kwara State’s Population of 3.4 million is 1.6 percent of national population, the 5th in the North-Central, 15th in the North, and 30th in Nigeria. With a land area of 35,700 per km2, Kwara State’s density is 95 people per km2 compared to the country average of 219/km2, the 5th in the North-Central, 15th in the North and 32nd among the 36 States and the FCT. Kwara’s literacy is the 6th in the North-Central, 7th in the North and 23rd in the country. The State’s life expectancy of 52 years is the 2nd in the North-Central, 3rd in Northern Nigeria, and 9th in Nigeria. Female life expectancy of 54 years in the State is 2nd to Niger in the North-Central and the North and 6th in Nigeria. Male life expectancy of 49 years is the 2nd in the North-Central and the North after FCT, 11th in the country. The State’s Per Capita GSP of N199 thousand is the 5th in North-Central, 16th in the North and 26th among the 36 States and FCT.

4. Budget

Kwara’s Total Spending: Total Spending declined only slightly by 4.6 percent from N63.9 billion in 2014 to N61 billion in 2017; but recurrent increased by 12.4 percent, while capital spending fell by 28 percent.

4.1. Fiscal Realities of Kwara 4.1.1 2018 Aspirations Kwara State’s 2018 budget of N191 billion is 2.06 percent of all States’ and FCT’s 2018 budget, the largest in North-Central, 5th in the North, and 14th in the country. 4.1.2 2017 Realities Revenue Use: Kwara State always maintained current surpluses with which it typically funded more than 90 percent of its capital outlays to keep its fiscal operations as close as possible close to a balanced budget. Kwara’s financing: • Revenue financing: Kwara maintained a largely balanced budget with overall surplus of 4.7 percent of total revenue in 2014 giving way to an overall deficit of 2.5 percent of total revenue in 2017. • Spending finance: overall surplus of 5 percent of total spending in 2014 gave way to an overall deficit of 2.4 percent in 2017. • Capital budget finance: overall surplus of 11.9 percent of capital budget in 2014 gave way to an overall deficit of 7.7 percent of capital budget in 2017. Kwara’s Debt • Domestic debt stock rose slightly from N22.4 billion in 2013 to N40.3 billion in 2017; from 20.7 percent of revenue in 2013 to 67.8 percent in 2017. • Foreign debt stock has risen from N7.2 billion in 2013 to N15.5 billion in 2017; from 6.6 percent of revenue in 2013 to 26.1 percent in 2017. • Total debt stock rose from 27.3 percent of revenue in 2013 to 93.9 percent in 2017.

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FINANCIAL TIMES

World Business Newspaper

Deutsche Bank’s woes force boss to explore Commerzbank merger Persistently low interest rates add to pressure on Christian Sewing to seek other options OLAF STORBECK

e u t s c h e B a n k ’s chief executive Christian Sewing has dropped his opposition to exploring a multibillion euro merger with German rival Commerzbank after persistently low interest rates and investor pressure over its grim performance forced him to consider other options. “We still prefer our plan A and would love to do our own homework, and look at our strategic options later,” said a person familiar with the bank’s internal discussions, adding that executives were concerned that “some interested parties” were deliberately building up pressure to arm-twist management into acting now. Cerberus, the US private equity group that is one of the biggest investors in both Deutsche Bank and Commerzbank, is actively pushing for a tie-up which the German finance ministry would welcome as a way to create a national champion in banking. Deutsche Bank’s chairman Paul Achleitner is also an advocate for a merger that would create the eurozone’s second-largest bank with close to €1.9tn in assets.

Last week’s decision by the European Central Bank to further delay the prospect of any interest rate rise has increased the pressure on Germany’s chronically unprofitable lenders as negative interest rates squeeze their core lending margins. Last autumn, Mr Sewing said that Deutsche Bank would spend the next 12 to 18 months putting its house in order before it would engage in any deal. “There are several options, a domestic merger with Commerzbank being one of them,” said a person familiar with the bank’s internal deliberations. Deutsche Bank’s executive board discussed the situation in the second part of February and gave Mr Sewing a formal mandate to informally explore a potential merger in talks with Commerzbank, people familiar with the matter said. German Sunday paper Welt am Sonntag first reported the executive board’s resolution. Top managers of Deutsche Bank and Commerzbank have repeatedly discussed options for more than a year. A person familiar with the matter pointed out that “there has been no new dynamic in recent days”, and no meetings between Mr Sewing and Commerzbank CEO Martin Zielke were

Christian Sewing (left) of Deutsche Bank and Martin Zielke of Commerzbank

scheduled for the coming days. Deutsche Bank’s supervisory board also discussed the issue without putting it formally on the agenda. “There is no decision by the supervisory board and no informal guidance to management,” said a person close to a supervisory board member. For now, the talks with Commerzbank have been on a superficial level, the people pointed out, adding that Germany’s strict secu-

rities laws would force the banks to formally disclose concrete talks in a regulatory statement if they leaked into the public domain. A person familiar with Deutsche Bank’s internal discussions said a key issue was the fact that a tie-up with Commerzbank was the only option for consolidation in its domestic market, which is dominated by stateowned lenders. “We have to clearly evaluate the consequence what a

‘no’ would mean for us,” said the person. A senior European regulator said that Deutsche Bank had not formally approached its regulators nor tabled any potential merger plan, adding that financial watchdogs were unlikely to oppose a deal that was backed by the lender’s management and shareholders. Deutsche Bank and Commerzbank declined to comment.

Theresa May prepares for a last-minute Germany’s Kramp-Karrenbauer warns on ‘European centralism’ CDU leader backs calls for rethink of Schengen area and immigration policy dash to save Brexit deal Backstop changes still not enough to satisfy prime minister’s critics

