BusinessDay 12 Aug 2019

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news you can trust I **MONDAY 12 AUGUST 2019 I vol. 19, no 369 I N300

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Nigeria’s downstream sector still attractive despite challenges DIPO OLADEHINDE

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espite a myriad of challenges bedevilling Nigeria’s downstream sector and few investors cashing out, some new investors and shareholders are still expecting a bumper performance in the sector in the coming years.

Some investors have exited the downstream sector due to persisting environmental, operational and regulatory challenges, including regulation of the sector, low operating margin for operators leading to low Return On Equity (ROE), huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest, and foreign exchange differentials on product importation.

Nigerian billionaire businessman Femi Otedola in June completed the sale of his stake in Forte Oil plc to focus on his investment in the power sector, according to him.

But another set of new inves-

analysts urge movement on fuel, electricity subsidies, PIGB FX squeeze on as $14bn of bonds to mature Sept-Feb 2020

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0.43 NGUS JAN 29 2020 362.48

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Buhari reforms take new urgency as oil prices, demand slide t’s almost like 2016 all over again in Nigeria. That’s after oil prices have plummeted below the Federal Government’s budget benchmark for the first time in three years, with focus again shifting to what

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ANALYSIS

L-R: Folorunso Coker, directorgeneral, Nigerian Tourism Development Corporation; Tolulope Sodipe, member, House of Representatives; Bamidele Abiodun, wife of Ogun State governor; Haresh Aswani, MD, Tolaram Group, and Bartholomew Brai, president, Nutrition Society of Nigeria, at the formal launch of Goodlife Magic fruit drinks in Lagos.

LOLADE AKINMURELE

fgn bonds

Treasury bills

President Muhammadu Buhari can do to make Africa’s largest economy less susceptible to oil price shocks.

The price of a barrel of Brent crude, Nigeria’s benchmark grade, has traded below the Federal Government’s $60 budget price peg for three straight days. The price

settled at $57 per barrel on Friday, $3 short of the budget peg.

Nigerian oil grades have suffered their slowest sales of the year in August, traders said, as US exports of competing light, sweet grades flood traditional markets in Europe and Asia.

The Federal Government re-

lies on oil sales for two-thirds of revenue and has failed to meet its income targets in the past three years mainly due to lower-thanexpected crude volumes.

“It is disappointing that Nigeria’s fortune remains heavily tied

Continues on page 42

tors are pumping in million-dollar investments into the sector. Majority of the new investors believe the chal-

Continues on page 42

Apapa: Haulage cost from Lagos ports drops as traffic P. 2 situation improves

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news Listed insurers strengthen cost management strategies to bolster margins BALA AUGIE

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igerian listed insurers are intensifying their cost management strategies in order to deliver a higher return to shareholders.

The country’s harsh economic environment confronts insurers with a myriad of challenges, from rising inflation to huge overheard costs, low consumer purchasing power, poor regulations, and currency volatility. Consequently, the profitability of insurers is barely above cost of capital as they are unable to translate impressive top-line performance into stronger bottom line.

The 17 largest listed insurers have spent a combined N203.30 billion on total operating costs (underwriting and management expenses) in the past four years, based on their half-year financial statements.

A breakdown shows total cumulative operating costs increased by 16.58 percent in June 2019 from N48.71 billion as at June 2018.

Experts say companies with very large product portfolios and multiple brands and channels are also those with the highest costs on average.

Tope Smart, managing director and CEO, NEM Insurance, said driving the company’s service delivery through

technology has resulted in a reduction in wastages with improved turn-around time.

“This has a positive impact on our claim payment, underwriting process and has contributed immensely to our customers’ satisfaction and retention,” said Smart.

Smart added that the insurer’s expenses in each year is based on the top-line (sales) performance, which translates to profitability, and that the issue of cost saving becomes irrelevant.

“What matters is what you spend the money on. Will the expenses add value to the performance? If yes, saving such cost is abnormal – an act of pennywise pound foolish,” said Smart.

In 2018, National Insurance Commission (NAICOM), after thorough scrutiny of the books of companies, placed a spending limit on those with financial challenges.

Mohammed Kari, immediate past commissioner for Insurance, had said the decision to limit spending of some insurers was taken to ensure companies do not spend unnecessarily to the extent that they would not be able to attend to claims settlement.

Nimota Adetoro (m), 70-year-old moin-moin seller/winner of the Dangote Cement ‘Bag of Goodies’ Promo’s saloon car; Joseph Makoju (2nd r), GMD, Dangote Cement plc; Funmi Sanni (2nd l), marketing director; Adeyemi Fajobi, national sales director, and Leye Bodunde, deputy regional director, South West, at the presentation of the saloon car in Osogbo.

Apapa: Haulage cost from Lagos ports drops as traffic situation improves …extortion still ongoing but at reduced rate, truckers allege CHUKA UROKO & AMAKA ANAGOR-EWUZIE

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ollowing the slight improvement in traffic situation in and out of Apapa, Nigeria’s premier port city, the cost of moving laden contain•Continues online at ers out of Apapa and Tin-Can www.businessday.ng Island ports to importers’ warehouses within and outside Lagos has reduced significantly two months after the Presidential Task Team on Apapa Gridlock commenced operations.

However, the first three days up to Thursday last economy. Crude oil price week were quite challenging settled at $57 per barrel on for motorists and residents Friday, which is $3 below the of the port city as the trucks Federal Government’s 2019 came back forcefully, making access to the city very budget benchmark.

Ayodele Akinwunmi, difficult.

The cost of transporting head, research, FSDH Merchant Bank Limited, said this one by 40-foot container may have negative impacts on revenue and other key prices in Nigeria.

However, the Nigerian central bank has been intervening in the currency mar- Olusola Bello with agency report ket over the past two weeks to igerian oil has sufkeep the naira stable. fered its slowest The Central Bank of Nigesales of the year ria (CBN) on Friday injected in August, traders $280.04 million and CNY28.3 said, as US exports of commillion in the spot and short- peting light, sweet grades tenored forwards segment of flood traditional markets in the inter-bank foreign market. Europe and Asia.

The latest interventions Despite this, European in the inter-bank foreign refiners still fall over themexchange market, which selves over Nigeria’s Egina were announced on Fri- crude oil because of its qualday, August 9, 2019, by Isaac ity and suitability for the Okorafor, director, corpo- refineries and its high yields. rate communications deThe new group managing partment, were for requests director of Nigerian Nationin the agricultural and raw al Petroleum Corporation materials sectors as well as (NNPC), Mele Kyari, has, Renminbi-denominated Let- however, stated that in spite ters of Credit. of the threats, Nigeria was

External reserves decline by $170m on lower FPI inflows

…CBN injects $280.04m, CNY28.3m into forex market HOPE MOSES-ASHIKE

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igeria’s external reserves decreased

by US$170 million in July to US$44.90 billion following lower portfolio inflows as well as drop in oil prices.

The stated reserves, according to FBNQuest, provide cover for 12.4 months of merchandise imports on the basis of the balance of payment (BoP) for the 12 months to Q1 2019, and 7.0 months when services are added.

There was a marginal increase in capital importation via the Investors and Exporters Foreign Exchange Window (I&E window) in July 2019 following a drop in June 2019.

Total capital importation through the I&E window in July 2019 stood at US$1.96bn, marginally up from US$1.91bn.

The price of oil has been trending downward. In the last few days, it has dropped below $60 per barrel, from over $70/b in April, as a result of fierce trade tensions between US and China which has impact on the global

within Lagos has reduced to N300,000-N400,000 from N700,000-N800,000, while cost of moving one by 20foot container dropped to N250,000-N230,000 from N500,000-N600,000.

Also, transporting one by 40-foot container to warehouse outside Lagos dropped to N700,000-N800,000 from N1 million-N1.3 million, while transporting one by 20-foot container now costs between N500,000-N600,000 from N750,000-800,000.

Tony Anakebe, managing director, Gold-Link Investment, who confirmed this to BusinessDay in an interview, attributed the reduction to the reduced volume of business activities at ports as well as the reduction in the level of extortion on truckers by traffic managers.

The challenges experi-

ence on Apapa roads last week created much concern, especially for the residents who concluded that the trucks and gridlock were back.

But that, according to Kayode Opeifa, executive vice chairman of the Presidential Task Team, was simply a flash in the pan, explaining that the challenge experienced within those days was caused by tankers that were rushing to the ports to lift fuel in readiness for the Sallah holiday.

“That challenge was expected and normal at a time like this when there will be two days holiday for the Sallah celebration; all the depots wanted to stock fuel because they won’t be lifting fuel on Monday and Tuesday because of the public holidays,” Opeifa explained to

BusinessDay in an interview at the weekend, assuring that the roads would be free again after “this rush”.

The cost of transporting containers skyrocketed when the congestion on Apapa road became unbearable as the then security operatives (in charge of controlling traffic on Apapa roads) comprising Navy and Army officers and others capitalised on the gridlock to extort money from truckers in exchange for access to the ports.

BusinessDay findings show that the recent conversion of the Lilypond Container Terminal and Tin-Can Island Trailer Park to truck holding-bay by the Nigerian Ports Authority (NPA), where manual call-up on

•Continues online at www.businessday.ng

Nigerian crude sees low demand in Europe as US exports rise

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

still going ahead to realise its dream of producing 3 million

barrels per day of oil in the nearest future.

Kyari said there would be investments by stakeholders that would make the anticipated 40 billion barrels reserve feasible.

According to Reuters, the changes illustrate how US President Donald Trump’s strategy for “energy dominance” is reshaping oil markets worldwide, as US oil exports surged 260,000 barrels per day in June to a monthly record of 3.16 million bpd.

Crude from Africa’s top exporter has largely been pushed out of the US market in the last decade due to booming domestic output.

Exports to the United States slid to zero for three weeks in July, the U.S. Energy Infor-

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mation Administration said.

But now shale oil from the U.S. Permian basin is pouring ever more into traditional strongholds for Nigerian oil in Western Europe, India and Indonesia.

Both Nigeria and the United States are big producers of the kind of light, sweet grades that are ideal for refining into gasoline.

According to IHS Markit, Europe has imported around 46 percent of Nigeria’s oil since the beginning of 2019, India nearly 18 percent, and the rest of Asia about another 10 percent.

“They’re facing bigger competition from the U.S., and in the last few weeks, U.S. exports have really picked up,” one major buyer @Businessdayng

of West African crude told Reuters.

As many as 40 cargoes for export in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on Jul. 18.

It was the largest oversupply so far in 2019, with about 25 cargoes the monthly norm.

Though the excess has begun to clear, in part due to energy majors absorbing much of the excess into their own refining systems, the discounts sellers made to attract interest have lowered price expectations for Nigerian exports for September.

“They’ve got a big volume

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news Women empowerment: UN reiterates support for Edo’s initiatives ... Obaseki, World Bank, EU review impact of strategy in fight against human trafficking

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he United Nations (UN) organ working for the empowerment of women, also known as UN Women, has pledged support to Edo State government’s policies aimed at protecting women and girls as well as strategies deployed by the Governor Godwin Obaseki-led administration in curbing human trafficking.

Country Representative for Nigeria, UN Women, Comfort Lamptey, said this during a courtesy visit to the governor at Government House in Benin City.

Lamptey said the domestication of the Violence Against Persons (VAP) Law by Edo State Government was commendable and a right step in protecting women and girls in the state.

The UN organ is working with the Italian Government to ensure that policies to protect women and girls are implemented in Nigeria, especially as the country is addressing the challenge of human trafficking, she said.

According to Lamptey, the partnership with the state government is aimed at ensuring

women organisations involved in the fight against trafficking of women and girls are strengthened and supported with relevant leadership skills so they can better interface with relevant agencies.

She said UN Women would also engage men and traditional rulers in the state to drive gender equality, noting, “Our collaboration is to support policy review, formulation and capacity building. We are ready to dialogue with Civil Society Organisations and Non-Governmental Organisations to see how our small

intervention can add value to the ongoing work in the state.”

In his response, Governor Obaseki said the UN Women’s partnership with the state government on policy implementation and capacity building was needed as his administration was executing policies against human trafficking.

He explained that the state government had put in place policies and programmes, as it relates to gender equality, adding that what needed to be done was the monitoring and evaluation of the effectiveness

of the policies.

“We have done a review of the policies and programmes that have to do with women across our Ministries, Departments and Agencies (MDA) so that we can streamline them.

We are now undertaking enumeration of businesses owned by women across the state to develop database for women businesses. The next stage for us is to focus on areas where girls are prone to trafficking and address the issue at that level,” he said.

He added that the state was

Niola Foundation awareness campaign to help Nigerians understand cancer prevention Modestus Anaesoronye

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s part of Niola Cancer Care Foundation’s objectives of promoting healthy lifestyle and living, it created an annual Health Education event known as ‘IJOYA,’ which third edition is coming up in October in Lagos.

The third edition of IJOYA 3.0 tagged “DEWS” Of Life (Dance; Exercise; Wellness & Screening) is an event organised by the Foundation in partnership with reputable fitness and exercise outfits - Safari Fitness and The Hit Squad in conjunction with Actors Guild of Nigeria Lagos Branch; to Dance, Exercise, Engage in Wellness activities, Screening and Exhibition Of Organic Food items in a bid to reduce risk of cancer and create awareness about the disease.

Its 2018 ‘IJOYA 2.0’ (2nd edition) was attended by over 2,000 participants. The Ijoya brand is gaining wider visibility and acceptance as a medium of awareness for Health related Education about Cancer. This year’s edition will take place on Saturday, October 5, 2019, at the outdoors of the National Stadium, Surulere, Lagos, between 7am and 10am. There will be health specialists in attendance with a projection of 5,000 participants.

In Nigeria, cancer screening, early detection and palliative care are largely unavailable in most of the public health care facilities.

Niola Cancer Care Foundation is Nigeria’s first non-governmental organisation dedicated to creating unmatched awareness on wellness with emphasis on colorectal cancer; conduct screening for early detection, advocate for better treatment and support research for its cure.

Its vision as an organisation is to set up Colorectal Cancer Screening Centres in Nigeria, with capacity to screen up to 100,000 individuals annually by the year 2030.

Its mission is to campaign for wellness and early detection through communication and engagement platforms, while leveraging on solid partnerships with its stakeholders and volunteers.

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@Businessdayng

working on several initiatives to curb human trafficking.

Meanwhile, Governor Obaseki has met with officials of the World Bank and the European Union (EU) to review the impact of the multi-pronged strategy being deployed in the fight against human trafficking in the state.

According to Obaseki, “the meeting provided us with the opportunity to appraise the work we have done so far and set new targets because the fight against human trafficking must be sustained.

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Government accountability and its impact on voluntary tax compliance (1)

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DAYO ADENIJI & AMINAT JEGEDE

ccording to Benjamin Franklin, there are only two things that are certain in life: death and taxes. Whilst the former is usually not a palatable topic for discussion in any gathering, the latter has been a subject of wide deliberations, ranging from its administration and collection to compliance level, interpretation of relevant legislation and the utilization of revenue generated from taxes and levies collected.

The Black’s Law Dictionary (the Dictionary) defines tax as a monetary charge imposed by the government on persons, entities, transactions, or property to yield public revenue. The Dictionary also defines public revenue as government’s income derived from taxes, levies and fees.

Tax has been generally used as a powerful tool for achieving economic and social policy objectives of government in most countries of the world. Although the payment of tax is a civic duty, it does not presuppose a ‘quid pro quo’ relationship between the government and its citizenry.

Nonetheless, it is the expectation of most citizens that the revenue generated from taxes

will be used for the betterment of the society. The government, on the other hand, expects that its citizens will be in full compliance with the prevailing tax laws, to enable it earn part of the necessary revenue to provide and maintain the essential services for its citizenry.

In Nigeria, voluntary tax compliance by citizens is somewhat a mirage; yet a feat that the government has been seeking to achieve for decades. Most taxpayers believe that the taxes collected are largely misappropriated as the government is perceived, in most quarters to be unscrupulous and insensitive to the needs of the people. As a result, taxpayers engage in tax avoidance schemes and/or outright evasion or are reluctant to perform their civic responsibility of voluntarily paying their taxes as they hold the view that such monies will either be spent recklessly or end up in individual pockets.

This article, therefore, seeks to evaluate the impact of government’s accountability and transparency on voluntary tax compliance.

Nigerian National Tax Policy The Nigerian income tax system is mainly characterised by selfassessments for companies and businesses based on the provi-

sions of the prevailing tax laws.

However, in certain instances, especially for transaction and personal income taxes, the tax laws provide for the appointment of persons, companies, ministries, extra-ministerial departments and agencies as agents of the government for withholding and collection of applicable taxes for onward remittance to the tax administrator, which is either the Federal Inland Revenue Service or the relevant State Internal Revenue Service.

Nigeria’s tax to Gross Domestic Product (GDP) ratio stands at approximately 4 percent as at 2018, according to data from the National Bureau of Statistics (NBS) and Federal Inland Revenue Services (FIRS). This pales in comparison to other African countries. For instance, based on the Africa Tax Administration Forum (ATAF) report, countries like South Africa and Kenya have a tax to GDP ratio of 27 percent and 16 percent, respectively as at 2017.

Similarly, in most developed countries, tax revenues account for over 30 percent of the GDP, while in other developing countries, it accounted for less than 20 percent of the GDP. Thus, in a bid to increase Nigeria’s tax to GDP ratio, amongst other things, the Federal Republic of Nigeria through the Federal Ministry of Finance, launched the National Tax Policy (NTP) in Febru-

‘

In Nigeria, voluntary tax compliance by citizens is somewhat a mirage; yet a feat that the government has been seeking to achieve for decades.

Most taxpayers believe that the taxes collected are largely misappropriated

ary 2017.

The NTP defines tax “as any compulsory payment to government imposed by law, without direct benefit or return of value or a service, whether it is called a tax or not”. This definition has, however, raised the question of whether the Nigerian government is seeking to shirk its responsibility of answerability for utilization of taxes.

Notwithstanding the definition of tax by the NTP, some of the objectives of the NTP are to serve as a point of reference for all stakeholders on taxation and to provide a benchmark on which stakeholders shall be held accountable. The NTP identifies the government, taxpayer, revenue agencies, professional bodies, tax practitioners, consultants, agents and media and advocacy groups as relevant stakeholders.

In addition, the NTP elucidates that sustainability is one of the guiding principles of the Nigerian Tax System. Thus, according to the NTP, the tax system should promote sustainable revenue, economic growth and development, which are legitimate expectations of the citizenry of any country.

(To be continued. The next article will look at government accountability in tax compliance in Nigeria) Adeniji and Jegede are, respectively, Senior Manager and Manager at KPMG Nigeria

Why George W Bush is Africa’s favourite US president

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he most popular living US president in Africa is not Barack Obama, whose election in 2008 prompted Kenya, the east African country where his father was born, to declare a national holiday. Nor was it Bill Clinton, despite the strong support he enjoyed from the African-American community and his rhetorical clasping of the continent. By some margin, the US president most respected in Africa is one George W Bush.

The main reason for Mr Bush’s enduring popularity is a health initiative he personally championed with the unpromising acronym of Pepfar. The President’s Emergency Plan for Aids Relief, one of the biggest global health initiatives in history, eclipsed anything that either presidents Obama or Clinton achieved in Africa. For Mr Bush, it has polished a legacy tarnished by misjudged adventures in the Middle East.

Begun in 2003 and covering some 50 countries, Pepfar has saved the lives of an estimated 13m people living with HIV-Aids, mostly in Africa, by providing them with antiretroviral drugs. The scheme, which has cost $80bn to date, has also prevented some 2.2m children from being infected through mother-to-child transmission. As Mr Bush himself has said, as well as being morally the right thing to do, it has won the US friends across the continent.

“The president who stood up and said

‘I am going to do this’ was Bush,” Joyce Banda, a former president of Malawi, told me last week in what is a familiar show of gratitude. “Because of Pepfar, Bush is my best president.”

Unlike some development assistance, Pepfar has the virtue of having demonstrably worked. Today, there are some 37m people living with HIV, the virus that causes Aids. That is more than at any time since the epidemic began for the simple reason that 23.3m people, many of them beneficiaries of Pepfar, are on the antiretroviral drugs that can suppress the virus indefinitely.

Infection rates, while still high, have dropped sharply. The HIV infection rate in Kenya, the most affected country in east Africa, has fallen from 14 per cent at the time Pepfar began to about 5 per cent today. Life expectancy around the continent, which dipped severely at the start of the Aids epidemic, has bounced back strongly. So have economies once threatened with the devastation of losing large swaths of their working population.

Six of the fastest-growing economies in the world last year were African.

To understand the impact of Mr Bush’s scheme one has to go back to the early 2000s, when the global Aids epidemic was exploding. In Africa, some 20m people were infected, of whom an estimated 11,000 were receiving the cocktail of antiretroviral drugs whose impact was www.businessday.ng

so dramatic in clawing people back from death it was called the “Lazarus effect”.

Unfortunately, the miracle came with a price tag of about $20,000 a year. Even when drug companies came under legal and moral pressure to slash prices, the medicine remained out of reach for the vast majority of Africans. HIV remained a death sentence.

This is where Mr Bush, encouraged by his wife Laura, came in. The president had heard that a single dose of a drug called Nevirapine could prevent mother-to-child transmission through breast-feeding.

According to an account in the Dallas Morning News, he asked Dr Anthony Fauci, an Aids specialist at the National Institutes of Health, to come up with a funding plan.

Dr Fauci laid out an initiative that would have cost $500m. Mr Bush asked him what it would take to do something truly transformative. In his 2003 State of the Union address, the president asked Congress to commit $15bn over five years to fight the epidemic. Pepfar was born.

Today, two things threaten the progress that has been made. One is complacency.

After 30 years of the epidemic, it is tempting to declare victory prematurely. But untreated, HIV will bounce back, not only in Africa but in the rest of the world. Second is funding for Pepfar itself. President Obama was the first to propose cutting the budget.

Donald Trump has urged cuts of around 20 per cent. So far, Congress has said no.

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DAVID PILLING

The idea of aid is under attack, even in Africa itself. In the US, many support a cut in foreign aid which, at 0.18 per cent of gross domestic product, is already near the bottom of the league table of contributions by developed countries.

In a 2016 speech, perhaps the nearest Mr Bush came to a “we choose to go to the moon” moment, he addressed the question head on. “I believe,” he said, “that spending less than two-tenths of 1 per cent of our federal budget to save millions of lives is [in] the moral, the practical and the national security interests of the United States.”

Millions of people with HIV who are living full and productive lives would agree.

@Businessdayng

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Amid global headwinds, does the current Naira policy serve Nigeria

PATRICK ATUANYA

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ap star and Philadelphia native Beanie Sigel’s smash 2004 hit single “feel it in the air” about a man with dark foreboding signs of some negative event about to take place, reminds one of happenings in the global and Nigerian economy lately.

Escalating U.S.-China trade tensions threaten to worsen global growth after President Donald Trump threatened to impose additional tariffs against China, last week.

President Trump also added for good measure on Friday that planned talks with China next month could be called off.

As the showdown between the U.S. and China persists, investors and emerging to developed markets, are struggling to gauge the likely outcome on the global economy and potential impact on asset prices.

Oil prices have already entered a bear market (defined as a 20% drop from recent highs), while global stocks have also sold off. Gold often seen as a safe haven however, is being bid as well as its digital counterpart Bitcoin.

Some countries are choosing to shoot first and ask questions later.

Three central banks across Asia Pacific delivered surprise interestrate cuts decisions last week as policy makers took aggressive action to counter a worsening global economy.

The Reserve Bank of India lowered its benchmark rate by 35 basis points to 5.4 percent, its fourth cut this year.

New Zealand reduced its rate by 50 basis points to 1 percent; economists had forecast a 25 basis-point reduction, while the Bank of Thailand’s cut rates by 25 basis-points to 1.50 percent, the first in more than four years.

The U.S Federal Reserve’s rate cut last week paved the way for much of the easing by Central Banks in Asia, even as markets are pricing in the chance of another cut by the Fed in September.

So why are these Asian countries so eager to have weaker currencies implied by the rate cuts?

For Thailand its surging currency brought about by a deluge of portfolio inflows, is hurting exports and tourism as the Thai baht (currency) has gained about 8 percent against the dollar in the past year.

In India, the fiscal authorities had earlier called for “significant” policy easing from the central bank to help revive growth, while New Zealand’s policy actions were in response to weakening domestic demand amid global trade tensions that threaten to curb exports and commodity prices.

Conventional monetary policy

would suggest the Central Bank of Nigeria (CBN) would be in lock step with its Asian counterparts and begin an easing cycle in earnest given all the headwinds described so far.

However like with all things Nigerian, it is not quite so simple.

The CBN is strongly committed to a stable Naira policy, and as such has: kept its benchmark policy rate elevated at 13.5 percent, tightened liquidity through the cash reserve ratio (CRR) which is at 22.5 percent, and periodically sold Open Market Operation (OMO) bills at high yields to mop up excess liquidity and attract foreign portfolio flows.

In essence a mirror opposite of what the mentioned Asian countries are trying to engineer/achieve.

To understand the dilemma of the CBN it will help to pay attention to the structure of the 4 economies.

Exports of goods and services as a percentage of GDP in Thailand was reported at 68.9 percent in 2018, New Zealand 27.6 percent, India 19.7 percent and Nigeria 13.2 percent, according to the latest World Bank data.

In essence Nigeria had the lowest export base among all four countries and even at that its exports are the least diversified with a single commodity oil responsible for some 95 percent of all export dollars earned.

So in essence Nigeria is using the proceeds of a single export commodity (whose price is becoming increasingly unpredictable amid a supply glut), to prop up its currency (the naira), in a battle it surely will not win in the

‘

For Nigeria, which is perhaps in a worse fiscal and monetary shape since the last recession in 2016, perhaps it’s time for the authorities to get paranoid, and begin to pull out all the reform policy stops

long run, but clearly cannot afford to lose.

Perhaps it may make more sense to begin to nudge the country into becoming an export base for global manufacturers, which would probably entail a free floating naira trading closer to its Real Effective Exchange Rate (REER).

If that were to be the case then the CBN would not find itself in the current situation where it has been stuck in a tight monetary policy stance for much of the past 5 years, even as Nigeria entered and exited a recession, while remaining trapped in a low growth trajectory.

Larry Summers, a Harvard professor, and former U.S. Treasury secretary and White House economic adviser during the global economic crises of 2007/2008 sees a less than 50/50 chance that the U.S. enters a recession in the next 12 months.

Such a scenario if it comes to pass would likely clobber commodity prices from copper to crude, with a negative fallout for emerging markets like Nigeria.

In the last verse of “Feel it in the Air” a clearly paranoid Sigel asks “Can you feel the grim reaper floatin’?”

For Nigeria, which is perhaps in a worse fiscal and monetary shape since the last recession in 2016, perhaps it’s time for the authorities to get paranoid, and begin to pull out all the reform policy stops.

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

What to produce?

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he question of what to produce is one of the foundations of any given country’s economic system.

How do people in a society decide what to do? How do they decide if they should produce milk or produce beef; if they should produce rice or maize; if they should produce rubber tires or plastic chairs? Of course, I am oversimplifying things as societies produce many things but stay with me here.

Consider a simple example of a farmer who has one hectare of land and has to decide what to grow. For simplicity we will assume that costs for each of the crops the farmer has the option of growing are the same (we economists and our pesky assumptions).

The farmer does a survey of various crops that could be grown on his farm and concludes that the farm will earn five million naira in that season if sesame seeds are grown. The farm will earn four million if maize is grown, three million if rice is grown, and finally two million if cotton is grown. At this point you do not need an economist to tell the farmer what should be grown. Sesame seeds are the obvious choice. For that farm, sesame is the crop with the highest level of productivity, compared to the other options.

But there is a plot twist. The farmer goes home and announces to the fam-

ily, “This year we are going to be growing sesame!” The family is not too pleased.

“We do not eat sesame seeds! We don’t even know how to eat sesame seeds!” The family accountant checks the accounts from the previous year and announces, “Last year we spent one million naira on rice. Surely that is what we should be growing so we stop wasting money on other people’s rice”.

The farmer laughs; by the way he took some basic economics classes in secondary school. “OK let me put it like this. We are going to eat one million naira worth of rice this year no matter what. But after we eat that rice, how much money will we have left? How much will have left if we grow sesame seeds? How much will we have left if we grow rice? How much if we grow maize?”

The family accountant brings out the calculator and crunches the numbers. “If we grow sesame seeds we will have four million naira left after eating. If we grow maize we will have three million naira left. If we follow my suggestion and grow rice we will have only one million naira left after eating. OK it makes sense to grow sesame seeds. We will be richer afterwards and still eat all the rice we want.”

Indeed, the farmer is right. The decision of what to produce does not really depend on what is consumed. As long www.businessday.ng

as the farmer can buy whatever it is the family consumes then the best thing to do is always to produce the most valuable thing, or the thing with the highest level of productivity.

The farm example is a very simplified one and economies are way more complex, but the logic still applies. How do you decide what to produce, and how do you decide where to channel resources to? In general, the smart thing to do is to channel resources to areas with the highest levels of productivity and then just trade for the rest.

On an economy-wide level, it doesn’t really matter what we consume or import. If we can grow $3bn worth of maize on our limited pieces of land then why should we choose to grow $1.5bn worth of rice instead? If the goal is to get richer and have wealthier citizens then the citizens should be doing the most productive things they can regardless of what it is, and of course continue learning to be even more productive.

However, how do we decide what the most productive thing we can do is? Is it the same everywhere or is it different depending on the location or sector? Is there any guarantee that the most productive thing this year will be the most productive thing next year? All these questions are mostly unanswerable. The

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NNIMMO NONSO BASSEY OBIKIL

National Bureau of Statistics is one of the model government agencies but even they don’t have the productivity data by sector, or by region or by firm.

Even if they did, predicting the future would probably be beyond their capacity. So how do we decide what to do? Let the people decide. Let the farmer, and the industrialist, and the tailor, and the oil company each decide what to invest in. The odds that they choose the thing which they are most productive at doing is much higher than if a bureaucrat sitting in Abuja without data chooses.

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

Ghana’s “pleasant” energy challenge

G

hana has d ifficulty with energy. Ghana is grappling with the consequences and costs of managing excess power supply rather than shortages. The situation of more power than the country currently needs is causing serious concern in both the Executive and Parliament.

Ghana moved from inadequate power supply in 2014-2015 to excess power in 2019. Five short years was all that it took our neighbour and competitor in West Africa to solve its problem of power supply. Today it has an installed capacity of 5,083 MW, almost double the peak demand of 2,700 MW. To tackle the power challenge the previous government signed contracts with three power generation firms and with gas suppliers.

The deals relied on take-orpay agreements, meaning they obliged the government to pay whether customers consumed the power gener-

ated or not. Further, payment was in foreign currency. The firms went to work. Now that they are generating excess energy, the government estimates it would cost the country extra US$500m annually to pay for power alone.

It faces a similar challenge with the gas supply. According to the Minister of Finance of Ghana, Ken Ofori-Atta, from next year a gas glut could cost the country of between US$550 and US$850 million every year The Ghanaians have proposed renegotiation of the contracts from take-or-pay to take-and-pay. The government would only pay for such power as citizens consume.

They would also be looking at the foreign currency component of the payment terms.

Nigerians would consider the energy challenge in Ghana a pleasant one given our benighted history of power supply. In 20 years, despite fanciful promises, Nigerians still grapple with power failures and blackouts arising

from inadequate generation and poor distribution. When it was in opposition, the now ruling APC government made extravagant promises about how it had the magic bullet to solve the power problem. It turned out to be mere bluster.

By solving its power challenge in just five years, Ghana has shown that a focused government can achieve. The Akufo-Addo government has shown great resolve in tackling Ghana’s challenges. It has changed the narrative of the country, following a dip, to one of sustained positives. The International Monetary Fund, in its 2019, report showcased Ghana as a case study.

Ghana has repaid a $918 million economic stabilisation loan it took from the IMF in 2015. It deployed the loan strictly according to the terms and for the stated purpose.

The IMF notes: “By 2015, Ghana’s economy was in trouble, hobbled by widening current account and budget deficits, rampant inflation, and a depreciating currency. Credit

dried up as interest rates rose and banks’ bad loans piled up.

At the root of Ghana’s woes was out-of-control government spending. In early 2015, Ghana turned to the IMF for a $918 million loan to help stabilise the economy”.

“Ghana’s economy is on the mend. The trade and budget deficits are narrowing. The pace of economic growth is poised to rise to 8.8 per cent in 2019 from 2.2 per cent in 2015. The inflation rate is projected to fall to 8 per cent from almost 19 per cent. Cuts to wasteful spending made room for much needed social services, such as free secondary education. For Ghana’s 28 million people, it all adds up to higher incomes, better job opportunities, and more purchasing power.”

The success story with power is proof that Ghana has turned the corner, and its trajectory is upward and positive. There are lessons for the federal and state governments in Nigeria. Give Nigerians power now.

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There will be no winners in a currency war

ESWAR PRASAD

T

he trade wars fomented by the Trump administration are on the cusp of morphing into currency wars.

Currency devaluation might seem a useful element of the policy toolkit for economies suffering from slowing growth or, indeed, dealing with trade disputes, but it carries enormous risks for those countries themselves and for the world economy.

Trade tensions between the US and China, which are on the verge of breaking out into open and allout economic warfare, constitute the main battle front for the currency wars. For nearly 15 years, from about 2000 to mid-2014, China’s central bank intervened aggressively in foreign exchange markets to prevent the renminbi’s rapid appreciation against the US dollar. By doing so, it gained a competitive advantage for China’s exports. Since mid-2014, the intervention has been in the opposite direction — to prevent the renminbi from depreciating too much or too

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quickly.

The Trump administration’s designation of China as a currency manipulator is thus a few years late and particularly ill-timed: the recent intervention by the Chinese central bank has mostly favoured US exporters not Chinese ones.

Still, given the arbitrary and retaliatory nature of the currency manipulation designation, China might well be tempted to allow further renminbi depreciation to hit back at the US and, at least partially, to offset US tariffs.

This would be a step with small benefits and enormous risks for China. One risk, which currency speculators are salivating over, is that further renminbi weakness sets off a spiral of currency depreciation and capital outflows as occurred in 2014-15. The government is better prepared this time around to prevent such a destructive spiral — it can use its foreign exchange reserves more aggressively early on and also shut down speculative activity in both onshore and offshore markets. But such measures, along with any tightening of capital controls to reduce capital flow volatility, would unravel the progress Beijing has made in convincing foreign investors that they can count on stable capital account and currency policies and should invest in China’s stock and bond markets.

A few key emerging market economies, such as India and Thailand, have cut interest rates sharply as a defensive action to protect themselves from the collateral damage resulting from rising global trade

tensions, amid weakening domestic growth. Major advanced economy central banks such as the Bank of England, the Bank of Japan and the European Central Bank are likely to loosen monetary policy in the coming months to deal with the travails of their own economies. Given the importance of trade to these economies, and whether or not they are explicitly targeting weaker currencies, they are no doubt counting on such a move to provide a boost to growth.

Under Donald Trump, the US administration has taken an aggressive rhetorical approach, threatening to devalue the dollar if the country’s trading partners engage in what it regards as competitive currency devaluations. The US has shown little interest in any fine distinctions between market-driven currency depreciations versus targeted policy-driven devaluations, viewing all currency depreciations relative to the dollar as hostile economic acts.

A currency war would do little to boost US growth prospects.

It is much harder for the US to push down the value of the dollar, ironically because of the currency’s dominant presence in global financial markets. It would be difficult to engage in unilateral intervention on a scale sufficiently large materially to affect the dollar’s value against other major currencies — especially if the Federal Reserve stayed on the sidelines in such an endeavour.

Besides, such a move would incite a broader currency war, with other

‘

All of these convulsions in currency markets will add to the uncertainty already spawned by global trade tensions

countries stepping up their own retaliatory intervention. The resulting turmoil in financial markets could actually firm up the dollar’s value if investors turn to it for safety.

So, for the US, a currency war could have the paradoxical effect of strengthening its currency, which remains the ultimate safe haven for investors in times of heightened uncertainty. Moreover, for Mr Trump to bully the Fed into participating directly in a currency war could have longer-lasting consequences for the credibility of the central bank.

There are other costs for the world economy. A stronger dollar would end up creating collateral damage in some emerging market economies, on account of balanceof-payments pressures caused by large amounts of external debt and weakening currencies.

All of these convulsions in currency markets will add to the uncertainty already spawned by global trade tensions. This uncertainty, in addition to the exchange rate volatility triggered by currency wars, will keep business investment weak and continue hurting productivity and employment growth around the world.

