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news you can trust I ** monDAY 11 may 2020 I vol. 19, no 560

Despite mark-down, Nigeria’s new non-oil revenue projections seen over-optimistic ... Experts proffer alternative ways of boosting revenue

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States’ coronavirus fight showcases the good, bad and ugly See story on page 7

LOLADE AKINMURELE

igeria may be better off projecting at least a 50 percent decline in nonoil revenues this year due to the COVID-19 pandemic’s impact on the economy and taxes, according to tax experts polled in a BusinessDay survey. It would appear that while the government has come to terms with significantly lower oil revenues, it remains quite bullish about non-oil revenues. Continues on page 7

Inside

Banks’ income from T-bills falls to 5-year low as COVID-19 shakes industry P. 6

L-R: Arvind Pathak, deputy managing director, Dangote Cement plc; Joseph Makoju, immediate past GMD, Dangote Cement plc; Emmanuel Ikazoboh, non-executive director, Dangote Cement plc; Opeyemi Agbaje, executive secretary/CEO, Ogun State Security Trust Fund, and Michel Puchercos, GMD, Dangote Cement plc, during presentation of 25 police patrol cars donated by Dangote Cement plc to Ogun State Security Trust Fund in Lagos.

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news Dangote Cement donates patrol cars to Ogun Security Trust Fund FIKAYO OWOEYE

A cross-section of 160 Nigerian returnees from the US on their arrival at the Nmamdi Azikiwe International Airport in Abuja, yesterday. NAN

Banks’ income from T-bills falls to 5-year low as COVID-19 shakes industry BALA AUGIE

anks’ interest income from investment securities has fallen for the first time in five years as the regulator may be reluctant to reverse some stringent policies in the face of economic crisis caused by COVID-19. For the first three months through March 2020, the largest lenders in Africa’s biggest economy realised N209.62 billion in interest income from short-term government securities, a 1.79 percent reduction from N213.35 billion made the previous year. In the past five years, they

have realised a combined N1.09 trillion, but those good old days – when they took advantage of attractive yields by parking their money in government securities – may be over. Interestingly, the decline, which has continued to hurt banks’ earnings, did not come as a surprise to analysts as they had been expecting such a drop given the dislocations of the fixed income markets brought on by heterodox policies adopted by the central bank. The CBN announced a flurry of regulations in the third and fourth quarters of 2019, including the minimum Loan to Deposit Ratio (LDR)

level of 65 percent, as well as banning corporates and Pension Funds Administrators (PFAs) from participating in its Open Market Operation (OMO). These policies resulted in a downward pressure on lending rates due to buoyant system liquidity as well as pressure on banks to create new loans. “Gains from interest income from loans to customers helped compensate for the drop in yields,” said Gbolahan Ologunro, equity research analyst at CSL Stockbrokers Limited. “However, with the impact of the virus on the economy, gains made from loans extended to customers will be eroded. Yields will

remain where they are in the short term. And the regulator may not reverse these policies in the short term.” Ologunro said if the central bank reverses the policy, banks would invest their money in OMO bills, and there would be little left for lending. Total income from investment securities for the largest banks makes up 34.15 percent of total interest income and similar charges of N684.33 billion as at March 2020. Combined interest income from loans and advances increased by 6.51 percent to N449.59 billion as at March 2020, from N422.09 billion the previous year.

Creative industry urged to leverage technology, innovation, collaboration to stay afloat … as COVID-19 impact takes a toll on sector EMELIKE OBINNA & BUNMI BAILEY

he Nigerian creative industry is not immune from the current challenges businesses are facing due to the persisting impact of COVID-19 across the globe. But amid these challenges, experts say the industry can leverage technology, collaboration and innovation to stay strong and relevant during and after the pandemic. The experts, who spoke at the latest BusinessDay Digital Dialogue Series on Friday, said with the lockdown, ban on public gathering, social distancing and other measures aimed at combating the pandemic, the sector has witnessed an unprecedented setback. From the closure of theatres, nightclubs and cinemas, no shootings of films,

no public concerts, no art exhibitions, no live music shows and other entertainment offerings, the sector has recorded huge losses. This situation has made technology, innovation and collaboration among players in the industry very imperative in order to stay afloat during the lull in business occasioned by the pandemic as well as the projected economic downturn after the virus is curtailed, they said. The experts agreed that online, especially streaming content, presents veritable platform for the industry to stay afloat in business now and in future. “There is a growing culture for streaming movies and whether we like it or not, streaming will hit the market soon,” said Chioma Ude, founder, African International www.businessday.ng

Film Festival (AFRIF), said at the digital dialogue series themed ‘COVID-19 and the Creative Industry: The Impact, Innovation & Planning for Post Crisis’. Streaming services accounted for nearly 80 percent of all music revenues in 2019, amid an impressive boost in movie earnings globally. Moreover, the last 10 years have ushered in a rapid progression of at-home entertainment as Netflix, Hulu, Disney Plus, HBO Now, and others rack up millions of subscribers. As more people are forced to stay at home to try to curb the spread of COVID-19, the experts believe that the concept of a bored and cablecutting consumer searching for things to constantly watch for weeks on end has become a reality. Ude said stakeholders

in the industry should start thinking of the bigger picture and seeing things differently by being innovative. “The information technology and creative industry will thrive in this COVID-19 leveraging streaming and other online business options,” she said. Omoyemi Akerele, founder and executive director, Style House Files, said the industry players need to find answers to questions on how to create collaborations that would strengthen the industry. To create a future beyond the runaway, protect and empower young entrepreneurs, she insisted that the industry must find innovative platforms to do business, especially in the face of the pandemic. Obi Asika, founder, Dragon Africa, affirmed that business in the creative industry has migrated to online platforms.

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angote Cement plc has donated 25 operational cars, fully equipped with security features, to the Ogun Security Trust Fund (OSTF) as part of its strategic Corporate Social Responsibility towards maintaining security of lives and property. The donation was a fulfillment of a pledge made by the immediate past group managing director (GMD) of the company, Joseph Makoju, who had promised the state government that Dangote Cement as a responsible corporate citizen would partner the government in ensuring the much-desired security is maintained in the state and its environs. Presenting the cars to the OSTF in Lagos on behalf of the management of Dangote Cement plc, Emmanuel Ikazoboh, independent non-executive director, said the donation was informed by the need to boost the Fund’s operation because security is essential to economic development. “No investor will be willing to put his/her funds in an economy where insecurity is rife with lawlessness and chaos as the order of the day. We are major investors in Ogun State and as such we prefer a state of orderliness and sound security which allows businesses to

thrive,” Ikazoboh said. Ogun Security Trust Fund was established in 2011 and refined in 2019 by Governor Dapo Abiodun. The objectives of the Fund include the maintenance ofsecurityandwelfareofcitizens. “I recall that on October 6, 2019, our then group managing director, Engr. Joe Makoju, made a pledge on behalf of the company to present operational vehicles to the Fund. As a corporate socially responsible organisation, the security and well-being of our host communities remain utmost in our minds,” he said. Ikazoboh said a major step towards encouraging investments and creation of employment is promoting and ensuring adequate security in the environment. “This is why we at Dangote Cement fully appreciate your state government’s several initiatives in the promotion of securityandasafeoperatingenvironmentforbusiness,”hesaid. He explained that government alone could not continue to bear the full cost of meeting the expectations of the entire populace in the provision of basic necessities like health, education and security for the citizenry, adding that this thought gave rise to Public Private Partnerships, where private sector collaborates with public sector in the provision of essential services.

Investment in medical surveillance, manufacturing capacity essential to strengthening Africa’s health systems Temitayo Ayetoto & Bunmi Bailey Nigeria, the most populous

frica’s health experts using innovation to lead the fight against the coronavirus disease have asked governments across the continent to consider investment in infrastructure for medical surveillance and manufacturing capacity of medical kits as priority. They say the challenges faced during the management of viral infections such as COVID-19 and even non-communicable diseases have shown that relying on the rest of the world for innovative solutions could constitute a setback. Speaking during a webinar on the ‘Future of Health’ organised by Nigeria Healthwatch on Thursday, Abasi Ene-Obong, CEO of 54gene, said lack of high capacity laboratories for molecular investigations, for instance, has been responsible for the low rate of testing and detection of the coronavirus in many remote regions in Nigeria. He highlighted having only few clinical diagnostic labs that can handle molecular diagnosis using PCRs as one of the issues affecting testing and diagnosis in Nigeria, noting that such gap leads to misdiagnosis. By the time the crisis hit @Businessdayng

African country had only about 200-testing capacity for a population nearing 200 million. The biggest lab in the country had already been sending samples that required molecular diagnosis outside the country, Ene-Obong said, noting that samples of Hepatitis B and cancers were shipped abroad for diagnosis, a situation that exposes the under-capacity in the health sector. “How do you have a good health system when you are sending Hepatitis B, C or cancer samples out of the country?” he queried. “We need to see the value on our health systems and stop taking shortcuts. We need to invest in infrastructure and training to ensure that we can actually be the people who do this surveillance ourselves. By so doing, people will learn a lot faster on what it is that heals them.” Lynn Morris, interim executive director at the National Institute for Communicable Disease (NCD) in South Africa, harped on the fact that Africa needs to invest in its manufacturing capacity to protect its people from the sort of fierce competition for survival that has played out with the production of medical kits seen since the coronavirus outbreak.

Monday 11 May 2020

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news Despite mark-down, Nigeria’s new... Continued from page 1

While the government expects oil revenues will slide by around 90 percent and GDP contract 3.5 percent, it is projecting only a marginal decline in key non-oil revenue items from Value Added Tax (VAT) to Custom duties. In its fresh projections, VAT is estimated to rake in N2.0 trillion, a 4.7 percent decline from N2.1 trillion earlier planned in the 2020 budget, while Customs receipt is expected to fall 20 percent to N1.2 trillion from N1.5 trillion. However, those estimates are deemed overly optimistic by tax experts who say the government should be expecting a much bigger decline this year due to the economic impact of the COVID-19 outbreak. “The new projections for Value Added Tax (VAT) and Customs are still too optimistic,” said Wole Obayomi, partner & head of tax, regulatory & people service (TRPS) practice, KPMG Nigeria. “It is unrealistic to be aggressive about VAT, which is driven by supply and consumption of goods and services, at a time when sales by businesses and consumer purchasing power have buckled due to the COVID-19 lockdown, downturn in the economy, job losses and pay cuts,” Obayomi said. “Same goes for the project-

ed customs receipts. Manufacturers and trading companies are not likely to import as much as they used to do due to sluggish sales. Capital importation will equally be impacted in the absence of growth and impairment of consumer purchasing power. These factors make it hard to see how the projection for Customs will be achieved,” he said. Global consulting firm, McKinsey, estimates that the jobs or incomes of 150 million Africans are vulnerable due to the COVID-19 crisis. Given that Nigeria accounts for around 20 percent of the continent’s GDP, that means the jobs and incomes of some 13 million Nigerians could be at risk. Some companies, battling with lower revenues, are already either shedding some workforce or cutting salaries in response to the pandemic. The government’s projection for Customs revenue is also deemed unrealistic, so much so that it was contradicted by Hadiza Bala Usman, managing director, Nigerian Ports Authority (NPA). While the government estimates a 20 percent decline in Custom duties, Usman predicts a 75 percent decline in revenue from the seaports which makes up the biggest source of Custom duties. Usman, who spoke at a

L-R: Ifeanyi Ugwuanyi, Enugu State governor; former governor of old Anambra State, and his wife, Pat, cutting Nwobodo’s 80th birthday cake at AmechiAwkunawnaw community in Enugu South Local Government Area, weekend. NAN

BudgIT webinar Thursday, said the slump in the international prices of crude oil as well as decline in the volume of import shipment into Nigeria due to the virus are the drivers of her projection. Analysts expect the virus to take a toll not only on VAT and Customs receipts but on corporate taxes as well. With the government faced with the stark reality of accepting that non-oil revenues will be just as challenged as oil revenue and that it may have to deal with a bigger budget deficit than first

thought, experts say the focus must shift to implementing wasteful expenditure cuts. “The revenue shortfall calls for significant rationalisation on the size of government in all its ramifications,” Obayomi said. “Among other things, the government must privatise and get out of businesses that are a drain on public treasury, and which can be better run by the private sector. The upstream and downstream sectors of the oil and gas industry must be prioritised for this purpose.” Taiwo Oyedele, partner

and West Africa tax lead at PwC Nigeria, said the government needed to cut wasteful spending and focus on revenue optimisation. “Government needs to look at areas where we seem to be wasting revenue, the subsidy is the biggest one,” Oyedele said. “So we have a subsidy on petroleum products, particularly petrol. The government says we have removed subsidy but they are not paying attention to the fact that we have three components of subsidy. There is under-recovery, that

is what has been removed; there is foreign exchange subsidy, that has not been removed; there is tax subsidy, that has not been removed,” he said. These subsidies, along with the foreign exchange and electricity subsidies, if removed, could save the government between N3-4 trillion, according to Oyedele. “The government also needs to find out how to harmonise the tax waivers and incentives that are not really adding value to the economy,” he said.

States’ coronavirus fight showcases the good, bad and ugly ... Lagos, Edo, Kaduna show shining leadership ... Kogi, Cross River in denial as cases rise MICHEAL ANI & SEGUN ADAMS

espite public outcry on the severity of the health and economic implications of the coronavirus, some state governors have chosen to live in denial of the disease and turned deaf ears to recommendations necessary to contain the spread. However, some others have been applauded by health experts for their bold leadership in tackling the spread of the virus. Public health experts say the situation in these states in denial risks the lives of citizens and could increase the number of infections in the country. Nigeria has recorded 3,526 cases of infection across 34 states and the FCT

as of May 7, including 601 recovered cases and 107 deaths, according to data from the Nigeria Centre for Disease Control (NCDC). That’s the highest in West

Africa and a 1,288 percent increase from the 254 total cases that were recorded a month ago, particularly in three states of Lagos, Abuja and Ogun. This shows how fast the disease is spreading and raises worries in the hearts of public health experts. While much of the numbers can be linked to a rampup of testing in the country by some states, from a total number 2,000 tests a month earlier to over 23,000 tests as at Friday, this cannot be said in some few others who have to a large extent downplayed the extent of the virus. Of the 37 states of the federation including the FCT, only the states of Cross River and Kogi are yet to record a single confirmed case of the virus. No tests have carried out in both states. In an April 30 letter sent to the desk of President Muhammadu Buhari through the office of the secretary to the government of federation, a group, Efik Leadership Foundation, raised concerns on the governor’s nonchalant response towards the fight against the coronavirus. www.businessday.ng

According to a copy of the letter seen by BusinessDay, the group alleged that the state governor, Benedict Ayade, has shown no interest in testing citizens of the state for the virus, even though most states in the country have reported an outbreak. Among other things, the group in the letter, which had first been sent to the governor on April 9, said there is a political motivation for the governor to keep testing low so that the state records no cases of the virus to the credit of its sub-national government. As a result, preparation to contact-trace, isolate and treat infections has suffered although large financial withdrawals have been made from the state’s account, Efik Leadership Foundation claimed in the letter of complaint sent to the presidency late April. The group said non-land borders of the state remain open, allowing for interstate movement, among other allegations of gross incompetence laid against the state governor and his health response team. Similar to the reports seen in Cross River, the Kogi State

ChapteroftheNigerianMedical Association also complained that the state government is not testing suspected cases of the disease and warned that such a move could lead to devastating outcome for Kogi. “If the state is not testing anybody despite having many suspected cases, it only translates that there may be more cases to deal with later and we don’t know where they are now,” said Kabir Zubair, chairman, Kogi chapter of NMA, in an interview with Premium Times. Zubair warned that community transmission was inevitable, portending an impending doom for Kogi. Kogi State alongside Cross River, Yobe and Nasarawa recently came under fire from the NCDC head who expressed dissatisfaction over the low samples submitted by the states for COVID-19 tests. Chikwe Ihekweazu, head of Nigeria’s frontline health response team, warned that the states cannot hide cases of the novel coronavirus forever. Phone calls put across to both states to get their side to these allegations were not immediately responded to.

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Despite the ordeal, a number of state governors have shown high leadership skills in their quest to keep the spread of the virus at bay, and which other governors can take a cue from. Whether it is through ramping up testing or working with various private sector players in building more isolation centres so that those who are confirmed to have been infected with the virus can be isolated from the public, these have been very helpful in containing the spread and have attracted various commendations from the public. In Lagos, Governor Babajide Sanwo-Olu swept into action by first strengthening protocols at the Murtala Muhammed International Airport, carrying out an assessment of some of the measures used to screen travellers coming into the country and state. His decision to make the airport his first point of action stemmedfromthefactthatmost of the cases reported at that time were mainly imported. To further curb the virus spread, he put measures in place to strictly enforce travel restrictions, limited gatherings and events to no more than 50 people and ensured appropriate social distancing must be observed, all in a bid to protect @Businessdayng

residents from physical and other potential threats. The governor also commenced grassroots sensitisation with fliers, on radio and other channels, using local dialects just to increase awareness of the disease and how it can be contained. As the disease entered the local communities, SanwoOlu also ordered public parks, including those in private and residents’ estates and other public places, to shut down until further notice in a bid to curb the virus spread. Also, on March 24, markets were ordered to close for seven days, except for sellers of food, medicines, medical equipment and other essential life-saving products. These were aimed at isolating those who are carriers of the disease, as the state worked more to improve on the testing capacity. On March 26, the Lagos State government deployed disinfectant equipment to fumigate the entire state. The next day, the advocacy team of Lagos State was empowered with more vehicles to aid information dissemination to all parts of the state. The governor also worked with various private-sector players in building additional 110-bed space fully equipped isolation centres.

Monday 11 May 2020

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news

Explainer

What data says about Nigeria’s Covid-19 fight eleven weeks after index case Nigeria with the largest population is believed to have conducted the least number of tests. South Africa and Ghana have tested more than 100,000 persons. It is in the area of testing that Nigeria’s pathetic healthcare infrastructure becomes amplified. On what trajectory is Nigeria? Scientists still say it is too early to say what the future holds for Africa’s most populous nation in its fight against the pandemic, especially because it is undertaking very low number of tests daily. No one can confirm if Nigeria has yet attained its target of 2,500 tests daily nationwide. South Africa tests over 15,000 tests daily with the private sector in the south African nation accounting for about 50% of the total tests so far carried out. Nigeria has so far resisted the push for the private sector to join in carrying out tests. While it is gradually allowing result analysis to be carried out in private laboratories in the country, the collection of test samples is still carried out by the NCDC. The NCDC is grossly

n Saturday May 9, 2020, the centre for disease control, NCDC announced that Nigeria had again bridged another grim milestone as the number of confirmed coronavirus cases rose above the four thousand mark to 4,151 cases. That was exactly 59 days after the country’s index case, an Italian engineer who came into the country to work at a plant in Ogun State. It is now week 11 and Nigeria’s coronavirus landscape has changed in such quick succession, with several scary milestones having been recorded. So, what has happened? From February 27 when the first case was recorded, there were only were a total of 97 cases in Nigeria during the first five weeks, including the index case. It was also after the 5th week when 75 new cases were recorded, that the president imposed a lockdown on Lagos, Ogun and the FCT. The 6th week ending April 4 saw the total number of new cases surging past the hundred mark. A total of 119 cases were recorded and the following week another 104 cases were recorded. The total number of new cases in a single week shot up to 223 in the 8th week and 641 in the 9th week. The 10th week saw the weekly total of new cases going above the thousand mark for the very first time, rising to 1206 and a then a staggering 1763 cases in a single week on May 10. In this period, the lockdown came and has gone in some key locations including Lagos where the government is now threatening to

reimpose some form of restrictions because of the failure of residents to comply with the social distancing requirement as well as the wearing of face masks when outside. What has lockdown got to do with it? Before the lockdown, Nigeria had recorded a total of 131 cases, two deaths, while five patients were discharged in 11 states and the FCT. However, in the time during

lockdown, Nigeria recorded 2427 cases, 85 deaths and 395 discharged patients in 34 states plus the FCT. In just one week since the partial relaxation of the lockdown, there has been 1593 new cases, 41 deaths and 345 cases of discharge. How does Nigeria compare with peers? As at the last count, South Africa leads in Africa when it comes to total number of confirmed cases and the

country also leads in the number of tests for covid-19 carried out. South Africa has recorded 9,420 cases with 186 deaths, and it is followed by Egypt with 8,964 cases with 514 deaths and Morocco comes in third with 6,038 confirmed cases with 188 deaths. Algeria is fourth with 5,558 cases and 494 deaths and followed by Ghana with 5,263 cases and 22 deaths, followed by Nigeria with 4,151 cases and 128 deaths.