GEORGE PARKER AND MEHREEN KHAN

heresa May is preparing for a last-minute dash to Brussels to try to save her Brexit deal, amid claims that she might have to sacrifice her premiership to win over Conservative Eurosceptic rebels. Mrs May’s allies said the prime minister’s plane was on standby at RAF Northolt to take her to talks intended to secure EU concessions on her exit deal, ahead of a crucial “meaningful vote” in the Commons on Tuesday. Matt Hancock, health secretary and an ally of the prime minister, insisted on Sunday that defeat was “not inevitable”, but senior Tories admit Mrs May could be heading for another heavy loss on Tuesday. The first vote on her deal, in January, resulted in a record defeat for the prime minister. “Nobody knows what would happen in everything that followed,” Mr Hancock told Sky’s Sophy Ridge on Sunday programme. “There would be total uncertainty.” Although Michel Barnier, the EU’s chief Brexit negotiator, offered some new legal assurances on the Brexit deal last Friday, aimed at reassuring Britain that the contentious Irish backstop — which aims to prevent a hard border in Ireland, would not be permanent, they have not gone far enough to satisfy Mrs May’s critics. Following Mr Barnier’s offer, the

two negotiating teams led by the UK’s Olly Robbins and the EU’s Sabine Weyand continued talks in Brussels over the weekend. A diplomatic note sent to EU ambassadors on Friday, and seen by the FT, said Brussels remained “open to further workable ideas from the UK” over the backstop. It also made clear that the EU’s offer to give legal assurances over the arrangements for Northern Ireland was “fully consistent with the withdrawal agreement which will not be reopened”. “Discussions at the technical level will continue over the coming days to find a solution. Political level meetings are to be confirmed,” the note said. The Sunday Times and Mail on Sunday reported Tory Eurosceptics saying they might only support the deal if Mrs May promised to step down as prime minister, clearing the way for a Brexiter to take over to handle talks on a future UK/EU trade deal. Mrs May has already indicated she will not lead the Tories into the next election, scheduled for 2022. But her team still hopes that if she can secure a Brexit deal she will have political space to deliver some domestic political reforms. The pro-Brexit Tory European Research Group and the Democratic Unionist party are so far refusing to yield, in spite of Mrs May’s warnings last week that if they block her deal then they could end up losing Brexit altogether.

GUY CHAZAN

he leader of Germany’s ruling Christian Democrats has warned against “European centralism”, in the first substantive German response to French president Emmanuel Macron proposals for a “European renaissance”. Writing in Die Welt am Sonntag, Annegret Kramp-Karrenbauer said the answer to curing Europe’s ills did not lie in transferring more powers from national governments to supranational institutions. “European centralism, European statism, communitising debt and Europeanising social security systems and the minimum wage would be the wrong approach,” she wrote, stressing instead the need for “subsidiarity and individual responsibility”. The op-ed, which in its conservative tone marked a sharp contrast to Mr Macron’s call for sweeping reforms to strengthen the EU, showed how difficult it will be to agree a common Franco-German approach to overhauling the bloc. Indeed Ms Kramp-Karrenbauer’s contribution contained some proposals that are seen as nonstarters in Paris, such as abolishing the second seat of the European Parliament in Strasbourg, and demanding a permanent seat for the EU in the UN Security Council. In his address to the “citizens of Europe” last week, Mr Macron

said the EU needed a new, liberal agenda to counter the rising power and popularity of nationalists who are expected to score big gains in the bloc’s elections in May. He called for a fundamental rethink of EU policies and rules on everything from industrial competition to the environment. That included reform of the EU’s borderless Schengen area, and the creation of a European security council that would include the UK, as well as a new agency to protect European democracies from cyber attacks. Ms Kramp-Karrenbauer embraced some of his proposals — particularly reform of Schengen and the EU’s asylum and immigration system. But she also warned against excessive European integration. “There is no version of a European superstate which can live up to the goal of a Europe made up of sovereign member states,” she said. Instead she stressed the need for more investment in innovation and policies to ensure Europe’s economy remains globally competitive. It was the first major contribution to the debate on the future of Europe by a woman who, as CDU leader, is in pole position to succeed Angela Merkel as Germany’s chancellor. That Berlin’s response to Mr Macron’s appeal was made by AKK, as she is universally known, and not Ms Merkel is one of the clearest signs yet of how power is gradually passing from Germany’s long-serving chancellor to her heir apparent.

But while there was no official word from Paris, the reaction from the German left was damning, with the Greens and Social Democrats both criticising its lack of ambition. “AKK’s ‘response’ has nothing to do with the renewal of the EU,” said Franziska Brantner, a Green MP. “No ambition on climate, social justice, a stable euro. Instead, she is just provoking France by proposing to abolish the [EU Parliament’s] seat in Strasbourg.” “A very thin CDU paper on the future of Europe, after a very long silence,” said Michael Roth, Germany’s minister of state for Europe, who is from the SPD. “AKK’s response to Macron is completely unambitious.” Ms Kramp-Karrenbauer, who was elected CDU leader last December, said Mr Macron was right that urgent action was needed to deal with the challenges facing Europe, in particular the rise of China and a Russia bent on destabilising and weakening its neighbours. Europeans wanted an EU that was better able to deal with challenges such as migration, climate change, terrorism and international conflicts. She also agreed with him on the need for reform of Europe’s system of immigration, saying the EU needed to “complete Schengen”. She said the EU should work towards “seamless border management”, introduce an “electronic register” for all those entering and leaving the bloc, and ensure that asylum claims are handled directly on the Schengen border.

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NATIONAL NEWS

FT Kelly Chibale: Overcoming sceptics at home and abroad

Ethiopian Airlines crash: ‘no survivors’ on Boeing 737

Founder of H3D is debunking the idea that Africa cannot be a leader in drug discovery

Aircraft bound for Nairobi was carrying 149 passengers and eight crew

DAVID PILLING

TOM WILSON

he rag in Kelly Chibale’s rags-to-riches story is the lit one he used to put into a paraffin-filled tub so that he could study at night. Brought up amid violence and squalor in the Zambian copper belt settlement of Kabulanda — whose name, he says, literally denotes “sadness” — Mr Chibale has fashioned a successful career from a tough start. The 54-year-old is the founder and director of H3D, Africa’s only fully integrated drug discovery centre, which in 2017 became the first to put an “African drug” — an anti-malarial — into Phase II clinical trials. A member of the Royal Society of Chemistry, in 2018 he was named by Fortune as one of the world’s top 50 leaders. At Cape Town university, Mr Chibale is in charge of more than 60 post-doctoral scientists working full and part-time for H3D, which he established in 2010. It has grown from a team of five, with a $1m annual budget, to a unit doing what Mr Chibale says is work on a par with global pharmaceutical companies. H3D receives funding from the likes of Novartis and Johnson & Johnson, as well as the Bill & Melinda Gates Foundation and the South African government. “I want to debunk this myth that Africa cannot lead international efforts to innovate in the pharmaceutical space and actually discover drugs,” says Mr Chibale. “It’s what I call confronting Afropessimism,” he says, talking in his Cape Town laboratory. “As an African I cannot demand respect, I have to earn it. Not just by what I say, but also by my actions.” It is not just about persuading outsiders that African innovation is worth taking seriously, he says. The biggest sceptics are Africans. “They can’t think that a guy like me from the townships and the villages of Zambia can lead international efforts and do something that is world class and innovative.” Mr Chibale was born in 1964; his father died two months later. Urged on by his mother, a market trader, he understood that education was the road out of poverty. “Our role models were people who went very far in education,” he says. After attending the University of Zambia, he applied for scholarships to study abroad, but got only rejections. He was working for an explosives subsidiary of ICI when, in 1989, he heard he had been shortlisted for a Cambridge Livingston Trust Scholarship. Mr Chibale’s first lesson in leadership is to recognise your limitations — and then do something about them. When he arrived in Cambridge “where the weather was strange, the people were strange, the food was strange”, he discovered that his education, however hard won, had not prepared him for the rigours of a world-class university. “I realised I was down here,” he says, pointing close to the floor. “And my friends were up there. And guess what? I had two options. I could give up or say: ‘How do I try to climb?’ I ended up benefiting because I realised these were the standards I should be aspiring to.”