A cheaper currency might seem easy to orchestrate and a convenient mechanism to boost domestic growth and retaliate against trade sanctions imposed by other countries. But the actual benefits are likely to be fleeting while the costs in disrupted trade and lost growth could be enormous.

How the finance sector can help stop illegal wildlife trade

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round the world, endangered species are being driven to the point of extinction by the demand for illegal wildlife products. Despite our best efforts, the criminals are still winning. To turn the tide, we need to rethink our approach. That means recognising that everyone has a part to play – including the financial sector.

The scale of the challenge is enormous, and the statistics are alarming.

More than 30,000 elephants are killed each year. Tigers have become so rare that there are more of them living in captivity in the US than in the wild. And there is a real human cost as well – approximately 1,000 wildlife rangers have been killed in the last 10 years while trying to protect endangered species.

This isn’t simply a conservation issue.

The reality is that the illegal wildlife trade is an organised crime which fuels violence, drives corruption, and impoverishes communities.

This brutal business is now worth between $7-23 billion annually to the criminals behind it. Research also shows that it is often linked to other damaging crimes: two-thirds of the cases of illegal wildlife trade analysed were connected to the narcotics trade.

That means that combating the illegal

wildlife trade offers an opportunity to better tackle the threat of organised crime.

It is a mistake to think we can just arrest our way out of this problem. Where one shipment is stopped, another will take its place. Instead, we need to disrupt the business model behind the trade. Its Achilles heel is the very thing that motivates it – the money. The need to move, store and realise proceeds gives governments and the financial sector the power to identify criminal networks via their financial footprints and help close the net.

However, to date, the illegal wildlife trade has barely received any attention as a form of financial crime. In fact, according to the UN Office on Drugs and Crime, only 26 percent of jurisdictions look at the finances behind the trade.

That means there is an important opportunity for banks to strengthen the fight against the trade.

To crack down on the trafficking and tackle the wildlife crime, the financial sector can do three things.

First, the financial system must become attuned to the activity that courses through the system and apply the armoury of tools that they use to fight other financial crimes. At Standwww.businessday.ng

ard Chartered, we’re training bank branch tellers to better spot potentially suspicious transactions relating to the illegal wildlife trade, we’re making this crime an area of focus for our financial crime investigators and, through our Correspondent Banking Academies, working with clients to better understand and respond to the illegal wildlife trade.

Second, raising awareness of the threat of the illegal wildlife trade, both to endangered species and through the organised crime it supports, is crucial to building and sustaining action. That’s why our latest brand campaign, showing across 11 countries, has focused on the illegal wildlife trade. Through the trusted relationships we have with millions of customers around the world, including in many of the countries crucial to the demand, supply, or transit of illegal wildlife products, we can draw attention to the damage the trade can cause.

No one organisation, government or law enforcement agency can combat wildlife trafficking alone. We will only succeed if we work in partnership with each other. That’s why coalitions of NGOs, financial institutions and wildlife experts like the United For Wildlife

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KWEKU BEDU-ADDO

Financial Taskforce are so important.

We’re proud to have played a central role in its establishment, and we must expand and accelerate partnership action.

We are hopeful that the world is approaching a tipping point in the efforts to combat the trade. It’s time for the financial sector to take a stand, and by working together we can make a real difference.

Bedu-Addo is the CEO of Standard Chartered Southern Africa

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Tertiary education in Africa

A Balkanon betrayal Democrats parade

A booming population is putting strain on Africa’s universities New initiatives can help to ease it

“I

N RWANDA IT’S not easy to get a job,” says Jean-Paul Bahati, a student at Kepler, a college founded in Kigali in 2013. But the 22-yearold believes his course will help him stand out. He studies health-care management, a growing industry in Rwanda. Kepler’s degrees are accredited by Southern New Hampshire University (SNHU), which runs one of the largest online universities in America. The first six months are a crash course in skills such as critical thinking, English, communication and IT. “I like that Kepler knows what employers want,” says Mr Bahati.

In recent decades millions of young people like Mr Bahati have swelled the number of students in sub-Saharan Africa. Today 8m are in tertiary education, a term that includes vocational colleges and universities. That is about 9% of young people—more than double the share in 2000 (4%), but far lower than in other regions (see chart). In South Asia the share is 25%, in Latin America and the Caribbean, 51%.

Both the number and share of young people in tertiary education in sub-Saharan Africa will keep growing. The region has about 90m people aged 20-24, a figure projected to double over the next 30 years. Whereas 42% of that age group had completed secondary school in 2012, 59% are forecast to do so by 2030. If African countries are to meet the aspirations of educated young people, they must ensure there are opportunities for further study.

So far they have struggled. Staterun institutions that trained the post-colonial elites are finding it hard to serve a mass market. In much of the region public funding per student has fallen since the late 1990s as enrolment has surged.

This reflects competing priorities. In the poorest African countries it costs 27 times more to fund a university place than one at primary school. Since students typically come from affluent families, university spending subsidises the children of elites. In Ghana, the higher-education spending that goes to the richest tenth of households is 135 times that spent on the

Nearly two dozen presidential candidates descend on Iowa Chicken wings, butter sculptures and American retail politics at its sweatiest

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poorest tenth. Policymakers find themselves deciding whether to spend scarce resources on helping poor children attend school or rich children go to university.

The effects of spreading public funding thinly are apparent on campuses. African universities have 50% more students per professor than the global average. Students are more likely to study humanities degrees than science ones, which are more expensive to teach. Over 70% of graduates have arts degrees, versus 53% in Asia.

More young people are heading abroad instead. In 2017 some 374,000 studied overseas, up from 156,000 two decades earlier. Many never return. One in nine Africans with a tertiary qualification lives in an OECD country, compared with one in 13 Latin Americans and one in 30 Asians.

With the public sector struggling to meet demand for places and to offer a high-quality education, the private sector is filling the gap.

From 1990 to 2014 the number of public universities in sub-Saharan Africa rose from 100 to 500, while private universities grew from 30 to more than 1,000. Many are small. In Kigali, the University of Rwanda has 30,000 students, while private ones have a few hundred each. But they are enrolling a growing proportion

of students, notes Daniel Levy of the University of Albany. In 2000 about 10% of African students went to private institutions; by 2015 the share was 20%. In Rwanda more than half do so.

Students at private universities often benefit from new ways of teaching. Consider Ashesi, which has grown steadily since its founding in 2002 in Accra. Much of Ghanaian higher education is based on rote learning, observes Patrick Awuah, its founder and a former Microsoft engineer, and was not “teaching students to think critically”. He based Ashesi on American liberal-arts colleges, where students combine humanities and sciences.

Vocational outfits can innovate, too. ALX, a for-profit institution that opened its first campus in Nairobi last year, runs a six-month “bootcamp” in soft skills, then helps students find a six-month internship. Its gambit is that its brand becomes so strong that employers do not mind that its graduates lack a degree.

“A traditional university model is very hard to make profitable,” says Fred Swaniker, the Ghanaian founder of ALX. He should know.

In 2013 Mr Swaniker set up the African Leadership University (ALU), which was dubbed the “Harvard of Africa”. But its campuses in Mau-

ritius ($15,000 per year for board and tuition) and Kigali ($9,000) are “too expensive”, he concedes. It has ditched plans to open dozens of campuses like these and is instead expanding the cheaper ($2,000 per year) ALX model.

Another reason for the shift is regulation. Gaining accreditation is arduous. Rwanda made ALU buy 90 desktop computers, even though it gives students laptops. Kepler’s application ran to 1,100 pages.

Yet the biggest barrier to expanding access to tertiary education is student financing. This is true for private and public universities, since in most African countries public ones charge upfront tuition fees.

(Scholarships exist, but these are often granted on merit, not need, putting them out of reach of poor children with good but not stellar grades.) “The bottleneck is not the education model; it’s the financing,” says Teppo Jouttenus of Kepler.

This is not just an injustice but a sign of economic inefficiency. The average gap between wages earned by graduates and non-graduates in sub-Saharan Africa is wider than in other regions. It would make sense if students could defer the expense.

This would ensure that those who benefit the most from university cover the costs, leaving more public money for other things.

PERSON would have to be dead inside not to not love the Iowa State Fair: 11 days of agriculture contests, carnival rides and inventive fried food. On opening morning, a line slowly snaked past Cookie Monster and Big Bird carved out of butter. A sudden rainstorm produced a larger-than-expected crowd for an indoor cow-judging contest (“That first place heifer is just a little more feminine than the second-place heifer”). For lunch your correspondent passed on the deep-fried, bacon-wrapped Cheddar on a stick, opting instead for a thick slab of brown-sugar-cured pork belly on a stick, followed immediately by cubes of pork belly not on a stick, an abiding sense of guilt and a greasy notebook.

In election years, the fair has another draw: politics. Presidential

candidates head to Des Moines en masse to woo the state’s voters.

Iowa’s caucuses kick off the primary season, and a weak showing in a crowded field can end a campaign.

Each White House hopeful gets 20 minutes on the soapbox to speak and take questions, and all take a stroll through the fairgrounds to prove their person-of-the-people bonafides.

Some fail the latter test. In 2003, John Kerry, the eventual Democratic nominee, managed to avoid every stall selling Iowa’s mouthwatering pork, funnel cakes, glistening sausages and local craft beer. Mr Kerry instead found the one stall where he could get a fresh fruit smoothie.

His press secretary, Robert Gibbs, was not amused. Mr Gibbs called campaign staffers: “Somebody get a fucking corn dog in his hand—now!”

Thursday’s speakers, Joe Biden and Steve Bullock, avoided any Continues on page 17

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Staring into the abyss

Chinese troops must stay off the streets of Hong Kong Deploying the army would have dangerous repercussions for China and the rest of the world

I

T IS SUMMER, and the heat is oppressive. Thousands of students have been protesting for weeks, demanding freedoms that the authorities are not prepared to countenance. Officials have warned them to go home, and they have paid no attention.

Among the working population, going about its business, irritation combines with sympathy.

Everybody is nervous about how this is going to end, but few expect an outcome as brutal as the massacre of hundreds and maybe thousands of citizens.

Today, 30 years on, nobody knows how many were killed in and around Tiananmen Square, in that bloody culmination of student protests in Beijing on June 4th 1989. The Chinese regime’s blackout of information about that darkest of days is tacit admission of how momentous an event it was. But everybody knows that Tiananmen shaped the Chinese regime’s relations with the country and the world.

Even a far less bloody intervention in Hong Kong would reverberate as widely (see article).

What began as a movement against an extradition bill, which would have let criminal suspects in Hong Kong be handed over for trial by party-controlled courts in mainland China, has evolved into the biggest challenge from dissenters since Tiananmen.

Activists are renewing demands for greater democracy in the territory. Some even want Hong Kong’s independence from China. Still more striking is the sheer size and persistence of the mass of ordinary people. A general strike called for August 5th disrupted the city’s airport and mass-transit network. Tens of thousands of civil servants defied their bosses to stage a peaceful public protest saying that they serve the people, not the current leadership. A very large number of mainstream Hong Kongers are signalling that they have no confidence in their rulers.

As the protests have escalated, so has the rhetoric of China and the Hong Kong government.

On August 5th Carrie Lam, the territory’s crippled leader, said that the territory was “on the verge of a very dangerous situation”. On August 6th an official from the Chinese government’s Hong Kong office felt the need to

flesh out the implications. “We would like to make it clear to the very small group of unscrupulous and violent criminals and the dirty forces behind them: those who play with fire will perish by it.” Anybody wondering what this could mean should watch a video released by the Chinese army’s garrison in Hong Kong. It shows a soldier shouting “All consequences are at your own risk!” at rioters retreating before a phalanx of troops.

The rhetoric is designed to scare the protesters off the streets. And yet the oppressive nature of Xi Jinping’s regime, the Communist Party’s ancient terror of unrest in the provinces and its historical willingness to use force, all point to the danger of something worse. If China were to send in the army, once an unthinkable idea, the risks would be not only to the demonstrators.

Such an intervention would enrage Hong Kongers as much as the declaration of martial law in 1989 aroused the fury of Beijing’s residents. But the story would play out differently. The regime had more control over Beijing then than it does over Hong Kong now. In Beijing the party had cells in every workplace, with the power to terrorise those who had not been scared enough by the tanks. Its control over Hong Kong, where people have access to uncensored news, is much shakier. Some of the territory’s citizens would resist, directly or in a campaign of civil disobedience. The army could even end up using lethal force, even if that was not the original

plan.

With or without bloodshed, an intervention would undermine business confidence in Hong Kong and with it the fortunes of the many Chinese companies that rely on its stockmarket to raise capital. Hong Kong’s robust legal system, based on British common law, still makes it immensely valuable to a country that lacks credible courts of its own. The territory may account for a much smaller share of China’s GDP than when Britain handed it back to China in 1997, but it is still hugely important to the mainland. Cross-border bank lending booked in Hong Kong, much of it to Chinese companies, has more than doubled over the past two decades, and the number of multinational firms whose regional headquarters are in Hong Kong has risen by two-thirds. The sight of the army on the city’s streets would threaten to put an end to all that, as companies up sticks to calmer Asian bases.

The intervention of the People’s Liberation Army would also change how the world sees Hong Kong. It would drive out many of the foreigners who have made Hong Kong their home, as well as Hong Kongers who, anticipating such an eventuality, have acquired emergency passports and boltholes elsewhere. And it would have a corrosive effect on China’s relations with the world.

Hong Kong has already become a factor in the cold war that is developing between China and America. China is enraged by the high-level reception given in recent weeks to leading

members of Hong Kong’s prodemocracy camp during visits to Washington. Their meetings with senior officials and members of Congress have been cited

by China as evidence that America is a “black hand” behind the unrest, using it to pile pressure on the party as it battles with America over trade (a conflict that escalated this week, when China let its currency weaken— see article).

Were the Chinese army to go so far as to shed protesters’ blood, relations would deteriorate further. American politicians would clamour for more sanctions, including suspension of the act that says Hong Kong should be treated as separate from the mainland, upon which its prosperity depends. China would hit back. Sino-American relations could go back to the dark days after Tiananmen, when the two countries struggled to remain on speaking terms and business ties slumped. Only this time, China is a great deal more powerful, and the tensions would be commensurately more alarming.

None of this is inevitable.

China has matured since 1989.

It is more powerful, more confident and has an understanding of the role that prosperity plays in its stability—and of the role that Hong Kong plays in its prosperity. Certainly, the party remains as determined to retain power as it was 30 years ago. But Hong Kong is not Tiananmen Square, and 2019 is not 1989.

Putting these protests down with the army would not reinforce China’s stability and prosperity.

It would jeopardise them.

Nearly two dozen presidential...

Continued from page 16

such gaffes. Mr Biden, who holds a comfortable if shrinking lead in most polls, was by far the bigger draw.

The former vice-president began by announcing that he was running “to restore the soul of this country”.

Restoration has emerged as Mr Biden’s main campaign theme—as it was, in a different and more malevolent way, for Donald Trump in 2016. But where Mr Trump wanted to return America to the 1950s, Mr Biden offers a briefer rewind. He simply wants to put things back the way they were before Mr Trump took office. He does not offer change so much as an experienced hand on the tiller. “I know how to deal with these world leaders,” Mr Biden said, as he discussed rejoining the Paris climate accord. “I know mostly every one of them”.

Of course, with experience comes age. Mr Biden would take office at 78.

That would make him not just the oldest president to be inaugurated, but the oldest ever to serve. It may not matter. Mr Biden certainly looks lithe and physically fit. He paced the stage energetically and spoke tirelessly. During the press scrum after the speech, he scrapped vigorously with a Breitbart editor who accused him of misquoting Mr Trump.

But Mr Biden’s speech was rambling and unfocused, more a laundry list of mainstream Democratic positions than a coherent narrative. Perhaps that was because he is the front-runner, and thinks he needs to do little more than tread water. Perhaps he sees himself as a known quantity, and feels he does not need to make the case for himself as strongly as his rivals, all of whom are newer to the national stage. He has always been somewhat discursive. Yet at times he sounded lost, and broke off on several bizarre tangents.

A Monmouth poll of Iowa voters released Thursday showed him comfortably atop the field at 28%. But that is nearly identical to his level of support four months ago. Elizabeth Warren, by contrast, has risen from 7% to 19%, and Kamala Harris from 7% to 11%. Mr Biden still feels like a weak front-runner, his support driven less by genuine enthusiasm than by voters’ belief that he is best positioned to beat Mr Trump.

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BUSINESS DAY

In Association With

Roman drama

Italy’s government is on the brink of collapse The shaky alliance between the Northern League and the Five Star Movement is on its last legs, and a fresh election is likely

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UITE A FEW things have melted away in this torrid European summer. By August 8th, the Italian government too looked ready to dissolve within days after Matteo Salvini (pictured above), leader of the hard right Northern League, the dominant party in Italy’s allpopulist coalition, signalled he was withdrawing his support. In a statement he said the League’s always-improbable partnership with the environmentalist, prowelfare Five Star Movement (M5S) had become unworkable and that the solution was an early election.

“It is pointless to go forward on the basis of [vetoes] and disputes,” he declared. And, indeed, the two parties have clashed over almost everything recently from regional autonomy to judicial reform and security policy to safeguards against corruption. But the crisis that blew up on August 8th nevertheless came as a shock, just three days after the League and M5S appeared to have settled their differences over a bill, sponsored by Mr Salvini as interior minister, that introduces draconian penalties for NGOs attempting to bring rescued

migrants into Italian ports.

The yield on Italy’s benchmark 10 year bonds leapt almost 20% after markets opened on August 9th amid fears an election could return to office an unfettered Mr Salvini, bent on busting the euro zone’s budgetary constraints in a desperate effort to revive Italy’s ailing economy. Later the same morning the League said it was tabling a motion of no confidence in the government of which it is a part.

The League leader has sparked a wildfire. But it is one he can no longer control. The crucial decisions from now on will depend on two

less adventurous figures: the prime minister, Giuseppe Conte, and the president, Sergio Mattarella.

Mr Conte, an independent law professor who was handed the job by Mr Salvini and the Five Stars leader Luigi Di Maio last year, must now choose between resigning and recalling parliament for a confidence vote. He initially signalled his preference for the second option, arguing that the League leader ought to explain to his fellow-lawmakers why he had decided to torpedo Italy’s populist experiment.

Clearly furious with Mr Salvini,

the prime minister quoted him as having said in their notionally private conversation earlier that he wanted an election to capitalise on his support in the polls. Since the last election in March 2018, Mr Salvini’s belligerently anti-immigrant stance, combined with relentless electioneering, has more than doubled support for the League, which he depicts as a party for all Italians.

The most recent polls suggest it has 37% backing, twice the share of the M5S, which actually outperformed it at last year’s election.

But a return to the polls is not inevitable. Another possible, if less likely, outcome is that the popular Mr Conte wins the backing of parliament for a new and different government. As ties with the League have strained, the M5S has become more receptive to approaches from those in the centre-left Democratic Party (PD) who favour a coalition between them. Mr Salvini has openly expressed concern over the Five Stars’ growing alignment with the PD and one reason he decided to sink the government may have been to eliminate the risk of an alternative, left-leaning coalition. At all events, he has probably acted in time: the majority of PD

voters and lawmakers, including the party leader Nicola Zingaretti, remain opposed to an alliance with the M5S. If, as seems more likely, Mr Conte loses the confidence of parliament next week, the ball will be in the president’s court.

Custom dictates that Mr Mattarella should consult his predecessors, the speakers of both houses, and the leaders of Italy’s parliamentary groups to decide what to do next.

Italy has never, since becoming a republic after the war, held an election in the autumn. The fear has always been that it would rob parliament of the time needed to agree a budget for the following year.

This year, that task is trickier than ever. Italy’s huge debts – 132% of GDP at the end of last year – keep rising. Yet, to the dismay of the European Commission, Mr Salvini favours swingeing tax cuts in pursuit of the flat tax he has promised his supporters. That could sway the president to installing a non-party government of respected independents – a solution Mr Salvini has opposed, but which he may privately favour, since it would relieve him of an onerous responsibility.

The guns of August

The trade war escalates, and the fog of war descends America brands China a currency manipulator, and global markets swoon

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ARL VON CLAUSEWITZ, the Prussian military theorist, never wrote about currency wars. But some policymakers see them in his terms: as the continuation of trade politics by other means. That, at least, is how the Trump administration views China’s decision on August 5th to let its currency weaken past seven yuan to the dollar for the first time since 2008. Though arbitrary, that threshold has assumed huge symbolic importance among traders, economic officials and fund managers (see Buttonwood). They were left stunned.

America’s Treasury quickly branded China a “currency manipulator”, a charge it has not levelled against any country for 25 years.

China, in the Americans’ view, was cheapening its currency to gain an unfair edge in retaliation for President Donald Trump’s surprise announcement four days earlier that he would impose new tariffs of 10% on roughly $300bn of Chinese goods.

This marked the end of investors’ hopes for a peaceful summer. At the end of July the Federal Reserve had cut interest rates to guard against a slowdown in America’s respectable growth rate, and trade tensions had “returned to a simmer”, as Jerome Powell, the Fed’s chair, noted with

satisfaction. But after the yuan’s move America’s stockmarket suffered its worst day this year. Emerging-market currencies, including the Brazilian real, Indian rupee and South African rand, fell. The price of Brent crude oil tumbled below $60 a barrel and safe havens, such as gold, rallied. The same search for safety pushed American ten-year government bond yields to 1.7%, as investors bet that the Fed would be forced to slash interest rates further to prevent a recession. The Reserve Bank of New Zealand cut its benchmark interest rate by twice as much as expected, citing “heightened uncertainty” and “historically low” global bond yields. The Australian dollar fell to its lowest level in a decade.

In matters of war and peace, countries must prepare for the worst.

But precautions can look like provocations. In allowing the yuan to fall, China signalled it is prepared for a protracted trade war. It let the yuan weaken in response to the threat of tariffs much as a floating currency would. Otherwise it would have needed to defend an arbitrary line against the dollar every time America turned belligerent. Its move nonetheless makes further belligerence more probable. Mr Trump is now unlikely to change his mind about the new tariffs before they kick in on September 1st.

Both sides blame the other for starting the fight. China has raised tariffs only in response to America’s.

But America sees its combative economic diplomacy as a belated response to decades of intellectualproperty theft and other misdeeds.

Each side’s attempt to get even looks to the other like one-upmanship.

China views a weaker yuan as a reasonable response to Mr Trump’s trade duties; Mr Trump, according to the Wall Street Journal, sees those tariffs as retaliation for China failing to commit to buy more American farm goods.

The irony is that Chinese purchases of American soyabeans and pork were already rising, and the government was offering buyers exemptions from some tariffs. But after Mr Trump’s new tariff threat it has reportedly told state-owned companies not to buy American farm goods after all. Thus Mr Trump’s tariffs may have caused the decision they were designed to punish.

Whatever the cause of the new levies, what might be their effect?

Some of America’s existing tariffs (of 25% on roughly $250bn-worth of merchandise) had been imposed on Chinese goods that American importers can buy elsewhere. That minimised the harm to American buyers and maximised the harm to China’s exporters, which lost business to close rivals elsewhere. Indeed, according to Goldman Sachs,

other Asian countries have filled around half of the gap created by the previous round of tariffs.

The next round of tariffs will hit goods for which China has fewer competitors. That should make it harder for American buyers to switch suppliers. Nonetheless the new tariffs’ direct impact could reduce China’s growth by at least 0.3 percentage points in 2020, according to UBS, to below 6% for the first time since 1990.

Monday 12 August 2019

BUSINESS DAY

COMPANIES & MARKETS

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COMPANY NEWS ANALYSIS INSIGHT

MANUFACTURING

Paint makers shed N94m in revenue as adulteration, high cost, bite harder OLUFIKAYO OWOEYE & ISRAEL ODUBOLA

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igerian publicly quoted paint manufacturers felt the backlash of adulteration of products by smaller industry players and high production cost on their mid-year earnings numbers, evidenced by weaker sales and dwindling margins.

Between January and June 2019, Berger Paints, Chemical & Allied Paint (CAP), Premier Paints, Portland Paints and Meyer generated a combined sales revenue of N7.42 billion, which is some 1.3 percent or N94 million lower than N7.51 billion made a year earlier.

A report titled ‘The Nigerian Paints & Coating Market’ published by Frost & Sullivan, an American consulting firms with presence in six continents including Africa, cited high energy cost, government neglect, product debasement and high cost of raw materials as major woes that has been facing industry players over the years.

These challenges, they say, hurt margin of players and in some cases compel them to lower prices to the competitive nature of the

market.

Of the five companies considered, only CAP, Nigeria’s biggest paint maker by market capitalization, saw positive revenue growth of 3 percent in the review period.

Sales of Berger Paints, Portland Paints and Meyer slumped by 1 percent 5 and 15 percent respectively, with Premier Paints bottoming with 24 percent contraction in top-line.

Generally, listed paint makers did not fare well in terms of profitability as two of five saw betterment in after-tax profit.

Berger Paints, the second biggest player by market value, led the pack with some 19 percent improvement in profit to N145.6 million, while CAP came a

distant second with some 6 percent growth.

Post-tax profit of Portland Paints plunged 26 percent, while Premier Paints and Meyer saw losses reducing to N14.3 million and N29.6 million in the review period from N36.4 million and N93.9 million incurred last year.

To some analysts, cash flow generated from operating activities is the best metric to assess a firm’s ability to survive. This is because without positive cash flows, a firm may have to embark on borrowing, raise additional equity or quit operation.

A dive into the companies’ cash flow statement revealed that the five listed paint makers are cashstrapped as money earned

from operations trended downward.

CAP generated N530 million from operations in H1 2019, to clinch the first spot, albeit this is 34 percent lower than N802 million realized last year.

Berger and Portland got N63 million and N14 million respectively from operations, representing a massive contraction from N106 million and N245 million earned a year earlier.

While cash deficit of Meyer slowed to N40 million from N52 million, that of Premier Paint worsened to N3.3 million from N534, 000.

However, having negative cash flows for a time might not be a bad thing, if a firm is building another plant for example, could pay off in the end if the plant

generates more cash.

Paint makers, for long, have been grappling with inability to source raw materials locally, as about 60 percent of inputs are imported and subjected to multiple levies, which further takes a toll on performance.

Despite this, three of five paint makers – CAP (52%), Berger (54%) and Portland (63%) were cost efficient in the first half of 2019 given their relatively low direct cost to revenue ratio.

Premier Paints saw cost margin trended slightly higher to 72 percent, with Meyer bottoming with 76 percent margin, a tangible upscale from 57 percent last year.

A cursory look at performance on the Nigeria Stock Exchange (NSE) revealed that leaders – CAP & Berger, have returned losses in excess of 20 percent year long.

The Nigerian paint industry can be broken down into two segments namely Decorative Paints, Industrial paints and coatings.

The Decorative coatings comprises a majority of the Nigerian paints & coatings market representing an estimated 71percent of total volume and about 60percent of market value, while, the Industrial coatings accounted for about 29percent of total volumes

in 2012 at an estimated $80 million.

Total sales volumes were an estimated 37 million litres. This segment can be broadly categorised into Industrial protective coatings, Marine coatings, Wood finishes, Coil coatings, Powder coatings, and Auto refinishes.

The Nigerian paint market is highly fragmented largely due to the low barrier of entry.

Major drivers of the industry are high demand for real estate properties, growing construction market, however, rising costs, growing competition coupled with activities of substandard and adulterated products has eroded the profit margins of most companies.

It is projected that sales value in the industry will reach an estimated $400 million in 2020, a Compound Annual Growth Rate of 9.01 percent.

If well protected, the paint industry looks very bright although this depends on economic recovery in the real estate sector which is still sluggish and big tickets projects. The Standard Organization of Nigeria must also ensure that only brands that meet standards are allowed in the Nigerian market.

TELECOM

MTN to hit bulls-eye on divestment plan, rakes in $140m from asset sales in H1

… plans music streaming services for Nigeria SEGUN ADAMS

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TN Group Ltd, the South African-based telecom giant, has announced that plans to raise 15 billion rand ($996 million) in asset by pruning operations and focusing on high growth markets are on track after it realized $140 million from asset sales in the first half of the year.

“So we’re well on track for our 15 billion rand (target),” MTN’s Chief Executive Rob

Shuter said on Thursday.

The mobile network operator earlier in March announced a 3-year divestment programme to exit e-commerce businesses and markets which were not strategic to its growth so it could concentrate on high potential markets in Africa and the Middle East.

MTN so far has sold down its interest in Jumia Technologies to 18.9 percent from 29.7 percent through an IPO of the ecommerce business in New York and is in the process

of redeeming MTN Nigeria preference shares for $315 million, Reuters report.

The Telco also sold its shareholder loan in ATC Ghana to American Tower Corporation for 900 million rand, as well as its stake in investment fund Amadeus and online travel platform Travelstart for 1.2 billion rand. HabourVest was the named buyer for MTN’s Amadeus stake.

Meanwhile, plans are underway to complete MTN’s exit from Bostwana’s Mascom Wireless in the second

half. MTN has a $300 million minority stake in Mascom.

Shuter also revealed that MTN will be launching its music streaming service, MusicTime, in Nigeria in the second half.

MTN’s first half revenue jumped 15.48 percent to 72.50 billion rand helped by earnings from Nigeria as well as South Africa. The performance was the best in three years.

MTN Nigeria reported a revenue growth of 29.54 percent in the first half while South Africa counterpart re-

ported 5.81 percent increase to bring the contribution from both markets to 30.66

percent and 30.89 percent of the overall group revenue in the period.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

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Monday 12 August 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

OIL & GAS

Seplat says adequate technology adoption will check poor forecast, risks in oil industry IHEANYI NWACHUKWU

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he right adoption of contemporary technologies like Artificial Intelligence (AI), big data and mobile technology will not only drive planning and forecast in the Nigerian oil industry, but will help in addressing like risks associated with the business, said Effiong Okon, Executive Operations Director at Seplat Petroleum Development Company Plc. Okon said this at the 43rd Society of Petroleum Engineers (SPE) Nigeria Annual International Conference and Exhibition held in Lagos recently, with the theme: Artificial Intelligence, Big Data and Mobile Technology: Changing the Future of the Energy Industry.

While delivering a presentation titled, Transforming Big Data and Technology to Business Value: Challenges and Strategic Options during a panel session, Okon said leveraging Cloud computing and big data, for instance, promotes accurate forecast of oil production for planning, which in turn drives operational excellence (production optimisation and asset performance).

The use of predictive and data-driven maintenance for production and cost efficiency, according to him, has helped to reduce Mean Time To Repair (MTTR), and increase Mean Time Before Failure (MTBF) in the industry.

For drilling, operators can get predictive analysis through smart drilling; guarantee early

identification of drilling anomalies, hazards to well control problems; develop more Enhanced Oil Recovery (EOR) techniques; and real time data through Logging While Drilling (LWD) and Measurement While Drilling (MWD), the Seplat Executive noted..

He added that in the area of exploration and appraisal, technology had made it possible to obtain big data from sensors attached to equipment used during exploration/appraisal activities(seismic,wells),whichwill further help in improving subsurface mapping and new well delivery performance through micro-seismic 3D imaging.

Narrating the Seplat technology story, Okon said the company had continued to make conscious efforts to drive operations using contemporary technologies, with the right investments. According to him, Seplat’s investments in technologies are driven by measurable and justifiable value accruable to the company.

He added: “With the right technology, we can identify rock and fluid properties through Magnetic Resonance Imaging (MRI); locate new oil fields through Wide azimuth towed streamer (WATS) Acquisition; and analyse big data through Ground Penetrating Radar (GPR) for cost efficiency.

“It also applies to oil/gas transportation while connecting pipelines, sensors, leak detection, alarms and emergency shutdowns; using drone technology for pipeline surveillance.

“Internet of Things (IoT) is revolutionising midstream

pipeline operations through Supervisory Control and Data Acquisition (SCADA) -based applications In the area of refining, the Seplat EOD noted that operators could now analyse economic indicators and weather patterns for forecasting demand, pricing and resource allocation while optimising integrated refineries and leveraging machine learning for predictive analysis and selfdiagnosis by refineries.

Okon added: “These technologies have a huge role to play in the future of the oil and gas industry. The need for smart, cost efficient ways to access unconventional reservoirs is undoubted. It requires the combination of technology and thinking that redefines how firms manage and execute a more harmonised approach to early well life. As drilling projects grow in ambition, smarter equals faster.

“Blockchain revolution is starting here and now. There is huge potential to reduce risk of fraud, error and invalid transactions in energy trading and enable interoperability. To revolutionise joint ventures (JVs), risk management, contracting and regulatory compliance.

This is critical to unlocking the efficiency potential of distributed energy generation.”

According to Okon, technology will be a facilitator in the transformation of oil and gas companies, and this demands that companies make confident, data driven decisions using relevant, accurate and trusted information platforms.

L-R: Kelechi Onwumere, business development manager, Inlaks; Oluleke Adegbola, CEO, Lagos Energy Academy; ShoboOlufemi, technical faculty trainer, Lagos Energy Academy; and Udoka Abanobi, field sales manager, Inlaks, at the Energy Stars Summer Lab co-sponsored by Inlaks, at the Lagos State Electricity Board, Ikeja, Lagos.

L-R: Maduabuchukwu Okeke, MD, Anambra Motor Manufacturing Company Limited (ANAMMCO); Godwin Okeke, chairman of ANAMMCO; Chigbo Anichebe, representative of director-general, Bureau for Public Enterprises (BPE), and Jiang Fei, representative of DONFENG Commercial Vehicle Company of China, at the rollout of ANAMMCO and DONGFENG heavy-duty trucks and articulated vehicles at ANAMMCO factory in Enugu. NAN

Lafarge, Zenith top Cardinal Stone’s H2 stock picks LOLADE AKINMURELE

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he best time to buy equities is when the market is down, as this way an investor is able to buy cheap and sell at a higher price in the future.

Nigerian equities are some of the worst performers globally this year and are down some 12 percent since January. With oil prices trending downwards, the feeling is there may be more pain for equities this year.

However, below are some of the cheapest stocks in the market which according to Lagos-based investment bank, Cardinal Stone, have potential to fetch good returns for investors by the end of the year.

L-R: Yusuf Manjo, permanent secretary, Kwara Ministry of Works and Transport; Georgina Ehuriah, permanent secretary, Federal Ministry of Interior; AbdulRahman AbdulRazaq, governor of Kwara State; Ibrahim Liman, controller-general, Federal Fire Service (FFS), and Susan Oluwole, head of service, at the closing ceremony of the 10th National Council on Fire in Ilorin.

Lamidi Adeosun (r), representative of the Chief of Army Staff, presents the Nigerian Army plaque to Eric Ichikowitz, senior vice president, Paramount Group, at the visit of a delegation of Paramount Group to Army Headquarters in Abuja.

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Monday 12 August 2019

BUSINESS DAY

21

cityfile A child being immunized by officials of Adamawa State Primary Health Care Development Agency during the start of statewide meningitis “A” immunization exercise in Demsa town Adamawa, at the weekend.

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Killing: Group calls for inquiry into activities of soldiers in Aba GODFREY OFURUM, Aba

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non-governm e nt a l o rganisation (NGO), EasyLife Initiative for Rural Youths, has urged the Federal Government to commission a judicial inquest into the alleged killing of one Chimaobi Nwaogu.

Nwaogu, a commercial motorcyclist, was reportedly shot dead, while returning to his Umuokereke Ngwa community in Obingwa local government area of Abia State.

He was said to have incurred the wrath of a soldier by allegedly failing to drop N100 bribe at a military checkpoint at Ohanze, near his village.

Reacting to the alleged murder, in Aba, Uche Emeku, the national secretary of the NGO, called for thorough investigation into the alleged activities of security operatives in the commercial city.

Emeku also requested that the operations of the military and other security agencies in the town be reviewed to ensure they conformed to the rule of

engagement.

He believed that the review of the activities of the security agencies in the area would help to check incessant harassment, intimidation, extortion and corrupt practices.

Emeku further demanded the immediate dismantling of all checkpoints in Aba and its environs in order to put an end to the mindless killings and harassment of innocent residents.

“The pathetic stor y of Chimaobi is that he was returning from the market to deliver what he

bought for his wife, who was nursing a new baby when he was stopped at the check point.

“He was expected to perform a ritual of giving N100 to the alleged army officers at the check point which he failed to perform,” he said.

He decried the alleged brutality often meted out to Aba residents, citing the recent random shaving of unsuspecting persons bearing dreadlocks and tinted hair by armed security men. “We unequivocally condemn this show of power,” Emeku said.

Obaseki presents N11.8m cheques to families of deceased workers IDRIS UMAR MOMOH, Benin

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do State governor, G odwin Obaseki, has presented cheques totaling N11.8 million to four families whose relatives died in active service for Edo State government.