‘Nigeria to commence agro export amid COVID-19 crisis’ Cynthia Egboboh, Abuja

mid the scourge of the coronavirus pandemic on global economy, the Nigeria Agricultural Quarantine Service (NAQS) has announced its preparedness to commence export of agricultural produce. Vincent Isegbe, director-general, NAQS, disclosed this in a statement signed by the head, media, communications and strategies, Gozie Nwodo, weekend, stating that the Federal Government had authorised the Agency to fully resume its export certification duties at all ports. “The Office of the Secretary to the Government of the Federation has issued a consequential wholeof-government directive instruct-

ing Ministries, Departments and Agencies as well state governments to cooperate with NAQS to enable a well-choreographed restoration of export traffic for the benefit of all Nigerians,’’ according to the statement. Isigbe said the lockdown, announced as part of the strategy to contain the spread of the novel coronavirus, had made the passage of agricultural commodities from the remote production hotspots to the ports, which are mostly located in the urban areas, difficult. “The lockdown announced as part of the strategy to contain the spread of the novel coronavirus occasioned a hiatus in the agricultural value chain. With almost all the states in the country under one form of curfew or the other coupled with the ban on interstate

transportation, institutional and logistical barricades blocking human and vehicular movement everywhere. “The Federal Government granted the Agency authorization to make agro-export kinetic again because of the manifest need to free all functions related to agricultural export on both the public and private sectors side from any encumbrance. “The Nigeria Customs Service, Nigerian Aviation Handling Company, Skyway Aviation Handling Company, Federal Airports Authority of Nigeria, the Federal Road Safety Commission, Vehicle Inspection Office, the Nigerian Police and other security agencies are now under obligation to work in concert with NAQS and stakeholders to reanimate agricultural export,” he said.

‘We have signed up 15,000 programme members, pays N200m in 3 years’ BUNMI BAILEY

s Lagos-based start-up, Plaqad, a marketing technology firm turns three, it says over the past 36 months, it has built a reputation of providing marketers with the people, products and platforms they need to effectively connect with customers. Through its online platform, Plaqad facilitates a seamless collaboration between social media influencers, content creators, and owners of media inventories, and brandslookingtoengageconsumers and reach new audiences at scale. Today, Plaqad, strengthened by a community of over 15,000 influencers, creators and publishers, has successfully placed over 25,000 pieces of content on social and web platforms across four continents, and directly paid out

over N200 million ($570,000) on hundreds of campaigns to members, effectively helping its programme members monetise their content, platform and influence. “Plaqad uses technology to solve public relations and marketing challenges faced by brands. By democratizing access to the best content creators, influencers and publishers around the world and providing users with the tools to effectively create, track, measure, and optimize their campaigns, we help businesses reach millions of consumers worldwide, irrespective of their size or location,” Plaqad’s co-founder/CEO, Gbenga Sogbaike, says. According to a new report “Martech: 2020 and Beyond” collaboratively produced by BDO, WARC, and the University of Bristol, the global spend on marwww.businessday.ng

keting technology is $121.5 billion. This represents a significant share of the global advertising market estimated to be worth $560 billion in 2019 by Statista. In addition, the Financial Times in a recent post projects the value of the global influencer market — another area where Plaqad features prominently — to reach $15 billion by 2022. With the covid19 pandemic necessitating prolonged social distancing and lockdown measures across the globe, traditional means of marketing like events, out-of-home and newspapers have suffered setbacks as consumer behaviour continues to change. Companies like Plaqad which are at the forefront of digital media technology will help marketers, influencers, brands and the government to navigate the new reality. https://www.facebook.com/businessdayng

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underfunded and under resourced and so expect Nigeria’s testing level to remain tempered by this factor going forward. And why is Lagos called the epicentre? Lagos is not just the point at which the first recorded case was confirmed, the commercial capital is now truly established as the state with the highest number of confirmed coronavirus cases in Nigeria and it is also the fastest growing. Since the first case was recorded on February 27, the virus has spread across the state with one local government alone, Mainland having a total of 541 cases. Today, Lagos now accounts for about 39% of the total number of cases in Nigeria. Over 70% of the confirmed cases in Lagos are still on admission and this will quickly put strain on the current healthcare structure of the state. It will be unsurprising if the state government begins to empower primary healthcare centres in the state to manage mild to moderate cases of Covid-19 because of this pressure.

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An empty seat for Chief (Dr.) Koleade Adeniji Abayomi, SAN; OON

Bashorun J.K Randle

bout thirty years ago at the Metropolitan Club, Kofo Abayomi Street (named after Kole’s father, Kofo Adekunle Abayomi) on Victoria Island, Lagos the hugely cerebral artist (Sculptor and Painter) Professor Ben Enwonwu pulled me aside just before the weekly Tuesday lunch to conspiratorially whisper as he surveyed the empty tables which would soon be filled and revert to emptiness in a matter of hours that his next undertaking would be a massive painting of the thirty empty tables at the exclusive club. It would be a magnificent piece of art – a spellbinding reflection of emptiness in all its splendour and majesty!! I was truly fascinated and almost mesmerized by the electrifying passion of the great artist who was clearly salivating and celebrating a great work of art which was in conception without a firm delivery date. It would be a monumental homage to the transience and emptiness of everything and every life – no matter how powerful or accomplished. Ben Enwonwu’s putative masterpiece would serve as a counterpoint/counter pose to Leonardo da Vinci’s (1452-1519) “Last Supper”. Right from inception, the founding fathers of the Metropolitan Club had a clear vision – the dining room which was overflowing with men of power, brain and brawn would have to serve a higher purpose, namely the uplifting of Nigeria to become a force to be reckoned within the comity of nations. The artist and I were somewhat in a trance when Kole sauntered in and he

could not resist asking why both of us appeared lost in silence. It was the artist’s prerogative to welcome Kole into the conspiracy and share with him the profundity of that moment. He was not mistaken. He made the right call and the perfect choice. Kole was (like the artist himself) DEEP, very deep. Both of them were gentle but had great strength of character. From time to time, the great artist would remind me and Kole that the great painting was still in contemplation but the concept and sketches were imminent. However, there was a dilemma: would the Dining Room be fully empty (an oxymoron!!) or half empty? Sadly, Ben Enwonwu died on 5th February, 1994. Thereafter, virtually every Tuesday Kole would be seated resplendent in his native Agbada robes with matching cap (he had given up the Savile Row Suits and pocket square) directly opposite me as he was sandwiched between two old boys of King’s College – Christopher Folarin Williams and Gabriel Olufemi Sowemimo. Kole was himself an old boy of King’s College. Perhaps, I should add that on the first Tuesday of every month, Kole would be seated opposite me at the monthly dinner of the Lagos Dining Club at the Southern Sun Hotel, Ikoyi. The third leg was the monthly Luncheon of Lagos Titled Chiefs whereas the Babasale of Lagos, he would be seated next to the President of the Association, Iyabo Foresythe and the Vice-President Kensington Adebutu, The Asoju Oba of Lagos and Odole Oodua of Yorubaland. Kole carried the title he inherited from his father with great dignity and aplomb. Seated next to him were the very senior Chiefs and Elder Statesmen - Folarin Coker (Baba Eto & Baba Oba of Lagos); E. O. Aina (Baba Eko of Lagos) and Bolaji Kuti (Olotu). With the demise of Kole on 2nd April 2020, his seat at the Metropolitan Club; Lagos Dining Club; and the Association of Lagos Titled Chiefs and other seats which he occupied - at his Church; as the head (Olori Ebi) of the Taiwo Olowo Family and head of his immediate family at

Plot 201, Etim Inyang Crescent, Victoria Island (we are neighbours) are all empty. Of course, at his law firm tucked away at Eric Moore Close, Surulere, Kole occupied the seat of the Principal Partner. Sadly, that seat is now empty – at least until his designated successor turns up to step into the big shoes of the departed Titan of the Law. At the annual New Year Party of the Lagos Dining Club, Kole’s seat was the epicentre. There he was radiating joy and bonhomie-the complete family man surrounded by his devoted wife Elfrida Apinke (previously his student at the Law School) and his children - Koleade; Kayode and Audrey; Yomi and Clare; Chima and Morenike; Sonny and Kofoworola; and Kolawole and Temi. The extra table was for the grandchildren (a football team of eleven) – Daniel; Mayokun; Kofoworola; Kayode; Kikelomo; Fikayo; Kojusoluwa; Amarachi; Adachi; Daniel (again); and Kofoworola (again). It was a different Kole – there he was in casual wear, the loving husband and indulgent father/grandfather. He was unambiguously in his element. This was Kole Abayomi at his best “beyond reasonable doubt”!! He was like a shepherd guarding his flock. In his church, Holy Flock of Christ at 45 Okepopo Street, Lagos (a stone throw from Ricca Street, where I was born and within walking distance from my elementary school - Lagos Government School) his seat was at the altar where he carried the title: Venerable Koleade Abayomi with consummate spirituality and humility. Tagged to the seat which is now empty was: “Vicar General”. Regrettably, time and space will not permit us to do justice to the seat (and various other seats) which Kole occupied at the Law School, Victoria Island where he served meritoriously from 1970 to 2005. He was the Director-General from 2004 to 2005 and he always insisted that he was not there for the money (having inherited a vast estate from his father). According to his Confessional Statement, he just loved teaching law. However, that did not prevent him from accepting as (tax-free) Benefit -in-Kind the well-de-

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Regrettably, time and space will not permit us to do justice to the seat (and various other seats) which Kole occupied at the Law School, Victoria Island where he served meritoriously from 1970 to 2005

served honour of SAN (Senior Advocate of Nigeria) in addition to an even more invaluable and enduring jewel, his loving wife Apinke at whose last birthday party he read a Sworn Affidavit in which he referred to her in glowing and endearing terms in flawless Latin eulogy as: “My lover; my best friend; my confidant and soulmate.” At the Law School, Kole Abayomi taught several generations of graduates of Nigerian and foreign Universities with diligence and dedication - to bring out the best in each one of them. His harvest and reward were many of the household names who now dominate the legal profession -- from the Bar to the Inner Bar and the highest echelons of the judiciary (including the Supreme Court). Also, on the list of those who were his former students are Royal Fathers (including His Royal Highness Oba Rilwan Akiolu I, the Oba of Lagos) and several others - East; West; North; South. Vice-President Yemi Osinbajo SAN, as well as Barrister Boss Mustapha, the Secretary to the Government of the Federation top the list of Kole’s former students who have veered into politics and recorded considerable success. Among the former students of Kole Abayomi is the Speaker of The House of Representatives, Rt. Hon Femi Gbajamiala. Not to be left out are Geoffrey Onyeama, Minister of Foreign Affairs; Babatunde Raji Fashola S.A.N, Minister of Works and Housing; and Lai Mohammed, Minister of Information. Also, on the Roll Call are Governors, Special Advisers, Permanent Secretaries, Ambassadors, as well as Senior Officers in the Army, Navy, Air Force, Police, Customs and Excise and the security/intelligence agencies. Others are captains of Industry and Commerce while many more have found refuge in academia and the clergy. J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services. Email: jkrandleintuk@gmail.com

Alternative revenue generation models for African governments: The case of short-term vacation rentals

he popularity of internet-based shortterm vacation rentals has exploded in Africa. These short-term rentals include Airbnb, VRBO and HomeAway, the most popular of the lot being Airbnb. Of the top eight fastest-growing countries in the world for Airbnb guest arrivals, three are located in Africa —i.e., Nigeria, Ghana, and Mozambique. The travel industry in Africa continues to grow partly because of the use of technology to tell stories of Africa’s diversity and authenticity, as well as the investment opportunities in the continent. Also, in recent years, there has been an influx of people of African descent to the continent, particularly Ghana as a result of the innovative “year of return” initiated by the Ghanaian government, which was estimated to have brought in $1.9 billion to the Ghanaian economy. The introduction of internet based shortterm vacation rentals like Airbnb has brought in additional growth and economic impact for Africa and created jobs. A 2018 survey showed that Airbnb had an estimated $678 million economic impact on South Africa alone. Property owners use Airbnb to diversify their streams of income, and the economic impact corresponds to a total of over 22,000 jobs supported across the broader South Africa economy. Many African countries have not regulated the activities of Airbnb because laws and regulations have not kept pace with the digital revolu-

tion, and it will take a while for governments and regulators to catch up. Most African countries have not fully grasped the revenue generation possibilities and adverse effects of Airbnb and its peers if they go unregulated. The major cost to African countries on the use of Airbnb is loss of revenue. The use of Airbnb and other internet based short term vacation rental diverts business from regular hotels which asides from their operating expenses, are heavily taxed depending on the location. Airbnb operates a similar business model as traditional hotels while escaping a large percentage of overhead costs associated with traditional businesses. Therefore, they should be subject to taxation. In several African countries, Airbnb encourages hosts to manually calculate occupancy taxes and add it to their fees on the booking page. This kind of system does not account for transparency and consistency and will deprive countries of revenue. Whereas, in the fifty states in United States as well as several countries worldwide, Airbnb has made arrangements with governments to collect and remit local taxes on behalf of hosts. Airbnb imposes the taxes at the time of booking and remits same to the applicable tax authority on the hosts’ behalf. For emphasis on the size of Airbnb remittance, in 2019 alone, Airbnb remitted a total tax of $136.7 million to the state of Florida. Apart from the loss of revenue to the system, potential problems that could arise from lack www.businessday.ng

of regulation includes housing shortage, rent control, safety, human trafficking and other crimes. According to Airbnb, the company is required to collect VAT on its service fees in countries that tax electronically supplied services. Currently, this includes all countries in the EU, Switzerland, Norway, Iceland, South Africa, and Albania. Nigeria, which has the largest economy in Africa stands a lot to benefit from the regulation of internet based short term vacation rentals. The Nigerian government recently passed into law, the Finance Act of 2020. This law imposes a five to seven percent VAT on internet-based non-resident corporations who have a Significant Economic Presence (SEP) in Nigeria. The law does not define SEP, but using the Organisation for Economic Co-operation and Development (OECD) factors, SEP will include the extent of revenue generation, the existence of a user base and sustained interaction with the economic life of a jurisdiction through digital means. Nigeria can slowly work her way out of deficits if she implements this law on internet based short term vacation rentals. Airbnb is the largest internet based short term vacation rental company, and was recently valued at $26 billion, down from $31 billion in 2017, because of the negative impact of COVID-19. There is also a likelihood that the company will have its IPO in 2021. In as much as African countries and in the case of Airbnb,

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Shade Amole

African citizens are directly benefitting from globalisation by generating income through Airbnb, African governments must be wary and ensure that regulations and standards are put in place to fully harness its advantages. To discuss this article further, or about navigating opportunities, regulation and government relations on short term rentals, you can contact the author on LinkedIn. Amole is an attorney licensed to practice in the state of Florida, United States. She is also licensed to practice law in Nigeria. She has government experience on the regulation of shortterm vacation rentals.

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Applause should go to NSE, other exchanges for enabling trading amid the corona lockdown

Patrick Atuanya

igerian financial markets came into their own during the recent coronavirus lockdown as stocks, bonds, and other financial assets continued to trade despite the closure of physical offices of most brokers, market makers and market participants. Top on the list of financial market Self-regulatory organisation or SRO to be applauded, is the premier exchange in the country, the Nigerian Stock Exchange (NSE), which continued to provide a platform for buyers and sellers to meet and trade, despite physical restrictions. The Federal Government of Nigeria (FGN) had announced restriction of all movements in Lagos

and Ogun States as well as the Federal Capital Territory, Abuja (FCT) for an initial period of 14 days effective 11:00 pm on March 30, 2020 to stem the spread of Coronavirus (COVID-19) in Nigeria. This was extended by another 21 days to total 5 weeks of lockdown. Earlier, the Lagos State Government had imposed a seven-day ‘slow down’ of non-essential services in the State, effective Thursday, March 26, 2020. Lagos being the financial hub of the country, it would have been disastrous if there were no means for the N26 trillion worth of equity and bonds listed on the NSE to be traded. The NSE was very supportive of the steps taken by the Federal and Lagos State Government aimed at flattening the rising curve of COVID-19 cases in Nigeria. Since the outbreak of the pandemic, financial markets, particularly the capital markets around the world have seen elevated levels of volatility comparable to the global financial crisis of 2007/2008. In Nigeria while stocks initially fell, they have quickly rallied to reverse most of the losses sustained during the lockdown. More importantly to maintain the integrity of the nation’s capital market to continue to stimulate economic growth, the Nigerian Stock Exchange (NSE) activated its business continuity plan on March 23, 2020. Through the activation, the NSE was able to achieve: continued trading during normal hours and

days by providing remote trading access for Dealing Member Firms through FIX Protocol and Virtual Private Network (VPN) platforms. It also commenced remote working for its non-essential staff nationwide; and closed its trading floors nationwide. The NSE maintained continuous flow of relevant market information to enable stakeholders make informed investment decisions; and engaged with Government to address market issues raised by COVID-19. The ability of the Nigerian financial and money markets to continue to operate during this crisis is testament to a well-functioning economy, and the robust processes and technology put in place by the NSE and its leadership team. Even as the Honourable Minister of Finance, Budget and National Planning, Zainab Ahmed and the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele received presidential approval to include the Financial System and Money Markets in the list of exempted services from the lockdown of Lagos and Ogun States and the FCT, the NSE out of an abundance of caution and given its robust technology continued to sustain its remote trading activities at normal hours and days, in line with the guidance provided by the World Federation of Exchanges. To comply with Government directives on the lockdown, the NSE activated the second phase of its business continuity plan that saw essential staff move into secured

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Lagos being the financial hub of the country, it would have been disastrous if there were no means for the N26 trillion worth of equity and bonds listed on the NSE to be traded