Everything on the table: US and Chinese delegations meet in the Indian Treaty Room in the White House complex in February © AP

US and China haggle over enforcement of trade commitments Timetable for deal slips as Washington wants mechanism to ensure obligations are met JAMES POLITI AND YUAN YANG

ang Shouwen, China’s vice-minister of commerce, chose a culinary anecdote on Saturday to illustrate why he thought there was still good faith in the trade negotiations with the US, despite jitters on both sides of the Pacific Ocean. At a lunch break during the last round of talks in Washington, Robert Lighthizer, the US trade representative, ordered a Chinese dish of chicken and eggplant, while Liu He, China’s vice-premier and top economic official, had a hamburger. Each honoured the other’s cuisine, Mr Wang recalled, and both had water to help them find “common ground”. Negotiators were in contact “day and night” and making “full efforts” to finalise a pact, he told a press conference in Beijing on Saturday. After D onald Tr ump announced in late February that he was close to an agreement with Xi Jinping, expectations were raised that the final details could quickly be sorted out in time for a March summit at the US president’s Mara-Lago resort. But that has proven harder than expected. It now seems likely that any firm agreement will come in April or later, according to people briefed on the talks, over concerns about ensuring obligations are met. China’s central bank gover-

nor Yi Gang said on Sunday that the two sides had discussed US concerns that Beijing engaged currency manipulation and reiterated pledges that have been made previously. “We will not use the currency to achieve competitive goals, to increase China’s exports, or as an instrument in trade frictions. This is our promise, we absolutely cannot do this,” he said at a press conference on the sidelines of the National People’s Congress, the country’s annual parliamentary session. Yet one of the thorniest issues in the talks is the enforcement mechanism demanded by the US to ensure that China sticks to its commitments, say people close to the negotiations. “We’re still on the train tracks towards a deal. No question the train has slowed a little bit,” said Myron Brilliant, vice-president for international affairs at the US Chamber of Commerce. “We shouldn’t be surprised that translating the talks into an enforceable agreement is difficult given the complexity of issues being negotiated and precision required.” The tone among US officials has become more cautious than it was a few weeks ago. Speaking at a conference at Georgetown University’s law school on Friday, Clete Willems, deputy director of the White House National

Economic Council, stressed that “much work” remained to be done before a deal could be reached. “This comes down to substance and we need to have a substantive outcome . . . we’re making progress but we’re not exactly where we need to be,” Mr Willems added. Earlier this month, Mr Lighthizer said any complaints that China was not complying would have to be resolved through a series of meetings between highlevel officials. But if this was still unsatisfactory, the US would take “proportional” but “unilateral” action against China, reviving the threat of tariffs. Chinese officials want to make sure that they will not be the subject of unjustified punishment from the US. Mr Wang on Saturday said enforcement provisions should be “two-way, fair and equal”, allowing China to act with its own retaliatory tariffs if it feels that Washington is over-reacting. “China doesn’t like the US proposal to include snapback tariffs that the US can impose on China, but the Chinese cannot retaliate against,” said Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies, a Washingtonbased think-tank. “The Chinese also seem uneasy about agreeing to a summit at Mar-a-Lago until all the details are settled lest they set up Xi Jinping for an embarrassing outcome.”

Bill Gross gets retirement gift from Bloomberg: free terminals Retired bond trader receives lifetime subscription from former New York mayor ROBIN WIGGLESWORTH

ill Gross once donated his old Bloomberg terminal keyboard to the Smithsonian’s Museum of American History, so it is fitting that former New York mayor Michael Bloomberg has given the erstwhile “bond king” a free, lifetime subscription to his flagship product as a retirement gift. Mr Gross retired from Janus Henderson at the start of this month, after a four-decade career that saw him reinvent the concept of bond investing and build the world’s biggest fixed-income asset manager, only to be ousted in a power struggle as his trading touch withered in recent years. He now plans to spend his time playing golf, in philanthropy and

managing his $390m foundation and a personal fortune estimated at about $1.5bn by Forbes. Luckily, when the 74-year-old’s retirement was announced Mr Bloomberg personally got in touch to say that he could keep his suite of three Bloomberg terminals — essential kit for any bond trader — gratis for perpetuity. “I didn’t want to lose my Bloombergs,” Mr Gross told the Financial Times in an interview. “So they contacted me and said we appreciate all our years together, so your Bloomberg are free for the rest of your life. It was a nice touch.” A single Bloomberg terminal costs about $24,000 a year, making it the most expensive data platform used by the finance industry. A spokesperson for the company

confirmed that Mr Bloomberg had himself been involved in the offer, but declined to comment further. Bloomberg works hard to keep its users hooked on its terminal, constantly rolling out new functions and data sets. If customers lose their jobs they are usually offered the use of a terminal free of charge for a few months, to keep them locked into its ecosystem and feed their dependency, as many users describe it. As a result, the Bloomberg terminal has managed to embed itself into the finance industry to an unprecedented degree. In 2010 the fiancée of a BlackRock fund manager commissioned a wedding cake shaped like a Bloomberg terminal, and in 2014 it even guest starred in an episode of HBO’s The Newsroom.