O b a s e k i p re s e nt e d the cheques to the beneficiary families at Government House, Benin, assuring them that the government would not forget their relations and their contributions to the development of the state.

The governor thanked lab our unions in the

state for supporting the government in implementing the scheme and expressed readiness to extend the scheme to local government.

“I want the union to continue to support the g ov e r n m e n t b e c a u s e we’re prepared for implementation of the contributory pension scheme across the entire workforce in Edo, particularly at the local government level.

“We want to step up our care for them to allow Edo State workers have access to better medical care. As a government, we have decided to have a contribwww.businessday.ng

utory medical insurance scheme for all citizens of Edo State,” he said.

Edo State Head of Service (HOS), Isaac Ehiozuwa, said the cheques presented were in compliance with the Pension Reform Act of 2014 and Edo State Law of 2010, as amended.

“The provision under Section 8(1) and 13(3) respectively made for the establishment of a Group Life Insurance policy for all employees, where a sum three times the last annual salary of the deceased employee will be paid to their next of kin.

Ehiozuwa said that

earlier in the year, a total of N21.59m was presented to beneficiaries. He said the state government has so far paid N50.29 million to beneficiaries since the commencement of the scheme in 2017.

Chairman of the Trade Union Congress (TUC), Edo State chapter, Marshall Orhue, commended the openness and commitment of government to workers’ welfare in the state.

Speaking on behalf o f t h e b e n e f i c i a r i e s, Bridget Odegua Umweni, thanked the government for the scheme.

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Police to mop up illegal arms in Enugu

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he police command in Enugu, on Friday, inaugurated eightman committee towards mopping up illegal arms and ammunition in the state.

It would be recalled that the command on Sunday, August 3, issued a three-day ultimatum for people in possession of unlicensed and authorised firearms to surrender them to the command.

The ultimatum was part of the decision reached at the emergency joint security meeting held in Enugu recently.

Inaugurating the committee at the police head-

quarters in Enugu, the state Commissioner of Police, Sulaiman Balarabe, said that the command would deal with anyone found in possession of any unlicensed and unauthorised firearms.

“Since the expiration of the three days of grace given by the command, it will now diligently prosecute anyone found with illegal and unauthorised arms and ammunition in line with the relevant section of the law.

“The command working in partnership with other security agencies and relevant stakeholders will fish out those within the category mentioned above’’ Balarabe said.

RANAO seeks improved welfare package for retired officers Abdulwaheed Olayinka Adubi, Kaduna

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etired Army, Navy and Air Force Officers (R ANAO) Association of Nigeria has appealed to the Federal Government to improve on the welfare of retired military officers in the country.

National president of RANAO, Axinda Mshelbwala made the call during the 32nd anniversary of the association held in Kaduna.

According to the retired army general, the military served the country diligently, protecting the people and its territory while some paid the supreme price.

He explained that the country can best appreciate the sacrifices of the soldiers by taking their welfare seriously.

He noted that the welfare of the retired soldiers was not limited to their pension alone, but also issues affecting their medi-

cals and accommodation.

He commende d the Federal Government for including them in the National Health Insurance Scheme, but said treatment for some the ailments affecting the soldiers are not listed on the scheme.

He further said some of them are carrying old wounds sustained during services years and as they are getting older the wounds are resurfacing and must be treated.

Mshelbwala encouraged soldiers still in active service to put in their best in the service of their motherland.

C h a i r m a n b o a rd o f trustees of the association, Zamani Lekwot, a retired army general on his part, back a call for the establishment of a ministry to look after the elderly people.

Lekwot said that the association would put its think tank together and find a way of passing such suggestion to the government.

Sylva’s community butchers giant whale Samuel Ese, Yenagoa

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he people of Okpoama community in Brass local government area of Bayelsa State have butchered a giant whale that was grounded on their beach, a reliable @Businessdayng

community source told Cityfile.

The whale described as humpbacked and measuring about 50 feet was found dead on the beach on Sunday night and community folks believed that it swam into the area at high tide, but was left stranded when the tide receded.

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BUSINESS DAY

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BUSINESS DAY

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Monday 12 August 2019

BUSINESS DAY

REAL SECTOR WATCH

MAN raises red flag on auto, chemical, cable industries as AfCFTA knocks Stories by ODINAKA ANUDU

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he Manufacturers Association of Nigeria (MAN) says the auto, pharmaceutical and chemical industries will be adversely affected by the oncoming African Continental Free Area (AfCFTA) if nothing is done to negotiate better terms for the sub-sectors.

In a study carried out by the association to determine the offensive and defensive impacts of the AfCFTA on the Nigerian economy, MAN said with AfCFTA, output will decline in all sectors but with higher magnitudes in motor vehicle assembly, chemicals, pharmaceuticals, electrical and electronic industries compared to others.

“The change in domestic outputs of manufacturing sector is negative and ranges from -10.00 percent to -0.228 percent, thus indicating that operators may close shop,” MAN said.

Man said import will surge in all the 77 manufacturing subsectors in the third phase of the liberalisation, which begins in 2029 and ends in 2033. The first phase starts in 2019 and ends in 2023, while the second phase is between 2024 and 2028.

The AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO)

in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.

The AfCFTA officially came into force on 30th May 2019 when the required number of ratifications—22— were obtained, making the agreement a binding international legal instrument.

Proper operations, however, are yet to start.

The treaty is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 and will liberalise 90 percent of products manu-

factured in Africa. This means that a country can only protect 10 percent of its local industries.

After severe opposition, which prevented President Muhammadu Buhari from signing the AfCFTA in 2018, MAN recently threw its weight behind the treaty.

But the association, however, carried out studies to determine the extent of impact the treaty would have on the Nigerian manufacturing sector and the economy in general.

“Particularly, tariff cuts would trigger increases in import for food, beverages and tobacco by 91 percent; chemical & pharmaceu-

tical products by 180.7 percent; plastic and rubber products by 111.6 percent, as well as wood and wood products sub-sector by 96.2 percent,” the association said.

It will also raise imports in textile, apparel and footwear by 55.2 percent ; non-metallic products by 67.2 percent; electrical and electronics by 218.2 percent; and motor vehicles and assembly by 2000 percent, MAN warned.

The association of over 2,000 members acknowledged that the AfCFTA agreement is expected to provide Nigeria ample opportunity for Nigerian firms to

look towards the African market to increase exports and diversify non-oil products, stressing that Nigeria is not taking advantage of huge export opportunities in the continent.

It recommended that the Central bank of Nigeria institute an exchange rate policy that balances the need for intermediate imports with that of export orientation, in the form of exportpromoting real exchange rate.

It suggested revitalisation of institutions mandated with inputs development to create appropriate prototypes to solve problems of non-availability and high prices of raw materials.

“We must upgrade and introduce new technical skills for competitive manufacturing,” it said, calling for a public-private partnership framework to boost social and economic infrastructure.

“The high cost and low access to infrastructure services such as energy and water to firms should be subject to a framework that ensures competitive pricing and supply,” MAN said.

It further canvassed access to technology and know-how to create a technical change that will drive exports.

It likewise recommended active subsidisation of research and development and encouragement of foreign direct investment through friendly policies.

Declining pharma export shows industry needs quick fix

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xport of Nigerian pharmaceutical firms has fallen by 91 percent in four years, signifying the need to fix the sub-sector.

In 2014, the industry earned $7.708 million from export of medicines to the African market, according to the International Trade Centre (ITC).

Four years later, however, the industry grossed only $708,000, representing a 91 percent fall.

Naira has weakened from N199/$ in 2014 to N360/$ in 2018 (80.9 percent), but export earnings fell by 91 percent.

The African Continental Free Trade Area (AfCFTA) is the biggest story at the moment as Nigeria becomes a signatory of the trade treaty. Firms that cannot compete in the upcoming trade regime will go out of business, experts say.

“This industry is yet to be competitive. If it’s not competitive, then it is set to face challenges when you throw it open to initiatives such as the African Continental Free Trade

Area (AfCFTA), which is going to enlarge the market a lot more,” Okey Akpa, chief executive of SKG Pharma Limited, said in an interview with BusinessDay in Lagos.

He said the biggest issues in the sector are absence of petrochemical industry and poor infrastructure.

“We need to have a petrochemical industry that will substitute what we are presently importing. It is a sector with a www.businessday.ng

big potential, but this is largely unrealised because of lack of petrochemical industry,” he said.

“If you look at the volume of paracetamol powder being imported into this country, you will see that we have no reason for not having a local plant here,” he added.

He stressed the need for the government to sustain the fiscal policy in the pharmaceutical sector, which limits importation of products produced locally in

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the required quantity.

Evans Medicals was taken over by the defunct Skye Bank and tier-one First Bank of Nigeria in 2017 over loan default.

This was after the firm had obtained the sought-after World Health Organisation (WHO)’s prequalification, which gave it an opportunity to participate in international bids.

Swiss Pharma sold its assets to Biogaran-Servier in March 2017, owing to financial crisis.

Neimeth International Pharmaceuticals Plc made a loss of N139.2 million for the fourth quarter of 2018. It later posted only N5.45 million profit after tax in the second quarter of 2019. The Agbara Ogun Statebased Pharma Deko suffered 36 percent drop in revenu in 2018, from N1.593 billion in December 2017 to N1.023 billion in 2018. It suffered loss after tax of N265.26 million.

The drug maker complained in its financial statement ended December 31, 2018, that the federal government placed a @Businessdayng

ban on the importation and sale of any pharmaceutical product containing codeine phosphate.

It said the ban affected the company’s sale of the flagship product—‘Parkalin Cough Syrup’.

“Local companies in the pharmaceutical industry are struggling to remain in business and some have gone into extinction. And to meet the shortfall in demand, import increases,” Gbolahan Ologunro, a research analyst at Lagosbased CSL Stockbrokers, said.

Tomisi Akinyemi, a pharmacist at HealthPlus Limited, said local pharmaceutical companies are shutting down in Nigeria while more importers coming up.

“Most people now say that they don’t want chemical drugs but herbal supplements. Demand for herbal supplements is on the increase. Now, most companies import natural herbal supplements than the chemical ones,” he said.

Monday 12 August 2019

BUSINESS DAY

25

REAL SECTOR WATCH Cement, glass makers challenged by low quality of solid minerals

Where are Nigeria’s paper mills? igeria spends N50 billion on importation of papers annually, statistics from the Raw Materials Research and Development Council (RMRDC) says.

The reason is that the Nigeria Paper Mill (NPM)Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company (NNMC)Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State, are not working.

develop.

According to Abimbola Ogunwusi of the RMRDC, the integrated pulp and paper mills established in Nigeria were privatised in the mid-2000s as a result of lack of adequate funds to import requisite raw materials and generally because of their non-performance.

In a paper, Peter Onwualu and Abimbola Ogunwusi said the Nigeria Paper Mill commenced rehabilitation immediately after privatisation and started production in 2009, while the two other mills could not. They added that while Nigeria Paper Mill had re-

Efforts are being made to revive NPM but whether these translate into success is a matter of time.

Chima Igwe, acting directorgeneral of the Federal Institute of Industrial Research Oshodi, attributes non-functionality of paper mills to lack of fibre trees such as gmelina, which is an essential raw material for the industry.

He said adequate provision of high-fibre trees would enable paper firms to return to business.

Three years ago, Ukana Akpabio, professor of chemistry at University of Uyo, had said the country was yet to utilise enormous pulp and paper materials (fibrous and non-fiborous) in the country, adding that there must be a well-defined strategy to develop the struggling industry.

Some industry players argue that the privatisation process which handed the firms to current owners were faulty and did not look at the capacities of the buyers.

The paper mills were privatised during Olusegun Obasanjo’s regime, which handed moribund and poorly-run government businesses to private entities.

Industry stakeholders say the privatisation of the paper mills were handed over to investors who have more interest in importation of papers from India than developing the mills which they bought and promised to

habilitated its paper machines, it was producing kraft paper within 60-250gsm range using recycled paper at that time.

The major problems the mills may likely continue to face are dependence on imported long fibre pulp and chemicals, they argued, adding that there is the need to deepen the local market, transfer technology transfer to generate employment and reduce the cost of local paper products.

Nigeria is losing N180 billion from non-performance of the three paper mills in the country, said Hussain Doko Ibrahim, director-general, RMRDC. In 2016, Oluwadare Oluwafemi, a professor in the department of agriculture and forestry, University of Ibadan, identified the inability to source long fibre trees as one key reason for the non-performance of the mills.

Oluwafemi lamented the abysmal fund devoted to research institutions, while also calling for the establishment of pulp and paper institute to save the country from these humongous losses.

“It is unfortunate that 90 percent of papers used in Nigeria are imported,” Oluwafemi said, while presenting a paper entitled, ‘Long Fibre Pulp Production in Nigeria: Prospects and Challenges’, at the Manufacturers Association of Nigeria (MAN) meeting in Lagos.

He also canvassed for the establishment of ‘Indigenous Long Fibre Pulpwood Improvement Programme’.

ODINAKA ANUDU

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ODINAKA ANUDU

Q

uality of s olid minerals, which are essential inputs for cement, glass and ceramics makers, remains a major challenge facing manufacturers in the sector, according to Mohammed Buga, head of Industrial, Chemicals and Minerals at the Raw Materials Research and Development Council (RMRDC).

Speaking at the annual general meeting of the Non-Metallic Products Group of the Manufacturers Association of Nigeria (MAN), which is made up of players in cement, glass, ceramics and chalk, in Lagos, Buga said lack of geoscience data is a critical issue affecting solid minerals exploration by both manufacturers and investors.

“The major issue is the quality of raw materials. Are they enough? Yes, they are.

Even if the deposits are there, how good are there?” he asked.

Nigeria has over 40 minerals in commercial quantity. Nonmetallic products sector uses critical solid minerals such as talc, limestone, feldspar, gypsum, and kaolin, among others. However, cement makers have, many times, resorted to importing gypsum and talc because the locally available ones were not good enough.

Buga explained that inadequate funding, poor infrastructure, insecurity and inadequate skilled manpower are critical issues affecting the solid minerals sector.

He disclosed that because of the challenges in the solid minerals sector, the RMRDC has intervened by setting up a phosphate plant in Sokoto and Ogun, including a fertilizer blending plant in Enugu.

He further said the agency has set up kaolin processing plants in Gwarzo (Kano) and Kankara (Katsina), while establishing many catalytic factories on non-metallic minerals.

On his part, Ime Ekrikpo, director of ferrous metals at the Federal Ministry of Mines and Steel Development, said his ministry has granted 84 million to 11 universities for research in various areas of mining.

He said the Executive Order 005, which specifies patronage and engagement of indigenous professionals in planning, design and execution of national security projects, needs to be legislated upon to make it have a grounding effect.

“We need to train Nigerians

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in key components of science and technology. If we are not able to do intensive manpower development, people will come in and do them for us when the African Continental Free Trade Area (AfCFTA) starts,” he said.

He explained that one major problem faced by solid minerals players is poor infrastructure as people spend a lot of money to transport iron ore from Itakpe (in Kogi State) to where it is needed for further beneficiation or sale.

John Aluya, immediate past chairman of the Non-Metallic Products Group of MAN, lamented that manufacturers were often asked by the Ministry of Mines and Steel Development to present permits of solid minerals they buy even when they are only consumers using them for production.

“We can give the ministry data if that is what they want, but when you attach a tax to what we buy by asking us to present permits, that is what we do not want,” he said.

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26

Monday 12 August 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Police retirees lament hardship over delayed pension accrued right Isamail Adekunle

P

olice retirees under the Contributory Pension Scheme (CPS) supervised by the National Pension Commission (PenCom) are groaning over undue delay in the remittance of their pension accrued rights, which they say has lingered over one year.

This is in addition to their complaint’s that that monthly pensions paid them by the Nigerian’ Police Force Pensions Limited, the police pension fund administrator is abysmally low to take care of them in retirement.

These retirees, under the umbrella body of Association of Retired Police Officers (under the Contributory Pension Scheme) lament their woes and the attendant hardships they are going through with their families.

They note that after 35 years of meritorious services to their fatherland, and having put their lives on the line for the safety of the country and her citizens, they deserve better treatment in their retirement life.

The situation is not only undermining the core objective of the Contributory Pension Scheme but also casting shadow on the image and integrity of Pension Fund Administrators (PFAs) who manages these funds. It is however heavier on the Police PFA, NPF Pensions Limited whose clients are only the police, unlike other PFAs that have a mix of probably 20 percent public service and 80 percent private sector clients.

From their analysis, a Police constable earns between N42, 000 and N47, 000 after deductions of tax, accommodation allowance and others; a Sergeant’s pay is about N50, 000 while a Police Inspector earns about N60, 000 monthly. In the Senior Police Officers (SPO) cadre, an Assistant Superintendent of Police earns a little above 80,000 after deductions have been made.

This they say undermines what they are paid in retirement because

President Buhari

Aisha Dahir-Umar, acting director-general, PenCom

pension is a function of salary, hence the benefit at retirement are also low. At retirement, a Police Inspector earns just about N20, 000, while those in the Superintendent cadre earn about N30, 000.

The recent reversal of the template used to calculate pension payments by the regulator, the National Pension Commission (PenCom) they also lament has further worsened the plight of the retires, with the retiree officers agitating to return back to other PFA’s or exit entirely.

Unfortunately, PenCom was to approve payment to the retirees from the available balances in their Retirement Savings (RSA) account, until the Federal Government pays their accrued rights, PFAs are not allowed to pay them from their contributions that have accrued since they joined the CPS, which they believe is denying them rights to their money.

They are therefore calling on PenCom bring in human face in its regulatory and supervisory activities, as some of the retirees die without enjoying the fruit of their labour on the back of the Commission’s claim of waiting for accrued rights, they lamented.

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While waiting for accrued rights, PenCom should allow PFAs to pay retirees from the balance in their RSAs. By the time a retiree is paid for a year and the accrued right comes, then the PFAs can regularize and pay the balance. The question of exhausting the balance in one year as argued

by PenCom is not tenable because a retiree cannot exhaust his or her balance. There is always return or interest from investment of the pension fund made on behalf of the retiree by his or her PFA. When the retirees are not paid because their employer, the Federal Government have not paid accrued rights, does PenCom consider that they have responsibilities to their children and other members of their families? Should the retiree die waiting? Does PenCom remember that they were bread winners of their homes before retirement and now you stop them payment for more than one year from earning a living because you have not received their accrued right. How are they going to survive? Even if it is N1 million that they were able to contribute into their account, allow the PFA’s to spread it, so that there will not be sudden cut of income to zero. If an

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officer was earning a N100, 000.00 it is better he or she earns N10,000 per month as pension than nothing, It is pertinent to state that from my research, the Pension Reform Act did not state that a PFA should wait and consolidate accrued rights before a retiree can be paid. It is being imposed by PenCom based on administrative convenience on their own part. It means they have to give approval twice and for the Commission, this is additional work.

But President Buhari and PenCom should remember that these people have been armed people all their lives. You have taken away their career, you have taken away the salary, can’t the human mind think of criminality to survive? The President should remember that we have trained them in arms and weapon handling. This is a significant security challenge to the country because a hungry man can do anything to survive. Allowing them to retire without paying them any pension benefit nor placing them on low monthly pension is a disaster waiting to happen.

The officers have every right to agitate for a better deal at retire-

@Businessdayng

ment and these agitations must be immediately addressed by PenCom. The Inspector-General of Police and NPF Pensions Limited, must rise up to the need to save the nation from the looming outrage of retired police officers and men.

Suffice it to state that NPF Pensions, in collaboration with the Police authorities in its wisdom set up a N500 million Retiree Support Fund in 2017 to cater for the retirees while awaiting their legitimate pension.

It was created to support the retirees such that when pension has not been paid due to unpaid accrued rights, NPF Pensions give them some money as a relief pending payment of their pension.

But because pension has not been paid for more than a year, the Retiree Support Fund is being misconstrued by the retirees as their legitimate payment. They want their pension entitlement. They think that perhaps somebody is keeping their money and giving them just hand out. Even police officers do not believe that the CPS is a different scheme. In their mind, these regulators can muddle the old Police pension fund with the CPS and again, mismanaged their pension funds.

While a Memorandum of Understanding reached between key stakeholders in the industry are being expected to approve a special gratuity for the police so that when they retire, the lump sum of their total pension will not be taken from their account and the balance will be channeled as monthly programmed withdrawal, they want the Federal Government to immediately pay accrued rights to relieve the retirees even if it’s not much. President Buhari should give them what is theirs.

They should also be paid gratuity and unless this is done, the police will remain cheated and will feel cheated.

They will continue to agitate and it might lead to worse consequences because they can mutiny against the people and the government.

Isamail Adekunle, concerned stakeholder contributed from Lagos

Monday 12 August 2019

BUSINESS DAY

insurance today

27

In association with

E-mail: insurancetoday@businessdayonline.com

Without ownership of the MDRI project, its chances of succeeding is slim - Oluyemi Patrick Olatunji Oluyemi, managing director/ CEO, Tespauruth Consulting Limited (TCL) in this interview with

Modestus Anaesoronye reviews the insurance industry Market Development and Restructuring Initiative, assess its performance and how it can be reinvigorated to drive the growth of insurance in Nigeria. Excerpt:

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industry (a Strategic Plan) how come the document is not freely and readily available? It is like the Economic Recovery and Growth Plan (ERGP) not being readily available to State Governments, Chambers of Commerce and Industry, large industrialists like the Dangote Group, universities and other academic institutions, etc.! It suggests, in the first place, that there is no ownership of MDRI, in the sense of the regulator who spearheaded its preparation taking charge vigorously of its implementation, and of the operators having a buy-in into the motivation for, preparation of, and the actualisation of the Plan.

The chances of the Pan succeeding in this circumstance must be slim, I think. The element of ownership of the Plan is absolutely crucial to its success. In addition, it does not seem there is any standing Committee on the lines of the Insurance Industry Consultative Committee (IICC) that is charged with carrying on an ongoing review on a regular basis to ensure that the ambitious targets and goals of the plan are really being actualised.

But what are the goals and strategies for market growth contained in MDRI? In the absence of the original document it is not possible to examine in depth its motivations, goals and objectives. But I do recall that in terms of top line income growth MDRI set a target of N1 trillion for the insurance industry by 2012. The industry gross written premium in 2018, in reality, was a miniscule N400 billion- a far cry from this ambitious objective. There was also a stated intention inter alia of revolutionising sales channel development, by having not less than 14 classes of insurance agent- it is plain that the Nigerian insurance industry does not in 2019 have 14 categories of agents operating in it, etc.

Clearly, this cannot be all there is in the MDRI document.

Truly, these are not the only targets/performance indicators in MDRI but that is what I can recall, in the absence of documentation.

It seems to be the case that if the regulator and the operators give any thought to the guide-book that MDRI is meant to be today (August 2019), it must be only slight consideration, as MDRI clearly is not top of mind. In 2017, it was announced

by NAICOM that MDRI was to be reviewed and updated. I looked for evidence to confirm that steps have been taken to give effect to this stated intention, in vain. With the lapse of 8 years from launch, and given the many changes the insurwww.businessday.ng

Patrick Olatunji Oluyemi

ance industry has gone through in the intervening period, and in particular the disruptive, ongoing industry changes in 2019/2020, perhaps it is time to consider setting a new Vision and Strategy for Nigeria’s insurance industry that will cover a period no longer than 5 years, say from 2020-2014. It seems that MDRI has been given a quiet, private funeral! If thereare indica-

‘

We need consider first of all some foundational matters that give support to and give effect to any Plan. First there must be very wide consultation among all the arms of the industry

‘

Tell us about your perception of MDRI and how far it has helped to reposition the insurance market? he Market Development and Restructuring Initiative (MDRI) is a regulator-led market development Plan to expand the width and depth of Nigeria’s insurance market. Launched in 2011 (shifted from the initial launch date of 2009).The market development initiative clearly is within the mandate of an industry regulator in a developing country like Nigeria, given the many market imperfections that are prominent in developing country economies.

Well, to be in a position to express informed opinions the first thing to do is to research the aims and objectives of MDRI, which seems to be both a medium term Vision Statement and Strategic Roadmap for the industry. Naturally, we made enquiries at the regulator (NAICOM), as well as other insurance industry sources. But first, a check was done on the NAICOM website for the MDRI document.

The first shocker- the MDRI document meant to guide insurance industry growth and development was not available on NAICOM’s website! Other alternative efforts to obtain this crucial document came up negative.

This is surprising. What could have happened to the document?

Surprising indeed it is that a document supposedly agreed as a guide to action is not available for public/industry consumption on the insurance regulator’s website. But available on the website (on 2nd August 2019) are a set of Laws, Discussion papers, Regulations, Publications, Guidelines, and Circulars. It is not out of place to mention some of these: Guidelines- Approved Takaful Guidelines, Micro insurance Guidelines 2018; Regulations- Regulatory priority update on Statement of regulatory priorities, Brokers re-re-registration requirements; Discussion papersGuidelines on State governments implementation of compulsory insurance, Mutual organisations’, community-based and non-government organisations’ micro insurance agencies’ guidelines; Circulars- Nineteen of them, among which are : Directives on rendition of quarterly returns to NAICOM 29th September 2016, Annual quarterly regulatory returns template for Nigerian insurance industry, etc.

Really this is a concern for me.

If there is a document that is meant to guide thought and action in the

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tions that MDRI is as at the time of this interview (early August 2019) still being actively implemented, I would be pleasantly surprised to be corrected.

If you are correct in asserting that the Nigerian insurance industry effectively does not have emplaced an overarching vision and overall strategy, how may the industry go about updating MDRI, or crafting a new Vision and Strategy for Nigeria’s insurance industry, which seems for a long time to have been the poor cousin in Nigeria’s financial services industry?

We need consider first of all some foundational matters that give support to and give effect to any Plan. First there must be very wide consultation among all the arms of the industry. Whatever the forms the consultation may take, it is important to seek out the problems of the industry, especially to ascertain the root causes of the seeming industry stagnation, as well as suggestions relating to growth and supervision of the industry. This is what will ultimately ensure that there is ownership of the outcome of deliberations. In particular the opinions and concerns of the market makers in each arm of the industry must consciously be courted as they, because of their size and clout can make or mar the implementation process. The opinions @Businessdayng

and position paper(s) of NAICOM will, of course, carry much weight.

A Vision/Strategy Paper cannot and must not be something exclusively written up on the laptop of a consultant, to the exclusion of the industry it is meant to serve, and then introduced to the operators after it is written up. That would be, from the onset, a guarantee that there would be no ownership of the Plan, from the industry arms. Secondly in the course of writing up the document, there will be necessity for a backand-forth interactive process of consultation among the parties, clarifying all grey areas, or areas on which there is less than full agreement by all parties. And then, there must of necessity be a Standing Committee drawn from all arms of the industry to carry on a comprehensive review of implementation, during the life of the Plan. But from what I said earlier, it is clear that my preference is for the crafting of a new document.

It seems MDRI is a tired document, indeed, one that has hardly been implemented, or implemented with the required vigour.

You have not answered the question about how the insurance industry should go about crafting a new Vision and Strategy.

This is not such a huge assignment. You need to consider what a Vision Document/Strategic Plan should contain. A Strategic Plan would include inter alia: A Vision Statement and a Mission Statement, Core Values agreed to by all parties (buy in), ASWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis, An assessment of industrycompetition, customers, and trends, probably along the lines of Professor Michael Porter’s famed Five Market Forces, Long term goals and objectives, Yearly objectives (broadly stated), and Action/ Tactical Plans (in outline).

Can you provide us some more detail on the constituents of what might be a new Vision and Strategy for the insurance industry?

I probably could go into a lot more detail, but such an exercise is probably one that is better left to Tespauruth Consulting Limited (TCL) the management consulting firm to handle. We may examine the detail later, but the above serves as an outline of what we believe needs to be done. It certainly is entirely appropriate in this season that heralds in a new profile of insurance industry, to have crafted a new Vision and Strategy, that is in more in tune with the demands of the emergent Nigerian insurance industry, and in particular the insurance industry’s customers.

28

Monday 12 August 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

What men can do to be better sponsors for women RANIA H. ANDERSON AND DAVID G. SMITH

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dvocating for women’s advancement at work is integral to the improvement of financial results and diversity in the workplace. Yet data from the Working Mother Research Institute finds that while 54% of men had a career discussion with a mentor or sponsor in the past 24 months, only 39% of women did.

Why? Research from the Center for Talent Innovation reports that a full 71% of executives have protégés whose gender and race match their own. That means that women and minorities don’t benefit from sponsorship like their male colleagues do.

Companies need to do

a better job of developing men to be champions for diverse talent.

Here are eight key guidelines to share with men seeking to sponsor women: — IDENTIFY HIGH-

POTENTIAL TALENT: Look for people who bring different experiences and perspectives from your own and also have the potential and ambition to make a larger contribution.

— DETERMINE THE BEST ROLE: Identify high-visibility opportunities that could benefit from your protégés’ talents and experiences.

— POSITION THE ROLE: Ensure that your

protégés understand that the organization values and thinks highly of them. Many women appreciate this type of encouragement and may be reticent to take a challenging role without it.

— PROVIDE OPPORTUNITIES FOR DEVELOPMENT AND SUPPORT: Ensure that people in your organization invest resources to give protégés the skills and experiences they need.

— PAVE THE WAY: Introduce your protégés to powerful people in your organization or industry, especially if they can serve as crucial professional connections.

— ENSURE PROTÉGÉS RECEIVES FEEDBACK: A 2006 McKinsey study found that women don’t receive the same direct, candid commentary on their performance as

their male counterparts do. Make sure that your protégés get clear performance assessments and guidance on how to improve results.

— HELP PROTÉGÉS PERSIST: Make sure that failures or naysayers don’t derail your protégés. That doesn’t mean sheltering them from adversity; it means ensuring that the organization is understanding if everything doesn’t work out the first time.

— CHAMPION PROMOTIONS AND RECOGNITION: Advocate for raises, promotions and recognition to deserving protégés.

• Rania H. Anderson is an executive business coach. David G. Smith is a sociology professor at the United States Naval War College.

New laws on data privacy and security are coming. Is your company ready?

ANDREW BURT

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ompanies today are often not equipped to sell secure software, because they are not incentivized to do so, and because consumers are in no position to demand it.

But this market failure won’t last long.

Governments are in the process of passing new laws to ensure higher standards for software security and data privacy. The era in which tech companies inadequately test their software for security and privacy vulnerabilities is coming to an end. Last year, for example, California became the first U.S. state to enact basic standards for software used in the “internet of things.” And various pro-

posed state laws around the country would raise the penalties for privacy or security failures. Similar efforts are

ongoing around the world, from India to Brazil.

Software companies and their corporate customers

shouldn’t wait to take action.

To start with, they should not only gauge their level of security in terms of the patches

they install or the incidents they respond to, but also consider the labor-intensive, ongoing processes they devote to preventing privacy and security vulnerabilities. That means that the time devoted to testing software and maintaining it once it is deployed will become central metrics in securing enterprise data.

Companies that create and deploy software can ready themselves by adopting two additional strategies.

First, they must focus on embedding security processes into the software design and deployment life cycle as early and as often as possible. Companies that purchase software should continuously track their attack surface and ensure that the teams appointed to simulate

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

Make this summer your best one ever With any of our FirstBank cards, you can enjoy a flexible summer in over 200 countries worldwide Visit any FirstBank branch for the issuance of your Summer Cards

attackers are actively probing company networks and testing security readiness.

Second, companies need to connect the resources they spend on privacy and security to the volume and complexity of the code they seek to protect. As the number of lines of code in any given software system grows, or as its user base expands, organizations will have to increase their efforts to protect the privacy and security of their customers.

Soon, a less than robust software security strategy will become more than a public relations liability; it will become a serious legal vulnerability. It’s best to be prepared.

• Andrew Burt is chief privacy officer and legal engineer at Immuta.

Monday 12 August 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

29

In association with

Executives’ English skills affect the outcomes of earnings calls used erroneous expressions or failed to speak clearly (by, for example, using the passive voice or negative compounds) suffered real consequences, including lower trading volumes, restricted price movements and inconsistent analyst forecasts.

Our research shows that earnings calls matter, and for different reasons than most people assume. The news being reported in the calls is obviously important — but so is the manner in which the calls are conducted. Because English is now the norm in the business world, executives conducting these calls need to make sure they communicate clearly.

FRANÇOIS BROCHET, GWEN YU AND PATRICIA NARANJO

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nvestment has become global. That’s not news, but the extent of the phenomenon might surprise you: Foreign funds today hold more than eight times more stock in listed companies than they did in 2000.

To reach this increasingly international group of investors, many companies are turning to live earnings conference calls.

The stakes are high: Earnings calls often prompt large trading volumes and stock-price movements. As a result, managers often receive extensive coaching on how to run them, but even with all that coaching, many still don’t grasp the important cultural factors that affect how their calls are received.

In a recent study, we analyzed how managers discuss financial news during earnings calls and discerned an

important pattern: Even when the underlying news being reported is a constant, markets often react differently depending on the language fluency of the person leading the call.

Like it or not, when it comes to business communication,

English is now the standard. Executives around the world use English when communicating with their investors today, and an increasing number of executives are nonnative English speakers. How well they speak the language has meaningful capital-market consequences.

We demonstrated this by reviewing the transcripts of earnings calls conducted by more than 4,500 non-U.S. firms, all of which hosted conference calls in English between 2002 and 2010.

When we analyzed the data, we found that executives that

• François Brochet is an associate professor of accounting at Boston University. Gwen Yu is an associate professor of accounting at the University of Michigan. Patricia Naranjo is an assistant professor of accounting at Rice University.

How Americans’ biases are changing over time bias to reach neutrality.

Whatever the causes of these changes in implicit attitudes, business leaders seeking to attract and maintain the best talent for their organizations must not forget the subtle forms of bias and discrimination that exist today. Nevertheless, the fact that some biases have ebbed significantly in recent years is cause for hope: It shows that even seemingly automatic biases can and do change.

TESSA E.S. CHARLESWORTH AND MAHZARIN R. BANAJI

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s early as the 1930s, surveys such as those from Gallup and Pew Research have documented long-term changes in attitudes toward social groups, including those based on gender, sexual orientation, race and ethnicity. These attitudes and beliefs, measured via selfreports on surveys, are widely described as “explicit,” because they reflect conscious recollection and controllable reports of the contents of one’s mind.

But self-reports have limitations. Respondents may be unwilling to divulge their true attitudes. In response, scientists have developed methods to measure relatively less conscious attitudes, known as “implicit” attitudes. The most widely used test of implicit attitudes is the Implicit Association Test. The IAT uses people’s response times to certain stimuli as an indirect measure of their attitudes toward those stimuli.

Until now it was assumed that it would be more difficult

• Tessa E.S. Charlesworth is a doctoral student at Harvard University. Mahzarin R. Banaji is a psychology professor at Harvard University.

to change implicit attitudes than explicit ones. But our new research shows that the implicit attitudes of a society can and do change durably over time — although at different rates and in different directions depending on the issue. Drawing on data from over 4 million tests of explicit and implicit attitudes

collected between 2007 and 2016, we assessed Americans’ implicit attitudes toward various issues.

Our study reveals that implicit attitudes about sexual orientation showed the fastest change, with anti-gay bias decreasing by 33% over the 10year period. Implicit attitudes

toward race and skin tone have also moved toward neutrality, by 17% and 15%, respectively. Meanwhile, negativity toward the elderly and people with disabilities has shifted by less than 5% since 2007. The change has been so slow that forecasts suggest it could take well over 150 years for either

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BUSINESS DAY

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Week Ahead

Watchlist

Nestle, Cadbury are good investment as ROE surges amid headwinds BALA AUGIE

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ompanies that utilize their capital resources efficiently are financially and fundamentally strong and investors should pay attention to them because they tend to outperform the All Share Index.

Of the ten consumer goods firms under our coverage, only Nestle Nigeria Plc and Cadbury Nigeria Plc are able to growth annualized return on average equity (ROAE), making them capital efficient firms good for investment.

For investors, it is paramount to evaluate the capital efficiency of a company before picking their stocks or investing in them.

For the first six months through June 2019, Nestle’s ROAE increased to 109 percent from 96.12 percent the previous year while Cadbury’s ROAE moved to 10.12 percent in June 2019 from -0.07 percent in June 2018 after the company reverted to

the path of profitability.

However, peer rivals fell off the clip as they succumbed to the harsh and unpredictable macroeconomic environment.

Unilever’s ROAE dipped (-14 percent), Flour Mills Nigeria’s ROAE was flat at 6.12 percent, Dangote Sugar’s reduced by (-7.44 percent); Nascon Allied Industry’s fell by 26.15 percent while International Breweries and Dangote Flour Mills recorded losses in the period under review.