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

The changing power dynamics in the search for non-oil revenue

s you no doubt have heard, the Nigerian government is desperately looking for ways to increase its revenues. At a presentation last week, the DG of the budget office laid bare the government’s expectations on revenue inflows thanks to the chaos caused by the coronavirus pandemic. As oil prices have crashed from around 50 dollars to the current 30 dollars it is now, the revenue projections of government have crashed with it. As a result, we are yet again regaled with tales of how the government needs to diversify its revenue base and grow non-oil revenues. However, the pandemic has really only exposed what was already a significant trend. Based on last year’s actual revenue and expenditure numbers when oil was about $64 a barrel on average, total revenue accruing to the federal government from crude oil was not even enough to meet its personnel costs. Total revenue from oil in 2019 was about N2.2 trillion while personnel costs alone were N2.6 trillion. In short, if anyone is expecting that a post-COVID recovery in oil prices would make the government’s financial challenges disappear then perhaps they better think again. The government already had no clothes although the pandemic seems to have blown

the underwear off too. It is clear that the Nigerian government really has no option but to transition from an oil funded government to a tax funded government. The thing is, most commentators seem to be forgetting that government revenue from oil works in a completely different way to revenue from regular taxes. In the oil industry the government collects the lion share of any value created. If a barrel of crude oil is extracted and sold, the government collects the lion share of the sales value after deducting production costs. Accurate data is hard to find but by my estimates, the government collects up to 70 percent of the profits from the sale of crude oil in taxes. The percentage fluctuates with oil prices. It can do this because crude oil is a natural resource and technically belongs to the country which is administered by the government. The situation is very different once you start to think about other productive economic activity. If a farmer does the hard work of tilling the soil and growing crops for export, is that farmer going to hand over 70 percent of the profits from farming to the government? Obviously not. The farmer will pay whatever the applicable tax rate is, which is anywhere from zero for poor low-income farmers to 30 percent www.businessday.ng

for corporate farmers. Although the true maximum is complicated by the plethora of taxes paid. The same is true for virtually every economic activity that involves something other than finding something of value in the ground. Manufacturers are not going to hand over the lion share of their profits. Private sector medical personnel are not going to handover the lion share of their profits. No one will hand-over the lion share of their profits. Even the most socially leaning countries do not have tax rates high enough to replicate the dynamics in the crude oil industry. The implication is that, if the government wants to earn as much as it did from other non-oil activities to replace lost crude oil income, people are going to need to produce four or five times the value that was lost in the value crude oil sales. If the government collected $700 million from $1 billion worth of crude oil sales then cocoa corporate farmers are going to need to make $2.33 billion in profits to pay that same $700 million in taxes to the government. This distinction between taxes from crude oil versus other productive economic activity means that, as a country, we probably cannot saddle the government with the same responsibilities that we did

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accommodation close to its offices with adequate arrangements for healthcare and other matters necessary to their wellbeing. Access to the NSE offices was also restricted to these essential staff who ensured smooth remote trading and provided remote technical support to Dealing Members. The NSE also continued to provide remote access to listed companies and issuers during this period. The exchange took steps to engage with its numerous stakeholders that it is open for business remotely and for them to engage with the NSE via other digital channels such as X-Issuer, X-Boss, X-Whistle, the website and other digital and social platforms. At other SROs such as the FMDQ, services remained uninterrupted as staff and systems were available remotely. The FMDQ had a market turnover of N25.6 trillion or $69 billion for the month of March, with trading across a wide range of asset classes including Foreign Exchange, Foreign Exchange Derivatives, Treasury Bills, and Repo agreements. The availability of secondary market trading during the lockdown period availed market participants (including the Federal Government) the necessary liquidity that has kept the Nigerian economy functioning. For that they should all be applauded!

ECONOMIST

NONSO OBIKILI

when crude oil was the major earner. It is probably not wise to expect a government who now has to depend on tax revenue to be responsible for the same things it was responsible for when it was flush with oil cash. That sword is double-edged though. The government also needs to realise that its power to “control” the economy has probably also evaporated. It may have had some power when it was armed with the lion share of resources from crude oil but with tax revenue the story is different. That power now lies with the farmers producing the $2.33 billion worth of exports. If you don’t have power again then perhaps it’s time to think about acting accordingly. Cut your coat according to your cloth. Dr. Obikili is the chief economist at BusinessDay

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Nigeria’s emergency response and management capabilities are pretty mediocre global Perspectives

OLU FASAN

he coronavirus pandemic may seem to have taken every nation by surprise, yet it was wholly predictable and was, indeed, predicted. The world was warned to prepare for such a major epidemic. Anyone who had been following the microbiological world or the world of epidemiologists and public health experts knew that it was a matter of time before a deadly virus struck that could turn the world upside down and shatter the fabrics of everyday life. In a very insightful piece entitled, “This is the cost of our hideous complacency”, David Aaronovitch, a columnist on the London Times newspaper, listed the stark warnings, issued over the past five years, about the likelihood of a potentially devastating global pandemic, and the clarion call for every nation to do everything possible to prevent, detect and prepare for such an event. For instance, four years ago, the independent Commission on Global Health Risk Framework for the Future published a report on how something like a flu pandemic could kill millions, cost trillions, and derail the global economy. Last September, the Global Preparedness Monitoring Board issued an expert warning that “the threat of a pandemic spreading around the globe is a real one” and that “a quick-moving pathogen has the potential to kill tens of millions of people, disrupt economies and destabilise national security.” Then, in November last year, the reputable Centre for Strategic and International Studies published a report entitled “Ending the Cycle of Crisis and in US Global Health Security”, calling for that cycle to be replaced “with a doctrine of continuous prevention, protection and resilience.” So, the world was warned. But when the coronavirus started in December last year, no nation, absolutely no na-

tion, was prepared for it. And, as a result, panic gripped the entire world as the pandemic spread globally. As I write, there are, according to “Worldometer”, the global statistical body, 3,952,162 confirmed coronavirus cases and 271,884 deaths worldwide! One thing that was, however, not predicted in all the modelling was that the epicentres of the pandemic would be Western countries and not developing countries, particularly Africa. Although the virus started in China, the countries that have been hardest hit are the United States, where there have, as I write, been 1,295,273 cases and 77,092 deaths, and countries in Western Europe, notably, Spain, Italy and the United Kingdom. The pandemic has really tested the health services and the economies of Western countries to their limits. But here is the question: If the Covid-19 pandemic were to hit Nigeria, which currently has 3,526 cases and 107 deaths, does the country have the capability to handle such a major health emergency? The answer must be “no” because Nigeria’s emergency preparedness and response capabilities are extraordinarily mediocre, a consequence of the country’s weak state capacity, particularly its lack of capacity for essential functions. Government effectiveness is defined as the ability to get things done. But, as everyone knows, Nigeria cannot provide the basic things that citizens of other nations take for granted. Think of it, which basic service works well in Nigeria? Hardly any! And, of course, this feeds through to Nigeria’s rankings in international league tables. For instance, according to the 2018 Government Effectiveness Index, produced by the Global Economy.com, Nigeria ranked 164 out of 193 countries. A few years ago, some foreign security experts came to Nigeria to study its crisis management system with a view to offering advice and support. What they found shocked them. Nigeria’s standards, they said, were below what they had feared. The country’s technical ability to handle crisis was very low. There was little day-to-day preparedness; there were too many competing agencies that never talked to each other, let alone coordinate their activities. The whole system was absurdly hierarchical and deferential, with an entrenched

‘Oga factor’. Although there were gadgets everywhere, none was connected to the real world. Basic IT skills were lacking. In short, the whole system was utterly shambolic and chaotic. When it comes to emergency preparedness and response, Nigeria has many agencies established statutorily for those purposes. But which of the emergency or crisis management institutions is working? Which of them has the ability to get things done? Take the Nigeria Centre for Disease Control, NCDC, established in 2011. The NCDC’s strapline is “protecting the health of Nigerians”, which is an absolutely appropriate vision. After all, as Cicero, the Roman orator, said, “The health of the people should be the supreme law”. But rhetoric apart, is the NCDC competent enough to achieve that goal? To be clear, Dr Chikwe Ihekweazu, the Director-General of the NCDC, is an internationally-renown public health expert, trained in Nigeria, Germany, and Britain. He has worked on public health issues across the world, including as a senior consultant to the World Health Organisation, WHO. Indeed, as President Buhari said in his first broadcast on the coronavirus, Dr Ihekweazu was one of the ten global health leaders invited by the WHO to visit China and understudy that country’s response to its Covid-19 crisis. So, there is no question about the competence and suitability of Dr Ihekweazu as the D-G of the NCDC. But here is the trouble. The NCDC that Dr Ihekweazu leads is severely hamstrung institutionally. For instance, according to the 2019 Global Health Security Index, GHI, Nigeria ranked 123 out of 195 on emergency preparedness; 170 on health capacity; and 174 on risk environment and vulnerability to biological threat. In other words, Nigeria is quite mediocre, by world standards, on health security capabilities. Since the outbreak of COVID-19 in Nigeria several months ago, there have been about 20,000 tests. Nigeria is still struggling to establish an effective testing, tracking and tracing system. Yet, it is well known that, without a vaccine, testing, tracing, isolation and treatments are the only ways of tackling Covid-19. But Nigeria’s testing and tracing capacity is pathetically poor. Indeed, Nigeria’s very low rankings on the GHI’s category

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The truth is, despite having many emergency management institutions, Nigeria lacks the capabilities to handle serious emergencies. Yet emergencies are inevitable. Nigeria must build its institutional capacities to prepare for and respond to them

of “sufficient and robust health sector to treat the sick and protect health workers” shows that the NCDC would be significantly constrained to deal with major emergencies and, thus, can’t be trusted to protect the health of Nigerians! Then, there is the National Emergency Management Agency, NEMA. Last week, President Buhari sacked its beleaguered Director-General, Mustapha Maihaja, a year before the expiry of his term, presumably because of incompetence. In 2018, NEMA held a workshop on “repositioning and re-engineering the agency’s operations” and a few months later held a retreat on “repositioning, strengthening and reorientation for effective performance of NEMA”. Obviously, NEMA is sick and unfit to manage major emergencies! Finally, what about the ministry in charge of emergencies? Last year, as he started his second term, President Buhari created a new ministry called the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development, with a convoluted acronym, FMHDSD. Surely, if there is any time the ministry should prove its mettle, this is the time. As the Financial Times wrote recently, “It is imperative to do everything possible to limit the consequences of lockdowns for the poorest”, citing what India is doing to that end. But the FMHDSD has largely failed to do that. Its minister, Sadiya Farouq, is good at paying courtesy calls on governors and other dignitaries and grabbing photo opportunities. The ministry’s website and Facebook page are littered with such pictures. Yet, many poor Nigerians say they are not getting the so-called social palliatives, and even some of the N-Power beneficiaries say they have not received their stipends since March! So, how humanitarian is the FMHDSD? The truth is, despite having many emergency management institutions, Nigeria lacks the capabilities to handle serious emergencies. Yet emergencies are inevitable. Nigeria must build its institutional capacities to prepare for and respond to them. 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

Hiring the CEO

he role of the Chief Executive Officer is unlike any other role within the Company structure. In addition to performing the crucial role of propelling the Company towards profitability and ensuring outperformance of competitors, whoever occupies the position becomes to a large extent the face of the company. The CEO’s actions and inaction will significantly impact on not just the Company but its stakeholders. Hiring the CEO is a major responsibility of the Board and given the potential impact of a wrong hire, it behoves on the Board to take the trouble to seek out a great CEO. What criteria should then guide the Board in making this all-important decision? Professional or academic qualification and track record of achievement whilst useful in shortlisting candidates for consideration are not critical in selecting the best fit for the CEO role. As economies embrace innovation and as markets continue to evolve and adapt to global changes, such predictive bias can no longer be sustainable. In selecting the CEO, the Board should carefully assess prospective candidates within the context of the attributes needed to thrive in an increasingly competitive market. Whilst it is difficult to set out definite and

cast-in-concrete attributes for the CEO candidate as sufficient flexibility and adaptability are critical, the following are useful criteria for the Board to consider: Integrity: The candidate should have a track record of integrity and strength of character. There should be a fit with the Company’s core values and culture. Where the intention is to achieve organisational transformation that encompasses a culture change, an alignment of the CEO’s values with the culture the Board seeks to enthrone will be a key criterion. Innovation /Out of the box thinker: The constant evolution of economies and markets demand that companies seeking to remain relevant must adapt their business to these changes. An excellent example is Richard Thoman, onetime CEO at IBM and later Xerox. At a time when the focus of competition was increased sales, mergers and acquisitions, Thoman’s strategy was as described by Harvard Business Review to leverage on “…something so intangible it does not even show up on the Balance Sheet.” He aggressively pursued a strategy focused on licensing the intellectual property of Xerox. This strategy saw increased revenue inflow of over a billion dollars from licensing its IP alone. Strategic thinker & effective communicator: www.businessday.ng

Devoid of ambiguity, the CEO has to be able to set clear direction for others to follow. The ability to communicate effectively – including great listening skills – is a must-have. The CEO’s ability to motivate and retain top talent will be garnered from his/her track record. Self-confidence: A leader that will be truly comfortable in his/her skin. Have clearly defined personal values, is confident about these and believes in themselves sufficiently to inspire others. Such a leader has no qualms about making mistakes and owning up to them rather than looking for who to blame. A self-confident leader realises that there will be brighter, quicker and more articulate people on their team and are happy to push them forward. Genuine humility: Is the CEO approachable and relatable? Able to balance self-confidence and humility? Is not arrogant nor has a chip on his/her shoulder? Does the leader recognise that everyone on the team is important? Leadership comes with owning up to mistakes and giving others credit when they have earned it. Courage to deal with crisis: Crisis is inevitable, and a great CEO will be proactive rather than reactive. The COVID-19 pandemic may be the most significant all-time test of leadership the world has ever witnessed. Every leader on the

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Bisi Adeyemi planet is facing the same potential threat. Every leader is reacting differently, in his or her own style. And every leader will be judged by the results. German Chancellor Angela Merkel embraces science. Brazilian President Jair Bolsonaro rejects it. U.S. President Donald Trump hosts daily briefings, while Indian Prime Minister Narendra Modi holds no regular briefings at all, even as he locks down 1.3 billion people.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

The common-sense case for going cashless in Nigeria amid COVID-19 pandemic It is time to modernise our financial system for economic growth

mong economic lessons the COVID-19 pandemic has revealed is the need to go cashless in Nigeria. This was glaring on the first day of the easing of the lockdown in Lagos and the FCT. Cash-starved residents besieged banks, spurning social distancing and face masks to withdraw cash. Given the sharp rise in COVID-19 cases in Nigeria, specifically in Lagos, ignoring the need for a cashless society in a period like this would further put residents at risk of contracting the disease. As at Thursday 7 May the Nigeria Centre for Disease Control (NCDC) recorded 381 new cases of COVID-19, which saw the total number of cases rise to 3526 from 3145 a day before. Lagos state currently accounts for about 43 percent of total cases. These critical times call for critical measures like going cashless. Cash handling has become

a major concern. Health experts believe the novel coronavirus, which causes the potentially deadly COVID-19 disease, is transmittable through surfaces, including paper money, an infected person has handled. Experts belief that this virus can stay active on cash and other surfaces for at least 10 days. It raises serious health concerns for deposit-taking financial institutions as well as their customers who handle cash transactions. Although the World Health Organisation (WHO) has refuted claims that the virus is transmitted through cash, it advises that it is good hygiene practice to wash your hands after handling money, especially if eating or handling food. Beyond the need to contain the spread of the virus, embracing technology and going digital has proven useful in ensuring continued activities across sectors. Cashless payments are faster as swiping or hovering a card over a terminal is more convenient than counting notes. Businesses would save

money by saving the time they would otherwise use to handle cash and most importantly, thefts would decrease with the absence of money in cash registers and a better ability to track payments. Various authorities could deposit monetary palliatives directly into bank accounts through electronic payment channels like mobile money and USSD to avoid physical sharing of cash and curb the spread of viruses. Making a case for a cashless Nigeria also means making a case for deepening financial inclusion. One of the major criticisms to going cashless is that it is discriminatory – it excludes people without bank accounts such as those who are young, low income, homeless or undocumented. As at today, Nigeria has one of the highest financial exclusion rates in Africa at 36.8 percent with some 40 million unbanked population and a regulatory target of 80 percent inclusion rate by the CBN. This would mean allowing FinTech’s

and digital financial services providers build a clear path towards regulation. Telcos in Nigeria are currently awaiting the CBN for a mobile money licence although they got a nod to offer mobile money services in October 2018. Despite the introduction of new players – which also included FinTechs – into the mobile money service market, the direction of mobile money initiative remains unclear one year and half after. It is time to modernise our financial system. Among different lessons from this crisis, one is that Nigeria must invest in its financial infrastructure to promote economic growth going forward. The right investments will yield returns beneficial to all. While we fight the COVID-19 pandemic, we must also think of ways to propel Nigeria out of a looming recession with longer-term measures to boost economic activities. One of such is going cashless as this will help businesses recover post-pandemic.

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Monday 11 May 2020

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Local investors take charge at equities market as foreign outflow surges 67.5% in March OLUFIKAYO OWOEYE

s g l o b a l ma rkets continue to grapple with the impact of plunging oil price and COVID-19 spread, data from the Nigerian Stock Exchange (NSE) on domestic and foreign investor participation for March 2020 showed an intensified sell-off by foreign investors on the back of elevated global risk aversion for emerging markets and frontier markets assets. The sell off by foreign investors also saw share prices of major bellwethers shares such as MTN, Nestle to historic lows, providing an attractive entry point. It also saw a broadly bearish trend as the NSE All Share Index shed 19percent. Foreign inflows grew

18.5percent month-onmonth to N22.5bn, while foreign outflows grew at a faster pace, up 67.5percent monthon-month to N87.7bn. Consequently, net outflows spiked from N33.4bn in February to N65.2bn in March, the highest since May 2018. Further analysis of the data showed that the total transactions at the nation’s bourse for the month of March increased by 63.58 percent from N148.50billion in February 2020 to N242.91billion in March 2020, when compared to the performance in March 2019 (N110.11billion) revealed that total transactions increased by 120.60percdnt. In March, the total value of transactions executed by domestic Investors outperformed transactions executed by Foreign Investors by

10percent Total transactions executed between the current and prior month (February 2020) revealed that total domestic transactions increased by 71.97percent from N77.16 billion in February to N132.69 billion in March 2020. Also, total foreign transactions increased by 54.50percent from N71.34 billion to N110.22 billion between

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February and March 2020. The value of domestic transactions executed by Institutional Investors outperformed retail Investors by 10percent. A comparison of domestic transactions in the current and prior month (February 2020) revealed that retail transactions increased significantly by 103.72percent from N29.56 billion in February 2020 to N60.22 billion in March 2020.

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Similarly, the institutional composition of the domestic market increased by 52.23percent from N47.60 billion in February 2020 to N72.46 billion in March 2020. According to analysts report at CSL Stockbrokers, the surge in net inflows from domestic investors in the month was purely driven by cheap valuations amidst elevated system liquidity driven by maturities from OMO bills

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and low yields on fixed income securities. “In the short to medium term, we expect this trend from domestic investors to persist, given the dislocation in the fixed income markets due to the heterodox policies adopted by the CBN. On the other hand, although we began to see increased level of foreign investor participation in April, we believe this was driven by the inability of many foreign investors to get dollars for repatriation, forcing some to reinvest their funds,” the report said. “We generally expect foreign investors’ interest to remain weak, owing to increased macroeconomic fragilities concerns on stability of the currency, amidst heightened uncertainties on the regulatory landscape in the banking sector,” the report added.