thiopia’s prime minister has promised a full investigation after an Ethiopian Airlines’ aircraft carrying 157 people crashed on Sunday killing all on board. The aircraft, a Boeing 737 MAX 8 with flight number ET 302, took off from the Ethiopian capital of Addis Ababa at 08.38am and lost contact with air traffic controllers six minutes later. The aircraft, which was heading to Nairobi, went down near Bishoftu, south-east of Addis Ababa, the airline said in a statement. Abiy Ahmed, the country’s prime minister, and Ethiopian Airlines’ chief executive, Tewolde Gebremariam, visited the accident scene on Sunday. Mr Tewolde said it was too early to know the cause of the accident. “Further investigation will be carried out to find out the cause of the accident in collaboration with all stakeholders including the aircraft manufacturer Boeing, Ethiopian Civil Aviation Authority and other international entities”, he said. The aircraft was piloted by an experienced captain with more than 8,000 hours of flying experience, according to the state-owned carrier. The 149 passengers and eight crew members came from 35 different countries and included 35 Kenyan citizens and seven British nationals, it said. Mr Abiy expressed his sympathies to the victims of Sunday’s crash via Twitter. “The Office of the PM, on behalf of the Government and people of Ethiopia, would like to express its deepest condolences to the families of those that have lost their loved ones”, he said. Ethiopia plane crash locator map The crash is the second to involve the latest model of Boeing’s bestselling jet, which only entered service in 2017. A Boeing 737 MAX 8 operated by Indonesia’s Lion Air, also crashed soon after take-off from Jakarta in October last year, killing all 189 passengers and crew. The investigation into that accident is still ongoing but a preliminary report published in late November focused on the maintenance of the jet and a new stall-prevention feature on the 737 Max which the probe found had erroneously kicked in during the flight. The US aircraft maker addressed Sunday’s crash in a statement and said it stood “ready to support the Ethiopian Airlines team”. “A Boeing technical team will be travelling to the crash site to provide technical assistance under the direction of the Ethiopia Accident Investigation Bureau and U.S. National Transportation Safety Board,” the company’s statement said. Ethiopian Airlines has expanded rapidly in the past decade to become Africa’s biggest carrier and is Ethiopia’s most successful state-owned company. The airline says it has grown by an average of 25 per cent a year since 2010 when it launched a 15-year expansion strategy to become the dominant pan-African airline. The airline now operates more than 100 aircraft. Last year it carried more than 10m passengers, up from 3.7m 8 years ago. It delivered profits of $232m in its last financial year.

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How worried should we be about the stock market wobble?

The key concerns for the week ahead FT REPORTERS

ow worried should we be about the stock market wobble? Major stock markets last week suffered their worst spell since the December carnage, as investors grew nervous about the health of the global economy. Was this just a slight wobble in the recovery or a sign of renewed trouble? The FTSE All-World ended the week with a 1.3 per cent loss, its biggest five-day decline since late December, when the global equities benchmark tumbled 5.7 per cent. Since then stocks have enjoyed their best start to a year in almost three decades, but many investors and analysts remain concerned that December’s volatility could return. Global data has been disappointing lately, with all of Citi’s “economic surprise” indices — which measure how data comes in relative to expectation — in deeply negative territory. The OECD and the European Central Bank underscored the economic worries last week, with the former cutting its forecasts for almost every major global economy and the latter unexpectedly unveiling fresh stimulus due to “continued weakness and pervasive uncertainty”. A limp week was then capped by a huge miss in US job creation. Robin Wigglesworth Is Mizuho’s $6bn restructuring hit a bad omen for Japanese banks? Mizuho’s shock announcement of ¥680bn ($6.1bn) in impairments last week was undoubtedly grim for Japan’s second-biggest bank. But the market is still wrestling with the question of whether this is a one-off disease or an epidemic that threatens the sector. Mizuho’s problems are twofold. The larger of the huge downward revisions relates to impairment losses on retail branches. It is an admission that the lender’s home market is shrinking, and that large parts of Japan

are uneconomic for its business as it begins scaling back its huge domestic network. All the big banks share those problems. However, they have been rather quicker off the mark in dealing with them. Also, within Mizhuo’s ¥500bn impairment loss on its fixed assets, 92 per cent of it is related to a problem with a software system. A more alarming issue, though, arises from the ¥180bn of losses on restructuring its securities portfolio at market-related operations — the majority of which came from overseas bonds. Japanese banks have been flocking overseas for yield since 2013 as the Bank of Japan embarked on an ultra-aggressive course of monetary easing. The three Japanese megabanks held more than ¥35tn of foreign bonds at the end of 2018 and have been buying at a record pace in the first eight weeks of this year. Leo Lewis Is it time for sterling buyers to emerge from the sidelines? Some hedge funds seem to think so. UK markets are heading for yet another crucial week, with Prime Minister Theresa May presenting her Brexit plans to MPs for a second time, and a separate parliamentary vote on whether to extend the deadline on the UK’s exit from the EU. Bank of America Merrill Lynch, among other banks, is advising its clients that the UK government “has effectively taken no-deal off the table”, establishing a bedrock of support for sterling. Hedge funds have already become buyers of the UK currency this year, the US bank said, helping the pound to become one of the best performing major currencies in the world so far this year. Sterling has clocked up a 2.5 per cent gain against the dollar since the turn of the year, trading most recently just under $1.31, and is nearly 5 per cent higher against the euro, leaving one euro buying about 86.3p.

Dovish Fed and weak jobs data fail to tame dollar US currency continues to strengthen despite concerns over economy and halt to rate rises LAURENCE FLETCHER

he dollar has been quietly creeping higher this year, and nothing — not even concerns over prospects for the US economy and interest rates — seems able to halt it. Last week the dollar index hit its highest close since the summer of 2017 and it is now about 10 per cent up from the low it hit in early 2018. How e v e r, t h e g re e n b a c k ’s strength appears to be coming less from a fundamental belief in the US currency and more from the weakness of its rivals. The euro is being held back by weak eurozone growth; the European Central Bank last week slashed its forecasts. Meanwhile the Bank of Canada has cut its growth outlook and Australia is having to grapple with a slowdown in China, its main trading partner — as witnessed by lower-than-forecast Australian gross domestic product figures last week. The strength of the dollar comes despite the US Federal Reserve’s sur-

prise U-turn at the end of January, when it put further interest rate rises on hold and said it would be flexible over the size of its balance sheet. Moves by other central banks to scrap or postpone their plans to tighten monetary policy are seen as “a reason not to punish the dollar for the fact that the Fed ended its rate cycle earlier than expected”, according to analysts at Commerzbank. But the analysts add that they are flummoxed as to why “the dollar should trade at such high valuation levels without the hope for further Fed hikes”. While the dollar index slipped slightly after Friday’s mixed jobs news out of America — non-farm payrolls were well short of forecasts but hourly earnings were strong — the US currency is still up since the start of the year. Worth watching is the progress of stocks in emerging markets, which have posted vigorous rebounds after last year’s falls. The MSCI Emerging Markets index is up 8 per cent this year.