Consumer goods firms have felt the pangs of a sluggish economy, and to exacerbate the anaemic situation they are in is inability of the government to formulate policies that will help remove a huge infrastructure deficit and propel the country to economic growth.

Post-recession, growth in real household consumption peaked at 3 percent in the final quarter of 2017, before falling to 1 percent in the second quarter of (Q2) 2018.

Nigerians are getting poorer as over 50 percent of a population of 200 million live on less than $1.98

dollars a day, as the country overtook India to become the world’s poverty capital.

Nestle Nigeria has seen growth strong growth in the Beverage business, as the Milo Ready To Drink (RTD) pack and Maggi seasoning continues to gain widespread acceptance in the market place.

The country’s GDP expanded by 2.01 percent in the three months through March 2019, from a year earlier; that compares with 2.4 percent expansion in the fourth quarter.

While inflation figure for the month of June fell to a 12 months low of 11.22 percent, the figure, however, falls below the central bank’s target range of 6 percent and 9 percent.

The near term outlook for the consumer goods firms is unimpressive. The macroeconomic environment has not supported growth in revenue. And those growing revenue are not efficient, according to Opeyemi Ani, consumer goods analyst at Cordros Securities Limited Nestle and Cadbury have been

more innovative and proactive to launch market penetrating products while contemporaneously spending on research and development with a view magnifying earnings. They have expanded their product portfolio, opened new factories, and curtailed costs.

Nestle’s Milo Ready To Drink pack and Maggi seasoning continues to gain widespread acceptance in the market place, adding impetus to earning.

Last year, the company opened a N4.10 billion RTD factory in Agbara Ogun State, and it has invested N74.10 billion on its operations in 5 years.

Cadbury re-launched its iconic cocoa beverage drink, Bournvita, with a new improved taste in line with consumers’ tastes and preferences.

The company’s Cadbury Hot Chocolate 3-in-1 brand, its treat portfolio, recorded substantial growth, driven by its unique offering, while the gum and candy brands also recorded success in their respective categories.

Dangote Group’s foresight extends to Dairy as CBN set to stimulate domestic market IFEANYI JOHN

E

arly in May, Dangote Group announced its strategic decision to delve into dairy farming as it had become a necessary route because of several issues involved in places where the country’s biggest investment holdings had acquired land in order to investment in rice and sugarcane. Months later, the Apex bank put foreign exchange restrictions on importers of milk.

Under the new policy, importers

will not be allowed to get forex from both official and parallel markets to bring in milk. They are likely to be forced to invest in ranching as Abuja continues to seek new ways to tackle the farmers-herders conflict in central and southern parts of the country.

Following the uproar caused

by CBN decision, the Apex bank quickly sought to clarify that it hadn’t banned milk importation, just access to forex. “For the avoidance of doubt, milk importation is not banned,” read the official statement to clarify the matter. “Indeed,

the CBN has no such power. All we will do is to restrict sale of forex for the importation of milk from the Nigerian foreign exchange market.

We wish to reiterate that we remain ready and able to provide the needed finance to enable investors who genuinely want to engage in milk.”

Well for Dangote Group, the new CBN policy is in line with the strategic foresight of the company.

Earlier in May, speaking at the African Development Bank (AfDB) Investment Forum for the New Special Agro-Processing Zones in

Abuja, the Group Executive Director, Engr. Ahmed explained that “We (Dangote Group) are planning to go into dairy farming. We (Nigerians) are spending huge sums of money importing powdered milk annually, this is simply unacceptable. We are going into large-scale dairy farming,” NBS Data shows that between $1.2 billion and $1.5 billion are spent yearly to import milk into the country. The total amount of imports into Nigeria for 2018 was Continues on Page 31

P.E

SHORT TAKES 13.5%

The Monetary Policy Committee (MPC) at its July meeting retained the benchmark interest rate at 13.5% while other policy parameters remain unchanged.

The decision by the committee to hold rates constant was informed by the conviction of members that key macroeconomic indicators are trending in the right direction.

$24.3 billion Portfolio flows to emerging markets were $24.3 billion in July, 2019. Equity and debt flows were $1.2 billion and $23.1 billion respectively. Net capital outflows from EM surged to $35.8 billion in June from $19 billion in May.

11.22% The consumer price index, which measures inflation increased by 11.22% year-onyear in June 2019, the lowest since May, 2018. On month-on-month basis, headline index increased by 1.07% in June, 2019, 0.04% lower than 1.11% reported in the previous month.

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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@Businessdayng

Monday 12 August 2019

BUSINESS DAY

31

MARKETS INTELLIGENCE Banking sector attracts N1.12 trn FDI in 3 years Ifeanyi John

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ut of a total N10.48 trillion ($34.16 billion) in capital imports to Nigeria over the last three years, the banking sector has been able to command N1.12 trillion, the largest sectorial share save for the hot money coming into the country.

In the last three years, the banking sector has been the go-to for foreign investors who looked beyond investing in shares.

Capital importation stems from an inflow of foreign capital either in the form of cash (loan or equity) or goods. Capital importation into Nigeria has been on the rise in 2019 as it grew by 216 per cent in the first quarter of 2019 as compared to the last quarter of 2018.

According to NBS data, hot money has been the most dominant form of capital importation averaging 55.5 percent of total capital imports since 2014. Looking

past the Foreign portfolio investments, the banking sector is the next best place to invest money according to the data provided.

The banking sector had received N1.12 trillion ($3.89 billion) 26.35 percent of all capital importation

less investments.

The service industry followed as the second most attractive sector for foreign direct investments pulling a total of N825.83 billion since 2014. Production (N598.65 billion), Finance (N583.3 billion)

and Telecoms (N488.13 billion) completes the top five sectors in terms of the ability to draw foreign direct investment into the country.

Under Nigerian law, it is very important that every foreigner investing in a local business in

Oil price starts the dip phenomena SEGUN ADAMS

B

rent, the international crude oil benchmark, fell to a seven-month low last week as demand and supply sided risks intensified following a more acute face-off between USA and China, while increased Shale

production threatened a glut. The Saudis want to nip the crisis in the bud.

The sudden drop in the price of the commodity is already sending a predawn chill down the spine of Nigeria’s policy makers because the budget had already been benchmarked at $60 per barrel.

Brent crude, as which Nigeria’s oil is priced, fall by $2.60 to $56.34 as of

8:10 pm last week Wednesday, but it moved higher to hit $58.71 as at 7:45 pm on Friday.

The big question for Nigeria should the OPEC+ coalition vote for muting supply further would concern a halt to Nigeria steady output rise since 2016 with implications for the country’s ambitious budget in the face of revenue challenges.

“Price at a decent level remains important for us. Even if we are producing so much and the price is below our budget benchmark, we will be in a bad position,” said Gbolahan Ologunro, an analyst at Lagos-based CSL Stockbrokers.

“To that extent, I think a compromise would be in the entire interest of the market and affect Nigeria positively.”

A rise in price, if it is further cut, would help support government earning but production is stated in the budget at 2.3 million bpd is very unlikely.

Nigeria no longer enjoys exemption from cuts since supply-disrupting activities of Nigeria Delta Military

have been quelled but production has remained above OPEC’s quota of 1.685 million bpd. June data show Nigeria’s output at 1.956 million bpd.

“If there would be any further cut, it would likely be backed by sanctions to ensure compliance,” Ologunro said.

The kingdom said it would take all necessary actions to stem the tide and prop up prices of oil that U.A.E. Energy Minister Suhail Al-Mazrouei said was inflicted by “temporary over-reaction, which is driven by speculation.” Front-month contract for Brent rose 2.8% on Thursday, snapping a 3-day losing streak.

The positive effect nonetheless, OPEC may be set for further output cut to create artificial gaps that would support prices of Brent hovering around $57, some 23 percent lower than April’s high and $3 short of Nigeria’s budget mark, mid-day Friday.

In Abu Dhabi next month, the world’s biggest oil cartel would have to agree with allies on the big move to help OPEC regain reins on oil price.

Nigeria is required to procure a Certificate of Capital Importation (“CCI”) on the inflow of foreign currency or raw materials or equipment imported into Nigeria.

A Certificate of Capital Importation (“CCI”) is a certificate issued by a Nigerian bank confirming an inflow of foreign capital either in the form of cash (loan or equity) or goods. A CCI is usually issued in the name of the applicant company within 24- 48 hours of the inflow of the capital into Nigeria.

The primary purpose of the CCI is to guarantee access to the official foreign exchange market for repatriations of capital and returns on investment, which include dividends, interest, and capital on divestments. The requesting company must present a copy of the CCI to the Nigerian bank to process a remittance.

Essentially, a capital importation can be done through an authorized dealer, which is usually a commercial bank or via a debt-equity scheme of the federal government.

Dangote Group’s foresight extends to Dairy ...

Continued from Page 40

$36.5 billion and therefore the potential reduction of imports on the back of a cost hike for importers of milk is around 4.10 percent of total imports.

In order to take advantage of this decision by CBN and venture into domestic production of the restricted item, investors need to have the foresight of Dangote Group. The first mover advantage sets Dangote Group up to profit from the $3 billion market.

Wall Street struggles to add to winning streak after Trump trade comments Sentiment also being hit by fresh political turmoil in Italy Philip Georgiadis in London, Siddarth Shrikanth in Hong Kong and Peter Wells and Matthew Rocco in New York, FT

W

all Street was on pace to snap a three-day winning streak on Friday amid fresh concerns about the US-China trade dispute, while Italian assets came under pressure from

the re-emergence of political risk in Europe.

President Donald Trump told reporters on Friday morning in Washington that he’s not ready to make a deal with China, cooling investors’ hopes for an imminent trade truce.

Market optimism was also tempered by a Bloomberg report that Washington was delaying licences for US companies to deal with Huawei, after China halted crop purchases.

US stocks traded lower following Mr Trump’s remarks, after posting on www.businessday.ng

Thursday their biggest one-day rise in two months. The S&P 500 fell more than 1 per cent at its lows for the day but pared some of those losses, trading down 0.6 per cent. The Nasdaq Composite fell 0.9 per cent on weakness in technology shares. The Dow Jones Industrial Average slipped 0.3 per cent.

In Europe, traders pulled out of Italian government debt as Italy’s ruling League party tabled a motion of no confidence in prime minister Giuseppe Conte, after its leader Matteo Salvini called time on Italy’s governing

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coalition.

Italian two-year government bond yields rose 31.8 basis points to 0.373 per cent, while the yield on 10-year debt was more than 28bp higher, its biggest daily gain since 2018. The rise in yield points to a drop in price.

Nadia Gharbi, an economist at Pictet Wealth Management, said one of the reasons for the sharp market reaction is that a possible general election in the autumn would come in the middle of 2020 budget negotiations with the EU. @Businessdayng

In the last MPC meeting, CBN governor Godwin Emefiele said: “We are determined to make milk production in Nigeria a viable economic proposition. If you need a loan to acquire land, do artificial insemination, grow grass, or even provide water, we will give it to you.

We are getting to the end of the road of milk production in Nigeria.”

32

Monday 12 August 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 09 August 2019

Top Gainers/Losers as at Friday 09 August 2019 LOSERS

GAINERS

ASI (Points)

Opening

Closing

Change

Company

Opening

Closing

Change

MTNN

N129.55

N131

1.45

ZENITHBANK

N16.8

N16.35

-0.45

WAPCO

N14.35

N15

0.65

GUARANTY

N26.9

N26.5

-0.4

N5.5

N6

0.5

UACN

N5.75

N5.5

-0.25

VOLUME (Numbers)

FO

N16.8

N17

0.2

UBA

N5.8

N5.55

-0.25

VALUE (N billion)

CILEASING

N6.05

N6.2

0.15

N10.1

N9.9

-0.2

MARKET CAP (N Trn)

Company

CUSTODIAN

DANGSUGAR

DEALS (Numbers)

27,306.81 2,702.00 220,800,725.00 4.477 13.307

VAT charges: Negligible impact seen on NSE daily market turnover

the Economy and Minister of Finance expired on July 24, 2019.

This initiative was aimed at reducing the cost of transactions for investors and to encourage investments in the Nigerian Capital Market.

VAT is now charged on all commissions applicable to capital market transactions.

These are commissions: earned by Dealing Members on traded values of shares; and payable to The Nigerian Stock Exchange (NSE) and the Central Securities Clearing System Plc (CSCS). The CSCS automated the deduction of VAT charged on commissions payable to The NSE and the CSCS; and Dealing Mem-

bers resumed the deduction of VAT on commissions earned; they are remitted to the Federal Inland Revenue Service (FIRS).

The Federal Government said recently at the Association of Issuing Houses of Nigeria (AIHN) event that it is already tackling the issues regarding stamp duties collection and the extension of the VAT exemption on capital market transactions.

The Vice President Yemi Osibanjo who was represented by Mary Uduk, Acting Director General of the Securities and Exchange Commission (SEC) said these and other issues are being addressed currently “and a resolution would be announced very soon.”

He Nigerian bourse had recorded significant decline in investors’ activity during the first-half (H1) period, with average daily turnover decreasing by 29.7percent year-on-year (YoY) in H1’2019.

The average volume of stocks traded in the week ended August 2 declined by 28.7percent, “partly due to the re-introduction of VAT charges on capital market transactions”, according to Lagos-based analysts at United Capital.

banks to maintain a loanto- deposit ratio (LDR) of at least 60percent, Agusto & Co. notes that as at December 31, 2018, the banking industry’s loan to deposit ratio stood at circa 63percent.

“When we back out loans funded by borrowings from multilateral financial institutions, the Central Bank and Bank of industry, this ratio would be significantly lower. Further examining this ratio by bank shows that most Tier 1 banks recorded LDRs below the newly introduced floor

of 60percent. The CBN’s target is to compel banks to increase lending to the private sector, particularly SMEs, retail, mortgage and consumer lending with a view to stimulating economic growth through increased lending to the real sector.

“However, with Stage 3 loans accounting for over 10prcent of gross loans and advances as at December 31, 2018, alongside a lingering macroeconomic lull, asset creation strategies of banks are expected to be conservative in the shortterm”, Agusto stated.

Stories by Iheanyi Nwachukwu

D

espite that the Nigerian stock market is already down and struggling to recover, the recently reintroduced 5 percent Value Added Tax (VAT) charges on all commissions applicable to capital market transactions is yet to fully impact negatively on daily stock market trading activity.

The stock market is down this year by -13.12 percent as investors (foreign and local) largely remain on the side-lines in search of clear cut policies to guide investment decisions.

Lagos-based CardinalStone Research had said there will be negligible impact on market turnover following the expired Value Added Tax (VAT) exemptions placed on equities.

Stock market data show that as at July 26, investors in the market exchanged 130.845 million units in 2,749 deals; on July 29, it was 93.112 million units in 3,056 deals; while on July 30, they exchanged 155.213 million units in 3,192 deals.

Likewise, on July 31, 251.930 million units were

exchanged in 3,937 deals; on August 1, it was 97.359 million units in 2,936 deals; and on August 2, in 3,088 deals 161.650 million units were exchanged.

The mixed trend continued on August 5 when in 3,314 deals, equity dealers exchanged 280.695 million units; on August 6, it was 170.723 million units in 3,614 deals; on August 7, the market recorded total volume of 39.422 million units in 699 deals; while 220.800 million units were traded on August 9 in 2,702 deals.

The Value Added Tax exemption of Commissions on stock exchange transactions Order (Order) granted on July 25, 2014 by the then Coordinating Minister for

Agusto assigns ‘Aa-’ rating to UBA …rating expires on June 30, 2020

A

gusto & Co. Limited has just assigned an “Aa-” rating to United Bank for Africa Plc. The rating assigned to United Bank for Africa Plc reflects the bank’s performance as underpinned by its good liability generation strategy and upheld by a strong brand franchise, the rating agency said.

This is in addition to a good liquidity profile, satisfactory asset quality given the operating terrain, as well as good capitalisation for current business risks, said Agusto whose strong

credibility presence and ratings are globally accepted in Nigeria, and across the globe.

“UBA’s rating is however constrained by weaknesses in the overall macroeconomy, a comparably lower net interest spread and a high cost to income ratio, limiting competitive profitability levels vis à vis Tier 1 banking peers”, said Agusto which is Nigeria’s first credit Rating Agency and a pan African leader in credit reports.

With the Central Bank of Nigeria’s recent regulation requiring deposit money www.businessday.ng

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Global market indicators FTSE 100 Index 7,253.85GBP -32.05-0.44%

Nikkei 225 20,684.82JPY +91.47+0.44%

S&P 500 Index 2,905.56USD -32.53-1.11%

Deutsche Boerse AG German Stock Index DAX 11,693.80EUR -151.61-1.28%

Generic 1st ‘DM’ Future 26,128.00USD -237.00-0.90%

Shanghai Stock Exchange Composite Index 2,774.75CNY -19.80-0.71%

FCMB introduces revamped agrocommodity trade finance facility

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irst City Monument Bank (FCMB) has introduced an enhanced agro-commodity trade finance facility for agribusiness operators.

The development marks another bold step by the Bank to expand and deepen its support to the agricultural sector, its value-chain and the overall growth of the Nigerian economy.

The revamped facility is designed for agro-commodity merchants with supply contracts to multinationals, large corporates and processors of agro-commodities.

Targeted commodities are cocoa, cashew nut, sesame, ginger, palm Oil, grains (maize, sorghum, soya beans, paddy rice). Under this new FCMB trade finance facility which is structured in the form of a working capital, the minimum amount that can be accessed by a qualified customer is N100million, while the maximum is N2billion.

Explaining the rationale behind the introduction of the facility in an enhanced form, the Divisional Head, Agribusiness of FCMB, Kudzai Gumunyu, said the Bank recognises the gap that exists in agribusiness financing as well as other challenges faced by operators, including farmers, in the sector.

According to him, “we realise there are millions of agrotraders and processors across the country that need credit at convenient and affordable rates, considering the level of attraction the agric sector has garnered. Our decision to introduce a revamped agrocommodity trade finance facility is part of our intervention in the agribusiness space to ensure agribusinesses and other stakeholders are empowered with the requisite funds and enablers to boost production and marketing of agricultural commodities.”

“Commodity producers and traders stand to immensely benefit from this facility, because it is a veritable and convenient opportunity to access funds that ensure cash flow is available for maximum output. We urge all to take advantage of this offering’’, Gumunyu said.

He assured that FCMB is focused on being a strategic partner in the agric sector to @Businessdayng

drive the diversification of the Nigerian economy, food selfsufficiency, employment and export earnings.

Highlighting FCMB’s contributions to agribusiness, Gumunyu said the Bank had sustained the tempo of support through numerous cutting-edge initiatives through innovative products. He said FCMB in 2018, provided lines of credit that peaked at 8 percent of the bank’s total loan book to the agric sector with the intention to improve on this this milestone.

FCMB has consistently proved its mettle as an inclusive and impact investment lender and as an institution that accords agribusiness top priority. For instance, the Bank facilitated and guaranteed the procurement of fifty (50) tractors by the Tractor Owners and Operators Association of Nigeria (TOOAN) Ventures from

Adam Nuru

the Bank of Industry. The tractors were handed over to the Association recently at Ilero town, Oyo State. In addition, FCMB is in partnership with several local and international institutions, such as CBN, BOI, DBN, FMO, International Finance Corporation, USAID, AFD and AGF to provide funding and other classes of support to the agric sector.

Recently, the lender signed a Memorandum of Understanding with the World Savings and Retail Banking Institute (WSBI). The memorandum is aimed at deepening agency banking, financial inclusion and savings culture in the informal and agribusiness sectors, starting with five states, namely Kaduna, Kano, Nasarawa, Ogun and Oyo. The plan is to reach 2 million farmers nationwide by the year 2023.

Monday 12 August 2019

BUSINESS DAY

START-UP DIGEST

33

In association with

Meet Oladoyin Olayiwola, first-class shoemaker MICHAEL ANI

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ladoyin Olayiwola is a 24year old entrepreneur who studied Economics at the University of Lagos. She is the chief executive officer of Ollyzsole, a small-scale firm that produces leather shoes, belts and sandals.

She went into this business in 2017 to tap into the increasing demand for footwear in the country, estimated at over $2 billion.

“I saw the opportunity to grow an indigenous manufacturing hub for footwear production as well as make people understand that anyone, irrespective of having formal or informal education, can manage a business that has to do with creating things with their hands,” she says.

She used her personal savings to start the business.

The savings were the money she made while doing her one year compulsory National Youth Service Corps.

Nigeria has a population of over 200 million people, according to the

United Nations estimate, all of who are striving to meet the basic needs of life which include shelter, clothing and food. Shoes and belts have become essential parts of clothing for an economy dominated by young people, most of who are below 18 years.

“My financial knowledge and educational back-

ground have also helped me to plan the business’ finances in such a way that it can fuel the business at its current stage,” she says.

She discloses that the opportunity in the industry is enormous. According to her, potential SMEs who have interest in the business needs as small as N30,000 N50,000 to start.

She says interested entrepreneurs do not have to wait until they get all the money to buy the required machines but could simply get a filing machine and some other basic tools.

“To be successful in the business, you need to acquire the required knowledge first, which you can then expand on as you go,” she recommends.

“You also need to get the best materials to help you achieve the best outcomes.

Creativity is another thing you need to develop, given the nature of the business,” she tells Start-Up Digest.

She says the entrepreneurs need other fundamentals such as financial management, marketing, sales, and customer service.

In making the Ollysole brand unique, Olayiwola ensures she uses the best materials and pays close attention to details regarding current trends, tastes and feedbacks when fulfilling each customer’s orders.

Olayiwola has had her fair share of ups and downs, with disappointments emanating from different ends, including her friends and family who felt she was wast-

ing her time. She also faces the challenge of combining work with business as well as sourcing for customers.

She currently works as a business operation analyst in one of the leading financial and investment banking firms in the country.

She explains that since starting the business, her biggest achievements have been to build and grow a quality brand for herself within the one-year period.

“The number of footwear I have successfully made is something I am proud of. Positive feedback from customers and growing referrals point to the fact that I am creating value,” she boasts Due to her drive for youth development, Olayiwola volunteered EduBridge Academy to train and offer career advisory services to both undergraduates and graduates students to help them get job placements in an economy bedevilled by unemployment that is as high as 23 percent.

She is one of those who believe that people learn handworks and become their own bosses in order to survive in a world that is

enveloped with volatility, uncertainty, complexity and ambiguity.

Like every other entrepreneurial goal, Olayiwola says she has a great plan of expanding the business as well as her market horizon to create an indelible niche for her in the industry.

“I look forward to building a global brand,” she says.

“I aspire to make my business attractive to anyone, especially people with formal education, who may say that being involved with a handwork is a job for people who don’t have a formal education or didn’t do well in school. In my case, I did not only go to the university, I also finished with a first class degree,” she says.

In her closing words, she encourages all Nigerian women to inculcate the habit of believing in themselves no matter the challenge on their way. “You need to believe in yourself and your ability,” she says. “It’s not going to be a smooth journey but once you know what you want for yourself, focus on the goal and ensure you take one step each day that will drive you closer to your goal.”

Okechukwu Ekemezie: Social entrepreneur We will not raise taxes for SMEs addressing community issues to increase IGR – Oyo Govt BLESSING BALA

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any entrepreneurs are driven by a passion to solve societal problems. For Okechukwu Ekemezie, co-founder, Docotal Health Foundation, his driving force is to address rural poverty by providing free medical care to lowincome earners in rural communities.

Through Docotal Health Foundation, Okechukwu established a non-governmental organisation (NGO) for rural communities by undertaking humanitarian work regarding their wellbeing.

He was inspired to establish it in 2018 owing to the inability of people living in rural communities to easily access medical care.

“I was inspired to start my business to ensure that many people, especially those in the rural communities, have access to quality healthcare.

Most of them could not because of high rate of poverty,” he says.

He says that his initial startup capital for the business was $500. According to him, the

Okechukwu Ekemezie

money was spent on purchasing equipment and renting an office space for the business.

He was able to raise the money from his personal savings, friends, family members and spirited donors.

Since he started, the enterprise has expanded its operations as it has now created a mobile app for individuals to access free medical consultation.

It is leveraging technology to reach more individuals and communities as well as build an online network for free medical consultations.

The graduate of the Latin America Medical School, Havana, Cuba (ELAM), says the business currently has four full-time employees and bewww.businessday.ng

tween five and ten volunteers selected based on the project being executed.

He tells Start-Up-Digest that the NGO plans to scale up its operations to the international level and to infiltrate every hook and cranny in Nigeria and Africa as a whole.

The business also plans to be in the same level as the international NGO, ‘Doctors without Borders’.

Okechukwu identifies inadequate medical supplies and funds as major challenges limiting the operations of the NGO. “Our biggest challenge has been access to finance and medical supplies,” he says.

He urges the Federal Government to partner with NGOs involved in addressing community issues to ensure adequate impact on the society.

He also calls on well-meaning Nigerians to support by donating to the less privileged in the society who can hardly afford medical expenses.

On his advice to other entrepreneurs, he says, “Start small, dream big, start now, and lead a tribe of like-minded visionaries.”

REMI FEYISIPO, Ibadan

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yo State government says it will not increase taxes on small- and medium- scale enterprises (SMEs) in its drive to soar up revenue base.

John Adeleke, chairman, Oyo State Board of Internal Revenue (BIR), said the state would rather look into areas not captured in the tax net to improve the Internally Generated Revenue(IGR).

Adeleke said the plans of Governor Seyi Makinde’s government is to build and nurture the growth of SMEs in the state and not to burden them with heavy taxes that could drive them out of business.

“It is in line with the promise of Governor Seyi Makinde to empower small scale businesses in the state to propel growth in our economy,” he said.

“As he works assiduously to attract foreign and domestic investments to the state, he is also working to establish and sustain small and medium scale industries in

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Seyi Makinde

Oyo State. So, the idea of tax increment on businesses is not even discussed here. We will rather nurture them to grow and be self-sustaining than to over-burden them with tax,” he stated.

“The government nonetheless expects all SMEs to comply with all extant tax laws, especially the ones on personal assessment of business proprietors, withholding tax and VAT payable to the State.”

Adeleke enjoined commercial vehicle owners and drivers as well as motorcycle riders and owners to collect necessary documents from approved agencies and tax stations under Oyo State @Businessdayng

Internal Revenue Services instead of doing same in neighbouring states.

“We assure everyone of quick turnaround time of registering or renewing vehicle documents. We also promise all our patrons quick availability of number plates for all categories of vehicles,” he said.

Adeleke used the occasion to call on staffers of the board of internal revenue to be quick, responsive and work with utmost integrity and professionalism which he said was the best way to support the present administration in its drive for improved internally-generated revenue.

34

Monday 12 August 2019

BUSINESS DAY

START-UP DIGEST

I started my business with no money and no structure – Onyeka Goodness ONYEKA GOODNESS Ifendu is the founder and chief executive officer of Exclusive Courts, a real estate development company which specialises in building and construction. He is also the managing director of Ifetech Auto Sales, an automobile sale and replacement part procurement company. Having been in business for over 25 years, he has been able to strengthen his footprints on the Nigeria entrepreneurship ecosystem. In this interview with ODINAKA ANUDU, he explains how he started and the mileage his firm has gained over time.

T

ell us a little about your academic background I finished my secondary education in Nigeria and attended some courses at the University of British, Columbia.

do not just want to provide services; we want to deliver the best.

Transparency, honesty and trust are our unique selling points. We want to be around for a long time, so we are building a trustworthy brand.

What’s your professional background?

I have been in business for the past 25 years. I learned auto wrecking in Nigeria before relocating to Canada. I discovered that many Nigerians do not have an operating standard for real estate. We can’t compete with our international counterparts. I wanted to create something acceptable worldwide.

What should be the major concerns of Nigerians in Diaspora thinking of investing in real estate?

I have met a lot of Nigerians abroad. Quality is one of the key factors they are concerned about. I discovered that they are afraid of our people back home because of bad reports. We are building a trusted brand for Nigerians at home and in the diaspora.

Why do you think Nigerians in Canada and other parts of the world should invest in real estate?

They should because ‘charity begins at home’. I know that Africa is the best place to be. I have travelled to about 56 countries but there’s nowhere like home.

We also partner with major auto repair centres all over Nigeria.

How did you start your business?

I started with nothing, I was just offering services to people. But today, we are building our own estate at Ikota Villa Estate Lagos.

What’s the biggest risk you’ve ever taken?

I have taken a lot of risks, but going into real estate was a major one. I started without any direction, but I found out that people

are on the lookout for quality.

I capitalised on that, and it has created avenues to build valuable relationships, which will later be useful in the next 20-25 years.

What sets you apart from other real estate companies?

Quality is my major priority. We

What were the challenges you faced while starting and how did you handle them?

Starting up was bad. There was no structure. With time, we put in well-defined structures in the businesses. I have built over 10 businesses, with Exclusive Business Group Nigeria as the mother organisation. Our building and construction arm has provided services for state governments, corporate institutions and individuals at different levels.

What’s the next big move for your company?

Major projects are coming up soon. One of them is undergoing construction at VGC at the moment.

How many employees do you have?

Currently, we have 87 employees in our real estate business and 46 in our automobile business.

What innovations are you bringing into the Nigerian real estate and automobile sphere?

We are detailed and particular about first-class finishing. For our automobile company, I discovered that people don’t think about mileages. We want to ensure people are aware of what they are about to buy. So providing information and quality is very important to us.

What is the future of the real estate industry in Nigeria?

Real estate transactions are going beyond just buying and selling of properties. People are more interested in development and innovation. In the next five to ten years, those who are not offering value will be out of the market. That is why we are doing our best to offer nothing short of excellence.

Business Opportunity

Exploiting opportunity in recycling …Zeugnis to duscuss recycling on August 24

Z

eugnis International Limited will expose opportunities in waste recycling in Lagos on August 24. Venue is the Lagos Chamber of Commerce and Industry, Ikeja.

The firm promises to reveal secrets in making wealth from waste.

Handled by Luther Kington Nwobodo, a PhD student and CEO of Zeugnis International Limited, the training will teach participants how to recycle waste nylons, PET bottles and other plastics to bricks and interlocking stones, the firm said. It will also enable Nigerians to learn opportunities in waste, including how to improve the environment through recycling it added.

“On daily basis, Nigerians consume lots of pure water and soft drinks in PET plastic bottles which are thrown away to litter our environment,” Nwobodo said.

“Plastic wastes are increasing day by day and our environment is not spared from pollution. These plastic wastes being thrown away are not really waste as we term them, but can be effectively recycled into useful various industrial materials. Hence, with adequate knowledge and recent

technology, these non-degradable materials can be recycled into high strength bricks or interlocking stones that possess thermal and sound insulation properties and reduce the overall cost of construction,” he explained. “ High -den sit y p o lyet hylen e (HDPE) and polyethylene (PE) bags are cleaned and added with sand and aggregate at various percentages under intense heat to produce high quality and durable bricks/interlocking stones which are relatively cheaper to concrete types.

“Also, colouring agents can be added to the mixture to attain desired forms or shapes. This technology is not new as it has been in existence in some African countries such as Uganda and Tanzania, among others, but new in our clime,” he said.

He added that adopting this recycling process in Nigeria would not only reduce the amount of waste in the environment but create jobs to reduce high unemployment situation estimated at 23.1 percent.

It would also reduce the huge cost of construction— that is government spending on construction of roads and other major projects that require

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bricks.

In the forthcoming training next month, Nwobodo and his team would be discussing recycling processes and conversion stages, including acceptable outcome of recycled wastes such flakes, and pellets, the firm said.

“A detailed process of converting waste plastics into interlocking stones and blocks will be unveiled, including machine sourcing and sources of raw materials,” he said.

He explained that return on investment is over 100 percent and participants will be introduced to partners.

“Anyone who wants to go into this business needs this training because it will reduce unnecessary waste of resources in machine sourcing and enable them to understand the difference in PET materials and be able to produce standard PET flakes,” he said.

He further encouraged those seeking lucrative businesses to invest in to give the training a try and learn the secrets of making money from waste. Interested investors are advised to contact the organisers on 08032810868

Monday12 August 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

35

• Utilities • Managing your Tax

Are you prone to money mistakes?

MONEY MATTERS

Nimi Akinkugbe

W

e all make money mistakes from time to time but there are some that are hard to recover from. Here are a few common mistakes that you should try to avoid: Failure to Plan When you have goals, you have something to work towards. These goals might include home ownership, starting your own business, early retirement. Without specific goals, you will flounder aimlessly much like a ship without a rudder and may not achieve much.

Take some time to set solid financial goals and review them each year to be sure they are still relevant and appropriate.

Failure to budget A budget helps you stay in control of your finances, as you know what is coming in and what is going out each month. Since budgeting allows you to create a spending plan for your money, it ensures that you are able to prioritise and will have enough money for your most important needs.

Without a budget, even with decent income you may still struggle to get by. A budget, seemingly such a simple tool, is one of the most powerful time-tested tools for saving and investing; it does in a sense hold you accountable for your expenses and guides you to cut back when things are out of control.

Succumbing to financial peer pressure In our day-to-day lives, we inevitably encounter many instances of financial peer pressure, particularly in the very materialistic and aspirational society that we live in. Financial peer pressure is visible everywhere and social media makes it even more in your face; it is so easy to succumb.

Here are some examples: “Everyone else” and their family are travelling to an exotic location this holiday. Many can’t afford a very expensive holiday, but feel the need to impress.

Many go into debt or bankruptcy over weddings and funerals just to try to keep up appearances.

People buy the latest gadgets to show off to friends and colleagues.

After work, your colleagues all go and hang out at the club and order drinks and meals; you can’t afford it but you tag along anyway

with your last few pennies!

“The Jones’ are broke” and if you continue trying to keep up with them, you will be broke too!

Much financial pressure is tied to the company that we keep. Be sure that you are hanging out with people that add value to your life in motivating and encouraging you to be your best self.

Putting all your eggs in one basket Diversification is one of the most important rules of investing.

The basic premise is that if you spread your investments across various asset classes, you will reduce the risk of losing money, because when one of the assets in your portfolio is struggling, another may be gaining in value and prospects.

A diversified portfolio with cash, bonds, stocks, property, business interests etc makes it easier to meet your short medium and long-term goals. You need cash and money market instruments to pay next terms school fees and don’t want to be forced to sell stocks at a loss for that purpose.

Borrowing money from friends and family It is so tempting to borrow from friends and family when things are a little tight. Sadly, sometimes something changes in the dynamics of a relationship when there is a money exchange that makes one indebted to the other.

Feelings of resentment, guilt and even a loss of trust come to the fore particularly when the money is not paid back on time.

This puts a strain on the relation-

ship. Likewise avoid lending to friends and family; if you can afford to give part of what they need and not expect it back, it is usually a better way to keep the relationship on an even keel.

Where you must borrow from friends and family, don’t treat it casually. There should be a formal agreement with clear repayment terms. It is nice to have that access to finance from friends and family if and when you need it; don’t abuse it. More often than not, it comes interest free. Once abused, both the money and the relationship may be lost.

Resigning without a plan Your boss annoys you, you don’t feel you have great prospects, or you are simply bored.

It’s so easy to want to throw in the towel and walk away even though you have not secured another job or haven’t done anything about starting your own business. If you are planning to resign suddenly, be aware of the financial implications.

It is easier to find a job whilst you are still employed. You also don’t want to have any significant gaps in your employment records. Sometimes this is not feasible as you can’t job search while working at your current job.

If you are unhappy in your role, start looking and leave when you are ready.

If you are working in a toxic environment that is devaluing you and affecting your mental health or psyche, then do try to leave as soon as possible. This underscored the importance of an emergency fund to tide you over with six months of expenses

‘

Take a step back and reflect on your objectives.

Base your investing on your risk profile, your goals, timing and needs, and not that of someone else

so you can survive whilst you put your plans in place.

Sometimes you are forced to take a particular job out of desperation. You do need a plan to move on to one that is better suited to your interests, skills and credentials but for as long as you are there, be the best that you can be.

Making financial decisions under pressure Sometimes people come to you with some “investment” opportunity that boasts of a fantastic return. Particularly when things are a little difficult, it can be tempting to want to take a chance. If something sounds too good to be true, it usually is; don’t get caught out by these offers. If you must take such risk, invest only what you can afford to lose.

Investing should be carefully thought out, usually with professional advice. Impulsive money decisions under pressure or fear often end badly. Take a step back and reflect on your objectives.

Base your investing on your risk profile, your goals, timing and needs, and not that of someone else.

Ignoring Insurance Insurance is there to protect you should things not go according to plan. Things do happen, and you need that safety net in place to lessen the burden. Don’t feel you can go afford to be without insurance just to save the money from the premiums.

Sign up for basic insurance coverage that includes health, life and of course other important assets such as your car and home.