Monday 11 May 2020

BUSINESS DAY

COMPANIES&MARKETS Lekki Port deepens CSR investments, donates Food items to host communities KELECHI EWUZIE

eveloper of the Lekki Deep Sea Port Project currently under construction at the Lagos Free Trade Zone, Lekki Port LFTZ Enterprise Limited, has deepened its investments in Corporate Social Responsibility (CSR) in Nigeria. The company, led by a director, Bode Oyedele, cushioned the effects of the COVID-19 pandemic lockdown on the people of the communities as it distributed food items to the 6 host communities of Itoke, Magbon-Segun, Idotun, Lujagba, Okesegun and Lekuru at the project site in Lagos. The gesture, which attracted

commendations from the community leaders, was done, according to Oyedele, based on the company’s core value of giving back to the community as palliative to help ease the difficulties occasioned by the COVID-19 lockdown. “We are here today to present these food items to the communities as a way of showing our concern to the wellbeing of the people of our host communities especially during this trying period”, he said. While assuring them of the commitment of Lekki Port and China Harbour Engineering LFTZ Enterprise (CHELE) to continue to do everything possible to support the host communities, Ayodele urged the

community leaders to ensure that the food items are distributed to reach every household within their communities. He further commended the communities for peaceful co-existence and relationship with the company over the years and expressed the hope that they will continue to adopt diplomacy and peaceful resolution of disputes and misunderstandings. Waheed Tubeko, the Baale of Idotun Community, while speaking on behalf of all the community leaders, lauded the company for the kind gesture and prayed for the successful completion of the project for the benefit of the company, the communities and humanity at large.

Unity Bank resumes FX sales to customers HOPE MOSES-ASHIKE

nity Bank Plc has received a supply of foreign exchange (forex) from the Central Bank of Nigeria (CBN) to adequately meet eligible demands from customers. The bank assured its customers that there is sufficient

forex provision to meet legitimate needs. “Customers are encouraged to come forward with their respective demands”, a statement signed by Nwokpoku Jonah Ogbonna, head, external communications and media relations reads. The CBN last week, resumed dollar sales for school fees and Small and Medium Enterprises (SMEs).

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The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels, and other designated retail uses, as soon as international flights resume. This was in view of the gradual easing of the COVID-19 lockdown both globally and in Nigeria.

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Monday 11 May 2020

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Millions of Americans to lose health insurance as jobless rate soars Trump administration under pressure to cover healthcare costs as unemployment rises to postwar high HANNAH KUCHLER AND KIRAN STACEY

illions of Americans risk losing health insurance as the jobless rate rises to a postwar high, adding pressure on the White House to cover the healthcare of laid-off workers. The US launched a publicly funded programme this week that will cover the 28m uninsured Americans — and rising — for the cost of coronavirus tests and treatment. But with the jobless rate reaching 14.7 per cent on Friday, insurers and healthcare providers warn the Trump plan is not enough. Democrats, including Joe Biden, are pushing policies to help the estimated 7m people who are likely to lose their insurance. Scott E Harrington, a professor of healthcare management at Wharton, said the White House had so far taken a “very targeted approach”, helping out only patients who test positive for Covid-19 rather than looking for new ways to support healthcare for the unemployed. Instead, they will have to navigate a “complex” system, he said. “The worse you are hit by the lay-offs, the better the safety net gets,” he said. “But that does not mean it is not a shock.” About half of all Americans receive their insurance through their jobs, with the average family paying more than $20,000 for insurance every year, according to the Kaiser Family Foundation, which researches health policy. The Affordable Care Act is facing its first financial crisis, a test of whether it can help the unemployed. But it is no longer President Obama’s Obamacare: the Trump administration has rolled back provisions,

When Americans lose their jobs, they are allowed to keep their insurance if they pay both their premiums and those the employer was paying. But many cannot afford to do so © REUTERS

pushing up the number of uninsured in the past two years, and allowing so-called “skinny plans”: so minimal that some do not even include hospitalisation. Molly Smith, a vice-president at the American Hospital Association, whose members are lumped with unpaid bills from the uninsured, said it was “very, very nervous” about people who think they have comprehensive coverage, but do not. Some employers, in particular the large retailers such as Macy’s and Gap, are continuing to pay the premiums of workers on furlough. But no one knows how long that will last. The poorest will be able to turn to Medicaid, the public insurance for people on low incomes. But that risks stretching the states that pay for it, just as they are losing tax revenue. When Americans lose their jobs, they are allowed to keep their insurance through Cobra, a law passed in the 1980s, if they pay both their premiums and those the employer was

paying. Many cannot afford to do this and so only the sickest tend to do so. Foremost among the Democratic proposals is a bill promoted by Bobby Scott, the chair of the House education and labour committee, that would cover the cost of emergency Cobra plans in full. The Obama administration did something similar during the financial crisis but covered only 65 per cent of costs, leading to low take-up. Mr Scott’s bill would cover 100 per cent, which policy researchers said could end up costing the US government hundreds of billions of dollars. “This is not going to bring costs down,” said Brandon Barford, a partner at the Washington-based consultancy Beacon Policy Advisers. “There is going to be a hefty government bill attached to such a plan.” Health insurers argue this allows patients to continue to see the same doctors. Justine Handelman, senior vice-president at the Blue Cross Blue Shield association, which

represents insurers, said people may have already paid their deductible, a contribution required at the start of the year until insurance kicks in. “We believe strongly that supporting Cobra is the best way that families can keep their existing coverage without disruption,” she said, adding that changes in providers could cause “unnecessary stress”, especially for people with serious chronic conditions. However, many on the left have objected to this plan because it would funnel billions of dollars’ worth of government money straight to private insurers. Ro Khanna, a Democratic congressman from California, said: “Putting more money into our current system isn’t actually helping solve the problem. It’s just putting more money in the pockets of profitskimming insurance companies.” Mr Khanna is one of many on the left — including Bernie Sanders, the leftwing senator from Vermont —

who wants instead to see an expansion of the state-provided Medicare and Medicaid schemes for the duration of the current crisis. But even the most ardent supporters of a temporary “Medicare for All” programme admit it has zero chance of passing the Republican-controlled Senate. And so a third option has emerged: to allow anyone who wants to enrol in a plan for free under the Obama-era Affordable Care Act. The ACA insurance exchanges usually only allow people to switch insurance once a year. Many states have already done this, so recently laid-off workers can buy their own plans, subsidised on a sliding scale if their household income is between 100 per cent and 400 per cent of the poverty line. But not all states have their own exchanges, and their residents rely on the still-shut federal exchanges. Many argue that opening up ACA enrolment would cost less than subsidising Cobra, while maintaining the private insurance market. Jon Gruber, economics professor at the Massachusetts Institute of Technology, said: “The right approach is that if anybody loses their job, we will let them get a ‘Gold’ [high level of coverage] plan for free.” But such an option is also politically difficult. Republicans who have spent much of the past few years rolling back the ACA are unlikely to back a plan to extend it. Many Republican states are battling the law in court. And there is an election coming. However, some warn that doing nothing poses an even bigger electoral risk to their party. “This is not something the Republicans are going to like,” said Mr Barford. “But they are scared of getting hammered by the kinds of economically vulnerable voters who turned out for them last time.”

United Airlines abandons $2.25bn bond offering Investors demanded too high a price to lend to US carrier reeling from coronavirus shutdown

JOE RENNISON, CLAIRE BUSHEY AND ERIC PLATT

nited Airlines abandoned an attempt to raise $2.25bn in the bond market on Friday after three days of trying, having found tepid demand from investors that could have forced it to pay an interest rate of about 10 per cent. The bonds, backed by a pool of 360 aircraft owned by United, representing 40 per cent of its fleet, were designed to repay a loan the airline secured from a group of banks in early March, when the coronavirus pandemic was taking hold outside China. United did not give a reason for scrapping the planned offering in a filing with US securities regulators late on Friday, but people familiar with the transaction said the interest rate demanded by investors proved too dear for the company. “This deal was oversubscribed but at a higher price point,” said a person with direct knowledge of the deal. “The company decided that they needed more time to

think about it.” A separate source familiar with the offering said the airline expected another chance soon to raise liquidity on better terms. There is plenty of money out there. It just looks like it got too expensive for United, and it wasn’t worth them pursuing it Andrew Brenner, National Alliance Securities The failure to secure a deal came at the end of a volatile week for airlines, which began with a big sell-off in their shares following news that the famed stockpicker Warren Buffett had ditched his investments in the sector. The US Treasury secretary Steven Mnuchin also indicated that the federal government might keep its bans on international travellers coming into the US for an extended period. United had announced on Wednesday that it would raise $2.25bn through a $1bn threeyear bond and a $1.25bn five-year bond. Investors expressed concerns about the age of the aircraft pledged as collateral, according www.businessday.ng

to people familiar with the discussions. Analysts and investors have raised questions generally about the value of older planes in a world where the airline industry’s international trade group estimates there may be 35 per cent more planes in service than justified by demand. Bankers, who at first marketed the bonds with an average coupon of 9 per cent, ultimately increased the return to about 10 per cent to get investors on board. A person with direct knowledge of the deal said the higher cost, alongside covenant changes to protect investors, gave United pause. The airline has been hard hit by a pandemic that has sent passenger revenue plunging to near zero, reporting a pre-tax loss of $2.1bn in the first quarter. It had $5.2bn in cash and short-term investments at the end of March, and $23.3bn in debt. Almost $15bn has been wiped from the company’s equity valuation since the start of the year, with its shares falling 71 per cent. The failed fundraising stands

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out, given the glut of debt that has been raised in the bond market in recent months. US companies have raised roughly $500bn since the Federal Reserve in late March announced an unprecedented move to buy corporate bonds. Some $95bn was raised in the past week, according to the data provider Refinitiv. United’s rival Delta Air Lines borrowed $5bn through a bond offering in April in a deal that was secured by routes and airport slots and which paid investors a coupon of 7 per cent. Other indebted groups in hard-hit industries, including Norwegian Cruise Lines and its rival Carnival, have had to offer assets such as cruise ships as security to clinch needed financings. “There is so much liquidity in the system right now — from the Fed, from the European Central Bank, from the Bank of Japan — and I don’t sense that this is ready to stop by any means,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “There is plenty of money out there. It just @Businessdayng

looks like it got too expensive for United, and it wasn’t worth them pursuing it.” United raised more than $1bn in late April selling equity and also took $5bn from the US government’s $50bn airline industry bailout fund, most of which was a grant but 30 per cent of which came in the form of a 10-year loan initially paying taxpayers a 1 per cent interest rate. The company has said it expects to cut its workforce dramatically after September 30, when constraints tied to the US government aid expire. The company started the second quarter burning $50m in cash a day and has said it hopes to reduce that to $40m by the end of June. It tried to reduce its 15,000 employees’ hours from 40 a week to 30 but backed off after the International Association of Machinists and Aerospace Workers sued on Tuesday. United has applied for another $4.5bn in secured loans from the federal bailout fund but can wait until later this year before deciding whether to tap them.

Monday 11 May 2020

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Branson clears path to sell $1bn stake in Virgin Galactic Filing opens door to potential sale of half of Virgin Group’s holding in space venture ANDREW EDGECLIFFE-JOHNSON AND RICHARD WATERS

ichard Branson is free to sell up to half his stake in his space tourism venture — potentially raising close to $1bn — after a littlenoticed filing by Virgin Galactic lifted constraints on investors. The entrepreneur has come under fire for seeking state help for Virgin Group’s airlines businesses, which have been hammered by the Covid-19 pandemic. But even as other parts of the empire have been paralysed, Virgin Galactic’s market value has almost doubled from $2.3bn at its initial public offering six months ago to $4.25bn, lifting the value of Virgin Group’s stake close to $2bn. A US securities filing last week clears the way for Virgin Group to sell up to half its holding and — coupled with the publication of first-quarter results this week — removes some barriers to insiders selling shares in the coming weeks. Virgin Group, which declined to comment, is unlikely to be able to place a stake that large

Virgin Galactic SpaceshipTwo Unity flies free for the first time over New Mexico on Friday © AP

in Virgin Galactic in one block, and it cannot sell the remaining half until two years after the IPO. Virgin Galactic has yet to send any paying passengers to the edge of space, although it has flown five crew members on two successful test flights and taken 600 reservations from would-be astronauts, including celebrities such as the actor Leonardo di Caprio. Cashing in part of his holding

would allow Sir Richard to inject more capital into Virgin Atlantic, the airline which has asked the UK government for up to £500m of support in the form of loans and guarantees. The request for state help has exposed Sir Richard to criticism because of his estimated $4bnplus wealth and because he is resident not in the UK, but in the low-tax British Virgin Islands. Any sale would also free up

cash to inject into Virgin Australia, which has collapsed into administration, wiping out Sir Richard’s 10 per cent equity stake. The Australian airline has attracted interest from several interested parties and Virgin Group may come in alongside a new investor to retain a voice in its future. Sir Richard has invested almost $1bn in Virgin Galactic, as well as roughly $600m in Virgin

Orbit, a still nascent satellitelaunching business. He had hoped to make his own maiden flight last year, to coincide with the 50th anniversary of the first Apollo moon landing, but this week the company said only that it remained focused on getting him to the edge of space “as soon as we can”. “It would be a huge thing for them — They’ve said for years now that this is the year Richard Branson will go up,” said Laura Forczyk, a consultant at Astralytical who said the maiden flight was looking unlikely to happen this year, even before the pandemic. “They’re making technical progress,” she said, but a move to New Mexico slowed the company down. “There’s no doubt it’s hype — their whole business is hype. But if it plays out, it will be a big moment,” she said of the prospect of Sir Richard’s first flight. Virgin Galactic, which this week hailed a new partnership with Nasa around high-speed flight technologies, has also raised money from more than 400 people who have paid it refundable deposits under its “One Small Step” initiative. The venture has lost almost $500m over the past three years.

Trillion-dollar club tightens grip on fund market during crisis Market leaders such as BlackRock, Vanguard and State Street have gained control of 61% of the industry’s assets SIOBHAN RIDING

ulti-trillion dollar managers including BlackRock, Vanguard, State Street and Fidelity tightened their stranglehold on the investment industry during the recent market correction, as jittery investors accelerated their migration towards large, low-cost fund groups. The concentration of assets in the hands of the largest investment managers, a trend that has been gathering pace since the 2008 financial crisis, spiked significantly in the first three months of the year, according to analysis from US-based research group Flowspring. The largest 1 per cent of investment groups manage 61 per cent of total industry assets. This is 243 times that of the bottom 50 per cent, compared with 208 times at the end of last year and 105 in 2010. “Investors are reconsidering everything about their portfolios right now, making decisions

The concentration of assets spiked in the first three months of the year

they’ve put off for years, and many of them are flocking to passive and low-cost providers,” said Warren Miller, chief executive of Flowspring. Market leaders BlackRock, Vanguard, State Street and Fidelity in recent years have capitalised on their economies of scale to implement ferocious fee cuts. These efforts have attracted new investors. In 2018, Fidelity Investments pioneered a range of zerofee index funds, a move that www.businessday.ng

spurred a flood of new investor money. More recently the US group launched a range of thematic active funds whose charges decrease over time if investors do not cash out. Vanguard slashed fees on nearly half its European fund range last year, while BlackRock and State Street have also reduced charges on their indextracking funds in an escalating passive investing price war. Quantitative investment specialist Dimensional, bond giant

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Pimco and American Funds, the retail arm of Capital Group, also feature among the 27 groups that make up the 1 per cent of asset managers, according to Flowspring. Fidelity’s inclusion in the ranking refers to US-based Fidelity Investments, combined with its international sister companies. The research company’s calculation is based on a universe of 2,772 managers and includes data for open-ended, closedended and exchange traded funds globally. Mr Miller said that concentration was also accelerating at fund level, with investors channelling more money into large, low-cost, predominantly passive funds. “We’ve seen investors buck the idea that active managers can outperform in a downturn,” he said. Seven out of the 10 largest global funds, including money market funds, are index trackers, according to Morningstar Direct. Two of the largest, Vanguard’s Total Stock Market index fund @Businessdayng

and State Street’s S&P 500 ETF Trust, attracted more than $24bn in new money in March. Industry concentration is set to increase as margin pressures and the desire for scale push more asset managers to take part in M&A. Franklin Templeton is in the process of buying Legg Mason in a deal that will swell its asset base to $1.5tn. Invesco also shot into the trillion-dollar club last year following its mega $5.7bn acquisition of OppenheimerFunds. Mr Miller warned that the concentration of assets in the hands of fewer decision makers could increase baseline market volatility in future. He added: “It could also make the heads of the largest asset managers incredibly powerful influencers of the global economy as they can exert serious pressure on their portfolio companies.” Groups are already making their voices heard. This year both BlackRock and State Street wrote to chief executives warning them to take sustainability seriously.

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CBN’s policies yield fruit as Banks record double digit loan growth BALA AUGIE

entral Bank of Nigeria (CBN)’s new guidelines is gradually paying off as Banks recorded double digit growth in loans, but the current macroeconomic conditions could force them to turn off the tap on lending. A glimpse the chart below shows total loans and advances of 10 largest banks in Africa’s largest economy hit N17.69 trillion as at March 2020, which represents an 11.64 percent increase from N15.85 trillion the previous year. There was a drop in the figure in 2017 financial year, when lenders packed their money in the fixed markets and refused to lend to the economy, as they took advantage of an attractive yields environment. While banks are gradually making gains from loans extended to the private sector, a reduction in interest income from short term government securities has undermine gross earnings.

After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

credit to the economy grew for the second consecutive quarter by 5.8 per quarter on quarter (q/q) in the last quarter (Q4) 2019 to N17.2 trillion, the highest level as far as 2007. Data gathered by BusinessDay shows total cumulative total loans and advances of the 1o largest lenders increased by 13.53 percent year on year (Y/Y) to N17.15 trillion as at March 2020, the highest in four years. Analysts say that recent business paralysis caused by lockdown imposed by government so as to contain the coronavirus pandemic result in huge impairment since customers will find it difficult to pay

fter taking a serious beating this year due to weak crude oil price and coronavirus selloff, stocks seem to be enjoying some sort of stability since the start of the second quarter. Data obtained from Nigerian Stock Exchange shows that quarter to date return in the stock market was about 12.89 percent as at Friday last week. While most analysts were tempted to point to the rising crude oil prices as the reason for the boost in investors confidence in the local market, others pointed out that the All Share Index was already rising for 2 consecutive weeks prior to the price rebound in

crude oil price. However, the recent surge in market prices has still not been able to send stock prices to where they were at the start of the year. The NSE ASI year to date performance is now -10.42 percent, an improvement from where it was at the end of Q1 but still about 5,500 points below its 2020 peak level of around 29,710 points it reached on January 20 this year. Most analysts surprise turn of events in the market could be as a result of investor excitement as most companies tend to pay dividends at the start of the second quarter of the year. Analysts also told BusinessDay that most companies have seen their stock price decline precipitously this year and investors noticing that these

SHORT TAKES N312m

For the first three months through March 2020, they realized N209.62 billion in interest income from short term government securities, a 1.79 percent reduction from N213.35 billion made the previous year. Recall that the central bank had hiked the minimum Loans to Deposit ratio to 65 percent as well as barred private companies and Pension Fund Administration from the Open Market Operations (OMO). The new policies sent yields tumbling, but it forced banks to start extending credit to the real sectors of the economy. Analysts are of the view that forcing banks to lend to risky sectors could balloon Non Performing Loans (NPLs) since these loans could go bad. Combined interest income from loans and advances increased by 6.51 percent to 6.51 percent to N449.59 billion as at March 2020, from N422.09 billion the previous year. According to the recently released data on the banking sector for Q4 2019 by the National Bureau of Statistics (NBS), banking sector interest on money borrowed. During an economic downturn, cash flows of companies are usually under pressure, and some of them scale back on expansion plans, just to stay afloat. “I think for Nigerian banks the opportunity to create risk assets will diminish, and just like any other sector, they will face difficulty,” said Johnson Chukwu managing director and CEO of Cowry Asset Management Limited. “Noninterest income will be affected as letters of credit have reduced since general level of production has fallen,” said Chukwu.