Hot-button topics this AGM season: pay, diversity and the climate Early votes indicate how shareholders will take companies to task JENNIFER THOMPSON

nger over executive pay grabs headlines but climaterelated voting and the push for board diversity will also be important to investors when the 2019 season of annual meetings begins in the next few weeks. In the UK, the new corporate governance code will put some executives’ length of service and pension arrangements under even stronger scrutiny — and fund managers are ready to flex their muscles. “Even in cases where you don’t win, [a protest vote] can still be an interesting temperature gauge,” says George Dallas, policy director at the International Corporate Governance Network. FTfm takes a look at the hotbutton issues this year. Executive pay “Executive remuneration always comes up,” says Leon Kamhi, head of responsibility at Hermes Investment Management. “Consultations [with investors] have become much better over time but three or four [cases] pop their heads up every year.” Company annual reports for 2018 are trickling out, so the full picture on pay — and which executives’ packages will anger investors most — is still forming. Ryanair’s decision to give chief

executive Michael O’Leary a bonus of up to €99m via a share option deal has already raised eyebrows. Royal London Asset Management, a shareholder in the budget airline, decried the potential award as “wholly inappropriate” and “ludicrous”. Meanwhile, shareholders at SSP, the travel food retailer, revolted against the £6.2m pay package of chief executive Kate Swann. A third of those who voted at the group’s AGM last month came out against the remuneration report. The Investment Association maintains a public register of listed UK companies subject to protest votes and publishes a “repeat offenders” list of companies that appear in two consecutive years. The remuneration report or pay-related issues were cited in 16 out of 33 companies on the list in both 2017 and 2018. “A lot of management teams still haven’t got it,” says one head of stewardship at a large UK asset manager. Board tenure In January the UK introduced a new rule as part of an overhaul of the corporate governance code that requires chairs to step down after serving on the board for nine years. From next year, UK public companies must comply with the code or explain why they have not. Directors who have served well over this limit include Tim Martin,

founder of JD Wetherspoon, who has been chairman of the pub chain for 36 years, and Michael Dobson, chairman at Schroders, who joined its board as a non-executive in 2001. Sarah Wilson, chief executive of Minerva, the stewardship consultancy, does not expect to see many protest votes on the issue this year. “You normally see a couple of years’ lag because it takes time to work its way through the system,” she says. There may still be some dissent: “Fund managers make their own decisions.” There is already disquiet. Investors holding nearly a fifth of shares voted against the re-election of Mark Williamson, chairman of Imperial Brands and on the board for 12 years, at the group’s recent AGM. The tobacco group is hunting for a successor. Mike Turner, chairman of Babcock, announced in January that he would step down from the FTSE 250 defence group, citing the code and the views of two top-20 shareholders who told him the company would have more credibility if he resigned. He has chaired the board for a decade. Mr Kamhi, however, indicates that Hermes, which manages £34bn of assets, is open-minded on board service. “What we’re looking for is a board that functions well, which has the right skills but is not a club. There’s an idea that if you’ve been there too long you’ve gone native,” he says.

Under-fire digital bank Revolut bolsters its governance Fast-growing fintech hires Standard Life Aberdeen co-CEO Martin Gilbert as an adviser NICHOLAS MEGAW

evolut has appointed Standard Life Aberdeen co-chief executive Martin Gilbert as an adviser and announced several other hires to boost regulatory compliance and governance efforts at the under-fire digital bank. Former Silicon Valley Bank chief operations officer Bruce Wallace and Deloitte veteran Caroline Britton will join Revolut’s board as non-executive directors, the digital bank announced on Sunday. Mr Wallace will chair Revolut’s risk and compliance committee, while Ms Britton will head its audit committee. Mr Gilbert, meanwhile, will work with chief executive Nikolay Storonsky in an “advisory” capacity, which both Mr Wallace and Ms Britton did before joining the board. News of the announcements

came after a difficult start to the year for the London-based fintech, which has faced questions over its ability to effectively manage its rapid growth. Its activities have been examined in recent weeks by the Financial Conduct Authority, Advertising Standards Authority and politicians in Lithuania, where it has a banking licence. Critics have also attacked its management for encouraging unhealthy working practices such as long hours and unpaid work. Revolut said that it started searching for the new directors and advisers last year, before the most recent criticisms. “The decision to make these appointments and executive hires was not made lightly and followed an extensive period of search for the right mix of technical and financial expertise,” Mr Storonsky said. The company, which is seeking

a full banking licence in the UK, has faced particular questions over its ability to combat illicit money transfers. It reported a spate of suspected money laundering to regulators and law enforcement last year, ran into problems with a planned upgrade to part of its compliance systems, and has suffered from high staff turnover in senior compliance roles. In addition to the incoming hires announced this weekend, it confirmed it had also appointed a new head of regulatory compliance and head of financial crime risk since the end of 2018. The group, which was valued at $1.7bn in its most recent fundraising last year, said the appointments “reflect a company that has matured over the past 18 months and transitioned from a fledgling start-up into a well-established financial services company”.

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ANALYSIS Shell and Siemens lead Europe’s charge into home power storage Tesla Powerwall battery has 30% US market share, but faces transAtlantic challenge PATRICK MCGEE

T South Africa: Battling to keep the lights on

Amid escalating debt and widespread blackouts, state power company Eskom could lose its century-old monopoly