Yes it all adds up, but when something untoward does happen, and they do, you will wish you had this important cover and have one less thing to worry about.

Follow Nimi Akinkugbe on: Twitter and Instagram: @ MMWithNimi, Facebook: ‘Money Matters With Nimi’ Send an email to info@ moneymatterswithnimi.com Or visit her Website www. moneymatterswithimi.com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi

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36

Monday 12 August 2019

BUSINESS DAY

Access Bank Rateswatch

Market Analysis and Outlook: August 9 - August 16, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.01

Q1 2019 — lower by 0.38% compared to 2.39% in Q4 2018

Broad Money Supply (N’ trillion)

34.89

Decreased by 0.77% in May’ 2019 from N35.17 trillion in Apr’ 2019

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

24.86 2.11

Decreased by 0.13% in May’ 2019 from N24.89 trillion in Apr’ 2019 Decreased by 2.22% in May’ 2019 from N2.16 trillion in Apr’ 2019

Inflation rate (%) (y-o-y)

11.22

Decreased to 11.22% in June 2019 from 11.40% in May 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

44.69 58.54 1.86

August 7, 2019 figure — a decrease of 0.41% from August start August 9, 2019 figure— a decrease of 9.30% from the previous wk June 2019 figure — an increase of 7.47% from May 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 9/08/19

NSE ASI Market Cap(N’tr)

27,306.81 13.31

Friday

Change(%)

1-week Change

YTD Change

(%)

27,630.46 13.46

(1.17) (1.17)

0.22

0.16

36.59

Value (N’bn)

4.48

4.80

(6.76)

MONEY MARKET NIBOR Friday Rate

9/08/19

2/08/19

Volume (bn)

Tenor

Indicators

Friday Rate

Change (Basis Point)

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

(%)

58.54 2.10

(9.30) (2.78)

(9.18) (31.28)

2251.00 97.00 59.14 11.51 502.00

(5.78) (0.67) (4.09) (4.16) 4.69

16.27 (25.50) (23.69) (24.92) 15.80

1502.30 17.00 259.85

4.51 4.87 (0.46)

14.02 (1.11) (20.73)

(%)

(%)

9/08/19

2/08/19

OBB

12.14

5.64

650

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

12.86 12.44 13.15

6.43 6.75 10.86

643 569 229

Tenor

9/08/19

2/08/19

90 Days

12.95

11.27

169

1 Mnth 3 Mnths

10.95 11.22

9.57 10.04

138 118

6 Mnths 9 Mnths 12 Mnths

12.44 12.70 13.09

11.19 11.66 11.94

125 104 114

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

Friday

1 Month

(N/$)

Rate (N/$)

9/08/19

2/08/19

9/06/19

Official (N) Inter-Bank (N)

306.90 363.31

306.85 362.23

307.00 360.79

BDC (N) Parallel (N)

0.00 360.00

0.00 359.00

0.00 360.00

Friday

Indicators

Friday

AVERAGE YIELDS (%) 9/08/19

(%)

Change (Basis Point)

2/08/19

3-Year 5-Year

0.00 13.08

0.00 12.91

0 17

7-Year 10-Year 20-Year

14.04 13.92 14.14

13.65 13.53 13.76

39 39 38

30-Year

14.20

14.06

14

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

Change

(%)

9/08/19 Friday

(Basis Point)

Friday

(%)

Friday

Change

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

BOND MARKET Tenor

Friday

(%)

(Basis Point)

2/08/19

Index

2,990.56

3018.50

(0.93)

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

9.06 5.78

9.15 5.88

(0.93) (1.68)

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

21.74 -34.04

22.88 -32.88

(1.14) (1.16)

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

5,849.03 26,600.00

9.74 10.75

17-July-2019 17-July-2019

364 Day

74,598.13

11.139

17-July-2019

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

Global Economy In the US, the nonfarm payrolls report showed that job growth slowed in July. The economy created 164,000 jobs, compared to a downwardly revised reading of 193,000 in June. Professional and business services once again led the way in hiring, adding 31,000 jobs.

Health-care companies hired 30,000 workers and providers of social assistance increased employment by 20,000. The unemployment rate was unchanged at 3.7% and remained near a 50-year low. In a separate development, the Bank of England (BoE) voted unanimously to keep its benchmark interest rate unchanged at 0.75%. The bank cut its growth forecast, saying it is less confident about the economic outlook due to increased Brexit uncertainty and a slowdown in global growth momentum. In contrast to the other major central banks, the BoE stated that they are still expected to hike rates gradually, but this now largely depends on a global uptick and a “smooth” Brexit.

Elsewhere in Brazil, conditions in the manufacturing sector deteriorated at the start of Q3. The HSBC Brazil Manufacturing Purchasing Managers' Index (PMI) fell to 49.9 in July from 51.0 in June, the worst reading since June 2018. As a result, the PMI now lies below the crucial 50-threshold, signaling contractionary conditions in the manufacturing sector. July's downturn reflects the first fall in output in one year and the sharpest drop in jobs reported since mid2017 as weak demand took a toll on firms' health.

Domestic Economy The Central Bank of Nigeria in its consumer protection guidelines on 'Responsible business conduct,' has ordered the lending institutions under its regulation to obtain the credit history of customers before giving out loans to them. The guidelines apply to all transactions by financial institutions licensed and regulated by the CBN, their agents, subsidiaries and associates. The guidelines had instructions such as, “Obtain the credit history of consumers from the Credit Risk Management System, Credit Bureaux and other sources of credit reference to ascertain consumers' outstanding debt obligations and repayment history before advancing credits.”

The CBN said that the financial institutions should follow its stated orders to ensure that debt recovery processes were courteous and fair, devoid of undue pressure, intimidation, harassment, humiliation or threat. In a separate development, the organization of the petroleum exporting countries (OPEC) pumped its lowest barrels in five years, however Nigeria remains the biggest outlier in terms of compliance, defying OPEC cuts which are meant to prop up prices of oil.

Nigeria produced 240,000 barrels per day (b/d) over its quota at 1.93 million b/d in July.

According to Platts' data, Nigeria's production output rose to 1.97mbpd in June, up from the 1.69mbpd quota under the cut agreement, signalling the nation's highest output since January 2015.Under OPEC's latest report, Nigeria saw the biggest jump in production, with a 130,000 b/d rise to 1.86 million b/d, according to secondary sources.

Stock Market Indicators at the local bourse maintained a negative trend with the market lacking the needed stimulus to trigger positive reactions to the prevailing low valuations.

Consequently, the All Share Index (ASI) eased by 1.17% to 27,306.81 points from 27,630.46 points the preceding week. Similarly, Market capitalization contracted by 1.17% to N13.31 trillion from N13.46 trillion the prior week. This

week, we expect the bearish performance to continue as traders and investors analyse the earnings reports released and reshuffle their portfolios in expectation of interim dividendpaying earnings reports.

Money Market Money market rates trended north as OMO auctions wiped off the excess liquidity in the market. Consequently, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates increased to 12.14% and 12.86% from 5.64% and 6.43% respectively last week. The 90-day NIBOR also closed higher to 12.95% from 11.27% the previous week. We expect activities in the market will be light in the holidayshortened week. However, rates may climb slightly on the back of an expected OMO auction.

Foreign Exchange Market The naira depreciated marginally against the green-back across all market segments monitored last week. At the official window the naira lost 0.02% to close at N306.90/$ compared to N306.85/$ the prior week.

Likewise, at the parallel market the naira closed lower by N1 at N360/$ from N359/$ the previous week. The Investors' and Exporters window, also lost N1.08 kobo to settle at N363.31/$ from N362.23/$ the previous week. The weakening seen across all markets comes amidst ongoing trade tensions and global investor risk aversion. This week, we envisage the naira will trade sideways across all windows.

Bond Market The bond market remained pressured driven by sell-offs across select trading instrument predominantly the 2028, 2036 and 2034 maturities. Yields on the five-, seven- , ten-, twenty- and thirty- year debt papers settled higher at 13.08%, 14.04%, 13.92%, 14.14% and 14.20 respectively.

The Access Bank Bond index declined by 27.95 points to 2990.56 points from 3,018.50 points the previous week. We expect the bond market to trade on a bearish note in the holiday-shortened week as market participants remain fixated on the direction of US-China trade war.

Commodities Oil prices fell last week as concerns about global demand and the escalating trade conflict persisted. Bonny light, Nigeria's benchmark crude, was down $6, or 9.30%, to $58.54 a barrel. In contrast, precious metals prices surged last week as investors scrambled to find safe-havens to park their cash in the wake of China's decision to let its currency weaken beyond 7 yuan per dollar.

Gold prices climbed $64.78 or 4.51% to settle at $1,502.30 per ounce. Silver prices also perked up, closing at $17 per ounce compared to $16.21 the previous week. This week, oil prices are like to come under more pressure following the announcement by Libya that it has resumed oil production from the country's largest oilfield, Sharara. For precious metals, prices are likely climb further buoyed by expectations of further monetary easing from global central banks.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Aug’19

Sept’19

362

361

362

Inflation Rate (%)

11.4

11.5

11.5

Crude Oil Price (US$/Barrel)

65

67

67

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

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Oct’19

Exchange Rate (Interbank) (N/$)

@Businessdayng

Monday 12 August 2019

BUSINESS DAY

37

FEATURE

How UBA is promoting the entrepreneurial spirit of Nigeria, Africa SEGUN ADAMS

E

ntrepreneurship has been said to be a national asset which should be cultivated and adequately rewarded given its fundamental importance in driving and sustaining the growth of any nation.

Through creative thinking and innovation, entrepreneurship raises the standard of living of any economy by inventing new ways of doing things or revising existing methods in a more efficient manner, thus creating employment and wealth for the country.

The presence of a large number of small and medium enterprises (SMEs) has been observed in large and well-to-do economies, while a good number of academic literature have argued that the growth of small businesses translates to economic gains.

The Organisation for Economic Corporation and Development (OECD) in its report “Entrepreneurship at a Glance 2018 Highlights” observed that the number of firms in a country is correlated with the size of the economy.

“In all countries, the majority of enterprises (between 70% and 95%) are micro-businesses, (i.e. enterprises with fewer than ten persons employed),” the OECD also noted, highlighting the importance of entrepreneurship.

Big corporations like Alibaba, Facebook, Amazon, Apple are all products of an enterprising spirit and started on a much smaller scale. Today, each of the aforementioned organizations contributes significantly to employment and growth both in their domestic economy and globally.

It is for this reason development experts have been argued for greater support for entrepreneurship, a catalyst for economic growth and development. According to Washington-based Global Entrepreneurship and Development Institute, (The GEDI Institute), many of the conditions that help entrepreneurs also help the economy as a whole, providing even broader gains from supporting entrepreneurship.

The reality for Nigeria is however grim as Africa’s biggest economy ranked 101 out of 137 countries on the GEDI Global Entrepreneurship Index 2018 with a score of 20 percent across critical sub-indices.

In context, Ghana which ranked 93, Algeria at 80, Botswana at 52, Egypt at 76, Gabon at 79,

Kennedy-Uzoka, CEO, UBA

and South Africa at 57 are some of the African countries with better support for entrepreneurship.

However, overall, the continent lagged in the ranking.

On this note, United Bank for Africa (UBA), a leading PanAfrican Bank, brought together over 20,000 participants and no less than 120 SMEs from across Africa as UBAmarketplace hosted the most influential gathering of entrepreneurs on the continent.

The event, the first of its kind by the bank, was held in Transcorp Hilton Hotel, Abuja between July 26 and 27.

The event was held on the side-line of the Tony Elumelu Entrepreneurship Forum, founded

by Tony Elumelu, who chairs United Bank of Africa, Heirs Holdings, and Transcorp. The Tony Elumelu Foundation (TEF) has been passionately paving the way for entrepreneurship in Africa over the years.

At the 2-day event, 7,521 beneficiaries of the TEF Entrepreneurship Programme were participants of the series of activities including an exhibition of innovative products and solutions by young Africans, providing a platform for networking and collaboration. www.businessday.ng

Entrepreneurs were presented a platform to pitch their businesses with a grand prize of a $5,000 grant for the winner, courtesy of UBA. 60 global speakers from the public and private sectors across three continents participated in interactive masterclasses, plenary sessions and debates geared towards generating ideas and defining concrete steps Africa must take to empower its youth and accelerate the continent’s development.

As the largest gathering of the entrepreneurship ecosystem in Africa, the event brought together businesses and business owners in various industries including food, fashion, beauty, home/interior and gadgets.

The event offered plenary sessions and discussions on the small and medium scale enterprises (SMEs) sector and the relevance of financing.

UBA officials were on ground to enlighten and educate entrepreneurs on tailor-made financing products that would help their business a great deal, while entrepreneurs whose business were ailing got firsthand knowledge on how their business could grow and most importantly the needed

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support that would help them succeed.

The plenary sessions highlighted the entertainment and music industries. Likewise, fashion, a big cultural and revenue attraction on the continent, was showcased the designs of 10 leading African labels.

At the master-class sessions held during the UBAmarketplace2019, small and medium scale businesses were provided with the opportunity to network and get solutions to some of the challenges they faced in running their businesses.

This was in line with UBA’s goal of helping both its customers and potential customers attain their dream of having successful and thriving businesses.

The highlight of the events included the unveiling music sensation Ayodeji Ibrahim Balogun, popularly referred to as Wizkid, as a brand ambassador of UBA and a presidential debate focused on charting the way forward towards the eradication of poverty in Africa through job creation.

Moderated by Fareed Zakaria, host of Global Public Square show on CNN, the public sector leaders on the panel included H.E. Paul Kagame, President, Republic of Rwanda; H.E. Macky Sall, President, Republic of Senegal; H.E. Félix Tshisekedi, President, the Democratic Republic of Congo (DRC); H.E. (Prof.) Yemi Osinbajo (SAN), Vice President, Federal Republic of Nigeria; and Hon (Dr.) Ruhakana Rugunda, Prime Minister, Republic of Uganda, representing the President of Uganda, H.E. Yoweri Museveni.

H e a l t h c a re e x p e r t s a l s o weighed on the dialogue “The Role of Healthcare in Economic Transformation”.

Speakers on this panel include Dr Awele Elumelu, Trustee, Tony Elumelu Foundation and Founder/CEO, Avon Medical Practice; H.E (Mrs.) Aisha Buhari, First Lady, Federal Republic of Nigeria, H.E (Mme.) Djena Kaba Condé, First Lady of Guinea; H.E. (Mme.) Keïta Aminata Maiga, First Lady, Mali; Gilles Carbonnier, Vice President, International Committee of the Red Cross (ICRC); Oulimata Sarr, Regional Director ai, UN Women Central and West Africa; and Dr Tedros Adhanom Ghebreyesus, Director-General, World Health Organisation.

At the event, Vice President @Businessdayng

of Nigeria, H.E. (Prof.) Yemi Osinbajo said commended Tony Elumelu and the initiatives from UBA. “By birthing this particular intervention, Tony Elumelu has compelled us to focus on what really matters, our youth and their dreams. The message to Africa’s emerging business giants is a clear one: How and what can you contribute, like Tony Elumelu, to empowering the next generation, helping them to realize their own dreams?” Osinbajo said.

The event also drew praises from other national and international figures including Nigeria’s erstwhile Senate President, Abubakar Bukola Saraki, who took to micro-blogging platform, Twitter, to appreciate what the commitment of UBA and TEF to promoting entrepreneurship.

“I have always believed have always believed that the creativity and dynamism of our youth offers a way out of the nation’s economic challenges and in hosting #UBAMarketPlace @TonyOElumelu and the @TonyElumeluFDN have created a fantastic platform that must be sustained and emulated. Well done.”

For Nigeria’s economy struggling to create jobs and achieve strong growth, the UBAmarketplace is timely given the need to challenge and support the country’s youth population towards entrepreneurship.

Youth unemployment is on the rise, according to the National Bureau of Statistics (NBS) latest employment data which put the percentage of unemployed young Nigerians at 29.72 percent-above national unemployment at its alltime high.

This is worrisome as it reinforces the cycle of poverty in Nigeria, already tagged world poverty capital. Tony Elumelu warned about the implication to the nation beyond economic losses.

“Extremism is a product of poverty and joblessness. Poverty anywhere is a threat to everyone everywhere,” he said.

Nigeria has 41,543,028, Medium, Small and Micro Enterprises (MSMEs) as at 2017 according to NBS data but the businesses still struggle from lack of access to finance, absence of entrepreneurship/vocational training, and poor Business Counselling/Monitoring, highlighting the importance the initiatives of UBA and the TEF in promoting entrepreneurship.

38

Monday 12 August 2019

BUSINESS DAY

FEATURE

PDP, zoning and Bayelsa governorship race SAMUEL ESE, Yenagoa

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ayelsa State is on the verge of witnessing the most exciting governorship election in its history going by the array of aspirants jostling for their parties’ candidature and the interest that has been awakened in the electorate.

However, some parts of the state are saying that the governorship position should be zoned when stakeholders had never at any time sat down to discuss or adopt any zoning formula since its creation, writes Samuel Ese in Yenagoa.

In a few weeks, various political parties would be conducting their primary elections to elect their candidates for the November 16, 2019 governorship election in Bayelsa State in line with the directives of the Independent National Electoral Commission (INEC).

As at now, 24 aspirants have purchased the expression of interest and nomination forms on the platform of the People’s Democratic Party (PDP) while two others are lining up under the All Progressives Congress (APC): the other political parties are quiet thus far.

Of the 24 aspirants under the PDP by local government area, Brass and Ogbia have one each, Kolokuma/Opokuma has four, Ekeremor and Nembe have two each, Yenagoa has five, Southern Ijaw has nine and Sagbama none.

For the APC, the two aspirants are from Ekeremor and Southern Ijaw local government areas; however, as more political parties reveal the identities of their governorship aspirants, the distribution of aspirants per local government area may be different.

But, one issue that has come to the fore particularly within the PDP is that of zoning, which some stakeholders claim has been in existence in the state and has been used in the past to determine the emergence of governors of the state although there is no record to show that zoning was formally adopted at any time in the state.

Zoning of any political office is usually applied in a multi-interest situation to ensure inclusiveness, but while it has its positives, the negatives, some believe, outweigh the positives such as the fear of promoting mediocrity and unpopular candidates, among others.

Some stakeholders and experts argue that zoning would give all the three senatorial districts a sense of belonging in the Bayelsa Project, foster unity and help in advancing political development in the state.

Whatever the positives, zoning can actually deny some aspirants with the requisite governorship qualities the opportunity to aspire to Creek Haven and change the ugly narrative in the state by turning Bayelsa State to a realistic Dubai of Africa and Silicon Valley

Alagoa Morris, Head, ERA’s Niger Delta Resource Centre, Yenagoa

of Nigeria as promised by some political leaders in the past.

For the records, Bayelsa State is made up of three senatorial districts of East, Central and West, and the first civilian governor of Bayelsa State, Late Diepreye Alamieyeseigha, was from Central Senatorial District while his successor, Goodluck Jonathan is from East Senatorial District.

Timipre Sylva, who succeeded Jonathan is also from East Senatorial District and the incumbent, Henry Seriake Dickson who took over from him is from West Senatorial District. So, the debate now is on which senatorial district or local government area should produce the next governor.

Bayelsa State is made up of eight local government areas of Brass, Nembe and Ogbia in East Senatorial District; Southern Ijaw, Yenagoa and Kolokuma/Opokuma in Central Senatorial District; and, Sagbama and Ekeremor in West Senatorial District.

Of the eight local government areas, Southern Ijaw, Ogbia, Brass and Sagbama have produced governors in that order while Ekeremor, Kolokuma/Opokuma, Nembe and Yenagoa are yet to produce governors and there is this strong argument by some stakeholders that the next governor should come from any of them. www.businessday.ng

Again, when looked at properly, any arrangement could suffice for zoning if it is actually an agreed determinant of where the next governor should emerge from. For instance, since West Senatorial District waited for 12 years before producing the governor, the next round of zoning could start from there as is done among traders and workers who contribute money to a common pool (osusu).

In the history of governorship elections in Bayelsa State from 1999 until now, every senatorial district has contested governorship elections without any regard to a zoning formula except in cases where party leaderships had prevailed on certain aspirants to step down.

In other elections such as Senate, House of Representatives and House of Assembly, zoning formula, if it exists, has been abused as some elected persons had refused to allow other local governments or constituencies produce their successors hence some lawmakers served two or three terms.

Even in this present race, there are aspirants who had contested before against others when East, Central and West senatorial districts produced governors, so it becomes difficult to convince stakeholders that zoning is an agreed formula for power rotation

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in Bayelsa State.

It is difficult for anyone to make claims about zoning especially in a multi-party system as stakeholders from all the political parties have never come together at any time to discuss zoning of the governorship. So why is the issue being promoted ahead of this governorship election?

Honestly, the PDP cannot arrogate the issue of zoning to itself as the dominant political party in the state as the other political parties are also major stakeholders in any discussion that centres around the zoning of the governorship position in the state.

Zoning is not a magic formula for development and in a state like Bayelsa that seems confounded by a myriad of challenges, it needs someone with competence coupled with determination, capacity and ability to turn the story around.

After nearly 23 years of statehood, not much has been attained in several sectors, which is a stark contrast to all the revenues that have accrued to the state over the years.

There is still no road to Brass, Koluama and Agge and even within Yenagoa, the capital, link roads are either non-existent or in state of disrepair, no industries exist anywhere, flooding is perennial, @Businessdayng

insecurity continues to mount and lip service is paid to agricultural development.

So much potential abounds, but nobody is thinking about how to harness the available potentials for growth and development hence despite the state’s unique position in power generation, outage is evident everywhere and joblessness casts a gloomy spectacle.

That is why those who argue in favour of zoning only have to look at the frightening statistics to realise that such an arrangement may not be the best for the state going forward especially with the kind of developmental challenges that seem insurmountable.

An honest evaluation of development projects across the state since 1999 shows that sometimes an entire senatorial district, local government area or community did not enjoy any important project while having a son as governor.

Frederick Agbedi, a governorship aspirant under the PDP, a former state chairman of the party, three-term member of the House of Representatives and a top notch politician gave BD Sunday a brief history of how all the past governors emerged and maintained that at no time did stakeholders discuss zoning of the governorship position.

Agbedi stated: “First, I think that you may not be right when you that people are talking about zoning formula and that it’s their turn. Whoever that says so does not know the political history of the state. And so, I’m passing this information or maybe ordinarily, people for the benefit of self-protection wanting to create an avenue to bring themselves or defend themselves with an argument that can put them in a vantage position and talk about the issue of zoning in Bayelsa.

“I emphasise that whoever that says so is saying so to get some comfort for himself in this governorship contest. Otherwise, for those of us who have been leaders in one guise or the other in the politics of this state coming from Rivers State know that we had never for once or at any time did zoning whether by way of omitting of a party or group or whatever in any guise and to sit by zoning governorship office to senatorial zone west or senatorial zone central or senatorial zone east.

“It has never happened in this state and that is why I keep telling that it is not true when you’re talking zoning in Bayelsa. There is no such issue. Anyone who is saying that it is zoned and it is our turn and all that, is not being factual and it amounts to wanting to present an argument that will give such people some comfort in this case.

“If we had not done zoning and the governorship election (position) has gone through the three senatorial districts, that is to say that every senatorial district has produced the governor of Bayelsa State. And so, where do we go from

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FEATURE here?

“Some of us are saying in our local parlance we have that understanding in any contribution that if you were the first to take, in another contribution, the last starts the next contribution. So, going by that, if Bayelsa West is now about to complete a term, then of course we are supposed to start.

“And when you look at the policy of government in terms of right of first refusal, we are the ones who have the right of first refusal Bayelsa West Senatorial District, which took last.

“In any case, it was not by zoning that Bayelsa West got it; it was not by zoning that Bayelsa East got it; it was not by zoning that Bayelsa Central got it. So, nobody should be talking about that. There was zoning because it never existed.

According to him the contest was between Bayelsa West and Bayelsa Central in 1999. He contends that that was not a product of zoning, stressing that if it had been zoning, then it would have been one senatorial district and people contesting against themselves.

“And that is why sometimes I tell them that even the PDP party primary was not won by a candidate from Central. It was won by a candidate from Bayelsa East; it was only given to a candidate from Bayelsa Central. It was taken from the winner and given to somebody who didn’t win and he flew the flag of PDP from Central, not from East that originally won the primary.

He contends that there was the argument that even in general election, it was the candidate from Bayelsa West that won, but notes that the people’s characteristic manner, there were some manipulations in the process and the one from Central became the governor.

“So, this was not as a result of zoning and the even when Mr. President (Goodluck Jonathan) then deputy governor emerged as governor, it was not as a result of zoning. It was because he was in a vantage position as the deputy governor, so he stepped in as acting governor and then governor, and then won the party primary to fly the flag of PDP - it was not by zoning.

“And even when he gave that flag, because he was nominated to be vice president, and he gave the PDP flag to Timipre Sylva, it was not by zoning - who came from the same East Senatorial District, it was not by zoning.

He notes further that for Governor Dickson to win the ticket, it was also not by zoning, adding that “nobody sat anywhere” to decide on that. “There where preferences, the Green Movement family looked at, you know, preferences and the former president had preferences and by the preferences, the lot fell on Governor Dickson.”

Based on the above developments, he argues further that it is erroneous for anybody to argue or canvass issues about zoning.

Besides, he points out that people are viewing the matter this way: now that the three senatorial districts have produced governors, we should be talking about how it should be done.

“It should be that the four local governments, because Bayelsa has

Frederick Agbedi, PDP governorship aspirant

eight local governments - four local governments have produced governors in three senatorial district.

“The four local governmentsEkeremor, Yenagoa, Kolokuma/ Opokuma and Nembe that have not produced governors should be the ones that should agitate to be elected as governor, so that we use an elimination series to begin to now eliminate the four that have not produced.

“Assuming that Ekeremor, by my contest, emerges as the flag bearer and governor, then there are three more local governments to go, so let us adopt that bye-elimination process so that by the time Ekeremor finishes, the next governor finishes, we have three more to go.

“And then one of these three left takes the governorship, and gradually we eliminate to zero: by that time we know that every area has produced governor and that is the argument that some of us are making further to say, this is power, this is position, if you want it to go round, it should go round and this is the way to go.”

He proposes that the four local government areas that have not produced governors in Bayelsa should be the ones to contest this election, arguing that there is no way that competent, qualified wouldn’t be found from these four local governments. “That is what some of us are saying and that is the right way to go.”

“And in case you are talking about competence, of course, that is what should determine where we go and when you talk about competence, some of us from the www.businessday.ng

party level, from our academic background as professional politicians, as parliamentarians, as party leaders, are the most competent,” he contends.

He describes himself as a grassroots man who is constantly with the people, has interacted with all the facets of the party, who has solved problems in the party, given party direction, led party candidates to victory; of course, most competent.

“And so, if you are talking about competence, of course, you have the competent candidate from Ekeremor Local Government, which has not also produced a governor, so that if anybody is still talking about zoning as an issue, it is no longer an issue.

“As far as I am concerned, we are not talking about zoning anymore.

Bayelsans are not talking about zoning anymore. And even in the course of my consultations - I have interacted and consulted; I have visited; I have asked for votes from leaders and delegates and stakeholders across the three senatorial districts, nobody has raised the issue of zoning.

“But, it is important that we continue to educate the public, give them the right information rather than people thinking that as at today, it is supposed to move from one point to another. It is no so. I should move within and amongst the four local governments that have not had the opportunity of producing governor of Bayelsa State.”

On Governor Dickson’s earlier disclosure of three members of the Restoration Team as his preferred

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candidates for the governorship of the state, Agbedi stated: “What I can tell you is that the governor may have some preferences in his mind, which necessarily must not be as a result of zoning: he just felt that ‘my heart goes for A, B, C, D.’ “But that his opinion may not be the opinion of the party or the delegates or the state. The state could have something completely different from his opinion; and, of course, something near that has largely happened from the reports and the information, you know, at our disposal.

“For the governor, he, too, must have clearly seen that those his preferences are not in the interest of the state and the state may have largely resisted it in one way or the other.

“Democracy is by casting of votes and what Bayelsans and like the governor, thereafter, has also consistently said, is that people are free to express their ambition and then they would be voted for or voted against.”

Based on this, he said that the delegates know who can best serve their purpose. Therefore he contends that that the governor never, by his preferences, said that the party had decided the way to go on the choice of the next governor.

For him, such decisions are the decisions of the party.

“He did not take or make those preferences for the party; if I still remember the news item talking about those preferences, it talked about members of the Restoration, and if it’s the Restoration, after the governor, I am the next one, next factor in the Restoration. @Businessdayng

“So, if it was a Restoration decision and I was not in that meeting, then, of course, you cannot say that Restoration has actually taken a decision, which the governor himself knows and every other member of the Restoration knows,” Agbedi stressed.

“A National Assembly member, a two-time director-general of the Restoration government cannot be an outsider, cannot be seen not to be in a meeting where very critical decisions are taken.

“That is the obvious truth, so, the governor may in his own mind have some preferences that he must have talked about, but, in fact, that is not the party’s decision and that may not be the direction of the party,” he further noted.

“And so, what every contestant is warming up for, whatever senatorial district is warming up for is to ensure that votes are cast, they cast votes for their preferred contestants and at the end of the day, the result will emerge such that the most popular, the most acceptable emerges by casting of votes.”

Also baring his mind on the issue of zoning, Alagoa Morris, Project Officer/Head Environmental Rights Action (ERA), Niger Delta Resource Centre, agreed that without zoning, someone “from a minority group can win, if the people (electorate) see ability or competence in such a man or woman.”

But, he pointed out that “all the years we stayed in Rivers State, zoning was not practised. We, the Ijaws, enjoyed that as we felt we had the majority. Why is it that the same Ijaws who had it without zoning in Rivers State now want it introduced in Bayelsa?”

Continuing, Morris stated: “Democracy is not about such, it is about the people who will truly represent all sections of the whole. Those saying ‘it is our turn now’ should know that for the number of years Rivers State has existed since 1967, (nobody from) Ogoni, Ahoada, Kalabari, Etche, Abua, Omoku, Eleme, etc. has ever been governor.”

He advanced a reason for the call for zoning saying it is as a result of bad governance and how some governors use the commonwealth in developing their personal empires at the detriment of the common man.

According to him, “Instead of saying ‘it is our turn now’, as if it is turn by turn, I suggest to ethnic groups that are disadvantaged in terms of numbers to build capacities acceptable to Bayelsans.

“The electorate is interested in who can take Bayelsa State out of the woods. No matter where such a person comes from, once he or she appears, I am sure Bayelsans will go for the person.”

But, a scenario that proponents of zoning are yet to look into is the possibility of a zone putting forward someone who does not meet the high expectation of other zones thereby bringing such a government into disrepute.

What Bayelsa State actually needs is a competent governor with capacity and ability to govern, who would see the entire state as his constituency, someone who understands the challenges confronting the state in all sectors and has what it takes to surmount those challenges.

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Monday 12 August 2019

BUSINESS DAY

NEWS

Nigeria Fintech firm takes inclusive banking strategy to Dubai HARRISON EDEH, Abuja

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Nigerian-based Fintech company, Innovate 1 Pay Limited, has announced the launch of its Dubai office, as part of effort to revolutionise payment system globally.

With the global operations office at Jumeirah Lakes Towers, Dubai UAE, Innovate1 Pay’s platform currently is capable of processing tens and thousands of transactions while having processed more than a million transactions for clients within

Nigeria and abroad.

In a statement issued by the managing director, Adamu Musa Mele, stated that technology changes fast with time. Mele said having this in mind brought about the need for the financial sector to take advantage of opportunities abound in using technology. On the back of this development, Innovate 1 Pay aims to explore how public and private sector players in Africa and the UAE can work together to sustainable partnerships.

The managing director notes further in the statement that the Dubai Chamber of Commerce

and Industry (Dubai Chamber) has already announced its plans to host the fifth edition of the Global Business Forum (GBF) on Africa on November 18th to 19th in Dubai.

The theme of the conference tagged, “Scale-Up Africa, GBF Africa 2019” will bring together African and UAE governments and business leaders to explore avenues of economic cooperation and to facilitate bilateral trade and investment flows.

As one of Africa’s leading providers of payment gateway, Innovate 1 Pay offers international money transfer and

foreign exchange management services. Also, the firm is the exclusive distributor of foreign currency to Bureau de Change (BDC) operators in Northern Nigeria. It can address the needs of either individuals or organisations, through a diverse portfolio of solutions.

It would be recalled that the bilateral ties between the two continents dates back to many decades, and continues to grow from strength to strength over time. He highlighted that Africa is set to surpass China and India as a job market by 2040, and with the recent visa reforms in

the UAE, Dubai has emerged as an attractive destination for Africans to pursue career advancement and professional fulfilment.

Mele, however, lauded the effort of the Federal Government of Nigeria for continuously creating the enabling environment of doing business with ease and for the private sector to thrive.

Consequently, bringing financial inclusion to all is possibly one of the most important steps in empowering untapped human potential, more equitable wealth distribution and a universally prosperous world.

FG appoints Sunday Thomas acting commissioner for Insurance/CEO NAICOM Modestus Anaesoronye

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ederal Government on Friday appointed Sunday Thomas the acting commissioner for Insurance/CEO of the National Insurance Commission (NAICOM) pending the appointment of a substantive commissioner.

He takes over from Mohammed Kari, immediate past commissioner for Insurance whose four years tenure ended July 30, 2019, but was not renewed for second terms.

The appointment was announced in a letter entitled: Re: Handing Over Note: Appointment of Acting Commissioner for Insurance, referenced, F.1948/BFPIAC/S,2/24, dated August 9, 2019, and signed for permanent secretary, Finance by deputy director, Home Finance, A.O. Bello.

According to Bello, the appointment was to ensure the effective administration of the commission in line with the provisions of the National Insurance Commission Act 1997.

Thomas was appointed Deputy Commissioner for Insurance Technical by President Muhammadu Buhari On April 15, 2017, having had over three dedicates of experience in the industry, both as regulator and operator. Prior his appointment in April 2017 as Deputy Commissioner in charge of technical matters at the Commission, Thomas held the position of director-general at the Nigerian Insurers Association (NIA) for seven years from May 2010.

He is a vastly experienced and knowledgeable Insurance Professional with over 35 years uninterrupted service to the Nigerian insurance industry.

During these years, Thomas worked as a Director for 17 years at the National Insurance Commission from 1992 to December 2009 where at different times, he superintended over different departments in the technical division. He had also worked as an insurance operator for over 10 years and rose to the position of Assistant General Manager at AIICO Insurance Plc until he left in 1992 to join NAICOM. www.businessday.ng

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Similarly, he affirmed that there is tremendous room for growth and expansion that exists at the intersection of increasing demand, market growth and the outreach potential of techenabled services not only in Nigeria and Africa but globally.

Innovate 1 Pay’s secure and convenient payment gateway and financial services platform which integrates seamlessly between Dubai and several African nations have paved the way to emerge as the solution to addressing this expanding market segment and its impending needs in the future.

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news LAWMA officials at work on Apapa Bridge as trucks celebrate with Muslim faithful Chuka Uroko

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t was a pleasant surprise Sunday afternoon to drive through Apapa Bridge to find a completely free and ‘unoccupied’ driveway with sweepers at work on it.

A detachment of officials of Lagos State Waste Management Authority (LAWMA) was seen busy with sweeping and clearing refuse/dirt on the traumatised and over-burdened bridge.

Just a couple of days ago, this was unimaginable as motorists and residents struggled in between trailers and tankers to find their way into the port city.

The situation this afternoon is a fallout of the Sallah celebrations by Muslim faithful for which the Federal Government has declared Monday and Tuesday public

holidays.

But Katode Opeifa, in an interview with BusinessDay, insisted it was the new way to go for Apapa in the days and months to come.

Opeifa is the executive vice chairman of the Presidential Task Team on Apapa Gridlock, which has made significant impact on Apapa, a hitherto occupied territory where gridlock defines daily experiences of residents, business owners and motorists.

“Apapa is a cash cow and so, everything possible has to be done to free it from further deterioration; we are determined to ensure that Apapa lives again,” Opeifa assured.

It is expected that in the next three days, Apapa will remain an interesting destination for anybody who has anything to do with/in the port city.

2nd Annual Igbo Cultural Festival in Germany holds Aug. 17 MICHAEL ANI

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d i - Igb o G e r ma ny (NIG), the apex b o dy o f a ll Igb o s living and working in the Federal Republic of Germ a n y , h a s re c o n f i r m e d Au gu s t 1 7 , 2 0 1 9 , a s t h e date for the 2nd Annual Igbo Cultural Festival and Convention scheduled to hold at Löwensaal am Tier Garten, Schmausenbruck Str. 166, 90480 Nürnberg.