Investors relieved as stock prices gradually rebound in Q2 IFEANYI JOHN

P.E

stocks possess very high dividend yields are now snatching up these stocks as bargain hunting continues broadly across the market. Most of the bargain hunting is happening around the banks who have been paying huge amounts in dividends despite fears that their asset quality may not be in its best shape this year considering prolonged partial city lockdowns and weaker oil prices. The high dividends yield in bank stocks is definitely attracting investors as most trades in the market during the past week were in the financial services companies. According to NSE weekly report, the Financial Services industry (measured by volume) led the activity chart with 1.385 billion shares valued at N11.813 billion

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run. Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month. Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week. “Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn traded in 17,117 deals; thus contributing 83.35% and 64.89% to the total equity turnover volume and value respectively. The Services industry followed with 53.551 million shares worth N128.065 million in 1,003 deals. The third place was the Consumer Goods industry, with a turnover of 53.444 million shares worth N2.780 billion in 3,607 deals. Investors will be hoping that the current upswing in stock prices is further supported by rising crude oil prices which has now jumped above $30 for the first time in weeks. The stock market will need more catalyst to continue its rebound path but the gradual reopening of the economy and stronger oil price appear to be enough for now.

Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early. According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; 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 Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 11 May 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

How to prevent fights over wealth in families The Solid Wealth Messenger

Grace Agada

hen a poor man dies in a family people mourn for what is lost. But when a rich man dies in a family people rejoice over what is left. This alertness to what is left behind after the death of a rich man is the reason for fights in wealthy families. Wealthy Families Fight because no one among the people left behind created the wealth. The man who worked hard to create wealth is dead. When he was alive, no one could contend with him over his wealth, how he used it, or decided to distribute it. The fact that he earned wealth canceled the motivation for confrontation. But when he dies all the people left behind becomes equal. They all become beneficiaries of wealth and not creators of wealth. When wealth is not earned but given as benefit issues like fairness, right of share and transparency begins to ensue. It is at this point that family fights begin. Whether this fight will happen in your family depends on what you choose to do today. Without a concrete after death plan, they will be fights over wealth when you die. These fights can come from several sources. They can come from random family members that come out of the woodworks to lay claims to wealth. Friends who do strange things in the absence of their friend. Creditors who harass families over unpaid debts. Advisors who use privileged information for their own selfish interests. And the media who lie in wait for juicy information to justify the cliché “the rich also cry”. There is no question whether there will be fights. The true question is do you have a plan in place to prevent these fights from happening in your family? When I ask family leaders whether they think their children will fight over wealth when they die. I usually get two types of No responses. The First is an affirmative No response and the second is a defensive No response. When I get an affirmative No response it is usually because a family leader thinks that the current peace in their family will remain the same in the future. Current peace is no guarantee for future peace. Besides current peace in most families is forced peace. Forced peace

is all the forms of peace that are not genuine. They are the kind of peace that results when children bury their pain and emotions out of fear and respect for parents. They are also the kind of peace that results when family members hide grudges and suppress hurtful emotions rather than express them. Forced peace will shatter as soon as the person exerting the force is out of the family. Research shows that nine out of ten families fail to stay together for more than two consecutive generations. This means that nine out of the ten wealthy families you know today will end up in court. If there is no fight prevention plan in place, wealth will destroy family relationships and waste the hard work of the founders of wealth. In the second case where I get a defensive No response, it is usually because a family leader already sees signs of potential fights. Rather than confront them, he chooses to allow his children to figure it out when he is gone. This type of attitude will destroy wealth and sacrifice family ties. Whether a family leader chooses to affirm a yes answer or defend a No answer, chances are high that there will be fights over wealth, and here is why. First, every family has that one child that fits the description of a problem child. This child will start the fight. Parents call this child the problem child because they think he is the problem of the family. But smart professionals call him the “symptom bearer” because he is the one that embodies hidden problems within the family. A problem child is never the problem he only reflects certain problems in the family. This problem

can be the presence of an item in the family that should not be in abundant supply. And it can also be the absence of an essential item in the family due to negligence, busyness, or ignorance. Parents also create problem children when they keep favorite children. When parents choose a favorite child, other children can see they are not the favorite. This creates deep resentment that causes endless sibling rivalry after death. The second reason Fights will ensue is this. Maintaining peace in a small nuclear family with one leader at the helm of affairs is easier than maintaining peace in an extended family with several bloodlines and nonbloodline leaders at the helm of affairs. This kind of collaborative leadership calls for a different kind of skills. As families expand, welcome new members, and dilute its bloodline the family boat begins to rock. Issues that were before suppressed begin to emerge. And previously held status quo gets a disruption. If there is no plan in place at this stage to maintain unity and indoctrinate new members for alignment of values. Fights can become the default mode of relationship. The more issues were suppressed in a family during the lifetime of the founder the higher the chances of a massive unity collapse. The third thing that can cause fights are the provisions in the Wealth Transfer Documents. The provisions of most wealth transfer document do not consider family unity in their compilation. This means that your estate plan or trust document can actually foster disunity. If wealth is to be passed to the next genera-

‘

When I get an affirmative No response it is usually because a family leader thinks that the current peace in their family will remain the same in the future

tion. It must be done in ways that are transparent, fair, and earned. Making sure that the provisions in your trust and estate plan foster peace and unity is thus critical for long-term family success. So, what then can family leaders do to prevent war in their families? Family leaders can do three things. First, they must resolve the problem of the problem child. If a family has a problem child, they must get to the root cause of the problem. And not wait for time and age to resolve the issue. Age does not make people wise. It makes them old. Without an intentional effort to resolve the fundamental issues that created a problem child. A family can suffer a selfinflicted pain that is resolvable. Through a series of expert facilitated conversations a family can get the help they need to resolve issues with the problem child. Second, family leaders must set up an induction and onboarding process for new family members. Whether these members are in-laws or newborns. This helps ingrain certain family values that foster unity. Third, Family leaders must get a second opinion review of their Trust and Estate plans document to ensure it provisions fosters family Unity. Maintaining unity in a nuclear family today is different from maintaining unity in tomorrow’s extended family. When families expand, family leaders need more than just shouting or induced fear to keep the family united. Without an organized system to prevent family fights, chances are high that unity and wealth will disintegrate. To prevent fights over wealth in your family now is the time to lay a solid foundation. If you need help laying this solid foundation and preparing your family for lasting wealth and unity, we can help you. The First step is to send an email to info@createsolidwealth.com The family that succeeds in preserving wealth also succeeds in keeping the family together. Grace Agada, is the First Profit Longevity Expert for B2C type Businesses. Grace believes that profit is the only thing that keeps businesses Alive. And so, she dedicates her time helping business Owners safeguard their long-term and short-term profit. Grace help business owners achieve three things. First, she helps them proactively self-disrupt their businesses so they can find new ways to optimize exiting Profit centers. Second, she helps them discover new market opportunities so they can capture long-term profit. Third, she helps them develop an integrated ecosystem of value so they can shield their businesses from the one-generation death sentence that kill businesses after the death of the founders. Through a 3-step process, Grace is able to transform ordinary businesses to businesses with Immortal Name and Legacy.

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

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Monday 11 May 2020

BUSINESS DAY

FEATURE

Why saving indigenous oil firms remains DIPO OLADEHINDE

he global oil marke t i s c u r re nt l y in turmoil on the heels of dwindling demand for crude oil brought about by the coronavirus pandemic. For several decades, Nigeria lived off the energy sector without consciously using the gains thereof to develop other industries including most of the country’s indigenous oil and gas firms. Considering Nigeria’s reliance on the oil and gas industry, one would expect that the Federal Government through the CBN would do everything to salvage the country’s independent crude producers, firms which between them pump about 10 percent of national output, failure of which risks inflicting severe pain on the local banks that finance them. Now, with a sharp drop in oil prices, thanks to crashed global demand, the government is conducting a hasty interventionist surgery to revamp some of the industries it scarcely paid attention to over the years. So far, the Central Bank of Nigeria (CBN), who is taking the lead in the administration of the fiscal intervention programme narrowly focused attention on four areas namely the small and medium scale enterprises (SMEs), the health and pharmaceutical industries, the manufacturing industries and the transport industry. N50 billion, N100 billion, N500 billion, and N15 trillion fiscal transfers will go to these sectors respectively between now and the next 36 months. Unfortunately, they forgot to include the oil sector, which is the goose that has been laying the golden egg for the country’s growth and survival for decades. Firms like Aiteo E & P Ltd, Seplat Petroleum Development Company and at least 50 small to mid-sized Nigerian producers pump between 1,000 and 100,000 barrels each day. But the pattern of intervention in many other oil-producing countries ensured that the upstream segments of their oil industries are alive and well. For instance, Russia permitted the delay in dividend payments for the state-controlled

Gazprom and Rosneft. In addition to that, the country is working out a plan to compensate oil companies for shortfalls suffered in export revenue since the crises began. Donald Trump’s USA is equally determined to bail out the struggling shale gas companies. The Canadian government has also promised to extend bailout credits to all the oil companies that are perceived to be on life-support. It also gave generous tax relief to the industry as well as suspended the fees typically collected by the sector regulator. Nigerian government’s foot-dragging in immediately intervening in the upstream segment of the oil and gas may orchestrate more disaster than good. Nigeria’s upstream oil sector remains important for our economic survival Nigeria’s oil sector has always been the driver of its prosperity and will likely remain so for a few more years to come. With less than 10percent contribution to national output, it is the source of about 90percent of its foreign exchange. With its contributions of more than two-thirds of the federal government’s revenue, it is the primary gauge for its budgets. But it is not only that; the upstream segment of the oil sector boasts of a very long chain of embedded services that umbilically derive economic life from its continued existence. In this list are construction engineers, health and safety organisations, training and consulting firms, lawyers and a host of other dependent industries. The local content policy amplified this dependency and created far-reaching skill development as well as job

opportunities for the Nigerian people. Figure 2 shows the strong relationship between the contributions of the oil and gas sector to unemployment reduction. Without a deliberate intervention in the participation of local players in the upstream oil sector, we stand to lose much of these employment gains. Local players in the upstream segment of the oil and gas sector do not possess the same capacity and leverage as their foreign counterparts in accessing global finance. It is even worse now when virtually every country in the world is concentrating on saving its

people and economy. Badly battered The oil demand collapse mingled with fierce price wars and the consequent oil supply glut deliver the most damaging punches on the industry’s survival. It all started with a virus that kept economic activities and oil usage on some level of lockdown. No one can predict with certainty when the crisis would be over, except if there is a vaccine that restores confidence in human agents to recommence their activities. Give or take, the 12-month horizon might be a reasonable guess for the

restoration of normalcy. Until then, it does not appear as if oil prices will bounce back to its pre-virus time. This situation is even more devastating for the Nigerian upstream oil industry, whose cost of production has made it difficult to sell at the international market. Nigeria’s cost of producing a barrel of crude oil is $30. See figure 3. Low-cost producers such as Saudi Arabia, Kuwait, Iran, Iraq and Russia are locked in in a fierce battle to sell their oil and are offering discounts of up to 30percent on the current price of oil. As if that is not enough, the industry is heavily indebted to the Nigerian banking sector who are bent on recovering their loans regardless of the crisis. But that should be expected because the Nigerian banking sector concentrates over 25% of its balance sheet in the oil and gas sector. The crisis, therefore, is a twoedged sword ready to destroy two of the most critical industries of the Nigerian economy. Many of the local players in the oil and gas sector who understandably depend on commercial bank financing are already defaulting. Since February, many of the local players have defaulted on their interest payments. This trend of defaults is not likely to be wished away unless the government takes accurately measured steps to save the industry. Tightly knot symbiosis

Monday 11 May 2020

BUSINESS DAY

critical for Nigeria’s economic survival Nigeria’s banking sector always had a symbiotically, rewarding relationship with the oil and gas sector. It is a relationship that progressively evolved. Between 2000 and 2010, total banking sector credits to the oil and gas sector grew fourfold from about 6percent to approximately 24percent. The depth of the symbiotically knotted relationship made both sectors share prosperity in booms as well as penalised likewise in crisis together. Many pieces of evidence from robust scholarly research showed the interdependency in the profitability performance of the two sectors. Similarly, banking industry data between 2007 and 2019, show that banks’ liquidity position on average appears to improve by 45percent for every 1percent increase in the crude oil export price, while, a 1percent increase in crude oil price leads to about a 67percent drop in the banking industry non-performing loans on average. It is a relationship that supports each other and by so doing, enables the broader economy to function much better. At present, almost one-third of the entire banking industries loan exposure is to the oil and gas sector. More than 90percent of the threatened ones are in the upstream sector, particularly those firms owned by Nigerians. (See figure 5). In the past two years, GT Bank appears to have exhibited the highest appetite for granting oil sector credits. In 2018 and 2019, 37percent and 40percent of its loan exposures respectively were to the oil and gas sector. Although GT Bank is not alone in this, it has nevertheless recorded fantastic average improvements in its asset quality since 2009. In 2019, the credit exposures of Zenith Bank, FCMB, First Bank, Union Bank, Sterling Bank and Access Bank to the oil and gas sector all exceeded 25percent

surviving on the sector.

of their total loan portfolio. That noted the average asset quality of Tier-2 banks strongly and inversely correlate with crude oil prices. Union Bank and Wema bank strongly exhibit this pattern regardless of the efforts of the former to whittle down its exposures to the oil sector. There is, therefore, an urgency to save both the Nigerian upstream oil and gas players and the many banks supporting them from sinking. Not intervening now in the industry may result in the crash up to 40percent of the activities taking place in the long stretched industrial chain of embedded services that are umbilically

Assured future, regardless… The future of the oil and gas sector in Nigeria remains bright. The Nigerian upstream oil sector is still firmly the enabler of our economic growth and prosperity. Anticipated successes in economic diversification are prospectively ascribable to the income from the sector. Therefore, its survival remains essential for sustaining and nurturing other industries and the economy as a whole. Beyond crude oil exports, the industry is capable of providing several other ex-portable intermediate products which are also critical for the growth of our domestic productions. It is therefore essential to interpret the current market hiccup correctly as a temporary and regular business possibility. Force majeure can always set markets and industries temporarily back. That, however, does not imply that such sectors should not be supported.

Do not mess up the local content policy The failure of the government to urgently draw up a Marshall plan to save the local participants in the upstream oil sector will deal a terrible blow on the domestic content policy. It will, in effect, set the policy back by up to two decades. As we all know, the policy in the oil and gas sector is the most strategic boost to our country’s repossession of some measure of control of our naturally endowed treasure. Not only did it raise increasingly more local investment participants, but it also presented itself as the best platform harvesting the skills and employment potential of millions of people working in the value chain. Table 1 shows the positive

effects of the local content policy on the size of small and medium scale enterprises in the oil industries in Nigeria. Based on 2.5 cut-off criterion (see table 1), the entire industry workforce seem to agree that the policy enhanced more contract award to indigenous SMEs, created more jobs and generally increased opportunities for SMEs to play in the industry. CBN’s aloofness policy may cause more harm Although it is not necessarily within its purview, the CBN has always led in the provision of strategic interventions in shocks of this nature. Most of its focus much of the time was the salvation of the banking sector. In the 2015 – 17 crisis, the CBN focused on the moderation of imports to save the naira currency. Consequently, there were restrictions on the import of goods that we can produce within the country. It also placed some banks – for example, Skye bank – under interim management because of the severity of its exposure.

There were also several other intervention measures and palliatives. Still, none focused on the survival of the upstream segment of the oil sector that received the first hit with the depressed prices. Local players in the industry were naturally worse off and had to recuperate on their efforts. Yet, they remained resilient in their push to survive that crisis without any support from the government. Now they are struck again by an even greater disaster. Will the CBN remain aloof? Doing so will only make matters worse. Also, as at that, what is good for the goose is equally suitable for the gander. Concessions and other forms of financial support from the government at this time are desirable for all critically affected sectors, including the upstream oil sector.

Monday 11 May 2020

BUSINESS DAY Harvard Business Review

MONDAYMORNING

How Banks are using behavioral science to prevent scandals HARRY ENGLER AND ANNA WOOD

fforts to deal with corporate malfeasance, employee misconduct and ethical failings are falling short. Nowhere is this more visible than in the financial sector. But one corner of the industry offers hope: It is using behavioral science tools to identify risky behavior early on. Three of Europe’s largest banks — ING Group and ABN Amro in the Netherlands and RBS in London — have created behavioral risk teams composed of professionals trained in organizational psychology, anthropology, forensics and other disciplines. Let’s look at how the RBS team operates. It searches for in-depth, granular insights specific to certain “subcultures” where ethical lapses may be occurring. Once the team selects a business unit for examination, it assesses it in five ways: surveys; confidential conversations; focus groups; examinations of the formal environment; and independent observations. The team’s findings are shared with executives of the unit in question, who are expected to act on any recommendations for change within a specified peri-

od. The efforts we have studied share certain characteristics: — Executive sponsorship is critical. — Teams are small. — Effectiveness is difficult to measure, given that the goal is to mitigate risky behavior at an early stage. — Direct employee engage-

ment is crucial. Although surveillance technology can play a role — companies can monitor conversations, chat rooms, email and so on — people themselves lie at the core of teams’ efforts. Wies Wagenaar leads a team of eight behavioral scientists at ABN AmroHere’s how she

describes its methodological framework: “We believe the behavior of our employees and leadership and the choices that they make are the outcome of all the signals they get from our organization as a whole.” As the behavioral risk teams at these European banks can attest, the key to preventing ethi-

cal scandals is identifying risky behavior before it’s too late.

(Henry Engler is a senior editor with Thomson Reuters Regulatory Intelligence. Anna Wood is a change management and organizational development consultant.)

How the coronavirus crisis is redefining jobs those organizations that have an excess of work (e.g., health, logistics, some retail stores). This avoids the frictional and reputational costs associated with letting people go while supporting workers in developing new skills and networks. Reimagining jobs around the constraints of today’s challenging business environment may accelerate the future of work and open up new and innovative ways in how, where and by whom work gets done. Ultimately, this can help us build greater resilience and efficiency in our organizations, and help people live healthier, more sustainable lives.