JOSEPH COTTERILL

a n d l a Ma b u z a looks out of his front door at Africa’s biggest power station and wonders if it is killing him. “Especially when the wind is blowing this side it affects us so badly,” Mr Mabuza says, as he gazes at a fume-belching tower of the 4,000-megawatt Kendal coal-fired plant in South Africa’s Mpumalanga region, barely a kilometre from his home in Khayalethu. “We are suffering,” the 46-year-old former coal miner says. It is not just the air. Khayalethu is without running water, and its houses are unsound — an effect of the coal mine next door that is blasting away to feed Kendal’s boilers. Khayalethu only exists because another colliery swallowed the residents’ old homes a decade ago. This is the outskirts of eMalahleni, South Africa’s “place of coal” — the heartland of Eskom, the state power company that generates 95 per cent of the nation’s electricity, mostly via coal plants such as Kendal. Over a decade of corruption, creeping blackouts and debt that has risen tenfold since 2007 to $30bn, Eskom’s problems have deepened under South Africa’s governing African National Congress. Khayalethu shows just how desperate the battle to keep South Africa’s lights on has become. Mmusi Maimane, leader of the main opposition Democratic Alliance, has blamed ANC misrule. He said in December that it had turned Eskom into a “national power utility that is on its knees, threatening to take the entire country down with it . . . the single biggest threat to our nation’s future.” The increasingly frequent blackouts are throttling Africa’s industrial powerhouse. President Cyril Ramaphosa is committed to breaking up Eskom’s nearly century-old monopoly. But he has caused anger in ANC-linked trade unions who see the split into state-owned generation, transmission and distribution units as potentially a threat to Eskom’s 48,000 jobs. For Mr Ramaphosa, it is about recognising Eskom as both “too big to fail” and “too difficult to lead” — and unable ultimately to wean South Africa, one of the world’s top 20 carbon emitters, away from its reliance on coal. “The consequences may be painful, but they will be even more devastating if we delay,” he told the country last month. Eskom, which officially has a capacity of 45,000 megawatts, is trying to stave off collapse by squeezing juice out of power stations that are on average 37 years

old, and which it lacks money to properly maintain. Eskom told South Africa’s energy regulator last year that it “operates an ageing generation fleet that has been run at high utilisation factors [or close to maximum output] for a number of years under severe financial constraints”. As a result, the government has tapped its already stretched public finances to provide a R69bn ($4.9bn) bailout to cover most of Eskom’s payments on its debt, which is largely state guaranteed, for the next three years. February’s bailout will free up funds to keep the lights on. But the biggest drain on Eskom’s finances is difficult to resolve — giant new plants that have proven better at burning cash than coal. Rising from the Highveld like ancient megaliths, each taller than the Statue of Liberty, the towers of Kusile station are an impressive sight, appropriate for what should be the world’s fourth-biggest coal plant — and Africa’s largest. Begun over a decade ago, Kusile — meaning “the dawn has come” in the local Ndebele language — should by now have been providing the extra capacity necessary to relieve blackouts and lighten the load on ageing stations, Pravin Gordhan, the minister of public enterprises, said last month. Yet, after falling half a decade behind schedule, Kusile and a twin station, Medupi,are commercially operating only a fraction of the 9,600MW they promised. Even that is subject to equipment faults, design flaws and frequent tripping out of power units in what might be Eskom’s greatest failing of all. The root cause of the blackouts this year has been the unreliability with which Eskom’s stations generate power, which has dropped from an average of four-fifths of its available energy in 2017 to less than two-thirds in 2019. And far from cushioning the grid, Medupi and Kusile have become so fault-ridden they have brought the average down. Originally estimated at an already hefty R150bn ($10.4bn), the cost of building Medupi and Kusile has since at least doubled, driving the increase in debt. Yet there is little to show for it. Much of the cost may simply have been stolen. State investigators are examining R139bn of supply contracts for alleged pilfering. This is being investigated separately to Eskom’s alleged role in the “state capture” scandal that helped bring down the presidency of Jacob Zuma 12 months ago over claims he helped the Guptas, a business family, abuse regulatory machinery to wrest control of assets such as coal supplies for the

utility. The Guptas and Mr Zuma deny wrongdoing. The scandals share a common element: Eskom is so vast, it seems irresistible to loot. Jabu Mabuza, who took over as the utility’s chairman last year, the sixth in a decade, told an inquiry examining state corruption that: “When you get hold of [Eskom], you can really be in business and you can live well for a long time . . . whether you can sleep well is another question.” Even assuming sluggish demand well into the 2020s, it will be a tight race to roll out enough capacity to replace the 7,000-10,000MW of planned station decommissioning of aged facilities, according to Moody’s. This assumes that Medupi and Kusile, whose final unit is meant to begin operating in mid-2022, will avoid further delays. It is a risky bet. Some argue that the cost of the mega-plant failures is so great that they should be scrapped. “They are so behind schedule and so over budget, and not being built effectively, that they really are a white elephant,” says Melita Steele, a Greenpeace campaigner. “Eskom is throwing money it does not have into a black hole . . . It’s not too late to turn back from Medupi and Kusile and recognise it was a bad decision.” It would be hard to measure if Kendal’s emissions are killing local resident Mr Mabuza and his neighbours. Eskom turned down a request by Khayalethu’s community to install dust monitors, he says. Eskom did not respond to a request for comment on the residents’ concerns. Yet the company has estimated to legislators that smoke, soot and other emissions trigger about 333 premature deaths on average per year in the surrounding population. Environmental groups argue the real toll is in the thousands. “Right now we’re talking about the energy crisis,” says Thomas Mnguni, a community activist in Middelburg, a Mpumalanga coal town. “But this will become a public health crisis. It has become normal for people around here to have bronchitis, asthma and sinus problems.” That includes his own son. Minimum emission standards such as for sulphur dioxide and particulate matter were already weaker in South Africa than China. Nevertheless, Eskom has secured delays on fully complying with these limits. It is “basically asking for a licence to kill people”, Ms Steele says. A recent study calculated that the company had exceeded emissions thresholds thousands of times. Eskom denies this, but acknowledges that Kendal has been non-compliant since 2018.

he German language is said to have a word for everything. Dunkelflaute — sometimes translated to “dark doldrums” — refers to the times when it is neither windy nor sunny. Dunkelflaute is a major problem for anyone relying purely on solar panels or wind turbines to power their home, business, or charge up their electric car. The answer to this problem is batteries: big, fridge-size batteries that store energy when renewable sources are available and can discharge it when needed so homeowners can flick the lights on, run the dishwasher and stream Netflix. The best-known is the Tesla Powerwall, which has a market-leading 30 per

batteries — like the market for electric vehicles — is rather niche today, but it is growing quickly. According to research consultancy Frost & Sullivan, some 90,000 residential battery storage units were purchased in 2017 led by Germany, Australia and the US, which together comprise nearly threequarters of the global market. By 2025, Frost expects the market to multiply six-fold to 531,000 units, as battery costs drop and manufacturers’ ability to scale ramps up. A further catalyst should be that more countries will introduce government incentives for homeowners to switch from centralised power plants based on fossil fuels. In terms of revenue, Frost predicts the market will grow from $711m in 2017 to $4.6bn in 2025. In addition to developed markets,