The organisation also confirmed that Mike Okiro, Nig e r i a’s f o r m e r In spector General of Police, would chair the occasion.

N i g e r i a’s i m m e d i a t e past deputy Senate presid e n t , I k e E kw e re m a d u , president-general of pan-Igbo socio-cultural organisation Ohanaeze Ndigbo, John Nnia Nwodo, and Nigerian Ambassador to Germany, Yusuf Maitama Tuggar, are also expected to add colour to the occasion, according to a press statement s i g n e d b y O g e O z o f o r, NIG coordinator, and Joeblaise Akanazu, the event committee chairman/NIG deputy coordinator.

Themed ‘Reawakening the Igbo Spirit in the 21st century’, the organisers said the objective of the event, among others, is to provide a forum for Ndi-Igbo Diasporans and other stakeholders t o n e t w o rk a n d c o n s u l t on issues of economic importance and to enable a n a t m o s p h e r e o f b e tter, broader cooperation between the GermanNiger ian business communities with the aim of boosting investors’ interest and facilitating pragmatic exchange of expertise and transfer of

technology to our homeland. “ The event is par t of our initiatives to expedite the integration of Nigerians in Germany into national development, by synchronising the activities of our Diasp ora groups with home-based o r g a n i s a t i o n s ,” t h e o rganisation said in the press statement. “ T h e e v e nt i s a n o p portunity to demonstrate our unity, to showcase the richness of our culture, our resilient and adaptable spirit, our unanimity in identifying with the high standard of our forebears and heroes of past,” it said.

A l s o e x p e c t e d t o a ttend are Suleiman Dauda Umar, Nigerian ConsulGeneral in Frankfurt ; Bi a n ca O ju kw u , w i f e o f the late Gburugburu Ndi Igbo and Ikemba Nnewi, Chukwuemeka Odumegwu Ojukwu; Innocent C h u kw u m a, C E O o f In noson Group of Companies, and His Majesty Eze C h u kw u e m e k a E r i , E z e Akajiofo Igbo.

Others are Chukwuemeka Ezeife, former governor of Anambra State; Prof Mazi Ojiaku; Emmanuel Iwuanyanwu, Ahaejiagamba Ndigbo; John C. Ejinaka, former Nigerian C o n s u l - G e n e r a l F r a n kfurt ; governors of the five South-Eastern states, among others.

The statement said Ndi-Igbo Germany (N.I.G) will also use the opportunity to host and honour distinguished sons and daughters of Nigeria who, in spite of all odds, have distinguished themselves in their various fields of endeavour. www.businessday.ng

L-R: Olusola Obabori, group managing director, Red Star Express plc; Suleiman Barau, chairman; Frances Ndidi Akpomuka, company secretary, and Sulaiman Koguna, director, during the annual general meeting of the company in Lagos, recently. Pic by Olawale Amoo

Durable products may suffer as consumers look to absorb higher milk price BUNMI BAILEY

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emand for durable itemsmayslowfurther as consumers may readjusttheirbudgetson possible higher milk prices, consumer experts say.

According to them, the proposal by the Central Bank of Nigeria (CBN) to restrict foreign exchange sales for the importation of milk and dairybased products may lead to a rise in the retail price of milk, making consumers spend more on the product, regarded as an essential item in homes.

Eronmosele Aziba, consumer analyst, Tellimer Group, said, “What we may now see is that ripple effect of people spending more on milk and as a result of this, consumer discretionary goods or durable goods will probably suffer for it because people will just triple down to the essentials ones.”

Consumer durables are the category of products that are not purchased frequently because they

are made to last for an extended period of time (typically more than three years). They are also called durable goods or durables. Examples of consumer durable goods include automobiles, books, household goods (home appliances, consumer electronics, furniture, tools, etc.), sports equipment, jewellery, medical equipment, firearms, and toys.

Milk is an essential commodity with very few alternatives, such as soya beans. If its price increases, people will still buy it. For example, an average worker who earns about N100, 000 monthly in Lagos, budgets about N60, 000-N70, 000 for food and transport. If there is an increase in the price of milk, depending on the how much of it that the family consumes, an average consumer will reduce his budget on durable products like cars, electronics, electrical, fashion items, etc, to maintain the level of milk consumption now at a higher cost.

Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, said, “The demand for consumer durable products will be affected. Consumer

durables are like luxury items whose prices are elastic as well as income elastic. When their prices go up or the income available to the consumer is affected, then they consume less of them. With price of milk likely to face upward pressures, consumers ultimately will adjust their budgets to maintain milk consumption and reduce demand for income-elastic consumer durables.

“However, another key factor to consider is the proportion of the consumer’s expenditure on milk and its variants relative to his or her total budget. So, if an average consumer spends one percent of his or her budget on milk, it may not significantly impact budget apportionment. Ultimately, it may not be as bad as first imagined. The biggest impact may be felt when the ripple effect on an aggregate consumer level is considered.”

Earlier in the year, BusinessDay findings show that durable items like household electronics comprising air conditioners, dishwashers, dryers, refrigerators, washing machines,

microwave ovens, etc, were suffering from low patronage due to weak purchasing power and demand from consumers in the country.

According to the International Monetary Fund (IMF), per capita income data in Nigeria rose from $1,994 in 2017 to $2,049 in 2018, below those of Ghana ($2,205), and South Africa $6,377.

But Abiola Gbemisola, consumer analyst at Chapel Hill Denham, expects that the possible increase in milk prices may not be significant as long as there is FX liquidity in the other exchange markets like Bureau De Change (BDC), Importer & Exporters (I&E) window and the parallel market “I don’t expect the price of milk to increase significantly. Normally if the price of a commodity increases, consumers may reduce their quantity of that commodity or use part of the savings to accommodate that increase. But for mothers and kids milk is very important to them; they might just have to adjust their budget,” Gbemisola added.

CRC’s credit score to quicken risk profile assessment for lenders STEPHEN ONYEKWELU

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ith the introduction of bank verification number, credit score bureaus are springing up in Nigeria to help lenders quickly assess how likely it is for a given individual to repay a loan, before making the offer.

One of the companies leading this charge is CRC Credit Bureau. The CRC Score is a digital method of determining the creditworthiness of customers before granting them credit facilities.

Credit Scoring is a method of allocating scores to customers, to determine their level of risk in extending them loans or credit facilities.

Credit Scores help lenders make quick and informed credit decisions on whom to extend credit facilities or loans to.

Tunde Popoola, MD/ CEO, CRC Credit Bureau, said CRC Score was developed by Fair Isaac Corporation (FICO), an American company with over 50 years of experience in data and analytics.

Powered by FICO, CRC Score analyses a statistical number and then defines how risky it is for lenders to do business with an individual.

According to Popoola, CRC is generated using data from the individual’s credit history detailed in their credit report. The CRC Score is a three-digit number that indicates if clients’ status is; excellent, good, fair or poor.

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The score ranges from 300850, with 300 being the lowest score and 850 the highest.

Before now, one of the challenges in giving loan facilities to investors, especially to micro, small and medium enterprises (MSMEs), was the inability of creditors to have informed knowledge about the financial history of their would-be debtors.

But now, as a lender, the CRC Score can be used to profile and make quick lending decisions on new and existing credit customers to know their level of risk prior to approving their loan or post-paid product applications.

“As an individual, the CRC Score shows the level of risk associated with doing business with you or the quality of your credit status,” Popoola said. @Businessdayng

This, according Popoola, meant that CRC Score can encourage or discourage credit providers at the point of making credit decisions on applicant’s application.

Making CRC Score available for everyone, he said upon payment of the required N400.00, the product can easily be accessible online through the CRC Credit Bureau website, https:// www.crccreditbureau.com/ product/crc-score-individual.

He advised everyone seeking loan facilities to first run through their credibility check before approaching any financial house for loans.

“Knowing your CRC Score makes you better prepared before applying for a loan and is the first step in taking control of your financial reputation,” he said.

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Monday 12 August 2019

BUSINESS DAY

news

Nigeria’s downstream sector still...

Continued from page 1 lenges faced by firms in the sector are temporary. Some stakeholders also believe there would soon be an increase in the pump price of petroleum products as it is becoming obvious state-owned Nigerian National Petroleum Corporation (NNPC) cannot sustain the huge burden of subsidy.

“Irrespective of the challenges, Nigeria’s downstream sector is always going to be attractive because of Nigeria’s population size and huge demands from over 200 million people,” Adeoluwa Eweje, an international energy solution consultant, said.

Eweje said the market anticipates the removal of fuel subsidy which is making some long-time investors position themselves for profit and market dominance.

“The new investors that took over from ExxonMobil were Indians who are trying to penetrate Nigeria downstream sector because of 11 plc’s dominance in natural gas, while the new investors at Forte Oil were attracted by its technological dominance in the sector,” Eweje told BusinessDay. Before now, the sector was the darling of all, but recent activities have raised concerns about the sustainability of Nigeria’s downstream sector.

According to a report by Major Oil Marketers Association of Nigeria (MOMAN) titled ‘Making the Downstream Sector Work – An Investor’s Perspective’, Conoil’s share price recorded -70 percent, MRS’ share price recorded -83 percent, while 11 plc (formerly Mobil Oil Nigeria plc), OVH Energy and Forte Oil recorded -44 percent, -94 percent and -90 percent, respectively.

Analysis of activity for the 12-month period ending December 31, 2018 showed the oil and gas industry underperformed in the NSE All Share Index (ASI) by 27.2 percent, while year to date also recorded -26.2 percent as at close of market on August 8, 2019.

Ademola Henry, team leader at the Facility for Oil Sector Transformation (FOSTER), said there’s still a lot of money to be made in the downstream sector. He said the new investors have recognised this and are pumping in a lot of money despite the current challenges.

In June, Abdulwasiu Sowami, through his investment portfolio, Ignite Investments and Commodities Limited, acquired a 74.02 percent equity stake in Forte Oil plc’s downstream operations, while NIPCO plc successfully acquired 60 percent equity stake in ExxonMobil (a major player in the downstream sector) leading to a change of name to Double One (11) plc.

Charles Akinbobola, an energy analyst at Sofidam

Capital, believes these deals signal a good omen for the downstream sector, noting that it may even propel other major oil producers into their own alignments to take advantage of Nigeria’s bourgeoning downstream sector.

“It shows that there is a positive outlook for the sector and we may yet see more of such deals,” Akinbobola said. Leading global consulting firm PricewaterhouseCoopers (PwC) believes Nigeria has the largest market in Africa and offers unique opportunities for investment in the petroleum downstream sub-sector.

Apart from new investment coming into the sector, other downstream firms are also increasing their investments and pumping in more money into operations.

Current alignments and deals in the sector seem to validate this decision. For example, Heyden Petroleum Limited announced the acquisition of 40 new petrol stations at the cost N10 billion, increasing the company’s retail outlets to 50.

Also, Eterna plc, a major operator in the downstream sector, has said it aims to increase the number of its petrol stations across the country to 200 and acquire upstream oil and gas assets in the next five years while also insisting on making significant investment in its lubricants business, despite having a thriving chemicals business.

“We hope to have 200 petrol stations in the next five years. Year-on-year, you are going to start seeing us doubling our capacity,” Mahmud Tukur, Eterna’s managing director/CEO, said at an event early this year.

Abdulwasiu Sowami, the new investor at Forte Oil, said the next phase of the company’s growth would focus on increasing volumes, diversifying business operations, widening distribution networks and extracting potential synergies with partners. “ We l o o k f o r w a rd t o working as part of the Forte Oil family to achieve this growth,” Sowami said.

Also, Oando Marketing Limited, in a bid restrategise and maintain relevance, changed its name to OVH Energy Marketing Limited (OVH) and increased its capacity to distribute 2 billion litres of petroleum products yearly.

“However, the government needs to create the necessary business environment through price liberalisation and strong independent regulation,” PwC said in a report titled ‘Nigeria: looking beyond oil’.

“In addition, challenges around pipeline infrastructure, technology, supply consistency and capital need to be addressed,” it said. www.businessday.ng

Continued from page 1 to the price of crude oil,” said Ayo Teriba, a leading Nigerian economist and CEO of advisory firm, Economic Associates.

According to Teriba, that’s despite having opportunities to soften the impact of a decline in crude oil prices on the economy.

“We have $60bn in dollardenominated equity sitting idle in JV assets that can be securitised and investors will jump at it, given the current liquidity glut,” Teriba said.

“We had this option before the oil price collapse in 2016 and long before the naira meltdown. We can’t have that much money and be scampering around whenever oil prices fall,” he said.

“Hopefully, this provides a timely reminder for President Buhari to act so that even if oil prices fall to $20, the economy and the naira are not in severe trouble,” he added.

Nearly 80 percent of economists polled by BusinessDay at the start of the year said that Nigeria risks another economic recession were oil prices to fall below $40 per barrel.

It took the same thing to tip Nigeria into recession in 2016, albeit this time production volumes have been quite stable in relative terms. Critics say the lack of outside-the-box thinking to raise equity is one of the many shortcomings of the Buhari government.

President Buhari has continued to stall in implementing key market reforms like ditching expensive fuel subsidies to free up government resources for investments in critical sectors, such as health and education, even as only slow progress has been made in doing away with FX and electricity subsidies that have curbed investments.

Three straight years of negative per capita GDP in Nigeria and one of the world’s worst performing stocks have not been enough to force Buhari, who was re-elected for a second four-year term in February, to action.

After five months of delay, Buhari passed to the National Assembly a 43-man ministerial nominees list that was heavy on politicians but light on technocrats. The ministerial nominees have all been confirmed by the National Assembly.

“The choice of ministers perhaps signalled the 76-yearold’s unwillingness to implement market reforms,” a fund manager in South Africa, who is underweight Nigerian equities, told BusinessDay. Another major reform waiting to happen is passage of the petroleum industry legislation needed to drive investment in oil exploration and production.

The reforms being considered include selling part of the state’s controlling stakes in joint ventures (JVs) or converting them into incorporated JVs entities, which would enable them to raise funding from financial

Buhari reforms take new urgency ....

Babajide Sanwo-Olu (l), Lagos State governor, presents a plaque to Emeka Anyaoku, former Commonwealth secretary-general, after a meeting at Lagos House, Alausa, Ikeja.

markets.

There are also plans to introduce royalties and taxes for the first time on deep-water exploration – a proposal that has faced stiff opposition from international oil companies including Exxon, Royal Dutch Shell plc, Chevron Corp., Total SA and Eni SpA, the state’s jointventure partners.

Nigeria will be hoping crude oil prices rebound soon enough to avert a monetary and fiscal crisis, once again underscoring the fragility of Africa’s largest economy.

On the fiscal side, lower oil prices will affect revenue projections in the 2019 budget and create a bigger budget deficit. This is at a time when the government’s debt-to-revenue ratio of 60 percent means there’s little room for borrowing to plug revenue leakages like was done the past three years.

On the monetary side, there is also a general expectation that the CBN would change its dovish stance on interest rates and be inclined to hike rates this year to attract foreign portfolio inflows and ease the rising pressure on the naira.

After long months of hovering between N360 and N362, one US dollar exchanged for N363 naira at the market-reflective Investors and Exporters window for most of last week, its weakest level since the presidential elections in February.

The marginal decline has proved enough to draw the worry of foreign investors who are curious about what happens to the exchange rate in the near term if oil spends considerable time below the $60 mark.

“One of the talking points from clients is trying to get a better feel of what we believe could happen between September

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and February 2020 and this speaks directly to the exchange rate,” Akinbamidele Akintola, equity sales manager for Africa at Stanbic IBTC, said.

Total government maturities in that period amount to $14 billion and foreign investors account for about 40 percent.

It means the Central Bank of Nigeria (CBN) could have to part with as much as $5 billion if all that money were to flow out.

That would push the external reserves below $40 billion from the current $44.7 billion, the lowest since January 2018.

“We think the CBN can survive this pressure even though the risk that FX rates could move very marginally exists,” Akintola said.

“The US Federal Reserve looking to cut rates further would probably ensure capital to flow back to EM markets.

However, if the oil price was to fall to $40 per barrel given the US/China tensions, things could change very quickly for us,” he said.

Investors have showed reluctance to invest in Nigerian equities since Buhari’s reelection in February, with the smart money opting instead for government debt.

Total offshore holdings in Nigeria rose to $27 billion in June from $26.8 billion in May. Most of the increase came from fixed income securities which were up to $20.7 billion.

Offshore holdings in equities have, however, plummeted by $4.5 billion, from a peak of $10.8 billion in February to $6.3 billion in June, according to recent CBN data.

“If oil prices remain on the downward spiral, the demand for government debt will wane drastically,” the South Africabased fund manager said. @Businessdayng

Nigerian crude sees low demand in Europe as US exports seek ...

Continued from page 1 still remaining, and though the number of cargoes left for August is in the single digits, it seems to be taking longer and longer to clear lately. It’s not a pretty picture,” the crude buyer said.

A fire and explosion on June 21 which shut down the Philadelphia Energy Solutions (PES) refinery – a consistent buyer of Nigerian oil – only added to the marketing challenge.

Up to two month’s worth of light sweet oil, or about 20 million barrels, from West Africa and the North Sea which had been scheduled to arrive there were rerouted elsewhere at steep discount.

The report added that despite a slight glut in light sweet and medium grades in the Atlantic Basin, distillate-rich crude grades – especially those in West Africa and the Mediterranean – are finding support from strong distillate refinery margins.

Egina oil has been clearing well recently, with almost all the August programme sold and September-loading barrels also seeing strong buying interest.

Egina loadings in August and September were expected to average 214,516 barrels per day and 200,000 barrels per day, respectively, according to Platts estimates.

Also production from the field has been stable, which also accounts for its good demand.

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Yellow fever: NCDC confirms 20 deaths in Ebonyi, 78 cases

Godsgift Onyedinefu, Abuja

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wenty people have been killed in the suspected outbreak of yellow fever in Ebonyi State, while some 78 cases recorded across states, the Nigeria Centre for Disease Control (NCDC) has confirmed.

The Centre, reacting to reported cases and deaths in Izzi Local Government Area (LGA) of Ebonyi, said an investigation launched by the state’s public health team revealed that there had been cases that fit into the case definition for Yellow fever and 20 deaths between May 1 and August 7, 2019.

The director-general, NCDC, Chikwe Ihekweazu, in a statement on Saturday, said the findings from the investigation indicated that the outbreak might have been going on for a few months undetected by local health authorities, adding that it was too late to collect samples for confirmation from the cases.

Ihekweazu informed that as at July 31, three cases had tested positive for Yellow fever at the NCDC’s National Reference Laboratory, which triggered an immediate response.

He said upon notification, the NCDC immediately deployed a

rapid response team to support Ebonyi State with contact tracing, case finding, risk communications and the management of cases.

He said the State Epidemiology Team was leading the response with support from the NCDC, National Primary Health Care Development Agenc y (NPHCDA) and the World Health Organisation (WHO).

He further informed that a detailed analysis and plans were in advanced stages to apply to the international vaccine stockpile to enable a reactive vaccination campaign in the state, in response to the cluster of cases.

Yellow fever virus is spread through bites of an infected mosquito, he explained, while noting that there is no human-tohuman transmission of the virus.

He added that Yellow fever was a completely vaccine preventable disease and a single shot provided immunity for a lifetime.

He reminded that the yellow fever vaccine was available for free in primary health care centres in Nigeria as part of the routine immunisation schedule.

“Every child is protected for life if vaccinated. We encourage every family to ensure that children receive all their childhood vaccines,” he said.

He added, “in addition to the vaccine, the public are advised to keep their environments clean and free of stagnant water to discourage the breeding of mosquitoes and use insecticide treated mosquito nets, screens on windows and doors to prevent mosquito bites.”

“It is important to avoid selfmedication, visit a health facility immediately if you feel ill,” he warned.

He further reminded healthcare workers that the symptoms of Yellow fever include yellowness of the eyes, sudden fever, and headache and body pain.

“If you have these symptoms or notice someone in your community displaying them, please contact your nearest health centre,” he urged Nigerians.

He recalled that since September 2017, Nigeria had recorded suspected cases of Yellow fever in all states in the country.

According to him, as at July 31, 2019, 78 cases have been laboratory confirmed in Nigeria in 2019 alone.

He noted that a multi-agency Yellow fever technical working group coordinated by NCDC had been leading the investigation and response to Yellow fever cases, while the National Primary Health Care Agency was leading efforts to provide an additional opportunity of vaccination through preventive vaccination campaigns across the country.

NAMA tasks ICAO on licensing for air traffic safety personnel

... says licensing will enhance safety IFEOMA OKEKE

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he Nigerian Airspace Management Agency (NAMA) has charged the International Civil Aviation Organisation (ICAO) to consider as a matter of urgency, the inclusion of Air Traffic Safety Electronics Personnel (ATSEP) licensing in its Annex 1 to the Chicago Convention.

This, the agency says, will place the responsibility to ensure safety on the holder because a licence is the confirmation of competence in a specific safety related area.

Speaking at the just concluded ninth International Federation of Air Traffic Safety Electronics Associations (IFATSEA) hosted by the National Association of Air Traffic Engineers (NAAE) in Abuja, Fola Akinkuotu, managing director of NAMA, said although the demand for the licensing of ATSEPs had been a recurring issue in the ICAO General Assembly yearly due to efforts of IFATSEA to give it a “loud voice,” stakeholders in the industry had the onerous duty to ensure that this message resonated globally given the safety-critical role ATSEPs play in the aviation sector.

Akinkuotu said as an agency with the largest concentration of ATSEPs in Nigeria, NAMA would

continue to support the advocacy for the inclusion of ATSEP licensing in ICAO Annex 1, as this would give them a sense of accountability and commitment to duty.

“Licensing of critical personnel in the aviation industry is fundamental to safety. We are demanding for license so that we can hold people responsible for their actions. The fact that a license unlike a university degree can be withdrawn makes the holder extremely responsible and careful in taking safety-critical decisions,” he said.

The NAMA boss said in recognition of the immense contribution of ATSEPs to safety in the nation’s aviation sector, Nigeria has an operating ATSEP licensing and rating programme included in the Nigerian Civil Aviation Regulation (NCAR), which NAMA is vigorously implementing as required, stressing that the programme had gone a long way in increasing the competency of ATSEPS in the country.

Akinkuotu, who was full of gratitude to the ATSEPs, said, “NAMA engineers have proved that they can stand their own in every situation and they have continued to ensure that our navigational equipment propagate accurate and reliable signals thereby ensuring safety of air travel in the

Single-digit mortgage rate: Stakeholders urge economic fix first Israel Odubola & Temitayo Ayetoto

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orthesingle-digitmortgage rate to become an effective tool in the push for more available housing funds, the Mortgage Banking Association of Nigeria (MBAN) has urged the government to embark on critical economic fix first. This, the association believes, will pave way for the realisation of the single interest rate for mortgage funds.

Kayode Omotosho, MBAN’s CEO, says mortgage rate is in double-digit because it is largely determined by economic conditions, speaking during the August editionofRealEstateInvestorSeries (REIS) themed “Financing Home Ownership: A Focus on Mortgages and Housing Funds as Veritable Platforms.

He states there is the need for

multiple housing vehicles since the National Housing Fund (NHF) loans were insufficient to meet Nigeria’s housing need.

“Market condition is what determines interest. We are mindful that double-digit rate on mortgage is not the best. We are in talks with theCentralBankofNigeria,buteconomic issues have to be addressed for mortgage rate to fall back to a single digit,” Omotosho notes.

Highmortgagerate,whichcontinues to deny many Nigerians the privilegeofowningahome,portrays the weak economic fundamentals of Africa’s most populous nation.

This even casts a pall on the country’sabilitytobridgeitsestimated 17 million housing unit shortfall and provide affordable houses to low-income earners, which forms the bulk of Nigerian populace.

In advanced economies, the

mortgage industry contributes significantly to economic developmentwithasingledigitinterestrate.

However,thereverseisthecase in Nigeria, where relatively high inflation rate and its attendant high mortgage rates hurt demand for housing.

Nigeria roughly needs about 750,000 units to meet its housing deficit. And this is a herculean task for a country stuck with low growth after the recent recession, even as limited access to funds dampens the performance of mortgage industry.

On its part, the MBAN has committed to improving funding sources for housing projects registration of nine mortgage brokerage companies, creation of mortgage defaultlossofjobinsurancescheme as well as collateral replacement indemnity scheme.

Sanusi appointed 1 Million Teachers’ advisory board chairman Temitayo Ayetoto

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Canada-based, a social enterprise that provides access to quality teacher education in underserved communities around the world, 1 Million Teachers Inc, has appointed Muhammad Sanusi II, the Emir of Kano, as its chairman of Advisory Board in Nigeria. This automatically makes him a board member of the enterprise parent organisation in Canada.

Announcing the appointment, Hakeem Subair, CEO, 1 Million Teachers, said the coming on board of the Emir would add impetus to spread of education for, deepening a just society.

“We are indeed very excited

about this great development. It is a morale booster for the team.

1 Million Teachers regularly seeks strong voices, to help us amplify our advocacy for access to equitable and inclusive education for all - especially women and girls, and to provide counsel to our team,” Subair said in a statement seen by BusinessDay. “It is therefore with great pleasure that we welcome His Highness, Muhammad Sanusi II, CON, Emir of Kano, as chairman, Advisory Board of 1 Million Teachers. By accepting this role, in addition to his recent appointment as a Sustainable Development Goals Advocate by the United Nations, His Highness, Emir of Kano, has further deepened his www.businessday.ng

commitment to the fight for a just society, and we are thrilled to have him on board.”

Stating his commitment, the Emir said, “he looks forward to working with 1 Million Teachers in its laudable efforts at providing access to highquality teacher education to underserved communities, especially in sub-Saharan Africa.

I am indeed excited about the project and its future impact on the education sector in Nigeria.”

1 Million Teachers (1MT) currently operating in 12 African countries, works with local and international partners to build a critical mass of dedicated educators who inspire and work with their colleagues to enhance students’ learning outcomes. https://www.facebook.com/businessdayng

@Businessdayng

country.”

Earlier in his remarks, Sabiu Zakari, permanent secretary, Ministry of Transportation, said the professionalisation of ATSEP had become indispensable as it would create the link between air traffic controllers and pilots, as is the practice globally.

Zakari, who was represented by the Director of Human resources, Nkeiru Ejiofor, said Nigeria has been a significant affiliate of IFATSEA and a flagship of safety in the region, even as he tasked participants to “churn out realisable and realistic strategies and modalities to enhance safety in the African airspace and the entire global aviation environment.”

Also in his welcome address, Ishaya Dung, the President, National Association of Air Traffic Engineers (NAAE), amented that in spite of concerted efforts by members over the years, ATSEPs were yet to be recognised by ICAO Annex 1, saying this development had impacted negatively on the psychology of members worldwide, making it a safety concern. He therefore called on stakeholders to back the association in its plan to represent the “safety case” in the forthcoming IC AO General assembly in September 2019.

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Dangote Cement’s ‘Bag of Goodies’ promo not a scam

AXA Mansard observes World Breastfeeding Week Emmanuel Ndukuba, Awka

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XA Mansard, a member of AXA, the global leader in insurance and asset management, joined in the observance of the just concluded World Breastfeeding Week.

World Breastfeeding Week is observed in more than 120 countries around the world between August 1 and 7 every year to encourage breastfeeding and improve the health of babies around the world. To commemorate World Breastfeeding Week 2019, the company held a breakfast session/ masterclass for woman at its head office in Lagos.

The event held on Tuesday, August 6 and it served as an avenue for the company to meet with various women from different works of life, engage them and educate them about breastfeeding.

Topics covered include ‘Health benefits of breastfeeding,’ ‘Making lactation easier,’ ‘How health insurance can benefit mother and baby’ amongst others.

Speakers at the event included Motunrayo Oyemade (founder of popular Insta-

gram platform – Wives and Mothers), Chinny Obinwanne (Lactation Consultant and founder of popular Instagram platforms – The Breastfeeding Doctor and Milk Booster) represented by Ifunnanya Obinwanne (a breastfeeding advocate), Omowunmi Adewusi (HR Director and Company Secretary at AXA Mansard), Olatokunbo Otitoju (Group Head of Retail Business at AXA Mansard Health Limited) and Aanu Soyoye (Head of Underwriting, Pricing & Enrolment at AXA Mansard Health).

‘The importance of breastfeeding cannot be over emphasised seeing as it not only has various benefits for a baby, it also contributes to the wellbeing of the mother,’ said Tope Adeniyi, CEO of AXA Mansard Health Limited. ‘Breast milk is the ideal food for babies.

It contains all the necessary nutrients for a baby’s healthy growth, contains antibodies that help protect babies against illnesses such as pneumonia and diarrhoea and it is linked to the prevention of Sudden Infant Death Syndrome (SIDS); it is also readily available and cost effective.’

...as ‘moin moin’ seller, others win cars in Osogbo, Benin, PH

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igeria’s leading cement manufacturer, Dang ote Cement plc, has said that the rate at which consumers are winning valuable prizes in its on-going national consumer promotion tagged ‘Bag of Goodies’ is not a gimmick but a means of giving back to the loyal consumers of its cement products.

Aliko Dangote, chairman, Dangote Cement plc, stated this in Port Harcourt, Rivers State, at a ceremony to reward winners in the promo, where a 35-year-old engineer and businessman, Tochukwu Anthony from Enugu State, won the star prize of a brand new GACs car, while Amadi Richard and Julius Ilabeshi won flat screen LED TV sets each.

Perhaps, the most in-

teresting of all is that of a 70-year-old moin-moin seller, Alhaja Nimota Adetoro, who won a saloon car in Ikirun and got her car presented to her in Osogbo, Osun State capital, amid pomp and thrills.

Dangote, who was represented in Port Harcourt and Benin by Dorathy Ufot, a Senior Advocate of Nigeria and a non-executive member of the company’s Board of Directors, stated that the presentation events were a proof to doubting Thomases that the promo is not a scam, pointing out that the company values its customers which explains why it would not make any promise that it won’t fulfil.

“We are giving out 43 cars nationwide and other prizes. We are here today to say thank you for your contribution to the growth

of our company, Dangote Cement plc. We value our customers, that is why we have brought this promo to Port Harcourt. We value everybody in our value chain system (distributors, wholesalers and retailers) and this our own way of giving back to our consumers,” Ufot said.

“O n behalf of Alhalji Aliko Dangote, the board of Dangote Cement, the management and the entire staff of the company, we are here to say a big thank you to you all. The national promo is for real. It is not a scam, it is not a gimmick and not a 419 thing.

“It is for real and we have made promises which we have been keeping across the country. We have several prizes and gifts to give out, starting from the star prize of the car. We have tricycles, TV sets, refrigerators and other

smaller gifts,” she said.

In Osogbo, Joseph Makoju, Dangote Cement Group Managing Director, who presented the car and television sets to the winners, said Dangote Cement is reliable and trustworthy.

“If you use our product you can go home and sleep.

We really appreciate you because without our customers, consumers, retailers, distributors, there will be no Dangote Cement,” Makoju said.

“This is the car key to our star winner. We are for real.

This is proof that we give life-changing prizes. If you continue to buy Dangote Cement, the next car may very well be yours. This evidence is made public to everybody.

Continue to buy Dangote Cement and keep scratching and you may be as lucky as Mr. Anthony,” he said.

SEC urges Nigerians to avoid Ponzi schemes Iheanyi Nwachukwu

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igerians have again been advised to desist from investing their money in various investment schemes that are not registered to carry out fund management functions.

This was stated weekend by acting director-general of the Securities and Exchange Commission (SEC), Mary Uduk, in the face of various unregistered schemes luring unsuspecting Nigerians with unreasonable returns.

Uduk, while enjoining investors to be wary of any investment that is proposing return levels that are unreasonably high, also advised investors to always cross check that such fund managers and the products they were offering were registered with the SEC. According to Uduk, the capital market is properly positioned to attract Nigerians and provide benefits to Nigerians who invest therein.

She said the SEC had been doing a lot in terms of investor education to assist people understand whatever issues they had around the capital market.

“But besides that, there are new products coming up every day in the Nigerian capital market. We have a lot of ethical funds, one of the safest areas to invest in is in Mutual Funds, Collective Investments Schemes and we encourage Nigerians to be part of these and others,” she said.

SEC is presently undertaking various initiatives to make the capital market more user friendly such that people can participate in it with greater ease, comfort and convenience, she said.

She said, “There is the added and all-important purpose of ensuring that the gains of your participation, be these dividends, proceeds from share sales/transfers, etc. accrue to you seamlessly, without sweat and in the shortest time possible.

“The purpose is also to ensure that you do not fall victim to the antics of fraudsters who purport to be able to double any amount of money you make available to them as investment value.

“These fraudsters or promoters of Ponzi schemes are the false prophets of the investment environment, they are the ill wind that blows no good and at whose sight you must flee; they are to be avoided. This is one message you must keep spreading to family, friends, relations and acquaintances in order to save them from the agony of loss of their hard–earned money.”

She therefore advised the general public to distance themselves from such schemes, adding, “Please note that anyone that subscribes to these illegal activities does so at their own risk.”

She also informed investors that the SEC was currently leading the entire capital market industry in an effort to migrate all shareholders to an e-Dividend regime.

Godwin Obaseki, governor, Edo State (r), with Gladys Olajumoke Simplice, president, Chartered Institute of Taxation of Nigeria (CITN), at a courtesy visit by members of the institute, at Government House, in Benin City, Edo State.

ICAN honours Akintola Williams at 100, awards N2m scholarships to indigent students KELECHI EWUZIE

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nstitute of Chartered Accountants of Nigeria (ICAN), as part of activities marking the centenary birthday of Akintola Williams, the Doyen of the Accounting profession, has awarded a N2-million scholarship to eight indigent, but brilliant university undergraduates.

ICAN says the scholarship is in line with Akintola Williams’ characteristic manner of affecting lives positively with great impact.

Nnamdi Okwuadigbo, president, ICAN, in his speech at the award presentation in Lagos, says the scholarship is to assist outstanding students with high Cumulative Grade Point

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Average (CGPA) who require financial assistance in their studies.

The recipients of the N250,000 each scholarship awards are Oladele Toyosi Michael from the University of Lagos with CGPA of 4.54; Akande Marvellous Feranmi, University of Abuja, CGPA of 4.83; Omotoso David Ayomide, Ahmadu Bello University, CGPA of 4.82 Others are Isaac Mark, University of Maiduguri, CGPA of 4.06; Ogbodo Anthonia, University of Nigeria, Nsukka, CGPA of 3.75; Ichella Victory Chinyere, University of Port Harcourt, CGPA of 3.55; Uche Emmanuel Miti, University of Benin, CGPA of 4.52, and Dakwak Nerat Musa, University of Jos, CGPA of 4.38.

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Okwuadigbo lauds the unparalleled and visionary leadership qualities of Williams, which led to the establishment of an Institute that has produced about 50,000 chartered accountants with over 250,000 students in its enrolment.

According to Okwuadigbo, “At ICAN, we hold Akintola Williams in high esteem. He is a trailblazer of no mean repute; a role model with an uncanny ability to identify potentials at a nascent stage; a manager of men and resources, and an organiser of unequalled status. This is the man we are gathered here to celebrate his 10 decades of fruitful life.”

He opines that over the years, ICAN continues to rely on the Doyen’s wealth of experience anytime @Businessdayng

critical decisions are to be made, adding that he has equally contributed immensely to the growth of the country through his engagements on different national assignments.

On his part, Emmanuel Ijewere, chairman, Body of Past Presidents of ICAN, lauds Akintola Williams for bringing respectability, dignity integrity to the accounting profession.

Ijewere says Williams has all through his professional life worked at ensuring that the accounting profession remains an embodiment of integrity of which he stands for.

He calls on current and future accounting professionals to strive to mirror all the incredible feats the Doyen has achieved all through these years.

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KADHIM SHUBBER IN WASHINGTON

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effrey Epstein’s death ended the criminal case against him, but lawyers for his alleged victims have vowed to pursue the multimillionaire’s estate to seek justice.

The 66-year-old money manager died on Saturday while awaiting trial on charges that he sex trafficked underage girls. He was being held in jail in Manhattan and his death was “an apparent suicide”, the Department of Justice said.

In court filings, Epstein had listed his net wealth at $559m, including the mansions in New York and Florida where prosecutors said he abused girls as young as 14 years old. Attorneys said they would fight to ensure Epstein’s assets were used to compensate his alleged victims.

“I can promise you I will get to them on behalf of my client, come hell or high water,” said Roberta Kaplan, an attorney who represents one of Epstein’s alleged victims referenced in his recent indictment.

Epstein had been arrested last month and indicted by the US attorney’s office for the southern district of New York. The case came more than a decade after he escaped federal charges in 2007 with a controversial plea deal that allowed him to plead guilty to less serious state offences.