RAVIN JESUTHASAN, TRACEY MALCOLM AND SUSAN

he outbreak of COVID-19 has forced organizations into perhaps the most significant social experiment of the future of work in action, with work from home and social distancing policies radically changing the way we work and interact. We propose three ways to shift work, talent and skills to where and when they are needed most: — MAKE WORK PORTABLE ACROSS THE ORGANIZATION: By breaking out of rigid job constraints, the right talent and work can be matched to solve evolving challenges in real time. Networks of teams empowered to operate outside of existing organizational hierarchy and bureaucratic structures are a critical capability to reacting

quickly in times of crisis. — ACCELERATE AUTOMATION: For certain types of work, automation can increase reliability, improve safety and well-being and handle sudden spikes in dewww.businessday.ng

mand. In fact, automation isn’t a job-killer in today’s economic environment; it is becoming a mandatory capability to deal with a crisis. — SHARE EMPLOYEES IN CROSS-INDUSTRY TALENT

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EXCHANGES: One innovative response is to develop a cross-industry talent exchange, temporarily moving employees who are without work because of the crisis (e.g., airlines, hospitality) to @Businessdayng

(Ravin Jesuthasan is managing director at Willis Towers Watson, where Tracey Malcolm is global future of work leader and Susan Cantrell is a senior consultant.)

Monday 11 May 2020

BUSINESS DAY

Start-Up Digest

In association with

Entrepreneur produces quality face masks to reduce spread of Covid-19 ODINAKA ANUDU

hukwubuike Nn o l i i s t h e chief executive officer of Zubnol Investment Limited, a start-up that manufactures quality face masks to reduce the spread of coronavirus. The Awka, Anambra State-based manufacturer, has the capacity to produce 10,000 to 20,000 face masks every week. He is originally a producer of interior decoration products, supplying them to retail stores, open markets and several outlets. But he now makes face masks to support the fight against Covid-19. “When you look at how the coronavirus is spreading so fast in Lagos, Kano and many parts of the country, you will agree that something has to be done, and fast too,” he tells Start-Up Digest. “This is our own contribution to the fight against Covid-19. Our face masks are different from many others because they enable you to breathe well and are good medical prescription products,” he explains. It takes Nnoli fewer than five minutes to produce a face mask. High quality

machines are handy, with staff members ready to work overnight to meet supply targets. Nnoli says that one major difference between his products and others is that they are fully sanitised and sealed per pack before being supplied to customers. “This helps protect hundreds of Nigerians from being infected with Covid19,”he says. He is collaborating with a partner in the industrial capital of South-East Nigeria, Aba, to enable him meet imminent higher targets. “What we have done is to give value at affordable rates,” he says. He says Nigerians can place their orders through the Growing Business Foundation or directly. He believes that entrepreneurs in the fashion and design need cheap funds currently to enable them make quality face masks. “Everybody is now producing face masks, but the quality you see every day is questionable,” he notes. “Face mask production is an industry on its own and it requires special skills. Few industries with the capacity to make high-quality ones need funds,” he says. Before now, Nnoli had

Chukwubuike Nnoli

been a producer of throw pillows, bed sheets, baby duvets and embroider y products. He says that the industry is a gold mine and has yet been fully tapped. But he admits that Covid-19 is hurting the industry. “Only few people are going to hotels now. The economy is shrinking, so many of our customers are not in the right shape,” he explains. But Nnoli says post-Covid-19, creative minds should

consider entering his industry to swoop on opportunities in it. “Yes, there is money in the industry, but the money is for those who are creative and dynamic,” he says. “It is not for the lazy. The industry needs innovation and people who can break with the past,” he explains. Nnoli’s basic business is to buy raw materials, which can be in unfinished or semifinished forms, and turn them into finished pillows,

bed sheets and duvets used in homes, offices and hospitals. His products are basically categorised into Exclusive, Dulux and Premium. Similarly, the duvets are classified into categories A, B and C. Zubnol Investment Limited started in 2011 with N190,000. It was then Zubnol Ventures. Just like many start-ups, the business faced challenges ranging from poor market access and lack of funds. However, things turned around in 2016 when the business began to gain traction. In February 2018, Zubnol Ventures transformed into Zubnol Investment Limited after acquiring machines that would enable it to sew pillows, bed sheets and duvets at the factory. From N190, 000, the business has now grown to over N3 million, supplying products to over 10 outlets located across the country. “Our target is to capture the local market and the West African market,” the entrepreneur tells Start-Up Digest. “One of the key feedbacks we get is that our products are well designed and durable,” he says. “We are in many stores

already and demand is already overshooting supply,” he discloses. According to him, Nigerians need to patronise more locally produced goods to grow the economy and create jobs. “I am not expecting Nigerians to patronise madein-Nigeria products just because they want to be patriotic. The truth is that locally made products are good enough and better than what we get from Asia,” he states. Zubnol is planning to export textile and internal decoration products to the African market and redefine the interior decoration industry, but he knows he needs funding and more machines. “Going into export requires some capital outlay. You will require a lot of funds. We need N10 to N20 million to acquire some more critical machines. The creativity is there, the innovation is not lacking, but we need cheap and long-term funds,” Chukwubuike says. “Our target is to satisfy the burgeoning local demand and then export to earn foreign exchange. This, with God, will happen soon,” he asserts.

“Drugs and vaccines are scarce, especially in this period of lockdown. Prices of feed fluctuate and these chicks eat a lot. Also, people tend to buy on credit or expect them as gifts,” she further says. While she has been able to handle some of these challenges, she urges the government to step in and make some policies to make the business easy to run. Despite the large market, Adio has been able to make a name for herself and has endeared herself to customers by ensuring that she does not compromise quality or use unnecessary chemicals for the chicks. “We feed them properly, and we are concerned about the health of the poultry, not just sales,” she notes. “So we keep the environment clean, giving drugs and vaccines at the right time and in the proper dosage. We also stock and properly

preserve feed and vaccines in large quantity for emergencies,” she says. As part of her business expansion, Adio plans to incorporate other birds like turkey, duck and possibly develop her own hatchery, while incorporating technology. To develop herself and business, she participates in valuable trainings online and offline which she sees a form of investment. Juggling the role of a pastor, wife, educationist and mother, she agrees that it is not easy but requires grit and hard work. She is determined to feed Nigerians with high-quality poultry products, and is grateful for the support of family, including her grown children and friends. Advising younger entrepreneurs, she says, “Be determined; there is no business without challenges, but before giving up, think of why you started.”

Adio: Setting the pace in poultry farming business Gbemi Faminu

uth Adio is a certified educationist, pastor, wife, mother and poultry farmer. She is the CEO of Ruthamos Farms, where she breeds organic day-old broilers and layers till they are matured for either consumption or egg laying. A graduate of English/Yoruba education from Olabisi Onabanjo University, she is also a master’s degree holder from the University of Lagos. Adio was inspired to take up poultry farming because she and her family members are conscious of healthy living and the quality of food they eat. This consciousness pushes them to grow what they eat. The entrepreneur says that she saw it necessary to share the unbeatable quality of her poultry products with the public. Adio started the poultry

two years ago with N500, 000. She used the money to procure the first batch of chicks from an agricultural company which operates a hatchery in Ibadan. She was able to get the funds through her savings as well as loans. She ploughs back a major part of the profits into the business in order to scale. Speaking her business growth, she agrees that it has not been easy, but it is worth the stress. For her, taking care of the chicks involves a difficult procedure which is repeated frequently. The entrepreneur, however, eatsn healthy and makes substantial profits from the business. Although she is yet to employ paid staff members, she has people who help her out. These include family members, a friend with valuable experience in poultry business and other people who assist in cleaning and other www.businessday.ng

basic chores especially when demand is high. Adio says that she is motivated by her husband who encourages her to think far and take up challenges. The entrepreneur admits that as much as she loves her

poultry business, some challenges make the business difficult to run. “When the chicks are young, their mortality rate is usually high and sometime can be beyond control,” she says.

Ruth Adio https://www.facebook.com/businessdayng

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Monday 11 May 2020

BUSINESS DAY

Start-Up Digest

Meet Chigozie Okwara, entrepreneur connecting freelancers to international jobs Josephine OkojiE

s the Internet makes it easier for freelancers to get clients around the world, Chigozie Okwara, founder and chief executive officer of Softwork.xyz, has created a platform for African freelance professionals. Okwara, a serial entrepreneur, manages two other businesses in the agricultural and real estate sectors. He was inspired to setup Softwork.xyz owing to a personal experience. The entrepreneur could not find a freelancing job when he needed one. As a result, he came up with a platform to address this challenge and help others facing a similar problem. He saw it as an opportunity to make a change but not as a perennial problem defying solutions. In 2018 established Softwork.xyz to realize this vision. “It was hard sourcing for freelance jobs when I needed one because I also had school work to handle,” the young entrepreneur says. “So, I went online and signed up on some international freelancing platforms to enable me to get to know the freelance jobs available online.” He says that the process of getting a freelance job online saves time and stress as it afforded him the opportunity to easily connect to jobs. “I kept on getting freelancing jobs on international platforms for about six years until 2017 when I decided to establish a freelancing platform where Nigerians and Africans could handle freelance jobs done and shared by us,” he explains. The young entrepreneur started the business small and was able to build his own website.

Chigozie Okwara

“I build websites, so I didn’t have to hire anyone to build the platform for me. I only requested assistance from fellow tech friends when I needed help,” he says. “Much of the money spent on the business was used for branding, marketing, logistics and in acquiring an office space,” he explains. Since starting in 2018, his business has grown tremendously and has connected over 5,000 freelancers across various skill sets with clients. He currently makes his money by charging 15 percent commission on all jobs got by the freelancers through his platform. He explains that the business works by connecting freelancers that have signed up on its platform and share their portfolios with clients in need of their services. He says the business plans to sign up over 100,000 freelancers across the continent by the end of 2021. He adds that the business plans to have a strong presence across cities in Africa in the long term. Highlighting some of the major challenges faced by

the business, he says poor power supply has impacted negatively on his business. Also, he states that inadequate access to cheap funds have also limited his business. He urges the government to pay more attention to tech entrepreneurs and make access to funds easy. Similarly, he calls for investment in critical infrastructures to aid industrialisation and growth of the Nigerian economy. Chigozie says that the Nigerian tech industry is evolving and has contributed largely to the growth of the economy. “The tech industry is very broad and there’s enough space for everyone to fit in,” he says. “The genius thing my team and I have done is to be unique in our approach to solving the problems at hand, and that automatically stands us out,” he adds. On his advice to other entrepreneurs, he says, “Start from whatever level you are with whatever resource you have and just keep being consistent. Other levels will surely be unlocked as you grow.”

Covid-19: Save SMEs from collapsing, analysts urge FG Odinaka Anudu & Josephine Okojie

nalysts have asked Nigeria’s federal and state governments to save millions of small businesses in their domains from collapsing after the coronavirus pandemic. “The Federal Government must do something immediately because a lot of MSMEs will inevitably collapse and die after the coronavirus pandemic,” Ike Ibeabuchi, CEO of MD Services Limited, said. “If you do not want uncontrollable job losses, then give MSMEs low-cost, long-

Evolving during the pandemic – Lessons from three business owners

term funds. This is something other countries have seen, but do not want it to happen,” he warned. Coronavirus, also known as Covid-19, has killed tens of thousands of people across the world and disrupted social and economic lives of the people. The United States has sought additional $250 billion to complement $350 billion earlier budgeted as relief fund for small businesses in the country. The Nigerian government has got a loan approval from the International Monetary Fund for $3.4 billion. Analysts are asking the www.businessday.ng

government to ensure that part of the funds go to the MSMEs who have created more than half of jobs in the economy. Bongo Adi, a Lagos-based economist, said that the impact of the pandemic was beyond what the MSMEs would handle and government must create palliative measures. A national sur vey of MSMEs conducted by NBS and Small and SMEDAN in 2017 said the number of MSMEs has risen from 37 million to 41.5 million MSMEs. They contribute 50 percent to the GDP and 83 percent of jobs in the economy, the survey said.

ast week we shared a summarised business guide for surviving the COVID-19 pandemic. Here is a quick summary of key takeaways from the guide posted in our April 27 article: 1. Draw up as complete a picture of your current affairs as possible – cash available, orders, suppliers, loans, etc. 2. Build out clear and detailed projected scenarios (external situations) specifically for your business. 3. Chart out clear plans of action for each of the possible scenarios you have identified, given your current business situation. 4. Take the time to painstakingly review existing contracts, and see if/how they can be re-negotiated to suit the current situation 5. Reach out to your key stakeholders – clients, suppliers, etc. – to give them clarity on how you will be moving forward. Manage expectations, be reasonably transparent and strive to maintain the relationships you have built. 6. In light of the conversations with your external stakeholders, have additional conversations with your internal stakeholders – your team. 7. Keep it simple, especially because the future remains uncertain. 8. Be honest with all of your stakeholders about potential changes, delays or challenges. 9. This is a difficult time for most of us, so maintaining and building community is key. 10. Feel free to contact us at Spurt! for a free consultation on how to go about this process This week, we would like to share case study insights from small and mediumsized businesses so you can see how peers are adjusting to the still unknown but potentially new normal. Regardless of industry, we can already tell that the effects of COVID-19 on businesses will be varied. Beyond this, each business likely has preexisting constraints and/or advantages based on the state of its finances and operations before the pandemic brought the world to a halt. However, one thing appears consistent across the board in the business response to Covid-19 — a need to adapt the business model. It is the successful implementation of this change, coupled with a strong financial and operational framework, that

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will determine those entrepreneurs whose ventures will survive the worst effects of the economic downturn. Accept that the world in which you built your model no longer exists and seize the opportunities of the new one. Be observant, be agile, think ahead. In Abidjan, Côte d’Ivoire, La Tulipe Food, an importer of frozen meats and fish products, have had to change their business model due to the reduced number of open restaurants. They launched a decade ago as a wholesale supplier of imports from Europe and the Americas and have successfully sold products across their home country. In response to reduced wholesale demand, they suspended imports and sold off stock on hand to a new customer base – retailers, and even end-users. To achieve this, they redefined their sales strategy for the pandemic and fitted their trucks for door-to-door delivery routes nationwide. La Tulipe Food’s philosophy for the pandemic is hinged on flexibility. They have done this by leveraging available technology to identify and access customers.

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Don’t jump to laying off [staff] as the only conclusion. See how you can use your team to help you innovate out of the challenge, versus just cutting your team and trying to wait it out Leveraging technology is certainly a key strategy for navigating this pandemic. Spacefinish, corporate design consultants in Lagos, Nigeria are relying even more heavily on technology than before. Being a player in the construction industry, the company has had to make dramatic changes to process and operations flows to maintain quality whilst complying with even higher safety standards. Additionally, the sales team has focused on emphasising the firm’s digital services, letting customers access its design services, even as the firm actively @Businessdayng

works out possibilities for remote project management offerings. Spacefinish CEO, Remi Dada, has suggested that entrepreneurs focus on community and innovation: “Don’t jump to laying off [staff] as the only conclusion. See how you can use your team to help you innovate out of the challenge, versus just cutting your team and trying to wait it out. Some of the most innovative businesses are birthed during such times of uncertainty.” As we emphasised last week, working innovatively and supportively with your stakeholders in these hard times will inadvertently lead to better value creation. Recognising that some businesses might only see limited room for deployments of technology at this time, there are still impressive opportunities for innovation and adaptation. Joe-Han Network Marketing Ltd, which sells, repairs and maintains automated banking equipment across Nigeria has had to deal with a slew of order cancellations as pending purchases have been put on hold. Their engineers were, in the first few weeks of lockdown, unable to conduct site visits for repairs and machine monitoring. They allowed their engineers to offer detailed support assistance over the phone and on calls. Whilst this is not an ideal state of affairs, they have avoided a complete shutdown of operations and allowed many of their clients to receive their services. They have also benefited from the knowledge gained from this inadvertent remote servicing pilot and it will shape their operations in the coming months. Whilst panic might seem attractive, resist the urge to make drastic decisions. Review your situation with a critical and forward-looking sensibility. We summarise the approaches taken by leaders across these three different industries as follows: Specifically identify the effects of the pandemic on your business operations and adapt your model accordingly. Get creative, get technological and get communal. As always, we are here to answer any questions you might have and would love to hear from you. Kristin & Oladoyin www.spurt.solutions Reach us at admin@spurt.group if you have any questions or comments.

Monday 11 May 2020

BUSINESS DAY

news

COVID-19: Experts call for training, inclusion of teachers in developing response strategy Josephine Okojie

o ensure that Africa effectively responds to the impact of COVID-19 on the educational sector, experts have called on governments and other relevant stakeholders to train and include teachers in developing a response strategy. The experts who spoke at the third webinar series on ‘Disruption & Innovation- Reshaping Education in Africa Post-COVID-19, organised by Axiom Learning Solutions, say teachers are the backbone of any educational system and the key to reaching learning goals regardless of the context and situation. “The COVID-19 pandemic has not only shown the widening gap and inequality in the student learning, but it has also shown the lack of preparedness and deficient skills in teachers,” says Olubukola Adebonojo, head of execution of teaching and learning strategy, Axiom Learning Solutions Limited. “COVID-19 responses need to be developed with the full involvement of teachers and their representative organisations at all steps in education policymaking and planning,” Adebonojo states. She also calls for the provision of adequate professional support and training for teachers to ensure that quality teaching and learning can continue during the crisis and that recovery post the pandemic is rapid. Adebonojo stated that postCOVID-19, the out of school rates in Sub Saharan Africa will

increase as many children will be unable to go back to school owing to the economic fallout from the pandemic. She noted that Africa is still struggling to effectively move to online platforms in delivering learning owing to the inadequate tools in deploying such technology while urging the government to make use of all possible delivery modes that are realistic, cheap, and sustainable in deploying online learning. Also speaking, Alec Couros, Professor at the University of Reginal, Canada says that teachers need a lot of training postCOVID-19 on how to effectively engage their students. According to him, teachers that have done a lot in deploying technology in teaching amid the pandemic are those that have participated in digital training before. “We need to focus more on teachers’ training and the ability to deploy technology wildly. We must also continue to lobby the government to provide access to the technology needed for learning,” Couros said. Ani Charles Bassey-Eyo, cofounder, Axiom Learning Solutions said that there is currently pressure on teachers and learners owing to the pandemic, adding that such pressure must be overcome. “Do we need to look into the curriculum for training teachers post-COVID-19?” he asked. Bassey-Eyo called on teachers to rely more on soft skills to engage learners better, while also asking them to impact the children.