Shell has acquired German start-up Sonnen, which is Tesla’s biggest rival with a 19 per cent market share for household batteries © Sonnen

cent share of sales in the US, according to Frost & Sullivan, a consultancy. But the competition is getting more intense since two European groups entered the fray in the past month. First, the Anglo-Dutch oil and gas major Shell purchased German startup Sonnen, Europe’s largest maker of home battery systems. With Shell’s backing, Sonnen hopes to bring its batteries to the masses — a credible threat given it is already market leader in Germany, the largest country by unit sales for home batteries. In the US, Sonnen is also Tesla’s biggest rival with a 19 per cent market share. Sonnen chief executive Christoph Ostermann says the Shell acquisition underscores “what everyone who isn’t dumb and blind acknowledges: renewable energy is not stoppable any more”. He adds: “It’s already price competitive to fossil fuels. Everyone can generate power on their roof and doorstep. This is happening throughout the entire energy industry [but] not everyone is as advanced as Shell is.” A few days after that acquisition, Siemens announced it would begin selling the Junelight Smart Battery, the first battery storage system offered by Europe’s largest industrial conglomerate for private homes. “We think this is a sign of how exciting the battery market is,” says Frank Rijsberman, director-general of the Global Green Growth Institute, which works with governments to support sustainability. “Solar and wind are now past the stage of being only commercially attractive,” he adds. “Solar is now cheaper than coal in many places, but the storage is still the issue. As soon as battery costs go down a little more, we see solar and wind, plus batteries, becoming a very attractive option.” The market for residential home

where household batteries are often a luxury for people to use sustainable energy and get off the grid, home storage batteries have the potential to gain a foothold in emerging and middleincome countries where power outages are a major problem. “The number of countries where people have a generator in the garage is very high,” Mr Rijsberman said. “Take India: a very large percentage of middle-income people have their own generator to deal with power failures. In Guyana, where we did a rooftop solar project last year, practically all businesses, all offices, have large diesel generators in their basements or parking lots.” Such potential underlines why Shell has committed to spending $2bn a year to bulk up its renewable energy operations. This month it also purchased UK-based Limejump, a digital platform to help businesses manage how they generate and consume sustainable electricity. “We are in the middle of a revolution towards a future where many electricity networks around the world are powered by renewable electricity,” says Limejump chief executive Erik Nygard. Sonnen and Limejump both declined to say what Shell paid to acquire them. But Mr Ostermann says that in 2017 Sonnen recorded €65m in revenues, then grew by about a third last year, as volumes expanded nearly 50 per cent. For the market to continue accelerating and expand to more markets, battery prices need to fall further. Between 2010 and 2017, the price of one of Sonnen’s fridge-sized units dropped 80 per cent from €25,000 to €5,000. The decline has been driven by surging investments into lithium-ion batteries thanks to mobile phones and electric cars. McKinsey, the consultancy, has noted that battery prices fell “much faster than anyone expected”.

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PDP alleges non use of card readers in Kaduna, as APC coast home to victory Abdulwaheed Adubi, Kaduna

…Assures perpetrators will be brought to justice

Card reader use would have averted election violence, fraud, says Dickson Samuel Ese, Yenagoa

Ajimobi expresses sadness with election violence, killings

Situation Room calls for independent inquiry into conduct of 2019 elections OWEDE AGBAJILEKE, Abuja

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INEC declares Abdulrazaq winner of governorship poll in Kwara SIKIRAT SHEHU, Ilorin

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Insight

Atiku may have lost, but Nigeria needs his ideas to prosper global Perspectives

OLU FASAN

ver the past four years of writing this column, I have espoused three main themes: free market economics, political restructuring and institutional reforms. I believe that Nigeria’s stability, progress and prosperity rest squarely onthe three issues, and I have been relentlessly critical of President Buhari simply because he rejects those ideas. To the detriment of Nigeria’s progress and unity, Buhari has stubbornly run a socialist government, viscerally opposed political restructuring and paid lip service to institutional reforms. I couldn’t support his administration or his re-election in those circumstances. But I warmed to Atiku Abubakar in the presidential election precisely because he laid out elaborate programmes of economic, political and institutional reforms, with a strong commitment to free market and political restructuring. I was not starry-eyed; I had some concerns about his personal reputation. But, for me, the big picture mattered more. If Atiku could implement his economic and political reform agenda and set Nigeria on the path to a true market economy and a true federal state, that would offset his alleged past misdeeds, which I hoped he wouldn’t repeat in office. That was the same reason the highly-respected elder statemen, under the auspices of the Forum of Nigerian Leaders and Elders,

gave for endorsing Atiku. They said he “demonstrated the deep understanding of the critical needs of the country at this time and possesses the capacity to proffer clear solutions in that respect”. I thought so too! However, the election has now come and gone, and Buhari has been declared winner. Last week, I wrote that the huge irregularities in the election did not materially affect the result. Some readers wrote to me, saying that the irregularities “inflated” Buhari’s 15m votes. I wouldn’t disagree with that. The result defied all the predictions of a close race. How could Atiku, a prominent Fulani and former vice president, fail to give Buhari at least some competition in the North? Why was he walloped by Buhari in the North? Surely, the huge irregularities, particularly the abuse of incumbency power through militarisation, intimidation, disenfranchisement, vote-buying and outright rigging, must have inflated Buhari’s votes. It’s difficult to imagine that didn’t happen. Yet, truth is, Buhari would still have defeated Atiku in the North, if by a smaller margin, and, given the abysmally low turnout in the South, Atiku’s strongholds, Buhari would still have won. Thus, my point about materiality stemmed from the fact that, under the doctrine of substantial performance and Nigerian electoral law, Buhari would still have won, despite the irregularities, because he would still have had more votes, even just 500,000, than Atiku! But, that said, Atiku is perfectly right to challenge the result of the election in court. It enhances electoral democracy to expose and document electoral irregularities and frauds through the judicial process. But if Atiku doesn’t win the case, he should take consolation in three undeniable facts. First, he has helped to strengthen democracy in Nigeria by testing its limits; second, unlike Buhari,

whose defeat would have caused massive bloodshed in the North, Atiku’s loss didn’t result in post-election violence; and third, through the vision that he articulated during the election, Atiku has set an agenda for retooling and transforming Nigeria that cannot be ignored. It’s the third element that’s my focus here. Say what you like about Atiku, he presented a real choice and a real alternative in this year’s presidential election, even though, sadly, the election turned out to be a battle of personalities over ideas. But anyone who read Atiku’s manifesto, entitled “My plan to get Nigeria working again”, must commend him for the thoughts he put into diagnosing and proffering solutions to what he described as Nigeria’s “many economic and political structural fault lines”. In a country where policy analysis is weak, Atiku put a lot of intellectual effort in crafting the policy document. Take the economy. The truth is that Nigeria can’t prosper and tackle poverty unless it becomes a market economy where the private sector flourishes and which foreign investors see as an attractive investment destination. Atiku recognised this, and set out a bold economic vision, based on stimulating private sector growth and attracting FDI through the deregulation and liberalisation of the economy. Atiku’s promises of privatisation, exchange rate flexibility, consolidation and simplification of business and investment regulations and “the lowest corporate income tax rate in Africa” would have made Nigeria one of the most business and investment friendly countries in the world, with significant economic benefits. Today, the three fastest growing economies in the world are African – Ethiopia (8.5%), Rwanda (7.8%) and Ghana (7.6%). But they are also the most liberal and business-friendly economies in Africa. So, to prosper, Nigeria needs the market-