He ultimately served just 13 months in a county jail, much of it on work release, and none of his alleged co-conspirators faced

Epstein’s accusers to pursue his estate following death

Investigation to continue as doubts raised over apparent suicide of accused sex trafficker

US attorney for the southern district of New York Geoffrey Berman has vowed to continue his investigation in to Jeffrey Epstein © JASON SZENES/EPA-EFE/Shutterstock

any charges. On Saturday, Geoffrey Berman, the Manhattan US attorney, made clear that his office was continuing to investigate associates of Epstein.

“Our investigation of the conduct charged in the indictment

— which included a conspiracy count — remains ongoing,” he said in a statement.

The FBI and the justice department’s inspector-general are investigating Epstein’s sudden death, which came after an in-

cident last month when he was found unresponsive in his cell with marks on his neck.

He had been placed on suicide watch following that incident but was taken off watch before his death, according to a person famil-

iar with the matter. The reasons for that decision are not clear.

Epstein’s wealth had long been shrouded in mystery, with new details about his links to billionaires such as Les Wexner and Leon Black coming to light in recent weeks following his arrest.

The administration of Epstein’s estate following his death should shed further light on Epstein’s finances and business dealings, according to Spencer Kuvin, who represented three of Epstein’s victims in the 2007 case in Florida.

“You’ll find in the coming months numerous people that were investing with him that you’ll be shocked to learn,” he said. “This is going to open a whole new chapter.”

It is not clear if Epstein had a will or who the beneficiaries may be. In court filings last month, he named his brother Mark as a co-surety of his bond as he tried to seek bail.

Typically, estates are administered in the state where the deceased resided at their time of death. Whoever is appointed to administer the estate will have to locate and collect together Epstein’s assets.

Poland’s ruling party fuels anti-LGBT sentiment ahead of elections Dozens killed in Yemen as allies turn on each other

Fighting within Saudi-led coalition sparks warning of ‘civil war within a civil war’

Big display of security for Pride march in Plock following anti-gay violence JAMES SHOTTER IN PLOCK

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housands of Poles flanked by a cordon of police in body armour marched through the city of Plock on Saturday in a display of support for LGBT rights, which have emerged as a deeply divisive topic ahead of a parliamentary election later this year.

Politicians from both sides of Poland’s conservative-liberal divide have labelled the October poll as a clash of civilisations, and in recent months, the ruling Law and Justice party has sought to rally its conservative base by presenting itself as a bulwark against LGBT groups, which it portrays as a threat to Catholic family values.

Tensions spilled over last month, when hooligans chased, beat and hurled bricks and bottles at participants in the first LGBT march in the city of Bialystok in Poland’s conservative east.

To avoid similar violence in the first Pride march since then, police armed with batons, tear gas, and shields flooded into Plock, a city of 120,000 north-west of Warsaw. Organisers said that more than 2,000 people — many waving EU and rainbow flags — joined the march.

Several hundred joined counter-pro-

tests, shouting abuse and whistling at the marchers. Despite scuffles, police recorded no serious incidents.

Nevertheless, the escalating rhetoric from Law and Justice — which began during the campaign for the European elections in early spring — and the eruption of violence in Bialystok has left many in Poland’s LGBT community deeply unsettled.

“Bialystok and the things that happened around the march were a tipping point in the public discourse regarding LGBTI issues in Poland and this part of Europe as well,” said Slava Melnyk from KPH, a group that campaigns against homophobia.

“Physical violence was very rare, at least in this decade in Poland. Previously there were instances of hate crime violence . . . but to the extent that there was hunting of people and an almost pogrom-like atmosphere, this hasn’t happened before.”

Mr Melnyk’s concerns were echoed by many of those who joined the march in Plock. “I came [to take part] because I am opposed to discrimination and to what happened in Bialystok . . . I don’t want certain groups to feel discriminated against and to be afraid to go on the streets,” said Olga, who travelled from Warsaw to join the march. www.businessday.ng

ANDREW ENGLAND IN LONDON

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lashes between Yemeni forces that had been fighting on the same side of the country’s civil war have killed up to 40 people, threatening to further complicate efforts to end a conflict that has triggered the world’s worst humanitarian crisis.

On Saturday, southern secessionist forces, which have been backed by the United Arab Emirates, seized the presidential palace in the port city of Aden from troops loyal to Yemen’s Saudi-backed government.

Both sets of fighters have been part of a Saudi-led coalition battling Iran-aligned rebels in Yemen’s four-year conflict, but the Aden clashes “threaten to tip southern Yemen into a civil war within a civil war”, said Crisis Group, a think-tank.

Saudi Arabia led the militarily intervention in Yemen in March 2015 after Houthi rebels took control of Sana’a, the Yemeni capital. The conflict has morphed into a proxy war as Saudi Arabia and the United Arab Emirates, its main coalition partner, accuse Iran of supplying

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weapons to the Houthis, who control the populous north.

The Saudi-led coalition has backed numerous militias and factions in its battle against the Houthis as the conflict has killed more than 10,000 people and pushed about 10m to the brink of famine.

The UN said in a statement on Sunday that as many as 40 people had been killed in the fighting in Aden and 260 wounded. “We are also very worried by reports that civilians trapped in their homes are running out of food and water,” said Lise Grande, the UN humanitarian co-ordinator in Yemen.

The UAE-backed secessionists have also taken control of other government buildings and military bases, effectively putting them in control of Aden, which had been the temporary seat of President Abd-Rabbu Mansour Hadi’s administration.

The secessionists, led by the Southern Transitional Council, want an independent south Yemen and have been demanding to be involved in UN-backed peace talks to end the conflict.

The south was independent until it united with the north in 1990.

Saudi Arabia has called on the transitional council’s forces @Businessdayng

to withdraw from the positions they seized in Aden and urged the rival factions to hold talks in the kingdom. But there were reports that the Saudi-led coalition launched attacks against the secessionists on Sunday.

Peter Salisbury, an analyst at Crisis Group, said the fighting was the result of Yemeni forces “leveraging external support to achieve internal goals”. But he added that from a Saudi perspective “it’s hard to see how it doesn’t feel like a humiliation and it undermines the coalition”.

“The Saudis and Emiratis have been able to walk this line since the beginning of the conflict where neither is particularly happy with who the other depends on to provide them military weight on the ground.

As long as the primary goal of the coalition was to fight the Houthis they were able to paper over the cracks,” he said.

“But the Emirati position has clearly been that there is no more war to fight and what’s needed is a political conclusion to the conflict. From that point onwards, the fragile detente between the UAE-backed and Saudi-backed forces was always going to be shaky.”

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FT

NATIONAL NEWS

Trade tensions test fund managers’ appetite for China expansion JPMorgan becomes first global group to acquire majority stake in mainland joint venture CHRIS FLOOD

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he race to win a share of China’s fast-growing investment market entered a new stage this week after JPMorgan’s asset management arm acquired majority control of its mainland joint venture, the first foreign player to pass this milestone.

The deal was concluded despite a marked deterioration in relations between the US and China, a shift that has added new layers of uncertainty and complexity to the calculations of other international managers pursuing ambitions in China.

Concerns that the trade war between Washington and Beijing could escalate further have been amplified by the Trump administration’s decision to label China a “currency manipulator”.

“The risk that the [trade] conflict takes on a momentum of its own and gets out of control has risen significantly. A sensible compromise might yet be reached in the longer term but the way there may well cause some headaches for investors,” said Stefan Kreuzkamp, chief investment officer at DWS, the asset management arm of Deutsche Bank.

Military tensions have also increased after China warned that any moves by the US to locate new intermediate-range missile weapon systems in Asia would be viewed as an offensive step

by Beijing.

These issues all add to the complex mix of regulatory, operational and cultural challenges of doing business in China, a country that offers the strongest growth prospects of any market globally to international investment managers.

China’s pool of investment assets is forecast to increase from about $4tn at the end of 2018 to $14tn by 2025, according to Boston Consulting Group.

Winning even a small slice of the pie will provide a lucrative stream of profits for international managers, but many remain wary of chasing expansion in China.

“Few global managers really want to commit to China. The trade war with the US provides the perfect excuse to wait until the dust settles,” said Peter Alexander, managing director of ZBen Advisors, a Shanghai-based consultancy.

Eye-popping deal valuations could provide another excuse for international players to delay efforts to acquire controlling majority stakes in mainland joint ventures from their Chinese partners.

JPMorgan will control a 51 per cent majority holding in its joint venture, China International Fund Management, after paying $35m to acquire an additional 2 per cent. The deal, which has to be approved by Chinese regulators, values CIFM as a whole at $1.8bn.

The price paid represents a 33 per cent premium, setting a new valu-

ation benchmark that will delight other Chinese managers.

Other foreign managers, however, will balk at the price tags that could now be attached to similar deals.

“Some of the other joint ventures have also built up significant assets and are making a lot of profits,” said Stewart Aldcroft, Asia chairman of CitiTrust, the securities and fund services arm of US bank Citigroup.

Mr Alexander said the price paid by JPMorgan was “aggressive but not excessive” when compared with the long-term growth prospects of the joint venture. He added that JPMorgan had seen a huge increase in the value of its existing stake in CIFM, which has delivered annualised returns of about 33 per cent since 2005.

“We know now that acquiring control of a mainland JV won’t come cheap to anyone. But the valuations are justified given the outlook for growth and the expected returns of these businesses over the next 10 years,” said Mr Alexander.

Another option for international players is to establish a wholly foreign-owned enterprise (WFOE), which can apply for regulatory permission to launch private funds. These private funds can only be sold to a limited number of rich individuals. This is expected to be a preparatory stage before regulators in Beijing grant approval to WFOEs to launch funds that can be sold to the general public, possibly as early as next year.

BlackRock, Fidelity International and UBS have all recently pumped additional capital into their mainland WFOEs, indicating that they are preparing for further expansion.

China began the process of lifting restrictions on foreign ownership of asset management companies less than two years ago. The rule changes affecting the mainland investment industry are just part of a bewildering array of financial reforms that foreign managers have found difficult to digest and navigate.

O nly last month, Beijing announced 11 new policy measures to open the country’s financial sector to foreign investments further. These included advancing the removal of limits on foreign ownership of fund management companies beginning in 2020, one year earlier than initially planned. Foreign ownership limits in other types of asset managers — including those set up by banks, insurers and pension investors — will also be relaxed.

“This is another clear signal of China’s determination to encourage greater foreign involvement in its investment market. Permission to participate in building China’s nascent private pension system will be a very significant development for international managers,” said Mr Aldcroft. www.businessday.ng

Imran Khan tweeted that India’s decision to scrap a constitutional provision ensuring the autonomy of Jammu and Kashmir amounted to ‘an impending genocide’ © Chip Somodevilla/Getty Images

Imran Khan steps up rhetoric over India’s Kashmir move Pakistan’s PM asks whether world will ‘appease as they did Hitler at Munich’ FARHAN BOKHARI IN ISLAMABAD AND BENJAMIN PARKIN IN MUMBAI

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mran Khan, Pakistan’s prime minister, stepped up his war of words with India over its decision to revoke Jammu and Kashmir’s autonomy, suggesting that the Indian government was motivated by an ideology comparable to Nazism.

Mr Khan, who is under mounting domestic pressure to take a harder stance, wrote on Twitter that India’s decision to scrap a constitutional provision ensuring the autonomy of Jammu and Kashmir amounted to “an impending genocide”.

“Attempt is to change demography of Kashmir through ethnic cleansing,” he wrote. “Question is: Will the world watch & appease as they did Hitler at Munich?” The ideology behind India’s actions, Mr Khan continued, “will lead to suppression of Muslims in India & eventually lead to targeting of Pakistan.”

The fate of Kashmir, India’s only Muslim-majority state and

a region to which both countries lay claim, has been a source of continued tension and three wars between Pakistan and India since the two countries were partitioned in 1947.

Earlier this month India decided to revoke a constitutional provision known as Article 370, which had allowed Jammu and Kashmir to make its own laws.

Analysts said Mr Khan’s rhetorical escalation was likely a calculated attempt to drum up international fury while countering domestic critics who think he has not been tough enough.

The heavily militarised line of division between the two nuclear-armed states in Kashmir is considered one of the most dangerous faultlines in the world. A two decade-long separatist insurgency in the region has claimed 45,000 lives.

Narendra Modi, India’s prime minister, and his supporters say giving Jammu and Kashmir autonomy was a historic blunder that prevented the state from being fully integrated with India and held back its economic develop-

ment. “Give us five years and we will make Kashmir the most developed state in India,” said Amit Shah, India’s home minister.

In a speech last week, Mr Modi also accused Pakistan of stirring up violence in Kashmir, saying that locals have long been subjected to “Pakistani conspiracies to promote terrorism and separatism”.

India imposed a curfew and communications blackout in the state and arrested hundreds of local politicians and separatists, sparking fury in Pakistan.

Pakistan has downgraded diplomatic ties with India, expelled India’s high commissioner and suspended trade and transportation links. Pakistan also plans to take its complaints to the UN Security Council.

Hasan Askari Rizvi, a commentator on defence and security affairs, said that Mr Khan’s comparison of India with the Nazis “appears to be an attempt to remind the western world of the grim humanitarian situation in Kashmir. It’s a comparison they will understand.”

India’s Congress party names Sonia Gandhi interim president Opposition defies calls to break with dynasty after election defeat BENJAMIN PARKIN IN MUMBAI

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ndia’s troubled opposition Congress party has appointed former leader Sonia Gandhi as its interim president, defying calls to break with the dynastic Gandhi family after a crushing election defeat.

The 134-year-old Congress party is one of the India’s most storied institutions, playing a key role in the campaign for independence from British rule and going on to lead the country for decades with various members of the Nehru-Gandhi family at the helm.

But the party has struggled to respond to the rise of current prime

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minister Narendra Modi and his Bharatiya Janata party, suffering two humiliating electoral defeats in 2014 and May this year. In the most recent election, Congress won 52 of 543 seats in parliament, compared with more than 300 for Mr Modi’s ruling alliance.

That loss prompted the resignation in July of president Rahul Gandhi, Ms Gandhi’s son, and sparked weeks of upheaval as the party searched for a new leader.

Central to that process was a debate over whether Congress could survive if it stuck to its tried-andtested dynastic model by choosing another member of the Gandhi @Businessdayng

family, or if it was time for new leadership.

But, with local elections coming up in three Indian states later this year, the party’s leadership committee announced late on Saturday night they had asked Ms Gandhi — who led the Congress party for almost two decades through 2017 — to return on an interim basis.

“Happy to see [Ms Gandhi] back in the saddle. It was the best decision in the current circumstances,” Amarinder Singh, the chief minister of Punjab who had previously called for fresh leadership, wrote on Twitter. “Her experience and understanding will help guide [Congress],” he continued.

Monday 12 August 2019

BUSINESS DAY

53

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

China’s economy caught in trade dispute crossfire Cutting global ties could threaten productivity, a main growth driver DON WEINLAND AND YUAN YANG IN BEIJING

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n the hunt for global talent, China’s Huawei will not be poaching engineers from US technology giants such as Qualcomm or Apple anymore. “If they are connected to the US, the long arm of US jurisdiction can reach our company,” Huawei founder Ren Zhengfei said earlier this year.

“If they have a US identity, we will not hire them.”

His decision to sever the link between the world’s largest telecoms equipment maker and the world’s largest pool of tech talent is just one symptom of a much larger battle over trade and technology that is playing out between China and the US — and causing growing damage to the Chinese economy.

The Trump administration’s decision last week to declare China a “currency manipulator” — a response to Beijing letting the renminbi slip through the symbolically important level of seven to the dollar — was just the latest evidence that both sides are digging in for the long run.

Economists worry that if China’s international links wither, so too will the productivity of its workforce and its capital, a casualty of its narrowing access to foreign technologies and talent.

“A disengaged China — whether it’s by China’s choice or the choice of others — is not good for productivity

growth,” said Scott Kennedy of the Center for Strategic and International Studies in Washington. “I’m quite worried about China’s economy in a disengaged world.”

The trade war comes at a difficult moment in China’s modern economic history. Huge returns generated by its young, vigorous labour force are starting to fade as the population ages.

Investment-led development over the past two decades produced double-digit growth but also created a pile of corporate, household and government debt equal to nearly 300 per cent of gross domestic product. It has become a drag on economic growth, which hit a 30year low in the second quarter of this year.

That leaves growth in total factor productivity — which measures innovation-related efficiency gains — as the main driver of future growth.

China’s total factor productivity fell by 0.6 per cent in 2017, according to a calculation by BNP Paribas Asset Management.

Most economists agree that the economic and political reforms China embarked on in the late 1970s have boosted the effectiveness of its workers and capital deployment.

As foreign companies enter the country, they bring with them new technologies and talented people and fuel competition, all factors that either rub off on local businesses or drive them to do better.

Maracaibo: portrait of a shattered Venezuelan city Former oil hub has gone from boomtown to ghost town under Maduro and US sanctions GIDEON LONG IN MARACAIBO, VENEZUELA

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n a rundown street in Maracaibo, Venezuela, Lucho Torres leans on the cab of his ancient brown pick-up truck and waits for petrol. Ahead of him, about 30 drivers sit in a line of cars that snakes around the corner and out of sight.

“Today’s not so bad. We should only be waiting an hour or so,” said Mr Torres. “My longest wait was from one day to the next. I slept in the gas station and woke up the next day and filled the tank at eight in the morning.”

Queues for petrol are common in Venezuela these days, but they are particularly galling for the residents of Maracaibo. For decades, this city and the surrounding area provided Venezuela with most of its oil.

Now, in the middle of a profound economic crisis, there is not enough petrol to go round in a country that sits on the world’s largest oil reserves.

While the whole country has been hit hard, Maracaibo and surrounding Zulia state have suffered even more than the capital

Caracas. Venezuela’s perilous economic situation is set to worsen as the US tightens sanctions.

Around Maracaibo, many gas stations are closed, chains slung across their entrances. It is a far cry from the city’s heyday a generation ago, when it was a boomtown renowned in Venezuela for its brash consumerism and heady nightlife.

The local chamber of commerce says retail sales have crashed 85 per cent in the past year. Hotel occupancy is at 12 per cent. Since January, US sanctions have made it difficult for the country to sell its oil abroad or import petrol from elsewhere — forcing it to become dependent on Russia for supply.

Many shops, too, are shuttered.

The few in the city centre that are open blare music from loud speakers to entice people in, but with little success. With the minimum monthly wage worth just $5, people have little money to spend on anything but basics.

Some owners have left the country, fleeing the economic collapse to neighbouring Colombia less than 100km away. Others have stayed but say it is not worth opening. www.businessday.ng

Authentic Brands’ licences generate $9.3bn in annual retail sales © Alamy

BlackRock buys $870m stake in Authentic Brands Licensing group owns rights to Marilyn Monroe and Elvis Presley RICHARD HENDERSON IN NEW YORK

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lackRock has sealed its first major buyout deal, scooping up Authentic Brands, the celebrity and clothing licensing group, as the world’s largest asset manager tries to muscle in on the private equity boom.

The asset manager will pay $870m for a controlling stake in New York-based Authentic Brands, which holds the brand rights to Marilyn Monroe and Muhammad Ali. It also owns Sports Illustrated magazine and is the majority shareholder in retailer Nine West.

The acquisition comes four months after BlackRock raised $2.75bn for Long Term Private Capital, its first private equity fund. It ultimately wants to raise $12bn for the fund.

Larry Fink, BlackRock’s chief executive, is spearheading a push into private equity as the group’s clients look beyond public stock and bond markets for juicier returns. Alternative investments, including private equity, generated 8 per cent of BlackRock’s

second-quarter revenues despite accounting for just 2 per cent of its assets. The bulk of the assets BlackRock manages are in passive investments with low fees.

“We are trying to do private equity in a different fashion and to address the issues investors have had with private equity in the past,” André Bourbonnais, global head of Long Term Private Capital, told the Financial Times. “We will be the only direct private equity fund within the BlackRock group.”

Authentic Brands, which is led by its founder and chief executive Jamie Salter, licenses 50 brands that together generate $9.3bn in annual retail sales, according to the company. Following the deal, BlackRock will be its largest shareholder.

BlackRock’s buyout vehicle is aiming to offer private equitylike returns for a low fee and is open-ended in nature. In this sense, the fund’s structure will resemble Warren Buffett’s Berkshire Hathaway as much as a private equity vehicle that typically locks up capital for around a decade.

Mr Fink told the FT in April

that private equity is “something everyone should be focused on, as there are extraordinary flows going into an illiquid asset class”.

He added that “if you have a client base with longer-dated liabilities you can have a higher percentage of illiquid investments”.

BlackRock appointed Edwin Conway to run BlackRock Alternative Investors, its private equity, private credit and real estate investing unit, as part of a management restructure earlier this year. In March, the company acquired private equity software platform eFront for $1.3bn this year and will integrate the tool into its Aladdin system.

Private equity is dominated by a cohort of large buyout groups, including KKR, Carlyle Group and Brookfield. BlackRock’s efforts in this field position the funds giant as a rival to Stephen Schwarzman’s Blackstone Group, another leading private equity firm that previously owned a stake in BlackRock.

Mr Schwarzman has described selling the BlackRock stake in 1994 to PNC Bank as a “heroic” mistake.

Cathay Pacific sacks staff who joined Hong Kong protests

Move follows pressure from China on flagship airline and other businesses

SUE-LIN WONG IN HONG KONG

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athay Pacific fired two airport employees and suspended a pilot for conduct linked to antigovernment protests as China stepped up its efforts to pull Hong Kong business into line over the increasingly angry demonstrations.

Hong Kong’s flagship carrier said at the weekend it would comply with a directive from China’s aviation authority that included an order to take workers off flights to China if they had participated in illegal demonstrations that have

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gone on for 10 weeks.

The regulator’s move was the starkest sign yet of Beijing’s growing readiness to make high-profile businesses choose between incurring the wrath of either Hong Kong staff and protesters or Beijing and customers in mainland China.

Some of Hong Kong’s largest property tycoons signed a petition published over the weekend in local newspapers arguing that the unrest in the region must not continue and voicing support for the territory’s chief executive Carrie Lam. Police fired tear gas into a @Businessdayng

subway station on Sunday night after clashes with protesters continued through the weekend.

Demonstrators’ tactics have evolved into unpredictable catand-mouse confrontations with police at venues across the city.

China also lashed out at the UK’s foreign secretary, Dominic Raab, after he spoke to Ms Lam about the protests and called for a “fully independent investigation” to rebuild trust. “It is simply wrong for the British government to directly call Hong Kong’s chief executive to exert pressure,” said a spokeswoman for China’s foreign ministry.

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ANALYSIS

AI and literature: the muse in the machine Novelists are captivated by the potential of artificial intelligence.

But what happens when the machines start writing about us?

JOHN THORNHILL

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o generalise heroically, the entire arc of world literature can be summarised as follows: writing about gods, then kings and queens, then ordinary people and, finally, ourselves.

But having exhaustively explored the divine and almost every dimension of the human, we are plunging deeper into a new era of literary history: writing about machines. And that may even presage the most startling evolution of all: machines writing about humans and perhaps, one day, machines writing about machines.

Literature, sometimes described as crystallised emotion, contains the very essence of the human experience. So what will it mean when machine intelligence trespasses into human territory? Will it open up exciting new vistas of understanding and insight? Or will it only highlight our own diminishment in the cosmic scheme of things?

Almost every day brings a startling new advance in the field of artificial intelligence (AI), the seemingly magical general-purpose technology of our times. In 1997, the world was stunned when IBM’s Deep Blue computer beat the greatest chess player of all time, Garry Kasparov.

Although impressive in its way, Deep Blue was little more than an immensely powerful rules-based calculating machine, a “$10m alarm

clock”, in Kasparov’s irritable phrase.

But more recent advances in Deep Learning techniques, combined with an explosion of data from our smartphones and computers and massive increases in computing power, have enabled machinelearning programs to perform an increasing array of tasks as well as (if not better than) any human: interpreting radiology scans, flying aircraft, identifying images and recognising speech (just ask Siri).

Google DeepMind’s defeat of two of the best players of the ancient — and fiendishly complex — Chinese game of Go in 2016 and 2017 also captivated a global audience. Using a very different technique from Deep Blue, AlphaGo’s success stemmed from “learning” by itself, defying 2,500 years of accepted wisdom about the game. Little wonder that some Chinese researchers called this a “Sputnik moment” for the country, stimulating a massive increase in spending on AI amid talk of a new technological arms race.

All this buzz about AI has also sparked the imagination of some of our most inventive novelists, among them Jeanette Winterson and Ian McEwan. Once the exclusive preserve of science fiction, thinking robots have now entered the literary mainstream. McEwan’s most recent muse is none other than Demis Hassabis, the luminous founder of Google DeepMind.

US accuses China ‘thuggish’ behaviour over diplomat meeting Washington condemns Beijing for ‘leaking’ official’s personal details in Hong Kong ALICE WOODHOUSE IN HONG KONG AND NIAN LIU IN BEIJING

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he US state department has accused China of acting as a “thuggish regime” for “leaking” personal details of an American diplomat who met Hong Kong pro-democracy activist Joshua Wong, as the city faces a 10th weekend of anti-government protests.

The strong response follows the publication of a social media post on Thursday by Chinese state broadcaster CCTV that showed the diplomat, identified as Julie Eadeh, meeting Mr Wong, the face of an earlier protest movement, the 2014 Umbrella Revolution, in the lobby of a luxury hotel earlier in the week.

CCTV accused her of being a “black hand” behind the protests, marking an escalation of China’s claims that the demonstrations were “the work of the US” — an argument the country’s foreign ministry spokeswoman made in July.

A pro-Beijing Hong Kong newspaper, Ta Kung Pao, which had earlier published the photograph of Ms Eadeh meeting Mr Wong and fellow pro-democracy activist Nathan Law, included a picture of a man it said was the diplomat’s husband and the names of her children.

“Releasing any of that personal information of an American diplomat is completely unacceptable, that’s not a protest, that’s what a thuggish regime does and it’s unacceptable,” said Morgan Ortagus, a state department spokeswoman.

“This is what American diplomats do every single day around the world,” Ms Ortagus said. “American diplomats meet with formal government officials, we meet with opposition protesters, not just in Hong Kong or China . . . So our diplomat was doing her job and we commend her for her work.”

The Hong Kong office of China’s Ministry of Foreign Affairs said on Thursday it had “made solemn representations, expressed strong dissatisfaction and resolute opposition” to senior officials from the US consulate and asked for an explanation of the meeting with what the ministry described as the city’s independence movement.

Anti-government protests, sparked by a now-suspended bill that would allow extradition of suspects to mainland China for the first time, have gripped Hong Kong for more than two months, with a general strike on Monday paralysing parts of the city’s transport network and forcing the cancellation of scores of flights at the airport. www.businessday.ng

Maria Ressa: ‘It would be great if we didn’t have to fight our government’ The crusading Filipino journalist on debunking disinformation and taking on President Duterte JOHN REED When plainclothes police officers burst in to Maria Ressa’s newsroom to arrest her back in February, her young reporters responded exactly as she had drilled them: they whipped out their phones and filmed her being escorted away, broadcasting live to their 10m readers. It was a vintage piece of heavy-handed intervention by the government of Rodrigo Duterte, the authoritarian president of the Philippines.

It was also a vintage piece of cutting-edge digital journalism by one of the sharpest editors of our illiberal age.

Ressa, the chief executive of the news website Rappler, is the most prominent journalistic gadfly of “Duterte Harry”, as some of the president’s critics call their strongman leader. The warrant for “cyber-libel” was served at 5pm, too late for her to post bail.

So she had to spend the night in a cell. It was just one of an array of charges heaped on her and her fellow editors. She has already spent, by her own reckoning, more on bail money than Imelda Marcos, the late dictator’s ex-wife recently convicted for graft (a conviction she intends to appeal).

But the sparky 55-year-old editor shows no sign of stress as she arrives just after noon at an upscale Japanese restaurant close to her newsroom in the bustling heart of Manila. Rather she is her usual geekily ebullient self.

“We’re building!” she exclaims, when I ask how she spent the morning. She has barely sat down in our bamboo-lined booth before she launches into a description of the new platform her team is developing, her eyes alight. Despite everything, I ask?

“Oh gosh, yeah! . . . It would be great if we didn’t have to fight our government. But in the end, if you only play a defensive game, you miss the point.” One of the difficulties of this period, she adds, is that the business is thriving. “So I am thinking, ‘How can we grow this business?’, even as I am thinking about how the hell I can avoid

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being arrested.”

Ressa’s ordeal is a defining struggle of our era of press-bashing populism. On the one side are Ressa and her three female business partners, striving to speak truth to power while staying afloat in the frenetic world of digital journalism. On the other is the Philippines’ most powerful leader in decades, who enjoys overwhelming popular support, trades in obscenities and violent threats, and commands millions of combative social media supporters.

In three years in power, Duterte has amassed near total control of the executive, legislative and judiciary in one of Asia’s oldest democracies. His small liberal opposition was wiped out in recent midterm elections to the Senate.

By the estimate of Jonathan Miller, author of a recent biography of the Philippine president, he has presided over more deaths of his own people than any leader in south-east Asia since Cambodia’s Pol Pot. Ressa has, by her own count, had to post bail eight times since January 2018, when the Philippine Securities and Exchange Commission first gave an order to shut Rappler. The site has made a name for itself with coverage of Duterte’s lethal drug war, his use of online trolls to maintain power, a slew of corruption scandals, and the government’s pivot toward China.

The editor is a recognised face in the Philippines, but today her presence goes almost unnoticed by the other lunchers. As we order — a bento set with sashimi, California maki, tempura and beef teppanyaki for her, and one with sashimi and grilled fish for me — we discuss the news, in particular the demonstrations in Hong Kong.

These are, we agree — and we are talking before the violence that has overshadowed recent protests — a display of the “People Power” that toppled Ferdinand Marcos in 1986, and rare inspiration in a world where democratic accountability seems in retreat.

“I don’t think we have wrapped our heads around how much technology has allowed the ma@Businessdayng

nipulation of individuals and democracies,” Ressa says. She was one of the first to warn of the dangers of the symbiosis between illiberal politicians and platforms such as Facebook and Google, which she says are “accelerants” for disinformation.

“Propaganda has been around forever, but never before have you been able to do it at this scale,” she says. “Exponential lies have become facts.”

Ressa, who is a US and Philippine citizen, is one of the smartest people I have met at analysing the way that “information warfare” tactics used to spread lies and manipulate voters in one country have been fine-tuned and unrolled across the globe. Way back in October 2016, a month before Donald Trump won office with (we have since learnt) a following wind from Kremlin-supported trolls, Ressa led an acclaimed Rappler series on disinformation. Its focus was Duterte’s “weaponisation” of the internet. The same methods devised in Russia, then deployed in Ukraine in the “hybrid” invasion of 2014 — where disinformation was deployed alongside weaponry — were swiftly brought to the Philippines, and spread via Facebook and other social media platforms.

“We were the first to say, this is a global effort and this is a scary effort,” she says. “And if the social media companies aren’t going to be the gatekeepers, then we have a huge problem.”

After the series’ publication, Ressa herself became the target of dozens of online hate messages per hour. It was a foretaste of bigger trials to come: the administration’s onslaught of litigation against Rappler, in which the site “has lost every single appeal or motion”, she says.

“Every single one.” So what, I ask her, gives her any grounds for optimism?

“It depends on the people, not the president,” Ressa says, choosing her words carefully to avoid new accusations of impugning the judiciary. “It depends on the men and the women of the judiciary. I really can’t believe that 100m Filipinos don’t have integrity.”

BD Money

Monday 12 August 2019

BUSINESS DAY

INVESTING

cover

FIXED INCOME

PERSONAL FINANCE

3 important things to note when trading Bitcoin

All you need to know about US-China trade war and how

Low interest rate regime, opportunity for long-term borrowing

How CRC FICO is deepening financial access in Nigeria

Trading Bitcoin, like any other financial assets, is all about making money. You buy low, sell high, profit from the spread, and repeat.

The world’s two economic heavyweights, United States and China, have been at loggerheads over trade since the early days of Donald Trump’s presidency.

Page 57

At present, the global market, including Nigeria is experiencing low interest rate regime, which seems to be seen as an opportunity to access long-term funds that can be used to improve the economy in terms of increased revenue generation.

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Credit is very important in every economy because it allows consumers to demand goods and services which might have otherwise been unaffordable, thus attain a higher standard of living.

Page 59

Page 61 @Businessdayng

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BD Weekly Tenders Wrap-up Tenders Wrap-up

T

etfund National Research Fund (NRF) calls for Concept notes. The call for concept note is available online at www.tetfund.gov.ng and interested candidates are advised to visit the website for detailed guidance on the format of presentation and evaluation process. Deadline 19th August 2019.

The Federal Ministry of Education, Federal Government College New Bussa, Niger state has published its invitation to tender for execution of 2018 appropriation. The project is titled: Rehabilitation/ Re-modelling of Boys hostel. Interested companies are expected to collect the Standard Bidding Document (SBD) from the office of the Vice-Principal (SD), FGC, New Bussa with evidence of N10,000 paid into the FGC New Busa, Niger state Remita account in any commercial bank.

Prospective bidders can contact the institution for further information. Deadline is 12 noon, 6 September, 2019.

National Orthopaedic Hospital Enugu invites reputable and experienced contractors/suppliers to tender in respect of the following projects as contained in 2019 Appropriation: LOT 1: Theater/Hospital Equipment.

LOT 2: Service Vehicles-Water tanker and Hiace 14-seater bus. LOT 3: Rehabilitation of wards. LOT 4: Rehabilitation of offices.

LOT 5: Renovation of student’s hostels.

LOT 6: Construction of General Outpatient Complex. LOT 7: Drilling of Borehole/Water well.

Interested contractors/ suppliers are advised to obtain Tender Document from the Procurement Department on presentation of evidence of payment of Nonrefundable fees of N10,000 for each LOT direct to National Orthopaedic Hospital account.

Further information can be obtained from the institution. Deadline is 9:00am Monday 16, September 2019.

The Shell Petroleum Development Company of Nigeria Limited (SPDC) invites interested and prequalified parties on upcoming tendering opportunities for the provision of Geosciences Supervision Services for SPDC. The proposed contarct would commence in January 2020 and remain active for 2-year duration followed by one year extension option.

Visit www.nipexng.com to determine

your eligibility, download application form, and make necessary payments and visit NipeX office at 8/10 Bayo Kuku street, ikoyi lagos for further action.

The African Development Bank is calling for expression of interest from eligible firms for supply and installation of various office equipment, stationery, consumables and services for the Nigeria Country Department. Interested companies registered in Nigeria are invited to express interest for one or several of the following lots – clearing & shipping agent services, provision of car hire & rental services and supply of office and computer stationeries among others. Expression of interest and evaluation form are on the bank’s website www.afdb. org/en/about-us/corporate-procurement/ procurement-notices/current solicitations/ Interested firms are to submit their expression of interest forms by courier or at delivery at the address indicated below not later than 30th August, 3pm.

Reference: ADB/EO1/RDNG/2019/0134 The Senior Director, African Development Bank, Nigeria Country Department, 1521 Cadastral Zone A0, Off Memorial Close, Abuja.

Jhpiego, an affiliate of John Hopkins University, would like to engage reputable dealers/distributors to supply SUV minibus, pickup van, laptop, generators, inverters and diesel generators its field offices in Uyo, Ogoja, Calabar, Mokwa, Minna and Yola. Interested applicants are to send an email to nigeriabidqueries@jhpiego.org for full specification. Bids should be addressed to Procurement Committee, Jhpiego, Plot 971, Rueben Okoya Crescet, Wuye District, Abuja.

USAID Global Health Supply Chain Program (GHSC) and Procurement Supply Management (PSM) is seeking competent transporters who would like to work with GHSC-PSM to provide temperature and time sensitive specimen transportation services. Organizations interested in receiving a copy of RCF shall submit the following documents – summary profile of the organization, summary of current employee, organization’s summary of past performance, proof of business registration, last one to two years audited financials and standard operating procedures (SOPs), to psmnigeriatlpquotes@ghscpsm.org not later than August 19.

USAID GHSC-PSM in Nigeria is requesting for expression of interest from competent transportation and warehousing/distribution centre service providers for the provision of pharmaceuticals and non-pharmaceuticals grade distribution and warehousing/distribution centre services. Organizations interested in being prequalified are to submit the following: summary profile of the organization, summary of current employee, organization’s summary of past performance, proof of business registration, last three years audited financials and standard operating procedures (SOPs), to psmnigeriatlpquotes@ghsc-psm.orgnot later than August 16.