COVID-19: Edo orders shut down of Lagos Street to all business activities … releases guidelines on visits to orphanage homes do State government has makes it important for resiordered the immediate dents and other persons in the shutdown of Lagos Street, area to participate in the exeran epicentre of trade and com- cise. Lagos Street will remain merce in Benin City metropolis, closed to all form of activities to check the spread of coronavi- until the residents participate in the screening and testing rus (COVID-19) in the state. In a statement, special adviser exercise.” Meanwhile, the state govto the governor on media and communication strategy, Cru- ernment has released guidesoe Osagie, said the decision to lines regulating visits to orshut down trading activities on phanage homes in the state as Lagos Street, followed the refusal part of strategies to check the of residents to comply with the spread of coronavirus. Commissioner for social state government’s directives to participate in the ongoing development and gender isscreening and testing exercise sues, Maria Edeko, disclosed for COVID-19, as part of efforts this after a tour of orphanage homes in Benin City, the state to contain the pandemic. He said, “The Edo State Gov- capital. The commissioner said the ernment has ordered the immediate shut down of all form state government’s new guideof activities including trading on lines for visitors to orphanage Lagos Street, a business hub in homes for charitable causes Benin City, over refusal of the resi- mandate that visitors must not dents to participate in ongoing be allowed to mingle with the screening and testing exercise to children in the homes. The commissioner revealed halt the spread of the COVID-19 that an undocumented weekspandemic.” Osagie said Lagos Street old baby was discovered durwould remain closed to activi- ing an unscheduled visit to Uyities until residents in the area osa Orphanage and Widows take part in the exercise to protect Ministry in Benin. She said when her team got to themselves and other members of the public, noting, “The partici- Uyiosa Orphanage and Widows pation of all residents in the exer- Ministry, they discovered that a cise is important in curtailing the baby in the custody of the centre spread of the virus in the state. was without documents notifying “Being a business hub, a governmentofthebirthofthechild. Edeko added that the state large number of residents in Benin City and other parts government has taken custody of the state visit Lagos Street of the baby while the proprietress daily for various activities will be made to explain how the making the area a hotspot for baby got into her custody without the spread of COVID-19. This the knowledge of the Ministry.

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L-R: Jean-Charles Marian, chief digital officer; Bertil David, MD, Universal Music Publishing; Eneibimo Apulu, COO, Aristokrat Group; Tinu Adesugba, executive vice president, content and communications, Aristokrat Group; Piriye Isokari, CEO, Aristokrat Group; Kel P, Grammy Nominated Record Producer; Steve Jervier, A&R consultant, Aristokrat Group; Olivier Nusse - CEO, Universal Music France, after the signing ceremony between Aristokrat Group and Universal Music Group in Paris, France.

Aristokrat Group signs joint venture with Universal Music Group ENDURANCE OKAFOR

niversal Music France (UMF ), a company of Universal Music Group (UMG), the world leader in music-based entertainment, today announced a strategic partnership with The Aristokrat Group, a prominent African entertainment company known for discovering and developing one of the biggest acts in the African Music industry today – Burna Boy. With over a decade of experience in developing young African talents, Aristokrat Represents the spirit and The Sound of New Afrika. This strategic partnership consists of a label deal and a publishing deal. The label deal intends to discover and develop African talent, and give them the opportunity to reach a global audience, thanks to the worldwide network of Universal Music Group companies. The first signings of the label deal are Kel P, Jujuboy Star and Tneeya. Kel P is a Nigerian producer, who

worked with Burna Boy on his Grammy nominated album African Giant, and recently worked with Wizkid on his Starboy, The Soundman Vol 1 EP. Jujuboy Star, is a Nigerian singer, songwriter and producer. Tneeya, is a Cameroonian singer and songwriter. All Aristokrat Records artists will be signed via Caroline France, a Universal Music France label. The publishing deal intends to discover and develop African artists, songwriters and producers, in order to give them the opportunity to access the global market. The first publishing signings are Kel P, Jujuboy Star and Saszy Afroshii. In announcing the partnership, Olivier Nusse, CEO, Universal Music France, said, “I am very proud that Aristokrat Group has chos en Universal Music France as its strategic partner to reach a global audience!” Bertil David, MD, Universal Music Publishing France, said, “Aristokrat is one of the most important voices in Africa right now. The qual-

ity of their A&R, their vision and entrepreneurship is both unique and progressive. We are very proud at UMP to be able to give Aristokrat the global presence the y deserve.” Piriye Isokrari, Founder and CEO, The Aristokrat Group, said, “This is an exciting time for African musicians, producers and companies such as ours. Over the last decade we’ve been at the forefront of cultivating the sound and building sustainable structures locally and we are happy to be able to bring our music and culture to the global market through this partnership with the Universal Music Group. ” Universal Music Group (UMG) is the world leader in music-based entertainment, with a broad array of businesses engaged in recorded music, music publishing, merchandising and audiovisual content in more than 60 countries. Featuring the most comprehensive catalog of recordings and songs across every musical genre, UMG identifies and develops artists and

produces and distributes the most critically acclaimed and commercially successful music in the world. Committed to artistry, innovation and entrepreneurship, UMG fosters the development of services, platforms and business models in order to broaden artistic and commercial opportunities for our artists and create new experiences for fans. Universal Music Group is a Vivendi company. The Aristokrat Group is an African Media & Entertainment Company headquartered in Lagos, Nigeria. Founded in 2009, The Aristokrat Group has expanded at a steady rate and is now present throughout the entire media and entertainment value chain. The Group currently houses a Record label, Touring and Event Production Company, Film and Television Production Company, Music Publishing Company, and Digital Media Company. The Aristokrat Group also offers a wide range of Multimedia & Enter tainment Services to artists, labels and corporate brands.

Funds, NMRC out with creative solutions to aid housing demand, supply amid Covid-19 CHUKA UROKO

espite the crippling impact of coronavirus, Federal Government’s housing agencies, notably the Family Home Funds (FHF), Nigerian Mortgage Refinance Company (NMRC) and the Federal Mortgage Bank of Nigeria (FMBN), are still putting measures in place to aid housing demand and supply. These agencies say they remain committed to their mandate of providing affordable housing for low income Nigerians, even though they are constrained by Covid-19, which has contracted global economy; the crash in oil price which has reduced govern-

ment’s revenue, and the downgrading of the country’s global rating which is lowering its ability to borrow. No matter the season or circumstance, experts believe that housing is the bedrock of the economy as it presents an opportunity for individuals to build their own balance sheet, such that the more people the sector can get on the property ladder, the better it is for the economy. This is why, instead of being limited, authorities in these government agencies say Covid-19 has strengthened the importance and their commitment to what they are set out and mandated to do. “Our resolve is still very strong commitment and our business outlook is still focused

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on Nigerians who are vulnerable; those who have not been able to access the commercial market thus far. Truly speaking, we are looking at households with income of about N100,000 per month,” explained Banke Abejirin, head, Strategy and Business Performance at FHF. As a Federal Government housing agency, FHF has the mandate of catalysing the development of affordable housing and creating jobs. Its target is to develop over 500,000 homes and create 1.5 million jobs in the next five years for Nigerians on low income. The Nigerian Bureau of Statistics (NBS) in its recently released 2019 report showed that, currently, 40 percent of Nigeria’s population has a per capita expenditure of N137,000 @Businessdayng

per year, meaning that the country has a large percentage of its population that is living on less than N12,000 per month. “We are looking at this population and even beyond; in terms of our strategic focus, we are pushing towards four key areas,” said Abejirin, who spoke on Wednesday at a Webinar on real estate in Abuja. According to her, FHF is providing construction financing for developers in both public and private sectors at lower than market rate. Their rate, she revealed, was now 7-9 percent which is about 100 less than the going market rate, and this is to ensure that they have affordable housing in the market that could be purchased for as low as N2 million.

Monday 11 May 2020

BUSINESS DAY

In Association With

A dangerous gap

A Balkan betrayal A bumpy road from plot to plate

The market v the real economy

Financial markets have got out of whack with the economy. Something has to give Editor’s note: The Economist is making some of its most important coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our hub

TO CKMARKET HISTORY is packed with drama: the 1929 crash; Black Monday in 1987, when share prices lost 20% in a day; the dotcom mania in 1999. With such precedents, nothing should come as a surprise, but the past eight weeks have been remarkable, nonetheless. A gutwrenching sell-off in shares has been followed by a delirious rally in America. Between February 19th and March 23rd, the S&P 500 index lost a third of its value. With barely a pause it has since rocketed, recovering more than half its loss. The catalyst was news that the Federal Reserve would buy corporate bonds, helping big firms finance their debts. Investors shifted from panic to optimism without missing a beat. This rosy view from Wall Street should make you uneasy (see article). It contrasts with markets elsewhere. Shares in Britain and continental Europe, for example, have recovered more sluggishly. And it is a world away from life on Main Street. Even as the lockdown eases in America, the blow to jobs has been savage, with unemployment rising from 4% to about 16%, the highest rate since records began in 1948. While big firms’ shares soar and they get help from the Fed, small businesses are struggling to get cash from Uncle Sam. Wounds from the financial crisis of 2007-09 are being reopened. “This is the second time we’ve bailed their asses out,” grumbled Joe Biden, the Democratic presidential candidate, last month. The battle over who pays for the fiscal burdens of the pandemic is just beginning. On the present trajectory, a backlash against big business is likely.

Start with events in the markets. Much of the improved mood is because of the Fed, which has acted more dramatically than other central banks, buying up assets on an unimagined scale. It is committed to purchasing even more corporate debt, including high-yield “junk” bonds. The market for new issues of corporate bonds, which froze in February, has reopened in spectacular style. Companies have issued $560bn of bonds in the past six weeks, double the normal level. Even beached cruise-line firms have been able to raise cash, albeit at a high price. A cascade of bankruptcies at big firms has been forestalled. The central bank has, in effect, backstopped the cashflow of America Inc. The stockmarket has taken the hint and climbed. The Fed has little choice—a run on the corporate-bond market would worsen a deep recession. Investors have cheered it on by piling into shares. They have nowhere else good to put their cash. Government-bond yields are barely positive in America. They are negative in Japan and much of Europe. You are guaranteed to lose money by holding them to maturity, and if inflation rises the losses would be painful. So stocks are appealing. By late March prices had fallen by enough to tempt the braver sort. They steeled themselves with the observation that much of the stockmarket’s value is tied to profits that will be made long after the covid-19 slump has given way to recovery. Tellingly, though, the recent

rise in share prices has been uneven. Even before the pandemic the market was lopsided, and it has become more so. Bourses in Britain and continental Europe, chock-full of troubled industries like carmaking, banking and energy, have lagged behind, and there are renewed jitters over the single currency (see article). In America investors have put even more faith in a tiny group of tech darlings—Alphabet, Amazon, Apple, Facebook and Microsoft— which now make up a fifth of the S&P 500 index. There is little euphoria, just a despairing reach for the handful of businesses judged to be all-weather survivors. At one level, this makes good sense. Asset managers have to put money to work as best they can. But there is something wrong with how fast stock prices have moved and where they have got back to. American shares are now higher than they were in August. This would seem to imply that commerce and the broader economy can get back to business as usual. There are countless threats to such a prospect, but three stand out. The first is the risk of an aftershock. It is entirely possible that there will be a second wave of infections. And there are also the consequences of a steep recession to contend with—American GDP is expected to drop by about 10% in the second quarter compared with a year earlier. Many individual bosses hope that ruthless cost-cutting can help protect their margins and pay down the debts accumulated through the

furlough. But in aggregate this corporate austerity will depress demand. The likely outcome is a 90% economy, running far below normal levels. A second hazard to reckon with is fraud. Extended booms tend to encourage shifty behaviour, and the expansion before the covid crash was the longest on record. Years of cheap money and financial engineering mean that accounting shenanigans may now be laid bare. Already there have been two notable scandals in Asia in recent weeks, at Luckin Coffee, a Chinese Starbucks wannabe, and Hin Leong, a Singaporean energy trader that has been hiding giant losses (see article). A big fraud or corporate collapse in America could rock the markets’ confidence, much as the demise of Enron shredded investors’ nerves in 2001 and Lehman Brothers led the stockmarket down in 2008. The most overlooked risk is of a political backlash. The slump will hurt smaller firms and leave the bigger corporate survivors in a stronger position, increasing the concentration of some industries that was already a problem before the pandemic. A crisis demands sacrifice and will leave behind a big bill. The clamour for payback will only grow louder if big business has hogged more than its share of the subsidies on offer. It is easy to imagine windfall taxes on bailedout industries, or a sharp reversal of the steady drop in the statutory federal corporate-tax rate, which fell to 21% in 2017 after President Donald Trump’s tax reforms, from a long-term average of well over 30%. Some Democrats want to limit mergers and stop firms returning cash to their owners. For now, equity investors judge that the Fed has their back. But the mood of the markets can shift suddenly, as an extraordinary couple of months has proved. A onemonth bear market scarcely seems enough time to absorb all the possible bad news from the pandemic and the huge uncertainty it has created. This stockmarket drama has a few more acts yet.

The race to feed Africa during a pandemic There is plenty of food, but getting it to people is a challenge

NCE THE market was closed, all my knowledge was over,” sighs Brian Kayongo, a spare-parts trader from Kampala, Uganda’s capital. Until the covid-19 lockdown he spent most of his time in the city. He knew about spark plugs, not seeds. But now he is planting maize and beans on a patch of land he has rented in a nearby village. Everybody there is digging, he says. Even the young people who turned up their noses at farming have “surrendered” to the tyranny of the hoe. Mr Kayongo is less worried about the virus than how to eat. And he is not alone. The UN’s

World Food Programme (WFP) warns that the number of people who are “acutely hungry”, most of them in Africa, could double this year. The World Bank forecasts that agricultural production in sub-Saharan Africa will fall by 3-7%, and food imports by 1325%, depending on how freely trade flows. Yet there is plenty of food in the world. If the pandemic creates hunger, it will be policy failures, not crop failures, that are mainly to blame. The nightmare scenario would be a repeat of the food crisis in 2007-08, when the world’s governments hoarded staple grains, making prices soar. Africa imports more than a quarter of its cereals. Much of the rice that Ghana gobbles up comes from Vietnam—which has restricted exports. Shiploads of Indian rice bound for Senegal and Benin have been stranded in gridlocked ports. In normal times several west African countries Continues on page 29

Monday 04 May 2020

BUSINESS DAY

In Association With

The kids are not all right

When easing lockdowns, governments should open schools first The costs of keeping them closed are too high

OV I D - 1 9 H A S s hu t t h e world’s schools. Three in four children live in countries where all classrooms are closed. The disruption is unprecedented. Unless it ends soon, its effect on young minds could be devastating. During some epidemics keeping children at home is wise; they are efficient spreaders of diseases such as seasonal flu. However, they appear to be less prone to catching and passing on covid-19. Closing schools may bring some benefit in slowing the spread of the disease, but less than other measures. Against this are stacked the heavy costs to children’s development, to their parents and to the economy (see article). A few countries, such as Denmark, are gradually reopening schools. Others, including Italy, say they will not do so until the autumn. In America, despite recent calls from President Donald Trump for schools to open, most states plan to keep their classrooms closed for the rest of the academic year—and possibly longer. That is a mistake. As countries ease social distancing, schools should be among the first places to unlock. Consider the costs of barring children from the classroom. No amount of helicopter parenting or videoconferencing can replace real-life teach-

ers, or the social skills acquired in the playground. Even in the countries best prepared for e-learning, such as South Korea, virtual school is less good than the real thing. Poorer children suffer most. Zoom lessons are little use if your home lacks good Wi-Fi, or if you have to fight with three siblings over a single phone. And whereas richer families often include well-educated parents who prod their offspring to do their homework and help when they get stuck, poorer families may not. In normal times school helps level the playing field. Without it, the achievement gap between affluent and working-class children will grow. By one estimate, American eight-

year-olds whose learning stopped altogether with the lockdown could lose nearly a year’s maths by autumn, as they fail to learn new material and forget much of what they already knew. School matters for parents, too, especially those with young children. Those who work at home are less productive if distracted by loud wails and the eerie silence that portends jam being spread on the sofa. Those who work outside the home cannot do so unless someone minds their offspring. And since most child care is carried out by mothers, they will lose ground in the workplace while schools remain shut. In poor countries the costs are

even greater. Schools there often provide free lunches, staving off malnutrition, and serve as hubs for vaccinating children against other diseases. Pupils who stay at home now may never return. If the lockdown pushes their families into penury, they may have to go out to work. Better to re-open schools, so that parents can earn and children can study. The obvious rejoinder is that shutting schools brings benefits. Covid-19 can be deadly. Parents do not want their children to catch it or to give it to grandma. In fact, though children are highly susceptible to flu, covid-19 is different. Two studies from China that trace the contacts of infected people find that children are at worst no more likely to catch the disease than adults—and possibly less so. If they do get it, they are 2,000 times less likely than someone over 60 to die. Nor is there evidence that children who do end up catching the disease are silent spreaders who pass it on to their families. Researchers in Iceland and the Netherlands have not found a single case in which a child brought the virus into their family. The European Centre for Disease Prevention and Control, the European Union’s public-health agency, said last week that child-to-adult transmission “appears to be uncommon”.

Essential workers

The Gulf states should take better care of their migrant workers It is not only humane, it is practical

IFE HAS never been easy for the Gulf ’s migrant workers. Though they are around half of the region’s population and are essential to its economy, the locals give them little respect. Coming from poorer countries such as India, Pakistan and Nepal, most work long hours for wages that are high compared with salaries back home but low by any other standard. They care for Kuwaiti children, nurse sick Saudis and build Dubai’s skyscrapers. When their workday is done, many are crammed into spartan dormitories by their employers. Whether visiting workers have lived in the Gulf for two months or two decades, they are deemed to be “temporary” and are left out of the social contract. Most citizens treat them as a subservient underclass. The outbreak of covid-19 has made life even harder for migrants, who probably account for most of the recorded infections in the Gulf and are also bearing the brunt of the economic fallout. Many are locked down, out of work and unable to go home because of restrictions on travel (see article). Some struggle to afford food. Governments should take better care of them. That is not only humane, it is also practical. If the Gulf states do not start treating their guests with more compassion, they are likely to find that their

outbreaks last longer and that their economies recover more slowly. So far, the pandemic has revealed more bigotry than benevolence. An MP in Kuwait wants to “purify” the country of illegal workers. “Put them in the desert,” says a famous Kuwaiti actress. A viral video in Bahrain featured a man complaining of migrants being treated next to citizens—never mind that half the nurses in Bahrain come from abroad. In hospitals across the region foreigners are on the front line fighting the virus. Discrimination is bad enough, but the dormitories where migrants live are incubators for covid-19. With four or more to a room, there is no www.businessday.ng

space for social distancing. At a big labour camp in Qatar one infection quickly became hundreds. Far from the Gulf, Singapore, which treats migrant workers somewhat better, thought it had the virus under control until it broke out in their dormitories. Now infections are rising fast and the authorities have had to extend restrictions on work and travel. Neglecting migrants hurts citizens, too. The dormitory outbreaks stand a good chance of spreading to the permanent population, lengthening lockdowns. Xenophobes see this as yet another reason to banish foreigners. But countries such as India, which have their hands full,

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are not co-operating with efforts to return their jobless, potentially ailing expatriates. The Gulf states are at last taking steps to stem the virus in migrant areas. Some have launched massscreening and are testing those with symptoms. Temporary housing has been set up to allow social distancing. Most countries are treating covid-19 patients, including migrants, without charging them. Saudi Arabia has also released dozens of migrants held for minor immigration offences, so that prisons do not become plague factories. The United Arab Emirates is automatically renewing the paperwork for migrant workers so that they don’t find themselves on the wrong side of the law just because they are locked down. That is all to the good, but more needs to be done. Some migrants are still working—building stadiums for the World Cup in 2022 or facilities for the World Expo next year. Employers should be held accountable for their safety. Many migrants cannot work, though, and states should care for them, too. Gulf countries can afford to guarantee a portion of their wages during the outbreak. That will not only ensure that they do not go hungry—it will mean that someone is there to turn the lights back on when businesses start to open up again. @Businessdayng

The race to feed Africa during a pandemic Continued from page 28

spend more than half their export earnings buying food. As the prices of their own commodities fall and their currencies weaken, they will have even less purchasing power than before. Fortunately world food systems today are “in a very different situation” from the crisis of 2007-08, says David Laborde of the International Food Policy Research Institute (IFPRI), a think-tank in Washington. Back then export restrictions blocked about 11% of the calories that flowed through global markets. In the pandemic similar measures have affected only 3% of supplies. The oil price was rocketing in 2007; now traders cannot give it away. World food stocks are high. Prices for rice are up, but not to crisis levels. South Africans can partly shift consumption to home-grown maize after a bumper crop, says Ferdi Meyer of the Bureau for Food and Agricultural Policy, a research group. Instead, covid-19 is hitting people’s pockets. In African cities the average household allocates half its expenditure to food. That budget has shrunk as economies nosedive and lockdowns close the informal businesses in which most workers hustle. The IFPRI estimates that 80m more Africans, mostly in cities, could see their incomes drop below the equivalent of $1.90 a day (though its model does not account for domestic stimulus packages). Several governments have tried to help by handing out food or regulating prices. But there have been problems. In Uganda four officials overseeing distribution were arrested on suspicion of fraudulently inflating prices. In Kibera, a slum in Kenya’s capital, Nairobi, women were trampled and police fired tear-gas as thousands of people jostled for a giveaway from wellwishers. It would be simpler just to give cash, which can be sent to people on their mobile phones.