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It is to Atiku’s credit that, although he knew that his radical free market ideas... were unpopular with vested interests, particularly in the North... he still advocated them

based economic vision that Atiku set out, rather than the current dirigisme of government interventions and economic restrictions. Free market economics, not statism, is the path to Nigeria’s economic development. Atiku articulated that bold economic vision in the election. But economic development rests on an enduring political settlement. Without political stability and social cohesion, there can’t be economic progress. And, here, again, Atiku set out a vision of political reform that would ensure Nigeria’s peaceful coexistence and stability. He promised to restructure Nigeria. In his manifesto, he recalled that “At independence, the various regions were growing at their own pace with the political and economic strategies that suited their individual peculiarities”, but regretted that, today, “Nigerian states have been reduced to parastatals of the federal government”. Thus, he promised to “decongest the exclusive and concurrent list in the Constitution”, and devolve powers, responsibilities and resources to Nigeria’s sub-units. It is to Atiku’s credit that, although he knew that his radical free market ideas, such as the proposed privatisation of the leviathanic and opaque NNPC, and political restructuring were unpopular with vested interests, particularly in the North, his ethnic region, he still advocated them, despite the potential adverse electoral consequences. Of course, he did so because he honestly believed they were the solutions to Nigeria’s economic and political structural problems. Indeed, they are, and well-meaning Nigerians are saying so. Continues online @www.businessday.ng

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

So much rice in the land but should we be growing something else? ECONOMIST

NONSO OBIKILI

nless you have been living under a rock for the past few years, you probably know that Nigeria has made rice a focus of its agricultural policy. The “problem” being solved here is that we import too much rice and the government wants us to produce more at home. Which, in of itself, is not a bad thing. Of course, there has always been some sort of government program to boost rice production, but no other government has gone to such levels to target rice. There was the 70 percent tariff and duty on imported rice to incentivize local production, imports through land borders were effectively banned, and government threw various funding schemes like the anchor borrowers’ program, at rice farmers. I don’t think any other crop was mentioned as much by politicians and policy makers over the last four years. What has been the outcome? According to data from the Food and

Agriculture Organization, a credible source for data, our rice production went up a lot. In 2010 we produced about 4.4 million tonnes of rice paddy which increased to six million tonnes in 2014, and almost doubled to 11.34 million tonnes in 2016 before dropping a bit to 9.8 million in 2017. Numbers for 2018 are not published yet. All good right? Well not quite. Our yields, or the amount of rice paddy grown per piece of land has not changed much. It has averaged about 19,000 hg/ha since 2010, which is not really that great. For comparison, yields in Thailand are about 30,000 hg/ha, yields in India are about 38,000 hg/ha, 68,000 hg/ha in China, and over 80,000 hg/ha in the United States. Our yields here are still very low relative to almost everyone else. Still we grew more rice. If we grew more rice but our yields were roughly the same, then that must mean we used a lot more land to grow the extra rice. Indeed between 2010 and 2017 the amount of land dedicated to rice cultivation more than doubled from 2.4 million hectares to an estimated 4.9 million hectares. We used 3.1 million hectares for rice in 2014 and 5.6 million hectares in 2016, the most amount of land used for rice since we started keeping records. But we know that the amount of land in Nigeria kind of has not changed. So, if we used so much more land for rice then what did we stop growing? In general, we haven’t re-

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It turns out maize (at $250 per hectare), sesame seeds (183), and soybeans (182) are more valuable than rice paddy at $175 per hectare based on our 2016 yields and prices

ally expanded our total amount of land used for growing cereals like rice. Since 1995 the total amount of land used for growing cereals has hovered between 17 and 20 million hectares, with some dips along the way. If we dedicated extra land to rice, then it must mean some other crops were displaced. Why is this important? A short story first. A couple of weeks ago a farmer friend of mine asked me a question. “I have all this land but what should I grow?” I told him to grow the most valuable thing he can, even if he doesn’t eat it. It should be obvious, but that is the foundation for wealth generation and one of the fundamental reasons why trade is good. If you grow the most valuable thing, even if you don’t want it, you are better off than if you grow what you want, because you can trade the valuable thing for the thing that you want and still have some value leftover. On the flip side, if you stop growing the most valuable thing you can and start growing something you want, then technically you get poorer. So, what have we stopped growing? Over the last decade the amount of land dedicated to cashew nuts has dropped by over 60 percent. Yes, those cashew nuts that used to by one of our largest agricultural exports. Land used for millet has also collapsed by over 50 percent in the last decade. Land used for seed cotton, sorghum, cocoa, and oil palm have all dropped by 26, 25, 12 and 4

percent respectively. Some of these used to be big export crops. In terms of the actual value of the crops, unsurprisingly the most valuable crops we could be growing are vegetables worth about $4700 per hectare per year based on our current yields and 2016 prices. We know rice and vegetables aren’t really substitutes so we can’t really compare both. We can compare rice to other cereals though. It turns out maize (at $250 per hectare), sesame seeds (183), and soybeans (182) are more valuable than rice paddy at $175 per hectare based on our 2016 yields and prices. Or to put it simply, if we decided to use all the land we used to grow rice to grow maize and exported it, we could have imported 40 percent more rice paddy than we grew. This is before you add all the special intervention funds that have been dedicated to growing rice. But at least we grow more rice so we can manage that one for now. Morale of this story: we need to think about policy objectives properly before we start targeting crops. If the goal is to grow rice then the policy is working, but if the goal is to generate wealth then it may not be working so well. Caveat: we still import a lot of rice indirectly via our neighbours to the west so the policy to stop imports is not working very well either. Dr. Nonso Obikili is Chief Economist at Business Day.

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