Nigeria LNG Limited (NLNG) is accepting expression of interest for the engineering, procurement, construction and commissioning of NLNG Industrial Area Access Road Project. Interested companies are required to provide the following documents for consideration: company profile & organization structure, certificate of incorporation and registration with Department of Petroleum Resources (DPR), current tax clearance certificate, evidence of previous work experience and evidence of strong HSE and QMS performance. Expression of interest should be submitted to : The Head, Business Strategy & Vendor Management, CPM Department, MD Division, Nigeria LBNG Limited.

Or send by email eoi.response@nlng. com with “Confidential - Expression of Interest for the Engineering, Procurement, Construction and Commissioning of IA Access Road Project” as subject-line.

Deadline for submission ends three weeks time.

The Ministry of Mines and Steel Development through the Mineral Sector Support for Economic Diversification (MinDiver) Projects is inviting sealed bids from eligible bidders for procurement and installation of laboratory equipment for the Nigerian institute of mining geoscience (NIMG) and National Metallurgical Development Centre (NMDC).

Interested bidders can obtain further information from MinDiver Project Office and inspect the bidding document. Bid must be delivered to 10, Lola Close, off Luanda Crescent, Off Ademola Adetokunbo Crescent, Wuse 11, Abuja, Nigeria.

The Sokoto State Universal Basic

Education Board wishes to pre-qualified contractors who wish to tender for building construction, renovation and procurement. This is aimed at developing public basic schools in the state.

Prospective contractors and supplier are expected to submit their sealed documents addressed to the Director Planning, Research, Statistics and Development of State Universal Basic Education Board, Sokoto.

The Nigeria Deposit Insurance Corporation (NDIC) is extending to August 14 the application deadline for competent companies with good track record of performance and experience to tender for the upgrade of facility for its new training academy in Abuja.

The tender opening which will commence immediately after the closing would take place at the corporation’s waiting room, ground Floor, NDIC Head Office Building, Abuja.

The Central Bank of Nigeria (CBN) on behalf of the Debt Management Office (DMO) is notifying that the Federal Government of Nigeria (FGN) Treasury Bills of 91, 182, 364-day tenors amounting to N4.38bn; N10bn; and N20bn respectively would be issued by Dutch auction on Thursday 15, 2019.

All money Market Dealers are expected to submit bids through the CBN S4 WEB INTERFACE between 9 -11 am on Wednesday, August 14, 2019.

The ECOWAS Commission invites sealed bids from eligible bidders for the supply in one (1) lot of the production of its 2020 calendars, diaries and greeting cards.

Interested bidders can obtain further information and inspect the bidding document at the Procurement Division of the Directorate of General Administration at 1st Floor ECOWAS Commission, 101 Yakubu Gowon Crescent, Asokoro District, PMB 401, Abuja or send an email to procurement@ecowas.int and sbangoura@ ecowas.int.

Nigeria LNG Limited (NLNG) is inviting aircraft operators with experience in providing fixed wing aircraft and ancillary services to express their interest to participate in the tendering for this service.

Interested companies are required to provide the following documents for consideration: documentation to demonstrate that the entity is a Nigeria-registered com-

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 12 August 2019

BUSINESS DAY

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Investing pany, evidence of registration with NCDMB’s NOGIC Joint Qualification System (JQS), Nigerian Civil Aviation of Nigeria and federal Aviation Authority of Nigeria.

The company should include a process and produce for compliance and achieving targets, details of its corporate organisation’s overall human resources structure, proposed organogram and a detailed description of the location of the facilities and infrastructure in Nigeria.

Expression of interest should be submitted to: The Head, Business Strategy & Vendor Management, CPM Department, MD Division, Nigeria LBNG Limited, Bonny Land, Rivers State.

Or send by email to: eoi.response@ nlng.com with “Confidential - Expression of Interest amd pre-qualification for provision of aircraft and ancillary services for NLNG” as subject-line. Deadline for submission ends in three weeks’ time.

The Ebonyi State Universal Basic Education Board, Abakaliki requires the services of reputable contractors/firms, for the execution of intervention projects in the basic education sub-sector of the state.

Interested contractors are requested to tender for prequalification for the execution of the projects which include construction, reconstruction and rehabilitation of classroom blocks.

Bid document must be enclosed in a sealed envelope marked Lot(s) No of “Year 2016, 2017 or 2018, Universal Basic Education Intervention project” and submitted to the office of head of Department: Physical Planning, Works and Maintenance, Ebonyi State Universal Basic Education Board, Abakaliki, within five (5) weeks.

Lagos State Government invites expression of interest for the engagement of vendors to provide catering, office stationeries, consumables supply, ICT repair, hotel, travel management, 3rd party logistics, and insurance provision services. The interest should be addressed to the coordinator, Grants Management Unit, LSMOH, GMU, Office, Folarin Coker Staff Clinic, Alausa, Ikeja between the hours of 8.00AM -5.00PM from Thursday 8th August to Thursday 5th September 2019.

Agip energy and natural resources has opened advert for tender opportunity revamping upgrade od distributed control system and fire & gas system at Agbara platform. To be eligible, tenders must comply with the Nigerian Content requirements in the NipeX system. The closing date of the advert is 2nd September 2019. Additional information on www.nipex.com West African Power Pool (WAPP) Secretariat is inviting interest from a reputable consulting firm. Interested consultants should submit an expression of interest in

French and English latest September 16, 2019, by 10.00am addressed to West African Power Pool, Mr. Siengul A. K1 Secretary-General Zones des Ambassess, Pk-6 Akpapkpa Cotonou 06 BP Cotonou, Benin.

Edo State Government invites bid of tenders for land clearing of 1000 hectares. The time and date for the collection of bidding document is 6th August 2019 to Thursday 29th August 2019. The venue is the Office of the Permanent Secretary, Ministry of Agriculture and Natural Resources, Benin City.

Creative Associates International under its Nigerian Chad Basin NLCB project is releasing a Request for Proposal (RFP) for some projects in Borno State. Interested firms may obtain electronic copy of RFP on this link: https://app.smartsheet .com.

The closing date is August 21st, 2019.

Lagos State Government invites expression of interest for the engagement of vendors to provide catering, office stationeries, consumables supply, ICT repair, hotel, travel management, 3rd party logistics, and insurance provision services. The interest should be addressed to the coordinator, Grants Management Unit, LSMOH, GMU, Office, Folarin Coker Staff Clinic, Alausa, Ikeja between the hours of 8.00AM -5.00PM from Thursday 8th August to Thursday 5th September 2019.

Agip energy and natural resources has opened advert for tender opportunity revamping upgrade od distributed control system and fire & gas system at Agbara platform. To be eligible, tenders must comply with the Nigerian Content requirements in the NipeX system. The closing date of the advert is 2nd September 2019. Additional information on www.nipex.com West African Power Pool (WAPP) Secretariat is inviting interest from a reputable consulting firm. Interested consultants should submit an expression of interest in French and English latest September 16, 2019, by 10.00am addressed to West African Power Pool, Mr. Siengul A. K1 Secretary-General Zones des Ambassess, Pk-6 Akpapkpa Cotonou 06 BP Cotonou, Benin.

Edo State Government invites bid of tenders for land clearing of 1000 hectares. The time and date for the collection of bidding document is 6th August 2019 to Thursday 29th August 2019. The venue is the Office of the Permanent Secretary, Ministry of Agriculture and Natural Resources, Benin City.

Creative Associates International under its Nigerian Chad Basin NLCB project is releasing a Request for Proposal (RFP) for some projects in Borno State. Interested firms may obtain electronic copy of RFP on this link: https://app.smartsheet .com.

The closing date is August 21st, 2019. www.businessday.ng

3 important things to note when trading Bitcoin SEGUN ADAMS

T

rading Bitcoin, like any other financial assets, is all about making money. You buy low, sell high, profit from the spread, and repeat.

Sounds easy right? Not all traders, however, have been able to achieve their investment goal trading the pioneer cryptocurrency.

One trader once described the Bitcoin market as juggling too many balls, alluding to the erratic nature of the market.

One moment Bitcoin is trading at $10,000 and the next you wake up to see the coin under $9,000.

The opposite trend was observed very recently as Donald Trump’s tweeting recently sent price to $12000.

If you are interested in trading, and not holding, your Bitcoin assets, these 5 tips would help you succeed.

Follow the news There’s a not-too-popular phrase advising to “follow the money”. In the Bitcoin world, you have to follow the news. You would find that information received in real-time can be the difference between cashing in mega profit and losing in a trade.

News about the USA and China trade war, the Senate hearing on Facebook’s Libra, the move by JP Morgan to create its coin and the likes have a profound impact on your ability to take in profit from Bitcoin.

Imagine increasing your Bitcoin holding moments before a 30 percent surge in price, or selling down some stake before the price crashed from its all-time high in 2017.

Well, some of the major fluctuations in Bitcoin have been triggered by events reported in Media.

Try as much as you can to keep abreast on the latest information on cryptocurren-

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cies and related technology. You can follow news platforms on social media and blogs too. A good application to get this information is coin news.

Sharpen your Technical skills Making money is never easy. It involves big risks, good instincts and of course, studying charts that let you understand market sentiment and trading patterns.

Even though it could be confusing at first, technical skills are important for trading- especially for day and intra-day trading.

Some technical indicators such as Simple Moving Average (SMA), Fibonacci Retracement, Stochastic Oscillator and many others can let you know the best time to take or exit a position in any cryptocurrency and make the most gain.

YouTube and an abundance of online courses can help you master technical analysis.

An extra tip: A successful trader explained that trading altcoins can allow crypto-traders to gain more bitcoin with their profits.

Know the technology Like stocks, fixed income and real estate investing, understanding the underlying technology or driver of growth enable holders of such investment make better returns.

For example, good stock investors rely on knowledge of an industry to assess prospects in a stock. In the same way, bitcoin traders have to understand the technology driving growth in cryptos.

While the long term gain would be staying ahead of the curve-like the early birds in Bitcoin when it sold very cheap- short and mid-term benefits would be knowing how to maximize the most from each coin type.

Blockchain, the technology behind Bitcoin and Ethereum networks, is increasingly finding its way into mainstream financial services and other industries.

@Businessdayng

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Monday 12 August 2019

BUSINESS DAY

Monday 12 August 2019

BUSINESS DAY

Fixed Income

Cover Story

All you need to know about US-China trade war and how it affects you Israel Odubola

T

he world’s two economic heavyweights, United States and China, have been at loggerheads over trade since the early days of Donald Trump’s presidency.

The trade tantrum, which is simply a ‘battle of tariff’, took another dimension two weeks back when China lowered the value of its national currency, Yuan, to the lowest level since 2008, following fresh US tariff threat.

The events unfold very quickly, and one could get dizzy trying to keep up with the latest. However you can catch up on all that has happened in ten minutes.

Need to correct trade deficit President Donald Trump of US, worrying about his country’s balance of trade deficit and in a bid to revitalize the US economy and bolster local producers, introduced tariffs on most of its trade partners.

Balance of trade (BOT) otherwise known as net exports is the difference between the monetary value of a country’s exports and imports. A country has a positive BOT when it exports outweighs imports, and vice versa.

Imposition of tariff elevates prices of foreign goods, making them less attractive.

This triggers consumers to switch to local products, and also help reduce cash going out of the economy in imports. This Trump is keen to achieve.

Tariff enforced China is US’s biggest trading partner, and the American nation has the largest trade deficit exposure to the Asian giant.

Right from his campaign days, Trump accused China of unfair trade practices and intellectual property theft.

His flight to presidency hinged on a vow to checkmate unfair practices by China, with threats to apply stringent tariffs.

Trump has so far, enforced tariffs on products manufactured abroad, affecting

its trade partners such as Canada, Mexico and the European Union, with China getting the biggest blow.

The war began around early 2018 when US imposed tariffs on all goods from, and four months later, China responded with tariff of about 25 percent on US products.

Until May 10, 2019, China was paying 25 percent tariffs only on $50 billion worth of goods and a lower 10 percent on $200 billion worth of goods.

Both leaders agreed to return to the negotiating table after the Group of 20 leaders met at Osaka, Japan nearly two months back, but trade talks fell through without a truce.

More tariff in offing The war grew from bad to worse as Trump threatened to impose a fresh 10 percent tariff on additional $300 billion worth of Chinese goods, effective September 1, unless China gives in to his www.businessday.ng

request.

If the threat works out, almost all imports from China including smartphones, consumer goods and toys among others that were previously exempted, will be taxed.

China reacted by weakening its national currency, Yuan, to the lowest level since 2008, and directed public enterprises to halt purchase of US agricultural products, and promise to retaliate further if Trump’s effect his threat.

Global growth at risk The crisis has been a nightmare to global growth, which has been sluggish and precarious. Seeing the dispute escalating, the International Monetary Fund (IMF) revised its forecast downwards to 3.2 percent and 3.5 percent in 2019 and 2020 respectively, according to figures in its latest outlook.

The trade war in addition to Brexit-related

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@Businessdayng

uncertainty, threatening global technology supply chains and rising geo-political tensions continues to put threat on global economy.

Hot money dash out of emerging markets Emerging markets (EMs) are not spared from the backlash of trade dispute as foreign portfolio investors pulled out capital worth $6.8 billion from EM between in the first six days of August, according to figures from Institute of International Finance.

A quarter cut in Fed’s benchmark index failed to trigger investor appetite for EM assets, as trade crises outweighed the dovish tilt of the US apex bank.

EM stocks and bonds have a taken beaten. A gauge of EM equities, MSCI EM index, have been on losing spree since July 24, trad-

59

Low interest rate regime, opportunity for long-term borrowing HOPE MOSES-ASHIKE

ing below the 1, 000 index points.

Bond flows have weakened albeit as slower pace than equities, with Africa’s most developed country, South Africa leading the pack of net outflows with over $600 million last week.

Worry, more worry for Nigerian economy Oil prices, Nigeria’s major source of foreign exchange, have come under pressure following the trade crises, which seem to be transiting into a currency war.

Brent per barrel is trading below Nigeria’s benchmark price of $60, thereby raising concerns about the country’s ability to meet its N3.73 trillion oil revenue target to fund budget.

Analysts say if prices continue to trend downwards, the impact goes beyond lower oil proceeds, but could squeeze the country’s external position, weaken the naira and propel foreign portfolio investors to move their funds offshore.

The domestic currency is already feeling the pangs, trading at N363 per dollar on the Investor & Exporter (I&E) window, down from N360 sustained since the year started.

Stocks bleed, Yields under pressure Renewed trade war mean more owes to Naira stocks that have lost some 13 percent year long. Rout on the Nigerian exchange might persist until the fiscal authorities come up with bold policy pronouncement to revive market.

The Federal Government bond market is trading on a relatively calm level, with bond yields on Nigeria’s 10-year tenor flat at 13.69 percent on Thursday.

However, if the trade war lingers and oil price remains weaker, appetite of foreign investors for naira debt may wane.

This may fuel selling interest on the notion that Nigeria might not be able to meet obligations, which could push bond prices lower and yields higher.

However, analysts at Zedcrest Capital, in a note to investors, said yields will remain pressured in near term, on weaker oil prices and renewed Open Market Operations (OMO) by the CBN.

A

t present, the global market, including Nigeria is experiencing low interest rate regime, which seems to be seen as an opportunity to access longterm funds that can be used to improve the economy in terms of increased revenue generation.

The Central Banks across key economies in both advanced and developing countries are adopting expansionary monetary policy stance in order to stimulate economic growth.

Specifically, the Federal Open Market Committee (FOMC) of the U.S Federal Reserve System cut the interest rate in July 2019, the first rate cut since 2008, the Bank of Japan maintains a negative policy rate, and the European Central Bank keeps its interest rate at zero.

Furthermore, the Bank of England maintains the interest rate at 0.75 percent, which is considered low compared with the historical average of 3.89 percent between 2006 and 2009 the South African Reserve Bank lowered its interest rate in July 2019 and the Central Bank of Nigeria (CBN) also lowered its interest rate in

“

We need support to achieve growth in Nigeria and it is important that when the MPC raised a concern about the flat loan rate deposit ratio, it was just about 57 percent which is too low whereas in other climes, loan to deposit ratio is more than 100 percent

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March 2019 and has indicated its preference for low interest rate, causing yields on fixed income securities to drop.

The CBN in March 2019 cut its benchmark interest rate by a 50 basis point to 13.5 percent from 14 percent since July 2016.

These strategies according to Ayodele Akinwunmi, head, research, FSDH Merchant Bank Limited have created easy money (low cost of fund) in the global financial market and by extension, in Nigeria.

“Individuals, companies and governments can now borrow money both from the domestic and foreign financial markets cheaper than in the last few months,” Akinwunmi said.

FSDH Research has observed that many banks and other credit providers in Nigeria have recently begun aggressively pushing credit to their customers.

The Monetary Policy Committee (MPC), at its last meeting in July, raised concern about the constrained growth in the monetary aggregates as an indication of weak financial intermediation in the banking system and called on the management of the CBN, to sustain the various initiatives of the Bank to improve lending to the private sector in Nigeria.

The Apex bank had given the banks

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September 30 as deadline for the commencement of 60 percent loan to deposit ratio, which was targeted at increasing credit to the real sector of the economy.

“We need support to achieve growth in Nigeria and it is important that when the MPC raised a concern about the flat loan rate deposit ratio, it was just about 57 percent which is too low whereas in other climes, loan to deposit ratio is more than 100 percent,” Godwin Emefiele, governor of CBN said after the last MPC meeting.

FSDH research said the FGN may also take advantage of the current low interest rate to access long-term debt and channel it specifically towards building the capacity of the economy to generate more revenue.

Investment in infrastructure, security, education, healthcare and other social safety net will improve the productivity of the country and provide an opportunity for government to generate future tax revenue.

“The current low interest rate should not be seen as an opportunity for individuals, companies and governments to increase deadweight debt,” Akinwunmi warns.

However, the low interest rate may not last forever; FSDH Research encourages economic agents to enjoy it while it lasts!

@Businessdayng

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Monday 12 August 2019

BUSINESS DAY

Personal Finance

How CRC FICO is deepening financial access in Nigeria SEGUN ADAMS

C

redit is very important in every economy because it allows consumers to demand goods and services which might have otherwise been unaffordable, thus attain a higher standard of living.

Businesses also can take advantage of market opportunities to expand while entrepreneurs can support their business ideas with borrowed funds, creating jobs and boosting aggregate national output in the process.

Despite the obvious advantages, there is still a credit problem in Nigeria.

This problem, however, tilts more towards accessibility than the availability of credit given the considerations that go into the process of granting a loan and other forms of credit issuance.

CRC Credit Bureau Limited has introduced a viable product in the Nigerian market to help people access credit without stress.

The CRC FICO, which is exclusive to the credit bureau, helps financial institutions and lenders understand the creditworthiness of prospective clients which reduces the risk of credit default and the impediments to credit supply.

What is CRC FICO? The CRC Score assesses the risk of existing and prospective customers for lenders using the FICO 3 digit scoring system.

The CRC Score powered by FICO summarizes credit risk, by merging the contents of a Credit Report at a point in time and representing it, in a 3 digit number.

The CRC Score was developed in collaboration with the Fair Isaac Corporation taking into consideration the unique peculiarities of the Nigerian Market.

The Score ranges from 300 to 850, with 300 being the lowest and 850 the highest. The lower the credit score, the higher the level of riskiness or probability that the customer may default in payment.

The CRC Score is calculated, using the following five parameters: Amount Owed, Outstanding debt (30%), Payment History (35%), Pursuit of New Credit (10%), Length of Credit History (15%) and Credit Mix (10%)

CRC Credit Bureau went into partnership with FICO in 2017 and is the only Credit Bureau in Nigeria that has access to the FICO scores which are called ‘CRC Scores powered by FICO’ How to access this service The CRC Score is available to anyone living in Nigeria, who has a Credit History with financial institutions like commercial banks, micro-finance banks, FinTech’s or has enjoyed postpaid services. They can request for the CRC Score online via the CRC website www. crccreditbureau.com/products/crcscore-individual at the cost of N400.00 (Four Hundred Naira only).

As a new customer on the website, you will be required to register with the following information before paying for your CRC Score. They are as follows: Surname, First Name, Middle Name, Email address, Phone Number and Password.

Getting your credit score www.businessday.ng

After registration and payment, the customer will be re-directed to a webpage, to verify their BVN number and when that has been done, they receive a PIN that is used to access the CRC score on their browser, which is then downloaded directly to their device ( Desktop or Phone) What FICO means for greater financial inclusion in Nigeria The CRC Score is already in use by financial institutions in Nigeria, helping them to reduce the time used in processing loan requests from their customers.

This help makes for an unbiased, faster and more informed lending process.

With the CRC Score, lenders can clearly understand their future credit risk based on Nigerian industry data, thereby growing their portfolio safely and more profitably.

They can also drive revenue growth by selecting and accepting the right customers for the right products based on

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acceptable risk criteria.

With the CRC Score, lenders can proactively pre-approve customers for existing loan products based on their scores and reduce customer default levels due to the early identification of customers with the highest risk before loan disbursements. This leads to building and maintaining a healthy portfolio.

For Nigerians, it gives users a quick overview of how they are perceived in the financial space and the level of risk associated with them.

With individual access to credit scores, borrowers can approach lenders for loans or credit without any fear and if their scores are high, allows them to negotiate for lower interest rates on their loan repayments for either business or personal needs.

This also has a ripple effect of giving Nigerians better access to finance which also improves financial inclusion and growth of the economy.

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BUSINESS DAY

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Data

Federal government Eurobond Yields on Eurobonds fell by 0.055 percentage points week on week from an average of 6.39 percent when the market closed last week to 6.36 percent following intensified face-off between US and China.

Corporate Eurobond For the corporate euro-debt market, yield across the tickers fell 0.09 percent points from 5.968 percent last week to 6.06 percent. www.businessday.ng

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Monday 12 August 2019

BUSINESS DAY

Personal Finance These Nigerian mobile apps offer the best savings options OLUFIKAYO OWOEYE

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aving money could be a struggle for monthly income earners, most times; the impulse to always spend is high especially within the first week of salary payment. By the second week, when the salary frenzy has gone down, you chastise yourself for not saving.

Then, you remember that the major difference between those who retire wealthy and those who retire poor is how well they were able to manage their finances during their earning years.

In a bid to help you better manage your money through savings and proper budgeting of all monthly expenses; we researched some of the apps that could help you do just that PiggyVest This is an online and mobile app saving platform that allows flexibility savings as users can choose to save daily, weekly or monthly. After downloading the app, users can save towards a specific target or choose to place a withdrawal restriction on the account.

The platform pays interest up to 10% per annum on Core Savings which could be a periodic sav-

ing,13% on SafeLock which is a Fixed Savings and 10% Savings Challenge also called the Target Savings.

For the Core Savings, interests are accrued daily on depositors balance and paid monthly available from the 1st of every month. For a SafeLock, interests are paid upfront into depositor’s Flex account which can be immediately accessed for free. While for the Savings Challenge, interests are paid daily into depositor’s Flex account which can be accessed immediately for free All interest earned is paid into the Flex Account and account owners can withdraw from it at any time, without any charges.

Cowrywise CowryWise is another saving and investment platform that pays higher interest rates. The good thing about this platform is that it has provision for users who just want to save without earning interests, with its halal savings option. The online savings platform pays 10-15% Interest annually and it’s paid daily to the user’s account.

The platform has various savings plans this includes Periodic Plans.

With these, users can set saving plan(s) to be daily, weekly or monthly for at least 3 months. These plans can also be topped up randomly with amounts outside the automated

scheduled amount.

Life Goals these plans help users meet commitments to long term financial goals. These are similar to periodic plans but they have a minimum maturity period of 1 year.

The Save As You Earn plan is for users with irregular income flow.

This plan is not automated and can only be topped up manually.

Fixed Plan allows users to keep aside a lump sum of money for at

Week Ahead Week Ahead(Monday, August 12 – Friday, August 16, 2019)

least 3 months. Unlike other plans, they cannot be topped up.

Interest-free Plans are for Muslims who don’t want to earn interest on their savings. They can be set up as periodic plans, life goals, save as you earn plans or fixed plan; but they won’t attract any form of interest.

Kolo Pay KoloPay is another mobile and web application that helps users save money little by little towards planned goals over some time. For-

merly known as MyKolo, the platform is aimed at attempting to ease the stress that comes with saving as its major aim is to help people save towards planned goals. With Kolopay users have the freedom to name the goal which they are saving towards and also the period users want to save to achieve the goal.

The locked account on KoloPay guarantees a 6%pa on the saved amount. Also, the Autosave feature on the platform, users can activate a standing order on the debit card or bank account for a regularly debit of a particular amount to be saved in the KoloPay account at a frequency (Daily, Weekly or Monthly) while the SaveNow feature is for you if you want to save anytime you have.

Wema Bank’s ALAT is the first fully digital banking platform. It has the Fixed goal plans that help users save toward a target amount of money daily, weekly or monthly.

Users can also choose the target amount, the target date and the date to start saving, and the app will work out how much users need to save periodically. However, they cannot withdraw from a Fixed goal until the goal is met. A Flexi goal helps to save a specific amount of money daily, weekly or monthly and can withdraw up to 50% of Flexi savings once a month.

Chart of the week Oil slides below Nigeria’s budget benchmark…again

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity Oil: Brent may likely between $56 and $60 per barrel for a while, following China’s threat to retaliate if the new tariffs go into effect could push prices downwards.

Cocoa: Cocoa prices slipped by 0.67% to $2, 361/metric tonnes driven by increased cocoa supplies from Ivory Coast and Ghana. Going forward, heavier rainfall in Ivory Coast is projected to increase cocoa supply and depress prices further.

Fixed Income The Central Bank of Nigeria will conduct a primary market auction on Wednesday, August 14. At the last auction, the apex bank allotted N28bn, N33.7bn and N161.5bn to 91, 182 and 364-dated notes respectively, with stop rates being 9.75%, 10.6% and 11.2%.

A 2-year Federal Government bond worth N220 million issued on August 16, 2017, at 13.535% coupon will mature Friday, August 16.

Commercial paper with description “FMNP II 13-Aug-19” issued by Flour Mill of Nigeria Plc at 14.75% issue yield will mature Tuesday, August 13.

Currency The naira is expected hover around N363 against the dollar on the Investors & Exporters window following the escalation of trade war between United States and China.

Data Release The Nigerian Bureau of Statistics will on Friday, August 16, release data on Consumer Price Index and Inflation Report for July, 2019. A dive into the report of the preceding month showed that headline inflation slowed to its lowest level in 11 months at 11.22%, albeit still above the CBN’s 6-9% target.

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Brent, the international crude oil benchmark, fell to a seven-month low last week as demand and supply sided risks intensified following a more acute face-off between USA and China, while increased Shale production threatened a glut.

Brent remained below Nigeria’s budget benchmark despite gains which followed attempts by Saudi Arabia to prop up price. Experts say current events show urgency for Nigeria to wean economy off oil.

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Monday 12 August 2019

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BUSINESS DAY

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AbujaCityBusiness

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Comprehensive coverage of Nation’s capital

Abuja residents to access basic health services as FCTA launches BHCPF James Kwen, Abuja

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esidents of the Federal Capital Territory (FCT), Abuja are now eligible to be enrolled to access the Basic Minimum Package of Health Services Programme of the Federal Government.

This followed the launching of the Basic Health Care Provision Fund (BHCPF), an intervention by the Federal Government to improve health outcomes in the country by the Federal Capital Territory Administration (FCTA).

These services include free Ante Natal Delivery and Post Natal Care for all pregnant women, im-

munization, Malaria, Pneumonia, Measles and Dysentery treatments for Children under Five Years and Malaria Treatment, Screening for Hypertension Diabetes and Family Planning.

Chinyeaka Ohaa, FCT Permanent Secretary at the launched of BHCPF in Abuja, said the plan was to support delivery of primary health services and provision of Basic Minimum Package of Health Services (BMPS).

Ohaa explained that the fund also covers emergency medical treatment through adequate and sustainable funding that will be efficiently and equitably used to provide health services thereby ensuring financial risk protection

in accessing quality health services for all Nigerians, particularly, the poor and most vulnerable.

“You all will agree that this programme will go a long way in meeting some of the basic health challenges confronting our people but which have proven very costly indeed in terms of lives lost and altered irreparably”, he stated.

In his remarks, Permanent Secretary, Federal Ministry of Health, Abdulaziz Abdullahi said the initiative was in line with the present administration’s commitment to universal health coverage, adding that the approach is consistent with broader national goals as espoused in the Economic Recovery and Growth Plan (ERGP).

RMRDC opens window of opportunities for young Nigerians in raw materials James Kwen, Abuja

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he Raw Materials Research Development Council, RMRDC has created vista of opportunities for young Nigerians in the nursing of entrepreneurial spirit in exploiting the nation’s vast raw materials.

One of such windows is the RMRDC’s, “Catch Them Young Programme” designed to excite the interest of young school pupils into the research and development activities.

The Catch them Young programme rests on a three- pronged approach involving National raw materials essay and quiz for secondary schools, National raw materials essay competition for tertiary

institutions and youth entrepreneurship promotion activities.

According to Hussaini DokoIbrahim, RMRDC has considered it necessary to factor in the entrepreneurship development of young school pupils in the implementation of its programmes, hence the agency has come out with a unique handbook presented in a pictorial cartoon style with, ‘Mr. Raw Materials’ as the lead character.

He said this consideration has become necessary to build a generation of young people who can understand and secure sustainability in driving issues about the availability and development potentials of the raw materials resources.

Abuja businesses to benefit as Regus provides opportunities in office spaces Harrison Edeh, Abuja

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L-R, Wada Ibrahim, CEO/Founder Nisa Medical Group, Obi Denies-Ekwenna, transplant and urological surgeon, Nisa Premier Hospital and Nabasu Lemech Ezra, urological and surgeon, Nisa Medical Croup during a media briefing on the first Kidney transfer at Nisa Premier Hospital in Abuja. picture by TUNDE ADENIYI.

Flood: FCTA vows to remove more structures on waterways James Kwen, Abuja

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s part of measures to mitigate the devastating effect of the flood disaster being experienced in Abuja, Chinyeaka Ohaa, Permanent Secretary of the Federal Capital Territory (FCT) has vowed that the Administration will continue to remove illegal structures built on waterways that complicate flood risk in the Territory.

Ohaa who said this at the Emergency Stakeholders Forum on flood mitigation and response Coordination organised by FCT Emergency Management Agency, FEMA, in Abuja revealed that so far 150 of such structures have been removed in some parts of Abuja.

He commended FEMA for its aggressive flood awareness campaign across the Six Area Councils and assured the stakeholders that

the Administration will consider closely resolutions reached at the forum with the view to implementing them in line with the extant government policies.

“It is my expectations that your deliberations will not only come up with watertight preventive and response strategies against the impending flood but also proffer durable solutions to the issue of recurrent flood in the Federal Capital Territory”, Ohaa said.

Abas Idriss, FEMA Director-General pointed out that information available form the Nigeria Hydrological Services Agency, from its daily monitoring of flood water level of River Niger at Lokoja revealed that water level since 8th July 2019 has exceeded the level recorded in 2012 and 2018 after a comparative analysis of same period. www.businessday.ng

buja businesses including small scale, medium enterprises, large corporations and entrepreneurs will now benefit as Regus, a brand if International Work Group (IWG) is set to provide opportunities in office spaces that will help maximized cost of running businesses.

Regus, which operates in 120 countries worldwide says it is providing office spaces that will not only allow Businesses maximize cost on rentage but will save up to 70 percent cost involved in setting up a business space which can be ploughed back into their business for higher returns.

The Sales Director, IWG, Karim Ahmed said in Abuja that the available opportunities are flexible and includes already serviced offices, virtual offices, day to day

rentals, short term and long term leasing which will be accessible to every business owner including start-ups and already established.

Karim noted that one big advantage of the opportunity is that the day to day and monthly rentage on even large spaces offered will help businesses not to tie down capital on long term rent, according to him, some landlords mandate businesses to pay rentage for a minimum of a year, money that could be used to run the business.

He said, “an entrepreneur who does not want to work from home and needs a registered address can get a virtual office at a very cost effective rates here and will not need to be in the office space.

The entrepreneur can use it for mailing and we can receive messages, read e-mails, interprete and send responses on behalf of the entrepreneur or a business man.

RANAO demands comprehensive welfare package for retired military officers Abdulwaheed Olayinka Adubi, Kaduna

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etired Army, Navy and Air Force Officers (RANAO) Association of Nigeria has called on the Federal Government to improve on the welfare of retired military officers in the country.

Axinda Mshelbwala (Retired Major General), National President of the Association who made the assertion during the 32nd Anniversary of the Association in kaduna.

Mshelbwala who said the military served the country dilegently, protecting the people and its territory, adding that some even paid the supreme price with their lives, explained that the way the country can appreciate them is to take the issues of their welfare serious.

He stressed that the welfare of the retired soldiers is not limited to their pension alone

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but also on issues that affects their health and accommodation, and commended the Federal Government for including them in the National Health insurance Scheme, but said treatment for some the ailments affecting the soldiers are not listed on the scheme.

Mshelbwala noted that some of them are carrying old wounds sustained during services years and as they are getting older the wounds are resurfacing and must be treated.

In his own remarks, the Chairman Board of Trustees of the Association, Zamani Lekwot said the call by the Guest speaker for the establishment of a Ministry that will look after the elderly people is a welcome Development, adding that RANAO will put its think tank together and find a way of passing such suggestion to the Government.

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Company IN FOCUS

BUSINESS DAY Monday 12 August 2019 www.businessday.ng

Why Carbon published first ever financial accounts that showed biggest profit in 7yrs LOLADE AKINMURELE & OLUWASEGUN OLAKOYENIKAN

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inancial technology is booming in risk-saturated Nigeria, prompting big lenders to revert to the personal loan space which has been dominated by nimble fintech companies.

Banks are turning their attentions to the personal loan space after years of abandon and the general feeling is that they can successfully take on the fintech companies for market share, thanks to more superior liquidity levels and ability to mobilise cheap funds.

Fintechs don’t have the luxury of mobilising cheap funds, which means their cost of capital dwarfs that of the banks. That’s the reason why their interest on loans given to people ranges between 3 to 4.5 percent monthly compared to the 1.75 percent that Guaranty Trust Bank for instance offers for personal loans.

The lifespan of fintech companies in Nigeria is largely dependent on their liquidity profile and ability to issue fresh loans at lower interest rates. While the latter appears feasible, the former poses a big threat as their latest competitors possess strong liquidity base to embark on aggressive loan offerings at fintechs’ expense.

As a result of this and in a renewed drive for business expansion, fintech firms are in the hunt for capital injections, according to sources familiar with the matter.

By improving their liquidity levels, they are in a better position to compete.

The first sign of the fintechs’ capital ambitions came last week when Carbon, formerly Paylater, made its financial results public in 2018 for the first time since it began operations in 2012 and after it turned profitable with an aftertax profit of N180 million from a disappointing 2017.

“Last year was a pretty good one for the Carbon team. We saw 300+% growth across existing/new products and improved business profitability,” the company stated in a tweet while unveiling the results. “Today, we’re sharing our 2018 financial report so you can view our key annual results.”

With Carbon’s 2018 stellar performance and its public disclosure of financial performance, the company has shown the public that fintech is a profitable business in Nigeria, these developments could attract investors seeking fintechdriven businesses operating in Africa’s most populous nation to invest in.

The prospects are evident as the financial digital services firm consistently grew its gross earnings since it was established to reach

”

Last year was a pretty good one for the Carbon team. We saw 300+% growth across existing/ new products and improved business profitability,” the company stated in a tweet while unveiling the results

an all-time high of N3.72 billion in the 2018 financial year, some 136 percent increase from N1.57 billion achieved a year earlier.

With increased funding, Carbon would become more liquid to offer more loans and expand its customer base. In 2018, the firm’s loans and advances to customers rose by 58 percent to N2.57 billion from N1.63 billion disbursed to borrowers in the previous year.

Despite the increase in the value of loan disbursement, the amount was a far cry from an average loans and advances of N1.69 trillion issued by Nigeria’s five largest banks to their customers in the 2018 financial year.

Carbon recently introduced a loan facility of up to N10 million for Small and Medium Enterprises (SMEs) with the option of a 3-month or 6-month – for returning customers – repayment schedule with a pledge to pay N10,000 to anyone who refers a business to the firm.

Similar to Carbon is OPay, an Africa-focused mobile payment startup founded by Norwegian browser company Opera, raised a sum of $50 million in funding from its lead investors including IDG Capital, Sequoia China, Source Code Capital, Meituan-Dianping, GSR Ventures and Opera Limited.

The aim was to deepen its digital finance business in Nigeria, and Opera’s motorbike ride-hailing, mobile payments and food delivery services.

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