Monday 11 May 2020

BUSINESS DAY

news Despite mark-down, Nigeria’s new... Continued from page 1

States’ coronavirus fight showcases the good, bad and ugly ... Lagos, Edo, Kaduna show shining leadership ... Kogi, Cross River in denial as cases rise MICHEAL ANI & SEGUN ADAMS

as of May 7, including 601 recovered cases and 107 deaths, according to data from the Nigeria Centre for Disease Control (NCDC). That’s the highest in West

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Monday 11 May 2020

BUSINESS DAY

news

IFC, CIBN to deliver sustainable Pan Atlantic University gifts students Big soft drinks makers heighten banking certification programme 3GB data weekly as it goes fully digital competition on 50cl Hope Moses-Ashike

nternational Finance Corporation (IFC) said it had firmed up arrangements with the Chartered Institute of Bankers of Nigeria (CIBN) on capacity building and Certification on Sustainable Banking in Nigeria Ibrahim Salau, Nigeria programme coordinator, Environmental and Social Risk Management (ESRM), IFC, made the call at an advocacy dialogue Webinar, organised by the Centre for Financial Studies (CFS)-CIBN in Lagos. Theobjectiveoftheprogramme is to increase the uptake of E&S standards by FIs in the sub-Saharan Africa region leading to a reduction in risk exposure for FIs and an improvement in the E&S performance of their clients in the long term, Salau said. Theprogrammepartnersfinancial services regulators and industry associations to raise awareness on the business case for E&S risk management in the financial sector, provide technical support on the development of mandatory E&S risk management standards for the financial sector and build capacity to supervise the implementation of the standards, he said. Also, the curriculum for the certification programme has been approved by the CIBN Governing Council and the course will be launched later this year, he disclosed, adding that a Training of Trainers (TOT) on Sustainable Banking will kick off next week with over 100 participants. Aishah N. Ahmad, deputy governor, financial systems stability directorate, Central Bank of Nigeria and chairman of the event, in her address, stated, “Banking has been

undergoing disruptions before the pandemic. Technological disruptions and competition have made banks change their business model. Giventhatbankshavebeenevolving overtimetheyareinabetterposition to weather the current storm. “Banks can only manage these challenges if at this disruptive event that is happening they can fortify their big models and become more agile to respond to what’s happening in the market. And over 80% of banks have incorporated sustainable banking principles in their model.” Mosun Belo-Olusoga, former chairman, Access Bank plc/guest speaker in her presentation, stated that the implications of the pandemic on the Nigerian economy include a rise in inflation, decline in investmentsuchasForeignPortfolio Investment(FPI)andForeignDirect Investment (FDI), a shrink in forex income, drop in oil revenue and a contraction in GDP, which would all in turn lead to a fall in the value of the currency She also expressed that some of the implications for the banking sector includes restrain on financial performance, movement of businesses to digital space, likely changes to board procedures and effectiveness, likely fall in Capital Adequacy Ratio below regulatory limit, decline in cash flow from loan repayment, increased fraud and cyber threats as a result of relaxed internal control etc. She said, “We don’t know when life will get back to normal; there is more pressure than ever for organisations to innovate and think outside the box. The good news is that financial institutions that step up to meet these challenges will benefit from a brand and shareholder perspective.

MARK MAYAH

very student of Pan Atlantic University will from Monday, May 11, receive a gift of 3gigabytes of data a week in compassionate support to access lectures as the highbrow private university declared its intention to march on with online tutorials in the wake of uncertainty around Covid-19. Vice Chancellor Juan Manuel Elegido announced the decision of the institution to continue online instruction for the remainder of the 2019/2020 academic year as well as the 2020/2021 session, hoping to commence October 2020. The decision represents a nod to the new paradigm of online learning as the primary method of instruction in education. The school would “teach, learn, collaborate and work online” in the days ahead. Like most institutions, Pan Atlantic University closed its lecture halls before the first lockdown of Lagos by the Lagos State government. It then switched students into online tutorials as it continued lectures for the second semester of the 2019/2020 session. Before the across-the-board 3gig data offer, PAU offered an allowance of N1,500 weekly to students on 75 to 100 percent schol-

arships. It also recorded slides and provided them to students of all Zoom sessions. PAU stated, “It requires up to 80 percent less data to download a pre-recorded session than to participant in it live and the download can be done even if one’s internet connection is unstable.” In a letter to all students on Friday, May 7, the PAU Vice Chancellor disclosed the decision of the University Management Council that the school would also conduct its examinations online subject to the approval of the Senate, continue compulsory internships required for graduation by appealing to companies to consider allowing students to do them online and plan ahead for the new session along the new paradigm. It would not pursue voluntary internships this period. The PAU vice chancellor declared, “As for the next academic session, much depends on decisions by the Ministry of Education and the National Universities Commission (NUC). However, if we are not prevented from doing so by these regulators, we are fully committed to starting the 2020/21 session in early October, as we have done every year. Whether we can do so physically or will have to start the session working fully or partially online will depend on the public health situation by then.”

BUNMI BAILEY

…others may follow soon

sales improved for them, why not its major competitor follow suit?” Ahmed said. “And going forward, I am sure that within the next one year other competitors will follow the same trend,” he said. Over the past four years, FastMoving Consumer Goods (FMCGs) firms, including soft drinks makers, have been competing for sales by increasing the quantity of their products without increasing their prices due to weak purchasing power of consumers. Data from the National Bureau of Statistics on Gross Domestic Product (GDP) by Income and Expenditure approach at 2010 purchaser’s values show that consumption expenditure of households has been declining at varying paces since it rose by 1.5 percent in 2015. Also, per capita income in Nigeria has declined to $2,049 in 2018 from $3,268 in 2014, according to the International Monetary Fund (IMF). Between 2014 and 2015, Bigi Cola garnered patronage from consumers because the product comes in a bigger (60cl) bottle and costs N100. The increased patronage for Bigi was making it tough for Pepsi and Coca-Cola and other drink manufacturers in the market.

here is a growing competition in the soft drinks space as heavyweight players, Coca-Cola and Pepsi, are fiercely slugging it out to gain competitive edge and maintain market share in the 50cl drink quantity category. Coca-Cola earlier in September 2019 reduced the volume of its 60cl PET bottle, which was sold for N150, to 50cl for N100 and also increased its 35cl PET bottle to 50cl for the same price of N100. Pepsi responded earlier this year by reducing its 60cl drink which was sold for N100 to 50cl without changing the price. “The trends in drink industry typify an oligopolistic market structure where players watch the behaviour of their rivals before taking any decision just to maintain relevance and competitiveness,” Adeshina Adewale, a Lagos-based economist, said. Ibrahim Ahmed, an expert in the carbonated soft drinks industry, said when the drinks were 60cl, there was serious competition among the big players, and now that it is 50cl, the same competition is expected. “Pepsi increasing its quantity was a short-term strategy to gain market share. But since Coke is now at 50cl which, by the way,

If nothing is done Jukun, Tiv crisis will consume all of us – Reps’ member Nathaniel Gbaoron, Jalingo

ollowing the renewed hostilities between the Jukun and Tiv in Southern Taraba that have claimed nearly a 100 lives in the last two weeks, the member representing Takum/Ussa/Donga/ Yangtu Federal Constituency in the House of Representatives, Rimande Shawulu, has called on all stakeholders and governments to work towards finding lasting solution to the crisis before the entire zone is completely ruined. Shawulu, who spoke exclusively with BusinessDay in a phone interview at the weekend, said it was pure madness that despite the high level of intermarriage and religious uniformity in the region, the people had continued to kill and destroy themselves over reasons that were not even clear. Though the Southern Taraba is enormously blessed with both human and natural resources like no other region in Nigeria, development has continued to elude the people because of incessant crisis, he said. Shawulu said it had come to a point where blame trading and claiming of right was no longer fashionable, and urged religious bodies, civil society organisations, and all stakeholders to come to a roundtable and sincerely chart a new course for the good of the people and posterity. “It is so sad, the news about the killings and destruction going on in Southern Taraba at the moment.

The intermarriages in that area is so much and most of the people are also Christians. So, you really begin to wonder why we are doing what we are doing in that area. Fights only increase the problems that people have, not reduced them. If we can find a way of sitting on a sincere roundtable, and I mean all the groups in Southern Taraba, that would be the best thing that would happen to that area. “The area is no doubt one of the richest areas in the whole country. There is therefore the need for all of us who are stakeholders in the state to come together on a roundtable and talk about peace. It is very important and we need to do it and do it quickly too. And I hope and pray that this will happen soon. I do not want to go on the path of saying these people are right or wrong or just blame trading. “There is no group that will not have its weaknesses and strength of argument. But it is this supposed strength in argument that is leading to the destruction of lives and property at this magnitude that we are experiencing. So, such arguments and justification that lead to the destruction of lives and villages cannot, in anyway whatsoever, contribute to the growth of the people. It is a very sad thing that is happening and the earlier it is stopped, the better for all of us,” he said. It could be recalled that renewed attacks started over a week ago mostly in Donga Local Government Area between the Tiv and Jukun, in a series of ongoing hostilities, leading to the death of scores and destruction of several villages. www.businessday.ng

Hope Uzodimma (l), governor, Imo State; Nana Opia (2nd l), director of DSS Imo State; Isaac Akinmoyede (r), Imo State commissioner of police, and others, during inspection at ADAPALM, Ohaji Egbema.

ACCA targets June to introduce remote exam-taking CHUKA UROKO

he Association of Chartered Certified Accountants (ACCA) says it is targeting June this year to introduce new flexibility for its students around the world to enable them take their exams at home or in another location in circumstances where centre-based exam sittings are disrupted. This development will ensure the robust and secure way of using the latest technology to enable remote invigilation of ACCA Qualification exams, to give its students reassurance that they can continue their exam journey in the face of Covid-19 disruption. “We recognise the disruption and frustration the

pandemic and resulting exam cancellations have caused for our students and their desire to progress, and this development will ensure their opportunity to do so,” Alan Hatfield, ACCA’s executive director, strategy and development, says. “We’re targeting June to enable this for our on-demand exams (Applied Knowledge and Foundation level exams) and September for our session-based Applied Skills exams. We’re still exploring the situation for our Strategic Professional exams and we’ll provide updates soon,” he assured. Under remote invigilation, exams are taken online and supervised remotely by a live invigilator. There is a thorough system of checks involving biometrics, artificial

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intelligence and recording – rigour, security and integrity are paramount. “ACCA aims to offer remote invigilation to students as widely as possible in circumstances and locations where our centre-based exams will need to be cancelled for health and safety reasons, or are affected by disruption. Exam entry is open for September and we know students are already planning for this session. We advise students to book exams in their local centre as usual and we’ll provide updates if circumstances change,” Hatfield said. Co nt inu ing, he sa i d, “we’re consulting with our learning partners on its introduction and how best to support our students, and we’ll continue to learn from their experience – and that of @Businessdayng

our students – on how remote invigilation might be further developed in the future.” ACCA will be using the latest in invigilation technology, providing assurance to regulators that ACCA’s exams have the same security and integrity around the world, whether that’s in an exam centre, at home or in a workplace. The association will provide more details as it moves nearer to enabling remote invigilation and it has produced a comprehensive set of online Q&As which students should refer to for more information. Hatfield noted that, in these uncertain times, they believed this innovative development would help students progress on their ACCA journey to becoming professionally qualified accountants.

Company IN FOCUS

BUSINESS DAY Monday 11 May 2020 www.businessday.ng

Wapic Insurance plc: Heralding bold new chapters through successful succession planning OLUFIKAYO OWOEYE

nsurance sector in Nigeria is faced with faced plethora of headwinds top among which include lack of insurance awareness and low public confidence in the sector; inadequate capital and prescriptive legal framework, among others. Despite these industry challenges, Wapic Insurance continues to pioneer innovation, technology, service excellence and sustainable business practices, thus attaining the primus inter pares status in the industry. Wapic has moved from a position of relative obscurity to notable prominence. The journey to greatness started following the introduction of a new banking model by the Central Bank of Nigeria which permits banking groups to either divest non-core banking business or to retain same by evolving into a non-banking holding company structure, tier1 lender, Access Bank divested from its non-banking subsidiaries in 2013, and distributed all its shareholding in Wapic Insurance to its 800,000 plus shareholders by way of a special dividend. This also culminated in the appointment of foremost banker and boardroom guru, Aigboje Aig-Imoukheuede, as its new chairman. The birth of Wapic Insurance came in 1958 as a private limited liability company under the name of West African Provincial Insurance Company Limited. It however became a public limited liability company in 1990 when its shares were listed on the Nigerian Stock Exchange. The Group secured a life insurance business license from National Insurance Commission (NAICOM) in 2000, and became a composite insurance business. The Group separated the life business and transferred the related assets and liabilities to its subsidiary, Intercontinental Life Assurance Limited (now Wapic Life Assurance Limited) in 2007 through which it continues to provide life assurance services. The insurance company is domiciled in Nigeria with operations in Nigeria and Ghana. Wapic Insurance Ghana Limited, a wholly owned subsidiary of Wapic Insurance Plc, was incorporated on in 2008 to carry on general insurance business in Ghana. The Group is principally engaged in the business of underwriting life and non-life insurance risks and also issues a diversified portfolio of investment contracts products to provide its customers with asset

Aigboje Aig-Imoukheuede, former chairman, Wapic Insurance plc

management solutions for their savings and target investment plans. The Aigboje AigImoukheuede-led board was saddled with an enormous task of repositioning the company and turning around its fortunes which would see Wapic emerge as a regional leader in the insurance sector. At the time Aig-Imoukhuede took over the leadership of the Board, Wapic Insurance’s total capital was N4.7 billion. Known for his track record as a turnaround expert, AigImoukhuede-led team successfully recapitalised the business to the tune of N23.1billion, between 2011 and 2019, a significant 400percent growth. It is noteworthy that the General business which has already met the 2018 NAICOM recapitalisation requirement is now also well positioned to recapitalise its Life subsidiary business in 2020. Wapic has also built a successful succession planning which has seen business objectives and vision passed on from individual to another. As the curtain draws on the tenure of foremost banker, and

with the appointment of Mutiu Sunmonu to succeed him as chairman of Board of Directors of Wapic Insurance, while Bababode Osunkoya takes over from him as chairman of Wapic Life Assurance, and Frank Beecham, the current Chairman of Wapic Insurance (Ghana) Ltd will retain his position until the end of his tenure. With this smooth transition, Wapic has further demonstrated that its commitment to raising a workforce of leaders who can be called upon to continue with the vision of the organisation and the future of any organisations lies in the growth of people in them According to Harvey Firestone, the growth and development of people is the highest calling of leadership. In his farewell speech, the former Chairman spoke highly of his two successors, their suitability for the job and the unimpeachable credentials they both exhibit. An excerpt from the speech reads, “My dear colleagues, Mr. Sunmonu is a respected business leader, with extensive board experience in various organisations across multiple sectors of the economy. He is

‘‘

It is noteworthy that even on the eve of Aig-Imoukhuede’s retirement from the Board of Wapic, the company continues to lead the industry as the first Nigerian underwriter to refund 100% premiums on motor insurance to its customers

Mutiu Sunmonu, new chairman, Wapic Insurance plc

well prepared to lead the next phase of the Wapic Insurance growth plan. He is the former Managing Director of Shell Petroleum Development Company of Nigeria (SPDC) and Country Chairman of Shell Companies in Nigeria, with an Oil & Gas career spanning over 36 years in Nigeria, United Kingdom and the Netherlands.” “Mr. Osunkoya is a Senior Partner at the Chartered Accounting firm of Abax-OOSA Professionals, boasting over twodecade cognate experience in banking, business and financial advisory. He is one of Nigeria’s foremost certified Forensic Auditors, a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and Chartered Institute of Taxation of Nigeria (CITN); he will champion Wapic Life Assurance’s growth objectives in this phase of the transformation agenda.” “As I retire from the Boards of Wapic Insurance and Wapic Life Assurance today, I am confident that Messrs. Mutiu Sunmonu and Bababode Osunkoya will enjoy the necessary support towards the actualisation of our outlined institutional goals in this second phase of our Transformation Agenda.” It is noteworthy that even on the eve of Aig-Imoukhuede’s retirement from the Board of Wapic, the company continues to lead the industry as the first Nigerian underwriter to refund 100% premiums on motor insurance to its customers. The Company understands that its customers are experiencing unprecedented circumstances and many are struggling to cope during this period, leading to the generous decision to refund customers in recognising that they are making a sacrifice by staying at home and supporting the country in flattening the

curve of the pandemic. “With a sense of fulfilment, Wapic Insurance has successfully transformed into an insurance company of choice. The series of implemented corporate actions have established the company as a leader championing customer-centric initiatives and programmes aimed at industry transformation.” In the words of John Maxwell, a leader’s lasting value is measured by succession. The retirement signals the beginning of another phase of Wapic’s transformation agenda. The new phase is expected to drive the extension of the accomplishments and successes, which saw the insurance company move from a mid-table position to an industry leading position, with shareholders’ funds growing significantly from N4.7 billion to N23.1 billion in the first phase of its transformation. Thus, making it one of the most capitalised companies in the industry and undoubtedly better positioned to take our position as one of the leading insurance companies in West Africa. Over the past 8 years, the Aig-Imoukhuede-led team has laid a solid foundation for the continuous growth of Wapic Insurance and its subsidiaries - Wapic Life Assurance Ltd and Wapic Insurance (Ghana) Ltd, and positioned Wapic Insurance as an industry model for distinctive innovation. No doubt that Wapic is now well placed to consolidate on its past efforts and push for a future in which it strives to delight its customers through outstanding service and innovative offerings. As a new era begins at Wapic, shareholders and other stakeholders expect the two new Board leaders to build upon the robust legacy of AigImoukhuede’s Board.

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